Selvaag Bolig ASA

Quarterly Report • Feb 13, 2018

Highlights of the fourth quarter 2017

• Operating revenues of NOK 1 259 million (NOK 886 million)
• Adjusted EBITDA* of NOK 242 million (NOK 170 million) and ordinary EBITDA of NOK 214 million (NOK 134 million)
• 168 units sold (161)
• Construction started on 217 units (196)
• 336 units completed (255) and 355 delivered (254)
• A total of 1 463 units (1 356) under construction at 31 December, with 73 per cent (85 per cent) of these sold at a combined sales value of NOK 6 994 million (NOK 5 709 million)
• 87 per cent of units to be completed in 2018 are sold
• The board proposes a dividend of NOK 1.80 per share for the second half (0.95). Overall dividend for the year will then be NOK 3.00 (1.60) per share

(Figured in brackets relate to the same period of the year before) * Adjusted EBITDA is less financial expenses included in project costs.

Key figures

(figures in NOK 1 000)	Q4 2017	Q4 2016	2017	2016
IFRS main figures
Operating revenues	1 258 766	885 535	3 228 832	3 000 347
EBITDA	214 486	134 173	547 737	413 964
EBITDA adjusted*	242 479	170 059	625 736	514 368
Operating profit/(loss)	213 468	132 356	543 653	393 903
Profit/(loss) before taxes	210 884	127 450	503 802	364 582
Cash flow from operating activities	506 316	77 021	303 242	440 267
Net cash flow	246 444	142 886	(400 632)	213 909
Interest-bearing liabilities	2 217 431	2 573 341	2 217 431	2 573 341
Total assets	6 352 018	6 408 662	6 352 018	6 408 662
Equity	2 858 142	2 699 172	2 858 142	2 699 172
Equity ratio	45.0%	42.1%	45.0%	42.1%
Earnings per share in NOK	1.78	1.24	4.35	3.21
Segment reporting (NGAAP):
Operating revenues	688 777	946 870	2 970 584	3 511 223
EBITDA**	103 804	213 479	680 218	683 492
EBITDA margin	15.1%	22.5%	22.9%	19.5%
Key figures:
Number of units sold	168	161	701	1 044
Number of construction starts	217	196	799	902
Number of units delivered	355	254	737	869
Number of units completed	336	255	690	836

* EBITDA adjusted is excluding financial expenses included in project costs, see note 6 for details.

** EBITDA is operating profit before depreciation, gains (losses) and profit from associated companies.

Financial review

Summary of overall results

(figures in NOK 1 000)	Q4 2017	Q4 2016	2017	2016
Total operating revenues	1 258 766	885 535	3 228 832	3 000 347
Project expenses	(982 915)	(677 035)	(2 432 818)	(2 379 746)
Other operating expenses, salaries and personnel cost,
depreciation and amortisation	(66 070)	(70 907)	(238 751)	(251 273)
Associated companies and other gains (loss)	3 687	(5 237)	(13 610)	24 575
Total operating expenses	(1 045 298)	(753 179)	(2 685 179)	(2 606 444)
Operating profit	213 468	132 356	543 653	393 903
Net financial expenses	(2 584)	(4 906)	(39 851)	(29 321)
Profit before taxes	210 884	127 450	503 802	364 582
Income taxes	(48 651)	(11 653)	(102 653)	(63 694)
Net income	162 233	115 797	401 149	300 888

Results for the fourth quarter of 2017

(Figures in brackets relate to the corresponding period of 2016. The figures are unaudited.)

Selvaag Bolig had operating revenues of NOK 1 258.8 million (NOK 885.5 million) in the fourth quarter. Revenues from units delivered accounted for NOK 1 239 million (NOK 808.2 million) of this total. Other revenues derived from non-core activities, mainly rental of commercial premises.

A total of 355 units (254) were delivered in the quarter, with 324 (252) from consolidated project companies.

Project costs for the quarter totalled NOK 982.9 million (NOK 677 million), of which NOK 28 million (NOK 35.9 million) represented previously capitalised financial expenses. Total project expenses primarily represented construction costs for units delivered as well as costs in projects which did not qualify for capitalisation as inventory.

Operating costs excluding project costs and the share of results from associated companies totalled NOK 66.1 million (NOK 70.9 million) for the period. Payroll costs accounted for NOK 36.9 million (NOK 35.4 million) of this figure. A further NOK 5.1 million (NOK 7.4 million) in payroll costs related to housing under construction was capitalised during the period and will be expensed as project costs on future delivery. Other operating costs came to NOK 28.1 million (NOK 33.7 million) for the quarter, including NOK 8.4 million (NOK 13.8 million) for sales and marketing.

The share of results from associates and other gains (losses) were negative at NOK 3.7 million (negative at NOK 5.2 million). This increase primarily reflected units delivered by a joint venture in Tønsberg.

