- Highlights of the year
- A year of records
- EKN’s mission and objectives
- A year of financial crisis
- All markets and new requirements
- Sweden’s successful industries
- SMEs in more than 90 countries
- Risk exposure
- International cooperation
- Corporate social responsibility
- Employees
- Analysis of results
- Income statement
- Balance sheet
- Cash flow statement
- Accounting principles
- Notes
- Board & executive management
- Audit report
Accounting principles
Premiums
Premiums are normally charged when a guarantee is issued. For working capital financing and counter guarantees, premiums are charged at regular intervals. As a result, the income statement has been supplemented with estimated premium income for these guarantee types, and for binding offers.
These items are included in the balance sheet under the heading Receivables from guarantee holders. If the guarantee holder elects to pay premiums in arrears, the premiums are charged as payments fall due under the guaranteed credit.
The nominal premium in arrears receivable, after adjustment for present value and risk, is recognised as an asset under Receivables from guarantee holders. Newly recorded premiums in arrears, and any changes in previously recorded premiums in arrears, are recognised as premium income. Periodising the present value adjustment, plus any changes in discount rates, are reported under Other interest income.
Valuation of exposure
EKN’s fixed exposure is defined as outstanding
guarantees, newly due amounts
in problem transactions, notified postponements
and binding offers. The currency for
part of the long-term exposure remains
undetermined at the date of contract and is
thus booked in SEK.
The risk valuation of the outstanding exposure is based on the premium set for risks with a corresponding time to maturity at the time of the valuation. A deduction is made from that part of the premium estimated to represent administrative expenses.
For major commercial risks, EKN monitors the project development or company performance, and the premium which at the time of assessment was deemed to reflect the remaining risk. These valuations result in an estimated expected risk of exposure loss under normal circumstances. If part of the exposure has been reinsured, the reinsurer’s risk is estimated (see also Note 2).
As a large proportion of EKN’s exposure is concentrated to a limited number of
countries and counter-parties, losses on
these may be considerably more negative
than would normally be expected. Consequently,
special provision is made for
unanticipated
losses in the exposure. The
estimate is made on the basis of a fixed 95%
confidence level. The previously used term ‘risk concentration’ is now called ‘unanticipated
loss’.
Valuation of indemnified claims
The definition of outstanding claims is based on the indemnification amounts paid out by EKN. Deduction is made for amounts recovered or written off. Capitalised interest, overdue unpaid contractual interest and accrued contractual interest not yet due are added. Demands for penalty interest are not added to claims until the amount of the claim is agreed with the debtor.
Large commercial claims are investigated
and valued on a case-by-case basis. Valuation
of claims is made in phased 5% steps.
For claims against countries, the assessment
is based on the country’s debt burden,
its level of income, plus how well it has
managed its debt repayments. The assessment
also includes information on the
general risk level for the country and the
term of EKN’s outstanding claim. Other
supplementary information may include
any prospects of selling the claims or of
debt relief.
As with exposure, a specific reduction is made on the claim value, taking into account the fact that most claims are also concentrated on a limited number of countries, with a view to ensuring a 95% probability that the stated claim value will be realised.
Dealing with currencies
in the provisions
As a consequence of the fact that a large proportion of the exposure is in foreign currencies, changes in the provisions consist to some extent of changes in exchange rates. These changes are included in the amount that is reported under “Change in provisions for actuarially calculated risk in the exposure”. Changes in exchange rates, on the asset side and among other liabilities, are reported, under “Financial income and expense”.
Other valuation
The valuation of assets and liabilities in foreign currencies is done at the closing day rates. The valuation of other assets and liabilities, plus the periodising of accruals and deferrals of income and expenses, has been done in accordance with normal accounting practice.
Other
Long-term investments are investments with an original maturity exceeding one year. This is in accordance with Chapter 5, Section 1, of the Annual Reports and Budget Documentation Ordinance (SFS 2000:605).
Computers and other computer equipment are written off over 3 years. Other office fixtures and fittings are written off over 5 years.
In a decision dated 11 February 2003, the Swedish National Financial Management Authority granted EKN exemption from the stipulations in the Annual Reports and Budget Documentation Ordinance (SFS 2000:605) regarding the presentation of the income statement, the balance sheet and the cash-flow statement.
In accordance with the Terms of Reference for 2009, EKN is exempted from Section 23 of the Capital Procurement Ordinance (SFS 1996:1188).