CEO Val Gooding retires
BUPA has reported an underlying pre tax surplus of £428.9m for the year, an increase of 19% on the previous year.
Announcing the tenth successive year of record profits, chief executive Val Gooding said the result reflected increased sales and continued re-investment in the group. The increase in surplus before taxation included strong performances in BUPA's international insurance businesses, UK Care Homes and a better year for UK Insurance.
She said: "2007 was an exceptional year in which we returned record profits and re-positioned our business for the future. We achieved strong organic growth and excellent customer satisfaction and service across the group despite a year of major corporate change.
“In 2008 we expect our main businesses to continue to grow well and the medium to long term prospects for the group are strong. We expect, however, that near term dilution from our acquisitions, the exit from Ireland and non recurring gains in 2007, will result in a somewhat lower underlying surplus for the current year.”
Ahead of today's results, Gooding announced her retirement. She will be succeeded by BUPA's finance director Ray King at the company's AGM in May. During her period as CEO, BUPA has seen an increase in turnover from £2 billion to £4.24 billion, customer numbers have increased from four million to almost eight million and the company has moved from being mostly UK-based to one in which over 35 percent of revenue is now derived from overseas operations.
BUPA's chairman Lord Leitch said: "Val Gooding has transformed the business in her time as CEO. Under her leadership BUPA has grown its home market and its diversification strategy has driven significant expansion of health and care services in Spain, Australia, New Zealand, Saudi Arabia and the US. She will leave the group in excellent health."
BUPA announced a number of major acquisitions in 2007, in Australia, New Zealand, Spain and the US, and confirmed its intention to merge its Australian health insurance business with the country’s second biggest player.
In 2007, the purchase of DCA Agedcare Group in Australia and New Zealand added 96 homes and almost 7,000 beds to BUPA's portfolio of care homes, making it a leading player in these markets. It also added the Euroresidencias group of 13 existing care homes and three new builds to its Spanish business.
The UK Care Homes portfolio grew with the acquisition of eight new care homes, one new build and the extension of seven others. In total, the Care Homes business invested £45 million as a result of the extensive development and refurbishment works both in the UK and Spain. BUPA is the largest care home owner-operator in the UK and New Zealand and second largest provider in Spain and Australia.
In December, BUPA announced the purchase of US based Health Dialog, in which it was the founder shareholder in 1997. The company is a leading provider of chronic condition management and 'shared decision making' services, which involves supporting patients in choosing between different treatments. BUPA completed this acquisition in January 2008.
The group also sold its 25 UK hospitals to the European private equity firm Cinven, and its insurance business in Ireland to the Quinn Group, following the imposition by the Irish government of the risk equalisation scheme.
Towards the end of the year, BUPA announced plans to merge BUPA Australia and MBF, Australia's second largest health insurer with almost two million members. The proposed merger will create Australia's leading private health insurer, insuring over three million customers, nearly 15 percent of the population. The proposed merger has been approved by the MBF's board and governing council. It will be voted on by policyholders in May '08.
Group income in 2007, at £4.24bn, was up 11%t. UK Insurance income grew by 7% to £1.90bn. Growth in surplus in the second half of the year for UK Insurance - which includes the provision of UK private medical insurance (PMI), expat health insurance, protection products, occupational health and health screening - was higher than anticipated due to good volume growth and some non recurring gains.
The UK Insurance business also developed its corporate health service, with such initiatives as online health assessments for all business customers, and further development of its positive health offering, forging closer links to the health and leisure sectors. The total number of UK Insurance customers rose by 5% to nearly 4.2 million.
Turnover from its care homes businesses increased by 10% to £648.7m, accounting for over 15% of the group's total income. Operating surplus was up by eight percent to £115.9m. The continued growth in surplus followed rigorous cost control, particularly in the use of agency staff.
Home and community healthcare provider Clinovia completed its first full year as a BUPA business following its acquisition in December 2006. It provides out of hospital care for around 12,000 NHS patients and recently won a contract to deliver a new service for 8,000 patients in Somerset.
In the UK, BUPA was appointed in 2007 to the Department of Health’s Framework for Procuring External Support for Commissioners (FESC). Its brief is to work with NHS Trusts as they plan, design, buy and evaluate health and care at a local level, so that taxpayers get the best value and patients receive the best possible care. BUPA commissions nearly £4bn of health and care per year on a global basis.
Val Gooding said: "Our support to NHS trusts is indicative of our increasing involvement, in the UK and elsewhere, in state funded healthcare systems. The majority of our care home residents in the UK, Australia and New Zealand are state funded. Our home and community healthcare specialist Clinovia provides out of hospital care for an increasing number of NHS patients. We’re building a new public hospital in Spain. And we currently work with around 200 NHS Trusts, comprising 350 hospitals and 60 NHS Foundations.
“We remain committed to our existing customer base but we are pleased to be able to make a wider contribution to the benefit of an increasing number of individuals, where this is commercially viable.”