Sustainability Bond Investor Presentation November 2018

Sustainability Bond Investor Presentation November 2018
Welcome Introduction of speakers Sustainability Bond Investor Presentation November 2018

Sustainability Development strategy Sustainability Bond Framework
2 Main Facts & Figures Public Finances Consolidated Debt Sustainability Development strategy Sustainability Bond Framework Appendix

Main Facts & Figures Belgium Federal Structure & Flanders key data
Federal State 3 Regions: Flanders Wallonia Brussels 3 Communities: Flemish French German Capital Brussels Language Dutch Surface km² Population (1/1/2018) Density hab./km² (1/01/2017) Currency Euro N° of Companies 547,503 (subject to VAT) Nominal GDP (PPS) EUR 228 bn (2016) GDP/Capita (PPS) EUR (2016) Real GDP growth rate % (2017) Unemployment rate 4.4% (2017) PPS = purchasing power standards 10 Provinces 589 Towns and Cities Since 1970, Belgium has gradually transformed itself into a federal state. Specifically, Belgium recognises the existence in the country of 3 Regions :the Flemish Region in the North, the Walloon Region in the South and the Brussels Capital Region in the centre. Since the geographical spread of the different linguistic groups does not correspond to the territory of the Regions (existance of the bilingual region Brussels and of a German speaking minority inside the Walloon region), a second layer of sub-national government was needed. These 3 bodies are called ‘Communities’, hence the Flemish Community, the French Community and the German-speaking Community. These 3 bodies are responsible for cultural matters and mainly for education (schools and universities). Each of these 3 Regions and Communities has its own government and parliament and determines its own budget (including the possibility to raise debt). In addition, the Regions have the authority to raise different taxes. The Dutch-speaking part of Belgium has merged the sub-national levels of Regions and Communities. The Flemish Community has taken over the competencies of the Region of Flanders, creating one unique government, parliament and budget at the Flemish level.

Main Facts & Figures High GDP per Capita (2016) 4
EUR per capita Flanders also is a prosperous area. Its GDP / capita amounted to € 35,100 PPS (purchasing power standard) in Thus Flanders ranks 8th among the 28 EU Member States. Of the neighbouring countries, the Netherlands, Germany and Luxemburg have a higher GDP per capita. The Flemish economy is larger than that of 14 EU Member States (including Denmark, Finland and Ireland) Source: Eurostat

Main Facts & Figures Strong Economic Fundamentals
Flanders benefits from very strong economic fundamentals. Flanders France Germany Netherlands EU - 28 Unemployment Rate (2017) 4.4% 9.4% 3.8% 4.9% 7.6% Real GDP Growth Rate (average 2011 – 2017) 1.5% 1.2% 1.8% 1.3% 1.4% The Flemish economy has had a moderate growth over the last years. There was on average a real GDP growth of 1.5% in the period Nevertheless this was higher than the average growth of the Netherlands (1.3%), France (1.2%) and the EU-28 (1.4%) in the same period. Furthermore the Flemish unemployment rate is very low. It was 4.4% in 2017 compared to the 7.1% national rate and lower than the Netherlands (4.9%), France (9.4%) and EU-28 (7.6%). Flanders benefits from strong and sound economic fundamentals. In 2017 the real GDP growth rate was 1.9% in Flanders which was much higher compared to the other regions (Walloon Region 1.7% and Brussels Region 1.2%) Source: Eurostat - Labour Force Survey, Study Office of the Governement of Flanders

Main Facts & Figures Public Finances Consolidated Debt Sustainability Development strategy Sustainability Bond Framework Appendix

Public Finances Return to a balanced budget
Several budgetary challenges in last years Financial-economical crisis: Deficit in 2009 and 2010, but within 2 years return to balanced budget Stricter European budgetary surveillance: considerable negative impact on budget from 2013, but gradually integrated in budget (completed in 2016) Sixth state reform: Financial autonomy raised to 34% (levy surtax on Personal income tax) More competences and increase in financial means (approx. EUR 9.7 bn for 2015) Recurrent contribution of EUR 1.55 bn to consolidation of public finances of federal government and social security Enhancement of federal tax shift (> EUR 300 m) Budget 2016 : deficit of EUR 468 m, in realisation deficit reduced to EUR 127 m Budget 2017: surplus of EUR 2 m, in realisation surplus of EUR 470 m Budget 2018: Balanced budget Flanders has had several budgetary challenges in the last 10 years. But despite this we always succeeded to return to a balanced budget. First there was the financial-economical crisis which causes a deficit in 2009 and 2010 but within 2 years we returned to a balanced budget. Then we have the stricter European budgetary surveillance. Due to the stricter European rules in 2014 a lot of institutions were reclassified which means that we have to consolidate them into our budget and our debt. This has had a considerable negative impact on our budget (and debt) from 2013 on (changes were retroactively). Gradually it was integrated into our budget which was completed in 2016. The last challenge was the Sixth State Reform and the federal tax shift. Because of the Sixth State Reform the financial autonomy of Flanders raised to 34%. Flanders got more competences in several domains and there is an increase in the financial means of approximately 9,7 billion euro for Due to the sixth state reform Flanders has to made a recurrent contribution of 1.55 billion euro to the consolidation of the public finances of the federal government and the social security. On the slide you can also see the budgettary targets and results of the last years. For 2016: the budget predicted a deficit of 468 million euro but in reality the deficit was only 127 million so more than 300 million euro better than expected. For 2017: there was a surplus 470 mln EUR which is 468 mln EUR better then foreseen in the budget adjustment 2017. For 2018 the Flemish Community foresees a balanced budget. If we look at the public finances of Belgium in 2017 we see that is it mainly the federal government which is responsible for the deficit and not the communities and regions or local authorities. General government: -1,0% of GDP Federal government: -1,3% of GDP Communities and Regions: 0,1% of GDP Local authorities: 0,1% of GDP

Public Finances Revenues by Segment
In kEUR The Sixth State Reform, which entered into force on 1 July 2014 brought about substantial changes to the Flemish budget landscape. First and foremost, the size of the Flemish budget has grown enormously. In addition to major transfers of powers and resources, the Sixth State Reform also provided for a large increase in Flemish tax autonomy. From now on, Flanders will be collecting a larger part of its resources (nearly 33%) via own fiscal instruments: regional taxes (15%) (Yellow part), and the additional personal income tax charge, the so-called 'surcharges' (18%) (Blue part). In 2017, the revenues increased with 2,7 billion EUR compared to 2016 and amounted to more than 42 billion EUR. Half of the increase of the revenues for 2017 is situated in the revenues of the consolidated institutions but there are also increases in the regional taxes and grants from the federal level. The revenues in 2018 will be of simular size as the revenues in the budget of No real changes there. the 6th State Reform Large increase in revenues Major transfer of powers and resources Comparison budget 2016 / 2017: Increase of EUR 2.7 bn reasons? Increase of the regional taxes and grants from the federal level Expansion of the consolidation perimeter Budget 2018: Revenues at the same level as in the budget 2017

