Recovery affecting
demand for EKF

In 2017, the world economy really began to pick up again, and the banks increased their lending. This means that the banks are now financing far more export activities in the EU and the OECD, and EKF consequently issued fewer new guarantees in 2017 than in the previous year in money terms. However, a much larger number of corporates used EKF’s solutions than was the case in 2016.

After the end of the financial crisis, Danish exporters are increasingly focusing on more exotic export markets in Africa, Asia and Latin America. These are classic export credit countries in which the banks – unlike EKF – are not always willing or able to get involved.

EKF finances Danish exporters and their buyers – also in countries with high levels of political, financial and project-related risk. A case in point is Iran, where the UN and the EU have lifted sanctions after more than ten years. Another case in point is Ethiopia, where major infrastructure projects are underway. And a third case in point is Argentina, which was racked by a debt crisis, but is currently investing strongly in green energy.

With a net profit of DKK 598 million, 2017 was a record year for EKF. A record attributable to the fact that fewer projects required new provisions for losses. All in all, a sign that the export markets are picking up.

EKF issued new export credits, working capital guarantees and loans worth DKK 11.5 billion in 2017, bringing EKF’s total administered portfolio to just under DKK 71 billion with equity amounting to DKK 7.6 billion.

In 2017, EKF helped Danish exporters secure contracts worth DKK 17 billion. Thus, EKF contributed more than DKK 6 billion to GDP in the year under review and helped to create and retain more than 8,000 jobs in Denmark.

EKF is owned by the Danish state, and as part of the government’s North Sea agreement of March 2017, we were asked to pay dividend to our owner in the past year. This led to a change in legislation in December, meaning that EKF will pay just over DKK 1 billion in dividend to the Danish state over the coming years. We contributed the first DKK 125 million in 2017, and EKF expects to contribute another DKK 140 million in 2018. Despite the dividend to our owner, EKF’s risk appetite remains unchanged, and we still have ambitions to use the remaining profit to help even more exporters.

Exports are among the key drivers of Denmark’s growth, and ’Vækst med omtanke’ (Prudent growth) is the title of EKF’s new strategy that was adopted in 2017. This strategy sets the direction for the export credit initiatives of the Danish government. Its objective is to ensure that both large Danish corporates and small and medium-sized enterprises step up their exports in the coming years.

Prudent growth concerns EKF’s activities in both Denmark and the countries in which Danish exporters are operating. We need to exercise care with regard to exporters’ special need for financing, and we must act with care in respect of their customers and the projects they start up around the globe. But it is also about exercising care with regard to credit rating when working with public funds like we do. And we must always keep in mind the impacts on the environment, the employees and the population in the countries we are exporting to.

EKF is there to help exporters implement their business growth plans. Including when they are venturing into new, high-risk markets, or when they need complex, customised financing solutions. In the coming years, we aim to be there for exporters to such an extent as to increase the number of new guarantees we issue even more.

All this would not be possible without the untiring commitment of EKF’s employees and without the close cooperation with our customers, the banks and our owners in the Danish Ministry of Industry, Business and Financial Affairs. I would like to extend my special thanks to them all.

Christian Frigast

Chairman of the Board of Directors

EKF is there to help exporters implement their business growth plans. Including when they are venturing into new, high-risk markets.​

CHRISTIAN FRIGAST
Chairman of the Board of Directors at EKF

Financial highlights

• Net profit

  • 598

    • DKK m

• Operating income

  • 812

    • DKK m

• Portfolio

  • 70,959

    • DKK m

• New guarantees 

  • 11,507

    • DKK m

• Customers

  • 769

Net profit​/loss
for the year

The net profit for 2017 amounted to DKK 598 million.

Net profit for 2017

Operating income​

EKF’s total operating income before administrative expenses amounted to DKK 812 million for 2017, including DKK 553 million from insurance activities and DKK 259 million from lending activities.

Total operating income before administrative expenses

+ Result of lending activities for 2015 included a negative value adjustment of DKK 416 million; 2016 saw a positive value adjustment of DKK 118 million.

Portfoli​o

EKF’s total portfolio amounted to DKK 70,959 million in 2017. It consists of EKF’s guarantee exposure, loans and offers issued.

EKF’s guarantee exposure after reinsurance amounted to DKK 38,248 million and loans amounted to DKK 12,627 million, i.e. DKK 50,875 million 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 34 billion.

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

EKF’s guarantee exposure fell by DKK 4.4 billion compared to 2016. The fall was attributable to large prepayments and reductions not offset by new guarantees in 2017.

Guarantee exposure and loans by region

Western Europe remains EKF’s largest region. Guarantee exposure and loans to Western Europe amount to DKK 23.8 billion, up from 23.3 billion at end-2016. Guarantee exposure and loans to North and South America, Eastern Europe and CIS as well as Asia/Pacific decreased relative to the preceding year. Similarly, guarantee exposure and loans to the Near and Middle East, including Turkey, and to Africa increased. 

New guarantees​

In 2017, EKF’s new guarantees amounted to DKK 11,507 million.

New guarantees​

Customers

EKF had a total of 769 customers at the end of 2017.

Development in the number of customers​

+ Unlike previous years, 58 customers from short-term reinsurance were included in 2017.

In the past five years, EKF has seen a pronounced increase in its customer base. The increase is driven by small and medium-sized enterprises, in particular. 

Customers by sector, 201​7

EKF’s customers are distributed across a wide range of sectors. In 2017, industrial production accounted for just over one quarter.

Financial highlights and
ratios for 2017
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.

++ Dividend is distributed in the financial year following the approval by the Danish Minister for Industry, Business and Financial Affairs.

+++ 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 is
Denmark’s
export credit agency

Ever since 1922, the object of EKF has been to support Danish exports and to create growth and jobs in Denmark. EKF makes it possible for Danish companies to realise their export dreams by providing export credits, working capital guarantees and loans and thus enabling 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 orders. In 2017, we helped Danish exporters and their sub-suppliers to secure contracts worth DKK 17 billion.

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 appetite necessary in countries and markets where the political and commercial situation may be uncertain.

In 2017, EKF helped Danish exporters and their sub-suppliers to secure contracts worth DKK 17 billion.

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 security to banks for exporters’ working capital and capital expenditure guarantees.

• 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 the 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.

EKF’s business model

EKF is an independent public company. We are owned by the Danish Ministry of Industry, Business and Financial Affairs and managed by our Board of Directors based on the Act on EKF Denmark’s Export Credit Agency.

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 five per cent of our guarantee exposure and loans, please also refer to Significant accounting policies.

Increasing activity
in distant markets

In 2017, EKF saw a pronounced increase in the number of new business transactions for large corporates. Project financing guarantees, buyer credit guarantees, working capital guarantees, bill of exchange and letter of credit financing emphasising that Danish companies are acting globally to a much higher extent and increasingly need to finance transactions in distant markets with high political or commercial risk.

