47Spire Healthcare Limited PartnershipConsolidated statement of cash flowsFor the year ended 31 December 2010 2010 2009£000£000£000£000Cash flows from operating activitiesLoss before taxation(51,304)(64,203)Adjustments for: depreciation45,80041,031 share-based payments261- loss on disposal of property, plant and equipment16360 finance income(93)(25) finance costs174,085168,233168,765145,396Movements in working capital: decrease/(increase) in trade and other receivables2,7913,577 (increase)/decrease in inventories(952)(1,970) increase/(decrease) in trade and other payables620(4,024) increase/(decrease) in provisions(961)524Cash generated from operations170,263143,503Income taxes received343,293Net cash from operating activities170,297146,796Cash flows from investing activitiesAcquisition of Group undertakings(6,100)-Purchase of property, plant and equipment(44,548)(66,988)Proceeds from disposal of property, plant and equipment8-Interest received93213Net cash used in investing activities(50,547)(66,775)Cash flows from financing activitiesInterest paid(98,685)(92,118)Debt issue costs(1,801)(6,777)Repayments of borrowings(23,066)(26,584)Proceeds from issue of equity24-Proceeds from long-term borrowing24,30539,335Net cash used in financing activities(99,223)(86,144)Net increase/(decrease) in cash and cash equivalents20,527(6,123)Cash and cash equivalents at beginning of year39,07845,201Cash and cash equivalents at end of year59,60539,078Note During the year the Group also revised its lease arrangements, as a result £32,829,000 of assets were capitalised as finance leases (see note 15).

48Spire Healthcare Annual Review 2010Spire Healthcare Limited PartnershipNotes to the financial statementsFor the year ended 31 December 20101. Accounting policiesStatement of complianceThe financial statements have been prepared in accordance with International Financial Reporting Standards. Basis of preparationThe financial statements are prepared on the historical cost basis, as modified by the revaluation of derivative financial instruments.Going concernAs at 31 December 2010, the consolidated balance sheet showed net liabilities of £356.6 million and the consolidated income statement a loss after tax for the year ended 31 December 2010 of £52.8 million. Therefore the General Partner has considered whether this could impact the preparation of these financial statements and in particular the adoption of the going concern basis of accounting.As set out in note 15, the Group is financed by long-term loans. These include:(i) loans from parent undertakings of £601.8 million, which are not repayable until the earlier of the sale of the business and 2037-2038. Interest costs arising theron, which totalled £64.6 million in 2010, are rolled up and are not required to be cash settled in the foreseeable future.(ii) bank loans of £1,293.7 million, of which £1,275.8 million are not due for repayment until 2014-2018. Cash flow forecasts prepared as at 31 December 2010 show that the anticipated trading performance of the Group will generate funds sufficient to meet its liabilities as they fall due and that the Group is compliant with the covenants imposed by the bank loan facilities.(iii) finance lease liability of £74.0 million, of which £67.7 million is not due for repayment until 2012-2040.In view of the foregoing, the General Partner is of the opinion that the accounts of Spire Healthcare Limited Partnership should continue to be prepared on a going concern basis.Accounting policies and consolidationAll accounting policies are consistent with those of the previous financial year, except for the adoption of the amended standard as follows:New and amended standards and interpretations adopted by the Group The following new standard has been applied in the preparation of these financial statements. . IFRS 3 Business Combinations (revised)IFRS 3 (revised) introduces significant changes in the accounting for business combination such as valuation of non-controlling interests, business combination achieved in stages, the initial recognition and subsequent measurement of a contingent consideration and the accounting for transaction costs. These changes may have an impact on profit or loss reported in the period of acquisition, the amount of goodwill recognised in a business combination and profit or loss reported in future periods. During the year, as a result of the revised standard, the Group charged £421,000 (2009: £nil) to the profit and loss account in respect of acquisition costs.