FINANCE COSTS

ACCOUNTING POLICY

Borrowing costs are capitalised to the extent that they are directly attributable to the acquisition and construction of qualifying assets. Qualifying assets are assets that take a substantial time to get ready for their intended use. These costs are capitalised until the asset moves into the production phase. Other borrowing costs are expensed. The foreign exchange translation loss is included in the borrowing cost calculation to the extent that it is considered to be a part of interest.


9	FINANCE COSTS continued



	SA rand
Figures in million	2019		2018		2017

Financial liabilities

Borrowings	402		227		110
Other creditors and liabilities	2		1		—

Total finance costs from financial liabilities	404		228		110

Non-financial liabilities

Post-retirement benefits	17		18		16
Time value of money component of silicosis provision	79		76		—
Time value of money and inflation component of rehabilitation costs	208		191		173

Total finance costs from non-financial liabilities	304		285		189
Total finance costs before interest capitalised	708		513		299
Interest capitalised (a)	(133	)	(183	)	(65	)

Total finance costs	575		330		234


(a)	The capitalisation rate used to determine capitalised borrowing costs is:



	2019		2018		2017
	%		%		%

Capitalisation rate	10.4	%	10.5	%	4.2	%

The change in the rate from 2017 to 2018 is due to the effect of the foreign exchange translation loss in 2018 compared with a gain of 2017 on the calculation of the rate.