Full Year Results

RNS Number : 2473I

Spire Healthcare Group PLC

24 March 2015

 

Spire Healthcare Group plc

Spire Healthcare reports strong results for the year ended 31 December 2014

London, UK, 24 March 2015, Spire Healthcare Group plc (LSE: SPI), one of the UK's leading independent hospital groups, today announces its preliminary results for the year ended 31 December 2014.

Our seventh full successive year of growth resulted in total revenue of £856.0 million and an operating profit before exceptional items of £114.1 million. During a year of significant progress, which included the successful Initial Public Offering in July, Spire delivered personalised care to more than 260,000 in-patient and daycase patients in 2014. The Company proposes a final dividend of 1.8p per ordinary share, subject to shareholders' approval.

Group financial highlights

·           Revenue rose 12.0% to £856.0m (2013: £764.5m) with positive contributions from all three payor groups

·           Adjusted EBITDA* up 6.1% to £159.2m (2013: £150.0m)

·           Operating profit before exceptional items up 2.7% to £114.1m (2013: £111.1m)

·           Net debt reduced to £424.3m (2013: £1,517.4m)

·           Final dividend proposed of 1.8p per share payable on 30 June 2015

·           Adjusted EPS** of 18.3p per share

Operating highlights

·           Invested £105.1m (2013: £53.7m) during the year, including  a new cardiac catheterisation laboratory in Cardiff

·           Grew in-patient and daycase discharges by 10.2% to 260,300 patients (2013: 236,200 patients)

·           Acquired St Anthony's Hospital in Cheam

·           Opened our first standalone radiotherapy centre in Bristol

·           Received planning consent for new Spire hospitals in Manchester and Nottingham, and a second radiotherapy centre in Chelmsford, Essex

Rob Roger, CEO of Spire Healthcare, said:
"Spire has again delivered excellent results for its patients, consultants and now, in its inaugural results as a public company, for its investors. With our dedicated staff, and experienced management team, track record of investment discipline and a focus on increasing efficiency, we are well placed to build on our position as a market leader.

Spire is ideally positioned for its next phase of development. We are well capitalised and ready to capture a growing share of the UK's expanding independent healthcare market and provide much needed additional capacity in areas such as radiotherapy and cancer care.

We have a strong track record of investment and growth, based on a culture of clinical excellence and care.  We have clear strategies in place, focused on meeting the requirements of all of our stakeholders.

Overall, the positive revenue trends are continuing into 2015 and should once again drive mid to high single digit revenue growth at EBITDA margins in line with 2014."

SUMMARY Group Results for the year ended 31 December 2014

(£ million)	Year ended 31 December
	2014	2013	Variance %	Variance excluding acquisitions %***
Revenue	856.0	764.5	12.0%	9.5%
Operating profit before exceptional items	114.1	111.1	2.7%	2.6%
Exceptional items	(54.0)	(11.5)
Operating profit	60.1	99.6	(39.7%)	(39.8%)
Profit on sale of property, plant and equipment	18.5	44.2
Net finance costs	(85.6)	(195.7)
Profit after tax	6.0	102.2
Pro-forma profit after tax ****	73.5
Adjusted EBITDA*	159.2	150.0	6.1%	5.6%
Adjusted, diluted earnings per share, pence****	18.3	-
Dividends proposed per share, pence	1.8	-
Operating cash flow, before exceptional items*****	164.2	111.2
Capital investments & acquisitions	105.1	53.7
Net debt at the year end	424.3	1,517.4

For further information please contact:

Spire Healthcare Antony Mannion, Investor Relations Director	[phone]
Maitland Martin Barrow	[phone]

Registered office and head office:

Spire Healthcare Group plc
3 Dorset Rise
London
EC4Y 8EN

Registered number 9084066

Notes

*        Operating profit, adjusted to add back depreciation and exceptional items and to adjust the comparator to conform the property rental base by £4.1 million, referred to hereafter as 'Adjusted EBITDA' (2013 EBITDA adjusted to include £4.1 million rental costs, to include these costs on the same basis as for 2014, following the sale in January 2013 of 12 hospital properties, subject to long-term leases, ('2013 Freehold Sale'), and the sale and leaseback of the Spire Washington Hospital premises in March 2014).

**       Adjusted EPS is calculated after eliminating exceptional items, profit on disposal of property, plant and equipment and adjusting for the effects of the capital restructuring on the IPO

***      Excludes St Anthony's Hospital acquired on 22 May 2014.

****     Calculated as pro-forma profit after tax divided by the number of ordinary shares in issue on Admission. Pro-forma profit is calculated as earnings after tax adjusted for the capital restructuring, exceptional items and the net profit arising on the sale of property and other assets.

*****   Operating cashflow adjusted to add back the cashflow effect of exceptional items.

 

About Spire

Spire is a leading independent hospital group in the United Kingdom, with 39 hospitals and 13 clinics across England, Wales and Scotland. The Group delivered tailored, personalised care to more than 260,000 in-patients and daycase patients in 2014, and is the leading provider by volume of knee and hip operations in the United Kingdom.

Cautionary statement

This preliminary announcement contains certain forward-looking statements relating to the business of Spire Healthcare Group plc (the "Company"), including with respect to the progress, timing and completion of the Company's development, the Company's ability to treat, attract, and retain patients and customers, its ability to engage consultants and GPs and to operate its business and increase referrals, the integration of prior acquisitions, the Company's estimates for future performance and its estimates regarding anticipated operating results, future revenues, capital requirements, shareholder structure and financing. In addition, even if the Company's actual results or development are consistent with the forward-looking statements contained in this preliminary announcement, those results or developments may not be indicative of the Company's results or developments in the future. In some cases, you can identify forward-looking statements by words such as "could," "should," "may," "expects," "aims," "targets," "anticipates," "believes," "intends," "estimates," or similar words. These forward-looking statements are based largely on the Company's current expectations as of the date of this preliminary announcement and are subject to a number of known and unknown risks and uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by these forward-looking statements. In particular, the Company's expectations could be affected by, among other things, uncertainties involved in the integration of acquisitions or new developments, changes in legislation or the regulatory regime governing healthcare in the UK, poor performance by consultants who practice at our facilities, unexpected regulatory actions or suspensions, competition in general, the impact of global economic changes, and the Company's ability to obtain or maintain accreditation or approval for its facilities or service lines. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements made in this preliminary announcement will in fact be realised and no representation or warranty is given as to the completeness or accuracy of the forward-looking statements contained in this preliminary announcement.

The Company is providing the information in this preliminary announcement as of this date, and we disclaim any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Analyst and investor meeting

There will be an analyst and investor meeting today at 10.00am at JP Morgan Cazenove, 1 John Carpenter Street, London EC4Y 0JP.

A live videocast of the presentation will be available at 10.00am. Slides will be put onto the Spire website approximately 45 minutes before the presentation is due to begin, and will be available to download from the Spire website at http://investors.spirehealthcare.com/home.

OPERATING REVIEW

Spire Healthcare aims to be the UK's leading independent hospital group. In 2014 we delivered tailored, personalised care to over 260,000 in-patient and daycase patients, an increase of 10.2% on the prior year. In total, including out-patient visits, we saw over 700,000 patients. In June, our outstanding performance was recognised when Spire Healthcare was named Private Hospital Group of the Year at the 2014 HealthInvestor awards, the main awards for our industry.

PATIENT CARE - THE HEART OF OUR BUSINESS

We aim to deliver care and clinical outcomes of the highest quality for our patients. They are our first priority.

We had no incidents of MRSA and our MSSA and c.difficile infection rates, both at 0.30 per 10,000 bed days, were lower than the equivalent NHS rates of 0.79 and 1.47 respectively.

Across all our hospitals, our Care Quality Commission (CQC) compliance rate was 99.5%, compared to an independent health sector average of 90% and a national average of 85%.

The outstanding quality of our care is reflected in our patient surveys, where 93% of patients rated Spire as 'Excellent' or 'Very good', and in our survey of Consultant satisfaction, where 79% rated us as 'Excellent' or 'Very good' and 97% would recommend us to their friends and family.

MARKET TRENDS

The overall UK healthcare market is subject to three major trends - our growing and ageing population, the increasing incidence of acute and chronic long-term conditions, and the continued development of new, often expensive, technologies and treatments. These factors contribute to independent forecasts* of growth in healthcare demand exceeding 5% a year over the next five years. Set against realistic forecasts of GDP and public funding growth, the NHS projects a growing supply and funding gap that could reach approximately £35 billion per annum by 2020/21.

We cannot provide the whole answer, but the independent healthcare sector is in a position to help meet this demand, working with the NHS, as part of the overall UK healthcare system.

*Source: LaingBuisson

FINANCIAL PERFORMANCE

Our financial performance in 2014 was strong. Overall revenue for the year grew 12.0% to £856.0 million (2013: £764.5 million) with positive contributions from all three of our major payor groups - Private Medical Insurance ('PMI'), Self-pay and NHS. Even though we had a higher NHS mix, which traditionally has a lower margin, with continued productivity and cost efficiency improvements, this growth generated an increase of 6.1% in adjusted EBITDA to £159.2 million (2013: £150.0 million). Operating profit before exceptional items increased 2.7% to £114.1 million (2013: £111.1 million) and cash conversion reached 103.1%.

We invested £105.1 million during the year across the business, including the acquisition of St Anthony's Hospital. Despite this, net debt was reduced to £424.3 million at year end following the capital restructuring at the time of the IPO.

BUSINESS DEVELOPMENT

Our strategy is based on four pillars.

First, we will continue to focus on our relationships with each of our three major payor groups - PMI, Self-pay and the NHS - developing targeted responses to their individual requirements.

