UK Export Finance (UKEF) has this week published its annual report and accounts showing £2.6 million of support provided to Welsh exporters, resulting in over £7.5 million worth of overseas sales.
Welsh companies supported by UKEF include Caerphilly-based Hobbs Valve, a market-leading supplier of specialist valves to the oil and gas and marine sectors.
When Hobbs Valve won a £2.2 million contract with a new buyer in Singapore and the buyer required a 3-year warranty, the company was able to get UK government backing for the deal. Due to the high value and long period of the warranty, the size of the deposit that would be required would have tied up significant cash for Hobbs Valve, which it importantly needed for paying suppliers and financing its other business operations.
UKEF provided Hobbs Valves’ bank a guarantee for 80% of the bond value, enabling the company to take its first steps into a new market, and start a valuable new relationship with an important customer.
Anthony Foley, Financial Controller at Hobbs Valve said:
“UKEF’s support helped us overcome a barrier that could have limited our competitiveness and ambitions. Their ability to use the strength of the government’s balance sheet to support access to finance or financial guarantees boosts our confidence in our export growth potential.”
Matthew Hughes, Export Finance Manager for Wales said:
“UKEF’s results demonstrate our ongoing commitment to making exports happen and to finding innovative ways to meet a broader range of exporter needs. More importantly, they highlight the growing international demand for UK goods and services and the willingness for UK businesses to meet that demand.”
UKEF’s national results for 2016/17 show that it provided £3 billion of support across the UK – a 60% increase on 2015/16 – for exports to 63 countries, with 79% of the UK exporters benefiting from this support small and medium-sized enterprises. UKEF also lent a record £305 million directly to infrastructure and energy projects.
This week, UKEF also published its Business Plan for the next three years, which identifies a number of concrete measures that will help more UK exporters and their suppliers benefit from UKEF support, including a partnership with banks to deliver support directly to their trading customers announced last week.
The plan also states that UKEF intends to use the draw of its financing to create procurement opportunities for smaller companies in the UK supply chain, incentivising overseas buyers to look to the UK to source goods and services.
Rt Hon. Greg Hands MP, Minister for International Trade, commented:
“This government is putting export finance at the heart of trade promotion, and UKEF’s 2016/17 results show that the UK’s world-leading exporters are supported by a world-leading export credit agency as they look to succeed in a global marketplace. And UKEF’s new Business Plan is a clear statement of intent: Britain is open for business, and we want to help even more companies realise the world of opportunity out there.”
UKEF’s Business Plan builds on the Autumn Statement 2016 announcement of significant increases to UKEF’s capacity and flexibility. UKEF’s total risk appetite doubled to £5 billion and the maximum cover limit for individual markets increased by up to 100%, potentially resulting in as much as £2.5 billion of additional capacity to support exports to some markets. The number of pre-approved local currencies in which UKEF can offer support also increased from 10 to 40, enabling more overseas buyers of UK exports to buy British and pay in their own currency.
National business highlights across the UK in 2016/17 noted in the annual report included:
- A year of innovations:
- UKEF made the first ever export credit loan to the Kurdistan Regional Government
- It introduced a market-leading local currency offering of 40 local currencies
- It was the first European ECA to support an upstream oil and gas development transaction through a hybrid finance structure comprising both project finance and reserve-based lending
- UKEF supported the construction of Bee’ah’s headquarters in Sharjah, designed by the late Dame Zaha Hadid, the world-renowned British architect
- UKEF connected lead UK contractors for large infrastructure projects with over 350 UK companies, increasing the total UK contribution to overseas projects
- UKEF reintroduced cover after a 20 year hiatus for UK companies seeking to compete for business in Argentina, with £1 billion of support made available
- UKEF directly helped 221 companies make their exports happen this year, 79% of which were small and medium-sized enterprises
- Through its trade finance products designed to help smaller exporters, UKEF supported £585 million of export contracts
The full documents can be downloaded below: