Spire Healthcare Group PLC

Annual Report • Dec 31, 2014

Spire&Healthcare&Group&plc

%%Annual%Report%2014

Open%to%everyone

Spire%Healthcare%Group%plc% Annual%Report%2014

Independent+ healthcare+–+ open+to+everyone

This%Annual%Report%is%also%available%on%our%website: www.spirehealthcare.com/annualreport

Important&Information:

or otherwise.

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

Spire%Healthcare%Group%plc%is%one%of%the% UK's%leading%independent%hospital%groups.% Our%39%hospitals%and%13%clinics%delivered% care%to%more%than 700,000%patients%last% year*,%while%maintaining%high%levels%of% patient,%staff%and%consultant%satisfaction.

We%put%patients%at%the%heart%of%everything% we%do.%Our%7,170%(fullKtime%equivalent)% staff%and%over 3,750 experienced% consultants%are%committed%to%providing% patients%with%the%highest%standards%of% healthcare,%delivered%with%attentiveness,% kindness%and%compassion,%in%modern,% highKquality%facilities.

Our%care%is%open%to%everyone,%whether% funded%by%private%medical%insurance% (PMI),%patients%selfKpaying%or%by%the%NHS.

A%continuous%programme%of%investment% in%our%hospitals%and%in%some%of%the%latest% medical%technology,%totalling%more%than% £500%million%(including%acquisitions)%since% the%Group%was%formed,%is%increasing%our% capacity%to%admit%and%treat%patients,% and broadening%the%services%we%offer.

*% %Including%outKpatient,%inKpatient,%daycase and%individual% patients%treated%at%least%once%during%the%year.%

Financial'highlights

2013:,236.2k

2009

2014	260.3k
2013	236.2k
2012	232.6k
2011	223.1k

ADJUSTED'EBITDA*'(+6.1%)

2013:,£150.0,million,

£159.2m

2014 £159.2m 2013 £150.0m

2014	£114.1m
2013	£111.1m

2014 1.8p

OPERATING'CASHFLOW'BEFORE' EXCEPTIONAL'ITEMS***'(+47.7%)

£164.2m

2013:,£111.2m

Contents

STRATEGIC'REPORT

• 01 Financial,highlights
• 02 Spire,at,a,glance
• 04 Chairman's,statement
• WXNS |NJutXzN %STJNpÊq qtAtNbNct
• 12 Our,market,
• 14 Our,business,model,
• 16 The,Spire,difference,
• 18 Our,strategy,
• 24 Key,performance,indicators,
• 28 Financial,review,
• 38 Clinical,review,
• 40 Operating,review
• 42 Our,people
• 44, ,Corporate,social,responsibility
• 48 Risk,management,and,internal,control
• 52 Principal,risks

GOVERNANCE

• 56 Our,Board,of,Directors
• 58 Executive,management,team,
• 59 Chairman's,governance,letter
• 60 Corporate,governance
• 67, ,Audit,and,Risk,Committee,Report
• 70, ,Clinical,Governance,and, Safety,Committee,Report
• 72 Nomination,Committee,Report,
• 74 Directors',Remuneration,Report
• 89 Directors',Report
• 92, ,Statement,of,directors',responsibilities

FINANCIAL'STATEMENTS

• 93 Independent,auditor's,Report
• ecqeXLAtNL TcAcJXA qtAtNbNctq

• etNq te tWN TcAcJXA` qtAtNbNctq

• -ApNct ebmAc} TcAcJXA` qtAtNbNctq

SHAREHOLDER'INFORMATION

133Additional,shareholder,information 135Glossary,

• *, ,Operating,profit,,adjusted,to,add,back,depreciation, and exceptional,items,and,to,adjust,the,comparator,to, conform,the,property,rental,base,,referred,to,hereafter, as 'Adjusted,EBITDA'.,
• **, ,Calculated,as,proZforma,profit,after,tax,divided,by,the, number,of,ordinary,shares,in,issue,on,Admission.,ProZforma, profit,is,calculated,as,earnings,after,tax,adjusted,for,the, capital,restructuring,,exceptional,items,and,the,profit, on asset,disposal,(detailed,on,page,34).
• ***,,Operating,cashflow,adjusted,to,add,back,the,cashflow, effect,of,exceptional,items.

Spire(at(a(glance

Spire(Healthcare(provides(in1patient,(daycase(and(out1patient( care(from(39(hospitals,(13(clinics(and(one(Specialist(Care(Centre( throughout(the(UK.(

We(also(own(and(operate(a(sports(medicine,(physiotherapy( and rehabilitation(brand,(Perform;(a(screening(service,( Lifescan, as(well(as(national(pathology(services.

What%we%provide

Providing(high1quality(patient(care(is(our(top(priority.(To(improve(our(patient( offering,(we invest(consistently(in(a(wide(range(of(services(and(treatments( at(each(stage(of(the(care(pathway:(from(initial(GP(referral,(through( consultation,(diagnosis(and(treatment,(to(recovery(and(rehabilitation.

PRIMARY%CARE

Working(with(GPs(to(facilitate(speedy,(convenient( and(fully(informed(referrals.(Enabling(patients( to(make(an(informed(choice(at(the(start(of(their( care(pathway.(

CONSULTANTS

Providing(high1quality(facilities,(a(wide(range( of(services(and(highly(trained(staff,(so(that( our(experienced(consultants(can(deliver( outstanding(healthcare.(

DIAGNOSTICS

Investing(in(the(latest(scanning(technology,(skilled( clinicians(and(comprehensive(pathology(services(to( provide(prompt(and(accurate(diagnoses.(Giving(patients( reassurance(that(comes(from(a(clear(treatment(plan.

TREATMENT%AND%SURGERY

Offering(a(full(range(of(treatment(and(surgery,( including(some(of(the(most(acute,(complex(and( specialist(procedures,(across(our(39(hospitals( nationwide.(Providing(choice(to(patients.

RECOVERY%

From(High(Dependency(and(Intensive(Care( Units(to(our(integrated(sports(injury(rehabilitation( facility,(getting(patients(back(on(their(feet(as(fast( as(possible.

Key%events

• Admitted(to(the(London(Stock(Exchange(following( our successful(Initial(Public(Offering((IPO)(
• Acquisition(of(St(Anthony's(Hospital(in(Cheam
• New(collaborative(six1year(agreement(with(Bupa( starting(1(April(2015
• %mNcNL eup Tpqt qtAcLAecN pALXetWNpAm} 1mNJXAXqt Care(Centre(in(Bristol
• Submitted(plans(for(a(second(radiotherapy(centre( to be built(at(Great(Baddow,(near(Chelmsford,(Essex,( which(were(approved(in(2015
• Opened(a(cardiac(catheterisation(laboratory(in(Cardiff
• Submitted(plans(for(a(new(hospital(in(Manchester,( in(partnership(with(Siemens(which(were(approved( in 2015
• Submitted(plans(for(a(new(hospital(in(Nottingham( which(were(approved(in(2015
• Recognised(as(Private(Hospital(Group(of(the(Year( in(the(HealthInvestor(Awards

Who%we%serve

%up WeqmXtA`q qmAc tWN Jeuctp}¸ qNpzXcV A LXzNpqXTNL patient(mix,(made(up(of(private(medical(insurance((PMI),( self1pay(and(NHS(patients.

PATIENT%DISCHARGES

Source:(Company(–(in1patient(and(daycase(discharges.

Where%we%are

North%West% 20Cheshire 21Fylde(Coast 22Liverpool 23Manchester 24Murrayfield( 25Regency Scotland% 26Murrayfield( 27 Shawfair(Park South%East% 28Alexandra 29Clare(Park 30Dunedin( 31 Portsmouth 32 Southampton 33 St(Saviour's( 34Sussex 35 Tunbridge(Wells

HOSPITALS%

East%of%England% Cambridge(Lea Harpenden Hartswood

4 Norwich 5 Wellesley

London%

6 Bushey 7 Gatwick(Park 8 Roding

9 St(Anthony's( 10Thames(Valley

Midlands%

11Leicester 12Little(Aston( 13Parkway 14 South(Bank(

North%East%

&%Yorkshire% 15Elland 16((Hull(and( East(Riding( 17 Leeds 18Methley(Park

CLINICS%

40Windsor( 41Droitwich 42Malvern( 43Dewsbury 44Harrogate( 45 Ilkley( 46Newcastle 47 Formby 48Lytham 49Hale( 50Livingston 51Whitstable 52((Abergele

RADIOTHERAPY% CENTRE

53((The(Bristol( Specialist( Care Centre

36Brighton South%West%

37((Bristol(Hospital( Wales% 38Cardiff 39Yale

Spire(Healthcare(Group(plc(Annual(Report(2014

Chairman's%statement% A"remarkable"year

2014%was%a%remarkable%year%for%Spire% Healthcare.%Not%only%did%we%become% a public%company,%but%we%also%bought%a% hospital%in%Cheam%(Greater%London),%opened% our%first%cancer%treatment%centre%in%Bristol,% finalised%a%new%agreement%with%Bupa%and% reached%the%end%of%the%two%year%industryF wide%investigation%with%the%Competition% and%Markets%Authority%(CMA)%–%all%while% providing%highFquality%care%to%more%patients% than%ever%and%achieving%our%highest%patient% and%consultant%satisfaction%scores.

T WXqXq1mXpNNAtWJApNÊqTpqtccuA Report%following%our%successful% Initial%Public%Offering%(IPO)%in%July% 2014.%We%have%been%well%received% as a%public%company;%the%combination%of%a% growing%market%and%awardFwinning%clinical% eutJebNq¸Jeum`NL{XtWeupLXzNpqXTNLmA}ep mix%and%strong%investment%strategy,%has%led% to%a%high%and%sustained%degree%of%interest% from%UK%and%international%investors.

FINANCIAL'PERFORMANCE

%upTcAcJXAmNpSepbAcJNXc{Aq strong.%Our%seventh%full%successive%year% of%growth%resulted%in%total%revenue%of% ¶bX``XecAcLAcemNpAtXcVmpeTt of £114.1%million\*.%We%continue%to%invest% qXVcXTJAct}XccN{qNpzXJNq¸tpNAtbNctq¸ hospitals%and%equipment.%In%the%last%year,% we have%invested%£105.1%million%across% these areas,%developing%further%our%key% role in%the%UK%healthcare%economy.

* Operating%profit,%adjusted%to%add%back%exceptional%items.

93% Patient%satisfaction%(2013:%92%)

92% of%staff%believe%what%they%do%makes% a positive%difference%(2013:%91%)%

With"the"great" team"we"have" in place,"we"can" look"forward" to the future" {XtWJecTLNcJN¶

GOVERNANCE

As%part%of%the%IPO,%we%appointed%four% experienced%nonFexecutive%directors%to%our% eApLXcucN¶3WN}WAzNqXVcXTJAct`} strengthened%the%range%of%skills%and% expertise%in%the%Boardroom%and%are%helping% to%guide%the%Company%through%its%inaugural% phase%as%a%public%entity%and%into%the%future.%

John%Gildersleeve,%our%Deputy%Chairman,% has extensive%retail%and%plc%experience,% having%served%on%the%Boards%of%Lloyds% TSB Bank%plc,%Vodafone%Group%plc%and% as a director%of%Tesco%plc%for%20%years% until he retired%in%2004.%He%is%the%current% Chairman%of%The%British%Land%Company%plc.% John%chairs%our%Nomination%Committee.

Dame%Janet%Husband%brings%with%her% a vastrange%of%clinical%expertise.%She%is% Emeritus%Professor%of%Radiology%at%the% Institute%of%Cancer%Research%and%currently% serves%on%the%Boards%of%Royal%Marsden% NHS Foundation%Trust%and%Nuada%Medical% Group.%Janet%chairs%our%Clinical%Governance% and%Safety%Committee.

0eINpt Np{X``¸AcN|mNpXNcJNLTcAcJN director,%currently%serves%as%a%nonFexecutive% director%of%ITC%Limited,%a%large%Indian% conglomerate,%and%DJI%(Holdings)%plc.% His%depth%of%experience%across%health% and%telecommunications%means%he%brings% a%unique%perspective%on%our%business.% Robert%chairs%our%Audit%and%Risk%Committee.

Tony%Bourne%is%familiar%with%the%healthcare% sector,%having%served%as%CEO%at%the%British% Medical%Association%for%nine%years.%He% is currently%a%nonFexecutive%director%at% various%companies,%including%Barchester% Healthcare%and%Bioquell%Plc.%Tony%chairs% the Remuneration%Committee.

Further%information%on%our%governance% can be%found%on%pages%56%to%92.

DIVIDEND

As%indicated%in%our%IPO%prospectus,%we%intend% to%adopt%a%progressive%dividend%policy%based% ecAmA}eutpAtXeeSApeucLeSmpeTt AStNptA|AtXecNAJWTcAcJXA}NAp¸XctWN approximate%proportions%of%oneFthird% XctNpXbAcLt{e¹tWXpLqTcA¸pNqmNJtXzN`}¸ ofthe%total%annual%dividend.

Subject%to%shareholder%approval,%the% ebmAc}{X`mA}ATcALXzXLNcLXcpNqmNJt eStWNJuppNctTcAcJXA`}NApeS¶mNcJNmNp ordinary%share.%

PEOPLE

I%would%like,%on%behalf%of%the%Board,%to% extend%a%heartfelt%thank%you%to%everyone% at%Spire%Healthcare%for%their%extraordinary% performance%during%2014.%Of%particular% note%was%the%role%of%the%management% tNAbLupXcVtWNUetAtXecmpeJNqq¶3WN UeAt{AqAJWXNzNLLupXcVtpXJ_}bAp_Nt conditions,%and%under%strict%timeframes.% 3WNXpLNLXJAtXecpNUNJtqtWNLXqtXcJt culture%at%Spire%and%supports%our%value% of%driving%excellence.

Our%hospital%staff%continued%to%deliver% excellent%care%throughout%the%year,% illustrated%by%further%improvement%in%our% patient%satisfaction%scores.%It%is%our%culture,% supported%by%our%values,%that%enables%us% to continue%to%deliver%to%those%that%matter% most%–%our%patients.

THE'FUTURE

Our%results%this%year%have%been%strong.%We% have%further%developed%and%strengthened% our%relationships%with%insurers%and%the%NHS,% AcL{NApNJecTLNcteSJectXcuNLVpe{tW across%all%our%payors.%The%success%of%the%IPO% has%been%pleasing;%there%will%be%challenges% ahead,%but%I%know,%with%the%great%team%we% have%in%place,%we%can%look%forward%to%the% SutupN{XtWJecTLNcJN¶

Garry'Watts Chairman

WXNS|NJutXzN%STJNpÊqqtAtNbNct A"key"part"of"the"UK's"healthcare"system

Spire%has%again%delivered%excellent%results% for%its%patients,%consultants%and,%with% its strong%financial%performance%in%2014,% its%investors.%With%our%dedicated%staff,% and%experienced%management%team,% a%track%record%of%investment%discipline% and% a%focus%on%increasing%productivity,% we are%well%placed%to%build%on%our% position as%a%market%leader.%

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

PATIENT'CARE'–'THE'HEART' OF'OUR'BUSINESS

We%aim%to%deliver%care%and%clinical%outcomes% of%the%highest%quality%for%our%patients.%They% ApNeupTpqtmpXepXt}¶

We%had%no%incidents%of%MRSA%and%our% "11AcLJ¶LXSTJX`NXcSNJtXecpAtNq¸IetW at%0.30%per%10,000%bed%days,%were%lower% than%the%equivalent%NHS%rates%of%0.79% and%1.47%respectively.%

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

The%outstanding%quality%of%our%care%is% pNUNJtNLXceupmAtXNctqupzN}q¸{WNpN 93% of%patients%rated%Spire%as%'Excellent'%or% 'Very%good',%and%in%our%survey%of%Consultant% satisfaction,%where%79%%rated%us%as% 'Excellent'%or%'Very%good'%and%97%%would% recommend%us%to%their%friends%and%family.%

Our%reputation%is%built%on%our%clinical% performance%and%these%results%are%a% testament%to%the%leadership%of%our%clinical% team%and%the%work%of%our%staff.%It%is%their% skills,%care%and%commitment,%delivered%day% and%night,%that%makes%Spire%what%it%is%today.

Further%details%of%our%clinical%performance% can%be%found%in%the%Clinical%and%Operating% Reviews%on%pages%38%to%41,%and%a%review%of% the%Board's%Clinical%Governance%and%Safety% Committee's%oversight%can%be%found%on% pages%70%to%71.%

STRONG'PERFORMANCE

Overall%revenue%for%the%year%grew%12.0%% to £856.0%million%(2013:%£764.5%million),% with positive%contributions%from%all%three%of% our%major%payor%groups%–%PMI,%selfFpay%and% NHS.%Even%though%we%had%a%higher%NHS%mix,% which%traditionally%has%a%lower%margin,%with% JectXcuNLmpeLuJtXzXt}AcLJeqt¹NSTJXNcJ} improvements,%this%growth%generated% an increase%of%6.1%%in%Adjusted%EBITDA% to £159.2%million%(2013:%£150.0%million).% %mNpAtXcVmpeTtINSepNN|JNmtXecA` items increased%2.7%%to%£114.1%million% (2013: £111.1%million)%and%cash%conversion% reached%103.1%.

While%we%invested%£105.1%million%during% the year%across%the%business,%including%the% acquisition%of%St%Anthony's%Hospital,%capital% restructuring%at%the%time%of%the%IPO%reduced% net%debt%to%£424.3%million%at%year%end,%with% a further%£100%million%committed,%undrawn% loan%facility,%we%are%well%positioned%to%invest% in%the%next%phase%of%our%development.

uptWNpLNtAXqeSeupTcAcJXAmNpSepbAcJN JAcINSeucLXc1XbecepLecÊqTcAcJXA` review%on%pages%28%to%35.%

OUR'YEAR'IN'BRIEF

1mXpNÊq-%Xcu`}bAp_NLAqXVcXTJAct step%forward%in%our%corporate%development.%

While%the%IPO%involved%considerable% management%time,%the%strength%in%depth%of% our%team%meant%that%the%business%continued% to%develop%positively%across%all%our%areas%of% strategic%focus.%

INVESTING'IN'OUR'CORE'BUSINESSES

Investment%in%increased%capacity%continued% throughout%the%year.

"eqtqXVcXTJAct}¸Xc"A}¸{NJebmNtNL the acquisition%of%St%Anthony's,%a%92Fbed,% fourtheatre%private%hospital,%located%in% Cheam.%With%room%for%further%expansion,% St Anthony's%will%be%a%central%platform% for Spire's%continued%growth%in%cardiology% and%other%areas%of%acute%care%and%is%another% step%in%our%strategy%to%build%services%in%and% around%Greater%London.%The%acquisition% received%CMA%approval%in%September.%

Spire%Southampton%Hospital's%new%£2%million% Perform%sports%medicine%centre%opened% XcucN¶cJuLXcVtWNUAVqWXmSAJXXt}At St%George's%Park,%we%now%have%10%Perform% centres%nationwide.

Also%in%June,%Spire%Cheshire%Hospital%opened% a new%Orthopaedic%Centre,%including% onFsite MRI%and%CT%scanning%and%upgraded% outFpatient%waiting%areas,%while%Spire% Cambridge%Lea%Hospital%opened%a%new% £1.4 million%stateFofFtheFart%reception% and outFpatient%suite.

New%operating%theatres%were%opened%at% Spire%Cardiff,%Harpenden%and%South%Bank% WeqmXtAqXctWN}NAp¸qXVcXTJAct}XcJpNAqXcV our%capacity%in%these%hospitals.

2014'highlights:

ST'ANTHONY'S'–'OUR'LATEST'HOSPITAL Acquired%in%2014,%St%Anthony's%is%the% next%step%in%extending%our%coverage% in and%around%London

BRISTOL'–'OUR'FIRST'STANDALONE' RADIOTHERAPY'CENTRE Our%Bristol%radiotherapy%Specialist%

ApN
NctpNXq1mXpNÊqTpqtNcL¹te¹NcL cancer%pathway%facility%

See%pages%22'and'23

HARPENDEN'–'INVESTING'IN'NEW' CAPACITY'TO'MEET'DEMAND New%theatre%and%outFpatient% areas%opened%in%2014%in% response to local%demand%

See%pages%36'and'37

HULL'AND'EAST'RIDING'– WORKING'WITH'THE'NHS A%chronic%pain%infusion%service%and% a specialist%team%of%pain%consultant% anaesthetists%built%up%to%meet% qmNJXTJ #1pNouXpNbNctq

See%pages%46'and'47

WXNS|NJutXzN%STJNpÊqqtAtNbNct continued

DEVELOPING'OUR'SERVICE'OFFERING

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

%upTpqtLNLXJAtNLpALXetWNpAm}JNctpN¸tWN £13.1%million%Specialist%Care%Centre%in%Bristol,% opened%in%April%and%our%£2.9%million%cardiac% catheterisation%lab%in%Cardiff%was%completed% in%May.%

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

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

We%have%taken%steps%to%further%strengthen% our%operational%management,%with%the% appointment%of%four%Operations%Directors,% Rob%Anderson,%Karen%Newton,%Paul%O'Conor% and%Nicola%Amery,%to%replace%the%single%role% eS
WXNS%mNpAtXecq%STJNp¸SepbNp}WNL by Andrew%Gore.%Further%details%of%our% operating%performance%can%be%found%in% my Operating%Review%on%pages%40%and%41.

DEVELOPING'RELATIONSHIPS'WITH'KEY' STAKEHOLDERS

In%November,%we%concluded%a%new,% longFterm agreement%with%Bupa,%the%UK's% leading%private%medical%insurer.%Following% the conclusion%of%the%CMA%review%of%the% independent%healthcare%sector,%this% represents%a%decisive%shift%to%a%more% partnershipFstyle%approach,%aiming%to% build%on%our%current,%excellent%working% relationship%in%order%to%drive%volume% growth%in%independent%patient%numbers,% based%on%affordable%healthcare,%particularly% for%outFpatients,%and%outstanding%clinical% outcomes.%The%agreement%runs%from% 1%April%2015%for%a%minimum%of%four%years,% with%prices%agreed%for%up%to%six%years.

We%are%pursuing%a%range%of%development% and engagement%activities%with%our%PMI% and other%stakeholders,%more%details%of% which%can%be%found%under%Our%Strategy% on pages%18%to%21.

REGULATION'AND'GOVERNANCE

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

c"ApJW¸{NmuI`XqWNLtWNTcLXcVqeS a%report%by%independent%consultancy%Verita% into%the%work%of%consultant%surgeon%Mr%Ian% Paterson%at%our%Spire%Little%Aston%and% Parkway%Hospitals.%We%commissioned%the% report%in%April%2013%following%a%separate% NHS review%into%Mr%Paterson's%work%on% breast%cancer%patients.%

The%report%criticised%us%for%failing%to%monitor% Mr%Paterson's%work%properly%and%for%our% handling%of%subsequent%complaints.%

I%immediately%gave%a%full%and%unreserved% apology%to%all%of%the%patients%and%their% families%for%any%distress%they%suffered%as% a result%of%their%treatment%by%Mr%Paterson% while%he%was%a%surgeon%at%our%hospitals,%and% committed%Spire%to%reviewing%our%processes% in%order%to%ensure%that%such%a%situation%could% never%happen%again.

FOCUS'ON'KEY'PAYOR'GROUPS PMI'

• Deepen%our%relationships%with% key insurers
• Increase%and%deepen%our%relationships% with%GPs%as%referrers
• Continue%to%expand%our%higher%acuity% healthcare%offer%

SELFRPAY'

• Continue%to%engage%with%GPs,% particularly%regarding%areas% of NHS service%constraint
• Extend%transparent%pricing% and quality reporting
• Increase%brand%awareness

NHS'

• Continue%to%build%key% NHS relationships
• Expand%our%service%offering%
• czNqttebNNtqmNJXTJ#1cNNLq

OPEN'TO'EVERYONE

The%overall%UK%healthcare%market%is%subject% to%three%major%trends%–%our%growing%and% ageing%population,%the%increasing%incidence% of%acute%and%chronic%longFterm%conditions,% and%the%continued%development%of%new,% often%expensive,%technologies%and%treatments.% These%factors%contribute%to independent% forecasts%of%growth%in%healthcare%demand% N|JNNLXcVA}NApezNptWNcN|tTzN}NApq¶ Set%against%realistic%forecasts%of%GDP%and% public%funding%growth,%the%NHS%projects%a% growing%supply%and%funding%gap%that%could% reach%approximately%£35bn%per%annum% by 2020F2021.%

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

STRATEGY'

Our%strategy%is%based%on%four%pillars.%

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

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

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

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

Our%strategy%is%already%delivering%across%all% these%pillars.%In%line%with%best%practice%for% public%company%strategic%reporting,%further% details%follow%my%review.%We%include%an% analysis%of%our%market,%our%business%model,% more%detail%of%our%strategy%in%action%and% the key%performance%indicators%(KPIs)% we use to%judge%our%progress.%

OUTLOOK'–'A'PICTURE'OF'HEALTH

As%I%said%at%the%time%of%our%IPO%and%in% subsequent%meetings%with%shareholders% and potential%investors,%I%believe%that%Spire% is ideally%positioned%for%its%next%phase%of% development,%ready%to%capture%a%growing% share%of%the%UK's%expanding%independent% healthcare%market%and%provide%much% needed additional%capacity%in%areas% such as radiotherapy%and%cancer%care.%

We%have%a%strong%track%record%of%investment% and%growth,%based%on%a%culture%of%clinical% excellence%and%care%that%is%highly%valued% by consultants,%GPs,%payors%and%patients.% We are%well%capitalised%and%able%to%fund% further%service%and%geographical%growth.% And%we%have%a%clear%strategy%in%place,% focused%on%meeting%the%requirements% of all of%our%stakeholders.

Supported%by%Spire's%outstanding%team,% I look forward%to%an%exciting%future.

Rob'Roger WXNS|NJutXzN%STJNp Overall"revenue" forthe"year"grew" ¶¸ {XtW meqXtXzN contributions"from" all"three"of"our"major" mA}ep Vpeumq¶

REVENUE'(+12.0%) £856.0m 2013:%£764.5%million

ADJUSTED'EBITDA'(+6.1%)

Continued%productivity%and% Jeqt¹NSTJXNcJ}XbmpezNbNctq help generate%an%increase%of%6.1%

OPERATING'PROFIT'BEFORE' EXCEPTIONAL'ITEMS'(+2.7%)

2013:%£111.1%million

%mNpAtXcVmpeTtINSepNN|JNmtXecA` items%increased%2.7%%and%cash%conversion% reached%103.1%

Rob%Roger%and%the%IPO%team%proudly% `AucJWNq1mXpNÊqTpqtLA}eStpALXcV

WHERE ARE WE? St Anthony's in Cheam, Surrey

BUILDING OUR NETWORK THROUGH ACQUISITION

At St Anthony's, we have inherited a uniquely caring ethos from the Daughters of the Cross. Our challenge is to develop the hospital, and treat more patients, without losing any of that spirit.

Strategic%Report Governance Financial%Statements Shareholder%Information

Founded%in%1904%by%the%Daughters% ofthe Cross%of%Liege,%St%Anthony's%is% a 92Fbed,%four%theatre%hospital,%with%an% eight%bed%ITU.%Skilled%and%dedicated%staff% are%able%to%deliver%highFquality%healthcare% in%a%calm%and%peaceful%environment.

We%acquired%St%Anthony's%in%2014% as part of%our%London%development% strategy and,%following%CMA%approval,% have%commenced%an%integration%and% development%programme.%Spire%protocols,% administration%and%procurement%are% A`pNAL}XbmpezXcVNSTJXNcJ}¶

A%£27%million%investment%plan,%including% six%new%stateFofFtheFart%theatres,%will% provide%additional%facilities%for%complex% surgery%and%high%acuity%treatments.

London%Bridge%Station St%Anthony's%Hospital Spire%Hospitals

Located%in%Cheam,%only%seven%miles% from%London%Bridge,%the%acquisition% of%Spire%St%Anthony's%Hospital%is% part of our strategy%to%extend%Spire's% coverage%in%and%around%London.

7'miles

Our market

The total UK healthcare market was estimated by the Office for National Statistics to be worth £144 billion in 2012.

The main provider for primary, secondary and tertiary care throughout the country is the NHS - in 2013-2014, in England, its budget was £95.6 billion; in Wales, £5.8 billion and, in Scotland, £10.7 billion.

Spire's principal market is private acute healthcare, worth, as a sector, an estimated £7.17 billion in 2013, according to LaingBuisson. This figure includes fees paid to consultants, as well as to private providers such as Spire.

THE FUNDING GAP

Public spending on the NHS has increased faster than general inflation for decades, from 3.5% of GDP in the year after its establishment, to 7.9% in the last year before the financial crisis.

Since then, NHS funding has tightened. In the absence of significant tax increases or non-healthcare spending cuts, funding constraints are forecast to continue throughout the next parliament.

At the same time, the King's Fund reports that the population of England, Scotland and Wales will grow by some five million over the next decade and the population of those aged 65 and over will grow by nearly half by 2032*.

Source: Office for National Statistics

As the population ages, the incidence of long-term and chronic conditions is also expected to rise.

As a result of these, and other factors, NHS England expects a funding gap between healthcare demand and projected NHS budgets of £30-35 billion per annum by 2020-2021.

To put that in context, funding £30 billion equates to approximately 5.5 pence on VAT or 7 pence on the basic rate of income tax.

Bridging this gap presents an opportunity for the independent sector, given its capacity to provide capital, to play an increasing role in an integrated, multi-provider healthcare system.

PAYORS

Private healthcare in the UK has three main payors - PMI, self-pay and the NHS.

PMI

The PMI market is dominated by four providers, Bupa, AXA, Aviva and Vitality (formally PruHealth), which, together account for over 87% of the market. Their revenues are split between 'Corporate', a benefit provided to employees by employers, which accounted for an estimated 78% of the total in 2012 (LaingBuisson) and 'Individual', that is, PMI taken out by private individuals, which makes up the balance. Altogether LaingBuisson estimates 10.8% of the UK population, equivalent to 6,890,000 people, had PMI in 2012.

PMI provides almost half of UK private hospital revenues and, historically, growth in lives covered has roughly tracked growth in GDP, linked to corporate performance and personal incomes. The number of people covered by PMI declined slightly in the recession after 2008, but is forecast to grow as the economic recovery gathers momentum.

The individual PMI market, largely retirees from corporate schemes, has proved to be price-sensitive and has declined as a proportion of the market since the mid-1990s. Private medical insurers are responding to pressure for increased affordability, negotiating keener prices from suppliers and consultants, and developing 'white label' self-pay products such as Bupa On Demand.

UK PMI PRINCIPAL PROVIDERS -

SELF-PAY

Patients without medical insurance are increasingly paying for private medical treatment themselves. Historically, this growth has been disproportionately attributed to the purchase of cosmetic , cardiac and orthopaedic procedures, but there is emerging evidence that the self-pay sector of the market will continue to grow as people choose to pay for other procedures and treatments.

Factors driving growth include: increasing NHS waiting times; constraints imposed by NHS Clinical Commissioning Groups (CCGs) on the reimbursement of some procedures; the price and level of exclusions applied to traditional PMI products; the development of more affordable and fixed price offerings, and greater awareness and changing perceptions of self-pay medical care.

NHS

The NHS uses the independent acute medical sector extensively to meet capacity needs and waiting time targets. Between 2004 and 2012 inclusive, NHS spending on independent sector acute medical care more than quadrupled, reaching some £1.2 billion in 2012 (LaingBuisson). NHS England figures show over 100.000 patients being admitted to independent sector hospitals in the last quarter of 2013 alone, with a further 160,000 GP referrals of NHS patients for independent sector out-patient appointments over the same period.

NHS patients are treated in the independent sector in England under the Any Qualified Provider patient choice provisions introduced in 2007–2008 and facilitated by the online Choose and Book portal, or through local hospitals and CCGs contracting for demand and waiting list management.

The NHS's Payment by Results system is based on nationally determined currencies and tariffs for treatments, modified to reflect differences in regional costs. but applied equally to public and private healthcare providers.

OUR PRINCIPAL COMPETITORS

The private acute medical sector is made up of hospitals and clinics owned and operated by a variety of companies and voluntary organisations, together with private patient units (PPUs) and pay beds within the NHS.

Spire's principal competitors are: HCA Holdings, Inc (Hospital Corporation of America), whose seven hospitals are concentrated in London, where it is the main provider; BMI Healthcare, owned by General Healthcare Group Ltd and, in turn, by listed South African hospital group Netcare Ltd and Apax Partners LLP; Nuffield Health, a not-for-profit provider; and Ramsay Health Care UK, the UK subsidiary of an Australian international healthcare group, which handles a particularly high proportion of NHS work.

RELATIVE MARKET SHARE - UK PRIVATE

PUBLIC FUNDED PRIVATE ACUTE

Our*business*model

Spire*provides*a*range*of*healthcare*services*to*patients*from* 39*hospitals*and*13*clinics*across*England,*Wales*and*Scotland.*

Each*of*our*39*hospitals*provides* hotel1style*accommodation,*up1to1date* equipment,*as*well*as*dedicated*doctor,* nursing*and*specialist*staff*to*support*the* practice*of*more*than*3,750*consultants.* We*are*paid*by*private*medical*insurers* and*self1paying*patients,*and*also*direct* by the*NHS*for*NHS1funded*patients.*Spire* aims*to*make*access*as*easy*as*possible*for* all*private*patients*while*managing*spare* capacity*and*supporting*the*NHS.

Key+services

• Orthopaedics*48.5%
• * *Gynaecology,*plastic*surgery,* urology*and*others*28.8%
• High*acuity*services,*including* cardiology,*cardiothoracic,*neurosurgery,* oncology*and*general 22.7%

Key+activities

Source:*Company*2014*in1patient*and*daycase*revenue.

* Percentage*of*in1patient,*daycase*and*out1patient*revenue. Source:*Company*2014*revenue.

The+patient+pathway+to+treatment+in+a+private+hospital

The*Group*receives*patients* through*multiple*routes.* The patient's*journey*typically* begins*with*a*visit*to*their* GP, who*will*either*treat*the* patient*directly*or*provide* a referral*to*a*consultant.* The procedure*or*treatment* provided*by*the*consultant* can be*funded*by*the*NHS,* a PMI*provider*or*by*the* patient directly*(referred* to as 'self1pay').* The*Group*accepts*patients* using*all*three*funding*methods:* Group*hospitals*may*obtain* referrals*for*patients*who* cannot*be*accommodated* atlocal*NHS*Trusts*(NHS* local contract)*or*through* the NHS*''Choose*and*Book''* system,*and*PMI*and*self1pay* patients*can*obtain*a*private* consultation*where*they*are* referred*to*a*Group*hospital.

Ne{XqAqXbmXTNLX``uqtpAtXec of*a*patient's*potential* journey*through*the*private* healthcare*system.

The*Spire*difference*

Spire*is*a*national*brand,*delivering*excellent*healthcare* at*a*local*level.*We*have*invested*consistently*in*high1quality* facilities,*state1of1the1art*equipment*and*well1trained*staff* to deliver*high1quality*patient*care.

Our*focus*on*clinical* excellence,*with*a*robust* governance*and*risk* management*system,* supported*by*the*right* people,*culture,*training* and technology,*is*at* the heart*of*our*success.

PROMPT+ACCESS

-pebmtAcLUN|XI`NAJJNqqteLXAVceqtXJq¸ giving*patients*reassurance*that*comes* from*a*clear*treatment*plan.*

CONSULTANTGLED+CARE

Spire's*consultants*are*our*partners*in* providing*high*levels*of*care*to*patients* SpebqtAptteTcXqWeStWNXptpNAtbNct¶ All our*consultants*are*on*the*General* Medical*Council's*Specialist*Register.*

SUPERIOR+FACILITIES

Patients*value*the*choice*of*when* and*where*to*be*treated,*in*hospitals* that*combine*exceptional*levels*of* infection*control*with*'hotel'*levels* of*customer*service.*

EXCELLENT+CLINICAL+OUTCOMES

High1quality*consultants,*using*state1of1 the1art*equipment*in*modern*facilities,* and*supported*by*exceptional*nursing*and* medical*support*staff,*deliver*excellent* clinical*outcomes*and*low*infection*rates.

WELLGINVESTED,+SCALABLE+ASSET+BASE

We*have*invested*consistently*in*further* capacity,*new*hospitals,*equipment*and* additional*services.

CAPITAL+EXPENDITURE+SINCE+2009 (excludes*acquisitions*and*capitalised*interest)

New*Hospital*Developments

Radiotherapy*–*Bristol

Source:*Company*information.

VTE*+RISK+ASSESSMENT+2011–2014

2014	98%
2013	97%
2012	96%
2011	92%

** *A*number*of*risk*factors*make*VTE*(Venous* thromboembolism)*more*likely*following* admission*to*hospital.*Assessing*this*risk*helps* to establish*whether*preventative*measures* ('prophylaxis')*should*be*offered*to*reduce* the risk of*VTE.

INFECTION+RATES+VS+NHS+2014+ (PER+10,000+BED+DAYS)

	Spire	NHS*Av
MRSA*bacteraemia	0.00	0.12
MSSA*bacteraemia	0.30	0.79
¶LXSTJX`N	0.30	1.47

Spire*data*collected*by*calendar*year*and*NHS*data*collected* by*financial*year.

Source:*Company*information.

PERCENTAGE+OF+PATIENTS+RATING+ SPIRE'S QUALITY+AND+SERVICE+ 'EXCELLENT' OR+'VERY+GOOD'

DIVERSIFIED+PAYOR+MIX

The*quality*of*our*care*and*outcomes,* AcLtWNNSTJXNcJ}eSeupLN`XzNp}¸AttpAJtq patients*from*all*major*payor*groups.* 3WNLXzNpqXTNLmA}epbX|AJpeqq-"¸ self1pay*and*NHS1funded*provision* offers*built1in*resilience.*

PERCENTAGE+OF+REVENUE

BROAD+GEOGRAPHIC+COVERAGE,+ IN+KEY+POPULATION+CENTRES+

We*offer*national*coverage*to*the*major* PMI*providers,*and*services*and*capacity,* often*tailored*to*NHS*commissioners'* requirements,*locally.*

NEW+THEATRE+CAPACITY

Our\$strategy

Our\$strategy\$aims\$to\$build\$value\$by\$offering\$a\$wider\$ range\$of\$treatments,\$more\$efficiently,\$to\$an\$increasing\$ number\$of\$patients.

1.\$To\$drive\$strong'growth\$through\$ a\$clear\$focus\$on\$our\$three'payor'groups

PMI

• Deepen\$our\$relationships\$with\$ key\$insurers
• Increase\$and\$deepen\$our\$relationships\$ with\$GPs\$as\$referrers
• Continue\$to\$expand\$our\$higher\$acuity\$ healthcare\$offer\$

Self:pay

• Continue\$to\$engage\$with\$GPs,\$particularly\$ regarding\$areas\$of\$NHS\$service\$constraint
• Extend\$transparent\$pricing\$and\$ quality\$reporting
• Increase\$brand\$awareness

NHS

• Continue\$to\$build\$key\$NHS\$relationships
• Expand\$our\$service\$offering\$
• czNqttebNNtqmNJXTJ#1cNNLq

OUR'PROGRESS

• We\$have\$contracts\$in\$place\$with\$all\$the\$ main\$PMIs.\$In\$2014,\$we\$agreed\$a\$new\$ contract\$with\$Bupa,\$our\$largest\$PMI\$ partner,\$to\$run\$from\$April\$2015\$for\$a\$ minimum\$of\$four\$years,\$with\$prices\$ agreed\$for\$the\$next\$six\$years,\$through\$ to\$March\$2021\$
• We\$will\$seek\$similar\$agreements\$with\$ our\$other\$PMI\$providers,\$aimed\$at\$ offering\$improved\$cost\$effectiveness\$
• In\$January\$2014,\$April\$UK\$launched\$ 'inSpire',\$a\$bespoke\$SpireRbased\$health\$ insurance\$plan\$that\$combines\$highR quality\$healthcare\$with\$exceptional\$ value\$for\$money\$

OUR'PROGRESS

• We\$are\$developing\$simple\$and\$transparent\$ packages,\$and\$offering\$patients\$procedures\$ not\$readily\$funded\$by\$the\$NHS
• :NWAzNXctpeLuJNLT|NLmpXJNqSepeuptem 15\$procedures\$–\$and\$plan\$to\$extend\$this\$to\$ at\$least\$50\$procedures\$–\$all\$supported\$by\$ clear\$'plain\$English'\$terms\$and\$conditions\$
• We\$started\$TV\$advertising\$in\$seven\$regions\$ during\$2014\$to\$build\$brand\$awareness\$and\$ increase\$enquiries.\$Results\$will\$feed\$into\$ future\$marketing\$plans

OUR'PROGRESS

• Our\$hospitals\$provide\$solutions\$for\$NHS\$ trusts\$to\$manage\$waiting\$lists,\$taking\$ elective\$patients\$out\$of\$overstretched\$ hospitals\$and\$helping\$the\$NHS\$improve\$ value\$and\$deliver\$better\$outcomes\$
• Our\$hospital\$directors\$develop\$close\$ working\$relationships\$with\$CCGs\$in\$ orderto\$respond\$to\$local\$commissioning\$ priorities\$–\$for\$example,\$Spire\$Hull\$and\$ East\$Riding\$Hospital\$was\$asked\$by\$local\$ commissioners\$to\$provide\$a\$chronic\$pain\$ infusion\$service.\$The\$purchase\$of\$three\$ additional\$infusion\$pumps\$and\$the\$ development\$of\$a\$specialist\$team\$of\$ pain consultant\$anaesthetists\$and\$ nurses\$at\$the\$hospital\$has\$seen\$NHS\$ treatments\$at\$the\$Pain\$Management\$ Unit\$rise\$74%\$between\$2012\$and\$2014

Our'strategic'pillars

1.To\$drive\$strong'growth through\$a\$clear\$focus\$on\$ our\$three'payor'groups

2.To\$maximise'utilisation\$\$ of\$existing\$sites\$by\$ growing'volume

3.\$To\$develop'new'sites\$and\$ services,\$particularly\$for\$the\$ treatment\$of\$cancer

4.To\$LpXzNNSTJXNcJ} and\$improve'productivity'

2.\$To\$maximise'utilisation\$\$ of\$existing\$sites\$by\$growing'volume

Drive'volume'growth' by continuing'to'build' our relationships'with' patients'and'GPs'

• Market\$directly\$to\$patients,\$ WXVW`XVWtXcV tWNINcNTtqeSAmpXzAtN hospital\$(see Spire\$difference\$on\$ page 16)\$and continue\$to\$target\$ improvement\$in patient\$satisfaction\$ to raise\$local\$reputation
• NzN`emtpAcqmApNct¸T|NLmpXJNeSSNpq for\$at\$least\$50\$procedures\$
• Provide\$training\$and\$information\$to\$GPs\$ to\$facilitate\$referrals\$to\$Spire\$consultants\$ and\$the\$use\$of\$Choose\$and\$Book

OUR'PROGRESS

• We\$started\$local\$TV\$advertising\$in\$ seven, regions,\$marketing\$direct\$to\$ patients,\$building\$brand\$awareness\$ and increasing\$enquiries
• :NWAzNmuI`XqWNLT|NLmpXJNqSep the 15\$most\$common\$procedures\$ and we\$plan\$to\$extend\$this\$to\$at\$least\$ 50 procedures.\$This\$approach\$gives\$ selfRpaying\$patients\$transparency\$ in terms\$of\$our\$pricing\$
• Our\$GP\$Toolkit\$and\$training\$initiatives\$ are\$raising\$awareness\$and\$helping\$GPs\$ in\$advising\$their\$patients,\$resulting\$in\$ increased\$referrals

Continue'to'build'our' partnership'with'consultants'to' improve'our'offering'to'patients'

• Help\$younger\$consultants\$to\$build\$ their practices\$and\$provide\$established\$ consultants\$with\$the\$highRquality\$facilities\$ and\$wellRtrained\$staff\$they\$need\$to\$deliver\$ outstanding\$care\$for\$their\$patients
• Continue\$to\$target\$improvement\$in\$ consultant\$satisfaction\$and\$timely\$ response\$to\$feedback\$on\$service\$ improvement\$opportunities\$

Utilise'our'existing' capacity'better'

• Raise\$average\$theatre\$usage\$ and\$optimise\$the\$mix\$of\$work
• Build\$more\$theatres\$in\$ our existing hospitals\$

OUR'PROGRESS

• We\$see\$consultants\$as\$partners,\$ developing their\$practices\$in\$our\$hospitals.\$ Our\$planned\$new\$hospital\$in\$Nottingham\$is\$ being\$developed\$with\$the\$engagement\$of\$ 70\$local\$surgeons\$in\$response\$to\$changing\$ market\$conditions\$in\$the\$area

OUR'PROGRESS

• On\$average,\$utilisation\$has\$increased\$ to 64%\$in\$the\$year.\$Within\$our\$portfolio\$ of\$hospitals\$there\$is\$capacity\$to\$increase\$ volumes\$without\$further\$investment.\$ Our\$top\$four\$hospitals\$average\$close\$ to 80%.
• We\$added\$seven\$new\$theatres\$–\$four\$ with\$the\$acquisition\$of\$St\$Anthony's\$ and\$one\$each\$at\$Cardiff,\$Harpenden\$ and\$South\$Bank\$hospitals\$

Our\$strategy\$ continued

3.\$To\$develop'new'sites\$and\$services,\$\$ particularly\$for\$the\$treatment\$of\$cancer

Acquire'or'build'new'sites'

• Expand\$geographically\$to\$cover\$ underserved\$areas

Develop'and'expand' our cancer care'offering

• Identify\$and\$develop\$standalone\$ radiotherapy\$centres\$as\$part\$of\$ expanding our\$cancer\$care\$offering\$

Develop'capabilities'in' areas of'higher'acuity

• Continue\$to\$develop\$higher\$acuity\$ services\$such\$as\$neurosurgery\$ and\$cardiac

OUR'PROGRESS

• We\$have\$expanded\$in\$Greater\$London\$ with\$the\$acquisition\$of\$St\$Anthony's\$ and\$are\$planning\$further\$capacity\$ in\$and\$around\$London\$
• Our\$plans\$for\$new\$hospitals\$in\$ Manchester\$and\$Nottingham\$are\$ well advanced.\$Planning\$permissions\$ have\$been\$approved\$and\$we\$aim\$to\$ commence\$construction\$in\$April\$2015

OUR'PROGRESS

• Our\$stateRofRtheRart\$radiotherapy\$ Specialist Care\$Centre\$opened\$in\$Bristol\$in\$ ¶tXq1mXpNÊqTpqtmpXzAtNNcL¹te¹NcL cancer\$pathway\$facility
• Plans\$have\$been\$approved\$for\$our\$second\$ Specialist\$Care\$Centre\$centre\$at\$Great\$ Baddow,\$near\$Chelmsford\$in\$Essex,\$which\$ we\$are\$aiming\$to\$open\$by\$the\$end\$of\$2015
• We\$are\$planning\$four\$more\$newRbuild\$ radiotherapy\$centres\$by\$the\$end\$of\$2017

OUR'PROGRESS

• Spire\$Cardiff\$Hospital\$is\$a\$centre\$ of excellence\$for\$orthopaedic\$care.\$ In April\$2014,\$a\$£2.9\$million\$cardiac\$ catheterisation\$laboratory\$in\$Cardiff\$ was completed
• 1mXpN-Ap_{A}eqmXtAXqtWNTpqtJNctpN outside\$London\$and\$only\$the\$second\$ in the\$UK\$to\$offer\$Magnetic\$ResonanceR guided\$Focused\$Ultrasound\$(MRgFUS)\$ which\$is\$currently\$used\$for\$the\$nonR qupVXJAtpNAtbNcteSutNpXcNTIpeXLq
• Spire\$Manchester\$Hospital\$is\$one\$ of only two\$centres\$of\$excellence\$ in the UK for\$bariatric\$and\$metabolic\$ surgery\$accredited\$by\$the\$European\$ Accreditation\$Council.\$It\$was\$also\$one\$ eStWNTpqtWeqmXtAqteeSSNp%IAec¸ an innovative\$weight\$loss\$treatment\$

Our'strategic'pillars

1.To\$drive\$strong'growth through\$a\$clear\$focus\$on\$ our\$three'payor'groups

2.To\$maximise'utilisation\$\$ of\$existing\$sites\$by\$ growing'volume

3.\$To\$develop'new'sites\$and\$ services,\$particularly\$for\$the\$ treatment\$of\$cancer

4.To\$LpXzNNSTJXNcJ} and\$improve'productivity'

4.\$To\$drive'efficiency' and\$improve'productivity

Continue'to'focus'on'cost'management,'optimising'central'and' eJAmpezXqXec¸JXcXJA¹qtASTcVpAtXeq¸SNNq AcLJecqubAI`Nq

OUR'PROGRESS

• Our\$inRhouse\$procurement\$and\$supply\$ chain\$model\$is\$based\$on\$a\$national\$ distribution\$centre\$(NDC)\$in\$Droitwich,\$ which\$aims\$to\$lower\$procurement\$and\$ distribution\$costs\$across\$the\$group\$ through\$consolidation\$of\$supplies\$
• The\$development\$of\$bespoke\$clinical\$ procedure\$packs\$to\$meet\$the\$exact\$ requirement\$of\$each\$Spire\$hospital\$ has produced\$component\$cost\$savings,\$ enabling\$faster\$response\$and\$procedure\$ setRup\$times,\$improving\$infection\$control\$ and\$reducing\$waste\$and\$packaging

WELL:ESTABLISHED'KPIs

• Continued\$focus\$at\$a\$local\$level\$on\$ established\$KPIs\$to\$manage\$costs,\$including\$ staff\$costs\$and\$clinical\$consumables
• The\$use\$of\$peer\$group\$benchmarking\$ between\$hospitals\$to\$share\$best\$ practice for\$cost\$control
• Investment\$in\$management\$reporting\$ systems\$to\$improve\$cost\$control

SPIRE'S'OPERATING'MODEL

• An\$optimal\$mix\$of\$centrally\$controlled\$ services\$with\$local\$management\$ UN|XIXXt}pNLuJNqJeqtq{WXN maintaining\$focus\$on\$quality
• eJAbAcAVNbNctWAzNtWNUN|XIXXt} to respond\$to\$the\$needs\$of\$their\$local\$ market\$while\$being\$given\$the\$tools\$ to manage\$costs

Open+to+everyone

WHERE'ARE'WE?' Specialist\$Care\$Centre\$–\$Bristol\$

BROADENING*ACCESS* TO*SPECIALIST*TREATMENT

Our+£13+million+Bristol+Specialist+Care+Centre+is+the+first+ of+a+planned+nationwide+network+offering+diagnostics,+ radiotherapy+and+ongoing+care+for+cancer+patients.

