Annual Report and ﬁnancial statements 2012
We believe hospitals  
can be better Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 1
Highlights Our credo
Our purpose
To build a great company dedicated to our patients.
Our parameters
We focus our efforts exclusively on:


 Our principles

 
We should select them attentively and invest in them passionately. As everyone 

 
 never-ending process. ‘Good enough’ never is.
Contents
Highlights 1
Business model 3
Chairman’s statement 7
Chief Executive Ofﬁcer’s report 8
Operational overview 10
Chief Financial Ofﬁcer’s report 12
Board of Directors 16
Directors’ report 19
Report on corporate governance 23
Directors’ remuneration report 26
Statement of 
directors’ responsibilities 30
Independent auditors’ report 31
Consolidated income statement 32
Consolidated balance sheet 33
Consolidated statement 
of changes in equity 34
Consolidated statement 
of cash ﬂows 35
Notes to the consolidated
ﬁnancial statements 37
Independent auditors’ report 84
Company balance sheet 85
Notes to the Company 
ﬁnancial statements 86
Company information  96
Financial highlights
 Revenue under management
*
 on continuing facilities
**
  
up 170.5% to £170.4 million (2011: £64.6 million).
 Group revenue on continuing facilities
**
 up 13.4% to  
£73.2 million (2011: £64.6 million).
 ***
 loss before exceptional items on continuing 
activities improved 8.4% to £14.2 million (2011: loss  
of £15.5 million).  
 Basic and diluted loss per share of 25.7p (2011: 64.4p  
loss per share).
 £47.5 million equity fundraising (before fees).
 Repayment of £14.1 million loan to James Caird  
Asset Management (‘JCAM’).
Operational highlights
 **
 up 20.9%  
to 147,291.
 patient satisfaction and average patient recommendation  
of 99.6% across all continuing facilities.  
 
 
2012, on time and on budget. 
 Selected as the preferred bidder by NHS commissioners to 

Centre for a further ﬁve years, commencing from July 2013.
 performance and patient experience at Hinchingbrooke 
 
annual deﬁcit cut from £10 million to £3.7 million.    

 
in Bedfordshire. 
 Engaged in strategic discussions regarding a potential 
ﬁnancing solution for the independent hospital  
development pipeline.
Group revenue on continuing facilities  
(£ million)
Volumes  
(continuing facilities)
Circle Group staff recommendation
****
 
 (%)
 
 170.4
2012
92.7
2012
99.6
2012
147,291
2012
64.6
2011
92.4
2011
99.1
2011
121,858
2011
54.1
2010
97 .9
2010
86,155
2010
 
by the Group, but not included in the Group’s consolidated revenue.
 
Circle’s Burton NHS Treatment Centre. 
 
 
for continuing facilities and Head Ofﬁce. No data available for 2010. Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 3 Page 2 Circle Holdings plc Annual Report and ﬁnancial statements 2012 C Circle Ho oldings plc Annua al Report and ﬁnanci ial statement ts 2012 Page 3 Page 2 Circ Ci C Circ Circ Circ Circ C C Ci i Cir ir rc c irc Circ C C Ci i i ir r r r r rc c c c c c Circ C C C Circ c c c c c c C C C Ci i ir r r r r r rc c c c c c c C C r rc c rc c C C C r rc rc c c c c c Circ C C C Circ r r rc c c c Circ Cir r r r rc c c c c c c C r rc c c c C C C rc c c c C C rc c c c c c C Circ c c c cl llH le H le H eH e H H le e H le H H le H le H e H e e e old old ld old ld ld d d ldi di ldi oldi o o di i d di o i i oldi i i ldin ng ng g gs s s s n ng g gs gs gs s n n ng gs gs gs s s ng g gs s ng g gs n n ng gs s s s ng gs s s s n n s s ngs ng gs ng g g g g g g g l l l l l l p pl l lc c c c p p p p pl l lc c p p p p p p pl l lc c c p p p pl l lc c c c c p pl p p p p p pl lc c c c p p p p pl lc c c p p p plc pl l p pl l lc c c plc c p p plc c c p A Annu A A An n n An nn nn A An nnu nu A Annu A A A A An n n n nn nu Annu A Annu A An nnu Annu A A A An Annu A n A An nn A Ann A A A An n A A A An nnu u Annu Annu A An n n n n n nn nu u u ua a al R a a a a a a a a a a a a a a a a a a a a a eport and ﬁnancial statements 2012
Business model

 patients and value for our stakeholders. 
Circle forms the largest partnership 
of healthcare professionals in Europe 
 the consultants and healthcare 
 
to put patients ﬁrst in everything  
that they do. 
Circle has a clear social mission  
to redeﬁne secondary healthcare  
 
this through our unique operating  
model (‘Circle Operating System’), 
 
back in charge of the delivery of 
 applied and proven to achieve high  
levels of patient care and efﬁciency 

participation in managing operations. 
A key target for Circle is the circa  
 healthcare market. The directors  
believe that current concerns over  
the quality of some NHS hospitals  
could increase the share of the NHS 
market available to the non-state  
 tender for further NHS contracts  
 
 
independent hospitals in Bath  
 
patients from both the NHS  
and independent markets.
Atrium at CircleBath Our partnership Chairman’s statement
 been another year of progress for the 
Group. Thanks to the dedication of 
our management and clinical teams, 
 our ground-breaking Hinchingbrooke 


bidder status to retain our operation of 
the Nottingham NHS Treatment Centre 
for a further ﬁve years. Our second  


from all regulators and private medical 
insurers. CircleBath has seen consistent 
 While the Company has yet to break into 

a proven concept in clinical performance 
 sustainability from a ﬁnancial perspective. 
 
by a substantial £47 .5 million equity 
fundraise to ﬁnance our operating plans. 
The Board has been gratiﬁed by the 
continuing conﬁdence demonstrated  
both by our current investors and our  
 


as positioning ourselves to bid for further 
NHS franchise management contracts. We 
are encouraged by the emergence of these 
and other NHS opportunities, including 
individual service lines and the delivery of 
integrated hospital and community care.
Leadership and Board changes
Earlier this year, Circle’s CEO and  
 
non-executive role on the Board in  
order to pursue other entrepreneurial 

Mobilisation, Steve Melton, to assume the 
 
Ofﬁcer. Over the past three months,  


conﬁrm his appointment to the CEO role 
on a formal and continuing basis. The Board 

Ali’s invaluable contribution over many 
years, and admiration for his founding 
vision and drive. Circle’s talented executive  
team and strong platform is a legacy  


 Bromovsky to the Board. Tony brings 
 entrepreneurial experience and is already 
making a substantive contribution as an 
integral Board member. 
The partnership
The contribution of our partnership of 
clinicians and staff is fundamental to 
our success. Our enviable track record 
 delivering the best possible patient care, 
and our reputation for efﬁcient operations 
is due to their active participation in the 
management of their facilities. At Circle, 

 stake in our success.
The Board is eager to ensure the 
continued engagement and motivation 
of clinicians and staff, and is therefore 
 the efﬁcacy of the current partnership 
incentivisation. The Board has noted that 
the Group structure is relatively complex, 


and incorporating a property development 
capability. Some progress has been made 

 Holdings being brought onshore for tax 
 focused on structural simpliﬁcation and 
improved transparency across the Group.
 We believe that our common-sense 
approach of putting doctors and nurses in 
charge of tackling the problems that the 
 elderly population, and an ever increasing 
focus on the quality of care provided by 
 scrutiny of NHS hospitals facing quality 

 improve quality and change culture.
Our focus in the year ahead is to build 
 the quality and costs of care through 
 

 
 value, innovation and service that our 
approach delivers against a backdrop of 
tighter budgets in the NHS, alongside 
the demographic challenge posed by an 
ageing population. Our vision, model and 
 deliver on its plans in the year ahead.
 Chairman
17 April 2013
 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 7 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 9 Page 8 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Chief Executive Ofﬁcer’s report
Steve Melton

 enormous contribution of my predecessor, 
 track record in innovative healthcare 
 
vision and entrepreneurial drive.
 in our mission to transform healthcare in 
 run Hinchingbrooke hospital, the opening 
 successful participation in a re-tendering 

 doctors and nurses in charge raises the 
quality of care, delivers value and sparks 
innovation. We are pleased to report that 
 operating proﬁts before exceptional items 
 
 services at the Nottingham NHS Treatment 
Centre for a further ﬁve years. This result 
is a vote of conﬁdence in our model 
of clinical leadership and employee 
engagement, and testament to the 
talent and commitment of our frontline 

 this contract cements our ﬁrst-mover 
advantage in independent NHS provision  
of services, through an innovative 
approach to integrating hospital  
and community care. 
 
year-on-year increases of 28% and 40%, 
respectively. While a strategy to increase 
private revenues substantially has seen 
 focus on securing improved margins. 
 CircleReading, opened in August 2012 
and has had a strong ﬁrst ﬁve months, 
 private revenue and gaining signiﬁcant 
 opening. At the same time, it has quickly 
matched other Circle facilities in achieving 
high levels of patient satisfaction. Lessons 
from the commissioning of CircleBath 
are being applied continuously to 
CircleReading operations.

 the ﬁrst 11 months of operations at 
 that our model has delivered strong 
performance across a range of indicators. 

 
also secured approximately 7% annualised 
savings against a £100 million budget, 
including a 50% decrease in locum costs. 
 on overcoming Hinchingbrooke’s 
historic ﬁnancial problems by achieving 
a sustainable break-even position, and 
making CircleBath and CircleReading 
economically sustainable by continuing  
 Quality
The strong thread running through all of  
our current facilities and future plans is 
our commitment to providing the best  
possible patient care. Our founding 
credo describes us as ‘the agents of our 
patients’, and speaks of ‘exceeding their 
expectations every time’. Our proudest 
achievement is the consistently high 
levels of patient satisfaction recorded in 

 Service’ for the second consecutive year, 
beating stiff competition from luxury 
hotels in the region. 
 
have made improving patient care our 
 or unsafe. Since then, the hospital has 
consistently ranked among the top of the 
regional health authority’s independent 
ratings of 46 in the Midlands and East 
region, including top 10 for patient 
 as one of the ﬁve most improved hospitals 
 60% year-on-year reduction in clinical 

culture of transparency that has achieved 
a 13-fold increase in the number of patient 
feedback forms. We ensure all concerns 
are addressed promptly by publishing 
feedback verbatim online in a ‘TripAdvisor’ 
style initiative and, so far, this has led to 
the scrapping of parking ﬁnes, an overhaul 
of menus, the installation of free patient 
television systems, and the introduction 
of bedside handovers on nursing shifts.
Strategy and outlook
We remain focused on a strategy of 
transforming healthcare by innovating in 
 that many opportunities exist to improve 
 At Hinchingbrooke, in a relatively short 
 
be achieved by putting doctors and nurses 
in charge: the quality of care goes up,  
 

stimulates innovation and initiative. 

contract on the back of innovative 
 the treatment centre and the community, 
 us to gain unique expertise in this area. 

Competition Commission inquiry into the 
private healthcare industry, and remain 
 
tackle many of the barriers to entry that 

A clear strategy, proven results and,  
above all, our ability to unleash innovation 
by putting doctors and nurses in charge, 
 Steve Melton
Chief Executive Ofﬁcer
17 April 2013 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 11 Page 10 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Operational overview
 NHS
 Patients recommending (%)
99.1
2011
99.4
2012
 Patients recommending (%)
98.3
2011
99.9
2012
CircleBath


 £15,644,000 (2011: £12,217,000), driven by an increase in the number of specialties 
offered to private and NHS patients. Spinal and neurosurgery have seen the greatest 
 

True to the Group’s belief that ‘hospitals can be better’, the Group is pleased that 
 ‘Customer Service’, beating stiff competition from some of the best ﬁve star hotels  
 
in the cancer leadership category of the Nursing Times
community. CircleBath became a training site for student nurses, student radiographers 
 

aimed at young people thinking about a career in healthcare. 
Hinchingbrooke Health Care NHS Trust
On 1 February 2012, the Group commenced operations at Hinchingbrooke, the ﬁrst  
 
Group manage an estimated £1 billion of revenue over the 10-year contract period.  
 
 
 
point the Group is also required to pay a further £2,000,000 in termination costs  
to Hinchingbrooke.
The Group is pleased to report strong performance across a range of indicators.  
 
 
the Trust has delivered signiﬁcant improvements in patient satisfaction, accident  

 
and quality of care to achieve our goal of making Hinchingbrooke one of the  
top 10 district general hospitals in the country.
Nottingham NHS Treatment Centre
Circle’s Nottingham NHS Treatment Centre, one of the largest day case centres in Europe, 
 (2011: £51,185,000), despite a modest increase of 0.8% in overall volumes. At the same 
time, operating proﬁt has increased by 14.2% to £2,729,000 (2011: £2,390,000).
 
 
 
sector treatment centre threshold. 
Furthermore, Circle is delighted to have been selected as the preferred bidder by  
 

 
 Clinical Commissioning Group, and is a testament to the Company’s model of clinical 
leadership and employee engagement.
 
 
intends to introduce a 10-bed inpatient facility to enhance services currently offered  
by certain specialties.
99.6
2012
 Patients recommending (%)
CircleReading
 
 
£1,000,000 in the month of November. 
 
of £3,221,000 predominately from privately-insured and self-pay patients. NHS  
activity commenced in the fourth quarter of 2012 and is expected to increase  
steadily during 2013. 
 

 
 At the same time, CircleReading has achieved high levels of patient satisfaction,  
 delivering a steady increase in NHS patient procedures. Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 13 Page 12 Circle Holdings plc Annual Report and ﬁnancial statements 2012
The Group has continued to deliver  
 revenue of £73,246,000 delivering 
a year-on-year increase of 13.4% in 
continuing facilities primarily resulting 

and the Nottingham NHS Treatment 
Centre, endorsing the concept of 
clinician engagement in healthcare. 

impressively, exceeding planned patient 
attendances in the ﬁve months from 
opening and contributed revenues of 
£3,221,000.
Overall patient procedures in continuing 
Circle facilities increased by 20.9% to 
147,291 procedures. CircleBath continued 
 number of procedures up 39.7% to 
46,340 (2011: 33,174). The increase in 
patient procedures in continuing facilities 
is also attributable to the impressive 
 
performed 11,599 procedures since opening 
in August 2012. Circle’s Nottingham NHS 
Treatment Centre continued to see strong 
 procedures increasing by 3.5% to 27,700. 
Crucially, the increases in patient numbers 
visiting Circle facilities have been achieved, 

on continuing facilities improved by 8.4%,  
from a loss of £15,500,000 to a loss 
of £14,200,000, primarily driven by 
improved operating results at CircleBath, 
Circle’s Nottingham NHS Treatment 
Centre and further cost efﬁciencies  
in the Group.
The Group generated an operating loss 
before exceptional items of £17 ,974,000, 
an increase of 4.9% on the previous 
year’s result. The increase in the Group’s 
 
loss of the contract to run the Burton 
NHS Treatment Centre in July 2011  
and CircleReading overhead costs  
prior to its opening.

stands at 25.7 pence, improved from a 
loss per share in 2011 of 64.4 pence.
Exceptional items
The Group recognised some key 
exceptional items in the year.
 VAT for prior periods, the Group has 
made a £1,500,000 provision relating 
predominantly to inaccuracies in the 
2008–10 period. The Group continues  
 
of ﬁnalising its position during 2013, and 
 Customs (‘HMRC’) on the outcomes of 
 Furthermore, the Group has impaired the 
carrying value of its land in Manchester 
by £2,200,000 and made a provision 
of £1,600,000 for historic balances due 


require the Group to consider the current 
 commissioning asset (approximately 
£2,100,000) relating to its CircleReading 
facility as a one-off exceptional item 
(note 14). The overall cash commissioning 
cost for CircleReading has remained 
unchanged and under budget for 2012. 
Exceptional ﬁnance income of  
£866,000 (2011: expense of £10,097 ,000 


 repayment of the JCAM loan offset by fair 
 in the year.
Financing
 
 of equity funding. The proceeds from this 
fundraise have been used, in part, to pay 
 
to JCAM, and complete the commissioning  
of CircleReading and the commencement  
of the Hinchingbrooke contract. Funds  
have also been used for the general  
 
Group, in particular CircleBath. The  
Group is encouraged by the emergence 
 consider the requirements for further capital 
depending on the opportunities presented.
The Group continues to seek ﬁnancing for 
CircleManchester and the independent 
hospital development pipeline, and is 
 investors for a potential ﬁnancing solution.

reduced by 27 .9% to £16,989,000 (2011: 
 the improvement in the underlying 
performance of the Group. Net debt  
has also fallen from £42,354,000  
to £23,471,000 at year end, despite  
funding CircleReading’s start-up phase.

£1,400,000 in developing the Circle 
Operating System and supporting 
the development of the information 
technology infrastructure across all sites 
to improve the stability and effectiveness 
of clinical and management information.
The Group’s interest expense in the year 


been accruing interest at 25% per annum.
Restructuring
The Group continues to focus on  
 
the current strategy, and recently 
undertook a restructure of its Head  
Ofﬁce to ensure the cost base remains  
 
 
 
 restructure charge of £500,000 in 2013.
The Group completed the migration  
of specialist surgical services from its 
CircleWindsor clinic to its CircleReading 
facility in March 2013. 
 plans for the coming years.
Group results
Revenue under management of £170,400,000 and revenue from continuing facilities of 
£73,200,000, mark a signiﬁcant uplift on the previous year’s results. The Group ends the 

  Year to  Year to
  31 December 31 December
  2012 2011
 Note £’000 £’000
Revenue under management
*
 (continuing facilities
**
)  170,403 64,618
Group revenue (continuing facilities
**
)  73,246 64,618
Group revenue  73,246 74,607
Earnings before interest, tax, depreciation and  
 ***
  6 (14,180) (13,633)
Total operating loss before exceptional items
***
  6 (17,974) (17,133)
Operating loss  (29,306) (18,546)
Loss and total comprehensive loss for the ﬁnancial year  (30,424) (32,311)
Net assets   42,727 26,184
 
 Continuing Continuing 
 facilities facilities
 Year to Year to  
 31 December 31 December 
 2012 2011 Change
 Number Number
*
 Outpatients 111,490 89,008 25.3%
Total procedures 147,291 121,858 20.9%
 
by the Group, but not included in  
the Group’s consolidated revenue.
 
 Circle’s Burton NHS Treatment Centre.
*** Exceptional items in the year ended 
 (2011: £1,413,000) consist largely 
of impairments to property, plant 

 of CircleReading pre-opening expenses, 
revaluation of ﬁnance lease payments, 
share-based charges in respect of 
 in onerous lease provisions and 
restructuring costs incurred during  
the year.
* The number of procedures in the year to 

NHS Treatment Centre, to enable a 
comparison of the Group’s continuing 
facilities (deﬁned as those existing at  
 Chief Financial Ofﬁcer’s report
 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 15 Page 14 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Chief Financial Ofﬁcer’s report
 Continued
Circle Holdings plc Annual Report and ﬁnancial state e e e e e e em me ments 20 20 0 201 12 1 1 Pa a ag ge ge e e ag Pa a 1 1 15 5 5 5 5
Atrium at CircleReading
Financial risks
The Group’s operations expose it to  
a variety of ﬁnancial risks that include 
 
contract risk and price risk. The Group  
has implemented a comprehensive 
strategic planning and budgeting system 
to monitor and limit the adverse effects 

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 
 Working capital and funding risk
Working capital and funding risk is the risk 


ﬁnancial liabilities or be unable to obtain 
 plans and expansion opportunities. 
The Group aims to mitigate this risk by 
robustly managing cash generation across 
its operations through detailed budgeting 
 cash collection targets throughout the 
Group. Where the need arises, signiﬁcant 
cost savings can be made in the short-
term by reducing Head Ofﬁce costs. 
 institutional investors that have ﬁnanced 
the Company through several ﬁnancing 
rounds over the last eight years.
Contract risk
Contract risk is the risk that the Group is 
 end of their ﬁxed tenure. The Group aims 
to mitigate this risk by maintaining good 
 
 
extensions ahead of time. The Group has 
recently been selected as the preferred 
bidder by NHS commissioners to provide 
 
Treatment Centre for a further ﬁve years  
commencing from July 2013. The Group  
also commenced a 10-year contract in 
February 2012 to run Hinchingbrooke 
Health Care NHS Trust in Huntingdonshire.
 The Group generally seeks to price 
contracts at levels that take account of 
 establish contract terms that enable 
 any future increasing price levels. As the 
volume of private patients is anticipated 
 insurance companies.
 Chief Financial Ofﬁcer
17 April 2013 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 17 Page 16 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Board of Directors
 Non-Executive Chairman (b), (c)
*
 Holdings plc as Chairman in June 2011. He is additionally Senior Advisor (formerly 

 


 He is a member of the Advisory Board of the Association of Corporate Treasurers and 
 
 
 and St George (CMG) in the Queen’s 2003 Birthday Honours.  
 Steve Melton
Chief Executive Ofﬁcer

 
 
April 2013. Steve has over 22 years of experience leading large scale operations. 

 Scottish Courage Limited, managing over 3,000 staff and a £165,000,000 cost base. 
 
in Chemical Engineering from the University of Cambridge.   
 Chief Financial Ofﬁcer

 Megastore business. He has a Bachelor of Accountancy degree from the University of  
 Chief Medical Ofﬁcer
Massoud is a co-founder of Circle. As Chief Medical Ofﬁcer, his vision has been to 

healthcare professionals. Massoud graduated from Bristol Medical School in 1990 
and completed his ophthalmology training at Birmingham and Midland Eye Centre in 

 2003 to 2007. He remains an active consultant specialising in ophthalmic surgery.
 Lorraine Baldry, OBE
Senior Non-Executive Director (independent) (a), (b)
*
, (c)



 plc, a senior advisor at Morgan Stanley, investment banking division, and Managing 


 Tony Bromovsky
Non-Executive Director (non-independent)

advised on and arranged investments in a variety of ventures in Eastern Europe, and 
(since 2012) is a director of Local World Limited, a local media business that has a 



 
an Honours degree in General Arts.
(a) Member of Audit and Risk Committee.
(b Member of Remuneration Committee.
(c) Member of Nomination Committee.
 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 19 Page 18 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Board of Directors
Continued
 Non-Executive Director (independent) (a), (b), (c)

 Year’ by Legal Business Vice-Chairman of the BVCA’s Global Buyout Committee. He is currently a member  
 Non-Executive Director (non-independent)
 an executive director of Goldman Sachs’ European technology investment banking 
 Health Service Journal’s 
annual survey in 2010, and by the Times 
 Non-Executive Director (independent) (a)
*
, (b), (c)

 

 
 
 Tim Bunting
Non-Executive Director (non-independent)
 various roles including Global Head of Equity Capital Markets (2002–2005) and  

 

University of Cambridge.
The directors present their Annual  
Report and audited ﬁnancial statements  
for the Group for the year ended 31 
 The Group ﬁnancial statements 
consolidate the ﬁnancial statements of 
Circle Holdings plc (the ‘Company’) and 
its subsidiary undertakings (‘subsidiaries’), 
including the Group’s quasi subsidiary 


 make up ‘Circle’ or the ‘Group’.
 The Group is a provider of healthcare 
 insured, self-pay and NHS-funded 
patients. The Group’s business strategy  
is founded on the fundamental belief that 
 
 treatment centres and clinics, to put 
 


 
 Group’s operating subsidiaries.
 The information that fulﬁls the 

be found in the operating and ﬁnancial 
 on environmental matters, employees, 
community and social issues is given in 
the Report on corporate governance on 
pages 23 to 25.
Results and dividends
The loss and total comprehensive loss for 
 of the parent, amounted to £25,426,000 
(2011: £28,693,000). The directors do 
not recommend the payment of any 
dividends (2011: £nil).

2012 is £38,029,000 (2011: £26,004,000), 

relates to unrestricted cash. Net cash 
used in operating activities totalled 
£16,536,000 (2011: £26,161,000).
Share capital and control

authorised share capital comprised 
250,000,000 (2011: 100,000,000) ordinary 

 Shareholders are entitled to receive the 
Company’s Annual Report and ﬁnancial 
statements, to attend and speak at general 
meetings, to appoint proxies and exercise 
voting rights. The Company’s ordinary 
shares do not carry any special rights  
 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 
 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.
 of creditors
 to abide by the payment terms agreed 
 that the supplier has provided goods 
 terms and conditions. A number of 
signiﬁcant purchases and commitments 
under operating leases are paid by direct 

had 51 equivalent days (2011: 51 days) of 
purchases outstanding and the Company 
had 33 equivalent days (2011: 19 days).
 
and £250,000 respectively (2011: 
£9,646,000 and £143,000).
Going concern

forecasts for a period of 18 months 
from the date of signing the ﬁnancial 
statements for the year ended 31 
 
the existing operating businesses to 
 
NHS Treatment Centre contract on 
revised terms. 
 management believe that it could 
mitigate these by undertaking some 
 

While the directors are conﬁdent that 
the Group and Company can continue to 
 over the next 12 to 18 months, any 
signiﬁcant deviations from the forecasts 
 capital, and this represents a material 
uncertainty that casts signiﬁcant doubt 
upon the Group’s and Company’s ability 
to continue as a going concern.  
Nevertheless, the directors believe that, 
based on its current business plan, the 
Group and Company have adequate 
resources to continue in operational 
existence. As such, the directors consider it 
appropriate for these ﬁnancial statements 
to be prepared on a going concern basis. 
The ﬁnancial statements do not include 
 continue as a going concern.
Directors’ report Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 21 Page 20 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Events after the balance  
sheet date
Hinchingbrooke Health Care NHS Trust
Under the terms of the Hinchingbrooke 
franchise agreement, Circle Hinchingbrooke 
Limited is required to make support 
payments to Hinchingbrooke Health  
Care NHS Trust in the event that the  

 obligation, the Group made a support 
payment to the Trust of £3.7 million at 
the end of January 2013, to ensure the 
Trust remains in surplus for the ﬁnancial 
year ending 31 March 2013.
Nottingham NHS Treatment Centre 
contract win
The Group has been selected as the 
preferred bidder by NHS commissioners 
 Nottingham NHS Treatment Centre for  
a further ﬁve years commencing from  
July 2013. The Group’s appointment is 
 
of the second quarter of 2013. The 
decision to select Circle as the preferred 
 process managed by NHS Midlands 

 Commissioning Group. The expected 
contract value for delivering core services 
 additional services expected to be 
provided under the Any Qualiﬁed  
 AIB/Edinburgh loan
 Edinburgh’) have agreed a series of  
 
 
on a consensual basis. This agreement  
 value of the property and the fact that 
the Circle Group holds no equity in the 
property. Current expectation is that  
 
the fourth quarter of 2013.
West London
 (‘Nations’) has exercised their right to 
terminate the lease of 1010 Great West 
 by Lloyds Bank in February 2012) in 
respect of this.
Future developments
Operationally, the intention during the 
coming year is to increase the patient 
volumes treated at each of the operating 
facilities, to raise the quality of care 
provided and to ensure that all facilities  
 and up to the date of signing the ﬁnancial 
 Steve Melton Chief Executive Ofﬁcer (appointed 3 April 2013)
Massoud Fouladi Chief Medical Ofﬁcer 
Paolo Pieri Chief Financial Ofﬁcer
Michael Kirkwood, CMG Non-Executive Chairman
Lorraine Baldry, OBE Peter Cornell Andrew Shilston Ali Parsa Tim Bunting Jamie Wood 
 (resigned 18 June 2012)
Tony Bromovsky 
 (appointed 22 November 2012)
Biographies of the current directors are detailed on pages 16 to 18, and directors’ 
 
pages 26 to 29 of the Directors’ remuneration report.
Directors’ report
Continued
 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.
 The Group made charitable donations 
totalling £2,000 (2011: £26,000) during 
the year to a number of charitable 


 Elections and Referendums Act 2000 by 
either the Company or its subsidiaries.
 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  
23 to 25.
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 
 in relation to clinical outcomes, patient 
experience, staff engagement and  
 
 mitigation, sharing of best practice  
and effective crisis management.
 principal business risk factors facing the  

relevant, of the mitigating actions in place.
 is the paramount consideration. The Group 
has an integrated governance structure 
 sits on the Board. This structure includes 
senior staff across the operational, clinical 
and central support teams. Each hospital 
 specialists is dedicated to developing 
up to date and consistent clinical and 
operational policies across all sites. Local 
 day clinical risks through a risk register, 
provide appropriate training to staff and 
consultants, and report their ﬁndings to the 

 assurance reports to the boards of the 
relevant Circle Group companies and the 
Company’s Audit and Risk Committee.
Additionally, the Group’s hospitals, clinics 
 and risk management procedures used at 
the sites.
Government policy and 
regulatory risk
There are risks that political or policy 
changes may mean that the number and 

 provided by the Group are contracted. 
 Group’s operational and compliance costs. 
 bodies such as CCGs and NHS trusts to  
pay for the Group’s services. 
Reputational risk
 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 

Steve Melton
Chief Executive Ofﬁcer
17 April 2013 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 23 Page 22 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page Pa ag ge e ag ag age age 22 22 22 2 2 C Circle H H le Holdi ings s ngs ngs gs plc plc plc c plc Annu Ann Annu Annu u Annu u nu u Annu u nnu u nnu nnu nnu u nnu nu nu u u u u nual al R R al R l l al l al R a al l al R a a al R al R a al R al R al l R R al R al R al R l epor epo epor por epor epor p p epor or o t tan t an t an an t an t an ndﬁn dﬁn dﬁ d ﬁn dﬁn dﬁn ﬁ ﬁ ﬁ ﬁ ﬁ ﬁ ﬁ ﬁ ﬁ ﬁ d dﬁ d ﬁn ﬁn ﬁ ﬁ dﬁ d ﬁn d ﬁn ﬁ ﬁ ﬁn n n n n d n nc nci anc c anci i anc an anci a an n n n nc ci i anc a anc a an anc n n n nc c c c c c ci i anc a a an an n nc n nc c c c c c c ci i nc n n nc c c c c c ci i a an n nci c c c c c c c c ci i i n nc c c c c ci i nc c c c c c ci nc c c c ci i c c c c c c cia a a al l l l l l s s s s a al l a a al s a a a a a a a a a al a a a a a al l s st t ta ta ta at ate te te e ate t t t e ta a at t tate eme m men n n n nt t e ent en nt t t me me e en nt t e en n n 2 s 20 s s 2 s s s s 20 s 12 2 2 2 2 2 12 2
General
 

 (the ‘Code’). Nevertheless, the directors 
are committed to the highest standards 
of corporate governance and have 


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 Nominations 


 into the Audit and Risk Committee. 

terms of reference, as determined by 

available at the Group’s registered ofﬁce. 
The functions and responsibilities of 

and the Chair and other members of the 
committees are listed in the Board of 
Directors’ biographies on pages 16 to 18.
The Board
 
non-executive Chairman, three 
independent non-executive directors, 
three non-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 16 to 18. The  
 
than three directors.
The Code recommends that the  
 
non-executive directors, determined 
by the Board to be independent in 

 may affect, or could appear to affect, the 


requirements of the Code in this regard.
The non-executive directors contribute 
 forming a strong and independent 
 
non-executive directors receive  
a ﬁxed fee for services rendered, are 
appointed for an initial period of  
 
