[13] Financial expenses

The financial expense is comprised of the following:

Financial expense

€ thousand

2011

2010

 

 

 

Interest expense from loans

135,737

167,347

Foreign currency exchange rate losses (financing)

52,264

53,877

Interest cost of defined benefit obligation

42,436

41,434

Interest cost of leases

37,738

35,951

Interest cost of shareholder loan

27,882

27,882

Interest expense from corporate bond

25,395

Amortisation of finance costs

11,359

8,333

Interest cost of non-current financial liabilities

2,574

3,263

Other interest expense and similar charges

10,324

16,318

Total financial expense

345,709

354,405

Interest expense include interest cost of €117,273 thousand arising from variable-rate loan liabilities under the senior facilities agreement (2010: €129,260 thousand) and losses of €18,464 thousand on interest-rate swaps (2010: €38,087 thousand).

The foreign currency exchange rate losses include a loss of €19,022 thousand on the translation of a foreign-currency loan denominated in US dollars (2010: €38,219 thousand) and losses of €31,843 thousand on derivative financial instruments (2010: €15,641 thousand).

The interest cost of the defined benefit obligation is the annual interest expense in connection with the change in the non-current pension obligations.

The interest cost of leases relates to the interest portion of lease payments in financial services transactions in which risks and rewards are borne by KION Group companies as the lessee (finance leases). Sale-finance leaseback-operating sub-leases (SALB-FL-OL) incurred interest expense of €19,587 thousand (2010: €16,615 thousand). This interest expense was not directly offset by any interest income. The interest income is a component of the lease payments reported within revenue.

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