2018

– a record year

EKF ended the year with a total of DKK 33.7 billion in new guarantees and close to DKK 90 billion in commitments. That is the highest demand for export finance in EKF’s almost 100-year history. At DKK 618 million, it was also EKF’s best result ever. This money will be spent on financing even more Danish exports.

The portfolio numbers everything from working capital guarantees of a few million for small and medium-sized manufacturers with a need to expand their manufacturing facilities in Denmark to securing foreign enterprises loans or credits of millions of Danish kroner for the procurement of equipment in Denmark.

2018 was particularly notable by record-high financing guarantees for very large infrastructure and energy projects abroad. But eight out of ten EKF customers are small and medium-sized enterprises, and EKF has a special role to play in relation to SMEs. The reason is that smaller and younger enterprises experience the greatest difficulty in securing financing for their international growth ambitions, and they are often most heavily impacted when something goes wrong in the export markets. In the event of a currency crisis, in the event of sanctions being implemented, or in the event of foreign customers being unable or unwilling to pay.

EKF’s work is driven by demand, and by far the largest new guarantees were issued within renewable energy. Among the largest projects was Hornsea in the UK – the largest wind farm in the world so far. Here EKF contributed guarantees worth DKK 6.7 billion. The substantial commitment to wind reflects Denmark’s position as world leader in wind technology. It is also a result of EKF’s new ‘Prudent growth’ strategy. One of the key reference points of the strategy is that EKF is to contribute to Denmark’s position of strength in the wind sector and support exports of green solutions.

In 2018, EKF thus helped generate revenue in Denmark of more than DKK 33 billion and contributed to creating and retaining around 14,600 Danish jobs. To this should be added the many effects derived from exports. But EKF also creates economic impact by paying dividend to our owner – the Danish state. EKF will pay DKK 140 million in dividend on the net profit for the year.

Despite its record level, the net profit for the year is not proportionally on a par with growth in new guarantees. This is attributable to several factors. One factor is that the international capital markets have ample liquidity, thus pushing loan and guarantee premiums down. Another is that EKF increases its provisions for losses in step with growth in country- or project-related risk. For this reason, we have made nine-digit provisions in 2018, and this affects the result.

2018 was an extremely turbulent year for world trade, what with trade war, Brexit negotiations, currency crises in Turkey and Argentina and tightening of US sanctions against Russia and Iran. 2019 promises to be just as stormy. So we expect that EKF’s risk cover will continue to be in high demand in the coming year – even if issues are not likely to reach the record level of 2018.

Another piece of positive news in 2018 was that Kirstine Damkjær accepted the position as EKF’s new CEO in October. Over the last 18 years, she has held a number of international management positions at the World Bank and at IFC – International Finance Corporation. We look forward to Kirstine making her extensive knowledge about international financing available to Danish exporters.

Christian Frigast
Chairman of the Board of Directors

EKF has a special role to play in relation to SMEs. The reason is that smaller and younger companies typically experience the greatest difficulty in securing financing for their international growth ambitions, and they are often the ones most heavily impacted when something goes wrong in the export markets.

CHRISTIAN FRIGAST
Chairman of the Board of Directors at EKF

EKF is Denmark’s
export credit agency

Ever since 1922, the object of EKF has been to support Danish exports and internationalisation and to create growth and jobs in Denmark. EKF helps Danish enterprises to realise their export dreams by providing export credits, working capital guarantees and loans to enable them to finance their activities and cover commercial and political risks in the export markets.

When EKF covers risks, it is easier for exporters and their foreign customers to obtain bank financing for their activities on competitive terms and easier for Danish companies to extend credit to their customers, which is often crucial in order to get a contract. Export credits, working capital guarantees or loans can therefore be decisive for exporters in winning or retaining customers. In 2018, we helped to create and retain 14,600 Danish jobs.

We are the only organisation in Denmark to provide cover for extraordinary export risks that the private market is unable or unwilling to cover. We operate with a long-term perspective and the risk exposure necessary in countries and markets where the political and commercial situation may be uncertain.

In 2018, we helped to create and retain 14,600 Danish jobs.​

EKF is an important financial partner for Danish companies wanting to:

• sell more
  EKF can offer financing for the foreign customers of Danish companies. This increases sales and strengthens the international competitiveness of Danish exporters. In practice, EKF provides a guarantee for the transaction to a bank. In doing so, we assume most of the risk related to the financing for the exporter’s customer. EKF can also provide export loans directly to a foreign buyer or a project. This is typically done in cases involving major projects.

• finance their business​
  EKF can expand the scope of exporters and their sub-suppliers for more customers and larger orders by improving their liquidity. To this end, EKF provides working capital and capital expenditure guarantees to banks.

• protect their exports
  EKF can assume the risk when Danish exporters engage in transactions abroad and ensure that they are paid. If something goes wrong, EKF will pay compensation.

Steps in EKF’s guarantee procedure

One of the ways in which EKF supports Danish exporters is by providing a guarantee for financing of their customers abroad. This enables companies to boost their sales by expanding the scope for more customers and larger orders.

Steps in EKF’s export loan procedure

EKF can also support Danish exports by providing attractive loans to projects with a need for large long-term loans, e.g. wind farms and cement plants. When EKF grants a loan for a project, the project will have the funds to place orders with Danish companies, thereby generating growth and jobs in Denmark.

Owned and guaranteed by the Danish State

EKF is an independent public company. EKF is owned and guaranteed by the Danish state under the Ministry of Industry, Business and Financial Affairs, but managed by an independent board of  directors based on the Act on EKF Denmark’s Export Credit Agency.

In March 2017, it was decided that EKF should pay dividend to our owner. Accordingly, EKF distributes half of its profit, but not exceeding DKK 140 million, to the Danish state. As from the financial year 2020, the amount will be reduced to maximum DKK 100 million per year. In addition, a lump sum of DKK 500 million will be distributed for the financial year 2019.

For the financial year 2017, we distributed DKK 140 million to the Danish state, and dividend of DKK 140 million was similarly proposed for the financial year 2018.

EKF’s equity and provisions must provide a reasonable basis for our liabilities and future activities. It defines the framework of EKF’s activity level.
Under the current rules, our equity must constitute minimum 5 per cent of our guarantee exposure and loans. See also the section on accounting policies.

§ 1. The object of EKF Denmark’s Export Credit Agency is to facilitate Danish companies’ export and internationalisation opportunities, participation in the global value chain and cultivation of new markets through internationally competitive financing and risk cover.​

Financial highlights

• Net profit

  • 618

    • DKK m

• Portfolio

  • 89,391

    • DKK m

• New guarantees

  • 33,683

    • DKK m

• Customers

  • 750

Net profit​/loss for the year​

The net profit for 2018 amounted to DKK 618 million.

Net profit for 2018​

Premium income for own account amounted to DKK 566 million for 2018. Of this, earnings from new guarantees amounted to DKK 411 million after guarantee provisions and reinsurance premiums paid. In 2018, as underlying loans guaranteed by EKF were gradually repaid, we were able to recognise as income DKK 362 million in the run-off result on previous years’ provisions for guarantees. Prepayments and refinancing of projects in 2018 represented an expense of DKK 53 million for EKF. Reclassification of countries and debtors amounted to an expense of DKK 153 million. The expense is primarily attributable to the OECD’s downgrading of Turkey from country risk category 4 to country risk category 5, resulting in an increase in EKF’s guarantee provisions of DKK 143 million.

Basic earnings for lending activities amounted to DKK 291 million in 2018 against DKK 275 million in 2017. One reason for the improvement was an increase in prepayment fees in relation to prepayments of loans.
Commission to and from reinsurance companies came to a net income of DKK 60 million. The income is attributable to the administration commission EKF charges reinsurers on reinsured transactions.

Claims for 2018 were higher than in 2017. Claims expenses for own account amounted to DKK 91 million, up DKK 72 million from 2017. In 2018, EKF adjusted provisions for losses upwards by DKK 130 million after reinsurance of a major transaction in the UK. In addition, claims payments were related to a number of new medium-sized transactions abroad and minor losses on working capital guarantees and other products issued to Danish small and medium-sized enterprises for which it was necessary to make new or higher provisions. In 2018, EKF adjusted its provisions for losses downwards on a major transaction in Mexico. Furthermore, EKF recognised as income the remaining share of the provisions previously made on a major transaction in Ukraine. As a result of the improved situation for the two transactions, EKF was able to recognise as income DKK 260 million, net. No objective indications of impairment of new loans were registered in 2018 compared to the previous year. A minor impairment was registered for one loan in the portfolio, which showed objective indications of impairment in 2018, resulting in increased write-down of DKK 52 million.

Administrative expenses for 2018 amounted to DKK 195 million, up DKK 16 million from 2017. The increase is primarily attributable to increased wages and salaries, since the staffing level was raised with several new jobs in the last few years in connection with the development of our new strategy as well as increasing activity.
Net financials represented an income of DKK 66 million compared to an expense of DKK 51 million in 2017.

Net profit for 2018 of DKK 618 million was in line with net profit for 2017. The distribution on individual accounting items varied considerably, however. 

Net profit for 2018 compared with net profit for 2017​

The chart shows the differences between net profit for 2018 and net profit for 2017 for each accounting item in the income statement.

In the above chart, the accounting item Premium income for own account is divided into three categories: basic earnings on new guarantees, change in guarantee provisions due to reclassification of countries and debtors, and other changes to guarantees. Other changes in guarantees includes prepayments, write-downs of gross premium income, and other changes in guarantee provisions.

Basic earnings
Basic earnings on new guarantees improved by DKK 315 million compared to 2017. Due to the high level of new guarantees in 2018, gross premium income was considerably higher than in 2017. The net effect of gross premium income less provisions of 80 per cent of the premium made by EKF on recognition was DKK 316 million higher in 2018 than in 2017.

The reinsurance level was similarly higher in 2018 compared to 2017, and the reinsurance premiums paid were also higher in 2018. The net effect of reinsurance premiums paid less provisions was DKK 41 million higher in 2018 than in 2017.
 
Reclassification of countries and debtors amounted to a higher expense of DKK 171 million in 2018 compared to 2017. The expense is primarily attributable to the OECD’s downgrading of Turkey from country risk category 4 to country risk category 5, resulting in an increase in EKF’s guarantee provisions of DKK 143 million.
Other changes to guarantees was higher in 2018 as a result of factors such as write-downs of premiums receivable according to IFRS9 by DKK 54 million in 2018 and other changes in guarantees of DKK 74 million such as prepayments etc.

Claims expenses
Claims expenses were DKK 72 million higher in 2018 compared to 2017. This is mainly due the greater need to make new or higher provisions on medium-sized transactions in 2018 compared to 2017.

Write-downs of loans
In 2018, a larger write-down was made of one loan in the portfolio showing objective indications of impairment.
Interest income from claims was higher in 2018 than in 2017. Discounting of premiums receivable represented an income in 2018 due to large new guarantees on transactions where the premium is paid over the maturity of the transaction and to general maturity reduction of the portfolio of premiums receivable. The effect of discounting premiums receivable represented an expense in 2017 due to prepayments on transactions where premiums are paid periodically and a moderate level of new guarantees on transactions with periodic premiums.

Net financials for 2018 included an expense of DKK 100 million relating to a change in an accounting estimate of the interest included in discounting of premiums receivable and payable to reinsurers. The change in the accounting estimate is described in the note on accounting policies.

Operating income​

EKF’s total operating income before administrative expenses amounted to DKK 747 million for 2018, including DKK 535 million from insurance activities and DKK 212 million from lending activities.

Total operating income after administrative expenses amounted to DKK 552 million for 2018 and for 2017, the operating income after administrative expenses amounted to DKK 649 million.

Total operating income before administrative expenses​

Operating income is the net profit for the year before administrative expenses and net financials.

Portfolio

EKF’s total portfolio amounted to DKK 89.4 billion in 2018. It consists of EKF’s guarantee exposure, reinsurance exposure, loans and offers issued.

EKF’s guarantee exposure after reinsurance amounted to DKK 54.5 billion and loans amounted to DKK 11.3 billion before write-downs, i.e. DKK 65.8 billion in total.

Guarantee exposure and loans by sector​

Wind is EKF’s largest business area. A look at the breakdown of EKF’s guarantee exposure and loans shows that wind projects account for DKK 46.9 billion, which is more than 70 per cent of EKF’s total guarantee exposure and loans.​

Development in export credits, working capital guarantees and loans less reinsurance​

EKF’s guarantee exposure increased by DKK 14.6 billion compared to 2017. The increase is attributable to large new guarantees in 2018 which are significantly higher than repayments, prepayments of and run-off on the existing portfolio.

New loans reflect the portions drawn down, not total new guarantees on loans in 2018.

Guarantee exposure and loans by region​

Western Europe increased significantly in 2018. One reason for the increase is that the year’s largest transaction of DKK 6.7 billion was in the UK. Moreover, a great many new guarantees were issued in Sweden, Argentina and Denmark. The Middle East, including Turkey, also increased in 2018. The primary reason for the increase is that a good many new guarantees were issued in Turkey.​

New guarantees​

EKF issued export credits, working capital guarantees and loans worth DKK 33.7 billion in 2018. The majority of these were issued for wind projects, but EKF also granted large financing guarantees for infrastructure projects in 2018.

New guarantees​

Customers

EKF had a total of 750 customers at the end of 2018.

Development in number of customers​

+ As from 2017, customers from the short-term reinsurance product portfolio are being recognised. Short-term reinsurance is a product by which EKF offers reinsurance for the private credit insurance market. In 2017, 58 customers from short-term reinsurance were recognised, and 45 customers from short-term reinsurance were recognised for 2018. ​

Customers by sector in 2018 (per cent)​

EKF’s customers are distributed across a wide range of sectors. In 2018, manufacturing accounted for just over one quarter.

5-year overview​

+ The merger of the Export Lending Scheme and EKF was implemented with effect from 1 January 2016. The overview is adjusted to the merger for 2015 and 2016, but not for previous years.

++ Proposed dividend is approved by the Minister for Industry, Business and Financial Affairs on presentation of the Annual Report and the distribution of profit at the company meeting. Dividend can then be paid to our owner.

+++ Write-down to expected loss according to IFRS 9 is not adjusted to the comparative figures from 2014-2017.

++++ Administered portfolio is EKF’s exposures to export credits, working capital guarantees, loans and conditional offers. The calculation includes exposures under the Mixed Credit Programme and investment guarantees issued by the Danish Ministry of Foreign Affairs before 2007. In addition, it includes exposures reinsured by EKF with other export credit agencies or private credit insurance companies.

Definitions of financial highlights and ratios

EKF ‘Prudent growth’ strategy launched in 2018

The new EKF ‘Prudent growth’ strategy was launched in 2018. A number of new strategic initiatives were launched in 2018, ’building the foundation’ for growth in the coming years, as stated in the strategy.

Activities in 2018 followed the four tracks indicated by the four must-win battles of the strategy:

Large corporates

EKF wants to do more business with more customers and more business with each customer, and we want to do it in even higher-risk markets.

SME segment

EKF wants to support the internationalisation of Danish SMEs – prudently by paying more attention to credit. In 2018, we focused on strengthening our relationships with customers, sales channels and partner organisations. At the same time, we worked on a digitisation project that will facilitate communication with banks about the working capital guarantee product.

Wind

EKF will help their customers move into new and more distant markets – both onshore and offshore. Under the sub-strategy for the wind segment, EKF has been working proactively on building relationships with customers, sponsors and international banks. It calls for a global outlook, and the focus has been on opportunities in Asia for Danish turbine manufacturers.

