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

Good morning. Welcome to our results presentation. It is always a pleasure and frankly, an honor to present the Discovery's results to you. Appreciate the time. These are the results for the full year ended 30 June 2023. I want to start by just thanking our Discovery people. It's been a very, very complex tough year. I get to present the incredible work that you all have done. So it's our 15,000 people around the world, just a great, great thank you. Very grateful and proud of what you've achieved. I hope I get issues across clearly. It has been a very complex year. I'm joined with our CFO, Deon with me sitting in [indiscernible] Deon and our key executives are all on the phone -- on the call. So we will take questions, I think, Deon, as we go -- at the end of the presentation. Let me start by just making the point that I think it was a very robust year for the group despite complexity and volatility in the macro aspects at play. The group has performed well. It's been a robust performance throughout all of the companies, and that's added up to a normalized operating profit up 24%, as you can see. Again, I think new business has also been across the board, strong up 12%. Interest -- rising interest rates, most importantly in South Africa and the U.K. had an effect of our headline earnings. We normalize that out, but it has a -- but in total, headline is up 5%, as you can see. When you normalize that effect out, normalized headline earning is up 32%, I think illustrating the robustness and the performance of the group over this period. I do think it's been certainly a tough complex, volatile year as complex as it's been. I probably say it's less complex than the COVID time. I do think, but there's huge amounts of risk out there, volatility and huge opportunity at the same time. There are 4 themes I think we'd like to get across to you, I hope I do justice in the presentation. But to illustrate you 4 themes that are really framed this [indiscernible] under review. I think the overall view from our perspective, it's been a very, very intense period of focus, focus on culling things we think aren't going to get us value, focus on growth or focus on robustness. And that playing out in 4 distinct themes. The first is just growth in quality earnings, with a robust balance sheet, and you'll see that coming through as I made the point about operating profit growing strongly. Cash conversion at 64%, bringing down our debt to our leverage ratio further to 20%. Second point, a very clear focus in each of our composites about growth and the focus and the initiatives we believe will drive us going forward, bringing down the investment in new initiatives as the bank has started to mature. And we've called certain new initiatives as we intensified focus on areas of growth. The third point and the critical point is just evolving the Vitality shared value insurance model. I don't have time in the presentation to take you through all of the stuff that we're doing, but it's important to understand, there's a considerable investment in this and it fills us through virtually all aspects of the group. And I hope that's evident as I go through the presentation. And then finally, from a reporting perspective, the important transition into IFRS 17. I'll take you through some of the logic around this and the technical aspects. There is a teacher in a session later at 12:00 for people. It's a separate login and sign in, I think. So you'll come off this and go back in, and that will be hosted by our CFO, Deon Viljoen; and our Chief Actuary, Andrew Rayner, and others will be in the session to answer question. So -- there's a lot there in IFRS 17. I'd like to give you a sense of that as I go through the presentation. Let me start by just touching on the macro, there's nothing new here, a complex environment, global growth under pressure, rising inflation really ambiguous and complexity and really a cautious approach around Central Bank as we've seen that over the last day as well as Internet is staying at a high level. In our environment, considerable volatile exchange rates, all of this stuff is kind of coalescent to you with very considerable complexity. Having said that, on the right-hand side of the chart, what you see is the key drivers in our group new business lapsation, claims levels have stayed very, very robust. So the group has a kind of consumable resilience. I would say no hubris in that, of course, there are all kinds of risks, but I think we're demonstrating considerable resilience and considerable opportunity to grow over this. I think as the environment is more complex and more difficult our relevance becomes, I think, more central. And particularly in markets like health insurance, I think the focus of health care and wellness and on funding health care will become a bigger and bigger issue as we go forward. So a complex environment with all kinds of issues. But we've been really in the thick of the U.K. with complex around the NHS, the Chinese environment with its complexity. So hopefully, as you see the results flow as I go through the presentation, you will see how this is manifested and how the group has, in fact, adjusted to this. Let me go with just the overall kind of statement it takes through all of our businesses. I hope I get it across as we go along, and I'm not going to go through detail here. But I think just some of the highlights, you can see each of the composites, SA growing 22%, the U.K., 21% and Vitality Global growing 74%. I think what's notable to me and I'm not going to call out anything, but across the board, the growth has been robust. There are some one-offs up and down, and I hope you'll see that as I go forward, but I think a very steady and solid performance across all of our businesses. And again, I think we're very pleased with the robust performance in a consistent way. Same thing with new business, as you can see, up 12% for the group, as you can see. And then the non-insurance income, as a bank has come on stream as alternative health products we brought out to see later has been very nonscheme products have started to grow. And then importantly, as VG grows, Vitality Global, we see the noninsurance income coming through very strongly, up 44% in a very short space of time. If you look at it graphically, I think it does tell the story for what actually is going on. You can see the operating profit up to ZAR 11.6 billion. It's interesting in the shape of the curve. So we've gone back a decade here to give you a sense of how that's played out. It's kind of thematic in 2017, 2018 with the investment in the banking new initiatives, we were funding that out of operating profit. And you can see that kind of [indiscernible] somewhat in 2019. Then we hit the COVID period, which took a really significant effect on us as we went through that a considerable mortality claims came through and you will know as well. And then in 2022, we bounced back with strong growth as you can see. And then this period, off a high base in 2022 is much stronger. So it has been a very robust and strong period, and I say I think we're pleased with that operating profit. If you look at the core new business API, a similar -- I think a similar kind of pattern. Strong growth, I think we've managed to achieve overall over the decade. But in fact, in this period, there's been a bit of a step-up in that regard. And then when you look at the noninsurance business lines in a very short space of time, they're becoming very, very meaningful and relevant. Of course, hope we can grow that going forward. On the new initiatives, there's been a very, very, very intense focus on making sure we grow the ones that have potential and culling and moving forward on the ones we don't. We've taken a view about Vitality Invest, I think, 18 months or 2 years ago, where we exited that market, there's a [indiscernible] of costs coming through. We've also exited the car market. We had a pilot going in that market. We've taken with our partner change direction. We are discontinuing as well. We are focusing down, of course, on things like the bank. And we've made a lot of restructuring inside the group. So Discovery Bank is due to back operational breakeven in this year, and we hope before the end of the calendar year, I'll take through that later. We've restructured Africa Health, reversed into Discovery Health, really focusing on where we think it needs to be. Umbrella funds is now part of a very important business that we built corporate and employee benefits. It joins a large group. Vitality1 has achieved scale. The investment, I think, in it will be stable going forward, it 's operating very well. And you'll see one of the aspects of Vitality Global, we believe, is to grow the top line while keeping the bottom line fixed in real terms, and that creates a very powerful gearing effect. Vitality Invest, I made the point about. And the Vitality Health International, I'll touch on that later. That is a key expansion area of the group. So if you look at that, you can see that new initiatives really climbed significantly, touching 25% of our operating profit in 2020 at the peak of getting the bank out. That's come down steadily. If you exclude the discontinued U.K. businesses, down to about the 10.6% level, very much in line with the 10% guidance that we said, And we expect that to come down. These things are built, we need to really get leverage out of how they can grow going forward. Moving to embedded value. I think tells an interesting story. The EV growth has been about 13.8% (sic) [ 13.2% ], as you can see from the slide, up from ZAR 86.3 billion to ZAR 98.2 billion at the end of the year. But I think the progression is interesting. You can see the unwind of the discount rate obviously is evident, but very strong positive noneconomic experience variance is just under ZAR 2.6 billion. If that's strong across the board. What is interesting is that there's kind of a bit of a resilience built into the group. We've had a rapid rise in interest rates in the U.K. and in South Africa over time. That actually diminishes new business margins. We'll see if that comes through strongly in the Life businesses. One of the challenges we face. But on the other end, it increases automatic contribution increases, and indexation in the U.K. So driving up some of the positive experience variances. So there's kind of a counterbalance. In addition, on the economic side, I made the point about interest rates really creating this kind of present value fit and future cash flows. You can see to the right of that ZAR 98.7 billion, that not from the effect of interest rate movements. But then there's a corresponding ForEx effect. So the kind of volatility creates a weakening of the rand, and we get a bit of a boost in that regard. So there's kind of a lot of counterbalancing forces, again, I wouldn't tell you that this is some mathematical resilience. I guess, I'm making the point there's a strong growth in the embedded value. But I think the broad nature of the group and where it operates, there is some resilience built in and there's some counterbalancing of all of the various factors that take place. And therefore, the return on EV of 13.2% is made up, I think, of a fairly strong set of positive initiatives that have taken place throughout the group, and you see them manifesting strongly in the embedded value. If I turn to the group capital plan and cash generation, we are pleased to this. I made the point, 64% cash conversion. You can see liquidity in the group has climbed significantly throughout all of our businesses. We've paid off some debt and given how the group has grown, the financial leverage ratio has come down to 20% or 20.4%. All of the entities in the third panel, as you can see, are strongly capitalized, and we maintained that buffer in the center of ZAR 1.5 billion to ZAR 2 billion, slightly higher than previous periods, slightly lower than the previous than 2022, which we keep that buffer firm in that range. So altogether, from a capital plan perspective, we are very comfortable the group is robust and generating good cash. Just to make this point, I'm not going to work through the face of the income statement in detail. Deon, you can cover that later in the questions on this issue, but I wanted to kind of reconcile the normalized operating profit up 24%, as you can see at the top of that chart. You can see the effect in that red rounded number of the rising interest effect on Discovery Life, effect on the present value of cash flows. It brings down the earnings by ZAR 2.8 billion. It has no impact at all on actual cash flows themselves, just to present value and liquidity or solvency or any of those aspects. And therefore, it doesn't really illustrate the operating performance of the group. But it hits headline earnings. And you can see that as you go down, there are a number of other adjustments and you see the effect of the profit before tax, up 2% to just under ZAR 7.4 billion. As you go down the face income statement, you get headline earnings up 5% to ZAR 5.5 billion, as I mentioned at the outset. When we normalize them out primarily is the addition back of that interest effect of ZAR 2.8 billion. You see ZAR 1.9 billion, that's the post-tax effect of it. It's pretax at the top of the chart. So we're adding back the post-tax effect of ZAR 1.9 billion. You bring it all together, you get normalized headline earnings growing 32%. At the highest level , ignoring the detail I would hope that normalized headline earnings or headline earnings will have a good effect to operating profit. There are things like finance charges over time. If we keep our debt level stable or declining, those finance costs should be flat or fairly flat. And therefore, you should get a gearing effect as the group grows. So hopefully, that is something we can maintain going forward, of course, that's going to be subject to all kinds of volatility of markets and exchange rates, et cetera. We're trying our best to manage it very carefully. But overall, I think a strong growth at the operating profit level and write down to normalized headline earnings, up 32%, obviously, we are pleased with that. And maybe to make the point, when you go back to the businesses, a very strong, solid and consistent growth across the businesses. I wanted to touch on the interest rate effect was that they're quite different in South Africa and the U.K. In the case of South Africa, you can see on the left-hand side of the chart, the yield curve, the horizontal axis is duration by month. So you can see the yield curve over time, our duration is up sloping, which is, of course, important. But you can see it has consistently gone up pre-COVID. It's gone up to just post COVID year ago and are up even higher. So probably in total, up 3% or 4%. It's a significant amount, and that has an obvious effect on your discounting cash flows back over 20 or 30 years. It has a dramatic effect. I'm not sure where that will go. But I mean, I guess, just the kind of some in risk premium, if that's priced -- that curve keeps going up, that creates that effect. You can see in the second panel, the volatility in our earnings, it creates considerable negative value to the present value of those cash flows. And that's come through in the past. We normalize that out because there's no impact on operating performance or the cash flows or liquidity, et cetera, as we've done. But going forward, and I'll touch on that a bit later. On the IFRS 17, we'll elect the OCI treatment, the other comprehensive income, which really doesn't let that flow through the P&L. So going forward on IFRS 17, you won't see that volatility will come through over time in an amortized way and that amount could be positive or negative, but we expect a lot less volatility going forward. The U.K. is a different dynamic. You can see in the third chart, rates there went dramatically up very quickly. So we're backing with negative, nearly negative rates or close to negative rates a few years ago, and record low interest rates have created all kinds of other issues. Then we had a period of slightly rising rates and then the sudden escalation as inflation rose in the U.K. We employed a very important hedging strategy over that period. If you follow us, you recall this issue. There was an issue of us taking the back book out of the Prudential -- out of our JV with Prudential onto our balance sheet and that creates considerable potential solvency of capital requirements under very low rates of interest. That is -- so we created a head strategy to make sure that we're absolutely safe. And that you can see on the right-hand side of the chart, at low rates and at high rates, you can see that now the last number of years, that hedging strategy has been remarkably successful. There's been very little effect on earnings, but importantly, on liquidity and capital, and that's important. Going forward, given how strong the back book is and the cash buildup in the back book and all the structures in place, we actually don't need that hedging strategy in the group going forward and U.K. is largely unaffected by moving interest rates to that extent. So there's been a lot of