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DG's statement EKN ANNUAL REPORT 2012see an increased commitment concerningthese issues in our sphere. We consider thisa long-term success factor for Swedish exports.OECD guidelines for environmentaland social responsibility in the transactionsthat export credit agencies guarantee wereupdated during the year.Burma/Myanmar is a market with hugepotentialEKN's vision is that all markets should beavailable to Swedish exports. In November,I joined the Swedish business delegationto Burma/Myanmar. The country was untilrecently closed and isolated, both politicallyand economically. Following a long periodof military rule in the country, EU foreignministers resolved in April to remove thesanctions against Burma/Myanmar for atrial period, with the arms embargo beingan exception. If the trend continues to movetowards democracy, sanctions may be permanentlydiscontinued. EKN's mission includespromoting exports to difficult markets. Wemonitor developments in countries such asBurma/Myanmar, where there eventuallymay be potential for Swedish exports. EKNoften enters early into markets that havejust opened for trade. Angola and Iraq areexamples of countries that in a short timehave evolved from war zones to marketswhere EKN guarantees export transactions.Wider distribution of EKN'srisk analysesAs more companies are looking to emergingmarkets, demand for information onthese countries is rising. A new featurethis year is that EKN has begun to publishcountry risk analyses which represent oneof the cornerstones of our risk assessment.They present our current assessment of thecountry's economic and political situationand the business climate in the country.Country risk analyses also show our experienceof guaranteeing transactions in thecountry as well as the payment experiencesof exporters. EKN has been monitoring7

Business intelligence analysis EKN ANNUAL REPORT 2012Six countries upgraded,five downgradedEKN monitors developments around the world and assesses the risk of payment difficulties.During the year EKN changed the country risk category of eleven countries. Theassessment is made in collaboration with other OECD countries.In sub-Saharan Africa, countries continueto develop positively. Angola is undergoinga phase of development that has lasted formany years. This is an interesting marketfor Swedish exports, and EKN had at theturn of the year outstanding guarantees fortransactions in the country totalling half abillion Swedish kronor. EKN upgraded thecountry during the year. EKN also upgradedBotswana, which is recovering from thefinancial crisis and now has the lowest risklevel in Africa. The exceptions to this otherwisepositive trend in Sub-Saharan Africaare Mali and Cape Verde, which EKN hasdowngraded.In Egypt, where EKN, among otherguarantees, has an outstanding investmentguarantee, the economy continues toweaken. EKN therefore downgraded thecountry early in the year.Country risk category 0Country risk category 1Country risk category 2Country risk category 3Country risk category 4Country risk category 5Country risk category 6Country risk category 7Not classifiedEKN's classification of the countries of the world, 31 Dec 2012. The lower the number the better the creditrating the country has.12

Business intelligence analysis EKN ANNUAL REPORT 2012Successful developments in Jakarta. Indonesia has been upgraded to country risk category 3.Expanded international sanctions againstIran have contributed to difficulties makingpayments to and from the country. Thishas led to a downgrade to the highest riskcategory. EKN has guaranteed an extensivevolume of export transactions to Iran duringmany years, but is now closed for newguarantees.In Asia, Indonesia was upgraded yet anotherlevel. Reduced debt and an otherwisepositive economic development have led tothe country being upgraded four levels overthe last ten years. Indonesia is the tenthlargest country where EKN has outstandingguarantees.Other changes during the year saw Israel,Latvia and Lithuania being upgradedand Jamaica downgraded.Changes to EKN'S COUNTRY RISK Classification IN 2012Upgrades in EKN's country risk classification:Downgrades in EKN's country risk classification:Country risk category year: 2012 2011Angola 5 6Botswana 2 3Indonesia 3 4Israel 2 3Latvia 4 5Country risk category year: 2012 2011Cape Verde 6 5Egypt 5 4Iran 7 6Jamaica 7 6Mali 7 6Lithuania 3 413

Export potential EKN ANNUAL REPORT 2012Solar panels and wind turbines, England.15

Export potential EKN ANNUAL REPORT 2012that sell equipment for the extraction ofminerals. Metal prices are expected toremain relatively high.EKN's issuing of guarantees over theyear for mechanical equipment in the miningsector continued to be extensive withmultiple transactions and a high volume.The greatest demand was for transactionsto copper, coal, gold and iron ore mines inGhana, Australia, South Africa and Zambia.The demand for EKN guarantees forexports of construction equipment forearthmoving, excavation work and transportationwas the highest ever recorded in2012. The greatest demand was for transactionsin Russia where EKN guaranteeddeliveries to dealers of Swedish machinery.The good times in the mining sector havealso affected the construction sector in apositive way. A significant portion of allconstruction equipment that EKN guaranteedin 2012 was exported for use in miningfacilities.Recovery in the Russiantransport sectorIn 2012, demand for guarantees for transactionsincreased in the transport sector inRussia, following a number of years of lowerdemand. Several of the major transportcompanies, especially in the food industry,have recovered from the financial crisis andexpanded their fleets. The transport sectorhas also been affected by the positive trend inthe mining sector. EKN guaranteed deliveriesof vehicles to mining facilities in Mongoliaand Peru. Demand was also great for vehiclefinancing in countries in Africa.EKN also guaranteed a couple of majorbus projects in Latin America. The projectswere turnkey solutions for public transport,known as Bus Rapid Transport Systems,which covers both systems and buses. InSouth America, it was the transport sectorthat dominated the issuing of guarantees.Consolidation in thetelecommunication sectorThe demand for EKN's guarantees in thetelecommunication sector is, as it has beenin previous years, global and includesboth long and short-term risk periods. Theexpansion and modernisation of the mobilenetworks, both 3G and 4G, are driving demand.Old infrastructure is being replacedwith new systems that use frequenciesmore efficiently and with lower powerconsumption.Consolidation is ongoing in the telecommunicationsector, where mergers andacquisitions are creating larger operatorsand purchasers of telecommunicationequipment. This will result in larger transactions.New guarantees in 2012 by SECTORTelecom 40 % (42 %)Power 28 % (16%)Machinery 15 % (16 %)Transport 12 % (15 %)Other 5 % (3%)Last year's percentage in brackets.17

Export potential EKN ANNUAL REPORT 2012Swedish bus over the Victoria Falls.The demand for EKN guarantees remainshigh for transactions in the OECD.Over the year, EKN issued major offersand guarantees for transactions to OECDcountries – four guarantees and six offersin excess of one billion Swedish kronor.We also see a trend whereby operators aremore generally seeking export credits as acomplement to other financing.competitive power sectorThe demand for EKN's guarantees in thepower sector relates to equipment for boththe transmission and the generation ofpower. The volume of guarantees grewover the year, even though the competitionincreased from suppliers in emerging countries.EKN's provision of guarantees for theyear for equipment that will be used in theproduction and transmission of renewableenergy totalled SEK 11 billion, which was80 percent of the total issuing of guaranteesfor export of power generation and transmissionequipment. Most of this relatedto transmission involving hydropower, butEKN also guaranteed exports of equipmentfor wind and solar power. Generally, wealso see a growing interest in the powersector to guarantee transactions in OECDcountries. For transactions that were previouslymade with cash conditions, financingsolutions with EKN guarantee are also nowbeing considered to a greater extent on thegrounds that banks are being more restrictivein their lending.18

Export potential EKN ANNUAL REPORT 2012tees as a means of managing the risk andoffering financing in their transactions.High-income countries in debt crisisThe debt crisis that has unfolded over thelast few years is essentially tied to the failureof a number of developed countries tokeep public budgets in balance and weaknessesin the financial systems. In countriessuch as Spain, Italy and Greece the sizeof the debt problems are such that thishas greatly affected trade and industry inthese countries. The fact that the issuing ofguarantees for transactions in this perspectivehas grown to OECD countries is in parta consequence of the market's lack of riskcapacity for companies in these countries.The increase in the issuing of guaranteesfor transactions to OECD countries measured20 percent in 2012. The demand wasmainly for telecommunication and powertransactions. Although economic reforms,support from, among others, the EuropeanCentral Bank, the EU and the IMF hashelped to stabilise the situation in the countrieswith debt crises, the demand for EKNguarantees will in all likelihood continue toremain high. Market operators perceive thesituation as uncertain and therefore thereis a demand for risk coverage.Asia growing fastestAsia has shown the highest growth amongthe world regions. With its fiscall policies,China has sought to achieve a growth ratethat neither risks overheating nor economicdecline. The outcome has largely been inline with expectations, with growth atnearly eight percent. The region's othermajor economy, India has lost much of itsNEW GUARANTEES BY REGION (SEK MILLION)2012 2011 2010 2009 2008Africa 3,577 7,367 5,327 5,620 5,717Asia 12,666 8,658 3,643 12,174 6,310Balkans 1,348 4,411 5,808 3,280 3,395Latin America 6,671 4,556 7,168 9,384 2,883Middle East 2,720 8,699 5,185 4,479 7,306OECD high income 15,540 12,814 22,493 8,100 133CIS 3,500 11,698 2,993 6,351 1,775Sweden* 3,233 4,036 60,767 30,712 5,076Other countries 89 874 233 71 317Total 49,344 63,113 113,618 80,171 32,912Japan and South Korea are included in OECD high income (not in Asia).Israel is included in OECD high income (not in Middle East)Kazakhstan is included in the CIS (not in Asia)Turkey is included in the Balkans (not in Asia)* 2010 and 2009 include the temporary solution with working capital credit guarantees for large Swedish companies.20

Export potential EKN ANNUAL REPORT 2012Angola, Nigeria, Zambia andGhana demonstrate longlasting,high economic growth.momentum in 2012. The growth rate hasmore than halved over the past two yearsfrom over ten to below five per cent. Theslowdown in growth is explained by thesignificant reforms that have not yet beenimplemented. In Indonesia and the Philippines,the slowdown was not as sharp.The increase in new guarantees to Asiawas primarily due to a major transactionin the power sector. Swedish exports to theregion dropped by ten percent over the year.The transport sector needs EKN inLatin America2012 was a year of subdued economicgrowth for Latin America's dominant country,Brazil. Growth ended up at 1.5 percent,which is almost half compared to 2011. Theregion as a whole grew by just over threeper cent.EKN increased the issuing of guaranteesfor transactions to Latin America. Theincrease was nearly 50 percent. In total, the21

Export potential EKN ANNUAL REPORT 2012guaranteed transactions corresponded to20 percent of Swedish exports to the region.EKN sees demand from several industries,but EKN has primarily guaranteed theexport of buses and trucks.new transactions to Iran ceasedDevelopments in several countries in theMiddle East and North Africa continue tobe characterised by the popular uprisingsthat spread after the events in Tunisia inDecember 2010. While Libya, Tunisia andEgypt are trying to find suitable forms ofgovernance, civil war is escalating in Syria.High oil prices have continued to favour theoil-exporting countries in the region. Theoil-exporting countries account for the lion'sshare of the region's overall economic growthof five percent in 2012. For oil-importingcountries, the political changes and high energyprices have contributed to low growthof around two percent. The prospects for betterliving conditions look markedly different.New guarantees for transactions to theMiddle East fell sharply in 2012. This islargely explained by the increasingly widespreadinternational sanctions imposed onIran. EKN ceased all issuing of guaranteesfor transactions to Iran in January 2012.The issuing of guarantees in relation toSwedish exports was ten percent.Africa – growing businessopportunitiesFor many countries in sub-Saharan Africa,the trend over the past decade hasbeen positive. However, the prospects forincreased prosperity vary enormously betweencountries. Countries that successfullymanage their natural resources such asAngola, Nigeria, Zambia and Ghana havelong-lasting high economic growth. Growthfor the region's oil producers is estimated,for example, to be nearly seven percent in2012, compared with the region as a wholeof just over five percent. Other countriesthat have succeeded relatively well havedone so through economic reforms, suchas Tanzania, Mozambique and Uganda.Sought-after commodities, economic reformsand greater political stability havecontributed to the outside world adoptingan increasingly more positive view of thefuture of Africa. This trend will lead to betterconditions for the business communityto operate and expand. As a result, importrequirements are diversified and thereforethe business opportunities for Swedishexporters.During the year Swedish exports to sub-Saharan Africa fell by 27 percent. EKN'sissuing of guarantees for the full year fellby over 30 percent. As a ratio of Swedishexports the provision of guaranteescorresponded to 13 percent. The demandfor guarantees for telecommunication andpower transactions in the region has beenhigh in recent years. Given the economicdevelopment in the region, there is potentialfor increased exports, an increase thatEKN can help with.telecommunication and transportationto CIS and BalkansIn light of the weak economies and debtproblems of the EU countries, an economicgrowth rate of four percent in some CIScountries is to be considered as relativelygood. Russia has offset the negative externalcircumstances through expansionaryfiscal policy and credit growth. Continuedhigh commodity prices have also helped theenergy-exporting countries.However, in the Balkans the economicsituation was bleak. Turkey's economy hascontinued to grow, but three percent for2012 is still a dramatic fall from over eightpercent in 2011. Serbia and Croatia even22

Export potential EKN ANNUAL REPORT 2012Volvo Trucks visits EKN for transactionsin Ethiopia. Marie Aglert,EKN, and Henrik Larsson andLars-Erik Forshag, Volvo.have slightly shrinking economies. A prolongedrecovery awaits the Balkans giventhe weak economic development in the EUcountries.In 2011, EKN guaranteed telecommunicationtransactions totalling SEK 9.7 billionto Russia, which meant that the issuingof guarantees to the CIS countries wasunusually high compared to 2012. For boththe Balkans and the CIS countries the issuingof guarantees dropped by 70 percent.The demand for guarantees comes mainlyfrom the telecommunication and transportsectors.23

