Net finance costs (Tables)

12 Months Ended

Jun. 30, 2021


	2021			2020			2019
	US$M			US$M			US$M
Financial expenses
Interest expense using the effective interest rate method:
Interest on bank loans, overdrafts and all other borrowings		610			1,099			1,296
Interest capitalised at 2.83% (2020: 4.14%; 2019: 4.96%) (1)		(248	)		(308	)		(248	)
Interest on lease liabilities		109			90			47
Discounting on provisions and other liabilities		467			452			470
Other gains and losses:
Fair value change on hedged loans		(779	)		721			729
Fair value change on hedging derivatives		704			(788	)		(809	)
Loss on bond repurchase (2)		395			–			–
Exchange variations on net debt		99			(18	)		6
Other		21			14			19

Total financial expenses		1,378			1,262			1,510

Financial income
Interest income		(73	)		(351	)		(446	)

Net finance costs		1,305			911			1,064

(1)

Interest has been capitalised at the rate of interest applicable to the specific borrowings financing the assets under construction or, where financed through general borrowings, at a capitalisation rate representing the average interest rate on such borrowings. Tax relief for capitalised interest is approximately US$74 million (2020: US$92 million; 2019: US$74 million).

(2)	Relates to the additional cost on settlement of two multi-currency hybrid debt repurchase programs and the unwind of the associated hedges, included in a total cash payment of US$3,402 million disclosed in repayment of interest bearing liabilities in the Consolidated Cash Flow Statement.