EBITDA adjusted for financial expenses included in project costs came to NOK 242.5 million (NOK 170.1 million), corresponding to a margin of 19.3 per cent (19.2 per cent). Ordinary EBITDA was NOK 214.5 million (NOK 134.2 million), corresponding to a margin of 17 per cent (15.2 per cent).

Consolidated depreciation and amortisation totalled NOK 1 million (NOK 1.8 million). This decline primarily reflected full depreciation of intangible assets in 2016. Consolidated operating profit thereby came to NOK 213.5 million (NOK 132.4 million).

Net financial expenses amounted to NOK 2.6 million (NOK 4.9 million). The reduction primarily reflected the redemption of the bond loan in 2017. Pre-tax profit for the quarter came to NOK 210.9 million (NOK 127.5 million).

Tax expense was NOK 48.7 million (NOK 11.7 million) for the quarter. Consolidated net profit for the fourth quarter consequently came to NOK 162.2 million (NOK 115.8 million). NOK 162.2 million (NOK 115.7 million) of the profit was attributable to the shareholders of Selvaag Bolig ASA, and NOK 0 (NOK 0.1 million) to non-controlling shareholders.

Results for 2017

(Figures in brackets relate to 2016. The figures are unaudited.)

Selvaag Bolig had operating revenues of NOK 3 228.8 million (NOK 3 000.4 million) in the full year. Revenues from units delivered accounted for NOK 2 760 million (NOK 2 869 million). Two sites were sold for a total of NOK 405 million during the year. Other revenues derived from non-core activities, mainly rental.

A total of 737 units (869) were delivered in the full year, with 694 (840) from consolidated project companies.

Project costs for the full year totalled NOK 2 432.8 million (NOK 2 379.7 million), including NOK 78 million (NOK 100.4 million) in previously capitalised financial expenses. These primarily represented construction costs for units delivered, as well as costs in other projects which do not qualify for capitalisation as inventory.

Operating costs excluding project costs and associated companies totalled NOK 238.8 million (NOK 251.3 million) for the period. Payroll costs accounted for NOK 120.4 million (NOK 109.4 million) of this figure. A further NOK 22.1 million (NOK 26.9 million) in payroll costs related to housing under construction was capitalised, and will be expensed as project costs on future delivery.

Other operating costs came to NOK 114.3 million (NOK 121.9 million), including NOK 38.6 million (NOK 49.3 million) for sales and marketing.

Cash flow

Consolidated net cash flow from operational activities was NOK 506.3 million (NOK 77 million) for the fourth quarter. The change from the same period of the year before primarily reflected more units delivered as well as a large tax payment in the fourth quarter of 2016.

Consolidated cash flow from operational activities was NOK 303.2 million (NOK 440.3 million) in the full year. The decline primarily reflected fewer units delivered and land purchases. See note 5 on inventories for more information.

Net cash flow from investing activities was NOK 29.6 million (negative at NOK 11.1 million) for the quarter. The change from the same period of 2016 primarily reflected repayment of loans by joint ventures.

Where the full year is concerned, net cash flow from investing activities was negative at NOK 114.1 million (NOK 14.8 million). The change from the same period of 2016 primarily reflected increased investment in joint ventures and loans made to these.

The share of results from associates and other gains (losses) were negative at NOK 13.6 million (positive at NOK 24.6 million). This decline primarily reflected a write-down of NOK 10 million on a joint venture in western Norway and the inclusion of NOK 31.6 in gains on the sale of shares and assets in 2016.

EBITDA adjusted for financial expenses included in project costs came to NOK 625.7 million (NOK 514.4 million), corresponding to a margin of 19.4 per cent (17.1 per cent). Ordinary EBITDA was NOK 547.7 million (NOK 413.9 million), corresponding to a margin of 17 per cent (13.8 per cent). During the third quarter 2016, the group reduced its holding in the Kaldnes Brygge project in Tønsberg to 50 per cent. The gain is recognised in the item other gains (losses).

Consolidated operating profit for the full year came to NOK 543.7 million (NOK 393.9 million). Net financial expenses amounted to NOK 39.9 million (NOK 29.3 million). This increase primarily reflected one-off costs related to redemption of the bond loan in the second quarter.

Pre-tax profit for the full year came to NOK 503.8 million (NOK 364.6 million). Tax expense was NOK 102.7 million (NOK 63.7 million). Consolidated net profit for the full year consequently came to NOK 401.1 million (NOK 300.9 million). NOK 401 million (NOK 301.2 million) of the profit was attributable to the shareholders of Selvaag Bolig ASA, and NOK 0.1 million (negative at NOK 0.3 million) to noncontrolling shareholders.

Net cash flow from financing activities was negative at NOK 289.5 million (NOK 77 million) for the quarter. The change from the same period of 2016 primarily reflected increased repayment of construction loans.

Net cash flow from financing activities was negative at NOK 589.8 million (NOK 211.5 million) for the full year. The decline from 2016 primarily reflected the redemption of the NOK 500 million bond loan, partly offset by higher drawdown of land and construction loans. In addition comes increased buy-back of the company's own shares in connection with the share programme for employees and the sale of shares to employees, which represented net spending of NOK 59.1 million (NOK 15.2 million). Payment of dividend also increased from 136 million in 2016 to NOK 197.8 million.

