Financial Statements

Notes to the Group financial statements

for the year ended 31 March 2006

9. Net financing costs	Notes	2006 £m	2005 £m
Interest income:
Bank deposits		7	8
Loan notes		8	8
Interest on derivatives		25	31
Expected return on pension scheme assets	25	58	55
Interest income		98	102
Interest expense:
Bank loans and overdrafts		32	13
Eurobonds, notes and perpetual securities		69	79
Finance leases		–	1
Commitment and facility utilisation fees		1	1
Interest expense on pension scheme liabilities	25	51	54
Gross interest expense		153	148
Less: interest charged to cost of sales		(16)	(18)
Net interest expense		39	28
Financing fair value remeasurements:
Fair value gains on non hedging derivatives		(13)	–
Ineffective portion of fair value hedges of borrowings		5	–
Ineffective portion of net investment hedges		(3)	–
Net foreign exchange transaction gains		14	–
Financing fair value remeasurements		3	–
Net financing costs		42	28

Interest charged to cost of sales relates to Financial Services activities.

There are no comparative numbers relating to financing fair value remeasurements since the GUS Group did not adopt IAS 32 and IAS 39 until the year commencing 1 April 2005 (see note 39).