19th Mar 2015 11:20
LONDON (Alliance News) - Healthcare services provider Circle Holdings PLC expressed optimism for 2015, saying it is aiming for all of its assets to be earnings positive by the end of the year, as it posted a widened pretax loss for 2014 on the back of exceptional costs relating to its withdrawal from the operation of Hinchingbrooke hospital in Cambridgeshire.
However, stripping out these exceptional costs, higher patient numbers helped swing the company to positive earnings before interest, tax, depreciation, amortisation and rent of GBP10.4 million, compared to a loss of GBP143,000 on the same basis a year before.
Circle announced plans to withdraw from its operation of Hinchingbrooke in January, as it said it was no longer sustainable. The move was significant, as Hinchingbrooke was the first NHS hospital to be run by a private company.
Circle cited rising demand for healthcare, income not increasing in line with this rise in activity, and its opinion that there was no immediate prospect of reform in the local health economy that it would need to make the contract sustainable.
"Solving the problems facing Hinchingbrooke could only be achieved through joined-up reform in Cambridgeshire across hospitals, GPs and community services - but these reforms are too far into the future. We reluctantly concluded that with little flexibility in the contract, Circle's involvement in Hinchingbrooke was unsustainable," Circle said in a statement. It expects to withdraw from the contract at the end of March.
Circle posted a pretax loss of GBP20.2 million for 2014, widened from GBP15.2 million a year before, as a rise in revenue to GBP111.0 million from GBP84.3 million was offset by higher cost of sales and exceptional charges of GBP5.3 million.
An exceptional GBP4.8 million gain from the wind-up of joint venture activities was cancelled out by GBP1.1 million in restructuring costs, a GBP1.9 million impairment of property, plant and equipment, and a GBP5.0 million impairment related to working capital contributions to Hinchingbrooke.
In the previous year the company had posted an exceptional GBP3.9 million gain resulting from the de-consolidation of Health Properties Edinburgh.
The company has been streamlining its operations, winding up a further eight entities during the year. It plans to dissolve a further eleven entities in 2015.
Shares in Circle are untraded Thursday. It last closed at 46.00 pence.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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