Export potential EKN ANNUAL REPORT 2012EKN CUSTOMER: EricssonGuaranteedmajor transactionfor EricssonThe US telecommunication company Sprint has about55 million subscribers, the third largest telecommunicationoperator in North America. Ericsson hassigned a contract to supply telecommunicationequipment to Sprint's Network Vision project. Thetransaction is being financed by a syndicate ofbanks and the total loan amount is for USD 1 billion.EKN has guaranteed the financing.Modernisation of the mobile networkNetwork Vision is a major project which will run forthree years. The project aims to modernise the mobilenetwork and adapt it in line with the growing useof smart phones. Sprint currently has three separatenetworks with different technologies and spectra.These have now been merged into a common Sprintplatform by the purchase of the latest version ofEricsson's multi-mode base stations.Lower costs and better coverageThe benefits of the platform for Sprint include costsavings through lower energy costs, lower roamingcosts, fewer base stations and that they can closethe 2G network. For Sprint customers, the modernisednetwork provides better signal strength, greatergeographic coverage, higher data rates and bettercoverage indoors.“Thanks to EKN's telecommunication expertiseand the strong commitment from its managers andleadership, we were able to complete a complextransaction on time,” says Stefan Karlsson, SeniorAdvisor Customer and Trade Finance at EricssonInc.Lending bank syndicateSprint's purchase of equipment from Ericsson wasfinanced by an export credit in the order of USD 1billion and will run until March 2017. The borrowersare a large number of operating subsidiaries toSprint. Security consists of pledges for deliveredequipment and payment guarantees from the parentcompany Sprint. The lenders are a syndicate ofbanks, including Deutsche Bank and AB SvenskExportkredit.EKN has offered a guarantee for loss onclaim, in favour of lender.FACTS ABOUT ERICSSONSTEFAN KARLSSONHeadquarters: StockholmSector: TelecomSales in 2012: SEK 227.8 billion, ofwhich the market in North America hadsales of SEK 56.7 billionMarket: Worldwide. Over 1,000 networksin more than 180 countries use Ericsson'snetwork equipment24

Export potential EKN ANNUAL REPORT 2012With the Export train on a company visit at Jonsson & Paulsson.Small and medium-sized enterprises’export to 85 countriesIn 2012, EKN issued offers to small andmedium-sized enterprises at a volume ofSEK 3.6 billion, which is SEK 0.1 billionhigher than in 2011.The volume of guarantees totalled SEK2.2 billion in 2012, compared to SEK 2.6 billionin 2011. The number of guarantees thatwere issued was in the same order of size,but the average transaction was significantlyless in 2012. The export market that weopen up for small and medium-sized enterprisesis extensive. During the year, EKN insuredexports from small and medium sizedenterprises to 85 countries on all continents.The countries with the greatest guaranteevolume for small and medium-sized enterpriseswere Tanzania, Ecuador, Algeria,Greece and Russia. Generally, we noted anincreased demand for guarantees duringthe year for transactions to Africa and LatinAmerica, and weaker demand for transactionsto Asia. The market in the OECD andespecially within the EU has declined forsmall and medium-sized enterprises in thelight of the current economic situation inmany countries.The needs of small and medium-sizedenterprises for the financing of exporttransactions is evident in the transactionswe guarantee. About half of the demandfor guarantees come via banks, in orderto facilitate attractive financing for moretransactions.Exports from the whole countryMost of EKN's customers are small andmedium-sized enterprises. In 2012, thenumber was about 200, which is in linewith 2011. The customers are spread acrossSweden in 115 different locations. Manyof the customers are regular, but for shortterm credits EKN can only issue guaranteesfor exports that are sent outsidethe OECD and EU. As they rarely exportto emerging markets, there may be longperiods between applications for EKNguarantees.In the business area for small andmedium-sized enterprises there are regionand account managers who visit companiesin the region and collaborate withAlmi's and Business Sweden's local offices,business promoters in the municipalitiesand other export promoters. The aim is toraise awareness of EKN and to be availablelocally for discussions on specific businessopportunities.During the year, 52 small and medium-26

Export potential EKN ANNUAL REPORT 2012Among exporting companies, awarenessof EKN measures 51 percent.sized enterprises were added to EKN's customerbase. These companies' transactionsrepresent exports from the whole of Swedenin a range of industries such as food, clothing,sports equipment, paper, technicalequipment and machinery.Seminars, exhibitions and promotionsAs in previous years, we have conductedmarketing activities around the countryto raise awareness of EKN at small andmedium-sized enterprises as well as atlocal bank branches. In addition to directcontacts with companies and banks, wehave participated in seminars arranged byother organisations such as Almi, BusinessSweden, chambers of commerce and thesubcontractors organisation Undexo. Wehave also participated in exhibitions, suchas the Euro Mine Expo in Skellefteå andthe subcontracting fair in Jönköping.In the autumn, a major promotion sawEKN send out brochures to 15,000 smalland medium-sized enterprises. Among theexporting companies, awareness of EKNcan be measured at 51 percent, accordingto our annual survey. Two-thirds of thesesay they have a deeper knowledge of EKN'sguarantees. The figure is not fully comparablewith last year's awareness figure of 56percent, as the sample of surveyed companieshas been expanded.Local bank branches know about EKNEKN's guarantees are often a prerequisitefor companies to obtain financing for exporttransactions at their local bank branches.It is therefore important that the banksare very familiar with EKN's services. Ofthe respondents at Sweden's local bankbranches, 96 percent are aware of EKN.Knowledge concerning guarantees is also ata high level.NUMBER OF NEW CUSTOMERS15012090Large corporatesSmall and medium-sized enterprises603002008 2009 2010 2011 2012In 2009 and 2010, EKN insured exports with shortcredit periods to high-income countries in theOECD and EU, in line with a temporary respite ofthe EU's regulatory framework. Additionally, EKNissued working capital credit guarantees to largecorporates during this period.27

Export potential EKN ANNUAL REPORT 2012EKN CUSTOMER: SkaltekFinancing gavecompetitiveadvantageSkaltek develops complete production lines for packagingand handling of cables in all possible sizes. Inorder to focus on selected markets, the companyhas been working with EKN for several years. Theguarantee for loss on claims helps Skaltek to offerits customers competitive financing.Cannot make money directlyMany of Skaltek's new customers in emergingmarkets, like Brazil, are currently in an expansionphase. The company is finding it difficult to financeand make money from its business directly. This iswhere EKN comes into the picture.“Skaltek never compromises on quality, whichmeans it is largely thanks to good financing termsthat we can compete as successfully as we do,”says Öystein Skalleberg, Skaltek's founder and CEO.Easy for the Bank tooFredrik Holmqvist at SEB in Solna, Stockholm adds:“With EKN's guarantees we can help Skaltekto offer its customers excellent financing terms.Skaltek has a guarantee framework that we calloff on a running basis. It provides quick and easyhandling for us at the bank both for Skaltek and forits customers.In most cases, EKN takes up to 95 percent ofthe risk. With a guarantee as security, SEB canprovide Skaltek “payment” for its deliveries directly.Skaltek's customers get the time they need to getpayback on their investment.“This makes it easier for everyone,” says Öystein.EKN has offered Skaltek AB a loss onclaim guarantee. Consequently,Skaltekhas been able to offer its customers afinancing solution.FACTS ABOUT SKALTEK ABHeadquarters: Kungsängen north ofStockholm.Sector: Skaltek develops and manufacturespackaging equipment for the cableindustry.Sales in 2012: SEK 116 millionMarket: So far the company has sold to59 countries worldwide.Öystein Skalleberg28

Export potential EKN ANNUAL REPORT 2012EKN has offered Handelsbanken acounter-guarantee, as security for anadvance payment guarantee.FACTS ABOUT AndonJAN BYLANDERHeadquarters: ÖrebroSector: Andon is an application companyfor robotised welding solutions and aglobal strategic partner to ABB.Sales in 2012: SEK 77 millionMarket: Manufacturing industry in EuropeEKN CUSTOMER: AndonMore transactionswithoutburdeningcredit limitsAndon Automation AB in Örebro develops and sellsrobotic welding applications, focusing particularlyon long series. Andon is part of a Swedish industrialsuccess story and a global strategic partner to ABB.Large orders – big advances“Our solutions are specialised and every transactionis fairly large” says Jan Bylander, one of Andon'sfounders. Therefore, we often agree on advancepayments of 30 percent of the order value. As securitythe customer quite rightly requires an advancepayment guarantee.”The limits can be used in other waysKenneth Andersson at Handelsbanken in Örebrocontinues:“The most common solution is that EKN takes 75percent of the risk in the advance guarantee. Thismeans that Andon can use its credit limits with usin other ways; for example, to make more transactions.This has been particularly important to us,especially as the capital cover requirement for bankshas increased. It's clear that both we and EKN wantthe same thing: to help our customers make moreand more secure transactions.”Quick and easy“EKN has a good understanding of our business andour market. Administration procedures are quickand easy and there are never any problems. EKNis simply a good lubricant and we can make moretransactions without burdening our credit limits,”says Jan.29

Export potential EKN ANNUAL REPORT 2012EKN's guaranteesFrom the exporter's sales and negotiations, during manufacturing and delivery, and allthe way to the customer's last payment, there is a need for EKN's guarantees.The loss on claim guarantees covers the risk ofnon-payment by the exporter’s customer. There aredifferent versions of the guarantee depending on thelength of the credit period and whether the exporteror the bank is extending the credit.The guarantee against loss on production andloss on claim covers the combined risk of nonpaymentduring the credit period and losses arisingduring production.The working capital credit guarantee enablesthe bank to share the risk with EKN when providingworking capital credits to small and medium-sizedenterprises.The counter-guarantee is used when the exporter'scustomer requests a contract guarantee.The banks issuing the contract guarantee and EKNthen share the risk of the guarantee being called bythe beneficiary.The bill of exchange guarantee enables the bankto share the risk with EKN when discounting bills ofexchange.The guarantee for unfair calling is used by theexporter to cover against the risk of unfair calling ofa contract guarantee by the beneficiary.The letter of credit guarantee enables the bankto share the risk with EKN when the bank confirmsletters of credit.The investment guarantee covers the risk ofpolitical events when investing abroad.Public transport in Lagos, Nigeria.30

Export potential EKN ANNUAL REPORT 2012New offers and guarantees during the yearDuring the year: 2012 2011 2010Offers SEK m number SEK m number SEK m numberGuarantees to exporters:Loss on claim 15,279 1,213 30,805 1,020 17,550 1,332Loss on production and losson claim 1,790 12 2,350 15 7,091 27Guarantees to lenders 42,132 46 16,981 37 59,706 83Total 59,202 1,271 50,136 1,072 84,347 1,442Guarantee for unfair calling 1,280 2 50 3 659 19Counter guarantee 14,127 180 7,213 252 12,093 203Letter of credit guarantee 1,323 267 2,146 279 1,350 344Bill of exchange guarantee 1,292 34 1,084 31 847 37Investment guarantee 0 0 4,601 1 0 0Working capital guarantee 1) 257 65 226 71 497 80Working capital guarantee 2) 0 0 303 3 29,847 55Total 77,481 1,819 65,759 1,712 129,640 2,180GuaranteesGuarantees to exporter:Loss on claim 17,829 2,604 18,197 2,442 16,173 2,809Loss on production and losson claim 860 6 1,834 16 4,337 16Guarantees to lenders 24,477 72 33,225 99 26,280 71Total 43,166 2,682 53,256 2,557 46,790 2,896Guarantee for unfair calling 1,285 3 1,216 7 796 12Counter guarantee 2,868 199 3,560 261 2,230 205Letter of credit guarantee 1,328 267 1,695 278 1,340 344Bill of exchange guarantee 474 72 852 85 596 95Investment guarantee 0 0 2,028 1 0 0Working capital guarantee 1) 223 66 201 63 326 67Working capital guarantee 2) 0 0 303 3 61,652 54Total 49,344 3,289 63,111 3,255 113,730 3,673Transactions to which theissued guarantees relate 1,511 1,458 1,6031) for small and medium-sized enterprises2) for large corporates (temporary solution)31

Responsible exports EKN ANNUAL REPORT 2012Responsibleexports34 Sustainability initiatives indevelopment36 Assessment of projectswith impact risks38 Media and NGOsreview EKN32

Responsible exports EKN ANNUAL REPORT 2012Agriculture, India.33

Responsible exports EKN ANNUAL REPORT 2012Sustainability initiativesin developmentResponsible exports are a part of EKN's mission. Today every transaction is screened.In 2012, EKN has continued to develop its efforts concerning liability issues in the fieldsof the environment, human rights and the combat against corruption.EKN assesses the risk of negative impactsin all transactions. A precondition for this isto work closely with companies and banks,and with a process that allows transactionsto be assessed effectively.ALL TRANSACTIONSIn 2012, EKN has developed the processfor environmental and social responsibility.The CSR perspective has become a part ofevery transaction and every transaction isnow screened. This is to ensure that anynegative consequences are managed in aresponsible and acceptable manner. Theunderwriter, the person responsible for thetransaction, assesses the risk of adverse environmentaland social impacts associatedwith the transaction. In transactions wherethere is the risk of a major negative impact,EKN's social and environmental analystsare also involved in the assessment process.IN LINE WITH NEW BRIBERY LEGISLATIONDuring the year, EKN developed its anticorruptionprocess to comply with the newSwedish bribery legislation.The anti-corruption work will bestrengthened to include increased scrutinyof certain transactions and agent feesin line with the new section on financialVesa Oksanen, Nordea, Erik Belfrage, ICC andAnders Nordstrom ABB in talks on responsible exports.34

Responsible exports EKN ANNUAL REPORT 2012The CSR perspective has become apart of every transaction, and everytransaction is screened.recklessness in the legislation. EKN willalso strengthen the wording of the applicationdocuments, anti-corruption statementand its general terms and conditions. A newmethod for examining the risk of corruptionwill start to be used in 2013.NEW INTERNATIONAL GUIDELINESOECD's guidelines for environmental andsocial responsibility play a crucial role inEKN's work on these issues. New guidelineswere adopted in 2012 which includeexplicit reference to human rights. EKNparticipates as an expert in the work ondeveloping OECD guidelines.from civil society, exporters and researchers.The first joint round table session washeld with Stora Enso, Nordea, ABB, InternationalChamber of Commerce, IF Metall,the WWF, Amnesty International, Swedwatch,Stockholm Environment Institute,the Stockholm School of Economics andthe Ministry of Finance and Foreign Affairs,Swedfund and SEK. In 2012, EKN also heldindividual talks with NGOs such as AmnestyInternational and Diakonia as well asmajor Swedish companies.DIALOGUE WITH STAKEHOLDERSEKN together with export promoters haveinitiated round table talks on internationalsustainable enterprise with stakeholdersExport promoters, companies, universitiesand NGOs in talks.35

