Report of the Board of Directors

During the past year there were some positive signs of economic growth in the USA and also of gradual recovery in Europe. However, the slowing down of the Chinese economy and the recession in Russia and, for example, in Brazil also reduced Finnish companies’ opportunities for growth. Growth was also hampered by our weak cost competitiveness and the time-consuming adjustment to the change in the structure of our industry.

The subdued outlook for exports and low spirits on the domestic market kept the demand for SME financing for investments modest. In contrast, financing for working capital and credits for changes of ownership were in great demand. In exports, shipbuilding orders were the biggest single factor increasing the demand for financing. In fact, Finnvera’s risk-taking played a central role in securing the record-high volume of orders for the Turku shipyard. Finnvera’s contribution was also needed in some other large export projects. Strict bank regulation has kept banks’ interest in long-term financing of exports low. In consequence, such financing has largely been left for national export finance institutions.

During the period under review, Finnvera played a major role in managing financing tasks that were also important for the national economy. The rapid rise of the shipbuilding industry, investment in the bioproduct mill in Äänekoski, and participation in important ownership arrangements were good examples of these. In all, Finnvera’s services affected the day-to-day lives of thousands of entrepreneurs and small and medium-sized enterprises by opening up new opportunities for them.

Finnvera revised and developed its operations briskly, in line with its strategy. This was seen, above all, as active work with clients. At the same time, service processes were made more efficient alongside digitisation and the establishment of the Credit Decision Unit and the Service Production Unit. New financing instruments were adopted successfully. These included the financing of SMEs larger than the EU’s definition of an SME, participation in financing by means of bond subscriptions, and the possibility to provide export credit guarantees for long-term bank loans that are used to finance domestic purchases of machinery or equipment aimed at exports.

Finnvera is an active Team Finland actor and, together with the other actors in the network, provides financial services for enterprises seeking growth through internationalisation. Cooperation will become even closer in autumn 2016 when Finnvera, Finpro and Tekes move to joint premises in Ruoholahti, Helsinki. Finnish Industry Investment Ltd will follow suit at the start of 2017.

 A new refinancing guarantee adopted

As from 1 May 2015, Finnvera has been able to guarantee the refinancing of export credits. The Refinancing Guarantee is a specific guarantee used to arrange financing for export trade. Its purpose is to facilitate the funding of export credits granted to buyers. Finnvera can grant the guarantee, for instance, to an institutional investor that refinances an export credit given by a bank. The guarantee can also be utilised in the financing of domestic investments that benefit exports.

Finnvera involved in important projects

Finnvera participates in the financing of two cruise vessels, Mein Schiff 7 and 8, ordered by TUI Cruises GmbH and built at the Turku shipyard of Meyer Turku Ltd. Finnvera provides guarantees for the pre-delivery financing granted to the shipyard and for the post-delivery financing granted to the buyer. Finnvera’s commitments on behalf of the shipowner will rise at most to about EUR 2 billion. After these orders for ships placed by TUI Cruises GmbH, Finnvera’s commitments for the financing of Meyer Turku Ltd can rise at most to about EUR 850 million.

Finnvera is participating in the financial arrangements for the world’s first bioproduct mill, to be constructed by Metsä Group in Äänekoski, Finland. Valued at EUR 1.2 billion, the investment project is the largest ever carried out by the forest industry in Finland. Finnvera provides guarantees for about half of the debt needed for equipment purchases from Finland. Finnvera’s guarantee covers 80 per cent of a credit of EUR 400 million. Apart from Finnvera, six commercial banks, the Swedish Export Credits Guarantee Board (EKN) and the European Investment Bank are also participating in the financial arrangements. The project will have a positive impact on Finnish exports, as it is expected to boost exports by EUR 0.5 billion annually. The investment also has substantial effects on employment.

During the year, Finnvera granted financing for many important enterprise and financial arrangements that were carried out in client enterprises and had, among other things, extensive impacts on employment.

