BUPF.L Regulatory News (BUPF)

Bupa Finance plc: half year statement for the six months ended 30 June 2016

MODEST GROWTH IN CHALLENGING MARKET CONDITIONS

HIGHLIGHTS

o Revenue £5.3bn (2015 HY: £5.0bn), up 7% at constant exchange rates (CER)[1]; up 8% at actual exchange rates (AER) (2015 HY: £4.9bn)

o Underlying profit[2] before taxation £303.8m, up 2% at CER (2015 HY: £298.4m); up 3% at AER (2015 HY: £295.3m)

o Statutory profit before taxation £185.7m, down 38% at AER (2015 HY: £297.5m) impacted by the planned early redemption of a £235m legacy securitisation, enabling lower funding costs in the future

o 28.2m customers[3], up 11%, including 7.1m from joint ventures and associates (2015 HY: 25.3m, 2015 FY: 32.2m)

o Net cash flow from operations of £547.0m, up 14% at AER (2015 HY: £480.2m)

Performance overview

In the first half of 2016, we remained focused on delivering value for money and providing great service and care to our customers. We have delivered modest growth in profitability despite challenging economic conditions in our key markets.

The immediate impact on Bupa Finance plc's financial position following the EU referendum in June has been limited. While there will be some operational and legal impacts, it is too early to conclude how the Leave vote will affect our underlying businesses and employees. We will continue to monitor the situation closely.

Looking forward, we currently anticipate modest growth for the full year, with continued emphasis on deepening our relationships with our customers, combined with robust financial management.

Market Unit performance

o Revenue growth in most of our Market Units: Australia and New Zealand (up 8%); the UK (up 8%); Spain and Latin America (up 7%); and International Development Markets (up 12%).

o Underlying profit growth in Australia and New Zealand (up 10%), the UK (up 24%) and International Development Markets (up 5%). Underlying profit down in Spain and Latin America (down 4%) mainly driven by the negative impact of the Free Choice Act affecting the Public Private Partnership (PPP) in Valencia[4].

o Revenue down 3% and underlying profit down 40% in Bupa Global, reflecting investment in capability and infrastructure and 2013 decision to exit non-strategic markets.

Operational highlights

o Continued expansion in dental, having increased the number of centres in Australia and New Zealand by nine to 239, in Spain and Latin America by eight to 221, and in the UK by four to 43.

o Opened four new care homes in Australia, one in New Zealand, and one in Spain. Integrated five care homes acquired from Hadrian Healthcare Limited in the UK in December 2015.

o Launched new jointly-branded international private medical insurance (IPMI) products with Blue Cross Blue Shield Association in the UK, France, Guernsey, Jersey, Gibraltar, the Dominican Republic, and Bolivia.

o 100% ownership of Bupa Chile (from 56.4% at 2015 half year), and increased ownership of Max Bupa in India to 49% (from 26%).

Financial position

o Bupa, which includes Bupa Finance plc and its subsidiaries, is well capitalised under the Solvency II regime, with a solvency coverage ratio of 180%

o Statutory profit adversely affected by the early redemption of a legacy securitisation, to simplify debt structure, remove complexity and reduce future financial expense charges. This has resulted in a £112.3m net expense in 2016, as planned. In future years, Bupa will benefit from a lower cost of funding.  

o Leverage ratio down to 25.8% (2015 HY: 28.8%; 2015 FY: 28.9%), driven by lower borrowings alongside the increase in equity from profits and foreign exchange movements, following the weakening of sterling.

o Bupa Finance plc's senior credit ratings remain at A- stable (Fitch) and Baa2 positive (Moody's).

o Net cash generated from operating activities of £547.0m remains strong; £66.8m increase reflecting favourable timing of invoice collection and favourable foreign exchange impacts.

Enquiries

Media

Sally Pain, Jo Hudson (Corporate Affairs): 020 7656 2273

Investors

Gareth Evans (Treasury): 020 7656 2316

About Bupa Finance plc

Bupa Finance plc (the "Company") is a company incorporated in England and Wales. The condensed consolidated half year financial statements comprise the financial results and position of the Company and its subsidiary companies (together referred to as the 'Group'). The immediate parent company of Bupa Finance plc is The British United Provident Association Limited, which is also the ultimate parent company of the Bupa Group ("Bupa"). Around 70% of Bupa's revenue is from health insurance, with the balance coming from health and care provision. This includes our 17 hospitals, 336 clinics, 453 care homes and 60 retirement villages, 565 dental centres, and 36 optical outlets[5].

