Bupa Finance plc. Issue price: per cent.

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1 Prospectus dated 30 June 2009 Bupa Finance plc (Incorporated with limited liability in England and Wales under the Companies Act 1985 with Registered no ) 350,000, per cent. Bonds due 2016 unconditionally and irrevocably guaranteed by The British United Provident Association Limited, Bupa Investments Limited, BHS (Holdings) 2006 Limited, Bupa Care Homes (CFG) plc, Bupa Investments Overseas Limited and ANS 2003 plc Issue price: per cent. The 350,000, per cent. Bonds due 2016 (the "Bonds") are issued by Bupa Finance plc (the "Issuer") and unconditionally and irrevocably guaranteed by The British United Provident Association Limited ("Bupa") (Registered no ), Bupa Investments Limited, ("Bupa Investments") (Registered no ), BHS (Holdings) 2006 Limited ("BHS") (Registered no ), Bupa Care Homes (CFG) plc ("Bupa Care Homes CFG") (Registered no ), Bupa Investments Overseas Limited ("Bupa Investments Overseas") (Registered no ) and ANS 2003 plc ("ANS") (Registered no ) (the "Guarantors") and constituted by a trust deed to be dated on or about 2 July 2009 (as amended or supplemented from time to time, the 'Trust Deed") between the Issuer, the Guarantors and the Trustee (as defined in "Terms and Conditions of the Bonds'). Application has been made to the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000 (the "UK Listing Authority" and the "FSMA" respectively) for the Bonds to be admitted to the official list of the UK Listing Authority (the "Official List") and to the London Stock Exchange plc (the "London Stock Exchange") for the Bonds to be admitted to trading on the London Stock Exchange's Regulated Market. The London Stock Exchange's Regulated Market is a regulated market for the purposes of Directive 2004/39/EC (the "Markets in Financial Instruments Directive"). This document comprises a prospectus for the purpose of Article 3 of Directive /EC (the "Prospectus Directive"). Subject to "Terms and Conditions of the Bonds - Interest", the Bonds will bear interest from 2 July 2009 at the rate of 7.50 per cent. per annum payable semi-annually in arrear on 4 January and 4 July in each year commencing 4 January The interest on the Bonds will be increased by 1.25 per cent. to 8.75 per cent. per annum in the event of a Rating Downgrade as described in "Terms and Conditions of the Bonds -Interest'. The Bonds will mature on 4 July The Issuer may redeem all (but not some only) of the Bonds at their principal amount together with interest accrued to the date of such redemption, in the event of certain tax changes as described under" Terms and Conditions of the Bonds - Redemption for Taxation Reasons". The Bonds will be issued on 2 July 2009 (the "Issue Date") and will initially be represented by a temporary global bond (the "Temporary Global Bond"), without interest coupons, which will be issued in the new global note ("NGN") form. The Temporary Global Bond will be deposited with a common safekeeper (the "Common Safekeeper") for Euroclear Bank S.A.lN.V. ("Euroclear") and Clearstream Banking, societe anonyme ("Clearstream, Luxembourg") on or about 2 July Interests in the Temporary Global Bond will be exchangeable for interests in a permanent global bond (the "Permanent Global Bond" and, together with the Temporary Global Bond, the "Global Bonds"), without interest coupons, on or after 11 August 2009, upon certification as to non-u.s. beneficial ownership. The Permanent Global Bond will be exchangeable for definitive Bonds in bearer form, with interest coupons attached, in certain limited circumstances - see "Summary of Provisions relating to the Bonds while in Global Form'. All investment in the Bonds involves certain risks. Prospective investors should have regard to the factors described under the section headed" Risk Factors" in this Prospectus. This Prospectus does not describe all of the risks of an investment in the Bonds. The Bonds are expected, on issue, to be rated Baa2 and A- by Moody's Investors Service, Inc. and Filch Ratings Ltd. respectively. For the avoidance of doubt, the Bonds will not be rated, on issue, by Standard & Poor's Rating

2 2 Services, Inc. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the relevant rating organisation. HSBC Joint Lead Managers THE ROYAL BANK OF SCOTLAND

