SIR.L Regulatory News (SIR)

Results for the nine months ended 31 December 2014

Secure Income REIT Plc (the "Company" or the "Group"), the specialist long term income UK REIT, today announces its maiden preliminary results since its admission to AIM, covering the nine month period ended 31 December 2014.

Highlights

• EPRA net asset value per share up 50% in seven months since listing to 258.5 pence

• Portfolio valuation up 11.6% since listing to £1.63 billion; net initial yield of 5.4% and an equivalent yield of 7.0%

• Weighted average unexpired lease term of 25.1years, with 57% of passing rent subject to annual fixed uplifts and 43% of passing rent subject to RPI linked upwards only rent reviews

• Net loan to value ratio of 70%, down from 80% at listing, providing gearing in a strong investment market

• 50% of passing rent guaranteed by Merlin Entertainments Plc, the second largest operator of visitor attractions in the world with a market capitalisation of £4.3 billion*, making it the 95th largest FTSE company

• 48% of passing rent guaranteed by Ramsay Healthcare Limited, with a market capitalisation of £6.9 billion*, listed on the Australian Stock Exchange and one of the five largest private hospital groups in the world

Martin Moore, Independent Non-Executive Chairman of the Company, commented: "Since listing we have continued to see growing demand for assets with high quality, long term income streams in alternative property sectors and this momentum, coupled with our strategy of being geared into market recovery, has led to the exceptional maiden annual results we are able to report today."

12 March 2015

* as at 11 March 2015

ENQUIRIES:

Prestbury Investments LLP Tel: 020 7647 7647

Nick Leslau

Mike Brown

Sandy Gumm

FTI Consulting Tel: 020 3727 1000

Richard Sunderland

Claire Turvey

Stifel Nicolaus Europe (Nominated Adviser and Broker) Tel: 020 7710 7600

David Arch

Mark Young

Tom Yeadon

Notes to Editors

Secure Income REIT Plc is a UK REIT specialising in generating long term, inflation protected, secure income from real estate investments. Its investment strategy is designed to satisfy investors' growing requirements for high quality, secure, inflation protected income flows. The Group owns a freehold portfolio of 28 well established operating real estate assets including some of the UK's top visitor attractions and theme parks: namely Madame Tussauds in London, Alton Towers theme park and hotel, Thorpe Park and Warwick Castle, as well as 21 private hospitals in the UK.

Forward looking statements

This document includes forward looking statements which are subject to risks and uncertainties. You are cautioned that forward looking statements are not guarantees of future performance and that if risks and uncertainties materialise, or if the assumptions underlying any of these statements prove incorrect, the actual results of operations and financial condition of the Group may differ materially from those made in, or suggested by, the forward looking statements. Other than in accordance with its legal or regulatory obligations, the Company undertakes no obligation to review, update or confirm expectations or estimates or to release publicly any revisions to any forward looking statements to reflect events that occur or circumstances that arise after the date of this document.

Chairman's Statement

I am delighted to report exceptional maiden annual results with a 50% rise in EPRA NAV per share in just seven months since listing.

The Group owns over £1.6 billion of high quality freehold properties which enjoy a rare combination of annual rental uplifts secured against strong covenants on very long leases, with average unexpired lease terms of over 25 years. Such assets are increasingly valued in a world of extraordinarily low interest rates and bond yields, where investors are finding it extremely difficult to earn a reasonable level of income return. We are now witnessing bond yields turning negative in a number of European countries whilst interest rates are not only at their lowest in the UK since the Bank of England commenced setting rates in 1694, but have remained at this level for six years - the longest period without change for over 60 years.

The yield profile of the 31 December 2014 valuation shows the net initial yield of 5.4% rising shortly to 5.5% in early May following the fixed annual uplifts of our healthcare rents and to 5.6% eight weeks later following the uplift of rents on our UK leisure assets. Valuation yields understate the income return actually earned by the Group as they make a hypothetical allowance for purchaser's costs in the event the properties are sold. In practice, the income return we enjoy from our properties is higher: 5.7% today, forecast to rise to 5.9% by July based on the same year end valuation.

We consider this to be a very attractive level of return for income of 25 years duration, 98% of which is secured on the parent guarantees of two strong global businesses in Ramsay Health Care Limited and Merlin Entertainments Plc, which are valued at £6.9 billion and £4.3 billion respectively. The commercial property market (represented by the IPD UK Quarterly Index at the same 31 December 2014 valuation date) has an initial yield of 5.1% but with much less income security with an average unexpired lease term of just over 10 years. The benefit of the Group's guaranteed uplifts is reflected in the portfolio's equivalent yield, which stands at 7.0% against IPD at 6.1%.

I would add that the combination of long income duration and rising rents is not only well sought after in the current market but also proved highly resilient in more difficult economic circumstances, with the portfolio showing a return that is some 6.5% per annum higher than the IPD UK Quarterly Index during its period of private ownership from purchase in mid-2007 to listing.

A feature of the London market has been an exceptional level of interest from overseas investors and, following a number of unsolicited approaches, in February we chose to market our freehold interest in Madame Tussauds in Marylebone Road. This is one of London's top visitor attractions and an iconic property, available on the market as an individual asset for the first time since the business started trading on this site 130 years ago. While the Group's strategy remains firmly to invest in and hold for the long term high quality assets with long term income characteristics, Madame Tussauds is our largest asset and with the London market so buoyant we felt we must explore this sale opportunity to ensure we continue to optimise shareholder returns. If successful, the sale would improve the income return on the remainder of the portfolio.

A corollary of a highly competitive market is that suitable acquisition opportunities have proved both scarce and competitively priced. I made the point in our interim results that the Board not only chooses to be patient in waiting for the right investment opportunity but that it can afford to be so, with no dilution of returns given that it holds little cash on its balance sheet. Indeed, the Group was floated with a high level of leverage in a rising market with the anticipation that this would augment shareholder returns. This has certainly proved to be the case since listing, with a valuation gain of 11.6% leading to a 50% EPRA NAV per share increase. It has also reduced our net loan to value ratio from 80% to 70%, and if Madame Tussauds is sold this will significantly reduce our levels of net borrowings, as this property has a value in excess of £300 million and represents 19% of our property portfolio.

