5 Finance expense

Interest payable
Interest payable on borrowings held at amortised cost(1)198.1206.1
Fair value losses/(gains) on debt and derivative instruments(2)
Fair value hedge relationships:
Designated swaps(62.2)(122.7)
Financial instruments at fair value through profit or loss:
Borrowings designated at fair value through profit or loss(3)4.365.0
Associated swaps(4)(23.5)(73.5)
Fixed interest rate swaps(4)46.2133.5
Electricity swaps(4)14.2(6.0)
Net receipts on swaps and debt under fair value option(16.1)(2.5)
Other swaps(4)(5)(3.0)1.1
Net fair value losses on debt and derivative instruments(6)26.3104.7
Net pension interest expense (see note 18)7.0


  1. Includes a £37.9 million (2015: £46.6 million) non-cash inflation uplift expense in relation to the group's index-linked debt.
  2. Includes foreign exchange losses of £62.1 million (2015: £10.5 million gains), excluding those on instruments measured at fair value through profit or loss. These losses/gains are largely offset by fair value gains/losses on derivatives.
  3. Includes a £15.1 million gain (2015: £4.6 million loss) on the valuation of debt reported at fair value through profit or loss due to changes in credit spread assumptions.
  4. These swap contracts are not designated within an IAS 39 hedge relationship and are, as a result, classed as 'held for trading' under the accounting standard. These derivatives form economic hedges and, as such, management intend to hold these through to maturity.
  5. Includes fair value movements in relation to other economic hedge derivatives relating to debt held at amortised cost.
  6. Includes £16.5 million income (2015: £4.0 million) due to net interest on swaps and debt under fair value option.

Interest payable is stated net of £21.3 million (2015: £20.9 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 2.7 per cent (2015: 3.1 per cent) to expenditure on such assets as prescribed by IAS 23 'Borrowing Costs'.