BUPA FINANCE PLC
(Company number 2779134)
Directors' report and financial statements
for the financial year ended 31 December 2023
Bupa Finance plc
Registered number: 2779134
Contents Page
Directors and officers 2
Strategic Report 3
Governance Report 19
Independent auditors’ report to the members of Bupa Finance plc 24
Consolidated Financial Statements 36
Notes to the Consolidated Financial Statements 42
Bupa Finance plc Company Accounts 113
Disclaimer: Cautionary statement concerning forward-looking statements This document may contain certain ‘forward-looking statements’. Forward-looking statements
often use words such as 'intend', 'aim', 'project', 'estimate', ‘plan’, ‘believe’, ‘expect’, ‘forecasts’, ‘may’, ‘could’, ‘should’, ‘will’, ‘continue’ or other words of similar meaning.
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, risks arising out of health crises and pandemics, the impact of
competition, the timing, impact and other uncertainties of future mergers or combinations within relevant industries. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors, which may cause the 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. Recipients should not place reliance on, and are cautioned about relying on, any forward-
looking statements. Except as required by any laws and regulations, 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 or any change in events, conditions or circumstances on which
any such statement is based. Forward-looking statements in this document are current only as of the date on which such statements are made. No statement in this
document is intended to be a profit forecast. Neither the content of Bupa’s website nor the content of any other website accessible from hyperlinks on Bupa’s website is
incorporated into, or forms part of, this document.”
Bupa Finance plc
Registered number: 2779134
Directors and Officers
Directors
C Binmore
G M Evans
S M Fielding
J A Lenton
Company Secretary
C R Campbell
Registered Office
1 Angel Court
London
EC2R 7HJ
Auditors
PricewaterhouseCoopers LLP
2
Strategic Report
For the year ended 31 December 2023
The Directors present their Report for the year ended 31 December 2023 for Bupa Finance plc, a company registered in
England as a public company limited by shares (the ‘Company’), and its subsidiary companies (together referred to as the
‘Group’). The immediate and ultimate parent of the Company is The British United Provident Association Limited (the ‘Parent’)
which is also the ultimate parent company of the Bupa Group ('Bupa’).
Strategic Report
Principal activities
The Company is a part of the Bupa Group, which is an international healthcare group. The principal activity of the Company is
the provision of financing and treasury management of Bupa’s businesses, which are managed in three Market Units; Asia
Pacific, Europe and Latin America and Bupa Global and UK.
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 50 million customers worldwide
1
. With no shareholders, Bupa Group reinvests profits into
providing more and better healthcare for the benefit of current and future customers.
Through 2023, we directly employed around 87,000
2
people, principally in the UK, Australia, Spain, Chile, Poland, New
Zealand, Hong Kong SAR, Türkiye, Brazil, Mexico, the US, Middle East and Ireland. We also have an associate business in
Saudi Arabia. From 2024 onwards, our associate business in India, Niva Bupa, will become part of Bupa Global and UK
following the acquisition of a majority shareholding in January 2024.
Business model
Our businesses What we do
Health insurance
• 72% of revenue
• 29.7m Insurance customers worldwide
•
•
•
•
Our main business is health insurance for corporate customers,
small and medium-sized enterprises (SMEs) and for individual
customers.
We provide health insurance and funding products to customers
in the UK, Australia, Spain, Chile, Poland, Hong Kong SAR,
Türkiye, Brazil and Mexico and via our associate businesses in
Saudi Arabia and India.
We also offer international private medical insurance (IPMI)
through our Bupa Global businesses.
We provide dental insurance in Australia, the UK, Spain, Chile,
Poland, Hong Kong SAR, Brazil and through Bupa Global.
Health Provision
• 20% of revenue
• 20.3m provision customers worldwide
•
•
•
•
We operate health facilities in Spain, Chile, Poland, the UK,
Brazil, Hong Kong SAR and Australia, and in our associate
business in Saudi Arabia. Services include health assessments,
GP services, physiotherapy and outpatient clinics.
We provide digital GP services, care triage and consultation,
mental health coaching and support, and chronic care
management. We provide optical services in Australia.
We run hospitals in Spain, Mexico, Chile, Poland and the UK.
We have dental centres across the UK, Ireland, Australia, Spain,
Chile, Poland, Brazil and Hong Kong SAR.
Aged care
• 8% of revenue
• 20,846 residents in our care homes
•
•
Our aged care services comprise care homes, retirement
villages, day centres and home care.
We provide care to our residents in Australia, New Zealand, the
UK and Spain.
Financial headlines
3
• Revenue
4,5
of £15.1bn was up 9% (2022: £13.9bn) at Constant Exchange Rates (CER)
6
with period-on-period growth
across all lines of business and Market Units driven by:
1
Customer counting methodologies may vary between Business Units.
2
Based on average number of employees during the year and including 16,000 colleagues in Poland who are engaged under contract for service arrangements.
3
Financial results are based on the new accounting standard for insurance contracts, IFRS 17 and the updated definition of underlying profit, with prior period
comparators restated where applicable. See Note 1.5 for further detail.
4
Revenues from associate businesses are excluded from reported figures. Customer numbers include 100% of our associate figures. Economic post-tax profits include
the associate contribution in line with our shareholding.
5
Revenue calculated based on the aggregation of “insurance revenue” and “total non-insurance revenue” as shown in the Consolidated Income Statement.
6
Constant exchange rate (CER) financials are the retranslation of the prior year Actual Exchange Rates (AER) financials based on the current financial years average
rate.
3
Strategic Report
For the year ended 31 December 2023
◦ Customer volume growth with health insurance customers increasing by over five million
7
and provision
customers by one million. Occupancy rates in aged care increasing by 4ppt to 92% exceeding pre-COVID
levels (2019: 88%); and
◦ The impact of pricing action, as we seek to balance elevated levels of inflation, remaining competitive for
our customers and maintaining discipline in our underwriting of insurance risk.
• Underlying profit
8
before taxation of £747m, was up 2% at CER (2022: £730m) as strong customer growth and higher
investment returns were offset by lower profits in Australia Health Insurance, due to timing differences between the
recognition of COVID-19 claims savings and returns made to customers as part of our COVID-19 support programme
introduced during the pandemic. In 2023 the cost of returning claim savings (accumulated through the pandemic) to
customers increased to £312m (2022: £240m)
9
. The amount of COVID-19 claim savings realised diminished in 2023
relative to 2022 as claims frequency increased following the pandemic. In 2022 we also recognised £117m of tangible
asset impairments in UK Dental, which was not repeated in 2023.
• Statutory profit before taxation of £717m increased by £986m at AER (2022: £(269)m loss) driven by a significant
reduction in non-underlying items following £888m of impairments in 2022.
• The Bupa Group's Solvency II capital coverage ratio remains strong at 175%
10
(2022: 181%).
• The leverage ratio (excluding IFRS 16 lease liabilities) is 20.6% (2022: 19.4%).
• Full Year 2023 results demonstrate that our strategy is delivering strong results with broad-based growth across all
lines of business and Market Units against a backdrop of continued macro-economic, political and regulatory
uncertainty.
Financial position
• The Bupa Group's Solvency II capital coverage ratio remained strong at 175% (2022: 181%).
• Leverage ratio is 27.9% (2022: 27.3%) when including IFRS 16 lease liabilities. Excluding these liabilities, the
leverage ratio is 20.6% (2022: 19.4%). In the first half of the year we repaid £250m of Tier 2 debt at maturity and we
issued a €500m senior bond in October.
• Net cash generated from operating activities increased by £265m period-on-period to £1,304m, driven by higher
revenue, partly offset by the reduction in Australia Health Insurance profits.
Note on Chile
• As disclosed previously, Bupa’s Isapre business in Chile has been negatively impacted by judicial and regulatory
action. The Chilean Supreme Court has significantly shifted its interpretation of Isapre pricing in recent years, with the
cumulative effect of restricting the previously permitted, and generally accepted, pricing/rate-setting approach. The
potential short and long-term implications for Bupa’s Isapre business remain highly uncertain, however, some recent
developments suggest that a revised pricing framework could emerge to support the sustainability of the industry.
• In the meantime, we continue to recognise contingent liabilities regarding the potential retrospective financial
implications relating to the Isapre business. Further details are included in the Financial Review.
BUPA GROUP CEO's UPDATE
Bupa had a very strong year in 2023. We are making good progress on delivering against our strategy with strong organic
growth across our health insurance businesses, increased occupancy in our aged care homes and villages, and increased
activity in our health provision businesses to meet growing customer demand.
We are encouraged by the overall performance of the Group as we continue our transformation to become an increasingly
digital business serving our customers, patients and residents.
I would like to thank all our people at Bupa who have worked incredibly hard to support our customers and transform the
business. Throughout the year, our teams have been focused on ‘running’ and ‘changing’ Bupa – continuing to run the
organisation efficiently and prioritising high standards of customer service while at the same time changing our business with a
focus on digital transformation. This has delivered strong performance across the organisation with our strategy driving positive
improvements and organic customer growth.
Significant progress in 2023
This year’s results demonstrate that our 3x6 strategy is the right one and delivering strong results:
• In health insurance, customer numbers grew 22%
11
as our market-leading propositions position us well to serve more
customers with an increasing focus on health and wellness.
• In health provision, we saw good customer growth and a strong increase in profitability. Notably in UK Dental we have
seen improved business performance as the business delivers against the early stages of its turnaround plan.
7
Includes customer numbers for associate businesses.
8
Underlying 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 profit before taxation, to facilitate period-on-period comparison. A reconciliation to statutory profit before taxation can be found in
the notes to the financial statements.
9
Note variance to Full Year 2022 disclosures relates to change in accounting for premium rate deferrals under IFRS 17. Previously expensed as incurred but now restated
and recognised over the duration of the contract to which the deferral relates.
10
The FY 2023 Solvency II capital coverage ratio is an estimate and unaudited.
11
Includes customers from Associate insurance businesses.
4
Strategic Report
For the year ended 31 December 2023
• And in aged care, we have reached an important milestone as a sharp focus on the business fundamentals has seen
occupancy exceed pre COVID-19 pandemic levels.
12
Our specialist healthcare focus, international footprint and trusted clinical expertise puts us in a strong position in a sector with
long-term rising demand. This has seen our insurance customer base, including associates grow to 29.7m, which is 22% higher
than in 2022.
We have delivered thousands of customer experience improvements across key parts of the customer journey and continue to
increase our focus on digital transformation. We now have over 5.5 million customers using Blua
13
, our innovative digital health
solution.
During the year, I was able to visit many of our teams in our different markets. While virtual meetings are an effective means of
communicating, it is important to meet our people and our customers in person. I’ve visited our businesses in countries
including Spain, Poland, Mexico, Saudi Arabia, Australia, India and the UK, and have been impressed by the energy,
commitment and care shown by all our colleagues.
I’m very proud of the strong leadership community we have built at Bupa. Our Strategic Development Forum is the group of our
75 most senior people from across every business who meet quarterly and which are driving the execution of our strategy. This
team is the best lever we have to maintain the momentum of our transformation.
Strategic progress
Bupa’s 3x6 strategy is centred around three bold ambitions focused on digitalisation and customer experience and six strategic
and enabling pillars. Over 2023, we made good progress, including:
• Customer: In 2023, 87% of our Business Units improved their Net Promoter Score (NPS). We also implemented over
8,000 customer experience improvements across key parts of the vital customer journeys.
• Growth: We have 20.3m provision customers, 6% growth from last year and 29.7m health insurance customers
14
,
reflecting a 22% growth from 2022.
• Transformation: We now have over 5.5 million Blua customers globally, with plans to significantly increase this going
forward. These customers are being served by our growing network of around 14,000 doctors and clinicians.
• Sustainability: We launched our Healthy Cities programme globally, which saw 80,000 people, including our
employees, customers and community partners take 10 billion steps throughout 2023, in turn unlocking £2 million of
funding for local nature regeneration projects in urban areas.
• Agile Culture: 457 leaders globally are listening to customer feedback via our internal listening app in almost every
business. 61,000 customer calls listened to, and 23,500 ideas generated for how we can improve our customer
experience.
• Data: Over 12,000 of our people are accessing and using data from our platforms to drive decision-making, and in
2023, 120 teams across 20 countries participated in the B-Disruptive Hackathon, upskilling Bupa’s workforce in
Generative AI.
Sustainability highlights
As an international healthcare company, the interconnection between human health and the health of the planet is core to our
strategy. In 2023, we made notable progress in decarbonising our operations and accelerating critical collaborations to shape
the delivery of net zero, patient-centric health systems, including Bupa joining the Sustainable Markets Initiative Health Systems
Taskforce and a global partnership with Health Care Without Harm. We also expanded our Healthy Cities programme to all our
Market Units, encouraging people to adopt sustainable and healthy lifestyles, while investing in regenerating urban
environments for people to thrive. Here are some of our other highlights:
• Our global talent and innovation programme eco-Disruptive continued into its third year, engaging more than 270
start-up applicants and 18 finalists. We awarded £200,000 to the winning start-up, UniSCool, who have pioneered a
liquid cooling solution which reduces the energy use of electrical appliances including medical equipment. They will
continue to work with Bupa employees to drive sustainability action.
• We expanded our international-level advocacy and partnerships, including a three-year partnership with the Norman
Foster Foundation to create healthy and climate-resilient cities.
Outlook
We are encouraged by the overall positive performance across the Group and how our businesses are transforming against the
strategic priorities they are given as part of our portfolio management strategy.
I’ve been particularly energised by my visits to India, where I’ve spent time with the team at Niva Bupa. In 2023, we began the
process to increase our stake in the business to become the majority shareholder of one of the fastest growing companies in
the Indian health insurance industry. This completed in January 2024. I am very impressed with what the Niva Bupa team have
achieved to date. It is a vibrant and exciting market, and we see huge opportunities to serve more customers and grow the
business and the market over the coming years.
The macro-economic, political and regulatory outlook remains uncertain. We continue to see elevated levels of inflation
increasing costs for our business and for our customers in certain markets. As stated in the Business Risk section, changes in
governmental and regulatory policy continue to be one of our top risks given the nature of our business. This risk is present in
12
Pre COVID-19 levels based on 2019 closing occupancy.
13
5.5 million customers are using Blua, our digital healthcare service, or an equivalent digital solution.
14
Includes customer numbers for associate businesses.
5
Strategic Report
For the year ended 31 December 2023
Chile, where the Isapre insurance industry continues to be negatively impacted by political uncertainty, potential changes in law
and regulatory and judicial action. This results in Contingent Liabilities being recognised as at 31 December 2023, as
summarised in the financial review.
We are confident for the future of our business, there is positive momentum behind our 3x6 strategy and our ambition to be the
world's most customer-centric healthcare company. There is much to do, but we are well positioned to meet customer
healthcare needs with an ever-increasing focus on health and wellbeing across our markets.
MARKET UNIT PERFORMANCE
Asia Pacific
Revenue Underlying profit
2023 £5,726m £151m
2022 (AER) £5,716m £424m
% growth/(decline) –% (64) %
2022 (CER) £5,454m £400m
% growth/(decline) 5% (62) %
Health insurance Healthcare provision
customers (m) customers (m) Aged care residents
2023 4.7 2.6 8,600
(Commentary on a CER basis)
Revenue in our Asia Pacific Market Unit increased by 5% to £5,726m driven by new Australia Health Insurance members, an
increase in Australia and New Zealand aged care occupancy, and higher utilisation in Hong Kong Health Services. Revenues
were reduced by £312m (2022: £240m) as a result of returning claim savings to customers via cash givebacks (£211m) and
premium rate deferrals (£101m). This takes the total support provided to customers since the pandemic started to £0.7bn.
Overall Asia Pacific profits reduced, due to timing differences between the recognition of COVID-19 claims savings and returns
to customers in Australia Health Insurance.
In Australia Health Insurance, revenues increased by 6% (when excluding the impact of COVID-19 claims savings returned to
customers) as a result of growth in domestic and international customers and the November 2022 (deferred from 1 April 2022)
and October 2023 (deferred from 1 April 2023) premium rate increases. On a reported basis, the combined operating ratio
(COR) increased to 98% (2022: 89%) due to the impact of timing differences between the recognition and return of COVID-19
claims savings to customers.
Australia Health Insurance increased its domestic market share in the December 2023 quarter, delivering five consecutive
quarters of market share growth. We remain committed to finding ways for our members to get the best value from their health
insurance in the face of cost-of-living pressures. Key propositions included: the Members First Ultimate Dental market leading
proposition, providing Bupa members free access to fillings and check-ups exclusively at Bupa-owned dental practices; the new
Australia Health Insurance extras products offering greater choice, value and flexibility to our customers; and the 24/7 virtual/
digital Doctor programme as part of the ‘Blua’ offering we are piloting with our regional members. During 2023, the uptake of our
programmes designed to improve our customers’ health increased significantly including dietary guidance, hospital stay
preparation, and treatment recovery and to address health issues including heart attacks and strokes. In addition, Bupa signed
a three-year contract with Healthscope, Australia’s second largest private hospital group.
In Australian Health Services, revenues remained stable due to volume growth in Dental, Optical and the Australian Defence
Force contract, offset by lower assessment volumes in the Bupa Medical Visa Services business due to a change in
government regulations. Notwithstanding the underlying profit decline in Bupa Medical Visa Services due to the change in
government regulations, volumes uplifted in the later part of 2023.
In Australian Aged Care, revenues grew strongly and the business returned to profitability due to higher occupancy rates,
improved government funding and enhanced compliance as the sector continues to recover from the impacts of the COVID-19
pandemic. Closing occupancy was 91% (2022: 84%).
In New Zealand Villages and Aged Care, targeted initiatives delivered an uplift in care home occupancy to close at 91% (2022:
87%). Village Unit resales uplifted 15% relative to last year driving higher revenues and profitability, reflecting the optimised
village development strategy.
In Hong Kong, revenues increased driven by higher utilisation and the launch of seven new clinics. Insurance revenues also
grew as we launched a revised pricing and retention strategy to transform business performance. Overall, Hong Kong reported
an underlying loss due to an increase in claims utilisation in Insurance following the end of the COVID-19 pandemic. This was
partially offset by Health Services delivering a strong profit result.
6
Strategic Report
For the year ended 31 December 2023
Europe and Latin America
Revenue Underlying profit
2023 £5,083m £358m
2022 (AER) £4,487m £300m
% growth 13% 19%
2022 (CER) £4,553m £307m
% growth 12% 17%
Health insurance
customers (m)
Healthcare provision
customers (m) Aged care residents
2023 5.6 13.5 5,800
(Commentary on a CER basis)
Revenue in our Europe and Latin America Market Unit grew by 12% to £5,083m as a result of strong customer growth and the
impact of pricing action as we seek to balance elevated levels of inflation, remaining competitive for our customers and
maintaining discipline in our underwriting of insurance risk. Underlying profit increased by 17% to £358m in the year, driven by
revenue growth, higher margins and increased investment returns with 2022 also being impacted by a £41m one-off Consumer
Price Index (CPI) linked performance catch-up on a long-standing public private partnership (PPP) hospital contract in Spain. In
Bupa Chile the October 2022 regulator-approved GES pricing increases returned the Isapre to a small profit for the year.
However, following an adverse court ruling cancelling the increase (effective 1 January 2024), the outlook for Isapre pricing
remains unclear.
Sanitas Seguros, our health insurance business in Spain, delivered strong revenue growth driven by increased organic
customer volumes and the impact of a new strategic alliance with Generali, which has increased customer numbers by
134,000. Underlying profits increased significantly driven by stable margins with a 89% COR (2022: 88%), combined with
higher revenues and investment returns. Other business highlights include the acquisition of the health business of Asefa
Seguros in June, which increased our health insurance portfolio by 37,000 customers. We also continued to expand digital
services and, in December, we reached an average of 68,000 video consultations per month (compared to an average of
64,000 per month in December 2022). We have made more than 814,000 video consultations this year, representing an
increase of 5.6%.
Our dental business in Spain saw increased revenue and underlying profit, driven by higher customer volumes. New
commercial agreements with Generali and Asefa contributed to good growth in the number of dental policyholders.
In our hospitals business in Spain, revenue and underlying profit reduced due to the impact of a historical CPI catch-up in 2022
on a long standing PPP hospital contract in Spain. During 2023, our own laboratory works reached full capacity with more than
750,000 samples taken this year.
In Sanitas Mayores, our aged care business in Spain, revenue and underlying profit improved through higher occupancy levels
and price increases. Closing occupancy rates increased to 96% (2022: 93%). We have announced plans to create capacity for
over 500 new beds over the next three years, opening five new residential centres in Madrid, Barcelona and Valencia, and
extending our existing centre in Barcelona.
In Bupa Chile, we returned to profitability, but the future outlook remains uncertain following cancellation of the GES price
increase (effective 1 January 2024) which had been a key driver of the return to a small profit in Isapre Cruz Blanca. However,
whilst the financial impact of adverse court rulings in relation to GES and RFT pricing remain unclear, more recent
developments suggest a pricing framework needed to support the sustainability of the industry is becoming more likely.
In Poland, LUX MED revenue increased and underlying profit was up as a result of strong customer growth in health provision.
In the year we also acquired a new hospital with leading multi-speciality capability. Through the period, we have maintained our
support for Ukrainian refugees who have been forced to flee the war.
In Türkiye, our health insurance business delivered substantial revenue growth, driven by pricing increases to keep pace with
higher rates of inflation. Profits increased in the period due to higher investment returns. The economy continues to be
classified as being a hyperinflationary environment, leading to the application of IAS 29. A net monetary loss of £18m has been
recorded outside of underlying profit for the period.
Care Plus in Brazil delivered strong revenue growth, with double-digit growth whilst customer numbers more than doubled.
Through the acquisition of Inpao Dental, Care Plus quadrupled its number of dental funding customers to 360,000; and through
the acquisition of Vacinar, an in-company provision provider focused on the corporate segment, Care Plus will now administer
over 400,000 vaccinations annually. Underlying profits reduced for the period driven by a provision release in the prior year for
onerous contracts.
7
Strategic Report
For the year ended 31 December 2023
Bupa Mexico delivered strong revenue and profit growth due to higher renewal rates in our insurance business alongside the
favourable rates boosting investment returns.
Bupa Global Latin America revenue increased due to higher volumes in the domestic health insurance market in Ecuador and
international products across the region. Underlying profits increased driven by higher revenue, investment returns and
improved margin. In the period, we started an alliance in Peru with Mapfre to jointly develop and offer new health products and
this will gradually expand to other countries in Latin America.
Bupa Global and UK
Revenue Underlying profit
2023 £4,235m £263m
2022 (AER) £3,842m £47m
% growth 10% 453%
2022 (CER) £3,840m £47m
% growth 10% 462%
Health insurance Healthcare provision
customers (m) customers (m) Aged care residents
2023 3.4 3.7 6,400
(Commentary on a CER basis)
We achieved good revenue growth in our Bupa Global and UK Market Unit of 10% to £4,235m. Underlying profit grew by
£216m due to £117m of UK Dental tangible asset impairments in 2022, which was not repeated in 2023, and improved financial
performance across all Business Units.
In UK Insurance, underlying profit increased through higher investment returns and strong revenue and customer growth across
medical insurance, health trusts, dental insurance and cash plan in 2023. We launched several new propositions for customers,
including Workplace Mental Health Advantage, a new corporate proposition to support their people’s mental health through
early intervention, and Family+, a new consumer proposition built around savings for families.
In Bupa Global, our IPMI business, revenue and profit improved driven by increased customer volumes and strong corporate
revenue performance. Under the new regional commercial structure, we have made good progress against targets to deliver
long-term sustainable growth, with propositions tailored to meet local requirements. We launched new products in the UK, Africa
and the Nordics, and have also announced an expanded range of services and products in Egypt to provide holistic global
cover for individuals and their families.
The combined operating ratio (COR) for Bupa Insurance Limited, the UK based insurance entity that underwrites both domestic
and international insurance, was 95% (2022: 94%).
UK Dental losses reduced significantly following the early success of our turnaround strategy. This included the decision in
March to close, sell or merge 85 of our 475 dental practices in the UK as a result of the national shortage of dentists to deliver
NHS care, and heightened operational challenges due to macro-economic pressures, rising inflation and energy costs. We are
seeing rising numbers of clinicians choosing to work for us and improving retention rates amongst colleagues. We are seeing
strong demand for our quality services and we continue to improve our offering.
UK Care Services, our aged care business, delivered good growth in revenue and profit with occupancy reaching 90% in 2023
(2022: 87%), which is higher than pre-pandemic levels (2019 average: 87%). Underlying profit growth was driven by occupancy
growth, more self-funding residents and a material improvement in staffing levels which has reduced our reliance on agency
support. Our business continues to be impacted by high energy costs and salary inflation. Digital transformation progresses at
pace, with electronic care planning fully live in all our services and the rollout of electronic medication administration records.
Our retirement village portfolio has delivered strong performance driven by occupancy growth and property sales have
performed well against the backdrop of an uncertain housing market, demonstrating the appeal of our services, which we
continue to adapt in response to the needs of this evolving market.
Health Services delivered good growth in revenue and underlying losses reduced, driven by higher customer numbers and
strong growth across all product and service lines. We opened a further three new partnership clinics in the second half of the
year, launched remote GP services for UK Insurance customers, and the Cromwell Hospital opened a new urgent care and
acute admissions unit. Our Clinics and Cromwell Hospital treated increased volumes of UK Insurance customers as we
developed our Connected Care strategy to deliver more joined-up care for our customers. We also announced a major
expansion to our Cromwell Hospital site which, when completed, will provide additional outpatient capacity and improved
facilities for patients.
8
Strategic Report
For the year ended 31 December 2023
Other businesses
Revenue Underlying profit
2023 £8m £85m
2022 (AER) £7m £49m
% growth 22% 73%
2022 (CER) £7m £48m
% growth 25% 77%
Health insurance Healthcare provision
customers (m) customers (m)
2023 16.0 0.5
Performance
Underlying profit was up 77% to £85m driven mainly by higher volumes, margins and increased investment returns in Bupa
Arabia.
FINANCIAL REVIEW
Summary
15
FY 2023
FY 2022
restated (AER)
% growth/
(decline)
FY 2022
restated (CER)
% growth/
(decline)
Revenue
£15.1bn £14.1bn 7% £13.9bn 9%
Underlying profit
£747m £748m – % £730m 2 %
Cash generated from operating
activities
£1,304m £1,039m 26% n/a n/a
Statutory profit/(loss) before taxation
£717m £(269)m n/a n/a n/a
Leverage (excl. IFRS 16)
20.6 % 19.4 % (1.2) ppts n/a n/a
Leverage (incl. IFRS 16)
27.9 % 27.3 % (0.6) ppts n/a n/a
Solvency
175 % 181 % (6) ppts n/a n/a
Revenue (CER)
Group revenue was up 9% as a result of customer growth in insurance, increased activity in health provision and higher
occupancy levels in aged care. This was partially offset by a significant increase in the cost of returning COVID-19 claims
savings to customers in Australia Health Insurance taking the total cost of the return in 2023 to £312m (2022: £240m)
16
. Pricing
changes contributed to revenue growth across all lines of business
17
as we seek to balance the impact of elevated inflation,
remaining competitive for customers and maintaining discipline in our underwriting of insurance risk across our markets.
Revenue in health insurance grew by 9% with customer growth of 8%
18
period-on-period across all of our market units. Our
health provision businesses saw revenue growth of 6% driven by higher levels of activity, particularly in our Polish business,
LUX MED, partially offset by a £41m one-off CPI linked performance catch-up on a long-standing PPP hospital contract in
Spain in 2022. In aged care, revenue was up 12% as occupancy rates increased by 4ppts, exceeding 2019 pre COVD-19
levels.
Underlying profit (CER)
Group underlying profit before tax increased 2% to £747m (2022: £730m) as strong customer growth and higher investment
returns were partially offset by lower profits in Australia Health Insurance, due to timing differences between the recognition of
COVID-19 claims savings and returns made to customers as part of our COVID-19 support programme introduced during the
pandemic. In 2023 the cost of returning claim savings (accumulated through the pandemic) to customers increased to £312m
(2022: £240m). In 2022 we also recognised £117m of tangible asset impairments in UK Dental, which was not repeated in
2023.
15
Prior period comparators have been restated to reflect the new accounting standard for insurance contracts, IFRS 17 and the updated definition of underlying profit. See
Note 1.5 and Note 2 for further detail.
16
Note variance to Full Year 2022 disclosures relates to change in accounting for premium rate deferrals under IFRS 17. Previously expensed as incurred but now
restated and recognised over the duration of the contract to which the deferral relates.
17
Lines of business represents, insurance, provision and aged care.
18
Excludes insurance customers from the associate businesses.
9
Strategic Report
For the year ended 31 December 2023
Health insurance underlying profit decreased as growth in revenues and investment returns across all Market Units were offset
by the timing differences between the recognition of COVID-19 claims savings and returns to customers in Australia Health
Insurance. Margins across our Europe and Latin America Market Unit improved, in part driven by the October 2022 GES
premium rate changes in the Isapre business which have been cancelled with effect from 1 January 2024. In Bupa Global and
UK, UK Insurance underlying profit increased through higher investment returns and strong revenue and customer growth. In
Bupa Global profits increased as we continue to see the positive effects of our portfolio management strategy improving the
performance of the business.
Profitability grew strongly in health provision due to margin improvement, customer growth and the absence of impairments.
Aged care returned to profitability in the period driven by higher levels of occupancy and an improved government funding
model in Australia.
Increased central investment into certain initiatives that increase our capability globally, including ESG, and higher interest rates
on variable rate debt, resulted in central costs increasing by £38m to £110m for the year.
Statutory profit
Statutory profit before taxation was £717m, up £986m AER (2022: £(269)m), driven by the higher underlying result and by the
movement in non-underlying items which totalled a £30m cost at FY 2023, compared with a £1,017m cost at FY 2022.
The key driver of the movement in non-underlying items was the near absence of impairments of intangible assets and goodwill
arising on business combinations of £1m (2022: £888m
19
). Our return-seeking asset portfolio delivered a positive return across
all asset classes, with strong performance in the final quarter of the year on lower yields and tightening of credit spreads. This
compares to mark-to-market losses that we saw across the portfolio in 2022 following general market volatility and inflationary
pressure which led to a significant increase in both interest rates and credit spreads in the period. We also reported a gain on
realised and unrealised foreign exchange in the period of £2m (2022: £15m loss).
Also included is a £21m (2022: £33m) net loss on property revaluations. In Bupa Villages and Aged Care Australia we
recognised a £32m (2022: £34m) amortisation charge on intangible assets following the government announcement to
deregulate bed licences from 2024. Losses in other non-underlying items of £8m (2022: £21m) primarily relate to restructuring
costs in Europe and Latin America and Bupa Global and UK. Partially offsetting this, Other businesses includes a £27m dilution
gain on the issue of share capital in Niva Bupa to external investors which took place ahead of us increasing our stake in the
business.
2022
2023 restated
£m £m
Bupa Asia Pacific at CER
151
400
Europe and Latin America at CER
358
307
Bupa Global and UK at CER
263
47
Other businesses at CER
85
48
Central costs (110) (72)
Consolidated underlying profit before taxation at CER 747 730
Foreign exchange re-translation on 2022 results (CER/AER) – 18
Consolidated underlying profit before taxation at AER 747
748
Impairment of intangible assets and goodwill arising on business combinations
(1)
(888)
Short-term fluctuation on investment returns
31
(22)
Net loss on disposal of businesses and transaction costs on business combinations
(1)
(4)
Net property revaluation losses
(21)
(33)
Realised and unrealised foreign exchange gains/(losses)
2
(15)
Amortisation of bed licences
(32)
(34)
Other non-underlying items
(8)
(21)
Total non-underlying items (30)
(1,017)
Statutory profit/(loss) before taxation at AER 717 (269)
IFRS 17 Insurance Contracts
The IFRS 17 Insurance Contracts standard was issued in May 2017 as a replacement for IFRS 4 Insurance Contracts, with
effect for annual accounting periods beginning on or after 1 January 2023. In applying the new standard, the Group is applying
the simplified Premium Allocation Approach leading to revenue recognition that is consistent with that used under IFRS 4. The
Group’s net assets at transition on 1 January 2022 reduced by £56m. This is due to the derecognition of deferred acquisition
costs assets and the recognition of the loss component on onerous contracts, offset by the derecognition of both the COVID-19
19
Total £1bn of impairments in 2022, of which £117m were impairments to right-of-use and fixed assets in UK Dental which were included within underlying profit, with the
remaining £888m recognised in non-underlying items.
10
Strategic Report
For the year ended 31 December 2023
deferred claims liabilities and the premium deferral provision in our Australian insurance business, as these are not included
under IFRS 17.
The change to IFRS 17 results in a restatement of our reported Full Year 2022 underlying profit from £693m to £739m
20
AER.
This increase is mainly driven by the derecognition of the COVID-19 deferred claims liability and premium rate increase deferral
provisions. Beyond this, the impact of IFRS 17 is small, with other factors driving the restatement of profits including the change
from deferring acquisition costs to expensing up front and the recognition of losses on onerous contracts up front. See note 1.5
of the Annual Report and Accounts for further detail on the impacts of IFRS 17.
Insurance service result
Following the transition to IFRS 17 we are required to report an insurance service result which comprises: insurance revenue,
less insurance service expenses. This result excludes financial income and expenses. The 2023 the Group insurance service
result was £445m (2022: £672m) with higher revenues being offset by the lower profits in Australia Health Insurance, due to
timing differences between the recognition of COVID-19 claims savings and the returns made to customers. The 2023
combined operating ratio (COR)
21
was 96% (2022: 93%).
Taxation
The Group’s taxation expense for the year was £177m which represents an effective tax rate of 25% (2022: (48)%) in line with
the UK statutory corporation tax rate. The 2022 effective tax rate of (48)% was mainly driven by the net tax impact of one-off
goodwill and fixed assets impairments for which no tax deductions can be claimed.
Cash flow
Net cash generated from operating activities increased by £265m year-on-year to £1,304m driven by higher revenue across the
market units partially offset by the reduction in Australia Health Insurance profits. Net cash flow used in investing activities
reduced by £731m to £142m as less of the cash generated from operating activities has been invested into financial assets
versus 2022 contributing to the higher cash and cash equivalent balances being held at the year end. Cash used in financing
activities has reduced in the period by £345m to £203m, primarily due to the issuance of €500m of senior unsecured bonds.
This was partially offset by the repayment of £250m of Tier 2 bonds.
Funding
We manage our funding prudently to ensure a strong platform for continued growth. Bupa’s policy is to maintain investment
grade access to both the senior and subordinated bond markets. Fitch and Moody’s reviewed Bupa’s credit ratings during 2023,
with no rating changes in 2023.
We continue to hold a good level of Group liquidity. At 31 December 2023, our £900m revolving credit facility was undrawn
(2022: £70m drawn). In November, the final one year extension on the facility was exercised, with it now maturing in December
2028. We used the facility in the first half of the year to repay a subordinated bond on its scheduled maturity date and this was
repaid in October following the issuance of a €500m senior bond. Coverage of financial covenants within the facility remains
strong.
We focus on managing our leverage in line with our credit rating objectives. Leverage excluding IFRS 16 leases at 31
December 2023 was 20.6% (2022: 19.4%) and was 27.9% (2022: 27.3%) when IFRS 16 lease liabilities are included.
Chile - Isapre Cruz Blanca contingent liabilities
The negative impact of judicial and regulatory action on the Isapre insurance industry in Chile continues as the method and
implementation of the statutory Risk Factor Tables (used to adjust the price of insurance contracts based on risk factors such as
age) following a Supreme Court decision of December 2022 remain unclear.
To date, several proposals have been put forward in an attempt to make the industry sustainable and attractive enough to
secure the required political support. The Technical Commission report published in October and revised draft law published in
November were both significantly more favourable than the initial draft law published in May 2023, but still led to differing
quantifications of the retrospective liabilities. The method, form and timing of settling any such liabilities also remains unclear
with the Technical Commission report proposing that these liabilities are funded over a period of 10 years in healthcare benefits,
rather than cash. These proposals were largely adopted into the revised draft law which has moved from the Senate to the
Congress, although the exact details of how this would operate are currently unclear. The draft law is progressing through the
20
FY 2022 reported underlying profit of £748m also includes £9m impact from the change to the underlying profit definition, our non-GAAP measure of trading profit. Other
and FX balances net to nil.
21
COR is calculated based on “Insurance service expense” plus “Net expense from reinsurance contracts held” divided by “Insurance revenue” as shown in the
Consolidated Income Statement.
11
Strategic Report
For the year ended 31 December 2023
legislative process, including approval by the Senate in January 2024, but is still subject to debate in Congress, the lower house
of the Chilean parliament.
Whilst the government remains committed to enacting legislation by the May 2024 deadline, there remains considerable scope
for the proposals to be amended or rejected. Given the range of uncertainty around the outcome, no IFRS provision has been
recognised as at 31 December 2023.
In contrast to the requirements of IFRS, under Solvency II the Group is required to include a value for contingent liabilities, even
if the amount of the obligation cannot be measured with sufficient reliability. As at 31 December 2023, the Group included an
allowance of £165m (HY23: £160m and FY22: £100m). As previously stated, the final impact is likely to differ materially from
this value and this is a calculation for Solvency II purposes and not a pre-estimate of all actual or potential losses relating to
Isapre Cruz Blanca. Any retrospective payments finally determined to be due in respect of historic policies as a result of the
Risk Factor Table ruling and subsequent legislation would be liabilities for Isapre Cruz Blanca.
In addition to the Risk Factor Table ruling, the Chilean Supreme Court decision in August 2023 led to the most recent regulator-
approved GES price increase being cancelled, effective from 1 January 2024. This had been a key driver of Isapre Cruz Blanca
returning to a small profit for Full Year 2023. In December 2023, the regulator communicated the basis for calculating the
retrospective payment element in relation to the GES rate increase. This has been provided for and given the low probability of
further exposure, no further contingent liability disclosed.
Solvency
22
The Group's solvency coverage ratio of 175%
23
remains strong and is above our target working range of 140-170%.
The Group holds capital to cover its Solvency Capital Requirement (SCR), calculated on a Standard Formula basis, considering
all our risks, including those related to non-insurance businesses. As at 31 December 2023, the estimated SCR of £2.9bn was
£0.2bn higher and Own Funds of £5.0bn was £0.1bn higher when compared to 31 December 2022.
The Group's surplus capital was estimated to be £2.1bn, compared to £2.2bn at 31 December 2022, representing a solvency
coverage ratio of 175% (FY 2022: 181%). Our business continued to generate capital through our underlying profitability. This
capital generation was offset by the £250m repayment of Tier 2 subordinated debt, capital expenditure, debt financing costs and
increased regulatory provisions in relation to Isapre Cruz Blanca in Chile.
On 8 January 2024, the Group acquired additional shares in Indian health insurer Niva Bupa Health Insurance Company
Limited resulting in a controlling shareholding. The impact of this acquisition is an estimated 8 percentage point reduction to the
Group solvency coverage ratio.
The Group perform an analysis of the relative sensitivity of our estimated solvency coverage ratio to changes in market
conditions and underwriting performance. Each sensitivity is an independent stress of a single risk and before any management
actions. The selected sensitivities do not represent our expectations for future market and business conditions. A movement in
values of properties that we own continues to be the most sensitive item, with a 10% decrease having a 10 percentage point
reduction to the solvency coverage ratio.
The Bupa Group's capital position is resilient in the face of the individual risks, illustrating the strength of our balance sheet.
Solvency II coverage
Risk Sensitivities ratio
Solvency coverage ratio
Property values -10%
Loss ratio worsening by 2%
Sterling depreciates by 20%
Group Specific Parameter (GSP) +0.2%
24
Interest rate -100bps
Credit spreads +100bps (no credit transition)
Pension risk +10%
Equity markets -20%
175 %
165 %
168 %
169 %
173 %
173 %
175 %
175 %
175 %
The Group includes a Group Specific Parameter ('GSP') in respect of the insurance risk parameter in the Standard Formula.
Applying a premium recognition adjustment to the GSP loss ratio data to allow for the distorting impact of the COVID-19
pandemic.
22
The Solvency II capital position, SCR and coverage ratio represents the Parent, The British United Provident Association Limited.
23
The 2023 Solvency II capital coverage ratio is an estimate and unaudited.
24
Group Specific Parameter (GSP) is substituted for the insurance premium risk parameter in the standard formula, reflecting the Group’s own loss experience.
12
Strategic Report
For the year ended 31 December 2023
Section 172 and engagement statement
The following provides the Directors’ statements, required by the Companies Act 2006 (the 'Act'), to report on how they have
performed their duties in relation to Section 172(1) of the Act and engaged with employees, suppliers, customers, and others. It
draws upon information contained earlier in the Strategic Report, which has been signposted and not repeated.
Section 172 Statement
This statement sets out how the Board has acted in a way that promotes the Company's long-term success and sustainability
for the primary benefit of its sole shareholder, The British United Provident Association Limited, to support the Parent's purpose
of helping people live longer, healthier, happier lives and making a better world, as well as its other key stakeholders.
When making decisions, the Board is guided by Section 172 of the Act when performing its duties and making decisions
regarding the likely long-term impact, interests, concerns of its key stakeholders and on the communities in which Bupa
operates, its environment and maintaining high standards of business conduct.
Engaging with our key stakeholders
As an intermediate holding company for the Group, how the Company engages with its key stakeholder groups is in the context
of business oversight and is consistent with reporting by our Parent in its Annual Report and Accounts in respect of 2023.
During the year, the Board has considered the Group’s Parent, customers, people, bondholders, suppliers and partners,
regulators, and communities and the environment, as its key stakeholder groups, and had regard for their views and interests
when making decisions and overseeing execution of Bupa’s business model and strategy.
Customers
With a Group ambition to be the world’s most customer-centric healthcare company, Bupa’s customers are the focal point of all
Bupa Board decisions. The Board has had regard to customers' experience and future expectations via the Customer Listening
app in 2023 and in reports to the Board.
People
Bupa’s people are central to supporting customers, living our values and the long-term success and sustainability of the
Company and Bupa. It is fundamental that we listen to our people and consider their interests to ensure we attract and retain
the best people and they feel Bupa is a great place to work. Reporting on people strategy and governance is made to, and
overseen by, the Bupa Board, including its talent management, people development, biannual People Pulse employee surveys
and the operation and reporting in respect of ‘Speak Up’, the confidential whistleblowing helpline.
Bondholders
As outlined earlier, the Company has a series of publicly-traded debt securities in issue on the London Stock Exchange and is
therefore subject to the relevant UK Listing Rules and the Disclosure Guidance and Transparency Rules, and the UK Market
Abuse Regulation, and matters relating to the issue and trading of its debt securities are regulated by the Financial Conduct
Authority (FCA). Investors in these debt securities are interested in the Company and Bupa’s financial performance and
strength, and increasingly Bupa’s sustainability and wider ESG activities. On behalf of the Company and its Parent, Directors
hold briefing calls for bondholders to discuss the full year and half year results, strategy, and its sustainability and ESG
activities. This provides an opportunity for them to question management on the financial performance and strategy of the
Company and Bupa. The Directors also held roadshows for current and prospective bondholders during the year, and
communicated other significant developments via regulatory announcements and press releases, which are also published on
our website, bupa.com.
Regulators
The Group operates in highly-regulated environments across the health insurance, provision, and aged care businesses. Our
insurance business is also subject to financial services regulatory regimes and our aged care business with care quality
regulators. In some cases, regulators are independent of governments, and in other situations Bupa’s activities are directly
regulated by national or local governments. The relationship with regulators is performed by our Parent, on behalf of the
Company and its Directors, as that is where the Group oversight responsibilities for Bupa sit under the Senior Managers and
Certification Regime in the UK.
Suppliers and partners
Bupa’s suppliers and partners support our business needs and help Bupa to deliver a high-quality service to customers, so it is
important that we have strong working relationships and operate ethically. The Board has regard to Bupa’s Responsible Supply
Chain Statement, available at bupa.com, that sets Group expectations of our suppliers and our commitments to them, alongside
Group policies set and approved by the Bupa Board. The Board also considers matters related to modern slavery and the
supply chain and approved the Modern Slavery Statement, which can be found on bupa.com.
13
Strategic Report
For the year ended 31 December 2023
Communities and the environment
Bupa operates within a societal context and believes the health of the community and environment we live in has a significant
impact on people living longer, healthier, happier lives. The Company’s Parent reports on sustainability and ESG actions,
engagement, and ambitions on behalf of the Group and provides Bupa’s statements on climate related financial disclosures
now under the Act, on page 34 of its Annual Report and Accounts 2023.
Strategic decisions and their impact on stakeholders
The table below sets out examples of decisions the Directors have taken during the year and how stakeholder views were taken
into account.
Bond Issuance – Bondholders, customers, regulators
The Board is responsible for promoting the
Company’s long-term sustainable success and
ensuring that the necessary resources are in place
to meet its objectives. Maintaining a strong capital
base and access to liquidity means the Group has
the resources to be able to maintain and improve
its offer to customers and fund future growth of the
business.
Action
On 12 October 2023, the Company issued €500m of 5.00% fixed rate
notes with a maturity date of 12 October 2030, following Board approval.
Stakeholder considerations
Management discussed the proposals with the regulator to ensure they
were comfortable with the proposal ahead of the issuance. Management
also consulted the Company’s rating agencies.
Long-term impact
Directors were satisfied the bond issuance demonstrated to bondholders,
customers, and regulators that the Group would continue to hold
sufficient capital reserves and could comply with relevant capital
adequacy regulations. The issuance enabled the Company to enhance
its strong liquidity and capital positions, improve our offer to our
customers and generate sustainable long-term growth. The issuance
was denominated in Euros which enabled the Company to access a
wider investor base.
Acquisition of Majority Shareholding in Niva Bupa – Customers, people, regulators, bondholders, communities
The Board monitors the Company’s funding and
liquidity position to ensure that it has sufficient
headroom in the level of liquidity we hold above
risk appetite. The Board manages the need to
maintain the financial strength of the Company with
the funding requirements of the business to invest
in growth opportunities and to achieve the Group’s
objectives.
Action
During the year, the opportunity arose to increase Bupa’s minority
shareholding in its associate business in India, Niva Bupa, to a
controlling interest. In order to carry out the acquisition, the Board
approved the funding of the acquisition through a capital injection into its
direct subsidiary, Bupa Investments Overseas Limited, for onward
funding of the transaction. The acquisition completed on 8 January 2024.
