BUPA Results for the Six Months Ended 30 June 2006 (Unaudited); Further Steady Growth.

LONDON -- BUPA:

----------------------------------------------------------------------
GBP million                      2006       2005     Change     2005

                             Half Year    Half Year    (%)   Full Year

Revenue                        2,098.0     1,866.6     12.4   3,878.7

Surplus before tax               131.7       150.7    (12.6)    357.4
Underlying surplus before
 tax(i)                          139.9       127.7      9.6     312.5
Net cash from operating
 activities                      254.7       224.4     13.5     394.5

Equity attributable to BUPA    1,794.3     1,308.0     37.2   1,702.9
----------------------------------------------------------------------

Highlights

--Revenue up 12.4% to GBP 2.1 billion including organic growth of 8%

--Underlying surplus before tax of GBP 139.9m - up 9.6%

--Strong cash generation of GBP 254.7m - up 13.5%

--Strong growth in International Insurance

--Higher claims in UK Insurance

--Integration of 2005 acquisitions, ANS, IHI and AMEDEX progressing smoothly

--BUPA Hospitals selected as preferred bidder for three tenders to provide services on behalf of the NHS

Commenting on these results, Val Gooding, Chief Executive, said:

"BUPA has continued to grow in line with expectations, with underlying profits up 9.6%. The Group has benefited from a consistent strategy of delivering high quality services for customers while investing to improve operating efficiency and for future growth. The geographic balance of the business provides considerable stability and opportunity."

For further enquiries:

Ray King, Group Finance Director, 020 7656 2330

Mark Hampton, Group Treasurer, 020 7656 2316

A conference call for bondholders will be held at 10am on Friday 15 September. Details are available from Sheila Boatswain at BUPA on 020 7656 2202.

(i) Excluding the impact of non-recurring items which includes profit on disposal of businesses and assets, costs relating to the Risk Equalisation Scheme in Ireland (RES), amortisation of intangible assets arising on acquisitions, goodwill impairment and various adjustments relating to the refinancing of Group debt. Underlying surplus for 2005 (full year) has been restated to exclude RES costs and amortisation of intangible assets.

INTRODUCTION

BUPA has continued to perform well in the first half of 2006. Compared to the first half of 2005, revenue grew by 12.4% to GBP 2,098m, with organic(1) growth of 8%. The underlying surplus before tax grew 9.6% to GBP 139.9m as detailed below.

The Group has continued to deliver on its strategy of offering customers a range of high quality services in growing healthcare markets. It is achieving strong organic growth in international markets as it capitalises on good trading conditions.

Six months ended 30 June                      2006      2005    Growth
                                             GBP m     GBP m
Surplus before taxation expense              131.7     150.7   (12.6)%

Exclude:
  BUPA Ireland RES and legal costs            10.1         -
  Profit on sale of businesses and assets    (16.4)     (6.3)
  Amortisation/impairment of goodwill and      2.7       3.9
  intangible assets
  Other items/currency translation             3.4       2.4
  Loss/(gain) on hybrid debt hedge(i)         19.0     (12.4)
Include:
  Hybrid debt interest(i)                    (10.6)    (10.6)

                                           ---------------------------
Underlying surplus before taxation           139.9     127.7      9.6%
 expense
                                           ---------------------------

    (i) Relates to the GBP 330m hybrid debt issue in 2004 which is
        accounted for as equity under IFRS. These adjustments
        represent the treatment of the net interest expense and the
        loss/gain on revaluation of the swap as if the borrowing was
        debt.

A summary of the Group's trading results for the six months ended 30 June 2006 is shown in the consolidated financial information (unaudited) on pages 12 to 22.

The Group has developed a broadly based healthcare business with a good geographic spread. In the first six months of 2006 the UK Insurance business accounted for 26% of Group operating surplus(2), International Insurance accounted for 27%, Care Homes 33% and Hospitals 14%.

After adjusting for business disposals, BUPA has achieved organic growth in customer numbers of 2% since the end of 2005, notably in Spain, the Middle East and in BUPA International, our expatriate insurer.