3 3 Each of the Issuer and Bupa accepts responsibility for the information contained in this Prospectus. To the best of the knowledge of the Issuer and Bupa (having taken all reasonable care to ensure that such is the case) the information contained in this Prospectus IS In accordance with the facts and does not omit anything likely to affect the import of such information. Bupa Investments accepts responsibility for the information contained in this Prospectus set out: (i) in Bupa Investments Limited's non-consolidated audited annual financial statements on pages F2 to F37 of the Prospectus; (ii) in the "Risk Factors" section on pages 9 to 16 of the Prospectus insofar as it relates to Bupa Investments; (iii) under the heading "Directors of Bupa Investments" on page 49 of the Prospectus; (iv) in the significant or material change statement in paragraph 11 of the General Information section on page 59 of the Prospectus; (v) in the litigation statement in paragraph 16 of the General Information section on page 59 of the Prospectus (insofar as it relates to Bupa Investments); and (vi) in paragraph 21 of page 60 of the Prospectus (together, the "Bupa Investments Information"). To the best of the knowledge of Bupa Investments, (having taken all reasonable care to ensure that such is the case) the Bupa Investments Information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. BHS accepts responsibility for the information contained in this Prospectus set out: (i) in BHS (Holdings) 2006 Limited's non-consolidated audited annual financial statements on pages F38 to F63 of the Prospectus; (ii) in the" Risk Factors" section on pages 9 to 16 of the Prospectus insofar as it relates to BHS; (iii) under the heading "Directors of BHS' on page 50 of the Prospectus; (iv) in the significant or material change statement in paragraph 12 of the General Information section on page 59 of the Prospectus; (v) in the litigation statement in paragraph 16 of the General Information section on page 59 of the Prospectus (insofar as it relates to BHS); and (vi) in paragraph 22 of page 60 of the Prospectus (together, the "BHS Information"). To the best of the knowledge of BHS, (having taken all reasonable care to ensure that such is the case) the BHS Information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Bupa Care Homes CFG accepts responsibility for the information contained in this Prospectus set out: (i) in the Bupa Care Homes (CFG) plc's consolidated audited annual financial statements on pages F64 to F152 of the Prospectus; (ii) in the" Risk Factors" section on pages 9 to 16 of the Prospectus insofar as it relates to Bupa Care Homes CFG; (iii) under the heading "Directors of Bupa Care Homes CFG" on page 50 of the Prospectus; (iv) in the significant or material change statement in paragraph 13 of the General Information section on page 59 of the Prospectus; (v) in the litigation statement in paragraph 16 of the General Information section on page 59 of the Prospectus (insofar as it relates to Bupa Care Homes CFG); and (vi) in paragraph 23 of page 60 of the Prospectus (together, the "Bupa Care Homes CFG Information"). To the best of the knowledge of Bupa Care Homes CFG, (having taken all reasonable care to ensure that such is the case) the Bupa Care Homes CFG Information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Bupa Investments Overseas accepts responsibility for the information contained in this Prospectus set out: (i) in Bupa Investments Overseas Limited's non-consolidated audited annual financial statements on pages F153 to F182 of the Prospectus; (ii) in the "Risk Factors" section on pages 9 to 16 of the Prospectus insofar as it relates to Bupa Investments Overseas; (iii) under the heading "Directors of Bupa Investments Overseas" on page 51 of the Prospectus;

4 4 (iv) in the significant or material change statement in paragraph 14 of the General Information section on page 59 of the Prospectus; (v) in the litigation statement in paragraph 16 of the General Information section on page 59 of the Prospectus (insofar as it relates to Bupa Investments Overseas); and (vi) in paragraph 24 of page 60 of the Prospectus (together, the "Bupa Investments Overseas Information"). To the best of the knowledge of Bupa Investments Overseas, (having taken all reasonable care to ensure that such is the case) the Bupa Investments Overseas Information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. ANS accepts responsibility for the information contained in this Prospectus set out: (i) in ANS 2003 plc's non-consolidated audited annual financial statements on pages F183 to F203 of the Prospectus; (ii) in the "Risk Factors" section on pages 9 to 16 of the Prospectus insofar as it relates to ANS; (iii) under the heading "Directors of ANS' on page 51 of the Prospectus; (iv) in the significant or material change statement in paragraph 15 of the General Information section on page 59 of the Prospectus; (v) in the litigation statement in paragraph 16 of the General Information section on page 59 of the Prospectus (insofar as it relates to ANS); and (vi) in paragraph 25 of page 61 of the Prospectus (together, the "ANS Information"). To the best of the knowledge of ANS, (having taken all reasonable care to ensure that such is the case) the ANS Information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Any information contained in this Prospectus which has been sourced from a third party has been accurately reproduced and, as far as the Issuer, Bupa and, where applicable, the other Guarantors are aware and are able to ascertain from information published by third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. This Prospectus is to be read in conjunction with all documents which are incorporated herein by reference (see "Documents Incorporated by Reference" below) and shall be read and construed on the basis that such documents are incorporated in and form part of this Prospectus. No person is or has been authorised to give any information or to make any representation other than those contained in or consistent with this Prospectus in connection with the issue or sale of the Bonds and, if given or made, such information or representations must not be relied upon as having been authorised by or on behalf of the Issuer, any of the Guarantors, any of the Managers (as defined in "Subscription and Sale" below) or the Trustee. Neither the delivery of this Prospectus nor any sale made in connection herewith shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer or any of the Guarantors since the date hereof or that there has been no adverse change in the financial position of the Issuer or any of the Guarantors since the date hereof or that any other information supplied in connection with the Bonds is correct as of any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same. The Managers and the Trustee have not separately verified the information contained in this Prospectus. Neither the Managers nor the Trustee makes any representation, express or implied, or accepts any responsibility, with respect to the accuracy or completeness of any of the information contained or incorporated in this Prospectus or any other information provided by the Issuer or any of the Guarantors in connection with the offering of the Bonds. None of the Managers or the Trustee accepts any liability in relation to the information contained or