Finnvera issued two loans

In May Finnvera issued a 10-year note of USD 500 million, and in September a 7-year note of EUR one billion. The notes have a fixed rate.

Finnvera uses the funds acquired both for SME financing and for financing export credits. By means of currency and interest rate swaps, Finnvera converts the funds acquired into euros or US dollars, depending on the final use of the funds.

The Government Programme sets new tasks for Finnvera

The Government Programme mentions several new tasks assigned to Finnvera. During the year, Finnvera made preparations for the adoption of a mezzanine financing instrument, known as junior financing, that supports the growth of SMEs and mid cap companies. In consequence, the Government decided on 17 December 2015 that Finnvera can grant a maximum of EUR 300 million for junior loans within a period of three years, and that the State will compensate Finnvera for 75 per cent of any losses arisen from these loans in all of Finland.

Preparations were made with the Federation of Finnish Enterprises to launch a financing programme for changes of ownership. In addition, possibilities of utilising the European Fund for Strategic Investments (EFSI) were charted in the financing of SMEs.

Maintaining export financing at the same level as in the principal competitor countries requires that Finnvera’s authority to grant financing be raised. The issue was discussed with the Ministry of Employment and the Economy. As a result, the Government presented a Bill for the necessary legislative amendments on 17 December 2015.

Team Finland developed its services

During the period under review, the Team Finland network developed its domestic services for enterprises seeking growth through internationalisation. Thanks to the new service model, enterprises receive the services of the network organisations in a uniform manner. The first changes visible to enterprises were the common service number and contact form. Services are improved by concentrating customer service and by deepening cooperation between the organisations in the management of client relations.  In regional activities, cooperation is conducted with local actors, such as regional development companies, chambers of commerce and the Federation of Finnish Enterprises. Thanks to the model, the entrepreneur need not have detailed information about the services of the various organisations.

Financial trend

The Finnvera Group in October—December 2015

The profit for the last quarter of 2015 was EUR 5 million. The profit was EUR 46 million, less than the profit for the previous quarter (51 million). The main factors affecting the smaller profit were the impairment losses on receivables and guarantee losses, which were EUR 33 million more than in the previous quarter. The increase in the impairment losses on receivables and guarantee losses between the two quarters was partly due to the reversal and reduction of impairment losses and provisions for losses, which took place in the previous quarter. Other factors decreasing the profit were the increase of EUR 12 million in losses on items carried at fair value and the increase of EUR 3 million in administrative expenses. The rise in administrative expenses was due to the accrual practices of personnel expenses and the timing of certain external services over the final months of the year.

The net interest income came to EUR 13 million in the last quarter. The net interest income declined by 12 per cent on the previous quarter, the reason being the fall in interest rates. The net value of the fee and commission income and expenses came to EUR 34 million, or about the same as in the previous quarter.

The Finnvera Group in January—December 2015

The profit for the Group in 2015 was EUR 111 million (100 million). This was 11 per cent better than the year before. The main factor improving the financial performance was the decrease of 57 per cent, or EUR 19 million, in the impairment losses on receivables and guarantee losses. In addition, the increase of 8 per cent in the net interest income and the rise of 3 per cent in the net value of fee and commission income and expenses improved the financial performance. The rise in the net interest income and in the net value of fee and commission income and expenses improved the result by a total of EUR 8 million.

The profit of the parent company, Finnvera plc, in 2015 stood at EUR 95 million (92 million). This was three per cent more than the year before. When divided between the business areas, the parent company’s financial performance was as follows: the profit for export financing was EUR 82 million (96 million) and that for SME financing EUR 38 million (6 million). In addition, the impairment losses recognised on investments, EUR 25 million (9 million), had an impact on the parent company’s profit.

The Group companies and associated companies had an effect of EUR 16 million on the Group’s profit (7 million). Venture capital investments accounted for EUR -24 million (-6 million) of this effect. Interest equalisation and the financing of export credits by Finnish Export Credit Ltd accounted for EUR 15 million (5 million). In addition, elimination of events between the Group companies had an impact on the Group’s financial performance.