work done around interest rate movements. And as I said at the outset, under IFRS 17 and OCI, this volatility will be removed quite considerably out of the mix. So coming back to the face of the income statement, we will be recommencing the dividend and declaring a final dividend on the back of, I think, very robust results. I think the group is in a very, very strong position. At the same time, there's a focused approach to new initiatives. The bank is turning quickly, et cetera. So we're recommencing the dividend. And we're setting the dividend, a final dividend declaration in respect of the half -- the second half of FY '23 of ZAR 1.10 per share. The coverage is about 5x, not very dissimilar to our guidance of 4.5x that we've given over many years in line with the growth model. And going forward, we'll probably shape the dividend. That's the intention based on market practice where the interim dividend will be lower. We expect that to be 30% to 40% of the expected total annual dividend and the final dividend making up the balance. So that will be the way going forward. And nothing different from what we expect to do as we came out of COVID, as we got to a stage where we felt that the group was resilient in terms of all of the growth initiatives, which we are now very, very pleased with. So that's where we are on kind of the core results. I wanted to give some key messages and summary of the IFRS 17 transition effect. As you all know, we are now moving to IFRS 17 from IFRS 4. For the first time in financial '24, we will be reporting on IFRS 17 basis. And in these accounts, we show a transitional balance sheet as of June 2022. This is complicated stuff, and we felt it's important that we did some sense of just the rationale of the effect and what it means for our balance sheet and very important what it means for earnings as we go forward. As I said at the outset, there is kind of a session -- there's a session at 12:00 that will go deep into these factors. But I want to give you a sense of what this means in terms of margin, equity, earnings and importantly, volatility going forward. A few important points, and I hope I'm not the [indiscernible], I hope I get the points across. IFRS 17 is really an accounting standard as complex as it is, but really focused on the timing of profit recognition. That's what it impacts on and therefore, it affects the transitional balance sheet. It has no effect on cash flows and underlying risks on solvency capital, on dividend paying, anything like that. It's really a function of how profit is recognized, where needs to recognize and how it emerges over time. That's the first point. The second point is if you look at the group in terms of our composites South Africa, the U.K. Vitality Global, IFRS 17 is really focus on long-term insurance businesses. So therefore, the bunch of business in a group like Discovery Health, like Vitality Group, et cetera, that are not affected by IFRS 17. This primarily has an effect on our long-term life businesses, Discovery Life, Discovery Invest, which is on the Discovery Life balance sheet and of course, Vitality Life in the U.K. So it has a specific effect on certain parts of the group. And therefore, when you think about the overall effect, it's kind of a weighted or arithmetic average of the various aspects of the group. Just in terms of some context, and I hope I'm not being patronizing how you will probably know this very, very well. But just to understand the balance sheet effect, it's important just to understand the shape of a life insurance balance sheet on the left-hand side. It has assets in the light they are ready to present value of future cash flows. That has a value. And then against it, what's in equal amount is the sum of margins and equity. Equity or shareholder equity is the present value of past profits earned. And the margins of the present value of future profits expected. The sum of the 2 must be equal to the present value of all of the future cash flows. That's a balancing item. When you compare IFRS 4 to IFRS 17, there's complexity, real complexity as you are not counting in actual complexity. But in reality, conceptually, it's very, very similar and -- foreside, you have a better estimate of future cash flows in IFRS 17, the net expected future cash flow is very similar conceptually. The margins are different in their construct. You have a compulsory margin, discretionary margin in IFRS 4. And IFRS 17, there's a contractual service margin and the risk adjustment. The philosophy is similar in the sense of margin versus shareholder equity. But the important point here, this is the fundamental issue, is that under IFRS 4 and IFRS 17, the total value is the same. So if you look at the kind of the best estimate on the asset side, the best estimate on future cash flows versus the IFRS 17 net expected future cash flows, the total value is not much different. So that means if you accept that on the right-hand side, the sum of your equity and your margins is always going to be the same between IFRS 4 and IFRS 17. The fundamental issue is simply the allocation between them, what happens in the inter-transfer between IFRS 4 and IFRS 17. So that's the first important point to note. The second point is how this affects our particular life businesses. Now I do think that discovery in our life business is quite unique. Our businesses are relatively young. Discovery Life started in 2000. It's just over 20 years old. Vitality Life, in fact, is only 6 years old or 7 years, bear in mind, we had a JV with the Prudential. So all of that business in the value of the Prudential balance sheet. So Vitality Life is only 6 to 7 years old. Of course, it doesn't sound that young when you think about 2000. But in the life insurance business, most of our competitors are decades old or in fact, centuries old if you look here and around the world. So these are long, long-term businesses. The second point is that our business has been a high-growth business. It's a long-term business, 50-year contract boundaries, high upfront acquisition costs, 85% upfront commission and the U.K. over 200% upfront acquisition costs, you get to coup that over 50 years. So these are businesses which require long discounting and have a long process of how they actually wind out. And I think unlike other businesses, we're almost monoline. So in Discovery Life, you got the Invest business. But if you remove that, it's an entirely long-term always whole of life business, the same in the case of the U.K. where to monoline focus on business, which I think is very, very different. So all of it is quite concentrated in this class of business. So the effect of that when you understand that is 2 important effects of the move from IFRS 4 to IFRS 17. The first is that under IFRS 4, all costs were attributable. And essentially, our accounting policy was to ensure at the point of sale, there was 0 profit. And the profit emerged, we felt over time, it gave a sense of how the profit recognition should take place. In IFRS 17, the methodology is exactly the same. We project out to the contract boundary. But the fundamental difference is certain of the expenses are not attributable. You're going to actually take those through the profit and loss immediately as they occurred. So you can see from the chart, it actually looks out. I hope you can see that the expenses under IFRS 17 that are not directly attributable, certain marketing expenses, sponsorships, R&D expenses. And the IFRS 4, those would be attributable and treated as we did in the case of IFRS 4. In IFRS 17, those are not attributable. Now that's 5% of the expenses that amount. But over 20 years, that, of course, the present value of that amounts to a substantial amount in IFRS 17. The second point is under IFRS 17, onerous contracts have to be separated out separately and not kind of cross subsidized. So in the overall value, there's a projection fall in the future cash flows of onerous contracts. The value is already in the IFRS 17 and IFRS 4. But on IFRS 17, you will highlight those contracts and actually take the present value of the potential value of onerous contract against your P&L. So it comes through immediately. Now just to point out, the onerous contracts don't mean loss-making. It just means under very conservative assumptions, they are not profitable. Hopefully, over time, those emerge as profit. But IFRS 17 on the transition, right, if you look at the previous 20 years and bring that forward, all of it in the capital value and take it off your P&L. The effect of both of these is to make IFRS 4 more generous in the early years and over time, less so in the late years. IFRS 17 becomes bigger as the margin emerges, because bear in mind, all of these effects are already in the value. There's no difference in the total values. It's just how that value emerges. So what I wanted to show you is it's quite an important theoretical construct of really what happens. On the left-hand side of the chart is really just an illustration of how the earnings emerge. From those 2 factors, you can see in IFRS 4, the profits in the darker line would start out higher, but be flatter in the long term. In the case of IFRS 17, the profits are low in early years, because of the non-attributable expenses and onerous contracts that you've capitalized low in early years net values in margin, as you can see in the shaded area. And then over time, IFRS 17 crosses over and becomes higher than IFRS 4. In total, the present value of those 2 profit lines are exactly the same because the value of the cohort is exactly the same. And therefore, that's a clear issue. A equals B mathematically. But it's important to understand that IFRS 4 profits are higher early, lesser later. If you look at the balance sheet effects, and you look at margin and shareholder equity, they're important relations to understand. In the case of IFRS 17 margins are always higher than IFRS 4. Bear in mind, over a cohort of business, ultimately, the margins go to north as you kind of reach the end of the line, and that's in 50 years' time for cohort of business. In the case of shareholder equity, IFRS 4 has a higher share of equity because the profits came earlier than IFRS 17. And over time, shareholder equity asymptotically gets to the same point on IFRS 4 -- IFRS 17. So I hope I'm not being too theoretical, but the important point to understand is when you cross over from IFRS 4 to IFRS 17, margins always go up and shareholder equity always goes down. And it's a concomitant effect, as I explained to the total value is exactly the same. So it's really margins going up and shareholder equity going down. Of course, the important question to answer is what happens to earnings. Now what happens to earnings is very much on the left-hand side. It depends where you are on this graph. If you -- to the left of the crossover point, your earnings will go down as you transition. If you're on the right, earnings will go up. The crossover point is a powerful point to view, because at the crossover point, your earnings are equal, but the potential for future earnings is the best on IFRS 17. All your margins are then, then your ability to then grow as those margin releases come through is very, very strong. So the crossover point is an important point, to be at. At the same time, I mean, just to make it clear, at the crossover point is the maximum difference between margin and shareholder equity between the 2 basis. So it's kind of a turning point that you'll see, I think, in the teaching, I would guess. But so just trying to make the point as you go from IFRS 17 to IFRS 4, on our class of business, the way that we've interpreted IFRS 4, you'll always get an increase in margin and a concomitant decrease in equity. So to go to the detail, going back to the balance sheet on this chart. I hope it's clear to you. What we will see in our business, and you'll see that on the transitional balance sheet is a reduction in equity of approximately ZAR 12 billion to ZAR 13 billion, a concomitant increase in margin of the pretax amount, which is about ZAR 15 billion. And that's the effect, the total value, of course, stays exactly the same. The middle of the chart shows you what that ZAR 15 billion is made up over the ZAR 12 billion to ZAR 13 billion pretax. The non-attributable expenses of ZAR 9 billion or ZAR 6.5 billion. The effect of onerous contracts, the value over 20 years of ZAR 3.5 billion or ZAR 4.5 billion pretax and then a number of other technical things that our team will take you through later about ZAR 1 billion. Importantly, just to contextualize and give kind of relevance, the non-attributable expenses, I said, makes up 5% of total expense base over the 20 years, but of course, over 20 years when you wind it forward, you bring it to present value, it is significant. And onerous contract is about 9% of the value written, which I think is not irrational and probably not unexpected that you expect 5% to 10% we work to be onerous, we're hoping that, that value comes through. And then finally, the other impact that you'll see later on. The question, of course, is the effect on earnings. Now this is important because the crossover point on the right-hand side of the chart is a fundamental issue. What I think is pleasing for us is Discovery Life, which is, of course, the biggest of the life businesses we have by a long margin is, very close to the crossover point, and that's a good thing. So it should, over time, generate considerably more profits in IFRS 17 as margins emerge. In the case of Vitality Life, it's a very young business, and therefore, it's much more to the left of the crossover point. And therefore, it will take time for the IFRS 17 profits to reach a level of IFRS 4 profits. For the group in total, and this is important for the group in total, where our earnings will sit under IFRS 17 versus IFRS 4 is the arithmetic average of where Discovery Life is, where Vitality Life is, and of course, where the rest of the group is. Our estimation going forward is that the group is likely to be in the short term, very close to the IFRS 4 earnings. And there's some volatility will depend how Vitality Life plays out. It's early in its transition. It's a long way to the left of the curve, but that is our expectation. So in summary, let me make just a few points again. I think, if you do have the time, come to the session on it. Value stays the same. The effect is a concomitant increase in margins, pretax of ZAR 15 billion, a decrease in shareholder equity post tax of ZAR 12.5 billion. Overall, we are close to approaching the crossover point and therefore, group earnings with some volatility in the short term should not be dissimilar in the IFRS 17, IFRS 4. A final point, I made the point about a move to the OCI treatment in addition with additional margins, because our margins are now dramatically more, volatility going forward should be a lot less, more margin than economic effects are taken out, which is very consistent in our normalizing of earnings. And therefore, going forward, the earnings should be less volatile than in the past. So that is a summary of effect on -- of IFRS 17. Our team will take you through that later at 12:00. Let me continue on just maybe social impact. I'm not going to into detail on this. I've dealt with financial impact of the year under review. I want to add some points about just the social impact. The group, of course, is focused very much on sustainability and not just in the case of ticking boxes in ESG with a very strong focus in our purpose and values on having an impact. So we have a very careful scorecard. You will have seen this, I guess, in the previous reporting period. I hope if you go through it, you'll see considerable progress in a lot of areas, making people healthier. We now recorded over ZAR 0.5 billion healthy activities. I think that's important call out from us and our partners. We've rolled our carbon footprint down quite significant. It's more to do. We've launched Discovery Green, that's going to help us do more of that and help our partners. We're doing a lot of stuff in terms of nation building in the health care system. The potholes process continues. It's always nice to mention this, if we fill 190,000 potholes in the Johannesburg area, illustrates that you can make a difference quickly. And I think we'll continue to do that. We continue to fund and strengthen the health care system, if we can. You'll see a diversity inclusion a lot of work done on our Board and our people. And then in terms of fair and responsible pay, I think we're doing good work hopefully at narrowing certain gaps in certain areas. From a rating perspective, we've come a long way up. The group is well rated across all of the -- amongst the highest rating in our peer group amongst the important rating agency. So very good progress in this regard. It's not here to tick boxes, I mean, making -- I want to make the point, in terms of our core purpose, make people healthier. We are fundamentally enforced. We need to be able to measure that and make our people the people that Discovery People understand the massive in that they're having on society in the markets that they operate in. Let me talk just about the model. I