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 refinancing agreements, an assessment is made to determine whether the original loan is being modified or exchanged, or whether the refinancing should be considered as an original loan 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, differs by at least 10% 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, and IFRS 9 requires any costs or fees incurred to be recognised as part of the gain or loss on 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. When the terms of a refinancing do not result in a substantial modification of a financial liability, the existing liability continues to be recognised, and any difference arising from the revised cash flows is accounted for as a modification gain or loss in consolidated statement of profit or loss.
The net finance cost can be specified as follows:
|
In millions of euro |
2025 |
2024 |
|---|---|---|
|
Interest income on short-term bank deposits |
2.3 |
3.0 |
|
Finance income |
2.3 |
3.0 |
|
Interest secured senior bank loan |
(95.1) |
(110.9) |
|
Gain on loan modification |
24.7 |
- |
|
Loss on loan extinguishment |
(5.6) |
(25.7) |
|
Amortisation finance fees |
(2.2) |
(1.8) |
|
Interest leases |
(7.2) |
(8.0) |
|
Interest rate hedge |
(1.6) |
(1.6) |
|
Interest revolving credit facility |
(5.5) |
(2.7) |
|
Interest secured bank overdrafts |
(1.7) |
(2.0) |
|
Loss on net monetary position (IAS 29) |
0.0 |
0.2 |
|
Unwinding of discount on contingent consideration |
(5.0) |
5.5 |
|
Other |
(8.1) |
(4.1) |
|
Finance expenses |
(107.2) |
(151.2) |
|
Net foreign exchange gain/(loss) |
74.3 |
(29.0) |
|
Net finance costs |
(30.6) |
(177.2) |
The amortisation of finance fees in 2025 includes a gain of €24.7 million as a result of a loan modification due to repricing, and a loss of €5.6 million on the extinguishment of a US dollar loan, resulting from a substantial modification due to an increase in facility size. The other finance cost includes other bank costs such as bank guarantees and other related finance expenses.