Half Year Results Presentation 2019 6 months ended 30 June 2019 - - PowerPoint PPT Presentation
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
Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019
Joy Linton Chief Financial Officer Gareth Roberts Group Financial Controller Gareth Evans Group Treasurer Section 5
Section 1
Section 4
Section 2
Section 3
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Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019
Joy Linton Chief Financial Officer
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Section 1 Section 2 Section 3 Section 4 Section 5
Bupa Half year results presentation 2019
Revenue
(1) The HY 2019 Solvency II capital position, SCR and coverage ratio are estimates and unaudited
IFRS profit before tax
Underlying profit before tax
Solvency coverage ratio1
Leverage
Ratings
Moody’s senior debt rating stable at
Fitch stable at
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Bupa Half year results presentation 2019
Investing in the dental sector in Australia, the UK, Spain and Poland Australian Defence Force health contract commenced on 1 July
Invested in information technology to enhance security and privacy and digitise customer experience Good progress across
responsibility agenda Brexit readiness: New Irish insurance company commenced trading activity Employee engagement score high at 78% Bupa Arabia reappointed as health insurance provider for the Saudi Basic Industries Corporation (SABIC) New mental health cover within consumer health insurance policies in the UK Integration of Bupa Acıbadem Sigorta in Turkey on track Simplification of our
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Joy Linton Chief Financial Officer
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1.BUPA HEALTH INSURANCE 82% 2.BUPA HEALTH SERVICES 7% 3.BUPA VILLAGES AND AGED CARE AUSTRALIA AND NEW ZEALAND 11%
Revenue by business Operating environment
slowed down in New Zealand.
to Australian Government.
industry facing increasing pressures, affecting results across the sector.
Quality and Safety commenced in January 2019.
− Bupa Health Insurance: Addressing industry pressures; with a focus on providing great value for money and quality for our customers. − Bupa Villages and Aged Care Australia: Profit fell due to lower
a number of compliance and service issues in some homes. − Bupa Health Services: ADF contract started on 1 July serving 85,000 personnel. − Bupa Villages and Aged Care New Zealand: More focused portfolio; investing in integrated care home villages. Revenue
(2018 HY: £2,266m CER)
Underlying profit
(2018 HY: £144m CER)
1 2 3
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1.SANITAS SEGUROS 37% 2.SANITAS DENTAL 5% 3.SANITAS HOSPITALS AND NEW SERVICES 7% 4.SANITAS MAYORES 5% 5.LUX MED 12% 6.BUPA CHILE 34%
Revenue by business Operating environment
General Election as acting Prime Minister Sánchez tries to form government.
4% in 2019; increasing demand of private medical services.
sector, with a delay in the approval of triennial premium rate increase and wider developments in the reform of the Isapres system.
− Sanitas Seguros: Profit growth driven by increased portfolio. − Sanitas Dental: Increase in customer numbers with dental cover drove strong performance. − Sanitas Hospitales and New Services: Integration of Ginemed going well. − Sanitas Mayores: Good revenue growth; high average occupancy rate at 95%. − LUX MED: Strong results driven by corporate subscription and inpatient businesses; opened 8 health clinics and 11 dental centres. − Bupa Chile: Outpatient business and Clínica Bupa Santiago hospital driving good revenue growth; higher claims costs in health insurance. Revenue
(2018 HY: £1,487m CER)
3% AER 5% CER Underlying profit
(2018 HY: £77m CER)
0% CER
1 2 3 4 5 6
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Revenue by business Operating environment
market, driven by increasing specialist treatments.
shortage of dentists.
− Bupa UK Insurance: Launched new mental health cover within consumer policies. − Bupa Dental Care: Strengthened our market position with additional acquisitions; underlying performance impacted by sector-wide pressures. − Bupa Care Services: Positive results; driving quality in our homes. − Bupa Health Services: Introduced Bupa Smart DNA testing kit. Revenue
(2018 HY: £1,252m)
+1% Underlying profit
(2018 HY: £54m)
1.BUPA UK INSURANCE 61% 2.BUPA DENTAL CARE 18% 3.BUPA CARE SERVICES 16% 4.BUPA HEALTH SERVICES 5%
1 2 3 4
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Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019
Revenue by business Operating environment
market to contract despite reforms.
inflation rates dropping.
down; political and social uncertainty.
growth due to a cut in oil production.
fastest growing economies.
− Bupa Global: Continued to see improving results; new Irish insurer for IPMI customers commenced trading activity. − Care Plus (Brazil): Delivered good performance. − Bupa Acıbadem Sigorta (Turkey): Integration of the business is on track. − Hong Kong: Clinic business performed well, driven by growth in corporate customers and walk-in patients. − Bupa Arabia: Reappointed as health insurance provider for SABIC. − Max Bupa (India): New partner as Max India selling its stake to True North.
