REG - Spire Healthcare Grp - Final Results
06/03/2025 07:15
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RNS Number : 5509Z Spire Healthcare Group PLC 06 March 2025
Spire Healthcare reports results for the year ended 31 December 2024
6 March 2025, Spire Healthcare Group plc (LSE: SPI) ('Spire Healthcare', 'the
Group' or 'the Company'), a leading independent healthcare group in the UK,
today announces its preliminary results for the year ended 31 December 2024
('the period' or 'FY24').
Good financial results, strong patient satisfaction and all core metrics in
line with guidance
Summary group results
Year ended 31 December
£m 2024 2023 Variance Comparable y/y growth((1))
Revenue 1,511.2 1,359.0 11.2% 6.2%
Adjusted EBITDA ((3)) 260.0 234.0 11.1% 9.0%
Adjusted operating profit (Adjusted EBIT) 149.4 130.4 14.6% 12.4%
Adjusting items included in operating profit (11.9) (4.2) NM NM
Operating profit 137.5 126.2 9.0% NM
Profit before taxation 38.3 34.6 10.7% NM
Adjusted profit before taxation 50.2 38.8 29.4% NM
Profit after taxation 26.0 27.9 (6.8%) NM
Basic earnings per share, pence 6.3 6.8 (7.4%) NM
Adjusted basic earnings per share, pence (2) 8.8 7.9 11.4% NM
Adjusted FCF ((4)) 39.0 48.0 (18.7%) NM
Net bank debt ((5)) 325.9 315.7 3.2% NM
Net bank debt / EBITDA covenant ratio 2.0 2.2 0.2 NM
Delivered guidance, mitigating mix and cost
(Unless otherwise stated, y/y growth metrics and margin expansion metrics are
presented on a comparable basis(1))
· Revenue growth of 6.2% y/y; comprised of 5.5% y/y in Hospitals
and 15.0% y/y from Primary Care services.
· Payor mix evolving with stronger performance in NHS revenue, up
8.8% y/y and Private patient revenue (PMI + Self-Pay) up 4.3% y/y.
· Group adj. EBITDA grew 9.0% to £260.0m. Reflecting price, acuity
and cost saving benefits which provided mitigation to H2 impacts from payor
mix changes and energy hedge roll off.
· Group adj. EBITDA margin of 17.2%. Within this, we saw good
expansion in Hospitals margin, up 30 bps y/y to 18.0% and very strong
expansion in Primary Care margin up 340 bps to 8.5%.
· Operating profit up 9.0% y/y on a stated basis to £137.5m,
including adjusting items of £(11.9)m largely related to the transformation
programme and previously disclosed remediation.
· ROCE((6)) increased to 8.2% (FY23: 7.5%).
· Recommended final dividend of 2.3 pence per ordinary share (FY23:
2.1 pence per ordinary share).
Strong strategic delivery of growth and efficiency
· Cost savings accelerated: delivering >£20m in FY24 through
procurement standardisation, automating booking procedures, Patient Support
Centres and implementing staffing models to reduce agency use.
· Vita outperforming management expectations with revenue of £107m
and EBITDA £11m.
· Three new Primary Care clinics opened. Meeting more patient needs
and driving referrals to nearby Hospitals.
· Responded to NHS demand. Increasing eRS slots and driving 20% y/y
volume growth in Q4, with high Orthopaedic mix of over 60%.
· Record levels of clinical permanent employment, with turnover at
an all-time low of 11.5%.
· Leading on quality. Average length of stay reduced for hip and
knee procedures, Patient Safety Incident Response Framework implemented and
Patient Survey showed 97% rated their experience as good / very good (up 1%
from prior year).
Outlook and current trading
We are confident in delivering mid-single digit y/y percentage Group revenue
growth in FY25. This will be driven by the combination of structural market
expansion, good growth prospects in Hospitals and the growing demand for our
Primary Care services.
We continue to see evolution in the underlying mix by payor group. We
anticipate strong overall demand for services, with growth in Private patients
and a continued strategic partnership with the NHS. The growth in Private
patients will be driven by Private Medical Insurers (PMIs), where they are
reporting strong increases in policies written, which in turn will result in
more activity; and working age patients increasingly being covered. The latter
means we anticipate continued Self Pay (SP) switching to PMI, where our
drivers for growth are focused on average revenue per case (ARPC) and mix
management. As a reminder, SP procedures are our highest margin activities,
followed by PMI, and NHS funded admissions.
Cost savings are already delivering ahead of plan and we intend to accelerate
this further. With new savings of at least £30m in FY25, which are c£10m
above our original plans. At the same time we are increasing our FY24-26
cumulative savings target to £80m (was previously £60m).
We expect a £(30)m EBITDA impact in FY25 as a result of National Insurance
(NI) and National Minimum Wage (NMW), payor mix changes and the roll off of
our energy hedge. We expect NI and NMW to add £18-20 million to operating
costs on an annualised basis before mitigation, making the FY25 in-year impact
c£13-15m. In FY25 we believe we can offset c£10m of NI, NMW, payor mix and
energy costs combined through accelerated cost savings, driving high margin
acuity mix and self-pay pricing changes.
Bringing this together, we are guiding to FY25 adjusted EBITDA for the Group
to be in the range of £270m to £285m.
We remain committed to our medium-term financial targets. We continue to
forecast ongoing revenue growth of greater than 5% for the Hospitals business.
Vita is delivering ahead of plan and newly opened Spire Clinics are sending
downstream revenue to nearby Hospitals. Our ambition is for Primary Care to
become a >£40m EBITDA business in the medium term, delivered through
significant contract wins in Mental Health/Occupational Therapy, more new
Clinic openings and small M&A. Combining this together with accelerated
savings, we expect to be able to neutralise NI/NMW and payor mix changes fully
by 2027, enabling delivery of our medium-term ROCE and Hospital margin
targets.
Spire Healthcare has traded in-line with our expectations since the year end.
Justin Ash, Chief Executive Officer of Spire Healthcare, said:
"This is a good set of results, delivering all core guidance measures in a
changing market. We saw revenue growth of 6.2% year-on-year and adjusted
profit before tax growing 29.4%. Market fundamentals remain strong, with
private medical insurance coverage growing significantly and a strong
partnership with the NHS.
Our strategy is delivering. We broadened our range of services to meet more
healthcare needs in our hospitals, our clinics, in the community and at home;
welcomed more NHS patients and invested significantly in our Hospital staff.
We are playing a pivotal role in helping employees stay in work or return to
work; all whilst maintaining and improving our quality of care and levels of
patient safety, which remain our number one priorities. I thank all our
colleagues and consultant partners for their expertise and commitment.
We are excited about the future. We remain confident in the combination of
structural market growth, supplemented by the potential of new Primary Care
services to complement our hospitals, and a continued strategic partnership
with the NHS helping to deliver waiting list reductions. In the year ahead, we
will see pressure on costs as a result of National Insurance and Minimum Wage
changes. However, we already have a successful efficiencies programme in place
and intend to drive self-help measures even faster, partly offsetting the
impact to operating costs.
I am excited about our prospects for 2025 and on behalf of Spire, we look
forward to contributing in even greater measure to the nation's health."
Footnotes:
1. On 31 March 2024, the Group sold the business operations and assets of
Spire Tunbridge Wells to the local NHS Trust. On 18 October 2023, the Group
purchased Vita Health Group. Therefore, where meaningful, we have presented
certain financial information on a 'Comparable Basis' where we have deducted
the contribution from Tunbridge Wells and presented Vita Health Group on a
proforma basis assuming it was owned for 12 months in 2023.
2. Adjusted basic earnings per share is stated before the effects of
Adjusting Items.
3. Adjusted EBITDA is calculated as Operating Profit, adjusted to add
back depreciation, amortisation and Adjusting items, referred to hereafter as
'Adjusted EBITDA' Refer to page 11. For EBITDA for covenant purposes, refer to
note 18.
4. Adjusted FCF (Free Cash Flow) is calculated as Adjusted EBITDA, less
rent, capital expenditure cash flows and changes in working capital after
adjusting for one-off items which are not related to the normal trading
activity of the business. Rent cash flows are defined as interest on, and
payment of, lease liabilities. Capital expenditure cash flows are defined as
the Purchase of plant, property and equipment.
5. Net bank debt is defined as bank borrowings less cash and cash
equivalents.
6. Return on capital employed (ROCE) is the ratio of the group's
Adjusted EBIT to total assets less cash, capital investments made in the last
12 months and current liabilities. In the prior year the ROCE outcome was
adjusted for the impact of the Vita Health Group (VHG) acquisition. Refer to
page 12.
7. The Hospitals Business relates to business operations performed at
hospital sites. All other Group operations are referred to as 'Primary Care'
and include the Doctors Clinic Group (DCG), Vita Health Group (VHG) and the
Spire clinics (community facilities that offer a range of diagnostics and
treatment that do not require an overnight stay). Unless otherwise stated, all
metrics are on a Group basis.
The person responsible for making this announcement is: Mantraraj Budhdev,
Company Secretary
For further information please contact:
Spire Healthcare investors@spirehealthcare.com
Amie Gramlick: Director of Investor Relations & Commercial Finance
Instinctif Partners spire@instinctif.com
Julian Walker
Tim Pearson
Registered Office and Head Office:
Spire Healthcare group plc
3 Dorset Rise
London
EC4Y 8EN
Registered number 09084066
About Spire Healthcare
Spire Healthcare (https://www.spirehealthcare.com/) is a leading independent
healthcare group in the United Kingdom, running 38 hospitals and over 50
clinics, medical centres and consulting rooms across England, Wales and
Scotland. It operates a network of private GPs and provides occupational
health services to over 800 corporate clients.
Working in partnership with over 8,600 experienced consultants, Spire
Healthcare delivered tailored, personalised care to over 1 million inpatients,
outpatients and daycase patients, and occupational health programme clients,
in 2023, and is the leading private provider, by volume, of knee
(https://www.spirehealthcare.com/treatments/bones-and-joints/knee-replacement/)
and hip
(https://www.spirehealthcare.com/treatments/bones-and-joints/hip-replacement-surgery/)
operations in the United Kingdom. It also delivers a range of private and NHS
mental health, musculoskeletal and dermatological services under the Vita
Health Group brand.
Spire Healthcare's well-located and scalable hospitals have delivered
successful and award-winning outcomes, positioning the group well with
patients, consultants, the NHS, GPs and Private Medical Insurance ('PMI')
providers. 98% of Spire Healthcare's inspected locations are rated 'Good,'
'Outstanding' or the equivalent by health inspectors in England, Wales and
Scotland.
Spire Healthcare is listed on the London Stock Exchange and is a member of the
FTSE 250.
Cautionary statement
This announcement contains inside information.
This announcement contains certain forward-looking statements relating to the
business of Spire Healthcare Group plc (the "company") and its subsidiaries
(collectively, the "group"), including with respect to the progress, timing
and completion of the group's development, the group'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 group's estimates for future performance and its
estimates regarding anticipated operating results, future revenue, capital
requirements, shareholder structure and financing. In addition, even if the
group's actual results or development are consistent with the forward-looking
statements contained in this announcement, those results or developments may
not be indicative of the group'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 group's current expectations as of the
date of this 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 group'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, risks arising
out of health crises and pandemics, changes in tax rates, future business
combinations or dispositions, and the group'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 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 announcement.
The group is providing the information in this 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 a hybrid analyst and investor meeting today at 9.00am.
In-person: The presentation will be hosted from our offices in Blackfriars. 3
Dorset Rise, City of London, London EC4Y 8EN
Virtually: Webinar link
https://storm-virtual-uk.zoom.us/webinar/register/WN_-vkJpdWrT16nYL9RqMlr0w
(https://storm-virtual-uk.zoom.us/webinar/register/WN_-vkJpdWrT16nYL9RqMlr0w)
Webinar ID: 837 0067 4053
The webinar will be available for replay shortly following the meeting through
the company's investor website: https://investors.spirehealthcare.com/home/
(https://investors.spirehealthcare.com/home/)
Operating review
(Unless otherwise stated, y/y growth metrics and margin expansion metrics are
presented on a comparable basis(1))
Our market
The demand for private healthcare remains strong. A number of key trends are
affecting our market in the near to medium term:
1. Waiting lists and partnership with the NHS
NHS waiting lists remain at significant levels, at 7.46m treatments (end of
2023: 7.6m). In 2019, there were around 1,600 people waiting longer than a
year for a procedure. Today, this number is c200,000 and the 18-week waiting
target has not been met for almost 10 years. The new government seeks to
reduce waiting lists and has recently launched a new partnership framework
with the independent sector. The partnership seeks to involve local NHS and
independent providers early in the planning process, increase patient
awareness of the legal right to choose and move to long term contracts to
underpin capital investment.
2. Private market
Demand for Self-Pay (SP) healthcare fell from the historic highs seen in 2023,
but still significantly exceeds pre pandemic levels and demand remains strong
in our core specialities of hip and knee surgery. We believe this dynamic is
partly explained by the ongoing movement of patients who might previously have
paid for their own treatment, who are increasingly being covered by employer
Private Medical Insurance (PMI) policies. PMI penetration continues to grow
significantly.
3. Healthcare workforce
Attracting and retaining the best people remains a focus for all healthcare
providers, both public and private. Spire has launched workforce initiatives
aimed at increasing our permanent employed staff, improving retention and
engagement and growing our own talent through apprenticeship programmes.
During 2024, above inflation pay rewards were implemented, particularly for
clinical staff, which has supported an improvement in turnover rates and the
lowest level of clinical vacancies for some time.
Our purpose and model for success
Our purpose is to 'make a positive difference to people's lives through
outstanding personalised care. Achieving this by running excellent hospitals
and developing primary care services to provide people with more choice and
the opportunity to access the healthcare they need.
Our model for success is driven by four main pillars:
· Building scale and access
· Investing in growth sectors
· Leading on quality
· Focusing on efficiency and expertise
Which supports the delivery of strong financial performance and investor
returns.
Build scale and access
Hospitals: The core of Spire's business remains the efficient operation of our
38 hospitals and we are the leading independent provider of orthopaedics
procedures and many other services. Overall, hospital performance during the
year was good, underpinned by strong structural demand for safe, high quality
treatment with revenue up 5.5% y/y to £1.39bn (FY23: £1.33bn).
In the Private payor group (SP and PMI combined), we saw good revenue growth
of 4.3% y/y. Admissions and Outpatient procedures grew 1% y/y, with stronger
volume growth in PMI, and softer volumes in SP where we continue to see some
switching to PMI. ARPC (Average Revenue Per Case) in Admissions grew 3.9%
y/y, which has been driven by both acuity (complexity) and price. In SP, we
have full control of pricing and proactively change our price points more
frequently than any of our main competitors. In PMI, prices are adjusted
annually in Q1 / Q2 each year and contain mechanisms linked to inflation, as
well as pricing incentives to capture increased patient flow from insurance
partners. The Private proportion of Hospital revenue during FY24 was 71.6%
(FY23: 72.3%). This aligns with our aim for Private revenue to be in the range
of 70-80%.
We saw increased activity from the NHS, ahead of our expectations, with
revenue up 8.8% y/y and a focus on high acuity orthopaedic services which make
up c60% of procedures. Additional NHS e-referral slots were opened up at the
end of Q3, leading to increased NHS revenues during Q4. The Government has
recently made a significant announcement around the reformation of elective
care and building a sustainable NHS, which involves a new partnership
agreement between the NHS and the private sector.
Primary Care services: grew significantly in FY24, growing revenue by 15.0% to
£121.0 million (FY23: £31.4m). A large part of this growth has come from the
acquisition of Vita Health Group, which was completed in October 2023. Vita is
the largest independent NHS Talking Therapies provider and delivers
musculoskeletal (physio) and dermatology services. Vita performed ahead of
expectations in FY24, delivering £107m in revenue. Primary Care also includes
our private GP services delivered through the London Doctors Clinic (LDC)
brand, Spire Occupational Health services and our recently opened Spire
Clinics which are focused on outpatient treatment, diagnostics and act as
referral centres to our Hospitals. As our broader healthcare offering
continues to be developed, income from this area will become increasingly
material to the Group's performance.
Invest in growth sectors
Spire wants to take a more proactive role in patients' care before and after a
stay in hospital and provide wraparound care through a person's whole
healthcare journey. Expanding our Primary Care services is core to this
strategy, which includes outpatient and minor treatments, diagnostics, GP
services, physio, mental health, occupational health, oncology and women's
health. As discussed above, the acquisition of Vita was core to our initial
buildout of Primary Care.
