Full year results presentation 12 months ended 31 December 2016 - PowerPoint PPT Presentation

Full year results presentation 12 months ended 31 December 2016

Overview Financial review Outlook & operating priorities 2016 full year results presentation Agenda Section 1 Section 2 Section 3 Overview Financial Outlook and review operating priorities Joy Linton CFO Gareth Evans Group Treasurer Evelyn Bourke Group CEO Evelyn Bourke Group CEO 2

Overview Financial review Outlook & operating priorities Section 1 Overview Evelyn Bourke Group CEO 3

Overview Financial review Outlook & operating priorities Our business model Funding and providing services to help people live longer, healthier, happier lives We fund We provide Helping customers fund health and Providing health and care services care through domestic and international through primary care clinics, hospitals, dental centres, and aged health insurance, as well as other funding models care services Our services Delivering for Customers Employees Partners Society Underpinned by 4

Overview Financial review Outlook & operating priorities Our refreshed Strategic Framework Our strategy to drive the next phase of Bupa’s growth in today’s digital age Investing in strength and depth Winning locally, enabled globally 5 Ever-focused on quality, efficiency, safety and compliance. Disciplined in risk and capital management

Overview Financial review Outlook & operating priorities FY 2016 Group highlights Revenue and profit growth in challenging market conditions Operating highlights: Operating environment characterised by: Good profit growth in three largest Market Units Consumer and government affordability pressures Australia's leading health insurer Weaker macro backdrop and political change Reshaped UK portfolio, exiting home healthcare Changing customer and regulatory expectations and purchasing Oasis Dental Care (1) Reduced from five to four Market Units Appointments to executive team 6 (1) Sale of Bupa Home \Healthcare in July 2016. Purchase of Oasis Dental Care on 09 February 2017 subject to CMA approval

Overview Financial review Outlook & operating priorities FY 2016 Group highlights Customers Revenue +4% CER £11.0bn 16.5m Insurance +6% Underlying profit before tax +10% CER 10.6m Provision +14% +2% CER (1) £700.7m 33,100 Aged Care +2% Statutory profit before tax +40% AER £522.9m Employee Net Promotor Score (eNPS) Net cash flow from operations +13% AER £891.0m +30 Oct +9pts Since July Solvency coverage ratio (2) +24% pts 204% (1) Underlying profit is up 2% at CER and up 12% at AER when excluding the impact of the IFRIC 12 adjustment relating to our Spanish Public-Private Partnerships (PPPs) in 2015. (2) The Solvency II capital coverage ratio for 2016 is an estimated value. This is prior to the completion of the Oasis Dental Care purchase. 7

Overview Financial review Outlook & operating priorities Australia and New Zealand Revenue up 7%; profit up 9% Operating Environment Revenues +7% CER £4,360.6m +20% AER • Customer affordability remains an industry-wide challenge; Bupa maintaining focus on service and value (FY 2015: £4,078.3m CER) • Continue to engage with Government regarding expected adverse impact of reduced Aged Care Funding Instrument Underlying profit +9% CER £344.4m +23% AER (FY 2015: £314.7m CER) Performance Customers • Resilient growth in Health Insurance business, becoming 4.0m Insurance Australia’s largest health insurer 1.9m Provision • Health Services Australia business maintained strong market position; Bupa is the country’s largest dental provider 10,800 Aged care • Bupa Aged Care Australia remains the country’s leading private Revenues by business aged care provider, caring for nearly 7,000 residents • Aged care business in New Zealand grew, with four new care homes and three retirement villages • Building new tools and capabilities for meaningful and personalised customer interactions 8

Overview Financial review Outlook & operating priorities United Kingdom Revenue down 3% (up 5% like-for-like (1) ); profit up 7% Operating Environment Revenues -3% • Further increases to the Insurance Premium Tax (IPT). £2,785.9m Committed to making quality, value-for-money healthcare more affordable and accessible (FY 2015: £2,857.8m) • Continue to negotiate with local authorities to cover the true Underlying profit +7% cost of care including impact of National Living Wage £194.9m • Limited impact from Brexit at this stage (FY 2015: £182.6m) Performance Customers • Decline in revenue of 3% due to sale of Bupa Home 2.4m Insurance Healthcare in July, up 5% when comparing like-for-like (1) 1.2m Provision • Health insurance business performed well, with profit 17,400 Aged care driven by improved corporate and consumer loss ratios Revenues by business • Digital transformation and innovation remains a priority • Active management of our Care Services portfolio • Significant re-shaping of UK portfolio with sale of Home Healthcare and Oasis Dental Care purchase (2) (1) When excluding Bupa Home Healthcare from 2015 and 2016. 9 (2) Bupa Home Healthcare sole July 2017. Purchase of Oasis Dental Care completed February 2017 subject to CMA approval.

Overview Financial review Outlook & operating priorities United Kingdom Purchase of Oasis Dental Care Rationale UK Dental market size £7.1bn • Dentistry is a strategic growth area for Bupa, as it enables us to build relationships with a broader base of customers • Total Bupa UK dental clinics post purchase Unique opportunity to establish a national retail presence and cross-sell c.420 Oasis overview Dentists • Customer-centric model: accessible, transparent pricing, high quality care 1,800 • Strong customer satisfaction: Net Promoter Score 2x market average • First dental chain to advertise nationally Customers 2m Transaction summary Pro forma Group Solvency ll coverage ratio (1) • Purchase announced on 18 November 2016 165% • Transaction completed 9 February 2017 with an enterprise value of £835m (2) Solvency Impact • Reduced our coverage ratio to an estimated 165%, comfortably within our capital risk appetite 10 (1) Estimated figure (2) Subject to CMA approval.

Overview Financial review Outlook & operating priorities Europe and Latin America Revenue up 10%; profit up 63% (up 10% like-for-like (1) ) Operating Environment Revenues +10% CER • Challenging Spanish political environment; we remain £2,474.7m +22% AER confident in our PPPs • (FY 2015: £2,251.8m CER) Mitigating the adverse impact of uncertainties relating to the Chilean premium increase process on Isapre through tighter Underlying profit +63% CER cost management £165.6m +84% AER Performance (FY 2015: £101.8m CER) • Revenue growth across a number of business units in Spain, Customers including continued growth in our Sanitas insurance business 2.9m Insurance • Achieved strong year-on-year revenue growth in Bupa Chile 6.7m Provision driven in part by Isapre performance improvement 4,900 Aged care • Ongoing investment in full digital transformation delivering improved customer journey Revenues by business • Aged care business, Sanitas Mayores, delivering consistently high occupancy rates • Increased ownership of Bupa Chile from 73.7% to 100% • LUX MED in Poland achieved significant revenue growth (1) Under IFRIC 12, which applies to service concession contracts such as Public-Private Partnerships, we use the average operating margin for the life of the contract (based on historic performance plus projections) as a means for recognising results. Once there is a change in performance compared to expectations, the operating margin is reassessed and an adjustment made to the current year 11 results to bring the contract performance to date in line with the revised margin. In 2015, this negative non-cash adjustment of £52.0m included an amount relating to the current year of £8.8m together with a retrospective adjustment for the years preceding 2015 of £43.2m. To compare the result on a ‘like for like’ basis with 2016, we have excluded £48.6m (being £43.2m retranslated at 201 6 rates) from underlying profit in 2015.