Credit insurance and letters of credit help avert unnecessary credit losses, especially on exotic export markets.Most SMEs engaged in exports have rather weak protection against potential credit losses.According to the latest SME Barometer Survey, 15 per cent of export companies use credit insurance to secure their sales receivables. Nine per cent of respondents relied on letters of credit with payment time, while the same percentage used letters of credit at sight.Respondents were allowed to tick more than one answer to questions about financial instruments in export trade. Nearly 6,000 SMEs responded to the barometer published in mid-September. One in five engaged in exports or business abroad. Eeva-Maija Pietikäinen, Head of Trade Finance at Finnvera, recommends that SMEs secure their sales receivables, especially in what are known as exotic countries.“Credit insurance is the simplest means of protection and particularly well suited to continuous, short-term trading. We are also able to provide one-off policies, that is, insurance for a single transaction – something very important for small actors,” Pietikäinen says.Finnvera can grant credit insurance only for countries that are not encompassed by the EU rules on State subsidies.The insurance also includes a self-risk portion of ten per cent and the receivables must be uncontested.“The company can apply for compensation from Finnvera when the payment is 90 days overdue,” Pietikäinen explains.Dozens of destinationsA letter of credit is also suitable for protecting companies in short-term transactions. In a letter of credit, the buyer-customer’s bank undertakes in writing to pay the purchase price to the seller.Pietikäinen sees it as a challenge that some countries do not necessarily have a bank that could assume the responsibility for a letter of credit.“One answer is to use pre-payment, which means that at least some of the purchase price is paid upfront. This procedure can be applied, in particular, in the most exotic countries,” Pietikäinen says.Finnvera has commitments in 90 countries, half of which are classified as exotic.Raija Rissanen, Vice President, Country and Bank Risks, at Finnvera, bases her definition of an exotic country on distance, culture and differences in operating environment. The most exotic destinations where Finnish companies export their products backed by Finnvera’s guarantees include Burkina Faso, Trinidad & Tobago, and Malawi.Besides countries in Africa and South and Central America, the list contains countries in Asia and the Middle East.“Most of our commitments concern buyer credits. This means that the credit is granted directly to the Finnish exporter’s buyer-customer abroad. The bank provides the financing and Finnvera shares the risk with the bank. Such credits are often worth over a hundred million euros. Credit insurance and letters of credit are typically used for smaller transactions,” Rissanen explains.FACT: Protection mechanisms for SMEs It pays for SMEs to use secured payment terms when doing business, or to protect their sales receivables, in order to avoid credit losses. The most common protection mechanisms are credit insurance, letters of credit and the Bill of Exchange Guarantee. Credit insurance: Finnvera grants credit insurance directly to the export company. The exporter signs an agreement with Finnvera. The insurance is suited to continuous, short-term trading.EU legislation prohibits Finnvera from granting credit insurance for exports to European countries and a few countries outside Europe. See the list here.If the risks are realised, the insurance includes a self-risk portion of ten per cent. The company can seek compensation after a payment delay of 90 days provided that the claim is uncontested.Credit insurance also suits small transactions: For example, Finnvera has credit limits of EUR 10,000.Letter of credit: A letter of credit means that the buyer-customer’s bank undertakes in writing to pay the purchase price to the seller, i.e. the bank issues the letter of credit. Similarly, the seller has an agreement with its own bank, which confirms the letter of credit. The bank, in turn, can share the risk associated with a foreign bank with Finnvera by applying for Finnvera’s Letter of Credit Guarantee. In all cases, the exporter does not necessarily know that a Letter of Credit Guarantee has been used.Bill of Exchange Guarantee: A Bill of Exchange Guarantee is ideal for fairly small capital goods transactions and continuous exports.The bill of exchange serves both the exporter and the buyer because the exporter is paid in cash while the buyer is given payment time. Finnvera’s Bill of Exchange Guarantee, in turn, protects the bank from any credit losses that might arise.The exporter applies for the guarantee from Finnvera and submits credit data and financial statements on both the buyer and the guarantor, if any, over the past three to four years.It is essential that the financing is planned well in advance before the export transaction. In this way it is possible to select the payment method that suits each deal.Read more about the Credit Risk Guarantee and the Export Receivables GuaranteeAlso, read more about the Bill of Exchange GuaranteeText: Kimmo Koivikko
A review of environmental risks also benefits Finnish export enterprises.Finnvera conducts an environmental review of all export projects undertaken by Finnish enterprises where the financial institution’s liabilities exceed EUR 10 million and the repayment period of the loan is at least two years.The recommendations have come from the OECD, and all OECD export credit agencies comply with them.When conducting an environmental review, Finnvera’s experts strive to ensure that the foreign investor adheres to the host country’s local legislation and meets international standards. The investor bears the principal responsibility for the background study. According to Lauri Etelämäki, Environmental Adviser at Finnvera, a review of environmental risks is standard practice and, at the same time, an advantage to Finnish export enterprises as it helps to avoid unnecessary damage to reputation.“Exporters are helpful and give us information about the investment. Sensitive areas involving, for instance, poor population groups or endangered plant or animal species, may exist anywhere in the world,” Etelämäki says.An environmental review encompasses the whole project even when export financing applies only to an individual delivery of equipment.Virve Tulenheimo, Finnvera’s second Environmental Adviser, emphasises that on the whole, an investment is not turned down because of environmental assessment.“The financier has the right to set terms for the credit agreement. Projects are so large that the investor usually wants to get things right,” Tulenheimo points out.Four different categoriesThere are four categories for environmental assessment: Categories A, B, C and non-project.Finnvera receives a few Category A projects per year. Category A means that the investment may involve significant environmental and social risks in the host country.“Examples are pulp mill projects, power plants and mines established abroad. In general, Finnish companies deliver larger sets of equipment for mills and plants,” Tulenheimo explains.She says that it takes months to assess a Category A project.- “We also make an effort to visit the project site. The final guarantee decision won’t be made until afterwards,” says Tulenheimo.The small number of Category A environmental reviews indicates that Finnish companies have not gained access to large international industry investments. As a rule, companies use export credit guarantees as protection against potential credit losses.“It has been quieter in recent years. On the other hand, projects are increasingly massive. Ships and oil rigs have been excluded from the review, but we plan to include them in the future,” Etelämäki explains.The second highest environmental category, or Category B, includes, among others, power plants of less than 140 megawatts. Hospitals and mobile phone manufacturing plants are examples of Category C. Finnvera conducts 5 to 10 reviews for Category B per year and dozens of reviews for Category C.“Category B is the most difficult to assess, because the background materials are diverse. Projects in Category C have minor environmental impacts and don’t require background studies,” says Tulenheimo.The fourth environmental category, non-project, has a misleading name. It generally consists of replacement investments.Text: Kimmo KoivikkoFACT: What classification? By using export credit guarantees, exporters and providers of financing for exports usually want to protect themselves against credit losses that may arise when a foreign customer is granted payment time. If needed, it is also easier to arrange financing for a foreign customer to purchase the product if Finnvera covers some of the credit risks Finnvera grants guarantees for countries with adequate credit standing and assesses the creditworthiness of buyers and guarantors If Finnvera’s liabilities for guarantees exceed EUR 10 million or the loan repayment period is at least two years, the project always undergoes an environmental and social impact review In general, Finnvera’s project review encompasses the whole project even when export financing is granted, for instance, for an individual delivery of equipment The owner of the project company or the main supplier for the project is responsible for ensuring that the background studies are made or commissioned. The applicant for export financing is responsible for supplying the information to Finnvera Projects are divided into four categories: A, B, C and non-project Categories A and B: The applicant must provide Finnvera with a report of the assessment of environmental and social impacts. In Category A, impacts are assessed more broadly C and non-project: No background studies are needed A prerequisite for granting financing for Category A projects is that the information on environmental and social impacts is published 30 days before Finnvera signs the agreement on export financing. The relevant parties are asked to give their consent for publication. Read more about export credit guarantees.
The number of growth-oriented SMEs has increased since last spring, and the number of enterprises with a strong desire to grow has already reached the level that prevailed before the-financial crisis. Yet problems exist in the application for financing.The positive trend observed already last spring has continued and among SMEs, economic expectations for the near future are considerably more optimistic than before. The same trend is also visible in growth orientation: 11 per cent of enterprises already say that they have a strong desire to grow while 39 per cent seek growth according to their possibilities.Internationalisation is seen as the key avenue for growth. The number of SMEs with a strong desire to grow has already reached the level that prevailed before the financial crisis.The availability of external financing has not changed. Slightly more SMEs than before plan to apply for financing within the next year. On the other hand, one in ten respondents reported that they would have needed financing during the past 12 months but had not applied for it. Nor has the will to apply for internationalisation financing risen at the same rate as growth orientation.“About 80 per cent of enterprises that had applied for financing said that the terms or availability of financing had no negative impact on the implementation of projects. Since as many as one in ten do not apply for financing because they assume that availability, in particular, is poor, we must communicate to SMEs ever more clearly that financing is indeed available for profitable projects,” says Katja Keitaanniemi, Executive Vice President, SMEs at Finnvera.However, a positive signal of the functioning of the financial market is that 46 per cent of the enterprises that had not applied for financing – despite their needs – reported that they had in any case implemented their project according to plans.Expectations for exports and investments on the riseThe respondents to the SME Barometer Survey also have positive expectations for exports, and exports are assumed to increase steeply in all sectors. Financing is now sought for investments slightly more often than before, while the number of applications for working capital has decreased.The Federation of Finnish Enterprises, Finnvera and the Ministry of Employment and the Economy jointly conduct an SME Barometer Survey twice a year. The goal is to study the operations and economic environment of small and medium-sized enterprises. The barometer for autumn 2016 is based on responses from over 6,000 SMEs.SME Survey on The Federation of Finnish Enterprises websiteAdditional information:Katja Keitaanniemi, Executive Vice President, SMEs, tel. +358 29 460 2888Jonna Myllykangas, Communications Officer, tel. +358 29 460 2740
The world’s largest power plant fuelled solely by biomass will be built near the town of Middlesborough, England. The circulating fluidised bed boiler and the flue gas cleaning system are delivered by Amec Foster Wheeler Energia Oy. Finnvera’s contribution to the financing of the project is GBP 100 million, or roughly EUR 120 million.The construction of the power plant is estimated to cost approximately GBP 650 million, or about EUR 780 million.Preliminary construction work for the MGT Teesside plant will begin within the next few months. Commercial operations are due to start during the first quarter of 2020. The 299 MW power plant will be fuelled solely by clean wood pellets and chips.“We’re glad of this opportunity to contribute to the export of Finnish renewable energy technology. Finland has solid expertise in this type of renewable energy technology. Elsewhere in the world – surprisingly– it is still often perceived as something new,” says Tuukka Andersén, Vice President and Head of Underwriting at Finnvera.“Finnvera’s participation in the project enabled long-term financing of 15 years. This is a key factor if a project of this type is to succeed,” he adds.Jaakko Riiali, VP, Commercial Operations at Amec Foster Wheeler Energia Oy, the company delivering the power plant boiler, sees the project as a good bridgehead for large biomass boilers of the power company class in Central Europe. In addition, the project serves as an example for more northern countries as well, showing that biomass as well as fossil fuels can be used to fuel large baseload plants. “Finnvera’s inclusion in the financial arrangements gave stability to the negotiations and made it considerably easier to reach an agreement on project financing,” Riiali says.Fuel from responsibly managed forestsIn order to ensure the sustainability of fuel supply, the biomass-fuelled power plant uses fuel acquired from FSC Forest Management certified forest areas. FSC certification guarantees that the fuel is derived from responsibly managed forests.The price paid by the British government for electricity produced using clean biomass is considerably higher than the normal price of electricity. The purpose is to support the attainment of the targets set by the UK Government and the European Union for CO2 emissions and to promote the objective of reducing coal combustion at both small and large power generation units.Additional information:Tuukka Andersén, Vice President, Head of Underwriting, Finnvera, tel. +358 29 460 2688Jaakko Riiali, VP, Commercial Operations, Amec Foster Wheeler Energia Oy, tel. +358 40 585 1590
After a long decline, investments by enterprises seeking growth on international markets seem to have picked up in the first half of the year. The information is based on applications for financing that Finnvera has processed during the first six months of the year.“I think this is a good signal showing that enterprises feel more confident about investing. The change is particularly significant because the growth is based on intangible investments, such as research and development, and on various corporate reorganisations,” says Katja Keitaanniemi, Executive Vice President, SMEs.Intangible investments have in recent years accounted for 2 to 3 per cent of internationalising enterprises’ projects financed by Finnvera. However, during the first half of the current year, their share almost doubled. The amount of financing needed for corporate reorganisations also nearly doubled when compared against previous years.Keitaanniemi stresses the importance of intangible investments for developing long-term competitiveness.“When operating on international markets, Finland’s problem has been the relatively small company size, which means that the resources available are also small. When the company size increases, there are more opportunities to invest in international growth.“No single region or sector explains the growth in investments. The probable reason is therefore an increase in general investment activity,” Keitaanniemi presumes.The surveys conducted by the Federation of Finnish Financial Services and the Confederation of Finnish Industries also corroborate the positive trend. Despite the increase in investments, the working capital required by growth is still the greatest single need for Finnvera’s financing.Links:Growth > InvestmentsGrowth > Business operations abroadFill in the contact request form
Contacts helped a health technology company to find a retailer. Outotec, in turn, has been doing business in Iran for over 40 years.Networks and contacts may be important in Finland, but in Iran they can be the lifeline of success.NewIcon, a Kuopio-based company specialising in automation solutions for medicine supply, was able to sign their first contract in Iran thanks to a good retailer. The following contracts also largely depend on the local retailer.According to Marketing Director Jori-Matti Savolainen of Kuopio-based NewIcon, good contacts helped the company to find the right retailer in Iran.“We were warned that everything proceeds slowly in Iran – especially as our customers are hospitals, that is, the public sector – and so we were surprised at how straightforward everything has been in comparison to other Middle Eastern countries,” says Jori-Matti Savolainen, Marketing Director of NewIcon.The company from Kuopio has customers the world over, for instance in Russia, Poland, Israel, the United Kingdom, the United Arab Emirates, Denmark and Sweden. However, most of the roughly EUR 5.5 million in turnover still comes from Finland.NewIcon can thank the Chairman of the company’s Advisory Board for finding the retailer.“Through the retailer’s contacts, our CEO was invited to Iran, to get to know our end customers. They were impressed that he actually came. At the turn of the year, we invited a delegation to Finland and showed them around at other health technology companies, too,” Savolainen reminisces.He is amazed at how much the Iranians know about Finland.“Thanks to Nokia, Finnish technology is appreciated. Our contacts also know of top-class Finnish surgeons we have never even heard of,” Savolainen says.In Iran for decadesThe history of Outotec, a listed company, differs somewhat from NewIcon. The company has been in Iran since 1973 – 43 years now.Adel Hattab, Executive Vice President, Markets Unit at Outotec, says that conducting business in Iran requires much time and presence.Adel Hattab, Executive Vice President, Markets Unit, says that their customers appreciate the fact that Outotec did not leave Iran even in hard times.“We have been open with respect to Iran and everything is done with security first. The trade embargo was a difficult period. We have big teams ensuring that we don’t sell anything inappropriate,” Hattab explains.Outotec’s projects are associated with the concentration processes of raw materials and the refining of metals. The company designs, builds and maintains equipment.Having visited Iran dozens of times, Hattab says that Iranians value interaction and bilateral relations.“They are demanding negotiation partners and shrewd in seeking good deals for themselves. People need to be known at all levels, including political decision-makers. As customers, Iranians are loyal,” Hattab lists.Savolainen of NewIcon agrees with Hattab’s characterisations. The Marketing Director says that their company has also had tough contract negotiations with their retailer.There are other differences in the business environment as well.“Patience is required in Iran and aggressive selling does not work. You need to talk about this and that with people. The first day you talk about sports and the family. It’s not until there’s a suitable moment on the second day when you start talking business,” Savolainen explains.Hitches in money transactionsAt NewIcon, assessment of the risks in the Iran deals was more about sufficient resources and economic risks.However, both Savolainen and Hattab name a risk that is shared by all companies: financing.“Investments don’t live up to their potential when the financial market is not functional. I hope that the bank system would recover and reach the same stage on average as elsewhere. Customers have big problems with letters of credit,” Hattab points out.He continues that the willingness of Western banks to take risks also depends on the United States’ attitudes towards Iran.Jori-Matti Savolainen of NewIcon advises Finnish companies to conduct their business in euros. Nor is it good to rely on any particular bank.“In Iran you should monitor which bank handles foreign transactions at any single time,” Savolainen advises.Text: Kimmo KoivikkoMore information:Credit risks in export tradeCountry classification
Different factors explain the success of small and large enterprises. According to studies, the company’s management is the most important factor for an SME. A large enterprise, in turn, has access to wider markets for management recruitment and, for instance, the option of transferring operations from one country to another to gain cost benefits. In consequence, for a large enterprise, the single factor having the highest correlation with the company’s success is simply its line of business. Since we at Finnvera have the opportunity to follow the stories of thousands of different enterprises and to observe the cause and effect relationships contributing to a company’s success – or sometimes, sad to say, its failure – I would claim that the owner is even more important for an SME than the management. Of course, these two are often the same person. But even when they aren’t, the owner has more direct influence over management selection and may intervene in the company’s day-to-day operations more than the owners of large corporations do. A good or a bad owner can be critical even for a large corporation – an example might be the revival of the Turku shipyard after its Korean owner was replaced by a German owner – but for an SME, the owner almost always has an absolutely pivotal role in the development and success of the Enterprise. Finnvera provides financing for over a thousand transfers of ownership each year. Statistics on the age structure of entrepreneurs reveal that the need for transfers of business to the next generation, and for business acquisitions, will continue at an exceptionally high level even for the next ten years. Surveys indicate that the principal bottlenecks are the matching of suitable buyers and sellers, accurate value determination and issues pertaining to taxation and law. Financing follows next. Together with enterprise organisations, Finnvera works actively to help eliminate all these bottlenecks. Throughout the country, we organise numerous events where buyers, sellers, experts in various fields and financiers can meet each other. Our goal is to ensure that as many enterprises as possible, after having been brought by their current owners along their own unique paths to this point in time, will find a good new owner who has the resources and the desire to continue in the future to the next success story! Pauli HeikkiläCEORead more about Finnvera's financing for transfers of ownership.