We are also driving Primary Care growth through the opening of new, outpatient
led Clinics. Some of the clinics follow an 'outreach' model, opening close to
existing hospitals and enabling the Group to move some of its outpatient
functions and minor treatments away from hospitals. Others will be in
completely new parts of the country where we do not currently have a presence,
enabling us to meet the healthcare needs of more people and build
relationships with new consultants. Our Harrogate and Norwich Clinics opened
at the end of FY24, with Abergele Clinic open since April 2024. Abergele has
already reached breakeven profitability, is on track to payback it's capital
investment within three years and has driven double its own revenue in
referrals to the nearest Spire Hospitals.
Spire Occupational Health continues to develop in line with the Group's plan.
The focus in FY24 was the integration of Soma Health and Maitland Medical, and
rebranding them as Spire Occupational Health. Looking ahead, we are exploring
opportunities for market consolidation. We are also seeking to streamline our
offering to employers in 2025, with synergies between Spire Occupational
Health and Vita.
We plan to further accelerate our Primary Care growth strategy, delivering a
>£40m EBITDA business in the medium-term. Supported by more new Clinic
openings, significant contract wins in Mental Health/Occupational Therapy, and
small M&A.
Leading on quality
In FY24, 98% of our inspected hospitals and clinics were rated 'Good',
'Outstanding' or the equivalent by regulators in England, Scotland and Wales.
Spire hospitals in Edinburgh, Spire Clare Park in Farnham and Spire Cardiff
were re-rated as good or equivalent. We are still awaiting reinspection of
Spire Alexandra in Kent, our remaining site which has a 'requires improvement'
rating and has not been inspected since 2016/17. All inspected Vita locations
are rated 100% 'Good' by the CQC. In FY24, 97% of our patients rated their
experience as 'very good' or 'good', while 95% of patients said they felt
'cared for' or 'looked after' in our hospitals, both up one percentage point
from FY23.
Championing sustainability is core to the Group's strategy and we continue to
implement the sustainability strategy we launched in 2022, which focuses on
three areas: Respect the environment, Engage our people and communities, and
Operate responsibly. We made further progress towards achieving net zero
carbon status by 2030, with the installation of over 12,000 solar photovoltaic
panels currently taking place at our 38 hospitals. Waste management
initiatives saved 2,742 tonnes of CO2 (FY23: 358 tonnes). Our journey towards
achieving net zero carbon by 2030 is progressing, and in FY24 we were just
short of our target, coming in (6)% under our goal. The sustainability
committee has reviewed all 17 sustainability goals and in the coming year will
review the net zero plan in light of changing external factors.
Focusing on efficiency and expertise
We responded well to the external environment in the period. UK inflation
pressures persisted and we also saw the additional cost impacts of changing
payor mix, record levels of permanent employment in clinical staff and the
roll off of our energy hedge in Q4. We responded effectively, with mitigation
through accelerating efficiency savings, which delivered >£20m during the
year (FY23: £15m).
To maximise performance in our hospitals, we are prioritising operational
control, driving capacity and utilisation across our sites. We have a clear
plan for growth and increased our ambition to cumulatively deliver more than
£80 million in savings by 2026. We are seeing encouraging momentum from new
initiatives such as workforce planning and scheduling tools, and the
transformation of our pathology business, better buying and procurement. By
leveraging hub ways of working, with procurement, administration and bookings
for hospitals now moving to regional patient support centres rather than by
hospital, we are driving consistency and value for money. It also gives us the
opportunity to re-commission clinical space. We have improved the performance
of core digital platforms such as our hospital management system, and
delivered digital check-in for patients using a tablet, thereby saving time.
As a people business, investment in our workforce is critical to the health of
Spire and delivering good patient outcomes. People costs, including clinical
and non-clinical staff, represent >40% of our Group cost base. Spire
supported eligible Hospital colleagues with an above inflation salary increase
during FY24, implemented a new Hospital Rewards Framework and once again
broadened our apprenticeship programme. We believe these efforts have helped
us to achieve record levels of permanent employment, high retention, and a
reduction in clinical turnover rates to an all-time low of 11.5%. In the
annual survey of colleagues, 76% recorded that they were proud to work for
Spire, down slightly vs FY23 (81%), but still a strong engagement score within
a time of transformation for the business.
Delivering strong financial performance and shareholder returns
(Unless otherwise stated, y/y growth metrics and margin expansion metrics are
presented on a comparable basis(1))
Spire Healthcare delivered good financial and operational performance during
2024. All core metrics were delivered in-line with guidance.
Revenue and profitability
Group Revenue in FY24 was up 6.2% to £1,511.2m (FY23: £1,359.0m), driven by
the demand for private healthcare and our expansion into Primary Care. In
the Hospitals business, revenue was up 5.5% y/y to £1,390m (FY23: £1,328m).
Within this, we saw 1.9% y/y growth in Admissions and Outpatient Procedures,
and strong growth in Admissions ARPC (average revenue per case), up 4.2% as a
result of our focus on higher acuity (complexity) procedures. Primary Care
Services revenues were up 15.0% to £121.0m.
Group adjusted EBITDA was £260.0m, up 9.0% y/y with a margin of 17.2% (FY23:
£234.0m).
Hospitals adjusted EBITDA was £249.7m and showed good EBITDA margin progress,
up 30 bps y/y to 18.0%. Delivered through price and acuity benefits, and
transformation cost savings; whilst also seeing investment in hospital staff,
payor mix changes and energy cost rises as discussed above.
Primary Care services generated EBITDA of £10.3m, with a very strong
expansion in EBITDA margin of 340 bps to 8.5%. Primary Care services have
lower EBITDA margins than the Group given they include a number of younger
maturity services across the Spire Clinics and LDC. Over time, we expect these
margins to increase through a combination of building scale and maturity.
Group operating profit was up 9.0% y/y on a stated basis to £137.5m,
including adjusting items of £(11.9)m largely related to the transformation
programme and previously disclosed remediation.
Cashflow and investment
Total capital expenditure in FY24 was £112.1m (FY23: £84.4m). This was
comprised of Hospital growth capex investment of c£40m, including major
refurbishments at Spire Portsmouth and Spire Washington; and five new MRI
scanners. We also deployed a growth investment of £13m towards supporting the
Primary Care expansion strategy, including the openings of Spire Clinics in
Abergele, Harrogate and Norwich. The remainder of capital spending was
deployed towards the ongoing maintenance of our estate and IT infrastructure
enhancement.
Net bank debt at the end of the year was £325.9m (vs £315.7m at 31 December
2023), with a cash balance of £41.2m (vs £49.6m at 31 December 2023). Our
existing debt financing facilities have a total facility size of £425m and
currently have headroom of £60m and an average interest rate of 5.85%. The
Group entered an interest rate hedge agreement for its senior lending
facility, of which 50% is currently hedged until February 2026 and our
facilities are available until February 2027. Net bank debt / Adjusted EBITDA
covenant ratio declined to 2.0x as at 31 December 2024 (FY23: 2.2x).
The Group continued to be cash generative during the period. Cash inflow from
adjusted operating activities during the period was £241.7 m (FY23: £228.2m)
which constitutes a cash conversion rate of 94% (FY23: 98%).
The strong operational performance resulted in adjusted EBIT rising by 12.4%
y/y to £149.4m, leading to ROCE up by 70 bps to 8.2%.
In regard to our capital allocation strategy, the priority will be to invest
for growth. This includes our core capital investment in the existing estate,
alongside growth investment to support the Primary Care strategy. This
investment will likely be a combination of small M&A and organic capex,
with all investments and returns rigorously assessed against strategic and
financial lenses such as ROCE and payback. We expect bank leverage to be
maintained at c2x net bank debt / adjusted EBITDA in the normal course of
business, with comfort to extend in the short term for selective M&A.
Dividend
The Directors of Spire Healthcare have recommended the payment of a final
dividend of 2.3 pence per share for the year ended 31 December 2024. Subject
to shareholder approval at the forthcoming Annual General Meeting on 14 May
2025, the dividend will be paid on 20 June 2025 to shareholders of the Company
at the close of business on 23 May 2025. This payment is in line with the
Group's dividend policy whereby dividends will typically be set at 25-35% of
Profit After Tax, provided bank leverage remains less than 2.5x.
Board and Executive team changes
It was with great sorrow that we announced the death of Martin Angle, Deputy
Chairman and independent Non-Executive Director in September 2024. Martin had
a hugely successful and distinguished career with senior positions across
banking, private equity and industry. He joined our Board in 2019 and was
chair of the Audit and Risk Committee as well as a member of several other
committees. We are grateful to Debbie White, senior independent director, for
chairing the Audit and Risk Committee on an interim basis.
Jill Anderson will join as an independent Non-Executive Director on 6 March
2025 and will chair the Company's Audit and Risk Committee from the conclusion
of our AGM in May. She will also become a member of the Remuneration
Committee on appointment.
In addition, after over 10 years of service, Professor Dame Janet Husband will
step down from the Board at our AGM in May 2025. Sir David Sloman will join as
a non-independent Non-Executive Director on 6 March 2025. Sir David will
become a member of the Company's Clinical Governance and Safety Committee on
appointment and will replace Dame Janet as chair on 14 May 2025. He will also
take on the role of Vice Chair from this date. As a result of Sir David's
appointment with AXA UK and Ireland, the Company does not consider him to be
independent.
Sir Ian Cheshire will become an additional member of the Remuneration
Committee on 6 March 2025.
Harbant Samra was appointed as Chief Financial Officer in May 2024, succeeding
Jitesh Sodha. Harbant joined Spire Healthcare in 2018 as Group Financial
Controller and became Deputy CFO in 2022. We also look forward to welcoming
Rebecca Harper to the new Executive Committee position of Group Corporate
Affairs Director in April 2025.
Footnotes:
1. On 31 March 2024, the Group sold the business operations and assets of
Spire Tunbridge Wells to the local NHS Trust. On 18 October 2023, the Group
purchased Vita Health Group. Therefore, where meaningful we have presented
certain financial information on a 'Comparable Basis' where we have adjusted
for the year-on-year (y/y) impact of Tunbridge Wells and presented Vita Health
Group on a proforma basis assuming it was owned for 12 months in 2023.
Financial review
Selected financial information
Year ended 31 December 2024 Year ended 31 December 2023
(£m) Total before Adjusting items Adjusting Total Total before Adjusting items Adjusting Total
items
items
(note 10)
(note 10)
Revenue 1,511.2 - 1,511.2 1,359.0 - 1,359.0
Cost of sales (827.6) - (827.6) (734.8) - (734.8)
Gross profit 683.6 - 683.6 624.2 - 624.2
Other operating costs (542.3) (16.4) (558.7) (497.4) (6.7) (504.1)
Other income 8.1 4.5 12.6 3.6 2.5 6.1
Operating profit 149.4 (11.9) 137.5 130.4 (4.2) 126.2
Finance income 0.7 - 0.7 1.4 - 1.4
Finance costs (99.9) - (99.9) (93.0) - (93.0)
Profit before taxation 50.2 (11.9) 38.3 38.8 (4.2) 34.6
Taxation (14.1) 1.8 (12.3) (6.4) (0.3) (6.7)
Profit for the period 36.1 (10.1) 26.0 32.4 (4.5) 27.9
Profit for the year attributable to owners of the Parent 35.5 (10.1) 25.4 31.8 (4.5) 27.3
Profit for the year attributable to non-controlling interest 0.6 - 0.6 0.6 - 0.6
Adjusted EBITDA ((1)) 260.0 234.0
Basic earnings per share, pence 6.3 6.8
Adjusted FCF ((2)) 39.0 48.0
Net cash from operating activities 235.7 215.5
Net bank debt ((3)) 325.9 315.7
1. Adjusted EBITDA is calculated as Operating Profit, adjusted to add
back depreciation, amortisation and Adjusting items, referred to hereafter as
'Adjusted EBITDA' refer to page 11. For EBITDA for covenant purposes, refer to
note 18.
2. Adjusted FCF (Free Cash Flow) is calculated as Adjusted EBITDA, less
rent, capital expenditure cash flows and changes in working capital after
adjusting for one-off items which are not related to the normal trading
activity of the business. Rent cash flows are defined as interest on, and
payment of, lease liabilities. Capital expenditure cash flows are defined as
the purchase of property, plant and equipment.
3. Net bank debt is defined as bank borrowings less cash and cash
equivalents
Revenue
(Unless otherwise stated, y/y growth metrics and/or margin expansion metrics
are presented on a comparable basis)
Group revenues increased 6.2% to £1,511.2m (2023: £1,359.0m) driven by the
demand for private healthcare and our expansion into Primary Care.
In the Hospitals business, revenue was up 5.5% y/y to £1,390m (FY23:
£1,328m). Within this, we saw 1.9% y/y growth in Admissions and Outpatient
Procedures, and strong growth in Admissions ARPC (average revenue per case),
up 4.2% as a result of our focus on higher acuity (complexity) procedures.
Looking to the payor Groups, we saw increased activity from the NHS, ahead of
our expectations, with revenue up 8.8% y/y and a focus on high acuity
orthopaedic services. Private (Self Pay + PMI) remained in good growth, up
4.3% y/y, with strong volume and pricing in PMI; and softer volumes in
Self-Pay where we continue to see switching to PMI.
Primary Care Services revenues were up 15.0% to £121.0m. Primary Care
includes Vita Health Group, which was acquired at the end of 2023 and
represents the majority of the business line. Vita is the largest independent
NHS talking therapies provider and delivers musculoskeletal (physio) and
dermatology services. Vita performed ahead of expectations in FY24,
delivering £107m in revenue. Primary Care also includes our private GP
services delivered through the London Doctors Clinic (LDC) brand, Spire
Occupational Health services and our recently opened Spire Clinics which are
focused on outpatient treatment, diagnostics and act as referral centres to
our Hospitals. As our broader healthcare offering continues to be developed,
income from this area will become increasingly material to the Group's
performance.
Revenue by location and payor
Year ended 31 December
2024 2023 Variance %
(£ million) Hospitals Business Primary Care Total Hospitals Business Primary Care Total Hospitals Business Primary Care Total
Total revenue 1,390.2 121.0 1,511.2 1,327.6 31.4 1,359.0 4.7% NM* 11.2%
Of which:
Inpatient 548.0 - 548.0 535.5 - 535.5 2.3% NM* 2.3%
Day case 426.6 0.6 427.2 399.9 - 399.9 6.7% NM* 6.8%
Out-patient 388.1 120.2 508.3 365.4 31.4 396.8 6.2% NM* 28.1%
Other 27.5 0.2 27.7 26.8 - 26.8 2.6% NM* 3.4%
Total revenue 1,390.2 121.0 1,511.2 1,327.6 31.4 1,359.0 4.7% NM* 11.2%
* Not meaningful due to the VHG acquisition in October 2023
Year ended 31 December
2024 2023 Variance %
(£m) Hospitals Business Primary Care Total Hospitals Business Primary Care Total Hospitals Business Primary Care Total
Of which:
PMI 662.4 1.6 664.0 615.7 0.8 616.5 7.6% NM* 7.7%
Self-pay 332.9 8.0 340.9 344.0 7.8 351.8 (3.2%) 2.6% (3.1%)
Total Private 995.3 9.6 1,004.9 959.7 8.6 968.3 3.7% 11.6% 3.8%
Total NHS 367.4 80.8 448.2 341.1 14.9 356.0 7.7% NM* 25.9%
Other 27.5 30.6 58.1 26.8 7.9 34.7 2.6% NM* 67.4%
Total revenue 1,390.2 121.0 1,511.2 1,327.6 31.4 1,359.0 4.7% NM* 11.2%
* Not meaningful due to the VHG acquisition in October 2023
Hospitals Business Revenue on comparable basis (adjusted for the effect of Tunbridge Wells)
2024 2023 Variance %
(£m) Hospitals Business adjusted for the effect of Tunbridge wells Tunbridge wells Hospitals Business Hospitals Business adjusted for the effect of Tunbridge wells Tunbridge wells Hospitals Business Hospitals Business adjusted for the effect of Tunbridge wells Tunbridge wells Hospitals Business
Total Revenue 1,386.5 3.7 1,390.2 1,314.8 12.8 1,327.6 5.5% NM(*) 4.7%
* Not meaningful due to period of trading for Tunbridge Wells hospital in 2024 being 3 months vs 12 months in 2023
Primary Care Revenue on comparable basis (adjusted for the effect of the acquisition in 2023)
2024 2023 Variance %
(£m) Primary Care Primary Care as reported in 2023 Pro-forma adjustment for full year VHG Pro-forma adjusted Primary Care Primary Care as reported Primary Care adjusted for pro-forma in 2023
Total Revenue 121.0 31.4 73.8 105.2 NM(*) 15%
* Not meaningful due to period of trading for VHG in 2023
Cost of sales and gross profit
(Unless otherwise stated, y/y growth metrics and/or margin expansion metrics
are presented on a comparable basis)
For the Hospitals business, gross margin remained flat at 46.2%. Cost of sales
increased in the period by £34.1m to £748.4m (2023: £714.3m). Increased
costs are due to inflationary pressures and continued wage rate expansion,
managed effectively through strong procurement processes, the benefit of an
energy hedge for the majority of the year (which rolled off in early Q4) and
our transformation cost savings programme, alongside optimisation of acuity,
payor mix and pricing.