The group's holding of cash and cash equivalents at 31 December totalled NOK 485.6 million (NOK 886.2 million), up by NOK 246.4 million from 30 September and down by NOK 400.6 million from a year earlier.

Cash flow summary

.

(figures in NOK 1 000)	Q4 2017	Q4 2016	2017	2016
Profit before taxes	210 884	127 450	503 802	364 582
Net cash flow from operating activities	506 316	77 021	303 242	440 267
Net cash flow from investment activities	29 581	(11 116)	(114 121)	(14 818)
Net cash flow from financing activities	(289 453)	76 981	(589 753)	(211 540)
Net change in cash and cash equivalents	246 444	142 886	(400 632)	213 909
Cash and cash equivalents at start of period	239 117	743 306	886 193	672 284
Cash and cash equivalents at end of period	485 561	886 193	485 561	886 193

Financial position

The carrying amount of Selvaag Bolig's total inventories (land, units under construction and completed units) at 31 December was NOK 4 643.9 million, compared with NOK 4 778.8 million at 30 September and NOK 4 284 million a year earlier. The decline during the quarter primarily reflected many units delivered, while the increase for the full year was largely attributable to land purchases. See note 5 for a further specification of inventories.

Equity was NOK 2 858.1 million (NOK 2 699.2 million) at 31 December, corresponding to an equity ratio of 45 per cent (42.1 per cent). Selvaag Bolig ASA paid NOK 109.9 million (NOK 60.9 million) in dividend during the third quarter, and NOK 87.9 million (NOK 75 million) in the second quarter. These payments related to the first half of 2017 and the second half of 2016 respectively. Non-controlling interests amounted to NOK 9.4 million (NOK 9.3 million) of equity.

Other current non-interest-bearing liabilities for the group totalled NOK 853.3 million (NOK 666.2 million) at 31 December, of which NOK 385.3 million (NOK 467.7 million) represented advance payments from customers.

At 31 December, consolidated interest-bearing debt amounted to NOK 2 217.4 million (NOK 2 573.3 million), of which NOK 1 836.8 million (NOK 2 038.7 million) was noncurrent and NOK 380.6 million (NOK 534.7 million) was current. The reduction in current debt primarily reflected construction loans for completed projects.

The group had land loans totalling NOK 1 248.7 million (NOK 946.1 million) at 31 December. These are normally converted to construction loans in line with the progress of the respective construction projects.

In connection with the redemption of the bond loan in June, Selvaag Bolig ASA entered into an agreement with DNB for a new credit facility of NOK 400 million. The group previously had two NOK 150 million credit facilities. Following the refinancing, one of these was cancelled and the other retained. No drawings had been made against any of these facilities at 31 December.

Net interest-bearing debt

(figures in NOK 1 000)	Q4 2017	Q3 2017	2016
Non-current interest-bearing debt	1 836 823	1 922 969	2 038 660
Current interest-bearing debt	380 608	573 688	534 681
Cash and cash equivalents	-485 561	-239 117	-886 193
Net interest-bearing debt	1 731 870	2 257 540	1 687 148

The group's interest-bearing debt falls primarily into three categories: 1) top-up loans, which are liabilities in parent company Selvaag Bolig ASA, 2) land loans and 3) construction loans. At 31 December, the group had no top-up loans, land loans of NOK 1 248.7 million and construction loans of NOK 968.8 million.

Interest-bearing debt at 31 December 2017 (NOKm) Interest costs on land loans are normally recognised in profit and loss until the site secures planning permission. They are capitalised against the site from the day the project secures planning permission, and recognised in profit and loss as part of the cost of sales when the units are delivered. Interest charges on construction loans are capitalised during the construction period and recognised under cost of sales in the same way.

At 31 December, interest on NOK 874 million in land loans had been capitalised, while interest charges relating to NOK 374 million in land loans spread over four projects were recognised in profit and loss.

Operational reporting

Each project is followed up individually in daily operations, and operational reporting accordingly comprises one main segment – housing development. Reporting also comprises the "other business" segment. The latter primarily includes service deliveries in completed Pluss projects as well as group administration not allocated to the other segments. Operational reporting utilises the percentage of completion method for recognising revenues and profit, which differs from the IFRS where profit is recognised on delivery. Note 4 to the financial statements presents segment information reconciled with the financial reporting figures (IFRS).

