(Ecofin Agency) - South African insurance and digital banking group, Discovery Limited, warned its investors on the Johannesburg Stock Exchange that its 2019/2020 financial year ending on 30 June 2020 could result in a drop of 70 to 90% in its net profit excluding exceptional income, the main indicator of net margin in South Africa.
“The financial performance of Discovery for the full year ending 30 June 2020 is expected to consist of […] the creation of a significant provision for expected future COVID-19 effects,” the company said.
The amount of this provision is R3.3 billion, or about $191.7 million, but Discovery Limited gave no details on the way the resource will be injected between the depreciation risks in the banking and insurance segments. However, the company has seen a 4% increase in business volume over the 11 months to the end of May 2020.
On the Johannesburg Stock Exchange, Discovery's share first plunged by 6.8% at the opening of trading before stabilizing at -3.22%. The UK-based firm Baillie Giffort will closely monitor developments. This investment manager positioned itself on 9 June 2020 in the capital of the group by buying back 32.14 million additional shares, thus becoming its 4th largest shareholder with 5% of the shares.