Primary Care gross margin decreased slightly to 34.5% from 34.7% as they
include a number of younger maturity services across the Spire Clinics and
LDC. Over time, we expect these margins to increase significantly through a
combination of building scale and maturity.
Cost of sales is broken down, and presented as a percentage of revenue, as
follows:
2024 2023
Year ended 31 December Year ended 31 December
£m % of Group revenue £m % of Group revenue
Clinical staff 375.9 24.9% 304.1 22.4%
Direct costs 325.5 21.5% 312.4 23.0%
Medical fees 126.2 8.4% 118.3 8.7%
Cost of sales 827.6 54.8% 734.8 54.1%
Gross profit 683.6 45.2% 624.2 45.9%
Cost of sales is broken down, and presented as a percentage of relevant
revenue split by operating segment, as follows:
Hospitals Business Primary Care
(£ million) 2024 % of Hospitals Business revenue 2023 % of Hospitals Business revenue 2024 % of Primary Care revenue 2023 % of Primary Care revenue
Clinical staff 302.0 21.7% 285.9 21.5% 73.9 61.1% 18.2 58.0%
Direct costs 321.8 23.1% 311.7 23.5% 3.7 3.1% 0.7 2.2%
Medical fees 124.6 9.0% 116.7 8.8% 1.6 1.3% 1.6 5.1%
Cost of sales 748.4 53.8% 714.3 53.8% 79.2 65.5% 20.5 65.3%
Gross profit 641.8 46.2% 613.3 46.2% 41.8 34.5% 10.9 34.7%
Other operating costs
For the Hospitals business other operating costs, excluding adjusting items,
have increased by £25.4m, or 5.2% to £511.1m (2023: £485.7m). The main
driver is increased central and non-clinical staff costs due to continued wage
rate expansion and other inflationary pressures. Depreciation for the year was
£106.4m (2023: £102.6m). The increase in depreciation is in line with
expectations and is due to increased capex investment and RPI increases on
properties. Operating margin for the year ended 31 December 2024 is 9.7%
(2023: 9.6%). Operating margin, excluding adjusting items, is 10.3% up from
9.9% at 2023.
Other operating costs for the Primary Care business is £39.5m (2023:
£11.7m). Depreciation and amortisation for the year was £4.2m (2023: £1.0).
Adjusted EBITDA
(Unless otherwise stated, y/y growth metrics and/or margin expansion metrics
are presented on a comparable basis)
Group adjusted EBITDA increased by 9.0% to £260.0m from £234.0m.
Hospitals adjusted EBITDA was £249.7m (2023: £233.8m) delivered through
price and acuity benefits, and transformation cost savings, whilst also seeing
investment in hospital staff, payor mix changes and energy cost rises as
discussed above
Primary Care services adjusted EBITDA was £10.3m (2023: £0.2m), with a very
strong expansion in EBITDA margin of 340 bps to 8.5%. Primary Care services
have lower EBITDA margins than the Group given they include a number of
younger maturity services across the Spire Clinics and LDC. Over time, we
expect these margins to increase significantly through a combination of
building scale and maturity.
Share-based payments
During the period, grants were made to executive directors and other employees
under the company's Long Term Incentive Plan. For the year ended 31 December
2024, the charge to the income statement is £4.2m (2023: £3.7m), or £4.7m
inclusive of National Insurance (2023: £4.1m).
Adjusting items
Year ended 31 December
(£m) 2024 2023
Asset acquisitions, disposals and aborted project costs (2.8) 3.1
Business reorganisation and corporate restructuring costs 4.3 2.0
Remediation of regulatory compliance or malpractice costs 6.9 (0.9)
Clinic set up costs 1.9 -
Amortisation on acquired intangible assets 1.6 -
Total pre-tax Adjusting items 11.9 4.2
Income tax credit charge on Adjusting items (1.8) 0.3
Total post-tax Adjusting items 10.1 4.5
Adjusting items comprise those matters where the directors believe the
financial effect should be adjusted for, due to their nature, size or
incidence, in order to provide a more accurate comparison of the group's
underlying performance.
Asset acquisitions, disposals and aborted project costs is a credit of £2.8m
and includes a profit of £4.5m relating to the sale of the Group's Tunbridge
Wells hospital to Maidstone and Tunbridge Wells NHS Trust ("Trust") for
£10.0m (refer to disposal note 24 for more details). In addition, there is
£0.6m of integration and other acquisition costs relating to the Vita
acquisition and £0.6m true up to provision on the DCG and Claremont
acquisitions.
In the prior year, costs of £3.1m mainly relate to asset acquisitions of Vita
and DCG.
Business reorganisation and corporate restructuring relates to the Group
announcement of a strategic, group wide initiative in H2 21 that will enable a
more efficient business operating model, including leveraging digital
solutions and technology. As a result of this initiative, additional costs of
£3.5m (2023: £2.0m) have been incurred in the period, bringing costs to date
of £9.3m. This initiative is being implemented over several phases and is
likely to be materially completed during 2026 as communicated at our capital
markets event in April 2024. Future costs are not disclosed as a reliable
estimate cannot be made due to the nature of the matter. £0.7m has been
incurred in respect of restructuring costs relating to the DCG.
Remediation of regulatory compliance or malpractice costs reflect an increase
in the provision in June 2024 of £4.6m (2023: £2.5m). The provision was
established by Spire Healthcare in respect of implementing the recommendations
of the Independent Inquiry including a detailed patient review and support for
patients of Paterson. The project is complex and the process for review and
settlement of claims, where relevant, takes some time. The detailed patient
review has now reached the milestone of having contacted all living patients
and invited them, where appropriate, to consultations to discuss their care.
As a consequence, the rate of new claims has dropped significantly, as most
patients now have their outcomes of their review and have initiated their
claim, where relevant. Claims activity in the second half of the year has
therefore been in line with the assumptions taken by management and the
provision established at the half year. As a result there has been no
subsequent increase in the provision. In addition, £1.7m of legal fees have
been incurred for the ongoing inquests. Whilst it is possible that, as further
information becomes available, an adjustment to this provision will be
required, at this time it reflects management's best estimate of the costs and
settlement of claims.
In the prior year the group has recognised a credit of £0.9 million in
respect of Remediation of Regulatory Compliance or Malpractice Costs relating
to Paterson. This comprised £2.5m funds received from its insurer and £0.9m
reduction in provision which had been held to resolve the matter. This was
offset by an increased separate provision in respect of Paterson by £2.5m.
Clinic set up costs relate to costs incurred for the set-up of the Abergele
and Harrogate clinics prior to opening. The clinic in Abergele opened in
February 2024 and Harrogate in January 2025.
£0.9m of amortisation on acquired intangible assets related to the customer
contracts recognised on the acquisition of Vita in October 2023.
Net finance costs
Net finance costs have increased by £7.6m to £99.2m (2023: £91.6m), mainly
due to RPI increases on leases and a slightly higher average interest rate on
bank borrowings.
Taxation
The effective tax rate assessed for the year, all of which arises in the UK,
differs from the standard weighted rate of corporation tax in the UK. The
reconciliation of the actual tax charge to that at the domestic corporation
tax rate is as follows:
Year ended 31 December
(£m) 2024 2023
Profit before taxation 38.3 34.6
Tax at the standard rate 9.6 8.1
Effects of:
Expenses and income not deductible or taxable 1.1 3.2
Adjustment for movement on share-based payments 0.3 -
Tax adjustment for the super-deduction allowance - (0.8)
Adjustments in respect of prior year 1.3 (4.2)
Difference in tax rates - 0.2
Deferred tax not previously recognised - 0.2
Total tax charge 12.3 6.7
Corporation tax is calculated at 25.0% (2023: 23.5%) of the estimated taxable
profit or loss for the year. The effective tax rate on profit before taxation
for the year is 32.1%. The effective tax rate is higher than the UK rate due
to due to the impact of prior year adjustments and non-deductible items.
Excluding the adjustments to prior years in 2024, the effective tax rate is
28.1%.
Profit after taxation
The profit after taxation for the year ended 31 December 2024 was £26.0m
(2023: £27.9m).
Alternative performance (non-GAAP) financial measures
We have provided alternative financial information that has not been prepared
in accordance with UK-adopted International Accounting Standards ("IFRS"). We
use these alternative financial measures internally in analysing our financial
results and believe they are useful to investors, as a supplement to IFRS
measures, in evaluating our ongoing operational performance. We believe that
the use of these alternative financial measures provides an additional tool
for investors to use in evaluating ongoing operating results and trends in
comparing our financial results with other companies in the industry, many of
which present similar alternative financial measures to investors.
Alternative financial measures should not be considered in isolation from, or
as a substitute for, financial information prepared in accordance with IFRS.
Investors are encouraged to review the reconciliation of these alternative
financial measures to their most directly comparable IFRS financial measures
provided in the financial statements table.
Adjusted EBITDA
(£ million) 2024 2023 Variance %
Hospitals Business Primary Care Hospitals Business Primary Care Hospitals Business Primary Care
Total Total Total
Operating profit 135.2 2.3 137.5 127.0 (0.8) 126.2 6.5% NM(*) 9.0%
Remove effects of:
Adjusting items 8.1 3.8 11.9 4.2 - 4.2 NM NM(*) NM
Depreciation 106.4 1.6 108.0 102.6 0.4 103.0 3.7% NM(*) 4.9%
Amortisation(1) - 2.6 2.6 - 0.6 0.6 NM NM(*) NM
Adjusted EBITDA 249.7 10.3 260.0 233.8 0.2 234.0 6.8% NM(*) 11.1%
1 Amortisation of £1.6 million is included in adjusting items
* Not meaningful due to the VHG acquisition in October 2023
Hospitals Business Adjusted EBITDA on comparable basis (adjusted for the effect of Tunbridge Wells)
2024 2023 Variance %
(£m) Hospitals Business adjusted for the effect of Tunbridge wells Tunbridge wells Hospitals Business Hospitals Business adjusted for the effect of Tunbridge wells Tunbridge wells Hospitals Business Hospitals Business adjusted for the effect of Tunbridge wells Tunbridge wells Hospitals Business
Total Adjusted EBITDA 249.2 0.5 249.7 232.7 1.1 233.8 7.1% NM(*) 6.8%
* Not meaningful due to period of trading for Tunbridge Wells hospital in 2024 being 3 months vs 12 months in 2023
Primary Care Adjusted EBITDA on comparable basis (adjusted for the effect of the acquisition in 2023)
2024 2023 Variance %
(£m) Primary Care Primary Care as reported in 2023 Pro-forma adjustment for full year VHG Pro-forma adjusted Primary Care Primary Care as reported Primary Care adjusted for pro-forma in 2023
Total Adjusted EBITDA 10.3 0.2 5.2 5.4 NM(*) 90.7%
* Not meaningful due to period of trading for VHG in 2023
Adjusted EBIT
(£ million) 2024 2023 Variance %
Hospitals Business Primary Care Hospitals Business Primary Care Hospitals Business Primary Care
Total Total Total
Operating profit 135.2 2.3 137.5 127.0 (0.8) 126.2 6.5% NM(*) 9.0%
Remove effects of:
Adjusting items 8.1 3.8 11.9 4.2 - 4.2 NM NM(*) NM
Adjusted EBIT 143.3 6.1 149.4 131.2 (0.8) 130.4 9.2% NM(*) 14.6%
* Not meaningful due to the VHG acquisition in October 2023
Hospitals Business Adjusted EBIT on comparable basis (adjusted for the effect of Tunbridge Wells)
2024 2023 Variance %
(£m) Hospitals Business adjusted for the effect of Tunbridge wells Tunbridge wells Hospitals Business Hospitals Business adjusted for the effect of Tunbridge wells Tunbridge wells Hospitals Business Hospitals Business adjusted for the effect of Tunbridge wells Tunbridge wells Hospitals Business
Total Adjusted EBIT 143.0 0.3 143.3 130.8 0.4 131.2 9.3% NM(*) 9.2%
* Not meaningful due to period of trading for Tunbridge Wells hospital in 2024 being 3 months vs 12 months in 2023
Primary Care Adjusted EBIT on comparable basis (adjusted for the effect of the acquisition in 2023)
2024 2023 Variance %
(£m) Primary Care Primary Care as reported in 2023 Pro-forma adjustment for full year VHG Pro-forma adjusted Primary Care Primary Care as reported Primary Care adjusted for pro-forma in 2023
Total Adjusted EBIT 6.1 (0.8) 2.6 1.8 NM(*) 238.9%
* Not meaningful due to period of trading for VHG in 2023
Adjusted profit after tax and adjusted earnings per share
Adjustments have been made to remove the impact of non-recurring items.
Year ended 31 December
(£m) 2024 2023
Profit before tax 38.3 34.6
Adjustments for: 11.9
Adjusting Items - operating costs 4.2
Adjusted profit before tax 50.2 38.8
Taxation((1)) (14.1) (6.4)
Adjusted profit after tax 36.1 32.4
Profit for the year attributable to owners of the parent 35.5 31.8
Profit / (loss) for the year attributable to non-controlling interests 0.6 0.6
Weighted average number of ordinary shares in issue (No.) 403,493,123 403,648,886
Adjusted earnings per share (pence) attributable to the parent 8.8 7.9
1. Reported tax charge for the period adjusted for the tax effect of Adjusting
Items
Return on capital employed
Return on capital employed ('ROCE') is the ratio of the group's Adjusted EBIT
to total assets less cash, capital investments made in the last 12 months and
current liabilities. In the prior year the calculation annualises the EBIT of
the Vita acquisition as it was not part of the group for the full year. The
calculation of return on capital employed is shown below:
Year ended 31 December
(£m) 2024 2023
Adjusted EBIT 149.4 130.4
Adjusted: for full year pro-forma effect of VHG acquisition - 6.8
Adjusted EBIT pre VHG 149.4 137.2
Total Assets 2,343.2 2,288.1
Less: Cash and cash equivalents (41.2) (49.6)
Less: Capital investments (127.2) (84.4)
Less: Current Liabilities (341.7) (317.6)
Capital Employed 1,833.1 1,836.5
Return on capital employed % 8.2% 7.5%
Adjusted Free Cash flow
Year ended 31 December
(£m) 2024 2023
Adjusted EBITDA 260.0 234.0
Less: Lease payments (102.3) (100.2)
Less: Cash flow for the purchase of property, plant and equipment (112.1) (84.4)
Less: Working capital movement (7.0) (15.5)
Less: Adjustments for non-recurring items 0.4 14.1
Adjusted FCF 39.0 48.0
Cash flow analysis for the period
Year ended 31 December
(£m) 2024 2023
Opening Cash balance 49.6 74.2
Operating cash flows before recurring items and VHG 244.3 228.2
Less: Adjustments for non-recurring items and VHG (2.6) (9.9)
Operating cash flows before Adjusting Items and income tax paid 241.7 218.3
Net cash flow from Adjusting Items (included in operating cash flows) (5.9) (2.7)
Income tax paid (0.1) (0.1)
Operating cash flows after operating Adjusting Items and income tax 235.7 215.5
Net cash in investing activities (99.0) (84.0)
Cash outflow for acquisition of subsidiary - (73.2)
Investing cash flows after investing Adjusting Items (99.0) (157.2)
Net cash in financing activities (145.1) (82.9)
Financing cash flows after financing Adjusting Items (145.1) (82.9)
Closing cash balance 41.2 49.6
Closing cash balance
The group's year end cash balance stood at £41.2m, which reflects a reduction
of £8.4m against the prior year balance of £49.6m. The reduction in cash is
largely due to increased capital expenditure of £27.7m offset by proceeds
from the Tunbridge Wells proceeds of £10.0m. There is £5.4m of capital
expenditure related to solar panels, for which we expect to convert and enter
into a sale and leaseback agreement in early 2025 and therefore represents a
timing difference on cash. Further detailed information on the cash flow
during the period is set out in the following sections.