Segments fourth quarter 2017

	Operating revenues			EBITDA	Operating profit/loss
(figures in NOK 1 000)	Q4 17	Q4 16	Q4 17	Q4 16	Q4 17	Q4 16
Property development	675 127	938 849	142 769	260 246	181 397	259 154
Other	13 650	8 021	(38 965)	(46 767)	(39 956)	(48 530)
IFRS adjustments	569 989	(61 335)	110 682	(79 306)	72 027	(78 268)
Total group	1 258 766	885 535	214 486	134 173	213 468	132 356

Segments full year 2017

		Operating revenues		EBITDA	Operating profit/loss
(figures in NOK 1 000)	12M 17	12M 16	12M 17	12M 16	12M 17	12M 16
Property development	2 930 526	3 478 871	826 903	824 914	901 521	783 262
Other	40 058	32 352	(146 685)	(141 423)	(150 648)	(146 345)
IFRS adjustments	258 248	(510 876)	(132 481)	(269 528)	(207 220)	(243 014)
Total group	3 228 832	3 000 347	547 737	413 963	543 653	393 903

Housing development

This segment comprises all Selvaag Bolig's projects regardless of geographical location, since each project is followed up individually.

Operating revenues for the fourth quarter were NOK 675.1 million (NOK 938.8 million). They derived from 18 projects currently in production. Their decline reflected fewer projects under construction compared with last year and a lower sales ratio.

Operating costs, primarily for construction and sales, are directly related to the projects and amounted to NOK 532.3

Other business - unallocated

The other business segment comprises a number of activities in the group which are not regarded as part of the core business on a stand-alone basis. It also includes administration and management which cannot be attributed

million (NOK 678.6 million) for the fourth quarter. Construction costs in the segment reporting are exclusive of directly-related financial expenses (interest on construction loans). This differs from the IFRS accounts, where financial expenses are included in project costs on delivery.

EBITDA presents operating profit (loss) before depreciation, gain (loss), and share of profit (loss) from associates. It came to NOK 142.8 million (NOK 260.2 million) for the quarter, corresponding to a profit margin of 21.1 per cent (27.7 per cent).

directly to the projects and are accordingly not allocated to the housing development segment.

Operating revenues for the segment in the fourth quarter came to NOK 13.7 million (NOK 8 million), while operating costs amounted to NOK 52.6 million (NOK 54.8 million). Costs relate largely to pay for the administration and management, as well as to central marketing. EBITDA was thereby negative at NOK 38.9 million (NOK 46.8 million).

Review of operations

Operations

A total of 182 units with a combined value of NOK 696 million were sold during the quarter. Selvaag Bolig's share amounted to 168 units sold with a combined value of NOK 632 million.

Activity in the group was at a high level, and construction started on 217 units during the fourth quarter.

Project

The company has projects in Oslo, Bærum, Asker, Lørenskog, Moss, Ski, Stavanger, Sandnes, Sola, Tønsberg, Trondheim, Bergen and Stockholm. However, no projects were under

To manifest value creation in the group, segment reporting shows revenue and costs in the various projects using the percentage of completion method as its accounting principle.

construction in Asker, Ski, Stavanger or Sandnes during the fourth quarter.

Quarterly development of project portfolio

	Q4 16	Q1 17	Q2 17	Q3 17	Q4 17
Number of units sold	161	190	165	178	168
Number of construction starts	196	186	318	77	217
Number of units completed	255	63	210	81	336
Number of units delivered	254	85	222	75	355
Number of units under construction	1 356	1 479	1 586	1 582	1 463
Proportion of sold units under construction	85 %	86 %	78 %	78 %	73 %
Number of completed unsold units	43	32	24	30	23
Sales value of units under construction (NOK million)	5 709	6 340	7 074	7 047	6 994

Purchase and sale of land

The group entered into an agreement during the quarter to purchase a site at Bjerke in Oslo which is expected to accommodate some 1 500 units. Furthermore, agreement has

Sales development and progress

Selvaag Bolig sold 168 residential units (161) during the fourth quarter. These sales comprise Selvaag Bolig's consolidated project companies as well as its relative share of homes sold in part-owned projects.

been reached on acquiring Segelckes vei 2 at Strømmen, which is expected to provide some 150 units.

Units sold

Total sales during the fourth quarter, including Selvaag Bolig's relative share of joint ventures, amounted to 168 units with a combined sales value of NOK 632 million. Sales in the corresponding period of 2016 totalled 161 units with a combined value of NOK 764 million.

Value of units sold (NOK mill)

Selvaag Bolig started sales during the quarter in four projects comprising a total of 175 residential units (171).

Sales starts in the quarter

Project	# of units Category		Region
Lade alle 65	30	Flat	Trondheim
Hovinenga	53	Flat	Greater Oslo
Kaldnes	20	Flat	Greater Oslo
Lørenskog Stasjonsby	72	Flat	Greater Oslo
Total	175

Construction began on 217 (196) units during the quarter. Construction starts can vary substantially from quarter to quarter, since construction normally only begins when 60 per cent of the value in a project has been sold.

Construction starts (no of units)

Project	# units	Category	Region
Lade Alle 65	97	Flat	Trondheim
Moss Glassverk	30	Flat	Greater Oslo
Svea Serenad	65	Flat	Stockholm
Kaldnes Dockside F	25	Flat	Greater Oslo
Total	217

At 31 December, Selvaag Bolig had 1 463 (1 356) units under construction. They included 1 247 units in Greater Oslo, 151 in the rest of Norway and 65 abroad.