Next year Kazakhstan will also host the Specialised Expo 2017. Protection of sales receivables is important.Finland may have a long land border with Russia, but it cannot rival with Kazakhstan in Central Asia.The border shared by Kazakhstan and Russia is no less than 6,500 kilometres long, and the border with China is measures 1,500 kilometres. The former Soviet republic is the world’s largest landlocked country, whose most famous ‘resident’ is probably the bumbling TV reporter Borat created by comedian Sacha Baron Cohen.Yet laughs end abruptly when the Silk Road is mentioned. Under China’s leadership, the ancient trade route is seeing a new prosperity, and Kazakhstan has a central location as a transit country.China has invested much prestige and tens of billions of euros to give new life to the Silk Road. An indication of the massive scale of the project, known as ‘One Belt, One Road’, is the fact that the Silk Road connects 64 countries covering an area that is home to 4.4 billion people.The aim is to create frequent train and airline connections as well as a road network between Europe and Asia.“China acts as the engine. Since the projects are really big, it may prove difficult for Finnish companies to get a foot in the door. Working as a subcontractor might be a more suitable role,” says Outi Homanen, Senior Adviser at Finnvera.Foreign companies are needed at least when planning and implementing infrastructure, transport, logistics, and information and communications technology.Homanen continues the list for Kazakhstan.“Kazakhstan has identified sustainable development as its goal, and the government supports renewable energy projects, for example. In addition, know-how in cleantech, education and mining attracts interest,” she explains.Next year in the spotlightIn other respects, too, Finnish companies should take a closer look at Kazakhstan. The reason is the Specialised Expo 2017 to be held next year in Astana.Finland will have its own pavilion at the event. More information on this topic is available here.“Participation in the Expo will entail much positive visibility and new opportunities for Finland, especially in the cleantech sector,” Homanen believes.Despite the Expo and the opportunities brought by the Silk Road, Finnvera classifies Kazakhstan as a high-risk country.The decline in oil prices has almost halved export revenue and inflation is soaring at over ten per cent. The value of the currency collapsed last year but is now more stable. The difficult financial situation has also accentuated the role of State-owned companies.Partly for these reasons, Finnish companies are not a familiar sight in Kazakhstan.“The business environment is challenging. It may therefore be difficult to predict how companies will behave. In general, timetables stretch. On the other hand, cash may be found if there is an urgency. It is highly important to protect receivables, and we recommend that letters of credit be used,” says Homanen describing the situation.A letter of credit is a written undertaking given by the buyer’s bank for the payment of the purchase price to the seller.Homanen also mentions the political situation as an additional question mark. Kazakhstan has only had one president, Nursultan Nazarbayev.“It’s very uncertain what will happen after him. One must be prepared for major changes,” Homanen muses.FACT: Kazakhstan in figuresFinnvera’s country risk category for Kazakhstan is 6/7. Kazakhstan is an important exporter of oil and gas. The country is also rich in other natural resources. The country’s indebtedness has increased in step with the collapse of oil prices, which weakens the income flow.Kazakhstan’s political situation is currently relatively stable. Finnvera’s country exposure is about EUR 10 million. When assessing country risk categories, Finnvera cooperates with the OECD group of country risk experts.Kazakhstan is currently a member of the World Trade Organization (WTO).Gross domestic product: EUR 110 billion (2015). In 2014, the GDP was EUR 185 billion. Finland’s gross domestic product is EUR 207 billion (2015).Gross domestic product per capita: EUR 6,230 (2015). In 2014, the gross domestic product per capita was EUR 10,600. Finland’s gross domestic product per capita is EUR 37,827 (2015).Economic growth: Forecast 0.1–0.7% (2016). The growth rate was 1% in 2015 and 4.3% in 2014.Inflation: 13.6% (2015).Exports: About USD 46 billion (2015).Imports: About USD 30 billion (2015).Principal sectors: Oil and gas industry, ore and metal industry. Kazakhstan is a Top 20 oil producer country. Oil production averages around 1.5–1.6 million barrels per day, or roughly the same as Norway. The world’s average oil production is 80 million barrels per day.Currency, the Tenge: The exchange rate is 1 euro to 376 tenges.Finnish citizens can travel to Kazakhstan without a visa when they stay for a maximum of 15 days. The visa waiver is limited in time and expires at the end of next year.More information about Finnvera’s export credit guarantees is available here.Sources: Statistics Finland, World Bank, IMF, Asian Dev Bank, Focus Economics.Text: Kimmo Koivikko
A marked rise in Finnvera’s authorisations – performance slightly negativeDuring the period under review, the maximum amounts of export credits and export credit guarantees that Finnvera is authorised to grant were raised through legislative amendments. The main reasons behind the need to raise the authorisations were the steep rise in ship financing within the past few years and the increase in the volume of export projects undertaken for telecommunications and the forest industry. The Group’s performance for the first six months of the year was EUR 7 million in the red, owing to losses and provisions for losses in export credit guarantees. The negative result for the first six months of the year does not affect the realisation of the cumulative self-sustainability of Finnvera’s export credit guarantee activities.The need for funding increased alongside the greater demand for export financing sevices. The fixed-rate bond of EUR one billion issued by Finnvera in April was the company’s first euro-denominated bond with a maturity of ten years.In April, Finnvera and enterprise organisations launched a joint campaign to speed up transfers of ownership in SMEs. Various activation measures are applied to increase enterprises’ awareness of issues such as valuation and taxation. During the first half of the year, transfers of ownership financed by Finnvera showed a rise of 17 per cent when measured in euros.In line with the Government Programme, Finnvera introduced a new debt-based mezzanine financing product onto the market: the Growth Loan. The new product is intended for financing SMEs and midcap companies in major growth and internationalisation projects.Business operations and the financial trendDuring the period under review, demand for Finnvera’s export and special guarantees and export credits rose steeply on the previous year: 50 per cent and 90 per cent, respectively. In contrast, demand for SME and midcap financing fell by 17 per cent on the previous year.Although the demand for export and special guarantees rose, the offers given by Finnvera for export credit and special guarantees and for export credits fell by 76 per cent and 87 per cent, respectively. The reason for this was that some of the projects or their credit agreements were still being negotiated at the end of June. The amount of loans and guarantees granted to SMEs and midcap companies fell by 11 per cent when compared against the first half of 2015. Finnvera Group 1 Jan-30 June 2016 1 Jan-30 June 2015 Change % Offered financing, MEUR Loans and guarantees 483 541 -11 % Export credit guarantees and special guarantees 1 226 5 124 -76 % Export credits 477 3 601 -87 % 30 June 2016 30 June 2015 Change % Outstanding commitments, MEUR Loans and guarantees 2 322 2 285 2 % Export credit guarantees and special guarantees 16 896 17 436 -3 % Export credits 4 718 4 240 11 % 1 Jan-30 June 2016 1 Jan-30 June 2015 Change % Net Interest income both fee and commission income and expenses, MEUR 93 102 -8 % Operating profit, MEUR -7 56 -113 % Profit for the period, MEUR -7 55 -113 % 30 June 2016 30 June 2015 Change % Balance sheet total, MEUR 9 166 8 418 9 % Equity; MEUR 1 116 1 121 0 % - of which non-restricted reserves, MEUR 865 871 -1 % 30 June 2016 30 June 2015 Change % points Equity ratio, % 12,2 % 13,3 % -1,1 % Capital adequacy, Tier 2, % 18,9 % 19,6 % -0,7 % Cost-income ratio, % 30,6 % 28,3 % 2,3 % The Finnvera Group’s financial performance for January–June showed a loss of EUR 7 million, as against a profit of EUR 55 million the year before. The result was EUR 62 million less than for the first six months of 2015.The principal factors affecting the negative result during the first half of the year were the increased losses and provisions for losses recognised by the parent company, Finnvera plc, for export credit guarantees. Losses on export credit guarantees and provisions for losses together amounted to EUR 66 million (2 million). During the period under review it emerged that the Brazilian Oi S.A. Group poses a risk that, if realised, might cause a loss that is currently estimated at about EUR 55 million. In consequence, the provisions for losses were increased during the period. Provisions for losses are current estimates. Their amount may still change considerably as more detailed information is obtained.The result of EUR -7 million recorded for the parent company, Finnvera plc, during the first half of the year (56 million), was broken down as follows: Large Corporates, EUR -17 million (48 million); SMEs, EUR 10 million (8 million).During the 17 years that the company has been in operation, the Group’s performance has been positive for all financial periods and, since the early 2009, for all six-month periods, until the recently ended period of January–June 2016. The parent company’s export credit guarantee activities have also been cumulatively self-sustainable throughout the company’s operations, even considering the negative result for January–June. Finnvera Group H1/2016 H1/2015 Change Change *2015 MEUR MEUR MEUR % MEUR Net Interest income 27 28 -2 -6 56 Fee and commission income and expenses (net) 67 73 -7 -9 141 Gains/losses from items carried at fair value -10 -6 4 63 -21 Administrative expenses -22 -22 0 1 -44 Other operating expenses -3 -3 0 -5 -6 Impairment losses, guarantee losses -65 -14 51 352 -15 Loans and domestic guarantees -15 -72 -57 -79 -87 Credit loss compensation from the State 15 60 -45 -74 83 Export credit guarantees and special guarantees -66 -2 64 - -10 Operating profit -7 56 -63 -113 114 Profit for the period -7 55 -62 -113 111 Outlook for financingIt is expected that demand for export credit guarantees and financing provided by Finnvera will continue to increase. Measured in euros, demand will probably continue to focus on cruise vessels, telecommunications and forestry. An internationally competitive export financing system plays an important role in these sectors, owing to the large scale of individual investments.New export markets have opened up, for instance, in Iran and Argentina. With opening markets, public financing sources, such as Finnvera’s export credit guarantees, are important for the realisation of export transactions. Among countries where Finnvera is exposed to risk, the situation in Brazil, Turkey and Russia is expected to remain uncertain. This will pose challenges to enterprises operating in these countries. On the other hand, Brazil’s and Russia’s weakened local currencies reinforce the operating conditions of export companies active in these countries. This may boost interest in investments and may provide export opportunities for Finnish businesses. The result of the British referendum on exiting the EU is likely to cause uncertainty in Europe for several years.During the first half of 2016, demand for Finnera’s SME financing was slower than a year ago. The financing granted was also at a lower level than the year before. During the first half of the year, Finnvera prepared the adoption of the Growth Loan, a new mezzanine financing product, and was getting ready to serve as an intermediary organisation for the European Fund for Strategic Investments. Together with the recently adopted programme on transfers of ownership, these developments are likely to increase the demand for and granting of financing in the latter half of the year.According to the estimate made in early 2016, the financial performance for the current year is likely to fall below that for 2015. The negative result for the first six months of the year does not affect the realisation of the cumulative self-sustainability of Finnvera’s export credit guarantee activities.CEO Pauli Heikkilä:“Finnvera’s exposure figures have risen higher than ever before, and it is expected that demand for export credit guarantees and financing provided by Finnvera will continue to increase. It is important to ensure the functioning of our export financing system so that Finnish companies can compete over export deals on equally good financing terms as their competitors.With respect to SME financing, the growth in the volume of enterprise acquisitions has been gratifying. We shall continue our efforts to encourage transfers of ownership; the greater the number of companies that continue their operations, the better it is for the overall economy of Finland. New owners often bring development ideas and the wish to grow.The Team Finland network is under intense development. Improvement of the joint domestic service model will continue for the rest of the year. So far the feedback from customers within the scope of the service has been positive. Team Finland cooperation will get a boost in practice with the impending move of Finnvera, Finpro, Tekes and Finnish Industry Investment to joint premises in Team Finland House, in the Ruoholahti district of Helsinki.Finnvera’s statutory mission is to bear some of the credit risks that are inevitable in all export transactions. Some of these risks were realised during the first six months of the current year.”Half Year Report 1 Jan - 30 June 2016 (PDF)Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400 Ulla Hagman, Senior Vice President, CFO, tel. +358 29 460 2458
During its first year, Finnvera’s Start Guarantee attracted applications for 1,600 financing projects. An entrepreneur considers the guarantee convenient for start-ups.Both banks and entrepreneurs have found Finnvera’s Start Guarantee, which has been in use for a little over a year.According to Team Leader Leena Waarna, banks have submitted applications for Start Guarantees to Finnvera for 1,600 financing projects.The bank applies for the Start Guarantee on behalf of the entrepreneur. In other words, the entrepreneur only deals directly with his own bank. Finnvera’s guarantee coverage can be at most 80 %. However, the total sum of Start Guarantees granted to one enterprise may not exceed EUR 80,000.“The Start Guarantee is also well suited for smaller projects, for instance from 30,000 to 50,000 euros in size. Therefore, entrepreneurs should not be discouraged even if they don’t have proper collateral for the bank,” Waarna says.She encourages starting entrepreneurs to contact local advisory services first. They have information, for instance, on competition in both the region and the sector involved.Companies’ initial costs and financing needs vary widely.A few tens of thousand euros is enough for the initial working capital for example in the service sector, whereas considerably more money is needed for investments in projects involving production.“Entrepreneurs are generally pretty good at calculating their expenses in advance. In contrast, turnover forecasts are easily over-optimistic. It is expected that turnover will start to accumulate quickly, and payment schedules are drawn up accordingly,” Waarna says.“Realistic overall calculations and correctly dimensioned credit with its repayment periods help the fledgling entrepreneur to avoid the worst pitfalls,” she continues.A faster startTuure Parkkinen, an entrepreneur from Helsinki, praises the Start Guarantee lavishly.“The Start Guarantee was unusually easy because the bank filed the application for us. From the entrepreneur’s perspective, there was little red tape. In the end, we decided to withdraw 25,000 euros,” Parkkinen reminisces.Together with his partners, he founded ResQ Club late last November. Using the digital service developed by the enterprise, consumers receive information on food that is about to go to waste in restaurants, bakeries, cafés and hotels.The service gives consumers the opportunity to buy food at discounts exceeding even 50 per cent. Restaurants, in turn, can reduce their waste.Parkkinen says that the founders had little savings when establishing their enterprise.“Even if we ourselves worked without pay, some expenses are inevitable at the start. Now we were able to kick off more quickly.”From the very start, ResQ Club’s services have attracted interest among both investors and consumers.With private individuals and venture capitalists as new investors, the company issued a financing call of over 300,000 euros. At the same time, ResQ Club announced that the service is also being launched in Sweden.The service has about 20,000 registered users and 150 partner suppliers.FACT: What’s a Start Guarantee? The Start Guarantee is intended for start-ups and enterprises that are no more than three years old. The enterprise must be owned by private individuals. The Start Guarantee is particularly well suited for small-scale financing, especially if the entrepreneur has insufficient collateral for the bank. Finnvera’s guarantee coverage is at most 80 per cent. The total amount of Start Guarantees granted to an enterprise cannot exceed 80,000 euros, in which case the maximum loan sought from a bank under the Start Guarantee is 100,000 euros. For collateral, the principal shareholders lodge special guarantee undertakings that must cover at least 25% of Finnvera’s guarantee sum. The enterprise presents the financing application to its own bank. Thereafter, the bank assesses the credibility of the business and checks the calculations and the applicants’ creditworthiness before granting financing. The bank submits the application for the Start Guarantee to Finnvera on behalf of the enterprise. The Start Guarantee is intended especially for the working capital and investment needs of start-up enterprises. It cannot be used for financing company acquisitions or purchases of business premises. The Start Guarantee may also be one part of the enterprise’s aggregate of loans. The maximum repayment period for loans under the Start Guarantee is ten years. More information about the Start Guarantee is available here.More financing solutions for setting up a company are found here.Text: Kimmo Koivikko
In South America, the Argentinian economy is gradually opening up for foreign business again. Finnvera’s experts see opportunities for Finnish companies in Argentina.Argentina’s economy collapsed at the turn of the millennium and, owing to unpaid debts, the country remained outside international financial markets for many years. However, the new conservative administration has taken quick action to resolve any unsettled disputes with Argentina’s creditors. In consequence, the country is gradually able to renew its relations with international providers of financing. The new Government has also lifted the restrictions on foreign trade.According to Jussi Haarasilta, Executive Vice President at Finnvera, Argentina is gradually becoming a potential export country for Finnish companies.“Necessary reforms were neglected during Argentina’s long period of isolation. For instance, the infrastructure is in urgent need of development, and that’s where Finns might well have a lot to offer in the coming years. This could mean, for example, telecommunication and electricity networks, mining, wood processing and the construction of harbours,” Haarasilta lists.“In short, the traditional Finnish export portfolio is well suited to Argentina’s future needs.”Haarasilta stresses that with its population of 43 million, Argentina is now becoming an attractive market for many companies.“Competition will be stiff for certain,” he predicts.“Realisation of large projects calls for financing, which in turn requires that the counterparty is creditworthy. Argentina was outside export credit guarantees for years. At present, Finnvera can support the financing of trade and is investigating how to guarantee long-term credits,” Haarasilta says.“It pays to look into partners’ backgrounds”Many companies have already contacted Finnvera to inquire about the situation in Argentina. Senior Adviser Mika Relander visited Argentina recently and underlines that even if Argentina offers promising opportunities, companies considering business there should still exercise caution.“The operating environment continues to involve risks, especially in the public sector, as the country’s economy is still rather weak and will require many long-term reforms. Good examples are the large subsidies for electricity and petrol prices that need to be dismantled before the public economy can be balanced.”“Otherwise, too, it pays to investigate customers’ solvency and the partners’ backgrounds in advance together with Finnvera,” Relander says.However, according to Relander, Finnvera always strives to seek and tailor financing solutions that would make the export transaction possible.“Still, in the case of Argentina, we also need to be rather cautious,” he adds.Additional information:Jussi Haarasilta, tel. +358 29 460 2601, jussi.haarasilta (at) finnvera.fiMika Relander, tel. +358 29 460 2725, mika.relander (at) finnvera.fi
Recruiting the right people and the owners’ capacity to take risks are crucial for a company’s growth.Everyone makes mistakes, but you should learn from them, growth entrepreneur Lennu Keinänen urges.Keinänen says that he himself has stepped on all possible mines, from market analyses to financing. Despite that, he has taken part in founding nine enterprises. Of these, the best known is Paytrail, a provider of online payment services. The Danish company Nets acquired 80 per cent of the enterprise two years ago.However, Keinänen identifies the team and its importance as the biggest mine.“Team members must have sufficiently diverse backgrounds. It’s not necessarily a good idea to hire your course mate,” Keinänen points out.In his view, building the right team can start once the entrepreneur understands what he or she is actually doing.“Corporate culture must be created first. In the end, culture is shaped only through people, but its desired state must be known so that the entrepreneur can make the right recruitment choices.”Despite his young age, Keinänen has already been an entrepreneur for 20 years. He set up his first enterprise, in Kuopio, at the age of 15. Growth, internationalisation and financing are all interlinked. Growth has always been at the core of Keinänen’s enterprises as well.“Growth calls for bigger thinking, that is, leaving one’s own sandbox. One of the worst things is underfunding. Growth is always more expensive than you had originally thought,” says Keinänen.He agrees with Kim Väisänen, a successful entrepreneur who says that a company has only one crisis and that is the cash crisis.From bikinis to a growth trackStudies indicate that young people are eager to start their own enterprises. Young entrepreneurs have recently gained visibility otherwise, too, with the selection of the Young Entrepreneur of the Year in Jyväskylä last Friday.Last year this recognition went to Varusteleka, which has also sought growth outside Finland.One of the finalists this year was Biancaneve of Tampere, a maker of individual sports garments. Biancaneva was ranked third in the national competition. Entrepreneur Elina Loueranta acknowledges that she has also stepped on various mines.“My dream was only to make clothes. At first I didn’t even calculate any profit margins,” Loueranta says.The awakening came three years ago at a growth camp where other companies were making plans for internationalisation. “We were so small next to the others. One company was selling a million screws to Russia and we were talking about bikinis. We were asked if we really believed that we could grow and become international. It didn’t occur to me to answer that each bikini cost 600 euros,” Loueranta recalls.Not even all of the team members believed in growth. The entrepreneur says that one team member aroused doubt in the others, too.Intervening in the situation required a lot, but it was necessary.“I stood up from behind the sewing machine and started to look at the big picture,” Loueranta says.With its turnover of about half a million euros, Biancaneve is living a strong growth phase. This summer, the company is launching a webcam service that will allow customers to order Biancaneve’s tailored bikinis from anywhere in the world.At present, growth is brought by a luxury-focused sportswear collection designed for women. The marketing of this product line also takes the entrepreneur outside Finland.“We wanted to go abroad and we were asked whether we were ready to travel. Now this has come to pass. Relations can only be created face to face,” Loueranta concludes.FACT: Ways to break the glass ceiling on growthAccording to research, one out of five enterprises has hit the glass ceiling on growth.The main factors keeping a glass ceiling on growth are sales and marketing skills, the availability of competent staff, the acquisition of financing and the capacity of owners to take risks.Growth entrepreneurs believe that the glass ceiling can be broken if the management or the owners have sufficient capacity to take risks. That is the most important single way. Other important ways are product and service innovations, sales and marketing expertise, the availability of competent personnel and customer demand.Obtaining adequate financial resources is another tool for breaking the glass ceiling.This information is based on the Growth Enterprise Survey, conducted by the Kauppalehti business periodical and sent to 715 entrepreneurs, of whom 92 responded.There are several financing solutions for working capital needs and for starting business abroad.Text: Kimmo Koivikko
