Financial Income

It may seem strange to talk about net financial income for an industrial or service
company whose activities are not primarily geared towards generating financial
income. Since finance is merely supposed to be a form of financing a company’s
operating assets, financial items should normally show a negative balance, and this
is generally the case. That said, some companies, particularly large groups generating substantial negative working capital (like big retailers, for instance), have financial aspirations and generate net financial income, to which the financial

income makes a good contribution.
Net financial expense thus equates to financial expense less financial income.
Where financial income is greater than financial expense, we naturally refer to it as
net financial income.
Financial income includes:

1)income from other securities and from loans recorded as fixed assets. This
covers all income received from investments other than participating
interests – i.e., dividends and interest on loans;

2)other interest and related income – i.e., income from commercial and other
loans, income from marketable securities, discounts obtained from suppliers,
other financial income;

3)write backs of certain provisions and charges transferred – i.e., write backs of
provisions for financial liabilities and charges, of impairment losses on
financial items and, lastly, write backs of financial charges transferred;

4)foreign exchange gains on debt;

5)net income on the disposal of marketable securities – i.e., capital gains on the
disposal of marketable securities.

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