Financial expense (income) amounts to €794 million, broken down as follows:
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|
(€ million) |
2011 |
2012 | ||
| ||||
|
Financial income |
(3) |
(7) | ||
|
Financial expense |
247 |
397 | ||
|
|
244 |
390 | ||
|
Derivatives (*) |
69 |
404 | ||
|
|
313 |
794 | ||
The net value of financial income and expense (€390 million) breaks down as follows:
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|
(€ million) |
2011 |
2012 | ||
| ||||
|
Financial expense related to net financial debt |
262 |
401 | ||
|
- Interest and other expenses on bond loans |
|
81 | ||
|
- Interest and other expenses from banks and other lenders |
262 |
239 | ||
|
- Other expenses related to financial debt |
|
81 | ||
|
Other financial expense (income) |
|
| ||
|
- Accretion discount (*) |
12 |
11 | ||
|
- Other financial expense |
10 |
23 | ||
|
- Other financial income |
(3) |
(7) | ||
|
|
19 |
27 | ||
|
Financial expense capitalised |
(37) |
(38) | ||
|
|
244 |
390 | ||
Financial expense related to net financial debt (€401 million) refers to: (i) interest on six bond loans issued in 2012 (€81 million); (ii) interest on loans from eni30 (€174 million), that were extinguished early in 2012 (iii). interest expense to banks relating to revolving credit lines and term loans, totalling €65 million; (iv) the portion of up-front fees for the year on the bridge-to-bond bank loan and revolving credit lines31 (€54 million), and fees for non-use of the credit lines (€27 million).
Other financial expense (income) of €27 million mainly relates to: (i) the net expense deriving from the discounting of receivables subject to transferral without recourse from the natural gas balancing business and receivables subject to liquidation by the Electricity Equalisation Fund, totalling €16 million, (ii) the accretion discount on provisions for the dismantling and restoration of storage sites (€11 million); and (iii) net interest expense accrued on accruals and deferrals from regulated activities (€6 million).
Financial expense capitalised (€38 million) relates to the part of financial expense absorbed by investment activities.
Derivatives
Expenses (income) on derivatives amount to €404 million and break down as follows:
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|
(€ million) |
2011 |
2012 |
|
Losses on derivative contracts: |
|
|
|
- Adjustment to fair value |
|
335 |
|
- Interest accrued during the period |
70 |
69 |
|
Gains on derivative contracts: |
|
|
|
- Interest accrued during the period |
(1) |
|
|
|
69 |
404 |
Losses for adjustment to fair value (€335 million) refer to financial expenses arising from the early termination of 12 IRSs entered into with eni.
At 31 December 2012, Snam held no derivatives.
30 The breakdown of financial payables is provided in Note 22 “Long-term financial liabilities and short-term portions of long-term liabilities”.
31 Up-front fees and substitute tax are to be regarded as “transaction costs” pursuant to IAS 39; the relative expenses are spread over the (expected) life of the financial instrument. Information on the debt refinancing is provided in the “Debt refinancing” section of the Directors’ Report.
