Note 8: Financing income and expenses
In € millions |
2021 |
2022 |
|---|---|---|
Financing income |
12 |
19 |
Financing expenses |
(74) |
(106) |
Net interest on net debt |
(62) |
(87) |
|
|
|
Other interest |
|
|
Financing income related to post-retirement benefits |
13 |
18 |
Interest on provisions |
3 |
17 |
Exchange rate results |
(21) |
(85) |
Other items |
28 |
13 |
Net other financing credit/(charges) |
23 |
(37) |
Total financing income and expenses |
(39) |
(124) |
Net financing expenses for the year were €124 million (2021: €39 million). Significant variances are:
- Net interest on net debt increased by €25 million to €87 million (2021: €62 million) mainly as a result of higher interest cost on debt from bonds issuance, increased short-term debt and financing related to the Grupo Orbis acquisition
- Interest income on provisions increased by €14 million to €17 million (2021: €3 million) due to the impact from discounting at higher discount rates
- Exchange rate results were €85 million negative (2021: €21 million negative), and include €20 million expenses from Argentina and Türkiye hyperinflation accounting
- Other items in 2022 include €10 million interest income from the UK ACT case (refer to Note 4 for further details on the UK ACT case). In 2021, an interest income of €28 million related to the Brazil ICMS case was included.
The average interest rate used for capitalized interest was 1.7% (2021: 1.9%). Capitalized interest was negligible in both 2022 and 2021. The average interest rate on total debt was 2.1% (2021: 2.3%).
Accounting impact hyperinflation accounting
We have applied IAS 29 “Financial Reporting in Hyperinflationary Economies” for Türkiye as from January 1, 2022. For Argentina, hyperinflation accounting was already applied as from January 1, 2018. In addition, and in line with IAS 21 “The Effect of Changes in Foreign Exchange Rates”, end of month rates are used to translate both the balance sheet and the statement of income into euros. For Türkiye, the revaluation effect on the non-monetary assets at January 1, 2022, was €16 million positive (after taxes), recorded as a restatement to opening shareholders’ equity. In addition, the opening balance of intangible assets has been restated by €1 million (refer to Note 11) and the opening balance of property, plant and equipment has been restated by €15 million (refer to Note 12). Refer to Note 9 Income tax for the related opening balance impact on deferred taxes.
The application of hyperinflation accounting and the use of end of month rates to translate the statement of income into euros resulted in an €5 million positive impact on revenues, an €46 million negative impact on operating income and an €63 million negative impact on net income for the year.
Defined as long-term borrowings plus short-term borrowings less cash, cash equivalents and short-term investments.
Operating income is defined in accordance with IFRS and includes the relevant identified items. Adjusted operating income excludes identified items.