STOCKHOLMS STADSHUS AB ANNUAL REPORT 2005

Transcription

1 STOCKHOLMS STADSHUS AB ANNUAL REPORT 2005

2 2005 IN BRIEF 3 A FEW WORDS FROM THE MANAGEMENT 4 GOALS AND PERFORMANCE 6 PROPERTY AND INVESTMENTS 8 PERSONNEL 10 GROUP OVERVIEW 12 DEFINITIONS 16 MULTI-YEAR REPORT 17 SVENSKA BOSTÄDER 18 FAMILJEBOSTÄDER 19 STOCKHOLMSHEM 20 STOCKHOLMS STADS BOSTADSFÖRMEDLING 21 SISAB 22 MICASA FASTIGHETER I STOCKHOLM 23 CENTRUMKOMPANIET 24 S:T ERIK MARKUTVECKLING 25 STOCKHOLM VATTEN 26 STOCKHOLMS HAMNAR 27 STOKAB 28 STOCKHOLM PARKERING 29 STOCKHOLMS STADSTEATER 30 STOCKHOLM GLOBE ARENA 31 S:T ERI K FÖRSÄKRING 32 STOCKHOLM BUSINESS REGION 33 BOARD OF DIRECTORS' REPORT 34 I NCOME STATEMENTS 35 BALANCE SHEETS 36 SHAREHOLDERS EQUITY 38 STATEMENT OF CASH FLOW 39 ACCOUNTING PRINCIPLES 40 NOTES 42 PROPOSED ALLOCATIONS OF UNAPPROPRIATED EARNINGS 50 AUDITORS' REPORT 51 LAY AUDITOR'S REVIEW 51 BOARD OF DIRECTORS AND AUDITORS 52 ADDRESSES 54 New incoming winds are met with open arms. This attitude of hospitality and ambition will lift the City to a higher level.

3 BRIEF OVERVIEW OF 2005 MORE APARTMENTS BUILT AND ALLOTTED The investment in building, made by the housing companies and the City, has led to a total of 7,800 apartments in the companies' project portfolio through During the year, building projects for 1,700 apartments were initiated, and for 2006, there are plans to start projects for another 3,500 apartments. More apartments will reach the market. The number of apartments allotted increased by 30 per cent in 2005 to 9,000. The number of people in the queue went up by 30 per cent to 130,000. LARGE PROJECTS IN PROGRESS The conversion of Studentskrapan on Södermalm to student housing and commercial premises has continued. The first apartments will be ready for viewing in the spring of The work on the Group's two single largest projects, the refining of Vällingby Centrum made by Svenska Bostäder, and of Skärholmens Centrum by Centrum- Kompaniet, is still in progress. RENEWAL FOR LONG-TERM IMPROVEMENT In 2005, a number of investigations and projects have been completed, while others have been started. The prerequisites for building a new, multi-function stadium, which have been investigated for a few years, have led to a decision to start a pre-study for a stadium in the Globen area. The Building Cost Project, in which various measures for reduction of building costs in new production were tested, has been completed. A long-term strategy for the City's harbours, Att Hamna Rätt, has been outlined. CHANGES IN THE GROUP S:t Erik Markutveckling AB has purchased the Norra Station area. Three new managing directors have been appointed: Olle Zetterberg for Stockholm Parkering, Göran Wendel for Svenska Bostäder and Gösta Lindh for Stockholm Vatten. KEY RATIOS Operating income, MSEK 12,283 11,705 11,547 11,135 11,144 Operating result, MSEK 1,552 1, ,238 12,381 Profit after financial items, MSEK ,973 Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times Balance sheet total, MSEK 66,989 62,532 60,118 60,551 59,671 Gross investments, MSEK 6,925 5,648 3,924 3,782 3,524 Depreciations, MSEK -1,734-1,683-1,563-1,481-1,468 Average number of employees 3,137 3,190 3,244 3,251 3,340

4 A FEW WORDS FROM THE MANAGEMENT ANNUAL REPORT Work more efficiently, build BOSSE SUNDLING, MANAGING DIRECTOR Stockholms Stadshus AB has kept up the high pace for new building and strived towards increased cost-effectiveness in all areas, from building projects to organisational work. Bosse Sundling MD for Stockholms Stadshus AB and Deputy MD Per Blomstrand present a summary of a successful DEVELOPMENT AND REFURBISHING PROJECTS Politically, house building is highly prioritised. The Group's housing company have the task to build 8,000 apartments during this election period. The project portfolios presently contain a total of 7,800 new apartments through In 2005, building projects totalling 1,700 apartments were started. For 2006, there are plans to start projects for another 3,500 apartments. How does the allotment of all the new apartments work? It is working well, but it is of course a great challenge for the housing agency, says Bosse Sundling. During the year, the number of allotted apartments increased by 30 per cent, from 6,900 to 9,000. The number of people in the queue also increased by nearly 30 per cent, from 100,000 to 130,000. But not only apartments are being built. The extensive refining of the centre complexes in Vällingby and Skärholmen will be of great importance to these areas. The conversion of Studentskrapan on Södermalm to student housing and commercial premises has continued. The first apartments will be ready for viewing in the spring of Sisab has started building Sjöstadsskolan in Hammarby Sjöstad and Smedshagsskolan in Hässelby, while Micasa Fastigheter i Stockholm AB, formerly FB Servicehus AB, has started a renovation of Stureby Sjukhem and begun to convert service centres into senior citizen apartments. Stockholm Parkering completed the Sjöstaden parking facility in Hammarby Sjöstad and started the work on the Högalid parking facility in Södermalm. The Group's building cost project has been completed and submitted to the City Council. The project has shown that building costs can be lowered substantially, says Bosse Sundling. After a few years of investigations, a decision has been made to start a pre-study for a multi-function stadium south of the Globe Arena. This stadium could replace Söderstadion and seat 50,000 spectators. A prerequisite would be joint financing together with private or other interested parties. The broadband expansion will continue, particularly in the outer areas. STRUCTURAL CHANGES The Stockholms Näringslivskontor AB has changed its name to Stockholm Business Region. The Stockholm Visitors Board AB subsidiary, which has been responsible for furthering the tourist industry, is a subsidiary of this Group. Business Arena Stockholm AB, which is responsible for foreign establishment, is being closed and the operation is restructured into Stockholm Business Alliance a cooperation partnership between the municipalities in the Stockholm-Mälardalen region. In 2005, Stockholm Business Region has launched the City's new trademark: Stockholm The Capital of Scandinavia. The streamlining of the City's property portfolio has continued, with the aim of creating prerequisites for improved management. Hospital property has been transferred to Micasa, cultural property to AB Stadsholmen and separate day-care centres to SISAB.

5 5 STOCKHOLMS STADSHUS AB and develop for the future PER BLOMSTRAND, DEPUTY MANAGING DIRECTOR Did the structural changes have the intended effect? Yes, we have gained substantially in terms of efficiency. We have saved more than 150 MSEK. The streamlining has also resulted in more distinct and uniform rental agreements, explains Bosse Sundling. S:t Erik Markutveckling has purchased the Norra Station area and Stockholms Hamn has outlined a vision regarding the development of Värtahamnen. Preparations for divestment of the oil handling at Loudden are in progress and the new depot for airline fuel at Brista will be completed in A proposal for a strategy for meeting the need of harbour capacity has been circulated for consideration. It has been proposed that a new life insurance company should handle the Group's pension commitment. A decision is expected in EFFICI ENCY Up until 2010, the City companies and boards will be systematically analysed. The goal is to achieve a more efficient use of the City's resources and the possibility to make reallocations to the welfare areas. Our ambition is to reallocate one to two billion SEK until the end of the next election period. What operations have you analysed in 2005? The tree housing companies, replies Per Blomstrand. This has led to stricter yield demands on the companies. In 2008, the yield in these three companies will amount to around 700 MSEK. Active efficiency work is now in progress there. We have also made a new analysis of Stockholm Vatten to find more rationalisation options and to secure an efficient organisation. It has also been decided that the rates will be lowered again. In 2006, the Globe Arenas, Stadsteatern and Bostadsförmedlingen will be analysed. The City continues to search for further ways to reduce the Group's administration costs. STEERING AND FOLLOW-UP The new joint City Group finance department, Finansenheten (formerly Internbanken), has total responsibility for all financial issues, including tactic and strategic interest risk handling, and will be working closely with all the companies. Bosse Sundling and Per Blomstrand discloses that issues relating to trustsensitive areas in the respective companies will also be penetrated: We wish to identify particularly sensitive areas and make sure that actions have been taken to clear away any risks relating to trust. What is the progress regarding the development of the Board's work and cooperation within the Group? We have done a follow-up of the corporate governance study within the Group and made a simplified evaluation. The aim is to develop the work of the Boards and the dialogue between them. In 2005, we have also carried out extensive training programmes among the board members. To strengthen the steering of the large Group investments, a decision has been made to implement a uniform and systematic decision, control and follow-up methodology with joint cost estimate models. We have a large need to find leaders and key personnel, notes Bosse Sundling. During 2005, we have started an internal leadership development programme with the aim to find and develop our future leaders.

6 GOALS AND PERFORMANCE ANNUAL REPORT The city becomes increasingly healthy and available For the years , the Stockholm City Council has established five overall directives. Improving wellfare and municipal operations Housing construction and the developement of Stockholm Making Stockholm ecologically sustainable Countering segregation and intensifying democracy Taking responsibility for finances The overall goals pertain to all the City's operations. They apply to all the City districts' boards, the central boards and all the companies in the Stockholms Stadshus AB Group. How the Group meets these goals gives an overall account for all the companies in the Group. The importance of the goals for each company depends on its operation. However, all the companies have developed key ratios, which can be followed up, for the overall goals. A number of examples of follow-up procedures, and which goals have been achieved, can be seen below. For a detailed account of the companies' work to reach the goals, an Appendix (in Swedish) to the annual report for the Group can be ordered from the Group management office. IMPROVING WELLFARE AND MUNICIPAL OPERATIONS Give all young people a good start in life In 2005, SISAB has taken over the management of the city's around 400 separate preschools. This reduces the total management costs for city pre-schools by around 30 MSEK annually, and it gathers all pre-schools, freetime activities and schools under the same management and one agreement. Improved quality of life for the elderly, the poor and handicapped people Together with the Min stora dag foundation, the Globe Arena has facilitated that sick children can visit the events at the stadiums. In 2005, Stockholm Parkering has introduced systems for payment afterwards, which make things easier for all motorists. Investments in keeping and recruiting personnel Throughout the year, the company has invested in activities such as subsidised healthcare and health checkups in order to reduce sick leave figures. Nearly all the companies have met the targets for reduced sick leave. The Globe Arena and S:t Erik Försäkring report record low sick leave and Svenska Bostäder and Stadsteatern have noted a substantial decrease. SISAB reports that the personnel are very pleased with its employer. Investments have also been made in a large number of training programmes. See also page 11. Improve quality and service Stockholm Parkering has established seven new commuter-parking areas. The Business Region Group has measured company opinions on the City's service and visited more than 500 companies. The apartment agency has created a site for direct registration to the queue via the Internet.

7 7 STOCKHOLMS STADSHUS AB GOALS AND PERFORMANCE HOUSING CONSTRUCTION AND THE DEVELOPEMENT OF STOCKHOLM A functioning business life and employment market, and more visitors The number of overnight stays in hotels and similar facilities in the region has gone up by eight per cent. The Business Region Group has had meetings with 3,200 travel agents, compared to the goal of 2,000. Stadsteatern has vastly surpassed its goal regarding audience figures. The Globe Arena has contributed to a presentation of a new stadium proposal. Apartments for everyone In the years , the City's three housing companies have the task of building 8,000 new apartments. It is estimated that the goal will nearly be reached. The housing companies' portfolios contain projects totalling around 16,500 new apartments until end These companies also have a number of projects in progress, aiming to reduce the building costs. The housing agency has allotted around 9,000 apartments in 2005, which is a new record. The cooperation with private landlords has been further developed. More on properties and projects is found on page 8. MAKING STOCKHOLM ECOLOGICALLY SUSTAINABLE Stockholmshem has carried out ambitious work for improvement of the indoor environment in their apartment buildings. For the second successive year, Familjebostäder is noting reduced energy consumption. In the projects for renovation of the shopping centres in Vällingby and Skärholmen, various heat pump solutions are being implemented to reduce costs and the strain on the environment. Stockholms Hamn has reduced its energy consumption. COUNTERING SEGREGATION AND INTENSIFYING DEMOCRACY Stadsteatern has staged more than 230 theatre shows in the outer city, compared to the goal of 180. Micasa Fastigheter has had 57 summer apprentices. Several other companies have also had apprentices. CentrumKompaniet has activated company associations in eight facilities. The housing agency has created basic information on allocation and booking of apartments in 10 languages and easy Swedish. TAKING RESPONSIBILITY FOR FINANCES Continued efforts towards improved efficiency The Familjebostäder results goal was substantially surpassed. Stockholms Hamnar and Stokab are also reporting result improvements. In 2005, Stokab has received a large number of new customers. The Stadsteatern ticket income widely excedes the goal. During the year, the Group management has investigated the efficiency and the administrative costs in the three housing companies and in Stockholm Vatten. This has led to an entirely new organisation for Svenska Bostäder and various projects in the other three housing companies. The IT costs in Stock-holmshem have been lowered by 10 MSEK. Stockholm Vatten has reduced the water rates by 10 per cent. The result development in the companies is more or less in line with expectations. The pages contain summaries for each company, showing results, investments and key ratios. The visible debt/equity ratio of the Group amounts to 39.6 per cent. The debt/equity ratio including consideration of overvalues amounts to 55.6 per cent. The return on total capital was 3.1 per cent.

