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

Good morning, and welcome to our results presentation. It's always a wonderful pleasure and an honor to present the Discovery results to you, and we appreciate your time. The presentation this morning is for the 6 months to the end of 31 December 2024, our interim results. And it's my pleasure, as always, to take you through them. I'm joined by our executive team, our CFO, Deon Viljoen, who's now in the room with me. And David Danilowitz later will facilitate questions into the results and into the presentation. So let me begin by firstly just saying it's been an absolutely wonderful period for Discovery in a complex market a lot of complexity and volatility. We're very proud and pleased with how the group has performed. And at the outset, that we thank our wonderful discovery people, our stakeholders, our members, our Board for the support for all that's been done in this period. It's an important period in and of itself, but we believe very important in terms of our ability to grow going forward. So let me begin by just stating the numbers at the highest level, you will have seen them, but strong and we think very consistent normalized operating profit up 27%. As you can see, headline earnings up 34%, similar to normalized headline earnings, and you'll see that through the presentation. New business down 12%, but the one-off effect of Sasolmed taking that into account, it's up 6%. And then a lot of the is noninsurance business that has grown by 14% to just the ZAR 3.2 billion. So at the highest level, those are the numbers and as you can see, they are robust. Before I get actually into the numbers, I wanted to make kind of points of observations and really 4 themes we think that are important in this results period. The first is growth. a lot has been done around restructuring the group around new initiatives, around focus and particularly in this period, focusing the group in 2 distinct composites, Discovery SA and Vitality Global. All of that is coalesced into a high-growth phase of the group. The second is a theme of consistency. You'll see that the businesses throughout in the composites and between the composites, the growth is of good quality and consistent. The third theme is one of resilience. In a world of considerable complexity and potential volatility, we've arranged the structure of Discovery in a very, very careful way to make sure that we are resilient. And finally and very importantly, I want to evidence the power of the Vitality shared value model. You will see that coming through as one of the key drivers of performance in the period, but more importantly, it points the way forward of a repeatable, scalable model that will help us globalize the group at a faster rate. So let me start by just dealing with the numbers at the highest level. You can see graphically operating profit, normalized operating profit growing by 27% to just over ZAR 7 billion. If you cast your eye over the tables, you can see that in Discovery South Africa, growth of 27%. Same as Vitality Global growth of 27%. Really robust performances from Discovery Health, Life and Invest in South Africa. Insure and Discovery Bank with exceptional performance. You can see how that played out. Discovery Bank has had a remarkably important 6 months, and you'll see that through the numbers. If you look globally, Vitality, Health and Life in the U.K., robust performances and some important issues strategically playing out that I'll take you through later. Vitality network, which is an area we believe we can globalize our IP strongly, had a robust performance. Ping An Health of considerable scale continues to grow strongly. And then some other important initiatives in the U.S. and with Amplify Health that I'll touch on later. That kind of gives a sense of how the group has performed. If you look at the new business, I made the point about Sasolmed, if you take that out, new business has grown by 6%. You can see the makeup of that in South Africa and in Vitality Global and noninsurance income growth of around 14%. There's been a strong focus on quality of new business. And so the growth could be stronger, it could be higher, but we focus very carefully, particularly in markets like insure on making sure that margin and quality is correct. So you'll see that in the presentation. Let me talk about growth. This is a complicated slide, but I did want to go back to it. It's a chart that we showed in the previous results and kind of illustrated the phases of growth of how the group is kind of playing out. We had a period of growth of kind of unfettered organic growth, followed by the last decade of a real focus on building new initiatives, notably -- most notably Discovery Bank and others to allow us to grow the shared value model to grow both in South Africa and globally. It's important that during that period of investment, you can see the spend on new initiatives dramatically increased. This chart really shows spending new initiatives, RA, all the different various KPIs. But you can see the various interplay in the middle of the chart as we focus on building new initiatives, we spent significantly more on investment over 15% of operating profit to build them out, driving up leverage, as you can see, and having an effect on operating profit at the top line. But of course, that's worthwhile, if you do that successfully, you end up with a group that has the ability to then grow without the constraints of requiring capital. And to an extent, that's the phase we're in now. We see the spend on new initiatives, expected spend in new initiatives, as you can see in that column called scaled organic growth coming down. We expect the FLR to come down within the band of 10% to 20%. And all of that has an effect, a compounding effect on operating growth. And we've made the point of the previous announcements, we should be growing at 15% to 20% -- what you see happening during this period is, in fact, better than that. We've grown by 27%, so slightly outside the growth corridor. And that's, of course, good. But all of the other factors are very much in line with the plan. Through the rest of the year, we are confident of the ability to continue to do that. We will retain the 27% growth, we'll see that. It's probably going to be lower than that, but above the plan. So we're feeling good about where the group is, all of the various KPIs are, intact, all of the dynamics that we predicted in the phase of growth of playing out. So we feel confident that these last 6 months is evidencing a very phase of the growth of Discovery. Let me make the point about kind of organic growth. The Discovery Group has been built organically using our Vitality shared value model. The effect of that, as we explained at the previous announcements, is that you kind of get this very difficult phase of investing in businesses that then break through and they get the super growth and you get this ultimately the plateau. I think the strength of Discovery Group of the group as it is now is we're kind of on the shoulder of that curve. In the case of South Africa, we've got the Discovery Bank that is really coming through strongly. And given its ability to really scale, has the ability to keep Discovery SA on the shoulder of that curve and growing. In the case of Vitality Global, it's actually at a low point in the curve. It's embryonic in many ways and grow strongly in many ways. And so we're sitting on the cusp of that shoulder with the ability to grow strongly and hence, the 15% to 20% growth. You can see that on the right-hand side of the chart, we expect SA to grow 12.5% to 17.5% and we expect Vitality globally to grow 20% to 30%. The combination of the 2 gives you this 15% to 20% corridor. At the Capital Markets Day just a few months ago, we kind of explained the global business, and we explained carefully the 2 composites, how they've been arranged I think the work done in the 6-month period of actually getting the global composite in one structure focused carefully has been exceptionally good and a clear understanding of what we need to do. We've laid out for you the various drivers and KPIs that will drive the growth, the bank, how we expect it to grow from a profit perspective. We said it should reach ZAR 3 billion of profitability by 2029. We've been clear on the rates of return in both Discovery Life and Vitality Life. So if you look across that chart, it gives you a sense of what makes up mathematically, the growth of 12.5% to 17% in South Africa and the growth of 20% to 30% globally. And so we've taken a very, very careful and precise approach to how we can grow and how the businesses should be arranged. I guess the question is we've outperformed in this period and the question, of course, is why. We thought this chart would be kind of useful. It brings all of it together. On the left-hand side of the screen really is the expected growth of the 15% to 20%. In South Africa, despite the fact the businesses are large, we do expect around 10% growth from them. We expect the bank, second column from the left to add 5% to the group growth because of it coming through and a strong profit growth. We expect the global business to grow stronger. That adds 3% to the growth. When you kind of add that up, you get the 15% to 20% growth expectation. On the right-hand side of chart is the reality of what happened. In fact, the existing businesses in South Africa, you will see that in the presentation, grew faster, growing by 21%. The bank has come through nicely, adding a further 6% better than we expected. And Vitality Global grew very much in line with expectation. And so you get this 27% growth outside of the target corridor growth. We're very pleased with that. We think the businesses have momentum. We hope they can grow at that pace throughout the year. We expect it coming off slightly, but still outside of the target corridor of growth. So that's kind of where