SHARES in Discovery added 5,66% to R22,40 after a trading statement from the group indicated an improved performance in the second half of its financial year. While it expected only a marginal change in headline earnings a share for the year to June, it reported a 17% fall in headline earnings a share to 28,2c for the six months to December. Earnings a share for the year were expected to be 0%-20% higher, it said. However, stripping out the effect of last year's empowerment deal, headline earnings and earnings a share would be 20%-40% higher. A year ago, the group sold 7% of its business to empowerment partners in a transaction worth R830m. The deal distorts Discovery's results due to its treatment under International Financial Reporting Standards. No further details were given in the trading statement. However, the market will be watching for a turnaround at US arm Destiny Health, which has battled to break into profitability. Destiny reported an operating loss of R80m in the six months to December, up from a R41m loss the previous year. CEO Adrian Gore said steps had been taken to address the challenges Destiny faced in the US, including stiff competition and the slower-than-expected rollout of its business. As part of its plan of action, Discovery said last month that Destiny was closing for new business in Massachusetts, where it operates in a joint venture with Tufts Health Plan. Destiny operates in a joint venture with Guardian Life Insurance in a number of other US states.

Stephen Gunnion: Business Day, 1 September 2006