Financial highlights and ratios
for the firtst half of 2019

A helping hand for exports
and internationalisation

EKF's raison d'être is to secure financing for Danish exports and to contribute to the internationalisation of the Danish business sector. In a situation in which trade wars and the prospect of a global recession
constitute latent threats to Danish exports, access to financing is a vital competitive parameter. EKF therefore works constantly to develop new solutions that make it easier for Danish companies to obtain financing for their foreign transactions.

Green technology and reducing CO₂ are on everyone's lips right now, and Denmark has specialist expertise in these areas. Some Danish companies are world leaders in renewable energy – and wind energy in particular.

Whether the wind farm is offshore or onshore, financing plays an important role in regard to who ends up being commissioned to supply, build and service new wind farms all over the world. The onshore wind energy sector has long been growing globally, since the price can compete with the price of energy from a power plant based on fossil fuels. But when it comes to developing countries, in particular, obtaining financing for the construction can be a challenge - and this is where EKF is often the deciding factor when financing is required.

Offshore wind, on the other hand, is a phenomenon almost exclusively found in the North Sea. This is changing quickly, and right now it is important to make offshore wind farms a global phenomenon with the strongest possible Danish imprint. In the past six months, EKF has therefore been heavily involved in securing financing for the construction of the first offshore wind farms in Taiwan – a destination that is expected to become key to the spread of offshore wind farms to the rest of Asia.

In the past six months, EKF has been heavily involved in securing financing for the construction of the first offshore wind farms in Taiwan – a destination that is expected to become key to the spread of offshore wind farms to the rest of Asia.

New markets

The major Danish companies are already well-established on the international stage. But for small and medium-sized enterprises, there are still many uncultivated markets, which can be difficult, expensive and time-consuming for the enterprises to access. EKF is increasingly helping here: not only with financing, but also with putting suppliers, buyers and banks in contact with one another with the aim of ensuring a greater degree of internationalisation for the Danish business sector.

In the past six months, therefore, EKF has worked on developing so-called ‘shopping lines’ – a kind of credit card scheme enabling foreign buyers to obtain credits of up to millions of Danish kroner, provided that the money is used to make purchases from Danish companies.
 
In the first half of 2019, we have established a shopping line in China, where we have connected Envision, the Chinese turbine manufacturer, with a large number of Danish wind technology sub-suppliers. We have secured bank financing for the scheme, and the Danish company Tradeshift will handle the digitisation of the logistics. This means that both large and small sub-suppliers suddenly have access to an enormous market, making them less dependent on delivering to a single company.

EKF is also attempting to establish similar shopping lines for the agricultural and food sector in Latin America and Asia. Denmark has a variety of businesses that can supply high-in-demand agricultural equipment, barn and stabling equipment, slaughterhouse equipment, equipment for fish farms and various forms of food technology, which can help to improve both food safety and competitive ability. But it can be difficult for the foreign customers to obtain financing when purchasing the Danish equipment, and in these cases, an agreement with EKF can be the factor that makes the transaction possible.

It can be difficult for foreign customers to obtain financing when purchasing Danish equipment. In these cases, an agreement with EKF can be the factor that makes the transaction possible​.

Digitisation

Time has also become a crucial factor when we talk about financing. For this reason, EKF has worked intensively in recent years to ensure greater digitisation of credit and authorisation procedures, so that it is both easier and faster to set up financing. This is about ensuring that the Danish business sector is in the best possible situation to export in a global market undergoing rapid change.

Management's comments

on the first half of 2019

Net profit/loss for the first half of 2019

In the first half of 2019, EKF had a net profit of DKK 369 million, compared with a loss of DKK 76 million in the first half of 2018. This improvement is partly due to a lower level of claims in the first half of 2019 compared with the same period last year, and to the fact that EKF was able to reverse a share of the provisions for claims expenses previously made due to reduced expected losses. In addition, last year EKF was required to substantially increase guarantee provisions regarding transactions in Turkey, because the OECD downgraded the country.

New guarantees and loans in the first half of 2019 amounted to DKK 8.3 billion, in line with expectations, but slightly lower than in the same period last year, when they amounted to DKK 10 billion. New guarantees and loans for the whole of 2018 totalled DKK 33.7 billion – the highest in EKF's history and not a level that EKF can expect every year. 