we are and explains, hopefully, the growth phase that the group is in. The second theme, consistency, not much to say, but just to look across the chart at the various businesses, so breaking them down, getting rid of the composite structure, looking at them individually. The performance has been absolutely remarkable. You can see across the board, very strong growth. If you look at it graphically, very strong growth. The bank now has now really turned to profitability. You don't see that yet in the graph, but you'll see that in the 6 months coming up. And across the board, I think the strength of how the businesses are playing out and how the model is working has been remarkable. So consistent and strong growth across the group. Just to reconcile the normalized operating profit all the way down to normalized headline earnings per share, we think very simple, 27%. I made the point about headline earnings per share growing at 34%. You can see steps along the way as you deduct off finance charges, et cetera, you get to profit before tax. and after tax up 32% and then headline earnings and the various adjustments that give you that reconciliation. Deon can touch on that later if there are any questions to it, it's fairly straightforward. But I thought the point to raise here is that given where the group is we'd like this relationship to be fairly simple. We would like to see our normalized headline earnings growing at faster than normalized operating profit. There is gearing in the group, except for gearing going down, but that gearing should have a geared effect. And so you should see the bottom line growing faster than normalized operating profit. There will be some volatility. We're holding ForEx, we're holding assets, the shareholder income. So very volatile markets may come through and create some volatility going forward. But this is a nice pattern that we'd like to see, seeing a strong growth in normalized operating profits and the effect of the rest having a further uplift in terms of normalized headline earnings. On the back of that, we're declaring a dividend of ZAR 0.87 per share. It's simply the mathematical application of the growth rate, 34% increase in normalized headline earnings. We're applying that 34% to the previous interim dividend, giving us an ZAR 0.87 per share dividend. A few other points at the group level. The embedded value, I think, illustrates a very strong performance, pretty clean buildup, new business, unwind of the discount rate, strong noneconomic experience variances, the effect of non-covered businesses giving ZAR 119.4 billion. and then some other factors, dividends coming off finance charges coming off, et cetera, giving you the total embedded value of ZAR 119.62 billion. Bear in mind, the group now is more than 30%, around 30% of revenue is, in fact, not in the embedded value fully. And so just to make that point, we don't publish a group equity or group enterprise value, but you see that in the embedded value. And bear in mind, 30% of the group now is not calculated in the embedded value. Turning to capital and cash. We're very pleased where the group is. You can see the FLR is the financial leverage ratio declining nicely to around 18%. We are sticking to a very, very careful approach to debt, bringing it down to the right level. Our mathematics show that 15% is about the optimal level we should be in. We've been very clear about sticking to exactly the schedule we set out raising debt very carefully, making sure it's the right price of debt. We've, in fact, accelerated 2 debt issues slightly, one before the SA elections or around the SA elections and one before the U.S. election in both cases, just making sure that we kind of are not caught by any volatility. So it's been a very, very prudent managing of debt. You can see all of our entities are well capitalized. Liquidity at the center remains above kind of the buffer we set. There's a clear amount set there for the next -- for the debt maturing, the next debt installment maturing. So there's a careful focus on how we manage money at the center. And importantly, cash conversion in the group is very strong, consistent to the previous period around 75%. You'll see that coming through, and I'll take you through that now. The group in total generated ZAR 8.3 billion from our in-force businesses, taking all factors into account. There was a spend about ZAR 3.5 billion on new business. There was ZAR 800 million spent on tax in this period, leaving about ZAR 4 billion of operating cash flow, about a 75% cash conversion. On the right-hand side, we give you a detail of how that cash has been applied in terms of servicing investment in growth in the existing business and capital movements. So it's giving you a sense of the 75% cash conversion. So we are very pleased with, I think, how the capital plan has played out, how the cash generation has played out. I wanted to touch on the theme of resilience and make the obvious point make the obvious point of volatility. In a world of considerable complexity, you know that well. Virtually all of the things we kind of have seen develop over many decades are, in a sense, being questioned, different trade rules, tariffs, all kinds of geopolitical events. But across every dimension of risk, there's potential volatility. Economic, I think a few periods back we were pretty clear interest rates should come down, inflation should come down. It's not clear where that goes. There's considerable potential for geopolitical risk and potential arm conflict. There's massive social polarization. Overlaying this, climate is an issue and many of the climate steps being taken maybe roll back over time. At the same time, AI is coming through. There's just considerable coalescing of risks. Our response has been to just not take a view. We have to be pretty clear that we need to be robust. And therefore, we put in place a number of defined risk principles. I think we've articulated them before to you. But I think the primary philosophy around these risk principles has been not to be a trading company. We're not trading. We're operating. We're not taking any position on any economic or market position that is not our role. So we try best to make sure every liability is matched. Interest rates are hedged. currency is matched. There's appropriate liquidity buffers. Where we can, we try and mitigate lapse risk, and we make a very clear focus on making clear new initiatives are carefully monitored and capital requirements are carefully monitored. You can see in the middle of the chart that 80% of our debt is, in fact, hedged from an interest rate perspective. U.K. debt is somewhat floating. And over time, we may mitigate that we'll decide to do that. And then on the right-hand side, very importantly, kind of cash flow required cash on the center into the businesses is coming down dramatically. So you can see in previous periods, ZAR 4 billion to ZAR 4.5 billion in early -- in '19, '19, '19 coming down significantly. We don't need much cash in the businesses going forward. In fact, from 25 to ZAR 29 billion in the projection period, there is very little capital, in fact, required. The bank does not require much capital to grow. So we are in a position where things are hedged, not much capital is required, and therefore, the business is both resilience and optionality. When you take the structure of how the group is now arranged and structured in its composites in its various capital plans and how we've arranged all of the factors, when you stress out all of the potential economic stresses, the currency, equity stresses, inflation up and down, interest rates up and down, you can see when you look at the major issues, cash flow, liquidity, earnings, solvency are incredibly robust against these stresses. So if you look over the projection period from '25 to '29, the group is very, very resilient. Now we must be careful here, there's no hubris here. Things are volatile and stressed and all kinds of potential things can take place. But we worked hard to make sure that the group is in a very strong financial position. And when you flex the various things, you get a very, very stable outcome. And so there's been a very clear focus on resilience. The fourth theme at the group level, I wanted to stress is the power of the Vitality shared value model. We've shown these data points and statistics and correlations very, very often. Vitality should bring claims down as people engage. It should show lower lapsation as people engage in the program, we should get a cause of the effect. And you can see across the group, whether it's life health, motor insurance, savings, banking, we're getting incredible correlations. They're very, very strong. We're very pleased about that. You will see that in Vitality South Africa, for example, there's been unbelievable engagement in the program in engagement, we're getting higher levels of engagement, the percentage of members and the number of members of Bronze level has climbed up dramatically. We generated 52 million workouts in the last calendar year, so an 8% increase. Amazing the extent of incentives and rewards people use. Over the last calendar year, people use 1.1 million flights. They bought 28 million healthy baskets of food from Woolworths, from Checkers and our work with Checkers and Woolworths has been absolutely tremendous. In both cases, we're proud to be their partners. But you see that coming through and the extent of the engagement. So kind of -- if you look at how the program is playing out, it has been incredibly, incredibly successful. And you see the same in the U.K. We see the same with our partners. But the point is maybe a bigger one. It's not a point of kind of the micro engagement in Vitality. The shared value model has a tremendous role to play in a very, very complex set of industries. The one thing that we're in and we're proud to be in these industries is considerable scale, impact importance. And