Stakeholder considerations
The Board considered Niva Bupa’s profitable outlook and robust growth
projections and the benefits for customers, people, and the community in
India. Additionally, the Board closely monitored the Company’s liquidity
and capital resources before concluding on balance, that the acquisition
was in the best interests of the Company and the Group’s long-term
growth objectives.
Long-term impact
The acquisition of a majority shareholding in Niva Bupa provides the
Company with an opportunity for long-term expected returns on the
additional investment, with Niva Bupa having the potential to play a key
role in driving Bupa’s growth and profitability in the medium to longer-
term. It also provides the opportunity to reach and serve more customers
in India.
14
Strategic Report
For the year ended 31 December 2023
Risk
Embedding a strong risk management culture is a priority across Bupa supported by robust risk management and
controls.
Our focus on culture is essential in order to respond to changing environments and evolving regulation. This means we can
foresee the potential risks of future changes that could affect our customers and our business, and to mitigate them. Together
with our internal controls, ensuring a strong risk culture helps us to continue to serve our customers well and meet all of our
stakeholders’ expectations. Our comprehensive risk management programme ensures that risk management is important to
everyone at Bupa and they are equipped to manage risk. Bupa have tools in place to achieve this, including The Bupa Code,
our code of conduct, risk appetites, Enterprise Policies and our Speak Up whistleblowing process.
Bupa continue to raise our standards and expectations in order to ensure the right outcomes for our customers, our markets
and our business. Our local businesses are exposed to a wide range of political, regulatory, legal, operational and economic
risks. Our health insurance, provision and aged care activities also carry different risk profiles including clinical risk. It makes
sure Bupa are in the best place to manage and diversify our risks, including emerging and strategic, by understanding the
factors behind the risk to each individual business and to our balance sheet, and by assessing how these risks interact.
Bupa manages its risks using a 3 lines model as set out in the risk management framework approved by the Parent Board. It
determines Bupa Group's risk appetite determined by setting the degree of risk the Group is prepared to accept in order to do
business and deliver the Bupa Group's strategy.
The core risk appetite statements focus on:
◦ The treatment of customers and employees
◦ Management of our financial strength and
◦ Operational risk, including information security; privacy and clinical risks.
The risk appetite statements are reviewed annually by management, then the Parent Board's Risk Committee, and are
approved by the Parent Board in respect of the Bupa Group.
Risk profile
Risk is an inevitable part of operating a business. Some risks are avoidable while others are inherent in our business model so
we have an effective internal control and risk management system to mitigate these risks.
The Parent ensures that significant economic capital is maintained at the Bupa Group level as a means of mitigating certain
inherent risks. This reflects the nature of our operations and the level of risk associated with them. These risks are set out in the
table below in order of the solvency capital required to mitigate them.
◦ Property Risk - The risk of the volatility in values or the devaluation of properties held for own use (including owned
care provision properties), or for investment purposes, resulting in adverse impacts. This includes capital associated
with leased properties following the introduction of IFRS 16.
◦ Insurance Risk - Risks relating to our insurance businesses. Risk of inadequate pricing and/or underwriting of
insurance policies, of claims experience being materially adversely different to expectations and that provisions made
for claims prove to be insufficient in light of later events and claims experience.
◦ Currency Risk - Risk arising from changes in the level or volatility of currency exchange rates impacting on cash
flows and assets held in currencies other than sterling, and on the financial statements.
◦ Operational Risk - Risk of loss arising from inadequate or failed internal processes, or from personnel, systems or
external events. This risk also includes conduct risk (the risk that our behaviours, actions or controls result in
detriment or unfair outcomes for our customers), and clinical risk (the risk of injury, loss or harm to customers in
receipt of healthcare).
◦ Credit spread and counterparty default Risk - Risk of a loss in value of bond assets and/or that a counterparty fails
to meet its obligations in the face of adverse economic conditions. This also includes the risk of a loss in value of the
bond assets held within the pension schemes
.
Other significant risks to Bupa, such as operational risk, cannot be effectively mitigated through holding capital alone, although
we do hold significant capital for operational risks. Our Market Unit Executive Risk Committees regularly review these residual
risks and the mitigating actions taken to reduce them. They also inform the Bupa Risk Committee and BERC about key areas of
specific concern. This provides management with a view of the priority areas in which resources should be focused. The table
below reflects the themes of the most significant risks currently facing Bupa. Strategic and operational risks remained
heightened due to the challenging economic environment and the launch of our new strategy.
15
Strategic Report
For the year ended 31 December 2023
Risk Comment and outlook Mitigating actions
Information security
The risk of significant
financial and reputational
impacts due to a failure to
appropriately secure
information (including
personal information).
Information security remains a critical challenge
for all businesses, particularly those in the
healthcare sector.
The threats to our businesses evolve constantly
and therefore our responses need to continue
to do so as well.
This risk will remain elevated given the
challenging macroeconomic and geopolitical
environment and several incidents targeting the
healthcare sector.
We are continuing to invest in a range of
activities and actions to enhance security as we
further digitalise customer experience
All staff are required to complete appropriate
mandatory training.
We have well-established and tested data
breach incident response plans in place across
the Group.
Liquidity risk
The risk that we hold
insufficient financial
resources to enable us to
meet our obligations as
they fall due or to take
advantage of potential
opportunities, or of being
able to secure such
resources only at
excessive cost, resulting
in adverse impacts
Liquidity risk is addressed not through capital
but by holding liquid assets and maintaining
appropriate controls.
Policyholder liabilities are predominantly
backed by liquid assets held locally in our
insurance businesses.
This is mitigated by the Treasury Function
actively managing borrowings, for which the
amount and timing of outflows are known, and
by maintaining a portion of the bank facility
undrawn.
We continue to monitor the markets to ensure
that we appropriately fund the Group.
Our stress-testing programme considers the
liquidity impacts of potential adverse scenarios
Government, legal and
regulatory change risk
The risk of failure to
anticipate or influence
changes in the
governmental and
regulatory environment
which may impact our
customers and the viability
or profitability of our
business.
Our health insurance, provision and aged care
businesses are subject to government and
regulatory policy, including insurance conduct
rules, minimum wage requirements, prudential
requirements, changes to tax regimes and the
interpretation of existing tax practices, pricing
controls in some of our health insurance
businesses and clinical care requirements for
our provision and aged care businesses.
All our markets have defined key activities to
make sure we can continue to monitor and
assess the strategic implications on our
businesses of any future changes in policy or
regulation, and advocate for appropriate
change in these areas.
Transformation
execution risk
The risks associated with
failing to deliver effective
and timely transformation
and change. This includes
the risks associated with
acquisition and disposal
decisions and their
implementation.
Our strategy is focused on addressing
customer expectations as they change.
All Market Units have a range of transformation
activities under way.
Transformation and strategy execution are a
key focus of senior management and the BERC
consider risks to the strategy as a standing
agenda item.
We have extensive governance mechanisms in
place with regards to acquisitions, including
conducting post-acquisition reviews and
implementing learnings into future acquisitions.
Data
The risks associated with
the ownership, use and
governance of data which
could impact on the
delivery of the Group
Strategy.
Data is fundamental to the delivery of the
Group strategy and will continue to remain a
key area of focus for some time.
We have a range of initiatives and programmes
in place across the Group focused on the use
and governance of data.
16
Strategic Report
For the year ended 31 December 2023
Operational resilience
The risks associated with
failure to ensure our
businesses remain
resilient to operational and
supply chain challenges
including those presented
by third-party suppliers.
This includes the risks
associated with complying
with the associated
regulatory requirements.
Operational resilience capabilities are key to
being able to maintain operations in the face of
many challenges including third-party and
supply chain risks, workforce fatigue,
information security and other operational risks
and the challenges presented by business
growth.
As we grow, these challenges will continue to
become more pronounced, particularly where
we increase our reliance on third parties
We continue to focus on heightening our
supplier monitoring, management and
communications to help minimise future
disruption.
Our businesses have well-established and
tested disaster recovery plans.
Technology innovation
The risk of failure to
anticipate and/or respond
to changing expectations
in relation to information
technology and resilience
which could impact the
viability or profitability of
the business.
Changing consumer expectations/ behaviours
with higher expectations for technological
solutions, including those utilising AI, to improve
interactions and the need for businesses to
ensure appropriate IT capabilities and
operational resilience to deliver for customers.
Customers are increasingly looking towards
digital and remote healthcare options and this
trend is likely to continue to accelerate.
We continue to focus on significantly increasing
our digital offerings in line with the Group
strategy.
We are enhancing our back-office processes
where possible to leverage emerging
technologies.
Geopolitical uncertainty
The risks associated with
geopolitical uncertainty
and increasing
nationalistic policies
across our businesses
and globally.
This has been an emerging and increasing
trend for some time and likely to continue for
the foreseeable future.
We continue to focus on heightening our
supplier monitoring, management and
communications to help minimise disruption.
Economic conditions
The risk that depressed
economic conditions
further exacerbate existing
challenges around
affordability for customers
with reduced spending
power which could impact
the profitability or viability
of the business.
The macroeconomic environment is challenging
in most markets. In many markets we are
seeing heightened inflationary pressures and
increased interest rates. This is challenging
both consumer and government spending.
Weakened economic environments are also
likely to compound the existing affordability
challenges in health insurance as premiums
rise, driven by high medical and wage inflation.
We regularly review our products and offerings
to ensure that we continue to provide value to
our customers despite the economic challenges
and affordability constraints.
Management of the financial and performance
risks as a result of the challenging economic
conditions is a key focus of management
Social licence to operate
The risk that reputational
damage could impact our
social licence to operate
and therefore our ability to
achieve our strategic
objectives.
Like many global companies, we face an
increased risk of stakeholder activism and
greater scrutiny of our record as a socially
responsible company on topics such as the
environment and climate change and other
issues which can be interpreted as having a
‘ethical’ dimension. Adverse comments and
unfavourable media coverage can impact
Bupa’s reputation.
Our reputation can also be impacted by
adverse operational issues such as cyber
attacks.
Reputational contagion risk remains prominent
in our operational and reputational risk
management agenda with a focus on resolving
and learning from issues faced.
With the continuing implementation of our new
sustainability strategy we have increased our
focus on management of sustainability and
ESG risks.
The implications of failures to manage our
reputation has been one of the key focus areas
of our stress-testing programme this year
Strategic workforce
risks
Risks associated with the
resilience of our own
people which may impact
their ability to deliver for
the customer. This also
includes strategic risks
associated with workforce
availability.
In many markets we continue to see strategic
challenges associated with workforce
availability, particularly clinical workforce,
exacerbated by cost-of-living challenges, which
may impact our ability to deliver services.
Workforce availability remains a key area of
focus for senior management with a range of
activities under way in each market to address
challenges.
17
Strategic Report
For the year ended 31 December 2023
Financial risks associated with climate change
We have integrated climate risk management into our existing Group-wide Risk Management Framework (RMF) which sets out
how we identify, assess, manage and report on risks. We will continue to ensure that climate-related risks are considered
appropriately throughout our governance arrangements, including the policy framework and management committees’
responsibilities. We also continue to reflect on changes in regulatory expectations (e.g., from the Prudential Regulation
Authority, PRA) whilst embedding climate risk through the RMF.
We have incorporated the financial risks from climate change into our wider stress testing programme. The results of our
scenario analysis carried out to date suggest that our strategy is resilient to the financial risks from climate change. We continue
to evolve and mature our climate scenario analysis along with our disclosure approach and scan for developments and
improvements in scenario methodology and data.
On behalf of the Board
James Lenton
Director
6 March 2024
18
Governance
For the year ended 31 December 2023
Corporate Governance Report
Corporate Governance statement
The Company meets the thresholds of the Act to apply a corporate governance code and is therefore required to report on its
corporate governance arrangements. While the Company is a holding company for Bupa subsidiaries, some of which are
regulated under financial services regimes, and has listed debt securities on the London Stock Exchange, it is also a wholly
owned subsidiary of The British United Provident Association Limited (Parent) and is included in their consolidated Group
accounts and reporting. Its Parent has the ultimate oversight role for the Group from a governance perspective, in accordance
with the Senior Managers and Certification Regime.
The Company's Parent has chosen to apply the FRC’s UK Corporate Governance Code 2018 (the Code) to the extent it is
appropriate and relevant to a company limited by guarantee, without shareholders. As a subsidiary, the Company therefore acts
in line with the corporate governance arrangements set and operated by its Parent, including Bupa Group's policies and
procedures. How the Company's Parent has chosen to apply the Code in accordance with the comply or explain requirements,
is set out in the Governance section of its 2023 Annual Report and Accounts which can be found on its website
(www.bupa.com/about-us/governance), .
Bupa's Governance Structure
Bupa’s governance structure is set by its Parent's Board and supports its systems of controls and risk management for the
Group to ensure the Bupa Group is operated and is managed in the most effective and responsible way in accordance with our
purpose and corporate values.
Audit, risk, and internal control
Bupa has a Risk Management Framework which follows the ‘three lines’ approach to risk that is common in financial service
organisations. It is intended to ensure appropriate governance is in place, risk appetite is set for key areas of business and risk,
effective controls are in place to either eliminate or mitigate risk, controls, are documented, and that there is adequate data
capture and reporting to monitor the risks, risk management and controls and their effectiveness throughout the Group. Detail
on Company's key risks, risk profile and how the risks are mitigated and managed is set out earlier in the Risk section of the
Strategic Report on pages 15 to 18.
Under its governance, and in accordance with the Code, the Company's Parent Board has delegated the oversight and
monitoring of the systems of internal control and risk management to its Board Audit and Risk Committees, respectively. The
Parent Board's Audit Committee has also been given specific delegated authority to monitor the integrity of the financial
statements of the Company, including its annual and half-yearly reports, preliminary announcements, and any other formal
announcement relating to their financial performance; and to review and report to the Parent and Company's Boards on
significant financial reporting issues and the judgements that those statements contain, having regard to matters communicated
by the External Auditor, PwC. The Parent Board's Audit Committee performs the functions in DTR 7.1.3 and DTR 7.2.5 in
respect of the Company and details of its members can be found on www.bupa.com/about-us/governance and the Board of
Directors pages in the Parent's 2023 Annual Report and Accounts.
Three Lines Model
First-line accountability
All of Bupa's people have first-line accountability to have awareness of the risks relevant to their role and work, and to manage
them in accordance with our policies, the Bupa Code and relevant laws and regulations. This keeps the Group safe, including
Bupa's customers. The programme to develop a Group-wide Integrated Management System (IMS) to map and document
Bupa’s risks and processes continued in 2023 and is designed to enhance first-line accountability. All Bupa’s people also
receive mandatory training on key topics and role-specific training to ensure they have appropriate knowledge and awareness.
Second-line assurance - Risk and clinical governance
The second-line is performed by the Group Risk function, led by the Group Chief Risk Officer (Group CRO). The function
operates across the Group and each Market Unit has its own chief risk officer. The Group Risk function monitors risks and the
application of the Risk Management Framework, operation of controls,adherence to the risk appetites in the first-line and clinical
governance, and reports to an executive forum, the Bupa Executive Risk Committee (BERC), comprised of direct executive
reports to the Group's Chief Executive Officer (Group CEO). The BERC supports the Group CRO to perform his SMCR Group
oversight role of Bupa’s UK regulated subsidiaries. The function provides reports to the Parent Board's Risk Committee to
support its independent monitoring and oversight of risk management and its effectiveness on behalf of the Parent's Board,
including a second-line view on the effectiveness of internal controls and the management of risks within appetite.
19
Governance
For the year ended 31 December 2023
Third-line assurance - Internal Audit
The third line is the Group Internal Audit function which operates as a global function and undertakes independent assurance
on behalf of the Parent's Board and its Audit Committee. The function is headed by the Group Chief Audit Officer (Group CAO),
who is appointed by the Parent's Audit Committee. Group Internal Audit operates in line with the global Institute of Internal
Auditors’ (IIA) International Standards and UK Financial Services Code, and other applicable legal and regulatory requirements.
Its role, authority and independence are set out in the Internal Audit Charter, which is reviewed and approved annually by the
Parent Board's Audit Committee. Each year Group Internal Audit develops a risk-based assurance plan, taking account of the
Group’s key risks, business plans, regulatory requirements, and other relevant information. The plan is reviewed and approved
by the Parent's Audit Committee and relevant subsidiary audit committees and updated periodically as required. The internal
audits are globally coordinated and/or typically performed by Market Unit or Business Unit internal audit teams, who are
supported by global operations and analytics teams. Internal audits typically provide an assessment of the effectiveness of risk
management and internal control, including evaluation and testing of the design and effectiveness of key governance,
management, and operational controls as appropriate. Group Internal Audit reports findings from its work to management and
agrees actions to address weaknesses or make improvements, which are management’s responsibility to implement. The
Parent Board's Audit Committee, and subsidiary audit and risk committees, receive summary reports from the Group or Market
Unit Chief Audit Officer on all of Group Internal Audit’s work, including summary observations relating to the effectiveness of the
Group’s risk management and internal control framework.
Oversight and annual review of the Group CAO and Group Internal Audit function’s performance is performed by the Parent's
Audit Committee, with an external quality assessment undertaken every five years in accordance with IIA International
Standards. The next external quality assessment is due in 2027.
External Auditor
The Company has appointed PricewaterhouseCoopers LLP (PwC) as its External Auditor, to provide independent external
assurance on the audited financial information in Bupa’s Annual Report Accounts, as well as other reviews and limited
assurance activities. The process for the tender and selection of an External Auditor, and their appointment and reappointment,
is run by the Parent Board's Audit Committee, which also reviews and approves the scope, terms, and fee for the External
Auditor’s work on behalf of Bupa's Group, and ensures PwC have the requisite internal procedures and controls, and resources,
to perform effectively, independently, objectively and in accordance with the FRC’s Revised Ethical Standard 2019. Following its
reviews the Parent Board Audit Committee recommended the reappointment of PwC, which the Company approved and will
propose to its shareholder at its Annual General Meeting. From time to time it may be appropriate for the Company to request
PwC undertake work outside of the scope of the external audit. In order to ensure that that PwC’s objectivity and independence
is preserved the Bupa Group has a Non-Audit Services Policy, that the Company adopts, which sets out the circumstances
under which PwC can be engaged for non-audit services, employment restrictions and the applicable controls. Details of non-
audit services and fees during 2023, and fees paid to PwC, are set out in the Notes to the Accounts on page 59.
Whistleblowing
Bupa's culture and values encourage its people, and third parties, to raise concerns of any malpractice or wrongdoing at Bupa
in a secure and anonymous way in cases where reporting directly to a manager is not appropriate or the concern has not been
fully addressed. Regular internal campaigns are run to raise awareness of Speak Up, Bupa’s internal whistleblowing process,
and provide feedback on the actions taken in response to concerns raised. All employees complete mandatory annual training
and there are Speak Up officers for each business. Bupa uses its biannual People Pulse engagement survey to test the level of
confidence people have in Speak Up, and invites feedback. The Parent Board's Audit Committee annually reviews the Group's
Speak Up Policy to ensure that it is robust and operating effectively and recommends it to the Parent Board for approval, and it
receives regular updates on issues reported through Speak Up during the year and on investigations and actions taken.
Report of the Directors
Disclosure compliance
The Strategic Report and the audited financial statements are presented on pages 3 to 18 and from page 36, respectively. The
Governance report on pages 19 to 23 comprises the Directors’ report.
The following disclosures required to be contained in the Directors’ report under the Companies Act 2006 (the Act) and related
regulations, or required to be contained in the Annual Report under Listing Rule 9.8.4, are set out on the pages referred to
below and incorporated by reference into this Directors’ report:
20
Governance
For the year ended 31 December 2023
Disclosure Location
Financial instruments Notes 10 & 11, pages 77-80
Risk management objectives and policies Note 25, page 98-110
Assessment or principal and emerging risks Risk, pages 15-18
Likely future business developments Strategic Report, pages 3-18
Acquisitions and disposals Note 23, pages 95-97
Financial performance Pages 9-12
Post balance sheet event Note 1.8, page 49
Relationships with suppliers, customers, and others Section 172 statement, pages 12-14
Engagement with employees Strategic Report, page 13
Insurance and indemnities
The Group has a directors’ and officers’ insurance policy in place, together with indemnities for the Directors and certain senior
managers, to the extent permitted by English law and the Company’s Articles of Association.
These cover all losses arising out of, or in connection with, the execution of their powers, duties, and responsibilities, as
Directors of the Company or of any of its subsidiaries. These have been in place throughout 2023 and to the date of this Annual
Report. There are no other qualifying third-party indemnity provisions or pension indemnity provisions in place.
Going concern
The Directors confirm that they are satisfied that the Company and the Group have adequate resources to continue in operation
for the next 12 months. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. The
going concern assessment in Note 1: Basis of Preparation on page 44 includes information on the Directors’ detailed
assessment of the Group’s status as a going concern.
Longer-term viability
The Directors have examined the outlook for the Company and the Group as required by provision 31 of the Code, assessing
our ability to operate and meet our liabilities as they fall due over a three-year period.
Bupa’s 3x6 Strategy introduced in 2021 is the driving force behind the transformation agenda and planning process. A three-
year assessment period was chosen for the longer-term viability assessment because it ties in with our internal planning
process. Bupa’s planning considers all important financial and regulatory measures over the period and stresses the key risks
facing individual Business Units, as well as global risks that could affect Bupa as a whole.
As part of the assessment of viability, the Directors looked at the financial performance, capital management, cash flow,
solvency and future outlook. Bupa is well capitalised and is expected to remain so over the plan period. The liquidity position of
the Group is expected to remain strong across the three-year period. The forecast assumes that the £300m senior bond
maturing in 2024 is repaid from available liquidity.
A number of reasonably plausible severe scenarios were considered as well as contingent liabilities. Our most severe
reasonably possible scenarios considered adverse outcomes from the Chile Supreme Court decision described on page 111,
combined with economic stresses and other factors. The outcomes considered in relation to Chile were materially worse
outcomes than the Solvency II capital allocated against the contingency given the inherent uncertainty surrounding the
implementation of the Chile Supreme Court decision. A variety of local scenarios developed by each Business Unit were
separately considered with the majority focusing on governmental, legal and regulatory risk and risks from climate change.
Under the most severe scenarios considered, the forecast liquidity position reduces and management actions would be
required to remain within the Group’s liquidity appetite over the three-year planning period. Management actions include
reducing expenditure, obtaining additional funding or divesting investments or businesses.
‘Reverse stress testing’ is also conducted at the Group level, aimed at identifying hypothetical circumstances that might result in
our business model failing and helps the Directors to better understand the Group’s risks. The Group remains most exposed to
failure through a lack of liquidity at the Group centre, although multiple improbable events would need to occur in order to
induce failure (prior to the taking of management actions) in the timeframe considered.
The most recent ORSA, that brings together the outcomes of risk management and financial management processes,
considers the level of regulatory capital we require to remain financially stable over the planning period given the nature of the
risks we currently face, our strategy and our risk appetite. It takes into account the quantification of the Group’s current risks as
defined by the Solvency II Directive and considers the impact of potential stressed scenarios that are aligned to our risk profile.
It also sets out the management actions, identified as part of the Group’s Recovery Plan, that are available to address
challenges to the Group’s liquidity or solvency position. This assessment concluded that we expect to have sufficient capital
assets to continue to meet regulatory requirements over a three-year period.
21
Governance
For the year ended 31 December 2023
Although Bupa pays interest on its borrowings, it has no shareholders and therefore does not pay dividends. Instead, Bupa can
invest in growing organically and through acquisition. This expenditure is largely discretionary and can be reduced if required.
Following a review of the key risks and uncertainties set out in Risk on pages 15 to 18, the Directors are satisfied that there are
appropriate risk management and governance procedures in place to manage and mitigate these risks over the three-year
period. Emerging risks are identified and reported on to ensure that they are properly understood and are considered in future
strategic decisions.
While continuing uncertainty exists as a result of the challenging macroeconomic and geopolitical environment, the Group’s
diversified business model continues to support the viability of the Group over the period considered.
Based on this analysis and regular risk and capital reporting processes, the Directors have a reasonable expectation that Bupa
will be able to continue in operation and meet its liabilities as they fall due throughout the three-year planning period up to 31
December 2026.
Dividends
The Company paid interim dividends of £134 million (2022: £89 million) during the year. No final dividend is proposed.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and Accounts and the Group and Parent Company financial
statements, in accordance with applicable law and regulations. Company law requires the Directors to prepare Group and
Parent Company financial statements for each financial year. Under that law they have elected to prepare the Group and the
Parent Company financial statements in accordance with UK-adopted international accounting standards in conformity with the
Act.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of
the Group and Parent Company financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently
• Make judgements and estimates that are reasonable, relevant, and reliable
• State whether they have been prepared in accordance with UK-adopted international accounting standards
• Assess the Group and Parent Company’s ability to continue as a going concern
• Use the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or
to cease operations or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and
enable them to ensure that its financial statements comply with the Act. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and other irregularities.
The Directors consider that the Annual Report and financial statements taken as a whole are fair, balanced and understandable,
and provide the information necessary for the shareholder to assess the Group’s position and performance, business model
and strategy.
The Directors have decided to prepare, voluntarily, a Corporate Governance Statement as if the Company was required to
comply with the UK Listing Rules, Disclosure Guidance and Transparency Rules of the Financial Conduct Authority in relation to
those matters.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Each of the current Directors, whose names and positions are set out on page 2, confirm that to the best of their knowledge:
• The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair
view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the
consolidation taken as a whole.
• The Strategic Report includes a fair review of the development and performance of the business and the position of
the Company and the undertakings included in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
22
Governance
For the year ended 31 December 2023
Disclosure of information to the External Auditor
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there
is no relevant audit information of which the Company’s External Auditor, PwC, is unaware; and each Director has taken all the
steps which they ought to have taken as a Director to make themselves aware of any relevant audit information, and to
establish that PwC is aware of that information.
External Auditor reappointment
A resolution to re-appoint PwC as the Company's External Auditor will be put to the Company's forthcoming AGM.
On behalf of the Board
James Lenton
Director
6 March 2024
Company number: 2779134
23
Independent auditors’ report to the members of Bupa Finance plc
Report on the audit of the financial statements
Opinion
In our opinion:
• Bupa Finance plc’s Group financial statements and Company financial statements (the “financial statements”) give a
true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2023 and of the
Group’s profit and the Group’s cash flows for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards as applied in accordance with the provisions of the Companies Act 2006;
• the Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework”, and applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Directors' report and financial statements (the “Annual Report”),
which comprise: Consolidated and Company Statement of Financial Position as at 31 December 2023; Consolidated Income
Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Cash Flows and Consolidated and
Company Statement of Changes in Equity for the year then ended; and the notes to the financial statements, comprising
material accounting policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided.
Other than those disclosed in Note 2.3.2, we have provided no non-audit services to the Company or its controlled undertakings
in the period under audit.
Our audit approach
Context
Bupa Finance plc (Bupa Finance) is part of the Bupa Group, which is an international healthcare group, providing health
insurance, health provision and aged care services. Bupa Finance is an intermediate holding company, providing financing and
treasury management for the Bupa Group's businesses and has issued listed debt as part of these activities. These financial
statements are consolidated, incorporating the four reportable segments: Bupa Asia Pacific; Europe and Latin America; Bupa
Global and UK; and Other businesses, which includes investments in associates. In planning for our audit, we met with the
Audit Committee and members of management across the Group to discuss and understand the businesses and any significant
changes during the year, and to understand their perspectives on associated business risks. We used this insight, in addition to
our understanding of the previous year's audit, when forming our own views regarding the audit risks and as part of developing
our planned audit approach to address those risks.
Given the activities of the Group, we have teams with the relevant industry experience in all significant locations in which the
Group operates and we continue to utilise virtual technologies and collaborative workflow tools to obtain sufficient, appropriate
audit evidence whilst working in a hybrid environment. On a rotational basis, we meet with a number of our component teams
and local management in person to fulfil our ISA 600 (UK) responsibilities.
We have also considered the sustainability commitments made by the directors and considered the potential impact of climate
change related factors in our audit, including challenging management on their assessment of how climate change related risks
and opportunities impact the financial statements.
24
Independent auditors’ report to the members of Bupa Finance plc (continued)
Overview
Audit scope
• The Group has four reportable segments, in addition to the Group Functions activities. Each reportable segment
includes a number of reporting components across different locations and service lines.
• We conducted audit testing over 29 components. These were selected based on our assessment of inherent risk and
their financial significance to the consolidated financial results.
• 8 components were subject to an audit of their complete financial information.
• Specific audit procedures were performed on certain balances and transactions for a further 21 components.
• Our audit scope provided coverage of 85% of IFRS profit before taxation expense.
Key audit matters
• Implementation of IFRS 17 (Group)
• Valuation of the estimate of the present value of future cash flows within the liability for incurred claims (Insurance
contract liabilities) (Group)
• Valuation of freehold property and investment property (Group)
• Impairment of goodwill or reversal of previous impairments to other intangible and tangible assets (Group)
• Classification, recognition and disclosure of certain liabilities relating to Isapre Cruz Blanca (Bupa Chile) under IAS 37
Provisions, Contingent Liabilities and Contingent Assets (Group)
• Recoverability of Company’s investment in subsidiaries (Company)
Materiality
• Overall Group materiality: £48.0 million (FY22: £30.8 million) based on 5% of Profit before taxation expense adjusted
for certain non-recurring items.
• Overall Company materiality: £26.4 million (FY22: £14.1 million) based on 1% of Net assets.
• Performance materiality: £36.0 million (FY22: £23.1 million) (Group) and £19.7 million (FY22: £10.6 million)
(Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or
not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Implementation of IFRS 17 and Valuation of the present value of future cash flows within the liability for incurred claims are new
key audit matters this year. Valuation of provisions arising from insurance contracts, Valuation of equity impact from the
transition to IFRS 17 and Application of IAS 29 - financial reporting in hyperinflationary economies, which were key audit
matters last year, are no longer included because of the update in the application of hyperinflationary accounting for Türkiye
now embedded in the group's business as usual processes. Otherwise, the key audit matters below are consistent with last
year.
25
Independent auditors’ report to the members of Bupa Finance plc (continued)
Key audit matter How our audit addressed the key audit matter
Implementation of IFRS 17 (Group)
Refer to Note 1.5 (for accounting policy and financial
disclosures)
The Group adopted IFRS 17 for insurance contracts as at 1 January The work to address the implementation of IFRS 17 included the
2023. This has led to changes in the valuation of insurance contract following procedures that we performed:
liabilities, recognition of insurance revenue and expenses, and the
presentation of the financial statements. We have determined the
• Assessed and tested the design and implementation of
implementation of IFRS 17 to be a key audit matter in the current
controls around the first-time adoption of IFRS 17;
year due to the significance of the changes brought about by the
• Considered the application of accounting policies for in-
new Standard.
scope components to assess whether the policies were
applied consistently across the Group;
The Group has applied the premium allocation approach (“PAA”) to
most of its insurance contracts given their short tailed nature.
• Assessed the appropriateness of key judgements used to
determine accounting policies and that the chosen
Key areas of focus were:
accounting policies are in-line with the requirements of the
Standard. This included the judgements in relation to the
Unit of account and contract boundaries
determination of the unit of account and contract
The determination of the unit of account and contract boundaries are
boundaries;
new considerations required by the Standard. There is often an
• Evaluated the appropriateness of management’s PAA
element of judgement in how these are determined, and these initial
considerations have downstream implications for PAA eligibility and
eligibility analysis and conclusions, including testing the
on the size of any loss component recognised.
completeness and accuracy of supporting data, evaluating
reasonably expected scenarios and testing the accuracy
PAA eligibility
of the models;
The majority of Bupa's policies have a coverage period of one year
• Evaluated the appropriateness of methodologies and
or less and are therefore eligible to apply PAA. For policies with a
assumptions used in determining loss components
coverage period greater than 12 months, judgement is required to
recognised, and tested the accuracy of the loss
determine whether there would be a material difference in applying
the PAA or the General measurement model (“GMM”). There is a
component calculation through reperformance; and
small amount of business around the Group that is not eligible for
• Tested the appropriateness of the split of non-claims
PAA and for these groups of contracts, the GMM is applied.
expenses between attributable and non-attributable.
Loss component
Based on the procedures performed, we consider the requirements of
The consideration of units of account drive the onerous contract
IFRS 17 have been implemented appropriately, including the use of
assessments at a more granular level than previously under IFRS 4.
appropriate accounting policies, and that judgements applied are
Under IFRS 17 loss components have been recognised for groups of
appropriate.
contracts that did not have an associated unexpired risk reserve
under IFRS 4.
Allocation of expenses to insurance contracts
Insurance service expenses include claims and non-claims
expenses. Non-claims expenses are required to be split between
attributable and non-attributable expenses which requires
judgement.
26
Independent auditors’ report to the members of Bupa Finance plc (continued)
Valuation of the estimate of the present value of future cash
flows within the liability for incurred claims (Insurance contract
liabilities) (Group)
Refer to Note 12 (for accounting policy and financial disclosures)
Insurance contract liabilities comprise the liability for remaining The work performed to address the valuation of the estimate of future
coverage (LFRC) and the liability for incurred claims (LFIC), which cash flows for insurance contracts included the following procedures:
comprises the estimate of the present value of future cash flows and
the risk adjustment. We have determined the estimate of the present
• Understood and evaluated the processes and controls in
value of future cash flows to be an area of focus given its magnitude
place to determine the estimate of future cash flows;
and the judgement required in estimating the cash flows, in particular
• Tested the design and implementation of controls in place
for incurred claims.
over the estimate of future cash flows, including those
covering the approval of assumptions, and the
Estimate of the present value of future cash flows within the
liability for incurred claims
completeness and accuracy of data used;
£1,313m (2022: £1,176m)
• Using our actuarial specialist team members, we:
The estimate of the present value of future cash flows is based on
◦ Applied our industry knowledge and experience and
certain key assumptions relating to the frequency, severity and
compared the methodology, models and assumptions
settlement patterns of insurance claims.
used against recognised actuarial practices;
◦ Evaluated the key assumptions used in the estimate
Established actuarial techniques including the chain ladder,
of future cash flows for reasonableness compared to
Bornhuetter-Ferguson and pure risk cost methods are used to
produce a best estimate of the present value of future cash flows.
historic experience, including the impact of inflation;
Consideration is made for the claims inflation assumptions and
◦ Performed independent estimate calculations for 53%
expected trends in medical costs and treatments.
of the estimate of future cash flows, comparing our
estimates to those booked by management, and
The frequency and severity of health insurance claims are generally
investigated differences, where material;
highly predictable with claims settled within a few months of a
◦ Evaluated the methodology and assumptions applied
medical event that has led to a claim.
by management for a further 29% of the estimate of
Given the short-tailed nature of the insurance, the key source of
future cash flows, including reperforming
estimation uncertainty is in relation to estimating the incurred claims
management’s calculations and performing
for the most recent months before 31 December 2023.
sensitivities to determine if the assumptions used
were reasonable; and
◦ Performed diagnostic testing for the remaining
estimates to identify and investigate any anomalies.
Based on the procedures performed and the evidence obtained, we
consider the valuation of the estimate of the present value of future
cash flows within the liability for incurred claims to be appropriate.
27
Independent auditors’ report to the members of Bupa Finance plc (continued)
Valuation of freehold property and investment property (Group)
Refer to Notes 4 and 5 (for accounting policy and financial
disclosures)
The Group holds significant freehold property and investment For the valuation of freehold property and investment property, we
property. We consider the valuation of freehold property and performed the following procedures:
investment property as key areas of audit focus given the magnitude
and inherent uncertainty involved in these estimates.
• Assessed the appropriateness of the valuation
methodology applied and whether this is in accordance
Freehold properties
with the requirements of the relevant standards;
Freehold properties of £2,073m (2022: £2,210m) comprise care
• Obtained the most recent external valuation reports and
homes, care villages, clinics, hospitals and offices across a number
critically assessed the qualifications and experience of the
of locations.
external valuers to determine whether they have the
The properties are held under the revaluation model and are subject
knowledge required to perform the valuations;
to periodic, and at least triennial, valuations performed by external
• For both external and Directors’ valuations, we challenged
independent valuation experts performed in accordance with
the key assumptions relating to operating cash flows,
relevant industry guidelines.
such as occupancy rates and discount rates, as well as
reviewing capitalisation rates and the useful lives of
The valuations are judgemental and involve estimation uncertainty.
existing facilities. In critically assessing the key
The significant assumptions include occupancy levels, estimated net
earnings, capitalisation rates and discount rates. There is also
assumptions, we have utilised our own valuation experts
judgement in the allocation of the fair value of the facility between its
as well as considered external benchmarks and external
constituent parts, including the property.
forecasts;
• For Directors’ valuations, using internal valuation experts
Where an external valuation has not been obtained in the year, a
we have also challenged management’s inputs to the
directors’ valuation is conducted to determine if the carrying amount
valuation models, with reference to the most recent
of the property remains appropriate and does not differ materially
external valuation.
from the fair value at the end of the year. At 31 December 2023
management obtained external valuations for £55m of the total
Based on the procedures performed and the evidence obtained, we
freehold property valuation, with the remaining balance being valued
consider the valuation of freehold property and investment property to
by the Directors.
be appropriate.
Investment properties
Investment properties of £776m (2022: £750m) relate predominantly
to retirement villages in New Zealand. The properties are leased to
third parties to generate rental income.
The properties are held at fair value and subject to an independent
external valuation annually. The valuation is based on discounted
cash flow projections and uses subjective assumptions including the
discount rate, capital growth rate and expected rental yields.
28
Independent auditors’ report to the members of Bupa Finance plc (continued)
Impairment of goodwill or reversal of previous impairments to
other intangible and tangible assets (Group)
Refer to Note 3 (for accounting policy and financial disclosures)
Where an individual asset or Cash Generating Unit (“CGU”) has an We performed the following procedures over management’s
indication of impairment, or for CGUs that have been allocated impairment assessment of the Bupa Dental Care UK CGU:
Goodwill (whether there are impairment indicators or not), these
should be tested for impairment. An impairment review of a CGU Discount rates
covers all of its tangible assets, intangible assets and attributable
• Used our valuation experts to assess the appropriateness
goodwill. Where the recoverable amount of an individual asset or
of management’s methodology for computing the
CGU is lower than the carrying value of a CGU, an impairment loss
Weighted Average Cost of Capital used for discounting
is recognised. Where there is any indication that a previous
projected cash flows in the Value in Use calculation.
impairment loss for an asset other than goodwill either no longer
• Used our valuation experts to independently determine a
exists or has decreased, the recoverable amount should be
estimated and an assessment performed of whether there should be
reasonable range for the CGU discount rate, using
a reversal of an impairment loss.
external comparable market information where possible.
Assessed how the rate used by management compared
Estimating and discounting the cash flow projections used in the
to that range and the sensitivity of rate changes to the
impairment assessments requires significant judgement. The key
overall impairment assessment.
assumptions include the discount rate and the forecast cash flows,
including the terminal growth rate.
Model integrity
• Verified the discounted cash flow models, including
We identified one CGU as having a higher risk of impairment (or
validating the numerical accuracy of the models and the
impairment reversal), namely Bupa Dental Care UK, and the
valuation of the goodwill and intangible assets in this CGU was an
application of the discount rates.
area of audit focus. As disclosed in Note 3 of the financial
statements, there has been no change in the carrying value of the
Cash flows
• Agreed cash flow forecasts to internal supporting
headroom in the goodwill impairment assessment of £72m (2022:
goodwill relating to this CGU of £191m (2022: £191m) with
documentation, including approved Business Plans.
£nil).
• Compared cash flow forecasts used in the review to
historical performance and challenged management
where forecasts indicated performance that deviated
significantly from historical performance.
• Challenged key assumptions in the cash flow projections,
including available clinician hours and the terminal growth
rates applied, and obtained supporting internal or external
information.
• Performed sensitivity analyses on the key assumptions.
Impairment reversal assessment
• Assessed whether the headroom identified represented
an increase in the estimated service potential of an asset
indicating a reversal of a previous impairment loss.
Disclosure
• Assessed the appropriateness of the relevant disclosures
to confirm compliance with the applicable financial
reporting standards.
Based on the procedures performed and the evidence obtained, we
consider that the carrying value of goodwill in the Dental Care UK
CGU is reasonable and there was not sufficient evidence to support
any reversal of the previously recorded impairment to other intangible
and tangible assets.
29
Independent auditors’ report to the members of Bupa Finance plc (continued)
Classification, recognition and disclosure of certain liabilities
relating to Isapre Cruz Blanca (Bupa Chile) under IAS 37
Provisions, Contingent Liabilities and Contingent Assets
(Group)
Refer to Note 27 (for accounting policy and financial disclosures)
In 2022, the Supreme Court in Chile issued a ruling that obliges
Isapres to make use of a specific table of risk factors in determining
insurance premiums charged, including retrospectively. The
calculation of the impact of the ruling on Bupa Chile is dependent on
the approval of new legislation and detailed application guidelines
which will be issued by the Chilean Superintendent of Health.
During 2023 and 2024 the matter progressed through the legislative
process, including consideration of a number of different proposals
which could have a wide range of possible outcomes. There is
considerable scope for the law to be either amended or rejected prior
to the legislative process concluding.
Given the uncertainty and the broad range of possible outcomes, the
Directors have determined that it is not possible to reliably estimate
the related liability.
To address the classification, recognition and disclosure of the
contingent liability we performed the following procedures:
• Critically challenged management's assessment that the
Supreme Court Ruling gives rise to a contingent liability,
specifically, that is not possible to determine a reliable
estimate;
• Reviewed announcements made by the Superintendent of
Health relating to the application of the Supreme Court
Ruling;
• Reviewed the draft laws and subsequent amendments
presented to the Chilean Senate, and the report issued by
the Senate Health Technical Commission;
• Evaluated the methodology and assumptions used to
Therefore, this is disclosed as a contingent liability as explained in
Note 27. The Directors have disclosed an indication of financial
impact in relation to the capital held for this matter for Group
Solvency II reporting purposes.
calculate the financial effect of the contingent liability for
Solvency II purposes as disclosed in note 27, considering
whether this in itself provided a reliable estimate; and
• Assessed whether the disclosures meet the requirements
of IAS 37 Provisions, Contingent Liabilities and Contingent
Assets.
Based on the procedures performed and the evidence obtained, we
consider the classification, recognition and disclosure under IAS 37
Provisions, Contingent Liabilities and Contingent Assets to be
appropriate.
Recoverability of Company’s investment in subsidiaries
(Company)
Refer to Company accounting policy (j) and Note C (for financial
disclosures)
The Company holds investments in subsidiaries with a carrying
value of £4,337m (2022: £4,046m).
Where there are indicators of impairment management compares
the carrying value to a recoverable amount, based on discounting
estimated future cash flows from board approved budgets.
There is inherent uncertainty in forecasting trading conditions and
discounting the future cash flows used in the budgets, with a
potential range of reasonable outcomes greater than our materiality
for the financial statements as a whole.
We performed the following procedures related to the recoverability of
the Company’s investment in subsidiaries:
• Assessed the reasonableness and appropriateness of the
assumptions used in the cash flows included in the
budgets based on our knowledge of the entities, the
markets in which the subsidiaries operate and cash flow
forecasts used elsewhere, for example, in the right of use
asset impairment testing;
• Assessed the reasonableness of the budgets by
considering the historical accuracy of the previous
forecasts and agreeing cash flow forecasts to internal
supporting documentation, including approved Business
Plans;
• Reviewed the methodology used in determining the
discount rate applied, including engaging our valuation
experts to assess the appropriateness of the inputs into
the discount rate; and
• Assessed the adequacy of the Company’s disclosures.
Based on the work performed and the evidence obtained, we
consider the carrying amount of the Company’s investment in
subsidiaries to be appropriate.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls,
and the industry in which they operate.
For the Group audit we defined a component as being a single reporting pack within the Group’s consolidation process. Based
on the output of our risk assessment, along with our understanding of the Bupa Group structure, we identified 8 components for
which a full scope audit of their financial information has been performed. This was determined by assessing those components
considered to be financially significant and with reference to our risk assessment.
30
Independent auditors’ report to the members of Bupa Finance plc (continued)
We identified a further 21 components where specific audit procedures were performed on certain balances and transactions to
provide sufficient and appropriate audit coverage over individual financial statement line items.
The components where we performed audit procedures included some operating in each of the Group’s Market Units and
covered 87% of Group Revenue, 85% of Group profit before taxation expense and 76% of Group Total assets.
We also performed audit procedures over the Group Functions, including the consolidation process and certain treasury and
payroll processes.
We performed analytical review procedures over the remaining components.
As the Group audit team, we determined the level of involvement required at those components to be able to conclude whether
sufficient and appropriate audit evidence had been obtained as a basis for our opinion on the consolidated financial statements
as a whole. In our role as Group Auditors our oversight of the work performed by auditors of the components included
performing the following procedures:
• Issued group instructions outlining areas requiring additional audit focus, including the key audit matters included
above;
• Maintained an active dialogue with reporting component audit teams throughout the year;
• Attended meetings with local management;
• Reviewed reporting requested from component teams, including on those areas determined to be of heightened audit
risk; and.
• Reviewed component team detailed working papers, where relevant. We have performed a detailed review of key
audit working papers at all in-scope components through a mixture of remote working and site visits.
For the Company audit, based on the outputs of our risk assessment, we identified one financially significant component being
the holding company operations.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the process management adopted to assess the extent of
the potential impact of climate risk on the Group’s financial statements. In addition to enquiries with management, we also
understood the governance processes in place to assess climate risk, read internal management reporting on climate risks and
read additional external reporting by the entity on climate, including sustainability publications.
We have also made enquiries to understand, and performed a risk assessment in respect of, the commitments made by the
Group and how these may affect the financial statements and the audit procedures that we perform. We have assessed the
risks of material misstatement to the financial statements as a result of climate change and concluded that for the year end 31
December 2023, the main audit risks are related to consistency of disclosures included within the Annual Report and 'other
information' including the Strategic Report.
Our procedures did not identify any material impact in the context of our audit of the financial statements as a whole, or our key
audit matters for the year ended 31 December 2023.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
31
Independent auditors’ report to the members of Bupa Finance plc (continued)
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - Group Financial statements - Company
Overall materiality £48.0 million (FY22: £30.8 million). £26.4 million (FY22: £14.1 million).