Within the past few years, Finnvera’s outstanding commitments and their risk levels have risen significantly. In 2015, the risk level of outstanding commitments for SMEs and enterprises larger than the EU’s definition of an SME remained steady, but the overall risk level is still markedly higher than it was before the financial crisis and the subsequent recession. Risks associated with individual clients could be reduced during 2015. In export financing, no major losses have been recorded in recent years, nor have any major increases been made in provisions for losses when seen in proportion to all outstanding commitments. Altogether 43 per cent of commitments in export financing were either in category B1, which is close to investment grade, or in better categories. New risks were mostly taken in categories B1–B2.

Analysis of financial performance in January—December 2015

Interest income and expenses and interest subsidies

The Finnvera Group’s net interest income for January–December came to EUR 56 million. The net interest income was eight per cent greater than during the corresponding period in 2014 (52 million).

The interest subsidies paid by the State and the European Regional Development Fund (ERDF), and passed on to clients directly, totalled EUR 3 million, or nearly 50 per cent less than the year before. The granting of interest-subsidised financing ceased at the beginning of 2014. In consequence, the amount of interest subsidies during the period under review was smaller than before. The accumulation of interest subsidies will cease completely in the coming years when all interest-subsidised financing has been repaid.

Fee and commission income and expenses

The net value of the Group’s fee and commission income and expenses came to EUR 141 million (137 million). This was three per cent more than during the same period the year before. Underlying the rise in fee and commission income were some individual major export credit guarantees that came into effect, while the increased use of reinsurance protection had an impact on the rise in fee and commission expenses.

The gross sum of the fee and commission income totalled EUR 158 million (145 million). Of this, the parent company’s fee and commission income from export credit guarantees and special guarantees accounted for 74 per cent, or EUR 116 million, (106 million), while SME financing accounted for 26 per cent, or EUR 41 million (37 million). Finnish Export Credit Ltd’s fee and commission income from interest equalisation and export credit financing amounted to EUR 1 million (1 million).

The fee and commission expenses totalled EUR 17 million (8 million). The fee and commission expenses consisted mainly of reinsurance costs for policies taken out by the parent company, Finnvera plc.

Gains/losses from items carried at fair value

The Group’s losses from items carried at fair value totalled EUR 21 million (10 million). The change in the fair value includes the change in the fair values of liabilities, interest rate and currency swaps and venture capital investments, as well as exchange rate differences.

The fair value of venture capital investments is determined using a valuation method approved by Finnvera’s Board of Directors. It complies with the International Private Equity and Venture Capital Valuation Guidelines (IPEV) for early-stage enterprises (see Accounting principles). In accordance with the government’s policy guidelines, Finnvera will give up a major part of its venture capital investments. Finnvera has already initiated measures to this end. In consequence, when the fair value of venture capital investments is determined, attention is also paid to how the management of both Finnvera and its subsidiaries engaged in venture capital investment assess the fair value of the investments.

Other income

In January–December, the Group’s net income from investments totalled EUR 0.1 million (1 million). Other operating income totalled EUR 2 million (2 million), which comprised, among other things, rental income and the management fee paid by the State Guarantee Fund for managing the liability for export credit guarantees and special guarantees arisen prior to 1999.

Impairment losses on receivables, guarantee losses

The impairment losses on the Group’s loans, domestic guarantees, export guarantees and special guarantees, as well as the guarantee losses recorded, totalled EUR 97 million (98 million). The credit and guarantee losses realised totalled EUR 135 million (125 million), while the change in impairment losses on credits and in provisions for losses accounted for EUR -40 million (-13 million). The reason for the exceptional negative change in impairment losses on credits and in provisions for losses was that the impairment losses and provisions for losses recognised in previous years were either reversed or decreased.

