exploreexport 2014 - finance considerations seminar

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ExploreExport

2014

Murrayfield Stadium

Edinburgh

Monday, 10 November 2014

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Finance

Considerations

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Jon Boyce

Senior Specialist Export Finance Adviser for the

Northern Regions

UK Export Finance

Welcome & introduction

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Joanne Hills

Solutions Delivery Manager, Trade & International

Transaction Services UK

The Royal Bank of Scotland

Types of debt funding available

The route to growth Supporting your international ambitions

www.rbs.co.uk/international

Support, wherever in the world you do business

• An on-the-ground presence in over 30 countries, including 10 in Asia

• Partner banking arrangements in an additional 24 countries

Doing business internationally - Everything you need Your opportunities – our solutions

Ian Burns

International Trade Director, Global Trade and

Receivables Finance

HSBC

Types of debt funding available

Ian Burns – HSBC

International Trade Director, Global Trade and Receivables Finance

ExploreExport - Finance Considerations

Date: Monday 10 November 2014

PUBLIC

Support for International Business

PUBLIC

Ian Burns (International Trade Director, HSBC)

http://www.business.hsbc.co.uk/

https://www.knowledge.hsbc.co.uk/

https://globalconnections.hsbc.com/

• UK Trade & Investment

• Export Credit Agencies

• Chambers of Commerce

• HM Revenue & Customs

• British Business Centres

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Anne Featherstone

Investment Specialist

Scottish Investment Bank

&

Catriona McCracken

Transaction Manager

Scottish Investment Bank

Access to Equity Finance & Finance Readiness

Scottish

Investment Bank -

Overview

November 2014

Remit

• Support the development of Scotland’s private sector SME

funding market to ensure that both early stage and

established SMEs with growth and export potential have

adequate access to growth capital

Rationale

• To address specific market failures/gaps in the growth capital

market for this cohort of companies where intervention will

have a demonstrable positive impact

SIB Overview

Some of SIB’s Current Interventions:

• Financial Readiness Advice

• Suite of Equity Investment Funds

• Scottish Loan Fund

• Renewable Energy Investment Fund

• Investment into a Scottish Life Sciences Venture

Fund

SIB’s Equity Investment Funds

Partners introduce deals to SE to be

matched subject to diligence and

negotiation.

£500k - £2m £2m - £10m Scottish

Venture

Fund

Partners are vetted, the SCF will match

all qualifying investments from

registered partners subject to

eligibility.

£100 - £1m £500k - £2m Scottish

Co-investment

Fund

Targeted at early stage deals, external

investors usually required, debt and

equity options.

Up to £250k Up to

£500k+

Scottish

Seed Fund

Key Features SIB

Participation

Transaction

Size

Maximum transaction size £500k £2m £10m

SCF

Up to £1m

SVF

Up to £2m

SSF

Up to £250k

For all general

enquiries

telephone Scottish

Enterprise on

0845 687 8787

Contact Email -

SIBAdmin@scotent.co.uk

For more

information about

The Scottish

Investment Bank

visit

www.scottish-

enterprise.com/sib

Scottish Enterprise can also be

followed on Twitter at

twitter.com/Scottish Enterprise

Catriona McCracken

Transaction Manager catriona.mccracken@scotent.co.uk 0141 228 2022

Anne Featherstone

Financial Readiness Manager anne.featherstone@scotent.co.uk 0131 313 6066

Scottish Investment Bank

Scottish Enterprise

Atrium Court

50 Waterloo Street

Glasgow

G2 6HQ

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Jon Boyce

Senior Specialist Export Finance Adviser for the

Northern Regions

UK Export Finance

International Trade Finance & Export Insurance

UK Export Finance

Government Support to UK Exporters

Explore Export Event, 10th November 2014 Developing for our customers

19

Objectives

– Tell you who we are and what we do

– How we support UK exporters and how we assist

overseas buyers of UK capital goods/services

– How to contact us

20

Who we are in UK

UK Export Finance is the UK’s export credit agency

formally the Export Credits Guarantee Department

We complement the private market by providing

government assistance to UK exporters and investors, in

the form of insurance policies and also guarantees on

bank loans, performance bonds & confirmed Letters of

Credit

Provide Political Risk Insurance on overseas investments

Who we can support

Deals done range from +£25k on bank guarantees (smaller amounts considered on

export credit insurance Min premium £250, no lower limit)

Expanded remit to cover all sectors, goods & services not just capital goods and

capital services

Minimum UK content of 20%

Unconditional AA1 guarantee

21

Export insurance policy (EXIP)

Insures exporter against risk of not being paid or of not being able to recover

costs of performing export contract due to specified events

All sectors and up to 95% cover, No minimum contract value!