8 PROPERTY AND INVESTMENTS ANNUAL REPORT Investments in property for apartments, schools and shops Stockholms Stadshus AB is responsible for the Group's overall development and strategic planning in areas such as home and premises provision, schools, energy, water supply, parking, ports and cultural activities. For this mission, property ownership is an important instrument for the delivery of useful services to the citizens. The total property ownership amounts to more than 10 million square metres of area for rent at an estimated real value of 107,597 MSEK, which makes Stockholms Stadshus AB one of Sweden's largest property owners in terms of size as well as value. Through active management of the total property portfolio, the Group creates optimum internal resources for new investments. EXAMPLES OF MAJOR PROPERTY INVESTMENTS Apartments The goal for the City of Stockholm is to build 8,000 apartments during the present election period, according to the 2005 owner directives. In principle, this goal will be met within the stated timeframe. Schools The City of Stockholm continuously produces new schools as needed and renovates the existing ones. The building of Sjöstadsskolan and Smedshagsskolan started in 2005, two projects at an estimated cost of 177 and 130 MSEK, respectively. In 2005, around 400 separate pre-schools were transferred to the Group. Shopping centre complexes CentrumKompaniet is making renovations of Skärholmens Centrum. The project will result in a shopping mall with more than 250 shops. Its completion is projected for Total investments at Skärholmen amount to 1.78 billion SEK. In Vällingby, the shopping centre is being renovated for completion in Investments total more than 2.6 billion SEK. Parking facilities In the spring of 2005, a new underground parking facility was built off Hammarby Allé at Hammarbyhamnen. The facility has more than 100 parking spaces and goes into operation in the spring of The investment amounts to around 33 MSEK. Harbours A harbour strategy, which could lead to accumulated investments of around 4 billion SEK in the next 10 years, was presented in 2005.

9 9 STOCKHOLMS STADSHUS AB PROPERTY AND INVESTMENTS OUR PROPERTY PORTFOLIO Area No. of apts/ Booked value Real value Rent income 05 (sqm.) premises (no.) (MSEK) (MSEK) (MSEK) Use Apartments 7,448, ,911 28,075 76,154 5,913 Shops 343,785 2,220 1,473 5, Offices 315,194 2,034 1,426 4, School buildings 1,683, ,760 11,870 1,510 Other premises 643,570 7,534 1,951 9, TOTAL 10,434, ,560 39, ,597 8,757 DISTRIBUTION, AREA SQM. DISTRIBUTION, RENT (MSEK) Comments on the summary The Group has a dominating position on the housing market. Of more than 765,000 citizens, nearly a quarter lives in apartments owned by one of the three housing companies in the Group. The Group makes an active contribution to the City's retail trade. Most office premises are smaller offices, which are part of housing complexes and shopping centres. All school buildings used by the City are included in the housing portfolio. Other premises include parking facilities, harbour areas and property for industry and health care. Other premises 6% Other premises 6% School buildings 16% Apartments 72% School buildings 17% Apartments 68% Offices 3% Shops 3% Offices 4% Shops 5% SUMMARY OF MAJOR APPROVED PROJECTS No. of apts/prms Area Investment Project Start Project End Part of Stockholm (no.) (sqm.) (MSEK) (year) (year) New production, apartments Apartments South ,690 1, /6 2004/7 Apartments West 1, ,609 1, /4 2005/6 Apartments Inner City 1,552 96,616 2, /4 2005/7 Comments on the summary The Group makes active contributions to new investments in the property portfolio. The total amount for planned projects is around 12 billion SEK. In 2005, the total investments in property amounted to 6.3 billion SEK. In the next few years, further investments of 15 billion SEK are planned. Total new production, apartments 3, ,915 5,961 Refurbishments Familjebostäder 1,091 71, Stockholmshem , /6 2005/8 Svenska Bostäder 2, ,130 1, /4 2004/8 Vällingby C 88,500 2, Skärholmen ,000 1, Refurbishments, schools 25 79, /6 Parking Facilities 1,340 36, /9 Total refurbishments 5, ,391 8,306 TOTAL 9, ,306 14,267

10 0 PERSONNEL ANNUAL REPORT Personnel care for mutual development The number of permanent staff in the Stockholms Stadshus AB Group at year-end was 3,041, of whom 35 per cent were women. The number of staff was virtually unchanged from the previous year. The number of staff, recalculated as full-time jobs, was just over 3,100. Among the men, 31 per cent were 55 or older, while 25 per cent of the women were 55 or older. The part of staff under age 35 was 15 per cent. The median age among permanent staff was 47. Of the permanent Group staff, 49 per cent were employed by property or building companies, 33 per cent by infrastructure companies and 18 per cent by other companies, of which Stadsteatern is the largest. PERSONNEL TURNOVER The personnel turnover, calculated as personnel who left during the year, was 7.6 per cent for men and 7.7 per cent for women. The total staff turnover was 7.6 per cent, up from 5.7 per cent the year before. TIME USAGE Total work time in the Group was 79.0 per cent, i.e presence at work. Vacation was 10.5 per cent, sickness 4.6 per cent, parental leave 3.0 per cent and the rest was other leave. SICK LEAVE Sick leave figures have gone down. The women have higher figures than men, 5.6 per cent versus 4.2 per cent, calculated on the basis of total employee normal working hours. Among the men, the sick leave figure was relatively high among staff aged 50 and up compared to women, where the highest sick leave figure related to the age group. The ratio for those on long-term sick leave was higher for women than for men, around 31 and 18 per cent respectively of total absence due to sick leave. And 49.5 per cent of the total sick leave lasted 60 days or more. PERSONNEL SURVEY A personnel survey was conducted in all the administrations and companies in The survey was aimed at permanent staff and included around 3,100 people. The response figure was 83 per cent. The staff feels that AGE DISTRIBUTION TRADE DISTRIBUTION PERSONN EL TURNOVER age age age age age Other Companies Property Companies Men Women Total No. of Permanent Staff 1,972 1,069 3,041 Joined in the Year age age age age age Infrastructure Companies Left in the Year Joined (%) Left (%) Men Women No. of People

11 11 STOCKHOLMS STADSHUS AB PERSONNEL their work is important and meaningful. Three out of four have had individual staff meetings in the past year, have regular staff meetings and feel that they get to use their competence in an adequate way. COMPETENCE DEVELOPMENT A ledarship development programme has been initiated in the Group and six men and six women are included. The companies set up goals for their competence development, for example individual training plans. Several companies have carried out education programmes during the year education for managers as well as general programmes for increased competence levels in the IT field. Some of these programmes get support from the Skills and Training Enhancement fund. Apart from these investments, a number of companies have invested in subject-specific competence development, such as training in communication, environment and safety. Individual development plans are also being implemented. Some companies have organised training to clarify the values and goals of the operation. KEEP-FIT MEASURES AND WORK ENVIRONMENT Major investments have been made in preventive health care and work environment. The staff has been offered annual membership tickets to sports and swimming facilities. Contributions are also made to personnel who wish to promote their health through activities of their own choice. Some companies cooperate with Stockholms Kommunalanställdas Idrotts- och Motionsförbund (SKIMF) and fitness centres. Some companies offer vaccination against influenza and other work-related risks of infection. Other benefits are regulated fitness hours for individual activities, health examinations, weight watcher courses, gymnastics breaks and massage. Another example of health care investments made are programmes for stress handling. TIME USAGE SICK LEAVE, AGE DISTRIBUTION SICK LEAVE, CATEGORY Sick Leave Parental Leave Vacation Other Leave Worked Time age > Short-term Sick Leave >60 Days age age < Men Women % Long-term

12 GROUP OVERVIEW ANNUAL REPORT Group overview Stockholms Stadshus AB is the Parent Company of a Group that consists of 17 active companies or sub-groups. Stockholms Stadshus AB is fully owned by the City of Stockholm. The Group of companies has operations in areas for the benefit of the Stockholm citizens. These include housing, water and sewage management, car parks, tourist information and cultural activities. The Stockholm City Council has the overall responsibility for the City's operations and decides on what operations the City should be running. The City of Stockholm has organised its operation in the form of companies, and most of them are organised in so-called Proper Groups. This means that the operational owner dialogue has been delegated to a Board of Directors for the Group. The Group's operations are an important part of the overall City Group, just like the operations that are run in the form of City administrations. The operations, which are run in the form of companies, are considered to be municipal business operations run without the purpose of making profits but to provide public facilities or services to the citizens. The operations run by the City companies are primarily intended to provide basic infrastructure and other collective utilities. The utilities may be transferred to other operators to enable the City to take a long-term responsibility for pricing, availability and quality goals. Municipal companies are subject to more comprehensive legislation than private and public companies. Applicable laws include The Companies Act, the Local Government Act (stipulates that municipal companies can handle municipal matters, which by law do not need to be handled in a certain way but TURNOVER TURNOVER, SEVERAL YEARS BALANCE SHEET TOTAL Stockholms Hamnar 4.87% Stockholm Parkering 2.76% Stockholm Tourism/Culture 2.79% Vatten 7.68% Centrum- Kompaniet 3.39% Others 3.76% SISAB 12.63% Other property companies 11.04% Total 12,283 MSEK Housing companies 52.08% MSEK 12,000 10,000 8,000 6,000 4,000 2, Other Companies Infrastructure Companies Property Companies MSEK 70,000 60,000 50,000 40,000 30,000 20,000 10, ,000-20,000 Other Companies Parent Company Infrastructure Companies Property Companies Group adjustments

13 13 STOCKHOLMS STADSHUS AB GROUP OVERVIEW are included in the municipal competence), the Official Secrets Act (regulations on the right to access public documents), the Administrative Law (regulations on motivation, information and directions on how to appeal against decisions), the Archiving Act and the Law on Public Procurement (LOU). Some companies are also subject to water and refuse laws and the Insurance Act. The Stockholm City Council makes decisions on Articles of Association, the object of and the aim of the operations of the City and its companies. The Articles of Association must not be changed without the Council's approval. The Stockholm City Council must be given the opportunity to react before decisions are made on company operations, which are of a principal nature or major importance. The addition of new, or selling of existing companies, are issues, which must be handled by the Stockholm City Council, unless the company in question has been given a directive to implement such a decision. The Stockholm City Council elects all the Board members in the municipal companies, unless legislation decides on other forms or if the company is not wholly owned. The Annual General Meeting is the supreme deciding body, where the shareholders use their rights to decide on company matters. The Group Board, the Board of Stock-holms Stadshus AB, appoints representatives each year to the AGM and Extra Shareholders' Meetings in the companies. However, owner steering is carried out outside the AGM. The Stockholm City Council decides on the annual owner directives for the companies in connection with the RESULT AFTER FINANCIAL ITEMS Property companies Infrastructure companies Other companies MSEK 6,000 5,000 4,000 3,000 2,000 1, , Capital Gains from Property Sales Property Companies, excl. Capital Gains MSEK MSEK From the left: Joachim Quiding, Administrative Director Torbjörn Johansson, Development Director Marie Wallhammar, Development Director Boris Amsköld, Controller Gull Axén, Financial Director, Sara Feinberg, Administrative Secretary, and Per Blomstrand, Deputy MD.

14 GROUP OVERVIEW ANNUAL REPORT budget for the City of Stockholm. Follow-up is done during preparations of the City's Annual Report, which also includes the City companies. Stockholms Stadshus AB is doing a followup of the subsidiary operations on the basis of Stockholm City Council directives. The company boards and executive management are operationally responsible for implementing the Stockholm City Council decisions. Authorised auditors and lay auditors appointed by the Stockholm City Council do the Group company audit. The directives given by the Stockholm City Council for the Parent Company include the implementation of owner directives, the responsibility for overall development, strategic planning, continuous overview and review, financial control and follow-up, development of more efficient forms for steering and coordination between owners, Group management and subsidiaries. In 2005, the Group had 3,137 employees and a turnover of approx. 12,283 MSEK. All the companies in the Group are listed in Note 15. PARENT COMPANY EMPLOYEES Stockholms Stadshus AB has a small, specialist administration. The Parent Company has seven employees. They are responsible for overall Group issues, such as coordinating the Group operations and ensuring that the owner's decisions are implemented. In addition to coordination of reporting, the Parent Company offers support to the individual subsidiaries regarding investment and financing decisions, tax issues and matters relating to financial and administrative control. CHANGES IN THE GROUP STRUCTURE The Parent Company has acquired FB Servicehus AB from the Familjebostäder AB subsidiary. The company has changed its name to Micasa Fastigheter i Stockholm AB. Stockholms Näringslivskontor AB has changed its name to Stockholm Business Region AB. I NVESTMENTS EQUITY/ASSETS RATIO RETURN ON TOTAL CAPITAL MSEK 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,000-2, % Adjusted Visible % Other Companies Infrastructure Companies Property Companies Internal Transfers

15 15 STOCKHOLMS STADSHUS AB GROUP OVERVIEW (MSEK unless otherwise stated) PROFIT/LOSS AFTER FINANCIAL ITEMS PARENT COMPANY Stockholms Stadshus AB Dividends from subsidiaries Dividends from associated companies 600 SUBSIDIARIES AB Svenska Bostäder (publ) (k) ,750 AB Familjebostäder ,475 AB Stockholmshem (k) Stockholms Stads Bostadsförmedling AB Skolfastigheter i Stockholm AB (SISAB) Micasa Fastigheter i Stockholm AB 1 62 CentrumKompaniet i Stockholm AB S:t Erik Markutveckling AB (k) -13 Stockholm Vatten AB Stockholms Hamn AB (k) AB Stokab Stockholms Stads Parkerings AB (k) Stockholms Stadsteater AB Stockholm Globe Arena Fastigheter AB (k) S:t Erik Försäkrings AB Stockholm Business Region AB (k) Stockholm Visitors Board AB Other Companies Group adjustments, net ,213 GROUP ,428 10,967 ASSOCIATED COMPANIES HOUSING COMPANIES' CAPITAL GAINS ,249 4,411 Note: Subsidiaries with the designation (k) are Groups of their own. 1) Formerly part of Familjebostäder 2) From 2004 part of Stockholms Business Region AB

16 DEFINITIONS ANNUAL REPORT Definition of key ratios SHAREHOLDERS EQUITY Reported shareholders' equity plus untaxed reserves less deferred tax liability. ADJUSTED EQUITY Equity, excluding the effect of associated companies plus convertible debt instruments. EQUITY/ASSETS RATIO Adjusted equity plus minority's equity divided by balance sheet total assets at year-end. DEBT/EQUITY RATIO Interest-bearing liabilities divided by the sum of adjusted equity and minority's equity. RETURN ON TOTAL CAPITAL Profit after financial items plus interest expenses and exchange rate differences divided by the average balance sheet total less share of equity in associated companies. RETURN ON CAPITAL EMPLOYED Profit after financial items plus interest expenses and exchange rate differences divided by the average balance sheet total less share of equity in associated companies and non-interest-bearing liabilities, including the deferred tax liability. RETURN ON EQUITY Profit after financial items less minority's share of this profit, with the addition of interest expense on convertible debt instruments, less 28 per cent tax on the net of this, and subsequently divided by average adjusted equity. CAPITAL TURNOVER RATE Operating income divided by the average balance sheet total less share of equity in associated companies and non-interest-bearing liabilities, including the deferred tax liability. INTEREST COVERAGE RATIO Profit after financial items plus financial expenses divided by financial expenses. PROFIT MARGIN Profit after financial items divided by operating income.