 
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 
 both operational and ﬁnancial, and they 
are free from any business or personal 
relationships (other than as declared 
in the case of non-independent non-
executive directors) that could interfere 

non-executive directors ensure that some 
meetings are set aside during the year 

Lorraine Baldry, OBE, is the nominated 

 normal channels have failed to resolve  
 The Chairman is responsible for leadership 
of the Board and ensuring its effectiveness 
in all aspects of the role, including:

for the discussion of complex or 
 
the performance of the Board as a 
 meeting the development needs of 
individual directors and the Board  
 The Board and its subcommittees meet  
at regular intervals throughout the year 
and have reserved for their consideration 
matters including:
 


 Annual Report and 
ﬁnancial statements 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 


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  
 appointment, and at each AGM thereafter. 
The shareholders may also remove a 
director by ordinary resolution.
Audit and Risk Committee
The Audit and Risk Committee’s role is  
 
its responsibilities in relation to internal 
and external audits and controls, including 
 Annual Report and  
ﬁnancial statements, considering the scope 
of the annual audit and the extent of the 
 auditors, advising on the appointment 
Report on corporate governance
Lisa, theatre nurse at CircleBath Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 25 Page 24 Circle Holdings plc Annual Report and ﬁnancial statements 2012
 effectiveness of the internal control 

 
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  
 
this regard.
Reporting into the Audit and Risk 


details are provided in the principal risks 
and uncertainties section of the Directors’ 
report on pages 19 to 21.
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 (‘Circle Health’). 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 

The Remuneration Committee meets not 
 Directors’ 
remuneration report is set out on pages 
26 to 29.
The Code recommends that all members 
of the Remuneration Committee be 
non-executive directors, and the Company 
 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 

Chief Executive Ofﬁcer. The Nominations 
Committee meets at least once a year 
 
its responsibilities. 
 of the Nominations Committee be 
non-executive directors, and the Group 
 Code in this regard.
 the Group in meeting its obligations 
to announce price sensitive and other 
signiﬁcant information, and decide quickly 
 and related legislation. 
The Code does not require companies to 

the directors consider it best practice to 
have such a committee.
 
and attendance
The Board has undertaken a formal 
 
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  
      Ad hoc and
  Audit and Risk Remuneration Nomination short notice
 Board Committee Committee Committee meetings
Lorraine Baldry, OBE 9 4 6 2 6
Tony Bromovsky
1
 1 n/a n/a n/a –
Tim Bunting
2
 9 n/a 1 n/a 6
 Massoud Fouladi 9 n/a n/a n/a 6
 3
 9 4 5 1 6
Jamie Wood
4
 4 n/a n/a n/a 6
Total meetings held 9 4 6 2 6
 
the Board on 22 November 2012.
 
the Remuneration Committee  
on 1 February 2012.
 the Remuneration and Nomination 
Committees on 1 February 2012.
4  Jamie Wood resigned from the Board  
on 18 June 2012.

on 3 April 2013, and has therefore been 
excluded from the above table.
 The Group maintains a regular dialogue 

 announcement of interim and ﬁnal 
results, to ensure that the investing 
community receives a balanced 
 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 
 conference to ensure employees are 
fully informed about plans and progress. 
Communications from the Human 
 any changes to personnel during the year. 
Semi-annual offsite meetings are held 
 strategy implementation and key business 
opportunities. Semi-annual performance 
 and individual training and development 
needs are identiﬁed to ensure staff  
receive supplementary training.
The Group’s principal subsidiary,  
 Group’s facilities. The Group encourages 
the involvement of employees in the 
performance of the Group through 
participation in the share scheme operated 


 
 
 
For further details, see note 24 to the 
ﬁnancial statements.
 The Group gives full consideration to 
applications for employment from 
 particular aptitudes and abilities are 
 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  
 an alternative position, and to provide 
appropriate training to achieve this aim.
Environmental matters
The services provided by the Group 
have minimal environmental impact. 
 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 
 materials are disposed of appropriately, 
 possible. The Group makes extensive 
use of electronic communications to 
 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 
 Ethical conduct
The Board is committed to uphold ethical 
conduct throughout the Group and has 
 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  

that enables periodic monitoring.
Health and safety
The Group is committed to protecting 
and enhancing the health and safety 
 are treated in the facilities it operates. 
The Group operates a formal health and 
 regularly monitored by a dedicated health 
 reports to the management teams at the 
operational level and quarterly reports to 
 delay to the Board.
 Chairman
17 April 2013
Report on corporate governance
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 27 Page 26 Circle Holdings plc Annual Report and ﬁnancial statements 2012
 This report sets out the Group’s 
remuneration policy and details  
of directors’ remuneration.
Remuneration Committee
The members of the Remuneration 
Committee are set out on pages 16  
to 18, and the role of the Remuneration 
Committee is set out in the Report on 
corporate governance on page 24.
Remuneration policy
Executive remuneration packages are  
designed to attract, motivate and retain  
 
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 

 
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, 
 
had been made.
Taxable and other beneﬁts
These include items such as private 
medical insurance and dental plans.  
 Share ownership plan

 the participants (including executive 
 participants are issued shares in Circle 


 for the shares becoming payable upon the 
occurrence of certain events, including the 
completion of a sale of the shares by a 
participant. The subscription price for the 
shares is the Fair Market Value (‘FMV’) as 
determined by an independent valuation.
Share issue to non-executive directors
On 18 June 2012, the Group issued, at 
nominal value, an aggregate of 78,465 
ordinary shares of £0.02 each in the 
capital of the Company (ordinary shares) 


 The ordinary shares once vested cannot 
be sold or transferred until one year 
 director’s term of service. The Share 

in June 2013 and June 2014. Authority to 
 approved by shareholders at the AGM 
held on 18 June 2012. The named  
non-executive directors do not hold  
any other interests in the ordinary share 
capital of the Company.
Share warrants
Health Trust (Jersey), a family trust of 
 the holder to an equivalent number of 
ordinary shares in the Company. They  
vest evenly over a 24-month period from 
May 2011 and are exercisable from the 
date they vest.
Service contracts
The Company’s policy is for executive 
directors’ service contract notice periods 
 directors having to give not less than six 
 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.
Other than payments made to Ali  
 
his employment, there have been no 
further payments made during the  
year in relation to compensation for  
loss of ofﬁce.
Directors’ remuneration report
 Number of Number of Number of
 ordinary shares ordinary shares ordinary shares
 awarded on vested and issued on  unvested at 
 18 June 18 June 31 December 
Non-executive director 2012 2012 2012

Lorraine Baldry, OBE                                 47 ,078                                  15,693 31,385


Non-executive directors
 months’ notice. None of the non-executive directors are engaged on a service contract 
 and taking into account relevant responsibilities and time commitments.
The remuneration for non-executive directors consists of fees for services in connection 
 responsibilities of the role. The non-executive directors are not involved in deciding  
their fees.
 director for the year, or from the date of appointment for those directors appointed  
in the year:
 Annual     Actual taxable
 contracted Actual Pension Share-based and other
 salaries/fees salaries/fees scheme charges beneﬁts
*
 Total 
2012 £’000 £’000 £’000 £’000 £’000 £’000
Executive
 1,060
Massoud Fouladi 156 156 26 2 – 184
 220
Non-executive       
 138
Lorraine Baldry, OBE 53 53 – 19 – 72
 59
 67
Tony Bromovsky 40 3 – – – 3
Tim Bunting – – – – – –
Jamie Wood – – – – – –
 1,040   1,003  127  108  565  1,803 
 beneﬁts during the year, is a payment to 
 payment includes 12 months’ base salary 
of £400,000, a termination payment of 
£71,000, and a contribution of £85,000 
 previous employer contributions have 
been made. Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 29 Page 28 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Shares in Circle Holdings plc
     Incremental 
  At Exchanged ﬁve-for-one Exchanged Disposed of  At
  1 January in year split in the year
*
  in the year 31 December 
 Year Number Number Number Number Number Number
 2012 3,136,180 – – – (5,000) 3,131,180
 2011 985,610 (179,187) 3,225,692 (895,935) – 3,136,180
Warrants in Circle Holdings plc
    Exercise At Awards At
    price 1 January  in year 31 December 
   Year £ Number Number Number
Health Trust (Jersey)
**
   2012 1.52 2,340,765 – 2,340,765
   2011 1.52 2,340,765 – 2,340,765
 
Lorraine Baldry, OBE
Chair, Remuneration Committee
17 April 2013
 Annual     Actual taxable
 contracted Actual Pension Share-based and other
 salaries/fees salaries/fees scheme charges beneﬁts Total 
2011 £’000 £’000 £’000 £’000 £’000 £’000
Executive
 169
Massoud Fouladi 152 152 – – – 152
 107
Non-executive       
 50
Lorraine Baldry, OBE 53 30 – – – 30
 20
 16
Tim Bunting – – – – – –
Jamie Wood – – – – – –
              976  543                –                     –                      1               544  
 
Note 33 provides further details of the ﬁduciary services provided by Capita to the Group during the year.
 Beneﬁcial interests
    (Restated)
**
    At
   at 1 January Exchanged Awards 31 December 
   2012 in the year
***
 in year 2012 
2012   Number Number Number Number
Health Trust (Jersey)
*
   2,394,185 – 1,111,111 3,505,296
Massoud Fouladi   5,100,000 63,500 150,000 5,313,500
              7 ,494,185 63,500 1,261,111 8,818,796
* Health Trust (Jersey) is a family trust  

 

trust, forfeited his shares in the scheme in 
exchange for 63,500 shares in the Circle 
 
on 30 August 2012.
 entered into a Share Transfer Agreement 
 
percentage of its holding in Circle Holdings  
plc to the existing shareholders in exchange 
 ** Health Trust (Jersey) is a family trust  
 Directors’ remuneration report
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 31 Page 30 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Statement of directors’ responsibilities Independent auditors’ report
To the members of Circle Holdings plc
The directors are responsible for preparing 
the ﬁnancial statements in accordance  
 statements for each ﬁnancial year. The 
directors have elected to prepare the 
Group ﬁnancial statements in accordance 
 European Union and the Company 
 
 ﬁnancial statements unless they are 
satisﬁed that they give a true and fair 
 and the Company, and the proﬁt or loss 
 these ﬁnancial statements, the directors 
are required to:
 

 accounting standards as appropriate, 
 material departures disclosed and 

 the going concern basis, unless it is 
inappropriate to presume the Company 
 The directors are responsible for keeping 
adequate accounting records that are  
 and Company’s transactions, and disclose  
 
the ﬁnancial position of the Group and 
the Company, and enable them to ensure  
that the ﬁnancial statements comply  

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  
 

preparation and dissemination of  
ﬁnancial statements may differ from 
 
and functions are listed in the Board  
of Directors’ report, conﬁrm that, to  
 ﬁnancial position and loss of the  
 Directors’ report includes a  
 performance of the business and the 
 
a description of the principal risks  
and uncertainties that it faces.               
 
to auditors
 
at the time the report is approved:
 that he or she ought to have taken  
as a director, in order to make himself  
 information and to establish that the 
 
the information.
 
in ofﬁce. A resolution concerning their 
 
Annual General Meeting.
Steve Melton
Chief Executive Ofﬁcer
17 April 2013
We have audited the Group ﬁnancial 
statements of Circle Holdings plc for  
 
 Consolidated income 
statement, the Consolidated balance 
sheet, the Consolidated statement of 
changes in equity, the Consolidated 
statement of cash ﬂows, and the related 
 that has been applied in their preparation 
 Financial Reporting Standards as  
adopted by the European Union.
Respective responsibilities  
of directors and auditors
As explained more fully in the Statement  
of directors’ responsibilities, set out on 
page 30, the directors are responsible 
for the preparation of the ﬁnancial 
statements and for being satisﬁed 

responsibility is to audit and express 
an opinion on the ﬁnancial statements 
 Board’s Ethical Standards for Auditors.
This report, including the opinion, 
has been prepared for and only for 
the Company’s members as a body in 

other purpose. We do not, in giving this 
opinion, accept or assume responsibility 
for any other purpose or to any other 
 Scope of the audit of  
the ﬁnancial statements
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 
 
caused by fraud or error. This includes an 
 policies are appropriate to the Group’s 
circumstances and have been consistently 
 reasonableness of signiﬁcant accounting 
 the overall presentation of the ﬁnancial 
 ﬁnancial and non-ﬁnancial information 
in the annual report to identify material 
 
apparent material misstatements or  
 implications for our report.
Opinion on ﬁnancial statements
 2012 and of the Group’s loss and cash 
 Reporting Standards as adopted by the 
 
 Opinion on other matter
 
in the Directors’ report for the ﬁnancial 
 statements.
Emphasis of matter –  
going concern
 have considered the adequacy of the 
disclosure made in note 2 to the ﬁnancial 
statements concerning the Group’s ability 
to continue as a going concern. While the 
directors are conﬁdent that the Group 
 capital requirements over the next 12 
to 18 months, any signiﬁcant deviations 
from their forecasts could impact on its 
ability to do so, and these conditions 
as explained in note 2 to the ﬁnancial 
statements indicate the existence of a 
 signiﬁcant doubt about the Group’s  
ability to continue as a going concern.  
The ﬁnancial statements do not include 
 
 
as a going concern.
 
required to report by exception
We have nothing to report in respect 
 
us to report to you if, in our opinion:
 

 
 information and explanations  

Other matter
We have reported separately on the 
parent company ﬁnancial statements  
of Circle Holdings plc for the year ended  
 Nigel Reynolds  
(Senior Statutory Auditor)
For and on behalf of 
 Chartered Accountants and  
Recognised Auditors
London
17 April 2013 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 33 Page 32 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Consolidated income statement
       2012 2011 
     Note £’000 £’000
Revenue     4 73,246 74,607
Cost of sales      (52,097) (50,887)
Gross proﬁt       21,149 23,720
Administrative expenses before exceptional items     (39,123) (40,853)
Operating loss before exceptional items     6 (17,974) (17,133)
Exceptional operating items     6 (11,332) (1,413)
Operating loss     5 (29,306) (18,546)
Finance income     10 3,513 3,454
Finance costs     9 (5,244) (6,809)
Exceptional ﬁnance items     6 866 (10,097)
 15 (259) (926)
Loss before taxation      (30,430) (32,924)
 12 6 613
Loss and total comprehensive loss for the ﬁnancial year      (30,424) (32,311)
Loss and total comprehensive loss for the year attributable to: 
 (25,426) (28,693)
– Non-controlling interests     24 (4,998) (3,618)
        (30,424) (32,311)
Basic and diluted loss per ordinary share attributable to the owners of the parent (pence)  11 (25.7) (64.4)
 