How we determined it 5% of Profit before taxation expense adjusted for certain non-
recurring items
1% of Net assets
Rationale for benchmark
applied
In determining our materiality, we have considered the financial
metrics which we believed to be relevant, and concluded that
Group Profit before taxation expense adjusted for certain non-
recurring items, notably the giveback payments to Australia
Health Insurance customers and the amortisation of bed
licenses, was the most appropriate benchmark. This is
because the Group is profit-orientated, but the non-recurring
items have significantly distorted the result of the Group. We
consider that the resulting materiality level is appropriate for
the size and complexity of the Group and relevant to the users
of the financial statements. We have substantively tested the
non-recurring items excluded to a lower materiality level.
In determining our materiality, we considered
the financial metrics which we believed to be
relevant and concluded that Net assets was
the most appropriate benchmark given the
Company has issued listed debt.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was £4.0 million to £18.0 million. Certain components were audited to a
local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of
our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% (FY22: 75%) of overall materiality, amounting to £36.0 million
(FY22: £23.1 million) for the Group financial statements and £19.7 million (FY22: £10.6 million) for the Company financial
statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount in the middle of our normal range was
appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £1.2m
(Group audit) (FY22: £1.2m) and £1.2m (Company audit) (FY22: £0.7m) as well as misstatements below those amounts that, in
our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group's and the Company’s ability to continue to adopt the going concern
basis of accounting included:
• Obtaining the Directors’ going concern assessment and challenging the rationale for downside scenarios adopted and
material assumptions made using our knowledge of the Group’s business performance, review of regulatory
correspondence and obtaining further corroborating evidence;
• Considering management’s assessment of the Group’s regulatory solvency coverage and liquidity position in the
forward looking scenarios considered;
• Assessing the impact of severe, but plausible, downside scenarios;
• Assessing liquidity of the Group and Company, including the Group’s ability to pay customers, suppliers and creditors
as amounts fall due;
• Assessing the ability of the Group to comply with covenants;
• Enquiring and understanding the actions taken by management to mitigate any significant risks facing the business,
including attendance at all Group Audit Committee and Group Risk Committee meetings; and
• Reviewing the disclosures included in the financial statements in relation to going concern, including the Basis of
Preparation.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group's and the Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group's and
the Company's ability to continue as a going concern.
32
Independent auditors’ report to the members of Bupa Finance plc (continued)
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic report and Directors' Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors' Report for the year ended 31 December 2023 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic report and Directors' Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The
directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to certain Group activities where non-compliance with the related laws and regulations could result in fines
or litigation, or loss of the Group’s licence to operate. We consider the areas most likely to have such an effect would be in
relation to financial conduct regulation, healthcare provision conduct regulation and regulatory capital and liquidity
requirements. In addition, risks arise from the Group’s required compliance with related taxation legislation (including VAT and
payroll taxes) and the requirements of the FCA handbook in relation to its listed debt, and we considered the extent to which
33
Independent auditors’ report to the members of Bupa Finance plc (continued)
non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that
have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined
that the principal risks were related to management bias in accounting estimates and judgemental areas of the financial
statements, including those shown in our Key Audit Matters, and the override of controls including the posting of inappropriate
journal entries. The group engagement team shared this risk assessment with the component auditors so that they could
include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group
engagement team and/or component auditors included:
• Discussions with the Board, management, Internal Audit, senior management involved in the Risk and Compliance
functions and the Group and Company’s legal function, including consideration of known or suspected instances of
non-compliance with laws and regulation and fraud;
• Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect
irregularities;
• Assessment of matters reported on the Group and Company’s whistleblowing helpline and fraud register and the
results of management’s investigation of such matters;
• Reviewing relevant meeting minutes including those of the Board of Directors, Remuneration and Disclosure
Committees and attending all Audit Committee and Risk Committee meetings;
• Identifying and testing journal entries based on risk criteria;
• Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;
• Testing transactions entered into outside of the normal course of the Group and Company’s business; and
• Reviewing the Group’s register of litigation and claims, Internal Audit reports, and Group Chief Risk Officer’s Reports
in so far as they related to non-compliance with laws and regulations and fraud.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or
through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we
will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 12 May 2021 to audit the
financial statements for the year ended 31 December 2021 and subsequent financial periods. The period of total uninterrupted
engagement is 3 years, covering the years ended 31 December 2021 to 31 December 2023.
34
Independent auditors’ report to the members of Bupa Finance plc (continued)
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial
Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no
assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF
RTS.
Joanne Leeson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
6 March 2024
35
Consolidated Income Statement
for the year ended 31 December 2023
Note
2023
£m
2022
restated¹,²
£m
Insurance revenue
Insurance service expenses
Insurance service result before reinsurance contracts held
Net expense from reinsurance contracts held
Insurance service result
2, 12.1
2.1, 12.1
12.1
12.2
10,770
(10,318)
452
(7)
445
10,033
(9,339)
694
(22)
672
Care, health and other customer contract revenue 2.2 4,268 3,967
Other revenue¹ 2.2 78 81
Total non-insurance revenue 4,346 4,048
Share of post-taxation results of equity-accounted investments¹ 6 83 44
Impairment of goodwill and intangible assets 3 (17) (894)
Other operating expenses¹ 2.3 (4,292) (4,093)
Other income and charges² 2.4 42 (11)
Total other expenses, income and charges (4,184) (4,954)
Profit/(loss) before financial income and expense 607 (234)
Financial income and expense
Financial income² 2.5 363 158
Financial expense 2.5 (190) (174)
Financial (expense)/income from insurance contracts issued 2.5, 12.1 (25) 16
Net monetary loss¹ 1.7 (18) (25)
Net impairment on financial assets (20) (10)
Net financial income/(expense) 110 (35)
Profit/(loss) before taxation expense 717 (269)
Taxation expense¹ 2.6 (177) (130)
Profit/(loss) for the year 540 (399)
Attributable to:
Shareholder of Bupa Finance plc¹
Non-controlling interests
Profit/(loss) for the year
538
2
540
(402)
3
(399)
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
2. Surplus on fair value of investment property has been reclassified and is now presented within other income and charges (see Note 2.4).
Notes 1-28 form part of these consolidated financial statements.
36
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
2022
2023 restated¹
Note £m £m
Profit/(loss) for the year¹ 540 (399)
Other comprehensive income/(expense)
Items that will not be reclassified to the Income Statement
Unrealised loss on revaluation of property 4 (15) (44)
Remeasurement gain on pension schemes 7 – 3
Taxation credit on income and expenses recognised directly in other
comprehensive income 2.6 – 12
Items that may be reclassified subsequently to the Income Statement
Foreign exchange translation differences on goodwill 3 (55) 112
Other foreign exchange translation differences¹ (235) 332
Net gain/(loss) on hedge of net investment in overseas subsidiaries 73 (80)
Share of other comprehensive income of equity-accounted investments 2 2
Change in fair value of financial investments through other comprehensive
income (4) (4)
Change in ECL of financial investments through other comprehensive income 1 –
Realised loss on disposal of financial investments at fair value through other
comprehensive income 4 –
Change in cash flow hedge reserve (7) –
Release of foreign exchange translation reserve on closure of subsidiaries (2) 4
Total other comprehensive (expense)/income (238) 337
Comprehensive income/(expense) for the year 302 (62)
Attributable to:
Shareholder of Bupa Finance plc¹ 302 (67)
Non-controlling interests – 5
Comprehensive income/(expense) for the year 302 (62)
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
Notes 1-28 form part of these consolidated financial statements.
37
Consolidated Statement of Financial Position
as at 31 December 2023
At 1 January
2022 2022
2023 restated¹ restated¹
Note £m £m £m
Assets
Goodwill and intangible assets 3 2,660 2,740 3,518
Property, plant and equipment 4 3,605 3,691 3,793
Investment property 5 776 750 666
Equity-accounted investments¹ 6 1,056 997 885
Post-employment benefit net assets 7 2 2 1
Deferred taxation assets¹ 8 95 127 64
Restricted assets 9 122 119 158
Financial investments 10 3,638 3,716 2,911
Derivative assets 11 46 28 41
Reinsurance contract assets¹ 12.2 38 21 18
Current taxation assets 50 23 15
Inventories 13 76 91 93
Trade and other receivables¹ 14 829 938 616
Assets held for sale 15 48 32 38
Cash and cash equivalents 16 2,278 1,403 1,739
Total assets 15,319 14,678 14,556
Liabilities
Subordinated liabilities 17 (747) (998) (997)
Other interest-bearing liabilities 17 (1,090) (648) (822)
Post-employment benefit net liabilities 7 (8) (7) (9)
Lease liabilities 18 (894) (926) (915)
Deferred taxation liabilities¹ 8 (115) (112) (144)
Derivative liabilities 11 (63) (137) (35)
Provisions for liabilities and charges¹ 19 (335) (287) (265)
Insurance contract liabilities¹ 12.1 (2,608) (2,378) (2,191)
Current taxation liabilities (35) (34)
(55)
Trade and other payables¹ 20 (2,417) (2,308) (2,114)
Liabilities associated with assets held for sale 15 (9) (1) (4)
Total liabilities (8,321) (7,836) (7,551)
Net assets 6,998 6,842 7,005
Equity
Share capital
Foreign exchange translation reserve¹
Property revaluation reserve
Cash flow hedge reserve
Income and expenditure reserve¹
22 200
241
601
(7)
5,648
200
437
634
–
5,254
200
91
655
–
5,745
Equity attributable to shareholder of Bupa Finance plc
Restricted Tier 1 notes
Non-controlling interests
Total equity
21
28
6,683
297
18
6,998
6,525
297
20
6,842
6,691
297
17
7,005
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
Approved by the Board of Directors and signed on its behalf on 6 March 2024 by
James Lenton
Director
Notes 1-28 form part of these consolidated financial statements.
38
6
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
2022
2023 restated¹
Note
£m £m
Cash flow from operating activities
Profit/(loss) before taxation expense¹ 717 (269)
Adjustments for:
Net financial (income)/expense¹ (153) 26
Net monetary loss¹ 1.7 18 25
Depreciation, amortisation and impairment 3, 4, 15 496 1,522
Other non-cash items¹ (162) (49)
Changes in working capital and provisions:
Increase in insurance contract liabilities 342 131
Increase in reinsurance contract assets (18) (1)
Funded pension scheme employer contributions (1) (1)
Decrease/(increase) in trade and other receivables, and other assets 2 (191)
Increase in trade and other payables, and other liabilities¹ 232 73
Cash generated from operations 1,473 1,266
Income taxation paid (175) (232)
Decrease in cash held in restricted assets 6 5
Net cash generated from operating activities 1,304 1,039
Cash flow from investing activities
Acquisition of subsidiaries and businesses, net of cash acquired (63) (29)
Investment in equity-accounted investments 6 (22) (14)
Dividends received from associates 42 42
Disposal of subsidiaries and other businesses, net of cash disposed of 30 3
Purchase of intangible assets 3 (117) (111)
Purchase of property, plant and equipment 4 (260) (208)
Proceeds from sale of property, plant and equipment 19 7
Purchase of investment property 5 (38) (29)
Disposal of investment property 5 – 1
Purchases of financial investments, excluding deposits with credit institutions (1,983) (1,720)
Proceeds from sale and maturities of financial investments, excluding deposits
with credit institutions 1,921 1,222
Net withdrawals from/(investments into) deposits with credit institutions 88 (119)
Interest received 241 82
Net cash used in investing activities (142) (873)
Cash flow from financing activities
Payment of Restricted Tier 1 coupon 21 (12) (12)
Proceeds from issue of interest-bearing liabilities and drawdowns on other
borrowings 493 51
Repayment of interest-bearing liabilities and other borrowings (342) (194)
Principal repayment of lease liabilities (148) (135)
Payment of interest on lease liabilities 18 (49) (46)
Interest paid (66) (64)
Net receipts/(payments) on settlement of hedging instruments 57 (57)
Dividends paid (134) (89)
Dividends paid to non-controlling interests (2) (2)
Net cash used in financing activities (203)
(548)
Net increase/(decrease) in cash and cash equivalents 959 (382)
Cash and cash equivalents at beginning of year² 1,479 1,850
Effect of exchange rate changes (76) 11
Cash and cash equivalents at end of year² 16 2,362 1,479
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
2. Includes restricted cash of £87m (2022: £78m) which are considered cash and cash equivalents along with cash balances classified as held for sale of £2m
(2022: £nil) and bank overdrafts of £1m (2022: £2m) which are not considered cash and cash equivalents in Note 16.
Notes 1-28 form part of these consolidated financial statements.
39
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
Share Capital
Foreign exchange
translation
reserve
Property
revaluation
reserve
Cash flow hedge
reserve
Income and
expenditure
reserve
Total attributable
to shareholder of
Bupa Finance plc
Restricted Tier 1
notes
Non-controlling
interests
Total equity
2023
Balance as at 1 January 2023
Note £m
200
£m
437
£m
634
£m
–
£m
5,254
£m
6,525
£m
297
£m
20
£m
6,842
Profit for the year – – – – 538 538 – 2 540
Other comprehensive income/(expense)
Unrealised loss on revaluation of property
Realised revaluation profit on disposal of
property
Foreign exchange translation differences on
goodwill
Other foreign exchange translation differences
Net gain on hedge of net investment in overseas
subsidiaries
Share of other comprehensive income of equity-
accounted investments
Change in fair value of financial investments
through other comprehensive income
Change in ECL of financial investments through
other comprehensive income
Realised loss on disposal of financial
investments at fair value through other
comprehensive income
Change in cash flow hedge reserve
Release of foreign exchange translation reserve
on closure of subsidiaries
Other comprehensive expense for the year,
net of taxation
4
3
25.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(55)
(212)
73
–
–
–
–
–
(2)
(196)
(15)
(5)
–
(13)
–
–
–
–
–
–
–
(33)
–
–
–
–
–
–
–
–
–
(7)
–
(7)
–
5
–
(8)
–
2
(4)
1
4
–
–
–
(15)
–
(55)
(233)
73
2
(4)
1
4
(7)
(2)
(236)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2)
–
–
–
–
–
–
–
(2)
(15)
–
(55)
(235)
73
2
(4)
1
4
(7)
(2)
(238)
Total comprehensive (expense)/income for
the year – (196) (33) (7) 538 302 – – 302
Payment of Restricted Tier 1 coupon, net of
taxation 2.6, 21 – – – – (10) (10) – – (10)
Dividends to shareholder of the Company – – – – (134) (134) – – (134)
Dividends paid to non-controlling interests – – – – – – – (2) (2)
Balance as at 31 December 2023 200 241 601 (7) 5,648 6,683 297 18 6,998
Notes 1-28 form part of these consolidated financial statements.
40
Consolidated Statement of Changes in Equity (continued)
for the year ended 31 December 2023
Share Capital
Foreign exchange
translation reserve¹
Property
revaluation reserve
Income and
expenditure
reserve¹
Total attributable to
shareholder of
Bupa Finance plc¹
Restricted Tier 1
notes
Non-controlling
interests
Total equity¹
Note £m £m £m £m £m £m £m £m
2022
Balance as at 1 January 2022, as previously
reported 200 92 655 5,800 6,747 297 17 7,061
Initial application of IFRS 17 1.5 – (1) – (55) (56) – – (56)
Balance as at 1 January 2022, as restated 200 91 655 5,745 6,691 297 17 7,005
(Loss)/profit for the year¹ – – – (402) (402) – 3 (399)
Other comprehensive income/(expense)
Unrealised loss on revaluation of property 4 – – (44) – (44) – – (44)
Realised revaluation profit on disposal of
property – – (6) 6 – – – –
Remeasurement gain on pension schemes 7 – – – 3 3 – – 3
Foreign exchange translation differences on
goodwill 3 – 112 – – 112 – – 112
Other foreign exchange translation differences¹ – 310 17 3 330 – 2 332
Net loss on hedge of net investment in overseas
subsidiaries 25.3 – (80) – – (80) – – (80)
Share of other comprehensive income of equity-
accounted investments – – – 2 2 – – 2
Change in fair value of financial investments
through other comprehensive income – – –
(4) (4) – – (4)
Release of foreign exchange translation reserve
on closure of subsidiaries – 4 – – 4 – – 4
Taxation credit on income and expense
recognised directly in other comprehensive
income 2.6 – – 12 – 12 – – 12
Other comprehensive income/(expense) for
the year, net of taxation – 346 (21) 10 335 – 2 337
Total comprehensive income/(expense) for
the year – 346 (21) (392) (67) – 5 (62)
Payment of Restricted Tier 1 coupon, net of
taxation 2.6, 21 – – – (10) (10) – – (10)
Dividends to equity holder of the Company – – – (89) (89) – – (89)
Dividends paid to non-controlling interests – – – – – – (2) (2)
Balance as at 31 December 2022, as restated 200 437 634 5,254 6,525 297 20 6,842
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
Notes 1-28 form part of these consolidated financial statements.
41
Notes to the Consolidated Financial Statements
for the year ended 31 December 2023
1 Basis of preparation
This section describes the significant accounting policies and accounting estimates and judgements that relate to the financial
statements and notes as a whole. Where accounting policies relate to a specific note, the applicable accounting policies and
estimates are contained within the note.
1.1 Basis of preparation
Bupa Finance plc (the ‘Company’), a company incorporated in England and Wales and domiciled in the United Kingdom,
together with its subsidiaries (collectively the ‘Group’) is an international healthcare business, providing health insurance,
treatment in clinics, dental centres and hospitals, and operating care homes. The immediate and ultimate parent of the
Company is The British United Provident Association Limited (the ‘Parent’ or ‘Bupa’ and together with its subsidiaries, the ‘Bupa
Group’).
Both the Company Financial Statements and the Group's Consolidated Financial Statements have been prepared in
accordance with UK-adopted international accounting standards, in conformity with the requirements of the Companies Act
2006.
The financial statements were approved by the Board of Directors on 6 March 2024. The Group’s accounting policies have
been applied consistently to all the years presented, and updated for the application of new and amended accounting standards
as set out in Note 1.5, including the adoption of IFRS 17 Insurance Contracts.
The financial statements are prepared on a going concern basis and under the historical cost convention, modified by the
revaluation of property, investment property, and financial investments at fair value, and the application of IAS 29 to balances in
hyperinflationary economies.
The presentation of line items within the Consolidated Statement of Financial Position is broadly in order of liquidity. Current
assets and liabilities disclosed in the notes to the Consolidated Financial Statements are those expected to be recovered or
settled in less than one year.
1.2 Basis of consolidation
The Consolidated Financial Statements for the year ended 31 December 2023 comprise those of the Company and its
subsidiaries, and the share of results of equity-accounted investments.
Subsidiaries are those entities over which the Group has control. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. The Group considers all relevant facts and circumstances when determining whether control exists and makes a
reassessment whenever those facts and circumstances change.
The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date that control
commences to the date that control ceases. Accounting policies of subsidiaries are aligned on acquisition to ensure consistency
with Group policies. Intra-group related party transactions and outstanding balances are eliminated in the preparation of the
Consolidated Financial Statements.
The Group applies the purchase method in accounting for business combinations. The Group recognises identifiable assets,
liabilities and contingent liabilities at fair value, and any non-controlling interests in the acquiree. Non-controlling interests in the
net assets of subsidiaries are identified separately from the Group’s equity. Non-controlling interests consist of the amount of
those interests at the date of the original acquisition and the non-controlling shareholders' share of changes in equity since this
date.
Functional currencies are identified at a statutory entity level. These vary across the Group and include sterling, Australian
dollar, euro, New Zealand dollar and US dollar. Each Group entity translates its results and financial position into the Group’s
presentational currency, sterling. Unless otherwise noted, the amounts shown in the Consolidated Financial Statements are in
millions of pounds sterling (£m).
1.3 Accounting estimates and judgements
The preparation of financial statements requires the use of certain accounting estimates and assumptions that affect the
reported assets, liabilities, income and expenses. It also requires management to exercise judgement in applying the Group’s
accounting policies.
The areas involving a higher degree of judgement or complexity, or where estimates are significant to the Consolidated
Financial Statements, are set out below. Changes in these estimates could lead to a material adjustment to the carrying value
of the assets and liabilities in the next financial year. Further detail is in the related notes.
42
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
These have been updated to include ongoing judgements following the implementation of IFRS 17 Insurance Contracts. Details
of judgements applied in the initial application of the standard have been included in Note 1.5 (a) below.
Area
Details Note
Goodwill and
intangible
assets
Goodwill and intangible assets are recognised on acquired businesses based on fair values at the date of
acquisition. Goodwill and intangible assets with indefinite lives are tested for impairment on an annual basis, or
more frequently when there are indicators of impairment. Other intangible assets are tested for impairment when
there are indicators of impairment.
3
Sources of estimation uncertainty
Impairment tests include a number of sources of estimation uncertainty as the key assumptions used when
modelling the recoverable amount require estimating the discount rate, terminal growth rate and the forecast cash
flows. Estimation uncertainties within these cash flows vary by cash-generating unit (CGU). For aged care these
include occupancy rates, fee rates, staff and agency costs and operating expenses; for provision business, number
of customers, available clinician hours, fee rates and operating expenses; and for insurance business, future
insurance premium rises, claims volatility and claims inflation.
Accounting judgements
Judgement has been applied to determine whether there are indications of impairment to intangible assets or an
indication that impairment should be reversed for intangible assets. In making this judgement, the Group has
considered current trading and future plans associated with each of the assets, along with external market factors,
in order to assess whether a full impairment assessment is required for impairments or reversal of impairments
.
Property
valuations
The Group has a significant portfolio of care home, hospital and office properties. These are subject to periodic and
at least triennial valuations performed by external independent valuers, with directors’ valuations performed in
intervening years. In addition, the Group has a significant portfolio of investment properties, primarily retirement
villages in New Zealand. These properties are revalued annually.
Sources of estimation uncertainty
Significant assumptions for freehold property are normalised earnings, average occupancy and capitalisation rates,
whereas for investment property key assumptions are discount and capital growth rates.
Accounting judgements
In valuing care home property, a judgement is made on the highest and best use of the property. In the majority of
cases this leads to the property being valued as part of a group of assets making up a going-concern business
using market-based assumptions. The business is valued on a fair maintainable trade basis with the fair value thus
calculated being allocated to plant and equipment and bed licences where applicable at net book value (as a proxy
for fair value), with the residual value being allocated to property.
4,5
Insurance
contracts
Provisions and
contingent
liabilities
Accounting judgements
Premium allocation approach (PAA)
The Group exercises judgement in determining whether the PAA eligibility criteria are met at initial recognition. For
a small number of insurance contracts, which have a coverage period that is greater than 12 months, the Group
elects to apply the PAA, if at the inception of the contract the Group reasonably expects that it will provide a liability
for remaining coverage (LFRC) that would not differ materially from the General Measurement Model (GMM).
Sources of estimation uncertainty
Best estimate of claims provisioning
Estimates included in the insurance contract liabilities include expected claims payments and expenses required to
settle existing insurance contract obligations. The key assumptions used in the calculation of the liability for
incurred claims (LFIC) include claims development, claims costs inflation, medical trends and seasonality.
Uncertainty exists particularly in relation to estimating the frequency and severity of incurred claims for the most
recent months prior to the year end.
The Group has circumstances arising in the ordinary course of business, including losses which might arise from
litigation, disputes, and interpretation of tax law or local regulations. Judgement is exercised in determining whether
the circumstances should give rise to the recognition of provisions or contingent liabilities. In the case of material
contingent liabilities further judgement is required in arriving at appropriate disclosure of such matters.
Accounting judgements
Significant judgement has been applied in assessing whether a contingent liability or provision exists as a result of
the ruling issued by the Supreme Court in Chile that obliges Isapres to make use of a specific table of risk factors.
12
27
43
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
1.4 Going concern
Following a detailed assessment of the Group’s going concern status based on its current position and forecast results, along
with scenario-based stress testing and reverse stress testing, the Directors have concluded that the Group has adequate
resources to operate for at least the next 12 months from the approval of these financial statements. This assessment
considered forecast and reasonably possible adverse changes to the Group’s liquidity, regulatory solvency, access to funding
and trading profitability over the next 12 months.
The assessment identified the risks and uncertainties most likely to impact the Group and considered the impact to the Group’s
businesses under a number of reasonably plausible severe scenarios as well as consideration of contingent liabilities. Our most
severe reasonably possible scenarios considered adverse outcomes from the Chile Supreme Court decision described in Note
27, combined with economic stresses and other factors. The Chile outcomes considered were materially worse than the
Solvency II capital allocated against the contingency given the inherent uncertainty surrounding the implementation of the
Supreme Court decision. Under this scenario, significant short-term reductions in profitability arise, and while the Group would
continue to operate over the next 12 months, it would drop below its risk appetites for liquidity and regulatory solvency.
Management actions would allow downside impacts to be mitigated, and risk appetites controlled, by reducing expenditure,
obtaining additional funding or divesting investments or businesses. Within its liquidity resources, the Group makes use of a
£900m revolving credit facility ('RCF') as described in Note 17(c). The Group expects to remain compliant with the RCF’s
covenants under stressed scenarios and may further draw down on the RCF in order to meet liquidity needs.
Details of the Group’s business activities, together with the factors likely to affect its future development, performance and
position are set out in the Strategic Report on pages 3-18. The financial position of the Group, its cash flows, liquidity position
and borrowing facilities are described in the Financial Review on pages 9-12. The Directors’ assessment of the Group’s longer-
term viability over a three-year period is described on pages 21-22.
1.5 Restatements and changes in accounting policies
Except where noted in (a)-(g) below, the Group has consistently applied its accounting policies to all periods presented in these
Consolidated Financial Statements.
(a) IFRS 17 Insurance Contracts
IFRS 17 sets out the principles for the recognition, measurement and presentation of insurance contracts and supersedes IFRS
4 Insurance Contracts. The Group has adopted IFRS 17 Insurance Contracts in these financial statements on a fully
retrospective basis for the majority of the Group's business. The Group has used the fair value approach for a small legacy
portfolio of individual health contracts in Brazil, as set out below.
Significant judgements on implementation of IFRS 17
On implementation of IFRS 17, significant judgements include the level of aggregation and the determination of the unit of
account, the application of PAA, the determination of which expenses are directly attributable to insurance contracts and the
identification of onerous contracts. The key considerations made by the Group on application of IFRS 17 are set out below.
See Note 1.3 for significant judgements and estimates relating to the application of IFRS 17 that are reassessed each reporting
period.
Insurance contract classification
As a result of the Standard's specificity regarding the contracts that it is applicable to, the Group has reviewed contracts issued
to customers by non-insurance businesses to ensure that no additional business has fallen within the scope of IFRS 17 when
compared to IFRS 4. This concluded that no additional contracts should be brought into scope on adoption of IFRS 17.
Level of aggregation
IFRS 17 defines a portfolio of insurance contracts as ‘Insurance contracts subject to similar risks and managed together’. As the
Group essentially sells one ‘health insurance’ product line, where cash flows are generally expected to respond similarly in
direction and timing to changes in assumptions, and the Group manages the insurance business at a geographic ‘Business
Unit’ level, the Group has defined portfolios as insurance Business Units at a minimum, with further disaggregation if there are
business lines which are managed separately and have different risk profiles. Portfolios are further divided into groups of
contracts for the identification of onerous contracts.
There is a presumption under the PAA that no contracts are onerous unless there are facts and circumstances that indicate
otherwise. However, the requirement to identify onerous contracts means that business is generally accounted for at a level
lower than portfolios, being profitability groupings. This is the basis on which the standard requires various assessments to be
made, e.g. PAA eligibility.
44
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Contract boundary and PAA
IFRS 17 requires a current measurement model for insurance contracts where estimates are remeasured each reporting period.
Under the GMM, contracts are measured using the building blocks of discounted probability-weighted cash flows, an explicit
risk adjustment, and a contractual service margin (CSM) representing the unearned profit of the contract which is recognised as
revenue over the coverage period. An optional, simplified PAA is permitted for eligible short-duration contracts.
In applying the standard, the Group has reviewed its insurance and reinsurance contracts and considered the contract
boundary for each type of policy. The majority of policies have a coverage period of one year or less. As a result, the Group has
taken the available policy choice to apply the PAA to these contracts. This approach leads to simplified measurement and
presentation relative to the GMM.
The Group has a small number of policy groups with a coverage period of greater than a year. For these groups of contracts,
the Group has assessed whether the measurement of the LFRC under the PAA is expected to differ materially from that under
the GMM. This required the use of a GMM and materiality thresholds determined by management for these policies, as well as
the selection of reasonably expected scenarios against which eligibility is assessed. The majority of contracts are eligible for the
PAA measurement model either automatically or through this assessment.
Liability for incurred claims
The LFIC is consistent under the GMM and the PAA. The LFIC is made up of the best estimate outstanding claims provision,
expenses already incurred but not yet paid in relation to claims and the cost of handling incurred claims at the reporting date.
Liability for remaining coverage
The LFRC under the PAA is valued at initial recognition based on premium received, less any directly attributable acquisition
costs. In subsequent periods, the LFRC is amortised to recognise revenue and insurance expenses (insurance acquisition cash
flows) on a passage of time basis over the coverage period. This is recognised on a straight-line basis as the expected pattern
of the release of risk during the coverage period does not differ significantly over the passage of time.
For groups of contracts where all contracts have a coverage period of one year or less, the Group has taken the policy decision
available to expense insurance acquisition cash flows as incurred. Where the contracts within a group have a coverage period
that is greater than one year, this policy choice is not available and the insurance acquisition cash flows are allocated to the
relevant group of insurance contracts. Allocated insurance acquisition cash flows are included within the LFRC, alongside
insurance receivables.
Under the PAA, a risk adjustment is recognised on all LFIC balances and on LFRC balances for onerous contracts issued. The
Group has taken the decision to use a confidence level technique to estimate the risk adjustment.
Discounting
Discounting is optional for the LFRC carrying amount if the time between providing each part of the coverage and the related
premium due date is one year or less and is optional for the LFIC if claims are expected to be paid in one year or less from the
date the claims are incurred.
The Group does not apply discounting to the majority of policies. However, at transition, Bupa Acıbadem Sigorta has applied
discounting to both the LFRC and LFIC due to the high interest rate and high inflation environment in Türkiye. Bupa Global has
also applied discounting to LFIC for certain groups of insurance contracts as a proportion of claims are settled in a period in
excess of one year. In addition, the LFRC for the legacy individual health policies in Brazil has been discounted due to the long-
term nature of these contracts as detailed below. Where discounting is applied, the Group policy is to use PRA published
discount rates or European Insurance and Occupational Pensions Authority (EIOPA) specified discount rates.
Onerous contracts
To identify potentially onerous contracts, the Group has considered information reviewed by senior management in monitoring
financial performance. The Group assumes that no PAA contracts are onerous at initial recognition. Where facts and
circumstances are identified that may indicate an onerous contract exists, detailed testing is performed. The loss component is
valued by comparing the carrying amount of the LFRC to the estimated fulfilment cash flows which include an assessment of
the risk adjustment using a confidence level approach. In subsequent periods, the loss component is reassessed and any
movements are recognised within the Consolidated Income Statement.
Key estimation uncertainty is driven by the future cash flows which are uncertain due to their timing, size and, or probability. The
underlying cash flows are determined by forecasting future claims based on internal and external historical claims and other
experience data and updated to reflect current expectations of future events and current conditions at the reporting date.
Legacy individual health policies in Brazil
The Group has a small legacy portfolio of individual health contracts in Brazil. On transition to IFRS 17, the contract boundary of
the policies has been deemed to be the lifetime of the policyholders due to mandatory renewal clauses included in the policies.
These contracts are onerous and a GMM valuation has been used to calculate the loss component of £47m at transition on 1
45
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
January 2022. The loss component has been discounted due to the long-term nature of these contracts. IFRS 17 has been
implemented for these contracts using the fair value approach.
Insurance service expenses
Judgement is exercised in determining which expenses are directly attributable to insurance contracts, and therefore included
within insurance service expenses. The Group classifies the majority of expenses incurred by Insurance entities within
insurance service expenses, except for those not directly attributable to insurance contracts.
Return of COVID-19 claims savings
In Australia Health Insurance, premium rate increase deferrals have been implemented to return claims savings to customers.
The reduced premium received from customers is recognised on a passage of time basis over the policy coverage period.
In addition, Australia Health Insurance has announced cash payments to customers. A provision is recognised at the point the
Group formally announces the cash payments and insurance revenue recognised within the Consolidated Income Statement is
reduced accordingly. The provision is subsequently utilised on payment to the eligible customers. As the payment reflects a
distinct promise associated with the return of COVID-19 savings to customers, the provision is reflected as a non-distinct
investment component.
An insurance provision for the return of premiums was established in 2020 in respect of Bupa Insurance Limited following the
commitment to pass back to eligible customers any exceptional financial benefits experienced by the UK PMI business that
ultimately arose as a result of the COVID-19 pandemic. In circumstances where a return of premiums is due to policyholders, a
provision is established within the LFIC. Movement in the provision is subsequently recognised to reflect the most recent
estimate of the costs of deferred claims expected to rebound after the reporting date.
Restatements
The Group’s net assets at transition on 1 January 2022 were reduced by £56m. The primary adjustments impacting net assets
were:
• the write off of deferred acquisition costs (DAC) assets
• the recognition of the loss component on onerous contracts in excess of the unexpired risk reserve (URR) held under
IFRS 4
• in the Group's Australian insurance business, the derecognition of the deferred claims liabilities which cannot be held
under IFRS 17 and the change in recognition of premium deferrals.
Other adjustments include changes to the net monetary loss recognised under IAS 29 Financial Reporting in Hyperinflationary
Economies as a result of IFRS 17 deeming all components of an insurance contract to be monetary items. Taxation has been
restated to reflect the taxation impact of the above adjustments. Any deferred taxation assets recognised on the adoption of
IFRS 17 should unwind through the Consolidated Income Statement in future periods, as and when taxation deductions are
taken, alongside the associated impact to current taxation.
Restatement of the legacy individual health portfolio in Brazil, adopted using the alternate fair value approach, is not shown
separately due to the low value of that portfolio (£47m). This portfolio is included within the restatement of deferred taxation
assets, insurance contract liabilities and provisions arising from insurance business.
Total
1 January 2022 £m
Net assets under IFRS 4 7,061
Derecognition of DAC (136)
Recognition of loss component for onerous contracts in excess of URR (76)
Derecognition of deferred claims liabilities and change in recognition of premium deferrals 163
Other adjustments (15)
Taxation adjustments 8
Net assets under IFRS 17 7,005
46
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
As published Reclassification Measurement Restated
1 January 2022 £m £m £m £m
Equity-accounted investments 905 – (20) 885
Assets arising from insurance business 1,380 (1,244) (136) –
Deferred taxation assets 89 – (25) 64
Reinsurance contract assets – 18 – 18
Trade and other receivables 618 (2) – 616
Deferred taxation liabilities (177) – 33 (144)
Provisions arising from insurance contracts (3,237) 3,237 – –
Provisions for liabilities and charges (270) 5 – (265)
Insurance contract liabilities – (2,283) 92 (2,191)
Other liabilities arising from insurance business (213) 213 – –
Trade and other payables (2,170) 56 – (2,114)
Total net asset restatement – (56)
The 31 December 2022 comparatives have also been restated for the impact of applying IFRS 17. The impact on profit for the
period and net assets are set out in the tables below.
Total
31 December 2022 £m
Loss after tax under IFRS 4 (418)
Derecognition of DAC (19)
Recognition of loss component for onerous contracts in excess of URR (11)
Derecognition of deferred claims liabilities and change in recognition of premium deferrals 81
Other adjustments (14)
Taxation adjustments (18)
Loss after tax under IFRS 17 (399)
As published Reclassification Measurement Restated
31 December 2022 £m £m £m £m
Equity-accounted investments 1,032 – (35) 997
Assets arising from insurance business 1,626 (1,470) (156) –
Deferred taxation assets 146 – (19) 127
Reinsurance contract assets – 21 – 21
Trade and other receivables 939 (1) – 938
Deferred taxation liabilities (121) – 9 (112)
Provisions arising from insurance contracts (3,709) 3,709 – –
Provisions for liabilities and charges (290) 3 – (287)
Insurance contract liabilities
– (2,528) 150 (2,378)
Other liabilities arising from insurance business (221) 221 – –
Trade and other payables (2,353) 45 – (2,308)
Total net asset restatement – (51)
(b) IAS 1 amendments
The Group has adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) from 1
January 2023. The amendments aim to help improve accounting policy disclosures for the primary users of financial
statements. Entities must disclose material accounting policies, rather than the previous requirement to disclose significant
accounting policies, and the concept of materiality in the context of accounting policies is further defined. Immaterial accounting
policy information must not obscure material accounting policy information. Accounting policy disclosures in these financial
statements have been aligned with the new requirements.
(c) IAS 8 amendments
The Group has adopted Definition of Accounting Estimates (Amendments to IAS 8) from 1 January 2023. The amendments
introduce the definition of accounting estimates and include further amendments to help entities distinguish changes in
accounting estimates from changes in accounting policies. On adoption there was no impact on the Group. Any future changes
in accounting estimate or changes in accounting policy will be assessed under the new requirements.
47
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
(d) Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
The Group has adopted Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS
12) from 1 January 2023. The amendments remove a previous deferred tax recognition exemption for transactions that give rise
to equal taxable and deductible temporary differences on initial recognition. A lessee’s recognition of assets and liabilities on
inception of a lease is potentially such a transaction, depending on applicable tax law. The Group previously accounted for
deferred tax on leases on a net basis in certain jurisdictions. As a result of adopting the amendments, in these jurisdictions the
Group recognised separate deferred taxation assets on the lease liabilities and deferred taxation liabilities on the right-of-use
assets of £16m each at 31 December 2022 (1 January 2022: £15m). As these balances qualify for offset, there was no impact
on the Consolidated Statement of Financial Position.
(e) International Tax Reform—Pillar Two Model Rules (Amendments to IAS 12)
The Group has adopted International Tax Reform—Pillar Two Model Rules (Amendments to IAS 12) from 1 January 2023. Pillar
Two seeks to establish a 15% global minimum tax rate for multinational enterprises. The Finance (No.2) Bill 2023, which
implements a domestic top-up tax and a multinational top-up tax in the UK effective for accounting periods starting on or after
31 December 2023, was enacted on 11 July 2023. If the top-up tax had applied in 2023, the impact would not have been
material for the Group. The IAS 12 amendments provide a temporary mandatory exception from deferred tax accounting for the
Pillar Two top-up tax, which the Group has applied. The amendments also require additional qualitative and quantitative
disclosures about the actual and potential impact of Pillar Two taxes. These disclosures are given in Note 2.6(iv).
(f) IFRS Interpretations Committee decision Premiums Receivable from an Intermediary (IFRS 17 and IFRS 9)
In October 2023, the IFRS Interpretations Committee (IFRS IC) published its final agenda decision Premiums Receivable from
an Intermediary (IFRS 17 and IFRS 9). This agenda decision considered how an entity that issues insurance contracts applies
the requirements in IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments to premiums receivable, where a policy
holder has paid premiums to an intermediary, but the insurer has not yet received the premiums from the intermediary.
The IFRS IC concluded that IFRS 17 was silent on whether such cash flows are within the bounds of an insurance contract, and
that the insurer should develop an appropriate accounting policy. The insurer could determine that the cash flows are removed
from the measurement of a group of insurance contracts either when they are settled to the insurer, or when the policyholder
has settled their obligations by paying the intermediary. Using the first approach, the premiums receivable would continue to be
considered future cash flows under IFRS 17. Using the second approach, the insurer would account for the premiums
receivable as a financial asset, applying IFRS 9.
The Group has reviewed its affected business and concluded that the first approach is consistently applied. All affected
business is accounted for under the PAA and the LFRC for affected groups of contracts is increased only when premiums are
recovered in cash from the intermediary. The Agenda Decision therefore resulted in no impact on recognition, measurement or
disclosure for the Group.
(g) Other
A number of other amended standards and interpretations became applicable for the current reporting period. The Group did
not have to change its accounting policies or make retrospective adjustments as a result of adopting these amendments.
1.6 Forthcoming financial reporting requirements
A number of financial reporting standards, amendments and interpretations have been issued but are not effective for the year
ended 31 December 2023 and have not been early adopted by the Group. These include:
(a) Non-current Liabilities with Covenants (Amendments to IAS 1)
In October 2022 the International Accounting Standards Board (IASB) issued Non-current Liabilities with Covenants
(Amendments to IAS 1). The amendments clarify that the need to comply with covenants beyond the reporting date does not
prevent a liability from being classified as non-current. Entities must disclose any such liability balances along with the presence
and nature of relevant covenants and additionally disclose if the covenants are likely to be breached within the following twelve
months. The amendments are effective from 1 January 2024. The application of these amendments is currently being evaluated
by the Group. The amendments may impact the classification of certain liabilities as current or non-current and require
additional disclosure, but are expected to have no other impact on recognition or measurement. The Group currently classifies
drawings on its revolving credit facility (as described in Note 17) as current liabilities and expects to classify these as non-
current liabilities once the amendments are effective.
(b) Other
A number of other amendments to standards and interpretations have been issued and are not yet effective for the year ended
31 December 2023. None of these are expected to have a material impact on the Group.
48
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
1.7 IAS 29 Financial Reporting in Hyperinflationary Economies
Türkiye is a hyperinflationary economy and IAS 29 Financial Reporting in Hyperinflationary Economies has been applied from
June 2022 onwards. As a consequence, the results and balances for the Group's Turkish operations have been adjusted for
changes in the general purchasing power of the Turkish lira. In order to make this adjustment the Group refers to the CPI index
published by the Turkish Statistical Institute. The value of CPI at 31 December 2023 was 1,859.40 (2022: 1,128.40) and the
movement in CPI for the year ended 31 December 2023 was 731.00 (2022: 441.45), an increase of 64.8% (2022: 64.3%). The
introduction of IFRS 17 has impacted the application of IAS 29 in prior periods as it deems all components of an insurance
contract to be monetary items, whereas under IFRS 4, the unearned premium provision and deferred acquisition costs were
deemed to be non-monetary items. This has led to the restatement of the monetary loss and the net impact to profit before
taxation for 2022.
A loss of £18m (2022 (restated): £25m) arising from the devaluation of net monetary assets has been recognised within net
financial expense in the Consolidated Income Statement. This includes the impact of indexing amounts in the Consolidated
Income Statement for the application of IAS 29, with the net impact reducing profit before tax by £10m (2022 (restated): £29m)
for the year.
For segmental reporting purposes, the net impact of applying hyperinflationary accounting has been excluded from underlying
profit and included within realised and unrealised FX gain/loss as this is how the Group measures performance of the business.
All Turkish lira amounts are translated to the Group's presentation currency of sterling, using the closing exchange rate in effect
on 31 December 2023 of 37.66 (2022: 22.58). The impact of this adjustment is recorded within other foreign exchange
translation differences in the Consolidated Statement of Comprehensive Income and within the foreign exchange translation
reserve in the Consolidated Statement of Financial Position. The Group recognises the remaining exchange difference arising
on consolidation within other foreign exchange translation differences through other comprehensive income in the foreign
exchange translation reserve.
1.8 Events occurring after the reporting period
On 8 January 2024, the Group acquired an additional 21.57% of shares in Indian health insurer Niva Bupa Health Insurance
Company Limited, for £258m in cash, resulting in a controlling shareholding of 62.98%. The transaction strengthens the Group’s
presence in the growing Indian health insurance sector.
As the Group has not finalised its accounting for the acquisition full details of the financial impact, including the net assets
acquired and the performance of the acquired business are not disclosed. The Group expects to recognise significant goodwill
and identifiable intangible assets as a result of the transaction.
Immediately prior to the acquisition, on 8 January 2024, the Group’s existing stake in Niva Bupa was remeasured to fair value,
resulting in the Group recording a £309m gain through other income and charges in the Consolidated Income Statement in
2024.
49
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
2 Operating segments
The organisational structure of the Group is managed through three Market Units based on geographic locations and
customers: Bupa Asia Pacific; Europe and Latin America; and Bupa Global and UK. Management monitors the operating results
of the Market Units separately to assess performance and make decisions about the allocation of resources. The Group’s
associate investments, Bupa Arabia and Niva Bupa, are reported within Other businesses. The segmental disclosures below
are reported consistently with the way the business is managed and reported internally.
Reportable segments Service and products
Bupa Asia Pacific Bupa Health Insurance: Health insurance, international health cover in Australia
Bupa Health Services: Health provision business, comprising dental, optical, audiology, medical
assessment services, and healthcare for the Australian Defence Force
Bupa Villages and Aged Care Australia: Nursing, residential, respite care and residential villages
Bupa Villages and Aged Care New Zealand: Nursing, residential, respite care and residential villages
Bupa Hong Kong: Domestic health insurance, primary healthcare and day care clinics including diagnostics
Europe and Latin America Sanitas Seguros: Health insurance and related products in Spain
Sanitas Dental: Insurance and dental services through clinics and third-party networks in Spain
Sanitas Hospitales and New Services: Management and operation of hospitals, rehabilitation centres
and health clinics in Spain
Sanitas Mayores: Nursing, residential and respite care in care homes and day centres in Spain
LUX MED: Medical subscriptions, health insurance, and the management and operation of diagnostics,
health clinics and hospitals in Poland
Bupa Acıbadem Sigorta: Domestic health insurance in Türkiye
Bupa Chile: Domestic health funding and the management and operation of health clinics and hospitals in Chile
Care Plus: Domestic health insurance in Brazil
Bupa Mexico: Health insurance and the management and operation of a hospital in Mexico
Bupa Global Latin America: International health insurance
Bupa Global and UK Bupa UK Insurance: Domestic health insurance, and administration services for Bupa health trusts
Bupa Dental Care UK: Dental services and related products
Bupa Care Services: Nursing, residential, respite care and care villages
Bupa Health Services: Clinical services, health assessment related products and management and operation of
a private hospital
Bupa Global: International health insurance to individuals, small businesses and corporate customers
Associate: Highway to Health (United States of America) (operating as GeoBlue)
Other businesses Associates: Bupa Arabia (Kingdom of Saudi Arabia) and Niva Bupa (India): Health insurance
Underlying profit
A key performance measure of operating segments utilised by the Group is underlying profit. Underlying profit is used to
distinguish underlying profit from other constituents of the IFRS reported profit before taxation not directly related to the trading
performance of the business. This measurement basis has been updated in 2023 to maintain consistency with the metric used
internally for managing the business.
The following changes have been made to the metric:
-
The allocation of central costs to Market Units has been revised and higher costs have been retained in the Group
functions segment.
-
Investment property returns have been included within underlying profit.
-
Financial investment returns have been included in Market Unit underlying profit to better reflect expected financial
asset returns. This includes the actual returns on cash, cash-like instruments and assets where returns do not fluctuate
with market movements. Expected returns are used for return-seeking asset portfolios. Short-term fluctuations on
investment returns are removed from underlying profit as they are not related to underlying trading performance.
