Discovery Limited (PDI.AX) Earnings Call Transcript & Summary

Good morning. Thank you for the time. It gives me always great -- it's always a great pleasure and honor to present Discovery's results to you. The presentation this morning is our interim results for the 6 months to 31 December 2022. At the outset, let me say it's been an excellent period. It really has been for us a robust, strong growth, and I hope you'll see that coming through. I do want to thank our Discovery people, Vitality people, Vitality Group people across the world. They've worked remarkably hard for the set of results that you will see. And I think our executive team and Board are very grateful to them. Let me also say that we have -- I have with me our CFO, Deon Viljoen and all of our key executives online. So afterwards, we'll take whatever questions that you have and we'll try best to answer them. We've also tried our best to provide all the data and stuff in the presentation, and you can drill down on that as we go through. So let me get going and maybe make kind of the point I always get kind of teased by my colleagues that I say every period is a complex period. But unfortunately, I have to say that this last 6 months really has been a remarkably complex period. I really like this risk analysis from World Economic Forum. Shows on the right-hand side, this idea of a poly crisis really is we've seen. The COVID epidemic come through, the knock-on effect of that, the great resignation, supply-side, inflation, then the conflict in the Ukraine, polarization, stagflation in the U.K., in the certain context, Eskom. It's just continuously remarkably complex and causal one thing leads to another as we're seeing. So this is a really, really complex environment. Also, if you look at the kind of risk registers that come out of the various analysis, I'm always amazed at how -- in the sense, accurate they are, as you can see on the chart, but they keep changing. So you can see the mix of climate, geopolitical confrontation. These are all risks that are serious and real but if you go back a number of years, they do keep changing. And I guess the question is with such a risk, what is the appropriate corporate strategy? What is the appropriate response to this. I think from a Discovery perspective, we've taken the view that it's kind of both ends. We need to be very prudent, kind of the adage of prepared for the worst, but hope for the best. We've been very prudent and I hope that comes through in every regard and very defensive in many ways. At the same time, with change and complexity comes opportunity. And I think we are more and more confident about the relevance of our business model, so we're investing heavily in growth. And hopefully, you'll see through the presentation, I think it's those 2 themes that really frame, I think, what we set out to do and set out to achieve in terms of both growth and managing a very, very complex environment. If I turn to the top line numbers, hopefully, you've seen them. I think they're hopefully are self explanatory. We've had a strong growth in operating profit up 22%. Core new business going up, growing 15%. For the first time, we illustrated even materiality and particularly of Discovery Bank coming through. You'll see that in the chart, what we're calling kind of noninsurance business as we're measuring it on a revenue basis, so you can get a sense of the growth in that at 51% to over ZAR 2.5 billion. So becoming quite significant. And I think that's important. Then normalised headline earnings up 30%. The effective interest rates of long-term rates of interest are really volatile, brings headline earnings down 9%. We normalize that as a policy, and you'll see that coming through in the rest of the presentation. We wanted to start, I think, in a sense with the end in mind and make 4 points that I hope are fairly clear. It's been a strong growth period for us, the earnings of high quality. I hope you'll see that. They really are the manifestation of the efficacy of a Vitality shared-value business model and our organic growth operating model, that should achieve a whole lot of things concurrently, and I hope you'll see that. Second point, given the strong growth, given the strong performance, there's no need for the raise of capital through a VCP that we announced. We won't be doing that. But given the strong growth that we're doing, we do believe it is premature to reinstate the dividend. We revisit at the end of the financial year and I will show you exactly the rationale behind that. Thirdly, we focus very much on financial prudence, and we structured the organization be largely immunized from changes in interest rates. I think that is important in a remarkably volatile environment. And then fourthly, again, I hope you'll see that through the presentation. The model really is evolving very strongly, and it provides a very powerful platform for future growth. I think all of the businesses are well positioned for future growth. So let me start going through a bit of rationale. I felt importantly, to start everything is context and strategy. Our view of the world around the nature of risk, the power of technology, the importance of purpose idea of making people healthier through our model is fundamentally, we see the relevance of that more and more as we go and as health care systems get into difficulty, we see the relevance of what we're doing as we see life insurance margins coming under pressure, we see the relevance in what we're doing. So the model is highly relevant. In terms of the actual business, while the shared-value model should do the right things. And this is theoretical, this is what we set out to do. And I guess the question is are we achieving it. So the shared-value model should for our customers offer better value for money, lower cost of financial services and make them healthier, healthier physically, healthier financially, et cetera. From our perspective, they should offer real product differentiation, better competitive advantage, higher margins, better persistency, low mortality claims, et cetera, and that should drive up growth margin. That's at the business level. Now the point of the shared-value model is our deep belief is that it's repeatable, scalable in adjacencies in different markets and therefore, our organic growth model. It's primarily about new business and new businesses. So we have to grow these things from new to emerging to establish businesses. And if we achieve that, we believe strongly we can achieve superior operating growth. Our target has been growing operating earnings by CPI plus 10% without recourse to additional capital, getting that all right will allow us to create real strength, but at the same time, enduring shareholder value. And so to an extent, I think you need to look at these results in the light of what we set out to achieve. Are we achieving the growth in operating performance. Are we getting the customer engagement, the better persistency and mortality, are new initiatives getting materiality and growing ultimately or we're creating a business of capital strength, the right balance of cash generation and growth. And I think we are, but I think you need to see the results as we play them out. So the first point is maybe to -- just to run through the businesses as they are, this is just a table of the performance. Obviously, I'd like to give you context and strategy. I wanted to give you a sense of how the businesses look on the face of things. You can see that I think the results are robust. Overall operating profit up 22%. You can see to just over ZAR 5.9 billion. New business growth has been very strong. Core new business growing to over ZAR 11 billion in the period. Very importantly, you can see that the -- what we call in the noninsurance business is growing by 51% to over ZAR 2.5 billion. You can see for the first time, seeing how the bank revenue is coming into the picture and being very, very significant in that regard. At the same time, Discovery Health is having considerable success in growing non-scheme products and penetrating other markets. And so that's coming through, I think, very nice and you see that in the growth. What's happening in the Vitality Group also had very strong growth, up nearly 70% in that regard. If you look at the kind of the 3, what we call the strategic strand South Africa, the U.K. and Vitality Group, the performance is strong across the board, 23% growth, 15% growth, 33% growth. Few comments I'd make. A few difficult issues for us to deal with, and I'll give you much more detail as we go through the presentation. Discovery Insure has had a difficult time over the last -- over -- in the previous 6-month period. Operating losses coming through from very, very complex supply-side, inflation, motor parts, cars, et cetera, added load-shedding claims, et cetera. We've done some remarkable action in that regard. And you can see it's kind of broken even. We're restoring the margin. I'll give you more insight going forward. And the other difficult environment, Ping An Health. China, obviously, environment has been very, very difficult. Lockdowns, the COVID wave coming through, all of that happening in the 6-month period. You can see profitability down 40% in that regard. But besides those 2, you can see, I think, a strong growth, Discovery Health robust across everything it does. The performance up 4% is somewhat muted to some one-off costs, we think they ameliorate by the end of the year. Discovery Life in total, up 30%. But a lot of that growth is due to group life really recovering post-COVID. The individual life up 11%. Discovery Invest in a very difficult market growing, I think, strongly, some tax efficiency in that growth of 15%, operating growth, more in line with the growth in fees, more like 7% to 8%. But I think a strong performance in a very difficult environment in the bank, the performance continues to be exceptionally good. The bank is performing well within the capital plan firstly. Secondly, every single metric coming out of the bank in terms of growth, quality, every aspect makes you very much on track towards what we set out to do, and you'll see that later in the presentation. The U.K. has had a tremendous period. It's a complex environment. It's a mix of stagflation, complexity in the NHS. You can see the growth of Vitality Health in terms of new business, very strong and Vitality Life new business. Vitality Health's profit grown by 2%, looking fairly flat, but certainly not. You'll see in the presentation later. The previous period was a massive jump up from the past. So this is off a very, very high base. Vitality Life growing strongly by nearly 50%. It really was a beneficiary to an extent of rising inflation but the policies are largely index-linked in the U.K. So to some extent, it's been a beneficiary of inflation but it's worked remarkably hard in terms of getting the operating performance and benefiting from that. And again, I hope you'll see that through the presentation. Vitality Group is a makeup of a number of different issues. I will take you through that later. Vitality network ran its profitability strongly. There's complexity in Vitality Health Insurance. We have a number of large things we're doing. Obviously, Ping An Health, Amplify Health come into being. You'll see how those are playing out in the process of the results. So let me just end there with kind of the drive numbers to give you a sense of a few of the cut from marks about how the businesses in a sense are performing. So let me make some comments. I mean I guess the first comment to make is, are we growing sufficiently? And is the -- is both the Vitality shared-value model and the operating model playing out appropriately. I think they are. You can see the operating profit has grown strongly by 22%. Obviously, that's a bump up. You can see in the previous number of years, it was the COVID period, it was a period of a considerable investment in new initiatives, over 20% of operating income. We brought that down. So you can see the jump up. But in fact, if you actually look at the progression of the operating profit over time and you look at the shape of the curve, we're not that far of CPI +10%. We're probably had about CPI +7% or 8% thereabout and over the last 10 or 15 years, the growth has been very, very strong. So I do think that we're kind of getting the mathematics of how the group grows coming through. And I do think we are positioned to continue that for some time. We'll see how that plays out. Obviously, all of this is buttressed with concern about the environment and all of those that are present, but I think we're confident about how the group's dynamics are playing out. You can see the growth in new business, again, growing strongly over time. And I think, graphically, when you look at the total income from noninsurance businesses driven by Discovery Bank, some have been done by Discovery Health, the growth is very, very strong, and I think the numbers are very material. Turning to new initiatives. You will know if you followed us, that we spent a considerable amount of new initiatives, The guidance we've given has been about spending about 10% of operating profit on new initiatives. That's how the mathematics play out. If you spend 10% on new initiatives and you grow the other business in line with the [indiscernible], you get the CPI plus 10% growth rate. But you have to accept that you cannot do that linearly. As the group gets bigger, you've got to take bigger bets in order to grow. You can't start up things in a linear fashion. And so we accepted building things like Discovery Bank, which require much more investment. And you can see that in the chart how that has been new initiatives went up over 10% to 12% to over 20% in the last number of years. And we made a point at the last results announcement that we bring that down to within guidance quite quickly. You can see that's exactly what's happened, we're about 11%. And even in that number is the Vitality Invest business in the U.K., which is in fact, now not a new initiative. We've rounded up. We're transferring it. All those structures have done. So that will come down further. Amplify Health in Asia with -- is immediately accretive to our P&L because the nature of the commitment of capital is that it flows through every year to build and [ make out ] the acquisitions in Amplify Health. So that's somewhat accretive to the numbers. But you can see on the right-hand side where the spend is, half of it is in Discovery Bank. A small amount is in the Discovery Business Insurance, Umbrella Funds that will come down very quickly. And then quite a bit is in VG outside of Amplify Health. There's a lot there. And I think as we go forward, you'll see the bank come down and the VG spend go up. And I think that's probably the right allocation behind new initiatives should play out. So I think we're feeling comfortable about the materiality of the potential of a new initiative. I think we're feeling comfortable about the spend and how that's come down to within guidance. Let me then push on and talk about the model. I think every time we present to you, we try best to give you insight into how the Vitality shared-value model is working from the engagement from a correlation causal perspective and all the factors we're trying to address. We tried in this results to kind of not show anecdotes, but take all the data that we've got and show you how balanced the model is. So firstly, the issue of engagement. I would put it to you that I don't think there are organizations anywhere else that are getting the kind of engagement in customers that we are. This is not light engagement, signing on to an app or whatever it might be. This is proper engagement in physical activity, nonphysical activity, eating differently, activations in the bank, et cetera, et cetera, et cetera. You can see from the chart in terms of scale, quality and duration, all I think are remarkably strong. In terms of scale across every market, we're in the average is about 40% of our clients are engaged. And you can see that across the distribution. In terms of quality, it's amazing. I think people are -- obviously, we're a physical engagement doing their steps, using their device, et cetera, but we're seeing very strong nonphysical engagement, healthy foods and other aspects