Note 7: Financing income and expenses
In € millions |
2018 |
2019 |
|---|---|---|
Financing income |
16 |
17 |
Financing expenses |
(92) |
(76) |
Net interest on net debt |
(76) |
(59) |
|
|
|
Other interest |
|
|
Financing income related to post-retirement benefits |
10 |
21 |
Interest charges on provisions |
(3) |
(14) |
Other items |
17 |
(24) |
Net other financing credit/(charges) |
24 |
(17) |
Total financing income and expenses |
(52) |
(76) |
Net financing expenses for the year were €76 million (2018: €52 million). Significant variances are:
- Net interest on net debt decreased by €17 million to €59 million (2018: €76 million), mainly due to lower interest on bonds as a result of repayment of a bond in December 2018, partially offset by interest on lease liabilities resulting from the implementation of IFRS 16 in 2019
- Financing income related to post-retirement benefits increased from €10 million in 2018 to €21 million due to improved funding positions
- Interest charges on provisions increased from €3 million in 2018 to €14 million due to changes in discount rates
- Other items in 2019 mainly include interest related foreign currency results; in 2018, other items mainly included a one-off interest benefit related to a tax settlement
The average interest rate used for capitalized interest was 1.5% (2018: 2.2%). Capitalized interest was negligible in both 2019 and 2018.
The average interest rate on total debt was 2.8% (2018: 2.6%).
Net debt
Defined as long-term borrowings plus short-term borrowings less cash and cash equivalents and short-term investments.