Annual Report and  
financial statements 2015
THE HEALTHCARE 
PARTNERSHIP ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     3
OUR PURPOSE To build a great company dedicated to our patients. OUR PARAMETERS We focus  
our efforts exclusively on what we are passionate about. What we can become best at. What drives  
our economic sustainability. OUR PRINCIPLES We are, above all, the agents of our patients. We aim  
to exceed their expectations every time so that we earn their trust and loyalty. We strive to continuously 
improve the quality and the value of the care we give our patients. We empower our people to do 
their best. Our people are our greatest asset. We should select them attentively and invest in them 
passionately. As everyone matters, everyone who contributes should be a partner in all that we do.  
In return, we expect them to give their patients all that they can. We are unrelenting in the pursuit  
of excellence. We embrace innovation and learn from our mistakes. We measure everything we do  
and we share the data with all to judge. Pursuing our ambition to be the best healthcare provider is  
a never-ending process. ‘Good enough’ never is.
OUR  
CREDO
 
Highlights  6   Chairman’s letter  7   Chief Executive Officer’s report  10
Chief Financial Officer’s report  19   Board of Directors  24   Directors’ report  27   Report on corporate governance  32  Directors’ remuneration report  36   Statement of directors’ responsibilities  41   Independent auditors’ report  42   Consolidated income statement  44   Consolidated balance sheet  45   Consolidated statement of changes in equity  46   Consolidated statement of cash flows  47   Notes to the consolidated financial statements  48   Independent auditors’ report  88  Company balance sheet  91   Notes to the Company financial statements  92  Company information  102 4     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     5
PATIENT  
EXPERIENCE
NHS PATIENTS  
COMING THROUGH E-REFERRAL
NHS PATIENTS WHO ACTIVELY  
CHOSE TO BE TREATED AT CIRCLE
85%
CIRCLEBATH
80%
CIRCLEREADING
“EXCELLENT SERVICE 
FROM START TO FINISH.  
The atmosphere at Circle is relaxing, clean and fresh. From 
the pre-op check until the day of the surgery, everything 
was made simple and clear. All the staff were so helpful 
and kind; it was the best choice we made coming here.”
GASTROINTESTINAL AND LIVER PATIENT 
CIRCLENOTTINGHAM
 
100% 
OF PATIENT AND  
VISITOR MEALS ARE  
COOKED FROM  
SCRATCH
RECOMMEND
98
%
OF PATIENTS 
WOULD
CIRCLE TO FRIENDS AND FAMILY  
Source: Results of Friends and Family Test,  
completed by Circle hospital patients. Artist’s impression of completed CircleBirmingham hospital
6     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     7
HIGHLIGHTS
Group revenue
+15%
+8%
Group EBITDA
*
 losses  
for the year more than 
halved to
Patient volumes
£4.9M
with total revenue increased to £127.8 million  
(2014: £111 million)
to 48,433 day cases (2014: 45,173) and  
292,472 outpatients (2014: 269, 316)
(2014: £10.4 million)
In 2015, Circle continued to grow its 
existing operations. Pleasingly, Bath, 
Nottingham and Bedfordshire MSK  
are now contributing positive EBITDA,  
and the Group’s growth performance  
in revenues and patient volumes 
outperformed the sector in general – 
though the Group has yet to reach a  
scale that fully covers central costs. 
Further discussion of operational and 
financial performance can be read in  
the Chief Executive Officer’s report.
Clinical performance remains consistently 
high. Notable outcomes included the 
exceptional patient satisfaction levels 
across the Group and the ‘outstanding’ 
CQC rating achieved for surgery at 
CircleNottingham.
During the year, the Board and management 
conducted an extensive review of the 
business. The review included an analysis 
of the competitive environment, options 
for inorganic growth, and examining 
opportunities to utilise our operational 
expertise, both in the UK and abroad. 
In the UK, the pressures facing healthcare  
are expected to grow. We anticipate 
increasing patient demand, tighter  
public finances, radical changes in 
technology, and a shift towards  
more integrated healthcare. 
The review concluded that in this 
environment, Circle’s core principles of 
a relentless patient focus, outstanding 
hospitality and design, persistent 
innovation, and clinical leadership, 
along with increasing expertise in 
musculoskeletal (‘MSK’) care, were 
developing a solid platform for  
further growth. 
To ensure adequate scale in this respect,  
we expect to commence construction 
work on our fourth new-build hospital  
in Birmingham during 2016. To further 
grow and optimise utilisation of our 
facilities, we are examining a partnership 
opportunity with a major healthcare group 
to extend our current acute offering into 
post-acute care, at our existing and new-
build operations. 
The emphasis in our business model on a 
wide clinician partnership, commissioning 
and operating expertise, and high patient 
satisfaction, has attracted attention 
from overseas interests. We are currently 
examining opportunities for Circle to 
engage with highly credible financial and 
operational partners in major economies, 
where our investment would be primarily 
in the form of our intellectual property. 
In summary, we believe Circle – after  
a period of maturation – is currently  
well poised to realise its potential  
through a sustainable business model,  
while generating consistent returns  
for our shareholders. 
In closing, I must pay tribute to our 
excellent executive team and their 
colleagues throughout the organisation 
for a year of hard work, strong operational 
performance, and for their full commitment 
to our strategic direction and identification 
of new opportunities. Likewise, I am hugely 
indebted to my Board colleagues for their  
commitment, wise counsel and full 
engagement in our mission.
Michael Kirkwood CMG
Chairman
29 March 2016
CHAIRMAN’S  
LETTER
 
* Earnings before interest, tax, depreciation, and amortisation, excluding exceptional items  
and IFRS 2 share-based payment charge for share options granted (‘Project Reset items’).
In summary, we 
believe Circle – after  
a period of maturation –  
is currently well poised to 
realise its potential through  
a sustainable business model, 
while generating consistent 
returns for our shareholders. 
MICHAEL KIRKWOOD CHAIRMAN
• All business segments now EBITDA positive, excluding  
Head Office. 
• Clinical performance consistently high, with patient 
recommendation rate above 98% across the Group,  
above NHS and private averages.
• 100% of CircleBedfordshire MSK patients triaged within  
24 hours.
• Nottingham one of few centres in the country to gain 
‘outstanding’ rating for surgery service from the Care  
Quality Commission (‘CQC’).
• Planning permission secured for CircleBirmingham,  
Circle’s fourth new-build hospital.
Won the LaingBuisson 
Award for ‘Private Hospital 
Group of the Year’ 8     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     9
 
DESIGN  
AND BUILD
APPROVED
PLANNING PERMISSION GRANTED FOR
CIRCLEBIRMINGHAM
 
 I WOULD HAVE 
NO HESITATION IN 
RECOMMENDING THIS 
HOSPITAL TO ANYONE;  
it was so nice to see such a friendly  
and clean environment.
ORTHOPAEDIC PATIENT  
CIRCLEREADING
“AS A TYPICAL MAN AND NOT 
OVERENTHUSIASTIC ABOUT 
VISITING MEDICAL FACILITIES,   
I came away from my visit yesterday to the 
treatment centre with a sense of renewed 
confidence with the facilities  
I can choose as a NHS patient…
the centre is spotlessly clean and  
with a calming ambience to make  
my visit as stress-free as possible. 
Treatment as it should be.”
ORTHOPAEDIC PATIENT 
CIRCLENOTTINGHAM ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     11 10     CIRCLE HOLDINGS PLC
CHIEF EXECUTIVE  
OFFICER’S REPORT
Operating overview
In 2015, we made encouraging progress in  
our core business, and developed significant 
opportunities for further growth. 
Circle’s management model has always 
emphasised a number of key principles.  
We believe that we offer better, more 
efficient care by focusing, above all else, 
on patients. We believe that excellent 
hospitality and design are essential to  
an excellent patient experience. We 
believe in clinical leadership, and constant 
innovation. And finally, we have built up  
a particular expertise in MSK care, beyond 
the orthopaedic surgery many private 
hospital groups offer. 
In 2015, we consolidated this operational 
expertise and, as a result, we have delivered 
solid financial results. 
Operating outlook
Our core strengths have enabled the Group 
to deliver excellent growth and improved 
results in 2015, both in our hospitals and  
in delivering integrated care. 
Our aim is to use the skills we have 
developed in these operations to further 
grow our core business, and to add logical 
extensions to our current services. 
Continued organic growth  
at hospital sites 
CircleBath will continue to secure its status 
as a clinical centre of excellence, pursuing 
higher acuity work that delivers strong 
margins to the Group. The hospital will 
continue to work on efficiency projects 
throughout 2016 to further improve 
financial performance.   
CircleReading will see a continued strong 
rate of growth in both patient volumes and 
revenue, as we continue to attract patients 
from an expanding catchment area. We 
expect the facility will further benefit from 
Circle’s planned rehabilitation service, 
which is outlined below.  
We have recently launched a new range 
of all-inclusive self-pay packages, with the 
aim of growing this payor group. Current 
self-pay patients account for 10% of the 
patient mix across the two hub hospitals 
for total patient procedures, and we, 
therefore, see an opportunity to grow this 
figure. These packages offer excellent value 
and promote the outstanding hospitality 
and quality care that are Circle’s hallmarks. 
CircleNottingham will continue with 
its integration into the local healthcare 
economy throughout 2016. It is expected 
that the hospital can leverage our core 
expertise to develop further opportunities 
in orthopaedic work, and it will drive 
efficiencies in the facility to accommodate 
continued volume growth.
Provisional contracts are in place for 
construction on CircleBirmingham. The 
concept has adapted to be a multi-use 
facility, to allow for expansion with an 
integrated rehabilitation centre. Building 
works will commence in the third quarter  
of 2016.
Further MSK contracts
Our Bedfordshire MSK contract has seen 
the Group transfer our strength of MSK 
knowledge and innovation from solely 
acute care to primary, community and 
secondary care. This represents unique 
operational knowledge and insight into 
the benefits and challenges of integrating 
care, from referral to triage, through to 
treatment completion. 
The Group is actively working on securing 
additional MSK services, and we expect 
further opportunities in integrated MSK 
work to come to market in the next 12 
months. Circle’s experience puts us in  
a prime position to secure further work, 
and we expect to do so. We will assess 
opportunities individually to ensure 
they are viable and that they genuinely 
offer shared benefits for both the NHS 
commissioner and the provider.  
 
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     11
Improving post-acute care in the UK 
Our experience in acute care has led to the 
insight that UK patients would benefit from 
improved rehabilitation services. 
There are some rehabilitation centres in 
the UK, but they tend to focus on drug, 
alcohol or mental health, and tend to 
be small centres disconnected from 
mainstream acute hospitals. Hospitals  
do provide some rehabilitation services  
for serious neurological conditions, but  
the UK could significantly improve its 
record on patients who fail to return 
to health after surgery. The NHS also 
faces recurrent problems of medically 
healthy patients in acute hospitals awaiting 
discharge, who cannot access social, step-
down or reablement care. With an ageing 
population, these problems will only grow.
This combination of demographic trends, 
gaps in current provision, and a growing 
crisis in post-acute patients suggest there 
is significant potential demand for better 
rehabilitation services. 
Circle expects to enter into a partnership 
with a major European provider of medical 
rehabilitation, with an extensive track 
record in providing public and private 
healthcare services.  
This will complement Circle’s experience 
in hospital care and orthopaedic work, and 
offer one of the UK’s only dedicated service 
to meet demand for intensive, medically-
driven rehabilitation. 
Circle expects to open rehabilitation facilities 
in Reading, Bath and Birmingham. We are 
finalising the terms of the partnership, and 
expect to confirm further details in the 
coming weeks.
Bringing next generation proton 
beam therapy to Harley Street
Circle’s desire to innovate also sees us 
partnering with Advanced Oncotherapy 
(‘AVO’), who are developing a next-
generation proton beam therapy system, 
incorporating technology licensed from 
CERN. This reduces the size and cost of 
the proton beam machine considerably, 
enabling AVO to install a facility in  
Harley Street.
AVO’s technology development remains on  
track, and we are supporting AVO’s efforts 
to obtain finance for its technology. 
Using Circle’s operational 
knowledge abroad
Circle has demonstrated its operational 
expertise and, as mentioned in our 2014  
results, we continue to explore opportunities 
in China to build on our UK platform. We 
expect to provide a subsequent update on 
these international opportunities in the 
coming months. 
2016 will be another important year 
for us. Our track record of growth, our 
commitment to excellent patient care  
and strategy to use our existing expertise 
to unlock further partnerships and growth, 
provides Circle with a clear path to 
sustained profitability. 
Together with a dedicated and talented  
team, we are excited about the opportunities 
that the next 12 months will bring. 
Steve Melton
Chief Executive Officer
29 March 2016 
CIRCLE’S CURRENT PATHWAY
Acute 
rehabilitation
Community- 
based 
rehabilitation
Acute  
treatment
Outpatient 
rehabilitation
Long-term  
care
• Rehabilitation role in the UK is 
currently underserved and not 
delivered to a high standard. 
• Circle plans to extend care from  
acute to post-acute, to create a  
holistic patient journey.
• Outcomes-based rehabilitation based 
on the northern European model is 
complementary to Circle’s hospital 
model to support the patient journey  
for orthopaedic and neurological 
patients. 
 Circle pathway
 Not widely available in the UK
CIRCLE’S CURRENT PATHWAY
Inpatient 
rehabilitation
Primary 
prevention
EXTENDED PATHWAY
Patients awaiting further non-acute NHS care is the 
single largest reason for delayed days in 2014/15 (20. 1%  
of all delayed days). Of all the reasons for DTOC, at 
least four areas could be significantly improved by the  
implementation of post-acute care services (see below).
Source: NHS England, Delayed Transfers  
of Care Annual Report 2013/14 and 2014/15.
Delayed transfers  
of care (‘DTOC’)
+15%
to 1.6 million bed days
Independent sector average
Patients awaiting: non-acute NHS care; 
completion of assessment; care package  
in own home; or, community equipment  
and adaptations.
700
2014 2015
740
780
820
860
900
DELAYED DAYS CircleReading, our newest hospital, 
secured £22.9 million revenue in its  
third full year of operations. 
Patient volumes increased 16%.  
In particular, the hospital saw a 
significant uplift in the number of  
day case procedures, as it expanded  
the range of NHS services offered.  
Like CircleBath, CircleReading attracts  
a large number of patients who 
choose the hospital: roughly 80% of 
CircleReading’s NHS patients come 
through the NHS e-Referral system, 
formerly known as Choose and Book. 
We were pleased to see an 8% point 
improvement in gross margin. This is 
primarily due to a number of efficiency 
measures, such as standardising 
consumable and prosthesis compliance 
towards industry standards – which in 
turn, we attributed to a model of clinical 
engagement. Agency staffing costs also 
reduced from £1.1 million in 2014 to  
£0.4 million in 2015.
Patient and staff satisfaction both 
remain extremely high at 99.6%  
and 79% respectively. 
CircleReading
Patient volumes
+16%
Patient recommendation rate
99.6%
Revenue growth
+9%
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     13
CircleBath
Patient volumes
+3%
Patient recommendation rate
99%
Revenue growth
+12%
© Foster + Partners
Revenues at CircleBath grew at a  
greater rate than patient volumes,  
12% and 3% respectively, reflecting  
a shift towards higher acuity work.  
On average, the hospital now performs 
100 hip and knee joint replacements a 
month, and has doubled the volumes  
of spinal procedures performed from  
the previous year. 
A clear majority (85%) of NHS revenue 
is derived from patients individually 
choosing CircleBath, as opposed to a 
trust transferring waiting list work to 
the hospital. The hospital continues to 
capture orthopaedic market share, which 
now stands at 54% of the local market, 
up from 44% in the previous year.  
CircleBath still faces challenges over 
agency staff expenses, in common  
with many other hospitals across the UK; 
however, we have resolved this issue in 
priority areas, and are ensuring a staffing 
and skill mix that ensures patient safety. 
The patient recommendation rate at the 
hospital remains strong at 99%, and we 
are proud that almost 80% of our staff 
would recommend working at Circle to 
their friends and family. 
12     CIRCLE HOLDINGS PLC
   
14     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     15
CircleBedfordshire MSK
Patients offered choice of 
treatment provider verbally 
by a patient advisor
98%
Patient recommendation rate
97%
We are now two years into our five-year 
Bedfordshire MSK contract. The purpose 
 of the contract is to make the system  
for MSK services more coherent for the 
patient, while capping the contract value – 
and thus the cost to taxpayers – beneath 
previously anticipated projections of MSK 
spending. 
Total MSK referrals increased 6% in 2015 
on prior year, and were up 17% compared 
to the 2013 calendar year. Despite this 
increase in patients, we achieved a 
number of improvements to MSK care.
We improved the triage process, so that 
every patient who was referred via our 
hub is triaged within 24 hours. At the 
same time, all patients requiring secondary 
care were offered a genuine choice of 
treatment providers – with 98% offered 
choice verbally by a patient advisor.
A number of operational issues were  
also resolved. Previously, we reported  
our challenge in convincing all local  
partners to use our triage hub. 
Following discussions with the local 
clinical commissioning group (‘CCG’), 
we launched a prior approval scheme 
which has reduced the level of patients 
circumventing the hub, and improved 
choice for a larger number of patients. 
We also saw improvements in outcome 
collection, such as a new MSK patient-
reported outcome measure developed 
by Oxford and Keele Universities, and 
using technology to improve community 
care outcome collection, where data 
has traditionally been poor. With this 
improved triage, better engagement  
with patients, greater control of the 
system, and stronger outcomes collection, 
we saw significant shifts towards more 
clinically-appropriate care.
In 2013, the year before the contract,  
11% of all MSK patients were treated 
in community care, with 18% in 
physiotherapy, and 65% in surgery  
or outpatient care. By 2015, this had 
moved to 18% in community care, 20%  
in physiotherapy, and 55% in surgery  
or outpatient care. 
These shifts make the MSK service more 
cost efficient than the previous system, as  
it moves activity towards more clinically-
appropriate treatments, and reduces 
unnecessary surgery. This underpins our 
ability to manage MSK services within 
the capped budget. This is in line with 
our contract and half the rate of activity 
increase.
More importantly, this shift in referral 
patterns is also better for patients, which 
is reflected in outcomes such as patient 
recommendation rates – where 97% of 
patients in our triage hub saying they 
would recommend our care – and county-
wide measures such as EQ-5D scores, 
which ask patients to report on their 
health before and after care. In 2014, 
73% of Bedford area patients reported 
health improvements following a course  
of physiotherapy; this rose to 78% in 2015.
In short, we believe the Bedfordshire 
contract is starting to deliver its proposed 
model of improved outcomes for capped 
spending, even as activity rises, with 
benefits shared between the NHS  
and the provider.
As mentioned in our interim results, 
CircleNottingham received a rating  
of ‘outstanding’ from the CQC for its 
core service of surgery. It is only one of 
a handful of facilities in the country to 
receive this rating. This was one highlight 
in a year of consistently strong clinical 
performance, also reflected in a strong 
patient recommendation rate of 97%. 
The hospital continues to increase its 
patient volumes, despite its contract 
having no guaranteed volumes: again, 
this is a testament to the patient care 
offered and the active choice of GPs  
and patients to be treated by us. To offer 
greater patient choice, we are offering 
operations on weekday evenings, and  
all day on Saturdays. 
EBITDA increased by £0.5 million to  
£3 million, supported by efficiencies 
in the treatment centre. We also seek 
further opportunities to support the  
local healthcare economy, and consider 
the treatment centre to be a prime 
example of the independent sector 
working closely with the NHS to  
offer excellent care. 
CircleNottingham
Patient volumes
+7%
Patient recommendation rate
97%
Revenue growth
+11% ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     17 16     CIRCLE HOLDINGS PLC
 
MUSCULOSKELETAL
EXPERTISE
54% 
CIRCLEBATH CAPTURES
UP FROM 44% IN 2014
OF THE LOCAL 
ORTHOPAEDIC  
MARKET
1,007
HIP AND KNEE 
JOINT REPLACEMENT 
PROCEDURES COMPLETED
AT CIRCLEBATH IN 2015 (2014: 793)
100% 
of referrals coming 
though the Bedfordshire 
hub are triaged within 
24 HOURS
“TOP OF THEIR CLASS  
IN CARE AND FACILITIES, 
WITH EFFICIENT AND 
FRIENDLY STAFF.
I have just had a hip replaced and would not hesitate 
recommending Circle. From the initial consultation, through  
to the operation and discharge, the staff were fantastic;  
especially my surgeon who has done a great job. 
THANKS!”
ORTHOPAEDIC PATIENT CIRCLEREADING
Source: Work-related Musculoskeletal 
Disorder (WRMSDs) Statistics,  
Great Britain, 2015 report.
9.5M
WORKING
DAYS
LOST
RELATED TO MSK 
DISORDERS IN 2015  
18     CIRCLE HOLDINGS PLC
Financial review
2015 has been a year of progress. We achieved revenue growth across all sites, we improved 
gross profit margins, and we further reduced operating overheads; all of which contributed 
to a 42% reduction in total losses. These results were achieved through increasing patient 
volumes and cost savings across many areas of our business.        
Last year, for the first time, we reported a positive EBITDAR
1
. In 2015, we improved on this  
milestone with a positive EBITDAR of almost four times higher at £5.5 million, and a positive  
EBITDA of £1.8 million, excluding our Head Office recharges.  
As anticipated in the 2014 Annual Report, growth in revenue and improvement in operational 
efficiency continued at every hospital site in 2015. NHS patient volumes continue to grow 
as a result of patient choice and our support of surrounding NHS trusts. A key milestone 
was achieved in 2015 with CircleBath realising a full-year positive EBITDA of £0.3 million, 
a turnaround from EBITDA loss of £0.8 million in the prior year. CircleNottingham and 
CircleReading continue to experience encouraging organic growth. Compared to prior  
year, CircleNottingham’s EBITDA increased by 20% to £3 million, while CircleReading’s 
EBITDA loss reduced by 38% to £2.8 million. 
The Group generated an operating loss before exceptional and Project Reset items
2
 of  
£8 million, an improvement of 40% on 2014. We are pleased with the financial progress 
made in 2015, while maintaining patient satisfaction levels at 99%. This positive growth 
provides solid grounding for 2016 and beyond, as we seek to maximise the scale of our 
provisions to cater to the full patient experience.    
Patient procedures 
 Year to Year to 
 31 December 31 December   
 2015 2014 
 Number Number Change
Day case and inpatients   48,433 45,173  7%
Outpatients  292,472 269,316  9%
Total procedures  340,905  314,489  8%
Patient volumes continue to grow at a steady rate, particularly NHS volumes, as more 
patients are actively selecting Circle as their healthcare provider of choice. At CircleReading 
and CircleBath, NHS e-Referral orthopaedic appointments booked have risen on average 
40% and 11% respectively, year-on-year. This reflects our growing orthopaedic market share.
Total day case and inpatient volumes increased by 7% on prior year. Particularly 
encouraging growth in inpatients was seen at CircleNottingham, where the number of 
inpatients increased by more than threefold on prior year. In addition, CircleNottingham  
has achieved year-on-year growth of 6%, which is very pleasing for a mature asset. 
Fee pressures were evident across the market in 2015, and we expect these to continue. 
After consecutive years of decreasing NHS tariffs, we take note of Monitor’s proposal for  
the 2016/17 financial year
3
. 
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     19
CHIEF FINANCIAL  
OFFICER’S REPORT
 