Strategic\$Report Governance Financial\$Statements Shareholder\$Information

Every\$two\$minutes,\$someone\$in\$the\$UK\$ is diagnosed\$with\$cancer.*\$

The\$NHS\$provides\$treatment\$for\$a\$wide\$ range\$of\$cancers,\$but\$the\$incidence\$of\$ cancer,\$and\$the\$demand\$for\$treatment,\$ continues\$to\$rise.\$

We\$already\$work\$with\$Cancer\$Partners\$ UK in\$the\$running\$of\$four\$specialist\$ centres\$and\$offer\$chemotherapy\$in\$21\$of\$ our\$39\$hospitals,\$but,\$in\$2014,\$we\$opened\$ eupTpqt{We`}e{cNL¸mupmeqN¹IuXt¸ radiotherapy\$centre,\$close\$to\$our\$hospital\$ in\$Bristol.

The\$Specialist\$Care\$Centre\$hosts\$a\$ stateRofRtheRart\$Linear\$Accelerator\$(LinAc),\$ offering\$Intensity\$Modulated,\$Volumetric\$ Modulated\$Arc\$therapy,\$and\$Image\$ Guided\$Radiotherapy\$treatment.\$Its\$ success\$shows\$that\$private\$provision\$ can play\$a\$key\$role\$in\$the\$future\$of\$UK\$ cancer\$treatment.\$

In\$December\$2014,\$we\$announced\$plans\$ for\$our\$second\$cancer\$treatment\$centre,\$ in Great\$Baddow\$near\$Chelmsford,\$ Essex. The\$facility\$will\$house\$two\$LinAcs,\$ a wideRbore\$CT\$scanner,\$consultant\$ eSTJNqAcLJecqu`tXcVpeebq¸AcLAc eight\$bay\$chemotherapy\$suite.\$

* Cancer\$Research\$UK.

Source:\$Ambrafund.

RADIOTHERAPY'CENTRES' PER'MILLION'PEOPLE

Switzerland			3.3
Germany		2.7
France		2.7
Italy		2.5
UK	1.2

Radiotherapy\$is\$a\$highly\$effective\$way\$ oftreating\$cancer,\$yet\$the\$UK\$trails\$the\$ rest\$of\$Europe\$in\$its\$use\$and\$it\$remains\$ relatively\$undersupplied\$in\$the\$NHS,\$with\$ just\$5.2\$LinAcs\$per\$million\$of\$population. Source:\$OECD\$Cancer+care:+assuring+quality+to+improve+ survival+October\$2013.

Key\$performance\$indicators

We\$measure\$our\$strategic\$and\$operating\$progress\$ using a\$range\$of\$financial\$and\$non5financial\$indicators.

1.\$To\$drive\$strong'growth\$through\$ a\$clear\$focus\$on\$our\$three'payor'groups

MEASURE	DATA	HOW'WE'MEASURE'THIS
PATIENT'DISCHARGES'(+10.2%) (INGPATIENT/DAYCASE) 260.3k We\$increased\$the\$volume\$of\$patients\$ requiring\$an\$overnight\$stay\$or\$an\$ in5hospital\$recovery\$period\$by\$over\$ 10%\$in\$2014	2014((total(260.3k) PMI 124.4k NHS 95.5k Self:pay 40.4k 2013((total(236.2k) PMI 123.7k NHS 76.5k Self9pay 36.0k	Number\$of\$in5patient/daycase\$ discharges in\$the\$period
REVENUE'BY'PAYOR' Revenue\$increased,\$year\$on\$year,\$in\$total\$ by\$£91.5\$million\$(12%)\$over\$2013\$and\$for\$ each\$payor\$group\$ The\$largest\$increase\$was\$in\$NHS\$revenue,\$ up\$£54.5\$million\$(28.5%)\$	£m 500 400 300 200 100 0 2011 2012 2013 2014 PMI NHS Self5pay Other	Revenue\$£million\$by\$payor\$in\$the\$period
PATIENT'SATISFACTION In\$2014,\$we\$improved\$on\$a\$consistently\$ very\$high\$patient\$satisfaction\$score\$to\$ achieve\$93%	2014 93% 2013 92% 2012 92% 2011 92%	Percentage\$of\$patients\$who\$rate\$our\$ overall\$quality\$of\$service\$as\$'excellent'\$ or 'very\$good'
CONSULTANT'SATISFACTION Consultants\$are\$our\$partners\$in\$delivering\$ quality\$patient\$care\$–\$satisfaction\$levels\$ have\$increased\$year5on5year\$to\$79%	2010 90% 2014 79% 2013 78% 2012 78% 2011 77%	Percentage\$of\$consultants\$who\$rate\$ the\$quality\$of\$service\$Spire\$provides\$ as 'excellent'\$or\$'very\$good'

2.To\$maximise'utilisation\$\$ of\$existing\$sites\$by\$growing'volume

MEASURE	DATA	HOW'WE'MEASURE'THIS
THEATRE'UTILISATION 64% Increased\$by\$3%,\$with\$increased\$volumes\$ largely\$delivered\$by\$utilising\$spare\$capacity\$	2014 64% 2013 61%	Number\$of\$utilised\$theatre\$hours\$divided\$ I}bA XbubtWNAtpNWeupq¢LNTcNLAq 10\$hours\$per\$weekday\$and\$seven\$hours\$ per\$Saturday\$for\$50\$weeks\$of\$the\$year),\$ expressed\$as\$a\$percentage\$
EMPLOYEE'SATISFACTION' & COMMITMENT A\$high\$proportion\$of\$our\$staff\$continued\$ to\$say\$that\$what\$they\$do\$at\$work\$makes\$ a positive\$difference\$	2014 92% 2013 91% 2012 92%	The\$percentage\$of\$participants\$in\$ our annual\$staff\$survey,\$who\$said\$ that what\$they\$do\$at\$work\$makes\$ a positive\$difference\$
UNPLANNED'RETURNS'BY'PATIENTS We\$continued\$a\$low\$level\$of\$returns,\$ pNUNJtXcVeupqtpecVpNJepLeS treatment effectiveness	0.3 0.2 0.1 0 2011 2012 2013 2014 Unplanned\$returns\$to\$theatre Unplanned\$readmissions	Unplanned\$returns\$to\$theatre\$is\$the\$ rate\$of\$patients\$returned\$to\$theatre\$ per\$100\$theatre\$episodes Unplanned\$readmissions\$is\$the\$rate\$ of\$patients\$readmitted\$to\$hospital\$ per\$100\$patients
MRSA 0.00 There\$were\$no\$MRSA\$cases\$in\$2014\$	2014%0.00 2013%0.00 2012 0.08	MRSA\$(infection\$rate\$per\$10,000\$bed\$days)\$
C.DIFFICILE 0.30 Infection\$rates\$were\$41%\$down\$ on the prior\$year	2014 0.30 2013 0.51 2012 0.24	¶LXSTJX`N¢XcSNJtXecpAtNmNpƒ'¸''' bed\$days)
INGPATIENT'SURGICAL'MORTALITY' (PER'10,000'ANAESTHETIC'EPISODES) 0.34 Surgical\$mortality\$rates\$remain\$low Not\$post5operative\$mortality.	2014 0.34 2013 0.33 2012 0.27	Mortality\$(per\$10,000\$ anaesthetic episodes)\$

Key\$performance\$indicators continued

3.To\$develop'new'sites\$and\$services,\$\$ particularly\$for\$the\$treatment\$of\$cancer

MEASURE	DATA	HOW'WE'MEASURE'THIS
NUMBER'OF'THEATRES 122 Capacity\$was\$expanded\$by\$the\$addition\$ oftheatres\$at\$three\$existing\$hospitals\$ and through\$the\$acquisition\$of\$ St Anthony's\$Hospital\$(four\$theatres)\$	2014 122 2013 115 2012 115 2011 111	Number\$of\$theatres\$in\$use\$at\$the\$end\$ of\$the\$period\$
NUMBER'OF'HOSPITALS 39 The\$acquisition\$of\$St\$Anthony's\$Hospital\$ increased\$the\$number\$of\$operating\$ hospitals\$to\$39\$	2014 39 2013 38 2012 38 2011 37	Number\$of\$hospitals\$in\$operation\$ at\$the\$end\$of\$the\$period\$
NUMBER'OF'CANCER'CENTRES 1 :NemNcNLeupTpqtLNLXJAtNL radiotherapy\$centre\$in\$Bristol\$in\$ April 2014,\$with\$further\$centres\$ in development	2014 1 2013	Number\$of\$cancer\$treatment\$centres\$ in operation\$at\$the\$end\$of\$the\$period\$

4.To\$drive'efficiency' and\$improve'productivity

MEASURE	DATA	HOW'WE'MEASURE'THIS
ADJUSTED'EBITDA' MARGIN'% 18.6%	2014 18.6% 2013 19.6% Including\$acquisition\$in\$2014	Adjusted\$EBITDA/total\$revenue,\$ expressed\$as\$a\$percentage
Key\$factors\$adversely\$impacting\$margin\$ included\$lower\$tariffs\$on\$NHS\$revenue\$ contracts\$and\$increased\$governance\$ costs incurred\$as\$a\$public\$company,\$ mApt`} eSSqNtI}emNpAtXcVNSTJXNcJXNq	2014 18.9% 2013 19.6% Underlying\$(excluding\$acquisition\$in\$2014)\$
CLINICAL'STAFF'COSTS'AS'A' PERCENTAGE'OF'REVENUE 17.6% Increased\$by\$0.1%\$of\$revenue;\$however,\$ on\$an\$underlying\$basis,\$clinical\$staff\$costs\$ were\$down\$0.1%\$of\$revenue\$to\$17.4%,\$ pNUNJtXcVNSTJXNcJXNqAJWXNzNL	2014 17.6% 2013 17.5% Including\$acquisition\$in\$2014 2014 17.4% 2013 17.5% Underlying\$(excluding\$acquisition\$in\$2014)	Clinical\$staff\$costs/total\$revenue\$ expressed\$as\$a\$percentage\$
OTHER'DIRECT'COSTS'AS'A' PERCENTAGE'OF'REVENUE' 33.4% Up\$0.9%\$of\$revenue,\$mainly\$due\$to\$ increased\$NHS\$orthopaedic\$opthalmology\$ activity\$and\$higher\$levels\$of\$complexity\$ across\$specialties Comprises\$direct\$costs\$and\$medical\$fees.	2014 33.4% 2013 32.5% Including\$acquisition\$in\$2014 2014 33.5% 2013 32.5% Underlying\$(excluding\$acquisition\$in\$2014)	Other\$direct\$costs/total\$revenue\$ expressed\$as\$a\$percentage\$

Financial'measures

Strong\$cash\$generation\$enables\$us\$to\$pursue\$our\$strategy\$for\$growth,\$without\$increasing\$gearing

Financial'review qtpecVTcAcJXA`mNpSepbAcJNXc

Good'revenue'growth'was'maintained,' up'£91.5'million'in'the'year'(+12%'on'2013),' with'growth'in'revenue'across'all'payor' groups,'flowing'through'to'increased'profits.' Operating'cash'flow'conversion'was'strong' and'net'debt'is'at'a'level'that'positions' the'Group'well'for'future'investments.

T he'Company'was'admitted'to'the' London'Stock'Exchange'on'23'July' 2014'and,'therefore,'these'results' cover'the'period'both'prior'to'and' following'Admission.'The'IPO'generated' cash proceeds'of'£306.9'million'net'of'costs,' which,'combined'with'a'restructuring'of' existing'shareholder'interests'in'the'Group' AcLtWNpNTcAcJXcVeStWNIAc_SAJXXtXNq¸ served'to'reduce'overall'Group'indebtedness.' These'events'fundamentally'impacted'the' capital'structure'of'the'Group'materially' reducing'its'net'funding'costs.'Therefore,' various'adjustments'have'been'made'to' cepbAXqNtWNpNqu`tqSeptWN}NApte pNUNJt tWNcN{peumTcAcJXcVqtpuJtupN¸tWN shares'issued'on'IPO'and'to eliminate' oneUoff exceptional'costs,'such as' the costs associated'with'the'IPO.

HIGHLIGHTS&

• Revenue'increased'12.0%'to'£856.0'million'(2013:'£764.5'million),'with'growth'delivered'in'all'payor'categories
• InUpatient'and'daycase'patient'volumes'up'10.2%'on'prior'year'to'approximately'260,300'patients'(2013:'236,200'patients)
• Adjusted'EBITDA**'up'6.1%'to'£159.2'million'(2013:'£150.0'million)
• %mNpAtXcVJAqWUe{¸INSepNN|JNmtXecA`XtNbq¸eS¶bXXec¢¿¶bXXec£¸{XtW¶emNpAtXcVJAqWJeczNpqXec (before'exceptional'items)'of'Adjusted'EBITDA'(2013:'74.1%)
• Net'debt'leverage'at'year'end'2.7'times'Adjusted'EBITDA
• Investment'in'acquisitions'and'capital'investments'totalled'£105.1'million'(2013:'£53.7'million),'including'the'St'Anthony's' Hospital'acquisition'

SELECTED&FINANCIAL&INFORMATION

		Year'ended'31'December
(£&million)	2014	2013	Variance'%	Variance, excluding acquisitions'%*
Revenue	856.0	764.5	12.0%	9.5%
Cost'of'sales	(436.6)	(382.1)	(14.3%)	(11.5%)
Gross'margin	419.4	382.4	9.7%	7.4%
Other'operating'costs	(359.3)	(282.8)	(27.1%)	(24.0%)
%mNpAtXcVmpeTt	60.1	99.6	(39.7%)	(39.8%)
Exceptional'items'included'within'other'operating'costs	(54.0)	(11.5)
%mNpAtXcVmpeTtINSepNN JNmtXecA`XtNbq	114.1	111.1	2.7%	2.6%
-peTtecqANeSmpemNpt}¸mActAcLNouXmbNct	18.5	44.2
#NtTcAcJNJeqtq	(85.6)	(195.7)
eqqINSepNtA	(7.0)	(51.9)	86.5%	86.3%
Taxation'	&13.0	154.1
-peTtSeptWN}NAp	6.0	102.2
L^uqtNL3¨¨	159.2	150.0	6.1%	5.6%
Adjusted,'diluted'earnings'per'share,'pence***	18.3	'–
Dividends'proposed'per'share,'pence	1.8	'–
%mNpAtXcVJAqWUe{¸INSepNN JNmtXecA`XtNbq¨¨¨¨	164.2	111.2	47.7%
Capital'investments'and'acquisitions'	105.1	53.7
#NtLNItAttWN}NApNcL	424.3	1,517.4

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

**' 'Operating'profit,'adjusted'to'add'back'depreciation'and'exceptional'items'and'to'adjust'the'comparator'to'conform'the'property'rental'base'by'£4.1'million'(as'further'described'on'page'33),'

referred to'hereafter'as''Adjusted'EBITDA'.

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

****Operating'cash'flow'adjusted'to'add'back'the'cash'flow'effect'of'exceptional'items.

Financial'review JectXcuNL

# <11<-<%0

		Year'ended'31'December
(£&million)	2014	2013	Variance'%	Variance, excluding acquisitions'%*
Total&revenue&	856.0	764.5	12.0%	9.5%
Of'which:
PMI	432.4	413.7	4.5%	1.4%
NHS	245.9	191.4	28.5%	27.3%
SelfUpay	146.1	132.9	9.9%	7.4%
Other**	31.6	26.5	19.2%	17.4%
	856.0	764.5	12.0%	9.5%
Of'which:
InUpatient/daycase	572.9	505.9	13.2%	10.2%
OutUpatient	251.5	232.1	8.4%	6.9%
Other	31.6	26.5	19.2%	17.4%
	856.0	764.5	12.0%	9.5%
#ubINp¢É'''q£
3etA`Xc¹mAtXNctºLA}JAqNLXqJWApVNq	260.3	236.2	10.2%	8.6%
Of'which:
PMI'volumes	124.4	123.7	0.6%	(1.6%)
NHS'volumes	95.5	76.5	24.8%	24.2%
SelfUpay'volumes'	40.4	36.0	12.2%	10.8%

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

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

GROWING&REVENUES

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

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

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

Of'the'underlying'revenue'growth'of'9.5%:

• additional'inUpatient'and'daycase'volumes'accounted'for'5.6%;
• the'rate'increase'in'inUpatient'and'daycase'(average'revenue'per'case)'accounted'for'1.2%;'and
• growth'in'outUpatient'revenues'accounted'for'a'further'2.1%'increase,'including'an'increase'in'minor'procedures'undertaken'in'outUpatient' rooms'of'£7.8'million.

-"

(£&million)	2013	InUpatient/ daycase volume	InUpatient/ daycase rate	OutUpatient	St'Anthony's	2014
PMI	413.7	(4.3)	5.2	4.7	13.1	432.4
		'(1.0%)	1.3%	1.1%	3.1%	4.5%

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

Of'the'underlying'growth'of'1.4%'in'PMI'revenues:

• the'decrease'in'the'volumes'of'inUpatient'and'daycase'admissions'accounted'for'a'1.0%'decline'in'revenues;
• the'rate'increase'in'inUpatient'and'daycase'(average'revenue'per'case)'accounted'for'a'1.3%'increase'in'revenues'and'offset'the'decline' in volume;'and
• growth'in'outUpatient'revenues'accounted'for'a'further'1.1%'increase,'including'an'increase'in'minor'procedures'undertaken'in'outUpatient' treatment'rooms'which'would'previously'have'been'undertaken'in'theatre.

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

NHS

(£&million)	2013	InUpatient/ daycase volume	InUpatient/ daycase rate	OutUpatient	St'Anthony's	2014
NHS	191.4	38.1	4.9	9.2	2.3	245.9
		19.9%	2.6%	4.8%	1.2%	28.5%

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

Of'the'underlying'growth'of'27.3%'in'NHS'revenues:

• AqXVcXTJActXcJpNAqNXcqupVXJA`ALbXqqXecqAJJeuctNLSepA¶XcJpNAqNXcpNzNcuNqÀ
• the'rate'increase'in'inUpatient'and'daycase'(average'revenue'per'case)'accounted'for'a'2.6%'increase'in'revenues,'notwithstanding'a'2.25%' decline'in'attributable'NHS'tariff'in'the'year;'and
• growth'in'outUpatient'revenues'accounted'for'a'further'4.8%'increase'in'revenues'in'the'year.

In'2013,'the'inUpatient'and'daycase'rate'was'adversely'impacted'by'a'temporary'reduction'in'case'mix'complexity'arising'from'the'transition' in April'2013'of'local'NHS'Commissioning'to'Clinical'Commissioning'Groups,'as'a'result'of'the'Health'and'Social'Care'Act.'The'year'ended' NJNbINpINcNTtNLSpebIetWtWNAIqNcJNeSqXbXApNSSNJtqAcLAcXcJpNAqNXceJAJectpAJt#1{ep\_¸t}mXJA``}bepNJebmN| procedures'attracting'a'higher'average'revenue'per'case.

1 ¹-<

		InUpatient/ daycase	InUpatient/ daycase
(£&million)	2013	volume	rate	OutUpatient	St'Anthony's	2014
SelfUpay	132.9	9.0	(1.1)	2.0	3.3	146.1
		6.8%	'(0.8%)	1.4%	2.5%	9.9%

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

Financial'review JectXcuNL

Of'the'underlying'growth'of'7.4%'in'selfUpay'revenues:

• an'increase'in'surgical'admissions'accounted'for'a'6.8%'increase'in'revenues;
• inUpatient'and'daycase'(average'revenue'per'case)'accounted'for'a'0.8%'decline'in'revenues;'and
• growth'in'outUpatient'revenues'accounted'for'a'1.4%'increase'in'revenues'in'the'year.

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

pebtWNINVXccXcVeSuctXNAp}¸tWNpeumINcNTtNLSpebAqXVcXTJActcubINpeSWXmpNzXqXecmpeJNLupNqAqqeJXAtNL{XtWA patient'recall'undertaken'by'DePuy.'These'revision'procedures'were'highly'complex'and'priced'at'a'substantial'premium'to'average'selfUpay' procedures.'The'absence'of'similar'work'in'2014'had'an'adverse'impact'on'rates'achieved'overall'and'masked'a'positive'rate'improvement' in underlying'recurring'case'mix.

OTHER&REVENUE

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

%13%1 1#0%11-0%3

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

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

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

peqqbApVXcWAqINNcALzNpqN}XbmAJtNLI}ApNLuJtXeceSXc#1tApXSSAmmXJAINtetWNÓTqJA}NApAcLASuptWNp¶#1 tApXSSpNLuJtXecAmmXJAINSpebmpXSeptWNÓTqJA}NApAcLI}AWXVWNpmpemeptXeceSpNzNcuNqSpebtWN#1XctWAc Xc ¶1ebNeStWXqXbmAJtWAqINNcbXtXVAtNLI}XbmpezNLemNpAtXcVNSTJXNcJ}XctWNmNpXeL¶

Underlying'clinical'staff'costs,'as'a'percentage'of'revenues,'reduced'by'0.1%'to'17.4%'of'revenue'for'the'year'ended'31'December'2014,'as' compared'to'31'December'2013.'Underlying'direct'costs'of'prostheses,'drugs'and'consumables,'as'a'percentage'of'revenues,'increased'from' ¶SeptWN}NApNcLNLNJNbINpte¶Xc¶3WXq{AqLuNteAqXVcXTJActXcJpNAqNXc#1eptWemANLXJAcLemWtWAbeeV} surgical'activity'in'the'period'and'a'general'increase'in'inUpatient'case'complexity'across'specialties,'relative'to'2013.

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

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

**%30%-03

%131**

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

Underlying'other'operating'costs,'excluding'£8.6'million'relating'to'Spire'St'Anthony's'Hospital,'increased'in'the'period'by'£67.9'million,' or 24.0%,'from'£282.8'million'for'the'year'ended'31'December'2013'to'£350.7'million'for'the'year'ended'31'December'2014.

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

**-0

3%#**

Excluding'£0.7'million'relating'to'Spire'St'Anthony's'Hospital,'the'charge'for'depreciation'for'the'year'ended'31'December'2014'has'increased' by'£1.4'million,'or'3.3%,'relative'to'2013,'to'£44.4'million.'Overall,'depreciation'arising'from'capital'expenditure'in'2014'and'the'acquisition' eS 1t ctWec}Êq¸WAzNeSSqNttWNSu`}NApXbmAJtecLNmpNJXAtXeceSpNLuJtXecqXctWNT|NLAqqNtIAqNSpebtWNqANXcAcuAp}eS hospital'properties,'subject'to'long'leases'('2013'Freehold'Sale'),'and'of'the'sale'and'leaseback'of'the'Spire'Washington'Hospital'premises' in March'2014.

RENT

Rent'of'land'and'buildings'for'the'year,'excluding'£0.1'million'relating'to'Spire'St'Anthony's'Hospital,'increased'by'£5.7'million,'or'10.4%,'to' ¶bXXec¶3WNXcJpNAqNXq`ApVN`}tWNJecqNouNcJNeStWNAccuA`XqNLXbmAJteStWNpNNWe`L1A`N¢¶bXXecXctWN}NAp£¸tWNTpqt annual'indexation'of'rental'costs'associated'with'the'2013'Freehold'Sale'(£1.3'million'in'the'year)'and'the'commencement'of'rent'following' the'sale,'subject'to'lease,'of'the'Spire'Washington'Hospital,'which'was'concluded'on'11'March'2014'with'a'starting'rent'of'£2.3'million'per' }NAp¢¶bXXecXctWN}NAp£¶3WNXbmAJtecJebmApAtXzNq{XcetcepbAXqNuctXtWNNcLeStWNTpqtouAptNpeS¶

**10¹1-<"#31#%30%-03

%131**

Since'Admission,'2.7'million'share'options'comprising'of'1.7'million'Directors''Share'Bonus'Award'and'1.0'million'Long'Term'Incentive'Plan' (LTIP)'have'been'awarded'to'executive'directors'and'members'of'the'senior'management'team.'These'are'conditional'on'certain'market' AcL etWNpmNpSepbAcJNJecLXtXecqINXcVSuT``NL¶uptWNpLNtAXqApNJectAXcNLXccetNecmAVNeStWNTcAcJXA`qtAtNbNctq¶

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

**;

-3%# 3"1#
4#%30%-03#
%131**

(£&million)	2014	2013
IPO'costs	46.1	–
epmepAtNpNqtpuJtupXcVAcLpNTcAcJXcV	3.9	3.5
Business'reorganisation'	–	3.0
Regulatory	4.0	5.0
Total	54.0	11.5

Full'details'of'exceptional'items'are'disclosed'in'note'8,'page'108.

3#4133

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

**%-03#-0%31%0#30;

-3%#
%131**

%mNpAtXcVmpeTtAStNpN|JNmtXecAJeqtqLNJpNAqNLI}¶XctWN}NApte¶bX``Xec¶NSepNN|JNmtXecAJeqtq¸emNpAtXcVmpeTtqXcJpNAqNL by'2.7%,'from'£111.1'million'for'the'year'ended'31'December'2013'to'£114.1'million'for'the'year'ended'31'December'2014.

-0%3%#1-%1 %-0%-03<¸- #3#/4-"#3

3WNmpeTtecLXqmeqAeS¶bX``XecSeptWN}NApNcLNLNJNbINppNAtNqmpXcJXmA}tetWNqA`NeStWNSpNNWe`L`AcLAcLIuX`LXcVq eS 1mXpN:AqWXcVteceqmXtA`¶3WNmpeTtXctWNmpXep}NApeS¶bXXecpNAtNqmpXcJXmA``}tetWNmpeTtectWNpNNWeL1A`N¶

FINANCE&COSTS&

Finance'costs'in'the'year'include'those'incurred'in'respect'of'borrowings'drawn'under'the'capital'structure'of'the'Group'prior'to'Admission.' %c LbXqqXec¸Ieppe{XcVqpNLuJNLqXVcXTJAct}AcL¸tWNpNSepN¸TcAcJNJeqtqAqepNLuJNL¶

XcAcJNJeqtqSeptWN}NApNcLNLNJNbINp¸INSepNN|JNmtXecATcAcJNJeqtq¸tetA``NL¶bX``Xec¸ApNLuJtXeceS¶bX``Xecep 44.2%'over'the'prior'year.'This'reduction'mainly'comprises'£35.9'million'of'interest'on'shareholder'debt'and'£32.1'million'on'bank'loans,'net' eStWNbAp\_¹te¹bAp\_NtbezNbNctecXctNpNqtpAtNq{AmXcqtpubNctqqNttNLecLbXqqXec¶ALtWNTcAcJNqtpuJtupNAqNSSNJtNLecLbXqqXec INNcXcmAJNtWpeuVWeuttWNTcAcJXA}NAp¸TcAcJNJeqtq¢INSepNN|JNmtXecAXtNbq£{euLWAzNSuptWNppNLuJNLI}¶bX``Xecte £20.7'million.

ctWN}NApNcLNLNJNbINp¸N|JNmtXecATcAcJNJeqtqeS¶bX``XecApeqNSpebtWNpNNWeL1ANAcLpNAtNteXctNpNqtpAtN swaps'being'recycled'to'the'income'statement'as'they'no'longer'met'the'criteria'for'hedge'accounting,'net'of'the'early'settlement'discounts' arising'on'the'repayment'of'bank'borrowings.

TAXATION

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

3WN4JepmepAtXectA|JWApVNecmpeTtq{AqcX¢¿cX£¸pNUNJtXcVtWNqXVcXTJActA`e{AINJeqtqApXqXcVSpebtWN XqtXcV¸ including the'settlement'of'outUofUtheUmoney'interest'rate'swaps.'The'UK'corporation'tax'charge'in'the'income'statement'is'an'adjustment' to prior'years.'

The'credit'for'deferred'taxation'for'the'year'ended'31'December'2014'was'£13.7'million,'comprising'deferred'tax'assets'previously' unrecognised,'in'relation'to'losses'carried'forward'following'the'reorganisation'of'the'Spire'Group'into'a'single'tax'group.'The'credit'for'the' }NApNcLNLNJNbINppNAtNqmpNLebXcAct}tetWNpNNAqNeSLNSNppNLtA|XAIX`XtXNqAqqeJXAtNL{XtWT|NLAqqNtqLXqmeqNLeSAqmApt ofthe'2013'Freehold'Sale.

Financial'review JectXcuNL

-0%3303;3%#

3WNmpeTtAStNptA|AtXecSeptWN}NApNcLNLNJNbINp{Aq¶bXXec¸JebmApNL{XtWAmpeTtAStNptA|AtXecSeptWN}NApNcLNL NJNbINpeS¶bXXec¶3WNmpeTtecAqqNtqqeLAqmApteStWNpNNWeL1ANAcLtWNJecqNouNctpNNAqNeSAqqeJXAtNL deferred'tax'liabilities'substantially'contributed'to'the'result'for'2013.

4130##1-010¢-1£

L^uqtNL-1¢AStNpNXbXcAtXcVN|JNmtXecAXtNbq¸mpeTtecLXqmeqAeSmpemNpt}¸mActAcLNouXmbNct¸AcLAL^uqtXcVSeptWNNSSNJtqeStWN capital'restructuring'on'the'IPO)'was'18.3'pence'per'share.

3WNmpe¹SepbATcAcJXAXcSepbAtXecqNteutINe{WAqINNcmpNmApNLteX``uqtpAtNtWNNSSNJteStWN-%ecNApcXcVqmNpqWApN¶tXqmpNmApNL for illustrative'purposes'only'and'does'not'represent'the'Group's'actual'earnings.'The'information'is'prepared'on'a'basis'consistent'with'the' accounting'policies'of'the'Group'and'as'described'in'the'notes'set'out'below.

(£&million)	Year'ended' 31'December 2014
Loss'before'taxation'	(7.0)
Operating'adjustments:
Exceptional'items'–'IPO	46.1
Exceptional'items'–'other	7.9
-peTtecLXqmeqAeSmpemNpt}¸mActAcLNouXmbNct¢cetNƒ£	(18.5)
Financing'adjustments:
Finance'costs'shareholder'loans'(note'2)	54.8
Finance'costs'bank'loans'(note'3)	10.4
-pe¹SepbAmpeTtINSepNtA	93.7
Taxation'(note'4)	(20.2)
-pe¹SepbAmpeTtAStNptA	73.5
Number'of'ordinary'shares'in'issue'on'Admission	401,081,391
ProUforma'basic'earnings'per'share'(pence)	18.3
Number'of'ordinary'shares'in'issue'on'Admission,'weighted'average'(note'5)	401,957,044
ProUforma'diluted'earnings'per'share'(pence)	18.3

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

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

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

Note'4 Taxation'is'calculated'at'the'statutory'rate'of'21.50%'of'the'proUforma'profit'before'tax'before'taking'account'of'available'tax'losses.

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

CASH&FLOW ANALYSIS&OF&CASHFLOWS&IN&YEAR

(£&million)	2014	2013
Opening'cash'balance	111.5	133.8
%mNpAtXcVJAqWUe{INSepNN JNmtXecA`XtNbq	164.2	111.2
Exceptional'items	(51.2)	(11.5)
%mNpAtXcVJAqWUe{AStNpN JNmtXecA`XtNbq	113.0	99.7
Net'cash'(used'in)/generated'from'investing'activities	(70.0)	647.1
#NtJAqWuqNLXcTcAcJXcVAJtXzXtXNq	(80.0)	(769.1)
Closing'cash'balance	74.5	111.5
`eqXcVcNtXcLNItNLcNqq	424.3	1,517.4

**%-03

1 %:1**

3WNJAqWXcUe{SpebemNpAtXcVAJtXzXtXNqINSepNN|JNmtXecAXtNbqSeptWN}NAp{Aq¶bX``Xec¸{WXJWJecqtXtutNqAJAqWJeczNpqXecpAtN SpebL^uqtNL3SeptWN}NApeS¶¢¿¶bX``Xecep¶£¶3WNcNtJAqWXcUe{SpebbezNbNctqXc{ep\_XcVJAmXtAXctWN }NApXq¶bX``Xec¸AqXVcXTJActXbmpezNbNctectWAtpNmeptNLSeptWN}NApNcLNLNJNbINp¶

INVESTING&AND&FINANCING&CASHFLOWS

Net'cash'used'in'investing'activities'for'the'year'is'£70.0'million,'which'includes'the'acquisition'of'Spire'St'Anthony's'Hospital'in'May'2014'for' £38.5'million'and'other'capital'expenditure'of'£66.6'million,'offset'by'the'proceeds'from'the'disposal'of'the'freehold'interest'(subject'to'lease)' in'Spire'Washington'Hospital'and'the'disposal'of'a'fertility'business,'totalling'£34.8'million,'and'interest'received'of'£0.3'million.'Capital' expenditure'comprises'the'completion'of'the'radiotherapy'centre'in'Bristol,'new'theatres'in'Harpenden'and'South'Bank,'the'completion' eS A JApLXAJJAtWNtNpXqAtXecAIepAtep}AcLtWNAtpNXc ApLXSS¸"0AtApN-Ap_AcLAbA^eppNJecTVupAtXecAcLLNzNembNcteSSAJXXtXNq in Tunbridge'Wells,'including'investment'in'outUpatient'areas'and'static'MRI'and'CT'machines'at'this'hospital.

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

NtJAqWuqNLXcTcAcJXcVAJtXzXtXNqeS¶bXXecJebmpXqNqcNtmpeJNNLqSpebtWNXqquNeSqWApNqeS¶bXXec¸tWNcNtpNmA}bNct of bank'debt'after'cash'raised'from'new'borrowings'of'£345.6'million'and'interest'paid'of'£41.3'million.'

On'Admission,'150,100,341'new'ordinary'shares'were'issued'by'the'Company,'which'generated'cash'proceeds'of'£306.9'million.'The'proceeds,' JebIXcNL{XtWApNqtpuJtupXcVeSN|XqtXcVqWApNWeLNpXctNpNqtqXctWNpeumAcLtWNpNTcAcJXcVeStWNIAc\_SAJXXtXNq¸qNpzNLtepNLuJNezNpA`` Group'indebtedness'and'materially'reduce'the'net'funding'costs'of'the'Group.

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

%00%:#1

tNJNbINp¸tWNpeumWAqIAc_LNIteS¶bX`Xec¸LpA{cucLNpSAJXXtXNq{WXJWbAtupNXcAcLTcAcJN`NAqNLNIt of £76.6 million.'Additionally,'the'Group'has'a'revolving'loan'facility'of'£100.0'million'available'until'July'2019,'which'was'undrawn'at' 31 December'2014.'

(£&million)	2014	2013
Cash	(74.5)	(111.5)
tNpcALNIt¢XcJ¶TcAcJN`NAqNq£	498.8	782.4
Shareholder'debt	–	846.5
#NtLNIt	424.3	1,517.4

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

RISK&MANAGEMENT

3WNmpXcJXmApXq\_qSAJNLI}tWNpeumApNXLNctXTNLXctWN-pXcJXmApXq_qqNJtXececmAVNqte¶

**30140<-%

1#%
391**

3WNVpeumWAqNqtAIXqWNLtpNAqup}meXJXNqAXbNLAtpNLuJXcVTcAcJXA`pXq_¶

uptWNpXcSepbAtXecAIeutTcAcJXApXq\_bAcAVNbNct¢XcJuLXcVXctNpNqtpAtN¸JpNLXtAcLXouXLXt}pXq\_q£XqmpezXLNLXccetNeStWNTcAcJXA statements'on'pages'122'to'125.

The'consolidated'cash'and'cash'equivalents'were'£74.5'million'at'31'December'2014.'Surplus'cash'balances'are'held'with'UKUbased' investmentUgrade'banks.'

Simon&Gordon WXNSXcAcJXA`%STJNp

Spire'Healthcare'Group'plc'Annual'Report'2014 35

1 Open to everyone

WHERE ARE WE? Spire Harpenden Hospital

INVESTING IN NEW CAPACITY TO MEET DEMAND

Building within the current hospital, together with extended parking, means easy access for our patients to all wards, theatres and patient areas. We're well positioned now to treat even more of our local population.

Strategic'Report

Governance Financial'Statements Shareholder'Information

Over'the'last'three'decades,'Spire' Harpenden'Hospital'has'grown'from' a'small'local'hospital,'with'fewer'than' 30'beds,'to'become'the'largest'private' hospital'in'North'Hertfordshire.'Demand,' particularly'from'local'NHS'trusts,' commissioners'and'through'NHS' Choose and'Book,'continues'to'grow.

By'2013,'theatre'utilisation'was'up'to' 76% and'the'hospital'was'beginning' to face'pinch'points'in'theatre'and' consultant'capacity.

An'additional'theatre,'incorporating' AbXcApUe{AcLAmApeqJemXJJAmAIX`Xt}¸ an'enhanced'recovery'area'and'a'further' sevenUbedded'ward'were'opened'in' September,'and'a'fully'refurbished' main'reception'area'was'opened' in February'2015.'

ApmNcLNcce{WAqINLq¸TzNbAXc theatres,'an'endoscopy'theatre'and' extensive'digital'XUray,'mammography,' ultrasound,'CT'and'MRI'facilities.' Following'the'new'investment,'theatre' utilisation'is'60%'and'the'hospital'now' has'capacity'for'future'growth.

6'theatres

1mXpNApmNcLNceqmXtAWAqTzNJebmN| theatres'and'one'endoscopy'theatre'

Planned'to'a'5cm'tolerance,'Spire' Harpenden'Hospital's'new'theatre' block was'craned'into'position'within' the existing'hospital'complex.'The'use' of offUsite'modular'construction'enabled' this'nine'month,'£5'million'development' to'be'completed'with'the'loss'of'only'one' day's'operation.

Clinical'review

Clinical'quality'and'performance'are'at'the' heart'of'everything'we'do.'

Our'Group'Medical'Director,' Dr'JeanGJacques'de'Gorter,' is responsible'for'defining' our'clinical'governance'and' quality'strategy'and'his'team' audit,'monitor'and'report'on' our'quality'performance.'In' addition,'the'Clinical'Services' team'supports'our'hospitals' to'comply'with'relevant' healthcare'regulations'across' England,'Scotland'and'Wales.

We'continued'a'low'level'of'returns,' pNUNJtXcVeupqtpecVpNJepLeS treatment effectiveness

Clinical'review

Dr'Jean.Jacques'de'Gorter Group'Medical'Director'

While'the'transition'to'becoming'a'public' company'was'an'important'milestone'for' Spire'in'2014,'we'worked'hard'to'ensure' thatthe'process'did'not'distract'us'from' our primary'purpose'–'delivering'safe'and' effective'care'for'our'patients.'It'is'pleasing,' therefore,'that'we'continued'to'make' improvements'in'clinical'performance'and' that'we'were'able'to'put'in'place'a'number' of'developments'that'will'stand'Spire'in' good'stead'for'the'future.

CLINICAL'PERFORMANCE

For'the'second'year'running,'there'was'not'a' single'case'of'MRSA'bacteraemia'reported'by' eupWeqmXtAq¶cALLXtXec¸JAqNqeS ¶LXSTJXN fell'by'41%,'yearGonGyear,'and'surgical'site' infections'following'hip'and'knee'replacement' surgery'remained'low.'We'report'hospital' acquired'infection'data'(MRSA,'MSSA,' ¹JeX IAJtNpANbXAAcLeqtpXLXubXSTJX`N infection)'to'Public'Health'England'and' participate'in'the'surveillance'programme' for hip'and'knee'replacement'surgical'site' infection.'Our'rates'compare'favourably' with published'national'averages.

In'terms'of'treatment'effectiveness,'in' 2014, we'reported'the'lowestGever'rate' of unplanned'patient'transfers'and' readmissions.'This'is'a'testament'to'the' care'and'attention'to'detail'shown'by' our'clinical'teams.'Good'teamwork,'robust' and'upGtoGdate'care'pathways,'and'a'

MRSA 0.00 MRSA'(rate'per'10,000'bed'days) 2014%0.00 2013%0.00 2012 0.08

C.'DIFFICILE 0.30 ¶LXSTJX`N¢pAtNmNp¸INLLA}q£

2014	0.30
2013		0.51
2012	0.24

IN.PATIENT'SURGICAL'MORTALITY*' (PER'10,000'ANAESTHETIC'EPISODES)

* Not'postGoperative'mortality

We#continued#to#make#improvements# in#clinical#performance.

Dr'Jean.Jacques'de'Gorter Group'Medical'Director

willingness'to'challenge,'together'create' the'platform'for'reliable'and'highGquality' care'within'our'hospitals.

Nursing'teams'are'able'to'call'upon'over'120' mpeJNLupN¹qmNJXTJJXcXJAJApNmAtW{A}q¶ Clinical'care'pathways'are'standardised' across'all'our'39'hospitals'and'are'printed' off individually'to'form'part'of'each'patient's' medical'records.'The'pathways'set'out'the' routine'activities'that'must'be'completed' pre'and'postGoperatively'and'contribute' to a successful'clinical'outcome.'

We'monitor'compliance'with'our'pathways' by'auditing'approximately'1,000'records' NzNp}bectWAcLpNmeptXcVeupTcLXcVq every'quarter.'Hospital'compliance'with'key' nursing'processes'–'such'as'use'of'the'Early' Warning'Score,'venous'thromboembolism' risk'(VTE)'assessment'and'the'assessment' of postGoperative'pain'–'remains' exceptionally'high.'

We'are'not'complacent'and'will'continue'to' focus'on'compliance'with'our'care'pathways' and'processes.

Our'hospitals'undertake'a'considerable' volume'of'elective'surgery,'including'many' complex'cases.'It'is,'therefore,'particularly' qXVcXTJActtWAtmeqt¹emNpAtXzNbeptA`Xt} within'31'days'of'surgery'fell'by'over'10%' yearGonGyear.

Over'the'past'four'years,'our'hospitals' have been'working'to'improve'processes' for patient'discharge'and'the'planning' necessary'to'ensure'this'is'undertaken' Xc A JA`bAcLNSTJXNctbAccNp¶-AtXNct satisfaction'with'discharge'processes' increased'for'the'fourth'year'in'a'row,' making this'the'greatest'improving' satisfaction'measure'over'this period.

As'we'develop'and'broaden'our'cancer' treatment'facilities,'it'is'important'that' we support'them'with'modern'technology' and'working'practices,'including'ensuring'

that'treatment'decisions'are'considered' and agreed'by'a'multiGdisciplinary'team.'

In'2014,'we'launched'a'transformation' programme'to'facilitate'these'discussions' and'for'the'effectiveness'of'treatment' recommendation'to'be'recorded'consistently.' In'time,'we'expect'to'publish'our'performance' in'this'regard'in'order'to'enable'patients'to' make'more'informed'choices'regarding'their' cancer'treatment,'as'more'and'more'options' become'available.

SAFETY'CULTURE

ttWNNcLeS¸{NucLNptee_eupTpqt Safety'Culture'survey,'based'on'one'used' by the'Agency'for'Healthcare'Research'and' Quality'(AHRQ)'in'the'US.'This'is'helping'us' to understand'the'importance'of'systems' and'processes,'as'well'as'culture'and' leadership,'when'trying'to'make'care'safer' for'patients.'All'employees'and'bank'workers' in'our'hospitals,'pathology'network,'Lifescan,' mobile'imaging'and'Perform'at'St'George's' Park'were'invited'to'take'part.'In'summary,' Spire'achieved'a'rating'of'71%,'compared' with'the'external'benchmark'of'63%.'

While'we'were'pleased'to'achieve'a'score' above'the'benchmark,'we'see'this'as'only' tWN TpqtqtNmXcpNXcSepJXcVqASNt}AqINXcV central'to'our'patient'offering.'We'will' continue'to'monitor'our'culture'in'this' way on'an'annual'basis.

%upJXcXJAtNAbqApN^uqtXTAI`}mpeuL oftheir'care'and'professionalism.'Strong' clinical systems'and'processes'create'a' stable foundation'to'build'on,'supported'by' a healthy'culture'that'values'and'prioritises' safety'and'clinical'quality.'We'will'continue' to'learn'from'the'unexpected'events' that will'always'occur.'In'terms'of'clinical' performance,'it'is'my'view'that'Spire'is'well' positioned'to'continue'to'deliver'excellent' care'to'increasing'numbers'of'patients,' with evermore'complex'needs.'

"I'love'working'here'and'there's'nothing' like'the'sound'of'a'happy'team'laughing' down'the'corridor'to'spur'you'on."' Elaine'Kennedy Clinical'nurse,'Edinburgh

It'is'Elaine's'responsibility'to'oversee'one' of'the'largest'theatre'departments'in'the' Group;'Elaine'and'her'team'successfully' discharge'over'1,300'patients'per'month' SpebtWNqX|tWNAtpNqAJpeqq"uppA}TNL and'Shawfair'Park.'Elaine'makes'sure'the' department'is'running'to'its'optimum' NSTJXNcJ}I}qJWNLuXcVqupVXJA`mAtXNctq¸ liaising'with'consultants,'addressing' qtASTcVXqquNqAcLAttNcLXcVtWNqNcXep management'meeting,'which'is'the' opportunity'to'discuss'the'nuts'and' bolts of'the'business.'

Operating'review

We'seek'to'deliver'clinical'excellence'as' efficiently'as'possible.'To'do'this,'we'listen'to' all'our''customers''(patients,'consultants,'GPs,' insurers,'commissioners),'to'our'staff'and'to' our'suppliers.

Our'new'operations'directors Rob'Anderson

Karen'Newton

Paul'O'Conor

Nicola'Amery

PERFORMANCE'IN'2014

Together'with'clinical'indicators,'we'monitor' our'performance'through'a'range'of'regular' surveys'of'our'patients,'consultants,'GPs' and'staff.

Patient'satisfaction'levels'continued'to' increase'in'2014,'overall'quality'of'service' rated''excellent''and''very'good''rose'1%' to 93%'and'the'proportion'of'patients' {We {euLÉLNTcXtN}ÊepINÉzNp}X\_N}Ê to recommend'Spire'to'their'friends' and family'also'rose'1%'to'88%.'

The'proportion'of'consultants'who' believe that'our'hospitals'go'out'of'their' way to'make'a'difference'to'their'working' relationship'remained'at'96%'and'those'who' would'be''very''or''fairly'likely''to'choose'a' Spire'hospital'for'their'own'treatment'was' constant'at'94%.'

Surveyed'in'April'2014,'the'proportion'of' GPs who'rated'their'satisfaction'with'Spire's' service'as''excellent''or''very'good''dipped' 1% to'90%,'while'the'ease'of'referring' patients'to'Spire'remained'at'99%.

Our'2014'Staff'Engagement'Survey'attracted' a'74%'response'rate.'The'response'rate'was' impacted'slightly'by'the'introduction'of'our' new'Staff'Culture'survey,'which'ran'at'the' same'time.'

Further'details'of'Staff'Engagement'Survey' can'be'found'in'Our'People,'the'section' thatfollows'this'review,'on'page'42.'

REGULATORY'COMPLIANCE

During'2014,'there'were'Care'Quality' Commission'(CQC)'standard'inspections' at 18'of'our'locations'in'England'and'all' standards'have'since'been'met.'

Spire'Southampton'Hospital'was'chosen'to' be'part'of'the'pilot'programme'for'the'new' style'of'CQC'inspection'in'October'2014.'The' hospital'received'a'detailed'report,'which' was'published'on'the'CQC'website,'but,'as' Xt {AqmApteStWNmX`et¸Xt{AqceteSTJXA``} rated'as'per'the'CQC'recommendations'–' reinspection'is'due'to'take'place'in'2015.'

Healthcare'Inspectorate'Wales'inspected' ourtwo'Welsh'hospitals'–'Cardiff'and'Yale' – in'2014.'Both'were'approved'with'only' minor'actions'listed.

Healthcare'Improvement'Scotland'inspected' eup"uppA}TNLAcL1WA{SAXp-Ap\_WeqmXtAq –'grades'achieved'were'six'outcomes'in' the 'very'good''category'and'four'in'the' 'good''category.'

OPERATIONAL'EXPANSION

In'a'year'that'saw'the'acquisition'of' St Anthony's'Hospital,'the'opening'of' Bristol's'Specialist'Care'Centre,'new'theatres' in'Worcester'and'Harpenden,'and'the' opening'of'the'cardiac'catheterisation'lab' in Cardiff,'operational'challenges'centred' ec pNJpuXtbNct¸qtASTcVAcLqumm`}JWAXc integration.'It'is'pleasing'to'report'that' allthese'facilities'are'operating'ahead' of expectations'and'that'the'integration' of Spire'St'Anthony's'Hospital'is' progressingwell.

More'details'on'Spire'St'Anthony's'Hospital' can'be'found'on'pages'10'and'11,'on'the' Specialist'Care'Centre'on'pages'22'and'23' and'on'the'expansion'of'Spire'Harpenden' Hospital'on'pages'36'and'37.'

IMPROVING'OPERATIONAL'EFFICIENCY

Balancing'the'advantages'of'our'national' scale'and'reach'with'the'requirements' of individual,'local'hospital'accountability,' we seek'to'maximise'margins'through' emNpAtXecA`NSTJXNcJ}¶

Theatre'utilisation'is'a'key'performance' indicator.'While'theatre'use'is'demandG driven,'sharing'operational'best'practice' can'optimise'capacity.'Average'utilisation' increased'to'64%'from'61%'across'all'our' hospitals'in'2014'(based'on'maximum' 2,850 hours'per'year,'i.e.'10'hours'per' weekday'and'seven'hours'per'Saturday,' 250 weekdays'and'50'Saturdays'per'year).

