Half Year Results Presentation 2019 6 months ended 30 June 2019
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 HY 2019 results presentation Agenda Section 1 Section 2 Section 3 Overview Market Unit Financial performance review Joy Linton Chief Financial Officer Section 4 Section 5 Outlook and Questions operating and answers priorities Gareth Roberts Gareth Evans Group Financial Group Treasurer Controller 2
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 Section 1 Overview Joy Linton Chief Financial Officer 3
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 HY 2019 Group highlights Results in line with expectations Revenue IFRS profit Underlying profit before tax before tax £6.0bn £207m £195m +2% AER -19% AER -23% AER +4% CER -21% CER Solvency coverage Leverage Ratings ratio 1 Moody’s senior debt 165% 24.3% rating stable at A3 191% FY 2018 23.5% FY 2018 Fitch stable at A- 4 (1) The HY 2019 Solvency II capital position, SCR and coverage ratio are estimates and unaudited
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 HY 2019 Group highlights Increased investment for sustainable growth Invested in information New mental health Bupa Arabia Brexit readiness: Investing in the technology to cover within re appointed as health New Irish insurance dental sector in enhance security consumer health insurance provider for company commenced Australia, the UK, and privacy and insurance policies in the Saudi Basic trading activity Spain and Poland digitise customer the UK Industries Corporation experience (SABIC) Australian Defence Integration of Bupa Simplification of our Employee Good progress across Acıbadem Sigorta in Force health contract organisation engagement score our social commenced on 1 July Turkey on track structure high at 78% responsibility agenda 5
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 Section 2 Market unit performance Joy Linton Chief Financial Officer 6
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 Australia and Results affected by challenges in our Australian health insurance and aged care businesses New Zealand Revenue Underlying profit − Bupa Health Insurance: Addressing Operating environment industry pressures; with a focus on £2,254m £79m providing great value for money and - Economy in Australia remained stagnant; quality for our customers. slowed down in New Zealand. (2018 HY: £2,266m CER) (2018 HY: £144m CER) − Bupa Villages and Aged Care - Coalition Liberals and Nationals returned -3% AER -47% AER Australia: Profit fell due to lower to Australian Government. -1% CER -45% CER occupancy and higher costs; addressing a number of compliance and service - Australian private health insurance issues in some homes. industry facing increasing pressures, Revenue by business affecting results across the sector. − Bupa Health Services: ADF contract 1.BUPA HEALTH - Royal Commission into Aged Care started on 1 July serving 85,000 INSURANCE 3 Quality and Safety commenced in 82% personnel. 2 January 2019. 2.BUPA HEALTH − Bupa Villages and Aged Care New SERVICES 7% Zealand: More focused portfolio; 3.BUPA VILLAGES AND investing in integrated care home AGED CARE villages. AUSTRALIA AND NEW ZEALAND 1 11% 7
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 Europe and Steady performance in Sanitas Seguros, with strong results in Sanitas Dental and LUX MED (Poland) Latin America Revenue Underlying profit − Sanitas Seguros: Profit growth driven Operating environment by increased portfolio. £1,558m £77m − Sanitas Dental: Increase in customer - Spain: Political uncertainty following numbers with dental cover drove General Election as acting Prime Minister (2018 HY: £1,487m CER) (2018 HY: £77m CER) strong performance. Sánchez tries to form government. 3% AER -1% AER - Poland: Economy projected to grow over − Sanitas Hospitales and New 5% CER 0% CER 4% in 2019; increasing demand of private Services: Integration of Ginemed medical services. going well. Revenue by business - Chile: Uncertainty in health insurance − Sanitas Mayores: Good revenue sector, with a delay in the approval of 1.SANITAS SEGUROS growth; high average occupancy rate 37% triennial premium rate increase and wider at 95%. developments in the reform of the Isapres 2.SANITAS DENTAL 5% system. − LUX MED: Strong results driven by 6 1 3.SANITAS HOSPITALS corporate subscription and inpatient AND NEW SERVICES 7% businesses; opened 8 health clinics and 11 dental centres. 4.SANITAS MAYORES 5% − Bupa Chile: Outpatient business and 5.LUX MED 5 2 12% Clínica Bupa Santiago hospital driving 3 4 6.BUPA CHILE good revenue growth; higher claims 34% costs in health insurance. 8
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 United Investing in dental and to further improve services for customers Kingdom − Bupa UK Insurance: Launched new Revenue Underlying profit Operating environment mental health cover within consumer £1,269m £36m policies. - Slow economic growth. − Bupa Dental Care: Strengthened our (2018 HY: £1,252m) (2018 HY: £54m) market position with additional - Political uncertainty relating to the acquisitions; underlying performance outcome of the Brexit process. impacted by sector-wide pressures. +1% -33% - Strong demand in private dentistry − Bupa Care Services: Positive market, driven by increasing specialist results; driving quality in our homes. treatments. Revenue by business − Bupa Health Services: Introduced - Pressures impacting dental sector due to 1.BUPA UK Bupa Smart DNA testing kit. shortage of dentists. INSURANCE 4 61% 3 2.BUPA DENTAL CARE 18% 3.BUPA CARE SERVICES 16% 2 1 4.BUPA HEALTH SERVICES 5% 9
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 International Positive results, reflecting Bupa Global, acquisition in Turkey and 2018 increase in stake in Bupa Arabia Markets (1) − Bupa Global: Continued to see Revenue Underlying profit Operating environment improving results; new Irish insurer for IPMI customers commenced £945m £15m trading activity. - IPMI market remained competitive. − Care Plus (Brazil): Delivered good - Brazil: moderate economic growth; (2018 HY: £811m CER) (2018 HY: £9m CER) performance. market to contract despite reforms. +20% AER +67% AER − Bupa Acıbadem Sigorta (Turkey): - Turkey: Economy to contract in 2019; +17% CER +67% CER Integration of the business is on track. inflation rates dropping. − Hong Kong: Clinic business performed well, driven by growth in - Hong Kong: Economic growth slowing Revenue by business corporate customers and walk-in down; political and social uncertainty. 1.BUPA GLOBAL (2) patients. 66% - Saudi Arabia: Moderate economic 3 − Bupa Arabia: Reappointed as health growth due to a cut in oil production. 2.HONG KONG insurance provider for SABIC. 25% 1 - India: Remained one of the world’s − Max Bupa (India): New partner as 3.BUPA ACIBADEM fastest growing economies. SIGORTA 2 Max India selling its stake to True 9% North. (1) Revenues from our associate and joint venture businesses are excluded from our reported figures. The appropriate share of profit from our associate and joint venture businesses are included in our reported figures 10 (2) Includes Care Plus (Brazil)
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 Section 3 Financial Review Gareth Evans Gareth Roberts Group Financial Controller Group Treasurer 11
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019 HY 2019 Financial Overview Financial highlights Leverage ratio 24.3% FY 2018: 23.5% Net cash flow generated from Solvency capital operating activities coverage 165% (1) £389m FY 2018: 191% Down 20% on 2018 12 (1) The HY 2019 Solvency II capital position, SCR and coverage ratio are estimates and unaudited
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