* Indicative times.
BEDFORDSHIRE MSK  
PATIENT PATHWAY
Patient has osteoarthritic knee requiring community treatment
.
Clinical triage in CircleBedfordshire 
Integrated MSK Service
Referred to community
First GP appointment
Waiting time:  
24 hours
Waiting time:  
3 weeks
*
Waiting time:  
1–4 weeks
*
Closing cash balance  
as at year-end
£15M
All business segments  
are now reporting positive 
EBITDA of
Total day case and inpatient 
volumes increased by
£1.8M
+7%
Excluding Head Office
    BEFORE
PRE-CIRCLE MSK PATIENT PATHWAY
Time to right treatment: 20–35 weeks
Patient experience: Poor
•	 Non-integrated	patient	path way	 with	no	standar dised	
assessment of patients to ensure correct clinical pathway 
delivered first time.
•	 No	independent	assessment	 of	patients	leading	 to	
unnecessary surgeries. 
•	 High	cost	settings	 for	patients	 tr eated	in	a	hospital	setting.	
    AFTER
THE CIRCLE MSK PATIENT PATHWAY
Time to right treatment: 1–7 weeks
Patient experience: Excellent
•	 P atient	path way	now	integrated	 with	patients	r eceiving	
clinical triage within 24 hours of referral.
•	 Initial	assessments	b y	independent	specialised	staff	lead	 
to reduced number of unnecessary surgeries
•	 Incr ease	in	low-cost	 tr eatments	such	as	ph ysiotherap y , 
while delivering improved quality of life for patients. 
•	 Man y	pr ocedur es	shifted	away	 fr om	high-cost	hospitals	 
into community setting. 
Total waiting time:  
1–7 weeks
Patient experience:  
Excellent
Consultation – pain 
injection administered
Physiotherapy 20     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     21
CHIEF FINANCIAL  
OFFICER’S REPORT
Continued
Like-for-like gross margin is at 34% for 
the year ended 2015, compared to 33% in 
2014. After removing the one-off impact 
of benefits received in 2014 in relation to 
the old Nottingham contract, like-for-like 
margins improved by 3% in the period.  
Group EBITDAR continues to improve  
at an encouraging rate, rising by nearly 
four times the EBITDAR of the prior year. 
EBITDA loss has also more than halved.  
The improvement in performance is  
driven by EBITDA progress across all 
hospital sites and facilities. 
The Bedfordshire MSK service operated for 
a full financial year in 2015, and completed 
its first year of operation in April 2015. The 
operational challenges that we faced in 
2014 have been largely resolved, and we 
can now concentrate on implementing our 
planned initiatives to improve care and 
reduce surgeries in a growing population. 
We are pleased that this success led  
to EBITDA of £1.3 million. In a capped 
budget model where overall activity  
was up 17% since calendar year 2013, 
this represents benefits genuinely shared 
between the independent provider and 
the NHS commissioner. We also continue 
to work closely with the CCG to engage 
Bedford GPs to utilise the referral process 
managed by Circle.
The Company issued initial allocations of 
options under its Management Incentive 
Plan (‘MIP’) and Partnership Incentive Plan 
(‘PIP’) share schemes during 2015. The total 
share option charge recognised in 2015 
amounted to £2.5 million. 
Together with 11.5 million 2016 convertible 
shares that will automatically convert into 
ordinary shares of the Company in June 
2016, up to 20 million options may vest 
and become eligible to exercise in 2016 
(approximately 13 million of which are 
subject to performance conditions that 
may or may not be satisfied). Both the 
2016 convertible shares and the ordinary 
shares into which these options will be 
exercised are currently issued and held  
by the Circle Partnership Benefit Trust  
(the ‘CPBT’), on behalf of scheme 
beneficiaries, and are non-dilutive.
With the aid of future plans to maximise 
scale, and also current strategies to reduce 
staffing costs, while simultaneously 
maintaining our high-quality clinical 
care, we are confident that we have the 
resources to achieve sustainable growth.              
Exceptional items
During 2015, net exceptional costs of  
£0.4 million were recognised in relation to:
•	 a gain due to lower than expected 
costs in 2014 for advisory fees to assist 
the Group’s consideration of potential 
acquisitions; and
•	 the IFRS 2 share-based charge on the 
share options awarded to the Group’s 
Chief Financial Officer.
Cash flow
Net cash outflow from operating  
activities amounted to £4.6 million (2014: 
£8.4 million), showing an improvement 
on prior year as a result of improved 
operational performance. 
At 31 December 2015, the only borrowings 
relate to finance leases of clinical equipment. 
Our cash flow forecasts have been prepared, 
based on the expected cash flows from the  
Group’s existing operating businesses, and  
the commitments associated with new 
projects, as discussed in the Chairman’s 
and Chief Executive Officer’s reports. 
Should any adverse variances to expected 
cash flows materialise, a number of actions 
could be taken to mitigate the negative 
impact. Actions include reducing Head 
Office costs, reducing the scale or timing 
of investment in new projects, or seeking 
further funding opportunities. There is  
also potential to generate additional capital 
through the sale of land in Manchester. 
We continue to evaluate our growth options 
to maintain a balance between capital 
requirements and potential returns. 
In early 2016, we marketed the sale of  
our land in Manchester. We expect to 
receive offers before we report again  
at the half year. 
Paolo Pieri
Chief Financial Officer
29 March 2016
       
 
CircleBath saw a total volume growth of 3% to 49,052. Average inpatient and day  
case revenue increased in both NHS and private medical insurance (‘PMI’) segments,  
due to changes in procedure mix, with a higher proportion of orthopaedic procedures  
than prior year. Growth in patient volumes at CircleReading was largely in specialties  
that are predominantly day case procedures. 
While we have seen strong growth in our NHS day case and inpatient procedure volumes 
across all three hospital sites, overall PMI volumes have remained flat with self-pay volumes 
falling slightly on prior year.
We have also seen a positive increase in outpatient volumes, increasing by 9% to 292,472 
year-on-year, with a corresponding 10% growth in outpatient revenues.
Overall, we are encouraged by the continuing steady growth at all our hospital sites. All 
assets, in particular CircleReading, have potential for increased utilisation, so as we move 
into 2016, we expect to see continued growth.
Group results
2015 continues the trend of positive growth from 2014. EBITDA loss before exceptional 
items reduced by more than half as the Group continues to grow in its core operations, 
while achieving operating efficiencies. Cash balance as at end of December was £15 million  
with no restricted cash reserves.
  Year to Year to  
  31 December 31 December    
  2015 2014 Difference Difference 
  £’000 £’000 £’000 %
Group revenue  127,790  110,983  16,807 15%
EBITDAR before  
exceptional items and  
Project Reset charge    5,530  1,152 4,378 380%
EBITDA before  
exceptional items and  
Project Reset charge    (4,915) (10,427)  5,512 (53%)
Total operating loss  
before exceptional items  
and Project Reset items   (7,967) (13,329)  5,362 (40%)
Exceptional items   (389)  (5,341)  4,952 (93%)
Loss and total  
comprehensive loss  
for the financial year   (11,656)  (20,155)  8,499 (42%)
Net assets    25,411  34,374  (8,963) (26%)
Like-for-like
4
 revenue increase at the current hospital sites was 11%, reflecting the strength 
of our core business. At CircleBath and CircleReading, 85% and 80% respectively of our 
revenues came from patients who chose these facilities through the NHS e-Referral system. 
While reassured by our progress on revenues, we acknowledge that gross margin growth 
has been slower to materialise than anticipated. This is partly due to challenges around 
agency costs and achieving sufficient scale, as addressed in the Chairman and CEO’s reports. 
1 Earnings before interest, tax, depreciation, 
amortisation and rent, excluding exceptional and 
Project Reset items (Note: Project Reset items 
relate to the IFRS 2 share-based payment charge 
for share options granted to Circle employees and 
clinical partners).
2   Project Reset items relate to the IFRS 2 share-
based payment charge for share options granted  
to Circle employees and clinical partners. 
3   www.england.nhs.uk/resources/pay-syst/tariff-
consultation-notice/ 
4 Like-for-like revenue growth refers to revenue 
growth at CircleNottingham, CircleBath and 
CircleReading.
Patient volumes 
continue to grow at a 
steady rate, particularly NHS 
volumes, as more patients 
are actively selecting Circle  
as their healthcare provider  
of choice. 
PAOLO PIERI CHIEF FINANCIAL OFFICER
ORTHOPAEDIC 
OPERATIONS
+19%
2011  
TO  
2015
Source: National Joint Registry ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     23 22     CIRCLE HOLDINGS PLC
 
“I HAD TO HAVE AN 
OPERATION AND WAS  
A BIT APPREHENSIVE.
I shouldn’t have been; every member of staff was very 
professional and efficient. The day care was extremely  
good and I can praise it to the highest order.”
VASCULAR PATIENT CIRCLEBATH
PROSTHESIS
78% OF
JOINT REPLACEMENTS 
USED STANDARDISED
CLINICAL  
ENGAGEMENT
CIRCLE TO FRIENDS AND FAMILY  
AS A PLACE TO WORK
RECOMMEND
80
%
OF STAFF 
WOULD
THE VALUE THAT WE PLACE ON  
OUR CLINICIANS HAS ALWAYS SET US  
APART FROM OTHERS IN OUR SECTOR.
In creating Circle, we realised that when you trust your staff to do well, when you  
give them the support and freedom to truly thrive in their role, they will be prepared  
to go that much further for patients. An empowered workforce is at the very heart  
of Circle’s business. In short, our staff are the reason we are successful.
MASSOUD FOULADI CHIEF MEDICAL OFFICER 24     CIRCLE HOLDINGS PLC
 
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     25
MICHAEL KIRKWOOD CMG
Chairman (a), (b), (c)
*
Michael Kirkwood is an Economics and 
Industrial Engineering graduate of Stanford 
University and a Fellow of the Chartered 
Institute of Bankers. He joined the Board 
of Circle Holdings plc as Chairman in June 
2011. He is additionally Senior Advisor 
(formerly Chairman) of Ondra Partners LLP, 
a non-executive director of AngloGold 
Ashanti Limited, and an Emeritus Director 
(formerly Chairman) of British American 
Business Inc.
Michael joined Citigroup in 1977 from 
where he retired at the end of 2008.  
Prior to Citigroup, he spent a number of 
years in Asia with Bowater-Ralli Group, 
having started his career at HSBC. He  
was previously a non-executive director  
of UK Financial Investments Ltd (UKFI),  
Eros International plc, Kidde plc, and Deputy  
Chairman of PricewaterhouseCoopers  
LLP’s Advisory Board. He is a member  
of the Advisory Board of the Association 
of Corporate Treasurers and a patron 
of poverty housing charity, Habitat for 
Humanity. During his City career, he served 
as Deputy Chairman of the British Bankers 
Association, President of the Chartered 
Institute of Bankers, Chairman of the 
Association of Foreign Banks, and as a 
member of the CBI’s Financial Services 
Council.
A Freeman and former HM Lieutenant for 
the City of London in 2004, Michael was 
appointed a Companion of the Order of  
St Michael and St George (CMG) in HM 
The Queen’s 2003 Birthday Honours.   
STEVE MELTON
Chief Executive Officer
Steve Melton was appointed as Chief 
Executive Officer in December 2012, after 
previously holding the roles of Head of 
Mobilisation and Chief Operating Officer 
since joining Circle in 2008. Steve has 
over 30 years of experience leading 
transformational change and operations in 
the retail, consumer goods and healthcare 
sectors. Prior to Circle, he was the Supply 
Chain Director at Argos, where he also 
led a number of group-wide business 
excellence programmes.  
Previously, he was Supply Chain Director 
at Scottish Courage, and General Manager, 
Non-Food Supply Chain at Asda. He began 
his career on Unilever’s Management 
Trainee Programme and, subsequently, 
held a number of roles at Unilever, working 
internationally across the personal products 
business. Steve holds an MA (First Class) in 
Chemical Engineering from the University 
of Cambridge. 
PAOLO PIERI
Chief Financial Officer
Paolo Pieri joined Circle after spending 
over five years at lastminute.com. He 
spent the majority of this time as the  
UK Finance Director and, subsequently, 
took on a number of operational roles, 
including the Managing Director of  
some European divisions.
Prior to this, Paolo spent seven years in  
the Virgin organisation, principally within 
the retail and cinema operations, where  
he spent three years as Finance Director  
of the Virgin Megastore business.
Paolo has a Bachelor of Accountancy  
from Glasgow University, and is a member 
of the Institute of Chartered Accountants 
for Scotland.
DR MASSOUD FOULADI
Chief Medical Officer
Dr Massoud Fouladi is a co-founder of 
Circle and Group Medical Director. He also 
serves as the initial director representative 
of the CPBT, the Group’s largest single 
shareholder.  
Massoud graduated from Bristol  
Medical School in 1990, and completed  
his ophthalmology training at Birmingham 
and Midland Eye Centre in 1999. He was 
also awarded a Masters in Health Services 
Management by Birmingham Health 
Services Management Centre in 1998.
In 2001, Massoud founded the Ophthalmic 
Clinical Leads Forum at the King’s Fund.  
He was Chairman of the Association of  
Ophthalmologists UK from 2003 to 
2007 . He remains an active consultant 
specialising in ophthalmic surgery.
LORRAINE BALDRY OBE
Senior Non-Executive Director 
(a), (b)
*
, (c)
Lorraine Baldry is Chairman of London  
and Continental Railways Limited, 
Schroders Real Estate Investment Trust, 
Inventa Partners Limited and Tri-Air 
Developments Limited. She is also a Board 
member of Thames Water Utilities Ltd. 
She was previously Senior Independent 
Non-Executive Director of DTZ Holdings 
plc, and Chairman of the London Thames 
Gateway Development Corporation.
Prior to that, Lorraine was Chief Executive 
of Chesterton International plc, a senior 
advisor at Morgan Stanley, investment 
banking division, and Managing Director 
and a member of the Executive Committee 
of Regus. Lorraine joined Regus from 
Prudential Corporation, where she held 
a number of posts, including Managing 
Director of Prudential Corporate Pensions, 
Chief Operating Officer of Prudential 
Portfolio Managers (now M&G), and 
Managing Director of its property 
investment division.
She was awarded OBE in the Queen’s 
Jubilee Honours, and is an Honorary 
Member of the Royal Institution of 
Chartered Surveyors and a past president  
of the British Property Federation.
1
3
5
7
2
4
6
8
BOARD OF  
DIRECTORS
MICHAEL KIRKWOOD CMG
Chairman
STEVE MELTON
Chief Executive Officer
PAOLO PIERI
Chief Financial Officer
DR MASSOUD FOULADI
Chief Medical Officer
LORRAINE BALDRY OBE
Senior Non-Executive Director
LORD HUTTON OF FURNESS
Non-Executive Director 
JUSTIN JEWITT
Non-Executive Director 
ANDREW SHILSTON
Non-Executive Director 
1
2
3
4
5
6
7
8
1
2
3
4
5  
26     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     27
LORD HUTTON OF FURNESS
Non-Executive Director (b), (c)
Lord Hutton served as a member of the 
British House of Commons from 1992 to 
2010. During his time in government, he 
held several prominent Cabinet positions, 
including Secretary of State for Defence; 
Business, Enterprise and Regulatory Reform; 
and Work and Pensions. Lord Hutton was 
also a minister in the UK Department 
of Health from 1998 to 2005, where he 
helped lead the modernisation of the 
National Health Service. Prior to public 
service, Lord Hutton worked as a senior 
law lecturer at Northumbria University, 
and served as a legal adviser to the 
Confederation of British Industry.  
Between 2010 and 2011, Lord Hutton  
was the Chairman of the Independent 
Public Service Pensions Commission.
He is currently Chairman of the Nuclear 
Industry Association, a non-executive 
director of Sirius Minerals plc and Arthurian 
Life Sciences Ltd. Lord Hutton also holds 
advisory positions at Bechtel Corporation, 
PricewaterhouseCoopers and Lockheed 
Martin. Lord Hutton graduated from 
Magdalen College, Oxford University,  
in 1978 with an MA and a Bachelor in  
Civil Law.
JUSTIN JEWITT
Non-Executive Director (a)
Justin Jewitt has extensive commercial 
knowledge and practical experience in 
the delivery and creation of public and 
private health services. He graduated from 
Leicester University in 1975, joining Mobil 
Oil Company Limited as a graduate trainee, 
where he occupied various roles for 12 
years. In 1986, he joined Thorn Emi  
plc in their retail/rental division, moving 
through various senior management roles. 
In 1992, Justin became Managing Director 
of two B.E.T plc companies, Laundrycraft 
and Initial Healthcare (Textile) Ltd. Justin 
joined Nestor Healthcare Group plc in 
1994, where he worked for 10 years as 
Chief Executive Officer of the Group, 
building it into a FTSE 250 listed company. 
Justin also held several non-executive 
director positions in both private and 
public healthcare companies. Justin is 
currently a visiting professor for the  
Welsh Institute for Health and Social  
Care, University of South Wales, a member 
on the Quality Committee of an NHS CCG, 
and a senior independent director of NHS 
Shared Business Services Ltd.   
ANDREW SHILSTON
Non-Executive Director (a)
*
, (b), (c)
Andrew Shilston graduated from the 
University of Oxford in 1977 with an MA 
in Engineering Sciences, and is a member 
of the Institute of Chartered Accountants 
of England and Wales, and a Fellow of the 
Association of Corporate Treasurers.
Andrew joined Rolls-Royce Group plc in 
2002 and was appointed Group Finance 
Director in 2003, where he remained 
until 2011. He was Finance Director at 
Enterprise Oil Ltd from 1993 to 2002.  
Andrew was an independent non-executive 
director of Cairn Energy plc between 2004 
and 2008, and is currently Chairman 
of Morgan Advanced Materials plc and 
Independent Non-Executive and Senior 
Independent Director of BP plc.
The Group financial statements 
consolidate the financial statements of 
Circle Holdings plc (the ‘Company’) and 
its subsidiary undertakings (‘subsidiaries’) 
drawn up to 31 December 2015. Together, 
these make up ‘Circle’ or the ‘Group’.
Principal activities
The Group is a provider of healthcare 
services in the UK, treating privately 
insured, self-pay and NHS-funded patients.  
The Group’s business strategy is founded 
on the belief that the best way to deliver 
great patient care is to empower the 
doctors, nurses and all other staff who  
work in our hospitals and treatment,  
to put patients’ needs first.  
Business review
The information that fulfils the 
requirements of the business review can 
be found in the operating review on pages 
10 to 15. Information on environmental 
matters, employees, community and social 
issues is given in the Report on corporate 
governance on pages 32 to 35.
Results and dividends
The total loss for the financial year amounted 
to £11,656,000 (2014: £8,055,000). The 
directors do not recommend the payment 
of any dividends (2014: £nil).
Cash flow
The total cash balance at 31 December 
2015 is £14,998,000 (2014: £24,496,000). 
Net cash used in operating activities 
totalled £4,642,000 (2014: £8,361,000).
Share capital and control
As at 31 December 2015, the Company’s 
authorised share capital comprised 
325,000,000 (2014: 325,000,000) 
ordinary shares of £0.02 each, 12,500,000 
convertible shares (18 months) of £0.02 
each, and 12,500,000 convertible shares 
(18 months) of £0.02 each, of which 
247 ,797 ,188 (2014: 247 ,797 ,188) (note 22) 
were in issue. Shareholders are entitled 
to receive the Company’s Annual Report 
and financial statements, attend and speak 
at general meetings, appoint proxies, and 
exercise voting rights. The Company’s shares 
do not carry any special rights with regard 
to control of the Company. 
The appointment and replacement of 
directors is governed by the Company’s 
Articles of Association. Any changes to the 
Articles of Association must be approved 
by the shareholders in accordance with 
the legislation in force at the time. The 
directors have authority to issue and  
allot ordinary shares pursuant to Article 7  
of the Company’s Articles of Association.
Policy and practice on 
payment of creditors
It is the Group’s and Company’s policy 
to abide by the payment terms agreed 
with suppliers wherever it is satisfied 
that the supplier has provided goods and 
services in accordance with agreed terms 
and conditions. A number of significant 
purchases and commitments under 
operating leases are paid by direct debit. 
At 31 December 2015, the Group had 
20 equivalent days (2014: 30 days) of 
purchases outstanding, and the Company 
had 16 equivalent days (2014: 46 days).
At 31 December 2015, trade creditors in 
the Group and Company were £6,840,000 
and £59,000 respectively (2014: £6,666,000 
and £133,000).
Going concern
The consolidated financial statements 
have been prepared on a going concern 
basis, which assumes that the Group will 
continue in operational existence for the 
foreseeable future. The directors have 
prepared cash flow forecasts for a period  
of not less than 12 months from the date 
of the signing of the financial statements 
for the year ended 31 December 2015. 
These forecasts have been prepared based  
on the expected cash flows from the Group’s 
existing operating businesses, as well as  
the commitments associated with new 
projects as discussed on pages 10 to 11. 
Management believes that if any significant 
variances from the underlying assumptions 
of the forecasts were to materialise, the 
negative impact to cash flows could be 
mitigated by undertaking a number of 
actions, including reducing Head Office 
costs, reducing the scale or timing of 
investment in new projects, or seeking 
further funding opportunities. The directors 
are also seeking to generate further capital 
through the sale of land in Manchester.
The Company continues to evaluate 
growth options available in the market, 
and ensures a balance between capital 
requirements and potential returns. 
Accordingly, the directors have a 
reasonable expectation that the Company 
has adequate resources to continue in 
operational existence for the foreseeable 
future, and conclude that it is appropriate 
for these accounts to be prepared on a 
going concern basis.
Events after the  
balance sheet date
In January 2016, marketing for the sale of 
the land held by Health Properties (South 
Manchester) Limited commenced. It has 
a carrying value of £5,000,000, and the 
directors believe the sales proceeds will 
support the carrying value.
Directors
The directors who served during the year 
and up to the date of signing the financial 
statements were as per the table on the 
following page.
BOARD OF  
DIRECTORS
Continued
(a) Member of Audit and Risk Committee.
(b) Member of Remuneration Committee.
(c) Member of Nomination Committee.
* Denotes Chair of respective committee.
The directors present their Annual Report and audited financial  
statements for the Group for the year ended 31 December 2015.
6
7
8
DIRECTORS’  
REPORT  
28     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     29
Biographies of the current directors are 
detailed on pages 24 to 26, and directors’ 
beneficial interests in the Group’s share 
capital and warrants are detailed on pages  
36 to 39 of the Directors’ remuneration 
report.
Directors’ indemnity
In its Articles of Association, the Company 
has granted an indemnity to every present  
and former officer in respect of proceedings  
brought by third parties. The Company has 
procured liability insurance for all directors 
and officers of the Company, and all Group 
companies. There are no outstanding claims 
or provisions as at the balance sheet date.
Donations
The Group made charitable donations 
totalling £845 (2014: £1,142) during 
the year to a number of charitable 
organisations within the UK. 
No donation was made to any political 
party registered in the UK under the  
Political Parties, Elections and Referendums  
Act 2000 by either the Company or its 
subsidiaries.
Principal risks  
and uncertainties
Enterprise risk identification  
and management
The Group has an effective system of risk 
management in terms of identifying risks 
and monitoring actions to manage these 
risks. Further details of the Group’s risk 
management process can be found in the 
Report on corporate governance on pages 
32 to 35.
Risk is an unavoidable element of doing 
business. The Group’s risk management 
system aims to provide assurance to  
the Board regarding the effectiveness 
of the Group’s ability to manage risk. 
The system includes the controlled 
prioritisation of issues; review of key 
operational metrics in relation to 
clinical outcomes, patient experience, 
staff engagement and value for money 
(together known as the Quality Quartet 
[‘QQ’] review); mitigation; sharing of best 
practice and effective crisis management.
The following provides an overview of  
the principal business risk factors facing 
the Group, along with a description, where 
relevant, of the mitigating actions in place.
Financial risks
The Group’s operations expose it to a 
variety of financial risks that include 
working capital and funding risk. The 
Group has implemented a comprehensive 
strategic planning and budgeting system 
to monitor and limit the adverse effects 
of the below risks, the results of which are 
presented to and approved by the Board. 
Management and the Board monitor 
performance against budget and key 
financial benchmarks through monthly 
reporting routines, detailed business 
reviews and variance analysis.
Working capital and funding risk 
Working capital and funding risk is the 
risk that the Group will encounter in the 
event of difficulty in meeting obligations 
associated with financial liabilities, or will 
be unable to obtain sufficient funding to 
pursue its growth plans and expansion 
opportunities. The Group aims to mitigate 
this risk by robustly managing cash 
generation across its operations through 
detailed budgeting and tight cost control, 
as well as applying cash collection targets 
throughout the Group. Where the need 
arises, significant cost savings are made  
in the short term by reducing Head Office  
costs. The Group is also backed by leading 
UK institutional investors that have provided  
finance through several financing rounds 
over the past 11 years.
Contract risk
Contract risk exists where the Group is 
unable to renew the NHS contracts at the 
end of their fixed tenure. The Group aims 
to mitigate this risk by maintaining good 
relationships with contracting parties and 
actively pursuing contract renewals and 
extensions ahead of time. During 2013, 
the Group won the retender to provide 
renewed services at the Nottingham NHS 
Treatment Centre for a further five years 
until July 2018. The Group also operates a 
five-year integrated MSK service contract 
in Bedfordshire, which ends in March 2019.
Owing to the complexity of delivering 
NHS-funded services, there is inherent 
contractual risk arising from the Group’s 
existing NHS contracts. Default and 
termination of these contracts could  
occur as a result of clinical or operational 
failures. The Group continues to mitigate 
these risks by focusing on its business 
model of delivering high-quality care  
at the best value.
Clinical quality risk
As with all medical providers, clinical 
quality risk is a major consideration. 
The Group has an integrated corporate 
governance structure which is chaired by 
the Chief Medical Officer, who also sits on 
the Board. This structure includes senior 
staff across the operational, clinical and 
central support teams. Each hospital site 
has its own local governance structure, 
while a team of clinical care quality 
specialists is dedicated to developing 
up-to-date and consistent clinical and 
operational policies across all sites.  
Local governance committees work to  
a rigorous assurance framework, manage 
day-to-day clinical risks through a risk 
register, provide appropriate training 
to staff and consultants, and report 
their findings to the Group’s Integrated 
Governance Committee (‘IGC’). This 
committee, in turn, provides written  
risk assurance reports to the Boards  
of the relevant Circle Group companies  
and the Audit and Risk Committee.
Price risk
The Group generally seeks to price 
contracts at levels that take account of 
increasing prices and, where appropriate, 
establish contract terms that enable 
revenues to be adjusted as a result of 
any future increasing price levels. As 
the volume of patients is anticipated to 
increase, the Group will be increasingly 
subject to pricing changes from private 
insurance companies and the NHS  
pricing tariff.
The Bedfordshire MSK contract operates  
under a capped revenue budget. The 
underlying principle assumes that the 
service can be run more efficiently, 
improving the patient experience and 
reducing operational costs. Nevertheless, 
the Group bears the risk of rising operational 
prices as the baseline revenue is fixed, 
subject to local demographic or service 
portfolio changes.
Government policy  
and regulatory risk
There are risks that political or policy 
changes may mean that the number and 
size of contracts awarded to the Group 
are diminished, and that fewer services 
provided by the Group are contracted  
by the public sector.  
New regulations may be introduced  
which could have an adverse effect on  
the Group’s operational and compliance 
costs. In addition, the Group relies on the 
ability and willingness of government-
funded bodies, such as CCGs and NHS 
trusts, to pay for the Group’s services.
Reputational risk
Reputational risk associated with poor 
clinical outcomes or patient satisfaction  
is mitigated by the focus on providing 
high-quality medical care at the Group’s  
facilities, and constantly seeking to improve 
clinical services through the activities  
of the IGC and the QQ reviews.
Steve Melton
Chief Executive Officer
29 March 2016  
Steve Melton Chief Executive Officer
Massoud Fouladi Chief Medical Officer
Paolo Pieri Chief Financial Officer
Michael Kirkwood CMG Non-Executive Chairman (independent)
Lorraine Baldry OBE Senior Non-Executive Director (independent)
Andrew Shilston Non-Executive Director (independent)
Lord Hutton of Furness Non-Executive Director (independent)
Justin Jewitt Non-Executive Director (independent) 
DIRECTORS’  
REPORT
Continued 30     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     31
OUR TELEDERM SERVICE, 
LAUNCHED IN AUTUMN 2015, 
gives GPs in Nottingham a specialist bit of equipment – a dermatoscope – attached  
to a very common technology – an iPhone. 
The practice takes images of a skin condition, and sends it in to our team for review.  
They are checked within 48 hours, and either asked to come in to hospital, or told it’s 
not urgent and can be treated in primary care.
This way, we speed up diagnosis of conditions, and can fast-track patients with 
conditions like skin cancer – but ensure that those who have 
benign conditions don’t unnecessarily see a consultant, and 
don’t spend weeks worrying they might have a serious illness. 
The overall effect is faster care, better care, and cheaper care.
NIKKI LUCAS TELEDERM LEAD, CIRCLENOTTINGHAM
“One of our big successes in Bedfordshire has 
been an outcomes app for physios. Previously, 
outcomes were not being formally monitored, 
and physios were understandably resistant to 
time-consuming form-filling. So, we deployed 
an app where they can type in outcomes on a 
tablet while they’re with the patient, and send 
it in to the Circle team – so we have a data-rich 
understanding of quality in 
community care. Thanks to 
this technology, we’re now 
able to steer physios across 
the county towards the 
best outcomes and share 
best practice.”
ZARA THOMAS MSK 
TECHNOLOGY LEAD, 
CIRCLEBEDFORDSHIRE MSK
INNOVATION
 