of other comprehensive income has been prepared.      
Consolidated balance sheet
       2012 2011 
     Note £’000 £’000
Non-current assets     
 13 6,368 5,391
 14 24,876 20,594
Trade and other receivables     17 662 43,961
      31,906 69,946
Current assets     
 16 1,298 901
Trade and other receivables     17 57,079 19,788
Cash and cash equivalents     18 38,029 26,004
       96,406 46,693
Total assets      128,312 116,639
Current liabilities     
Trade and other payables     19 (15,111) (15,303)
 20 (50,836) (22,099)
 21 (2,468) (924)
      (68,415) (38,326)
Non-current liabilities     
Trade and other payables     19 (2,257) –
 20 (10,664) (46,259)
 15 (2,947) (2,688)
 21 (189) (707)
 22 (1,113) (2,475)
      (17,170) (52,129)
Total liabilities       (85,585) (90,455)
Net assets      42,727 26,184
Share capital     23 2,614 1,255
Share premium     23 193,145 148,548
Other reserves     23 22,182 22,182
Warrant reserve     25 22,390 21,475
Share-based charges reserve     26 96 –
Retained deﬁcit       (170,612) (147,106)
Equity attributable to owners of the parent       69,815 46,354
Non-controlling interests     24 (27,088) (20,170)
Total equity      42,727 26,184
 Steve Melton  Paolo Pieri 
Chief Executive Ofﬁcer  Chief Financial Ofﬁcer
Circle Holdings plc  Registered number: 100016 (Jersey) Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 35 Page 34 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Consolidated statement of changes in equity
        Equity 
      Share-based  attributable Non- 
  Share Share Other Warrant charges Retained to owners of controlling Total 
  capital premium reserve  reserve reserve deﬁcit the parent interests equity 
 Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2011  425 111,680 – 19,878 – (128,049) 3,934 (9,157) (5,223)
Loss and total comprehensive  
loss for the year  – – – – – (28,693) (28,693) (3,618) (32,311)
Transactions with owners:              
 23 535 40,674 – – – 2,241 43,450 – 43,450
 23 295 – 22,182 – – – 22,477 – 22,477
Share-based charges  26 – – – 1,597 – – 1,597 – 1,597
Capitalised costs in relation  
to fundraising  – (3,806) – – – – (3,806) – (3,806)
Effect of shares vesting  
in the year 24 – – – – – 1,438 1,438 (1,438) –
 24 – – – – – 2,204 2,204 (2,204) –
Winding up of Health  
 24 – – – – – 835 835 (835) –
Effect of Nations Healthcare  
Group restructure 24 – – – – – 2,383 2,383 (2,383) –
Effect of anti-dilutive shares  
 24 – – – – – 535 535 (535) –
At 1 January 2012  1,255 148,548 22,182 21,475 – (147,106) 46,354 (20,170) 26,184
Total comprehensive loss  
for the year  – – – – – (25,426) (25,426) (4,998) (130,424)
Transactions with owners:               
 23 1,357 46,143 – – – – 47,500 – 47,500
 
 
non-executive directors  23 2 – – – 96 – 98 – 98
Share-based charges in  
 26 – – – 915 – – 915 – 915
Capitalised costs in  
relation to fundraising  23 – (1,546) – – – – (1,546) – (1,546)
Effect of shares vesting  
in the period 24 – – – – – 1,920 1,920 (1,920) –
At 31 December 2012  2,614 193,145 22,182 22,390 96 (170,612) 69,815 (27,088) 42,727
Consolidated statement of cash ﬂows
       2012 2011 
     Note £’000 £’000
Cash ﬂows from operating activities     
 30 (16,989) (23,575)
 (2,998) (6,040)
 10 3,513 3,454
Tax paid      (62) –
Net cash used in operating activities      (16,536) (26,161)
     
Cash ﬂows from investing activities     
Additional consideration paid for Circle Clinic Windsor    19 (10) (10)
 13 (1,401) (185)
 40 –
 – 2,500
 (2,746) (10,530)
Net cash used in investing activities      (4,117) (8,225)
     
Cash ﬂows from ﬁnancing activities     
 23 – 295
 23 47,502 52,545
Capitalised costs in relation to fundraising     23 (1,546) (3,806)
 31 (12,604) (5,922)
 31 – 5,000
Repayment of ﬁnance lease     31 (674) (44)
Movement in restricted cash:      
–  Release of minimum balance – GE Capital Equipment Finance Limited (‘GE’)  
 31 – 600
 31 – 500
 31 175 (175)
–  Committed cash in respect of Hinchingbrooke deposit    31 (2,000) –
Net cash inﬂow from ﬁnancing activities      30,853 48,993
     
Net increase in unrestricted cash and cash equivalents     10,200 14,607
Unrestricted cash and cash equivalents at the beginning of the year    22,729 8,122
Unrestricted cash and cash equivalents at the end of the year    32,929 22,729
     
Cash and cash equivalents consist of:     
Cash at bank and in hand      38,029 26,004
Restricted cash:        
 18 (1,300) (1,300)
–  Letter of credit – GE     18 (1,800) (1,800)
 18 – (175)
–  Hinchingbrooke deposit     18 (2,000) –
Unrestricted cash at bank and in hand      32,929 22,729 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 37 Page 36 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Notes to the consolidated ﬁnancial statements
 1. General information
Circle Holdings plc (the ‘Company’), its 
 
the ‘Group’), provide healthcare services  
 The Company is a public limited company 
 
 
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 
 These policies have been consistently 
applied to all the years presented, unless 
 Basis of preparation 
The consolidated ﬁnancial statements 

 under the historical cost convention, as 
modiﬁed by the revaluation of derivative 
ﬁnancial instruments and the fair valuing 
 management must make certain critical 
accounting estimates and exercise 
 Group’s accounting policies. The areas 
 signiﬁcant to the consolidated ﬁnancial 
statements, are set out at the end of note 2.
 measured using the functional currency, 

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 
 for accounting periods beginning 1 January 
2012, but have not had a material impact on 
the results or ﬁnancial position of the Group:
 Deferred Tax: Recovery 
of Underlying Assets. Limited scope 
amendment regarding recovery of 
underlying assets.

the classiﬁcation, measurement and 
recognition of ﬁnancial assets and 
 to the classiﬁcation and measurement 
 measurement categories: those measured 
as at fair value, and those measured 
at amortised cost. The determination 
is made at initial recognition. The 
classiﬁcation depends on the entity’s 
business model for managing its ﬁnancial 
instruments and the contractual cash 




‘Consolidated and separate ﬁnancial 
 special purpose entities’ (applies to 
annual periods beginning on or after  
 
by the EU). 
 ventures’ – these standards provide 
 arrangements by focusing on the rights 
and obligations of the arrangement, 
rather than its legal form (applies to 
annual periods beginning on or after  
 
by the EU). 
 entities’ – the standard requires entities to 
disclose information that helps ﬁnancial 
statement readers to evaluate the nature, 
risks and ﬁnancial effects associated 
 off balance sheet vehicles (applies to 
annual periods beginning on or after  
 by the EU).   

standard aims to improve consistency and 
reduce complexity by providing a precise 
deﬁnition of fair value and a single source 
of fair value measurement and disclosure 

the fair value measurement of share-based  
charges (applies to annual periods 
beginning on or after 1 January 2013). 
The above amendments are not expected 
to materially impact the Group’s ﬁnancial 
statements in future periods.
Going concern 
The directors consider it to be appropriate 
for the accounts to be prepared on a going 
concern basis, based on the assumptions 
considered in the Directors’ report on  
page 19.
Basis of consolidation 
i Subsidiaries
 The results of subsidiaries (deﬁned 
 operating policies of the subsidiary) are 
 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 
 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 
 business and the equity interests issued 

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. 
ii Circle Partnership Limited share scheme
 consolidated in these ﬁnancial statements 
P P Page P P P P P P P P 36 Circ C le Holdings plc Annual Report and ﬁnancial statements 20 s2 20 20 0 0 0 0 s 2 s 20 20 2 20 2 2 20 0 0 2 2 2 20 0 0 0 2 2 20 0 20 0 0 0 0 0 0 0 0 0 0 0 0 0 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 01 1 1 12 1 1 12 2 2 2 2 12 12 12 12 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 12 12 1 12 2 2 2 2 12 2 12 1 1 1 12 2 2 1 1 12 2 2 2 2
Atrium at Nottingham NHS Treatment Centre Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 39 Page 38 Circle Holdings plc Annual Report and ﬁnancial statements 2012
 share scheme is considered part of the 

 employees, clinicians and consultants 
 
of the Circle Health Group, subscribe  
 iii Joint ventures
 parties undertake an economic activity 
 involves the establishment of a separate 
 interest. The Group recognises its 

 consolidated balance sheet at cost plus 
post-acquisition changes in the Group’s 
share of its net assets and liabilities, less 
distributions received and impairments in 
 the Group recognises a provision for its 
constructive and legal obligations in 
 iv Non-controlling interests
 Non-controlling interests in the results, 
and equity of the Group’s subsidiary 
undertakings, are recorded in the 
Consolidated income statement and 
Consolidated balance sheet, based upon 
the proportion of the non-controlling 

subsidiary undertakings. This arises in 
Circle Health because of the portion of 
shares issued to employees, clinicians and  
 

 venture are measured as at the same 
reporting date as the parent company,  
using consistent accounting polices.  
 
are eliminated on consolidation.
Segment reporting
Operating segments are reported in  
 reporting provided to the chief operating 
 for allocating resources and assessing 
performance of the operating segments. 
Revenue
 value of consideration received for the 
activity performed, represents the total 
amounts derived primarily from the 
 after deducting relevant discounts and 
 are not exempt). Revenue is recognised on 
completion of the patient’s appointment 
 – Contracts with guaranteed volumes  
and payments
 Such contracts, namely the existing 
Nottingham NHS Treatment Centre 
long-term contract, offer guaranteed 
payments, based on medical procedures 
 the revenue to be deferred until certain 
contractual obligations have been 

the appointments are completed, but 
 contract quarters and years. Revenue is 
 takes place ahead or behind contractual 
activity levels. 
 An element of this revenue is used to pay 
the costs of consultants.
– Any Qualiﬁed Provider 
Such NHS contracts offer payment by 

 The mechanism for this is that the 
 slots under the national Choose and Book 
 
at that tariff for medical procedures 
 
the patient’s appointment.
 Again, an element of this revenue is  
used to pay the costs of consultants. 
– Private and self-pay 
 performed, either at contractually  
agreed insurance prices or self-pay  
 speciﬁc procedure undertaken.
 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 all the 
revenue and cost of the consultant is 
charged to cost of sales.
– Revenue under management 
For accounting purposes, the Group is not  
deemed to control the Hinchingbrooke 
Health Care NHS Trust (‘Hinchingbrooke’), 
and therefore does not consolidate the 
net assets and results of the Trust. Until 
such time that surpluses are generated 

 revenue generated by Hinchingbrooke  

 
non-statutory term.
– Other miscellaneous income 
Other miscellaneous income primarily 
relates to car parking revenue, delicatessen 
revenue, property rental and advertising 
income.
Operating ﬁnancial asset 
An element of the Nottingham NHS 
Treatment Centre income is attributable 
to construction services, and is therefore 
 
‘Construction contracts’, using the 
 current operational phase of the contract, 
a ﬁnancial asset is recognised to the extent 
that the operator receives a ﬁxed payment 
from the client, irrespective of the extent  
of use. 

interest receivable and the operating 
ﬁnancial asset, using the contracted rate of 
 loss is recognised if the carrying amount 
of these assets exceeds the present value 
 contracted rate of return. The remainder 

Group only recognises income in respect 
of the services provided, as it fulﬁls its 

fair value of the consideration receivable. 
Notes to the consolidated ﬁnancial statements
Continued
The underlying asset, namely the Nottingham 
NHS Treatment Centre, is not deemed to 
 that there is an unconditional right to 
receive cash, the construction costs of the 
treatment centre are recorded as a ﬁnancial 
asset under the heading ‘Operating ﬁnancial 

and recognised at amortised cost. 
Operating ﬁnancial assets are presented  
 
are presented as non-current.
Exceptional items 
Exceptional items are disclosed and 
described separately in the ﬁnancial 
 
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 
 readers to gain an understanding of the 
underlying results of the business. 
Exceptional items in the year ended  
 £1,413,000), consist largely of impairments 
to property, plant and equipment, provision 
 of CircleReading pre-opening expenses, 
revaluation of ﬁnance lease payments, 
 and shares issued, increases in onerous lease 
provisions, and restructuring costs incurred 
during the year.
Exceptional ﬁnance income of £866,000 

 Finance costs 
Finance costs are recognised on an effective 
 directly attributable to the acquisition or 
 a substantial period of time to get ready for 
intended use, such as the construction of a 
 capitalised as part of the cost of that asset 
 incurred for the asset. Capitalisation ceases 
 prepare the asset for use are complete. 
On certain loans, interest is rolled up into 
the principal. This is taken into account 

Finance income 
Finance income is accrued by reference to 
the principal outstanding and the effective 
interest rate applicable. Finance income 
arises on the operating ﬁnancial asset, 
recognised at the effective interest rate  

from cash balances held.
Intangible assets 
 i Goodwill
 of acquisition 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 
 purpose of impairment testing. 
ii Computer software 

that is not considered an integral  
 represents third-party costs incurred 
in relation to the Group’s information 
technology systems. 
iii Other intangible assets 
Other intangible assets comprise 


shortened time frame, utilising standard 
 manufactured off site.
Impairment and amortisation
Assets that have an indeﬁnite useful life  
 
that are still in their development phase,  
 tested annually for impairment, or  
more frequently if there are indications 

 

indicate that the carrying amount may  
not be recoverable. An impairment loss 
 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. 

 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 business sold.
 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 
 asset may be impaired. 
The useful economic life of the Group’s 
 three years
 
ﬁve years
Property, plant and equipment     
 
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  

 

exception of freehold land and assets under 
 less estimated residual value and is provided 
on a straight-line basis over the estimated 
 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 41 Page 40 Circle Holdings plc Annual Report and ﬁnancial statements 2012
 life of lease
 shorter  
of lease life or expected useful life  
(ﬁve to 10 years)
 three to ﬁve years
 (including commissioning costs) –  
three to 10 years

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 
 circumstances indicate the carrying value 
may not be recoverable. 
Assets under construction
i Commissioning costs in course  
of construction
 Commissioning costs comprise 
staff, property, consultancy and 
operational costs directly related to the 
 Such costs are capitalised up to the point 
that the commissioning is complete and 
the hospital is fully open for business, 
 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-

useful lives as outlined above. 
ii Development costs in course of 
construction
 attributable to the development of 
property are capitalised as part of the  
cost of the property. The commencement 

costs for the property are being incurred, 
and activities that are necessary to 
prepare the asset ready for use are in 
 all the activities that are necessary to 
prepare the asset for use are complete.
Leases
Where substantially all the risks and 
 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 

future lease payments. Lease payments 
 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 

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

 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.
Amounts recoverable on contracts
Amounts recoverable on contracts are 
 All costs incurred in advance of a contract 
 statement, until the date that, in the opinion  
of the directors, it is virtually certain that 
the contract has been secured. Once the 
directors consider virtual certainty has been 
achieved and the contract is expected to 
 costs incurred up to the time the contract 
becomes operational are carried as amounts 

other receivables’. Once the contract is 
operational, the balance is accounted for  
as part of the accounting for the contract  

18, and recognised in the income statement 
over the contract term. 
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 

 
to collect all amounts due according to the  

 the asset’s carrying amount and the present 
 at the original effective interest rate. The 

is taken to administrative expenses. 
Trade receivables are presented as current 
 
 
as non-current.
Cash and cash equivalents
Cash and cash equivalents include cash 
 overnight deposits, other short-term highly 
 of three months or less, and bank overdrafts. 
 Consolidated balance sheet, bank 
 
to contractual arrangements.
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 

 classiﬁed as current liabilities.
Pension costs
The Group operates personal deﬁned 
contribution pension schemes. Contributions 
are charged to the income statement as 
 the rules of the scheme. The Group has 
no further payment obligation once the 
contributions have been paid.
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 
 deductible in other accounting periods and 
 is calculated using tax rates that have been 
enacted or substantively enacted by the end 
of the reporting period. 
Notes to the consolidated ﬁnancial statements
Continued
 the liability method in respect of temporary 
 the tax bases of assets and liabilities, and 
their carrying amounts in the consolidated 
 tax liabilities are recognised for all taxable 
temporary differences, and deferred tax 
assets are recognised to the extent that 
 temporary differences can be utilised. Such 
assets and liabilities are not recognised 
if the temporary difference is due to the 
 initial recognition of an asset or liability 
in a transaction (other than a business 
 transaction does not affect either taxable  
or accounting proﬁt. 
 taxable temporary differences arising on 
investments in subsidiaries and interests  
 
is able to control the reversal of the 
temporary difference and it is probable  
 reverse in the foreseeable future. 

