MANAGEMENT OF STATE GUARANTEES

ACTIVITY REPORT

2 013

MANAGEMENT OF

STATE GUARANTEES

2

CONTENTS

03

PROFILE

04

CEO’S MESSAGE

06

OUR ASSIGNMENTS

Coface State guarantees: French export credit agency

09 OUR COMMITMENTS

Environmental and social

10

INTERNATIONAL COOPERATION

Interacting and sharing to make progress

11

PARTNERS

An extensive, active network

13

CLIENTS

Targeting maximum satisfaction

15

OUR PRODUCTS, A RANGE ADAPTED

TO THE NEEDS OF OUR CUSTOMERS

Credit insurance

Foreign Investment Insurance

Market survey insurance

Bonds and working capital guarantee

Exchange risk insurance

3

COFACE

Historic manager of State guarantees

Since 1946, Coface has managed State guarantees on behalf of, and with the guarantee of,

the French State with the aim of promoting, supporting and securing French exports for

medium and long-term export credit and investments abroad.

Within this framework, Coface offers a wide range of insurance products to cover risks

that cannot be covered by the private sector. They benefit French companies carrying out

markets surveys, that have products or services to export or that are investing abroad.

Profile

¤7.1

billion

—

of contracts covered

by credit insurance

93%

—

of the companies are satisfied or very satisfied

with the services provided by Coface

300

—

employees

11,000

—

companies use market

survey insurance

2,000

—

guaranteed bonds currently

in force

4

CEO’s Message

INTENSE ACTIVITY

The activity that Coface manages on behalf of the State was intense, against a background of increasingly complex projects and ever-increasing numbers of applications from small and medium-sized companies, acute international competition, and the continually forceful policies of the other export credit agencies.

Export contracts secured in credit insurance in 2013 totalled ¤7.1 billion, with the development of increasingly complex transactions. The appeal for bonds and working capital guarantee continued its upward movement (+ 10% in the number of applications compared with 2012). Exchange risk cover is attracting increasing numbers of SMEs and rate of applications converted into approvals remains high: 85% (against 79% on average over the last five years). At year-end 2013, 11,095 companies made use of the market survey insurance to launch their business abroad, an increase of 20% compared with the end of 2012.

MEETING CLIENTS EXPECTATIONS

The public short-term credit insurance facility for exports to Greece, set up by Coface as requested by the State, to take account of the needs expressed by French exporters, recorded a cumulative outstanding of nearly one million euros. This temporary facility should be replaced by a per-manent scheme like the Cap and Cap + export type (trialled between 2009 and 2011).

Under the impetus of the French government, the creation of Bpifrance Export helped strengthen and clarify the de-velopment of State guarantees for small and medium-sized companies. Within the framework of this partnership, the State guarantees development managers are now installed in the premises of the regional Directorates of Bpifrance, form-ing a centralised hub for the distribution of export supports. Distribution based on regional Bpifrance offices provides an opportunity to serve small and medium-sized companies on a wider scale which represent more than 90% of the customers of Coface State guarantees.

NEW PRODUCTS

2013 was also rich in new product developments: exten-sion of Unconditional Pure Cover for other types of aircraft than Airbus, implementation of an enhanced guarantee to facilitate the financing of exports by enabling banks to

get some refinancing from specific organisations for the buyer credits they give, or raising to 100% of the cover-age of rediscounted supplier credit for companies whose turnover doesn’t exceed 150 million euros.

A CONTINUOUSLY IMPROVING ORGANIZATION

In terms of organization, the State guarantees Directorate has consolidated its process of improving efficiency, leading to a revised organisational structure better suited to the needs of the customers and to the management of trans-versal activities. Our ultimate goal is to simplify procedures and come up with new products to meet exporters’ needs. More consistent targeting of companies (small and medium-sized companies/Key Accounts) to differentiate the needs of customers according to their maturity in terms of exports and the refocusing of market survey insurance was found to be effective, leading to strong growth in applications from small and medium-sized companies.

RECOGNIZED CUSTOMER SERVICE

The customer satisfaction survey of the first half of 2013 concluded that the high level of satisfaction was maintained: 93% of the companies were satisfied or very satisfied and 94% would recommend Coface.

Finally, the State guarantees Directorate also renewed its ISO 9001 certification as part of a process to ensure con-tinuous improvement and customer satisfaction.

2014: SIMPLIFYING PROCESSES

The State guarantees Directorate has undertaken a pro-cess to simplify its organizational and business propro-cesses in order to further improve its effectiveness in serving its clients. The development of State guarantees, underlined by the signing of the convention until 2015, illustrates the renewal of State’s confidence in our services and sets us specific targets, all of which are advantages allowing us to pursue our continuous improvement for the benefit of our customers. JEAN-MARC PILLU COFACE CEO

2013

AN INTENSE,

INNOVATIVE YEAR

5

2013 HIGHLIGHTS

• Establishment of the Sector Understanding on

Export Credits for railway infrastructure projects.

• Extension of the special financial provisions for

project financing operations in high income OECD

countries until 31 December 2014.

• Extension of the temporary short-term credit

insurance facility for Greece.

• Establishment of a KYC “Know Your Customer”

procedure in accordance with the provisions relating

to the regulation in force in the fight against money

laundering and terrorist financing.

• Participation in technical discussions amongst ECAs

on human rights, greenhouse gas emissions, etc.

6

Our assignments

OVERVIEW

State guarantees are governed by rules regard-ing the grantregard-ing and monitorregard-ing of guarantees and by specific principles. Furthermore, they have to be managed in strict compliance with the rules of the WTO, the European Union, and the OECD, the latter regulating environmen-tal and social issues amongst others. In order to deliver the best possible service to French companies wishing to export or invest abroad, Coface is increasing the number of coopera-tion agreements signed with its counterparts all over the world.