Responsible exports EKN ANNUAL REPORT 2012Assessment of projectswith impact risksDuring the year, EKN guaranteed five category A and four category B projects inexcess of SEK 100 million, and with a credit period exceeding two years, which isreported to the OECD. For all projects, our assessment is that the risks are managedresponsibly. They observe international standards, primarily the “International FinanceCorporation (IFC) Performance Standards on Environmental and Social Sustainability.”The projects are described here in brief and includessome of the points that EKN's position is basedon. The reporting requirements mentioned aim toensure that environmental and social action plansare complied with and that international standardsare met even when EKN has issued a guarantee.For particularly complex projects, EKN requires thatthe lender is able to terminate the loan if the projectviolates environmental and social conditions.ACategory A projectMeans a risk ofadverse impactsIndia, power transmission systemThe transmission system for ultra-high voltage directcurrent (UHVDC) will transport electricity from thehydropower plant in north-east India to the populousregion of Agra in central India. The transmission lineis 1,700 km long and has a capacity of 8,000 MW.• No protected natural areas, endangered speciesor culturally protected areas or buildings areeffected.Colombia, steam and gas turbinesfor refineryThe turbines are to meet a large part of the needsfor energy for the oil refinery, and the investmentis part of a major upgrade and expansion plan.Environmental impacts come from the dischargeof wastewater, emissions of pollutants into the air,hazardous waste and noise.• An entirely new wastewater treatment plant will bebuilt and the facility is designed to meet internationalrequirements.• A management system for environmental as wellas socio-economic and cultural aspects has beendeveloped.• EKN conditions include requirements for reporting.Brazil, machineryfor pulp and paper millDelivery to a pulp and paper mill being built in TrêsLagoas north-west of Sao Paulo that will be one ofthe world's largest mills. Wood fibre is eucalyptus.The project includes facilities for eucalyptus plantationsand certain investments for power transmissionand logistics.• The factory is built using modern and Best AvailableTechnology with regards to both production andpurification facilities.• Forest certification in accordance with FSC (ForestStewardship Council) is conducted for all plantationsover the period 2012–2017.• The social problems concerning the housing situationthat arose during the construction period of thefacility have been improved gradually.• EKN conditions include requirements for reporting.36

Responsible exports EKN ANNUAL REPORT 2012India, manufacturing of plasticraw materialProcess technology and equipment for the manufacturingof TDI (Toluene diisocyanate) used as plasticraw material. The chemical plant is located in thestate of Gujarat in north-western India. Raw materialsand products are toxic and require the use ofwell-developed production and safety methods, andwell-trained staff.• The process engineering and environmental engineeringinstallations comply with modern technology.• Both emissions to air and water are treated inpurification plants.• The company has a certified management systemfor quality (ISO 9001),for environment (ISO 14001)and for health and safety (OHSAS 18000).Uruguay, pulp and paper millProjects for new pulp mills, power plants, roads andnew deep-water port and plantations of eucalyptus.• The technology will comply with “Best AvailableTechnology” and the plant will be operated withrenewable fuels. All emissions to air and water willbe below international standards.• The wood raw material will pass FSC's requirementsfor sustainable forest management.• Terms for technical management and informationto the local people will be monitored and reportedto EKN.BCategory B projectMeans a risk ofSOME impactRUSSIA, GAS TURBINES FOR POWER STATIONSGas turbines for power stations at an oil field andpower station at a refinery. The turbines will bepowered by natural gas with diesel as a backup fuel.The energy plant will be a part of a larger industrialcomplex being built over the period 2009–2015.• Emissions are expected to be below internationalstandards.MEXICO, GAS TURBINE FOR POWER PLANTThe project relates to the supply of a gas turbineto an existing power plant in Mexico. The mostimortant environmental impacts come from burningfossil fuels.• No sensitive nature conservation values ​are presentin the factory area.• Emissions from the gas turbines will be well belowinternational standards.SPAIN, TURBINES FORSOLAR POWER FACILITYThe transaction relates to the delivery of steamand gas turbines for solar power projects in Spain,Algeria and the United States.• The locations are in non-environmentally sensitiveareas.• The project helps reduce carbon emissions byincreasing the share of renewable energy.37

Responsible exports EKN ANNUAL REPORT 2012Media and organisationsreview EKNThe most common probing questions EKN gets concern what we require, how we followup and about exports to countries with an autocratic rule.What requirements does EKN set?EKN requires companies to assume responsibilityfor the environmental consequences,human rights and working conditions in thetransactions EKN guarantees. The applicantfor a guarantee must certify that thereis no corruption involved in the transaction.How is compliance measured?In transactions with a risk of a negative impact,EKN requests information about thepurchasing company and the environmentaland social impact assessments (ESIA)for new projects. If necessary, EKN contactslocal interest groups, and gathers data fromexternal sources and experts. For largerprojects, EKN makes a site visit to ensurethat the project's environmental and socialimpacts are consistent with the informationobtained. EKN may, as a condition of theguarantee require reporting over the courseof the transaction.Why does EKN work with CSR?It is part of our mission. EKN is part of theSwedish government and assumes responsibilityfor Sweden's goals and values. Socialand environmental risks are critical to anytransaction. The transactions EKN guaranteemust be sustainable. EKN works withcompanies to ensure responsible exports.How does EKN combat corruption?Companies must certify that there is nocorruption involved in the transaction. TheEKN guarantee may be rendered void ifthere is any corruption. EKN also makes itsown checks.What is confidential at EKN?According to the principle of public accessto official records, EKN must submit informationand be transparent. According tothe secrecy legislation, EKN must classifyinformation as confidential whose disclosurecould undermine the guarantee holder.Does EKN insure exports to countrieswith dictatorial regimes?Sweden imports from and exports to mostcountries of the world. Global trade is importantfor development and change. Thereare only a few countries in the world wherethe international community has chosen toimpose trade sanctions.EKN sets requirements for responsibleexports to all countries. In some countriesand industries, environmental and socialrisks are higher and require a more thoroughexamination.Does EKN insure exports to poor,indebted countries?In poor countries with a severe debt situation,EKN does not guarantee transactionsthat violate the recipient country's povertyreduction strategy or hinders the country'sdevelopment. The policy covers the provisionof guarantees that increases the director indirect indebtedness of the state.38

Responsible exports EKN ANNUAL REPORT 2012AGNETA MELIN“We promote responsibletransactions”Agneta Melin is the environmental analyst at EKN. Her job is to help ensure that EKN'stransactions are conducted with respect to environmental impact and social rights.“It is a very stimulating job. We have thetools and hold a position that allows us toeffectively contribute to responsible transactions.”Agneta is a new addition to the EKNteam. She began her employment in August2012. She has previously been employedas environmental manager at the SwedishUniversity of Agricultural Sciences and atTetra Pak. When asked what she likes bestabout the new job, she replies:“Variation. And working with transactionsoutside the EU. There is a big differencein transactions in the EU and inChina, for example.”The responsibility perspective is nowintegrated into all EKN's transactions. Asa specialist Agneta is primarily involved incategory A transactions. This means transactionswith high risk of adverse environmentaland social impacts.“The exporter is obliged to produce an environmentaland social impact assessment,an ESIA, for larger category A transactions.Our job is to review the material with acritical eye. It often needs supplementing orcloser examination. When it is necessary wemake additional reviews ourselves. We can,for example, find out if there have been protestsand criticism of a particular activity.Setting requirements is a key part of thejob,” says Agneta.“It is not always particularly popularwhen it is urgent, and we need more supportingdocumentation from the companies.But they also want to help with responsibleexports and return with answers to ourquestions. The sooner we come into thetransaction, the better.”39

Collaboration EKN ANNUAL REPORT 2012Gas pipelines buried in Mumbai, India.40

Collaboration EKN ANNUAL REPORT 2012Collaboration42 Record-breaking internationalmeeting in Stockholm46 Collaboration aimed increasinglytowards financing41

Collaboration EKN ANNUAL REPORT 2012Record-breaking internationalmeeting in StockholmFinancing of export transactions was one of the most important issues at the BerneUnion Annual Meeting in 2012. The meeting was held in Stockholm with EKN as host.Trends in world trade and the turmoil in the Eurozone were also topics of discussion atthe meeting.In October, EKN hosted the annual generalmeeting of the Berne Union. The meetingwas held in Stockholm and gathered a recordnumber of participants – 185 delegatesfrom the 50 member organisations locatedthroughout the world.Financing issues were in focus at themeeting. Banks around the world have42

Collaboration EKN ANNUAL REPORT 2012Page 42:Arisa Nakazawa, NEXI, Eun Young Lee,KSURE, Yuka Oga, NEXI and ReikoGoto,NEXI.Page 43:Berne Union President Johan Schrijver.Hanieh Ferdowsi, SACE andZvi Chalamish, ASHRA.grown more cautious in their lendingbecause of higher capital coverage requirements.Add to this the uncertainty aboutdevelopments in the Eurozone. Severalagencies have established their own lendingfacilities, known as direct lending. Trendsin world trade and a review of the countrieswere other issues discussed during theBerne Union meeting.The Berne Union, founded in 1934, isan international business association forexport credit and investment insuranceoperators. The organisation holds two meetingseach year.Two new agreements in the OECDIn 2012, the OECD Ministerial Counciladopted a recommendation on stricterguidelines for the export credit agencies'consideration for environmental and socialissues. The updated regulatory frameworksets tougher requirements on social issuessuch as working conditions being handledresponsibly in activities that are guaranteedor funded by government export creditagencies. Another updated area is emissionsthat affect the climate. Behind the newguidelines from the OECD, there are standardsestablished by the IFC (InternationalFinance Corporation), part of the WorldBank Group. The collaboration with banksis facilitated by export credit agencies andbanks observing the same IFC standards.The difference is that export credit agencies43

Collaboration EKN ANNUAL REPORT 2012apply them in more transactions.In order to stimulate exports of andinvestments in renewable energy andclimate-friendly projects, the OECD hasdecided on a new climate agreement. Thenumber of sectors that can be offered bettercredit conditions – longer terms of repayment(15-18 years) – has been extended.This concerns sectors that contribute to reducinggreenhouse gas emissions, as well asthose determined to contribute to efficientenergy use.New global initiative for levelplaying fieldThe US and China initiated an internationalworking group for new internationalrules for export financing at a summit inFebruary 2012. A large number of countriesfrom different parts of the world are invitedto participate in the work, including the EUcountries. This is an important initiative forSwedish exports and EKN to create a morelevel playing field in terms of competition.Sweden's large international companiesrely on submitting tenders with creditson similar terms as suppliers from othercountries.More transparency for EUropeanParliamentExport credit agencies reported for the firsttime to the European Parliament on theiractivities. The aim is for the Parliamentto gain more insight into the work of theagencies. The European Parliament paidparticular attention to CSR issues.The European Commission has revisedStockholm City Hall.44

Collaboration EKN ANNUAL REPORT 2012competition rules for the risks handled bythe private insurance market. New rulescame into force on January 1, 2013 and willapply until the end of 2018. The rules areessentially the same as those applied todate – short-term risks in the EU and severalOECD countries should be handled bythe private market and not insured by governmentagencies. However, there is someroom for exceptions when private insurancecompanies do not offer risk coverage. Thismeans that if Swedish exporters cannotinsure export transactions through privateoperators, EKN can assist also with shorterpayment periods in the EU and OECD followingauthorisation by the Commission.Cooperation agreementsEKN administers Sida's (Sweden InternationalDevelopment Cooperation Agency)issuing of guarantees and manages Sida'sprovitions.EKN has an administrative cooperationagreement with New Zealand's exportcredit agency NZECO. Within this frameworkthere is an underwriter from EKNon hand to provide advice. EKN also hasagreements with export credit agenciesfrom other states to facilitate reinsurance.In 2012, EKN has entered into cooperationagreements with Taiwanese TEBC andIndian ECGC. The reinsurance agreementwith South Korean KSure was renewed.EKN was host for the trade associationBerne Union's annual meeting with arecord number of participants.Delegates from Turk Eximbank.45

Collaboration EKN ANNUAL REPORT 2012Collaboration aimed increasinglytowards financingEKN collaborates regularly with other export promoters. Over the year, EKN has,among other things, participated in delegation trips with Business Sweden, ridden theExport Train with the Swedish Minister for Trade and held seminars with Almi and thesubcontractors' organisation Undexo.Financing has become increasingly importantfor organisations that support Swedishexports. One reason is that banks aremore cautious when granting credit, whichcould pose a problem for Swedish exports.For this reason, many of the activities thatEKN has implemented along with otherexport promotion organisations in 2012 arefocused on making it easier for both smalland medium-sized as well as large exportingcompanies to gain access to funding.On board the Export TrainEKN arranges both its own seminars andevents and participates in others in order tomeet entrepreneurs and banks. One of themore unconventional events was the “ExportTrain”. The Swedish Minister for Tradearranged a trip along the inlandsbananrailway track. EKN's Director General KarinApelman and regional managers MattiasBerntsson and Håkan Bäckström were onboard the train. Local entrepreneurs andbusiness developers from the municipalitieswere invited on board to attend speedmeetings with the various export promotingorganisations.EKN has co-financed and participated asa speaker at Business Sweden seminars, forexample, on Sub-Sahara, Iraq and Croatia.International conferencesAlong with SEK we have presented theSwedish export credit system at interna-Exporta conference in Gothenburg.46