Scope'for'further'improvement'remains' – some'14'of'our'hospitals'are'currently' running'below'60%'utilisation.'

Throughout'2014,'we'continued'to'focus'on' eupqumm`}JWAXcAcLbA|XbXqXcVNSTJXNcJXNq that'support'improving'patient'care.'

Our'inGhouse'procurement'and'supply'chain' model'is'based'at'our'in'NDC'in'Droitwich.' In 2014,'we'delivered'over'1.2'million'product' lines'to'our'hospitals'with'a'value'of'around' £50'million.'The'central'procurement'team' continues'to'generate'cost'savings.

One'aspect'of'our'supply'chain'and' procurement'improvement'is'the' development'and'supply'from'the'NDC' eS WeqmXtA¹qmNJXTJbNLXJAJecqubAIN procedure'packs'that'contain'all'the' bNLXJA JecqubAI`NqpNouXpNLSepqmNJXTJ mpeJNLupNq¶cALLXtXecteqmNJXTJAtXec beLXTJAtXecqAcLcNVetXAtNLJebmecNct cost'savings,'bespoke'clinical'procedure' kits meet'the'exact'requirement'of'each' Spire'hospital,'enabling'faster'response'and' procedure'setGup'times,'improving'infection' control'and'reducing'waste'and'packaging.

During'2015,'we'plan'to'link'the'supply'of' clinical'procedure'kits'to'our'SAP'enterprise' resource'planning'system.'This'will'be'part' of ongoing'developments'within'our'IT' offering,'as'we'further'embed'SAP'across' the supply'chain.'

We'began'rolling'out'our'SAP'system'in' 2012 and'had'fully'implemented'it'across'all' platforms'by'April'2013.'In'2014,'we'achieved' full'NHS'compliance'and'accreditation'for' integration'and'use'on'Choose'and'Book.

3WNINcNTteSAcXctNVpAtNLmAtXNct¸ TcAcJXAAcL{ApNWeuqXcV¢qumm}JWAXc and stock'control)'system,'which'our' qtASS AcLJecqu`tActqTcLNAq}teuqN¸ is being'seen'in'improved'management' information,'cost'savings'and'streamlined' administration'processes.

During'2015,'SAP'enhancements'will' be largely'targeted'at'improving'patient' experience'by'the'implementation'of'CRM' and the'expansion'of'the'current'direct' booking'capability'for'insurers'and'selfGpay' patients.'There'is'also'a'major''Purchase'2' Pay''initiative,'which,'it'is'hoped,'will'produce' major'cost'savings'by'improving'the' management'of'stock'across'the'business' and'a'further'initiative'to'provide'automated' NHS'discharge'information'for'GPs.'

We'continuously'seek'to'improve'our' engineering'governance'and'compliance' processes'across'our'facilities.'Estates'and' engineering'audits,'including'feedback' reports'covering'hard'facilities'management' services,'were'completed'at'all'hospitals' during'2014,'helping'to'ensure'that'all' hospitals'are'operating'in'line'with'Spire' policy'and'discharging'their'statutory' responsibilities.

We'monitor'and'prioritise'investment'in' the upgrade'of'our'infrastructure'through' remedial'works'highlighted'in'these' compliance'audits,'recorded'on'our'Property' Risk'Management'system'(PRisM).'PrisM' analysis'of'hospital'equipment'maintenance' and'replacement'schedules'aids'patient' safety'and'provides'costGsaving' opportunities'for'capital'maintenance' and planned'replacement.

All'of'these'operational'enhancements' qummeptAJ`eqNpSeJuqecJAqWUe{ throughout'the'business.'This'was' emphasised'in'2014'and'is'an'area' of continued'focus'in'2015.'

2015'PRIORITIES

We'are'working'to'develop'our'recruitment' and'retention'strategies.'Further'details' of our'Human'Resources'approach'can' be found'in'the'section'on'Our'People' thatfollows'this'review,'on'page'42.'

The'development'and'opening'of'our'new' hospitals'in'Manchester'and'Nottingham,' during'2016–2017,'will'require,'not'only'the' recruitment'of'additional'staff,'but'also'the' support'of'our'Procurement'and'Stock' Management'teams'throughout'next'year.

The'same'will'be'true'for'our'planned'new' Specialist'Care'Centre'in'Chelmsford'and' other'sites'that'will'follow,'as'we'roll'out' our radiotherapy'services'across'the'country.'

Rob'Roger WXNS|NJutXzN%STJNp

"Through'the'Spire'supply'chain,'we' {ep_ AqNSTJXNct}AqmeqqXINteLpXzN cost'savings'throughout'the'business."' Mathew'Mason Head'of'Supply'Chain' & Purchasing (central)'

Mat'oversees'all'aspects'of'Spire's' purchasing'operations'–'a'world'of' ouA`Xt}¸ NSTJXNcJ}AcLJeqtqAzXcVqÓSep everything,'from'surgical'gloves'to'highly' complex'MRIs,'CT'scanners'and'LinAcs.

It's'Mat's'job'to'design'and'develop' corporate'supply'chain'and'purchasing' strategies'and,'then,'implement'them' across'all'areas'of'the'business'–'and' throughout'the'supply'chain,'right' down to'our'central'warehouse' and distribution'operations.'

Mat'and'his'team'of'specialist'buyers' work'closely'with'key'clinicians'and' WeqmXtA`uqNpqteXcJpNAqNNSTJXNcJ} and'provide'better'value'for'patients.' They'are'constantly'looking'to'balance' improvements'in'our'inGhouse'supply' chain,'reducing'stock'holding'and'freeing' working'capital,'with'optimum'availability.

DISTRIBUTION'OF'THEATRE'UTILISATION' BY'HOSPITAL1,2

2,850 hours'per'year'(10'hours'per'weekday'and' seven hours'per'Saturday,'totalling'250'weekdays' and 50'Saturdays'per'year).

2' 'Includes'one'joint'theatre'utilisation'rate' for Murrayfield'and'Shawfair'hospitals.

Our\$people\$

Our\$people\$are\$our\$difference.\$It's\$the\$ dedication,\$warmth\$and\$skills\$of\$our\$ people that\$sets\$Spire\$Healthcare\$apart.\$

We\$believe\$that\$the\$best\$service\$and\$ patient care\$comes\$from\$skilled\$staff\$who\$ are fully engaged\$and\$feel\$truly\$valued\$by\$the\$ company\$they\$work\$for\$–\$staff\$who\$feel\$they\$ make\$a\$personal\$contribution\$to\$the\$success\$ of\$their\$hospital\$and\$can\$genuinely\$say\$that\$ Spire\$is\$a\$great\$place\$to\$work.\$

At\$31\$December\$2014,\$we\$employed\$over\$ 8,000\$people\$(over\$12,000,\$including\$bank\$ staff)\$–\$equivalent\$to\$just\$over\$7,000\$ fullNtime jobs\$–\$split\$between\$nursing,\$ theatre\$staff,\$allied\$health\$professionals,\$ and administration\$and\$clinical\$support\$ staff (see\$opposite).\$

Our\$employees\$are\$predominantly\$female (10,113\$compared\$to\$2,256\$male).\$For\$senior\$ management\$we\$employ\$27\$female\$ managers\$out\$of\$a\$total\$of\$65.\$

CONTINUOUS(IMPROVEMENT

We\$fully\$recognise\$that\$advancing\$ quality is dependent\$on\$Spire\$acting\$ as a learning\$organisation.

We\$place\$the\$individual\$patient\$at\$the\$centre\$ of\$our\$business.\$This\$means\$that\$increasingly\$ wellNinformed\$patients\$are\$key\$partners\$ in decision\$making,\$able,\$with\$the\$support\$ oftheir\$families,\$carers\$and\$consultants,\$ to manage\$their\$own\$health\$and\$illness.

An\$effective\$and\$consistent\$patient\$ experience\$feedback\$loop,\$encouraging\$ not\$only\$compliments,\$but\$also\$constructive\$ feedback\$and\$complaints,\$is\$therefore\$a\$ key\$component\$of\$our\$continuous\$ improvement\$culture.

The\$other\$key\$component\$comes\$from\$our\$ staff.\$We\$are\$committed\$to\$developing\$all\$ our staff,\$listening\$to,\$and\$learning\$from,\$their\$ experiences,\$to\$help\$improve\$nursing\$care.\$

All\$clinical\$activities\$are\$aligned\$to\$our\$ strategic\$pillars\$and\$will\$be\$embedded\$within\$ our\$job\$descriptions.\$The\$aim\$is\$to\$ensure\$ clinical\$quality\$standards\$are\$understood\$ and consistent\$throughout\$the\$business.\$

ENGAGEMENT(AND(VALUES(

We\$take\$employee\$engagement\$seriously;\$ every\$year,\$we\$invite\$all\$our\$employees\$to\$ complete\$a\$survey\$to\$provide\$feedback\$ on how\$we're\$doing\$and\$offer\$suggestions\$ about\$what\$action\$could\$be\$taken\$to\$ make Spire\$an\$even\$better\$place\$to\$work.\$ The\$survey\$comprises\$40\$questions,\$which\$ are\$designed\$to\$establish\$how\$effectively\$ we\$do\$this.\$

"What\$good\$leadership\$looks\$like."\$ Anna(Tchaikovsky Hospital(Director,(Spire(Leeds(Hospital(

Over\$its\$25\$years\$(and\$one\$million\$ patients),\$Spire\$Leeds\$has\$developed\$an\$ international\$reputation\$for\$highNquality\$ healthcare\$across\$a\$broad\$range\$of\$ medicine\$and\$surgery,\$acting\$as\$the\$ pioneers\$for\$clinical\$advancement\$ in the north\$of\$England.\$

A\$large\$part\$of\$that\$is\$owed\$to\$solid\$ leadership\$and,\$for\$the\$past\$10\$years,\$ Anna\$has\$been\$at\$the\$helm\$of\$the\$ship,\$ introducing\$a\$large\$amount\$of\$clinical\$ expansion\$and\$positive\$change.\$

We#are#very#much#looking#to#the#future,#as# we#continue#to#develop#new#services#for#our# patients,#maintain#our#excellent#in:patient# care#and#remain#at#the#forefront#of#medical# developments#in#the#region.

Anna(Tchaikovsky Hospital(Director,(Spire(Leeds(Hospital

Our values:

Caring is our passion Succeeding together Driving excellence Doing the right thing Delivering on our promises Keeping it simple

EMPLOYEES INCLUDING BANK STAFF* (31 DECEMBER 2014)

Nursing 2,529 O

• O Theatre Staff 1,352
• Allied Health Professionals 1,852 O
• Clinical Support & Admin 6,636

DIVERSITY OVERALL EMPLOYEES

SENIOR MANAGERS

The Group employs 'bank' staff (staff who do not work regularly scheduled hours, but are directly employed by the Group).

In 2014, we received 6,171 responses, with 76% of those taking part agreeing that they would be likely to recommend Spire Healthcare to friends and family as a place to work (up from 72% in 2013).

Other highlights from the 2014 results included:

• · 92% of respondents believe what they do at work makes a positive difference (91% in 2013)
• 89% of respondents feel that they really fit in with the rest of their team (88% in 2013)
• · 88% of respondents agree that they were proud to work for Spire Healthcare (86% in 2013)
• · 88% of respondents agree that their manager trusts them to make the right decisions at work (86% in 2013)
• · 88% of respondents agree that they can rely on colleagues in their team to be there for them if they need help or support (86% in 2013)

The annual employee survey results are published in December and each hospital or business unit director is responsible for sharing the results with their management and staff, and agreeing actions to address any areas for improvement.

The annual staff survey also allows us to gauge whether our employees experience our values in the way we work. This is of significant importance, as seeing an organisation's values reflected in day-to-day behaviours is one of the four key drivers of employee engagement, as identified in the MacLeod report, Engaging for Success, published in 2009.

Our values are also central to Enabling Excellence, our performance management and appraisal system, and are part of every employee's annual appraisal.

IMPROVING CAPABILITIES

Investment in our staff is investment for the future, ensuring that patients and their families can rely upon the right staff working in the right place with the right skills to provide high-quality care.

In 2014, we supported around 100 people through our Management Fundamentals programme and 11 future leaders through our Leadership Essentials programme.

Management Fundamentals is focused on developing the people skills of new managers. It is designed to build managerial capability, skills, behaviours and attitudes in areas such as employee engagement, performance management, culture, coaching and managing absence.

Leadership Essentials is a seven month, four module programme designed to develop our leaders, building their capability and confidence to engage with, and lead, a successful team to deliver strong business results. Topic areas, such as managing change, creative leadership and managing self, are grounded in specific projects, aimed at business growth and showing a return on investment.

In line with Spire's devolved hospital management model, each hospital assesses individual staff training needs, taking into consideration both specialty and regulatory requirements and business gap analysis, and agrees a personal development plan as part of annual appraisals. Our nurses undertake annual training in order to maintain their registration.

Corporate social responsibility

Spire's ethos reflects our care for the environment and our local communities.

Spire is a significant local employer. In 2014, Spire continued its fundraising activities for charities and local communities. Typical of the fundraising events undertaken was a major 620 kilometre cycling challenge undertaken over a series of weekends in the summer to raise money for Walking with the Wounded and Macmillan Cancer Care. Led by our CEO, Rob Roger, the route went from Spire Wellesley Hospital in Southend up to Spire Murrayfield Hospital in Edinburgh across six separate legs, which aimed to include as many Spire hospitals as possible.

Other examples of corporate and local community support during the year include:

• Spire Hull and East Riding Hospital held their own Grand Depart festivities which raised £6,000 for Marie Curie Cancer Care
• · Through various fundraising events, Spire Harpenden Hospital raised £6,500 for local and international charities

LOOKING AFTER OUR ENVIRONMENT

We want to take care of the environment as well as our patients and we continue to promote a low-carbon culture across our hospitals. Continued monitoring and targeting of our buildings' energy consumption takes place through our Energy Remote Monitoring system, which we run with our partners Schneider Electric.

Artificial lighting accounts for a significant portion of electrical energy consumed through the operation of our buildings and has been selected as a key area of investment to reduce energy consumption.

We have installed LED street and car park lighting at 21 of our hospitals, improving lighting and reducing energy consumption. Replacing just over 500 fittings has yielded in excess of 70% energy savings and Future Energy Solutions estimate 10-year savings

in excess of £0 5 million on the basis of energy savings, reduced maintenance costs and environmental tax savings.

Spire Leicester Hospital is now our trial site for a similar investment in the upgrade of internal lighting systems to LED technology. Comparative data from October, November and December 2014 indicates potential energy savings of up to 69% are achievable.

We intend to invest further in both these areas during 2015 to ensure we continue to reduce our electricity consumption and realise our energy reduction targets.

Capital investment in our engineering plant continues to improve energy efficiency. Modular condensing heating and hot water boilers were installed at Spire Portsmouth, Spire Clare Park and Spire Thames Valley hospitals in 2014, which are expected to deliver a reduction in gas consumption at those sites in future years.

Our theatre ventilation plant in our hospitals ensures rapid air exchange within our theatre suites to protect our patients from infection. By their nature, these systems are energyhungry. We replaced ageing systems in Norwich and Cheshire in 2014, installing high-efficiency control and heat recovery systems that help deliver this critical air in the most efficient way.

Reduced CO2 emissions is also being achieved through the Company car fleet list. The approved vehicle list is reassessed regularly to ensure the most efficient and cost-effective models are available. From a 2010 baseline average of 145 CO2 g/km, the fleet now averages 120 CO2 g/km, a 17% reduction.

The car choice list has been revised using a whole life costing model. The CO₂ g/km range on the list is now between 88 and 102, which will further reduce the overall average as vehicles are replaced.

Caledonian Challenge — par
in by consultants and staff participated

ENERGY SAVING OPPORTUNITY SCHEWE (ESOS)

Article 8 of the EU Energy Efficiency Directive requires all Member States to introduce a programme of regular energy audits for 'large enterprises'. The UK government believes that this programme offers a significant opportunity for the UK. It will help drive the take-up of cost-effective energy efficiency measures by participants, benefiting their competitiveness and contributing to the wider growth agenda.

ESOS is the government's proposed approach to implementing this requirement and is a mandatory energy assessment scheme for organisations in the UK that meet certain criteria.

Spire's audits took place in December 2014, conducted by an approved ESOS assessor, and the results will be notified to the Environment Agency in line with the ESOS regulations. The audits were carried out in four hospitals, one clinic, the NDC and the Reading Finance Office; the expectation is that the ESOS assessments will help Spire to identify cost-effective measures to save energy and money.

WASTE

The NDC provides the Group with a collection service removing cardboard and paper for recycling, which avoids this waste entering into the general waste stream. The success of this scheme has resulted in an increase of cardboard and paper recycling by 10%, or 60 tonnes (1 Jan 2014 to 31 Dec 2014).

Central Purchasing continues to work with our strategic waste management partners to help direct general waste that is generated by the Group away from landfill and into Energy from Waste (EfW) facilities. Over 80% of our general waste (1,700 tonnes) is now being recycled utilising material recycling facilities and around 10% of the residue waste is now being sent to EfW. All the clinical waste generated by clinical facilities is now either incinerated or pre-treated and the residual sent to EfW.

GREENHOUSE GAS EMISSIONS (GHG)

This section provides the emission data and supporting information required by The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, Part 7: Disclosures Concerning Greenhouse Gas Emissions.

FOOTPRINT BOUNDARY

An operational control approach has been used to define the GHG emissions boundary, as defined in Defra's latest Environmental Reporting guidelines: "Your organisation has operational control over an operation if it or one of its subsidiaries has the full authority to introduce and implement its operating policies at the operation".

For Spire Healthcare, this captures emissions associated with the operation of all our hospitals and other buildings such as clinics, offices and the NDC, plus company-owned and leased transport. As Spire has no overseas operations, all emissions refer to UK operations only.

EMISSIONS SOURCES

All material scope one and two emissions are included. These are:

• · fuel combustion: stationary (natural gas, diesel oil) and mobile (vehicle fuel);
• purchased electricity; and
• fugitive emissions (refrigeration F-gases, medical gases).

There are no known process emissions and no purchased heat or steam.

METHODOLOGY AND EMISSIONS FACTORS

Our figures have been calculated using the methodology set out in Environmental Reporting Guidelines (ref. PB 13944), published by Defra in June 2013. Emissions factors are taken from DECC/Defra's June 2014 update

GHG EMISSIONS DATA

The GHG emissions for Spire Healthcare for the reporting period January-December 2014 were 45,054tCO2e.

As this is the first reporting year, no historical comparison is available.

EMISSIONS INTENSITY

For the purposes of establishing a baseline and ongoing comparison, we are required to express the GHG emissions data using a 'carbon intensity' metric.

The intensity metric we have chosen is revenue. Spire Healthcare's revenue in 2014 was £856 million, giving an intensity of 52.6tCO2e per £m revenue.

2014 TOTAL EMISSIONS (%)

(tCO₂e)

• Fuel Combustion: Stationary 10,360
• O Fuel Combustion: Mobile 1,124
• O Facility Operation 6,543
• Purchased Electricity 27,027

Alina Carunto Specialist breast care nurse - Spire Bushey Hospital

Alina has set up local patient support
group Pink Petal Club for women living with breast cancer in North London.

Alina started the group to help women meet others in the same situation
and to provide extra support by having specialists such as breast surgeons lymphedema nurses, dentists ly inpricacina hal 525) achtists,
nutritionists and hairdressers answer
questions on treatment, lifestyle,
side effects and surgery.

One patient said of the club: "One of the most amazing afternoons since my diagnosis my diagnosis was give
the opportunity to talk to other women who have had similar experiences to me"

Rob and the cycling challenge team at the start line.

Open#to#everyone

WHERE(ARE(WE?( Spire\$Hull\$and\$East\$Riding\$Hospital

PARTNERING) WITH)THE)NHS

The#long:term#collaboration#between#NHS#Hull#Clinical# Commissioning#Group#and#Spire#Hull#and#East#Riding# Hospital#works#so#successfully#because#it#is#based#around# a#set#of#common#objectives#and#shared#values#that#put# patients#at#the#centre#of#their#care.

Strategic\$Report

Governance Financial\$Statements Shareholder\$Information

Spire\$hospitals\$work\$with\$local\$ NHS hospital\$trusts\$and\$Clinical\$ Commissioning\$Groups\$(CCGs)\$to\$provide\$ qmNJXTJ qNpzXJNq AcL ALLXtXecA` JAmAJXt} for\$NHS\$patients.\$We\$are\$part\$of\$the\$local\$ healthcare\$economy\$across\$the\$country.\$

Our\$hospital\$directors\$develop\$close\$ working\$relationships\$with\$NHS\$ commissioners\$in\$order\$to\$respond\$to\$ NHS\$capacity\$constraints,\$local\$priorities\$ and\$patient\$needs.\$

The\$chronic\$pain\$infusion\$service\$featured\$ on\$these\$pages,\$built\$up\$at\$Spire\$Hull\$and\$ East\$Riding\$Hospital\$in\$response\$to\$a\$local\$ CCG\$request,\$is\$just\$one\$example.\$

As\$Julia\$Mizon\$of\$NHS\$Hull\$CCG\$says,\$"the\$ Infusion\$Therapy\$Service\$is\$a\$key\$example\$ of\$our\$collaborative\$approach.\$A\$clear\$pain\$ pathway\$is\$in\$place\$across\$the\$local\$health\$ community\$led\$by\$the\$pain\$management\$ tNAb At 1mXpN¸ {WXJW WAq qXVcXTJAct`} improved\$the\$standard\$of\$care\$for\$this\$ group\$of\$patients".

Our\$services\$are\$complementary\$to\$the\$ NHS,\$but\$we\$share\$a\$common\$objective:\$ we\$are\$all\$driven\$by\$patient\$needs.

74% NHS\$treatments\$at\$the\$Pain\$Management\$

Unit\$rise\$from\$2012\$to\$2014\$

Investment\$in\$additional\$equipment\$and\$ the\$development\$of\$a\$specialist\$team\$of\$ pain\$consultant\$anaesthetists\$and\$nurses\$ at\$Spire\$Hull\$and\$East\$Riding\$Hospital\$ has seen\$NHS\$treatments\$at\$the\$Pain\$ Management\$Unit\$rise\$74%\$between\$ 2012\$and\$2014.

Risk%management%and%internal%control

The%following%section%describes%the%risk%management% and internal%control%processes%employed%by%the% Group,%for%the%year,%to%help%ensure%the%delivery% of%its%corporate%objectives.

Approach%to%managing risk

Overall%responsibility%for%the% Group's%risk management% and%internal%control systems% (together%'the%risk%management% framework')%lies%with%the Board% of%Directors.

The%Board%has%delegated%key% elements%of%the%oversight%of% the%Group's%risk%management% framework%to%two%committees,% as%detailed%below:

The%Audit%and%Risk%Committee,%with%the%assistance%of%the%Clinical% Governance%and%Safety%Committee%(CGSC),%provides%the%Board%with% advice%on%the%Group's%overall%risk%appetite%and%strategy,%and%a%view%on% current%risk%exposures,%the%future%risk%strategy%and%the%effectiveness% of%the%Group's%risk%management%and%internal%control%processes.%The% 1
pNmeptqectWNqmNJXTJpXq_qtWAtXtbecXtepq¢qNNtAININe{£ to%the%Audit%and%Risk%Committee%and%additional%detail%on%the%work% ofthe%CGSC%(in%conjunction%with%the%Audit%and%Risk%Committee)%can% be found%on%pages%70%and%71.

The%risk%management%framework%is%designed%to%identify,%evaluate% and%mitigate%the%risks%that%the%Group%faces.%The%underlying%process% aims%to%understand%and%mitigate,%rather%than%eliminate,%the%risk%of% failure%to%achieve%business%objectives%and,%therefore,%can%only%provide% reasonable%and%not%absolute%assurance%against%loss.

Appetite%for%risk%is%considered%at%Board%meetings%whenever% qXVcXTJActqtpAtNVXJ¸TcAcJXAepemNpAtXecALNJXqXecqApN made, and is%a%key%part%of%ongoing%discussions%about%strategy.%

The%Board%recognises%that%it%has%limited%control%over%many%of%the% external%risks%it%faces,%such%as%macroTeconomic%events%and%the% complex%regulatory%environment,%and%it%periodically%reviews%the% potential%impact%of%such%ongoing%risks%on%the%business%and%actively% considers%them%in%its%decision%making%(see%the%list%of%principal%risks% on pages%52%to%55,%including%how%we%manage%the%risks).%

Board%Committee	Members	Committee%role	Membership
Audit%and%Risk%	Chair:%Robert%Lerwill.% Members:%Dame% Janet%Husband,% Tony%Bourne	3ebecXteptWNXctNVpXt}eSTcAcJXA`pNmeptXcVAcLteAqqXqt the%Board%in%its%review%of%the%effectiveness%of%the%Group's% internal%control%and%risk%management%systems	Independent%nonTexecutive% directors
Clinical%Governance% and%Safety	Chair:%Dame% Janet Husband.% Members:%Tony%	To%promote,%on%behalf%of%the%Board,%a%culture%of%highT quality%and%safe%patient%care,%and%to%monitor%the%Group's% cec¹TcAcJXApXq_qAcLtWNXpAqqeJXAtNLmpeJNqqNq¸meXJXNq	Chair:%independent% nonTexecutive%director
	Bourne,%Garry%Watts%	and%controls%in%the%following%areas:	Members:%executive%and% nonTexecutive%directors
	and Rob Roger	(a)%Clinical%and%regulatory%risks
		(b)%Health%and%safety
		(c)%Facilities%and%plant

Risk%management%and%internal%control continued

RISK%MANAGEMENT%AND%INTERNAL%CONTROLS

The%adequacy%of%the%Group's%risk%management%and%internal%control% processes%was%subject%to%detailed%scrutiny%by%independent%assessors% as%part%of%the%IPO,%and%was%deemed%as%being%appropriate,%given% the nature%and%scale%of%the%Group%at%that%time.%However,%the%Board% recognises%that,%as%a%listed%company,%the%Group%needs%to%conform% to the%UK%Corporate%Governance%Code%(UK%Code)%and%to%increasing% regulatory%expectations.%In%consequence,%following%the%IPO,%the% Board has%initiated%reviews%of%existing%risk%management%oversight% arrangements%and%processes%to%identify%where%improvements% can be made%to%bring%the%Group%into%line%with%best%practice.%

Since%July,%the%overall%corporate%governance%structure%has%been% beLXTNLAcLqtpNcVtWNcNLtebNNttWNbepNqtpXcVNctpNVu`Atep} requirements%and%UK%Code%obligations.%This%is%still%being%formulated% in%certain%areas%and%is%being%closely%monitored%to%ensure%adherence% to best%practice.

The%overall%risk%management%framework%is%being%reviewed%by%the% Board%and%its%Committees%during%2015.%

CLINICAL%GOVERNANCE%AND%SAFETY%COMMITTEE

Up%until%July%2014,%clinical%delivery%and%patient%safety%risk%was% subjectto%detailed%internal%scrutiny%and%monitoring%by%the%executive% management%team%and%by%a%Board%subTcommittee%(the%Clinical% Governance%and%Risk%Committee),%whose%membership%comprised% the executive%chairman,%a%nonTexecutive%director%and%the%director% of Clinical%Services.%

Subsequent%to%the%IPO,%this%Committee%has%been%restructured%and% renamed%the%CGSC;%it%is%chaired%by%an%independent%nonTexecutive% director,%Dame%Janet%Husband%(who%possesses%relevant%clinical% expertise),%and%its%membership%comprises%a%mix%of%nonTexecutive% and executive%directors%(see%details%on%pages%70%and%71).%

CORPORATE%RISKS

`qXVcXTJActpXq\_qSAJXcVtWNpeumApNJAmtupNL{XtWXcA epmepAtN Risk%Register%and%are%assessed%in%terms%of%likelihood%and%potential% impact.%Each%such%risk%is%owned%by%a%member%of%the%executive% management%team%who%works%with%the%senior%management% responsible%for%the%monitoring%and%mitigation%of%that%risk.%Since%July% 2014,%the%Corporate%Risk%Register%has%been%subject%to%detailed%review% AcLWAqINNcumLAtNLtepNUNJttWNALLXtXecApXq_qAqqeJXAtNL{XtW being%a%listed%Group%and%developing%issues%in%the%wider%regulatory% environment,%to%ensure%it%remains%complete%and%relevant%to%support% decision%making.%The%principal%risks%facing%the%Group,%drawn%from% the risks%listed%in%the%Corporate%Risk%Register,%are%detailed%on% pages 52 to%55.

INTERNAL%CONTROL

The%principal%internal%controls%and%assurance%activity%over%the%risks% that%are%directly%manageable%by%the%Group%are:

STANDARD%POLICIES%AND%PROCEDURES

The%Group%has%documented%policies%and%standard%procedures%in%place% JezNpXcVA``qXVcXTJActAJtXzXtXNqAcLApNAqeSpXq_¸{WXJWApNquI^NJt to regular%review%and%update.%

ASSURANCE%OVER%CLINICAL%DELIVERY%AND%CLINICAL%REGULATORY% COMPLIANCE RISKS

qAmpezXLNpeSJXcXJAqNpzXJNqtemAtXNctq¸tWNpeumSAJNqAqmNJXTJ qNteScec¹TcAcJXApXq\_qAqqeJXAtNL{XtWquJWmpezXqXec¶cpNAtXec to these%risks:

• the%corporate%Clinical%Services%Team,%which%is%independent%of% the hospital%operations%and%is%led%by%the%Group%Medical%Director,% oversees%a%national%programme%of%clinical%audits,%in%addition% to conducting%onTsite%clinical%reviews%of%every%hospital%and% nonThospital%unit,%according%to%the%approach%taken%at%regulatory% inspections,%as%part%of%the%overall%framework%for%clinical%governance% and%quality,%to%ensure%that%clinical%risk%and%clinical%regulatory% compliance%is%managed%effectively%across%all%registered%sites.% The results%of%these%activities%are%regularly%reviewed%by%the% corporate%Clinical%Services%Team,%business%unit%directors%and% matrons,%the%executive%management%team%and%the%CGSC;%

• JebmpNWNcqXzN¸cec¹TcAcJXAbAcAVNbNctXcSepbAtXececJXcXJA` performance,%including%safety,%clinical%effectiveness%and%customer% experience,%is%produced%and%reviewed%quarterly%against%preTagreed% standards%by%the%corporate%Clinical%Services%Team,%business%unit% directors%and%matrons,%the%executive%management%team%and%the% 1
  ¶1mNJXTJ-bNAqupNqLpA{cSpebtWXqbAcAVNbNct information%are%given%on%pages%24%and%27;
• the%Group%is%subject%to%substantial%levels%of%external%inspection%and% review,%both%by%the%range%of%clinical%regulators%and%through%choice,% such%as%the%rolling%programme%of%Health%&%Safety%inspections% carried%out%by%thirdTparty%specialists.%The%outcomes%of%all%such% inspection%activity%are%reviewed%by%management,%the%executive% management%team%and%the%CGSC;%and
• tWNqtpuJtupNqAcLmpeJNqqNqSepXctNpcAJecTpbAtXeceSJXcXJA` regulatory%compliance%and%the%level%of%evidence%and%assurance% required%to%monitor%this%on%an%ongoing%basis%have%been%further% strengthened%and%formalised%from%early%2015.

FINANCIAL%AND%OPERATIONAL%CONTROLS

Financial%control%is%established%through:

• the%annual%process%of%preparing%business%plans%and%budgets,% followed%up%by%close%monitoring%of%operational%performance% by the executive%management%team%and%the%Board;%
• monthly%monitoring%of%actual%results,%compared%to%budgets,% forecasts%and%the%previous%year;
• all%material%capital%expenditure%is%subject%to%an%investment% evaluation%and%authorisation%procedure;
• common%accounting%policies%and%procedures;%and
• the%Group's%treasury%position%and%forecast%liquidity%are%kept%under% review%to%ensure%that%borrowings%are%aligned%with%the%Group's% growth%and%are%in%compliance%with%banking%covenants.

%tWNpcec¹TcAcJXAemNpAtXecApXq_XqbAcAVNLI}bNAcqeS tWN AmmXJAtXeceSINqtmpAJtXJN¸AqLNTcNLI}peummeXJXNqAcL standard%procedures,%in%areas%such%as%project%management,%Human% Resources%management%and%IT%security%and%delivery,%supported%by% detailed%performance%monitoring%of%outputs%and%issues.

INTERNAL%AUDIT/INTERNAL%CONTROL%ASSURANCE

The%Group%has%not%historically%considered%it%necessary%to%establish% an Internal%Audit%function,%in%part%because,%through%the%way%that% hospitals%and%administration%activities%are%structured,%the%initiation% oftransactions%are%entirely%separated%from%the%delivery%of%the% AqqeJXAtNLqNpzXJNqAcLtWNXpTcAcJXApNJepLXcV¸AcLtWNe{NzN of delegated%authority%at%hospital%level,%which%limits%risk.%Reliance%is% placed%on%the%management%review%process,%transactionTlevel%controls% built%into%business%processes%and%other%forms%of%assurance%activity% and%audits%being%performed%across%the%Group,%including%Clinical% and Health%and%Safety%audits,%and%regulatory%inspections.%

The%need%for%an%Internal%Audit%function%will%be%reviewed%by%the%Audit% and%Risk%Committee%during%2015,%alongside%the%implementation%of% any revisions%to%the%risk%management%framework,%taking%into%account% assurance%activity%undertaken%on%clinical%delivery,%clinical%regulatory% compliance%and%on%the%risk%management%framework.

CONTINUOUS%LEARNING

Accepting%that%an%internal%control%system%cannot%guarantee%to%reduce% error%or%loss%to%zero,%the%Group%takes%all%instances%of%complaints,% control%failures,%regulatory%nonTcompliance%or%other%risk%events%very% seriously,%and%has%detailed%processes%in%place%to%take%action%in%respect% eSNAJWqmNJXTJXqquNXLNctXTNL¸teucLNpqtAcLtWNJAuqNAcLte`NApc from%the%event%wherever%possible,%so%that%the%chance%of%reToccurrence% is%minimised.%An%open%culture%is%promoted%within%the%Group%that% positively%encourages%the%reporting%of%all%risk%events%and%other%issues% arising.%The%number%and%nature%of%events%arising%and%the operation% of event%management%processes%are%closely%monitored%by%hospital% management,%the%executive%management%team,%the%CGSC%and% the Audit%and%Risk%Committee.

The%Group%operates%an%independent%whistleblowing%service% to facilitate%reporting%of%any%issues%or%concerns%that%staff%may% have thatthey%are%unwilling%to%raise%via%any%other%channel.

Details%of%the%principal%risks%facing%the%Group,%and%the%controls% and mitigating%actions%applied%to%them,%are%set%out%overleaf.

Principal)risks

The)Group's)principal)financial)and)operational)risks,)how)they) have)changed)and)how)they)are)managed,)are)shown)below:

Risk	Description)and)impact)	Risk)change
Macroeconomic) conditions	Approximately)70%)of)the)Group's)revenue)is)dependent)on)private)patients)having)private) medical)insurance)(PMI),)paid)by)their)employer)or)paid)by)the)individual,)or)being)able)to) afford)its)services)(selfHpay).)	Down
	In)an)economic)downturn,)the)number)of)insured)individuals)falls)with)the)level)of) employment)and)individuals)have)reduced)real)income)to)fund)insurance)or)'selfHpay') for)procedures.
	This)would)have)an)adverse)effect)on)the)Group's)business,)the)results)of)its)operations) and)prospects.
Government)policy	Change)in)the)mediumHterm)public)funding)of)NHS)services)provision,)and/or)the) prioritisation)of)this)funding)to)particular)service)lines)over)time)(elective)healthcare,) ž¸ JebbucXt}JApN¸NtJ¶£¸JeuLALzNpqN}pNLuJNtWNUe{eS#1mAtXNctq¶	Up
	Changes)in)the)service)level)requirements)for)providers)of)NHS)services,)and)service)level) commitments)to)members)of)the)public)served)by)the)NHS,)could)adversely)impact)the) attractiveness)of)privately)funded)treatment.
	A)fundamental)change)in)the)tariff)structure)(pricing)arrangements),)associated)with)the) provision)of)services)to)the)NHS,)could)result)in)reduced)access)to)patients,)reduced)tariffs,) or reduced)prices)leading)to)reduced)volumes)and/or)margins.
Laws,)regulations) and)loss)of)	The)Group)operates)in)a)highly)regulated)environment,)including)complying)with)the) requirements)of,)for)example,)the)CQC,)Monitor)and)the)CMA.)	Down
reputation	Failure)to)comply)with)laws,)regulations)or)regulatory)standards)may)expose)the)Group)to) mAtXNctJAXbq¸TcNq¸mNcAtXNq¸LAbAVNtepNmutAtXec¸quqmNcqXecSpebtWNtpNAtbNcteS#1 patients)and)loss)of)private)patients,)such)that)the)Group)may)not)be)able)to)operate)one)or) bepNeSXtqWeqmXtA`q¸JAuqXcVAqXVcXTJActpNLuJtXecXcmpeTt¶
	In)addition,)the)Group)could)fail)to)anticipate)legal)or)regulatory)changes)leading)to)a) qXVcXTJActTcAcJXAeppNmutAtXecAXbmAJt¶
Clinical)care	Spire)operates)in)a)highly)complex)medical)sector)and)requires)high)clinical)standards)from) staff,)consultants)and)thirdHparty)suppliers.)If)they)fail)to)meet)the)standards)required,)the) Group)may)be)subject)to)litigation)and/or)media)coverage,)resulting)in)reputational)damage) AcL¸metNctXA}¸TcAcJXAeqq¶	Level
	The)Group's)future)growth)depends)upon)its)ability)to)maintain)its)reputation)for)highHquality) services)by)meeting)its)quality)goals.)Poor)clinical)outcomes,)negative)media)comment)or) patient,)GP)and/or)consultant)dissatisfaction)could)reduce)the)quality)ratings,)which)could) lead)to)a)loss)of)patient)referrals.)
	The)Group)could)receive)claims)arising)from)clinical)care)that)could)exceed)its)insurance)limits) of)cover,)giving)rise)to)additional)expenses)being)borne)by)the)Group.

Our1strategic1pillars

1.To)drive)strong1growth through)a)clear)focus)on) our)three1payor1groups

2.To)maximise1utilisation)) of)existing)sites)by) growing1volume

3.)To)develop1new1sites)and) services,)particularly)for)the) treatment)of)cancer

4.To)LpXzNNSTJXNcJ} and)improve1productivity1

Macroeconomic) conditions

Laws,)regulations) and)loss)of) reputation

afford)its)services)(selfHpay).)

for)procedures.

and)prospects.

Approximately)70%)of)the)Group's)revenue)is)dependent)on)private)patients)having)private) medical)insurance)(PMI),)paid)by)their)employer)or)paid)by)the)individual,)or)being)able)to)

In)an)economic)downturn,)the)number)of)insured)individuals)falls)with)the)level)of) employment)and)individuals)have)reduced)real)income)to)fund)insurance)or)'selfHpay')

Government)policy Change)in)the)mediumHterm)public)funding)of)NHS)services)provision,)and/or)the)

or reduced)prices)leading)to)reduced)volumes)and/or)margins.

requirements)of,)for)example,)the)CQC,)Monitor)and)the)CMA.)

bepNeSXtqWeqmXtA`q¸JAuqXcVAqXVcXTJActpNLuJtXecXcmpeTt¶

Clinical)care Spire)operates)in)a)highly)complex)medical)sector)and)requires)high)clinical)standards)from)

of)cover,)giving)rise)to)additional)expenses)being)borne)by)the)Group.

attractiveness)of)privately)funded)treatment.

qXVcXTJActTcAcJXAeppNmutAtXecAXbmAJt¶

AcL¸metNctXA}¸TcAcJXAeqq¶

lead)to)a)loss)of)patient)referrals.)

This)would)have)an)adverse)effect)on)the)Group's)business,)the)results)of)its)operations)

prioritisation)of)this)funding)to)particular)service)lines)over)time)(elective)healthcare,) ¸ JebbucXt}JApN¸NtJ¶£¸JeuLALzNpqN}pNLuJNtWNUe{eS#1mAtXNctq¶

Changes)in)the)service)level)requirements)for)providers)of)NHS)services,)and)service)level) commitments)to)members)of)the)public)served)by)the)NHS,)could)adversely)impact)the)

A)fundamental)change)in)the)tariff)structure)(pricing)arrangements),)associated)with)the) provision)of)services)to)the)NHS,)could)result)in)reduced)access)to)patients,)reduced)tariffs,)

The)Group)operates)in)a)highly)regulated)environment,)including)complying)with)the)

In)addition,)the)Group)could)fail)to)anticipate)legal)or)regulatory)changes)leading)to)a)

staff,)consultants)and)thirdHparty)suppliers.)If)they)fail)to)meet)the)standards)required,)the) Group)may)be)subject)to)litigation)and/or)media)coverage,)resulting)in)reputational)damage)

The)Group's)future)growth)depends)upon)its)ability)to)maintain)its)reputation)for)highHquality) services)by)meeting)its)quality)goals.)Poor)clinical)outcomes,)negative)media)comment)or) patient,)GP)and/or)consultant)dissatisfaction)could)reduce)the)quality)ratings,)which)could)

The)Group)could)receive)claims)arising)from)clinical)care)that)could)exceed)its)insurance)limits)

Failure)to)comply)with)laws,)regulations)or)regulatory)standards)may)expose)the)Group)to) mAtXNctJAXbq¸TcNq¸mNcAtXNq¸LAbAVNtepNmutAtXec¸quqmNcqXecSpebtWNtpNAtbNcteS#1 patients)and)loss)of)private)patients,)such)that)the)Group)may)not)be)able)to)operate)one)or)

Risk Description)and)impact) Risk)change Related)strategic)pillars How)we)manage)the)risk

Down The)Board)manages)this)risk)by)regularly)reviewing)market)conditions)and)economic)indicators)to)assess)whether) actions)are)required.

As)successfully)employed)in)the)recent)economic)downturn,)if)the)private)market)contracts,)the)Group)can)try)to) pNLuJNJeqtqAcLSutupNXczNqtbNctteXbmpezNmpeTtAcLJAqWUe{¸AcLbA}INAINteeSSNptWNpNNAqNLJAmAJXt} tetWN#1AtXtq`e{NptApXSS¸pNLuJXcVtWNXbmAJtecmpeTt¶

The)Group)believes)that)the)private)sector)has)become)a)fundamental)partner)of)the)NHS)across)the)UK.)The) continued)use)of)private)facilities)is,)in)Spire's)view,)the)best)way)to)meet)the)challenges)facing)the)NHS)particularly) as)there)is)limited)capacity)within)the)NHS)to)take)back)work)currently)undertaken)by)the)private)sector.)
3WNpeumÊqqNpzXJNNzNqApNJecTpbNLI}pNVuApqupzN}qeSmAtXNctq¸-qAcLJecqutActq¸{WXJWmpezXLNecVeXcV feedback)to)ensure)NHS)requirements)(whether)as)providers)or)as)commitments)to)its)patients))are)met.)In) addition,)the)Board)regularly)reviews)the)competitiveness)of)its)patient)offering)(both)NHS)and)private)patients).)
The)Board)continually)monitors)government)policy,)NHS)requirements)and)associated)tariff)structures)to)consider) the)need)for)cost)and/or)investment)reduction,)whether)in)the)short,)medium)or)long)term.
See)Spire)Hull)and)East)Riding)Hospital's)case)study)(on)pages)46)and)47),)which)demonstrates)a)successful) partnership)with)the)NHS.
Following)the)IPO,)the)Group)is)in)the)process)of)implementing)a)new)groupHwide)risk)management)framework) (and associated)policies)and)procedures),)which)is)tasked)with)the)review,)monitoring)and,)via)the)executive) management)team,)ensuring)that)these)risks)are)mitigated)as)far)as)possible.)During)2015,)this)framework)will) be further)strengthened)in)order)to)monitor)and)react)to)the)changing)regulatory)framework)of)a)listed)company) in the)healthcare)sector.)
Emerging)legal)or)regulatory)changes)are)monitored)by)the)Board,)its)executive)management)team)and)the) pXq_ eApL ebbXttNNq¸Aq{N`AqJecqutAtXecq{XtWN tNpcA`ALzXqNpqAcLXcLuqtp}IpXNTcVq¶
Spire)has)implemented)and)continually)monitors)its)clinical)standards,)policies)and)procedures.)The)introduction) ofthe)Board's)Clinical)Governance)and)Safety)Committee)will)aid)the)monitoring)and)control)of)clinical)risks.
A)number)of)key)performance)indicators)are)used)in)the)assessment)of)clinical)standards)and)these)may)be)found) in the)Clinical)Review,)on)pages)38)and)39.
The)Group)reviews)and)maintains)insurance)to)mitigate)the)possibility)of)a)major)loss.)Adequacy)of)cover) is reviewed)annually)with)the)Group's)brokers.)

Principal)Risks continued

Risk	Description)and)impact)	Risk)change
Competitor) challenge	Spire)operates)in)a)highly)competitive)market.)New)or)existing)competitors)may)enter)the) market)of)one)or)more)of)our)existing)hospitals,)or)offer)new)services,)reducing)the)market) share)for)the)Group.	Level
	3WNmetNctXAXbmAJt{euLINtWNeqqeSbAp_NtqWApNAcLpNLuJNLmpeTtAIXXt} AcLJAqW¹Ue{¶
Concentration) of PMI)market)	The)PMI)market)is)concentrated,)with)the)top)four)companies)–)Bupa,)AXA,)Aviva)and) VitalityHealth)(formerly)PruHealth))–)having)a)market)share)of)over)87%)(see)page)13).	Down
	eqqeSAcN XqtXcVJectpAJtuApNAtXecqWXm{XtWAc}eStWN_N}mA}NpqJeuLqXVcXTJAct`} pNLuJNpNzNcuNAcLmpeTt¶
Availability)of)key) medical)staff	uNteVpe{XcVLNbAcLSepWNAtWJApN¸AcLAXbXtNLqumm}eSAmmpempXAtN}ouA`XTNL nursing)staff,)the)healthcare)sector)is)seeing)a)rising)shortage)of)skilled)nursing)staff.)	Up
	-peTtAINVpe{tW¸XcXcN{XtWtWNpeumÊqqtpAtNV}¸pNouXpNqAcN mAcqXeceSJXcXJAqNpzXJNq in)hospitals,)particularly)including)more)complex)surgical)procedures)and)ongoing)treatment) of)higherHrisk)patients,)which)could)be)impacted)by)a)shortage)of)key)medical)staff.
	In)order)to)expand)our)directory)of)services)at)hospital)level,)in)line)with)our)strategy,) XtXq zXtAteWAzNAJJNqqteAmmpempXAtN}ouAXTNL¸qNS¹Nbme}NLJecqutActq¶
	The)market)may)well)see)salary)rates)rise)as)competition)for)staff)increases)and,) Aq A pNqut¸tWNpeumÊqJeqtq{euLXcJpNAqNAcLXtqmpeTtq{eu`LpNLuJN¶
Investment)plans) and)execution	The)capital)investment)programme)(which)includes)IT)system)developments))for)the)Group)in) 2015)and)beyond)consists)of)the)largest)number)of)parallel)developments)undertaken)to)date.	Up
	The)management)of)the)programme)brings)risks)relating)to:)
	• delays)in)bringing)additional)facilities,)or)IT)functionality,)on)line;
	• cost)overruns;)and
	• change)capacity)and)project)management)capability.
	Any)major)cost)overrun)or)substantial)delay)in)delivery)could)impact)upon)the)expected) pNtupcqAcLtWNpeumÊqm`AccNLmpeTtVpe{tWAcLSutupNJAqWUe{¶
Liquidity)and) covenant)risk	3WNpeumbA}WAzNXcquSTJXNctXouXLpNqeupJNqtebNNtXtqTcAcJXA``XAIXXtXNq AqtWN}SA`LuN¸epIpNAJWTcAcJXAJezNcActq`Xc_NLteXtqIeppe{XcVq¶	Down
	Failure)to)meet)its)obligations)or)covenants)would)have)a)substantial)adverse)effect) on the Group's)reputation)and)may)lead)to)borrowings)becoming)repayable)earlier) than contracted)for.
Interest)rate)risk	3WNpeumWAqXAIXXtXNqeutqtAcLXcVucLNpUeAtXcVpAtNIAc_eAcSAJXXtXNq AcL¸ Xq tWNpNSepN¸ N meqNLteXctNpNqtpAtNpXq_SpebUuJtuAtXecqXcbAp_NtpAtNq¶	Down
	AqWUe{q{euLINALzNpqN}XbmAJtNLLuNteAc}XcJpNAqNqXcXctNpNqtpAtNq¸ reducing availability)for)other)purposes.