APPLICATIONS

Coface processes applications sent to it directly by companies and/or banks, within the frame-work of the cover policy defined annually by the ministers for Economy and Finance. This allows its customers – the State, French companies and banks – to benefit from its expertise in risk analysis, insurance ratings, evaluation of French companies, foreign buyers and/or banks as well as environmental and social analysis.

DECISION

After processing applications, Coface submits a guarantee proposal to the Foreign Trade Guarantees and Credit Committee (Ministries of Economy and Finance) which decides on the outcome. However, it does have powers to cover certain applications, depending on the amount of the transaction, the duration of the credit or the premium category.

SIGNING AND MANAGING INSURANCE CONTRACTS

Coface issues insurance contracts in its own name, based on decisions made by the govern-ment or itself within the scope of its powers. It then manages the contracts – monitoring risks, drawing up contract amendments, processing claims, collecting outstanding debts, consoli-dating debts, etc.

ACCOUNTING PRINCIPLES

The risks are borne by the State. All financial flows relating to State guarantees (premiums, indemnities and repayments) are recorded in the books and kept separate from Coface’s own accounts. Premiums and repayments received

OUR ASSIGNMENTS

COFACE STATE GUARANTEES:

FRENCH EXPORT CREDIT

AGENCY

Ethics are central

to our processes

An ethics charter governing State guarantees details the due diligence procedure that Coface must implement when granting and managing State guarantees.

FOCUS

7

by Coface are immediately paid into the State’s account. Indemnities are paid out by Coface from this same account.

A MULTILATERAL FRAMEWORK

State guarantees are managed in strict compli-ance with the international rules of the WTO, the European Union and the OECD. In the field of credit insurance, the European Un-ion defines the principle of subsidiarity limit-ing guarantees issued on behalf of the State against non-marketable risks (a communication from the European Commission distinguishes marketable and non-marketable risks). The OECD’s Arrangement sets out the guidelines for officially supported export credit. These guidelines are updated on a regular basis in line with developments in the world economy and international trade.

In addition to these European and international finance rules, Coface implements principles which are defined in close conjunction with the international institutions and based on regular consultation with civil society:

• Compliance with the environmental and so-cial standards set out in the OECD’s Common

Approaches on the Environment (see page 8). • Compliance with the OECD Guidelines for good conduct for multinational companies as part of their international business activities and guiding principles of the OECD.

• Commitment to sustainable lending: the OECD export credit agencies have developed a set of principles and guidelines to promote sustainable lending practices in the provi-sion of official export credits to low-income countries.

• Combating bribery: Coface has put in place anti-bribery measures (1997 OECD Anti-brib-ery Convention and 2001 action statement issued by the OECD’s Export Credit Group) to combat bribery of foreign public officials; this was incorporated into French law in articles 453-3 et seq. of the French Penal Code. The measures were strengthened in December 2006 when the OECD members adopted the council recommendation on bribery and of-ficially supported export credits.

The Convention between the french State and Coface

State guarantees are managed by Coface on behalf of and with the guarantee of the State, in accordance with articles L432-1 to L432-4 of the French Insurance Code.

They constitute one of the key components of the State’s policy to support the international development of all French companies and the banks that back them.

Coface is entrusted with managing these guarantees within the framework of an agreement drawn up with the State. This agreement, which has been renewed for the period 2012-2015, sets out specific quantitative targets. It also lays down quality criteria to be met by Coface in the provision of services to companies, on which Coface’s remuneration is based. Lastly, it sets out specific ethical standards (such as equal rights to government guarantees for all French companies), rules governing communications in respect of its public service role and the requirement for a distinction to be made between the activities that Coface manages on behalf of the State and those conducted on its own behalf.

8

ENVIRONMENTAL AND SOCIAL ANALYSIS

For every credit insurance project or invest-ment over ¤10 million and/or located in a sensi-tive area, Coface conducts an environmental and social due diligence, in line with the OECD Recommendation on Common Approaches for officially supported export credit and envi-ronmental and social due diligence, signed by all member countries, most recently revised in 2012. This Recommendation is intended to ensure that projects supported comply with the local regulations of the host country and the relevant international standards, mainly those of the World Bank and the International Finance Corporation.

CLASSIFYING PROJECTS

The impact analysis process requires that the project be classified according to the signifi-cance of its potential impacts (category A, B or C) based on information supplied by the ex-port company when applying for the guarantee.

ASSESSING THE IMPACTS OF EACH PROJECT

A project is deemed acceptable if, after analy-sis, it is considered that the impacts are limited or properly controlled in accordance with local and international standards through appro-priate mitigation or compensation measures. Should this not be the case, special terms have to be laid down and Coface has to ensure that they are complied with throughout the dura-tion of the guarantee, by means of reports and, where necessary, site visits.

TRANSPARENCY

Coface publishes on its website (in the “State guarantees” section) information about envi-ronmental and social aspects of projects which could possibly have a significant impact, at least 30 days before the final decision is made. For projects over ¤10 million and/or located in a sensitive area, it publishes a description of the project and of its environmental and social aspects, once a final commitment has been made to the project.

OUR ENVIRONMENTAL

AND SOCIAL

COMMITMENTS

COFACE INTEGRATES ENVIRONMENTAL AND SOCIAL RISKS

IN THE PROJECTS IT MANAGES ON BEHALF, AND WITH THE

GUARANTEE OF, THE FRENCH STATE. ENVIRONMENTAL AND

SOCIAL STANDARDS ARE DEFINED IN CLOSE CONJUNCTION

WITH THE OECD COUNTRIES, BUT ALSO ON THE BASIS OF

INTERACTION WITH CIVIL SOCIETY.

E

9

A petrochemical complex

1. CLASSIFICATION: CATEGORY A

Information required: : an environmental and social impact study is provided for the project by its sponsors, along with a due diligence report drawn up by independent consultants with reference to international and local standards.