An infrastructure project in Ethiopia, a power plant in Mali, an agricultural project in Belarus and a slaughterhouse project in the Dominican Republic are examples of Danish businesses expanding globally with EKF financing. These projects are dependent on long-term financing and a high risk appetite, and EKF is able to deliver both.

New guarantees to large corporates in high-risk countries

In 2017, EKF provided new guarantees in high-risk countries in the amount of DKK 2.8 billion, which is a much higher amount than in 2015 and 2016.

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.

Wind projects making up a large share

Wind projects make up a large share of EKF’s business. Denmark has three world-leading wind energy companies and many sub-suppliers, which makes wind turbines an important Danish export commodity. A number of large wind turbine projects were realised in 2017 with EKF’s assistance. EKF helped to finance the Walney Extension offshore wind farm project in the UK, among other projects. Construction of offshore wind farms is still mainly concentrated in Northern Europe. The projects are typically very large and financed by a veritable web of financial players.

Onshore wind turbine construction remains cheaper than offshore construction, and today, electricity from new onshore wind farms in many countries are able to compete cost-effectively against fossil fuel and solar energy power plants. This means that onshore wind farms have now become a competitive energy source.

In the past year, EKF was involved in onshore wind turbine projects in Mongolia, Argentina, Mexico and Turkey, among other countries. These are wind turbine projects for which export credit is an important part of the financing, and the fact that EKF is involved in financing the Danish suppliers becomes a key competitive parameter.

A total of DKK 7.1 billion or 61 per cent of new guarantees went to both onshore and offshore wind turbine projects. Offshore projects accounted for 45 per cent of this, while onshore projects accounted for 55 per cent. In 2017, new guarantees decreased by DKK 2.3 billion compared to 2016. The primary reasons were a lower financing requirement for offshore wind projects than in the previous years and several major construction projects in e.g. Africa taking longer than expected.

Development in wind guarantees 2014-201​7

A total of DKK 7.1 billion or 61 per cent of new guarantees in 2017 went to wind turbine projects. 45 per cent were offshore projects and 55 per cent were onshore. 

Sub-suppliers with special requirements

Siemens Gamesa, MHI Vestas Offshore Wind and Vestas Wind System A/S all received large orders in 2017, but since the Danish wind industry numbers more than 250 companies spearheaded by Vestas and Siemens, a host of sub-suppliers have also had a share in the Danish wind adventure. Altogether, the companies have more than 30,000 employees and an annual turnover of almost DKK 90 billion.

Many sub-suppliers benefit from the large orders for Siemens and Vestas. EKF has been involved in business transactions with, among others, Bladt Industries, which supplies foundations for offshore wind turbines, with operating systems experts DEIF and with LORC, which is an internationally leading wind turbine test centre in Munkebo on Funen.

EKF aims to get closer to its customers, so direct sales and relation-creating activities were top priorities in 2017, and this will also be the case in 2018. For many years, EKF has had a close working relationship with a large group of Denmark’s largest export companies such as BWSC, Per Aarsleff, FLSmidth, Haldor Topsøe, Skov and Nilpeter. We will continue this working relationship in 2018, and aim to do more business with existing customers and to reach even more.

Development in number of new guarantees for large corporates

The number of new guarantees for large corporates increased by 12 compared to 2016.

EKF guarantee helping to secure the world’s largest offshore wind farm

As the world’s leading public financing partner on wind turbine projects, EKF opted for a new approach in 2017 with its new financing model.

The wind tears across the roaring sea most days of the year, and according to some, it is one of the most windswept areas in the UK. We are around 14 km west of the island of Walney in north-western England. Not the most obvious destination for a beach holiday, but the perfect place for the world’s largest offshore wind farm.

When the Walney Extension offshore wind farm is commissioned in the second half of 2018, it will overtake London Array as the world’s largest wind farm of its kind. With a capacity of 659 megawatts, the wind farm will supply electricity to around half a million British homes.

Construction of wind farms of that magnitude is complex and highly expensive. They require huge loans with long maturities, so it is not possible for a single bank to provide financing. In such cases, financing is dependent on different institutions, including export credit agencies such as EKF, which is the world’s leading public financing partner on wind projects.

In the case of Walney Extension, Ørsted (formerly DONG) was in charge of construction, while a consortium consisting of Danish pension funds PFA and PKA purchased a 50 per cent ownership interest.

As part of the financing, PFA and PKA issued credit-rated project bonds to Aviva Investors, BlackRock Investment Management (UK) Limited, Legal & General Investment Management Real Assets and Macquarie Infrastructure Debt Investment Solutions.

EKF provided a guarantee of just under DKK 3 billion for one of the bond series. The novel aspect of the financing model was that the debt was structured as a green bond where proceeds from the issuance are allocated to the financing of green investments. The bond was indexed to inflation in the UK, which contributes to reducing the financial risks of the project. This was the first time that an offshore wind farm in the UK was financed by a green bond.

”We are world leaders when it comes to public financing of wind farms. We are ready to explore new avenues to ensure successful wind turbine projects as well as to support Danish exports. The solution with a green bond indexed to inflation in the UK is a case in point. At the same time, it is highly satisfactory to be part of a wind partnership that distributes green energy to more than half a million British households,” says Christian Ølgaard, Deputy CEO at EKF.

We are world leaders when it comes to public financing of wind farms. We are ready to explore new avenues to ensure successful wind turbine projects as well as to support Danish exports. The solution with a green bond indexed to inflation in the UK is a case in point.

CHRISTIAN ØLGAARD
Deputy CEO at EKF

A year of several
new initiatives
aimed at Danish exporters

An upturn in the global economy means that private financial institutions have more venture capital. This has somewhat reduced demand for EKF’s financing solutions. Nevertheless, EKF saw some growth in the number of customers in 2017 – most of them small and medium-sized enterprises (SMEs).

In 2017, 254 companies got an export credit, a working capital guarantee or a loan from EKF. This was slightly fewer than the approx. 300 enterprises in 2016. However, current guarantees were issued to 515 enterprises in previous years, bringing EKF’s total number of customers to 769.

630 – or 82 per cent – of the customers belong in the SME segment. This means that EKF welcomed more than 70 new SME customers in 2017 relative to its 564 customers in 2016. One reason for the large increase was that EKF included short-term reinsurance customers in the number for 2017. New guarantees issued to Danish SMEs totalled DKK 1.5 billion.

Development in number of customers in the SME segment

2017 includes short-term reinsurance customers which totalled 58 in 2017.

EKF welcomed 70 new SME customers in 2017, bringing the total number of customers to 630 compared to 564 in 2016.

Working capital, L/C and supplier credit guarantees are popular

As in the preceding years, working capital guarantees were the EKF product most in demand from Danish SMEs. Working capital guarantees accounted for 214 of the 312 export credits, working capital guarantees and loans issued in 2017, corresponding to 69 per cent. With a working capital guarantee from EKF, the banks have the necessary security to offer SMEs credits. The popularity of the working capital guarantees indicates that liquidity and financing of their current capital and operational costs remain the most pronounced needs SMEs have.

