ASEAN Insight Seminar Yorkshire and the Humber Export Finance – Support for UK Exporters Innovation Centre, York Science Park- April 27th 2016 Paul Wright Export Finance Adviser – Yorkshire and the Humber
2 Who are we....
3 Our products and services in simple terms.... •UKEF’s support broadly falls into two categories • Reducing or removing the risk of non – payment from the Products and overseas buyer services that • Helping to support a bond offering which is a requirement of the support the contract exporter • Assisting with working capital requirements Products and • Providing guarantees to banks on the loans they give to overseas services that support the buyers to purchase goods and services from UK suppliers overseas • Direct lending to the overseas buyer so that they have the funds to buyer that then support purchase goods and services from UK suppliers the exporter
Eligibility and Conditions of Support • Our role is to support UK exports, so we require a contract with an entity carrying on business in the UK • Shareholder nationality is not important, but must be a registered business in the UK • Flexible in terms of UK Content o Min. of 20% UK content (“UK content” = contract value less non -UK costs) o Up to 80% from third party countries
5 Can I offer credit but reduce risk of non payment from customer? Credit insurance provides a business with protection against the failure of a customer to pay them for the products/services they have delivered Export Insurance Policy
6 UKEF Export Insurance Policy…. Single Risk Cover Designed to cover specific buyers/contracts, 1-2% premium, up to 95% indemnity More difficult markets For non Europe/Advanced OECD countries where private market cover declined Increased confidence to trade Risk horizon of 24 months allowing pre and post shipment risk to be covered Support growth with new partners in new markets … and may support financing if needed
7 Export Insurance Policy – Health/Greece “We wouldn’t have been able to continue trading under such restrictive terms. UKEF stepped into the breach with an alternative to the private sector insurance that had suddenly become unavailable.” Paul Whatley, Finance Director, GR Lane
8 How can I pay my suppliers before being paid from my customer? Payment received Customer Stock invoiced Purchased Product or Wages service paid created Export Working Capital Scheme
9 Case Study • Specialist supplier of heating, ventilating, air conditioning (HVAC) and refrigeration equipment and systems. UKEF Export Working Capital Scheme: • Any country / max 75% contract value • Bank guarantee (up to 80%) • Access to bank funding / bank terms • Allows flexibility in payment terms
10 How can I issue bonds and guarantees without restricting cash flow? Advance Payment Bonds / Guarantees Performance Bonds Warranty / Retention Bonds But……. • Utilise bank facilities • Cash cover • Makes export less attractive Bond Support Scheme
11 Case Study • Specialist supplier to Mining and other sectors UKEF Bond Support Scheme: • Bank guarantee (up to 80%) • UKEF security can replace cash cover / Increase facilities • Guarantees may be required to secure contract / deposits
Can I Offer Finance to my Buyers? • We can support loans for up to 85% of the contract value (potentially a repayment guarantee of 100%) • We can also lend directly to overseas buyers • Loans are typically repaid over a 2-10 year period plus any construction/delivery period • Support is available in a range of major currencies, including GBP, USD, Euro
13 Case Study: Nghi Son Refinery Project • UKEF was among several ECAs which worked together to support the US $9.4bn financing for the Nghi Son Refinery Project with a US$250m loan. • As Vietnam’s largest civil construction project to date, it will process 10 million tons of crude oil a year when completed in 2017. • UKEF supported a range of supplies from UK firms, including the EPC contract, project management services and other supplies in relation to the refining and petrochemical process. • The site is located 200km south of Hanoi in the Tinh Gia District of the Thanh Hoa Province.
14 Questions
15 Contact Details Paul.wright@ukef.gsi.gov.uk Export Finance Adviser, Yorkshire and the Humber Tel. (07812) 667312 www.ukexportfinance.gov.uk We aim to ensure that no viable UK export fails for want of finance or insurance
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