Highlights
- Revenue1 £12.3bn, up 4% at AER (2018: £11.9bn); up 5% at constant exchange rates2 (CER) (2018: £11.7bn)
- Statutory loss before taxation £78m, down £580m at actual exchange rates (AER) (2018 profit before taxation: £502m) with £443m of non-cash items, notably goodwill impairments in UK dental (£226m) and Australian aged care (£177m)
- Underlying profit before taxation3 £416m, down 32% at AER (2018: £613m); down 31% at CER (2018: £603m)
- Solvency II capital coverage ratio4 of 159% (2018 Proforma5: 166%)
Evelyn Bourke, Group CEO, commented: “Our 2019 results reflect tough market conditions in some of our key markets, especially Australia and UK dental, and our continued significant investment in technology to enable long term sustainable growth.
“In Australia, results were affected by margin pressures in health insurance and challenges in our aged care business. We are committed to our homes operating at a high level of quality and are investing to ensure this. In UK dental, our results reflected sector-wide issues with the availability of dental staff, which have been exacerbated by Brexit.
“We anticipate near term trading conditions will continue to be challenging, particularly in Australia and UK dental. However, our market-leading health insurance businesses, and our strong balance sheet and capital position enable us to continue to invest in organic growth in selected markets, technology capabilities and operational resilience. While this will impact profitability in the short term, we are focused on delivering long term sustainable growth while controlling costs.
“We will continue to improve our offer for customers, further strengthening our brand and market positions. We will also make a positive contribution to the health of the wider community, particularly mental wellbeing, and we are taking action on climate change”
Market performance6(CER)
- Australia and New Zealand: revenue up 3% to £4.7bn; underlying profit down 47% to £160m due to margin pressures in Australian health insurance and a loss in our Australian aged care business. To address these challenges, in health insurance we are focused on improving and optimising our propositions and reducing costs. In aged care, we are addressing the compliance issues and are making progress under a new management team.
- Europe and Latin America: revenue up 12% to £3.9bn; underlying profit down 8% to £156m due to the Chilean Government’s delay in approving the sector-wide premium rate increase.
- Bupa Global and UK: revenue up 1% to £3.3bn; underlying profit down 37% to £117m, mainly due to planned investment in technology capabilities, and dentist availability impacting our UK dental business. We are focused on being a great place to work for dental professionals and generating synergies across dental provision and funding.
- Other businesses: underlying profit grew year-on-year to £46m, led by Bupa Arabia, which had strong revenue and profit growth.
Financial position
Despite lower underlying trading, our balance sheet remains strong:
- Net cash generated from operating activities was £697m, down £111m (14%) on prior year (2018: £808m)
- Solvency II capital coverage ratio of 159% (2018 Proforma5: 166%)
- Leverage ratio7 of 25.1% (2018: 23.5%); 32.7% including the impact of IFRS 16: ‘Leases’ (2018 Proforma: 31.1%)
- Bupa Finance plc senior debt ratings unchanged at A3 (stable) by Moody's and A- (stable) by Fitch
Operational highlights
- Simplified our organisation structure from four to three Market Units to accelerate organic growth and unlock cost efficiencies while strengthening governance
- Increased customers from 30.0m to 33.3m with improved Net Promoter Scores (NPS)
- Strengthened our market positions:
- We remain a leading health insurer in Australia with improved customer satisfaction and retention. We began providing healthcare services to 85,000 Australian Defence Force personnel
- Our UK health insurance portfolio grew steadily across all segments. We launched our Bupa Touch digital portal and established a Family Mental HealthLine service
- Extended our key Spanish bancassurance agreement with BBVA to 2033, and grew our Blua digital proposition to over 480,000 customers
- Progressed the integration of Bupa Acıbadem Sigorta in Turkey
- Bupa Arabia renewed the key contract with SABIC and won the contract for Saudi Telecom Company
- Completed the transition to our new associate business partner in India, True North
- Advanced our multi-year strategic programme to enhance security and privacy, ensure operational resilience and digitalise customer experience
- Developed our Environmental, Social and Governance (ESG) agenda creating a Corporate Responsibility and Sustainability (CRS) Advisory Committee, establishing a social focus on mental wellbeing, progressing our action on climate change, and strengthening our responsible investment standards
- Employee engagement scored 78 out of 100 in our People Pulse survey
Read the full Group Preliminary statement.
Bupa Finance plc, a wholly owned subsidiary of Bupa, is required to publish its financial results as it has listed debt. Read the Bupa Finance plc 2019 Annual Report and Accounts.
Notes to editor
1Revenues from associate and joint venture businesses are excluded from reported figures. Customer numbers and economic share of post-tax profits from our associate and joint venture businesses are included
2All figures are at constant exchange rates (CER) unless stated. We use CER to compare trading performance in a consistent manner to the prior year. We have restated 2018 results to 2019 average exchange rates.
3Underlying 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 (loss)/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 (loss)/profit before taxation can be found in the notes to the condensed consolidated financial statements.
4The 2019 Solvency II capital position, SCR and coverage ratio are estimates.
52018 Solvency coverage position of 191% after taking into consideration the impact of IFRS 16 (16ppts) and the acquisition of Acıbadem Sigorta (7ppts).
6At the half year, we announced the simplification of our organisation into three Market Units: Australia and New Zealand; Europe and Latin America; and Bupa Global and UK. For 2019, we are reporting in accordance with this new structure and have restated our 2018 results, where applicable.
7Leverage is calculated based on gross debt (including hybrid debt) divided by gross debt plus equity
About Bupa
Bupa's purpose is helping people live longer, healthier, happier lives and making a better world.
We are an international healthcare company serving over 31 million customers worldwide. With no shareholders, we reinvest profits into providing more and better healthcare for the benefit of current and future customers.
We directly employ around 85,000 people, principally in the UK, Australia, Spain, Chile, Poland, New Zealand, Hong Kong SAR, Turkey, Brazil, Mexico, the US, Middle East and Ireland. We also have associate businesses in Saudi Arabia and India.