REG - Circle Holdings PLC - Half Yearly Report <Origin Href="QuoteRef">CIRC.L</Origin> <Origin Href="QuoteRef">MRON.L</Origin> - Part 2
29/10/2014 15:49
- Part 2: For the preceding part double click ID:nRSb1812Qa
The judgements and estimates which have the most significant effect on the
amounts recognised in the Interim report and financial information are
consistent with those reported in the Annual Report and financial statements
for the year ended 31 December 2013.
3. Segmental reporting
The chief operating decision-maker has been identified as the Board. The Board
reviews the Group's internal reporting in order to assess performance and
allocate resources, and to date has divided the Group into three reportable
business segments based on the Group's management and internal reporting
structure. The Board assesses the performance of the segments based on
revenue, gross profit, EBITDA before exceptional items and operating (loss) /
profit. These are all measured on a basis consistent with that of the
consolidated income statement. Revenue charged between segments has been
charged at arm's length and eliminated from the Group financial statements.
Revenue from external customers in the segmental analysis is also measured in
a manner consistent with the income statement. This is split by hospital
rather than by patient. CircleReading and CircleBath are contained within the
"Circle Independent" sector, while revenue earned from the Nottingham NHS
Treatment Centre is categorised within "Circle NHS". Geographic factors are
not considered as all of the Group's operations take place within the United
Kingdom.
Six months ended 30 June 2014 Circle NHS Circle Independent Other Segments and Unallocated Items Total Group
(unaudited)
£'000 £'000 £'000 £'000
Revenue from external customers 27,802 21,045 19 48,866
Gross profit 7,421 7,363 19 14,803
EBITDA before exceptional items 1,094 (2,633) (4,312) (5,851)
Operating profit / (loss) 899 (3,587) (7,324) (10,012)
Finance income 24
Finance costs (465)
Provision for joint venture deficit (132)
Loss before taxation (10,585)
Six months ended 30 June 2013 Circle NHS Circle Independent Other Segments and Unallocated Items Total Group
(unaudited)
£'000 £'000 £'000 £'000
Revenue from external customers 29,158 14,719 41 43,918
Gross profit 9,492 3,755 38 13,285
EBITDA before exceptional items 4,028 (6,315) (5,342) (7,629)
Operating profit / (loss) 2,861 (7,244) (6,180) (10,563)
Finance income 1,748
Finance costs (1,922)
Exceptional finance income 850
Provision for joint venture deficit 233
Loss before taxation (9,654)
Year ended 31 December 2013 Circle NHS Circle Independent Other Segments and Unallocated Items Total Group
(audited)
£'000 £'000 £'000 £'000
Revenue from external customers 51,675 32,525 52 84,252
Gross profit 17,715 9,627 49 27,391
EBITDA before exceptional items 6,351 (11,088) (9,075) (13,812)
Operating profit / (loss) 4,851 (13,153) (5,564) (13,866)
Finance income 2,035
Finance costs (2,774)
Exceptional finance income 1,113
Provision for joint venture deficit (1,738)
Loss before taxation (15,230)
4. EBITDA and exceptional items
Exceptional operating items Unaudited Unaudited Audited
Six months to Six months to Year to 31
30 June 2014 30 June 2013 December 2013
£'000 £'000 £'000
Impairment of property, plant and equipment 2,782 - 152
Share-based charges in respect of warrants issued - 314 313
Share-based charges in respect of awards to Non-Executive Directors - 41 55
Deconsolidation of Health Properties Edinburgh - - (4,384)
Revaluation of finance lease payments - - 136
Provision for under declared VAT in prior periods - - 115
Restructuring costs - 312 312
Decrease in provision for onerous leases, including dilapidations - (146) (579)
Other exceptional expense - 19 20
2,782 540 (3,860)
The Group has provided for the carrying costs on the current design
development costs which were historically spent on its Manchester site as it
re-evaluates the model appropriate for that market. This impairment to assets
under construction has resulted in an exceptional charge of £2.782 million in
the profit and loss account.
Exceptional finance items Unaudited Unaudited Audited
Six months to Six months to Year to 31
30 June 2014 30 June 2013 December 2013
£'000 £'000 £'000
Gain on fair value of interest rate derivative - (850) (1,113)
- (850) (1,113)
The Barclays swap was tied to the PFI loan of £41,768,000. This was
extinguished in full on 1 July 2013 when the Group exercised their
unconditional right to receive cash from the construction of Circle's
Nottingham NHS Treatment Centre and the PFI operating asset was handed to the
Department of Health.