With interest rates at historic lows, it makes sense for us to investigate whether an early refinancing of the portfolio would be in shareholders' best interests. This would present an opportunity to lock into lower interest rates for a longer period, but at the cost of breaking our interest rate swaps which otherwise expire in 2017 when the associated debt matures. An early refinancing should bring forward the date we could commence paying a dividend ahead of our previous indication of 2017. We will report further to shareholders if our investigations lead us to conclude that an early refinancing is in the best interests of shareholders.

In the meantime we note that the search for yield has continued to drive up values over the opening months of this year which provides a favourable backdrop for the Group's activities during 2015.

Results and financial position

The financial statements presented in this results announcement are for a nine month period ended 31 December 2014 with comparative figures at 31 March 2014, which predates the listing of the Company. The 31 March 2014 figures present the capital structure as it was prior to our listing on 5 June 2014 and consequently comparisons to the prior period are not particularly meaningful. Therefore we highlight in this report the growth in EPRA NAV per share since listing, when the current capital structure took effect. The growth achieved in that seven month period is 50%, which is driven principally by the 95.3 pence per share property valuation uplift and 37.2 pence per share of rent net of property costs. After all financing and running costs of the Group, an increase in shareholder value of 86.5 pence per share since listing has been achieved. The portfolio uplift of 11.6% translates into significant NAV per share performance through the strategy of being geared into the recovery as detailed in our previous statements.

The Group's 6.7 pence of adjusted EPRA earnings per share comprises 1.9 pence per share attributable to the period up to and including listing and 4.8 pence per share attributable to the period post listing, which is made up as follows:

Further details of the Group's capital structure and performance are set out in the Strategic Report and the Investment Adviser's Report.

Outlook

The world currently lacks an adequate supply of investments able to generate a safe and secure income stream at reasonable levels. The resultant search for yield is driving up the prices of those remaining assets that share such characteristics and this is likely to continue whilst most countries around the world maintain low interest rates and QE supresses bond yields. Of course there is always the possibility that events steer markets off course, but the early months of 2015 have seen a further continuation of this trend, which augurs well for the Company.

Martin Moore

Chairman

12 March 2015

Strategic Report

Business review

Key performance indicator - EPRA NAV per share

The principal financial outcome that the Board seeks to achieve is attractive growth in shareholder returns. Progress towards this objective is specifically measured through growth in EPRA NAV, which is a measure of the fair value of a company on a long term basis, ignoring the impact of hedging valuations and any deferred tax.

As the reporting period includes results both before and after listing, and as the capital structure of the Group prior to listing was very different to the structure since then, we believe that the most appropriate measure of growth for shareholders is progress in EPRA NAV per share since listing. The Group's EPRA NAV per share at 31 December 2014 was 258.5 pence, which represents a 50% increase over the unaudited pro forma EPRA NAV as at listing. In an effort to fairly reflect the capital reorganisation and effects of the listing, the following table summarises growth in EPRA NAV as adjusted for the reorganisation and listing.

* including 6.7 pence from the impact of rent smoothing adjustments in the period, arising from the Group's accounting policy to spread the impact of fixed rental uplifts evenly over the whole term of relevant leases, in accordance with SIC 15 "Operating Leases - Incentives". The impact of this accounting treatment is to reflect a receivable, included in the book value of investment property, for the amount of rent included in the income statement ahead of actual cash receipts. In order that the rent smoothing receivable does not, in combination with the book value of the investment properties, overstate the value of the property portfolio, any movement in the rent smoothing receivable is offset against property revaluation movements.

Key performance indicator - adjusted EPRA earnings per share

The Company intends to make distributions to shareholders once it generates sufficient profits. In order to monitor its ability to make distributions, the Board uses the Group's adjusted EPRA earnings per share as a key performance indicator. EPRA EPS excludes investment property revaluations, fair value movements in interest rate derivatives and deferred tax to give a measure of underlying earnings from core operating activities. An adjusted EPRA EPS figure is presented, also excluding any performance fee as that is largely derived from investment property revaluations, and the non-recurring costs of the reorganisation and listing, as the Board believes this enables a more consistent comparison of underlying earnings:

Further details of the Group's financial performance are given in the Investment Adviser's Report.

Principal risks and uncertainties

Investment Adviser's Report

Prestbury Investments LLP advises Secure Income REIT Plc and is pleased to report on the operations of the Group for the nine months ended 31 December 2014. Consistent with the Chairman's Statement and Strategic Report, we focus in this report on results since listing last June.

The portfolio

The portfolio throughout the period to 31 December 2014 comprised 28 properties with secure, long term income and contractual uplifts derived from tenants whose businesses offer global spread and have performed very well over many years, demonstrating their strong defensive qualities.

Healthcare assets (50% of portfolio value)

The healthcare assets comprised 21 freehold private hospitals located throughout England, 20 of which are let to a subsidiary of Ramsay Health Care Limited, the listed Australian healthcare company, and the other to Groupe Sinoue, a French company specialising in mental health. The hospitals let to Ramsay comprise 96% of the healthcare assets' passing rent and 95% of their fair value.

The Ramsay hospitals are let on full repairing and insuring leases with a term to expiry at 31 December 2014 of 22.4 years without break. The rent increases by a fixed 2.75% per annum throughout the lease term in May each year, except in 2017 when it is increased to the higher of 2.75% or 88.5% of 65% of site earnings before interest, tax, depreciation, amortisation, rent and head office costs, and every fifth year thereafter when it is increased to the higher of 2.75% or open market value. The rent from the Ramsay hospitals is currently £45.9 million per annum.