Public Finances Revenues by Segment Key revenues 2018:
The pie chart shows the different revenues of The biggest part of revenues are the regional and community resources (56%). From the pie chart you can also deduce that Flanders has gained more fiscal autonomy. As already mentioned, this is the result of the 6th state reform. 33,2% of its resources are collected via own fiscal instruments, being the regional taxes (15,4% ) and the additional personal income tax charge, the so-called ‘surcharges’ (17,8%). Key revenues 2018: 56% Regional and Community resources from Federal level 33.2% own fiscal instruments: 15.4% regional taxes 17.8% additional personal income tax charge ( = surcharges)

Public Finances Regional Taxes Key regional taxes of Flanders:
- Registration tax - Tax on real estate - Road tax (cars) - Tax on first use of car - Heavy goods vehicles charge - Inheritance tax - Donation tax - Other taxes In kEUR This slide shows an overview of the regional taxes in Flanders. The registration tax (when you buy a house), inheritance tax and road tax for cars are the 3 most important taxes. They count for 77% of the regional taxes. It is the region which has the competences, that can decide and make laws on the policy of these taxes. In Flanders almost 99% of these regional taxes are also collected by the Flemish administration. Key regional taxes of Flanders: Registration tax Inheritance tax Road tax for cars

Public Finances Breakdown of Public Spending
Also in the expenditures we see a large increase, as a result of the Sixth State Reform, in the adjusted budget 2018 (AB 2018) compared to the realizations The largest increases are situated in Welfare, Public Health and Family and in Employment and Social Economy. Also in the expenditures we see a large increase, as a result of the Sixth State Reform, in the adjusted budget 2018 (2018 AB) compared to the realizations 2014 (ACT). The largest increases are situated in Welfare, Public Health and Family and in Employment and Social Economy.

Public Finances Breakdown of Public Spending
The Sixth State Reform not only increased significantly in absolute terms the expenditures of the Flemish Community, but also changed the proportion of the different policy areas in the expenditure budget. Before the state reform almost 40% of the expenditures went to Education and Training. After the sixth state reform the proportion of Education and Training decreased to 30%, although increasing in amount. At the same time we see an increase from 15% to 27% for Welfare, Public Health and Family Affairs and from 5% to 8% for Employment and Social Economy. Key competences in the Flemish budget: Education welfare, public health, family

Budgetary targets and results (in mio euro)
Public Finances Realisations Budgetary targets and results (in mio euro) Despite budgetary difficulties in the past, the Flemish Community has proven in the past that she takes the necessary measures to put the budget back on track. This is one of the reasons why rating agencies, in the past and present, allways pointed out the strong track record of budgetary discipline as one of the major strengths of Flanders. Budget 2016 : deficit of 468 mln EUR, in realisation deficit reduced to 168 mln EUR Mainly due to the expenses: 259 mln lower than budgeted (747 mln less expenses versus expected underutilisation of 490 mln: ex. Energy fund: 128 mln, institutions: 137 mln, DAB’s: 154 mln) Budget 2017: in the budget of 2017 there was a surplus of 2,4 million foreseen. However in realisation there was a surplus of 470 million euro. The budget surplus was mainly due to a surplus in revenues: regional taxes (+93.1 million compared to the 2017 budget) Additional personal income tax charge, the so-called ‘surcharges” ( million compared to the 2017 budget) Other revenues ( million compared to the 2017 budget) Besides the surpluses in revenues, there was also a surplus in expenditures ( million compared to the 2017 budget) Furthermore there were some corrections on the budget. The sum of these corrections was around 60 million euro. The Flemish Government aims to achieve a balanced budget in 2018. Despite budgetary difficulties in (financial and economic crisis) and (stricter European surveillance) the Flemish Community has taken immediately the necessary measures to set the budget back on track. Budget surplus in 2017: EUR 470 m

Consolidated Debt Overview of the Strategy
Diversified financing strategy: Combination of banking and non-banking financing tools; Large and diversified access to short term liquidity: Belgian Commercial Paper programme combined with a short term credit line of EUR 3.25bn; Conservative Risk management: Conservative interest rate risk management : indexation linked to fixed rates or simple floating rates in the Euro zone (Euribor…); distribution fixed rate / floating rate adjusted depending on the long term economic trends; 95% of the outstanding debt at fixed rate as of 31/12/2017 Complete hedging of currency risk: no currency risk incurred by the Flemish Community; Systematic hedging at the issuance via swaps in EUR; Conservative approach on derivatives: No structured products; Issuance of bonds as main medium and long term financing tool: Flanders is a recognized issuer in the capital markets. Purpose is to further develop the reference benchmark curve; Diversification of the investor base; Since the middle of 2015 the Flemish Community is issuing again on the international capital market. These proceeds are used to internally finance consolidated entities in: social housing and the PPP project of school buildings. In the future the Flemish Community will continue to issue under her name on the capital market instead of using guarantees. The purpose is to build up a reference benchmark curve for Flanders and to diversify the investor base. We have a conservative risk management, so we are mostly interested in issuing long term debt with a fixed interest rate in EUR. In the case we would issue in a foreign currency we are legally obliged by a Flemish decree to hedge the currency risk. We have also a large access to short term liquidity through the Belgian Commercial Paper program of 1,5 billion euro and a credit line with our cashier of 3,25 billion euro.

Consolidated Debt Consolidated Debt position in mio EUR 2016 2017
2018 forecast Direct and indirect debt 4.642,12 5.313,89 6.782,97 VMSW (social housing) 6.282,50 6.112,95 5.929,78 VWF (social housing) 2.842,66 2.705,57 2.558,28 EKM's (social housing) 590,59 595,41 603,71 VIPA (including debt infrastructure hospitals and rest homes) 1.760,22 1.670,24 1.577,76 DBFM "Schools of Tomorrow" 393,88 181,96 141,26 PPP debt 779,06 756,93 737,84 Hospital infrastructure 4.963,21 4.726,93 4.487,20 Debt taken over from municipalities 0,00 90,59 Transitional account resettlement 2018 SFA 967,59 Rest 1.554,19 1.321,86 1.287,39 TOTAL 23.808,43 23.385,74 25.164,37 This slides tells something more about the consolidated debt position of Flanders. Flanders consolidated debt position is strronly influenced by two major changes. First in 2014 the National Accounts Institute reclassified a large number of public entities as a consequence of the new rules of ESA 2010. Most important consolidations were: The incorporation of the social housing companies (VMSW and VWF) - 9 billion euro The incorporation of the financing of the infrastructure of hospitals and rest homes by VIPA - 2,1 billion euro the ppp scheme for the building of 215 schools million euro It should be noted that most of these debts were no new debts but debts that were previously reported as guaranteed debt. Secondly In 2016 there was a large increase of 4,85 billion euro in comparison to This augmentation is due to the sixth state reform that assigns the financing of hospital infrastructure from the federal government to the communities. When you look at the consolidated debt without taking into account the changes of the sixth state reform, there is even a slight decline in comparison to 2015. In 2017 the consolidated debt decreased with 420 million euro while an increase of 920 million was expected in the budget of This is mainly due to the smaller increase of the direct debt: it only increased with 500 million euro instead of an expected increase of 1.8 billion euro. The coming years an increase is expected due to an increase in direct funding of the Flemish Community in: the social housing sector due do the objectives in the land and property act, the program of the building of the schools who is in full progress the big mobility project in Antwerp (Oosterweel link). More information about the projects can be find on our website. In 2016 there was an increase of EUR 4.86 bn. This is mainly due to the take over of the imputed loans from the federal level (Hospital infrastructure). Without this take over the consolidated debt would have slightly decreased. In 2017 the consolidated debt decreased with EUR 420 m while an increase of EUR 920 m was expected in the budget 2017.

