[PPT] - Region Stockholm Investor presentation March 2019 2 2 PowerPoint Presentation

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Region Stockholm

Investor presentation March 2019

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Disclaimer

This presentation may not be distributed in the United States or to U.S. persons as defined in Regulation S of the U.S. Securities Act 1933, as amended. The information contained in this Presentation has been prepared exclusively for the benefit and internal use of prospective investors in order for them to evaluate the feasibility of a potential financing for Stockholm County Council (“SCC”) and for no other purpose. This Presentation may not be used for any other purposes without the prior written consent of SCC. This Presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by SCC and

ther documentation and material made available in connection with a potential financing. The information does not purport to be all-inclusive or to contain all information

that a prospective investor may desire. It is understood that each recipient of this Presentation will perform its own independent investigation and analysis of the proposed financing and the creditworthiness of SCC, based on such information as it deems relevant. The information contained herein is not a substitute for the recipient’s independent investigation and analysis. Recipients of this Presentation and the information contained herein must check and observe all applicable legal requirements and, for the avoidance of doubt, receipt of this Presentation and the information contained herein may not be taken as discharging the regulatory or statutory responsibilities under applicable legislation of any such recipient. The distribution of this Presentation and a potential financing for SCC may in certain jurisdictions be restricted by law. Any persons reading this Presentation should inform themselves of and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of any such jurisdiction. SCC shall not have any responsibility for any such violations. This Presentation does not constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe, any securities in any jurisdiction. This Presentation includes information which is or may constitute forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties and SCC cautions the recipients of this Presentation that forward-looking information and statements are not guarantees of future performance and that its actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Any such forward-looking statements and this Presentation are based on current expectations, estimates and projections about [global economic conditions and of the economic conditions of SCC. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates”, “targets”, “intends”, “anticipates” or similar expressions or the negatives thereof. Important factors that could cause actual results to differ materially from those expectations include, among others, [macroeconomic fluctuations, changes in tax levels and tax basis, inflation rate, interest rates], and such other factors as may be discussed from time to time in the Presentation. Although it is believed that such expectations and the Presentation are based upon reasonable assumptions, no assurance can be given that those expectations will be achieved or that the actual results will be as set out in this Presentation. SCC is not making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither SCC nor any of its respective directors, officers or employees will have any liability to any recipient of this Presentation or any other persons resulting from such recipient’s or other person’s use. Potential investors should not construe the contents of this Presentation as legal, accounting or tax advice. This Presentation has been prepared for information purposes

nly and should not be conceived as investment advice. In making an investment decision investors must rely on their own examination of SCC including the merits and

risks involved. Each prospective investor should consult with its own advisors as to the legal, accounting, tax, business, financial and related aspects of a potential financing for SCC. Any views contained in this Presentation are based on financial, economic and other conditions prevailing at the date hereof and SCC shall be under no obligation to update this Presentation in the light of changes to such conditions or otherwise. 2

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Key Credit Highlights

Critical part of Swedish economy Strong institutional framework Solid financial position Favourable macro-economic environment

High employment rate (72% in 2017) and strong population growth
Average Gross Regional Product (GRP) growth of 3.2% between 2001-2016
Region Stockholm incorporates 26 municipalities at the

heart of the Kingdom of Sweden’s (Aaa/AAA/AAA) capital Stockholm

Responsible for over 32% of Swedish Gross Regional Product
Home to 23% of Swedish population
Region Stockholm is rated AA+ (stable) by Standard & Poor’s
Predictable and stable regional government policies
Fiscal policy framework that promotes budgetary discipline
Conservative financial policy
Ability to levy taxes through the income tax rate
Zero per cent risk weighted by Bank for International Settlements (BIS)

Source: Eurostat, Länsstyrelsen and SCB (Statistics Sweden)

Sustainability

Systematic and goal oriented sustainability work as an integrated part of the
rganization
The first environmental program was adapted in 1990

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Content

▪ Overview of Region Stockholm ▪ Environmental Policy & Social Responsibility ▪ Green Bond Framework & Eligible projects ▪ Regional Macro-Economic Conditions ▪ Financial Policy, Financial Position & Rating

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Region Stockholm Responsibilities and Structure

▪ In Sweden, public sector consists of a three-tier system:

1. Central Government

▪ Higher education ▪ Police and military ▪ National roads

2. County Councils

▪ Healthcare ▪ Public transport ▪ Regional planning ▪ Culture

3. Municipalities

▪ Childcare ▪ Compulsory education ▪ Upper secondary education ▪ Elderly care

Sweden Region Stockholm

▪ Region Stockholm is a legally independent entity ▪ It is a democratically controlled organisation and has: – Its own legislatures, and; – Its own taxation rights ▪ It is the largest of Sweden’s 20 county councils – Includes 26 municipalities – Has 2.3 million inhabitants 5

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SL (public

transportation) has

82% market share of rush hour traffic in Stockholm 90% of public transport by SL is run on renewable energy 80 children per day are born at one of

ur six obstetrics

clinics 600 ambulance cases are conducted every day, including cases with helicopter- ambulance 1,500 visits are made to an emergency room at emergency hospitals each day Revenues of approximately SEK 101bn 2018 Debt portfolio of approximately SEK 51bn

Region Stockholm in brief

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Becoming Region Stockholm

▪ Enlarged responsibility for regional development ▪ Our responsibility for Health care, public transportation and culture is unchanged

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Strong Institutional Framework

A local government cannot be declared bankrupt in Sweden:

▪ The Swedish Court has stated that the local governments in Sweden are NOT covered

by the Bankruptcy Act (RH 1996:75) meaning bankruptcy in accordance to the Swedish Bankruptcy Act is not applicable for local governments

▪ This is due to the fact that local governments have constitutional rights to levy taxes

and this is also supported by the Swedish Constitution

Requirement for sound financial management Balanced budget requirement Local government financing principle Financial equalisation

Local governments must work according to a sound financial management

Law: “Kommunallagen chapter 11,§ 1 (2017:725)”

Annual local government budgets should be in balance, imbalances are normally restored within 3 years

Law: “Kommunallagen chapter 11,§ 5 (2017:725)”

If the government alters the tasks of local governments, the government must also neutralise their financial effect

Approved by the parliament and in force since 1993

Imbalances between local governments are equalised annually through income and cost equalisation schemes

Law: “Lagen (2004:773) om kommunalekonomisk utjämning” 8

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Investment plan

>120bn SEK

in 10yrs

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Population in the Stockholm region Age distribution 2015 and 2050

Growing population, increasing demands

Every day

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Content

▪ Overview of Region Stockholm ▪ Environmental Policy & Social Responsibility ▪ Green Bond Framework & Eligible projects ▪ Regional Macro-Economic Conditions ▪ Financial Policy, Financial Position & Rating

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Taking responsibility for the future, Region Stockholm pursues innovative environmental work that both improves and inspires. “A role model for the future”

Sustainability is key to us

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Reduction of CO2 emissions

70%

Since 1990

45%

Since 2011

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Environmental Program 2017–2021

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Health and medical care Public and

ther

transport Properties and installations

Sustainable procurement Climate commitment

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Goal 1: In 2021, Region Stockholm’s greenhouse gas emissions will have been reduced by at least 50 per cent compared with 2011 and by at least 75 per cent compared with 1990.

1.1 INDICATOR: climate impact from greenhouse gas emissions, tonnes CO2 equivalents.

Climate commitment

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Goal 2: In 2021, Region Stockholm will be working systematically and efficiently on climate adaptation.

2.1 INDICATOR AND TARGET: Region Stockholm has an

rganisation for climate

adaptation and works in accordance with an adopted climate adaptation plan.

Climate commitment

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Climate impact - results

16 50000 100000 150000 200000 250000 300000 350000 400000 450000

1990 2011 2017 Tonnes CO2e

70 %
45 %

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Social responsibility

Means that Region Stockholm: ▪ combats discrimination and promotes equality in general ▪ promotes gender equality ▪ ensures access for people with disabilities ▪ promotes national minorities and minority languages ▪ promotes the rights of children according to the child convention ▪ monitors the organization’s code of conduct for suppliers

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Content

▪ Overview of Region Stockholm ▪ Environmental Policy & Social Responsibility ▪ Green Bond Framework & Eligible projects ▪ Regional Macro-Economic Conditions ▪ Financial Policy, Financial Position & Rating

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Region Stockholm’s framework follows the Green Bond Principles

Sustainable Public Transport Sustainable buildings Waste management Water management

▪ Region Stockholm takes a broad view of climate change impact in its environmental policies, incorporating life-cycle analysis and suppliers. ▪ Region Stockholm has a newly updated (Aug-18) and certified framework which has been reviewed by an independent party, Cicero giving it a dark green rating. ▪ Dark green is allocated to projects and solutions that correspond to the long-term vision of a low carbon and climate resilient future. ▪ Region Stockholm can finance four eligible areas:

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Transparent reporting

▪ Region Stockholm provides transparency through an annual impact report. ▪ The impact report follows the guidelines set out in the position paper on green bonds impact reporting. ▪ All reports could be found at: https://www.sll.se/greenbonds ▪ An earmarked account is used for use of proceeds. ▪ Region Stockholm offers investors to yearly participate in site visits.

