Notes to the consolidated financial statements - analysis of items in the primary statements
5. Finance income and costs
| 2010 £m | 2009 £m | 2008 £m |
|
|---|---|---|---|
| Interest income and similar income | |||
| Expected return on pension and other post-retirement benefit plan assets | 981 | 1,236 | 1,064 |
| Interest income on financial instruments: | |||
| Interest income from bank deposits and other financial assets | 18 | 60 | 209 |
| Interest receivable on finance leases | – | 1 | 2 |
| Gains transferred from equity on disposal of available-for-sale investments | 6 | 18 | – |
| Interest income and similar income | 1,005 | 1,315 | 1,275 |
| Interest expense and other finance costs | |||
| Interest on pension and other post-retirement benefit plan obligations | (1,193) | (1,250) | (1,001) |
| Interest expense on financial liabilities held at amortised cost: | |||
| Interest on bank loans and overdrafts | (80) | (136) | (71) |
| Interest on other borrowings | (938) | (1,135) | (990) |
| Interest on finance leases | – | (14) | (11) |
| Interest on derivatives | 22 | 5 | (46) |
| Unwinding of discounts on provisions | (70) | (68) | (45) |
| Less: Interest capitalised (i) | 99 | 133 | 119 |
| Interest expense and other finance costs before exceptional items and remeasurements | (2,160) | (2,465) | (2,045) |
| Exceptional items | |||
| Exceptional debt redemption costs | (33) | – | – |
| Remeasurements | |||
| Net gains/(losses) on derivative financial instruments included in remeasurements (ii): | |||
| Ineffectiveness on derivatives designated as fair value hedges (iii) | 67 | (34) | 1 |
| Ineffectiveness on derivatives designated as cash flow hedges | (5) | (18) | 13 |
| Ineffectiveness on derivatives designated as net investment hedges | (19) | (2) | 14 |
| On undesignated forward rate risk relating to derivatives designated as net investment hedges | 51 | 112 | (53) |
| On derivatives not designated as hedges or ineligible for hedge accounting | (13) | (140) | 18 |
| Financial element of remeasurements on commodity contracts | (1) | (2) | (9) |
| 80 | (84) | (16) | |
| Interest expense and other finance costs | (2,113) | (2,549) | (2,061) |
| Net finance costs | (1,108) | (1,234) | (786) |
| Comprising: | |||
| Interest income and similar income | 1,005 | 1,315 | 1,275 |
| Interest expense and other finance costs: | |||
| Before exceptional items and remeasurements | (2,160) | (2,465) | (2,045) |
| Exceptional items and remeasurements | 47 | (84) | (16) |
| After exceptional items and remeasurements | (2,113) | (2,549) | (2,061) |
| (1,108) | (1,234) | (786) |
- (i)
- Interest on funding attributable to assets in the course of construction was capitalised during the year at a rate of 2.8% (2009: 5.7%; 2008: 6.3%).
- (ii)
- Includes a net foreign exchange gain on financing activities of £334m (2009: £1,500m loss; 2008: £885m loss) offset by foreign exchange gains and losses on derivative financial instruments measured at fair value.
- (iii)
- Includes a net loss on instruments designated as fair value hedges of £90m (2009: £382m gain; 2008: £87m gain) offset by a net gain of £157m (2009: £416m loss; 2008: £86m loss) arising from fair value adjustments to the carrying value of debt.