7. Financial income/(expense)

Following is a breakdown of financial income/(expense):

(€ thousand) 2012 2011
Financial income 11,845 38,081
Financial expense (262,380) (364,654)
Net gains/(losses) on derivative financial instruments 34,455 (108,073)
Total financial income/(expense) (216,080) (434,646)

Financial income consisted of the following:

(€ thousand) 2012 2011
Financial income from Group companies and other related parties:    
-Interest income on current account with Fiat Finance S.p.A. 7,080 32,123
-Fee income for sureties and unsecured guarantees 4,302 4,699
-Other financial income 48 41
Total financial income from Group companies and other related parties 11,430 36,863
Financial income from third parties:    
-Interest income on bank and other deposits 5 6
-Interest income on tax credits 383 1,060
Total financial income from third parties 388 1,066
Currency translation gains/(losses) 27 152
Total financial income 11,845 38,081

Financial expense consisted of the following:

(€ thousand) 2012 2011
Financial expense to Group companies and other related parties:    
-Interest expense on current account with Fiat Finance S.p.A. 1,990 -
-Interest expense on loans from Fiat Finance S.p.A. 251,310 347,819
-Commissions and other charges payable to Fiat Finance S.p.A. 5,598 6,521
-Commissions and other charges payable to Fidis S.p.A. 1,760 471
-Interest and financial expense payable to other Group companies and other related parties 115 150
Total financial expense to Group companies and other related parties 260,773 354,961
Financial expense payable to third parties:    
-Interest expense and charges for the sale of receivables 567 815
-Interest costs on employee benefits 298 302
-Other third party interest and financial expense 742 896
Total financial expense to third parties 1,607 2,013
Net adjustment for fair value measurement of Fiat Industrial shares (see Note 11) - 7,680
Total financial expense 262,380 364,654

Net gains on derivative financial instruments of €34,455 thousand (net losses of €108,073 thousand for 2011) essentially related to a gain arising from fair value measurement of the equity swaps entered into as hedges on options granted to the Chief Executive Officer in 2004 and 2006 (see Note 18). The contracts in place at 31 December 2012 related to 16,920,000 Fiat and Fiat Industrial shares and the notional value of the swaps, based on the contractual exercise prices, was €153,803 thousand at year end. Although the swaps were entered into as hedges, they do not qualify for hedge accounting under IFRS and, accordingly, are classified as held for trading.

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