For its own part, Finnvera wants to ease the financing of smaller export transactions carried out by enterprises. The first step is the new Bill of Exchange Guarantee, which is best suited to transactions of less than two million euros.Finnish exports are concentrated in a few sectors and are dominated by large corporations. SMEs account for only about 15 per cent of the total value of exports.“It is evident that Finland needs more SME exporters. In general, simpler financing options should be available for small export deals. Complex credit documents and their high costs are often obstacles to financing the smallest transactions. The first product we are launching is the Bill of Exchange Guarantee, where we have considerably relaxed our requirements for both the exporter and the bank. We’ll continue making our services increasingly responsive in order to help Finnish exporters in their sales efforts,” says Executive Vice President Jussi Haarasilta.A bill of exchange is a traditional means of paymentThe use of bills of exchange has gradually increased in foreign trade in recent years. The bill of exchange serves both the exporter and the buyer because the exporter is paid in cash while the buyer is given payment time. Finnvera’s Bill of Exchange Guarantee, in turn, protects the bank from any credit losses that might arise. Compared to a loan agreement, for example, a bill of exchange is a quick and cheap payment instrument.“Our new Bill of Exchange Guarantee requires no security for small transactions of under two million euros. We trimmed the contents of the guarantee agreement and simplified pricing. We also cover risks stemming from the application of laws and regulations on bills of exchange that have been passed in various countries. We want to boost transactions of this size class in particular by increasing flexibility in our guarantee terms associated with export bills of exchange,” Team Leader Eeva-Maija Pietikäinen explains.The exporter applies for the guarantee from Finnvera and submits credit data and financial statements on both the buyer and the guarantor, if any, over the past two to three years. Additional information is requested, if necessary. Finnvera always makes guarantee decisions individually for each project.Finding the right kind of payment method requires cooperation with the exporter, the exporter’s bank and Finnvera. It is essential that the financing is planned well in advance before the conclusion of the export transaction. In this way it is possible to select the payment method that suits each export deal. This is important particularly for bills of exchange because not all countries use them as a means of payment.Additional information:Jussi Haarasilta, Executive Vice President, tel. +358 29 460 2601Eeva-Maija Pietikäinen, Team Leader, tel. +358 29 460 2674Products > Export Credit Guarantees > Bill of Exchange Guarantee
Marju Silander, Managing Director of the Women Entrepreneurs of Finland, sees many solutions for improving the state of the economy. One key factor is to seek growth through internationalisation and transfers of ownership.Finnish working life and enterprise structure have been in turmoil in recent years. Marju Silander, herself an entrepreneur by background, has been on the front line of this restructuring. Prior to her appointment as Managing Director of the Women Entrepreneurs of Finland, Silander had earned her stripes, among others, at the Regional Organisation of Enterprises in Helsinki.“We have changed from a Finland of large corporations to a Finland of micro-enterprises.”According to Silander, Finnish legislation is still living in the time of large corporations even though the current Government strives to revise the structures of working life and to dismantle unnecessary regulation.“Most jobs are created in small and micro-enterprises. By following the Think Small First principle of the EU, Finland Ltd could be brought to the present day,” Silander ponders.Small enterprises face a new situationSilander is concerned about the lack of international growth. Economic growth centring on Europe does not seem to trickle to Finland.“Small enterprises face the challenge of how to reach the international growth market. A strong domestic market is not enough to stop the spiral of increasing government debt: in practice we are sitting at the same table circulating money from one purse to another,” Silander summarises the situation.She believes that technology-driven industries, in particular, have growth potential. Sustainable development and the circular economy, ageing of the population and the health and wellness boom offer diverse opportunities for creating new products and services for the international market. Younger entrepreneur generations also have the enthusiasm to venture out into the world.“It’s no longer necessary to think that first we’ll establish a company and then we’ll go international. Instead, there can be a bigger picture from the very start,” Silander says.Being an entrepreneur has become attractive: young entrepreneurs are increasingly eager to seize the opportunity to build exactly the kind of life they have dreamed for themselves.“In addition to the cultural shift, the many years of entrepreneur training given by educational institutions and entrepreneur organisations are finally starting to bear fruit,” Silander rejoices.Transfers of ownership add momentum to Finnish work life Internationalisation is not an option for all entrepreneurs. Certain local services cannot be globalised or digitised, and boosts for business must be sought through other means. Silander says that transfers of ownership are a pivotal tool for growth in the Finnish economy.“At present we have more than 80,000 entrepreneurs over 55 years of age. Nearly one third of them have announced that they will wind up their business when they retire. It is also known that, in general, one transfer of ownership affects on average four people. This means that many jobs are in the danger zone,” Silander ponders.Lack of information is one reason why there are so few transfers of ownership.“Especially sole entrepreneurs are often too modest when putting a value on their enterprise. As a trade association within the Federation of Finnish Enterprises, we also conduct serious dialogue with Finnvera about how we could make entrepreneurs understand the realisable value of their enterprises so that they can continue to offer jobs in the future as well,” Silander explains.She mentions a case where a woman entrepreneur was about to wind up her enterprise for good, but decided in the end to ask for advice about selling the enterprise. The outcome was that the entrepreneur was able to supplement her pension income with a profit of nearly 10,000 euros by splitting up the company’s inventories and operations into packages ready to buy.“In a way, we squander our assets if no deals are made. Entrepreneurs should feel proud and pleased for having created something that is useful for others, too,” says Silander.Finding the right partner is rewardingFor a starting entrepreneur, buying an existing enterprise is an excellent way to pick up speed quickly. The entrepreneur does not need to start from scratch, since networks, premises and processes are already available. In fact, persons who have become entrepreneurs by buying an enterprise are on average more satisfied with being an entrepreneur and feel that they have made a go of it.According to Silander, buyers’ knowledge of company acquisitions is also scanty.“Many people come to Enterprise Agencies with their own ideas. If the idea isn’t viable, it could be proposed that a development partner be sought in an existing enterprise,” Silander suggests.When a novel idea is combined with an operating enterprise, the result may be something brand new. Earning money on the basis of one’s own idea will then take less time and, on the other hand, the idea may also be refined in the process.What’s more, transfers of ownership are an excellent way to expand existing business operations.“When two enterprises are put together, the result may sometimes be greater than two. It would be really valuable to get people together at an earlier stage instead of waiting until the enterprise has suffered from years of underdevelopment,” Silander sums up.Silander compares selling an enterprise to selling a home: usually everyone selling their home makes sure that they get as good a price as possible when closing the sale. She urges entrepreneurs to keep this philosophy in mind at every stage of developing their companies. Quotes “Finland is such a small country that cooperation is extremely important. We cannot waste time by arguing among ourselves; instead, we must stand as a united Finland against China, Germany or Sweden.” “If the only plumber in the village closes up shop, it should be in the interest of towns and municipalities to look for a new entrepreneur in the locality rather than letting operations cease and allowing residents’ basic services to decline.” “Business Infrastructure Analysis, which is a public service provided free of charge, is an excellent way of keeping abreast of a company’s development potential and value. It would be good if every company were given a kind of ‘annual inspection’ at certain stages of the life cycle.”Text: Noora Puro Photo: Heidi Strengell
It often comes as a surprise when sales lag behind expectations. An entrepreneur’s advice is to seek local partners.Growth companies entering international markets badly underestimate their need for financing.There are many reasons for this.The most common reason is that the business launches organised by enterprises abroad are in fact much more expensive and more time-consuming than had originally been planned.The discrepancy between plans and reality is explained, among others, by unexpected turns of event and more sluggish sales of products or services on targeted markets.“The costs are always at least twice as much, and the need for external financing three times greater than what had been planned. When drawing up their budgets, companies are slightly overoptimistic. The fact is that an enterprise must get loads of visibility on the consumer market. Achieving credibility in business between companies takes time,” says Titta Mantila, Vice President, SME Financing at Finnvera.She heads the Growth and Internationalisation Team at Finnvera.According to Mantila, Finnish companies are told repeatedly about the importance of sales skills. However, skills in financing and economics should not be underestimated.Shareholders’ equity should account for almost one third of the total need for financing. Additionally, it would be good to think about what happens to the company if everything goes wrong abroad. In other words, risk tolerance.“Nor does it hurt to learn about the target countries and their business culture,” Mantila continues.There are no major differences in the financing needs of growth companies and companies with a slower growth pace. Working capital is the most common reason for seeking external sources of financing.With growth companies, everything is just a lot bigger. The financing granted to a growth company by Finnvera is on average about EUR 400,000.“No one can set up an international business with 100,000. Companies turn to us to obtain financing for expanding their own organisation, recruitment, sales and marketing, and for launching on international markets,” Mantila lists.She says that, for instance, Finnvera can offer several financing solutions for working capital needs and starting business abroad.Seek partners Katja Lindy-Wilkinson, Marketing Director of Picote Oy Ltd and CEO of Picote Solutions Inc., admits that a perpetual shortage of resources has also slowed down the growth of the company based in Porvoo, Finland.The company renovates drainage pipes and develops and manufactures pipe lining tools, and has been able to forge ahead abroad in step with financial resources.“Equipment sales abroad began in 2012. Our German partner wanted to become a reseller, and that gave us a good start,” Lindy-Wilkinson reminisces.Today, foreign buyers account for 88 per cent of Picote’s equipment sales. The company, with a turnover exceeding six million euros, has 19 resellers around the world.Lindy-Wilkinson, who has lived in the United States for years, says that resellers are supported in many ways in their efforts to succeed. In return, resellers bring added value with their knowledge of the local markets.“The chances of success are much better if you find local partners. It’s also worth remembering that there are many Finnish expatriates living all over the world. We, too, hired a Finnish consultant in the USA. That person was an excellent support for us,” Lindy-Wilkinson says.FACT: Does the lack of money slow down growth? According to companies, the main factors keeping a glass ceiling on growth are sales and marketing skills, the availability of competent staff, the acquisition of financing and the capacity of owners to take risks. During the first months of the current year, Finnvera’s financing for enterprises exceeded 300 million euros. Growth companies accounted for 49 per cent of this. Despite their potential, not all companies seeking solid growth have a long, economically profitable history behind them. In consequence, their rating may not be high enough. Rating affects the price and availability of money. The rule of thumb is that loan financing must be accompanied by a sufficient amount of equity. It can be considered that 30 per cent is a sufficient amount. Text: Kimmo Koivikko
At the beginning of April, Finnvera’s selection of financing services was supplemented with a new loan product, the Growth Loan.Kalle Åström, Program Manager at Finnvera’s SME Unit, for what types of projects is the Growth Loan designed?– The Growth Loan is intended for financing SMEs and midcap companies in major growth and internationalisation projects or corporate reorganisation. The idea is that the loan would attract financiers operating on market terms to invest in projects where risks are high but profitability and effectiveness are deemed to be good.Who can apply for a Growth Loan?– Finnvera’s Growth Loan may be granted to SMEs and midcap companies that have been in operation for over three years. The loan is not suited for the very start of business or for small projects. In these situations, some other financing product we provide may be the solution; for instance, Finnvera’s Start Guarantee, where the bank submits the guarantee application to Finnvera on behalf of its customer.The Growth Loan is a debt-based mezzanine financing product that combines the features of both equity and debt financing. The company’s self-financing portion must always be at least 20% and the share contributed to the total financing by financiers other than Finnvera must be at least 50%.The Growth Loan is granted for each project on a case-by-case basis. Project profitability and eligibility for financing are assessed together with other financiers.Read more: Growth Loan
Interview of Joonas Mikkilä, Organization Manager at the Federation of Finnish EnterprisesFederation of Finnish Enterprises’ survey reveals: University students, in particular, have embraced entrepreneurship. One out of five students sees being an entrepreneur as a probable career direction.How has interest in entrepreneurship developed among young people?JOONAS MIKKILÄ: Attitudes are undergoing a major generational shift. In consequence, the young people entering the labour market now are increasingly entrepreneurial. According to the Global Entrepreneurship Monitor survey, in 2015 as many as 20 per cent of young people between 18 and 24 years of age deemed that they would set up an enterprise within the next three years. At the turn of the millennium, only a few per cent of the same age bracket thought in this way.How actively do Finnish young people start enterprises when compared against young people in other countries?JM: Fairly actively. About five per cent of working Finns under 30 years of age work as entrepreneurs. In the rest of the Nordic countries, the ratio of young people working as entrepreneurs is 2–4 per cent. The EU average is about seven per cent.How are young people encouraged to become entrepreneurs in Finland and what kind of mentoring is available?JM: The development of entrepreneur training in basic and upper secondary education has been one of the focal points of Finnish education policy since the 1990s. The results are now becoming clearly visible. Universities have also gradually realised the importance of entrepreneur education for strengthening young people’s skills on the labour market. University students themselves have also established communities that promote growth enterprise culture on campuses.The association Suomen Yrityskummit provides mentoring for young entrepreneurs. Enterprise Agencies, in turn, give high-quality enterprise consulting to people planning to start a business. Business accelerators, operating in connection with universities and regional development companies, provide services for those seeking faster growth. Our Young Entrepreneurs programme aims to offer peer support and ready-made networks for starting entrepreneurs.What are the biggest challenges facing a young entrepreneur?JM: Apart from financing, many young entrepreneurs seeking to expand their operations are concerned about the risks involved in employing people. The significant increase in the number of one-person firms in the 2000s is an indication of the high threshold for hiring others and the rigidity of our labour markets. In certain sectors, the amount of regulation and administrative oddities also causes concern. How is financing arranged?JM: Getting financing from a bank is currently challenging for a starting entrepreneur who has little capital. However, supplementary financing from Finnvera and Tekes has helped to ease the situation. New crowdfunding forms are also becoming clearly more popular. How could young people be inspired to buy already existing companies?JM: Persons who engage in entrepreneur training and consulting must communicate to young people that continuing the operation of existing companies is an excellent channel to entrepreneurship. As entrepreneurs age, these opportunities will be available increasingly often in the coming years. Additional information:www.yrityssuomi.fiwww.uusyrityskeskukset.fiwww.yrittajat.fiwww.nuoretyrittajat.fiwww.yrityskummit.fiwww.nuoriyrittajyys.fiwww.yes-keskus.fiPhoto: Jaakko Översti
Finnish exports to Russia fell by one-third, but inquiries about Finnvera’s guarantees come in steadily.Lower oil prices, the weak rouble and the sanctions imposed in consequence of the Ukrainian crisis have cramped Finnish companies’ exports to Russia.According to customs statistics for last year, exports to Russia plummeted by 32 per cent, to EUR 3.2 billion. The first months of the current year have not changed this trend.The last time when exports fell below four billion euros was in 2003. At the same time, Russia has dropped to rank fifth among the most important export markets.As a counterbalance to the gloomy news, enterprises have fortunately woken up to the situation.According to Jussi Haarasilta, Executive Vice President at Finnvera, companies’ crisis awareness has increased and they more actively seek to protect their claims.“We want to advance Finnish companies’ opportunities to engage in export trade. We will therefore continue to grant guarantees for exports to Russia, but we will observe how larger transactions, in particular, affect the level of total exposure,” says Haarasilta.Outstanding commitments have remained steadily around 1.5 billion. This accounts for a little less than ten per cent of total outstanding commitments.“Even now we have dozens of clients that export to Russia. There is a constant flow of inquiries about guarantees. Immediately after the sanctions were imposed, many companies hurried for guarantees, but not all projects have proceeded,” says Haarasilta.Know your partner’s backgroundMost of Finnvera’s guarantee commitments involve the exports of large corporations. According to the Finnish-Russian Chamber of Commerce, hundreds of companies carry out regular exports to Russia.“We grant short-term credit insurance for good buyers, but since the outbreak of the crisis, payment defaults have increased. We are particular about the buyer’s creditworthiness. In large projects that require credits, export credit financing is often channelled through a bank that is backing the Russian buyer,” Haarasilta explains.He advises companies to investigate their trading partners’ background.“Who is the buyer and the actual owner of the company making the purchase. The seller may start to pursue the issue too easily, without verifying the background.”Russia’s economy will continue to slip this year. The IMF’s forecast for the change in the GDP is -1.8 per cent. The situation caused by the sanctions adds to economic uncertainty.“The weak economic situation has caused a cut in imports. This means that many important investments or supplies for maintenance are sorely needed. This may gradually be seen in demand for imports in some sectors,” Haarasilta believes.Finnvera has many tools for financing and guarantees that companies can use in their exports. More information about the various alternatives is available at: www.finnvera.fi/eng > Export.Text: Kimmo Koivikko