Operating cash flows before Adjusting items
The cash inflow from operating activities before tax, adjusting items was
£244.3m (2023: £228.2m), which constitutes a cash conversion rate from
£260.0m Adjusted EBITDA of 94% (2023: 98% conversion of £232.2 Adjusted
EBITDA). The net cash outflow from movements in working capital in the period
was £7.0m (2023: £15.5m outflow).
Investing and financing cash flows
Net cash outflow in investing activities for the period was £99.0m (2023:
£157.2m). The cash outflow relates to the purchase of plant, property and
equipment in the period totalled £112.1m (2023: £84.4m). Capital investments
in the year includes major refurbishments at Spire Portsmouth and Spire
Washington; energy savings initiatives including solar panel installations;
and new MRI scanners. We also deployed an accelerated growth investment
supporting the Primary Care expansion strategy, including the openings of
Spire Clinics in Abergele, Harrogate and Norwich.
Net cash used in financing activities for the period was £145.1m (2023:
£82.9m). Cash outflows include interest paid and other financing costs of
£98.1m (2023: £90.0m), and £26.2m (2023: £27.2m) of lease liability
payments, a final dividend payment of £8.5m and £3.1m for the buyback of
shares to settle share awards and £3.1m for share cancellation to return
value to shareholders.
Borrowings
At 31 December 2024, the group has bank borrowings of £367.1m (2023:
£365.3m), drawn under facilities which mature in February 2027.
Year ended 31 December
(£m) 2024 2023
Cash 41.2 49.6
Bank borrowings 367.1 365.3
Bank borrowings less cash and cash equivalents 325.9 315.7
In the prior year, the group exercised its option to extend the senior loan
facility by a further year. The financial covenants and agreement terms
relating to this agreement are unchanged, with leverage to be below 4.0x and
interest cover to be in excess of 4.0x. As at 31 December 2024 the leverage
measure stood at 2.0x (2023:2.2x) and interest cover of 7.5x (2023: 8.5x).
As at 31 December 2024 lease liabilities were £912.8m (2023: £891.7m).
Dividend
The directors of Spire Healthcare have recommended the payment of a final
dividend of 2.3 pence per share for the year ending 31 December 2024, subject
to shareholder approval at the forthcoming Annual General Meeting on 14 May
2025.
Related party transactions
There were no significant related party transactions during the period under
review.
Principal Risks
We set out our principal risks with their material mitigations below. Further
detail on our principal risks will be found in the 2024 Annual Report and
Accounts.
1. Inflation and wage inflation In response to macro inflationary pressure, we continue to benefit from a
range of inflation mechanisms built into the PMI contracts and will benefit
from our ability to change self-pay pricing quickly via our pricing engine
subject to prevailing market conditions. Our conversion rate from outpatient
appointment to inpatient procedure remains stable. Our procurement team
maintains a constant review of pricing and seeks opportunities to mitigate
inflationary increases.
We continue to respond to changing economic circumstances by optimising our
private and NHS-funded work, ensuring we are not over-reliant on one income
source, and supported by an efficient cost base.
In 2024, we announced an above inflation pay award of 2.75% for all colleagues
in the hospital business, and around 5% for colleagues on the minimum hourly
rate.
2. Private market dynamics We invest in high-quality patient care service to our self-pay and insured
patients of our PMI partners.
We ensure we have long-term contracts in place with our PMI partners that
avoids co-termination of contractual arrangements.
We believe that continuing to invest in our well-placed portfolio of hospitals
provides a natural fit to the local requirements of all the PMI providers long
term.
We continue to invest in efficiency programmes to ensure that we can offer the
best combination of high-quality patient care at competitive prices.
Since 2022, we have deployed national multi-media advertising campaigns
highlighting the key benefits of private healthcare to increase our brand
awareness.
We are strengthening our operational capability with further enhancements to
the website (content and functionality) and call centre resilience and
training.
We have adopted sophisticated pricing capability.
We are promoting patient financing as a payment option.
3. Climate change Flood risk mitigation includes a continued periodic review of our estate in
relation to existing and predicted flood risk zones and investment in improved
roofing and drainage where vulnerabilities have been identified. None of our
current sites are situated in predicted high risk flood zones or in coastal
areas predicted to be at risk from rising sea levels.
Extreme ambient temperature risk mitigation includes an informed investment
plan for upgrade of failing and vulnerable plant. Design of the replacement
and upgrade would account for the predicted increase in ambient temperature
profiles expected within the lifespan of the plant eg, 15 years. Further
mitigation measures include extreme weather warning protocol and business
continuity plans to provide emergency loan HVAC plant.
Energy price risk mitigation includes energy efficiency measures to reduce
consumption and our energy hedging strategy which has seen all our current
energy requirements secured until December 2025.
4. Cyber security The data strategy, governance and security committee monitor the risk and
mitigations for cyber security. The committee reports into the executive
committee with a separate reporting line to the audit and risk committee. To
support this governance structure, we have a range of policies and practices,
and mandatory staff training covering cyber security.
Our IT team have a cyber-security strategy for continuous improvement based on
industry standards. It covers the processes from identifying specific risks,
to protecting physical and digital data assets through to recovery in the
event of a successful cyber-attack.
We work with several industry-leading technical partners to provide:
· Multiple layers of security controls providing advanced detection
and protection capabilities
· Regular third-party penetration testing on new and existing IT
systems
· Red-teaming exercises to attempt to access our systems using a
variety of real-world techniques
· Managed Security Operations Centre (SOC) to monitor, analyse and
respond to security threats 24x7
· Threat intelligence from a variety of external sources
· Varonis DatAlert system is in place for user behaviour analytics
that uses algorithms and machine learning to detect anomalies in the behaviour
of both users and devices
· Third party (Reliance) triage of colleagues reporting potential
phishing emails via the 'Phish Alert' button
· Enhanced detection of phishing emails via Microsoft Exchange
Online Protection (EOP)
SAFE, Security Awareness For Everyone campaign advising colleagues of threats
to be aware of and preventative action to take
5. Organisational transformation We have a range of mitigations in place:
· Governance - there is a programme hierarchy of project, programme
and steering board committees, which then report into the executive and board
committees
· Executive accountability - There is dual executive committee
representation on all programme boards, with best practice project management
processes in place including disciplined stage gate reviews, lessons learnt
reviews and comprehensive risk and issue management
· Investment - We are investing in both communication resource and
expanding the Information Technology Operating Model to ensure there is
adequate resource to support the technical aspects of the change programme
Being kind - A set of established principles for those affected by
organisational change, including offering comprehensive outplacement support
and enhanced redundancy packages
6. Digital, automation and efficiency The digital strategy focuses on an 18-24 month planning horizon to improve the
predictability of investment and outcomes. This will enable Spire to adjust
the priorities (through transparent visibility and reporting), managing
flexibility to investment and increase speed of implementation, consider
informed changes in approach in response to changes in the macro climate and
competitive landscape.
We will utilise best-practice programme governance, supported by third-party
experts, to deliver change programmes into the business, coupled with the
adoption of lean, agile change methodology along with driving and adopting
one-best way eg patient support centres. In addition, we will initiate quality
assurance and assessment via a trusted independent partner.
In addition, we developed and introduced in 2024, a strategic response and
approach to the specific management of change and implementation (deployment),
upskilling and increasing the necessary structure to provide the required
standards of: impact assessment, colleague engagement, training, adoption
strategies and ensuring accurate and
effective embedding of new ways of working, in order to maximise business
opportunities and performance improvements.
We will use technology to enable early benefits' realisation, for example
utilising process automation to release immediate efficiencies and
improvements to boost productivity and further fund future investments for
digitisation. Clinical Safety and Standards will be involved in the input to
design.
The digital strategy has built-in focus on appropriate levels of innovation,
coupled with external horizon scanning, to ensure we are not behind the curve
compared to competitors (current or future).
7. NHS market dynamics We apply a disciplined approach to what procedures we will undertake for the
NHS to optimise the balance of resource
utilisation and margin contribution.
We maintain diversification of revenue streams with self-pay, PMI patients and
new business streams.
We continue to invest in the capital base of our hospitals to provide services
needed by the NHS (eg diagnostics).
We continue to invest in efficiency programmes to ensure that we can offer the
best combination of high-quality patient care with acceptable margins at NHS
tariff prices.
We have strong relationships with the Integrated Care Systems (ICSs) and
signed contracts with all ICSs.
Vita Health Group's acquisition in 2023 gave us a new opportunity to
participate in the NHS tender market.
8. Brand reputation Our primary mitigations against damage to our brand reputation is through the
good management of our principal
risks, in particular:
· Clinical quality and governance
· Cyber security
· Workforce
In addition, we continue to:
· Invest in the awareness and health of the brand through national
advertising, public relations and centrally coordinated social media
· Build our reputation and enhance understanding among analysts,
public commentators, key stakeholders, public bodies and parliamentarians
· Comprehensive crisis communications planning
Creating social value supports our brand reputation. We contribute to social
value through:
· Delivering good quality healthcare to patients who need it the
most
· Reducing waiting times for NHS patients through increasing
capacity
· Generating positive social impact for colleagues and communities
· Community efforts to support local businesses and charities
· Environmental efforts to reduce our impact
· The onward value created by our apprenticeship programmes
9. Government policy We have a proactive strategy to establish and build relationships with new
government ministers and advisors in both the health department and other
related departments (eg Department for Work and Pensions).
We seek to build relationships with our local MPs, and have written to newly
elected MPs, who cover our physical locations across Great Britain to
introduce them to Spire Healthcare and build their understanding of what we
do.
We are actively engaging with the Independent Healthcare Providers Network
(IHPN) to support IHPN's input into the Government's 10-year strategic plan.
10. Major infrastructure failure We maintain the following controls to mitigate against a failure of patient
safety and clinical quality:
· All our hospitals have a backup power source provided from diesel
powered generators that operates major circuits of a hospital, but some key
equipment is not covered, eg, MRI scanners. Battery powered uninterrupted
power is provided into specific equipment in theatres to ensure patients
remain safe in the event of a generator failure. These backup power sources
are designed to keep patients in the hospital safe but are not a complete
substitute for mains power
· Our national distribution fleet refuel daily at the end of their
shifts to ensure resilient operational capability
· NHS hospitals are obliged to provide emergency care to everyone
but their pressures on ambulance services can, and do, lead to delays to
emergency transfers on rare occasions. Mitigation plans are in place and
rehearsed at hospitals
· The chief operating officer chairs a regular multi-disciplinary
winter planning meeting to co-ordinate response activities to any
infrastructure failures
· The use of the Microsoft Azure 'cloud' platform for core Spire IT
services is split into multiple availability zones. Primary Service is hosted
in UK South (London) and Secondary Service in UK West (Wales)
· Spire IT on-premise infrastructure is hosted in Telehouse
Docklands with resilient power, communications, monitoring and cooling
technologies
11. Clinical quality We maintain the following core processes to monitor clinical quality:
· Quality and safety reporting based on a quality assurance
framework with a standard set of KPIs
· A schedule of robust and regular internal hospital inspections
including the patient safety and quality reviews, with action plans for
improvement that is centrally monitored
· A schedule of excellence in care meetings with the group clinical
director and directors of clinical services to drive assurance and
accountability for standards of care
· Consistent reporting of clinical outcome and effectiveness
measures within the hospital and central meeting governance structures
(including medical advisory committee meetings) to ensure that insights and
learning are actioned and shared
These processes are underpinned by:
· A reporting culture of openness and shared learning from
ward-to-board, with a FTSU guardian at each site
· Timely incident reporting via a database with central oversight
and development of actions to ensure learning. We utilise the new Patient
Safety Incidence Response Framework (PSIRF) introduced in 2024
· Continuous monitoring of patient experience via regular surveys
with policies and procedures in place to ensure learning from patient
experience feedback (including detractors and complaints)
· Standard operating procedure for patient notification exercises
that includes learning and continuous improvement methodologies
Clinical quality processes and controls are governed by the executive's
safety, quality and risk committee and the board's clinical governance and
safety committee (CGSC).
12. Expanding our proposition We have:
· An innovation board bringing together the CEO and executive
committee members of the medical, clinical, commercial and finance functions
to identify healthcare trends and opportunities to develop new services
· A dedicated director of innovation and proposition development
sourcing specific opportunities to support the group strategy, leading on
development, supported with dedicated IT and project resource
· A dedicated director sourcing suitable target acquisitions
supported by an expert external financial and tax adviser
· A property lead to handle the assessment and acquisition of new
physical assets with the support of retained property advisers
· Acquisition due diligence processes using appropriate third-party
expertise
· Board review and approval of acquisitions
· Post-acquisition project management and integration processes
incorporating learnings from previous acquisitions
The acquisition of Vita Health Group has opened new commercial opportunities
for us, but importantly also improved
our mitigation of this risk.
13. Workforce We seek to retain colleagues through:
· A common purpose and a positive workplace culture (our employee
engagement score provides evidence that this mitigation is effective)
· A standardised, fair and competitive pay and reward benefit
structure. In 2023, we announced a competitive pay award that provided a 5.5%
increase for most colleagues, and extra to bring all colleagues up to the
living wage, and in September 2024 a further 2.75%. We will continue to review
pay competitiveness in all the sectors in which we operate
· Our new reward framework for all permanent hospital (and NDC)
colleagues was implemented in Q4 2024.
· Offering greater flexibility in colleagues' roles and contact
types
· Ensuring we have the right and relevant employee development
programmes, eg a nurse training programme and other relevant apprentice
schemes
· Retaining professional development (excellence programme)
· Continuous investment in our equipment, facilities and services
to retain high-quality clinicians and colleagues
Our risk mitigations have helped to produce a downward trend in colleague
churn rates with consistent reduction during 2024.
We seek to recruit colleagues through:
· A centralised recruitment process which we brought in-house in
2023
· Offering apprenticeship programmes to support the development of
clinical and non-clinical teams across the business
· Building of local bank colleague pools and using digital
solutions to improve access to available shifts
The group manages immediate colleague shortages using agency and bank workers.
14. Data protection The data strategy, governance and security committee is chaired by the senior
information risk owner and monitors the risks and mitigations for data privacy
and cyber security. The committee reports into the executive committee with a
separate reporting line to the audit and risk committee.
The following are the most material controls to mitigate the risk from
materialising:
· In-house data protection officer reports into the group general
counsel, providing expertise and independence as a second line assurance
mechanism
· Dedicated governance platform for the management and oversight of
data subject's rights requests
· Data Protection Impact Assessments (DPIA) to assess data
protection risks in the processing of data, and third-party vendor
· Comprehensive data protection policies and procedures
· Mandatory staff training covering data protection and cyber
security
· Privacy lead in each hospital and clinic that provide the link
between local site and the central data protection team
· Internal incident reporting system for reporting and managing
data incidents used to identify trends and learnings
· Quarterly data privacy key performance indicator reporting into
the data strategy, governance and security working group
14. Supply chain disruption We run a centralised supply chain with a national distribution centre (NDC)
and its own vehicle and driver fleet. Medical
consumables are held at the NDC with an average of six weeks' supply;
medicines and prostheses are being held at
hospital sites.
We must respond to product shortages and global recalls consistently, and we
have seen some minor shortfalls in order
fulfilment. In all cases, our centralised procurement function has been able,
with the support of a permanent presence from the clinical team, to find
alternative supplies to maintain hospitals' activities.
Fresh food is supplied through a national food distributor which has its own
delivery fleet and directly employs its HGV drivers. Order fulfilment has
remained in the high ninety percentile. We have contingency menu plans in case
of fresh food shortages.
Any national shortages in critical medicines and medical gases are managed by
NHS Supply Chain. We receive allocations based on our activity.
14. Data protection Our mitigations are:
· Executive level awareness of the government's five-year AMR
strategy
· Participation in, and collaboration with, government's monitoring
of AMR outbreaks
· Requirement on clinicians to follow guidance in line with
government guidelines on the prescribing of antibiotics
· Access to up-to-date antimicrobial prescribing via online systems
and access to microbiologists at all sites
· Appropriate investigations of post-surgery infections including
review of antibiotics
Directors' responsibilities statement
Viability
Assessment of prospects
In accordance with the 2018 UK Corporate Governance Code, the directors
assessed the viability of the group and have maintained a period of three
years for their assessment. Although longer periods are used when making
significant strategic decisions, three years has been used as it is considered
the longest period of time over which suitable certainty for key assumptions
in the current climate can be made. The assessment conducted considered the
group's current financial position and forecasted revenue, EBITDA, cash flows,
risk management controls and loan covenants over the three-year period (which
is consistent with the approach for prior years, with the exception of capital
structure due to refinancing).