5 5 incorporated by reference in this Prospectus or any other information provided by the Issuer or any of the Guarantors in connection with the offering of the Bonds or their distribution. Neither this Prospectus nor any other information supplied in connection with the offering of the Bonds is intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Issuer, the Guarantors, the Managers or the Trustee that any recipient of this Prospectus or any other information supplied in connection with the offering of the Bonds should purchase the Bonds. Each potential purchaser of Bonds should determine for itself the relevance of the information contained in this Prospectus and its purchase of Bonds should be based upon such investigation as it deems necessary. None of the Managers or the Trustee undertakes to review the financial condition or affairs of the Issuer or any of the Guarantors during the life of the arrangements contemplated by this Prospectus nor to advise any investor or potential investor in the Bonds of any information coming to their attention. In the ordinary course of business, each of the Managers has engaged and may in the future engage in normal banking or investment banking transactions with the Issuer, the Guarantors and their affiliates or any of them.

6 6 Neither this Prospectus nor any other information provided by the Issuer or the Guarantors in connection with the offering of the Bonds constitutes an offer of, or an invitation by or on behalf of, the Issuer or the Guarantors or the Managers or the Trustee or any of them to subscribe for, or purchase, any of the Bonds (see "Subscription and Sale" below). This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy the Bonds in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Prospectus and the offer or sale of Bonds may be restricted by law in certain jurisdictions. The Issuer, the Guarantors, the Trustee and the Managers do not represent that this Prospectus may be lawfully distributed, or that the Bonds may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer, the Guarantors, the Trustee or the Managers or any of them which is intended to permit a public offering of the Bonds or the distribution of this Prospectus in any jurisdiction where action for that purpose is required. Accordingly, no Bonds may be offered or sold, directly or indirectly, and neither this Prospectus nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Prospectus or any Bonds may come must inform themselves about, and observe, any such restrictions on the distribution of this Prospectus and the offering and sale of Bonds. In particular, there are restrictions on the distribution of this Prospectus and the offer or sale of Bonds in the U.S. and the United Kingdom. Persons in receipt of this Prospectus are required by the Issuer, the Guarantors, the Trustee and the Managers to inform themselves about and to observe any such restrictions. For a description of certain further restrictions on offers and sales of Bonds and distribution of this Prospectus, see "Subscription and Sale" below. The Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") and are subject to U.S. tax law requirements. Subject to certain exceptions, Bonds may not be offered, sold or delivered within the U.S. or to U.S. persons, as defined in Regulation S under the Securities Act. For a description of certain restrictions on offers and sales of Bonds and on distribution of this Prospectus, see "Subscription and Sale". In this Prospectus, unless otherwise specified, all references to "pounds", "sterling", " ", "p" or "pence" are to the lawful currency of the United Kingdom and references to "euro" and " " are to the currency introduced at the start of the third stage of the European Economic and Monetary Union pursuant to the Treaty establishing the European Community, as amended.

7 7 Table of Contents Documents Incorporated by Reference... 8 Risk Factors... 9 Terms and Conditions of the Bonds Summary of Provisions relating to the Bonds while in Global Form Business Description Taxation Subscription and Sale General Information Schedule - Financial Information... F1 IN CONNECTION WITH THE ISSUE OF THE BONDS, THE ROYAL BANK OF SCOTLAND PLC (THE "STABILISING MANAGER") (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) MAY OVER-ALLOT BONDS OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE BONDS AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) WILL UNDERTAKE STABILlSATION ACTION. ANY STABILlSATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE BONDS IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE BONDS AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE BONDS. ANY STABILlSATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE STABILISING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.

8 8 Documents Incorporated by Reference This Prospectus should be read and construed in conjunction with the audited consolidated annual financial statements of the Issuer for the financial years ended 31 December 2007 and 2008 together, in each case, with the audit report thereon and the audited, consolidated annual financial statements of Bupa for the financial years ended 31 December 2007 and 2008 together, in each case, with the audit report thereon, which have been previously published or are published simultaneously with this Prospectus and which have been approved by the Financial Services Authority or filed with it. The documents referred to above shall be incorporated in, and form part of this Prospectus, save that any statement contained in a document which is incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Prospectus to the extent that a statement contained herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Prospectus. Following the publication of this Prospectus a supplement may be prepared by the Issuer and approved by the UK Listing Authority in accordance with Article 16 of the Prospectus Directive. Statements contained in any such supplement (or contained in any document incorporated by reference therein) shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify or supersede statements contained in this Prospectus or in a document which is incorporated by reference in this Prospectus. Any statement so modified or superseded shall not, except as so modified or superseded, constitute part of this Prospectus. The Issuer will, in the event of any significant new factor, material mistake or inaccuracy relating to information included in this Prospectus prior to the issue date which is capable of affecting the assessment of the Bonds, prepare a supplement to this Prospectus. The Issuer has undertaken to the Managers that it will comply with section 87G of the FSMA. Copies of documents incorporated by reference in this Prospectus can be obtained from the registered office of the Issuer and from the specified offices of the Paying Agents for the time being in London. Any documents themselves incorporated by reference in the documents incorporated by reference in this Prospectus shall not form part of this Prospectus.

