267694 EdinburghIT AR 2024 WEB - Flipbook - Page 87
THE EDINBURGH INVESTMENT TRUST PLC / OTHER INFORMATION FOR SHAREHOLDERS / 85
GROSS GEARING (APM)
This reflects the amount of gross borrowings in use by a company and takes no account of any cash balances. It is based on
gross borrowings as a percentage of net assets.
Page
Unsecured Senior Loan Notes – debt at fair value
76
a
Gross borrowings
Net asset value – debt at fair value APM
86
Gross gearing
2024
£’000
2023
£’000
73,461
78,253
73,461
78,253
b
1,181,586
1,181,091
c = a/b
6.2%
6.6%
NET GEARING OR NET CASH (APM)
Net gearing reflects the amount of net borrowings invested, i.e. borrowings less cash and cash equivalents (incl. investments in
money market funds). It is based on net borrowings as a percentage of net assets. Net cash reflects the net exposure to cash
and cash equivalents, as a percentage of net assets, after any offset against total borrowings.
Page
2024
£’000
2023
£’000
Unsecured Senior Loan Notes – debt at fair value
76
73,461
78,253
Less: cash and cash equivalents
59
Net borrowings
Net asset value – debt at fair value APM
Net gearing
86
(36,314)
(22,362)
a
37,147
55,891
b
1,181,586
1,181,091
c = a/b
3.1%
4.7%
LEVERAGE
Leverage, for the purposes of the UK AIFM Directive is not synonymous with gearing as defined above. In addition to
borrowings, it encompasses anything that increases the Company’s exposure, including foreign currency and exposure gained
through derivatives. Leverage expresses the Company’s exposure as a ratio of the Company’s net asset value.
Accordingly, if a Company’s exposure was equal to its net assets it would have leverage of 100%. Two methods of calculating
such exposure are set out in the AIFMD, gross and commitment. Under the gross method, exposure represents the aggregate
of all the Company’s exposures other than cash balances held in base currency and without any offsetting. The commitment
method takes into account hedging and other netting arrangements designed to limit risk, offsetting them against the
underlying exposure.
NET ASSET VALUE (NAV)
Also described as shareholders’ funds, the NAV is the aggregate value of all assets less all liabilities. Liabilities for this purpose
include debt, deducted at either par value or fair value as described in more detail below. The NAV per share is calculated by
dividing the net asset value by the number of ordinary shares in issue (excluding shares held in treasury).
NET ASSET VALUE (NAV) – DEBT AT PAR
The NAV with debt at par recognises the value of the debt liability as the nominal amount that will be repaid at maturity. For
the £120m Unsecured Senior Loan Notes, this recognises a liability of £120m. This is the basis used in the preparation of the
Balance Sheet on page 59.