Risk)change	Related)strategic)pillars	How)we)manage)the)risk
Level		The)Group)maintains)a)watching)brief)on)new)and)existing)competitor)activity)and)retains)the)ability)to)react) quickly)to)changes)in)patient)and)market)demand.
		The)Group)considers)that)a)partial)mitigation)of)the)impact)of)competitor)activity)is)ensured)by)providing)patients) with)highHquality)care)and)by)maintaining)good)working)relationships)with)GPs)and)consultants.
Down		The)Group)works)hard)to)maintain)good)relationships)and)a)joint)product/patient)health)offering)with)the)PMI) companies,)which,)it)is)believed,)assists)the)healthcare)sector)as)a)whole)in)delivering)highHquality)patient)care.) 3WN eApLINXNzNqJectXcuXcVteXczNqtXcXtq{N``¹mAJNLmeptSeXeeSWeqmXtAqqWeuLmpezXLNAcAtupATttetWN local)requirements)of)all)the)PMI)providers.
		The)Group)has)entered)into)contracts)to)continue)the)good)relationships)for)the)long)term)(see)Bupa)in)the) WXNS NJutXzN%STJNpÊqqtAtNbNctecmAVNŠ£AcLtepNLuJNtWNpeumÊqpXq_¶
Up		The)Board)focuses)on)staff)retention,)evidenced)by)very)high)levels)of)staff)satisfaction)and,)hence,)low)staff) turnover,)and)its)excellent)reputation)to)attract)new)staff.)
		Overseas)recruitment)of)EnglishHspeaking)nurses)is)being)used)to)mitigate)the)UK)shortage)of)trained)nursing)staff) and)to)reduce)the)cost)of)using)agency)staff.)
		The)Group)believes)consultants)are)attracted)by)its)advanced)facilities,)technology)and)equipment,)excellent)brand) and)reputation,)the)availability)of)a)broad)range)of)treatments,)skilled)nursing)staff)and)medical)support)staff,)and) tWNNSTJXNcJ}eSALbXcXqtpAtXzNqummept¶3WNpeumucLNptA_NqJectXcueuqXczNqtbNctXcXtqNouXmbNct¸SAJXXtXNq<br>and)services)to)retain)highHquality)consultants)and)also)provides)theatre)capacity)to)new)consultants.)This)is)<br>JecTpbNLI}WXVWJecqutActqAtXqSAJtXecNzNq¸qNNmAVN"†¶
		An)employee)survey)is)conducted)annually)to)establish)employee)satisfaction)and,)where)appropriate,)changes) Xc {ep_XcVmpAJtXJNqApNbALNXcpNqmecqNtetWNqupzN}TcLXcVqteAXLpNtNctXec¶
Up		The)Group)ensures)change)and)project)risks)are)minimised)by)the)following:
		• ALNtAXNLTcAcJXAAcLemNpAtXecAAmmpAXqAmpeJNqqXqXcmAJNteNzAuAtNtWNN mNJtNLpNtupcqecJAmXtA`¶ During)the)course)of)development,)the)actual)costs)and)estimated)returns)are)regularly)monitored;)
		• implementing)robust)bid)procedures,)including)a)thorough)review)of)the)contract)terms)and)conditions,) technical requirements)and)programme)cost)forecasting;
		• rigorous)planning,)and)programme)and)project)management;
		• the)selection)of)contractors)and)suppliers)is)based)upon)track)record)of)delivery)and)credit)worthiness;)and
		• regular)reviews)of)the)programme,)and)individual)projects,)by)the)executive)sponsor)and)the)Board.
		3WNpeumAJtXzN}becXtepqAcLbAcAVNqXtqXouXLAqqNtmeqXtXec¸XtqTcAcJXAXAIX`XtXNqSAXcVLuNAcLtWNJezNp against)its)loan)covenants.
		Forward)projections)show)that)the)Group)can)meet)its)liquidity)requirements)from)existing)liquid)assets)and) maintain)its)loan)covenant)obligations,)even)in)adverse)scenarios.)In)addition,)there)is)a)committed,)undrawn) revolving)credit)facility)of)£100)million)available)to)meet)liquidity)needs,)if)required.
		In)an)adverse)scenario,)capital)expenditure)could)be)cut)back)to)reduce)the)demand)on)liquidity.
		%cApNVuApIAqXq¸tWNpeumpNzXN{qtWNJeqtINcNTteSNctNpXcVXcteLNpXzAtXzNTcAcJXAXcqtpubNctqteWNLVN its exposure)to)interest)rate)volatility)based)on)existing)variable)rates,)current)and)predicted)interest)yield)curves,) AcLtWNJeqteSAqqeJXAtNLbNLXub¹tNpbLNpXzAtXzNTcAcJXA`XcqtpubNctq¶
		The)impact)of)changes)in)market)rates)of)interest)would)be)partially)mitigated)by)increased)rates)receivable) on)money)market)deposits.

The)Strategic)Report,)from)page)1)to)page)55,)was)reviewed,) approved)by)the)Board)and)signed)on)its)behalf)on)23)March)2015.)

Rob1Roger

WXNS|NJutXzN%STJNp 23)March)2015

Our\$Board\$of\$Directors

In\$preparation\$for\$the\$IPO,\$ the\$Board\$of\$Directors\$was\$ strengthened,\$increasing\$ its experience\$and\$diversity\$ in order\$to\$achieve\$Spire's\$ strategic\$aspirations.

Garry%Watts%

Non,executive%Chairman Garry\$Watts,\$FCA,\$MBE,\$joined\$the\$Group\$ as executive\$chairman\$in\$2011\$and\$became\$ nonKexecutive\$chairman\$at\$the\$time\$of\$the\$ IPO\$in\$2014.\$Prior\$to\$joining\$Spire,\$he\$was\$ CEO\$of\$SSL\$International\$plc\$for\$seven\$years\$ (and,\$before\$that,\$its\$CFO).\$SSL\$was\$a\$£2.5\$

billion\$international\$consumer\$healthcare\$brands\$company,\$which\$ was\$acquired\$by\$Reckitt\$Benckiser\$in\$late\$2010.\$Garry\$is\$also\$Chairman\$ of\$BTG\$plc,\$and\$of\$Foxtons\$Group\$plc,\$deputy\$chairman\$of\$Stagecoach\$ Group\$plc\$and\$a\$nonKexecutive\$director\$of\$CocaKCola\$Enterprises\$Inc.\$ A chartered\$accountant\$and\$former\$partner\$at\$KPMG,\$Garry\$was\$ previously\$an\$executive\$director\$of\$Celltech\$plc\$and\$of\$Medeva\$plc,\$ and\$a\$nonKexecutive\$director\$of\$Protherics\$plc.\$Other\$roles\$have\$ included\$17\$years\$as\$a\$member\$of\$the\$UK\$Medicines\$and\$Healthcare\$ Products\$Regulatory\$Agency\$Supervisory\$Board.

Garry\$is\$a\$member\$of\$the\$Clinical\$Governance\$and\$Safety\$Committee.\$

Rob%Roger

WXNS|NJutXzN%STJNp

Rob\$Roger\$has\$been\$CEO\$of\$Spire\$since\$May\$ 2011.\$Previously,\$he\$was\$appointed\$CFO\$ when\$Spire\$Healthcare\$was\$formed\$in\$2007.\$ Prior\$to\$joining\$Spire,\$Rob\$spent\$nine\$years\$ with\$the\$Tussauds\$Group\$as\$CFO.\$During\$this\$ time,\$he\$also\$had\$responsibility\$for\$business\$

development,\$was\$CEO\$(acting)\$in\$2001–2002\$and\$oversaw\$the\$ opening\$of\$Madame\$Tussauds\$in\$six\$markets.\$He\$oversaw\$the\$sale\$of\$ the\$Tussauds\$Group\$to\$Merlin\$Entertainment\$in\$April\$2007.\$Prior\$to\$ tWXq¸0eI{Aq
%eSXpqt
WeXJNWeXLA}qAcLUXVWtqXcÓ¸ AcL{Aq %eS-XAutXcpAcJNXcÓezNpqNNXcVtWN pe``¹euteSqXtNqAJpeqqpAcJN¶0eIouAXTNLAqAJWAptNpNL accountant\$with\$PricewaterhouseCoopers\$LLP.

Rob\$is\$a\$member\$of\$the\$Nomination\$Committee\$and\$Clinical\$ Governance\$and\$Safety\$Committee.\$

Simon%Gordon

**WXNSXcAcJXA%STJNp** Simon\$Gordon\$joined\$Spire\$in\$July\$2011,\$ having\$spent\$eight\$years\$as\$Group\$Finance\$ Director\$of\$leading\$international\$health\$and\$ TtcNqqJuIIuqXcNqq¸9XpVXcJtXzN¶upXcV WXqtXbNAt9XpVXcJtXzN¸tWNIuqXcNqqVpN{

from\$breakeven\$to\$£150\$million\$EBITDA,\$

emNpAtXcVXcTzNJeuctpXNq¶3WXqVpe{tW{AqAJWXNzNLI}A successful combination\$of\$organic\$development\$and\$acquisition.\$

-pXepte^eXcXcV9XpVXcJtXzN¸1Xbec{ep_NLSep-"ecIetW audit and\$transaction\$advisory\$projects\$for\$both\$listed\$and\$private\$ JebmAcXNq¶1XbecouA`XTNLAqAJWAptNpNLAJJeuctAct{XtW-"¶

Simon\$does\$not\$sit\$on\$any\$Board\$Committees.

Strategic\$Report Governance

Tony%Bourne

Independent%Non,executive%Director%

Tony\$Bourne\$has\$been\$a\$nonKexecutive\$ director\$since\$June\$2014.\$He\$is\$also\$ nonKexecutive\$director\$at\$various\$ companies,\$including\$Barchester\$Healthcare\$ Limited,\$one\$of\$the\$UK's\$largest\$residential\$ care\$home\$businesses,\$and\$Bioquell\$Plc,\$a\$

London\$Stock\$ExchangeKlisted\$company\$with\$a\$leading\$position\$ in bioKdecontamination\$and\$in\$testing,\$regulatory\$and\$compliance\$ services.\$Tony\$was\$Chief\$Executive\$of\$the\$British\$Medical\$Association\$ for\$nine\$years\$until\$2013.\$Prior\$to\$that,\$he\$was\$in\$investment\$banking\$ for\$over\$25\$years,\$including\$as\$a\$partner\$at\$Hawkpoint\$and\$as\$global\$ head\$of\$the\$equities\$division\$and\$a\$member\$of\$the\$managing\$Board\$ of Paribas.\$Tony\$has\$also\$previously\$served\$as\$a\$nonKexecutive\$director\$ of\$Southern\$Housing\$Group,\$from\$2004\$to\$2013,\$and\$Scope,\$which\$ focuses\$on\$cerebral\$palsy\$and\$is\$one\$of\$the\$UK's\$largest\$charities.

Tony\$is\$a\$member\$of\$the\$Audit\$and\$Risk\$Committee,\$the\$ Clinical Governance\$and\$Safety\$Committee\$and\$is\$Chair\$ ofthe Remuneration Committee.

John%Gildersleeve

Deputy%Chairman%and% Senior%Independent%Director%

John\$Gildersleeve\$has\$been\$the\$NonK Executive\$Deputy\$Chairman\$and\$Senior\$ Independent\$Director\$of\$Spire\$since\$June\$ 2014.\$He\$has\$been\$chairman\$of\$The\$British\$ Land\$Company\$plc\$since\$January\$2013,\$prior\$

to\$which\$he\$served\$as\$a\$nonKexecutive\$director\$of\$British\$Land\$from\$ September\$2008\$and\$as\$senior\$independent\$director\$from\$November\$ 2010.\$John\$is\$also\$nonKexecutive\$director\$of\$Dixons\$Carphone\$and\$ TalkTalk\$Telecom\$Group\$plc.\$John\$served\$as\$a\$director\$of\$Tesco\$plc\$for\$ 20\$years\$until\$he\$retired\$in\$2004.\$He\$was\$formerly\$chairman\$of\$EMI\$ Group\$and\$Gallaher\$Group\$plc,\$and\$was\$also\$a\$nonKexecutive\$director\$ eS e}Lq31Ac\_mJAcL9eLASecNpeum¶

John\$is\$a\$member\$of\$the\$Remuneration\$Committee\$and\$is\$Chair\$of\$the\$ Nomination\$Committee.

Professor%Dame%Janet%Husband

Independent%Non,executive%Director% Dame\$Janet\$Husband\$has\$been\$a\$nonK executive\$director\$since\$June\$2014.\$She\$ holds\$the\$position\$of\$Emeritus\$Professor\$ of Radiology\$at\$the\$Institute\$of\$Cancer\$ Research\$and\$currently\$serves\$on\$the\$Boards\$ of\$Royal\$Marsden\$NHS\$Foundation\$Trust\$and\$

Nuada\$Medical\$Group\$as\$a\$nonKexecutive\$director.\$Prior\$to\$her\$ appointment\$with\$the\$Group,\$she\$also\$served\$as\$a\$Specially\$ Appointed\$Commissioner\$to\$the\$Royal\$Hospital\$Chelsea,\$was\$ President\$of\$the\$Royal\$College\$of\$Radiologists\$and\$chaired\$the\$ National Cancer\$Research\$Institute\$in\$the\$UK.\$She\$trained\$in\$medicine\$ at\$Guy's\$Hospital\$Medical\$School\$and\$was\$appointed\$as\$Professor\$ of Diagnostic\$Radiology\$at\$the\$University\$of\$London,\$Institute\$of\$ Cancer\$Research,\$in\$addition\$to\$more\$than\$20\$years\$as\$a\$practising\$ consultant\$radiologist.

Janet\$is\$a\$member\$of\$the\$Audit\$and\$Risk\$Committee,\$the\$ Nomination Committee\$and\$is\$Chair\$of\$the\$Clinical\$Governance\$ and Safety\$Committee.

Robert%Lerwill%

Independent%Non,executive%Director%

Robert\$Lerwill\$is\$a\$chartered\$accountant\$ and has\$been\$a\$nonKexecutive\$director\$since\$ June\$2014.\$He\$spent\$13\$years\$with\$Arthur\$ Andersen\$and\$10\$at\$WPP\$as\$CFO.\$He\$then\$ ^eXcNL
AIN:XpNNqqAq
%XcAcL subsequently\$became\$deputy\$CEO\$and\$CEO\$

of\$Cable\$&\$Wireless\$Regional,\$leaving\$in\$2003.\$In\$2000,\$Robert\$ joined Aegis\$plc\$as\$a\$nonKexecutive\$director\$and\$Chair\$of\$the\$Audit\$ Committee\$and\$then\$served\$as\$CEO\$of\$Aegis\$Group\$from\$2005\$to\$ 2008.\$Robert\$also\$served\$as\$a\$nonKexecutive\$director\$at\$Synergy\$ Health\$plc\$from\$2005\$to\$2012,\$becoming\$Chairman\$of\$the\$Board\$in\$ 2010,\$and\$at\$British\$American\$Tobacco\$plc\$from\$2005\$to\$2013,\$where\$ he\$was\$Chair\$of\$the\$Audit\$Committee.\$Robert\$currently\$serves\$as\$a\$ nonKexecutive\$director\$of\$ITC\$Limited\$(a\$large\$Indian\$conglomerate),\$ DJI\$(Holdings)\$plc\$and\$the\$Payments\$Council\$Limited.\$Robert\$has\$a\$ BA degree\$from\$Nottingham\$University\$(industrial\$economics)\$and\$ has\$also\$attended\$the\$Advanced\$Management\$Program\$at\$Harvard\$ Business\$School.

Robert\$is\$a\$member\$of\$the\$Nomination\$Committee,\$the\$Remuneration\$ Committee\$and\$is\$Chair\$of\$the\$Audit\$and\$Risk\$Committee.

Dr%Supraj%Rajagopalan Non,executive%Director%

Dr\$Supraj\$Rajagopalan\$has\$been\$a\$nonK executive\$director\$since\$June\$2014\$and\$has\$ served\$as\$a\$nonKexecutive\$director\$of\$the\$ Group\$since\$2012.\$He\$is\$a\$partner\$at\$Cinven,\$ {WNpNWN`NALqtWNTpbÊqAJtXzXtXNqXctWN healthcare\$sector.\$During\$nearly\$10\$years\$at\$

Cinven,\$he\$has\$been\$involved\$in\$a\$wide\$variety\$of\$transactions,\$ beqtpNJNct}NALXcVtWNTpbÊqXczNqtbNctqXc"
eAcL"NLmAJN¶ He\$has\$sat\$on\$the\$Board\$of\$several\$other\$Cinven\$portfolio\$companies,\$ including\$Phadia\$and\$Ahlsell.\$Prior\$to\$joining\$Cinven\$in\$2004,\$Supraj\$ worked\$at\$the\$Boston\$Consulting\$Group\$in\$London,\$advising\$corporate\$ JXNctqXctWNWNAtWJApNAcLTcAcJXA`qNpzXJNqqNJtepq¶NSepNtWXq¸ he was\$a\$doctor\$in\$the\$NHS.\$Supraj\$graduated\$with\$undergraduate\$ and\$postgraduate\$degrees\$in\$Medical\$Sciences\$from\$the\$University\$ of\$Cambridge.

Supraj\$does\$not\$sit\$on\$any\$Board\$Committees.\$

Simon%Rowlands

Non,executive%Director% Simon\$Rowlands\$has\$been\$a\$nonKexecutive\$

director\$since\$June\$2014\$and\$has\$served\$as\$ a nonKexecutive\$director\$of\$the\$Spire\$Group\$ since\$2007.\$His\$other\$current\$appointments\$ include\$nonKexecutive\$directorships\$at\$ MD Medical\$Group\$and\$Avio.\$Simon\$is\$a\$

eucLXcV-AptcNpeSupemNAcmpXzAtNNouXt}Tpb
XczNc-AptcNpq¸ {WXJWWN^eXcNLXc¶t
XczNc¸1XbecNqtAIXqWNLAcLNLtWN healthcare\$team\$and\$was\$involved\$in\$a\$number\$of\$transactions,\$ including:\$General\$Healthcare\$Group,\$Amicus\$and\$Partnerships\$in\$ Care\$in\$the\$UK;\$USP\$in\$Spain;\$and\$Générale\$de\$Santé,\$Aprovia\$and\$ MediMedia\$in\$France.\$In\$July\$2012,\$Simon\$became\$senior\$adviser\$at\$ Cinven.\$Prior\$to\$joining\$Cinven,\$Simon\$worked\$with\$an\$international\$ JecqutXcVTpbecbutX¹LXqJXm`XcAp}NcVXcNNpXcVmpe^NJtqXctWN4 and\$southern\$Africa.\$He\$has\$an\$MBA\$in\$business,\$a\$BSc\$in\$engineering\$ and\$is\$a\$chartered\$engineer.

Simon\$does\$not\$sit\$on\$any\$Board\$Committees.\$

Executive management team

The executive management team consists of the Chief Executive Officer, Chief Financial Officer and the following senior executives:

Dr Jean-Jacques de Gorter Group Medical Director

Dr Jean-Jacques de Gorter is the Group Medical Director and has overseen Spire's clinical governance and quality for the past nine years. Prior to this, he served as Director of Clinical Services for Bupa Hospitals and as a Medical Director for NHS Direct. He is

currently a non-executive director at the Milton Keynes Foundation Trust and chairs its Quality Committee. Dr de Gorter graduated with a Bachelor of Medicine and Bachelor of Surgery from Charing Cross and Westminster Medical School and subsequently completed his MBA degree at Cranfield School of Management.

Daniel Toner

General Counsel and Group Company Secretary

Previously with Freshfields and the commercial directorate at the Department of Health, Daniel joined Bupa hospitals as Head of Legal in 2006, becoming General Counsel and Company Secretary for Spire

Peter Kahn

Commercial Director

in September 2007.

Peter joined as Commercial Director in August 2011 after being involved with Spire as a management consultant for four years. Peter has over 18 years' experience in hospital and health insurance management, having held senior positions in several

companies, including Affinity Health, which was the largest hospital group in Australia before it was sold to Ramsay Healthcare. He was Principal of the management consulting firm Intrinsix, which was established in 2005, providing strategic advice to healthcare organisations in Australia and internationally.

Antony Mannion

Investor/Public Relations Director Antony joined Spire as Investor and Public Relations Director in March 2012, having spent seven years at SSL International plc (ending in its acquisition by Reckitt Benckiser in 2010) as Group Legal Director and Head of Acquisitions. Prior to SSL,

Antony had started his career as a corporate lawyer at Freshfields in London and Paris, and had then worked as an investment banker at Citicorp Investment Bank in London and New York, and latterly at Standard Chartered in Singapore. Antony has a wide range of experience in all areas of corporate finance, and has worked on significant acquisition and IPO transactions in the UK, Europe, the US, South America, Asia Pacific, India, China and Russia. Immediately prior to joining Spire, Antony had worked as a consultant at Hawkpoint.

Neil McCullough

Business Development Director

Following an early career in accounting and finance, Neil moved into healthcare in 1993 working with Bupa UK Membership, where he held a number of senior sales and relationship management roles. Neil moved into the Bupa hospitals business in 1998,

holding hospital general manager roles in Birmingham and East Anglia. He then moved into preventative healthcare with Bupa Wellness in 2002, where, as sales director, he led the rapid expansion of the business for five years.

Neil joined Spire Healthcare on its formation in 2007 as Hospital Director at Cambridge Lea before joining the executive team in 2011. In his role, Neil oversees Spire's business development strategy both at the local hospital level and corporately - in the UK, as well as internationally.

Neil also oversees sales and marketing for Spire Healthcare, leading Spire's online and off-line marketing, brand development and communications, while supporting Spire's local sales and marketing activity.

Chairman's governance letter

Dear Shareholder. Welcome to the first Annual Report in which your Board, supported by the executive management team, embraced the challenges of governance as an independent public company following Admission to the London Stock Exchange on 23 July 2014.

Garry Watts Chairman

"ollowing the significant changes in narrative reporting recently introduced, we now present our Annual Report within the expanded reporting requirements, including our Strategic Report and the Remuneration, Audit and Risk, and the new Clinical Governance and Safety Committee reports, together with

our greenhouse gas emissions and diversity data. We have used the reporting structure to explain the Spire Healthcare story, its strategy and the active ongoing management of our

BOARD

successful business model.

On Admission, we formed a new Board, which will assist in ensuring we deliver the Group's strategy for the future.

The new independent non-executive directors have each taken specific responsibility for a Board Committee and report within the following Corporate Governance section upon the activities of the Board Committee that they have chaired since Admission.

I consider that the Board's composition addresses our current requirements for expertise, diversity and experience and, as such, is well-equipped to face the challenge of setting and managing the strategic direction of the business.

EVALUATION

As the Group was listed on 23 July 2014, the Board decided that an evaluation of the Board, Committees and individual directors was inappropriate, as the Board had not been in place for a sufficient length of time to provide a meaningful review across the Group's annual business cycle; the first evaluation will be carried out during 2015.

This will be an informal evaluation and will include strategy, succession planning and Board composition, as well as the changing governance and compliance obligations placed on PLC Boards.

As a new Board with diverse commercial skills and experience, I believe we have already developed good working relationships and Board synergies, which will aid our future stewardship of the Company and its overall governance. We look forward to meeting the strategic challenges that the rapidly evolving healthcare sector poses for the Group.

The Board is committed to an open dialogue with our shareholders and stakeholders; I and John Gildersleeve, our Deputy Chairman, ensure we are available for effective engagement, whether at the Annual General Meeting, or other investor relations activities. The ongoing programme of meetings in 2014 with investors, led by the Chief Executive Officer and the Chief Financial Officer, covered in excess of 130 meetings and presentations, of which 74 were subsequent to the IPO process.

Finally, my Board colleagues and I look forward to meeting shareholders at our first AGM at 11am on 21 May 2015 in Freshfields Bruckhaus Deringer's offices at 65 Fleet Street, London EC4Y 1HS.

Garry Watts Chairman

Corporate governance

The Group complies with the UK Corporate Governance Code, except as noted.

COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE (UK CODE)

The Group has complied with, and will continue to comply with, the principles (and code provisions) of the UK Code, except as described below, from the date of Admission.

Independence is determined by ensuring that, apart from receiving their fees for acting as directors or owning shares, non-executive directors do not have any other material relationship or additional remuneration from, or transactions with, the Group, its promoters, its management or its subsidiaries, which in the judgement of the Board may affect, or could appear to affect, their independence of judgement.

The UK Code recommends that at least half the Board of Directors of a UK-listed company, excluding the Chairman, should comprise non-executive directors determined by the Board to be independent in character and judgement and free from relationships or circumstances that may affect, or could appear to affect, the directors' judgement.

The Group complies with this recommendation of the UK Code, notwithstanding that Simon Rowlands and Dr Supraj Rajagopalan are not independent, as they have been nominated to act as non-executive directors by Cinven Funds, the principal shareholder who entered into a Relationship Agreement with the Company on 7 July 2014. Under the terms of that agreement, for as long as they and their associates control in excess of 30% of the votes able to be cast, they are entitled to appoint two non-executive directors.

When Cinven Funds control between 15% and 30% of votes, they will be entitled to appoint one non-executive director. They control 48.35% of votes as at 23 March 2015.

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

The UK Code also recommends that the Chairman of the Board of Directors should meet the independence criteria set out in the Code on appointment.

Garry Watts was not independent on appointment, having previously served as executive chairman of Spire. Following his appointment as non-executive chairman, Garry is responsible for the leadership and overall effectiveness of the Board and setting the Board's agenda, but he is no longer responsible for the day-to-day management of the Group

CONFLICTS OF INTEREST

Simon Rowlands and Dr Supraj Rajagopalan are partners at Cinven Funds, which controls 48.35% of the voting rights in the Company as at 23 March 2015

Save as set out in the paragraph above, there are no actual or potential conflicts of interest between any duties owed by the directors or senior management to the Company and their private interests or other duties.

KEY ROLES AND RESPONSIBILITIES

Garry Watts Chairman

The Chairman leads the Board. He is responsible for:

• · the leadership and overall effectiveness of the Board;
• a clear structure for the operation of the Board and its Committees;
• · setting the Board agenda in conjunction with the Company Secretary and Chief Executive; and
• · ensuring that the Board receives accurate, relevant and timely information about the Group's affairs.

John Gildersleeve

Deputy Chairman and Senior Independent Director

The Board nominates one of the non-executive directors to act as senior independent director. He is responsible for:

• · being an alternative contact for shareholders at Board level other than the Chairman;
• · acting as a sounding board for the Chairman;
• · if required, being an intermediary for non-executive directors' concerns;
• undertaking the annual Chairman's performance evaluation; and
• · when required, leading the recruitment process for a new Chairman.

BOARD AND COMMITTEE STRUCTURE

Ultimate responsibility for the management of the Group rests with the Board of Directors.

The Board focuses primarily upon strategic and policy issues and is responsible for:

• · leadership of the Group;
• · implementing and monitoring effective controls to assess and manage risk;
• · supporting the executive management team to formulate and execute the Group's strategy;
• · monitoring the performance of the Group; and
• · setting the Group's values and standards.

There is a specific schedule of matters reserved for the Board.

THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER

The division of responsibilities between the Chairman and the Chief Executive Officer is set out in writing and was reviewed and approved by the Board during the Admission process.

Rob Roger Chief Executive Officer

The Chief Executive Officer manages the Group. He is responsible for:

• developing the Group's strategic direction for consideration and approval by the Board;
• · day-to-day management of the Group's operations;
• · the application of the Group's policies;
• · the implementation of the agreed strategy; and
• · being accountable to, and reporting to, the Board on the performance of the business.

Daniel Toner General Counsel and Group Company Secretary

The Company Secretary supports the Chairman on Board corporate governance matters. He is responsible for:

• · planning the agenda for the annual cycles of Board and Committee meetings;
• · making appropriate information available to the Board in a timely manner;
• ensuring an appropriate level of communication between the Board and its Committees;
• ensuring an appropriate level of communication between senior management and the non-executive directors;
• · keeping the Board appraised of developments in relevant legislative, regulatory and governance matters; and
• facilitating a new director's induction and assisting with professional development, as required.

THE NON-EXECUTIVE DIRECTORS

The non-executive directors bring a wide range of skills and experience to the Board. The independent non-executive directors represent a strong, independent element on the Board and are well placed to constructively challenge and support management. They help to shape the Group's strategy, scrutinise the performance of management in meeting the Group's objectives and monitor the reporting of performance.

Their role is also to satisfy themselves with regard to the integrity of the Group's financial information and to ensure that the Group's internal controls and risk management systems are robust and defensible.

The independent non-executive directors oversee the adequacy of the risk management and internal control systems (from their membership of the Audit and Risk Committee and Clinical Governance and Safety Committee (CGSC), as well as the remuneration for the executive directors (from their membership of the Remuneration Committee).

As members of the Nomination Committee, the non-executive directors also play a pivotal role in Board succession planning and the appointment of new executive directors.

Corporate governance continued

YOUR BOARD IN 2014

Since the date of Admission, the Board met on four scheduled occasions (including one by telephone conference) for the year ended 31 December 2014.

The agenda at scheduled meetings in 2014 covered standing agenda items, including: a review on the Group's performance by the Chief Executive Officer, the current month's and YTD financial statistics by the CFO and a report from the Chair of the Clinical Governance and Safety Committee (including a clinical performance report). In addition, the Board received a verbal report from other Committee Chairmen, where the Committee met immediately in advance of the scheduled Board meeting, and the Board regularly received reports on legal and statutory matters.

Also in 2014, the Board focused upon major elements of the Group's operations by:

• · reviewing, and approving, the Group's five-year Strategic Plan;
• · considering a draft 2015 Annual Operating Plan; and
• receiving, reviewing and approving major capital expenditure proposals.

The Board has a formal schedule of matters reserved to it and delegates certain matters to Committees, as outlined elsewhere. Specific matters reserved for the Board considered during the period to 31 December 2014 included: reviewing the Group's performance (monthly and YTD); approving capital expenditure; setting and approving the Group's strategy and annual budget; and a review of the draft dividend policy.

THE BOARD'S PLAN FOR 2015

It is planned that the Board will convene on eight formal scheduled occasions (including one by telephone conference) during 2015, as well as holding any necessary ad hoc Board and Committee meetings to consider non-routine business.

The Chairman and the other non-executive directors are scheduled to meet on their own without the executive directors present. In addition, the non-executive directors will also meet without the Chairman present to discuss matters such as the Chairman's performance.

The Board will maintain its focus on the Group's pursuit of its 2015 targets and, during the year, its activities will include:

• review and approve the 2014 Annual Report;
• review the proposed final dividend for 2014;
• · approve the 2015 Annual Operating Plan;
• · consider specific major themes;
• review the risk management framework; and
• · follow a rolling agenda, ensuring proper time for strategic debate.

The Board will enhance and streamline information flows to the Board and Committees (via an on-line portal with Board documents, briefing papers and a library of relevant information about the Group and its activities), will meet the senior leadership across the Group and will review the delegation of its authority, as appropriate.

Furthermore, the Board will consider clinical safety matters and maintain overall responsibility for the Group's system of internal control and risk management processes via the relevant Board Committees.

SHARE SCHEMES COMMITTEE

In addition, the Board delegates certain responsibilities on an ad hoc basis to the Share Schemes Committee, which operates in accordance with the delegation of authority agreed by the Board.

Committee	Role	Chair of Committee
Share Schemes	To facilitate the administration	Any member.	Any one executive director.
Committee	of the Company's share schemes.

GOVERNANCE FRAMEWORK

Garry Watts

hairman

Key objectives:

• · ensure effectiveness of the Board;
• · promote high standards of corporate governance;
• ensure clear structure for the operation of the Board
• and its Committees; and
• encourage open communication between all directors. .

THE BOARD OF SPIRE HEALTHCARE GROUP PLC

The Board comprises nine directors – the non-executive Chairman, Garry Watts; the Chief Executive Officer, Rob Roger; the Chief Financial Officer, Simon Gordon; and six non-executive directors, four of whom are deemed to the purposes of the UK Code. Daniel Toner serves the Board as General Counsel and Group Company Secretary.

Key objectives:

• · leads the Group;
• oversees the Group's system of risk management and internal controls;
• · supports the executive management team to formulate and execute the Group's strategy;
• monitors the performance of the Group; and
• · sets the Group's values and standards.

AUDIT AND RISK COMMITTEE	CLINICAL GOVERNANCE AND SAFETY COMMITTEE	NOMINATION COMMITTEE	REMUNERATION COMMITTEE
Tony Bourne, Dame Janet Husband; Chair is Robert Lerwill	Tony Bourne, the Chairman, Chief Executive Officer; Chair is Dame lanet Husband	Dame Janet Husband, Robert Lerwill, Chief Executive Officer; Chair is John Gildersleeve.	John Gildersleeve, Robert Lerwill; Chair is Tony Bourne.
Key objectives: · monitors the integrity of financial reporting; and assists the Board in its review of the effectiveness of the Group's internal control and risk management systems.	Key objectives: · promotes, on behalf of the Board, a culture of high- quality and safe patient care; monitors specific non- financial risks and their associated processes, policies and controls: clinical and regulatory risks; health and safety; and (ii) (iii) facilities and plant.	Key objectives: · advises the Board on appointments, retirements and resignations from the Board and its Committees; and reviews succession planning for the Board	Key objectives: determines the appropriate remuneration packages for the Chairman, executive directors and Company Secretary; and recommends and monitors the level and structure for other senior management remuneration.
>XECUTIVE MANAGEMENT TEAM

The Group also operates an executive management team (convened and chaired by the Chief Executive Officer). The team generally meets weekly as operational activities allow and its members are as follows: Chief Executive Officer, Chief Financial Officer, General Counsel and Group Company Secretary, Group Medical Director, Investor/Public Relations Director, Commercial Director and Business Development Director.

Key objectives:

• · assists the Chief Executive Officer in discharging his responsibilities;
• ensures a direct line of authority from any member of staff to the Chief Executive Officer; and
• · assists in making executive decisions affecting the Company.

Corporate\$governance continued

BOARD&AND&COMMITTEE&ATTENDANCE

The\$attendance\$of\$the\$directors\$who\$served\$between\$the\$date\$of\$Admission,\$23\$July\$2014,\$and\$31\$December\$2014,\$at\$the\$Board\$and\$principal\$ Committee\$meetings\$held\$during\$this\$period,\$is\$shown\$in\$the\$table\$below.\$The\$number\$of\$meetings\$in\$the\$period\$when\$the\$individual\$was\$a\$ Board\$or\$Committee\$member\$is\$shown\$in\$brackets.\$

			Committees
			Clinical\$Governance\$
	Board	Audit\$and\$Risk	and\$Safety	Nomination1	Remuneration
Chairman
Garry\$Watts	4(4)		3(3)
Deputy&Chairman&
John\$Gildersleeve	4(4)				3(3)
Executive&Directors
Rob\$Roger	4(4)		3(3)
Simon\$Gordon	4(4)
Non=Executive&Directors
Tony\$Bourne	4(4)	2(2)	3(3)		3(3)
Robert\$Lerwill	4(4)	2(2)			3(3)
Dame\$Janet\$Husband	4(4)	2(2)	3(3)
Simon\$Rowlands	3(4)
Dr\$Supraj\$Rajagopalan	3(4)

1 \$ \$The\$Nomination\$Committee\$has\$to\$ensure\$the\$best\$possible\$leadership\$and,\$as\$the\$onOexecutive\$directors\$were\$appointed\$for\$the\$first\$time\$on\$24\$June\$2014,\$there\$has\$been\$no\$meeting\$of\$this\$ Committee\$in\$2014\$(two\$meetings\$have\$been\$scheduled\$in\$2015).

To\$the\$extent\$that\$directors\$are\$unable\$to\$attend\$scheduled\$meetings,\$ or\$additional\$meetings\$called\$on\$short\$notice,\$they\$will\$receive\$the\$ papers\$in\$advance\$and\$relay\$their\$comments\$to\$the\$Chairman\$for\$ communication\$at\$the\$meeting.\$The\$Chairman\$will\$follow\$up\$after\$ the\$\$meeting\$in\$relation\$to\$the\$decisions\$taken.

EFFECTIVENESS

BOARD&COMPOSITION

The\$Board\$seeks\$to\$ensure\$that\$both\$it\$and\$its\$Committees\$have\$the\$ appropriate\$range\$of\$skills,\$experience,\$independence\$and\$knowledge\$ of\$the\$Group\$to\$enable\$them\$to\$discharge\$their\$respective\$duties\$ and responsibilities\$effectively;\$for\$example,\$the\$2015\$Board\$calendar\$ includes\$Board\$development\$training\$sessions\$on\$the\$role\$and\$ regulatory\$powers\$of\$the\$CQC.

The\$number\$of\$nonOexecutive\$directors\$and\$their\$range\$of\$skills\$and\$ experience\$were\$carefully\$reviewed\$and\$agreed\$as\$part\$of\$the\$IPO\$ process.\$The\$continuing\$requirements\$and\$the\$number\$of\$directors,\$ together\$with\$the\$Group's\$succession\$plans,\$will\$form\$part\$of\$the\$ Nomination\$Committee\$activities\$and\$the\$Board's\$evaluation\$process\$ in\$2015.\$The\$Board\$considers\$its\$size\$and\$composition\$to\$be\$ appropriate\$for\$the\$current\$requirements\$of\$the\$business.\$

Committee\$composition\$is\$set\$out\$in\$the\$relevant\$Committee\$ reports. NoOone\$other\$than\$Committee\$Chairs\$and\$members\$of\$ the Committees\$is\$entitled\$to\$participate\$in\$meetings\$of\$the\$Audit\$ and\$Risk, Nomination,\$Remuneration\$and\$Clinical\$Governance\$and\$ Safety\$Committees,\$unless\$by\$invitation\$of\$the\$Committee\$Chair.\$

The\$Board\$considers\$that\$half\$of\$the\$Board\$is\$independent\$of\$ management\$and\$free\$from\$any\$business\$or\$other\$relationship\$ that\$could\$affect\$the\$exercise\$of\$their\$independent\$judgement.\$ Simon\$Rowlands\$and\$Dr\$Supraj\$Rajagopalan\$are\$remunerated\$by\$ Cinven\$Funds\$and\$are\$not\$considered\$to\$be\$independent.\$

As\$the\$Chairman\$was\$previously\$the\$executive\$chairman\$prior\$ to Admission,\$he\$did\$not\$satisfy\$the\$independence\$criteria\$on\$ his appointment\$to\$the\$Board.\$John\$Gildersleeve\$was\$appointed\$ as the Senior\$Independent\$Director\$and\$Deputy\$Chairman.\$

Biographical\$details\$of\$the\$Directors\$are\$set\$out\$on\$pages\$56\$and\$57.

APPOINTMENTS&TO&THE&BOARD

Recommendations\$for\$appointments\$to\$the\$Board\$are\$made\$by\$ the Nomination\$Committee.\$The\$Committee\$will\$follow\$a\$formal,\$ rigorous\$and\$transparent\$procedure\$for\$the\$appointment\$of\$ new directors\$to\$the\$Board.\$Further\$information\$is\$set\$out\$ in the Nomination\$Committee\$Report\$on\$pages\$72\$and\$73.

TIME COMMITMENT OF THE CHAIRMAN AND THE NON-EXECUTIVE DIRECTORS

The Chairman and non-executive directors each have a letter of appointment, which sets out the terms and conditions of their directorship. An indication of the anticipated time commitment is provided in any recruitment role specification, and each director's letter of appointment provides details of the meetings that they are expected to attend.

Non-executive directors are required to set aside sufficient time to prepare for meetings, and to regularly refresh and update their skills and knowledge. In signing their letters of appointment, all directors have consequently agreed to commit sufficient time for the proper performance of their responsibilities, acknowledging that this will vary from year to year, depending on the Group's activities.

Directors are expected to attend all Board and Committee meetings, and any additional meetings, as required. Each director's other significant commitments were disclosed to the Board at the time of their appointment and they are required to notify the Board of any subsequent changes. The Group has reviewed the availability of the non-executive directors and considers that each of them is able to, and in practice does, devote the necessary amount of time to the Group's business.

INDUCTION AND TRAINING

An induction programme was used in 2014 for the initial introduction of all non-executive directors to the Group's activities.

Generally, reference materials are provided, including information about the Board, its Committees, directors' duties, procedures for dealing in the Group's shares and other regulatory and governance matters, and directors are advised of their legal and other duties, and obligations as directors of a listed company.

The Company Secretary ensures that any additional request for information is promptly supplied. Whilst the Chairman, through the Company Secretary, ensures that there is an ongoing process to review any internal or external training and development needs.

As already noted, in the event of a general training need, in-house training will be provided to the entire Board. Necessary and relevant regulatory updates are provided as a standing item at each Board meeting in the Group Company Secretary's report and Board briefing by external advisers, where appropriate.

INFORMATION AND SUPPORT

The Board ensures that it receives, in a timely manner, information of an appropriate quality to enable it to adequately discharge its responsibilities. Papers are provided to the directors in advance of the relevant Board or Committee meeting to enable them to make further enquiries about any matters prior to the meeting, should they so wish. This also allows directors who are unable to attend to submit views in advance of the meeting.

Outside the Board papers process, the Chief Executive provides written updates to non-executive directors on important business issues, including financial and commercial information. In addition, relevant updates on shareholder matters (including analyst's reports) are also provided to the Board.

All directors have access to the advice and services of the Company Secretary. There is also an agreed procedure in place for directors, in the furtherance of their duties, to take independent legal advice, if necessary, at the Group's expense.

PERFORMANCE EVALUATION

The UK Code requires (main principle (B.6)) that the Board should undertake a formal and rigorous evaluation of its own performance and that of its Committees and individual directors.

As the date of Admission was 23 July 2014, the Board had not yet had sufficient time working together for an evaluation of their performance to be sufficiently wide-ranging across the full business cycle of the Group.

Hence, no Board evaluation was performed in 2014.

The Board will undertake an informal evaluation of its performance, and that of its Committees, in 2015

ELECTION OF DIRECTORS

All the directors offer themselves for election at the first AGM and, in future, will be re-elected in accordance with the requirements of the UK Code. The biographical details of each of the directors are set out in the 2015 Notice of AGM. The Board believes that each of the directors standing for election is effective and demonstrates commitment to their respective roles. Accordingly, the Board recommends that shareholders approve the resolutions to be proposed at the 2015 AGM relating to the election of the directors.

DIRECTORS' INDEMNITIES

The directors of the Group have the benefit of a third-party indemnity provision, as defined by section 236 of the Companies Act 2006, in the Group's Articles of Association. In addition, directors and officers of the Group are covered by directors' and officers' liability insurance.

DIRECTORS' CONFLICTS OF INTEREST

The Board has established a formal system to authorise situations where a director has an interest that conflicts, or may possibly conflict, with the interests of the Company (Situational Conflicts) Directors declare Situational Conflicts, so that they can be considered for authorisation by the non-conflicted directors.

In considering a Situational Conflict, these directors act in the way they consider would be most likely to promote the success of the Group, and may impose limits, or conditions, when giving authorisation or, subsequently, if they think this is appropriate.

The Company Secretary records the consideration of any conflict and any authorisations granted. The Board believes that the system it has in place for reporting Situational Conflicts continue to operate effectively.

Corporate governance continued

ACCOUNTABILITY

THE AUDIT AND RISK COMMITTEE

The Committee's report is set out on pages 67 to 69 and identifies its members, whose details are set out on pages 56 and 57.

The report describes its work in discharging its responsibilities in the period ended 31 December 2014 and its terms of reference can be found on the Group's website (www.spirehealthcare.com).

RISK MANAGEMENT AND INTERNAL CONTROL

The Board has overall responsibility for establishing and maintaining a sound system of risk management and internal control, and for reviewing its effectiveness. This system is designed to manage, rather than eliminate, the risks facing the Group and safeguard its assets. No system of internal control can provide absolute assurance against material misstatement or loss. The Group's system is designed to provide the directors with reasonable assurance that issues are identified on a timely basis and are dealt with appropriately.

The Audit and Risk Committee and the Clinical Governance and Safety Committee, whose reports are set out on pages 67 to 69 and pages 70 and 71, respectively, assist the Board in reviewing the effectiveness of the Group's risk management system and internal controls, including financial, clinical, operational and compliance controls.

EXECUTIVE COMPENSATION AND RISK

Only independent non-executive directors are allowed to serve on both the Audit and Risk, and Remuneration Committees. The non-executive directors are, therefore, able to bring their experience and knowledge of the activities of each Committee to bear when considering the critical judgements of the other.

This means that the directors are in a position to consider carefully the impact of incentive arrangements on the Group's risk profile and to ensure the Group's remuneration policy and programme are structured, so as to accord with the long-term objectives and risk appetite of the Group.

FINANCIAL AND NON-FINANCIAL RISK

Independent non-executive directors serve on the Clinical Governance and Safety Committee, as well as the Chief Executive Officer. In conjunction with the independent members of the Audit and Risk Committee, both Committees aim to ensure that the control and monitoring of both financial and non-financial risks is satisfactory.

In addition, the Committees, jointly, seek to ensure, as far as practicable, there are no elements omitted or unnecessarily duplicated and that all critical judgements receive the correct level of challenge.

RELATIONS WITH SHAREHOLDERS

The Board is committed to communicating with shareholders and stakeholders in a clear and open manner, and seeks to ensure effective engagement through the Group's regular communications, the AGM and other investor relations activities.

The Group undertakes an ongoing programme of meetings with investors, which is managed by the Chief Executive Officer and Chief Financial Officer. The majority of meetings with investors are led by them.

During the year, there were in excess of 130 individual meetings, conference presentations, group lunches and telephone briefings with investors, attended by one or both of the CEO and CFO, supported by the Investor Relations Director, of which 74 were subsequent to the IPO process.

The Chairman, Senior Independent Director and Committee Chairs remain open for discussion with shareholders on matters under their areas of responsibility, either through contacting the Company secretary or directly at the AGM.

The Company reports its financial results to shareholders twice a year, with the publication of its Annual and Half-yearly Financial Reports.

It also currently issues further trading updates each year with the publication of an Interim Management Statement. In conjunction with these announcements, presentations or teleconference calls are held with institutional investors and analysts, and copies of any presentation materials issued are made available on the Company's website (www.spirehealthcare.com).

All directors are expected to attend the Company's AGM, providing shareholders with the opportunity to question them about issues relating to the Group, either during the meeting, or informally afterwards.

Audit and Risk Committee Report

Welcome to the Group's first Audit and Risk Committee Report.

Robert Lerwil Chair, Audit and Risk Committee Other members: Dame Janet Husband, Tony Bourne. All the members of the Audit and Risk Committee (the 'Committee') were appointed in July. In accordance with the UK Code, the Board has determined that the Chairman, Robert Lerwill, has recent and relevant financial experience.

The Committee members' biographies are on page 57, and its terms of reference (approved by the Board) can be found on the Group's website, www.spirehealthcare.com.

The Company Secretary, or his deputy, is Secretary to the Committee.

The Committee will normally meet at least three times a year. It met twice in the short period between the IPO and 31 December 2014, with attendance disclosed on page 64. The Committee normally invites the external auditor and the Chief Financial Officer to attend each meeting and other members of the management team attend as and when invited. Representatives of the Group's external auditor have a private session with the Committee/ Chairman of the Committee

EXTERNAL FINANCIAL REPORTING

The Committee is responsible for monitoring, reviewing and challenging the integrity of the financial statements, and ensuring compliance with legal, regulatory and statutory requirements, giving due consideration to the provisions of the UK Code.

The external auditor provided reports for the half-year and year end reporting, including all significant issues, with an assessment of the prudence of management's judgements. The Committee considered that management's judgements were cautious, but not overly prudent, a view shared by the external auditor, Ernst & Young LLP (EY).

EY proposed no material audit adjustments arising from their audit work, which provided additional comfort to the Committee.

At the request of the Board, the Committee considered whether the 2014 Annual Report and Accounts was fair, balanced and understandable, and whether it provided the necessary information for the shareholders to assess the Group's performance, business model and strategy. The Committee was satisfied that, taken as a whole, the Annual Report and Accounts is fair, balanced and understandable, and has affirmed that view to the full Board.

ROLES AND RESPONSIBILITIES

The Committee has responsibility for overseing the financial reporting and internal financial controls of the Group, for reviewing the Group's internal control and risk management systems, and for maintaining an appropriate relationship with the external auditor of the Group and for reporting its findings and recommendations to the Board.

These comprise:

• receiving and reviewing the Annual Report and Accounts of the Group and half-yearly financial statements and any public financial announcements, and advising the Board on whether the Annual Report and Accounts is fair, balanced and understandable;
• · receiving and reviewing reports from the external auditor, monitoring their effectiveness and independence, and approving their appointment and their terms of engagement;
• monitoring the effectiveness of the risk management system;
• · reviewing the effectiveness of the Group's system of internal control systems, assessing and advising the Board on the internal financial, operational and compliance controls; and
• · overseeing the Group's procedures for detecting fraud and relating to whistleblowing.

Audit and Risk Committee Report continued

ACTIVITIES

The main activities were as follows:

• · adopting the Committee's terms of reference, which are set out on our website: http://investors.spirehealthcare.com/corporate-governance/committees/;
• agreeing the Committee's rolling agenda for 2014;
• · approving the terms of engagement of the external auditor, including its remuneration and reviewing its independence;
• · approving the plan for the external audit for 2014;
• · reviewing changes to the Group's capital structure in preparation for the IPO;
• challenging and reviewing the financial and regulatory reporting relating to the Combined Historical Financial Information included within the Price Range Prospectus;
• · discussing and reviewing the Group's accounting policies and critical estimates and judgements;
• · receiving and approving the Interim Report and the 2014 Annual Report and Accounts;
• · reviewing the systems of internal control, including assessing the requirement for an internal audit function;
• · agreeing the policy for approval of non-audit services provided by the external auditor details are on our website: http://investors.spirehealthcare.com/corporate-governance/committees/;
• considering the adequacy of the risk management systems of the Group; and
• · receiving a report on the IT function and how its risks are managed, with particular focus on IT security.

