Selvaag Bolig ASA

Earnings Release • Nov 14, 2018

Oslo 14 November 2018 Olav H. Selvaag, acting CEO Sverre Molvik, CFO

Agenda

• Highlights
• Operational update
• Financial update
• Market

• Summary

• Urban development, large projects in growing regions

• Housing for all, competitive housing offering

Highlights Q3 2018 HIGHLIGHTS

• Continued strong results and margins
• Stable market conditions despite interest rate increase
• New CEO appointed
• Positioned with competitive housing offering and substantial capacity

12 000 units

Key financials Q3 2018

HIGHLIGHTS

* EBITDA is profit before interest, taxes, depreciation and amortization. EBITDA adjusted is excluding

financial expenses included in project costs ** EBITDA is operating profit before depreciation, gains (losses) and profit from associated companies

Agenda

• Highlights
• Operational update
• Financial update
• Market
• Summary

Sales value and units sold

OPERATIONAL UPDATE

NOK million

Units

Total and average sales value Number of units sold per quarter

Note: All numbers are adjusted for Selvaag Bolig's share in joint ventures

Rolling sales value and units sold

OPERATIONAL UPDATE

Note: Sales value is adjusted for Selvaag Bolig's share in joint ventures

Construction starts and completions

OPERATIONAL UPDATE

Units

Construction starts and completions per quarter

Units under construction and completions

OPERATIONAL UPDATE

• High value of units under construction
• Q3 2018: 74% of units under construction sold by Q3 2018
• Q3 2018: 82% of construction volume in Greater Oslo
• Of which 78% in Oslo. Rest of volume in Lørenskog, Moss and Tønsberg

▪ Expected completions for 2018 as of Q3 18: 854 units

• 96% of 2018 completions sold by Q3 2018

Agenda

• Highlights
• Operational update
• Financial update
• Market
• Summary

Income statement highlights Q3 2018 (IFRS)

FINANCIAL UPDATE

Note: EBITDA is profit before interest, taxes, depreciation and amortization. EBITDA adjusted is excluding financial expenses included in project costs

Income statement highlights Q3 2018 (NGAAP)

FINANCIAL UPDATE

* Construction costs are exclusive of financial expenses in the segment reporting (NGAAP) Note: EBITDA is operating profit before depreciation, gains (losses) and profit from associated companies

Cash flow development Q3 2018

FINANCIAL UPDATE

Note: Amounts below NOK 5m are excluded from the cash flow overview

• Cash flow from financing activities negative at NOK 261m mainly due to dividend payment of NOK 185 and net decrease in loans

Balance sheet highlights Q3 2018

FINANCIAL UPDATE

Balance sheet composition

		NOK million
▪	Book value decreased by NOK 1.4 to NOK 29.0 per share	7 000
	Paid dividend of NOK 2.00 per share ▪	6 000	Non-current assets
	Equity ratio 40.9% ▪ Changes from Q2 2018:	5 000
▪	Inventories increased by NOK 160m ▪	4 000
	Trade receivables decreased by NOK 255m ▪	3 000	Current assets
	Cash decreased by NOK 11m ▪	2 000
▪	Prepayments from customer's accounts for NOK 337m of other current non	1 000
	interest-bearing liabilities	0	Cash

Assets Equity and Liabilities

Current liabilities

Equity

Non-current liabilities

Inventories (property) Q3 2018

FINANCIAL UPDATE

Q3 18 vs Q2 18 Inventory value development

• Land value up NOK 6m
• Work in progress up NOK 185m
• Mainly due to units under construction
• Finished goods down NOK 31m
• Due to units delivered

Interest-bearing debt as at 30 September 2018

	Loan facility	Drawn at 30 Sep. (NOKm)	Interest rate margin
1	NOK 500 million revolving credit facility from DNB maturing in 2022	0	3.40%
2	NOK 150 million working capital facility from DNB maturing in 2018	0	2.00%
3	Land loan facilities from a range of Nordic credit institutions	1 226	2.00% - 2.50%
4	Construction loan facilities from a range of Nordic credit institutions	1 469	1.75% - 2.60%