all of them are facing massive, massive, profound change. In the case of health insurance, health care is the biggest industry in the world. It is going through tremendous, tremendous change across the world, except for markets like sub-Saharan Africa, there's depopulation, -- there's aging populations, there's fiscal pressure. And therefore, there's all kinds of pressure on medical inflation and to keep things sustainable. That is a common thread throughout the world. So it makes health insurance both growing, but hugely complex in terms of being able to create affordability and access. In the case of life insurance, it's a mature business. It's hugely capital intensive. It has long payback periods. Risk and investment has been separated a long time ago, so there's been margin compression. There's increasing legislation around consumer duty, treating customers fairly. The fundamental forces on margin compression and the challenge is an acceptable return on capital in the long-tail business, not easy and not simple. In the case of long-term savings, a profound change around moving from defined benefit to defined contribution. All of the risk sits with the individual investor. The manifestation we're seeing now is in adequate retirement savings, all of the risk entirely both behavioral and asset returns sitting with the investor. In motor insurance, short-term insurance, property and casualty, supply chain disruptions, rising inflation, climate and weather being unpredictable and commoditization at the same time, again, margin pressure. And then finally, banking, the kind of the power of digital banking of AI has created a very, very different force of many skinny banks, separation of payment systems and the advent of the multibank clients. The ability to offer value, the ability to engage clients becomes critical. So when you look at this, you see kind of a very profound set of industries we're involved in. You see a very profound set of changes and challenges. But at the core of it, the Vitality shared value model, ignoring kind of the narrow engagement issues is a model that can differentiate, can create pricing power, gets better selection, better lapsation, better cause of effects and has the ability to offer each of these a considerable remedy to the challenges facing them. Throughout our presentation and throughout the results, all of these factors are playing out. And I hope I can kind of evidence to you the power of the model as it plays through in each of these different businesses. So let me now turn, if I can, to the actual 2 composites, Discovery in South Africa, Vitality Globally, we've made the point that growth coincidentally happened to be 27% in both cases. Both are now arrange complete on the Vitality shared value structure, both are focused in their markets and they know what they need to do, and we set out clear KPIs for them. If I deal with Discovery South Africa first, it's had an incredibly strong period. You'll see that playing through. Discovery Bank was quite remarkable, excellent performance, ahead of budget on virtually every single measure, ZAR 1 billion of capital ahead of budget and now breaking even and strongly profitable, we expect going forward. Discovery Health, a robust period, strong new business growth if you reverse out Sasolmed, strong performance of the Discovery Health Medical team remaining incredibly robust. Discovery Life, a strong performance, positive experience variances, excellent cash generation. Discovery Invest, just a robust performance, excellent work with BlackRock on Cogent and more to come. And then Discovery Insure had a blowout period, very, very strong margin creation, great steps taken towards building the margin and maintaining it. I'll take you through that as we go forward. Let me start with Discovery Bank. And kind of we wanted to make the point. The numbers, I think, speak for themselves. But I think the kind of the central question is it's been a start-up business in a very crowded, very competitive banking space, but it has made considerable strides. And the question is kind of why and how. And I mean, I think I put it to you that we built the business on a number of hypotheses, the shared value model, the digital frame, the ability to use the Discovery structure as a full-service bank, not a skinny bank. There are a number of very strong principles that we put in place. And all of them, we believe, have proven to be correct. But if you go outside in, if you look at the major trends facing the banking market, I think we're strong in all of them. So when it comes to use of AI of hyper-personalization, that is fundamentally what Discovery Bank can and is doing in its way. And the actual digital interface is easy, usable, personal and more will be launched this month to the market in terms of that ability. When you look at the use of rewards and incentives and ecosystems, we're incredibly well placed using our travel ecosystem within the whole Discovery Group, using our partners, Discovery Miles being an incredibly powerful currency, offers considerable capability. And then the ability to be digital, physical and safe from a cybersecurity perspective has been something we focused on, making a different. You'll see again work being done on these issues going forward and in this launch. So it's kind of manifested in a bank qualitatively and anecdotally that is incredibly strong and appealing. winning awards and maybe more importantly on the right-hand side at the bottom, when you look at kind of the surveys being rated #1 by customers or by consumers across many of the very, very important dimensions. And so the bank has exceeded expectation, ignoring kind of the financial numbers, but looking at the actual qualitative issues and how people are using the bank, and it's something we are very, very proud of. When you look at the numbers, the performance is kind of blow out there. The growth continues to be strong, 35% increase in accounts, 32% increase in number of clients. Deposit book continues to grow at 27%. The advances book now growing on the back of, I think, a very, very good issuing of credit, the home loan business getting -- the home loan product, getting very good traction. Revenue on the back of both is growing by 42%. And then you can see kind of the total profit coming down, the losses coming down towards breakeven in the second 6-month period. If you look at the arithmetic behind kind of how the profitability emerges, it's actually very, very simple. There's operating income, there's expenses and there's acquisition costs. And we showed you this set of relationships, I think, at a previous announcement. It's very simple. You see the operating income growing by 56% compound expenses because of the digital framework now fairly fixed growing more in line with inflation and acquisition costs now growing -- actually not growing, staying kind of flat as we go forward. The effect of that in the half year is ZAR 145 million loss, as you can see. But in January, you can see the breakthrough profitability. And cash actually precedes operating profits and that the profit emerging now will be in cash and the bank does not require much capital going forward. So the bank has broken to profitability. There's much more to come. We believe the ZAR 3 billion target that we set for 2029 is very much in line with what we think can be achieved. All of the aspects of the bank are playing out. There's no heroic assumptions about new products and new markets. It is what it is. It's growing linearly in the market we set out to do. It should achieve kind of a running return on equity that's acceptable in a few years' time. And so we're pleased with every aspect of the bank performance. Underlying it, the qualitative issues are clear. The growth is strong. As you can see, daily sales per day are now around 1,300 to 1,400. There's a shift towards more credit mix product that is very, very good. Amazingly, more than 65% of new business to the bank are not Discovery members. That's a powerful statistic when you think about the bank's ability to act as the composite maker. It means that the bank can attract many more clients to various other products of the group, and that bodes well. The engagement per client, if you look at payments and number of payments actually escalates quickly over the 12-month period. You can see that we made that point very clearly. So people get engaged in the bank very, very quickly. The home loan product we launched during the period, a roll out, I think, just before September, you can see the growth rate over ZAR 1 billion of home loans disbursed. And then the switching market, these are early days, we kind of capturing 9% to 10% of that market. So very good traction. And then the quality of clients remains very, very strong. You can see the credit loss ratio is dramatically lower than the rest of the market. When you look at Vitality Money correlations turning out better than we expected. So if you look at the NIR per client, Vitality Money, high-level Vitality Money or high status Vitality Money members are generating dramatically more revenue for the bank. On the extreme right-hand side, the credit loss ratio is dramatically lower and all other aspects, deposits, probably of default, all of the factors are very much correlated to their money status. So the bank, there's much more to be said about the bank, but the bank has performed remarkably well, a blowout period, profitable, continues to grow and escalating in that growth rate. When you turn to Discovery Health, robust performance, normalized operating profit up 8% I'd point out to you that new business affected by the Sasol once-off in the previous period. But if you take that out, strong growth in kind of the core new business of Discovery Health and Discovery Health Medical Scheme, particularly. Membership, total lives under administration, just under 4 million. non-scheme growth. So outside of the