51Spire Healthcare Limited PartnershipLeasesLeasing arrangements that 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 over their estimated 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 elements. The capital 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.Taxation including deferred taxationIncome tax on the result for the period comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised directly in equity.Current tax is the expected tax payable on the taxable result for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustments to tax payable in respect of previous years.Deferred tax is recognised in full 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 taxation purposes. The following temporary differences are not recognised: goodwill not deductible for tax purposes and 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, affects neither the accounting profit nor the taxable profit or loss.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.Deferred tax is recognised on temporary differences arising on investments in subsidiary companies, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.A deferred tax asset is only recognised to the extent that it is probable that future taxable profits will be available against which the asset can be used.Derivative financial instrumentsThe Group has entered into various derivative financial instrument arrangements to manage its exposure to interest rate risk.Derivatives are initially recognised at fair value at the date a derivative contract is entered into and subsequently remeasured to their fair value at each balance sheet date.Hedge accountingThe Group applies cash flow hedge accounting. The Group formally documents the hedging relationship between a hedging instrument and a hedged item. Documentation includes the risk management objectives and the strategy in undertaking the hedge transaction.Cash flow hedgesThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in 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 of the income statement as the recognised hedged item.

52Spire Healthcare Annual Review 2010Spire Healthcare Limited PartnershipNotes to the financial statementsFor the year ended 31 December 20101. Accounting policies continuedHedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in other comprehensive income and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in profit or loss.Significant judgements and estimatesIn preparing these financial statements, the General Partner has made the following significant estimates and judgements:. GoodwillAssumptions have been made when reviewing goodwill for impairment. The key assumptions are shown in note 9.. Fair value of swapsSpire Healthcare use the Sterling zero coupon curve as at the balance sheet date to discount financial instruments where the fair value cannot otherwise be found from quoted market values.2. Immediate and ultimate parent undertakingsThe immediate and ultimate parent undertakings of Spire Healthcare Limited Partnership are Fourth Cinven Fund (No.1) LP, Fourth Cinven Fund (No.2) LP, Fourth Cinven Fund (No.3 - VCOC) LP, Fourth Cinven Fund (No.4) LP, Fourth Cinven Fund (UBTI) LP, Fourth Cinven Fund Co-Investment Partnership and Fourth Cinven (MACIF) LP (together the 'Cinven Funds'), being funds managed and advised by Cinven Limited, a company incorporated under the laws of England and Wales.Accordingly, the General Partner considers that the Partnership's ultimate controlling party is Cinven Limited, the managers of and advisor to the Cinven Funds.3. Staff costsEmployeesThe average number of full-time equivalent persons employed by the Group during the year, analysed by category, were as follows:2010Number2009NumberClinical3,5123,402Non-clinical2,7512,8826,2636,284The aggregate payroll costs of these persons were as follows:2010£0002009£000Wages and salaries161,293157,062Social security costs14,72414,303Other pension costs9,2988,880185,315180,245Other pension costs are in respect of the defined contribution scheme; unpaid contributions at 31 December 2010 were £789,000 (2009: £1,117,000).