National Grid 2007 Annual Report Download - page 55

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National Grid Electricity Transmission plc Annual Report and Accounts 2006/07
9. Finance income and costs
2007 2006
£m £m
Pensions - expected return on scheme assets 84 76
Interest income on financial instruments 41 31
Interest income and similar income 125 107
Pensions - interest on scheme liabilities (83) (84)
Interest expense on financial liabilities held at amortised cost (193) (196)
Exceptional debt redemption costs (8) (2)
Interest on derivatives (16) -
Less: interest capitalised 32 33
Interest expense (268) (249)
Net (losses)/gains:
On derivatives designated as fair value hedges (1) 6
On derivatives not designated as hedges or ineligible for hedge accounting - (3)
Net (losses)/gains on derivative financial instruments (1) 3
Interest expense and other finance costs (269) (246)
Net finance costs (144) (139)
Comprising:
Interest income and similar income 125 107
Interest expense and other financial costs
Before exceptional items and remeasurements (260) (247)
Exceptional items and remeasurements (9) 1
(144) (139)
Interest income on financial instruments comprises interest income from bank deposits and other financial assets of £38m
(2006: £27m) and other interest receivable of £3m (2006: £4m).
Interest expense on financial liabilities held at amortised cost comprises interest on bank loans and overdrafts £20m (2006: £21m),
preference dividends £1m (2006: £3m) and interest on other borrowings £172m (2006: £172m). Preference dividends of 2.78
pence have been charged to the income statement for the year ended 31 March 2007 (2006: 5.79 pence per preference share).
Interest on the funding attributable to assets in the course of construction was capitalised during the year at a rate of 5.5%
(2006: 5.85%).
Interest expense and other finance costs include £8m (2006: £2m) relating to losses incurred on the repurchase of debt.
Derivative net gains on fair value hedges comprise a net gain on the hedging instruments of £36m (2006: £17m), offset by a net
loss of £37m (2006: £11m) from the fair value adjustments to the carrying value of debt.
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