Jon Boyce,UK Export finance Slides from "New landscapes of doing business in China" event on 24 June 2015 in Glasgow.

1. Government Support to UK Exporters
Business in China Event
Glasgow 24th June 2015
Developing for our customers

2. 2
Objectives
– How we support UK exporters and how we assist
overseas buyers of UK capital goods/services
– How to contact us

3. 3
Who we are in UK
UK Export Finance is the UK’s export credit agency
formally the Export Credits Guarantee Department
We complement the private market by providing
government assistance to UK exporters and
investors, in the form of insurance policies and also
guarantees on bank loans, performance bonds &
confirmed Letters of Credit
Provide Political Risk Insurance on overseas
investments

4. Who we can support
Deals done range from +£25k on bank guarantees (smaller amounts
considered on export credit insurance Min premium £250, no lower limit)
Expanded remit to cover all sectors, goods & services not just capital goods
and capital services
Minimum UK content of 20%
Unconditional AA1 guarantee
4

5. Export insurance policy (EXIP)
Insures exporter against risk of not being paid or of not being able to
recover costs of performing export contract due to specified events
All sectors and up to 95% cover, No minimum contract value!
Can be introduced by a qualified credit insurance broker
Not for EU / rich OECD markets below 2 year risk horizon
Not whole turnover cover
It is conditional cover, so the terms of the policy must be met to have a
valid claim
Exporter completes application form and send to UKEF
5

6. EXIP Case Study – Flexal Springs
Company secured contract with Indian based Aerospace manufacturer
however, company concerned about their cash flow and getting paid on
time
Insurance companies unwilling to take risk and provide export credit
insurance. A LOC arrangement was possible but far more expensive than
export insurance cover.
Nalin De Silva General Manager said that Flexal needed peace of mind
that they would be paid within a reasonable time frame
The EXIP policy gave the company an added degree of security
6

7. Contract Bond Support Scheme
Where a participating bank issues a contract bond (or indemnifies another
bank issuing the bond) for UK export contract
For advance payment, progress payment and all other performance bonds
we normally guarantee up to 80% of the bond
Exporter and Bank complete application form and submit to UKEF along
with:
– Last 3 years accounts
7

8. Bond Support Case Study – Eduteq ltd
Secured large multi million contract in Africa that required a performance
bond however, there was insufficient security for their Bank to issue bond
on their behalf. The bond could have been cash backed however, that
would have tied up the company's working capital. UKEF provided Bank
with bond guarantee thereby reducing the banks risk and ensuring the
company had sufficient cash to deliver the contract
According to Chris Foster Operations Director, Eduteq is looking to expand
overseas sales by utilizing further UKEF support
8

9. Export Working Capital Scheme
We provide guarantees to banks to cover the credit risks associated with
export working capital facilities in respect of specific export contracts.
UKEF formally guarantees up to 80% of risk
Useful where a UK exporter wins an overseas contract that is higher in
value than is typical, or succeeds in winning more overseas contracts than
it has done before.
Last 3 years accounts,, cash flow forecast and/or trade cycle details
Max term loan is 2 years, working capital facility to contract value is max
75%
9

10. Export Working Capital Case Study
UKEF’s Export Working Capital Scheme meant museum display case
maker Click Netherfield had enough working capital to sustain its contract
and look for further work overseas
The overseas contract was really good news for us. But the payment terms
agreed with the client meant that we would have had difficulty maintaining
a consistent cash flow over the period of the contract, which would have
had an impact both on this new project and on our work elsewhere.
Jim Stewart M.D
ClickNetherfield
10

11. Letter of Credit Guarantees
UKEF can provide 50-90% guarantee to a UK Bank on a confirmed letter
of credit The confirmed letter of credit gives exporter a double guarantee,
one from the Issuing Bank and a confirmed letter of credit from UK
Confirming Bank.
With our guarantee, the UK Bank is able to confirm a letter of credit even if
it does not have the risk appetite on the foreign issuing Bank
The exporter is protected against a default of the foreign buyer and the
foreign bank
Bank makes application to UKEF
*Goods must touch UK shores!
11

12. Buyer/Supplier Credit, Direct Lending Facilities
UKEF provides a guarantee to Bank that makes a loan to an overseas
buyer for capital goods and/or capital services
Value of export contract on buyer credit facility is min £5M and covers
capital goods and services
Value of export contract on supplier credit facility is min £25K and covers
capital goods and services. UKEF may cover up to 85% of contract value
We can also look at providing guarantees under Bills of Exchange and
Promissory notes
Exporter makes application to UKEF
Direct Lending is where UKEF acts as a Bank and gives loan to buyer
12

13. TAKE YOUR
BUSINESS
FURTHER.

14. 14
Jon Boyce
0141 228 2329
(07990 887852)
Jon.Boyce@ukef.gsi.gov.uk
www.ukexportfinance.gov.uk