The leases on the Ramsay hospitals are all guaranteed by Ramsay Health Care Limited, Australia's largest hospital operator, one of the top five private hospital operators in the world and a constituent of the ASX 50 index of Australia's largest companies, with a market capitalisation at 11 March 2015 of £6.9 billion.

The tenant's rental obligations with regard to the central London psychiatric hospital in Lisson Grove are guaranteed by Orpea SA, the parent company of the Orpea Group, a leading European operator of nursing homes, post-acute care and psychiatric care, listed on Euronext Paris with a market capitalisation at 11 March 2015 of £2.6 billion. Orpea owns 45% of Group Sinoue.

With a current rent of £1.8 million per annum, the Lisson Grove hospital accounts for 2% of the Group's passing rent, and represents 2% of the gross property assets. The rent increases each year by 3%. A reversionary lease will take effect on expiry of the existing lease in May 2037 and extend the term by a further seven years, with fixed rental increases of 3% per annum throughout this extended term.

Total healthcare rent is currently £47.7 million per annum.

Leisure assets (50% of portfolio value)

The leisure assets comprise five well known visitor attractions and two hotels, located in England and Germany. The properties are all let to subsidiaries of Merlin Entertainments Plc, the guarantor of the leases. Merlin is a leisure group listed on the London Stock Exchange's FTSE 250 index with a market capitalisation at 11 March 2015 of £4.3 billion. Measured by the number of visitors, it is Europe's largest and the world's second largest operator of leisure attractions.

The UK leisure assets are:

· Madame Tussauds London

· Alton Towers theme park and the Alton Towers Hotel

· Thorpe Park theme park

· Warwick Castle

In addition the leisure portfolio includes two German assets: Heide Park theme park and the Heide Park hotel, both located in Soltau, Saxony. The German assets, which generate Euro denominated rents, make up 11% of the leisure portfolio passing rent and 5% of the total Group rent.

Across the leisure portfolio the visitor attractions account for 88% of the passing rent and 89% of fair value, with hotels making up the balance.

The average unexpired lease term of the leisure assets is 27.5 years and the tenants have two rights to renew these leases for 35 years at the end of each term. The leases are full repairing and insuring leases and there are no break options. There are upwards only uncapped RPI-linked rent reviews every June throughout the term for the UK leisure portfolio and fixed annual increases of 3.34% every July throughout the term for the German properties. The 2014 rent reviews resulted in an average increase of 2.5% in the RPI-linked rents of the leisure assets, with the total rent currently £45.5 million per annum, including £5.0 million of Euro denominated German rents at a rate of €1:£0.77877.

Portfolio valuation yields at 31 December 2014

Portfolio valuation by location

Portfolio valuation uplift in the period

The healthcare investment property valuations at 31 December 2014 reflect a weighted average net initial yield of 5.6% compared to 6.2% at 31 March 2014, resulting in a valuation uplift of £85.5 million (11.8%) in the period. The rental uplifts in May 2014 had already been reflected in the 31 March 2014 valuation.

The leisure investment property valuations at 31 December 2014 reflect a weighted average net initial yield of 5.3% compared to 5.8% at 31 March 2014. The net initial yield for the UK leisure assets is 5.2% compared to 5.6% at 31 March 2014 which, together with a 2.5% RPI rental uplift on 24 June 2014, has resulted in a valuation uplift of £77.1 million (11.6%) in the period. The fixed 3.34% rental income uplift on the German assets in July 2014 was reflected in the valuation at 31 March 2014, but a fall in the net initial yield from 7.3% to 6.5% has resulted in an uplift of €11.8 million (14.7%) in the Euro denominated valuation of those properties; currency translation movements have, however, reduced the Sterling equivalent by £4.4 million (6.6%), resulting in a net valuation uplift of £5.4 million (8.1%) in the German leisure assets over the period. Across the whole leisure portfolio, there has therefore been a valuation increase of £82.5 million (11.3%) in the period.

As a result of these valuation movements, the total portfolio uplift comprises:

The rent smoothing adjustment arises from the Group's accounting policy to spread the impact of fixed rental uplifts evenly over the whole term of relevant leases. The adjustments relate to those rents on the healthcare assets which increase by 2.75% (on 96% of healthcare rents) and 3% (on 4% of healthcare rents) every May, and those rents on the German leisure assets which increase by 3.34% every July.

The impact of this accounting treatment is to reflect a receivable, included in the book value of investment property, for the amount of rent included in the income statement ahead of actual cash receipts. This receivable increases over the first half of each lease term then unwinds, reducing to zero over the second half of each lease term. The impact over time for each of the rental income flows subject to smoothing is as follows:

* at the period end Euro conversion rate of €1:£0.77877

In order that the rent smoothing receivable does not, in combination with the book value of the investment properties, overstate the value of the property portfolio, any movement in the rent smoothing receivable is offset against property revaluation movements. As a result, this adjustment affects only the income statement presentation and does not change the Group's net assets.

Financial review

Basis of preparation of the financial statements

Note 2 to the Group financial statements sets out the basis of preparation of the financial information in this report. Because the results and net assets presented for the year to 31 March 2014 relate to a period where the capital structure and tax status of the Group were different to that which has been in place since the listing of the Company, we have not sought in this report to compare all the elements of the results for the nine months ended 31 December 2014 with those of prior periods, as the comparison is not considered to be meaningful. Instead we focus on results and movements in net assets since listing on AIM in June 2014.

EPRA net asset value

The Board measures the Group's progress primarily through the growth in EPRA net asset value ("EPRA NAV") per share over the period since listing. EPRA NAV strips out the impact of hedging revaluations and any deferred tax on investment property revaluations to provide a measure of the fair value of a company on a long term basis. The EPRA NAV per share at 31 December 2014 of 258.5 pence per share represents a 50% increase over the unaudited pro forma EPRA NAV for the shares issued at listing. In an effort to fairly reflect the capital reorganisation and effects of the listing, the following table summarises growth in EPRA NAV before and after listing:

The movements in investment property valuations shown in the income statement are described above in the portfolio section of this report. The Group's net results for the period are explained in the Income Statement section below.

