Company presentation Baard Schumann, CEO Sverre Molvik, CFO - PowerPoint PPT Presentation

Company presentation Baard Schumann, CEO Sverre Molvik, CFO November 2014

Selvaag Bolig is a residential developer that provides targeted housing concepts to suit aspirations of different households in and around the main cities: Oslo , Stavanger , Bergen and Trondheim 2

Norway’s leading homebuilder Tromsø 155 units ¡ Sales in Q3: 259 units ¡ Industrial approach to homebuilding Trondheim 332 units ¡ Land bank for 10 500 homes ¡ Housing concepts Bergen tailored to house buyer 156 units Greater-Oslo requirements 7 667 units Stavanger Stockholm 1 803 units 103 units Other 310 units Note: The numbers represent the size of the land portfolio as at 30. September 2014. All numbers are adjusted for Selvaag Bolig’s share in joint ventures. 1) Greater Oslo area: Oslo, Akershus, Buskerud, Vestfold and Østfold, 2) 260 units at Stord (Hordaland county) and 50 units at Alfaz Del Sol (Spain), 3) The residential property development portfolio consists of land plots that are to be paid for when planning permission is received. These have a development potential of ~3 700 residential units, whereof the company has purchasing obligations for ~3 200 and purchasing options for ~500. units.

Housing for all Housing for all The Gullhaug House 2013 50 000 homes Pluss: Housing with completed extra service 2012 Modular construction 2011 Listed at Oslo Børs 2003 2000 Defjned housing concepts 1999 Løren district Terraced 1988 buildings «It is better to build 30 000 homes for 15 000 kroner than 15 000 1958 Industrial production homes for 30 000 kroner» 1951 Olav Selvaag 1948 Veitvet district The Ekeberg House 4

Value creation in Selvaag Bolig 6 – 36 MONTHS 12 – 24 MONTHS 6 – 12 MONTHS 3 – 9 MONTHS development Residential Acquire and Marketing refine land for Project design Construction and sale development creation Value Zoning Sales start Construction start Deliveries optimization § Plan and § Buy (i) options on § Target 60% pre-sale § Fixed price contracts with prepare for unzoned land, or (ii) before start-up reputable and solid Project construction ready to build land (irrevocable purchase counterpart contracts) § Lever acquired land § Construction costs financed to improve ROE § Prices on remaining 40% with construction loans increased gradually § Target 100% sale at delivery during sell out phase 5

Norwegian housing market ¡ Good demand for new homes and persistent population growth in urban areas ¡ Low risk for housebuilders ¡ Advance sales: banks require that 50-70% of homes are sold before construction starts ¡ Binding offers: offer to purchase is a binding sales contract, and requires a 10% minimum cash deposit ¡ High level of home ownership ¡ 85% (one of the world’s highest) ¡ Economic benefits for home owners ¡ 27% of mortgage loan interest payments are tax-deductible ¡ Transfer stamp duty for new houses is lower than for second hand homes ¡ Attractive market outlook ¡ Strong population growth ¡ High level of purchasing power ¡ Favourable macro-economic climate and low interest rates Source: Source Selvaag Bolig and Eurostat 6

Selvaag Bolig – value proposition Selvaag Bolig ASA is a Norwegian residential property developer with no in-house construction arm, which controls the entire value chain from the acquisition of land to the sale of homes. ¡ Proven low-cost strategy ¡ Very competitive prices ensure a broad customer base ¡ No in-house construction arm ¡ low building costs ¡ fixed construction price ¡ reduced risk ¡ smaller exposure to market fluctuations ¡ Defined housing concepts ¡ Aimed at broad consumer categories ¡ Profit maximisation in all projects ¡ Large land bank ¡ Several thousand homes under development in Norway’s four fastest growing urban regions 7

Three well defined and robust concepts § Affordable apartments based on a "no frills" model § Low cost land plots situated in fringe zones of large cities § Mostly modular based construction § Young people in the start-up phase § Apartments/small houses situated in high density areas § Established housing solutions, solid quality and well planned living environment § Modular and on site construction § Single people/couples in all ages, with/without children § Apartments with attractive, central location in large cities § High quality standard coupled with a service concept § On site construction § Affluent customers who value comfort and convenience 8