SIGNIFICANT ISSUES AND MATERIAL JUDGEMENTS

The Committee assesses whether suitable accounting policies have been adopted and whether management has mades and judgements. The table below summarises where the most significant judgements have been made in relation to reporting in 2014. EY also identified these matters in its audit report, commenting that they had the greatest effect on the overall audit strategy, the allocation of resources and in directing the efforts of the engagement team:

Matters	Judgement and estimation required	How the Committee gained comfort on the matter
Revenue recognition	The complexity of the pricing structures and the high volume of procedures undertaken present a risk in relation to the accuracy and completeness of revenue recognition.	By assessing the internal measures taken in the analytical review of revenues and procedures relating to the controls over the invoicing process. In addition, EY tested key manual controls and performed extensive substantive testing, with no issues being noted by it during this work.
Goodwill carrying amounts	The carrying value of goodwill was significant (£519.1 million as at 31 December 2014). It is tested by reference to its value in use, which involves judgements by management as regards the assumptions used in forecasting cash flows, in particular regarding growth rates and the discount rate applied.	By challenging the reasonableness of assumptions used in impairment calculations by management and the appropriateness of the judgements and forecasts used the growth rate and discount rate and reviewing the sensitivity analyses as applied to the key assumptions.
Recognition of deferred tax balances	The reorganisation of the Group's ownership structure prior to IPO results in a higher inherent risk associated with the calculation of tax balances. There are judgements required in estimating the liability to deferred tax on the property portfolio (£91.7 million as at 31 December 2014) and in the recognition of deferred tax assets (£43.6 million as at 31 December 2014) in accordance with IAS 12, particularly in respect of available losses.	By reviewing the key assumptions adopted by management in the calculation of deferred tax, in particular the assumptions about the future use or disposal of properties and the deductibility of items yet to be approved by the relevant tax authority. EY reviewed the tax calculations in detail, testing key assumptions, with no issues being noted.
Treatment of costs directly attributable to the Group's IPO	Management has exercised judgement about how the IPO costs are presented in the financial statements. Exceptional costs of £54 million, mainly related to the IPO, were classified as exceptional, in accordance with the Group's definition thereof, and charged to the Income Statement. Costs arising from the IPO directly related to the issue of shares have not been expensed, but netted to equity in accordance with IAS 32.	By reviewing management's approach to identifying costs as directly attributable to the issue of shares, as netted to equity. Careful consideration was given by management to the FRC guidance issued on 13 December 2013, as regards consistency in reporting exceptional items, as it relates to items arising in 2014. Particular attention was given to the nature and magnitude of the costs incurred.

EXTERNAL AUDITOR

The Committee oversees the Group's relationship with the external auditor and formally reviews the relationship, policies and procedures to ensure independence.

The Committee adheres to the Auditing Practices Board's Ethical Standard 3, which requires the rotation of the audit partner for listed companies every five years. EY has audited the financial statements of Spire since 2008 under the same audit engagement partner, David Hales and, therefore, his term will end in 2015. As a FTSE 250 Group, we will comply with the new provisions requiring an audit tender at least every 10 years and our approach to this will be considered further in 2015.

As noted, we reviewed the independence and effectiveness of the external auditor. We did this by:

• reviewing its proposed plan for the 2014 audit;
• discussing the results of its audit, including its views about material accounting issues and key judgements and estimates, and its audit report;
• reviewing the quality of the people and service provided by EY; and
• evaluating all of the relationships between the external auditor and the Group, to determine whether these impair, or appear to impair, the auditor's independence.

NON-AUDIT SERVICES AND INDEPENDENCE

The details of our policy in relation to non-audit services are set out on our website: www.investors.spirehealthcare.com/corporategovernance/committees/. In summary, there are certain services termed 'excluded services' that are not permitted to be provided by the external auditor, including where the auditor may be required to audit its own work, would participate in activities that would normally be undertaken by management or is remunerated through a 'success fee' structure.

Total non-audit services provided by EY to the Group for the year ended 31 December 2014 totalled £0.5 million. The majority of the services related to the IPO in July 2014. IPO services are typically performed by auditors, as they are mostly assurance-related; the fee was not contingent or success-based. Excluding the fees in relation to the IPO, non-audit fees principally related to tax advisory and compliance services and they represent less than 20% of the recurring base fee and will remain subject to scrutiny and approval by the Committee. A full breakdown of non-audit fees paid during the year is disclosed within note 12 to the financial statements on page 109.

The Committee considers the requirements of the UK Code and the appropriateness of tendering the external audit contract as part of normal business practice. Based on an ongoing assessment, for example, of the quality of the external auditor's report to the Committee and the audit partner's interaction with the Committee, the Committee remains satisfied with the efficiency and effectiveness of the audit. The Committee, therefore, has not considered it necessary to require the audit to be put to tender.

The Committee has recommended, and the Board has agreed, that, subject to shareholder approval, EY will be reappointed at the 2015 AGM.

RISK MANAGEMENT AND INTERNAL CONTROLS

An overview of the risk management and internal controls processes are contained on pages 48 to 51. The Committee, with the assistance of the Clinical Governance and Safety Committee (CGSC) (which focuses on key non-financial risks, including patient and clinical risks), carried out the following:

• · reviewed the work carried out by the CGSC in relation to the risks within its remit;
• reviewed the Group's system of internal control;
• · monitored the risks and associated controls over the financial reporting processes, including the process by which the Group's financial statements are prepared for publication; and
• reviewed reports from the external auditor on any issues identified during the course of its work, including a report on control weaknesses

The overall risk management framework, including the Board's appetite for risk and the underlying process for capturing and reporting risk and control data, will be reviewed by the Board and its Committees during 2015 to ensure, as far as possible, that changes to reflect the new regulatory environment and best practice are incorporated.

WHISTLEBLOWING

The Committee also continued its monitoring and oversight of the procedures for the receipt, retention and treatment of qualifying disclosures by staff.

The Group offers its staff an independent and confidential service, where staff may register any concerns about any wrongdoing or safety at work. The General Counsel is, as Whistleblowing Officer, responsible for the investigation of any concerns arising and reporting directly to the Committee.

ACCOUNTABILITY

At the year-end, following a detailed review by the Committee of the Corporate Risk Register and the principal risks drawn from it, consideration of reports on the operation of the risk management and internal control systems from senior management, the results of all external audit, review and inspection activity and all reported risk events, the directors confirmed that no material failings or weaknesses were identified.

ANNUAL EVALUATION OF THE COMMITTEE'S PERFORMANCE

As the Committee has only been in existence for a short period of time, an evaluation of its performance has not been undertaken. The first evaluation is scheduled for 2015

On behalf of the Committee

Robert Lerwill

Chair, Audit and Risk Committee 23 March 2015

Clinical Governance and Safety Committee Report

The work of this Committee, in overseeing the delivery of clinical governance, patient safety and care quality, is central to the success of Spire Healthcare.

Professor Dame Janet Husband Chair, Clinical Governance and Safety Committee Other members: Tony Bourne, Garry Watts, Rob Roger

Dear Shareholder

On behalf of the Board, I am pleased to present our first Report of the Clinical Governance and Safety Committee (the 'Committee' or 'CGSC') since Spire was admitted to the London Stock Exchange in July 2014.

COMMITTEE PURPOSE

The Group's mission is to bring together the best people, dedicated to developing excellent clinical environments and delivering the highest-quality patient care. The CGSC oversees, reviews and monitors the quality of our clinical services with the aim of ensuring that the highest standards of governance are consistently met and that clinical outcomes, patient safety and patient experience continuously improve in support of this mission.

The Committee also has an important role in identifying areas of clinical risk, and of ensuring that controls are in place to mitigate such risk as far as possible. Close links between the CGSC and the Audit and Risk Committee have been developed to support the Company's robust approach to risk management.

COMMITTEE MEMBERSHIP

Since listing, the Committee has been reconstituted, bringing together non-executive directors and senior management to further develop a sound framework of clinical governance within Spire. With my recent, relevant and broad clinical experience, acquired during a long medical career, I have the required experience to chair this Committee of the Board

The CGSC members during the period since Admission were:

Dame Janet Husband	Independent Non-Executive Director Committee Chair
Tony Bourne	Independent Non-Executive Director
Rob Roger	Chief Executive Officer
Garry Watts	Group Chairman

Members' biographies and details of Committee attendance are on pages 56 and 57, and page 64, respectively.

The Group Company Secretary, or his appointed nominee, is secretary to the Committee.

The Committee operates in an inclusive manner. The Company's Group Medical Director and Chief Nursing Officer attend each meeting, with other management and Board members invited, as appropriate. This openness supports the quality and transparency of the Committee's work and the communication of its deliberations with the Audit and Risk Committee, the Board and the hospitals' executive management teams.

COMMITTEE MEETINGS

The Committee will meet eight times in 2015, in accordance with its terms of reference, with meetings scheduled to take place before each Board meeting, so that there is a timely flow of information on clinical governance matters to the Board.

From the above meetings schedule, the Committee will hold four meetings at Spire's head office in London, and four in a designated Spire hospital, thereby providing the opportunity for the Committee to meet Hospital Directors, matrons and other front-line staff and to tour the hospital facilities. This will aid a 'ward to Board' approach to clinical governance and also permits the hospital management team to present its own strategic developments and challenges and to focus on specific aspects of clinical governance relevant to its own experience.

PRINCIPAL ACTIVITIES

The Committee reviews a number of standing items, including:

• the Group Medical Director's Review of performance, in the form of a Clinical Governance and Safety Report, and, on a quarterly basis, a review of Serious Adverse Events;
• · health and safety;
• · information governance; and
• · whistleblowing.

In 2014, the Committee developed its strategy, which not only focuses on monitoring clinical performance and trends in practice, but also on a programme of themed reviews to address key strategic quality areas in a rolling agenda over the next two years.

Themed reviews planned for 2015 include:

• a programme of preparation and training for the new CQC inspections regime;
• · a review of our complaints process and its compliance with national guidance;
• a review of Spire's in-house clinical review process of individual hospitals, which will enable us to benchmark our hospitals against well-defined standards; and
• · a review of the quality of service provided by resident medical officers at each of our 39 hospitals.

We will also undertake specific 'deep dives' to investigate compliance with best practice guidance and to take action where needed. This approach will ensure that the Committee has a detailed understanding of contemporary clinical issues and of the challenges of delivering the highest standards of modern hospital-based healthcare.

2014 ACTIVITIES

The Committee held two meetings at head office and one off-site meeting in 2014.

Apart from standing review activities, the Committee conducted its first themed review, examining the clinical governance structure across Spire, information flows, the escalation of issues through the executive management to the Board, and ensuring that the structures and processes comply with best practice across healthcare organisations in the UK.

In future, the Committee intends to review its clinical governance framework in the light of developing practice on a regular basis.

The off-site meeting was held at Spire Bristol Hospital in November. Hospital staff, including management, clinicians and nurses, met members of the Committee and were able to highlight particular successes and discuss areas targeted for further improvement. Members of the Committee were able to see the hospital's levels of care for themselves and to meet the Chair of the hospital's Medical Advisory Committee and a number of other specialist consultants.

PERSONAL EXPERIENCE

In order to better understand the business, culture and ethos within Spire's diverse group of hospitals, I am also undertaking a programme of informal visits to all of our hospitals. These visits will enable me to engage more closely with senior clinical and managerial staff and to be 'visible' as Chair of the CGSC. In 2014, I visited 13 of our 39 hospitals and plan to complete my tour during 2015.

These hospital visits have allowed me to question the hospital management teams on various issues, to learn about their aspirations and challenges, and to gather ideas and suggestions that may have an impact on the future strategy of both the Committee and the Group. I have also learnt an enormous amount about the complexity and variety of Spire's healthcare business and of the influences that drive change and development in the local environment.

Equally important, I have been able to talk to individual patients on a one-to-one basis and have learnt about their experience of being a patient at a Spire hospital and how they viewed the quality of care they have received.

I am pleased to report that the feedback from the patients I have met has been overwhelmingly positive.

TERMS OF REFERENCE AND EVALUATION

The Committee operates under formal terms of reference that were approved by the Board during the year. The terms of reference are available on the Group's website (www.spirehealthcare.com).

Within these terms, the Committee and its individual members are empowered to obtain outside legal or other independent professional advice (at the cost of the Group). Such powers were not required during the period.

As the Committee has only been in existence for a short period of time, an evaluation of its performance has not been undertaken. The first evaluation is scheduled for 2015

Details of the risk management and internal control processes are contained on pages 48 to 51.

The Committee believes that it has received sufficient, relevant and reliable information from management and the clinical executive team to enable us to discharge our responsibilities.

FUTURE DEVELOPMENT

In this Report, our aim has been to present information in a simple and transparent way and I hope that shareholders will find it informative.

As Chair of the Clinical Governance and Safety Committee, I am committed to ensuring an open dialogue with our shareholders. If you have any questions about clinical governance or safety generally, or the contents of this report, please contact me via the Company Secretary-companysecretary@spirehealthcare.com.

The work of this Committee, in maintaining the highest standards of clinical governance, patient safety and care quality, is central to the success of Spire Healthcare. It is part of a governance structure that seeks to balance central and common standards and processes with the unique circumstances of each of our hospitals. As a process seeking continuous improvement, I look forward to reporting on our further progress in a year's time.

Professor Dame Janet Husband DBE FMedSci, FRCP, FRCR Chair, Clinical Governance and Safety Committee 23 March 2015

Nomination Committee Report

The Committee did not meet in the period following Admission, as the appointments of all independent non-executive directors took place at the same time.

John Gildersleeve Chair, Nomination Committee Other members: Dame Janet Husband, Robert Lerwill, Rob Roger

THE NOMINATION COMMITTEE

The Nomination Committee (the 'Committee') must have at least three members, of which a majority must be independent non-executive directors. The Board appoints the Chairman of the Committee, who must be either the Chairman of the Board or an independent non-executive director. During the year, I was appointed to the role of Chairman of the Committee, though, in my absence, the Committee will be chaired by an independent non-executive director. The Company Secretary or, in his absence, the Deputy Company Secretary is secretary to the Committee.

MEFTINGS

The Committee meets as and when required, but did not meet in the period following the IPO, as the appointments of all independent non-executive directors were made on the same date and there was no immediate requirement for further consideration of the Board's diversity of skill and experience, nor that of succession planning at the Board and below.

Meetings of the Committee are scheduled to take place twice in 2015 and the Committee will invite other senior executives to assist their discussions

The meetings will consider any standing items of business, together with ad hoc discussion between Committee meetings in the event of new director recruitment and I will report the outcome of our meetings to the Board.

The Committee operates under formal terms of reference, which were reviewed and approved by the Board. The terms of reference are available on the Group's website (www.spirehealthcare.com). The Committee and its members are also empowered to obtain outside legal or other independent professional advice (at the cost of the Group) in relation to its deliberations (which were not exercised during the period) and to secure the attendance at its meetings of any employee or other parties, should it be considered necessary.

ROLE AND RESPONSIBILITIES

The Committee's foremost priorities are to ensure that the Group has the best possible leadership and a clear plan for both executive and non-executive director succession. Its prime focus is, therefore, to concentrate upon the strength of the Board, for which appointments will be made on merit against objective criteria, selecting the best candidate for the post. The Nomination Committee advises the Board on these appointments, and also on retirements and resignations from the Board, and its other Committees.

The Committee's key objectives can be found on page 63.

BOARD COMPOSITION

All the executive and independent non-executive directors have served at a very senior level in global and UK-based organisations, have international experience across a variety of industries, and most have financial experience. At present, one of the seven executive and independent non-executive directors is female.

It should be noted that in Lord Davies' original recommendation on Women on Boards, he stated that listed companies in the FTSE 100 should aim for a minimum of 25% female Board member representation by 2015. He also recommended that FTSE 350 companies should be setting their own challenging targets and expected that many would achieve a much higher figure than this minimum. We note this requirement and aim to move towards this target as soon as practicable.

PROCESS FOR BOARD APPOINTMENTS

When considering Board recruitment, the Committee will draw up a specification for a director, taking into consideration the balance of skills, knowledge and experience of its existing Board members, the diversity of the Board, the independence of continuing Board members, together with the ongoing requirements and strategic development of the Group. The search process can then focus on appointing a candidate with a balance of skills that will enhance the Board.

The Committee will utilise the services of an executive search firm to identify appropriate candidates, ensuring that the search firm appointed does not have any other connection with the Group. In addition, the Committee will only use those firms that have adopted the Voluntary Code of Conduct addressing gender diversity and best practice in search assignments. A 'long list' of potential appointees will then be reviewed, followed by the shortlisting of candidates for interview, based upon the objective criteria identified at inception. Care is taken to ensure that all proposed appointees will have sufficient time to devote to the role and do not have any conflicts of interest. The Committee will then recommend a preferred candidate and the directors not on the Committee will meet the candidate. Following these meetings, and assuming acceptance, the Committee will make a formal recommendation to the Board on the appointment. Wherever possible, the Nomination Committee will arrange for all directors to meet the preferred candidate.

BOARD SUCCESSION

The Committee will regularly examine succession planning based on the Board's balance of skills and overall diversity. Led by the Committee, succession planning of the Board will form an integral part of the Board's annual strategy meeting.

SENIOR MANAGEMENT SUCCESSION

During 2015, it is anticipated that the executive directors will submit succession plans in respect of senior executives to the Board for review. The Board also actively seeks to meet with key executives throughout the Group in order to gain a greater understanding of the breadth and depth of management talent. During 2015, this process will be augmented to include a series of formal presentations to the Board by relevant members of the executive management team, and of the senior leadership team. This will allow members of the Committee to adopt a more informed approach to the requirements of Board and/or Group succession planning in 2015.

COMMITTEE EVALUATION

As the Committee has only been in existence for a short period of time and did not meet in 2014, an evaluation of its performance has not been undertaken. The first evaluation is scheduled for 2015.

RE-ELECTION OF DIRECTORS

The Committee met in March 2015 and reviewed the continuation in office, and potential re-appointment, of all members of the Board. Following this review, the Committee recommended to the Board that all directors should be re-appointed, and hence all directors will seek re-election at the AGM.

On behalf of the Nomination Committee

John Gildersleeve

Chair, Nomination Committee 23 March 2015

Directors' Remuneration Report

Tony Bourne Chair, Remuneration Committee Other members: John Gildersleeve, Robert Lerwill

ANNUAL STATEMENT FROM THE REMUNERATION COMMITTEE CHAIRMAN

Dear Shareholder

On behalf of the Board, I am pleased to present our first Directors' Remuneration Report ('DRR') following the IPO in July 2014, which has been prepared in accordance with the relevant legislation, including Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) and the Listing Rules. This Report is, therefore, set out in two parts:

• i. Policy Report This sets out our Remuneration Policy ('Policy') for all directors of the Group, which will be subject to a binding shareholder vote at our 2015 AGM.
• ii. Annual Report on Remuneration This sets out how our directors were paid in 2014 and how we will apply our Policy in 2015. There will be an advisory shareholder vote on this section of the Report at the 2015 AGM.

OUR APPROACH TO REMUNERATION

The overall remuneration structure was designed prior to the IPO and detailed in the Prospectus. The approach was intended to provide a simple and transparent structure that reflected our business operations and future strategy. The structure also took into account evolving market norms and best practices.

The Committee has spent considerable time focusing on how the remuneration structure adopted prior to IPO should be implemented in practice. The Committee wanted to enshrine core behaviours and values that have been integral to Spire Healthcare's success to date and to tie variable pay to future Group success with performancerelated payments being aligned with sustainable shareholder value, and subject to the achievement of rigorous and stretching targets.

The Committee considers that our new policy provides a wellbalanced remuneration package that will continue to attract and retain people of the right calibre, and incentivise our executive directors and senior executives to achieve the short and longer-term business targets of the Group and to deliver shareholder value.

The Committee operates under terms of reference approved by the Board, available on the Group's website (www.spirehealthcare. com)

REMUNERATION DECISIONS IN RESPECT OF 2014

As described elsewhere in the Strategic Report and in the financial highlights on page 1, during our first year as a listed Group, we achieved a strong financial performance, and continue to deliver on our strategic and operational priorities.

The 2014 annual bonus awards were based on a mix of financial and non-financial metrics. On the basis of the reported EBITDAR outcome of £219.9 million and the achievement of strategic and personal objectives, including delivering a successful IPO of the Group, approximately 34% of the maximum bonus potential was paid to the executive directors, of which one-third will be deferred into shares.

During the year, the Committee also considered the terms of the Company's Long Term Incentive Plan ('LTIP'), adopted at IPO. The first awards were granted in September 2014. The Committee has determined that these 2014 awards to senior executives, including executive directors, are based on stretching relative Total Shareholder Return ('TSR') and Earnings Per Share ('EPS') performance targets. Subject to achievement of the relevant targets, these awards will vest in early 2017 in accordance with the normal business cycle. The Committee is satisfied that the targets are appropriately linked to delivery of demanding long-term financial goals and the creation of shareholder value.

As noted in the Prospectus, executive directors are expected to build and retain a shareholding at least equivalent to twice their salary. This will create further alignment with shareholders. Both executive directors meet this guideline.

REMUNERATION DECISIONS FOR 2015

In relation to remuneration arrangements for the executive directors in respect of 2015 performance and beyond, the only structural change is to introduce clawback provisions for both the annual bonus and LTIP awards (see page 77 for more detail). The Committee is of the view that this change further strengthens the existing malus provision that already applies to our incentive plans.

Apart from a change to the annual bonus metrics (replacing EBITDAR with EBITDA measures and introducing a balanced scorecard of strategic objectives) and weightings, no other changes are proposed in respect of 2015 bonus awards. LTIP awards to be granted in 2015 will continue to be subject to EPS and relative TSR targets.

SHAREHOLDER COMMUNICATION

As Chairman of the Remuneration Committee, I am committed to ensuring an open dialogue with our shareholders.

If you have any questions about remuneration generally, the presentation or contents of this Report, please contact me via companysecretary@spirehealthcare.com

THE DRR AND THE AGM

The Committee recommends both elements to you for approval and we look forward to your support at the 2015 AGM.

Tony Bourne

Chair. Remuneration Committee 23 March 2015

Policy%Report

The*following*sections*set*out*our*Directors'*Remuneration*Policy*('Policy'),*which*will*be*put*forward*for*shareholder*approval*at*the*2015* AGM.*Subject*to*shareholder*approval,*the*Policy*will*take*effect*from*the*date*of*the*AGM*on*21*May*2015.

REMUNERATION%POLICY%TABLE FIXED%REMUNERATION

`NbNct	Purposeand linktostrategy	Operation	Maximum*opportunity	Performance* measures
Salary	• 3empezXLNT NL remuneration thatis appropriate fortherole and tosecure andretainthe talentrequired bythe*Group.	• TheCommitteetakesintoaccount a numberoffactorswhensetting salaries, including: ª scopeandresponsibilityoftherole; ª theskillsandexperience oftheindividual; ª salarylevelsforsimilarroles within appropriatecomparators; ª overallstructureoftheremuneration package;and ª payandconditionselsewhere intheGroup. • Salariesarenormallyreviewedannually, withanyincreaseusuallytakingeffect* in January.	• :WX`NtWNpNXqceLNTcNLbA Xbub opportunity,salaryincreasesnormally take intoaccountincreasesforfullLtime employeesacrosstheGroup. • TheCommitteeretainsdiscretiontomake higherincreasesincertaincircumstances, forexample,followinganincreaseinthe scopeand/orresponsibilityoftherole,ora qXVcXTJActJWAcVNXcbAp_NtmpAJtXJNeptWN developmentoftheindividualintherole. • Thecurrentsalarieseffectivefrom 1January2015are: ª %¿›‡"‡¸''' ª CFO:*£350,000	• None
NcNTtq	• Fixedelement ofremuneration providing market competitive INcNTtqte both support retentionand recruitpeople ofthenecessary calibre.	• pAcVNeSpeN¹AmmpempXAtNINcNTtq<br>may be*provided*to*executive*directors,*<br>including*such*items*as*private*medical*<br>insurance*(for*the*executive*director*and*<br>their*family),*permanent*health*assurance,*<br>participation*in*an*income*protection*<br>scheme,*life*assurance,*an*annual*health*<br>assessment*(for*the*executive*director*and*<br>their*spouse)*and*a*car*allowance.*<br>• LLXtXecAecN¹eSSINcNTtqbA}AqeIN<br>provided*where*the*Committee*considers*<br>this*appropriate*(e.g*on*relocation).*<br>• NJutXzNLXpNJtepqApNAqeNXVXINte participateinanyallLemployeeshare plansoperatedbytheCompanyfrom timetotimeonthesamebasisasother eligiblecolleagues. • 3WN ebbXttNN_NNmqtWNINcNTtq packageofferedtoexistingandnew executivedirectorsunderreview.	• Whilstnomaximumlimitexists,individual INcNTtAppAcVNbNctqtA_NXcteAJJeuct a numberoffactors,includingmarket practiceforcomparableroleswithin appropriatepaycomparators. • ParticipationinanyHMRCLapproved allLemployeeshareplanissubjectto themaximumpermittedbythe relevanttaxlegislation.	• None
Retirement% INcNTtq	• Fixedelement ofremuneration toassistwith retirement planning. • Retirement INcNTtqApN providedto bothsupport retentionand recruitpeople ofthenecessary* calibre.	• NJutXzNLXpNJtepqJAcemtte^eXctWN ebmAc}ÊqLNTcNLJectpXIutXecqJWNbN¸ receiveacontributionintoapersonal pensionscheme,takeacashsupplement oranycombinationofthethree. • 3WNNbme}NpLNTcNLJectpXIutXecNzN¸<br>the*contribution*into*a*personal*pension*<br>scheme*and/or*cash*supplement*are*<br>kept under*review*by*the*Committee.<br>• 3WNpNtXpNbNctINcNTtqApNcetXcJuLNL incalculatingbonusandlongLterm incentive*quantum.	• 3WNbA XbubNzNeSpNtXpNbNctINcNTtq is25%ofbasesalary,andthecurrent provisionfortheexecutivedirectors is 18% ofbasesalary. • Theyaresetbytakingintoaccounta numberoffactors,includingmarket practiceforcomparablerolesat appropriate paycomparators. • Fornewexecutivedirectors,thenatureand zA`uNeSAc}pNtXpNbNctINcNTtqmpezXLNL willbe,intheCommittee'sview,reasonable inthecontextofmarketpracticefor comparablerolesandtakeaccountofboth theindividual'scircumstancesandthecost totheGroup.	• None

Directors'*Remuneration*Report continued

VARIABLE%REMUNERATION

`NbNct	Purposeand linktostrategy	Operation		Maximumopportunity Performancemeasures
Annual% Iecuq	• Toincentivise andrewardthe achievementof AccuATcAcJXA¸ operational and individual objectivesthat arekeytothe deliveryof the Group's strategy.	• Objectivesaresetannuallytoensurethat theyremaintargetedandfocusedonthe deliveryofstrategicgoals. • TheCommitteesetstargetsthatrequire appropriatelevelsofperformance,taking intoaccountinternalandexternal expectationsofperformance. • Assoonaspracticableaftertheyear end,theCommitteemeetstoreview performanceagainstobjectivesand determinespayoutlevels.TheCommittee mayadjustpaymentstoensuretheyare pNUNJtXzNeSezNpA``mNpSepbAcJN¶ • Aportionofanybonus(asdeterminedby theCommittee)isnormallydeferredinto anawardofsharesundertheDeferred BonusPlan(DBP).CurrentlyoneLthirdof anybonusisdeferredforaperiodofthree years(althoughtheCommitteemayvary thisapproach). • DBPawardsmaybeintheformof conditionalshareawardsornilLcostoptions oranyotherformallowedbytheplan rules. Thisdeferredbonuselementis not normallysubjecttoanyfurther performanceconditions,althoughit is subjecttocontinuedemployment. • Furtherdetailsofthemalusand clawback provisionsapplicable are set out onpage77.	• Maximum award opportunity for executive directorsis 150%ofbase salaryforeach TcAcJXA}NAp¸<br>a portion*<br>of which*<br>is normally*<br>deferred*into*an*<br>award*of*shares*<br>under*the*DBP*<br>(currently*<br>oneLthird).* | • Awards*are*based*on*a*combination*<br>eSTcAcJXA¸emNpAtXecAAcL<br>individual*goals*measured*over*<br>ecNTcAcJXA}NAp¶ • Atleast50%oftheawardwillbe AqqNqqNLAVAXcqtpeumTcAcJXA<br>metrics.*The*remainder*of*the*<br>award*will*be*based*on*performance*<br>against*strategic*objectives*and/or*<br>individual*objectives.*Details*of*the*<br>performance*measures*for*2014*and*<br>2015*are*set*out*in*the*Annual*Report*<br>on*Remuneration.<br>• A*sliding*scale*between*0%*and*100%*<br>of*the*maximum*award*pays*out*for*<br>achievement*between*the*minimum*<br>and*maximum*performance*<br>thresholds.*<br>• For*annual*bonuses*in*respect*of*<br>2015,*the*targets*will*be*based*on*<br>3AcLAIAAcJNLqJepNJApL of strategicmetrics. • Thedetailsofmeasures,targets and weightingsmaybevariedby the CommitteeyearLonLyearbased ontheGroup'sstrategic*priorities.
Long%Term% Incentive% Plan%(LTIP)	• Toincentivise andreward the delivery of longLterm strategic objectives. • Toalignthe interestsof the executive directors with thoseof shareholders. • Toassist recruitment and retention of executive* directors.	• AwardsgrantedundertheLTIPvest subjecttoachievementofperformance conditionsmeasuredoveraperiodofat leastthreeyears,unlesstheCommittee determinesotherwise. • Awardsmaybeintheformofconditional shareawardsornilLcostoptionsorany otherformallowedbytheplanrules. • Furtherdetailsofthemalusand clawback provisionsapplicable are set out onpage77.	• Themaximum award opportunity (at grant) for executive directorsin respectofa TcAcJXA}NAp<br>is 200%*of*<br>base salary.* | • Vesting*of*awards*will*be*dependent*<br>ecApAcVNeSTcAcJXA¸emNpAtXecA<br>or share*price*measures,*as*set*by*the*<br>Committee,*which*are*aligned*with*the*<br>longLterm*strategic*objectives*of*the*<br>Group*and*shareholder*value*creation.<br>• Not*less*than*30%*of*an*award*will*<br>be based*on*share*price*measures.*<br>The remainder*will*be*based*on*either*<br>TcAcJXAAcLºepemNpAtXecAbNAqupNq¶<br>• At*the*threshold*performance,*no*more*<br>than*25%*of*the*award*will*vest,*rising*<br>to*100%*for*maximum*performance.<br>• For*awards*granted*in*2015,*vesting*<br>{X``INIAqNLec-1¢‡''£AcLpNAtXzN TSR(50%)targets. • Thedetailsofmeasures,targets andweightingsmaybevariedbythe Committeepriortograntbasedon theGroup'sstrategic*objectives.

NOTES TO THE POLICY TABLE PERFORMANCE MEASURES AND TARGETS

Annual bonus

The annual bonus performance measures are designed to provide an appropriate balance between incentivising executive directors to meet financial targets for the year and to deliver specific strategic, operational and personal goals. This balance allows the Committee to review the Group's performance in the round against the key elements of our strategy, and appropriately incentivise and reward the executive directors.

Bonus targets are set by the Committee each year to ensure that executive directors are focused on the key financial and strategic objectives for the financial year. In doing so, the Committee usually takes into account a number of internal and external reference points, including the Group's business plan.

LTIP

The Committee believes it is important that the performance conditions applying to LTIP awards support the long-term ambitions of the Group and the creation of shareholder value. The Committee currently considers that a combination of relative TSR and financial metrics (currently EPS) are the most appropriate measures to assess the underlying performance of the business, while creating alignment with shareholders and rewarding long-term value creation.

The Committee will keep the measures and weightings under review to ensure that the most appropriate measures to incentivise the long-term success of the Group are used.

RECOVERY PROVISIONS (MALUS AND CLAWBACK)

Prior to vesting, the Committee may cancel or reduce the number of shares subject to, or impose additional conditions on, LTIP, DBP awards and Directors' Share Bonus Awards in circumstances where the Committee considers it to be appropriate ('malus'). Such circumstances may include: a serious misstatement of the Group's audited financial results, a serious miscalculation of any relevant performance measure, a serious failure of risk management on regulatory compliance by a relevant entity, serious reputational damage to the Group, or the participant's material misconduct.

In addition, for cash bonus awards in respect of 2015 and future years, and for LTIP awards granted after 1 January 2015, the Committee may also claw back vested awards in certain extreme circumstances (including those listed above) for up to two years following the determination of the relevant performance outcome.

Prior to applying malus or clawback, the Committee will take into account all relevant factors (including, where a serious failure of risk management or regulatory compliance or serious reputational damage has occurred, the degree of involvement of the employee in that failure or damage in question and the employee's level of responsibility) in deciding whether, and to what extent, it is reasonable to operate malus and/or clawback. The Committee is satisfied that the above provisions provide robust safeguards against inappropriate payment of incentive awards.

LEGACY ARRANGEMENTS

Directors' Share Bonus Plan Awards ('Awards') were granted to Rob Roger, Simon Gordon and Garry Watts (in recognition of his performance as Executive Chairman) to reflect their contribution to the Company prior to Admission. These awards were made over shares in the form of nil-cost options. The awards are split into two equal tranches, which normally become exercisable on the first and second anniversary of Admission, respectively.

Although these awards were made in recognition of services provided to the Company prior to Admission, the awards will only be exercisable in full if the 90-day average share price prior to the first and second anniversary of Admission is at least 359 pence. If, at the relevant anniversary, the average share price is at or below 224 pence then the number of shares in the relevant tranche to which the options relate will be reduced by approximately 35%. Where the average share price at the relevant anniversary is between 224 pence and 359 pence, the proportion exercisable will be reduced on a pro-rata basis.

RECRUITMENT POLICY

In determining remuneration for new executive directors, the Committee will consider all relevant factors, including the calibre of the individual and the external market, while aiming not to pay more than is necessary to secure the required talent. The Committee would seek to act in what it considers to be the best interests of the Group and its shareholders. Normally, the Committee will seek to align the new executive director's remuneration package to the remuneration policy, as set out above.

Salary and benefits (including any retirement benefits) will be determined in accordance with the policy table above. In certain instances, the Committee may decide to appoint an executive director to the Board on a lower-than-typical salary, with the intention of gradually increasing the salary to move closer to market level as they build experience in the role. Normally, benefits will be limited to those outlined in the policy table above, including a relocation allowance in certain circumstances.

The maximum level of variable pay (excluding any buyouts) that may be awarded to a new executive director will be limited to 350% of base salary, which is consistent with the policy table above. Incentives will normally be granted under the existing plans; however, where appropriate, the Committee may tailor the award (e.g timeframe, form, performance criteria) based on the commercial circumstances.

The Committee may 'buyout' remuneration terms a new hire has had to forfeit on joining the Group. Buyout awards are intended to be of comparable commercial value, and capped accordingly. The Committee will take into account all relevant factors when determining the quantum and form/structure of any buyout, including any performance conditions attached to any forfeited awards, the likelihood of those conditions being met, and the proportion of the vesting/performance period remaining.

The service contracts for new appointments will be consistent with the policy described below. Where an executive director is appointed from within the organisation, the policy of the Group is that any legacy arrangements would be honoured in line with the original terms and conditions. Similarly, if an executive is appointed following an acquisition of, or merger with, another company, legacy terms and conditions would be honoured.

Directors' Remuneration Report continued

EXECUTIVE DIRECTOR SERVICE CONTRACTS AND PAYMENTS FOR LOSS OF OFFICE

The key employment terms and other conditions of the current executive directors, as stipulated in their service contracts, are set out below:

Provision	Policy
· 12 months' notice by either the Group or the executive director. This is also the policy for new recruits. Notice period
Benefits	• The Group may agree that certain benefits will be specified within the executive directors' service contracts.
	• The current executive directors are contractually entitled to private medical insurance (for the executive director and his family), permanent health assurance, income protection, life assurance, an annual health assessment (for the executive director and their spouse) and a car allowance.
Termination payment	· It is the Group's policy that service contracts contain provisions that allow the Group to terminate employment by making a payment in lieu of notice (PILON) equivalent to (i) 12 months' base salary and (ii) the cost of specific benefits (including retirement benefits).
	• Upon termination by the Group, the Group can determine whether a PILON is made as a single lump sum or paid in instalments, subject to mitigation. Where the sum is paid in instalments, the executive director has a duty to use reasonable endeavours to secure alternative employment as soon as reasonably practicable. In the event the executive director commences alternative employment with an annual salary of greater than £30,000, there will be a pro-rata reduction in the PILON payments.
Immediate termination	• The service contract of an executive director may also be terminated immediately and with no liability to make payment in certain circumstances, such as the executive director bringing the Group into disrepute or committing a fundamental breach of their employment obligations.
External appointments	• Executive directors may accept one position as a non-executive director of another publically listed company that is not a competitor of the Group, subject to prior approval of the Board. External appointments to any other company (and treatment of any fees) are also subject to the prior approval of the Board.

In the event that the employment of an executive director is terminated, any compensation payable will be cordance with the terms of the service contract between the Group and the employee, as well as the rules of any incentive participate.

Where an executive director's employment with the Group ceases prior to the annual bonus in respect of a financial year, the Committee in its absolute discretion will determine whether any bonus should be paid and the extern into shares should be applied. Any awards would normally be pro-rated. For bonuses in respect of 2015 onwards, clawback provisions will also apply. For the avoidance of doubt, in the executive director is dismissed for misconduct, no bonus will be payable.

The treatment of share awards made by the celevant share plan rules. The following table summarises the leaver provisions of share plans under which executive directors may currently hold awards.

Plan	Leaver reasons where awards may continue to vest	Vesting arrangements
Deferred Bonus Plan	· Death	• LTIP awards will vest to the extent determined by the Committee, which, unless the Committee determines otherwise, will be calculated on the basis of the
(DBP) and LTIP	• Injury, ill health or disability
	· Retirement	achievement of any performance conditions at the relevant
	· The transfer of the individual's employing company or business out of the Group	vesting date and, unless the Committee determines otherwise, the period of time that has elapsed between grant and cessation of employment/directorship.
	• Any other scenario in which the Committee determines good leaver treatment is justified	• The vesting date for such awards will normally be the original vesting date, although the Committee has the flexibility to determine that awards can vest upon cessation of employment.
		· DBP awards will normally vest in full on the original vesting date, although the Committee has the flexibility to determine that awards can vest earlier.
		· DBP and LTIP awards will continue to be subject to the malus provisions outlined on page 77 until the vesting of the awards. LTIP awards granted from 2015 onwards will also be subject to a clawback provision, as described above.
	· Any other reason	• Awards lapse in full.
Directors' Share Bonus Plan (Legacy arrangements granted prior to	• Any circumstance other than dismissal for cause	· These awards were made in recognition of services provided to the Company prior to Admission and, as such, are not subject to continued employment (except in the case of dismissal for cause).
Admission)		· Awards vest on the first and second anniversary of Admission to the extent the share price performance targets have been met.
		· Awards will continue to be subject to the malus provisions outlined on page 77 until the vesting of the awards.
	· Dismissal for cause	· Awards lapse in full.

Where directors participate in any HMRC approved all-employee share plans, the leaver treatment with the relevant legislation on the same terms as all other employees.

Directors' Remuneration Report continued

CHAIRMAN AND NON-FXFCUTIVE DIRECTORS

The Group seeks to appoint non-executive directors who have relevant professional knowledge (and/or specific technical skills) to support the current expertise of the Board and to match the healthcare sector within which the Group operates.

In the event of the appointment of a new Chairman and/or non-executive director, remuneration arrangements will normally be in line with those detailed in the relevant table below. Fees to non-executive directors will not include share options or other performancerelated elements.

Remuneration of independent non-executive directors, with the Chairman, is determined by the Chairman and the executive directors. The remuneration of the Chairman is determined by the Committee. Directors are not involved in any decisions in relation to their own remuneration.

The table below sets out the remuneration policy with respect to non-executive directors do not participate in the Group's bonus arrangements, share incentive schemes or retirement benefit plans.

Approach to setting remuneration for non-executive directors

|--|

· Fees are set at appropriate levels to ensure	· The total fees paid to non-executive directors will remain within the limit stated
non-executive directors are paid to reflect	in the Articles of Association of the Company.
the individual responsibility taken, as	Individual fees reflect responsibility and time commitment, as well as the skills and
well as the skills and experience of the	experience of the individual. Additional fees may be paid for further responsibilities,
individual. Fees are reviewed periodically.	such as chairmanship of committees.
· When setting fee levels, consideration is	Any benefits provided will be reasonable in the market context and take account of the
given to a number of factors, including	individual circumstances and benefits provided to comparable roles. Expenses reasonably
responsibilities and market positioning.	incurred in the performance of the role may be reimbursed or paid for directly by the Group,
· Where appropriate, benefits to the role	as appropriate, including any tax due on the benefits. Non-executive directors will also be
may be provided. Travel and other	covered by the Group's indemnity insurance.
reasonable expenses (including fees incurred in obtaining professional advice	The fees as at 31 December 2014 were:
in the turtherance of their duties and any	– Chairman: £257,000
associated taxes) incurred in the course	– Deputy Chairman and Senior independent director: £140,000
of performing their duties may be paid	– Non-executive director basic fee: £50,000
by the Group or reimbursed to non-	– Committee chairmanship: £10,000
executive directors.	• Individuals appointed to the Board by Cinven Funds pursuant to the Relationship Agreement do not currently receive any annual fees from the Comnanv

Under the terms of his appointment, Garry Watts is entitled to private medical expenses insurance (for both himself and his spouse and any dependent children), life assurance, annual health assessment for both himself and his spouse) and office facilities as Chairman. Medical expenses insurance will be provided under the Group's arrangements or, if he obtains equivalent benefits directly, the Group will meet his costs (up to a specified cap).

CHAIRMAN AND NON-EXECUTIVE DIRECTORS' LETTERS OF APPOINTMENT

The Chairman and non-executive directors have letters of appointment that set out their duties and responsibilities. They do not have service contracts with either the Group or any of its subsidiaries.

The key terms of the appointments are set out in the table below. This is the policy for current and any new non-executive directors.

Provision	Policy
Period	• In line with the UK Code, the Chairman and all independent non-executive directors are subject to annual re-election by shareholders at each AGM.
	After the initial three-year term, the Chairman and the non-executive directors are typically expected to serve a turther three-year term.
Termination	• The appointment of the Chairman is terminable by either the Group or the director by giving 12 months' notice.
	The appointment of the Deputy Chairman is terminable by either the Group or the director by giving three months' notice.
	• The appointment of any independent non-executive directors is terminable by either the Group or the director by giving two months' notice.
	• The non-executive directors nominated by Cinven Funds pursuant to the Relationship Agreement are terminable without notice.

FURTHER DETAILED PROVISIONS

The DBP and LTIP, as well as the outstanding legacy Directors Share Bonus Awards, will be operated in accordance with the relevant plan rules (which were summarised for shareholders in the Prospectus). The Committee may adjust only in accordance with the provisions of the relevant plan rules. This includes making adjustments to reflect one-off corporate events, such as a change in the Group's capital structure. In accordance with the plan ray be settled in cash rather than shares, where the considers this appropriate.

The performance conditions applicable to incentive awards may be amended on an appropriate basis determined by the Committee, if an event occurs or circumstances arise that cause the performance condition is no longer a fair measure of performance (and, in the case of the Directors' Share Bonus Award, the Committee determines fairly and reasonably that the circumstances prevailing at grant have changed). For LTIP and Directors' Share Bonus Awards, the amended performance condition will be at least as challenging as the original condition.

Under the DBP, LTIP and Directors' Share Bonus Awards, participants may receive an additional amount, in cash or shares, to take account of the value of dividends the participant would have received on the shares that vest.

In the event of a change of control of the Company, ITP awards may vest to the Committee deternines, taking into account the extent to which any performance conditions have been satisfied, and such other factors as the Committee considers relevant in the circumstances, provided that, unless the Committee determine, awards will be adjusted to reflect the period of time that has elapsed between grant and cessation of employment/directorship; DBP awards will normally vest in full; and legacy Share Bonus Awards may vest based on the per-share price payable to shareholders on the relevant transaction, or, in the case of a winding-up, the share price at the time. Alternatively, awards may be exchanged for equivalent awards in the acquiring company.

The Committee may make any remuneration payments (incentives) and payments for loss of office, notwithstanding that they are not in line with the Policy set out above, where agreed before this Policy came into effect; or at a time when the relevant individual was not a director of the Company and, in the Committee, the payment was not in consideration for the individual becoming a director of the Company.

The DBP and LTIP incorporate dilution limits are 10% in any rolling 10-year period for all plans and 5% in any rolling 10-year period for executive share plans. Shares issued out of treasury will count towards this is required under institutional shareholder guidelines. Shares issued, pursuant to any awards granted on or before the date of Admission will not count towards these limits. In addition, awards that lapse shall be disregarded for the purposes of these limits.

The Committee may make minor amendments to the Policy set out above for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation without obtaining shareholder approval for that amendment.

ILLUSTRATION OF THE REMUNERATION POLICY

Chief Executive Officer - Rob Roger

The remuneration arrangements have been designed to ensure that a significant proportion of pay is dependent on the delivery of stretching short-term and long-term performance targets aligned with the Group's objectives, and on delivering shareholder value. The Committee considers the level of remuneration that may be received under different performance outcomes to ensure that the context of the performance delivered and the value added for shareholders.

The charts that follow provide illustrative values of the annual remuneration packages in 2015 under three assumed performance scenarios. These charts are for illustrative purposes only and actual outcomes may differ from those shown.

Chief Financial Officer - Simon Gordon

Directors' Remuneration Report continued

	Assumed performance	Assumptions used
Fixed pay	All performance scenarios	· Consists of total fixed pay, including base salary, benefits and retirement benefits.
		• Base salary – salary effective as at 1 January 2015.
		· Benefits - based on 2014 values.
		· Retirement benefits - 18% of 2015 salary.
Variable pay	Minimum performance	· No payout under the annual bonus.
		• No vesting under the LTIP.
	Mid-point	• 50% of the maximum payout under the annual bonus. This represents 75% of base salary for both executive directors. One-third of the bonus payable is deferred into shares under the DBP.
		50% vesting under the LTIP. This represents 100% of base salary for both executive directors.
	Maximum performance	· 100% of the maximum payout under the annual bonus. This represents 150% of base salary for both executive directors. One-third of the bonus payable is deferred into shares under the DBP.
		100% vesting under the LTIP. This represents 200% of base salary for both executive directors.

DBP and LTIP awards have been shown at face value, with no share price growth, dividend accrual or discount rate assumptions. Excludes payouts under the Legacy Share Bonus Award, which were granted to the executive directors in recognition of services prior to Admission

REMUNERATION ARRANGEMENTS THROUGHOUT THE COMPANY

The Policy for our executive directors is designed in line remuneration philosophy and principles that underpin remuneration across the Group. When making decisions in respect of the executive director remuneration arrangements, the Committee takes into consideration the pay and conditions for employees throughout the Group. As stated in the policy table, salary increases are, in practice, normally aligned to the general employee population. The Committee does not directly consult with our employees as part of the process of determining executive pay.

DIFFERENCES IN REMUNERATION POLICY FOR ALL EMPLOYEES

The remuneration of the wider employee population is based on the same reward philosophy, whilst the components of remuneration vary with seniority. All employees, including executive directors, receive a salary and role appropriate benefits. Role-specific annual bonus arrangements are operated across the Group. For more senior roles, a portion of the bonus is deferred on a similar basis to executive directors. Only senior individuals who can have significant influence on the Group as a whole are invited to participate in the long-term incentive plans. This provides those individuals with an incentive to help achieve the Group's medium and long-term objectives and create shareholder value, whilst ensuring their remuneration varies to the extent these goals are achieved.

CONSIDERATION OF SHAREHOLDER VIEWS

The structure of remuneration for Board members was presented to shareholders in the Prospectus prior to Admission.

The Committee is mindful of shareholder views when evaluating and setting ongoing remuneration strategy, and intends to appropriately consult with shareholders prior to any significant proposed changes to the remuneration policy.

Annual%Report%on%Remuneration

**1# 3%3 40%0"4#03%#Ó;

4390
3%01¢43£**

The*following*table*sets*out*the*total*remuneration*for*the*executive*directors*for*the*year*ended*31*December*2014.*This*comprises*the*total* remuneration*received*over*the*full*year*from*1*January*2014*to*31*December*2014,*including*remuneration*received*from*the*Group*prior*to* Admission*and*the*incorporation*of*the*Company*on*12*June*2014.

As*Spire*Healthcare*Group*plc*was*a*newly*listed*company*during*2014,*there*is*no*disclosure*in*this*report*of*prior*year*information.*

£000's	RobRoger ¢ %£	Simon*Gordon (CFO)
Salary*	450.0	302.1
NcNTtq	16.1	14.4
0NtXpNbNctINcNTtq	80.5	54.1
Annualbonus(includingdeferredelement)		118.2
LongLterm*incentives	–	–
SubVtotal	742.0	488.8
Legacy–AccruedIncentivePayments	4,450.01	2,050.41
Legacy–ShareBonusAward2	1,031.1	562.4
Total	6,223.1	3,101.6

1 The*Accrued*Incentive*Payment*for*R*Roger*was*paid*wholly*in*cash,*and*for*S*Gordon*was*paid*half*in*cash*(less*the*repayment*of*a*loan*of*£12,890)*and*half*in*shares*as*noted*on*page*84. 2 The*value*of*the*Share*Bonus*Award*is*calculated*at*the*date*of*Admission*based*on*a*share*price*of*£2.10.

ADDITIONAL%NOTES%TO%THE%TABLE

SALARY

%cLbXqqXec¸tWNqAAp}SeptWN WXNS|NJutXzN%STJNp{Aq¸AcLtWNqAAp}SeptWN
WXNSXcAcJXA`%STJNp{Aq¸¸AcLtWNXp salary*for*2015*remains*unchanged.

BENEFITS

3WNINcNTtqJecqXqteSmpXzAtNbNLXJAXcqupAcJN¢SeptWNN|NJutXzNLXpNJtepAcLtWNXpSAbX}£¸mNpbAcNctWNAtWAqqupAcJN¸XSNAqqupAcJN and*a*car*allowance.*Under*his*contractual*terms,*Simon*Gordon*also*has*an*annual*health*assessment*(for*himself*and*his*spouse).* Under his contractual*terms,*Rob*Roger*also*has*income*protection*cover.

RETIREMENT%BENEFITS

The*amount*set*out*in*the*table*represents*the*Group*contribution*to*the*directors'*retirement*planning*at*a*rate*of*18%*of*base*salary.* Simon*Gordon*is*a*member*of*the*the*Spire*Healthcare*Pension*Plan*and*Rob*Roger*has*a*personal*pension*scheme.

ANNUAL%BONUS

3WNN|NJutXzNLXpNJtepqÊAccuAIecuqtApVNtq{NpNqNtAttWNINVXccXcVeStWNTcAcJXA}NAp¸mpXepteLbXqqXec¸AcL{NpNAbNcLNLec LbXqqXecI}mpe¹pAtXcVtepNUNJttWNcN{JXpJubqtAcJNqeStWNJebmAc}¶3WN30pNmeptNLSeptWNSu``}NApeS¶b{AqAWNAL ofthe amended*threshold*target.*Additionally,*both*Rob*Roger*and*Simon*Gordon*achieved*their*strategic*and*personal*objectives*in*full,* including*the*successful*delivery*of*the*IPO,*such*that*each*has*earned*in*total*a*bonus*of*34.3%*of*their*maximum*potential*annual*bonus.