right to offset current tax assets against 

income tax assets and liabilities relate to 
income taxes levied by the same taxation 
authority on either the taxable entity or 
 
an intention to settle the balances on a  
net basis.
 that are expected to apply to the period 
 settled using rates enacted, or substantively 
enacted, at the end of the reporting period. 
 consolidated income statement, except 
to the extent that it relates to items 
recognised in other comprehensive income 
 is also recognised in other comprehensive 
income or directly in equity, respectively.
 
to the extent that it is probable that future 

the temporary differences can be utilised. 
The carrying amount of deferred tax assets 

reduced to the extent that it is no longer 
probable that sufﬁcient taxable proﬁts  
 
the deferred tax asset to be recovered.
Derivative ﬁnancial instruments
The Group has entered into derivative 
ﬁnancial instrument arrangements to 
manage its exposure to interest rate risk. 
The Group’s criteria for entering into such 
 are that the instrument must be related to 
an asset or a liability and it must change the 
character of the interest rate by converting 
a variable rate to a ﬁxed rate or vice versa.
 value at the date a derivative contract is 
entered into, and are classiﬁed as current 
or non-current based on the timing of 
 remeasured to fair value at each balance 
sheet date, and the movement is recognised 
immediately in the income statement, in 
ﬁnance income or ﬁnance costs accordingly.
Provisions for other liabilities and charges
 onerous leases and under declared VAT are 

 money is considered to be material, using 
 current market assessments of the time 
value of money and the risks speciﬁc to the 
 recognised as a ﬁnance cost.
Loans and borrowings
 are recognised initially at fair value, net 
of directly attributable transaction costs. 
Subsequent to initial recognition, loans and 

 of transaction costs) and redemption value 
being recognised in the income statement 

effective interest rate method. 
 unless the Group has an unconditional right 
to defer settlement of the liability for at 
least 12 months after the reporting date.
Compound ﬁnancial instruments
Compound ﬁnancial instruments issued  
by the Group comprise convertible loans 
that can be converted to share capital at  
the option of the holder. The number of 
shares to be issued is calculated based on 
the outstanding loan commitment at the 
date of conversion.
The liability component of a compound 
instrument is recognised initially at the 
fair value of a similar liability that does 
not have an equity conversion option. The 
equity component is recognised initially as 
 and the fair value of the liability component. 
Subsequent to initial recognition, the 
liability component of a compound ﬁnancial 
instrument is measured at amortised cost, 
using the effective interest method. The 
equity component of a compound ﬁnancial 
instrument is not remeasured subsequent 
to initial recognition, except on conversion 
or expiry.
Warrants
 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. 
 obliged to deliver a variable number of  
 than by a ﬁxed amount of cash or other  
assets for a ﬁxed number of the Company’s 

the liability and equity components of the  
instrument, based on the allocation of proceeds  
to the liability and equity components  
 Equity warrants 
 transaction costs. The fair value of the equity 
component is not remeasured in subsequent 
 the income statement or taken to liabilities 
 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 43 Page 42 Circle Holdings plc Annual Report and ﬁnancial statements 2012
 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 
 are issued to employees and consultants. 
The fair value of the employee services 
received in exchange for the grant of the 
 to equity. The total amount expensed is 
determined by reference to the fair value  
 
 and service conditions included in 
assumptions about the number of  

 And excluding:
 performance vesting conditions 
 remaining an employee for a speciﬁed 
period of time).
The total expense is recognised over the 

are expected to be satisﬁed. 
Dividends
 shareholders is recognised as a liability  
in the Group’s ﬁnancial statements in the 

by the Company’s shareholders.
Share capital
Ordinary shares are classiﬁed as equity. 
 attributable transaction costs, are  
credited to share capital (nominal  
value) and share premium. 
Signiﬁcant accounting judgements  
and estimates
 accounting policies, the directors make 
 future. The resulting accounting estimates 
 and estimates have the most signiﬁcant 
effect on the amounts recognised in the 
consolidated ﬁnancial statements:
Judgements
 
carrying amounts of assets and liabilities 
 i Revenue recognition
 Revenue is recognised on completion of  
 
Nottingham NHS Treatment Centre 
 based on total contracted volumes 
 certain amount of income in the balance 
sheet. This includes the recoverability 
of revenue recognised in excess of the 
minimum payments received.
ii Consolidation of Circle Partnership 
Limited share scheme

 The results of this entity has been 
consolidated into the Group ﬁnancial 
 special purpose entities’, on the basis that 
the entity is controlled by the Group.
iii Amounts recoverable on contracts
 over the life of the contract. Estimates  
of future income may be inaccurate,  
such that proﬁts may not arise to  
support their carrying value. 
Estimates
The key assumptions and estimates at 
the end of the reporting period, that have 
a signiﬁcant risk of causing a material 
 
 
 i Tax
 The recognition of deferred tax assets is 
dependent upon an estimation of future 
 that actual taxable proﬁts are different, 
such differences may impact the carrying 
value of such deferred tax assets in future 
years. Based on this, management has not 
 assets arising.
ii Provisions
 event or transaction, and a reliable 
 

this may impact the ﬁnancial statements 
in future years. 
iii Valuation of property, plant  
and equipment 
 
 
by third-party professional valuers. The 
 factors including intended usage for the 

 
may impact the ﬁnancial statements  
in future years.
iv Share-based charges
 Share-based charges are based on the 
 using several assumptions (for example, 
share price volatility and time constraints) 

may impact the charge in future years.
Notes to the consolidated ﬁnancial statements
Continued
v Useful lives and recoverability  
of property, plant and equipment
 are still in use, to ensure that their useful 
 life of the asset and that their carrying 

ﬁnancial statements in future years.
vi Fair value of ﬁnancial instruments
 movement being recognised directly in 
the income statement. These fair values 
are not based on quoted prices in active 
markets, but on estimates of observable 
 
the charge in the income statement.
vii Allowance for impairment of  
trade receivables

receivables is made, based on the 

amount and the present value of 

the ﬁnancial statements in future years. 
viii Goodwill and intangibles

cost less amortisation and impairment 
 is assessed annually based on value 
 forecasts prepared by management. 
 and in the event that these estimates 

statements in future years.
 to amortisation are considered for 
 
in circumstances indicate that the  
carrying amount may not be recoverable. Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 45 Page 44 Circle Holdings plc Annual Report and ﬁnancial statements 2012
3. Segmental reporting
 performance and allocate resources, and to date, has divided the Group into three reportable business segments based on the Group’s 
 

 
 Overall, the directors consider that the Group is principally a provider of medical services, that treats privately insured, self-pay and  
 
 
       All other  
      segments and 
    Circle Circle unallocated  
    independent NHS items Total group 
2012    £’000 £’000 £’000 £’000
Revenue from external customers    19,696 53,317 233 73,246
Cost of sales    (14,524) (37,554) (19) (52,097)
Gross proﬁt    5,172 15,763 214 21,149
Administrative expenses before exceptional items, depreciation, amortisation  
and charge recognised in respect of amounts recoverable on contract  (14,386) (10,717) (10,226) (35,329)
EBITDA before exceptional items    (9,214) 5,046 (10,012) (14,180)
 
in respect of amounts recoverable on contract    (987) (2,293) (514) (3,794)
 Revaluation of ﬁnance lease payments    – – (572) (572)
CircleReading pre-opening expenses    (1,069) – – (1,069)
 Restructuring costs    – – (650) (650)
 Operating (loss)/proﬁt    (13,391) 2,765 (18,680) (29,306)
Finance income        3,513
Finance costs       (5,244)
Exceptional ﬁnance costs       866
 Loss before taxation        (30,430)
Other information 
Capital additions    10,104 447 1,275 11,826
Notes to the consolidated ﬁnancial statements
Continued
3. Segmental reporting (continued)
       All other  
      segments and 
    Circle Circle unallocated  
    independent NHS items Total group 
2011    £’000 £’000 £’000 £’000
Revenue from external customers    13,224 61,175 208 74,607
Cost of sales    (10,631) (40,245) (11) (50,887)
Gross proﬁt    2,593 20,930 197 23,720
Administrative expenses before exceptional items, depreciation, amortisation  
and charge recognised in respect of amounts recoverable on contract  (11,056) (14,441) (11,856) (37,353)
EBITDA before exceptional items    (8,463) 6,489 (11,659) (13,633)
 
in respect of amounts recoverable on contract    (480) (2,765) (255) (3,500)
 Other exceptional items    (63) – 46 (17)
Operating (loss)/proﬁt    (9,156) 5,167 (14,557) (18,546)
Finance income        3,454
Finance costs       (6,809)
Exceptional ﬁnance costs       (10,097)
 Loss before taxation        (32,924)
Other information        
Capital additions    285 1,005 13,652 14,942
4. Revenue
i Revenue
      2012 2011 
      £’000 £’000
 72,760 74,339
Other miscellaneous income      486 268
      73,246 74,607 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 47 Page 46 Circle Holdings plc Annual Report and ﬁnancial statements 2012
4. Revenue (continued)
ii Other income       
 
 For accounting purposes, the Group is not deemed to control Hinchingbrooke and therefore does not consolidate the net assets and results  
 
 
 
 
 5. Operating loss
      2012 2011 
     Note £’000 £’000
Operating loss is stated after charging:    
Charge recognised in respect of amounts recoverable on contracts    17 2,027 2,253
Amortisation of intangible assets      13 282 57
 14 1,485 1,190
 552 397
Expense for bad debts      10 22
Operating lease rental      10,132  10,800
Exceptional operating items      6 11,332 1,413
Auditors remuneration payable to PricewaterhouseCoopers LLP:  
Fees payable to the Company’s auditors for the parent  
company and consolidated ﬁnancial statements      88 109 
Fees payable to the Company’s auditors for other services  
– The audit of Company’s subsidiaries        197 171
–  Audit-related assurance services      39 –
–  Tax advisory services      178 117
–  Other assurance services       – 888
–  All other non-audit services       50 –
       552 1,285
       
  
Notes to the consolidated ﬁnancial statements
Continued
6. EBITDA and exceptional items
Exceptional operating items
      2012 2011 
     Note £’000 £’000
 13 142 –
 14 4,614 30
 26 915 1,597
 26 96 –
Revaluation of ﬁnance lease payments      572 –
CircleReading pre-opening expenses      1,069 –
 21 1,500 –
Restructuring costs      650 –
 – 293
 – (1,493)
 21 239 999
 33 1,575 –
Other exceptional items      (40) (13)
      11,332 1,413
     
 
in a higher rent being paid until such time that the site is developed.    
 increased, have been included as an exceptional item.     
 
the total liability to Circle arising from the settlement agreement reached. 
Exceptional ﬁnance items
      2012 2011 
     Note £’000 £’000
  
 25 – 7,373
 25 – 3,506
Accelerated ﬁnance charge due to early repayment of JCAM loan    325 –
 171 – 
 – 237
Gain on fair value of interest rate derivative      22 (1,362) (1,019)
      (866) 10,097
      

    Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 49 Page 48 Circle Holdings plc Annual Report and ﬁnancial statements 2012
6. EBITDA and exceptional items (continued)
Operating loss and EBITDA before exceptional items
      2012 2011 
      £’000 £’000
Operating loss before exceptional items      (17,974)  (17,133)
 1,485 1,190
Amortisation of intangibles      282 57
Charge recognised in respect of amounts recoverable on contracts     2,027 2,253
 (14,180) (13,633)
     
This information is included here, as it provides useful information to the reader of the ﬁnancial statements for understanding  
operational performance. 
7 . Employee information
Staff costs
      2012 2011 
     Note £’000 £’000
Wages and salaries      17,485 16,922
Share-based charges     26 1,011 1,597
Social security costs      1,657 1,699
Other pension costs     28 779 228
      20,932 20,446
 Monthly average number of full time equivalent employees
      2012 2011 
      Number Number
Administrative      340 323
Clinical      243 208
      583 531
The average number of employees includes directors on a service contract.     
Notes to the consolidated ﬁnancial statements
Continued
8. Directors’ emoluments
      2012 2011 
      £’000 £’000
Aggregate emoluments      1,803 544
 The directors had retirement beneﬁt contributions during the year of £127,000 (2011: £nil). 
 
 previous employer contributions have been made, and a further £6,000 in relation to personal expenses. 
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  
      2012 2011 
      £’000 £’000
Short-term employment beneﬁts      1,486 624
 
 
share-based charge arises. Note 26 provides more details.  
 
 
 9. Finance costs
      2012 2011 
      £’000 £’000
 2,236 2,246
 *
 loan      2,017 4,122
 371 359
Finance lease interest      583 57
 37 25
       5,244   6,809
  
*  James Caird Asset Management  
loan facility of £13,300,000 repaid  
in June 2012. Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 51 Page 50 Circle Holdings plc Annual Report and ﬁnancial statements 2012
10. Finance income
      2012 2011 
      £’000 £’000
Bank interest receivable      136 77
 3,377 3,377
      3,513 3,454
11. Loss per share
 
 
 
the only category of dilutive ordinary shares for the Group. 
      2012 2011
 (25,426) (28,693)
Weighted average number of ordinary shares in issue (number)     99,065,631 44,547,591
Basic and diluted loss per ordinary share (pence)     (25.7) (64.4)
 
as the effect of all potentially dilutive ordinary shares outstanding is anti-dilutive. 
12. Tax
i Analysis of income tax credit in year
      2012 2011 
      £’000 £’000
Current tax    
 – 32
 (6) –
Deferred tax    
Originating and reversal of timing differences      – 94
Effect of change of tax rate      – 60
Recognition of previously unrecognised temporary difference     – (799)
Income tax credit      (6) (613)
   
12. Tax (continued)
ii Factors affecting the current tax credit for the year
 
 
      2012 2011 
      £’000 £’000
Loss before taxation      (30,430) (32,924)
 Loss before taxation multiplied by the average standard rate  
 (7,455) (8,721)
    
Effects of:    
Expenses not deductible for tax purposes      2,253 3,492
 (46) 81
Other temporary differences      (803) (270)
Tax losses not utilised      5,920 4,850
Effect of Jersey tax at 0.0%      131 694
 – (799)
 (6) –
Change in tax rate      – 60
Total income tax credit for the year      (6) (613)
iii Factors that may affect future tax charges
 
 
 
 
 
enacted at the balance sheet date, their effects have not been included in these ﬁnancial statements.   
 
  
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 53 Page 52 Circle Holdings plc Annual Report and ﬁnancial statements 2012
12. Tax (continued)
iv Deferred tax
 
      2012 2011 
      £’000 £’000
At 1 January       – (645)
Recognised during the year      – 645
At 31 December      – –
The net deferred tax asset/(liability) comprises: 
 9,763 7,205
 – 595
Short-term temporary differences      (9,763) (7,800)
      – –
      
The deferred tax is presented net since the entities concerned have a right to set off current tax assets against current tax liabilities,  
and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on the same  

      2012 2011 
      £’000 £’000
 9,763 10,751
 (9,763) (10,751)
      – –
      
 26,251 25,888
 3,161 2,741
Short-term temporary differences      2,303 1,061
      31,715 29,690
      
A deferred tax asset has not been recognised in the ﬁnancial statements due to the uncertainty over the availability  
    
        
       
13. Intangible assets
      Other  
     Computer intangible  
    Goodwill software assets Total 
    £’000 £’000 £’000 £’000
Cost
At 1 January 2011    8,271 333 166 8,770
Additions    – 185  – 185
 At 1 January 2012    8,183 518 166 8,867
Additions    – 1,401  – 1,401
 At 31 December 2012    8,183 1,744 166 10,093
Accumulated amortisation and impairment 
At 1 January 2011    3,179 207 – 3,386
Amortisation charge for the year    – 57 – 57
 At 1 January 2012    3,212 264 – 3,476
Amortisation charge for the year    – 249 33 282
 At 31 December 2012    3,212 480 33 3,725
Net book amount
At 31 December 2012    4,971 1,264 133 6,368
At 31 December 2011    4,971 254 166 5,391
At 1 January 2011    5,092 126 166 5,384
 
An analysis by line item can be seen in note 5.      
i Goodwill       
 
      2012 2011 
      £’000 £’000
Circle’s Nottingham NHS Treatment Centre      4,971 4,971
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 55 Page 54 Circle Holdings plc Annual Report and ﬁnancial statements 2012
13. Intangible assets (continued)
 

 
 
 
 

 
 
 
 
 
continuation of the existing activities of the CGU.
ii Computer software
 
 iii Other intangible assets
 
 
      2012 2011 
      £’000 £’000
 665 –
      665 –
 
technology assets for the hospital in CircleReading.       
 