WE ARE 
DELIGHTED TO  
PARTNER WITH CIRCLE, 
who have a proven track record of innovation in 
healthcare delivery. Our plans are to focus on creating  
and adopting new technologies from around the world 
into the UK healthcare market – which is facing 
unprecedented pressures on its finances. We felt 
that Circle were the best partner to work with.
RAJIB BHATTACHARYA VICE PRESIDENT,  
TECH MAHINDRA
ONE ANSWER 
TO THE NHS’ 
EFFICIENCY 
CHALLENGE  
IS TO USE TECHNOLOGY 
TO MAKE SURE 
CONSULTANTS’ TIME IS  
FOCUSED.
  32     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     33
General
The Company, being quoted on AIM, is not 
required to comply with the provisions of 
the UK Corporate Governance Code (the 
‘Code’). Nevertheless, the directors are 
committed to the highest standards of 
corporate governance, and have voluntarily 
complied with elements of the Code issued 
by the Financial Reporting Council where 
relevant and appropriate to the Company. 
As envisaged by the Code, the Board has 
established three committees: an Audit 
and Risk Committee, a Remuneration 
Committee and a Nomination Committee. 
In addition, the Board has authorised a 
Market Disclosure Committee and the 
IGC, with the latter reporting on clinical, 
operational and financial matters into 
the Audit and Risk Committee. These 
committees operate within defined terms 
of reference, as determined by the Board, 
details of which are publicly available at 
the Group’s registered office. The functions 
and responsibilities of each committee are 
described below, and the members of each 
committee are listed in the biographies of 
the Board of Directors on pages 24 to 26.
The Board
The Board of Directors comprises a non-
executive chairman, four independent non-
executive directors, and three executive 
directors (Chief Executive Officer, Chief 
Medical Officer and Chief Financial 
Officer). The profiles of the current 
executive directors and non-executive 
directors are set out on pages 24 to 26.  
The Articles of Association allow no  
fewer than three directors.
The Code recommends that the Board 
should comprise at least two non-executive 
directors, determined by the Board to be  
independent in character and judgement, 
and free from relationships or circumstances  
which may affect, or could appear to affect,  
the directors’ judgement. The Board 
considers that the Company complies with  
the requirements of the Code in this regard.
The non-executive directors contribute a 
wide range of skills and experience, forming 
a strong and independent element within 
the Board. The non-executive directors 
receive a fixed fee for services rendered, 
are appointed for an initial period of 
three years, which may be extended by 
agreement with the Board, are subject to 
re-election by shareholders at the Annual 
General Meeting (‘AGM’), and are not 
employees of the Company at the time. 
Their opinions carry significant weight 
in the decision-making processes, both 
operational and financial, and they are free 
from any business or personal relationships 
that could interfere with their independent 
judgement. The non-executive directors 
ensure that some meetings are set aside 
during the year without the executive 
directors present. Lorraine Baldry OBE,  
is the nominated senior independent non-
executive director to whom shareholders, 
directors and employees may raise 
concerns which normal channels have 
failed to resolve or are otherwise not 
appropriate.
The Chairman is responsible for leadership 
of the Board and ensuring its effectiveness 
in all aspects of the role, including:
•	 managing the Board;
•	 ensuring that sufficient time is allowed 
for the discussion of complex or 
contentious issues; 
•	 ensuring a regular evaluation of the 
performance of the Board as a whole, its 
committees and individual directors; and 
•	 taking the lead in identifying and 
meeting the development needs of 
individual directors and the Board  
as a whole.
The Board and its subcommittees meet 
at regular intervals throughout the year 
and have reserved for their consideration 
matters including:
• the responsibility for the overall strategy 
of the Group;
• significant capital expenditure projects, 
budget approval and any major financial 
proposals;
• ensuring effective systems of internal 
control and risk management;
• regulatory compliance;
• approval of public announcements and 
communications with shareholders;
• approval of the Annual Report and 
financial statements; and
• remuneration of key senior employees.
Detailed monthly operational, clinical 
and financial information is provided to 
the Board in a timely manner to enable 
it to discharge its duties. This includes 
information on the historic, budgeted 
and forecast financial performance of 
the business, as well as key performance 
indicators covering volumes, revenue and 
EBITDA, to allow the Board to challenge 
Group management effectively. A budget 
is agreed by the Board annually, and 
performance against budget is reported 
monthly.
The Board ensures that all directors  
receive appropriate training and induction, 
as required, and that they are able to take 
independent professional advice in the 
furtherance of their duties. The Board may 
appoint a director and revoke or terminate 
the appointment of a director as it thinks 
fit. Any director so appointed shall offer 
himself or herself for reappointment at  
the first AGM following appointment. No 
director shall remain in office for longer 
than three years since their last election or 
re-election without submitting themselves 
for re-election. The shareholders may also 
remove a director by ordinary resolution.
Audit and Risk Committee
The Audit and Risk Committee’s role is to 
assist the Board with the discharge of its 
responsibilities in relation to internal and 
external audits and controls, including 
reviewing the Group’s Annual Report and 
financial statements, considering the scope 
of the annual audit and the extent of the 
REPORT ON  
CORPORATE 
GOVERNANCE
REPORT ON  
CORPORATE 
GOVERNANCE
   
34     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     35
Relations with shareholders
The Company maintains a regular dialogue  
with fund managers, other investors 
and analysts, usually following the 
announcement of interim and final results, 
to ensure that the investing community 
receives a balanced and consistent view 
of the Group’s performance. The principal 
documents received by shareholders are  
the Interim Report, Annual Report and 
financial statements, and any circulars  
as appropriate. The Company’s AGM 
provides an opportunity to respond  
to shareholders’ questions.
Employee involvement
Circle is a socially responsible employer,  
and various initiatives are in place to 
ensure that staff are treated fairly as  
they are critical to its clinical, commercial 
and operational success. Communication  
is critical to employee relations, and the  
Group uses bi-weekly business updates 
with all sites present via teleconference to  
ensure employees are fully informed about  
plans and progress. Communications from  
the Human Resources Department notify 
all staff of any changes to personnel during 
the year. Semi-annual off-site meetings are 
held for management and directors to 
review strategy implementation and key 
business opportunities. Annual performance 
reviews are conducted for employees, and  
individual training and development needs  
are identified to ensure staff receive 
supplementary training.
The Group is 25% owned by the  
CPBT, which holds shares on behalf of 
employees and clinicians who work in  
the Group’s facilities, and who receive 
share options linked to their performance. 
This performance-based incentive scheme 
strengthens our identity and ethos as an 
employee co-owned company.
Disabled employees
The Group gives full consideration to 
applications for employment from disabled 
persons, where the candidate’s particular 
aptitudes and abilities are consistent with 
adequately meeting the requirements of 
the job. Opportunities are available to 
disabled employees for training, career 
development and promotion.
Where existing employees become disabled,  
it is the Group’s policy to provide continuing 
employment wherever practicable in the 
same or an alternative position, and to 
provide appropriate training to achieve  
this aim.
Equality 
Circle seeks to be a socially responsible 
Group which has a positive impact on 
the communities it operates in. We look 
to employ a workforce which reflects the 
diversity of the Group’s communities. 
No discrimination is tolerated, and we 
endeavour to give all employees the 
opportunity to develop their capabilities.
Environmental matters
The services provided by the Group  
have minimal environmental impact. 
However, the Board believes that good 
environmental practices support the 
Group’s strategy by enhancing the 
reputation of the Group and improving 
the efficiency of running hospitals. 
Consequently, the Group continues  
to put environmental responsibilities  
high on the agenda.
The Group and its employees try to 
ensure that both services and products 
are procured in an environmentally 
friendly manner, and that waste materials 
are disposed of appropriately, including 
recycling where economically possible.  
The Group makes extensive use of electronic 
communications to reduce the amount of  
printing waste produced. Where appropriate, 
electronic communication methods such 
as email, telephone and video conference 
facilities are used to avoid non-essential 
travel. The Group does not offer a Company  
car scheme to employees, and encourages 
its employees to travel to work using public  
transport or a ‘bike-to-work’ scheme.
Ethical conduct
The Board is committed to uphold ethical 
conduct throughout the Group, and has  
in place confidential whistleblowing and  
anti-bribery policies that enable unresolved  
concerns to be escalated to the Board’s 
senior independent non-executive director. 
These policies are made available to all  
employees via a web-based policy 
management system that enables  
periodic monitoring.
Health and safety
The Group is committed to protecting 
and enhancing the health and safety 
of its employees, and all patients who 
are treated in the facilities it operates. 
The Group operates a formal health and 
safety risk assurance framework, which is 
regularly monitored by a dedicated health 
and safety officer who provides monthly 
reports to the management teams at the 
operational level, and quarterly reports 
to the Group’s IGC. Under the framework, 
significant incidents are reported without 
delay to the Board.
Michael Kirkwood CMG
Chairman
29 March 2016
non-audit work undertaken by external 
auditors, advising on the appointment 
of external auditors, reviewing the 
effectiveness of the internal control 
systems in place within the Group, and 
determining and reviewing the nature  
and extent of the risks facing the Group.  
The Audit and Risk Committee meets  
not less than four times a year.
The Code recommends that all members 
of the Audit and Risk Committee be 
non-executive directors, and that the 
committee is not chaired by the Chairman 
of the Board. The Company complies with  
the requirements of the Code in this regard.
Reporting into the Audit and Risk 
Committee is the IGC, which is chaired 
by the Chief Medical Officer, Dr Massoud 
Fouladi, who also sits on the Board. Further 
details are provided in the principal risks 
and uncertainties section of the Directors’ 
report on pages 28 to 29.
Remuneration Committee
The Remuneration Committee recommends 
policies the Group should adopt on executive 
remuneration, determines the levels of 
remuneration for each of the executive 
directors, and is also invited to attend 
meetings of the Remuneration Committee  
of Circle Health Limited. The Remuneration 
Committee generates an annual 
remuneration report to be approved  
by the members of the Company at the 
AGM. The minutes of the Remuneration 
Committee are circulated to, and reviewed 
by, the Board. The Remuneration Committee 
meets not less than twice a year, and the 
Directors’ remuneration report is set out  
on pages 36 to 39.
The Code recommends that all members  
of the Remuneration Committee be  
non-executive directors, and the Group 
complies with the requirements of the 
Code in this regard.
Nomination Committee
The Nomination Committee assists the 
Board in determining its composition, 
desired balance of skills and potential 
Board candidates as the need may  
arise, and formulates the succession  
plans for the Chairman. It recommends 
to the Board the succession plans for the 
Chief Executive Officer. The Nomination 
Committee meets at least once a year 
and whenever necessary to fulfil its 
responsibilities. 
The Code recommends that a majority  
of the Nomination Committee be  
non-executive directors, and the Group 
complies with the requirements of the  
Code in this regard.
Market Disclosure Committee
The Market Disclosure Committee  
assists the Group in meeting its obligations 
to announce price-sensitive and other 
significant information, and decide quickly 
whether an announcement obligation has 
arisen under the AIM Rules for Companies 
and related legislation. 
The Code does not require companies  
to have a Market Disclosure Committee, 
but the directors consider it best practice 
to have such a committee.
Performance evaluation  
and attendance
The Board has undertaken a formal 
evaluation of its own performance 
and that of its committees through 
the circulation and completion of a 
comprehensive questionnaire. Having 
considered the results of the questionnaire, 
the directors have concluded that the 
Board and its committees continue to 
function effectively, and that the other 
commitments of the Chairman and 
directors are such that all directors  
are capable of devoting sufficient  
time to the Company.
Attendance by the directors at the various 
committees during the year was as follows:
     Market  
    Disclosure Audit and Risk Remuneration Nomination 
   Board Committee Committee Committee Committee
Lorraine Baldry   11 N/A 4 4 3
Massoud Fouladi   10 N/A N/A N/A N/A
Lord Hutton   10 N/A N/A 3 2
Justin Jewitt   11 N/A 4 N/A N/A
Michael Kirkwood   11 2 N/A 4 3
Steve Melton   11 2 N/A N/A N/A
Paolo Pieri   11 2 N/A N/A N/A
Andrew Shilston   11 N/A 4 4 3
Total meetings held   11 2 4 4 3
REPORT ON CORPORATE  
GOVERNANCE
Continued 36     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     37
DIRECTORS’  
REMUNERATION  
REPORT
This report sets out the Group’s remuneration  
policy and details of directors’ remuneration.
 
The Chapel, Circle Head Office, London
Remuneration Committee
The members of the Remuneration 
Committee are set out on pages 24  
to 26, and the role of the Remuneration 
Committee is set out in the Report on 
corporate governance on page 34.
Remuneration policy
Executive remuneration packages are 
designed to attract, motivate and retain 
directors, and to reward them for enhancing 
value to shareholders. The performance 
measurement of the executive directors 
and key members of senior management, 
and the determination of their annual 
remuneration package, is undertaken  
by the Remuneration Committee. The 
Board determines the remuneration  
of the non-executive directors.
There are several elements to the 
remuneration policy:
Basic salary
Executive directors’ base salaries are 
set by the Remuneration Committee, 
taking into account the individual’s 
level of responsibility, experience and 
performance. Salary levels are reviewed 
annually. In setting base salary levels, 
the Remuneration Committee also takes 
into account salary levels in comparable 
companies.
Pension scheme
The Group made contributions on behalf 
of executive directors during the year to 
a defined contribution pension scheme 
which was introduced in 2012. 
Taxable and other benefits
These include items such as private 
medical insurance and dental plans.  
These benefits are in line with the 
remuneration policy framework.
Share incentive plans
The CPBT holds a 25% interest in the 
issued share capital of the company,  
in the form of convertible and ordinary 
shares, on behalf of employees and 
clinicians. The ordinary shares are to  
be used to satisfy options granted under 
the Company’s share incentive plans in 
accordance with the terms previously 
approved by the Company’s shareholders. 
It enables the participants (including 
executive directors) who contribute to 
the success and growth in value of the 
Group to be owners of the business. The 
convertible shares automatically convert 
in two equal tranches in June 2016 and 
December 2017 into ordinary shares.   
Share issue to non-executive 
directors
There have been no shares issued to  
non-executive directors during the year.
The ordinary shares granted to non-
executive directors cannot be sold or 
transferred until one year following the 
end of the non-executive directors’ term  
of service. The named non-executive 
directors do not hold any other interests in 
the ordinary share capital of the Company.
Share issue to directors
In December 2013, the Company agreed to 
grant to the Group’s Chief Financial Officer 
options to subscribe for 2,200,000 ordinary 
shares at an exercise price of £0.02 per 
ordinary share. This separate incentive 
arrangement was agreed, given he was not 
a participant in the Group’s former share 
scheme, nor had he previously received 
as remuneration any shares or options 
in the Company since joining in 2010. 
The options were granted in December 
2014, and vested in two equal tranches 
in December 2014 and December 2015. 
An IFRS 2 charge of £485,000 (excluding 
National Insurance contribution costs) was 
recognised in the year (2014: £572,100).    
In January 2015, the Company agreed 
to grant share options to the Group’s 
executive directors under a MIP. In 
accordance with the terms of the MIP, 
a combination of options with exercise 
prices of £0.02 and £0.50 were granted 
in June 2015, and will vest based on a 
required holding period and certain share 
price triggers. The earliest exercise date 
is 1 December 2016. The IFRS 2 charge 
recognised during 2015 in relation to 
the share options granted to the Group’s 
directors under the MIP scheme was 
£633,000 (2014: nil). 
 Number of ordinary shares held on 
Non-executive director 31 December 2014 and 31 December 2015
Michael Kirkwood 94,157
Lorraine Baldry  47 ,078
Andrew Shilston 47 ,078
Shares in Circle Holdings plc
    
 Circle Holdings Circle Holdings  
 plc convertible plc convertible Total 
 (18 months) (36 months) convertible 
 shares
*
 shares
*
 shares
*
Massoud Fouladi 1,181,233   1,181,233 2,362,466 
Steve Melton 197,944  197,944  395,888   
38     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     39
Share options in Circle Holdings plc
    At  At 
  Exercise Earliest 1 January Awards 31 December 
 Share options price date 2015 in year 2015
**
 