3WN
ebbXttNNXqqAtXqTNLtWAttWNpNqutXcVmA}bNctqeS¸AcL¸te0eI0eVNpAcL1XbecepLecpNqmNJtXzN}ApNSu``} merited.*The*performance*targets*in*relation*to*the*2014*awards,*which*were*set*prior*to*Admission,*are*considered*to*be*commercially* sensitive.*The*Committee*have*implemented*a*revised*bonus*framework*for*2015*(as*set*out*on*page*86).*

TwoLthirds*of*the*bonus*will*be*paid*in*cash.*The*remaining*oneLthird*of*the*bonus*in*respect*of*2014*will*be*deferred*into*shares*under* the DBP.*These*shares*will*be*deferred*for*a*period*of*three*years,*conditional*on*continued*employment.*These*shares*will*remain*subject* to*a*malus*provision.

LONGVTERM%INCENTIVES

eA{ApLqucLNptWN 3-zNqtNLXctWNTcAcJXA}NApAcL¸quIqNouNct}¸ceA{ApLXqqWe{cXctWNqXcVNTVupNtAINAIezN¶

3WNTpqtA{ApLqucLNptWN 3-{NpNVpActNLec1NmtNbINp¶3WNqNA{ApLq{NpNVpActNLXctWNSepbeScX¹JeqtemtXecqezNp1mXpN NAtWJApNpeummJqWApNq¸{XtWtWNcubINpeSqWApNqtWAtbA}zNqtJecLXtXecAecmNpSepbAcJNtetWNNcLeStWNTcAcJXA`}NAp¶ The*maximum*award*granted*to*executive*directors*was*equivalent*to*200%*of*base*salary.

Shortly*following*Admission,*the*Committee*considered*the*key*longLterm*objectives*over*the*2014*to*2016*performance*period.* The Committee*determined*that*the*awards*for*the*performance*period*to*31*December*2016*should*be*linked*to*the*value*created* Sep qWApNWeLNpqezNptWNmNpXeL¸AcLAqAJecqNouNcJNtWAttWNA{ApLqqWeuLINNouA`}{NXVWtNLAVAXcqtpNAtXzN310AcL-1 performance targets.*Further*details*of*the*performance*conditions*are*set*out*on*page*84.

Directors' Remuneration Report continued

EPS - 50% of award

Vesting of this element is based on the adjusted EPS outcome for the 2016 financial year.

2016 EPS	Percentage of the element vesting
Less than 20.6 pence	0%
20.6 pence	25%
23.9 pence or more	100%

Straight-line vesting operates between these points.

Relative TSR - 50% of award

Vesting of this element is based on TSR performance measured against the constituents of the FTSE 250 (excluding investment trusts).

TSR performance	Percentage of the element vesting
Below median	0%
Median	25%
Upper quartile	100%
Straight-line vesting operates between these points. Based on relative TSR performance from Admission to 31 December 2016.

The following table provides details of the awards made on 30 September 2014:

Name	Type of award	Number of shares	Face value at grant	End of performance period
Rob Roger (CEO)	Conditional Share Award	372,340	£1,050,000
Simon Gordon (CFO)	(in the form of nil-cost options)	248,226	£700,000	31 December 2016

The share price used to determine the number awards was £2.823, the average of the middle matche of business over the last five date of grant. The face value is equivalent to 200% of base salary.

LEGACY ARRANGEMENTS - VARIABLE INCENTIVES RELATING TO THE PERIOD PRIOR TO ADMISSION

As disclosed in the Prospectus, the Company granted, conditional on Admission, Accrued Incentive Payments and Share Bonus Plan Awards. These are legacy arrangements that were adopted and operated prior to Admission. These figures have been included in the single-figure table above in the interests of transparency; however, it should be noted that they relate to performance delivered prior to Admission.

LEGACY ARRANGEMENT - ACCRUED INCENTIVE PAYMENTS

Bonus awards were made to approximately 160 current and former employees of the Group, including the executive directors Rob Roger, Simon Gordon and Garry Watts (in respect of his pre-Admission role of Executive Chairman). Half of the award made to Simon Gordon was delivered in shares. All remaining awards were paid in cash.

LEGACY ARRANGEMENT – DIRECTORS' SHARE BONUS PLAN AWARDS

Awards were granted to Rob Roger, Simon Gordon and Garry Watts (in recognition of his performance in his pre-Admission role of Executive Chairman) to reflect their contribution to the Company prior to Admission. Details of these awards are to create further alignment with shareholders, these awards were made over shares in the form of nil-cost options and split into two equal tranches, which become exercisable on the first and second anniversary of Admission, respectively.

Although these awards were made in recognition of services provided to the Company prior to Admission and, as such, are not subject to continued employment, the Share Bonus Awards will only remain exercisable in full if the 90 day average share price prior to the first and second anniversary of Admission is at least 359 pence. If, at the relevant anniversary, the average share price is at or below 224 pence then the number of shares in the relevant tranche, to which the reduced by approximately 35%. Where the average share price at the relevant anniversary is between 224 pence then the proportion exercisable will be reduced on a pro-rata basis.

As the awards were made in respect of the period prior they are not subject to continued employment, except in the case of dismissal for cause, and remain subject to the malus provision policy. The amounts shown in the single-figure tables is the minimum number of shares that may vest valued at the share price on Admission (210 pence).

No further awards will be made under this arrangement.

The following table provides details of the Directors' Share Bonus Awards:

Name	Type of award	Minimum exercisable award No. of shares	Maximum exercisable award No. of shares	Face value of maximum	Vesting date
Rob Roger (CEO)		491,000	766,000	£1,608,600	Vesting date for all
Simon Gordon (CFO)	Conditional Share Award (in the form	267,800	417,800	£877,380	participants:
Garry Watts (in respect of previous role as Executive Chairman)	of nil-cost options)	312,500	487,400	£1,023,540	50% — 23 July 2015 50% — 23 July 2016

These awards were granted on 4 July 2014. The face value shown number of shares execcisable valued at the share price on Admission (£2.10).

SINGLE TOTAL FIGURE OF REMUNERATION - NON-EXECUTIVE DIRECTORS (AUDITED)

The following table sets out the total remuneration for the year ended 31 December 2014. This comprises the total remuneration received by them since the incorporation of the Company on 12 June 2014. Full year information is shown for the Chairman (including detail relating to his pre-Admission role as Executive Chairman)

As Spire Healthcare Group plc was a newly listed company during 2014, there is no disclosure in this report of prior year information.

£000's	Fees	Benefits	Total
John Gildersleeve	75.0	-	75.0
Simon Rowlands		-
Dr Supraj Rajagopalan		-	l
Tony Bourne	30.0	-	30.0
Dame Janet Husband	30.0	-	30.0
Robert Lerwill	30.0	-	30.0
Total	165.0	-	165.0

CHAIRMAN

	Garry Watts	Garry Watts
	(as Executive	(as Non-Executive
£000's	Chairman)	Chairman)
Salary/Fees	143.3	114.0
Benefits	2.2	1.0
Retirement benefits
Annual bonus	144.2
Long-term incentives
Sub-total	289.7	115.0
Variable incentives prior to Admission
Legacy – Accrued Incentive Payment	1,298.7
Legacy – Share Bonus Award1	656.3
Tota	2,244.7	115.0

1 The value of the Share Bonus Award is calculated at the date of Admission based on a share price of £2.10.

NOTES TO THE TABLE

FEES

The fees shown are paid to the non-executive director from the date of their appointment. The non-executive directors nominated by Cinven Funds, subject to the Relationship Agreement, do not receive any fees.

BENEFITS

Only Garry Watts has a contractual entitlement to benefits, which consist of private medical insurance for himself and family; life cover for himself only; annual health assessment for himself and spouse; and office facilities to enable him to perform his duties as Chairman.

Reasonable expenses incurred by any non-executive director will be reimbursed by the Company.

CHAIRMAN

As disclosed in the Prospectus, Garry Watts was entitled to a time pro-rated bonus for the period prior to Admission, in respect of his previous role as Executive Chairman. The amount shown is equivalent to 100% of his previous salary pro-rated for the period from 1 January 2014 to the date of Admission.

Details of the legacy awards relating to performance prior to Admission are set out on page 84.

Following Admission, Garry Watts was appointed as a non-executive Chairman and, in line with corporate governance guidelines, he will not participate in any future incentive plans.

Directors'*Remuneration*Report continued

IMPLEMENTATION%FOR%2015%

The*following*table*summarises*how*remuneration*arrangements*will*be*operated*for*2015.*Shareholders*will*note:

• salaries*remain*unchanged*for*the*year;*and
• the*maximum*opportunity*under*the*incentive*plans*will*remain*unchanged.

1A`Ap}AcLINcNTtq	• Followingtheyearend,theCommitteereviewedthebasesalaryforexecutivedirectorsaspartoftheannualsalary reviewprocessanddecidednottoincreasethematthispointintime.
	On*Admission	2015*salary

	Rob*Roger	£525,000	£525,000
	Simon*Gordon	£350,000	£350,000
	• #eJWAcVNqteINcNTtqSep"'ƒ‡ÓINcNTtqXcJuLNmpXzAtNbNLXJAXcqupAcJN¸mNpbAcNctWNAtWAqqupAcJN¸XcJebN<br>protection,*life*assurance,*an*annual*health*assessment*and*car*allowance.*Company*contributions*to*the*executive*<br>LXpNJtepqÊpNtXpNbNctINcNTtqpNbAXcAtƒŠ'eSqAAp}¶
ccuA`Iecuq	• Themaximumopportunityforbothexecutivedirectorswillremainat150%ofsalary.
	• 3WNmNpSepbAcJNtApVNtqXcpNqmNJteStWN"'ƒ‡Iecuq{X`INIAqNLec3¸AcLAIAAcJNLqJepNJApLIAqNL on strategictargetslinkedtoproductivity,customer,qualityandstaffmeasures.Thedetailoftargetsforthecoming yeariscommerciallysensitive;however,theCommitteewilllooktoprovideexpandeddisclosureregardingbonus outcomesinnextyear'sreport.
	• OneLthirdofanybonusearnedwillbedeferredintosharesforthreeyears.
LTIP	• Conditionalawardovershareswillbemadein2015of200%ofbasesalaryintheformofnilLcost*options.
	• Performancewillbemeasuredovertheperiodfrom1January2015to31December2017.
	• {ApLqJecLXtXecAecpNAtXzN310AcLAL^uqtNL-1tApVNtq¿
		Threshold (25%vests)	Fullvesting (100%vests)
	310z31"‡'¢N J`uLXcVXczNqtbNcttpuqtq£¢‡''£	Median	Upper quartile
	L^uqtNL-1ÓeutJebNXc"'ƒ‰¢‡''£¨	23.8*pence	27.5*pence
	¨ 1tpAXVWt¹XcNzNqtXcVINt{NNcmeXctqqWe{c¶#ezNqtXcVeSNNbNctSepmNpSepbAcJNINe{tWpNqWeL¶
	Shareholding%guideline • NJutXzNLXpNJtepqApNN mNJtNLteIuXLumAcLbAXctAXc¸ezNpAmNpXeLeSTzN}NApq¸AqWApNWeLXcVNouXzA`Nct to twicetheirrespectivebasesalaries.
	• Asatthedateofthisreport,bothexecutivedirectorshaveholdingsthatexceedthis*guideline.
NonVExecutive% XpNJtepq	• ThecurrentfeespayabletotheChairmanandnonLexecutivedirectorsareshowninthefollowingtable.Thesefees willbesubjecttoreviewontheappointeddate.
	Role		Fee
	Chairman		£257,000
	DeputyChairman/SeniorIndependent*Director		£140,000
	BasicfeeforothernonLexecutive*directors		£50,000
	AdditionalfeeforchairofaBoard*Committee		£10,000

**133"#3%0

3%01Ê10% ##10#30131¢43£**

The*table*below*sets*out*the*directors'*shareholdings*in*the*Group.*As*noted*above,*executive*directors*are*expected*to*build*up*and*maintain* a*holding*equivalent*to*twice*their*base*salary.*

	Shareholding	Guidelines
	Asat31December2014	Proportionofshareholding guidelineachieved1
NJutXzNXpNJtepq
RobRoger	%518,216%	188%
SimonGordon	262,596	143%
#ec¹ NJutXzNXpNJtepq
Garry*Watts	266,532	n/a
JohnGildersleeve	%4,761%	n/a
Simon*Rowlands	0	n/a
DrSuprajRajagopalan	0	n/a
Tony*Bourne	%11,904%	n/a
DameJanetHusband	4,761	n/a
Robert*Lerwill	23,809%	n/a

1* Calculated*based*upon*the*closing*share*price*on*31*December*2014*of*£3.80,*both*executive*directors*significantly*exceed*the*guideline*of*200%*of*salary.

The*table*below*sets*out*the*directors'*interests*in*shares*of*the*Group*which*remain*unvested*as*at*the*year*end.

		Shares
Name	Unvestedandsubject toperformance*conditions1	Unvestedandnotsubject toperformanceconditions2
NJutXzNXpNJtepq
Rob*Roger	647,340	491,000
Simon*Gordon	398,226	267,800
#ec¹ NJutXzNXpNJtepq
Garry*Watts	174,900	312,500
JohnGildersleeve	–	–
Simon*Rowlands	–	–
DrSuprajRajagopalan	–	–
Tony*Bourne	–	–
DameJanetHusband	–	–
Robert*Lerwill	–	–

1* *Awards*granted*under*the*LTIP*(372,340*for*Rob*Roger*and*248,226*for*Simon*Gordon),*plus*the*proportion*of*the*Directors'*Share*Bonus*Plan*that*is*delivered*dependent*on*share*price*performance* (275,000*for*Rob*Roger,*150,000*for*Simon*Gordon*and*174,900*for*Garry*Watts).

2* Consists*of*the*proportion*of*the*Directors'*Share*Bonus*Award*that*is*not*subject*to*performance*(491,000*for*Rob*Roger,*267,800*for*Simon*Gordon*and*312,500*for*Garry*Watts).

Unvested*awards*are*structured*as*nilLcost*options.*

Directors' Remuneration Report continued

LETTERS OF APPOINTMENT

Non-Executive Director	Date of appointment	Notice period	Date of expiry
G Watts	4 July 2014	12 months	23 July 2017
J Gildersleeve	24 June 2014	3 months	23 July 2017
T Bourne	24 June 2014	2 months	21 May 2018
R Lerwill	24 June 2014	2 months	21 May 2018
J Husband	24 June 2014	2 months	21 May 2018

SERVICE CONTRACTS

Each of the executive directors, who both put themselves up for re-election at the AGM to be held on 21 May 2015, are employed under ongoing service contracts with the Group. These contracts do not have a fixed term of appointment. A copy of each executive director's service contract is available at the registered office for inspection.

PERFORMANCE TABLE

The table below illustrates Spire Healthcare's TSR performance against the FTSE 250 (excluding investment trusts) since listing.

23 July 2014	31 Dec 2014
FTSE 250 100	107
Spire Healthcare 100	148

The table below shows the total remuneration paid to the Chief Executive Officer since Admission.

Chief Executive Officer's remuneration	2014
CEO single figure of remuneration (£000's)	398.6
Annual bonus payout (% of maximum)	34%
LTIP vesting (% of maximum)	N/A

PERCENTAGE CHANGE IN REMUNERATION OF THE DIRECTOR UNDERTAKING THE ROLE OF CHIEF EXECUTIVE OFFICER

There is no comparative data from previous year, as shown in the single-figure table. Hence, there will be no percentage changes in salary, benefits and annual bonus for the CEO or for the comparator group of all UK permanent employees.

RELATIVE IMPORTANCE OF SPEND ON PAY

The table below illustrates the year change in the total remuneration costs for all employees and shareholder distributions.

£million	2013	2014	% change
Total remuneration	210.9	283.11	34%
Distributions to shareholders			N/A

1 Included in total remuneration for the year ended 31 Decesses notes 7 and 108 of the Notes to the financial statements for futher deal.

ADVICE PROVIDED TO THE REMUNERATION COMMITTEE

During the course of the year, Deloitte LLP was appointed by the Committee to provide external advice. Its total fees for advice provided to the Remuneration Committee were £60,500. Deloitte has voluntarily signed up to the Remuneration Consultants of to executive remuneration consulting during the year. The Comfortable that the Deloitte LLP engagement partner and team that provides remuneration advice to the Committee do not have connections with the Company that may impair their independence. During the year, Deloitte also provided unrelated tax and consultancy services to the Group.

The Chairman, CEO, CFO and Simon Rowlands attended committee meetings by invitation in order to provide the Committee with additional context. The Company Secretary (or in his absence, the Deputy Company Secretary) act as the Committee's secretary. No individual participates in discussions regarding their own remuneration.

On behalf of the Remuneration Committee

Tony Bourne Chair, Remuneration Committee 23 March 2015

Directors' Report

The directors submit their Annual Report together with the audited financial statements of the Group and of the Company, Spire Healthcare Group plc, for the year ended 31 December 2014.

Certain disclosure requirements for inclusion in this report have been incorporated by way of cross reference to the Strategic Report on pages 1 to 55 and the Directors' Remuneration Report on pages 74 to 88, and should be read in conjunction with this report. The following, included in the Strategic Report, also form part of this report:

• greenhouse gas emissions, which can be found in Corporate Social Responsibility on page 45;
• · employees, which can be found in Our People on pages 42 and 43;
• · the Corporate Governance statement, set out on pages 59 to 66; and
• · Our Strategy set out on pages 18 to 21.

Information regarding the Company's charitable donations can be found in the Corporate Social Responsibility section on pages 44 and 45.

LISTING ON THE LONDON STOCK EXCHANGE

The Company's registered office and principal place of business is at 3 Dorset Rise, London EC4Y 8EN. On 23 July 2014, the entire issued ordinary share capital of the Company was admitted to the premium listing segment of the Official List of the Financial Conduct Authority and to unconditional trading on the London Stock Exchange plc's main market for listed securities.

DIVIDEND

The directors are recommending a final dividend in respect of 2014 of 1.8 pence per ordinary share which, if approved by shareholders at the AGM, will be paid on 30 June 2015 to shareholders on the register at 5 June 2015.

BOARD OF DIRECTORS

The directors of the Company were all appointed in June 2014, prior to Admission to Listing and their biographical information is set out on pages 56 and 57. All directors will retire at the AGM and offer themselves for re-election. Further information on the contractual arrangements of the executive directors is given on page 88. The non-executive directors do not have service agreements.

POWERS OF THE DIRECTORS

The business of the Company is managed by the directors who may exercise all the powers of the Company, subject to any relevant legislation, any directions given by the Company by passing a special resolution and to the Company's Articles of Association. The Articles, for example, contain specific provisions concerning the Company's power to borrow money and issue shares.

APPOINTMENT AND REMOVAL OF DIRECTORS

Rules relating to the appointment and removal of the directors are contained within the Company's Articles of Association.

DIRECTOR'S INDEMNITIES

See page 65 in the Corporate Governance section.

AMENDMENT OF ARTICLES OF ASSOCIATION

The Company may only make amendments to the Articles of Association of the Company, by way of special resolution of the shareholders, in accordance with the Companies Act.

FMPI OYFES

The Group is an equal opportunities employer and is committed to creating an environment which will attract, retain and motivate its people, by creating a working environment in which individuals are able to make best use of their skills, free from discrimination or harassment, and in which all decisions are based on merit. Spire Healthcare employs people who consider themselves to have a disability (a physical or mental impairment which has a substantial and long term adverse effect on their ability to carry out normal day to day activities). Employees who consider themselves to have a disability are under no obligation to inform their employer of this, however, we are fully aware of, and comply with, our obligations in accordance with the relevant provisions of The Equality Act 2010.

The Group gives full and fair consideration to applications for employment from disabled persons. Should an employee become disabled during their employment with Spire Healthcare, every effort is made to enable them to continue their service with the Group.

Further information on our employees can be found in Our People on pages 42 and 43.

POLITICAL DONATIONS AND EXPENDITURE

The Group made no political donations in the period since Admission. Although the Company does not make, and does not intend to make, donations to political parties, within the normal meaning of that expression, the definition of political donations under the Companies Act 2006 is very broad and includes expenses legitimately incurred as part of the process of talking to members of parliament and opinion formers to ensure that the issues and concerns of the Group are considered and addressed. These activities are not intended to support any political party and the Group's policy is not to make any donations for political purposes in the normally accepted sense.

A resolution (continuing the approval granted by shareholders as part of the IPO) will therefore be proposed at the AGM seeking shareholder approval for the directors to be given authority to make donations and incur expenditure which might otherwise be caught by the terms of the Companies Act 2006. The authority sought will be limited to a maximum amount of £100,000.

Directors' Report continued

SHARE CAPITAL

As at the date of this report, the Company had an issued share capital of 401,081,391 ordinary shares of 1 pence each, being the total number of Spire Healthcare Group plc shares with voting rights.

The rights attaching to the shares are set out in the Articles of Association. There are no restrictions on the transfer of ordinary shares in the capital of the Company other than those which may be imposed by law from time to time. There are no special control rights in relation to the Company's shares and the Company is not aware of any agreements between holders of securities that may result in restrictions on the transfer of securities or on voting rights, except for the lock-ins agreed at the time of Admission as set out in the Prosepctus. In accordance with the Disclosure and Transparency Rules, certain employees are required to seek approval to deal in Spire shares.

Further information relating to the Company's issued share capital can be found in note 27 to the Company financial statements on page 119.

ALLOT SHARES AND PRE-EMPTION RIGHTS

Resolutions giving the directors the authority to allot further shares and make allotments of shares to persons other than existing shareholders in certain circumstances will be proposed for the first time at the AGM. See the Notice of Meeting contained within the AGM circular for additional detail.

VOTING RIGHTS

In a general meeting of the Company, on a show of hands, every member who is present in person or by proxy and entitled to vote shall have one vote. On a poll, every member who is present in person or by proxy shall have one vote for every share of which they are the holder.

RESTRICTIONS ON VOTING

Unless the directors otherwise determine, a shareholder shall not be entitled to vote either personally or by proxy;

• · if any call or other sum presently payable to the Company in respect of that share remains unpaid, or
• having been duly served with a notice to provide the Company with information under Section 793 of the Companies Act, and has failed to do so within 14 days, for so long as the default continues.

DIRECTORS' INTERESTS IN SHARE

The directors' share interests in the Company are detailed on page 87.

MATERIAL INTERESTS IN SHARES

The Group has been notified in accordance with DTR 5 of the Disclosure and Transparency Rules of the following interests in its issued ordinary shares as at 23 March 2015:

	Current %
Cinven Funds	48.35
Woodford Investment Management	10.21
BlackRock Investment Management	4.18
Lazard Asset Management	3.84
Capital World Investors	3.82

SIGNIFICANT AGREEMENTS

The following agreements are considered to be significant in terms of their potential impact on the business of the Group as a whole and could alter or terminate on a change of control of the Group:

• · the Group's bank facility agreement contains provisions entitling the counterparties to exercise termination or other rights in the event of a change of control;
• there are a number of contracts which allow the counterparties to alter or terminate those arrangements in the event of a change of control of the Company. These arrangements are commercially sensitive and confidential and their disclosure could be seriously prejudicial to the Group; and
• · the Company's share incentive plans contain provisions relating to a change of control and full details of these plans are provided in the Directors' Remuneration Report on pages 75 to 88. Outstanding options and awards would normally vest and become exercisable on a change of control, subject to the satisfaction of performance conditions, if applicable, at that time.

As disclosed in the Prospectus, the Relationship Agreement is a material agreement between the Company and Cinven Funds as the principal shareholder. The agreement does not include a change of control provision but does terminate upon the earlier of the Shares ceasing to be listed and traded on the London Stock Exchange's main market for listed securities and the principal shareholder's ceasing to be entitled, in aggregate, to exercise or to control the exercise of 15 per cent. or more of the votes to be cast on all or substantially all matters of a general meeting of the Company.

COMPENSATION FOR LOSS OF OFFICE

There are no agreements between the Group and its directors or emplovees providing for compensation for loss of office or employment that occurs as a result of change of control.

DISCLOSURES REQUIRED UNDER LISTING RULE 9.8.4R

The following table is included to meet the requirements of Listing Rule section 9.8.4R. The information required to be disclosed by that section, where applicable to the Company, can be located in the Annual Report and financial statements at the references set out below.

Information required	Location in annual report
Amount of interest capitalised	Note 11 on page 109
Long-term incentive schemes	See DRR pages 74–88
Equity securities allotted for cash	Note 27 on page 119
Parent and subsidiary undertakings	Note 18 on page 114
Subsisting significant contracts	Note 33 on page 125
Controlling shareholder relationships	Pages 60 and 90

EVENTS AFTER THE REPORTING PERIOD

There have been no material events affecting the Group or Company since 31 December 2014.

GOING CONCERN

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

The directors have considered the Group's forecasts and projections, and the risks associated with their delivery, and are satisfied that the Group will be able to operate within the covenants imposed by the new bank loan facility for the foreseeable future. In relation to available cash resources, the directors have had regard to both cash at bank and a £100 million committed, undrawn revolving credit facility.

Accordingly, they have adopted the going concern basis in preparing these financial statements.

DISCLOSURE OF INFORMATION TO AUDITOR

Having made enquiries of fellow directors and of the Company's auditor, each of the directors confirms that:

• · to the best of their knowledge and belief, there is no relevant audit information of which the Company's auditor is unaware; and
• · they have taken all the steps a director might reasonably be expected to have taken to be aware of relevant audit information and to establish that the Company's auditor is aware of that information.

RE-APPOINTMENT OF AUDITOR

Resolutions for the re-appointment of Ernst & Young LLP as the Auditor of the Company and to authorise the directors to determine its remuneration are to be proposed at the AGM.

ANNUAL GENERAL MEETING (THE 'AGM')

The Annual General Meeting of Spire Healthcare Group plc will be held at Freshfields Bruckhaus Deringer, 65 Fleet Street, London EC4Y 1HS on Thursday 21 May 2015 at 11.00 am. The notice of meeting is contained within the AGM circular.

The Directors' Report has been approved by the Board and is signed on its behalf by:

Daniel Toner

General Counsel and Group Company Secretary 23 March 2015

Statement of directors' responsibilities

The directors are responsible for preparing the Annual Report and Accounts, including the consolidated financial statements and the Company financial statements, Directors' Report, including the Directors' Remuneration Report and the Strategic Report in accordance with applicable law and regulations. Under that law, the directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and Article 4 of the IAS Regulation and have elected to prepare the parent company financial statements in accordance with IFRS, as adopted by the EU.

Company law requires the directors to prepare such financial statements for each financial year. Under company law, the directors must not approve the financial statements, unless they are satisfied that they give a true and fair view of the state of affairs of the Company on a consolidated and individual basis, and of the profit or loss of the Company on a consolidated basis for that period.

In preparing these financial statements, the directors are required to:

• · select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
• · make judgements and estimates that are reasonable and prudent;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
• provide additional disclosures when compliance with the specific requirements in IFRSs as adopted by the EU is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's and Company's financial position and financial performance;
• state that the Group's and Company's financial statements have complied with IFRSs as adopted by EU, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on a going-concern basis, unless it is not appropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions, and disclose, with reasonable accuracy at any time, the Company's financial position and enable them to ensure compliance with the Companies Act 2006. They are also responsible for safeguarding the Company's assets and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each of the directors, whose names and functions are listed on pages 56 and 57, confirms that:

• to the best of their knowledge, the consolidated financial statements and the Company financial statements, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Company on a consolidated and individual basis;
• to the best of their knowledge, the Strategic Report and the Directors' Report include a fair review of the development and performance of the business and the position of the Company on a consolidated and individual basis, together with a description of the principal risks and uncertainties that it faces; and
• they consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

By order of the Board,

Rob Roger Chief Executive Officer

Simon Gordon Chief Financial Officer 23 March 2015

Independent)auditor's)Report To)the)members)of)Spire)Healthcare)Group)plc

OUR&OPINION&ON&THE&FINANCIAL&STATEMENTS&IS&UNMODIFIED

:NWAzNAuLXtNLtWNTcAcJXAqtAtNbNctqeS1mXpNNAtWJApNpeum plc)for)the)year)ended)31)December)2014)which)comprise)the)Group) Income)Statement,)the)Group)Statement)of)Comprehensive)Income,) the)Group)and)Parent)Company)Balance)Sheets,)the)Group)and) Parent)Company)Statements)of)Changes)in)Equity,)the)Group)and) Parent)Company)Cash)Flow)Statements)and)the)related)notes)1)to) ¶ 3WNTcAcJXApNmeptXcVSpAbN{ep\_tWAtWAqINNcAmmXNLXctWNXp preparation)is)applicable)law)and)International)Financial)Reporting) Standards)(IFRSs))as)adopted)by)the)European)Union)and,)as)regards) tWN-ApNct
ebmAc}TcAcJXAqtAtNbNctq¸AqAmmXNLXcAJJepLAcJN with)the)provisions)of)the)Companies)Act)2006.

This)report)is)made)solely)to)the)Company's)members,)as)a)body,) in accordance)with)Chapter)3)of)Part)16)of)the)Companies)Act)2006.) %up AuLXt{ep_WAqINNcucLNptA_NcqetWAt{NbXVWtqtAtNtetWN Company's)members)those)matters)we)are)required)to)state)to) them in)an)auditor's)report)and)for)no)other)purpose.)To)the)fullest) extent)permitted)by)law,)we)do)not)accept)or)assume)responsibility) to)anyone)other)than)the)Company)and)the)Company's)members) Aq A IeL}¸SepeupAuLXt{ep_¸SeptWXqpNmept¸epSeptWNemXcXecq we have)formed.

In)our)opinion:

• tWNTcAcJXA`qtAtNbNctqVXzNAtpuNAcLSAXpzXN{eStWNqtAtNeStWN Group's)and)of)the)Parent)Company's)affairs)as)at)31)December)2014) AcLeStWNpeumÊqmpeTtSeptWN}NAptWNcNcLNLÀ
• tWNpeumAcL-ApNct
  ebmAc}TcAcJXA`qtAtNbNctqWAzN been properly)prepared)in)accordance)with)IFRSs)as)adopted) by the European)Union)and)for)the)Parent)Company)as)applied)in) AJJepLAcJN{XtWtWNmpezXqXecqeStWN
  ebmAcXNqJtÀAcL
• tWNTcAcJXAqtAtNbNctqWAzNINNcmpNmApNLXcAJJepLAcJN{XtW the)requirements)of)the)Companies)Act)2006)and,)as)regards)the) peumTcAcJXAqtAtNbNctq¸ptXJNeStWN10NVuAtXec¶

RESPECTIVE&RESPONSIBILITIES&OF&DIRECTORS&AND&AUDITOR&

As)explained)more)fully)in)the)Directors')Responsibilities)Statement) set)out)on)page)92,)the)directors)are)responsible)for)the)preparation) eStWNTcAcJXAqtAtNbNctqAcLSepINXcVqAtXqTNLtWAttWN}VXzN a true)and)fair)view.)Our)responsibility)is)to)audit)and)express)an) emXcXecectWNpeumTcAcJXAqtAtNbNctqXcAJJepLAcJN{XtW applicable)law)and)International)Standards)on)Auditing)(ISAs)) (UK and Ireland).)Those)standards)require)us)to)comply)with) the Auditing)Practices)Board's)Ethical)Standards)for)Auditors.)

OUR&AUDIT&OF&THE&FINANCIAL&STATEMENTS&

An)audit)involves)obtaining)evidence)about)the)amounts)and) LXqJequpNqXctWNTcAcJXAqtAtNbNctqquSTJXNctteVXzNpNAqecAIN AqqupAcJNtWAttWNTcAcJXAqtAtNbNctqApNSpNNSpebbAtNpXAmisstatement,)whether)caused)by)fraud)or)error.)This)includes)an) assessment)of:)whether)the)accounting)policies)are)appropriate)to) the)Group's)and)the)Parent)Company's)circumstances)and)have)been) JecqXqtNct}AmmXNLAcLALNouAtN}LXqJeqNLÀtWNpNAqecAINcNqq eS qXVcXTJActAJJeuctXcVNqtXbAtNqbALNI}tWNLXpNJtepqÀAcLtWN ezNpAmpNqNctAtXeceStWNTcAcJXA`qtAtNbNctq¶cALLXtXec¸{NpNAL AtWNTcAcJXAAcLcec¹TcAcJXAXcSepbAtXecXctWNccuA`0Nmept and)Accounts)to)identify)material)inconsistencies)with)the)audited)

TcAcJXAqtAtNbNctqAcLteXLNctXS}Ac}XcSepbAtXectWAtXq apparently)materially)incorrect)based)on,)or)materially)inconsistent) {XtW¸tWN\_ce{NLVNAJouXpNLI}uqXctWNJeupqNeSmNpSepbXcVtWN audit.)If)we)become)aware)of)any)apparent)material)misstatements) or)inconsistencies)we)consider)the)implications)for)our)report.)

OUR&APPLICATION&OF&MATERIALITY&

We)apply)the)concept)of)materiality)both)in)planning)and)performing) our)audit,)and)in)evaluating)the)effect)of)misstatements)on)our)audit) AcLectWNTcAcJXAqtAtNbNctq¶eptWNmupmeqNqeSLNtNpbXcXcV {WNtWNptWNTcAcJXAqtAtNbNctqApNSpNNSpebbAtNpXAbXqqtAtNbNct{NLNTcNbAtNpXAXt}AqtWNbAVcXtuLNeS bXqqtAtNbNcttWAtbA_NqXtmpeIAINtWAttWNNJecebXJLNJXqXecq eS ApNAqecAI}_ce{NLVNAINmNpqec¸pN}XcVectWNTcAcJXA qtAtNbNctq¸{eu`LINJWAcVNLepXcUuNcJNL¶

We)then)determine)a)lower)level)of)performance)materiality) which we)use)to)determine)the)extent)of)testing)needed)to)reduce) to an)appropriately)low)level)the)probability)that)the)aggregate)of) uncorrected)and)undetected)misstatements)exceeds)materiality) SeptWNTcAcJXAqtAtNbNctqAqA{WeN¶

When)establishing)our)overall)audit)strategy,)we)determined)a) magnitude)of)uncorrected)misstatements)that)we)judged)would) IN bAtNpXASeptWNTcAcJXAqtAtNbNctqAqA{WeN¶:NLNtNpbXcNL materiality)for)the)Group)to)be)£4.2)million)(2013:)£3.6)million),)which) XqJAJu`AtNLAq¢¿£eSAL^uqtNLmpeTtINSepNtA|¶:NAL^uqt the)loss)before)tax)as)reported)by)the)Group)to)exclude)the)impact)of:

• exceptional)items)of)£54.0)million)(note)8)to)the) TcAcJXA` qtAtNbNctq£À
• mpeTtecLXqmeqAeSWeqmXtAmpemNptXNqeS¶bX`Xec ¢cetN te tWNTcAcJXAqtAtNbNctq£ÀAcL
• XctNpNqteceAcqSpebSepbNputXbAtNmApNctucLNptA_XcVqAcL bAcAVNbNcteS¶bX`Xec¢cetNtetWNTcAcJXAqtAtNbNctq£¶

:NN|JuLNN|JNmtXecAXtNbqAcLtWNmpeTtecLXqmeqAeSWeqmXtA mpemNptXNq{XtWtWNXctNctXeceSAzeXLXcVXcAmmpempXAtNUuJtuAtXecq XceupbAtNpXAXt}Speb}NApte}NApAqApNquteScec¹pNJuppXcVXtNbq tWAtLecetpNUNJttWNucLNp}XcVtpALXcVmNpSepbAcJNeStWNpeum¶ Similarly)interest)paid)to)the)former)shareholders)prior)to)the)Group) INXcVALbXttNLtetWN ecLec1teJ\_|JWAcVNecu}Xq N|JuLNLqetWAttWNmpN¹tA|mpeTtpNUNJtqtWNtpALXcVmNpSepbAcJN of)the)newly)restructured)Group.)As)a)result)of)excluding)these)items,) AL^uqtNLmpN¹tA|mpeTtSpeb{WXJW{NWAzNJAJu`AtNLtWNIAqXq for)materiality)is)£83.3)million.

%ctWNIAqXqeSeuppXq_AqqNqqbNctq¸teVNtWNp{XtWeupAqqNqqbNct ofthe)Group's)overall)control)environment,)our)judgement)is)that) performance)materiality)for)the)Group)should)be)75%)(2013:)75%)) eS bAtNpXAXt}¸cAbN}¶bXXec¢¿¶bXXec£¸{WXJWpNUNJtq our)assessment)of)the)overall)control)environment)and)the)history)of) no)or)very)few)audit)adjustments.)Our)approach)is)designed)to)have) a reasonable)probability)of)ensuring)that)the)total)of)uncorrected) and undetected)audit)differences)does)not)exceed)our)materiality) eS ¶bXXec¢¿¶bXXec£SeptWNTcAcJXA`qtAtNbNctq as a whole.

Independent)auditor's)Report To)the)members)of)Spire)Healthcare)Group)plc)continued

We)evaluated)any)uncorrected)misstatements)against)both)the) quantitative)measures)of)materiality)discussed)above)and)in)light) of other)relevant)qualitative)considerations.

AN&OVERVIEW&OF&THE&SCOPE&OF&OUR&AUDIT

The)Group)continues)to)operate)solely)in)the)UK)and)with)common) TcAcJXAq}qtNbq¸mpeJNqqNqAcLJectpeqJezNpXcVA`eSXtqemNpAtXecq¶ Two)trading)entities)account)for)96%)of)the)Group's)revenue,) and both)were)subject)to)full)scope)audits)for)the)year)ended) NJNbINp¶3{eetWNpcec¹tpALXcVNctXtXNq{NpNAqeXcJuLNL within)full)scope)audit)procedures,)resulting)in)96.3%)of)the)Group's) pNzNcuN¸eStWNpeumÊqemNpAtXcVmpeTtINSepNN|JNmtXecAq and)46.5%)of)the)Group's)assets)being)covered)through)full)scope) audit)procedures.)

1mNJXTJqJemNAuLXtmpeJNLupNq{NpNmNpSepbNLSepetWNpNctXtXNq¸ tWNbA^epXt}eS{WXJWJebmpXqNtWNpeumÊqWNALeSTJNAcLmpemNpt} functions)and)covered)52.6%)of)the)Group's)asset)base.)These)entities) {NpNqN`NJtNLSepqmNJXTJqJemNAuLXtmpeJNLupNqSep{WXJWtWN N|tNcteSAuLXt{ep_{AqIAqNLeceupAqqNqqbNcteStWNpXq_qeS material)misstatement)and)of)the)materiality)of)those)locations) to the)Group's)business)operations.

PRINCIPAL&RISK&AREA&AND&RATIONALE AUDIT&RESPONSE

Revenue&recognition

ecqXqtNct{XtWtWNqXVcXTJActXqquNqAqXLNctXTNLI}tWNuLXtAcL 0Xq_
ebbXttNN¸{NJecqXLNpNLtWAttWNJebmN|Xt}eStWNmpXJXcV qtpuJtupN¸qmNJXTJA``}tWNWXVWzeubNeSLXSSNpNctmpeJNLupNqtWAt ApN ucLNptA_NcAJpeqqtWNmAtXNctpNzNcuNqtpNAbqJpNAtNqApXq_tWAt systematic)errors)or)manipulation)of)pricing)could)lead)to)an)error)in) reported)revenues)(£856.0)million)for)the)year)ended)31)December)2014) (2013:)£764.5)million)).)

3WXqpXq_XqJecqXLNpNLteINWXVWNpXcpNJepLXcV-"AcL#1pN`AtNL pNzNcuNq{WNpNtWNN|tNcteSmpXJXcVzApXAtXecqXqbeqtqXVcXTJAct and)requires)clinical)input)as)appropriate.)

The)Group's)accounting)policies)themselves)in)respect)of)revenue) pNJeVcXtXecApNcetJecqXLNpNLtempNqNctAc}qXVcXTJActpXq_eS misstatement)because)revenue)is)recognised)only)on)completion) of medical)procedures.

ebIXcNLSu``AcLqmNJXTJqJemNAuLXtmpeJNLupNqmNpSepbNLAJpeqq the)Group)for)the)year)ended)31)December)2014,)covered)over)99%) eStWNpeumÊqpNzNcuN¸eStWNpeumÊqemNpAtXcVmpeTtINSepN exceptional)items)and)99%)of)the)Group's)total)assets.)The)audits)of) all)these)components)are)performed)at)a)materiality)level)calculated) by)reference)to)a)proportion)of)the)Group)performance)materiality) appropriate)to)the)relevant)scale)of)the)business)concerned.)The) components)were)allocated)a)performance)materiality)threshold) ranging)between)£0.6)million)and)£2.9)million.

3WNAuLXteSA`eStWNJebmecNctq{XtWXctWNpeumXqucLNptA\_Nc by one)audit)team)which)is)led)by)the)senior)statutory)auditor.) uN te tWNcAtupNeStWNbAXcpXq\_ApNAqcetNLINe{¸tWNAuLXt team is)supported)by)experts)in)taxation,)property)valuations,) and the)evaluation)of)appropriate)discount)rates)used)within) zAuN¹Xc¹uqNJAJu`AtXecq¶

OUR&ASSESSMENT&OF&RISKS&OF&MATERIAL&MISSTATEMENT

:NJecqXLNptWAttWNSee{XcVApNAqmpNqNcttWNVpNAtNqtpXq\_eS bAtNpXA`bXqqtAtNbNctXctWNTcAcJXA`qtAtNbNctqAcLJecqNouNct`} have)had)the)greatest)impact)on)our)audit)strategy,)the)allocation) of resources)and)the)efforts)of)the)engagement)team,)including) the more)senior)members)of)the)team.)This)is)not)a)complete)list) eS A pXq_qXLNctXTNLAcLALLpNqqNLtWpeuVWeupAuLXtmpeJNLupNq¶

:NXLNctXTNLtWNJectpeqezNptWNeJJuppNcJNeSpNzNcuNte be the most)appropriate)to)test.)The)remaining)audit)procedures) over revenue)measurement)and)validation)utilised)a)substantive) AmmpeAJW¶3eALLpNqqtWNpXq\_qeSbXq¹qtAtNbNctXcpNAtXec to the revenue)recognition)we)performed)a)number)of) procedures, including:

• transactional)level)pricing)validation)was)performed)on)a) qAbmN eSXczeXJNqAJpeqqtWNpeumAcLAVpNNLIAJ\_teqeupJN pricing)documentation)and)evidence)of)input)from)clinical) pNzXN{ AqAmmXJAI`NÀ
• post)year)end)credit)note)testing)to)validate)that)pre)year) NcL pNzNcuN{AqcetXcAmmpempXAtN`}pNJeVcXqNLÀ
• analysis)of)credit)notes)raised)during)through)the)period)to) JecqXLNpXSmpXepWXqtep}XcLXJAtNLtpNcLqeSNppepqXcXczeXJXcVÀ
• consideration)and)support)of)any)payor)pricing)disputes,)or) X\_NXWeeLtWNpNeS¸LupXcVtWNmNpXeLteVAXcNzXLNcJNtWAttWNpN was)no)material)inappropriate)billing)during)the)period)under) pNzXN{ÀAcL
• analytical)review)at)a)hospital)level)to)consider)unusual)trends) that could)indicate)material)misstatement)to)revenue.

PRINCIPAL RISK AREA AND RATIONALE

Goodwill carrying amounts

We focused on this area due to (i) the significance of the carrying value of the goodwill being assessed (£519.1 million as at 31 December 2014); and (ii) as a result of the level of subjectivity associated with the forecast assumptions which underpin management's assessment of value-in-use, including the degree of subjectivity of cash flow forecasts, associated growth rates and the appropriateness of the discount rate applied.

AUDIT RESPONSE

We examined the Group's forecast cash flows which underpin management's impairment review. We tested the basis of preparing those forecasts taking into account the accuracy of previous forecasts and the historic evidence supporting underlying assumptions.

Future cash flow assumptions were challenged through comparison of current trading performance, seeking corroborative evidence and enquiry with management in respect of key growth and trading assumptions.

The reasonableness of other key assumptions such as the discount rate and long term growth rate were tested with appropriate input from EY valuation experts and applying an independent assessment on general market indicators to conclude on the appropriateness of these assumptions.

We also tested the mathematical integrity of management's model and carried out audit procedures on management's sensitivity calculations.

We also tested management's assessment on whether any reasonably possible change in these key assumptions would result in an impairment of goodwill and therefore require disclosure under IAS 36 Impairment of Assets.

Appropriate recognition of deferred tax balances

We consider that the Group's structure, including the changes arising during the year as a result of the Group reconstruction prior to IPO, results in there being a higher inherent risk associated with the calculation of current and deferred tax balances and the resulting tax position adopted by the Group. This is consistent with both the significant issue as identified by the Audit and Risk Committee and the significant judgement as set out in note 4 to these financial statements.

We consider that there is a level of estimation in assessing the tax base of the property portfolio for the purposes of calculating the associated deferred tax liability (£91.7 million as at 31 December 2014). Such calculations are dependent on management's assumption on use or possible disposal of properties in the future.

The scope for recognition of the Group's deferred tax assets (£43.6 million as at 31 December 2014) in accordance with IAS 12, particularly in respect of available losses is also a matter of judgement.

Treatment of costs directly attributable to the Group's IPO We considered the judgement management has exercised in appropriately presenting significant costs incurred in respect of the IPO.

Costs that are directly attributable to the issuance of new share capital may be allocated directly against share premium. This presents the risk that management may allocate costs to equity that are not directly attributable to the IPO, resulting a misstatement of profit. In addition costs directly incurred in raising new debt are required to be presented set off against the associated loan balance. This increases the risk that management may present costs in the balance sheet that are not directly related to raising new debt.

We also considered the classification of employee bonus charges and other expenses incurred as a consequence of the IPO process as exceptional.

We considered the status of any recent and current tax audits and enquiries and reperformed management's true up to the corporation tax calculations from the tax returns submitted for the prior year.

We understood and verified management's assumptions supporting the calculation of the deferred tax liability arising in respect of the property portfolio. Through our enquiries with management, we assessed the appropriateness of how the carrying amounts are assumed to be recovered with regard to Group's business plans and known developments.

In respect of both current and deferred tax, we tested management's estimates of appropriate levels of allowed tax deductions where the final tax treatment is yet to be agreed by the relevant tax authority. This included examining any available correspondence with tax authorities or tax advisors at the time of our audit procedures to corroborate the treatment adopted by management.

We considered the appropriateness of the taxation disclosures made in the financial statements.

We have audited costs that are reported by management to be related to the IPO and in particular tested management's allocation of such costs that are presented as directly attributable to the share issuance (£11.4 million for the year ended 31 December 2014) or new debt (£5.6 million for the year ended 31 December 2014).

We also considered the appropriateness of presenting the other IPO related costs as exceptional costs (£46.1 million for the year ended 31 December 2014) and concluded that such presentation was in accordance with the Group's accounting policy and the relevant 2013 FRC guidance.

Independent auditor's Report To the members of Spire Healthcare Group plc continued

OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion:

• · the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
• · the information given in the Strategic Report and the Directors' Report for the financial year for which the Group financial statements are prepared is consistent with the Group financial statements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the Annual Report is:

• materially inconsistent with the information in the audited financial statements; or
• · apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or
• · is otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the Annual Report is fair, balanced and understandable and whether the Annual Report appropriately discloses those matters that we communicated to the Audit Committee which we consider should have been disclosed.

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
• · the Parent Company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or
• · certain disclosures of directors' remuneration specified by law are not made: or
• · we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

• · the statement of directors' responsibilities, set out on page 92, in relation to going concern; and
• · the part of the Corporate Governance Statement relating to the Company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review.