Second, we will leverage and develop our existing well-invested and scalable hospitals, maximising existing capacity and opening new theatres to meet growing demand. We will continue to build relationships with our patients, their referring GPs and the consultants who provide treatment in our hospitals.

Third, we will develop new sites and services, targeting identified growth areas such as radiotherapy and cancer care, but also orthopaedics, cardiac and general surgery, and acquiring or building new hospitals in areas where Spire is underrepresented, including London.

Fourth, we will continue to drive productivity improvement and cost management, both centrally and locally.

INVESTING IN OUR CORE BUSINESSES

Investment in increased capacity continued throughout the year.

Most significantly, in May we completed the acquisition of St Anthony's, a 92-bed, four theatre private hospital located in Cheam. With room for further expansion, St Anthony's will be a central platform for Spire's continued growth in cardiology and other areas of acute care and is another step in our strategy to build services in and around Greater London. The acquisition received Competition and Markets Authority ('CMA') approval in September.

Spire Southampton Hospital's new £2 million Perform sports medicine centre opened in June. Including the flagship facility at St George's Park, we now have ten Perform centres nationwide.

Also in June, Spire Cheshire Hospital opened a new Orthopaedic Centre, including onsite MRI and CT scanning and upgraded out-patient waiting areas, and Spire Cambridge Lea Hospital opened a new £1.4 million reception area and out-patient suite.

New operating theatres were opened in Cardiff, Harpenden and South Bank in the year, significantly increasing our capacity in these hospitals.

DEVELOPING OUR SERVICE OFFERING

We continued to develop our higher acuity services, particularly in oncology and cardiology.

Our first dedicated radiotherapy centre, the £13.1 million Specialist Care Centre in Bristol, opened in April and our £2.9 million cardiac catheterisation laboratory in Cardiff was completed in May.

The launch of a new cataracts pathway enabled us to reduce the cost of treatment, with the result that 9.3% more patients were attracted to our facilities during the year.

We continue to offer fertility treatment at some of our hospitals, but in line with our strategic focus, we sold our interest in the stand alone London Fertility Clinic in August.

We have taken steps to further strengthen our operational management, with the appointment of four Operations Directors, Rob Anderson, Karen Newton, Paul O'Conor and Nicky Amery.

DEVELOPING RELATIONSHIPS WITH KEY STAKEHOLDERS

In 2015, we continue to drive strong growth through a clear focus on our three payor groups. In November, we concluded a new, long-term agreement with Bupa, the UK's leading private medical insurer. Following the conclusion of the CMA review of the independent healthcare sector, this represents a decisive shift to a more partnership-style approach, aiming to build on our current excellent working relationship in order to drive volume growth in independent patient numbers, based on affordable healthcare, particularly for out-patients, and outstanding clinical outcomes. The agreement runs from 1 April 2015 for a minimum of four years, with prices agreed for up to six years.

In our self-pay market, we are concentrating on developing simple and transparent packages, and offering patients procedures not readily funded by the NHS.  We have introduced fixed prices for our top 15 procedures - and plan to extend this to at least 50 procedures in 2015 - all supported by clear 'plain English' terms and conditions. 

We continue to build key NHS relationships, expand our service offering and invest to meet specific NHS needs. Our hospitals provide solutions for NHS trusts to manage waiting lists, taking elective patients out of overstretched hospitals and helping the NHS improve value and deliver better outcomes.

We are pursuing a range of development and engagement activities with our PMI and other stakeholders.

Board changes

As part of the IPO, we enhanced and strengthened our Board with the appointment of four experienced non-executive directors; John Gildersleeve, Professor Dame Janet Husband, Robert Lerwill and Tony Bourne. They have significantly strengthened the range of skills and expertise in the Boardroom and are helping to guide the Company both through its inaugural phase as a public entity and into the future.

REGULATION AND GOVERNANCE

In October 2014, the CMA published its Final Order for measures to increase competition in the independent healthcare market after its inquiry. We welcomed the recognition that there needs to be transparency of arrangements between hospitals and consultants, and support the drive to establish an industry-wide information organisation to be the repository for quality indicators and measures. We fully support initiatives that help patients and GPs feel confident when choosing their healthcare provider and we continue to work with our consultants to implement the Final Order.

Outlook

The new financial year has begun as the old one finished, with revenue growth in all payor groups and with PMI revenues underpinned by the newly acquired St Anthony's. We expect these dynamics to continue through the year leading to mid to high single digit revenue growth, an EBITDA margin consistent with 2014 and high single digit growth in earnings per share (based on the 2014 pro-forma).

Given the timing of our listing early in the second half of 2014 and the consequent effect of PLC overheads, we expect growth in reported profits to be weighted to the second half.

Financial review

The Company was admitted to the London Stock Exchange on 23 July 2014 and, therefore, these results cover the period both prior to and following Admission. The IPO generated cash proceeds of £306.9 million net of costs, which, combined with a restructuring of existing shareholder interests in the Group and the refinancing of the bank facilities, served to reduce overall Group indebtedness. These events fundamentally impacted the capital structure of the Group, materially reducing the net funding costs of the Group. Therefore, various adjustments have been made to normalise the results for the year to reflect the new financing structure of the Group, the shares issued on IPO and to eliminate one-off exceptional costs, such as the costs associated with the IPO.

SELECTED FINANCIAL INFORMATION

	Year ended 31 December
(£ million)	2014	2013	Variance %	Variance excluding acquisitions %*
Revenue	856.0	764.5	12.0%	9.5%
Cost of sales	(436.6)	(382.1)	(14.3%)	(11.5%)
Gross margin	419.4	382.4	9.7%	7.4%
Other operating costs	(359.3)	(282.8)	(27.1%)	(24.0%)
Operating profit	60.1	99.6	(39.7%)	(39.8%)
Exceptional items included within other operating costs	(54.0)	(11.5)
Operating profit before exceptional items	114.1	111.1	2.7%	2.6%
Profit on sale of property, plant and equipment	18.5	44.2
Net finance costs	(85.6)	(195.7)
Loss before tax	(7.0)	(51.9)	86.5%	86.3%
Taxation	13.0	154.1
Profit for the year	6.0	102.2
Adjusted EBITDA **	159.2	150.0	6.1%	5.6%
Adjusted, diluted earnings per share, pence ***	18.3	-
Dividends proposed per share, pence	1.8	-
Operating cash flow, before exceptional items ****	164.2	111.2	47.7%
Capital investments and acquisitions	105.1	53.7
Net debt at the year end	424.3	1,517.4

*           Excludes the impact of St Anthony's Hospital, acquired on 22 May 2014 (referred to as 'Underlying' in this report).

**         Operating profit, adjusted to add back depreciation and exceptional items and to adjust the comparator to conform the property rental base by £4.1 million, referred to hereafter as 'Adjusted EBITDA' (2013 EBITDA adjusted to include £4.1 million rental costs, to include these costs on the same basis as for 2014, following the sale in January 2013 of 12 hospital properties, subject to long-term leases, ('2013 Freehold Sale'), and the sale and leaseback of the Spire Washington Hospital premises in March 2014).

***        Calculated as pro-forma profit after tax divided by the number of ordinary shares in issue on Admission. Pro-forma profit is calculated as earnings after tax adjusted for the capital restructuring, exceptional items and the net profit arising on the sale of property and other assets.

****      Operating cashflow adjusted to add back the cashflow effect of exceptional items.

Analysis by Payor	Year ended 31 December
(£ million)	2014	2013	Variance %	Variance excluding acquisitions %*
Total revenue	856.0	764.5	12.0%	9.5%
Of which:
PMI	432.4	413.7	4.5%	1.4%
NHS	245.9	191.4	28.5%	27.3%
Self-pay	146.1	132.9	9.9%	7.4%
Other **	31.6	26.5	19.2%	17.4%
	856.0	764.5	12.0%	9.5%
Of which:	572.9	505.9	13.2%	10.2%
In-patient/daycase
Out-patient	251.5	232.1	8.4%	6.9%
Other	31.6	26.5	19.2%	17.4%
	856.0	764.5	12.0%	9.5%
Number ('000s)	260.3	236.2	10.2%	8.6%
Total in-patient/daycase discharges
Of which:
PMI volumes	124.4	123.7	0.6%	(1.6%)
NHS volumes	95.5	76.5	24.8%	24.2%
Self-pay volumes	40.4	36.0	12.2%	10.8%

*     Excludes the impact of St Anthony's Hospital, acquired on 22 May 2014 (referred to as 'Underlying' in this report).

**   Other revenue includes consultant revenue, third-party revenue streams (e.g. pathology services), secretarial services and commissioning for quality and innovation payments (earned for meeting quality targets on NHS work) ('CQUIN').

GROWING REVENUES

		In-patient/ daycase	In-patient/ daycase
(£ million)	2013	volume	rate	Out-patient	Other	St Anthony's	2014
Total revenue	764.5	42.8	9.0	15.9	4.6	19.2	856.0
		5.6%	1.2%	2.1%	0.6%	2.5%	12.0%

Revenue for the year ended 31 December 2014 increased by £91.5 million, or 12.0%, to £856.0 million from £764.5 million for the year ended 31 December 2013.

Underlying growth, excluding revenues of £19.2 million arising relating to Spire St Anthony's Hospital since its acquisition in May 2014, was 9.5%.

Of the underlying revenue growth of 9.5%:

·           additional in-patient and daycase volumes accounted for 5.6%;

·           the increase in in-patient and daycase (average revenue per case) accounted for 1.2%; and

·           growth in out-patient revenues accounted for a further 2.1% increase, including an increase in minor procedures undertaken in out-patient rooms of £7.8 million.