Total Q3 2018 net interest-bearing debt NOK 2 273 million

Total Q2 2018 net interest-bearing debt NOK 2 322 million

Debt structure FINANCIAL UPDATE

NOK million

Return on equity (IFRS) FINANCIAL UPDATE

12 months rolling net income (IFRS)* and return on equity**

NOK million

* Net income attributable to shareholders in Selvaag Bolig ASA

** Based on equity at the start of the period (attributed to shareholders in Selvaag Bolig ASA)

19

Agenda

• Highlights

• Operational update

• Financial update

• Market
• Summary

Low share of income spent on housing in Norway

MARKET

Second-hand market update Oslo

MARKET

0 500 1 000 1 500 2 000 2 500 3 000 Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Inventory second-hand Units sold Units Oslo, October* Price change Oslo, Jan.-Oct. (year to date) -4.0% 11.1% 7.8% 20.1% -8.9% YTD 2013 YTD 2014 YTD 2015 YTD 2016 YTD 2017 Price change Average price change (Price increase last 12 months of 5.0%)

*Unsold units that have been withdrawn from the market are marked as inventory for 6 months before being removed Sources: Eiendomsverdi, Eiendom Norge, Ny Analyse and Selvaag Bolig

Newbuild market update

MARKET

Supplied to the market Available end of Q3

Supplied to the market Available end of Q3

At 12 November 2018

New homes (not built) available for sale

• Oslo: ~ 1 850 units
• 52% of total inventory
• Bergen: ~ 1 170 58% of total inventory
• Trondheim: ~ 1 020 53% of total inventory
• Stavanger: ~ 270
• 27% of total inventory

23

MARKET

Source: NyAnalyse, Prognosesenteret, Oslo kommune, Statistics Norway (SSB)

Note: Number of persons per household in Oslo: 1.90

Note: Housing demand calculated on parameters such as number of persons per household, lag on housing development, housing demolition

Expected completions lower than forecasted housing demand in Oslo

MARKET

Newbuild effect on total second-hand market in Oslo for 2018

Increase in newbuild completions has limited effect on second-hand market

• newbuild units)
• hand market in Oslo
• Second-hand sales generated from newbuild completions in an average year
• Second-hand sales generated from newbuild completions in 2018
• Additional second-hand sales generated from newbuild completions in 2018
• Total second-hand market in Oslo in 2018

▪ On average ~ 1 400 units are added to the second-hand market in Oslo (based on ~ 2 800 completed

▪ Completion of 3 800 newbuild units in 2018 will add ~ 1 900 units to the second hand market in Oslo

▪ The additional ~ 500 units in 2018 will have a limited effect on second-

Units

Second-hand market update other core markets

MARKET

* Unsold units that have been withdrawn from the market are marked as inventory for 6 months before being removed Sources: Eiendomsverdi and Eiendom Norge

YTD 2017 YTD 2018

Peers

MARKET

Housing types Selvaag Bolig: flats, semi-detached and terraced homes Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig

0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 2 200 2 400 N/A

Q1 2018 Q2 2018 Q3 2018

MARKET

• Substantial land bank to accommodate targets/growth in core areas
• Acquire the right mix of zoned and unzoned land in suitable locations
• No zoning risk: price and market risk minimised
• Land acquisitions throughout the economic cycle
• Good infrastructure and public transport

Land bank exposure

Geographical spread

Stockholm 40 units

Land-bank objectives

Note: The numbers represent the size of the land portfolio as at 30 September 2018. All numbers are adjusted for Selvaag Bolig's share in joint ventures. 1) Greater Oslo area: Oslo, Akershus, Buskerud, Vestfold and Østfold, 2) The residential property development portfolio consists of land plots that are to be paid for when planning permission is received. The portfolio has a development potential of ~5 300 residential units, whereof the company has purchasing obligations for ~4 500 and purchasing options for ~800 units.