17 17 STOCKHOLMS STADSHUS AB MULTI-YEAR REPORT The Group in brief (MSEK unless otherwise stated) FINANCIAL POSITION Fixed assets 55,406 53,318 53,218 47,206 41,484 Current assets 11,584 9,213 6,900 13,345 18,216 Minority interest 1,095 1,082 1,037 1,127 1,014 Equity 25,452 25,573 25,605 26,195 25,197 Non-interest-bearing liabilities 6,816 7,586 5,047 7,659 7,582 Interest-bearing liabilities 33,626 28,282 26,107 25,570 25,907 Balance sheet total 66,989 62,532 60,118 60,551 59,671 Equity per share (SEK) 8,930 8,973 8,984 9,191 8,841 Equity/Assets ratio (%) Debt/Equity ratio (times) NET INCOME Operating income 12,283 11,705 11,547 11,135 11,144 Result after financial items ,428 10,973 Tax according to the income statement ,553 Net result for the year ,848 8,935 Profit per share (KSEK) ,135 Return on total capital (%) Return on capital employed (%) Return on equity (%) Capital turnover rate (times) Interest coverage ratio (times) Profit margin (%) AVERAGE NUMBER OF EMPLOYEES 3,137 3,190 3,244 3,251 3,340 GROSS INVESTMENTS 6,925 5,648 3,924 3,775 3,524

18 ANNUAL REPORT In Grimsta, Svenska Bostäder is building 72 new apartments where tenants will be moving in by spring Photo: Binge Eliasson. GÖRAN WENDEL, MANAGING DIRECTOR Svenska Bostäder's business concept is to have a varied supply of attractive properties for letting to tenants and businesses in Stockholm. The company creates, in a committed and professional way, individual and secure solutions for long-term customer relationships. Svenska Bostäder was founded in 1944 and is the largest housing company in the country. The company owns and administers nearly 43,000 flats in Stockholm and 5,400 premises. The total area of the premises amounts to 611,000 square metres. Svenska Bostäder is operating on Sweden's hottest housing market. Just like in previous years, there were no vacant flats at year-end. The vacancy level for Svenska Bostäder premises is still low in comparison to the sector in general. INTENSE NEW BUILDING Svenska Bostäder invests heavily in the building of new apartments. Our goal is to build 4,000 new rental flats in the present election period. New production is extensive and is estimated to be around 3,300 apartments started in this period. And in 2007 and 2008, the annual production is likely to be around 800 new apartments. REFURBISHMENT OF CITY DISTRICTS One of our important goals as a public utility company is to create living and attractive city districts. Presently, our refurbishment of the Akalla and Kärrtorp centres and our multimillion program areas such as Östberga and Nybohov are in progress. The renovation of Vällingby Centrum continues. The goal is to have a refurbished centre by 2008, with new flats and offices in the area. Investments include an increase of the premises by 18,000 square metres, around 50 new shops and a few thousand new parking spaces. NEW STUDENT HOMES In the next few years, we will be building a large number of new student homes. The largest ongoing project is Skrapan in Södermalm, which will have homes for 600 students. INVESTMENT IN BROADBAND FOR OUR TENANTS We are installing broadband for our tenants. By end-june 2006, the new infrastructure will be installed in nearly one third of our properties. The network will also be open to other property owners. So this investment is important to all Stockholm citizens. NEW MD AND REORGANISATION In August 2005, Göran Wendel became MD of Svenska Bostäder. After examining the company's potential, we have started a reorganisation with the aim to increase our efficiency and focus on our customers. Svenska Bostäder has made provisions of 135 MSEK for restructuring, aiming to have a new organisation as of April 1, SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 3,215 MSEK Operating income, MSEK 3,215 3,239 3,310 3,028 Operating result, MSEK ,341 Profit after financial items, MSEK Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times Balance sheet total, MSEK 13,724 12,319 12,694 12,271 Gross investments, MSEK 1, , Depreciations, MSEK Average number of employees Chairman of the Board: Teres Lindberg

19 19 STOCKHOLMS STADSHUS AB HANS PETTERSSON, MANAGING DIRECTOR The Mältplåten block in Hammarby Sjöstad. Familjebostäder offers attractive rental flats in safe and well-run areas. The company was founded in 1936 and owns and manages 22,400 apartments and nearly 200,000 sqm. of premises. All the properties are located in the City of Stockholm. Most of the apartments are located to the south, which has 58 per cent. More than half the apartments, 60 per cent, are located to suburbs built between 1940 and The company aims to provide the City with inexpensive quality housing and further the development of living city districts. The operation is focusing on cost-effective property management involving a variety of housing establishments within the city limits. The demand for housing in Stockholm continues to be very high and there are very few vacancies in the company's housing establishments. Västermalmsgallerian is the company's largest commercial shopping centre complex. Our property also includes district shopping centres in Årsta, Gubbängen and Blackeberg and a number of premises in residential buildings. BUILDING AND RENOVATING Until end-2006, Familjebostäder will build at least 2,000 apartments. At the end of 2005, 951 apartments had been completed or started since 2002, and we plan to start building another 1,000 apartments. In our outer areas from the 1940's to 60's, we have changed pipes and renovated more than 2,000 apartments. In 2006, similar activities are planned for another 1,750 apartments. LOWERED PRODUCTION COSTS We are striving to reduce the production costs. In 2004, a form and contract contest was staged, resulting in a number of model houses as the basis for new building projects. The winning proposals were built in Högdalen and Svedmyra in More building will start in AVAILABILITY IN THE APARTMENT BLOCKS Availability is a key issue. In 2005, we checked 90 per cent of our apartments from the perspective of availability for elderly and disabled people. Development work is in progress within a cooperation project with EU financing. In 2006, our experiences will be converted into an action plan for assessment of the need of investment. Availability will also be checked for public premises. STREAMLINING THROUGH SISTER COMPANIES The former subsidiary FB Servicehus, presently Micasa Fastigheter i Stockholm AB, became a sister company in the Group as per September 1, CONTINUED STRIVING FOR FAIR RENTS As per February 1, 2005, the rent in our apartments went up an average 21 SEK per sqm., or 2.51 per cent, on an annual basis. Like in previous years, the raise was differentiated on the basis of the matrix developed by the Rental Committee. The raise varied between around and 30 SEK per sqm. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK MSEK Operating income, MSEK 1,508 1,963 1,669 1,590 Operating result, MSEK Profit after financial items, MSEK Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times Balance sheet total, MSEK 7,224 10,844 7,424 7,511 Gross investments, MSEK 929 3, Depreciations, MSEK Average number of employees Chairman of the Board: Kersti Py Börjeson

20 ANNUAL REPORT A view from our new production in Skärholmen. In the rear is another new building site in Sätra. PELLE BJÖRKLUND, MANAGING DIRECTOR The Stockholmshem business concept is to own and let apartments in Stockholm. The company shall create the best possible conditions for the tenants in order to further good and long-term tenant relationships. The property administration shall yield a healthy growth in value and create a good cash flow. Stockholmshem is the country's second largest housing company with 60,000 tenants in 30,850 apartments in the Stockholm area. The company was founded in 1937 and has ever since been one of the largest contributors to the expansion and growth of the capital. The housing market in Stockholm is characterised by an increasing supply of new apartments, where rental rights are becoming increasingly important. It is nowadays quite likely that people can get a first-hand contract to an apartment without having to be in the agency's queue for a long time. Stockholm again took the lead among the country's growth regions, and supply of housing is of crucial importance in order to retain this lead. Stockholmshem has a continually strong position on the Stockholm region housing market. The company has no vacant apartments and the vacancy rate for the 3,600 premises is low. NEW PRODUCTION AND REFURBISHMENT Stockholmshem has been commissioned to start production of 2,000 new apartments during the election period. The building of 560 apartments was in progress during the year and 100 were completed. Our efforts to continue tightening of the production costs include measures to increase competition via new contract forms, which allow several smaller subcontractors to participate. Refurbishment and renovation of older property was in progress in 1,030 apartments and 740 were completed. TH E TENANTS HAVE GREAT CONFIDENCE IN US Repeated customer surveys have shown that the tenants have great confidence in us. This was again confirmed in the 2005 studies. Our apartment service and image is highly valued. To maintain and strengthen this position, we changed our organisation to emphasise our total responsibility and competence in the administrative areas. The service department's problem reporting and apartment repair systems were made more efficient as we put computers and GPS system equipment into 100 service vehicles. MEETING ON THE HOUSING MARKET In rent negotiations, the Swedish Tenants' Association demanded a three per cent decrease, while our estimates indicated a need to raise them by 2.32 per cent. The negotiations ended up with unchanged rents for 2006, but with a 10 per cent discount on the March rent. But the rent for people moving in after renovation of our narrow block areas were raised by 7.5 per cent in the inner city and five per cent in the inner suburbs. EXCELLENT RESULT The financial result for 2005 surpassed our forecasts. Reasons for this include our work to reduce the heating costs in procurement and the use of alternative fuels and production methods, as well as the continually low interest rate levels. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 1,919 MSEK Operating income, MSEK 1,919 1,889 1,841 1,772 Operating result, MSEK Profit after financial items, MSEK Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times Balance sheet total, MSEK 10,453 9,941 9,766 9,342 Gross investments, MSEK Depreciations, MSEK Average number of employees Chairman of the Board: Leif Rönngren

21 21 STOCKHOLMS STADSHUS AB PER ANDERS HEDKVIST, MANAGING DIRECTOR Waiting for an apartment Stockholms Stads Bostadsförmedling has substantially strengthened its role as the obvious marketplace for vacant apartments, both for property owners and those who are queuing for housing. This has been done through longterm work on the basis of the company's business ideas: Bostadsförmedlingen should be the obvious marketplace for vacant apartments for both property owners and prospective tenants. Bostadsförmedlingen shall allot apartments on the basis of queuing time in an open and fair system with excellent service and availability. Bostadsförmedlingen shall run a professional, efficient and fair priority operation. Bostadsförmedlingen was founded in 1947 and has been a company since As of 2001, it is financed by an annual fee from the queuing people, and an allotment fee when they get an apartment through the agency. MORE APARTMENTS In 2005, Bostadsförmedlingen received nearly 9,000 apartments for allotment. This is an increase of 2,100 apartments or 30 per cent from the year before. In the last two years, the number of apartments received for allotment has nearly doubled. The private property owners have more than doubled the number of apartments with us. MORE CUSTOMERS We have been able to substantially increase the number of customers in Our end-year queue had more than applicants, up by around 30 per cent compared to the previous year. An important reason for this is the possibility to sign up directly to the queue via the agency's website, which was launched in SHORTER QUEUING TIMES All in all, the changes in 2005 mean that it has become easier for the applicants to get an apartment through the agency. One thing, which reflects this fact, is that average queuing times are shorter for apartments in all our areas. But the most significant change is that the number of apartments allotted with short queuing times also has been markedly increased, from around 400 in 2004 to more than 1,200 in UPSWING FOR NEW PRODUCTION In 2005, we allotted around 1,000 new apartments. The new production was primarily located to Hammarby Sjöstad, Årstadal and the western suburbs. I NTERN ET, THE MOST IMPORTANT CHANNEL The main channel to our customers is our website and the Internet service Mina Sidor (My Pages). About 90 per cent of our apartment bookings are done this way. Major work has been done in 2005 to improve the Internet service. As of February 6, 2006, it only takes a minute to register for the queue, get access to the Internet service and report an interest in your first apartment. In January 2005, the same process took five to seven working days. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 54 MSEK Operating income, MSEK Operating result, MSEK Profit after financial items, MSEK Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times n.a. n.a. n.a. n.a. Balance sheet total, MSEK Gross investments, MSEK Depreciations, MSEK Average number of employees Chairman of the Board: Roger Mogert

22 ANNUAL REPORT In the year 2005, SISAB has taken over a large part of the Stockholm pre-schools. KRISTER SCHULTZ, MANAGING DIRECTOR Skolfastigheter i Stockholm, SISAB, owns and manages most of the schools in Stockholm. Eighty-five per cent of the SISAB facilities are rented by the City of Stockholm. Together with the tenants, SISAB, which was founded in 1991, has a mission to create high-quality learning environments, which have a sound economy and long-term environment goals. Our vision is to be the obvious landlord for comprehensive and secondary schools in Stockholm. The company has a turnover of around 1,630 MSEK and administrates around 1,700,000 square metres of premises. The vacancy rate for premises is still low and is presently equivalent to 1.19 per cent of the premises. TOOK OVER PRE-SCHOOLS In April 2005, we took over 380 of the City's separate pre-schools with an area of around 224,000 sqm., according to a decision in the City Council, and from the former Gatu- och fastighetskontoret we took over all the personnel involved. In June, we introduced a new organisation with combined administration of schools and pre-schools, and our three regional offices were merged into two. NEW BUILDINGS AND RENOVATIONS In 2005, we have run around 250 major projects including new buildings, refurbishments, maintenance and setting up pavilions. Sjöstadsskolan was started. It will house 730 pupils from pre-school up to ninth grade, with an area of around 8,500 sqm. We started the first separate pre-school built by us, Griffeltavlan in Vällingby. It will accommodate around 70 children aged 0 to five. Among the renovations in 2005 is the assembly hall at Skärholmens gymnasium, which has been rebuilt into a theatre stage for Stockholms Stadsteater AB. For the Education Administration, parts of the school have been modified to suit a new dance and theatre education. Pre-school operations have also been integrated in Tallkrogens skola and Magelungsskolan. ACQUISITIONS AND SALES We purchased two pre-school properties from Stockholmshem: Asplunden 6 in Kungsholmen and Tennhjärtat 9 in Bromma. Västberga Police Station was sold to GE Real Estate (Sweden) AB and the Tensta central kitchen was sold to the Syrian-Orthodox Church in Tensta. REDUCED DAMAGES The number of reported graffiti scrawling during the year was reduced by 396, or 26 per cent. Svensk BevakningsTjänst carried out a number of coordinated actions together with the local police, the social services and schools and us, aimed at parts of the city and/or schools where the costs or damage figures had been high. As part of our damage-preventing activities, our cooperation with the Fryshuset Lugna Gatan hosts has been renewed. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 1,638 MSEK Operating income, MSEK 1,638 1,472 1,558 1,551 Operating result, MSEK Profit after financial items, MSEK Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times Balance sheet total, MSEK 7,687 6,906 7,414 7,184 Gross investments, MSEK 1, Depreciations, MSEK Average number of employees Chairman of the Board: Lars-Åke Henriksson