Assessment of viability
Further detail on Macroeconomic-related risk is provided in the risk
management and internal control section in the Strategic Report.
Other specific scenarios covered by our testing were as follows:
· The group is subject to temporary suspension of trade, with a
temporary adverse impact on revenue, for example, as a result of a successful
cyber-attack on key business systems
· The downside modelling of a number of risks which result in a
decline in earnings, including the loss of a contractual relationship with a
key insurer
· Significant change in government policy resulting in consultants
going on payroll
· Short-term disruption to trade at a sub-set of hospitals owing to
an extreme weather event.
Management's approach also included testing for a specific combination of
these risks. This testing entailed modelling for the potential impact if,
although considered highly remote, the three risks which individually give
rise to the largest adverse financial impact were to take place in
combination.
This review included the following key assumptions:
· The Group's senior finance facility and revolving credit facility
which mature in February 2027 are refinanced to cover the three-year period.
We have commenced with the processes to refinance our facilities and are
confident that the facilities will be re-financed and will be in place for the
three-year period. In the unlikely event that financing is not obtained, the
Group has an extensive freehold property portfolio which could be accessed
through sale and leaseback to provide the funding required, and
· The government will not make significant change to its existing
policy towards utilising private provision of healthcare services to
supplement the NHS
Based on the results of this analysis, the directors confirm that they have a
reasonable expectation that the group will be able to continue in operation
and meet its liabilities as they fall due over the next three years.
Going Concern
The group assessed going concern risk for the period through to 30 June 2026.
As at 31 December 2024 the group had cash of £41.2m and borrowings of £365m
of which £325m is a Senior Loan Facility and £40m drawn Revolving Credit
Facility. The Group has access to an undrawn Revolving Credit Facility of
£60m. On 3 March 2023, the group exercised the option to extend the senior
loan facility and RCF by a further year to February 2027. The financial
covenants relating to this agreement are materially unchanged and there have
been no modifications to the agreement terms.
The group has undertaken extensive activity to identify plausible risks which
may arise and mitigating actions, which in the first instance would include
management of working capital and constrained levels of capital investment.
Based on the current assessment of the likelihood of these risks arising by 30
June 2026, together with their assessment of the planned mitigating actions
being successful, the directors have concluded it is appropriate to prepare
the accounts on a going concern basis. In arriving at their conclusion, the
directors have also noted that, were these risks to arise in combination, it
could result in a liquidity constraint or breach of covenant, however, the
risk of this is considered remote.
The group has also assessed, as part of its reverse stress testing, what
degree of downturn in trading it could sustain before it breaches its
financial covenant. This stress testing was based on flexing revenue downwards
with a consistent percentage decline in variable costs, whilst maintaining the
forecast of fixed costs. The testing allows for the benefit of mitigating
actions that could be taken by management to preserve cash. This testing
suggested that there would have to be at least a 30% fall in annual forecast
revenue before the group breaches its financial covenant. We believe that the
risk of an event giving rise to this size of reduction in revenue is remote.
It should be noted that we remain in a period of material geopolitical and
macroeconomic uncertainty. Whilst the directors continue to closely monitor
these risks and their plausible impact, their severity is hard to predict and
is dependent upon many external factors. Accordingly, the actual financial
impact of these risks may materially vary against the current view of their
plausible impact.
By order of the board
Justin Ash
Harbant Samra
Chief Executive
Officer
Chief Financial
Officer
5 March 2025
Consolidated income statement
For the year ended 31 December 2024
2024 2023
(£m) Note Total before Adjusting Adjusting Total Total before Adjusting items Adjusting Total
items
items
items
(note 10) (note 10)
Revenue 5 1,511.2 - 1,511.2 1,359.0 - 1,359.0
Cost of sales (827.6) - (827.6) (734.8) - (734.8)
Gross profit 683.6 - 683.6 624.2 - 624.2
Other operating costs (542.3) (16.4) (558.7) (497.4) (6.7) (504.1)
Other income 7 8.1 4.5 12.6 3.6 2.5 6.1
Operating profit (EBIT) 8 149.4 (11.9) 137.5 130.4 (4.2) 126.2
Finance income 9 0.7 - 0.7 1.4 - 1.4
Finance cost 9 (99.9) - (99.9) (93.0) - (93.0)
Profit before taxation 50.2 (11.9) 38.3 38.8 (4.2) 34.6
Taxation 11 (14.1) 1.8 (12.3) (6.4) (0.3) (6.7)
Profit for the year 36.1 (10.1) 26.0 32.4 (4.5) 27.9
Profit for the year attributable to
owners of the parent 35.5 (10.1) 25.4 31.8 (4.5) 27.3
Profit for the year attributable to
non-controlling interests 0.6 - 0.6 0.6 - 0.6
Earnings per share (in pence per share)
- basic 12 8.8 (2.5) 6.3 7.9 (1.1) 6.8
- diluted 12 8.6 (2.4) 6.2 7.7 (1.1) 6.6
Consolidated statement of comprehensive income
For the year ended 31 December 2024
(£m) 2024 2023
Profit for the year 26.0 27.9
Items that may be reclassified to profit or loss in subsequent periods
Loss on cash flow hedges (1.5) (4.2)
Taxation on cash flow hedges 0.3 0.9
Other comprehensive loss for the year (1.2) (3.3)
Total comprehensive profit for the year, net of tax 24.8 24.6
Attributable to:
Equity holders of the parent 24.2 24.0
Non-controlling interests 0.6 0.6
24.8 24.6
Consolidated statement of changes in equity
For the year ended 31 December 2024
(£m) Note Share Share Capital EBT share Retained Equity attributable to owners of the parent Non-controlling interests Total equity
capital Premium reserves reserves Hedging loss
(note 17) (note 17) (note 17) (note 17) reserve
(note 17)
As at 1 January 2023 4.0 830.0 376.1 - 6.6 (485.7) 731.0 (5.9) 725.1
Profit for the year - - - - - 27.3 27.3 0.6 27.9
Other comprehensive loss for the year - - - - (3.3) - (3.3) - (3.3)
Total comprehensive profit for the year - - - - (3.3) 27.3 24.0 0.6 24.6
Dividends paid - - - - - (2.0) (2.0) - (2.0)
Share-based payments 22 - - - - - 3.7 3.7 - 3.7
Deferred tax adjustment on share-based payments reserve
- - - - - (0.3) (0.3) - (0.3)
Settlement on vested share awards - - - - - (0.6) (0.6) - (0.6)
Purchase of own shares by EBT - - - (3.1) - - (3.1) - (3.1)
Issue of own shares by EBT in respect of share awards - - - 2.4 - (2.4) - - -
Additional interest acquired of non-controlling interest - - - - - (3.2) (3.2) 3.2 -
Financial liability to acquire non-controlling interests - - - - - (9.6) (9.6) - (9.6)
As at 1 January 2024 4.0 830.0 376.1 (0.7) 3.3 (472.8) 739.9 (2.1) 737.8
Profit for the year - - - - - 25.4 25.4 0.6 26.0
Other comprehensive loss for the year
- - - - (1.2) - (1.2) - (1.2)
Total comprehensive profit for the year - - - - (1.2) 25.4 24.2 0.6 24.8
Dividends paid - - - - - (8.5) (8.5) - (8.5)
Dividends paid to non-controlling interests - - - - - - - (0.7) (0.7)
Share-based payments 22 - - - - - 4.0 4.0 - 4.0
Deferred tax adjustment on share-based payments reserve
- - - - - 0.4 0.4 - 0.4
Settlement on vested share awards - - - - - (5.4) (5.4) - (5.4)
Purchase of own shares by EBT - - - (3.1) - - (3.1) - (3.1)
Issue of own shares by EBT in respect of share awards - - - 2.9 - (2.9) - - -
Purchase of ordinary shares for cancellation - - - - - (3.1) (3.1) - (3.1)
As at 31 December 2024 4.0 830.0 376.1 (0.9) 2.1 (462.9) 748.4 (2.2) 746.2
Consolidated balance sheet
For the year ended 31 December 2024
(£m) Note 2024 2023
ASSETS
Non-current assets
Property, plant and equipment 13 1,663.4 1,618.8
Intangible assets 14 437.4 438.3
Other receivables 18 4.4 -
Derivatives 18 0.4 0.4
Financial assets 12.3 10.0
2,117.9 2,067.5
Current assets
Financial assets 2.5 -
Inventories 46.6 44.3
Trade and other receivables 15 131.4 121.6
Derivatives 18 2.5 4.0
Cash and cash equivalents 41.2 49.6
224.2 219.5
Non-current assets held for sale 16 1.1 1.1
225.3 220.6
Total assets 2,343.2 2,288.1
EQUITY AND LIABILITIES
Equity
Share capital 17 4.0 4.0
Share premium 17 830.0 830.0
Capital reserves 17 376.1 376.1
EBT share reserves 17 (0.9) (0.7)
Hedging reserve 17 2.1 3.3
Retained loss (462.9) (472.8)
Equity attributable to owners of the parent 748.4 739.9
Non-controlling interests (2.2) (2.1)
Total equity 746.2 737.8
Non-current liabilities
Bank borrowings 18 363.5 361.9
Lease liabilities 18 811.0 793.3
Financial liabilities 19 - 9.6
Deferred tax liabilities 80.8 67.9
1,255.3 1,232.7
Current liabilities
Bank borrowings 18 3.6 3.4
Lease liabilities 18 101.8 98.4
Provisions 20 14.2 16.4
Trade and other payables 21 214.0 197.1
Financial liabilities 19 8.0 -
Income tax payable 0.1 2.3
341.7 317.6
Total liabilities 1,597.0 1,550.3
Total equity and liabilities 2,343.2 2,288.1
These Consolidated financial statements and the accompanying notes were
approved for issue by the Board on 5 March 2025 and signed on its behalf by:
Justin Ash
Harbant Samra
Chief Executive Officer
Chief
Financial Officer
Consolidated statement of cash flows
For the year ended 31 December 2024
(£m) Note 2024 2023
Cash flows from operating activities
Profit before taxation 38.3 34.6
Adjustments to reconcile profit before tax to net cash flows:
Profit on disposal of property, plant and equipment (5.2) (0.3)
Fair Value movement on financial liability (1.6) -
Adjusting items - other 1.5 1.5
Depreciation of property, plant and equipment and right-of-use assets 108.0 103.0
Amortisation of intangible assets 4.2 0.6
Finance income (0.7) (1.4)
Finance costs 99.9 93.0
Other income (5.8) (3.6)
Share-based payments expense 4.2 3.7
Movements in working capital:
Increase in trade and other receivables (11.0) (12.7)
Increase in inventories (2.3) (3.7)
Increase in trade and other payables 9.0 2.2
Decrease in provisions (2.7) (1.3)
Cash generated from operations 235.8 215.6
Tax paid (0.1) (0.1)
Net cash flows from operating activities 235.7 215.5
Cash flows from investing activities
Receipt from financial asset 0.7 0.7
Acquisition of a subsidiary, net of cash acquired - (73.2)
Purchase of property, plant and equipment (109.3) (83.9)
Purchase of intangible assets (2.8) (0.5)
Proceeds on disposal of property, plant and equipment 11.7 0.8
Interest received on bank deposits 0.7 1.4
Movement in restricted cash - (2.5)
Net cash used in investing activities (99.0) (157.2)
Cash flows from financing activities
Interest paid and other financing costs (22.0) (17.0)
Interest on lease liabilities (76.1) (73.0)
Payment of lease liabilities (26.2) (27.2)
Draw down on revolving credit facility 5.0 60.0
Repayment on revolving credit facility (5.0) (20.0)
Purchase of own shares by EBT (3.1) (3.1)
Settlement on vested share awards (5.4) (0.6)
Dividends paid to equity holders of the parent (8.5) (2.0)
Dividends paid to non-controlling interests (0.7) -
Purchase of ordinary shares for cancellation (3.1) -
Net cash used in financing activities (145.1) (82.9)
Net decrease in cash and cash equivalents (8.4) (24.6)
Cash and cash equivalents at 1 January 49.6 74.2
Cash and cash equivalents at 31 December 41.2 49.6
Total pre-tax adjusting items is £11.9m (2023: £4.2m) of which £10.4m
(2023: £2.7m) is included in cash generated from operations.
( )
Notes to the preliminary announcement
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 financial statements for the year ended 31 December 2024 were authorised
for issue by the board of directors of the company on
5 March 2025.
The company is a public limited company, which is listed on the London Stock
Exchange, incorporated, registered and domiciled in England and Wales
(registered number: 09084066). 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 2024
included in this report was approved by the board on 5 March 2025. The
financial information set out here does not constitute the company's statutory
accounts for the year ended 31 December 2024 but is derived from those
accounts. Statutory accounts for 2024 will be delivered following the
company's annual general meeting. The auditor has reported on those accounts;
their report was unqualified and 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.
The financial information contained within this report has been prepared in
accordance with UK-adopted International Accounting Standards in accordance
with the requirements of the Companies Act 2006.
The consolidated financial statements are presented in UK sterling and all
values are rounded to the nearest million pounds (£m), except when otherwise
indicated.
Going concern
The group assessed going concern risk for the period through to 30 June 2026. As at 31 December 2024 the group had cash of £41.2m and borrowings of £365m of which £325m is a Senior Loan Facility and £40m drawn Revolving Credit Facility. The group has access to an undrawn Revolving Credit Facility of £60m. On 3 March 2023, the group exercised the option to extend the senior loan facility and RCF by a further year to February 2027. The financial covenants relating to this agreement are materially unchanged and there have been no modifications to the agreement terms.
The group has also assessed, as part of its reverse stress testing, what
degree of downturn in trading it could sustain before it breaches its
financial covenant. This stress testing was based on flexing revenue downwards
with a consistent percentage decline in variable costs, whilst maintaining the
forecast of fixed costs. The testing allows for the benefit of mitigating
actions that could be taken by management to preserve cash. This testing
suggested that there would have to be at least a 30% fall in annual forecast
revenue before the group breaches its financial covenant. We believe that the
risk of an event giving rise to this size of reduction in revenue is remote.
It should be noted that we remain in a period of material geopolitical and macroeconomic uncertainty. Whilst the directors continue to closely monitor these risks and their plausible impact, their severity is hard to predict and is dependent upon many external factors. Accordingly, the actual financial impact of these risks may materially vary against the current view of their plausible impact.
3. Accounting policies
In preparing this preliminary announcement, the same accounting policies,
methods of computation and presentation have been applied as set out in the
group's Annual Report and Accounts for the year ended 31 December 2024, a copy
of this report will shortly be available on the company's website at
www.spirehealthcare.com.
Changes in accounting policy - New standards, interpretations and amendments applied
The following amendments to existing standards were effective for the group
from 1 January 2024. Other than some additional disclosures, these amendments
have not had a material impact on the consolidated financial statements of the
group.
Effective date*
Amendments to IAS 1 - Classification of liabilities as current or non-current 1 January 2024
Amendments to IAS 1 - Non-current Liabilities with Covenants 1 January 2024
Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements 1 January 2024
Amendments to IFRS 16 - Lease Liability in a sale and leaseback 1 January 2024
* The effective dates stated above are those given in the original
IASB/IFRIC standards and interpretations that are consistent with the
endorsement process for use in the UK.
Changes in accounting policy - new standards, interpretations and amendments in issue, but not yet effective
As at date of approval of the group financial statements, the following new
and amended standards, interpretations and amendments in issue are applicable
to the group but not yet effective and thus, have not been applied by the
group:
Effective date*
Amendments to IFRS 9 and IFRS 7 - Amendments to the Classification and 1 January 2026
Measurement of
Financial Instruments
IFRS 18 - Presentation and Disclosure in Financial Statements 1 January 2027
* The effective dates stated above are those given in the original
IASB/IFRIC standards and interpretations. As the group prepares its financial
statements in accordance with IFRS as issued by the IASB as endorsed by the
UK, the application of new standards and interpretations will result in an
effective date subject to that agreed by the UK Endorsement process.
We are in the process of assessing the impact of the above on the presentation
of and disclosure in the financial statements.
4. Critical accounting 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 relevant. Actual results may differ from
these estimates.
In preparing this preliminary announcement, the significant judgements and
estimates 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 2024.