that we focus on. I think also very pleasing, this over duration engagement tends to improve. So you can see the engagement almost doubles over a 24-month period as people come in to the system, engagement tends to get stronger as they go on. So from an engagement perspective, I think we're feeling very strongly that the group has the ability through our shared-value model to get best levels of engagement. And even in markets like the U.S. where we offer Vitality to corporate clients, I think our engagement levels are the highest in the industry. So the model is working. I think our understanding of how to engage clients is getting stronger and stronger. In terms of the actuarial factors, I mean, the fundamental issue is to bring mortality down, mobility down, defaults down, accidents down, et cetera, and to make the business stickier and more persistent. You can see across the board from all the data we have, those downsloping correlations are strongly, strongly in place. We're getting remarkably strong results. I think the difference is between mortality of people who aren't engaged or likely engaged less those that are heavily engaged is dramatically different as is the persistence and that kind of tends to be a virtuous cycle. You keep your better lives in selecting this and they're getting hopefully healthy and healthy over time, the portfolio over time gets better. So I think we're feeling comfortable about where the model is. There's a considerable investment in kind of a Vitality 2.0, I'd like to talk to that a bit later. But it's off the basis of what I think we feel very strongly about is a very, very strong model. The manifestation of that, I think, is fundamentally in operational non-economic experience variances. You can see over the period for the group that are strongly positive at ZAR 1.8 billion. You can see how they're made up of, there's a lot of moving parts in that. If I urge you to look at the detail, there's complexities and all kinds of stuff taking place. Long COVID, high morbidity claims. You'll see that coming through but when you look at the group level, I think across the board, the results are strong. It shows you that the embedded value buildup is strong, the annualized return on embedded value, just over 14.4% and I think the [ billback ] is fairly clean and fairly simple. You can see the opening balance, positive experience variances, unwind of the discount rate and VNB coming in, giving you the operational EV. The economic effects are quite small despite the swing in interest rates where someone on the beneficial of inflation and that come mitigates it on the embedded value. So a fairly smooth and, I think, strong growth in the EV illustrating where shareholder value is being built up. But I do think one of the important points is that we're a business now that's building a bank. We have a health insurer in China. We have a motor insurance business. All of these businesses, we have Vitality Group, all of them are not in the EV. So you can see on the right-hand side of the chart, that 28% of group revenue is now attributable to businesses, not kind of EV, so to speak. And these are a business of scale. I mean Ping An Health has an NAV of around ZAR 20 billion of our -- ours is 25% of that. So these are businesses of considerable scale that are building up. And I think over time, hopefully, you'll see that shareholder value coming through in the sum of these issues. So it does show, I think the manifestation of the group's model, the manifestation of the growth target operating model, I think the quality of the business being written. Let me turn to cash generation and how we are growing the business. We always show this chart. I think it looks -- I think a lot more pleasing than in the past and illustrating how the -- I think the model is very much in balance. You can see on the left-hand side of the chart, just the cash conversion numbers close to 70% of profitability was in cash. You can see how the cash is generated and where it's used. You can see we generated ZAR 7.5 billion of cash. We spent ZAR 6.9 billion of it mainly in new initiatives and particularly in new business. So we're investing most of it in growing the organization, leaving about ZAR 600 million at percent of shareholder cash at the center. Obviously, liquidity and cash remains inside the different businesses. But at the center, the kind of the excess cash is about ZAR 600 million. We used a lot of that to pay down debt. So we really are focusing on bringing debt down and bringing the FLR down at the same time. When you bring it together, the position looks, I think, fairly clean. You can see cash generation. As I said, about ZAR 600 million better than in previous periods. The FLR, the leverage ratio is coming down strongly. We had a self-imposed cap of 28%. We were around there a number of years ago. We brought that down to about 22%. Inside the businesses, they're strongly capitalized and at the center, we continue to have the same kind of buffer that we've used over the past. So the business is very much in balance, and I think the model is playing out very much as we set out to do. I want to turn to the dividend and spend a bit of time on this because as we said, we're not an organization that's focused on the dividend, the scale of the dividend. We're focusing on growth. We're focusing on growth in the terms of not topline growth, proper quality operational earnings in terms of our growth. But I have to say we got land-based significantly. At the last presentation, we're flippantly saying we're not reinstating the dividend. So we felt it's important that we take you through the logic, and I hope it makes sense. I mean, firstly, just theoretically on the left-hand side, we've had a dividend cover, historic dividend cover of 4 to 5x. It's actually just a derivation of how the model works. Our established businesses should pay 2 to 3x the dividend. The emerging businesses shouldn't pay anything that kind of new and we should spend the 10% of operating profit on new initiatives. If you work that out, you get a 4 to 5x cover. That's how it pays out. So it's just mathematically, if you're paying 4 to 5x cover, you can facilitate the growth model that we set out to achieve. And that's what we did until COVID started. When the COVID period started 2020 to 2022, like most companies in our sector, we seized the dividend. But we focused on prudence in 2 other ways. We took a view to actually reducing our leverage. We began doing that during the COVID period. And secondly, given massive insurance volatility. If you follow as you will know, we are through considerable pain is rates really far down in the U.K., the lowest, I think everyone on record, now that picked up again. We focus strongly on making sure that the group is immunized in terms of operational solvency liquidity from volatile interest rates, we focus on achieving that. But importantly, we're focused on growth at the same time. So we continue to invest in growth in our businesses. We invested over 20% of our operating profit on new initiatives, notably Discovery Bank, and we followed a ZAR 1.5 billion capital raise -- capital raise from Ping An Health into the business. So at the same time, is kind of focusing on prudence during that period, we focused very much on growth. So where are we now? I think demand is very much in balance. As you can see, operating profit has grown strongly. Cash generation is there. You can see the leverage ratio has come down. I'm summarizing what you've seen. The investment in U.S. come down in the bank within during this calendar year from an operational perspective, will breakeven and is growing strongly. So the business is in a strong position. It's really in balance. It seems at this stage that the focus on growth and the dynamics are excellent. It's not the time to reinstate the dividend. We'd like to wait and revisit it at the year-end. And then to make, I guess, the obvious point, when you look at how we're spending cash and capital coming back to the previous slide, we're spending ZAR 4.5 billion on growth in our existing businesses. We're spending nearly ZAR 1 billion on new initiatives, into businesses, we think we'll have considerable materiality. We expect the return on those investments to be close to long-term risk rates was close to 10%. That's over 20%. That is an incredibly good use of capital in our view. And therefore, given the growth dynamics, we think that's where the focus should be. So give us time on this, we'll revisit this at the year-end and continue to see how the group plays out. But we're very comfortable with how the group is in balance in terms of its operating model. Let me end on the kind of group reconciliation of just working down from the operating profit, which is what I'm focused on down to normalized headline earnings. So operating profit up 22%. That's what I focused on, as you can see on the face of the income statement on the chart. Hopefully, that's clear. The fundamental issue is just the scale of volatility in interest rates and what that does through the P&L. You can see in Discovery Life, the first entry underneath there, in the previous period, [indiscernible] created this bloating of nearly ZAR 0.5 billion. And in this period, a reduction of over ZAR 862 million. So what you see is when you look at the swing is about ZAR 1.2 billion or ZAR 1.3 billion over the period. That has no effect at all on the operations, liquidity, solvency of the group. And therefore, as a policy, we normalize that up. You can see as it plays out down profit before tax from operating income up 22% is a profit before tax, down 10%. Few adjustments to headline earnings down 9%, as you can see, when you add back those intra effects, you get the headline earnings up 30%. And so I mean, our view is that I think the operating profit up 22% illustrates, I think, the strength of the operating profit of the group. The headline earnings, I think, illustrates effectively kind of flat leverage and many other expenses are flat over time below the line, giving you a bit of a gearing effect up to the 30%. It's important just to make clear our kind of position on interest rates, I made the point, and I think it is important that we build an organization that is not affected dramatically by changes in long-term rated interest. They are hugely volatile. We've seen it. I think [indiscernible] volatile in history. The shape of the curves are changing, real long-term rates of return are changing dramatically. And what this analysis does in your own time. I urge you to go through it. It kind of looks at the South African and the U.K. Life businesses and the impact of insurance on them. What you will see is that in the second part, earnings are dramatically volatile through the income statement in IFRS 4. And IFRS 17, that may be different. In IFRS 4, you can see the dramatic change in earnings. In the case of Discovery Life, if you had a year and 2 weeks before or 2 weeks after, it will make a difference of hundreds of millions. So the effect on the income statement is dramatic. But when you look at liquidity and solvency in SA, it hardly has any effect at all. The South African Life business is largely an asset. It's simply a present value of a bond in a way, and that moves up and down. It doesn't affect solvency much nor liquidity. In the case of the U.K., it's more complex. Given that part of the business sits in the belly of the Prudential. As you know, if you followed us, there is a truing up of the P&L every year. And therefore, blockchain initiates did in the past, create some potential liquidity issues, as you can see. So we've, over the years, developed a very sophisticated approach to hedging out the risk, as you can see in the chart, and therefore, ultimately, there is no real effect on solvency nor liquidity in the U.K. either. So we've got to a point where you have this massive volatility in interest rates. But given the structure we've created, it does not present any liquidity, solvency issue, it doesn't affect operations, operational impacts whatsoever. And therefore, we tend to obviously deal with it, but it doesn't affect how we see the business progressing. And therefore, as per our policy, we normalize it out. So let me summarize. At this point, I've taken some time. I hope it's clear, but as we get you to the numbers though there that clear, you can see the dynamics of operating profit, strong growth in new business. You can see the dynamics between normalised headline earnings is an accurate depiction of how the group has performed and then the effect of interest rates, which we've largely immunized for in the structure of the group. Let me move on and then make some observations about the businesses, the 3 big pieces of the business in terms of Discovery SA, Vitality U.K. and Vitality Global. But I wanted to just make some points about Vitality and how the model is evolving. I think it's very important to understand just the power of what we've done and what the data can do and how we see it going forward in the future. Now I showed you earlier the incredible correlations between people engaging in the program and illustrating, for example, much lower mortality rates. The issue about that is that, that's largely -- that's factual, but it could be selection. It could be correlations about causal. And to develop the model, we really need to understand the causal effects of what we're trying to incentivize in changing behavior of people. So just on that physical activity, which is an area of considerable data, on the left-hand side of the chart, this is a similar analysis that you've just seen. We look at only physical activity it's stratified by age, 45 to 65, et cetera. What it shows is as people engage in physical activity from a base of zero to low to medium to high, you get a dramatic decline in levels of mortality. It's a fantastic result, but we kind of knew that. The question is what is the causal effect of physical activity or mortality? And to do that, you've got to kind of get out of every other effect. Now we have the data to do that. This is a study we did over the period just before COVID, over 0.5 million lives used in this, and we keep updating the factors that come out of this, but it really takes out all the different co-variants, Vitality status, extent of health usage, socioeconomic class, et cetera. So you can see on the list of that and isolates down the effective exercise on the person based on age. And what you see on the right-hand side is exactly that. So we're really focusing down on the causal effects of physical activity or mortality. And again, it's remarkable. It is incredibly strong. And I think what's very positive about it is -- it's even more powerful as you get older. So we are getting to a point where you can see the benefits of, for example, physical activity. The studies we're doing now will be mental health as well. So we're trying to get all the factors that we understand because I think understanding the causal effect will allow us to properly value. Our products will properly structure them in the right way. We're getting to that kind of precision of data. Now once you know the factors of what causes changes in mortality, the question in, you're valuing something going forward, you have to well to predict where people change their behavior. And the data has allowed us to develop this concept of habit theory, understanding how people change, habits, say with physical activity. We've got to a point to 7 weeks of data, we can ascertain the extent of other habit. How strong it is, how weak it is? Is it good? Is it bad? And from that actually work out the scale of the habit. Once you have that, you can understand going forward for causal effects, the habit effects and actually value what their behavior change could do. That creates a valuation model where it's kind of value prospectively, the value of that behavior change and then compare it to the value giving that to clients in terms of premium discounts, incentives and awards, create a profit sharing model for the product allows us to really perfect the products. But at the same time, for the first time, allows to do proper valuations of assets and liabilities on the back of the shared-value model. What we'll get to -- I can't get to the detail now is, a Vitality 2.0, that really is