23 23 STOCKHOLMS STADSHUS AB ANDERS NORDSTRAND, MANAGING DIRECTOR Micasa Fastigheter i Stockholm AB, formerly FB Servicehus AB, is a property company which owns and administrates all City of Stockholm health care property. The company's business concept is to offer attractive and modified living for people in Stockholm who need support and safety. The company also has a special commission to make an active contribution to the development of housing for the elderly, the disabled and other with special needs. Micasa Fastigheter shall also, ikn cooperation with other operators, be a driving force in the development of the industry. A health care property may be a service house, a treatment home, sheltered accommodation or a nursing home. Presently, Micasa Fastigheter also owns and administrates 700 apartments for senior citizens, which are allotted via Stockholms Stads Bostadsförmedling. There are also a number of different premises, from office space and business premises to storerooms. The property portfolio includes 130 properties with a total of 832,000 sqm., valued at 6.65 billion SEK. NEW START FOR THE COMPANY The year 2005 has been a year filled with changes. Our company has changed its name, created a new business concept, a new strategy and developed a concept for senior citizen living, to mention a few. The company's special aim demands that we develop a property administration, which looks after the need of our tenants. This has characterised our work, both internally and externally. MORE PROPERTY PURCHASES The transfer of health care property to Micasa Fastigheter in 2005 has meant that another 17 properties have been purchased from Svenska Bostäder AB, AB Stockholmshem and Fastighets- och saluhallsförvaltningen at a price of 191 MSEK. REFURBISHMENT OF SENIOR CITIZEN APARTMENTS We have been commissioned to convert former service house apartments into senior citizen apartments. A special programme was initiated to include both apartment standard and contents. Conversion has been started for two properties. MORE EFFICIENT WITH NEW TECHNOLOGY An increasing use of new technology has made our property administration more efficient. This includes palm computers for all repair workers and administrators. Technology will also be used to increase safety and service to the tenants, for example in alarm and key systems. COMPETENCE DEVELOPMENT We have completed the Increased efficiency for health care property project with money from the Competence Fund. The aim has been to establish an efficient and coherent organisation through development of a united company culture, a common work approach, and to raise the staff competence and knowledge about the customers and their situation and needs. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 719 MSEK Operating income, MSEK Operating result, MSEK Profit after financial items, MSEK Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times Balance sheet total, MSEK 4,734 4,434 Gross investments, MSEK 399 2,868 Depreciations, MSEK Average number of employees Chairman of the Board: Kersti Py Börjeson

24 ANNUAL REPORT The work at Skärholmen continues. CHRISTER OSSLIND, MANAGING DIRECTOR renovation work was started. Up until September 2008, the number of shops is expected to increase from 130 to 200 and the turnover from 1.3 MSEK to 2.4 MSEK a year. The project is progressing according to plan, both in terms of time and costs. We aim to affect the customers' situation as little as possible during the renovation period. The project will make Skärholmen one of the largest and most exciting building projects in Sweden. ORGANISATION CHANGES The goal of developing CentrumKompaniet as a landlord for commercial premises created a need in 2004 to change the organization. This was done in With focus on the respective centres, we introduced a business area organisation. Each business area is adapted to the special needs of the respective parts of the city. We also outsourced the technical property administration. The changes have led to an organisation, which is very adaptable to change and which focuses on development of key competences. Centrum- Kompaniet primarily owns and administrates property in the City of Stockholm with commercial value. The operation consists of four parts, three of which are handled by company staff: shops, local services and offices. The apartment buildings are mainly administrated by the former property owner, Familjebostäder. The aim of CentrumKompaniet is to work closely with merchants and the business community in developing attractive meeting places for trade and other business operations. At the same time, the Stockholm people should consider the facilities attractive places for getting together. The properties include 247,000 square metres of premises, around 4,100 indoor and outdoor parking places and 1,200 apartments. The letting problems have been reduced, but they still exist for suburban offices. The market for shops and other premises is looking good. We have no vacant apartments. The company's challenge is to handle the unique needs for development and improvement in each part of the City, while still maintaining the present result level. DEVELOPMENT OF CITY CENTRE COMPLEXES. CentrumKompaniet is striving to combine commercial operation with public welfare. Nearly 10 per cent of the Stockholm retail trade is located to our city centre complexes. Apart from trade, there are a number of operations, which make everyday life easier for the Stockholm people. To meet the competition from neighbouring commercial centres, an analysis of the development needs in Ringen was initiated in We are taking an active part in the renewal of the city. In November, the boxing centre in Rinkeby was officially opened, a positive part of the leisure activities for youngsters in this area. Other investment projects include citizen hosts in Rinkeby, actions to keep the Chemistry in Bredäng and parking spaces for customers in Hässelby. RENEWAL OF SKÄRHOLMEN Within the framework for the South Side Vision, work is in progress to bring Skärholmen back to the top of the rating lists. In 2005, the SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 444 MSEK Operating income, MSEK Operating result, MSEK Profit after financial items, MSEK Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times Balance sheet total, MSEK 2,303 2,004 1,987 1,973 Gross investments, MSEK Depreciations, MSEK Average number of employees Chairman of the Board: Karin Hanqvist

25 25 STOCKHOLMS STADSHUS AB MARIE WALLHAMMAR, MANAGING DIRECTOR An aerial photo of the Norra Station area. S:t Erik Markutveckling AB's operation started at the end of 2004 in connection with a Stockholm City decision to acquire the former Carlsberg brewery in Ulvsunda, a property at Slussen and the so-called Norra Station area. The company aims to further the development of Stockholm by owning and administrating property in the most viable way financially, awaiting the conversion of the properties to housing, offices, service road junctions, etc. S:t Erik Markutveckling AB consists of a Parent Company and three subsidiaries for property administration; Fastighets AB G-mästaren, Fastighets AB Runda Huset and Stockholm Norra Station AB. The purpose of ownership in the form of companies is to make the administration cost efficient for the City. FASTIGHETS AB G-MÄSTAREN Carlsberg Sweden is renting half of the property's 100,000 sqm. rentable area. The Carlsberg head office has moved back to Ulvsunda and has a storage and distribution facility on the property and a malt house. In 2005, we started the conversion into a property for commerce, storage and logistics. Westin Buss has moved in and CityGross will open one of Stockholm's largest food stores in the autumn of The letting process for commercial premises is in progress. There is great interest in The Bromma Brewery. The City Planning Administration has started its planning work for Vision Ulvsunda. FASTIGHETS AB RUNDA HUSET The company owns Södre Torn 1 in the middle of Slussen. The premises of the former owner, Birka Cruises, have been converted into a youth hostel. We have opened an exhibition hall for The Slussen Project. The City Council has commissioned the City Planning Administration to plan the Slussen area. The detailed plan is scheduled for STOCKHOLM NORRA STATION AB We pruchased the company from Jernhusen AB in The company owns Vasastaden 1:17, a former goods terminal area at Norra Station. The property is now letted for shops, storerooms and parking. The property is involved in the Norra Länken project. The Swedish Road Office needs a work area until Som buildings will be torn down and a building ramp will be constructed. A number of tenants have therefore been given notice. Stockholm, Solna, Stockholm County Council (SLL)/Locum, Karolinska Institutet and Akademiska Hus are working together on a new district with 3,000 apartments, which will join the quality of the City with world-leading science, business operation and living. There will be a tunnel for the E4/E20 road and a new university hospital will be created. Consultation according to The Planning and Building Act has been completed and SSL has invited to an architecture competition. Planning and cooperation will be more intense in SHARE OF GROUP TURNOVER KEY RATIOS 2005 Total 12,283 MSEK 70 MSEK Operating income, MSEK 70 Operating result, MSEK 9 Profit after financial items, MSEK -13 Return on total capital, % 0.9 Equity/Assets ratio, % 0 Interest coverage ratio, times 0.4 Balance sheet total, MSEK 1,061 Gross investments, MSEK 502 Depreciations, MSEK -4 Average number of employees 1 Chairman of the Board: Per Blomstrand

26 ANNUAL REPORT Around the clock, all year round, Stockholm Vatten delivers fresh and tasty water to more than one million people in Stockholm. GÖSTA LINDH, MANAGING DIRECTOR Stockholm Vatten AB was founded in The company is in charge of the water supply and sewage cleaning for more than one million people in the Stockholm area, as well as maintenance and development of more than 5,000 kms of water and sewage pipes. The operation is built on a comprehensive view and a circulation approach. The company shall satisfy the customers' needs of water services and contribute to a long-term sustainable development of the society. Through continued development of quality, efficiency and customer management, the company is striving to be a price-worthy ideal for the European water and sewer supply companies. The Norsborg and Lovö water supply stations produce drinking water of a high and even quality to Stockholm, Huddinge and nine neighbouring municipalities. The sewage cleaning stations in Bromma and Henriksdal receive and clean sewage water from Stockholm, Huddinge and six other municipalities. Cleaning results are excellent and the water situation in the archipelago is developing in a positive way. CUSTOMER IN FOCUS Last February, Stockholm Vatten changed over to a new organisation. The distribution of responsibility became much clearer in the new organisation, which is based on the company's core operations. The customer perspective was put in focus through a special customer and market department. Last year, we also decided to lower the rates by 10 per cent as of January 1, Our successful information efforts have affected the customers to a more environmentally friendly behaviour. STABLE OPERATION The water production was stable in 2005 and the quality of the drinking water was acceptable. With a new sludge water draining system in operation, the water stations no longer release sludge into Lake Mälaren. The cleaning results from the sewage cleaning stations are good and meet authority demands. To obtain a sustainable circulation, we have continued to develop the residual products found during the cleaning process. The biogas production is increasing according to plan and deliveries are made to Storstockholms Lokaltrafik and AGA Gas. A new agreement was signed with Boliden Mineral for transportation and handling of decayed sewage sludge. The sludge is used as cover material and for soil improvement in the Aitik mine. 170 MSEK FROM THE ENVIRONMENT BILLION The City Council granted Stockholm Vatten more than 170 MSEK from the so-called environment billion. The money is financing some 30 projects, including restoration of lakes and streams and new surface water facilities. POSITIVE REGIONAL DEVELOPMENT The work on the new mains water duct to Nynäshamn was started in The solution means increased delivery safety and improved water quality for the residents of Nynäshamn. Strängnäs municipality has also expressed an interest in buying water from Stockholm Vatten. We expect to sign an agreement in SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 1,161 MSEK Operating income, MSEK 1,161 1,167 1,185 1,159 Operating result, MSEK Profit after financial items, MSEK Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times Balance sheet total, MSEK 4,718 4,428 4,201 4,043 Gross investments, MSEK Depreciations, MSEK Average number of employees Chairman of the Board: Rebwar Hassan

27 27 STOCKHOLMS STADSHUS AB CRISTEL WIMAN, MANAGING DIRECTOR Harbour Day in September gathered plenty of people. Photo: Christian Lagereek. Stockholms Hamnar shall contribute to the securing of good conditions for the shipping and the goods supply in the region and thereby further the development of the region. The operation shall stimulate and be a model for environmentally friendly transports. The Stockholms Hamnar Group includes ports in Stockholm, Kapellskär and Nynäshamn. Stockholm has three major port terminals for goods and passenger ferries to and from Finland, the Baltic states and Poland, as well as one of the leading container terminals on the east coast. Via the Stockholm port, the Stockholm area gets its supply of bulk goods such as oil, coal, bio fuel, sand and cement. The growing international cruise ship traffic is giving Stockholm large income from tourism. Kapellskär and Nynäshamn are sheer ferry ports with well-developed terminals. Operation and maintenance of the inner Stockholm quays, port areas and locks, provision of land and premises in the port areas and regulation of the Lake Mälaren water level are also important parts of the operation. VITAL STRATEGIC WORK Unanimous forecasts say that trade in the Baltic Sea region will expand considerably in the next 20 years. This will mean substantial expansion for the shipping industry. Our most important tasks are to be at the right place, have the right contacts, be a partner in the logistic network for the future, have the right facilities and high security and offer qualified know-how and services. The Stockholm ports shall be the right choice for transportation customers and partners, and we shall make a valuable contribution to the improvement of our common environment. STRONG DEVELOPMENT IN THE BALTIC AREA Goods transportation to and from Sweden, Finland, the Baltic nations and Poland keeps growing. In total, the ferry lines transported 6.1 million tons of goods, which is a two per cent increase. The largest relative increase of goods was noted for traffic to Latvia, which went up by 42 per cent to a total of 360,000 tons. Transports of bulk products and containers to and from Stockholm were unchanged at 2.7 million tons. The total amount of goods via our ports has increased by two per cent to 8.9 million tons. THE LARGEST MEETING PLACE IN THE BALTIC SEA The number of passengers by ferry and on cruise ships has increased by four per cent or 436,000 passengers to a total of 11.4 million. On top of this, around 1.3 million people have travelled in the archipelago and on Lake Mälaren. In the summer of 2005, 255 international cruise ships called at Stockholm and Nynäshamn. This added 51 to the number of calls in Stockholm thereby confirms its position as one of the primary destinations in the Baltic Sea, and takes a prominent position among the world's cruise harbours. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 632 MSEK Operating income, MSEK Operating result, MSEK Profit after financial items, MSEK Return on total capital, % neg Equity/Assets ratio, % Interest coverage ratio, times neg Balance sheet total, MSEK Gross investments, MSEK Depreciations, MSEK Average number of employee Chairman of the Board: Malte Sigemalm