PMI

		In-patient/ daycase	In-patient/ daycase
(£ million)	2013	volume	rate	Out-patient	St Anthony's	2014
PMI	413.7	(4.3)	5.2	4.7	13.1	432.4
		(1.0%)	1.3%	1.1%	3.1%	4.5%

PMI revenues for the year ended 31 December 2014 increased by £18.7 million, or 4.5%, from £413.7 million for the year ended 31 December 2013 to £432.4 million for the year ended 31 December 2014. Underlying growth, excluding revenues relating to Spire St Anthony's Hospital, was 1.4%.

Of the underlying growth of 1.4% in PMI revenues:

·           the decrease in the volumes of in-patient and daycase admissions accounted for a 1.0% decline in revenues;

·           the rate increase in in-patient and daycase (average revenue per case) accounted for a 1.3% increase in revenues and offset the decline in volume; and

·           growth in out-patient revenues accounted for a further 1.1% increase, including an increase in minor procedures undertaken in out-patient treatment rooms which would previously have been undertaken in theatre.

The growth in rate was adversely impacted by an increase in the proportion of surgical cases treated as daycases. These procedures carry a lower revenue per case than in-patient admissions. Revenue per case of in-patient admissions increased by 6.4% relative to the prior year, supported by an increase in the complexity of surgical procedures undertaken. The average revenue per daycase admission increased by 2.2% in the year.

NHS

		In-patient/ daycase	In-patient/ daycase
(£ million)	2013	volume	rate	Out-patient	St Anthony's	2014
NHS	191.4	38.1	4.9	9.2	2.3	245.9
		19.9%	2.6%	4.8%	1.2%	28.5%

NHS revenues for the year ended 31 December 2014 increased by £54.5 million, or 28.5% from £191.4 million for the year ended 31 December 2013 to £245.9 million for the year ended 31 December 2014. Underlying growth, excluding revenues relating to Spire St Anthony's Hospital was 27.3%.

Of the underlying growth of 27.3% in NHS revenues:

·           a significant increase in surgical admissions accounted for a 19.9% increase in revenues;

·           the increase in in-patient and daycase (average revenue per case) accounted for a 2.6% increase in revenues, notwithstanding a 2.25% decline in attributable NHS tariff in the year; and

·           growth in out-patient revenues accounted for a further 4.8% increase in revenues in the year.

In 2013, the in-patient and daycase rate was adversely impacted by a temporary reduction in case mix complexity arising from the transition in April 2013 of local NHS Commissioning to Clinical Commissioning Groups, as result of  the Health and Social Care Act. The year ended 31 December 2014 benefitted from both the absence of similar effects and an increase in local contract NHS work, typically more complex procedures attracting a higher average revenue per case.

SELF-PAY

		In-patient/ daycase	In-patient/ daycase
(£ million)	2013	volume	rate	Out-patient	St Anthony's	2014
Self-pay	132.9	9.0	(1.1)	2.0	3.3	146.1
		6.8%	(0.8%)	1.4%	2.5%	9.9%

Self-pay revenues for the year ended 31 December 2014 increased by £13.2 million, or 9.9%, from £132.9 million for the year ended 31 December 2013 to £146.1 million for the year ended 31 December 2014. Underlying growth, excluding revenues relating to Spire St Anthony's Hospital was 7.4%.

Of the underlying growth of 7.4% in self-pay revenues:

·           an increase in surgical admissions accounted for a 6.8% increase in revenues;

·           in-patient and daycase (average revenue per case) accounted for a 0.8% decline in revenues; and

·           growth in out-patient revenues accounted for a 1.4% increase in revenues in the year.

Revenue per case for in-patient admissions increased by 1.6% and by 1.5% per daycase admission; however, daycase admissions accounted for 59% of total admissions, up from 57% in the previous year.

From the beginning of 2012 until early 2013, the Group benefitted from a significant number of hip revision procedures associated with a patient recall undertaken by DePuy. These revision procedures were highly complex and priced at a substantial premium to average self-pay procedures. The absence of similar work in 2014 had an adverse impact on rates achieved overall and masked a positive rate improvement in underlying recurring case mix.

OTHER REVENUE

Other revenue, which includes fees paid to the Group by consultants (e.g. for the use of Group facilities and services) and third-party revenues (e.g. pathology services to third-parties), increased by £5.1 million, or 19.2%, in the year, from £26.5 million for the year ended 31 December 2013 to £31.6 million for the year ended 31 December 2014.

COST OF SALES AND GROSS PROFIT

Cost of sales increased in the year by £54.5 million, or 14.3%, from £382.1 million for the year ended 31 December 2013 to £436.6 million for the year ended 31 December 2014.

Underlying cost of sales, excluding £10.5 million relating to Spire St Anthony's Hospital, increased in the period by £44.0 million, or 11.5%, from £382.1 million for the year ended 31 December 2013 to £426.1m for the year ended 31 December 2014.

Underlying gross margin for the year of 2014 was 49.1%, compared to 50.0% in 2013.

Gross margin has been adversely impacted by a reduction of 3% in NHS tariff applicable to the 2013/2014 fiscal year and a further 2.25% NHS tariff reduction applicable from 1 April 2014 for the 2014/15 fiscal year and by a higher proportion of revenues from the NHS in 2014 than in 2013. Some of this impact has been mitigated by improved operating efficiency in the period.

Underlying clinical staff costs, as a percentage of revenues, reduced by 0.1% to 17.4% of revenue for the year ended 31 December 2014, as compared to 31 December 2013. Underlying direct costs of prostheses, drugs and consumables, as a percentage of revenues, increased from 21.3% for the year ended 31 December 2013 to 22.1% in 2014. This was due to a significant increase in NHS orthopaedic and ophthalmology surgical activity in the period and a general increase in in-patient case complexity across specialties, relative to 2013.

Underlying medical fees payable to consultant surgeons and anaesthetists for services performed in connection with NHS patients grew as a consequence of the increase in NHS activity in the year. Medical fees for NHS work increased from 5.2% of total revenues in 2013 to 5.8% of total revenues in 2014; however, as a consequence of the continued focus on cost management, these fees reduced as a percentage of NHS revenues, from 20.7% in 2013 to 20.0% in 2014.

Other fees payable to consultants for out-patient and diagnostic activities reduced as a percentage of revenues, from 6.0% in 2013 to 5.7% in 2014.

OTHER OPERATING COSTS

Other operating costs for the year ended 31 December 2014 increased by £76.5 million, or 27.1%, from £282.8 million for the year ended 31 December 2013 to £359.3 million for the year ended 31 December 2014.

Underlying other operating costs, excluding £8.6 million relating to Spire St Anthony's Hospital, increased in the period by £67.9 million, or 24%, from £282.8 million for the year ended 31 December 2013 to £350.7 million for the year ended 31 December 2014.

Included within these costs are exceptional costs of £11.5 million for 2013 and £54.0 million for 2014 relating to the business reorganisation, corporate restructuring and regulatory and governance costs. Before exceptional items, underlying operating costs increased by £25.4 million, or 9.4% from £271.3 million for the year ended 31 December 2013 to £296.7 million for the year ended 31 December 2014 on revenue growth of 9.5% in the year.

DEPRECIATION

Excluding £0.7 million relating to Spire St Anthony's Hospital, the charge for depreciation for the year ended 31 December 2014 has increased by £1.4 million, or 3.3%, relative to 2013, to £44.4 million. Overall, depreciation arising from capital expenditure in 2014 and the acquisition of St Anthony's Hospital, have offset the full year impact on the depreciation of reductions in the fixed asset base from the sale in January 2013 of 12 hospital properties, subject to long-term leases, ('2013 Freehold Sale'), and of the sale and leaseback of the Spire Washington Hospital premises in March 2014.

RENT

Rent of land and buildings for the year, excluding £0.1 million relating to Spire St Anthony's Hospital, increased by £5.7 million, or 10.4%, to £60.6 million. The increase is largely the consequence of the annualised impact of the 2013 Freehold Sale (£2.2 million in the year), the first annual indexation of rental costs associated with the 2013 Freehold Sale (£1.3 million in the year) and the commencement of rent following the sale, subject to lease, of the Spire Washington Hospital, which was concluded 11 March 2014 with a starting rent of £2.3 million per year (£1.9 million in the year). The impact on comparatives will not normalise until the end of the first quarter of 2015.

SHARE-BASED PAYMENTS IN OTHER OPERATING COSTS

Since Admission, 2.7 million share options comprising 1.7 million Directors' Share Bonus Award and 1.0 million Long Term Incentive Plan ('LTIP') have been awarded to executive directors and members of the senior management team. These are conditional on certain market and other performance conditions being fulfilled. Further details are contained in note 19 of this preliminary statement.

The charge to the income statement in the year was £2.8 million (£3.7 million inclusive of NI), of which £2.5 million (£3.4 million inclusive of NI) related to the Directors' Share Bonus Award and was charged to exceptional items, as it related to performance during the period prior to the IPO.

EXCEPTIONAL ITEMS INCLUDED IN OTHER OPERATING COSTS

(£ million)	2014	2013
IPO costs	46.1	-
Corporate restructuring and refinancing	3.9	3.5
Business reorganisation	-	3.0
Regulatory	4.0	5.0
Total	54.0	11.5

Full details of exceptional items are disclosed in note 7 of this preliminary statement.

EBITDA AND ADJUSTED EBITDA

EBITDA for the year ended 31 December 2014 increased by £5.1 million, or 3.3% from £154.1 million to £159.2 million. Adjusted EBITDA increased by 6.1%, from £150.0 million to £159.2 million (2013 EBITDA adjusted to include £4.1 million rental costs, to include these costs on the same basis as for 2014, following the 2013 Freehold Sale and the sale, subject to lease, of the Spire Washington Hospital in March 2014).

