Discovery said on Friday its profit for the year ended June 30 could be completely erased. Picture: Karen Sandison/African News Agency(ANA)
Discovery said on Friday its profit for the year ended June 30 could be completely erased. Picture: Karen Sandison/African News Agency(ANA)

Discovery warns profit could be wiped out due to coronavirus

By Reuters Time of article published Aug 28, 2020

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JOHANNESBURG - Discovery said on Friday its profit for the year ended June 30 could be erased by provisions to take account of the new coronavirus and volatility in long-term interest rates.

Its headline earnings per share (HEPS), the main measure of profit for South African companies, will fall by 90 percent to 100 percent, to between 78.9 cents ($0.0468) and zero, it said in a statement.

It had reported a HEPS of 789 cents in the last fiscal year.

The company, which reports full-year results on Sept. 16, had predicted a decline in HEPS of between 70 percent and 90 percent for the full year in a June trading update and had scrapped its dividend.

While the amount of R3.3 billion it had provisioned for Covid-19 related impacts remains unchanged, Discovery said continuing volatility in interest rates in South Africa and Britain will reduce its headline earnings.

It had estimated an impact of R3.5 billion earlier, but expects the number to rise to R4.8 billion.

Discovery said in a statement its financial performance for the year to the end of June would still be resilient and core new business is expected to increase by 4 percent.

Its share price fell by 3.25 percent at 0900 GMT while the JSE top 40 companies index was nearly 1 percent lower.

Companies in South Africa are suffering from changes to interest rates after the government lost its final investment-grade credit rating earlier this year.

Britain also has historically low interest rates.

REUTERS

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