Presentational updates have been made to show revenue before IAS 29 adjustments, which reflects the view that is presented
to management. In addition, Group investment funding costs, which principally include investment in ESGC initiatives, have
been presented separately.
The segmental tables have been restated to reflect the revised definition of underlying profit. A reconciliation between the old
and new definition of underlying profit, including the impacts of IFRS 17, is included under the table below.
50
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The following items are excluded from underlying profit:
-
Impairment of intangible assets and goodwill arising on business combinations – these impairments are considered to
be one-off and not reflective of the in-year trading performance of the business.
-
Short-term fluctuations on investment return – underlying profit includes an expected long-term investment return over
the period for return-seeking financial assets. Any variance between the total investment return (including realised and
unrealised gains) and the expected return over the period is not included in underlying profit. These fluctuations are not
related to underlying trading performance.
-
Net gains/losses on disposal of businesses and transaction costs on business combinations – gains/losses on disposal
of businesses that are material and one-off in nature to the reportable segment are not considered part of the continuing
business. Transaction costs that relate to material acquisitions or disposals are not related to the ongoing trading
performance of the business.
-
Net property revaluation gains/losses – short-term fluctuations which would distort underlying trading performance. This
includes deficit on the revaluation of freehold properties and property impairment losses.
-
Realised and unrealised foreign exchange gains/losses – fluctuations outside of management control, which would
distort underlying trading performance. This includes the net impact of applying hyperinflationary accounting.
-
Amortisation of bed licences – following the Australian Government's announcement of the deregulation of bed licences
from 1 July 2024, their amortisation term was reviewed and updated from having an indefinite useful life to amortising
over the period to 1 July 2024. The impact of this is not considered reflective of the trading performance of the business.
-
Other Market Unit/Group non-underlying items – includes items that are considered material to the reportable segment
or Group and are not reflective of ongoing trading performance. This includes items such as restructuring costs and
profit or loss amounts related to changes to strategic investments.
The total underlying profit of the reportable segments is reconciled below to the profit before taxation expense in the
Consolidated Income Statement.
(i) Revenues
Europe and
Bupa Asia Latin Bupa Global Other Group
Pacific America and UK businesses Functions Adjustment² Total
2023 £m £m £m £m £m £m £m
Insurance revenue 4,412 3,359 2,935 – – 64 10,770
Inter-Market Unit revenue (59) – 59 – – – –
Insurance revenue for reportable
segments 4,353 3,359 2,994 – – 64 10,770
Care, health and other customer contract
revenue 1,320 1,710 1,238 – – – 4,268
Other revenue 53 14 3 8 – – 78
Non-insurance revenue for reportable
segments 1,373 1,724 1,241 8 – – 4,346
Total revenue for reportable segments 5,726 5,083 4,235 8 – 64 15,116
Europe and
Bupa Asia Latin Bupa Global Other Group
Pacific America and UK businesses Functions Adjustment² Total
2022 restated¹ £m £m £m £m £m £m £m
Insurance revenue 4,431 2,926 2,647 – – 29 10,033
Inter-Market Unit revenue (57) – 57 –
– – –
Insurance revenue for reportable
segments 4,374 2,926 2,704 – – 29 10,033
Care, health and other customer contract
revenue 1,282 1,550 1,135 – – – 3,967
Other revenue¹ 60 11 3 7 – – 81
Non-insurance revenue for reportable
segments 1,342 1,561 1,138 7 – – 4,048
Total revenue for reportable segments 5,716 4,487 3,842 7 – 29 14,081
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
2 Adjustment includes impacts of applying IAS 29.
51
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
(ii) Segmental result
Europe and
Bupa Asia Latin Bupa Global Other Group
Pacific America and UK businesses Functions Adjustment¹ Total
2023 £m £m £m £m £m £m £m
Underlying profit for reportable segments 151 358 263 85 (2) – 855
Borrowing costs – – – – (82) – (82)
Group investment funding – – – – (26) – (26)
Consolidated underlying profit before
taxation expense 151 358 263 85 (110) – 747
Non-underlying items:
Impairments of intangible assets and goodwill
arising on business combinations – (1) – – – – (1)
Short-term fluctuation on investment returns 12 – 16 – 3 – 31
Net (loss)/gain on disposal of businesses and
transaction costs on business combinations (2) (9) 10 – – – (1)
Net property revaluation loss (3) – (18) – – – (21)
Realised and unrealised FX (loss)/gain – (7) 12 2 5 (10) 2
Amortisation of bed licenses (32) – – – – – (32)
Other non-underlying items² – (17) (18) 27 – – (8)
Total non-underlying items (30)
Consolidated profit before taxation
expense 717
1. Adjustment includes impacts of applying IAS 29.
2. Other non-underlying items includes £17m and £18m relating to restructuring costs in Europe and Latin America and Bupa Global and UK. Other businesses
includes a £27m dilution gain on the issue of share capital in Niva Bupa to external investors (see Note 2.4).
Europe and
Bupa Asia Latin Bupa Global Other Group
Pacific America and UK businesses Functions Adjustment² Total
2022 restated¹ £m £m £m £m £m £m £m
Underlying profit for reportable segments¹ 424 300 47 49 (6) – 814
Borrowing costs – – – – (66) – (66)
Consolidated underlying profit before
taxation expense 424 300 47 49 (72) – 748
Non-underlying items:
Impairments of intangible assets and goodwill
arising on business combinations³ (108) (161) (619) – – – (888)
Short-term fluctuation on investment returns 6 – (34) – 6 – (22)
Net gain/(loss) on disposal of businesses and
transaction costs on business combinations 4 (3) (1) (4) – – (4)
Net property revaluation (loss)/gain (6) 5 (32) – – – (33)
Realised and unrealised FX gain/(loss) – 5 8
– 1 (29) (15)
Amortisation of bed licenses (34) – – – – – (34)
Other non-underlying items⁴ (4) (16) (1) – – – (21)
Total non-underlying items (1,017)
Consolidated loss before taxation expense (269)
1. Amounts have been restated for the adoption of IFRS 17 (see Note 1.5) and to reflect the revised definition of underlying profit.
2. Adjustment includes impacts of applying IAS 29.
3. Includes impairments recognised within Bupa Asia Pacific (Bupa Villages and Aged Care Australia), Europe and Latin America (Bupa Chile) and Bupa Global and
UK (Bupa Dental Care UK and Bupa Care Services).
4. Europe and Latin America segment includes £16m restructuring costs.
Bupa Asia
Europe and
Bupa Global
Other
Group
Pacific
Latin America
and UK
businesses
Functions
Adjustment Total
2022 £m £m £m £m £m £m £m
Consolidated underlying profit before
taxation expense 424 300 47 49 (72) – 748
Impact of applying IFRS 17 (59) 11 6 9 (13) – (46)
Net gains on investment property (28) – – – – – (28)
Investment returns (6) (52) (14) – 91 – 19
Underlying profit by reportable segments
as previously reported 331 259 39 58 6 – 693
52
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
(iii) Other information
The Market Unit segmental results set out in table (ii) above include the following material non-cash items:
Europe and Bupa
Bupa Asia Latin Global and Other Group
Pacific America UK businesses Functions Total
2023 £m £m £m £m £m £m
Amortisation and depreciation costs for reportable
segments (179) (194) (93) – – (466)
Unrealised gain on investment property 29 – 2 – – 31
Deficit on revaluation of property (3) – (18) – – (21)
Share of profits from associates – – 3 80 – 83
Europe and
Bupa Asia Latin Bupa Global Other Group
Pacific America and UK businesses Functions Total
2022 restated¹ £m £m £m £m £m £m
Amortisation and depreciation costs for reportable
segments¹ (193) (182) (129) – – (504)
Unrealised gain on investment property 28 – – – – 28
Deficit on revaluation of property (6) 5 (32) – – (33)
Share of profits from associates¹ – – 3 41 – 44
1. Amounts have been restated for the adoption of IFRS 17 (see Note 1.5) and to reflect the revised definition of underlying profit.
(iv) Geographical information
The following information has been provided based on the geographical location of the business:
Consolidated non-current
Insurance revenue Total non-insurance revenue assets¹
2022
2023 2022 2023 2022 2023 restated²
Geographical £m £m £m £m £m £m
Australia 3,999 4,029 981 977 2,152 2,337
Brazil 339 270 6 4 66 52
Chile 722 712 402 389 415 485
Hong Kong 421 410 216 197 265 290
New Zealand – – 176 167 916 930
Poland – – 749 569 686 625
Spain 1,595 1,395 532 571 724 708
United Kingdom 2,773 2,489 1,241 1,138 2,670 2,588
Rest of the World 921 728 43 36 243 190
Total 10,770 10,033 4,346 4,048 8,137 8,205
1. Consolidated non-current assets exclude financial investments, restricted assets, deferred taxation assets and post-employment benefit net assets
2. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
(v) Risk concentration
The following table sets out the carrying amount of the Group's insurance and reinsurance contracts by country:
Insurance issued Reinsurance held
2023 2022 2023 2022
Geographical £m £m £m £m
Australia (748) (660) – –
Brazil (95) (80) – –
Chile (141) (164) – –
Hong Kong (189) (176) 2 2
Spain (290) (248) 1 1
United Kingdom (723) (709) 25 13
Rest of the World (422) (341) 10 5
Total (2,608) (2,378) 38 21
53
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
2.1 Insurance service result
The Group generates the insurance service result from its health insurance business. This includes insurance revenues, offset
by directly attributable insurance service expenses.
Insurance revenue
The Group recognises insurance revenue based on the passage of time over the coverage period of the group of contracts.
Insurance service expenses
Insurance service expenses comprise expenses directly attributable to fulfilling a group of insurance contracts. Judgement is
exercised in determining which expenses are directly attributable to insurance contracts, and therefore included within
insurance service expenses. The Group classifies the majority of expenses incurred by insurance entities within insurance
service expenses, except for those not directly attributable to insurance contracts.
Insurance claims are amounts payable under insurance contracts arising from the occurrence of an insured claims episode. A
claims episode is an insured medical service that the Group has an obligation to fund, which could be consultation fees,
diagnostic investigations, hospitalisation or treatment costs.
Incurred claims comprise insurance claims paid during the year together with related handling costs, the movement in the gross
provision for claims in the period and the Risk Equalisation Special Account levy for the Australia Health Insurance business.
Private health insurers in Australia provide private health insurance cover through a community rated scheme. To avoid adverse
selection and ensure the Australian private health insurance scheme is sustainable, a risk equalisation mechanism operates to
subsidise insurers with higher risk policyholders. See Note 12 for details of the LFIC.
Insurance acquisition cash flows arise from the costs of selling, underwriting and starting a group of insurance contracts that are
directly attributable to the portfolio of insurance contracts to which the group belongs. The Group’s policy is to expense
acquisition costs as they are incurred where the coverage period of each contract in the group is no more than one year. For
the remaining contracts with a longer coverage period, insurance acquisition costs are allocated to the relevant group of
insurance contracts and are amortised consistently with the pattern of insurance revenue recognition.
Changes in the risk adjustment for non-financial risk are presented in the insurance service result and not disaggregated into an
insurance service component and an insurance finance component.
2023 2022
Note £m £m
Incurred claims and other expenses 12.1 10,385 9,302
Amortisation of insurance acquisition cash flows 12.1 (6) –
Losses on onerous contracts and (reversal) of those losses 12.1 (27) 8
Changes to liabilities for incurred claims relating to past service 12.1 (34) 29
Insurance service expenses 10,318 9,339
Reinsurance contracts held
The Group releases ceded insurance premiums on the passage of time basis over the coverage period. Ceding commissions
that are not contingent on claims of the underlying contracts issued reduce ceded premiums.
All directly attributable reinsurance expenses, including claims handling costs, are expensed as incurred.
2023 2022
Note £m £m
Premiums ceded to reinsurers (166) (131)
Reinsurance commission income 18 15
Total allocation of reinsurance premiums 12.2 (148) (116)
Amounts recoverable for incurred claims and other expenses 12.2 140 94
Changes to amounts recoverable for incurred claims relating to past service 12.2 1 –
Total amount recoverable from reinsurers for incurred claims 141 94
Net expense from reinsurance contracts held (7) (22)
54
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
2.2 Non-insurance revenue
The Group generates revenues from its trading activities through the provision of healthcare and insurance management
services (care, health and other customer contract revenue) and rental income and other fees (other revenue).
Revenue stream Recognition policy
Care, health and
other customer
contract revenue
The Group generates income from the operation of its care homes, hospitals, dental centres and other healthcare and
wellbeing centres. In instances where Bupa is acting as an agent and another party is primarily responsible for fulfilling
the contract, revenue is recognised on a net basis. When considering whether the Group is acting as an agent or as a
principal, factors such as which party is primarily responsible for fulfilling the obligation, bears the inventory and credit risk
and has discretion in establishing prices are considered.
These revenue streams typically relate to short-term services that have fixed, rather than variable, transaction prices and
there are no significant judgements required when considering the time pattern of revenue recognition. Payment terms
vary from on completion of the service, to payments made monthly in advance. Bupa has the right to bill and receive
payment for services rendered to date. Contracts for these revenue streams do not transfer significant insurance risk.
The Sanitas Hospitales and New Services revenue stream includes one public hospital in Spain that is operated under a
separate service concession arrangement granted by the local government (the grantor). Revenue is recognised from the
construction of infrastructure and from the operation of the hospital. Construction revenues are recognised in line with the
stage of completion of the work performed. Operational revenues are recognised in the period in which the services are
provided, based on the average operating margin for the life of the contract. As revenue is based on an expected margin,
with some potential variability, revenue is only recognised to the extent that it is highly probable a significant reversal will
not occur when the uncertainty is resolved. Significant changes in margin result in a retrospective margin recalculation.
The impact of this on prior years is recognised as a margin catch up in the year the recalculation is performed.
Other customer contract revenue includes contracts entered into by the Group’s insurance entities that do not result in
the transfer of significant insurance risk to the Group and are accounted for as service contracts. These contracts mainly
relate to the administration of claims funds on behalf of corporate customers. Revenues from service contracts are
recognised as the services are provided. Some of these contracts contain financial liabilities representing deposits
repayable to the customer. These are measured at amortised cost.
Other revenue Other revenue comprises:
• Rental income and amenities fees from occupational right agreements, which are recognised on a straight-
line basis over the term of the arrangement.
• Imputed interest on interest-free refundable accommodation deposits (RADs) in respect of payments for aged
care units in Bupa Villages and Aged Care Australia. Revenue is recognised for the imputed interest on
RADs, reflecting the Group's position as lessor. Use of the Maximum Permissible Interest Rate (MPIR) is
considered most appropriate to determine the imputed revenue and interest amounts. The MPIR is a rate set
by the Australian Government and is used to calculate the Daily Accommodation Payment to applicable
residents.
• Government funding received in response to COVID-19, most notably in Bupa Villages and Aged Care
Australia. Such funding is recognised when it is considered reasonably certain that the funding will be
received and all necessary conditions have been complied with.
55
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Revenue for the year has been analysed at Business Unit level, reflecting the nature of services provided by geography that is
reported internally to management.
Care, health and
other customer Total non-insurance
contract revenue Other revenue revenues
2023 2023 2023
£m £m £m
Bupa Health Insurance 9 3 12
Bupa Health Services 580 – 580
Bupa Villages and Aged Care Australia 357 32 389
Bupa Villages and Aged Care New Zealand 158 18 176
Bupa Hong Kong 216 – 216
Bupa Asia Pacific 1,320 53 1,373
Sanitas Seguros 13 3 16
Sanitas Dental 134 4 138
Sanitas Hospitales and New Services 229 1 230
Sanitas Mayores 162 – 162
LUX MED 748 1 749
Bupa Acıbadem Sigorta – 2 2
Bupa Chile 402 1 403
Care Plus 6 – 6
Bupa Mexico 16 1 17
Bupa Global Latin America – 1 1
Europe and Latin America 1,710 14 1,724
Bupa UK Insurance 25 1 26
Bupa Dental Care UK 518 1 519
Bupa Care Services 474 – 474
Bupa Health Services 221 1 222
Bupa Global – – –
Bupa Global and UK 1,238 3 1,241
Other – 8 8
Other businesses – 8 8
Consolidated non-insurance revenues 4,268 78 4,346
56
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Care, health and other
customer contract Total non-insurance
revenue Other revenue revenues
2022 2022
2022 restated¹ restated¹
£m £m £m
Bupa Health Insurance 7 2 9
Bupa Health Services 614 1 615
Bupa Villages and Aged Care Australia 318 37 355
Bupa Villages and Aged Care New Zealand 148 17 165
Bupa Hong Kong 195 3 198
Bupa Asia Pacific 1,282 60 1,342
Sanitas Seguros¹ 10 2 12
Sanitas Dental 119 4 123
Sanitas Hospitales and New Services 305 1 306
Sanitas Mayores 145 – 145
LUX MED 568 – 568
Bupa Acıbadem Sigorta¹ – 2 2
Bupa Chile 388 1 389
Care Plus 4 – 4
Bupa Mexico 11 – 11
Bupa Global Latin America – 1 1
Europe and Latin America 1,550 11 1,561
Bupa UK Insurance¹ 21 2 23
Bupa Dental Care UK 487 – 487
Bupa Care Services 431 – 431
Bupa Health Services 196 1 197
Bupa Global and UK 1,135 3 1,138
Other – 7 7
Other businesses – 7 7
Consolidated non-insurance revenues 3,967 81 4,048
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
2.3 Other operating expenses
Other operating expenses include staff costs, medical supplies, overheads, depreciation, amortisation of intangible assets, and
gains or losses on foreign exchange transactions incurred as a consequence of operating our businesses. Expenses attributed
to insurance acquisition cash flows and Other directly attributable insurance expenses are included within insurance service
expenses.
Operating expenses exclude insurance claims, finance costs and taxation.
57
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Other operating expenses
Expenses
attributed to
insurance
Other directly
attributable
acquisition cash
flows¹
insurance
expenses¹
Other operating
expenses Total
2022 2022
2023 2022 2023 2022 2023 restated³ 2023 restated³
Note £m £m £m £m £m £m £m £m
Staff costs 2.3.1 108 109 834 692 1,927 1,699 2,869 2,500
Commissions³ 485 416 – – – – 485 416
Medical supplies and fees – – 218 185 1,121 1,067 1,339 1,252
Property costs³ 2 3 59 55 255 356 316 414
Lease rentals and other expenses²,³ 3 5 5 4 21 21 29 30
Marketing costs³ 55 50 69 60 27 13 151 123
Catering and housekeeping costs – – 6 6 62 55 68 61
Consultancy fees³ 11 2 129 103 15 37 155 142
Net loss/(gain) on foreign exchange transactions³ – – 4 31 – (2) 4 29
Amortisation of intangible assets 3 – – 65 72 94 103 159 175
Depreciation expense 4 – – 82 77 230 252 312 329
Other operating expenses (including auditors’
remuneration)³ 2.3.2 23
39 397 342 540 492 960 873
Total other operating expenses 687 624 1,868 1,627 4,292 4,093 6,847 6,344
1. Expenses attributed to insurance acquisition cash flows and other directly attributable insurance expenses incurred by the Group relate directly to the fulfilment of
contracts issued within the scope of IFRS 17 and reinsurance contracts held. See Note 2.1.
2. Includes short-term and low-value lease rentals, and other lease expenses.
3. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
2.3.1 Staff costs
The below table represents the total employee benefit expenses incurred by the Group during the year.
2023 2022
£m £m
Wages and salaries 2,679 2,323
Social security costs 138 126
Contributions to defined contribution schemes 50 47
Other pension costs 2 4
Total staff costs 2,869 2,500
Employee numbers
The average number of employees, including Executive Directors, employed by the Group during the year was:
2023 2022
Bupa Asia Pacific 17,780 15,811
Europe and Latin America 44,540 42,541
Bupa Global and UK 22,362 20,949
Total average employee numbers 84,682 79,301
The figure disclosed for Europe and Latin America includes 15,759 colleagues (2022: 14,732) in Poland who are engaged
under contract for service arrangements and are fundamental to the operations of the LUX MED business. Related costs of
£296m (2022: £222m) are also included in the above wages and salaries cost.
58
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Directors' remuneration
2023 2022
£000s £000s
Emoluments 3,246 2,582
Company contributions to defined contribution pension schemes 28 28
Compensation for loss of office – 104
Total 3,274 2,714
The remuneration of the highest paid director was
Emoluments 1,560 1,407
Company contributions to defined contribution pension schemes 7 –
Total 1,567 1,407
There are no Directors who are members of a Bupa defined benefit pension scheme (2022: nil).
2.3.2 Auditors' remuneration
2023 2022
£m £m
Audit fees for the audit of the Company's annual accounts 0.7 0.6
Fees payable to the Company's auditor and its associates for:
Audit fees for audit of Company's subsidiaries required by legislation 8.8 9.2
Audit fees for audit-related assurance services 1.0 1.1
Audit fees to the Company's auditors 10.5 10.9
Fees payable to the Company's auditor and its associates for other services:
All other non-audit services 0.4 0.2
Total non-audit fees 0.4 0.2
Total auditors' remuneration 10.9 11.1
2022 audit fees included £1.1m in respect of the transition to IFRS 17. All non-audit services provided during the year were in
compliance with the Group’s non-audit services policy and the FRC Ethical Standard.
2.4 Other income and charges
Other income and charges comprise income or expenses that are related to the investing and divesting activities of the Group.
2022
2023 restated¹
Note £m £m
Gain on on dilution of ownership in Niva Bupa 6 27 –
Net loss on disposal and restructuring of businesses (1) (4)
Loss on revaluation of property 4 (21) (33)
Net gain/(loss) on disposal of property, plant and equipment 6 (2)
Surplus on fair value of investment property¹ 31 28
Total other income and charges 42 (11)
1. Surplus on fair value of investment property has been reclassified to other income and charges (see Note 2.5).
2.5 Financial income and expense
Financial income and expense are earned and incurred from the Group’s financial assets and liabilities.
Financial income
Interest income is recognised in the Consolidated Income Statement, using the effective interest method.
Changes in the value of financial assets at fair value through profit or loss are recognised within financial income as unrealised
gains or losses while the assets are held. Upon derecognition of an asset, the cumulative unrealised gain or loss is reversed
and a realised gain or loss is recognised.
Changes in the value of debt instruments at fair value through other comprehensive income are recognised in other
comprehensive income as an unrealised gain or loss. The cumulative gain or loss recognised in the income and expenditure
reserve is reclassified to realised gain or loss in the Consolidated Income Statement when the financial asset is derecognised.
59
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
2022
2023 restated¹
£m £m
Interest income:
Investments at fair value through profit or loss 48 61
Investments at fair value through other comprehensive income 20 1
Investments at amortised cost 225 72
Net realised gain/(loss):
Net realised gain/(loss) on investments at fair value through profit or loss 16 (13)
Net realised loss on financial investments at fair value through other comprehensive income (4) –
Net movement in fair value:
Investments at fair value through profit or loss 44 (5)
Net foreign exchange translation gain 14 42
Total financial income 363 158
1. Surplus on fair value of investment property has been reclassified and is now presented within other income and charges (see Note 2.4).
Financial expense
Interest payable on borrowings is calculated using the effective interest method.
Finance charges in respect of leases and restoration provisions are charged to the Consolidated Income Statement over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each year.
2023 2022
£m £m
Interest expense on financial liabilities at amortised cost 116 99
Finance charges in respect of leases and restoration provisions 50 46
Other financial expense 24 29
Total financial expense 190 174
Other financial expense includes £20m (2022: £20m) of imputed financial expenses in relation to interest-free refundable
accommodation deposits received by the Group in respect of payment for aged care units in Bupa Villages and Aged Care
Australia. For year ended 31 December 2022, other financial expense includes £6m loss recognised following the early
redemption of £47m of inflation-linked senior unsecured bonds, originally due to mature on 30 June 2033.
2.5.1 Insurance financial income and expense
The Group's insurance financial expense of £25m (2022: £16m income) arises from the impact of unwinding the discount rate
and any change in the discount rate from the beginning of the year, which causes movement in the overall insurance contract
liability. Discounting of insurance contracts is only applied by exception.
There is an option to disaggregate any insurance financial income or expense between other comprehensive income and the
income statement. Bupa has elected to recognise all insurance financial expense (2022: income) within the Consolidated
Income Statement.
2.6 Taxation expense
Taxation expense comprises current and deferred taxation. It considers foreign taxation and double taxation relief and includes
adjustments in respect of prior periods.
Income taxation is recognised in the Consolidated Income Statement except to the extent that it relates to items recognised
directly in other comprehensive income, in which case it is recognised directly in the Consolidated Statement of Comprehensive
Income. The Group has determined that the global minimum top-up tax – which it is required to pay under Pillar Two legislation
– is an income tax within the scope of IAS 12.
(i) Recognised in the Consolidated Income Statement
Current taxation is the expected taxation payable on the taxable profit for the year, using taxation rates enacted or substantively
enacted at the reporting date, and any adjustments to taxation payable in respect of previous years.
The Group is subject to taxation audits in the territories in which it operates and considers each issue on its merits when
deciding whether to hold a provision against the potential tax liability that may arise. However, the amount that is ultimately paid
could differ from the amount initially recorded and this difference is recognised in the period in which such a determination is
made.
60
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
2022
2023 restated¹
£m £m
Current taxation expense
UK taxation on income for the year 15 25
UK taxation adjustments in respect of prior periods (5) (5)
Total UK current taxation expense 10 20
Double taxation relief (10) (8)
Foreign taxation on income for the year 153 190
Foreign taxation adjustments in respect of prior years (6) –
Total foreign current taxation expense 147 190
Total current taxation expense 147 202
Deferred taxation expense/(income)
Origination and reversal of temporary differences¹ 26 (57)
Adjustments in respect of prior periods 4 4
Changes in taxation rates – (19)
Total deferred taxation expense/(income) 30 (72)
Taxation expense 177 130
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
(ii) Reconciliation of effective taxation rate
2022
2023 restated¹
£m £m
Profit/(loss) before taxation expense¹ 717 (269)
UK corporation taxation rate 23.5% 19%
Tax at the UK corporation taxation rate¹ 168 (51)
Effects of recurring taxation reconciliation items:
Different taxation rates in foreign jurisdictions¹ 5 29
Deductions not allowable for taxation purposes¹ 24 25
Income not taxable or taxable at concessionary rates (25) (18)
Property revaluation not included as a temporary difference (8) (6)
Results of associates¹ (20) (9)
Changes in taxation rates – (19)
Movement in deferred taxation asset not recognised 31 29
7 31
Effects of non-recurring taxation reconciliation items:
Taxation adjustments in respect of prior periods (7) (1)
Loss on disposal of business 2 –
Impairment of goodwill and other assets not allowable for taxation purposes – 142
Non-deductible IAS 29 adjustments² 7 9
2 150
Taxation expense at the effective rate of 25% (2022 (restated): (48)%) 177 130
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
2. See Note 1.7 for details of the impacts of IAS 29.
61
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
(iii) Current and deferred taxation recognised directly in other comprehensive income and equity
2023 2022
£m £m
Deferred taxation credit in respect of:
Unrealised loss on revaluation of property – 11
Other items including foreign exchange translation differences – 1
Taxation credit on income and expenses recognised directly in other comprehensive
income – 12
Current taxation credit in respect of:
Restricted Tier 1 coupon payment¹ 2 2
Taxation credit on income and expenses recognised directly in equity 2 2
1. Included within payment of Restricted Tier 1 coupon of £10m (2022: £10m) in the Consolidated Statement of Changes in Equity.
(iv) Global minimum top-up tax
The Group operates in the UK where new tax legislation to implement a global minimum top-up tax has been enacted. Since
this newly enacted tax legislation is only effective from 1 January 2024, there is no current tax impact in the period (2022: £nil).
The Group has applied a temporary mandatory relief from deferred tax accounting in 2023 for the impacts of the top-up tax, and
instead accounts for it as a current tax when it is incurred.
If the top-up tax had applied in 2023, the impact would not have been material for the Group.
3 Goodwill and intangible assets
Goodwill and intangible assets are non-physical assets used by the Group to generate revenues.
Goodwill
Goodwill represents the excess of the cost of a business combination over the fair value of the Group’s share of identifiable
assets, liabilities and contingent liabilities of the acquired subsidiary at the date of the business combination. The carrying value
of goodwill may be adjusted up to 12 months from the accounting date of acquisition, as the allocation of the purchase price to
identifiable intangible assets is finalised within that period. Goodwill arising on business combinations is capitalised and
presented within goodwill and intangible assets in the Consolidated Statement of Financial Position. Where the fair value of net
assets acquired is greater than the consideration paid, the excess is recognised immediately in the Consolidated Income
Statement.
Goodwill is held at cost less accumulated impairment losses. Impairment reviews are performed annually or more frequently if
there is an indication that the carrying value may be impaired. Impairment reviews are performed at the level of the relevant
CGU. In identifying CGUs, the Group considers the smallest identifiable group of assets that generate independent cash
inflows, how managers monitor operations and the level at which strategic decisions are made.
Other intangible assets
Intangible assets, other than goodwill, that are acquired as part of a business combination are recognised at fair value which
represents cost at acquisition and are subsequently held at cost less accumulated amortisation and impairment. Intangible
assets acquired separately are held at cost less accumulated amortisation and impairment.
Costs relating to the development of intangible assets, including computer software, are capitalised once all development phase
recognition criteria are met.
Amortisation is charged to the Consolidated Income Statement on a straight-line basis as follows, excluding any intangible
assets to which an indefinite useful life has been attributed:
• Computer software 2-10 years
• Brands/trademarks 3 years-indefinite
• Customer relationships 3-20 years
• Distribution networks 10-14 years
• Licences to operate care homes Term of licence
• Bed licences in Australia From 1 October 2021 to 1 July 2024
Intangible assets that are subject to amortisation are reviewed for impairment if circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised in the Consolidated Income Statement to reduce the carrying amount
to the recoverable amount. This impairment may be reversed in future periods if there is indication that there will be a significant
long-term improvement in the value of the CGU.
62
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Intangible assets with an indefinite useful life, or not yet available for use, are subject to annual impairment reviews or more
frequently if there is an indication that the carrying value may be impaired.
In other intangibles, the Group holds bed licences, with a carrying value of £16m (2022: £50m), with respect to Bupa Villages
and Aged Care Australia CGU. In September 2021, following the Australian Government’s announcement of the deregulation of
bed licences from 1 July 2024, the Group reviewed the amortisation term and reduced it from being an indefinite useful
economic life to cover the period from 1 October 2021 to 1 July 2024. During 2023, the Group recognised £32m (2022: £34m)
of amortisation in respect of Australian bed licences. In addition, an impairment loss of £nil (2022: £2m) was recognised in
respect of bed licences no longer in use.
Computer Brands/ Customer
Goodwill software trademarks relationships Other¹ Total
£m £m £m £m £m £m
2023
Cost
At beginning of year 3,349 1,032 322 956 326 5,985
Assets arising on business combinations 37 1 1 20 – 59
Additions – 117 – – – 117
Disposals (2) (73) – – (4) (79)
Transfer to assets held for sale – (1) – – – (1)
Other – (8) – – – (8)
Foreign exchange (89) (18) (15) (15) (10) (147)
At end of year 3,295 1,050 308 961 312 5,926
Amortisation and impairment loss
At beginning of year 1,368 693 202 769 213 3,245
Amortisation for year – 82 8 29 40 159
Impairment loss – 16 1 – – 17
Disposals – (73) – – (4) (77)
Transfer to assets held for sale – (1) – – – (1)
Other – (2) – – – (2)
Foreign exchange (34) (11) (8) (15) (7) (75)
At end of year 1,334 704 203 783 242 3,266
Net book value at end of year 1,961 346 105 178 70 2,660
Net book value at beginning of year 1,981
339 120 187 113 2,740
2022
Cost
At beginning of year 3,249 914 294 924 315 5,696
Assets arising on business combinations 14 2 3 2 – 21
Additions – 111 – – – 111
Disposals (53) (28) (4) (6) (12) (103)
Other – (2) – – – (2)
Foreign exchange 139 35 29 36 23 262
At end of year 3,349 1,032 322 956 326 5,985
Amortisation and impairment loss
At beginning of year 784 622 160 442 170 2,178
Amortisation for year – 72 8 53 42 175
Impairment loss 609 6 22 255 2 894
Disposals (52) (27) (4) (6) (12) (101)
Other – (1) – – – (1)
Foreign exchange 27 21 16 25 11 100
At end of year 1,368 693 202 769 213 3,245
Net book value at end of year 1,981 339 120 187 113 2,740
Net book value at beginning of year 2,465 292 134 482 145 3,518
1. Predominantly comprises bed licences, distribution networks and licences to operate care homes.
63
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Goodwill and intangible assets of £2,660m (2022: £2,740m) include £353m (2022: £420m) attributable to other intangible
assets arising on business combinations included within brands/trademarks, customer relationships and other in the above
table.
Computer software assets with a net book value of £346m (2022: £339m) include £240m (2022: £245m) attributable to
capitalised internal development costs. The cost attributable to these assets is £526m (2022: £526m). £101m of costs (2022:
£93m) were capitalised in the year.
Impairment testing of goodwill and indefinite life intangible assets
Goodwill and intangible assets with indefinite useful lives are tested at least annually for impairment by comparing the net
carrying value with the recoverable amount, using value in use calculations.
In arriving at the value in use for each CGU, key assumptions have been made regarding future projected cash flows, discount
rates and terminal growth rates. The key business drivers of the cash flow forecasts vary by CGU. For aged care, key drivers
are occupancy rates, fee rates, staff and agency costs and operating expenses. For provision business, the cash flows are
driven by number of customers, available clinician hours, fee rates and operating expenses. For insurance business, key
drivers are assumed business volumes, future insurance premium rate rises, claims volatility and claims inflation. Cash flow
projections have been calculated from management operating profit projections for a five-year period. These are based on the
three-year plan which has been approved by the Board, with further projections added for years four and five. Cash inflows or
outflows relating to financing activities have been excluded from the estimated future cash flows.
Taxation has been applied to the pre-taxation underlying profit based on the statutory taxation rates in the country of operation.
Forecast future post-taxation cash flows have been discounted at post-taxation discount rates. Discount rates have been
derived using a Weighted Average Cost of Capital (WACC) methodology, representing the minimum return a business must
earn on its asset base to satisfy providers of capital. Discount rates used for the value in use calculations for each of the
Group’s CGUs are based on considerations of the systemic risks associated with each CGU, as well as external factors such as
inflation and local market leverage. These include a market assessment of the time value of money and the risks inherent in the
relevant country where the cash flows are generated.
The following table summarises the pre-taxation discount rates used for impairment testing for the main CGUs, which were
determined through grossing up the post-tax discount rates by the applicable corporate taxation rates:
2023 2022
% %
Bupa Australia Health Insurance 10.0 10.0
Bupa Health Services Australia 12.4 13.1
Hong Kong 11.5 11.4
LUX MED 10.4 11.1
Sanitas Seguros 9.6 10.6
Sanitas Mayores 9.2 10.1
Bupa Acıbadem Sigorta 26.1 27.7
Care Plus 16.2 15.8
Bupa Dental Care UK 11.5 10.5
Bupa Global 12.7 12.3
Cash flow projections beyond the forecast periods have been extrapolated by applying a terminal growth rate between 2.0%
and 6.7% (2022: 2.0% and 8.5%) for all CGUs. The terminal growth rates represent an estimate of the long-term growth rate for
each CGU, taking into account the future and past growth rates and external sources of data, such as forecast GDP growth
rates, inflation and long-term consumer price index rates. The values assigned to the key assumptions are based on past
experience of the CGUs and assessment of future trends in the relevant industry.
During the year, no impairment losses were recognised in relation to goodwill (2022: £609m). In 2022, the impairments were
primarily in respect of Bupa Dental Care UK (£274m), Bupa Chile (£139m), Bupa Villages and Aged Care Australia (£103m)
and Bupa Care Services (£90m). In addition to recognising a goodwill impairment, Bupa Dental Care UK also recognised a
£255m write down of its customer relationship intangible and a £117m write down of right-of-use assets and property, plant and
equipment.
64
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The following table summarises goodwill by CGU as at 31 December 2023:
2023 2022
£m £m
Bupa Asia Pacific
Bupa Australia Health Insurance 817 863
Bupa Health Services Australia 282 299
Hong Kong 122 129
Europe and Latin America
LUX MED 287 265
Sanitas Seguros 62 49
Sanitas Mayores 21 22
Bupa Acıbadem Sigorta 52 53
Care Plus 41 29
Other 11 10
Bupa Global and UK
Bupa Dental Care UK 191 191
Bupa Global 68 68
Other 7 3
Total 1,961 1,981
Sensitivity to changes in key assumptions
As part of the annual impairment test, management considers the sensitivity of the tests to changes in key assumptions
including changes in the discount rate, terminal growth rate and cash flows. Management believes that there are no reasonably
possible changes to key assumptions that would cause the carrying value of any goodwill or intangible asset with an indefinite
useful life to exceed its recoverable amount.
Management continues to closely monitor the headroom on Bupa Dental Care UK, following the impairments recognised in
2022, to ascertain whether any reversals to impairment of intangible assets or property, plant and equipment should be
recognised. Headroom at 31 December 2023 is £72m (2022: £nil) with the increase in the year driven by a reduction in
estimated replacement property costs and the annual unwind of discounting. As these are not attributable to a notable
improvement in the underlying forecast cash flows of the business, which are most sensitive to available clinician hours and
operating expenses, no impairment reversal has been recognised. The sensitivity of the headroom to changes in key
assumptions are included in the table below.
Reduction in
Reduction in headroom Reduction in
headroom from 0.5% headroom
from 1% reduction in from 10%
Terminal increase in terminal reduction in
Headroom Discount rate growth rate discount rate growth rate cash flows
£m % % £m £m £m
Bupa Dental Care UK 72 11.5 2.1 (36) (14) (27)
Impairment of other intangible assets
As at 31 December 2023, other intangible assets with indefinite useful lives were tested for impairment with a £1m impairment
of brand intangibles being recognised (2022: £22m impairment relating to the write off of the Bupa Chile Isapre brand due to the
local legal and regulatory pressures on the Isapre industry).
A review of intangible assets that are subject to amortisation resulted in impairments of £16m (2022: £263m), of which £10m
relates to Bupa Australia Health Insurance computer software and £4m relates to the Bupa Health Funding computer software
(2022: £255m relating to Bupa Dental Care UK customer relationship intangible).
65
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
4 Property, plant and equipment
Property, plant and equipment are the physical assets or rights to use leased assets which are utilised by the Group to carry out
business activities and generate revenues and profits.
The majority of assets held relate to care homes, hospital properties, equipment, and office buildings.
Freehold properties
Freehold properties comprise care homes, care villages, clinics, hospitals and offices and are initially measured at cost and
subsequently at revalued amount less accumulated depreciation and impairment losses. These properties are subject to
periodic and at least triennial valuations performed by external independent valuers. Borrowing costs relating to the acquisition
or construction of qualifying assets are capitalised as part of the cost of that asset.
Equipment
Equipment (including leasehold improvements) is held at historical cost less subsequent depreciation and impairment losses.
Depreciation
Freehold land and assets under construction, included within freehold properties, are not depreciated. Depreciation on other
items of property, plant and equipment is calculated using the straight-line method to allocate cost or revalued amount less
residual value over estimated useful lives, as follows:
• Freehold property 50 years
• Right-of-use property Lease term
• Leasehold improvements Shorter of useful life or lease term
• Owned equipment 3-10 years
• Right-of-use equipment Lease term
Impairment
Impairment reviews are undertaken where there are indications that the carrying value of an asset may not be recoverable. An
impairment loss on an asset carried at amortised cost is recognised in the Consolidated Income Statement within other
operating expenses to reduce the carrying value to the recoverable amount. An impairment loss on an asset carried at revalued
amount is recognised in the property revaluation reserve, except where an asset is revalued below historical cost, in which case
the loss below the historical cost is recognised within other income and charges in the Consolidated Income Statement (see
Note 2.4).
For information regarding leased (right-of-use) assets, see Note 18.
66
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Right-of-use Right-of-use
Freehold asset Leasehold Owned asset
property property improvements equipment equipment Total
£m £m £m £m £m £m
2023
Cost or valuation
At beginning of year 2,247 1,288 331 1,537 19 5,422
Assets arising on business combinations 3 – – 2 – 5
Additions 37 74 37 186 3 337
Transfer to assets held for sale (31) – (6) (20) – (57)
Disposals (6) (84) (34) (76) (2) (202)
Revaluations (45) – – – – (45)
Remeasurements – 63 – – – 63
Other (4) 1 1 5 – 3
Foreign exchange (70) (28) (9) (28) (1) (136)
At end of year 2,131 1,314 320 1,606 19 5,390
Depreciation and impairment loss
At beginning of year 37 540 182 962 10 1,731
Depreciation charge for year 36 133 22 117 4 312
Transfer to assets held for sale (4) – (6) (15) – (25)
Disposals – (84) (28) (72) (3) (187)
Revaluations (9) – – – – (9)
Other – 1 – 2 – 3
Foreign exchange (2) (13) (5) (20) – (40)
At end of year 58 577 165
974 11 1,785
Net book value at end of year 2,073 737 155 632 8 3,605
Net book value at beginning of year 2,210 748 149 575 9 3,691
2022
Cost or valuation
At beginning of year 2,296 1,165 297 1,390 15 5,163
Assets arising on business combinations 4 4 – 1 – 9
Additions 25 51 38 145 3 262
Transfer to assets held for sale (27) – – (16) – (43)
Disposals (2) (44) (19) (44) (1) (110)
Revaluations (130) – – – – (130)
Remeasurements – 57 – – 1 58
Other (2) 1 2 1 – 2
Foreign exchange 83 54 13 60 1 211
At end of year 2,247 1,288 331 1,537 19 5,422
Depreciation and impairment loss
At beginning of year 48 364 137 815 6 1,370
Depreciation charge for year 39 140 25 121 4 329
Transfer to assets held for sale – – – (8) – (8)
Disposals – (42) (17) (38) (1) (98)
Revaluations (53) – – – – (53)
Impairment loss – 56 31 37 – 124
Other –
1 – – – 1
Foreign exchange 3 21 6 35 1 66
At end of year 37 540 182 962 10 1,731
Net book value at end of year 2,210 748 149 575 9 3,691
Net book value at beginning of year 2,248 801 160 575 9 3,793
67
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Revaluation of properties
External valuations are performed at least every three years. To ensure that the carrying value does not differ significantly from
fair value at the reporting date, in years where a full external valuation is not completed, a directors’ valuation is conducted,
based on updated cash flows and other market variables with support from external valuers where necessary. Consideration is
also given to whether there are any factors which indicate a full out-of-cycle external revaluation is required.
Following the external triennial revaluations of properties in the UK, Chile, Poland and Türkiye, and full out-of-cycle revaluations
of properties in Australia and New Zealand in 2022, there were no scheduled external triennial revaluations of properties in
2023. However, external valuations were performed on a small number of individual properties in the UK and New Zealand; in
the UK due to significant movements in the commercial property markets, and in New Zealand for newly developed property
assets. These have been independently performed by Colliers in UK, and Jones Lang LaSalle (JLL) in New Zealand.
In valuing care home property, a judgement is made on the highest and best use of the property. In the majority of cases this
leads to the property being valued as part of a group of assets making up a going concern business, using market valuations.
This approach is in line with market practice. The business is valued on a fair maintainable trade basis with the fair value thus
calculated being allocated to plant and equipment and bed licences applicable at net book value (as a proxy for fair value), with
the residual value being allocated to property.
The valuations of care homes across the Group (and hospitals in Spain and Poland) are therefore determined based on a
capitalisation of earnings approach. Each facility’s normalised earnings are calculated based on what a reasonably efficient
operator could be expected to achieve. This is divided by an appropriate capitalisation rate to determine a value in use. The
capitalisation rate is the average rate of return for each facility and is based on qualitative and quantitative indicators of the
facility’s current and future performance.
The valuations of hospitals and clinics in Chile are determined based on discounted future cash flow projections. The discount
rate is determined according to the time value of money, the level of risk of the industry and the corresponding premium risk.
Unobservable inputs include the capitalisation or discount rate and, for all properties except those in Poland and Chile, the
average occupancy.
All other properties are valued based on observable market values of similar properties. Due to the level of judgement and
adjustments required to the observable inputs used in the valuation methodologies, a Level 3 classification, under the fair value
hierarchy in accordance with IFRS 13 Fair Value Measurement, is considered appropriate for all properties in the Group.
At each revaluation date, accumulated depreciation is eliminated against the gross carrying amount of the asset.
Sensitivity analysis
The significant assumptions used in the calculation of the fair values of the material Level 3 freehold properties in the Group are
shown in the table below. Average occupancy rate and average capitalisation rates or discount rates are inputs to the valuation
of care home property, hospitals and clinics. Average price per square metre and average yield are primarily assumptions used
in valuing offices or other commercial property.
New
Freehold properties Australia Zealand UK Spain Chile Poland
2023
Valuation assumptions: average occupancy rate
93.1% 90.3% 90.3% 89.6% N/A N/A
Valuation assumptions: average capitalisation/
discount rate
15.1% 12.5% 10.4% 19.8% 9.0% 18.9%
Valuation assumptions: average price per square
metre
N/A N/A £2,732 £2,377 N/A N/A
Valuation assumptions: average yield
N/A N/A 7.7% 5.5% N/A N/A
2022
Valuation assumptions: average occupancy rate
93.1% 91.4% 86.6% 88.4% N/A N/A
Valuation assumptions: average capitalisation/
discount rate
15.1% 12.9% 8.9% 19.0% 9.0% 11.6%
Valuation assumptions: average price per square
metre
N/A N/A £3,389 £2,391 N/A N/A
Valuation assumptions: average yield
N/A N/A 6.3% 5.2% N/A N/A
The valuations are most sensitive to changes in capitalisation rate assumptions, and an increase/decrease of 0.5% in
capitalisation rates would decrease/increase the total carrying value of freehold properties by £(76)m/£73m (2022: £(97)m/
£89m). An increase/decrease of 0.5% in occupancy rates would increase/decrease the total carrying value of freehold
properties by £7m/£(8)m (2022: £8m/£(8)m).
68
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The table below shows the date at which freehold properties held as at 31 December 2023 were last subject to external
valuation.