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 2011  9,024 1,712 1,041 1,764 14,220 27,761
Additions  10,677 2,600 204 814 462 14,757
 At 1 January 2012  19,701 3,287 746 1,472 14,452 39,658
Additions  – 2,537 134 6,522 1,232 10,425
Reclassiﬁcations  – (2,201) 1,916 50 235 –
 At 31 December 2012  19,701 3,404 2,796 8,005 15,917 49,823
Accumulated depreciation and impairment 
At 1 January 2011  4,493 1,077 539 935 12,778 19,822
 At 1 January 2012  4,493 52 216 882 13,421 19,064
 At 31 December 2012  6,709 165 2,248 1,531 14,294 24,947
Net book amount        
At 31 December 2012  12,992 3,239 548 6,474 1,623 24,876
At 31 December 2011  15,208 3,235 530 590 1,031 20,594
At 1 January 2011  4,531 635 502 829 1,442 7,939
 
(note 5). 

 
the Manchester land of £2,181,000. Further impairments across various asset classes relate to the CircleReading commissioning  
 
 
     
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 57 Page 56 Circle Holdings plc Annual Report and ﬁnancial statements 2012
14. Property, plant and equipment (continued)
      2012 2011 
      £’000 £’000
 Leasehold land      4,342 4,377
Clinical equipment      5,711 –
Furniture, ﬁttings and ofﬁce equipment       923 230
      10,976 4,607
 
      2012 2011 
      £’000 £’000
 Freehold      8,650 10,831
Leasehold       4,342 4,377
      12,992 15,208
15. Provision for joint venture deﬁcit
      2012 2011 
      £’000 £’000
At 1 January       (2,688) (1,762)
 (259) (926)
At 31 December      (2,947) (2,688)
Group’s share of net liabilities of joint venture (38.7%)       
Non-current assets      13,572 13,571
Current assets      1,003 1,014
      14,575 14,585
Current liabilities      (1,113) (15,902)
Non-current liabilities      (16,409) (1,371)
      (17,522) (17,273)
Group’s share of net liabilities      (2,947) (2,688)
Group’s share of results of joint venture (38.7%)    
Revenue      1,362 1,302
Operating expenses      (39) (46)
Finance costs      (1,582) (2,182)
Group’s share of loss after tax of joint venture     (259) (926)
 
 
 
 
 
 
be ‘A’ directors (representing the ‘A’ shareholders) and three shall be ‘B’ directors (representing the ‘B’ shareholders). Health Estates  
 
 

 
 

 guarantees provided to Lehmans are therefore £1,625,000 (2011: £1,000,000).
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 59 Page 58 Circle Holdings plc Annual Report and ﬁnancial statements 2012
16. Inventories
      2012 2011 
      £’000 £’000
Consumables      1,298 901
 
The cost of inventories recognised as an expense in the year is £5,509,000 (2011: £5,338,000). 
17 . Trade and other receivables
 Current Non-current
    2012 2011 2012 2011 
   Note £’000 £’000 £’000 £’000
Trade receivables    4,150 2,865 – –
 (131) (141) – –
Net trade receivables    4,019 2,724 – –
 5,255 10,494 662 802
Other receivables    3,047 390 – –
Operating ﬁnancial asset    41,991 1,012 – 41,991
Amounts recoverable on contracts    1,181 2,040 – 1,168
 33 1,586 3,128 – –
    57,079 19,788 662 43,961
       
The directors consider the carrying amount of trade and other receivables approximate to their fair value. Long-term receivables have  
 Operating ﬁnancial assets are recognised to the extent that there is an unconditional right to receive cash from the construction of Circle’s 
 
are entered at the present value of amortised costs. The annual accumulation of interest on these discounted values is recorded as ﬁnance 
 
 
is considered to be recoverable.
 
 
be recoverable.
 
in 2011. The remainder had been used to settle interest accrued in the intervening period.
17 . Trade and other receivables (continued)
      2012 2011 
      £’000 £’000
At 1 January      141 163
Released in the year      (10) (22)
At 31 December      131 141
        
        
      2012 2011 
      £’000 £’000
Not past due       1,968 1,917
 1,363 445
 286 131
 402 231
      4,019 2,724
Trade receivables are non-interest bearing and credit terms are generally 30 days.  
The above receivables are overdue but not impaired, because management believes they are fully recoverable.
      2012 2011 
      £’000 £’000
At 1 January      43,003 44,015
Amounts received      (1,012) (1,012)
At 31 December      41,991 43,003
        
      2012 2011 
      £’000 £’000
 41,991 1,012
 – 41,991
      41,991 43,003
      2012 2011 
     Note £’000 £’000
At 1 January      3,208 5,461
Recognised in income statement     5 (2,027) (2,253)
At 31 December      1,181 3,208
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 61 Page 60 Circle Holdings plc Annual Report and ﬁnancial statements 2012
18. Cash and cash equivalents
      2012 2011 
     Note £’000 £’000
Cash and cash equivalents      38,029 26,004
Less restricted balances:       
 a (1,300) (1,300)
–  Letter of Credit  – GE     b (1,800) (1,800)
 c – (175)
–  Hinchingbrooke deposit     d (2,000) –
Restricted cash       (5,100) (3,275)
Unrestricted cash and cash equivalents       32,929 22,729
The directors consider the carrying amount of cash and cash equivalents approximate to their fair value. 
 
minimum balance of £1,300,000 (2011: £1,300,000) for Nations Healthcare (Nottingham) Limited is maintained at each month end.
 

 
up to £2,000,000 in termination costs to Hinchingbrooke. As part of the contract agreement, these funds have been deposited in an  
 19. Trade and other payables
 Current Non-current
    2012 2011 2012 2011 
   Note £’000 £’000 £’000 £’000
Trade payables    9,128 9,646 – –
 873 2,026 – –
Accruals     4,101 2,841 2,257 –
Social security and other taxation    842 681 – –
 33 34 34 – –
 33 128 65 – –
Contingent consideration    5 10 – –
     15,111 15,303 2,257 –
 The directors consider the carrying amount of trade and other payables approximate to their fair value. Long-term payables have  
 On the acquisition of Circle Clinic Windsor in 2008, contingent consideration arose, based on annual revenues over the ﬁve years from  
 
 
on actual and budgeted turnover over the remaining life of the agreement, less payments already made during the year (note 20). 
 
      2012 2011 
      £’000 £’000
At 1 January       10 35
 – (15)
 5 –
 (10) (10)
At 31 December      5 10
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 63 Page 62 Circle Holdings plc Annual Report and ﬁnancial statements 2012
20. Loans and other borrowings
 Current Non-current
    2012 2011 2012 2011 
    £’000 £’000 £’000 £’000
Barclays     41,768 920 – 41,701
 7,380 7,380 – –
JCAM    – 13,614 – –
Secured bank loans (i)     49,148 21,914 – 41,701
Unsecured loan notes (ii)    348 316 – –
Secured ﬁnance leases (iii)    1,340 (131) 10,664 4,558
    50,836 22,099 10,664 46,259
i Secured bank loans
    Effective Loan 
   Loan interest facility 2012 2011 
  Note commenced rate £’000 £’000 £’000
Barclays   a July 2005 5.0% 44,474 41,768 42,621
 b 7,380 7,380
JCAM  c August 2008 28.8% 13,300 – 13,614
      49,148 63,615
 
NHS Treatment Centre. Barclays also has a charge over the shares of Nations Healthcare (Nottingham) Limited that can be exercised  
in the event that it does not meet its ﬁnancial obligation to Barclays. The loan is being repaid in quarterly instalments of £227 ,000 to 




 taken to the income statement. 
 
 
 
 
to the Group. 

        
   
20. Loans and other borrowings (continued)
ii Unsecured loan notes
    Effective Loan 
   Loan interest facility 2012 2011 
   commenced rate £’000 £’000 £’000
Loan notes   July 2008 n/a n/a 348 316
        
 mature over ﬁve years from the date of acquisition and are dependent on performance over that period. The directors believe the undiscounted 
values of these loan notes are £274,000 (2011: £273,000) and £91,000 (2011: £91,000) respectively. These are payable on 4 July 2013 and do 
not attract interest.        
 Clinic Windsor, sets out covenants and guarantees related to the acquisition. These covenants are currently in breach due to the net asset value 

balance had therefore previously been classiﬁed as a current liability. Amounts are payable in July 2013.   
 
      2012 2011 
      £’000 £’000
At 1 January       316 364
 – (73)
 32 25
At 31 December      348 316
iii Finance leases        
 
 

 
      2012 2011 
      £’000 £’000
Gross ﬁnance lease liabilities – minimum lease payments 
Falling due:
– No later than one year      2,279 204
– Later than one year and no later than ﬁve years     12,240 4,706
– Later than ﬁve years      1,187 1,197
      15,706 6,107
Future ﬁnance charges on ﬁnance leases      (3,702) (1,680)
      12,004 4,427
 Falling due:       
– No later than one year      1,340 (131)
– Later than one year and no later than ﬁve years     10,504 4,420
– Later than ﬁve years      160 138
      12,004 4,427
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 65 Page 64 Circle Holdings plc Annual Report and ﬁnancial statements 2012
20. Loans and other borrowings (continued)
 
 
 
 
 
a period of six months prior to the ﬁrst lease break date in 2046. Both instances require payment of a premium, calculated in accordance  
 
lease, and there are no contingent rents. 
 
rate and the proﬁle of the annual rent in the early year of the lease liability, initially gave rise to an interest charge greater than the rent 
payment, resulting in a debit balance in the less than one year category above.
The Singers ﬁnance lease liabilities are effectively secured as the rights to the leased asset revert to Singers in the event of a default. At the  
end of the initial hire period, the Group is entitled to extend the duration of the lease and pay an agreed secondary rental, or act as agent  
for the lessor in the sale of the equipment. There are no covenants or restrictions on the Group imposed by this lease, and there are no 
contingent rents.
iv Maturity proﬁle
    Between Between Greater 
   Less than one to two two to three than four 
   one year years years years Total 
2012   £’000 £’000 £’000 £’000 £’000
Barclays    41,768 – – – 41,768
 Loan notes   348 – – – 348
Finance leases   1,340 1,351 6,048 3,265 12,004
   50,836 1,351 6,048 3,265 61,500
    Between Between Greater 
   Less than one to two two to three than four 
   one year years years years Total 
2011   £’000 £’000 £’000 £’000 £’000
Barclays    920 41,701 – – 42,621
 JCAM   13,614 – – – 13,614
Loan notes   316 – – – 316
Finance leases   (131) 4,402 18 138 4,427
   22,099 46,103 18 138 68,358
21. Provisions for other liabilities and charges
      2012 2011 
      £’000 £’000
Current      2,468 924
Non-current      189 707
      2,657 1,631
    Onerous Onerous Under 
    leases leases declared 
   Dilapidations (property) (equipment) VAT Total 
   £’000 £’000 £’000 £’000 £’000
At 1 January 2011   – 1,194 16 – 1,210
Charged to the income statement   450 549 – – 999
Utilised during the year   – (562) (16) – (578)
At 1 January 2012   450 1,181 – – 1,631
Charged to the income statement   – 239 – 1,500 1,739
Utilised during the year   – (713) – – (713)
Reallocation   222 (222) – – –
At 31 December 2012   672 485 – 1,500 2,657
Dilapidations       
 Onerous leases (property)        
 to earn additional advertising revenue from the prime advertising space on top of the building, and rental income from renting out ofﬁce space. 
The provision of £195,000 (2011: £1,027,000) has been calculated based on the total net costs expected to be incurred by the Group until the 
ﬁrst opportunity to exit the lease arrangement in April 2013.     
 £290,000 (2011: £154,000) has been calculated based on the total net costs expected to be incurred by the Group until the ﬁrst opportunity  
to sub-let the property.        
Under declared VAT
 

£1,500,000 including penalties and ﬁnes.
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 67 Page 66 Circle Holdings plc Annual Report and ﬁnancial statements 2012
22. Derivative ﬁnancial instruments
       Barclays 
       interest 
       rate swap 
       £’000
At 1 January 2011       3,494
Gain in fair value credited to income statement      (1,019)
At 1 January 2012       2,475
Gain in fair value credited to income statement      (1,362)
At 31 December 2012       1,113
Effective interest rate       5.0%
 
 23. Share capital and share premium
Authorised
      2012 2011 
      £’000 £’000
Ordinary shares of £0.02 each      5,000 2,000
      Number Number
Number of authorised shares       250,000,000 100,000,000
Allotted and fully paid up
    Share Share Other 
   Shares capital premium reserve Total 
   Number £’000 £’000 £’000 £’000
Ordinary shares:   
At 1 January 2011   4,248,300 425 111,680 – 112,105
Shares issued – March 2011  £0.10 234,375 23 2,277 – 2,300
Shares issued – May 2011  £0.10 1,793,722 179 13,448 – 13,627
   6,276,397 627 127,405 – 128,032
Five-for-one share split  £0.02 31,381,984 627 127,405 – 128,032
Shares issued – June 2011 (net of costs)  £0.02 16,633,552 333 21,143 – 21,476
 £0.02 14,755,513 295 – 22,182 22,477
At 1 January 2012   62,771,049 1,255 148,548 22,182 171,985
Shares issued – 18 June 2012 (net of costs)  £0.02 78,465 2 – – 2
Shares issued – 19 June 2012 (net of costs)  £0.02 67,857,143 1,357 44,597 – 45,954
At 31 December 2012   130,706,657 2,614 193,145 22,182 217,941
Notes to the consolidated ﬁnancial statements
Continued
23. Share capital and share premium (continued)
On 18 June 2012, the Group issued, at nominal value, an aggregate of 78,465 ordinary shares of £0.02 each in the capital of the  
 On 19 June 2012, the Group received £47,500,000 (before fees) of equity investment. Of the total consideration received, £1,357,000  
 
received £2,000 from the allocation of shares to non-executive directors. 
 

