The Edinburgh Investment Trust Plc Annual Financial Report 2022 - Flipbook - Page 76
74 / FINANCIAL REVIEW / THE EDINBURGH INVESTMENT TRUST PLC
Notes to the Financial Statements / continued
The book cost and fair value of the debenture stock, based on the offer value at the balance sheet date, are as follows:
2022
2021
Book
Value
£’000
Fair
Value
£’000
Book
Value
£’000
Fair
Value
£’000
100,000
102,734
100,000
109,041
Debenture stock repayable within one year:
7 ¾% Debenture Stock 30 September 2022
Discount on issue of debenture stock
(126)
–
(377)
–
Loan notes repayable after five year:
Unsecured Senior Loan Notes
20,000
18,204
–
–
119,874
120,938
99,623
109,041
Incorporating the fair value of the debt, results in the reduction of the net asset value per ordinary share to 686.69p (2021: 628.29p).
18. CAPITAL MANAGEMENT
The Company's total capital employed at 31 March 2022 was £1,295,711,000 (2021: £1,190,854,000) comprising
borrowings of £119,874,000 (2021: £99,623,000) and equity share capital and other reserves of £1,175,837,000 (2021:
£1,091,231,000).
The Company’s total capital employed is managed to achieve the Company’s objective and investment policy as set out on page 14,
including that borrowings may be used to provide gearing of the equity portfolio up to the maximum authorised by shareholders,
currently 25% of net assets. Net gearing was 4.4% (2021: 7.1%) at the balance sheet date. The Company’s policies and processes for
managing capital were unchanged throughout the year and the preceding year.
The main risks to the Company’s investments are shown in the Strategic Report under the ‘Principal Risks and Uncertainties’ section on
pages 19 to 21. These also explain that the Company is able to use borrowings to gear and that gearing will amplify the effect on equity of
changes in the value of the portfolio.
The Board can also manage the capital structure directly since it has taken the powers, which it is seeking to renew, to issue and buy-back
shares and it also determines dividend payments.
The Company is subject to externally imposed capital requirements with respect to the obligation and ability to pay dividends by
section 1158 Corporation Tax Act 2010 and by the Companies Act 2006, respectively, and with respect to the availability of the bank
facility by the terms imposed by the lender. The Board regularly monitors, and has complied with, the externally imposed capital
requirements. This is unchanged from the prior year. As detailed in note 11 and note 12, borrowings comprise the debenture stock
and unsecured senior loan notes, a bank facility and an uncommitted overdraft facility which may be used for short-term funding
requirements.
19. CONTINGENCIES, GUARANTEES AND FINANCIAL COMMITMENTS
This note would show any liabilities the Company is committed to honour, and which are dependent on future
circumstances or events occurring.
There are no contingencies, guarantees or financial commitments of the Company at the year end (2021: £nil).