2023
£m
Valuation - 31 December 2023 55
Valuation - 31 December 2022 1,755
Valuation - 31 December 2021 243
Assets held at cost¹ 78
Cost or valuation 2,131
1. Primarily relates to assets under construction and initial fair value of additions.
Gains and losses on revaluation are recognised in the property revaluation reserve, except where an asset is revalued below
historical cost, in which case the deficit is recognised in the Consolidated Income Statement. When a revaluation reverses
losses recognised in the Consolidated Income Statement in prior years, the credit is recognised in the Consolidated Income
Statement.
In the current year, a £15m net revaluation deficit (2022: £44m) has been recognised in the property revaluation reserve, with a
revaluation loss of £21m (2022
: £33m) charged to the Consolidated Income Statement within other income and charges (see
Note 2.4).
Recognised in the carrying amount of freehold property is £52m (2022: £63m) in relation to freehold property in the course of
construction.
Historical cost of the Group's revalued freehold property assets
2023 2022
£m £m
Historical cost of revalued assets 2,062 2,088
Accumulated depreciation based on historical cost (506) (465)
Historical cost net book value 1,556 1,623
Depreciation charge for the year on historical cost 41 42
Impairment of tangible assets
A review of tangible assets has resulted in impairments of £nil (2022: £124m).
5 Investment property
Investment properties are physical assets that are not occupied by the Group and are leased to third parties to generate rental
income. Most investment properties held by the Group relate to a portfolio of retirement villages in New Zealand.
Investment properties are initially measured at cost and subsequently at fair value, determined individually, on a basis
appropriate to the purpose for which the property is intended. Investment properties are revalued at least annually, with any
gain or loss arising from a change in fair value recognised in the Consolidated Income Statement within financial income and
expense.
In Australia and New Zealand, the retirement village market is fragmented as each village is unique due to building
configuration and location. As there are no directly comparable sales from which values can be derived, the fair value of
investment property is determined using unobservable inputs. Therefore, the Group has categorised investment property as
Level 3 under the fair value hierarchy in accordance with the IFRS 13 Fair Value Measurement. These properties are valued
using discounted cash flow projections.
In an active market, the portfolio is valued annually by an independent valuer, holding a recognised and relevant professional
qualification, and with recent experience in the location and category of investment property being valued.
69
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
2023 2022
£m £m
At beginning of year
750 666
Additions
38 29
Transfer to assets held for sale
(2) –
Disposals
– (1)
Increase in fair value
32 29
Foreign exchange
(42) 27
At end of year
776 750
In the current year, a revaluation surplus of £31m (2022: £28m) was credited to the Consolidated Income Statement. This is net
of £1m (2022: £1m) attributable to occupational right agreement liability holders which is paid upon their exit of the retirement
village.
The carrying value of investment properties primarily consists of the Group's portfolio of retirement villages in New Zealand of
£703m (2022: £681m) and Australia of £53m (2022: £55m). These were valued by management using internally prepared
discounted cash flow projections, supported by the terms of any existing lease and other contracts. Discount rates are used to
reflect current market assessments of the uncertainty in the amount or timing of the cash flows. During the year, an independent
valuation of the New Zealand portfolio was performed by Jones Lang LaSalle (JLL), and this valuation, also based on a
discounted cash flow model, was in line with management’s valuation.
The historical cost of investment properties is £495m (2022: £482m).
Significant assumptions used in the valuation include:
Australia and New Zealand 2023 2022
Discount rate 14.0% 14.0%
Capital growth rate 3.3% - 3.5% 3.2% - 3.5%
The sensitivity analysis below considers the impact on the year-end valuation of Level 3 investment properties and is based on
a change in one assumption while holding all other assumptions constant. In practice, changes in assumptions may be
correlated.
Australia and New Zealand 0.5% absolute increase 0.5% absolute decrease
2023
Discount rate £13m decrease £14m increase
Capital growth rate
£20m increase £18m decrease
2022
Discount rate £12m decrease
£13m increase
Capital growth rate
£18m increase £16m decrease
During the year ended 31 December 2023, the Group’s retirement village portfolio in Australia and New Zealand generated
£28m (2022: £25m) of income which was recognised as care, health and other customer contract revenue in the Consolidated
Income Statement. Total direct operating expenses of these retirement villages amounted to £21m (2022: £19m).
6 Equity-accounted investments
Equity-accounted investments comprise associates and joint ventures in which the Group has significant influence, but not
control.
Associates include those entities over which the Group has significant influence, but has no right to direct the activities which
determine the variable returns it receives from the entity.
Associates are accounted for using the equity method and are initially recognised at cost. The cost of the investment includes
transaction costs. The carrying value of the investment is adjusted for the Group’s share of any post-acquisition profits or losses
of the associated entity.
If the Group’s share of losses exceeds its interest in an equity-accounted investment, the carrying amount of that interest
(including any long-term debt interests that, in substance, form part of the Group’s net investment), is reduced to £nil. In
addition, the recognition of further losses is discontinued except to the extent that the Group has an obligation to make
payments on behalf of the equity-accounted investment.
70
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The Consolidated Financial Statements include the Group’s share of income and expenses, and other comprehensive income,
from the date that significant influence commences until the date that significant influence ceases. Adjustments are made to
align the accounting policies with those of the Group where materially different.
The carrying amount of equity-accounted investments is £1,056m (2022 (restated): £997m). All equity-accounted investments
are included based on coterminous accounting periods.
The Group’s principal equity-accounted investments are:
Business
activity
Share of issued
capital
Principally
operates in
Country of
incorporation
Bupa Arabia for Cooperative Insurance Company (Bupa Arabia) Insurance 43.25% Saudi Arabia Saudi Arabia
Highway to Health, Inc. (Highway to Health) Insurance 49.00% USA USA
Niva Bupa Health Insurance Company Limited (Niva Bupa) Insurance 41.41% India India
During the year, the Group received dividends of £49m (2022: £52m) from Bupa Arabia.
During the year, the Group's shareholding in Niva Bupa was diluted from 44.39% to 41.41% due to Niva Bupa issuing shares to
external investors. This led to a gain on dilution of shares of £27m. The Group made further capital injections in Niva Bupa of
£20m (2022: £14m). Distributions to shareholders are currently restricted by local regulatory requirements which are
reassessed on a regular basis. Subsequent to the year-end, the Group increased its shareholding in Niva Bupa resulting in a
controlling interest of 62.98%. This is disclosed further in Note 1.8.
(i) Summarised financial information for material associates
The tables below provide summarised financial information for those associates that are material to the Group. The information
disclosed reflects the full balances for the relevant associates, and not the Group's share of those amounts. They have been
amended to reflect adjustments made by the Group when using the equity method, including fair value adjustments and
modifications for differences in accounting policies.
Bupa Arabia Highway to Health Niva Bupa
2022
2023 restated¹ 2023 2022 2023 2022
£m £m £m £m £m £m
Revenue 3,362 2,782 239 201 362 245
Cash and cash equivalents 263 283 112 94 7 9
Other current assets 1,050 974 130 122 33 27
Current assets 1,313 1,257 242 216 40 36
Non-current assets 1,707 1,413 20 10 497 319
Current liabilities (1,965) (1,665) (144) (123) (142) (110)
Non-current liabilities (74) (74) (13) (3) (193) (141)
Net assets 981 931 105 100 202 104
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
Reconciliation to carrying amounts
Bupa Arabia Highway to Health Niva Bupa
2022
2023 restated¹ 2023 2022 2023 2022
£m £m £m £m £m £m
Opening net assets 931 817 100 86 104 70
Profit/(loss) for the year 201 116 8 8 (3) (8)
Other comprehensive income 6
(54) – – – –
Dividends paid (116) (116) – – – –
Other reserve movements (41) 168 (3) 6 101 42
Closing net assets 981 931 105 100 202 104
% Ownership 43.25 % 43.25% 49.00 % 49.00% 41.41 % 44.39%
Reporting entity’s share² 424 403 51 49 75 35
Goodwill and local accounting differences 264 281 186 196 22 20
Carrying amount 688 684 237 245 97 55
Reporting entity's share of profit/(loss) 80 48 3 2 (1) (3)
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
2. Reporting entity's share excludes subordinated debt recorded under equity for Niva Bupa as the Group has no rights over the debt.
71
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
(ii) Individually immaterial equity-accounted investments
In addition to the interests in associates disclosed above, the Group also has interests in a number of individually immaterial
associates and a joint venture that are accounted for using the equity method. The aggregate carrying amount of the associates
is £6m (2022: £6m). The carrying amount of the joint venture is £28m (2022: £7m). The Group’s share of results recognised
during the year for these is a profit of £1m (2022: loss of £3m), which is entirely attributable to the investment in the joint
venture.
7 Post-employment benefits
The Group operates several funded and an unfunded defined benefit and defined contribution pension schemes for the benefit
of employees.
Defined contribution pension schemes
The defined contribution pension schemes provide employees with a retirement fund accumulated through investment of
contributions made by Bupa and the employees. Members of the scheme use their funds to secure benefits at retirement.
Benefits are not known in advance and the investment and longevity risks are assumed solely by the members of the scheme.
Contributions payable by the relevant sponsoring employers are defined in the scheme rules or plan specifications and these
contributions are recognised as an expense in the Consolidated Income Statement as incurred.
Defined benefit post-employment schemes
The defined benefit pension schemes provide benefits based on final pensionable salary. The Group’s net obligation in respect
of defined benefit pensions is calculated separately for each scheme and represents the present value of the defined benefit
obligation less the fair value of any scheme assets. The discount rate used is the yield at the reporting date on high-quality
corporate bonds denominated in the currency in which the benefit will be paid and taking account of the maturities of the
defined benefit obligations. When the calculation results in a benefit to the Group, the recognised asset is limited to the present
value of any future refunds from the scheme or reductions in future contributions to the scheme.
The charge to the Consolidated Income Statement for defined benefit schemes represents administrative expenses.
All remeasurements are recognised in full in the Consolidated Statement of Comprehensive Income in the period in which they
occur.
(i) Amounts recognised in the Consolidated Income Statement
The charge to administration expenses in the Consolidated Income Statement for defined benefit schemes is £2m (2022 £nil).
The charge to other operating expenses in respect of cash contributions to defined contribution schemes is £50m (2022: £47m).
(ii) Amounts recognised directly in other comprehensive income
The amounts charged/(credited) directly to equity are:
2023 2022
£m £m
Actual return less expected return on assets (1) 23
Loss/(gain) arising from changes to financial assumptions 1 (26)
Loss arising from changes to experience assumptions 1 1
Gain arising from changes to demographic assumptions (1) (1)
Total remeasurement gain credited directly to equity – (3)
7.1 Group post-employment benefit schemes
Defined contribution pension schemes
The principal defined contribution pension scheme in the UK during the year was the My Bupa LifeSight Plan. The Group
automatically enrols any eligible non-pensioned employees into the National Employment Savings Trust (NEST).
Defined benefit post-employment schemes
The principal defined benefit scheme in the UK is The Bupa Pension Scheme which has been closed to new entrants since 1
October 2002 and closed to future accrual since 31 December 2020. The British United Provident Association Limited is the
principal sponsoring employer for The Bupa Pension Scheme. The Company (which is not an employer in respect of the
scheme) had entered into a legally binding and irrevocable guarantee for the benefit of the trustee in respect of the payments
due from Bupa. Please see the 2023 Bupa Annual Report and Accounts for full details.
72
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
There are several other smaller defined benefit pension schemes operated by UK and overseas subsidiaries. The defined
benefit pension schemes are assessed by independent scheme actuaries in accordance with UK or local practice and under
IAS 19 as at 31 December 2023 for the purposes of inclusion in the Group’s Consolidated Financial Statements.
Trustees are appointed for each scheme as determined by its respective trust documentation and Trustees are required to act
in the best interests of the schemes’ beneficiaries. The long-term investment objectives of the Trustees and the employers are
to limit the risk of the assets failing to meet the liabilities of the schemes over the long term, and to maximise returns consistent
with an acceptable level of risk.
The smaller defined benefit pension schemes are not individually material to the Group on a net surplus/deficit basis, but details
have been disclosed within the subsidiary financial statements of the relevant sponsoring employer of each scheme.
(a) Assets and liabilities of schemes
2023 2022
£m £m
Present value of funded obligations (55) (54)
Fair value of scheme assets 50 49
Net liabilities of funded schemes (5) (5)
Present value of unfunded obligations (1) –
Net recognised liabilities (6) (5)
In the Consolidated Statement of Financial Position:
Net liabilities (8) (7)
Net assets 2 2
Net recognised liabilities (6) (5)
(b) Present value of schemes' obligations
The movements in the present value of the schemes' obligations are:
2023 2022
£m £m
At beginning of year 54 82
Interest on obligations 3 1
Administration expenses 2 –
Loss/(gain) from changes to financial assumptions 1 (26)
Loss from changes to experience assumptions 1 1
Gain from changes to demographic assumptions (1) (1)
Benefits paid (3) (4)
Foreign exchange (1) 1
At end of year 56 54
(c) Fair value of funded schemes' assets
The movements in the fair value of the funded schemes' assets are:
2023 2022
£m £m
At beginning of year 49 74
Interest income 3 1
Return on assets excluding interest income 1 (23)
Contributions by employer 1 1
Benefits paid (3) (4)
Foreign exchange (1) –
At end of year 50 49
73
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The market values of the assets of the funded schemes are as follows:
2023 2023 2022 2022
£m % £m %
Government bonds 17 34 % 12 25 %
Equities 15 30 % 6 12 %
Corporate bonds 10 20 % 11 23 %
Cash/other assets 7 14 % 13 26 %
Loans 1 2 % 7 14 %
Total market value 50 100 % 49 100 %
Aside from government bonds, equities and corporate bonds in the table above, no other assets have a quoted market price.
Amounts reported in the table above include those held through pooled investment funds in which Bupa is not the sole investor,
as well as direct investments.
7.2 Actuarial assumptions
The responsibility for setting the assumptions underlying the IAS 19 valuations rests with Bupa's Directors, having first taken
advice from the Group’s independent actuary.
The key weighted average financial assumptions used when valuing the obligations of the post-employment benefit schemes
under IAS 19 for the schemes within the Group are as follows:
2023 2022
% %
Inflation rate 3.2 3.2
Rate of increase in salaries 2.9 3.0
Rate of increase of pensions in payment 3.6 3.6
Rate of increase of pensions in deferment 3.1 3.1
Discount rate for scheme assets and obligations 4.8 5.0
(a) Actuarial assumptions underlying the valuation of obligations
The inflation rate assumption is set by reference to the difference between the yield on long-term fixed interest gilts and the real
yield on index-linked gilts, with a deduction of 0.2% to reflect an inflation risk premium.
The rate of increase in salaries is equal to the long-term expected annual average salary pay increase for the employees who
are members of the respective schemes. This assumption is set relative to the inflation rate assumption.
The rate of increase of pensions in payment is the same as the inflation rate, with the exception of benefits which receive fixed
increases in payment as defined under the respective scheme rules.
The rate of increase of pensions in deferment is set relative to the inflation rate assumption and adjusted for any relevant caps
or collars.
The discount rate used to value scheme liabilities is the yield at the reporting date on high-quality corporate bonds of
appropriate term.
An increase/decrease in the discount rate by 0.5%, while holding all other assumptions constant, would result in a decrease/
increase in the defined benefit pension scheme liabilities by £3m (2022: £3m).
(b) Mortality assumptions
The mortality tables adopted as at 31 December 2023 are the S3PA year of birth mortality tables using the CMI 2022 projection
model, with a long-term rate of improvement of 1.5% p.a. adjusted by 104% (male non-pensioners); 94% (female non-
pensioners); 97% (male pensioners) and 94% (female pensioners) (2022: CMI 2021 projection model, with a long-term rate of
improvement of 1.5% p.a. adjusted by 95% (male non-pensioners); 94% (female non-pensioners); 90% (male pensioners) and
92% (female pensioners)).
74
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The average life expectancy on retirement at age 60 are as follows:
For members aged 60, on the valuation date:
Male
Female
2023
26.5
28.9
2022
27.9
29.7
For member aged 45, on the valuation date:
Male
Female
27.3
30.2
28.8
30.9
(c) Assumptions over duration of liabilities
The weighted average duration of the defined benefit obligation is approximately 12 years (2022: approximately 11 years).
8 Deferred taxation assets and liabilities
Deferred taxation is an amount which recognises the differences between the carrying amounts of assets and liabilities for
financial reporting and the amounts used for taxation purposes. An example is the variance between the carrying value of
equipment due to depreciation being charged for financial reporting purposes and written down allowances being applied for the
relevant tax authorities.
Deferred taxation is recognised in full using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not recognised: goodwill not deductible for taxation purposes and the initial recognition of an
asset or liability in a transaction that is not a business combination which, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences. The
amount of deferred taxation recognised is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using taxation rates enacted or substantively enacted at the reporting date.
A deferred taxation asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred taxation assets and liabilities are offset when they relate to income taxes levied by the
same taxation authority and when the Group can settle its current taxation assets and liabilities on a net basis.
Recognised deferred taxation assets and liabilities
Deferred taxation assets and liabilities are attributable to the following:
Assets Liabilities Net
2022 2022 2022
2023 restated¹ 2023 restated¹ 2023 restated¹
£m £m £m £m £m £m
Accelerated capital allowances¹ 34 59 (56) (54) (22) 5
Post-employment benefits 2 3 (2) (1) – 2
Revaluation of properties to fair value 1 1 (84) (87) (83) (86)
Employee benefits (other than post-
employment) 64 47 (4) – 60 47
Provisions¹ 105 112 – – 105 112
Taxation value of losses carried forward 32 48 – – 32 48
Goodwill and intangible assets 10 13 (116) (136) (106) (123)
Other¹ 37 35 (43) (25) (6) 10
Deferred taxation (before allowable netting)¹ 285 318 (305) (303) (20) 15
Allowable netting of deferred taxation¹ (190) (191) 190 191 – –
Deferred taxation – net 95 127 (115) (112) (20) 15
1. Amounts have been restated for the adoption of IFRS 17 and amendments to IAS 12. See Note 1.5.
Unrecognised deferred taxation assets
As at 31 December 2023, the Group had deductible temporary differences relating to trading losses of £223m (2022 (restated):
£194m), to capital losses of £154m (2022: £80m), and to other temporary differences of £35m (2022: £9m) for which no
deferred taxation asset was recognised due to uncertainty of utilisation of those temporary differences.
75
76
Accelerated capital allowances¹ 4 – 3 – (1) – (1) 5
Post-employment benefits 2 – – – – – – 2
Revaluation of properties to fair value (102) – 10 11 – – (5) (86)
Employee benefits (other than post-employment) 43 – 2 – – – 2 47
Provisions¹ 110 – (3) – – – 5 112
Taxation value of losses carried forward 44 – (1) – 1 – 4 48
Goodwill and intangible assets (198) (6) 87 – – – (6) (123)
Other¹ 23 – (26) 1 – – 12 10
Total (74) (6) 72 12 – – 11
1. Amounts have been restated for the adoption of IFRS 17 and amendments to IAS 12. See Note 1.5.
2. See Note 1.7 for details of the impacts of IAS 29.
9 Restricted assets
Restricted assets are amounts held in respect of specific obligations and potential liabilities and may be used only to discharge
those obligations and potential liabilities if and when they crystallise.
2023 2022
£m £m
Non-current restricted assets 33 40
Current restricted assets 89 79
Total restricted assets 122 119
The non-current restricted assets balance of £33m (2022: £40m) consists of cash deposits held in respect of a charge over
certain unfunded pension scheme obligations in the Parent. Included in current restricted assets is £85m (2022: £74m) cash in
respect of claims funds held on behalf of corporate customers.
2022 restated¹
At beginning of
year
Initial
application of
IAS 29²
Income
Statement
comprehensive
income
Total 15 – (30) – – (2) (3) (20)
business
combinations
for sale
Foreign
exchange
At end of year
2023
Accelerated capital allowances 5 – (24) – – – (3) (22)
Post-employment benefits 2 – (2) – – – – –
Revaluation of properties to fair value (86) – (2) – – – 5 (83)
Employee benefits (other than post-employment) 47 – 15 – – – (2) 60
Provisions 112 – 2 – – – (9) 105
Taxation value of losses carried forward 48 – (12) – – (1) (3) 32
Goodwill and intangible assets (123) – 14 – – (1) 4 (106)
Other 10 – (21) – – – 5 (6)
At beginning of
year
Initial application
of IAS 29
£m £m £m £m £m £m £m £m
Recognised in Recognised in
Consolidated Consolidated
Income
Statement
Recognised in Recognised in
other other
comprehensive
income
Acquisitions Acquisitions
through through
business
combinations
Transfers to held
Transfers to held
for sale
Foreign
exchange
At end of year
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Movement in net deferred taxation (liabilities)/assets
15
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
10 Financial investments
The Group generates cash from its underwriting, trading and financing activities and invests the surplus cash in financial
investments. These include government bonds, corporate bonds, pooled investment funds and deposits with credit institutions.
All financial investments are initially recognised at fair value, which includes transaction costs for financial investments not
classified at fair value through profit or loss. Financial investments are recorded using trade date accounting at initial
recognition.
Financial investments are derecognised when the rights to receive cash flows from the financial investments have expired or
where the Group has transferred substantially all risks and rewards of ownership.
The Group has classified its financial investments into the following categories: at fair value through profit or loss, at fair value
through other comprehensive income (FVOCI) and at amortised cost.
Classification Criteria and treatment under IFRS 9
Fair value Debt and equity instruments where performance is managed and evaluated on a fair value basis and the objective is to
through profit or realise cash flows through the sale of the assets. The investments are carried at fair value, with gains and losses arising
loss from changes in this value recognised in the Consolidated Income Statement in the period in which they arise.
Fair value Non-derivative debt instruments where the contractual characteristics of the financial assets represent solely payments of
through other principal and interest and the objective is to hold the instrument to collect cash flows and sell, with a greater frequency
comprehensive and value of sales than instruments at amortised cost. The investments are carried at fair value and fair value changes
income are recognised in the Consolidated Statement of Comprehensive Income, except for interest and foreign exchange gains
or losses and impairment gains and losses that are derived using the same methodology that is applied to financial assets
measured at amortised cost, which are recognised in the Consolidated Income Statement. The cumulative gain or loss
that was recognised in other comprehensive income is recognised in the Consolidated Income Statement when a financial
asset at FVOCI is derecognised.
Amortised cost Non-derivative debt instruments where the contractual characteristics of the financial assets represent solely payments of
principal and interest and the objective is to hold the instrument to collect cash flows over its life. Any disposals are
expected to be infrequent or insignificant. The investments are measured at amortised cost using the effective interest
method, less any impairment losses. Any discount or premium on purchase is amortised over the life of the investment in
the Consolidated Income Statement.
Under IFRS 9, impairment provisions for expected credit losses (ECL) are recognised for financial investments measured at
amortised cost and FVOCI. An allowance for either a 12-month or lifetime ECL is required, depending on whether there has
been a significant increase in credit risk since initial recognition. For trade receivables lifetime ECL is always applied. An
assumption can be made that the credit risk on a financial instrument has not increased significantly since initial recognition if
the financial instrument is determined to have low credit risk at the reporting date (e.g. it is investment grade). The Group
applies a 12-month ECL allowance to all assets other than trade receivables, as no significant increases in credit risk since
initial recognition have been identified.
The measurement of ECL should reflect a probability-weighted outcome, the time value of money and the best available
forward-looking information. An analysis of ECL provisions is provided in Note 25.5.
77
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Financial investments are analysed as follows:
Carrying value Fair value Carrying value Fair value
2023 2023 2022 2022
£m £m £m £m
Fair value through profit or loss
Corporate debt securities and secured loans 312 312 301 301
Government debt securities 34 34 41 41
Pooled investment funds 524 524 459 459
Deposits with credit institutions 25 25 4 4
Other loans – – 7 7
Equities 36 36 32 32
Fair value through other comprehensive income
Corporate debt securities and secured loans 17 17 41 41
Government debt securities 37 37 19 19
Amortised cost
Corporate debt securities and secured loans 1,056 1,061 1,114 1,110
Government debt securities 507 510 468 468
Deposits with credit institutions 1,090 1,095 1,230 1,230
Total financial investments 3,638 3,651 3,716 3,712
Non-current 780 784 756 752
Current 2,858 2,867 2,960 2,960
Fair value of financial investments
An asset's fair value is the price at which an orderly transaction to sell or transfer the asset would take place between market
participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the
perspective of the market participant that holds the asset). The objective of a fair value measurement is to estimate this price.
The fair values of quoted investments in active markets are based on current bid prices. The fair values of unlisted securities
and quoted investments for which there is no active market are established by using valuation techniques supported by market
transactions and observable market data provided by independent third parties. These may include reference to the current fair
value of other investments that are substantially the same and discounted cash flow analysis.
The fair values of financial investments are determined using different valuation inputs categorised into a three-level hierarchy.
The different levels are defined by reference to the lowest level input that is significant to the fair value measurement, as
follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
78
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
An analysis of the financial investment fair values by hierarchy level is as follows:
Level 1 Level 2 Level 3 Total
£m £m £m £m
2023
Fair value through profit or loss
Corporate debt securities and secured loans 18 293 1 312
Government debt securities 13 21 – 34
Pooled investment funds 93 407 24 524
Deposits with credit institutions 25 – – 25
Equities – – 36 36
Fair value through other comprehensive income
Corporate debt securities and secured loans 17 – – 17
Government debt securities 37 – – 37
Amortised cost
Corporate debt securities and secured loans 443 618 – 1,061
Government debt securities 325 185 – 510
Deposits with credit institutions – 1,095 – 1,095
Total financial investments 971 2,619 61 3,651
Level 1 Level 2 Level 3 Total
£m £m £m £m
2022
Fair value through profit or loss
Corporate debt securities and secured loans 21 279 1 301
Government debt securities 22 19 – 41
Pooled investment funds 89 347 23 459
Deposits with credit institutions 4 – – 4
Other loans – – 7 7
Equities – – 32 32
Fair value through other comprehensive income
Corporate debt securities and secured loans 38 3 – 41
Government debt securities 19 – – 19
Amortised cost
Corporate debt securities and secured loans 488 622 – 1,110
Government debt securities 290 178 – 468
Deposits with credit institutions –
1,230 – 1,230
Total financial investments 971 2,678 63 3,712
Transfers between fair value hierarchy levels
The Group’s policy is to determine whether transfers have occurred between fair value hierarchy levels at the end of a reporting
period. Classification is reassessed based on the lowest level input that is significant to the fair value measurement as a whole.
There were no transfers between fair value hierarchy levels in the year (2022: £nil).
The Group currently holds Level 3 financial investments totalling £61m. The majority of Level 3 investments are unlisted
equities and pooled investment funds valued at recent subscription values and conversion prices, which are considered to be
unobservable inputs. Changes to the valuation assumptions which are reasonably possible could result in a change in fair value
of plus or minus £3m (2022: plus or minus £3m).
79
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The table below shows movement in the Level 3 assets measured at fair value.
2023 2022
Level 3 £m £m
At beginning of year 63 34
Additions 1 4
Net (decrease)/increase in fair value¹ (1) 24
Transfer between levels – –
Foreign exchange (2) 1
At end of year 61 63
1. All gains and losses are recognised in financial income in the Consolidated Income Statement.
The Group uses a market interest curve supported by third parties as at the reporting date to discount financial assets,
borrowings and derivatives, where the fair value cannot otherwise be found from quoted market values. The interest rate used
is based on the duration of the financial asset/liability resulting in a range as follows:
2023 2022
% %
Sterling assets and liabilities 4.2 - 4.3 3.4 - 3.7
Australian dollar assets and liabilities 3.6 - 3.9 3.3 - 3.7
Euro assets and liabilities 2.3 - 3.1 2.5 - 2.6
US dollar assets and liabilities 3.9 - 4.7 3.9 - 4.6
11 Derivatives
A derivative is a financial instrument whose value is based on one or more underlying variables. The Group uses derivative
financial instruments to hedge its exposure to foreign exchange and interest rate risk. Derivatives are not held for speculative
reasons.
Derivative financial instruments are accounted for at fair value through profit or loss unless hedge accounting requires another
treatment. See Note 25 for details on how the Group accounts for derivatives that qualify for hedge accounting. Derivatives that
have been purchased or issued as part of a hedge that subsequently do not qualify for hedge accounting are accounted for at
fair value through profit or loss.
Fair values are obtained from market observable pricing information including interest rate yield curves.
Fair values have been calculated for each type of derivative as follows:
• The fair value of currency contracts, including forwards, swaps and options is determined using third-party sourced
market data at the reporting date. The resulting value reflects changes in spot exchange rates and interest differential
between the currency pair involved, over the life of the contract, discounted back to the present value.
• The fair value of interest rate swaps is determined as the present value of the estimated future cash flows based on
observable yield curves.
Valuation inputs are classified as Level 2 in the fair value hierarchy.
2023 2022
£m £m
Derivative assets
Non-current
Current
Total derivative assets
17
29
46
2
26
28
Derivative liabilities
Non-current
Current
Total derivative liabilities
(42)
(21)
(63)
(64)
(73)
(137)
80
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
12 Insurance and reinsurance contracts
Insurance contracts are contracts under which the Group accepts significant insurance risk from a policyholder by agreeing to
compensate the policyholder if a specified uncertain future event adversely affects the policyholder.
Unit of account
A portfolio of insurance contracts is defined as insurance contracts subject to similar risks and managed together. The Group
defines portfolios as insurance Business Units at a minimum, as the Group essentially sells one health insurance product line
where cash flows are generally expected to respond similarly in direction and timing to changes in assumptions and as the
Group manages the insurance business at geographical Business Unit level. There may be further disaggregation if there are
business lines which are managed separately and have different risk profiles.
Each portfolio is subsequently disaggregated into groups of contracts:
• that are onerous at initial recognition;
• that have no significant possibility of becoming onerous subsequently; and
• all remaining contracts.
The Group assumes that no contracts are onerous at initial recognition unless facts and circumstances indicate otherwise. An
assessment is made whether contracts that are not onerous at initial recognition have no significant possibility of becoming
onerous subsequently by assessing the likelihood of changes in applicable facts and circumstances. Bupa assesses the
profitability of a set of contracts for which it has reasonable and supportable information that the contracts will all be in the same
group. Each set contains contracts issued in a single half year period, which is a subset of one issuing year of a portfolio.
Insurance contracts remain within the same group from initial recognition until they are derecognised.
Portfolios of reinsurance contracts held are assessed for aggregation separately from portfolios of insurance contracts issued.
The Group’s policy is that for reinsurance contracts held, each individual reinsurance contract is considered a group.
Recognition and derecognition
Groups of insurance and reinsurance contracts are initially recognised from the earliest of the beginning of the coverage period;
the date when the first payment from a policyholder in the group becomes due; and when the group of contracts or the
underlying insurance contract becomes onerous.
For proportional reinsurance, recognition is the later of the date that any underlying insurance contract is initially recognised or
the beginning of the coverage period of the group of reinsurance contracts held.
A group of insurance contracts or reinsurance contracts are derecognised when all rights and obligations are extinguished or a
contract modification occurs.
Contract boundary and fulfilment cash flows
Cash flows are within the boundary of an insurance or reinsurance contract if they arise from substantive rights and obligations
that exist during the reporting period. For insurance contracts, Bupa has a substantive right when it can compel the policyholder
to pay the premiums or a substantive obligation when it has to provide the policyholder with insurance contract services. For
reinsurance contracts held, the substantive right is to receive reinsurance services and the substantive obligation is to pay
amounts to the reinsurer.
Cash flows within the contract boundary directly relate to the fulfilment of the contract and include cash flows relating to the
collection of premiums and payments for claims, benefits and expenses.
Cash flows are outside of the contract boundary of an insurance contract when Bupa's substantive rights and obligations end.
This mainly occurs when the Group has the practical ability to reprice the risks of a particular policyholder or change the level of
benefits so that the price fully reflects those risks.
Cash flows outside the contract boundary relate to future insurance contracts. These future insurance contracts are recognised
only when they meet the recognition criteria.
PAA eligibility
The Group applies the PAA for the measurement of the majority of insurance contracts. The majority of the Group’s contracts
automatically qualify as the coverage period of each contract in the group is one year or less.
As a result, the Group has taken the available policy choice to apply the PAA to these contracts. The Group also has a small
number of policy groups with a coverage period of greater than a year. For these groups of contracts, the Group assesses
whether the measurement of the LFRC under the PAA is expected to differ materially from that under the GMM. This requires
the use of GMM and materiality thresholds determined by management for these policies, as well as the selection of reasonably
expected scenarios against which eligibility is assessed. As a result of this assessment, these remaining contracts are also
eligible to use the PAA measurement model with the exception of one legacy portfolio of individual health contracts in Brazil.
81
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
This portfolio of contracts has a contract boundary of greater than one year where the contracts are onerous and a GMM
valuation has been used.
Measurement
Liability for remaining coverage
On initial recognition of each group of insurance contracts, the carrying amount of the LFRC is based on the premiums received
less any directly attributable acquisition costs not expensed as incurred. In subsequent periods, the LFRC is increased for any
additional premiums received and release of any insurance acquisition cash flows and decreased for the recognition of
insurance revenue that is released on a straight-line basis over the coverage period. The Group's default policy is not to adjust
the LFRC to reflect the time value of money and the effect of financial risk, as the Group expects on initial recognition of each
group of contracts that the time between providing each part of the services and the related premium due date is typically no
more than one year. However, discounting may be applied in exceptional circumstances, as described below.
Insurance acquisition cash flows
Insurance acquisition cash flows are cash flows arising from the costs of selling, underwriting and starting a group of insurance
contracts (issued or expected to be issued) that are directly attributable to the portfolio of insurance contracts to which the
group belongs. It includes external and internal costs and incremental direct and indirect costs.
The Group’s policy is to expense acquisition costs as they are incurred where the coverage period of each contract in the group
is no more than one year. For the remaining contracts with a longer coverage period, insurance acquisition costs are allocated
to the relevant group of insurance contracts and reduce the LFRC. The allocated acquisition costs are amortised consistently
with the pattern of insurance revenue recognition.
Onerous contracts
If facts and circumstances indicate that a group of contracts is onerous, detailed testing is performed by comparing the carrying
amount of the LFRC to the estimated fulfilment cash flows, which include an assessment of the risk adjustment using a
confidence level approach. If the carrying amount of the LFRC is less than the estimated fulfilment cash flows, a loss
component is recognised. The loss component increases the LFRC and is recognised as an expense in the Consolidated
Income Statement. Subsequently, the loss component is reassessed, with any movements in the loss component adjusting the
LFRC and being recognised within the Consolidated Income Statement.
Liability for incurred claims
The LFIC represents the estimated liability arising from claims episodes in current and preceding financial years which have not
yet given rise to claims paid. A claims episode is an insured medical service that the Group has an obligation to fund which
could be consultation fees, diagnostic investigations, hospitalisation or treatment costs. The liability includes an allowance for
claims management and handling expenses.
The Group recognises the LFIC of a group of insurance contracts as the present value of the expected cash flows required to
settle the obligation with an adjustment for non-financial risk. The Group does not adjust the future cash flows either for the time
value of money or for the effect of financial risk for portfolios in which incurred claims are expected to be paid within one year of
occurrence, except in exceptional circumstances, as described below.
The LFIC across the Group is set in line with Bupa’s Claims Reserving standards, at a level to achieve an appropriate
probability of sufficiency and is estimated based on current information. The ultimate liability may vary as a result of subsequent
information and events. Adjustments to claims estimates for prior years are included in the Consolidated Income Statement in
the financial year in which the change is made. The methods used and estimates made for the LFIC are reviewed regularly.
Risk adjustment
The risk adjustment reflects the compensation the Group requires for bearing the uncertainty about the amount and timing of
the cash flows from non-financial risk as the Group fulfils insurance contracts. The Group has estimated the risk adjustment
using a confidence level approach at the 85th percentile (2022: 85th percentile) and any movements in the risk adjustment are
recognised in full within the insurance service result.
Reinsurance contracts held
For reinsurance contracts held, Bupa applies the PAA for the majority of reinsurance contracts as the coverage period is one
year or less. Bupa assesses the remaining contracts and applies the PAA as the resulting measurement would not differ
materially from the result of applying the requirements in the GMM for reinsurance contracts held.
The Group measures the asset for remaining coverage (AFRC) on initial recognition of a group of reinsurance contracts held as
the amount of ceded premiums paid. Subsequently the remaining coverage is increased for ceded premiums paid and
decreased for amounts of ceded premiums recognised as reinsurance expenses for the services received in the period. The
Group releases ceded reinsurance premiums on a passage of time basis over the coverage period. The Group does not adjust
the AFRC for the time value of money or for the effect of financial risk as the time between providing the coverage and the
related underlying premium is one year or less.
82
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The carrying amount of a group of reinsurance contracts held also includes the asset for incurred claims (AFIC) comprising the
fulfilment cash flows related to the past service allocated to the group. The Group does not adjust the AFIC for the time value of
money or effect of financial risk as recoveries are expected to be paid within one year of occurrence.
The estimates for future cash flows of a group of reinsurance contracts held should allow for the risk of non-performance by
reinsurers, which is the probability weighted expected value of the effect of reinsurance counterparty failure to fulfil the
contractual obligations. Bupa's policy is to set the non-performance risk to zero as there are restrictions in place on the credit
quality and amount of reinsurance ceded to individual counterparties and Bupa uses reinsurance only to a limited extent to
mitigate insurance risks.
Discounting
Discounting is optional for the LFRC carrying amount if the time between providing each part of the coverage and the related
premium due date is one year or less and for the LFIC if claims are expected to be paid in one year or less from the date the
claims are incurred. The Group does not apply discounting to the majority of policies. However, Bupa Acıbadem Sigorta has
applied discounting to both the LFRC and LFIC due to the high interest rate and high inflation environment in Türkiye. Bupa
Global has also applied discounting to the LFIC for certain groups of insurance contracts as a proportion of claims are settled
over a period that is greater than one year. In addition, the LFRC for the legacy individual health policies in Brazil has been
discounted due to the long-term nature of these contracts. Where discounting is applied, the Group policy is to use either the
PRA published discount rates or European Insurance and Occupational Pensions Authority (EIOPA) specified discount rates.
Discount rates are calculated based on a bottom-up approach.
COVID-19 claims savings
In circumstances where a return of premiums is due to policyholders, a provision is established within the LFIC. An insurance
provision for the return of premiums was established in 2020 in respect of Bupa Insurance Limited following the commitment to
pass back to eligible customers any exceptional financial benefits experienced by the UK PMI business that ultimately arose as
a result of the COVID-19 pandemic. As a result of a step-change in claims, the estimate for delayed claims rebounding was
reassessed and resulted in the return of premium provision being released in full during the first half of 2023 such that there is
no provision remaining at 31 December 2023 (2022: £59m).
Investment components
An investment component is an element within an insurance contract that would require Bupa to repay a policyholder in all
circumstances, regardless of whether an insured event occurs. The LFIC includes an insurance provision that is a non-distinct
investment component for cash payments to Australia Health Insurance customers under a COVID-19 customer support
programme. The provision is recognised at the point the Group formally announces the payment and insurance revenue
recognised within the Consolidated Income Statement is reduced accordingly. The insurance provision is subsequently utilised
on payment to the eligible customers. As at 31 December 2023, the LFIC includes an insurance provision of £46m (2022
(restated): £35m) relating to these cash giveback payments. The increase in provision of £11m reflects the announcement of
£211m further giveback payments during the year, offset by subsequent payments of £200m made to eligible customers.
The Group does not recognise any other material investment components or separate components from insurance contracts.
An analysis of the amounts presented on the Consolidated Statement of Financial Position for insurance and reinsurance
contracts is included in the tables below, along with the presentation of current and non-current portions of the balances:
Assets Liabilities Net
2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
Insurance contracts
Non-current
– – (133) (130) (133) (130)
Current
– – (2,475) (2,248) (2,475) (2,248)
Total insurance contract liabilities – – (2,608) (2,378) (2,608) (2,378)
Reinsurance contracts
Non-current 1 1 – – 1
1
Current 37 20 – – 37 20
Total reinsurance contract assets 38 21 – – 38
83
21
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
12.1 Insurance contracts roll forward
Liability for remaining coverage Liability for incurred claims Total
For year ended 31 December 2023
Insurance contract liabilities at beginning
of year
Insurance revenue
Insurance service expenses
Excluding loss
component
£m
1,081
(10,770)
(6)
Estimates of
present value of
Loss future cash
component flows
£m £m
100 1,176
– –
(27) 10,344
Risk adjustment
£m
21
–
7
£m
2,378
(10,770)
10,318
Incurred claims and other expenses – – 10,372 13 10,385
Amortisation of insurance acquisition cash
flows (6) – – – (6)
Losses on onerous contracts and (reversal) of
those losses – (27) – – (27)
Changes to liabilities for incurred claims
relating to past service – – (28) (6) (34)
Insurance service result (10,776) (27) 10,344 7 (452)
Foreign exchange (41) (1) (61) (1) (104)
Finance expense from insurance contracts
issued – 19 6 – 25
Total changes in statement of
comprehensive income (10,817) (9) 10,289 6 (531)
Other movements¹ (2) – (148) – (150)
Non-distinct investment components (223) – 223 – –
Cash flows
Premiums received 11,152 – – – 11,152
Claims and other expenses paid – – (10,227) – (10,227)
Insurance acquisition cash flows (14) – – – (14)
Total cash flows 11,138 – (10,227) – 911
Insurance contract liabilities at end of year 1,177 91 1,313 27 2,608
1. Other movements include £147m of amortisation and depreciation expenses included within insurance service expense (see Note 2.3) that are non-cash items that do
not form part of the insurance contract liabilities balance.
84
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Liability for remaining coverage Liability for incurred claims Total
Estimates of
Excluding loss present value of
component Loss component future cash flows Risk adjustment
For year ended 31 December 2022 restated¹,² £m¹ £m £m¹,² £m £m
Insurance contract liabilities at beginning
of year 985 94 1,098 14 2,191
Insurance revenue (10,033) – – – (10,033)
Insurance service expenses – 8 9,326 5 9,339
Incurred claims and other expenses – – 9,302 – 9,302
Losses on onerous contracts and (reversal) of
those losses – 8 – – 8
Changes to liabilities for incurred claims
relating to past service – – 24 5 29
Insurance service result (10,033) 8 9,326 5 (694)
Foreign exchange 20 10 62 2 94
Finance income from insurance contracts
issued – (16) – – (16)
Total changes in statement of
comprehensive income (10,013) 2 9,388 7 (616)
Other movements¹ – – (187) – (187)
Non-distinct investment components² (177) – 177 – –
Cash flows
Premiums received 10,286 4 – – 10,290
Claims and other expenses paid – – (9,300) – (9,300)
Total cash flows 10,286 4 (9,300) – 990
Insurance contract liabilities at end of year 1,081 100 1,176 21 2,378
1. Other movements have been restated to include £149m of amortisation and depreciation expenses that are included within insurance service expense (see Note 2.3).
These expenses are non-cash items that do not form part of the insurance contract liabilities balance. The remaining balance of £38m relates to the sale of a portfolio of
life insurance in Bupa Global Latin America.
2. Non-distinct investment components have been restated by £90m due to the September 2022 giveback being incorrectly excluded.
Contracts measured on a GMM basis
Included within the loss component is £49m (2022: £45m) related to the legacy portfolio of individual health contracts in Brazil,
measured on a GMM basis. This portfolio is onerous as, due to regulatory restrictions on pricing, the insurance contracts
continue to renew at premium rates that do not reflect the current cost of claims. During the year, movement in the loss
component driven by a change in the discount rate and the impact of the unwind of discounting applied to the fulfilment cash
flows is a £17m expense (2022: £16m income) and is recognised as insurance financial expense (2022: income) within the
Consolidated Income Statement.
As the portfolio is onerous, the contractual service margin is nil. A risk adjustment of £9m (2022: £10m) is recognised to
compensate the Group for the uncertainty about the amount and timing of cash flows from non-financial risk as the Group fulfils
these contracts.
12.2 Reinsurance contracts roll forward
Asset for Amount
remaining recoverable on
coverage incurred claims Total
For year ended 31 December 2023 £m £m £m
Reinsurance contract assets at beginning of year (18) 39 21
Allocation of reinsurance premiums (148) – (148)
Amounts recoverable from reinsurers for incurred claims:
Amounts recoverable for incurred claims and other expenses – 140 140
Changes to amounts recoverable for incurred claims relating to past service – 1 1
Net expense from reinsurance contracts held (148) 141 (7)
Foreign exchange – (1) (1)
Cash flows
Premiums paid 150 – 150
Recoveries from reinsurance – (125) (125)
Total cash flows 150 (125) 25
Reinsurance contract assets at end of year (16) 54 38
85
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
A risk adjustment is estimated on the amount recoverable on incurred claims using a confidence level approach at the 85th
percentile (2022: 85th percentile). As this totals less than £1m, it has not been separately presented.
Asset for remaining Amount recoverable
coverage on incurred claims Total
For year ended 31 December 2022 £m £m £m
Reinsurance contract assets at beginning of year
Allocation of reinsurance premiums
Amounts recoverable from reinsurers for incurred claims:
Amounts recoverable for incurred claims and other expenses
Net expense from reinsurance contracts held
(17)
(116)
–
(116)
35
–
94
94
18
(116)
94
(22)
Foreign exchange
Cash flows
Premiums paid
Recoveries from reinsurance
2
113
–
(1)
–
(89)
1
113
(89)
Total cash flows 113 (89) 24
Reinsurance contract assets at end of year (18) 39 21
Assumptions for general insurance business
The process of recognising liabilities arising from general insurance entails the estimation of future payments to settle incurred
claims and associated claims handling expenses, as well as assessing the extent to which any groups of contracts have
become onerous.
The principal assumptions in the estimation of the LFIC relate to the expected frequency, severity and settlement patterns of
insurance claims, which are expected to be consistent with recently observed experience and trends. The aim of claims
reserving is to select assumptions and reserving methods that will produce the best estimate of the future cash outflows for the
subject claims; it is an uncertain process which also requires judgements to be made.
Claims development patterns are analysed in each of the Group’s insurance Business Units. Various established reserving
methods for general insurance are considered, typically basic chain ladder, Bornhuetter-Ferguson and pure risk cost methods.
Additional consideration is given to the treatment of large claims, claims seasonality, claims inflation and currency effects, for
which appropriate adjustments to assumptions and methods are made.
While there is some diversity in the development profile of health insurance claims across the Group, such claims are generally
highly predictable in both frequency and average amount, and claims are settled quickly following the medical event for which
benefit is claimed. Medical expense claims are, typically, substantially fully settled within just a few months.