OPERATING PROFITS BEFORE AND AFTER EXCEPTIONAL COSTS

Operating profit after exceptional costs decreased by 39.7% in the year to £60.1 million. Before exceptional costs, operating profits increased by 2.7%, from £111.1 million for the year ended 31 December 2013 to £114.1 million for the year ended 31 December 2014.

PROFIT ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT

The profit on disposal of £18.5 million for the year ended 31 December 2014 relates principally to the sale of the freehold land and buildings of the Spire Washington Hospital. The profit in the prior year of £44.2 million relates principally to the profit on the 2013 Freehold Sale.

FINANCE COSTS

Finance costs in the year include those incurred in respect of borrowings drawn under the capital structure of the Group prior to  Admission. On Admission, borrowings reduced significantly and, therefore, finance costs also reduced.

Finance costs for the year ended 31 December 2014, before exceptional finance costs, totalled £85.9 million, a reduction of £68.0 million or 44.2% over the prior year. This reduction mainly comprises £35.9 million of interest on shareholder debt and £32.1 million on bank loans, net of the mark-to-market movement on interest rate swap instruments settled on Admission. Had the finance structure as effected on Admission been in place throughout the 2014 financial year, finance costs (before exceptional items) would have further reduced by £65.2 million to £20.7 million.

In the year ended 31 December 2013, exceptional finance costs of £42.2 million arose from the 2013 Freehold Sale and relate to interest rate swaps being recycled to the income statement as they no longer met the criteria for hedge accounting, net of the early settlement discounts arising on the repayment of bank borrowings.

TAXATION

The taxation credit for the year ended 31 December 2014 consisted of a £13.7 million credit for deferred tax and a charge of £0.7 million for corporation tax.

The UK corporation tax charge on 2014 profits was £nil (2013:£nil), reflecting the significant allowable costs arising from the Listing, including the settlement of out-of-the-money interest rate swaps. The UK corporation tax charge in the income statement is an adjustment to prior years.

The credit for deferred taxation for the year ended 31 December 2014 was £13.7 million, comprising deferred tax assets previously unrecognised, in relation to losses carried forward following the reorganisation of the Spire group into a single tax group. The credit for the year ended 31 December 2013 relates predominantly to the release of deferred tax liabilities associated with fixed assets disposed of as part of the 2013 Freehold Sale.

PROFIT AFTER TAXATION

The profit after taxation for the year ended 31 December 2014 was £6.0 million, compared with a profit after taxation for the year ended 31 December 2013 of £102.2 million. The profit on assets sold as part of the 2013 Freehold Sale and the consequent release of associated deferred tax liabilities substantially contributed to the result for 2013.

ADJUSTED EARNINGS PER SHARE ('EPS')

Adjusted EPS (after eliminating exceptional items, profit on disposal of property, plant and equipment and adjusting for the effects of the capital restructuring on the IPO) was 18.3p per share.

The pro-forma financial information set out below has been prepared to illustrate the effect of the IPO on earnings per share. It is prepared for illustrative purposes only and does not represent the Group's actual earnings. The information is prepared on a basis consistent with the accounting policies of the Group and as described in the notes set out below.

(£ million)	Year ended 31 December 2014
Loss before taxation	(7.0)
Operating adjustments:
Exceptional items - IPO	46.1
Exceptional items - other	7.9
Profit on disposal of property, plant and equipment (note 1)	(18.5)
Financing adjustments:
Finance costs shareholder loans (note 2)	54.8
Finance costs bank loans (note 3)	10.4
Pro-forma profit before tax	93.7
Taxation (note 4)	(20.2)
Pro-forma profit after tax	73.5
Number of ordinary shares in issue on Admission	401,081,391
Pro-forma basic earnings per share (pence)	18.3
Number of ordinary shares in issue on Admission, weighted average (note 5)	401,957,044
Pro-forma diluted earnings per share (pence)	18.3

Note 1    Profit on disposal of the freehold interest in the Spire Washington Hospital, net of the loss arising on the disposal of trade and assets of a fertility business

Note 2    Removes finance costs in the year relating to shareholder loans capitalised on Admission

Note 3    Reduces bank finance costs; revised costs calculated as if the bank refinancing had occurred on 1 January 2014 and the new loan facility had been entered into on that date

Note 4    Taxation is calculated at the statutory rate of 21.50% of the pro-forma profit before tax before taking account of available tax losses

Note 5    Dilution relates to the weighted average number of share options awarded in the period

CASH FLOW

ANALYSIS OF CASHFLOWS IN YEAR

(£ million)	2014	2013
Opening cash balance	111.5	133.8
Operating cashflow before exceptional items	164.2	111.2
Exceptional items	(51.2)	(11.5)
Operating cashflow after exceptional items	113.0	99.7
Net cash (used in)/generated from investing activities	(70.0)	647.1
Net cash used in financing activities	(80.0)	(769.1)
Closing cash balance	74.5	111.5
Closing net indebtedness	424.3	1,517.4

OPERATING CASHFLOWS

The cash inflow from operating activities before exceptional items for the year was £164.2 million, which constitutes a cash conversion rate from Adjusted EBITDA for the year of 103.1% (2013: £111.2 million or 74.1%). The net cash inflow from movements in working capital in the year is £4.0 million, a significant improvement on that reported for the year ended 31 December 2013.

INVESTING AND FINANCING CASHFLOWS

Net cash used in investing activities for the year is £70.0 million, which includes the acquisition of St Anthony's Hospital in May 2014 for £38.5 million and other capital expenditure of £66.6 million, offset by the proceeds from the disposal of the freehold interest (subject to lease) in Spire Washington Hospital and the disposal of a fertility business, totalling £34.8 million, and interest received of £0.3 million. Capital expenditure comprises the completion of the radiotherapy centre in Bristol, new theatres in Harpenden and South Bank, the completion of a cardiac catheterisation laboratory and theatre in Cardiff, MRI at Clare Park and a major reconfiguration and development of facilities in Tunbridge Wells, including investment in out-patient areas and static MRI and CT machines at this hospital.

Net cash generated from investing activities for the year ended 31 December 2013 was £647.1 million, including proceeds from the 2013 Freehold Sale.

Net cash used in financing activities of £80.0 million comprises net proceeds from the issue of shares of £306.9 million, the net repayment of bank debt after cash raised from new borrowings of £345.6 million and interest paid of £41.3 million.

On Admission, 150,100,341 new ordinary shares were issued by the Company, which generated cash proceeds of £306.9 million. The proceeds, combined with a restructuring of existing shareholder interests in the Group and the refinancing of the bank facilities served to reduce overall Group indebtedness and materially reduce the net funding costs of the Group.

In the prior year, in January 2013, the Group completed the £704.0 million 2013 Freehold Sale, the net proceeds of which were used to repay debt.

BORROWINGS

At 31 December 2014, the Group has bank debt of £422.2 million, drawn under facilities which mature in 2019 and finance lease debt of £76.6 million. Additionally, the Group has a revolving loan facility of £100.0 million available until July 2019, which was undrawn at 31 December 2014.

(£ million)	2014	2013
Cash	(74.5)	(111.5)
External debt (incl finance leases)	498.8	782.4
Shareholder debt	-	846.5
Net debt	424.3	1,517.4

Net debt as at 31 December 2014 was 2.7 times Adjusted EBITDA (2013: 10.1 times Adjusted EBITDA).

The consolidated cash and cash equivalents was £74.5 million at 31 December 2014. Surplus cash balances are held with UK-based investment-grade banks.

DIVIDEND

As indicated in the prospectus, issued as part of the IPO, we intend to adopt a progressive dividend policy based on a payout ratio of around 20% of profit after taxation each financial year, in the approximate proportions of one-third interim and two-thirds final, respectively, of the total annual dividend.

Subject to shareholder approval, the Company will pay a final dividend in respect of the current financial year of 1.8 pence per ordinary share.

PRINCIPAL RISKS

The principal risk factors faced by the Group are identified in the 'Principal Risks' section.

Principal risks

There are a number of risks facing the business in the forthcoming financial year. The Board has reconsidered the risks listed below:

Risk	Mitigation of risk
Demand for services is adversely affected by changes in macroeconomic conditions	The Board regularly reviews market conditions and economic indicators to assess whether actions are required.
Changes in government policy	The Board continually monitors government policy, NHS requirements and associated tariff structures to consider the need for cost and/or investment reduction, whether in the short, medium or long term.
Laws, regulations and loss of reputation	Following the IPO, the Group is in the process of implementing a new group wide risk management framework (and associated policies and procedures) which is tasked with the review, monitoring and, via the executive management team, ensuring that these risks are mitigated as far as possible.
Spire operates in a highly complex medical business and requires high clinical standards from staff and consultants	Spire has implemented and continually monitors its clinical standards, policies and procedures. The introduction of the Board's Clinical Governance and Safety Committee will aid the monitoring and control of clinical risks.
Competitor challenge	The Group maintains a watching brief on new and existing competitor activity and retains the ability to react quickly to changes in patients and market demand.
The private medical insurance ('PMI') market is concentrated with the top four companies	The Group works hard to maintain good relationships and a joint product/patient health offering with the PMI companies which, it is believed, assists the healthcare sector as a whole in delivering high quality patient care.
Availability of key medical staff	The Board focuses on employment and staff retention, evidenced by very high levels of staff satisfaction and hence low staff turnover, and its excellent reputation to attract new staff.
Investment plans and execution	The Group ensures change and project risks are minimised by, amongst others, a detailed financial and operational appraisal process, robust bid procedures and regular reviews.
Liquidity and covenant risk	The Group actively monitors and manages its liquid asset position, its financial liabilities falling due and the cover against its loan covenants.
Interest rate risk	On a regular basis the Group reviews the cost benefit of entering into derivative financial instruments to hedge its exposure to interest rate volatility based on existing variable rates, current and predicted interest yield curves and the cost of associated medium term derivative financial instruments.

