36Spire Healthcare Annual Review 2010Chief Financial Officer's statement continuedBorrowingsAt the end of 31 December 2010, net bank debt was £1,245.1 million (2009: £1,276.7 million). This comprised senior bank debt of £1,304.7 million (2009: £1,315.8 million), partially offset by cash in hand of £59.6 million (2009: £39.1 million). In addition, Spire has investor-funded loan notes of £601.8 million (2009: £537.2 million) and obligations under finance leases of £74 million (2009: £nil).Spire's borrowings are available under a number of term loan facilities, including operating company facilities of £293 million (2009: £310 million) and property company facilities of £1,078 million (2009: £1,075 million), repayable over the years 2014 to 2018. During the year £23.1 million of bank debt was repaid and £24.3 million was raised from finance leases and bank loan facilities. Further detail on borrowings is set out in note 15 of the financial statements.Loan facilities referred to above also include: . revolving credit facilities totalling £55 million (2009: £55 million), which are available to finance working capital requirements and for general corporate purposes . acquisition/capital investment facilities of £56 million (2009: £56 million) As at 31 December 2010, £17.7 million of the revolving credit facility had been utilised in the form of guarantees and letters of credit, leaving a balance available of £37.3 million (2009: £36.8 million), and £44.9 million drawn from the acquisition/capital investment facilities, leaving a balance available of £11.1 million (2009: £15.6 million).Profit before interest and tax for the year was £122.7 million, compared with £104.0 million in 2009. Integration and rebranding costs were £0.4 million, which related to activities associated with acquisitions.Reorganisation and set-up costs in 2010 were £1.1 million. These comprise costs associated with the new hospitals at Shawfair (Edinburgh) and Brighton and the cost of acquisitions in the year relating to The London Cognitive Behaviour Therapy Centres and London Fertility Centre.Corporate restructuring and refinancing of £1.6 million net, related to accounting adjustments following changes to lease terms, after charging £1.6 million costs incurred in respect of corporate financing.Cash flowThe business remains highly cash generative and cash flow from operations during the year was £170.3 million (2009: £146.8 million). Of this cash flow, £98.7 million (2009: £92.1 million) was used to meet the cash interest and other financing costs of Spire's borrowings. Capital projectsSpire's targeted capital expenditure programme is aimed at investing in new equipment that will enable us to increase capacity, improve service and drive additional growth through carrying out more complex procedures. In addition, we have spent capital on maintaining the infrastructure of our existing hospitals. All proposed capital projects are separately appraised, both operationally and financially, and Spire sets clear targets to help in assessing the viability and prioritisation of capital projects.

37(d) Liquidity riskSpire ensures that sufficient cash on demand is held to meet expected operational expenses for a period of 90 days, including the servicing of financial obligations. The business maintains financing lines of credit, including £55 million revolving facilities and £56 million acquisition/capital investment facilities. As referred to above, the bank loans contain various covenants, which are regularly monitored by management.(e) Interest rate riskSpire is exposed to interest rate risk arising from fluctuations in market rates. This affects the future cash flows from money market investments and the cost of floating rate borrowings. Spire has entered into interest rate swaps to fix interest payable on its bank loans, therefore minimising its exposure to interest-rate risk. Taking account of these swaps as at 31 December 2010, 89% of the business' borrowings were fixed rate loans.Group structure Two separate corporate groups, each held under the common ownership of Spire Healthcare Limited Partnership, operate hospitals under the Spire Healthcare brand. One group operates the original 25 hospitals acquired in August 2007 together with Spire Thames Valley Hospital and Spire Shawfair Park Hospital. The second group operates the 10 Classic Hospitals acquired in March 2008. Further details of Spire's group structure can be found on page 39. The two groups with Spire Healthcare Limited Partnership as their parent are referred to in this Annual Review as 'Spire', 'Spire Healthcare' or 'Group'.Principal risks and uncertaintiesIn addition to the risks (described on page 28), there are a number of risks of a financial nature, as follows:(a) Market riskSpire is reliant upon key commercial relationships with stakeholders; the relationships are subject to continual review based on financial and contractual criteria. The business has developed a flexible cost approach model that enables it to manage such risk.(b) Medical/regulatory riskSpire is subject to the risk of litigation as a result of medical malpractice suits. Spire has insurance policies in place to cover such instances and the directors are of the view that these policies adequately protect the business from this risk. Spire operates in the healthcare sector, one of the most closely monitored and regulated areas of business. Our services are subject to external inspection by regulators and other authorities, which are followed by publicly available reports. We also conduct our own internal inspections.(c) Credit riskCredit risk arises principally from receivables from customers and cash deposits. Exposure to credit risk from trade receivables is considered to be low because of the nature of Spire's customers. The credit risk relating to bank deposits is managed by only investing with major financial institutions, which under Spire policy must be rated at least AA by key rating agencies.