We serve 32 million customers[6] in 190 countries. We employ 82,000 people, principally in the UK, Australia, Spain, Poland, New Zealand and Chile, as well as Saudi Arabia, Hong Kong, India, Thailand and the US.

Management review

In 2016, we have remained focused on delivering value for money and providing great service and care to our customers. We have delivered modest growth in profitability despite challenging economic conditions in our key markets.

We have refreshed Bupa's strategy, deepening our position in key markets with an increased focus and better execution. We are placing our customers front and centre and, as a service organisation, recognise that our people are central. To serve customers in the digital age, we need to be relentless in our focus on improving all aspects of the customer experience, transforming how we operate.

We see opportunity for profitable growth in our current geographies by focusing on strengthening our businesses in our chosen markets. We continue to seek to expand selectively in Asia and Latin America and leverage our partnerships to grow and innovate. We remain focused on cost-efficiency and highly disciplined in capital management.

In the first half of 2016, we have delivered revenue and underlying profit growth and maintained our strong market positions, despite the tough operating environment and increased political uncertainty in the UK, Australia and Spain.

The immediate impact on the Group's financial position following the EU referendum in June has been limited. Liquidity remains strong, our investment portfolio is largely cash-based and low risk and weaker sterling has a positive impact on our statutory profits and cash flows. There was also a small positive impact from market movements on Bupa's solvency capital coverage at the half year. While there will be some operational and legal impacts, it is too early to conclude how the Leave vote will affect our underlying businesses and employees. We continue to monitor the situation closely.

In Australia and New Zealand, underlying profit and revenue increased, mainly due to higher customer numbers, higher premiums and a stable loss ratio. Political uncertainty around July's federal election also impacted consumer and business confidence. The new coalition Government has now been formed. The Government has signalled significant changes to its Aged Care Funding Instrument which will reduce funding for high quality care for residents with complex needs[7]. The changes could impact revenue and profitability of our Aged Care Australia business and the sustainability of the wider aged care industry, which faces the increasing demands of an ageing population. In New Zealand, a pending fair wage case may also increase costs in the sector.

In the UK, revenue and profit growth has been good across all areas of the business, despite continued challenges in the market. Profit increased 24%, reflecting good customer retention and improved loss ratios, as well as the continued expansion of our dental business. The increase in Insurance Premium Tax continues to penalise our customers. We are focused on ensuring the fees charged by hospitals and consultants are fair and reasonable for the benefit of our customers. The aged care sector is challenging, with the introduction of the National Living Wage increasing staffing costs. We are in active negotiations with local authorities to ensure their fees reflect the true cost of care. On 1 July 2016, we announced the completion of the sale of Bupa Home Healthcare in the UK to Celesio, a leading provider of healthcare services to the NHS. As this transaction completed in the second half of our financial calendar, the financial impact will be reflected in our 2016 full year results.

In Spain and Latin America, we achieved good revenue and customer growth. This is despite a backdrop of political uncertainty in Spain following the second general election in June, in which no party secured a majority and a coalition government is still under negotiation. The decrease in underlying profit is mainly driven by regulatory changes affecting our Manises PPP hospital in Valencia[8], as signalled in our 2015 full year reporting.

In International Development Markets, we have delivered good revenue and profit growth and maintained strong market positions in Poland, Hong Kong, Saudi Arabia and India.

In Bupa Global, profit has been impacted by our investment in capability and infrastructure to improve the customer experience and grow our Corporate book. We have also seen the continued impact on revenue and profit of our 2013 decision to exit non-strategic markets, with a higher rate of lapses in the period.

Outlook

Looking forward, we expect challenging market conditions to continue in our key markets, but anticipate modest growth for the rest of 2016. We are focused on deepening our relationships with customers and strengthening our key market positions.

MARKET UNIT PERFORMANCE

Australia and New Zealand

Australia and New Zealand generated good revenue growth across all business lines during the reporting period, up 8%, in a challenging and highly competitive health and care environment. This was driven mainly by the health insurance business, now Australia's largest health fund, accounting for more than 80% of the Market Unit's revenue. We have grown our market share marginally against the backdrop of slower growth in the health insurance market, which continues to face significant consumer affordability pressures and public policy headwinds. This is expected to lead to increased downgrades and discontinuances across the Australian private health insurance sector. 