made the point that this is obviously fundamental to what we do. I can't do this justice here, so I'm not going to spend too much time on this, but there's a number of important trends. The model has proven to be so powerful. There's a lot of aspects that we need to drive going forward with the model. The first is making sure that it kind of emerges from just kind of a wellness structure wrapped around life and health insurance and banking and other, how people drive to an economic model. And the ability -- the second point is the ability to demonstrate its impact. You'll see later in the presentation, there's demonstrable impact on our partners that is very, very profound. We've got to monetize that and demonstrate our value in a much more articulate way. We are focusing very hard now on the actual drivers of value in our case, on the right-hand side of the chart, the rate of mortality can we bring that down to behavior change. Second, the cost and the rate of sickness and morbidity, of course, the lapsation rate and critically, the upsell rate in many of our partners and our other businesses we upsell to existing clients, understanding if they're engaged, if they're healthy, understanding the particular certain helps us upsell product them as we go forward. We have really focused down on making the shared value model a set of modules that is hyper personalized, clear, focused where value can be demonstrated. In the case of life insurance, dynamic pricing models, personalized engagement, risk assessment and then the ability to value it based on habit indices, change in behavior formation, et cetera. There's a lot of work taking place, and we'll be doing a launch next week on a lot of this. But in the case of the life value chain, we are really focusing on the issue of real ability to have dynamic pricing architects. We can offer different partners, a focus across all of our markets of the ability to have hyper-personalized dynamic risk assessment and real focus on engagement that is personalized and [indiscernible] base action, simple for the client that absolutely fed by proper data ingested into the model, personalized algorithms as you can see. And then personalized potholes that come out of this. In the case of -- in the case of health insurance, this is a massive opportunity, because to an extent, what we see in the world is you have on one side, wellness and prevention, on the other side of your disease management. Disease management has been -- it's a massive industry, but it really doesn't get tremendous levels of engagement. Our sense is that by bringing the Vitality incentivization and personalization, there's a spectrum of Vitality, the shared value model can straddle all the way from wellness and prevention, all the way to coaching, disease management, medicine adherence, et cetera. The methods are the same. It's about identifying risk, personalizing the pathway, managing and incentivizing and getting behavior change and creating habit differences. The powerful thing in the health insurance space, we're pioneering this in the case of Discovery Health and this will roll out in our launch next week is the considerable amount of data, we have a lifestyle data, we have behavioral data, clinical data, pathology data. The ability to bring that together to understand both the absolute hyper-personalized risk assessment of an individual and secondly, their propensity to make changes and what kind of things would appeal to them. So all of this goes into this strong platform, comes out with a personalized pathway using machine learning actually spits out a path of each individual, million gets a separate pathway with specific behaviors and specific incentives of the gamified to get that change. Of course, getting strive to be a pioneering capability that, of course, can roll out across our partners across Vitality Health, which is also central to building this. We're doing this with Quantium and bringing all of our data together. This is a considerable investment for the group, but we believe it will roll out and strengthen our business across the world for amplify to work in [indiscernible] and to others, we hope we can share this with. So there's a lot taking place in the case of our shared value model, there's more data that if you go through the presentation, you can look at it. So -- and that said, on kind of the overall financial impact, the social impact, the growth of the model. I wanted to make some comments about our various businesses in the 3 composites. There's a huge amount to tell. I'm going to touch just the tree tops and try and give you a sense of where the emphasis should be. I think the point we made is it has been a period of considerable focus. I think we know what we have to do, and we focused hard on getting that done. So while in the case of South Africa, it's about being this composite, having a bank at percent, we've done clearly, it's about scaling the bank to profit, ensuring each of our businesses is a market leader in every dimension. And there's work to do across the board. In the case of the U.K., a new generation of life and health insurance composite, we focused hard. The U.K. is complex. You've had this massive effect of inflation, high rates of interest and at the same time, the complexity around the NHS as it - it has had its own complexities and difficulties. All of that is great environment of considerable complexity and opportunity. And then finally how we scale us to our partners through these years, has been a clear focus, scale Ping An, monetize our IP property, as I said before, with our partners and get real scale. And of course, globalizing unique health assets, which you're focused on. So -- the point I wanted to make is I think there's a very clear strategy in everything we do, both at a vision level and at an ability to get growth and scale. Let me deal with the South African composite. Let me deal with the South African composite and maybe start with Discovery Bank. Discovery Bank had a tremendous second half. If you look across kind of the key metrics, the growth and the momentum in velocity has been very, very strong. Total clients growing by just under 50% to over 700,000. We've touched 750,000 in the last, I think, few weeks, the last few days. Total accounts up 60% to 1.6 million. I think in that now 1.75 million. You can see the growth in income. Retail deposits continue to grow. The advances have grown 22%. That's an area of consumable opportunity. We remain cautious there. And we remember product shy. There's a lot we're doing and I'll take you through that. And then the operating result turning now strongly. You can see the breakdown between operating results and acquisition costs. Our intention is to get the operating piece in blue to a breakeven month by month by the end of this calendar year. That's a hard task. We believe we can achieve it. A few dimensions of the bank or few kind of lenses to look through. The first is just revenue growth and velocity continues. You can see that we've crossed -- come to 1,000 members per day, and that is -- their growth tends to be very, very strong. At the same time, the NIR by duration tends to climb very, very quickly. This is a fundamental issue, because this illustrates the issue of a new bank. Can you get people to bank with you over time? Can you get into use our services at scale? That's a critical issue for usability for stickiness and of course, revenue generation. What is fascinating inside Discovery Bank is typically people join. There's a number of ways that we reach out to them, well, new member calls and we -- there's a number of stuff through the digital experience that is quite different, powerful using data, et cetera. But you can see -- in a short space of time, the usage goes up. So typically, within a 12-month period, usage levels and revenue growth is up 70% or 80% of what it was 12 month earlier -- 12 months earlier. And that is the opportunity of the bank, the ability to drive that over time. The [indiscernible] that, as you can see on the second last panel is a very strong growth in the overall revenue up 55% over 18 months. So if we can continue to grow and then get efficiencies, you can see how the economic model works. And then the overall benchmark, I think, is just to see the NIR per customer is the second highest in the market. And hopefully, we can increase it over time. So the hypothesis about a bank that's built on a digital frame, shared value that engages customers in a full service way is fundamentally how the bank is growing, value-added customers and fundamentally economic model that you can see coming through. In terms of the quality of clients and the opportunity on advances, it is significant. On the left-hand side, you can see the quality of clients that we're achieving over 50% of our client base is super prime. When you look at the credit card experience, our actual credit loss ratio is dramatically lower than the rest of the market. It has risen somewhat in the last few months as the environment has happened. It's still at a very low level and easing a bit. So in that regard, you can see the quality of the client base. But the opportunity in this market for us is substantial. We checked very carefully the entire borrowings of our client base on the bank. You can see it in the in the third panel, the outstanding balances our clients have with other banks is close to ZAR 300 billion. A lot of that, of course, is home loans. But the other pieces, they look like around the years are huge, ZAR 25 billion in the credit card space and ZAR 18 billion in the personal loan space. We only have an advance in total of ZAR 5 billion out of one product. So we're in the process, obviously, of enhancing the product range, home loans, access facilities and personal loans are coming quite quickly. We've done a lot of work over the last year on the home loan product that we roll out for our staff initially at launch next week. And as part of understanding the pilot in the first quarter of 2024 and then access facilities and personal loans will follow quite quickly. So we are really filling up the product to make sure we can take we can rise to opportunity presented by the scale and quality of our client base. And then to bring this together, just to understand the efficiencies, I mean, the main thing is that we've built a very, very powerful digital capability. And therefore, the fixed costs are largely fixed. And you can see that on the left-hand chart. As we grow, you can see how downsloping. The cost per client. And then the middle chart, which is critical, the kind of jaws between revenue per client and expenses per client. And I think importantly on the revenue line, the darker blue line, it's staying fairly flat over time, which illustrating that we're keeping the quality of clients and the engagement where it has been. But at the same time, we're getting this dramatic decline in expenses per client. And of course, that opening jaws creates the economic value over time. On the right-hand side is a repetition of a chart we showed you, I think at interims in the dark blue is really the expectation of how the bank should break even operationally and then how we expect to do the analysis. So in fact, we're slightly ahead of that projection as we go along. This is months away, we'll see how it plays out. But I think the point we made in terms of capital plan growth, all of the metrics, the bank is very much in line or better than expected. I didn't want to dwell on this, but I did want to make the point that the bank has a few dimensions of real competitive advantage. I mean obviously, we believe the digital experience of what we can do in the traditional banking sector is different than better and hopefully that is what's playing out. But there are a few things that I think make the bank, 3 dimensions that I think make the bank very, very powerful. And it comes to the architecture of how we built the bank. But versus at the top of the bank, the kind of the carousel mindset, your entire financial portfolio sits on the face of the bank. So not only the traditional banking portfolio, but your health, your life, you ensure you'll invest your umbrella fund, all of that stuff is sitting on the face of the bank. So the entire financial portfolio is on here as the products come out, the new learning product, they too will appear on the face of the carousel. Then underneath that is our entire shared value behavioral piece of what you do. So Vitality, your health issue, your drive issue, your money issue, all of that into a single currency, you can access all of the partners. And then third, and this is critical, and this we're starting to roll out now is different ecosystems. The travel platform, Vitality Travel has been remarkably successful. We have access to all airlines, airport lounges, all of that stuff at discounts and the discounts are driven by your levels of engagement on the face of the bank. We are now rolling that to fitness, linking into the health care system, to the home environment, et cetera. And I think they have ability to offer ecosystems, tied to payment systems like Apple Health, Apple Pay and our discovery capability is powerful. So this is where I think the bank has the ability not only to be a full-service bank. The ability to be a super app, where [indiscernible] all of this interconnected, your financial world is linked, your behavior world is linked, your ecosystem, all of it is linked to a payment account that you can just assign all on the face of the bank. So all of the stuff should play out as we go forward. As we innovate, we'll add ecosystems, add functionality, add products to carousel, et cetera, and again next week in our product launch more of that will come forward. So -- and after the bank, I think that we are pleased with the progress of the bank. I want to talk on Discovery Health, just at the very high level, the performance continues to be exceptionally strong. Operating profit, it's a massive business, it's grown 7%. New business up 19%, that's a very strong level of growth. Bear in mind, there's a lapsation effect inside Discovery, just given its scale. So the new business footprint has to more of competence for that, but in the period, very, very strong. Membership over 3.8 million. Then you see on the right-hand side, the non-scheme growth, [indiscernible] revenue to 15% of Discovery Health revenue, very, very strong growth in Gap Cover, Flexicare, Healthy Company stuff that's not inside the medical scheme business. It's strong growth, but I think it illustrates, which I think is important, just the powerful latent potential of these nonscheme medical products and our team doing a great job of growing into that potential market. Looking at the actual performance of the Discovery Health Medical Scheme. It's a separate entity, but its performance has been quite remarkable. We make up now close to 58% of market share of the market. You can see the other schemes are small, and when you add them together, add up to less than that, gives you the 42% or thereabout. I think fundamentally, you can see the stability of the scheme. If you look at the customer satisfaction, it's quite remarkable. I mean, obviously, in this environment where people are under stress and strain, you get people wanting to leave to buy up and out to buy down the options. We don't see that happening inside the medical scheme. So amazing, if you look at that chart in the middle of the second panel, 97% of the client base has not moved plans. And in fact, more have moved up than have moved down. So there's considerable stability and that stability, which is interesting, has gone up over time. So the plan change moves, although very small, 3% or so, 5 years ago has come down significantly over time. Lapses are -- as I said to you, there's a large amount of lapsation with a [indiscernible] of only 45%, the numbers are big. You got to grow the book to make up for it. And then the solvency of the scheme is quite remarkable at 30%, at ZAR 26.9 billion, just ZAR 27 billion of solvency sitting inside the Discovery Health Medical Scheme, the trustees have been very careful about releasing that solvency. It was built up a lot during the COVID period, above the 25%. As claims were reduced down, the approach has been to kind of use that to stagger the contribution increases to make sure we get to the right solvency levels and the right cost curve over time. I think it's that's been a very, very good process. So a lot is happening, a lot of innovation, a lot of complexity about medical inflation going forward at the launch next week, of course, we will tell with our stakeholders and members much more about this. I did want to use the opportunity to talk about NHI and just give Discovery's position on NHI. This is, of course, a critical piece of legislation. Its effect is likely only to be felt in a decade or more away, but it is a very important piece of regulation. I want to just give you our view of where we stand on. The first point to make is that we don't believe the status quo is sustainable. So we do believe the universal health care for all South Africans is a crucial issue. It's a noble goal. It must be achieved. And NHI is a