The Growth Loan introduced by Finnvera at the start of April provides an instrument for financing major growth and internationalisation investments in SMEs and midcap companies.The Growth Loan is intended for SMEs and midcap companies that have been operational for more than three years and seek funding for major growth and internationalisation projects and corporate restructuring. Midcap companies are enterprises that are larger than SMEs and have a turnover of less than EUR 300 million.- The purpose of the Growth Loan is to attract market-based financing to projects where risks are high but that are expected to be profitable and effective, explains Katja Keitaanniemi, Executive Vice President, SMEs at Finnvera.The Growth Loan is a debt-based mezzanine financing product combining features of equity and debt financing. The company must provide at least 20 per cent of the financing and the contribution of Finnvera and other financiers must be at least 50 per cent.The Growth Loan is granted on a project-specific basis and Finnvera and other financiers jointly evaluate the profitability and financing eligibility of each project.Further information: Kalle Åström, Program Manager, SMEs, tel. 029 460 2747
Half of all decision-makers in Finnish SMEs follow changes in the value of their enterprises. Less than half of all Finnish SMEs have made preparations for ownership changes. These are some of the findings of a survey conducted among Finnish SMEs.Each year thousands of companies find themselves in a situation where they have to find a new owner for their business. Despite this, more than half (56%) of them have not made any plans for the situation. Retention of value is a particularly low priority in companies with the smallest number of employees and the lowest turnover.- It should definitely be a greater concern. Making sure that the company retains its value should be a top priority and the owner should also develop the business operations throughout the company’s life cycle. This helps to ensure that the company is in good shape when a new owner has to be found, says Katja Keitaanniemi, Executive Vice President, SMEs at Finnvera.Finnvera, the Federation of Finnish Enterprises and the Ministry of Employment and the Economy jointly conduct the SME Barometer Survey twice a year. In this year’s survey the respondents were specifically asked about changes in ownership. About 6,000 SMEs took part in the spring 2016 barometer and the findings on ownership changes are based on the responses provided by them.Boosting growth through company acquisitionsEven though company acquisitions may be a good way of expanding business, some 80 per cent of all SMEs taking part in the survey said that they are not interested in acquiring other companies or business operations. However, strongly growth-oriented companies see more opportunities in this area and about 40 per cent of them said that they would be interested in such acquisitions.- From the perspective of growth, acquiring an existing company would open up new opportunities and it might also be smarter economically than organic growth. A company acquisition is also a good idea for new entrepreneurs because that would give them a well-tested business concept for further development, explains Anssi Kujala, Deputy Managing Director of the Federation of Finnish Enterprises.The Yrityspörssi website of the Federation of Finnish Enterprises is a place where companies are sold and acquired. It is Finland’s largest market place for SMEs and nearly 25,000 people interested in company acquisitions check the ads on the site each month. Yrityspörssi now also provides basic information about valuation, business practices, financing and taxation. In addition to the nationwide Yrityspörssi, there are also ten regional Yrityspörssi websites.Further information: Katja Keitaanniemi, Executive Vice President, SMEs, Finnvera plc, tel. 029 460 2888 Anssi Kujala, Deputy Managing Director, Federation of Finnish Enterprises, tel. 0400 567 925Finnvera provides financing for the start, growth and internationalisation of enterprises and guarantees against risks arising from exports. Finnvera strengthens the operating potential and competitiveness of Finnish enterprises by offering loans, guarantees and other services associated with the financing of exports. The risks included in financing are shared between Finnvera and other providers of financing. Finnvera is a specialised financing company owned by the State of Finland and it is the official Export Credit Agency (ECA) of Finland. https://www.finnvera.fi/eng/ https://www.finnvera.fi/eng/Finnvera/Media/Media The Federation of Finnish Enterprises promotes the interests of small and medium sized enterprises in Finland. With a membership of more than 115,000, 400 local associations, 20 regional organisations and 63 branch organisations we are Finland’s largest business federation. Self-employed individuals account for half of our members, while the other half consists of employer enterprises. Our members provide employment for about 650,000 people. Further information: http://www.yrittajat.fi/en-GB/. http://www.yritysporssi.fi/en
Brazil is expected to play a major role for Finnish exports in the coming years as well. Despite the current economic difficulties, it is believed that Brazil will continue to offer business opportunities in many of the strong sectors of the Finnish export industry.According to Jussi Haarasilta, Executive Vice President at Finnvera, Brazil is an important and, above all, growing market from the viewpoint of Finnish enterprises.“Brazil’s devalued currency, the real, stimulates demand in the export-oriented sector of wood processing and pulp manufacture. Moreover, the great potential in the country’s bioenergy and cleantech sectors is finally being realised and, as we know, Finland has volumes of first-rate expertise in these fields,” says Haarasilta.“In addition, Brazil has made extensive investments in telecommunications, which has also benefited Finnish enterprises.”Haarasilta says that Brazil’s economy of 200 million people would also have great demand for consumer goods.“The consumer market will certainly experience vigorous growth in the future. So far Finland’s exports to Brazil have focused on capital goods and, at least yet, Finland has not been able to profit from the consumption potential of the growing middle class.”Economic recession is hoped to remain shortJussi Haarasilta judges that Brazil’s economic problems and domestic policy crisis inevitably make an impact on the business environment of foreign enterprises in Brazil, at least to some extent.“It is clear that more caution and deliberation than normally is advisable when planning business deals in Brazil. However, I’d like to stress that despite the current problems, Brazil has many good enterprises and sectors that can serve as trading partners,” he says.“In the longer term, Brazil still has much potential as an export country for Finland, and sales to Brazil could be much higher than at present. We naturally hope that the recession of the Brazilian economy will be as short-lived as possible.”According to Haarasilta, Finnvera for its part is willing to support Finnish companies’ export efforts in Brazil as well, but keeps a close eye on the development of the country’s economy.“The more contracts Finnish export companies can win, the better it is for the whole of Finland.”Finvera’s guarantees for exports to Brazil account for the third highest country exposure among all countries. Apart from Finnish companies’ active efforts in Brazil, the exposure is explained by the fact that individual transactions in Brazil often have a very high monetary value.Additional information:Jussi Haarasilta, Executive Vice President, tel. +358 50 346 95 37
The ceilings for the Finnvera Group's export credits and export credit guarantees have been raised. The Finnvera Group can continue to provide Finnish export companies with internationally competitive financial arrangements for their export transactions. The legislative amendments will enter into force on 15 April 2016.The authorisation to grant export credits will rise from EUR 7 billion to EUR 13 billion, while the authorisation to grant export credit guarantees will rise from EUR 17 billion to EUR 19 billion. The authorisation to provide interest equalisation will also increase, from EUR 7 billion to EUR 13 billion. The purpose of the increases is to improve the competitiveness of Finnish companies engaged in the exports of capital goods and to enhance their opportunities to secure export contracts.– “Long-term financing plays an important role in negotiations for export-related purchase agreements. Bank regulation has affected banks’ possibilities to finance long loan periods. For this reason, Finnish Export Credit Ltd is needed in large financial arrangements. Some individual large export deals have increased our exposures close to their maximum limits. The increases in the authorisations enable Finnvera to participate in financial arrangements for Finnish companies’ export transactions and for their foreign buyers in the coming years as well,” says CEO Pauli Heikkilä.The parent company Finnvera’s total commitments for export credit guarantees and special guarantees amounted to EUR 17.4 billion at the end of December 2015. The outstanding commitments for export credit guarantees in accordance with the ceiling laid down by law totalled EUR 14.2 billion. The outstanding export credits and ship credits granted by the subsidiary Finnish Export Credit totalled EUR 4.2 billion. The granting of export and ship credits always requires an export credit guarantee. In other words, the risks associated with the project are covered with an export credit guarantee. According to the goal of economic self-sustainability set for Finnvera’s operations, the income received from the company’s operations must, in the long run, cover the company’s operating expenses. The self-sustainability of export financing has been realised over Finnvera’s history of 17 years, and Finnvera’s operations have not caused any costs to the State.Finnvera acquires the funds needed for credits from the market, by issuing State-guaranteed notes. The maximum amount of loans guaranteed by the State was raised from EUR 9 billion to EUR 15 billion. Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Jussi Haarasilta, Executive Vice President, tel. +358 29 460 2601
On 6 April 2016, Finnvera issued a ten-year, fixed-rate bond of EUR one billion. Among the euro-dominated bonds issued by Finnvera so far, this one has the longest maturity.The bond attracted much interest, and subscriptions rose to about EUR 1.9 billion.Over 60 investors from 15 countries participated in the arrangement. The greatest demand came from investors in Central Europe, especially Germany, Austria and Switzerland (36%), the Benelux countries and France (30%), Finland (17%) and other Nordic countries (7%).Finnvera’s EMTN Programme and the bonds issued under it are guaranteed by the State of Finland. Finnvera uses the funds both for SME financing and for financing export credits.The bookrunners for the issue are Citigroup, Credit Agricole, Danske Bank and HSBC.Finnvera acquires funds from international capital markets within the Medium Term Note Programme. The programme is guaranteed by the State of Finland.The rating of Finnvera’s EMTN Programme corresponds to the rating assigned to the State of Finland for its long-term liabilities. The rating given by Moody’s to Finnvera is Aaa and that given by Standard & Poor’s is AA+.Additional information:Ulla Hagman, CFO, tel. +358 29 460 2458Mikael Nordgren, Head of Treasury, tel. +358 29 460 2467
On 6 April 2016, Finnvera plc issued a ten-year, fixed-rate bond of EUR 1.0 billion.This is Finnvera’s first euro-denominated bond with a maturity of ten years.The bond was issued under Finnvera’s EMTN (Euro Medium Term Note) Programme.Finnvera’s EMTN Programme and the bonds issued under it are guaranteed by the State of Finland. Finnvera uses the funds both for SME financing and for financing export credits.Additional information: Ulla Hagman, CFO, tel. +358 29 460 2458Mikael Nordgren, Head of Treasury, tel. +358 29 460 2467
On 23 March 2016, Finnvera's Annual General Meeting elected new members to the company's Supervisory Board. No changes were made to the composition of the Board of Directors.The new members of the Supervisory Board are Laura Huhtasaari, Timo Kalli, Krista Kiuru, Kari Kulmala, Ville Niinistö and Eero Suutari, Members of Parliament; and Kari Luoto, Managing Director; Carita Orlando, Managing Director; and Christel Tjeder, Second Vice Chairman.Antti Rantakangas, Member of Parliament was elected Chairman and Krista Kiuru, Member of Parliament Vice Chairman of the Supervisory Board. Eeva-Johanna Eloranta, Member of Parliament; Mika Harjunen, Information Security Manager; Lasse Hautala, Member of Parliament; Olli Koski, Chief Economist; Leila Kurki, Senior Adviser; Veli-Matti Mattila, Chief Economist; Tommi Toivola, Senior Adviser; and Sofia Vikman, Member of Parliament will continue as members of the Supervisory Board.Markku Pohjola, B.Sc (Econ.), will continue as Chairman, Pekka Timonen, Director General, as First Vice Chairman and Marianna Uotinen, Specialist Counsel, as Second Vice Chairman of Finnvera's Board of Directors. The following persons will continue as Board members: Kirsi Komi, LL.M.; Pirkko Rantanen-Kervinen, B.Sc (Econ.); Harri Sailas, B.Sc (Econ.); and Antti Zitting, Chairman of the Board.The Annual General Meeting adopted the Consolidated Financial Statements and the Parent Company’s Financial Statements for the period 1 January–31 December 2015, discharged the Supervisory Board, the Board of Directors and the Chief Executive Officer from liability, and approved the proposal made by the Board of Directors for the use of the parent company’s profits.KPMG Oy Ab was re-elected Finnvera’s regular auditor with Juha-Pekka Mylén, Authorised Public Accountant, as the principal auditor.Further information:Pauli Heikkilä, CEO, tel. +358 29 460 2400Risto Huopaniemi, Senior Vice President, Administration, Legal Affairs and Administration tel. +358 29 460 2520
A bilateral agreement pertaining to the State Guarantee Fund’s arrears of EUR 37.8 million from Cuba was signed in Havana on 17 March 2016. The arrears stem from export credit guarantees granted 30 years ago.The agreement was signed by Under-Secretary of State Pirkko Hämäläinen and Vice President of the Council of Ministers of Cuba Ricardo Cabrisas Ruiz. The bilateral agreement complements the arrears clearance negotiated in Paris on 10–12 December 2015. According to the agreement, Cuba repays the principal and contractual interest, in total EUR 7.7 million, within 18 years. The late interest that has accumulated is cancelled. However, cancellation of the late interest requires that Cuba repays the principal and interest as agreed. In summer 2015, Cuba paid its old, short-term arrears associated with trade finance contracts. The agreement now concluded continues this favourable trend.An important step for trade between Finland and CubaThe agreement that has now been signed is an important step for promoting trade between Finland and Cuba. “Finnvera has already made guarantees available for small export transactions with Cuba and keeps a close eye on the country’s development as a potential trading partner,” says Senior Adviser Mika Relander.The State Guarantee Fund is organised under the Ministry of Employment and the Economy. Its receivables stem from export credit guarantees granted by Finnvera’s predecessors. Finnvera manages the receivables on behalf of the fund.Additional information:Mika Relander, Senior Adviser, tel. +358 29 460 2725
According to Pauli Heikkilä, CEO of Finnvera, Finland has a well-functioning financial market. Writing in Finnvera’s Annual Report of 2015, he states that Finnvera’s role is emphasised especially at the start of enterprise activities and in various situations of change, when the company is needed as a co-financier for projects.Heikkilä also stresses that Finnvera’s role is to encourage enterprises to enter international markets:“We have constantly developed our operations to be able to meet the needs of our clients in the optimal way. Our goal is to identify growth companies and encourage them to become international,” he underlines.For export financing, the year was busy and the total value of offers pertaining to exports was record high.“The orders for ships that followed the ownership arrangements of the Turku shipyard, an event important from the point of view of industrial history, were the absolute highlight of the year and were also visible in our export financing.”“We want to ensure that Finnish companies get the financing they need for their profitable projects,” Heikkilä writes.Read the CEO’s full review of 2015 here.
As in previous years, we have published our annual report online.Each year we also report on corporate responsibility. Our corporate responsibility report is included in the annual report. Combining the reports is a natural step since Finnvera’s operations as a whole have a broad impact on enterprise and employment in Finland, and thereby on all aspects of society. This year, for the first time, Finnvera has compiled the reports in accordance with the G4 Guidelines of Global Reporting Initiative (GRI). In our reporting, we concentrate on key issues in terms of the company’s operations and its stakeholders and we adhere to the reporting guidelines of State-owned companies whenever applicable.The annual report is published in Finnish and in English.
A variable and record-breaking yearCompared against the previous year, the world economy gained a little momentum in 2015. However, the economy did not develop steadily; instead, situations and divergent estimates varied throughout the year. The subdued outlook for exports and low spirits on the domestic market kept the demand for SME financing for investments modest. In contrast, financing for working capital and credits for changes of ownership were in great demand. In exports, shipbuilding orders were the biggest single factor increasing the demand for financing. Finnvera’s contribution was also needed in some other large export projects.Business operations and the financial trend In 2015, Finnvera’s offers for export credit guarantees increased by 28 per cent, while offers to finance export credits rose by 46 per cent on the previous year. The volume of loans and guarantees granted to SMEs and enterprises larger than the SME definition applied by the EU was 19 per cent greater than the year before. Finnvera Group 1 Jan–31 Dec 2015 1 Jan–31 Dec 2014 Change % Offered financing Loans and guarantees 906 MEUR 763 MEUR 19% Export credit guarantees and special guarantees 6 760 MEUR 5 274 MEUR 28% Export credits 4 131 MEUR 2 829 MEUR 46% 31 Dec 2015 31 Dec 2014 Change Outstanding commitments Loans and guarantees 2 285 MEUR 2 378 MEUR -4% Export credit guarantees and special guarantees 17 436 MEUR 12 600 MEUR 38% Export credits 4 240 MEUR 3 330 MEUR 27% 1 Jan–31 Dec 2015 1 Jan–31 Dec 2014 Change % Net interest income and fee and commission income and expenses (net) 197 MEUR 189 MEUR 4% Operating profit 114 MEUR 101 MEUR 13% Profit for the period 111 MEUR 100 MEUR 11% 31 Dec 2015 31 Dec 2014 Change %-point Equity ratio 13.3% 15.2% -1.9% Capital adequacy, Tier 2 19.6% 18.6% 1% Cost-income ratio 28.3% 25.9% 2.4% The profit for the last quarter of 2015 was EUR 5 million. The figure was two thirds, or EUR 46 million, less than the profit for the previous quarter (51 million). The main factors affecting the smaller profit were the impairment losses on receivables and guarantee losses, which doubled and were EUR 33 million more than in the previous quarter. The increase in the impairment losses on receivables and guarantee losses between the two quarters was partly due to the reversal and reduction of impairment losses and provisions for losses, which took place in the previous quarter.The profit for the Group in 2015 was EUR 111 million (100 million). This was 11 per cent better than the year before. The main factor improving the financial performance was the decrease of 57 per cent, or EUR 19 million, in impairment losses on receivables and guarantee losses. In addition, the increase of 8 per cent in the net interest income and the rise of 3 per cent in the net value of fee and commission income and expenses improved the financial performance.The profit of the parent company, Finnvera plc, in 2015 stood at EUR 95 million (92 million). This was 3 per cent more than the year before. When divided between the business areas, the parent company’s financial performance was as follows: the profit for export financing was EUR 82 million (96 million) and that for SME financing EUR 38 million (6 million). In addition, the impairment losses recognised on investments, EUR 25 million (9 million), had an impact on the parent company’s profit. Finnvera Group Q4/2015 Q3/2015 Change Q4/2014 Change *2015 *2014 Change Profit for the period MEUR MEUR % MEUR % MEUR MEUR % Net interest income 13 15 -12 10 35 56 52 8 Fee and commission income and expenses (net) 34 34 -1 35 -4 141 137 3 Gains/losses from items carried at fair velue -13 -2 - 4 - -21 -10 108 Other operating income 2 0 - 0 - 2 2 43 Administrative expenses -12 -9 32 -11 9 -44 -41 8 Impairment losses, guarantee losses -17 16 201 -9 84 -15 -34 -57 Loans and guarantees -21 6 444 -26 -22 -87 -105 -18 Credit loss compensation from the State 13 9 42 18 -28 83 64 30 Export credit guarantees and special guarantees -9 1 927 -1 - -10 8 232 Operating profit 5 53 -90 27 -81 114 101 13 Profit for the period 5 51 -90 25 -80 111 100 11 Outlook for financingEconomic growth and investments are likely to remain at a low level in 2016, and SME financing continues to focus on working capital needs. However, it is expected that the increase in changes of ownership and the investments disclosed by large corporations will have a positive effect on the demand for SME financing. In addition, Finnvera’s new mandates and financing products support the rise in the volume of SME financing.Financing solutions offered to buyers will continue to play a pivotal role in exports of capital goods sold by large corporations. It is expected that the demand for export credit guarantees and export credits will decline slightly from the previous year if no individual major orders are placed in 2016. Ships, telecommunications and the forest industry are still anticipated to account for the bulk of demand associated with large corporations’ exports.According to the current estimate, the Finnvera Group’s financial performance for 2016 is likely to fall below that for 2015. The uncertainty factors associated with economic trends make it difficult to predict financial performance. If more risks materialise than has been anticipated, the situation may weaken considerably from what is projected.CEO Pauli Heikkilä:“The new tasks assigned to us added momentum to the year and increased the demand for our financing. We granted markedly more financing to SMEs than the year before. This rise was mainly attributable to our new mandates and to a positive trend in changes of ownership. However, investments did not pick up yet; instead, SME financing continued to be needed mainly for working capital.The total value of offers pertaining to exports was record high. The orders for ships that followed the ownership arrangements of the Turku shipyard, an event important from the point of view of industrial history, were the absolute highlight of the year and were also visible in our export financing. To provide financing for the buyer, export credit guarantees or, possibly, pre-delivery financing are needed in practice almost always for major shipbuilding projects. In consequence, ship financing will account for an exceptionally large share, or about one third, of our current commitments. The shipyard is an important employer in the Turku region and also has several hundreds of sub-contractors giving work to tens of thousands of people.”Financial Statements 2015 (PDF)Statement on the Corporate Governance and Steering System 2015 (PDF)Additional information: Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400 Ulla Hagman, Senior Vice President, CFO, tel. +358 29 460 2458Distribution NASDAQ OMX Helsinki Oy London Stock Exchange The principal media www.finnvera.fiFinnvera publishes its Annual Report for 2015 as an electronic document on the company’s website in Finnish and English during week 10. The Annual Report also includes the Corporate Responsibility Report. The half year report 1 Jan–31 June of the company will be published on 11 August 2016.
