NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2022 (CURRENCY - SINGAPORE DOLLARS UNLESS OTHERWISE STATED) E2 Finance costs, net (continued) Group 2022 $’000 2021 $’000 Finance costs Interest expense - bank loans and overdrafts (20,896) (6,584) - medium term notes and commercial papers (94,418) (18,669) - lease liabilities (15,854) (15,752) - contracts with customers (1,040) (1,190) - others (5,101) (2,853) Exchange loss, net (11,520) – Fair value changes of financial instruments - loss on ineffective portion of forward currency contract designated as hedging instrument in cash flow hedges – (2) Fair value changes of hedged items – (2,675) (148,829) (47,725) Finance costs, net, recognised in profit or loss (137,626) (36,039) Recognition and measurement Finance income comprises interest income, dividend income, gains on disposal and fair valuation of financial assets and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss when the shareholder’s right to receive payment is established. Finance costs comprise interest expense, losses on disposal and fair valuation of financial assets, and losses on hedging instruments that are recognised in profit or loss. Interest expense that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Foreign currency gains and losses on financial assets and liabilities are reported on a net basis as either finance income or finance cost. 226 ST ENGINEERING ANNUAL REPORT 2022
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