Our Aged Care Australia and Care Services New Zealand businesses continue to perform well, with high occupancy levels, and four new homes opened in Australia[9] and one in New Zealand[10].

Our Health Services business achieved good profit growth, particularly through the branded dental centres. Bupa's 239 centres across Australia and New Zealand make us the region's largest dental provider. We opened two optical stores in Australia and are running two private medical clinics in Sydney to explore how we can increase coordination of health and care for our customers.

We are working on important preventative health measures and joined forces with The George Institute for Global Health to develop a new 'polypill' to reduce the impact of heart disease and stroke[11].

UK

In the UK, revenue growth has been good across all areas of the business, despite continued challenges in the market. Revenue is up 8%, driven by the health insurance business with higher earned premiums, most notably in the Corporate and small and medium-sized enterprises (SME) segments, and strong customer retention rates.

Underlying profit growth was driven by the health insurance business, through good customer retention and improved loss ratios in the Consumer and Corporate segments, as well as the continued expansion of our dental business.

In Care Services, our acquisition of five care homes from Hadrian Healthcare Limited in December 2015 and strong sales in Richmond Witney, a retirement village currently under construction, have had a positive impact. The aged care sector continues to be challenging, with the introduction of the National Living Wage increasing staffing costs. We are continuing our disciplined approach to fee negotiations, focusing on recovering the cost of caring for our residents from local authority contracts. Occupancy is flat at almost 86%.

Bupa Cromwell Hospital maintained solid performance throughout an extensive refurbishment programme. Increased trading activity in Bupa Home Healthcare also made a positive contribution. The sale of this business to Celesio completed on 1 July, and the financial impact will be reflected in our 2016 full year results.

In Health Clinics, we opened four new dental centres in the first half of 2016, which combined with the three opened in the second half of 2015 brings our total to 43. We have also enhanced our range of health assessments.

Spain and Latin America

In Spain and Latin America, revenue and customer growth has been good. Revenue was driven mainly by increased customer numbers in both Sanitas Seguros and our dental businesses, led by the addition of eight dental centres. Bupa Chile has also contributed to increased revenue through higher premiums from the Isapre business[12] and increased outpatient numbers in clinics. Hospitals and clinics in Spain produced good revenue growth.

There was a decrease in profit, driven by the impact of the Free Choice Act on our Manises PPP hospital in Valencia, and the increased investment in customer acquisition and retention.

Record occupancy levels were achieved in Sanitas Mayores, our Spanish aged care business, up 2% to 95%, in comparison with HY 2015. Jardines de Sabatini, a new care home in Madrid, opened with occupancy levels already at 60%.

Clίnica Bupa Santiago in Chile, set to be Bupa's largest hospital in the country with 460 beds, is under construction and is expected to be completed by early 2018, with some services expected to be provided towards the end of 2017.

International Development Markets

International Development Markets experienced higher volatility across all businesses compared to last year. Overall, revenue increased by 12% and profit grew by 5%.

Our Bupa Hong Kong insurance business and Quality HealthCare, our Hong Kong clinics business, continue to perform well. Our market position in Poland, through our LUX MED business, remains strong. We have increased walk-in customers and recently opened a flagship clinic in Warsaw to support this.

Our associate business, Bupa Arabia, is the largest health insurer in Saudi Arabia[13]. The macroeconomic environment has been affected by lower oil prices[14] impacting margins, and we have also seen increased claims and more price competition. This has been more than offset by the growth in our customer numbers, driving an increase in underlying profit in Bupa Arabia. We are pursuing a number of new growth opportunities in the market, closely monitoring the Government's major economic reform programme[15].

This is partially offset by high claims in the health insurance business in Thailand due mainly to a very heavy flu season.

Bupa Global

In Bupa Global, underlying profit is down 40% in the first half of 2016, primarily due to investment in capability and infrastructure. This investment will strengthen our efficiency and effectiveness in sales, operations, health and benefits, and actuarial. Two key areas of investment include moving from a centralised to regional distribution model in our priority markets of Greater China and the Middle East, as well as investment in sales capability to grow our Corporate book. In 2013 we took the decision to exit non-strategic markets; this continues to contribute to significantly higher lapses in some areas, which is likely to continue into the second half.

In our priority markets, new business has grown by 83% since 2015 half year; this is driven by strong performance in Greater China, the Middle East and North America, with the loss ratio of our priority markets in line with 2015.