a sophisticated set of modules. In the case of the customer, it stays the same, know your health, improve your health, get rewarded. But in terms of us, it's the prediction model and the healthy future, understanding life band, health band, risk factors. Going to the engagement model, understanding what's the next best action for that particular individual using our gateway technology to be able to give people access to the entire range of health applications out there, incentivized people properly, and they're critically the ability to value this, the ability to use the data and the data science underneath it. So more and more we are getting these modules, I think, to a point with obviously of extreme value to us, but to our partners as well, help us, obviously, make changes to the lives of our customers, but help us monetizing it much more value out of where we're heading with the model. So I want to give you some sense in a very short space of time and a very complex issue, but how the Vitality shared-value model is evolving from a correlation model to one that's causal and then one that we can properly value and really get the precision of what's needed to make it super powerful. Let me talk to the 3 strands and give you some strategic insights into each. I'm going to talk about the South African piece. As I said, I think the performance has been strong. Operating profit up 23%. New business up 15%. I am starting with Discovery Bank, I think the performance has been remarkably strong. We are very proud of the bank's performance. It's operating well within its capital plan, and it's playing out exactly as we'd hoped for and better than, I think, expected. You will have seen these numbers in different ways, but I wanted to cut them in a way that gives you a sense of kind of the strategic areas of importance. So first, you can see the growth continues. Clients now touching over 580,000, total accounts of 1.3 million. The net income to the bank is over ZAR 700 million during this period, up 70%. So you can see the rate of growth coming through in terms of proper revenue flowing in. Deposits and advances are growing. Advances is largely on the back of Discovery Card, there's much work to be done on personal loans, on mortgages, et cetera. We need to grow the NII. You'll see that coming up a bit later. And the operating result is turning around. Now for the first time, why don't you show you the difference between kind of operating profits and losses versus acquisition costs. Obviously, the bank must make profitability in total. But given the bank that's growing this quickly, we're spending a lot of money on acquisitions. So it's important to understand kind of the core operating results versus the acquisition cost spending. You can see how they're turning at different levels. The operating profit -- the operating losses narrowing very, very quickly, but you still will have acquisition costs as we go forward. We need to grow the bank, and I think that's important. So the first point you made, just off the pace state of the slide is just the scale of growth that we're achieving and I think the quality of the growth, we've set a goal of 1,000 cases per day. That's, to a large extent, what we're achieving. You see from the chart and that growth has come up very strongly. We're watching very carefully each cohort of new business are the same quality. So you can see the product mix is largely the same if you look a year ago to this period. I think it was exciting is that people come into the bank and they use it more and more. So this is about a full service bank that we are -- we built when people who come in and buy up one to use it fully in over duration. You can see from the third panel, how people come through. I think what is important is that if you do the analysis between Discovery Bank and the other banks in the environment, our NIR per client now is already in line with the average. I think that's been the case for the last period as well. And in fact the second, I think it's the second largest or about the second largest in the set on individual banks. But if you look at the extreme right-hand side, what you find is total revenue is a lot less per client. And the gap there is NII. We have not been doing much personal loans at all or other forms of lending. And that, of course, is an important gap for us. The potential, I think, is tremendous. It's simply a product suite we're having it develop, we're rolling that out quite soon. But factually, you can see the quality of the client base that we have. I think we're really banking the mass affluent. You can see that we had great success in growing our new credit market share up significantly to 15%. And then you can see how low in the latest period, our credit loss ratios are, dramatically low. I think it's a quarter of what the banks have an average. So the quality of the installed client base, the quantum of what they borrow is significant. We just need a product to offer into that space, and that's imminent. Our sense of that is quite quickly, you'll see the NII grow in addition to the NIR driving the economics of the bank. And I think that's important. So I think from a growth perspective, from a revenue perspective, I think we're feeling fairly confident that the bank's ability to grow strongly is present and almost kind of imminent, and you see it playing out. The question on cost is just the economics of growth. I'd point you to the right-hand side of the chart, firstly, just to make the point, the shared-value model is very much in balance here. You all know we have a number of very complex structures and I think fantastic value to customers, our travel platform, for example, that offers access to the entire end-to-end travel experience. All of these things are triggered by your behavior, your Vitality status, et cetera, interest rates flex, et cetera. But you can see on the right-hand side, kind of the lifetime value of clients and embedded value of clients or they are per client is actually very flat across the board. In fact, our more engaged members are giving us in a sense, more value. So it's actually a very, very balanced model. It means that we seek clients across the board, we seek highly engaged clients because they're good for us as well. I think that's important. But the economics of growth actually is interesting. On the left-hand chart, this is a theoretical analysis. Just please follow me on this. It's kind of -- we came out of an insurance background to an extent. I mean that's been our kind of genesis. In insurance markets, they're very different to bank markets who's starting up and growing. Insurance businesses typically do 200 to 300 units a day of business if they're doing well. But in insurance markets typically clients buy one of your products, you buy one motor insurance product, you may buy one medical scheme cover. You may buy a few life insurance products, typically one that's very, very infrequent purchase, so it's typically a one product purchase. Secondly, lapsation rates are very high. That's only 10% to 15% insurance market. So what you find is you can grow quickly on the white line. But over time, your new business footprint can't quite meet the lapsation. So at some point, 10, 20 years, you can plateau. So it's a harder cycle. In the case of banking, it's different. It's a bit like a -- it's like a coffee shop, people come and they don't leave in a sense. You have a massive market in South Africa. The margins are good. But very importantly, what you see is the lapse rates are very, very low. People typically don't cancel their banking [indiscernible] or the credit cards. So what you get is a strong growth, similarly in the early years, but it tends to out-accelerate them. Are you far by year 10, you're kind of 2.5x the size. So it seems to us clearly as we experience the growth of Discovery Bank. The potential to grow over a long period of time is quite remarkable. We're seeing that in how the bank is growing. It's a remarkably strong rate of growth. As we look at the economics of that plays out, that's remarkable. So our sense is that the growth will continue and hope to accelerate. At the same time, the quality is there. But I think the fundamental issue is the power of the digital base, as you can see in the middle of the panel, operating leverage is quite incredible. You can see just over the year, over 18 months or so, you can see how our NIR stayed flat or going up a client, the actual operating expenses are coming down dramatically per client as the fixed cost base kind of kicks into gear. So the effect on profitability is obviously going to be significant. We've made this point before, we expect to breakeven. We expect to breakeven operation during this calendar year, and that's our hope. We expect to breakeven in total in the next calendar year, and you can see from the chart we've shown both just operational breakeven and total breakeven below. You can see both a kind of a base set of assumptions and an upside, not only is the breakeven, I think, quite imminent, but at the same time, you can see the ability to get to ZAR 100 million or so run rate per month in a short space of time is not going to be difficult. We believe it will happen in the next couple of years, as you can see from the chart. So before giving you a sense of how the bank economics play out, giving you a sense of operational breakeven should happen during this calendar year in total breakeven next calendar year is important. We try our best on the right-hand side of the chart to show you the assumptions on base upside, et cetera, and where we think the fluctuations in terms of the underlying assumptions are important. And you can kind of draw conclusions from that, but I think we've been feeling very comfortable about the potential and the quality of Discovery Bank. Let me turn to Discovery Health and make some comments. I've tried -- we tried our best. There's some much to say about these businesses. I'm not doing our teams the justice that they deserve. So I had to pull out a number of comments of what to say, but hopefully, these things are clear. Discovery Health continues to perform robustly. It's completely in tune. I think that's so important in the health care system. It is about kind of an orchestra of keeping things in balance, solid in everything you do. You can see the growth continues. New business has been stagnantly strong, up 23%. I do believe you see it in Vitality Health as well. There's a flat to quality, there's an importance of health care. There's a primacy of health care. And you see it coming through our new business growth. We've seen that inside in close, employers are hiring more and putting more people on Discovery Health, and we're seeing that in individual side as well. So Discovery Health Medical Scheme is seeing that growth. In addition, non-scheme growth, we're getting considerable success on products in primary care, Gap Cover, et cetera, that's grown nicely by up to 15% of total revenue. So this is a market that was, at one stage, quite marginal for us, we see it as socially important and financially important for Discovery Health. And the operating profit, I think, is stable at 4%. It's had some one-off costs that we ameliorate in the second half of the year. So we expect that growth to continue, but it's just kind of moves on and on and on its scale and the quality, I think, is exceptional. The Discovery Health Medical Scheme has been remarkably strong. Credit to the trustees of the scheme and the management, it's been really, really strong, as you can see, membership has really grown. I think I've -- I think I'm just jumping in the wrong slide, just to Discovery Health Medical Scheme continues to grow. You can see on the left-hand side of the chart, just now close to 58% of the market share of the open scheme market. You can see it scale compared to its competitors. I'm always amazed by the stability of the scheme in the sense the stability versus the narrative is very important to understand. Of course, affording medical scheme coverage is a massive issue. That's our primary role making medical scheme coverage affordable. But the concept that people are buying down and all the time doing that is not really the case. You can see in the pie charts, it's hard to see but that actually reflects the percentage of people buying up or buying down, I think, in the red, downgrading up or buying up the plan or buying down. What you see is it's not only remarkably stable, it's coming down. So a couple of years ago, it was about 5% or 6% of people during the year. Other bought up, other bought down. That was typically half and half. But what you see in the latest year is that's gone down to about 3%. So it's become more sticky, more stable. And you see on the bottom of the chart, the lapse rate have stayed largely the same at about 5% to 5.5% thereabout. We're showing on the right-hand side, the scheme is massive. The growth is substantially attracted 338,000 lives over a 6-month period, but we lost 312,000 lives. You can see the reason for that in the previous -- in the previous analysis, just trying to point out that a lot of that loss was, in fact, not within our control. People leaving their employer group, finding another affordable, et cetera, immigrating a small number, as you can see. We don't know the exact reasons for all of these factors. But gives you a sense of just the dynamics of growth. So just to put it to you, I think, strongly the performance of Discovery Health -- the performance of the Discovery Health Medical Scheme has been remarkably strong. So I think one of the points we wanted to make in the presentation is now we kind of hopefully post-COVID. The COVID pandemic has created quite a dilemma for the medical schemes industry and the health care industry because what you will know is that, 2 things happened during this period. One is that people could not go for health care during the COVID period, as you know. And therefore, utilization went through the floor and surplus inside medical schemes dramatically grew. The second point is that people could not follow preventive screening and therefore, there's all kinds of embedded potential health issues were the people that were screened out in a period that didn't have COVID. So the dilemma, how do you deal with these issues? How do you deal with the health issue, how do you deal with the affordability issue. It's a legitimate social issue here because people are back into a full scheme coverage, but at the same time, the medical schemes have considerable medical scheme surplus. So what do you do with this? And how do you think about it? How do the trustees of medical schemes think about this? I guess the [indiscernible] content review is one, if you just escalate your contributions at a rate lower than medical inflation and eat up the surplus and give people a kind of a break in terms of affordability but we wanted to demonstrate that it's a remarkably -- what appears a simple issue is a remarkably complex issue in the health care system, particularly one that has community rating. So the analysis on the chart is actually a simple one. Seeing the left-hand side of the chart is medical schemes have surged in terms of surplus up to 50% of contributions. The solvency requirement is 25%. So they've got much too much surplus. They don't need it. They should give it back to members in some way. But on the right-hand side, the cost curve at this point is growing at, we know CPI plus 4%. If you look at the supply side dynamics, the demand side dynamics, underlying fees, et cetera, we know that medical inflation is typically CPI plus 4% or thereabouts. So that's what the cost curve is doing. So the question is if you were to take a view that what if we just escalate contributions, if your trustee, if you're a body of trustees of a scheme, you escalate contributions at say, CPI, which I think is actually probably not dissimilar to what customers would expect. The CPI plus 4%, which you've got all the solvency, why not just escalate at inflation. What you find, and I guess it's an obvious conclusion, but I don't think it's evident clearly to people. Once you escalate below medical inflation, you're falling below the cost curve, as you can see on the chart, once you falling below the cost curve, you're eating into surplus, which