L/C guarantees are the second-most-in-demand EKF solution from SMEs. In 41 instances in 2017, an EKF L/C guarantee was the decisive factor in enabling Danish exporters to accept orders from uncertain markets. With an L/C guarantee, exporters will be able to arrange for their bank to participate in payments by letter of credit in countries and in markets where the bank would otherwise be unwilling to accept risk.

In third place, the SME guarantee was overtaken by the supplier credit guarantee as the third-most-in-demand EKF solution from SMEs with 25 guarantees issued in 2017.

Important to ensure awareness of EKF’s services

For Kim Richter, Senior Director, and his SME department at EKF, 2017 was in many ways similar to the previous year. Because of the strong economic upturn in the last couple of years, it has become easier for SMEs to finance their export activities.

”The positive development in the global economy has secured private players more venture capital to finance Danish SMEs, so the enterprises no longer see financing as a bottleneck. This is a positive development for Denmark, as it strengthens the SMEs’ ability to conclude agreements with foreign customers. Even so, we anticipate a slight increase in EKF’s customer numbers in 2018.”

Kim Richter explains:

”Some SMEs in Denmark are still not familiar with EKF’s possibilities of supporting their business development, so we need to keep focusing on our efforts to ensure awareness of EKF’s services. Here, the banks are important partners.”

As part of its ambassador programme in Danish banks, EKF has trained almost 200 advisors in the possibilities of offering their customers export credits. This has led to a good deal of new business, and EKF plans to continue its efforts to train more ambassadors and keep existing ones up to date on new initiatives in 2018.

In addition to its cooperation with banks, EKF’s partnership with company incubators and the Danish Trade Council also plays an important role in ensuring awareness of our services. In 2017, EKF launched several new initiatives to reach even more SMEs, including providing working capital guarantees to tourism companies, shopping lines and leasing guarantees

Some SMEs in Denmark are still not familiar with EKF’s possibilities of supporting their business development, so we need to keep focusing on our efforts to ensure awareness of EKF’s services.

KIM RICHTER
Senior Director, SME and Cleantech, at EKF

Breakdown of customers 201​7

SMEs accounted for 82 per cent of EKF’s 769 customers in total at the end of 2017.

Shopping lines, leasing and a helping hand to the tourism sector

2017 saw the introduction of several new EKF initiatives that may help Danish SMEs to reach beyond national borders. For example, the Danish consulate general in São Paulo, the Confederation of Danish Industry, the Danish Agriculture & Food Council and EKF has launched an initiative to make it easier for the agricultural sector and food industry in Brazil to purchase from Danish companies. The huge Brazilian cooperative farms are experiencing rapid growth, and they have a strong appetite for purchasing Danish farm and food equipment.

”We have offered so-called shopping lines to six cooperative farms. By offering them competitive financing, we basically enable them to purchase from Danish suppliers without having to worry about the challenge of financing the purchase,” explains Kim Richter.

In the autumn, EKF was also working on two other offers to Danish SMEs. In November, the rapidly growing tourism sector got a helping hand when EKF provided access to its working capital guarantees. The tourism sector creates growth and jobs in Denmark, and foreign tourists contribute up to DKK 50 billion annually to Danish exports. Many financial institutions in the private market have been reluctant to extend loans to this sector, however. It is dependent on the changeable Danish weather, the season is short, and many Danish tourism companies are located in rural districts.

”Our working capital guarantees enable the tourism companies to implement their business growth plans – provided they are healthy and creditworthy businesses,” Kim Richter points out.

EKF has also developed the Operating Lease Guarantee solution, which was launched in early 2018. The new guarantee enables Danish companies to lease rather than sell their assets to foreign customers, with EKF covering up to 90 per cent of any losses.

EKF is looking forward to monitoring demand for the new products in 2018.

We have offered so-called shopping lines to six cooperative farms. By offering them competitive financing, we basically enable them to purchase from Danish suppliers without having to worry about the challenge of financing the purchase.

KIM RICHTER
Senior Director, SME and Cleantech, at EKF

Form3 Retail winning foreign orders with financing from EKF

Danish Form3 Retail designs and builds attractive shops for well-known brands in both Denmark and abroad. The architectural firm develops approx. 40-50 new projects every year, and thanks to SME guarantees from EKF, they can safely accept more.

Form3 Retail’s principal task is to create unique interior design solutions for the retail industry. You do not just enter a traditional shop, but are guided into a creative universe full of life and all sorts of sense impressions. Everything is carefully selected and adapted. Every detail has been considered.

From conventional production to design

The small firm of interior architects in Kolding, Denmark, has spent many years trying to find its niche and reaching its current level of expertise. In 2010, adversity in the form of increasing e-commerce was what it took for Form3 to find its niche.

”We experienced a sharp fall in demand for the physical shop which was reflected in the number of requests. Rather than seeing this as a limitation, we analysed how we could turn the development to our advantage,” explains Tommy Toft, CEO at Form3 Retail.

”We found out that the need for shops to stand out had suddenly increased compared to previous years. This opened new opportunities for us to offer more holistic solutions that increase the visibility of the customer’s brand. As a result, we stand out from our competitors today, because we are a fully design-based company rather than a conventional production-based company.”

Financing was the key to growth

The development in Form3 really got things going. Today, the Jutland-based architectural firm implements approx. 50 new projects a year and has become a highly attractive partner for major well-known brands from all over the world, including Sand, Marc by Marc Jacobs, DAY Birger et Mikkelsen, Høyer, Levi’s and Paris Hilton.

”Today, our work is not just about interior decoration – it is also very much about branding. We include all aspects and create a holistic experience for our customers,” explains Tommy Toft.

We present EKF’s financing solution to both existing and new customers and explain how we can help to secure financing for their projects, if required. As a result, many projects that used to be merely a dream are now being implemented.

TOMMY TOFT
CEO, Form3 Retail

CSR at EKF

At EKF, we are constantly striving to adapt and streamline our CSR processes. In 2017, our main focus was on environmental and social sustainability. 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-owned export credit agencies.

At EKF, it is an absolute requirement that the transactions in which we are involved 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. We are continuously monitoring this, which is also one of the aspects of ‘Prudent growth’.

It is elaborate and time-consuming work, and we are consequently striving to establish a flexible process to ensure that the projects comply with environmental and social sustainability standards. 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. This clearly and unequivocally shows our customers, and often also their customers, how CSR must be integrated in the business.

According to the OECD Common Approaches, projects are classified as category A, B or C projects. The classification indicates the review and assessment processes required for the 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.

In 2017, EKF was involved in six projects classified as category A projects and ten projects classified as category B projects. Around half were wind projects, while five others were agricultural projects.

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.

