Reverse factoring, policy and disclosure of amounts involved

Ferrovial S.A. – Annual report – 31 December 2019

Industry: construction

4.3. SHORT-TERM TRADE AND OTHER PAYABLES (extract)
The detail of “Short-term trade and other receivables” at 31 December 2019 and 2018 is as follows:

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a) Trade payables
The detail of the trade payables at 31 December 2019 and 2018 is as follows:

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The line item “Trade Payables” increased by EUR 13 million compared to the balance recognised at 31 December 2018, mainly as the result of exchange rate effects (EUR 11 million) and changes in the consolidation scope and transfers for EUR 18 million. As regards other movements, the main change relates to trade payables subject to reverse factoring, that is balances pending payment to suppliers under reverse factoring arrangements (see Note 1.2.3.3 on accounting policies) amounting to EUR -37 million, the balance having decreased from EUR 209 million at 31 December 2018 to EUR 172 million in December 2019.

Group management considers that the carrying amount of trade receivables approximates their fair value.

1.2.3.3. Other line items in the balance sheet and income statement
Trade payables
Trade payables include the balances payable to suppliers under reverse factoring arrangements with banks.

These balances are classified as trade payables and the related payments as cash flows from operating activities, since the payments are made to the banks under the same conditions as those agreed with the supplier, the company bound by the obligation to make payment does not agree an extension with the financial institutions beyond the due dates agreed with the supplier, the cost of the reverse factoring is paid by the supplier, and there are no special guarantees to secure the payments to be made.