Consolidated Debt Financing needs 2017 - 2020
in EURm 2017* 2018 2019 2020 VMSW 950.00 800.00 1,225.41 1,135.09 VWF 150.00 220.00 323.23 311.49 School Invest 450.89 88.53 35.53 49.88 BAM 0.00 87.50 262.50 275.1 TOTAL New funding 1,550.89 1,196.03 1,846.67 1,771.57 Loan redemptions 252.6 758.71 58.41 322.67 TOTAL 1,803.49 1,954.74 1,905.08 2,094.24 2017* = realised numbers Financing 2018 (in EUR m) This slides gives an overview of the realist budget in 2017 and a forcast of the financing needs for the coming years. As shown there are big needs for the social housing sector (VMSW/VWF): min 1 billion euro for 2018 and 1,5 billion for 2019 (due to the objectives in the Land and Property Act.) the program of the school buildings total amount of the program is 1.5 billion euro spread over several years: the needs are estimated at 88 million euro for 2018 and 35 million euro for 2019. BAM (the big mobility project in Antwerp- Oosterweel): Total estimated amount: 3,5 billion euro spread over several years 2018: 87 million euro 2019: 262 million euro There was also an EMTN who came at maturity in 2018 (750 million euro) Total needs for Flanders are between 1.8 and 2.1 billion euro per year In 2018 we already financed 750 million with a regular BM, 150 million through or BCP, 295 with private placements We would like to issue een sustainability bond depending on the market circumstances. 2018 EIB BM (regular) Sustainability BM 750.00 tbc BCP 150.00 Private placements 295.00 Balance 9.74

Consolidated Debt Financial instruments
EMTN Program amount: EUR10 bn (dated 31st October 2018) Currently outstanding: EUR 5,131.5 m EMTN (all fixed rate) Dealers: ING, BNP Paribas Fortis, KBC, Belfius, HSBC, Société Générale, LBBW, CA ECB-eligible PSPP eligible Commercial Paper Program amount: EUR 1.5 bn BCP-programme Dealers: KBC, Belfius Currently outstanding: EUR 0 m STEP-compliant Schuldschein Currently outstanding: EUR 37.5m Cashier : ING creditline of EUR 3.25 bn To finance al those needs we have the following financial instruments at our disposal. Under the Emtn –program (long Term) we issue: Benchmark issues under our EMTN-program this year we plan a total benchmark issues of max 1.5 billion euro – Flanders already issued a first BM of 750 million euro – Depending on the market conditions we plan to issue a sustainability bond of 500 /750 million euro The maturities are between 10 and 20 years or longer. Purpose is to build a reference benchmark curve. Private placements on our EMTN program Schuldschein: maturities between 7 and 40 years Commercial Paper program (Short Term): A part of the underlying funding of the program of the school building is financed with a floating rate. Therefore the Flemish community decided to also fund a part on the capital market through a floating interest rate on the BCP program. We expect to fund 150 million euro in 2018. Current Account Creditline of 3,25 billion euro.

Sustainability Development strategy
Competence Distribution Federal State “powers related to public interest” Flemish Community “powers related to language and culture” Flemish Region “powers related to territory and economy” Economic development & co-operation Public infrastructure Town & country planning Environment Energy Employment Agriculture Foreign Trade Regional transport Control & organization of local governments Public Finances Defense Security Justice Social Security Public Health Domestic & International politics Transport & Communication Education Culture Public health (prevention) Welfare Language issues Child protection Family Affairs This slide gives an overview of the structure of Belgium and its communities and regions. The process of decentralising the Belgian State involved the gradual transfer of competences to the regional and community entities. Like I already told before there are 3 regions and 3 communities in Belgium. In Flanders the Flemish Community and Flemish Region have merged, this means that there is only one parliamant, one government and one budget. The major competences of Flanders are stipuled on this slide, giving Flanders the possibility to emphasize on specific flemish accents and to create an added value to the Flemish people. Like you can see Flanders has competences in the domains of education and culture for example (competences of the Flemish Community) but also in the domains of public infrastructure, environment, energy,.. (competences of the Flemish Region). The Legislative power is exercised by the Parliament which is composed of 124 members. The Parliament of Flemish Community rules by decree, passing laws of the Flemish Community and the Flemish Region. The Flanders’ Parliament also delegates 29 of its members to the Federal Senate.

Flemish strategy for Sustainable Development Flanders has actively integrated sustainability into its development plans: 2006 First Flemish strategy for Sustainable Development based upon the thematic priorities of the European Sustainable Development strategy (EU SDS). 2008 Decree guarantees the continuity in the sustainable development policy 2011 Second Flemish strategy for Sustainable Development design to incorporate the existing action plans of the Flemish Government (Flanders in Action, Pact 2020) and resulted in a strategic plan with long-term objectives This slide gives an overview of the different strategies Flanders has taken for sustainable development. Flanders has actively integrated sustainability into all its development plans. Like you can see Flanders already started in 2006 (more than 10 years ago) with his first Flemish strategy for Sustainable Development. This strategy was to a large extent based upon the thematic priorities of the European Sustainable Development Strategy. To guarantee the continuity of a horizontal policy and the development of a strategy for Sustainable Development in every legislature the Flemish Government adopted a decree for Sustainable Development in September 2008. The second Flemish strategy for Sustainable Development was adopted in 2011 and resulted in a strategic plan with long-term objectives that incorporate the existing action plans of the Flemish Government (Flanders in Action, Pact 2020). In March 2016 the Flemish Government presented its new strategic outlook for the future « Vision 2050: a long-term strategy for Flanders » which constitutes the third Flemish strategy for Sustainable Development. I will tell more about Vision 2050 in the next slide. Most recently, Flanders has developed a roadmap to support the Flemish SDG implementation agenda: « Vizier Flemish 2030 target framework » (hereafter Vizier 2030) with intermediate objectives for 2030 to achieve the Vision 2050, 2016 Third Flemish strategy for Sustainable Development – Vision 2050 : a long-term strategy for Flanders 2018 Roadmap to support the Flemish SDG implementation agenda - Vizier 2030: Flemish 2030 target framework with intermediate objectives for 2030 to achieve the Vision 2050