2015 award name Pence vesting Number Number Number
Massoud Fouladi   MIP 2 Dec 16 –  1,000,000  1,000,000
  MIP 50 Dec 16 – 1,344,090  1,344,090
        –  2,344,090  2,344,090
Steve Melton MIP 2 Dec 16 –  2,500,000  2,500,000
  MIP 50 Dec 16 –  1,254,782  1,254,782
  MIP CSOP 50 Jun 18 –  60,459  60,459
        – 3,815,241  3,815,241
Paolo Pieri CFO share option award 2 Dec 15 2,200,000  –  2,200,000
  MIP 2 Dec 16 –  1,150,000  1,150,000
  MIP 50 Dec 16 – 486,281  486,281
        2,200,000 1,636,281  3,836,281
     2,200,000  7,795,612  9,995,612
   Annual    Total salary 
   contracted Annual Pension  and other 
   salaries/fees salaries/fees scheme Other  benefits 
2015   £’000 £’000 £’000 £’000 £’000
Executive
Steve Melton   339 339 – 2 341
Massoud Fouladi    158 158 24 – 182
Paolo Pieri   210 210 32 1 243
Non-executive
Michael Kirkwood    100 100 – – 100
Lorraine Baldry    53 53 – – 53
Lord Hutton of Furness   40 40 – – 40
Justin Jewitt   40 40 – – 40
Andrew Shilston   48 48 – – 48
   988 988 56 3 1,047
   Annual    Total salary 
   contracted Annual Pension  and other 
   salaries/fees salaries/fees scheme Other  benefits 
2014   £’000 £’000 £’000 £’000 £’000
Executive
Steve Melton   339 328 15 2 345
Massoud Fouladi   158 158 24 – 182
Paolo Pieri   210 210 31 1 242
Non-executive
Michael Kirkwood    100 100 – – 100
Lorraine Baldry    53 53 – – 53
Lord Hutton of Furness   40 23 – – 23
Justin Jewitt   40 23 – – 23
Andrew Shilston   48 48 – – 48
Tony Bromovsky   40 17 – – 17
Tim Bunting   – – –  – 0
   1,028 960 70 3 1,033
No directors waived emoluments in respect of the year ended 31 December 2015 (2014: none).
Lorraine Baldry OBE
Chair, Remuneration Committee
29 March 2016
DIRECTORS’  
REMUNERATION REPORT
Continued
Share warrants
Health Trust (Jersey) holds a total of 
2,340,765 share warrants at an exercise  
price of £1.52, which entitles it to an 
equivalent number of ordinary shares  
in the Company. None of the warrants 
have been exercised to date.
Service contracts
The Company’s policy is for executive 
directors’ service contract notice periods 
to be no longer than 12 months, with the 
directors having to give not less than six 
months’ written notice. In the event of 
termination, the Company will seek fair 
mitigation of contractual rights. Within 
legal constraints, the Remuneration 
Committee tailors its approach, in 
the event of early termination, to the 
circumstances of each individual case.  
The contracts of executive directors do  
not provide for any enhanced payments  
in the event of a change of control in  
the Company.
Non-executive directors
Non-executive directors are appointed  
for an initial period of three years, which  
may be extended by agreement with the  
Board, subject to re-election by shareholders 
at the AGM. Such appointment may be 
terminated by the Board or the director 
with one month’s notice. None of the  
non-executive directors is engaged on  
a service contract with the Company.
The Chairman’s remuneration was 
determined by the Board, based on industry 
practice and taking into account relevant 
responsibilities and time commitment.
The remuneration for non-executive 
directors consists of fees for services in 
connection with Board and committee 
meetings, and share options. Fees for non-
executive directors are determined by the 
Board, within the restrictions contained 
in the Articles of Association. The levels 
of remuneration for the non-executive 
directors reflect the time commitment 
and responsibilities of the role. The non-
executive directors are not involved in 
deciding their fees.
Individual emoluments  
for the year 
The table below shows a breakdown, 
including taxable and other benefits,  
for each director for the year:
* On 4 December 2014, Circle Holdings plc acquired all the issued shares of Circle Partnership Limited by means of 
a Scheme of Arrangement. As consideration, the Company issued convertible shares (18 months) and convertible 
shares (36 months) of £0.02 each.
 Convertible (18 months) shares – the shares of £0.02 par value each in the capital of Circle Holdings plc which are 
convertible into Circle Holdings shares in accordance with the provisions of the Circle Holdings New Articles, either 
on such date as is 18 months from the date of their issue, or otherwise as provided in the Circle Holdings New Articles.
 Convertible (36 months) shares – the shares of £0.02 par value each in the capital of Circle Holdings plc which are 
convertible into Circle Holdings shares in accordance with the provisions of the Circle Holdings New Articles, either 
on such date as is 36 months from the date of their issue, or otherwise as provided in the Circle Holdings New Articles.
** During 2015, no share options were exercised by the directors of Circle Holdings plc. 40     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     41
The directors are responsible for preparing 
the financial statements in accordance 
with applicable law and regulations.
Directors are required by Companies 
(Jersey) Law 1991 to prepare financial 
statements for each financial year. The 
directors have elected to prepare the 
Group financial statements in accordance 
with International Financial Reporting 
Standards (‘IFRSs’), as adopted by the 
European Union and the Company financial 
statements, in accordance with Financial 
Reporting Standard 101 Reduced Disclosure 
Framework (FRS 101), as well as applicable 
law. Under Company law, the directors 
must not approve the financial statements 
unless they are satisfied that they give a 
true and fair view of the state of affairs  
of the Group and the Company, and the 
profit or loss of the Group for that period. 
In preparing these financial statements,  
the directors are required to:
• select suitable accounting policies  
and then apply them consistently;
• make judgements and estimates  
that are reasonable and prudent;
• state whether applicable IFRSs and  
FRS 101 as appropriate, have been 
followed, subject to any material 
departures disclosed and explained  
in the financial statements; and
• prepare the financial statements on 
the going concern basis, unless it is 
inappropriate to presume the Company 
and the Group will continue in business.
The directors are responsible for keeping 
adequate accounting records that are 
sufficient to show and explain the Group’s 
and Company’s transactions, and disclose 
with reasonable accuracy, at any time, 
the financial position of the Group and 
the Company, and enable them to ensure 
that the financial statements comply with 
Companies (Jersey) Law 1991. They are also 
responsible for safeguarding the assets of the 
Company and hence for taking reasonable 
steps for the prevention and detection of 
fraud and other irregularities.  
The directors are responsible for the  
maintenance and integrity of the Company’s 
website. Legislation in the United Kingdom  
governing the preparation and dissemination 
of financial statements may differ from 
legislation in other jurisdictions.  
Each of the directors, whose names  
and functions are listed in the Board  
of Directors’ report, confirm that, to  
the best of their knowledge:
• the Group financial statements, which 
have been prepared in accordance with 
IFRSs, as adopted by the EU, give a true 
and fair view of the assets, liabilities, 
financial position and loss of the  
Group; and
• the Directors’ report includes a  
fair review of the development and 
performance of the business and the 
position of the Group, together with  
a description of the principal risks  
and uncertainties that it faces. 
Disclosure of information  
to auditors
So far as the directors are aware,  
at the time the report is approved:
• there is no relevant audit information 
of which the Company’s auditors are 
unaware; and
• each director has taken all the steps  
that he or she ought to have taken  
as a director in order to make himself 
or herself aware of any relevant audit 
information, and to establish that the 
Company’s auditors are aware of the 
information.
Independent auditors
PricewaterhouseCoopers LLP have 
indicated their willingness to continue 
in office. A resolution concerning their 
reappointment will be proposed at  
the AGM.
On behalf of the Board
Steve Melton
Chief Executive Officer
29 March 2016
STATEMENT  
OF DIRECTORS’  
RESPONSIBILITIES
The gift of sight on one’s 
birthday is special. Caring  
staff, hygienic surroundings, and  
an excellent surgeon and medical 
team were all I could have asked for.
OPHTHALMOLOGY PATIENT CIRCLEBATH
   
42     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     43
We test and examine information, using 
sampling and other auditing techniques, 
to the extent we consider necessary to 
provide a reasonable basis for us to draw 
conclusions. We obtain audit evidence 
through testing the effectiveness of 
controls, substantive procedures, or  
a combination of both. 
In addition, we read all the financial and 
non-financial information in the Annual 
Report to identify material inconsistencies 
with the audited financial statements, 
and to identify any information that is 
apparently materially incorrect, based 
on, or materially inconsistent with, the 
knowledge acquired by us in the course  
of performing the audit. If we become 
aware of any apparent material 
misstatements or inconsistencies, we 
consider the implications for our report.
Other matter
We have reported separately on  
the Company financial statements  
of Circle Holdings plc for the year  
ended 31 December 2015.
Simon O’Brien (Senior Statutory Auditor)
For and on behalf of 
PricewaterhouseCoopers LLP
Chartered Accountants and  
Recognised Auditors
London
29 March 2016
Report on the Group 
financial statements
Our opinion
In our opinion, Circle Holdings plc’s  
Group financial statements (the ‘financial 
statements’):
• give a true and fair view of the state of 
the Group’s affairs as at 31 December 
2015, and of its loss and cash flows  
for the year then ended;
• have been properly prepared in 
accordance with IFRSs, as adopted  
by the European Union; and
• have been prepared in accordance with  
the requirements of the Companies 
(Jersey) Law 1991.
What we have audited
The financial statements, included  
within the Annual Report, comprise:
• the consolidated balance sheet as at  
31 December 2015;
• the consolidated income statement  
for the year then ended;
• the consolidated statement of cash  
flow for the year then ended;
• the consolidated statement of changes  
in equity for the year then ended; and
• the notes to the financial statements, 
which include a summary of significant 
accounting policies and other 
explanatory information.
Certain required disclosures have been 
presented elsewhere in the Annual Report, 
rather than in the notes to the financial 
statements. These are cross-referenced 
from the financial statements and are 
identified as audited.
The financial reporting framework that 
has been applied in the preparation of the 
financial statements is IFRSs as adopted by 
the European Union, and applicable law. 
In applying the financial reporting 
framework, the directors have made  
a number of subjective judgements,  
for example, in respect of significant 
accounting estimates. In making such 
estimates, they have made assumptions  
and considered future events.
Opinion on other matter 
In our opinion, the information given in the 
Directors’ report for the financial year for 
which the financial statements are prepared 
is consistent with the financial statements.
Other matters on which  
we are required to report  
by exception
Accounting records and information 
and explanations received
Under the Companies (Jersey) Law 1991,  
we are required to report to you if, in  
our opinion:
• we have not received all the information 
and explanations we require for our 
audit; or
• proper accounting records have not  
been kept; or 
• proper returns adequate for our audit 
have not been received from branches 
not visited by us; or
• the financial statements are not  
in agreement with the accounting 
records and returns.
We have no exceptions to report arising 
from this responsibility.
Responsibilities for the 
financial statements and  
the audit
Our responsibilities and those  
of the directors
As explained more fully in the Statement 
of directors’ responsibilities set out on page 
41, the directors are responsible for the 
preparation of the financial statements  
and for being satisfied that they give a  
true and fair view.
Our responsibility is to audit and express 
an opinion on the financial statements 
in accordance with applicable law and 
International Standards on Auditing (‘ISAs’) 
(UK and Ireland). Those standards require 
us to comply with the Auditing Practices 
Board’s Ethical Standards for Auditors.
This report, including the opinions, has been 
prepared for, and only for, the Company’s 
members as a body in accordance with 
Article 113A of the Companies (Jersey) Law 
1991 and for no other purpose. We do not, 
in giving these opinions, accept or assume 
responsibility for any other purpose or to 
any other person to whom this report is 
shown or into whose hands it may come, 
save where expressly agreed by our prior 
consent in writing.
What an audit of financial 
statements involves
We conducted our audit in accordance  
with ISAs (UK and Ireland). An audit 
involves obtaining evidence about the 
amounts and disclosures in the financial 
statements sufficient to give reasonable 
assurance that the financial statements  
are free from material misstatement, 
whether caused by fraud or error.  
This includes an assessment of: 
• whether the accounting policies are 
appropriate to the Group’s circumstances, 
and have been consistently applied and 
adequately disclosed; 
• the reasonableness of significant 
accounting estimates made by the 
directors; and 
• the overall presentation of the  
financial statements. 
We primarily focus our work in these areas  
by assessing the directors’ judgements 
against available evidence, forming our  
own judgements, and evaluating the 
disclosures in the financial statements.
INDEPENDENT  
AUDITORS’ REPORT
To the members of Circle Holdings plc  
44     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     45
        2015 2014 
      Note £’000 £’000
Non-current assets     
Intangible assets      13 5,340 5,562
Property, plant and equipment     14 17,550 17,498
Trade and other receivables      17 2,500 2,500
       25,390 25,560
Current assets     
Inventories      16 1,876 1,806
Trade and other receivables      17 14,692 16,683
Cash and cash equivalents      18 14,998 24,496
       31,566 42,985
Total assets       56,956 68,545
Current liabilities     
Trade and other payables      19 (19,902) (21,256)
Loans and other borrowings      20 (2,332) (1,922)
       (22,234) (23,178)
Non-current liabilities     
Trade and other payables      19 (1,979) (2,074)
Loans and other borrowings      20 (7,282) (8,869)
Provisions      21 (50) (50)
       (9,311) (10,993)
Total liabilities        (31,545) (34,171)
Net assets       25,411 34,374
Share capital      22 4,956 4,956
Share premium      22 236,795 236,795
Other reserves      22 22,182 22,182
Warrant reserve      23 22,703 22,703
Share-based charges reserve     24 4,535 1,842
Treasury share reserve      22 (9,587) (9,587)
Retained deficit        (256,173) (244,517)
Equity attributable to owners of the parent      25,411 34,374
Non-controlling interests       – –
Total equity       25,411 34,374
     
The financial statements on pages 44 to 86 were approved by the Board of Directors on 29 March 2016 and were signed on its behalf by:
 Steve Melton Paolo Pieri 
 Chief Executive Officer Chief Financial Officer
 Circle Holdings plc  
 Registered number: 100016 (Jersey)
       2015 2014 
     Note £’000 £’000
Revenue     4 127,790 110,983
Cost of sales      (90,335) (80,373)
Gross profit       37,455 30,610
Administrative expenses before exceptional items     (47,934) (43,939)
Operating loss before exceptional items     5 (10,479) (13,329)
Exceptional operating items     6 (389) (5,341)
Operating loss     5 (10,868) (18,670)
Finance income     10 5 181
Finance costs     9 (793) (911)
Exceptional finance items     6 – (625)
Provision for joint venture deficit     15 – (130)
Loss before taxation      (11,656) (20,155)
Income tax     12 – –
Loss for the financial year       (11,656) (20,155)
Loss for the year attributable to     
–  Owners of the parent      (11,656) (8,055)
–  Non-controlling interests      – (12,100)
      (11,656) (20,155)
Basic and diluted loss per ordinary share attributable to the owners of the parent (pence) 11 (4.7) (4.3)
     
There is no other comprehensive income arising in the Group (2014: £nil) and, therefore, no separate statement of other  
comprehensive income has been prepared.     
CONSOLIDATED  
INCOME STATEMENT
For the year ended 31 December 2015
CONSOLIDATED  
BALANCE SHEET
As at 31 December 2015  
46     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     47
       2015 2014 
     Note £’000 £’000
Cash flows from operating activities     
Net cash outflow from operating activities    27 (4,642) (8,361)
Interest paid     (793) (1,536)
Net cash used in operating activities     (5,435) (9,897)
     
Cash flows from investing activities     
Purchase of computer software    13 (51) (112)
Purchase of property, plant and equipment     (1,998) (1,383)
Net cash used in investing activities     (2,049) (1,495)
     
Cash flows from financing activities     
Proceeds from issuance of ordinary shares     22 – 27,500
Capitalised costs in relation to fundraising    22 – (1,280)
Capitalised costs in relation to Group restructuring     – (1,250)
Repayment of borrowings    28 – –
Repayment of finance lease    28 (2,019) (1,660)
Interest received    10 5 181
Movement in restricted cash:     
–  Release of minimum balance – GE Capital Equipment Finance Limited (‘GE’)  28 – 1,800
–  Release of committed cash in respect of Hinchingbrooke Health Care NHS Trust deposit  28 – 2,000
Net cash (outflow)/inflow from financing activities     (2,014) 27,291
     
Net (decrease)/increase in unrestricted cash and cash equivalents    (9,498) 15,899
Unrestricted cash and cash equivalents at the beginning of the year    24,496 8,597
Unrestricted cash and cash equivalents at the end of the year    14,998 24,496
     
Cash and cash equivalents consist of     
Cash at bank and in hand     14,998 24,496
Unrestricted cash at bank and in hand     14,998 24,496
CONSOLIDATED  
STATEMENT OF  
CHANGES IN EQUITY
For the year ended 31 December 2015
CONSOLIDATED  
STATEMENT OF  
CASH FLOWS
For the year ended 31 December 2015
         Equity 
      Treasury Share-based  attributable Non- 
  Share Share Other Warrant share charges Retained to owners of controlling Total 
  capital premium reserves  reserve reserve reserve deficit the parent interests equity 
  £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2014  2,616  193,145  22,182  22,703  – 151  (169,980) 70,817  (42,950) 27,867 
Loss and total  
comprehensive  
loss for the year  – – – – – – (8,055) (8,055) (12,100) (20,155)
Transactions with owners
Issue of shares in relation 
to fundraising (note 22)  1,100  26,400  – – – – – 27,500  – 27,500 
Capitalised costs in relation  
to fundraising (note 22)  – (1,280)  – – – – – (1,280) – (1,280)
Effect of shares vesting  
in the period (note 23)  – – – – – – 6,439  6,439  (6,439) –
Issue of shares in  
respect of Project  
Reset (notes 22 and 23)  1,239  19,780  – – (9,587) – (72,921) (61,489) 61,489  –
Issue of shares to acquire  
unvested shares in Circle  
Partnership Limited in  
respect of Project Reset  
(note 24)  – – – – – 1,105  – 1,105  – 1,105 
Capitalised costs in relation  
to Project Reset (note 23) – (1,250) – – – – – (1,250) – (1,250)
Issue of shares in respect  
of awards to non-executive  
directors (note 23)  1  – – – – 14  – 15  – 15 
Other share-based  
charges (note 24)  – – – – – 572  – 572  – 572 
At 1 January 2015  4,956  236,795  22,182  22,703  (9,587) 1,842  (244,517) 34,374  – 34,374 
Loss and total  
comprehensive  
loss for the year  – – – – – – (11,656) (11,656) – (11,656)
Transactions with owners
Share-based charges  
(note 24)  – – – – – 2,693  – 2,693  – 2,693 
At 31 December 2015 4,956  236,795  22,182  22,703  (9,587) 4,535  (256,173) 25,411  – 25,411   48     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     49
1  GENERAL INFORMATION
Circle Holdings plc (the ‘Company’), its 
subsidiaries and joint venture (together  
the ‘Group’) provide healthcare services  
in the UK. 
The Company is a public limited company 
and is incorporated in Jersey; however,  
it is resident in the UK for tax purposes.  
The registered office is 12 Castle Street,  
St Helier, Jersey, JE2 3RT. 
2  SIGNIFICANT ACCOUNTING 
POLICIES
The principal accounting policies applied 
in the preparation of these consolidated 
financial statements are set out below. 
These policies have been consistently 
applied to both years presented,  
unless otherwise stated.
Basis of preparation
The consolidated financial statements  
have been prepared in accordance with 
IFRSs, as adopted by the European Union 
and IFRIC interpretations, Companies 
(Jersey) Law 1991, on a going concern basis 
and under the historical cost convention, 
as modified by the revaluation of financial 
assets and financial liabilities (including 
derivative financial instruments). In their 
preparation, management must make 
certain critical accounting estimates  
and exercise judgement in the process of 
applying the Group’s accounting policies. 
The areas involving a higher degree of 
judgement, assumption or estimates  
which are significant to the consolidated 
financial statements are set out at the  
end of note 2.
Items included in the results of each of the 
Group’s subsidiaries are measured using the 
functional currency, which in all instances is 
Sterling. The Group’ s consolidated financial 
statements and parent company statements 
are presented in Sterling. All financial 
information presented has been rounded  
to the nearest thousand.
New standards, amendments  
and interpretations
These consolidated financial statements  
are prepared in accordance with IFRSs,  
as issued by the International Accounting 
Standards Board (‘IASB’), and as adopted 
by the European Union as at 31 December 
2015. The following standards have been 
adopted by the group for the first time for 
the financial year beginning on or after  
1 January 2015, but have not had material 
impact on the Group:
• Amendments to IFRSs Annual 
Improvements to IFRSs 2010–2012 cycle.
• Amendments to IFRSs Annual 
Improvements to IFRSs 2011–2013 cycle.
New standards and  
interpretations not yet adopted
A number of new standards and amendments 
to standards and interpretations are effective  
for annual periods beginning on or after  
1 January 2015, and have not been applied  
in preparing these consolidated financial 
statements. None of these are expected to  
have a significant effect on the consolidated  
financial statements of the Group, although 
the full impact is currently still under review:
• IFRS 9 Financial Instruments (as 
revised in 2014) will supercede IAS 39 
Financial Instruments: Recognition and 
Measurement, upon its effective date 
(annual periods beginning on or after  
1 January 2018).
• IFRS 15 Revenue from Contracts with 
Customers is a converged standard 
from the IASB and Financial Accounting 
Standards Board (‘FASB’) on revenue 
recognition. The standard will improve  
the financial reporting of revenue and  
improve comparability of the top line in  
financial statements globally. Effective 
date is expected to be annual periods 
beginning on or after 1 January 2017.  
The impact of this standard is currently 
under review.
• Amendments to IFRS 11 Accounting 
for Acquisitions of Interests in Joint 
Operations provide guidance on how  
to account for the acquisitions of a joint  
operation that constitutes a business, as 
defined in IFRS 3 Business Combinations. 
Effective for annual periods beginning on 
or after 1 January 2016.
• Amendments to IAS 1 Disclosure  
Initiative give some guidance on how 
to apply the concept of materiality in 
practice. It is effective for annual periods 
beginning on or after 1 January 2016.
• Amendments to IFRS 10, IFRS 12 and 
IAS 28 Investment Entities: Applying 
the Consolidation Exception. The 
amendments clarify that the exemption 
from preparing consolidated financial 
statements is available to a parent entity 
that is a subsidiary of an investment 
entity, even if the investment entity 
measures all its subsidiaries at fair  
value in accordance with IFRS 10.  
This is effective for annual periods 
beginning on or after 1 January 2016).
• Annual Improvements to IFRSs  
2012–2014 cycle.
• IFRS 16 Leases issued in January 2016 
and applies to annual reporting periods 
beginning on or after 1 January 2019.
Going concern
The directors consider it to be appropriate 
for the financial statements to be prepared 
on a going concern basis, based on the 
assumptions considered in the Directors’ 
report on page 27.
 
