Page 9 - Annual Report 2010

Introduction

In 2010, EIF reached an operating profit of EUR 65.4m which is 25% ahead of the Corporate Operating Plan (COP). The main drivers of this positive development are equity gains and guarantee income. This strong operating

profit performance led to a net profit ahead of plan at EUR 7.2m despite higher than forecast pro-visions and impairments.

The overall economic condi -tions have remained very dif-ficult for SMEs this year, and further downgrades in the rat-ings of certain transactions in which EIF is guarantor have occurred. A total level of new provisions for guarantees of EUR 53.8m together with some small equity portfolio impairments have re-sulted in total exceptional charges of EUR 58.1m. As in 2009, the level of calls under these guarantees is very low and, given the general improvement in the European economies, we are convinced that the total provisions that have now been made are very prudent.

Looking forward, EIF will continue the intensive work with the EIB and the European Commission to maximise the impact on smart, sustainable and inclusive growth in the context of Europe 2020. EIF has developed long-term strategies for its equity, guarantees and securiti -sation activities with a view to further increasing their impact and

A reputatio employer a factor. Thus provement velopment

Finally, I wo to all the st year of exc holders, ma for their exc

“Once more, EIF has proven its position as a cornerstone

of European

venture capital and has catalysed

new lending to SMEs across Europe.”

In the face of continuing challenges for micro, small and medium-sized enterprises throughout Europe, EIF again stepped up its countercyclical response in 2010 by increasing the volume of activities, introducing new products and instruments for speci f ic market needs and ex t end i ng i t s geograph i c reach.

In 2010, EIF continued its early s tage inves tment s and has proven once more its position as a cornerstone of European venture capital. Overall com-

mitments to venture and growth capital funds in 2010 reached a record of EUR 930m. This has leveraged more than EUR 4.5bn of new capital for investment over the next few years.

EIF has also continued its intensive effort to catalyse new lending to SMEs through banks and guarantee institutions throughout Europe. The Competitiveness and Innovation Programme (SMEG) facility was fully utilised once again mobilising EUR 1.1bn of new lending with a significant number of new commercial bank partners. EIF continues to be a leading player in the structuring and credit en-hancing of SME loan portfolios providing liquidity and capital relief to banks. In 2010, it played a key role in the re-opening of this vital element of the capital markets.

During 2010, EIF intensified its regional business devel -opment activity and made considerable progress in the implementation of the 11 JEREMIE mandates. New fund-ing agreements were put in place in Malta and Sicily, the latter using European Social Funds, and SMEs in the JEREMIE regions started to benefit from the programme in 2010.

In a period of a little more than a year, EIF finalised with the European Commission and the EIB the EUR 200m European Progress Microfinance Facility. Commitments under this newly created facility have already been made and a strong pipeline of loans, guarantees and equity investments into microfinance institutions across Europe has been developed.

FOREWORD by the Chief Executive