80 / 132
Consolidated
2017
$’000
2016
$’000
Finance costs
30,759
42,141
30,759
42,141
Accounting Policy
Finance costs
Borrowings are initially recognised at fair value, net of transaction costs incurred and thereafter at
amortised cost.
Borrowing costs on Bonds, including fees paid on establishment, are recognised as they accrue using
the effective interest method. This is a method of calculating the amortised cost of a financial liability
and allocating the interest and other costs over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash flows through the expected life of the
financial liability to the net carrying amount of the financial liability.
Syndicated Debt Facility borrowing costs are recognised as they accrue using the effective interest
method; however the fees and interest applicable have different durations to the facility and the
variable rates are linked to the market. As a result the shorter period is utilised to undertake the
recognition of the individual components of the borrowing costs. As the duration is generally shorter
than a year there is generally no difference between effective interest method and straight line
recognition.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset are capitalised as part of the cost of that asset. Borrowing costs consist of interest and other
costs incurred in connection with the borrowing of funds.
From time to time the Group may undertake short term borrowings such as bridging facilities for
contingency or other purposes, and to the extent there is no evidence that it is probable that some
or all of the facility will be drawn down, the fee is capitalised as a prepayment and amortised over
the period of the facility to which it relates.
(f) Finance costs
78
NOTE 5
INCOME AND EXPENSES (CONTINUED)