5. Revenue
All revenue is attributable to, and all non-current assets are located in, the
United Kingdom.
Revenue by location (inpatient, day case or out-patient) and wider customer
(payor) group is shown below:
2024 2023
(£ million) Hospitals Business Primary Care Total Hospitals Business Primary Care Total
Inpatient 548.0 - 548.0 535.5 - 535.5
Day case 426.6 0.6 427.2 399.9 - 399.9
Out-patient 388.1 120.2 508.3 365.4 31.4 396.8
Other (1) 27.5 0.2 27.7 26.8 - 26.8
Total revenue 1,390.2 121.0 1,511.2 1,327.6 31.4 1,359.0
Insured 662.4 1.6 664.0 615.7 0.8 616.5
Self-pay 332.9 8.0 340.9 344.0 7.8 351.8
NHS 367.4 80.8 448.2 341.1 14.9 356.0
Other 27.5 30.6 58.1 26.8 7.9 34.7
Total 1,390.2 121.0 1,511.2 1,327.6 31.4 1,359.0
Group revenues increased by 11.2% to £1,511.2m (2023: £1,359.0m). Hospitals
Business revenue has increased by 4.7% to £1,390.2m (2023: £1,327.6m),
driven by the demand for private healthcare and our expansion into Primary
Care. Overall revenue growth is underpinned by increased average revenue per
case (APRC) for all payor groups. Revenue for Primary Care is £121.0m (2023:
£31.4m) with the majority of this from Vita Health Group which was acquired
in October 2023.
6. Segmental reporting
In determining the group's operating segments, management has primarily
considered the financial information in internal reports that are reviewed and
used by the executive management team and board of directors (who together are
the chief operating decision maker of Spire Healthcare) 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 three operating segments, being
Hospitals Business, Vita Health Group and Doctors Clinic Group.
The Hospitals Business is the group's core business activity and consists of
hospitals, clinics, medical centres and consulting rooms. They provide
diagnostics, inpatient, day case and outpatient care in areas including
orthopaedics, gynaecology, cardiology, neurology, oncology and general
surgery.
We have aggregated Vita Health Group and Doctors Clinic Group into one
reportable segment called Primary Care as they meet the aggregation criteria
under IFRS 8 operating segments. These entities all have similar economic
characteristics such as offering similar services and have a similar type of
customer. These services being primarily focused on the primary care needs of
outpatients whether these services are GP services, occupational health
services or mental and physical health services.
Segment performance is evaluated based on profit or loss and is measured
consistently with profit or loss in the consolidated financial statements. The
balance sheet is evaluated on a group level.
2024 2023
(£ million) Hospitals Business Primary Care Total Hospitals Business Primary Care Total
Revenue 1,390.2 121.0 1,511.2 1,327.6 31.4 1,359.0
Cost of sales (748.4) (79.2) (827.6) (714.3) (20.5) (734.8)
Gross profit 641.8 41.8 683.6 613.3 10.9 624.2
Other operating costs (519.2) (39.5) (558.7) (492.4) (11.7) (504.1)
Other (1) 12.6 - 12.6 6.1 - 6.1
Segmental operating profit (EBIT) 135.2 2.3 137.5 127.0 (0.8) 126.2
Finance income, finance costs and taxes are not allocated to individual
segments as these are managed on an overall group basis.
Reconciliation of segment operating profit to group profit for the year:
(£ million) 2024 2023
Segmental operating profit (EBIT) 137.5 126.2
Finance income 0.7 1.4
Finance costs (99.9) (93.0)
Profit before taxation 38.3 34.6
Taxation (12.3) (6.7)
Profit for the year 26.0 27.9
Operating profit is arrived at after charging:
2024 2023
(£ million) Hospitals Business Primary Care Total Hospitals Business Primary Care Total
Depreciation of property, plant and equipment and right-of-use assets 106.4 1.6 108.0 102.6 0.4 103.0
Amortisation of intangible assets 1.6 2.6 4.2 - 0.6 0.6
Lease payments made in respect of low value and short leases 16.6 3.8 20.4 16.9 1.7 18.6
Staff costs 494.4 73.0 567.4 458.7 18.5 477.2
The total pre-tax adjusting items is £11.9m (2023: £4.2m) of which £8.1m
(2023: £4.2m) relate to the Hospitals Business and £3.8m (2023: Nil) relate
to Primary Care.
7. Other income
(£ million) 2024 2023
Fair value movement on financial asset 4.8 2.8
Realised profit in respect of financial asset 1.0 0.8
Fair value movement on financial liability 1.6 -
Profit on disposal of hospital (adjusting items) (see note 10) 4.5 -
Profit on disposal of property, plant and equipment 0.7 -
Settlement from an insurer (adjusting items) (see note 10) - 2.5
Total other income 12.6 6.1
The fair value movement in respect of the financial asset was recognised to
reflect the on-going profit share arrangement with Genesis Care which arose as
part of the sale of the Bristol Cancer Centre in 2019. Profits of £1.0m
(2023: £0.8m) have been realised in respect of this arrangement. The fair
value movement on financial liability relates to the change in cash flows
relating to the financial instruments held to purchase own equity instruments.
8. Operating profit
Arrived at after charging / (crediting):
(£ million) 2024 2023
Depreciation of property, plant and equipment (see note 13) 67.0 65.5
Depreciation of right-of-use assets (see note 13) 41.0 37.5
Amortisation of intangible assets (see note 14) 4.2 0.6
Acquisition-related transaction costs (adjusting item) (see note 10) - 2.5
Lease payments made in respect of low value and short leases 20.4 18.6
Provision related to Ian Paterson (adjusting item) (see note 10) 4.6 2.5
Movement on the provision for expected credit losses of trade receivables 1.0 0.5
(Profit) / loss on disposal of property, plant and equipment - (0.3)
Staff restructuring costs 4.3 2.0
Staff costs (net of staff restructuring costs and including share-based 567.4 475.2
payment charge)
9. Finance income and costs
(£ million) 2024 2023
Finance income
Interest income on bank deposits 0.7 1.4
Total finance income 0.7 1.4
Finance cost
Interest on bank facilities 22.3 18.5
Amortisation of fee arising on facilities extensions/borrowing costs 1 1.5 1.5
Interest on obligations under leases 76.1 73.0
Total finance costs 99.9 93.0
Total net finance costs 99.2 91.6
1. £5.0m of borrowing costs were capitalised on the refinancing of the senior
facility, these are being amortised over the life of the facility.
10. Adjusting items
(£ million) 2024 2023
Asset acquisitions, disposals, and aborted project costs (2.8) 3.1
Business reorganisation and corporate restructuring costs 4.3 2.0
Remediation of regulatory compliance or malpractice costs 6.9 (0.9)
Clinic set up costs 1.9 -
Amortisation on acquired intangible assets 1.6 -
Total pre-tax adjusting items 11.9 4.2
Income tax (credit) / charge on adjusting items (1.8) 0.3
Total post-tax adjusting items 10.1 4.5
Adjusting items comprise those matters where the directors believe the
financial effect should be adjusted for, due to their nature, size or
incidence, in order to provide a more accurate comparison of the group's
underlying performance.
Asset acquisitions, disposals, impairment and aborted project credit of £2.8m
includes a profit of £4.5m relating to the sale of the group's Tunbridge
Wells hospital to Maidstone and Tunbridge Wells NHS Trust ("Trust") for
£9.975m (refer to disposal note 24 for more details). In addition, there is
£0.6m of integration and other acquisition costs relating to the VHG
acquisition and £0.6m true up to provision on the DCG and Claremont
acquisitions.
In the prior year, costs of £3.1m mainly relate to asset acquisitions of Vita
Health Group Limited and The Doctors Clinic Group.
Business reorganisation and corporate restructuring relates to the group
announcement of a strategic, group wide initiative in H2 21 that will enable a
more efficient business operating model, including leveraging digital
solutions and technology. As a result of this initiative, additional costs of
£3.5m (2023: £2.0m) have been incurred in the period, bringing costs to date
of £9.3m. This initiative is being implemented over several phases and is
likely to be materially completed during 2026 as communicated at our capital
markets event in April 2024. Future costs are not disclosed as a reliable
estimate cannot be made due to the nature of the matter. £0.7m has been
incurred in respect of restructuring costs relating to the Doctors Clinic
Group.
Remediation of regulatory compliance or malpractice costs reflect an increase
in the provision in June 2024 of £4.6m (2023: £2.5m). The provision was
established by Spire Healthcare in respect of implementing the recommendations
of the Independent Inquiry including a detailed patient review and support for
patients of Paterson. The project is complex and the process for review and
settlement of claims, where relevant, takes some time. The detailed patient
review has now reached the milestone of having contacted all living patients
and invited them, where appropriate, to consultations to discuss their care.
As a consequence, the rate of new claims has dropped significantly, as most
patients now have their outcomes of their review and have initiated their
claim, where relevant. Claims activity in the second half of the year has
therefore been in line with the assumptions taken by management and the
provision established at the half year. As a result there has been no
subsequent increase in the provision. In addition, £1.7m of legal fees have
been incurred for the ongoing inquests. Whilst it is possible that, as further
information becomes available, an adjustment to this provision will be
required, at this time it reflects management's best estimate of the costs and
settlement of claims.
In the prior year the group has recognised a credit of £0.9m in respect of
Remediation of Regulatory Compliance or Malpractice Costs relating to
Paterson. This comprised £2.5m funds received from its insurer and £0.9m
reduction in provision which had been held to resolve the matter. This was
offset by an increased separate provision in respect of Paterson by £2.5m.
Clinic set up costs relate to costs incurred for the set-up of the Abergele
and Harrogate clinics prior to opening. The clinic in Abergele opened in
February 2024 and Harrogate in January 2025.
£0.9m of amortisation on acquired intangible assets related to the customer
contracts recognised on the acquisition of VHG in October 2023.
11. Taxation
(£ million) 2024 2023
Current tax
UK corporation tax expense 0.7 0.9
Adjustments in respect of prior years (1.0) (1.3)
Total current tax credit (0.3) (0.4)
Deferred tax
Origination and reversal of temporary differences 10.3 10.0
Adjustments in respect of prior years 2.3 (2.9)
Total deferred tax charge 12.6 7.1
Total tax charge 12.3 6.7
In addition to the above, a credit of £0.3m has been recognised in Other
Comprehensive Income (2023: £0.9m credit) and £0.4m credit (2023: £0.3m
credit) through Equity. The £0.4m credit through equity relates to
movements on share-based payments and reflects a £0.5m deferred tax charge,
offset by a current tax credit of £0.9m.
Corporation tax is calculated at 25.0% (2023: 23.5%) of the estimated taxable
profit or loss for the year. The effective tax rate on profit before taxation
for the year is 32.1%. The effective tax rate is higher than the UK rate due
to the impact of prior year adjustments and non-deductible items. Excluding
the adjustments to prior years in 2024, the effective tax rate is 28.1%.
The effective tax assessed for the year, all of which arises in the UK,
differs from the standard weighted rate of corporation tax in the UK. The
reconciliation of the actual tax charge to that at the domestic corporation
tax rate is as follows:
(£ million) 2024 2023
Profit before taxation 38.3 34.6
Tax at the standard rate 9.6 8.1
Effects of:
Expenses and income not deductible or taxable 1.1 3.2
Adjustment for movement on share-based payments 0.3 -
Tax adjustment for the super-deduction allowance - (0.8)
Adjustments in respect of prior year 1.3 (4.2)
Difference in tax rates - 0.2
Deferred tax not previously recognised - 0.2
Total tax charge 12.3 6.7
Expenses and income not deductible or taxable relate mostly to depreciation on
non-qualifying fixed assets, disallowable entertaining and legal and
professional fees.
The current year and prior year charges are driven by expenses not deductible
for tax purposes, adjustments to prior year and the movement on share-based
payments.
The group does not hold any uncertain tax positions under IFRIC 23 at the
year-end (2023: none).
Pillar Two legislation, reflecting the OECDs Base Erosion Profit Shifting
('BEPs') framework is effective for periods beginning 1 January 2024. The
group continues to only operate in the UK. Based on the group's assessment,
the Pillar Two effective tax rates continue to be above 15% and therefore, the
group does not expect an exposure to Pillar Two top-up taxes.
12. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit for the year attributable to
ordinary equity holders of the parent by the weighted average number of
ordinary shares outstanding during the year.
2024 2023
Profit for the year attributable to ordinary equity holders of the parent 25.4 27.3
(£m)
Weighted average number of ordinary shares for basic EPS (No.) 403,991,639 404,117,249
Adjustment for weighted average number of shares held in EBT (498,516) (468,363)
Weighted average number of ordinary shares in issue (No.) 403,493,123 403,648,886
Basic earnings per share (in pence per share) 6.3 6.8
For dilutive EPS, the weighted average number of ordinary shares in issue is
adjusted to include all dilutive potential ordinary shares arising from share
options. Refer to the Remuneration Committee Report in the Annual Report and
Accounts for the terms and conditions of instruments generating potential
ordinary shares that affect the measurement of diluted EPS.
2024 2023
Profit for the year attributable to ordinary equity holders of the parent 25.4 27.3
(£m)
Weighted average number of ordinary shares in issue (No.) 403,493,123 403,648,886
Adjustment for weighted average number of contingently issuable shares 7,900,003 9,494,645
Diluted weighted average number of ordinary shares in issue (No.) 411,393,127 413,143,531
Diluted earnings per share (in pence per share) 6.2 6.6
The directors believe that EPS excluding adjusting items (adjusted EPS) better
reflects the underlying performance of the business and assists in providing a
clearer view of the performance of the group.
Reconciliation of profit after taxation to profit after taxation excluding
Adjusting items ("Adjusted profit"):
2024 2023
Profit for the year attributable to owners of the parent (£m) 25.4 27.3
Adjusting items (see note 10) 10.1 4.5
Adjusted profit (£m) 35.5 31.8
Weighted average number of Ordinary Shares in issue 403,493,123 403,648,886
Weighted average number of dilutive Ordinary Shares 411,393,127 413,143,531
Adjusted basic earnings per share (in pence per share) 8.8 7.9
Adjusted diluted earnings per share (in pence per share) 8.6 7.7
13. Property, plant and equipment
(£ million) Freehold property Leasehold improvements Equipment Assets in the course of construction Right-of-use Total
(ROU)
Cost:
At 1 January 2023 850.2 180.4 455.3 30.2 873.9 2,390.0
Additions 7.2 12.1 42.3 22.3 - 83.9
Acquisition of a subsidiary (note 24) - - 1.3 - 1.3 2.6
Additions to ROU assets - - - - 14.7 14.7
Adjustments to existing assets (e.g. indexation) - - - - 36.7 36.7
Disposals (0.7) (2.4) (21.6) (0.4) (0.1) (25.2)
Transfers(1) 3.7 13.3 9.9 (26.9) - -
At 1 January 2024 860.4 203.4 487.2 25.2 926.5 2,502.7
Additions 8.9 14.8 52.9 32.7 - 109.3
Additions to ROU assets - - - - 15.1 15.1
Adjustments to existing assets (e.g. indexation) - - - - 36.9 36.9
Disposals (1.3) (9.6) (84.0) - (2.4) (97.3)
Transfer(1) 1.2 15.9 0.7 (17.8) - -
At 31 December 2024 869.2 224.5 456.8 40.1 976.1 2,566.7
Accumulated depreciation and impairment:
At 1 January 2023 198.2 60.1 291.8 - 255.5 805.6
Charge for the year 12.2 9.8 43.5 - 37.5 103.0
Disposals (0.6) (2.4) (21.6) - (0.1) (24.7)
Transfers(1) (0.2) - 0.2 - - -
At 1 January 2024 209.6 67.5 313.9 - 292.9 883.9
Charge for the year 12.3 10.6 44.1 - 41.0 108.0
Disposals (1.2) (4.9) (82.3) - (0.2) (88.6)
At 31 December 2024 220.7 73.2 275.7 - 333.7 903.3
Net book value:
At 31 December 2024 648.5 151.3 181.1 40.1 642.4 1,663.4
At 31 December 2023 650.8 135.9 173.3 25.2 633.6 1,618.8
1 In the current year the transfer from assets under construction relates to
assets which were brought into use. These have been reflected in the transfers
line in the note above. There is no overall impact to the carrying value of
property, plant and equipment.
The net book value of land is £156.3m (2023: £156.3m). Nine of the group's
freehold properties are pledged as security against the senior finance
facility, the net book value of these properties are £120.0m (2023:
£124.0m). There were no borrowing costs capitalised during the year ended 31
December 2024 (2023: Nil). The fair value of Freehold properties is £1.4bn.
