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€ million |
2012 |
2011 | ||
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Result from investments in joint ventures and associates |
-82.6 |
-7.7 | ||
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Of which pro rata result attributable to joint ventures |
-22.3 |
-20.7 | ||
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Of which pro rata result attributable to associated companies |
16.7 |
13.0 | ||
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Of which impairments |
-77.0 |
– | ||
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Other investment income |
0.1 |
– | ||
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Net interest income |
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Interest income |
16.0 |
16.9 | ||
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Of which from available-for-sale financial instruments |
2.1 |
0.2 | ||
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Interest expenses |
-26.2 |
-13.5 | ||
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-10.2 |
3.4 | ||
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Other financial result |
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Other financial income |
20.5 |
23.4 | ||
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Interest effect of interest-bearing provisions/liabilities/financial leases |
-52.2 |
-38.8 | ||
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Other financial expenses |
-22.9 |
-23.8 | ||
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-54.6 |
-39.2 | ||
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Financial result |
-64.8 |
-35.8 | ||
The income from investments in joint ventures and associates relates mainly to companies in China and Singapore. This income includes not only the pro rata shares of net results for the year, but also effects from pro rata eliminations of intercompany profits.
Long-term supply contracts based on fixed transfer prices are in place with the associated company Dow Corning (ZJG) Co. Ltd., Zhangjiagang, China. Changes in the transfer pricing policy led to a substantial reduction in future transfer prices, bringing about a change in the associated company’s expected cash inflows. For this reason, WACKER has reduced – by €77.0 million – the related carrying amount of the associate, which is accounted for using the equity method. The impairment test performed was based on the value-in-use method. The discount rate amounted to 10.7 percent (after tax). The charge was allocated to the silicones segment.
Borrowing costs of €14.2 million (2011: €11.3 million) were capitalized in the year under review, resulting in a corresponding improvement in the net interest result. The average borrowing interest rate applied by the Group in the 2012 financial year was 3.1 percent (2011: 4.1 percent).
The interest effect of interest-bearing provisions includes net interest expenses from accrued interest on pension obligations and expected proceeds from plan assets totaling €38.0 million (2011: €26.6 million) and interest expenses from accrued interest on other provisions of €13.9 million (2011: €10.1 million).
Other financial income and expenses primarily result from currency translation.