10. Other financial income/expenses
The following table summarizes other financial income and expenses for the years ended 31 December 2020 and 2019.
|
Year ended 31 December |
|
(thousands of €) |
2020 |
2019 |
Other financial income: |
|
|
Interest income |
10,030 |
14,305 |
Effect of discounting long term R&D incentives receivables |
93 |
93 |
Currency exchange gain |
4,697 |
775 |
Fair value gain on financial assets held at fair value through profit or loss |
2,397 |
5,355 |
Fair value gain on current financial investments |
- |
611 |
Gain upon sale of financial assets held at fair value through profit or loss |
- |
2 |
Other finance income |
1,450 |
248 |
Total other financial income |
18,667 |
21,389 |
|
|
|
Other financial expenses: |
|
|
Interest expenses |
(9,389) |
(1,268) |
Effect of discounting long term deferred income |
(16,278) |
(6,900) |
Currency exchange loss |
(110,416) |
(47,720) |
Loss upon sale of financial assets held at fair value through profit or loss |
(88) |
- |
Fair value loss on current financial investments |
(15,901) |
(3,700) |
Other finance charges |
(773) |
(380) |
Total other financial expenses |
(152,844) |
(59,968) |
|
|
|
Total net other financial expenses |
(134,177) |
(38,579) |
The currency exchange loss in 2020 of €110.4 million primarily consisted of an unrealized exchange loss of €106.4 million on deposits and current financial investments held in U.S. dollars, as compared to a realized currency exchange loss in 2019 of €34.9 million on the U.S. dollars upfront payment from Gilead and an unrealized exchange loss in 2019 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.
Net currency exchange loss amounted to €105.7 million for the year ended 31 December 2020, compared to a net currency exchange loss of €46.9 million for the year ended 31 December 2019.
Interest expenses were related to interests on term deposits, treasury bills that came to maturity and on leases of buildings and cars. Other financial expense for 2020 also included €16.3 million of costs (€6.9 million for the year ended 31 December 2019) linked to the accounting under IFRS 15 for a financing component embedded in the upfront consideration received from Gilead in connection with the revised agreement for filgotinib.
Interest income was related to interests on term deposits, notice accounts and current financial investments.
For the year ended 31 December 2020, 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 value loss on the current financial investments reflects the interest on the treasury bills which have not yet expired and the effect of the re-measurement at fair value of our money market funds on 31 December 2020. These fair value losses are mainly the result of the negative returns on the EUR denominated money market funds.