NOTES TO THE  
CONSOLIDATED  
FINANCIAL STATEMENTS
For the year ended 31 December 2014  
50     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     51
Basis of consolidation
Subsidiaries
The results of subsidiaries (defined as 
entities over which the Group has the 
power to govern the financial and operating 
policies of the subsidiary) are consolidated 
from the date on which control of the net  
assets and operations of the acquired 
company are effectively transferred to the 
Group. Similarly, the results of subsidiaries 
disposed of cease to be consolidated from 
the date on which control of the net assets 
and operations are transferred out of  
the Group.
The Group applies the acquisition method 
to account for business combinations. The 
consideration transferred for the acquisition 
of a subsidiary is the fair value of the 
assets transferred, the liabilities incurred 
to the former owners of the business and 
the equity interests issued by the Group. 
Identifiable assets acquired, liabilities and 
contingent liabilities assumed in a business 
combination are measured at their fair 
values at the acquisition date. Acquisition-
related costs are expensed as incurred. 
The results of the subsidiaries are measured 
as at the same reporting date as the parent 
company using consistent accounting 
policies. Intra-group transactions and 
balances are eliminated on consolidation.
Segment reporting
Operating segments are reported in  
a manner consistent with the internal 
reporting provided to the chief operating 
decision-maker, who is responsible 
for allocating resources and assessing 
performance of the operating segments. 
Revenue
Revenue, which is measured as the fair 
value of consideration received for the 
activity performed, represents the total 
amounts derived primarily from the 
provision of healthcare services in the UK, 
after deducting relevant discounts and 
value added tax (where services provided  
are not exempt). Revenue can be broken 
down into the following categories: 
Any qualified provider
Any provider who is able to provide a 
specific service that meets the required 
minimum standards can be listed as a 
possible provider to deliver healthcare on 
behalf of the NHS at tariff. Patients choose 
their preferred provider under the national 
e-Referral system (formerly Choose and 
Book). Following the patients’ treatment 
and subsequent discharge from hospital, 
the Group will invoice the CCG directly at 
tariff for the medical procedure performed. 
No provider is guaranteed any volume or 
exclusivity.
For non-fixed payments at treatment 
centres, outpatient revenue is recognised 
for a bundle consisting of an initial 
appointment and follow-ups, at completion 
of the first appointment, with any uplifts  
for outpatient procedures recognised at  
the time of the procedure. 
Contracts with guaranteed payments
The new Bedfordshire MSK contract 
has a term of five years. The contract 
aims to create a ‘prime provider’ which 
takes responsibility for co-ordinating and 
managing the rest of the system. The main 
contracting parties are Bedford CCG and 
local care providers. The contract revenue 
is spread over the term of the contract on a 
straight-line basis, as activity is expected to 
increase by demographic growth only over 
the five-year contract period. Additional 
revenue has been recognised, only to the 
extent that there is a high probability of 
receiving the revenue, and where it can  
be measured accurately. 
Additional revenue has been recognised  
in the financial statements relating to 
groups of patients that fall outside the 
initial contract scope. 
Circle bears the risk and rewards of the 
revenue and costs, meaning that an agency 
relationship between Circle, Bedford CCG 
and the providers does not exist. As such, 
Circle has recognised the revenue and cost 
separately in the profit and loss account.
Private and self-pay
Payment is based on procedures performed, 
either at contractually agreed insurance 
prices or self-pay rates, which are determined 
by the specific procedure undertaken.
In the case of private revenue, the  
insurance companies pay the consultants 
directly, and Circle recognises revenue for 
use of the hospital, consumables and other 
clinical services.
For self-pay, Circle recognises that all  
the revenue and cost of the consultant  
is charged to cost of sales.
Other miscellaneous income
Other miscellaneous income primarily  
relates to car parking revenue and 
delicatessen revenue. This income  
is recognised at the point of sale.  
Consulting projects are recognised  
by percentage of completion.
Exceptional items
Exceptional items are disclosed and 
described separately in the financial 
statements where it is necessary to do 
so, to provide further understanding of 
the financial performance of the Group. 
They are items of income or expense, 
either one-off in nature, non-cash, or of 
such magnitude that the directors believe 
separate disclosure is required to allow 
readers to gain an understanding of the 
underlying results of the business. 
The exceptional cost in the year ended 
31 December 2015 was £389,000 (2014: 
£5,341,000).
There are no exceptional finance costs 
during 2015 (2014: 625,000). 
Finance costs
Finance costs are recognised on an effective 
interest rate basis in the period in which 
they are incurred, except where they are 
directly attributable to the acquisition or 
production of a qualifying asset, which takes 
a substantial period of time to get ready for 
intended use, such as the construction of a 
hospital. In such cases, borrowing costs are 
capitalised as part of the cost of that asset 
from the first date on which expenditure 
is incurred for the asset, provided that the 
asset is determined to be economically 
viable. Capitalisation ceases when all the 
activities that are necessary to prepare  
the asset for use are complete. 
Finance income
Finance income is recognised as earned.
Intangible assets
Intangible assets comprise:
Goodwill
Goodwill represents the excess of the  
fair value of the consideration of a business 
combination over the Group’s share of the 
fair value of identifiable assets, liabilities, 
and contingent liabilities of the business 
acquired at the date of acquisition. At the 
date of acquisition, goodwill is allocated 
at the lowest levels for which there are 
separate identifiable cash flows for the 
purpose of impairment testing. 
Computer software
Computer software (defined as software 
that is not considered an integral part  
of the hardware equipment) represents 
third-party costs incurred in relation to  
the Group’s information technology  
(‘IT’) systems. 
Other intangible assets
Other intangible assets comprise third- 
party ‘know-how’ costs which meet  
the criteria of IAS 38 Intangible Assets.  
Know-how costs are incurred in creating 
a ‘new-build programme’ to standardise 
the design of future world-class hospitals, 
by building them within a shortened time 
frame, utilising standard build components 
which have been manufactured off-site. 
Impairment and amortisation
Assets that have an indefinite useful  
life such as goodwill, or intangible assets 
that are still in their development phase,  
are not subject to amortisation, but are 
tested annually for impairment, or more 
frequently if there are indications of 
impairment. Assets that are subject to 
amortisation or depreciation are reviewed  
for impairment whenever events or 
changes in circumstances indicate that the 
carrying amount may not be recoverable. 
An impairment loss is recognised for the 
amount by which the asset’s carrying 
amount exceeds its recoverable amount. 
The recoverable amount is the higher of  
an asset’s fair value less cost to sell, and 
value in use. 
Goodwill is initially recognised at cost.  
After initial recognition, goodwill is 
measured at cost less any accumulated 
impairment losses. The value in use is 
calculated using an appropriate pre-tax 
discount rate. Gains and losses on disposal 
of a business include the carrying amount 
of goodwill relating to the business sold.
Computer software and other intangible 
assets are stated at historic cost less 
accumulated amortisation and impairment 
losses. Once the asset is complete, 
amortisation is provided on a straight-line 
basis to allocate the cost of the asset over  
its estimated useful life, and the charge 
is taken to administrative expenses. The 
intangible asset is assessed for impairment 
whenever there is an indication that the 
asset may be impaired. 
The useful economic life of the Group’s 
intangible assets is as follows:
Computer software Three years
New-build programme  
know-how
Five years
Property, plant and equipment
Property, plant and equipment is stated 
at historical cost less accumulated 
depreciation and impairment losses. 
Historical cost comprises all amounts 
directly attributable to making assets 
capable of operating as intended, including 
development costs and borrowing costs 
where relevant. 
Depreciation is provided on all categories 
of property, plant and equipment, with 
the exception of freehold land and assets 
under construction. Depreciation is based 
on cost less estimated residual value, and 
is provided on a straight-line basis over the 
estimated useful life of the asset as follows:
Leasehold land Life of lease
Leasehold improvements Shorter of 
lease life or 
expected 
useful life  
(five to ten 
years)
Clinical equipment Three to  
five years
Furniture, fittings  
and office equipment 
(including commissioning 
costs)
Three to  
ten years 
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued  
52     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     53
Current and deferred income taxation
Tax expense comprises current and deferred 
tax. The charge for current income tax 
is based on the results for the period, as 
adjusted for items which are taxable or 
deductible in other accounting periods,  
and items not taxed or disallowed. The 
charge is calculated using tax rates that 
have been enacted or substantively enacted 
by the end of the reporting period. 
Deferred income tax is accounted for using  
the liability method in respect of temporary 
differences arising from differences between 
the tax bases of assets and liabilities, and 
their carrying amounts in the consolidated 
financial statements. In principle, deferred 
tax liabilities are recognised for all taxable 
temporary differences, and deferred tax 
assets are recognised to the extent that  
it is probable that taxable profits will  
be available against which deductible 
temporary differences can be utilised. Such 
assets and liabilities are not recognised 
if the temporary difference is due to the 
initial recognition of goodwill or from the 
initial recognition of an asset or liability 
in a transaction (other than a business 
combination), which at the time of the 
transaction does not affect either taxable  
or accounting profit. 
Deferred tax liabilities are recognised for 
taxable temporary differences arising on 
investments in subsidiaries and interests  
in joint ventures, except where the Group 
is able to control the reversal of the 
temporary difference, and it is probable  
that the temporary difference will not 
reverse in the foreseeable future. 
Deferred income tax assets and liabilities 
are offset when there is a legally enforceable 
right to offset current tax assets against 
current tax liabilities, and when the deferred 
income tax assets and liabilities relate to 
income taxes levied by the same taxation 
authority on either the taxable entity, or 
different taxable entities where there is  
an intention to settle the balances on  
a net basis.
Deferred tax is calculated at the tax rates 
that are expected to apply to the period 
when the asset is realised or the liability is 
settled using rates enacted, or substantively 
enacted, at the end of the reporting period. 
Deferred tax is charged or credited in the 
consolidated income statement, except 
to the extent that it relates to items 
recognised in other comprehensive income  
or directly in equity. In this case, the tax 
is also recognised in other comprehensive 
income or directly in equity, respectively.
Deferred tax assets are recognised only to 
the extent that it is probable that future 
taxable profit will be available against 
which the temporary differences can be 
utilised. The carrying amount of deferred 
tax assets is reviewed at each balance sheet 
date, and reduced to the extent that it is 
no longer probable that sufficient taxable 
profits will be available to allow all or part 
of the deferred tax asset to be recovered.
Provisions for other liabilities  
and charges
Provisions are recognised when the Group 
has a present obligation in respect of a 
past event, when it is probable that an 
outflow of resources will be required to 
settle the obligation and it can be reliably 
estimated. Provisions are discounted where 
the time value of money is considered to 
be material, using an appropriate rate that 
reflects current market assessments of the 
time value of money and the risks specific 
to the obligation. The unwinding of the 
discount is recognised as a finance cost. 
Warrants
A warrant is an instrument issued by  
the Company which gives the holder the 
right to purchase shares in the Company  
at a specific price at a future date. An 
equity instrument is any contract that 
evidences a residual interest in the assets 
of the Company after deducting all of its 
liabilities. A warrant is treated as a financial 
liability if:
•	 it is a non-derivative and the Group  
is obliged to deliver a variable number  
of its shares; or
•	 it is a derivative that will be settled  
other than by a fixed amount of cash  
or other assets for a fixed number of  
the Company’s own shares.
Transaction costs are apportioned between 
the liability and equity components of 
the instrument, based on the allocation 
of proceeds to the liability and equity 
components when the instruments are  
first recognised. 
Equity warrants
The proceeds on issue of equity warrants 
are included within shareholders’ equity, 
net of transaction costs. The fair value of 
the equity component is not remeasured in 
subsequent years. The fair value of warrants 
is credited to equity with the debit being 
charged to the income statement or taken 
to liabilities where the warrants are linked 
to a loan.
Equity warrants are valued using an 
appropriate valuation methodology on a 
diluted pricing basis, based on the relevant 
share price at the time of issue or based on 
an assessment of the market price at the 
time of issue.
Share-based charges
Shares, and in some cases share warrants, 
are issued to employees and consultants. 
The fair value of the employee services 
received in exchange for the grant of the 
shares or share warrants is recognised as  
an expense, with a corresponding credit  
to equity. The total amount expensed  
is determined by reference to the fair  
value of the warrants granted, including:
•	 any market performance conditions  
such as an entity’s share price;
•	 non-market performance conditions 
and service conditions included in 
assumptions about the number of 
options that are expected to vest; and
•	 the impact of any non-vesting conditions.
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
Residual values and useful lives are 
reviewed at the end of each reporting 
period. The expected useful lives of the 
assets to the business are reassessed 
periodically in the light of experience. 
The carrying values of property, plant and 
equipment are reviewed for impairment 
when events or changes of circumstances 
indicate the carrying value may not be 
recoverable. 
Assets under construction
Commissioning costs in course  
of construction
Commissioning costs comprise staff,  
property, consultancy and operational  
costs directly related to the commissioning  
of new-build hospitals. Such costs are  
capitalised, provided the asset is determined  
to be economically viable, up to the point 
that the commissioning is complete and 
the hospital is fully open for business, 
subsequent to which further such 
expenditure is charged to the income 
statement. Once commissioned, the 
asset is reclassified from ‘assets under 
construction’ to the relevant property,  
plant and equipment category, and 
depreciated on a straight-line basis in 
accordance with the estimated useful  
lives as outlined above. 
Development costs in course  
of construction
Development costs which are directly 
attributable to the development of  
property are capitalised as part of the  
cost of the property. The commencement 
of capitalisation begins when development 
costs for the property are being incurred, 
and activities that are necessary to prepare 
the asset ready for use are in progress. 
Capitalisation ceases when all the activities 
that are necessary to prepare the asset for 
use are complete.
Leases
Where substantially all the risks and 
rewards of ownership of the leased item 
are transferred to the Group, the lease is 
classified as a finance lease and capitalised 
at the fair value of the leased asset or, if 
lower, at the present value of the minimum 
future lease payments. Lease payments  
are apportioned between finance charges 
and reduction of the lease liability, so as  
to achieve a constant rate of interest on the 
remaining balance of the liability. Finance 
charges are recognised in the income 
statement. Leased assets are depreciated  
over the useful life of the asset. 
Where the Group does not retain 
substantially all the risks and rewards of 
ownership of the asset, leases are classified 
as operating leases. Operating lease rental 
payments are recognised as an expense in 
the income statement on a straight-line 
basis over the lease term. Lease incentives 
are recognised over the lease term.
Inventories
Inventories, primarily medical consumables, 
are stated at the lower of cost and net  
realisable value. Cost comprises purchase 
price less trade discounts, and is determined 
on a first-in, first-out basis. Net realisable 
value means estimated selling price, less 
all costs incurred in marketing, selling and 
distribution. Obsolete stock is provided for 
in the income statement.
Where title never transfers to the Group, 
consignment stock is held off balance sheet.
Trade receivables
Trade receivables represent amounts 
due from customers arising from the 
performance of services or sale of goods. 
Trade receivables are initially recognised at 
fair value and, subsequently, measured at 
amortised cost, which includes an 
allowance for impairment where there 
is objective evidence that the Group will 
not be able to collect all amounts due, 
according to the original terms of the 
contract. The allowance for impairment  
is the difference between the asset’s 
carrying amount and the present value  
of estimated cash flows, discounted  
at the original effective interest rate.  
The movement in the allowance for 
impairment is taken to administrative 
expenses. 
Trade receivables are presented as current 
where collection is expected within one 
year or less, otherwise they are presented  
as non-current.
Cash and cash equivalents
Cash and cash equivalents include cash 
in hand, deposits held at call with banks, 
overnight deposits, and other short-term 
highly liquid investments with original 
maturities of three months or less, and 
bank overdrafts. In the consolidated  
balance sheet, bank overdrafts are shown 
within borrowings in current liabilities. 
Trade payables
Trade payables are obligations to pay  
for goods or services that have been 
acquired in the ordinary course of business 
from suppliers. Trade payables are initially 
recognised at fair value and, subsequently, 
measured at amortised cost. If payment is 
contractually not due for more than one 
year, they are classified as non-current 
liabilities.
Pension costs
The Group operates personal defined 
contribution pension schemes. Contributions 
are charged to the income statement as they  
become payable, in accordance with the  
rules of the scheme. The Group has no 
further payment obligation once the 
contributions have been paid.  
54     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     55
And excluding:
•	 impact of any service and non-market 
performance vesting conditions 
(profitability, sales growth targets and 
remaining an employee for a specified 
period of time).
The total expense is recognised over  
the vesting period, which is the period  
over which all of the specified vesting 
conditions are expected to be satisfied. 
Where modifications to existing share 
options occur, the difference between the 
revised charge and the existing charge will 
be recognised in the income statement.
Dividends
Dividend distribution to the Company’s 
shareholders is recognised as a liability  
in the Group’s financial statements in the 
period in which the dividends are approved 
by the Company’s shareholders.
Share capital
Ordinary shares are classified as  
equity. Proceeds received, net of any 
directly attributable transaction costs,  
are credited to share capital (nominal 
value) and share premium. 
Treasury shares
Following Project Reset, the CPBT  
was issued with shares in the Company.  
The Trust is consolidated in the financial 
statements and, accordingly, shares held  
by the Trust are recognised at cost as a 
debit to equity in the Treasury share reserve. 
Significant accounting  
judgements and estimates
In the process of applying the Group’s 
accounting policies, the directors make 
judgements and estimates concerning the 
future. The resulting accounting estimates 
will, by definition, seldom equal the related 
actual results. The following judgements 
and estimates have the most significant 
effect on the amounts recognised in the 
consolidated financial statements:
Judgements
The key judgements that have a significant 
risk of causing a material adjustment to 
the carrying amounts of assets and liabilities 
within the next financial year are discussed 
below: 
i Revenue recognition
 Across the Group, a number of  
CCGs have signed up to a framework 
agreement, whereby, payment is made  
in advance based on indicative volumes, 
and then reconciled to actual volumes 
over a period of up to three months when  
the CCGs then approve the activity levels. 
Revenue is estimated and recognised 
based on activity performed in the 
month, which had not been approved  
at the end of the year.
 The Bedfordshire MSK contract entitles 
Circle to a revenue stream that is pre-
determined by the programme budget 
(‘capped’ budget). The annual revenue is 
spread across the term of the contract, 
and incorporates monthly seasonal 
fluctuations and demographic growth.  
In addition to this, the contract allows 
for one-off payments from Bedford CCG 
to Circle, in respect of treating inherited 
activity outside the initial scope of the 
contract. A judgement has been taken 
on the income per procedure, which is 
expected to be recovered from the CCG 
with reference to the income recovered 
from similar procedures.
Estimates
The key assumptions and estimates at 
the end of the reporting period, that have 
a significant risk of causing a material 
adjustment to the carrying amounts  
of assets and liabilities within the next  
financial year are discussed below: 
i Tax
 The recognition of deferred tax assets is 
dependent upon an estimation of future 
taxable profits that will be available 
against which deductible temporary  
differences can be utilised. In the 
event that actual taxable profits are 
different, such differences may impact 
the carrying value of such deferred tax 
assets in future years. A deferred tax 
asset has not been recognised in the 
financial statements due to uncertainty 
over the availability of suitable future 
taxable profits against which they will 
reverse.
ii Provisions
 Provisions are assessed annually 
in accordance with the Group’s 
accounting policy. Provisions are 
recognised where it is probable that 
an outflow of economic benefits will 
occur as a result of a past event or 
transaction, and a reliable estimate  
of the outflow can be made. In the 
event that estimates are wrong, this 
may impact the financial statements  
in future years. 
iii Valuation of property, plant  
and equipment
 Freehold and leasehold land are held 
at cost less accumulated impairment 
losses. These were subject to valuations 
at 31 December 2012 by third-party 
professional valuers to assess for any  
indications of impairment. The valuations  
were based on a number of factors, 
including intended usage for the site, 
potential rental value and, where 
applicable, the length of the lease.  
In the event that estimates are wrong,  
this may impact the financial statements  
in future years.
iv Share-based charges
 Share-based charges are based on  
the share and warrant valuations  
calculated, using several assumptions  
(for example, share price volatility and 
time constraints) included within an 
option pricing model. In the event that 
estimates are wrong, this may impact  
the charge in future years.
v Useful lives and recoverability  
of property, plant and equipment
 Property, plant and equipment are 
reviewed on a regular basis to check  
they are still in use, to ensure that their 
useful economic life is in line with the 
expected life of the asset, and that their 
carrying values are recoverable. In the 
event that estimates are wrong, this  
may impact the financial statements  
in future years.
vi Allowance for impairment  
of trade receivables
 An allowance for impairment of  
trade receivables is made, based on  
the difference between the asset’s 
carrying amount and the present value  
of estimated cash flows. In the event 
that estimates are wrong, this may 
impact the financial statements in 
future years. 
vii Goodwill and intangibles
 Goodwill and intangibles are 
recognised at cost less accumulated 
amortisation and impairment losses. 
The carrying amount of goodwill is 
assessed annually based on value-
in-use calculations, using cash flow 
projections based on five-year financial 
forecasts prepared by management. 
Key assumptions relating to forecasts 
in revenue growth and decline are 
used, which include discounting back 
to present value using a risk-adjusted 
pre-tax discount rate of 10%, and 
assumptions in terms of volume and 
cost savings. In the event that these 
estimates are wrong, this may impact 
the financial statements in future years. 
 Intangible assets that are subject 
to amortisation are considered for 
impairment when events or changes  
in circumstances indicate that  
the carrying amount may not  
be recoverable.
                                
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued  
56     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     57
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
3  SEGMENTAL REPORTING continued
       All other 
      segments and 
    Circle hospital Other Circle unallocated Total 
    services services items Group 
2014    £’000 £’000 £’000 £’000
Revenue from external customers    89,407 21,557 19 110,983
Cost of sales    (60,212) (20,161) – (80,373)
Gross profit    29,195 1,396 19 30,610
Administrative expenses before exceptional items, depreciation, amortisation  
and charge recognised in respect of amounts recoverable on contract   (32,075) (2,547) (6,415) (41,037)
EBITDA before exceptional items     (2,880) (1,151) (6,396) (10,427)
Depreciation, amortisation and charge recognised  
in respect of amounts recoverable on contract    (2,448) (2) (452) (2,902)
Operating loss before exceptional items    (5,328) (1,153) (6,848) (13,329)
Share-based charges in respect of awards and warrants issued   – – (1,756) (1,756)
Impairment of non-current assets    – – (2,907) (2,907)
Provision for receivables    – – (5,000) (5,000)
Other exceptional items    – – 4,322 4,322
Operating loss    (5,328) (1,153) (12,189) (18,670)
Finance income       181
Finance costs      (911)
Exceptional finance costs      (625)
Provision for joint venture deficit      (130)
Loss before taxation       (20,155)
Other information
Capital additions   2,070 29 210 2,309 
3  SEGMENTAL REPORTING
The chief operating decision-maker has been identified as the Board. The Board reviews the Group’s internal reporting in order to  
assess performance and allocate resources, and has divided the Group into three reportable business segments based on the Group’s 
management and internal reporting structure. The Board assesses the performance of the segments based on revenue, gross profit,  
EBITDA before exceptional items and operating (loss)/ profit. Measures of assets and liabilities for each reportable segment is not  
reviewed by the Board in the Group’s internal reporting. All measures are prepared on a basis consistent with that of the consolidated  
income statement. Revenue charged between segments has been charged at arm’s length and eliminated from the Group financial 
statements. 
Revenue from external customers in the segmental analysis is also measured in a manner consistent with the income statement. This  
is split by hospital rather than by patient. Circle hospital services include CircleReading, CircleBath and CircleNottingham. Other Circle 
services include other non-hospital management services such as the contract with Bedfordshire CCG to provide MSK services to patients in 
Bedfordshire. Geographic factors are not considered, as the vast majority of the Group’s operations take place within the United Kingdom.
       All other 
      segments and 
    Circle hospital Other Circle unallocated Total 
    services services items Group 
2015    £’000 £’000 £’000 £’000
Revenue from external customers    98,952 28,771 67 127,790
Cost of sales    (65,511) (24,824) – (90,335)
Gross profit    33,441 3,947 67 37,455
Administrative expenses before exceptional items, depreciation and amortisation  (32,904) (2,641) (9,338) (44,883)
EBITDA before exceptional items     537 1,306 (9,271) (7,428)
Depreciation and amortisation charge    (2,782) (16) (253) (3,051)
Operating loss before exceptional items    (2,245) 1,290 (9,524) (10,479)
Exceptional items    – – (389) (389)
Operating loss    (2,245) 1,290 (9,913) (10,868)
Finance income       5
Finance costs      (793)
Loss before taxation       (11,656)
Other information      
Capital additions   1,653 56 1,182 2,891   
58     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     59
4  REVENUE
       2015 2014 
      £’000 £’000
Provision of healthcare services     127,321 110,547
Other miscellaneous income     469 436
     127,790 110,983
5  OPERATING LOSS
       2015 2014 
     Note £’000 £’000
Operating loss is stated after charging/(crediting)
Amortisation of intangible assets     13 273 451
Depreciation of property, plant and equipment     14 2,779 2,451
Auditors’ remuneration (see below)     291 564
Movement in provision for bad debts     17 222 (73)
Operating lease rental     10,445  11,579
Exceptional operating items     6 389 5,341
Auditors’ remuneration payable to PricewaterhouseCoopers LLP  
Fees payable to Company’s auditors for the parent company and consolidated financial statements    94
Fees payable to the Company’s auditors for other services     
–  The audit of Company’s subsidiaries     182 203
–  Audit-related assurance services      – 234
–  Tax advisory services      11 33
     291 564
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
6  EBITDA AND EXCEPTIONAL ITEMS
Exceptional operating items
       2015 2014 
     Note £’000 £’000
Impairment of property, plant and equipment     14 – 2,907
Impairment of Hinchingbrooke working capital contributions    – 5,000
Share-based charges     24 552 651
Provision for under-declared VAT in prior periods     21 – (226)
Restructuring costs     – 1,105
Gain on the wind-up of joint venture activities (net of professional fees)    – (4,750)
Other exceptional (income)/expense     (163) 654
     389 5,341
An IFRS 2 charge for the share options granted to the Group’s Chief Financial Officer in the prior year amounted to £552,000, including  
National Insurance contributions costs (2014: £651,000).      
Other exceptional costs incurred relates to the release of a provision for advisory fees to assist the Group’s consideration of potential 
acquisitions. This provision was recognised as an exceptional item in 2014 (2014: £654,000 exceptional cost recognised in relation to 
advisory fees).
Exceptional finance items
         2015 2014 
        £’000 £’000
Financing costs paid in respect of the final recourse guarantee in relation 
to the wind-up of activities in Health Properties (Bath) Limited (‘HP Bath’)     – 625
        – 625  
60     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     61
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
7  EMPLOYEE INFORMATION
Staff costs
         2015 2014 
       Note £’000 £’000
Wages and salaries        29,487 25,695
Share-based charges        24 2,512 14
Social security costs        2,715 2,404
Other pension costs        25 1,452 1,492
        36,166 29,605
Monthly average number of employees
         2015 2014 
        Number Number
Administrative        529 451
Clinical        516 523
        1,045 974
The average number of employees includes directors on a service contract.
8  DIRECTORS’ EMOLUMENTS
       2015 2014 
      £’000 £’000
Total salary and other benefits     1,047 1,033
IFRS 2 share-based payment charge     1,118 583
Aggregate emoluments     2,164 1,616 
Directors’ emoluments relate to the non-executive and executive directors, who are remunerated by Circle Holdings plc and  
Circle Health Limited. 
The directors had retirement benefit contributions during the year of £55,000 (2014: £70,000).   
During 2015, no share options were granted to non-executive directors (2014: £11,000). Share-based payment charge recognised  
in relation to the executive directors was £1,118,000 (2014: £572,000). No share options were exercised by the directors of the  
Group during 2015. 
Please refer to the Directors’ remuneration report for further details.      
    
