Financial items, net, decreased by DKK  239m, primarily due to the issue of bonds  late in 2012 with a lower coupon than that  of bonds maturing during 2013. The coupon  was also lower than the interest rates on  swaps maturing in 2013. Interest expenses primarily relate to interest  on borrowings measured at amortised cost  and include DKK -37m which is the ineffective  portion of interest rate swaps. The ineffective- ness was recognised in fair value adjustments  in 2012 and realised in 2013. Borrowing costs  on specific or general borrowings which are  directly attributable to the development or  construction of a qualifying asset are included  in the cost of that asset. Interest, losses and  write-downs relating to on-trade loans, which  are measured at amortised cost, are included  as income and expenses in other operating ac- tivities (cf. section 1.3.4), as such loans are seen  as a prepaid discount to the customer. Financial income and expenses comprise interest  income and expenses, payables and transactions  denominated in foreign currencies, amortisation of  financial assets (other than loans to customers in  the on-trade, which are included in other operating  activities, net) and liabilities, including defined ben- efit retirement plans, and surcharges and refunds  under the on-account tax scheme etc. Realised  and unrealised gains and losses on derivative  financial instruments which are not designated as  hedging arrangements and the ineffective portion  of those designated as hedging arrangements are  also included. Borrowing costs on specific or general borrowings  which are directly attributable to the development  or construction of a qualifying asset are included  in the cost of that asset. Of the net change in fair value of cash flow hedges  transferred to the income statement, DKK 58m (2012:  DKK 266m) is included in cost of sales and DKK 246m  (2012: DKK 356m) is included in financial items. Carlsberg Group Annual Report 2013 Consolidated financial statements SECTION 4: FINANCING COSTS, CAPITAL STRUCTURE AND EQUITY 90 4.1  ACCOUNTING POLICIES FINANCIAL ITEMS RECOGNISED IN THE INCOME STATEMENT DKK million 2013 2012 Financial income Interest income 307 345 Fair value adjustments of financial instruments, net, cf. section 4.8 - 189 Foreign exchange gains, net 178 - Expected return on plan assets, defined benefit plans 218 323 Other financial income 18 43 Total 721 900 Financial expenses Interest expenses -1,726 -1,905 Capitalised financial expenses 4 - Fair value adjustments of financial instruments, net, cf. section 4.8  -17 - Foreign exchange losses, net - -172 Impairment of financial assets -8 -3 Interest cost on obligations, defined benefit plans -332 -381 Other financial expenses -175 -211 Total -2,254 -2,672 Financial items, net, recognised in the income statement -1,533 -1,772 DKK million 2013 2012 Foreign exchange adjustments of foreign entities Foreign currency translation of foreign entities -7,260 1,904 Recycling of cumulative translation differences of entities acquired in step acquisitions  -239 - Effect of hyperinflation 61 75 Total -7,438 1,979 Value adjustments of hedging instruments Change in fair value of effective portion of cash flow hedges -176 -295 Change in fair value of cash flow hedges transferred to the income statement 304 622 Change in fair value of net investment hedges -118 -216 Total 10 111 Financial items, net, recognised in other comprehensive income -7,428 2,090 FINANCIAL ITEMS RECOGNISED IN OTHER COMPREHENSIVE INCOME Interest income relates to interest from cash and cash equivalents measured at amortised cost. Financial income  and expenses 