Regular follow-up on transactions

Following up on environmental and social sustainability requirements is just as important as following up on financial conditions. We prioritise both internal resources and consultancy services in order to ensure project compliance with international standards. In 2017, our follow-up activities included:

• Scandinavian Farms pig breeding project in China
•  Awash-Weldia – railway project in Ethiopia
• Teghout – copper and molybdenum mine in Armenia

EKF has been involved in Scandinavian Farms’ establishment of a large pig herd in China for several years. In 2017, we visited Scandinavian Farms in China to follow up on employee conditions, slurry handling and animal welfare, among other aspects.

In 2017, construction of the last 100 km stage of the railway project in Ethiopia was started. As in previous years, EKF monitors the project closely, which includes visiting the construction sites as well as the neighbouring local communities.

It is an absolute requirement that the projects comply with international standards, and EKF always does whatever it can to guide the projects in the right direction. However, due to the nature of EKF’s business, very few sanctions are available to us once the loans have been extended and the projects have started. Therefore, if all other options have been exhausted, there is only one ultimate solution: to withdraw the guarantee and require prepayment of the loan.

EKF is involved in approx. 500 export transactions in more than 100 countries. Frequently in countries with other traditions and environmental and social regulations than in Denmark, so compliance with these requirements is a condition for EKF’s participation. In 2017, EKF made the decision to withdraw its financing for a copper mine in Armenia. The decision was reached after multiple attempts over several years to get the mine to comply with the terms of the agreement with EKF. For the first time in EKF’s history, we were compelled to withdraw our financing of a project in progress due to environmental and social impacts.
 

Consistent application and interpretation of international standards

EKF has long-standing experience with applying and interpreting the international standards that we, like all other export credit agencies, must comply with. We wish to pass on this experience to our international colleagues and partners. Partly to ensure equal terms of competition for Danish companies and partly because we believe that applying international standards is important to ensure responsible growth in connection with export finance. It is a principal element of EKF’s CSR policy.

EKF’s CSR policy also covers environmental and employee conditions for our own business.

Environmental conditions at EKF

EKF’s environmental footprint is moderate, as is the case with most office businesses. 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 2017 amounted to 620 tonnes. At 532 tonnes, air travel is by far the largest single contributor, which can be attributed to EKF’ participation in numerous negotiations in relation to our projects around the world.

CO2 emissions associated with EKF’s consumption and transportation

Employee conditions

EKF is continuously striving to ensure good conditions for our employees. Annual employee satisfaction surveys show that job satisfaction is high. Another focus area in 2017 was safety in relation to official business travel. It is important to us that our employees feel comfortable travelling to the destinations where we conduct business. Accordingly, all business trips must be registered by Control Risk, which provides information on safety conditions in the countries of destination – before and after the trips.

For a number of years, we have undertaken a systematic approach to ensuring that the UN Guiding Principles on Human and Business Rights are incorporated in our business transactions. In 2017, EKF also analysed potential negative impacts on human rights based on EKF’s own activities and employees. This work will continue in 2018. The purpose of the analysis is to point out any human rights issues that are not being specifically handled in order to prevent potential negative impacts.

EKF employees

EKF is a knowledge-intensive institution and the vast majority of our employees have a long-cycle higher education. Skills development is key in ensuring that we are able to meet our customers’ requirements. 

At EKF, we want to be known as a financial institution that creates results and is customer-oriented, an institution based on commitment, professionalism and reliability. To that end, we focus on employees to provide the basis for continued successful development of EKF. We invest a significant amount in staff and management development every year. In 2017, our special focus was on targeted courses.

We seek to develop a culture that promotes employee well-being and development and contributes to a financially efficient and quality-driven operation of EKF. We want to provide attractive conditions for our employees and believe that a positive working environment based on employee well-being counteracts absenteeism and ensures dedicated and happy employees.

We wish to attract and retain the best employees to the organisation, and in our experience, interest in working at EKF is high. In 2017, we received approx. 800 job applications and hired 16 new employees. The average number of staff in 2017 was 124. The high number is attributable to the fact that our business has grown substantially in recent years, that complexity has increased and that we are currently assisting more companies than ever before.

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 50 per cent (33 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 33 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, 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)

Corporate governance

EKF organises the management of EKF and our activities in accordance with the purpose 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.

The framework for EKF’s activities is laid down in the Act on EKF Denmark’s Export Credit Agency. 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 eight members, six 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-assessment. The most recent self-assessment was performed in September 2017.

According to EKF’s articles of association, board meetings are held at least four times a year. Eight board meetings were held in 2017.

The Board of Directors set up two sub-committees in 2017: an Audit and Risk Committee and a 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.

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 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 2017.

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 in Danish at the Ministry of Finance website.

New EKF strategy
Prudent growth

The environment in which EKF operates is constantly changing, so it is important for us to regularly consider how best to support the internationalisation of Danish companies. Against that backdrop, we developed a new strategy for EKF in 2017.

The name of the new strategy is ‘Prudent growth’. With this name, we wish to signal that EKF aims to create growth with our customers and partners – for Denmark. We will achieve this by being bold and accepting risk and by acting responsibly and with care.

The generally increasing risk appetite of banks has a very positive effect on Danish exports. For EKF it means lower demand for our guarantees and loans in local markets and higher demand in high-risk countries. EKF needs to exercise care when taking risks in those countries.

We will work strategically to strengthen the SME segment. This means we must exercise care in terms of our credit ratings, our acceptance criteria and our customer relationships.

Strategy process

EKF developed the new strategy by means of a conventional strategy process, including a thorough analysis of the environment in which we operate and EKF’s previous performance. We relied on the expertise of external consultants who presented their estimate of EKF’s near future in the form of megatrends and the Danish export environment. They also analysed our results, business areas, ratios and internal processes. A benchmark analysis comparing EKF with other export credit agencies based on a number of parameters was also conducted. Finally, approx. 140 of our customers and stakeholders were interviewed in the course of the process.

Four must-win battles

The strategy indicates four must-win battles for EKF in the years to come:

Strategy work in 2018​

In 2018, EKF will also endeavour to set up a number of requirements to ensure a successful roll-out of the strategy:

• We will conduct outreach activities to get more customers.

• We will strengthen our dialogue with customers, sponsors and banks.

• We will increase our site visits in order to physically inspect projects and debtors – before taking on risk.

• We will focus particularly on IT and digitisation at EKF.

EKF's
risk management

Risk-taking is a cornerstone in EKF’s activities, so risk management is an integral part of EKF’s business model. We work tirelessly to develop and adapt our risk management to the current risk landscape. In 2017, EKF expanded its risk management by a number of initiatives, including a whistleblowing scheme and the establishment of an Audit and Risk Committee.

At EKF, we balance our objective of ensuring that Danish exporters have access to internationally competitive financing by minimising unnecessary losses through adequate and transparent risk management. EKF’s greatest risk is that Danish and international debtors do not have the possibility, ability or willingness to pay the guarantee holder, which is usually a bank. To this may be added the risk of non-repayment of EKF’s export loans.

