10. Other financial income/expenses
The following table summarizes financial income and expense for the years ended 31 December 2019 and 2018.
|
Year ended 31 December |
|
|---|---|---|
(thousands of €) |
2019 |
2018 |
Other financial income: |
|
|
Interest income |
14,306 |
5,219 |
Effect of discounting long term R&D incentives receivables |
93 |
199 |
Currency exchange gain |
850 |
11,027 |
Fair value gain on financial assets held at fair value through profit or loss |
5,355 |
1,203 |
Fair value gain on current financial investments |
611 |
|
Gain upon sale of financial assets held at fair value through profit or loss |
2 |
668 |
Other finance income |
264 |
19 |
Total other financial income |
21,482 |
18,335 |
|
|
|
Other financial expenses: |
|
|
Interest expenses |
(1,302) |
(780) |
Effect of discounting long term deferred income |
(6,900) |
|
Currency exchange loss |
(47,769) |
(1,174) |
Fair value loss on current financial investments |
(3,700) |
|
Other finance charges |
(400) |
(782) |
Total other financial expenses |
(60,071) |
(2,737) |
|
|
|
Total net other financial expenses (-)/income |
(38,589) |
15,598 |
The currency exchange loss in 2019 primarily related to a realized currency exchange loss of €34.9 million on the U.S. dollars upfront payment from Gilead and an unrealized exchange loss of €10.6 million on deposits and current financial investments held in U.S. dollars. We have cash, cash equivalents and current financial investments 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.
The decrease in currency exchange gain was due to a currency exchange gain in 2018 of €10.1 million on our cash and cash equivalents held in U.S. dollar. Net exchange loss amounted to €46.9 million for the year ended 31 December 2019, compared to a net exchange gain of €9.9 million for the year ended 31 December 2018.
Interest expenses were related to interests on term deposits and on lease of buildings and cars. Other financial expense for 2019 also includes €6.9 million of costs linked to the accounting for a financing component embedded in the upfront consideration received from Gilead in connection with the revised agreement for filgotinib.
For the year ended 31 December 2019, 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 fair values loss on the current financial investments reflects the effect of the re-measurement at fair value of our money market funds denominated in EUR at 31 December 2019. These fair value losses are mainly the result of the negative returns on the EUR denominated money market funds.