Finnvera has revised its country policy for Iran after the EU’s economic sanctions were lifted in January. This means that Finnvera can begin to grant export credit guarantees for exports from Finland to Iran. Because of the sanctions, it is almost ten years since export credit guarantees were last granted for Iran.Since the economic sanctions were lifted, Finnish companies have shown interest in the Iranian markets.“We are ready to receive guarantee applications for exports. Our task is to support Finnish export companies in their efforts to secure contracts in Iran,” says Executive Vice President Jussi Haarasilta.According to Haarasilta, financing on new markets typically opens first between governments or banks. When more experience is gained, it becomes more common to provide financing for companies.Iran is a wealthy country and thereby a large market. This creates great potential for exports. Haarasilta assesses that, for instance, the modernisation of Iran’s basic infrastructure could bring opportunities for Finnish exporters.“Of course, it must be remembered that competition over contracts will be fierce. Many other countries have their eye on the Iranian markets, and the export credit agencies of several states have also relaxed their policies on Iran after the sanctions were cancelled.”“A challenging business environment”Jussi Haarasilta underlines that although trade with Iran will be easier once the sanctions have been suspended, projects should be prepared carefully in advance.“On the whole, the business environment is challenging but I encourage companies to explore business opportunities.”Haarasilta points out that some of the sanctions caused by the nuclear programme are still in force. Human rights sanctions remain in force, too, Haarasilta stresses.He also underlines that each export project is always assessed on a case-by-case basis at Finnvera.Iran is the world’s 18th largest economy. The International Monetary Fund (IMF) has predicted a growth rate of about four per cent for the Iranian economy in the coming years. Read more about Finnvera’s export credit guarantees and country policy.Additional information:Jussi Haarasilta, Executive Vice President, tel. +358 29 460 2601, jussi.haarasilta (at) finnvera.fi
Economic outlook for SMEs shows improvement. The desire for growth remains strong and export volume is expected to increase sharply. In the near future, SMEs will see a bit of light at the end of the tunnel for the first time in a long while. This positive outlook is reflected in the desire for growth, with more enterprises than before being growth-oriented: 9 per cent of enterprises report being strongly growth-oriented, while 36 per cent plan for growth wherever possible.SMEs are looking for growth on the international market and, according to the survey, export volume is expected to rise above current levels within the next year. A positive sign in all sectors is the increase in plans for internationalisation financing.However, outside financing is still being sought primarily for working capital, even though the investment percentage in strongly growth-oriented enterprises is already showing a slight increase. There have been no changes in the availability of financing compared to the results from last autumn. In any case, there are signs that the terms of financing are becoming more favourable, as over 80 per cent of the SMEs seeking financing stated that the availability of financing was not an obstacle to realising projects."Improvement of the economic situation in the euro zone can be clearly seen in higher expectations concerning the demand for export goods. The export share of Finnish SMEs is currently below the EU average, so it's of the utmost importance to find the internationalisation potential behind the Barometer results," says Finnvera's CEO Pauli Heikkilä.The Federation of Finnish Enterprises, Finnvera and the Ministry of Employment and the Economy jointly conduct the SME Barometer Survey twice a year. The aim is to examine the operations and economic operating environment of small and medium-sized enterprises. The spring 2016 Barometer Survey is based on the responses submitted by 6,000 SMEs.SME Survey on The Federation of Finnish Enterprises websiteFurther information:Pauli Heikkilä, CEO, tel. +358 29 460 2400Jonna Myllykangas, Communications Officer, tel. +358 29 460 2740
The economic situation posed challenges both to enterprises operating on the domestic market and to export companies. As in the previous year, continued uncertainty in the global economy dampened companies’ willingness to invest, make growth plans and take risks.However, a positive feature was the upswing in companies’ ownership arrangements, the first since 2012. It is estimated that Finnvera is involved in every third company acquisition. Otherwise, despite the improved investment expectations of SMEs, there was no change of course in the allocation of financing. It is four years since investments accounted for a larger share of financing offered to SMEs than working capital.Long-term financing played an important role in negotiations for export-related purchase agreements. Banks were still cautious when financing transactions requiring long repayment periods; in consequence, the role of Finnish Export Credit, in particular, was emphasised. Institutional investors participated in loan arrangements on credit markets slightly more than before but, owing to investors’ expectations for returns, demand and supply did not meet in export credits, with a few exceptions.In international comparison, Finland has well-functioning financial markets, and good projects receive financing from banks. However, the definition of a good project is more demanding than before. “Companies must have credible plans, a good balance sheet structure and adequate collateral. Finnvera is needed as a co-financier in projects especially at the start of enterprise activities and in various situations of change. Internationally, the impact of bank regulation is seen the most in demand for Finnvera’s export financing,” says CEO Pauli Heikkilä.A positive trend in ownership arrangementsIn 2015, Finnvera granted a total of EUR 1,116 million in financing to SMEs and to companies larger than the SME definition used by the EU. Of the financing granted, over 50 per cent was used to finance working capital. Loans and domestic guarantees accounted for EUR 906 million of the financing; this was 19 per cent more than the year before. The factors contributing to this increase included the mandate granted to Finnvera at the start of 2015 to provide financing for companies larger than SMEs, the increase in changes of ownership, and the restructuring of financing granted earlier. The value of guarantees granted to SMEs for exports totalled EUR 210 million, or 13 per cent less than the year before. In 2015, about 950 enterprises received financing for ownership changes. The total sum was EUR 116 million.At the end of 2015, outstanding commitments for SME financing totalled EUR 2.7 billion.The volume of offers for export credit guarantees increasedThe value of export credit guarantees and special guarantees offered rose by 30 per cent, to a total of EUR 6,550 million. Western banks think carefully before granting credits with long repayment periods, especially when they exceed five years. This underlines the importance of the Finnvera Group’s financing. Offers pertaining to the financing of export credits totalled EUR 4,131 million. This is nearly 50 per cent more than the year before. At annual level, the value of export credits offered was the greatest in Finnvera’s history.In total, 88 per cent of the export credit guarantees offered concerned the traditional sectors of Finnish capital goods exports, such as shipbuilding, telecommunications and the forest industry.At the end of 2015, outstanding commitments for export financing totalled EUR 17.0 billion.Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Finnvera publishes the financial statements for the period 1 January to 31 December 2015 on 26 February 2016 and the Annual Report during week 10.
OECD Participants to the Arrangement on Officially Supported Export Credits have agreed new rules on coal-fired power plants, including restrictions on export credits for the least efficient coal-fired power plants.The new agreement will remove support for large super and sub-critical coal-fired power plants, while allowing support for smaller sub-critical plants in poorer, developing countries. “After two years of intense negotiations, the agreement represents a first important step towards aligning export credit policies with climate change objectives to achieve lower emissions”, says Pekka Karkovirta, vice president for international relations in Finland’s export credit agency Finnvera and Chairman of the Participants to the Arrangement.The private sector is expected to follow suit in with the now agreed public sector agreement, which could mean increasing the emission cuts in the future. The new agreement will also improve the competitive position of the Finnish high technology.The 2015 United Nations Climate Change Conference in Paris negotiated a global agreement on reduction of climate change. The agreement was accepted by 196 countries and parties. The agreement sets a goal of limiting global warming to less than 2 degrees Celsius with an additional commitment to pursue efforts to limit the warming to 1.5 degrees. Finnish scholars and specialists have stated that Finland will benefit from the reduction of global warming economically. Finnish cleantech companies have developed technological solutions to curb emissions. We believe that global demand for Finnish cleantech companies will increase in the future.Finnvera supports exports of new clean tech technologiesThe OECD agreement on restricting financial support for certain coal fired power plants together with the UN agreement on restrictions of global warming is expected to enhance the competitiveness of technologically advanced Finnish companies in global trade. Finnvera will take an active role in financing Finnish technology exports to secure that the ambitious goal to limit global warming will be secured. Cleantech projects can benefit from export credits and guarantees with repayment periods up to 18 years.
Finnvera monitors 140 political risk countries and classifies them into country risk categories 0–7, with category 0 as the lowest country risk rating. Country risk categories are reviewed by region once a year in cooperation with the other OECD members. At the latest meeting, it was time to update the classifications of countries in Latin America, the Caribbean, and Western and Central Africa. It was consequently decided that two countries would be upgraded in a better category and three countries downgraded in a weaker category.Despite the slowdown in global economic growth, the economies of many countries in the regions now considered have continued to grow, though some opposite trends have also occurred. Especially in countries that are dependent on the exports of oil and other raw materials, the economy has taken a negative turn as income from exports has shrunk. Despite the gloomier economic outlook, political and social stability has largely continued to evolve in a positive way.Brazil’s country risk category downgraded from 3 to 4Brazil’s economic growth has been slowing down for the fourth consecutive year and corruption scandals have fuelled a political crisis. In consequence, the outlook of South America’s largest economy is now clearly weaker than before. The prolonged political stalemate, faltering domestic demand, the falling prices of raw materials important for the country’s exports, and the inability to carry out the necessary structural reforms for achieving economic growth mean that Brazil’s prospects will remain negative in the coming years as well. In the longer term, however, Brazil is a large, strong and diverse economy that still has all the prerequisites for emerging from the recession and thriving. With its exposure of over EUR 1.8 billion, Brazil accounts for the third highest country exposure for Finnvera.Ghana’s country risk category downgraded from 5 to 6Concern over Ghana’s economic situation has continued for a long time. The country’s public debt has increased, economic growth is sluggish and the value of the currency see-saws. The economy is also burdened by low raw material prices. Ghana’s financing costs are high and currency reserves low. However, the political situation is stable, and the IMF and the World Bank have a strong presence in Ghana. Support by international financial institutions creates prerequisites for improving the situation in the future.The country risk categories of Benin and Ivory Coast upgraded from 7 to 6Benin is a politically stable country whose economy is expected to grow in the coming years. The central government debt is relatively low, and the focus in the coming years will be on making important structural changes and improving the business environment. Benin’s main trading partner is Nigeria, whose problems are reflected in Benin as well.Ivory Coast’s economic growth is very strong, as much as 7 per cent annually. The outlook for the near future is bright, the infrastructure is constantly being improved and effort is made to develop the business environment. The political situation is calm and creates a basis for long-range development.El Salvador’s country risk category downgraded from 4 to 5The country’s economic trend has steadily deteriorated at the same time as disagreements in internal politics make it more difficult to carry out the necessary structural reforms. However, El Salvador’s business environment is still at a reasonable level, and the revival of the U.S. economy promises better times for El Salvador’s economic prospects, too.Gradual opening of export credit guarantees for CubaFor many years, Finnvera has not granted export credit guarantees for Cuba. In September, Finnvera made Cuba eligible for short-term letters of credit guarantees after the country had repaid its short-term debts to Finnvera. The improvement of relations between Cuba and the United States has contributed to positive developments in Cuba. The launching of medium-term guarantees requires that Cuba and its creditors agree on the multilateral rescheduling of debts. Finland also has claims in Cuba.The situation in Iran is monitored closelyAn agreement in Iran’s nuclear programme negotiations was reached in summer. This started a process that, if successful, would bring Iran into the global economy. Economic sanctions are still in force and Iran is required to comply with the agreement closely under the supervision of the International Atomic Energy Agency (IAEA). For as long as the sanctions are in force, Finnvera cannot grant export credit guarantees for Iran. If the situation changes, the possibilities for making export credit guarantees available for Iran will be reconsidered. The lifting of sanctions will begin when the IAEA verifies that Iran complies with the agreement.
OECD Participants to the Arrangement on Officially Supported Export Credits have agreed new rules on official support for coal-fired power plants, including restrictions on official export credits for the least efficient coal-fired power plants.“After two years of intense negotiations, the agreement represents a first important step towards aligning export credit policies with climate change objectives to achieve lower emissions”, says Pekka Karkovirta, vice president for international relations in Finland’s export credit agency Finnvera and Chairman of the Participants to the Arrangement.The new agreement, or rather, the new climate sector understanding under the Arrangement on Officially Supported Export Credits, will remove support for large super and sub-critical coal-fired power plants, while allowing support for smaller sub-critical plants in poorer, developing countries.The private sector is expected to follow suit with the now agreed public sector agreement, which will mean leveraging the emission cuts in the future.“The new agreement is not seen to hinder the Finnish export industries, on the contrary it is more likely to improve the competitive position of the Finnish high technology coal power plant solutions”, says Pekka Karkovirta.The new Climate Sector understanding will be set in force on and as from 1st January 2017.The Participants to the Arrangement on Officially Supported Export Credits are: Australia, Canada, the European Union, Korea, Japan, New Zealand, Norway, the United States and Switzerland.For further information, please contact:Pekka Karkovirta, Vice President, International Relations, tel. +358 (0)29 460 2768In OECD website: http://www.oecd.org/newsroom/statement-from-participants-to-the-arrangement-on-officially-supported-export-credits.htm
KPA Unicon, a company based in Pieksämäki, Finland, opened an export window to South Africa and will deliver a boiler plant worth about ten million euros. Financial arrangements were very important for the success of the export Project.KPA Unicon specialises in the delivery of tailored and modular boiler plants on a turnkey basis. In accordance with a recently signed contract, KPA Unicon will deliver a boiler plant to the South African subsidiary of ArcelorMittal, the world’s leading steel and mining company. KPA Unicon has about twenty years of experience of export projects. When trade with Russia began to wane, new markets had to be found. “We succeeded because we have a good product and can give a similar plant, delivered to the same global corporation, as a reference,” says Mikko Marttala, CFO of KPA Unicon.According to Marttala, this deal will bring vast amounts of credibility for the future. He stresses that, when entering a developing market, it is worth hiring an agent who knows the local actors. The biggest fear of the locals is that the foreign operator comes in and does everything in the Western style. “To be able to enter a new market, a company must have a systematic approach and be tenacious in its development work. The very first thing to do is to go to a trade fair where new contacts can be made. Patience is needed: for each successful deal there are certainly twenty failures. Much time must also be spent on site, because no deal can be concluded from Finland.”Customer financing opens doorsSelling equipment means engineers talking about screws and mechanical properties. Marttala has discovered that when financing is also discussed in the sales setting with the buyer, one gets a seat at the same table with the persons who actually decide on the deals. “A financing offer combined with sales opens doors and is really an important factor. At the same time the seller learns to understand the customer’s business better.”For new potential customers, financiers should be contacted at once in order to determine what financial arrangements would be possible. “This is what we do, and at the same time we also take a closer look at customer risks. Anyone can learn export financing; the more pertinent question is perhaps whether one has the time to concentrate on it.”Alongside selling, for some years KPA Unicon has offered its customers financing solutions worked out together with banks and Finnvera. “Today, financing begins to be a prerequisite for entering any competitive bidding at all. We often hear grumblings that Finnish companies cannot match, say, German companies. We can, but we just have to make a slight effort and learn to master this aspect of export trade as well.”In recent years, Finnvera has paid special attention to financing expertise needed for the exports and internationalisation of SMEs. “For the third year in a row, we have arranged the SME Export Finance Programme where we cooperate with banks to provide information about financing options available for enterprises that engage in exports. The aim is to give companies tangible solutions that they can use when making tenders to customers abroad. It pays for the exporter to find out about financing in good time and to discuss the matter with banks and Finnvera. Before making our decision, we conduct background studies pertaining to the project, for instance, on country risks and the buyer’s creditworthiness,” Finance Manager Otto Lindstedt of Finnvera explains.Exports as a precondition for existenceA couple of years ago, exports accounted for 99 per cent of KPA Unicon’s turnover, but now the figure is smaller. The company believes that imports to Russia and the rest of the CIS countries will revive.“In terms of risks, our situation is now healthier because we had to start looking for new markets. Once the decision is made, results start to appear. Our future target is that one third of our turnover comes from Finland, one third from the CIS countries and one third from other export markets. A precondition for our existence is that we have exports,” Marttala sums up.Marttala encourages exporters to discard the “I sell, you buy” thinking and contemplate what they could do together with the customer. “The more we see ourselves as partners, the better.”Read about Finnvera’s SME Export Finance Programme
Finnvera plc issued on 15th September 2015 a EUR 1.0 billion seven year fixed rate bond. The bond is Finnvera’s largest transaction so far and it was issued under Finnvera’s EMTN (Euro Medium Term Note) programme.Finnvera’s EMTN programme and notes issued under it are guaranteed by the Republic of Finland. Finnvera uses the funds for financing the domestic SME sector as well as export credits.Additional information:Ms Ulla Hagman, CFO, Tel +358 29 460 2458Mr Mikael Nordgren, Head of Treasury, Tel +358 29 460 2467
SMEs see the future as being perhaps a bit brighter, and the protracted economic uncertainty has not reduced their desire for growth. Outside financing is being sought for not only working capital, but now also enterprise development.Compared to the results of last spring’s SME Barometer Survey, the economic expectations of enterprises have taken a turn for the better. Nearly one out of every three SMEs expects the economic situation to improve in the next 12 months. Also where investments are concerned, the expectations are slightly better than before, even though the trend remained on the minus side.Despite the unstable economic situation, SMEs’ desire for growth and internationalisation is still moderate: 8 per cent of enterprises report being strongly growth-oriented, while 34 per cent plan for growth wherever possible.There has been no change in the availability of outside financing and SMEs intend on applying for it slightly more than before. Interest in outside financing has grown, particularly among strongly growth-oriented companies. Even though the desire to invest is currently weak, there are signs of an upturn. Financing is primarily being sought for working capital, and one key reason that enterprises seek outside financing is to develop their operations.- According to the autumn SME Barometer Survey, interest in obtaining internationalisation financing has dropped in all sectors, while, on the other hand, strongly growth-oriented enterprises show a clear desire to expand by internationalising. Right now, the most important thing is to line up needs and offerings and make sure that not a single profitable project falls outside our network of Team Finland organisations, says Finnvera CEO Pauli Heikkilä.The Federation of Finnish Enterprises, Finnvera and the Ministry of Employment and the Economy jointly conduct the SME Barometer Survey twice a year. The aim is to examine the operations and economic operating environment of small and medium-sized enterprises. The autumn 2015 Barometer Survey is based on the responses submitted by more than 6,500 SMEs.