On the 31 March 2024 the group sold its Tunbridge Wells Hospital business to
Maidstone and Tunbridge Wells NHS Trust for £9.975m and derecognised
property, plant and equipment of £6.2m. As part of the sale agreement the
group has entered into a sub lease agreement with the Trust to lease the
Tunbridge Wells property (refer to note 18). A right of use asset of £2.4m
was derecognised and a finance lease receivable of £4.4m was recognised. The
finance lease receivable represents the cash flows receivable from the Trust
to settle the lease obligation in the head lease. Refer to note 18 for more
details.
Impairment testing
The directors consider property and property right-of-use assets for
indicators of impairment semi-annually. As equipment and leasehold
improvements do not generate independent cash flows, they are considered
alongside the property as a single cash-generating unit (CGU). When making the
assessment, the value-in-use of the property is compared with its carrying
value in the accounts. Where headroom is significant, no further work is
undertaken. Where headroom is minimal, a detailed assessment is performed for
the property, which includes identifying the factors resulting in limited
headroom and undertaking financial forecasts to assess the level of
sensitivity this has on key assumptions.
In order to estimate the value-in-use, management has used trading projections
covering the period to December 2029 from the most recent board approved
strategic plan. The variables in the cash flows are interdependent and reflect
management's expectations based on past experience and current market trends,
it takes into account both current business and committed initiatives. To the
extent that there was a shortfall between the recent actual cash flows and
forecast, the future cash flows have been adjusted to reflect any initiatives
implemented by management to address the underlying cause. In addition,
management consider the potential financial impact from short-term climate
change scenarios, and the cost of initiatives that have substantially
commenced by the group to manage the longer-term climate impacts .
Key assumptions
Management identified a number of key assumptions relevant to the value-in-use
calculations, being EBITDA growth over the five-year period, capital
maintenance spend, discount rates and long-term growth rates. The assumptions
are based on past experience and external sources of information.
The trading projections for the five-year period underlying the value-in-use
reflect a growth in EBITDA. EBITDA is based on a number of elements of the
operating model over the longer term, including pricing trends, volume growth
and the mix and complexity of procedures and assumptions regarding cost
inflation.
Management has performed a sensitivity analysis on these properties using
reasonably possible changes for each key assumption, keeping all other
assumptions constant. The sensitivity analysis included an assessment of the
break-even point for each of the key assumptions.
The sensitivity analysis identified two properties that a reasonably possible
change would eliminate the headroom of the property. One property with a
headroom of £9.1m is sensitive to the EBITDA growth over the five year period
as it, would result in the elimination of headroom. The average annual EBITDA
growth over the five years is 11.4%. The annual EBITDA over the five year
period would have to decrease by 5.8% per annum to eliminate the headroom.
Another property with a headroom of £3.4m is sensitive to the discount rate
which would need to increase by 155bps to result in the elimination of the
headroom.
During the 2023 financial year, the group moved to a post IFRS 16 discount
rate. The group has used a pre-tax discount rate of 11.2% (2023: 11.5%).
A long-term growth rate of 2.0% has been applied to cash flows beyond 2029
based on a long-term view of inflation, revenue growth and market conditions.
Capital maintenance spend is based on historic run rates and our expectations
of the group's requirements. The sensitivity testing identified no reasonably
possible changes in the discount rate, capital maintenance and long-term
growth rates that would cause the carrying amount of any CGU to exceed its
recoverable amount.
As a result, management believe that some of the key impairment review
assumptions constitute a major source of estimation uncertainty as they
consider that there is a significant risk of a material change to its estimate
of these assumptions within the next 12 months.
14. Intangible assets
(£ million) Goodwill Customer contracts IT projects Mobilisation costs Total
Cost or valuation:
At 1 January 2023 546.8 - - - 546.8
Acquisition of a subsidiary 65.3 20.6 4.3 2.4 92.6
Additions - - 0.3 0.2 0.5
At 31 December 2023 612.1 20.6 4.6 2.6 639.9
Acquisition of a subsidiary -0.5 - - - 0.5
Additions - - 2.1 0.7 2.8
At 31 December 2024 612.6 20.6 6.7 3.3 643.2
Accumulated amortisation and impairment:
At 31 January 2023 201.0 - - - 201.0
Amortisation charge during the year - 0.2 0.3 0.1 0.6
At 31 December 2023 201.0 0.2 0.3 0.1 201.6
Amortisation charge during the year - 1.9 1.6 0.7 4.2
At 31 December 2024 201.0 2.1 1.9 0.8 205.8
Carrying amount:
At 31 December 2024 411.6 18.5 4.8 2.5 437.4
At 31 December 2023 411.1 20.4 4.3 2.5 438.3
Impairment testing
The directors treat the hospitals business, Vita Health Group and The Doctors Clinic Group as separate cash-generating units for the purposes of testing goodwill for impairment as the goodwill can be reliably allocated. The recoverable amount of goodwill is calculated by reference to its estimated value-in-use. In order to estimate the value-in-use, management has used trading projections covering the period to December 2029 from the most recent board-approved budget. The variables in the cash flows are interdependent and reflect management's expectations based on past experience and current market trends, it takes into account both current business and committed initiatives. In addition, management consider the potential financial impact from short-term climate change scenarios, and the cost of initiatives by the group to manage the longer-term climate impacts.
Key assumptions
Management identified a number of key assumptions relevant to the value-in-use calculations, being EBITDA growth over the five-year period, capital maintenance spend, discount rates and long-term growth rates. The assumptions are based on past experience and external sources of information.
The table below provides the resulting headroom as determined in our calculation.
Headroom (the amount that recoverable amount exceeded the carrying amount)
Cash generating unit £m
Goodwill
£m
Hospitals business 334.6 1,136.2
Vita Health Group ("VHG") 65.9 68.0
The Doctors Clinic Group ("DCG") 11.1 0.5
The trading projections for the five-year period underlying the value-in-use reflect a growth in EBITDA. EBITDA is dependent on a number of elements of the operating model over the longer term, including pricing trends, volume growth and the mix and complexity of procedures and assumptions regarding cost inflation.
The group has used a pre-tax post discount rate of 11.2% (2023: 11.5%).
A long-term growth rate of 2.0% has been applied to cash flows beyond 2029 based on long-term view of inflation and market conditions. Capital maintenance spend is based on historic run rates and our expectation of the group's requirements.
Management has performed a sensitivity analysis using reasonably possible changes for each key assumption, keeping all other assumptions constant. The sensitivity testing for the hospitals business and Vita Health Group identified no reasonably possible changes would cause the carrying amount of any CGU to exceed its recoverable amount.
Doctors Clinic Group is a younger maturity CGU and during the year made a small loss owing to the effect of integration costs and one-off investments in new clinics and infrastructure. The growth rates used in the five-year period are based on the return from this investment and integration with Vita Health Group and the wider group, therefore management have determined there is no impairment. However owing to these factors uncertainty exists in the key assumptions and we have determined that reasonable possible changes exists which could lead to an impairment.
The value in use calculation uses an average EBITDA growth over the five-year period of 61.8%. A change in the three key assumptions would result in the elimination of the headroom, being an increase of 78bps in the pre-tax discount rate and a decrease in the average EBITDA growth rate to 58.3% resulting in a decrease of 5.7% per annum over the five year period and a decrease of 42bps in the long-term growth rate.
A reasonable possible change in the three key assumptions that would result in
the recognition of an impairment would be a decrease in the average EBITDA
growth rate to 30.9% resulting in a decrease of 50.0% per annum over the five
year period this would result in an impairment of £3.4 million. In addition,
an increase of 230bps in the pre-tax discount rate would result in a £0.8
million impairment and a decrease of 1.0% in the long-term growth rate would
lead to a £0.7 million impairment. The capital maintenance assumption did not
identify a reasonable possible change.
As a result, management believe that some of the key impairment review assumptions constitute a major source of estimation uncertainty as they consider that there is a significant risk of a material change to its estimate of these assumptions within the next 12 months.
15. Trade and other receivables
(£ million) 2024 2023
Amounts falling due within one year:
Trade receivables 83.1 74.8
Unbilled receivables 22.2 20.2
Prepayments 26.1 21.9
Other receivables 6.2 10.2
137.6 127.1
Allowance for expected credit losses (6.2) (5.5)
Total current trade and other receivables 131.4 121.6
Unbilled receivables reflects work in progress where a patient had treatment,
or was receiving treatment, at the end of the period and the invoice had not
yet been raised.
Other receivables of £6.2m includes £4.3m insurance reimbursement right
(2023: £4.6m); and £1.3m (2023: £4.1m) reimbursement right related to the
Paterson fund.
The Paterson fund is being held by solicitors on account until payments are
made, with any amount not paid out being returned to Spire Healthcare. During
the year, £4.7m was paid out of this fund and an additional £1.4m was paid
into the fund. The amounts paid to the Paterson fund do not reflect an
investment in a financial asset, but merely a right to reimbursement should
the fund not be utilised in full.
Trade receivables comprise amounts due from private medical insurers, the NHS,
self-pay patients, consultants and other third parties who use the group's
facilities. Invoices to customers fall due within 60 days of the date of
issue.
The group was successful in its bid to be included on the NHSE Framework for
purchasing additional activity from the independent sector, which commenced in
April 2021. Inclusion on the Framework is at an agreed price for activity,
based on the NHS tariff, but carries no guaranteed volumes. For contracts
under the framework that include an estimated contract value, billing is in
advance for the expected volume, with a quarterly true-up for actual volumes
undertaken. For contracts under the framework without an estimated contract
value (which can include local agreements), billing is in arrears based on
actual volumes only.
The ageing of trade receivables is shown below and shows amounts that are past
due at the reporting date (excluding payments on account where there is no
right to offset these at the reporting date). A provision for expected credit
losses has been recognised at the reporting date through consideration of the
ageing profile of the group's trade receivables and the perceived credit
quality of its customers reflecting net debt due. The carrying amount of trade
receivables, net of expected credit losses, is considered to be an
approximation to its fair value.
The loss allowance as at 31 December 2024 for trade receivables was determined
as follows:
Current 0-30 days 31-90 days 91-364 days 1-2 years Total
Expected loss rate 1.0% 3.9% 42.9% 57.6% 33.9% 5.6%
Gross debt (£m) 81.8 17.8 2.1 3.3 5.6 110.6
Less payments on account (£m) - - - - - (27.5)
Carrying amount of trade receivables (£m) - - - - - 83.1
Loss allowance (£m) 0.8 0.7 0.9 1.9 1.9 6.2
The loss allowance as at 31 December 2023 for trade receivables was determined
as follows:
Current 0-30 days 31-90 days 91-364 days 1-2 years Total
Expected loss rate 0.0% 2.7% 16.3% 29.0% 41.9% 5.1%
Gross debt (£m) 75.3 14.8 4.3 6.2 6.2 106.8
Less payments on account (£m) (32.0)
Carrying amount of trade receivables (£m) 74.8
Loss allowance (£m) - 0.4 0.7 1.8 2.6 5.5
Trade receivables are written off when there is no longer a reasonable
expectation of recovery. Indicators that there is no reasonable expectation of
recovery include, amongst others, the failure of a debtor to engage in a
repayment plan with the group, and failure to make contractual payments for a
period of greater than two years past due.
The group assesses on a forward-looking basis expected credit losses
associated with its debt instruments carried at amortised cost. The impairment
methodology applied for trade receivables is the simplified approach, which
requires expected lifetime losses to be recognised from initial recognition of
the trade receivables.
Trade receivables after expected credit losses comprise the following wider
customer/payor groups:
(£ million) 2024 2023
Private medical insurers 31.1 29.5
NHS 30.7 25.0
Patient debt 6.0 4.1
Other 9.1 10.7
76.9 69.3
The movement in the allowance for impairment in respect of trade receivables
during the year was as follows:
(£ million) 2024 2023
At 1 January 5.5 5.0
Provided in the year 2.0 1.6
Utilised during the year (0.3) (0.3)
Released during the year (1.0) (0.9)
At 31 December 6.2 5.5
The group applies the IFRS 9 simplified approach to measuring Expected Credit
Losses (ECLs) for trade receivables. Under this standard, lifetime ECL
provisions are recognised for trade receivables using a matrix of rates
dependent on age thresholds and customer types. The ECL rates are determined
with reference to historical performance of each payor age group during the
last two years.
To develop the ECL matrix, trade receivables were grouped according to shared
characteristics (payor/payor type) and the days past due. As the majority of
the group's debt is receivable from large, well-funded insurance companies,
the National Health Service or from a large number of individuals, the group
has concluded that historical debt performance of the portfolio during the
last two reporting periods provides a reasonable approximation of the future
expected loss rates for each payor age category.
16. Non-current assets held for sale
As at 31 December 2024 the group's management have committed to sell a parcel
of land at Bostocks Lane as the group has accepted an offer on the property.
The sale is considered highly probable and the assessment has not changed. It
therefore remains as classified as held for sale.
(£ million) 2024 2023
Bostocks Lane (East Midlands Cancer Centre) 1.1 1.1
1.1 1.1
17. Share capital and reserves
2024 2023
Authorised shares
Ordinary share of £0.01 each 402,751,824 404,126,630
402,751,824 404,126,630
2024 2023
£0.01 ordinary shares £0.01 ordinary shares
Shares £'000 Shares £'000
Issued and fully paid
At 1 January 2024 404,126,630 4,042 404,108,470 4,041
Issued during the year 13,943 - 18,160 1
Cancelled during the year (1,388,749) (14) - -
At 31 December 2024 402,751,824 4,028 404,126,630 4,042
Share premium
(£ million) 2024 2023
At 1 January 830.0 830.0
Issue of new shares - -
At 31 December 830.0 830.0
Capital reserves
This reserve represents the loans of £376.1m due to the former ultimate
parent undertaking and management that were forgiven by those counterparties
as part of the reorganisation of the group prior to the IPO in 2014.
Capital redemption reserve
During the year, the group announced a share buyback programme, the company
redeemed 1,388,749 shares with a nominal value of £0.01 per share, resulting
in a transfer of £13,887 from distributable profits to the Capital redemption
reserve.
EBT share reserves
Equiniti Trust (Jersey) Limited is acting in its capacity as trustee of the
company's Employee Benefit Trust (EBT). The purpose of the EBT is to further
the interests of the company by benefitting employees and former employees of
the group and certain of their dependants. The EBT is treated as an extension
of the group and the company.
During the year, the EBT purchased 1,312,000 shares and exercised 1,235,976
(2023: 1,339,634 shares acquired and 1,054,620 transferred) in order to settle
share awards in relation to the directors' share bonus award and Long-Term
Incentive Plan.
Where the EBT purchases the company's equity share capital the consideration
paid, including any directly attributable incremental costs, is deducted from
equity attributable to the company's equity holders until the shares are
cancelled or reissued. As at 31 December 2024, 388,184 shares (2023: 312,160)
were held by the EBT in relation to the directors' share bonus award and
Long-Term Incentive Plan. The EBT share reserve represents the consideration
paid when the EBT purchases the company's equity share capital, until the
shares are reissued.
As with prior years, the company will continue to fund the Spire Healthcare
Employee Benefit Trust (EBT), a discretionary trust held for the benefit of
the group's employees, for the ongoing acquisition of shares to satisfy the
exercise of share plan awards by employees.
2024 2023
number of shares £m number of shares £m
At 1 January 312,160 0.7 27,146 -
Purchased 1,312,000 3.1 1,339,634 3.1
Exercised (1,235,976) (2.9) (1,054,620) (2.4)
At 31 December 388,184 0.9 312,160 0.7
Hedging reserve
The balance of £2.1m at 31 December 2024 (2023: £3.3m) reflects the £4.3m
debit (2023: £4.4m debit) recycled in the period, the fair value credit of
£2.8m (2023: £0.2m credit) and the £0.3m tax credit on the profit (2023:
£0.9m credit) to give a net movement of a decrease of £1.2m during the year
(2023: a decrease of £3.3m) on a hedged transaction. See note 18 for further
information.
18. Borrowings
The group has borrowings in two forms, bank borrowings and lease liabilities
as disclosed on the consolidated balance sheet. Total borrowings at 31
December 2024 were £1,279.9m (2023: £1,257.0m). More detail in respect of
these two forms of borrowings are set out below.