9 9 Risk Factors The Issuer and the Guarantors believe that the fol/owing factors may affect their ability to fulfil their respective obligations under the Bonds. Most of these factors are contingencies which mayor may not occur and neither the Issuer nor any of the Guarantors is in a position to express a view on the likelihood of any such contingency occurring. In addition, risk factors which are specific to the Bonds and factors which the Issuer believes may be material for the purpose of assessing the market risks associated with Bonds issued under the Prospectus are described below. The Issuer and the Guarantors believe that the factors described below represent the principal risks inherent in investing in the Bonds, but the inability of the Issuer or the Guarantors to pay interest, principal or other amounts on or in connection with any Bonds may occur for other reasons and neither the Issuer nor the Guarantors represents that the statements below regarding the risks of holding any Bonds are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Prospectus and reach their own views prior to making any investment decision. In these risk factors, "Group" means Bupa and its Subsidiaries (as defined in Condition 9 and which includes the Issuer). Risks expressed to affect the Group should, unless otherwise indicated, be taken to affect the Issuer and ai/ of the Guarantors. Factors that may affect the Issuer's or any of the Guarantors' ability to fulfil its obligations under the Bonds Clinical risk The Group is dedicated to ensuring its customers, wherever they are in the world, are treated and cared for according to evidence-based best practice and the highest clinical standards. The Group aims to follow the highest standards of clinical best practice appropriate to the markets where it operates and adopts a customer centred approach to care. Clinical risk is mainly a divisional responsibility and key businesses have a Medical Director responsible for ensuring clinical quality within the business. The board of directors of Bupa (the "Board") has a Medical Advisory Panel that advises it on medical issues. The Panel includes one executive director and two non-executive directors and a number of leading doctors. The Group Medical Director provides a quarterly report on clinical performance to the Medical Advisory Panel and an annual report to the Panel and the Board. The annual report makes commendations and recommendations for improvements which are followed up through the year. The Medical Advisory Panel receives and considers updates from the Group Medical Director regarding clinical incidents and the results of clinical audits undertaken across the Group. Clinical governance, encompassing both audits and proactive risk management, is integral to encouraging continuous quality improvement and ensuring the standard of clinical services. Insurance risk The Group's insurance businesses face the risk that unexpected variations in the frequency, size or timing of claims will lead to variations in financial returns. By virtue of being in the

10 10 healthcare, critical illness, income protection and life protection insurance business, the Group is exposed to a number of factors affecting its insurance risk. These include macroeconomic trends, medical inflation, shifts in demographics, changes in population health, developments in healthcare delivery, and technology, catastrophes and statistical fluctuation. The Group manages its insurance risks by the use of advanced analytic models of products, pricing, and sectors, controls on underwriting and claims settlement, policy clarity and contract certainty, internal and external actuarial reviews and the use of reinsurance of long-term insurance policies to transfer risk. A significant mitigating factor is that the vast majority of insurance business is for short-term risks, rather than long-term chronic conditions, enabling regular repricing in the event of changes in claims trends. However, there can be no assurance that the insurance risks which the Group faces may not adversely affect the Group's financial condition, results of operations and cash flow. Increasing competition in the private medical insurance market Private medical insurance markets are increasingly competitive. A number of new players have entered the market in recent years, with many seeking to compete on price and often offering products with more limited benefits. The Group keeps its competitive position in each of its markets under continuous scrutiny and regularly reviews strategic and tactical objectives. The Board and senior management monitor performance via key indicators such as trend data, customer satisfaction results and monthly financial results. Provider costs The Group's insurance customers benefit from services procured from a wide range of providers including hospitals and consultants. In the face of inflationary pressures, there is a risk that increasing provider charges will lead to substantial increases in premium rates and customer dissatisfaction. The Group's policy is to work with its providers to maintain and improve quality while containing the cost of procuring medical services. This includes, where possible, the use of contracts, preferred supplier arrangements and case management techniques. While the Group seeks to mitigate the risks of rising costs, there can be no assurance that such risks may not adversely impact the Group's business, results of operations and financial position. Care Homes' fees and costs The profitability of the UK care homes business, and therefore its ability to reinvest in the care of its residents, is dependent on achieving an adequate funding stream from the local authorities, which fund the fees of approximately 70% of residents. There is continuing difficulty in achieving an adequate level of settlement from local authorities. In the UK, staffing costs constitute over half of Bupa Care Homes' cost base. Any increase in staffing costs, including an increase in the UK national minimum wage, that could not be recovered by increased charges to local authorities or privately funded residents would have an impact on the financial results of the Group.