EPRA triple net asset value

The EPRA triple net asset value includes the mark to market values of debt and hedging instruments, and any inherent tax liabilities not provided for in the financial statements. This is calculated as follows:

Income statement

The income statement presented in these financial statements covers periods both before and after listing including a period of just over two months when the Group had a different capital structure and tax status. The following table distinguishes between the periods before and after the listing and capital restructuring:

The rental income profile and the credit strengths of the businesses paying the rent are disclosed in the Portfolio section of this report, along with details of the investment property revaluations.

Administrative expenses charged to the income statement since listing include performance fees of £35.2 million, advisory fees of £2.7 million, other administrative expenses of £0.7 million and corporate costs of £0.2 million. As part of a balanced package of fees and incentive arrangements entered into between Prestbury and the Company at the time of listing, Prestbury is rewarded if and when the Company exceeds an EPRA NAV growth rate of 10% in each year, subject to meeting certain other detailed tests. In order for a performance fee to arise in the period, the EPRA NAV of the Group needed to grow by an annualised 10% from the 172 pence per share pro forma net asset value at the time of listing, to a minimum 182 pence per share. As the EPRA NAV of the Group actually grew by 50% in the period to 258.5 pence per share, the fee that arose amounted to £35.2 million as described in note 19.

As the Group's healthcare assets cannot be VAT elected, there is an element of irrecoverable VAT on all costs attributable to the healthcare business, including a £3.1 million irrecoverable VAT cost on the performance fee. As the fee itself is payable by way of a share issue, the only impact on the absolute net asset value is this irrecoverable VAT element. The net assets per share and earnings per share are diluted by 7.1% representing the 11.9 million shares to be issued to Prestbury in settlement of the fee. Sales of these shares are restricted, with the restriction only lifted on a phased basis over a period from 18 to 42 months from the date of listing, subject to a release in the event that Prestbury needs to sell shares to settle any tax liability on the fee income received.

Advisory fees were payable to Prestbury during the period, under an agreement entered into prior to listing by which it is entitled to receive cash fees based on a sliding scale relative to the Group's EPRA NAV, currently payable at 1.25% per annum of EPRA NAV. This amounted to a fee of £2.7 million in the period. Until July 2016, the cash required to satisfy this advisory fee is recovered from the pre-listing shareholders of the Company up to a maximum of £5.3 million per annum so for the period to 31 December 2014 the cash required to fund the advisory fee payment was met by those shareholders.

Corporate costs are those costs necessarily incurred as a result of the Company being listed, and principally comprise:

· the cost of the board of seven Directors, four of whom are entitled to receive fees currently totalling £0.2 million per annum. The other three Directors are partners in the Investment Adviser and receive no remuneration from the Company; and

· othercosts of being listed, includingbroker/nominated adviser fees, registrar fees and listing fees, which amountto a total of £0.5 million per annum.

External finance costs since listing comprise £45.3 million of interest payable, £1.7 million of amortised finance fees and £2.8 million of other fees.

The average interest rates paid during the period for each facility, excluding fees payable to lenders, were as follows:

Effective from the date of listing, the terms of the Group's two bank loan facilities were amended in order to remove any LTV tests until loan maturity and to permit the capital reorganisation, listing and conversion to REIT status. The healthcare facility was also varied so that from that date it became an interest only loan, and a covenant release fee of £11.9 million became payable as a result, falling due in quarterly instalments commencing on 29 July 2014. This fee is being charged to the income statement evenly over the remaining term of the loan from June 2014 to July 2017, resulting in a £2.3 million charge in the period.

Both of the bank loans are floating rate facilities with interest rate risk managed by way of interest rate swaps, with the entire principal amount of each facility fixed for the term of the relevant loan. The market value of these interest rate swaps at 31 December 2014 was a liability of £117.6 million; this liability will not, however, be immediately payable unless the interest rate swap contracts are terminated and will otherwise be expected to reduce to zero over the remaining term of the contracts, which expire in line with the debt maturity dates in mid 2017.

Tax

The Group entered the UK REIT regime on 5 June 2014, so all of the Group's UK rental operations became exempt from UK corporation tax from that date, subject to the Group's continuing compliance with the UK REIT rules. The Group is otherwise subject to UK corporation tax.

The Company's election into the REIT regime meant that certain items of deferred tax will no longer crystallise. This resulted in the reversal through the income statement of a deferred tax liability of £117.3 million relating to unrealised UK capital gains tax, and the release through the statement of other comprehensive income of a deferred tax asset of £26.9 million relating to the Group's Sterling interest rate swaps. These are allocated to the pre-listing period in the results analysis in this report.

In the event that a UK REIT has financing costs that are not covered at least 1.25 times by profits, tax is payable at the UK corporation tax rate on the interest over that level, up to a cap of 20% of taxable profit. In the period from 5 June 2014 to 31 December 2014, the Group incurred a current tax charge of £0.7 million on such excess interest at a tax rate of 21%.

Realised profits from the Group's German rental operations are taxable in Germany, though in the period a tax credit of £0.1 million arose as a result of a number of historic adjustments. The Group also retains a deferred tax liability of £4.9 million relating to unrealised German capital gains tax and a deferred tax asset of £0.6 million relating to the Group's Euro interest rate swaps.

Currency translation

The majority of the Group's operations are in the UK and the financial statements are therefore presented in Sterling. Just over 4% of the Group's EPRA NAV is in Germany, valued in and generating revenue in Euros. The debt financing these operations is also denominated in Euros, which acts as a partial hedge of the currency risk, but the Group remains exposed to translation differences on the results and net assets of these operations, with movements recognised in the statement of other comprehensive income. The Euro has weakened against Sterling over the period and as a result there was a net currency translation loss of £0.4 million in relation to the German operations.