2. TRANSPARENCY:

• Ex ante: the environmental and social impact study is published on Coface’s State guarantees website at least 30 days before the final decision is made;

• Ex post: disclosure of information about the project regarding its category, impacts and compliance with standards, mitigating measures and monitoring;

• OECD reporting: information to the OECD members that the project is being underwritten.

3. MAIN IMPACTS:

• Impact on marine and terrestrial biodiversity;

• Impact on agricultural land and farming families;

• Impact on the local community, associated with the influx of workers.

4. EXAMPLES OF MITIGATING MEASURES REQUESTED:

• Review of biodiversity and

implementation of a management plan during construction;

• Creation of a compensation plan for social impact and monitoring by specialized consultants.

CASE STUDY

Production, storage and transport of electricity Telecom

Other

Dams, hydroelectric equipment and Civil engineering

Infrastructures Water and sanitation Hydrocarbons, petrochemicals Agrifood, forestry and agricultural industries Heavy processing industries

Mines and extractive industries

24 5 6 3 11 14 14 6 12 5

PROJECTS ASSESSED BY BUSINESS SECTOR IN 2013 (in %)

(126 projects were assessed in 2013)

PROJECTS ASSESSED BY CATEGORY IN 2013

A B C

60

40

20

0

50 57 19

10

International cooperation

Coface has signed cooperation agreements with most of the foreign credit export agen-cies, enabling it to support French exporters involved in contracts with a major proportion of foreign investment. This cooperation may take the form of co-insurance, joint insurance or reinsurance agreements.

In 2013, a Memorandum of Understanding was signed with the South Korean agency K-sure, in order to promote the exchange of information and cooperation between the two institutions. They have agreed to hold a bilateral meeting each year to share their experiences and prac-tices in credit insurance.

Reinsurance allows all aspects of a commercial contract to be covered in one single insurance policy, which is beneficial to both the exporters and buyers as it reduces the number of admin-istrative formalities. Coface’s three main part-ners in this field are, and have been for many years, Euler Hermes (Germany), UK Export Finance (United Kingdom), and Sace (Italy). Systematic use is now made of reinsurance for Airbus transactions, with Coface, Euler Hermes

and UK Export Finance taking turns to act as the principal insurer. It is also increasingly used with Sace for ATR transactions. In addition, cooperation should increase with the Russian agency Exiar and Sace in transactions involving the delivery of Superjet aircraft.

Since 2009, the value of reinsurance agree-ments (see table below) has grown signifi-cantly, particularly due to the large number of Airbus transactions subject to reinsurance agreements between Euler Hermes, UK Export Finance and Coface. In 2013, these accounted for almost 80% of the total number of reinsur-ance transactions. The energy and space sec-tors are also significant contribusec-tors to growth in the reinsurance business and account for almost 50% of the applications currently be-ing processed or in force, excludbe-ing Airbus transactions.

INTERNATIONAL

COOPERATION

INTERACTING AND SHARING

TO MAKE PROGRESS

HIGHLIGHTS

CHANGE IN THE NUMBER OF REINSURANCE OPERATIONS 350 300 250 200 150 100 50 0 2009 31 135 2010 21 184 2011 29 238 2013 17 316 Pending In force 2012 30 267

BREAKDOWN OF THE CIVIL REINSURANCE PORTFOLIO BY GEOGRAPHICAL REGION1_{(in %)}

Asia/Oceania Europe Middle East America Africa 16 4 22 31 27

1) Operations pending and in force at 31 December 2013.

IN ORDER TO DISSEMINATE AND SHARE BEST PRACTICES, COFACE REGULARLY

EXCHANGES WITH EXPORT CREDIT AGENCIES IN OTHER COUNTRIES,

ESPECIALLY DURING THE MEETINGS AND SEMINARS OF THE BERNE UNION BUT

ALSO AT BILATERAL MEETINGS.

332 reinsurance

applications being

processed

Memorandum of

Understanding signed

with K-sure (South

Korea)

4 bilateral meetings

with German,

Canadian, Korean

and Japanese

counterparts

Reinsurance is the

most commonly

used method of

cooperation

11

“BPIFRANCE EXPORT” PARTNERSHIP

At the initiative of the State, the label “Bpi-france Export” has been created for the offers and promotional activities of the 3 operators, Bpifrance, Ubifrance and Coface.

As part of the rational development of public support for financing export desired by the State, Coface has approached Bpifrance, whose main asset is its network of several hundred regional business managers.

During the second half of 2013, State guarantees development managers were repositioned in the regional directorates of Bpifrance located in Bordeaux, Clermont-Ferrand, Dijon, Greno-ble, La Défense, Lille, Lyon, Marseille, Nancy, Nantes, Noisy-le-Grand, Orléans, Paris, Rennes, Rouen, Strasbourg and Toulouse (see the list on page 23).

Within this new framework, they provide due diligence and consultancy services for Ubi-france and BpiUbi-france business managers work-ing together in the same premises, to promote products in the Bpifrance export range. They may also intervene or participate in events together with other Bpifrance Export stakeholders.

THE OTHER COFACE STATE GUARANTEES PARTNERS

In parallel Coface is continuing its mission of providing information, disseminating and de-veloping State guarantees to businesses and regional stakeholders, both public and private (such as chambers of commerce, banks, profes-sional associations, etc.).

To do so, the development managers rely on partnership agreements signed with Regional Chambers of Commerce and Industry (RCCI), Chambers of Commerce and Industry (CCI), the Chambers of Trade and Crafts, the Associa-tion of Companies Specialized in InternaAssocia-tional Trade, etc.

They also maintain close ties with regional banking networks.

In 2013, Coface launched a new partnership with members of the Conférence des grandes

écoles, which offers training courses enabling

them to promote State guarantees among companies. As a result of these partnerships, development managers host a number of in-formation meetings and the promotion of State guarantees.