1.BUPA GLOBAL(2) 66% 2.HONG KONG 25%
3.BUPA ACIBADEM SIGORTA
9%
1 2 3
Revenue
(1)
(2018 HY: £811m CER)
+20% AER +17% CER Underlying profit
(2018 HY: £9m CER)
+67% AER +67% CER
(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 (2) Includes Care Plus (Brazil)
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Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019
Gareth Roberts Group Financial Controller Gareth Evans Group Treasurer
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Net cash flow generated from
Down 20% on 2018
Solvency capital coverage
(1)
(1) The HY 2019 Solvency II capital position, SCR and coverage ratio are estimates and unaudited
Leverage ratio
FY 2018: 23.5% FY 2018: 191%
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HY 2017 91%
Underlying profit before tax (1) Revenue
at CER.
Acibadem Sigorta, revenue grew by 2% on a like-for-like basis at CER.
CER compared to 2018. +4% at CER +2% at AER HY 2019 HY 2018 (CER) £6.0bn £5.8bn
(1) Underlying profit is a non-GAAP financial measure which means it is not comparable to other companies. Underlying profit reflects our trading performance and excludes a number of items otherwise included in statutory profit, to facilitate year-on-year comparison. These items include the 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 (2) Combined Operating Ratio is an alternative performance metric for insurance businesses. It is calculated based on incurred claims and operating expenses divided by net earned premiums. Combined operating ratios are calculated based on local reporting requirements: Group: S.05.01 Prudential Regulation Authority (SII) form (estimated and unaudited); BUPA HI Pty Ltd (Australia): HRF 602 Australian Prudential Regulation Authority quarterly returns (unaudited); Sanitas S.A. de Seguros (Spain): Prepared under local GAAP (unaudited) and Bupa Insurance Limited (UK): Prepared under local GAAP (unaudited)
Combined operating ratios (2)
Insurance regulated entities Group Bupa HI Pty Ltd (Australia) Bupa Insurance Ltd (UK) Sanitas S.A. de Seguros (Spain) HY 2019 HY 2018 HY 2019 HY 2018 HY 2019 HY 2018 95% 93% 95% 94% 90% 91% HY 2019 95% HY 2018 94%
CER.
acquisition of Acibadem Sigorta, underlying profit decreased by 22% on a like-for-like basis at CER.
HY 2019 HY 2018 (CER) £195m £248m
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Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019
HY 2019 £m HY 2018 (AER) £m Underlying profit before tax 195 253 Net (losses)/gains on disposal of businesses and transaction costs on business combinations (5) 8 Net property revaluation gains/(losses) 8
(9) 5 Gains/(losses) on return seeking assets, net of hedging 24 (4) Other non-underlying items (6) (5) Total non-underlying items 12 4 IFRS profit before tax 207 257
reduced trading profitability on prior year, with the nature of non- underlying items comparable, but slightly higher than 2018.
HY 2019 HY 2018 (AER) £207m £257m
IFRS profit before tax 14
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(1) The HY 2019 Solvency II capital position, SCR and coverage ratio are estimates and unaudited
Solvency Capital Requirement £2.4bn HY 2019 Own Funds Surplus £1.6bn £4.0bn
recognised on the solvency II balance sheet on 1 January 2019; this reduced the solvency coverage ratio by 18 percentage points.
coverage ratio by 7 percentage points
comfortably in excess of our risk appetite.
into our business
15 Solvency II coverage ratio 165% 191% HY 2019 165% 191% FY 2018
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(1) The HY 2019 Solvency II capital position, SCR and coverage ratio are estimates and unaudited (2) Operating capital includes comprehensive income of £152m adjusted to reflect changes in the SII valuation, including removing amortisation and impairment of goodwill and intangibles (3) Other includes the effect of market movements including FX
1,866 1,504 1,569 201 231 131 39 51 31 15
Solvency Surplus FY 2018 IFRS 16 Acıbadem Sigorta acqusition Pro-forma Surplus Operating Capital Cost of debt financing Net Capex M&A Activity Other inc. market & FX Solvency Surplus HY 2019
(2) (3)
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Bupa Half year results presentation 2019
165% 162% 164% 165% 152% 162% 165% 163% 157% Solvency Coverage Ratio Interest rate +100bps Credit spreads +100bps (assuming no credit transition) Equity markets -20% Property values -10% Sterling depreciates by 10% Pension risk +10% Group Specific Parameter (GSP) 3 + 0.2% Loss ratio worsening by 2%
(1) The HY 2019 solvency II capital position, SCR and coverage ratios are estimates and unaudited (2) While this table only shows the impact of individual stresses, it is a helpful illustration of the relatively low risk inherent in our capital base (3) Group Specific Parameter (GSP) is substituted for the insurance premium risk parameter in the standard formula, reflecting the Group’s own loss experience
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Net cash generated from operating activities
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cashflow earnings before interest, depreciation and amortisation declined broadly in line with pre-tax profit
(1) When excluding the change in presentation arising from IFRS 16, the payment following the one-off tax settlement with Australian Tax Office in 2019, and a one-off working capital receipt in 2018
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Sigorta (FY 2018: 23.5%).
stood at 31.9% at the HY (FY 2018 Proforma(2): 31.2%).