Cash flow

The movement in cash over the period comprised:

The investment properties of the Group are let on full repairing and insuring terms, with each tenant obliged to keep the premises in good and substantial repair and condition, including rebuilding, reinstating, renewing or replacing the premises where necessary. Consequently it is not expected that material capital expenditure will be required for the current portfolio.

The placing of shares at listing on 5 June 2014 raised £11.9 million, from gross proceeds of £15.0 million net of costs of £3.1 million. £0.2 million of those costs related to the issue of new shares so was charged to the share premium reserve, while the remaining £2.9 million related to the listing and the reorganisation, and was therefore charged to the income statement.

Financing

The Group's operations are financed by a combination of cash resources and non-recourse debt finance, where the assets at risk in the event of a loan default are limited to those within a specific ring-fenced structure. The healthcare assets and the leisure assets each secure separate non-recourse facilities.

The loan financing the healthcare assets at 31 December 2014 was an interest only Sterling facility of £608.9 million.

The loans financing the leisure assets at 31 December 2014 comprised a Sterling facility of £497.2 million and a Euro facility of £51.5 million (€66.1 million translated at the year end rate), with security cross-collateralised between the UK and German leisure assets. The leisure facilities amortise quarterly by the application of net portfolio cash flow in repayment of debt and as a result amortisation payments of £3.2 million have been made since listing.

The Group's gross and net debt at 31 December 2014 is as follows:

Secured cash is held in bank accounts under the control of the lenders. Free cash held within the secured portfolio structures is available to be applied for general corporate purposes for as long as there is no default under the relevant loan agreement. Free cash held by the Company outside the secure portfolio structures would not be at risk in the event of any default.

All facilities remain within the relevant financial covenants. There are no LTV tests before the loans mature, while interest cover is tested quarterly. When most recently tested in January 2015, there was headroom over the interest cover covenant thresholds in each facility of 13% or better.

There have been no defaults or potential defaults in either facility during the period or since the balance sheet date.

Group Income Statement

All amounts relate to continuing activities.

The notes formpart of these financial statements.

Group Statement of Other Comprehensive Income

The notes formpart of these financial statements.

Group Statement of Changes in Equity

The notes formpart of these financial statements.

Group Balance Sheet

The notes formpart of these financial statements.

Group Cash Flow Statement

The notes form part of these financial statements.

Notes to the Group Financial Statements

 1. General information about the Group

The financial information set out in this report covers the nine month period to 31 December 2014, with comparative amounts relating to the year to 31 March 2014, and includes the results and net assets of the Company and its subsidiaries, together referred to as the Group.

The Company is incorporated and domiciled in the United Kingdom. The address of the registered office and principal place of business is Cavendish House, 18 Cavendish Square, London, W1G 0PJ. The nature and scope of the Group's operations and principal activities are described in the Chairman's Statement the Strategic Report, and the Investment Adviser's Report.

The Company was listed on AIM on 5 June 2014. Further information about the Group can be found on its website, www.SecureIncomeREIT.co.uk.

2. Basis of preparation and accounting policies

a) Statement of compliance

Prior to 21 May 2014, the Company and SIR Hospital Holdings Limited (the holding company of the Group that owns the healthcare assets) were entities under common control but did not form a single legal group. On 21 May 2014, by virtue of a reorganisation, the groups headed by these two companies became a legal group headed by the Company. This reorganisation is deemed to be a "combination under common control" and as a result is outside the scope of IFRS 3 "Business Combinations". As such it is considered appropriate that the principles of merger accounting, as set out under UK GAAP, are used to account for the reorganisation and these entities are treated as if they had always been part of a single group. No fair value adjustments are required.

Accordingly, although these entities did not form a legal group for the comparative period reported herein, the comparatives comprise the net assets of all entities as if the subsequently formed legal group had been in existence throughout all periods reported on. In particular:

· earnings per share figures (including diluted, EPRA and adjusted EPRA EPS) have been calculated on the assumption that the capitalisation of shareholder loans which occurred in May 2014 had been in place throughout the whole period from 1 April 2013, with a corresponding effect on earnings and number of shares used in the EPS calculations (see note 7); and

· NAV per share figures (including adjusted basic, diluted and EPRA NAV) have been calculated on the assumption that the capitalisation of shareholder loans had been in place throughout the whole period from 1 April 2013 with a corresponding effect on the number of shares used in the NAV per share calculations (see note 18).

Except for the above EPS and NAV matters, the consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS") adopted for use in the European Union.

The financial information contained in this announcement has been prepared on the basis of the accounting policies set out in the financial statements for the year ended 31 December 2014. Whilst the financial information included in this announcement has been computed in accordance with IFRS, as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS. The financial information does not constitute the Group's financial statements for the periods ended 31 December 2014 or 31 March 2014, but is derived from those financial statements. Those accounts give a true and fair view of the assets, liabilities, financial position and results of the Group. Financial statements for the year ended 31 March 2014 have been delivered to the Registrar of Companies and those for the period ended 31 December 2014 will be delivered following the Company's Annual General Meeting. The auditors' reports on both the 31 December 2014 and 31 March 2014 financial statements were unqualified; did not draw attention to any matters by way of emphasis; and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

b) Basis of preparation

The Group financial statements are presented in Sterling as this is the currency of the primary economic environment in which the Group operates. Amounts are rounded to the nearest thousand, unless otherwise stated.

Euro denominated results for the German assets have been converted to Sterling at an average exchange rate for the period of €1:£0.79916 (year to 31 March 2014: €1:£0.84337) and period end balances converted to Sterling at the 31 December 2014 exchange rate of €1:£0.77877 (31 March 2014: €1:£0.82629).

The Directors have, at the time of preparing the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis of accounting in preparing the financial statements.

The financial statements have been prepared on the historical cost basis except that investment properties and interest rate derivatives are stated at fair value. The accounting policies have been applied consistently in all material respects.