Collaboration EKN ANNUAL REPORT 2012Director General Karin Apelman andSwedish Minister for Trade Ewa Björlingon board the Export Train.EKN's regional manager for northernSweden met entrepreneurs along theInlandsbanan railway.tional conferences, including in Johannesburg,Barcelona and Gothenburg.Organisers of these conferences are internationalorganisations who arrange conferencesworldwide.part of the local networksIn 2012, EKN participated in a congressheld in Linköping by the Swedish MunicipalIndustry & Commerce Officials.Contacts with business promoters in themunicipalities mean that EKN reaches outinto the local networks of small enterprises.This is also the purpose of EKN's collaborationwith Undexo. EKN, Almi and Undexohave jointly held seminars throughout Sweden,aimed at suppliers involved in exporttransactions. EKN's participation in tradefairs throughout the year, such as the EuroMine Expo in Skellefteå and subcontractingfair in Jönköping have also been conductedin partnership with other export promoters.Joined the delegation tripsEach year, EKN takes part in delegationtrips together with Swedish exportingcompanies, banks, Business Sweden andembassies. This year, the majority of thedelegation trips that EKN has participatedin were to Asia, for example, Japan, Indiaand Burma/Myanmar but also to Mozambique.The delegation trip to South Koreawas made in connection with the SwedishKing's state visit to the country and thevisit to Burma/Myanmar was led by theSwedish Minister for Trade and the InternationalCouncil of Swedish Industry.47

ExpertisE EKN ANNUAL REPORT 2012EKN's employees meet companies and banks.48

ExpertisE EKN ANNUAL REPORT 2012Diverse workEach export transaction that EKN considers has many aspects to be regarded.This is why we need skilled and flexible employees.We assess the viability of a transaction,the risk situation in the importing countryand the creditworthiness of the buyer. Atthe same time, we consider the possibleenvironmental and social aspects and othersustainability issues.Our employees also need to address theconsiderations that EKN as a governmentagency must deal with concerning publicaccess in relation to confidantiality. In addition,EKN employees need to communicateabout EKN and what we can offer the Swedishexport industries – both to our existingcustomers and to the companies that arenot yet familiar with EKN.Skills development150 people work at EKN. The number ofemployees and number of full-time workershas changed little over the past two years.Between 2008 and 2010, we added 20 positionsand 15 full-time employees.Most people at EKN have academiceducation and experience working in thebanking and finance industry. Continuousprofessional development in the form ofnew challenges and direct training initiativesare necessary to ensure that we candeliver what our business context demands.In 2012, EKN has held seminars with all itsemployees in the area of ​publicity and secrecy.Underwriters have also been trainedin environmental and social responsibility.Over the past year, several employees havealso taken courses in credit assessment andnegotiation methods.Tailored trainingAnother important field that requires skillsdevelopment is EKN's task of extending itscustomer base and reaching out to morecompanies. As part of this process, the businessarea for large corporates has identifiedits sales processes and created a customisedtraining programme for its underwriters,which starts in 2013.During the year, training in presentationtechniques were implemented in order forEKN's employees to be able to meet potentialcustomers, to a much greater extent,AGE DISTIBUTION OF STAFF29 years or under 3 %30-34 years 9 %35-39 years 19 %40-44 years 15 %45-49 years 19 %50-54 years 11 %55-59 years 9 %60 years or above 13 %50

ExpertisE EKN ANNUAL REPORT 2012150 people work at EKN.and explain how EKN's services can assistto help create additional and more securetransactions.jobs aboad and new mindsetsChanging work tasks at EKN or workingtemporarily outside of EKN in neighbouringbusinesses, are other ways of developingskills. Over the past year, one employee hasworked on behalf of EKN in Shanghai. Oneemployee has been loaned to NZECO, theequivalent of EKN in New Zealand to workthere and provide advice. One employee hasworked at Business Sweden and one employeeat the Financial Supervisory Authority.Employees give their opinionsEKN conducts annual surveys among itsemployees. They answer questions aboutthe management team, immediate managers,exchange of experiences, ability to influence,taking responsibility and personaldevelopment. The average rating in 2012from employees is 4.4 on a scale of 1 to 6,where 6 is the highest rating.Overall EKN's employees say that themost important factor with the job, and thething that is most stimulating, is workingwith challenging tasks in an internationalcontext.SICKNESS ABSENCE 20122012 2011 2010Younger than 30 years 0.3 % 2.6 % 1.5 %Between 30 and 49 years 2.5 % 3.2 % 3.8 %50 years and above 2.9 % 2.5 % 4.1 %Women 3.3 % 4.3 % 4.8 %Men 1.6 % 1.0 % 2.6 %Total sickness absence 2.6 % 2.9 % 3.8 %Proportion of long-term sick of totalsickness absence (60 days or more) 39.19 % 55.6 % 54.9 %51

ExpertisE EKN ANNUAL REPORT 2012Helicopter perspectivein transactionsEKN's country analysts monitor and assess the economic and political situation in alarge number of countries. They collaborate with OECD and recommend EKN's policyfor these countries. The policy then serves as guidance for EKN when setting pricesand making risk assessments.Johan Fredriksson began at EKN in 1994.He took a break in his graduate studies atthe Stockholm School of Economics to takeup a temporary position at EKN. However,he is still here and the job was a step into amore action-emphasised reality. After a fewyears of work at the UN Development ProgrammeUNDP in Vietnam, Johan returnedto EKN in 2002 and since then has been acountry analyst in charge of East Asia, fromBurma/Myanmar to North Korea. The workincludes long-term monitoring of economicand political development in the countries.In his position Johan needs to have a solid52

ExpertisE EKN ANNUAL REPORT 2012understanding of the risks and factors thatmay affect the prospects for doing businessin the country.“For me, there are not many jobs that cancompete with this one. It is varied, full ofinteresting international issues concerningpolitics and economics. It is a job witha helicopter perspective while remainingclose to reality because we support Swedishexports in individual transactions,” saysJohan.When EKN decides to participate in atransaction, the country analyst collaborateswith the underwriter who is responsiblefor the transaction.assesses how a countries featuresaffects the transactionCharlotte Svensson, who works with LatinAmerica and the Caribbean, finds that participationin the transactions makes workingas a country analyst extra stimulating.“It is interesting to apply our knowledgeof the region to specific transactions. Weassess how the situation in a country canhave a direct impact. We always analysethe political, economic and institutionalrisk profile of a country.If there is a transaction in the transportsector, we can, for example, make an assessmentof the security status in the region.However, if the purchaser is in the miningsector, the regulatory environment andglobal economic trends are more importantfactors. The analyses turn out very industryspecific.”Charlotte started working for EKN in theautumn of 2012. Just a few months earlier,she finished her master's degree in economicsat the Stockholm School of Economics.JOHAN FREDRIKSSONCHARLOTTE SVENSSONThe work is varied and includes interesting questionsabout international politics and economics.53

ExpertisE EKN ANNUAL REPORT 2012HILDA HELLGRENCLAES NORDSTRÖMAround half of the analysts have started atEKN pretty shortly after graduation. Otheranalysts have had longer work experiencebefore working for EKN. Charlotte is wellversed in the area that she monitors. Shehas both worked and studied in Mexico.“Of course, it helps a lot that I speakSpanish,” she says.visits to the countryHilda Hellgren has a background as afinancial historian, and has written a doctoralthesis on savings banks. She startedworking at EKN in 2007, right at the startof the financial crisis. Hilda previouslyworked at the credit rating agency Standard& Poor's. She is now working with theCIS countries and Eastern Europe.“The media image of the former EasternBloc countries can sometimes be prettynegative. But in terms of commerce, it is anarea of ​great potential,” says Hilda.Country analysts visit countries to forma better idea of ​the development there andto participate in transactions. In certaintransactions EKN meets the exporter'scustomer. The country analyst can then accompanyan underwriter together with theexport company.“Really getting to know the country is apart of this job that I appreciate the most,”says Hilda.The country analysts also participate ininternational seminars and panels to communicateviews of EKN on countries andregions, and the possibilities that EKN canoffer. One of Hilda's trips last year was toBelarus. There, she participated in a paneldiscussion at an international seminar forcompanies and banks on innovation andentrepreneurship.“The Belarus companies and banks werevery interested in what EKN does.”disseminating knowledgeIn 2012, EKN published its country riskanalyses for the first time on www.ekn.se. In November, country risk analyseswere published for Chile, Mexico, Peru andColombia.54

ExpertisE EKN ANNUAL REPORT 2012Public country risk analyses from EKN.At EKN we have comprehensive knowledge ofmany export countries. We want to share thisknowledge.The country analyst Claes Nordström, whois an expert on Latin America has been involvedin the work of making the analysesmore accessible.“At EKN we have comprehensive knowledgeof many export countries. We want toshare this knowledge with exporters andothers who might benefit from it,” saysClaes.Latin America is a region that has beenin the media shadow due to the absenceof spectacular events. There has been animportant break in the trend here over thelast ten years. Latin America has stabilisedand has had a very positive and more eveneconomic development.Claes also believes that the image ofMexico and Colombia as countries impactedby drug syndicates and organised crime isexaggerated. Both countries have performedwell financially.following changesChanges happen even in Asia. Johan Fredrikssonhighlights the positive developmentsin Burma/Myanmar as an example.“The country has been isolated for manyyears. Trade has been restricted by sanctions.Steps towards democracy and economicreforms have now been taken. Thisis opening up opportunities for investmentand trade. It is a market with great longtermpotential, but with a long way to go.”In 2013 big decisions are also expected inChina.“The country has changed leadership andwill get a new government in March 2013.On paper it seems that it will be a conservativeappointment that is made in China,which alludes to ‘business as usual’. Butthere may still be surprises. It is an ageingleadership suggesting that changes can beexpected earlier than the ten years which isthe usual period of office,” says Johan.55

Risk, provisions and results EKN ANNUAL REPORT 2012Port Elisabeth, USA.56

Risk, provisions and results EKN ANNUAL REPORT 2012Risk andprovisions58 Sufficent risk capacityfor new business62 Indemnified claims in linewith last year66Slightly lower provisionrequirements57

RISK AND PRovisions EKN ANNUAL REPORT 2012Sufficent risk capacity fornew businessCommitments remain at the same level as last year. The average level of risk in theguarantee portfolio also remains largely unchanged.EKN's binding commitment, consisting ofcurrent guarantees and binding offers forexport credit guarantees, totaled over SEK211 billion at year end and thus remainedat the same level as at the beginning of theyear. Over the last three fiscal years, thecommitment has increased from SEK 159billion or by nearly 33 percent. When alloffers are included, both binding and nonbinding,the volume at year end was SEK331 billion, compared to SEK 339 billion atthe previous year-end.In addition to this reported exposure toexport credit guarantees, EKN also has anexposure to investment guarantees, whichat year-end was almost SEK 5 billion. Forinvestment guarantees there is a separatestatutory limit approved by the Swedishparliament that amounts to SEK 10 billion.Utilisation of the statutory limit wasin line with last yearWhen EKN calculates its exposure inrelation to the statutory limit decided bythe Swedish parliament, for export creditguarantees of SEK 500 billion, half of thenon-binding offers are included. Theseamounted to over SEK 113 billion at theTHE 15 largest countries – outstanding guarantees (SEK million)66,14120,00018,00016,00014,00012,00010,0008,0006,0004,0002,0000SwedenIndiaRussiaPakistanJapanSouth AfricaSpainTurkeyItalyIndonesiaMexicoUKUSAFinlandChile31 Dec 201231 Dec 201158

RISK AND PRovisions EKN ANNUAL REPORT 2012PROVISION FOR ANTICIPATED LOSS INPERCENT OF EKN'S COMMITMENT5%4%3%2%1%0%2008 2009 2010 2011 2012end of the year. This provides a statutorylimit utilisation at the end of the yearof SEK 275 billion which is unchangedcompared to previous annual financialstatement. In comparison with a statutorylimit utilisation of SEK 305 billion in thefinancial statements for 2010, this means areduction of 10 percent.The applicable guarantee limit in combinationwith own reserves give EKN thecapacity to guarantee significantly moretransactions. Consequently, the ability tomeet an increasing demand from exportcompanies is secured.Risks on Swedish export companiesdominateEKN has outstanding exposure and claimsin a total of 138 countries, but this exposureis unevenly distributed. The fifteencountries where EKN has the greatest riskexposure accounted at the end of the yearfor about 85 percent of the total risk exposure.Of this, the risk exposure on Swedishcompanies was over a third.The risk exposure on companies in Swedenat year-end totaled over SEK 66 billion,of which working capital guarantees tolarge Swedish export companies that EKNissued during the financial crisis accountedfor nearly SEK 64 billion. Consequently,Sweden still dominates the exposure whichremains essentially unchanged since lastyear end. The working capital guaranteesmean that EKN shares the risk with thelending bank for major Swedish exportcompanies with good credit ratings. Theywere introduced as a temporary response tothe financial crisis. The option for applyingfor this guarantee expired mid-2010.The working capital guarantees that havethe longest maturity fall due in 2017. Theaverage remaining maturity is a little overthree years.India has risen to second placeDuring the year, the exposure on compa-Outstanding offers and guarantees by SECTOR 31 DEC 2012Telecom 31 % (28%)Defence 22 % (24%)Power 12 % (11%)Machinery 11 % (11%)Transport 7 % (9%)Mining equipment and steel 4 % (4 %)Contract work 3 % (3%)Other 10 % (10 %)Last year's percentage in brackets.59

RISK AND PRovisions EKN ANNUAL REPORT 2012Mumbai, India. India is second on the list ofcountries with the largest EKN exposure.nies in India has increased significantly,and the country is now the second largestafter being in sixth place at the time of theprevious financial statements. The changeis essentially based on a single very largetransaction in the power sector, but also additionalexposure in the telecom sector hascontributed to the increase.Furthermore, the exposure to companiesin Japan and the United States hasincreased significantly during the year. Inboth cases, it is major transactions in thetelecom sector that lie behind the increase.Large countries over a long periodCompanies in Russia account for an almostequal exposure compared to the previousyear and even here it is mostly very largetransactions in the telecom sector thatEKN guarantees. As before, Pakistan andSouth Africa are also among the countrieswith the greatest exposure. The reason ismainly a very large transaction in eachcountry, in both cases for defence equipment,which will remain in EKN's portfoliofor a long time to come.The exposure on companies in Spain andItaly has decreased slightly over the year,but from the perspective of expected newmajor telecom transactions in these countries,this can be regarded as a temporarydecline. However, the exposure on companiesin Indonesia decreased over the year.Commitment in Iran due to sanctions decreasedfurther during the year, and alongwith Saudi Arabia the country is no longeramong the top 15 countries.Outstanding offers and guarantees by counterparty 31 DEC 2012Foreign companies 50 % (48 %)Swedish companies 27 % (25 %)Public buyers 21 % (23 %)Banking/Finance 2 % (4%)Last year's percentage in brackets.60

