10. Net debtNet debt consists of loans and other borrowings less current asset investments and cash and cash equivalents. Loans and other borrowings are measured at the net proceeds raised, adjusted to amortise any discount over the term of the debt. For the purpose of this analysis current asset investments and cash and cash equivalents are measured at the lower of cost and net realisable value. Currency denominated balances within net debt are translated to Sterling at swapped rates where hedged.This definition of net debt measures balances at the expected value of future undiscounted cash flows due to arise on maturity of financial instruments and removes the balance sheet adjustments made from the re-measurement of hedged risks under fair value hedges and the use of the effective interest method as required by IAS 39. In addition, the gross balances are adjusted to take account of netting arrangements amounting to £256 million (2007: £49 million). Net debt is a non-GAAP measure since it is not defined in accordance with IFRS but it is a key indicator used by management in order to assess operational performance and balance sheet strength.
After allocating the element of the adjustments which impacts loans and other borrowings as defined above, gross debt at 31 March 2008 was £11,076 million (2007: £8,943 million).
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