At the local level, Regional Plans for Corpo-rate Internationalization have been initiated to improve the international performance of companies and promote complementarity between stakeholders in exports. Against this background, since mid-2013, Coface has signed a number of agreements in which the partners agree to jointly monitor a growing number of companies in order to promote and support their international approach on a long-term basis.

PARTNERS

AN EXTENSIVE,

ACTIVE NETWORK

The Bpifrance Export offer

The common catalogue includes 9 products tailored to the needs of companies at different stages of their international development. The funding offer has been simplified and clarified, in particular by removing the duplicate offers provided by ex Oséo and Coface. Coface is the exclusive agency in charge of financing the expenses related to market development through market survey insurance and now solely covers bonds and working capital. Credit insurance, exchange risk insurance and foreign investment insurance against political risks remain within the scope of the Coface offering.

FOCUS

Partners

COFACE HAS DEVELOPED AN ACTIVE POLICY OF PARTNERSHIPS

WITH THE MAJOR FRENCH ECONOMIC STAKEHOLDERS, TO

PROMOTE AS WIDELY AS POSSIBLE THE STATE GUARANTEES

MADE AVAILABLE TO ALL FRENCH EXPORT COMPANIES.

CUSTOMERS, THE KEY FOCUS

FOR COFACE

An organization tailored to meets the needs

of customers according to their maturity in

terms of exports has resulted in strong growth

in applications from small and medium-sized

companies, which now represent more than 90%

of the customers of Coface State guarantees.

13

Clients

CLIENT APPROACH:

TARGETING MAXIMUM SATISFACTION

COFACE’S MAIN OBJECTIVE IS TO MEET THE NEEDS OF COMPANIES AND BANKS IN

THE CONTEXT OF THE ROLE ENTRUSTED TO IT BY THE STATE. A FUTHER OBJECTIVE

IS TO MAKE THEM AWARE OF THE OPPORTUNITIES AVAILABLE TO THEM IN THE

PUBLIC SECTOR.

Assessing customer

satisfaction

A customer satisfaction survey was conducted in 2013 by an independent market research company.

Out of the 307 companies which 90% were SMEs (all insured by Coface): • 93% were satisfied or very satisfied with the services provided by Coface; • 94% would recommend Coface as a partner;

• 79% intend to make use of State guarantees again in 2013;

• 50% have increased their export turnover thanks to the guarantees they were given;

• 26% created export-related jobs in their companies with the help of Coface.

ZOOM

• The “Intermediate sized enterprises and SMEs” department is responsible for the processing of applications from companies whose turnover is less than ¤150 million, as well as all the applica-tions relating to exchange risk cover.

• The “State guarantees development and management in regional centers” Department focuses on the development of State guaran-tees in general, as well as on providing support and assistance for first-time exporters whose needs are generally directed towards market survey insurance.

• The “Claims management and risks control” Department centralizes risk management, claims, debt consolidation and controls, regard-less of the size of the company insured.

MORE ATTENTIVE TO CUSTOMERS

Since 2011, in a context of crisis and intense international competition, Coface has endeav-oured to be more attentive to what companies and banks have to say, to ensure it continues to improve the quality of its products and ser-vices. It regularly meets with customers, whether they are major groups or small to medium-sized companies. Meetings are also held with banks, whether working with Key accounts or SMEs.

ON-GOING COMPETITIVE INTELLIGENCE

The Coface State guarantees Directorate is one of the channels available to the State to implement its policy to support the interna-tionalisation of French companies. In order to make recommendations to the State concern-ing improvements to its guarantees, Coface monitors the competition to glean information about other public export credit agencies in terms of projects, products, guarantee terms or general policies. Regular meetings with its peers allow comparisons of the various export support systems.

REDESIGN OF THE WEBSITE DEVOTED TO STATE GUARANTEES

As part of the redesign of the Coface.fr web-site, the State guarantees Directorate is pro-viding its customers with a new version of the

“State guarantees” website (www.coface.fr/ garanties-publiques) which facilitates access to information for the companies, banks and institutional partners seeking state support for exports. A customer space also enables direct access to online applications.

COMMITTED ORGANIZATION

In terms of organization, the State Guarantees Directorate has consolidated its process of im-proving efficiency, leading to a revised organi-sational structure better suited to the needs of its customers and to the management of trans-versal activities. Our ultimate goal is to simplify procedures and come up with new products to meet exporters’ needs.

This organization enables us to target groups of enterprises (small and medium-sized com-panies / Key Accounts), and to differentiate the requirements of customers according to their maturity for export. The refocused manage-ment of market survey insurance was found to be effective with high growth in requests from small and medium-sized companies.

THE STATE GUARANTEES DIRECTORATE HAS FIVE DEPARTMENTS

• The “International-Organisation-Expertise” Department coordinates international relations with members of the Berne Union, OECD and European Union and is responsible for product development, environmental and social due dili-gence, general organisation and coordination functions, communication, quality and compli-ance, IT contract management, notifications, ratings and reporting activities.

• The “Key Accounts” Department manages guarantee applications made by companies with a turnover of more than ¤150 million, predomi-nantly taking a sector-wide approach. In 2013, the ISO 9001 certification

was extended by one year for all the guarantees provided by Coface. —

ISO 9001 certification

2013: DEVELOPING PRODUCTS IN

RESPONSE TO CUSTOMER DEMAND

May: the Minister for Economy and Finance and the Minister

for Foreign Trade announced measures to improve the

financing of exports by small and medium-sized companies:

1. Simplification of the State offer: Coface was given the

exclusive responsibility for managing bonds and working

capital guarantee, as well as financial support for market

prospecting expenses using a single system, that of Coface

market survey insurance.

