Selvaag Bolig ASA

Earnings Release • Aug 15, 2018

Oslo 15 August 2018 Olav H. Selvaag, acting CEO Sverre Molvik, CFO

Agenda

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

Highlights Q2 2018 HIGHLIGHTS

• H1 2018 dividend of NOK 2.00 per share
• Good results driven by healthy margins
• Market improved as expected
• Well positioned in core markets
• CEO change

Key financials Q2 and H1 2018

HIGHLIGHTS

Q2 2018 H1 2018

* 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

Firm long-term strategy

Competitive housing offering only targeting selected growth regions

Efficient and flexible cost structure, no in-house construction

Capital-efficient business model backed by strong balance sheet

Large, actively-managed land bank

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

*Total columns show Selvaag Bolig's gross sales **Columns excluding dotted areas show Selvaag Bolig's net sales

Construction starts and completions

OPERATIONAL UPDATE

Units

Construction starts and completions per quarter

Units under construction and completions

OPERATIONAL UPDATE

Sales value units under construction Expected completions per quarter

• High value of units under construction
• Q2 2018: 72% of units under construction sold by Q2 2018
• Q2 2018: 83% of construction volume in Greater Oslo
• Of which 77% in Oslo. Remaining in Lørenskog, Moss and Tønsberg

▪ Expected completions for 2018 as of Q2 18: 854 units

• 91% of 2018 completions sold by Q2 2018

117 441

Agenda

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

Income statement highlights Q2 2018 (IFRS)

• 243 units delivered (222)
• Revenues NOK 864m (1 135)
• Units delivered NOK 847m (860)
• Other revenues NOK 16m (265+9)
• Project costs NOK 646m (841)
• Of which NOK 16m is interest (19)
• Other costs NOK 73m (60)
• Salaries, sales and marketing
• Adjusted EBITDA NOK 178m (245)
• Adjusted for financial expenses included in project costs
• EBITDA NOK 162m (225)
• EPS in the quarter NOK 1.26 (1.58)

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 H1 2018 (IFRS)

• Delivery of 302 units (307)
• Revenues NOK 1 244m (1 591)
• EBITDA adjusted 229m (338)
• Adjusted for financial expenses included in project costs
• Earnings per share H1 2018 NOK 1.60 (2.39)
• Dividend of NOK 2. 00 per share for H1 2018

FINANCIAL UPDATE

NOK million

Revenues and adjusted EBITDA margin (IFRS)

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

Operating revenues Adjusted EBITDA margin

Income statement highlights Q2 2018 (NGAAP)

FINANCIAL UPDATE

Revenues and EBITDA margin (NGAAP)* 12 months rolling revenues (NGAAP)*

* 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

3 229

Operating revenues EBITDA margin

Cash flow development Q2 2018

FINANCIAL UPDATE

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

Share buy back and share program for employees Dividends paid to equity holders of Selvaag Bolig ASA Cash and cash equivalents at 30 June 2018

▪ Cash flow from operations negative at NOK 139m mainly explained by units delivered in June and payment in July

• Cash flow from investment activities negative at NOK 2m
• Cash flow from financing activities positive at NOK 235m mainly due to net increase in loans, partly offset by dividend payment of NOK 166m

Balance sheet highlights Q2 2018

FINANCIAL UPDATE

Balance sheet composition

▪	Book value decreased by NOK 0.6	NOK million
	to NOK 30.4 per share	7 000
	Paid dividend of NOK 1.80 per share ▪	6 000	Non-current assets
	Equity ratio 41.9% ▪
▪	Changes from Q1 2018:	5 000
	Inventories decreased by NOK 128m ▪	4 000
	Trade receivables increased by NOK 390m ▪	3 000	Current assets
	Cash increased by NOK 94m ▪	2 000
▪	Prepayments from customer's accounts for NOK 356m of other current non	1 000
	interest-bearing liabilities	0	Cash

Assets Equity and Liabilities

Current liabilities

Equity

Non-current liabilities

Inventories (property) Q2 2018

FINANCIAL UPDATE

Q2 18 vs Q1 18 Inventory value development

• Land value up NOK 7m
• Work in progress down NOK 86m
• Mainly due to units delivered
• Finished goods down NOK 50m
• Due to units delivered

Interest-bearing debt as at 30 June 2018

Loan facility 1 NOK 500 million revolving credit facility from DNB maturing in 2022 2 NOK 150 million working capital facility from DNB maturing in 2018 3 Land loan facilities from a range of Nordic credit institutions 4 Construction loan facilities from a range of Nordic credit institutions

Drawn at 30 Jun. (NOKm)	Interest rate margin
0	3.40%
0	2.00%
1 225	2.00% - 2.50%
1 530	1.75% - 2.60%

