Company presentation Baard Schumann, CEO Haavard Rnning, CFO May - PowerPoint PPT Presentation

Company presentation Baard Schumann, CEO Haavard Rønning, CFO May 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 Q1: 139 units ¡ Industrial approach to homebuilding Trondheim 323 units ¡ Land bank for 11 200 homes ¡ Housing concepts Bergen tailored to house buyer 163 units Greater-Oslo requirements 8 319 units Stavanger Stockholm 1 849 units 79 units Other 310 units Note: The numbers represent the size of the land portfolio as at 31. March 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 3 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 ~3 900 residential units, whereof the company has purchasing obligations for ~3 400 and purchasing options for ~500. units.

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 4

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 ����������������������� 1999 Løren district Terraced 1988 buildings «You can't criticise things unless you can simultaneously present 1958 Industrial production an alternative or a solution which 1951 is better than the one you're criticizing» 1948 Veitvet district The Ekeberg Olav Selvaag House 5

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 6

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 Q1’14 contract 7

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 8

OPERATIONAL UPDATE Improved sales pace Total sales value and value per sold unit Residential units sold NOKm Units 1 011 897 722 740 625 649 483 4,0 3,7 3,6 3,5 246 2,6 139 2011 2012 2013 2014 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q1 Q2 Q3 Q4 9

FINANCIAL UPDATE Income statement highlights Q1 2014 (IFRS) Revenue and EBITDA margin (IFRS) ¡ Revenues NOK 245 million (524) NOKm ¡ Delivery of 80 units (170) 677 621 ¡ Project costs NOK 193 million (378) 524 ¡ Low Sales & Marketing costs 376 ¡ NOK 8.1 million (7.3) 20 % 15 % 245 13 % 4 % 0 % Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Operating revenues EBITDA margin 10

FINANCIAL UPDATE Income statement highlights Q1 2014 (NGAAP) Revenue and EBITDA margin (NGAAP)* ¡ High production NOKm ¡ Good margins in projects under 755 construction 688 638 614 593 23 % 18 % 17 % 15 % 11 % Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Operating revenues EBITDA margin * Construction cost are exclusive of financial expenses in the segment reporting 11

FINANCIAL UPDATE Cash flow development Q1 2014 Condensed cash flow ¡ Payments for majority of NOKm residential units delivered in Q1 2014 will be received in 5 416 586 587 later quarters -3 ¡ High activity in projects under construction 34 -361 -3 -90 Cash and cash Profit (loss) Depreciation Changes in Changes in Other changes CF from Net change in Cash and cash equivalents at before income and inventories trade in working investment borrowings equivalents at 31 December taxes amortisation (property) receivables capital activities 31 March 2014 2013 12

FINANCIAL UPDATE Balance sheet highlights Q1 2014 Balance sheet composition ¡ Book value per share NOK 23.8 NOKm ¡ Trade receivables increased NOK 90 7 000 million 6 000 Non-current ¡ Inventory increased NOK 378 million assets Equity 5 000 ¡ Net increase NOK 215 million in non 4 000 Current current interest-bearing liabilities assets 3 000 Non-current liabilities ¡ Net increase NOK 218 million in 2 000 current interest-bearing liabilities Current 1 000 liabilities Cash ¡ Prepayments from customers count 0 Assets Equity and Liabilities for NOK 328 million of other current non interest-bearing liabilities 13

FINANCIAL UPDATE Inventories (property) Inventory value development ¡ Land value decreased NOKm ¡ Due to construction starts 5 000 99 ¡ Work in progress increased by NOK 132 149 205 106 442 million 4 000 ¡ High activity in projects under 2 841 3 000 2 399 1 830 1 895 1 882 construction 2 000 ¡ Finished goods decreased by NOK 32 million 1 000 1 917 1 871 1 778 1 753 1 721 ¡ Delivered units finalized in previous - quarters Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Land (undeveloped) Work in progress Finished projects 14

FINANCIAL UPDATE Sound debt structure Interest bearing debt as at 31 Mar 2014 Drawn per 31 Mar Interest rate (NOKm) margin Loan facility 1 NOK 500 million senior unsecured 500 4.75% bond loan 489 2 NOK 150 million revolving credit 0 2.50% facility from DNB maturing in 2015 NOK 3 NOK 150 million working capital 0 2.50% 3 218 facility from DNB maturing in 2014 1 554 Million 4 Land loan facilities from a range 1 175 2.20% - 3.15% of Nordic credit institutions 1 175 5 Construction loan facilities from a 1 554 2.20% - 3.00% range of Nordic credit institutions Top-up loan Land Loan Construction loan Note: Bond loan of NOK 500m differs form the summed up top up loan in the table (NOK 489m). The difference is due to NOK -11m in amortized cost which is not actual debt. 15

COMPETITION Sales 300 243 250 210 200 167 150 139 122 121 113 109 95 100 68 61 51 45 42 50 35 0 Selvaag Bolig BWG Norge JM Norge Skanska Norge Veidekke Norge Q1 2013 Q4 2013 Q1 2014 16