is what you expect to do. Except the problem is that you can't catch up, that's different to our medical schemes because 4% deficit turns into an 8% deficit by year 2. Now your 8% to 10% compound below the cost curve. You've got to get back there. So how do you get back? You've got a community rating environment. So what you do is, you want to jack up your contributions. But when you escalate contributions, you have 25% of contribution solvency requirement goes up, at the same time, you get adverse selection, which means that healthy people when you put through 8% or 10% increase drop out and go elsewhere, drop out of the system entirely, you left with a [indiscernible] you get into a [indiscernible]. And what you find from our projections on the left-hand side of the chart, and it's quite terrifying, you can see that while you're at 50% solvency, if you were to go up at CPI or CPI plus 4%. So in other words follow inflation, not medical inflation, in literally 2 or 3 years, you're insolvent. It's kind of like the Everest 2 pm rule. If you haven't summit about 2 pm, no matter what it looks like, you will not make it back. And that's the same thing with medical scheme solvency. It is a very, very tricky issue. If you will -- if you fall behind by 5 or so percent, 4% a year thereabout, after 2 years you will never come back. You will never recover from it with our dramatic, dramatic structural change. So we've taken a very, very conservative view, the trustees of the Discovery Health Medical Schemes who obviously applied their minds very carefully to how we bring that surplus down overtime. The approach of used that I think makes absolute sense is a delaying tactic. In other words, on the right-hand side, always staying at the cost curve but delaying those increases, as you can see, sustaining at the cost curve, delaying the increase by a couple of months, going back to the cost curve. So having the same create increases, but spreading them out. And what you finally have over time is the situation of the rate increase you're at the right level and you've eaten up the right amount of solvency, but you never fall below the cost curve. That's one piece of the puzzle. The other piece is something, I think, very, very bold that Discovery Health Medical Scheme has done is created this WELLTH Fund. You can see from the data that people have really reduced their screening over COVID, as you can see the left-hand side of the chart, we've seen terrible results in that regard. People are presenting much later in less than that would have been picking up stuff a lot later, and that's problematic. So the WELLTH Fund is a structure within the Discovery Health Medical Scheme that offers up to ZAR 10,000 to pursue discretionary wellness, screening and benefits, et cetera, that really aligned with the Vitality mindset, but it's inside the scheme offers considerable benefits to get a health check to understand that stuff, almost a one-off reset of a proper understanding of people's health. If you bring these 2 things together, what I think you'll find is hopefully affordability. You find the scheme surplus at the right level. But at the same time, people back to see the considerable benefit but of course, fundamentally, a reset of the health care, and that's kind of where the strategy is moving. So let me end by just one comment, and I hope it's maybe a good segue into that. And the issue of just private health care. What you can see from the analysis I've shown, I hope is just -- health care is about stability. It's about a very complicated orchestra of things that work together if you shock it in any way, it gets into difficulties very, very quickly. In a medical scheme in 2 years, you can create insolvency. It's a good segue to the concept to the debate about the National Health Insurance Bill that the legislation in someone, I would guess, is a few months offices being debated. I guess our position I wanted to state it, obviously, the unacceptable levels of inequality in health care are not sustainable and must be addressed. At the same time, it must be taken as unequivocal, a quality private health is exceptional. It's an incredible asset. Our doctors, our hospitals do a great job. We need to preserve. We need to build it. And I view very strongly is and NHI that's functional is important. It must happen in the right way, but it's important to have a blended funding model. The private health care system has to play a role in that NHI. And at the same time, there's a range of products, low-cost benefit options being debated. I showed you some of the products we're rolling out to considerable success outside of the traditional medical scheme environment, FlexiCare with clicks and others that service domestics and all kinds of people in the environment offers considerable support for people at one private health care. It is a powerful asset to be used in the tapestry of NHI. So of course, our appeal, I'll make it again, is just appreciate, I think the quality, the importance and the powerful asset that private health care is in a blended funding model going forward. Let me move to Discovery Life and move quite quickly. I am speaking too long here, but let me keep going. Discovery Life, hopefully becomes clear. It's had a very robust performance over the period, 30% increase in operating profit. A lot of that driven by the group life bounce-back, but still 11% growth in individual life. Strong new business, API growing 17%. A lot of that is growth in ACI. So growth in the inflation. That's part of our model. People take inflation increases and tend to stick with us and that's important. You can see the growth in embedded value is just under 15%. We remain the leader in the market share on the pie chart on the right-hand side. Some of the actual dynamics I think are important. One of the issues we're driving Discovery Life to is cash generation. That is important as the business goes. It can never generate mass amounts of cash, given its profitability. It is fundamentally investing capital at scale to get returns over time. But you can see in the period under review over the 6 months, we generated just under ZAR 700 million. It's about a 30% cash conversion, dramatically better to previous times. You can see the positive experience variances on the left on the second chart, highly positive over the period. It's interesting that the lapse rates and the mortality variances are quite small and in a sense, that's counter insurer. I've just told you about the Vitality share that model people are engaging. They're getting healthier. They're sticky more. I want to show you a bit more about the dynamics of that. But I wanted to make the point on the third chart, post-COVID. Mortality has largely come back to where it should be, you can see in the blue line, but we do have elevated mobility claims, income continuation, there could be long COVID, the issues of more hazard in a tough environment. So we've seen capital visibility somewhat swelled. You can see that in the red circle on the chart. But hopefully, you can see the mortality has come down kind of in line where we expect it to be. But I want to get back to the dynamics of the shared-value model. I make the point that the model, in a sense, is self-correcting. I've shown you that people engage in the Vitality model their claims, their mortality and mobility claims go down. And the lapsation goes down. That's exactly what we see. But of course, the critical issue is the model expects that. I mean that's how the model works. So it has in the valuation model and people up its expectation of mortalities to be lower. So what the chart shows you there is in the horizontal white lines, what the expectation is. And in the actual charts by Vitality status, what we're actually experiencing. And I want to give you a sense of how in-balance model is. The experience variances are there that positive but you can see how the model is self-correcting. And I think the fundamental thing to understand is that our mortality experience is close to 13% to 15% lower than the benchmark in the industry. That's what our reinsurers analysis show us. So you see the effect of the power of the model. On the right-hand side going through COVID, you can see that why our mortality went up like the rest of the industry, it was 42% lower through the COVID period. So I think in terms of the shared-value model, making people healthier, focusing on behavior change, seeing that come through in benefits, you don't necessarily pick that up in the granularity of the experience variances inside the embedded value. But I wanted to give you that clarity of how the model works. Let me turn quickly to 2 other businesses, Discovery Invest. It was a tough period, I think you know. Discretionary savings always dried up. It's a risk of people focused on money market funds. So the assets administration going 3% was quite pleasing. Fees I think grew by 7%, normalised operating profit by 15%. It's quite swelled by a taxation structure that affects below the line and gave a bit of a boost to Discovery Invest profitability. So that's some are boosted. New business is actually not, it was 1% off, not a bad performance in a very difficult time. The shared-value dynamics continue to grow. So fairly robust in that time. But the business has been strongly profitable. It has good margin. It's doing remarkably well. And I guess the question is why in a market that's difficult, where margins are under pressure. I think 2 points to make here. I think 2 points to make here. On the left-hand side. The assets and administration that we have now, in addition to the umbrella fund business that's coming on stream in the little white pieces on the graph, now has reached about ZAR 150 billion, not insignificant, but particularly, we're one of the only players that are outsourcing that asset management. So we're buying quality asset management on the margin. Given that scale, we can work with the best asset managers like 91 and others at marginal cost to us. So it provides incredibly good and competitive input costs. In the middle, though, our products are very differentiated. We've got 2 platforms now Discovery and there's Cogent with BlackRock is starting to roll out. They're dramatically different boosts and structure that offer people engaging in Vitality. They're very sticky lapse rates are very, very low. I think I didn't show you in the previous chart, sorry, the lapse rates are, in fact, quite so I've gone -- where we go back. So essentially, what you have is a model where you had some pricing power, but you have no input costs. And it's given us the ability to somewhat maintain our margins, maintain our profitability. There is some volatility with tax, et cetera, generally, profitability is strong, stable and even in a very difficult market. I think we're pleased with performance and excited about how we can grow Cogent with BlackRock as we go forward. When we talk to Discovery Insure, a very, very difficult period, and the team has worked really hard to recover back the malls. I think we've done well in that regard, gross written premium of 11%. New business of only 3%. We focus very strongly on quality during this period, you can see we're touching about 395,000 vehicles we insure. The operating profit period-on-period is down but I'll show in the next chart, that's not really the issue. It's the previous 6 months where the losses were that we're recovering from, that's important. Our market share is about 10%. You can see those numbers. But the -- sorry, I'm out of [indiscernible] here. Just Deon help me out. I'm showing you the wrong slide, sorry. I've just shown you a range of numbers about Discovery Insure. I think I'm right. Yes. Just -- I think I am, sorry. So the numbers I've just showed you on Discovery Insure are on the screen as you can see them. I hope that's fairly clear. But the point I wanted to make was to drill down kind of 1 chart. And just trying to understand the dynamics. The first point is it the business dynamics are working really, really well. So the shared value Vitality dry bond is working well, all the correlations are in place. The fundamental issue is one of pricing and just what's happened to the industry through COVID. Fundamentally, I think we lost pricing power through COVID. Through the COVID period, what happened is that people didn't drive. It was very difficult to put rate increases through, obviously, in that period despite the fact that the underlying dynamics of [ hospital ] starting to come through. And so kind of rates were fairly flat over COVID. But under loan to us and I think the industry, and I think we picked up very early, is supply cell constraints, motor spares constraints, et cetera, set a massive suddenly through the floor, the cost of repairs went through the floor and just came past the premium curve. So the cost curve actually completely broke through the premium curve. And in the previous page, you can see on the extreme right-hand side of the chart, in the previous 6 months, the consequential 6 months, you had a massive loss. In addition, we've seen huge increase in power surge claims. You're paying, I think, close to ZAR 100 million every 6 months on power surge claims. We've seen set of high vehicles, et cetera, those things I think are manageable over time. But the fundamental point is, I think, the pricing power that we need to make sure that we get back, we need to get that -- the pricing correct. Over the last 6 months, the team has done, I think, a remarkable job on using price optimization, focusing hard on how we increase prices. I think we've done a great job. We've increased prices in the right places all over the book. You can see on the bottom chart on the third panel, that the loss ratios or the claims levels of people leaving versus staying are dramatically different. So we're keeping better is losing worse risks. And that floats are actually quite low. They're not dramatically high despite what we've done. So what you see in the third panel is very important. You can see how the cost curve came through in the white, just shot through the premium curve, creating losses in the previous 6 months. We brought the premium curve very quickly at -- as you can see. And now we are kind of hoping to restoring margins. So giving you a sense that in this period, it's almost a breakeven as you can see. There's no predictions here, it's not guidance but I'll want to give you a sense if we think of the next period margins should get back to close to 4% with a bit of a confidence ban. So a lot of work to be done, the inherent nature of the model, I think the business built by the team is remarkable. I think the work done in the 6-month period has been strong. And let's see how it plays out over the 6 months. We'll see very quickly if those margins do recover to where they should be. So let me end with the South African piece at that stage. I hope it's fairly clear. I wanted to give you some comments to turn to the U.K., make the point the U.K. has had, I think, a strong period, a very complex environment and high rates of inflation, economic growth down, kind of a staycation environment, all kinds of dynamics taking place. The business is growing strongly. Operating profit at 15%, new business up very, very strong. You can see it broken down in the different panels. As you see, Life's cover growing very strongly, 15% in 81.7 million lives, a tremendous performance in new business driven by both Vitality Life and Vitality also. There really is a demand for our products. I think Vitality Health, has had a tremendous performance is really turning out to be, I think, a leader in terms of quality, digital first, just everything it does. If you cut the data in any way, I think the performance is strong. You can see the normalized operating profit. I made the point is only up 3%. But if you look at the graph, you can see it jumped up in the previous period, and we've maintained that. So it's off a very, very high base and the quality is very strong. You can see new business up 26% at just under ZAR 44 million in the period and very strong growth in [ LivesCo ], very strong growth to over 900,000 lives in the period. The actuarial performance of the business is strong. COVID claims or claims or authorizations are now at pre-COVID level. So the claims, as we thought we do