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29. Financial income and expense

Below is a breakdown of financial income and expense:

 20162015
 IncomeExpensesNetIncomeExpensesNet
Interest5(259)(254)10(288)(278)
Premiums received (paid) on IRS6(6)-6(6)-
Commissions on borrowings-(14)(14)-(18)(18)
Other commissions2(9)(7)4(13)(9)
Income (expense) from equity investments and securities14(52)(38)25(7)18
Fair value gains (losses) through profit or loss48(11)3713(20)(7)
Premiums (paid) received on forwards32(44)(12)12(13)(1)
Exchange rate differences336(318)18270(291)(21)
Interest cost on defined-benefit plans (Note 21)-(5)(5)-(6)(6)
Financial income (expense) - related parties (Note 34)33(5)283(8)(5)
Other financial income and expense17(92)(75)13(119)(106)
 493(815)(322)356(789)(433)

Overall the item improved by €mil. 111, mainly as a result of the reduction in other financial charges (which in 2015 included €mil. 48 related to the buy-back of bonds) and of the consequent interest reduction, in addition to exchange gains, which had a positive effect also on the fair value of derivatives in portfolio. This improvement is partially offset by the effects of the extraordinary transactions. In detail:

  • net interest expenses decreased by €mil. 24. The item includes €mil. 246 (€mil. 271 in 2015) related to interest on bonds and €mil. 7 (€mil. 8 in 2015) related to the interest on the EIB loan. The figure of interest on bonds benefitted, as mentioned above, from the effects of the buy-back transactions carried out in the second half of 2015;
  • the expenses arising from the application of fair value break down as follows:

 

 20162015
 IncomeExpensesNetIncomeExpensesNet
Exchange rate swap1-11-1
Interest rate swaps-(1)(1)1(1)-
Ineffective portion of hedging swap38(10)2811(18)(7)
Embedded derivatives9-9-(1)(1)
 48(11)3713(20)(7)

  • costs from equity investments and securities include the results of the sales concluded during the year, while in 2015 these included net income linked to the sale of some activities of DRS;
  • other net financial expense mainly refers to the discounting effects on non-current liabilities. The figure of the prior year was affected, as previously said, by the recognition of charges related to the buy-back transactions carried out in 2015.