The chart below shows the differences between the net profit/loss for the first half of 2019 and the net profit/loss for the first half of 2018 for each accounting item in the income statement.

The net profit for the first half of 2019 amounted to DKK 369 million.

Premium income for own account

Premium income for own account amounted to DKK 334 million in the first half of 2019, compared with an income of DKK 102 million in the same period last year.

Earnings on new guarantees amounted to DKK 157 million after guarantee provisions and reinsurance premiums paid in the first half of 2019. This was an improvement of DKK 104 million compared with the first half of 2018.
Among other things, the improvement can be attributed to the fact that EKF has obtained a premium for a major transaction which exceeds the OECD minimum premium.

As underlying loans guaranteed by EKF were gradually repaid, in the first half of 2019 EKF was able to recognise as income DKK 206 million in the run-off result on previous years' provisions for guarantees. The run-off result for the first half of 2019 has improved by DKK 41 million compared with the same period last year. Among other things a result of the fact that new transactions from recent years have started to be paid off.
Prepayments and refinancing of projects in the first half of 2019 resulted in a cost to EKF of DKK 7 million, compared with a cost of DKK 17 million in the first half of 2018.

Reclassification of countries and debtors represented an expense of DKK 50 million in the first half of 2019, because EKF chose to downgrade the ratings of several Turkish banks.
 

Claims expenses for own account

Claims expenses for own account amounted to an income of DKK 92 million in the first half of 2019, compared with an expense of DKK 217 million in
the first half of 2018. The need to make new or higher provisions on large or medium-sized transactions was limited in the first half of 2019. The provision was also reduced because a settlement was approved for a major claim. This meant that a large amount was paid into the project, which has substantially reduced EKF's risk, and EKF has been able to reduce its claims expenses considerably.
 

Significant risks for the rest of 2019 

Because EKF's business model is based on the provision of guarantees and loans, credit risk is the most significant risk exposure. EKF measures the credit quality of guarantee holders and borrowers using Standard & Poor's rating system, in which AAA is the best rating. 

EKF's portfolio has an average rating of between BB- and B+. The average country risk category for the portfolio as a whole is just under 2 on a scale of 0 to 7, in which 0 is the best country risk category.

Corporate information

EKF Denmark's Export Credit Agency

Lautrupsgade 11
DK-2100 Copenhagen

Telephone: +45 35 46 26 00
Fax: +45 35 46 26 11

Website: www.ekf.dk
E-mail: ekf@ekf.dk

CVR no.: 30 76 37 77
Founded: 19. november 1999
Registered: Copenhagen

Financial year: 1 January – 31 December

Board of Directors

Christian Frigast, Chairman

Dorrit Vanglo, Deputy Chairwoman

Jørgen Høholt

Poul Due Jensen

Flemming Aaskov

Jørgensen Karen Nielsen

Jørgen Skeel

Anna Marie Owie, elected by the employees

Yasir Al-Gailany, elected by the employees

Management

Kirstine Damkjær, CEO

Jan Vassard, Deputy CEO

Christian Ølgaard, Deputy CEO

Auditors

PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44
DK-2900 Hellerup

Rigsrevisionen
Landgreven 4
DK-1301 Copenhagen

Management statement

Today the Board of Directors and the Management considered and approved the Half-Year Report of EKF Denmark's Export Credit Agency for the period 1 January – 30 June 2019.

The Half-Year Report was prepared in accordance with the Danish Financial Statements Act, subject to the necessary exemptions and adjustments required as a consequence of EKF Denmark's Export Credit Agency's special position as an independent public company, cf. the Act on EKF Denmark's Export Credit Agency. 

In our opinion, the Half-Year Report gives a true and fair view of EKF Denmark's Export Credit Agency's assets, liabilities and financial position at 30 June 2019 and of the results of EKF Denmark's Export Credit Agency's operations and cash flows for the period 1 January – 30 June 2019. 

Furthermore, we are of the opinion that the management's review gives a true and fair account of the development of EKF Denmark's Export Credit Agency's operations and financial circumstances and a description of the significant risks and uncertainty factors that could impact EKF Denmark's Export Credit Agency.

Copenhagen, 2 September 2019

Income Statement for the period 1 January – 30 June

Income Statement for the period 1 January – 30 June (continued)

Balance sheet

Statement of changes in equity

Notes