4.3.9Net Financing Costs
2023 | 2022 | ||
|---|---|---|---|
Interest income on loans & receivables | 3 | 0 | |
Interest income on investments | 21 | 10 | |
Net foreign exchange gain | - | - | |
Other financial income | 1 | 2 | |
Financial income | 25 | 12 | |
Interest expenses on financial liabilities at amortized cost | (731) | (352) | |
Interest income / (expenses) on hedging derivatives | 139 | (28) | |
Interest expenses on lease liabilities | (5) | (2) | |
Interest addition to provisions | (1) | (1) | |
Net cash flow hedges ineffectiveness | - | (1) | |
Net foreign exchange loss | (3) | (1) | |
Financial expenses | (601) | (385) | |
Net financing costs | (575) | (373) |
The Company has increased its debt (see note 4.3.23 Borrowings and Lease Liabilities) in order to finance its ongoing construction program of five FPSOs during the period.
The increase in net financing costs is mainly due to (i) increased project financing to fund continued investment in growth on the five FPSOs under construction during the period, (ii) additional interest expense on FPSO Liza Destiny and FPSO Liza Unity variable rate project loans and (iii) interest expense on the US$125 million funding loan agreement secured in 2023 with CMFL in relation to FPSO Cidade de Ilhabela, in line with the Company aim to diversify its sources of debt funding and to accelerate equity cash flow from the backlog, partially offset by (iv) the scheduled amortization of project loans.