Estimation uncertainty exists in determining a loss component, where facts and circumstances are identified that may indicate
that a group of onerous contracts exists. As described above, a loss component is measured by comparing the current
estimates of the fulfilment cash flows that relate to the remaining coverage to the carrying amount of the LFRC. Uncertainty is
driven by the future cash flows which are uncertain due to their timing, size and, or probability. The underlying cash flows are
determined by forecasting future claims and any other expenses, based on internal and external historical claims and other
experience data and updated to reflect current expectations of future events and current conditions at the reporting date.
Estimation is also involved in deriving an appropriate discount rate applied to the fulfilment cash flows, in particular, for the
legacy individual health policies in Brazil due to the long-term nature of these contracts.
Insurance provisions are inevitably estimates. Actual experience or losses incurred may vary from that anticipated in the
reserving estimates.
The following tables show the impact on profit before taxation of reasonably possible variations in the key assumptions used to
determine the best estimate of claims provisioning and in estimating the fulfilment cash flows used in onerous contract testing.
Changes to these assumptions are made while holding all other assumptions constant, however in practice, it is likely that
variations in some of the assumptions may be correlated.The sensitivity analysis reflects one-off impacts at the reporting date
and should not be interpreted as predictions.
The sensitivity analysis includes the legacy portfolio of individual health contracts in Brazil, measured on a GMM basis.
Any loss is reduced only to a limited extent by reinsurance provided by third-party reinsurers. As the mitigation impact is not
material for the Group, the impact of reinsurance is not separately disclosed in the tables below.
As the impact on equity will not be materially different from the profit before taxation impact, this has not been separately
disclosed.
86
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Best estimate of claims provisioning
Claims¹ Expenses²
2023
Change in variable Increase/decrease by 2% Increase/decrease by 10%
Impact on profit before taxation Decrease/increase by £24m Decrease/increase by £3m
2022
Change in variable Increase/decrease by 2% Increase/decrease by 10%
Impact on profit before taxation Decrease/increase by £21m Decrease/increase by £2m
Onerous contract testing
Claims² Expenses² Discount rate²,³
2023
Change in variable Increase/decrease by 2% Increase/decrease by 10% Increase/decrease by 1%
Impact on profit before taxation Decrease/increase by £14m
Decrease by £8m/increase
Increase by £11m/decrease
by £7m
by £18m
2022
Change in variable Increase/decrease by 2% Increase/decrease by 10% Increase/decrease by 1%
Impact on profit before taxation
Decrease by £15m/increase
Decrease by £10m/increase
Increase by £10m/decrease
by £14m
by £7m
by £14m
1. The impact of any movement in claims is shown net of reinsurance as both gross and ceded claims are affected by this sensitivity.
2. Sensitivity analysis excludes the impact of reinsurance as any movements would not be passed on ceded insurance contracts.
3. Sensitivity of the discount rate on onerous contract testing has only been applied to profitability sets in which discounting has been applied.
13 Inventories
Inventories comprise drugs, prostheses, consumables and housing stock utilised in the course of our care, health and dental
operations.
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in first-out method, or
methods that approximate this, and includes costs incurred in acquiring the inventories and in bringing them to their current
location and condition.
As at 31 December 2023, inventories were £76m (2022: £91m). Inventory write-downs of £4m were made during the year
(2022: £4m). The Group consumed £229m (2022: £219m) of inventories, which are recognised within other operating expenses
in the Consolidated Income Statement.
14 Trade and other receivables
Trade and other receivables arise in the ordinary course of business.
2022
2023 restated¹
Note £m £m
Trade receivables (a) 414 420
Amounts owed by Parent 55 50
Other receivables¹ (a) 154 225
Service concession receivables (b) 30 71
Prepayments¹ 114 110
Contract costs 3 4
Accrued income 59 58
Total trade and other receivables 829 938
Non-current 23 24
Current¹ 806 914
1 Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
Trade and other receivables are carried at amortised cost, net of provisions for ECLs. Trade receivables relate to consideration
due from non-insurance customer contracts. All trade receivables and service concession receivables are classified as
receivables under IFRS 15, as a receivable is an entity’s right to consideration that is unconditional, i.e. only the passage of time
is required before payment is due. Other receivables relate to consideration due from non-insurance customer contracts that are
outside the scope of IFRS 15, e.g. rental receivables. Information regarding the ageing of trade and other receivables is shown
in Note 25.5.
87
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The carrying value of trade and other receivables is a reasonable approximation of fair value.
(a) Impairment of financial assets
Financial assets comprise trade and other receivables and financial investments. See Note 10 for financial investments.
All receivables are measured net of lifetime ECL. Where appropriate, a provision matrix is used to estimate ECL.
Under a provision matrix, receivables are grouped into customer segments and further divided into categories by age. Historical
credit loss experience and any relevant forward-looking information are then used to establish the ECL provision for each
category. An analysis of ECL provisions for trade and other receivables is disclosed in Note 25.5. All impairment losses are
recognised in the Consolidated Income Statement within net impairment on financial assets. Impairment losses on trade
receivables of £19m have been recognised in the period (2022: £11m).
(b) Service concession receivables
The Group has recognised service concession receivables in respect of a public–private partnership arrangement in Spain. A
financial asset is recognised to the extent that Bupa has an unconditional contractual right to receive cash at the direction of the
grantor for both the construction and operational services and the grantor has little, if any, discretion to avoid payment. This
financial asset is carried at amortised cost (using the effective interest method) less ECL provision.
In respect of operational services provided, revenue is recognised based on the average operating margin for the life of the
contract. The operating margin is based on historic performance plus projections and is reassessed based on changes in
expected performance, with an adjustment made to the current year results to bring the contract performance to date in line
with the revised margin. As revenue is based on an expected margin, with some potential variability, revenue is only ever
recognised to the extent that it is highly probable a significant reversal will not occur when the uncertainty is resolved.
15 Assets and liabilities held for sale
Non-current assets or disposal groups comprising assets and liabilities are classified as held for sale if their carrying amount will
be recovered primarily through sale rather than continuing use and a sale within 12 months is considered to be highly probable.
Classification as held for sale
Assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Subsequent to initial
classification as held for sale, any impairment losses and gains or losses on remeasurement are recognised in the
Consolidated Income Statement.
On classification as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated.
Assets and liabilities classified as held for sale
2023 2022
£m £m
Assets held for sale
Property, plant and equipment 41 31
Investment property – 1
Financial investments 5 –
Cash and cash equivalents 2 –
Total assets held for sale 48 32
Liabilities associated with assets held for sale
Lease liabilities (2) –
Provisions for liabilities and charges (2) (1)
Insurance contract liabilities (4) –
Trade and other payables (1) –
Total liabilities held for sale (9) (1)
Net assets held for sale 39 31
Net assets held for sale as at 31 December 2023 predominantly comprise a number of care homes within Bupa UK Care
Services and Bupa Villages and Aged Care New Zealand, an insurance business in ELA, as well as a number of dental
practices within Bupa Dental Care UK.
An impairment loss of £8m (2022: £nil) has been recognised within other income and charges (see Note 2.4) in the
Consolidated Income Statement resulting from write-downs on the classification of assets as held for sale in the year.
88
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Net assets held for sale as at 31 December 2022 primarily comprised a number of care homes within Bupa UK Care Services
and Bupa Villages and Aged Care New Zealand, and an office within Care Plus in Brazil.
16 Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits and other short-term highly liquid investments (including
money market funds) with original maturities of three months or less which are subject to an insignificant risk of change in
value.
2023 2022
£m £m
Cash at bank and in hand 1,075 1,141
Short-term deposits 1,203 262
Total cash and cash equivalents 2,278 1,403
Bank overdrafts of £1m (2022: £2m) that are repayable on demand are reported within other interest-bearing liabilities (Note 17)
in the Consolidated Statement of Financial Position. Demand deposits with restrictions on use set by a third party that
fundamentally change their nature are reported within restricted assets (Note 9) in the Consolidated Statement of Financial
Position. Both of these are considered components of cash and cash equivalents for the purpose of the Consolidated
Statement of Cash Flows.
17 Borrowings
The Group has various sources of funding including subordinated bonds, senior unsecured bonds and loans.
Borrowings are recognised initially at fair value less attributable transaction costs. Subsequently, they are held at amortised
cost, with any difference between the initial recognition value and redemption value being recognised in the Consolidated
Income Statement over the period of the borrowings on an effective interest basis.
The Group uses interest rate swaps to manage its interest rate risk on certain borrowings under fair value hedges. Changes in
the fair value of swaps designated and qualifying as fair value hedge are recorded in the Consolidated Income Statement
together with changes in the fair value of the borrowings, due to the hedged risk. A gain or loss relating to any ineffective portion
is directly recognised in the Consolidated Income Statement.
2023 2022
Note £m £m
Subordinated liabilities
Subordinated unguaranteed bonds (a) 747 998
Total subordinated liabilities 747 998
Other interest-bearing liabilities
Senior unsecured bonds (b) 1,035 600
Fair value adjustment in respect of hedged interest rate risk (22) (60)
Bank loans and overdrafts (c) 48 108
Other unsecured loans (d) 29 –
Total other interest-bearing liabilities 1,090 648
Total borrowings 1,837 1,646
Non-current 1,489 1,287
Current 348 359
Subordinated liabilities
Other interest-bearing
liabilities Total
2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
At beginning of year 998 997 648 822 1,646 1,819
Arising on business combinations – – – 1 – 1
Net (repayments)/proceeds (250) – 400 (141) 150 (141)
Interest payments (41) (47) (25) (17) (66) (64)
Accrued interest and amortisation 40 48 30 19 70 67
Fair value adjustment in respect of hedged risk – – 38 (44) 38 (44)
Foreign exchange – – (1) 8 (1) 8
At end of year 747 998 1,090 648 1,837 1,646
89
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
(a) Subordinated unguaranteed bonds
The total carrying value of subordinated unguaranteed bonds, net of accrued interest, capitalised issue costs and discounts,
was £747m (2022: £998m).
On 25 April 2023, the Company redeemed the outstanding maturing £250m of the £500m 5.000% fixed rate subordinated
bonds.
On 25 June 2020, the Company issued £350m of unguaranteed subordinated bonds which mature on 14 June 2035. Interest is
payable on the bonds at 4.125% per annum. In the event of the winding up of the Company, the claims of the bondholders are
subordinated to the claims of other creditors of the Company.
On 8 December 2016, the Company issued £400m of unguaranteed subordinated bonds which mature on 8 December 2026.
Interest is payable on the bonds at 5.000% per annum. In the event of winding up of the Company the claims of the
bondholders are subordinated to the claims of other creditors of the Company.
(b) Senior unsecured bonds
On 12 October 2023, the Company issued €500m of senior unsecured bonds, guaranteed by the Parent, which mature on 12
October 2030. The bonds bear interest on their outstanding principal amount at a fixed rate of 5.00% per annum. The total
hedged fair value of these bonds, including accrued interest, capitalised issue costs and discounts, is £447m. The change in
value arising from interest rate risk is matched, subject to any hedge ineffectiveness, by the fair value of swap contracts in place
to hedge this risk.
On 13 April 2022, Bupa Chile early redeemed £47m of inflation-linked senior unsecured bonds that were issued on 30 June
2012 and originally due to mature on 30 June 2033. This led to a loss of £6m in 2022 charged to the Consolidated Income
Statement within financial expenses (see Note 2.5).
On 25 June 2020, the Company issued £300m of senior unsecured bonds, guaranteed by the Parent, which mature on 14 June
2027. Interest is payable on the bonds at 1.750% per annum. The total hedged fair value of these £300m senior unsecured
bonds, including accrued interest, capitalised issue costs and discounts is £268m (2022: £252m). The change in value arising
from interest rate risk is matched, subject to any hedge ineffectiveness, by the fair value of swap contracts in place to hedge
this risk.
On 5 April 2017, the Company issued £300m of senior unsecured bonds, guaranteed by the Parent, which mature on 5 April
2024. Interest is payable on the bonds at 2.000% per annum. The total hedged fair value of these £300m senior unsecured
bonds, including accrued interest, capitalised issue costs and discounts, is £299m (2022: £288m). The change in value arising
from interest rate risk is matched, subject to any hedge ineffectiveness, by the fair value of swap contracts in place to hedge
this risk.
See Note 25.4 for details on the Group's interest rate hedging activities.
(c) Bank loans and overdrafts
Bank loans and overdrafts are £48m (2022: £108m), which includes a portfolio of loans held in Bupa Chile totalling £29m (2022:
£33m) and loans held in Grupo Bupa Sanitas S.L. of £18m (2022: £3m).
The Group maintains a £900m revolving credit facility which had an initial maturity of December 2026 with two, one-year
extension options. The facility was extended by the two, one-year extension options in November 2022 and November 2023
respectively. The maturity date for the facility is now December 2028. The facility was not drawn down at 31 December 2023
(2022: £70m drawn down). Drawings under the £900m facility are guaranteed by the Company and the Parent.
The overdraft facilities are subject to cross guarantees within the Group. The bank loans and overdrafts bear interest at
commercial rates linked to SONIA for sterling or equivalent for other currencies.
(d) Other unsecured loans
The Group has other unsecured loans of £29m (2022: £nil), which includes a loan from George Health Enterprises Pty Ltd. This
is an unsecured facility due on 30 June 2025 and is repayable at any time prior to the expiry date.
Fair value of financial liabilities
The fair value of a financial liability is defined as the amount for which the liability could be exchanged in an arm’s-length
transaction between informed and willing parties. Fair values of subordinated liabilities and senior unsecured bonds are
calculated based on quoted prices.
The fair values of quoted liabilities in active markets are based on current offer prices. The fair values of financial liabilities for
which there is no active market are established using valuation techniques. These may include reference to the current fair
value of other instruments that are substantially the same and discounted cash flow analysis.
90
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Financial liabilities are categorised into a three-level fair value hierarchy as described in Note 10. Where the fair value of a bond
cannot be otherwise determined from quoted market values, the instrument is discounted using similar duration treasuries and
applying an instrument-specific spread.
An analysis of borrowings by fair value classification is as follows:
2023 2022
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m £m £m £m £m £m £m £m
Subordinated liabilities 678 – – 678 906 – – 906
Senior unsecured bonds 1,033 – – 1,033 545 – – 545
Other unsecured loans – – 29 29 – – – –
Bank loans and overdrafts – 48 – 48 2 106 – 108
Total fair value 1,711 48 29 1,788 1,453 106 – 1,559
The Group does not have any material Level 3 financial liabilities except for the unsecured loan disclosed in (d).
18 Leases
Leases are contracts that convey the right to use an asset for a period of time in exchange for consideration. The majority of the
Group’s leases relate to properties.
The Group’s leases primarily relate to hospitals, care homes, clinics and office buildings. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and conditions. Property leases often include extension and
termination options, open market rent reviews, indexation uplifts or fixed uplifts.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the individual lessee company’s incremental borrowing rate taking into account the duration of the lease. The
lease liability is subsequently measured at amortised cost using the effective interest method, with the finance cost charged to
the Consolidated Income Statement over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability. It is remeasured when there is a change in future lease payments arising from a change in index or rate,
or if the Group changes its assessment of whether it will exercise an extension or termination option. The lease liability is
recalculated using a revised discount rate if the lease term changes as a result of a modification or reassessment of an
extension or termination option.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs
contractually required to restore properties to their original condition, less any lease incentives received. The right-of-use asset,
excluding restoration costs, is typically depreciated on a straight-line basis over the lease term. In addition, the right-of-use
asset may be adjusted for certain remeasurements of the lease liability, such as indexation and market rent review uplifts.
Restoration costs included in the right-of-use asset are amortised over the same term as the corresponding provision, which
may be longer than the IFRS 16 contractual lease term where occupancy of the property is expected to be longer than the
existing contract. The movement of the right-of-use asset is disclosed in Note 4.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a term of 12
months or less or leases that are of low value (£4,000 or less). Lease payments associated with these leases are expensed on
a straight-line basis over the lease term.
2023 2022
Lease liabilities £m £m
At beginning of the year 926 915
Additions arising on business combinations – 4
Additions 76 51
Disposals (5) (1)
Remeasurement 62 56
Interest on lease liabilities 49 46
Repayments (197) (181)
Transfer to liabilities associated with assets held for sale (2) –
Foreign exchange (15) 36
At end of year 894 926
Non-current 763 795
Current 131 131
See Note 25.6 for maturity analysis of lease liabilities.
91
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Expenses
The Consolidated Income Statement includes expenses relating to short-term leases of £2m (2022: £4m) and expenses relating
to leases of low-value assets of £nil (2022: £1m). Depreciation of right-of-use assets is reported in Note 4. Interest on lease
liabilities is reported within financial expenses (see Note 2.5).
Extension options
Some of the Group's property leases contain extension options exercisable by the lessee before the end of the non-cancellable
contract period. The periods covered by extension options are only included in the lease term if the lessee is reasonably certain
to exercise the options. At lease commencement an assessment is performed of whether the lessee is reasonably certain to
exercise the extension options, taking into account factors such as the future timing of the options, economic incentives for the
lessee to exercise the options or the lessee's past practice. The Group reassesses whether it is reasonably certain to exercise
the extension options if there is a significant event or change in circumstances within its control.
As at 31 December 2023, potential discounted future cash outflows of £298m (2022: £358m) have not been included within
lease liabilities because it is not reasonably certain that the related extension options will be exercised.
Termination options
A number of the Group's lease contracts contain termination options. Periods covered by a termination option are only included
in the lease term if the lessee is reasonably certain not to exercise the option.
As at 31 December 2023, potential discounted future cash outflows of £51m (2022: £60m) have not been included within lease
liabilities because it is not reasonably certain that the related termination options will not be exercised.
Future lease commitments
The Group is committed to leases that have not yet commenced to the value of £9m as at 31 December 2023 (2022: £10m).
Variable lease payments
Some leases, predominantly of care home properties in Spain, contain variable lease payments that are based on earnings.
The future potential cash flows arising from variable lease payments not included in the lease liability are estimated at £30m
(2022: £23m).
19 Provision for liabilities and charges
A provision is recognised when the Group is expected to make future payments as a result of a past event.
These payments can result from a legal obligation or a constructive obligation, where an expectation has been created by the
Group. A provision is made where an outflow of resources is probable and where the payments can be reliably estimated. If the
effect is material, provisions are determined by discounting the estimated future payments at a pre-taxation rate that reflects a
current market assessment of the time value of money and, where appropriate, the risks specific to the liability.
Although provisions are made where payments can be reliably estimated, the amounts provided are based on a number of
assumptions which are inherently uncertain and therefore the amounts that are ultimately paid could differ from the amounts
recorded.
Long service
and annual
leave
Customer
remediation and
legal
provisions¹
Provision for
underpayment
of employee
entitlements
Property
restoration
provision
NHS dental
contract
clawback
provision
Contract
provisions
Other
Total
2023 £m £m £m £m £m £m £m £m
At beginning of year¹ 97 13 41 30 50 25 31 287
Interest on obligations – – – 1 – – – 1
Charge for year 65 8 6 1 54 33 37 204
Released in year (11) (5) – (1) – – (3) (20)
Utilised in year (42) (1) (22) (3) (48) – (9) (125)
Transfer to liabilities held
for sale (1) – – (1) – – – (2)
Foreign exchange (7) – (2) – – (1) – (10)
Total provisions for
liabilities and charges 101 15 23 27 56 57 56 335
Non-current 24 8 – 22 – 46 24 124
Current 77 7 23 5 56 11 32 211
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
92
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Long service and annual leave
The long service leave provisions relate to territories where employees are legally entitled to substantial paid leave after
completing a certain length of qualifying service. Uncertainty around both the amount and timing of future outflows arises as a
result of variations in employee retention rates, which may vary based on historical experience. The annual leave provisions
relate to territories where the annual entitlement of leave is not required to be taken within a predetermined time nor does it
expire. Therefore, uncertainty exists around the timing of future outflows as well as around the amount of future outflows due to
wage inflation.
Customer remediation and legal provisions
Customer remediation provisions relate to the costs of compensating customers for losses or damages associated with a failure
to comply with regulations or to treat customers fairly. Legal provisions relate to potential and ongoing legal claims and
represent the discounted fair value of total estimated liabilities. Due to the nature of these provisions, the timing and potential
costs are uncertain.
Provision for underpayment of employee entitlements
In 2021, a provision was established in respect of underpayments of employee entitlements affecting some current and former
employees, following an extensive proactive pay compliance review carried out in Australia and New Zealand. The Group
anticipates that the remaining remediation payments will be made during 2024.
Property restoration provisions
Property restoration provisions relate to the estimate of costs to be incurred by the Group in its capacity as a lessee, when
dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the
condition required by the terms and conditions of the lease. Due to potential future renewals of leases, the timing and potential
costs are uncertain.
NHS dental contract clawback provision
A provision is held in respect of amounts that are expected to be deducted from future NHS contracts held by Bupa Dental Care
UK, as a result of not meeting required treatment targets set by the NHS in the current contract period.
Contract provisions
Provisions are held in respect of amounts potentially due to third parties to settle liabilities arising in relation to performance
under certain contracts. Due to the nature of the matters arising, the timing and potential costs are uncertain.
Other
Other provisions include regulatory provisions relating to settlements, penalties and levies payable to the Group’s various
regulators and other smaller provisions, along with contingent consideration related to earn-out payable on acquisitions of
dental practices in Poland.
93
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
20 Trade and other payables
Trade and other payables arise in the ordinary course of business.
2022
2023 restated¹
Note £m £m
Accruals 754 697
Refundable accommodation deposits (a) 464 455
Amounts owed to parent 118 119
Trade payables¹ 311 295
Other payables¹ 193 196
Occupational right agreement liabilities (b) 387 374
Deferred revenue¹ (c) 116 106
Social security and other taxes 74 66
Total trade and other payables 2,417 2,308
Non-current 16 23
Current¹ 2,401 2,285
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
Trade and other payables (excluding deferred revenue) are carried at amortised cost. The carrying value of trade and other
payables is a reasonable approximation of their fair value. Information regarding the maturity of trade payables, other payables,
occupational rights agreement liabilities, refundable accommodation deposits and accruals is shown in Note 25.6.
(a) Refundable accommodation deposits
Refundable accommodation deposits are non-interest-bearing deposits paid by some residents of care homes held in Bupa
Aged Care Australia as payment for a place in the care home facility. These deposits are repayable at any time when the
resident leaves the facility and are therefore not discounted but are recognised as current liabilities in the Consolidated
Statement of Financial Position. The deposits are recorded as the proceeds received, net of amounts deducted at the election
of the resident.
(b) Occupational right agreement liabilities
Occupational right agreement liabilities represent the amount payable to a resident on termination of the resident's occupation
rights to an independent living unit in a retirement village in New Zealand or Australia or a care home resident occupying a care
suite in New Zealand. The liability varies according to the agreement with the resident. Changes in the value of the liability are
recorded as an expense in the Consolidated Income Statement. Residents have the right to cancel their residency agreement
with the Group at any time. As such, the liability is not discounted but is recognised as a current liability in the Consolidated
Statement of Financial Position. Occupational right agreement liabilities are held net of deferred management fees and
amenities fees receivable.
(c) Deferred revenue
The total balance of £116m (2022 (restated): £106m) includes £80m (2022: £79m) of deferred revenue under IFRS 15, related
primarily to care home government funding received in advance. The liability is released and recognised as revenue as the
services are provided and the performance obligations are satisfied.
Changes in this deferred revenue balance during the year are as follows:
2023 2022
£m £m
At beginning of year 79 81
Revenue recognised (437) (390)
Revenue deferred 440 384
Foreign exchange (2) 4
At end of year 80 79
Revenue recognised includes £72m (2022: £75m) of revenue that was deferred at the beginning of the year. £77m (2022:
£72m) of revenue deferred as at 31 December 2023 will be recognised during 2024 as the performance obligations are
satisfied. £3m (2022: £7m) of revenue deferred as at 31 December 2023 will be recognised over the remaining contract period.
94
297
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
21 Restricted Tier 1 (RT1) notes
The RT1 notes meet the classification of equity and are presented as a separate category of equity in the Consolidated
Statement of Financial Position at an amount equal to the proceeds of issue less transaction costs. RT1 coupons are
recognised directly in the Consolidated Statement of Changes in Equity, net of tax, upon payment.
2023 2022
£m £m
Restricted Tier 1 notes 297
On 24 September 2021, the Company issued £300m of RT1 notes with a fixed coupon of 4.000% paid semi-annually in arrears.
Transaction costs of £3m were recognised in respect of the issue. The total coupon paid during the year was £12m (2022:
£12m).
The RT1 notes are perpetual, with no fixed maturity or redemption date. The notes have a first call date of 24 March 2032 and
interest is payable at the sole and absolute discretion of the Company, with cancelled interest providing no rights to the holder
of the notes nor being considered a default. The RT1 notes are therefore treated as equity. The notes are convertible to share
capital of the Company on the occurrence of certain trigger events.
22 Share capital
2023 2022
£m £m
Allocated, called-up and fully paid
200,050,000 ordinary shares of £1 each 200
23 Business combinations and disposals
A business combination refers to the acquisition of a controlling interest in a business, which is further defined as an integrated
set of activities and assets that is capable of being conducted and managed for the purpose of providing economic benefits to
the owners. A disposal refers to the sale of a subsidiary, liquidation or closure of a company or a business.
Business combinations are accounted for using the acquisition method. Identifiable assets and liabilities acquired and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any
non-controlling interests are recognised as a proportionate share of the acquiree’s net identifiable assets.
The identification and valuation of intangible assets arising on business combinations is subject to a degree of estimation and
judgement. We engage independent third parties to assist with the identification and valuation process. In valuing these
intangible assets, market-accepted methodologies have been applied. Customer relationships are valued using methodologies
such as the Multi-Period Excess Earnings Method (where the value of an intangible asset is equal to the present value of the
after-tax cash flows attributable only to that intangible asset). Brands and trademarks are valued using methodologies such as
the Relief from Royalty Method (applying an estimated royalty rate to the projected sales relating to each asset over the
economic life).
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable assets acquired is recorded as
goodwill.
Acquisition accounting must be completed within 12 months of the transaction date.
Costs related to the acquisition are expensed as incurred.
(a) 2023 acquisitions
During the year, the Group made acquisitions for a total consideration of £63m, recognising net assets on acquisition of £26m.
In June 2023, the Group acquired the insurance and medical business of Asefa, S.A. Seguros y Reaseguros, an insurance
company specialising in the construction industry that operates in Spain, for consideration of £32m. Intangible assets consisting
of customer relationships and computer software totalling £18m, other net liabilities of £(1)m and resulting goodwill of £15m
were recognised on acquisition.
Acquisitions with a total consideration of £13m were made in Poland over the course of the year as the Group continued to
grow and enter into new market segments. These included the acquisitions of Orthos, Stomatologia Makara and 4Dent for
consideration of £13m. Intangible assets consisting of brands/trademarks of £1m and other net assets of £4m were recognised
in respect of the acquisitions along with associated goodwill of £8m.
95
200
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Acquisitions with a total consideration of £15m were made in Brazil as part of a strategic plan to acquire new businesses in the
region. These included the acquisitions of Instituto de Previdência e Assistencia Odontologia Ltda and Vacinar Centro De
Imunizacao Ltda for consideration of £8m and £7m respectively. Intangible assets consisting of customer relationships of £3m
were recognised in respect of the acquisitions along with associated goodwill of £12m.
In addition, in December 2023, the Group acquired Smart Clinics Limited, a private members healthcare company operating in
the UK, for consideration of £4m; other net assets of £1m and resulting goodwill of £3m were recognised on acquisition.
There was an adjustment to goodwill and consideration in respect of the prior year acquisitions in Poland. Both goodwill
acquired and consideration decreased by £1m.
Included in the Group Consolidated Income Statement is revenue of £18m and a profit before taxation of £1m in relation to
those businesses acquired in the year. If the acquisition date of the businesses acquired during the year had been 1 January
2023, revenue of £26m and a profit before taxation of £3m would have been recorded by the Group for the year ended
31 December 2023.
The following table summarises acquisitions recognised during the year:
Fair value
£m
Intangible assets 22
Property, plant and equipment 5
Financial investments 1
Trade and other receivables 2
Trade and other payables (2)
Insurance contract liabilities (2)
Net assets acquired 26
Net assets acquired 26
Goodwill 37
Consideration 63
Consideration satisfied by:
Cash 61
Deferred and contingent consideration 2
Total consideration paid 63
Purchase consideration settled in cash 61
Net cash outflow on acquisition 61
Settlement of deferred and contingent consideration 2
Net cash outflow associated with acquisitions 63
(b) 2023 disposals
During 2023, the Group made disposals for a total consideration of £31m, recognising net loss on disposals of £1m.
The Group completed the sale of 4 care homes and a retirement village in Bupa Villages and Aged Care New Zealand for a
consideration of £11m and the sale of 3 care homes within Bupa UK Care Services for a consideration of £14m, resulting in a
net gain on disposal of £3m.
In addition, the Group completed the sale of 12 dental clinics in the UK for a consideration of £4m, resulting in a net gain on
disposal of £3m. Other minor disposals in the period included 5 dental clinics in Australia.
The Group liquidated Amedex insurance company resulting in a net gain on disposal of £2m and liquidated Sonorad company
in Integramedica business resulting in a net loss on disposal of £8m. Other minor liquidations in the period included the closure
of 2 clinics in China.
(c) 2022 acquisitions
During 2022, the Group made acquisitions for a total consideration of £23m, recognising net assets on acquisition of £9m.
Acquisitions with a total consideration of £13m were made in Poland over the course of the year as the Group continued to
expand its presence in the region. This included the acquisition of Med-Polonia Sp. z.o.o in April 2022 for a consideration of
£7m. Total net assets of £4m were recognised in respect of the acquisitions along with associated goodwill of £9m.
96
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
In addition, in November 2022, the Group acquired Bité Medica Hospital in Mexico for a consideration of £9m. Net assets of
£5m and resulting goodwill of £4m were recognised on acquisition.
There was an adjustment to goodwill and consideration in respect of the prior year Citomed acquisition. Both goodwill acquired
and consideration increased by £1m.
Included in the Group Consolidated Income Statement is revenue of £5m and a loss before taxation of £1m in relation to those
businesses acquired in the year. If the acquisition date of the businesses acquired during the year had been 1 January 2022,
revenue of £14m and a loss before taxation of £2m would have been recorded by the Group for the year ended 31 December
2022.
(d) 2022 disposals
In June 2022, the Group sold its portfolio of life insurance in Bupa Global Latin America to a third party for £(3)m, realising a net
loss on disposal of £3m. In June 2022 the Group closed the Bupa representative office in China, resulting in a net loss on
disposal of £4m. Other minor disposals in the year included individual dental businesses and care homes in New Zealand,
Australia and the UK resulting in a net gain on disposal of £3m.
24 Capital management
The Parent, Bupa, is a company limited by guarantee, with no shareholders. It is funded through retained earnings and
borrowings. Bupa's capital management objective is to maintain sufficient capital to protect the interests of its customers,
investors, regulators and trading partners while deploying capital efficiently and managing risk to enable Bupa to continue to
deliver its purpose in a sustainable manner. All profits are reinvested to develop Bupa's business for the benefit of current and
future customers.
Bupa is subject to the requirements of the Solvency II framework, as enacted in the UK.
Bupa must hold sufficient capital to cover its Group Solvency Capital Requirement (SCR), which takes account of the risks in
the Group, including those related to non-insurance businesses.
Bupa's SCR is calculated in accordance with the Standard Formula specified under Solvency II. Bupa has obtained approval
from the PRA to substitute the insurance premium risk parameter in the Standard Formula with a Group Specific Parameter
(GSP) which reflects Bupa’s own loss experience.
The capital positions of the Bupa Group and its regulated insurance entities are kept under regular review and these are
reported quarterly to the Board.
Bupa's capital resources are managed in line with the Bupa Group Capital Management Policy. While Bupa is subject to the
Solvency II requirements at a consolidated level, all regulated entities within the Group maintain sufficient capital resources to
meet any minimum capital requirement required by respective local regulators. In addition, Bupa and its regulated entities are
required to maintain a buffer over the regulatory minimum requirements in line with their capital risk appetites. During the year,
Bupa and its regulated entities complied with all external capital requirements. The ability of the Group’s regulated entities to
transfer funds to parent entities is subject to local solvency requirements.
Bupa has target ranges for solvency and leverage ratios with a view to maintaining investment grade access to both senior and
subordinated bond markets. Bupa as a whole is not rated by any rating agency. Individual debt issues and certain subsidiaries
within the Group have public ratings from both Fitch and Moody’s.
At least annually, the Bupa Group carries out an Economic Capital Assessment (ECA) in which it makes its own quantification of
how much capital is required to support its risks. The ECA is used to assess how well the Standard Formula SCR reflects the
Group’s actual risk profile.
The ECA forms part of the Own Risk and Solvency Assessment (ORSA) which comprises all the activities by which the Group
establishes the level of capital required to meet its solvency needs over the planning period given Bupa’s strategy and risk
appetite. The conclusions from these activities are summarised in the ORSA report which is reviewed by Bupa's Risk
Committee, approved by the Board and submitted to the PRA annually.
Bupa’s eligible Own Funds include the Group IFRS net assets (£7.0bn) valued on a Solvency II basis, together with eligible
subordinated liabilities, subject to adjustments for non-available assets and non-controlling interests.
As at 31 December 2023, Bupa’s eligible Own Funds, determined in accordance with the Solvency II valuation rules, were
£5.0bn¹ (2022: £4.9bn), which was in excess of the Bupa Group estimated SCR of £2.9bn¹ (2022: £2.7bn). This represented a
solvency coverage ratio of 175%¹ (2022: 181%).
97
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
On 8 January 2024, the Group acquired additional shares in Indian health insurer Niva Bupa Health Insurance Company
Limited, resulting in a controlling shareholding. The impact of this acquisition is an estimated 8 percentage point reduction to the
Group solvency coverage ratio.
1. The Solvency II Capital position (eligible Own Funds, SCR and coverage ratio) is estimated and unaudited.
25 Risk management
The Bupa Risk Committee has responsibility to the Board for the oversight of risk. It recommends to the Board a risk appetite
that reflects Bupa’s purpose and expresses the degree of risk Bupa should accept in delivering on its strategy.
Bupa operates a ‘three lines’ approach to the governance of risk management:
1. Business management and employees are responsible for the identification and assessment of risks and controls.
2. Risk, Compliance and Clinical Governance functions provide support and challenge the completeness and accuracy of
risk assessments and the adequacy of mitigation plans.
3. Internal Audit provides independent and objective assurance on the robustness of the risk management framework, and
the appropriateness and effectiveness of internal controls.
The operations of the risk management framework and current principal risks of the Group and how they are mitigated are
described on pages 15-18.
The Group has adopted a risk management strategy that endeavours to mitigate these risks, which is approved by the Board. In
managing these exposures, the Corporate Finance Executive Committee reviews and recommends changes to the
management of insurance and investment risks.
The Group has exposure to a number of financial risks associated with its insurance business and from its use of financial
instruments. These have been categorised into the following types of financial risk, and details of the nature, extent, and how
the Group has managed these risks is described below.
– Insurance risk
– Market risk
– Credit risk
– Liquidity risk
25.1 Insurance risk
Insurance risk only affects the insurance entities in the Group (see Note 12). It consists of underwriting risks which relate to the
potential inadequacy of insurance premiums as well as reserving risk which relates to the potential inadequacy of claims
provisions.
(i) Underwriting risk
Underwriting risk refers to the potential deviation of claims experience from the actuarial assumptions used for setting insurance
premium rates which could lead to premium inadequacy. Underwriting risk is therefore concerned with both the setting of
adequate premium rates (pricing risk) and the management of claims (claims risk) for insurance policies underwritten by the
Group.
Pricing risk
Pricing risk relates to the setting of adequate premium rates taking into consideration the volume and characteristics of the
insurance policies issued. External influences on pricing risk include (but are not limited to) competitors’ pricing and product
design initiatives, regulatory environments and claims. The level of influence from these external factors can vary significantly
between regions and largely depends on the maturity of health insurance markets and the role of the regulator. Actuarial
analysis performed on a regular basis combined with an understanding of local market dynamics and the ability to change
insurance premium rates when necessary are effective risk mitigations.
The direct impacts of climate change on health are unclear but these impacts are likely to emerge over time and the short-tailed
nature of the Group's products allows for responses to be made to any developments, although this can be limited by pricing
controls in some markets.
In every health insurer in the Group, the dominant product or policy category is an annually renewable health insurance
contract. This permits insurance premium rate revisions to respond quickly to changes in customer risk profiles, claims
experience and market considerations.
98
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The ability to review premium rates is a significant mitigant to pricing risk. The Group does not underwrite a significant amount
of health insurance business that commits it to cover risks at premiums fixed beyond a 12-month period from inception or
renewal.
Claims risk
Claims risk is the risk of claims exceeding the amounts assumed in the premium rates. This can be driven by adverse
fluctuations in the amount and incidence of claims incurred and external factors such as medical inflation.
Claims risk is managed and controlled by means of pre-authorisation of claims, outpatient benefit limits, the use of consultant
networks and agreed networks of hospitals and charges. Specific claims management processes vary across the Group
depending on local requirements, market environment and practice.
Identified recent adverse claims experience is reflected in these Consolidated Financial Statements in claims paid and
movements in the LFIC. Any other adverse claims experience, for example, which is caused by external factors such as
medical inflation, will be reflected in the next financial year’s Consolidated Financial Statements.
Generally, the Group’s health insurance contracts provide for the reimbursement of incurred medical expenses, typically in-
hospital for treatment related to acute, rather than chronic, medical conditions. The contracts do not provide for capital sums or
indemnified amounts. Therefore, claims experience is underpinned by prevailing rates of acute sickness events giving rise to
hospitalisations. Claims risk is generally mitigated by having processes to ensure that both the treatments and the resulting
reimbursements are appropriate.
(ii) Reserving risk
Reserving risk is the risk that provisions made for claims prove to be insufficient in light of later events and claims experience.
There is a relatively low exposure to reserving risk compared with underwriting risk due to the very short-term nature of the
claims development patterns. The short-term nature of the Group’s health insurance contracts means that movements in claims
development assumptions are generally not significant. The development claims settlement patterns are kept under regular
review to maintain the validity of the assumptions and, hence, the validity of the estimation of recognised health insurance
liabilities. In most jurisdictions, the Group has established fee agreements with healthcare provider groups to limit the impact of
unexpected claims cost inflation.
The amount of claims provision at any given time that relates to potential claims payments that have not been resolved within
one year is less than 5% in the context of the Group. The small provisions that relate to longer than one year can be calculated
with reasonable confidence.
(iii) Other risks related to underwriting health insurance business
Except for the circumstances described in Note 12, claims provisions are not discounted as claims are expected to be settled in
one year or less from the date that the claim has been incurred. The short-term nature of the claims means that changes in
interest rates have no impact on reserving risk. In addition, the future premium income and claims outflows of health insurance
premium liabilities are largely unaffected by changes in interest rates. However, changes to inflationary factors such as wage
inflation and medical cost inflation affect the value of future claims outflows.
The Group’s health insurance contracts do not contain embedded derivatives; however; the Group is exposed to foreign
currency risk through some of the insurance liabilities which are settled in a local currency. Where possible, these liabilities are
matched to assets in the relevant currency to hedge this exposure, as described in Note 25.3.
The majority of the Group’s health insurance activities are single-line health portfolios. Even though only one line of business is
involved, the Group does not have significant concentration of insurance risk for the following reasons:
• Broad geographical diversity across several markets – across the UK, Spain, Australia, Latin America, Türkiye, the
Middle East and Hong Kong.
• Product diversity between domestic and expatriate, and individual and corporate health insurance.
• A variety of claims type exposures across diverse medical providers: consultants, clinics, individual hospitals and
hospital groups.
The Group as a whole, and its principal health insurance entities, are well diversified in respect of insurance risk. Only in very
select circumstances does the Group use reinsurance to transfer risk. The reinsurance used does not give rise to a material
counterparty default credit risk exposure for the Group. Restrictions are in place on the credit quality and amount of reinsurance
ceded to individual counterparties.
(iv) Catastrophe risk
A natural disaster or a man-made disaster could potentially lead to a larger than expected number of claims being received over
a short period of time, resulting in higher than expected claims costs. In the majority of jurisdictions, the Group is not
contractually liable for such claims. Risks are reduced to a limited extent by excess of loss reinsurance provided by third party
reinsurers. Bupa’s Group Actuarial function oversees and implements strategic improvements to ensure the overall adequacy of
these arrangements.
99
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
25.2 Market risk
Market risk is the risk of adverse financial impact due to changes in fair values or future cash flows of financial instruments from
fluctuations in interest rates, foreign exchange rates, commodity prices, credit spreads and equity prices. The focus of the
Group’s long-term financial strategy is to facilitate growth without undue balance sheet risk.
In order to reduce the risk of assets being insufficient to meet future policyholder obligations, the Group actively manages
assets using an approach that balances duration, quality, diversification, liquidity and investment return.
The Group invests in a limited portfolio of return-seeking assets (principally bonds and loans) via the regulated entities in the
UK and Australia. These assets totalled £671m as at 31 December 2023 (2022: £635m). These entities use value at risk
analysis (VaR) to quantify risk, taking account of asset volatility and correlation between asset classes.
In addition to local VaR analysis, the Group applies an aggregate VaR limit to all cash and investments within the regulated
insurance entities. The Group also limits the contribution of the combined investment risk charge from all cash and investments,
in both insurance and provision businesses, to a maximum percentage of the Group’s SCR.
25.3 Foreign exchange risk
The Group is exposed to foreign exchange risks arising from commercial transactions and from recognising assets, liabilities
and investments in overseas operations. The Group is exposed to both transaction and translation risk. The former is the risk
that a company’s cash flows and realised profits may be impacted by movements in foreign exchange rates. The latter arises
from translating the financial statements of a foreign operation into the Group’s presentational currency.
The results and financial position of the Group’s foreign entities that do not have a functional currency of sterling are translated
into sterling as follows:
• Assets and liabilities at the exchange rate at the reporting date.
• Income and expenses at average rates for the period.
All foreign exchange differences arising on translation are recognised initially in other comprehensive income, and are only
subsequently reclassified to the Consolidated Income Statement in the period in which the entity is eventually disposed.
Foreign currency transactions in the Group’s subsidiaries are measured using the functional currency of the subsidiary, which is
based on the primary economic environment in which the subsidiary operates. The transactions are translated into the
functional currency at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange
rate ruling at the reporting date; the resulting foreign exchange gain or loss is recognised in operating expenses, except where
the gain or loss arises on financial assets or liabilities, when it is presented in financial income or financial expense as
appropriate.
Non-monetary assets and liabilities denominated in a foreign currency at historical cost are translated using the exchange rate
at the date of the transaction; therefore, no exchange differences arise.
Non-monetary assets and liabilities denominated in a foreign currency at fair value are translated using the exchange rate ruling
at the date that the fair value was determined. Transactional foreign exchange differences are recognised in operating
expenses.
Transactional exposures arise as a result of differences between the currency of local revenues and claims, typically in the case
of international private medical insurance. The currency exposures are deemed to be acceptable but are kept under review by
management.
As disclosed in Note 1.7, Türkiye became a hyperinflationary economy during 2022. As a consequence, IAS 29 is applied and
the results and balances for the Group's Turkish operations have been adjusted for changes in the general purchasing power of
the Turkish lira. In addition, all Turkish lira amounts, including transactions in the Income Statement during the year, are
translated to the Group's presentation currency of sterling, using the closing exchange rate in effect on 31 December 2023. The
impact of this adjustment is recorded within other foreign exchange translation differences in the Consolidated Statement of
Comprehensive Income and within the foreign exchange translation reserve in the Consolidated Statement of Financial
Position. The Group recognises the remaining exchange difference arising on consolidation within other foreign exchange
translation differences through other comprehensive income in the foreign exchange translation reserve.
100
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The following significant exchange rates applied during the year:
Average rate Closing rate
2023 2022 2023 2022
Australian dollar 1.87 1.78 1.87 1.77
Brazilian real 6.21 6.38 6.19 6.38
Chilean peso 1,045.33 1,076.32 1,123.02 1,023.92
Danish krone 8.57 8.73 8.61 8.39
Euro 1.15 1.17 1.15 1.13
Hong Kong dollar 9.74 9.68 9.95 9.42
Mexican peso 22.05 24.88 21.62 23.54
New Zealand dollar 2.03 1.94 2.02 1.91
Polish zloty 5.22 5.50 5.01 5.28
Saudi riyal 4.67 4.64 4.78 4.54
Turkish lira¹ 37.66 22.58 37.66 22.58
US dollar 1.24 1.24 1.27 1.21
1. Closing rate of Turkish lira applied to average rate following the application of IAS 29. See Note 1.7 for details.
Foreign exchange hedging activities
The Group manages its exposure to foreign exchange risk by entering into hedging transactions using derivative financial
instruments. The Group also uses non-derivative financial instruments, specifically foreign currency borrowings to hedge foreign
currency risk on its net investments in foreign operations.The Group applies fair value, cash flow and net investment hedge
accounting.
The hedging relationship between a hedging instrument and a hedged item is formally documented. Documentation includes
the risk management objectives and the strategy in undertaking the hedge transaction.
(a) Fair value hedges
Where a derivative financial instrument hedges the change in fair value of a recognised asset or liability or an unrecognised firm
commitment, any gain or loss on remeasurement of the hedging instrument at fair value is recognised in the Consolidated
Income Statement. The hedged item is fair valued for the hedged risk with any gain or loss on remeasurement being recognised
in the Consolidated Income Statement.
(b) Cash flow hedges
Where a derivative financial instrument hedges the change in cash flows related to a recognised asset or liability, or a highly
probable forecast transaction, it is accounted for as a cash flow hedge.
The effectiveness of a cash flow hedge is the degree to which the cash flows attributable to a hedged risk are offset by changes
in the cash flows of the hedging instrument. The effective portion of any gain or loss on the hedging instrument is recognised
directly in other comprehensive income until the forecast transaction occurs, i.e. when a hedged interest payment is recognised
in the Consolidated Income Statement, the related hedging gain or loss is also recycled to the Consolidated Income Statement,
and when a hedged business combination is recognised, the hedging gain or loss is also recycled to goodwill in the
Consolidated Statement of Financial Position. The ineffective portion of the gain or loss is always recognised in the
Consolidated Income Statement.
