2.6 FINANCIAL RESULT

The table below shows the detail of the changes in the financial result from 2016 to 2017. The result of infrastructure projects is presented separately from the result of non-infrastructure project companies (see Note 1.1.2 for the definition) and in each of them a further distinction is made between the financial result on financing -which includes the finance costs on bank borrowings and bonds, and the returns on financial assets and loans granted- and the financial result on derivatives and other items, which includes the impact of the fair value measurement of ineffective hedges and other income and expenses not directly related to financing.

• The financial result on the financing of the infrastructure project companies: amounted to EUR -254 million in 2017 (31 December 2016: EUR -305 million). Of this result, EUR -256 million relate to these companies’ borrowing costs. The following table shows a detail of these borrowing costs, which include the capitalised costs of toll roads under construction:

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  BORROWING COSTS OF INFRA­STRUC­TURE PROJECT COMPANIES (Millions of euros)	2017	2016
  Accrued finance costs	-298	-342
  Borrowing costs capitalised during the construction period	42	36
  Finance costs recognised in profit or loss	-256	-306

  The improved financial result on financing is due mainly to the changes in the scope of consolidation in 2016 (sale of the Chicago Skyway toll road and the Irish M3 and M4/M6 toll roads and the filing for Chapter 11 insolvency of the SH-130 toll road); in 2016 these companies contributed a financial result on financing of EUR -36 million. In addition to the above impact, it should be noted that in 2017 partial divestments, with the consequent loss of control, were made of the Portuguese Norte Litoral (April) and Algarve (September) toll roads, as a result of which a finance cost of only EUR -12 million accrued, compared with EUR -22 million in 2016.

• Other financial results of infrastructure projects: include mainly other financial results, which include exchange differences and other results considered to be of a financial nature but not directly related to financing. The change compared to 2016 (EUR 14 million) is due mainly to the impact in 2016 of the result on derivatives (EUR -12 million), most notably Autopista del Sol (EUR -11 million) as a result of the termination of the interest rate swap held by it, as part of the refinancing of its debt, which did not take place in 2017.
• The financial result on financing excluding infrastructure projects in 2017 amounted to EUR -29 million (31 December 2016: EUR -49 million), corresponding to borrowing costs (EUR -83 million) net of the interest obtained mainly from financial investments (EUR 54 million). The improvement compared with 2016 is due mainly to the higher returns on available cash than in 2016 (larger position in Canadian dollars, which is remunerated at better rates than the eurozone) and the reduction of debt in 2017 (mainly the repayment of the High Yield Bonds at Broadspectrum in April 2017 for AUD 325 million -EUR 243 million-), the net amount of the cross-currency swap.
• Other financial results excluding infrastructure projects include the impact of derivatives and other fair value adjustments relating mainly to the impact of the derivatives not designated as hedges, including most notably Canadian dollar-denominated options amounting to EUR 22 million, aimed at hedging the cash balances the Group holds in that currency, and the equity swaps arranged by the Group to hedge the impact on equity of share-based variable remuneration schemes (see Note 6.7) with a positive impact in 2017 of EUR 5 million due to the positive performance of the share price in 2017.

Excluding the impact of derivatives, the detail of other financial results excluding infrastructure projects is as follows:

This sub-heading includes mainly the cost of guarantees, late-payment interest, exchange differences, interest on loans granted to companies accounted for using the equity method, finance costs on pension plans and interest on tax assessments. The other items in 2017 include basically the impact of EUR -15 million relating to the repayment of the High Yield Bonds at Broadspectrum (see Note 5.2.2). These borrowings bore very high finance costs (8.38%) and, therefore, the repayment thereof contributed to a reduction in the Group’s non-infrastructure project finance costs.

The same line item also includes the costs relating to the penalty incurred for the delay in delivering a waste treatment plant in the UK (EUR -10 million), which was calculated as a specific rate of interest on the amount of the borrowings of the concession operator.

• Impact on cash flows: As can be observed in the following table, the difference between the financial result on financing and the interest cash flows reported in the statement of cash flows is EUR -90 million.

This difference at infrastructure project level arose mainly at the US toll roads (NTE, LBJ, NTE Segment 3 and I-77), whose financing arrangements allow for the compounding of interest in the first years of the concession, as a result of which the interest is added to the principal and does not represent a cash outflow in the year (EUR -83 million).