a bounce back to our concern about how they will come back is largely manifested. I think all of the reserving, the benefits that we set out to achieve have been achieved as rates have come down and we're keeping them there. And then you see the loss ratio and the engagement and correlations between people engaging in Vitality, engaging in, all the stuff we're doing is dramatically down sloping. The business continues to generate good cash off the back book and use some of it for new business spend, new projects, but still kind of generating over ZAR 20 million of cash at the end of that. So I think we're very pleased by the dynamics of Vitality Health. What is very interesting, though, is just how the business is growing and how it grows in relation to the NHS. And what we are trying to do in terms of growing the capability. You will know the NHS, which is a remarkable capability of the U.S, it's spend in itself is bigger in the GDP of Greece. It's an incredibly powerful thing. And in the U.S., in the U.K., it has tremendous social importance. It's free at the point of claim. That's important and that must obviously perpetuate. But it has had a difficult time post-COVID, all kinds of difficulties in terms of resources, the bounce back of claims or mental health claims. So what you see on the left-hand side is just the waiting. The number of people waiting for treatment in the NHS has suddenly grown from a COVID period quickly up to where it is today, and it's really problematic. You can see how the private system to the extent is operating as a safety valve. You can see our growth in the face of that people are buying more and more private medical insurance. And I think what's very important is the nature of PMI is changing, what it used to be is kind of potential hospital coverage when you have long waiting periods, today, it's the entire health care system. So talking therapies, mental health treatment, physiotherapy, optics, dental, very importantly, GPs, all of that stuff is now becoming part and parcel of the offering. You can see on the right-hand side of the chart, just the growth in that primary care that's come about. But I thought it's very interesting is just to superimpose on the chart, I hope you can see it. The timing of the change in waiting with NHS, to all of the growth in Vitality Health to the growth in primary care demand. It's completely and totally correlated. It's almost to the day that those things happen. So it illustrates obviously the kind of the sematic relationship that takes place, which I think is kind of ironic in the debate the NHI and SA. You can see how the private sector plays an important role and hopefully supporting the NHS. But at the same time, I think the agility of the team, they built a remarkably strong capability. Vitality Health today offers digital first across everything, tries to show you whether it's online GPs, talking therapies, claims, whether you want to access booking appointments, all of it is available in the face of the mobile. It's a digital-first capability. So we are I think pleased with the performance and quality of Vitality. The team has done an unbelievably strong job in that regard. Let me turn to Vitality Life, performance again, has been strong. It's been a difficult evolution, as you know, over the last number of years. We've worked hard to make it a quality [ canvas ] with strong returns on what we're doing. Operating profit grew by 49%, as you can see, very strong growth in new business. We're focused on quality of new business. We still have to -- with letting make sure that all of our expense levels are appropriate to get the kind of returns out of the new business, we believe they'll come through very, very strongly, but the quality and scale, I think, is very strong in that regard. If you look at the actual dynamics of the business, it's an old chart, and I wanted to make the point that over the last 10 years, a huge amount of work has taken place in every aspect of the business, and that is manifested in considerable strength in every regard. We left part of the back book in the [indiscernible] credential, never did the transfer to make sure that the capital structure of the group is super-efficient. We looked at new business channels, et cetera. Every aspect of the business has been rebuilt and it's coming through in a very powerful way. So no matter how you cut the data, I think we're very pleased with the performance of Vitality Life. One of the key things in the period under review has been the fact, and I think very important is that we're selling index-linked policies, which is very, very important. The people are linked to inflation. So what's happening in the U.K. as inflation has come through, premiums have gone up. But at the same time, given the engage in the vitality, our premiums have gone up, we haven't seen the lateration , which is an incredibly powerful result. So a lot of the gain you see coming through. You see that in the various statements. That's come through, through the indexation of the policies, through the engagement in Vitality and through the high rates of inflation in the U.K. And you can see the lapses on the third panel largely staying very much below expectation while we grow market share, so I think third biggest in the market, about 7% or 8% or thereabout growing strongly. So we're pleased by the performance of Vitality Life, work to be done in every regard but I think the U.K. has performed remarkably well in a very, very difficult environment. Let me turn to the last piece, I'm running a bit later, and I'm sorry for that. The last piece of our -- of the Discovery puzzle, and it's a very important piece for us for future growth. It's been a complex period in the case of Vitality Global, we're excited about its potential growth. I think the numbers are complex to follow because there's so many different moving parts in Vitality Group. It's made up of 2 distinct pieces: Vitality network, which is where we take the Vitality capability, tech models, we partner with major insurers like Sumitomo, AIA, John Hancock, Manulife, et cetera, around the world. They use them all in the sense we earn a fee structure from that and some performance fees from that. It's a light capital model and hopefully, over time, it grows and becomes material. Our focus on that is extending the reach, extending the depth and making sure that can grow. And I think the possibilities are very, very strong. On the right-hand side is Vitality Health. It's a different structure. It's generally equity structures, notably Empire Health and Ping An Health and our work being done in the U.S. where we expect those to really grow substantially through organic growth of those businesses in and of themselves. So looking at the kind of overall, there's so many moving parts. It's important to see the underlying performance. I'll deal with the Vitality network piece first. It has been not an easy time, as you will know, Asia is still somewhat recovering. So AIA, for example, now is starting to bounce back in terms of growth. But you can see integrated premiums in dollar terms are slightly down in rands obviously strongly given the strength of the of the dollar currency. Revenue growing nicely by 38% in rands, reflecting we're getting more materiality or more revenue out of our partners, operating profit growing strongly to just under ZAR 200 million or just under $12 million. Material let's say has to change. We need to grow that base. You can see the growth in membership is very, very strong. There are a number of areas that we are growing in all of our partners, I think -- in many cases, what we do is transformational. Hopefully, the results inside John Hancock, Sumitomo, AIA are remarkably strong, we need to grow on that. But there are a number of things I wanted to mention to you that are important about the potential growth. Firstly, AIA is bouncing back strongly in that, I think, is important. Second point is that for the first time, we've entered India with Tata AIA, so it's Tata AIA Vitality that will grow very, very quickly. We are very excited about the potential growth of that market. We are working now in the Prudential U.S. across Latin America around the proper wellness ecosystem where we -- all the learnings we've had in the South African context we'd like to take there. And then Manulife, which is the group that John Hancock sits and Manulife in Canada is now a much more comprehensive focus on a kind of all-in Vitality strategy. In addition, there are certain large markets we are looking at additional partners for and we're fairly advanced process of how we'll play that out. So there's a lot of potential growth in that business. It doesn't present capital risk, it represents considerable upside. We think we can grow that significantly going forward. And I think importantly, the stuff I showed you earlier on how the Vitality model is evolving is important in the context of how that may play out. Let me turn to Vitality Health International. This is made up of a number of complex moving parts. And again, I think just looking at the kind of addition of them doesn't give you any sense. You can see the revenue of the non Ping An stuff has grown dramatically. That's a function of Amplify Health and immediately is revenue generating for us. On the right-hand side, really a breakeven a function of Ping An Health, somewhat constrained, spending new initiatives and Amplify Health. So it's a mix of a number of different things. I wanted to make a few points about the potential of each, but just breaking it down. You can see, I think, the scale of what we have there in terms of Ping An Health, Amplify Health Vitality U.S. and the other Vitality Africa, which is very important for Discovery Health and Quantium, all of them, I think, have growth potential. There's a real big potential in them. It's about how we play them out. The period review has been a complex one. I mean in the case of Ping An Health, it has really been a very, very difficult time, as I think you'd understand. Just some data we want to share with you. On the left-hand side of the screen, this really was 6 months of considerable lockdown. You can see on left-hand side of the chart the lockdown index across 100 cities in China, really almost total lockdown coming down, coming up again and then ultimately, the move from zero-COVID and opening up almost entirely. In the middle, you see the Omicron wave coming through during that time, significant wave came through, estimations that 80% of the population were infected. Official death rates are kind of 80,000 people, but I think models show that there can be 0.5 million to 1.5 million over that period and future waves are likely to follow a hopefully of a less intensity. We've watched very carefully obviously concerned about COVID claims coming through [ stunning ] at the business and be very, very cautious about a very careful approach and a conservative approach to reserve was taken during the period. I'll touch on that now. But you can see that the economy is likely to bounce back. These are growth predictions of the economy. The economic growth came down to 3% is expected to get to just under 6% in the '23 calendar and the chart at the bottom shows you how that is expected to manifest. So the growth is expected to be very strong. So our sense of it is the 6 months under review very, very difficult period for the business, but the growth potential going forward this year should be strong. You can see the play out of this on the face part of Ping An Health, operating profit is down 44%. You'll see on the left-hand side, very interestingly, we've broken it down between investment income and operating profit. Investment income actually took a bigger hit than the operating profit, as you can see. The business actually performed quite well. You can see our share of the after-tax number down 40%, very much in line with the top line performance of Ping An Health. Written premium flat for the 6 months, about ZAR 20 billion of written premium and new business down significantly during the period. A feature of 2 things. One is we've made this point before, we're using less and less of the Ping An life channel, and you're seeing that come down in certain markets. But even on our own license, it's down 12%, reflecting a very difficult period in China, not unexpected. But I think we are confident about the business' ability to bounce back. We wanted to break down the performance for you. Ping An Health has a calendar year. So I wanted to show you the entire year, how that's played out from an operational perspective and there from an investment income perspective. And what you see interesting in the investment income has been somewhat curtailed, but the real hit took place outside of this period. But the profit from operations has been actually very strong in the last quarter, a very conservative approach to reserving the face of COVID has taken, and you can see that bringing our profitability quite substantially. On the right-hand side of the chart, you can see that fully ZAR 11 billion of reserves are being held. So it's a very, very large asset base, a very conservative approach to reserving. And I think we're confident about the quality of the business. Our combined operating ratio at just under 94%. You can see the level of solvency. The business is large. [indiscernible] I think is well positioned as China emerges from the zero-COVID policy. Let me finish with Amplify Health. It's a year into the rollout of Amplify Health. I think things are moving very, very quickly. We are pleased with the year. It's been a year of shifting a huge amount of IP from Discovery, building the team, et cetera. Five observations we thought we'd make. The first is that there's a pretty complex revenue model. You'll recall the $200 million of capital of our spend would be funded by AIA over a 10-year period for the build and the acquisition requirements of Amplify, that's turned out to be, I think, entirely appropriate and fit for purpose in the sense that we think it's the right quantum. We think it's right given the scale of IP that we shifted, and it's playing out quite well. We already have shifted most of the IP, most of the people, and we've done an acquisition of AiDA which is a fantastic health tech data science business across Asia Pacific. It is entirely complementary to the Discovery IP office fantastic synergies in the belly of Amplify Health. That's been digested. It's been worked together with the Vitality -- with the Discovery IP, so it's going to offer considerable product strength in the Asian market. The fourth point we've developed now then 7 products that we will be rolling out very quickly, smart claims, chronic disease management platform, a very important and powerful data foundation. There's a number of products we are prioritizing in that regard. And now we're in advanced discussions with 3 markets within AIA, early-stage discussions with others. So Amplify Health we believe is ready for proper business in this calendar year. Hopefully we'll get moving and you'll see it play out over the year, the growth we expect hopefully will come in over time. But the revenue model comes through our P&L and I think a very important way as you will see, if you look at the detail. So I've said too much. I hope I've given some clarity. I wanted to just give you a sense of 3 strands of business, Discovery as a Vitality, Vitaly Global on a model, a Vitality that is continuously evolving. We're in a very important phase now of growing that model, of growing and evolving into something into a separate form that I think is much more powerful. You can see the numbers, I think, are fairly clear and very strong. We're pleased with the results. And the 4 points that I wanted to get across around growth, around performance, capital, dividend, focus on prudence hopefully have come through in that regard. So let me end. I'm 9 minutes late Deon. But hopefully, giving you a sense of how the group has performed. We are feeling good about the way forward. There are gaps and holes in different places. We need to require to fix them but enough. Let me end there and thank you for the time. And I think with Deon will facilitate questions. Questions have come through. Deon, how do you -- all of our team on site, do you want to deal with them?