In the UK, BUPA Hospitals has been named preferred bidder for three five-year contracts to provide surgical and diagnostic services on behalf of the Department of Health.

(1) References to organic growth in revenues and surplus exclude the effect of currency translation differences and the impact of acquisitions and disposals.

(2) Operating surplus before costs relating to RES, amortisation of acquired intangible assets, unallocated central overheads, goodwill impairment, other income/charges and financial income and expenses.

The Group has progressed the integration of the acquisitions made during 2005; ANS is now fully integrated within Care Homes, while IHI and AMEDEX in International Insurance have delivered substantial purchasing efficiencies.

We are focused on enhancing operating capability and efficiency to improve value for customers. Initiatives such as a new operating platform and purchasing initiatives in UK Insurance, a new customer contact centre and digital imaging systems in BUPA Hospitals, and synergies generated from the businesses acquired in 2005 will benefit future service and operating margins.

During the first half of 2006, BUPA's strong cash generation continued to improve with net cash flows from operating activities up by 13.5% to GBP 254.7m. Total borrowings (including the subordinated perpetual guaranteed bonds) fell by 4% to GBP 1,404.9m. BUPA's shareholding in the Blackrock Clinic in Ireland was sold in March 2006 for GBP 34.5m, generating a profit on disposal of GBP 12.2m.

REVIEW OF OPERATIONS

UK Insurance

BUPA's UK Insurance operations provide private medical insurance to nearly four million customers in UK Membership, BUPA Ireland and BUPA International as well as providing life assurance, income protection and critical illness cover through BUPA Health Assurance, and health assessments and occupational health services through BUPA Wellness.

Revenue in UK Insurance grew by 9% to GBP 914.2m compared to the first six months of 2005 while the operating surplus decreased by GBP 2.8m to GBP 38.0m. This excludes a charge of GBP 10.1m for costs relating to the Risk Equalisation Scheme in Ireland (described in more detail below). The reduction in profit mainly reflected an increase in claims in UK Membership and BUPA International. Appropriate action is being taken to restore margins over time in both businesses.

In UK Membership volumes remained stable year on year, consistent with the overall market. Profits were lower during the first six months due to increasingly competitive market conditions across the business sector and an upturn in claims experience across both the individual and business sectors.

During the period, the business has progressed a major change programme begun in 2005 which will deliver operating efficiencies and allow greater speed and flexibility in the development of new products. It has implemented the first phase of a major new operating system and the second phase will be implemented during 2007. This will yield substantial cost savings thereafter through replacement of existing mainframe systems.

The business continues to work with healthcare providers to ensure effective cost management without compromising care. In April, UK Membership launched the UK's first specialist MRI network, which gives members access to leading radiologists and state-of-the-art scanners in centres of excellence around the country. This will ensure high quality of service and better value for money for members. Further specialised networks are planned for the future. The Group is committed to its customers and has continued to provide the most comprehensive cancer coverage in the UK market, notwithstanding the pressure on margins from the growing number of high cost treatments now available.

BUPA International provides expatriate health insurance for over 320,000 customers across the world, an increase of 6% since the end of 2005. BUPA International's UK-based operations are complemented by our international insurance businesses, IHI and AMEDEX, acquired in 2005, which are reported within International Insurance (see below).

BUPA Health Assurance has grown its customer base by over 7% in the individual and group risk markets since the end of 2005. In the individual protection market BUPA recently introduced a web-based system to allow online processing of customer applications, enhancing the service to the IFA community. The service is being rolled out and enhanced during 2006 and 2007.

In 2005, BUPA began a legal challenge in Ireland and continued its legal challenge in Europe against the introduction of the Risk Equalisation Scheme (RES); RES would act to create a subsidy for the State insurer, VHIB. During the first half of 2006, the legal challenge against the validity of RES was heard in the Irish High Court; a decision is expected in mid-September. Pending the outcome of this matter, the income statement includes a charge of GBP 10.1m consisting of the estimated RES liability for the six months to 30 June 2006 and the legal fees incurred, in case the outcome proves unfavourable.