 
£23,000 has been allocated to share capital (234,375 ordinary shares at £0.10 each), £2,277,000 to share premium, £2,959,000 to  
   At 1 18 June 2012 19 June 2012 Additional At 31 
   January (at £0.02 issue (at purchases/ December 
   2012 each) £0.02 each) (sales) 2012 
   Number Number Number Number Number
Health Trust   3,136,180 – – – 3,136,180
Balderton Capital   10,613,677 – 2,142,857 – 12,756,534

BlackRock    8,051,993 – – (873,438) 7,178,555
BlueCrest Capital Management   9,252,685 – – – 9,252,685
Odey Asset Management   10,394,930 – 17 ,142,857 341,000 27 ,878,787
JCAM   479,800 – – (479,800) –

Other   2,671,214 78,465 203,571 (785,262) 2,167,988
   62,771,049 78,465 67,857,143 – 130,706,657
        Health  
  At 1 March 2011 May 2011 Incremental  June 2011 Partners Additional At 31 
  January issue (at issue (at  ﬁve-for-one June 2011 issue Limited purchases/ December 
  2011 £32.00 each) £11.15 each) split issue (IPO) (warrants) transfer (sales) 2012 
  Number Number Number Number Number Number Number Number Number

Balderton Capital  921,938 40,275 – 3,848,852 3,289,474 2,399,648 113,485 5 10,613,677

BlackRock   665,234 90,477 – 3,022,844 1,973,684 2,107,930 218,010 (26,186) 8,051,993
BlueCrest Capital Management  417,018 59,645 448,431 3,700,373 1,973,684 2,531,091 122,445 (2) 9,252,685
Odey Asset Management  – – 1,345,291 5,381,166 506,579 3,161,896 – (2) 10,394,930
JCAM  95,960 – – 383,840 – – – – 479,800
Other  198,348 – – 793,392 1,653,289 – – 26,185 2,671,214
  4,248,300 234,375 1,793,722 25,105,587 16,633,552 14,755,513 – – 62,771,049 Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 69 Page 68 Circle Holdings plc Annual Report and ﬁnancial statements 2012
24. Non-controlling interest
     Circle Health 
     Health properties Total 
     £’000 £’000 £’000
At 1 January 2011     (8,789) (368) (9,157)
Effect of shares vesting in period     (1,438) – (1,438)
 Effect of Nations Healthcare Group restructure    (2,383) – (2,383)
 Non-controlling interest’s share of losses     (3,618) – (3,618)
At 1 January 2012     (20,170) – (20,170)
Effect of shares vesting in period     (1,920) – (1,920)
Non-controlling interest’s share of losses     (4,998) – (4,998)
At 31 December 2012     (27,088) – (27,088)
Circle Health Limited
 

 an authorised share capital of 1000,000,000 (2011: 100,000,000) ordinary shares of £0.01 nominal value that give equal rights to the voting, 
dividend and capital of the company.
 



Nations Healthcare Group
 
 Health Properties Limited
 
 
 Health Partners Limited
 
the existing shareholders (note 33 (h)).

 
 25. Warrants
 Warrants treated as equity instruments
      2012 2011 
     Note £’000 £’000
At 1 January     26 21,475 19,878
 915 1,597
At 31 December      22,390 21,475
   Original  
   warrants,    
  Revised restated for   At 1  At 31 
  exercise ﬁve-for-one  Revised January Share-based December 
  price split Modiﬁed warrants 2012 charges 2012 
 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
 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
 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 13,515 915 14,430
    1,282,240 2,340,765 3,623,005 21,475 915 22,390
 
Trust (Jersey), are detailed in note 26.


 
to the incremental fair value, in addition to the residual income statement charge relating to the fair value at the grant date of the original 
 Warrant reserve:
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 71 Page 70 Circle Holdings plc Annual Report and ﬁnancial statements 2012
26. Share-based charges
 
 
 
 
      2012 2011 
    Note Type £’000 £’000
 a  Shares  – –
 b Warrants 915 1,597 
 c  Shares  96  –
      1,011 1,597
a Circle Partnership Limited
 
 
 
of certain events, including the completion of a sale of the shares by a participant. The subscription price for the shares is the FMV as 
determined by an independent valuation and, as such, there is no share-based charge.
b Health Trust (Jersey)
 2011 and are exercisable from the date they vest (1/24 every month from May 2011) and do not have any expiry date. A fair value assessment 
 
Black-Scholes on a diluted pricing basis, using the parameters outlined on the next page.
c Non-executive directors
 The Group operates an equity-settled, share-based compensation plan for its non-executive directors. The entity receives services from  
 
 Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest.  
 satisﬁed. At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest, based  
 
 
net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
26. Share-based charges (continued)
Modiﬁed warrant issue parameters (reﬂecting ﬁve-for-one share split):
Stock price  £1.52 
Exercise price  £1.52 
Expected volatility
*
  50.0% 
Risk-free interest rate  5.0% 
Warrant life
**
  10 years
 
 
 
    2012 2012 2011 2011 
     Average  Average 
    Warrants exercise price Warrants exercise price 
    Number £ per share Number £ per share
At 1 January     2,340,765 1.52 468,153 51.55
Five-for-one share split     – – 1,872,612 (41.24)
Modiﬁcation    – – – (8.79)
At 31 December    2,340,765  1.52 2,340,765 1.52
27 . Capital commitments
      2012 2011 
      £’000 £’000
Contracted for but not provided in these ﬁnancial statements     – –
28. Pension commitments
 
 
 *  The historical volatility is assumed to be 
 
not necessarily be the actual outcome. 
 expected term and is not necessarily 
indicative of exercise patterns that  
may occur.
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 73 Page 72 Circle Holdings plc Annual Report and ﬁnancial statements 2012
29. Operating lease commitments
 
 Plant and machinery Land and buildings
    2012 2011 2012 2011 
    £’000 £’000 £’000 £’000
No later than one year    3,129 4,226 9,106 4,724
Later than one year and no later than ﬁve years   483 3,614 36,113 15,761
Later than ﬁve years    – – 194,459  63,725
    3,612 7,840 239,678 84,210
On 7 June 2012, the Group entered into an operating lease in respect of the CircleReading hospital for 25 years at an initial annual rent  
 

 30. Net cash outﬂow from operating activities
      2012 2011 
     Note £’000 £’000
Loss before taxation       (30,430)  (32,924) 
 259  926
Exceptional ﬁnance items        (866) 10,097
Finance costs        5,244  6,809
Finance income       (3,513) (3,454)
 14  1,485  1,190
Amortisation of intangible assets     13   282 57
Charge recognised in respect of amounts recoverable under contract    17 2,027 2,253
 13   142 –
 14  4,614 30
 26  915 1,597
 26 96 –
Revaluation of Birmingham ﬁnance lease payments      572 –
Non-cash element of CircleReading pre-opening expenses       647 –
 1,500 –
Restructuring costs       650 –
 – (1,493)
 239 –
 1,575 –
Other exceptional items        – (13)
 (397) 283
 (1,818) (3,968)
 501 (5,386)
 (713)  421
 (16,989) (23,575)
31. Reconciliation and analysis of net debt
      2012 2011 
      £’000 £’000
 10,200 14,607
 1,825 (925)
 12,604 5,922
 –  (5,000)
Repayment of ﬁnance lease          674 44
Movement in net debt from cash ﬂow          25,303  14,648
Other non-cash movements        (6,420) (4,632)
Movement in net debt        18,883  10,016
Net debt at 1 January        (42,354) (52,370)
Net debt at 31 December       (23,471) (42,354) 
      Other  
   At 1 Cash  non-cash At 31 
   January ﬂow Reclassiﬁcations changes December 
2012   £’000 £’000 £’000 £’000 £’000
Liquid resources   
Unrestricted cash   22,729 10,200 – – 32,929
Restricted cash   3,275 1,825 – – 5,100
Debt due within one year   
 (7,380)
Barclays   (920) 920 (41,701) (67) (41,768)
JCAM   (13,614) 11,684 – 1,930 –
Loan notes   (316) – – (32) (348)
Finance leases   131 674 (103) (2,042) (1,340)
 
Debt due after one year   
Barclays   (41,701) – 41,701 – –
Finance leases   (4,558) – 103 (6,209) (10,664)
Net debt   (42,354) 25,303 – (6,420) (23,471)
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 75 Page 74 Circle Holdings plc Annual Report and ﬁnancial statements 2012
31. Reconciliation and analysis of net debt (continued)
      Other  
   At 1 Cash  non-cash At 31 
   January ﬂow Transfers changes December 
2011   £’000 £’000 £’000 £’000 £’000
Liquid resources   
Unrestricted cash   8,122 14,607 – – 22,729
Restricted cash   4,200 (925) – – 3,275
Debt due within one year   
 (7,380)
Barclays   (922) 922 (920) – (920)
JCAM   (13,224) – – (390) (13,614)
Loan notes   (364) – – 48 (316)
Finance leases   (76) 44 (67) 230 131
 
Debt due after one year   
Barclays   (42,556) – 920 (65) (41,701)
Finance leases   (170) – 67 (4,455) (4,558)
Net debt   (52,370) 14,648 – (4,632) (42,354)
 
on acquisition of £32,000 (2011: £25,000).
 
the Birmingham ﬁnance lease (note 6) of £572,000.
Notes to the consolidated ﬁnancial statements
Continued
32. 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  
 
 Classes of ﬁnancial instruments
The Group’s ﬁnancial instruments comprise ﬁnancial assets such as cash, short-term deposits, trade and other receivables, and ﬁnancial 
 
Group’s interest rate risks arising from the Group’s sources of ﬁnance. 

     Fair value  
    Loans and through proﬁt Amortised 
    receivables and loss cost Total 
   Note £’000 £’000 £’000 £’000
As at 31 December 2012 
Financial assets
Trade and other receivables    17 50,643 – – 50,643
Cash and cash equivalents    18 38,029 – – 38,029
Total ﬁnancial assets    88,672 – – 88,672
Financial liabilities
Trade and other payables   19 – – (9,167) (9,167)
 22 – (1,113) – (1,113)
Bank loans    20 – – (49,148) (49,148)
Loan notes    20 – – (348) (348)
Finance lease liabilities   20 – – (12,004) (12,004)
Total ﬁnancial liabilities    – (1,113) (70,667) (71,780)
As at 31 December 2011 
Financial assets
Trade and other receivables    17 49,245 – – 49,245
Cash and cash equivalents    18 26,004 – – 26,004
Total ﬁnancial assets    75,249 – – 75,249
Financial liabilities
Trade and other payables   19 – – (9,690) (9,690)
 22 – (2,475) – (2,475)
Bank loans    20 – – (63,615) (63,615)
Loan notes    20 – – (316) (316)
Finance lease liabilities   20 – – (4,427) (4,427)
Total ﬁnancial liabilities    – (2,475) (78,048) (80,523) Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 77 Page 76 Circle Holdings plc Annual Report and ﬁnancial statements 2012
32. Financial risk management (continued)
a Market risk
 
 1) Interest rate risk
Financial instruments affected by interest rate risk include bank loans, short-term deposits and derivative ﬁnancial instruments.  
 
 
 
 
rates of interest represented 28.2% (2011: 22.2%) of total assets of the Group.
      Interest 
    Variable Fixed free Total 
    £’000 £’000 £’000 £’000
At 31 December 2012
 At 31 December 2011
    Effective  Notional Carrying 
   Counter interest rate Maturity amount value 
   party % date £’000 £’000
At 31 December 2012
 At 31 December 2011
 
 
risk. The analysis assumes that all other variables remain constant:
     Proﬁt or loss  Equity 
    100bp 100bp 100bp 100bp 
    increase decrease increase decrease 
    £’000 £’000 £’000 £’000
At 31 December 2012
Variable rate bank loans    (74) 74 – –
Net sensitivity    (74) 74 – –
At 31 December 2011
Variable rate bank loans    (74) 74 – –
Net sensitivity    (74) 74 – –
32. Financial risk management (continued)
The directors believe that a change of 100bp represents a reasonable sensitivity of the Group’s interest rate risk. The rest of the debt in the 
 
 
not been included on the previous page.
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  
 
 b Credit risk
Credit risk is the risk of ﬁnancial loss to the Group if a customer or counter-party to a ﬁnancial instrument fails to meet its contractual 
 represented by their carrying amount.
 
that invoiced revenue is collected according to agreed terms, that policies exist to limit exposure to any one party, and ensure approved  
 
 
 

 c Liquidity risk
 
 
 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.
 
 
based on the remaining period at the balance sheet date to the contract maturity date. The amounts included in the table are the  
 Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 79 Page 78 Circle Holdings plc Annual Report and ﬁnancial statements 2012
32. Financial risk management (continued)
   Between Between Between Between  
  Less than one to two two to three three to four four to ﬁve Over ﬁve 
  one year years years years years years 
  £’000 £’000 £’000 £’000 £’000 £’000
At 31 December 2012 
Trade and other payables  (9,167) – – – – –
Bank loans   (49,148) – – – – –
 Finance leases   (2,279) (2,160) (6,650) (1,801) (1,629) (1,187)
Loan notes  (348) – – – – –
Net outﬂows  (62,055) (2,160) (6,650) (1,801) (1,629) (1,187)
At 31 December 2011 
Trade and other payables  (9,690) – – – – –
Bank loans   (12,631) (57,256) – – – –
 Finance leases   (204) (4,676) (10) (10) (10) (1,197)
Loan notes  (364) – – – – –
Net outﬂows  (24,417) (63,051) (10) (10) (10) (1,197)
 
 
than those indicated, is mitigated by the fact that the trade payables are due imminently, and the principal and interest on the bank loans  
 
of covenant takes place.
ii Capital risk
 
 
and debt.
 
are tested monthly.
32. Financial risk management (continued)
iii Fair value
 Level 1: quoted prices in active markets.
 Level 3:  inputs of the asset or liability that are not based on observable market data.
     Level 1 Level 2 Level 3 
    Note £’000 £’000 £’000
At 31 December 2012
Liabilities
 22 – 1,113 –
      – 1,113 –
At 31 December 2011
Liabilities
 22 – 2,475 –
      – 2,475 –
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 81 Page 80 Circle Holdings plc Annual Report and ﬁnancial statements 2012
33. Related party transactions
Subsidiaries and joint ventures
   Proportion of   
Name of company Holding Nature of business voting rights held Country of incorporation
 Health Estates Managers Limited Ordinary shares Fund services (JFSC
**
 registered) 100.0% Jersey
 Circle Health Limited
*
 Circle Clinics Ltd
*
 Windsor Hand Surgery Limited
*
 Nations Healthcare Limited
*
 Nations Healthcare Limited
*
 
(Nottingham) Limited
*
  
Nations Healthcare (Burton) Limited
*
 
(North Bradford) Limited
*
 
 
West London 2006 Limited
*
 

*
 Circle (Welbeck) Limited
*
 Circle (Welbeck) Limited
*
 Circle Hospital (Bath) Limited
*
 Circle Hospital (Reading) Limited
*
 Circle Hinchingbrooke Limited
*

*
 Circle Birmingham Limited
*
 CH Subco Limited Ordinary shares Finance company 100.0% Jersey

*
 *
 
 ordinary shares and management 

*
 
  and development 
 
(South Manchester) Limited
*
  and development   
 

  
*  Subsidiary held indirectly. 
**  Jersey Financial Services Commission.
33. Related party transactions (continued)
Trading transactions
 
     2012  2011 
    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
 a – – – –
 b 1,586 (34) 3,128 (34)
JCAM   c – – – (13,614)
Stonehage Fund Services Limited (‘Stonehage’)  d – – – (1)
Capita   e – (126) – (65)
Health Estates Limited   f 9 – – –
Hinchingbrooke Health Care NHS Trust    i 241 (2) – –
    1,836 (162) 3,128 (13,714)
a Circle Partnership Limited 
 
 b Health Properties (Bath) Limited
 
 considered to be recoverable.
 On 5 October 2009, Circle Hospital (Bath) Limited, a subsidiary of the Group, entered into an agreement to lease the Bath hospital  
 
 
 
 c JCAM
 
 
 
 
to JCAM (2011: £6,204,000) (note 18).
 presented separately in equity at an amount of £1,616,000.
d Stonehage Fund Services Limited
 Stonehage Fund Services Limited, a management and ﬁduciary services company based in Jersey, has been appointed as the manager  
 
 
 
Limited, is also a director of the corporate trustee of Health Trust (Jersey) and of Health Estates Limited.
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 83 Page 82 Circle Holdings plc Annual Report and ﬁnancial statements 2012
33. Related party transactions (continued)
e Capita
 Directors’ report
 
 f Health Estates Limited
 
 amount of £9,000 (2011: £nil) remains receivable at year end.
g Health Trust (Jersey)
 
 

 

h Health Partners
  
 
 
 
 
 
 i Hinchingbrooke Health Care NHS Trust 
  
 

33. Related party transactions (continued)
     Number of % Number of 
     shares held shareholding warrants held
Balderton Capital     12,756,534 9.8% 4,786
BlackRock      7,178,555 5.5% –
BlueCrest Capital Management     9,252,685 7.1% 296

Odey Asset Management     27,878,787 21.3% –
Tim Bunting and Jamie Wood (resigned 18 June 2012) served as non-executive directors of Circle Holdings plc. They are employed  
 