The compensation paid by the State and the European Regional Development Fund for credit and guarantee losses in SME financing totalled EUR 83 million (64 million), or 64 per cent of the realised losses. Some large individual losses that were realised in January–December had an impact on the total compensation for credit losses. After the compensation for credit losses by the State, the Finnvera Group’s liability for the impairment and losses in the period under review was EUR 15 million (34 million).

Losses and provisions for losses in export credit guarantee and special guarantee operations totalled EUR 10 million in 2015 (-8 million).

Calculated according to the method harmonised at EU level, the net amount of doubtful receivables in SME financing stood at EUR 287 million at the end of December. When the impairment losses recognised are considered, doubtful receivables accounted for 8.3 per cent of the total outstanding commitments. The ratio of doubtful receivables to total outstanding commitments was 3.3 per cent, when the State’s compensation for credit losses – a reducing factor in SME financing – is also taken into account.

Operating expenses

The Group’s operating expenses, including personnel expenses and other administrative expenses, were EUR 44 million (41 million). Personnel expenses accounted for 69 per cent of operating expenses (69). The factors contributing to the increase in operating expenses on the previous year included the reorganisation and the associated development measures carried out.

Amortizations and other operating expenses in the Group amounted to EUR 7 million (6 million).

Long-term economic self-sustainability

In its operations, Finnvera is expected to attain economic self-sustainability. This means that the income received from the company’s operations must, in the long run, cover the company’s operating expenses. The period for reviewing self-sustainability is 10 years for SME financing and 20 years for export financing.

Self-sustainability in Finnvera’s SME financing has been attained over a period of ten years when the cumulative result is calculated up to the end of December 2015. Correspondingly, export financing has been economically self-sustainable during Finnvera’s 17 years of operation. Economic self-sustainability is also realised over a 20-year period if the payment-based result of Finnvera’s predecessor, the Finnish Guarantee Board, for its last years of operation is taken into account when reviewing the self-sustainability of export financing.

The extent and risk level of Finnvera’s outstanding commitments will have a significant impact on its financial performance and long-term economic self-sustainability in the coming years. In examining the financial performance, it is important to note that, at the end of December 2015, Finnvera’s total commitments for export credit guarantees and special guarantees amounted to EUR 17.4 billion and the exposure to credits and guarantees, as well as guarantee receivables, in the financing of SMEs and enterprises larger than the EU’s definition of an SME, stood at EUR 2.3 billion. Seen against these exposures, the net profit building a loss buffer on the balance sheet is now about 0.5 per cent at the annual level, and the equity is 6 per cent.

Balance sheet 31 December 2015

At the end of December, the consolidated balance sheet total was EUR 8,418 million (6,619 million), while the balance sheet total of the parent company, Finnvera plc, came to EUR 5,783 million (4,132 million). The consolidated balance sheet total increased by 27 per cent, or EUR 1,799 million, during 2015. Most of the increase stemmed from the financing of export credits carried out by the subsidiary Finnish Export Credit Ltd. At the end of December, the balance sheet total of Finnish Export Credit Ltd was EUR 4,350 million (3,425 million).

At the end of December, the Group’s outstanding credits came to EUR 5,347 million (4,593 million), or EUR 754 million more than at the start of the year. The outstanding credits of the parent company, Finnvera plc, came to EUR 2,772 million (2,193 million), of which the receivables from the subsidiaries totalled EUR 1,641 million (928 million).

The parent company’s outstanding domestic guarantees increased slightly during 2015 and totalled EUR 1,003 million on at the end of December (988 million).

The outstanding guarantee exposure, as defined in the Act on the State’s Export Credit Guarantees, totalled EUR 14,236 million at the end of December (10,755 million). Outstanding exposure arising from export credit guarantees and special guarantees (current commitments and offers given, including export guarantees) totalled EUR 17,436 million (12,600 million).

