[13] Financial expenses

Financial expenses break down as follows: > TABLE 056

In 2017, financial expenses rose by €28.8 million year on year. This increase stemmed largely from the rise in the current interest expense on loans and the promissory note in connection with the acquisition of Dematic and from exchange rate losses (see note [12] for details of the countervailing exchange rate gains).

At the time of the early repayment of certain financial liabilities (see also note [30]), deferred borrowing costs of €3.5 million were reclassified as financial expenses. The prior-year figure included one-off financial expenses of €25.7 million, which were also incurred in connection with the optimisation of the financing structure.

The interest cost of leases relates to the interest portion of lease payments in financial services transactions in which the material risks and rewards are borne by KION Group entities as lessees (finance leases). Sale and finance leaseback operating sub-leases (SALB-FL-OL) incurred interest expenses of €27.7 million (2016: €28.3 million). The income from corresponding customer agreements is, according to IAS 17, a component of the rental and lease payments received and is therefore reported within revenue rather than as interest income.

Net interest expense from defined benefit plans relates to the net interest cost of the net liability of pension plans applying the discount rate for plans in which pension obligations exceed plan assets.