28 ANNUAL REPORT STAFFAN LUNDGREN, MANAGING DIRECTOR Stokab is commissioned to expand and maintain fibre optics communication networks in the Stockholm region and to provide leased fibre. The company is operator independent and competition neutral and provides a network, which is open to everyone on the same conditions. The goal of the infrastructure and the operation is to stimulate positive development of Stockholm and its business community by laying the foundation for IT development in the region. The continued expansion of the network shall be made at a pace that reflects market demands, the development and requirements regarding the usefulness of the investments and a suitable expansion pace. Expansion beyond the City limits shall be made in cooperation with other providers and the respective municipalities. On top of this, Stokab is commissioned to providing communication solutions to internal network in the City of Stockholm, which means that Stokab owns, maintains and develops the City's active data and telecom network for City offices, schools and companies. THE HIGHEST NET TURNOVER EVER Our net income in 2005 was the highest since the company was founded. It is the result of the strong last four months of 2004, new products and a more distinct adjustment to the market, which in turn led to the signing of several major contracts. The 2005 result surpasses the budget. The work that was initiated in 2003 is now beginning to bear fruit. The focus during the period has been on an adapted organisation, a changed sales strategy, competence development and new recruitments. NEW PRODUCT PORTFOLIO We have launched a new product portfolio, to which the customers have responded very well. The new product structure enables increased flexibility, and the customers have a choice of prices depending on service level. With this product portfolio, we will be able to reach a broader market and new customers among small and medium-sized companies, and we can meet the needs for broadband among households and small businesses. NEW ORGANISATION We have continued to create a more efficient operation, adjusted to the demands of tomorrow. We have formed a new organisation, where production and development have been separated in order to strengthen the focus on both the running operation and issues for the future. TECHNOLOGY AND BROADBAND DEVELOPMENT A number of pilot projects have been completed for the integration of wireless infrastructure with our open wired network. In cooperation with us, the public utility housing companies in Stockholm have started the expansion of a fibre-optic network for 100,000 apartments. In a first stage, the apartments in Norra and Södra Järva have been connected. The cooperation means greater possibility for freedom of choice and competition regarding the broadband services. I NCREASED FOCUS ON THE ENVIRONMENT Our environmental efforts have continued. All our work and service cars have been replaced with environmentally friendly options. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 405 MSEK Operating income, MSEK Operating result, MSEK Profit after financial items, MSEK Return on total capital, % neg 5.7 Equity/Assets ratio, % Interest coverage ratio, times neg 1.8 Balance sheet total, MSEK 1,226 1,280 1,971 1,913 Gross investments, MSEK Depreciations, MSEK Average number of employees Chairman of the Board: Sven Hulterström

29 29 STOCKHOLMS STADSHUS AB OLLE ZETTERBERG, MANAGING DIRECTOR The new commuter parking in Hanviken at Skrubba Malmväg has 120 spaces. The Stockholm Parkering business concept is to provide conveniently located and attractive parking facilities at competitive prices. The fundamental idea of the company's strategy is that the financial surplus from the parking operation should be returned to the citizens of Stockholm and its visitors in the form of new parking facilities and renovation and maintenance of older parking facilities. Stockholm Parkering offers parking in underground and multi-storey car parks, in outdoor, terminal and commuter parking areas. The operation totals 100,000 parking spaces. The Parkab Övervakning AB subsidiary is responsible for the surveillance of parking facilities. The company contributes to the Stockholm infrastructure by building and developing new parking facilities and increasing the use of the existing capacity and thereby improving the City environment IN BRIEF The company got a new chairman of the board and MD in The Parkab subsidiary also got a new MD, named Marianne Larsson. In May, we started Sweden's first new building with three-dimensional property division in the Kölnan block at Hammarby Sjöstad. Seven new commuter-parking facilities with room for more than 800 cars were completed during the autumn in view of the Stockholm toll-fee test (Stockholmsförsöket). NEW POSSIBILITIES WITH 3D LEGISLATION The parking facility under Sjöstadshallen at Hammarby Sjöstad opened in the autumn and the spaces were immediately in demand. In accordance with a City Council decision, we will purchase the garage as a 3D property. The new legislation enables us to specialise in building, owning and operating parking facilities, and thereby become an even stronger vehicle in the City's infrastructure planning. MUCH APPRECIATED QUALITY WORK Our efforts to get a quality stamp on our garages (Q garage) have been much appreciated. This has been of special importance with regard to attracting women to use the garages. So far, 12 garages have got a quality stamp. The Stockholm Parkering website is continuously being improved, and a few new services have been introduced to our customers. Our goal is to make more services available around the clock via the website. POSITIVE RESULT The company has surpassed the result requirements in the budget and we have more or less reached the return requirements from the owner. The reason for the good result is that we have been able to keep the company's costs down, and that we have continued to make the administration work more efficient. The positive financial development in the Stockholm region is, of course, another crucial factor. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 366 MSEK Operating income, MSEK Operating result, MSEK Profit after financial items, MSEK Return on total capital, % Equity/Assets ratio, % Interest coverage ratio, times Balance sheet total, MSEK Gross investments, MSEK Depreciations, MSEK Average number of employees Chairman of the Board: Leif Rönngren

30 ANNUAL REPORT The Tolvskillingsoperan first night on September 10. Pia Johansson, Dan Ekborg, Philip Zandén, Helen Sjöholm. Photo: Petra Hellberg. BENNY FREDRIKSSON, MANAGING DIRECTOR Stockholms Stadsteater shall be important to all Stockholm residents. Stadsteatern shall produce excellent theatre shows of artistic quality, and bear the stamp of artistic and organizational innovation. The theatre shall offer anything from easily understood popularity to narrow experimental performances. The theatre shall strive to reach new audience groups. The main stage is focusing on a broad audience. Klarascenen, Lilla scenen and Bryggan enables performances, which are expected to appeal to a more select audience. Kafé Klara offers lunch theatre, while the Backstage target group is young adults. Three groups are primarily working with child and youth theatre, Unga Klara, Långa Näsan and Marionetteatern. Parkteatern performs in the parks during the summer season. Ung Scen is seeking out new audiences in the outer city. Within the framework of Vision Söderort, Stadsteatern opened a new permanent stage in Skärholmen in Together with the education administration, the theatre runs the Stockholm secondary school for dramatic art at this location. Stadsteatern produces new shows each year and also takes part in international exchange activities. ARTISTIC AND PUBLIC SUCCESS The year 2005 was a marvellous year in the theatre's history. The figures for number of shows, 1,555, and ticket income, 40.6 MSEK, are the highest ever. An audience rate of 89.6 per cent is unique in the theatre's history, and the audience total of 329,392 (not counting the Parkteatern figure of 114,650) is the highest ever. Two of our staff were awarded the Swedish Theatre Critics' Prize for 2005: Birgitta Egerbladh, producer and choreographer, was awarded the Grand Theatre Prize, while Sofia Fredén, our playwright since 2004, won the Child and Youth Prize. TH E STADSTEATERN AUDIENCE An audience study in the spring 2005 showed that 61 per cent of our audience comes from the outer areas of Stockholm. Eighteen per cent were born abroad or had parents with a non-swedish background. The times are changing: everybody in Stockholm is finding the way to us! The theatre is essential to the work for democracy and freedom of speech. It is therefore important to reach more people and groups in society. The multi-cultural perspective has a natural place in our work. In 2005, we have offered a broad variety of child and yuoth theatre, with an audience of more than 54,000 under the age of 26, of which 27,000 under 12. GREAT VARIETY The programme at the theatre should be challenging and entertaining and stimulate to reflection on both the history, present time and the future. All of this year's shows are characterised by high professional standard, guaranteed by skilful and highly motivated staff on stage and behind the stage. It is difficult to single out individual shows in 2005, but some of the most memorable ones are Tolvskillingsoperan (The Threepenny Opera) by Berthold Brecht, directed by Lars Rudolfsson, Erik XIV by August Strindberg, directed by Lennart Hjulström and Flickan och skulden (The Girl and the Guilt) by Katarina Wennstam, directed by Åsa Kalmér. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 114 MSEK Operating income, MSEK Operating result, MSEK Profit after financial items, MSEK Return on total capital, % neg neg neg neg Equity/Assets ratio, % Interest coverage ratio, times neg neg neg neg Balance sheet total, MSEK Gross investments, MSEK Depreciations, MSEK Average number of employees Chairman of the Board: Daniel Suhonen

31 31 STOCKHOLMS STADSHUS AB ULF LARSSON, MANAGING DIRECTOR The Stockholm Globe Arena Group consists of a property company, Stockholm Globe Arena Fastigheter AB, which is the parent company, and a subsidiary company for events, AB Stockholm Globe Arena, a wholly owned subsidiary. The Group's vision is to create one of Europe's leading event areas in terms of quality as well as quantity. The Group's business concept focuses on making people, companies and organisations feel good by offering joint experiences in a flexible event area in the heart of Stockholm. A SUCCESSFUL YEAR The year 2005 was another very successful one, with regard to operation as well as financially. The number of events was 246, which is six more than in 2004, and the number of spectators was 1,318,000. Examples of events in the year are Disney on Ice, the Unicef Gala in support of the tsunami victims, Sweden Hockey Games, the Djurgården quarter- and semi-finals in ice hockey, The Swedish nomination for the Eurovision Song Contest, John Fogerty, Rod Stewart and Bruce Springsteen. In September, Luciano Pavarotti visited the Globe Arena. SPECTACULAR AND BEAUTIFUL A much publicised event in May was K1, a martial art gala with nearly 11,000 spectators. In the autumn, Hot Wheels Monster Jam returned and attracted 46,963 spectators, and the Stockholm International Horse Show was set up later on. In December, Adolf Fredriks Musikskola gave its annual Lucia concert. For the first time, a Christmas show was performed in the Annex, attracting people. Robert Wells and Joe Labero entertained audiences for 10 nights. The year ended with a very much acclaimed concert by Andrea Bocelli. Among company events, we hosted the Karolinska University Hospital staff party for people. PRACTICAL IMPROVEMENTS From the summer of 2005, we changed our catering supplier. Baldakinenrestaurangerna AB has taken over the operation, which has meant new investments and changes. Extensive renovation work went on all summer. Despite this, a number of concerts and soccer matches were organised during this period. PERSONN EL DEVELOPMENT In 2004 and 2005, we have done comprehensive work on company development around the concept of Medarbetarskap (Staffmanship). The work has mainly done in cross-sectional groups with staff from different departments and units, with the task of identifying the Globe Arenas' corporate culture. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 127 MSEK Operating income, MSEK Operating result, MSEK Profit after financial items, MSEK Return on total capital, % neg neg neg neg Equity/Assets ratio, % Interest coverage ratio, times neg neg neg neg Balance sheet total, MSEK Gross investments, MSEK Depreciations, MSEK Average number of employees Chairman of the Board: Barry Andersson

32 ANNUAL REPORT An apartment building in Husby was severely damaged by fire in November ANDERS CARLSUND, MANAGING DIRECTOR S:t Erik Försäkring's vision is that the company shall contribute to a risk awareness and security approach in the City of Stockholm to prevent damages, keep the City's services in operation and minimize insurance costs. The goal of our operation is that S:t Erik Försäkring shall be the best and most cost-efficient tool for risk handling, in order to give optimum protection of the City's administrations and companies. The company is a purchase centre for the City Group's insurances and an instrument for handling the Group's joint excess. Each year, S:t Erik Försäkring procures all the reinsurance for the Group's entire property, valued at 200 billion SEK. The aim of the procurement is to gain heavy buying advantages and create the best possible competition by having access to both the Swedish and the international insurance market. FOCUS ON CUSTOMER BENEFIT S:t Erik Försäkring shall help its customers to identify risks in their operations, which need to be insured, give information on damage protection for them and, when necessary, buy insurances. We are in close contact with our customers and take responsibility for all our customers' insurance issues. The heavy buying advantages achieved when buying reinsurance for the entire insurance value will be returned to our customers in the form of competitive premiums. The premiums are decided according to a price cost principle. EFFICIENT DAMAGE ORGANISATION An important task for the company is to take care of our customers' damages and make sure that an organisation with competence to handle major damages is available. An agreement has been signed with Larmtjänst on the saving of residual value around the clock. A contracted, independent company settles the damages. DAMAGES IN 2005 The largest damage event was a fire in an apartment building in Husby, estimated at more than 20 MSEK. Apart from that, a number of other fires have cost a total of around 20 MSEK. Water damages are estimated at a cost of around 2.5 MSEK. The cost for damages in 2005, on top of excess duties, amounted to 44.9 MSEK. PREVENTIVE MEASURES In 2006, we will continue to support our customers in their risk handling process and work" with them on various prevention projects. We will also demonstrate good examples to stimulate and improve the risk handling work in the Group. SHARE OF GROUP TURNOVER KEY RATIOS MSEK Premium income, MSEK Profit after financial items, MSEK Equity/Assets ratio, % Policyholders' funds, MSEK Balance sheet total, MSEK Average number of employees Chairman of the Board: Catharina Gyllencreutz Total 12,283 MSEK

33 33 STOCKHOLMS STADSHUS AB JÖRGEN KLEIST, MANAGING DIRECTOR Photo: Olof Holdar. Stockholm Business Region, formerly Stockholms Näringslivskontor, and its subsidiary Stockholm Visitors Board have the joint task of marketing Stockholm as a city to visit and to establish a business. The goal is that Stockholm will be the leading growth region in Sweden and Northern Europe. It is the task of the Parent Company SBR to develop the City's contacts with the business community, develop the business perspective in the City's operations, contribute to continued growth of the Stockholm business community and increase the establishment of foreign companies in the region. The subsidiary SVB has the task of promoting private travel to Stockholm as well as attracting business meetings, incentive travel, congresses and events to Stockholm. The company shall also supply tourist services. NEW TRADEMARK In 2005, we have launched the trademark concept Stockholm The Capital of Scandinavia. This is a collective platform for our message, which will make our marketing much clearer and more powerful. Our basic problem is that the international knowledge of Stockholm is low. The idea is that everybody in the region shall work within the platform framework to position Stockholm as the capital of Scandinavia. COOPERATION IN STOCKHOLM-MÄLARDALEN In November, Stockholm Business Alliance, a partnership open to all municipalities in the Stockholm-Mälardalen region, was launched. The aim is to cooperate across the municipal limits to attract new company establishments and increase the growth in the region. Through the partnership, we will cultivate the businesspolitical cooperation with the goal of improving the local establishment conditions and providing better service to the companies. INCREASED CONTACTS WITH THE LOCAL BUSINESS COMMUNITY Since 2005, we are organising systematic company visits. Our goal was to visit 500 companies in 2005, which we achieved. The purpose is to increase the contacts between us and the companies to find out what they want and to answer questions about the business life in the region. COOPERATION WITH THE BUSINESS COMMUNITY The Stockholm Meeting was held for the second time at Stadshuset (the City Hall) last June. Around 100 invited representatives of the business community, mostly company managers, discussed the future development of Stockholm with leading politicians. In 2005, we also followed up the growth report from Småföretagardelegationen (Small Enterprise Delegation). Of more than 50 concrete actions, 16 have been completed. The work has been so successful that Småföretagardelegationen plans to put together a follow-up report with further proposals for action. SHARE OF GROUP TURNOVER KEY RATIOS Total 12,283 MSEK 122 MSEK Operating income, MSEK Operating result, MSEK Profit after financial items, MSEK Return on total capital, % neg neg Equity/Assets ratio, % Interest coverage ratio, times neg neg Balance sheet total, MSEK Gross investments, MSEK 3 0 Depreciations, MSEK -1-1 Average number of employees Chairman of the Board: Annika Billström