8  DIRECTORS’ EMOLUMENTS continued
Compensation of key management personnel
The Group made payments to key management personnel, defined as the key executive partners of the business, for services provided  
to the Group as follows:
       2015 2014 
      £’000 £’000
Total salary and other benefits      766  755
IFRS 2 share-based payment charge      1,118  583
Short-term employment benefits      1,884  1,338
All key management personnel were also directors of the company in the year and, therefore, their remuneration has also  
been disclosed within aggregate emoluments of the previous section.
9  FINANCE COSTS
       2015 2014 
      £’000 £’000
Finance lease interest     745 895
Other bank charges     48 16
      793   911 
10  FINANCE INCOME
       2015 2014 
      £’000 £’000
Bank interest receivable     5 118
Other interest income     – 63
      5 181  
62     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     63
12  TAXATION continued
iii Factors that may affect future tax charges
The standard rate of corporation tax in the UK changed from 21% to 20% (and was unified with the small companies rate)  
with effect from 1 April 2015. 
Legislation was enacted during 2015 to reduce further the rate of corporation tax. The rate will reduce to 19% from 1 April 2017 ,  
and to 18% from 1 April 2020.
As these rate changes had been substantively enacted at the balance sheet date, their effects have been included in these  
financial statements.
On 16 March 2016, a further rate change was announced in the 2016 Budget Statement. The rate of corporation tax will be  
reduced from 18% to 17% from 1 April 2020. As this rate change had not been substantively enacted at the balance sheet  
date, its effects have not been included in these financial statements. The proposed rate change may affect future tax charges.  
In addition, the utilisation of any tax losses and temporary differences for which no deferred tax asset has been recognised may  
also affect future tax charges.
iv Deferred tax
UK deferred tax has been calculated at the rates of tax at which assets/(liabilities) are expected to reverse, based on enacted tax rates.  
Deferred tax has been calculated at a rate of 18% (2014: 20%). The net deferred tax recognised in the balance sheet is as follows: 
      2015 2014 
      £’000 £’000
At 1 January       – –
Recognised during the year      – –
At 31 December      – –
The deferred tax asset not recognised in the financial statements is as follows:
    2015 2015 2014 2014 
    Tax value Gross Tax value Gross 
    £’000 £’000 £’000 £’000
Tax losses carried forward    27,662 153,677 29,480 147,400
Deductible temporary differences    2,876 15,977 4,129 20,645
    30,538 169,654 33,609 168,045
A deferred tax asset has not been recognised in the financial statements due to the uncertainty over the availability of suitable future  
taxable profits against which the asset will reverse. 
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
11  LOSS PER SHARE
Basic loss per ordinary share is calculated by dividing the loss attributable to owners of the parent by the weighted average number of  
ordinary shares in issue during the year. Diluted loss per ordinary share is calculated by adjusting the weighted average number of ordinary  
shares outstanding to assume the conversion of all potentially dilutive ordinary shares. Share warrants and options in issue represent the  
only category of potentially dilutive ordinary shares for the Group.
The following table sets out the computation for basic and diluted net loss per share for the year:     
      2015 2014
Loss and total comprehensive loss for the year attributable to owners of the parent (£000’s)  (11,656) (8,055)
Weighted average number of ordinary shares in issue (number)    247 ,797 ,188 186,911,084
Basic and diluted loss per ordinary share (pence)     (4.7) (4.3)
There is no difference in the weighted average number of ordinary shares used for basic and diluted net loss per ordinary share,  
as the effect of all potentially dilutive ordinary shares outstanding is anti-dilutive.
12  TAXATION
i Analysis of income tax charge in year
         2015 2014 
        £’000 £’000
Current tax
UK corporation tax on profit     – –
Deferred tax    
Originating and reversal of timing differences     – –
Income tax charge on loss for the year     – –
ii Factors affecting the current tax charge for the year
Although the parent company is registered in Jersey, it is resident in the UK for tax purposes and is subject to UK corporation tax.  
The tax assessed on the Group’s loss before taxation differs from the average standard rate of UK corporation tax of 20.25%  
(2014: 21.5%). The differences are explained below:    
         2015 2014 
        £’000 £’000
Loss before taxation     (11,656) (20,155)
Loss before taxation multiplied by the average standard  
rate of corporation tax in the UK of 20.25% (2014: 21.5%)     (2,360) (4,333)
Effects of
Expenses not deductible for tax purposes     440 1,407
Temporary differences for which no deferred tax recognised     456 175
Tax losses for which no deferred tax recognised     1,463 3,862
Effect of Jersey tax at 0%     1 (1,111)
Total income tax charge for the year     – –  
64     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     65
13  INTANGIBLE ASSETS
       Other 
     Computer intangible 
    Goodwill software  assets Total 
    £’000 £’000 £’000 £’000
Cost     
At 1 January 2014   8,183 1,801 166 10,150
Additions   – 112 – 112
As at 1 January 2015   8,183 1,913 166 10,262
Additions   – 51 – 51
As at 31 December 2015   8,183  1,964  166  10,313
Accumulated amortisation and impairment  
At 1 January 2014   3,212 890 66 4,168
Amortisation charge for the year   – 432 19 451
Impairment charge for the year   – – 81 81
As at 1 January 2015   3,212 1,322 166 4,700
Amortisation charge for the year   – 273 – 273
As at 31 December 2015   3,212 1,595 166 4,973
Net book amount      
At 31 December 2015   4,971 369 – 5,340
At 31 December 2014   4,971 591 – 5,562
At 1 January 2014   4,971 911 100 5,982
The amortisation charge for the year is included within the income statement within administrative expenses before exceptional items.  
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
13  INTANGIBLE ASSETS continued
i Goodwill
Goodwill acquired in a business combination is allocated to the cash-generating units (‘CGUs’) that are expected to benefit from that 
business combination. CGUs are independent sources of income streams and represent the lowest level within the Group at which the 
associated goodwill is monitored for management purposes. The carrying amount of goodwill has been allocated to the following CGU:
      2015 2014 
      £’000 £’000
Circle’s Nottingham NHS Treatment Centre      4,971 4,971
Goodwill is subject to impairment testing annually, or more frequently where there are indications that the goodwill may be impaired. 
The recoverable amounts of all CGUs are determined based on value-in-use calculations, using pre-tax cash flow projections based on 
management approved financial forecasts for the period of the contract. The key assumptions for these forecasts are those relating to 
revenue growth and decline, based on past experience and expectations of future changes in relevant CGUs. The Group prepares cash  
flow forecasts derived from the most recent financial plans approved by management for the period of the contract. Cash flows are 
discounted back to present value using a risk-adjusted pre-tax discount rate of 10%, which represents an internally computed rate,  
based on gearing levels and loan interest rates.
The financial plans reflect past experience and incorporate assumptions in terms of volumes and tariff changes. Volume increase is  
reasonably assumed to be 5%, and tariff inflation at 1.2% for 2016, and assumed flat thereafter. The value in use calculations are  
sensitive to changes in the key assumptions used; however, management’s sensitivity analysis shows that a reasonable change in  
key assumptions will not cause an impairment in the goodwill related to Circle’s Nottingham NHS Treatment Centre. 
ii Computer software
Computer software represents third-party costs incurred in relation to the Group’s IT systems. 
iii Other intangible assets
Other intangible assets include the development of ‘know-how’ for a new programme to build hospitals within a shortened time  
frame. This is achieved by utilising standard build components which have been manufactured off-site at a reduced cost, and reducing  
the amount of build time on-site. During 2014, this was fully impaired.
Assets held under finance lease have the following net book amounts:
      2015 2014 
      £’000 £’000
Computer software     261 382
     261 382  
66     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     67
14  PROPERTY, PLANT AND EQUIPMENT
       Furniture, 
  Freehold and    fittings 
  leasehold Assets under Leasehold Clinical and office 
  land construction improvements equipment  equipment Total 
  £’000 £’000 £’000 £’000 £’000 £’000
Cost     
At 1 January 2014 11,842 3,307 3,216 8,846 15,934 43,145
Additions – 69 137 1,558 433 2,197
Disposals – – – (42) – (42)
At 1 January 2015 11,842 3,376 3,353 10,362 16,367 45,300
Additions – 1,128 116 1,231 365 2,840
Disposals – – – (7) (2) (9)
At 31 December 2015 11,842 4,504 3,469 11,586 16,730 48,131
Accumulated depreciation and impairment
At 1 January 2014 2,385 165 2,405 2,734 14,781 22,470
Depreciation charge for the year 35 – 104 1,826 486 2,451
Impairment charge for the year – 2,907 – – – 2,907
Disposals – – – (26) – (26)
At 1 January 2015 2,420 3,072 2,509 4,534 15,267 27,802
Depreciation charge for the year 35 – 113 2,189 442 2,779
Impairment charge for the year – – – – – –
Disposals – – – – – –
At 31 December 2015 2,455 3,072 2,622 6,723 15,709 30,581
Net book amount      
At 31 December 2015 9,387 1,432 847 4,863 1,021 17,550
At 31 December 2014 9,422 304 844 5,828 1,100 17,498
At 1 January 2014 9,457 3,142 811 6,112 1,153 20,675
The depreciation charge for the year is included in the income statement within administrative expenses before exceptional items (note 5).
Freehold and leasehold land were valued at 31 December 2012 by a third-party valuer. Management believes these to be appropriate on the 
basis that there have not been decreases in land values in the areas since.        
     
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
14  PROPERTY, PLANT AND EQUIPMENT continued
Assets held under finance leases have the following net book amounts:
      2015 2014 
      £’000 £’000
Leasehold land     4,237 4,272
Clinical equipment     3,994 4,686
Furniture, fittings and office equipment      395 469
     8,626 9,427
The additions during the year comprise lease agreements with Shawbrook Bank Limited and Close Leasing  
Limited to finance the purchase of clinical equipment at the CircleReading and CircleNottingham hospitals.
Freehold and leasehold land can be split into the following net book amounts:
      2015 2014 
      £’000 £’000
Freehold     5,150 5,150
Leasehold      4,237 4,272
     9,387 9,422
15  PROVISION FOR JOINT VENTURE DEFICIT
      2015 2014 
      £’000 £’000
At 1 January      – (4,685)
Gain on wind-up of activities in HP Bath     – 4,685
At 31 December     – –
Group’s share of results of joint venture (38.7%)
Revenue     – 716
Operating expenses     – (21)
Finance costs     – (825)
Group’s share of loss after tax of joint venture     – (130)
      
During 2014, the activities of HP Bath were wound up, therefore, there is no longer a provision for a joint venture deficit  
as at 31 December 2015.        
68     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     69
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
16  INVENTORIES
      2015 2014 
      £’000 £’000
Consumables     1,876 1,806
At 31 December 2015, an amount of £nil (2014: nil) has been provided against the gross cost of inventories.  
The cost of inventories recognised as an expense in the year is £14,051,000 (2014: £13,096,000). 
17  TRADE AND OTHER RECEIVABLES
 Current Non-current
    2015 2014 2015 2014 
   Note £’000 £’000 £’000 £’000
Trade receivables   10,111 10,906 – –
Less: allowance for impairment of trade receivables   (409) (187) – –
Net trade receivables   9,702 10,719 – –
Prepayments and accrued income   4,335 4,843 2,500 2,500
Other receivables   655 1,108 – –
Amounts owed by joint venture    – 13 – –
   14,692 16,683 2,500 2,500
The directors consider the carrying amount of trade and other receivables to approximate to their fair value. Long-term receivables  
are discounted where the time value of money is considered to be material using a risk-adjusted post-tax discount rate of 10%. 
The movement in the allowance for impairment in respect of trade receivables during the year was as follows: 
      2015 2014 
      £’000 £’000
At 1 January     187 260
Increase/(decrease) in the year     222 (73)
At 31 December     409 187
17  TRADE AND OTHER RECEIVABLES continued
At 31 December, the ageing analysis of trade receivables was as follows:
      2015 2014 
      £’000 £’000
Not past due     5,536 3,660
Past due 0–30 days, but not impaired     1,052 4,493
Past due 31–60 days, but not impaired     960 748
Past due by more than 60 days, but not impaired     2,153 1,818
     9,702 10,719
Trade receivables are non-interest bearing, and credit terms are generally 30 days. The above receivables are not impaired  
because management believes they are fully recoverable.
18  CASH AND CASH EQUIVALENTS
      2015 2014 
      £’000 £’000
Cash and cash equivalents     14,998 24,496
The directors consider the carrying amount of cash and cash equivalents approximate to their fair value. There is no unrestricted  
cash in 2015 and 2014. 
19  TRADE AND OTHER PAYABLES
 Current Non-current
    2015 2014 2015 2014 
   Note £’000 £’000 £’000 £’000
Trade payables   6,840 6,666 – –
Deferred income   847 787 – –
Accruals    10,969 12,319 1,979 2,074
Social security and other taxation   1,246 1,319 – –
Amounts owed to other related parties   30 – 165 – –
   19,902 21,256 1,979 2,074
Trade payables, accruals and amounts owed to other related parties are unsecured and interest free.
The directors consider the carrying amount of trade and other payables approximate to their fair value.  
Long-term payables have been discounted where the time value of money is considered to be material.  
70     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     71
20  LOANS AND OTHER BORROWINGS continued
The Group signed a finance lease commitment with GE on 11 June 2012 for a total facility of £5,000,000 to lease medical equipment over a  
five-year period. On 13 July 2012, the Group signed a finance lease commitment with Close Leasing Limited for a total facility of £2,000,000  
to lease IT equipment and fixtures, fittings and furniture over a five-year period.   
In June  2015, CircleBath signed a finance lease commitment for a facility of £21,000 over a three-year period. In July 2015, CircleReading signed  
a new finance lease with Shawbrook Bank Limited for a facility of £45,000 over a five-year period. In addition, in November, the Group signed 
finance lease commitments with GE for a total facility of £800,000 to lease medical equipment at CircleNottingham until June 2018.   
The Pebble Mill site lease liabilities are unsecured, but are guaranteed by Circle Holdings plc. The Group can terminate the lease on 1 August 
2046 or 1 August 2071, by giving at least six months’ written notice to the landlord. In addition, the Group has two opportunities to reduce the 
annual rent: the first buy-down right is within a period of five years from the date of the lease, and the second buy-down right is within a period 
of six months prior to the first lease break date in 2046. Both instances require payment of a premium calculated in accordance with a formula 
set out in the lease and adjusted using the RPI index. There are no contingent rents. The value of the finance lease creditor is £4,895,000 (2014: 
£4,946,000).  
Maturity profile 
Under the terms of the loans, the amounts fall due as follows:
    Between Between Greater 
   Less than one to two two to three than four 
   one year years years years Total 
2015   £’000 £’000 £’000 £’000 £’000
Finance leases  2,332 2,031 664 4,587 9,614
  2,332 2,031 664 4,587 9,614
    Between Between Greater 
   Less than one to two two to three than four 
   one year years years years Total 
2014   £’000 £’000 £’000 £’000 £’000
Finance leases  1,922 2,011 1,967 4,891 10,791
  1,922 2,011 1,967 4,891 10,791
20  LOANS AND OTHER BORROWINGS
 Current Non-current
    2015 2014 2015 2014 
    £’000 £’000 £’000 £’000
Secured finance leases    2,332 1,922 7,282 8,869
   2,332 1,922 7,282 8,869
Finance leases
Finance leases comprise various lease agreements with Close Leasing Limited, Shawbrook Bank Limited and GE, to finance the purchase  
of IT assets, fixtures, fittings and furniture, and medical equipment, for the commissioning of CircleReading hospital and the 125-year  
lease for land in Birmingham entered into with Pebble Mill Investments Limited (‘Pebble Mill’) in November 2011. During 2015, CircleReading  
and CircleBath signed new finance leases with Shawbrook Bank Limited to purchase medical equipment and furniture respectively. 
CircleNottingham also signed two new finance leases for medical equipment with GE.
      2015 2014 
      £’000 £’000
Gross finance lease liabilities – minimum lease payments
Falling due:
–  No later than one year     2,987 2,711
–  Later than one year and no later than five years     4,093 5,837
–  Later than five years     9,323 9,691
     16,403 18,239
Future finance charges on finance leases     (6,789) (7,448)
     9,614 10,791
The breakdown of the present value of finance leases
Falling due:      
–  No later than one year     2,332 1,922
–  Later than one year and no later than five years     2,697 4,028
–  Later than five years     4,585 4,841
     9,614 10,791
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued  
72     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     73
22  SHARE CAPITAL, SHARE PREMIUM AND OTHER RESERVES
Authorised
      2015 2014 
      £’000 £’000
Ordinary shares of £0.02 each     6,500 6,500
Convertible shares (18 months) of £0.02 each     250 250
Convertible shares (36 months) of £0.02 each     250 250
     7,000 7,000
      Number Number
Ordinary shares of £0.02 each     325,000,000 325,000,000
Convertible shares (18 months) of £0.02 each     12,500,000 12,500,000
Convertible shares (36 months) of £0.02 each     15,500,000 12,500,000
     350,000,000 350,000,000
Allotted and fully paid up
    Share Share Treasury Other   
  Par Shares capital premium shares reserves Total 
  value Number £’000 £’000 £’000 £’000 £’000
Ordinary shares
At 1 January 2014   130,785,122 2,616 193,145 – 22,182 217,943
Fundraise – 9 January 2014  
(net of costs)  £0.02 55,000,000 1,100 25,120 – – 26,220
Shares issued – 16 June 2014  
(net of costs)  £0.02 62,769 1 – – – 1
Project Reset – ordinary shares  
issued – 8 December 2014  
(net of costs)  £0.02 38,855,367 777 7,560 (9,587) – (1,250)
Project Reset – convertible shares 
issued – 8 December 2014  
(net of costs)  £0.02 23,093,930 462 10,970 – – 11,432
At 31 December 2014   247,797,188 4,956 236,795 (9,587) 22,182 254,346
At 31 December 2015   247,797,188 4,956 236,795 (9,587) 22,182 254,346
21  PROVISIONS FOR OTHER LIABILITIES AND CHARGES
      2015 2014 
      £’000 £’000
Current     – –
Non-current     50 50
     50 50
      Under- 
      declared 
     Dilapidations VAT Total 
     £’000 £’000 £’000
At 1 January 2014    159 496 655
Released to the income statement    – (226) (226)
Utilised during the year    (109) (270) (379)
At 1 January 2015    50 – 50
Released to the income statement    – – –
Utilised during the year    – – –
At 31 December 2015    50 – 50
Dilapidations
This provision relates to the expected cost of returning various leased properties to their former state when the Group exits the leases.
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued  
74     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     75
22  SHARE CAPITAL, SHARE PREMIUM AND OTHER RESERVES continued
The following table details the movement in share capital (ordinary and convertible) in the year ending 31 December 2015  
by major shareholder:
      At Additional At 
      1 January purchases/ 31 December 
      2015 (sales) 2015 
      Number Number Number
Lansdowne Partners      54,167,008 – 54,167,008
Invesco Perpetual      53,268,920 (35,000,000) 18,268,920
Odey Asset Management      27,447,406 (27,447,406) –
Toscafund      – 62,397,297 62,397,297
Balderton Capital      16,756,534 – 16,756,534
BlueCrest Capital Management     9,252,685 – 9,252,685
BlackRock       5,781,380 (157,110) 5,624,270
Polar Capital      1,000,000 400,000 1,400,000
Circle Partnership Benefit Trust     61,949,297 – 61,949,297
Henderson      5,200,000 (5,200,000) –
Other      12,973,958 5,007,219 17,981,177
      247,797,188 – 247,797,188
The following table details the movement in ordinary share capital in the year ending 31 December 2014 by major shareholder:
   At 9 January 16 June 8 December Additional At 
   1 January 2014 2014 2014 purchases/ 31 December 
   2014 (at £0.02 each) (at £0.02 each) (at £0.02 each) (sales) 2014 
   Number Number Number Number Number Number
Lansdowne Partners 37,967,008 16,200,000 – – – 54,167,008
Invesco Perpetual 30,368,920 22,900,000 – – – 53,268,920
Odey Asset Management 27,542,881 – – – (95,475) 27,447,406
Balderton Capital 12,756,534 4,000,000 – – – 16,756,534
BlueCrest Capital Management 9,252,685 – – – – 9,252,685
BlackRock  6,997,555 – – – (1,216,175) 5,781,380
Polar Capital 1,000,000 400,000 – – (400,000) 1,000,000
Circle Partnership Benefit Trust – – – 61,949,297 – 61,949,297
Henderson – 5,200,000 – – – 5,200,000
Numis – 1,150,000 – – (1,150,000) –
Singers – 150,000 – – (150,000) –
Broker Option – 5,000,000 – – (5,000,000) –
Other 4,899,539 – 62,769 – 8,011,650 12,973,958
 130,785,122 55,000,000 62,769 61,949,297 – 247,797,188
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
23  WARRANTS
The Group issues warrants which give the holders the right to purchase shares for a specific price at a future date. The warrants are  
treated either as equity instruments and recorded in the warrant reserve, or as financial liabilities and recorded in liabilities, depending  
on certain criteria, as outlined in the Group’s accounting policies. There are no remaining warrants issued as financial liabilities.
Warrants treated as equity instruments
Movements in the warrant reserve during the year are as follows:
      2015 2014 
      £’000 £’000
At 1 January and at 31 December      22,703 22,703
The following table details all share warrants issued by the Group which are recognised in equity, none of which have been exercised to date:
 Warrant reserve:
      At  At 
  Exercise Original  Revised 1 January Share-based 31 December 
  price warrants Modified warrants 2015 charges 2015 
 Note £ Number Number Number £’000 £’000 £’000
Beneficiary
Warrants issued in 2008
Balderton Capital  b £1.52 523,460 – 523,460 4,111 – 4,111
Lansdowne Partners b £1.52 99,630 – 99,630 783 – 783
JCAM    £10.31 238,930 – 238,930 1,616 – 1,616
 
