13. Financial income and costs

Financial income and costs comprised the following:

The reduction in interest expenses compared to the previous year results mainly from the reduction of NORMA Group’s gross debt (liabilities to banks) at the end of 2020, the net repayment in the previous fiscal year and the refinancing through the Commercial Paper program with significantly lower interest rates. Furthermore, the reduction in interest expenses was favored by the impact of the interest rate cuts in the US dollar area in the second half of 2020, which had a positive effect on the US dollar tranches of the financing. NOTE 5 ‘Financial risk management’

The development of the result from the valuation of derivatives and the foreign exchange result from financing activities resulted from the hedging of the US dollar financial liabilities taken up and the increase in the value of the US dollar compared with the previous year. The hedging relationship was classified as a fair value hedge, hence the effects from the measurement of the derivatives and from the measurement or translation of the financial liabilities are reflected within the financial result. The net effect is disclosed in note 14 ‘Net foreign exchange gains/losses’.

Transaction costs in connection with financing are netted with the bank borrowings. They are amortized over the financing period of the respective debt using the effective interest method. As of December 31, 2021, the value of transaction costs recognized in the balance sheet and amortized over the maturities of the bank borrowings amounted to EUR 594 thousand (2020: EUR 848 thousand).