11 11 Regulatory environment The Group serves customers of more than 190 countries and could therefore be affected by changes in financial, clinical and health and safety regulations in a number of countries. This could affect the way it carries out business, and in certain cases might increase costs. Any such increases in costs could adversely impact the Group's business, results of operations and financial position. The Group seeks to operate to the highest regulatory standards and to maintain an awareness of and, where possible, anticipate regulatory change. The Group's principal financial regulator is the UK's Financial Services Authority. Political risk There is a risk of change to healthcare policy in key markets as a result of political decisions; such change may have favourable or adverse consequences for the Group. As part of the strategic planning process, the Group regularly analyses the impact of possible political change on its business model. The Group seeks to maintain a constructive dialogue with governments in its main areas of operation, promoting the benefits of high quality private health care alongside public provision. This risk is also mitigated by the international diversification of the Group's operations. However, there is no assurance that there will not be a change in healthcare policy in any of the markets in which the Group operates which could adversely impact the Group's business, results of operations and financial position. Evolving UK NHS The evolution of the NHS presents opportunities and risks for the Group, as it engages with the NHS and bids for contracts to provide services to it. Any uncertainties or changes in UK Government procurement policy potentially prejudice the development of new services for the NHS because of the financial and other investment they represent. Overall, the Group regards the provision of services to the NHS as a positive development opportunity. It is consistent with the Group's belief in a mixed healthcare economy in which the Group can leverage its expertise and assets for the benefit of more patients. Geographical spread The international businesses operate in a wide range of locations across the world, many at significant distances from Group headquarters in London. Geographical diversification provides the benefit of spreading risk by reducing the relative exposure to any single healthcare economy but also represents a risk when operating in new markets with which the Group is less familiar. The Group recognises the need to maintain effective central oversight of its operations while allowing each business the flexibility to evolve its business model, which allows it to operate effectively in its local market. The Group employs the highest quality local management, with strong oversight from Group senior management who are either based in or regularly visit overseas business units to monitor performance. The dissemination of best practice and collaboration among business units is encouraged through regular business reviews and the Group's international executive development programmes.

12 12 Acquisitions The Group makes acquisitions where it considers they will enhance its services or geographical spread and increase the value of the business in the long term. Any major acquisition involves risk until the acquired business is successfully integrated. The Group controls acquisition risk by focusing on product and service areas in which it has expertise. It has a defined acquisition methodology and expert staff, and integration programmes are regularly reviewed by senior management Leadership As the Group changes and grows, it needs to make sure it has the right people to move the Group forward. The Board views the development and training of the Group's people, and the recruitment of experienced individuals from outside the Group, as central to the organisation's future success. Management of change The Group is undertaking a number of change programmes: the UK insurance business is introducing a major upgrade to its core operating system and the International and UK care homes businesses have grown rapidly, partly by acquiring and integrating other businesses. The Group mitigates the risk inherent in change by having stringent change management procedures. Major project expenditure on new developments is approved by the Board following a thorough assessment of plans. Professional programme management resources are used and the internal audit function reviews the impact of major changes on the Group's operational controls. Progress on key projects is reviewed by the Audit Committee or the Board. Growing economic weakness in key markets The Group is experiencing lower rates of growth in all its major markets as a result of economic recession together with rising unemployment and falling rates of inflation. To better anticipate the possible effects of these trends on future performance, the Group carries out sensitivity and stress testing for the key businesses within the Group. While the Group expects the economic recession to have an adverse impact on its business, the Group's diversification in terms of geography and sector should help to mitigate our exposure in anyone area. However, a prolonged or severe economic recession could have an adverse impact on the Group's business. Pandemic As the Group is a major health and care provider, a potential pandemic such as avian or swine flu could have a significant impact. A pandemic could present the Group's care homes and hospitals with major operational difficulties in maintaining an adequate staffing profile and protecting residents and patients, in addition to disrupting normal business activities across the organisation. Although the Group has extensive plans in place to mitigate as far as possible the impact of a pandemic such as avian or swine flu, there can be no assurance that a pandemic would not have any adverse impact on the Group.

13 13 Investment risk The Group had financial assets, cash and cash equivalents totalling 2.65bn at 31 December These are controlled by Group Treasury in London under the supervision of the Investment Committee, chaired by the Group Finance Director, which also includes operational management and two independent directors of Bupa Insurance. Most of the investments are held in cash, exposure to individual counterparties is restricted and generally deposits are not placed with institutions rated less than AA- / Aa3 by Standard & Poor's or Moody's. In an economic environment where interest rates are lower than historic norms, the investment income earned on these deposits is likely to be lower than in prior years. The Group also invests in absolute return assets within a risk budget framework which measures risk using Value at Risk methodology. At times of market stress or dislocation the investment techniques employed may become less effective in mitigating adverse investment performance. Funding riskslchanges in the rating environment The Group supports its current operations and future growth from a combination of internally generated profits and externally raised debt. To ensure appropriate diversification of funding risk, the Group has accessed a variety of debt capital markets to support its growth. These currently include the bank debt market, asset securitisations and the senior and perpetual (hybrid) bond market. The Group is committed to maintaining an appropriate investment grade credit rating with major credit rating agencies and closely targets key financial ratios, such as gearing and interest cover. The Group also actively monitors regulatory solvency levels and ensures appropriate headroom. Current conditions in the capital markets lead to the increased risk that the Group will not be able to refinance its bank facilities on as favourable commercial terms. Risk factors relating to the Bonds generally Set out below is a brief description of certain risks relating to the Bonds generally: Modification, waivers and substitution The Trust Deed contains provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Bondholders, including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a manner contrary to the majority, and all Couponholders. The Trust Deed also provides that the Trustee may, without the consent of the Bondholders or the Couponholders, agree to any modification of, or to the waiver or authorisation of any breach or proposed breach of any of the provisions of Bonds or any of the provisions of the Trust Deed, or determine that any Event of Default or potential Event of Default (as defined in the Trust Deed) shall not be treated as such, or to the substitution of another company as principal debtor