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

Total Q1 2018 net interest-bearing debt NOK 2 019 million

Debt structure FINANCIAL UPDATE

NOK million

19

Earnings and dividend per share since IPO

FINANCIAL UPDATE

Accumulated dividend per share since IPO in June 2012

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)

21

Agenda

• Highlights

• Operational update

• Financial update

• Market
• Summary

MARKET

*Greater Oslo = Oslo and Akershus Source: Statistics Norway (medium alternative)

Population in Greater Oslo* Estimated population in Greater Oslo*

Estimated population 2040: ~ 1.56 million (growth of 280 000)

Stable population growth in Greater Oslo…

MARKET

Population in Oslo Estimated population in Oslo

…and in Oslo until 2040

Source: Statistics Norway (medium alternative)

24

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

Forecasted housing need of 4 500 units per year until 2023

Expected completions lower than forecasted housing demand in Oslo

MARKET High activity in the second-hand market in Oslo

Second-hand market update Oslo

MARKET

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

MARKET

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

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

• 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 newbuild units are added to the second-hand market in Oslo (based on ~ 2 800 completed newbuild units)

▪ Completion of 3 650 newbuild units in 2018 will add ~ 1 800 units to the second hand market in Oslo

▪ The additional ~ 400 units in 2018 will have a limited effect on secondhand market in Oslo

Units

Second-hand sales generated from newbuild completions in an average year

MARKET

Price development SBO newbuild project at Lørenporten (Oslo) vs. second-hand market in Oslo

Increased price pressure lowers newbuild premium in Oslo

Newbuild market update

MARKET

2 450 1 390 1 600 Supplied to the market Sold Available end of Q2 H1 2017 (Oslo) H1 2018 (Oslo) ^{650 710} 1 910 Supplied to the market Sold Available end of Q2 At 14 August 2018 New homes (not built) available for sale ▪ Oslo: ~ 1 680 units 45% of total inventory ▪ Bergen: ~ 1 030 55% of total inventory ▪ Trondheim: ~ 1 020 50% of total inventory ▪ Stavanger: ~ 260 30% of total inventory

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

Sales versus peers

MARKET

Quarterly sales activity vs. peers

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

Annual sales activity vs. peers

Agenda

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

Summary

• H1 2018 dividend of NOK 2.00 per share
• Good results driven by healthy margins
• Market improved as expected
• Well positioned in core markets

Thank you for your attention – follow us online!

Next event: 3 rd quarter 2018 14 November 2018

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

Share performance since IPO in June 2012

SHARE INFORMATION

Source: Oslo Børs

$\%$ sha
53.5%
6.2%
$3.0\%$
$2.2\%$
1.7%
1.6%
1.5%
$1.4\%$
$1.0\%$
1.0%
$0.9\%$
$0.8\%$
$0.7\%$
0.6%
$0.6\%$
0.6%
$0.6\%$
0.6%
$0.5\%$
$0.5\%$
79.6%
20.4%
00.0%

Largest shareholders at 30 June 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. *)	2 817 590	3.0%
PARETO AS	2 065 624	2.2%
VERDIPAPIRFONDET PARETO INVESTMENT	1 596 366	1.7%
HOLBERG NORGE	1 459 238	1.6%
SEB PRIME SOLUTIONS SISSENER CANOP	1 450 000	1.5%
SELVAAG BOLIG ASA **)	1 307 577	1.4%
FLPS - GL S-M SUB	946 000	1.0%
State Street Bank and Trust Comp *)	911 459	1.0%
HOLTA INVEST AS	800 000	0.9%
Baard Schumann	777 127	0.8%
REGENTS OF THE UNIVERSITY OF MICHI	657 218	0.7%
Deutsche Bank Aktiengesellschaft *)	595 735	0.6%
MSIP Equity	588 867	0.6%
STOREBRAND NORGE I VERDIPAPIRFOND	588 364	0.6%
State Street Bank and Trust Comp *)	567 959	0.6%
BANAN II AS	555 190	0.6%
State Street Bank and Trust Comp *)	480 101	0.5%
SPARHANS AS	476 221	0.5%
Total 20 largest shareholders	74 649 511	79.6%
Other shareholders	19 116 177	20.4%
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 book value vs. external valuation

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

FINANCIAL UPDATE

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

Substantial land bank in Norway's four largest growing urban areas

SELVAAG BOLIG LAND-BANK DISTRIBUTION

• Acquire the right mix of zoned and unzoned land in suitable locations
• Land acquisitions in defined core areas
• High degree of site utilisation and strategic land development
• Substantial land bank to accommodate targets/growth in core areas
• Good infrastructure and public transport
• Joint ventures (JVs)

Land bank exposure

Geographical spread

Stockholm 40 units

Land-bank strategy

Note: The numbers represent the size of the land portfolio as at 30 June 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 ~6 100 residential units, whereof the company has purchasing obligations for ~5 600 and purchasing options for ~500 units.