Business development

When servicing EKF’s 750 customers, we want more and closer relations, greater focus on business development based on customer input, clear and simpler communication and increased digitisation. We have been applying special resources to develop and bring some of EKF’s basic tools up to date. Thus, in 2018, EKF developed a new premium model, adjusted the requirements for private buyers, developed a risk-based CSR approach and updated the Danish economic interest model.

Strategy work in 2019

In 2019, EKF will continue to follow the four tracks to ensure a successful roll-out of the strategy:

• We will conduct outreach activities to get more customers.
• We will support growth in business volume by increasing our risk sharing through syndication and reinsurance with financial partners, including otherexport credit agencies. 
• We will implement a new visual identity and strengthen our visibility through increasedcommunication and marketing.
• We will strengthen IT and digitisation activities further at EKF.

Case: From local egg producer to global export success

SKOV, a company based in Glyngøre, Denmark, sells ventilation and management systems for livestock production across the world. With their proactive use of competitive financing from EKF, they are often one jump ahead when closing orders.

In the mid-1960s, egg producers Kristen and Kjeld Skov found that the air quality in their stables was unsatisfactory. They were unable to find a ventilation system to ensure the indoor climate in stables of a magnitude such as theirs. So there was nothing for it but for them to roll up their sleeves and manufacture the systems themselves.

This became the start of SKOV in Glyngøre, Denmark, which is currently a world leader in its field, supplying ventilation systems and complete farm management systems capable of centralised management of several stables.

”A lot has happened since the 1960s. We have developed new systems and products and are currently among the world’s leading suppliers of farm management systems. We can supply complete digital solutions that help our customers improve their animal welfare and productivity, and we can be involved in the whole process from development and tests to production and user training,” explains Jørgen Yde Jensen, CEO at SKOV.

One of the things SKOV does better than its competitors is to think in systems and offer complete solutions consisting of mechanical components and advanced control systems.

”A farmer can connect all his stable systems online and subsequently control the climate in all his stables from his desk. Moreover, our solutions are among the most energy efficient in the market and therefore cheaper to operate.”

Financing as the key to sales
SKOV’s solutions are so popular that they are currently being exported to more than 80 countries. The company in Glyngøre has subsidiaries in Thailand and China, and more countries are on the drawing board, including the USA and Russia. In 2018, sales increased by 22 per cent to DKK 835 million, and there is hope for continued growth in the years to come.

”We envisage a positive future, because the food industry is experiencing constant growth. The world’s population is growing and getting richer, thus increasing demand for food products and for livestock production in particular. As a result, our market is large,” says Jørgen Yde Jensen.

But in large markets, competition often equals the potential, and this is where EKF enters into the picture. When competition is strong, a financing solution from EKF may determine whether a foreign customer chooses to place its order with the Danish company.

”I actually believe we are among the companies working most proactively with financing from EKF. We have specific material about EKF and train our sales staff in offering financing from EKF whenever needed. We do not offer financing as the first step, but if called for during the sales process, everyone must be properly trained, so they can offer such financing.”

On several occasions, SKOV’s sales staff have experienced that financing was the deciding factor. Particularly in exotic markets, where financing costs are high, EKF’s competitive financing provides an edge.

”While making a sale to a customer in Peru at one time, our salesperson found out that one of our American competitors had offered the customer a year of financing. Our Peruvian customer was brandishing our competitor’s offer, asking why they should choose SKOV. At this point, our salesperson was able to offer 18 months’ financing from EKF, and that clinched the deal,” says Jørgen Yde Jensen.

I actually believe we are among the companies working most proactively with financing from EKF. We have specific material about EKF and train our sales staff in offering financing from EKF whenever needed.

JØRGEN YDE JENSEN
CEO at SKOV

Large guarantees to projects
across the world

EKF experienced a pronounced increase in demand last year attributable primarily to its participation in the financing of a number of large wind farms and public construction projects. Transactions worth DKK billions contribute to filling the order books of Danish companies and EKF alike.

A number of developing countries are working on construction projects that are to serve as the basis for future growth. They aim to secure proper infrastructure and sufficient energy supply. But these countries often find it difficult to obtain loans in the commercial loan market, so EKF has an important role to play here.

In 2018, we contributed to the financing of a transmission line in Angola and three cement plants in Bangladesh, among other projects. These are places where it would be difficult to arrange financing without the participation of public export credit agencies such as EKF. Large construction projects in 2018 also included the financing of a motorway and a suspension bridge in Turkey and a biogas plant in the USA.

New guarantees to large corporates in high-risk countries​

Countries of the world are divided into risk categories from 0-7. High-risk countries are defined as countries in risk categories 6 and 7.

Denmark has the highest possible rating available from the international rating agencies, so EKF is one of only eight export credit agencies worldwide enjoying the highest AAA rating. For many Danish companies, this provides an important seal of approval. Especially when they want to sell their projects and goods in a world where the price of financing is often a key purchase parameter. This applies irrespective of whether financing is required for stable fixtures for Russia, a coffee factory in Vietnam or a wind farm in Norway.

Over the past year, EKF had particular focus on expanding our customer relations and doing more business with existing customers. Our aim is to give Danish exporters the best possible financial security when they venture into export markets. Furthermore, exporters are becoming increasingly aware that the ability to offer their customers financing arrangements can give them a competitive edge. This applies especially to the farm equipment industry and to the food and cement industries.

Development in number of new guarantees and loans for large corporates​

The number of new guarantees for large corporates was much higher in 2018 than in 2017.

Overall, wind financing accounted for 75 per cent of new guarantees in 2018. At the forefront was Hornsea 1 in the UK. This is the largest wind farm in the world so far, and EKF provided guarantees worth DKK 6.7 billion to several lending banks. To this should be added a number of other onshore and offshore wind farms, including in Belgium, Sweden, Australia and Mexico. But the financing of a wind farm in Senegal – the first large wind farm in West Africa– was also among the more spectacular wind guarantees provided in 2018.

EKF’s financing for wind projects is in such high demand, not least because of Denmark’s leading position within wind technology, construction of a number of offshore wind farms in Northern Europe, and the fact that onshore wind farms are becoming increasingly important focus areas for both emerging markets and developing countries. In both cases, EKF can provide the guarantees ensuring that banks will grant loans for the projects. Consequently, EKF’s guarantees are helping to ensure that the orders go to Danish companies.

Development in wind guarantees 2015-2018​

Case: The largest wind farm in West Africa is ”made in Denmark”

640 million people in Africa are estimated to be without electricity. The energy is too expensive, and investors are too anxious about making energy investments in Africa. The first large wind farm in West Africa, Taiba N’Diaye, is to change all that. EKF has ensured the financing of this wind farm.

By July 2020, 46 Vestas wind turbines are commissioned to deliver power corresponding to 15 per cent of Senegal’s current energy supply.

EKF has provided an export loan of DKK 910 million with a term of 17 years, and this has helped securing Vestas the order for the wind turbines, the construction and the maintenance of the wind farm, which will have a capacity of 158 MW. It is to supply around two million households with power and, not least, contribute to preventing the frequent power cuts that plague the capital Dakar, and which make industrial development difficult.

In addition to EKF, the US development fund OPIC provided part of the financing. The project owner is the company Lekela, which has been in charge of developing a number of wind farms in Africa in recent years, including in Egypt, Ghana and South Africa. They are optimistic about the opportunities.

“African countries have some of the world’s best renewable energy sources. If we can exploit that energy on a large scale, we can fill the African energy deficit very quickly. But this assumes a fivefold increase in investment capital as a minimum and that investors accept the long-term nature of these investments. This requires that we have some successful energy cases to show investors, and here we hope the project in Senegal can make a significant difference,” says Chris Antonopoulos, CEO at Lekela.

One billion people globally are estimated to live without access to electricity, but this is not due to lack of focus on the issue. UN global goal number 7 is about ensuring access to sustainable energy for the world’s poorest citizens by 2030, and a number of African countries have developed ambitious energy strategies to ensure that renewable energy contributes to obtaining the power supply required to provide the basis for industrial growth and development.

But despite the great potential, only around one per cent of the power generated in Africa came from renewable energy sources in 2016. Instead, power stations fuelled by fossil fuels, including coal and diesel, account for a large share of the energy supply.

”Wind energy is a speedy and sustainable means to fill the energy deficit, become independent of fossil fuels and avoid large fluctuations in oil prices. And if we consider that it is currently possible to construct onshore wind farms and supply power at competitive prices compared to the prices of coal and diesel-generated energy, it shows the potential scope for Danish wind energy exports to Africa,” says Christian Ølgaard, Deputy CEO at EKF.

The state-owned Senegalese energy company has concluded an agreement to purchase the wind energy at a fixed price and secure the line of supply throughout the entire repayment term of the loan. Christian Ølgaard hopes that the project in Senegal will be a model for other African countries:

”In our experience, banks and investors are increasingly interested in participating in financing renewable energy in developing countries. But once they begin to analyse the many risk elements involved in countries with high political risk, economic instability and poor infrastructure, they frequently opt out. We would like to help change this, because covering that kind of risk is our expertise. For EKF, it is a matter of contributing to successful energy projects to ensure that Danish wind technology exports gain ground in new markets with huge potential," says Christian Ølgaard.
 

And if we consider that it is currently possible to construct onshore wind farms and supply power at competitive prices compared to the prices of coal and diesel-generated energy, it shows the potential scope for Danish wind energy exports to Africa.

CHRISTIAN ØLGAARD
Deputy CEO at EKF

SMEs still make up
the largest share

In view of a high and fairly stable number of SME customers, small and medium-sized enterprises remain EKF’s predominant customer segment.

Although EKF’s largest new guarantees were issued to finance projects in the energy, infrastructure and construction sectors, small and medium-sized enterprises still make up the backbone of EKF’s business in numerical terms. With a slight reduction of 27 SME customers, the number of customers remains more or less unchanged. 588 – or approx. 78 per cent – of EKF’s customers belong in the SME segment. New guarantees issued to Danish SMEs totalled DKK 1.3 billion. This is a slight reduction compared to DKK 1.5 billion in 2017.

Breakdown of customers 2018

SMEs accounted for 78 per cent of EKF’s 750 customers in total at the end of 2018.

Working capital guarantees are popular

As in the preceding years, working capital guarantees were among the most popular for SMEs. Working capital guarantees accounted for 183 of the 338 export credits, working capital guarantees and loans issued to SMEs in 2018.Even though the Danish economy is in good shape, many banks still want EKF to provide security when they grant loans for the general operating expenses of an SME. And with a working capital guarantee from EKF, the banks have the necessary security to offer credits to SMEs.

Steps in EKF’s working capital guarantee procedure

With a working capital guarantee, EKF assumes most of the bank’s risk, making it more attractive for the bank to grant the Danish SME credit. When it secures credit from a bank, the SME has the scope to accept more and larger orders, implement a growth strategy or pay for materials, wages and suppliers.

Supplier credit guarantees are the second-most-in-demand EKF solution from SMEs. In 72 instances in 2018, a supplier credit guarantee from EKF was the decisive factor in enabling Danish companies to secure an order by offering the foreign buyer a lengthy credit period. With a supplier credit guarantee, EKF assumes the credit-related risk from the Danish exporters. If the foreign buyer fails to pay as agreed, the Danish company is paid compensation by EKF.

High risks create demand for EKF

2018 was a turbulent year in the export markets, requiring Danish exporters to navigate in a world scenario of trade war, sanctions, currency unrest and e.g. Brexit uncertainty. This may be one of the reasons why EKF is still in high demand, even if demand is traditionally the highest in an economic downturn, says Kim Richter, Senior Director of the SME department at EKF

”We are in a boom, so the banks have plenty of room for manoeuvre to provide financing to SMEs. That is a good thing, because it gives Danish companies more power to accept orders from foreign buyers. But SMEs are also navigating in an ever more complex world scenario of increasing risks, which may to some extent explain that risk-taking state export credit is still in high demand. But another reason is also the extensive effort we have put into ensuring awareness of EKF’s services.”

Important networking

In 2018, we continued our efforts to ensure awareness of state export credits. Danish banks are among our most important partners, and EKF has trained approx.
225 export ambassadors. They are advisors who, as part of EKF’s ambassador programme, have been trained in the possibilities of offering customers export credit. We trained three new teams of export ambassadors in 2018.

”In addition to export credit, the training also includes an introduction to our other partners in the Trade Council, Erhvervshusene  (Regional Business Development Centres) and IFU, and the objective is to give the export ambassadors a good grasp of where Danish SME exporters can get help to realise their export dreams," says Kim Richter.

An analysis from the Wilke research agency shows that the export ambassadors do a good job of sharing their knowledge in the banks.
"We appreciate this, because it means that more Danish SMEs will be met by business advisors who are able to advise them on their scope for using EKF. The ambassador programme has led to a good deal of new business, so we intend to continue our efforts to increase awareness of our services in the banks,” says Kim Richter and continues:

”The partnerships with Erhvervshusene (Regional Business Development Centres), the Trade Council and the Connect Denmark business network also play an important role in ensuring awareness of EKF’s services. And we are also doing a lot to cultivate new networks and to be present at relevant conferences. For example, we were partners on Børsen Gazelle (annual selection of Danish gazelle companies) again this year in order to show the flag for Danish growth companies.”

Introducing new initiatives 

In late 2017, EKF launched several new initiatives in order to extend the use of export credits, and the new options were gradually implemented in 2018.

”In 2018, we issued the first working capital guarantee to a tourism company. It was a Danish caravan park that needed financing for a major renovation project. The banks have been reluctant to extend loans to this sector due to its highly seasonal and weather-dependent nature, so it is good to see that EKF’s export credits and working capital guarantees can also contribute to growth here,” says Kim Richter.

Furthermore, for the first time EKF participated in a transaction where a foreign company preferred to lease Danish equipment rather than buying it. EKF launched its Operating Lease Guarantee solution in early 2018.

”We have been contacted by several companies wanting to hear about the new options – within both leasing and tourism. It is good to see that the new initiatives are favourably received, but fully in line with our experience from other new initiatives – e.g. the InnovFin programme that has just been extended – it takes time before they gain ground with our customers.”

Offering working capital guarantees and loans at low premium rates to innovative companies, the InnovFin programme was introduced in 2016 in cooperation with the European Investment Fund.

In 2018, we also worked on ensuring awareness of Shopping Lines, a proactive service whereby EKF helps open doors for Danish exporters by offering credit to strategic foreign buyers. The buyers can use the credit to trade with more Danish suppliers, thereby facilitating access to export financing for Danish SME exporters in particular.

The initiative is closely coordinated with the Trade Council and relevant trade associations. We have implemented initiatives in China for wind sub-suppliers and in Brazil for farm and food enterprises, and in the spring of 2018, the government decided to include the initiative in its growth strategy for 2018-2020 in order to increase the financing scope for Danish investments in growth and volume markets.

”In 2017, Shopping Lines was presented to a number of large cooperative farms in Brazil. It was favourably received, and we expect the first contracts to be concluded in the first half of 2019. In 2018, jointly with the Confederation of Danish Industry (DI), the Danish Agriculture & Food Council and the Danish embassy in Mexico, we worked to introduce the concept in Mexico. In January 2019, the first Danish delegation visited nine Mexican buyers, and several Danish companies were matched with potential customers. In addition, we will revisit Brazilian cooperatives in March 2019. It takes time to secure contracts of such a magnitude, but we hope to see the first transactions in the course of 2019,” says Kim Richter.

Last, but not least, EKF launched a digitisation project in November 2018, which will facilitate communication with banks about working capital guarantees to SMEs when it is implemented in 2019.