Quite a few questions, Adrian. Thank you. That came through. Let's hope we can get through all of them in the remaining time. First question from Michael Christelis around you've highlighted that IFRS 17 will result in downward restatement of equity in the 2 life operations. Can you elaborate on the sources of that write-down. Given the similarities between your accounting policy and IFRS 17 and also any comment on the size of these impacts. And we also had a question from Keith Claren, who was also asking, can you talk through your expectations for how IFRS 17 will affect the group result in future. So maybe just a few points to make here. And for the others on the call, just to make sure everybody is on board. IFRS 17 is the new accounting standard for insurance contracts, replacing IFRS 4. It is applicable to Discovery with -- for our financial year ending June 24. So as from July this year, we will be in that new accounting standard. And Michael is right at a very high-level general philosophical level. The way that we've always applied IFRS 4 is very similar to the underlying philosophy of IFRS 17. But obviously, there's a lot of detailed guidance in IFRS 17 that would make an impact. And at a very high level, for the short-term insurers, the impact is immaterial for the 2 long-term insurers. There are some impacts, and that's what Michael is asking about. And so maybe just to explain where some of those impacts will come from. And later in the year, as we head towards year-end and into the next year, we will certainly make sure that we give -- spent quite a lot of time to educate around this particular issue. But most important point, this is an accounting standard that really deals with how you account and how you account for your profit around these very long-term contracts. And so that's an important point to bear in mind that underlying economics, the cash flow of the policy doesn't change at all. That remains intact. And in the work that we've done, our best estimate liability and the quantification of that remains unchanged. Where there are some impact is in the way that IFRS 17 dictates how margins are quantified, accreted and released to P&L. And the timing of that is different as well as the treatment of these economic assumption changes that we've seen, where you have an election under IFRS 17 to take those impacts through OCI. So the real impact comes from things like the definition of upfront cost, the definition of your coverage unit and how you release that to profit. But again, important to understand to the extent that you now raise additional margin, it is purely because of timing of those releases to the P&L. So to the extent that you create more margin on the balance sheet, that margin will release to profit over time in the future. And we've seen some very interesting publication from the rating agencies, for instance, that would deem that TSM to be part of equity or a proportion of equity. So those are the sort of high-level impacts that we would expect. And as I said, this is purely timing. It doesn't change the underlying cash flows. That doesn't change the EV and you will now see these economic assumptions coming through the -- through OCI if we use that election. And that also supports the reason for us over the past while when we had these economic impacts coming through the P&L to normalize that impact. Maybe a few other points just to make also in this regard. We are in a very unique position as a group that we were able to go back because of the data that we have. We are applying IFRS 17 fully retrospectively. And that has given us the ability to model how IFRS 17 plays out over time and has actually identified some very unique sort of features. For instance, during the global financial crisis, how the profit emergence happens over that period and also during COVID and where you have swings and roundabouts. But if you stand back from that, the profit emergence and the profile of profit emergence was not significantly different. The negative impact as I said, largely from the definition of upfront cost, which is much more narrow in its application and a much more granular cohorting and portfolio profiling under IFRS 17. So we're -- under IFRS 4, you had a larger portfolio and you had a number of offsets or cross subsidization within that portfolio. You now are much more granular than IFRS 17. It requires you to identify loss-making policies, policies that are profitable, but at risk and profitable, and you treat those separately. And you also treat every cohort from a time perspective separately. So you've got a much more granular view and treatment of policies. And all of that obviously will have some impact on how you recognize through the P&L. And for that reason, the impact on the transitional balance sheet. From a economic perspective, and that opening balance sheet transition, it's merely a factor of where the markets are, to the extent that interest rates are treated now separately depending on what the rates are on the transitional balance sheet. And the reason why we flagged this issue as we saw that, obviously the opening transitional balance sheet is June 22. We know what the interest rates did at that point, and you will have that impact in OCI. When interest rates revert that will actually revert back. So some of it is purely timing. Some of it is the granular cohorting and the definition of upfront cost, and that is what impacts the equity position. As I said, important to understand that to the extent that you have a negative impact on equity, that will release as profit in future. And for that reason, you'll see the rating agents is also taking that view on the CSM. Michael also asked about quantification. We are currently -- this has been a project over a number of years. We are currently busy with finalization of that and the verification and providing or getting assurance from the auditors. We're in a very unique position in that as we transition, we've now gone into the sort of joint audit and the compulsory rotation of auditors. So we've actually got 3 of the large firms who are required to sign off on this. And that verification will happen over the next number of months and to be ready for implementation on the first of July. So that gives a feel. And as I said later in the year, we will do a lot of education around this issue and to explain how exactly it impacts Discovery.