Building land bank throughout the economic cycle

MARKET

• Land acquired: Q4 2013
• Sales start: Q4 2014
• Project completion: June 2019
• Sales value project: NOK 1.9 billion

Nybyen Økern

Tiedemannsfabrikken

Hovinenga

Lørenporten

Key land acquisitions demonstrate strategy execution

• Land acquired: Q1 2015
• Sales start: Q4 2015
• Project completion: December 2019

• Sales value project: NOK 1.8 billion

• Land acquired: Q1 2014

• Sales start: Q2 2016
• Project completion: June 2020

• Sales value project: NOK 1.7 billion

• Land acquired: Q2 2015

• Sales start: Q2 2016
• Project completion: December 2020
• Sales value project: NOK 2.4 billion

Margin development through project stages*

▪ Delivery in accordance with expectations

Delivery to customers

MARKET

MARKET Project margin development

* Construction costs are exclusive of financial expenses in the segment reporting (NGAAP)

** Project margins are exclusive of overhead costs

Land bank book value vs. external valuation

Q4 2015	Q4 2016	Q4 2017
NOK million	NOK million	NOK million

MARKET

Note: Joint ventures and land options not included in the valuation

MARKET

Large upcoming projects in growth areas

Selected upcoming projects in Greater Oslo

Agenda

• Highlights
• Operational update
• Financial update
• Market
• Summary

Summary

• Continued strong results and margins
• Stable market conditions despite interest rate increase
• Positioned with competitive housing offering and substantial capacity

Thank you for your attention – follow us online!

Next event: 4 th quarter 2018 13 February 2019

Appendix

Selvaag Bolig's ambition is to pay high and stable dividends to its owners.

The company aims to pay dividends of minimum 40 per cent of net annual profit, paid in two instalments over the year. However, the size of the dividend will be weighed against the company's liquidity forecasts and capital adequacy.

The company will maintain an equity ratio of minimum 30 per cent

Dividend policy

Dividend policy

Earnings and dividend per share since IPO

FINANCIAL UPDATE

Accumulated dividend per share since IPO in June 2012

Share performance since IPO in June 2012

SHARE INFORMATION

Source: Oslo Børs

$%$ share

53.5%
$6.2\%$
$3.0\%$
2.2%
1.7%
1.7%
1.4%
1.3%
1.0%
1.0%
$0.8\%$
$0.8\%$
$0.8\%$
$0.7\%$
$0.7\%$
$0.7\%$
$0.6\%$
0.6%
$0.6\%$
$0.5\%$
79.7%
20.3%
100.0%

Largest shareholders at 30 September 2018

Shareholder	# of shares	% share
SELVAAG GRUPPEN AS	50 180 087	53.5%
LANDSFORSAKRINGAR FASTIGHETSFOND	5 828 788	6.2%
MORGAN STANLEY & CO. INT. PLC. *)	2 791 302	3.0%
PARETO AS	2 065 624	2.2%
VERDIPAPIRFONDET PARETO INVESTMENT	1 596 366	1.7%
SEB PRIME SOLUTIONS SISSENER CANOP	1 550 015	1.7%
SELVAAG BOLIG ASA **)	1 307 577	1.4%
HOLBERG NORGE	1 176 845	1.3%
FLPS - GL S-M SUB	944 200	1.0%
STATE STREET BANK AND TRUST COMP *)	906 385	1.0%
Baard Schumann	777 127	0.8%
HOLTA INVEST AS	721 000	0.8%
DEUTSCHE BANK AKTIENGESELLSCHAFT *)	718 978	0.8%
JPMORGAN CHASE BANK, N.A., LONDON *)	659 395	0.7%
REGENTS OF THE UNIVERSITY OF MICHI	657 218	0.7%
MSIP EQUITY	627 302	0.7%
STATE STREET BANK AND TRUST COMP *)	602 754	0.6%
STOREBRAND NORGE I VERDIPAPIRFOND	581 257	0.6%
BANAN II AS	555 190	0.6%
SPARHANS AS	476 221	0.5%
Total 20 largest shareholders	74 723 631	79.7%
Other shareholders	19 042 057	20.3%
Total number of shares	93 765 688	100.0%

* Further information regarding shareholders is presented at: http://sboasa.no/en