EKF is exposed to various risk types, and risk management is a significant focus area for our Board of Directors and Management alike. The Board of Directors defines the risk policy and other policies to ensure risk management at EKF. Management is responsible for the implementation of the risk exposure framework in the business and for ongoing risk management and follow-up, including mapping and assessment of the individual risks associated with our business activities. Using internal regulations at EKF, we ensure compliance with the policies adopted by the Board of Directors.

EKF’s overall risk management is vested in the Finance department, which is responsible for the management and control of financial risks. Compliance & Operational Risk is responsible for operational risk management. The departments are jointly responsible for the practical implementation of the decisions made by the Board of Directors and Management in relation to risk management at EKF.

We cooperate with rating agencies and national and international credit insurers with regard to international credit and risk management standards.

Risk management

Credit risk

Credit risk, which is EKF’s greatest risk, occurs when counterparties on EKF-guaranteed loans, working capital guarantees and direct lending default on their debts. EKF manages credit risks via the credit rating framework defined in its credit policy and product-specific guidelines. We apply a number of internal credit risk pointers in connection with export credits, working capital guarantees, loans and conditional offers with a view to evaluating individual new transactions and regularly reassessing the overall portfolio risk. For risk classification of commercial risks, we use internationally recognised tools from Standard & Poor’s to assess 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 stress test debtors’ payment ability. Moreover, relevant collateral is included in the overall risk exposure.

Large projects in the construction phase involve supplier risk in case the Danish exporter is unable to deliver the project as agreed. The exporter may issue a counter-guarantee, thereby guaranteeing a form of compensation for foreign buyers. Risks in the construction phase are included in EKF’s overall credit assessment. Project financing transactions in the wind sector are increasingly based on an element of spot prices in the electricity market rather than fixed-price purchase agreements, which makes future cash flows less predictable. We seek to mitigate the higher risk by means of lower leveraging, additional reserves and incentives to increase fixed-price sales using cash sweep mechanisms.

For our assessment of political risks, we use the OECD’s minimum country risk classification, which comprises the factors that may impact debtors’ possibilities, ability and willingness to meet their payment obligations. Developments in the credit rating of relevant banks and countries are continuously monitored.

EKF’s credit risk on swap counterparties occurring in connection with hedging of market risk on lending is restricted by a number of guidelines, since we comply with standards determined by Danmarks Nationalbank concerning ratings and amount sizes as well as stipulation of requirements for Euroclear under CSA agreements.

The figures below show our guarantee exposure broken down by the Standard & Poor’s credit rating categories applied by EKF.

Rating distribution of EKF’s new guarantee exposure and loans​

Rating distribution of EKF’s guarantee exposure and loans
at 31 December​

New guarantees in 2017 had an average credit quality equivalent to BB- and average maturity of 11.8 years.

EKF undertakes high and long-term credit risks. At 31 December 2017, the average maturity of the entire portfolio was 11.6 years, and the average credit rating was slightly below BB-.

Insurance risk

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.

Our insurance risk is significant due to 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 2017, our restricted equity totalled DKK 2.4 billion.

One of our risk management tools is monitoring portfolio risks. EKF runs credit rating checks of approx. 60 per cent of our existing portfolio with commercial risks based on principles concerning exposure, estimated probability of loss and customer characteristics. 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 calibration of provisions when required. The portfolio with bank and sovereign risks is monitored by reviewing financial institution ratings and by reviewing regions minimum once a year. Overall, EKF monitors minimum 80 per cent of the portfolio using automated, systematic processes.

At EKF, we use reinsurance in our risk management as well as our business model. EKF’s case-specific reinsurance and EKF’s treaty reinsurance agreement, under which we reinsure significant new guarantees within the given framework, add great value in terms of risk management 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 2017, EKF retained a reinsurance level of 20 per cent of EKF’s total exposure.

Hence, in addition to reducing insurance risk, reinsurance also lessens our capital requirements and frees up capacity to issue new guarantees and loans.

Guarantee exposure and loans, excluding reinsurance, by country risk category at 31 December 2017​

Market risk​

Market risk is the risk of loss or additional expenses due to adverse changes in the financial markets. In terms of market risk, EKF is exposed to interest rate, exchange rate and liquidity risks.

For guarantees, we only hedge exchange rate and interest rate risks in relation to accounting assets and liabilities. Our exchange rate risk is related to the difference, at portfolio level, between our total liabilities (provisions) and assets (premium receivables and claims) in each of the currencies to which we are exposed. The overall accounting effect is reduced, as far as possible, through financial contracts such as forward exchange contracts.

EKF’s principal currency exposure is to the euro, but the fixed exchange rate policy reduces the impact of fluctuations in the euro on our net profit. Based on an assessment of the overall exchange rate risks of our portfolio, the US dollar, the Mexican peso and the pound sterling are currently the only currencies we hedge.

We do not hedge market impacts on the guarantee exposure as the size of provisions reflects EKF’s overall expected loss on the portfolio. In general, the actual credit risk of individual transactions is not affected by changes in exchange rates and interest rates. Where such changes actually affect the credit risk of a transaction, this impact has been stress tested and the risk has been factored into the rating – and thus into the recalculated premium on which our provisions are based.

For export loans, we hedge the interest rate and exchange rate risks that occur when raising loans in Danish kroner at a fixed interest rate and providing loans at a fixed or floating reference rate, typically LIBOR or EURIBOR, in foreign exchange. Using interest rate and currency swaps, EKF ensures a link between the raising of loans under the re-lending scheme and lending to customers. The liquidity risk associated with export loans is due to placement risk, since re-lending is obtained prior to the long payment period of export loans. EKF hedges placement risk by using the repo market, which reflects the drawing profile of export loans through a number of repos.

Our capital requirements are affected by exchange rate and interest rate fluctuations through the size of our guarantee exposure and loans. If our export credit and working capital guarantee exposure and loans increase, so does the capital requirement in terms of the size of our non-restricted equity. Consequently, our scope for issuing new export credits, working capital guarantees and loans changes when exchange rates appreciate or depreciate.

Since the beginning of 2017, EKF has invested part of our free funds in a portfolio of particularly secure securities. The portfolio is classified as ‘held to maturity’ and managed on the basis of the criteria for a positive return and a modified duration of 5.5 years. EKF’s liquidity reserve management is now based on a number of basic principles in its policy for investment of EKF’s free funds setting the limits for operating liquidity, on-demand liquidity and free funds as well as risk management of EKF’s investments. In the event of extraordinarily high indemnification payments, EKF may use bonds in the investment portfolio as collateral in a repo transaction.

Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, including compliance and reputational risks and legal risks. Operational risk is managed through internal regulations drawn up in order to ensure the best possible control environment at EKF. We seek to minimise operational risk by, for instance, separation of duties between performance and control of activities and by an authorisation structure.