Deon, do you want to keep going?

Yes. We had a question from [ Sandila Magagula ]. At which level or year will growing Discovery begin to make less economic sense to paying dividends at 2 to 3x cover. Secondly, has the gearing level peaked at this level given delevering -- deleveraging effort. What is Discovery's hurdle rate of return associated with investing in growth? Yes. Maybe just to take that last point, our default minimum hurdle for return, investing in growth, is risk-free plus 10, typically, and we've communicated that previously. Adrian, I'm not sure if you wanted to address that first bit on the dividend?

Maybe back to the point, I think we've had this guidance of 10% spend on new initiatives. We kind of backed down to that issue. We've got a lot on our plate to get the bank to scale and put our health to scale, et cetera. That we haven't really thought through how that will play out over time. I think that we will always continue to invest in the right kind of new initiatives. But I think the model is in balance, and I think we should get back to the same, over time, kind of dividend cover deal. I don't think it's going to be different. But I think we've kind of feeling at the moment, we're in balance [indiscernible] so give us time to get clarity. I think our focus must be if you get the bank to scale and the stuff we're doing, the returns to shareholders will be dramatic. And I think that the payoff will be significant. So let's play that out a bit longer. Thanks for the question.

Yes. And maybe just very briefly on the deleveraging point. The absolute -- in our capital plan, the absolute level of debt is relatively stable. And the FLR, therefore, comes down as the group grows and the equity grows. Warwick Bam from RMB Morgan Stanley. You had quite a few questions here. The first is, there's been significant volatility in the Ping An Health profits for '22, profits declining by 18% year-on-year and H1 '23 by 40%. Can you give us a sense of whether this earnings volatility is unique? Or will the investment returns and claims dynamic naturally result in large profit variances from period to period? So maybe we'd let's deal with that one first, and then we can talk about the ROEV.

I would just take a point where Barry can just -- Barry shortly can be back in it, but the volatility for us is often that Ping An Health is a calendar year. And in fact, the earnings have been quite stable and growing quite steadily from year-to-year. We kind of see often volatility in our first 6 months, and I think that's important. I think this volatility now is a function very much of the COVID and lockdown period. That should not recur. But Barry, if you're online, will you make a few comments on that?

Thanks, Adrian. I mean it's, first of all, let me say that the business is managed by an excellent team in China. We also had a team there from Discovery with excellent management. I think it's very conservatively managed. So over the last 6 months, just given the dynamics in the market, I think they have just managed the entire business conservatively, ensuring that there's sufficient reserves for any eventuality following from the COVID pandemic and we should see a strong recovery coming into 2023.

Yes. The second part of Warwick's question is your ROEV of 14.4 includes material positive experience variances, considering the IRR on new business of risk-free plus 9.4 and the decline in new initiative losses. Should we expect the ROEV to improve beyond 14.4? And then maybe the other question as well, what gives you comfort that the inflation-linked nature of premiums in Vitality Life does not increase the persistency risk given the unusually high inflation rates?

Maybe should I deal with -- maybe the second piece first, maybe, just to make a point -- Neville, you might want to come in, is that the -- is that there's a certain increase in lapses with higher levels of inflation, but it's kind of counterbalanced with the increase itself. So to an extent, we can sustain quite a bit of lapsation, but keep some of the value. I think we had a very good period. Neville, do you want to make -- Neville, do you want to, if you're online, make some comments on this?

Yes. I think -- I mean the point being made that we have a dedicated and conscious effort to do retention, especially in these high inflation environments. And then the cover goes up as well so that people understand the need for the increasing cover. But as Adrian said, we have made allowances for higher lapses and for some inflation-linked premium holidays, which have been taken into account, but we're quite confident that we'll be able to continuously outperform in terms of the lapse rates. I think importantly, though, the significant increases far, far outweigh the lapses that have actually occurred. So we're quite confident. Obviously, we understand that the economy and the cost of living crisis plays a role. But once again, what we've experienced is that we have definitely got a higher quality of client who is not as impacted as our competitors are who are targeting -- some of them targeting the low end of the market.

Neville, thanks for that. Maybe, Andy, if you want to -- if you're online, Andy Rayner, our Chief Actuary, maybe talk to the EV -- ROEV comment -- question.

Thanks, Adrian. I can do that. Warwick, thanks for your question. I think, yes, look, I mean the key moving parts in the ROEV that -- beyond the unwind of the risk discount rate, which is just baked in, is obviously the value of new business that you can add and the margin on that, the experience variances and then the basis changes if they're needed. And then obviously, the things that aren't in covered business, so all your other businesses, what profits or losses they make. So with regard to the latter, we would expect that as the J curve of the new initiatives comes down, particularly the spend on bank, that will directly come into a lift in ROEV as businesses like Ping An Health and Insure recover and get back to former levels of profit and beyond. That will also give a lift to ROEV. In terms of value of new business, there are -- obviously, we continually strive to reduce acquisition costs and get expense efficiencies across the board. Some areas where we're looking to increase the volumes as well. Obviously, you do as much of that as you can at profitable levels. So we're definitely working on improving that. The experience variances are less predictable, I guess. They're a function of your basis and the strength of that, but they're also not entirely within your control. So if we look at this year's experience variances, there's a couple of them in there which are very much one-offs. So the lift from very high inflation in the U.K. and then somewhat high in South Africa could be a one-off. We may not see that in year 1 and 2 and 3 from this point forward. So you do need to take allowance for that. So I think where we can control it, we definitely would see lift in that ROEV going forward. The experience variances are less under our control, I think, Warrick. Thanks, Adrian.