RISK AND PRovisions EKN ANNUAL REPORT 2012Outstanding offers and guarantees31 Dec 2012 31 Dec 2011 31 Dec 2010Offers SEK m number SEK m number SEK m numberGuarantees to exporters:Loss on claim 11,776 743 20,213 690 12,917 935Loss on production and losson claim 966 7 1,397 7 2,832 15Guarantees to lenders 80,565 46 78,717 58 127,799 85Total 93,307 796 100,326 755 143,548 1,035Guarantee for unfair calling 151 2 225 7 1,672 12Counter guarantee 34,191 45 29,354 53 32,002 47Letter of credit guarantee 0 0 0 0 - -Bill of exchange guarantee 977 26 501 27 448 27Working capital guarantee 1) 352 31 338 39 339 35Working capital guarantee 2) 0 0 0 0 - -Investment guarantees 2,796 1 3,039 1 0 0Total 131,774 901 133,784 882 178,009 1,156GuaranteesGuarantees to exporter:Losses on claim 18,150 2,544 17,982 2,183 13,718 2,165Loss on production and losson claim 2,262 26 5,633 31 5,087 30Guarantees to lenders 107,232 490 106,003 452 93,518 418Total 127,644 3,060 129,617 2,666 112,323 2,613Guarantee for unfair calling 2,428 16 3,200 22 2,121 27Counter guarantee 6,354 329 6,216 316 4,053 273Letter of credit guarantee 743 118 873 148 848 146Bill of exchange guarantee 469 102 922 105 482 98Working capital guarantee 1) 282 71 273 74 316 57Working capital guarantee 2) 63,706 56 65,084 59 79,224 70SLV guarantees 842 2 2,118 42 2,081 42Investment guarantee 1,928 1 2,096 1 0 0Total 204,396 3,755 210,398 3,433 201,448 3,326Outstanding offers andguarantees 336,169 4,656 344,181 4,315 379,457 4,4821) for small and medium-sized enterprises2) for large corporates (temporary solution)61

RISK AND PRovisions EKN ANNUAL REPORT 2012Indemnified claims in linewith last yearWhen payment is not made in transactions that EKN guarantees, EKN indemnifies andtakes over the guarantee holder's claim. Claims on private companies increased by SEK10 million during the year. Claims on the Iranian state also increased.Claim payments for the year related primarilyto ongoing business in the transportsector to Russia and Sudan. They are forthe transactions that already had claims.A larger claims payment was made in atelecommunication transaction to Kazakhstan.EKN's claim against the debtor inKazakhstan was sold during the year.Notified delays in payment for thetransactions EKN guarantees increasedsignificantly during the year. Loss preventionand claim-minimising measures resulted inindemnifications remaining at the same levelas last year.new Commercial claimsAt year-end EKN had outstanding claimson private companies totalling SEK 795million. More than ten of these each exceededSEK 15 million and apply mainlyto transactions in the transport sector toRussia and Ukraine. In addition, there area few major claims in the food sector inMacedonia, the energy sector in Colombiaand the solar industry in Italy. Other claimsare divided among 150 claims adjustedtransactions.Tehran, Iran. There has been a problem transferring funds from Iran.62

RISK AND PRovisions EKN ANNUAL REPORT 2012COMMERCIAL RECOVERIES, CLAIMS PAYMENTS, OUTSTANDING CLAIMS (SEK MILLION)RecoveriesIndemnificationsOutstandingclaims31 Dec 2012Continuing commitmentin transactions withoutstanding claimsAngola 6 17 0Argentina 2 15 2Brazil 4 10 18 12Colombia 23 0Costa Rica 5 5 19 0Croatia 15 0Honduras 9 22 2Italy 21 38 8Kazakhstan 43 79 1 0Macedonia 59 0Poland 8 24 95Russia 33 51 19Serbia 2 4 17 0Spain 1 39 35Sudan 14 14 0Sweden 1 5 82 130Turkey 3 3 27 9UK 0 47 33Ukraine 0 2 67 3USA 0 3 58 94Transactions in 37other countries 16 43 142 530Damage prevention lease 53 0Total 76 299 795 972Total year 2011: Recoveries 27, indemnifications 368, outstanding claims 786Total year 2010: Recoveries 29, indemnifications 385, outstanding claims 557Total year 2009: Recoveries 26, indemnifications 262, outstanding claims 45263

RISK AND PRovisions EKN ANNUAL REPORT 2012Political claims on IranDuring the year, EKN indemnified a total ofSEK 124 million, for transactions to Iran.The reason for the non-payment is that theinternational sanctions against Iran haveprevented the transfer of payments for thetransactions conducted prior to the sanctions.Transfer problems led to EKN havingan outstanding claim against the Iraniangovernment and Iranian banks amountingto SEK 120 million at year-end.For significantly older transactions, EKNhas outstanding claims on eleven states.Claims on these states totalled SEK 4.9billion. Of these states Bosnia-Herzegovina,Egypt, Indonesia, Iraq, Kenya, Pakistanand Serbia are paying according to theagreed plan.POLITICAL RECOVERIES, CLAIMS PAYMENTS, OUTSTANDING CLAIMS (SEK MILLION)Recoveries2012 Indemnifications 2012Outstanding claims31 Dec 2012Argentina 69Bosnia and Herzegovina 3 39Cuba 1 543Egypt 29 134Indonesia 19 127Iran 124 120Iraq 491Kenya 2 18North Korea 2,662Pakistan 26 576Serbia 4 56Syria 1 1Venezuela 3Zimbabwe 43Standard distributed rec. 12Total 96 125 4,882Total year 2011: Recoveries 87.8, indemnifications 4.5, outstanding claims 4,852Total year 2010: Recoveries 163, indemnifications 11, outstanding claims 5,969Total year 2009: Recoveries 275, indemnifications 11, outstanding claims 6,25164

Moscow, Russia.65

RISK AND PRovisions EKN ANNUAL REPORT 2012Slightly lower provisionrequirementsThe average portfolio risk has declined after the financial crisis of 2008–2009. EKNhas reinsured nearly SEK 5 billion. Provision requirements have decreased slightly duringthe year.EKN charges premiums and makes provisionsfor the anticipated losses for eachguarantee that is issued. The size of theprovision is affected by the risk assessmentof the risk in each individual transaction,including the length of the transaction.Of the risk-based accounts that EKNmakes quarterly, a development of riskis evident in the transactions that EKNhas in its portfolio. At the end of 2012, theprovision for expected losses totaled SEK7.3 billion compared to SEK 7.6 billion lastyear. The average maturity in the portfolioalso decreased slightly to 3.25 years at theend of 2012.A large proportion of the guaranteesthat were issued after the financial crisisof 2008–2009 cover risks for companies inSweden and other OECD countries. Thesecompanies generally have a higher creditrating than what is normal for the typeof company that traditionally appears inTelemast in Argentina.66

RISK AND PRovisions EKN ANNUAL REPORT 2012EKN's portfolio of guarantees, mainly inemerging markets in Asia, Africa and LatinAmerica. At the same time, these often verylarge transactions in terms of value meanthat EKN has increased the number ofrisks in the portfolio, each of which couldlead to large losses.During the year, the average risk valuationcontinued to decline and is significantlylower than for the crisis year of 2008. Atthat time, an unusually high proportion ofalready signed guarantees in certain industriesand in certain markets were revalued,with increased risk provisions, as a resultof the financial crisis. In 2009, the averagerisk dropped as the macroeconomic outlookimproved. The continued decline in theaverage portfolio risk can be for the mostpart explained by new large transactions toOECD countries with companies with goodcredit ratings.The risk for unexpected losses isunchangedEKN also analyses in its calculations ofrisk exposure the unanticipated loss (concentrationrisk) in the portfolio to ensurethat there is a sufficient capital buffer tomeet future indemnifications using its ownfunds (see Note 14 to the balance sheet).By contrast, there is no premium surchargefor transactions that increase the concentrationrisk in the portfolio, and EKN willcontinue to be open to issuing new guaranteesto markets and companies where therisk exposure is already high. At the end of2012, EKN's risk exposure to unexpectedlosses was close to SEK 6.2 billion, a dropfrom SEK 6.5 billion at the beginning of theyear.Lower percentage of risk thanbefore the financial crisisThe valuation of the overall risk of losses inthe commitment fell during the year fromSEK 14.1 to 13.6 billion, but in relativeterms remained unchanged, with 6 percentof the fixed exposure of SEK 218 billion.This compares with the valuation of theoverall risk of losses before the financialcrisis, which was 10 percent of the fixedexposure.New reinsuranceAt year end, EKN had reinsured USD 650million or SEK 4.2 billion of its outstandingexposure in the private reinsurancemarket, compared to USD 460 million forthe previous year. The increase in volumeis due to EKN being able, for the first timesince the financial crisis in 2009, to signnew reinsurance policies in a cost neutralway.During the year, EKN reinsured a singletransaction in the telecom sector in Russia.The reinsured amount is close to USD 200million (SEK 1.3 billion). Furthermore, theportfolio of reinsurance that includes 20risks in 18 countries that EKN signed in2006 has been extended until the end of2016. In so doing, the agreement period hasbeen extended from three to four years.Reinsurance of transactions in Pakistanhas been extended by the companiesinitially signing up to agreement periodsshorter than 12 years.By signing reinsurance in the privatemarket, EKN has been able to reduce itsrisk exposure by nearly SEK 0.8 billion,of which almost half relates to the risk foranticipated losses.EKN has reinsured transactions with foreignexports at other credit agencies for justover SEK 0.5 billion. Foreign export creditagencies have reinsured Swedish exports atEKN to a value of SEK 13.5 billion, of whichSEK 10 billion relates to exports of JASGripen fighter aircraft to South Africa.67

ACCOUNTING EKN ANNUAL REPORT 2012Accounting697476788082899092949698Analysis of resultsIncome statementBalance sheetCash flow statementAccounting principlesNotes to the income statement and balance sheetCompilation of material informationStatutory limits and utilisationRisk managementAudit reportBoard of DirectorsExecutive Management68

ACCOUNTING EKN ANNUAL REPORT 2012Analysis of resultsHigh premium income, reduced provisions and relatively low levels of indemnificationsproduced a strong result. Over time, operations should be self-financed. The accumulatedprofits should be seen in relation to EKN´s large and long commitments.The result for 2012 was SEK 2,115 million,which is one of the top results in EKN´shistory. Last year, the result was SEK 1,628million.PremiumsNet premium amounted to SEK 1,969million compared to 1.251 million previousyear. Of these SEK 1,803 million waspremium from current guarantees and SEK281 million was premium from binding offers.Premium from reinsurance amountedto SEK 28 million and the cost of reinsurancewas 143 million. The reduction inrisk provisions due to reinsured transactionamounted to SEK 372 million at yearend, which was SEK 23 million less thanat year end 2011. During the year 2012EKN has not issued any guarantees with apremium in excess of the expected loss, andthus has nothing to report in accordancewith Ordinance (2011:211) on lending andguarantees.Public art in São Paulo, Brazil.69

ACCOUNTING EKN ANNUAL REPORT 2012ProvisionsIn 2012 the provisions for expected losshave been reduced with SEK 291 million.During the previous year the provisionsincreased by SEK 13 million to SEK 7,325million at year end.IndemnificationsIndemnifications for the year 2012 amountedto SEK 437 million, compared to SEK373 million last year.Sanctions against Iran led to difficultiesmaking payments to and from the country.EKN worked successfully with banks andexporters during the year in solving problemsrelated to payments, and managedto secure the majority of the payments.Indemnifications related to Iran were limitedto SEK 124 million. Other indemnificationsdue to political events were made fortransactions with Syria and totaled SEK 1million.The indemnifications due to commercialevents amounted to a total of SEK 299million compared to SEK 368 million lastyear. Payment of compensation under theaircraft leasing agreements, which in recentyears have resulted in large payments,continued during the year and amounted toSEK 53 million compared to SEK 89 millionlast year. The previously known problemswith a bank in Kazakhstan were finally settledduring the year, and as a result SEK 79million was paid out.No indemnifications have been made forthe working capital guarantees that EKNissued to major Swedish exporters as atemporary intervention/action during thefinancial crisis.The automotive industry continued todominate indemnifications and accountedfor SEK 75 million which mainly relate todebtors in Russia, Central America andSudan.The indemnifications to small andmedium-sized guarantee holders due tocommercial events were SEK 53 million,which was almost half of the figure for theprevious year. The largest single paymentwas made for a solar project in Italy.RecoveriesRecoveries during the year were SEK 170million, compared to SEK 112 million lastyear. Recoveries relate to the paymentsmade for EKN´s claims arising after indemnifications.Under the intergovernmentalagreements signed within the frameworkof the Paris Club, Egypt, Pakistan andIndonesia together repaid SEK 75 million.Assets EKN obtained in the reconstructionof a Kazakh bank were sold and SEK 43million was recovered. This was the largestrecovery in respect of a single claim. Inthe automotive sector, it is common for theinsured vehicles to be used as collateral.Recoveries in the automotive industry wereSEK 12 million.Compensation for debt depreciationEKN receives compensation for the debtrelief that was granted by the Swedish governmentwithin the framework of the ParisClub. During the year, EKN has receivedSEK 78 million in compensation for claimswritten off for the benefit of Congo, Montenegro,Serbia, and Togo. Compensationis based on a valuation of the outstandingclaims that are made on the basis of severaldifferent economic parameters.Operating costsOperating costs totaled SEK 198 millionnet and was slightly higher than SEK 193million for the previous yea. EKN´s largestoperational cost is staff-related costs. Payrollcosts and other staff-related costs roseby SEK 2 million compared to the previousyear and totaled SEK 135 million. The costof premises totaled SEK 17 million and rose70