Compliance risks are managed by Compliance & Operational Risk that holds overall responsibility for 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. Compliance & Operational Risk reports directly to the EKF CEO.

Financial
review

Income statement

EKF’s total net profit for 2017 was DKK 598 million. This is an improvement on 2016 when the net profit was DKK 467 million. The profit for 2017 is highly satisfactory, enabling EKF to distribute DKK 140 million to the Danish state for 2017. As expected, EKF achieved a positive result for 2017. Demand for export credits, working capital guarantees and loans was relatively high, but the number of new guarantees issued was lower than expected. In 2017, an increase in the risk appetite of private entities in the market reduced demand for EKF’s participation in a number of transactions. It also reduced demand for export loans as the capital markets were highly liquid. As expected, a relatively large part of the new issues were wind project guarantees, and in terms of new issues in Ethiopia and Mali, among other countries, EKF also saw Danish exporters turning to more high-risk markets.

Despite a fall in issues of new export credits, working capital guarantees and loans from 2016 to 2017, net profit for 2017 was higher than for 2016. EKF has a large portfolio of transactions issued in previous years for which reductions in guarantee provisions and interest income on loans are regularly recognised as income. At the same time, there was no need to make provisions or write-downs for any large new non-performing guarantees or loans in 2017. In 2014, EKF made large provisions due to the situation in Ukraine. EKF contributed to the reconstruction of a large project in Ukraine, meaning that a considerable proportion amounting to DKK 104 million of the provisions made for claims expenses could be recognised as income in 2017.

Following the upturn in the financial market, a number of large guarantees were redeemed ahead of time in 2017, while a few guarantees were refinanced. As a result, EKF was able to reverse substantial premiums in 2017 and to recognise the related guarantee provisions as income.

Profit is an important contribution to our non-restricted equity, which is significant in terms of our capacity to issue new export credits, working capital guarantees and loans in the years ahead. EKF expects to distribute DKK 140 million on approval of the Annual Report for 2017. Moreover, EKF allocates part of the profit to the restricted equity, which may be used in case of major claims.

Insurance

The technical result before administrative expenses amounted to DKK 553 million in 2017. This is a significant improvement on the 2016 result, which amounted to DKK 269 million. The technical result consists of premium income for own account of DKK 550 million, claims expenses for own account of DKK 19 million and commission to and from reinsurance companies of DKK 22 million. The higher technical result before administrative expenses is mainly attributable to the low level of claims expenses in 2017.

Gross premiums amounted to DKK 890 million, which is a decrease of DKK 312 million compared to 2016. The decrease in gross premiums in 2017 is mainly attributable to a lower level of export credits and working capital guarantees in 2017 compared to 2016. In 2017, EKF issued new export credits, working capital guarantees and loans totalling DKK 11.5 billion, or DKK 2.4 billion below the amount in 2016 when new issues amounted to DKK 13.9 billion. Reinsurance premiums paid represented an expense of DKK 179 million in 2017. The premiums paid to reinsurance companies for guarantees issued in 2017 represented an expense of DKK 372 million in 2017. As a result of prepayments and refinancing, EKF was able to recognise DKK 193 million as income in the form of reversed reinsurance premiums.

EKF had a treaty reinsurance agreement with the private reinsurance market for 2017, 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.

Changes in guarantee provisions represented an income of DKK 257 million. Due to new issues of export credits and working capital guarantees, EKF made provisions of DKK 730 million. In 2017, as underlying loans guaranteed by EKF were gradually repaid, we were able to recognise as income DKK 420 million in reductions in previous years’ provisions for guarantees. As a result of prepayments and refinancing of projects in 2017, EKF was able to recognise guarantee provisions of DKK 449 million as income. Provisions corresponding to DKK 47 million were reversed in relation to projects that had run into difficulties. Other effects such as adjustments of guarantees and adjustments to country and debtor risk classifications returned a total income of DKK 71 million.

Claims for 2017 were substantially lower than in 2016. Claims expenses for own account amounted to DKK 19 million, net, which was DKK 342 million lower than in 2016. There were no new major transactions in 2017 for which it was necessary to make provisions. Indemnification payments were mainly related to a few medium-sized transactions abroad and minor losses on working capital guarantees and other products issued to Danish small and medium-sized enterprises. In 2017, EKF recognised as income a share of the provisions previously made on a major project in Ukraine. As the project is reinsured, the share of the provisions related to the reinsurance was charged to the income statement in 2017.

Commission to and from reinsurance companies came to a net income of DKK 22 million. The income is ascribable to the administration commission EKF charges on reinsured transactions.

Lending activities

The result of lending activities before administrative expenses was DKK 259 million. This was a decrease on 2016 when the profit was DKK 331 million. The decrease is mainly due to fluctuations in unrealised value adjustments.

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 floating 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 from lending activities amounted to DKK 275 million in 2017 against DKK 317 million in 2016. The primary reason for the decrease is a reduction in the portfolio of loans as a result of repayments.

No objective indications of impairment of new loans were registered in 2017 compared to the previous year. As no further impairment of already impaired loans was registered either, the expense was DKK 0 million in 2017.

Value adjustments, unrealised, represented an income of DKK 7 million. The income is related to the fact that EKF’s loans are measured at amortised cost, while hedging of market risks is measured at fair value. In 2016, EKF had an income of DKK 118 million as a result of a development in the yield curves (OIS curves) for the US and Australian dollar. While this development affected the market value of EKF’s currency swaps, its loans were not similarly affected, as they are not measured at fair value (accounting mismatch). 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.

Administration

Net administrative expenses totalled DKK 179 million, up DKK 5 million relative to 2016. The rise is mainly attributable to consultancy fees related to a new strategy for EKF.

Investment income

Investment income represented an expense of DKK 35 million compared to an income of DKK 41 million in 2016.

Total financial income was DKK 52 million in 2017. In 2016, financial income amounted to DKK 192 million. The income in 2017 was related to interest from securities and claims. In 2016, EKF posted a large income from discounting of premiums receivable as a result of falling interest rates.

Financial expenses amounted to DKK 46 million in 2017. Due to prepayments in 2017, the total discount effect of premium receivables was negative by DKK 19 million. Accrued interest paid and amortisation of premiums on securities totalled DKK 19 million.

In 2017, EKF posted an expense concerning exchange rate adjustments of DKK 41 million. The expense related mainly to foreign currency hedging of a large indemnification payment in US dollars.

Balance sheet

At 31 December 2017, our assets totalled DKK 26.8 billion, down from DKK 30.1 billion at 31 December 2016.

Assets

Cash and demand deposits fell to DKK 5.3 billion from DKK 9.0 billion at the end of 2016. The main reason for the fall was security investments and indemnification payments on a few major claims.

Loans amounted to DKK 12.6 billion at 31 December 2017. Compared to the end of 2016, this is a fall of DKK 1.2 billion. The fall is mainly due to general repayments on EKF’s loan portfolio.

