Notes 9 and 10
9. Net Financial Expense
|
2005
£m |
2004
£m |
| Interest payable on bank borrowings |
(1.5) |
(1.7) |
| Interest charge on pension scheme liabilities |
(2.0) |
(1.1) |
| |
|
|
| Net fair value losses in financial instruments(1) |
(0.8) |
|
| Net foreign exchange losses(2) |
(0.2) |
(0.1) |
| Other financial expense |
(1.0) |
(0.1) |
| Financial expenses |
(4.5) |
(2.9) |
| |
|
|
| Interest income |
0.2 |
0.1 |
| Expected return on assets in the pension scheme |
2.2 |
1.4 |
| Financial income |
2.4 |
1.5 |
| |
|
|
| Net financial expense |
(2.1) |
(1.4) |
(1) The Group uses options as part of its hedging of future cash flows. Under IFRS, the Group is able to hedge account for the intrinsic value of such options, but is not permitted to hedge account for the time value of such options. This time value is therefore marked-to-market at each balance sheet date. As such options are held to maturity, the ultimate net amount charged to the income statement in respect of any one option will always equate to the initial premium paid for that option. However, as a result of the mark to market, this may introduce volatile income and expenses between periods and such amounts are therefore being identified as other financial expense. The value of this volatile premium on options recorded in significant items within other financial expense was £0.3 million. The value of amortisation of options recorded within other financial expense as a non-significant item was £0.5 million. The total is therefore £0.8 million. Because this is the first year of adoption of IAS 39 there are no comparatives for this amount.
(2) Under IFRS, currency translation differences arising on long-term intra-group funding loans that are net investments are charged/credited to reserves. Amounts relating to the currency translation differences arising on certain other intra-group funding balances that do not meet this strict criteria but are very similar in nature are included within other financial expense. The value of currency translation on intra-group funding balances recorded in significant items within other financial expense was £0.2 million.
10. Net Foreign Exchange Losses
The exchange differences charged to the income statement are included as follows:
|
2005
£m |
2004
£m |
| Cost of goods sold |
0.8 |
1.6 |
| Net financial expense |
0.2 |
0.1 |
| Total net foreign exchange loss |
1.0 |
1.7 |
Information correct at 02/05/2006