** The shares were purchased for the company's share programmes for employees

Land bank in Oslo and Greater Oslo LAND BANK

Land bank in Stavanger area LAND BANK

Land bank in Bergen, Trondheim and Stockholm LAND BANK

Efficient and flexible value chain

• Target 100% sale at delivery

Delivery to customers

Margin development through project stages*

▪ Delivery in accordance with expectations

Delivery to customers

Norwegian housing market

• 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 minimum 10% cash deposit
• High level of home ownership
• 85% (one of the world's highest)
• Economic benefits for home owners
• 23% of mortgage loan interest payments are tax deductible
• Transfer stamp duty for new houses is lower than for second-hand homes
• Strong population growth
• Norway's urban areas are among the fastest growing in Europe
• Good demand for new homes

Low-risk business model

Risk profile at start of a MNOK 550 project De-risking in key stages of projects

• Selvaag's equity investment in a project and project margin bring the remaining project cost down to 74%-78%
• With minimum 60% pre-sale there is limited remaining project risk. For the the remaining 40% a price reduction of 35% would recover equity
• 74% of units in production are sold at end Q3'18

▪ Purchase and payment of land takes place after zoning plan approval. If this is not obtained, the purchase is cancelled

▪ SBO is in charge of the zoning process

▪ Purchase price is decided by a land appraisal made by three external consultants at the time of zoning approval

▪ The median valuation is used as purchase price

▪ Pre-sales of minimum 60% secures the majority of revenue before construction

▪ 10% of purchase price paid by the buyer at point of sale, and proof of financing for the remaining amount is required

▪ Construction contracts with solid counterparties are made with fixed price

▪ Project costs are secured before construction starts

Low-risk business model creates healthy profits

Competitive housing offering, targeting growth regions

Efficient and flexible cost structure

Capital-efficient business model backed by strong balance sheet

Large, actively-managed land bank

• Presence in fast-growing urban regions with high demand and large market depth ▪ Competitive prices, addressing large customer base
• Defined housing concepts, aimed at wide range of consumers
• Value appreciation through refinement of land for housing development
• Flexibility to develop thousands of homes in growing urban regions
• Active asset management
• No in-house construction arm; improves flexibility and cost optimisation
• Project-based business model improves flexibility and reduces risk
• Economies of scale through large projects
• Lean organisation reduces overhead
• 60% pre-sale before construction start lowers project financing need and inventory risk
• Sound debt structure and financial flexibility

Strategy Value drivers

Income statement IFRS

(figures in NOK million)	Q3 2018	Q3 2017	2017
Total operating revenues	473.2	379.4	3 228.8
Project expenses	(372.0)	(297.4)	(2 432.8)
Other operating expenses	(56.9)	(52.5)	(234.7)
Other gains (loss)	-	-	-
Associated companies and joint ventures	30.5	(3.3)	(13.6)
EBITDA	74.9	26.1	547.7
Depreciation and amortisation	(0.9)	(1.0)	(4.1)
EBIT	73.9	25.1	543.7
Net financial expenses	(4.0)	(5.1)	(39.9)
Profit/(loss) before taxes	69.9	20.1	503.8
Income taxes	(13.4)	(3.7)	(102.7)
Net income	56.5	16.4	401.1
Net income for the period attributable to:
Non-controlling interests	(0.0)	(0.0)	0.1
Shareholders in Selvaag Bolig ASA	56.5	16.4	401.0

Cash flow statement

(figures in NOK million)	Q3 2018	Q3 2017	2017
Net cash flow from operating activities	202.8	(163.4)	303.2
Net cash flow from investment activities	47.4	(45.7)	(114.1)
Net cash flow from financing activities	(261.2)	107.2	(589.8)
Net change in cash and cash equivalents Cash and cash equivalents at start of period Cash and cash equivalents at end of period	(11.0) 433.2 422.1	(102.0) 341.1 239.1	(400.6) 886.2 485.6

