2016-08-11 14:10:31 CEST
2016-08-11 14:10:31 CEST
REGULATED INFORMATION
Finnvera Oyj - Half Year financial report
The Finnvera Group Half Year Report 1 January–30 June 2016
A marked rise in Finnvera's authorisations - performance slightly negative
During 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 ew 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 ofthe 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 ear 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 fied-rate bond of EUR one billion issued by Finnvera in
April was the company’s first euo-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 ear, transfers of ownership financed y
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 poduct onto the market: the Growth Loan. The new product is
intended for financing SMEs and midcap companies in major gowth and
internationalisation projects.
Business operations and the financial trend
During 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
ell 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 1 Jan-30 Change %
June 2016 June 2015
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Offered financing, MEUR
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Loans and guarantees 483 541 -11 %
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Export credit guarantees and special 1 226 5 124 -76 %
guarantees
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Export credits 477 3 601 -87 %
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30 June 2016 30 June 2015 Change %
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Outstanding commitments, MEUR
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Loans and guarantees 2 322 2 285 2 %
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Export credit guarantees and special 16 896 17 436 -3 %
guarantees
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Export credits 4 718 4 240 11 %
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1 Jan-30 1 Jan-30 Change %
June 2016 June 2015
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Net Interest income both fee and 93 102 -8 %
commission income and expenses, MEUR
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Operating profit, MEUR -7 56 -113 %
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Profit for the period, MEUR -7 55 -113 %
--------------------------------------------------------------------------------
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30 June 2016 30 June 2015 Change %
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Balance sheet total, MEUR 9 166 8 418 9 %
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Equity; MEUR 1 116 1 121 0 %
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- of which non-restricted reserves, MEUR 865 871 -1 %
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30 June 2016 30 June 2015 Change %
points
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Equity ratio, % 12,2 % 13,3 % -1,1 %
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Capital adequacy, Tier 2, % 18,9 % 19,6 % -0,7 %
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Cost-income ratio, % 30,6 % 28,3 % 2,3 %
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The Finnvera Group’s financial peformance for January–June showed a loss of EUR
7 million, as against a profit of EUR55 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 ear were the increased losses and provi-sions 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 ear (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 financialperiods 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 compa-ny’s operations,
even considering the negative result for January–June.
Finnvera Group H1/2016 H1/2015 Change Change *2015
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MEUR MEUR MEUR % MEUR
Net Interest income 27 28 -2 -6 56
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Fee and commission income and expenses 67 73 -7 -9 141
(net)
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Gains/losses from items carried at fair -10 -6 4 63 -21
value
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Administrative expenses -22 -22 0 1 -44
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Other operating expenses -3 -3 0 -5 -6
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Impairment losses, guarantee losses -65 -14 51 352 -15
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Loans and domestic guarantees -15 -72 -57 -79 -87
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Credit loss compensation from the State 15 60 -45 -74 83
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Export credit guarantees and special -66 -2 64 - -10
guarantees
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Operating profit -7 56 -63 -113 114
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Profit for the period -7 55 -62 -113 111
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Outlook for financing
It is expected that demand for export credit guarantees and financing povided
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 plys 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 souces, 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 ear ago. The financing ganted was also at a lower level than the year
before. During the first half of the ear, Finnvera prepared the adoption of the
Growth Loan, a new mezzanine financing poduct, and was getting ready to serve
as an intermediary organisation for the Euro-pean 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 ear.
According to the estimate made in early 2016, the financial peformance for the
current year is likely to fall below that for 2015. The negative result for
the first six months of the ear does not affect the realisation of the
cumulative self-sus-tainability of Finnvera’s export credit guarantee
activities.
CEO Pauli Heikkilä:
“Finnvera’s exposure figues have risen higher than ever before, and it is
expected that demand for export credit guaran-tees and financing povided by
Finnvera will continue to increase. It is important to ensure the functioning
of our export financing system so that Finnish companies can compete ver export
deals on equally good financing terms as theircompetitors.
With respect to SME financing, the gowth 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 curent year.”
Additional information:
Pauli Heikkilä, Chief Executive Office, tel. +358 29 460 2400
Ulla Hagman, Senior Vice President, CFO, tel. +358 29 460 2458
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