2. Facilitating access to supplier credit: the turnover threshold

below which exporters can benefit from a maximum guarantee

quota of 100% for credit risk as part of the supplier credit

guarantee, simple discounting and without recourse, assigned

debt guarantee and assignor risk guarantee were increased

from ¤75 million to ¤150 million.

June: the Unconditional Pure Cover (GPI) previously reserved

for Airbus financing was extended to finance all civil aircraft

over 10 tons at takeoff and civil helicopters over one ton at

takeoff.

October: the enhanced guarantee was set up in order to

improve the competitiveness of the funding of French exports,

providing 100% coverage for investors who provide the

15

Our products

OUR PRODUCTS

A RANGE ADAPTED TO THE

NEEDS OF OUR CUSTOMERS

FOR FRENCH COMPANIES WISHING TO PROSPECT FOREIGN MARKETS,

INVEST ABROAD OR EXPORT GOODS AND SERVICES, COFACE OFFERS

PRODUCTS TO SUPPORT THEM AT EVERY STAGE OF THEIR EXPORT

DEVELOPMENT.

CREDIT

INSURANCE

OUR

PRODUCTS

EXCHANGE RISK

INSURANCE

MARKET SURVEY

INSURANCE

FOREIGN

INVESTMENT

INSURANCE

To guarantee completion and payment of an export contract or repayment of the loan agreement that finances it To invest abroad whilst being protected against political risk To win market share abroad without fear of failure and with financial support To facilitate the bond insurance or obtain a prefinancing To export in foreign currencies without exposure to exchange risk

BONDS AND

WORKING CAPITAL

GUARANTEE

(exporter risk)

16

Our products

CREDIT INSURANCE

This insurance is aimed at export companies and bankers to guarantee the completion and the payment of export contracts or the repayment of loans issued to buyers. It nor-mally takes the form of insurance (conditional) except for aircraft and helicopters financing, where it can take the form of a guarantee (unconditional).

SCOPE

Credit Insurance covers the exporter and/or its banker against certain risks specific to the completion of export contracts of goods and/ or services with long construction periods and/or credit terms of more than two years. By virtue of the principle of subsidiarity, the State Guarantees Directorate does not under-write risks that can be insured by the private sector.

RISKS COVERED

Credit insurance mainly covers manufacturing risks, i.e. the risk of a contract being inter-rupted due to a factor outside the control of the exporter, and credit risk, which refers to the payment default by the foreign buyer or the non-transfer of funds.

CAUSES OF LOSS

These risks may arise following events of a commercial nature (risks involving the buyer itself and/or the guarantor) or of a political nature (risks involving the buyer’s country or a third country such as war, an act or decision taken by a foreign government that prevents the performance of the guaranteed contract, or measures taken by a foreign government preventing the transfer of monies settled by the debtor). They may also result from natural

cing institutions, that provide the necessary liquidity to banks to finance export credits. The funders that can benefit from this gua-rantee are extremely diverse: insurance companies, mutual funds, investors or their representatives as part of bond issues, provi-dent societies incorporated under French or foreign law, central banks, States and sove-reign wealth funds under certain conditions. The guaranteed contract is the refinancing contract concluded between the lending bank and the refinancing institution. The guarantee is back to back to a credit insurance poli-cy which is its underlying collateral. Callable on failure of the lending bank, it is a 100% unconditional guarantee, payable five days af-ter a claim waiting period of 15 days.

disasters (cyclone, tidal wave or earthquake). In unconditional guarantee, the risk only oc-curs when the borrower defaults on payment.

TRANSACTIONS GUARANTEED

This type of insurance covers a wide range of exports of goods and/or services. Speci-fic terms and conditions are tailored for civil engineering and construction contracts or contracts involving a substantial local content being paid on the basis of interim payment certificates, as well as exports of intangible goods or services.

Credit insurance may cover:

• risks during the fulfilment of commercial contracts; and/or

• the risk of unfair or abusive calling of a bond, or political incidents as well as the bonds is-sued under these contracts; and/or

• the risks associated with various internatio-nal trade finance instruments, such as letters of credit (confirmed or not), supplier credit which may be discounted with or without recourse, debt transfers or buyer credit issued by French or foreign banks to finance export transactions. • Credit assurance may cover common finan-cial packages or more complex ones, such as local currency financing, limited-recourse financing, project financing and asset-based finance. Credit institutions approved by a Eu-ropean Union Member State may, in the same way as French banks, benefit from the interest rate stabilisation programme.

NEW PRODUCT:

THE ENHANCED GUARANTEE

This new product facilitates access to new sour-ces of liquidity and thus allows banks to offer competitive export financing. It covers

refinan-For the first time, Coface

secured bond issues

as part of the financing of an Airbus A380 for Emirates in March 2013, followed by two more in August to finance an Airbus A330 to Aircastle and September 2013 for the financing of two other Airbus A380 for Emirates.

HIGHLIGHTS

Extension of

Unconditional Pure Cover

to other aircraft (including helicopters) than those manufactured by Airbus. _

Increase to 100%

of the coverage for supplier credits, simple discounting and without recourse, and assigned debt for companies whose turnover is less than ¤150 million.

17

TO FIND OUT MORE, PLEASE CONTACT

Cécile Boselli Tel.: 33 (0)1 49 02 15 61 garantiespubliques@coface.com State guarantees development managers

(see list page 23) www.coface.fr/garanties- publiques

CHANGE IN PREMIUMS, INDEMNITY PAYMENTS AND RECOVERIES

1,000 800 600 400 200 0 2009 2010 2011 2012 2013

Indemnities Premiums Recoveries

NOTEWORTHY CONTRACTS GUARANTEED IN 2013

• Alstom Transport contracts in the rail transportation sector in Morocco and Kazakhstan and in urban transport in Casablanca, Morocco.