Some corporate clients have faced economic pressures, particularly in the oil and gas sector, reducing the Corporate and SME books. This has had a significant impact on earned revenue in some regions and remains a key area of focus for 2016. However, there has been record new business performance in the Corporate book in 2016.

The bancassurance partnership with Hang Seng Bank in Hong Kong, and International Development Markets, has been a key contributor to new business growth and continues to deliver above expectations.

The investment in Highway to Health is performing well, with increased year-on-year profit. We have strengthened our global partnership with Blue Cross Blue Shield Association[16], by jointly branding IPMI products, Blue Cross Blue Shield Global[17]. So far this year these products have been introduced in the UK, France, Guernsey, Jersey, Gibraltar, the Dominican Republic and Bolivia.

FINANCIAL REVIEW

Summary of results

The Group's statutory profit before taxation was £185.7m (HY 2015: £297.5m), with underlying profit[18] before taxation of £303.8m (HY 2015: £295.3m) at actual exchange rates (AER). The statutory profit reflects a slight increase in underlying profit being offset by the net loss on non-underlying items in 2016 compared to a net gain in the prior year, mainly due to the net expense on the early redemption of the legacy £235m securitisation. Profit exceeds that of Bupa as there are expenses incurred by the ultimate parent company which are not included within the Group.

Consolidated total revenues were up 7% at constant exchange rates (CER) with growth achieved through expansion and increased customer numbers in all Market Units except Bupa Global. Underlying profit increased by 2% at CER, mainly driven by increased numbers of members and higher revenue in the UK and Australia and New Zealand and lower net interest expense following the securitisation redemption. Underlying profit was higher in International Development Markets due to increased customers, particularly in Bupa Arabia, partially offset by a high level of claims experienced in Thailand. This was partially offset by challenging conditions in the other Market Units with Bupa Global reflecting investment in capability and infrastructure and the 2013 decision to exit non-strategic markets. Spain and Latin America was negatively impacted by the Free Choice Act affecting the PPP in Valencia.

Operating segments at constant exchange rates:

Following the result of the EU referendum, sterling weakened considerably against the major currencies the Group trades in. The impact of the EU referendum on the half year segmental financial performance was minimal as these are based on year to date average exchange rates.

After the impact of foreign exchange is considered, notably a strengthening of the euro and US dollar compared with sterling, underlying profit increased by 3% at AER.

Non-underlying profit items

In order to reflect trading performance in a consistent manner year on year, a number of non-trading items that limit comparability are removed from the Group's reported profit to arrive at underlying profit. These items are presented in the table below:

Non-underlying items for the six months to 30 June 2016 resulted in a net loss compared to a net gain in the six months to 30 June 2015, primarily driven by the net loss of £112.3m on the redemption of the secured loan notes. This comprised of the early redemption of the notes (£151.6m) and profit on early termination of the zero coupon deposit (£39.3m) which provided security for repayment of the notes. 2015 benefitted from the £24.1m receipt of deferred consideration in relation to the 2007 sale of Bupa Ireland Limited.

The gains on return-seeking assets (£17.7m) were driven by the corporate bond and emerging market debt exposure. The global corporate bond market benefitted from the sharp decline in developed market sovereign bond yields in response to expectations of less aggressive interest rate changes in the US and further monetary policy easing in the euro area. The emerging market debt fund performed strongly due to the rebound in oil prices and reduced concerns over key emerging market economies.

Taxation

The Group's effective tax rate for the period was 25.4% (HY 2015: 19.8%), which is higher than the UK corporation tax rate of 20%, mainly due to the the Group's profits arising in jurisdictions with a higher rate of corporate income tax. The rate was lower for the six months to 30 June 2015 due to tax savings recognised in the period.

Funding

The Group manages funding prudently to secure a sustainable platform for continued growth. A key element of the Group's funding policy is to target an A-/A3 senior credit rating for the Group, the main issuer of Bupa debt.

There have been no changes to the ratings since 31 December 2015: the Group is currently rated A- (stable) and Baa2 (positive) by Fitch and Moody's respectively.

The £800m committed bank facility was drawn down by £90m at 30 June 2016 in addition to £6.4m of outstanding letters of credit required for general business purposes.

An additional committed bank facility of £250m was agreed in June 2016. This new facility matures in December 2017 with an option to extend for an additional six months thereafter. This new facility will help ensure that the Group continues to maintain its strong liquidity position, as well as remain within its liquidity risk appetite - even after the repayment of the Group's senior £350m bond which took place on 4 July 2016. The facility was undrawn at 30 June 2016.