In accordance with the government’s policy guidelines, Finnvera will give up a major part of its venture capital investments. As a result, the shares of Finnvera’s subsidiary Seed Fund Vera Ltd in the parent company’s financial statements and, correspondingly, the assets and liabilities of Seed Fund Vera Ltd in the consolidated financial statements have been transferred to long-term assets available for sale. At the end of December, the long-term assets available for sale totalled EUR 102 million.

The parent company’s long-term liabilities as per 31 December totalled EUR 4,046 million (2,650 million). Of this sum, EUR 3,958 million (2,564 million) consisted of debt securities. The liabilities include subordinated loans of EUR 38 million received by Finnvera from the State for investment in the share capitals of Seed Fund Vera Ltd and Veraventure Ltd (36 million), and a subordinated loan of EUR 50 million granted by the State for strengthening capital adequacy (50 million).

At the end of December, the Group’s non-restricted reserves contained a total of EUR 871 million (756 million), of which the reserve for domestic operations accounted for EUR 136 million (135 million), the reserve for export credit guarantees and special guarantees EUR 536 million (436 million), the reserve for venture capital investments EUR 17 million (17 million) and retained profits for EUR 183 million (169 million).

To comply with the requirements of IAS 8 standard, the non-restricted reserves were adjusted during the second quarter of 2015. The reason for the adjustment was a system error affecting export credit guarantee income and reinsurance expenses, which meant that the figures for guarantee premiums and reinsurance premiums paid in advance for the previous financial periods and shown on the balance sheet were too high, EUR 53 million. The impact of the adjustment on the net value of the fee and commission income and expenses for the reference period of 1 January–31 December 2014 was EUR -1.4 million (see Accounting principles).

The reserve for venture capital investments, under unrestricted equity on the balance sheet, is used to monitor the assets allocated by the ERDF to venture capital investments.

Funding

In 2015, the Group’s long-term funding totalled EUR 1,827 million (2,036 million). EUR 603 million in long-term debt was repaid (529 million).

Capital adequacy

The Act on Finnvera (443/1998) stipulates that domestic operations must be kept separate from export credit guarantee and special guarantee operations. In consequence, losses from domestic operations are covered from the reserve for domestic operations, while losses from export credit guarantees and special guarantees are covered from the reserve for export credit guarantee and special guarantee operations. According to the Act on the State Guarantee Fund (444/1998), the State is responsible for export credit guarantees and special guarantees. Should the reserve for export credit guarantee and special guarantee operations lack sufficient assets to cover the losses incurred in the respective operations, the losses are covered from assets in the State Guarantee Fund, which are supplemented, whenever necessary, by an appropriation from the State Budget. The above separation prescribed by law, and the State’s responsibility for export credit guarantees, explain why Finnvera calculates its capital adequacy, i.e. the ratio between its commitments and assets, only for domestic operations.

According to the goal set by the State of Finland, the owner of Finnvera, the Group’s domestic operations’ capital adequacy ratio should be at least 12.0 per cent. Capital adequacy is calculated in accordance with the principles of the Basel III standard method. At the end of December, the Group’s domestic operations’ Tier 2 capital adequacy ratio stood at 19.6 per cent (18.6) while the Tier 2 capital adequacy of the parent company’s domestic operations, Finnvera plc, was 18.1 per cent (17.8). The Finnvera Group’s leverage ratio was 14.1 per cent at the end of December.

The Finnvera Group’s risk-weighted receivables totalled EUR 2,322 million at the end of December (2,349 million). Of these, loans and guarantees pertaining to business proper amounted to EUR 1,808 million (1,926 million), or 78 per cent of risk-weighted receivables. Most of the remaining receivables were associated with derivatives and the investment of cash assets. About 50 per cent of loans and guarantees consisted of a large number of individual commitments of under one million euros. Calculated according to the standard method, their risk weight was 75 per cent. The risk weight of other loans and guarantees was 100 per cent.