34. Events after the balance sheet date
Hinchingbrooke Health Care NHS Trust 
Under the terms of the Hinchingbrooke Health Care NHS Trust franchise agreement, Circle Hinchingbrooke Limited is required to make  
 Circle Hinchingbrooke Limited made a support payment to the Trust of £3.7 million at the end of January 2013, to ensure the Trust remains  
in surplus for the ﬁnancial year ending 31 March 2013.    
Nottingham NHS Treatment Centre contract win    
 AIB/Edinburgh loan
 
 
 
 
fourth quarter of 2013. 
West London    
 
 
respect of this.    
Notes to the consolidated ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 85 Page 84 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Independent auditors’ report
To the members of Circle Holdings plc
We have audited the ﬁnancial statements 
of Circle Holdings plc for the year ended 
 
Company balance sheet and the related 
 that has been applied in their preparation 

Respective responsibilities  
of directors and auditors 
As explained more fully in the Statement of 
directors’ responsibilities set out on page 
30, the directors are responsible for the 
preparation of the ﬁnancial statements 
and for being satisﬁed that they give 
 is to audit and express an opinion on 
the ﬁnancial statements in accordance 
 Those standards require us to comply 
 Standards for Auditors.
This report, including the opinion, 
has been prepared for and only for 
the Company’s members as a body in 

other purpose. We do not, in giving this 
opinion, accept or assume responsibility 
for any other purpose or to any other 
 Scope of the audit of  
the ﬁnancial statements 
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 

or error. This includes an assessment 
 are appropriate to the company’s 
circumstances and have been consistently 
 reasonableness of signiﬁcant accounting 
 the overall presentation of the ﬁnancial 
 ﬁnancial and non-ﬁnancial information 
in the annual report, to identify material 
 any apparent material misstatements 
 implications for our report. 
Opinion on  
ﬁnancial statements 

 
state of the company’s affairs  
 
 Opinion on other matter 
 
in the Directors’ report for the ﬁnancial  
 
 ﬁnancial statements. 
 
required to report by exception 
We have nothing to report in respect 
 
us to report to you if, in our opinion: 
 been kept or returns adequate for our 
audit have not been received from 
 
 information and explanations  

Emphasis of matter –  
going concern 
 have considered the adequacy of the 
disclosure made in note 1 to the Company 
ﬁnancial statements concerning the 
Group’s ability to continue as a going 
concern. While the directors are conﬁdent 
that the Group can continue to meet 
 the next 12 to 18 months, any signiﬁcant 
deviations from their forecasts could 
impact on its ability to do so, and these 
conditions as explained in note 1 to the  
ﬁnancial statements, indicate the existence 
 signiﬁcant doubt about the Company’s 
ability to continue as a going concern. 
The ﬁnancial statements do not include 
 going concern. 
Other matter 
We have reported separately on the 
Group ﬁnancial statements of Circle 
Holdings plc for the year ended 31 
 Nigel Reynolds
For and on behalf of 
 Chartered Accountants and  
Recognised Auditors
London
17 April 2013
Company balance sheet
       2012 2011 
     Note £’000 £’000
Fixed assets
 5 17,106 24,194
Current assets
 6 48,802 18,597
Cash at bank and in hand      22,899 15,452
      71,701 34,049
Creditors – amounts falling due within one year    7 (577) (14,303)
Net current assets      71,124 19,746
Total assets less current liabilities       88,230 43,940
Net assets       88,230 43,940
Capital and reserves
Share capital      8 2,614 1,255
Share premium      8 193,145 148,548
Other reserves      8 11,303 11,303
Warrant reserve      9, 11 22,390 21,475
Share-based charges reserve      9, 11  96 –
 9 (141,318) (138,641)
Total shareholders’ funds      10 88,230 43,940
   
   
  
     
Steve Melton   Paolo Pieri 
Chief Executive Ofﬁcer   Chief Financial Ofﬁcer
Circle Holdings plc   Registered number: 100016 (Jersey)     
  Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 87 Page 86 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Notes to the Company ﬁnancial statements
 1. Accounting policies
Basis of preparation
These ﬁnancial statements are prepared for 
Circle Holdings plc (the ‘Company’) for the 

is the ultimate parent entity of the Circle 
Holdings plc Group (the ‘Group’). These 
ﬁnancial statements are prepared under the 
historical cost convention and in accordance 



been applied consistently for both years 

Accounting convention
These ﬁnancial statements have been 
prepared on a historical cost basis in 
 standards. The Company has not prepared 
a separate proﬁt and loss account and cash 

 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 19.
Investments

ventures are valued at cost less provision  
for impairment. The carrying value of 
 circumstances indicate the carrying value 
may not be recoverable.
Deferred tax
 discounting), based on current tax rates and 
 obligation at the balance sheet date to pay 
more tax, or a right to pay less tax in the 
 
 Warrants

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 

is treated as a ﬁnancial liability if:

obliged to deliver a variable number  
 
other than by a ﬁxed amount of cash  
or other assets for a ﬁxed number of  
 the liability and equity components of the 
shares based on the allocation of proceeds 

the instruments are ﬁrst recognised.
i  Equity warrants
 net of transaction costs. The fair value of 
the equity component is not remeasured 
in subsequent years. The fair value of 

debit being charged to the income 
statement or taken to non-current 
 
linked to a loan.
 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.
ii Financial liability warrants
 Warrants issued that create a ﬁnancial 
liability to the Company are presented as 
a liability in the balance sheet, measured 
initially at fair value, net of transaction 
costs and subsequently at amortised 
cost until extinguished on conversion or 
redemption. The initial fair value of the 
 appropriate valuation methodology.
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 

is measured by reference to the fair value 
 and is recognised over the vesting period, 
 employees become fully entitled to the 
 
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  
 
to equity.
2. Proﬁt and loss
The result for the year is a loss of 
£2,677,000 (2011: loss of £67,728,000).
3. Auditors’ remuneration
The Company incurred £26,000 (2011: 
 4. Directors’ emoluments

includes amounts received in respect of 

to other directors via subsidiary companies, 
 Directors’ remuneration report.
5. Investments
Company
         2012 2011 
        Note £’000 £’000
Cost
At 1 January         163,735 64,346
Additions – Circle Welbeck Limited        13 – 97,791
 – 1
Additions – CH Subco         1,800 –
Additions – capital contributions        12 915 1,597
At 31 December         166,450 163,735
Provision for impairment
At 1 January         139,541 38,136
Reclassiﬁcation from trade receivables         – 31,637
 9,803 69,768
At 31 December         149,344 139,541
Net book amount      
At 31 December         17,106 24,194

   Proportion of   
Name of company Holding Nature of business voting rights held Country of incorporation
 Health Estates Managers Limited Ordinary shares Fund services (JFSC
**
 registered) 100.0% Jersey
CH Subco Limited Ordinary shares Finance company 100.0% Jersey
Circle (Welbeck) Limited
*
 *  Subsidiary held indirectly. 
**  Jersey Financial Services Commission. Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 89 Page 88 Circle Holdings plc Annual Report and ﬁnancial statements 2012
6. Debtors
       2012 2011 
      £’000 £’000
 20 4,256
 48,782 14,341
      48,802 18,597
 
on demand (note 13).
7 . Creditors – amounts falling due within one year
       2012 2011 
     Note £’000 £’000
Bank loans (JCAM)      – 13,614
Trade creditors      250 143
 13 195 –
Accruals and deferred income      132 546
      577 14,303
 
 8. Called up share capital
Authorised
         2012 2011 
         £’000 £’000
Ordinary shares of £0.02 each         2,000 2,000
         2012 2011 
         Number Number
Number of authorised shares         250,000,000 100,000,000
Allotted and fully paid up
    Share Share Other 
   Shares capital premium reserve Total 
   Number £’000 £’000 £’000 £’000
Ordinary shares:   
At 1 January 2011    4,248,300  425  111,680 –  112,105
Shares issued – March 2011    £0.10  234,375  23 2,277  – 2,300
Shares issued – May 2011    £0.10  1,793,722 179 13,448 – 13,627
   6,276,397 627 127,405 –  128,032
Five-for-one share split    £0.02  31,381,984  627  127,405 – 128,032
Shares issued – June 2011 (net of costs)   £0.02  16,633,552  333  21,143 – 21,476
 £0.02  14,755,513 295 – 11,303 11,598
At 1 January 2012     62,771,049  1,255  148,548  11,303  161,106
Shares issued – 18 June 2012 (net of costs)  £0.02  78,465  2 – – 2
Shares issued – 19 June 2012 (net of costs)  £0.02  67,857,143  1,357  44,597  – 45,954
At 31 December 2012     130,706,657  2,614  193,145 11,303 207,062
On 18 June 2012, the Group issued, at nominal value, an aggregate of 78,465 ordinary shares of £0.02 each in the capital of the Company  
 On 19 June 2012, the Group received £47 ,500,0900 of equity investment. Of the total consideration received, £1,357 ,000 has been allocated  
 
from the allocation of shares to non-executive directors.
 
 Notes to the Company ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 91 Page 90 Circle Holdings plc Annual Report and ﬁnancial statements 2012
9. Reserves
         Share-based Proﬁt 
      Share Warrant Other charges and loss 
      premium reserve reserve reserve account 
     Note £’000 £’000 £’000 £’000 £’000
At 1 January 2011      148,548 21,475 11,303 –  (138,641)
 Loss for the ﬁnancial year      – – – – (2,677)
 12 – 915 – – –
 At 31 December 2012      193,145 22,390 11,303 96 (141,318)
10. Reconciliation of movement in shareholders’ funds
       2012 2011 
     Note £’000 £’000
Loss for the ﬁnancial year      (2,677) (67,728)
 – 2,241
Net proceeds on issue of ordinary share capital     8 45,956 49,001
 11 915 1,597
 96 –
Net addition to shareholders’ funds      44,290 (14,889)
Opening shareholders’ funds      43,940 58,829
Closing shareholders’ funds      88,230 43,940
 
 
 11. Warrants
 
 
 Warrants treated as equity instruments
         2012 2011 
        Note £’000 £’000
At 1 January         21,475 19,878
 12 915 1,597
At 31 December         22,390 21,475
   Original  
   warrants,    
  Revised restated for   At 1  At 31 
  exercise ﬁve-for-one  Revised January Share-based December 
  price split Modiﬁed warrants 2012 charges 2012 
 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
 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
 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 13,515 915 14,430
    1,282,240 2,340,765 3,623,005 21,475 915 22,390
 
Health Trust (Jersey), are detailed in note 26 of the consolidated ﬁnancial statements.
 

 
 
 
 

 
to the incremental fair value in addition to the residual income statement charge relating to the fair value at the grant date of the original  
 Warrant reserve:
Notes to the Company ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 93 Page 92 Circle Holdings plc Annual Report and ﬁnancial statements 2012
12. Capital contributions
 
 
 
 
      2012 2011 
    Note Type £’000 £’000
 a  Shares  – –
 b Warrants 915 1,597 
 c  Shares  96  –
      1,011 1,597
a Circle Partnership Limited


 
of certain events, including the completion of a sale of the shares by a participant. The subscription price for the shares is the FMV as 
determined by an independent valuation and, as such, there is no share-based charge.
b Health Trust (Jersey)
 

 c Non-executive directors
 The Group operates an equity-settled, share-based compensation plan for its non-executive directors. The entity receives services from  
 

 Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest.  
 satisﬁed. At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest, based  
 
 
received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
12. Capital contributions (continued)
Modiﬁed warrant issue parameters (reﬂecting ﬁve-for-one share split):
Stock price  £1.52 
Exercise price  £1.52 
Expected volatility
*
  50.0% 
Risk-free interest rate  5.0% 
Warrant life
**
  10 years
 
 
 
    2012 2012 2011 2011 
     Average  Average 
    Warrants exercise price Warrants exercise price 
    Number £ per share Number £ per share
At 1 January     2,340,765 1.52 468,153 51.55
Five-for-one share split     – – 1,872,612 (41.24)
Modiﬁcation    – – – (8.79)
At 31 December    2,340,765  1.52 2,340,765 1.52
13. Related party transactions
 
     2012  2011 
    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
JCAM   a  – – – (13,614)
Circle Health Limited   b 33,706 (195) 8,948 –
Nations Healthcare Limited   c 3,205 – 2,890 –
Circle (Welbeck) Limited   d 8,927 – 1,732 –
Capita   e 12 – 17 –
*  The historical volatility is assumed to be 
 
not necessarily be the actual outcome. 
 expected term and is not necessarily 
indicative of exercise patterns that  
may occur.
Notes to the Company ﬁnancial statements
Continued Circle Holdings plc Annual Report and ﬁnancial statements 2012 Page 95 Page 94 Circle Holdings plc Annual Report and ﬁnancial statements 2012
13. Related party transactions (continued)
a JCAM 

 
 
(notes 21 of the consolidated ﬁnancial statements).
 
of £1,616,000.
b Circle Health Limited
  
 
 
(2011: £206,000).
c Nations Healthcare Limited
  
are included in ﬁxed asset investments (note 5). The Company has accrued a total of £3,205,000 (2011: £2,890,000) of preference  
dividends on these shares.
d Circle (Welbeck) Limited 
  
 
and Nations Healthcare Limited respectively, to Circle (Welbeck) Limited, for consideration of £97 ,791,000 of 7 .0% preference shares.  
The Company has accrued a total of £8,927,000 (2011: £1,732,000) of preference dividends on these shares.



e Capita
 
 
 f Health Trust (Jersey)
  

 g Health Partners Limited
  
 13. Related party transactions (continued)
     Number of % Number of 
     shares held shareholding warrants held
Balderton Capital     12,756,534 9.8% 4,786
BlackRock     7,178,555 5.5% –
BlueCrest Capital Management     9,252,685 7.1% 296
Odey Asset Management     30,368,920 23.2% –

Tim Bunting and Jamie Wood (resigned 18 June 2012) served as non-executive directors of Circle Holdings plc. They are employed by  
 
 
the Group.
 14. Events after the balance sheet date
Hinchingbrooke Health Care NHS Trust 
Under the terms of the Hinchingbrooke Health Care NHS Trust franchise agreement, Circle Hinchingbrooke Limited is required to make  
 Circle Hinchingbrooke Limited made a support payment to the Trust of £3.7 million at the end of January 2013, to ensure the Trust remains  
in surplus for the ﬁnancial year ending 31 March 2013.    
Nottingham NHS Treatment Centre contract win    
 AIB/Edinburgh loan
 
 
 
 
fourth quarter of 2013. 
West London    
 
 
respect of this.    
Notes to the Company ﬁnancial statements
Continued Page 96 Circle Holdings plc Annual Report and ﬁnancial statements 2012
Company information
 Non-executive directors
 Lorraine Baldry, OBE
 Tim Bunting
Tony Bromovsky
 Executive directors    
Massoud Fouladi     
 Company secretary    
Capita Company Secretarial Services 
The Registry    
34 Beckenham Road    
Beckenham    
 BR3 4TU    
 Registrars    
Capita Registrars (Jersey) Limited 
12 Castle Street    
St Helier    
Jersey     
JE2 3RT    
 Chartered Accountants  
and Recognised Auditors    
 London WC2N 6RH    
 Bankers    
Barclays plc    
 St Helier     
Jersey     
JE4 8NE    
 Advisors    
Numis Securities Limited    
 Greater London     
EC4M 7LT    
 Solicitors    
 Whiteley Chambers     
 St Helier     
Jersey     
JE4 9WG    
 4 More Riverside    
London SE1 2AU    
 Registered ofﬁce    
12 Castle Street    
St Helier    
Jersey     
JE2 3RT    
 Administrative ofﬁce 
32 Welbeck Street    
London W1G 8EU 32 Welbeck Street
London W1G 8EU
circleholdingsplc.com