16 Financial Expenses

The financial expenses mainly relate to interest expense on financial liabilities measured at amortized cost as well as transaction costs for financing measures.

The application of the effective interest method reduced the interest expense by € 53.2 million as of the reporting date. In 2014, financial expenses were increased by € 18.2 million through the use of the effective interest method.

Interest expense includes interest accretion to provisions for pensions in the amount of € 9.0 million (2014: € 9.1 million) and, for miscellaneous other provisions, reductions in the amount of € -0.4 million (2014: interest charges amounting to € 3.3 million).

In 2015, transaction costs of € 60.5 million were recognized as expenses, largely due to refinancing, the creation of land charges and consultancy costs (2014: € 5.0 million).

In addition, interest from prepayment penalties and commitment interest negatively impacted results in the amount of € 29.9 million (2014: € 34.7 million).

In the reporting year, € 31.1 million was recognized as net interest in connection with swaps (2014: € 3.7 million).

A reconciliation of net interest to net interest with regard to measurement categories in accordance with IAS 39 is shown in the following table:

in € million

 

2015

 

2014

*

Including interest income on plan assets of € 0.4 million (2014: € 0.6 million)

 

 

 

 

 

Interest income

 

2.1

 

3.4

Interest expense

 

-418.4

 

-280.3

Net interest

 

-416.3

 

-276.9

 

 

 

 

 

Less:

 

 

 

 

Net interest from provisions for pensions in acc. with IAS 19*

 

9.0

 

9.1

Net interest from other provisions in acc. with IAS 37

 

-0.4

 

3.3

Net interest from derivatives in acc. with IAS 39: swaps

 

31.1

 

3.7

Net interest from finance leases in acc. with IAS 17

 

5.4

 

5.2

Net interest with regard to measurement categories in acc. with IAS 39

 

-371.2

 

-255.6

The net interest breaks down into the measurement categories in accordance with IAS 39 as follows:

in € million

 

Measurement category in acc. with IAS 39*

 

2015

 

2014

*

See note [37] Additional Financial Instrument Disclosures

 

 

 

 

 

 

 

Loans and receivables

 

LaR

 

1.0

 

3.1

Available-for-sale financial assets

 

AfS

 

0.5

 

Financial liabilities held for trading

 

FLHfT

 

-25.9

 

-3.9

Financial liabilities measured at amortized cost

 

FLAC

 

-346.8

 

-254.8

 

 

 

 

-371.2

 

-255.6