As previously stated, the Group regards a satisfactory outcome of the RES issue as essential to the viability of its Irish business, which serves over 450,000 customers. If BUPA is not successful in its challenge then it will be forced, reluctantly, to withdraw from the market. However, it is important to note that while the Irish business serves a significant number of customers it represents only 3% of Group revenues.

International Insurance

The International Insurance segment includes the Group's private medical insurance businesses in Spain (Sanitas), Australia, Saudi Arabia (BUPA Middle East), Hong Kong, Thailand, and IHI in Denmark and AMEDEX in the USA. It also includes the hospitals and clinic activities in Spain, which primarily treat Sanitas private medical insurance customers.

BUPA's successful international growth has continued, with revenue in International Insurance increasing by 31% to GBP 663.1m compared to the first half of 2005, and the operating surplus increasing by 52% to GBP 37.7m. Organic growth in revenues and operating surplus was 11% and 38% respectively, due mainly to membership growth within Sanitas and the Middle East and good underwriting results in Australia. Overall membership outside the UK grew by 3% compared with the end of 2005.

Sanitas increased its membership by 4% since the end of 2005 with good growth in the business sector, driven by an expanded sales force and a differentiated product portfolio, combined with good cost control. Sanitas continues to implement a change programme designed to enhance its product offering to members and to grow the business further across Spain.

2006 is the first full year of trading within BUPA for IHI and AMEDEX. Since the acquisition of these businesses the two companies' customer base has grown by 11% to over 351,000. These businesses are working closely with BUPA International and have already secured cost savings, principally through purchasing efficiencies. BUPA now holds a leading position in the expatriate market.

BUPA Australia insures nearly one million members and has grown membership by 1% in the period in a stable market. It trades under the names HBA in Victoria and New South Wales, and Mutual Community in South Australia. Volumes benefited from continuing growth in New South Wales, a new market entered in late 2005. BUPA Australia continues to be the most efficient health insurer in the market, ensuring good control over medical costs and with operating costs consistently lower than the Australian industry average.

BUPA Middle East, the joint venture with the Nazer Group, grew membership in Saudi Arabia to over 205,000 in the first six months of 2006. This is an increase of 30% since the end of 2005. The business is benefiting from a requirement for companies to provide their expatriate employees with medical insurance.

The Hong Kong business has maintained its membership above 140,000 since the end of 2005. During the first half BUPA has seen the benefit of the actions taken in 2005 to restore profitability following the disruption in the market post SARS. BUPA Thailand has over 160,000 members, down from 184,000 at the end of 2005 due to increased competition from multi-line insurers. In the face of aggressive competition both businesses are focusing on winning and retaining profitable customers.

Care Homes

BUPA is one of the largest providers of high quality nursing and residential care to older people in the UK with 298 homes and over 20,000 beds in the UK and 21 homes and over 2,000 beds in Spain. Overall revenue grew to GBP 288.1m, an increase of 20% compared to the first half of 2005, and the operating surplus grew by 35% to GBP 48.0m, benefiting from the contribution of ANS, acquired in August 2005. Organic growth in revenue and operating surplus was 5% and 9% respectively.

The UK care homes business continued to perform well. The former ANS care homes have been fully integrated into the BUPA care homes portfolio. Organic growth was achieved through normal fee increases, and tight cost management, especially agency costs, notwithstanding slightly lower occupancy than in the first half of 2005 as a result of a tightening of Local Authority budgets. Occupancy levels have started to improve in the second half of the year.

In June the business opened a 56 bed care home in North Baddesley, near Southampton, at a cost of GBP 3.7m; the home is dedicated to residents with dementia. In the second half of the year construction is expected to begin on five new extensions adding over 100 beds and two new homes in the UK for opening in 2007. BUPA continues to invest in the existing portfolio through refurbishment to maintain a high quality environment for residents.

Sanitas Residencial, the Group's Spanish care homes business, has grown occupancy in 2006 and started a new development in the Basque region. Construction is also expected to start later this year on a further two new homes in Salamanca and Madrid, for opening in January 2008.

