[PPT] - Stockholm County Council Investor presentation Green Bond PowerPoint Presentation

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Stockholm County Council

Investor presentation Green Bond transaction November 2018

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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.

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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
Stockholm County Council (“SCC”) 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
SCC 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 SCC ▪ Environmental Policy & Social Responsibility ▪ Green Bond Framework & Eligible projects ▪ Regional Macro-Economic Conditions ▪ Financial Policy, Financial Position & Rating ▪ Appendix

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SCC 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 Stockholm County Council

▪ SCC 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 97bn 2017 Debt portfolio of approximately SEK 50bn

SCC in brief

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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” 7

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Investment plan

>110bn 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 SCC ▪ Environmental Policy & Social Responsibility ▪ Green Bond Framework & Eligible projects ▪ Regional Macro-Economic Conditions ▪ Financial Policy, Financial Position & Rating ▪ Appendix

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Taking responsibility for the future, Stockholm County Council 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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Health and medical care Public and

ther

transport Properties and installations

Sustainable procurement Climate commitment

Environmental Program 2017–2021

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Goal 1: In 2021, the County Council’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, the County Council will be working

systematically and efficiently on climate adaptation.

2.1 INDICATOR AND TARGET: the

County Council has an organisation for climate adaptation and works in accordance with an adopted climate adaptation plan.

Climate commitment

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Climate impact - results

15 50000 100000 150000 200000 250000 300000 350000 400000 450000

1990 2011 2017 Tonnes CO2e

70 %
45 %

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Social responsibility

Means that Stockholm County Council: ▪ 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 SCC ▪ Environmental Policy & Social Responsibility ▪ Green Bond Framework & Eligible projects ▪ Regional Macro-Economic Conditions ▪ Financial Policy, Financial Position & Rating ▪ Appendix

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SCC’s framework follows the Green Bond Principles

Sustainable Public Transport Sustainable buildings Waste management Water management

▪ SCC takes a broad view of climate change impact in its environmental policies, incorporating life-cycle analysis and suppliers. ▪ SCC 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. ▪ SCC can finance four eligible areas:

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Transparent reporting

▪ SCC 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. ▪ SCC offers investors to yearly participate in site visits.

Investor visit Södertälje Sjukhus Investor visit Norsborgsdepån

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Growth in our green financing portfolio

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Total green financing Green bonds EIB/NIB loans

Green financing 55% Other financing 45%

7 400 19 759 27 159 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

SEK m

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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

Green building 45% Green transportation 55%

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Summary green bonds

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2014-2018 YTD 2017

SEK 7.2

billion

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Green bonds issued

5

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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Eligible projects Green benchmark bond 2018

*These are main part of eligible projects. Use of proceeds are closely linked to pace of investments, therefore there may be change of projects. However, all projects are in accordance to SLL:s green bond framework. 23

Estimated impact: ▪ 9,000 tonnes CO2e avoided per year on average ▪ 15,000 tonnes CO2e avoided per year max capacity ▪ 1,500 trips around the world avoided on average Certified according to Miljöbyggnad Gold ▪ 90% of building material certified ▪ 65% of legal demands on energy use

Green transportation: Roslagsbanan 70% of proceeds Green buildings: Huddinge Chopin 30% of proceeds

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Huddinge Chopin – Miljöbyggnad GOLD

▪ Part of our plan to cater for future health and medical care demand. ▪ New surgery building (29,000 gross floor area) with 23 operating theaters with a capacity of 18,000 surgeries per year. ▪ Radiology and a caesarean section at the

bstetrics department with a capacity of

7,500 births per year. ▪ Separate flows for patients, materials and personnel leading to increased efficiently, better availability and higher quality. ▪ Facility supporting new ways of working and built with the patient in focus. ▪ The construction started in 2016 and is estimated to be completed in 2019.

Project in short Huddinge - Chopin

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What is Miljöbyggnad GOLD?

▪ An Swedish environmental certification system for buildings. 3 grades: bronze, silver & gold

Who is the certifier?

▪ Sweden Green Building Council (SGBC)

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▪ Energy

Energy use
Heat losses
Solar Heat Load
Energy sources

▪ Indoor environment

Acoustics
Moisture resistance
Thermal comfort winter
Thermal comfort summer

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What is measured in Miljöbyggnad?

▪ Materials

Documentation of building materials
Phasing out of hazardous substances
Climate impact of loadbearing structure
Decontamination of hazardous substances

in existing buildings

Daylight
Legionella
Radon
Ventilation

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Roslagsbanan expansion programme

▪ Increase capacity by almost 100% from 2016 to 2030 to meet increasing travelling needs. ▪ Allow for a 8 trains per hour service, for the most frequented stations. ▪ Reduce sensitivity to traffic disruption. ▪ Confine with noise limits indicated in the Government’s Infrastructure Bill for new Railway Construction. ▪ Adapt stations and existing carriages for accessibility. ▪ Improve safety in the rail system.

Project in short Roslagsbanan expansion map

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Key deliverables Total Double track 22.5 km New station & depot 1 station & 1 depot New trains 22 Noise protection 28.2 km and 915 houses Improved security 113 level crossings

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Roslagsbanan’s other qualitative impact

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▪ Large focus on the re-usage of materials. ‒ Rail and sleepers, ticket machines and catenary posts. ‒ Recycled glass used as lightweight fillers. ▪ Large focus on wildlife preservation. ‒ Building wildlife passing tunnels. ‒ Insect hotels and one hotel for salamanders. ▪ Better living environment for up to 10 000 people due to noise reduction. ▪ Accessibility improvements for Roslagsbanan to be accessible for all travelers.