Operating loss, EBITDA and EBITDAR before exceptional items Unaudited Unaudited Audited
Six months to Six months to Year to 31
30 June 2014 30 June 2013 December 2013
£'000 £'000 £'000
Operating loss before exceptional items (7,230) (10,023) (17,726)
Depreciation 1,166 1,363 2,290
Amortisation of intangibles 213 17 443
Charge recognised in respect of amounts recoverable on contracts - 1,014 1,181
EBITDA before exceptional items (5,851) (7,629) (13,812)
Operating lease rental 809 2,196 3,988
Building rental 5,423 4,408 9,681
EBITDAR before exceptional items 381 (1,025) (143)
This information is included here as it provides useful insight to the reader of the accounts for understanding operational performance.
5 Finance income
Unaudited Unaudited Audited
Six months to Six months to Year to 31
30 June 2014 30 June 2013 December 2013
£'000 £'000 £'000
Bank interest receivable 24 59 65
Interest receivable on operating financial asset - 1,689 1,970
24 1,748 2,035
6 Finance costs
Unaudited Unaudited Audited
Six months to Six months to Year to 31
30 June 2014 30 June 2013 December 2013
£'000 £'000 £'000
Interest on Barclays Bank loan - 1,225 1,466
Interest on Allied Irish Bank ('AIB') loan - 195 317
Finance lease interest 465 484 973
Interest unwind of discount on deferred consideration of Circle Clinic Windsor - 18 18
465 1,922 2,774
7 Loss per share
Basic loss per ordinary share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the year. Diluted loss per ordinary share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume the conversion of all potentially dilutive ordinary shares. Share warrants in issue represent the only category of dilutive
ordinary shares for the Group.
The following table sets out the computation for basic and diluted net loss per share for the six months ended 30 June 2014 and 2013 and the year ending 31 December 2013:
Unaudited Unaudited Audited
Six months Six months Year to
to 30 June to 30 June 31 December 2013
2014 2013
Loss attributable to equity holders of parent (£000's) (7,050) (6,084) (6,678)
Weighted average number of ordinary shares in issue 185,789,480 130,706,658 130,748,362
Basic and diluted loss per ordinary share (pence) (3.8) (4.7) (5.1)
There is no difference in the weighted average number of ordinary shares used for basic and diluted net loss per ordinary share as the effect of all potentially dilutive ordinary shares outstanding is anti-dilutive.
8 Net cash outflow from operating activities
Unaudited Unaudited Audited
Six months Six months to 30 June 2013 Year to 31 December 2013
to 30 June
2014
£'000 £'000 £'000
Loss before tax (10,585) (9,654) (15,230)
Provision for joint venture deficit 132 (233) 1,738
Exceptional finance items - (850) (1,113)
Finance costs 465 1,922 2,774
Finance income (24) (1,748) (2,035)
Depreciation of property, plant and equipment 1,166 1,363 2,290
Amortisation of intangible assets 213 17 443
Recognised in respect of amounts recoverable under contracts - 1,014 1,181
Impairment of property, plant and equipment 2,782 - 152
Restructuring Costs - 312 -
(Decrease) / increase in provision for onerous leases - (146) (579)
Share-based charges in respect of warrants issued - 314 313
Share-based charges in respect of awards to Non-Executive Directors 14 41 55
Re-scheduling of Birmingham finance lease payments - - 136
Deconsolidation of Health Properties Edinburgh - - (4,384)
Provision for VAT - - 115
Provision of debtor with Health Properties Bath - - 40
Movements in working capital:
- Decrease / (increase) in inventories 20 (84) (347)
- Increase in trade and other receivables (5,879) (7,262) (2,804)
- Increase / (decrease) in trade and other payables 6,784 (4,318) (3,229)
- Decrease in provisions (210) (402) (1,578)
Cash flows from operating activities (5,122) (19,714) (22,062)
9 Reconciliation of net debt
6 months to 30 June 2014 6 months to 30 June 2013 year to 31 December 2013
£'000 £'000 £'000
Increase / (decrease) in unrestricted cash in the period / year 19,154 (21,276) (24,332)
Decrease in restricted cash in the year - - (1,300)
Repayment of borrowings - 398 430
Repayment of loan notes - - 366
Repayment of finance lease 756 653 1,471
Movement in net debt from cash flow 19,910 (20,225) (23,365)
Other non-cash movements - (18) 47,704
Movement in net debt 19,910 (20,243) 24,339
Net debt at 1 January 868 (23,471) (23,471)