Andy, while you're online, there's a question from [ Canol Calian ]. He says good day. Higher rates Discovery on ESG, and it's good to see improvement in ESG disclosure, especially on renewables. How is Discovery integrating ESG into its underlying investment portfolios?

Thanks, [ Canol ], and thanks -- glad that Risk Insights is evaluating us. Thanks for that. I think a couple of key things here. We are a signatory to the principles for responsible investment, and we apply that rigorously across the assets in the group. We have adapted investment mandates that we have with our investment managers to accommodate that or to incorporate that. We've selected investment managers that are fully committed to operating in -- consistent with the UN PRI principles. And we regularly monitor that. They give us fantastic feedback on their engagements with the companies that they direct some of our investments to and the level, in their view, of the ESG ratings of those companies. So it's very deeply rooted in the way we do investment management. The other thing to bear in mind is that there's very little shareholder investments in equity markets. Most of our shareholder investments are in our own businesses or in very, very stable cash and government bond type assets. The majority of the equity-related investments are sitting in our linked funds in the Invest business where by nature, the mandates are -- do need to be competitive. As a balanced fund, it needs to be sort of comparable with the balanced fund mandates across the market. So there's obviously that's a caveat to that. But all of the funds are managed according to the UN PRI.

Deon, on the next question, maybe call it out, but I think Riaan and [ Emil ] can maybe.

I'll just quickly read it. This is [ Andrew Baker ]. You clearly show lower claims and lower lapses from greater engagement with shared -- with a shared value model, for example, [ global business blue ] and lower mortality and lapses versus the insurance industry as a whole. But are you able to share any data that shows that you have better persistency and lower mortality versus your direct peers in South Africa and the U.K. who don't have a shared value model. Maybe Riaan -- maybe if you.

Yes. Thank you for the question. I think the numbers that Adrian has showed in the slide, the -- of 20% reduction in lapses compared to peers within a reinsurance study is a good way of showing that as well as the 13% reduction in mortality experience compared to peers in that same reinsurance portfolio. So I think that is comparable. I think however, the beauty of a shared value model is that one shouldn't only compare a total reduction in mortality and lapses over time. The statuses are indicative of underlying mortality and morbidity experience. And very importantly, we see a reduction in persistency rates more pronounced at the higher statuses when you have the best claims experience. So put differently, we see the best persistency experience at the best areas in the risk pool, and that really leads to an overall improvement in the risk pool compared to peers. So hopefully, that gives some insights to that question.

[ Emil ], maybe as a U.K. perspective, it could be worthwhile, [ Emil Stoop ].

Yes. Thanks [indiscernible] question, [ Andrew ]. So what we can see, unfortunately, the data is not -- the published data for the industry is not entirely up to date. There's a bit of a lag. But certainly, from what we can tell, the U.K. business is performing exceptionally well against the industry in terms of lapses. We think also in terms of claims, although it's not always visible because not everybody discloses segmentals in the U.K. in the way that we do. But certainly, that appears to be the case, and there's more and more evidence as we're developing that, that is indeed happening. And maybe just the way to think about it is that there's almost -- there's a logical reason why this happens. And the simple fact is that we give rewards to people. So if you exercise more, you get rewards. It means that you are less likely to lapse your policy. And because you get healthier by exercising more, it means that those effects just build up in time in the portfolio. So across the world, we see a net improvement in engagement, which then leads to an improvement in lapses and mortality over time as it unfolds in the portfolio.

It's a suggestion that Mike Christelis has a follow-up question on -- just on Vitality. We'll comment those others Deon, just that question. [ Emil ], maybe if you're online, can you say it with the presence in 41 countries, how does Discovery plan to leverage the data and experience from the network to improve health care outcomes. There were -- [ Emil ], you're at the epicenter, Give us -- just make some comments.

Absolutely. So it's a question from Mike, and what he asks for says COVID-19 demonstrated how health is interconnected across the globe. Do we think that vitality plays a new role in managing the impact or preventing global pandemic? Now I think what was fascinating to us, Mike, when we looked at this during the pandemic is that for years, we've said that exercise reduces the risk of noncommunicable disease. And then what we saw there in COVID very quickly is that actually people who exercised more also had a much lower COVID risk, both in terms of hospitalization, also in terms of mortality. And when we look at the data now over time, we're now emerging from COVID. And those causal inference models that you saw in Adrian's slides earlier, if we extended to during the COVID period and after the COVID period, it's all consistent. Basically, it shows the same trend, whether you include COVID claims or not. So the answer to your question is that to a large extent, what this model does in 41 countries in the world, by encouraging people to exercise, is to reduce their suitability to consequences of getting a virus as you get in the pandemic. Obviously, it doesn't stop the virus itself, that emerges for different reasons, but it seems to us and it's very clearly indicating in our data that exercise and lifestyle is a very important factor, both for infectious disease and noncommunicable disease, the outcomes of that and mortality. And for that reason, we think it does play a significant role in managing the impact of the pandemic.

Thanks, [ Emil ]. We had another question from Andrew. On persistency, we've heard some of your South African peers being pretty vocal about the risks here. Why do you think it hasn't impacted you to the same extent? Is it business mix related? Or do you think that it is something to do with a shared value model? Are you able to provide a little more detail on the one-off costs in Discovery Health? What were they and how much it was? Thank you. So maybe Riaan on the persistency issue, maybe?

Yes. I think the parent environment certainly adds to the persistency risk that -- going -- looking forward. However, we haven't seen any impacts in persistency. The shared value model as we've explained earlier, certainly reduces any risk to higher lapses, given as [ Emil ] also explained that for engagement, we do provide lower lapses, better benefits and more rewards to our customers. So it's in their interest to engage, and through that we see significantly better persistency on our base risks. I think it's also important to note that Discovery tend to operate in the higher end of the market, where historically, we have seen our customers being more resilient in terms of economic stress. And we also have seen a flight to quality. So in tough economic times, there's typically a flight to quality which has lowered Discovery's persistency risk relative to competitors.

Is there -- Deon, the one-off costs, obviously there are a few areas, one, of course, nothing dramatic. It should recur. That should come back quite quickly in the second half. I'm not sure you need much more detail. You want to say anything on that? It's a couple of percentage points of growth, probably.

Probably there's a bit of investment there in operational and...

Some timing on certain incentive payments, et cetera, et cetera. I remember right, so if you're okay with that.

Yes and then another question from Mike Christelis, just asking what is holding back the new business margins in the two Life operations given that volumes are largely back to pre-COVID levels. Riaan, you want...

Riaan, and maybe [ Emil ] might comment in the U.K. Riaan?

Yes. So looking at the South African, African protection market, what the market share statistics has shown us is that the market has shrunk overall compared to pre-COVID levels. And Discovery Life has, in fact, maintained and even grown our market share within the African protection market. So we are quite comfortable on that front. So I think what that means is really for margins to improve, we require an increase in volume as well as a drive in terms of costs, acquisition costs, ongoing costs to reduce unit costs, at the same time to get a lift back in margins. On the back of that, we're focusing on innovation, and just yesterday, we have launched some exciting new initiatives which we are confident will give us a lift in new business volume. Should we get that lift to new business volume, we are also confident that you could see a somewhat recovery in margins.

And on the U.K.?

[indiscernible] There's 2 aspects there. On the health business, there's an anomaly in tax rates. So corporate tax rates are going up. That means that effectively, that just the way that the VNB calculation works, there's anomaly and it reduces VNB for a temporary period, but it will basically adjust as soon as the corporate tax rate is consistent through the projection period. In other words, we write in for expenses at a low corporate tax rate then what we'll pay tax in the future on the margins. And on the Life business, there are mix issues involved there as well. So the mix of new business has changed quite a lot. We are working hard also on going forward with the launch of new [ SIC ] products, changing that mix again and driving higher-margin products in the Life business in the U.K. And then Neville, if you want to add to that.

[indiscernible] in the U.K. to be targeting the higher-margin business. But as Riaan said, it is a function of new business volumes, business mix and expenses, and the team is working exceptionally hard to get ourselves improving in all those areas, and it's looking very positive at the moment.

Should we -- Deon, on Baron's question?

So Baron, I think we did touch on this. Baron Nkomo just asking, the U.K. Life business benefited from high inflation without an impact on lapses, do you not anticipate a late impact on lapses going into H2 and H1 of '24? So Neville, [indiscernible].

Yes. I think we've answered that question, and various of my colleagues have as well. I think the underlying issue is that the shared value model actually is working, and especially in tough times, Riaan made the point on the flight to quality, we definitely see people valuing their Vitality rewards, their Vitality benefits and looking at it as a complete package and not just an insurance premium that's going off on their debit order. So I think that the shared value model is robust. Stood us in excellent state and now is the true test, and we continue to push ahead to make sure that our members understand the value they're getting out of Vitality, but not only about their personal health improvement but also about the value they get from a financial perspective. And we have a significant amount of work that takes place, digital work, call centers, calling out to people. So the conscious effort that the teams are undergoing to actually maintain this is significant, and we're quite confident going into the future. Caveating that we're not [ tuberous ] about the marketplace, the environment. But we -- once again, I believe that the shared value model is significant in the impact that it's having.

Okay. Can I ask us to, we wrap up? [indiscernible] permutations of questions coming through, but if we can -- although we ran out of time. Once again, just to thank you for your time. It's been a busy period. But again, thank my colleagues and all of Discovery people across the world for a remarkably successful 6 months. It's always a pleasure to present their work and an honor. Thanks, everyone, and thanks for the time and best wishes to you all.