ACCOUNTING EKN ANNUAL REPORT 2012EKN's administrative income and expenses2012 2011 2010Administrative incomeAdministrative percentage of premium income 253,820 395,202 291,468Administrative compensation Sida 1,389 1,204 1,113Administrative reimbursement of service exports 494 159 –123Other administrative income 47Total 255,703 396,565 292,505Operating costsLoss prevention expenses –12,664 –1,308 –3,719Admin expenses for claims recoveries 1,782 1,419 1,514Salaries –79,442 –78,120 –72,270Other staff costs –55,211 –54,230 –46,861Cost of premises –17,049 –16,517 –16,777Other operating costs –46,431 –43,393 –50,055Depreciation –2,220 –2,464 –1,827Total –211,235 –194,613 –189,995Surplus for the year 44,468 201,952 102,510Interest on accumulated surplus 8,301 1,355 8,988Accumulated 909,725 856,956 653,648by 3 percent compared to last year. Therewere no changes in the lease agreement orto the premises during the year. Operatingcosts for offices and IT, including IT consultants,totaled SEK 20 million which is anincrease of SEK 1.4 million. Other consultancyand auditor related costs amountedto SEK 9.8 million which is an increaseof 1 million, and is partly explained byincreased costs for handling CSR issues.In order to increase awareness of EKN, thecost of marketing activities grew by SEK2 million and amounted to SEK 6 million.Travel expenses dropped by 1 million.During the year, a new working methodconcerning environmental and social issueswas implemented in the underwritingprocess. EKN now reviews all transactionsusing the new method within the existingorganization. Work is also underway todevelop support systems for electronic businessmanagement. The work to implementthis will commence in 2013 and is expectedto continue for some years. The aim is tomodernise and stream line the businesssupport system.Administrative compensation fromSida (Swedish International Development71

ACCOUNTING EKN ANNUAL REPORT 2012Coocperation Agency) and the ExportCredit Office in New Zealand amounted toSEK 2 million.Since 1998, EKN´s administrative incomehas exceeded operating costs. At the endof 2012 the administrative reserve wasSEK 910 million, which included interestreceived on these funds over the years.PerformanceThe nature of the business causes measurementdifficulties in relation to administrativehandling time and underwritingcosts. The guarantees vary greatly incomplexity and length. For the very largeguarantees it is not uncommon for theapplication and offer period to stretch overa few years, involving complex analyticalwork. In addition, these guarantees have aterm of several years during which they areadministered. When problems arise, extraefforts are needed to prevent claims. EKNalso have a flow of very short term guaranteesof less than one year. Calculating costper guarantee is therefore difficult. In caseswhere an exporter does not receive the order,no compensation will be paid to EKN inregard to the offer, and the work carried outby EKN. Premium is only received when aguarantee is issued.EKN has one business area for small andmedium-sized enterprises and one for largecorporates. Generally speaking, the largecorporates have longer transactions with ahigher complexity than smaller companies.The common costs of running EKN arecharged internally on each business area.Operating costs per transaction showcosts per new guarantee issued duringthe year. The cost per new transaction hasdropped for the large corporates businessarea as the number of transactions has increasedmore than operating costs. For thesmall and medium-sized company businessarea a reduced number of transactions hasled to increased costs per transaction.In order to capture the cost of managementof the guarantee portfolio EKN alsomeasurers the operating cost in relation tothe guarantees managed by each businessarea.Financial managementEKN´s liquid assets at year end totalledSEK 24,054 million, compared to SEK22,400 million at the beginning of the year.Of the financial assets SEK 20,251 millionconsisted of positions in Swedish kronor,and the equivalent of SEK 3,803 millionwere invested in foreign currencies. Assetsin foreign currency decreased during theyear by the equivalent of SEK 4,069 million.The reason is that EKN, since 2011,no longer makes provisions for unexpectedrisks (concentration risk) and thereforedoes not hold assets in foreign currencies tobalance such provisions. Income from thefinancial management (the book interestincome) amounted to SEK 527 million, comparedto SEK 546 million in 2011. In total,EKN´s financial management returnedabout 2.2% compared to 2.6% in 2011. Ofthe assets in Swedish krona, SEK 20,169million is invested in Riksgälden (SwedishNational Debt Office), while the foreigncurrency assets, equivalent of SEK 3,017million, are invested in bonds. The remainingfunds are invested in commercial banks.Financial positionEKN´s financial position has strengthenedfurther during the year. Again it was a yearwith high premium income and relativelylow indemnification costs. Equity at yearend totals at SEK 21,488 million comparedto SEK 19,373 million last year. Concentrationrisk in EKN´s guarantee portfolio wereestimated at SEK 6,237 million, which isa decrease of SEK 291 million during theyear. The concentration risks are reported72

ACCOUNTING EKN ANNUAL REPORT 2012OPERATING COSTS DIVIDED BY NEW TRANSACTION, SEK THOUSAND2012 2011 2010 2009 2008Large corporates 155 167 148 144 155Number of transactions large corporates 914 824 893 774 601Small and medium-sized enterprises 96 90 79 79 84Number of transactions for small and medium-sized enterprises 597 634 710 617 484Total 132 134 117 117 128operating costs per commitment million2012 2011 2010 2009 2008Large corporates 429 406 353 311 519Small and medium-sized enterprises 10,551 10,390 9,865 10,779 12,329Total 593 566 495 449 759as a note to the equity. Concentration risksare calculated assuming a run off scenariowith no additional guarantees and the calculationgives the amount of equity neededto cover 95% of all losses the following 20years. Equity exceeds the calculated concentrationrisk.The stable financial position gives EKNexcellent ability to promote Swedish exportby being a risk partner for Swedish exporters.This especially applies to the risks thatare difficult to find coverage for from otherproviders. EKN can assume risk on verylarge transactions, and this is reflected inthat the five largest guarantee exposurestogether amount to SEK 38 billion and thetop five offers together total SEK 77 billion.73

ACCOUNTING EKN ANNUAL REPORT 2012Income statementAmounts in SEK thousandOperating income and expenses 2012 2011PremiumsPremium income Note 1 1,802,663 1,665,426Change in estimated premiums for counter guarantees 0 0Change in estimated premiums for binding offers 281,183 –471,205Premium income from reinsurance 27,976 66,948Premium expenses for reinsurance –142,720 –10,078Net premium income 1,969,102 1,251,091PROVISIONSChange in provisions for actuarially calculated risk in the exposure, gross Note 2 314,000 27,000Reinsurers' share of change in provisions for actuarially calculated risk in theexposureChange in provisions for actuariallycalculated risk in the exposure, netNote 2 –23,000 –40,000Note 2 291,000 –13,000RECOVERIESCapital 136,488 85,788Capitalised interest Note 3 5,863 5,811Interest Note 3 16,927 12,955Recoveries without specific allocation Note 3 12,332 10,376Total amount recovered claims Note 3 171,610 114,930Other recovery costs –1,868 –2,752Net recovery income 169,742 112,178indemnificationsIndemnifications –371,180 –283,451Loss prevention leasing –53,379 –88,736Loss prevention measures –12,664 –1,308Total indemnifications –437,223 –373,495Called excess –8,780 074

ACCOUNTING EKN ANNUAL REPORT 2012Amounts in SEK thousand2012 2011Compensation for debt reduction 77,717 0Change in actuarially calculated net worth of indemnified claims Note 4 41,000 –34,000Other operating income Note 5 1 41,489Other operating costs Note 5 –171,360 –2,179OPERATING COSTSAdministrative costs Note 6 –198,133 –192,260Depreciation of equipment Note 6 –2,220 –2,464Administrative income Note 6 1,883 1,363Total operating costs Note 6 –198,470 –193,361OPERATING RESULT 1,732,727 788,723FINANCIAL INCOME AND EXPENSESInterest income from treasury management 526,662 545,849Other interest income 18,259 193,481Interest expenses loans –86 –129Other interest expense –1,080 –8,153External expenses for treasury management –2,565 –2,298Exchange differences, assets and liabilities Note 7 –159,057 110,723TOTAL FINANCIAL ITEMS 382,133 839,473profit/loss FOR THE PERIOD 2,114,860 1,628,19675

ACCOUNTING EKN ANNUAL REPORT 2012Balance sheetAmounts in SEK thousandASSETS 31 Dec 2012 31 Dec 2011Tangible assetsMachinery and computer equipment Note 8 4,209 6,124Financial assetsActuarially calculated net worth of indemnified claims Note 4 1,239,000 1,198,000Pension funds Note 9 22,310 21,853Other long-term securities Note 10 22,496,519 20,645,642Reinsurers' share of actuarial provisionsProvisions for actuarially calculated risk in the exposure Note 2 372,000 395,000ClaimsPremium claims Note 11 3,635,051 3,329,842Other claims 3,359 2,602Total claims 3,638,410 3,332,444Cut-off itemsPrepaid expenses Note 12 4,905 4,981Accrued income Note 12 217,460 279,615Total cut-off items 222,365 284,596Short-term investmentsDeposits and securities Note 13 0 68,821Cash and bank balancesNational debt office Note 13 689,068 715,977Cash and cash equivalents Note 13 868,427 988,432Total cash and bank balances 1,557,495 1,704,409TOTAL ASSETS 29,552,308 27,656,88976

ACCOUNTING EKN ANNUAL REPORT 2012Amounts in SEK thousandCAPITAL AND LIABILITIES 31 Dec 2012 31 Dec 2011EquityRetained earnings 19,373,202 17,745,006Profit for the year 2,114,860 1,628,196Total equity Note 14 21,488,062 19,373,202ProvisionsProvisions for actuarially calculated risk in the exposure Note 2 7,697,000 8,011,000Provision for pension liability 22,310 21,853LiabilitiesLoans for fixed assets, RGK Note 15 4,200 6,563Debt to guarantee holders 11,175 5,721Debt to Sida and Baltramen 2,374 0Accounts payable 36,010 7,509Other liabilities 270,763 221,082Total liabilities 324,522 240,875Cut-off itemsAccrued expenses Note 12 11,087 9,959Prepaid income Note 12 9,327 0Total cut-off items 20,414 9,959TOTAL CAPITAL AND LIABILITIES 29,552,308 27,656,88977

ACCOUNTING EKN ANNUAL REPORT 2012Cash flow statementAmounts in SEK thousandOPERATIng activities 2012 2011Profit for the year 2,114,860 1,628,196Depreciation charged against earnings 2,220 2,464Disposals 0 0Change in current claims –243,735 1,209,853Change in current liabilities 96,465 –62,061Cash flow from operations for the year 1,969,810 2,778,452INVESTMENTSInvestments in machinery and computer equipment –305 –1,317Disposals 0 0Change in actuarially calculated net worth of indemnified claims –41,000 34,000Change in pension funds –457 1,192Change in other long-term securities –1,850,877 –3,898,232Total Investments –1,892,639 –3,864,357Remaining after net investments 77,171 –1,085,905FINANCING ETC.Change in provisions for actuarially calculated risk in exposure –291,000 13,000Change in provision for pension liabilities 457 730Change in loans for fixed assets, RGK –2,363 –937Change in debt interest compensation 0 0Total financing etc. –292,906 12,793CHANGE IN CASH AND CASH EQUIVALENTS –215,735 –1,073,112CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,773,230 2,846,342CASH AND CASH EQUIVALENTS AT END OF YEAR 1,557,495 1,773,230Cash and cash equivalents are defined as short-term investments and cash and bank balances.78

Cash flow statemeNT EKN ANNUAL REPORT 2012Asunción, Paraguay.79

ACCOUNTING EKN ANNUAL REPORT 2012Accounting principlesPremiumsEKN´s premium is intended to cover theexpected risk and EKN´s administration.When an offer is bound, the assumedpremium income is recognised as an assetunder premium claims and the expectedrisk is included in the provisions for anticipatedlosses. Premiums are invoiced eitherwhen the guarantee is issued or on an ongoingbasis. In cases where the premium ispaid in arrears, the premium claims andprovision requirement gradually declineand these items balance each other interms of results. In the guarantees relatingto approved credit limits, both maximumpremium claim and maximum risk arerecognised, as the assumptions are basedon a maximum credit utilisation. In thesecases, premiums are paid in relation to theutilised credit, which can provide negativepremium income.Amortisation of present value adjustmentof premium claims and any changes indiscount rates are recognised under otherinterest income.Valuation of commitmentEKN's binding commitment is defined asbinding offers, outstanding guarantees,recently overdue amounts in problem transactionsand notified delays. A certain portionof long-term commitment is not, at thetime of the agreement, specifically linkedto currency and is therefore recognised asSwedish kronor.Prior to each quarterly report, the valuationof the risk in the outstanding commitmentis updated and takes into account thematurity of each commitment. These values ​result in an estimated anticipated loss riskin the commitment under normal conditions.In the case where reinsurance hasbeen made for a part of the commitment,the risk is calculated for the reinsurer (seealso Note 2).Valuation of indemnified claimsIn the event of claims adjustment, EKNtakes over the claim from the guaranteeholder. Claims increase with capitalisedinterest, past due unpaid interest and accruedinterest not yet due according to newrepayment agreements. Claims decreaseas interest and amortization is paid orwhen depreciation occurs. Depreciation isdetermined when the recovery possibilitiesare considered as exhausted, or when thedebtor is granted debt relief. The size ofthe claim is also affected by exchange ratefluctuations.The value of the claims reflects theexpected recovery possibilities. All majorclaims are measured prior to each quarterlyreport. The valuation of the claims is madein incremental five percent levels. In assessingsovereign risks, the starting point isthe country's debt and its income level andhow well it has managed its debt payments.The assessment is supplemented with informationabout the general risk situationin the country, and how long the maturity ison EKN's claim. Other additional informationthat is used, may be the possibility ofdisposing of assets or the prospects for debtreduction.Currency managementThe recognised premium claims arepredominantly denominated in foreigncurrency and exchange rate fluctuations onthese claims are recognised under “Otherincome and expenses”. A large part of the80