The UK care homes market continues to offer good prospects for profitable growth based on favourable demographics, provided local authority fee levels fairly reflect the cost of care.

Hospitals

This business comprises the 25 BUPA hospitals in the UK, the Redwood Diagnosis and Treatment Centre in Surrey, and Teddies nurseries.

BUPA Hospitals' revenue decreased by 16.8% to GBP 232.6m and operating surplus of GBP 21.2m was 28.1% lower than the first half of 2005, reflecting the sale of nine hospitals in July 2005 and the Blackrock Clinic in March 2006. Organic growth in revenue, excluding the effects of disposals, was 2%, reflecting a strong performance from outpatient treatment and diagnostic scans, offset by a change in activity mix and a decrease in NHS volumes following the completion of the GSUPP2 contract. NHS activity is expected to increase in 2007 with the development of the NHS' extended choice network (ECN).

Excluding the impact of disposals, operating surplus fell by GBP 0.7m (3.2%) to GBP 21.2m. This reflected a GBP 2m increase in investment in business development, including the implementation of a new operating model to capitalise fully on the network capabilities of our hospital portfolio, creation of a new customer contact centre and bid costs for NHS tenders; investment will continue in the second half of 2006. BUPA has been named the preferred bidder for three five-year contracts for the provision of elective care services (ECS) and provision of diagnostics procedures. ECS inpatient and daycase volumes are expected to be over 10,000 per year, and diagnostic procedures over 100,000 per year. BUPA is developing the capability to store and transmit medical scans digitally to support the delivery of diagnostic services. This will allow for faster and more cost-effective diagnosis of patient conditions.

In March 2006 BUPA disposed of its majority shareholding in the Blackrock Clinic. Proceeds from the sale were GBP 34.5m, generating a profit on sale of GBP 12.2m.

FINANCIAL REVIEW

The Group surplus before financial income and expenses grew by 14% compared to the first half of 2005, to GBP 148.1m (2005: GBP 129.5m). This reflected the growth in operating surplus from business units described above, together with an increase in other income of GBP 16.4m (2005: GBP 6.3m) due mainly to the profit on sale of the majority shareholding in the Blackrock Clinic.

Financial income and expenses

Net financial expenses were GBP 16.4m (2005: GBP 21.2m net financial income). As required by IAS 32, this excludes the interest payable on the subordinated perpetual guaranteed bonds of GBP 10.6m (2005: GBP 10.6m) and includes a reduction of GBP 19.0m (2005: GBP 12.4m gain) in the fair value of the interest rate swaps held in relation to the perpetual bonds, reflecting the movement in interest rates during the period. Management considers the perpetual bonds and associated payments to be financial liabilities and expenses of the Group; on that basis net financial expenses, including the interest payable on the perpetual bonds and excluding the interest rate hedge, were GBP 8.0m (2005:GBP 1.9m).

Taxation

The tax charge for the half-year ended 30 June 2006 was GBP 41.5m (2005: GBP 45.2m). This represents an effective rate of 31.5% (2005: 30.0%) on the surplus before taxation expense of GBP 131.7m (2005: GBP 150.7m) and is described in more detail in note 6.

Surplus and movements in total equity

The surplus for the six months ended 30 June 2006 was GBP 90.2m (2005: GBP 105.5m). Equity attributable to BUPA increased by GBP 91.4m in the six months to 30 June 2006 to GBP 1,794.3m. This includes actuarial gains on the Group's pension schemes of GBP 19.7m (2005: GBP 2.7m gain), and net foreign exchange losses of GBP 5.3m (2005: GBP 0.4m loss) in respect of the translation of the balance sheets of overseas subsidiaries. Total equity rose to GBP 2,129.0m at 30 June 2006, an increase of GBP 85.1m in the period, and an increase of GBP 482.8m since 30 June 2005, reflecting the retained surplus in the 12 months and the property revaluation of GBP 306.3m in December 2005.