Securities amounted to DKK 1.8 billion at 31 December 2017. In 2017, EKF invested DKK 1.8 billion of the balance with the Danish state in securities.

Reinsurance shares of guarantee provisions and provisions for claims expenses amounted to DKK 1.0 billion at the end of 2017, which was in line with the previous year due to a stable level of EKF’s reinsurance share.

Receivables amounted to DKK 6.0 billion in 2017, down from DKK 6.2 billion at the end of 2016. Claims increased by DKK 0.6 billion as a result of indemnification payments on a few major claims. Premiums receivable fell by DKK 0.8 billion due to prepayments.

Equity and liabilities

Total equity increased to DKK 7.6 billion from DKK 7.1 billion at the end of 2016. Of this, restricted equity amounted to DKK 2.4 billion compared to DKK 2.8 billion at 31 December 2016. The reduction was attributable to the restricted equity having reached the maximum calculated size determined on the basis of the concentration on countries and the risk-weighted exposure of the portfolio. This is attributable mainly to EKF receiving substantial prepayments in 2017, reducing both the concentration and the risk-weighted exposure. The non-restricted equity amounted to DKK 5.0 billion at the end of 2017, up DKK 0.9 billion compared to the end of 2016. The increase in the non-restricted equity means that EKF has more capacity for new business transactions. The exchange rate adjustment reserve amounted to DKK 0.1 billion at 31 December 2017, which is on a par with the previous year.

Technical provisions decreased by DKK 1.2 billion to DKK 3.8 billion at 31 December 2017. Guarantee provisions decreased by DKK 0.3 billion to DKK 3.1 billion due to reductions and prepayments. Provisions for claims expenses fell to DKK 0.8 billion from DKK 1.5 billion at the end of 2016 due to claims payments.

Payables amounted to DKK 15.4 billion at the end of 2017, down by DKK 2.6 billion from the level at 31 December 2016. The reason is that EKF reduced its payables to the Danish state under the re-lending scheme.

Key figures for EKF’s total claims and potential losses 2013-2017​

Claims and potential losses

Claims expenses for own account amounted to DKK 19 million in 2017, down from DKK 361 million in 2016 and thus much lower than the level of recent years. At the end of 2017, EKF’s total provisions for claims expenses amounted to DKK 0.8 billion, down by DKK 0.7 billion from the level at end-2016. The reason for the decrease is that EKF paid indemnification on claims for which provisions were made for potential losses. When EKF pays indemnification, we also take over a claim on the debtor concerned that we then seek to recover.

The increase in the provisions for claims expenses relate to cases assessed by EKF to involve potential losses. The 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 totalled DKK 1,451 million, gross in 2017, representing a pronounced increase relative to previous years. EKF paid indemnification of DKK 1,405 million on claims subject to foreign risk and DKK 46 million on claims subject to Danish risk.

Net claims increased from DKK 450 million in 2016 to DKK 1,096 million in 2017, reflecting that EKF takes over the claim when indemnification has been paid

Post balance sheet events

No events have occurred after 31 December 2017 that would have a material impact on the assessment of the Annual Report.

Outlook for 2018

EKF expects a slight recovery of the global economy and less sluggish credit markets. However, the growth forecasts are subject to considerable uncertainty, including because emerging markets are vulnerable to capital outflow and debt crises due to high levels of debt.

EKF expects to issue more export credits, working capital guarantees and loans in 2018 compared to 2017. Wind projects are expected to make up two thirds of new export credits, working capital guarantees and loans. At the same time, EKF expects increased issues of working capital guarantees and loans in high-risk markets.

Increased liquidity and growing risk appetite in the financial markets have intensified competition for wind financing. EKF consequently expects pressure on prices in 2018, leading to a lower premium level relative to new guarantees.

Compared to the period 2015-2017, EKF expects a relatively larger share of loans to be issued in 2018 in view of its expectations of increased demand in markets where export loans will be a key transaction financing element.

At the end of 2017, the portfolio of export credits, working capital guarantees and loans was still at a 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 a positive result of around DKK 300 million for 2018.

New accounting rules for 2018

As from 1 January 2018, a number of amendments to the Danish Executive Order on Financial Reporting for Credit Institutions etc. (Danish Executive Order on the Presentation of Financial Statements for Credit Institutions etc.) will enter into force. The amendments are a consequence of the implementation of IFRS 9 in the Danish accounting rules for credit institutions etc. EKF presents its financial statements under the Danish Financial Statements Act subject to the necessary exemptions and adjustments required as a consequence of EKF’s special position. As EKF has substantial lending activities, it will be relevant for EKF to implement the amendments to the Danish Executive Order on the Presentation of Financial Statements for Credit Institutions etc.

As a result of the amendments, write-down of loans etc. will be based on expected losses in future and not, as was previously the case, on losses incurred (objective indications of impairment). The write-down must be based on a continuous assessment of whether the credit risk has increased significantly relative to the initial recognition.

For EKF, loans and premiums receivable will be covered by the new rules. EKF’s guarantees are treated as insurance contracts and consequently will not be covered by the new rules.

EKF estimates that the effect of the new accounting rules will be in the order of DKK 200-250 million. It will be carried as a reversing entry in equity at 1 January 2018.

Corporate information

EKF Denmark’s Export Credit Agency

Lautrupsgade 11
DK-2100 Copenhagen

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

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

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 Skeel

Søren Østergaard Sørensen

Anna Marie Owie, elected by the employees

Charlotte Hagen Simonsen, elected by the employees

Management

Anette Eberhard, CEO

Jan Vassard, Deputy CEO

Christian Ølgaard, Deputy CEO

Auditors

PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
Strandvejen 44
DK-2900 Hellerup

Rigsrevisionen

Landgreven 4
DK-1301 Copenhagen

Management statement​

Today 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 2017.

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 2017 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 2017.

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, the net profit/loss for the year and of EKF Denmark’s Export Credit Agency’s financial position.

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

Copenhagen, 23 March 2018

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 2017, 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 2017 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 2017 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, 23 March 2018

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 accounting policies are unchanged from the previous year.

The policies for recognition and measurement are described in more detail below:

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 at the exchange rate 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. 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.

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 on loans comprise write-downs for the year and changes in write-downs on loans where objective indications of impairment were registered.

Exchange rate adjustments and value adjustments, realised 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.

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.

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.

Investment income

Investment income comprises interest received in connection with claims, interest and exchange rate adjustment of bank deposits, guarantee provisions 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 is, however, recognised in the year in which it falls due. This item also includes exchange rate adjustment of receivables and payables, maturity reduction of insurance obligations, interest on the balance with the Danish state and investment income from securities. The item furthermore includes gains/losses on hedging of the exposure in foreign currency.

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. Up to and including 30 June 2016, the rate of interest applied to the balance is equivalent to the average yield to maturity of three calendar years on government securities with a remaining maturity of five years. The interest factor for 2016 is calculated as the average yield to maturity on five-year government securities for 2012, 2013 and 2014. As from 1 July 2016, interest is no longer applied to EKF's balance with the Danish state.