remedy for sure. And we have to try and make it workable. But our position is that NHI is not workable with our private sector collaboration. And I'll show you through the numbers where that position is. The pinch point in the -- the other parts of it, the main pinch point is the so-called Section 33, which really says that once NHI is fully implemented, medical schemes can't cover those aspects that the NHI fund does cover. And in the sense, that effectively takes medical schemes out of the main stay of health care. Now while it's a medical scheme issue, that really takes private health care out of it because private health is funded by medical schemes. That's the primary way that you fund private health care. Without that funding methodology, private health care can't survive. So this is a crucial issue. Of course, this is a decade or more away, as we move towards how the NHI can work. But our position is, you need a private sector collaboration in this from the get-go. So we can make it work. We're seeing what the private and public sector can do in the context of the vaccine. It's a very narrow focused issue. But this is the same for the new private sector collaboration. I also want to make a call out and a case for the private sector. It's a remarkable national asset. It is unusual in its scale, in its quality and its sustainability. We should never forget that. There are amazing doctors and hospitals and facilities and corporates involved in it. You can see on the left-hand side of the chart, nearly 840 facilities, 15,000 doctors, GPs and specialists, nearly 50,000 nurses. It's a massive, massive system. And it's funded by medical schemes, ZAR 260 billion flows through the system every year. But the critical thing is we have an open enrollment community-rated medical scheme system. So it works on very socially egalitarian principles. People have guaranteed access to the system if they can afford it, that's a critical issue. And there's no discrimination. It's a flat community rate. This is incredibly powerful. When you look at the actual data on the side, our team have shared some data with you. It's remarkably comprehensive. Our survival rates for cancers among the best in the world. Readmission rates for people over 65, a great measure of quality is lower than many American measures. And you can see the cost when you look at other developed countries, when you compare the private sector, adjusting for purchasing power parity is nearly 40% cheaper. Now not to say that we kind of more efficient, there isn't waste, there is an issue that have to be addressed. But in the main, this is an incredible system. And it's an orchestration. If you upset the funding structure and you have set the cross subsidies, you don't regain it back. There are doctors of considerable quality. We have to maintain and sustain them, make sure they're paid appropriately. We have to get people to want to become doctors and go into medical school and come out. We need more doctors in public and private. So this is a system that shouldn't be messed up. And it's a system that is right for collaboration in the context of the NHI, and it's very important to achieve that. But I guess the point I wanted to make is just like looking at the numbers. And these numbers I'm not -- this is not intent be critical. It's a tend to illustrate just how complex the financing of NHI is and how hard it is to achieve. And this is based on numbers as they are now. Of course, this is something that's going to take decades to achieve. And hopefully, our country can achieve better economic growth over time, become more prosperous. But I think the points made directionally are relevant that you should understand, and you may know this anyway. But just to make the point, we have a lot of money being spent on public health care, about ZAR 200 billion of their amount being spent on public health and about ZAR 250 billion spent on public health care. The amount that's been spoken about often that's needed for the NHI is about ZAR 200 billion. That's not dissimilar to the total spend of medical schemes, but that's been muted as the additional funding required per annum for an NHI. The question, of course, is where does that come from? How could it be raised? Now even if you don't have medical schemes, medical scheme contributions sit in a pocket of individuals, that's personal voluntary money that's being spent, right? So we do want to raise ZAR 200 billion, you'd have to do it through the increase in rates of taxation. When you look at the numbers, you can see a hard risk do on the right-hand side of the chart to raise ZAR 200 billion would require a 30% increase in personal income tax or a 6.5 percent points increase in VAT from current 15% to, say, 21% to 22%. That's not doable or a 10x increase in payroll taxes. When you look at any of these you realize just how hard they would be doing. If you would do that in one shot, you would create real difficulty and a real destruction to the economy in many different ways. So this is a very difficult thing to achieve. But the second point to make is even if you do achieve it, how far does that ZAR 200 billion go. If you go through the numbers, it doesn't go very far. And that's the tragedy of our country, and that's what we have to work hard to alleviate. We currently spend, if you look at the left-hand side of the chart, we currently spend ZAR 425 per person per month on health care. That ZAR 200 billion, we'll take that up to ZAR 684 per person per month. It is an increase, but that ZAR 684 is not enough to offer a very, very comprehensive NHI. A lot can be done with [indiscernible] and hope we can do a lot more with it. But bear that in mind, we don't have sufficient resources, even if we raised the ZAR 200 billion to offer very comprehensive NHI. But the important point on the right-hand side is what it does to the employed market, because the employed people are the tax base that fund the NHI in a public system. Think about what happens there. You would raise taxes by 30%. But because all of them would be forced under Section 33 into an NHI with no ability to buy up and out of it. Their health care will go effectively from ZAR 2,300 that they're spending per month on average, that's the spend, down to the ZAR 684 down 70%. Now obviously, there are all kinds of parity issues and directional issues over time that can be addressed. But directionally, I guess the point to make is we're public where finances are currently. If you were to impose NHI today and limit medical scheme involvement, you'd really see that the employed population pay 30% more tax and get 70%, there's health care resources available to them. That, I think, would have a considerable effect on the employed sector. And that we undermine the tax base, we should underline NHI for all South Africans. So this is a complex issue. And I think the point is not to make the numbers, the only issue. Socially, we have to go towards that. But you can see the difficulty and the complexity we collectively face, government faces and how we do this. This is a complex issue that will need all hands on deck. The last point to be made is that very few countries don't have a private health insurance market. In every country, health care is complex to funding new the private sector as a safety valve, where people can fund more and it can take the pressure off the national system. We've looked for countries that don't have private health insurance markets, they're very few on the right-hand side, as you can see. There are countries like Iceland and Norway that are remarkably rich countries with homogeneity, the GDP per head is high and very, very constant. In those markets, they don't even need it. I mean that's the reality. It would be wonderful if we could achieve it. We have the opposite. We have a low GDP, low GDP behead massive inequality. So this is a complex issue. And I kind of wanted to make clear our position. It's a constructive one. We don't believe the state is quite sustainable. We're determined to help. We believe that NHI cannot be workable unless you have private sector collaboration. And we need to change certain aspects very simply to allow that collaboration. It can be done, let's do it and move forward that we can make things workable going forward. And that said on that, let me move to Discovery Life. Spending a lot of time, and I hope I get through this. I always tend to overuse time, I am sorry for that. Let me turn to Discovery Life. A very robust performance in Discovery Life. You can see normalized operating profit up 19% to point out that the individual life business grew 8%. We returned to profitability of the group life driving profit up 19%. Strong growth in new business, strong growth in automatic contribution increases, strong solvency position, all of the liquidity [indiscernible] is post COVID on our rebuild strongly. The market is flat and very tight, but we continue to drive market share into it. So that the market share has gone up from 27% in the previous period to now 30%, as you can see. Strong cash generation from Discovery Life and investors. You can see there's a waterfall chart showing you all the various elements, but at the end of the chart, just over ZAR 2.1 billion of cash generated by Discovery Life and Discovery [indiscernible] that's important, of course, a very important issue. If you look at the embedded value, you can see the buildup, there's been a positive experience variance of just over ZAR 1 billion, second from the left. You will see that the actual mortality morbidity experience is interesting. We're getting excellent mortality experience, reflecting what we expect in the model. Bear in mind, the expectation is that mortality comes down as you go up in Vitality status. We're doing better than that, as you can see. So the actual experience is better than expected. Where we're lagging behind is mobility and particularly income protection business, where often that's a function of the economy. When things are very, very tough. You find that income protection claims tend to escalate, you find that capital instability claims tend to escalate. So that's a pattern of the experience. But overall, very strong positive experience variances from Discovery Life. You can see the policy alterations are negative, reflecting the environment. But on the counter side, the contribution increases and economic is a kind of counterbalancing factor, as you see. If you look at the embedded value, not dissimilar to what I showed you earlier, but the economic effect in the case of Discovery Life doesn't have the ForEx counterbalances the rising interest rates hit the EV by to the extent of 4%, as you can see in that red block on the right-hand side. One of the fundamental issues of difficulty has been the rising rates of interest and the effect on the value on the VNB margin. The VNB is a present value of those future flows. When [ interest rates ] go up, the value in the tail comes down quite significantly. So you can see in the previous -- in the previous period, margins were around the 6% level. You can see the economic effect of insurance hit us dramatically. In addition, our unit expenses per policy written of too high. There's work to be done in terms of bringing those unit expenses down and just making sure we can alleviate this. So you can see that the margin of VNB is come down quite significantly from 6.34% down to 2.5%. It's still 5.7% above risk free, but it's below where we'd like it to be. It's about 19% or 20% return on capital, but more can be done and has to be done to get us over the expected hurdle. Let me turn to Discovery Invest and be relatively quick Discovery Invest had an exceptionally strong period, normalized profit going up 30%, as you can see, about 14% on a sustainable basis, we are number of one-offs, most notably, a better matching process in our guaranteed products. That really had a once-off effect. New business up 4%. That's a fairly low number, but the industry has had in many cases, net negative growth. So we are pleased with that. You can see total assets under administration about ZAR 140 billion. If you add umbrella funds to that close to ZAR 153 billion. And then the shared value model is working even in this difficult environment. The effect of boost, we incentivize people to be healthier to save earlier, to draw down less and later. You can see the effect of those boots has a 60% lower withdrawal rates. So people are sticking with what we're doing stronger, substantially stronger by the nature of the value they're getting out of the shared value. I'll touch on Discovery Insure. If you follow [indiscernible], Discovery Insure had a very difficult year last time flipping into a loss. We really lost a euro of rate increases under COVID. During the COVID period, there was considerable profitability coming through as people didn't drive in that period, obviously. And therefore, the inability to raise rates, because people wouldn't pay more for insurance, even though the underlying cost curve will return. At the same time, if you followed our presentations, there was massive inflation on motor cars and motor car spares, et cetera, coming through from all supply chain issues, et cetera. So the 2 can together in 2022 to drive a considerable loss. We've done a lot of work to recover from that. You can see on the right-hand side of just break into profitability. The recovery monthly now is very, very strong. So we're very pleased with that recovery. You can see gross written premium up 10%. The business is a bit over ZAR 5 billion of premium. New business is flat. We've done a lot to cull per business with upgrades that would have an effect in new business and vehicles insured are slightly down, but the quality of the book is better. Our price levels are better. I don't want to spend too much time, but I think we are pleased with the work the team has done on this. You can see on the left-hand side, the actual premium increase in the blue has now caught up with the kind of the motor cost curve. You can see the loss ratio pre-COVID, COVID and now where it is now is really come down to similar levels to the pre-COVID level. You can see the model is working incredibly well. Loss ratio by status is very down-sloping, dramatically down sloping that [indiscernible] by status. So when increasing those rates, we've kind of lost worse quality lives, and that bodes well. If you look at it half year by half year, you can see that the second half has been dramatically stronger than the first half. We have to regain our margins, and I think we work quite quickly. This is a business of considerable potential scale, cash generation profit generation. We're determined to really get the quality of what we've done out there going forward. All of the dynamics looked exceptionally good pre-COVID. We kind of lost a year rate increases. We need to regain that quickly, which I think we've done and move forward and generate profitability. And I've said on the SA composite, I hope I've given you some sense of the issues at play. I want to go to the U.K. and just make a few points. The U.K. is a complex environment. It's complex in terms of inflation, rates of interest and be volatile at the same time, the NHS has had great difficulties. All of us, of course, coalesce to make life complex. With greater risk with great opportunities for both Vitality Health, it is an effect of the complexity of the health care system. And Vitality Life is, of course, affected by inflation and interest rates and all of those impacts. Overall, the composite has done well. You can see normalized operating profit at 14%. We cover 1.72 million lives in the U.K., very strong growth in new business. A lot of that is the indexation, the contribution increase in the Life business and the health business growing very, very strongly. So a very good set of numbers at the top. The other point to make is that the U.K. business now is very much self-standing. It requires no funding from the group going forward. And over time, it's very cash generative, we believe. At the same time, it had its own financial rating from Fitch of an A rating. So it's self-standing. It has ability to raise capital, to raise debt, et cetera, given that financial strength and its brand self-standing. If you follow us, you'll recall, one of the key strategies for us when we left the Prudential was what we do with our brand, how do we get it to the scale where it needs to be. The team has done an incredible job over the years of a concern about leading a brand like Prudential and quite quickly, they made an impact. But you can see from this chart on the right-hand side, the brand awareness now is very much in line with institutions that have been in the U.K. for hundreds of years. So the brand and the financial position now is really stable and strong. That obviously creates a fantastic opportunity to grow. Turning to VitalityHealth. VitalityHealth's performance, I think, has been very, very robust. You can see operating profit coming down if you look at the graph, there was a considerable jump in the previous period. If you follow the detail of VitalityHealth, you recall that in the COVID period, we generated considerable