In 2018, we issued the first working capital guarantee to a tourism company. It was a Danish caravan park that needed financing for a major renovation project.
The banks have been reluctant to extend loans to this sector due to its highly seasonal and weather-dependent nature, so it is good to see that EKF’s export credits and working capital guarantees can also contribute to growth here.

KIM RICHTER
Senior Director, SME and Cleantech at EKF

Case: Food company Carnad turns small crabs into a huge success

It can be expensive for a small company to achieve success with large international customers, because large customers often require long credit periods. So when a company starts up in the wake of the financial crisis, experiences technical difficulties and requires export risk cover, it has to explore new avenues. The solution for the food company Carnad turned out to be a working capital guarantee from EKF.

”See if you can do something with these,” was the bold statement made by two Limfjord fishermen who had just delivered 25 kilos of live shore crabs to the cold store at Carnad – a company specialising in producing extracts from meat and seafood products, primarily exporting them to SMEs in Asia and large food companies in Europe.

The 25 kilos of shore crabs triggered an experiment to create a new export product that would not only be marketable, but also help solving a local problem for the Limfjord fishermen,because the small, unappetising crabs are exploding in numbers in the Danish fiords, getting stuck in fishing nets and damaging the famous Limfjord mussel beds.
 

80-120 tonnes of crabs

”We have a highly flexible facility capable of handling all types of raw material of animal origin and quick restructuring for test production purposes,” says Johnny Koch, Managing Director at Carnad.

Our crab fishery objective was to produce and sell an extract with a flavour so close to the flavour of the basic ingredient in lobster soup that even experienced chefs cannot taste the difference. We have achieved this objective. Today, two fishermen are employed full time during the summer half of the year supplying crabs to Carnad. 

It comes to 80-120 tonnes of crabs per year, and demand, not only for crab extract, but also for the company’s other products, is increasing year by year. But the export success comes with a price tag.
”The challenge is that our customer and order numbers keep growing, as does our liquidity requirement. While payment terms of 30 days were enough for our small customers in the past, large food enterprises require payment terms of 180 days.

Carnad’s extracts and powders are characterised by being based on natural raw materials rather than artificial flavouring. Furthermore, the company has started to develop organic products, and they are constantly working with international food giants to expand into new areas of the food industry.
 

The solution turned out to be a working capital guarantee

The bank and investors have all been patient and monitored the company regularly. They could see that the company was growing, but also that there were production challenges. So they held back.

”The first years were a disaster. We started up in 2009 right after the financial crisis, and we had a lot of technical challenges. I was convinced that the right product at the right price was certain to sell, so we hired sales staff to develop the markets in Asia. But developing new customers in the food sector is a slow and demanding process, and neither the board of directors nor the bank thought we were ready for debt financing,” explains Johnny Koch, who has now assumed responsibility for sales himself.

The good news is that customers have started contacting us of their own accord. The bad news is that growth in turnover has put the company’s liquidity under further pressure.

It was Asbjørn Berge, chairman of Carnad’s board of directors, who suggested contacting EKF for financing assistance.

”He had heard that we were beginning to turn customers down because we couldn’t afford the long credit periods, so he suggested that we turn to EKF for assistance.”

Once Carnad had contacted EKF in consultation with its bank, things really picked up. The company was assessed based on the financial statements of three years, and in close dialogue with the bank it was decided to grant a three-year operating credit guarantee capable of covering growth in turnover of 10-20 per cent per year. Because half of the guarantee was covered by EKF, the bank was willing to grant a loan.

The challenge is that our customer and order numbers keep growing, as does our liquidity requirement. While payment terms of 30 days were enough for our small customers in the past, large food companies require payment terms of 180 days.

JOHNNY KOCH
Managing Director at Carnad

CSR at EKF

EKF is constantly striving to integrate consideration for people and the environment in its strategy and business processes. This is a natural consequence of the fact that, as an export credit agency, we must comply with a number of international standards applying to all state export credit agencies in the OECD.

Within the framework of the Act on EKF Denmark’s Export Credit Agency, EKF is working to ensure protection of the environment and human health in Danish exports. Based on the international rules on corporate social responsibility (CSR), we set standards for ourselves and for the Danish exporters, foreign buyers and financial institutions we cooperate with. EKF’s CSR policy not only plays a vital role in relation to the projects we help to finance, it also lays down environmental and employee conditions for our own business in Denmark.

EKF has long-standing experience with interpreting and applying the international standards that we, like all other export credit agencies, must comply with. In 2018, we focused on sharing our experience with our international colleagues and partners. Partly to ensure equal terms of competition for Danish and foreign companies and partly because we believe that applying international standards is important to ensure responsible growth.

In 2018, EKF developed and integrated a new CSR policy that defines our ambitions and commitments. In practice, this means that EKF requires transactions in which we are involved to comply with international standards such as the IFC Performance Standards, the OECD Common Approaches, the OECD Multinational Enterprise Guidelines, the UN Global Compact and the UN Guiding Principles on Human and Business Rights.

Accordingly, our work to apply CSR already begins in the early dialogue with a potential customer and continues throughout the period in which EKF is involved in a project and has the opportunity to influence it. We see to it that environmental and human rights aspects and social sustainability are integral parts of EKF’s initial screenings, risk assessments and regular follow-up. Our aim is to clearly show how CSR must be integrated in the business. EKF’s requirements often contribute to enhancing the project standards for environmental and social sustainability. We are continuously following up on these requirements, and this is one aspect of our Prudent growth strategy.
 

Compliance with CSR requirements is a condition

EKF is involved in approx. 1,100 export transactions in more than 100 countries. Often in countries with traditions and regulations for environmental, working and social conditions that differ from those in Denmark. Compliance with these requirements is therefore a condition for EKF’s participation in the financing.
It is elaborate and time-consuming work to ensure compliance with standards, and in many cases it involves both advisory services and capacity building on the individual projects. To avoid misunderstandings, EKF is constantly seeking to create a transparent and tangible process in its CSR work.

According to the OECD Common Approaches, EKF classifies projects as category A,B or C projects. The classification indicates the review and assessment processes required for a project. Category A projects require an extensive assessment of environmental and social sustainability, while category B projects are typically smaller, have fewer impacts and therefore do not require the same level of assessment. C projects are projects with very low or no environmental and social impacts.

In 2018, EKF was involved in seven projects classified as category A projects and 21 projects classified as category B projects. 16 were wind projects, four were cement projects, six were infrastructure and utilities projects, one was a biogas project and one was an industrial project. Finally, EKF’s CSR department is regularly monitoring and handling 114 transactions from the previous years.

Read more about EKF’s CSR activities and our obligations with regard to environmental and social sustainability at ekf.dk.

Here you can find more detailed information about the international standards with which EKF must comply and read more about the methods to calculate environmental and social impacts for EKF’s transaction portfolio.

Follow-up

Following up on environmental and social sustainability requirements is just as important as following up on financial conditions. Therefore, we prioritise both internal resources and consultancy services in order to ensure project compliance with international standards.

Cement project in Bangladesh

In 2018, EKF participated in a cement project in Bangladesh. We experienced a number of problems that had to be solved for us to enter the project. They ranged from lack of protection equipment to an inadequate environment and health management system. Once the necessary contacts and communication channels had been established, the systems and practices improved considerably before the funds were released.

This case emphasises the effect of requiring compliance with environmental and social responsibility standards. In addition to giving companies access to financing, it also helps them to enhance their standards and meet the international requirements. This opens new market opportunities and ensures investment.

Environmental conditions at EKF

EKF’s environmental footprint is moderate. The most significant impact is related to energy and water consumption. Waste volume and resource consumption levels are both relatively constant in comparison to previous years.

The figure below shows EKF’s CO2 emissions related to consumption and transportation. The total contribution of CO2 equivalents for 2018 amounted to 730 tonnes. At 630 tonnes, air travel is by far the largest single contributor, which can be attributed to EKF’ participation in numerous negotiations, including on CSR matters, in relation to our projects in various places around the world. The number reflects a minor increase compared to 2017, but should be viewed in the context of EKF’s growing business volume and number of employees.

CO2 emissions associated with EKF’s consumption and transportation​

+ Not all data was available at the time of reporting. In these cases, data is based on the previous year. Emissions were calculated on the basis of HOFOR’s environmental product declaration for district heating in the current year, if available at the time of reporting.

++ Not all data was available at the time of reporting. In these cases, data is based on the previous year. Emissions were calculated on the basis of Energinet’s environmental product declaration for electricity supplied for consumption in Denmark in the current year, if available at the time of reporting.

EKF employees

Being Denmark’s export credit agency with business activities in more than 100 countries is a task which requires a competent and diversified staff. EKF has such a staff. A career with us is an opportunity for development in a company with great ambitions and for contributing to growth and wealth in Denmark.

EKF’s principal task is to help Danish exporters move forward. But this mantra also applies to our staff. We want to be known as a financial institution that creates results and is customer-oriented, an institution based on commitment, professionalism and reliability. We do business with both large and small Danish companies in more than 100 countries, and the challenges encountered by our customers are more complex than ever before. Hence, we are a knowledge-intensive institution that takes the professionalism and ongoing skills development of our staff very seriously. Each year we allocate a large amount for skills development as our staff provide the basis for EKF's continued success.

We also want to attract and retain the best employees. Our business activities have grown considerably in recent years, and complexity has increased. As a consequence,we welcomed 11 new employees in 2018, bringing our average number of employees to 131 in the past year.
 

Our employees make a difference

As an employee at EKF, you are part of an organisation with a large network of contacts in both Denmark and abroad. We are working in an interesting international environment, collaborating on a daily basis with companies, banks and embassies worldwide as well as international organisations such as the EU and the OECD.

As a result, our employees work in a busy and interesting environment with an international outlook, requiring high-quality solutions, often within short time limits.
EKF’s employees meet some of the most committed and talented people in Denmark and around the world as part of their activities to ensure success for our customers.

An export credit or working capital guarantee is often key to securing contracts for Danish exporters. In this way, our work helps to create growth and jobs in Denmark, which is of the utmost importance to us. Besides good working conditions, it is one of the primary reasons that the average length of employment at EKF is seven years, and we are still experiencing considerable interest in working at EKF.
 

Good working conditions

EKF strives to ensure the best possible conditions for our employees, because we believe that a positive working environment based on employee well-being counteracts absenteeism and ensures dedicated and happy employees. We are busy and ambitious, but we are also having fun. Communication is informal, and we have a flat structure with a short ‘chain of command' between employees and managers.

Expectations of employees at EKF are high, but as an employee, you will able to significantly influence your work content and planning of your day-to-day work. Every day brings new, demanding challenges, but we also do our utmost to promote the important work-life balance..
 

Gender balance in EKF’s management

At EKF, we support the principle of equal gender representation in EKF’s supreme governing body, i.e. the Board of Directors. We recognise the need for diversity in management, because we believe this creates the best business results. As an independent public company we are subject to the provisions of the Danish Gender Equality Act stating that boards, assemblies of representatives or similar collective management bodies should have an equal gender balance.
Since the proportion of women on EKF’s Board of Directors constitutes 33 per cent (29 per cent excluding members of the Board of Directors elected by the employees) and thus meets the requirement for an equal gender balance, EKF has not set any targets for this.

EKF has a policy on equal gender representation in management. The policy covers all layers of management in the organisation. Women managers at EKF account for 42 per cent of the overall management group. We want to increase the proportion of women managers in our management group, so we encourage women to go for management positions. We do this by striving for a representation of women in the recruitment process for management positions at EKF, provided that the candidate meets the qualification requirements. Furthermore, we ensure internally that management positions are discussed with potential women managers as part of the discussion of their career development during performance reviews.

Total number of EKF employees (average)​

The chart is based on the average number of employees according to the ATP method.​

Corporate governance

EKF organises the management of EKF and our activities in accordance with the object of EKF as defined in the Act on EKF Denmark’s Export Credit Agency. According to the Act, EKF is to facilitate Danish companies’ export and internationalisation opportunities, participation in the global value chain and cultivation of new markets through internationally competitive financing and risk cover.

As part of this organisation, EKF must follow the recommendations for exercising ownership and corporate governance in state-owned companies as described in the government’s ownership policy for 2015.

As EKF has the status of an independent public company, the Danish state through the Ministry of Industry, Business and Financial Affairs has the final power over its activities within the framework of legislation.

EKF’s Board of Directors undertakes the overall and strategic management of EKF and the supervision of Management. The general tasks and responsibilities of the Board of Directors are laid down in its rules of procedure. Management is in charge of the day-to-day management of EKF and must thus comply with the policies, guidelines and instructions provided by the Board of Directors.

The Board of Directors consists of nine members, seven appointed by the minister and two elected by the employees. In accordance with the Danish state ownership policy and the corporate governance recommendations, the Board of Directors performs an annual self-evalualtion. In 2018, a few questions were added to the question frame approved by the chairmanship, based on the most recent recommendations from the Corporate Governance Committee. The questions are divided into the following categories: Work climate and cooperation with EKF, Board duties, Competencies, Chairman’s role and General questions. The self-evaluation was performed in October 2018. In line with the recommendations of the Corporate Governance Committee, EKF plans to involve external assistance for the evaluation every three years.

According to the Act on EKF Denmark’s Export Credit Agency, the members of the Board of Directors shall between them have the competencies necessary to pursue the objects of the enterprise, including the required professional credit, financial, business, management and economic insights. EKF performs an analysis of the competencies of the Board of Directors in connection with the self-evaluation of the Board of Directors, and that was also the case in 2018.
The self-evaluation of the Board of Directors, including the analysis of its competencies, was presented to the Ministry of Industry, Business and Financial Affairs in December 2018.

According to EKF’s articles of association, board meetings must be held at least four times a year. Seven physical board meetings and one board meeting conducted by telephone were held in 2018. Furthermore, a two-day board seminar was held.

The Board of Directors has two sub-committees: the Audit and Risk Committee and the Remuneration Committee. In accordance with the Danish state ownership policy, the members of the committees and the committees’ terms of reference can be seen on the EKF website www.ekf.dk.

Four physical meetings and five meetings conducted by telephone were held in the Audit and Risk Committee and four meetings were held in the Remuneration Committee.

As laid down in the strategic ownership document for EKF, the chairmanship holds quarterly meetings with the Ministry of Industry, Business and Financial Affairs, presenting a comprehensive and detailed report on EKF’s strategic relations and a follow-up on its operating results etc.

For more information on remuneration and fees, see note 6 to the income statement and the other duties etc. of the Board of Directors in the section entitled ‘EKF’s Board of Directors’.

EKF applies the Danish state ownership policy​

As an independent public company, EKF applies the Danish state ownership policy as its corporate governance code.

The ownership policy contains a large number of specific recommendations for and expectations of the Danish state’s exercise of ownership and the conduct of state-owned companies.

EKF aims to comply with all recommendations of the state ownership policy. We achieved this aim in 2018.

In accordance with the Danish state ownership policy, EKF notes that EKF’s Board of Directors holds eight annual board meetings.

The state ownership policy is available at the Ministry of Finance website (in Danish).

Internal risk management
at EKF

The Board of Directors is responsible for the overall framework of EKF’s business. It is important to ensure that EKF has the necessary procedures for risk management, financial statements and capital resources, and that EKF complies with applicable legislation. Risk management must comprise managing inherent risks in EKF’s business model and minimising risks. That is a precondition if EKF is to offer financing to Danish exporters and their buyers on competitive terms.
 

Control environment

EKF works actively with risk management before, during and after the granting of export credits and loans. The organisation is adapted to the basic risk management principles.