Investor visit Södertälje Sjukhus Investor visit Norsborgsdepån

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9 900 19 759 29 659 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

SEK m

Green financing 57% Other financing 43%

Growth in our green financing portfolio

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Total green financing Green bonds EIB/NIB loans

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Green bond portfolio

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Year Amount Maturity 2014 SEK1.1bn 6 years 2015 SEK 1.8bn 6 years 2016 SEK 1.5bn 5 years and 4 months 2017 SEK 2bn 5 years 2018 SEK 1bn 5 years 8 months 2018 SEK 2.5bn Short 3 year

Green building 41% Green transportation 59%

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Summary green bonds

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2014-2018 YTD 2017

SEK 9.9

billion

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Green bonds issued

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Green projects financed GHG emissions avoided

19 700

tCO2

Annual energy savings

6 900

MWh

Renewable energy production

30 000

MWh

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Fully funded and ongoing green projects

Södertälje hospital New Karolinska hospital Roslagsbanan Extended metro Metro red line

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Huddinge CHOPIN

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Content

▪ Overview of SCC ▪ Environmental Policy & Social Responsibility ▪ Green Bond Framework & Eligible projects ▪ Regional Macro-Economic Conditions ▪ Financial Policy, Financial Position & Rating

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Sweden’s economy in brief

Key facts about Sweden Strong underlying economy

Source: Eurostat, SCB (Statistics Sweden), Bloomberg 0,0 1,0 2,0 3,0 4,0 Sweden Euro area US Percent GDP growth Q4 2017 (Y-o-Y, seasonally adjusted) 0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 Q4 2016 Q4 2017 % of labour force Unemployment rate Q4 2016-2017 Sweden Euro area US

▪ Capital: Stockholm ▪ Government: Parliamentary democracy, constitutional monarchy ▪ Population: 10 million (2017) ▪ Currency: Swedish krona (SEK) ▪ European Union: Member of the EU since 1995. Not a member of EMU, i.e. has not adopted the Euro ▪ Industry: Diversified, export- based ▪ Ratings: Aaa/AAA/AAA (all stable)

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Region Stockholm in numbers

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Population GRP

▪ Region Stockholm is the growth engine of Sweden

Considerable

proportion

f the national output

Geographical size Unemployment

6,3 6,7 5,0 5,5 6,0 6,5 7,0 Region Stockholm Sweden Percent Unemployment 2017 Source: Latest available data from SCB (Statistics Sweden) and Länsstyrelsen Stockholm “GRP” - Gross Regional Product 23% (2.3m) 2017 2017 32% Region Stockholm Sweden Region Stockholm Sweden Region Stockholm Sweden 1% (6,488km2)

Region Stockholm’s position in Sweden

▪ Continued population growth fuelled by a strong labour market

Unemployment rate

lower than the national average

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Robust underlying economy

Region Stockholm - GDP growth per year Net population growth

Source: SCB (Statistics Sweden) “RGDP” - Regional Gross Domestic Product

6,0
4,0
2,0

0,0 2,0 4,0 6,0 8,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Percent Region Stockholm Sweden 0,0 0,5 1,0 1,5 2,0 2,5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Percent Region Stockholm

Large service sector

Manufacturing Construction Trade Service 28

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Stockholm’s global position

Region Stockholm (2017) Home to leading companies

#3

Infrastructure & Logistics The World bank Logistics Performance Index 2016

#7

Competitiveness PWC Cities of Opportunities monitor 2016

#19

Quality of Living Mercer 2016 Quality of living index

Home to 3 of the world’s strongest banks Head offices of global leading corporates

#2

Broadband penetration European Digital City Index 2016

Stockholm in Rankings

Median Income 310 033 SEK Average age 39.2 years New business creation 14.7 / 1,000 persons College educated (25-64 years old) 34 % Source: SBR Annual Report, SCB, Ekonomifakta.se Stockholm Chamber of Commerce Select leading Stockholm based companies Banks in the Nordic considered among the soundest in the world and are subject to some of the toughest capital requirements globally

51%

Global companies with

ffices in the Nordic

region Choose the Stockholm region

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Content

▪ Overview of SCC ▪ Environmental Policy & Social Responsibility ▪ Green Bond Framework & Eligible projects ▪ Regional Macro-Economic Conditions ▪ Financial Policy, Financial Position & Rating

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Financial Policy

▪ Full hedging of all foreign exchange risk inherent in non-SEK debt. ▪ Interest rate derivatives only against underlying debt, no speculative trading. ▪ Derivatives only entered into with highly credit worthy counterparties.