(i) Estimates and judgements

The preparation of financial statements requires the Directors to make judgements, estimates and assumptions that may affect the applicationof accounting policies and reported amounts of assets and liabilities as at each balance sheet date and the reported amounts of revenue and expenses during the reporting period. Any estimates and assumptions are based on experience and any other factors that are believed to be relevant under the circumstances and which the Board considers reasonable. Actual outcomes may differ from these estimates.

Certain accounting policies which have a significant bearing on the reported financial condition and results of the Group require subjective or complex judgements. The principal ongoing areas of judgement are:

· investment property valuation where, as described in note 8, the opinion of independent, external valuers has since listing been obtained at each reporting date using recognised valuation techniques and the principles of IFRS 13 "Fair Value Measurement". The opinion of an appropriately qualified director was used in valuing the investment properties in the prior year; and

· the valuation of interest rate derivatives used to hedge interest rate exposures, shown in note 14, where the valuations are independently assessed by expert valuers on the basis of market rates and credit risk at each reporting date.

In addition, during the period the following specific matters also required judgement:

· whether the services to the Group that generated a performance fee of £35.2 million were provided by employees or non-employees;

· the allocation of £3.1 million of listing expenses between the income statement and the share premium account; and

· whether the amendment that resulted in an £11.9 million covenant release fee on one of the Group's loan facilities represented a "substantial modification" of the loan.

The Group's accounting policies for these matters, together with other policies material to the Group, are set out in paragraphs (c) to (j) below.

(ii) Adoption of new and revised standards

During the period, the Group has adopted IFRS 10 "Consolidated financial statements", IFRS 11 "Joint arrangements" and IFRS 12 "Disclosure of interests in other entities", along with the related amendments to IAS 27 (revised) "Separate financial statements" and IAS 28 (revised) "Investments in associates and joint ventures". The requirements of IFRS 10 have not changed the scope of the Group's consolidation and the Group has no associates or joint ventures, so the only impact of these new and revised standards on the financial statements results from IFRS 12, which expands the disclosures on subsidiary undertakings in note 9.

None of the other new standards or interpretations issued by the International Accounting Standards Board ("IASB") or the IFRS Interpretations Committee ("IFRIC") has led to any material changes in the Group's accounting policies or disclosures during the period.

(iii) Standards and interpretations in issue not yet adopted

The IASB have issued the following standards that are mandatory for later accounting periods, subject to endorsement by the EU, and which are relevant to the Group but have not been adopted early:

The Group's revenue is derived entirely from leases, which are outside the scope of IFRS 15. IFRS 9 deals with the classification and measurement of financial instruments but since the Group only has relatively straightforward hedging transactions using interest rate swaps, the Directors do not anticipate that the adoption of this standard will have a material impact on the Group's financial statements in the period of initial application, other than on presentation and disclosure.

The IASB and IFRIC have also issued or revised IFRS 14, IAS 1, IAS 16, IAS 19, IAS 38, IAS 39 and IAS 41 but these are not expected to have a material effect on the operations of the Group.

c) Basis of consolidation

Subsidiaries are those entities controlled by the Group. The Group has control within the meaning of this policy when it has power over an entity, is exposed to or has rights to variable returns from its involvement with the entity, and has the ability to use its power over the entity to affect those returns.

The consolidated financial statements include the financial statements of its subsidiaries prepared to 31 December under the same accounting policies as the Group as a whole, using the acquisition method. All intra-group balances and transactions are eliminated on consolidation.

d) Property portfolio

(i) Investment properties

Investment properties comprise properties owned by the Group which are held for capital appreciation, rental income or both. They are initially recorded at cost and subsequently valued at each balance sheet date at fair value as determined by professionally qualified independent external valuers.

Valuations are calculated, in accordance with RICS Valuation - Professional Standards January 2014, by applying capitalisation yields to current and future rental cash flows, with reference to data from comparable market transactions, together with an assessment of the security of income. Gains or losses arising from changes in the fair value of investment properties are recognised in the income statement in the period in which they arise. Depreciation is not provided in respect of investment properties.

Acquisitions and disposals of investment properties are recognised on unconditional exchange of contracts where it is reasonable to assume at the balance sheet date that completion of the acquisition or disposal will occur. Gains on disposal are determined as the difference between the net disposal proceeds and the carrying value of the asset in the previous balance sheet adjusted for any subsequent capital expenditure or capital receipts.

(ii) Occupational leases

The Directors exercise judgement in considering the potential transfer of the risks and rewards of ownership in accordance with IAS 17 "Leases" for all properties leased to tenants and determines whether such leases are operating leases. A lease is classified as a finance lease if substantially all of the risks and rewards of ownership transfer to the lessee. If the Group substantially retains those risks, a lease is classified as an operating lease. All leases reflected in these financial statements are classified as operating leases.

(iii) Rental income

Revenue comprises rental income exclusive of VAT. Rental income is recognised in the income statement on an accruals basis. Contingent income, arising from RPI-linked rent reviews, is recorded in the income statement in the periods in which it is earned. Rental income from leases with fixed rent uplifts is recognised on a straight line basis over the term of the lease. Where income is recognised in advance of the related cash flows, an adjustment is made to ensure that the carrying value of the relevant investment property including accrued rent does not exceed the valuation.

e) Financial assets and liabilities

Financial assets and liabilities are recognised when the relevant Group entity becomes a party to the unconditional contractual terms of the instrument. Unless otherwise indicated, the carrying amounts of financial assets and liabilities are considered by the Directors to be a reasonable estimate of their fair values.

(i) Financial assets

Financial assets are recognised initially at their fair value and are classified into one of the categories set down in IFRS 7 "Financial Instruments: Disclosures" at the time of initial recognition. All financial assets currently qualify as "loans and receivables", which are measured at amortised cost using the effective interest method, less any impairment.

(ii) Trade and other payables

Trade and other payables are recognised initially at their fair value and subsequently at amortised cost.

(iii) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, deposits held at call with banks and financial institutions, and other short term highly liquid investments with original maturities of three months or less.