The order backlog at 31 December – in other words, the sales value of the 1 463 (1 356) units then under construction – was NOK 6 994 million (NOK 5 709 million).

A total of 336 (255) units were completed in the fourth quarter, and 355 (254) – including ones completed earlier – were delivered. The completed units were divided between the Kaldnes Dockside D, Kilenkollen, Løren Stasjon, Moss Glassverk and Nybyen Økern projects. A total of 23 (43) completed units were unsold at 31 December. Consolidated project companies accounted for 324 (252) of the units delivered, while 31 (2) were in a part-owned project company.

Units completed by project

Project	# units	Category	Region
Kaldnes Dockside D	31	Flat	Greater Oslo
Kilenkollen	153	Flat	Greater Oslo
Løren Stasjon	52	Flat	Greater Oslo
Moss	33	Flat	Greater Oslo
Nybyen Økern	67	Flat	Greater Oslo
Total	336

Based on expected progress for the projects, 54 units are expected to be completed in the first quarter of 2018. Estimated completions amount to 854 units for 2018 as a whole.

Expected number of completions

Share information

The company had 93.77 million issued shares at 31 December, divided between 1 957 shareholders.

The 20 largest shareholders controlled 83.5 per cent of the total number of issued shares. The largest shareholder was Selvaag Gruppen, with a 53.5 per cent holding.

During the quarter, the Selvaag Bolig share varied in price from NOK 34.70 to NOK 28.90. The closing price at 31 December was NOK 33.90, compared with NOK 34.00 at 30 September. The share price accordingly fell by 0.3 per cent over the quarter. A total of 5.6 million shares, or six per cent of the total outstanding, were traded during the period. Share turnover totalled NOK 174 million during the quarter, corresponding to an average daily figure of roughly NOK 2.8 million.

20 largest shareholders at 31 December 2017

Shareholder	# of shares	% share
SELVAAG GRUPPEN AS	50 180 087	53.5%
LANDSFORSAKRINGAR FASTIGHETSFOND	5 278 334	5.6%
MORGAN STANLEY & CO. INT. PLC. *)	2 747 423	2.9%
PARETO AS	2 065 624	2.2%
SELVAAG BOLIG ASA **)	2 004 071	2.1%
SEB PRIME SOLUTIONS SISSENER CANOP	2 000 000	2.1%
HOLBERG NORDEN	1 812 539	1.9%
HOLBERG NORGE	1 693 763	1.8%
VERDIPAPIRFONDET PARETO INVESTMENT	1 686 000	1.8%
FLPS - GL S-M SUB	1 202 000	1.3%
HOLTA INVEST AS	1 200 000	1.3%
JPMORGAN CHASE BANK, N.A., LONDON *)	1 010 166	1.1%
REGENTS OF THE UNIVERSITY OF MICHI	959 183	1.0%
JPMORGAN CHASE BANK, N.A., LONDON *)	856 021	0.9%
STATE STREET BANK AND TRUST COMP *)	766 754	0.8%
STATE STREET BANK AND TRUST COMP *)	630 473	0.7%
STOREBRAND NORGE I VERDIPAPIRFOND	590 932	0.6%
BANAN II AS	555 190	0.6%
FIDELITY INT REAL ESTATE FUND	531 300	0.6%
Torstein Tvenge	500 000	0.5%
Total 20 largest shareholders	78 269 860	83.5%
Other shareholders	15 495 828	16.5%
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

Risk and uncertainty factors

As a housing developer, Selvaag Bolig is exposed to risks which could affect the group's business and financial position. Risk factors relate to land development, sales, and the execution of housing projects, and can be divided into market, operational and financial categories. The group gives priority to work on managing and dealing with risk, and has established routines and control systems to limit and control risk exposure.

Macroeconomic conditions, particularly unemployment and interest rates, as well as demographic changes are factors which affect the group's progress. See the company's annual report, available on its website, for a more detailed explanation of the risk and uncertainty factors it faces.

Transaction with related parties

Selvaag Bolig purchased and took delivery during the quarter of a site at Lørenskog for NOK 225 million. The vendor was Vinterparken Holding AS, a joint venture part-owned by Selvaag Gruppen AS. See note 23 to the group's annual reports for detailed information on transactions with related parties in earlier years.

Housing market

House prices rose during the fourth quarter. According to Statistics Norway (SSB), seasonally adjusted Norwegian house prices at 31 December were on average 0.9 per cent higher than at 30 September and up by 0.7 per cent from 31 December 2016.

Price developments differed between Selvaag Bolig's core areas during the quarter. Overall prices rose by 0.1 per cent in Oslo including Bærum, and were three per cent lower than at 31 December 2016. In Akershus county excluding Bærum, prices rose by 0.2 per cent and had risen 3.1 per cent since

31 December 2016. Prices in Stavanger rose by 0.1 per cent over the quarter and were up by 3.7 per cent from 31 December 2016. They fell by 0.8 per cent in Bergen for the quarter and declined up by 2.1 per cent over the year. In Trondheim, prices fell by 0.8 per cent for the quarter and were 1.4 per cent lower than at 31 December 2016.