Directors' responsibility statement

Each of the Directors confirms that, to the best of their knowledge:

·           the preliminary financial information, which has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS'), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company on a consolidated and individual basis; and

·           the preliminary announcement includes a fair summary of the development and performance of the business and the position of the Company on a consolidated and individual basis, together with a description of the principal risks that it faces.

Consolidated income statement

For the year ended 31 December 2014

(£ million)	Notes	2014	2013
Revenue	6	856.0	764.5
Cost of sales		(436.6)	(382.1)
Gross profit		419.4	382.4
Other operating costs		(359.3)	(282.8)
Operating profit	5	60.1	99.6
Exceptional items included within other operating costs	7	(54.0)	(11.5)
Operating profit before exceptional items		114.1	111.1
Profit on disposal of property, plant and equipment	8	18.5	44.2
Interest income		0.3	0.4
Finance costs	9	(85.9)	(153.9)
Exceptional finance costs	9	-	(42.2)
Total finance costs		(85.9)	(196.1)
Loss before taxation		(7.0)	(51.9)
Taxation	10	13.0	154.1
Profit for the year		6.0	102.2
Profit for the year attributable to owners of the Parent		6.0	102.2
Earnings per share - basic and diluted (in pence per share)	11	1.9	40.9

Consolidated statement of comprehensive income

For the year ended 31 December 2014

(£ million)	2014	2013
Profit for the year	6.0	102.2
Other comprehensive income for the year
Net gain on cash flow hedges	-	39.4
Deferred tax on cash flow hedges taken to hedge reserve	-	(11.1)
Hedge loss recycled to income statement (note 9)	-	68.8
Deferred tax on recycled cash flow hedge losses	-	(13.8)
Other comprehensive income net of tax	-	83.3
Total comprehensive income for the year	6.0	185.5
Total comprehensive income for the year attributable to owners of the Parent	6.0	185.5

All other comprehensive income will recycle to profit or loss in this or future periods.

Consolidated statement of changes in equity

For the year ended 31 December 2014

(£ million)	Share capital	Share premium	Hedging reserve	Capital reserves	Retained earnings	Total equity
As at 1 January 2013	-	-	(83.3)	-	(358.5)	(441.8)
Profit for the year	-	-	-	-	102.2	102.2
Other comprehensive income	-	-	83.3	-	-	83.3
Total comprehensive income	-	-	83.3	-	102.2	185.5
Employee benefit trust	-	-	-	-	0.1	0.1
As at 1 January 2014	-	-	-	-	(256.2)	(256.2)
Profit for the year	-	-	-	-	6.0	6.0
Total comprehensive income	-	-	-	-	6.0	6.0
Group reorganisation	2.5	525.0	-	376.1	-	903.6
Shares issued on Admission	1.5	313.3	-	-	-	314.8
Transaction costs of shares issued	-	(11.4)	-	-	-	(11.4)
Share-based payments	-	-	-	-	2.8	2.8
Deferred tax on share-based payments	-	-	-	-	0.4	0.4
Balance at 31 December 2014	4.0	826.9	-	376.1	(247.0)	960.0

Consolidated balance sheet

As at 31 December 2014

(£ million)	Notes	2014		2013
ASSETS
Non-current assets
Intangible assets	13	519.1		514.9
Property, plant and equipment	14	851.9		813.9
Deferred tax asset		-		17.1
		1,371.0		1,345.9
Current assets
Inventories		26.0		26.2
Trade and other receivables	15	139.9		131.2
Cash and cash equivalents		74.5		111.5
		240.4		268.9
Total assets		1,611.4		1,614.8
EQUITY AND LIABILITIES
Equity
Share capital	18	4.0		-
Share premium		826.9		-
Capital reserves	18	376.1		-
Retained earnings		(247.0)		(256.2)
Equity attributable to owners of the Parent		960.0		(256.2)
Non-controlling interests		-		-
Total equity		960.0		(256.2)
Non-current liabilities
Borrowings	16	493.5		882.1
Derivative financial instruments		-		52.4
Deferred tax liability		48.1		77.4
		541.6		1,011.9
Current liabilities
Provisions		6.2		3.2
Borrowings	16	5.3		746.8
Derivative financial instruments		-		22.1
Trade and other payables	17	98.3		87.0
		109.8		859.1
Total liabilities		651.4		1,871.0
Total equity and liabilities		1,611.4		1,614.8

Consolidated statement of cash flows

For the year ended 31 December 2014

(£ million)	Notes		2014	2013
Cash flows from operating activities
Loss before taxation			(7.0)	(51.9)
Adjustments for:
depreciation	5		45.1	43.0
goodwill impairment	13		1.0	0.9
share-based payments	19		2.8	-
profit on disposal of property, plant and equipment	8		(18.5)	(44.2)
interest income			(0.3)	(0.4)
finance costs	9		85.9	153.9
exceptional finance costs	9		-	42.2
			109.0	143.5
Movements in working capital:
increase in trade and other receivables			(9.3)	(32.0)
decrease/(increase) in inventories			1.5	(0.7)
increase/(decrease) in trade and other payables			9.5	(10.7)
increase/(decrease) in provisions			2.3	(0.4)
Net cash from operating activities			113.0	99.7
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired	12	(38.5)		-
Purchase of property, plant and equipment		(66.6)		(53.7)
Proceeds from disposal of property, plant and equipment		34.8		700.4
Interest received		0.3		0.4
Net cash (used in)/generated from investing activities		(70.0)		647.1
Cash flows from financing activities
Proceeds from issue of share capital		317.2		-
Share issue costs		(10.3)		-
Acquisition of minority interest		-		(0.6)
Interest paid		(41.3)		(59.2)
Repayments of borrowings		(805.0)		(789.3)
Proceeds from drawdown of long-term borrowing		465.0		80.0
Debt issuance costs		(5.6)		-
Net cash used in financing activities		(80.0)		(769.1)
Net decrease in cash and cash equivalents		(37.0)		(22.3)
Cash and cash equivalents at beginning of year		111.5		133.8
Cash and cash equivalents at end of year		74.5		111.5
Exceptional costs
Exceptional costs included in the cash flow from operating activities		51.2		11.5
Total exceptional costs		51.2		11.5

1. General information

Spire Healthcare Group plc (the 'Company') and its subsidiaries (collectively, 'the Group') owns and operates private hospitals and clinics in the UK and provides a range of private healthcare services.

The Company is a public limited company, which is listed on the London Stock Exchange and incorporated and domiciled in the UK (registered number: 9084066). The address of its registered office is 3 Dorset Rise, London, EC4Y 8EN.

2. Basis of preparation

The preliminary financial information for the year ended 31 December 2014 included in this report was approved by the Board on 23 March 2015. The financial information set out here does not constitute the Company's statutory accounts for the year ended 31 December 2014, but is derived from those accounts. Statutory accounts for 2014 will be delivered following the Company's annual general meeting. The auditor has reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498 (2) or (3) of the Companies Act 2006.

Group reorganisation during 2014

Spire Healthcare Group Limited was incorporated on 12 June 2014 and was subsequently re-registered as a public company on 23 June 2014 with the name Spire Healthcare Group plc.

With effect from 18 July 2014, the Company became the legal parent of Spire Healthcare Group UK Limited and Spire UK Holdco 2A Limited and their respective subsidiary undertakings. The Group was admitted to the premium segment of the London Stock Exchange on 23 July 2014 (the 'Admission').

These companies were under common management and control throughout the years presented and, therefore, this preliminary announcement has been prepared as if the reorganisation had taken place as at the beginning of the earliest year presented herein.

The comparative period comprised Spire Healthcare Group UK Limited and Spire UK Holdco 2A Limited, together with each of their subsidiaries, and, until 17 January 2013, the comparative period also included Spire UK Holdco 1A Limited, Spire UK Holdco 3A Limited and their subsidiaries.

As the group reorganisation did not lead to a change in control of the companies included in the Group, it has been accounted for using the pooling-of-interest method by aggregating the assets, liabilities, results, share capital and reserves, after eliminating intercompany balances and unrealised profits. The financial information, therefore, reflects the assets, liabilities and results of operations of the components of the Group that constituted the property ownership and trading businesses.

Transactions with Cinven Funds (the controlling party until the Admission on 23 July 2014) and other entities under common control that were not acquired and, therefore, are not part of the Group, are disclosed as transactions with related parties (see note 22 for further information on related party transactions).

Going concern

On Admission on 23 July 2014, the Group refinanced its bank loan facilities with a facility that matures in 2019. The proceeds from the issue of new ordinary shares, existing resources and £425.0 million from the new term loans, were applied in the repayment of all of the existing bank loan and interest rate swap liabilities. Loans from former parent undertakings were settled through the issue of new shares in the Company.

The directors have considered the Group's forecasts and projections, and the risks associated with their delivery, and are satisfied that, the Group will be able to operate within the covenants imposed by the new bank loan facility for the foreseeable future. In relation to available cash resources, the directors have had regard to both cash at bank and a £100.0 million committed undrawn revolving credit facility. Accordingly, they have adopted the going concern basis in preparing this preliminary announcement.

3. Accounting policies

In preparing this preliminary announcement the same accounting policies have been applied as those set out in the Group's Annual Accounts for the year ended 31 December 2013, a copy of which can be found on the Company's website at www.spirehealthcare.com.

The auditors have reported on those accounts. Their reports were not qualified and did not contain any emphasis of matter paragraph.

