ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) E2 Finance costs, net (continued) Group 2020 2019 $’000 $’000 Finance costs Interest expense – bank loans and overdrafts (7,974) (18,988) –medium term notes and commercial papers (21,549) (8,902) – lease liabilities (16,458) (12,481) – contracts with customers (1,480) (1,579) – others (2,122) (2,803) Exchange loss, net (19,441) – Net change in fair value of cash flow hedges reclassified from equity on occurrence of forecast transactions (1,306) (1,343) Fair value changes of financial instruments – loss on forward currency contract designated as hedging instrument (892) – – loss on fair value changes of forward currency contract not designated as hedging instrument – (2,841) (71,222) (48,937) Finance costs, net, recognised in profit or loss (61,948) (34,647) 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. 23 9 ANNUAL REPORT 2 0 2 0 / CORPORATE OVERVI EW PERFORMANCE REVI EW SUSTAINABI L ITY CORPORATE GOVERNANCE F INANCIAL REPORT