NOTE F6 Net financial charges
- Index
- 1 NOTE F1 Segment information
- 2 NOTE F2 Consolidated income statement by nature
- 3 NOTE F3 Revenue from non-core activities
- 4 NOTE F4 Other operating gains and losses
- 5 NOTE F5 Results from portfolio management and reassessments, legacy remediation and major litigations
- 6 NOTE F6 Net financial charges
- 7 NOTE F7 Income taxes
- 8 NOTE F8 Discontinued operations
- 9 NOTE F9 Profit for the year
- 10 NOTE F10 Earnings per share
Accounting policy
Interest on borrowings is recognized in costs of borrowings as incurred, with the exception of borrowing costs directly attributable to the acquisition, construction, and production of qualifying assets (see note F23 Property, Plant and Equipment).
Net foreign exchange gains or losses on financial items and changes in fair value of derivative financial instruments related to net indebtedness are presented in “Other gains and losses on net indebtedness”, with the exception of changes in fair value of derivative financial instruments that are hedging instruments in a cash flow hedge relationship, and which are recognized on the same line as the hedged item, when the latter affects profit or loss.
In € million |
2017 |
2016 |
||
Cost of borrowing |
(172) |
(187) |
||
Interest on lendings and short term deposits |
15 |
13 |
||
Other gains and losses on net indebtedness |
(44) |
(50) |
||
Net cost of borrowing |
(201) |
(224) |
||
Cost of discounting provisions |
(97) |
(115) |
||
Income/loss from available-for-sale financial assets |
|
5 |
||
Net financial charges |
(298) |
(334) |
Details are included in note F33 Net indebtedness.
The decrease of the net cost of borrowing is explained mainly by:
- The repayment of the Senior notes of US$ 82 million maturing in July 2017,
- The partial early repayment of US$204 million of Senior Notes 2023 (out of US$400 million) and of US$87 million of Senior Notes 2025 (out of US$250 million) of Cytec Industries,
- The partial early repayment of €118 million of EMTN Bond 2018 (€500 million) of Solvay SA, and
- The repayment of the Solvay Floating Rate Notes of €1 billion maturing early December 2017.
That decrease is partially offset by one-off accretion costs (acceleration) linked to the early repayments for €(10) million.
The other gains and losses on net indebtedness decreased slightly from €(50) million in 2016 to €(44) million in 2017. The decrease is explained mainly by:
- A significant decrease linked to the optimization of our subsidiaries‘ capital structure resulting in rationalization of swap volume needed to cope with local funding in US$ (€(20) million in 2017 as against €(48) million in 2016), and
- One-off premiums amounting to €(15) million related to the early repayments of the Senior Notes 2023 and 2025 and of the EMTN Bond 2018.
The decrease of cost of discounting provisions relates predominantly to post-employment benefits for €18 million and is explained mainly by the evolution of the applicable discount rates.