Leverage at the half year was 25.8% (FY 2015: 28.9%). This is largely due to lower borrowings alongside the increase in equity as a result of profits in the period and foreign exchange translation movements, following the weakening of sterling. Financial covenant coverage remains considerably within levels required in the Group's bank facilities.

In 2000 the Group issued £235m secured notes in two tranches with coupons of 6.3% and 7.5% respectively. On 1 April 2016, the Group took the opportunity to early redeem both tranches of the securitisation, which were due to mature in 2029 and 2031. This redemption reduced the complexity and cost inherent in maintaining the debt in place. It also reduced the ongoing interest cost of the Group's debt. A zero coupon bond which was in place to support the ultimate repayment of one of the tranches of debt was simultaneously unwound and helped to fund the redemption.

Cash flow

Net cash generated from operating activities for the six months to 30 June 2016 has increased by £66.8m compared to the same period in 2015. This reflects the impact of Market Unit working capital cash flows, including higher receipts in Spain and Latin America.

Cash used in investing activities has decreased by £365.5m compared to half year 2015. Financial investments and deposits with credit institutions withdrawals were made primarily as a result of a change in portfolio mix to increase other financial investments and to make cash available to repay interest bearing liabilities, partly offset by £128.5m cash received on sale of the zero coupon bond that provided security for repayment of the £235m secured loan notes. This is offset by the Group acquiring a further 26.3% interest in Bupa Chile for £93.1m for full ownership in 2016. HY 2015 also benefitted from a deferred consideration of £24.1m on the 2007 disposal of Bupa Ireland Limited.

Cash outflows from financing activities in the first half of 2016 have increased by £360m compared to half year 2015. The variance to the prior period is due to the £381.6m repayment of the aforementioned secured loan notes. Offsetting this, the additional revolving credit facility has been drawn down by £90m in the period. Payments to hedging instruments of £24.4m were driven by the weakening of sterling.

The Group has maintained a strong cash position throughout the period with favourable foreign exchange impacts of £166.9m.

Cash and cash equivalents, in addition to the Group's financial investments and longer term deposits, continue to be managed conservatively, in line with a clearly articulated risk appetite. The Group actively manages its counterparty exposures and cash is only invested with counterparties rated A/A2 or higher, unless approved by the relevant investment committee of Bupa.

The Group has a preference for low risk asset classes, with modest holdings of corporate and other bonds, therefore it is not significantly exposed to market movements.

Solvency

Bupa, which includes Bupa Finance plc and its subsidiaries, monitors its solvency capital on an ongoing basis and has continued to maintain regulatory capital well in excess of its requirements.

Since 1 January 2016, Bupa has been subject to the Solvency II Directive which requires Bupa to hold sufficient eligible Own Funds (Own Funds) to cover its Solvency Capital Requirement (SCR) which takes account of all the risks in Bupa, including those related to non-insurance business. The estimated Solvency II surplus capital as at 30 June 2016 was £1.5bn[20], compared to £1.3bn at 31 December 2015. The Solvency ratio was 180% at 30 June 2016 (31 December 2015: 178%).

BUSINESS RISKS AND UNCERTAINTIES

The principal risks and uncertainties faced by the Group are set out in the Risks and Uncertainties section of the Group Directors' Report and Financial Statements 2015.

The Group maintains a well established process for identifying and managing all business risks, including all aspects of operational risk, such as conduct risk, cyber security risk, and clinical risk. This also includes effective oversight of the risks associated with the change programmes underpinning delivery of the Group's strategy.

The most significant quantifiable risks facing the Group are property risk and insurance risk, reflecting the significant property portfolio, mainly care homes, owned or leased by the Group and the potential volatility arising from claims patterns in our insurance businesses. Movements in property markets aside, exposure to investment market fluctuations is relatively low, reflecting the Group's conservative investment strategy.

Economic conditions may impact trading performance in the Group's insurance and care services businesses, reducing demand for insurance and constraining public support for health and care services. In many markets in which the Group operates, the decisions of governments and regulators on issues such as tax relief, the pricing and regulation of health insurance, as well as care services fees and referrals, or national minimum wage levels, continue to present a risk to some Group businesses. To mitigate this risk, the Group's businesses continue to develop differentiated products and services, focus on customer retention and work to control costs carefully.