profitability, but the concern about COVID claims coming back made us reserve very carefully for a post-COVID period and some of that had to be released over time. And then entirely by this year, as you see in the latest year, what's happened with that is that the growth has been very strong. But at the same time, given the growth of new business, there'll be new business strain and claims of return. So it's a very high base, you can see that decline. We hope we can build that going forward. Loss covered just shy of ZAR 1 million. You can see we hope that's quite a magical market if we can achieve that. 960,000 lives. You can see the strong growth in new business graphically. The environment is complex, and we are metamorphisizing to make sure that we're in the right place to obviously provide support to the environment. The NHS is a fundamental issue of U.K. society. We part of that tapestry to provide help and support to make sure that the whole thing works together in the right way. But it is under considerable pressure. There's a lack of capital investment, the best beds available, staff shortages, skilled staff are leaving. You can see the waiting periods in the middle of the chart. It's quite remarkable. Nearly 8 million people are on waiting list, quite a large proportion, 18 weeks to 52 weeks are waiting for care. The cancer waiting times are very high. Nearly 40% of people are waiting over 2 months for their first treatment following referral. So these are complicated things to address. [indiscernible] insurance is climbing dramatically. It's just the last number of years, it's grown to nearly 1 million more lives. So it really is responding to that. And you can see on the right-hand side between right-hand side, authorization rates for hospitalization are going up dramatically. So this is a complex process. On one hand, the demand for health care is climbing, and that's a good thing -- on the out -- for private health care is climbing. On the other hand, people are coming with expectations of different kinds of care, cancer treatment. It's different to the old days of just trying to avoid waiting list. This is a different set of demands that we have to address and understand. So we're very carefully working out exactly how the product should look, how we should be as we go forward in this very, I think, exciting environment, complex environment. We've done a lot to VitalityHealth over the years. It really is a digital first leading health insurer. You can see on the left-hand side, we continue to get exceptional results out of the Vitality program, great correlations. We've done amazing work about offering a whole range of things, virtual GPs, talking therapies, a lot of outpatient care. We have exceptionally good end-to-end digital capabilities in the case of VitalityHealth. And you can see on the right-hand side that the growth rate, although market is growing, we're growing 3x. We're growing at a rate substantially faster than the market. We are now behind Bupa and PPP, the third largest health insurer, and we hope we can grow off that base. So a lot of opportunity and a lot of complexity at the same time. Let me turn to VitalityLife. Interesting period of VitalityLife rapid rise in interest rates, but at the same time, rapid rise in inflation. And one of the key strategies of VitalityLife has been to index premiums against inflation. In other words, people buy policies. And as inflation comes through, their premiums go up, which keeps them obviously real over time, and that's a good thing for them and for us. And a lot of that driving forward of new business has come through that indexation. So you can see new business up strongly, up 30%. You can see profit up 47%. A lot of that is at the value of indexation. That's about ZAR 18 million in that profit line. And then you can see the lives covered up 9% to 760,000 not insignificant as we go forward. The quality of work, I think, is exceptionally strong. You can see market share on the left-hand side is climbing strongly in the IFA market to 15%. It's growing strongly of a reasonable base of 9%. And the lapse rate is coming down. I think that's a remarkable indicator of quality. This is an environment where there's a cost of living crisis, Inflation is coming up, and we are indexing premiums to inflation. The workdown of keeping clients in the effect of the Vitality structure and engagement or coalesce to bring the lapse rate down very strongly. The combination of that provides a fantastic counterbalance to inflation and interest rates. Now this is an important issue and very much like Discovery Life, this counterbalancing effect. The U.K., as you can see from the chart on the left-hand side, had this dramatic rise in interest rates over the last year, really dramatic. From amongst the lowest, I think the lowest recorded of hundreds of years to now a very high rate of -- a high level of interest rates that creates considerable volatility. The effect of the VNB margin has been pretty substantial. You can see the 3% was what we aim to achieve the economic effect only with all of that out. So in fact, the VNB margin is negative against the expected hurdle rate. We're still only 1.8% above risk free, but it should be risk free plus 6% to 8%. We are a long way off that because of the knock that economic events has on that. Having said that, on the right-hand side, the counterbalance is the indexation. We've managed to index 14% of the business to inflation. And therefore, while interest rates inflation have gone up, that's hit the VNB margin, the actual value of the positive experiences from ACR or the contribution increases has been a full ZAR 18 million in the period. So for us going forward, if we can -- the rate increase was so rapid, we couldn't adjust rates in time neither could the market. Over time, we believe quickly, we can re-rate focus on the unit cost and get that right. At the same time, hopefully, we can manage the indexation and keep their value coming in. The opportunity, of course, is big for us, but there's work to be done to make sure we achieve that. So a lot of dynamics in that regard, and I hope you go through the pack, it will be clear how that plays out. Let me turn to the Vitality Group and try end off fairly quickly, but a lot going on in the Vitality Group. For -- our overall group has a lot of great growth potential in the Vitality Group. It is made up of a Vitality Network that works with partners, predominantly in the life insurance space and then Vitality Health International that is working in 4 dimensions, globalizing our health insurance assets -- excuse me, 1 sec, all of it is aimed at globalizing and monetizing the unique IP of the Vitality Shared Value Model. You can see the operating result has grown 74% to ZAR 777 million, 50% in dollar terms. That can grow significantly off that base. It's an [indiscernible] of different issues that I'd like to take you through. First is the Vitality Network, which really partners with major companies around the world using the Vitality model. You can see that the growth in premium that is linked to Vitality is about 16% in rand terms. Pretty flat to downsloping in dollar terms. A lot of that is just weakness in markets like Asia Pacific, post COVID. In addition, the dollar has been very strong against markets like Japan. So our income in yen is lower, et cetera. So you can see how that is affected. Revenue up 20% in rand terms, up 3% in dollar terms, operating profit up 26% in rand terms. You can see the growth in membership. So it's growing ahead quite strongly, but the potential is very, very substantial. Our partners are seeing considerable, considerable benefits from the model. For the first time, we could share with you specific company experience, let's assume [indiscernible] 2 models are Japan, which is the fourth biggest life insurance market in the world; and John Hancock, which is in the U.S., the first -- the largest life insurance market in the world. You can see the effect of the Vitality model. You can see the growth in premium. In the case of Sumitomo Life in just a few years, 1.5 million policies sold, and you can see graphically that rate of growth. The levels of engagement are remarkable. 64% of members have earned. At least a point the attachment rate, 70% of sales now include the Vitality program. And then the same relative mortality effect, 43% lower to the highly engaged the Vitality members to non-Vitality fantastic effect on hospital costs, et cetera, getting very, very similar data coming out of Sumitomo. When you look at John Hancock in the U.S., the results of staging. If you look at the annual Vitality PLUS sales growing at 36% per year compound growth rate. The election rate of people choosing the full Vitality is now climbing at a rapid rate. And then if we look at the health outcomes, they're quite remarkable. BMI, better cholesterol, people reporting same or better blood pressure, et cetera. If you go through the data, it's quite remarkable. So it's clear to us and to our partners, the power of the model. For us, the ability is to get deeper to get more value to extend the network and to get scale. There are 3 distinct strategies that we are focusing on now. One is obviously to get revenue growth through the deepening of relationships through our major partners. But the other point is in certain of our contracts, we have the ability to participate in emerging profitability. How the market -- the model is outperforming expectations. That offers considerable value for us. The second, I think, very important, we are targeting specific -- specifically the U.S. market. We've had a fantastic rollout in that market, and we intend to expand in that market, together with John Hancock. We're working very carefully on that. We're working with certain partners in the U.S. in addition to John Hancock with them. But in addition to them, in other sectors of the U.S. market, it's a very, very large market with specific sectors. So the ability to do that without creating any kind of competitive distance and that offers great opportunity. We're busy with that right now. And then finally, the economics of the model offers great potential. Bear in mind, the cost base is largely built. I made that point earlier. Most of it is in rands. Yet the top line is in dollars and growing. And therefore, the kind of ability to get it geared effect is substantial. The expense base currently is 66% of the top line revenue. So there's a massive gearing effect. So if we can achieve one and two and at the same time, get the economics of the model to work the effect on the profit of Vitality Network should be quite considerable quite quickly, and that's the expectation. If I turn to our Vitality Health International, Its profits have grown significantly to over ZAR 402 million, driven in the main by Ping An Health and I touch on that, but there's a lot of stuff in the pipeline in Vitality Health International over time. I hope that becomes evident. It's made up of Ping An Health, Amplify Health of our U.S. business that we are now focusing on carefully and the Quantium Health, which is a fantastic data science business that has start to be using, as I explained to you previously and how the shared-value model is playing out. In terms of Amplify Health, it's important to understand this is a business literally 2 years out of the gate. We have shifted people, systems, AI has done the same. It's a massive initiative. It's going to take some time to get scale. We're not in a position where 5 major products have been developed by exceptionally strong chronic disease management, Vitality is now inside, Amplify Health provider management, end-to-end claims administration, for all waste and abuse. It actually there was an acquisition of AiDA, which is a fantastic data science business in Asia that brought with incredibly strong full waste and abuse products and capabilities, making it to the Discovery Health capability has offered a tremendously strong product. You can see from the map now we're making solid progress in the AI markets with AI companies across Asia Pacific. This has to roll out over time, but I want to get a sense of the work done. In the case of Ping An, -- it's been quite, I think, incredibly robust, to say the least. The performance has been really strong. This is a very, very complex period, as you would know, in China. The [indiscernible] review included the COVID lockdown. So a very difficult period for health insurance companies. Despite that, you can see the progress has been strong. Operating profit grew by 39% in rands, just over 30% in RMB. You can see a lot of that profitability is a growth in investment returns, but in fact, operating income grew by 12% over that period. We affected that on us as a 76% increase in after-tax profit to nearly ZAR 600 million, not insignificant. You can get a sense of the scale of the business, written premium up 11% to over ZAR 50 billion. And then, of course, the challenge is new business in that environment with a COVID lockdown with the decline in Ping An Life Agents, new business down 9%. We're doing a lot quickly to try and make sure we can recover that over time. The actual operational dynamics of the business is very strong. You can see the combined ratio coming down nicely to 89% persistency, which is the opposite of lapsation is very strong, climbing strong over the years. The profit margin is dramatically higher than competitors in the market. And then the sense of the scale of the business, it has ZAR 50 billion of premium and RMB 8 billion, nearly RMB 8 billion of NAV. So it strongly, strongly capitalized a lot of value in it. So the business is performing well and is financially strong. I made the point about new businesses a lot that we're doing to offset the new business headwinds. You can see the number of online agents is now 27% lower. That affected new business in this period, what it's known as the red door sales period at the start of the year was obviously dramatically affected by the COVID lockdown. But there's a number of areas of new products or new distribution channels. And if you follow monthly, you can see how we're kind of clawing back the new business production. I think the case for the Chinese market is a strong one. I wanted to make this point in the presentation. Obviously, China has its complexities. now, and there's a lot of debate about investability and different investment cases. From our perspective, it's important to understand that we remain optimistic about this business to scale and grow. Health insurance is a massive issue in China. We are not a foreign company. We're a local company with Ping An, with a Ping An Group, a shareholder in Ping An. And some of the underlying issues are important to understand. The middle class is growing and is affluent and is of considerable scale, 473 million people, now growing to 550 million over time. We know as people become prosperous, they demand better health care. You can see setting from the left the population is aging at a record rate and people age their consumer health care. And then when you look at the size of the market, it's significant. China spends currently $477 billion on health care. And you can see below that, it's a small slither, but private health insurance is climbing from 5% now to nearly 10%. Expect to be 10% in a few years' time. So that market is growing considerably. And then finally on the right-hand side, if you read through it, you'll see that policy from government is actually encouraging our private health insurance market together with social health insurance market at the city level, very in line with what I was saying earlier about NHI and that's an important issue. So all that direction here, it seems to be a very, very strong investment case. And as you've seen from the slides, the actual performance of Ping An Health has been very strong over a very difficult period. So we're optimistic at that team can deliver. So let me wrap up. I've been a bit long. But to make the point that I think the financial performance has been strong. We're in a good place in terms of how we're transitioning through IFRS 17. And the focus on the composite there's a lot to tell. I wanted to give you a sense of just the clear things that we are focusing on. This a clear focus on making sure we grow. At the same time, we are robust throughout the business. And all of this is manifested over this period in 4 focal areas, a focus on quality earnings, in addition to cash generation, making sure each of our composites are focused carefully on robustness and growth. We focus on the right new initiatives. We evolved the shared value model, which I think we're doing very strongly. And finally, we go through the IFRS 17 transition smoothly and appropriately. And going forward, you will see reporting on the IFRS 17 basis in the next financial year. That is our results for the period. I hope it's given you a sense of where we are at -- there are a bunch of questions. What I would suggest is I'm happy to just facilitate that, but I have Deon Viljoen, our CFO, we have all of our CEOs and experts and Chief Actuary, Andrew Rayner on the line. So my suggestion is Deon you with me. Let's go to the questions.