medical scheme, Flexicare, Gap Cover, a healthy company grow by 21%, becoming a very significant business inside Discovery Health. The Discovery Health Medical Scheme, credit to the trustees and the work done inside the Discovery Health Medical Scheme remains incredibly robust. It has 58% market share. You can see on the right-hand side -- on its right-hand side, you can see the size of its competitors. The stability of the Discovery Health Medical Scheme, despite all of the kind of the narrative and all the difficulties and no hubis, these are complicated issues remains incredibly robust. So if you look at kind of planned changes, people buying up and buying down, it remains below 2% buy ups and buydowns or thereabouts, amazingly stable. The Latare continues to remain stable and the solvency level is just incredibly strong. It's just under ZAR 30 billion. That's been a very, very strong area of focus of how that is used over time to help members post COVID, and that's an important issue. A fundamental issue of competitiveness is the rate increase, the cost per unit of benefit. This is in the case of the Discovery Health Medical scheme. You can see rate increases put through by the various competitors going into the calendar year 2025 have been high, kind of 9% to 12%. You can see that the Discovery Health Medical Scheme is the lowest amongst that universe of competitors. Importantly, on the right-hand side of the chart, you can see kind of the cumulative effect or the effect per year of those rate increases. We remain now about 12.7% cheaper per unit of benefit in the market. And that makes the options that the Discovery Health Medical Scheme offers very, very competitive. And that's a critical issue, not only of competitiveness, but of course, of our social purpose, making health care available to our members. So it's very well positioned. Having said that, there is an issue of affordability. And our strategy together with the Discovery Health Medical Scheme must be to make health care more affordable. The issue that's driving our cost is twofold. One is sustained aging of the scheme, and you see that in the membership. The second is increasing currency, the 2, of course, linked. It's a complicated slide, but we thought it's important to show it to you. You can see over the age group over the last number of years, if you look at 2008, 2021 and today, you can see, in fact, how the age distribution has shifted. Less younger people in the distribution, more older people. You can see that, that average age going from about 32 years to about 37.6. If you look at the chronic ratio of people with chronicity going from about 15% or 16% to about 32%. So much higher levels of chronicity across, in fact, the age. There are many reasons for that, but it all manifests in increasing costs. So the strategy we are using is twofold. One is we are focusing on making sure we attract young and healthy. It's the best way to make sure that old and sick have protection and that the risk pool remains whole. So a lot of work, of course, in vitality of offering that, but a lot of work around specific benefit options. We launched this very powerful Active smart option. It comes in at a price point of 1,350. That's an excellent price point for a pretty comprehensive plan per month. We're seeing considerable traction from that, that has the ability to pull a considerable number of clients of the right risk profile into the Discovery Health Medical scheme. That's one piece of the strategy. On the other side in chronicity, the work done on hyper-personalization on the Vitality AI model has been a fundamental issue. We've spoken about this at previous results announcements, but for the first time, it's been launched. There was a kind of a pilot test for a number of months at the end of the year. This is now rolling out to the Discovery Health Medical Scheme base. It's been a remarkably powerful process of personal health pathways. On the left-hand side is a complicated process of data, AI risk assessment. But all of it comes down to the simple idea of taking kind of the vitality mindset of incentivizing healthy things, but in fact, getting people to do exactly the right thing based on their risk profile. And that is kind of what the Discovery Health Medical Scheme is now offering through these personalized -- personal health pathways. What you see on the screen in the middle are the actions. These are my personal actions that came up on the face of my mobile through the app. These are the things that the data shows that I should be doing it prescribes specific amount of physical activity. It suggests a prostate screening, which is, of course, not a pleasant revelation here publicly, but that's what it says. And it prescribes a mental well-being check. These are things that the data shows I should be doing. And then critically, I hope you can read it in the middle of the screen, it actually tells you the kind of incentives and rewards I'll get for doing it. So making these cards valuable incentivizes people to do these things. So it really is the hyper-personalization of the data, juxtaposing a complicated stack of data and AI, but at the member level, a simple set of things to do on the face of the mobile. It's rolling out now. We've launched it publicly for the first time this week. You can see on the right-hand side, there's just over 2 million lives eligible. We've already seen 350,000 net test actions since January since it came out. The potential for this is remarkable. We know from the data that if we can get to the sickest 25% of the diabetic pool or the hypertensive pool, the ability to save 50% to 60% of the cost is real. So this really has a potential to make the members of the Discovery Health Medical Scheme healthier while at the same time, bringing down the costs. And that is a focus of Discovery Health and the Discovery Health Medical Scheme. So we're optimistic. A lot of work to be done to make people healthy and to bring those costs under control. In this context, I must make some comments about the health care system, about the NHI debate and about private health care and its potential. Our fundamental position has been that NHI is not workable with our private sector collaboration. That remains the case. There simply is not the fiscal space to do that. And you have a private health care system that is incredibly robust with the ability to be a complementary piece to NHI. Hopefully, direction, that's where we will go. But a few comments in that regard. Firstly, just to make the point, of the scale of the asset we have in our private health care system. It's large, as you can see on the left-hand side, 42,000 hospital beds, 47,000 nurses, 7,000 specialists. This is a big system. It's funded by medical schemes that are structured on the egalitarian basis, open enrollment, community rated. So the ability to actually -- there's no risk selection. It's an egalitarian structure. And then amazing, a lot is made out and correctly so of the skewness of spend. 15% to 20% of South Africans are covered by medical schemes. But in fact, if you look, 42% of South African households in some way make use of the private health care system. So this is a massive system. It's an important system. And if you look at the data on the right-hand side and you look at specific kind of procedures across the world, you'll find that it's reasonably priced. The cost of cover is quite a bit lower on a purchasing power parity. So access to the system is lower than in many countries. So this is an asset that we should never underwrite, we should be proud of, we should build and has the potential to be a real piece of an important emerging health care system. But at the same time, we must acknowledge rates of inflation that are very high. And often, this kind of paradox is put to us, what is driving up medical inflation? And is that sustainable? Are there alternatives? How do we deal with it? This is our core social responsibility as an industry to make this accessible. But it's important to understand what's driving it to find out what the remedies may be. And it's interesting this, and I wanted to put it to you, and I think this is a chart that we show you this certainly came out of our Discovery Health, Discovery of Medical scheme launch around the rate increase into 2025. On the left-hand side of the chart, it kind of shows the components of medical inflation of the rate increase. In the blue chart, we're seeing our 10% to 11% inflation. What it shows is the components of the tariffs going up, number one, as you can see in the first column, labeled #1, around 45%, very much in line with inflation. We then get supply side utilization. Supply side drivers are technology, primarily new drugs, new oncology treatment, et cetera. And then you get this very complicated demand side utilization, the aging of the scheme, increasing chronicity, the effect of adverse selection. That adds a full 4% to 5% to the inflation rate. It's quite remarkable. You can see in the green, the effect of risk management vitality pulling it down somewhat by 2%, giving you that 10%. So what you end up with is kind of 3 drivers of inflation, tariffs, technology and demographic aspects of kind of adverse selection. That is what makes up medical inflation. Often, people think that just containing tariffs and those kind of things will work. The reality is tariffs are not the problem. Tariffs are growing very much in line with CPI. The second point is technology, where we are paying for more and more new drugs. We think that's a good thing. We think we need to keep the health care system in balance. And finally, you have the cost of kind of galiteran system or open enrollment community rating, where you get people moving in and out, they delay moving in while they're healthy, move in when they're sick and they move benefit options, et cetera, and you get this kind of increasing aging and chronicity. When you play it