Wildlife passing tunnel Re-usage of rail & sleepers

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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 ▪ Appendix

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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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Stockholm County Council in numbers

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Population GRP

▪ Stockholm County 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 SCC 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% SCC Sweden SCC Sweden SCC Sweden 1% (6,488km2)

SCC’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

Stockholm County Council - 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 SCC Sweden 0,0 0,5 1,0 1,5 2,0 2,5 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Percent SCC

Large service sector

Manufacturing Construction Trade Service 31

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Stockholm’s global position

Stockholm County (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 ▪ Appendix

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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

2017 revenue 2017 costs

▪ In 2017, revenues amounted to SEK 97.1 billion ▪ County council tax was SEK 12.08 per taxable 100kr ▪ In 2017, costs amounted to SEK 95.8 billion Patient fees, 2 % State subsidies, 5 % Tax revenue, 77 % Other revenues, 8% Transportation fees, 8 % Source: SCC Financial results 2017, SCC T2 2018 Medication, 8 % Staff costs, 32 % Purchased healthcare, dental care, 21 % Capital costs 5 % Other costs, 20 % Purchased transportation, 14 %

January – August 2018 in brief ▪ The surplus for January – August 2018 amounted to SEK 3,905 million. ▪ Operating expenses for the period increased by 5.7%. ▪ Investments for the period totalled SEK 6,956 million, which is equivalent to a completion rate of approximately 41% of budget for the whole year. ▪ Tax revenues for the period increased by 4.3%.

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Investment plans

Investment financials

Source: SCC Budget 2018 (decided by SCC´s assembly 5th of December 2017) and SCC T2 2018. * Cofinanced SEK million 2016 2017 2018F 2019F 2020F 2021F Public transport 7,183 10,424 5,359 8,467 11,354 10,472 Healthcare 7,947 8,775 6,814 5,971 4,290 3,992 Other 9 41 1,228 19 17 16 Total investments * 15,138 19,239 13,401 14,456 15,660 14,480

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 37 10000 20000 30000 40000 50000 60000 SEK million Leasing Loans

Debt Portfolio and Maturity Profile

Debt maturity profile

Source: SCC, as per October 2018

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 7bn

Total borrowings

43bn 37 1000 2000 3000 4000 5000 6000 7000 8000 9000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 SEK million Bilateral loans (EIB/NIB) Leasing Bonds Green bonds Bilateral loans (EIB/NIB) 40% Bonds (SEK) 10% Green bonds (SEK) 15% Bonds (other currencies) 22% Leasing 13%

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Funding Plans for 2018

▪ Estimated funding need SEK 6-9 billion + pre-financing need for 2019

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

2018 Funding plans Funding intensions Q4 2018

▪ Benchmark Green Bond ▪ Private Placements ▪ Bilateral EIB loans

Completed activities YTD

▪ Private Placement Green Bond in SEK ▪ Private Placements in SEK ▪ Bilateral EIB loans

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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 39

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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Content

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

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SLIDE 41 Health and Socialcare Office The Municipal Association for Health and Welfare in Norrtälje1) Growth and Regional Planning Administration Committee of Growth and Regional Planning Patient Advisory Committee Administration Patient Advisory Committee Public Healthcare Services Administration Public Healthcare Services Committee Culture Committee Administration Culture Committee Traffic Administration Traffic Committee County Council Assembly Human Resources Committee Research Planning Committee Innovation Planning Committee Environment Planning Committee Property and Investment Planning Committee Metro Expansion Planning Committee 1) Joint municipal association with Norrtälje Municipality Nomination Committee Landstingsråds- beredningen County Council Executive Board Administration County Council Executive Board Owner Committee Audit Office Audit Board Executive Committee Transport of the Disabled Planning Committee Transport of the Disabled Committee Committee for Future Health and Medical Care Three Healthcare Services Boards (North, City of Stockholm and Ekerö, South) Three Healthcare Committees (North, City of Stockholm and Ekerö, South) Planning Committees Elderly and multiple ill Emergency medical care Public Health and Psychiatry Child, adolescent and maternity care Dental care Widespread diseases Patient choice Transport Services Planning Committee Planning Committee for Marine Transport Services Extended Metro Administration

Stockholm County Council

rganisation

Political organisation Boards for companies and Boards and committees

perated under company-like forms

Administrations and operations

SL Infrateknik AB
AB SL Finans
SL Älvsjö AB
Södersjukhuset AB
Danderyds Sjukhus AB
Södertälje Sjukhus AB
S:t Eriks Ögonsjukhus AB
Folktandvården

Stockholms län AB

Ambulanssjukvården i

Storstockholm AB

Stockholm Care AB
MediCarrier AB
Locum AB
Waxholms Ångfartygs AB
AB Stockholms Läns

Landstings Internfinans

TioHundra AB

Landstingshuset i Stockholm AB, LISAB The Municipal Association for Health and Welfare in Norrtälje1)

Karolinska University

Hospital

Stockholm Health

Care Services Boards and committees

perated under company-

like forms AB Storstockholms Lokaltrafik, SL 41

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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

Contact details, Investor relations, Stockholm County Council

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