Vision 2050 The Vision 2050 : a long-term strategy for Flanders is a forward-looking policy document that sets out a vision for an inclusive, open, resilient and internationally connected region Seven priorities identified in the 2050 Vision Circular Economy: Closing cycles, recyclable materials Healthcare and welfare: Provide population with an adequate quality of life Smart living: Smart and sustainable buildings Transport and mobility: Smoother, safer and more Environmentally friendly transport system Vision 2050 is the long-term strategy for Flanders. This forward-looking policy document is the first step of the SDG implementation agenda and sets out a vision for an inclusive, open, resilient and internationally connected region that creates prosperity and well-being for its citizens in a small, innovative and sustainable matter. There are 7 priorities identified in the Vision 2050: Circular economy: in the circular economy we deal more efficiently with raw materials, materials, energy, water, space and food by smartly closing cycles. Natural resources are so much possibly reused. Smart living: transformation of the existing residential heritage into smart and sustainable buildings. Industry 4.0: Industry 4.0 is a collective term for new technologies and concepts within the knowledge and manufacturing economy. It also refers in particular to the intensive digitalisation of the industry that is currently taking place. Lifelong learning and a dynamic professional career: Provide the opportunity to the population to fully develop their potential through education and training. The education and training landscape is an active learning and living environment experiential work and combinations of learning and working and social engagement have a full place. Healthcare and welfare 4.0: provide the population with an adequate quality of life. There is a general effort to support children and young people but also elderly people get the opportunity to stay active in all areas stay and if their condition no longer allows, there is access to affordable and quality care. Working on a smooth and safe mobility system. We are committed to a smoother, safer and more environmentally friendly transport system. For this we need a trend break. To realize this, there is a need for a modal and mental shift, innovation in the logistics systems (the feed and vessel fleet and the railways). In line with the European environment and climate policy we are committed to a low carbon and environmentally friendly transport system. Energy transition: transition to a low-carbon energy system that is maximally renewable and provides a realistic energy mix. It is sustainable and affordable competitive energy whose supply is assured. Industry 4.0: New technologies and concepts Energy: Low carbon, sustainable, reliable and affordable energy system Lifelong learning and a dynamic professional career: Provide opportunity to the population to fully develop their potential

Vizier 2030 The Flemish 2030 target framework: Develop a clear long-term vision geared to the SDGs Define Flemish 2030 objectives Take appropriate actions Applying a customized monitoring and reporting system Integrating the SDGs into internal operations, management and the instruments of government institutions Cooperation with cities, municipalities and provinces Carry out a customized stakeholder management Is the translation of the 2030-agenda of the UN to a Flemish SDG framework It consists of 49 objectives starting from the 17 SDGs, with 2030 as the horizon and the focus on Flanders In order to bring this framework closely in line with Vision 2050, the 2030 goals framework follows the following structure: “for an inclusive society, through a new economy, within the ecological limits of the planet, with an open and flexible government in partnership” Vizier 2030 is the translation of the ADO (agenda voor duurzame ontwikkeling) of the UN. It comprises of 49 objectives for 2030 that are concrete intermediate steps for achieving the Vision These 49 targets are aligned on The United nations’ 17 SDG’s. In order to bring this framework closely in line with Vision 2050, the 2030 goals framework follows the following structure: for an inclusive society, through a new economy, within the ecological limits of the planet, with an open and flexible government in partnership.

Sustainability Bonds Summary
Flanders’ objective is to create prosperity and well-being for its citizens in a smart, innovative and sustainable manner. Flanders Sustainability Bonds’ will channel investments towards the pillar sectors of its Vision and notably towards the sectors that have priority for Flanders in the coming years: Energy, Housing, Education and Circular Economy. A framework fully aligned with Flanders Sustainable Development strategy and combining both environmental and social benefits Categories supported by the Sustainability Bond Environmental benefits Social benefits Energy Energy Efficiency in Buildings Climate change mitigation Reduction of energy poverty Smart living Affordable Housing (resulting from most recent EPB requirements for housing) Reduction of inadequate housing conditions and poverty Lifelong learning and a dynamic professional career Access to Education (resulting from most recent EPB requirements for schools) Extension and adaptation of school capacities Circular economy Pollution prevention and control (including circular economy) Waste reduction and recycling Support to local economy Job creation First i will start with a short summary of the sustainability bond framework With the issuance of our sustainable bond we want to channel the investments towards 4 key pillar sector of visions 2015 for Flanders. Why do we emphasize those 4 pillars? Because they belong to the competences of the Flemish community or region. pillar: Energy (Flemish region) The related use of proceed supported by the sustainability bond is Energy efficiency in buildings Second pillar: Smart living (Flemish Region) The related use of proceeds supported by the sustainability bond is Affordable Housing 3th pillar: lifelong learning and a dynamic professional career (Flemish community) The related use of proceed supported by the sustainability bond is Access to Education Fourth pillar: circular economy ( Flemish community) The related use of proceed supported by the sustainability bond is pollution prevention and control (including circular economy) The eligible projects within these categories generate both climate change mitigations and social benefits such as the reduction of energy poverty, extension and adaption of school capacities, job creation,… In the following slides I will give more details about the categories and the eligible projects. If financing needs appear in other activities, that are defined as green or social activities in the Green and Social principles, the framework will be updated accordingly. Flanders Sustainability Bond framework complies with best market practices (cf. next slide)

Sustainability Bond Framework
Follows the ICMA Sustainability Bond Guidelines Use of Proceeds Evaluation & selection Reporting Management of proceeds Energy Efficiency in Buildings Affordable Housing Access to Education Pollution prevention and control (including circular economy) Eligible Expenditures: expenditures made in the current calendar year of the issuance of a Sustainability Bond and in the previous year Exclusion of expenditures dedicated to other Belgian agencies that could refinance themselves by issuing their own Social, Green or Sustainability Bonds or that beneficiate from federal or European financing Sustainability Bond Committee: Finance & Budget, VMSW, Agion, Vlaio, VEA, Circular Flanders, Environment Committee identifies and selects the Eligible Expenditures in Flanders’ budget, at the beginning of each fiscal year Committee validates the effective disbursed amounts of Eligible Expenditures at the end of each fiscal year Register established to monitor the allocation of proceeds Allocation in priority to expenditures of the previous year, and thereafter expenditures of the current year Pending full allocation, cash managed within normal treasury liquidity Annual reporting until full allocation on: Allocation of Eligible expenditures Unallocated proceeds Examples of projects Environmental and social impact indicators The sustainability bond framework follows the icma sustainability bond guidelines and consist of 4 types of use of proceeds (energy efficiency in buildings, affordable housing, access to education and pollution, prevention and control (including circular economy) The eligible expenditures will first be selected of the previous year. Only if there are not enough expenditures from the previous year, Flanders will also take expenditures from the current year. The evaluation and selection will be done by a sustainability committee. The committee will comprise of members of the department of finance and budget, Vmsw, Agion (agency for school infrastructure, Vlaio (Agency for innovation and Entrepreneurship) VEA (Flemish Energy Agency) and circular Flanders and the department of Environment. The committee will meet minimum twice a year to: Identify and select the eligible expenditures in Flanders ‘ budget (at the beginning of each fiscal year) Validate the effective disbursed amount of eligible expenditures (at the end of each fiscal year) To discuss and evaluate the allocation reporting and impact reporting Flanders values the importance of transparency and therefor we will publish an annual report on our website that will detail the allocation and impact of Sustainability Bond net proceeds The allocation reporting will be produced on a portfolio basis. It will provide: The total amount of expenditures per eligible categories The share of allocated amount vs total amount The amount of unallocated proceeds if any Examples of the projects The impact reporting will provide information on the environmental and social impact indicators As confirmed by Sustainalytics, our framework is aligned with the sustainability Bond Guidelines and its 4 core components. Flanders Sustainability Bond framework complies with the best practices including : The alignment with the Sustainability Bond Guidelines (June 2018) The setting-up of a Sustainability Bond committee to identify and select Eligible Sustainable Expenditures The publication of an annual allocation and impact reporting An external review by Sustainalytics