34 BOARD OF DIRECTORS' REPORT 2005 ANNUAL REPORT Board of Directors' Report 2005 The Board of Directors of Stockholms Stadshus AB (org.nr ) is hereby submitting the following Board of Directors' Report. Stockholms Stadshus AB is fully owned by the City of Stockholm. The company was registered on December The company as such has no operation but acts as a holding company. The number of employees in the Parent Company is 7. OPERATION AND GROUP RESULT The Group has operations in several areas for the benefit of the Stockholm citizens. These include housing, school buildings, water and sewage management, car parks, tourist information and cultural activities. The Group's operating income increased by 578 MSEK to 12,283 MSEK. Operating expenses rose by 704 MSEK. Depreciations according to plan were 52 MSEK higher than in Interest expenses were 40 MSEK lower than in The capital gain from sales of property amounted to 56 (237) MSEK. Investments have mainly been made in property. The Group profit after financial items amounted to 773 (923) MSEK. The Group companies' current tax amounted to 289 (81) MSEK and the change in deferred taxes amounted to 34 (- 198) MSEK. After minority interests, the Group's consolidated net annual income amounted to 487 (600) MSEK. Stadshusbolagen sales to the Group's Parent Company, the City of Stockholm, amounted to 2,285 (2,268) MSEK. Purchases from the City amounted to 480 (484) MSEK. The Group companies' interest income from the City amounted to 435 (567) MSEK while interest expenses to the City amounted to 1,069 (1,080) MSEK. IMPORTANT EVENTS IN 2005 The rearrangement and streamlining of the properties in the City, following a decision in the Stockholm City Council, has continued. In 2005, a large number of day-care centres have been transferred from Gatu- och fastighetskontoret to SISAB. The subsidiary S:t Erik Markutveckling AB has purchased the Norra Station area. The aim of the purchase is to secure the City's control of the properties, which may be used for future exploitation. An initial decision has been made to form a life insurance company. The purpose is to handle the Group's entire pension commitments in this company. A concession application is beeing filed and the City Council is expected to make a final decision in OPERATION AND RESULT I N THE PARENT COMPANY The Parent Company has received dividends of 37 (13) MSEK from subsidiaries and reported a surplus of 318 (244) MSEK after tax. The Parent Company received Group contributions, which increased its equity by 30 (-17) MSEK. The tax effect of these items was 10 (23) MSEK. The Parent Company sales to Group subsidiaries amounted to 20 (16) MSEK. Parent Company purchases from the subsidiaries were 2 (2) MSEK. Income interest from the subsidiaries amounted to 7 (7) MSEK. In 2005, the Parent Company has had interest expenses to subsidiaries amounting to 8 (12) MSEK. CHANGES IN THE GROUP The former sub-subsidiary FB Servicehus AB has changed its name to Micasa Fastigheter i Stockholm AB and has been moved within the Group. The company is now owned directly by Stockholms Stadshus AB. Stockholms Näringslivskontor AB has changed its name to Stockholm Business Region AB. S:t Erik Markutveckling AB has, as per April 1, purchased Stockholm Norra Station AB. ENVIRONMENT REPORT The subsidiary Stockholm Vatten AB conducts water purification operations, which require a permit. The Stockholm Vatten annual report accounts for the environmental impact of these operations. Apart from this, no other operation in the Group requires a permit. EVENTS AFTER THE END OF THE REPORTING PERIOD As per January 2, the City of Stockholm transferred its minority shares in subsidiaries to Stockholms Stadshus AB. The proposal for dividend is found on page 50. The Board of Directors proposes that the AGM decides on a dividend of 600 MSEK. The due date for the dividend is April

35 35 STOCKHOLMS STADSHUS AB INCOME STATEMENTS Income statements Group Parent Company (MSEK) Note Operating income 1 12, , Raw materials and consumables Other external costs 2-6, , Personnel costs 3-1, , Depreciations 4-1, , Write-downs Items affecting comparability Other operating items Total expenses -10, , Pre-tax shares of associated companies' income Operating result 1, , Financial income and expenses Dividends from subsidiaries Financial income Financial expenses interest -1, , Result after financial items Appropriations Tax on this year's result Minority share of this year's result NET RESULT FOR THE YEAR

36 BALANCE SHEETS ANNUAL REPORT Balance sheets Group Parent Company (MSEK) Note ASSETS Fixed assets Intangible assets Tangible assets Buildings and land 10 44, ,472.8 Plants and machinery 11 2, ,602.1 Equipment Construction in progress 13 4, ,943.8 Total tangible assets 52, , Financial assets Shares in subsidiaries 14 1, ,655.2 Receivables from Parent Company 2, , , ,515.0 Receivables from associated companies Shares in associated companies Other long-term receivables Deferred tax receivables Other long-term receivables Total financial assets 3, , , ,170.2 Total fixed assets 55, , , ,170.8 Current assets Stock, etc. Raw materials and consumables Finished goods and goods for sale Work in progress Total stock, etc Current receivables Accounts receivables Receivables from Parent Company 9, , , ,084.2 Receivables from subsidiaries Receivables from associated companies Tax receivables Other receivables Prepaid expenses and accrued income Total receivables 11, , , ,335.4 Liquid assets Cash and bank balances Total liquid assets Total current assets 11, , , , TOTAL ASSETS 66, , , ,506.2

37 37 STOCKHOLMS STADSHUS AB BALANCE SHEETS Group Parent Company (MSEK) Note SHAREHOLDERS EQUITY AND LIABILITIES Restricted equity Share capital, 2,850,000 shares Restricted reserves 2, , , , , , Total restricted equity 8, , , ,420.0 Non-restricted equity Non-restricted reserves Net result for the year 16, , , , Total non-restricted equity 17, , , ,648.1 Total equity 25, , , ,068.1 Minority interest 1, ,082.1 Untaxed reserves Provisions Provisions for pensions Deferred taxes Other provisions , , , , Total provisions 2, , Long-term liabilities State loans Amounts owed to credit institutions ,468.6 Amounts owed to Parent Company 21, ,779.7 Other long-term liabilities Total long-term liabilities 20 21, ,299.1 Current liabilities Accounts payable trade 1, , Amounts owed to subsidiaries Amounts owed to Parent Company 10, , Debt to associated companies Taxes due Other current liabilities Accrued expenses and prepaid income , , Total current liabilities 15, , , ,173.1 Total liabilities and provisions 19, 20 40, , , ,203.9 TOTAL EQUITY AND LIABILITIES 66, , , ,506.2 Pledged assets Contingent liabilities none , none 0.6 none 0.6

38 SHAREHOLDERS EQUITY ANNUAL REPORT Shareholders equity Share Capital Other restricted Non-restricted This year's Total (MSEK) equity share fund reserves equity result Equity Group Balance carried forward , , , ,605.4 Effect of switch to RR Result disposition Dividend Transfers from restricted to non-restricted equity Net result for the year Balance carried forward , , , ,573.0 Result disposition Dividend Transfers from restricted to non-restricted equity Change of accounting principle* Net result for the year Balance carried forward , , , ,451.6 *relates to Stockholms Stads Bostadsförmedling Parent Company Share Statutory Non-restricted This year's Total equity Reserve equity result Equity Balance carried forward , , ,438.5 Result disposition Dividend Merged companies Group contribution Tax effect of Group contribution Net result for the year Balance carried forward , , ,068.1 Result disposition Dividend Group contribution Tax effect of Group contribution Net result for the year Balance carried forward , ,810.2 The share capital consists of 2,850,000 shares.

39 39 STOCKHOLMS STADSHUS AB STATEMENT OF CASH FLOWS Statement of cash flows Group Parent Company (MSEK) Not Result after financial items Operating activities Depreciation and write-downs 1, , Adjustment for items not included in the cash flow Net result of fixed assets sales Income tax paid Cash flow from operating activities before change in working capital 2, , Change in equipment and working capital Change in current receivables -1, , , ,459.1 Change in current liabilities 4, , Cash flow from operating activities 5, , ,308.7 Investing activities Acquisition of intangible assets Acquisition of financial assets Acquisition of properties 25-2, ,662.5 Investment in construction in progress 26-4, ,324.7 Acquisition of other tangible assets Payments received from sale of fixed assets Cash flow from investing activities -6, , Financing activities New borrowing 9, ,040.2 Change in long-term receivables 2, , , ,150.1 Amortization of debt -9, , Group contribution Shareholders contribution Dividends paid Cash flow from financing activities 1, , , ,901.3 CASH FLOW FOR THE YEAR , Liquid assets, opening balance including Group account 1, , Liquid assets, closing balance including Group account 1, , , The statement of cash flows includes liquid assets in the City's Group account. The amounts are included in the Current receivables from the Parent Company: 1, ,

40 ACCOUNTING PRINCIPLES ANNUAL REPORT Accounting and valuation principles Stockholms Stadshus AB's annual report has been prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Accounting Standard Council's recommendations and statements. CORPORATE ANNUAL REPORT The Corporate Annual Report includes subsidiaries where Stockholms Stadshus AB, directly or indirectly, holds more than 50 % of the voting rights. The Group's consolidated accounts have been prepared according to the acquisition accounting method, whereby subsidiaries' shareholders' equity at the time of acquisition, determined as the difference between the actual value of assets and liabilities, is entirely eliminated. Thereby, the Group's shareholders' equity only includes the portion of subsidiaries equity, which arose after the acquisition. If the consolidated acquisition value of the shares exceeds the value of the Company's net assets according to the acquisition analysis, the difference is reported as consolidated goodwill. Should, however, the consolidated acquisition value of the shares be less than the value of the Company's net assets according to the acquisition analysis, the difference is deducted from the non-monetary assets of the acquired company. Should the entire difference not be eliminated through reduction of the non-monetary assets, the remaining amount is reported under other provisions as negative Group goodwill. The provision is dissolved on the basis of expected result trend. Companies acquired during the year are included in the consolidated accounts to an amount relating to the time after the acquisition. Minority shares of net result for the year have been reported in the consolidated income statement. Minority shares in subsidiaries' capital have been reported as a separate item in the consolidated balance sheet. The Parent Company applies the same accounting principles as the Group. ASSOCIATED COMPANIES Companies that are not subsidiaries, but in which Stockholms Stadshus AB directly or indirectly holds at least 20 % of the voting rights for all participations, are considered associated companies. In the consolidated accounts, participations in associated companies are reported according to the equity method. Participations in associated companies are reported at acquisition value, with adjustment of the Group's share of changes in the associated company's net assets, including goodwill (after deduction for accumulated depreciations). The Group's share of the associated company's result is included as income in the consolidated income statement. Undistributed accumulated profit shares relating to associated companies are reported under restricted reserves in the consolidated balance sheet as an equity reserve. Unrealised intra-group profits are eliminated against the share of profits relating to the Group. INCOME A majority of the Group's operations are located to the Stockholm area. Sales of good and services are reported on delivery of the product or service to the customer, in accordance with the sales terms. Rental revenue is reported for the period to which it is related. Income is reported net after VAT and discounts. Intra-Group sales are eliminated from the consolidated accounts. Intra-Group sales are done at normal prices. INCOME TAXES Reported income taxes include tax to be paid or received relating to the current year, with adjustments for current taxes relating to previous years, changes in deferred tax and share of tax relating to associated companies. Valuation of all tax liabilities/assets is made at nominal amounts according to the tax regulations and applicable rates, or which have been notified and are likely to be implemented. Tax effects of items reported in the income statement are reported in the income statement. Tax effects of items reported directly against shareholders' equity are reported against shareholders' equity. Deferred tax is calculated on all temporary differences arising between reported and fiscal values of assets and liabilities. The main reason for such temporary differences is depreciations of properties. Deferred tax assets relating to loss carry-forwards or other future fiscal deductions are reported to the extent that it is likely that the deduction can be settled against a future

41 41 STOCKHOLMS STADSHUS AB ACCOUNTING PRINCIPLES taxation surplus. Deferred tax liability related to temporary differences in investments in subsidiaries and associated companies is not reported in the consolidated accounts since the Parent Company can always control the date for reversal of the temporary differences, and it is not deemed likely that such cancellation is made in the foreseeable future. The deferred tax liability relating to untaxed reserves is reported in the Parent Company as part of the untaxed reserves. FINANCIAL ASSETS All deposits are made with the City of Stockholm finance department in accordance with the approved policy. Financial assets are not subject to financial interest risks. RECEIVABLES Receivables are individually assessed and taken up to the amount expected to be paid. EQUI PMENT Applying the first-in/first-out principle, equipment is valued at the lower of acquisition value and fair value at the end of the reporting period. FIXED ASSETS Tangible and intangible fixed assets are written off systematically over the asset's estimated economic life. Straight-line depreciation is used for all types of assets. The following depreciation periods apply: Goodwill 5 years Capitalised development costs 3 5 years Leasehold and similar rights 5 years Office buildings 50 years Industrial buildings 3 5 years Plants and machinery 3 50 years Equipment, tools, fixtures and fittings 5 years Property, which is not utilised by Group companies, and which are owned for long-term renting, are classified as administration properties in the consolidated financial statements. Write-downs are made as per fixed assets if the real value is less than booked value. Real value is based on external valuation or usage value. LOAN COSTS Costs for loans are expensed during the related period. All new borrowing is made through the Parent Company's, the City of Stockholm, finance department. All companies have established a financial policy. DEVELOPMENT WORK Research and development costs are normally expensed as they occur. Certain major development projects have been considered of significant value to the company in years to come and have been capitalised in the balance sheet under Capitalised development costs. LEASING AGREEMENTS The Stockholms Stadshus AB Group has no financial leasing agreements. Operational leasing agreements are seen as rents. CASH FLOW ANALYSIS The cash flow analysis is prepared according to the indirect method. The reported cash flow only includes transactions, which involve payments received and made. The classification as liquid assets includes cash and bank balances and balances in the Parent Company's, the City of Stockholm, finance department. CHANGES IN ACCOUNTING PRINCIPLES In Stockholms Stads Bostadsförmedling AB, the accounting principles have been changed with regard to queuing fee periods. The change has given the company a conditional shareholders' contribution of 8.3 MSEK as per January Repayment of 5.7 MSEK is made on the basis of the 2005 result. Stockholm Vatten AB changes its accounting principles regarding connection fees as of The figures for previous years are not changed. Due to this change, the Stockholm Vatten result was reduced by 26.5 MSEK.