New and amended standards and interpretations

The following new and amended IFRS and IFRIC interpretations that are applicable to the Group and are effective from 1 January 2014 and have been applied to this preliminary announcement:

IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

IAS 32 Financial Instruments, Presentation (May 2012 annual improvements)

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39

IAS 32 Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32

These new and amended standards and interpretations did not have any significant effect on the financial position of the Group, or result in changes in accounting policy or any significant additional disclosure. There have been other new and amended standards and interpretations issued, or have come into effect, from 1 January 2014; however, they are not applicable to the Group and, hence, not included above.

Standards and interpretations issued but not yet applied

The standards and interpretations issued, but only effective for annual periods beginning on, or after, 1 January 2015 or later, which are considered applicable and may have a significant impact on the Group financial statements, are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 Financial Instruments - The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. Subject to endorsement for use in the European Union, IFRS 9 is effective for annual periods beginning on, or after, 1 January 2018, with earlier application permitted. Retrospective application is required, but comparative information is not compulsory. The impact of the standard on the Group's performance and financial position will be evaluated.

IFRS 15 Revenue from Contracts with Customers - The standard replaces all existing IFRS standards and interpretations that currently govern revenue recognition under IFRS and provides a single, principles based five-step model to be applied to all contracts with customers. It does not apply to insurance contracts, to financial instruments or to lease contracts, which fall within the scope of other IFRSs. The standard also requires entities to provide users of financial statements with more disclosures. Subject to endorsement for use in the European Union, IFRS 15 is effective for annual periods beginning on, or after, 1 January 2017, and is to be applied retrospectively, with earlier application permitted. The impact of the standard on the Group's performance and financial position is being evaluated.

4. Significant judgements and estimates

In the application of the Group's accounting policies, the directors are required to make judgements, and estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

In preparing this preliminary announcement, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2013 with the exception of measurement and valuation of share-based payments.

5. Operating profit

Operating profit has been arrived at after charging:

(£ million)	2014	2013
Rent of land and buildings under operating leases	60.7	54.9
Depreciation of property, plant and equipment	45.1	43.0
Impairment of intangible assets	1.0	-
Staff costs	285.9	210.9

6. Segmental reporting

In determining the Group's operating segment, management has primarily considered the financial information in the internal reports that are reviewed and used by the executive management team and the Board of Directors (in aggregate the chief operating decision maker) in assessing performance and in determining the allocation of resources. The financial information in those internal reports in respect of revenue and expenses has led management to conclude that the Group has a single operating segment, being the provision of healthcare services.

All revenue is attributable to and all non-current assets are located in the United Kingdom.

Revenue by wider customer (payor) group is shown below:

(£ million)	2014	2013
Insured	432.4	413.7
NHS	245.9	191.4
Self-pay	146.1	132.9
Other	31.6	26.5
Total	856.0	764.5

7. Exceptional items

(£ million)	2014	2013
Initial Public Offering ('IPO') related:
Costs incurred in relation to the IPO	43.6	-
Share-based payment (Directors' share bonus award) (note 19)	2.5	-
	46.1	-
Non-IPO related:
Business reorganisation and hospital set up costs	3.9	3.0
Corporate restructuring and financing costs	-	3.5
Regulatory costs	4.0	5.0
	7.9	11.5
Total exceptional costs	54.0	11.5

IPO related

In July 2014, the Group was listed on the London Stock Exchange. The costs charged to the income statement relate to costs incurred as a result of the listing, but not directly related to the issues of new shares. These costs include such items as IPO bonuses, marketing expenditure, professional and other services. These costs were largely tax deductible. A deferred tax asset was recognised in relation to the share-based payments.

Non-IPO related

In the year ended 31 December 2014, reorganisation and set up costs were mainly associated with the costs of acquisition of St Anthony's Hospital, which as a material acquisition in the current year, has been treated as exceptional. Regulatory costs include costs relating to the Competition and Markets Authority ('CMA') enquiry and £3.3 million of estimated liabilities payable to third parties, arising from uninsured, or partly uninsured, claims for damages in respect of the supply of medical products and other legal claims made in respect of services previously supplied to patients. These costs were largely tax deductible except for the costs of acquisition of St Anthony's Hospital.

In the year ended 31 December 2013, reorganisation and set up costs were mainly associated with the dual running IT costs and an onerous lease. Corporate restructuring and refinancing costs related to advisers' fees associated with the sale of twelve property-owning companies on 17 January 2013, subject to leases ('2013 Freehold Sale'), and other refinancing activity. Regulatory costs mainly comprised the costs of the CMA enquiry.

8. Profit on disposal of property, plant and equipment

On 15 August 2014, the Group completed the disposal of the assets of Spire Fertility (Disposal) Limited (formerly London Fertility Centre Limited) for a consideration of £3.0 million. The assets had a net book value at the disposal date of £3.8 million.

On 11 March 2014, the Group completed the sale of a long leasehold interest in the land and buildings of the Spire Washington Hospital, Washington, Tyne and Wear, for a consideration of £32.3 million. The property and associated plant and equipment had a net book value at the disposal date of £12.3 million.

For the year ended 31 December 2013, the profit on disposal included that arising on the 2013 Freehold Sale on 17 January 2013. Total consideration received was £704.0 million and the net cash proceeds of the transaction were used to repay bank borrowings and interest rate swaps.

9. Finance costs

(£ million)	2014	2013
Interest on loans from former ultimate parent undertakings and management	54.8	90.7
Interest on bank facilities	26.9	56.6
Finance charges payable under finance leases	7.6	7.5
Change in fair value of interest rate derivatives	(2.8)	(0.1)
	86.5	154.7
Finance costs capitalised in the year	(0.6)	(0.8)
	85.9	153.9
Exceptional finance costs	-	42.2
Total finance costs	85.9	196.1

Finance costs capitalised during the year were calculated based on a weighted cost of borrowing of 8% (2013: 8%).

Exceptional finance costs

In the year ended 31 December 2013, following the extension of the Group's bank loan facilities, and reflecting the Group's revised strategy for future re-financing, it was determined that the remaining interest rate swap contracts no longer met the criteria for hedge accounting and, therefore, the non-cash fair value of swap losses of £68.8 million, previously accumulated in the hedging reserve, were recycled to the income statement.

Other items arising in the year ended 31 December 2013 include a credit related to the partial waiver of bank debt and interest rate swap liabilities on settlement, net of the unamortised debt costs. This resulted in a total net credit of £26.6 million.

10. Tax on loss

(£ million)	2014	2013
Current tax
UK Corporation tax arising in subsidiaries on loss for the year	-	-
Adjustments in respect of prior years	0.7	(7.4)
Total current tax	0.7	(7.4)
Deferred tax
Released on disposal of property	-	(102.3)
Origination and reversal of other temporary differences	(11.9)	(13.4)
Change in tax rates	-	(15.5)
Adjustments in respect of prior years	(1.8)	(1.7)
Total excluding deferred tax on recycling of ineffective hedges	(13.7)	(132.9)
Recycling of deferred tax relating to ineffective hedges	-	(13.8)
Total deferred tax	(13.7)	(146.7)
Tax on loss	(13.0)	(154.1)

Corporation tax is calculated at 21.5% (2013: 23.25%) of the estimated taxable profit or loss for the year.

As at 31 December 2014, subsidiary undertakings of the Group have the following to offset against future trading profits:

·      unused capital allowances of £277.6 million (31 December 2013: £237.6 million); and

·      unutilised losses totalling £155.5 million (2013: £117.2 million).

With effect from the Admission the Group was restructured. This allows the recognition, for deferred tax, of previously unrecognised losses and results in the overall tax credit for the year.

The amounts described above relating to unused capital allowances and carried forward losses include amounts recognised as deferred tax assets.

11. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares. For year ended 31 December 2014, the calculation is based on the 401,081,391 shares that were in issue on Admission on 23 July 2014. For shares prior to the Admission date, as a proxy, the calculation is based on the 250,000,000 shares that were issued to Cinven, the former ultimate parent undertaking of the Group, and current and former management on Admission on 23 July 2014 in exchange for the liabilities to the former ultimate shareholders and management.

For year ended 31 December 2013, the calculation is based on the 250,000,000 shares mentioned above.

(£ million)	2014	2013
Profit for the year attributable to owners of the Parent	6.0	102.2
Weighted average number of ordinary shares in issue	317,055,302	250,000,000
Basic earnings per share (in pence per share)	1.9	40.9

For dilutive earnings per share, the weighted average number of ordinary shares in issue is adjusted to include all dilutive potential ordinary shares arising from share options.

(£ million)	2014	2013
Profit for the year attributable to owners of the Parent	6.0	102.2
Weighted average number of ordinary shares in issue	317,055,302	250,000,000
Adjustment for weighted average number of contingently issuable shares	875,653	-
	317,930,955	250,000,000
Diluted earnings per share (in pence per share)	1.9	40.9

12. Business combination

On 22 May 2014, the Group acquired St Anthony's Hospital for a total consideration of £38.5 million. St Anthony's Hospital is a 92-bed private hospital based in Cheam, Surrey. This acquisition supports the Group's strategy of increasing its presence in the Greater London region

The fair values of the identifiable assets and liabilities as at the acquisition date are set out below. Accounting standards permit up to 12 months for provisional acquisition accounting to be finalised following the acquisition date, if any subsequent information provides better evidence of the item's fair value at the date of acquisition.

Fair value of identifiable assets and liabilities acquired

(£ million)
Property and equipment	30.5
Inventory	1.2
Trade and other receivables	2.7
Trade and other payables	(0.6)
Deferred tax liability	(1.9)
Fair value of net assets acquired	31.9
Goodwill	6.6
Net assets acquired	38.5
Cash consideration	38.5
Total consideration	38.5

The total consideration of £38.5 million comprised of the following:

·      a cash payment of £38.0 million, which was made in May 2014; and

·      a deferred consideration contingent upon the working capital of the business on completion date. This amount was determined to be £0.5 million by the parties involved in August 2014 and the amount was settled at that time.

Goodwill arises on the acquisition primarily because of the geographical location of the established hospital, procurement and other synergies, relationships with consultants and other clinical personnel, as well as deferred tax liability recognition on the property.

St Anthony's Hospital contributed revenue of £19.2 million and an operating profit of £0.1 million in the period from the date of acquisition to the balance sheet date.

If the acquisition had taken place on 1 January 2014, the first day of the financial year, revenue would have been £31.2 million. Management is not disclosing the profit or loss of the combined entity for the current reporting year due to impracticability, as this disclosure could potentially be misleading and does not reflect the actual results that would have arisen if the hospital had been trading under the ownership of the Spire Group. St Anthony's Hospital was previously a not-for-profit organisation.

Acquisition costs of £2.0 million have been expensed in the income statement.

13. Intangible Assets

(£ million)	Goodwill
Cost
At 1 January 2013	516.2
Additions in the year	-
At 1 January 2014	516.2
Additions in the year	6.6
Disposal in the year	(2.7)
At 31 December 2014	520.1
Impairment
At 1 January 2013	0.4
Charge for the year	0.9
At 1 January 2014	1.3
Charge for the year	1.0
Disposal in the year	(1.3)
At 31 December 2014	1.0
Net book value
At 31 December 2014	519.1
At 31 December 2013	514.9

The goodwill arising on acquisitions is reviewed annually for impairment or when there is an event that may indicate impairment. In the year, the Group's goodwill in relation to an investment in a medical practice of £1.0 million was impaired following a CMA Final Order, whereby consultants are allowed to practise wherever they wish. The prior year's impairment of £0.9 million relates to Spire Fertility (Disposal) Limited (formerly London Fertility Centre Limited), a business disposed of by the Group during the year. The directors do not believe that any further impairment is required in the financial period.

14. Property, plant and equipment

(£ million)	Freehold property	Long leasehold property	Equipment	Assets in the course of construction	Total
Cost
At 1 January 2013	1,178.5	292.1	220.3	-	1,690.9
Additions	0.1	11.1	37.1	6.2	54.5
Disposals	(610.8)	(116.7)	(23.0)	-	(750.5)
At 1 January 2014	567.8	186.5	234.4	6.2	994.9
Additions	23.1	10.2	32.5	1.4	67.2
Additions on business combination	27.1	-	3.4	-	30.5
Disposals	(0.2)	(17.4)	(7.3)	-	(24.9)
Transfers	6.1	-	0.1	(6.2)	-
At 31 December 2014	623.9	179.3	263.1	1.4	1,067.7
Depreciation
At 1 January 2013	119.8	31.3	76.8	-	227.9
Charge for the year	12.7	4.7	25.6	-	43.0
Disposals	(64.0)	(7.4)	(18.5)	-	(89.9)
At 1 January 2014	68.5	28.6	83.9	-	181.0
Charge for the year	15.6	9.4	20.1	-	45.1
Disposals	(0.2)	(3.8)	(6.3)	-	(10.3)
At 31 December 2014	83.9	34.2	97.7	-	215.8
Net book value:
At 31 December 2014	540.0	145.1	165.4	1.4	851.9
At 31 December 2013	499.3	157.9	150.5	6.2	813.9

On 17 January 2013, twelve hospital properties with a net book value of £661.0 million were disposed of as a result of the 2013 Freehold Sale.

On 11 March 2014, the long leasehold interest in the Spire Washington Hospital, with a net book value of £12.3 million, was disposed of.

As at 31 December 2014, included in the net book value of property, plant and equipment above is £29.0 million (2013: £32.5 million) relating to assets held under finance leases on which there was a depreciation charge of £1.5 million in the year (2013: £1.2 million).

15. Trade and other receivables

(£ million)	2014	2013
Amounts falling due within one year:
Trade receivables	108.0	87.9
Other receivables	4.0	20.9
Prepayments	27.9	22.4
	139.9	131.2

Trade receivables comprise amounts due from private medical insurers, the NHS, patients, and consultants and other third parties who use the Group's facilities. Invoices to customers fall due within 60 days of the date of issue. Some of the agreements with NHS customers operate on the basis of monthly payments on account with quarterly reconciliations, which can lead to invoices being paid after their due date.

The ageing of trade receivables is shown below and shows amounts that are past due at the reporting date. A provision for doubtful receivables has been recognised at the reporting date through consideration of the ageing profile of the Group's receivables and the perceived credit quality of its customers. The carrying amount of trade receivables is considered to be an approximation to its fair value.

The ageing of trade receivables at the reporting date was:

(£ million)	2014	2013
Not past due and not impaired	62.0	55.1
Past due 0-30 days, not impaired	20.1	17.2
Past due 31-90 days, not impaired	13.1	11.8
More than 3 months, not impaired	12.8	3.8
Total	108.0	87.9

Trade receivables comprise the following wider customer/payor groups:

(£ million)	2014	2013
Private medical insurers	48.0	39.3
NHS	49.9	37.5
Patient debt	1.0	0.8
Other	9.1	10.3
Total	108.0	87.9

16. Borrowings

(£ million)	2014	2013
Unsecured borrowings
Amount due to former ultimate parent undertaking and management	-	846.5
Secured borrowings
Bank loans	422.2	702.7
Obligations under finance leases	76.6	79.7
	498.8	782.4

The bank loans are secured on fixed and floating charges over both the present and future assets of material subsidiaries of the Group.

Total borrowings (measured at amortised cost)
(£ million)	2014	2013
Amount due for settlement within 12 months	5.3	746.8
Amount due for settlement after 12 months	493.5	882.1
	498.8	1,628.9

Obligations under finance leases

The Group has finance leases in respect of three hospital properties and medical equipment. Future minimum lease payments under finance leases are as follows:

(£ million)	2014		2013
	Minimum payments	Present value of payments	Minimum payments	Present value of payments
Within one year	7.3	4.1	7.7	4.9
After one year but not more than five years	29.1	13.5	31.9	17.1
More than five years	174.2	59.0	181.4	57.7
Total minimum lease payments	210.6	76.6	221.0	79.7
Less amounts representing finance charges	(134.0)	-	(141.3)	-
Present value of minimum lease payments	76.6	76.6	79.7	79.7

Property leases, with a present value liability of £75.1 million (2013: £74.9 million), expire in 2040 and carry an implicit interest rate of 9.1% (2013: 9.1%).

Terms and debt repayment schedule

The maturity date is the date on which the relevant bank loans are due to be fully repaid, as at the balance sheet date.

The carrying amounts drawn (after issue costs and including interest accrued) under facilities in place at the balance sheet date were as follows:

(£ million)	Maturity	Margin over LIBOR	2014	2013
Senior finance facility (a)	July 2019	2.25%	422.2	-
Term loan - operating companies (b)	June 2015	1.75%-3.0%	-	104.5
Term loan - operating companies (b)	June 2015	3.0%	-	80.1
Capex loan -operating companies (b)	June 2015	1.75%	-	50.0
Term loan - property companies (b)	June 2015	1.25%-2.35%	-	421.4
PIK loan - property companies (b)	June 2015	7.05%	-	46.7
			422.2	702.7
Revolving credit facility (undrawn committed facility)			100.0	28.5

a)  On Admission on 23 July 2014, the Group was refinanced, and it entered into a new bank loan facility with a syndicate of banks, comprising a 5 year, £425.0 million term loan and a 5 year £100.0 million revolving facility. The proceeds of these facilities, together with existing funds of the Group, have been used in the full repayment of the existing bank debt and interest rate swap liabilities. The new loans are non-amortising and carry interest at an initial margin of 2.25% over LIBOR. On the same date, the amounts due to the former ultimate parent undertakings and management were capitalised in exchange for the issue of ordinary shares.

b)  On 17 January 2013, following a partial refinancing of the Spire Group under the 2013 Freehold Sale, term loans with a total value of £606.4 million were either repaid or waived.

On 18 December 2013, one of the Spire operating groups was refinanced, following which all of the liabilities outstanding under its bank facilities were repaid.

The carrying amounts drawn (after issue costs and including interest accrued) under facilities in place at the previous balance sheet date were as follows:

(£ million)	Maturity	2014	2013
Former ultimate parent undertaking	August 2037	-	707.6
Former ultimate parent undertaking	March 2038	-	138.9
		-	846.5

The principal amounts drawn under these facilities were fully settled on Admission via the issuance and exchange of the Company's new ordinary shares. These loans were unsecured and interest bearing at 12% per annum.

17. Trade and other payables

(£ million)	2014	2013
Trade payables	50.8	38.0
Other payables	4.8	9.6
Corporation tax	0.7	-
Other taxation and social security	6.1	5.2
Accruals	35.9	34.2
	98.3	87.0

18. Share capital and reserves

	2014
	£0.01 ordinary shares		£1 redeemable preference shares
Share capital of Spire Healthcare Group plc	Shares	£'000	Shares	£'000
Issued and fully paid
At date of incorporation (a)	100	-	49,999	50
Acquisition of a subsidiary undertaking (b)	1	-	-	-
On capitalisation of loans:
shareholder loans (c)	248,699,063	2,487	-	-
managers' loan notes (c)	1,300,836	13	-	-
New shares issued:
Directors' and managers' Accrued Incentive Payments (d)	1,036,156	10	-	-
Subscribed for by non-executive directors (e)	45,235	-	-	-
New shares (f)	150,000,000	1,500	-	-
Redemption (a)	-	-	(49,999)	(50)
At 31 December 2014	401,081,391	4,010	-	-

Group reorganisation

a)  On 12 June 2014, the Company issued 100 ordinary shares of £0.01 each to the initial shareholder, Spire Healthcare Limited Partnership.

On 12 June 2014, the Company issued 49,999 non-voting redeemable preference shares of £1 each to Spire Healthcare Limited Partnership. These shares were subsequently redeemed on 23 July 2014.

b)  On 23 July 2014, the Company acquired the entire issued share capital of Spire Healthcare Group UK Limited in exchange for the issue of 1 new ordinary share of £0.01 to Spire Healthcare Limited Partnership.

c)  The Company subsequently reorganised its share capital. On 23 July 2014, the Company issued 248,699,063 ordinary shares and 1,300,836 ordinary shares of £0.01 each at a premium of £2.09 per share to Rozier S.à. r.l in exchange for settlement of the former ultimate parent loan notes and to the Management team in exchange for settlement of the Management loan notes, respectively.

d)  On 23 July 2014, the Company issued 1,036,156 ordinary £0.01 shares at a premium of £2.09 each to members of the executive management team and a director, Simon Gordon, in order to reflect their contribution to the past performance of the Group and to the Group achieving Admission ('Accrued Incentive Payments').

On 23 July 2014, the Company issued 45,235 ordinary £0.01 shares at a premium of £2.09 each to certain non-executive directors, namely, John Gildersleeve, Tony Bourne, Dame Janet Husband and Robert Lerwill.

On Admission on 23 July 2014, the Company issued 150,000,000 new ordinary shares, generating cash proceeds of £306.9 million, net of costs.

Capital reserves

This reserve represents the loans of £376.1m due to the former ultimate parent undertakings and management that were forgiven by those counterparties as part of the reorganisation of the Group prior to the IPO in 2014.

19. Share-based payments

The Group operates a number of share-based payment schemes for executive directors and other employees, all of which are equity settled. The Group has no legal or constructive obligation to repurchase or settle any of the options in cash. The total cost recognised in the income statement was £2.8 million in the year ended 31 December 2014 (2013: £nil). Employer's NI is being accrued, where applicable, at the rate of 13.8%, which management expects to be the prevailing rate at the time the options are exercised, based on the share price at the reporting date. The total NI charge for the year was £0.9 million (2013: £nil).

The following table analyses the total cost between each of the relevant schemes, together with the number of options outstanding:

	2014
(£ million)	Charge £m	Number of options (thousands)
Directors' share bonus award*	2.5	1,671
Long term incentive plan	0.3	1,063
Deferred bonus plan	-	-
	2.8	2,734

* disclosed as an exceptional item - see note 7

A summary of the main features of the scheme is shown below:

Directors' share bonus award

At the time of the IPO on 23 July 2014, the Company granted nil cost share options to executive directors to reflect their contribution prior to  Admission. The maximum number of shares underlying the awards total 1,671,200. Each award has been divided into two equal tranches, which will become exercisable on the first and second anniversaries of  Admission. The number of options that will vest will depend on conditions relating to share price on the relevant date.

Long term incentive plan

The long term incentive plan ('LTIP') is open to executive directors and designated senior managers, and awards are made at the discretion of the remuneration committee. Awards are subject to market and non-market performance criteria and vest over a 2.4 year period.

Deferred bonus plan

The deferred bonus plan is a discretionary executive share bonus plan under which the remuneration committee determines that a proportion of a participant's annual bonus will be deferred. The market value of the shares granted to any employee will be equal to one-third of the total annual bonus that would otherwise have been payable to the individual. The awards will be granted on the day after the announcement of the Group's annual results. The awards will normally vest over a three year period.

20. Commitments

Operating leases

The Group had future minimum lease payments under non-cancellable operating leases, as set out below:

	2014		2013
(£ million)	Land and buildings	Other	Land and buildings	Other
Not later than one year	61.9	0.7	56.3	-
Later than one year and not later than five years	244.0	1.4	229.7	0.7
Later than five years	1,353.0	-	1,340.9	2.2
	1,658.9	2.1	1,626.9	2.9

On 17 January 2013, the Group sold twelve of its property-owning companies to a consortium of investors, comprising Malaysia's Employees Provident Fund (EPF), affiliated funds of Och-Ziff Capital Management Group and Moor Park Capital. This sale involved varying the terms of lease agreements, which, until that date, had been in place between these property-owning companies and other operating companies in the Group.

As a result of the sale, the Group has long-term institutional lease arrangements (up to December 2042, subject to renewal or extension), with the landlord for each of the 12 properties. The leases include key terms such as annual rental covenants and minimum levels of capital expenditure invested by the Group. Rent is indexed annually in line with RPI, subject to a floor of 0.0% and a cap of 5.0%. The capital expenditure covenants measured on an average basis over each five-year period during the term of the leases, require the Group to incur, in total, £5.0 million of maintenance capital expenditure and £3.0 million of additional capital expenditure on the portfolio of 12 hospitals each year, such being subject to indexation in line with RPI.

Capital expenditure commitments

Capital commitments comprise amounts payable under capital contracts which are duly authorised and in progress at the balance sheet date. They include the full cost of goods and services to be provided under the contracts through to completion. The Group has rights within its contracts to terminate at short notice and, therefore, cancellation payments are minimal.

Capital commitments at the end of the year were as follows:

(£ million)	2014	2013
Contracted but not provided for	6.4	25.0

21. Contingent liabilities

The Group had the following guarantees at 31 December 2014:

Spire Healthcare Limited, a subsidiary undertaking of the Group, has entered into an Authorised Guarantee Agreement (AGA) with regard to the premises of the former customer contact centre at Victoria Harbour City, Manchester. Under the AGA, Spire Healthcare Limited will act as a guarantor to the new tenants until the end of the lease term, January 2016. The maximum contingent liability at the balance sheet date was £0.8 million (2013: £1.3 million).

The bankers to Spire Healthcare Limited have issued a letter of credit in the maximum amount of £1.5 million (2013: £1.5 million) in relation to contractual pension obligations and statutory insurance cover in respect of the Group's potential liability to claims made by employees under The Employers' Liability (Compulsory Insurance) Act 1969.

Under certain lease agreements entered into on 26 January 2010, the Group has given undertakings relating to obligations in the lease documentation and the assets of the Group are subject to a fixed and floating charge.

22. Related party transactions

Relationship Agreement

On 7 July 2014, the Group and Cinven Funds, the former ultimate parent undertakings, entered into the Relationship Agreement, which, upon Admission, regulates the ongoing relationship between the Group and Cinven Funds. The principal purpose of the Relationship Agreement is to ensure that the Group is capable of carrying on its business independently of Cinven Funds, that transactions and relationships with Cinven Funds (including any transactions and relationships with any member of the Group) are at arm's length and on normal commercial terms, and that the goodwill, reputation and commercial interests of the Group are maintained.

The Directors believe that the terms of the Relationship Agreement will enable the Group to carry on its business independently of Cinven Funds.

Trading transactions

Group companies entered into the following transactions:

(£ million) Counterparty	Nature of relationship		2014	2013
Former parent undertakings:
Cinven Limited	Monitoring fees *	0.4		0.6
Rozier Finco Limited	Interest payable	45.1		75.8
Rozier Finco 2 Limited	Interest payable	9.1		14.9
Other related party:
Management team of Spire Group	Interest payable	0.3		0.5
Subsidiary undertakings:
Montefiore House Limited **	Management services	0.5		0.3
Montefiore House Limited **	Property rental	1.8		1.7
Montefiore House Limited **	Interest receivable	1.0		1.5

*     In respect of the monitoring of the performance of the Group on behalf of Cinven Funds.

**   Montefiore House Limited ('MHL') is a hospital operating company which is owned 50.1% by the Group. A subsidiary company of the Group provides management services to MHL, leases the hospital property to MHL in exchange for the payment of rent by MHL and loan finance..

Amounts owed (to)/by related parties

(£ million)	Nature of relationship	2014	2013
Cinven Limited	Former parent undertakings	-	0.1
Rozier No. 1A Limited Partnership	Former parent undertakings	-	12.6
Montefiore House Limited	Subsidiary undertaking	22.1	18.6

Loans due to related parties

(£ million)	Nature of relationship	2014	2013
Spire Healthcare Limited Partnership	Former parent undertakings	-	2.6
Rozier Finco Limited	Former parent undertakings	-	707.6
Rozier Finco 2 Limited	Former parent undertakings	-	138.9
Management team	Other related party	-	4.4

As part of Admission, the loans due to former parent undertakings and the Management team were either capitalised or repaid.

For year ended 31 December 2013, amounts payable to Rozier Finco Limited, Rozier Finco 2 Limited and Management carried interest of 12% per annum.

24. Events after the reporting period

2014 Final Dividend

For 2014, the Board has recommended a final dividend of 1.8 pence per share, amounting to approximately £7.2 million, to be paid on 30 June 2015 to shareholders on the register at the close of business on 5 June 2015.

Shareholders' information

Registered office and group head office

Spire Healthcare Group plc
3 Dorset Rise
London EC4Y 8EN

Tel [phone]
Fax [phone]

(Registered in England & Wales No. 09084066)

Corporate website

Shareholder and other information about the Company can be accessed on the Company's website: www.spirehealthcare.com.

Financial Calendar

2015 Annual General Meeting                        21 May 2015

Ex-div date for Final 2014 dividend                 4 June 2015

Record date for Final 2014 dividend                5 June 2015

Payment date for Final 2014 dividend             30 June 2015

Announcement of 2015 half year results         August 2015

 

END

 

 

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