Outlook

According to SSB, urbanisation and high population growth create a big and long-term demand for new homes in Selvaag Bolig's core areas. The company is well positioned with large projects centrally located in and around Greater Oslo, Stavanger, Bergen and Trondheim. However, house price developments in the second half of 2017 were negative and the newbuild market was markedly quieter than in earlier periods. One of the underlying reasons for this is assumed to be the government's residential mortgage regulations, which came into effect on 1 January 2017.

They impose a loan cap of 60 per cent of the house value on mortgages for second homes in Oslo and limit total loans to five times the mortgagee's gross income. These regulations apply until 30 June 2018. However, macroeconomic conditions and household purchasing power are good. Selvaag Bolig therefore expects a gradual improvement in the market position in 2018.

Interim financial statements IFRS

Statement of comprehensive income

	Q4 2016 2017	2016
		2 923 966
		76 381
		3 000 347 -
		(2 379 746)
		(109 361)
		(20 061)
		(121 851)
-	58	31 679
		(7 104)
		(2 606 444)
		393 903
		8 264
		(37 585)
		(29 321)
		364 582
		(63 694)
		300 888
		(3 095)
		297 793
		(267)
		301 155
		(267)
		298 060
		3.21
	Q4 2017 1 239 045 19 721 1 258 766 - (982 915) (36 947) (1 018) (28 105) 3 687 (1 045 298) 213 468 5 819 (8 403) (2 584) 210 884 (48 651) 162 233 2 846 165 079 (11) 162 244 (11) 165 090 1.78	863 164 3 165 042 22 371 63 790 885 535 3 228 832 - - (677 035) (2 432 818) (35 434) (120 354) (1 817) (4 084) (33 656) (114 313) - (5 295) (13 610) (753 179) (2 685 179) 132 356 543 653 3 011 12 749 (7 917) (52 600) (4 906) (39 851) 127 450 503 802 (11 653) (102 653) 115 797 401 149 591 4 633 116 388 405 782 102 104 115 695 401 045 102 104 116 286 405 678 1.24 4.35

The consolidated financial information has not been audited

Statements of financial position

(figures in NOK 1 000)	Note	Q4 2017	Q3 2017	2016
ASSETS
Non-current assets
Goodwill		383 376	383 376	383 376
Other intangible assets		-	-	-
Property, plant and equipment		11 428	8 451	10 867
Investments in associated companies and joint ventures		316 241	307 553	289 818
Loans to associated companies and joint ventures		122 982	158 879	63 757
Other non-current assets		214 039	213 269	197 318
Total non-current assets		1 048 066 -	1 071 528 -	945 136 -
Current assets
Inventories (property)	5	4 643 938	4 778 784	4 284 011
Trade receivables		133 832	142 141	103 420
Other current receivables		40 621	105 804	189 902
Cash and cash equivalents		485 561	239 117	886 193
Total current assets		5 303 952	5 265 846	5 463 526
TOTAL ASSETS		6 352 018	6 337 374	6 408 662
EQUITY AND LIABILITIES		-	-	-
Equity attributed to shareholders in Selvaag Bolig ASA		2 848 723	2 679 240	2 689 857
Non-controlling interests		9 419	9 430	9 315
Total equity		2 858 142	2 688 670	2 699 172
		-	-	-
LIABILITIES
Non-current liabilities
Pension liabilities		643	594	594
Deferred tax liabilities		84 161	84 389	84 486
Provisions		60 373	75 073	75 073
Other non-current non interest-bearing liabilities		8 349	7 404	6 938
Non-current interest-bearing liabilities		1 836 823	1 922 969	2 038 660
Total non-current liabilities		1 990 349 -	2 090 429 -	2 205 751 -
Current liabilities
Current interest-bearing liabilities		380 608	573 688	534 681
Trade payables		166 479	139 239	219 562
Current tax payables		103 158	80 026	83 343
Other current non interest-bearing liabilities		853 282	765 322	666 153
Total current liabilities		1 503 527	1 558 275	1 503 739
Total liabilities		3 493 876	3 648 704	3 709 490
TOTAL EQUITY AND LIABILITIES		6 352 018	6 337 374	6 408 662

The consolidated financial information has not been audited

Statements of changes in equity

		Share	Other	Cumulative			Equity attributed	Non
	Share	premium	paid-in	translation	Other	Retained	to shareholders in	controlling	Total
	capital	account	capital	differences	reserves	earnings	Selvaag Bolig ASA	interests	equity
EQUITY AS OF 1 JANUARY 2017		186 298 1 394 857 700 629		842	3 528	403 702	2 689 857	9 315 *)	2 699 172
Transactions with owners:
Dividend	-	-	-	-	-	(197 820)	(197 820)	-	(197 820)
Share buy back	(4 240)	-	-	-	-	(72 652)	(76 892)	-	(76 892)
Employee share program	1 465	-	-	-	-	26 435	27 900	-	27 900
Total comprehensive income/(loss) for
the period:
Net income/(loss) for the period	-	-	-	-	-	401 045	401 045	104	401 149
Other comprehensive income/(loss) for
the period	-	-	-	4 633	-	-	4 633	-	4 633
EQUITY AS OF 31 DECEMBER 2017		183 523 1 394 857 700 629		5 475	3 528	560 710	2 848 724	9 419 *)	2 858 142