out, cumulatively, you see the effect of this. And this is kind of an analysis done from our data over the last 10 years. If you kind of indexed the price at 100 units in 2024 and you look at the various factors, what you will find is that tariffs in yellow are, in fact, almost in line with CPI. In fact, in the case of the Discovery Health Medical Scheme, they're slightly below CPI increase. The expense of technology adds a further 2%, so CPI plus 2%, but it's the effect of adverse selection of demographic factors that adds a further 4%, CPI plus 6%. And that really is the issue. These are choices we've made as a society to an extent. I think we do choose that technology should be at the cutting edge. We think that's a good thing. We're choosing the egalitarian system. That is also a good thing, socially, but it's expensive. And so we need to understand the kind of choices we make as a society to make medical inflation affordable. If we can keep medical inflation between CPI plus 2% to CPI plus 3%, that would be a good thing. That's hard to do. I think we've over-indexed on too much adverse selection. And you see that inside the Discovery Health Medical Scheme, an aging population, increasing chronicity. So steps in reform over time need to be thought about to make sure that those things are taken into account. But you can see from the components, this is a system well understood, sustainable. The choices we can and will make over time. And it comes back to the NHI debate. The private sector is a massive asset, well funded, well structured. There are many aspects of reform. It can be more efficient. There are many ideas of how they can be done, and we need to do that. But at the same time, it's an important adjunct to NHI. We stay with the view that to make NHI workable requires private sector collaboration. There's been a lot of dialogue, a lot of discussion, a lot of proposals floating around. We remain of the view that NHI is going to take a long time to implement, and we remain of the view that inevitably, the private sector will play an important role in that process. A fundamental issue, we believe, is the spend on private health care is likely to climb significantly going forward. And Discovery Health and the Discovery Health Medical Scheme, we believe, is well positioned in that regard. Let me end off on that and turn to Discovery Life. Performance has been really, really strong. Normalized operating profit up 15% Group Life having an exceptionally strong period, Individual Life up 12%. New business of Individual Life kind of flat, new business down 4%. Group Life was lower in the period. You can see on the right-hand side of the chart, market share staying very, very strong, around 27% and maintaining that market share. The performance has been really strong on the core issues, positive experience variances, both noneconomic and economic, giving a total positive experience variances of just under ZAR 470 million. I wanted to point out here kind of the interplay between policy alterations, which is kind of a negative, and that's something we're addressing and working hard on over the last number of periods. But on the other side, the exceptionally strong mortality and morbidity experience. And it comes back to the kind of power of that shared value model. South African life insurance has the structure often of starting lower premiums and escalated predetermined rates. And that escalation over time creates policy alterations in the long term, and you see that effect of it. The counter effect of that is the shared value of giving people the ability to engage, making them healthy and getting them right kind of selection, leading to mortality and morbility profits and lapsation profits. You see that playing strongly, this kind of interplay between the 2 and making the point again of the power of that engagement model that makes the system more efficient. If you look on the right-hand side of the chart, the mortality experience has been very, very strong. It's interesting, by status, we expect the line that comes down, we expect in the calculations for mortality to be lower as people engage, and that's, in fact, what happens. In the kind of shaded graph, you can see what happened in the previous 5 years. But in the solid lines, you can see what's happened in the last 6 months. And the performance of the experience has been dramatically better than in the last 5 years and a lot better than expectation. So this is a 6-month period, it can be volatile, but directionally, it would seem the causality and the selection of it working very strongly. Steady value of new business around 5%, climbing to about 5.4% at the individual life level. I wanted to point out the internal rate of return on the investment in new business, just under 20%. We think that's very, very acceptable. All of these factors coming together to create a strong growth in EV of about 14% when you exclude economic updates and just under 21% annualized return on EV when you bring it all together, just over ZAR 50 billion. You can see that playing out. Very clean buildup of the EV new business unwind positive experience variances, giving you that kind of EV earnings and the growth in the embedded value. Another important aspect of the Discovery Life performance, strong cash flow generation. You can see on the left-hand side of the chart of ZAR 11.5 billion of income, about 60% cash conversion of the earnings, about 60% cash conversion coming through of ZAR 1.5 billion. You can see the uses of that. If you look on the right-hand side of the chart, shows you the cash flow generation over time, negative during COVID, as you'd expect, but then strongly growing. over the period, the ZAR 1.5 billion during this period. Discovery Life used that to reduce some financing and declare dividend to the center of the group in the period. For completeness, we've kind of illustrated here, and I'm sure you will talk to our team in much more detail on the buildup of the stored value of the CSM, the risk adjustment and OCI. You can see it playing out here the total stored value growing by about 17%. You can see the OCI Discovery as part of that philosophy of not having fluctuations play through in our P&L. You can see economic fluctuations being -- coming through in the OCI with a reduction in long-term interest rates. The OCI of a negative nearly ZAR 4 billion has flipped around quite substantially. So about ZAR 3 billion flip in the OCI. You can see -- you'll see the policy alterations coming through in the buildup of the CSM, but you see it counted somewhat in the earnings on the other side, on the P&L side from the mortality experience. So hopefully, that gives you components of the CSM. And again, that's something I think, to deal in detail with our team. Let me make some more comments on Discovery Invest be very quick on this, excellent robust performance, normalized operating profit, up 46%. asset growth, a strong 15% up to just under ZAR 170 billion, excellent work done in our products, Cogent, BlackRock and more work has been done in that regard. There are a few one-offs in the operating profit, a very stringent focus on our guaranteed capital bonds in terms of how we manage the matching created a few one-off areas of profitability. In addition, we elected a slight -- a different coverage unit runoff in terms of IFRS 17 that had a once-off effect, and that brings it up 46%. But taking that out, earnings grew by 19%. So a very robust performance. I made the point that Discovery Insure had an excellent period. You can see that on the left-hand side, profit growing dramatically off a base of close to 0 to just under -- just over ZAR 370 million in the period. There's been a very strict focus on quality of the business. So we've been careful about new business and new business growth slightly down of 1%. We hope that will come back. We are focusing very much on margin and on quality, but really focusing on making sure the model works, making sure the margin is properly developed. If you look at how the Vitality Drive program has played out, it's been tremendous. We're getting better quality new business coming through. All of the correlations are strong. So the ability to actually focus on pricing the book properly, targeting the premium increases at the right lives, retaining the right lives has been completely correlated. Amazing stuff, you can see on the extreme right-hand side, the loss ratio is very down sloping by status. And even it's interesting when people have accidents, the highest status, the better drivers have lower severity accidents. So it is an interesting set of kind of correlations and causal effects of how we're measuring the model. Understand the competitive advantage. Often when you don't have a claim, you don't understand the underlying risk factors of the insured life, whereas when you have Vitality drive, we are seeing how people are behaving. So claim or not, we kind of have a huge amount of data on how to price, on how to kind of interact with that client. Here is a reconciliation of the buildup of the margin. There's been a number of precise events and initiatives to build the margin from close to 0 to about 10%, as you can see, it's a number of initiatives, all of them on the use of Vitality Drive. In addition, there's a 2.5% in a sense, unexpected weather improvement. That's a very volatile issue. One of the features of the emerging insurance market is considerable weather volatility and the inability to lay that off into the reinsurance market. So it introduces somewhat of volatility, which we manage very, very carefully. I wanted to make one point on the data. It's kind of unrelated to performance. I guess it's in the performance, but just a point you made that is interesting coming out of the data, and we think very important. If you look at actual theft, it's come down significantly. So if you look at motor theft on the top row and you look at house and content theft