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Bupa Half Year Results 2016

Evelyn Bourke, CEO of Bupa, commented, "In the first half of 2016, we remained focused on delivering value for money and providing great service and care to our customers. We have delivered modest growth in profitability despite challenging economic conditions in our key markets. The immediate impact on Bupa’s financial position following the EU referendum in June has been limited. While there will be some operational and legal impacts, it is too early to conclude how the Leave vote will affect our underlying businesses and employees. We will continue to monitor the situation closely. Looking forward, we currently anticipate modest growth for the full year, with continued emphasis on deepening our relationships with our customers, combined with robust financial management."


  • Revenue £5.3bn (2015 HY: £5.0bn), up 7% at constant exchange rates (CER)1; up 8% at actual exchange rates (AER) (2015 HY: £4.9bn)
  • Underlying profit before taxation £261.7m, up 2% at CER (2015 HY: £256.8m); up 3% at AER (2015 HY: £253.3m)
  • Statutory profit before taxation £139.6m, down 45% at AER (2015 HY: £255.4m) impacted by the planned early redemption of a £235m legacy securitisation, enabling lower funding costs in the future
  • 28.2m customers, up 11%, including 7.1m from joint ventures and associates (2015 HY: 25.3m, 2015 FY: 32.2m)
  • Net cash flow from operations of £513.4m, up 13% at AER (2015 HY: £453.7m)

Market Unit performance

  • Revenue growth in our largest Market Units: Australia and New Zealand (up 8%); the UK (up 8%); and Spain and Latin America (up 7%).
  • Underlying profit growth in Australia and New Zealand (up 10%) and in the UK (up 30%). Underlying profit down in Spain and Latin America (down 9%) mainly driven by the negative impact of the Free Choice Act affecting the Public Private Partnership (PPP) in Valencia.
  • Revenue growth of 12% in International Development Markets with underlying profit down 9% largely due to high claims in Thailand.
  • Revenue down 3% and underlying profit down 43% in Bupa Global, reflecting investment in capability and infrastructure and 2013 decision to exit non-strategic markets. 

Operational highlights

  • Continued expansion in dental, having increased the number of centres in Australia and New Zealand by nine to 239, in Spain and Latin America by eight to 221, and in the UK by four to 43.
  • Opened four new care homes in Australia, one in New Zealand, and one in Spain. Integrated five care homes acquired from Hadrian Healthcare Limited in the UK in December 2015.
  • Launched new jointly-branded international private medical insurance (IPMI) products with Blue Cross Blue Shield Association in the UK, France, Guernsey, Jersey, Gibraltar, the Dominican Republic, and Bolivia.
  • 100% ownership of Bupa Chile (from 56.4% at 2015 half year), and increased ownership of Max Bupa in India to 49% (from 26%).

Financial position

  • Well capitalised under the Solvency II regime, with a solvency coverage ratio of 180%.
  • Statutory profit adversely affected by the early redemption of a legacy securitisation, to simplify debt structure, remove complexity and reduce future financial expense charges. This has resulted in a £112.3m net expense in 2016, as planned. In future years, Bupa will benefit from a lower cost of funding.
  • Leverage ratio down to 24.3% (2015 HY: 28.0%; 2015 FY: 27.7%), driven by lower borrowings alongside the increase in equity from profits and foreign exchange movements, following the weakening of sterling.
  • Bupa Finance plc’s senior credit ratings remain at A- stable (Fitch) and Baa2 positive (Moody’s).
  • Net cash generated from operating activities of £513.4m remains strong; £59.7m increase reflecting favourable timing of invoice collection and favourable foreign exchange impacts.
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