Net finance costs

12 Months Ended

Jun. 30, 2022

22 Net finance costs


	2022			2021			2020
	US$M			US$M Restated			US$M Restated
Financial expenses
Interest expense using the effective interest rate method:
Interest on bank loans, overdrafts and all other borrowings		491			607			1,093
Interest capitalised at 2.90% (2021: 2.83%; 2020: 4.14%) 1		(113	)		(204	)		(265	)
Interest on lease liabilities		119			102			82
Discounting on provisions and other liabilities		645			353			343
Other gains and losses:
Fair value change on hedged loans		(1,286	)		(779	)		721
Fair value change on hedging derivatives		1,277			704			(788	)
Loss on bond repurchase 2		–			395			–
Exchange variations on net debt		(99	)		99			(18	)
Other		16			13			24

Total financial expenses		1,050			1,290			1,192

Financial income
Interest income		(81	)		(67	)		(334	)

Net finance costs		969			1,223			858

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$34 million (2021: US$61 million; 2020: US$80 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.

Recognition and measurement

Interest income is accrued using the effective interest rate method. Finance costs are expensed as incurred, except where they relate to the financing of construction or development of qualifying

assets.