EQUITY AS OF 1 JANUARY 2016		186 799 1 394 857 700 629		3 937	3 528	249 859	2 539 609	9 582 *)	2 549 192
Transactions with owners:
Dividend	-	-	-	-	-	(135 961)	(135 961)		(135 961)
Share buy back	(1 419)	-	-	-	-	(22 415)	(23 834)		(23 834)
Employee share program	918	-	-	-	-	11 064	11 982		11 982
Total comprehensive income/(loss) for
the period:
Net income/(loss) for the period	-	-	-	-	-	301 155	301 155	(267)	300 888
Other comprehensive income/(loss) for
the period	-	-	-	(3 095)	-	-	(3 095)	-	(3 095)
EQUITY AS OF 31 DECEMBER 2016		186 298 1 394 857 700 629		842	3 528	403 702	2 689 857	9 315 *)	2 699 172

The consolidated financial information has not been audited

*) Non-controlling interests includes tax from profits in companies subject to partnership taxation. Income taxes in the Group does not include taxes from tax subjects outside the Selvaag Bolig Group.

Statement of cash flow

(figures in NOK 1 000)	Q4 2017	Q4 2016	2017	2016
CASH FLOW FROM OPERATING ACTIVITIES
Profit/(loss) before taxes	210 884	127 450	503 802	364 582
Income taxes paid	(25 414)	(137 351)	(82 886)	(138 722)
Depreciation and amortisation	1 018	1 817	4 084	20 061
Other gains (losses), net	-	(58)	-	(31 679)
Share of profits/(losses) from associated companies and joint
ventures	(3 687)	5 295	13 610	7 104
Changes in inventories (property)	146 545	148 382	(389 230)	142 352
Changes in trade receivables	8 309	(2 436)	(30 343)	(2 373)
Changes in trade payables	27 240	97 668	(53 083)	121 626
Changes in other operating working capital assets	62 454	(151 387)	154 629	(67 062)
Changes in other operating working capital liabilities	78 966	(12 359)	182 659	24 377
Net cash flow from operating activities	506 316	77 021	303 242	440 267
CASH FLOW FROM INVESTMENT ACTIVITIES
Proceeds from sale of property, plant and equipment and intangible
assets	-	80	-	3 580
Purchases of PPE and intangible assets	(3 983)	(84)	(4 614)	(408)
Proceeds from disposal of businesses and subsidiaries, net of cash
disposed	-	-	-	8 344
Purchases of businesses and subsidiaries, net of cash acquired	-	-	(1 800)	-
Proceeds from sale of associated companies	-	-	-	-
Purchases of associated companies and joint ventures	(5 000)	(9 317)	(40 033)	(12 835)
Proceeds from sale of other investments and repayment of loans	45 064	13 205	63 661	13 205
Purchases of other investments and loans	(6 500)	(15 000)	(131 335)	(32 954)
Dividends and disbursements from associated companies and joint
ventures	-	-	-	6 250
Net cash flow from investment activities	29 581 -	(11 116) -	(114 121) -	(14 818) -
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from borrowings	336 642	201 807	1 526 383	1 013 589
Repayments of borrowings	(611 779)	(119 568)	(1 859 207)	(1 073 895)
Net change in bank overdrafts	(16 886)	-	-	-
Dividends paid to equity holders of Selvaag Bolig ASA	-	-	(197 820)	(135 961)
Share buy back Selvaag Bolig ASA	-	(5 804)	(76 892)	(23 834)
Proceeds from disposal of shares Selvaag Bolig ASA	2 571	546	17 783	8 561
Net cash flow from financing activities	(289 453)	76 981	(589 753)	(211 540)
Net change in cash and cash equivalents	- 246 444	- 142 886	- (400 632)	- 213 909
Cash and cash equivalents at start of period	239 117	743 306	886 193	672 284
Cash and cash equivalents at end of period	485 561	886 193	485 561	886 193

The consolidated financial information has not been audited

Selected notes to quarterly financial statements

1. General information and accounting policies

Selvaag Bolig ASA (the "company") and its subsidiaries (together "the group") is a property development group, involved in the construction of residential property for sale in the ordinary course of business. The condensed consolidated interim financial information consists of the group and the group's interest in associated companies and jointly controlled entities.

The group's consolidated financial information have been prepared in accordance with IAS 34 Interim Financial Reporting. The report does not include all the information and disclosures required for annual financial statements and should be read in conjunction with the group's consolidated financial statements for 2016.

