8. Financial income/expenses

Financial statements CSR report

The following table summarizes financial income and expense for the years ended 31 December 2018 and 2017.

 

Year ended 31 December

(thousands of €)

2018

2017

Financial income:

 

 

Interest on bank deposit

5,219

3,045

Effect of discounting long term R&D incentives receivables

199

Currency exchange gain

11,027

1,797

Fair value gain on financial assets held at fair value through profit or loss

1,203

Gain upon sale of financial assets held at fair value through profit or loss

668

Other finance income

19

34

Total financial income

18,335

4,877

 

 

 

Financial expenses:

 

 

Interest expenses

(780)

(936)

Currency exchange loss

(1,174)

(29,176)

Other finance charges

(782)

(469)

Total financial expense

(2,737)

(30,582)

 

 

 

Total net financial expense (-)/income

15,598

(25,705)

Financial expenses decreased significantly by €27.8 million, from €30.6 million for the year ended 31 December 2017 to €2.7 million for the year ended 31 December 2018. The currency exchange loss in 2017 primarily related to a currency exchange loss of €27.8 million on deposits held in U.S. dollars. Our cash and cash equivalents include cash held in U.S. dollars, which could generate foreign currency exchange gain or loss in our financial results in accordance with the fluctuation of the EUR/U.S. dollar exchange rate as our functional currency is EUR.

Interest expenses were related to interests on term deposits and on lease of cars.

Financial income increased by €13.4 million, from €4.9 million for the year ended 31 December 2017 to €18.3 million for the year ended 31 December 2018. This increase was due to a currency exchange gain of €10.1 million on our cash and cash equivalents held in U.S. dollar. Interest income was related to interests on term deposits. Net exchange gain amounted to €9.9 million for the year ended 31 December 2018, compared to a net exchange loss of €27.4 million for the year ended 31 December 2017.

For the year ended 31 December 2018, fair value gain on financial assets held at fair value through profit or loss consisted of positive effects from the fair value re-measurement of financial assets classified as equity investments which qualify for level 1 fair value measurement based upon the closing price of such securities at each reporting date. The gain realized upon sale of some of those equity investments was reported in financial income.