(figures in NOK million)	Q3 2018	Q3 2017	2017
Intangible assets	383.4	383.4	383.4
Property, plant and equipment	9.4	8.5	11.4
Investments in associated companies and joint ventures	305.2	307.6	316.2
Other non -current assets	348.3	372.1	337.0
Total non -current assets Inventories (property) Land Work in progress Finished goods Other current receivables Cash and cash equivalents Equity attributed to shareholders in Selvaag Bolig ASA Non -controlling interests	1 046.3	1 071.5	1 048.1
	4 944.8	4 778.8	4 643.9
-	1 905.9	1 682.4	1 938.1
-	2 942.4	2 866.5	2 501.7
-	96.5	229.9	204.2
	257.6	247.9	174.5
	422.1	239.1	485.6
Total current assets	5 624.5	5 265.8	5 304.0
TOTAL ASSETS	6 670.8	6 337.4	6 352.0
	2 722.3	2 679.2	2 848.7
	9.3	9.4	9.4
Total equity	2 731.7	2 688.7	2 858.1
Non -current interest -bearing liabilities	1 897.1	1 923.0	1 836.8
Other non -current non interest -bearing liabilities	147.2	167.5	152.9
Total non -current liabilities	2 044.3	2 090.4	1 989.7
Current interest -bearing liabilities	797.9	573.7	380.6
Other current non interest -bearing liabilities	1 097.0	984.6	1 123.5
Total current liabilities	1 894.9	1 558.3	1 504.2
TOTAL EQUITY AND LIABILITIES	6 670.8	6 337.4	6 352.0

Balance sheet

* Corresponding to a book value of NOK 29.0 per share

Substantial portfolio for development

Units

Total land bank portfolio at 30 September 2018

5300

Operational highlights – key operating figures

	Q3 17	Q4 17	Q1 18	Q2 18	Q3 18
Number of units sold	178	168	185	181	182
Number of construction starts	77	217	102	234	102
Number of units completed	81	336	54	242	117
Number of units delivered	75	355	59	243	126
Number of units under construction	1 582	1 463	1 511	1 503	1 488
Proportion of sold units under construction	78%	73%	73%	72%	74%
Number of completed unsold units	30	23	19	18	12
Sales value of units under construction (NOK million)	7 047	6 994	7 032	7 076	6 908
Number of employees	100	100	100	95	91

(31.8)	74.9
	30.5
(41.7)	(56.9)
0.2	(372.0)
9.7	473.2
Other	Total

IFRS EBITDA Q3 2018

(figures in NOK million)	Property development	Other	Total
IFRS EBITDA for the quarter, per segment
Operating revenues	463.6	9.7	473.2
Project expenses	(372.2)	0.2	(372.0)
Other operating expenses	(15.2)	(41.7)	(56.9)
Share of income (losses) from associated companies and joint ventures	30.5	-	30.5
Other gain (loss), net	-	-	-
EBITDA	106.7	(31.8)	74.9

Operational reporting Q3 2018

(figures in NOK million)	Property development	Other	Total
Operating revenues	695.9	9.7	705.6
Project expenses	(494.3)	0.2	(494.1)
Other operating expenses	(15.2)	(41.7)	(56.9)
EBITDA (percentage of completion)	186.4	(31.8)	154.6

Note: Construction costs are exclusive of financial expenses in the segment reporting.

Share of sales from joint ventures

OPERATIONAL UPDATE

Sales value of units sold

Sales value of sold units (net) Sales value of sold units (gross)

Share of sales from joint ventures

OPERATIONAL UPDATE

Number of units sold

Untis sold net Units sold gross

MARKET

Note: In 2017 Greater Oslo had 23% of housing completions in Norway Source: Statistics Norway

A larger share of Norway's population lives in Greater Oslo

Immigration increases demand over time

MARKET

of years in Norway

Homeownership rate among immigrants in Norway (per year living in Norway)

Source: Statistics Norway

60

Total household debt and homeownership

MARKET

Source: OECD, Prognosesenteret

Household debt in % of net disposable income (2015) Homeownership rate (2016)

Norway – robust economic conditions

Population growth 2015 - 2030e and 2040e Interest rates 2010 - 2018e

GDP growth 2010 - 2019e Unemployment 2010 - 2019e 0% 2% 4% 6% 8% 10% 12% 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e Norway Sweden Germany UK France -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2010 2011 2012 2013 2014 2015 2016 2017e 2018e Norway Sweden EU UK