14 14 under any Bonds in place of the Issuer, as described in Condition 10 of the Terms and Conditions of the Bonds. European Monetary Union If the United Kingdom joins the European Monetary Union prior to the maturity of the Bonds, there is no assurance that this would not adversely affect investors in the Bonds. It is possible that prior to the maturity of the Bonds the United Kingdom may become a participating Member State and that the euro may become the lawful currency of the United Kingdom. In that event: (i) all amounts payable in respect of the Bonds may become payable in euro; (ii) the law may allow or require the Bonds to be re-denominated into euro and additional measures to be taken in respect of the Bonds; and (iii) there may no longer be available published or displayed rates for deposits in sterling used to determine the rates of interest on the Bonds or changes in the way those rates are calculated, quoted and published or displayed. The introduction of the euro could also be accompanied by a volatile interest rate environment, which could adversely affect investors in the Bonds. EU Savings Directive Under European Council Directive 2003/48/EC on the taxation of savings income (the "Savings Directive"), each Member State of the European Union is required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State or to certain limited types of entities established in that other Member State. However, for a transitional period, Belgium, Luxembourg and Austria are instead required, unless during such period those countries elect otherwise, to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of other non-eu countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland). If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer, the Guarantors nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Bond or Coupon as a result of the imposition of such withholding tax. The Issuer will be required to maintain a Paying Agent in a Member State that will not be obliged to operate a withholding system pursuant to the Savings Directive or any law implementing or complying with or introduced to conform to such directive. On 15 September 2008 the European Commission issued a report to the Council of the European Union on the operation of the Savings Directive, which included the Commission's advice on the need for changes to the Savings Directive. On 13 November 2008 the European Commission published a more detailed proposal for amendments to the Savings Directive, which included a number of suggested changes. The European Parliament approved an amended version of this proposal on 24 April If any of the proposed changes are made in relation to the Savings Directive, they may amend or broaden the scope of the requirements described above.

15 15 Change of law The Terms and Conditions of the Bonds are based on English law in effect as at the date of issue of the Bonds. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice after the date of issue of the Bonds. Integral multiples of less than 50,000 Although the Bonds are required to have a minimum denomination of 50,000, it is possible that the Bonds may be traded in the clearing systems in amounts in excess of 50,000 that are not integral multiples of 50,000. In such a case, should definitive Bonds be required to be issued, they will be issued in principal amounts of 50,000 and higher integral multiples of 1,000 up to a maximum of 99,000 but will in no circumstances be issued to Bondholders who hold Bonds in the relevant clearing system in amounts that are less than 50,000. If definitive Bonds are issued, Bondholders should be aware that definitive Bonds which have a denomination that is not an integral multiple of 50,000 may be illiquid and difficult to trade. Eligibility of the Bonds for Eurosystem Monetary Policy The Bonds are intended to be held in a manner which will allow Eurosystem eligibility. This means that the Bonds are upon issue deposited with one of the international central securities depositories ("ICSDs") as common safekeeper and does not necessarily mean that the Bonds will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem ("Eurosystem Eligible Collateral") either upon issue, or at any or all times during their life. Such recognition will depend upon satisfaction of the Eurosystem eligibility criteria and other obligations (including the provision of further information) as specified by the European Central Bank from time to time. The Issuer does not give any representation, warranty, confirmation or guarantee to any investor in the Bonds that the Bonds will, either upon issue, or at any or all times during their life, satisfy all or any requirements for Eurosystem eligibility and be recognised as Eurosystem Eligible Collateral. Any potential investor in the Bonds should make their own conclusions and seek their own advice with respect to whether or not the Bonds constitute Eurosystem Eligible Collateral. Risks related to the market generally Set out below is a brief description of certain market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk: The secondary market generally The Bonds may have no established trading market when issued, and one may never develop. If a market does develop it may not be liquid. Therefore, investors may not be able to sell their Bonds easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. Exchange rate risks and exchange controls The Issuer will pay principal and interest on Bonds in sterling. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in

16 16 a currency or currency unit (the "Investor's Currency") other than sterling. These include the risk that exchange rates may significantly change (including changes due to devaluation of sterling or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to sterling would decrease (1) the Investor's Currencyequivalent yield on the Bonds, (2) the Investor's Currency-equivalent value of the principal payable on the Bonds and (3) the Investor's Currency-equivalent market value of the Bonds. Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal. Interest rate risks Investment in the Bonds involves the risk that subsequent changes in market interest rates may adversely affect the value of them. Credit ratings may not reflect all risks The Bonds are expected, on issue, to be rated Baa2 and A- by Moody's Investors Service, Inc. and Fitch Ratings Ltd. respectively and one or more other independent credit rating agencies may from time to time assign credit ratings to the Bonds. For the avoidance of doubt, the Bonds will not be rated, on issue, by Standard & Poor's Rating Services, Inc. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Bonds. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time. Legal investment considerations may restrict certain investments The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) the Bonds are legal investments for it, (2) the Bonds can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of the Bonds. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Bonds under any applicable risk-based capital or similar rules.