The Board of Directors adopts the general rules of a number of policies. Management is responsible for implementing the risk exposure framework in the business and for ongoing risk management. In close cooperation with the Heads of Department, who make up the first line of defence, Management assesses and handles the risks associated with individual business activities. EKF also makes use of cross-organisational risk coordination units and risk management functions serving as the second line of defence.

Risk management​

Risk assessment

The Board of Directors has set up an Audit and Risk Committee to prepare its decisions regarding all matters related to accounting, auditing and risk. Together with the Board of Directors and Management, the Committee has a supervisory and advisory risk management function at EKF.

Risk assessment

The Board of Directors has defined a number of principles for EKF’s risk management in a risk management policy. Once a year, the Board of Directors makes an overall assessment of EKF’s financial and operational risks. To that end, the Board of Directors assesses initiatives to reduce risks, EKF’s organisation and risk management.

Financial reporting

The Board of Directors, the Audit and Risk Committee and Management assess the financial reporting process every year. This process comprises controls of data, systems and procedures as well as compliance with legislation. As part of the process, EKF also considers the separation of duties and the need to launch new controls.

Risk exposure

EKF’s risk exposure is strongly affected by credit risk, which is EKF's greatest risk. Credit risk occurs when counterparties on EKF-guaranteed loans, working capital guarantees and direct lending default on their debts. Insurance risk is the risk of loss on the guarantee portfolio above the expected level. Operational risk covers the risk of loss due to inadequate internal management of processes and systems. Market risk is the risk of loss due to changes in the financial markets, e.g. interest rate and exchange rate risks.

Further risks associated with investments, liquidity and swap counterparty risks are described in notes 22 and 24.

Credit risk

The object of EKF is to facilitate Danish companies’ export and internationalisation opportunities, participation through internationally competitive financing and risk cover. Consequently, EKF’s exposure is based on either major transactions, challenging markets or other business-specific ambitions such as the extension of product lines in Denmark. The advantage to the Danish exporters is that EKF’s export credit covers the buyer’s payment ability. Payment to Danish exporters can also be guaranteed by a foreign bank or a sovereign debtor. Hence, EKF’s greatest risk is that the exporter’s customer does not have the possibility, ability or willingness to pay.

Export credits, working capital guarantees and loans

EKF offers especially working capital guarantees, buyer credit guarantees and project financing guarantees to Danish exporters selling their goods abroad. Furthermore, EKF can provide direct loans to Danish exporters’ customers in connection with exports. EKF manages credit risk via the framework for its credit rating process defined in the credit policy and product-specific guidelines.

Concentration

EKF’s portfolio is concentrated on the wind turbine industry and covers several single exposures worth billions. Diversification of risk on debtors, countries and regions is a key part of EKF’s risk management. EKF applies internal benchmarks for credit risk and portfolio concentration. The benchmarks monitor e.g. concentrations on individual debtors and the credit quality of the portfolio as well as growth patterns.

EKF uses reinsurance in both risk and capacity management. In addition to reducing credit and insurance risk, reinsurance also lessens capital requirements and frees up capacity to issue new guarantees and loans.

Reinsurance adds great risk management value by addressing large concentrations on debtors and countries in the portfolio. At the same time, EKF is able to increase its capacity through strategic reinsurance based on portfolio segmentation. In 2018, EKF retained a reinsurance level of more than 20 per cent of EKF’s total exposure.

Allocation

EKF applies a fixed-limit authorisation structure for Heads of Department and Management. All sizeable transactions must be approved by the Board of Directors. The Board of Directors’ makes decisions on granting of loans and export credits at its board meetings.  

Distribution of approvals of new guarantees 2018​

Monitoring

Risk management includes an updated picture of EKF’s risk exposure on the existing portfolio. EKF runs annual credit rating checks of exposures based on principles of exposure, estimated probability of loss and customer characteristics. Monthly monitoring includes ratings of banks to ensure that EKF has an updated credit quality assessment.

EKF regularly monitors country risk and reassesses its cover policy in case of internal or external changes. In addition, EKF reviews regions minimum once a year.
Continuous monitoring helps to ensure that we know the portfolio and the overall risk profile and its development. Moreover, it enables us to implement loss prevention measures and calibrate provisions when required.

Credit rating

We use internationally recognised tools from Standard & Poor's for risk classification of foreign debtors and projects. For risk classification of Danish risks, we use a model developed by Moody’s. In our assessment of commercial risks and sector risks, we perform stress tests of debtors’ payment ability. Moreover, relevant collateral is included in the overall risk exposure.

For our assessment of country risks, we use the OECD’s country risk classification, which comprises the factors that may impact debtors' possibilities, willingness and ability to meet their payment obligations.

Insurance risk and provisions for losses

EKF regularly assesses the need for provisions for losses. Insurance risk is the risk that realised losses on EKF’s portfolio of guarantees exceed total provisions and write-downs. Thus, insurance risk expresses a portfolio consideration under which the provisions made do not measure up to potential losses.

In addition to the annual adjustment of the need for provisions for losses in the commitment follow-up, EKF notifies the Board of Directors of the 10 largest provisions at the eight annual board meetings. The size of provisions reflects EKF’s overall expected loss on the portfolio. Furthermore, EKF performs statistical calculations of the need for write-downs of loans and premiums receivable in the quarterly financial statements in accordance with the accounting standard on impairment of financial assets measurement, IFRS 9.

Our insurance risk is significant because of major concentration on individual debtors, sectors and regions, but is reduced by a number of initiatives. In accordance with EKF’s articles of association, we have established a concentration reserve, the ‘restricted equity’, which increases in case of a rise in portfolio size and concentration in order to absorb major potential losses. At the end of 2018, our restricted equity totalled DKK 2.6 billion.

EKF operates with a number of low credit quality exposure classifications. Exposures will be classified as potential losses if, in EKF’s assessment, there is a risk of credit loss. Exposures will be classified as claims if it is certain that EKF has to pay compensation or cannot expect its total receivable to be paid.

Indemnification payments, gross, and commitment exposed to potential losses and claims from 2017 to 2018​

Market risk

Market risk is the risk of loss due to changes in the market value of assets and liabilities attributable to developments in the financial markets. In terms of market risk, EKF is exposed to interest rate and exchange rate risks.

Our capital requirements are affected by exchange rate and interest rate fluctuations through the size of our guarantee exposure and loans. EKF is exposed to exchange rate and interest rate risks on that part of the guarantee exposure that is not hedged by swaps or indirectly by forward exchange contracts. Consequently, our scope for issuing new export credits, working capital guarantees and loans changes when exchange rates appreciate or depreciate. EKF’s total guarantee exposure consists of different types of guarantee around the globe – mainly issued in EUR, GBP, USD and DKK. Export loans are issued in EUR, AUD, USD, GBP, NZD and DKK.

Guarantee exposure​

Interest rate risks

EKF provides full hedging of interest rate risks on issuance of export loans. Using interest rate swaps, EKF ensures a link between the raising of loans in Danmarks Nationalbank at a fixed interest rate and lending to customers at a variable interest rate.

EKF performs stress tests of interest rate changes affecting the credit risk of export credit guarantees and factors the risk into the rating and thus into the premium on which our provisions are based.

EKF performs an annual sensitivity analysis of the accounting impact on net profit and guarantee exposures due to interest rate changes. EKF is primarily sensitive to interest rate changes for premiums receivable.

Exchange rate risks

EKF provides full hedging of exchange rate risks on issuance of export loans, except for exposures in euro. Using currency swaps, EKF ensures hedging of the risk of exchange rate changes and a link between the raising of loans in Danish kroner in Danmarks Nationalbank and lending to customers in another currency.

EKF assumes guarantee exposure in many different currencies, resulting in liabilities and receivables, in many cases in foreign currency. EKF calculates the result in Danish kroner, however, and so is exposed to risk in the event of changes in exchange rates. EKF reduces the overall accounting impact, as far as possible, through forward exchange contracts.

EKF’s principal currency exposure, except for exposures in euro, is to US dollars. EKF regards Denmark’s fixed exchange rate policy as a means of hedging against fluctuations in EKF’s exposures in euro. In conjunction with the hedging of US dollars, the fixed exchange rate policy ensures that our net profit is not significantly affected by exchange-rate fluctuations.

Export loans​

EKF performs an annual sensitivity analysis of the accounting impacts on our profit and guarantee exposures due to exchange rate changes. EKF is highly exposed to EUR, which consequently has the highest impact on the guarantee exposure. See note 23 for more information about the sensitivity analysis.

Operational risks

Operational risks, including compliance and reputational risks, are the risk of loss resulting from inadequate or failed internal processes, people
and systems.

Operational risk is managed across the organisation through internal regulations drawn up in order to ensure an efficient control environment at EKF. We seek to minimise operational risks by e.g. separation of duties between performance and control of activities and by an authorisation structure.

In 2018, EKF developed a new incident reporting structure in order to support our operational risk policy.

Compliance risks are managed by continuous implementation and maintenance of efficient processes to ensure that EKF meets its obligations in accordance with relevant national and international regulations and relevant standards. The risk functions at EKF are independent of EKF’s three business columns and report directly to EKF’s Management.

Financial review

Income statement

EKF’s total net profit for 2018 was DKK 618 million. This is a slight improvement on 2017 when the net profit was DKK 598 million. The net profit for 2018 is satisfactory and the highest profit in the history of EKF. The net profit allows EKF to distribute the maximum amount of DKK 140 million in accordance with EKF's dividend policy. The improvement of net profit for 2018 mainly reflects very large new guarantees, reversal of provisions for claims expenses on two major transactions due to significantly reduced expected losses, and the fact that only few major transactions were classified as potential losses. Even higher profit might have been expected in view of the very large new guarantees, but net profit for 2018 was negatively affected by an expense of DKK 143 million due to the OECD’s downgrading of Turkey from country risk category 4 to country risk category 5, resulting in an increase in EKF’s guarantee provisions.

The new guarantees in 2018 were much larger than expected with new guarantees and loans worth DKK 33.7 billion compared to DKK 11.5 billion in 2017. Gross premium income from new guarantees amounted to DKK 2,140 million in 2018 compared to DKK 890 million in 2017.

EKF expected a larger number of new guarantees and loans to be issued in 2018 than in 2017. This expectation was definitely fulfilled with new guarantees worth DKK 33.7 mia. compared to the expectation of DKK 15.2 billion. Wind projects accounted for three fourths of new guarantees and loans in 2018. Earnings per DKK of new guarantee exposure were lower than in recent years. Ample liquidity in the international capital markets puts the premium level of new guarantees under pressure. Seven new loans were issued in 2018, which is far more than the two new loans issued in 2017.

2018 was the first year in which EKF carried out write-downs of expected losses on loans and premiums receivable according to IFRS 9. The transition to the new impairment rules involved a reversing entry in equity of DKK 234 million mio. kr. Write-downs to expected losses on loans amounted to DKK 3 million for 2018 and write-downs of premiums receivable for the year amounted to DKK 53 million after reinsurance.

Premiums receivable used to be discounted by the interest rate on the current five-year bullet mortgage bond in DKK. In 2018, they were discounted at the current CIRR rate for the currency in which the receivable concerned was raised. The impact on net profit for the year as a result of this change in the accounting estimate was an expense of DKK 100 million, which was recognised in net profit for 2018.

Insurance

The technical result before administrative expenses amounted to DKK 535 million in 2018. The technical result consists of premium income for own account of DKK 566 million, claims expenses for own account of DKK 91 million and commission to and from reinsurance companies of DKK 60 million. The favourable technical result before administrative expenses is mainly attributable to the record number of new guarantees and the low level of claims expenses in 2018. The technical result before administrative expenses was also favourable in 2017 due to a very low level of claims expenses.

Premium income for own account​

Premium income for own account amounted to DKK 566 million for 2018. Of this, earnings from new guarantees amounted to DKK 411 million after guarantee provisions and reinsurance premiums paid. In 2018, as underlying loans guaranteed by EKF were gradually repaid, we were able to recognise as income DKK 362 million in the run-off result on previous years’ provisions for guarantees. Prepayments and refinancing of projects in 2018 represented an expense of DKK 53 million for EKF. Reclassification of countries and debtors amounted to an expense of DKK 153 million. The expense is primarily attributable to the OECD’s downgrading of Turkey from country risk category 4 to country risk category 5, resulting in an increase in EKF’s guarantee provisions of DKK 143 million.

Claims for 2018 were higher than in 2017. Claims expenses for own account amounted to DKK 91 million, up DKK 72 million from 2017. In 2018, EKF adjusted provisions for losses upwards by DKK 130 million after reinsurance of a major transaction in the UK. In addition, claims payments were related to a number of new medium-sized transactions abroad and minor losses on working capital guarantees and other products issued to Danish small and medium-sized enterprises for which it was necessary to make new or higher provisions.
In 2018, EKF adjusted its provisions for losses downwards on a major transaction in Mexico. Furthermore, EKF recognised as income the remaining share of the provisions previously made on a major transaction in Ukraine. As a result of the improved situation for the two transactions, EKF was able to recognise as income DKK 260 million, net.

Commission to and from reinsurance companies came to a net income of DKK 60 million. The income is attributable to the administration commission EKF charges reinsurers on reinsured transactions. EKF had a treaty reinsurance agreement with the private reinsurance market for 2018, under which all major projects were automatically reinsured within the agreed framework. Our reinsurance led to a reduction in EKF’s exposure and thus a fall in related guarantee provisions.

Lending activities

The result of lending activities before administrative expenses was DKK 212 million. This was a decrease on 2017 when the profit was DKK 275 million.
 
Under EKF’s business model for lending activities, EKF raises re-lending at Danmarks Nationalbank, on-lending it for export transactions. This involves considerable market risks, since re-lending is raised in Danish kroner at a fixed rate, while loans for export transactions are raised in different currencies at variable rates. EKF hedges the market risks occurring in this connection by interest rate and currency swaps. As a result, EKF will receive the full margin concerning loans expressed in the line Financial income related to loans, which are then converted into interest rate and currency swaps and repaid to Danmarks Nationalbank as a fixed interest rate in the line Financial expenses related to loans. So to assess the income related to EKF’s lending activities, basic earnings, financial income and financial expenses should be taken as one.

Basic earnings for lending activities amounted to DKK 291 million in 2018 against DKK 275 million in 2017. The reason for the increase is a prepayment fee in relation to prepayments of loans.

No objective indications of impairment of new loans were registered in 2018 compared to the previous year. A minor impairment was registered for one loan in the portfolio which showed objective indications of impairment in 2018, resulting in increased write-down of DKK 52 million.

Administration

Net administrative expenses for 2018 amounted to DKK 195 million, up DKK 16 million from 2017. The increase is primarily attributable to increased wages and salaries, since the staffing level was raised by several new positions in the last few years in connection with the development of our new strategy as well as increasing activity.

Net financials

Net financials represented an income of DKK 66 million compared to an expense of DKK 51 million in 2017.
Total financial income was DKK 139 million in 2018. In 2017, financial income amounted to DKK 52 million. The income in 2018 was related to interest from securities of DKK 22 million and from claims of DKK 78 million Discounting of premiums receivable and reinsurance premiums represented an income of DKK 36 million due to major new guarantees and run-off in 2018. Premiums receivable used to be discounted by the interest rate on the current five-year bullet mortgage bond in DKK. In 2018, they were discounted at the current CIRR rate for the currency in which the receivable concerned was raised. The impact on net profit for the year as a result of this change in the accounting estimate was an expense of DKK 100 million, which was recognised in net profit for 2018.