Yes questions from the top. Thanks, Adrian. Good morning, everybody. We've got a question from James Shuck, Citi. Please could you unpack the EV assumption changes also focusing on the second half developments? There were circa ZAR 0.1 billion of negative assumption changes as and ZAR 1.3 billion of negative lapse assumption changes from lower exit rates on invest products. et cetera, that were broadly offset by positive premium and fee income assumption changes. Just looking to understand this better. Andy, I don't know if you want to kick off on that one?

Thanks, James, for the question. I'm happy to pick up on that one. Just, James, to -- just to give a quick answer to your question. So outside of the economic basis changes, as you've pointed out there, the 2 key changes around the lapse assumption. And around the fee income assumption. On the lapse assumption, there's 2 components to that. Part of that is the strengthening of the life lapse assumption over the next 2 years. As you may recall in the past, we've had a lapse stress assumption in there. And although we've had positive experience variances against that, we do remain concerned about having for the consumer given the level of interest rates and inflation. So we've reinstated or extended that lapse stress for life. That's a part of that lapse change of ZAR 1.2 billion to ZAR 1.3 billion. The other and the major part of it is actually a change to the discovery of Retirement Optimizer product. We've looked -- obviously, we're growing with experience over time in that product, and we can see how policy behavior is changing. And what we're seeing is more and more policyholders are hanging in to get the benefits of that product offers when you integrate it with a life product. So we've had to strengthen the assumptions around policyholder behavior as they approach retirement and that's the largest part of that lapse assumption. Against that is then we've actually made a product change, partly in response to that as well as other demographic and economic experiences. We've actually strengthened or increased the product fees actually dropped asset management fees for some funds, but we've actually changed the discount and actually reduced the discounts for some people, who are getting very high levels of discount. And overall, that gives the circa ZAR 600 million of positive basis change as you're seeing in there. And that largely offsets the negative lapse assumption. Just to also ask how does that compare first half, second half? Just to reiterate, in the first half, other than economic basis changes, we generally don't make any experience changes in the EV, it's all captured at the year-end. I hope that answers your question, James.