• Contracts in the energy field with Thermodyn Australia as part of the ICHTHYS project, Alstom Power Services in South Africa for the Kusile power plant, GE Energy Products France SNC in Tunisia for the extension of the Bir M’cherga power plant in particular.

• Two STX contracts for the supply of cruise ships in the United States and Ger-many, and an Ocea contract for the supply of 20 speed boats to Panama.

• Contracts in the aerospace field with Astrium in Russia and Arianespace in Australia.

• Various contracts for engineering and/ or the supply of industrial equipment for Fives in Brazil, Fives DMS in China, Carbone Savoie SAS in Abu Dhabi, Saint Gobain in Kuwait and Technip in Russia.

• A contract in the civil engineering sector with Vinci in Tajikistan for the construction of the Dushanbe airport terminal.

• Delivery of 100 Airbus aircraft to ACG, Air Arabia, Air Pacific, Air Asia, Avianca, Avolon, Awas Aviation Capital Ltd, Boc Aviation, British Airways, Cit Aerospace International, Emirates, IndiGo, Korean Air-lines, LATAM, Philippines AirAir-lines, Thai AirA-sia, Thai Airways, Tunisair, Turkish Airlines, VEB-Leasing and Vietnam Airlines.

• Delivery of 12 Eurocopter helicopters to Utair, CHC and Pegaso.

• Delivery of 3 ATR aircraft to Nordic Avia-tion Capital and Avianca.

• Delivery of a Superjet to Interjet ABC Aerolineas.

For further information, please consult the list of contracts guaranteed over EUR 10 million on the Coface State guarantees website.

¤92

million

—

of indemnity

payments in 2013

(as opposed to

¤291 million in 2012).

¤527

million

—

of recoveries in 2013

(as opposed to

¤548 million in 2012).

¤7.1

billion

—

of contracts

guaranteed in 2013

slightly down compared with

2012, (¤10.1 billion), but in

line with the level of business

recorded prior to 2008.

18

FOREIGN INVESTMENT

INSURANCE

This insurance is aimed at all companies incor-porated under French law wishing to protect a long-term investment abroad against political risks. It is also aimed at the banks that back them.

SCOPE

It covers all types of investment as long as there is an interest for the French economy. The investment may involve an equity in-vestment (including in kind), an allocation of funds to a local branch or office, a shareholder loan or current account advance, a bond in exchange for local loans, royalties or an ac-companying bank loan. This investment may be made in an existing company or in a new one, provided these investments are new or made less than 24 months before the appli-cation for cover.

RISKS COVERED

The risks covered are the risks of non-transfer, property infringement and non-recovery, for a period of 3 to 20 years.

CAUSES OF LOSS

The insured party chooses the causes of loss it wishes to cover from three risk categories: voluntary acts by the authorities of the foreign country, political violence and non-transfer. The cover may be extended to breach of contract by the local authorities.

PREMIUM

The premium rate is fixed for the duration of the contract, based on the country and pro-ject risks. The insured amount is adapted to the variation in the value of the investment over time: the insured party estimates this value every year, up to a limit of 150% of the paid-in funds.

EXAMPLE OF INVESTMENT GUARANTEED IN 2013

Investment by the Millet Innovation compa-ny in the textile sector in Tunisia: guarantee covering the capital contribution, dividend repatriation and shareholder loan.

HIGHLIGHTS

• Business was low on this

product: the risk exposure stood at ¤360 million at year-end 2013.

• Claims business increased, due to situations of expropriation and political violence.

—

TO FIND OUT MORE

Cécile Boselli

Tel.: 33 (0)1 49 02 15 61

garantiespubliques@coface.com

State guarantees development managers (see list page 23)

www.coface.fr/garanties- publiques

Our products

19

MARKET SURVEY

INSURANCE

Surveying new markets abroad exposes com-panies to considerable costs without assu-rance of success.

MARKET SURVEY INSURANCE

Market survey insurance is designed for all types of companies or business groups (in-dustrial, commercial or service) governed by French law (excluding international trading companies):

• whose turnover does not exceed ¤500 million, • and which intend to establish or develop a flow of exported French goods and/or ser-vices with added high value.

It is designed to cover the risk of commercial failure of these companies, by supporting a portion of the market prospecting costs incur-red that have not been offset by a sufficient level of sales in the geographical area covered, and to provide them with cash support.

EXPENDITURE GUARANTEED

The following specific market surveying costs corresponding to expenses are taken into ac-count:

• new and non-recurring

• committed and borne by the companies for their market prospecting, whether these are incurred one off events (participation in professional international events such as trade shows, conferences, collective missions, etc.) or a programme structured over several years (travel and accommodation costs for em-ployees of the business in the area covered, salaries and expenses of newly recruited ex-port personnel for the purposes of prospec-ting, consulting fees, operating costs of a local office or a commercial subsidiary, registrations of trademarks, models or patents, purchases of market studies, adaptation of products

already marketed to the standards and requi-rements of the prospect markets, advertising in all its forms, etc.).

INDEMNIFICATION CONDITIONS

During the cover period, Coface indemnifies the insured party, within the limit of the ex-penditure budget guaranteed, for up to 65% (or even 75% depending on the type of com-pany) of annually incurred expenses. During the amortisation period, the insured party then pays back every year a percentage of the revenues generated in the area specified in the contract and always up to the amount of the indemnities received. At the end of the contract, the balance of indemnities not re-paid by the insured party is written off.

RESPONSE TIMES

Once a company has been trading for more than three years, its application (for an ave-rage annual budget of ¤50,000 maximum over a period of one to three years) will be processed within 48 hours. For all other ap-plications, a response will be given within 20 to 30 days.

The entire contract, from request for cover to settlement or renewal, can now be processed online.

HIGHLIGHTS

• 4,884 applications were

received in 2013; 2,145 were for market survey insurance and 2,739 for A3P insurance. • These applications generated

3,453 contracts (1,573 market survey contracts and 1,880 A3P contracts).