Risk position

At the end of 2015, credit and guarantee exposure for SMEs and enterprises larger than the EU’s definition of an SME totalled EUR 2.7 billion. The credit and guarantee exposure were slightly less than at the same time the year before. Demand for SME financing focused on working capital, and demand for financing for investments continued to be low. In 2013 and 2014, outstanding commitments fell by nearly EUR 400 million. Seen against this trend, the decline in outstanding commitments came to a halt.

In practice, the risk level of credit and guarantee exposure remained unchanged during the year when calculated using the so-called indicator of expected losses, which stood at 3.4 per cent of credit and guarantee exposure at year’s end. The overall risk level is still markedly higher than it was in 2008, before the financial crisis and the subsequent recession. The weak and uncertain general economic outlook and the risks associated with some individual major exposures have an impact on the risk level. In 2015, it was possible to reduce the risks pertaining to individual clients. This had a positive effect, for instance, on the amount of non-performing credits. No significant changes took place in the distribution of credit and guarantee exposure by risk category in 2015. As a result, there were fewer shifts to weaker risk categories than in the past few years.

Credit and guarantee losses and impairment losses totalled EUR 87 million. Although the gross amount of credit losses was at a high level, the share of losses at Finnvera’s own responsibility, remaining after the State’s compensation for losses, decreased markedly, in part because of incidental causes. The amount of new impairment losses at Finnvera’s own responsibility fell notably when compared against previous years.

At the end of 2015, credit and guarantee exposure for export financing, monitored by risk management, totalled EUR 17.0 billion. The ‘old liability’ under the State Guarantee Fund’s direct responsibility accounted for no more than EUR 3 million of this sum. Credit and guarantee exposure increased by EUR 4.8 billion during the year. At year’s end, a significant share of the current guarantees and binding offers was in the country risk categories 0 and 4. Most of the guarantees granted during the year were also entered into these categories.

The volume of enterprises’ commercial exposure, associated with export guarantees and special guarantees, rose by about EUR 4.6 billion during 2015, to EUR 15.7 billion at year’s end. The sectors with the highest exposure were telecommunications, shipping companies, shipyards, and the forest industry. These sectors accounted for a total of 84 per cent of corporate exposure. Altogether 43 per cent of the commitments were either in category B1, which is close to investment grade, or in better categories. New risks were mostly taken in categories B1–B2.

Guarantee losses totalled EUR 10 million in 2015.

The outstanding export credits provided by Finnvera's subsidiary Finnish Export Credit Ltd totalled EUR 4.2 billion at the end of December (3.3 billion). The outstanding loans include export credits financed both under the temporary system and the permanent system launched in 2012. The credit risks associated with the outstanding loans are fully covered by means of export credit guarantees granted by the parent company, Finnvera plc. These export credit guarantees are included in the above-mentioned guarantee exposure for export financing.

Finnvera’s investments in subsidiaries engaged in venture capital investments totalled EUR 173 million at year’s end. An additional investment of EUR 15 million were made in Seed Fund Vera Ltd using appropriations from the State Budget. Investments are distributed among numerous companies. This reduces the risk arising from the operations to the Finnvera Group. Owing to policy decisions made on venture capital investments, Veraventure Ltd exited from several investments in 2015.

Attainment of industrial policy and ownership policy goals

Finnvera’s operations are steered by the legislation on the company and by the industrial and ownership policy goals determined by the owner. Being responsible for the ownership and industrial policy steering of Finnvera, the Ministry of Employment and the Economy sets industrial and ownership policy goals for the company for a period of four years. Whenever necessary, the Ministry revises these goals annually.

Corporate governance

Personnel

At the end of the financial period, the Group had 396 employees (394). Finnvera plc had 381 employees (376), of whom 354 (358) held a permanent post and 27 (18) a fixed-term post.

The salaries and fees paid to the personnel totalled EUR 24 million for the Group (23 million) and EUR 23 million for the parent company (22 million).