Energy Efficiency in Buildings (1/2) Eligible Expenditures related to Energy Efficiency in Buildings are the Fund’s expenditures and Flanders’ expenditures dedicated to energy loans at adjusted interest rates The Fund Aim: help targeted populations – “Emergency Buyers” - with the energy refurbishment of houses in poor condition to combat energy poverty by making the house more energy-efficient Eligible works : roof insulation wall insulation high-efficiency glazing installation of condensation boilers Energy loans To carry out energy refurbishment in existing housing and energy-efficient techniques in newly built houses All types of insulation High-efficiency glazing Air-tightening and airtightness tests Energy-efficient ventilation and heating systems Solar panels Solar water heaters or other economic systems for domestic hot water Relighting or relamping Energy audit Energy-efficient domestic appliances; Energy storage techniques and management systems The first category: energy efficiency in building Context: the Flemish climate policy plan and the concept nota about the Flemish energy plan contain measures to limit energy consumption in among others the housing sector. Objective: is to support affordable clean energy and energy efficiency and reduce energy poverty. So both a social en environmental approach. Concrete measures: Subsidizing of energy loans and the setting up of a so called rolling fund (herafther the fund). I want to emphasize that the fund still has to be set up. It is not concrete yet. The Fund In a nutshell, what aims it to do: combat energy poverty by making the house more energy – efficient. For whom? targeted populations will be the vulnerable low income household (the exact conditions to dertermine the beneficiaries still have to be decided) In short Flanders will co-finance the investments. The owner – occupier must only repay this investment on sale or inheritance of the property. As a result, the monthly income is not affected. Moreover the Eligible works that qualify are: roof and wall insulation, high-efficiency glazing and installation of condensations boilers. these investments lead to more energy efficiency and thus reducing the energy cost which also results in a higher monthly income. Energy loans Aim: Energy refurbishment in existing houses Energy-efficient techniques in newly built houses. The modalities of the loan vary according to the target group. By doing so, Flanders wants to priorities certain low income households. For the low income households Zero rate is applicable Max Amount of the loan: € Repayable over a period of 10 years. Non-commercial legal entities and cooperative companies (schools, hospitals,…) 1% rate is applicable Amount: € Repayable over a period of 10 years 3th group: is everybody else 2% rate is applicable Amount: euro Repayable over a period of 8 years This measure will stop at the end of 2018 due to the market conditions. Nowadays you can get better rates in a bank Works that qualify are amongst others: All types of insulation, high – efficiency glazing, solar panels, … On the slide you can see the complete list.

Energy Efficiency in Buildings (2/2) Project Energy Loans in 2017 – split up per category Number of loans granted in 2017: 3,629 Total amount: EUR 25.7m The pie chart on this slide shows a split up by category for the year 2017 As shown, the loan is mostly used to finance solar panels (39%), followed by high-efficiency glazing (20%), roof and attic floor insulation 16% and condensing boliler (15%) In total there were 3629 loans granted in 2017 for a total amount of 25,7 million euro.

Affordable Housing (1/4) Eligible Expenditures related to Affordable Housing are Flanders’ expenditures dedicated to the financing of the social housing agencies VMSW and VWF. It should be noted that these expenditures are not included in the year budget related to the Social Housing subsidies Flemish Social Housing Association (VMSW) social mortgage loans for certain acquisitions and renovations to targeted populations provide subsidised funding and market loans with compensation to local housing actors Flemish Housing Fund (VWF) special social mortgage loans to households to buy, renovate or preserve their property VWF buys buildings that are vacant for a long time to renovate or replace. Afterwards they rent the houses to targeted populations The second category Flanders is intending to finance are the expenditure related to affordable housing. The 2 main actors for Flanders are VMSW and VWF. Both entities aim to facilitate ownership to targeted populations and provide social housing with adapted rents to targeted populations. They consciously opt for an approach with a view to the sustainable use of space and materials on the one hand and the creation of a social mix on the other.

Affordable Housing (2/4) Objective of VMSW and VWF: facilitating ownership to targeted populations and provide social housing with adapted rents to targeted populations Project name: Luca 2 118 dwellings Location: Antwerpen, Noorderlaan , Canadalaan , Manchesterlaan 5-9 Flanders' committed amount: EUR 13.9m Construction started in 2017 This is an example of a Project of VMSW in Antwerp, the Luca 2 building. The newly built construction will consist of 118 rental dwellings and meets the most recent EPB requirements. Therefore this project is a nice example of a combinations of climate change mitigations and social benefits The commitment of Flanders in this project through VMSW is 13,9 million euro. The building is still in a construction phase.

Affordable Housing (3/4) VMSW - Main Figures Some key figures for VMSW over 2017 2489 renovations completed for a total cost of 156,94 million euro 1049 new owner occupied dwellings completed 2101 new rental dwellings constructed.

Affordable Housing (4/4) VWF- Main Figures Some key figures for VWF over 2017 In 2017 VWF granted 2174 loans for a approximatly 351 million euro. The average loan amount was € with an average duration of 23 /24 years. All loans were granted with a rate of 2%. If we look at the family composition we see that the largest part of loans was granted to two parent families (49%), followed by families without childeren (29%). The single parent families are good for 22%.

Access to education (1/2) Eligible Expenditures are dedicated to the construction of public Primary and Secondary Education school buildings under the DBFM program of Schools of Tomorrow The objective is to expand capacity for additional places and to guarantee the multi functionality of new school buildings for the public. Flanders has approximately 20,000 school buildings The “Masterplan Scholenbouw” established in 2014 has 5 strategic objectives: Renewing the existing educational heritage Extend the educational capacities Tapping alternative sources of funding (DBFM schools of Tomorrow) Focusing on school buildings of the future Promote long-term planning and a management approach 3th category is acces to education. Flanders counts school buildings of which more than half were built before 1970 and even a quarter were built before 1950; Moreover, due to years of underinvestment in education and demographic growth the school infrastructure is unsufficient and their is a capacity shortage. To tackle those challenges, Flanders approved the « Masterplan scholenbouw » in An ambitous plan that consists of 5 strategic objectives. One of those objectives is the DBFM (Design Built Finance Maintenance),program schools of Tommorrow. The eligible exependitures in our 3th category are Flanders’ expenditures related to the construction of schools under the DBFM program Schools of Tomorrow the DBFM program contains: The building of 182 school buildings projects. 82% of the new buildings are already in use at the end of 2017 For a total amount of 1,5 billion € In total M² Student capacity: students All the schools building have to meet very strict EPB requirements and 8 of the schools under the DBFM prgram are passive schools. This brings me to the next slide Project name: BA Koekelberg - Campus Unesco Location: Kleine Berchemstraat 1 , 1081 Koekelberg Flanders' committed amount: EUR 23.1m 1,200 students beneficiated Project completed in 2018 DBFM program Schools of Tomorrow: PPP-project of 182 school building projects In total 1,5 billion euro 710,000 m² buildings 133,000 students 150 school buildings in use at the end of 2017 (82%)

