10. Net finance costs
Finance income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. For financial assets, finance income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired.
In regards to any refinancing agreements, the assessment is made to determine whether the original loans are being modified or exchanged or whether the refinancing should be considered as original loans being repaid and replaced by a new loan on market terms. The terms of exchanged or modified debt are considered ‘substantially different’ if the net present value of the cash flows under the new terms (including any fees paid net of any fees received) discounted at the original effective interest rate is at least 10% different from the discounted present value of the remaining cash flows of the original debt instrument. if an exchange of debt instruments or modification of terms is substantial, it is accounted for as an extinguishment of the original debt and the recognition of new debt, IFRS 9 requires any costs or fees incurred to be recognised as part of the gain or loss on the extinguishment. Where the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
The net finance cost can be specified as follows:
In millions of Euro |
2023 |
2022 |
---|---|---|
Interest income on short-term bank deposits |
1.9 |
- |
Finance income |
1.9 |
- |
Interest secured senior bank loan |
(77.0) |
- |
Amortisation finance fees |
(20.0) |
- |
Interest leases |
(6.2) |
- |
Interest rate hedge |
7.1 |
- |
Interest secured bank overdrafts |
(4.2) |
- |
Loss on net monetary position (IAS 29) |
(4.1) |
- |
Other |
(1.4) |
- |
Finance expenses |
(105.8) |
- |
Net foreign exchange gain/(loss) |
(1.4) |
- |
Net finance costs |
(105.3) |
- |
The amortisation finance fees include modification loss on loan extinguishment of €15.4 million and amortisation of capitalised finance fees of €4.6 million. The other finance cost includes other bank cost such as bank guarantees and other related finance expenses.