10. Other financial income/expenses

Notes to the consolidated financial statements

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.