11. Finance costs and finance income

11.1 Accounting policy

The ineffective portion of the change in fair value of interest rate swaps designated as cash flow hedges is included within interest payable on loans and overdrafts. Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. All other borrowing costs are recognised as an expense in the income statement using the effective interest rate method.

11.2 Total net finance costs

2012
£m
2011
£m
Interest payable on borrowings
Loans, overdrafts and factoring arrangements20.627.2
Obligations under finance leases0.20.2
Amortisation of capitalised borrowing costs1.21.2
Total interest payable on borrowings22.028.6
Other interest payable
Interest on retirement benefits obligations27.530.7
Unwinding of discounted provisions1.41.4
Total ordinary finance costs50.960.7
Exceptional finance costs1.9
Total finance costs50.962.6
Interest receivable(1.4)(5.5)
Expected return on retirement benefits assets(26.9)(29.0)
Unwinding of discounted receivables(0.4)(0.4)
Total finance income(28.7)(34.9)
Total net finance costs22.227.7

11.3 Exceptional finance costs

The exceptional finance costs incurred in 2011 resulted from the early write-off of unamortised borrowing costs as a consequence of the Group entering into a new revolving credit facility in 2011. The costs written off related to the old facility that had been due to expire in 2012.