on the bottom row, it's interesting, you track it back 10 years, the rate of theft is dramatically lower. Now is this an indication of the entire employed market? It probably is. If you vary it by some assured in the middle column or you vary it by geography, the patterns tend to be the same. So we're seeing a dramatic reduction in theft over the last number of years. long may that continue. But those are good signs and good statistics we should try and understand deeper into in terms of what that means socially as we go forward. So let me end the Discovery South Africa piece. I hope it's clear, a very robust set of results, the bank really pushing ahead strongly, insure pushing it strongly, but all of it kind of pivoting on the Vitality shared value model. Let me now turn to Vitality Global. The performance has been robust in the U.K., both Health and Life are focused on specific issues, health, the pressures coming out of the NHS in terms of people claiming more on their PMI products and in life, making sure we get the right rates of return on capital invested, and that's been a specific focus that has come through very strongly. In the case of Vitality Network, a focus on growth and a focus on margin. Ping An Health is now a business of considerable scale. The performance has been excellent in every regard across every dimension. And then in Vitality Health International, we've taken a careful step into the U.S. market. We signaled that, I think during the Capital Markets discussion, if I recall, but just we made a small acquisition of Wellspark inside Emblem Health Plan that we're going to work with in terms of Vitality AI. We continue to push on Amplify Health, and I'll touch on very, very briefly. But let me just restate the point. It's been a very, very important 6 months. We've restructured the entire global business into one single global composite. The rationale was making a single Vitality chassis, a single brand, a single set of partners, centers of excellence and this idea of Vitality AI, we're investing centrally in the right way that plays out throughout all of the markets. The conviction of that has come through from just the data coming out. You will have seen this in different forms, and I want to restate our conviction. The data shows causality when people engage in better lifestyle choices, physical activity, et cetera. Mortality goes down, lives get longer and better health care costs come down regardless of age. We've seen the elasticity of it that when people make changes regardless of age, often in the older age, chronicity, the changes have a massive effect on health span and lifespan. And now we're learning from the science, the visit of the science of habit formation that this stuff is habitual, how you kind of habit ladder certain behaviors to make sure people form a habit around those behaviors. When we can get that, people are better, they do it for longer, those habits are durable. And we can value that in the valuation of liabilities and in the valuation of incentives and rewards. On the back of that, we've invested heavily in this idea of Vitality AI, using all of the data, dynamic risk assessments, using AI and machine learning to recommend what people should do, incentivizing engagement, using, again, AI to communicate to people in the right way and then pricing risk in a dynamic way. We've centered down on exactly what those value drivers are. So this has moved from being kind of a conceptual idea to one that actually -- we understand how to value, the effect on new business selection, behavior change through causality, selective lapsation and the ability to upsell. And all of these value drivers coming down to enhanced value of new business and/or enhanced internal rate of return on capital invested. So we're building the model across this entire composite around the science. There's a considerable investment in it, and we'll be rolling it out very, very carefully. The first piece as you saw is in South Africa, the Discovery Health Medical Scheme. The second will be in the U.K. of our business there, but now working and talking to our partners about how this plays out. And that plays through in everything we do. In the case of the U.K., I wanted to make the point about the scale, the scale of the business. You can see we now cover on the extreme right-hand side, 1.9 million lives. The number of lives covered in total grew by 7% period-on-period. Normalized profit growing by 12% and the business is growing really, really strongly and robustly. But in fact, in the 2 pieces of it, Vitality Health and Vitality Life, the performance has been really, really good. And to an extent, really has dealt with a specific issue in that business. The Vitality Health challenge has been the -- both a challenge and an opportunity has been in the NHS difficulties. I won't repeat them here, but they're well known around the complexity of aging, chronicity, resources, et cetera. The effect of it is that people are claiming more on their private medical insurance. And that's a good thing. It means that there's more demand for it in the long term, but it's created a considerable pressure for the entire industry where we've seen claim levels go up. And so the focus has been on repricing the book, on repricing new business. And you see the interplay in these results, operating profit coming up by 15%. So we're now regaining the margin to an extent that's been lost. You can see new business has suffered somewhat as we've priced up the new business category. But generally, premium income growing by 16% in pounds and lives covered climbing to over GBP 1 million. So the business has been robust. Across all of it, the kind of results have been strong. This shows you the challenge we face. You can see on the left-hand side of the chart, if you look at claim levels, they're highly seasonal from summer to winter. But if you look at 2022 in the blue all the way through to 2024, you can see how that jump in claims cost has come through, a 13% inflation rate in the U.K. in claims in just a 1-year period. You can see where it's coming from mainly outpatient, Vitality -- sorry, virtual consultations, talking therapies, but cardiac oncology growing by 15%, 20%. It's not sustainable without significantly repricing the book. What we did do in the middle chart is while you see that loss ratio going up, we repriced the book significantly to get back the margin. And I think very importantly, second from the right, the actual lapse rates have been held very, very firm. So using the Vitality model and the people that are engaged across the board has given us the ability to properly price appropriately and at the same time, making sure people are engaged and they don't lapse out of their policies. The effect has been to somewhat regain the margin that we've lost and you see that coming through in the profitability. And I think when you think about it going forward, we felt this graph on the right-hand side illustrates the point. On the extreme right-hand side is the profitability for the half year. But if you look at the previous full financial year, we had profit in the first half. That's the growth year-on-year that I just explained. But in fact, in the second half, quite a substantial loss based on an increase in claims. Having regained that margin and having regained that pricing power, we expect our second half again to be hopefully a lot stronger than it was, and therefore, the growth for the year should be very strong. So Vitality Health, we think, is well positioned. In the case of Vitality Life, strong focus on internal rate of return on new business. This is a capital-intensive business. The business continues to invest in new business and grow strongly. And if you get a good return on capital, the potential for profit and value going forward is substantial. Life insurance is a long-tail business, but it is one business where you can deploy huge amounts of capital. If at the right level, you create considerable value. So what you see there, new business has grown very strongly by 19% in pounds. The profit is up 8%. The kind of the release of the CSM mathematically does create that level of profit release over time, but all areas of performance in the group have been strong, strong positive experience variances through the group. The key issue has been a focus on making sure that capital invested is at the right rate. It's an interesting complex market. The U.K. life insurance market is big. It's the third biggest -- I think it's the third biggest in the world. It's increasingly commoditized. So advisers are using portals, as you can see on the left-hand side, to actually shop and make sure that prices are appropriate and you get this very, very price elastic market. The issue here, and this has been -- it's taken us time to get this right, but to use the shared value model to be able to arbitrage that in the right way to offer value to customers where we're competitive on entry. But thereafter, what you see is the shared value model prices premiums based on engagement. So what it lets us do is a very narrow corridor of competitiveness exists now in this commoditized market. We come in at the right level, often at a discount to the market. And thereafter, as people take the product and they engage, they in a sense through the engagement determine the level of premiums. It's equitable, it's actuarially sound, but it creates a fantastic ability to be both price competitive and get better return on capital. Fully 30% -- sorry, we give fully 60% of our cases are now kind of at the cheapest level, the most competitive level, but actuarially, the return on capital is very strong. The effect of it on growth and on value has been absolutely staggering. On the left-hand side, we made the point new business grew by 19%. But in fact, if you take out the inflation automatic inflation increases that accounted as new business on the existing block and you