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
• 72% of units in production are sold at end Q2'18

▪ 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)	Q2 2018	Q2 2017	2017
Total operating revenues	863.6	1 134.6	3 228.8
Project expenses	(646.3)	(840.5)	(2 432.8)
Other operating expenses	(71.7)	(59.0)	(234.7)
Other gains (loss)	-	-	-
Associated companies and joint ventures	16.4	(9.8)	(13.6)
EBITDA	162.0	225.4	547.7
Depreciation and amortisation	(0.9)	(1.0)	(4.1)
EBIT	161.0	224.4	543.7
Net financial expenses	(8.3)	(23.0)	(39.9)
Profit/(loss) before taxes	152.7	201.4	503.8
Income taxes	(36.8)	(55.1)	(102.7)
Net income	115.8	146.3	401.1
Net income for the period attributable to:
Non-controlling interests	(0.1)	(0.0)	0.1
Shareholders in Selvaag Bolig ASA	115.9	146.3	401.0

Cash flow statement

(figures in NOK million)	Q2 2018	Q2 2017	2017
Net cash flow from operating activities	(139.2)	539.5	303.2
Net cash flow from investment activities	(1.6)	(72.1)	(114.1)
Net cash flow from financing activities	234.5	(500.8)	(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	93.7 339.5 433.2	(33.4) 374.5 341.1	(400.6) 886.2 485.6

(figures in NOK million)	Q2 2018	Q2 2017	2017
Intangible assets	383.4	383.4	383.4
Property, plant and equipment	9.6	9.4	11.4
Investments in associated companies and joint ventures	308.8	280.9	316.2
Other non -current assets	358.2	354.9	337.0
Total non -current assets	1 060.0	1 028.5	1 048.1
Inventories (property)	4 784.8	4 618.5	4 643.9
- Land	1 899.5	1 672.4	1 938.1
- Work in progress	2 757.5	2 761.3	2 501.7
- Finished goods	127.7	184.7	204.2
Other current receivables	547.0	203.1	174.5
Cash and cash equivalents	433.2	341.1	485.6
Total current assets	5 765.0	5 162.6	5 304.0
TOTAL ASSETS	6 824.9	6 191.2	6 352.0
Equity attributed to shareholders in Selvaag Bolig ASA	2 850.9	2 774.1	2 848.7
Non -controlling interests	9.3	9.4	9.4
Total equity	2 860.3	2 783.5	2 858.1
Non -current interest -bearing liabilities	2 172.1	2 062.7	1 836.8
Other non -current non interest -bearing liabilities	147.2	167.6	152.9
Total non -current liabilities	2 319.3	2 230.3	1 989.7
Current interest -bearing liabilities	583.1	207.1	380.6
Other current non interest -bearing liabilities	1 062.3	970.2	1 123.5
Total current liabilities	1 645.4	1 177.3	1 504.2
TOTAL EQUITY AND LIABILITIES	6 824.9	6 191.2	6 352.0

Balance sheet

* Corresponding to a book value of NOK 30.4 per share

Substantial portfolio for development

Units

Total land bank portfolio at 30 June 2018

4 900

Operational highlights – key operating figures

	Q2 17	Q3 17	Q4 17	Q1 18	Q2 18
Number of units sold	165	178	168	185	181
Number of construction starts	318	77	217	102	234
Number of units completed	210	81	336	54	242
Number of units delivered	222	75	355	59	243
Number of units under construction	1 586	1 582	1 463	1 511	1 503
Proportion of sold units under construction	78%	78%	73%	73%	72%
Number of completed unsold units	24	30	23	19	18
Sales value of units under construction (NOK million)	7 074	7 047	6 994	7 032	7 076
Number of employees	100	100	100	100	95

IFRS EBITDA Q2 2018

(figures in NOK million)	Property development		Total
IFRS EBITDA for the quarter, per segment
Operating revenues	851.7	11.9	863.6
Project expenses	(645.9)	(0.4)	(646.3)
Other operating expenses	(12.5)	(59.2)	(71.7)
Share of income (losses) from associated companies and joint ventures	16.4	-	16.4
Other gain (loss), net	-	-	-
EBITDA	209.7	(47.7)	162.0

Operational reporting Q2 2018

(figures in NOK million)	Property development	Other	Total
Operating revenues	652.6	11.9	664.5
Project expenses	(447.2)	(0.4)	(447.6)
Other operating expenses	(12.5)	(59.2)	(71.7)
EBITDA (percentage of completion)	192.9	(47.7)	145.2

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

Share of sale from joint ventures

OPERATIONAL UPDATE

Sales value of units sold

Share of sale 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