The Team Finland network is developing its domestic services. The aim is to simplify companies' access to the network's services and to improve the smoothness of service. Prime Minister Juha Sipilä has today appointed a new Steering Group for the network, with Mr. Risto Siilasmaa as Vice Chairman.Team Finland network is developing its domestic services. Thanks to the new service model, the network organizations can now serve companies in an unbroken chain, without referring them from one organization to another. The first changes visible to Finnish companies are one common telephone service number and an online contact form. The new services were introduced on Thursday, August 27, 2015."The idea underlying Team Finland's new domestic service model is simple: a company gets all the services it needs from a single service point. In other words, the company does not need to learn the division of tasks between public organizations in order to obtain the services they provide. Instead of dallying over complex administrative structures, we must direct our attention towards conquering new markets and building new growth. This calls for a Finnish team spirit – which is exactly what Team Finland is all about," says Mr. Olli Rehn, Minister of Economic Affairs.Service is improved by more focused customer service and tighter cooperation between the organisations in managing customer relationship. Each customer company will get a service team which, according to the customer's needs, combines the expertise of different organizations. The team makes a service proposal for the customer and takes care of the customer's changing needs. Regional activities are carried out in cooperation with local actors, including regional development agencies, chambers of commerce and the Federation of Finnish Enterprises. Due to the new service model, the entrepreneur need not know the details about the services provided by different organisations."There is a demand for Finnish expertise worldwide. The duty of the State is to ensure that the operating environment for companies is good. Well-functioning internationalization services are an integral element in this," Ms. Lenita Toivakka, Minister for Foreign Trade and Development, points out.Prime Minister Juha Sipilä has appointed Risto Siilasmaa, Chairman of the Board of Nokia Corporation and F-Secure Corporation, to act as Vice Chairman of the Team Finland Steering Group. Prime Minister Sipilä himself serves as Chairman of the Steering Group. The following persons were appointed as members of the Steering Group: Ilkka Kivimäki, Partner, Inventure Oy; Nina Kopola, President and CEO, Suominen Corporation; Päivi Leiwo, Chairman of the Board, Oilon Oy; Paula Salastie, CEO, Teknos Group Oy; Paula Lehtomäki, State Secretary, Prime Minister's Office; Peter Stenlund, Secretary of State, Ministry for Foreign Affairs; Jari Gustafsson, Permanent Secretary, Ministry of Employment and the Economy (as of October 1, 2015); and Anita Lehikoinen, Permanent Secretary, Ministry of Education and Culture."We will continue developing the Team Finland network in line with the Government Programme. We want to help even more new, internationally competitive companies to reach the global markets. At the same time, we will steer the internationalization service providers to ever closer cooperation," states Prime Minister Juha Sipilä.The Steering Group is appointed for the duration of Government's term, it is responsible for target setting and the strategic steering of the network. Its composition ensures good interaction between the business world and government.Team Finland network brings together all government-funded players providing internationalisation services for companies, working to attract foreign direct investments to Finland, and promoting Finland's country brand. The core of the network comprises of the Ministry of Employment and the Economy, the Ministry for Foreign Affairs, the Ministry of Education and Culture, and the publicly funded organisations under their supervision that offer internationalisation services.Team Finland's common telephone service number is +358 295 020 510. The contact form for the companies is available at https://www.tekes.fi/team-finland-yhteydenotto/More information Anna-Kaisa Heikkinen, Special Adviser to the Prime Minister (International Affairs), tel. +358 40 7483 867, Prime Minister's Office; Jannika Ranta, Special Adviser to the Minister of Economic Affairs, tel. +358 29 504 7165, Ministry of Employment and the Economy; Marja Koskela, Diplomatic Adviser to the Minister for Foreign Trade and Development, tel. +358 295 350 633, Ministry for Foreign Affairs. Requests for interviews of Risto Siilasmaa, Vice Chairman of the Team Finland Steering Group, please contact Mari-Kaisa Brander, Communications Manager, tel. +358 40 131 3388, Prime Minister's Office.
An eventful start of the year for FinnveraFinnvera’s mandates and tasks have expanded on several occasions during last year and the current year. In the period under review, it became possible for Finnvera to guarantee the refinancing of export credits granted by banks. This arrangement promotes the acquisition of funds for financing exports.A new guarantee, known as the Start Guarantee, was taken into use in April. It is intended for the financing of starting enterprises that have been in business for no more than three years. Demand for the guarantee, which is given for a loan granted by a bank, has been brisk. Within three months, over 400 enterprises have been granted these guarantees, for a total sum of almost EUR 20 million. Improvements to the provision of financing have been implemented in all enterprise size categories. Since the beginning of this year, when certain conditions are met, Finnvera has been able to provide a growth enterprise a loan of at most EUR 2 million without collateral in order to finance growth.In line with the Government Programme public actors are still given the task of offsetting shortcomings that exist in enterprise financing on the commercial market. During the summer and early autumn, Finnvera will work under the Ministry of Employment and the Economy to prepare new measures for implementing the Government Programme.Business operations and the financial trendDuring the first half of the year, the volume of export credit guarantee offers given by Finnvera was over four times greater than in the first six months of 2014. As concerns financing offers for export credits, the figure was nearly three times greater. The volume of loans and guarantees granted to SMEs and enterprises larger than the SME definition applied by the EU was 34 per cent greater than the year before.The Finnvera Group’s profit for January–June came to EUR 55 million (34 million). This was EUR 20 million more than for the first six months of 2014. The main factors improving the financial performance were the decreases in impairment losses on receivables and guarantee losses, as well as the increase in the fee and commission income of the parent company, Finnvera plc.The profit of the parent company, Finnvera plc, stood at EUR 56 million (40 million). The Group companies and associated companies had an effect of EUR -1 million on the profit (-5 million). Venture capital investments accounted for EUR -6 million of this effect (-7 million). Interest equalisation and the financing of export credits by Finnish Export Credit Ltd accounted for EUR 5 million (1 million).The parent company’s export financing and SME financing showed a profit: the separate result for export credit guarantees and special guarantees came to EUR 46 million (31 million), while the profit for loans and guarantees in SME financing was EUR 10 million (4 million).In accordance with IAS 8 standard, an adjustment affecting the previous financial periods has been made in the Finnvera Group’s financial statements for January–June 2015. Owing to a system error in the accrual of income from export credit guarantees and expenses from reinsurance, the sums recognised on the income statement had been too small. Correspondingly, the sums for guarantee premiums and reinsurance premiums paid in advance and shown on the balance sheet had been too large. The adjustment had an effect of EUR 53 million on the equity attributable to the parent company on the balance sheet as per 31 December 2014 and 30 June 2015. The effect on the net value of fee and commission income and expenses for the reference period 1 January–30 June 2014 was EUR 43 thousand (Notes to the accounts 1).ezembedOutlook for demand for financingDuring the first half of 2015, demand for Finnvera’s SME financing was considerably livelier than it was a year ago. The value of the applications increased by 44 per cent. Above all, the growth was attributable to Finnvera’s wider mandates, such as the possibility to finance enterprises larger than SMEs and to subscribe bonds. The SME financing volume is also expected to remain on high level during the latter half of the year.Individual large projects increased the demand for export financing, which was more than triple the figure for the corresponding period the year before. Demand for export credit guarantees is expected to remain brisk in Finland. However, the worldwide demand for guarantees has shown signs of decline in many countries because banks have increasingly often started once again to provide financing for large export transactions and, on the other hand, because investments have been falling, especially in the energy sector.CEO Pauli Heikkilä:'“For us, the first six months of the year were busy as concerns both demand for financing and the granting of financing. Thanks to our ever wider range of financing opportunities, we were able to participate in many financial arrangements. For instance, we completed our first bond subscription during the period under review. Our anchor role ensured that financing could be arranged for the total investment of over 100 million euros by Kotkamills. We are also participating in the financial arrangements for the bioproduct mill to be constructed in Äänekoski by Metsä Group. To facilitate equipment purchases from Finland, we provide guarantees for about half, or 400 million euros, of the debt needed for the project. Apart from Finnvera, six commercial banks, the Swedish Export Credits Guarantee Board (EKN) and the European Investment Bank are participating in the arrangements.”Additional information:Pauli Heikkilä, CEO, tel. +358 29 460 2400Ulla Hagman, Senior Vice President, Finance and IT, tel. +358 29 460 2458Interim Report for January-June 2015 (PDF)
Finnvera plc will participate in the financing of two cruise vessels, Mein Schiff 7 and 8, ordered by TUI Cruises GmbH and to be built at the Turku shipyard of Meyer Turku Ltd. Finnvera will provide guarantees for the pre-delivery financing granted to the shipyard and for the post-delivery financing granted to the buyer. Finnvera will guarantee 50 per cent of the pre-delivery credit and 80 per cent of advance payments and also 95 per cent of the post-delivery buyer credits granted to TUI Cruises GmbH for the purchase of the vessels.Finnvera’s subsidiary, Finnish Export Credit Ltd, provides financing for the buyer credits arranged by commercial banks. When the ships ordered both earlier and now are considered together, Finnvera’s commitments on behalf of the shipowner will rise at most to about EUR 2 billion. After these latest orders for ships placed by TUI Cruises GmbH, Finnvera’s commitments for the financing of Meyer Turku Ltd can rise at most to about EUR 850 million.Additional information: Topi Vesteri, Executive Vice President, tel. +358 400 702 002
Finnvera is participating in the financial arrangements for the world’s first bioproduct mill, to be constructed by Metsä Group in Äänekoski, Finland. Valued at EUR 1.2 billion, the investment project is the largest ever carried out by the forest industry in Finland.To facilitate equipment purchases from Finland, Finnvera provides guarantees for about half, or EUR 400 million, of the debt needed for the project. Apart from Finnvera, six commercial banks, the Swedish Export Credits Guarantee Board (EKN) and the European Investment Bank are also participating in the financial arrangements.Last summer Finnvera was authorised to offer export credit guarantees for financing investments that are made in Finland and generate, or otherwise benefit, exports. Previously, export credit guarantees could only be used to facilitate financial arrangements for transactions abroad and to meet exporters’ needs for working capital and performance bonds. Another objective of the legislative amendment was to balance the competitive standing of Finnish equipment suppliers vis-à-vis their foreign counterparts.“Metsä Group’s investment satisfies the criteria defined for our new mandate, and we were able to participate in the project financing with our export credit guarantee. The project will have a positive impact on Finnish exports, as it is expected to boost exports by EUR 0.5 billion annually. The investment also has substantial effects on employment,” says Executive Vice President Topi Vesteri, who is responsible for export financing in Finnvera.“Our project is based on a careful overall assessment of the profitability of the pulp business and the long-term market situation. Financing is a central element of the whole project, and the fact that both Finnvera and the State of Finland are participating in sharing the financing risk significantly reduced the limit load of commercial banks. The loan guaranteed by Finnvera is an important component of overall financing. Conforming to the OECD terms, the loan has sufficiently long maturity and in general offers competitive terms. Finnvera plays one of the key roles in the financing package,” says Kari Jordan, President and CEO of Metsä Group.According to Jordan, the goal in equipment purchases was to ensure that the technology, delivery reliability and commercial terms were the best available. It is positive that the leading technology suppliers for the pulp industry are companies operating in Finland. For its part, the amendment made to the Act on the State’s Export Credit Guarantees enabled the high percentage of domestic equipment deliveries.“It is important that Finland has a competitive organisation promoting exports and an operating model that levels the playing field between companies operating in Finland and their competitors. Here Finnvera is doing good work, and the amendment made to the Act on the State’s Export Credit Guarantees in 2014 is an example of dynamic development to secure the prerequisites for exports,” says Kari Jordan.Construction of the mill has begun. It is scheduled to be in operation by the end of 2017.Additional information:Topi Vesteri, Executive Vice President, tel. +358 29 460 2676Image: Metsä Group
The Financial Supervisory Authority, which is responsible for the supervision of the financial and insurance sector, imposed an administrative fine of EUR 12,000 on Finnvera plc on 22 May 2015. According to the decision, Finnvera neglected to comply with the time limit for making notification of major holdings and proportions of voting rights, laid down in Chapter 9, section 9(1) of the Securities Markets Act.Finnvera sold shares of Incap Corporation in January 2014. As a result of this sale, Finnvera's proportion of the number of Incap Corporation's votes and total number of shares fell below five percent whereby a notification of major shareholding shall be made without undue delay.– It is rare for Finnvera to become an owner of shares in a listed company. When these were sold in various phases, a human error occurred in communication between the parties to the assignment, so the exceeding of the notification threshold was discovered and reported too late. If we need to sell shares in the future, we will ensure that the sales process is more precise, says Pauli Heikkilä, Finnvera's CEO.News on the website of the Financial Supervisory Authority Further information:Pauli Heikkilä, CEO, tel. +358 (0)29 460 2400
Finnvera issued on 28th May 2015 a USD 500 million ten year fixed rate bond. The bond was issued under Finnvera’s EMTN (Euro Medium Term Note) programme.Finnvera’s EMTN programme and notes issued under it are guaranteed by the State. Finnvera uses the funds for financing domestic SME sector as well as export credits.Additional information:Ms Ulla Hagman, CFO, Tel +358 29 460 2458Mr Mikael Nordgren, Head of Treasury, Tel +358 29 460 2467
Demand for financing revived despite uncertaintyFrom the perspective of the economy, the first quarter of 2015 was varied. Despite unstable and negative economic outlook, the weakening of the euro brought a little light to export enterprises. SME financing was sought actively, and Finnvera strove to meet enterprises’ expectations through its wider range of financing possibilities. The great majority of enterprises can obtain financing for profitable projects even though banks have introduced more stringent requirements for loans and collateral. Thanks to some major individual projects, the total demand for export credit guarantees, expressed in euros, was many times greater than during the same period a year ago. Finnvera’s risks pertaining to Russia have increased. The company continues to grant export credit guarantees for Finnish exporters’ projects in Russia, but the Russian counterparty's credit standing is examined increasingly carefully. The exposure trend and repayment times are monitored.Business operations and the financial trendIn January–March, the value of offers given by Finnvera for export transactions was over three times greater than the year before. Loans and guarantees granted to SMEs and – by virtue of the authorisation received by Finnvera at the start of 2015 – to enterprises larger than the EU’s definition of an SME increased by over 40 per cent on the figure for the previous year.The Finnvera Group’s financial performance in January–March came to EUR 26 million, or EUR 19 million more than during the corresponding period the year before (8 million). The main factors improving the performance were the decrease in impairment losses on receivables and in guarantee losses, as well as profits on items carried at fair value. The profit of the parent company, Finnvera plc, stood at EUR 26 million (10 million). The subsidiaries and associated companies had an impact of EUR 1 million on the Group’s profit (-3 million). Venture capital investments accounted for EUR -0.5 million (-3.3 million) of this impact. Interest equalisation and financing of export credits by Finnish Export Credit Ltd accounted for EUR 1.1 million (0.7 million).The parent company’s export financing and SME financing showed a profit: the separate result for export credit guarantees and special guarantees came to EUR 24 million (5 million) while the profit for credits and guarantees in SME financing was EUR 0.3 million (5 million). The parent company’s result included a surplus of EUR 2 million (0.2 million) from export credit financing.The Group’s key figures on 31 March 2015 (31 December 2014)• Equity ratio 13.9% (14.4%) • Capital adequacy, Tier 2 18.1% (18.6%) • Cost-income ratio 24.1% (25.7%) Outlook for financingDuring the first quarter of 2015, demand for Finnvera’s SME financing was livelier than during the same period a year ago. The total sum of applications for financing increased by nearly 50 per cent. The deal flow in financing for growth and internationalisation is likely to remain good, and some signs of recovery are also visible in the subcontracting chains of large enterprises. However, most of the demand for SME financing still focuses on working capital; this would indicate that the investment level will remain low. Demand for export financing is rising when compared to the previous year. Owing to ownership arrangements in the shipyard industry, demand for ship financing will increase. Another consideration contributing to the higher demand for export credit guarantees is the fact that Finnvera can now provide financing for large enterprises’ domestic projects targeted at exports. Demand for guarantees to finance transactions in Russia has been very brisk in early 2015 despite the fact that Finnish exports to Russia have shrunk. Finnvera estimates that the Russian share of the total exposure will not increase.CEO Pauli Heikkilä:“The international market has improved although the prospects for the Finnish economy are unclear. Finnvera’s financing possibilities have been expanded in various ways. For instance, Finnvera can now subscribe bonds, finance domestic investments benefiting exports, and provide financing for larger enterprises than before. An indication of this was that demand for financing during the first quarter clearly exceeded the figure for the year before. A welcome feature was that, after a long time, enterprises also sought financing for some fairly large investments, although most of the demand still focused on working capital needs. In the challenging financial situation, banks require more self-financing from enterprises, which may make it more difficult for enterprises to obtain financing. It would therefore be important to strengthen the equity of Finnish enterprises.”Additional information:Pauli Heikkilä, CEO, tel. +358 29 460 2400Ulla Hagman, Senior Vice President, Finance and IT, tel. +358 29 460 2458Interim report Q1 2015 (PDF)
It is now possible for Finnvera to guarantee the refinancing of export credits granted by banks to buyers. The arrangement promotes the acquisition of funds for financing exports. The change in Export Guarantee Act will enter into force on 1 May 2015.The Refinancing Guarantee is a separate guarantee used to arrange financing for export trade. Its purpose is to facilitate the funding of export credits granted to buyers. Finnvera can grant the guarantee, for instance, to an institutional investor that refinances an export credit given by a bank. The guarantee can also be utilised in the financing of domestic investments that benefit exports. In most cases, the guarantee is associated with one export credit, but it can also be used in a situation where the bank refinances several export credits.“The adoption of the new guarantee stimulates the operations of the financial market and the private financing of exports. It allows banks to finance some of their export and ship credits by acquiring the necessary funds from the market with the help of the Refinancing Guarantee. The guarantee arrangement also reduces our own need for funding,” CEO Pauli Heikkilä says.The guarantee helps to develop the Finnish export financing system further, increasing its competitiveness. Similar arrangements are already in use in many of our reference countries, such as Germany, Denmark and the Netherlands.Additional information: Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400
Russia’s economic situation creates uncertainty for Finnish enterprises’ exports to Russia. Demand for Finnvera’s export credit guarantees for business in Russia increased in early 2015.Russian banks and enterprises do not currently have the same access to financing on the international market as before, and enterprises’ capacity to meet their financial obligations has weakened. Higher credit loss risks also hinder Finnish enterprises’ exports to Russia According to Finnvera, Finnish export enterprises’ demand for export credit guarantees for Russia has increased in early 2015.Raisioagro Ltd, a Finnish manufacturer of animal feeds, has exported its products to Russia since the 1990s and has used Finnvera’s credit insurance since the early 2000s.Sales Director Erik Norrgård of Raisioagro explains that successful trading in Russia requires, in particular, trust between the seller and the buyer. Personal relations are very important. Thanks to its long experience, Raisioagro has managed to find reliable and well-established partners in Russia, but the company also has experience of situations where the buyer has not paid as agreed.“In the first case, payments were made as agreed for a fairly long time, but when the volumes of goods increased, payment transactions ceased. This was followed by long explanations and promises and, in the end, the buyer’s bankruptcy. In the second case, the company’s excessive growth depleted the company’s liquidity. The management changed and the end result was the same: payments ceased and the company went bankrupt,” Norrgård says.When the buyers’ insolvency became evident, Finnvera’s export credit guarantees eased Raisioagro’s situation. On the basis of the guarantees, Raisioagro was paid compensation for the sales receivables it did not repatriate.Creditworthiness of Russian enterprises under closer scrutinyAccording to Finnvera’s Claims Adviser Tarja Junno, Finnvera received about 30 claims for compensation in 2014. In the current year, the figure so far is about ten. At present, most of the claims are associated with Russian buyers.“As a rule, the reason behind a claim is the buyer’s insolvency or reluctance to pay. Often the exporter has said that the reason for the buyer’s default on payments is Russia’s economic situation,” Junno says.Eeva-Maija Pietikäinen, Team Leader, Finance, at Finnvera, says that, for an enterprise engaged in foreign trade, consideration of buyer risks and the buyer’s solvency is part of risk management. In the case of weak buyers, advance payments or otherwise secure payment terms are recommended.“If payment time is granted, insuring credit risks is part of risk management. In other words, it can be compared to property insurance. Unprotected risks may become fatal for the enterprise’s cash flow and profitability,” Pietikäinen cautions.Finnvera has tightened its guarantee policy vis-à-vis Russia, and the exposure trend and repayment times of transactions with Russian partners will be monitored closely. Export credit guarantees continue to be granted, but Finnvera will thoroughly investigate Russian buyers’ creditworthiness and will pay particular attention to buyers’ capacity to withstand fluctuations in the exchange rate of the rouble and in interest rates.In addition, Finnvera checks that the buyer companies and their owners are not on the list of EU sanctions. Exporters are requested to provide assurance that the products exported are not under export restrictions and that the necessary export permits are in order.Differences in corporate culture and legislation create challengesAccording to Erik Norrgård, exports to Russia are complicated by the Russian corporate culture, where it is very difficult to obtain access to companies’ managers. In addition, the rapid growth and indebtedness of companies pose risks to commerce. Norrgård characterises Russian legislation as challenging.“Information is splintered and, for instance, different customs districts may apply differing practices. It may also be difficult to obtain accurate information about the buyer company’s actual situation, since especially smaller undertakings are not necessarily used to being asked to show their financial statements,” Norrgård says.Despite the challenging economic situation in Russia, Raisioagro plans to increase its sales there. More than before, however, the company will make use of its familiar contacts and will focus on existing agreements.Norrgård recommends that enterprises planning exports to Russia take out guarantees. It is also advisable to prepare thoroughly for the initial investigation and for any barriers to sales that might exist. Norrgård says that restrictions posed by the customs and other authorities often come unexpectedly and at a short notice.“It’s good to be prepared for the fact that, in particular, buyers associated with primary production do not necessarily buy anything without some sort of a limit. The risk must always be weighed case-by-case. The Russians are a proud people, and it is good for neighbours across the border to recognise these realities for commerce. Especially in these times, Finnvera and other additional assistance are needed in exports to Russia.”Export credit guarantee: By using export credit guarantees, exporters and providers of financing for exports can protect themselves against credit losses that may arise when a foreign customer is granted payment time. If needed, it is also easier to arrange financing to a foreign customer for purchasing the export product when Finnvera covers the credit risk. Finnvera grants guarantees for countries with sufficient credit standing and assesses the creditworthiness of buyers and guarantors. The risks covered by export credit guarantees can be commercial, such as bankruptcy or reluctance to pay, or political, i.e. associated with the buyer’s country. Apart from the receivables, the guarantees also cover costs arising from recovery. Claims for compensation are submitted in writing, either as a free-form application or on the claims form provided by Finnvera. Once the application has arrived , Finnvera starts the claims process to determine whether the general guarantee terms and the terms of the guarantee agreement, such as the prescribed times for filing the claim and the completion of export declarations, have been met.