ACCOUNTING EKN ANNUAL REPORT 2012commitment is also in foreign currency andchanges in provisions are to some extentmade up of exchange rate fluctuations.These changes are included in the amountrecognised as “Changes in provisions foractuarially calculated risk in the exposure.”On the asset side, and among other liabilities,exchange rate fluctuations arerecognised under “Financial income andexpenses”. The valuation of assets andliabilities in foreign currencies has beenmade at the bid price on the reporting date.Concentration risksA large part of EKN's commitment is concentratedto a limited number of countriesand counterparties, claims on these canprovide a significantly more negative outcomethan normally expected. Indemnifiedclaims are also concentrated to a limitednumber of countries. EKN calculates, bysimulating a large number of scenarios,the outcome of risk concentrations for bothcommitments and indemnified claims. Thecalculation is based on a set confidencelevel of 95 percent. Since year 2011 theconcentration risks have been recognised asa note to agency capital.50,000 are amortized over the period towhich the cost relates. Fixed assets includepurchases in excess of SEK 20,000. Computersand other IT equipment are depreciatedover three years. Other office equipmentis depreciated over five years.Long-term investments refer to investmentswith an original maturity exceedingone year, which is in accordance with Chapter5, section 1 of Ordinance (2000:605)concerning annual accounts and budget.The National Financial Management Authorityhas, in a decision dated 11/02/2003,allowed EKN exemption from the prescribedformats for the income statement,balance sheet and cash flow statement thatare regulated in the Ordinance (2000:605)concerning annual accounts and budget.OtherThe valuation of other assets and liabilitiesand the accrual of income and expensesin general have occurred under the rulesof the Ordinance concerning the annualaccounts and budget and good accountingprinciples. Operating costs in excess of SEK81

ACCOUNTING EKN ANNUAL REPORT 2012Notes to the income statementand balance sheetAll amounts are in SEK thousandNote 1. Premium income2012 2011Premium income, gross 1,671,115 2,600,245Other premium-related costs –207 –49PREMIUM INCOME, NET 1,670,908 2,600,196Changes to claims relating to premiums in arrears, nominal 133,904 –948,455Changes to claims relating to premiums in arrears, present value adjustment –9,686 –2,004Changes to claims relating to premiums in arrears, risk adjustment 7,537 15,689Changes to claims relating to premiums in arrears, net 131,755 –934,770TOTAL PREMIUM INCOME 1,802,663 1,665,426Note 2. Provisions for actuarially calculated risk in the exposureProvisions for actuarially calculated risk in the exposure, gross (before reinsurance):Provisions for anticipatedlossesOpening balance 2011 –8,038,000Change for the year 27,000CB 2011 / OB 2012 –8,011,000Change for the year 314,000Closing balance 2012 –7,697,000Reinsurers' share of provisions for actuarially calculated risk in the exposure:Opening balance 2011 435,000Change for the year –40,000CB 2011 / OB 2012 395,000Change for the year –23,000Closing balance 2012 372,000Provisions for actuarially calculated risk in the exposure, net (after reinsurance):Opening balance 2011 –7,603,000Change for the year –13,000CB 2011 / OB 2012 –7,616,000Change for the year 291,000Closing balance 2012 –7,325,00082

ACCOUNTING EKN ANNUAL REPORT 2012Note 3. RecoveriesRecoveries with agreed due dates up to and including the closing date were recognised as income during the year. At theclosing date there were SEK 44,022 thousand received, not yet distributed recovered damage amounts. Of these, 80percent, or SEK 35,217 were recognised conventionally. The remaining 20 percent have been recognised as a liability to theguarantee holders. Last year income of SEK10,376 thousand was recognised through standard distribution. Net of 2012and 2011 standard distribution, i.e. SEK 12,322 thousand affects the fiscal year results.2012 2011Capital, own insurance 138,849 87,810Capital from principal insurer 0 0Capital, reinsurers' share -2,361 –2,022TOTAL CAPITAL 136,488 85,788Capitalised interest, own insurance 5,875 5,821Capitalised interest from principal insurer 0 0Capitalised interest, reinsurers' share –12 –10TOTAL CAPITALISED INTEREST 5,863 5,811Interest, own insurance 17,915 13,701Interest, from principal insurer 0 0Interest, reinsurers' share –988 –746TOTAL INTEREST 16,927 12,955RECOVERED CLAIMS WITHOUT SPECIFIC ALLOCATION 12,332 10,376TOTAL AMOUNT RECOVERED CLAIMS 171,610 114,930Note 4. Actuarially calculated net worth of indemnified claimsGross valueProvision for anticipatedlossesNet valueOpening balance 2011 6,526,000 –5,294,000 1,232,000Change for the year –888,000 854,000 –34,000CB 2011 / OB 2012 5,638,000 –4,440,000 1,198,000Change for the year 39,000 2,000 41,000Closing balance 2012 5,677,000 –4,438,000 1,239,00083

ACCOUNTING EKN ANNUAL REPORT 2012Note 5. Other operating income / expensesOther operating income 2012 2011Estimated exchange gain, premiums 0 31,476Other 1 10,013TOTAL 1 41,489Other operating costs 2012 2011Estimated exchange losses, premiums –171,360 –2,179Note 6. Operating costs2012 2011Payroll costs –79,442 –78,120Other staff costs –55,211 –54,230Cost of premises –17,049 –16,517Other operating costs –46,431 –43,393Depreciation –2,220 –2,464Administrative compensation 1,883 1,363TOTAL OPERATING COSTS –198,470 –193,361Chairman Jan Roxendal was paid SEK137,000. First Deputy Chairman GöranJohnsson was paid SEK 109,500. KarinApelman, has received remuneration of SEK1,422,668. No remuneration was paid forthe office of Board Member at EKN. YvonneGustafsson, Andreas Skinnars, Kerstin NordlundMalmegård and Minoo Akhtarzand eachreceived SEK 55,000. Eva Karlsson and PeterSandewall each received SEK 76,000. WilhelmAlstermark received SEK 56,684, travelexpenses included.Any other benefits or future exposure has notbeen agreed for EKN's Board of Directors andDirector General.The above figures include remuneration forwork on Board committees. Remuneration toGöran Johnsson was SEK 27,000 and SEK21,000 was paid to Jan Roxendal, Eva Karlsson,Wilhelm Alstermark and Peter Sandwall.Jan Roxendal, ChairmanChairman of mySafety Group AB and Member of the Board of AB SvenskExportkredit (Swedish Export Credit Corporation) and Catella AB.Göran Johnsson, First Deputy ChairmanChairman of Unionkonsult AB, Calmando AB, and Sveriges Television,Member of the Boards for Elanders AB, IQ-Iniativet AB, Umeå Universityand Stockholm Business Region AB.Karin Apelman, Director GeneralBoard member of Swedavia AB, Member of the Advisory Board forfunding issues at Strålsäkerhetsmyndigheten (Radiation Safety Authority(SSM)) and Kammarkollegiet's advisory council (the Judicial Boardfor Public Lands and Funds).Yvonne Gustafsson, Member of the Board of ESO (The Expert Groupon Public Economics) and Mittuniversitetet (Mid Sweden University)and member of the Advisory Council at Livsmedelsverket (NationalFood Agency) and Statens Folkhälsoinstitut (National Institute of PublicHealth).Andreas Skinnars, Member of the Board of Vesper Group AB.Minoo Akhtarzand, Member of the Board of Fortum OYJ, Chairman ofNTF Jönköping county, Godstransportrådet (Freight Council) Smålandand Hushållningssällskapet (Swedish Rural Economy and AgriculturalSocieties) of Jönköping.Eva Karlsson, a Member of the Boards of SAU, Sveriges allmännautrikeshandel (Swedish Foreign Trade Association) and Svenska Förpackningsföreningen,(Swedish Packaging Association).Wilhelm Alstermark, Kerstin Nordlund Malmegård and PeterSandwall had no other directorships.84

ACCOUNTING EKN ANNUAL REPORT 2012Note 7, Exchange rate differences2012 2011Realised currency gains/losses on assets 61,969 –2,048Unrealised currency gains/losses on assets –241,002 116,022Unrealised currency gains/losses on liabilities 19,976 –3,253TOTAL –159,057 110,721Note 8. Machinery and computer equipment2012 2011AcquisitionvalueAccumulateddepreciationAcquisitionvalueAccumulateddepreciationOpening balance 17,054 –10,930 15,738 –8,466Acquisitions for the year 305 0 1,316 0Retirements 0 0 0Depreciation for the year –2,220 –2,464Closing balance 17,359 –13,150 17,054 –10,930Net value in the balance sheet 4,209 6,124Note 9. Pension funds and provisions for pension liabilitiesPension funds of SEK 22,310 thousand have been funded by the National Debt Office for future pension payments. Pensionliability refers to the former employees as per 31/12/2003 received occupational pension.Note 10. Other long-term securitiesEKN has assets in Swedish (investments in the National Debt Office) and foreign currency (bonds) to cover the exposure theagency has on the liability side. EKN's goal is to have a low risk in the management and to get a return on a level with governmentsecurities in each currency. The risk is limited by counterparty limits and rating requirements (for counterparty andindividual issues) in accordance with the requirements of the authority's financial policy. Financial management is followed upon a monthly basis to the Chief Financial Officer (CFO) and quarterly to the Board's Finance Committee.2012 2011CurrencyBookvalue of thecurrency inthousandsMarketvalue of thecurrency inthousandsBookequivalentvalue in SEKthousandMarketvalue in SEKthousandBookvalue of thecurrency inthousandsMarketvalue of thecurrency inthousandsBookequivalentvalue in SEKthousandMarketvalue in SEKthousandSEK 19,480,000 19,778,619 19,480,000 19,778,619 13,780,000 14,154,034 13,780,000 14,154,034USD 318,788 326,245 2,063,946 2,245,265 727,052 729,318 5,003,680 5,019,275EUR 97,510 103,448 837,696 922,652 172,768 175,511 1,540,912 1,565,375JPY 1,522,818 1,539,502 114,877 136,999 3,607,750 3,587,289 321,050 319,229Total 22,496,519 23,083,534 20,645,642 21,057,91385

ACCOUNTING EKN ANNUAL REPORT 2012Note 10. Other long-term securities Cont.Currency/Rating AAA AA A Total currencySEK 19,480,000 19,480,000USD 281,247 37,541 318,788EUR 82,441 15,069 97,510JPY 500,629 1,022,189 1,522,818Equivalent value SEK 22,009,131 410,277 77,111 22,496,519Liquidity risk, book value, SEK thousandCounterparty/Maturity < 1 year 1 – 5 years 5 – 10 years TotalSwedish state 3,084,130 8,712,580 8,130,000 19,926,710Foreign states 336,819 313,370 650,189Credit agencies guaranteed bySwedish or foreign government 99,154 196,854 296,008Supranationals 1,029,680 513,221 1,542,902Swedish or foreign credit agency –bonds 80,710 80,710Total 3,084,130 10,258,943 9,153,446 22,496,519Currency sensitivity, book value, SEK thousandChange in book value of the assets if the Swedish krona is strengthened by one krona in relation to each currency.CurrencyChange SEKChangein percentper currencyChange inpercent of thetotal portfolioUSD –318,788 –15% –1.4%EUR –97,510 –12% –0.4%JPY –15,228 –13% –0.1%Total –431,526 –14% –1.9%Interest rate sensitivity as measured with the discounted present value of nominal investments including interest (Dirty Price)Change in value if interest rates rise by one per centCurrencyChange in currencyamountsChange in SEKat the closingrateChange inpercentSEK –806,637 –806,637 –4 %USD –13,789 –89,272 –4 %EUR –4,715 –40,508 –4 %JPY –56,320 –4,249 –4 %Total –940,666 –4 %86

ACCOUNTING EKN ANNUAL REPORT 2012Note 11. Premium claims2012 2011Claims related to debited premiums 120,340 71,376Claims related to premiums for binding offers 828,249 606,745Claims related to premiums for counter guarantees and investment guarantees 0 0Total claims for advance premiums 948,589 678,121Claims relating to premiums in arrears, nominal 2,867,577 2,854,681Claims relating to premiums in arrears, present value adjusted –40,645 –47,074Claims relating to premiums in arrears, risk adjustment –140,470 –155,886Claims relating to premiums in arrears, net 2,686,462 2,651,721TOTAL PREMIUM CLAIMS 3,635,051 3,329,842Note 12. Cut-off itemsPrepayments and accrued income consisted of: 2012 2011Prepaid rent first quarter of next year 3,782 3,769Other prepaid expenses 1,123 1,211Accrued recoveries for Kenya 803 733Accrued premium income 0 7,062Other accrued income 1,496 –130Price discount SEB 362 0Accrued interest income on fixed income investments 214,799 271,951TOTAL 222,365 284,596Accrued expenses and prepaid income consisted of: 2012 2011Interest compensation for guarantee holders for standard distribution of recoveries 11 7Accrued holidays and overtime wages 9,274 8,919Other accrued expenses 1,802 1,033Prepaid premiums 1,066 0Recovery Iraq 8,261 0TOTAL 20,414 9,95987

ACCOUNTING EKN ANNUAL REPORT 2012Note 13. Short-term investments and cash and bankEKN's cash and cash equivalents (bank balances) are distributed as follows:2012 2011CurrencyAmounts in thousandsof currencyEquivalent value inSEK thousandAmounts in thousandsof currencyEquivalent value inSEK thousandSEK 770,658 770,658 766,479 766,479USD 82,383 533,374 106,779 734,867EUR 21,946 188,535 24,865 221,773CHF 977 6,944 623 4,573JPY 768,635 57,984 511,728 45,538TOTAL 1,557,495 1,773,230As of 31 Dec 2012, EKN's cash in bank balances consisted of SEK 770,658 thousand, of which SEK 689,068 thousandwas invested in an interest bearing account with the National Debt Office and SEK 81,590 thousand was invested in Swedishcommercial banks. Bank deposits in currency were equivalent to SEK 786,837 thousand.Note 14. EQUITY – Retained earningsIn the fiscal year 2011, EKN revised its accounting principles for provisions for unanticipated losses (concentration risk). Theyhave been transferred to equity and specified in the note below, which also shows the proportion of administrative excess.2012 2011Equity 12,193,477 10,322,050Equity administrative surplus 909,725 856,956Equity for concentration risks in commitment 6,629,000 6,858,000Equity for concentration risks in indemnified claims 33,000 38,000Equity for concentration risks in reinsurance –392,000 –330,000Profit for the year 2,114,860 1,628,196EQUITY 21,488,062 19,373,202Note 15. Loans for fixed assets, swedish national debt office (RGK)EKN's loan limit for fixed assets was SEK 6,700 thousand at 31 Dec 2012.2012 2011Opening debt 6,563 7,500Loan amount 0 0Amortization –2,363 –937CLOSING DEBT 4,200 6,56388