Thank you, Andy. Another question from James asking the U.K. Life New business margin was negative, partly due to higher interest rates. What is the outlook now and how temporary is this? Neville?

As you saw, I mean, it was predominantly from the interest rates spike at the back of the financial year. The strategy to enhance new business profitability remains writing in the more sort of profitable segments and the benefits of income protection [indiscernible] cover indexation are key focus. We've recently introduced some really positive product changes, and we're already starting to see growth in that volume. We've also taken some pricing actions in the lower margin sales. But very much we believe this is temporary and we can achieve our shareholder targets on the new business, that will still be impacted in the short term with these high interest rates.

Excellent. Thank you, Neville. A question from Michael Christelis from UBS. What is the strategy with respect to improving the SA and U.K. Life new business margins? And can these revert to historical levels. So very similar question. I don't know if there's anything to add on the SA side. Riaan?

Sure. Thank you for the question, Michael. I think there are 3 clear and complementary strategies on the South African side to enhance for new business margin. The first is focused around product innovation and specifically expanding into profitable adjacencies, bank assurance being the most obvious opportunity. Then secondly, growing new business and growing market share through the expansion of our very productive agency forces as second clear strategy. And then the third strategy is around focusing on expenses and driving down unit expense levels to ensure a higher new business margin. So if you get these 3 strategies right, you should end up with lower expenses as expressed as a unit of new business volume and basically too higher new business margins.