look at pure new business, it grew by 39%, illustrating the success of the strategy. Market share has grown to 12%. And then importantly, the new business value month by month, you can see second from the right, has grown strongly. So new business from a loss in the previous period value of new business has now strongly improved to GBP 24 million or thereabout. And the VONB has gone from negative to positive. So making an excellent return of risk-free plus 6% on the business. Again, for more detail, we're illustrating how the buildup of the CSM. I think in the previous announcement, we show how we expect the store value to decline. You can see it hasn't done that. It's increased by 3%, illustrates all the various issues of the CSM. Again, I would urge you to engage our team on this and questions, of course, can come through as we go through the presentation. Let me just end the U.K. by making the point. I often kind of feel it's difficult to kind of in a set of numbers, explain the quality of Vitality U.K. In the market, it's making a tremendous, tremendous impact. It's transforming, we believe, markets in the U.K. It is an incredibly fun, exciting new generation business. The service is exceptional. It continues to win awards. It is now kind of coming out with an incredibly powerful Vitality offering with the best partners, the best ambassadors. It's a remarkable business in every way. And for the first time, we are now advertising this idea that with Vitality, we're helping you live 5 years longer. Now in a market as complex as the U.K. and it's very careful about consumer messages, we've had to back that up with a huge amount of data and science and clarity on why that's true. But for the first time, we are kind of making it clear. When you cover by us, you live longer, and that's important. So we're doing a lot of work that you don't see in the numbers that make that business quite unique and give an ability to really scale. Let me turn to Vitality Network and an area where we believe we can grow our IP significantly. It's in a state of focus around how it expands. We have exceptional partners. You can see normalized profit growing by 20%. We hope -- we expect revenue to grow by 15%. That is the target. In the period, it grew by 8%. There were some distortions around fixed revenue and performance-based revenue that did grow in line, but the margin has grown nicely as we expected. And we're focusing on 3 strategies. We made this point at the Capital Markets Day, growing with our partners, growing to other markets, importantly, unlocking the gearing inherent in the model where we can keep expenses down and grow the top line. And then finally, evolving products, making the point again that Vitality AI is now rolling out. It's very interesting, just want to show a bit of the data. Sumitomo Life, which is our biggest partner, has given us clearance to just show more of the data they've seen coming out of the Sumitomo Life Vitality program. It's quite remarkable. You can see on the bottom. I'm making a comparison here between our U.K. Vitality Life and Discovery Life in South Africa. Their rollout has been absolutely exceptional. You can see the correlations and causal effect, their mortality levels of higher engagement is dramatically lower as our lapsation. And you can see on the right-hand side, member engagement has been tremendous. If you go back to 2019, with the bulk of members on the blue level, you can see how that has changed over time. So an incredible rollout giving us confidence about how the model can work and how it can be played out to many of our different partners. Let me turn to Ping An Health, absolutely robust performance. Operating profit up 62% period-on-period. You can see the buildup of the profit is important to understand. incredible investment returns in that space. Operating profit slightly down. We believe that's a timing difference. It should ameliorate by the year-end. You'll see now the underlying dynamics of the business have been tremendous. At the Discovery level, the effect of tax and the effect of previous release of tax in the previous period, operating profit grew by 27%, 23% in rand terms. You can see the scale of the business, up 11% in lives to over ZAR 29 million. So it's a business of considerable scale. Persistency levels continue to climb. The combined ratio continues to go down. The balance sheet of the business is very, very strong, as you can see on the right-hand side, net asset value of over RMB 10 billion, cash generative and therefore, paying dividends to its shareholders, which is excellent. It exists in a market that we remain confident of its ability to grow. The Chinese economy is going through a difficult time. There are a number of factors that you know about. So there's a macro -- there's a number of headwinds from a macroeconomic perspective. But in the micro sector, in the sectoral view, it would appear kind of directional that private health insurance is going to grow. It's an aging population. You can see on the chart above, if you actually study it, it's aging quickly. And with increasing aging comes increasing chronicity quickly. So you can see rising diabetes, et cetera, et cetera. The spend on health care is growing at 4%. It should grow faster, but there's a lot of things that should drive it. There's expectation of continual or increasing tax incentives. for private health insurance is pressure on social health insurance systems. So the pressure should increase on people buying private health insurance. It seems pretty clear in terms of how the analysis plays out. In addition, we would argue, despite the operating performance, Ping An Health is well positioned amongst the universe of competitors. There's a group of competitors coming out that are specialist health insurers. We've listed them and give you some detail of them in the chart. It's interesting, Ping An Health is the second biggest in market share against PICC, which is state-owned, but by a long shot, the highest profit margin. So very well placed in terms of its competitive positioning. If you look at the relative performance, it's growing a lot quicker than others, number one. Number two, it is growing its market share. And on the right-hand side, you can see how the profitability growth is completely different, dramatically more profitable, better quality business. So we think we're positioned well in terms of Ping An Health. We expect continued growth. Will that investment returns continue? Probably not. That will move from time to time, but the operating performance, we are confident about its ability to perform. Let me just make 2 comments on smaller initiatives, ones that we believe have potential. Amplify Health, which we launched 3 years ago, JV with AIA. This has taken us time and it will take time to get going. It really is a health tech business that really is at the core of AIA's health offering. It's taken all of our IP. It's swelling up Vitality AI as well at the same time. It's taking us time to get that traction. The period under review has been an important one. The products are now embedded in various markets. The kind of value sharing and fee structures have been agreed with the various markets, a lot to be done in that regard. I need to point out, and I keep relearning, we keep relearning the same thing. Our business takes a long time to build organically. All of our businesses take 3 to 5 years to get some scale. So you must give us patience on this. We remain confident about its ability to understand the scale of AIA, understand the scale of its health ambitions and understand the scale of the region together with the macroeconomic effects, make it something we are proud to be in. And then Vitality U.S., I'd like to end off on. We've had a footprint in the U.S. servicing John Hancock. It's been very successful. We've had a Vitality corporate business. With the advent of Vitality AI, we've taken the step into offering it much more aggressively to health plans. We made an acquisition, a small acquisition of Wellspark. We're working with Emblem Health in New York with the City of New York to kind of really get the model to work well and offer that to other health plans. That process has started. Not very capital intensive, but one that we think has considerable potential for the Vitality AI ability to offer from wellness all the way through to care coordination, disease management. That is kind of the ability to hyperpersonalize. So a lot of work being done in that regard. So let me end, probably spot on time and just make the point. Our 2 composites are well positioned. They're well positioned for growth. We've been clear about what actually drives that growth going forward. we wanted to evidence today just 4 themes: growth coming through the 27% growth. We're driving through the various vectors of growth that you've seen, consistency of performance across all of our businesses that have driven to a consistent set of performance of the composites, resilience in terms of capital structure, cash generation and finally, very importantly, the shared value model that we think has not only the ability to perform well, but drive us globally into a very, very different space. Prospects, we think are very, very strong. We are confident about the business model. As I've said, we have a clear growth target and corridor and evidence that clearly we can grow into that target. And then importantly, we can do so with decreasing leverage, increasing cash and no requirement of capital going forward, gives us ability to grow and gives us optionality as various opportunities emerge. So very pleased with the 6 months and hopefully, it evidences growth and potential going forward. Let me end at that point and hand over to David Danilowitz, Head of Investor Relations, who will who will take the questions, David, and guide them to various executives in our group as we go forward. Thank you, and let me hand to David.

