13. Financial income and costs

Financial income and costs comprised the following:

The increase in interest expense compared to the previous year resulted mainly from the effects of interest rate increases in the US dollar area and the Eurozone. These mainly had an impact in the fourth quarter of 2022.  NOTE 5 “FINANCIAL RISK MANAGEMENT”

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, and are included in the interest expense item. The remaining amount to be allocated to the remaining terms of the financing as of December 31, 2022, amounted to EUR 388 thousand (2021: EUR 594 thousand).

The items foreign exchange losses and foreign exchange gains on financing activities contain the effects of the translation of external and intragroup foreign currency loans and the effects of foreign currency derivatives used to hedge these loans. The hedging relationship was classified as a hedge of fair value changes, as a result of which the effects from the measurement of the derivatives and from the measurement or translation of the financial liabilities are reflected in the financial result. The net effect is presented in  NOTE 14 “NET FOREIGN EXCHANGE GAINS / LOSSES”. Furthermore, effects from the translation of bank balances in foreign currencies are included in these items.