Anglo American Annual Report 2012

9. NET FINANCE (COSTS)/INCOMEFinance costs and exchange (losses)/gains are presented net of hedges for respective interest bearing and foreign currency borrowings.The weighted average capitalisation rate applied to qualifying capital expenditure was 4.2% (2011: 5.0%).US$ million 2012 2011Investment incomeInterest income from cash and cash equivalents 155 239Other interest income 195 194Expected return on defined benefit arrangements 200 199Dividend income from financial asset investments 54 59604 691Less: interest income capitalised (7) (23)Total investment income 597 668Interest expenseInterest and other finance expense (691) (615)Interest payable on convertible bond (25) (68)Unwinding of discount on convertible bond (25) (71)Interest cost on defined benefit arrangements (230) (205)Unwinding of discount relating to provisions and other liabilities (114) (80)(1,085) (1,039)Less: interest expense capitalised 287 344Total interest expense (798) (695)Other financing (losses)/gainsNet foreign exchange losses (90) (16)Net fair value (losses)/gains on fair value hedges (24) 16Other net fair value gains 27 7Total other financing (losses)/gains (87) 7Net finance costs before remeasurements (288) (20)Remeasurements (see note 5) (89) 203Net finance (costs)/income after remeasurements (377) 18310. FINANCIAL INSTRUMENT GAINS AND LOSSESThe net gains and losses recorded in the Consolidated income statement in respect of financial instruments were as follows:US$ million 2012 2011At fair value through profit and lossCash flow hedge derivatives transferred from equity (1) (4) (5)Fair value hedge derivatives (193) (263)Fair value hedge underlying instruments 169 279Foreign exchange gains/(losses) 12 (9)Other fair value movements (2) (144) (205)Loans and receivablesForeign exchange gains 17 9Interest income at amortised cost (3) 307 368Available for saleNet gain transferred on sale from equity 67 10Dividend income 54 59Impairment of available for sale investments (84) –Foreign exchange losses (30) –Other financial liabilitiesForeign exchange (losses)/gains (106) 240Interest expense at amortised cost (3) (404) (345)Financial statements(1)These amounts are included in Group revenue.(2)Includes the impact of provisional pricing, see note 3, and certain operating and financing remeasurements, see note 5.(3)Interest income and expense at amortised cost are shown net of amounts capitalised.Anglo American plc Annual Report 2012 157