Financial expenses amounted to DKK 17 million in 2018 compared to DKK 46 million in 2017. For securities purchased, the difference between principal and cost, i.e. the premium or discount, is recognised in the balance sheet and reported as accruals over the maturity period and recognised under net financials. Net financials from premiums on securities amounted to DKK 16 million for 2018.

In 2018, EKF posted an expense concerning exchange rate adjustments of DKK 2 million.

Value adjustments, unrealised represented an expense of DKK 54 million. The expense was mainly attributable to value adjustments of currency swaps. 2018 saw a development in the yield curves used to calculate future interest payments and the OIS curves (‘risk-free’ yield curves) used to discount cash flows on currency swaps. EKF’s currency swaps were primarily affected by development in the yield curves for the US and Australian dollar. The value of EKF’s loans was not similarly affected, as they are not measured at fair value. Hence, there is an accounting mismatch between EKF's loans and hedging that may result in cost and income in net profit.

The fluctuations in value adjustments were due to adjustments to the fair value of EKF’s portfolio of derivative financial instruments and re-lending as well as value adjustments of EKF’s loans. Major fluctuations in unrealised value adjustments are collected in a reserve under equity. Over time, this reserve will be reduced to zero in step with lending, re-lending and derivative financial instruments approaching maturity.

Balance sheet

At 31 December 2018, our assets totalled DKK 28.0 billion, up from DKK 26.8 billion at 31 December 2017.

Assets
Cash and demand deposits increased to DKK 7.8 billion from DKK 5.3 billion at the end of 2017. The increase is primarily attributable to large new guarantees and related premium payments as well as few indemnification payments during the year.
Loans amounted to DKK 10.7 billion at 31 December 2018. Compared to the end of 2017, this is a fall of DKK 1.9 billion. The fall is mainly attributable to prepayments of two loans and general repayments of loans in 2018. Large new guarantees on loans were issued in 2018, but the loans have not yet been fully drawn as a drawdown period of two years is typically applied.

Securities amounted to DKK 1.8 billion at 31 December 2018. EKF did not invest in new securities in 2018.
Receivables amounted to DKK 6.6 billion in 2018, up from DKK 6.0 billion at the end of 2017. Claims increased by DKK 0.2 billion as a result of indemnification payments on a few medium-sized claims as well as exchange rate adjustments. Premiums receivable increased by DKK 0.7 billion due to large new guarantees in 2018 where premiums are paid periodically over the maturity period.
Reinsurance shares of guarantee provisions and provisions for claims expenses amounted to DKK 1.1 billion at the end of 2018 compared to DKK 1.0 billion at the end of 2017. The increase is attributable to new reinsurance agreements on new guarantees from 2018.

Liabilities
Total equity increased to DKK 7,856 million at the end of 2018 from DKK 7,612 million at the end of 2017. In addition to net profit for the year and distribution to the state of DKK 140 million, changes in equity in 2018 also consisted of a reversing entry due to change in accounting policies for write-downs of loans and premiums receivable. The total reversing entry amounted to DKK 234 million for 2018. Restricted equity was consolidated by DKK 224 million, consisting of a share of net profit for the year of DKK 399 million and a reversing entry of DKK 175 million and amounted to DKK 2,616 million at the end of 2018.

Restricted equity did not reach the maximum calculated size determined on the basis of the concentration on countries and the risk-weighted exposure of the portfolio. Non-restricted equity amounted to DKK 5,071 billion at the end of 2018. It was consolidated by DKK 74 million and consisted of DKK 133 million from net profit for the year and DKK 59 million from a reversing entry. The increase in non-restricted equity means that EKF has more capacity for new business transactions.

The exchange rate adjustment reserve amounted to DKK 29 million at 31 December 2018, down by DKK 54 million compared to the previous year. Proposed dividend amounted to DKK 140 million at the end of 2018, as it did in 2017.

Payables amounted to DKK 15.2 billion at the end of 2018, down by DKK 0.2 billion from the level at 31 December 2017. The reason is that EKF reduced its payables to the Danish state under the re-lending scheme in step with run-off on the loan portfolio.

Technical provisions increased by DKK 1.2 billion to DKK 5.0 billion at 31 December 2018. Guarantee provisions increased by DKK 1.2 billion to DKK 4.3 billion due to large new guarantees in 2018. Provisions for claims expenses amounted to DKK 0.7 billion, which is in line with the level at the end of 2017.

Key figures for EKF’s total claims and potential losses 2014-2018​

Claims and potential losses

Claims expenses for own account amounted to DKK 91 million in 2018, up from DKK 19 million in 2017. The level in 2018 was relatively low compared to 2016 and 2015. EKF adjusted its provisions for losses downwards on two major transactions in 2018 with an impact of DKK 260 million. For one transaction there is no longer deemed to be exposure to potential losses, so provisions for claims were reversed in the income statement. For the other major transaction, potential losses are expected to be substantially lower, so the write-down ratio was adjusted downwards.

In 2018, the two above-mentioned transactions reflected reduced expected losses due to good reconstruction. EKF conducts regular follow-up on claims in order to minimise losses and ensure claims repayment.

Provisions for claims expenses are made on a case-by-case basis. When provisions are made for claims expenses, the guarantee provision is reversed under Premium income for own account. Obviously, the provisions are subject to uncertainty due to the complexity of the cases.

 Indemnification payments, gross, totalled DKK 155 million, in 2018, representing a pronounced decrease relative to previous years.

Net claims increased from DKK 1,096 million in 2017 to DKK 1,268 million in 2018, reflecting that EKF takes over a claim when indemnification has been paid.

Post balance sheet events

No events have occurred after 31 December 2018 that would have a material impact on the assessment of the Annual Report.

Outlook for 2019

EKF expects a slight reversal of the global economy towards lower growth og more sluggish credit markets in 2019. The forecasts for the global economy are subject to considerable uncertainty, as the central banks’ desire to scale down economic stimuli is hampered by declining growth figures. But while a number of emerging markets are vulnerable to capital outflow and debt crises due to high levels of debt, activity in EKF’s most important market – wind – is expected to continue on a large scale, although EKF’s level of issuance in this sector is expected to be lower than in 2018.

EKF expects a high level of guarantees and loans to be issued in 2019, albeit lower than the record level in 2018. Wind projects are expected to make up two thirds of new guarantees and loans. Northern Europe and Asia are expected to be the primary wind markets. At the same time, EKF expects demand for EKF’s participation in projects in higher-risk markets to be relatively high.

The intensified competition for wind financing that EKF has experienced in recent years is expected to continue in 2019, resulting in premium levels compared to new guarantees in line with 2018.

At the end of 2018, the portfolio of guarantees and loans was at a very high level, and combined with sustained uncertainty about the international economy, this may result in claims on guarantees and impaired loans in the coming years.
Overall, EKF also expects net profit of around DKK 300 million for 2019.
 

Corporate information

EKF
Denmark’s Export
Credit Agency

Lautrupsgade 11, fourth floor
DK-2100 Copenhagen

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

Website: www.ekf.dk
E-mail: [email protected]

CVR no. (company registration no.):
30 76 37 77
Founded: 19 November 1999
Registered office: Copenhagen

Financial year:
1 January to 31 December

Board of Directors​

Christian Frigast, Chairman

Dorrit Vanglo, Deputy Chairwoman

Flemming Aaskov Jørgensen

Karen Nielsen

Jørgen Høholt

Jørgen Skeel

Poul Due Jensen

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
1301 Copenhagen

Management statement​

Today EKF’s Board of Directors and Management considered and approved the Annual Report of EKF Denmark’s Export Credit Agency for the financial year 1 January to 31 December 2018.

The Annual 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 financial statements give a true and fair view of EKF Denmark’s Export Credit Agency’s assets, liabilities and financial position at 31 December 2018 and of the results of EKF Denmark’s Export Credit Agency’s operations and cash flows for the financial year

1 January to 31 December 2018.

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 significant risks and uncertainty factors that could impact EKF.

The Annual Report is recommended for approval by the Danish Minister for Industry, Business and Financial Affairs

Copenhagen, 21 March 2019

The independent
auditors’ report​

TO THE MINISTER FOR INDUSTRY, BUSINESS AND FINANCIAL AFFAIRS

Auditors’ report on the financial statements 

Opinion
We have audited the financial statements of EKF Denmark’s Export Credit Agency for the financial year 1 January to 31 December 2018, which comprise the income statement, balance sheet, statement of changes in equity, cash flow statement and notes, including significant accounting policies. The financial statements are 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 financial statements give a true and fair view of EKF Denmark’s Export Credit Agency’s assets, liabilities and financial position at 31 December 2018 and of the results of EKF Denmark’s Export Credit Agency’s operations and cash flows for the financial year 1 January to 31 December 2018 in accordance with the Danish Financial Statements Act.

Basis of opinion
We have conducted our audit in accordance with International Standards on Auditing and the additional requirements applying in Denmark and in accordance with good public auditing practice, given that the audit is conducted on the basis of the provisions of the Act on EKF Denmark’s Export Credit Agency. Our responsibility according to these standards and requirements is described in more detail in the section ‘Auditors’ responsibility for audit of the financial statements’ in this auditors’ report.

The Auditor General is independent of EKF Denmark's Export Credit Agency, cf. section 1(6) of the Act on Audit of the State Accounts, and the approved auditor is independent of EKF Denmark's Export Credit Agency in accordance with the IESBA's Code of Ethics for Professional Accountants and the additional requirements applying in Denmark. We have both complied with our other ethical obligations under such code and requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Management's Responsibility
Management is responsible for the preparation and fair presentation of financial statements in accordance with the Danish Financial Statements Act. This responsibility includes implementing such internal controls that Management determines are necessary for the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
When preparing the financial statements, Management is responsible for assessing EKF Denmark's Export Credit Agency's ability to continue as a going concern, for providing information about going concern issues where this is relevant and for preparing the financial statements on the basis of the going concern accounting principle, unless Management plans either to liquidate EKF Denmark's Export Credit Agency or to discontinue operations or has no other realistic alternative than to do so.

Auditors' responsibility for audit of the financial statements
Our objective is to obtain a high degree of certainty that the overall financial statements are free from material misstatement, whether due to fraud or error, and to present an auditors' report with an opinion. A high degree of certainty is a high level of certainty, but is not a guarantee that an audit performed in accordance with International Standards on Auditing and the additional requirements applying in Denmark and in accordance with good public auditing practice will always disclose material misstatements, if any. Misstatements may occur as a result of fraud or error and can be deemed to be material if it can reasonably be expected that they will, individually or jointly, have an impact on the financial decisions made by users on the basis of the financial statements.

As part of an audit performed in accordance with International Standards on Auditing and the additional requirements applying in Denmark and in accordance with good public auditing practice, we perform professional assessments and exercise professional scepticism during the audit.

In addition:

• We identify and assess the risk of material misstatement in the financial statements, whether due to fraud or error, plan and perform audit activities in response to such risk and obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinion. The risk of not discovering material misstatements is higher for material misstatements resulting from fraud than for material misstatements resulting from error as fraud may include conspiracy, forgery, wilful omissions, misrepresentation or non-observance of internal controls.

• We gain insight into the internal controls of relevance to the audit in order to design audit activities that are appropriate in the circumstances, but not to express an opinion on the effectiveness of EKF Denmark’s Export Credit Agency’s internal controls.

• We consider whether the significant accounting policies applied by Management are appropriate and whether the accounting estimates made and related information prepared by Management are reasonable.

• We express an opinion as to whether the preparation of the financial statements by Management on the basis of the going concern accounting principle is appropriate and whether, on the basis of the audit evidence obtained, there is material uncertainty linked to events or circumstances that may cause substantial doubt as to EKF Denmark’s Export Credit Agency’s ability to continue as a going concern. If we reach the conclusion that there is material uncertainty, we must in our auditors’ report draw attention to information about this in the financial statements or, if such information is not sufficient, qualify our opinion. Our opinions are based on the audit evidence obtained until the date of our auditors' report. However, future events or circumstances could mean that EKF Denmark's Export Credit Agency is no longer able to continue as a going concern.

• We consider the overall presentation, structure and content of the financial statements, including information in the notes, and whether the financial statements reflect the underlying transactions and events in such a way that they provide a true and fair view thereof.

We communicate with the top management on, inter alia, the planned scope and timing of the audit, as well as material audit observations, including any material shortcomings in the internal controls identified by us during our audit.

Statement on the management's review
Management is responsible for the management's review.
Our opinion on the financial statements does not include the management's review, and we do not express any opinion with certainty about the management's review.
In connection with our audit of the financial statements, it is our responsibility to read the management's review and in that connection to consider whether the management's review is materially inconsistent with the financial statements or with the knowledge we have gained during the audit or otherwise seems to contain any material misstatement.
In addition, it is our responsibility to consider whether the management's review includes the information required under the provisions of the Danish Financial Statements Act.
In our opinion and based on the work performed, the management's review is in accordance with the financial statements and has been prepared in accordance with the requirements in the Danish Financial Statements Act. We have not found any material misstatements in the management's review.

Statement according to other legislation and regulation

Statement on compliance audit and performance audit

Management is responsible for ensuring that the transactions that are covered by the financial statements are in compliance with the funding granted, legislation and other regulations, as well as with agreements made and customary practice, and that the necessary financial considerations have been made in the administration of the funds and operation of the enterprises comprised by the financial statements.

In connection with our audit of the financial statements, it is our responsibility, in accordance with good public auditing practice, to select relevant issues for both compliance audit and performance audit. During our compliance audit, we control with a high degree of certainty in terms of the issues selected whether the transactions that are covered by the financial statements are in compliance with the funding granted, legislation and other regulations, as well as with agreements made and customary practice. During our performance audit, we assess with a high degree of certainty whether the systems, processes or transactions examined support the necessary financial considerations in the administration of the funds and operation of the enterprises comprised by the financial statements.

If, based on the work performed, we reach the conclusion that there is cause for material critical remarks, we must report this. 

We have no material critical remarks to report in this connection.

Copenhagen, 21 March 2019

Income statement for the year

1 January to 31 December

Distribution of profit

Balance sheet at 31 December

Assets

Balance sheet at 31 December

Liabilities

Risk and off-balance sheet notes

Statement of changes in equity

Cash flow statement

Notes

Note 1: Gross premium income after reversed premiums and other adjustments

Note 2: Change in guarantee provisions

Note 3: Change in the reinsurance share of guarantee provisions

Note 4: Claims expenses

Note 5: Information about income, losses and costs related to financial instruments linked to lending activities

Note 6: Administrative expenses

+ The remuneration for 2018 includes a fee for the Audit and Risk Committee.

++ In 2018, Poul Due Jensen, Jørgen Høholt and Yasir Al-Gailany joined the Board of Directors. Søren Østergaard Sørensen and Charlotte Hagen Simonsen resigned from the Board of Directors in 2018-

The CEO’s fixed remuneration includes expenses for a company-paid car, a company-paid phone and provisions for fixed-term remuneration.

Members of Management at EKF have a bonus scheme. The maximum CEO bonus is 10 per cent of the salary and is calculated based on the degree of fulfilment of EKF’s business plan. The Deputy CEO bonus is a fixed amount and calculated based on the degree of fulfilment of EKF’s business plan. The annual bonus is shown as a variable salary under the salary of the Deputy CEO concerned.

Other duties of the Board of Directors can be seen in the section entitled ‘EKF’s Board of Directors’.

Note 7: Net financials

Note 8: Loans

Note 9: Securities

Note 10: Intangible fixed assets

Note 11: Tangible fixed assets

Note 12: Investments

Note 13: Claims

Note 14: Premiums receivable

Note 15: Derivative financial instruments

Note 16: Prepaid interest expenses and income

Prepaid interest income concerns a number of loans where EKF receives the part of the interest margin related to the loan risk as an upfront payment. As interest income is earned over the term of the loan, EKF has accrued interest paid, but not yet earned. A number of these loans are reinsured. In these cases, prepaid interest income was paid to the reinsurer despite the risk margin not having been earned. Interest is recognised as income in line with the repayment profile of the loans.