Low-risk business model Risk profile at start of project De-risking in key stages of projects 100 % § Purchase and payment of land takes place after 10 % zoning plan approval. If this is not obtained, the 1 - Land purchase 90 % purchase is cancelled conditional on 12%-16% zoning approval 80 % § SBO is in charge of the zoning process 70 % 60 % § Purchase price is decided by a land appraisal 2 - Land purchase made by three external consultants at the time of price based on 50 % 100 % zoning approval market value at 40 % time of zoning 74%-78% § The median valuation is used as purchase price approval 30 % 60 % 20 % § Pre-sales of minimum 60% secures the majority of 10 % revenue before construction 3 – Minimum sales rate of 60% before § 10% of purchase price paid by the buyer at point 0 % Sales price Equity investment Project margin Remaining project cost Minimum pre-sale construction of sale, and proof of financing for the remaining amount is required § Selvaag’s equity investment in the project and project margin bring the remaining project cost down to 74%-78% § Construction contracts with solid counterparties are made with fixed price 4 – Fixed price § With minimum 60% pre-sale, there is limited remaining project risk construction § Project costs are secured before construction starts § 76% of units in production are sold per Q2’14 contract 9

Industrial approach ¡ Modular construction ¡ Profitable ¡ High quality ¡ Sub-contractors in ¡ Lower construction costs ¡ Reduced risk of faults Estonia and Poland ¡ Higher project margins ¡ Technically better homes ¡ Modern factories ¡ Sensible house prices ¡ Energy efficient homes ¡ 14 years of experience 10

OPERATIONAL UPDATE Strong sales development Total sales value and value per sold unit Residential units sold NOKm Units 1 011 915 856 * 740 625 * 653 649 483 4,0 3,5 3,5 3,4 246 2,6 2011 2012 2013 2014 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q1 Q2 Q3 Q4 Note: All numbers are adjusted for Selvaag Bolig’s ownership in joint ventures. * Includes 95 student residences with an average value of NOK 0.7 million (dotted area) 11

OPERATIONAL UPDATE Sales development per quarter Total value of units sold per quarter Units sold per quarter No of units MNOK 915 259 856 255 236* 625* Q3 13 Q2 14 Q3 14 Q3 13 Q2 14 Q3 14 Note: All numbers are adjusted for Selvaag Bolig’s ownership in joint ventures. * Includes 95 student residences with an average value of NOK 700 000 (shaded area) 12

FINANCIAL UPDATE Income statement highlights Q3 2014 (NGAAP) Revenues and EBITDA margin (NGAAP)* 12 months rolling revenues (NGAAP)* NOKm NOKm 830 2 997 2 891 2 888 755 2 650 724 2 600 688 614 18 % 17 % 17 % 15 % 11 % Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Operating revenues EBITDA margin * Construction costs are exclusive of financial expenses in the segment reporting (NGAAP) 13

FINANCIAL UPDATE Income statement highlights Q3 2014 (IFRS) Revenues and EBITDA margin (IFRS) ¡ Delivery of 279 units (187) NOKm ¡ Revenues NOK 765 million (677) 810 Including 95 student residences with an average ¡ 765 value of NOK 0.7 million 677 ¡ Project costs NOK 628 million (536) ¡ Other costs NOK 47 million (56) 376 ¡ EBITDA NOK 95 million (91) 13 % 12 % 12 % 245 ¡ EBITDA adjusted 125 million 4 % 0 % Adjusted for financial expenses included in project ¡ costs Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 ¡ Earnings per share NOK 0.65 Operating revenues EBITDA margin Earnings per share year-to-date NOK 1.33 ¡ 14

FINANCIAL UPDATE Cash flow development Q3 2014 Condensed cash flow ¡ Positive cash flow from operating activities NOKm ¡ Dividends from JV in Stockholm 51 of NOK 27 million 5 84 23 (48) ¡ Continued high activity in (1) projects under construction (36) 777 754 (57) Cash and cash Profit (loss) Depreciation Share of profits/ Changes in Changes in Other changes CF from Net change in Cash and cash equivalents at before income and (losses) from inventories trade in working investment borrowings equivalents at 30 June 2014 taxes amortisation associated (property) receivables capital activities 30 September companies 2014 15