If the hedged cash flow is no longer expected to take place, all deferred gains and losses are released to the Consolidated
Income Statement immediately. If the hedging instrument or hedge relationship is terminated but the hedged transaction is still
expected to occur, the cumulative gain or loss at that point remains in other comprehensive income and is recognised in
accordance with the above policy when the transaction occurs.
101
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The impact of cash flow hedging activity is set out below.
2023 2022
£m £m
Notional amounts 261 –
Carrying amount – Liabilities (7) –
Financial statement line item Derivatives –
Change in value used for calculating hedge ineffectiveness (7) –
Hedging loss recognised in other comprehensive income (7) –
Consolidated Income Statement line item (for ineffectiveness) Financial expense –
Consolidated Income Statement line item (for reclassifications) Financial expense –
Financial statement line item (for reclassifications) Goodwill –
Change in value used for calculating hedge ineffectiveness (7) –
Amounts in reserves for continuing hedges (7) –
In 2023, foreign currency swap contracts of INR 27,000m (£261m) were entered into to hedge the cash outflows in relation to
the acquisition of Niva Bupa Health Insurance Company Limited completed in 2024.
As at 31 December 2023, the cash flow hedge reserve amounts to £7m (2022: £nil).
(c) Net investment hedging
The Group hedges appropriate levels of its net asset exposures after taking into consideration key regulatory and financial
metrics. In using derivatives to hedge currency risk, the Group designates the forward element of foreign currency forward and
swap contracts as hedging instruments. The Group hedges the net investments only to the extent of the notional amount of the
foreign exchange leg of the hedging derivative.
Where the Group uses foreign currency denominated debt to hedge currency risk, the Group designates the foreign currency
exposure on the debt as the hedge of the change in the value of the investment in foreign operation attributable to a change in
the spot rate. Changes in foreign currency exposure on the debt are determined in accordance with IAS 21 The Effects of
Changes in Foreign Exchange Rates.
Changes in the fair value of the hedging instruments are initially recognised in other comprehensive income to the extent that
the hedge is effective. Exchange differences arising on the consolidation of these net assets are deferred in equity until the
foreign operation is disposed of or liquidated, when the differences are then recognised in the Consolidated Income Statement
as part of the gain or loss on disposal.
To assess hedge effectiveness, the Group determines the economic relationship between the hedging instruments and the
hedged items by comparing changes in the fair value of the hedging instrument with changes in the fair value of a hypothetical
derivative, representing the net investment. An amount equal to the excess of the cumulative change in the fair value of the
hedging instruments over the cumulative change in the fair value of the hypothetical derivative, is recorded in the Consolidated
Income Statement as ineffectiveness. When using derivatives as hedging instruments, ineffectiveness is expected to arise from
the effect of the counterparty and the Group’s credit risk on the fair value of the derivative which is not reflected in the
hypothetical derivative. Ineffectiveness could also arise from currency basis, which is present in the hedging derivative but
excluded from the hypothetical derivative.
102
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Effect of foreign exchange hedging transactions
The table below shows the notional amounts and carrying values of the currency contracts and other interest-bearing liabilities
held by the Group to hedge its net investment in foreign operations as at the end of the year, along with the impact of net
investment currency hedging activity.
2023 2022
£m £m
Notional amounts 1,527 1,592
Carrying amount – Assets 22 5
Carrying amount – Liabilities¹ (458) (53)
Financial statement line item
Derivatives/Other
interest-bearing
liabilities
Derivatives
Change in value used for calculating hedge ineffectiveness 73 (82)
Hedging gain/(loss) recognised in other comprehensive income 73 (80)
Hedge ineffectiveness recognised in Consolidated Income Statement – (2)
Consolidated Income Statement line item (for ineffectiveness) Financial expense Financial expense
Consolidated Income Statement line item (for reclassifications) Financial expense Financial expense
Change in value used for calculating hedge ineffectiveness 73 (82)
Amounts in reserves for continuing hedges 73 (82)
1. 2023 includes €500m of senior unsecured bonds which has been designated as a hedge of net investment in foreign operations. A gain of £1m has been
recognised in hedging gain recognised in other comprehensive income and change in value used for calculating hedge ineffectiveness. Details of the bond are
included in Note 17.
In the Consolidated Financial Statements, where a loan between Group entities results in an exchange gain or loss, then it is
recognised in the Consolidated Statement of Comprehensive Income to the extent that it relates to the Group’s net investment
in overseas operations.
The Group has exposure to both translational and transactional foreign exchange risk arising from its overseas operations.
Currency exposures as at 31 December 2023 are as follows:
Net currency
exposure¹ Currency contracts
Net currency
exposure including
hedges
£m £m £m
2023
Australian dollar 2,492 (548) 1,944
Euro¹ 452 (76) 376
New Zealand dollar 564 (262) 302
US dollar 128 (408) (280)
Other 1,596 324 1,920
Total foreign currency denominated net assets 5,232 (970) 4,262
Percentage of Group net assets 75% 61%
1. Euro net currency exposure includes €500m of senior unsecured bonds utilised as a hedging instrument. Details of the bond included in Note 17.
Net currency
exposure including
Net currency hedges
exposure (restated)¹ Currency contracts (restated)¹
£m £m £m
2022 restated¹
Australian dollar¹ 2,743 (578) 2,165
Euro¹ 993 (502) 491
New Zealand dollar 571 (277) 294
US dollar¹ 287 (368) (81)
Other¹ 1,461 89 1,550
Total foreign currency denominated net assets 6,055 (1,636) 4,419
Percentage of Group net assets 88% 65%
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
103
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Currency risk exposure for insurance contracts under IFRS 17 is provided below:
Net insurance
contracts Reinsurance held Total
£m £m £m
2023
Australian dollar (748) – (748)
Euro (318) 2 (316)
US dollar (238) 14 (224)
Other (702) 6 (696)
Total foreign currency denominated insurance/reinsurance
contracts (2,006) 22 (1,984)
Percentage of Group net assets 29% 28%
Net insurance
contracts Reinsurance held Total
£m £m £m
2022
Australian dollar (660) – (660)
Euro (278) 1 (277)
US dollar (242) 11 (231)
Other (616) 3 (613)
Total foreign currency denominated insurance/reinsurance
contracts (1,796) 15 (1,781)
Percentage of Group net assets 26% 26%
The impact of reasonably possible changes in sterling against the currencies below, with all other variables constant, would
have (decreased)/increased profit and hedged equity by the amounts shown below. As currency risk is managed by the Group
on a net asset basis, the impact of reasonably possible changes in the currencies of insurance contract liabilities and
reinsurance contract assets are not considered separately.
These tables consider both translation and transaction risk.
Strengthening 10% Weakening 10%
Losses included in
Gains included in
Consolidated
Income Statement
(Losses)/gains
Consolidated Income
included in equity
Statement
Gains/(losses)
included in equity
£m £m £m £m
2023
Australian dollar (5) (177) 6 216
Euro (19) (34) 23 42
New Zealand dollar (1) (27) 1 34
US dollar (2) 25 3 (31)
Other (11) (174) 14 212
Total sensitivity (38) (387) 47 473
Strengthening 10% Weakening 10%
(Losses)/gains
Gains/(losses)
included in
included in
Consolidated Income
(Losses)/gains
Consolidated Income
Gains/(losses)
Statement
included in equity
Statement
included in equity
£m £m £m £m
2022 restated¹
Australian dollar¹ (24) (197) 29 241
Euro¹ (23) (45) 29 55
New Zealand dollar – (27) – 33
US dollar¹ 4 7 (5) (9)
Other¹ 13 (140) (16) 171
Total sensitivity (30) (402) 37 491
1. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
104
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
25.4 Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates.
The Group is exposed to interest rate risk arising from fluctuations in market rates. This affects the return on variable-rate
assets, the cost of variable-rate liabilities and the Statement of Financial Position value of its investment in fixed rate bonds.
Variable-rate assets represent a natural hedge for variable-rate liabilities.
The net asset balance on which the Group is exposed as at 31 December 2023 was £2,730m (2022: £2,154m). The rate at
which maturing deposits are reinvested, in currencies such as sterling and Australian dollar where the Group has a significant
variable-rate net asset exposure, represents a significant potential risk to the Group.
The Group has also used interest rate swaps to manage interest rate exposure whereby the requirement to settle interest at
fixed rates has been swapped for variable rates. This increases the ability to match variable-rate assets with variable-rate
liabilities.
Variable loans are repriced at intervals of between one and six months. Interest is settled on all loans in line with agreements
and is settled at least annually.
The impact of a reasonably possible rise of 100 basis points (bps) in interest rates at the reporting date, on an annualised basis,
would have decreased equity by £1m and profit by £2m (2022: decrease of £3m and £2m respectively). The impact of a fall of
100 bps in interest rates, on an annualised basis, would have the inverse effect. This calculation is based on the assumption
that all other variables, in particular foreign exchange rates, remain constant.
Interest rate hedging activities
The Group applies fair value hedges and cash flow hedges to hedge its exposure to interest rate risk on its borrowings.
As at 31 December 2023, interest rate swaps totalling £817m (2022: £600m) have been entered into, to swap the fixed rate
coupon of the two £300m senior unsecured bonds and 50% of the €500m senior unsecured bond, to a variable rate. These
interest rate swaps are designated as fair value hedges of the underlying interest rate risk on the debt. The fair value movement
in the bonds attributable to the hedged risk for the year ended 31 December 2023 amounted to a gain of £38m (2022: gain of
£43m). The fair value movement on the interest rate swaps amounted to a loss of £38m (2022: loss of £45m) and the fair value
and carrying value of this derivative is a £23m liability (2022: £61m). The €500m senior unsecured bond was issued on 12
October 2023 and therefore 2022 comparatives will not include this bond.
25.5 Credit risk
Credit risk is the risk that those that are in debt to the Group default on their obligations. Examples of credit risk would be non-
payment of a trade receivable or a corporate bond failing to repay the capital sum and related interest.
Investment exposure with external counterparties is managed by the Enterprise Treasury Policy which ensures that there is a
sufficient spread of investments and that cash and investment counterparties are rated at least A/A2 unless otherwise
approved. The Corporate Finance Executive Committee approves the full list of counterparties used on a periodic basis. There
are exceptions to the A/A2 rating requirement for a number of reasons including where local country ratings are below this level
and due to certain regulatory and commercial requirements in specific markets.
In estimating ECL on financial investments, the Group reviews individual issuer's default probability based on a credit score
model over a 12-month horizon to determine whether there has been a material change in an issue score from the preceding
period. Where a specific default score is not available for a single investment, average default probabilities for instruments with
a similar credit rating are used. Determining when an issuer is in financial difficulty and that a lifetime ECL allowance is
required, requires the use of judgement. The Group considers a number of factors including economy wide and industry specific
risk factors, issuer’s financial and liquidity position, near-term prospects, credit rating declines and known breaches of contracts
in determining financial difficulty.
When there is objective evidence of impairment of a financial asset as a result of one or more events and the event has an
impact on the estimated future cash flows of the assets that can be reliably estimated, the Group considers such investment as
credit impaired. To the extent that an investment is impaired, it is written down to its recoverable amount, measured as the
present value of expected future cash flows discounted at the original effective interest rate on the instrument. Subsequent
recoveries in excess of the written-down carrying value are credited to the Consolidated Income Statement.
105
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The investment profile (including financial investments, restricted assets and cash and cash equivalents) as at 31 December is
as follows:
2023 2022
£m £m
Investment grade counterparties 5,194 4,541
Non-investment grade counterparties 844 697
Total 6,038 5,238
Investment grade counterparties include restricted assets of £118m (2022: £117m). Non-investment grade counterparties are
those rated below BBB-/Baa3, and mainly comprise corporate bonds, government bonds, deposits with credit institutions and
pooled investment funds of £659m (2022: £565m), and cash and cash equivalents of £183m (2022: £132m).
Assets pledged as security include £122m (2022: £117m) of cash held in restricted access deposits.
Information regarding the credit risk exposure for financial assets held at fair value through other comprehensive income and
amortised cost is provided below.
Government
debt
Corporate
debt
securities and
Deposits with
credit
Reinsurance
contract Restricted
Cash and
cash
securities
secured loans
institutions
assets assets equivalents
£m £m £m £m £m £m
2023
AAA 196 195 – – – 6
AA- to AA+ 99 392 623 8 1 691
A- to A+ 45 477 344 23 117 1,325
BBB- to BBB+ 128 – 25 – – 73
BB+ and below (below investment grade) 79 10 99 7 4 183
Total 547 1,074 1,091 38 122 2,278
Loss allowance¹ (3) (1) (1) – – –
Carrying amount 544 1,073 1,090 38 122 2,278
1. In addition to the loss allowance shown in the table above, a provision for expected credit losses on financial investments at FVOCI of £1m has been
recognised.
Corporate
Government
debt
Deposits with
Reinsurance
Cash and
debt
securities and
credit
contract
Restricted
cash
securities
secured loans
institutions
assets
assets
equivalents
£m £m £m £m £m £m
2022
AAA 173 186 – – 1 2
AA- to AA+ 107 361 631 4 – 402
A- to A+ 44 580 521 11 116 810
BBB- to BBB+ 99 4 3 – – 57
BB+ and below (below investment grade) 67 25 76 6 2 132
Total 490 1,156 1,231 21 119 1,403
Loss allowance¹ (2) (1) (1) – – –
Carrying amount 488 1,155 1,230 21 119 1,403
1. In addition to the loss allowance shown in the table above, a provision for expected credit losses on financial investments at FVOCI of £1m has been
recognised.
Information regarding the ageing and impairment of financial assets is shown below.
Not past due 0-3 months 3-6 months
6 months - 1
year
Greater than 1
year
Total carrying
value
£m £m £m £m £m £m
2023
Trade and other receivables gross
value 351 135 57 56 115 714
ECL (10) (3) (5) (9) (30) (57)
Trade and other receivables net
value¹ 341 132 52 47 85 657
106
2
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Not past due 0-3 months 6 months - 1 Greater than 1 Total carrying
(restated)² (restated)² 3-6 months year year value
£m £m £m £m £m £m
2022
Trade and other receivables gross
value 439 164 51 58 100 812
ECL (6) (5) (4) (6) (17) (38)
Trade and other receivables net
value¹ 433 159 47 52 83 774
1. Comprises trade receivables, other receivables, service concession receivables and accrued income detailed in Note 14.
Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
Information regarding the ECL allowance by class of financial assets held at fair value through other comprehensive income
and amortised cost is shown below.
Government
Corporate debt
securities and
Deposits with
credit
Trade and
other Restricted Cash and cash
debt securities secured loans institutions Other loans receivables¹ assets equivalents
Gross ECL Gross ECL Gross ECL Gross ECL Gross ECL Gross ECL Gross ECL
2023 £m £m £m £m £m £m £m £m £m £m £m £m £m £m
At beginning of
year 490 (3) 1,156 (1) 1,231 (1) – – 812 (38) 119 – 1,403 –
Recognition
and settlement 67 – (33) – (93) – – – (42) (23) 3 – 948 –
Transfer to
assets held for
sale (1) – (3) – – – – – (9) 2 – –
2 –
Foreign
exchange and
other (9) – (46) – (47) – – – (47) 2 – – (75) –
At end of year 547 (3) 1,074 (1) 1,091 (1) – – 714 (57) 122 – 2,278 –
Corporate debt Trade and other
Government securities and Deposits with receivables Restricted Cash and cash
debt securities secured loans credit institutions Other loans (restated)¹,² assets equivalents
Gross ECL Gross ECL Gross ECL Gross ECL Gross ECL Gross ECL Gross ECL
2022 £m £m £m £m £m £m £m £m £m £m £m £m £m £m
At beginning of
year
Recognition
and settlement
Foreign
exchange and
other
At end of year
243
222
25
490
(4)
1
–
(3)
840
278
38
1,156
–
(1)
–
(1)
1,045
129
57
1,231
(1)
–
–
(1)
1
(1)
–
–
–
–
–
–
548
223
41
812
(29)
(7)
(2)
(38)
158
(45)
6
119
–
–
–
–
1,739
(409)
73
1,403
–
–
–
–
1. Comprises trade receivables, other receivables, service concession receivables and accrued income detailed in Note 14.
2 Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
107
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Offsetting financial assets and financial liabilities
The following financial assets and liabilities are subject to offsetting, enforceable master netting arrangements and similar
agreements:
Gross amounts of
Net amounts of
Gross
recognised
financial assets/
Related amounts not set off in
amounts of
financial liabilities
(liabilities)
the Consolidated Statement of
recognised
financial
set off in the
Consolidated
presented in the
Consolidated
Financial Position
assets/
(liabilities)
Statement of
Financial Position
Statement of
Financial Position
Financial
instruments
Cash collateral
received
Net amount
2023 £m £m £m £m £m £m
Derivative financial assets 46 – 46 (35) (4) 7
Derivative financial liabilities (63) – (63) 35 31 3
Cash and cash equivalents 2,380 (102) 2,278 – – 2,278
Total 2,363 (102) 2,261 – 27 2,288
Gross
amounts of
recognised
financial assets/
(liabilities)
2022 £m
Gross amounts of
Net amounts of
recognised
financial liabilities
set off in the
Consolidated
financial assets/
Related amounts not set off in the
(liabilities)
Consolidated Statement of Financial
presented in the
Position
Consolidated
Statement of
Statement of
Financial
Cash collateral
Financial Position
Financial Position
instruments
received
Net amount
£m £m £m £m £m
Derivative financial assets 28 – 28 (27) (1) –
Derivative financial liabilities (137) – (137) 27 81 (29)
Cash and cash equivalents 1,554 (151) 1,403 – – 1,403
Total 1,445 (151) 1,294 – 80 1,374
The Group also mitigates credit risk in derivative contracts by entering into collateral agreements where appropriate. The
amount of collateral received or posted is shown in the table above.
For the financial assets and liabilities subject to enforceable master netting arrangements or similar arrangements above, each
agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities
where both elect to settle on a net basis. In the absence of such an election, financial assets and liabilities will be settled on a
gross basis; however, each party to the master netting agreement or similar agreement will have the option to settle all such
amounts on a net basis in the event of default of the other party.
25.6 Liquidity risk
Liquidity risk is the risk that the Group will not have available funds to meet its liabilities when they fall due.
The Group's insurance contract liabilities are predominantly backed by liquid assets, held locally, including cash held in bank
accounts, deposits, liquidity funds and covered bonds so reducing the liquidity risk exposure relating to insurance contract
liabilities.
The Group’s main source of short-term funding is via a £900m revolving credit facility which had an initial maturity of December
2026 with two, one-year extension options. The facility was extended by the two, one-year extension options in November 2022
and November 2023 respectively. The maturity date for the facility is now December 2028. The facility was undrawn as at
31 December 2023 (2022: £70m drawn down).
The Group monitors funding risk as well as compliance with existing financial covenants within the banking arrangements.
There were no concerns regarding bank covenant coverage in 2023 and that position is not expected to change in the
foreseeable future.
The Group holds a strong liquidity position and adheres to strict liquidity management policies as set by the Board Risk
Committee as well as adhering to liquidity parameters for the Group’s regulated entities. Regular stress testing is conducted to
assess liquidity risk.
108
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
The contractual maturities of undiscounted financial liabilities and the expected maturities of insurance liabilities based on the
present value of future cash flows and including estimated interest payments of the Group are as follows:
Other
interest- Insurance Trade and
Subordinated bearing Lease contract other Derivative
liabilities liabilities liabilities liabilities payables¹ liabilities Total
£m £m £m £m £m £m £m
As at 31 December 2023
2024
2025
2026
2027
2028
2029-2033
After 2033
Total
(35)
(34)
(434)
(14)
(14)
(73)
(372)
(976)
(329)
(56)
(27)
(325)
(22)
(476)
–
(1,235)
(190)
(166)
(142)
(128)
(135)
(293)
(252)
(1,306)
(2,475)
(65)
(18)
(4)
(2)
(6)
(38)
(2,608)
(2,217)
(5)
(1)
(2)
(2)
–
–
(2,227)
(21)
(8)
–
(34)
–
–
–
(63)
(5,267)
(334)
(622)
(507)
(175)
(848)
(662)
(8,415)
Carrying value in the
Consolidated Statement of
Financial Position
S
(747)
Other interest-
ubordinated
liabilities
£m
(1,090)
bearing
liabilities
£m
(894)
Lease
liabilities
£m
(2,608)
Insurance
contract
liabilities
(restated)² (
£m
(2,227)
Trade and
other
payables
restated)¹,²
£m
(63)
Derivative
liabilities
£m
(7,629)
Total
(restated)²
£m
As at 31 December 2022
2023 (297) (83) (177) (2,248) (2,128) (73) (5,006)
2024 (35) (308) (153) (63) (6) (15) (580)
2025 (34) (5) (131) (18) (1) – (189)
2026 (434) (5) (113) (6) (1) – (559)
2027 (14) (303) (103) (2) – (49) (471)
2028-2032 (73) – (331) (6) – – (410)
After 2032 (386) – (212) (35) – – (633)
Total (1,273) (704) (1,220) (2,378) (2,136) (137) (7,848)
Carrying value in the
Consolidated Statement of
Financial Position (998) (648) (926) (2,378) (2,136) (137) (7,223)
1. Comprises trade payables, other payables, occupational right agreement liabilities, refundable accommodation deposits, amounts owed to Parent and accruals
detailed in Note 20.
2. Amounts have been restated for the adoption of IFRS 17. See Note 1.5.
Interest payments are included in the cash flows for subordinated liabilities other interest-bearing liabilities and lease liabilities.
Maturity profile of financial assets
The majority of reinsurance contract assets and trade and other receivables fall due within one year as detailed in Notes 12 and
14, respectively. The maturity profile of other financial assets (excluding ECLs), which are also available to fund the repayment
of liabilities as they crystallise, is as follows:
Corporate debt
Deposits with
securities, other
Pooled
Cash and cash
credit
Government
loans and
investment
equivalents
institutions
debt securities
equities
funds
Total
£m £m £m £m £m £m
As at 31 December 2023
2024 2,278 1,097 490 776 500 5,141
2025 – 19 52 142 – 213
2026 – – 4 231 15 250
2027 – – 19 77 – 96
2028 – – 1 135 9 145
2029-2033 – – 4 43 – 47
After 2033 – – 11 18 – 29
Total 2,278 1,116 581 1,422 524 5,921
109
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
Corporate debt
securities, other
Cash and cash Deposits with
Government debt
loans and
Pooled
equivalents credit institutions
securities
equities
investment funds
Total
£m £m £m £m £m £m
As at 31 December 2022
2023 1,403 1,190 448 892 436 4,369
2024 – 44 58 209 – 311
2025 – – 6 154 – 160
2026 – – 2 129 14 145
2027 – – 3 44 – 47
2028-2032 – – 3 54 9 66
After 2032 – – 11 13 – 24
Total 1,403 1,234 531 1,495 459 5,122
26 Related party transactions
Related party transactions are transactions between the Group and individuals or entities related by nature of influence or
control. The Group has such relationships with its key management personnel, equity-accounted investments and the Parent.
The disclosure of transactions with these parties in this note enables readers to form a view of the impact of related party
relationships on the Group.
All transactions with related parties are conducted on an arm’s-length basis.
There were no material transactions during the year with any related parties, as defined by IAS 24 Related Party Disclosures,
other than those disclosed in this note.
(i) Transactions with key management personnel
The key management personnel are the Group’s Directors and the Chief Executive Officers of the Group’s Market Units. No
Director had any material interest in any contracts with Group companies as at 31 December 2023 (2022: £nil) or at any time
during the year. The remuneration of the Group’s Directors is disclosed in Note 2.3.
The total remuneration of the Market Unit Chief Executive Officers is as follows:
2023 2022
£'000 £'000
Short-term employee benefits 5,302 3,777
Post-employment benefits 131 104
Total 5,433 3,881
The total remuneration of key management personnel is included in staff costs (see Note 2.3).
(ii) Transactions with the Parent
2023 2022
£m £m
Management charges paid 337 327
Expenses received (15) (13)
Dividends paid 134 89
27 Commitments and contingencies
A commitment is future expenditure that is committed to as at year end. These relate to contracted capital expenditure.
Contingent liabilities are those that are considered possible at year end, whose existence will be determined by uncertain future
events, or present obligations that are not sufficiently probable or cannot currently be measured with sufficient reliability to give
rise to provisions.
(i) Capital commitments
Capital expenditure for the Group contracted as at 31 December 2023 but for which no provision has been made amounted to
£42m (2022: £40m). Of this, £38m (2022: £40m) relates to aged care facility and retirement village project commitments in
Australia and New Zealand and care homes in the UK; specifically £13m (2022: £21m) in relation to property, plant and
equipment and £25m (2022: £19m) in relation to investment property. £4m (2022: £nil) relates to computer software projects
commitments in Australia.
110
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
(ii) Contingent assets
The Group currently has no contingent assets.
(iii) Contingent liabilities
The Group has contingent liabilities arising in the ordinary course of business. These include losses which might arise from
litigation, consumer matters, other disputes, regulatory compliance (including data protection) and interpretation of law
(including employment law and tax law). It is not considered that the ultimate outcome of any contingent liabilities other than the
items below relating to Isapre Cruz Blanca could have a significant adverse impact on the financial condition of the Group.
The negative impact of judicial and regulatory action on the Isapre insurance industry in Chile continues as the method and
implementation of the statutory Risk Factor Tables (used to adjust the price of insurance contracts based on risk factors such as
age) following a Supreme Court decision of December 2022 remains unclear.
To date, several proposals have been put forward in attempt to make the industry sustainable and attractive enough to secure
the required political support:
• The Chilean government proposed a draft law in May 2023, this did not receive the necessary political support and
did not progress through the legislative process.
• Alongside the draft law, the Superintendent of Health (SIS), responsible for implementing the court ruling, shared a
draft methodology to illustrate the application of the draft law.
• As part of the SIS report, the creation of a new Committee was recommended to advise Congress in issuing
regulations that seek to maintain financial balance of the system and make it more efficient. The government set up
this committee as the Technical Commission.
• On 10 October 2023, the Technical Commission published its report.
• The timing for implementation of the risk factor table ruling has been extended again from November 2023 to May
2024 and discussion of a revised draft law by the Senate started in November 2023.
Both draft laws and the Technical Commission report led to differing quantifications of the retrospective liabilities. The Technical
Commission report proposed that these liabilities are funded over a period of 10 years, in healthcare benefits, rather than cash.
These proposals were largely adopted into the revised draft law although the exact details of how this would operate are
currently unclear.
The draft law is progressing through the legislative process, including approval by the Senate in January 2024, but is still
subject to debate in Congress, the lower house of the Chilean parliament. Whilst the government remains committed to
enacting legislation by the May 2024 deadline, there remains considerable scope for the proposals to be amended or rejected.
If the law is enacted, the SIS must issue further guidance its implementation. Each Isapre will have to submit a plan for how
remediation would be resolved which would then require regulatory approval prior to the final quantification of retrospective
liabilities and agreement of settlement mechanisms.
Given the complexity of the remaining legislative steps, the potential for amendment to any retrospective amounts quantified
based on the current draft law and the need for clarity regarding the specific settlement mechanisms of any retrospective
amount, there remains continuing uncertainty. There are a wide range of possible outcomes and resultant future outflow of
economic benefits and so it is not possible to reliably estimate the value of any such future retrospective payments, therefore,
no IFRS provision has been recognised as at 31 December 2023.
This is consistent with the position reported in Chile. In December 2023, the SIS, as the local prudential regulator, released an
instruction to the Isapre market stating that the regulator views any potential RFT retrospective payment an unquantifiable
contingent liability under IAS 37 as of 31 December 2023 and instructed the Isapres to include only an explanatory disclosure
note in their local financial statements.
There continues to be a broad range of possible outcomes, however, in contrast to the requirements of IFRS, under Solvency II
the Group is required to include a value for contingent liabilities, even if the amount of the obligation cannot be measured with
sufficient reliability. As at 31 December 2023, the Group included an allowance of £165m (HY 2023: £160m, FY 2022: £100m)
for this contingent liability for retrospective payments within the Solvency II regulatory balance sheet. As previously stated, the
final impact is likely to differ materially from this value and this is a calculation for Solvency II purposes and not a pre-estimate of
all actual or potential losses relating to Isapre Cruz Blanca. Any retrospective payments finally determined to be due in respect
of historic policies as a result of the Risk Factor Table ruling and subsequent legislation would be liabilities for Isapre Cruz
Blanca.
(iv) Defined benefit post-employment schemes
The Company has entered into a legally binding and irrevocable guarantee for the benefit of the trustee of the principal defined
benefit scheme in the UK, The Bupa Pension Scheme, in respect of the payments due from the Parent.
111
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2023
28 Entities in which the Group holds less than 100% equity interest
(i) Consolidation of entities in which the Group holds less than 50% equity interest
Eurocredit Investment Fund 1 plc
Eurocredit Investment Fund is a structured entity set up for the purpose of investing in primary and secondary secured loans.
Bupa is the only investor in the issued debt of the entity and is exposed to the risks and rewards of the fund.
(ii) Non-controlling interests
The Group has no subsidiaries whose non-controlling interest is material on the basis of their share of equity or profit or loss.
112
Financial Statements of the Company
for the year ended 31 December 2023
Statement of Financial Position
as at 31 December 2023
Note
2023
£m
2022
£m
Assets
Property, plant and equipment
B
38 43
Investment in subsidiaries
C
4,337 4,046
Deferred taxation assets
D
1 7
Restricted assets
E
32 40
Derivative assets F 36 5
Current taxation assets 35 –
Trade and other debtors
G
126 98
Cash and cash equivalents H 486 14
Total assets 5,091 4,253
Liabilities
Borrowings I (1,759) (1,607)
Lease liabilities J (39) (43)
Derivative liabilities F (55) (115)
Provisions for liabilities and charges (3) (3)
Trade and other creditors K (599) (1,073)
Total liabilities (2,455) (2,841)
Net assets 2,636 1,412
Equity
Called-up share capital
Profit and loss account
Total attributable to ordinary shareholder
Restricted Tier 1 notes
Total equity
L
M
200
2,139
2,339
297
2,636
200
915
1,115
297
1,412
Approved by the Board of Directors and signed on its behalf on 6 March 2024 by
James Lenton
Director
Registered Number 2779134
Notes A-P form the associated notes to the Company financial statements.
113
Financial Statements of the Company
for the year ended 31 December 2023
Statement of Changes in Equity
For the year ended 31 December 2023
Called-up share
capital
Profit and loss
account
Total equity
attributable to
shareholder
Restricted Tier
1 notes Total equity
£m £m £m £m £m
Balance as at 1 January 2023 200 915 1,115 297 1,412
Comprehensive income for the year
Profit for the year – 1,368 1,368 – 1,368
Total comprehensive income for the year – 1,368 1,368 – 1,368
Transactions with shareholder, recorded
directly in equity
Dividends – (134) (134) – (134)
Total distributions to shareholder – (134) (134) – (134)
Payment of Restricted Tier 1 coupon, net of
taxation – (10) (10) – (10)
Balance as at 31 December 2023 200 2,139 2,339 297 2,636
Total equity
Called-up share Profit and loss attributable to Restricted Tier 1
capital account shareholder notes Total equity
£m £m £m £m £m
Balance as at 1 January 2022 200 155 355 297 652
Comprehensive income for the year
Profit for the year – 859 859 – 859
Total comprehensive income for the year – 859 859 – 859
Transactions with shareholder, recorded
directly in equity
Dividends – (89) (89) – (89)
Total distributions to shareholder – (89) (89) – (89)
Payment of Restricted Tier 1 coupon, net of
taxation – (10) (10) – (10)
Balance as at 31 December 2022 200 915 1,115 297 1,412
Notes A-P form the associated notes to the Company financial statements.
114
Financial Statements of the Company
for the year ended 31 December 2023
1.1 Basis of preparation
Bupa Finance plc (the ‘Company’), a company incorporated in England and Wales and domiciled in the United Kingdom,
together with its subsidiaries (collectively the ‘Group’) is an international healthcare business, providing health insurance,
treatment in clinics, dental centres and hospitals, and operating care homes. The immediate and ultimate parent of the
Company is The British United Provident Association Limited (the ‘Parent’ or ‘Bupa’ and together with its subsidiaries, the ‘Bupa
Group’).
These financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (FRS 101). In preparing these financial statements, the Company applies the recognition, measurement and
disclosure requirements of International Financial Reporting standards (IFRS) as adopted by the UK (UK-adopted international
accounting standards) and makes amendments where necessary in order to comply with the Companies Act 2006. The
Company has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
The Company is taking advantage of the exemption in Section 408 of the Companies Act 2006 not to present its individual profit
and loss account. As the consolidated financial statements of the Group include the equivalent disclosures, the Company has
also taken the exemptions under FRS 101 available in respect of the following disclosures:
• Cash Flow Statement and related notes;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of compensation of key management personnel;
• Certain disclosures required by IFRS 7 and IFRS 13 regarding financial instrument disclosures have not been
provided apart from those which are relevant for the financial instruments which are held at fair value and are not held
as either part of a trading portfolio or derivatives; and
• IAS 24 - Exemption for related party transactions entered into between two or more members of a group, provided
that any subsidiary party to the transaction is wholly owned by such a member.
Company accounting policies
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
financial statements.
(a) Accounting estimates and judgements
The impairment review of investments in subsidiaries is a source of significant estimation uncertainty in the preparation of the
Company financial statements. Annual impairment tests include a number of sources of estimation uncertainty as the key
assumptions used when modelling the recoverable amount include estimating the discount rate, terminal growth rate and the
forecast cash flows. Changes to these assumptions could materially change the calculation of the recoverable amount.
(b) Restatements and changes in accounting policies
The Company has consistently applied its accounting policies to all periods presented in these financial statements.
(c) Going concern
The Directors have a reasonable expectation that the Company has access to adequate resources to continue in operational
existence for at least the next 12 months from the date of approval of these financial statements. They continue to adopt the
going concern basis of accounting in preparing the annual financial statements.
(d) Foreign currency
The financial statements are presented in sterling, which is also the currency of the primary economic environment in which the
Company operates (its functional currency). Transactions in currencies other than the functional currency are recorded at the
rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the exchange rate ruling at the reporting date. Non-monetary items denominated in a
foreign currency at historical cost are translated using the exchange rate at the date of the transaction therefore, no exchange
differences arise.
Exchange differences are recognised in the profit and loss account in the period in which they arise except for exchange
differences on transactions entered into to hedge certain foreign currency risks (see below under financial instruments/hedge
accounting).
115
Financial Statements of the Company
for the year ended 31 December 2023
(e) Financial income and expenses
Financial income comprises interest receivable, realised gains and losses on investments, foreign exchange gains and losses,
dividend income on equity investments and changes in the fair value of financial assets recognised at fair value through profit or
loss.
Interest income, except in relation to assets classified as at fair value through profit or loss, is recognised in the profit and loss
account as it accrues, using the effective interest method.
Changes in the value of financial investments at fair value through the profit and loss account are recognised within financial
income as an unrealised gain or loss while the asset is held. Upon derecognition of these assets, the cumulative unrealised
gain or loss is reversed and a realised gain or loss is recognised.
Financial expense includes interest payable on borrowings, calculated using the effective interest method, and other financial
expenses.
(f) Classification of financial instruments issued by the Company
Financial instruments issued by the Company are treated as equity only to the extent that they meet the following two
conditions:
• They include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange
financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the
Company; and
• Where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that
includes no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will
be settled by the Company exchanging a fixed amount of cash or other financial assets for a fixed number of its own
equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so
classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called-up
share capital and share premium account exclude amounts in relation to those shares.
Where a financial instrument contains both equity and financial liability components, these components are separated and
accounted for individually under the above policy.
(g) Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other debtors, cash and cash
equivalents, loans and borrowings, and trade and other creditors.
(h) Property, plant and equipment
Property, plant and equipment are held at historical cost less accumulated depreciation and recognised impairment losses.
Depreciation is charged to the profit and loss account on a straight-line basis to allocate cost less residual value over the
estimated useful life, as follows:
• Right-of-use property lease term
• Leasehold improvements shorter of useful life or lease term
• Owned equipment 3 to 10 years
No depreciation is charged on assets under construction. Useful lives, depreciation method and residual values are reviewed at
each reporting date.
Impairment reviews are undertaken where there are indicators that the carrying value may not be recoverable. An impairment
loss is recognised in the profit and loss account to reduce the carrying value to the recoverable amount. Assets classified as
under construction are also reviewed for impairment at each reporting date.
(i) Leases of property
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the Company’s incremental borrowing rate taking into account the duration of the lease.
The lease liability is subsequently measured at amortised cost using the effective interest method, with the finance cost charged
to the profit and loss account over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability. It is remeasured when there is a change in future lease payments arising from a change in index or rate,
or if the Company changes its assessment of whether it will exercise an extension or termination option. The lease liability is
recalculated using a revised discount rate if the lease term changes as a result of a modification or reassessment of an
extension or termination option. The leases currently held by the Company do not contain any extension or termination options.
116
Financial Statements of the Company
for the year ended 31 December 2023
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs,
contractually required to restore properties to their original condition, less any lease incentives received. The right-of-use asset,
excluding restorations costs, is typically depreciated on a straight-line basis over the lease term. In addition, the right-of-use
asset may be adjusted for certain remeasurements of the lease liability, such as indexation and market rent review uplifts.
Restoration costs included in the right-of-use asset are amortised over the same term as the corresponding provision, which
may be longer than the IFRS 16 contractual lease term where occupancy of the property is expected to be longer than the
existing contract.
The Company has elected not to recognise the right-of-use assets and lease liabilities for short-term leases that have a term of
12 months or less or leases that are of low value (£4,000 or less). Lease payments associated with these leases are expensed
on a straight-line basis over the lease term.
(j) Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated at cost less impairment. Investments are reviewed annually to test whether
any indicators of impairment exist. Where there is objective evidence of such an asset being impaired, the investment is
impaired to its recoverable value and any unrealised loss is recorded in the profit and loss account.
When any indication that an impairment loss recognised in prior periods may no longer exist or may have decreased, the
recoverable amount of an investment is assessed. Should the recoverable value exceed the carrying value, an impairment
reversal is recognised in the profit and loss account up to the value of previously recorded impairments.
Dividends received from subsidiaries are recognised in the profit and loss account when the right to receive is established.
All loans and receivables to and from subsidiary undertakings are shown at cost less amounts written off where deemed
irrecoverable.
(k) Restricted assets
Restricted assets are amounts held in respect of specific obligations and potential liabilities and may be used only to discharge
those obligations and potential liabilities if and when they crystallise.
(l) Derivative financial instruments
Derivative financial instruments are accounted for at fair value through profit or loss. The gain or loss on remeasurement to fair
value is recognised immediately in the profit and loss account. However, where derivatives qualify for hedge accounting,
recognition of any resultant gain or loss depends on the nature of the item being hedged (see below).
Derivative fair value
Fair values of derivative instruments are obtained from market observable pricing information including interest yield curves.
Fair value of currency contracts, including forwards, swaps and options is determined using third party sourced market data at
the reporting date. The resulting value reflects changes in spot exchange rates and interest differential between the currency
pair involved, over the life of the contract, discounted back to present value.The fair value of interest rate swaps is determined
as the present value of the estimated future cash flows based on observable yield curves.
Hedge accounting
The Company applies fair value hedge accounting. The Company formally documents the hedging relationship between a
hedging instrument and a hedged item. Documentation includes the risk management objectives and the strategy in
undertaking the hedge transaction.
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability,
or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is
recognised directly in the hedging reserve. Any ineffective portion of the hedge is recognised immediately in the profit and loss
account.
Fair value hedges
Where a derivative financial instrument is designated as a hedge of the variability in fair value of a recognised asset or liability
or an unrecognised firm commitment, all changes in the fair value of the derivative are recognised immediately in the profit and
loss account. The carrying value of the hedged item is adjusted by the change in fair value that is attributable to the risk being
hedged (even if it is normally carried at cost or amortised cost) and any gains or losses on remeasurement are recognised
immediately in the profit and loss account (even if those gains would normally be recognised directly in equity).
117
Financial Statements of the Company
for the year ended 31 December 2023
(m) Trade and other debtors
Amounts owed by subsidiaries
Amounts are recognised initially at fair value. They are subsequently measured at amortised cost using the effective interest
method, net of provision for expected credit loss (ECL).
The ECL is measured at an amount equal to the lifetime ECL. Where appropriate, a provision matrix is used to estimate ECL.
Under a provision matrix, receivables are grouped into customer segments and further divided into categories by age. Historical
credit loss experience and any relevant forward looking information are then used to establish the ECL provision for each
category.
Other trade and other debtors
This predominantly relates to pledges of cash collateral in respect of certain derivative contracts. Collateral pledged in the form
of cash is recognised and subsequently measured at fair value.
(n) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits and other short-term highly liquid investments (including
money market funds) with original maturities of three months or less which are subject to an insignificant risk of change in
value.
(o) Trade and other creditors
Trade and other creditors are recognised initially at fair value. They are subsequently measured at amortised cost using the
effective interest method.
(p) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, they are held at amortised cost using the effective interest method.
(q) Restricted Tier 1 (RT1) debt
The RT1 notes meet the classification of equity and are presented as a separate category of equity in the Statement of
Financial Position at an amount equal to the proceeds of issue less transaction costs. RT1 coupons are recognised directly in
the Statement of Changes in Equity, net of taxation, upon payment.
(r) Intra-group financial instruments
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its
group, the Company considers these to be insurance arrangements and accounts for them as such. In this respect, the
Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be
required to make a payment under the guarantee.
(s) Taxation including deferred taxation
Taxation on the profit or loss for the year comprises current and deferred taxation. Taxation is recognised directly in equity to the
extent that it relates to items recognised directly in equity or other comprehensive income.
Current taxation is the expected taxation payable or receivable on the taxable income or loss for the year, using taxation rates
enacted or substantively enacted at the reporting date, and any adjustment to taxation payable in respect of previous years.
Deferred taxation is recognised in full using the balance sheet liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of an asset or
liability in a transaction that is not a business combination and which, at the time of the transaction, affects neither accounting
nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences; and differences relating
to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary
differences and it is probable that the temporary differences will not reverse in the foreseeable future. The amount of deferred
taxation recognised is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using taxation rates enacted or substantively enacted at the reporting date.
A deferred taxation asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised.
(t) Provisions
A provision is recognised in the Statement of Financial Position when the Company has a present legal or constructive
obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will
be required to settle the obligation. If the effect is material, provisions are determined by discounting the estimated future
payments at a pre-taxation rate that reflects a current market assessment of the time value of money and, where appropriate,
the risks specific to the liability.
118
Financial Statements of the Company
for the year ended 31 December 2023
Profit attributable to the Company
The profit within the financial statements of the Company is £1,368m (2022: profit of £859m). In accordance with the exemption
granted under Section 408 of the Companies Act 2006, a separate profit and loss account for the Company has not been
presented.
119
Financial Statements of the Company
for the year ended 31 December 2023
Notes to the Financial Statements
A. Directors and employees
The Company employed no employees during 2023 (2022: nil) and had four Directors as at 31 December 2023 (2022: four).
During the year four individuals served as Directors (2022: six). Details of Directors serving during the year can be found on
page 2.
Directors’ remuneration
Remuneration paid to the Directors is borne by the Company or other Group companies and is disclosed in Note 2.3.1.
B. Property, plant and equipment
2023 2022
Right-of- Right-of-use
use asset Leasehold Owned asset Leasehold Owned
property improvements equipment Total property improvements equipment Total
£m £m £m £m £m £m £m £m
Cost or valuation
At beginning of year 48 9 1 58 32 9 1 42
Additions – – – – 16 – – 16
At end of year 48 9 1 58 48 9 1
Depreciation and
impairment loss
At beginning of year 11 4 – 15 7 3 – 10
Depreciation charge for
year 4 1 – 5 4 1 – 5
At end of year 15 5 – 20 11 4 – 15
Net book value at end of
year 33 4 1 38 37 5 1
Net book value at
beginning of year 37 5 1 43 25 6 1
C. Investment in subsidiaries
At Reversal of Foreign
beginning Impairment impairment Redemptions/ exchange At end of
of year loss losses Additions Disposals Repayments revaluation year
£m £m £m £m £m £m £m £m
2023
Group Undertakings:
Shares in subsidiary undertakings 5,663 – – 402 – – (115) 5,950
Loans to Group companies 75 – – 4 – – – 79
5,738 – – 406 – – (115) 6,029
Provision for impairment (1,692) – – – – – – (1,692)
Net book value 4,046 – – 406 – – (115) 4,337
At
beginning
of year
Impairment
loss
Reversal of
impairment
losses Additions Disposals
Redemptions
/Repayments
Foreign
exchange
revaluation
At end of
year
2022
£m £m £m £m £m £m £m £m
Group Undertakings:
Shares in subsidiary undertakings 5,588 – – 1 (36) – 110 5,663
Loans to Group companies 187 – – 5 – (117) – 75
5,775 – – 6 (36) (117) 110 5,738
Provision for impairment (814) (1,059) 145 – 36 – – (1,692)
Net book value 4,961 (1,059) 145 6 – (117) 110 4,046
120
58
43
32
Financial Statements of the Company
for the year ended 31 December 2023
Additions in the year of £402m relate to capital injections to existing subsidiaries. Loans to Group companies comprise loan
facilities of a fixed amount and a long-term maturity date, with the movements in the year driven principally by capitalised
interest during the year.
In 2022, a £752m impairment was recognised in relation to the Company's shareholding in The Oasis Healthcare Group
Limited, and an additional provision of £307m recognised in relation to the Company's shareholding in Bupa Care Homes
(Holdings) Limited. This was partially offset by the reversal of provisions of £82m and £63m in respect of Bupa Care Homes
(CFG) plc and Cromwell Health Group Limited respectively.
The subsidiary undertakings of the Company as at 31 December 2023 are listed in Note P.
D. Deferred taxation assets
Deferred taxation is an amount which recognises the differences between the carrying amounts of assets and liabilities for
financial reporting and the amounts used for taxation purposes. Deferred taxation assets relating to provisions and unused
taxation losses are recognised only to the extent that it is probable that future taxable profits will be available against which the
assets can be utilised.
Deferred taxation assets are attributable to the following:
2023 2022
£m £m
Provisions 1 1
Taxation value of losses carried forward – 6
Deferred taxation assets
1 7
Unrecognised deferred taxation assets
As at 31 December 2023, the Company had deductible temporary differences relating to trading losses of £7m (2022: £7m) and
to capital losses of £26m (2022: £nil) for which no deferred taxation asset was recognised due to uncertainty of utilisation of
those temporary differences.