Excellent. Thank you, Riaan. The next question from Warwick Bam from RMB Morgan Stanley. How did IFRS 17 impact the profitability of the Prudential back book and what proportion of the Vitality Life profit related to this back book. This is quite an interesting one. The pack book accounting, even under IFRS 4, quite complex. We used to treat this almost as a combination of cell captive kind of accounting and a reinsurance contract under IFRS 4. IFRS 17 actually brings quite a lot of clarity to that, actually simplifies the accounting quite a lot. It now falls into a category of reinsurance contract out. So what you may expect going forward is more of a single line and some disclosure in the notes. The impact on that book, not that material on the overall transition. As we mentioned, we'll deal with all of the technicalities a little bit later in the technical session. A question from [ Techron ] at WhiteOak Capital. Just want to understand the medical scheme system in South Africa and the medical schemes, the position. What happens if there's low solvency? I want to maybe can treat that one outside the session, if that's acceptable. Baron Nkomo from JPMorgan, can you elaborate on the strategy to roll out and grow mortgages and personal loans in the bank? The big SA banks are well entrenched in these products. So maybe Hylton, if you want to kick off on that one?

Sure -- thanks for the question, Baron. The -- I think you're quite correct. I think the mortgage market is significant, and it's a central product. So we will be communicating over the next month or so to the market. But I think we've been fairly clear that our strategy will be to effectively commence with internal pilots and in line with the lending strategy in the bank to date, particularly in the current market to focus on our existing client base where we've got deep data, our shared-value model where we think we can release significant value for our clients and we have significant competitive advantage and apply the kind of the ecosystem that Adrian alluded to, and I think demonstrates that across the South African composite where we have obviously long-term insurance as well as existing buildings cover, which are complementary to the home loans. And I think from our perspective, we see it as a central product for our clients and it really rounds off the full suite of retail products. So I'm not kind of underestimated the complexity. Our ambitions are fairly conservative in the space and moderate. And so we expect to start with pilots and kind of a low-end growth strategy in this space, but then the looking over time, we do expect it to be part of the central part of the offering.

Okay. Great. Thanks, Hylton. I'm hoping that sort of largely covers Michael's question as well from -- on the strategy with the bank.

Maybe one point add to it, Viljoen, because I can see it's slightly broader -- we do -- in addition to home loans, we do expect to start rolling out access facilities, unsecured facilities towards the end of this year as well to our client base. But the risk appetite will remain in line with the current -- in the bank and therefore, focused on the existing team, client base and segment and from a kind of risk perspective, a prudent approach. I think in terms of the kind of the lending itself, we are -- we're well funded. So we can support the advance of strategy within the bank. And in percentage terms, maybe we would expect it to outstrip client growth as we go forward in the short to medium term at least, given the kind of the base that we're coming from and the fact that the product suite will be significantly expanded.

Thanks, Hylton. Next question is from [indiscernible]. How does consumer duty impact your business in the U.K., Neville?

Yes. Thanks, [indiscernible], for the question. So we are fully compliant consumer duty came into effect on -- and was implemented in July. As you're probably aware, the full sort of key outcomes from the FCA being the products and services need to be appropriate. Price and value needs to be demonstrated at customer understanding through communications needs to be fit for purpose and being able to support customers when needed. On all 4 counts of that, we actually have done exceptionally well. And we -- in fact, our model has really been around customer and the customer centricity and value through the shared value model. So relative to our competitors, we think we've done exceptionally well and, in fact, welcome consumer duty. And it really is something that we embrace way before regulation. But we've ticked all the regulatory boxes as well.

Thank you, Neville. Just going through the refresher. [indiscernible] from WhiteOak Capital asks, you had mentioned that Discovery Life is a relatively young business, would you be able to disclose how the 10-plus and 20-year cohort is doing in terms of persistency and retention costs? I think, again, we'll touch on this and particularly the cohorting under IFRS 17 and the disclosures in much more detail going forward. Up to this point, we didn't necessarily show those kind of rundowns by COVID. But you will see some of that coming through under the new disclosure requirements of IFRS 17. Then the question from James as well on the CSM runoff, again, that will be addressed in the technical session. We'll definitely get to that. And then Stuart -- sorry, that's fine. I'm just trying to refresh it and see whether we've covered all the questions. Yes, here, we go [indiscernible] from [indiscernible]. What is the attraction for the U.K. consumer to buy the VitalityLife policy, specifically versus long-standing and well-known life company brands and products? And what percentage of policies are sold with Vitality rewards attached? Is this optional or compulsory when buying VitalityLife in the U.K.? Neville?

Yes. I mean, as you do point out, it is a very well-established market. But our cut through has very much been around the shared value model and which manifests in the -- optimize the product which gives quite a significant upfront entry point from a premium perspective that can be maintained if people actually manage their health. And that has resonated well within the marketplace in a very competitive market. Also other product features around our severe illness cover severity based has also resonated well in the market. In terms of Vitality, Vitality is embedded in every product, various forms of the Vitality plan -- of the Vitality program or dependent on the product safety, which you take out. So it is something where in the optimizer product, it is compulsory to have the Vitality program, because we need people to make the behavioral changes to maintain their rights, and that has resonated exceptionally well. So from a VitalityLife perspective, there's, I believe, still significant opportunity as there are still a lot of IFAs and intermediaries, who have not written for us. And this does bode well for the future as well as our direct distribution is increasing as a percentage of our total sales in the VitalityLife segment.

Yes. All right. We have a question from Matthew Hodgkinson, this is -- it says please walk us through the cash flow by segment and dividend cover. Happy to do that maybe outside the meeting. But the bigger question we apply -- if we apply your historic dividend cover guidance, we would have expected to see a dividend closer to ZAR 2. Are you modifying your dividend cover approach? Adrian, I don't know if you want to talk to that.

I mean maybe to make the point, we're not modifying the approach. In fact, the one-off [indiscernible] cover was mathematically derived, because the growth model assumed a certain percentage of our business that we established and actually we had a 2x cover. The emerging businesses we should not provide a dividend yet, and we should fund the new businesses out of earnings. If you do the mathematical work, you get a 4.5x cover, that's been the guidance, we try to stick to that. I think in the past, we have drifted down from 4.5 down to 3.5, et cetera. When we looked at it now, we're kind of trying to understand expectations and trying to get back to where we should have been at 4.5. And if that's just starting up, we felt 5 is probably appropriate. So I mean that's the range. We'll see how plays going forward. But we thought that's the right way to start conservative and not out of line with where we should be mathematically. So that's how we got to the ZAR 1.10.

I think anyone just going through the questions here. Francois Du Toit from Anchor asking what would your lapse and mortality variances have been at your long-term assumptions as opposed to the assumptions that have been strengthened for 2 years ahead? I'm not sure which part of the business we're actually referring to. Andy, do you want to kick off on that one?

Yes, I'm not sure that that's kind of a big topic for now. I mean you're asking us to I think Francois, if I'm not mistaken, so we go back and say what would the original variances have been under the old assumptions. And obviously, each year, we make basis changes. I don't think it's going to be possible to answer this on the call on. That's quite an in-depth thing that we need to look at when we engage as far [indiscernible].

On a separate engagement -- and then just from Sundhiren Govender from SBG. What have been the main contributors of the drop in new initiative spend? A large contributor there is, particularly the bank obviously coming out of the or through the J curve as it goes to scale. That was probably one of the main contributors for -- in the past where we were well above our long-term guidance of 10% of operating profit spend on new. That's probably the main contributor. But for all of those new initiatives, very much on a similar path. Adrian, you want to add?

Just deal mathematically take the bank, which is turning now quite strongly. So the bank is turning and the operating profit is growing at 20%. So it's just the mathematics of those turning plus the base growing gives you a quick reduction. So I think there's an [indiscernible] of all of those things. And that creates the drive down. I think it's easy to demonstrate that offline. But I mean I think it's kind of a combination of the turning, the culling and the growth of the underlying base gives you that mathematical effect that happens very quickly.

I'm just trying to see whether we cleared all the questions in -- because it is a bit slower to refresh, are those still to be [indiscernible] I think that first one we did touch on -- In your plan to focus on key initiatives and closing, what does not work where Discovery invest? So I'm not quite clear on that one. see.

Maybe interpret the question in the Discovery investments, what do we find not working. I don't know if [ Kenny's ] online. I would tend to say not much we have -- we have our Cogence DFM. That is something that's new that we're quite excited about the work being done. I'm not sure anyone, Hylton?

More broad than Discovery Invest, I think is just about key initiatives, closing of the initiatives.

No, I think there's a continual process of making sure we don't follow, I think it's sort of too long ahead and have a 2 [ DPJ ] curve. I think most of what we see is being done, give us time to just continue that focus. Also, I think you see the spend on new initiatives being at the turn or slightly below going forward. Maybe Deon, that's a supposed to end as we've covered all.

I think that covers all. clearly, if anything is not fully covered, happy to engage afterwards Back to you, Adrian.

Okay, Deon. Thanks for the questions. We are -- as you say, we'll engage on every issue in the various forums. I am just to stress at 12:00, we're starting this deeper dive into IFRS 17. I know there's long in details on our website in the financial reporting section. So check that out, that should be a very important session. I mean by saying thank you. We've got a lot of work to do. We know where we have to focus growth, new business margins and monetizing IP. I think be clear what we need to do. That's an important year ahead. Thank you very much. And again, thank you to our remarkable people. Very grateful collectively of our [indiscernible] Board for that. Deon, thank you. Thanks for the time. Hope it is worthwhile.