(S&P: A-, Moodys:A3, Fitch: A-)

Source: SCC, Financial Policy 2018

Policy is reviewed annually and monitored daily

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Financial prerequisites

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Operating result (SEK m)

Source: SCC Financial results 2018

2018 in brief ▪ The surplus for 2018 amounted to SEK 2,171 million. ▪ Operating expenses for the period increased by 4.3%. ▪ Investments for the period totalled SEK 12,211 million, which is equivalent to a completion rate of approximately 72% of budget for the whole year. ▪ Tax revenues for the period increased by 3.7%.

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Investment plans

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Investment financials

Source: Region Stockholm Budget 2019 (decided by SCC´s assembly 12th of December 2018) * Cofinanced SEK million 2017 2018F 2019F 2020F 2021F 2022F Public transport 8,109 8,189 8,146 9,801 9,852 12,839 Healthcare 797 765 1,039 1,058 1,110 1,340 Real estate & service 6,242 6,104 5,685 3,023 2,850 3,024 Other 67 1,988 855 676 65 17 Total investments * 15,216 17,046 15,726 14,558 13,877 17,220

Selected major investments ▪ Danderyds hospital – a new emergency building to be opened in 2019 ▪ Expanded metro – 20 kilometres of new track and 11 new stations ▪ Roslagsbanan – new track, increased capacity and new trains

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SLIDE 34 10000 20000 30000 40000 50000 60000 SEK million Leasing Loans

Debt Portfolio and Maturity Profile

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Debt maturity profile

Source: Region Stockholm, as per February 2019

Debt type breakdown

Back –up facilities

Overdraft Facility SEK3bn 2011- 2018 Green Revolving Credit Facility* SEK4bn 2015- 2021

* The facility includes a SEK 1bn green revolving credit

tranche. The tranche can be used for environmentally

sustainable projects 6bn

Total borrowings

45bn Certificate 3% Bilateral loans (EIB/NIB) 38% Bonds (SEK) 7% Green bonds (SEK) 19% Bonds (other currencies) 21% Leasing 12% 1000 2000 3000 4000 5000 6000 7000 8000 9000 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 SEK million Bilateral loans (EIB/NIB) Leasing Bonds Green bonds Certificate sek 34

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Funding Plans for 2019

▪ Estimated funding need SEK 1-5 billion + pre-financing need for 2020 ▪ Benchmark SEK 2.5bn Green Bond ▪ Private Placement bonds in SEK ▪ Bilateral EIB loans ▪ Certificate in SEK

35 Cash flows will be closely linked to the pace of investments and are assessed on an ongoing basis. Investors are encouraged to contact Region Stockholm directly for the latest information.

2019 Funding plans Completed activities 2018

▪ Green Bond Private Placement/ Benchmark Green Bond ▪ Opportunistic Private Placement ▪ Bilateral EIB loans ▪ Certificates in SEK

Funding intensions 2019

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Strong and stable rating (AA+/Stable)

Historical rating trajectory

1 2 3 4 5 AAA AA+ AA AA- A+ Source: Standard & Poor’s, October 8 2018

“The affirmation reflects our view that

Stockholm County Council's budgetary performance will remain stable through 2020, despite continued high investment needs and expenditure pressures. The county council's

Rated by S&P since September 1999 36

liquidity, flexibility, financial management, and contingent liabilities are further strengths, in our view, and somewhat offset by its high debt..” (S&P April 6 2018)

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Frida Korneliusson, CEO frida.korneliusson@sll.se +46 70-737 44 20 Charlotta Brask, Sustainability Manager charlotta.brask@sll.se +46 70 002 88 10 Claes Ewetz, Senior Debt Manager claes.ewetz@sll.se +46 70 737 43 42 Disa Hammar, Debt Manager and Investor relations disa.hammar@sll.se +46 70 737 78 18 Magnus Nelin, Financial communications magnus.nelin@sll.se +46 70 237 37 08

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Contact details, Investor relations, Region Stockholm

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