Prepaid interest expenses cover future reinsurance of the credit risk on loans. The prepayments are recognised at the time of payment and charged to the income statement in line with the repayment profile of the loans.

Note 17: Guarantee provisions

Note 18: Provisions for claims expenses

Note 19: Payables to the Danish state (re-lending)

Note 20: Payables to reinsurers

Note 21: Overview of financial instruments

EKF uses only the accounting categories financial assets at fair value, financial liabilities measured at fair value and loans and receivables measured at amortised cost. Financial instruments are specified as follows:

Note 22: Information about credit risks

Credit risk is the risk that EKF will incur a financial loss due to non-payment by a counterparty. EKF’s counterparty risk relates to loans guaranteed by EKF and to EKF’s direct loans. Default can be both the inability and the unwillingness to pay.

EKF may only provide financing and risk cover where risks of the relevant nature or extent are not normally assumed by the private, commercial insurance and capital market. EKF therefore assumes extraordinary risks compared to the risks taken on by ordinary financial institutions and banks. This means that EKF’s risk appetite is high.

EKF’s credit risk also includes financial counterparties. The risk comprises default on the financial contracts used by EKF in connection with interest rate and currency swaps and conclusion of repo transactions.

The risk management framework is determined by the Board of Directors. EKF has drawn up a number of policies, guidelines and procedures describing EKF’s business objectives and risk management thereof. ‘Risk management policy’ and ‘Risk management policy for export loans’ describe the overall framework, while the ‘Credit policy’ lays down the framework for EKF’s guarantee and credit facilities. The policies are determined and regularly reassessed by the Board of Directors. EKF works on credit quality limits and procedures in terms of amount sizes and territorial limits. Guarantees and loans are subject to the same criteria as credit facilities with each transaction being given an internal rating. If the counterparty has a rating from external rating agencies, that rating is used.

The table below shows EKF’s maximum credit risk broken down by guarantee and loan exposure and financial credit risk, respectively. The table takes into account both EKF’s on-balance sheet credit risk and off-balance sheet items.

The table below shows that EKF’s maximum credit exposure is primarily attributable to issuance of guarantees and loans.

As a state-owned export credit agency, EKF is subject to a number of international rules where OECD premium regulation determines the framework for the premium rate. The OECD determines minimum rates that all EKF's transactions and projects must comply with. EKF also uses the market price as a benchmark for transactions in country risk category 0, comprising mainly the OECD countries in which the financial and political risks are low, and for project financing transactions.

EKF’s risk management also entails exposure limits in risk categories for all countries and relevant banks. EKF uses and actively participates in the OECD’s country risk classification that is based on member countries’ overall payment experience. EKF places banks in the OECD’s commercial risk categories by comparing an internal risk assessment and the OECD’s country risk classification. Exposures and limits on countries as well as banks are defined in EKF’s guidelines for countries and banks.

For large issues in countries where the risk is deemed to be particularly high, EKF requires a sovereign guarantee in most cases, cf. the ‘cover subject to sovereign guarantee’ term. Sovereign guarantees are normally the relatively best credit risk of the country rather than the financial sector, and they have access to collective bargaining through international institutions in the event of payment default.
EKF guarantees or finances transactions for Danish exporters in cases where the buyer has limited access to financing, the financial markets are short of capacity or the risk appetite is too low. This specific role in Danish exports also makes EKF an accustomed player in new sectors and markets and a strength for Danish exporters. EKF’s exposure is mostly concentrated on project financing and transactions in the wind sector. However, EKF’s large share of transactions involving the wind sector is highly diversified in terms of wind farm types, geography and counterparties.

Day-to-day credit management is conducted in EKF’s customer-oriented departments and in our credit and customer administration. The approval structure for guarantees and loans is in accordance with EKF's authorisations under which transactions of a specific nature and amount size are approved by Management acting as a credit committee. Overall monitoring of EKF’s credit risks is anchored in an annual commitment follow-up, checking and thus monitoring developments in the credit quality of commitments selected on the basis of a number of financial parameters. Commitments included in the commitment follow-up for 2018, covered approximately 83 per cent of EKF’s total exposure. Continuous assessment of the portfolio credit quality and a corresponding capital ratio are important elements of EKF’s credit risk management. EKF’s existing portfolio is continuously monitored based on a number of focus areas such as sector, market, country, buyer and exporter. This includes relevant material from the guarantor and exporter as part of the guarantee and loan agreement.

The risk of the maximum loss at a 95 per cent probability is calculated semi-annually to match reserves by the expected loss as well as a stress scenario over a full run-off of the existing portfolio.

The aim of EKF’s investment policy is to achieve a stable return based on a conservative risk consideration. EKF manages issuer risk for particularly secure securities through asset class and type of issuance requirements.

Write-downs according to IFRS 9

For Loans and Premiums receivable, a calculation is made of expected credit losses according to IFRS 9. Each asset is divided into stage 1, 2 or 3, and the division into stages is described in Significant accounting policies. EKF calculates write-downs according to IFRS 9 using a proprietary PD-based model describing the process in a business procedure. The business procedure contains guidance on running the PD model and a description of the manual processes related to the model.
EKF prepares an annual validation report concerning the PD model. By means of validation and monitoring, EKF is also able to continuously assess developments in credit risks for loans and guarantees with premiums receivable. The validation process is described in a business procedure, including e.g.processing control, review of discounting methods, reconciliation of input data and criteria for significant credit risk development (division into stages).
The following tables show the financial assets for loans and premiums receivable, respectively:

• Changes in financial assets from the beginning to the end of 2018 before write-downs and reinsurance, if any, by stages 1–3.
• Changes in financial assets before write-downs and reinsurance, if any, by country risk categories and stages 1–3.
• Financial assets before write-downs and reinsurance, if any, by debtor rating and stages 1–3.
• Changes in write-downs from the beginning to the end of 2018 by stages 1–3.

Guarantee exposure

EKF provides guarantees for loans with export transactions. Guarantee exposure is not registered in EKF’s balance sheet, but is a contingent liability.

Guarantee exposure comprises the largest possible exposure in cases that include both commercial and political exposure. The guarantee exposure is regularly written down during the guarantee period on the basis of the repayment profile defined when the guarantee is issued. The amounts stated for guarantees include future interest payments on the guaranteed loan.

Guarantee exposure to potential losses/claims plus impaired loans

Provisions for claims expenses on guarantees

Where the probability that EKF could incur a loss on a transaction exceeding the usual guarantee provisions is deemed to be high, provisions for claims expenses are made.

The risk of loss is assessed on the basis of objective evidence and determined on a case-by-case basis. EKF performs individual write-down based on a trade-off between three scenarios: a best-case scenario, a base-case scenario and a worst-case scenario. The current impairment is assessed as a write-down ratio and determined on the basis of available information, thus constituting a specific assessment of the risk of loss. The write-down ratio is fixed until new significant changes are reported and a reassessment is made. Furthermore, the write-down ratio of large loans will be reassessed at the end of the year.

Write-down of impaired loans

If a loan is deemed to be credit-impaired (stage 3), the asset is written down by an amount corresponding to the expected credit loss during the remaining term of the asset. Loans for which EKF has observable data on events indicating that the asset is credit-impaired are written down individually. EKF performs individual write-down based on a trade-off between three scenarios: a best-case scenario, a base-case scenario and a worst-case scenario. The current impairment is assessed as a write-down ratio and determined on the basis of available information, thus constituting a specific assessment of the risk of loss. The write-down ratio is fixed until new significant changes are reported and a reassessment is made.

Furthermore, the write-down ratio of large loans will be reassessed at the end of the year.

The process to assess the impaired asset starts with a screening of the loan based on a report received or other observations. It is important for EKF to spot and act effectively on indications of loss risk as early as possible.

Hence, the impaired financial assets are assessed on the basis of a specific assessment of the current loss risk. The assessment emphasises the status of on-going negotiations, macroeconomic conditions and the evolution of market indicators, among other factors.

Derivative financial instruments subject to ISDA/CSA agreements

The terms of EKF’s derivative financial instruments are laid down in ISDA/CSA agreements. An ISDA master agreement is the standard document specifying the overall framework of international over-the-counter derivatives and outlining the terms to be applied to derivative transactions between two parties. Provision of collateral is regulated by the CSA (Credit Support Annex) agreement.

Credit risks on counterparties are managed by requirements with regard to ratings from external rating agencies, limits to counterparty concentration and conclusion of the international ISDA/CSA netting and framework agreements for financial contracts and GMRA/RSA agreements for repo transactions, which minimise the risk of loss by collateral requirements.

EKF has concluded derivative financial instruments with a number of financial counterparties. These are major international banks. All financial counterparties all have a rating ranging from BBB- to AA-. EKF has entered into master netting agreements (ISDA Master Agreement) with related agreements on collateral for derivative financial instruments. The collateral received comprises only high credit quality bonds.

Positive and negative fair values of financial instruments are included in separate balance-sheet items, and positive and negative values are set off only when EKF is entitled and intends to settle several financial instruments, net. This would be the case only in a bankruptcy scenario or in connection with a substantial downgrading of the counterparty.

Collateral

Collateral plays an active part in EKF’s risk management and loss-reducing processes. The existence of collateral entails that the bank and thereby EKF rank pari passu with the asset provided as collateral. Collateral is usually relevant if and when a loan accelerates and may also in certain circumstances be used as a tool to aid the negotiation process in a default situation. Collateral is included in EKF’s risk management together with loss-reducing elements such as covenants, waivers and conditions precedent.

Reinsurance is included as a significant factor in mitigating EKF’s risk concentration. Furthermore, EKF’s position in the order of priority, fixed assets and intellectual property rights charged as security and subject to retention of title serve as proactive safeguards. In the event of objective indications of impairment or claims, EKF will launch a number of loss-reducing processes, including setting up a team with specifically selected qualifications to handle the transaction, participation in restructuring agreements and other legal insolvency processes.

In connection with its issuance of export loans, EKF hedges market risks by entering into framework agreements with swap counterparties and by using the repo market. In these instances, counterparty and liquidity risks are minimised by requirements for collateral.

Note 23: Information about market risks

At EKF, market risks are defined as the risk of financial losses due to changes in market variables such as interest rates and exchange rates. EKF’s risk appetite and tolerance of market risks is low and hedged insofar as possible.

EKF defines the market risk framework through its ‘Risk management policy’ and ‘Export loan risk management policy’. These describe the principles of hedging, day-to-day management of financial instruments and separation of duties.

Exposure to interest rate fluctuations and exchange rate changes on issuance of export loans are hedged through simultaneous conclusion of interest rate and currency swaps, securing the full cash flow in relation to the underlying re-lending. The risk of spreads between re-lending over a
10-year period and the export loan over a period of more than 10 years is mitigated by a weighted addition matching the term of the export loan.

It is EKF’s policy to provide foreign currency hedging based on a balance sheet principle. This is done by calculating EKF’s net position for each currency and hedging positions exceeding DKK 50 million. Hence, in case of changes in exchange rates, the result of such hedging and EKF’s net position will be balanced. Exchange rate changes will have an effect on guarantee exposure and the principal amount of loans. These are included when calculating the capital ratio. The US dollar, the Australian dollar and the pound sterling are the currencies estimated to have a significant effect.  The effect on the profit/loss for the year is calculated by taking the net positions of all balance sheet items including hedging in order to simulate the effect of an increase in the exchange rate.

Interest rate changes will have an effect on discounted values of premium income receivable and payables to reinsurers. The effect was calculated by raising the discount rate by 1 per cent.

Interest rate changes will also have an effect on provisions for claims expenses on guarantees with underlying variable interest rates. The effect was calculated by raising the underlying variable interest rate by 1 per cent.

There may also be an effect on the result of lending activities due to a simulated increase in interest rates. This effect is attributable to the fact that, despite full financial hedging of the interest rate risk, EKF may experience fluctuations in the result due to an accounting mismatch between loans, which are measured at amortised cost, and interest-rate hedging, which is measured at fair value. These fluctuations are collected in the exchange rate adjustment reserve under equity. The fluctuations will be eliminated over the period until maturity and ultimately reach zero. These effects are consequently not included in the sensitivity analysis.

Note 24: Information about liquidity risks

Liquidity risk is the risk that EKF will not have the necessary means or access to the necessary liquidity to cover expected liabilities, costs or losses. Liquidity risk may occur in case of a mismatch between cash flow and debts between both EKF and the borrower and EKF and Danmarks Nationalbank.

EKF manages its liquidity reserve by sub-dividing it based on needs analyses. Operating and demand liquidity are fixed and based on operating and demand needs over a 1-year period. Investment liquidity is the excess liquidity managed through EKF’s investment policy. EKF’s liquidity management is based on a high level of access to liquidity through acquisition of flexibility. In addition, EKF handles day-to-day liquidity by applying amount limits to custody accounts and other accounts.

EKF’s funding of export loans via Danmarks Nationalbank does not match the cash flow of its export loans. Placement risk is hedged through the repo market and the collateral for such risk. The diversification of loans with different terms and exposure aims at mitigated hedging.

In addition to this, EKF has outstanding guarantee exposure before reinsurance of DKK 50.9 billion. The guarantee exposure is treated as a contingent liability until the recognition criteria are met. EKF makes provisions for claims expenses corresponding to the expected loss. The guarantees provided typically have long maturities.

EKF’s restructuring and recovery process may extend over several years and it is not possible to estimate the cash flow for these transactions. Therefore, it is not possible to present a fair maturity analysis. For this reason, the maturity of provisions for claims expenses is entered as a short-term liability.

When assessing the liquidity risk it must also been taken into consideration that EKF is guaranteed by the Danish state.

Note 25: Fair value by fair value hierarchy

Fair value hierarchy

Level 1: Fair values measured on the basis of unadjusted quoted prices in an active market
Level 2: Fair values measured using valuation methods and observable market data.
Level 3: Fair values measured using valuation methods and observable and significant non-observable market data.

Level 2 – Derivative financial instruments

Derivative financial instruments at level 2 are used to hedge interest rate and exchange rate risks related to export loans and to hedge both assets and liabilities.
The fair value is calculated by discounting future cash flows based on observable market data. The fair value is determined as a settlement price, so the value is not adjusted for credit risks.
The valuation methods for interest rate and exchange rate instruments are identical. A fair value is calculated for both legs of the instrument. For financial instruments with floating rates, an expected yield curve is used on the current index based on observable market data. The expected yield curve is used to estimate the future cash flows. The future cash flows are subsequently discounted by a discount rate.
The discount curve on the interest rate instruments is generated on the basis of the zero-coupon rates. The discount curve on the exchange rate instrument is based on the CSA curve (EUR) as defined in the ISDA/CSA agreement.

Level 2 – Payables to the Danish state (re-lending)

Payables to the Danish state comprise loans concluded under the Danish state’s re-lending scheme (Statens Genudlånsordning) and match EKF’s total loans receivable. The re-lending portfolio comprises serial loans raised at par and bullet loans raised at the current rate.
The fair value is calculated by discounting future cash flows based on observable market data. The fair value is determined as a settlement price, so the value is not adjusted for credit risks.

The re-lending structure of interest rates is fixed, so the future interest rates are known. The fair value is calculated by discounting the future cash flows using a discount curve generated on the basis of the zero-coupon rates.
No change is made to the fair value of EKF’s payables to the Danish state resulting from changes in EKF’s credit risk. The reason is that EKF has a guarantee from the Danish state, cf. section 10 of the Act on EKF Denmark’s Export Credit Agency.