17 17 Terms and Conditions of the Bonds The following, subject to minor amendment, are the Terms and Conditions of the Bonds, substantially as they will appear on the Bonds in definitive form (if issued). The 350,000, per cent. Bonds due 2016 (the "Bonds") (which expression shall, in these Conditions, unless the context otherwise requires, include any further bonds issued pursuant to Condition 14 and forming a single series therewith) of Bupa Finance plc (the "Issuer") are constituted by a trust deed (the "Trust Deed") dated 2 July 2009 (the "Issue Date"), between the Issuer, The British United Provident Association Limited ("Bupa"), Bupa Investments Limited, BHS (Holdings) Limited, Bupa Care Homes (CFG) plc, Bupa Investments Overseas Limited and ANS 2003 plc (together with Bupa, the "Guarantors" and each a "Guarantor") and HSBC Corporate Trustee Company (UK) Limited (the "Trustee", which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the holders of the Bonds (the "Bondholders"). These Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Bonds and Coupons referred to below. "BACA" means Bupa Aged Care Australasia Pty Ltd. References to "Guarantors" includes any company which has become an additional guarantor (an "Additional Guarantor") in accordance with the provisions of the Trust Deed. Payments in respect of the Bonds will be made pursuant to an agency agreement (the "Agency Agreement") dated 2 July 2009 and made between the Issuer, the Guarantors, the Trustee, HSBC Bank plc as principal paying agent (the "Principal Paying Agent" and any additional paying agents or successor, successors, assign or assigns as paying agents under the Agency Agreement (the "Paying Agents")}. Copies of the Trust Deed and the Agency Agreement are available for inspection at the specified office for the time being of the Trustee, being at the Issue Date, Level 24, 8 Canada Square, London, E14 5HQ, United Kingdom, and at the specified office of each of the Paying Agents. The Bondholders and the holders of the interest coupons (the "Coupon holders") appertaining to the Bonds (the "Coupons") are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and those applicable to them of the Agency Agreement. 1. Form, Denomination and Title The Bonds are issued in bearer form, serially numbered, with Coupons attached on issue, in denominations of 50,000 and integral multiples of 1,000 in excess thereof up to and including 99,000. No definitive Bonds will be issued with a denomination above 99,000. Title to the Bonds and to the Coupons will pass by delivery. The Issuer, the Guarantors, any Paying Agent and the Trustee may (to the fullest extent permitted by applicable laws) deem and treat the bearer of any Bond or Coupon as the absolute owner for all purposes (whether or not the Bond or Coupon shall be overdue and notwithstanding any notice of ownership or writing on the Bond or Coupon or any notice of previous loss or theft of the Bond or Coupon or of any trust or interest therein) and shall not be required to obtain any proof thereof or as to the identity of such bearer.

18 18 2. Guarantee and Status (a) Guarantee The Guarantors have jointly and severally unconditionally and irrevocably guaranteed the due payment of all sums expressed to be payable by the Issuer under the Trust Deed, the Bonds and Coupons. Their obligation in that respect are contained in the Trust Deed. "Guarantee" means the guarantee obligations of the Guarantors referred to in this Condition and as set out in the Trust Deed. (b) Status of Bonds and Guarantee The Bonds and the Coupons constitute (subject to Condition 3) unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves. The payment obligations of the Issuer under the Bonds and Coupons and of the Guarantors under the Guarantee shall, save for such exceptions as may be provided by applicable legislation and subject to Condition 3, at all times rank at least equally with all other unsecured and unsubordinated indebtedness and monetary obligations of the Issuer and the Guarantors respectively, present and future. (c) Accession of BACA as a guarantor Bupa and the Issuer shall use all reasonable endeavours to procure that BACA becomes an additional guarantor and guarantee the obligations of the Issuer under the Bonds, the Coupons and the Trust Deed on a basis equivalent to that referred to in Condition 2(a) and in accordance with the provisions of the Trust Deed within 60 days of the date of the Trust Deed. The Issuer shall notify the Bondholders as soon as practicable after BACA has become an Additional Guarantor in accordance with Condition Negative Pledge So long as any of the Bonds remains outstanding (as defined in the Trust Deed) neither the Issuer nor any of the Guarantors will, and Bupa will ensure that none of its Material Subsidiaries (as defined in Condition 9) will, create or have outstanding any mortgage, charge, pledge, lien or other encumbrance (other than any arising by operation of law) (each a "Security Interest") upon the whole or any part of its or their respective undertakings or assets present or future. to secure any Relevant Indebtedness (as defined below) or to secure any guarantee or indemnity in respect thereof, without simultaneously with, or prior to, the creation of such Security Interest, securing the Bonds equally and rateably therewith to the satisfaction of the Trustee, or providing such other Security Interest therefor which the Trustee in its absolute discretion shall deem not materially less beneficial to the Bondholders or as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders, save that the Issuer, any of the Guarantors or any Material Subsidiary may create or have outstanding (without the obligation so to secure the Bonds) a Permitted Security Interest. For the purposes of these Conditions:

19 19 "Relevant Indebtedness" means any indebtedness for moneys borrowed (as defined in Condition 9) which is in the form of, or represented or evidenced by, bonds, notes, debentures, loan stock or other securities which, with the agreement of the issuer thereof, are quoted, listed, dealt in or traded on a stock exchange or over the counter or other recognised securities market other than (i) indebtedness which has a stated maturity not exceeding one year or (ii) any indebtedness which comprises non-recourse borrowings (as defined below); "non-recourse borrowings" means any indebtedness for moneys borrowed to finance the ownership, acquisition, development and/or operation of an asset in respect of which the person or persons to whom any such indebtedness for moneys borrowed is or may be owed by the relevant borrower has or have no recourse whatsoever to the Issuer, any Guarantor or any Subsidiary within the Group (as defined in Condition 9) for the repayment thereof other than: (i) recourse to such borrower for amounts limited to the cash flow or net cash flow from such asset; and/or (ii) recourse to such borrower for the purpose only of enabling amounts to be claimed in respect of such indebtedness for borrowed money in an enforcement of any encumbrance given by such borrower over such asset or the income, cash flow or other proceeds deriving therefrom (or given by any shareholder or the like in the borrower over its shares or the like in the capital of the borrower) to secure indebtedness for moneys borrowed, provided that (A) the extent of such recourse to such borrower is limited solely to the amount of any recoveries made on such enforcement, and (8) such person or persons are not entitled, by virtue of any right or claim arising out of or in connection with such indebtedness for moneys borrowed, to commence proceedings for the windingup or dissolution of the borrower or to appoint or procure the appointment of any receiver, trustee or similar person or officer in respect of the borrower or any of its assets (save for the assets the subject of such encumbrance); and/or (iii) recourse to such borrower generally, or directly or indirectly to the Issuer or any of its Subsidiaries, under any form of assurance, undertaking or support, which recourse is limited to a claim for damages for breach of an obligation (not being a payment obligation or an obligation to procure payment by another or an indemnity in respect thereof) by the person against whom such recourse is available, up to an aggregate amount of 100,000,000 (or its equivalent in any other currency) at any time outstanding; "Subsidiary" means any entity which is for the time being a subsidiary (with the meaning of Section 1159 of the Companies Act 2006); and "Permitted Security Interest" means: (a) any Security Interest existing on 30 June 2009 as set out more particularly in the Trust Deed;

20 20 (b) any Security Interest which secures any Relevant Indebtedness which exists on any undertaking or asset of the Issuer, any Guarantor or any Material Subsidiary which asset or undertaking or which Material Subsidiary is acquired after 30 June 2009 provided that such Security Interest existed at the date of such acquisition, was not granted in contemplation of the acquisition and the amount thereby secured has not been increased in contemplation of, or since the date of, the acquisition and any Security Interest over the same undertaking or asset which is given for the purpose of, and to the extent of, the refinancing of any such Relevant Indebtedness; and (c) any Security Interest as shall have been previously approved in writing by the Trustee (which may only be so approved if the Trustee is of the opinion that to do so will not be materially prejudicial to the Bondholders). 4. Interest (a) Interest Rate and Interest Payment Date Subject to Condition 4(b), each Bond bears interest on its outstanding principal amount from and including 2 July 2009 at the rate of 7.50 per cent. per annum (the "Initial Interest Rate"), such interest being payable semi-annually in arrear on 4 January and 4 July in each year (each an "Interest Payment Date"). The first payment (for the period from and including 2 July 2009 to but excluding 4 January 2010 and amounting to per 1, principal amount of Bonds) shall be made on 4 January (b) Coupon Step-up The Initial Interest Rate payable on the Bonds will be subject to adjustment if a Rating Downgrade (as defined below) occurs. From and including the first Interest Payment Date following the occurrence of a Rating Downgrade (the "Rating Downgrade Interest Payment Date") the Initial Interest Rate payable on the Bonds shall be increased by 1.25 per cent. to 8.75 per annum. If, at any time after a Rating Downgrade has occurred, the then current rating of the Bonds assigned by each Rating Agency (as defined below) is increased or reinstated to Investment Grade (as defined below) or better, the rate of interest payable on the Bonds shall, from and including the first Interest Payment Date following such increase or reinstatement (the "Rating Upgrade Interest Payment Date"), be equal to the Initial Interest Rate. There shall be no limit on the number of times that adjustments to the rate of interest payable on the Bonds may be made pursuant to this Condition 4(b) during the term of the Bonds, provided always that at no time during the term of the Bonds will the rate of interest payable on the Bonds be less than the Initial Interest Rate or more than the Initial Interest Rate plus 1.25 per cent. per annum. For these purposes: a "Rating Downgrade" shall be deemed to have occurred if the rating of the Bonds from any Rating Agency (as defined below) is (i) downgraded to below Investment