- Includes a £100.8 million (2019: £98.3 million) non-cash inflation expense repayable on maturity in relation to the group’s index-linked debt and £1.6 million (2019: £nil) interest expense on lease liabilities, representing the unwinding of the discounting applied to future lease payments.
- Includes foreign exchange losses of £14.8 million (2019: £37.6 million gains). These losses/gains are largely offset by fair value gains/losses on derivatives.
- Under the provisions of IFRS 9 ‘Financial instruments’, a £1.3 million fair value gain resulting from changes to the foreign currency basis spread (2019: £2.2 million loss) has been recognised in other comprehensive income rather than profit or loss as they relate to items designated in an accounting hedge relationship.
- Under the provisions of IFRS 9 ‘Financial instruments’, a £34.2 million fair value gain resulting from changes in the group’s own credit risk (2019: £6.6 million gain) has been recognised in other comprehensive income rather than profit or loss.
- These swap contracts are not designated within an IFRS 9 hedge relationship and are classed as ’held for trading’ under the accounting standard. These derivatives form economic hedges and, as such, management intends to hold these through to maturity.
- Includes £16.0 million income (2019: £30.6 million) due to net interest on derivatives and debt under fair value option and £0.5 million income (2019: £nil) due to non-cash inflation uplift on index-linked derivatives.
Interest payable is stated net of £40.6 million (2019: £37.4 million) borrowing costs capitalised in the cost of qualifying assets within property, plant and equipment and intangible assets during the year. This has been calculated by applying a capitalisation rate of 3.2 per cent (2019: 3.1 per cent) to expenditure on such assets as prescribed by IAS 23 ‘Borrowing Costs’.
In addition to the £308.0 million finance expense, a £5.0 million allowance for expected credit losses was recognised during the year (2019: £nil) in respect of loans to the group's joint venture, Water Plus (see note A6 for further details).