Movement in net deferred taxation assets:
Recognised in
At beginning of year Income Statement At end of year
£m £m £m
2023
Provisions 1 – 1
Taxation value of losses carried forward 6 (6) –
Total
7 (6) 1
E. Restricted assets
2023 2022
£m £m
Restricted assets 32
The restricted assets balance of £32m (2022: £40m) consists of cash deposits held to secure a charge over the unfunded
pension scheme obligations held in the Parent.
F. Derivative assets and liabilities
A derivative is a financial instrument whose value is based on one or more underlying variables. The Company uses derivative
financial instruments to hedge its exposure to foreign exchange and interest rate risk. Derivatives are not held for speculative
reasons.
The fair value of non-current derivative assets relate to interest rate swaps which are recognised at fair value. The interest rate
swaps are held to hedge the 2024 £300m, 2027 £300m and 2030 €500m unsecured bonds issued by the Company.
Derivatives are held at fair value through profit or loss, and therefore the carrying value is equal to fair value.
121
40
Financial Statements of the Company
for the year ended 31 December 2023
2023 2022
£m £m
Derivative assets
Non-current
18 2
Current
18 3
Total derivative assets
36 5
Derivative liabilities
Non-current
(42) (64)
Current
(13) (51)
Total derivative liabilities
(55) (115)
Valuation techniques and assumptions applied for the purposes of measuring fair value
Derivatives that have been purchased or issued as part of a hedge that subsequently do not qualify for hedge accounting are
accounted for at fair value through profit or loss.
Fair values are obtained from market observable pricing information including interest rate yield curves.
G. Trade and other debtors
2023 2022
£m £m
Amounts owed by subsidiaries
Other trade and other debtors
Total trade and other debtors
93
33
126
23
75
98
All balances are current.
H. Cash and cash equivalents
Short-term deposits
Cash and cash equivalents
2023
£m
486
486
2022
£m
14
14
I. Borrowings
Subordinated liabilities
Subordinated unguaranteed bonds
Total subordinated liabilities
Other interest-bearing liabilities
Senior unsecured bonds
Bank loans
Total other interest-bearing liabilities
Note
(a)
(b)
(c)
2023
£m
747
747
1,012
–
1,012
2022
£m
998
998
540
69
609
Total borrowings
Non-current
Current
1,759
1,459
300
1,607
1,286
321
a) Subordinated unguaranteed bonds
The total carrying value of subordinated unguaranteed bonds, net of accrued interest, capitalised issue costs and discounts,
was £747m (2022: £998m).
On 25 April 2023, the Company redeemed the outstanding maturing £250m of the £500m 5.000% fixed rate subordinated
bonds.
On 25 June 2020, the Company issued £350m of unguaranteed subordinated bonds which mature on 14 June 2035. Interest is
payable on the bonds at 4.125%. In the event of the winding up of the Company, the claims of the bondholders are
subordinated to the claims of other creditors of the Company.
122
Financial Statements of the Company
for the year ended 31 December 2023
On 8 December 2016, the Company issued £400m of unguaranteed subordinated bonds which mature on 8 December 2026.
Interest is payable on the bonds at 5.000% per annum. In the event of winding up of the Company the claims of the
bondholders are subordinated to the claims of other creditors of the Company.
The Company has not had any defaults of principal, interest or other breaches with respect to subordinated liabilities during
2023 or 2022.
b) Senior unsecured bonds
The total senior unsecured bonds balance of £1,012m (2022: £540m) is net of initial issue costs, discount on issue, accrued
interest and, where hedged, a fair value adjustment in respect of hedged interest rate risk.
On 12 October 2023, the Company issued €500m of senior unsecured bonds, guaranteed by the Parent, which mature on 12
Oct 2030. The bonds bear interest on their outstanding principal amount at a fixed rate of 5.00% per annum. The total hedged
fair value of these bonds, including accrued interest, capitalised issue costs and discounts, is £447m. The change in value
arising from interest rate risk is matched, subject to any hedge ineffectiveness, by the fair value of swap contracts in place to
hedge this risk.
On 25 June 2020, the Company issued £300m of senior unsecured bonds, guaranteed by the Parent, which mature on 14 June
2027. Interest is payable on the bonds at 1.750% per annum. The total hedged fair value of these £300m senior unsecured
bonds, including accrued interest, capitalised issue costs and discounts is £268m (2022: £252m). The valuation adjustment is
the change in value arising from interest rate risk, which is matched subject to any hedge ineffectiveness, by the fair value of
swap contracts in place to hedge this risk.
On 5 April 2017, the Company issued £300m of senior unsecured bonds, guaranteed by the Parent, which mature on 5 April
2024. Interest is payable on the bonds at 2.000% per annum. The total hedged fair value of these £300m senior unsecured
bonds, including accrued interest, capitalised issue costs and discounts, is £299m (2022: £288m). The change in value arising
from interest rate risk is matched, subject to any hedge ineffectiveness, by the fair value of swap contracts in place to hedge
this risk.
See Note 25.4 for details on the Group's interest rate hedging activities.
c) Bank loans
Bank loans of £nil (2022: £69m) include drawings of £nil (2022: £70m drawn down) under a £900m revolving credit facility
which had an initial maturity of December 2026 with two, one-year extension options. The facility was extended by the two, one-
year extension options in November 2022 and November 2023 respectively. The maturity date for the facility is now December
2028. The facility was not drawn down at 31 December 2023 (2022: £70m drawn down).
Drawings under the £900m facility are guaranteed by the Company and the Parent.
The overdraft facilities are subject to cross guarantees within the Group. The bank loans and overdrafts bear interest at
commercial rates linked to SONIA for sterling or equivalent for other currencies.
J. Lease Liabilities
2023 2022
£m £m
At the beginning of the year
Additions
Interest on lease liabilities
Repayments
At end of year
Non-current
Current
44
–
1
(6)
39
34
5
30
14
1
(2)
43
38
5
K. Trade and other creditors
Amounts owed to subsidiaries
Other creditors
Total trade and other creditors
2023
£m
588
11
599
2022
£m
1,070
3
1,073
All balances are current.
123
Financial Statements of the Company
for the year ended 31 December 2023
L. Called-up share capital
Allocated, called-up and fully paid
200,050,000 ordinary shares of £1 each
2023
£m
200
2022
£m
200
M. Restricted Tier 1 (RT1) notes
The RT1 notes meet the classification of equity and are presented as a separate category of equity in the Statement of
Financial Position at an amount equal to the proceeds of issue less transaction costs. RT1 coupons are recognised directly in
the Statement of Changes in Equity, net of tax, upon payment.
2023
2022
£m
£m
Restricted Tier 1 notes 297
On 24 September 2021, the Company issued £300m of RT1 notes with a fixed coupon of 4.000% paid semi-annually in arrears.
Transaction costs of £3m were recognised in respect of the issue. The total coupon paid during the year was £12m (2022:
£12m).
The RT1 notes are perpetual, with no fixed maturity or redemption date. The notes have a first call date of 24 March 2032 and
interest is payable at the sole and absolute discretion of the Company, with cancelled interest providing no rights to the holder
of the notes nor being considered a default. The RT1 notes are therefore treated as equity. The notes are convertible to share
capital of the Company on the occurrence of certain trigger events.
N. Commitments, guarantees and contingencies
Guarantees
As at 31 December 2023, the Company was party to a £900m multi-currency revolving credit facility. The Company has joint
and several liability for all obligations under the multi-currency revolving credit facility described in Note I(c). The revolving credit
facility was not drawn down at 31 December 2023 (2022: £70m drawn down).
The Company has provided guarantees to certain other Group undertakings. These are either as part of the Group banking
arrangements in respect of the overdrafts, or, if called on to do so, to provide or procure necessary support to enable certain
other Group undertakings to meet their liabilities as they fall due.
Contingent liabilities
Under a Group registration the Company is jointly and severally liable for Value Added Tax due by certain other companies in
the Group.
Pension contributions
The Company has given a legally binding and irrevocable guarantee for the benefit of the trustees of The Bupa Pension
Scheme, in respect of payments that the Parent was obliged to make between 31 December 2022 and 31 December 2023 to
The Bupa Pension Scheme.
O. Ultimate Parent
The Company’s immediate and ultimate parent undertaking is The British United Provident Association Limited which includes
the Company in its consolidated financial statements. The consolidated financial statements of The British United Provident
Association Limited are prepared in accordance with International Financial Reporting Standards and are available to the
public. Copies of the consolidated financial statements of The British United Provident Association Limited can be obtained from
The Registrar of Companies, Cardiff, CF14 3UZ.
124
297
Financial Statements of the Company
for the year ended 31 December 2023
P. Related Undertakings
In compliance with Section 409 of the Companies Act 2006, disclosed below is a list of the Company’s related undertakings as
at 31 December 2023, comprising subsidiaries, joint ventures, associated undertakings and other significant holdings, together
with the country of incorporation, registered office address, each share class held by the Company and the Group and the
proportion of the nominal value of the of that class represented by those.
See Notes 1.2 and 6 for further information on basis of consolidation and accounting policies.
Subsidiaries
Unless otherwise stated, the subsidiaries listed below are wholly owned indirectly by the Company with 100% of the nominal
value of each share class held by Group subsidiaries. Where a subsidiary is not wholly owned, the proportion of the nominal
value of each share class held by the Company or the Group, together with the Group’s effective ownership, calculated by
reference to the voting rights, is shown below. All subsidiaries are included in the Group consolidation.
Name Share class
Proportion of
class held (%)
Effective %
ownership
Australia
Level 16, 33 Exhibition Street, Melbourne VIC 3000, Australia
Benefit Pocket Pty Ltd AUD Ordinary
Bupa Aged Care Australasia Pty Limited AUD Ordinary
Bupa Aged Care Australia Holdings Pty Ltd AUD Ordinary
Bupa Aged Care Australia Pty Ltd AUD Ordinary
Bupa Aged Care Holdings Pty Ltd AUD Ordinary
Bupa Aged Care Property No.2 Trust Trust Interest
Bupa Aged Care Property No.3 Trust Trust Interest
Bupa Aged Care Property No.3A Trust Trust Interest
Bupa Aged Care Property Trust Trust Interest
Bupa ANZ Finance Pty Ltd AUD Ordinary
Bupa ANZ Group Pty Ltd AUD Ordinary
Bupa ANZ Healthcare Holdings Pty Ltd AUD Ordinary
Bupa ANZ Insurance Pty Ltd AUD A Class Preference,
AUD Ordinary
Bupa ANZ Property 1 and 2 Limited AUD Ordinary
Bupa ANZ Property 3 and 3A Pty Ltd AUD Ordinary
Bupa Care Villages Australia Pty Ltd AUD Ordinary
Bupa Dental Corporation Pty Ltd AUD Ordinary
Bupa Foundation (Australia) Limited Guarantee Member
Interest
Bupa Health Centres Pty Ltd AUD Ordinary
Bupa Health Services Pty Ltd AUD Ordinary
Bupa HI Holdings Pty Ltd AUD Ordinary
Bupa HI Pty Ltd AUD Ordinary
Bupa Innovations (ANZ) Pty Ltd AUD Ordinary
Bupa Medical Services Pty Limited AUD Ordinary
Bupa Optical Pty Ltd AUD Ordinary
Bupa Telehealth Pty Ltd AUD Ordinary
Bupa Wellness Pty Limited AUD Ordinary
DC Holdings WA Pty Ltd AUD Ordinary
Dental Corporation Holdings Pty Ltd AUD Ordinary
Dental Corporation Pty Ltd AUD Ordinary
Bahrain
Office 814, Building 2420, Road 2831, Block 428, Seef, Bahrain
Bupa Middle East Holdings Two W.L.L. BHD50.00 Ordinary 75.00 75.00
Bolivia
Calacoto Calle 9 esq, Avda. Sanchez Bustamante, N7979, Edificio Vitruvio II, Piso 3. La Paz, Bolivia
Bupa Insurance (Bolivia) S.A BOB100.00 Ordinary
125
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
Brazil
Alameda Mamoré, No. 678, 11th Floor, Room 1104, Alphaville, 06454-040, Barueri, São Paulo, Brazil
Care Plus Negócios Em Saúde Ltda. BRL1.00 Quotas
Alameda Mamoré, No. 687, 12th Floor, Rooms 1201, 1202, 1203 and 1204, Alphaville, 06454-040, Barueri, São Paulo,
Brazil
Care Plus Medicina Assistencial Ltda. BRL1.00 Quotas
Av. das Nações Unidas, 12,901, Unidade 901, Torre Oeste, Bloco C, Centro Empresarial Nações Unidas, Brooklin
Paulista, São Paulo, SP, Brazil
Personal System Serviços Médicos e Odontológicos Ltda. BRL1.00 Quotas
Av. Vereador José Diniz, nº 3 300, 18º andar, Campo Belo, São Paulo, SP, CEP 04604-006, Brazil
Instituto de Previdencia e Assistencia Odontológica Ltda. BRL378.00 Ordinary
Avenida Portugal, nº 307, Brooklin, CEP 04559-000, São Paulo - SP, Brazil
Vacinar Centro de Imunização Ltda. BRL1.00 Ordinary
Chile
Anabaena N° 336, Comuna Viña del Mar, Region Valparaiso, Chile
Clinica Renaca S.A.
Desarrollo E Inversiones Medicas S.A.
Promotora De Salud S.A.
Sociedad Medica Imageneologia Clinica Renaca Limitada
CLP Ordinary
CLP Ordinary
CLP Ordinary
CLP Social Rights
100.00
97.56
67.03
80.00
95.88
93.45
67.03
76.70
Av. Matta No 1868, Comuna Antofagasta, Region Antofagasta, Chile
Sociedad Medico Quirurgica De Antofagasta S.A.
1
CLP Ordinary 100.00 72.98
Cerro Colorado N° 5240, Piso 11, Comuna Las Condes, Region Metropolitana, Chile
Bupa Administracion y Servicios SpA CLP Ordinary
Bupa Chile S.A. CLP Ordinary
Bupa Compania de Seguros de Vida S.A. CLP Ordinary
Bupa Inversiones Latam S.A. CLP Ordinary
Clinica Bupa Santiago S.A. CLP Ordinary
Examenes De Laboratorio S.A. CLP Ordinary
Grupo Bupa Sanitas Chile Uno, SpA CLP1,000.00 Ordinary
Inversiones Clinicas CBS S.A. CLP Ordinary
Isapre Cruz Blanca S.A. CLP Ordinary
100.00
99.79
99.99
99.41
Cerro Colorado N° 5240, Piso 6, Comuna Las Condes, Region Metropolitana, Chile
Bupa Servicios de Salud SpA
1
CLP Ordinary
Integramedica S.A. CLP Ordinary
Recaumed S.A.
1
CLP Ordinary
Sonorad II S.A.
1
CLP Ordinary
100.00
99.99
58.40
100.00
99.99
99.99
58.40
99.89
Dr. Juan Noe N° 1370, Comuna Arica, Region Arica y Parinacota, Chile
Corporacion Medica de Arica S.A. CLP Ordinary
Sociedad De Inversiones Pacasbra S.A. CLP Ordinary
68.97
100.00
68.97
69.19
Manuel Antonio Matta N° 1868, Comuna Antofagasta, Region Antofagasta, Chile
Inmobiliaria Centro Medico Antofagasta S.A. CLP Ordinary 99.99 88.94
Manuel Antonio Matta N° 1945, Comuna Antofagasta, Region Antofagasta, Chile
Centro Medico Antofagasta S.A. CLP Ordinary
Inversiones Clinicas Pukara S.A. CLP Ordinary
Servicios Y Abastecimiento A Clinicas S.A. CLP Ordinary
100.00
88.95
100.00
88.95
88.95
88.92
126
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class Proportion of
class held (%)
Effective %
ownership
Chile (continued)
Pedro Aguirre Piso 5, Cerda N° 843, Comuna Arica, Region Arica y Parinacota, Chile
Centro De Diagnostico Avanzado San Jose S.A. CLP Ordinary 100.00 68.98
China
Suite 07-2, 08, 4F Fortune Financial Center, No 5 Dongsanhuan Zhong Road, Chaoyang District, Beijing, 100020,
China
Bupa Consulting (Beijing) Co. Ltd. HKD1.00 Ordinary
Denmark
Axeltorv 2, 1609, Copenhagen V, Denmark
Bupa Denmark Services A/S
2
DKK100.00 Ordinary
Dominican Republic
Av. Winston Churchill, corner with Rafael Augusto Sanchez, Plaza Acropolis, Apt. P2-D, Santo Domingo, Dominican
Republic
Bupa Dominicana, S.A. DOP1,000.00 Ordinary
Ecuador
Av. Republica de El Salvador N34-229, 4th Floor, Quito, Ecuador
Bupa Ecuador S.A. Compania de Seguros
3
USD1.00 Capital Stock
Egypt
Building 55, Street 18, Maadi, Cairo, Egypt
Bupa Egypt Insurance S.A.E.
4
EGP10.00 Ordinary
Mivida Business Park, Building 3/B1, 5th Settlement, New Cairo, 11835, Egypt
Bupa Egypt Services LLC EGP100.00 Ordinary
Guatemala
Quinta avenida número cinco guión cincuenta y cinco, Zona catorce de esta ciudad, Edificio Europlaza World
Business Center, Torre III, undécimo nivel, área corporativa número un mil, Guatemala
Bupa Guatemala, Compania de Seguros, S.A.
5
GTQ1.00 Ordinary
Guernsey
PO Box 155, Mill Court, La Charroterie, St Peter Port, GY1 4ET, Guernsey
Bupa Holdings (Guernsey) Limited £1.00 Ordinary
UK Care No. 1 Limited £1.00 Ordinary
Hong Kong
6/F & Unit Nos. 701B, 702-704 of Tower 2, The Quayside, 77 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong
Bupa (Asia) Limited HKD10.00 Ordinary
Bupa International Limited
6
HKD Ordinary
Bupa Limited HKD1.00 Ordinary
Horizon Health and Care Limited HKD Ordinary
6/F, and Unit Nos. 701-702 and 704, Tower 1, The Quayside, 77 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong
Allied Medical Practices Guild Limited HKD1.00 Ordinary
Alpha Medical MRI (TST) Limited HKD10,000.00 Ordinary
Central Medical Diagnostic Centre Limited HKD1.00 Ordinary 74.49 74.49
Central MRI Centre Limited HKD1.00 Ordinary 100.00 74.49
Central PET/CT Scan Centre Limited HKD1.00 Ordinary 100.00 74.49
Eplushealth Limited HKD1.00 Ordinary
Quality Healthcare Chinese Medicine Services Limited HKD1.00 Ordinary
Quality HealthCare Dental Services Limited HKD1.00 Ordinary
Quality Healthcare Group Limited HKD1.00 Ordinary
127
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
Hong Kong (continued)
Quality HealthCare Medical Centre Limited HKD100.00 Ordinary
Quality Healthcare Medical Diagnostic & Imaging Services HKD1.00 Ordinary
Limited
Quality HealthCare Medical Services Limited HKD1.00 Ordinary
Quality HealthCare Nursing Agency Limited HKD10.00 Ordinary
Quality HealthCare Physiotherapy Services Limited HKD1.00 Ordinary
Quality HealthCare Professional Services Limited HKD1.00 Ordinary
Quality Healthcare TPA Services Limited HKD1.00 Ordinary
Ireland
Second Floor, 10 Pembroke Place, Ballsbridge, Dublin, 4, Ireland
Bupa Global Designated Activity Company €1.00 Ordinary
St Martins House, Waterloo Road, Ballsbridge, Dublin, Ireland, D04 V6V4, Ireland
Oasis Healthcare Holdings Ireland Limited €1.00 Ordinary
Xeon Dental Services Limited €0.01 Ordinary
Macao
Rua De Xangai No. 175 Edif., Associacao Comercial De Macau, 11 Andar, K, Macau
Quality EAP (Macau) Limited MOP1.00 Ordinary
Quality Healthcare Medical Services (Macau) Limited MOP1.00 Ordinary
Mexico
Av. Xola 535, Piso 17, Col. Del Valle, Mexico City, CP 03100, Mexico
Corporativo Vitamedica, S.A. De C.V. MXN10.00 Ordinary
Vitamedica Administradora, S.A. De C.V. MXN Class I, Series A
(Fixed), MXN Class I,
Series B (Fixed), MXN
Class II, Series A
(Variable)
Avenida Ejercito Nacional Numero 843-B, Edificio Corporativo Antara I, Piso 9, Colonia Granada, Alcaldia Miguel
Hidalgo, C.P. 11520, Mexico
Bupa Mexico, Compania de Seguros, S.A. de C.V. MXN1,000.00 Series A
(fixed), MXN1,000.00
Series B (variable)
Bupa Servicios de Evaluacion Medica, S. de R.L. de C.V.
7
MXN Ordinary, MXN
Ordinary (Variable)
Bupa Servicios Dentales, S.A. de C.V. MXN10.00 Ordinary
Bupa Servicios Globales, S. de R.L de C.V. MXN1.00 Ordinary
Prolongacion Paseo de la Reforma No. 9, Paseo de las Lomas, Alvaro Obregon, C.P. 01330, Mexico City, Mexico
Promotora de Hospitales y Servicios Integrales, S.A.P.I. de C.V. MXN Fixed Capital Class
I, MXN Variable Capital
Class II
New Zealand
Bupa House, Level 2, 109 Carlton Gore Road, Newmarket, Auckland, 1023, New Zealand
Bupa Care Services NZ Limited NZD Ordinary
Bupa Retirement Villages Limited NZD Ordinary
Panama
Prime Time Tower, Floor 25, Office 25 b La Rotonda Ave, Costa del Este, Panama
Bupa Panama S.A. US$1,000.00 Ordinary
Bupa Servicios Panama, S.A. US$1.00 Common
128
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
Peru
Av. Guardia Civil N° 664, Comuna San Isidro, Region Lima, Peru
Anglolab S.A PEN Ordinary-A
PEN Ordinary-B
100.00 85.00
Integramedica Peru S.A.C. PEN Ordinary
MediPerú S.A. PEN Ordinary 99.97 99.97
Poland
Al. Tadeusza Rejtana 20A, 35-310 Rzeszów, Poland
Stomatologia Aleksander Makara Spolka Z Ograniczona
Odpowiedzialnoscia
PLN100.00 Ordinary
Czapliniecka 93/95, 97-400, Belchatow, Poland
Megamed Sp. z.o.o. PLN1,000.00 Ordinary
Goszczyńskiego 1 Street, 02-616, Warsaw, Poland
Hifu Clinic Sp. z.o.o.
Szpital Sw. Elzbiety Sp. z.o.o.
PLN50.00 Ordinary
PLN50.00 Ordinary
70.16 70.16
Partyzantow 76, 80-254, Gdansk, Poland
Projekt Usmiech Bis Sp. z.o.o. PLN500.00 Ordinary
Podleśna 61, 01-673, Warsaw, Poland
"Centrum Medyczne Mavit" Sp. z.o.o. PLN100.00 Ordinary
Pory 78 Street, 02-757, Warsaw, Poland
"Sport Medica" S.A.
Pory 78 Sp. z.o.o.
PLN1.00 Ordinary-A,
PLN1.00 Ordinary-B,
PLN1.00 Ordinary-C,
PLN1.00 Ordinary-D,
PLN1.00 Ordinary-E,
PLN1.00 Ordinary-F,
PLN1.00 Ordinary-G,
PLN1.00 Ordinary-I,
PLN1.00 Ordinary-J,
PLN1.00 Ordinary-K,
PLN1.00 Ordinary-L
PLN100.00 Ordinary
Pulawska 48, 05-500 Piaseczno, Poland
Silver Dental Clinic Sp. z.o.o. PLN50.00 Ordinary
Rowninna 6 Street, 87-100, Torun, Poland
Citomed Nieruchomosci Sp. z.o.o. PLN100.00 Ordinary
Szamocka 6 Street, 01-748, Warsaw, Poland
LUX MED Onkologia Sp. z.o.o. PLN50.00 Ordinary
ul. Byslawska 84, 04-993 , Warszawa, Polska
Centrum Edukacji Medycznej Sp. z.o.o. PLN100.00 Ordinary
ul. Dluga 43, 05-510 Konstancin-Jeziorna, Polska
LUX MED Tabita Sp. z.o.o. PLN100.00 Ordinary 88.00 88.00
ul. Elblaska 135, 80-718, Gdansk, Poland
"Centrum Opieki Medycznej Comed" Sp. z.o.o. PLN500.00 Ordinary
129
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
Poland (continued)
ul. Franciszka Rakoczego 19 lok. U5, 80-286 Gdansk, Polska
Mediss Dental Clinic Sp. z.o.o. PLN250.00 Ordinary
ul. Kamienna 21, 31-403 Krakow, Polska
Medtour Sp. z.o.o. PLN50.00 Ordinary
ul. Kuznicka 1, 72-010 Police, Polska
"Medika" Uslugi Medyczne Spolka Z Ograniczona
Odpowiedzialnoscia
PLN50.00 Ordinary
ul. Marszalkowska 55/73 lok. 42, 00-676, Warszawa, Polska
LUX MED Benefity Sp. z.o.o. PLN100.00 Ordinary
ul. Obornicka 262, 60-693 Poznan, Polska
Fundacja MedPolonia
Med-Polonia Sp. z.o.o.
Founder Contribution
PLN50.00 Ordinary
Ul. Porcelanowa 23, 40-246, Katowice, Poland
4DENT Sp. z.o.o. PLN100.00 Ordinary
ul. Postepu 21 C , 02-676, Warszawa, Polska
“Fundacja LUX MED Im. Dr Joanny Perkowicz”
Elblaska Sp. z.o.o.
LUX MED Sp. z.o.o.
LUX-MED Investment S.A.
Founder Contribution
PLN50.00 Ordinary
PLN500.00 Ordinary
PLN50.00 Series A,
PLN50.00 Series B,
PLN50.00 Series C,
PLN50.00 Series D
ul. Stefana Batorego 17/19, 87-100 Torun, Poland
Tomograf Sp. z.o.o. PLN500.00 Ordinary
ul. Wiejska 17/7 Street, 00-480, Warsaw, Poland
ApteGo Sp. z.o.o. PLN50.00 Ordinary 51.00 51.00
ul. Wrocławska 2A, 52-229 Komorowice, Polska
Orthos Szpital Wielospecjalistyczny Spolka Z Ograniczona
Odpowiedzialnoscia
PLN500.00 Ordinary
Wileńska, 44 Street, 80-215, Gdańsk
Swissmed Centrum Zdrowia S.A. PLN10.00 Ordinary
Swissmed Nieruchomosci Sp. z.o.o. PLN500.00 Ordinary
Swissmed Opieka Sp. z.o.o. PLN1,000.00 Ordinary
Saint Kitts and Nevis
Amory Building, Victoria Road, Basseterre, St. Kitts, Saint Kitts and Nevis
Amedex Services Ltd. (St Kitts) US$1.00 Capital Stock
Singapore
600, North Bridge Road, #05-01 Parkview Square, 188778, Singapore
Bupa Singapore Holdings Pte Ltd SGD Ordinary
Spain
Avda Marcelo Celayeta, 144 - Pamplona (31014), Spain
Sanitas Mayores Navarra S.L. €60.10 Ordinary
130
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
Spain (continued)
Avenida Generalitat Valenciana no 50, Valencia, Spain
Especializada y Primaria L'Horta-Manises, S.A.U. €1.00 Ordinary
c/ Eguskiaguirre no.8, 48902, Baracaldo, Bilbao, Spain
Sanitas Mayores Pais Vasco S.A. €120.00 Ordinary
Calle Ribera Del Loira, 52, 28042, Madrid, Spain
Elegimosalud S.L.U
Fundacion Sanitas
8
Fundacion Sanitas Hospitales Para el Desarrollo de la
Investigacion y la Innovacion Medica
Grupo Bupa Sanitas S.L.U.
Sanitas Emision S.L.U.
Sanitas Holding, S.L.U.
Sanitas Mayores S.L.
Sanitas Nuevos Negocios S.L.U.
Sanitas S.A. de Seguros
Sanitas S.L. de Diversificacion S.U.
Sanitas, S.A. de Hospitales S.U.
€1.00 Ordinary
€1.00 Contribution
Founder Contribution
€100.00 Ordinary
€1.00 Ordinary
€1.00 Ordinary
€651.28 Ordinary
€1.00 Ordinary
€0.68 Ordinary
€6.02 Ordinary
€6.01 Ordinary
100.00
99.92
99.92
99.92
Sweden
Box 27093, 102 51, Stockholm, Sweden
LMG Forsakrings AB €1,000.00 Ordinary
Türkiye
Cevizli Mah. Tugay Yolu Cad. No: 69A, Maltepe, Istanbul, 34846, Türkiye
Bupa Turkey Sağlık Hizmetleri A.S. TRY1,000.00 Ordinary
Sencard Dis Klinigi AS TRY100,000.00 Ordinary
Küçükbakkalköy Mah. Basar Sok, No: 20 Atasehir, Istanbul, 34750, Türkiye
Bupa Acibadem Sigorta A.S. TRY1.00 Ordinary
Piazza Ofis, Cevizli Mah. Tugay Yolu Cad. No: 69A, İç Kapı No: 52 Maltepe, Istanbul, Türkiye
Sencard Direkt Satis Sigorta Araciligi A.S. TRY1.00 Ordinary
United Arab Emirates
Unit C1204, Level 12, Burj Daman, DIFC, PO Box 507019, Dubai, United Arab Emirates
Bupa Global Middle East (DIFC) Limited US$1.00 Ordinary
United Kingdom
1 Angel Court, London, EC2R 7HJ, United Kingdom
ANS 2003 Limited
2
£0.01 Ordinary
ANS Limited £0.10 Ordinary
Bede Village Management Limited £1.00 Ordinary
Bridge Health Investments Limited
2
£1.00 Ordinary
Bupa Care Homes (AKW) Limited £1.00 Ordinary
Bupa Care Homes (ANS) Limited £1.00 Ordinary
£1.00 Special Share
Bupa Care Homes (BNH) Limited £1.00 Ordinary
Bupa Care Homes (BNHP) Limited £1.00 Ordinary
Bupa Care Homes (CFCHomes) Limited £1.00 Ordinary
Bupa Care Homes (CFG) Limited
2
£0.25 Ordinary
Bupa Care Homes (CFHCare) Limited €0.000001 Redeemable
Preference, £1.00
Ordinary
131
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
United Kingdom (continued)
Bupa Care Homes (Developments) Limited £1.00 Ordinary
Bupa Care Homes (GL) Limited £1.00 Ordinary
Bupa Care Homes (HH Bradford) Limited £1.00 Ordinary
Bupa Care Homes (HH Hull) Limited £1.00 Ordinary
Bupa Care Homes (HH Leeds) Limited £1.00 Ordinary
Bupa Care Homes (HH Northumberland) Limited £1.00 Ordinary
Bupa Care Homes (HH Scunthorpe) Limited £1.00 Ordinary
Bupa Care Homes (HH) Limited £1.00 Ordinary
Bupa Care Homes (Holdings) Limited
2
£1.00 Ordinary
Bupa Care Homes (Partnerships) Limited £1.00 Ordinary
Bupa Care Homes (PT Lindsay) Limited £1.00 Ordinary
Bupa Care Homes (PT Links) Limited £1.00 Ordinary
Bupa Care Homes Investments (Holdings) Limited
2
£1.00 Ordinary
Bupa Care Services (Commissioning) Limited £1.00 Ordinary
Bupa Care Services Limited
2
£0.20 Ordinary
Bupa Foundation Guarantee Member
Interest
Bupa Global Holdings Limited €1.00 Ordinary, €0.01
Ordinary, £1.00 Ordinary
Bupa Healthcare Services Limited
2
£1.00 Ordinary
Bupa Home Healthcare Pension Scheme Trustee Limited
2
£1.00 Ordinary
Bupa Insurance Limited
2
£1.00 Ordinary
Bupa Insurance Services Limited
2
£1.00 Ordinary
Bupa International Markets Limited £1.00 Ordinary
Bupa Investments Limited
2
£1.00 Ordinary
Bupa Investments Overseas Limited
2
AUD Redeemable
Preference, CLP1.00
Redeemable Preference,
£1.00 Ordinary
Bupa Limited £1.00 Ordinary
Bupa Occupational Health Limited £1.00 Ordinary
Bupa Pension Scheme Trustees Limited
2
£1.00 Ordinary
Bupa Secretaries Limited £1.00 Ordinary
Bupa Trustees Limited £1.00 Ordinary
Cromwell Hospital Retirement Plan Trustee Limited
2
£1.00 Ordinary
Occupational Health Care Limited £1.00 Ordinary, £1.00
Redeemable Preference
Richmond Care Villages (Property) Limited £1.00 Ordinary
Richmond Care Villages Holdings Limited
2
£1.00 Ordinary
Richmond Coventry Limited £1.00 Ordinary
Richmond Letcombe Limited £1.00 Ordinary
Richmond Nantwich Developments Limited £1.00 Ordinary
Richmond Nantwich Limited £1.00 Ordinary
Richmond Nantwich Properties Limited £1.00 Ordinary
Richmond Northampton Limited £1.00 Ordinary
Richmond Northampton Management Limited £1.00 Ordinary
Richmond Painswick Management Company Limited £1.00 Ordinary
Richmond Villages Operations Limited £1.00 Ordinary
13 Queens Road, Aberdeen, Aberdeenshire, AB15 4YL, United Kingdom
Hillington Park Dental Practice Limited £1.00 Ordinary
MFM Community Limited £1.00 Ordinary
132
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
United Kingdom (continued)
Bupa Dental Care, Vantage Office Park, Old Gloucester Road, Hambrook, Bristol, BS16 1GW, United Kingdom
A4 Health Group Limited £1.00 Ordinary
Aesthetic Dental Laboratory Limited £1.00 Ordinary
Apex Dental Care Limited £1.00 Ordinary
Archway Dental Practice Limited £1.00 Ordinary
Arnica Dental Care Limited £1.00 Ordinary
Avsan Cove Limited £1.00 Ordinary
Avsan Dental Edinburgh Limited £1.00 Ordinary
Avsan Ferryburn Limited £1.00 Ordinary
Avsan Fife Limited £1.00 Ordinary
Avsan Fleet Limited £1.00 Ordinary
Avsan Gloucester Limited £1.00 Ordinary
Avsan Halstead Limited £1.00 Ordinary
Avsan Kseat Limited £1.00 Ordinary
Avsan Queenscross Limited £1.00 Ordinary
Avsan Queensroad Limited £1.00 Ordinary
Avsan Visage Limited £1.00 Ordinary
B Dental Limited £1.00 Ordinary
BASDAC (2011) LLP Partnership Interest
BE White Ltd £1.00 Ordinary
Bupa Dental Services Limited £1.00 Ordinary
Caring Dentistry Ltd £1.00 Ordinary
Cheshire Cat Orthodontics Limited £1.00 Ordinary
Clock Tower Dental Care Limited £1.00 Ordinary
Colchester Dental Referral Centre Limited £1.00 Ordinary
Croft Dental Care Limited £1.00 Ordinary
Den Dental Group Practice LLP Partnership Interest
Dencraft (Leicester) Ltd £1.00 Ordinary
Dencraft (South Yorkshire) Limited £1.00 Ordinary
Dental Confidence Limited £1.00 Ordinary
Dental Excellence - Harewood Practice LLP Partnership Interest
Dentalign Colwyn Bay Ltd £1.00 Ordinary
Dentalign Eastbourne Ltd £1.00 Ordinary
Dentalign Orthodontics Limited £1.00 Ordinary
Dentalign Orthodontics LLP Partnership Interest
Dentalign Wrexham Ltd £1.00 Ordinary
Derwent House Orthodontics Limited £1.00 A Ordinary
Devon Smiles Limited £1.00 Ordinary
Deysbrook Dental Surgery Limited £1.00 Ordinary
Diamond House Dental Practice Limited £1.00 Ordinary
Eckington Dental Practice Limited £1.00 Ordinary
Eurodontic Limited £1.00 Ordinary
Fairfield Dental Surgery Limited £1.00 Ordinary
Freshdental Practice Limited £1.00 Ordinary
Future Drilling Limited £1.00 Ordinary
Goodteeth Dental Surgeries Limited £1.00 Ordinary
Grosvenor Orthodontic Clinic (Beckenham) Limited £1.00 Ordinary
Harbour Way Surgery Limited £1.00 A Ordinary
Haven Green Clinic Limited £1.00 Ordinary
Highland Dental Care Limited £1.00 Ordinary
Highwoods and St Johns Limited £1.00 Ordinary
Highworth Dental Care Limited £1.00 Ordinary
Hope Dental Practice Limited £1.00 Ordinary, £1.00
Ordinary B
133
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
United Kingdom (continued)
Hospital Lane Dental Clinic Limited £1.00 Ordinary
Iosis Clinic Limited £1.00 Ordinary
J A Jordan & Associates Limited £1.00 Ordinary
J.J. Thompson (Orthodontic Appliances) Limited £1.00 Ordinary
James Taylor and Partners Limited £1.00 Ordinary
JDH Holdings Limited £0.10 Ordinary
Kidson Orthodontics Limited £1.00 Ordinary
King Lane Dental Care Limited £1.00 Ordinary
KN Wellness Ltd £1.00 Ordinary
Lab 53 Limited £1.00 Ordinary
Lawrence Street Dental Practice Limited £1.00 Ordinary
Linden Dental Centre Limited £1.00 Ordinary
Luke Barnett Limited £1.00 Ordinary
Mainestream Dental Care Limited £1.00 Ordinary
Mark Fazakerley (VHO) Limited £1.00 Ordinary
MCM (Dental Services) Limited £1.00 Ordinary
MDANZ Limited £1.00 Ordinary
Metrodental Limited £1.00 Ordinary
Milehouse Dental Care Limited £1.00 Ordinary
Mojo-D Limited £1.00 Ordinary
MZINC Limited £0.01 Ordinary
Nigel Reynolds Limited £1.00 Ordinary
NM Jones Ltd £1.00 Ordinary
North Devon Orthodontic Centre Limited £1.00 Ordinary
Oasis Dental Care (Central) Limited £1.00 Ordinary
Oasis Dental Care (Southern) Holdings Limited £0.10 Ordinary-A
Oasis Dental Care (Southern) Limited £1.00 Ordinary
Oasis Dental Care Limited £1.00 Ordinary
Oasis Healthcare Limited £0.01 Ordinary
Oral Implantology Limited £1.00 Ordinary
Ortho 2008 Limited £1.00 Ordinary
Orthoscene Limited £1.00 Ordinary
Oswestry Dental Laboratory Limited £1.00 Ordinary
Peter Baldwin (VHO) Limited £1.00 Ordinary
Priors Croft Dental Practice Limited £1.00 Ordinary
Private Dental Services Ltd £1.00 Ordinary
Quantum Ortho Limited £1.00 Ordinary
Quest Dental Care LLP Partnership Interest
Raglan Suite Limited £1.00 Ordinary
Ratcliffe Dental Limited £1.00 Ordinary
Richley Dental Ceramics Limited £1.00 Ordinary
Rise Park Dental Practice Limited £0.10 Ordinary A,
£0.10 Ordinary B
Roberts-Harry Clinic Ltd £1.00 Ordinary
Shaw & Associates Dental Surgeons Ltd £1.00 Ordinary
Silverwell Surgery Ltd £1.00 Ordinary
Siobhan Owen Limited £1.00 Ordinary
Smile Dental Care Ltd £1.00 Ordinary
Smile Lincs Limited £1.00 Ordinary
Steeple Grange Smiles Limited £1.00 Ordinary
Stob Dearg Limited £1.00 Ordinary
Stop the Clock Dental Care Limited £1.00 Ordinary
Synergy Ceramics Ltd £1.00 Ordinary
TDK Dental Limited £0.50 Ordinary A
134
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
United Kingdom (continued)
The Adams and Lee Dental Practice Ltd £1.00 Ordinary
The Clinic Dental Facial Limited £1.00 Ordinary
The Dental Solutions Centre Ltd £0.02 Ordinary
The Exeter Dental Centre Limited £1.00 Ordinary
The Facial Aesthetics & Dental Centre Ltd £1.00 Ordinary
The Oasis Healthcare Group Limited
2
£1.00 Ordinary
The Spire Halifax Limited £1.00 Ordinary
The Tutbury Dental Practice Limited £1.00 Ordinary
Tooth Fixer Limited £1.00 Ordinary
Total Orthodontics Limited £1.00 Ordinary
Wessington Way Limited £0.10 Ordinary
Whole Tooth Limited £1.00 Ordinary
Wimborne Total Dental Care Limited £1.00 Ordinary
Windslade Limited £1.00 Ordinary
Winning Smiles (Gillingham) Limited £1.00 Ordinary
Wylde Green Orthodontics LLP Partnership Interest
Wylye Valley Dentistry Limited £1.00 Ordinary
Xeon Smiles UK Limited £1.00 Ordinary
Cromwell Hospital, Cromwell Road, London, SW5 0TU
Cromwell Health Group Limited
2
£1.00 A Ordinary
Medical Services International Limited £1.00 Ordinary
Mind Your Business (Ni) Ltd, 1 Elmfield Avenue, Warrenpoint, Newry, County Down, BT34 3HQ, Northern Ireland
Belfast Orthodontic Clinic Ltd £1.00 Ordinary
Blueapple Dental and Implant Team Limited £1.00 Ordinary
Cranmore Excellence in Dentistry Limited £1.00 Ordinary
DE (Belmont Road) Ltd £1.00 Ordinary
Fortwilliam and Ballymena Specialist Dental Clinics Limited £1.00 Ordinary
Smiles Dental Practices North Limited £1.00 Ordinary
Pinsent Masons Llp, 13 Queens Road, Aberdeen, AB15 4YL, United Kingdom
Martin and Martin Dental Care Limited £1.00 Ordinary
Partick Dental Ltd. £0.01 Ordinary
United States
18001 Old Cutler Road , Suite 300 Palmetto Bay , Florida 33157, United States
Bupa Insurance Company US$1.25 Capital Stock
Bupa Investment Corporation, Inc. US$1.00 Capital Stock
Bupa U.S. Holdings, Inc. US$0.01 Common Stock
Bupa Worldwide Corporation US$5.00 Capital Stock
U.S.A. Medical Services Corporation US$5.00 Capital Stock
1. In dissolution, pending deregistration
2. Held directly by the Company
3. 0.000015% held by nominee
4. 0.017% held by the Company
5. 1% held directly by the Company
6. 0.000001% held directly by the Company’s parent
7. 0.03% held directly by the Company
8. The Sanitas Foundation
135
Financial Statements of the Company
for the year ended 31 December 2023
Other related undertakings
The related undertakings listed below comprise joint ventures, associated undertakings and other significant holdings. Unless
otherwise stated, the proportion of the nominal value of each share class held indirectly by the Company is shown below,
together with the Group’s effective ownership, calculated by reference to the voting rights. All joint ventures are included in the
Group consolidation using the equity method.
Proportion of Effective %
Name Share class class held (%) ownership
Australia
International Tower 3' Level 18, 300 Barangaroo Ave, Sydney NSW 2000, Australia
George Health Enterprises Pty Limited AUD Ordinary 21.15 21.15
Level 16, 33 Exhibition Street, Melbourne VIC 3000, Australia
Mobile Dental Pty Ltd AUD Ordinary 49.00 49.00
Chile
Manuel Antonio Matta N° 1945, Comuna Antofagasta, Region Antofagasta, Chile
Sociedad Instituto De Cardiologia Del Norte Limitada CLP Social Rights 50.00 44.47
Pedro Aguirre Piso 5, Cerda N° 843, Comuna Arica, Region Arica y Parinacota, Chile
Centro De Imagenes Medicas Avanzadas San Jose S.A. CLP Ordinary 70.00 48.28
India
C-98 Lajpat Nagar, Part 1, New Delhi, 11002, India
Niva Bupa Health Insurance Company Limited
1
INR10.00 Ordinary 41.41 41.41
Poland
Tytusa Chalubinskiego 8 Street, 00-613, Warsaw, Poland
Centrum Edukacyjne Medycyny Sportowej Sp. z.o.o. PLN50.00 Ordinary 50.00 50.00
Saudi Arabia
7764 Prince Sultan St, Al Mohammediyah Dist., PO Box 260, Jeddah, 21411, Saudi Arabia
My Clinic Global Medical Company SAR100.00 Ordinary 100.00 50.00
My Clinic International Medical Company Limited SAR100.00 Ordinary 100.00 50.00
Nazer Bupa Medical Equipment Company Limited SAR1,000.00 Ordinary 50.00 50.00
Al-Khalidiyah-Nour Al Ehsan 3538, Unit 1 Jeddah 7505-23423, P.O. Box 23807, Jeddah, 21436, Saudi Arabia
Bupa Arabia For Cooperative Insurance Company SAR10.00 Ordinary 43.25 43.25
Bupa Arabia For Third Party Administration SAR1,000.00 Ordinary 100.00 43.25
Health Horizon Medical Care SAR100.00 Ordinary 100.00 43.25
United Kingdom
1 Angel Court, London, EC2R 7HJ, United Kingdom
Fulford Grange Medical Centre Limited £1.00 'A' Ordinary 100.00 50.00
4th Floor, 167 Fleet Street, London, EC4A 2EA, United Kingdom
Healthbox Europe 1 LP £1.00 Partnership Capital 37.04 37.04
Swan Court, Waterman's Business Park, Kingsbury Crescent, Staines, Surrey, England, TW18 3BA, United Kingdom
Healthcode Limited
2
£1.00 A Ordinary 100.00 20.00
£1.00 E Ordinary 20.00
Wilson House Waterberry Drive, Waterlooville, Hampshire, PO7 7XX, United Kingdom
London Oncology and Wellbeing Centre Limited £1.00 B 100.00 38.90
£1.00 Ordinary 17.91
136
Financial Statements of the Company
for the year ended 31 December 2023
Name Share class
Proportion of
class held (%)
Effective %
ownership
United States
745 Fort St, Ste 1100, Honolulu HI 96813, United States
HTH Re, Ltd US$1.00 Ordinary 100.00 49.00
933 First Avenue, King of Prussia PA 19406, United States
Highway to Health, Inc US$0.01 Ordinary 49.00 49.00
HTH Worldwide, LLC US$1.00 Ordinary 100.00 49.00
Worldwide Insurance Services, LLC US$1.00 Ordinary 100.00 49.00
1. Part held by nominees and see Note 1.8 for the Group's shareholding post year end date.
2. Held directly by the Company
137
