Agfa-Gevaert N.V. – Annual report – 31 December 2018
19. RECEIVABLES UNDER FINANCE LEASES
Lease agreements in which the other party, as lessee, is to be regarded as the economic owner of the leased assets give rise to accounts receivable in the amount of the discounted future lease payments. These receivables amounted to 94 million Euro as of December 31, 2018 (2017: 86 million Euro) and will bear interest income until their maturity dates of 10 million Euro (2017: 8 million Euro).
As of December 31, 2018, the impairment losses on the receivables under finance leases amounted to 2 million Euro (2017: 1 million Euro).
The receivables under finance leases are as follows:
The Group leases out its commercial equipment under finance leases mainly via Agfa Finance (i.e. Agfa Finance NV, its subsidiaries, Agfa Finance Corp. and Agfa Finance Inc.) and via Agfa sales organizations in the US, New Zealand, Australia and South Africa.
At the inception of the lease, the present value of the minimum lease payments generally amounts to at least 90% of the fair value of the leased assets.
The major part of the leases concluded with Agfa Finance typically run for a non-cancellable period of four years. The contracts generally include an option to purchase the leased equipment after that period at a price that generally lies between 2% and 5% of the gross investment at the inception of the lease.
Sometimes, the fair value of the leased asset is paid back by means of a purchase obligation for consumables at a value higher than its market value, in such a way that this mark-up is sufficient to cover the amount initially invested by the lessor.
In these types of contracts the mark-up and or the lease term can be subject to change.
Agfa Finance offers its products via its subsidiaries in France and Italy and its branches in Europe (Spain, Switzerland, Benelux, Germany, UK and the Nordic countries), via Agfa Finance Corp. in the US and Agfa Finance Inc. in Canada. As of December 31, 2018, the present value of the total future lease payments before impairment losses for Agfa Finance amounted to 93 million Euro (2017: 85 million Euro).
Agfa sales organizations in the US, Australia, New Zealand and South Africa offer customer financing of graphical equipment with an average remaining term of 12 months. As of December 31, 2018, the present value of the total future lease payments before impairment losses for these sales organizations amounted to 1 million Euro (2017: 1 million Euro).
During 2018, the Group has sold receivables under finance lease amounting to 1.5 million Euro (2017: no sales).