ACCOUNTING EKN ANNUAL REPORT 2012Compilation of material informationPURSUANT TO CHAPTER 2, SECTION 4 OF THE REGULATION ONANNUAL REPORTS AND BUDGETARY DOCUMENTATION(SEK m) 2012 2011 2010 2009 2008Loan limit at the National Debt Office forindemnifications, granted Unlimited Unlimited Unlimited Unlimited UnlimitedLoan limit at the National Debt Office forindemnifications, utilised 0 0 0 0 0Loan limit at the National Debt Office forfixed assets, granted 6.7 6.7 7.5 6.5 6.5Loan limit at the National Debt Office forfixed assets, utilised 4.2 6.6 7.5 3.2 1.7Future exposure = outstanding guarantees204,396 210,398 201,448 147,152 105,407Premium income 1,803 1,665 2,846 2,861 525Profit for the year 2,115 1,628 1,311 1,102 1,210Retained earnings 19,373 17,745 16,434 15,332 14,122Number of full-time employees 131 129 126 129 115Average number of employees 150 153 148 138 131Running cost per full-time employee, in SEK thousand 1,529 1,509 1,490 1,265 1,20989

ACCOUNTING EKN ANNUAL REPORT 2012Statutory limit and utilisationRefers to guarantee amounts inSEK mExport credit guarantees 31 Dec 2012 31 Dec 2011 31 Dec 2010 31 Dec 2009 31 Dec 2008The highest payment liability permittedby the Swedish parliament 500,000 500,000 500,000 350,000 200,000Authorisation given to EKN by thegovernment 500,000 500,000 500,000 350,000 175,000Outstanding guarantee exposure(guarantees and offers) 274,747 281,186 304,879 264,162 150,786Investment guaranteesThe highest payment liability permittedby the Swedish parliament 10,000 10,000 10,000 10,000 10,000Authorisation given to EKN by thegovernment 10,000 10,000 10,000 10,000 10,000Outstanding guarantee exposure(guarantees and offers) 4,724 5,135 0 0 0Statutory limit for EKNThe Swedish parliament decides the maximum amount for which EKN may commit theSwedish state to guarantees. Guarantees and binding offers are offset in relation to thelimit for the full amount, while non-binding offers are offset in relation to the framework by50 percent.The limit for export credit guarantees was expanded to SEK 500 billion, from the previousSEK 350 billion on 1 January, 2010. The amount the government authorised for EKN touse is SEK 500 billion.At the end of the year, EKN had utilised the limit by SEK 275 billion. At the same time lastyear the limit utilisation was SEK 281 billion.For investment guarantees there is a special limit for SEK 10 billion. At year end, it hadbeen utilised by SEK 5 billion and the utilisation was broadly unchanged from last year.90

§ACCOUNTING EKN ANNUAL REPORT 2012Possible developments in Burma/Myanmar.91

ACCOUNTING EKN ANNUAL REPORT 2012Risk managementEKN covers political and commercialevents that lead to payment default in thetransactions that are guaranteed. Countryrisk and credit risk serves as a comprehensiveconcept for these risks. Country risksare risks in the state's economic, financialand political environment that could lead topayment default. Credit risk is the uncertaintyof whether a buyer is willing andable to pay. Both of these risks could leadto the exporter or the financing bank notbeing paid.The portfolio of outstanding guaranteesis concentrated to certain companies,industries, countries or time periods. Thefact that the portfolio has concentrationsmeans that losses over a period of time maybe significantly higher or lower than thoseanticipated. In addition, there are currencyrisks and interest rate risks in EKN'sguarantees, and operational risks in theoperations.Risk assessmentIn EKN's risk assessment, the country riskis assessed along with the buyer's abilityand willingness to pay the underlyingguaranteed transaction. This is carried outaccording to EKN's credit policy.At EKN there is a delegation process fortransaction decisions from the Board tothe Director General and further down theorganisation. Based on the assessed level ofrisk in the transaction and the guaranteedamount, the transaction is analysed in severalinstances before a decision is made, incommon with other financial organisations.EKN's values its outstanding guaranteesquarterly to give a true and fair view of therisks in the portfolio. All transaction risksare reassessed in the light of new informationabout the company, country andbusiness. In addition, EKN has an annualplan for in-depth reviews of major transactionsand problem transactions in order tomonitor developments in the transactionsas a way of acting in a timely manner in theevent of any problems.Risks in the guarantee portfolioEKN's portfolio of guarantees includeconcentrations for companies, industries,countries and time periods. This is a consequenceof the task of promoting Swedish exports,which means that EKN manages therisks that Swedish exporters need protectionfrom. The risk at portfolio level is managedin accordance with the set PortfolioPolicy approved by the Board of Directors.EKN calculates the unanticipated loss tothe portfolio in order to manage these concentrationrisks, for example, by reinsuringtransactions. EKN makes these calculationsusing a proprietary model. The unanticipatedlosses are calculated in a “settlementscenario” over a twenty year horizon, i.e.where no new guarantees are issued and nonew premiums are paid to EKN either. Thecalculation of the capital requirements ismade with a confidence level of 95 percent,in order to clearly identify the risks thatthe agency capital is to act as a buffer for.The portfolio calculations are used regularlyin financial statements and to notifymanagement and the Board about the risksin the existing portfolio.Financial risksEKN manages assets of SEK 22.5 billion.These assets are managed in accordancewith a financial policy adopted by theBoard. The goal for financial management92

ACCOUNTING EKN ANNUAL REPORT 2012is to achieve a return in line with sovereignsecurities in the corresponding currency.EKN's results are affected by the Swedishkrona, particularly in relation to the USdollar and the Euro, as two-thirds of EKN'sguarantees are in these two currencies.For the purpose of minimising currencyimpacts on its earnings, EKN holds assetsin currency equal to the actuarial liabilityin the respective currency. EKN's result isalso affected by changes in interest rates invarious currencies. EKN tries to minimisethe interest rate risk by matching the maturityof assets with the liabilities in eachguarantee currency.The assets in Swedish krona are investedin the National Debt Office, either as fixedinterest investments or on demand. Foreigncurrency assets are invested in governmentsecurities, government-guaranteed bonds orbonds issued by international financial organisations,such as the Nordic InvestmentBank or the European Investment Bank.Operational risksAccording to the government Ordinance(1995:1300) on Risk Management forNational Authorities, EKN must identify,analyse and evaluate operational risks.EKN's functions for compliance and securitycoordination are responsible for thesystematic work involved in operationalrisks. EKN's work is based on an updatedrisk and vulnerability analysis, and EKNmonitors and complies with the requirementsset by the authorities.Compliance monitors that the operationscomply with national and internationallaws, and rules and agreements that governEKN. Compliance must assist in ensuringa satisfactory internal control and ensurethat the operations comply with EKN'sinternal regulations. Compliance reports tothe Director General. The responsibilitiesalso include the development of guidance,training and audits, as well as beingresponsible for and ensuring a uniformapplication in matters concerning publicityand privacy.In 2012 a process of building up systematicsecurity management in EKN began.During the year, a risk and vulnerabilityanalysis has been conducted, which includesthe operational risks. This analysisresulted in an action plan with suggestionsfor improvements to be implemented in2013.93

ACCOUNTING EKN ANNUAL REPORT 2012Audit reportReport on the Annual ReportThe Swedish National Audit Office has audited EKN’s annual report for the 2012 fiscalyear, as adopted on 11 February 2013.Responsibility of Executive ManagementExecutive Management of the agency is responsible for preparing an annual report thatgives a true and fair picture of the agency’s financial position and results of its operationspursuant to the Annual Reports and Budget Documentation Ordinance (SFS 2000:605) andin accordance with instructions, appropriation directions and other decisions pertainingto the agency. Management is also responsible for internal controls and other controls itdeems necessary for the preparation of annual financial statements that are free of materialmisstatement, whether due to malpractice or error.Auditor’s responsibilityThe Swedish National Audit Office is responsible for expressing an opinion on the annualfinancial statements based on our audit. The Swedish National Audit Office has conductedthe audit in accordance with International Standards of Supreme Audit Institution forfinancial audit. Those standards require that we follow business ethics requirements andplan and perform the audit to obtain reasonable assurance that the annual financial statementsare free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and otherdisclosures in the annual financial statements and assessing management’s compliancewith applicable regulations and special decisions in its administration. The Swedish NationalAudit Office decides which measures are to be carried out, including an assessmentof the risk of material misstatement in the annual financial statements, whether due tomalpractice or error. In this risk assessment, the auditor takes into consideration areas ofinternal controls which are relevant to the agency’s preparation of annual financial statementsthat give a true and fair picture of its financial position and results of operations.The aim is to apply auditing measures that are appropriate to the circumstances but notto express an opinion about the efficiency of the agency’sinternal controls. An audit also includesassessing the accounting principles used, and their application by management, andsignificant estimates when preparing the annual financial statements, as well as evaluatingthe overall presentation of information.The auditors of the Swedish National Audit Office believe our audit provides a reasonablebasis for the opinion set out below.94

ACCOUNTING EKN ANNUAL REPORT 2012OpinionThe annual accounts, in all respects, give a true and fair view of the Swedish Export CreditsGuarantee Board’s financial position at 31 Dec 2012 and of the results of its operationsand financing for the year, in accordance with the Annual Reports and Budget DocumentationOrdinance (SFS 2000:605), instructions, appropriationdirections and other decisionspertaining to the agency.Stefan Andersson (auditor director) had right of decision in this case.Annika Karlsson was appointed to present the report.Stefan AnderssonAnnika KarlssonCc for information:The Swedish Export Credits Guarantee BoardMinistry for Foreign affairsMinistry of Finance, Budget Department95

ACCOUNTING EKN ANNUAL REPORT 2012Board of directors96

ACCOUNTING EKN ANNUAL REPORT 2012Jan Roxendal, ChairmanFormer CEO of Intrum Justitia, Vice CEO of ABBGroup Executive, CEO of ABB Financial Services.Elected chairman in 2010.Karin ApelmanEKN's Director General. Board Member since 2002and was appointed Director General of EKN in 2007.Göran Johnsson, First Deputy ChairmanFormer General Secretary of the Swedish industrialworkers' union IF Metall. Board Member since 2005.Minoo AkhtarzandCounty Governor of Jönköping. Board Member since2010.Andreas SkinnarsHead of Marketing and Sales at Business Sweden.Board Member since 2007.Kerstin Nordlund MalmegårdDeputy Director of Foreign Affairs and Deputy Headof Promotion and the EU's internal market. BoardMember since 2010.Eva KarlssonCEO of Herrljunga Packaging AB. Board Membersince 2010.Yvonne GustafssonDirector General of the State Treasury. Board Membersince 2006.Bo Lindgren, Employee representativeWorks in the customer team; power, defence andfacilities. Employed at EKN in 1988 and has been astaff representative on the Board since 2008.William Farlow, Employee representativeWorks at Risk Advisory and CSR. Employed at EKNin 1985 and has been a staff representative on theBoard since 2008.Inger Dovlin and Gia Wickbom are new to the Boardin 2013. Inger Dovlin has extensive experience inexport finance with a background as a director atEricsson and Nordea. Gia Wickbom is an assistantunder-secretary at the Swedish Ministry of Finance.In 2012, Wilhelm Alstermark and Peter Sandewallresigned.97

ACCOUNTING EKN ANNUAL REPORT 2012Executive managementBeatrice Arnesson, Head of Communications. Anne Abrahamson, Head of Planning and InternationalCooperation. Karin Apelman, Director General. Gun Lidholm, HR Manager. Patrick Nimander, CFO.Margaretha Bergman, Acting Head for the Small and Medium-sized enterprises business area. HelénSeemann, Head of the Large Corporates business area. Stefan Karlsson, Head of Risk Advisory and CSR.98

Production: EKN and Gracemill Communication.Graphic design: Gracemill Communication.Cover photo: Spencer Rowell, Getty Images.Photo: Page 7: Lars Claesson. Page 11: Göran Wink. Page 13: Supri/Reuters/Scanpix. Page 15:Ashley Cooper, SpecialistStock/Scanpix. Page 16: Göran Wink. Page 18: Göran Wink. Page 19: DavidChang, EPA/Scanpix. Page 23: Lars Claesson. Page 24: Ericsson Inc. & Spencer Blatt, AFP/Scanpix.Page 26: Lars Claesson. Page 28: Gustav Lindh. Page 29: Gustav Lindh. Page 30: Pius Utomi Ekpei,AFP/Scanpix. Page 33: Biswaranjan Rout, AP/Scanpix. Page 34: Own image, EKN. Page 35: Ownimages, EKN. Page 39: Lars Claesson. Page 40: Divyakant Solanki, EPA/Scanpix. Page 42: LarsClaesson. Page 43: Lars Claesson. Page 44: Lars Claesson. Page 45: Lars Claesson. Page 46: LarsClaesson. Page 47: Lars Claesson. Page 48: Lars Claesson. Page 51: Stefan Bergkvist. Page 52: LarsClaesson. Page 53: Lars Claesson. Page 54: Lars Claesson. Page 55: Lars Claesson. Page 56: MarkLennihan, AP/Scanpix. Page 60: Divyakant Solanki, EPA/Scanpix. Page 62: Vahid Salemi, AP/Scanpix.Page 65: Reuters/Scanpix. Page 66: SIPA/Scanpix. Page 69: Nacho Doce, Reuters/Scanpix. Page 79:Norberto Duarte, AFP/Scanpix. Page 91: Lynn Bo Bo, EPA/Scanpix. Page 96: Lars Claesson. Page 97:Lars Claesson. Page 98: Lars Claesson.Printing: Åtta.45Paper: Maxioffset99

Environmental certified printed matter 341 001 Gracemill Communication 2013-02EKN – creating confidence in your exportsEKN is a government agency that supports Swedish exportsand the internationalisation of Swedish industry. This we doby offering exporting companies and banks guarantees forpayment and financing, together with advice on businessstructure and risk management. Our services provide anextra level of confidence, increased competitiveness andmore opportunities for successful export transactions.The Swedish Export Credits Guarantee BoardKungsgatan 36, Box 3064, SE 10361 Stockholm, Sweden | Tel +46 8-7880000 | www.ekn.se100

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