Warrants issued in 2009
Balderton Capital  b £1.52 172,355 – 172,355 675 – 675
Lansdowne Partners b £1.52 172,355 – 172,355 479 – 479
BlueCrest Capital  
Management b £1.52 75,510 – 75,510 296 – 296
Warrants modified in 2011
Health Trust (Jersey) a, b £1.52 – 2,340,765 2,340,765 14,743 – 14,743
   1,282,240 2,340,765 3,623,005 22,703 – 22,703
a The 2,340,765 share warrants vested over a 24-month period from May 2011 until May 2013, and were exercisable from the date they 
vest (1/24 every month from May 2011) and do not have any expiry date. None of the warrants were exercised during 2015 (2014: nil).
b In May 2011, after the initial public offering (‘IPO’), the existing share warrants, which consisted of warrants issued in 2008 and 2009  
to Health Trust (Jersey) and Health Trust (Jersey) option pool, were modified, adjusting both the exercise price and vesting conditions. 
Under the terms of the modification, the existing share warrants were replaced with warrants issued exclusively to Health Trust (Jersey),  
and the exercise price was set to the IPO price of £1.52 per new ordinary share issued. The modified share warrants do not have any 
expiry date or any conditions attached. A fair value assessment was completed, based on the value of the existing warrants prior to IPO, 
and the fair value of the modified warrants determined using Black-Scholes on a diluted pricing basis. The incremental fair value of the 
modification was recognised on a straight-line basis over a 24 month period from May 2011 until May 2013, in line with the revised 
vesting timetable (1/24 every month from May 2011).           
76     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     77
24  SHARE-BASED CHARGES
Shares, shares options and share warrants are issued to directors, employees, clinicians and external investors who contribute to the  
success and growth in value of the Group. The issuance of these warrants and shares, including the issue of shares to scheme participants  
and employees, qualifies as equity-settled share-based payment transactions, and falls within the scope of IFRS 2 Share-based Payment.  
The impact on the income statement in respect of share-based charges is as follows. Note: there is no charge associated with the transaction 
where the employees subscribe for the shares at full market value:
      2015 2014 
   Note  Type £’000 £’000
Issued as part of Project Reset   a  Shares – 1,105
Awarded to non-executive directors   b  Shares – 14
Share options issued to Circle employees and partners  c  Share options 2,693 572
      2,693 1,691
a Project Reset
 Shares were issued in 2014 as part of Project Reset. Of the total number of Circle Partnership Limited (‘CPL’) shares which were  
acquired by the Group, 5,118,739 were partially vested. The unvested portion of these shares in CPL were accelerated as part of  
Project Reset, and exchanged for 2,231,770 Circle Holdings plc convertible shares at £0.02 each. A share-based charge of £1,105,000  
was recognised to record the incremental fair value of shares given to members of the CPL share scheme. The charge was calculated,  
based on the share price on 4 December 2014, the date of Project Reset completion.
b Non-executive directors
 The Group operated an equity-settled, share-based compensation plan for its non-executive directors. The entity receives services  
from these directors as consideration for shares in the Group. The fair value of the services received in exchange for the grant of the 
awards is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the awards granted.  
No share options were granted to the non-executive directors during 2015.
c Share options issued to Circle employees and partners
 During 2015, a number of share option awards were granted to Circle employees and Circle partners. There are two main share option 
schemes: PIP and MIP. The MIP scheme has market conditions attached. In accordance with the terms of the MIP, the granted options  
will vest, based on a required holding period and certain share price triggers. The earliest exercise date is 1 December 2016.  
 Included within exceptional items is an IFRS 2 share-based payment charge for share options granted to the Chief Financial Officer  
in December 2014, and vested in December 2015.
      2015 2014 
      £’000 £’000
Share-based charges reserve
At 1 January     1,842 151
Share-based charges     2,693 1,691
At 31 December     4,535 1,842
24  SHARE-BASED CHARGES continued
The parameters on which the fair values of the various share option schemes were calculated are detailed below.  
The fair value of a share option disclosed below represents the value of the share option as determined by IFRS 2,  
minus the strike price payable by the holder of the option upon exercise.
Share options granted to Chief Financial Officer   
Stock price at grant date (1 December 2014)   £0.50
Exercise price   £0.02
Expected volatility   50%
Risk-free interest rate   5%
Vesting period   1 year
Fair value of share option   £0.50
2013 and 2014 share option awards – £0.02   
Stock price at grant date (30 April 2015)    £0.49
Exercise price    £0.02
Expected volatility    79. 1%
Risk-free interest rate    0.447%
Vesting period    8 months
Fair value of share option    £0.47
2013 and 2014 share option awards – £0.50   
Stock price at grant date (30 April 2015)    £0.49
Exercise price    £0.50
Expected volatility    79. 1%
Risk-free interest rate    0.447%
Vesting period    8 months
Fair value of share option    £0. 12
2015 share option awards – £0.02   
Stock price at grant date (25 September 2015)   £0.38
Exercise price    £0.02
Expected volatility    79. 1%
Risk-free interest rate    0.620%
Vesting period    2 years
Fair value of share option    £0.36
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued  
78     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     79
24  SHARE-BASED CHARGES continued
2015 share option awards – £0.50   
Stock price at grant date (25 September 2015)   £0.38
Exercise price    £0.50
Expected volatility    79. 1%
Risk-free interest rate    0.620%
Vesting period    2 years
Fair value of share option    £0. 13
MIP (with market conditions attached) – £0.02   
Stock price at grant date (23 June 2015)    £0.48
Exercise price    £0.02
Expected volatility    79. 1%
Risk-free interest rate    0.72%
Vesting period    2 years
Fair value of share option    £0.39
MIP (with market conditions attached) – £0.50   
Stock price at grant date (23 June 2015)    £0.48
Exercise price    £0.50
Expected volatility    79. 1%
Risk-free interest rate    0.72%
Vesting period    2 years
Fair value of share option    £0.23
25  PENSION COMMITMENTS
The Group participates in two personal defined contribution pension schemes for its employees. The assets of the schemes are held 
separately from those of the Group in independently administered funds. The contributions by the Group for the year were £1,452,000  
(2014: £1,492,000). As at 31 December 2015, outstanding contributions totalled £127,000 (2014: £140,000).    
    
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
26  OPERATING LEASE COMMITMENTS
The Group has entered into various non-cancellable operating leases of equipment, land and buildings with varying terms, escalation  
clauses and renewal rights. The future aggregate minimum lease payments under non-cancellable operating leases are as follows: 
 Plant and machinery Land and buildings
    2015 2014 2015 2014 
    £’000 £’000 £’000 £’000
No later than one year     547 730 10,283 9,985
Later than one year and no later than five years   724 1,272 37,327 37,995
Later than five years     – – 142,964 151,493
     1,271 2,002 190,574 199,473
27  NET CASH OUTFLOW FROM OPERATING ACTIVITIES
      2015 2014 
     Note £’000 £’000
Loss before taxation     (11,656) (20,155)
Provision for joint venture deficit     – 130
Exceptional finance items     – 625
Finance costs     793 911
Finance income     (5) (181)
Amortisation of intangible assets     13 273 451
Depreciation of property, plant and equipment    14 2,779 2,451
Loss on sale of tangible fixed assets     9 16
Impairment of property, plant and equipment     14 – 2,907
Impairment of intangible assets     13 – 81
Share-based charges    24 2,693 1,691
Gain on the wind-up of joint venture activities     – (4,750)
Provision for VAT    21 – (226)
Movements in working capital:      
–  Increase in inventories      (70) (161)
–  Increase in trade and other receivables     1,990 (1,159)
–  (Increase)/decrease in trade and other payables     (1,448) 9,387
–  Decrease in provisions     – (379)
Net cash outflow from operating activities     (4,642) (8,361)  
80     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     81
28  RECONCILIATION AND ANALYSIS OF NET DEBT continued
       Other At 
    At   non-cash 31 December 
    1 January Cash flow Reclassifications changes 2014 
2014    £’000 £’000 £’000 £’000 £’000 
Liquid resources
Unrestricted cash    8,597 15,899 – – 24,496
Restricted cash     3,800 (3,800) – – –
Debt due within one year
Finance leases    (1,547) 1,660 (1,801) (234) (1,922)
Debt due after one year
Finance leases    (9,982) – 1,801 (688) (8,869)
Net debt    868 13,759 – (922) 13,705
29  FINANCIAL RISK MANAGEMENT
i Financial risk factors
The Group’s operations expose it to a variety of financial risks that include price risk, credit risk, liquidity risk and interest rate  
risk. The Group seeks to limit the adverse effects of these risks by monitoring levels of debt finance and the related finance costs,  
and by matching the risks of the financing with the risks and return profiles of the assets. The risks are monitored by management  
throughout the year via monthly reviews of operational performance, cash flows, levels of individual debt instruments and overall  
debt levels.
Classes of financial instruments
The Group’s financial instruments comprise financial assets such as cash, short-term deposits, trade and other receivables, and  
financial liabilities, such as bank loans, loan notes, and trade and other payables. In addition, the Group was party to interest rate  
swaps to manage the Group’s interest rate risks arising from the Group’s sources of finance. 
28  RECONCILIATION AND ANALYSIS OF NET DEBT
      2015 2014 
      £’000 £’000
(Decrease)/increase in unrestricted cash in the year     (9,498) 15,899
(Decrease) in restricted cash in the year     – (3,800)
Repayment of finance lease     2,019 1,660
Movement in net debt from cash flow     (7,479) 13,759
Other non-cash movements     (842) (922)
Movement in net debt      (8,321) 12,837
Net debt at 1 January     13,705 868
Net debt at 31 December     5,384 13,705
       Other At 
    At   non-cash 31 December 
    1 January Cash flow Reclassifications changes 2015 
2015    £’000 £’000 £’000 £’000 £’000 
Liquid resources
Unrestricted cash    24,496 (9,498) – – 14,998
Debt due within one year         
Finance leases    (1,922) 2,019 (2,152) (277) (2,332)
Debt due after one year         
Finance leases    (8,869) – 2,152 (565) (7,282)
Net debt    13,705 (7,479) – (842) 5,384
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued  
82     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     83
29  FINANCIAL RISK MANAGEMENT continued
The following tables classify the Group’s financial instruments according to IAS 39 Financial Instruments; Recognition and Measurement:
      Fair value   
     Loans and through profit Amortised  
     receivables and loss cost Total 
    Note £’000 £’000 £’000 £’000 
As at 31 December 2015 
Financial assets
Trade and other receivables    17 10,357   –     –     10,357 
Cash and cash equivalents     18  14,998   –     –     14,998 
Total financial assets     25,355 – – 25,355
Financial liabilities        
Trade and other payables     19  –     –    (6,840) (6,840)
Finance lease liabilities     20  –     –    (9,614) (9,614)
Total financial liabilities     – – (16,454) (16,454)
      Fair value   
     Loans and through profit Amortised  
     receivables and loss cost Total 
    Note £’000 £’000 £’000 £’000 
As at 31 December 2014 
Financial assets
Trade and other receivables    17 11,840  – – 11,840 
Cash and cash equivalents     18 24,496  – – 24,496 
Total financial assets     36,336 – – 36,336
Financial liabilities
Trade and other payables    19  – – (6,831) (6,831)
Finance lease liabilities     20 – – (10,791) (10,791)
Total financial liabilities     – – (17,622) (17,622)
a Market risk
 Market risk is the risk that changes in market prices, such as interest rates or other price risks, and will affect the income  
from or the value of financial instruments. The objective of market risk management is to manage and control market  
risk exposures within acceptable parameters, while optimising the return on risk.
 The Group is primarily impacted by interest rate risk and other price risks which are outlined below:
29  FINANCIAL RISK MANAGEMENT continued
 1) Interest rate risk
  Financial instruments affected by interest rate risk include short-term deposits. The Group is primarily sensitive to changes in UK  
 interest rates. This affects future cash flows from short-term cash deposits held. As at 31 December 2015, the Group, excluding the  
 joint venture, does not hold any long-term loans. Previously, the Group has managed this risk, where significant, by holding long-term  
 loans and entering into interest rate swaps in order to fix the interest payable on these. These swaps have now all expired. The Group  
 also manages the interest rate risk through financing assets through finance leases which have fixed rates of interest, rather than  
 through loans. 
 The following table summarises the fixed and variable rate loans:
       Interest 
     Variable Fixed free Total 
     £’000 £’000 £’000 £’000 
At 31 December 2015 
Loans and other borrowings   – 9,614 – 9,614
At 31 December 2014
Loans and other borrowings   – 10,791 – 10,791
 2) Other price risks
  The Group has a number of long-term contracts containing fixed indexation provisions. The Group generally seeks to price  
 contracts at levels that take account of increasing prices. As the volume of private patients is anticipated to increase, the  
 Group will be increasingly subject to pricing changes from private insurance companies.
  The new Bedfordshire MSK contract operates under a capped revenue budget. The underlying principle assumes that the service  
 can be run more efficiently, improving the patient experience and reducing operational costs. Nevertheless, the Group bears  
 the risk of rising operational prices as the baseline revenue is fixed, subject to local demographic or service portfolio changes.
b Credit risk
 Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual 
obligations, and arises principally from the Group’s receivables from customers and cash deposits, with their maximum exposure being 
represented by their carrying amount.
 The Group has policies with customers that require upfront payment, where appropriate. Credit control procedures are designed  
to ensure that invoiced revenue is collected according to agreed terms, that policies exist to limit exposure to any one party, and  
ensure approved credit limits are reviewed regularly. These all help to eliminate significant concentrations of credit risk.
 Most revenues arise from insured patients’ business and the NHS. Insured patients give rise to trade receivables which are mainly due  
from large insurance institutions, who have high credit worthiness. The remainder of revenues arise from individual self-pay patients.
 When utilising bank accounts and cash deposits, the Group transacts with counterparties who have sound credit profiles. Such 
counterparties are primarily large, highly-rated financial institutions. In relation to financial institutions, the Group allocates a  
credit limit based on external credit ratings. The counterparty’s total outstanding transactions with the Group, including bank  
accounts and cash deposits, must not exceed limits agreed by the Board of Directors.
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued  
84     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     85
30  RELATED PARTY TRANSACTIONS
Subsidiaries
Details of the investments in which the Group holds 20% or more of the nominal value of any class of share capital and quasi-subsidiaries  
are as follows:
   Proportion of  
Name of company Holding Nature of business voting rights held Country of incorporation 
Circle International plc  Ordinary shares Holding and management 100% United Kingdom
Health Properties Limited
*
  Ordinary shares Holding and management 100% Jersey
Circle Health Limited Ordinary shares Holding and management 100% United Kingdom
Nations Healthcare Limited ‘A’ ordinary shares Holding and management 100% United Kingdom
CircleNottingham Limited ‘C’ preferred shares Holding and management N/A United Kingdom
CircleNottingham Limited Ordinary shares Medical practice services 100% United Kingdom
Circle (Welbeck) Limited Ordinary shares Finance company 100% United Kingdom
Circle (Welbeck) Limited Preference shares Finance company N/A United Kingdom
Circle Hospital (Bath) Limited Ordinary shares Medical practice services 100% United Kingdom
Circle Hospital (Reading) Limited Ordinary shares Medical practice services 100% United Kingdom
Circle Clinical Solutions Limited Ordinary shares Property development 100% United Kingdom
Circle Birmingham Limited Ordinary shares Property development 100% United Kingdom
Health Properties  Ordinary shares Property ownership 100% Jersey 
(South Manchester) Limited
*
  and development 
Circle Partnership Limited
**
 Ordinary shares Former employee  
  share ownership plan 100% British Virgin Islands
Trading transactions
During the year, the Group entered into transactions, in the ordinary course of business, with other related parties.  
Transactions entered into and trading balances outstanding are as follows:
      2015  2014 
     Amounts Amounts Amounts Amounts 
     owed by owed to owed by owed to 
     related party related party related party related party 
    Note £’000 £’000 £’000 £’000 
HP Bath    a – – 13 –
Capita    b – – – (1)
Hinchingbrooke Health Care NHS Trust    c – – 4,836 (164)
     – – 4,849 (165)
29  FINANCIAL RISK MANAGEMENT continued
c Liquidity risk
 Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group’s  
approach to liquidity is to manage short and long-term borrowings to ensure that it will always have sufficient liquidity to meet  
its liabilities when due, without incurring unacceptable losses or risk damaging the Group’s reputation.
 This is achieved by robustly managing cash generation across its operations, by applying cash collection targets throughout the  
Group, and by managing liquidity risk via long-term debt and equity funding from shareholders.
 The Group has received strong support from its shareholders, who have provided equity cash funding when necessary to fund the  
Group’s activities. These funds have been utilised to support the business plans of the Group in accordance with the Group’s financial 
projections, which are updated on a regular basis. 
 The table below analyses the Group’s non-derivative and derivative financial liabilities into relevant maturity groupings, based  
on the remaining period at the balance sheet date to the contract maturity date. The amounts included in the table are the  
contractual undiscounted cash flows:
    Between Between Between Between  
   Less than one to two to three to four to Over 
   one year two years three years four years five years five years 
   £’000 £’000 £’000 £’000 £’000 £’000 
At 31 December 2015 
Trade and other payables   (6,840) – – – – –
Finance lease   (2,987) (2,635) (696) (389) (374) (9,323)
Net outflows   (9,827) (2,635) (696) (389) (374) (9,323) 
At 31 December 2014 
Trade and other payables   (5,465) – – – – –
Finance leases    (2,450) (2,450) (2,390) (2,033) (395) (10,059)
Net outflows   (7 ,915) (2,450) (2,390) (2,033) (395) (10,059)
Included in the previous tables are the cash flows in respect of the Birmingham lease. There are various buy-down options  
over the term of the lease, and management’s intention has been reflected in the cash flows set out above.
ii Capital risk management
The primary objective of the Group’s management of debt and equity is to ensure the continued growth of the business, including  
the financing of new hospitals, equipment, start-up costs, and Head Office overheads, in order to provide returns for the Group’s  
shareholders and other stakeholders. The Group raises financing, when needed, through a combination of equity and debt.
Objectives are set out at the beginning of each year, in line with the imposed requirements and covenants of the shareholder agreements. 
Covenants on the CircleBath rental agreement with Medical Properties Trust are tested monthly. No long-term debt exists elsewhere  
in the Group.
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
* Jersey Financial Services Commission.
** Following the completion of Project Reset in 2014, 
the CPBT, through which staff are awarded share 
options in Circle, became a major shareholder in 
Circle Holdings plc. CPL is an historic entity from 
the prior structure, and we expect it to be wound 
up in 2016. 86     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     87
30  RELATED PARTY TRANSACTIONS continued
a Health Properties (Bath) Limited
 HP Bath is a joint venture of the Group which owned the Bath hospital that was sold during 2014. 
 As at 31 December 2015, an amount of nil was outstanding (2014: £13,000) 
b Capita
 During 2015, the Group was charged £85,000 (2014: £96,000) by Capita for fiduciary services provided to companies within  
the Group during the year. The amount outstanding at 31 December 2015 was £nil (2014: £nil). 
 The Capita Group also provided IT data hosting services during the year. The Group was charged £514,000 (2014: £540,000)  
for these services provided during the year. The amount outstanding at 31 December 2015 was nil (2014: £1,750).  
c Hinchingbrooke Health Care NHS Trust          
 During 2015, a settlement agreement relating to the termination of the franchise was agreed. Thereafter, Hinchingbrooke  
Health Care NHS Trust ceased to be a related party.        
Health Trust (Jersey)
Health Trust (Jersey) also holds 2,340,765 warrants in the Company (note 23). 
Following the completion of Project Reset on 4 December 2014, Health Trust (Jersey) shareholding in CPL was exchanged  
for 2,309,402 convertible shares in Circle Holdings plc. The previous agreement for Health Trust (Jersey) to own an amount  
equal to an aggregate 10% of the issued share capital of CPL has now extinguished.   
The following are related parties by virtue of their significant shareholding. Notes 22 and 23 provide further details:
      Number of   
      shares held  Value of  
      (including Percentage warrants held 
      convertible shares) shareholding £
Balderton Capital      16,756,534 7% 4,786
BlueCrest Capital Management     9,252,685 4% 296
Invesco Perpetual      18,268,920 7% –
Lansdowne Partners      54,167,008 22% 1,262
Toscafund      62,397,297 25% –
Circle Partnership Benefit Trust     61,949,297 25% –
Other than the above and the equity transactions detailed in notes 22 and 23, there have been no transactions with these related parties.
31  EVENTS AFTER THE BALANCE SHEET DATE
In January 2016, marketing for the sale of the land held by Health Properties (South Manchester) Limited commenced.  
It has a carrying value of £5,000,000, and the directors believe the sales proceeds will support the carrying value.
NOTES TO THE CONSOLIDA TED  
FINANCIAL STATEMENTS
Continued
 
I felt extremely well 
looked after and very 
safe. The consultant and all 
the nurses were fantastic. 
Thank you so much.
INPATIENT CIRCLEBATH 88     CIRCLE HOLDINGS PLC
 