Cash comprises cash at bank and repo/reverse transactions.

Loans

Loans are measured at fair value on initial recognition with the addition of transaction costs and less front-end fees etc. This normally corresponds to the amount paid to the customer. Loans are subsequently 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 individually, if they are deemed to show objective indications of impairment. Loans are written down to the present value of expected payments from the loans. When calculating the individual write-down, any reinsurance cover is taken into account.

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. Premium and discount are reported as accruals over the maturity period and recognised under net financials. Market value of securities is calculated as the market value on the balance-sheet day plus interest receivable.

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 three to five years from the date of commissioning.

Development projects in progress relate 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 relate to hardware, fixtures and fittings and refurbishing of leased premises and 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.

Reinsurance share

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. Payables with a maturity of more than one year are discounted by the interest rate of either zero or the yield on the current five-year bullet mortgage bond, whichever is higher.

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 on the basis of 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 initially recognised 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 the interest rate of either zero or the interest rate on the current five-year bullet mortgage bond, whichever is higher.

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 developments in the individual risk profile and the remaining term of the guarantee.

For some of EKF’s products, provisions of a different percentage of the premium are made. For working capital transactions, 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 claims 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 and cash equivalents.

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. Either conditional offers are 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 50 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.

Income statement for the year

1 January to 31 December

Distribution of profit

Balance sheet at 31 December

Assets

Balance sheet at 31 December
Equity and 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: Reinsurance premiums and guarantee commission paid

Note 3: Change in 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 Chairman and some members of the Board started on 1 July 2016, so their remuneration for 2016 does not cover a full year.

++ The remuneration for 2017 includes a fee for the Audit and Risk Committee.

+++ Lars B. Caspersen resigned at 31 December 2017.

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.
Please refer to ”EKF’s Bord of Directors” for other board positions held by the members of the Board of Directors.

Note 7: Investment income

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 of debt covered by EKF via a guarantee. Furthermore, credit risk is EKF’s direct counterparty risk on loans (export loans). Default can be both the ability and the willingness 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.

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 item.

EKF’s most significant credit risks are attributable to guarantees and loans.

As a state-owned export credit agency, EKF is subject to a number of international rules where OECD premium adjustments determine 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 both countries and banks are defined in EKF’s guidelines for countries and banks

The amounts stated for guarantees include future interest payments on the guaranteed loan. Loans include the current carrying amount, i.e. the principal less any write-downs.

For large issues in countries where the risk is deemed to be particularly high, EKF requires a sovereign guarantee in most cases, cf. the term ‘cover subject to sovereign guarantee’. Sovereign guarantors are normally the relatively best credit risk of the country rather than the financial sector, and they often 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 sales in the wind sector is highly diversified in terms of wind farm types, geography and counterparties.

The risk management framework is determined by the Board of Directors. 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 2017 covered approximately 60 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 reduction of the existing portfolio.

EKF’s assessment of objective indications of impairment and thus the need for write-downs, or the assessment of provisions for claims expenses follow firm principles including relevant risk conditions with a view to assessing the ability to service the debt. Claims management is based on a classification of claims as political or commercial according to EKF’s internal principles.

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 unilateral 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.

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.

Write-down of loans

If there is objective indication of impairment of a loan, the risk of EKF incurring a loss is assessed. To the extent necessary, the loan is written down based on a prudent and realistic assessment of the loss risk. 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.

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 and export loan risk management policies. 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 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 on the basis of 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 EUR CSA curve 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 loan receivables. 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 of the individual loans and a haircut 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 2017, 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.

The administration of the Danish Trade Fund and the CIRR scheme is vested in EKF by the Ministry of Industry, Business and Financial Affairs. EKF administers 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. Under the arrangement with DBF, 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 2017 is set out in note 6.

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

Note 29: EKF’s auditors’ fee

Organisation

EKF’s Management

CEO

Anette Eberhard
EKF Denmark’s Export Credit Agency

Management positions:
Eksport Kredit Finansiering A/S

Board positions:
Pensionskassen for sundhedsfaglige, Member of the Audit Committee
Sundhedsfagliges Ejendomsaktieselskab Alm. Brand A/S, Member
Alm. Brand A/S, Chairwoman of the Audit Committee Alm. Brand Forsikring A/S, Member
Alm. Brand Bank A/S, Member
Alm. Brand Liv og Pension, Member

Deputy CEO

Jan Vassard
EKF Denmark’s Export Credit Agency

No other positions

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:
Frigast A/S

Board positions:
Eksport Kredit Finansiering A/S, Chairman 
Axcel Management A/S, Chairman
Axcel Management Holding ApS, Chairman 
AX IV HoldCo P/S, Chairman
MNGT2 ApS, Chairman
Danmarks Skibskredit Holding A/S, Chairman
Pandora A/S, Deputy Chairman
Kapitalfondenes brancheforening DVCA, Deputy Chairman
Axcel Advisory Board, Deputy Chairman
Nordic Waterproofing Holding A/S, Member
Danmarks Skibskredit A/S, Member
Denmark-America Foundation and Board Leadership Society, Member
Nissens A/S, Member
K. Nissen International A/S, Member
AX V Nissens ApS, Member
AX V Nissens I ApS, Member
AX V Nissens II ApS, Member
Frigast A/S, Member

Deputy Chairman of EKF, Member of Remuneration Committee​

Dorrit Vanglo

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

Søren Østergaard Sørensen

Management positions:
Crossroads ApS

Board positions:
Eksport Kredit Finansiering A/S, Deputy Chairman
Monark GmbH, Germany, Chairman
AVK China, Chairman
AVK Hong Kong, Chairman
B8 A/S, Chairman
Frese Holding ApS, Deputy Chairman
Frese Metal- & Stålstøberi A/S, Deputy Chairman
Frese A/S, Deputy Chairman
Ib Andresen Industri A/S, Deputy Chairman
IAI Holding A/S, Deputy Chairman
Frese Ejendomme ApS, Member
AVK Holding A/S, Member
H+H International A/S, Denmark, Member
Sanistål A/S, Member
Exodraft A/S, Member
Shimizu Valves, Japan, Member
AVK Korea, Member
Hoyer Group A/S, Member
Svend Hoyer A/S, Member
Svend Hoyer Holding A/S, Member
DIS Group Holding A/S, Member
DIS Group II A/S, Member
DIS DK Holding A/S, Member
Dansk Ingeniørservice A/S, Member
Dansk Ingeniørservice Holding A/S, Member

Member of Audit and Risk Committe​e

Karen Nielsen

Management positions:
J.K.N. Holding ApS

Board positions:
Eksport Kredit Finansiering A/S
Erik Sørensen Vin A/S
LB Forsikring A/

Jørgen Skeel

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

Anna Marie Owie

No other positions

Charlotte Hagen Simonsen

No other positions