Access to education (2/2) Focus on Passive Schools included in the DBFM program of Schools of Tomorrow What are passive schools buildings? Very energy-efficient school buildings with a comfortable indoor climate with minimal power consumption Decree of 7 December 2007 contains the technical criteria for the 'Pilot project Passive schools’ 8 projects under the DBFM program Schools of Tomorrow are passive schools In Flanders there is also a pilot project, the so called passive schools. What are the key features of a passive school? A Very energy-efficient buiding a comfortable indoor climate minial power consumption. The technical criteria of a passiv school are regulated by the decree of 7 december 2007 An example of a passive school under the DBFM program is the school in Mortsel. Flanders will invest 6,6 million in the project. The project is still under construction Project name: Mortsel Location: Lusthovenlaan 12, 2640 Mortsel Flanders' committed amount: EUR 6.6m Expected number of students: 700 Project under construction

Pollution prevention and control (incl. circular economy) (1/2) Eligible Expenditures related to Pollution Prevention (including circular economy) are Flanders’ expenditures dedicated to “Circular Flanders” and Vlaio circular economy projects Circular Flanders Since 1 January 2017, the ‘Circular Flanders’ hub is a partnership of governments, companies, civil society, and the knowledge community taking action together Waste recycling Soil remediation Waste to energy Waste reduction Reduction of air emissions (excluding from fossil fuel technologies) Wastewater treatment Eco-efficient and circular economy adapted products Vlaio Clusters initiatives Demand-driven innovation platforms for stimulating collaboration between companies and knowledge centers The cluster organizations are financially supported by Vlaio (Flemish Agency for innovation and entrepreneurship) A 4th categorie are the exependitures related to pollution prevention and control (including circular economy). The 2 main actors here are: Circular Flanders and the Vlaio clusters initiatives. 1 Circular Flanders is a partnership of governments, companies, civil society and knowledge taking action together. 2 The clusters initiatieves are: Demand driven Innovation platforms For stimulating collaboration between companies and knowledge centers. The cluster organisations are financially supported by Vlaio. Both projects funded by Circular flanders and the Vlaio clusters initiatives are within the scope of the sustainability bond. Flanders intends to use part of the proceeds to finance the costs for projects that contribute to: a circular economy, waste reduction, recycling, reuse, waste to energy, waste water treatment, soil remediation. The projects that will be chosen in the future are based on their innovation, scalability, partnerships, as well as learning and demonstration value.

Pollution prevention and control (incl. circular economy) (2/2) The projects are chosen based on their innovation, scalability, partnerships, as well as learning and demonstration value Project name: InOpSys Location: 12, Zandvoortstraat, 2800 Mechelen Flanders' committed amount: EUR 1.25m Waste treatment project counting with innovative concept of Plant-on-a-Truck : mobile water treatment plants that reuse materials and reduces waste in the production of new medicines An example of a project that could be financed in the future is a project like InOpys They have developed an innovative concept to treat toxic, non – biodegradable and / or persistent chemical and pharmaceutical wastewater streams by introducing their mobile purification installations or plant-on-a-truck. I now will give the worth to Kristien, she will tell you something more about the allocation reporting

Allocation Reporting – potential breakdown Flanders will publish an allocation reporting approximately one year from the date of the bond issuance, and annually thereafter until full allocation of the net proceeds. In EUR m 2017 Affordable housing 1,099.80 Access to Education 253.50 Energy efficiency in buildings 25.70 Pollution prevention and control (incl. Circular economy) - Total Eligible Expenditures in 2017 1,379.00 Flanders will publish an allocation reporting approximately one year from the date of the bond issuance and annually thereafter until full allocation of the net proceeds. The reporting will be produced on a portfolio basis (i.e. aggregated amount per eligible category). It will provide: the total amount of expenditures per eligible categories, the share of allocated amount vs. total amount (in %), the amount of unallocated proceeds, depending on confidentiality constraints, examples of projects subsidized by Flanders Flanders has identified million of eligible expenditures in 2017, so we expect the inaugural issuance to be allocated in full immediately. We will finance expenditures of 2017 in 3 categories: Affordable housing, access to education and energy efficiency in buildings. Future transactions will also include expenditures in the pollution prevention and control. The impact reporting will provide information on the environmental and social impacts of its eligible expenditures. This information will be publicly available on Flanders’ website: Flanders has identified EUR 1.379m of eligible expenditures in 2017 Inaugural Sustainability bond fully allocated at issuance with 3 of the categories Future transactions will include expenditures in the ‘Pollution prevention and control” eligible categories

Impact Reporting – examples of indicators Flanders intends to publish an impact reporting that will provide information on the environmental and social impacts of its Eligible Expenditures. The relevant metrics will, to the extent of possible and when applicable, include: Category Environmental indicator Social indicator Energy Efficiency in Buildings Number of loans Overview of the investment types Energy saving (MWh/year) Avoided CO2 emissions (tCO2/year) Number of households Affordable housing Buildings with E-level ≤ 60 Number of rent houses with high efficiency glazing, roof insulation of energy-efficient heating systems Number of low-income households Spread of the rent subsidy according to the household income Spread of the rent subsidy according to the number of family members Access to Education Building data per passive school (E-value, K-level, airtightness, energy demand cooling & heating and compactness) Number of education centres supported Number of students supported Pollution prevention and control (including circular economy) Avoided food waste / year Tonnage of recycled materials that are ready to be reused Number of companies This slide gives an overview of the different environmental and social indicators Flanders will report on to the extent of possible and when applicable. This is not an exhaustive list. For each eligible category Flanders have social and environmental indicators. We will report on social indicators such as the number of households or students supported and on environmental indicators such as energy capacity generated or estimated CO2 emissions avoided. The list of indicators is also available in the framework.

External review Flanders’ Sustainability Bond framework was assessed by Sustainalytics and received a positive second-party opinion. “Flanders intends to issue several green, social and sustainability bonds to finance activities including: (i) energy efficiency in buildings, (ii) affordable housing, (iii) access to education, and (iv) pollution prevention and control (including circular economy) that contribute to the sustainable development targets stated in Flanders’ “Vision 2050” and “Vizier 2030” The use of proceeds categories are aligned with those recognized as impactful by the Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines. In addition, Sustainalytics considers the activities financed to contribute to reduced GHG emissions and waste in Flanders and contribute to affordable housing and access to education. Sustainalytics highlights that all social categories have well defined target populations and that Flanders aims to report for each category on social as well as environmental impact indicators.” Flanders has appointed Sustainalytics as their Second Opinion Provider following a Request for Proposal sent to different Second Opinion Providers. Sustainalytics proposal was the most adapted to this Sustainability Bond project. As confirmed by Sustainalytics, Flanders Sustainability Bond Framework is credible and impactful and alignes with the Sustainability Bonds Guidelines (2018) and its 4 core components. Use of proceeds: The use of proceeds categories are aligned with those recognized as impactful by the Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines. In addition, Sustainalytics considers the activities financed to contribute to reduced GHG emissions and waste in Flanders and contribute to affordable housing and increased access to education. Moreover, Sustainalytics highlights that all social categories have well defined target populations Project evaluation and selection: Flanders’ internal process in evaluating and selecting projects is aligned with market standards. A dedicated Sustainability Bond Committee is responsible for project evaluation and selection. Sustainalytics views positively the inclusion of innovation and scalability as criteria for project selection for the circular economy related projects. Management of proceeds: Flanders’ processes for management of proceeds is aligned with market standards, including a dedicated register to monitor the allocation of proceeds. Reporting: Sustainalytics highlights that Flanders wants to report for each category on social as well as environmental impact indicators. Sustainalytics is of the opinion that the Flanders’ Sustainability Bond Framework is credible and impactful and aligns with the Sustainability Bond Guidelines 2018.