In addition, we read all the financial and 
non-financial information in the Annual 
Report to identify material inconsistencies 
with the audited financial statements, 
and to identify any information that is 
apparently materially incorrect, based 
on, or materially inconsistent with, the 
knowledge acquired by us in the course  
of performing the audit. If we become 
aware of any apparent material 
misstatements or inconsistencies,  
we consider the implications for  
our report.
Other matter
We have reported separately on  
the Group financial statements  
of Circle Holdings plc for the year  
ended 31 December 2015.
Simon O’Brien (Senior Statutory Auditor)
For and on behalf of 
PricewaterhouseCoopers LLP
Chartered Accountants and  
Recognised Auditors
London
29 March 2016
Report on the Company’s 
financial statements
Our opinion
In our opinion, Circle Holdings plc’s  
Company financial statements (the  
‘financial statements’):
• give a true and fair view of the  
state of the Company’s affairs  
as at 31 December 2015;
• have been properly prepared in 
accordance with United Kingdom 
accounting standards; and
• have been prepared in accordance with  
the requirements of the Companies 
(Jersey) Law 1991.
What we have audited
The financial statements, included  
within the Annual Report, comprise:
• the Company balance sheet  
as at 31 December 2015; and
• the notes to the financial statements, 
which include a summary of significant 
accounting policies and other 
explanatory information.
Certain required disclosures have been 
presented elsewhere in the Annual Report, 
rather than in the notes to the financial 
statements. These are cross-referenced 
from the financial statements and are 
identified as audited.
The financial reporting framework that 
has been applied in the preparation of the 
financial statements is United Kingdom 
accounting standards, comprising FRS  
101 Reduced Disclosure Framework,  
and applicable law. 
In applying the financial reporting 
framework, the directors have made  
a number of subjective judgements,  
for example, in respect of significant 
accounting estimates. In making such 
estimates, they have made assumptions  
and considered future events.
Opinion on other matter 
In our opinion, the information given in the 
Directors’ report for the financial year for 
which the financial statements are prepared 
is consistent with the financial statements.
Other matters on which  
we are required to report  
by exception
Accounting records and information 
and explanations received
Under the Companies (Jersey) Law 1991,  
we are required to report to you if, in  
our opinion:
• we have not received all the information 
and explanations we require for our 
audit; or
• proper accounting records have not  
been kept; or 
• proper returns adequate for our audit 
have not been received from branches 
not visited by us; or
• the financial statements are not in 
agreement with the accounting records 
and returns.
We have no exceptions to report arising 
from this responsibility.
Responsibilities for the 
financial statements and  
the audit
Our responsibilities and those  
of the directors
As explained more fully in the Statement 
of directors’ responsibilities set out on page 
41, the directors are responsible for the 
preparation of the financial statements  
and for being satisfied that they give a  
true and fair view.
Our responsibility is to audit and express 
an opinion on the financial statements in 
accordance with applicable law and ISAs 
(UK and Ireland). Those standards require 
us to comply with the Auditing Practices 
Board’s Ethical Standards for Auditors.
This report, including the opinions, has been 
prepared for, and only for, the Company’s 
members as a body in accordance with 
Article 113A of the Companies (Jersey) Law 
1991 and for no other purpose. We do not, 
in giving these opinions, accept or assume 
responsibility for any other purpose or to 
any other person to whom this report is 
shown or into whose hands it may come, 
save where expressly agreed by our prior 
consent in writing.
What an audit of financial 
statements involves
We conducted our audit in accordance  
with ISAs (UK and Ireland). An audit 
involves obtaining evidence about the 
amounts and disclosures in the financial 
statements sufficient to give reasonable 
assurance that the financial statements  
are free from material misstatement, 
whether caused by fraud or error.  
This includes an assessment of: 
• whether the accounting policies 
are appropriate to the Company’s 
circumstances, and have been 
consistently applied and adequately 
disclosed; 
• the reasonableness of significant 
accounting estimates made by the 
directors; and 
• the overall presentation of the  
financial statements. 
We primarily focus our work in these areas  
by assessing the directors’ judgements 
against available evidence, forming our  
own judgements, and evaluating the 
disclosures in the financial statements.
We test and examine information, using 
sampling and other auditing techniques, 
to the extent we consider necessary to 
provide a reasonable basis for us to draw 
conclusions. We obtain audit evidence 
through testing the effectiveness of 
controls, substantive procedures, or  
a combination of both. 
INDEPENDENT  
AUDITORS’ REPORT
To the members of Circle Holdings plc
© Foster + Partners 90     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     91
        2015 2014 
      Note £’000 £’000
Non-current assets     
Investments      5 – –
Current assets     
Debtors       6 2,919  101,785
Cash at bank and in hand        8,313  14,180
       11,232  115,965
Creditors – amounts falling due within one year    7 (3,217) (3,075)
Net current assets        8,015  112,890
Total assets less current liabilities      8,015  112,890
Net assets       8,015  112,890
Capital and reserves     
Called-up share capital      8 4,956  4,956
Share premium      8 236,795  236,795
Other reserves      8 11,303  11,303
Warrant reserve      9, 11 22,703  22,703
Share-based charges reserve     9, 11 4,535  1,842
Treasury share reserve      9 (9,587) (9,587)
Profit and loss account      9 (262,690) (155,122)
Total shareholders’ funds      10 8,015  112,890
The financial statements on pages 91 to 100 were approved by the Board of Directors on 29 March 2016 and were signed on its behalf by:
Steve Melton Paolo Pieri 
Chief Executive Officer Chief Financial Officer
Circle Holdings plc  
Registered number: 100016 (Jersey)
COMPANY  
BALANCE SHEET
As at 31 December 2015
I was very impressed with the 
efficient and professional staff, 
who were also very friendly and made me 
feel at ease. The environment was very 
clean, and I felt safe and well cared for. 
Thank you for making my experience as 
stress free and comfortable as possible.
DAY CASE PATIENT CIRCLENOTTINGHAM
  92     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     93
1  ACCOUNTING POLICIES
Basis of preparation
These financial statements are prepared  
for Circle Holdings plc (the ‘Company’)  
for the year ended 31 December 2015.  
The Company is the ultimate parent  
entity of the Circle Holdings plc Group  
(the ‘Group’). The financial statements  
have been prepared in accordance with  
FRS 101 Reduced Disclosure Framework. 
These financial statements are prepared 
under the historical cost convention  
and in accordance with the Companies  
Act 2006 and applicable accounting  
standards in the United Kingdom.  
The following exemptions from the 
requirements of IFRSs have been applied  
in the preparation of these financial 
statements: 
•	 Paragraphs 45(b) and 46 to 52  
of IFRS 2 Share-based Payment.
•	 IAS 7 Statement of Cash Flows and 
paragraph 10(d) of IAS 1 (statement  
of cash flows).
•	 The requirement in IAS 24 Related  
Party Disclosures to disclose related  
party transactions entered into between 
two or more members of a group.
The principal accounting policies, which 
have been applied consistently for both 
years presented, are set out below. 
Accounting convention
These financial statements have been 
prepared on a historical cost basis in 
accordance with the Companies (Jersey) 
Law 1991 and applicable UK accounting 
standards. The Company has not prepared 
a separate income statement and cash flow 
statement, as it is not a requirement under 
Companies (Jersey) Law 1991.
Going concern
The directors consider it to be appropriate  
for the Company financial statements to  
be prepared on a going concern basis,  
based on the assumptions considered  
in the Directors’ report on page 27.
Investments
Investments in subsidiaries and joint 
ventures are valued at cost less provision 
for impairment. The carrying value of 
fixed asset investments is reviewed for 
impairment when events or changes  
in circumstances indicate the carrying  
value may not be recoverable.
Deferred tax
Deferred tax is provided in full (without 
discounting) based on current tax rates and 
law, on timing differences that result in an 
obligation at the balance sheet date to pay 
more tax, or a right to pay less tax in the 
future, except as otherwise required by  
FRS 101. 
Warrants
A warrant is an instrument issued by a 
company, which gives the holder the right 
to purchase shares in that company at a 
specific price at a future date. An equity 
instrument is any contract that evidences  
a residual interest in the assets of an entity  
after deducting all of its liabilities. A warrant  
is treated as a financial liability if:
• it is a non-derivative and the entity is 
obliged to deliver a variable number  
of the company’s own shares; or
• it is a derivative that will be settled  
other than by a fixed amount of cash  
or other assets for a fixed number of  
the company’s own shares.
Transaction costs are apportioned between 
the liability and equity components of the 
shares, based on the allocation of proceeds 
to the liability and equity components 
when the instruments are first recognised.
Equity warrants
The proceeds on issue of equity warrants 
are included within shareholders’ equity, 
net of transaction costs. The fair value of 
the equity component is not remeasured  
in subsequent years. The fair value of 
warrants is credited to equity, with the 
debit being charged to the profit and loss 
account, or taken to non-current liabilities 
where the warrants are linked to a loan.
Equity warrants are valued using an 
appropriate valuation methodology  
on a diluted pricing basis, based on  
the relevant share price at the time  
of issue, or based on an assessment  
of the market price at the time of issue.
Capital contributions
Share-based incentive schemes for 
employees are operated by subsidiary 
undertakings that are settled by equity 
instruments in the Company. The cost of 
equity-settled transactions with employees 
is measured by reference to the fair value 
at the date at which they are granted, 
and is recognised over the vesting period, 
which ends on the date on which relevant 
employees become fully entitled to the 
warrants in the Company.
The grant of these warrants in the Company  
to the employee of the subsidiary undertaking  
is treated as a capital contribution. The fair 
value is recognised over the vesting period 
as an increase to the investment in subsidiary 
undertaking, with a corresponding credit  
to equity.
2  PROFIT AND LOSS
The result for the year is a loss of 
£107 ,568,000 (2014: loss of £8,083,000). 
During 2015, the Company provided for 
a number of intercompany loans. These 
intercompany loans are to be written off  
as in accordance with the objectives of 
Project Reset.
3  OPERATING COSTS
The Company incurred £29,000 (2014: 
£28,000) in relation to UK statutory audit 
fees for the year ended 31 December 2015.
NOTES TO THE COMPANY  
FINANCIAL STATEMENTS
For the year ended 31 December 2015
   
94     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     95
6  DEBTORS
       2015 2014 
      £’000 £’000
Prepayments and accrued income      20 35
Other debtors      11 59
Amounts owed by Group undertakings      2,888 101,691
      2,919 101,785
Amounts owed by Group undertakings are a combination of interest-bearing and interest-free amounts, unsecured and receivable  
on demand.
7  CREDITORS – AMOUNTS FALLING DUE WITHIN ONE YEAR
       2015 2014 
      £’000 £’000
Trade creditors      59 133
Amounts owed to Group undertakings       2,639 2,636
Accruals and deferred income      519 306
      3,217 3,075
Amounts owed to Group undertakings are unsecured and repayable on demand.
8  CALLED-UP SHARE CAPITAL
Authorised 
       2015 2014 
      £’000 £’000
Ordinary shares of £0.02 each      6,500 6,500
Convertible shares (18 months) of £0.02 each     250 250
Convertible shares (36 months) of £0.02 each     250 250
      7,000 7,000
       2015 2014 
      Number Number
Ordinary shares of £0.02 each      325,000,000 325,000,000
Convertible shares (18 months) of £0.02 each     12,500,000 12,500,000
Convertible shares (36 months) of £0.02 each     12,500,000 12,500,000
      350,000,000 350,000,000
NOTES TO THE COMP ANY  
FINANCIAL STATEMENTS
Continued
4  DIRECTORS’ EMOLUMENTS
During the year, £280,000 (2014: £274,000) was paid to directors of the Company, which includes amounts received in respect  
of share-based charges. Remuneration was paid to other directors via subsidiary companies; total details of which are included in  
the Directors’ remuneration report.
5  INVESTMENTS
Company
       2015 2014 
     Note £’000 £’000
Cost
At 1 January      178,029 166,763
Additions – CPL      – 13,066
Wind-up of investment in CH Subco Limited     – (1,800)
Capital reduction on preference shares in Circle (Welbeck) Limited    (97,791)
Additions – capital contributions      12  2,208 –
At 31 December       82,446 178,029
Provision for impairment
At 1 January       178,029 166,763
Provision in the year      2,208 13,066
Capital reduction on preference shares in Circle (Welbeck) Limited    (97,791) 
Wind-up of investment in CH Subco Limited     – (1,800)
At 31 December       82,446 178,029
Net book amount at 31 December      – –
The directors consider that the value of the Company’s fixed asset investments, which are listed below, is supported by their  
underlying assets:
   Proportion of  
Name of company Holding Nature of business voting rights held Country of incorporation 
Circle International plc Ordinary shares Holding and management 100% United Kingdom
Health Properties Limited
*
  Ordinary shares Holding and management 100% Jersey
Circle (Welbeck) Limited Preference shares Finance company N/A United Kingdom
Circle Partnership Limited
**
 Ordinary shares Former employee  
  share ownership plan 100% British Virgin Islands
* Jersey Financial Services Commission.
** Following the completion of Project Reset in 2014, 
the CPBT, through which staff are awarded share 
options in Circle, became a major shareholder in 
Circle Holdings plc. CPL is an historic entity from 
the prior structure, and we expect it to be wound 
up in 2016.  
96     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     97
NOTES TO THE COMP ANY  
FINANCIAL STATEMENTS
Continued
8  CALLED-UP SHARE CAPITAL continued
Allotted and fully paid up 
     Called-up Share Other 
   Shares share capital premium reserves Total 
   Number £’000 £’000 £’000 £’000
Ordinary shares
At 1 January 2014   130,785,122 2,616 193,145 11,303 207,064
Fundraise – 9 January 2014 (net of costs)  £0.02 55,000,000 1,100 25,120 – 26,220
Shares issued – 16 June 2014 (net of costs)  £0.02 62,769 1 – – 1
Project Reset – ordinary shares issued –  
8 December 2014 (net of costs)  £0.02 38,855,367 777 7,560 – 8,338
Project Reset – convertible shares issued –  
8 December 2014 (net of costs)  £0.02 23,093,930 462 10,970 – –
At 31 December 2014   247,797,188 4,956 236,795 11,303 241,623
At 31 December 2015   247,797,188 4,956 236,795 11,303 241,623
9  RESERVES
      Treasury Share-based Profit 
  Share Warrant Other share charges and loss 
  premium reserve reserves reserve reserve account 
  £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2015  236,795 22,703 11,303 (9,587) 1,842 (155,122)
Loss for the financial year  – – – – – (107,568)
Issue of shares options  – – – – 2,693 –
At 31 December 2015  236,795 22,703 11,303 (9,587) 4,535 (262,690)
During 2015, £2,693,000 was the IFRS 2 share-based payment charge for share options issued to Circle employees and partners.  
This charge has been passed onto the subsidiary company in which the services are being provided, namely Circle Health Limited,  
by way of capital contribution.
10  RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
       2015 2014 
     Note £’000 £’000
Loss for the financial year      (107,568) (8,083)
Awards of shares to non-executive directors     12 – 14
Issue of share options      12 2,693 38,080
Net addition to shareholders’ funds      (104,875) 30,011
Opening shareholders’ funds      112,890 82,879
Closing shareholders’ funds      8,015 112,890
11  WARRANTS
The Company issues warrants which give the holders the right to purchase shares for a specific price at a future date. The warrants are  
treated either as equity instruments and recorded in the warrant reserve, or as financial liabilities and recorded in liabilities, depending  
on certain criteria, as outlined in the Company’s accounting policies. There are no remaining warrants issued as financial liabilities.
Warrants treated as equity instruments
Movements in the warrant reserve during the year are as follows:
      2015 2014 
      £’000 £’000
At 1 January      22,703 22,703  
98     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     99
11  WARRANTS continued
The following table details all share warrants issued by the Company which are recognised in equity, none of which have been  
exercised to date:
   Original    Warrant reserve:   
   warrants,      
  Revised restated for   At  At 
  exercise five-for-one  Revised 1 January Share-based 31 December 
  price split Modified warrants 2015 charges 2015 
 Note £ Number Number Number £’000 £’000 £’000
Beneficiary
Warrants issued in 2008
Balderton Capital  b £1.52 523,460 – 523,460 4,111 – 4,111
Lansdowne Partners b £1.52 99,630 – 99,630 783 – 783
JCAM    £10.31 238,930 – 238,930 1,616 – 1,616
Warrants issued in 2009
Balderton Capital  b £1.52 172,355 – 172,355 675 – 675
Lansdowne Partners b £1.52 172,355 – 172,355 479 – 479
BlueCrest Capital  
Management b £1.52 75,510 – 75,510 296 – 296
Warrants modified in 2011
Health Trust (Jersey) a £1.52 – 2,340,765 2,340,765 14,743 – 14,743
   1,282,240 2,340,765 3,623,005 22,703 – 22,703
a The cancellation of the warrants issued to Health Trust (Jersey) and Health Trust (Jersey) option pool, and reissue of warrants  
to Health Trust (Jersey) are detailed in note 23 of the consolidated financial statements.
b In May 2011, after the IPO, the existing share warrants, which consisted of warrants issued in 2008 and 2009 to Health Trust  
(Jersey) and Health Trust (Jersey) option pool, were modified, adjusting both the exercise price and vesting conditions. Under the  
terms of the modification, the existing share warrants were replaced with warrants issued exclusively to Health Trust (Jersey), and  
the exercise price was set to the IPO price of £1.52 per new ordinary share issued. The modified share warrants do not have any expiry  
date or any conditions attached. A fair value assessment was completed, based on the value of the existing warrants prior to IPO,  
and the fair value of the modified warrants determined using Black-Scholes on a diluted pricing basis, using the parameters outlined  
on the next page. The incremental fair value of the modification was recognised on a straight-line basis over a 24-month period from  
May 2011 until May 2013, in line with the revised vesting timetable (1/24 every month from May 2011). 
NOTES TO THE COMP ANY  
FINANCIAL STATEMENTS
Continued
* The historical volatility is assumed to be indicative of future trends, which may not necessarily be the actual outcome.
** The life of the warrant is based on the expected term and is not necessarily indicative of exercise patterns that may occur.   
12  CAPITAL CONTRIBUTIONS
Shares and share warrants are issued to employees, clinicians and external investors, who contribute to the success and growth in value  
of the Group. The issuance of these warrants and shares, including the issue of shares to scheme participants and employees, qualifies as 
equity-settled share-based payment transactions, and falls within the scope of IFRS 2 Share-based Payment. The impact on the income 
statement in respect of share-based charges is as follows. Note: there is no charge associated with the transaction where the employees 
subscribe for the shares at full market value:
      2015 2014 
    Note Type £’000 £’000
Awarded to non-executive directors   a Shares – 14
Other share-based charges   b Shares 2,693 572
     2,693 586
a Non-executive directors
 The Group operates an equity-settled, share-based compensation plan for its non-executive directors. The entity receives services  
from these directors as consideration for shares in the Group. The fair value of the services received in exchange for the grant of the 
awards is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the awards granted. 
 Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest. 
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be 
satisfied. At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest, based  
on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the profit and loss account, 
with a corresponding adjustment to equity. When the vesting conditions are met, the company issues new shares. The proceeds received  
net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
b Other share-based charges
 During 2015, £2,693,000 was the IFRS 2 share-based payment charge for share options issued to Circle employees and partners.  
This charge has been passed onto the subsidiary company in which the services are being provided, namely Circle Health Limited,  
by way of capital contribution.
Modified warrant issue parameters (reflecting five-for-one share split)
Stock price      £1.52
Exercise price      £1.52
Expected volatility
*
      50%
Risk-free interest rate      5%
Warrant life
**
      10 years
Fair value of warrant      £1.02
The incremental increase in the fair value was assessed at £1,478,000 and was charged to the income statement over the remaining  
vesting period, along with the residual charge relating to the fair value at the grant date of the initial warrants. The warrants charge  
recognised in the income statement for the year to 31 December 2015 is £nil (2014: £nil). There were no new warrant issues qualifying  
as share-based charges during 2015 (2014: £nil), and none of the warrants were exercised in 2015 (2014: £nil).  
100     CIRCLE HOLDINGS PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     101
13  RELATED PARTY TRANSACTIONS
During the year, the Company entered into transactions, in the ordinary course of business, with other related parties.
Following the group’s reorganisation, transactions with some group companies which are now 100% owned by the Company  
are eligible for exemption from disclosure under IAS 24 Related Party Disclosures, and have accordingly been removed from  
the list of related party transactions.
      2015  2014 
    Amounts Amounts Amounts Amounts 
    owed by owed to owed by owed to 
    related party related party related party related party 
   Note £’000 £’000 £’000 £’000
Capita  a – – – –
a Capita
 During 2015, the Group was charged £85,000 (2014: £96,000) by Capita for fiduciary services provided to  
companies within the Group during the year. The amount outstanding at 31 December 2015 was £nil (2014: £nil). 
The following are related parties by virtue of their significant shareholding. The Group financial statements provide more details.
       Value of 
     Number of  warrants held 
     shares held Shareholding £
Balderton Capital    16,756,534 7% 4,786
BlueCrest Capital Management    9,252,685 4% 296
Invesco Perpetual    18,268,920 7% –
Lansdowne Partners    54,167,008 22% 1,262
Toscafund    62,397,297 25% –
Circle Partnership Benefit Trust    61,949,297 25% –
Other than the above and the equity transactions detailed in notes 11 and 12, there have been no transactions with these related parties.
14  EVENTS AFTER THE BALANCE SHEET
There are no post-balance sheet date events to report.
15  RECONCILIATION FROM EXISTING ACCOUNTING STANDARDS TO FRS 101
As noted in the accounting policies, the Company has adopted FRS 101. The Company’s transition date for the adoption of FRS 101  
is 1 January 2014. This transition date has been selected in accordance with FRS 100 Application of Financial Reporting Requirements,  
and is the first day of the comparative period of account. 
The Company is required to establish its FRS 101 accounting policies for the years ended 31 December 2014 and 31 December 2015,  
and apply these retrospectively to determine its opening FRS 101 balance sheet at the transition date of 1 January 2014, unless transition  
reliefs are available. 
There are no differences for the Company between reporting under FRS 101 as compared to reporting under UK GAAP as at 1 January  
2014, or for the years ended 31 December 2014 and 31 December 2015. 
NOTES TO THE COMP ANY  
FINANCIAL STATEMENTS
Continued
Everything was clean and 
nicely decorated. The ward 
was so quiet and peaceful.
INPATIENT CIRCLEREADING ANNUAL REPORT AND FINANCIAL STATEMENTS 2015     103 102     CIRCLE HOLDINGS PLC
COMPANY  
INFORMATION 
NON-EXECUTIVE DIRECTORS
Michael Kirkwood CMG
Lorraine Baldry OBE
Andrew Shilston
Justin Jewitt
Lord Hutton of Furness
EXECUTIVE DIRECTORS
Steve Melton
Massoud Fouladi 
Paolo Pieri
COMPANY SECRETARY
Shane Cobb
REGISTRARS
Capita Registrars (Jersey) Limited
12 Castle Street
St Helier
Jersey 
JE2 3RT
Channel Islands
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
Chartered Accountants and  
Recognised Auditors
1 Embankment Place
London WC2N 6RH
BANKERS
Barclays plc
13 Library Place
St Helier 
Jersey 
JE4 8NE
Channel Islands
ADVISORS
Numis Securities Limited
10 Paternoster Square  
London EC4M 7LT
SOLICITORS
Ogier LLP
Whiteley Chambers 
Don Street 
St Helier
Jersey 
JE4 9WG
Channel Islands
Gowling WLG
4 More London Riverside
London SE1 2AU
REGISTERED OFFICE
12 Castle Street
St Helier
Jersey 
JE2 3RT
Channel Islands
ADMINISTRATIVE OFFICE
32 Welbeck Street
London W1G 8EU
 
A wonderful experience; 
I cannot thank the staff 
enough. Everyone was respectful, 
helpful and informative. They 
also looked after my wife 
whenever she visited. Thanks 
again to everyone involved 
for making this very worrying 
experience as easy as possible. 
GENERAL SURGERY PATIENT CIRCLEREADING 32 Welbeck Street
London W1G 8EU
circleholdingsplc.com