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Bupa Announce 2021 Group Half Year Financial Results

Financial headlines

  • Revenue1 of £6.5bn was up 9% (2020: £5.9bn2 ) at constant exchange rates (CER) with year-on-year growth in the majority of our business lines.
  • Underlying profit3 before taxation of £191m, was up 44% at CER (2020: £133m) as the impacts of COVID-19 started to subside in some markets, with health provision and aged care performance returning towards more normal trading levels, offset by an increase in claims in our insurance businesses.
  • Statutory profit before taxation of £245m was up 60% at actual exchange rates (AER) (2020: £153m).
  • Solvency II capital coverage ratio4 remains strong at 163% (FY 2020: 160%).

Business context

  • We continue to benefit from our diversified portfolio of businesses and our financial resilience as we navigate the ongoing impacts of COVID-19. We are in a robust position and set up for future growth and transformation as the world begins to emerge from the pandemic.
  • The impact of COVID-19 will continue to be felt across all of our businesses for the foreseeable future. However, the Half Year results show early signs of a return to growth as our businesses and the societies we operate in come to terms with evolving rules and restrictions.
  • We have seen growing insurance portfolios in many of our markets, increased activity in our health provision businesses, and improving occupancy rates in aged care.
  • There are major shifts in customer expectations and engagement, particularly in digital healthcare. We have refreshed our plans and ambition and launched a new strategy to address these changes. Our focus is on embedding this strategy and leveraging our strengths while we transform Bupa.

Iñaki Ereño, Group CEO, commented:

“These results reflect Bupa’s resilience and how well our teams have served our customers as our businesses navigate the pandemic. Although restrictions are generally being lifted around the world, we remain vigilant as the pandemic is not yet over.”

“Looking ahead, I believe that we must pursue growth from faster transformation, leveraging the solid platform we have developed; we must run and change. We are now embedding our ambitious new strategy which will position Bupa to satisfy major shifts in customer expectations and engagement with healthcare.”

Market performance (all at CER)

  • Australia and New Zealand: Revenue increased by 6% to £2,549m largely due to strong customer retention and the 2020 premium rate deferral in health insurance, and improved customer volumes in our health provision business. Underlying profit increased to £132m, reflecting stronger health provision business performance, reduced losses in aged care and an improved result in health insurance.
  • Europe and Latin America: Revenue grew by 14% to £2,016m and underlying profit was broadly flat at £68m as growth in our insurance portfolio, improved health provision and aged care results, were offset by increased insurance claims following the disruption to supply seen in the first half of 2020.
  • Bupa Global and UK: Revenue was up 9% to £1,660m. This was driven by higher health provision customer volumes; and the impact of the provision for the pledge we made to pass back any exceptional financial benefit ultimately arising from the pandemic to eligible customers (UK return of premium commitment) being lower than it was during the first half of 2020. Underlying profit was down 59% to £9m, as improved dental results were more than offset by higher year-on-year claims in Bupa Global, our International Private Medical Insurance (IPMI) business.
  • Other businesses: Revenue was up 5% to £232m with higher revenue in our Health Services business in Hong Kong SAR. Underlying profit was down 16% to £26m predominantly reflecting the ongoing COVID-19 impacts on our associate business in India.

Financial position

  • Solvency II capital coverage ratio of 163% (FY 2020: 160%).
  • Leverage is 31.1% (FY 2020: 32.4%) when including IFRS 16 leases as liabilities. Excluding these liabilities, the leverage ratio is 24.1% (FY 2020: 25.3%).
  • Net cash generated from operating activities was £440m, down £403m on prior year (2020: £843m) reflecting the delay in claims outflows in the insurance businesses in 2020 partly offset by the return towards more normal trading levels across provision and insurance businesses.

New strategy – key points

  • We have refreshed Bupa’s purpose to be: “helping people live longer, healthier, happier lives and making a better world”.
  • We have introduced our ambition “to be the world’s most customer-centric healthcare company”.
  • We have refreshed our values so that they are aligned to our purpose, ambition and strategy. Together with their supporting statements, these are:
    • Brave: make new possibilities happen
    • Caring: act with empathy and respect
    • Responsible: own your decisions and actions
  • This is supported by 3 ambitious KPIs to measure progress against achieving our purpose and ambition:
    • 40% of customer care touchpoints owned by Bupa
    • 60% active digital customers
    • NPS scores of 80
  • We will achieve this ambition through 6 strategic pillars of: Customer; Growth; Transformation and Sustainability, enabled by focusing on Data and an Agile Culture.
  • This 3x6 Strategy will drive Bupa’s transformation.

Other highlights

  • We announced the appointment of James Lenton as Chief Financial Officer (CFO) and he is due to join Bupa in September 2021.
  • We committed to the Science Based Targets Initiative to reduce our carbon emissions.
  • With effect from 1 July, Bupa Hong Kong has been incorporated into the Australia and New Zealand Market Unit to form Bupa Asia Pacific. Also, from the same date, our associate business in India, Max Bupa, is being rebranded Niva Bupa and will be overseen by the Bupa Global and UK Market Unit.

Read the full Bupa Group 2021 half year financial results statement here


1 Revenues from associate businesses are excluded from reported figures. Customer numbers and economic share of post-tax profits from our associate businesses are included.

2 Balances have been restated for a gross up between other revenue and financial expense (included within central expenses and net interest margin) in relation to the remeasurement of imputed revenue and interest in respect of interest-free refundable accommodation deposits received by the Group as payment for aged care units in Bupa Villages and Aged Care - Australia. Refer to Note 1.4 for further details.

Underlying profit is a non-GAAP financial measure. This means it is not comparable to other companies. Underlying profit reflects our trading performance and excludes a number of items included in statutory profit before taxation, to facilitate year-on-year comparison. These items include impairment of intangible assets and goodwill arising on business combinations, as well as market movements such as gains or losses on foreign exchange, on return-seeking assets, on property revaluations and other material items not considered part of trading performance. A reconciliation to statutory profit before taxation can be found in the notes to the Condensed Consolidated Financial Statements.

The 2021 Solvency II capital coverage ratio is an estimate and unaudited.

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