(iv) Borrowings and finance charges

Secured debt is initially recognised at its fair value, net of any transaction costs directly attributable to its issue. Subsequently, secured debt is carried at amortised cost. Transaction costs are amortised over the life of the loan and charged to the income statement as part of the Group's financing costs, unless they represent a substantial modification of the loan in which case they are taken immediately to the income statement in full.

(v) Interest rate derivatives

The Group uses interest rate derivatives to hedge its exposure to cash flow interest rate risks. Derivatives are initially recognised at fair value on the date on which the derivative contract is entered into and subsequently measured at fair value.

Derivatives are classified either as derivatives in effective hedges or derivatives held for trading. It is anticipated that hedging arrangements will generally be "highly effective" within the meaning of IAS 39 "Financial Instruments: Recognition and Measurement" and that the criteria necessary for applying hedge accounting will therefore be met. All derivatives held in the period covered by these financial statements have met these criteria. Hedges are assessed on an ongoing basis to ensure they continue to be effective.

The gain or loss on the revaluation of the portion of an instrument that qualifies as an effective hedge of cash flow interest rate risk is recognised directly in other comprehensive income through the cash flow hedging reserve. Amounts accumulated in equity will be reclassified to the income statement in the period when the hedged items affect the income statement. The gain or loss on the revaluation of any derivative financial instrument classified as held for trading because it is not an effective hedge is recognised directly in the income statement.

There has been no hedge ineffectiveness to recognise in the income statement in the current period or prior year, so all movements in the fair value of these instruments are reflected in other comprehensive income.

f) Tax

Tax is included in the income statement except to the extent that it relates to income or expense items recognised through reserves, in which case the related tax is recognised either in other comprehensive income or directly in equity.

Current tax is the expected tax payable on taxable income for a reporting period, using tax rates enacted or substantively enacted at the balance sheet date, together with any adjustment in respect of previous periods. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

g) Foreign currency translation

The results of subsidiary undertakings with a functional currency other than Sterling are translated into Sterling at the average rate for a reporting period.

The gains or losses arising on the end of year translation of the net assets of such subsidiary undertakings at closing rates and the difference between translating the results at average rates compared to the closing rates are taken to Other reserves. Monetary assets and liabilities denominated in foreign currencies are translated into Sterling at the rates of exchange ruling at the balance sheet date with any gains or losses arising on translation recognised in the income statement.

h) Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of directly attributable issue costs. Costs not directly attributable to the issue are disclosed within administrative expenses in the income statement.

i) Share based payments

The fair value of payments that are to be settled by the issue of shares is determined on the basis of an estimate of the value of the services provided by non-employees over the relevant accounting period. The estimated number of shares to be issued in satisfaction of the services provided is calculated using the average closing share price of the Company for that period.

j) Fair value measurements

Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market. It uses the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. A fair value measurement of a non-financial asset takes into account the highest and best use for that asset.

3. Operating segments

IFRS 8 "Operating Segments" requires operating segments to be identified on the basis of internal reports about components of the Group that are reviewed by the chief operating decision maker to make decisions about resources to be allocated between segments and assess their performance. The Group's chief operating decision maker is considered to be the Board as a whole.

The Group owns two property portfolios. Although these are described individually within the Investment Adviser's report, the Board receives quarterly management accounts prepared on a basis which aggregates the performance of the portfolios and focuses on total returns on shareholders' equity. The Board has therefore concluded that the Group has operated in and was managed as one business segment, being property investment, in the current period and prior year.

The geographical split of revenue and applicable non-current assets required by IFRS 8 was as follows:

Revenue, which reflects the impact of rent smoothing adjustments, includes £42.9 million (year to 31 March 2014: £57.8 million) relating to the Group's largest tenant, and £35.8 million (year to 31 March 2014: £47.2 million) relating to the Group's second largest tenant. No other single tenant or guarantor contributed more than 10% of the Group's revenue in either reporting period.

4. Operating profit

The Group had no employees other than the Directors, who are also the key management personnel, in either the current period or the prior year. Directors' remuneration, all of which represents fees for services provided, was as follows:

Mike Brown, Tim Evans, Sandy Gumm and Nick Leslau received no Directors' fees from the Group in either the current period or prior year.

5. Finance income and costs

As required for disclosure by IFRS 7, included within interest on secured debt is an amount of £40.7 million (31 March 2014: £55.1 million) which has been reclassified from other comprehensive income in respect of the Group's interest rate derivatives in effective hedges.

On issue in 2007, interest free shareholder loans were measured at fair value using imputed interest rates of between 11.2% and 11.7%. The difference between the fair value of the loans on inception and their face values at that date was being unwound over the minimum term of the loans prior to their capitalisation in May 2014.

Net finance costs analysed by the categories of financial asset and liability shown in note 14 are as follows:

The Group's sensitivity to changes in interest rates, calculated on the basis of a 10 basis point increase or decrease in LIBOR, was as follows:

The Group receives interest on the majority of its bank balances but a 10 basis point change in LIBOR would have no material effect on finance income in the income statement. There would also be no significant impact on finance costs in the income statement because the floating rate secured debt is effectively hedged with interest rate swaps. Movements in interest rates would therefore only have an impact on the valuation of those interest rate swaps through other comprehensive income and equity. An increase in interest rates would result in a credit to other comprehensive income.

6. Tax

The tax assessed for the period varies from the standard rate of corporation tax in the UK applied to the profit before tax. The differences are explained below:

The Group elected into the UK REIT regime with effect from 5 June 2014. Subject to continuing compliance with certain rules, the UK REIT rules exempt the profits of the Group's UK property rental business from corporation tax. Gains on the Group's UK properties are also exempt from tax, provided they are not held for trading or sold in the three years after completion of development. Corporation tax could also be payable were the shares in a subsidiary company to be sold.