• The total number of companies benefitting from market survey insurance amounted to 11,095 at 31 December 2013 (including 8,302 market survey contracts and 2,793 A3P contracts) against 9,225 at year-end 2012, an increase of 20.3 % (1,870). • The total value of budgets

guaranteed in 2013: ¤280.5 million (¤224 million in market survey insurance and ¤56.4 million in A3P).

• 503 applications for market survey insurance financing were received in 2013. • 351 recipient companies of

a market survey advance guarantee.

20

Our products

MARKET SURVEY ADVANCE

Banks that have signed a partnership agree-ment with Coface undertake to offer custom-ers/companies with a turnover of between ¤1.5 million and ¤500 million what is known as a “market survey advance”. This combines market survey insurance with funding to ex-plore new markets. This guarantee allows the bank financing the expenditure covered by the market survey insurance to insure itself against the risk of the company defaulting on the repayment of its loan.

FIRST STEPS MARKET SURVEY INSURANCE (A3P)

Coface offers very small and small to medium-sized companies a special, simplified fixed-rate product, called “first steps market survey insurance” or A3P. This guarantee is designed for businesses in every sector (except inter-national trade):

• whose total turnover is less than ¤50 million and whose export turnover (excluding taxes) is less than or equal to ¤200,000 or repre-sents less than 10% of total turnover;

• having published a tax balance sheet closing at least one full year of operation.

Without prior approval, up to 65% of actual survey costs are underwritten to a maximum limit of ¤30,000. The insurance is filled in on-line, with a response given within 48 hours. A fixed minimum premium of 200 euros is paid by the insured party on signing the con-tract and the provisional indemnity is paid within 15 days of the insured party sending in

TO FIND OUT MORE, PLEASE CONTACT

prospection@coface.com State guarantees development managers (see list page 23) www.coface.fr/garanties-publiques

a statement of expenditure any time within 12 months of the start of contract.

At the end of the third tax period, depend-ing on how much its export turnover has in-creased, the company pays back as much as it can of the amount it received. Any amount not paid back by the company is written off.

COMPANIES BENEFITTING FROM MARKET SURVEY INSURANCE 12000 10000 8000 6000 4000 2000 0 2009 2010 2011 2012 2013 6 462 7 142 7 508 8 047 1 178 8 302 Number of companies benefitting from A3P Number of companies benefitting from market survey insurance 2 793

EXAMPLE OF SUCCESSFUL INTERNATIONAL

EXPANSION WITH MARKET SURVEY INSURANCE

In 2008, the HGH SYSTEMES INFRAROUGES company, specializing

in the development of optronic and infrared systems, took out market

survey insurance for its exploration of the Canadian and United States

markets for a guaranteed expenditure budget of ¤0.8 million. In 2013,

the indemnity received by the company was fully paid back, i.e. 3 years

before the end of the amortization period as a result of income from the

guaranteed area.

21

BONDS AND

WORKING CAPITAL

GUARANTEE

BONDS

To facilitate the setting up of bonds, in the context of export contracts that may have a determining effect on the growth of com-panies, Coface offers a guarantee aimed at bond issuers.

The export process usually begins with the foreign customer being issued bonds by banks or insurers (the issuers) which are generally callable by their beneficiary on first demand. Issuers, who are increasingly in demand, are sometimes reticent to provide these guar-antees, either for reasons of equity manage-ment, or because the financial situation of the French company is too unstable. In this case, Coface insures the risk of the French company defaulting if the foreign buyer calls the bond for whatever reason, up to the percentage of cover (50% or 80% maximum, depending on the size of the company) and gets a share of the issuer’s remuneration.

WORKING CAPITAL

To help put in place working capital for export companies, Coface offers a guarantee which covers the bank against the risk of the exporter defaulting. Trade negotiations increasingly in-volve long or extended payments terms and very few down-payments. Such requirements weigh heavily on the export company’s cash flows forcing it to seek bank overdrafts. With this guarantee, the lending institution only re-tains a proportion of the risk of non-recovery, in exchange for a share of the remuneration. As the financing is facilitated, companies can more easily manage the whole negotiation phase and expenses incurred in relation to the contract. Working capital guarantee is made available to banks at no additional cost to the company.

TO FIND OUT MORE, PLEASE CONTACT

Béatrice Langella Tel.: 33 (0)1 49 02 11 38 caution@coface.com, prefi@coface.com Corinne Martinez Tel.: 33 (0)1 49 02 11 14 caution@coface.com, prefi@coface.com

2013

• Further to the creation of Bpifrance Export in May 2013, Coface is the exclusive agency in charge of managing bonds and working capital due to the removal of the guarantee scheme proposed by ex OSEO.

• Since its inception in 2005, bonds guarantee (exporter risk) has been constantly growing, resulting in the issue of almost 7,080 bonds with an exposure of ¤ 1.5 billion. • The attraction of working capital

guarantee remains strong with a 12% increase in the number of guarantee applications compared with 2012. The exposure at year-end 2013 amounted to ¤151 million.

Noteworthy contracts

guaranteed in 2013

• Ziemex contracts in the food and brewing industry in Europe and Africa for a bond budget of ¤4.96 million.

• Metalliance Contracts for the supply of trains on tyres and multiservice vehicles as part of the construction of tunnels in Norway, United States, Venezuela, Canada, Australia and Turkey for a bond budget of ¤8.3 million.

• SDCEM contract for the supply of electrical equipment in Saudi Arabia for a working capital budget of ¤247,000.

• Vernet Behringer contract for the supply of machine tools in India, Belgium and Russia for a working capital budget of ¤384,000.

