10. Other financial income/expenses
The following table summarizes other financial income and expenses for the years ended 31 December 2021 and 2020.
|
Year ended 31 December |
|
|---|---|---|
(thousands of €) |
2021 |
2020 |
Other financial income: |
|
|
Interest income |
2,865 |
10,030 |
Effect of discounting long term R&D incentives receivables |
93 |
93 |
Currency exchange gain |
60,727 |
4,697 |
Fair value gain on financial assets held at fair value |
- |
2,397 |
Fair value gain on current financial investments |
6,763 |
- |
Other finance income |
100 |
1,450 |
Total other financial income |
70,548 |
18,667 |
Other financial expenses: |
|
|
Interest expenses |
(11,656) |
(9,389) |
Effect of discounting long term deferred income |
(9,289) |
(16,278) |
Currency exchange loss |
(4,235) |
(110,416) |
Fair value loss on financial assets held at fair value |
(4,919) |
- |
Loss upon sale of financial assets held at fair value |
- |
(88) |
Fair value loss on current financial investments |
- |
(15,901) |
Other finance charges |
(812) |
(773) |
Total other financial expenses |
(30,911) |
(152,844) |
|
|
|
Total net other financial income/expenses (-) |
39,638 |
(134,177) |
The currency exchange gain in 2021 of €60.7 million primarily consisted of an unrealized exchange gain of €56.6 million on cash and cash equivalents held in U.S. dollars, as compared to an unrealized exchange loss in 2020 of €106.4 million on cash and cash equivalents and current financial investments held in U.S. dollars. As from 2021, the currency exchange results on the current financial investments (an exchange gain of €16.3 million in 2021) are reported, together with the other fair value results on current financial investments, on the line fair value gain (or loss) on current financial investments. 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 gain amounted to €56.5 million for the year ended 31 December 2021, compared to a net currency exchange loss of €105.7 million for the year ended 31 December 2020.
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 2021 also included €9.3 million of costs (€16.3 million for the year ended 31 December 2020) 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 2021, fair value loss on financial assets held at fair value through profit or loss consisted of negative 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, and of an impairment loss on a participation in a non-listed company. The fair value gain on the current financial investments in 2021 reflected the positive exchange differences booked on these current financial investments, compensated by 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 2021. These re-measurement losses were mainly the result of the negative returns on the EUR denominated money market funds.