Level 3 – Derivative financial instruments

Derivative financial instruments at level 3 comprise hedging of exchange rate risk related to export loans and are used to hedge assets. For hedging in currencies subject to restrictions so they cannot be traded freely, an offshore market is used to determine fair values.
The fair value is calculated by discounting the future cash flows based on our own valuation model.

The fair value calculation method is identical with level 2, as it calculates a discounted value based on the future cash flows. Financial instruments at level 3 differ in that the underlying conventions, indices and discount curves are not based on observable market data. EKF’s internal model converts the cash flows of the instrument to US dollars in order to estimate the future cash flows using a USD forward curve. The fair value is then calculated by discounting the financial instrument using an estimated discount curve in US dollars.
Fair value calculations at level 3 are checked against market valuations from the counterparties

Note 26: Fair value of financial assets measured at amortised cost

The fair value of EKF’s loans is estimated based on an assessment of the development in the future cash flows and market risks and an adjustment taking the current value of the loan into account.

The fair value calculation is made at level 3 of the fair value hierarchy.

The fair value of EKF’s securities is estimated on the basis of the security market value plus accrued interest.

With respect to other financial instruments measured at amortised cost, cf. note 21, amortised cost is deemed to be an approximation of the fair value.

Note 27: Contingent assets and liabilities

+ Reinsurance is related solely to guarantee exposure. In addition, EKF has reinsured a share of the portfolio of loans.

EKF provides guarantees for loans in connection with export transactions. To the extent that the guarantee becomes a potential loss or claim, provisions are made for claims expenses. Part of the guarantee exposure may be regarded as a contingent liability if net provisions for claims expenses were not made for own account and thus not recognised in the balance sheet

Note 28: Related parties

In 2018, EKF had transactions with the Danish state as well as other related parties. The balance with the Danish state is determined by agreement with the Danish Ministry of Industry, Business and Financial Affairs. Transactions with other related parties are administration fees for administered schemes. These schemes and administration fees are set out in note 6. Settlement is on market terms according to actual consumption.

EKF distributed DKK 140 million in dividend to the Danish state in 2018.

The administration of the Danish Trade Fund and the CIRR scheme is vested in EKF by the Ministry of Industry, Business and Financial Affairs. Managed by EKF A/S CVR no. 20895470 (Lautrupsgade 11, DK-2100 Copenhagen) on behalf of the Danish state in accordance with Finance Committee Document no. 30 of 27 October 1999. Administration of EKF A/S is charged at an hourly rate.

EKF has entered into a cooperation agreement with Danida Business Finance (DBF) on the administration of the Mixed Credit Programme. The basis of the agreement is Finance Committee Document no. 106 of 24 May 2016 concerning the distribution basis for Danida Business Finance. The arrangement with DBF entails that DBF bears all losses and costs in connection with the provision of guarantees, so that EKF is exempt from paying costs. EKF receives a standard amount from DBF for each guarantee transaction. The total amount for 2018 is set out in note 6.

EKF also administers the Danish Ministry of Foreign Affairs’ investment guarantees for developing countries.

Note 29: EKF’s auditors’ fee

Note 30: Significant accounting policies

General

The Annual Report of EKF Denmark’s Export Credit Agency (EKF) was prepared in accordance with the provisions of the Danish Financial Statements Act for reporting class D, subject to the necessary exemptions and adjustments required as a consequence of EKF’s special position as an independent public company, cf. the Act on EKF Denmark’s Export Credit Agency. In addition, policies applied to private non-life insurance companies and banks are taken into consideration.

The policies applied from the requirements for non-life insurance companies as established by the Danish Executive Order on Financial Reporting for Insurance Companies and Multi-Employer Occupational Pension Funds (Danish Executive Order on the Presentation of Financial Statements for Insurance Companies) relate to recognition and measurement of EKF’s insurance-like activities. These requirements comprise premiums, guarantee exposures, indemnification payments and provisions for claims expenses as well as the reinsurance share of these items.

The policies applied from the requirements for banks as established by the Danish Executive Order on Financial Reporting for Credit Institutions etc. (Danish Executive Order on the Presentation of Financial Statements for Credit Institutions etc.) relate to recognition and measurement of EKF’s bank-like activities. This includes state lending and re-lending.
The presentation of the income statement and balance sheet chosen is believed to provide the fairest presentation of EKF’s activities. Against that backdrop, the format requirements of the Danish Financial Statements Act have been departed from.
The policies for recognition and measurement are described in more detail below.

The financial statements present all amounts in whole DKK millions. Each figure is rounded separately, possibly leading to minor differences between the totals stated and the sum of the underlying figures.

Change in accounting policies

As from 1 January 2018, the new international financial reporting standard for financial instruments, IFRS 9, and the compatible Danish accounting rules entered into force. According to IFRS 9, receivables must be written down to the expected loss from issuance rather than the recorded loss as was previously the case. For EKF, loans and premiums receivable will be covered by the new impairment rules.
EKF uses a proprietary model to calculate the expected credit loss according to IFRS 9. The model is based on an assessment of the likelihood that the counterparty will no longer be able to meet its contractual commitments – Probability of Default (PD). EKF uses well-known methods such as rating tools from S&P and Moody’s to determine ratings. Ratings are translated into PD based on Moody’s statistics for 1-year default rates.

Financial assets, loans and premiums receivable are written down on initial recognition by an amount corresponding to the expected credit loss during a 12-month period (stage 1). EKF calculates the 12-month credit loss as the product of the probability of default (PD), the average expected receivable in the coming 12 months and the share EKF expects to lose.
In the event of a subsequent considerable increase in credit risk relative to the time of initial recognition, the asset is written down by an amount corresponding to the expected credit loss during the remaining term of the asset (stage 2). Because EKF uses a PD model, the following principle is applied to assess when a considerable increase in credit risk exists:

• If the 12-month PD on initial recognition is under 1 per cent: At the time of calculation, the 12-month PD must have increased by 0.5 percentage point or more and the PD must have doubled for the expected remaining term of the asset.
• If the 12-month PD on initial recognition is 1 per cent or more: At the time of calculation, the 12-month PD must have increased by 2.0 percentage points or more or the PD must have doubled for the expected remaining term of the asset..

EKF calculates the credit loss over the useful life of the asset as the product of the probability of default (PD), the average expected annual receivable and the share EKF expects to lose.

If the asset is deemed to be credit-impaired (stage 3), the asset is written down by an amount corresponding to the expected credit loss during the remaining term of the asset. Assets, loans and premiums receivable for which EKF has observable data on events indicating that the asset is credit-impaired are written down individually. EKF performs individual write-down based on a trade-off between three scenarios: a best-case scenario, a base-case scenario and a worst-case scenario.

Comparative figures for 2017 have not been restated, as it was not possible to do this reliably without post-rationalisation. The accumulated effect of the change was thus recognised in equity on 1 January 2018. The total effect at 1 January 2018 represented a reduction of equity by DKK 234 million. Loans were reduced by DKK 175 million, premiums receivable were reduced by DKK 63 million and reinsurance premiums payable were reduced by DKK 4 million.

Change in accounting estimates

Effective from 1 January 2018, the estimate of the interest included in discounting of premiums receivable and payables to reinsurers was changed to the current CIRR rate in the currency of the individual premium receivable and the payable to the reinsurer, respectively. A CIRR rate in the currency is applied with a repayment term corresponding to the average term of EKF’s premiums receivable and payables to reinsurers.
Hence, premiums receivable are discounted at a CIRR rate including the risk margin of the transaction. Payables to reinsurers are discounted at the CIRR rate of the currency concerned.

The new accounting estimate means that Premiums receivable were reduced by DKK 116 million, whereas Payables to reinsurers were increased by DKK 15 million. Accordingly, the total impact on net profit was DKK 101 million for 2018.
Apart from the implementation of the new impairment rules and the change in the accounting estimate of the discount rate, the accounting policies are unchanged from the accounting policies applied in the financial statements for 2017.

Combination of accounting items

The items Exchange rate adjustments and Exchange rate adjustments and value adjustments, realised in the Annual Report 2017 have been combined into the accounting item Exchange rate adjustments in the 2018 Annual Report.

Recognition and measurement in general

The Annual Report is presented in accordance with a number of concepts and definitions as described below.

Premium income and related income are recognised in the income statement as earned. The income date for premium income is the date on which the cover under the guarantee commences, and in the case of related income the time from which the income can be considered to be sufficiently certain. Interest income is recognised as earned, and interest expenses are correspondingly reported as accruals. Other income and value adjustments of financial assets and liabilities are recognised in the income statement as earned. Similarly, all expenses, including depreciation, amortisation and write-downs, are recognised in the income statement in the period in which the activity has taken place.
Assets are recognised in the balance sheet when it is probable that future economic benefits will flow to EKF and the asset can be reliably measured. Liabilities are recognised in the balance sheet when it is probable that future economic benefits will flow from EKF and the value of the liability can be reliably measured. Assets and liabilities are measured at cost on initial recognition. Subsequently, assets and liabilities are measured as described for each accounting item.

Certain financial assets and liabilities are measured at amortised cost, recognising a constant effective interest rate over the maturity period. Amortised cost is determined as the original cost less any repayments plus addition/deduction of the accumulated amortisation of the difference between the cost and nominal amount.

On initial recognition, transactions in foreign exchange are measured on the transaction date. Exchange differences occurring between the exchange rate on the transaction date and the exchange rate on the payment date are recognised in the income statement as an item under financial income and expenses, net.
On the balance sheet date, monetary assets and liabilities in foreign exchange are recognised at the exchange rate on that date. The difference between the exchange rate on the balance sheet date and the exchange rate on the date the receivables or payables were incurred or recognised in the financial statements of the previous year, are recognised in the income statement under financial income and expenses and under result of lending activities to the extent that it is attributable to EKF’s loans or hedging thereof.

Income statement

Premium income for own account

Gross premium income comprises premiums on export credit and working capital guarantees issued for the year, including any returned premium amounts etc. Moreover, upfront and commitment fees are included. Write-down of the expected loss on premiums receivable are set off in gross premium income according to IFRS 9. Premiums paid over more than one year are discounted and recognised at present value. Premiums are recognised when cover under the guarantee commences or when the policy is issued. The share of premiums received on current contracts that concern future risks is reported as accruals via provisions for guarantees on the balance sheet date.

Reversed premiums comprise reversals or adjustments of gross premium income recognised in previous years. Reversals or adjustments arise as a result of prepayments, refinancing or other changes in the agreement leading to an adjustment of the original gross premium on issuance

Reinsurance premiums paid are the share of the gross premium income for the year ceded to other insurance companies due to reinsurance cover.

Change in guarantee provisions describes the change in provisions for guarantees and is included under Premium income for own account as EKF’s recognition of premium accruals. Change in guarantee provisions includes reductions in guarantee provisions that express provisions for guarantees recognised as income as underlying loans are repaid. In addition, the accounting item includes additions resulting from new issues, change in the assessment of countries and debtors etc.
Change in the reinsurance share of guarantee provisions states the shift in the share of provisions for guarantees that EKF has reinsured with foreign export credit agencies or private reinsurance companies.

Claims expenses for own account

Claims expenses comprise the loss assessment of indemnification payments and changes in commercial and political claims as a result of additions and disposals of provisions for claims expenses and potential losses. Claims expenses also include write-off and value adjustment of claims.

Change in the reinsurance share of provisions for claims expenses comprises additions and disposals related to the reinsurance share of EKF’s provisions for claims expenses and potential losses.

Commission to and from reinsurance companies

Commission to and from reinsurance companies is the administration fee that EKF receives or pays in connection with reinsurance agreements.

Result of lending activities before administrative expenses

Financial income related to loans comprises interest income for the year from loans, derivative financial instruments, repos and upfront and commitment fees received.

Financial expenses related to loans comprise interest expenses for the year for re-lending and derivative financial instruments. The item also includes fees to Danmarks Nationalbank calculated based on the nominal value of re-lending.

Write-downs of loans comprise write-downs for the year and changes in write-downs of loans. Write-downs of loans are made according to IFRS 9. See under loans.

Administration

Administrative expenses, net comprise expenses related to the administration of EKF and the Danish Trade Fund, the Mixed Credit Programme, Eksport Kredit Finansiering A/S (EKF A/S), the CIRR scheme and investment guarantees issued by the Danish Ministry of Foreign Affairs.
Administrative expenses have been reduced by income received by EKF in connection with the administration of various schemes (see above), as well as the sale of consulting services. These schemes are normally invoiced at agreed hourly rates for the actual number of hours spent by EKF. In addition, large direct expense items related to the individual scheme are invoiced.

Net financials

Financial income and expenses comprises interest received in connection with claims, interest and exchange rate adjustment of bank deposits, guarantee provisions and claims, investment income from securities and claims. The item also includes adjustment of discounting of premiums receivable and guarantee provisions as well as reinsurance premiums payable. Due to the general uncertainty surrounding claims, the related interest is recognised only when payment is made, apart from any recognised capitalised interest. Prepaid interest, however, is recognised in the year in which it falls due.

Exchange rate adjustments comprise positive and negative realised exchange rate adjustments of loans, derivative financial instruments and exchange rate accounts for the year. The item also includes positive and negative value adjustments of loans, re-lending and derivative financial instruments for the year. The item furthermore includes exchange rate adjustment of receivables and payables and gains/losses on hedging of the exposure in foreign currency.

Value adjustments, unrealised comprise unrealised fair value adjustments of re-lending, derivative financial instruments, unrealised exchange rate adjustments of loans and exchange rate adjustments of repo transactions concerning unpaid loans.

Balance sheet

Cash and demand deposits

The balance with the Danish state comprises EKF’s liquidity placed in an intermediate account with the Danish state. As from 1 July 2016, interest is no longer applied to EKF’s balance.

Cash comprises cash at bank and repo/reverse transactions.

Loans

Loans are measured at amortised cost using the effective interest method. The difference between the value on first recognition and the redemption value is amortised over the remaining time to maturity and recognised under financial interest income.

Loans are written down according to IFRS 9. EKF uses a proprietary model to calculate the expected credit loss according to IFRS 9. The model is based on an assessment of the likelihood that the counterparty will no longer be able to meet its contractual commitments – Probability of Default (PD). EKF uses well-known methods such as rating tools from S&P and Moody’s to determine ratings. Ratings are translated into PD based on Moody’s statistics for 1-year default rates.

Loans are written down on initial recognition by an amount corresponding to the expected credit loss during a 12-month period (stage 1). EKF calculates the 12-month credit loss as the product of the probability of default (PD), the average expected receivable in the coming 12 months and the share EKF expects to lose.

In the event of a subsequent considerable increase in credit risk relative to the time of initial recognition, the asset is written down by an amount corresponding to the expected credit loss during the remaining term of the asset (stage 2). Because EKF uses a PD model, the following principle is applied to assess when a considerable increase in credit risk exists:

• If the 12-month PD on initial recognition is under 1 per cent: At the time of calculation, the 12-month PD must have increased by 0.5 percentage point or more and the PD must have doubled for the expected remaining term of the asset.
• If the 12-month PD on initial recognition is 1 per cent or more: At the time of calculation, the 12-month PD must have increased by 2.0 percentage points or more or the PD must have doubled for the expected remaining term of the asset.

EKF calculates the credit loss over the useful life of the asset as the product of the probability of default (PD), the average expected annual receivable and the share EKF expects to lose.