Last year Finnvera was authorised to subscribe bonds issued by SMEs. As of the beginning of the current year, this authorisation was expanded to encompass enterprises larger than SMEs. Finnvera has now made its first bond subscription, which enabled the arrangement of financing for an investment of over 100 million euros by Kotkamills. The investment is used to convert a paper machine so that it will produce packing board instead of magazine paper.“The financing package ensured continuity for the Kotkamills production plant that gives work to 500 people. Finnvera’s anchor role in the subscription ensured that the bond issue could be carried out. The development of the bond market and the diversification of financing sources are extremely important for enterprises of this size class,” says Markku Hämäläinen, CEO of Kotkamills.The fact that Finnvera can subscribe bonds improves enterprises’ possibilities to obtain financing from the market. Finnvera makes its bond subscriptions at market price. A normal enterprise analysis is conducted when the project is being reviewed.Additional information: Jussi Haarasilta, Senior Vice President +358 29 460 2601
On 9 April 2015, Finnvera’s Annual General Meeting elected new members to the company’s Supervisory Board and Board of Directors.Composition of the Supervisory BoardThe new members on the Supervisory Board are Mika Harjunen, Information Security Manager; Ann-Louise Laaksonen, Vice Chair; Veli-Matti Mattila, Chief Economist; Hanna Sarkkinen, M.A; and, Senior Adviser, Financing.Johannes Koskinen, Member of Parliament, will continue as Chairman of the Supervisory Board, and Lauri Heikkilä, Member of Parliament, as Vice Chairman. Paula Aikio-Tallgren, Entrepreneur; Eeva-Johanna Eloranta, Member of Parliament; Lasse Hautala, Member of Parliament; Olli Koski, Chief Economist; Leila Kurki, Employment Policy Expert; Esko Kurvinen, Member of Parliament; Anna Lavikkala, Labour Market Director; Lea Mäkipää, Member of Parliament; Antti Rantakangas, Member of Parliament; Osmo Soininvaara, Member of Parliament; and Sofia Vikman, Member of Parliament, will continue as members of the Supervisory Board.Composition of the Board of DirectorsThe new members on the Board of Directors are Harri Sailas, B.Sc (Econ.), and Antti Zitting, Chairman of the Board.Markku Pohjola, B.Sc (Econ.), will continue as Chairman: Pekka Timonen, Director General, as First Vice Chair; and Marianna Uotinen, Specialist Counsel, as Second Vice Chair of Finnvera's Board of Directors. Kirsi Komi, LL.M.; and Pirkko Rantanen-Kervinen, B.Sc (Econ.) will continue as Board members.Financial Statements 2014 and distribution of profitsThe Annual General Meeting adopted the Consolidated Financial Statements and the Parent Company’s Financial Statements (link) for the period 1 January–31 December 2014, discharged the Supervisory Board, the Board of Directors and the Chief Executive Officer from liability, and approved the proposal made by the Board of Directors for the use of the parent company’s profits.Election of the auditorKPMG Oy Ab was re-elected Finnvera’s regular auditor with Juha-Pekka Mylén, Authorised Public Accountant, as the principal auditor.Further information:Pauli Heikkilä, CEO, tel. +358 (0)29 460 2400Risto Huopaniemi, Senior Vice President, Administration, tel. +358 (0)29 460 2520
Finnvera grants export credit guarantees for Finnish exporters’ transactions in Russia. The exposure trend and repayment times are monitored closely.The country classification determined by the OECD member countries for Russia has been downgraded from 3/7 to 4/7. The country classification is based on an assessment of the country’s economic situation and ability to meet its financial obligations. A downgraded country class raises export companies’ guarantee premiums. Risks in export credit guarantee operations have increased, for instance, because it has become more difficult for Russian banks and enterprises to obtain financing from international markets.Finnvera will continue to grant export credit guarantees for exports to Russia, but the Russian counterparty's credit standing is examined increasingly carefully. Before a guarantee decision is made, it is ensured that financing has been arranged for the exports, the bank providing the financing is known, and the current sanctions do not restrict the arrangement of financing or the granting of the guarantee. As part of risk management, Finnvera will monitor the development of outstanding commitments. At the end of 2014, Russia accounted for 7 per cent of all outstanding commitments. Demand for export credit guarantees for transactions in Russia increased in early 2015. The trend in Finnvera’s exposure vis-à-vis Russia will also be taken into account in the overall assessment of large projects worth several tens of millions euros.“Finnvera monitors the exposure trend and the repayment times of credits. Since a large share of the current commitments for Russia will be paid back within the next few years, there will constantly be room for new commitments,” says Pauli Heikkilä, CEO of Finnvera.Additional information: Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Topi Vesteri, Executive Vice President, tel. +358 29 460 2676
As in previous years, we are publishing our annual report online.We also report on our corporate responsibility each year, including the corporate responsibility report as part of the annual report. Combining the two reports is only natural, as Finnvera’s operations have a broad impact on Finnish business and employment, and thereby on society as a whole. In our reporting, we focus on matters that are vital to the company’s operations and its stakeholders, and it complies with the reporting guidelines for state-owned companies, where applicable.The publication contains several user-friendly tools, including the option to assemble and print a report consisting of only selected pages. This customised report can be either saved as a file or printed.We publish our annual report in Finnish, English and as a summary in Swedish. We also publish a printed summary of the annual report in Finnish and English.Read the Annual Report
Finnvera’s possibilities to provide financing improved markedlyThe Finnish financial market was marked by diffuse economic prospects and the effects of tightening bank regulation, which were felt, in particular, in the credit terms and credit margins of the weakest borrowers. Demand for financing focused heavily on working capital, and there were very few investment projects. The government greatly improved Finnvera’s possibilities to provide public financing.The Group’s financial trend The Finnvera Group’s profit for the year 2014 was EUR 101 million, or 27 million euros more than the year before (75 million). The main factor improving the performance was the decrease of 47 per cent in impairment losses on receivables and in guarantee losses, totalling EUR 34 million (64 million). In addition, financial performance was improved by the reduction of administrative expenses by 5 per cent, to EUR 41 million (43 million) and the increase of 3 per cent in the net value of fee and commission income and expenses, totalling EUR 138 million (134 million). Correspondingly, the performance was encumbered, among other factors, by the lower net interest income, EUR 52 million (56 million), due to a fall in interest levels and in the amount of outstanding credits in SME financing. Moreover, losses on venture capital investments and on the recognition of derivatives and liabilities at fair value totalled EUR 10 million (2 million). The financial performance of the parent company, Finnvera plc, in 2014 came to EUR 94 million (69 million).The Group’s operating profit amounted to EUR 102 million (75 million) and was broken down as follows: EUR 6 million for SME financing (7 million) and EUR 104 million for export financing (74 million). The operating profit from venture capital investments was EUR 7 million in the red (5 million).The Finnvera Group’s profit for the last quarter of 2014 was EUR 25 million, or clearly less than for the third quarter (42 million). The main factors affecting the smaller profit were the impairment losses on receivables and guarantee losses, which nearly doubled and were EUR 19 million more than in the third quarter.Within the past few years, Finnvera’s outstanding commitments and their risk levels have risen significantly. However, in 2014 the outstanding commitments for SME financing fell and the risk level did not rise any longer. The outstanding commitments for export financing increased in 2014 but, as in the case of SME financing, the risk level did not rise. Nevertheless, the risk levels are still high, as evidenced by the considerable impairment losses and guarantee losses in SME financing in recent years, even though the impairment losses on receivables and guarantee losses in 2014 were below the figures for 2013. In export financing, no major losses have been recorded in recent years or in 2014. The estimated provisions for losses in export financing were reduced in 2014 when compared against the provisions for losses in the financial statements for 2013.The extent and risk level of Finnvera’s outstanding commitments will have a significant impact on its financial performance and long-term economic self-sustainability in the coming years. In examining the financial performance, it is important to note that, at the end of December 2014, Finnvera’s total commitments for export credit guarantees and special guarantees amounted to EUR 12.6 billion and the commitments for credits and guarantees in SME financing, as well as guarantee receivables, stood at EUR 2.4 billion. Seen against these commitments, the net profit building a loss buffer on the balance sheet is now about 0.7 per cent at the annual level and the equity 6 per cent.The group’s key figures on 31 December 2014 (31 December 2013) Capital adequacy, Tier2 18.6% (16.9) Cost/income ratio 25.7% (27.0) Equity ratio 14.4% (18.4) Outlook for financingThe U.S. economy has got a foothold on the growth path, but economic growth in the euro area is stagnating. In Russia, the sanctions focusing on the country’s economy, the falling oil prices and the change in the political direction caused financial difficulties for the country in late 2014. The situation will affect the demand for Finnvera’s export financing and the company’s risk position in an essential way if the current uncertain political and financial situation continues. Finnvera’s financing plays an increasingly central role in the conclusion of export transactions. Despite this, it is expected that the demand for export financing will decrease further from the previous year, as uncertainty keeps the volume of investments small. Finnvera’s possibilities to provide financing for large enterprises’ domestic projects intended for exports will become concrete when Finnvera can participate in investment projects undertaken by the export industry in Finland.The slow economic growth and the low investment level will keep the demand for SME financing moderate in 2015. However, according to Finnvera’s estimate, the new mandates received by the company and, for its part, the regulation of banks may increase the overall level of demand. Most financing needs are still associated with working capital.The uncertainty of the economy makes it difficult to predict financial performance. The materialisation of large individual export credit guarantee claims may considerably weaken the projected situation. According to the current estimate, the Finnvera Group’s financial performance for 2015 is likely to be somewhat weaker than that for 2014.CEO Pauli Heikkilä:“The government greatly improved Finnvera’s possibilities to provide public financing. Thanks to the amendments made to legislation and commitments, we can increase our risk-taking in both SME financing and export financing. Financing through bonds, guaranteeing large enterprises’ domestic investments relating to exports, and the possibility to provide financing for enterprises larger than the SME definition applied by the EU, diversified our selection of means. Once the bill on the refinancing guarantee is passed, we can state that, in terms of authorisations and financial instruments, we are on the same level as our principal reference countries, such as Sweden and Germany.One of our goals is to identify growth companies and encourage them to grow internationally. With respect to enterprises operating on the domestic market, our principle is to share risks so that a bank or some other private provider of financing, such as an insurance company, is the principal source of financing. In particular, we focus our financing on situations of change within companies and on the financing needed by start-up enterprises during establishment. We continue our efforts to ensure that our financing has the maximum impact and is allocated to the most important uses in view of industrial policy.Financial Statements 2014 (PDF)Statement on the Corporate Governance and Steering System 2014 (PDF)Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Ulla Hagman, Senior Vice President, Finances and IT, tel. +358 29 460 2458DISTRIBUTIONNASDAQ OMX Helsinki OyOslo Børs ASALondon Stock ExchangeThe principal mediawww.finnvera.fiFinnvera publishes its Annual Report for 2014 as an electronic document on the company’s website in the week 11 in Finnish, English and as a summary in Swedish. The Annual Report also includes the Corporate Responsibility Report.
Meyer Turku Ltd and Tallink have announced that they have signed a shipbuilding contract for a passenger ferry with a purchase price of about EUR 230 million.Finnvera guarantees 95 per cent of Tallink’s post-delivery buyer credit for which Finnvera’s subsidiary, Finnish Export Credit Ltd, has offered to provide long term financing for commercial banks arranging the buyer credit. The loan period is 12 years from the delivery of the vessel, which is to take place in early 2017.Additional information:Topi Vesteri, Executive Vice President, tel. +358 29 460 2676
Arctic Drilling Company is looking for new markets in Chile. To accelerate its internationalisation process, the company has participated to the Team Finland LetsGrow financing programme.Founded in 2004, Arctic Drilling Company (ADC) provides drilling services, such as sampling and measuring, and develops machinery for surface and underground drilling. The company's products and services are mostly used in mineral exploration. ADC's customers include some of the largest mining companies in the world, such as LKAB, Anglo-American, Agnico-Eagle and FQM. The company's factory is located in Rovaniemi, Finland.ADC employs almost 80 people, and its turnover has been growing steadily; last year the company's turnover was approximately EUR 10 million. The company's primary markets for drilling services are the Nordic countries."Competition in the Nordic countries is fierce, as the volume of work and prices have dropped in the last two years. Chile is a rapidly growing market area at the moment", explains Aleksi Autti, ADC's Head of Exports."We are looking to grow through export trade. Our main goal is to secure a share of the Chilean market, make our operating model better suited to the international domain and invest in the manufacture and sales of drilling machinery in specific markets. LetsGrow seemed well suited for these purposes."The Team Finland LetsGrow financing programme is based on the premise that Finnvera grants an unsecured loan, Tekes provides grant for innovation services and Finpro provides advice on growth and internationalisation.According to Autti, the LetsGrow funding and advice bundle is an important tool for businesses that are looking to invest in growth. Businesses are more likely to apply for funding if they can get a comprehensive financing service for promoting export trade from the same source.ADC strives to stand out from the competition by investing in next-generation drilling machinery. The machines are automated and move independently, which makes them safer and more efficient than conventional drilling machines. ADC invests in quality, environmental friendliness and safety, which is evidenced by the company's ISO9001, ISO14001 and OHSAS18001 certification. Arctic Drilling Company is the first Nordic company in its field to be given these certificates."In five years' time, ADC will be operating not just in the Nordic countries but also in at least three other market areas on a permanent basis, and the company will be one of the biggest employers in Rovaniemi."Text: Kaj Nordgren, TekesPhoto: Arctic Drilling Company
SMEs are planning to apply for internationalisation financing despite the record weak economic outlook. The availability of financing is considered to be good.Economic expectations have undergone a major change compared against the survey done last autumn. The balance figure is negative for the first time since 2009, and 28 per cent of the respondents assessed that the downward trend of the economy will continue for the next 12 months.From the perspective of financing, a positive feature in this spring’s SME Barometer Survey is that enterprises are willing to apply for internationalisation financing. Plans to apply for financing have risen in all sectors. Aside from the internationalisation expectations, the willingness to grow is also reasonably good despite economic uncertainty: seven per cent of enterprises say that they have a strong desire to grow and 35 per cent plan to grow according to their possibilities.SMEs perceive that providers of financing have set stricter requirements for collateral and expect companies to provide larger shares of self-financing. In general, however, financing is not seen as a problem, and over 80 per cent of the respondents say that the availability of financing has not affected the implementation of projects.“Last year, enterprises fell short of their growth targets mainly because of weak demand and stiffer competition. The business cycles may be unfavourable, but the markets still exist, and the winners on the markets are those who develop their competitiveness. Growth enterprises now need all possible support to gain a foothold on international markets. This is where we want to make an impact through financing, in cooperation with the other Team Finland organisations,” says CEO Pauli Heikkilä of Finnvera.Improved financing options for FinnveraDemand for outside financing will decline slightly during the next 12 months. Companies are cautious about investments and seek financing mainly for working capital.Finnvera’s possibilities to finance different-sized enterprises improved markedly at the start of the current year. Finnvera’s range of tools is now considerably wider than before, especially in terms of encouraging investments and financing growth.“We can now also finance enterprises larger than SMEs. On the other hand, small enterprises will be able to get loans of up to 50,000 euros directly from Finnvera. When business is profitable, we are increasingly better equipped to contribute to financing growth,” Heikkilä says.The Federation of Finnish Enterprises, Finnvera and the Ministry of Employment and the Economy jointly conduct an SME Barometer Survey twice a year. The goal is to study the operations and economic environment of small and medium-sized enterprises. The barometer for spring 2015 is based on responses from over 4,400 SMEs.Hela SMF-barometer (på finska)Arbets och näringsministeriet: Konjunkturbilden för tillväxtorienterade SMF-företag positivare än för andraAdditional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Jonna Myllykangas, Communications Officer, tel. +358 29 460 2740Finnvera provides financing for the start, growth and internationalisation of enterprises and for protection against export risks. We strengthen the operating potential and competitiveness of Finnish enterprises by providing loans, domestic guarantees, venture capital investments and export financing services. The risks involved in financing are shared between Finnvera and other providers of financing. Finnvera is a specialised financing company owned by the State of Finland. It has official Export Credit Agency (ECA) status.
