In the voestalpine Group, trade receivables are sold monthly to various banks on a revolving basis. In this context, there are four different types of factoring agreements.
Under the first type of factoring agreement, trade receivables totaling EUR 1,086.7 million (March 31, 2021: EUR 760.7 million) were sold to various banks. Receivables covered by credit insurance were assigned to banks in an amount corresponding to 100% of the nominal value, with the acquiring banks assuming the risk of default. Any claims arising under the credit insurance are assigned to the acquiring bank. The selling Group company only assumes liability for default up to—generally—9% of the retention level under the credit insurance. As of the reporting date, the maximum risk associated with the liability for default was EUR 97.8 million (March 31, 2021: EUR 76.1 million). The liability for default corresponds to the theoretical maximum loss. The probability of needing to fall back on this liability is extremely low. The fair value of this risk is assessed at EUR 0.2 million (March 31, 2021: EUR 0.0 million). The receivables are derecognized in full in accordance with the provisions of IFRS 9 due to the transfer of the material risks and opportunities as well as control to the acquiring party.
Under the second type of factoring agreement, uninsured trade receivables of EUR 318.9 million (March 31, 2021: EUR 241.6 million) were sold. The acquiring bank assumes 100% of the default risk. All of the receivables are fully derecognized. With the exception of the capitalized service fee mentioned below for the administration of the receivables, there is no ongoing commitment.
Under the third type of factoring agreement—introduced in October 2014—both insured and uninsured trade receivables of EUR 132.5 million (March 31, 2021: EUR 99.5 million) were sold. Any claims arising under the credit insurance were assigned to the acquiring bank. At the time the receivables were sold, loss reserves of 0.9% and dilution reserves of 1.6% (with reference to the sold receivables) were deducted from the purchase price. The dilution reserves totaling EUR 2.1 million (March 31, 2021: EUR 1.6 million) for receivables sold as of the reporting date concern claims to discounts, bonuses, etc. and are posted as other receivables. The carrying amount corresponds to the fair value. A loss reserve to cover any defaults in the amount of EUR 1.2 million (March 31, 2021: EUR 0.9 million) for receivables sold as of the reporting date was posted as an expenditure, which is reversed in the absence of any defaults. The theoretical maximum loss is limited to the loss reserve. The receivables are derecognized in full in accordance with the provisions of IFRS 9 due to the transfer of the material risks and opportunities as well as control to the acquiring party.
Under the fourth type of factoring agreement, both insured and uninsured trade receivables of EUR 38.3 million (March 31, 2021: EUR 40.0 million) were sold. Any claims under the credit insurance were assigned to the acquiring bank. For bad debts, a “first loss reserve account” was funded in the amount of EUR 0.3 million for 12 months by the selling Group company. The first loss reserve account was EUR 0.3 million (March 31, 2021: EUR 0.3 million) as of the reporting date and was reported as cash. The carrying amount corresponds to the fair value. The theoretical maximum loss is limited to the amount of the first loss reserve account. Due to the transfer of the material risks and opportunities as well as control to the acquiring party, the receivables were derecognized in full in accordance with the provisions of IFRS 9.
Under all of the types of factoring agreements, the payments received from customers during the period between the last sale of receivables and the reporting date are recognized on an accrual basis in other current financial liabilities.
The administration of receivables for all types of factoring contracts remains with the respective Group companies. For the receivables sold, as of March 31, 2022, a total service fee of 0.15% of the sold receivables of EUR 2.4 million (March 31, 2021: EUR 1.7 million) was recognized in other provisions. The carrying amount corresponds to the fair value of the ongoing commitment.