42 NOTES ANNUAL REPORT Notes NOTE 1 OPERATING INCOME NOTE 3 PERSONNEL Group Parent Company (MSEK) State support is included in the income with Stadsteatern receives state support of 65.2 MSEK. The housing companies are accounting for state interest contributions as financial income, see note 7. A majority of the Group's operations are located to the Stockholm area. Subsidiaries' turnover, result, balance sheet total and other key ratios are reported in the respective subsidiary's fact table. The Group overview on page 15 shows the development over time for certain key ratios per trade. NOTE 2 OTHER EXTERNAL COSTS Group Parent Company (MSEK) The following amounts related to auditors' fees are included: Audit assignments Öhrlings PricewaterhouseCoopers KPMG Ernst & Young Deloitte 1.3 Other assignments Öhrlings PricewaterhouseCoopers KPMG 1.0 Ernst & Young Deloitte Total auditors' fees Rents Amount for the year Commitments within one year Commitments 1 5 years More than 5 years Group Parent Company (MSEK) Average number of employees 3,137 3, Men, % Wages, salaries, other remuneration and social security costs Board Members and MD Social security costs (incl. pension costs of) Pension commitments entered as liabilities amount to Pension commitments not entered as liabilities amount to Other employees 1, , Social security costs (incl. pension costs of) Total wages, salaries and other remuneration 1, , Social security costs (incl. pension costs of) Remuneration paid to senior executives Members of the Board are elected by the City Council. Of the Board members, five are women and four are men. For deputy members, the distribution is five women and four men. No change has been made since the previous year. The Chairman has received 62,000 SEK, Vice Chairman 49,000 SEK. The Managing Director is also the City Director of Stockholm. A supplementary salary of 180,000 SEK has been paid to the Managing Director. The Deputy Managing Director is employed on the same terms as the City's chief administrative officers. These terms mean permanent employment entitlement to pension benefits according to PA-KL after 12 years of employment, but not before the age of 60. In the event of termination of employment by the Company, the severance payment entitlement is two years' salary. Other employees in the Parent Company are part of the management. They have no supplementary salary. They have pension rights according to PA-KFS or PFA. Remuneration and other benefits during the year Name Company Basic Pension Pension- Total (KSEK) salary cost agreement Bosse Sundling, MD Stockholms and City Director Stadshus AB 180 PA-KL 180 Per Blomstrand, Stockholms Deputy Managing Stadshus AB 1, PA-KL 1,793 Director Pension age from 60

43 43 STOCKHOLMS STADSHUS AB NOTES Group employees The number of employees in the Group at year-end 2005 was 3,048, of which 35 per cent were women. Among the men, 29 per cent were aged 55 or older, while the corresponding figure for women was 23 per cent. Of the total annual work time in Stockholms Stadshus AB, 79.0 per cent was so-called worked time, meaning presence at work. Vacation was 10.5 per cent, sickness 4.6 per cent, parental leave 3.0 per cent and the rest was other leave. The women had more sick leave than the men, 5.6 per cent compared to 4.2 per cent. Among the men, the sick leave figure was relatively high among staff aged 50 and up compared to women, where the highest sick leave figure related to the age group. The ratio for those on long-term sick leave was higher for women than for men, around 31 and 18 per cent, respectively, of the total absence due to sick leave per cent of the total sick leave was 60 days or more. Group Pension Plans PA-KL is a remuneration-specific gross pension that has applied to employees in the municipality and County Council. For most employees, the pension agreement has been replaced with another agreement, but it is still applied to certain managers. PA-KL means that the employer promises a gross pension equivalent to a certain salary level. PFA is a pension plan for employees in municipalities and County Councils, which includes a fee-related old age pension and remuneration-specific supplementary old age pension. PLANNED BENEFIT COMMITMENTS Income statement Plans based on benefit commitments include: benefit parts PFA (>7.5 basic amounts) PA-KFS active PA-KL Pensions paid during the period, with effect on the income statement 44.7 Upward adjustment of pension debts at the end of the period 32.9 Remunerations relating to notice, and which have affected the income statement 1.9 Total effect on the income statement 79.5 Balance sheet Provisions for pensions b/f 1,114.0 Pensions paid, reported against pension debt Upward adjustment of debt after new valuation 52.9 Provisions for pensions c/f 1,136.3 Actuary assumptions Discounting interest 3.7 Future annual salary increases 3.0 Changes in the income basic amount 3.0 Inflation 2.0 Life expectancy P94 Personnel Turnover 2.0 PA-KFS is similar to ITP, a pension plan that applies to employees in municipal companies. It mainly contains a remuneration-specific old age pension, supplementary old age pension and survivor pension. NOTE 4 DEPRECIATION ACCORDING TO PLAN PENSION PLANS BASED ON FEES, THIS YEAR'S FEES/CHANGES Plans based on fees include: old age pension PFA and PFA FAstigo 24.6 ITP 19.9 upward adjustment of life annuities and pensions in PA-KL -8.4 complementary PA-KFS 13.6 fees for other pension plans based on fees 19.1 pension fees paid, which have affected the income statement 49.9 remunerations relating to notice, and which have affected the income statement 0.8 Total effect on the income statement Group Parent Company (MSEK) Intangible assets Capitalised development costs % Leasehold and similar rights 20.0 % -0.2 Goodwill % Total Tangible assets Buildings and land % -1, ,389.5 Plant and machinery % Equipment % Total -1, , Total depreciations -1, ,

44 NOTES ANNUAL REPORT NOTE 5 WRITE-DOWNS NOTE 8 TAXES Group Parent Company (MSEK) Intangible assets Shares in associated companies Goodwill Total Tangible assets Buildings and land Construction in progress Total Current assets Construction in progress Total write-downs Svenska Bostäder: Reversal of previous write-downs of 54.8 MSEK has been made. Familjebostäder: Write-downs of 22 MSEK have been made. Stockholmshem: Write-downs of 38.6 MSEK have been made, reversal of write-down of 2.6 MSEK referring to land has been made. SISAB: Write-downs of 25.1 MSEK for school premises have been made, reversal of previous write-downs of 22.6 MSEK has been made. Micasa: Write-downs of 5.7 MSEK have been made. Stokab: Write-downs of 16.2 MSEK have been made. Group Parent Company (MSEK) Information about taxes in the income statement Current tax rate, % Current tax expense Reported result before tax Tax according to current tax rate Tax effects of costs which are not tax-deductible Tax effects of result-related Group adjustments Tax effect of Group capital gains Tax effect of untaxed reserves Tax effects of income which is not liable for tax Utilised, previously not reported tax recoverables Current tax expense for the year Current tax for previous periods Deferred tax Deferred tax expenses referring to temporary differences Deferred tax income referring to temporary differences Reported tax expense NOTE 6 ITEMS AFFECTI NG COMPARABILITY Information about taxes in the balance sheets Group Parent Company (MSEK) Capital gain from sold property with conversion into tenant-owned apartments Allocation for Restructuring Svenska Bostäder Others Total Current tax receivables Current tax liabilities Deferred tax receivables Difference between fiscal/book values of property Non-taxable provisions UER investments 93/ Housing loan item Contingent property sales Income tax recoverables Total deferred tax receivables NOTE 7 FINANCIAL INCOME Group Parent Company (MSEK) Interest Interest subsidies Others Total Deferred tax liabilities Deferred tax, surplus values Write-ups Untaxed reserves ,067.5 Total deferred tax liabilities 1, ,188.3 Deferred tax liability, net

45 45 STOCKHOLMS STADSHUS AB NOTES NOTE 9 INTANGIBLE ASSETS NOTE 10 BUILDINGS AND LAND Group Parent Company (MSEK) Capitalised development costs Acquisition value brought forward Acquisitions for the year Re-classifications 2.4 Disposals Acquisition value carried forward Depreciations brought forward Depreciations for the year Re-classifications -1.6 Disposals Depreciations carried forward Net value carried forward Leasehold and similar rights Acquisition value brought forward Acquisition value carried forward Depreciations brought forward Depreciations for the year -0.2 Depreciations carried forward Net value carried forward Goodwill Acquisition value brought forward Re-classifications 2.3 Disposals -3.5 Acquisition value carried forward Depreciations brought forward Depreciations for the year Re-classifications Disposals 3.5 Depreciations carried forward Write-downs brought forward Re-classifications -0.9 Write-downs this year Write-downs carried forward Net value carried forward Total intangible assets Group Parent Company (MSEK) Buildings Acquisition value brought forward 51, ,910.3 Acquisitions for the year 1, ,651.2 Sales/disposals Re-classifications 2, ,302.2 Acquisition value carried forward 55, ,767.3 Depreciations brought forward -13, ,320.3 Depreciations for the year -1, ,372.6 Sales/disposals Re-classifications Depreciations carried forward -14, ,699.7 Write-ups brought forward 1, ,024.8 Depreciations for the year Sales/disposals Write-ups carried forward Write-downs brought forward -1, ,508.2 Write-downs for the year Sales/disposals Re-classifications Write-downs carried forward -1, ,883.4 Net value carried forward, buildings 39, ,199.6 Land Acquisition value brought forward 4, ,334.0 Acquisitions for the year Sales/disposals Re-classifications Acquisition value carried forward 5, ,319.2 Write-ups brought forward Re-classifications -2.9 Write-ups carried forward Write-downs brought forward Write-downs for the year Reversal of previous write-downs 18.8 Write-downs carried forward Net value carried forward, land 5, ,273.2 Tax assessment value of buildings 36, ,824.4 Tax assessment value of land 27, ,585.9 Real value 108, ,064.1 Write-downs for the year relate to the following subsidiaries: Svenska Bostäder: Reversal of previous write-downs of 54.8 MSEK has been made. Familjebostäder: Write-downs of 5 MSEK have been made. Stockholmshem: Reversal of write-downs of 2.6 MSEK for land has been made. SISAB: Write-downs of 25.1 MSEK for school premises have been made, reversal of previous write-downs of 22.6 MSEK has been made. Micasa: Write-downs of 0.2 MSEK have been made. Stokab: Write-downs of 8.5 MSEK for Mälarringen have been made.

46 NOTES ANNUAL REPORT Real value is calculated as follows: Svenska Bostäder: Valuation is based on actual conditions and estimates of market yield demands. Each property has been valuated individually. Familjebostäder: Valuation was made by external, independent valuators. Stockholmshem: Valuation is mainly done by independent valuators, complemented with internal yield valuations. CentrumKompaniet: Has its own model for calculating a market value and totalling operational nets calculated on the basis of actual value. SISAB: Has its own model based on recovery value. Micasa: Valuation was made by external, independent valuators. Stockholms Hamnar: Valuation made by external independent valuation company, based on market value. For a more detailed account of valuation methods, please consult the annual report of the respective companies. Summary regarding buildings held for investment purposes Of the values for buildings and land above,the following net values refer to administration property: 35, ,572.7 Income 7, ,637.2 Operation cost -4, ,671.8 Other costs -1, ,597.4 Financial costs Net income Information on state support State subsidy included in the income 54.3 Interest subsidies included in financial income State contribution, which has reduced facility values Non-interest-bearing loan NOTE 11 PLANT AND MACHINERY Group Parent Company (MSEK) Acquisition value brought forward 4, ,523.4 Acquisitions for the year Sales/disposals Re-classifications Acquisition value carried forward 4, ,058.5 Depreciations brought forward -1, ,184.8 Depreciations for the year Sales/disposals Re-classifications Depreciations carried forward -1, ,453.3 NOTE 12 EQUIPMENT Group Parent Company (MSEK) Acquisition value brought forward Acquisitions for the year Sales/disposals Re-classifications Acquisition value carried forward Depreciations brought forward Depreciations for the year Sales/disposals Re-classifications Depreciations carried forward Net value carried forward, equipment NOTE 13 CONSTRUCTION IN PROGRESS Group Parent Company (MSEK) Acquisition value brought forward 3, ,978.6 Acquisitions for the year 4, ,978.2 Sales/disposals Re-classifications -2, ,939.5 Acquisition value carried forward 4, ,013.6 Write-downs brought forward Write-downs for the year Reversal of previous write-downs Write-downs carried forward Net value carried forward 4, ,943.8 Write-downs for the year relate to the following subsidiaries: Stockholmshem: 38.6 MSEK, has been estimated through external market valuation. Familjebostäder: 17 MSEK, has been estimated through external valuation, desktop model. Micasa: 5.5 MSEK, has been estimated through external valuation, desktop model. Stokab: 7.7 MSEK, refers to disposal of equipment in connection with expansion of the fibre-optic network. Write-downs brought forward Write-downs carried forward Net value carried forward plant and machinery

47 47 STOCKHOLMS STADSHUS AB NOTES NOTE 14 SHARES IN SUBSIDIARIES Group Parent Company (MSEK) Acquisition value brought forward 1, ,659.7 Acquisitions for the year Sales/mergers -4.9 Acquisition value carried forward 1, ,655.2 Share % Number Booked value capital and votes of shares Corporate ID No. Domicile AB Svenska Bostäder 94.35% 14,332, Stockholm Fastighets AB Burspråket % Stockholm Centrumhuset i Vällingby KB % Stockholm AB Stadsholmen 91.00% Stockholm Lodet Fastighets AB % Stockholm Härolden Fastighets AB % Stockholm Fastighets AB Centrumhuset Vällingby % Stockholm IT-Bo i Stockholm AB % Stockholm AB Studentskrapan % Stockholm AB Familjebostäder 91.00% 6,825, Stockholm Micasa Fastigheter i Stockholm AB % 150, Stockholm AB Stockholmshem 91.00% 16,052, Stockholm Västertorp Energi AB % Stockholm Stockholms Stads Bostadsförmedling AB % 1, Stockholm CentrumKompaniet i Stockholm AB % 1, Stockholm Skolfastigheter i Stockholm AB 91.00% 45, Stockholm Stockholm Vatten AB 91.00% 1,137, Stockholm Stockholms Hamn AB 91.00% 455, Stockholm Roslagshamnar AB 91.00% Stockholm Stockholms Hamnentreprenad AB % Stockholm Nynärhamns Hamn AB % Stockholm AB Nynäshamns Skeppsmäkleri o speditionskontor AB % Nynäshamn AB Stokab % 500, Stockholm Stockholms Parkerings AB 91.00% 36, Stockholm Parkab Övervakning AB % Stockholm Stockholms Stadsteater AB 96.40% 12, Stockholm Stockholm Globe Arena Fastigheter AB % 1, Stockholm AB Stockholm Globe Arena % Stockholm Stockholm MFO AB % 1, Stockholm S:t Erik Försäkrings AB % 100, Stockholm AB Glasbrukskvarteret Saluhall % 1, Stockholm AB Glasbrukskvarteret SWF % 40, Stockholm Great Europena Duck Races AB % 1, Stockholm Stockholm Water Action AB % 1, Stockholm S:t Erik Markutveckling AB % 1, Stockholm Fastighets AB G-mästaren % Stockholm Fastighets AB Runda Huset % Stockholm Stockholm Norra Station AB % Stockholm Stockholm Business Region AB % 21, Stockholm Stockholm Visitors Board AB % Stockholm Business Arena Stockholm AB 66.35% Stockholm Stockholms Näringslivskontor AB % 1, Stockholm Stockholm Event AB % 1, Stockholm AB Stockholms-Turisten % 1, Stockholm Sold/merged companies 4.9 Total 1, ,655.2