£295m at 30 June 2019 (FY18: £170m).
Leverage(1) 30.2% 25.3% 24.5% 23.5% 24.3% FY 2017 HY 2017 HY 2019 HY 2018 FY 2018
(1) Gross debt (including hybrid debt) / gross debt plus equity (2) When including the impact of IFRS 16
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investments rated at least A-/A3.
managed bond and loan funds) held in UK and Australian regulated entities.
and loan portfolio of £24m (HY 2018 losses of £4m).
challenging investment backdrop.
appetite including ESG considerations.
Cash and investment portfolio
HY 2019 Cash and cash-like instruments (e.g. deposits, liquidity funds, covered bonds) Return seeking assets HY 2018 £4.3bn £4.2bn
HY 2019 Cash and investments by credit rating (%)
AAA 6% <BBB-/NR 10% BBB 8% A 37% AA 39%
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Joy Linton Chief Financial Officer
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Driving and investing in
Improving customer experience; investing in the services we offer to our customers and harnessing digital technology Continuing to strengthen risk management, privacy and information security Being more cost
will increase speed and efficiency Focus areas: 22
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Joy Linton Chief Financial Officer Gareth Roberts Group Financial Controller Gareth Evans Group Treasurer Section 5
Section 1
Section 4
Section 2
Section 3
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Section 1 Section 2 Section 3 Section 4 Section 5 Bupa Half year results presentation 2019
For further information email: ir@bupa.com
All financial results and Solvency and Financial Condition Reports are available on: www.bupa.com/Corporate/
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Bupa Half year results presentation 2019
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Bupa Half year results presentation 2019
Australia
New Zealand
(1) We recently announced some changes to simplify our organisation structure. From the second half of the year onwards, Bupa will be structured as three Market Units (MUs): Australia & New Zealand; Europe & Latin America; and Bupa Global & UK. We will report
New Services
(Turkey)
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Bupa Half year results presentation 2019
(2) Bupa Arabia in Saudi Arabia and Max Bupa in India are associate businesses (3) Global international insurance available in most countries. Includes 49% stake in Highway to Health (GeoBlue) in the US (4) Domestic insurance and clinics in Brazil (5) In addition to care homes and villages, New Zealand also has a brain rehabilitation business (6) In Spain we also have day care centres
Funding
Health insurance Pay-as-you-go Dental insurance Travel insurance Clinics Hospitals Dental centres Optical and audiology
Healthcare provision
Care homes Retirement villages
Aged care provision
International Markets Australia and New Zealand UK Europe and Latin America
Australia New Zealand(5) Bupa Global China Saudi Arabia(2) India(2) Hong Kong UK Poland Spain Chile Turkey
(3) (4) (6)
(1) We recently announced some changes to simplify our organisation simplification of our organisation structure. From the second half of the year onwards, Bupa will be structured as three Market Units (MUs): Australia & New Zealand, Europe & Latin America and Bupa Global & UK. We will report our full year 2019 results in accordance with this new structure
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Bupa Half year results presentation 2019
HY 2019 £m FY 2018 £m HY 2018 £m Borrowings under £800m bank facility 295 170 210 £330m perpetual hybrid bond (guaranteed by Bupa Insurance Ltd) 362 357 374 £350m senior bond due 2021 349 349 349 £500m subordinated bond due 2023 502 502 501 £300m senior bond due 2024 301 295 293 £400m subordinated bond due 2026 396 396 396 Bupa Chile borrowings 183 188 201 Other 53 53 84 Total borrowings 2,441 2,310 2,408
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This document may contain certain ‘forward-looking statements’. Statements that are not historical facts, including statements about the beliefs and expectations of The British United Provident Association Limited (Bupa) and Bupa’s directors or management, are forward- looking statements. In particular, but not exclusively, these may relate to Bupa’s plans, current goals and expectations relating to future financial condition, performance and results. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon future circumstances that may or may not occur, many of which are beyond Bupa’s control and all of which are solely based on Bupa’s current beliefs and expectations about future events. These circumstances include, among others, global economic and business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the impact of competition, the timing, impact and other uncertainties of future mergers or combinations within relevant
actual future condition, results, performance or achievements of Bupa or its industry to be materially different to those expressed or implied by such forward-looking statements. Other than as required by law, Bupa expressly disclaims any obligations or undertakings to release publicly any updates or revisions to any forward-looking statements to reflect any change in the expectations of Bupa with regard thereto
and using, this document, you release Bupa and each of its affiliates, advisers, directors, employees and agents, in all circumstances (other than fraud) from any liability whatsoever and howsoever arising from your use of this document. In addition, no responsibility of liability or duty of care is or will be accepted by Bupa or its respective affiliates, advisers, directors, employees and agents, for updating the document (or any additional information), correcting any inaccuracies in it or providing any additional information to any person. Accordingly, none of Bupa or its affiliates, advisers, directors, employees or agents shall be liable (save in the case of fraud) for any loss (whether direct, indirect or consequential) or damage suffered by any person as a result of relying on any statement in, or omission from, the document.
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