Supervisory Board, Board of Directors and auditor

On 9 April 2015, Finnvera’s Annual General Meeting elected new members to the company’s Supervisory Board and Board of Directors.

The new members on the Supervisory Board are Mika Harjunen, Information Security Manager; Ann-Louise Laaksonen, Vice Chairman; Veli-Matti Mattila, Chief Economist; Hanna Sarkkinen, Member of Parliament; and Tommi Toivola, Senior Adviser, Financing.

Johannes Koskinen, Member of Parliament, was elected Chairman of the Supervisory Board. Koskinen resigned from membership and chairmanship of the Supervisory Board as of 1 September 2015, when he assumed the post of a Director in the European Bank for Reconstruction and Development. Lauri Heikkilä, Member of Parliament, continues as the Vice Chairman. The members continuing on the Supervisory Board are: Paula Aikio-Tallgren, Entrepreneur; Eeva-Johanna Eloranta, Member of Parliament; Lasse Hautala, Member of Parliament; Olli Koski, Chief Economist; Leila Kurki, Senior Adviser; Esko Kurvinen, Engineer; Anna Lavikkala, Labour Market Director; Lea Mäkipää, Member of Parliament; Antti Rantakangas, Member of Parliament; Osmo Soininvaara, Licentiate of Social Sciences; and Sofia Vikman, Member of Parliament.

The new members on the Board of Directors are Harri Sailas, B.Sc. (Econ.) and Antti Zitting, Chairman of the Board.

Markku Pohjola, B.Sc. (Econ.) continues as Chairman of Finnvera’s Board of Directors. Pekka Timonen, Director General, continues as the First Vice Chairman and Marianna Uotinen, Specialist Counsel, as the Second Vice Chairman. The members continuing on the Board are Kirsi Komi, LL.M., and Pirkko Rantanen-Kervinen, B.Sc. (Econ.).

KPMG Oy Ab was re-elected Finnvera’s regular auditor with Juha-Pekka Mylén, Authorised Public Accountant, as the principal auditor.

Strategic priorities for 2016

Finnvera allocates its financing so as to promote the growth and internationalisation of Finnish companies and offset market failures detected in enterprise financing. Domestic financing focuses on start-up enterprises and enterprises seeking growth through internationalisation. Finnvera participates actively in Team Finland cooperation and implements the objectives set for it. Finnvera continues to develop export financing so that Finnish exporters would have an internationally competitive system at their disposal. Operations are developed to enable efficient and rapid response to new challenges in enterprise financing.

Events after the period under review

In January 2016, the General Meeting of Shareholders of Seed Fund Vera Ltd approved the draft terms of demerger for the establishment of a new company called ERDF Seed Fund Ltd. All investments made using the assets of the European Regional Development Fund (ERDF), and all other assets and liabilities associated with ERDF activities, will be transferred from Seed Fund Vera Ltd to the new company. ERDF Seed Fund Ltd will start operations in April May 2016. Finnvera’s holding of the company will be the same as that for Seed Fund Vera Ltd, or 94.59 per cent.

Outlook for financing

Economic growth and investments are likely to remain at a low level in 2016, and SME financing continues to focus on working capital needs. However, it is expected that the increase in changes of ownership and the investments disclosed by large corporations will have a positive effect on the demand for SME financing. In addition, Finnvera’s new mandates and financing products support the rise in the volume of SME financing.

Financing solutions offered to buyers will continue to play a pivotal role in exports of capital goods sold by large corporations. It is expected that the demand for export credit guarantees and export credits will decline slightly from the previous year if no individual major orders are placed in 2016. Ships, telecommunications and the forest industry are still anticipated to account for the bulk of demand associated with large corporations’ exports.

According to the current estimate, the Finnvera Group’s financial performance for 2016 is likely to fall below that for 2015. The uncertainty factors associated with economic trends make it difficult to predict financial performance. If more risks are realised than has been anticipated, the situation may weaken considerably from what is projected.