Based on its own risk assessments, Finnvera may continue to provide short-term export credit guarantees for exports to Greece until 30 June 2015. The special status of Greece among the EU Member States is based on the decision of the EU Commission to continue to exclude Greece from the list of countries for which Finnvera cannot provide short-term export credit guarantees (risk period less than two years) in a normal market situation. The Commission decision will remain in effect until 30 June 2015.Under the Communication on short-term export credit insurance, which is based on the EU competition legislation and which entered into force in 2013, public credit insurance institutions may not guarantee marketable risks (risks that private insurance companies are prepared to guarantee).According to the Communication, in a normal market situation, Finnvera may not provide guarantees with a risk period of less than two years (manufacturing + credit repayment period) to following countries: EU Member States (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom) Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, United States of America The EU Commission has also granted Finland an exemption concerning short-term export guarantees to all countries listed above. Read more
Information on Finnvera’s operations in 2014The year 2014 started on a more positive note than the past years, but political crises blurred the outlook again. The cautious and anticipatory atmosphere caused by the general economic situation was reflected in the operations of companies and, through client enterprises, in Finnvera’s operations. Fortunately, the prospects reported by many client enterprises at the turn of the year seemed to have improved again slightly.The Finnish financial markets operated better than some individual opinions would suggest but were still unusually polarised in 2014. In particular, smaller companies reported financing difficulties in cases where the company’s balance sheet structure had weakened. Demand for export financing remained at a high level. Finnvera’s opportunities to provide financing for enterprises were increased through both legal amendments and Government decisions, especially during the latter half of 2014.“Finland needs new businesses and new growth enterprises, and we facilitate the creation of these success stories by using our improved financing opportunities,” says CEO Pauli Heikkilä.Working capital neededIn 2014, Finnvera’s financing for SMEs totalled EUR 1.0 billion, which was about one fifth more than in 2013. Some of this increase was due to the rescheduling of financing granted previously. The bulk of the financing granted, or 49 per cent, was used to finance working capital. Less financing than the year before was needed for company reorganisations and investments. The sectors that received the most financing were industry, services to business, and trade and consumer services.At the end of 2014, outstanding commitments for SME financing totalled EUR 2.8 billion.The volume of offers for export credit guarantees increasedThe volume of guarantee offers given increased by about half on the previous year, to EUR 5.0 billion. The growth was partly explained by the fact that some agreement negotiations associated with exports, which had still been in progress the year before, were brought to a conclusion in 2014.In total, 88 per cent of the guarantees offered concerned the traditional sectors of Finnish capital goods exports, such as shipbuilding, telecommunications and the forest industry. Seen against the previous year, the most rapid growth was recorded in offers given for exports to industrialised countries and Latin American countries. Their combined share was 86 per cent. The largest volumes of guarantees were offered for the United States, Finland and Germany.At the end of 2014, outstanding commitments for export financing totalled EUR 12.2 billion.Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400Finnvera publishes the financial statements for the period 1 January to 31 December 2014 on 27 February 2015 and the Annual Report during week 11.
Business angel investments are rapidly increasing in Finland. Finnvera's venture capital portfolio companies received a total of EUR 15 million in business angel investments in 2014.The investments made by individuals (business angels) in the portfolio companies of the Seed Fund Vera, which is administered by Finnvera's venture capital investments, increased for a fifth successive year. In 2014, the fund made a total of EUR 14.3 million in initial and follow-on investments in 72 early-stage companies. There were a total of 133 companies in the fund's portfolio at the end of last year. About one third of the portfolio companies also received business angel investments totalling EUR 15 million. For the first time, the amount of angel investments exceeded the investments made by the fund.Business angels make investments totalling between EUR 40 and 50 million in Finland each year.'In proportion to the annual volume of business angel investments, one can say that Finnvera plays an important role in the channelling of angel financing in early-stage companies,' says Leo Houtsonen, who is responsible for Finnvera's venture capital investments.In euro terms, the business angel investments made in Finnvera's venture capital portfolio companies almost quadrupled between 2009 and 2014. The average size of an investment was about EUR 60,000 and investments were made by a total of 201 business angels. A total of 253 investments were made during the year. Finnvera will make direct investments in innovative early-stage companies until the end of 2017.Further information: Leo Houtsonen, Finnvera plc, tel. +358 (0)29 460 2733, leo.houtsonen (at) finnvera.fi
The nationwide Kasvu Open 2015 business competition has started. It provides companies with free support and coaching for promoting growth and renewal.Kasvu Open ('Growth Open') is an effective growth-coaching process, in which each participating company has a chance to develop its operations and business idea with experts. In 2015, growth-coaching will be provided on more than 20 regional or sectoral growth paths. A total of 455 companies will be able to join the coaching process and 80 of them will be selected to the Kasvu Open final, which will take place on 22 and 23 October.'Finnvera was also involved in the Kasvu Open process last year as a partner and a provider of coaching. Judging by the feedback received from companies, Kasvu Open provides concrete tools for growth. You rarely have the chance to test your own ideas before such a diverse group of experts. On the other hand, this is also a great opportunity for us at Finnvera to get close to Finnish growth companies,' explains Titta Mantila, Finnvera's Director of Finance.Applications for Start up and Start again series can be submitted until 30 June on the website of Kasvu Open. The Start again series is intended for companies seeking renewal. Companies are supported by a total of 910 experts representing different business sectors, who offer their services for Kasvu Open free of charge.'Kasvu Open provides a comprehensive package of business and financing expertise and the aim is to help your company to succeed,' says Titta Mantila, encouraging enterprises to take part.Finnvera, together with Nordea and Sonera, is the main partner of the Kasvu Open competition.Further information: Uljas Valkeinen, Director of Kasvu Open, tel. +358 (0)50 568 8555http://www.kasvuopen.fi http://www.kasvuopen.fi/osallistu
Finland and Argentina signed a Bilateral Agreement on repayment of Argentina’s USD 8,7 mill. arrears to State Guarantee Fund of Finland. According to the Agreement Argentina will repay the debt in five years the last payment falling due in May 2019.Argentine economy faced serious challenges at the end of 1990 as a result of the financial crisis. Argentine debt increased rapidly to unsustainable levels. As a consequence the Argentine government ceased to service its public debt. After several years of discussions the creditors to Argentine have reached an Agreement of an arrears clearance scheme. Argentina will repay the arrears including interest fully. The conditions of the scheme were negotiated in the framework of Paris Club. Finland is a member of Paris Club. The Agreement was signed in Buenos Aires January 23, 2015.
Changes introduced at the start of 2015 mean better financing opportunities for companies of different sizes, make the financing more effective and improve companies' competitiveness. Finnvera can now increase its risk-taking, especially in the financing of start-up and growth companies and companies expanding their international operations.Finnvera can grant credits to SMEs that have profitable business operations but that have difficulty getting all the necessary financing from banks.From the start of 2015 Finnvera has also been able to provide financing for larger companies. The changes were introduced because while there is a broad range of public financing options available for Finnish companies meeting the EU criterion of an SME, companies that are only slightly larger have much fewer options. For example, a growth-oriented company can quickly exceed the limit of 250 employees laid out in the EU definition. With a new three-year mandate, Finnvera will be able to provide financing for companies that are important for the Finnish economy and that have a turnover of up to EUR 300 million.Moreover, the scope of the Act on the State's Export Credit Guarantees was widened on 1 September 2014. Under the amendment, which applies to investments made in Finland, Finnvera may provide the party making the investment or the suppliers with financing when the investment helps to boost exports. The new provisions do not involve any upper limit to company size or time limit.Improvements for companies of all sizesIn the future, small companies can get larger credits directly from Finnvera because the amount of micro-financing has been increased from EUR 35,000 to EUR 50,000. This change also has a major impact on thousands of existing Finnvera customers.As regards larger companies, Finnvera normally shares the financing risks with banks on an equal basis. However in high-impact projects and in the financing of contracts, Finnvera may make a larger financing contribution. Finnvera can now provide financing with lower amount of collateral than before. If a company has sufficiently strong financial standing, even collateral-free growth financing is possible. In investment projects, Finnvera can also provide financing with longer repayment periods than banks.These reforms and the wider financing powers help Finnvera to assist companies to get started, to grow and to expand internationally.– We want to find the companies that would otherwise not find us but which we can help to become more competitive by offering them financing solutions. The new powers will make this much easier. The reforms have given us tools that organisations doing the same tasks in other countries already have. In the current economic situation, we want to encourage companies to make investments and to seek new growth. Not a single profitable project should fail because of insufficient financing, says Pauli Heikkilä, Finnvera's CEO.Finnvera has made a favourable financing decision in about 80 per cent of the applications it has received from SMEs. In 2014, SME financing applications totalled 21,677 (+7%) and had a value of EUR 1,408 million (+1%).Further information: CEO Pauli Heikkilä, tel. +358 (0)29 460 2400
The company Rapal seeks strong international growth in several markets. The growth is accelerated through Team Finland LetsGrow finansing programme.Established in the early 1990s, Rapal specialises in consulting services and software for developing working and living environments. The firm, which is wholly staff owned, helps companies develop the working environment to meet changes in working practice, and to save office costs and to draw up reliable infrastructure cost estimates.Modern work is location-independent and current offices are not necessarily designed with this in mind. In the best case scenarios Rapal can achieve a triple win situation. Employees can be free to decide for themselves the best place to do the job, the company can save office costs and the environmental load can be reduced through less commuting and business travel.“Through our software and consulting services Rapal's aim is to verify and assess the impact of developing the working environment in monetary, carbon footprint, employee satisfaction and wellbeing terms,” says CEO Tuomas Kaarlehto.Growth in the United States and Central EuropeRapal is seeking international growth through the Team Finland LetsGrow finansing programme, where Finnvera offers unsecured loans, Tekes provides funding for securing expert services and Finpro advice for internationalizing.“Our cash flow and equity are in good shape. Money has been set aside in our books for capturing new markets. The loan from Finnvera, obtained through the LetsGrow programme, is an excellent way to share the risks involved in internationalisation and provides some financial breathing room, which is especially useful in these economically tough times. The Tekes funding has been used, among other things, for marketing research in Central Europe and China.”Rapal's office is located in Leppävaara in Espoo, and the company has a subsidiary in the US in San Francisco. The group has about 70 employees. Turnover has been steadily rising since the company was established and annual growth stands at around 15 per cent. The company's customer base is made up of government and large corporations in various sectors. The largest client of the California based subsidiary is the biotechnology company Genentech.“The United States is our most important market. It can be really difficult, but it is definitely the most productive. We are also currently looking into the potential in Central Europe, because we believe our products have a clear market there.”www.letsgrow.fiKaj Nordgren, TekesPhoto: Rapal
Finnvera issued on 13th November 2014 a EUR 750 million seven year fixed rate bond. The bond was issued under Finnvera’s EMTN (Euro Medium Term Note) programme.Finnvera’s EMTN programme and notes issued under it are guaranteed by the State. Finnvera uses the funds for financing the domestic SME sector as well as export credits.Additional information:Ms Ulla Hagman, CFO, Tel +358 29 460 2458Mr Mikael Nordgren, Head of Treasury, Tel +358 29 460 2467Petri Pärssinen, Manager, Treasury, puh. +358 29 460 2472
More tools and authorisations for enterprise financingThanks to legislative amendments and Government decisions, Finnvera has gained important additional authorisations to participate in the financing of projects undertaken by both SMEs and export companies.Finnvera can increase risk-taking in the financing of SMEs because the compensation paid by the State of Finland to Finnvera will cover a greater share of potential losses in Southern Finland as well. In export financing, the statutory ceilings for export credit guarantees and export credits have been raised markedly. The new financing instruments include the option to subscribe to bonds issued by SMEs, the joint Team Finland LetsGrow financing programme of Finnvera, Finpro and Tekes, and the possibility to guarantee domestic investments associated with exports.Russia’s weakened economy and the sanctions and retaliatory sanctions that have stemmed from the Russo-Ukrainian crisis have strained Finnish companies engaged in trade with Russia. The sluggish economy and the low investment level were reflected in the demand for financing.Business operations and the financial trendThe euro sum of the loan and guarantee offers given to SMEs in January–September was slightly higher than during the corresponding period the year before. Many of the offers continued to be associated with working capital or with the rearrangement of financing granted earlier. The amount of offers given for the financing of export trade was almost one third higher than at the same time the year before.The Finnvera Group’s profit for January–September was EUR 76 million. This was 8 per cent more than for the first nine months of 2013 (71 million). The main factors affecting the improved performance were lower administrative expenses than last year, the increase in net interest income and fee and commission income, and decreased guarantee losses and loss provisions in export credit guarantee and special guarantee operations. Underlying the increase of the fee and commission income were some individual major export credit guarantees that came into effect and the general rise in risk premiums on the market. In contrast, the improved performance was weighed down by impairment losses on receivables in SME financing and by losses from venture capital investments, both of which were greater than the year before.The financial performance of export financing and SME financing by the parent company, Finnvera plc, came to EUR 85 million, or EUR 11 million more than during the corresponding period the year before (74 million). Finnvera plc’s profit for export financing was EUR 79 million (63 million) and that for credits and guarantees in SME financing EUR 4 million (11 million).The Group’s key figures on 30 September 2014 Equity ratio 15.9 per cent (19.3 per cent/30 September 2013) Capital adequacy, Tier 2 18.2 per cent (16.9 per cent/30 September 2013) Cost-income ratio 25.3 per cent (25.1 per cent/30 September 2013) Outlook for financingThe economy has started to revive in the United States, but in Europe growth continues to be sluggish. Political turmoil in the Middle East maintains the overall uncertainty. Owing to the dispute between Russia and Ukraine, uncertainty about the financing of transactions to Russia, a market important to Finnish exporters, will continue.Banks are very cautious when funding transactions in Russia, as banks operating in the EU must also consider the existing and anticipated sanctions posed by the United States. In Finland, SMEs and medium-sized enterprises encounter increasing difficulties in financing export trade, as banks are directing their export finance services to projects that are more profitable to banks, which in practice means major companies and their larger transactions.The decision on the ownership of the Turku shipyard, reached in September, and the new orders publicised at the same time, mean that Finnvera’s commitments pertaining to shipbuilding contracts will rise. The authorisation to guarantee debt financing for domestic investments associated with exports, which came into effect at the beginning of September, has aroused much interest among export companies and Finnvera’s financing partners. It seems that this opportunity given to Finnvera to share risks can be a significant boost to decisions concerning new investments, and investments to replace ageing production capacity, within the export industry. The reform may also promote individual infrastructure investments serving the export industry, as well as domestic deliveries of equipment and services for these projects.Finnvera does not expect the demand for SME financing to reach a very high level during the final months of the current year. The factors contributing to this situation include the pessimistic economic outlook, an unusually low investment level and, in part, the regulations posed on banks. Increasingly often, SMEs need financing for working capital.According to the current estimate, the Finnvera Group’s financial performance for 2014 is likely to reach at least the same level as in 2013. A similar estimate made early in 2014 expected the financial performance to fall below that in 2013. The uncertainty factors associated with economic trends and if more risks materialise than has been anticipated, the situation may weaken considerably from what is projected.CEO Pauli Heikkilä:“During the past couple of years, and especially this year, the government has greatly improved Finnvera’s possibilities to provide public financing. Thanks to the amendments made to legislation and commitments, we can increase our risk-taking in both SME financing and export financing. The possibility to subscribe bonds issued by SMEs and to guarantee large enterprises’ domestic investments relating to exports diversified our selection of instruments. It would be essential, as of the beginning of next year, to implement the financing possibility for enterprises larger than the SME definition applied by the EU so that measures such as the possibility to subscribe bonds could be utilised in our enterprise financing. I also hope that the legislative proposal for what are known as refinancing guarantees will be presented before the end of the year. After these changes we can state that, in terms of authorisations and financial instruments, we are on the same level as our principal competitor countries. The consequences of recent events complicate the operations of Finnish companies engaged in exports to Russia.For this reason, the turnover of an SME may have fallen considerably. We can offer financing to strengthen the working capital of SMEs that are encountering difficulties because of the crisis. We also continue to grant export credit guarantees for exports to the Russian market. We comply with the sanctions approved in the EU and we assess our possibilities to participate in projects on a case-by-case basis, in keeping with our normal criteria.Finnvera also continues to provide venture capital investments for innovative start-up enterprises. Owing to the decisions made on the division of tasks between public actors, we shall gradually give up venture capital investments within the next few years.”Interim Report 1 January–30 September 2014 (PDF)Additional information:Pauli Heikkilä, CEO, tel. +358 29 460 2400Ulla Hagman, Senior Vice President, Finances and IT, tel. +358 29 460 2458