Adrian, thank you very much. We are going to move to the Q&A session now. Just as a reminder to participants, if you could post questions online, there's also a dial-in for that are not wanting to post questions. We have the opening question, I am going to post to Rob Attwell. A question comes from Michael from UBS. Rob, the question is, please provide some color on the Geotab JV that was launched last week. Can this be a meaningful contributor? And how does Discovery generate revenue from this JV?

Thanks, Dave. Yes, the Vitality Geotab joint venture was announced in the U.S. last week with a particular focus on Vitality Drive. Geotab really is a global leader in fleet telematics, particularly just to give you a sense of the scale, they have really more than 4.2 million vehicles within their fleet. And the idea is that we would unlock Vitality Drive for these fleet drivers. So essentially rewarding them for driving well with a real intention to see the same actuarial dynamics play out that we do see in South Africa in terms of a reduction in frequency and severity of claims. How we would commercialize this is to really charge the fleet a dollar-based amount per month for drivers to be part of the program. It's still very, very early days, but we are cautiously optimistic that this is potentially a great dollar-based revenue driver and then, of course, not exposed to the typical volatility that we do see with, with insurance revenue.

Excellent. Thank you very much, Rob. I'll move over to the next question from Daniel from Ashburton Investments. What is free cash conversion -- apologies, this is a question for Riaan in Discovery Life. The question is, what is free cash conversion net of financing for Discovery Life in South Africa?

Thanks for the question. So I think on the graph, we show the components of the cash flow in Discovery Life and Invest. And we show that there was over the period, the ZAR 981 million net repayment of financing. I think it's important to note that included in that number is a significant discretionary reduction in the financing. We've taken the view that in this period, that's a good short-term store of value, even though it's discretionary and available, that money earns a good rate of return by reducing the financing balances. So it's not necessarily that the entire amount is constrained by any liquidity or capital constraints. In fact, you'll see earlier in the presentation, the Discovery Life capital and liquidity levels are significantly above targets. So allowing for all of that, just mechanically playing that through, taking the full new business strain as well as the discretionary reduction in financing into account, you still end up with a greater than 20% cash conversion in this period.

Thank you, Riaan. The next question from Michael Christelis. I'll pass this over to Johnny Broomberg. This is Michael from UBS. Can you provide any detail on the revenue and costs within Amplify Health. When is this business expected to generate a meaningful profit for Discovery?

Thanks, David. Thanks, Michael. In line with our agreement with our partner, AIA, we do not disclose significant detail on revenue and costs, Michael. So let me make some general comments. As Adrian said, this business is taking time to build and to emerge. It's just on its third birthday as we speak. The revenue has been slower to emerge. The revenue has been slower to emerge than we anticipated at the beginning. But as Adrian mentioned, is now emerging very nicely. A number of deployments have been made in key AIA markets. This integrated solution has been developed, which brings with it significant subscription as well as performance-related revenue. So we are optimistic that there is now real traction on the revenue side. The start-up costs have been high. This is inevitable with the tech start-up needing teams to modify and build the technology. Those are also now being managed quite well and coming down relative to revenue. So we are optimistic about this business. We expect it to break even in the next couple of years and to see profits emerge thereafter.

Thanks, Johnny. The next question comes from Baron from JPMorgan. I will pass this question over to Justin Skinner in the U.K. Justin. The question is, please unpack the recovery in the U.K. margin? And is this sustainable?

Okay. So thanks so much for the question, Baron. In terms of it is sustainable, yes. There's basically 3 elements, of course, the change in VNB. so first of all, a big focus around pricing and making sure we're getting the right business that we want in terms of mix of business and quality of business. Number two, a very strong focus on expense management. So there's been a lot of investment in systems and process and it means we can actually run our systems at much lower cost saves than we did in previous leading supported by sense people in the market actually talking now to the U.K. market. So there's less competition, which means when we pick up more volumes mix show 3 things means that VNB has improved, as mentioned, and is sustainable as well.

Great. Thanks, Justin. The next question comes from [ Marius Stratum from Arsen Lawrence ]. First of all, congratulations with a strong set of results. Thanks, Marius to the team. Marius, through his organization LG consider CSM growth as a key of structural growth potential? This question is positioned for Riaan. Your SL Life business under delivered on its superior CSM growth potential in the first half of this year and in last year due to negative CSM basis changes and other. How comfortable are you that the superior growth will become more apparent over upcoming periods.

Thanks, Marius. Yes, we agree with CSM and the components into CSM is a indicator of value. I think it's important to note for just a dynamic given the OCI election, you have to allow for or consider movements in the CSM together with movements in the OCI as we have demonstrated on the graph in the presentation. So taking those together, you get a very similar outcome compared to what you see in the embedded value variances, but kind of focusing primarily on the negative policy alterations experience that we've seen in this period. We're quite confident that we've got an action plan in place that will get rolled out over time for that variance to reduce. So I think it will take a little bit of time for all these actions to play out, reducing the net economic impact. And then I think the last point to note is that, again, pointing back to the embedded value variances and the link between the 2. You can see a lot of offsetting other variances that really come through as cash flow in the period in the earnings line, giving you this total positive growth in value over the period. So the CSM is certainly 1 component and an important component, but not the only component to consider. And the overall experience in the business has been very strong.

Great, Riaan. Thank you very much. Adrian, we are -- there are no more questions online. There are none on Chorus Call. So I'll move back over to you.

David, thanks for that, and thanks to all of you for the questions. Our team is largely on the road and is acting on these issues. I think it's not much more for me to say, it's been a great period. Again, thank you for the time. Thanks to our team. Thanks to all of our people. It's been a great period, a lot to do. So thank you. Let me shut down the presentation.