Discovery slides over 7% on decision not to pay ordinary dividends

Discovery – the JSE-listed medical aid giant and growing financial services group – saw its shares slide over 7% by midday on Tuesday, after it opted not to pay any dividends to ordinary shareholders for another financial year.

This is despite the group reporting a stronger financial performance for the year ended 30 June 2022. The group however has paid its obligatory dividends for the year to its preference shareholders.

“While the group’s capital position remains robust, in light of the uncertain future impact of Covid-19 and the volatile global macro-economic environment, the Discovery board has decided to retain its prior stated position and has decided not to declare an ordinary final dividend for the year ended 30 June 2022,” it notes in its results Sens statement.

Discovery did not pay-out an interim ordinary dividend for its 2022 half-year either.

“The reintroduction of an ordinary dividend will be considered on an ongoing basis,” Discovery points out in its latest financial results announcement.

“Discovery’s business model has proven to be highly relevant during the Covid-19 pandemic, with robust underlying growth trends continuing in most parts of the business,” it says.

“The group is capitalising on its growth opportunities while ensuring operational resilience despite the challenging macro environment. The effect of rising inflation and interest rates globally, together with continued currency volatility, is expected to remain a feature of the reported results,” adds Sandton headquartered Discovery.