Bank borrowings
The bank loans are secured on fixed and floating charges over both the present
and future assets of material subsidiaries of the group. On 24 February 2022,
the group successfully refinanced its debt facilities with a syndicate of
existing and new lenders. The arrangement has a maturity of February 2027. The
financial covenants relating to this new agreement are materially unchanged.
The loan is non-amortising and carries interest at a margin of 2.05% over
SONIA (2023: 2.05% over SONIA).
(£ million) 2024 2023
Amount due for settlement within 12 months 3.6 3.4
Amount due for settlement after 12 months 363.5 361.9
Total bank borrowings 367.1 365.3
Terms and debt repayment schedule
The maturity date is the date on which the relevant bank loans are due to be
fully repaid.
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 SONIA 2024 2023
Senior finance facility February 2027 2.05% 327.1 325.3
Revolving credit facility February 2027 1.95% 40.0 40.0
Net debt for the purposes of the covenant test in respect of the Senior Loan
Facility was £323.8m (2023: £315.4m) and the net debt to EBITDA ratio was
2.0x (2023: 2.2x). The net debt for covenant purposes comprises the senior
facility of £325.0m, drawn revolving credit facility of £40.0m less cash and
cash equivalents of £41.2m. EBITDA for covenant purposes comprises Adjusted
EBITDA for Last Twelve Months (LTM) of pre-IFRS 16 Adjusted EBITDA of £171.1m
(2023: 152.9m) less the rental of a finance lease pre-IFRS 16 of £10.4m
(2023: £10.0m).
The interest cover for covenant purposes was 7.5x (2023: 8.5x) and is
calculated as the pre-IFRS 16 EBITDA described above over pre-IFRS 16 finance
costs paid.
The senior finance facility includes a sustainability-linked element connected
to environmental and quality factors. The group also has access to a further
£60.0 million through a committed and undrawn revolving credit facility to
February 2027.
Effect of covenants
The group's non-current bank borrowings include borrowings amounting to
£365.0m that contain covenants, which, if not met, would result in the
borrowings becoming repayable on demand. These borrowings are otherwise
repayable more than 12 months after the end of the reporting period. The
financial covenants are tested by reference to the most recent consolidated
financial statements of the group, namely, 30 June and 31 December each year.
The financial covenants is for the leverage ratio to be below 4.0x and
interest cover to be in excess of 4.0x. As at 31 December 2024, the group
complied with all covenants as the leverage measure stood at 2.0x and interest
cover of 7.5x and therefore bank borrowings remain classified as non-current
liabilities. The group is not aware of any circumstances in which there will
be a breach in financial covenants.
Lease liabilities
The group has finance in respect of hospital properties, vehicles, office and
medical equipment. The leases are secured on fixed and floating charges over
both the present and future assets of material subsidiaries in the group.
Leases, with a present value liability of £912.8 million (2023: £891.7
million), expire in various years to 2046 and carry incremental borrowing
rates in the range 3.2% - 14.6% (2023: 3.1% - 14.6%). Rents in respect of
hospital property leases are reviewed annually with reference to RPI or CPI,
subject to assorted floors and caps. The discount rates used are calculated on
a lease by lease basis and are based on estimates of incremental borrowing
rates. A movement in the incremental borrowing rate of 1% would result in an
7.5% movement in lease liability.
In the year, the group recognised charges of £3.4m (2023: £3.8m) of lease
expenses relating to low value leases and £17.0m (2023: £14.8m) of lease
expense in respect of short-term leases for which the exemption under IFRS 16
has been taken. Lease commitments for short term leases is not dissimilar to
the expense recognised. The total cash outflow of £122.7m (2023: £118.8m).
The group has not made any variable lease payments in the year. The group is a
lessor to one lease to external parties and has recognised a finance lease
receivable of £4.4m (2023: Nil). The terms of the sublease are the same as
those contained in the head-lease. There have been no (2023: no) sale and
leaseback transactions in the year. Where new leases have the right to extend
and management is not reasonably certain to exercise the extension option,
those future cash flows are not reflected in the above.
During the year the group sold its Tunbridge Wells Hospital business to
Maidstone and Tunbridge Wells NHS Trust, as part of the sale agreement the
group has entered into a sub lease agreement with the Trust to lease the
Tunbridge Wells property. The finance lease receivable represents the cash
flows receivable from the Trust to settle the lease obligation in the head
lease.
Some leases receive RPI increases on an annual basis which affects both the
cash flow and interest charged on those leases. Except for this increase, cash
flows and charges are expected to remain in line with current year. The cash
flows above do not reflect any termination, extension or break clause options
as management is reasonably certain that the options will not be exercised.
There are no significant restrictions or covenants which impact the cash flows
in respect of these leases.
See note 13 for more detail on the depreciation of the Right-of-use (ROU)
assets and note 9 for more detail on the interest expense relating to leases.
Changes in bank borrowings and leases liabilities arising from financing
activities
(£ million) 1 January Cash flows Non cash changes(1) 31 December
Additions(2)
2024
Bank loans 365.3 (22.0) 23.8 - 367.1
Lease liabilities 891.7 (102.3) 76.1 47.3 912.8
Total 1,257.0 (124.3) 99.9 47.3 1,279.9
(£ million) 1 January Cash flows Non cash changes(1) 31 December
Additions(2)
2023
Bank loans 324.3 (17.0) 18.0 40.0 365.3
Lease liabilities 866.5 (100.2) 73.0 52.4 891.7
Total 1,190.8 (117.2) 91.0 92.4 1,257.0
( )
( )
(1 Non-cash changes reflect interest charged on the loan)
(2 Additions include both new leases entered into, indexation of existing
leases and acquisitions of subsidiaries.)
Derivatives
The following derivatives were in place at 31 December:
Interest rate Maturity date Notional amount Carrying value Asset
31 December 2024 (£m)
Interest rate swaps 2.7780% Feb 2026 162.5 2.9
31 December 2023 (£m)
Interest rate swaps 2.7780% Feb 2026 243.8 4.4
(£ million) 2024 2023
Amount due for settlement within 12 months 2.5 4.0
Amount due for settlement after 12 months 0.4 0.4
Total derivatives 2.9 4.4
The group entered into interest rate swaps on the 25 July 2022. The movement in respect of derivatives reflects £4.3m (2023: £4.4m) recycled in the period and a £2.8m credit (2023: £0.2m credit) in fair value. All movements are reflected within other comprehensive income.
19. Financial liabilities
Financial instruments to purchase non-controlling interest
In 2023 the group entered into an agreement with the non-controlling interest of one of its subsidiaries, Montefiore House Limited, in which both parties can exercise an option for Spire Healthcare to purchase the remaining 25% interest in the subsidiary at a future date. On 21 February 2025 Brighton Orthopaedic and Sports Injury Clinic Limited (BOSIC) formally notified Spire Healthcare of the intention to exercise their option.
The purchase price is calculated in line with pre-determined metrics which are based on the subsidiary's EBITDA performance and the group multiple. The option can be exercised between two to five years. The expected future cash flow to settle the obligation is discounted at the group cost of debt of 8.1%. The financial liability is initially recognised through equity at the present value of future cash flows and subsequently recognised at amortised cost.
(£m) 2024 2023
Valuation at 1 January 9.6 -
Movement in financial liability (1.6) -
Option to purchase non-controlling interests - 9.6
Valuation at 31 December 8.0 9.6
20. Provisions
(£ million) Medical malpractice Business restructuring Total
and other
At 1 January 2024 15.1 1.3 16.4
Increase in existing provisions 4.6 0.8 5.4
Provisions utilised (6.5) (0.2) (6.7)
Provisions released - (0.9) (0.9)
At 31 December 2024 13.2 1.0 14.2
Medical malpractice relates to estimated liabilities arising from claims for
damages in respect of services previously supplied to patients. During the
period £4.6m was added due to additional claims received, and £6.5m
utilised. Amounts are shown gross of insured liabilities. Any such insurance
recoveries of £4.3m (December 2023: £4.6m) are recognised in other
receivables.
In response to the publication of the Public Inquiry report on Paterson on 4
February 2020, Spire Healthcare established a provision in respect of
implementing the recommendations including a detailed patient review and
support for patients. Since inception of the provision in 2021 £13.1m has
been utilised in settlement of patient claims. The provision to complete the
reviews, settle any claims and costs in respect of other Paterson items has
been increased by £4.6m as reported in June 2024.
The provision was established by Spire Healthcare in respect of implementing
the recommendations of the Independent Inquiry including a detailed patient
review and support for patients of Paterson. The project is complex and the
process for review and settlement of claims, where relevant, takes some time.
The detailed patient review has now reached the milestone of having contacted
all living patients and invited them, where appropriate, to consultations to
discuss their care. As a consequence, the rate of new claims has dropped
significantly, as most patients now have their outcomes of their review and
have initiated their claim, where relevant. Claims activity in the second half
of the year has therefore been in line with the assumptions taken by
management and the provision established at the half year. As a result there
has been no subsequent increase in the provision. In addition, £1.7m of legal
fees have been incurred for the ongoing inquests. While it is possible that,
as further information becomes available, an adjustment to this provision will
be required, at this time it reflects management's best estimate of the costs
and settlement of claims.
As at 31 December 2024, the business restructuring and other provisions
primarily includes dilapidation provisions for the primary care business.
During the year the group released its provision related to acquisition tax
matters other than income tax as the relevant tax years have closed for
review.
Provisions as at 31 December 2024 are materially considered to be current and
expected to be utilised at any time within the next twelve months, subject to
external factors beyond the group's control.
21. Trade and other payables
(£ million) 2024 2023
Trade payables 84.9 63.9
Accrued expenses 53.8 65.9
Deferred income 10.5 10.4
Social security and other taxes 18.4 15.2
Other payables 46.4 41.7
Trade and other payables 214.0 197.1
Accrued expenses includes general operating expenses incurred but not invoiced
as at the year end, as well as holiday pay accrued of £2.1m (2023: £2.1m),
and bonuses accrued during the year and paid during the following year of
£5.3 million (2023: £12.7 million). Deferred income of £10.5m relates to
contract revenue of VHG.
Other payables include an accrual for pensions and payments on account.
Revenue is not recognised in respect of payments on account until the
performance obligation has been met at year end the balance of payments on
account was £10.3m (2023: £10.3m). In addition other credit balances
re-classed from trade debtors were £27.0m (2023: £32.0m), which largely
relate to NHS credits. Payments on account are expected to be utilised against
patient procedures within the following 12 months. The balance of payments on
account as at 31 December 2023 were utilised in the current year when the
patient attended the procedure, and not cancelling or deferring treatment,
such payments on account could result in repayment to the patient should they
request so.
22. 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 in respect of LTIPs and SAYE recognised
in the income statement was £4.2m in the year ended 31 December 2024 (2023:
£3.7m). Employer's National Insurance is being accrued, where applicable, at
the rate of 14.3%, 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 National Insurance charge for the year was £0.5m (2023:
£0.4m).
The following table analyses the total cost between each of the relevant
schemes, together with the number of options outstanding:
2024 2023
Charge Number of options (thousands) Charge Number of options (thousands)
£m £m
Long Term Incentive Plan 3.3 11,643 3.0 12,394
Deferred Share Bonus Plan - 531 - 449
Save As You Earn (SAYE) 0.7 2,957 0.7 3,252
Cash-settled Long Term Incentive Plan 0.2 - - -
4.2 15,131 3.7 16,095
A summary of the main features of the scheme is shown below:
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.
Awards granted under the LTIP vest subject to achievement of performance
conditions measured over a period of at least three years, unless the
committee determines otherwise. Awards may be in the form of conditional share
awards or nil-cost options or any other form allowed by the plan rules.
Vesting of awards will be dependent on a range of financial, operational or
share price measures, as set by the committee, which are aligned with the
long-term strategic objectives of the group and shareholder value creation. No
less than 30% of an award will be based on share price measures. The remainder
will be based on either financial and/or operational measures. At the
threshold performance, no more than 25% of the award will vest, rising to 100%
for maximum performance.
On 14 March 2024, the Company granted a total of 2,054,599 options to the
executive directors and other senior management. The options will vest based
on return on capital employed ('ROCE') (35%) targets for the financial year
ending 31 December 2026, relative total shareholder return ('TSR') (20%)
targets over the three year period to 31 December 2026, EBITDA margin (15%)
targets for the financial year ending 31 December 2026 for the Company's
Hospital Business and operational excellence ('OE') (30%) targets based on
employee engagement targets and regulatory ratings for the current portfolio
of hospitals (including Doctors Clinic Group, but excluding new clinics that
open during the performance period and Vita Health Group). The options are
subject to continued employment and, upon vesting, will remain exercisable
until March 2034. The executive directors are subject to a 2-year holding
period.
On 14 March 2024, the Company also granted a total of 235,231 options
to senior management. These options will vest based on return on capital
employed ('ROCE') (35%) targets for the financial year ending 31 December
2026, relative total shareholder return ('TSR') (20%) targets on performance
over the three year period to 31 December 2026, EBITDA margin (15%) targets
for the financial year ending 31 December 2026 for the VHG and operational
excellence ('OE') (30%) targets (based on non-market vesting conditions
related to access rates and recovery for mature contracts and employee
engagement targets for the VHG). The options are subject to continued
employment and, upon vesting, will remain exercisable until March
2034.
Deferred Share Bonus Plan
The Deferred Share 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.
On 14 March 2024, the Company granted a total of 221,319 options to executive
directors, with a vesting date of 14 March 2027. There are no performance
conditions in respect of the scheme and is subject to continued
employment.
Save As You Earn
The Save As You Earn (SAYE) is open to all Spire Healthcare employees. Vesting
will be dependent on continued employment for a period of three years from
grant. The requirement to save is a non-vesting condition.
23. Commitments
Consignment stock
At 31 December 2024, the group held consignment stock on sale or return of
£25.5m (2023: £24.5m). The group is only required to pay for the equipment
it chooses to use and therefore this stock is not recognised as an asset.
Capital commitments
Capital commitments comprise amounts payable under capital contracts which are
duly authorised and in progress at the consolidated 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) 2024 2023
Contracted but not provided for 24.7 31.6
23. Financial guarantees
The group had the following guarantees at 31 December 2024:
• the bankers to Spire Healthcare Limited have issued a letter of credit
in the maximum amount of £1.5m (2023: £1.5m) in relation to contractual
pension obligations.
• 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.
24. Disposals and acquisitions
On 31 March 2024, the group sold the assets and operations of its Tunbridge
Wells hospital to Maidstone and Tunbridge Wells NHS Trust. The group
recognised a total profit on disposals in the period of £4.5m. The profit is
reported within adjusting items (Note 10). As part of the sale agreement the
group has entered into a sub lease agreement with the Trust to lease the
Tunbridge Wells property. Included in the profit is £2.0m relating to the
derecognition of the right of use asset (£2.4m) and recognition of the
finance lease receivable (£4.4m). The finance lease receivable represents the
cash flows receivable from the Trust to settle the lease obligation in the
head lease.
In addition, the group entered into a management service agreement whereby
Spire operated the administration function of the hospital for a fixed monthly
fee at an arm's length basis to allow for the proper transfer of contracts and
operations. The management service agreement ended in September 2024.
The profit on disposal is as follows:
(£ million) 2024
£m
Consideration received 10.0
Net assets disposed (Note 13) (5.8)
Disposal costs (1.7)
Derecognise right of use asset (Note 13) (2.4)
Recognise finance lease receivable (Note 18) 4.4
Profit on disposal (Note 7) 4.5
Deferred tax charge (Note 11) (1.2)
Profit on disposal after tax 3.3
Prior year Acquisition of Kingfisher TopCo Limited (together 'Vita Health
Group')
During the year, the group reviewed its goodwill position in respect of Vita
Health Group in line with IFRS 3 and a provision of £0.5m has been recognised
in respect of deferred consideration this has been adjusted through goodwill.
25. Events after the reporting period
On 21 February 2025 Brighton Orthopaedic and Sports Injury Clinic Limited
(BOSIC) formally notified Spire Healthcare of the intention to exercise their
put option for Spire Healthcare to purchase the remaining 25% interest in
Montefiore House Limited. A financial liability of £8.0m is provided for this
purchase, refer to note 19.
Shareholders' information
Registered Office and Head Office:
Spire Healthcare Group plc
3 Dorset Rise
London
EC4Y 8EN
Tel +44 (0)20 7427 9000
Fax +44 7427 9001
(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
2025 Annual General Meeting (London) 14 May 2025
Announcement of 2025 half year results 11 September 2025
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
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. END FR SSDEDIEISELDRecent news on Spire Healthcare
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