If the asset is deemed to be credit-impaired (stage 3), the asset is written down by an amount corresponding to the expected credit loss during the remaining term of the asset. Loans for which EKF has observable data on events indicating that the asset is credit-impaired are written down individually. EKF performs individual write-down based on a trade-off between three scenarios: a best-case scenario, a base-case scenario and a worst-case scenario.

Securities

Securities are classified as ‘held to maturity’ assets and recognised at fair value corresponding to cost price. The securities are subsequently measured at amortised cost plus interest receivable. Premium and discount are reported as accruals over the maturity period and recognised under net financials.

Fixed assets

Intangible fixed assets relate to software acquisitions and are recognised at cost less accumulated amortisation and write-downs. Cost includes expenses directly linked to acquisition and implementation, up to the date when the asset can be commissioned. Intangible fixed assets are amortised on a straight-line basis over the expected useful lives of the assets of 3 to 5 years from the date of commissioning.

Development projects in progress relates to software acquisitions that are clearly defined and identifiable. Development expenses are determined as direct expenses incurred.

An impairment test is carried out for acquired intangible fixed assets if there are indications of impairment. Additionally, every year an impairment test is carried out on development projects in progress. The impairment test is carried out for each asset. The assets are written down to the higher of the asset’s value in use and net selling price (recoverable amount), if this is lower than the carrying amount.
Tangible fixed assets relating to hardware, fixtures and fittings and refurbishing of leased premises are measured at cost less accumulated depreciation and write-downs. Cost includes the purchase price and expenses directly related to the acquisition.

Cost is depreciated on a straight-line basis over the expected useful lives of the assets at a residual value of DKK 0. The expected useful lives of the assets are deemed to be as follows:

• IT hardware 3–5 years
• Other plant and operating equipment 3–5 years
• Refurbishing of leased premises 5 years

An impairment test is carried out for tangible fixed assets if there are indications of impairment. The impairment test is carried out for each asset. The assets are written down to the higher of the asset’s value in use and net selling price (recoverable amount), if this is lower than the carrying amount.

Deposits concern deposits from rent etc. Deposits are recognised at cost with subsequent indexation.

Reinsurance shares

Reinsurance share of guarantee provisions comprises the reinsurers’ share of EKF’s guarantee provisions. The share is adjusted for EKF’s counterparty risk on the reinsurers.

Reinsurance share of provisions for claims expenses comprises the reinsurers' share of EKF's provisions for claims expenses. The share is adjusted for EKF's counterparty risk on the reinsurers.

Receivables

Claims consist of commercial claims and claims on countries.

Where an agreement exists with the counterparty, commercial claims are recognised at cost and subsequently assessed so that the value of the claim corresponds to the expected repayment. Where no agreement exists with the counterparty, which is the general rule, the value of claims is assessed taking into account the debtors' ability and willingness to pay. Gross claims comprise indemnification payments with addition of the recognised capitalised interest less recovered amounts, adjusted at the exchange rate on the balance sheet date. Net claims are reduced by actual write-downs to offset losses.

Claims on countries relate to receivables from countries resulting from indemnification payments, capitalised interest and purchase of the uninsured part of the political risks, or purchase of claims by EKF. Claims on countries are recognised at cost and subsequently assessed at fair value, so that the value of the claim corresponds to the expected repayment and the exchange rate on the balance sheet date, taking into account the countries’ ability and willingness to pay.

Claims on countries are recognised at the value of the indemnification paid, with addition of the recognised capitalised interest. Recognised capitalised interest is interest accrued on the claim prior to the conclusion of the rescheduling agreement and recognised by the debtor country. The capitalised interest thus becomes part of the new principal of the rescheduling agreement. A rescheduling agreement is an agreement between an individual creditor country and debtor country. The rescheduling agreement is negotiated under the auspices of the Paris Club.

Premiums receivable are measured at the present value of receivables at the date of recognition. Subsequently, current recalculation of present values is performed on the balance sheet date. Premiums receivable with a maturity of more than one year are discounted by a CIRR rate in the currency of the receivable concerned.

Premiums receivable are written down according to IFRS 9. EKF uses a proprietary model to calculate the expected credit loss according to IFRS 9. The model is based on an assessment of the likelihood that the counterparty will no longer be able to meet its contractual commitments – Probability of Default (PD). EKF uses well-known methods such as rating tools from S&P and Moody’s to determine ratings.
Ratings are translated into PD based on Moody’s statistics for 1-year default rates.

Premiums receivable are written down on initial recognition by an amount corresponding to the expected credit loss during a 12-month period (stage 1). EKF calculates the 12-month credit loss as the product of the probability of default (PD), the average expected receivable in the coming 12 months and the share EKF expects to lose.

In the event of a subsequent considerable increase in credit risk relative to the time of initial recognition, the asset is written down by an amount corresponding to the expected credit loss during the remaining term of the asset (stage 2). Because EKF uses a PD model, the following principle is applied to assess when a considerable increase in credit risk exists:

• If the 12-month PD on initial recognition is under 1 per cent: At the time of calculation, the 12-month PD must have increased by 0.5 percentage point or more and the PD must have doubled for the expected remaining term of the asset.
• If the 12-month PD on initial recognition is 1 per cent or more: At the time of calculation, the 12-month PD must have increased by 2.0 percentage points or more or the PD must have doubled for the expected remaining term of the asset.

EKF calculates the credit loss over the useful life of the asset as the product of the probability of default (PD), the average expected annual receivable and the share EKF expects to lose.

If the asset is deemed to be credit-impaired (stage 3), the asset is written down by an amount corresponding to the expected credit loss during the remaining term of the asset. Premiums receivable for which EKF has observable data on events indicating that the asset is credit-impaired are written down individually. EKF performs individual write-down based on a trade-off between three scenarios: a best-case scenario, a base-case scenario and a worst-case scenario.

Derivative financial instruments are recognised from the trading date and measured in the balance sheet at fair value. Positive and negative fair values of derivative financial instruments are included on separate lines in the balance sheet, and positive and negative values are set off only when the enterprise is entitled and intends to settle several derivative financial instruments, net. Fair values of derivative financial instruments are determined based on current market data and recognised valuation methods.

Prepaid interest expenses comprise prepayments to reinsurers. The prepayments cover contracts with reinsurance of the credit risk on loans. The prepayments are charged to the income statement as a financial expense under result for lending activities in line with the repayment profile of the loan.

Other receivables comprise interest related to export loans and other receivables and are measured at amortised cost, usually equivalent to nominal value. The value is reduced by write-downs to offset expected losses.

Equity and capital ratio

Equity comprises restricted equity, the exchange rate adjustment reserve, proposed dividend and non-restricted equity.

Restricted equity is strengthened by 75 per cent, or another share recommended by the Board of Directors, of any positive result less Value adjustments, unrealised under the lending result and provision for dividend distribution. The restricted equity is strengthened only when below the calculated maximum size of the restricted equity.

The exchange rate adjustment reserve corresponds to the accumulated unrealised fair value and exchange rate adjustments related to loans, re-lending and interest rate and currency swaps.

Proposed dividend to the Danish state is shown as a separate item under equity. Proposed dividend is recognised as a liability on the date the Minister for Industry, Business and Financial Affairs approves the proposed dividend.

Non-restricted equity comprises the remaining reserve after calculation of the restricted equity, the exchange rate adjustment reserve and proposed dividend.

Management of activities through equity means that the non-restricted equity must at any time meet a minimum requirement calculated as the non-restricted equity relative to the sum of guarantee exposure, offers, loans and outstanding claims. Offers are weighted pro rata with a share determined by the Board of Directors. The pro rata share is determined prior to each financial year. Guarantee exposure, loans and claims are calculated less any provisions and write-downs. If the non-restricted equity fails to meet the minimum requirement, EKF may not undertake any new guarantee or loan commitments. According to EKF’s articles of association, the minimum requirement for non-restricted equity will be 5 per cent until the end of 2018 and 4 per cent after that.

Payables

Payables to the Danish state (re-lending) via Danmarks Nationalbank are recognised initially at the proceeds received. In subsequent periods, re-lending is measured at fair value. The fair value is calculated as the exchange rate on discounting to net present value of future cash flows at the relevant discount rates determined on the basis of current market data.

Derivative financial instruments are initially recognised in the balance sheet at cost and subsequently measured at fair value. The fair value is calculated as the exchange rate on discounting to net present value of future cash flows at the relevant discount rates determined on the basis of current market data.

Prepaid interest income comprises prepayments received from borrowers. The prepayments cover future interest income on loans. The prepayments are recognised as income in line with the repayment profile of the loan.

Payables to reinsurers are recognised at the present value at the date of recognition. Subsequently, current recalculation of present values is performed on the balance sheet date. Payables with a maturity of more than one year are discounted by a CIRR rate in the currency in which the receivable concerned was raised. Payables to reinsurers are written down according to the same principles as premiums receivable. See the section on premiums receivable.

Other payables are measured at amortised cost, essentially equivalent to nominal value.

Technical provisions

Guarantee provisions are measured on the basis of the risk assessment carried out when the premium is set. Provisions for guarantees are made when cover under the guarantee commences. The individual guarantee provisions are calculated continuously based on the classification of the buyer country and the guaranteed buyer or bank into eight risk categories. Based on these country (political risk) and buyer (commercial risk) classifications, the risk of loss on the guarantee exposure is calculated.

The tenor of the guarantees is also included in the risk calculation. The guarantee exposure and guarantee provisions for individual transactions are regularly written down on the basis of a repayment profile that is defined when the guarantee is established and matches the payment plan provided by the lender to the borrower.

The individual rate applied to the guarantee provision expresses the risk of loss on the individual guarantee.

On initial recognition, provisions of 80 per cent of the premium are usually made. The remaining 20 per cent of the premium is considered as coverage for administrative expenses, cf. international procedures agreed within the OECD. No provisions are made for upfront and commitment fees.

Subsequent provisions are measured based on the current recalculated present value of the premium. Provisions are recognised on an ongoing basis, taking into account the individual risk profile and the remaining tenor of the guarantee.

For some of EKF’s products, provisions of a different percentage of the premium are made. For working capital guarantees, provisions are made for 100 per cent of the premium. In case of significantly increased risk on a guarantee, a specific assessment of the guarantee provision will be made.

Provisions for claims expenses are amounts allocated to cover payments on commercial and political claims received or potential commercial and political claims. Provisions for claims expenses also include expenses related to the prevention and assessment of claims. In the event of a potential loss on a guarantee, a specific assessment and measurement of the expected loss on the guarantee will be made.

When provisions are made for claims expenses, the provision for the guarantee will be reversed.

Cash flow statement

The cash flow statement based on the indirect method shows the cash flows from the operating, investment and financing activities during the year. The impact of these cash flows on liquidity at the end of the year is also shown. Liquidity at the end of the year comprises the items Balance with the Danish state and Cash.

Assessment of guarantee exposure and conditional offers

Guarantee exposure comprises the largest possible exposure less reinsurance in cases that include both commercial and political exposure. The guarantee exposure is regularly written down during the guarantee period on the basis of the repayment profile defined when the guarantee is issued.

Conditional offers comprise the largest possible exposure in cases that include both commercial and political exposure. Conditional offers are either converted to a guarantee or the transaction is completed on the expiry date.

Adjusted guarantee and loan exposure is defined as the sum of EKF’s guarantee exposure, loans and 55 per cent of EKF’s exposure on conditional offers, as well as net claims less technical provisions after reinsurance. The adjusted guarantee and loan exposure is applied to the calculation of capital requirements.

Organisation

EKF’s Management

CEO

Kirstine Damkjær
EKF Denmark’s Export Credit Agency

Management positions:
Eksport Kredit Finansiering A/S
 

Deputy CEO​

Jan Vassard
EKF Denmark’s Export Credit Agency

Board positions:
Advisory Board, Institute for Trade and Innovation (IfTI), Offenburg University

Deputy CEO

Christian Ølgaard
EKF Denmark’s Export Credit Agency

Board positions:
P/F Fønix, Tórshavn

EKF’s Board of Directors

Chairman of EKF, Chairman of Remuneration Committee, Member of Audit and Risk Committee

Christian Frigast

Management positions:
Esplanaden I/S
Axcel IV K/S 2
AX Management Invest II K/S
AX Management Invest K/S
Axcel III K/S 1
Axcel III K/S 2
Axcel IV K/S
Axcel III K/S 3
Frigast A/S
Chr. Frigast 

Board positions:
Axcelfuture, Chairman
Board Leadership Society, Chairman
Danmarks Skibskredit Holding A/S, Chairman
Axcel Management Holding ApS, Chairman
AX IV HoldCo P/S, Chairman
Axcel Management A/S, Chairman
MNGT2 ApS, Chairman
DVCA, Chairman
Eksport Kredit Finansiering A/S, Chairman
PostNord, Deputy Chairman
Axcel Advisory Board, Deputy Chairman
Pandora A/S, Deputy Chairman
Axcel Fonden, Member
AX V Nissens I ApS, Member
AX V Nissens II ApS, Member
Danmarks Skibskredit A/S, Member
AX V Nissens ApS, Member

Deputy Chairwoman of EKF, Member of Remuneration Committee​

Dorrit Vanglo

Management positions:
LD Fonde

Board positions:
KAPITALFORENINGEN LD, Chairwoman
Eksport Kredit Finansiering A/S, Deputy Chairwoman
Investment Fund for Central and Eastern Europe (IØ), Member
Investment Fund for Developing Countries (IFU), Member
Dalgasgroup A/S, Member
Det Danske Hedeselskab, Member
Investeringsforeningen Lægernes Invest, Member
Kapitalforeningen Lægernes Invest, Member

Chairman of Audit and Risk Committee​

Flemming Aaskov Jørgensen

Management positions:
D&F Invest ApS
88 Invest ApS

Board positions:
Eksport Kredit Finansiering A/S, Member
Alsie Express, Member

Jørgen Høholt

Management positions:
JH Financial Advisory

Board positions:
H.E. Jørgensen A/S, Member 
Nyscan A/S, Member 
Nyscan Trucks A/S, Member 
H.E.J. HOLDING A/S, Member 
H.E.J Ejendomme A/S, Member 
H.E.J Fuel A/S, Member 
Axcel Advisory Board, Member 
Eksport Kredit Finansiering A/S, Member 
Sydbank A/S, Member 

Jørgen Skeel

Management positions:
Birkelse Gods
JSJ-Agro I/S

Board positions:
AKV-Langholt AmbA, Chairman 
Slåbakkegaard Fonden, Chairman 
Donau Agro ApS, Chairman 
Det danske Hedeselskab, Deputy Chairman
Dalgas Group A/S, Deputy Chairman
Eksport Kredit Finansiering A/S, Member 
Den Schimmelmannske Fond, Member 
Sisseck Familieinvest A/S, Member 

Member of Audit and Risk Committee​

Karen Nielsen

Management positions:
J.K.N. Holding ApS

Board positions:
Eksport Kredit Finansiering A/S, Member 
LB Forsikring A/S, Member 
Leman A/S, Member 
Leman Holding A/S, Member 

Poul Due Jensen

Board positions:
Grundfos (Singapore) Pte.Ltd, Chairman 
Grundfos Pumps Corporation, Chairman 
Grundfos (China) Holding Co., Ltd., Chairman 
Grundfos Pumps (Shanghai) Co., Ltd., Chairman 
Poul Due Jensens Fond, Deputy Chairman
Eksport Kredit Finansiering A/S, Member 
Ormstrup Gods A/S, Member 
Grundfos OOO, Member 
DWT Holding S.p.A., Member 

Anna Marie Owie

No other positions

Yasir Al-Gailany

No other positions