48 NOTES ANNUAL REPORT NOTE 15 SHARES IN ASSOCIATED COMPANIES Group Parent Company (MSEK) Acquisition value brought forward 4,6 5,6 Share of result for the year 0,1-1,0 Net value carried forward 4,7 4,6 Share % Number Booked value capital and votes of shares Corporate ID No. Domicile Syvab AB 33.33% Stockholm Nynäshamns Mark AB 50.00% 2, Stockholm Bodab 50.00% Stockholm Total NOTE 16 OTHER LONG-TERM SECURITIES NOTE 18 UNTAXED RESERVES Group Parent Company (MSEK) Acquisition value brought forward Acquisitions Sales/disposals Accumulated acquisition values carried forward Net value carried forward NOTE 17 PREPAID EXPENSES AND ACCRUED INCOME Group Parent Company (MSEK) Accrued interest income* Accrued rents Other accrued income Other pre-paid expenses Other items Total pre-paid expenses *Accrued interest income relates to receivables in Parent Company Parent Company (MSEK) Allocation fund Total NOTE 19 PROVISIONS Group Parent Company (MSEK) Provisions for pensions Provision at the start of the period 1, , Upward adjustment of b/f Provisions for the period Used during the period Provision at the end of the period 1, , Other short-term provisions Provision at the start of the period Allocation for Restructuring Svenska Bostäder Other provisions for the period Used during the period Effect of changed conditions for discounting Provision at the end of the period

49 49 STOCKHOLMS STADSHUS AB NOTES NOTE 20 TOTAL LIABILITIES NOTE 23 CONTINGENT LIABILITIES Group Parent Company (MSEK) Long-term interest-bearing liabilities 21, ,336.5 Current interest-bearing liabilities 11, , Of the long-term liabilities, 0 (69.5) MSEK in the Group fall due more than five years after the reporting period. The Parent Company has no long-term liabilities that fall due more than five years after the reporting period. Borrowing for companies in the Group is done through borrowing from the Parent Company's, the City of Stockholm, finance department. Duration expressed in years is % of the debt is subject to a fixed interest rate. Group Parent Company (MSEK) Guarantees and contingent liabilities Capital value of pension commitments in excess of provision Conditional shareholders' contribution 2.6 Total contingent liabilities The Parent Company has issued a capital adequacy guarantee in favour of: AB Stokab Stockholms Stadsteater AB Skolfastigheter i Stockholm AB, SISAB Stockholms Stads Bostadsförmedling AB CentrumKompaniet i Stockholm AB S:t Erik Markutveckling AB Stockholm Globe Arena Fastighet AB NOTE 21 ACCRUED EXPENSES AND PREPAID INCOME Group Parent Company (MSEK) Holiday pay liability Social security costs Accrued interest Accrued rental costs Other prepaid income Other accrued costs Total accrued expenses NOTE 22 PLEDGED ASSETS Group Parent Company (MSEK) Relating to amounts owed to credit institutions Property mortgages 49.9 NOTES TO THE CASH FLOW 24 Items not included in the cash flow Provisions Change in interest receivables 51.0 Change in interest liabilities 33.0 Others Acquisition of properties Norra Station area Other properties 1, , Investment in construction in progress Including: Unpaid invoices from suppliers 82.5 Paid debts related to previous years Relating to other liabilities Property mortgages 1,070.5 Total pledged assets 0.0 1,120.4

50 PROPOSED ALLOCATION OF UNAPPROPRIATED EARNINGS ANNUAL REPORT Proposed allocation of unappropriated earnings GROUP The Group's non-restricted equity according to the consolidated balance sheet amounted to 17,202.8 MSEK, 0.1 MSEK of which is proposed to be transferred to restricted equity. PARENT COMPANY At the disposal of the Annual General Meeting Profit brought forward 10,072,372, Net result for the year 317,808, Total 10,390,181, The Board and the Managing Director propose that the earnings be appropriated as follows: Paid as dividends to the shareholders ( SEK per share) 600,000, Carried forward to new account 9,790,181, ,390,181, Stockholm, March ANN I KA BI LLSTRÖM Chairman of the Board JAN BJÖRKLUND Deputy Chairman CATHARINA TARRAS-WAHLBERG ROGER MOGERT ANN-MARGARETHE LIVH KRISTINA AXÉN OLIN MAGNUS TEGBORG EWA SAMUELSSON LEIF RÖNNGREN BOSSE SUNDLING Managing Director

51 51 STOCKHOLMS STADSHUS AB AUDITORS' REPORT AND LAY AUDITORS' REVIEW Auditors' Report TO THE ANNUAL GENERAL MEETING OF STOCKHOLMS STADSHUS AB, COMPANY REG.NO I have audited the annual report, the consolidated financial statements (pp 34 50) and the accounts and the administration of the Board of Directors and the Managing Director of Stockholms Stadshus AB for It is my responsibility to express my opinion on the annual report, the consolidated financial statements and the accounts and the administration on the basis of my audit. I have conducted my audit in accordance with Generally Accepted Auditing Standards in Sweden. This means that I have planned and performed my audit to obtain high, but not absolute, assurance that the annual report and the consolidated financial statements are free from material faults. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the Managing Director, and to assess the important considerations made by the Board of Directors and the Managing Director when preparing the Annual Report and the consolidated financial statements, as well as valuating the overall information in the annual report and the consolidated financial statement. As a basis for my opinion regarding discharge from liability, I have reviewed important decisions, actions and directions in the company to assess whether any Board Member or the Managing Director has any possible liabilities toward the company. I have also assessed whether any Board Member or the Managing Director has in any way acted in contravention of the Companies Act, The Annual Accounts Act or the Articles of Association. In my opinion, my audit provides a reasonable basis for the opinion I have presented below. The annual report and the consolidated financial statement have been prepared in accordance with the Annual Accounts Act, thereby giving a fair description of the Company's and the Group's results and position in accordance with Generally Accepted Auditing Standards in Sweden. The Board of Directors' report is in agreement with the other parts of the Annual Report and the consolidated financial statements. I recommend that the AGM adopts the income statements and the balance sheets for the parent Company and the Group, that the profit of the parent Company is dealt with in accordance with the proposal in the Board of Directors' Report and that the Members of the Board and the Managing Director are discharged from liability for the financial year. Stockholm, March Magnus Fagerstedt Authorised Public Accountant Lay Auditor's Review TO THE ANNUAL GENERAL MEETING OF STOCKHOLMS STADSHUS AB, COMPANY REG.NO I have reviewed the company's accounts and operations for the year The review has been conducted in accordance with The Companies Act and generally accepted auditing practices for municipal operations. This means that I have planned and performed the review to obtain reasonable assurance that the Company's operations are managed in an appropriate and satisfactory way from a financial point of view, and that the Company's internal control is satisfactory. My review was based on the decisions made by the Company's owners, and focused on reviewing whether decisions were implemented and that the operations adhered to the guidelines of the Articles of Association. A summary of the review is reported in a separate review PM of , which I have approved and handed over to the company's Board of Directors. In my opinion, my review provides a reasonable basis for the opinion I have presented below. The Company's operations have, in my judgment, been conducted in an appropriate and satisfactory way from a financial point of view, and the internal control has been satisfactory. Therefore, I find no reason to criticise the members of the Board or the Managing Director. Stockholm, March Bo Dahlström Lay auditor appointed by the Stockholm City Council

52 BOARD OF DIRECTORS AND AUDITORS ANNUAL REPORT Board of Directors and Auditors THE BOARD OF DIRECTORS OF STOCKHOLMS STADSHUS AB The Group's Board of Directors consists of at least five and no more than nine members, and at least three and no more than five deputies. They are elected by the Stockholm BOARD OF DIRECTORS PERMANENT ANNIKA BILLSTRÖM Born in 1956 Chairperson of the Board City Commissioner, Stockholm City Council JAN BJÖRKLUND Born in 1962 Deputy Chairman City Commissioner, Stockholm City Council City Council. The Board of Directors is assigned the overall co-ordination of the companies in the Group. The Board shall ensure that the companies follow the guidelines and financial framework set by political decisions. It is the task of the Board to clarify the strategic guidelines for the City Council and to provide the City Council with the foundation for balancing the requirements for financial return against the requirements for public services investments that the City Council may make on the companies. CATHARINA TARRAS-WAHLBERG Born in 1943 Deputy City Commissioner of Finance Stockholm City Council ROGER MOGERT Born in 1969 City Commissioner, Stockholm City Council ANN-MARGARETHE LIVH Born in 1948 Director of Communications Stockholm City Council KRISTINA AXÉN OLIN Born in 1962 City Commissioner, Stockholm City Council MAGNUS TEGBORG Born in 1964 Managing Director EWA SAMUELSSON Born in 1949 Group Manager, Stockholm City Council LEIF RÖNNGREN Born in 1966 City Commissioner, Stockholm City Council

53 53 STOCKHOLMS STADSHUS AB BOARD OF DIRECTORS AND AUDITORS BOARD OF DIRECTORS DEPUTIES KERSTI PY BÖRJESON Born in 1945 City Commissioner, Stockholm City Council TERES LINDBERG Born in 1974 City Commissioner, Stockholm City Council TOMAS RUDIN Born in 1965 Municipal Secretary MARGARETA OLOFSSON Born in 1947 City Commissioner, Stockholm City Council VIVIANN GUNNARSSON Born in 1944 City Commissioner, Stockholm City Council TORD BERGSTEDT Born in 1933 Ph.D. of Technology, Stockholm City Council ERI K SAERS Born in 1960 Director LOTTA EDHOLM Born in Deputy Group Leader for the Liberal Party in the Stockholm City Council HARDY HEDMAN Born in 1936 Editor, Stockholm City Council AUDITORS UNION REPRESENTATIVES CONNY NILSSON Kommunal Member Technician ROGER WICKENBERGH SKTF Member Project Manager PER-OLOF DIGNÉ SACO Deputy Company Lawyer MAGNUS FAGERSTEDT Authorised Public Accountant Deputy Auditor MIKAEL SJÖLANDER Authorised Public Accountant Lay Auditor BO DAHLSTRÖM Lay Auditor, Deputy JOEN LAGERBERG BENGT WINROTH SKTF Deputy Network Engineer KURT ÖRSTRÖM Fastighetsanställdas Förbund Deputy Landlord ROLF NORBERG SACO Member Social Welfare Secretary

54 ADDRESSES ANNUAL REPORT Company addresses STOCKHOLMS STADSHUS AB (PARENT COMPANY) SE STOCKHOLM Visiting address: Stadshuset, floor 3 Tel. swb: Fax no: [email protected] AB SVENSKA BOSTÄDER Box 95 SE VÄLLINGBY Vällingbyplan 2 Tel. swb: [email protected] AB STOCKHOLMSHEM Box 9003 SE STOCKHOLM Hornsgatan 128 Tel. swb: [email protected] AB FAMILJEBOSTÄDER Box SE STOCKHOLM S:t Eriksgatan 47 Tel. swb: [email protected] MICASA FASTIGHETER I STOCKHOLM AB Box 49,127 SE STOCKHOLM Sankt Eriksgatan 47 Tel. swb: SISAB Box 13 SE FARSTA Arvikagatan Tel. swb: [email protected] STOCKHOLMS STADS BOSTADSFÖRMEDLING AB Box 8317 SE STOCKHOLM Fleminggatan 6 Tel. swb: bostadsformedlingen@ bostad.stockholm.se STOCKHOLM VATTEN AB SE STOCKHOLM Torsgatan 26 Tel. swb: Fax no: [email protected]

55 55 STOCKHOLMS STADSHUS AB ADDRESSES STOCKHOLMS HAMN AB Box SE STOCKHOLM Magasin 3, Frihamnen Tel. swb: [email protected] AB STOKAB Box 6813 SE STOCKHOLM Tulegatan 11 Tel. swb: [email protected] STOCKHOLMS STADS PARKERINGS AB Box 4678 SE STOCKHOLM Medborgarplatsen 3 Tel. swb: [email protected] STOCKHOLMS STADSTEATER AB Box SE STOCKHOLM Beridarbansgatan 5 Tel. swb: Fax no: [email protected] AB STOCKHOLM GLOBE ARENA Box SE STOCKHOLM-GLOBEN Globentorget 2 Tel. swb: [email protected] S:T ERIK FÖRSÄKRINGS AB SE STOCKHOLM Kaplansbacken 10 Tel. swb: [email protected] CENTRUMKOMPANIET I STOCKHOLM AB Box Hornsbruksgatan 28 2nd floor SE STOCKHOLM Tel. swb: Fax no: [email protected] STOCKHOLM BUSINESS REGION AB STOCKHOLM VISITORS BOARD AB Box SE STOCKHOLM Drottninggatan 33 Tel. swb: Fax no: [email protected] S:T ERIK MARKUTVECKLING AB SE STOCKHOLM Stadshuset, floor 3 Tel. swb: Fax no: marie.wallhammar@ s-husab.stockholm.se

56 LAYOUT AND PRODUCTION: SIRIUS KOMMUNIKATION PHOTO:ANDERS RISING The wind is environmentally friendly and the wind turbine is a renewable energy source. In Sweden, we have several hundred wind turbines, which produce electricity, and there are large possibilities for expansion, on land as well as at sea. Wind turbines cause neither greenhouse effect nor pollution, but great care must be taken regarding placement in order not to endanger the landscape scenery, sound levels, flora and fauna. Sailing is a pleasant and environmentally friendly way of discovering the archipelago.