HIGHLIGHTS

400 350 300 250 200 150 100 50 0 2009 2010 2011 2012 2013 234 147 337 268 299 366

Bond Working capital

NUMBER OF BOND AND WORKING CAPITAL APPLICATIONS

303

190 239 304

22

EXCHANGE RISK

INSURANCE

TO FIND OUT MORE, PLEASE CONTACT: Patricia Perez Tel.: 33 (0)1 49 02 13 85 change@coface.com Béatrice Langella Tel.: 33 (0)1 49 02 11 38 change@coface.com Corinne Martinez Tel.: 33 (0)1 49 02 11 14 change@coface.com www.coface.fr/garanties-publiques SECURING EXPORT OFFERS IN FOREIGN

CURRENCIES

Coface offers various insurance products to secure export transactions in foreign curren-cies. In this way the insured company avoids any foreign exchange risk. The rate guaran-teed for each commercial transaction provides total protection, from the commercial nego-tiation to the payment of the contract. The insurance schemes are aimed at companies based in France negotiating with foreign buy-ers (excluding international trade).

Exchange risk negotiation insurance is in-tended for projects in which a company expe-riences significant competition, more specifi-cally when responding to international calls for tenders. The eligible currencies are principally: the United States dollar, the Canadian dollar, the Swiss franc, the pound Sterling, the yen, the Danish, Swedish and Norwegian kroner, the Hong Kong dollar and the Singapore dol-lar. Other convertible currencies such as the Australian dollar, Polish zloty, Hungarian for-int, South African rand, Russian rouble and the Brazilian real may be considered on a case by case basis.

The rate of exchange may be determined at any point in the negotiation process, even if the awarding of the commercial contract is still uncertain.

Exchange risk negotiation insurance with profit-sharing a variant of exchange risk ne-gociation insurance, enables a company, if market conditions allow it, to adjust the rate guaranteed during the negotiation period and at the latest at the time of signing the con-tract.

Exchange risk contract insurance is designed for companies, and more specifically for small to medium-sized companies, that through lack of competition cannot benefit from negotia-tion-type contracts or are obliged to deal in a currency other than the euro at the final nego-tiation stage.

It is limited to transactions of a maximum amount of ¤15 million in United States dollars or pounds Sterling. The guarantee may be tak-en out prior to the commercial contract being signed or within 15 days of the contract being concluded.

In 2013, the levels of the euro-dollar exchange rates on the Markets were very mixed with a minimum of 1.2768 at the end of the first quar-ter and a peak of 1.3814 at the end of the year, or a variation of 8%. This high volatility has prompted companies to purchase more cov-erage of the “Exchange risk negotiation insur-ance with profit-sharing” type.

900 800 700 600 500 400 300 200 100 0 2009 2010 2011 2012 2013

NUMBER OF APPLICATIONS FOR EXCHANGE RISK INSURANCE

Highlights in 2013

• 85% of the applications were approved (risk actually arising) as opposed to 79% on average over the last five financial periods. • The number of SMEs involved is

continuing to grow (65% against 63% in 2012).

• Applications for negotiation insurance with profit-sharing is increasingly sought, representing 41% of accepted applications (against 33% in 2012) and 59% in accepted amounts (against 50% in 2012).

Noteworthy contracts

guaranteed in 2013

• Exchange risk cover for an amount of 41 million USD as part of the CEGELEC Abu Dhabi contract. • Exchange risk cover for an amount

of 14 million USD as part of the Prosernat contract in Russia.

HIGHLIGHTS

Our products

23

Contacts

CONTACTS IN YOUR REGION

STATE GUARANTEES DEVELOPMENT MANAGERS

DEPARTMENT

SGDM

MOBILE

Nord-Pas-de-Calais

(59,62)

Picardie

(02,80)

Claudie Jonard

+33 (0)6 15 77 74 28

Île-de-France Ouest

(78,92,95)

Gonzague de Fromont de Bouaille

+33 (0)6 16 29 05 85

Île-de-France Est

(77,91,93,94)

Charles Brun

+33 (0)6 23 66 22 69

Basse-Normandie

(14,50,61)

Haute-Normandie

(27,76)

Oise

(60)

Cécile Le Maître

+33 (0)7 86 90 82 82

Bretagne

(22,29,35,56)

Catherine Crochet

+33 (0)6 22 19 46 47

Lorraine

(54,55,57,88)

Champagne-Ardennes

(08,10,51,52)

Brigitte Clément Demange

+33 (0)6 20 66 84 31

Paris

(75)

Caroline Wood

+33 (0)6 23 61 04 47

Pays de la Loire

(44,49,85)

Poitou-Charentes

(16,17,79,86)

David Massenet

+33 (0)6 07 62 90 32

Centre

(18,28,36,37,41,45)

Mayenne

(53)

Sarthe

(72)

Michel Dutheil

+33 (0)6 20 66 84 84

Auvergne

(03,15,43,63)

Limousin

(19,23,87)

Loire

(42)

Marie-Claire Sarliève

+33 (0)6 20 66 84 42

Bourgogne

(21,58,71,89)

Rhône-Alpes

(69)

Christian Terrier

+33 (0)6 23 61 03 61

Rhône-Alpes

(01,07,26,38,73,74)

Colin Dieudonné

+33 (0)6 32 40 20 94

Aquitaine

(24,33,40,47,64)

Midi-Pyrénées Ouest

(32,46,65,82)

Françoise Lamarque

+33 (0)6 20 66 84 80

Midi-Pyrénées Est

(09,12,31,81)

Languedoc Roussillon

(11,30,34,48,66)

Emmanuel Roubenne

+33 (0)6 24 70 80 67

PACA

(04,05,06,13,83,84)

Corse

(2A,2B)

Marie-Danielle Bahisson

+33 (0)6 07 25 29 07

Alsace

(67,68)

Franche-Comté

(25,39,70,90)

Philippe Sugniaux

+33 (0)6 20 66 84 28

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