Financial income is broken down as follows:

(in thousands of euro) 
  2011 2010
Interests 30,156 22,258
Other financial income 8,652 11,506
Fair value measurement of currency derivatives 15,343 -
Fair value measurement of other derivative instruments 2,522 -
  56,673 33,764


The fair value measurement of currency derivatives relates to forward purchases/sales of foreign currencies to hedge commercial and financial transactions, in accordance with the Group foreign exchange risk management policy. For transactions open at the end of the year, the fair value is determined using the forward exchange rate at the reporting date. Fair value measurement is made up of two elements: the interest component linked to the interest rate spread between the two currencies subject to the individual hedges, a net hedging cost of euro 13,854 thousand, and the exchange rate component, a net gain of euro 29,197 thousand. When comparing this last amount with net losses on exchange rates included in financial expenses, totalling euro 33,113 thousand, net foreign exchange gains/(losses) are in substantial balance.

The fair value measurement of other derivative instruments (see also note 28 “Derivative financial instruments”) mainly consists of:

  • euro 4,142 thousand for the positive measurement of the interest rate swaps made by Pirelli & C. S.p.A. on a notional value of euro 125 million, for which fair value hedge accounting was adopted;
  • negative euro 2,454 thousand for reclassification in the income statement of losses that were previously accumulated in equity and associated with derivative instruments for which hedge accounting was interrupted (euro 5,386 thousand at December 31, 2010);
  • positive euro 1,122 thousand for the premature unwinding of certain derivative contracts;
  • negative euro 288 thousand for the ineffective part of derivatives designated as hedging instruments.