David Hales

(Senior Statutory Auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor London

23 March 2015

• 1 The maintenance and integrity of the Spire Healthcare Group plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.
• 2 Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Consolidated)income)statement

For+the+year+ended+31+December+2014

(£&million)	#etNq	2014	2013
Revenue	6	856.0	764.5
Cost)of)sales		(436.6)	(382.1)
peqqmpeTt		419.4	382.4
Other)operating)costs		(359.3)	(282.8)
%mNpAtXcVmpeTt	5	60.1	99.6
Exceptional)items)included)within)other)operating)costs	8	(54.0)	(11.5)
%mNpAtXcVmpeTtINSepNN JNmtXecA`XtNbq		114.1&	111.1
-peTtecLXqmeqAeSmpemNpt}¸mActAcLNouXmbNct	9	18.5	44.2
Interest)income	10	0.3	0.4
Finance)costs	11	(85.9)	(153.9)
JNmtXecA`TcAcJNJeqtq	11	–	(42.2)
3etA`TcAcJNJeqtq		(85.9)	(196.1)
Loss&before&taxation		(7.0)	(51.9)
Taxation	13	13.0	154.1
-peTtSeptWN}NAp		6.0	102.2
-peTtSeptWN}NApAttpXIutAI`Ntee{cNpqeStWN-ApNct		6.0	102.2
Earnings&per&share&–&basic&and&diluted&(in&pence&per&share)	14	1.9	40.9

Consolidated)statement)of)comprehensive)income

For+the+year+ended+31+December+2014

!! (£&million)	2014	2013
-peTtSeptWN}NAp	6.0	102.2
Other&comprehensive&income&for&the&year
#NtVAXcecJAqWUe{WNLVNq	–	39.4
NSNppNLtA ecJAqWUe{WNLVNqtA_NcteWNLVNpNqNpzN	–	(11.1)
Hedge)loss)recycled)to)income)statement)(note 11)	–	68.8
NSNppNLtA ecpNJ}JNLJAqWUe{WNLVNeqqNq	–	(13.8)
Other)comprehensive)income)net)of)tax	–	83.3
Total&comprehensive&income&for&the&year	6.0	185.5
Total&comprehensive&income&for&the&year&attributable&to&owners&of&the&Parent	6.0	185.5

etWNpJebmpNWNcqXzNXcJebN{XpNJ}JNtempeTtepeqqXctWXqepSutupNmNpXeLq¶

<-- PDF CHUNK SEPARATOR -->

Consolidated)statement)of)changes)in)equity

For+the+year+ended+31+December+2014

(£&million)	Share) capital	Share) premium	Hedging) reserve	Capital) reserves	Retained) earnings	Total)equity
As&at&1&January&2013	–	–	(83.3)	–	(358.5)	(441.8)
-peTtSeptWN}NAp	–	–	–	–	102.2	102.2
Other)comprehensive)income	–	–	83.3	–	–	83.3
Total)comprehensive)income	–	–	83.3	–	102.2	185.5
bm`e}NNINcNTttpuqt	–	–	–	–	0.1	0.1
As&at&1&January&2014	–	–	–	–	(256.2)	(256.2)
-peTtSeptWN}NAp	–	–	–	–	6.0	6.0
Total)comprehensive)income	–	–	–	–	6.0	6.0
Group)reorganisation	2.5	525.0	–	376.1	–	903.6
Shares)issued)on)Admission	1.5	313.3	–	–	–	314.8
Transaction)costs)of)shares)issued	–	(11.4)	–	–	–	(11.4)
1WApN¹IAqNLmA}bNctq	–	–	–	–	2.8	2.8
NSNppNLtA ecqWApN¹IAqNLmA}bNctq	–	–	–	–	0.4	0.4
Balance&at&31&December&2014	4.0	826.9	–	376.1	(247.0)	960.0

Consolidated)balance)sheet

As+at+31+December+2014

!! (£&million)	#etNq	2014	2013
ASSETS
Nonacurrent&assets
Intangible)assets	16	519.1	514.9
Property,)plant)and)equipment	17	851.9	813.9
Deferred)tax)asset	24	–	17.1
		1,371.0	1,345.9
Current&assets
Inventories	19	26.0	26.2
Trade)and)other)receivables	20	139.9	131.2
Cash)and)cash)equivalents	21	74.5	111.5
		240.4	268.9
Total&assets		1,611.4	1,614.8
EQUITY&AND&LIABILITIES
Equity
Share)capital	27	4.0	–
Share)premium		826.9	–
Capital)reserves	27	376.1	–
Retained)earnings		(247.0)	(256.2)
Equity&attributable&to&owners&of&the&Parent		960.0	(256.2)
Nonacontrolling&interests		–	–
Total&equity		960.0	(256.2)
Nonacurrent&liabilities
Borrowings	22	493.5	882.1
NpXzAtXzNTcAcJXA`XcqtpubNctq	25	–	52.4
Deferred)tax)liability	24	48.1	77.4
		541.6	1,011.9
Current&liabilities
Provisions	23	6.2	3.2
Borrowings	22	5.3	746.8
NpXzAtXzNTcAcJXA`XcqtpubNctq	25	–	22.1
Trade)and)other)payables	26	98.3	87.0
		109.8	859.1
Total&liabilities		651.4	1,871.0
Total&equity&and&liabilities		1,611.4	1,614.8

3WNqN
ecqeXLAtNLTcAcJXAqtAtNbNctqAcLtWNAJJebmAc}XcVcetNq{NpNAmmpezNLSepXqquNI}tWNeApLeSXpNJtepqec"ApJW and)were)signed)on)its)behalf)by:

Rob&Roger& WXNS|NJutXzN%STJNp

Simon&Gordon WXNSXcAcJXA`%STJNp

ecqe`XLAtNLqtAtNbNcteSJAqWUe{q

For+the+year+ended+31+December+2014

(£&million)	#etNq	2014	2013
AqWUe{qSpebemNpAtXcVAJtXzXtXNq
Loss)before)taxation		(7.0)	(51.9)
Adjustments)for:
depreciation	5	45.1	43.0
goodwill)impairment	16	1.0	0.9
qWApN¹IAqNLmA}bNctq	28	2.8	–
mpeTtecLXqmeqAeSmpemNpt}¸mActAcLNouXmbNct	9	(18.5)	(44.2)
interest)income	10	(0.3)	(0.4)
TcAcJNJeqtq	11	85.9	153.9
N JNmtXecA`TcAcJNJeqtq	11	–	42.2
		109.0	143.5
"ezNbNctqXc{ep_XcVJAmXtA`¿
increase)in)trade)and)other)receivables)		(9.3)	(32.0)
decrease/(increase))in)inventories		1.5	(0.7)
increase/(decrease))in)trade)and)other)payables		9.5	(10.7)
increase/(decrease))in)provisions		2.3	(0.4)
Net&cash&from&operating&activities		113.0	99.7
AqWUe{qSpebXczNqtXcVAJtXzXtXNq
Acquisition)of)subsidiary,)net)of)cash)acquired	15	(38.5)	–
Purchase)of)property,)plant)and)equipment		(66.6)	(53.7)
Proceeds)from)disposal)of)property,)plant)and)equipment		34.8	700.4
Interest)received		0.3	0.4
Net&cash&(used&in)/generated&from&investing&activities		(70.0)	647.1
AqWUe{qSpebTcAcJXcVAJtXzXtXNq
Proceeds)from)issue)of)share)capital		317.2	–
Share)issue)costs		(10.3)	–
Acquisition)of)minority)interest		–	(0.6)
Interest)paid		(41.3)	(59.2)
Repayments)of)borrowings		(805.0)	(789.3)
-peJNNLqSpebLpA{Le{ceS`ecV¹tNpbIeppe{XcV		465.0	80.0
Debt)issuance)costs)		(5.6)	–
#NtJAqWuqNLXcTcAcJXcVAJtXzXtXNq		(80.0)	(769.1)
#NtLNJpNAqNXcJAqWAcLJAqWNouXzA`Nctq		(37.0)	(22.3)
Cash)and)cash)equivalents)at)beginning)of)year		111.5	133.8
Cash&and&cash&equivalents&at&end&of&year		74.5	111.5
Exceptional&costs
JNmtXecAJeqtqXcJuLNLXctWNJAqWUe{SpebemNpAtXcVAJtXzXtXNq		51.2	11.5
Total)exceptional)costs		51.2	11.5

Notes to the financial statements

1. GENERAL INFORMATION

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

The financial statements for the year ended 31 December 2014 were authorised for issue by the Board of the Company on 23 March 2015.

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

2. BASIS OF PREPARATION

The financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS') and on an historical cost basis, except for derivative financial instruments that are measured at fair value.

GROUP REORGANISATION DURING 2014

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

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

These companies were under common management and control throughout the years presented and, therefore, these financial statements have been prepared as if the reorganisation had taken place as at the beginning of the earliest year presented herein.

The comparative financial statements comprised Spire Healthcare Group UK Limited and Spire UK Holdco 2A Limited, together with each of their subsidiaries, as included in note 18, and, until 17 January 2013, the comparative financial statements also included Spire UK Holdco 1A Limited, Spire UK Holdco 3A Limited and their subsidiaries.

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

Transactions with Cinven Funds (the controlling party until Admission on 23 July 2014) and other entities under common control that were not acquired and, therefore, are not part of the Group, are disclosed as transactions with related parties (see note 33 for further information on related party transactions).

GOING CONCERN

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

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

3. ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES APPLIED

The principal accounting policies adopted are described below and were consistently applied for all periods noted below.

Revenue recognition

The Group derives its revenue primarily from providing private health care services to both the public sector and private patients in the UK.

Revenue from charges to patients is recognised when the treatment is provided.

Interest income

Interest is recognised on an effective interest rate basis.

Cost of sales

Cost of sales principally comprises salaries of clinical fees, medical services and inventories, including drugs, consumables and prostheses.

3. ACCOUNTING POLICIES continued

Other operating costs

Other operating costs mainly comprise non-alinical staff costs, rent associated with properties leases, depreciation, maintenance and running costs of properties and equipment. It also includes administrative expenses, including the provision of central support services, IT and other administrative costs.

Operating profit

Operating profit is the profit arising from the normal, recurring operations of the business and after charging exceptional items, as defined below.

Operating profit is adjusted to exclude exceptional items to calculate the Key Performance Indicator exceptional items', which is utilised in measuring performance before the impact of non-recurring, exceptional items in the income statement.

Exceptional items

Exceptional items are those items which, by virtue of their individually or in aggregate, need to be disclosed separately to allow a full understanding of the underlying performance of the Group.

Consolidation

The results of all subsidiary undertakings are included financial statements. The results of subsidiary undertakings acquired during the period are brought into the accounts from the date of purchase, being the Group obtains control. The results of subsidiaries disposed of during the period are included in the accounts until the Group's control ceases.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

• · power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);
• · exposure, or rights, to variable returns from its involvement with the investee; and
• · the ability to use its power over the investee to affect its returns.

Business combination and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to men-controlling interests in the acquiree at fair value or at the proportionate share of the acquires identifiable net assets. Acquisition-related costs are expensed as incurred and included in other operating costs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

Goodwill represents the excess of the cost of acquisition over the assets, liabilities and contingent liabilities of aquired businesses at the date of acquisition. Goodwill is stated at cost less accumulated impairment losses.

Goodwill is allocated to cash-generating units and is tested annually for impairment, or more frequently if there is an indication that the value of the goodwill may be impaired.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation.

No depreciation is charged on freehold land or properties under construction. Other assets are depreciated so as to write off the carrying amounts of the assets over their expected useful lives, as follows:

Freehold buildings and improvements	- 5-50 years
Leasehold buildings and improvements	- lower of unexpired lease term or expected life, with a maximum of 35 years
Plant and machinery	- 5-10 years
Fixtures, fittings and equipment	- 3-10 years

The expected useful lives of property, plant and equipment are reviewed annually and review of the asset lives and residual values of properties takes into consideration the plans of the business and levels of expenditure incurred on an ongoing basis to maintain the properties in a fit and proper state for their ongoing use as hospitals and the forecast timing of disposal.

3. ACCOUNTING POLICIES continued

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost means purchase price, less trade discounts, calculated on an average basis. Net realisable value means estimated selling price, less trade discounts, and less all costs to be incurred in marketing, selling and distribution.

Cash and cash equivalents

Cash and cash equivalents comprise cash ball deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a components for the purpose only of the statement of cash flows.

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost on an effective interest basis.

Borrowing costs

Borrowing costs that are directly attributable to the acquisition of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

Pensions

The Group operates the Spire Healthcare Pension a defined contribution scheme are held separately from those of the Group in independently administered funds.

Obligations for contributions to defined contribution pension schemes are recognised as an expense in the income statement as incurred.

Other employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related. A provision is recognised for the amount expected to be paid under short-term cash bonuses if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Share-based payments

The Group operates a number of equity-settled share-based payment schemes under which the Group receives from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. Where the share non-market related performance criteria, the Group has used the Black Scholes valuation model to establish the relevant fair values. Where the share hotal shareholder return (TSR') market related performance citeria, the Group has used the Monte Carlo simulation model to establish the relevant fair values (see note 28) The resulting fair values are recognised in the income statement over the vesting period of the options.

At the end of each year, the Group revises its estimates of the number of options that are expected to vest based on the non-market conditions and recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

The social security contributions payable in connection with the grant of the share options is considered to be an integral part of the grant itself, and the charge will be treated as a cash-settled transaction.

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected, risk adjusted, future cash flows at a pre-tax risk-free rate.

Leases

Leasing arrangements which transfer to the Group substantially all the risks and rewards of ownership of an asset are treated as if the asset had been purchased outright. The assets are included in tangible assets and depreciated economic lives or over the term of the lease, whichever is the shorter.

The capital element of the leasing commitments is included in liabilities as obligations under finance leases. The lease rentals are treated as consisting of capital and interest element is applied to reduce the outstanding obligation and the interest element is charged to the income statement in proportion to the capital element outstanding.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term.

3. ACCOUNTING%POLICIES%continued

Taxation%including%deferred%taxation

3etAXcJebNtA|ectWNpNqutSeptWN}NApJebmpXqNqJuppNctAcLLNSNppNLtA|¶cJebNtA|XqpNJeVcXqNLXctWNXcJebNqtAtNbNctN|JNmt to the extent'that'it'relates'to'items'recognised'directly'in'equity'and'other'comprehensive'income,'in'which'case'it'is'recognised'directly' in equity'and'other'comprehensive'income.

Current'tax'is'the'expected'tax'payable'on'the'taxable'result'for'the'year,'using'tax'rates'enacted,'or'substantively'enacted,'at'the'balance' sheet'date,'and'any'adjustments'to'tax'payable'in'respect'of'previous'years.

NSNppNLtA|XqmpezXLNLecA`tNbmepAp}LXSSNpNcJNqINt{NNctWNJApp}XcVAbeuctqeSAqqNtqAcLXAIXXtXNqSepTcAcJXApNmeptXcVmupmeqNq and'the'amounts'used'for'taxation'purposes,'except'for:'

• goodwill'not'deductible'for'tax'purposes;
• the'initial'recognition'of'an'asset'or'liability'in'a'transaction'that'is'not'a'business'combination'and'which,'at'the'time'of'the'transaction,' ASSNJtqcNXtWNptWNAJJeuctXcVmpeTtceptWNtA|AINmpeTtepeqqÀAcL
• investments'in'subsidiary'companies'where'the'timing'of'the'reversal'of'the'temporary'difference'is'controlled'by'the'Group'and' itis probable'that'the'temporary'difference'will'not'reverse'in'the'foreseeable'future.

The'amount'of'deferred'tax'recognised'is'based'on'the'expected'manner'of'realisation'or'settlement'of'the'carrying'amounts'of'assets' and liabilities,'using'tax'rates'enacted,'or'substantively'enacted,'at'the'balance'sheet'date.'A'deferred'tax'asset'is'only'recognised'to'the' N|tNcttWAtXtXqmpeIAINtWAtSutupNtA|AINmpeTtq{X`INAzAXAI`NAVAXcqt{WXJWtWNAqqNtJAcINuqNL¶

NpXzAtXzNTcAcJXA`XcqtpubNctq

3WNpeumbA}NctNpXcteLNpXzAtXzNTcAcJXA`XcqtpubNctAppAcVNbNctqtebAcAVNXtqN|mequpNteXctNpNqtpAtNpXq_¶

NpXzAtXzNqApNXcXtXA`}pNJeVcXqNLAtSAXpzAuNAttWNLAtNALNpXzAtXzNJectpAJtXqNctNpNLXcteAcLquIqNouNct`}pNbNAqupNLtetWNXp fair'value'at'each'balance'sheet'date.

3WNpeumAmm`XNqJAqWUe{WNLVNAJJeuctXcVtequJWLNpXzAtXzNqXStWNJpXtNpXASepLeXcVqeApNbNt¶

3WNNSSNJtXzNmeptXeceSJWAcVNqXctWNSAXpzAuNeSLNpXzAtXzNqtWAtApNLNqXVcAtNLAcLouAXS}AqJAqWUe{WNLVNqApNLNSNppNLXc other comprehensive'income.'The'gain'or'loss'relating'to'the'ineffective'portion'is'recognised'immediately'in'the'income'statement.

Amounts'deferred'in'equity'are'recycled'in'the'income'statement'in'the'periods'when'the'hedged'item'is'recognised,'in'the'same' line ofthe income'statement'as'the'recognised'hedged'item.

Hedge'accounting'is'discontinued'when'the'Group'revokes'the'hedging'relationship,'the'hedging'instrument'expires'or'is'sold,'terminated,' ep N|NpJXqNL¸epceecVNpouAXTNqSepWNLVNAJJeuctXcV¶c}JubuAtXzNVAXcepeqqLNSNppNLXcNouXt}AttWAttXbNpNbAXcqXcetWNp comprehensive'income'and'is'recognised'when'the'forecast'transaction'is'ultimately'recognised'in'the'income'statement.'When'a'forecast' tpAcqAJtXecXqceecVNpN|mNJtNLteeJJup¸tWNJubuAtXzNVAXcepeqqtWAt{AqLNSNppNLXcNouXt}XqpNJeVcXqNLXbbNLXAtN}XcmpeTtep`eqq¶

Share%capital

%pLXcAp}qWApNqApNJAqqXTNLAqNouXt}¶cJpNbNctAJeqtqLXpNJt}AttpXIutAINtetWNXqquNeScN{qWApNqApNLNLuJtNLSpebqWApNmpNbXub¶ :WNpNtWNNbme}NNINcNTttpuqtmupJWAqNqtWN ebmAc}ÊqNouXt}qWApNJAmXtA¢tpNAqup}qWApNq£¸tWNJecqXLNpAtXecmAXL¸XcJ`uLXcVAc} directly'attributable'incremental'costs,'is'deducted'from'equity'attributable'to'the'Company's'equity'holders'in'both'the'Company'and' the Consolidated'balance'sheet'until'the'shares'are'cancelled'or'reissued.

Dividend%distribution

XzXLNcLLXqtpXIutXectetWN
ebmAc}ÊqqWApNWeLNpqXqpNJeVcXqNLAqAXAIXXt}XctWNpeumÊqTcAcJXAqtAtNbNctqXctWNmNpXeLXc{WXJW tWN LXzXLNcLqApNAmmpezNLI}tWN
ebmAc}ÊqqWApNWe`LNpq¶ctNpXbLXzXLNcLqApNpNJeVcXqNL{WNcmAXL¶

NEW%AND%AMENDED%STANDARDS%AND%INTERPRETATIONS%

3WNSe`e{XcVcN{AcLAbNcLNL01AcL0 XctNpmpNtAtXecqtWAtApNAmmXJAINtetWNpeumAcLApNNSSNJtXzNSpebAcuAp} AcL WAzNINNcAmmXNLtetWNqNTcAcJXA`qtAtNbNctq¿

• 01
  ecqeXLAtNLXcAcJXA1tAtNbNctq
• 01eXctppAcVNbNctq
• 01XqJ`equpNeSctNpNqtqXc%tWNpctXtXNq
• 1XcAcJXAcqtpubNctq¸-pNqNctAtXec¢"A}AccuAXbmpezNbNctq£
• 1#ezAtXeceSNpXzAtXzNqAcL
  ectXcuAtXeceSNLVNJJeuctXcVÓbNcLbNctqte1
• 1%SSqNttXcVXcAcJXAqqNtqAcLXcAcJXA XAIX`XtXNqÓbNcLbNctqte1

3WNqNcN{AcLAbNcLNLqtAcLApLqAcLXctNpmpNtAtXecqLXLcetWAzNAc}qXVcXTJActNSSNJtectWNTcAcJXAmeqXtXeceStWNpeum¸eppNqutXc JWAcVNqXcAJJeuctXcVmeXJ}epAc}qXVcXTJActALLXtXecALXqJ`equpN¶3WNpNWAzNINNcetWNpcN{AcLAbNcLNLqtAcLApLqAcLXctNpmpNtAtXecq issued,'or'have'come'into'effect,'from'1'January'2014;'however,'they'are'not'applicable'to'the'Group'and,'hence,'not'included'above.

3. ACCOUNTING POLICIES continued

STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET APPLIED

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

• IFRS 9 Financial Instruments The standard introduces new requirements for classification and measurement, and hedge accounting, Subject to endorsement for use in the European Union, JFRS 9 is effective for annual periods beginning on, or after, 1 January 2018, with earlier application is required, but comparative informative information is not compulsory. The impact of the standard on the Group's performance and financial position will be evaluated.
• IFRS 15 Revenue from Contracts with Customers The standard replaces all existing IFRS standards and interpretations that currently govern revenue recognition under IFRS and provides a single, principles based five-step model to all contracts with customers. It does not apply to insurance contracts, to financial instruments or to lease contracts, which fall within the scope of other IFRSs. The standard also requires entities to provide users of financial statements with more disclosures for use in the European Union, IFRS 15 is effective for annual periods beginning on, or after, 1 January 2017, and is to be applied retrospectively, with earlier application permitted. The impact of the Group's performance and financial position is being evaluated.

4. SIGNIFICANT JUDGEMENTS AND ESTIMATES

In the application of the Group's accounting policies, the directors are required to make judgements, and estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The following accounting policies have been identified as involving particularly complex judgements or subjective estimates:

JUDGEMENTS

· Deferred tax

Deferred tax assets are recognised to the extent that it is probable that taxable in future against which they can be utilised. Future taxable profts are estimated based on business plans which include estimates and assumptions regardh, interest, inflation rates and taxation rates.

The Group owns a portfolio of freehold and leasehold property interests. The Group has recognised a deferred tax liability in its financial statements in respect of capital gains tax and other taxes based on the assumption of the freehold properties will be disposed of in future years, with the remaining properties being realised through use. This calculation requires judgement about the timing and number of the related property disposals, which is potentially impacted by the business over time and, in particular, changes in business plans in respect of the holding or disposing of properties.

Leases

In the determination of the classification of a number of leases over hospital properties as operating have been made about the discount rate applied to the annual rent payable over the remainder of the useful economic life of the hospitals. Further information about commitments under these leases is given in note 29.

· Exceptional items

Judgements are required as to whether items that are material in size, unusual or infrequent in nature should be disclosed as exceptional. Deciding which items meet this definition requires the judgement. Details of these items categorised as exceptional are outlined in note 8.

ESTIMATES

· Estimation of useful lives and residual values

Property, plant and equipment are depreciated over their account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining lives of the assets and projected disposal values. The estil lives of property, plant and equipment are set out in note 3.

Goodwill

Goodwill is considered for impairment at least annually if there is an indication that goodwill may be impaired. This is achieved by comparing the value-in-use of the goodwill with its carrying value in the accounts. The value-in-use calculations require the Group to estimate future cash flows expected to arise into account market conditions. The present value of these cash flows is determined using an appropriate discount rate.

The assumptions considered to be most critical in reviewing goodwill for impairment are contained in note 16.

· Share-based payments

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

5. OPERATING%PROFIT

%mNpAtXcVmpeTtWAqINNcAppXzNLAtAStNpJWApVXcV¿

(£%million)	2014	"'ƒ
Rent'of'land'and'buildings'under'operating'leases	60.7	‡†¶‹
NmpNJXAtXeceSmpemNpt}¸m`ActAcLNouXmbNct	45.1	†…¶'
bmAXpbNcteSXctAcVXI`NAqqNtq	1.0	–
Staff'costs'(see'note'7)	283.1	210.9

6. SEGMENTAL%REPORTING

cLNtNpbXcXcVtWNpeumÊqemNpAtXcVqNVbNct¸bAcAVNbNctWAqmpXbApX}JecqXLNpNLtWNTcAcJXAXcSepbAtXecXctWNXctNpcApNmeptqtWAt ApN pNzXN{NLAcLuqNLI}tWNN|NJutXzNbAcAVNbNcttNAbAcLtWNeApLeSXpNJtepq¢XcAVVpNVAtNtWNJWXNSemNpAtXcVLNJXqXecbA\_Np£Xc AqqNqqXcVmNpSepbAcJNAcLXcLNtNpbXcXcVtWNA``eJAtXeceSpNqeupJNq¶3WNTcAcJXAXcSepbAtXecXctWeqNXctNpcA`pNmeptqXcpNqmNJteSpNzNcuN and'expenses'has'led'management'to'conclude'that'the'Group'has'a'single'operating'segment,'being'the'provision'of'healthcare'services.

All'revenue'is'attributable'to'and'all'nonRcurrent'assets'are'located'in'the'United'Kingdom.

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

(£%million)	2014	"'ƒ
cqupNL	432.4	†ƒ…¶‰
NHS	245.9	191.4
SelfRpay	146.1	ƒ…"¶‹
Other	31.6	"ˆ¶‡
Total	856.0	‰ˆ†¶‡

7. STAFF%COSTS

EMPLOYEES

The'average'number'of'fullRtime'equivalent'persons'employed'by'the'Group'during'the'year,'analysed'by'category,'was'as'follows:

No.	2014	"'ƒ
Clinical	3,762	¸ˆ‡'
NonRclinical	3,408	¸"‹†
	7,170	6,944
The'aggregate'payroll'costs'of'these'persons'were'as'follows: (£%million)	2014	"'ƒ
Wages'and'salaries	244.1	180.9
Social'security'costs	24.0	ƒ‡¶Š
Other'pension'costs	15.0	14.2

cJuLNLXc{AVNqAcLqAApXNq¸qeJXAqNJupXt}JeqtqAcLqWApN¹IAqNLmA}bNctqSep}NApNcLNLNJNbINpApNN|JNmtXecAXtNbq eS ¶bXXec¸¶bXXecAcL¶bX`Xec¸pNqmNJtXzN}¶0NSNptecetNSepSuptWNpLNtAX`q¶

%tWNpmNcqXecJeqtqApNXcpNqmNJteStWNLNTcNLJectpXIutXecqJWNbNÀucmAXLJectpXIutXecqAtNJNbINp{NpN¶bXXec ¢¿¶bXXec£¶

283.1 210.9

8. EXCEPTIONALITEMS

(£ million)	2014	2013
Initial Public Offering ('IPO') related:
Costs incurred in relation to the IPO	43.6
Share-based payment (Directors' share bonus award) (note 28)	2.5
	46.1
Non-IPO related:
Business reorganisation and hospital set up costs	3.9	3.0
Corporate restructuring and financing costs		3.5
Regulatory costs	4.0	5.0
	7.9	11.5
Total exceptional costs	54.0	115

IPO REI ATED

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

NON-IPO REI ATED

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

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

9. PROFIT ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT

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

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

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

10. INTEREST INCOME

(£ million)	2014	2013
Interest income on bank deposits	0.3	0.4

11. FINANCE%COSTS

(£%million)	2014	"'ƒ
ctNpNqteceAcqSpebSepbNputXbAtNmApNctucLNptA_XcVqAcLbAcAVNbNct	54.8	90.7
ctNpNqtecIAc_SAJX`XtXNq	26.9	‡ˆ¶ˆ
XcAcJNJWApVNqmA}AINucLNpTcAcJNNAqNq	7.6	‰¶‡
Change'in'fair'value'of'interest'rate'derivatives	(2.8)	(0.1)
	86.5	ƒ‡†¶‰
Finance'costs'capitalised'in'the'year	(0.6)	(0.8)
	85.9	ƒ‡…¶‹
JNmtXecA`TcAcJNJeqtq	–	42.2
3etA`TcAcJNJeqtq	85.9	196.1

XcAcJNJeqtqJAmXtAXqNLLupXcVtWN}NAp{NpNJAJu`AtNLIAqNLecA{NXVWtNLJeqteSIeppe{XcVeS¢¿£¶

|JNmtXecA`TcAcJNJeqtq

ctWN}NApNcLNLNJNbINp¸Se`e{XcVtWNN|tNcqXeceStWNpeumÊqIAc\_eAcSAJXXtXNq¸AcLpNUNJtXcVtWNpeumÊqpNzXqNLqtpAtNV} Sep SutupNpN¹TcAcJXcV¸Xt{AqLNtNpbXcNLtWAttWNpNbAXcXcVXctNpNqtpAtNq{AmJectpAJtqceecVNpbNttWNJpXtNpXASepWNLVNAJJeuctXcV and,therefore,'the'nonRcash'fair'value'of'swap'losses'of'£68.8 million,'previously'accumulated'in'the'hedging'reserve,'were'recycled'to'the' income'statement.

%tWNpXtNbqApXqXcVXctWN}NApNcLNLNJNbINpXcJuLNAJpNLXtpNAtNLtetWNmAptXA`{AXzNpeSIAc_LNItAcLXctNpNqtpAtNq{Am liabilities'on'settlement,'net'of'the'unamortised'debt'costs.'This'resulted'in'a'total'net'credit'of'£26.6'million.

12. AUDITOR'S%REMUNERATION

upXcVtWN}NAp¸tWNpeum¢XcJuLXcVXtqquIqXLXApXNq£eItAXcNLtWNSe``e{XcVqNpzXJNqSpebtWNpeumÊqN|tNpcAAuLXtepqAqLNtAXNLINe{¿ (£%million) 2014

Amounts'receivable'by'auditor'and'their'associates'in'respect'of:
uLXteStWN ebmAc}ÊqAccuATcAcJXAqtAtNbNctq	0.3	–
Audit'of'the'Company's'subsidiaries	0.2	0.4
%tWNpAqqupAcJNqNpzXJNq¢-%pN`AtNLqNpzXJNq£	0.5	–
Other'services*	–	0.1
	1.0	'¶‡

* Other'services'relates'to'financial'and'accounting'advice.

13. TAX%ON%LOSS%

(i) Analysis%of%tax%credit%in%the%year:

(£%million)	2014	"'ƒ
Current'tax
UK'Corporation'tax'arising'in'subsidiaries'on'loss'for'the'year	–	–
Adjustments'in'respect'of'prior'years	0.7	(7.4)
Total'current'tax	0.7	(7.4)
NSNppNLtA
Released'on'disposal'of'property	–	¢ƒ'"¶…£
Origination'and'reversal'of'other'temporary'differences	(11.9)	¢ƒ…¶†£
Change'in'tax'rates	–	¢ƒ‡¶‡£
Adjustments'in'respect'of'prior'years	(1.8)	(1.7)
Total'excluding'deferred'tax'on'recycling'of'ineffective'hedges	(13.7)	¢ƒ…"¶‹£
Recycling'of'deferred'tax'relating'to'ineffective'hedges	–	¢ƒ…¶Š£
Total'deferred'tax	(13.7)	(146.7)
Tax'on'loss	(13.0)	¢ƒ‡†¶ƒ£

epmepAtXectA|XqJAJuAtNLAt¶¢¿¶£eStWNNqtXbAtNLtA|AINmpeTtepeqqSeptWN}NAp¶

13. TAX ON LOSS continued

(ii) Factors affecting the tax credit

The effective tax assessed for the year, all of which arises in the UK, differs from the standard weighted rate of corporation tax in the UK. The differences are explained below:

(£ million)	2014	2013
Weighted rate of corporation tax	21.5%	23.25%
Loss before taxation	(7.0)	(51.9)
Tax credit on loss at weighted rate of corporation tax	(1.5)	(12.1)
Effects of:
Deferred tax released on disposal of property		(130.8)
Expenses not deductible for tax purposes	10.4	20.1
Deferred tax credit on property assets	(3.7)	(12.2)
Non-taxable profit on disposal of property, plant and equipment	(3.3)	(10.8)
Movements on deferred tax asset previously not recognised	(13.7)
Difference in tax rates		23
Adjustments to prior years	(1.1)	(9.1)
Other items	(0.1)	(1.5)
Total tax credit for the year	(13.0)	(154.1)

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

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

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

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

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

14. EARNINGS PER SHARE

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

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

(£ million)	2014	2013
Profit for the year attributable to owners of the Parent	6.0	102.2
Weighted average number of ordinary shares in issue		317,055,302 250,000,000
Basic earnings per share (in pence per share)	1.9	40.9
For dilutive earnings per share, the weighted average number of ordinary shares in include all dilutive potential ordinary shares arising from share options.
(£ million)	2014	2013
Profit for the year attributable to owners of the Parent	6.0	102.2
1 A		1947 AFF SAS

Weighted average number of ordinary shares in issue		317,055,302 250,000,000
Adjustment for weighted average number of contingently issuable shares	875.653
		317,930,955 250,000,000
Diluted earnings per share (in pence per share)	1.9	40.9

14. EARNINGS%PER%SHARE%continued

PROQFORMA%ADJUSTED%EARNINGS%PER%SHARE

-pe¹SepbAAL^uqtNLNApcXcVqmNpqWApNXqJAJuAtNLI}LXzXLXcVtWNmpe¹SepbAAL^uqtNLmpeTtAStNptA|AtXecSeptWN}NApI}tWNcubINpeS epLXcAp}qWApNqXcXqquNecLbXqqXececu`}¶3WNpNWAzNINNcceJWAcVNqtetWNcubINpeSepLXcAp}qWApNqXcXqquNqXcJNLbXqqXec to'the'London'Stock'Exchange.

Loss'before'taxation Adjustments: JNmtXecAXtNbqÓ-%<br>46.1<br>Exceptional'items'–'other<br>7.9<br>-peTtecLXqmeqAeSmpemNpt}¸m`ActAcLNouXmbNct1 Financing'adjustments: Finance'costs'shareholder'loans2 ‡†¶Š Finance'costs'bank'loans 10.4 -pe¹SepbAmpeTtINSepNtA AtXec ‹…¶‰ Taxation4 -pe¹SepbAmpeTtAStNptA AtXec ‰…¶‡ Number'of'ordinary'shares'in'issue'on'Admission' †'ƒ¸'Šƒ¸…‹ƒ ProQforma%basic%earnings%per%share%(pence) 18.3 Number'of'ordinary'shares'in'issue'on'Admission,'weighted'average‡ †'ƒ¸‹‡‰¸'†† ProQforma%diluted%earnings%per%share%(pence) 18.3	(£%million)
		(7.0)
		¢ƒŠ¶‡£
		(20.2)

-peSXtecLXqmeqAeS1mXpN:AqWXcVteceqmXtA¸cNteStWNeqqApXqXcVectWNLXqmeqAeStpALNAcLAqqNtqeStWNSNptX`Xt}IuqXcNqq¶

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

0NLuJNqIAc_SXcAcJNJeqtqÀpNzXqNLJeqtqJAJuAtNLAqXStWNIAc_pNSXcAcJXcVWALeJJuppNLecAcuAp}AcLtWNcN{eAcSAJXXt}WALINNcNctNpNLXcteectWAtLAtN¶

3A|AtXecXqJAJuAtNLAttWNqtAtutep}pAtNeS¶eStWNmpe¹SepbAmpeSXtINSepNtA|AtXecINSepNtA_XcVAJJeucteSAzAXAINtA|`eqqNq¶

XutXecpNAtNqte{NXVWtNLAzNpAVNcubINpeSqWApNemtXecqA{ApLNLXctWNmNpXeL¶

15. BUSINESS%COMBINATION

%c"A}¸tWNpeumAJouXpNL1tctWec}ÊqeqmXtASepAtetAJecqXLNpAtXeceS¶bX`Xec¶1tctWec}ÊqeqmXtAXqA¹INLmpXzAtN hospital'based'in'Cheam,'Surrey.'This'acquisition'supports'the'Group's'strategy'of'increasing'its'presence'in'the'Greater'London'region.'

3WNSAXpzAuNqeStWNXLNctXTAINAqqNtqAcLXAIXXtXNqAqAttWNAJouXqXtXecLAtNApNqNteutINe{¶JJeuctXcVqtAcLApLqmNpbXtumte bectWqSepmpezXqXecAAJouXqXtXecAJJeuctXcVteINTcA`XqNLSe``e{XcVtWNAJouXqXtXecLAtN¸XSAc}quIqNouNctXcSepbAtXecmpezXLNq better evidence'of'the'item's'fair'value'at'the'date'of'acquisition.

FAIR%VALUE%OF%IDENTIFIABLE%ASSETS%AND%LIABILITIES%ACQUIRED

(£%million)
-pemNpt}AcLNouXmbNct	'¶‡
czNctep}	1.2
Trade'and'other'receivables	2.7
Trade'and'other'payables	(0.6)
NSNppNLtA XAIXXt}	(1.9)
Fair'value'of'net'assets'acquired	ƒ¶‹
Goodwill	6.6
Net'assets'acquired	ж‡
Cash'consideration	ж‡
Total%consideration	38.5

15. BUSINESS COMBINATION continued

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

• •  a cash payment of £38.0 million, which was made in May 2014; and
• · a deferred consideration contingent upon the working capital of the business on completion date. This amount was determined to be £0.5 million by the parties involved in August 2014 and the amount was settled at that time.

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

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

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

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

16. INTANGIBLE ASSETS

(£ million)	Goodwill
Cost:
At 1 January 2013	516.2
Additions in the year
At 1 January 2014	516.2
Additions in the year	6.6
Disposal in the year	(2.7)
At 31 December 2014	520.1
Impairment:
At 1 January 2013	0.4
Charge for the year	0.9
At 1 January 2014	1.3
Charge for the year	1.0
Disposal in the year	(1.3)
At 31 December 2014	1.0
Not has rusluar

At 31 December 2014	519.1
At 31 December 2013	514.9

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

IMPAIRMENT TESTING

Goodwill arose principally from separate acquisitions of two hospital businesses:

• £422.5 million from the acquisition of hospitals from Bupa in 2007; and

· £82.6 million on the acquisition of the Classic Hospitals Group in 2008.

The balance of £14.0 million arose on subsequent acquisitions.

The recoverable amount of goodwill is calculated by reference to its estimated value in use.

In order to estimate the value-in-use, management have used trading projections covering the four year period to December 2018, which were extended to cover the five year period to December 2019,

16. INTANGIBLE ASSETS continued

Management identified a number of key assumptions relevant to the value-in-use calculations, being revenue growth, which is impacted by an interaction of a number of elements of the operating model, including pricing trends, volume growth and complexity of discharges, assumptions regarding cost inflation and discount rates are interdependent and the forecast cash flows reflect management's expectations based on current market trends. Revenue growth is projected to be in line with past experience and expectations of future performance, averaging 5.9% for the five year period (2013: 6.5%). Cost assumptions are consistent with the Group's historic track record, after taking account of headline inflation at 3.3% (2013: 3.3%).

A long-term growth rate of 2.25% (2013; 2.25%) has beend 2019, which is based on historic growth rates achieved by the sector, which have typically exceded RPI. Pe-tax discount rates were based on the capital asset pricing model, utilising a sector specific Beta in arriving at the equity premium and cost of debt based on current bank lending rates. A specific pre-tax discount rate was calculated to reflect the profile of cash flows inherent to that specific cash-generating unit and this was 10.2% (2013: 10.2%).

The recoverable amount from acquistions is calculated based on cash flow assumptions stated above. A sensitivity analysis has been performed in order to review the impact of changes in key assumptions. For example, an increase of 3% in the pre-tax discount rate to 13.2%, with all other assumptions held constant, did not identify any impairments. Similarly, zero growth in the period beyond 2019, with all other assumptions held constant or combined with a 1% increase in the pre-tax discount rate, did not identify any impairments.

As at the balance sheet date, it is not considered to be reasonably possible that circumstances will change, so that the key assumptions made in assessing the recoverable amount relating to each of the acquisitions will be revised to the point where the goodwill is considered impaired.

17. PROPERTY, PLANT AND EQUIPMENT

(£ million)	Freehold property	Long leasehold property	Equipment	Assets in the course of construction	Total
Cost:
At 1 January 2013	1,178.5	292.1	220.3		1,690.9
Additions	0.1	11.1	37.1	6.2	54.5
Disposals	(610.8)	(116.7)	(23.0)		(750.5)
At 1 January 2014	567.8	186.5	234.4	6.2	994.9
Additions	23.1	10.2	32.5	1.4	67.2
Additions on business combination	27.1		3.4		30.5
Disposals	(0.2)	(17.4)	(7.3)		(24.9)
Transfers	6.1		0.1	(6.2)
At 31 December 2014	623.9	179.3	263.1	1.4	1,067.7
Depreciation:
At 1 January 2013	119.8	31.3	76.8		227.9
Charge for the year	12.7	47	25.6		43.0
Disposals	(64.0)	(7.4)	(18.5)		(89.9)
At 1 January 2014	68.5	28.6	83.9		181.0
Charge for the year	15.6	9.4	20.1		45.1
Disposals	(0.2)	(3.8)	(6.3)		(10.3)
At 31 December 2014	83.9	34.2	97.7		215.8
Net book value:
At 31 December 2014	540.0	145.1	165.4	1.4	851.9
At 31 December 2013	499.3	157.9	150.5	6.2	813.9

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

On 11 March 2014, the long leasehold interest in the Spire Washington Hospital, with a net book value of £12,3 million, was disposed of.

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

18. SUBSIDIARY UNDERTAKINGS

The Group comprises a large number of companies, most of which are incorporated in, and whose operations are conducted in, the United Kingdom. It is not practical to include all of this report; therefore, the Group discloses below only those companies that have a more significant impact on the profit or assets of the Group companies will be included in the Company's Annual Return to the Registrar of Companies. These companies are wholly-owned, unless otherwise stated.

Incorporated and registered in the UK	Principal activity	Class of share
Spire Healthcare Finance Limited*	Holding company	Ordinary
Spire Healthcare Group UK Limited	Holding company	Ordinary
Spire UK Holdco 2A Limited	Holding company	Ordinary
Spire UK Holdco 4 Limited	Holding company	Ordinary
Spire Healthcare Holdings 1 (formerly Spire UK Holdco 6)	Holding company	Ordinary
Spire Healthcare Holdings 2 Limited (formerly Spire UK Finance Limited)	Holding company	Ordinary
Spire Healthcare Holdings 3 Limited (formerly Spire Healthcare Group Limited)	Holding company	Ordinary
Spire Healthcare (Holdings) Limited	Holding company	Ordinary
SHC Holdings Limited	Holding company	Ordinary
Spire Healthcare Limited	Health provision	Ordinary
Spire Healthcare Properties Limited	Hospital leasing	Ordinary
Fox Healthcare Holdco 1 Limited	Holding company	Ordinary
Fox Healthcare Holdco 2 Limited	Holding company	Ordinary
Fox Healthcare Acquisitions Limited	Holding company	Ordinary
Classic Hospitals Group Limited	Holding company	Ordinary
Classic Hospitals Property Limited	Property company	Ordinary
Classic Hospitals Limited	Health provision	Ordinary
GX Holdco Limited	Holding company	Ordinary
Lifescan Limited	Health provision	Ordinary
Spire Fertility (Disposal) Limited (formerly London Fertility Centre Limited)	Non-trading company	Ordinary
Montefiore House Limited*	Health provision	Ordinary
Medicainsure Limited	Holding company	Ordinary
The Richard Villar Practice Limited	Health provision	Ordinary
Spire Thames Valley Hospital Limited	Health provision	Ordinary
Spire Thames Valley Hospital Propco Limited	Property company	Ordinary
Spire Links 2 Limited	Holding company	Ordinary
Spire Property 1 Limited	Property company	Ordinary
Spire Property 4 Limited	Property company	Ordinary
Spire Property 5 Limited	Property company	Ordinary
Spire Property 6 Limited	Property company	Ordinary
Spire Property 9 Limited	Property company	Ordinary
Spire Property 13 Limited	Property company	Ordinary
Spire Property 16 Limited	Property company	Ordinary
Spire Property 17 Limited	Property company	Ordinary
Spire Property 18 Limited	Property company	Ordinary
Spire Property 19 Limited	Property company	Ordinary
Spire Property 23 Limited	Property company	Ordinary

* Direct shareholding of the Company. + Ownership interest is 50.1%.

19. INVENTORIES

(£ million)	2014	2013
Prostheses, drugs, medical and other consumables	26.0	26.2

Cost of sales for the year ended 31 December 2014 includes inventories recognised as an expense amounting to £160.0 million (2013: £134.1 million).

20. TRADE AND OTHER RECEIVABLES

(£ million)	2014	2013
Amounts falling due within one year:
Trade receivables	108.0	879
Other receivables	4.0	20.9
Prepayments	27.9	22.4
	139 9	131 2

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

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

The ageing of trade receivables at the reporting date was:

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

Trade receivables comprise the following wider customer/payor groups:

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

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

(£ million)	2014	2013
At 1 January	5.0	3.5
Provided in the year	2.4	3.4
Utilised during the year	(1.5)	(1.9)
At 31 December	5.9	5.0

#etNq te tWN TcAcJXA` qtAtNbNctq continued

!! 21. CASH%AND%CASH%EQUIVALENTS

(£%million)	2014	2013
AqW At IAc_	65.4	33.9
1Wept¹tNpb XczNqtbNctq	9.1	77.6
	74.5	111.5

1Wept¹tNpb XczNqtbNctq ApN becN} bAp_Nt LNmeqXtq¶

22. BORROWINGS

(£%million)	2014	2013
Unsecured%borrowings
Amount'due'to'former'ultimate'parent'undertaking'and'management	–	846.5
Secured%borrowings
Bank'loans'	422.2	702.7
%IXVAtXecq ucLNp TcAcJNNAqNq	76.6	79.7
	498.8	782.4

3WN IAc_ eAcq ApN qNJupNL ec T|NL AcL UeAtXcV JWApVNq ezNp IetW tWN mpNqNct AcL SutupN AqqNtq eS bAtNpXA quIqXLXApXNq eStWN peum¶

Total%borrowings%(measured%at%amortised%cost)

(£%million)	2014	2013
Amount'due'for'settlement'within'12'months	5.3	746.8
Amount'due'for'settlement'after'12'months	493.5	882.1
	498.8	1,628.9

%IXVAtXecqucLNpTcAcJNNAqNq

3WN peum WAq TcAcJN NAqNq Xc pNqmNJt eStWpNN WeqmXtA mpemNptXNq AcL bNLXJANouXmbNct¶ utupN bXcXbubNAqN mA}bNctq ucLNp TcAcJN leases'are'as'follows:

	2014		2013
(£%million)	Minimum payments	Present value%of payments	Minimum payments	Present value'of payments
Within'one'year'	7.3	4.1	7.7	4.9
StNp ecN }NAp Iut cet bepN tWAc TzN }NApq	29.1	13.5	31.9	17.1
"epN tWAc TzN }NApq	174.2	59.0	181.4	57.7
Total'minimum'lease'payments'	210.6	76.6	221.0	79.7
Nqq Abeuctq pNmpNqNctXcV TcAcJN JWApVNq	(134.0)	–	(141.3)	–'
Present%value%of%minimum%lease%payments%	76.6	76.6	79.7	79.7

-pemNpt} NAqNq¸ {XtW A mpNqNct zAuN XAIXXt} eS ¶ bXXec ¢¿ ¶ bXXec£¸ N|mXpN Xc AcL JApp} Ac Xbm`XJXtXctNpNqtpAtN eS ¶ (2013:'9.1%).

22. BORROWINGS%continued

Terms%and%debt%repayment%schedule

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

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

(£%million)	Maturity	Margin'over'LIBOR	2014	2013
1NcXep TcAcJN SAJX`Xt} ¢A£	July'2019	2.25%	422.2	–
Term'loan'–'operating'companies'(b)	June'2015	1.75%'–'3.0%	–	104.5
Term'loan'–'operating'companies'(b)	'June'2015	3.0%	–	80.1
AmN `eAc Ó emNpAtXcV JebmAcXNq ¢I£	June'2015	1.75%	–	50.0
Term'loan'–'property'companies'(b)	June'2015	1.25%'–'2.35%	–	421.4
PIK'loan'–'property'companies'(b)	June'2015	7.05%	–	46.7
			422.2	702.7
Revolving'credit'facility'(undrawn'committed'facility)			100.0	28.5

¢A£ %c LbXqqXec ec u} ¸tWN peum {Aq pNTcAcJNL¸ AcL Xt NctNpNL Xcte A cN{ IAc\_eAc SAJXXt} {XtW A q}cLXJAtN eS IAc\_q¸ JebmpXqXcVA }NAp¸ ¶ bX``Xec tNpbeAc AcL A }NAp ¶ bX`Xec pNzezXcV SAJXXt}¶ 3WN mpeJNNLq eStWNqN SAJXXtXNq¸teVNtWNp {XtW existing'funds'of'the'Group,'have'been'used'in'the'full'repayment'of'the'existing'bank'debt'and'interest'rate'swap'liabilities.'The'new' eAcq ApN cec¹AbeptXqXcV AcL JApp} XctNpNqt At Ac XcXtXA bApVXc eS ¶ ezNp %0¶ %c tWN qAbN LAtN¸tWN Abeuctq LuN te tWN SepbNp ultimate'parent'undertakings'and'management'were'capitalised'in'exchange'for'the'issue'of'ordinary'shares.

¢I£ %c AcuAp} ¸ See{XcV A mAptXA` pNTcAcJXcV eStWN 1mXpN peum ucLNptWN pNNWe`L 1A`N¸tNpb `eAcq {XtW A tetA` zA`uN eS¶ bXXec {NpN NXtWNp pNmAXL ep {AXzNL¶

%c NJNbINp ¸ ecN eStWN 1mXpN emNpAtXcV Vpeumq {Aq pNTcAcJNL¸ See{XcV {WXJW A eStWN XAIXXtXNq eutqtAcLXcV ucLNp its bank facilities'were'repaid.'

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

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

3WN mpXcJXmAAbeuctq LpA{c ucLNptWNqN SAJXXtXNq {NpN mAptXA`} qNttNL ec LbXqqXec zXA tWN XqquAcJN AcL N|JWAcVN eStWN ebmAc}Êq new ordinary'shares.'These'loans'were'unsecured'and'interest'bearing'at'12%'per'annum.

23. PROVISIONS

(£%million)	2014	2013
At'beginning'of'year	3.2	3.6
Acquired'on'acquisition'of'subsidiary'undertaking	0.7	–
WApVN Sep tWN }NAp	3.5	–
Utilised'during'the'year	(1.2)	(0.4)
At'end'of'year'	6.2	3.2

Provisions'relate'to'onerous'tenancy'contracts,'end'of'life'dilapidations'under'leases,'commitments'to'patients'in'respect'of'the'removal' or replacement'of'the'PIP'brand'of'breast'implants,'and'estimated'liabilities'arising'from'claims'for'damages'in'respect'of'services'previously' supplied'to'patients.

Provisions'as'at'31'December'2014'are'expected'to'be'utilised'within'3'years.

#etNq te tWN TcAcJXA` qtAtNbNctq continued

!! 24. DEFERRED%TAXATION

Deferred'tax'liabilities/(assets)'are'analysed'as'follows:

(£%million)	2014	2013
Temporary'differences'on:
Property,'plant'and'equipment'	91.7	99.9
NpXzAtXzN TcAcJXA` XcqtpubNctq	–	(14.9)
Losses'and'other'items	(43.6)	(24.7)
	48.1	60.3
Presented'as:'
Deferred'tax'asset'	–	(17.1)
Deferred'tax'liability'	48.1	77.4
	48.1	60.3

Deferred'tax'on'property,'plant'and'equipment'has'arisen'on'differences'between'the'carrying'value'of'the'relevant'assets'and'the'tax'base.' %tWNp LNSNppNL tA| XtNbq pNAtN te tNbmepAp} LXSSNpNcJNq ec cec¹qmNJXTJ mpezXqXecq AcL N|mNcqN AJJpuAq¶ NSNppNL tA| AqqNtq AcL XAIXXtXNq are'measured'at'the'tax'rates'that'are'expected'to'apply'in'the'period'when'the'asset'is'realised'or'the'liability'settled,'based'on'tax'rates' that have'been'enacted,'or'substantively'enacted,'at'the'balance'sheet'date.

