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13 Financial income and charges

Interest rate and foreign exchange derivatives63,2651,46561,800
Income from valuation at fair value of financial liabilities20,8618,65712,204
Capital gains on equity investments and dividends from other companies 1295,696-5,567
Other financial income1,4792,320-841
Total financial income91,02122,96768,054
Bond loans77,91351,03726,876
Charges from valuation at fair value of financial liabilities46,955 46,955
Interest rate and foreign exchange derivatives46,86227,73519,127
Discounting of provisions and financial leases13,56917,129-3,560
Bank current account overdrafts2,9208,010-5,090
Capital losses and write-downs of equity investment1654-38
Other financial charges8,08220,413-12,331
Total financial charges206,642140,24466,398

The change in the financial operations is described, overall, in the Directors’ Report.

The most significant changes are remarked on below.

The items "Interest rate and foreign exchange derivatives", "Income from valuation at fair value of financial liabilities", and "Charges from valuation at fair value of financial liabilities" are commented on in note 22 of the balance sheet.

"Other financial income" decreased compared to the previous year, since 2009 included Euro 1,400 thousand of income generated by the renegotiation of the Put Extendable bond, totalling Euro 200 million.

The financial charges regarding "Bond loans" comprises:

  • Euro 62,459 thousand in financial charges actually paid (Euro 37,677 thousand in 2009);
  • Euro 15,154 thousand related to the application of amortised cost (Euro 13,360 thousand in 2009). With regard to the method used, please note that in the recalculation, the maximum duration for the loans was assumed, and it was also assumed that the put options would not be exercised for the duration of the same loans, within the terms set out in the contract.

The increase compared to last year is due to the issue, during the second half of 2009, of a 15-year bond loan for the amount of 20 billion Japanese Yen (with a Euro hedge of and therefore for a total of 150 million), the issue of the Euro 500 million, fixed rate of 4.5%, bond loan effective as from November 2009, and the issue of the convertible bond loan of a par value of Euro 140 million effective as from November 2010.

The decrease of the "Capital gains on equity investments and dividends from other companies" compared to 2009 is due to a 2009 dividend on account paid by Energia Italiana Spa in December 2009 (Euro 5,015 thousand).

As for "Other financial charges", the item mainly includes the charges borne for transfer of credits without recourse (Euro 6,286).  The reduction by comparison with the previous year is due to the fact that in 2009 the item included Euro 12,254 thousand in financial charges paid after the recovery for the fiscal moratorium. To this purpose, for a more thorough description see note 15 regarding taxes.

Item “Discounting of provisions and financial leases” is broken down as follows:

Landfill post-closure provision 7,1045,6751,429
Restoration of third party assets  4,4957,514-3,019
Employee leaving indemnity and other similar benefits1,4273,030-1,603
Financial leasing543910-367

The decrease in financial charges concerning the "Restoration of third party assets" is mainly attributable to the renegotiation of the lease agreement with Con.Ami, expiring on 31 December 2010, for another 30 years. The agreement regards management of the Tre Monti plant in Imola.

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