Can be introduced by a qualified credit insurance broker

Not for EU / rich OECD markets below 2 year risk horizon

Not whole turnover cover

It is conditional cover, so the terms of the policy must be met to have a valid

claim

Exporter completes application form and send to UKEF

22

EXIP Case Study – Flexal Springs

Company secured contract with Indian based Aerospace manufacturer however,

company concerned about their cash flow and getting paid on time

Insurance companies unwilling to take risk and provide export credit insurance. A

LOC arrangement was possible but far more expensive than export insurance

cover.

Nalin De Silva General Manager said that Flexal needed peace of mind that they

would be paid within a reasonable time frame

The EXIP policy gave the company an added degree of security

23

Contract Bond Support Scheme

Where a participating bank issues a contract bond (or indemnifies another bank

issuing the bond) for UK export contract

For advance payment, progress payment and all other performance bonds we

normally guarantee up to 80% of the bond

Exporter and Bank complete application form and submit to UKEF along with:

– Last 3 years accounts, cash flow forecast for project, Business

plan/forecast

24

Bond Support Case Study – Eduteq ltd

Secured large multi million contract in Africa that required a performance bond

however, there was insufficient security for their Bank to issue bond on their

behalf. The bond could have been cash backed however, that would have tied up

the company's working capital. UKEF provided Bank with bond guarantee

thereby reducing the banks risk and ensuring the company had sufficient cash to

deliver the contract

According to Chris Foster Operations Director, Eduteq is looking to expand

overseas sales by utilizing further UKEF support

25

Export Working Capital Scheme

We provide guarantees to banks to cover the credit risks associated with export

working capital facilities in respect of specific export contracts.

UKEF formally guarantees up to 80% of risk

Useful where a UK exporter wins an overseas contract that is higher in

value than is typical, or succeeds in winning more overseas contracts than

it has done before.

Last 3 years accounts,, cash flow forecast

Max term loan is 2 years, working capital facility to contract value is max 75%

26

Export Working Capital Case Study

UKEF’s Export Working Capital Scheme meant museum display case maker

Click Netherfield had enough working capital to sustain its contract and look for

further work overseas

The overseas contract was really good news for us. But the payment terms

agreed with the client meant that we would have had difficulty maintaining a

consistent cash flow over the period of the contract, which would have had an

impact both on this new project and on our work elsewhere.

Jim Stewart M.D

ClickNetherfield

27

Letter of Credit Guarantees

UKEF can provide 50-90% guarantee to a UK Bank on a confirmed letter of

credit The confirmed letter of credit gives exporter a double guarantee, one from

the Issuing Bank and a confirmed letter of credit from UK Confirming Bank.

With our guarantee, the UK Bank is able to confirm a letter of credit even if it

does not have the risk appetite on the foreign issuing Bank

The exporter is protected against a default of the foreign buyer and the foreign

bank

Bank makes application to UKEF

*Goods must touch UK shores!

28

Buyer/Supplier Credit, Direct Lending Facilities

UKEF provides a guarantee to Bank that makes a loan to an overseas

buyer for capital goods and/or capital services

Value of export contract on buyer credit facility is min £5M and covers capital

goods and services

Value of export contract on supplier credit facility is min £25K and covers capital

goods and services. UKEF may cover up to 85% of contract value

We can also look at providing guarantees under Bills of Exchange and

Promissory notes

Exporter makes application to UKEF

Direct Lending is where UKEF acts as a Bank and gives loan to buyer

29

TAKE YOUR BUSINESS FURTHER.

31

Jon Boyce Tel. 0141 228 2329 Mob. 07990 887852 Jon.Boyce@ukef.gsi.gov.uk www.ukexportfinance.gov.uk

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Q & A

Panel Session

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Book an appointment with an Export Advisor to get you started.

Email: international@scotent.co.uk

Telephone: 0800 0191 953

Events: http://www.scottish.enterprise.com/events

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NEXT STEPS – TALK TO SDI

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End of seminar

Thank you!