To remain a UK REIT, there are a number of conditions to be met in respect of the Group's principal company, qualifying activity and balance of business. Since entering the REIT regime the Group has continued to meet these conditions. There are certain other conditions which if not met, do not result in expulsion from the REIT regime, including two with which the Group does not currently comply:

· within three years of entry into the REIT regime, a company must not be a close company. The Company was a close company when it entered the REIT regime, and continues to be so. The Board intends, in the course of implementing its investment strategy, to issue new shares or to place sufficient of the existing shares to new investors (or a combination of both) so that the shares of the Company are widely enough held to meet this requirement by 5 June 2017; and

· an interest cover test requires the profits of the tax exempt business of the Group to be at least 1.25 times its cost of financing. If this condition is not met, the Group is required to pay UK corporation tax on an amount equivalent to the excess interest costs or 20% of the tax exempt business profits if that is less. The Group has not met this test for the period between 5 June and 31 December 2014, so tax of £0.7 million is payable.

The Group is subject to German corporation tax on its German property rental business. Historically this has been at an effective rate of 21%, though during the period a tax credit has arisen as a result of changes to a number of underlying assumptions following discussions with local tax authorities. In addition, a deferred tax liability is recognised for the German capital gains tax that would potentially be payable on the sale of those investment properties, and a deferred tax asset is recognised against the interest rate derivatives hedging the loan facility secured on those properties (note14).

7. Earnings per share

Earnings per share is calculated as profit attributable to ordinary shareholders of the Company for each period divided by the weighted average number of ordinary shares in issue throughout each relevant period during which those profits were earned.

On 21 May 2014, by virtue of the reorganisation set out in note 2, the Company and SIR Hospital Holdings Limited (the "Combined Companies") became a legal group. During the year ended 31 March 2014 and in the current period until 20 May 2014, the Combined Companies were entities under common control. It is considered that the use of the actual number of shares of the Combined Companies in issue prior to 21 May 2014 as a denominator in the EPS calculation would not provide meaningful information. Instead, the weighted average number of shares in issue has been determined based on the number of shares that would have been in issue in each period had the shareholder loans to the Combined Companies been capitalised on the basis of one share for each £1 of shareholder loans at the time they were advanced. The profit attributable to the shareholders of the Combined Companies prior to 20 May 2014 has also been adjusted to remove the impact of the amount included in finance costs in respect of the shareholder loans together with the related deferred tax.

Diluted EPS reflects the shares that will need to be issued in settlement of the performance fee, as explained in more detail in note 19.

The European Public Real Estate Association ("EPRA") publishes guidelines for calculating adjusted earnings designed to represent core operational activities. As well as the standard EPRA earnings figure, an adjusted EPRA earnings calculation has also been presented, excluding the performance fee, which is largely derived from investment property revaluations, and the non-recurring costs of the reorganisation and listing. The Directors consider this enables a more consistent comparison of underlying earnings.

8. Investment properties

The properties were independently valued at £1,625.4 million as at 31 December 2014 by CBRE Limited, Commercial Real Estate Advisers, in their capacity as external valuers. The valuation was prepared on a fixed fee basis, independent of the portfolio value, and was undertaken in accordance with RICS Valuation - Professional Standards January 2014 on the basis of fair value, supported by reference to market evidence of transaction prices for similar properties.

The properties were valued at £1,457.4 million as at 31 March 2014 by Nick Leslau BSc (Hons) FRICS, a Chartered Surveyor and Director of the Company, on the basis of fair value.

The Group did not have any contractual obligations to purchase, construct or develop investment property at either balance sheet date. The responsibility for repairs and maintenance resides with the tenants.

All of the investment properties are held as security under fixed charges in respect of secured debt.

The historic cost of the Group's investment properties at both reporting dates was £1,315.1 million.

The Board determines the Group's valuation policies and procedures, and is responsible for overseeing the valuations. Valuations are based on information provided from the Group's financial and property reporting systems, such as current rents and the terms and conditions of lease agreements, and assumptions used by the valuer (based on market observation and their professional judgement) in the valuation model.

At each reporting date, certain partners and employees of the Investment Adviser, who have recognised professional qualifications and are experienced in valuing the types of property owned by the Group, initially analyse movements in the property valuations from the prior reporting date. Fair value changes (positive or negative) over a certain threshold are considered. Changes in fair value are also compared to external sources (such as the Investment Property Databank or other relevant benchmarks) for reasonableness. Once the Investment Adviser has considered the valuations, the results are discussed with the Group's independent auditors, focusing on properties with unexpected fair value changes and, if applicable, properties undergoing significant refurbishment. The Audit Committee also considers the valuation process as part of its overall responsibilities.

The fair value of the investment property portfolio has been determined using an income capitalisation technique, whereby contracted and market rental values are capitalised with a market capitalisation rate. This technique is consistent with the principles in IFRS 13 and uses significant unobservable inputs, such that the fair value measurement of each property within the portfolio has been classified as level 3 in the fair value hierarchy as defined in IFRS 13. There have been no transfers to or from other levels of the fair value hierarchy during the year.

The key inputs for the level 3 valuations were as follows:

The principal sensitivity of measurement to variations in the significant unobservable outputs is that decreases in net initial yield, decreases in reversionary yield and increases in RPI will increase the fair value.

Included within the carrying value of investment properties at 31 December 2014 is £154.4 million (31 March 2014: £142.7 million) in respect of the smoothing of fixed contractual rental uplifts. This balance arises through the Group's accounting policy in respect of leases with fixed uplifts, which requires the recognition of rental income on a straight line basis over the lease term. The difference between rents on a straight line basis and rents actually receivable are included within, but do not increase, the carrying value of investment properties.

All of the Group's revenue as reflected in the income statement is derived from rental income on investment properties. Property outgoings arising on investment properties, all of which generated rental income in each period, were £19,000 (year to 31 March 2014: £23,000).

9. Principal subsidiaries

The companies listed below were the principal subsidiary undertakings of the Company at 31 December 2014, all of which are wholly owned and incorporated in England.