3WN peum WAq ucpNJeVcXqNL LNSNppNL tA| AqqNtq Aq At NJNbINp eS ¶ bXXec¸ JebmpXqXcV ¶ bXXec eStpALXcV eqqNq AcL ¶bX``Xec eS JAmXtA eqqNq ¢¿ ¶ bX``Xec¸ JebmpXqXcV ¶ bX``Xec eStpALXcVeqqNq AcL ¶ bX`Xec eS JAmXtA `eqqNq£¶ LNSNppNL tA|AqqNt WAq cet INNc pNJeVcXqNL Xc pNqmNJt eStWNqN Abeuctq LuN te ucJNptAXctXNq Aq te tWN tXbXcV eS SutupN mpeTtq tWAttWN tpALXcV losses could'be'set'against'and'whether'capital'gains'will'arise'against'which'the'capital'losses'could'be'utilised.

The'movement'for'the'year'in'the'net'deferred'tax'liability'is'as'follows:

		Total
		182.1
		(146.7)
		24.9
		60.3
		(13.7)
		1.9
		(0.4)
		48.1
Property,' plant'and equipment 250.8 (150.9) – 99.9 (10.1) 1.9 – 91.7	Derivative financial Instruments (54.6) 14.8 24.9 (14.9) 14.9 – – –	Losses' and'other (14.1) (10.6) – (24.7) (18.5) – (0.4) (43.6)

(£%million)	2014	2013
Amounts'arising'within'12'months	–	22.1
Amounts'arising'after'12'months	–	52.4
	–	74.5

%c u} ¸ XctNpNqtpAtN q{AmXAIXXtXNq {XtW A zAuN eS ¶ bX`Xec {NpN pNmAXL AcL tWN pNAtNL XcqtpubNctq {NpN tNpbXcAtNL¶ Further information'regarding'the'interest'rate'swap'contracts'is'contained'in'note'32.

26. TRADE%AND%OTHER%PAYABLES

(£%million)	2014	2013
Trade'payables'	50.8	38.0
Other'payables'	4.8	9.6
epmepAtXec tA	0.7	–
Other'taxation'and'social'security'	6.1	5.2
Accruals'	35.9	34.2
	98.3	87.0

27. SHARE%CAPITAL%AND%RESERVES

Share%capital%of%Spire%Healthcare%Group%plc

	2014
	£0.01%ordinary%shares		£1%redeemable%preference%shares
	Shares	£'000	Shares	£'000
Issued%and%fully%paid
At'date'of'incorporation'(a)	100	–	49,999	50
Acquisition'of'a'subsidiary'undertaking'(b)	1	–	–	–
On'capitalisation'of'loans:
–'shareholder'loans'(c)	248,699,063	2,487	–	–
Ó bAcAVNpqÊ `eAc cetNq ¢J£	1,300,836	13	–	–
New'shares'issued:
XpNJtepqÊ AcL bAcAVNpqÊ JJpuNL cJNctXzN -A}bNctq ¢L£	1,036,156	10	–	–
1uIqJpXINL Sep I} cec¹N NJutXzN LXpNJtepq ¢N£	45,235	–	–	–
New'shares'(f)	150,000,000	1,500	–	–
Redemption'(a)	–	–	(49,999)	(50)
At'31'December'2014	401,081,391	4,010	–	–

GROUP%REORGANISATION

¢A£ %c ucN ¸tWN ebmAc} XqquNL epLXcAp} qWApNq eS ¶ NAJW te tWN XcXtXAqWApNWeLNp¸ 1mXpN NA`tWJApN XbXtNL -AptcNpqWXm¶

%c ucN ¸tWN ebmAc} XqquNL ¸ cec¹zetXcV pNLNNbAIN mpNSNpNcJN qWApNq eS NAJW te 1mXpN NAtWJApN XbXtNL -AptcNpqWXm¶ These'shares'were'subsequently'redeemed'on'23'July'2014.

• ¢I£ %c u} ¸tWN ebmAc} AJouXpNL tWN NctXpN XqquNL qWApN JAmXtA eS 1mXpN NAtWJApN peum 4 XbXtNL Xc N|JWAcVN SeptWN XqquN eScN{ epLXcAp} qWApN eS ¶ te 1mXpN NAtWJApN XbXtNL -AptcNpqWXm¶
• ¢J£ 3WN ebmAc} quIqNouNct} pNepVAcXqNL Xtq qWApN JAmXtA¶ %c u} ¸tWN ebmAc} XqquNL ¸¸ epLXcAp} qWApNq AcL ¸¸epLXcAp} qWApNq eS ¶ NAJW At A mpNbXub eS ¶ mNp qWApN te 0eXNp 1¶B¶ p¶ Xc N|JWAcVN Sep qNtt`NbNct eStWN SepbNp ultimate parent'loan'notes'and'to'the'Management'team'in'exchange'for'settlement'of'the'Management'loan'notes,'respectively.
• ¢L£ %c u`} ¸tWN ebmAc} XqquNL ¸¸ epLXcAp} ¶ qWApNq At A mpNbXub eS ¶ NAJW te bNbINpq eStWN N|NJutXzN bAcAVNbNcttNAb AcL A LXpNJtep¸ 1Xbec epLec¸ Xc epLNpte pNUNJttWNXp JectpXIutXec te tWN mAqt mNpSepbAcJN eStWN peum AcL tetWNpeum AJWXNzXcV LbXqqXec ¢ÉJJpuNL cJNctXzN -A}bNctq棦
• ¢N£ %c u`} ¸tWN ebmAc} XqquNL ¸ epLXcAp} ¶ qWApNq At A mpNbXub eS ¶ NAJW te JNptAXc cec¹N|NJutXzN LXpNJtepq¸ namely, John'Gildersleeve,'Tony'Bourne,'Dame'Janet'Husband'and'Robert'Lerwill.
• ¢S£ %c LbXqqXec ec u`} ¸tWN ebmAc} XqquNL ¸¸ cN{ epLXcAp} qWApNq¸ VNcNpAtXcV JAqW mpeJNNLq eS ¶ bX``Xec¸ net of costs.

CAPITAL%RESERVES

3WXq pNqNpzN pNmpNqNctq tWN eAcq eS ¶ bX``Xec LuN te tWN SepbNp utXbAtN mApNct ucLNptA_XcV AcL bAcAVNbNcttWAt {NpN SepVXzNc by those counterparties'as'part'of'the'reorganisation'of'the'Group'prior'to'the'listing'in'2014.

28. SHARE-BASED PAYMENTS

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

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

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

* Disclosed as an exceptional item - see note 8

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

DIRECTORS' SHARE BONUS AWARD

At the time of the IPO on 23 July 2014, the Company granted nil cost share options to reflect their contribution prior to Admission. The maximum number of shares underlying the award has been divided into two equal tranches, which will become exercisable on the first and second anniversaries of Admission. The number of options that will depend on conditions relating to share price on the relevant date. For further details, see the Directors' Remuneration Report, on pages 74 to 88

LONG TERM INCENTIVE PLAN

The long term incentive plan ('LTIP') is open to executive directors and awards and awards are made at the discretion of the Remuneration Committee. Awards are subject to market performance criteria and vest over a 2.4 year period.

DEFERED BONUS PI AN

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

The aggregate number of share awards outstanding for the Group and their weighted average exercise price is shown below:

	As at 31 December 2014
	Directors' share bonus award* (thousands)	LTIP (TSR condition) (thousands)	LTIP (EPS condition) (thousands)	Deferred bonus plan (thousands)
At 1 January
Granted	1,671	531	531
At 31 December	1,671	531	531
Grant date		23/07/2014 30/09/2014 30/09/2014		n/a
	Immediately
Vesting date	upon grant		31/12/2016 31/12/2016
Expiry date		23/07/2024 30/09/2024 30/09/2024

*

28. SHARE-BASED PAYMENTS continued

The following information is relevant to the fair value of the awards granted during the year under the schemes.

	Directors' share bonus award	LTIP (TSR condition)	LTIP (EPS condition)	Deferred bonus plan
	Modified		Fair value at
Option pricing model	Black-Scholes Monte Carlo		grant date	n/a
Weighted average share price at grant date	2.1	2.85	2.85	n/a
Exercise price	£2.24-3.59	Op	Op	n/a
Weighted average contractual life	1–2 years	2.4 years	2.4 years	n/a
Expected dividend yield	1.6%	n/a	n/a	n/a
Risk-free interest rate	0.5=1.0%	1.1%	n/a	n/a
Volatility	26%	26%	n/a	n/a

The expected volatility is based on the historical volatility of the Company and a comparator group of other international healthcare companies.

29. COMMITMENTS

(a) Operating leases

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

	2014		2013
(£ million)	Land and buildings	Other	l and and buildings	Other
Not later than one year	61.9	0.7	56.3
Later than one year and not later than five years	244.0	1.4	229.7	0.7
Later than five years	1,353.0	-	1.340.9	2.2
	1,658.9	2.1	1,626.9	2.9

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

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

(b) Consignment stock

At 31 December 2014, the Group held consignment stock on sale or return of £19,3 million (31 December 2013: £17.6 million).

(c) Capital expenditure commitments

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

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

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

30. CONTINGENT LIABILITIES

The Group had the following guarantees at 31 December 2014:

• Spire Healthcare Limited, a subsidiary undertaking of the Group, has entered into an Authorised Guarantee Agreement (AGA) with regard to the premises of the former customer contre at Victoria Harbour City, Manchester. Under the AGA, Spire Healthcare Limited will act as a guarantor to the new tenants until the end of the lease term, January 2016. The maximum contingent liability at the balance sheet date was £0.8 million (2013: £1.3 million).
• · The bankers to Spire Healthcare Limited have issued a letter of credit in the maximum amount of £1.5 million (in relation to contractual pension obligations and statutory insurance cover in respect of the Group's potential liability to claims made by employees under The Employers' Liability (Compulsory Insurance) Act 1969.
• · Under certain lease agreements entered into on 26 January 2010, the Group has given undertakings relating to the lease documentation and the assets of the Group are subject to a fixed and floating charge.

31. CAPITAL MANAGEMENT

The Croup's objective is to maintain an appropriate balance of debt and equity financing to enable the Group to continue as a going concern, to continue the future development of the business and to optimise returns to shareholders and benefits to other stakeholders.

The Board closely manages trading capital, defined as net assets plus net assets at 31 December 2014 were £960.0 million (2013: £256.2 million net liabilities) and net debt (comprising obligations under finance leases and borrowings), less cash and cash equivalents, amounted to £424.3 million (2013: £670.9 million).

Principal focus of capital management revolves around working capital management and compliance with externally imposed financal covenants. Throughout the period, the Group complied with all covenants required by our lending group.

Major investment decisions are based on reviewing the expected future cash flows and all major capital expenditure requires approval by the Board.

At the balance sheet date, the Group's committed undrawn facilities, and cash equivalents, were as follows:

(£ million)	2014	2013
Committed undrawn revolving credit facility	100.0	28.5
Cash and cash equivalents	74.5 /	111.5

32. FINANCIAL RISK MANAGEMENT

The Group has exposure to the following risks from its use of financial instruments:

• · credit risk;
• · liquidity risk; and
• · market risk.

This note presents information about the Group's exposure to each of the Group's objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout these financial statements.

The directors have overall responsibility for the establishment and oversight of the Group's risk management framework.

The Group's risk management policies are established to isks faced by the Group, to set apropriate risk limits and controls, and to monitor risks and adherence to limits.

CREDIT RISK

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and investment securities.

· Trade and other receivables

The Group's exposure to credit risk is influenced mainly by the individual characteristics of each risk from trade receivables is considered to be low because of the nature of its customers and policies in place to prevent credit risk occurring.

Most revenues arise from insured patients' business and the NHS. Insured revenues give rise to trade receivables which are mainly due from large insurance institutions, which have high credit worthiness. The remainder of revenues arise from individual self-pay patients and consultants

32. FINANCIAL RISK MANAGEMENT continued

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. This allowance is composed of specific losses that relate to individual exposures and also a component established in respect of losses that have been incurred but not yet identified, determined based on historical data of payment statistics.

Note 20 shows the ageing and customer profiles of trade receivables outstanding at the year end.

• Investments

The Group limits its exposure to credit risk by only investing in short-term money market deposits with large financial institutions, which must be rated at least Investment Grade by key rating agencies.

LIQUIDITY RISK

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

Liquidity is managed across the Group and consideration is taken of the segregation of accounts for regulatory purposes. Short-term operational working capital requirements are met by cash in hand and overdraft facilities.

Typically the Group ensures that it has sufficient cash on demand to meet experses for a period of at least 90 days, including the servicing of financial obligations. In addition to cash on demand, the Group has available the following lines of credit:

• £100 million of revolving credit facility, which was fully undrawn as at 31 December 2014.

The following are the contractual maturities, as at the balance sheet date, of financial liabilities, including interest payments and excluding the impact of netting arrangements:

At 51 December 2014
(£ million)	Carrying amount	Contractual cash flows	1 year or less	1-2 years	More than 2 years
Non-derivative financial liabilities
Secured bank facility	422.2	499.1	12.9	14.2	472.0
Obligations under finance leases	76.6	210.6	7.3	73	196.0
Trade and other payables	54.5	54.5	54.5
Derivative financial liabilities
Interest rate swaps
As at 31 December 2014	553.3	764.2	74.7	21.5	668.0
At 31 December 2013
(£ million)	Carrying amount	Contractual cash flows	1 year or less	1-2 years	More than 2 years
Non-derivative financial liabilities
Amount due to former ultimate parent undertakings	846.5	926.9			926.9
Secured bank facilities	702.7	721.3	721.3
Obligations under finance leases	79.7	221.0	7.7	7.9	205.4
Trade and other payables	47.6	47.6	47.6
Derivative financial liabilities
Interest rate swaps	74.5	81.7	243	23.1	34.3
	1.751.0	1.998.5	800.9	31.0	1.166.6

The amounts due to the former ultimate parent undertakings were repayable on the occurrence of predetermined conditions of the loans, which were assumed to occur no later than the maturity date of the former bank facility.

32. FINANCIAL RISK MANAGEMENT continued

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

Level 3: techniques which use inputs which have a significant effect on the recorded fair are not based on observable market data.

Bases of valuation

As of 31 December 2014, the Group did not hold financial instruments that are included in level 1, 2 or 3 of the hierarchy. Interest rate swaps existing on 31 December 2013 were repaid in full on Admission.

The management assessed that cash and short-term deposits, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The carrying value of the other financial instruments, being finance leases and debt, is approximately equal to their fair value, except for floating rate debt, which is after the deduction of £5.1 million) of issue costs, based on a review of current terms against market and expected short term settlements.

As at 31 December 2014, the Group did not hold any financial instruments measured at fair value.

During the year ended 31 December 2014, there were no transfers between the levels in the fair value hierarchy.

As at 31 December 2013, the Group held the following financial instruments measured at fair value:

Liabilities measured at fair value

(£ million)	Value as at 31 December 2013	Level 1	Level 2	Level 3
Financial liabilities at fair value through profit or loss
Interest rate swaps	74.5	-	74.5
Financial liabilities at fair value using hedge accounting
Interest rate swaps
	74.5	-	74.5

During the year ended 31 December 2013, there were no transfers between the levels in the fair value hierarchy.

MARKET RISK

Market risk is the risk that changes in market prices, will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

Interest rate risk

The Group is exposed to interest rate isk arising from fluctuations in market rates. This affects future cash flows from money market investments and the cost of floating rate borrowings.

From time to time, the Group considers the cost benefine financial instruments to hedge its exposure to interest rate volatility based on existing variable rates, current and the cost of associated medium term derivative financial instruments

Interest rates on variable rate loans are determined by LIBOR fixings on a quarterly basis. Interest is settled on all loans in line with agreements and is settled at least annually.

(£ million)	Variable	Fixed	Total	Undrawn facility
31 December 2014	425.0	1	425.0	100.0
Effective interest rate	2.80%		2.80%
31 December 2013	260.8	442.2	703.0	28.5
Effective interest rate	3.06%	7.97%	6.15%
The following derivative contracts were in place at 31 December 2013:
(£ million)	Interest rate		Maturity date Notional amount	Carrying value
Interest rate swaps		5.9735% August 2017	442.2	74.5
				715

32. FINANCIAL RISK MANAGEMENT continued

SENSITIVITY ANALYSIS

A change of 25 basis points in interest rates at the reporting date would have increased/(decreased) equity and reported results by the amounts shown below. This analysis assumes that all other variables remain constant.

	Profit or loss		Equity
(£ million)	25 bp increase	25 bp decrease	25 bp increase	25 bp decrease
At 31 December 2014
Variable rate instruments	(0.3)	0.3	(0.3)	0.3
Interest rate swaps
Sensitivity (net)	(0.3)	0.3	(0.3)	0.3
	Profit or loss		Equity
(£ million)	25 bp increase	25 bp decrease	25 bp increase	25 bp decrease
At 31 December 2013
Variable rate instruments	(0.4)	0.4	(0.4)	0.4
Interest rate swaps	0.2	(0.2)	4.3	(4.3)
Sensitivity (net)	(0.2)	0.2	3.9	(3.9)

33. RELATED PARTY TRANSACTIONS

RELATIONSHIP AGREEMENT

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

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

TRADING TRANSACTIONS

Group companies entered into the following transactions:

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

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

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

#etNq te tWN TcAcJXA` qtAtNbNctq continued

33. RELATED%PARTY%TRANSACTIONS%continued

AMOUNTS%OWED%(TO)/BY%RELATED%PARTIES

(£%million)	Nature'of'relationship	2014	2013
XczNc XbXtNL	Former'parent'undertakings	–	0.1
0e€XNp #e¶ ƒ XbXtNL -AptcNpqWXm	Former'parent'undertakings	–	12.6
"ectNTepN euqN XbXtNL	Subsidiary'undertaking	22.1	18.6
LOANS%DUE%TO%RELATED%PARTIES
(£%million)	Nature'of'relationship	2014	2013
Spire'Healthcare'Limited'Partnership	Former'parent'undertakings	–	2.6
0e€XNp XcJe XbXtNL	Former'parent'undertakings	–	707.6
		–	138.9
0e€XNp XcJe " XbXtNL	Former'parent'undertakings

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

ep }NAp NcLNL NJNbINp ¸ Abeuctq mA}AI`N te 0eXNp XcJe XbXtNL¸ 0eXNp XcJe XbXtNL AcL "AcAVNbNct JAppXNL XctNpNqt of 12% per'annum.

TRANSACTIONS%WITH%KEY%MANAGEMENT%PERSONNEL

Key'management'personnel'are'those'persons'having'authority'and'responsibility'for'planning,'directing'and'controlling'the'activities' eStWNpeum¸ LXpNJt} ep XcLXpNJt}¶ 3WN} XcJ`uLN tWN eApL AcL N|NJutXzN bAcAVNbNcttNAb¸ Aq XLNctXTNL ec mAVNq te ¶

ebmNcqAtXec Sep _N} bAcAVNbNct mNpqeccNXq qNt eutXc tWN tAIN IN`e{¿

(£%million)	Notes	2014	2013
1Wept¹tNpb Nbm`e}NN INcNTtq		17.3	1.5
-eqt¹Nbm`e}bNct mNcqXec		0.3	0.2
1WApN¹IAqNL mA}bNctq	28	2.8	–
Total		20.4	1.7

cJuLNL {XtWXc qWept¹tNpb Nbme}NN INcNTtq ApN -% IecuqNq eS ¶ bX``Xec¶

34. EVENTS%AFTER%THE%REPORTING%PERIOD

2014%FINAL%DIVIDEND

ep ¸tWN eApL WAq pNJebbNcLNL A TcALXzXLNcL eS ¶ mNcJN mNp qWApN¸ AbeuctXcV te Ammpe|XbAtN} ¶ bX``Xec¸te IN mAXL on 30 June 2015'to'shareholders'on'the'register'at'the'close'of'business'on'5'June'2015.

Company)balance)sheet

As#at#31#December#2014

(Registered)number:)9084066)

(£&million) Notes	2014
ASSETS
Non4current&assets
Investments C10	830.0
	830.0
Current&assets
Other)receivables C7	7.8
Cash)and)cash)equivalents C6	38.6
	46.4
Total&assets	876.4
EQUITY&AND&LIABILITIES
Equity
Share)capital 27	4.0
Share)premium	826.9
Retained)earnings	38.9
Total&equity	869.8
Current&liabilities
Trade)and)other)payables C8	6.6
	6.6
Total&liabilities	6.6
Total&equity&and&liabilities	876.4

3WNTcAcJXAqtAtNbNctqecmAVNqte{NpNAmmpezNLI}tWNeApLeSXpNJtepqec"ApJWAcLqXVcNLecXtqINWASI}¿

Rob&Roger WXNS|NJutXzN%STJNp

Simon&Gordon WXNSXcAcJXA`%STJNp

Company)statement)of)changes)in)equity

For#the#period#ended#31#December#2014

!! (£&million)	Share& capital	Share& premium	Retained& earnings	Total
At&date&of&incorporation	–	–	–	–
-peTtSeptWN}NAp	–	–	36.1	36.1
Other)comprehensive)income	–	–	36.1	36.1
Group)reorganisation	2.5	525.0	–	527.5
Shares)issued)on)Admission	1.5	313.3	–	314.8
Transaction)costs)of)shares)issued	–	(11.4)	–	(11.4)
ShareMbased)payment)	–	–	2.8	2.8
Balance&at&31&December&2014	4.0	826.9	38.9	869.8

ebmAc}qtAtNbNcteSJAqWUe{q

For#the#period#ended#31#December#2014

(£&million) Notes	2014
AqWUe{qSpebemNpAtXcVAJtXzXtXNq
Loss)before)taxation	(0.2)
Adjustments)for:
interest)income	(0.1)
	(0.3)
"ezNbNctqXc{ep_XcVJAmXtA`¿
increase)in)trade)and)other)receivables)	(7.7)
increase)in)trade)and)other)payables	5.5
Net&cash&used&in&operating&activities	(2.5)
AqWUe{qSpebXczNqtXcVAJtXzXtXNq
Additional)investment)in)subsidiary	(302.2)
Interest)received	0.1
XzXLNcLqpNJNXzNL	36.3
Net&cash&used&in&investing&activities	(265.8)
AqWUe{qSpebTcAcJXcVAJtXzXtXNq
Proceeds)from)issue)of)share)capital	317.2
Share)issue)costs	(10.3)
#NtJAqWVNcNpAtNLSpebTcAcJXcVAJtXzXtXNq	306.9
Net)increase)in)cash)and)cash)equivalents	38.6
Cash)and)cash)equivalents)at)beginning)of)period	–
Cash&and&cash&equivalents&at&end&of&period	38.6

#etNqtetWN-ApNct

ebmAc}TcAcJXA`qtAtNbNctq

3WXqqNJtXecJectAXcqtWNcetNqtetWN
ebmAc}TcAcJXA`qtAtNbNctq¶

3WNXqquNLqWApNJAmXtAXqJecqXqtNct{XtWtWN1mXpNNAtWJApNpeummJpeumTcAcJXAqtAtNbNctq¶ 0NSNptecetNeStWNpeumTcAcJXA`qtAtNbNctq¶

!! C1. BASIS&OF&PREPARATION

3WNTcAcJXAqtAtNbNctqWAzNINNcmpNmApNLXcAJJepLAcJN{XtWctNpcAtXecAXcAcJXA`0NmeptXcV1tAcLApLq¢01£AqALemtNL by the European Union.

1mXpNNAtWJApNpeum XbXtNL{AqXcJepmepAtNLecucNAcL{AqquIqNouNct}pN¹pNVXqtNpNLAqAmuIXJJebmAc} ec ucN {XtWtWNcAbN1mXpNNAtWJApNpeumm`J¶

The)Company)applies)consistent)accounting)policies,)as)applied)by)the)Group.)To)the)extent)that)an)accounting)policy)is)relevant)to)both) peum AcL
ebmAc}TcAcJXAqtAtNbNctq¸pNSNptetWNpeumTcAcJXAqtAtNbNctqSepLXqJequpNeStWNAJJeuctXcVmeXJ}¶"AtNpXAmeXJXNq that apply)to)the)Company)only)are)included)as)appropriate.

1mXpNWAquqNLtWNN|NbmtXecVpActNLucLNpqeStWN
ebmAcXNqJttWAtA`e{qSeptWNcec¹LXqJequpNeStWNcJebN1tAtNbNct ofthe)Parent)Company.

The)Company)did)not)have)items)to)be)reported)as)other)comprehensive)income;)therefore,)no)statement)of)comprehensive)income) {Aq mpNmApNL¶

3WNmpeTtAttpXIutAI`NtetWN
ebmAc}SeptWNmNpXeLNcLNLNJNbINp{Aq¶bX``Xec¶

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ebmAc}ÊqXcJepmepAtXec¸ucN¸teNJNbINp¶

C2. SIGNIFICANT&ACCOUNTING&POLICIES&IN&THIS&SECTION

INVESTMENT&IN&SUBSIDIARIES

3WN
ebmAc}ÊqXczNqtbNctqXcquIqXLXApXNqApNJAppXNLAtJeqtNqqmpezXqXecqpNqutXcVSpebXbmAXpbNct¶ctNqtXcVSepXbmAXpbNct¸tWNJApp}XcV value)of)the)investment)is)compared)to)its)recoverable)amount,)being)its)fair)value)less)costs)of)disposal.)The)fair)value)is)calculated)using)the) qAbNAqqubmtXecqAqcetNLSeptWNtNqtXcVeSVeeL{X`XbmAXpbNctXccetNtetWNpeumTcAcJXAqtAtNbNctq¶

SHARE4BASED&PAYMENTS

3WNTcAcJXANSSNJteSA{ApLqI}tWN ebmAc}eSemtXecqezNpXtqNouXt}qWApNqteNbme}NNqeSquIqXLXAp}ucLNptA_XcVqXqpNJeVcXqNLI}tWN ebmAc}XcXtqXcLXzXLuATcAcJXAqtAtNbNctqAqAcXcJpNAqNXcXtqXczNqtbNctXcquIqXLXApXNq{XtWAJpNLXtteNouXt}NouXzA`NcttetWN01 JeqtXcquIqXLXAp}ucLNptA_XcVq¶3WNquIqXLXAp}¸Xctupc¸{X``pNJeVcXqNtWN01JeqtXcXtqXcJebNqtAtNbNct{XtWAJpNLXtteNouXt}tepNUNJt the)deemed)capital)contribution)from)the)Company.

C3. KEY&ESTIMATES&AND&ASSUMPTIONS&IN&THIS&SECTION

IMPAIRMENT&TESTING&OF&INVESTMENTS&IN&SUBSIDIARIES

3WN
ebmAc}ÊqXczNqtbNctqXcquIqXLXApXNqWAzNINNctNqtNLSepXbmAXpbNctI}JebmApXqecAVAXcqttWNucLNp}XcVzAuNeStWNquIqXLXApXNqÊ AqqNtqIAqNLecSAXpzAuNqJAJuAtNLuqXcVtWNqAbNAqqubmtXecqAqcetNLSeptWNtNqtXcVeSVeeL{X``XbmAXpbNctXccetNeStWNpeum TcAcJXAqtAtNbNctq¶

C4. STAFF&COSTS&AND&DIRECTORS'&REMUNERATION

The)Company)had)no)employees)during)the)period,)except)for)the)directors.)The)information)on)compensation)for)the)directors)is)disclosed) Xc cetN
¶

C5. AUDITOR'S&REMUNERATION

upXcVtWNmNpXeL¸tWN
ebmAc}eItAXcNLtWNSe`e{XcVqNpzXJNqSpebtWN ebmAc}ÊqN|tNpcAAuLXtepq¸AqLNtAXNLINe{¿

(£&million)	2014
Amounts)receivable)by)auditor)and)their)associates)in)respect)of:
uLXteStWN ebmAc}ÊqAccuATcAcJXAqtAtNbNctq	–
Other)assurance)services)(IPO)related)services)
	0.5

C6. CASH&AND&CASH&EQUIVALENTS

	(£ million)
	e I il I

(£&million)	2014
AqWAtIAc_	38.6
	38.6

C7. OTHER&RECEIVABLES

(£&million)	2014
beuctqe{NLI}quIqXLXAp}ucLNptA_XcVq	7.8
	7.8

3WNAbeuctqe{NLI}quIqXLXAp}ucLNptA_XcVqINApXctNpNqtAt %0muq¶¶3WNAbeuctqApNucqNJupNLAcLpNmA}AINecLNbAcL¶

C8. TRADE&AND&OTHER&PAYABLES

(£&million)	2014
beuctqe{NLtequIqXLXAp}ucLNptA_XcVq	5.5
Accruals	1.1
	6.6

3WNAbeuctqe{NLtequIqXLXAp}ucLNptA_XcVqINApXctNpNqtAt %0muq¶¶3WNAbeuctqApNucqNJupNLAcLpNmA}AINecLNbAcL¶

C9. FINANCIAL&INSTRUMENTS

(£&million)	2014
Financial)assets:)Carrying)amount)and)fair)value
Loans&and&receivables
Cash)and)cash)equivalents	38.6
beuctqe{NLI}quIqXLXAp}ucLNptA_XcVq	7.8
	46.4
`eStWNAIezNTcAcJXAAqqNtqApNJuppNctAcLucXbmAXpNL¶
(£&million)	2014
Financial)liabilities:)Carrying)amount)and)fair)value
Amortised&cost
Accruals	1.1
beuctqe{NLtequIqXLXAp}ucLNptA_XcVq	5.5
	6.6

3WNSAXpzAuNeSTcAcJXAAqqNtqAcLXAIXXtXNqAmmpe|XbAtNqtWNXpJApp}XcVzA`uN¶

MATURITY&ANALYSIS

eStWN ebmAc}ÊqTcAcJXAXAIXXtXNqWAzNAbAtupXt}eSNqqtWAcecN}NAp¶

C10. INVESTMENT&IN&SUBSIDIARIES

(£&million)	Subsidiary undertakings	Total
#NtIee_zA`uN
At)date)of)incorporation	–	–&
Additions	830.0	830.0
At&31&December&2014	830.0	830.0

NtAXqeStWN ebmAc}ÊqmpXcJXmAquIqXLXApXNqAttWNIA`AcJNqWNNtLAtNApNXccetN¶Su```XqteSquIqXLXApXNqJAcINSeucLectWN Annual Return.

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ebmAc}AJouXpNLeStWNqWApNJAmXtAeS1mXpNNAtWJApNXcAcJN XbXtNL¶

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ebmAc}¶

%cu}1mXpNNAtWJApNXcAcJN XbXtNLXqquNL¸¸¸epLXcAp}qWApNqeS¶NAJWAqJecqXLNpAtXecSeptWNAqqXVcbNct eStWNAbeuctqLuNteSepbNpu`tXbAtNmApNctucLNptA_XcVAcLbAcAVNbNct¶

%cLbXqqXececu}¸tWN ebmAc}quIqJpXINLteASuptWNp¸¸¸epLXcAp}qWApNqeS¶NAJWXc1mXpNNAtWJApN XcAcJN XbXtNLXcN|JWAcVNSepJAqWeS¶bX``Xec¶

SuptWNp¶bX`Xec{AqpNJeVcXqNLAqALLXtXecqpNAtXcVte1mXpNNA`tWJApN XbXtNLSeptWNA{ApLqeSqWApNemtXecqeStWN
ebmAc} to the employees)of)Spire)Healthcare)Limited.)

ttWN}NApNcL¸XczNqtbNctqXcquIqXLXApXNq{NpNpNzXN{NLSepXcLXJAtepqeSXbmAXpbNctAcLceXcLXJAtepqSepXbmAXpbNct{NpNSeucL¶

C11. CONTINGENT&LIABILITIES

LEASE&ARRANGEMENTS&WITH&A&CONSORTIUM&OF&INVESTORS

3WN
ebmAc}WAqVXzNcAVuApActNNteAJecqeptXubeSXczNqtepq¸JebmpXqXcV"AA}qXAÊqbme}NNq-pezXLNctucL¢-£¸ASTXAtNLSucLq eS %JW¹?XSS AmXtA"AcAVNbNctpeumAcL"eep-Ap_
AmXtA¸XcpNAtXectetWNqANeSt{NzNeStWN1mXpNpeumÊqmpemNpt}¹e{cXcV JebmAcXNqecAcuAp}¶:XtWNSSNJtSpebAcuAp}¸tWNtetAtWXpL¹mApt}AccuAJebbXtbNctqeStWNpeumucLNptWNqN emNpAtXcV`NAqNqXcJpNAqNLI}¶bX``XecmNpAccub¶

Notes to the Parent Company financial statements continued

C11. CONTINGENT LIABILITIES continued

As a result of the sale, the Group has long-term institutional lease arrangements (up to December 2042, subject to renewal or extension), with the landlord for each of the 12 properties. The leases include key terms such as annual rental covenants and minimum levels of capital expenditure invested by the Group. The capital expendture covenants measured on an average basis over each five-year period during the term of the leases, require the Group to incur, in total, £5.0 million of maintenance capital expenditure and £3.0 million of additional capital expenditure on the portfolio of 12 hospitals each year, subject to indexation in line with RPI. If the minimum capital expenditure levels are not met, the Group is required to enter into a recovery plan in order to comply with the covenants, but no default would be deemed to have occurred.

The Company is a party to this guarantee.

LEASE AGREEMENTS ENTERED INTO BY CLASSIC HOSPITALS LIMITED

Under lease agreements entered into on 26 January 2010 by Classic Hospitals Limited, a subsidiary undertaking of the Company, the Company, the Company, the Company has undertaken to guarantee the payment of rentals over the lugust 2040, and to ensure that the other covenants in the lease are observed. The initial rentals payable under the leases in 2010 were £6.3 million per annum, which will be subject to an increase in future years. As part of these arrangements, the assets of the Company are subject to a fixed and floating charge.

C12. CAPITAL MANAGEMENT

The objective and management of the Company's capital structure is consistent with the Group (see note 31 to the Group financial statements).

The Company's net assets at 31 December 2014 were £869.8 million and cash amounted to £38.6 million.

C13. RELATED PARTY TRANSACTIONS

The Company's principal subsidiaries are listed in note 18 to the Group financial statements. The following table provides the Company's balances which are outstanding with subsidiary companies at the balance sheet date:

(£ million)

(z million)	CULT
Amounts owed from subsidiary undertakings	7.8
Amounts owed to subsidiary undertakings	(5.5)
	2.3

The amounts outstanding are unsecured and repayable on demand.

The following table provides the Company's transactions with subsidiary companies recorded in the profit for the year:

(£ million)	2014
Amounts invoiced to subsidiaries	7.8
Amounts invoiced by subsidiaries	5.5
Dividend received from subsidiaries	36.3

DIRECTORS' REMUNERATION

The remuneration of the non-executive directors of the Company is set out below. Further information of individual directors is provided in the audited part of the Directors' Remuneration Report on pages 74 to 88.

(£ million)	2014
Emoluments*	0.3
Pension contributions	I
Share-based payments*	l
Total	0.3

* Emoluments and share-based payment charge for the claiman prior to Admission are by a subsidiary company Spire Heathcare Limited.

Directors' interests in share-based payment schemes

Refer to note 28 to the Group financial statements for further details of the Chairman and executive members of the Board of Directors

OTHER TRANSACTIONS

During the period, the Company did not make any purchases in the ordinary course of business from an entrol.

C14. EVENTS AFTER THE REPORTING PERIOD

2014 FINAL DIVIDEND

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

Additional)shareholder)information

REGISTERED*OFFICE*AND*GROUP*HEAD*OFFICE*

Spire)Healthcare)Group)plc) 3)Dorset)Rise London)EC4Y)8EN) Tel)+44)(0)20)7427)9000) Fax)+44)(0)20)7427)9001) (Registered)in)England)&)Wales)No.)09084066))

CORPORATE*WEBSITE*

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

CORPORATE*ADVISERS

AUDITOR

Ernst)&)Young)LLP,)1)More)London)Place,)London,)SE1)2AF

BROKERS

Bank)of)America)Merrill)Lynch,)2)King)Edward)Street,)London,)EC1A)1HQ

JPMorgan)Cazenove,)25)Bank)Street,)Canary)Wharf,)London,)E14)5JP

LEGAL*ADVISERS

pNqWTNLqpuJ\_WAuqNpXcVNp -¸NNt1tpNNt¸ ecLec¸
<1

REMUNERATION*CONSULTANTS

Deloitte)LLP,)2)New)Street)Square,)London,)EC4A)3BZ

REGISTRARS*

Equiniti)Limited,)Aspect)House,)Spencer)Road,)Lancing,)West)Sussex,)BN99)6DA)

ENQUIRIES*

Shareholder)enquiries)should)be)addressed)to)the)Company's)share)registrar)at)the)above)address,)or)as)follows:)

Equiniti)Limited Tel)(UK)only))0871)384)2030) Tel)(nondUK))+44)(0)121)415)7047)

For)the)hard)of)hearing,)Equiniti)offers)a)special)Textel)service)that)can)be)accessed)by)dialling)0871)384)2255)(or)+44)(0)121)415)7028) from outside)the)UK).)

`etWNpqWApNWeLNpNcouXpXNqcetpNAtNLtetWNqWApNpNVXqtNpqWeuLINALLpNqqNLtetWN
ebmAc}1NJpNtAp}AttWN0NVXqtNpNL%STJN or emailed)to:)companysecretary@spirehealthcare.com.

SHAREVIEW*

A)website,)www.shareview.co.uk,)is)operated)by)Equiniti)Limited,)enabling)shareholders)to)access)details)of)their)shareholdings)online.) The website)provides)information)useful)to)the)management)of)investments)together)with)an)extensive)schedule)of)frequently)asked) questions.)In order)to)gain)access)to)information)on)shareholdings)the)shareholder)reference)number)is)required,)which)can)be)found) AttWN tem eStWN
ebmAc}ÊqqWApNJNptXTJAtNq¶

DEALING*SERVICES*

UK)resident)shareholders)can)now)sell)shares)on)the)Internet)or)by)phone)using)Equiniti's)Shareview)Dealing)facility)by)either)logging)onto) www.shareview.co.uk/dealing)or)by)calling)0845)603)7037)between)8.00am)and)4.30pm)on)any)business)day)(excluding)Bank)Holidays).)

In)order)to)gain)access)to)this)service,)the)shareholder)reference)number)is)required,)which)can)be)found)at)the)top)of)the)Company's) qWApN JNptXTJAtNq¶

OVERSEAS*PAYMENT*SERVICE

Equiniti)provides)a)dividend)payment)service)in)over)30)countries)that)automatically)converts)payments)into)the)local)currency)by)an) arrangement)with)Citibank)Europe)PLC.)Further)details,)including)an)application)form)and)terms)and)conditions)of)the)service,)are)available)on) www.shareview.co.uk)or)from)Equiniti)by)calling)+44)(0)121)415)7047)or)writing)to)Equiniti,)Aspect)House,)Spencer)Road,)Lancing,)West)Sussex,) BN99)6DA,)United)Kingdom)(please)quote)Overseas)Payment)Service)with)details)of)the)Company)and)your)shareholder)reference)number).

Additional)shareholder)information) continued

!! "BOILER*ROOM"*SCAMS

In)recent)years,)many)companies)have)become)aware)that)their)shareholders)have)received)unsolicited)phone)calls)or)correspondence) concerning)investment)matters.)These)are)typically)from)overseasdbased)"brokers")who)target)UK)shareholders,)using)persuasive)and) highdpressure)tactics)to)lure)investors)into)scams)in)what)often)turn)out)to)be)worthless,)nondexistent)or)highdrisk)shares)in)US)or)UK) investments.)These)operations)are)commonly)known)as)"boiler)rooms".)

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Shareholders)are)advised)to)be)very)wary)of)any)unsolicited)advice,)offers)to)buy)shares)at)a)discount)or)offers)of)free)company)reports.) Always:

Check)the)Financial)Services)Register)from)www.fca.org.uk)to)see)if)the)person)contacting)you)is)authorised)by)the)FCA;

Make)sure)you)get)the)correct)name)of)the)person)and)organisation;

Use)the)contact)details)from)the)Register)to)call)them)back)–)not)those)given)to)you;

Report)the)matter)to)the)FCA)by)calling)0800)111)6768;)and)

If)the)calls)persist,)hang)up.

If)approached)by)fraudsters,)please)tell)the)FCA)using)the)share)fraud)reporting)form)at)www.fca.org.uk/scams.

FINANCIAL*CALENDAR

2015)Annual)General)Meeting	21)May)2015
Exddiv)date)for)Final)2014)dividend	4)June)2015
Record)date)for)Final)2014)dividend	5)June)2015
Payment)date)of)Final)2014)dividend	30)June)2015
Announcement)of)2015)half)year)results	August)2015

ANALYSIS*OF*ORDINARY*SHAREHOLDERS*

As*at*31*December*2014*

	Investor)type			Shareholdings
	Private	Institutional and)other	Total	1–1,000	1,001– 50,000	50,001– 500,000	500,001+
Number)of)holders)	30	309	339	45	167	69	58
Percentage)of)holders	8.85%	91.15%	100%	13.28%	49.26%	20.35%	17.11%
Percentage)of)shares)held	0.23%	99.77%	100%	0.01%	0.50%	3.13%	96.36%

Glossary

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2013FreeholdSale	sale,)in)2013,)of)the)companies)holding) freehold)and)leasehold)interests,) subject to long)term)institutional) leases, in 12 of Spire's)hospitals	CREST	the)UKdbased)system)for)the)paperless) settlement)of)trades)in)listed)securities,) of which)Euroclear)UK)and)Ireland) Limited is)the)operator
Act	The)Companies)Act)2006,)as)amended	CRM	customer)relationship)management)
Acute*care	active)but)shortdterm)treatment)for)		system)/software
a)severe)injury)or)episode)of)illness		CT	computerised)tomography
Adjusted*EBITDA	pNmpNqNctqtWNpeumÊqemNpAtXcVmpeTt¸	DBP*	Deferred)Bonus)Plan
	adjusted)to)add)back)depreciation)and) exceptional)operating)items	Directors	the)executive)and)nondexecutive)directors
Admission	the)admission)of)the)Shares)to)the)premium)	EBIT	earnings)before)interest)and)taxes) pNmpNqNctqtWNpeumÊqemNpAtXcVmpeTt
	XqtXcVqNVbNcteStWN%STJXA XqtAcLte trading)on)the)London)Stock)Exchange's) main)market)for)listed)securities		earnings)before)interest,)taxes,) depreciation)and)amortisation;) pNmpNqNctq tWNpeumÊqemNpAtXcVmpeTt¸
AGM	Annual)General)Meeting		adjusted)to)add)back)depreciation
Articles	the)Articles)of)Association)of)the)Company	EBITDAR	earnings)before)interest,)taxes,) depreciation,)amortisation)and)rent;) represents)Adjusted)EBITDA,)adjusted)
AuditCommittee	Audit)and)Risk)Committee
Board	the)Board)of)Directors)of)the)Company
J¶LXSTJXN |eqtpXLXubLXSTJX`N		to add)back)rent)expense
CAGR	compound)annual)growth)rate	EfW	Energy)from)Waste)
	Cardiac*catheterisation insertion)of)a)catheter)into)a)	EPS	earnings)per)share
	chamber or vessel)of)the)heart	ESOS	Energy)Saving)Opportunity)Scheme
Cardiology	speciality)which)encompasses)the)treatment)	EU	the)European)Union)
	of)patients)with)cardiovascular)disease	Executive*Directors	the)executive)directors)of)the)Company
CCG	Clinical)Commissioning)Group	EY	Ernst)and)Young)LLP,)the)external)auditor
CEO*	WXNS NJutXzN%STJNp	FCA	the)Financial)Conduct)Authority
CFO	WXNSXcAcJXA`%STJNp	Final*Order	the)Private)Healthcare)Market)Investigation) Order)2014,)issued)by)the)CMA)
CGSC	Clinical)Governance)and)Safety)Committee	GDP	gross)domestic)product
Cinven	Cinven)Partners)LLP	GHG	greenhouse)gas)
CinvenFunds	Fourth)Cinven)Fund)(No.1))Limited) Partnership,)Fourth)Cinven)Fund)(No.2))	GP	General)Practitioner)
	Limited)Partnership,)Fourth)Cinven)Fund)	HCAHoldings,Inc.	Hospital)Corporation)of)America)
	(No.3—VCOC))Limited)Partnership,)Fourth)	HD	hospital)director
	Cinven)Fund)(No.4))Limited)Partnership,)	Health&Safety*Act	The)Health)&)Safety)at)Work)etc)Act)1974
	Fourth)Cinven)Fund)FCPR,)Fourth)Cinven)	HMRC	HM)Revenue)&)Customs
	Fund)(UBTI))Limited)Partnership,)Fourth) Cinven)Fund)CodInvestment)Partnership)and) Fourth)Cinven)(MACIF))Limited)Partnership	IFRS	International)Financial)Reporting) Standards,)as)adopted)by)the)EU
CityCode	the)City)Code)on)Takedovers)and)Mergers	IPO	initial)public)offering)of)Shares)to)certain)
CMA	the)UK)Competition)and)Markets)Authority		institutional)and)other)investors
CNST	the)NHS)Clinical)Negligence)Scheme)	ITU	Intensive)Therapy)Unit)
	for trusts)administered)by)the)NHS)	KPI	key)performance)indicator
	Litigation)Authority	Lifescan	part)of)Spire)Healthcare)offering)
CompanyorGroup	Spire)Healthcare)Group)plc		advanced healthcare)CT)scans,)
CQC	Care)Quality)Commission		health checks)and)blood)tests
CO2e	carbon)dioxide)equivalent	Legacy*award	Directors')Share)Bonus)Plan)Awards
CQUIN	commissioning)for)quality)and)innovation)	Legacy*award	accrued)incentive)payments
	payment)which)is)earned)for)meeting) quality)targets)on)NHS)work	LinAc	linear)accelerator)enabling) intensity modulated)and)image) guided radiotherapy)treatment)

Glossary continued

!!

Listing*Rules	the)listing)rules)of)the)FCA)made) under section)74(4))of)the)FSMA
LondonStock Exchange	London)Stock)Exchange)plc
LTIP	Long)term)incentive)plan
MAC	Medical)Advisory)Committee
Monitor	an)executive)nonddepartmental)public) body)of)the)Department)of)Health)that) acts)as)the)sector)regulator)for)health) services)in)England
MRgFUS	Magnetic)Resonance)guided) Focused Ultrasound)treatment
MRI	magnetic)resonance)imaging
MRSA	Methicillindresistant)Staphylococcus)aureus
MSSA	Methicillindsensitive)Staphylococcus)aureus
NDC	Spire's)national)distribution) centre in Droitwich
NHS	the)National)Health)Services) in England, Scotland,)Wales)and) Northern Ireland,)collectively
NI	National)Insurance
NICE	the)National)Institute)for) Health and Care Excellence
nonaexecutive directorsor*NEDs	the)nondexecutive)directors) of)the)Company
%STJXAXqt | the)record)of)whether)a)company's)<br>qWApNq ApNeSTJXA``}XqtNL¸bAXctAXcNL I} tWN ¢tWN4 %STJXA` Xqt£
Oncology	speciality)which)encompasses)the) treatment)of)people)with)cancer
Perform	part)of)Spire)Healthcare,)specialises) in sports)medicine,)rehabilitation) and human)performance.
PIK	payment)in)kind)
PILON	payment)in)lieu)of)notice
PIP*Claims	the)claims)relating)to)the)supply) of alleged faulty)PIP)breast)implants
PMI	private)medical)insurance/insurer
PPE	property,)plant)and)equipment)
PPU	Private)Patient)Unit
PRisM	Property)and)Risk)Management)system
Prospectus	tWNTcA`mpeqmNJtuqeStWN ebmAc} approved)by)the)FCA)as)a)prospectus) prepared)in)accordance)with)the)Prospectus)

Rules)made)under)section)73A)of)the)FSMA

	PublicHealthEngland the)executive)agency,)whose)purpose)is)to) protect)and)improve)the)nation's)health)and) wellbeing,)and)reduce)wealth)inequalities
Registrars	Equiniti)Limited
Registration* Regulations	the)Care)Quality)Commission) (Registration) Regulations)2009
RegulatedActivities Regulations	the)Health)and)Social)Care)Act)2008) (Regulated)Activities))Regulations)2010
Relationship* Agreement	the)relationship)agreement)dated) 7 July 2014)entered)into)between) the Company)and)Cinven)Funds
Reorganisation	the)reorganisation)of)the)Group) in preparation)for)the)IPO
RIDDOR	Reporting)of)Injuries,)Diseases)and) Dangerous)Occurrences)Regulations
RNOH	Royal)National)Orthopaedic)Hospital
ROCE	return)on)capital)employed
RQIA	the)independent)health)and)social) care regulator)for)Northern)Ireland) is the Regulation)and)Quality) Improvement Authority
SAC	standard)acute)contract)issued) by NHS England
SAP*	global)software)developer/software
Selfapay	when)a)procedure)or)treatment)provided) is funded)by)the)patient)directly
Shareholders	the)holders)of)shares)in)the)capital) of)the)Company
Shares	the)ordinary)shares)of)the)Company,) having the)rights)set)out)in)the)Articles
tCO2e	tonnes)of)equivalent)carbon)dioxide)
TSR	total)shareholder)return
UK	the)United)Kingdom)of)Great)Britain) and Northern)Ireland
UK*Code	the)UK)Corporate)Governance)Code) issued by)the)Financial)Reporting)Council,) as)amended)from)time)to)time
VTE	Venous)thromboembolism)(the)impact)of)a) loose)blood)clot)travelling)within)the)blood)
YTD	year)to)date

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