Details of the components of the cost of gross financial indebtedness are as follows:
| (in millions of euros) | 2019 | 2018 |
|---|---|---|
| Interest expenses on financing operations(2) | Interest expenses on financing operations (2)2019 (1,801) | Interest expenses on financing operations (2)2018 (1,765) |
| Change in the fair value of derivatives and hedges of liabilities | Change in the fair value of derivatives and hedges of liabilities 2019 (14) | Change in the fair value of derivatives and hedges of liabilities 2018 (93) |
| Transfer to income of changes in the fair value of cash flow hedges | Transfer to income of changes in the fair value of cash flow hedges 2019 (40) | Transfer to income of changes in the fair value of cash flow hedges 2018 102 |
| Net foreign exchange gain on indebtedness | Net foreign exchange gain on indebtedness 2019 49 | Net foreign exchange gain on indebtedness 2018 44 |
| COST OF GROSS FINANCIAL INDEBTEDNESS | COST OF GROSS FINANCIAL INDEBTEDNESS 2019 (1,806) | COST OF GROSS FINANCIAL INDEBTEDNESS 2018 (1,712) |
(1) Restated for the impacts of IFRS 5 concerning the discontinued E&P operations (see note 2.3).
(2) In 2019, interest expenses on financing operations include interest on the lease liability (IFRS 16) amounting to €(85) million at 31 December 2019.
The effect of unwinding the discount primarily concerns provisions for the back-end of the nuclear cycle, decommissioning and last cores, and long-term and post-employment employee benefits.
Details of the final discount effect are as follows:
| (in millions of euros) | 2019 | 2018 |
|---|---|---|
| Provisions for long-term and post-employment employee benefits | Provisions for long-term and post-employment employee benefits 2019 (931) | Provisions for long-term and post-employment employee benefits 2018 (875) |
| Provisions for the back-end of the nuclear cycle, decommissioning and last cores(2) | Provisions for the back-end of the nuclear cycle, decommissioning and last cores (2)2019 (2,116) | Provisions for the back-end of the nuclear cycle, decommissioning and last cores (2)2018 (2,480) |
| Other provisions and advances | Other provisions and advances 2019 (114) | Other provisions and advances 2018 (109) |
| DISCOUNT EFFECT | DISCOUNT EFFECT 2019 (3,161) | DISCOUNT EFFECT 2018 (3,464) |
(1) Restated for the impacts of IFRS 5 concerning the discontinued E&P operations (see note 2.3).
(2) Including the effect of discounting the receivable corresponding to amounts reimbursable by the NLF (see note 39.3).
The lower discount effect on nuclear provisions is explained by a 10 base point decrease in the real interest rate applied to nuclear provisions in France in 2019, compared to a 20 base point decrease in 2018.
Other financial income and expenses comprise:
| (in millions of euros) | 2019 | 2018 |
|---|---|---|
| Financial income on cash and cash equivalents | Financial income on cash and cash equivalents 2019 17 | Financial income on cash and cash equivalents 2018 13 |
| Gains/(losses) on other financial assets (including loans and financial receivables) | Gains/(losses) on other financial assets (including loans and financial receivables) 2019 248 | Gains/(losses) on other financial assets (including loans and financial receivables) 2018 254 |
| Gains/(losses) on debt and equity securities | Gains/(losses) on debt and equity securities 2019 878 | Gains/(losses) on debt and equity securities 2018 496 |
| Changes in financial instruments carried at fair value through profit and loss | Changes in financial instruments carried at fair value through profit and loss 2019 2,338 | Changes in financial instruments carried at fair value through profit and loss 2018 (995) |
| Other financial expenses | Other financial expenses 2019 (129) | Other financial expenses 2018 (274) |
| Foreign exchange gain/loss on financial items other than debts | Foreign exchange gain/loss on financial items other than debts 2019 (9) | Foreign exchange gain/loss on financial items other than debts 2018 (93) |
| Return on fund assets | Return on fund assets 2019 523 | Return on fund assets 2018 475 |
| Capitalised borrowing costs | Capitalised borrowing costs 2019 740 | Capitalised borrowing costs 2018 502 |
| OTHER FINANCIAL INCOME AND EXPENSES | OTHER FINANCIAL INCOME AND EXPENSES 2019 4,606 | OTHER FINANCIAL INCOME AND EXPENSES 2018 378 |
*Restated for the impacts of IFRS 5 concerning the discontinued E&P operations (see note 2.3).
“Gains/(losses) on debt and equity securities” in 2019 principally include:
Other financial income and expenses include changes in fair value on financial instruments, amounting to €2,338 million. This favourable development, in a context of rising markets, is explained by the €2,586 million change in the fair value of debt and equity securities (including €2,545 million on dedicated assets) and changes in the fair value of derivatives (€(248) million). In 2018, changes in financial instruments carried at fair value through profit and loss amounted to €(995) million, including €(989) million relating to dedicated assets.
The increase in capitalised borrowing costs relates to the increase in work in progress for Flamanville 3 and HPC.
