4.3.9Net Financing Costs
|
2020 |
2019 |
||
|---|---|---|---|
|
Interest income on loans & receivables |
3 |
10 |
|
|
Interest income on investments |
3 |
10 |
|
|
Net foreign exchange gain |
2 |
10 |
|
|
Other financial income |
1 |
1 |
|
|
Financial income |
9 |
31 |
|
|
Interest expenses on financial liabilities at amortized cost |
(181) |
(247) |
|
|
Interest expenses on hedging derivatives |
(76) |
(17) |
|
|
Interest expenses on lease liabilities |
(5) |
(6) |
|
|
Interest addition to provisions |
(1) |
(2) |
|
|
Net loss on financial instruments at fair value through profit and loss |
0 |
(0) |
|
|
Net cash flow hedges ineffectiveness |
(3) |
(3) |
|
|
Net foreign exchange loss |
0 |
0 |
|
|
Financial expenses |
(265) |
(274) |
|
|
Net financing costs |
(257) |
(243) |
The increase in net financing costs is mainly due to: (i) the decrease of interest income on investments due to lower interest rates (US$ LIBOR) in 2020; (ii) the decrease of interest income on loans and receivables resulting from the repayment of loans from Sonasing Xikomba Ltd (the entity that owns the N’Goma FPSO), following optimization of the non-recourse project loan in 2019 and; (iii) the decrease of the net foreign exchange gain related to the reduction of index-linked term deposits protecting the Company against Kwanza devaluation for its cash held in Angola.
As a result of the Company’s hedging policy, the decrease of Libor 3M in 2020 had a limited impact on Financial expenses as it led both to a decrease of Interest expenses on financial liabilities at amortized costs and to an increase of interest expenses on hedging derivatives.