Indicative terms Flanders’ Sustainability Bond Issuer
The Flemish Community Issuer Rating Aa2 (stable) by Moody’s Expected Issue Rating Aa2 Issue Type Senior unsecured fixed rate notes (the “Sustainability Bond”) to be issued within the Flanders’ Sustainability Bond Framework Issue Format Reg S Documentation Drawdown under Flander’s existing EMTN programme Currency EUR Tenor Expected maturity of 10 to 15 years Size Benchmark size Use of proceeds To finance or refinance eligible expenditures that have environmental and social benefits: energy efficiency in buildings, affordable housing, access to education and pollution prevention and control (including circular economy) Second opinion Sustainalytics Governing Law Belgian Listing Venue Euronext Brussels Green Structuring Advisors Crédit AgricoleCIB , Société Générale CIB Joint Bookrunners Belfius, Crédit Agricole CIB, KBC, LBBW, Société Générale CIB

Flanders in a nutshell Key Investment Highlights
One of the strongest regions in Europe Flanders has a wealthy, diversified and strong economy with one of Europe’s highest GDP per capita; unemployment rate close to Germany and solid economic growth Solid Financial Situation Flanders is collecting a greater part of its revenues via own fiscal instruments; which is positive in the context of economic growth and increasing GDP per capita levels  Fiscal flexibility: Flanders can levy more taxes rapidly if needed Fiscal Autonomy Through the 6th state reform, Flanders has received a greater range of competences and benefits from an increased tax autonomy (own fiscal instruments) Positive track record of Budgetary discipline Over recent years, Flanders has demonstrated its ability to reduce deficits while maintaining economic growth and social welfare. Flanders is the leading economic region in Belgium and amongst the richest regions in Europe. This position is mainly due to the strongly diversified economy and a top notch education system (3th best educating system according to a recent study of the OECD). Flanders has also a prudent financial strategy, a moderate level of debt and a positive track record of budgetary discipline. All this is reflected in the strong rating of Aa2. Education in Belgium ranks third-best among 35 OECD countries, well above the EU and world averages. With the highest level of pre-school participation, good teachers and flexible higher education system. Belgium is one of only six countries in the EU to meet the benchmark level performance on at least 7 out of 10 targets set by the OECD. Australia and Canada tied at the top of the list, followed by the Netherlands and Belgium. More details you can find in the appendix. Moderate direct debt levels Despite ESA 2010 rules, moderate levels of debt combined with a sound financial management strategy (no debt wall)

42 Questions ?

For more information please also consult:
Contacts Koen Algoed Secretary – general Flemish Community, Department of Finance and Budget Heidi Debedts Policy officer of Financial Operations Kristien Hantson Advisor of Financial Operations Flemish Community, Department of Finance and Budget Hugues Mommens Senior advisor, head of financial operations For more information please also consult:

Disclaimer This presentation has been prepared by Flanders for informational purposes only. Although the information in this presentation has been obtained from sources which Flanders believes to be reliable, we do not represent or warrant its accuracy, and such information may be incomplete or condensed. This presentation report is not intended to provide the sole basis for any evaluation of the transactions discussed herein. All estimates and opinions included in this presentation constitute our judgment as of the date of the presentation and may be subject to change without notice. Changes to assumptions may have a material impact on any recommendations made herein. Flanders will not accept any liability whatsoever for any loss howsoever arising, directly or indirectly, from the use of this presentation or the information provided for in this presentation or otherwise arising in connection with this presentation. This presentation is confidential and is provided to you for information purposes only and does not constitute a public offering or an investment service in Belgium. This presentation is being submitted to selected recipients only and neither this presentation nor any other offering materials may be distributed, published or made available to the public in Belgium. This presentation may not be reproduced or passed on (in whole or in part) to any other person than the selected recipients. Neither this presentation nor any offering materials may be used in relation to any investment service in Belgium unless all conditions of directive 2004/39/EC, as implemented in Belgium, are satisfied. Neither this document nor any offering materials can be used to publicly solicit, provide advice or information to, or otherwise provoke requests from, the public in Belgium in relation to the offering. Any offering in Belgium is made exclusively on a private basis in accordance with article 3 of the Belgian law of 16 June 2006 on the public offering of investment instruments and the admission of investment instruments to the trading on a regulated market. © October 2018 Flanders. All rights reserved.

APPENDIX Key Strengths

Key Strengths Located in the Heart of Europe
Flanders lies at the center of the EU’s wealthiest and most populated area; Highly developed transport and communications systems so that companies can take full advantage of this fact; Strong stimulus for companies to locate in Flanders – central location; Flanders is situated in the center of Europe, and in the middle of the axis where major economic activities are located. In terms of market access, this has a huge advantage knowing that 10% of the surface represents 50% of the activity and that within a reach of km from Antwerp, 60% of the purchasing power in Europe can be serviced. Source: Healey & Baker study

Key Strengths A Unique European Hub
Flanders offers companies rapid and efficient supply and distribution links with other major European centers and beyond. Leading ports Antwerp, Ghent, Ostend, Zeebrugge Airport freight & logistic hubs Brussels, Ostend Extensive inland waterway system Linking into the European system High density of freeways Connecting directly to other European countries High density rail network Dedicated freight lines to other parts of Europe Flanders has a very dense transport infrastructure, good connections to a lot of European capitals and industrial zones. With Antwerp as the third biggest of Europe’s harbours, a lot of container and bulk transport passes via their docks. Moreover; there are ports located in Ghent, Ostend and Zeebrugge as well. Infrastructure is extensive for railway, inland waterway as freeway systems. Moreover some larger freight and logistic hubs by air are located in Flanders, with Zaventem as a key distribution center. All this together ensures a good infrastructure and logistic system for transport and distribution. Source: Healey & Baker study

Key Strengths An Economy based on Trade and Services (2016)
Construction % Chemicals 3.2% Iron, Metal & Steel 2.1% Food & Tobacco 2.7% Other % Flanders’ economy relies, as is also for our neighbouring regions, for 73% on the tertiary sector with strong contribution of real estate & business services, wholesale & retail business, transport but also health services, government and education. Furthermore the tertiary sector counts for more than 77% of total employment. In the secondary sector, important posts are construction and chemicals. The primary sector has a marginal contribution to GDP growth and is mostly concentrated in agriculture, forestry and fishery. Real Estate and Business Services 23.8% Wholesale and Retail % Transport % Health Services % Other % Source: Institute of National Accounts