The immediate impact on the Group's financial position following the EU referendum in June has been limited. Liquidity remains strong, the Group's investment portfolio is largely cash-based and low risk, and there was a small positive impact of market movements on Bupa's solvency capital coverage at the half year. Given the Group's globally diversified portfolio of businesses and in particular its significant euro and Australian dollar denominated revenues, a weaker sterling has a positive impact on underlying and statutory profits and cash flows. The Group is closely monitoring the implications of the UK's vote to leave the EU and is analysing potential business, employee, customer, legal and regulatory impacts on its operations in the UK and other subsidiaries in the EU. The Group's head office, the UK Market Unit and key operations of its Bupa Global Market Unit are based and regulated in the UK, and the Group's European subsidiaries (including the Group's key operations in Spain and Poland) are incorporated and regulated in their relevant markets. The Group is monitoring developments and note that the negotiations to agree the new terms of the future relationship between the UK and the EU are likely to take a number of years.

The Group faces competition in its insurance and healthcare businesses, which can affect customer growth and retention and erode margins. A lack of competition among hospitals and other suppliers can also lead to higher claims costs for insurance businesses. In recent times, the regulatory focus applied to the Group, and other companies operating within regulated markets, has continued to increase.

Therefore, in continuing to monitor and manage the Group's risks, the Group seeks to ensure that the evolving expectations of its customers, investors and regulators continue to be met.

BUPA AROUND THE WORLD

Bupa is organised across five Market Units:

Australia and New Zealand

· Bupa Health Insurance, a leading health insurance provider in Australia, which also offers health insurance for overseas workers and visitors.

· Bupa Health Services, a health provision business, which comprises Bupa Dental, Bupa Optical, Bupa Medical Visa Services, Bupa Medical TeleHealth and Bupa Medical GP Clinics.

· Bupa Aged Care Australia, the largest privately-owned residential aged care provider, caring for almost 11,000[21] residents each year across 70 homes.

· Bupa Care Services New Zealand, a leading aged care provider, caring for around 24,00023 people a year in 60 homes, 32 retirement villages, seven rehabilitation sites and through its personal medical alarm network.

UK

· Bupa Health Funding, offering health insurance and health funding products.

· Bupa Care Services, caring for around 43,00023 people each year in 283 homes and 27 retirement villages.

· Bupa Health Clinics, wellness centres, clinics, occupational health services and dental clinics.

· Bupa Home Healthcare[22], providing out-of-hospital healthcare services to around 40,00023 patients.

· Bupa Cromwell Hospital, complex care hospital in London, providing care for insured, self-pay and international patients.

Spain and Latin America 

· Sanitas Seguros, the second largest health insurance provider in Spain.

· Sanitas Hospitales and New Services, four private hospitals, 34 private medical clinics and two PPPs in Spain.

· Sanitas Dental, dental insurance services through 184 centres and third-party networks in Spain.

· Sanitas Mayores (previously known as Sanitas Residencial), caring for around 9,00023 people every year in 39 care homes and three day care centres in Spain.

· Bupa Chile, a leading health insurer and provider with three hospitals and 37 medical clinics.

International Development Markets

· Bupa Arabia, an associate company in which Bupa has a 26.25% stake, and the largest health insurance business in Saudi Arabia.

· LUX MED, the largest private healthcare business in Poland operating in health funding and provision.

· Max Bupa, a 49:51 associate between Bupa and Max India Limited (increased from 26% ownership in June 2016), offering private medical insurance.

· Bupa Hong Kong, a leading specialist private health insurer in Hong Kong.

· Quality HealthCare, a leading private clinic network in Hong Kong.

· Bupa Thailand, a leading specialist health insurer.

· Bupa China, a representative office in China.

Bupa Global

International health insurance, travel insurance and medical assistance provided worldwide to individuals, small businesses and global corporate customers. Five regions:

· Bupa Global Business Unit, oversees the regional operations in Greater China, the Middle East and Rest of the World (Africa, South East Asia and Europe).

· Bupa Global Latin America, the largest provider of international health insurance in Latin America.

· Bupa Global North America, responsible for Bupa's (49%) investment in Highway to Health, Inc. in the US and the strategic global partnership with the Blue Cross Blue Shield® (BCBS) Association, which created the largest combined healthcare provider network ever formed in the IPMI market.

A full copy of the Half Year Report has been submitted to the National Storage Mechanism and will shortly be available for inspection at:

http://www.morningstar.co.uk/uk/NSM

ENDS