As required by IFRS 3, the balance sheet as at 31 December 2005 has been restated following finalisation of accounting for the 2005 acquisitions as set out in note 10 to the consolidated financial information. This restatement has no material effect on equity.

Post employment benefits

The net deficit under IAS 19 of the post employment schemes has decreased during the first half of 2006 from GBP 181.7m to GBP 157.4m. The main component of this decrease in deficit relates to the BUPA Pension Scheme, for which the deficit has fallen by GBP 25.3m from GBP 138.5m to GBP 113.2m. This is largely due to the actuarial gains in the period, the most significant of which resulted from the increase in the yield on corporate bonds which has the effect of reducing scheme liabilities. In addition, the Group has continued to make special contributions since 2003 to reduce the deficit; in the first half of 2006 these totalled GBP 7.6m (2005: GBP 7.6m).

Cash flow and financing

Net cash generated from operating activities in the first half of 2006 was GBP 254.7m (2005: GBP 224.4m). This mainly reflected the increase in surplus before financial income and expenses to GBP 148.1m (2005: GBP 129.5m) and an increase in cash inflow from working capital movements to GBP 107.8m (2005: GBP 68.1m), offset by an increase in tax paid to GBP 37.1m (2005: GBP 17.7m) due mainly to the substantial growth in UK taxable profits from 2004 to 2005.

Capital expenditure decreased to GBP 48.3m (2005: GBP 56.1m) due to phasing of care home developments and the development of the La Moraleja hospital in Spain during the first half of 2005. Capital expenditure for the full year is currently expected to be similar to 2005 levels as the Group increases investment in care home development in the UK and Spain, medical centres in Spain, the SWIFT system in UK Membership, and Hospitals' digital imaging system.

Proceeds from the sale of businesses, property, plant and equipment totalled GBP 39.9m (2005: GBP 11.1m), principally from the sale of BUPA's majority share in the Blackrock Clinic in Ireland.

The Group holds cash and other financial assets principally to meet the technical liabilities and solvency requirements of its regulated insurance subsidiaries. The total of cash and cash equivalents and financial assets increased by GBP 168.1m from GBP 1,888.5m to GBP 2,056.6m, the majority of this increase reflecting cash generated in the insurance businesses. Total debt (including interest-bearing liabilities, subordinated liabilities and the perpetual bond) was reduced by GBP 57.9m during the period, from GBP 1,462.8m to GBP 1,404.9m.

The Group has continued to invest a proportion of its liquid assets in non-cash investments (for example, corporate bonds) which are intended, over time, to provide enhanced returns over cash. By 30 June 2006, GBP 114.6m was invested in such assets.

In February 2006, the Group completed a refinancing of senior bank facilities, raising GBP 1.1bn from a syndicate of eight banks. The five year facility is fully revolving, multi-currency and is on improved terms to the previous bank facilities.

OUTLOOK

BUPA expects trading in the second half of 2006 to continue in line with guidance provided with the 2005 results, notwithstanding current pressure on PMI margins in the UK. We await the imminent decision of the Irish High Court on Risk Equalisation; a satisfactory outcome of this issue is essential to the viability of the Irish business. The International Insurance outlook remains positive and we expect to see good growth in membership and operating surplus.

In Care Homes, with the majority of the local authority funding now determined for the year, the business will continue to focus on maintaining occupancy levels and controlling costs, while delivering a high quality service. Hospitals' trading outlook for the remainder of 2006 is expected to remain stable with a continuing focus on operating efficiency. The underlying business continues to perform well, albeit with a delayed build in NHS volumes. Private patients will continue to represent the vast majority of Hospitals' activities.

The Group benefits from the strength and breadth of its diversified UK and international healthcare businesses, its continued focus on improving efficiency and its strong cash flow generation. It remains committed to delivering high quality, value for money services to our customers worldwide.

Val Gooding CBE, Chief Executive

15 September 2006

A full version of this announcement is available at www.bupa.co.uk/about/html/financial/.

The British United Provident Association Limited

Registered in England and Wales No. 432511

Registered Office: BUPA House, 15-19 Bloomsbury Way, London, WC1A 2BA