Key Strengths Strong Export-Driven Economy
The Flemish economy is strongly export oriented: Flanders’ exports represent 83.2% of Belgium’s total export in volume; Flemish exports grow steadily over time (+4.99% in 2017); The region’s most successful export products are chemicals, transport equipment, machines and equipments, pharmaceuticals and minerals. Flanders’ economy is very export-driven and accounts for 83% of the Belgian export volume. This is also valid for import activities . Being export-oriented means that in times of economic booming, growth figures are often above average. When economic growth is slowing down sensitivity of the Flanders economic activity will increase although Flanders has proven in the past to resist quite well to economic slackening due to amongst others a very diversified activity range, high labour productivity, very qualified and flexible working force, investments in innovation and R&D. Since the financial and economic crisis of 2009, export has steadily been growing, reaching year after year a new record. Source: Institute for the National Accounts

Key Strengths Diversified Base of Trading Partners
Around than 42% of Flanders’ export volumes are traded with our 3 neighbouring countries (Germany, the Netherlands, France). The Flemish economy is strong in particular in the areas of chemicals, mineral products, vehicles, machines and equipment, pharmaceuticals and plastics. According to the new 2010 regional input-output table 34% of employment for Flanders was active for Flemish exports. The EU-28 is the most important Flemish export market, due to its location (surrounding Flanders). But also emerging economies such as India and China are steadily becoming more important for Flemish exports. The same countries are amongst our largest import partners as well. The EU28 is the most important Flemish export market and the 3 neighbouring countries (Germany, France and the Netherlands) are Flanders main trading partners. Also emerging economies like India and China are steadily becoming more important for Flemish exports. Source: Institute of National Accounts

Top 10 biggest investors in 2017
Key Strengths Foreign Direct Investment Figures & Trade Partnerships Flanders has a proven track record of welcoming foreign businesses to its region. Top 10 biggest investors in 2017 1 USA 21.4% 2 Netherlands 11.6% 3 Germany 10.7% 4 France 8.4% 5 China 6.5% 6 Japan 6.1% 7 Sweden 4.7% 8 United Kingdom 4.2% 9 Switzerland 3.7% 10 Italy 1.9% Flanders managed to welcome a large number of Multinationals that have their European Coordination Centre based on Flemish grounds. We are talking about a broad range of companies active in many different sectors. In the top ten investors for 2017, you can observe a mix of countries from all around the world. The largest investor for 2017 is the USA, but some western European countries are also amongst those who contributed to all foreign investments. With China and Japan, Asian companies from the 2 leading eastern industries have put their stakes in Flanders as well and have chosen to have Flanders as their main gateway to Europe. The total investment amount was 2,08 billion euro in 2017 and created 5377 new jobs. The foreign investments were situated in Manufacturing (33,02%), Sales & Marketing (16,28%), R&D (20,00%) and Logistics (24,65%). Source: Flanders Investment and Trade Office

Key Strengths Low Unemployment Rate
The Flemish unemployment rate is lower than in Belgium, the Walloon region, Brussels region and the EU-15. At the end of 2017 unemployment rate was 4,4% in Flanders. Total employment was 72% of the population on active age (20-64 y) in This employment rate stays unchanged the last years. Flanders has a very good score on employment rate for all subgroups (towards gender and education level) of years in the EU-28: the 7th place for men and 3rd place for women. It is in the age group above 55 years where Flanders has a low score in the EU-28 and has some work to do. Source: Statistics Belgium EAK, Eurostat, Labour Force Survey Website Steunpunt Werk: Other graphs on labour market see appendix

Flanders in a nutshell Credit rating Long term credit rating
Moody’s: Aa2 stable (Belgium: Aa3 stable) Short term credit rating Moody’s: P-1 On September 16th Moody’s confirmed our excellent debt and issuer rating of Aa2 with a stable outlook and the short term rating of P-1 for our treasury notes. Our credit rating is the highest of the Belgian region’s and communities and even lies one notch above the sovereign rating. Flanders is one of the 4 regions within Europe with a rating above the sovereign rating. The other regions are Bask country, Lombardy and the autonomous province of Trento. In September of this year Moody’s plans a new visit. ISSUER MOODY'S FITCH STANDARD & POORS FLEMISH COMMUNITY Aa2 Stable BELGIUM FEDERAL STATE Aa3 Stable AA- Stable AA Stable FRENCH COMMUNITY OF BELGIUM WALLOON REGION A2 Stable BRUSSELS CAPITAL REGION

Contribution to the consolidated debt (Maastricht in EURm)
Consolidated debt of Belgium EURm 2013 2014 2015 2016 2017 Federal Gov and Soc Security ,00 ,00 ,00 ,00 ,57 Communities and Regions 45.756,00 48.705,00 48.939,00 57.214,00 57.284,23 Local entities 22.803,00 24.163,00 23.964,00 23.915,00 Total ,00 ,00 ,00 ,00 ,80 EURm 2013 2014 2015 2016 2017 Walloon Region 18.284,80 19.435,50 20.360,30 21.271,00 21.339,23 Brussels Region 4.278,20 4.219,10 3.893,50 3.799,00 4.146,06 Flemish Community 16.710,80 18.285,20 17.341,10 18.187,10 18.157,27 French speaking Community 5.916,50 5.958,10 6.408,10 7.075,20 7.105,50 Interregional 366,70 460,80 476,00 6.428,90 6.056,65 Rest 198,90 346,00 459,80 452,50 479,52 Total 45.755,90 48.704,70 48.938,80 57.213,70 57.284,23

Consolidated Debt Direct Debt position
EURm 31/12/2015 31/12/2016 31/12/2017 EMTN 3.201,50 3.516,50 4.836,50 Schuldschein 37,5 Bank loans 150,44 97,8 95,16 BCP 755 250 Current account 17,27 738,73 262,27 FRGE 5,88 Amoras 50,42 Ground lease 26,16 TOTAL 4.124,21 4.640,53 5.313,89 95% Fixed 5% Floating Average duration (end 2017): 12 years and 10 months By the end of 2017 almost 91% of the direct debt was financed with the EMTN programme (LT/ fixed interest rate) compared to 76% in 2016. Besides the financing through the EMTN program, the Flemish Community issued also Schuldschein for a limited amount of 37.5 million euro. Furthermore the Flemish Community negotiated very favorable terms for the new cashier contract at the beginning of 2016. Therefore the current account was a frequently used short term finance instrument in 2016 and had a slightly negative balance of 262 million euro at the end of 2017. We also have some bank loans for a limited amount: these loans were taken over from Vismijn and municipal Holding. One of the most remarkable changes the last 4 years in our direct debt is the average duration. At the end of 2014 the average duration was only 2 years and 3 months and increased to 12 years and 10 months at the end of This large increase in duration can be explained by the underlying assets, in social housing and school buildings which have also very long maturities. At the end of % of direct debt had a fixed interest rate and only 5% had a floating interest rate. Due to the positive budget result and some cash revenues in 2017, the BCP and current account were largely decreased in the last quarter of In the future the goal will stay to have a floating rate debt of around 15%. By the end of % of direct debt was financed with the EMTN programme (EMTN + Schuldschein). Further increase of duration: from 3 years and 10 months at the end of 2015, over 10 years and 4 months at the end of 2016 to 12 years and 10 months at the end of 2017.

Consolidated Debt Debt Redemption Schedule
EURm Situation: 31/10/2018 In this graph you can see the redemptions of our direct debt in the next 30 years. At this moment there are 5 large benchmarks in 2018, 2025, 2026, 2036 and 2042. The objective is to issue more benchmarks in the next years and to built up a reference benchmark curve for Flanders.

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