Net debt at 30 June / 31 December 20,778 (43,714) 868
June 2014 At 1 January 2014 Cash flow Transfers At 30 June 2014
£'000 £'000 £'000 £'000
Liquid resources
Unrestricted cash 8,597 19,154 - 27,751
Restricted cash 3,800 - - 3,800
Debt due within one year
Finance leases (1,547) 756 (834) (1,625)
Debt due after one year
Finance leases (9,982) - 834 (9,148)
Net debt 868 19,910 - 20,778
June 2013 At 1 January 2012 Cash flow Reclassifi-cations Other non-cash changes At 30 June 2013
£'000 £'000 £'000 £'000 £'000
Liquid resources
Unrestricted cash 32,929 (21,276) - - 11,653
Restricted cash 5,100 - - - 5,100
Debt due within one year
AIB (7,380) - - - (7,380)
Barclays (41,768) 398 - - (41,370)
Loan notes (348) - - (18) (366)
Finance leases (1,340) 653 (659) - (1,346)
Debt due after one year
Finance leases (10,664) - 659 - (10,005)
Net debt (23,471) (20,225) - (18) (43,714)
December 2013 At 1 January 2012 Cash flow Transfers Other non-cash changes At 31 December 2013
£'000 £'000 £'000 £'000 £'000
Liquid resources
Unrestricted cash 32,929 (24,332) - - 8,597
Restricted cash 5,100 (1,300) - - 3,800
.
Debt due within one year
AIB (7,380) - - 7,380 -
Barclays (41,768) 430 - 41,338 -
Loan notes (348) 366 - (18) -
Finance leases (1,340) 1,471 (1,409) (269) (1,547)
Debt due after one year
Finance leases (10,664) - 1,409 (727) (9,982)
Net debt (23,471) (23,365) - 47,704 868
10. Related party transactions
There have been no material changes to the principal subsidiaries and joint
ventures as listed in the Annual Report and financial statements for the year
ended 31 December 2013.
All related party transactions between subsidiaries and joint ventures arose
during the ordinary course of business and were on an arm's length basis.
11. Events after the balance sheet date
Refinance of Health Properties (Bath) Limited
On 1 July Medical Properties Trust ("MPT"), the specialist hospital Real
Estate Investment Trust based in the US, completed the purchase of the Bath
Hospital asset for £28.3m. The asset was previously owned by Health
Properties (Bath) Limited, a joint venture of which the Group controlled
38.7%. This sale fully extinguished the loans held by Health Properties (Bath)
Limited with Santander and Lehmans as well as an interest rate swap held in
conjunction with the Santander loan. CircleBath have signed a 15 year lease
agreement with MPT, with a further 15 year extension, which will see their
rent reduce by £1.0m to £2.5m a year. As part of the repayment of the
mezzanine debt, Circle Holdings plc had to pay a final recourse guarantee to
Lehman Brothers of £625,000.
Release of £2,000,000 escrow amount
In July 2014, an amount of £2,000,000 was released from escrow in Circle
Hinchingbrooke Limited as a result of the Group meeting certain conditions
set out within the contract.
In July 2014, an amount of £2,000,000 was released from escrow in Circle
Hinchingbrooke Limited as a result of the Group meeting certain conditions
set out within the contract.
Statement of directors' responsibilities
The directors confirm that the condensed set of consolidated financial
information in the Interim report has not been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting' as adopted
by the European Union and that the Interim report includes a fair review of
the information, including:
· an indication of important events that have occurred during the first
six months and their impact on the condensed set of consolidated financial
information;
· a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related party transactions in the first six months and any
material changes in the related party transactions described in the last
Annual Report and financial statements.
The directors and their positions held during the period were as published in
the Annual Report and financial statements for the year ended 31 December
2013.
On behalf of the Board
Steve Melton
Paolo
Pieri
Chief Executive Officer
Chief Financial Officer
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Melrose Industries
See all newsREG - Melrose Industries - Transaction in Own Shares
AnnouncementREG - Melrose Industries - Alison Goligher appointed Non-Executive Director
AnnouncementREG - Melrose Industries - Transaction in Own Shares
AnnouncementREG - Melrose Industries - Transaction in Own Shares
AnnouncementREG - Melrose Industries - Transaction in Own Shares
Announcement