The accounting policies applied in preparing these interim condensed consolidated financial statements are consistent with those applied in the group's consolidated financial statements for the year ended 31 December 2016.

Group management has not yet evaluated the impact of implementing new, revised and amended standards with a later date of adoption.

2.Accounting judgements, estimates and assumptions

The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting principles and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing this consolidated interim financial information, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were largely the same as those that applied in the consolidated financial statements for the year ended 31 December 2016.

3. Transactions with related parties

See note 23 in the group's Consolidated Financial Statements for 2016 for detailed information on related party transactions in previous years.

4. Segment information

The main segment is defined as Property development. In addition the Other segment consists of Services and Estate Agent, as well as unallocated revenues and costs.

The group utilises the percentage of completion method in its internal reporting for which the degree of completion is estimated based on expenses incurred relative to total estimated costs and sales rate. Operating profit (loss) under the percentage of completion method also includes an estimated profit element. The group consolidated income statement is based on the completed contract method, in which revenue is recognised at the time of transfer of risk and control, being the point of delivery of the property. A reconciliation of this effect (from stage of completion to completed contract) can be found in the segment reporting under "Reconciliation EBITDA to operating profit (loss)".

Group management considers segment results based on the percentage of completion method for determining EBITDA. The method of measurement is defined as operating profit (loss) before "Depreciation and amortisation", "Other gain (loss), net", and "Share of income (losses) from disposals from associated companies and joint ventures". Financial income and expenses are not allocated to operating segments since this type of activity is managed by a central finance function focused on managing the group's liquidity.

Fourth quarter 2017

	Property
(figures in NOK 1 000)	development	Other	Total
Operating revenues	675 127	13 650	688 777
Project expenses	(518 285)	(1 636)	(519 921)
Other operating expenses	(14 073)	(50 979)	(65 052)
EBITDA (percentage of completion)	142 769	(38 965)	103 804
Reconciliation EBITDA to operating profit (loss):
EBITDA (percentage of completion)	142 769	(38 965)	103 804
Sales revenues (adjustment effect of percentage of completion)	(629 762)	-	(629 762)
Sales revenues (completed contract)	1 199 752	-	1 199 752
Project expenses (adjustment effect of percentage of completion)	472 310	-	472 310
Project expenses (completed contract)	(935 305)	-	(935 305)
Depreciation and amortisation	-	(1 018)	(1 018)
Share of income (losses) from associated companies and joint
ventures	3 687	-	3 687
Other gain (loss), net	-	-	-
Operating profit (loss)	253 451	(39 983)	213 468
Units under construction	1 463	N/A	N/A
Units delivered	355	N/A	N/A
Fourth quarter 2016	Property
(figures in NOK 1 000)	development	Other	Total
Operating revenues	938 849	8 021	946 870
Project expenses	(661 645)	(2 656)	(664 301)
Other operating expenses	(16 958)	(52 132)	(69 090)
EBITDA (percentage of completion)	260 246	(46 767)	213 479
Reconciliation EBITDA to operating profit (loss):
EBITDA (percentage of completion)	260 246	(46 767)	213 479
Sales revenues (adjustment effect of percentage of completion)	(868 028)	-	(868 028)

Units under construction	1 356	N/A	N/A
Operating profit (loss)	180 940	(48 584)	132 356
Other gain (loss), net	58	-	58
ventures	(5 295)	-	(5 295)
Share of income (losses) from associated companies and joint
Depreciation and amortisation	-	(1 817)	(1 817)
Project expenses (completed contract)	(657 848)	-	(657 848)
Project expenses (adjustment effect of percentage of completion)	645 043	-	645 043
Sales revenues (completed contract)	806 764	-	806 764

Units delivered 254 N/A N/A

At 31 Dec 2017

	Property
(figures in NOK 1 000)	development	Other	Total
Operating revenues	2 930 526	40 058	2 970 584
Project expenses	(2 053 106)	(2 593)	(2 055 699)
Other operating expenses	(50 517)	(184 150)	(234 667)
EBITDA (percentage of completion)	826 903	(146 685)	680 218
Reconciliation EBITDA to Operating profit (loss):
EBITDA (percentage of completion)	826 903	(146 685)	680 218
Sales revenues (adjustment effect of percentage of completion)	(2 433 467)	-	(2 433 467)
Sales revenues (completed contract)	2 691 715	-	2 691 715
Project expenses (adjustment effect of percentage of completion)	1 794 639	-	1 794 639
Project expenses (completed contract)	(2 171 758)	-	(2 171 758)
Depreciation and amortisation	-	(4 084)	(4 084)
Share of income (losses) from associated companies and joint
ventures	(13 610)	-	(13 610)
Other gain (loss), net	-	-	-
Operating profit (loss)	694 422	(150 769)	543 653
Units under construction	1 398	N/A	N/A
Units delivered	737	N/A	N/A
At 31 Dec 2016
	Property
(figures in NOK 1 000)	development	Other	Total
Operating revenues	3 478 871	32 352	3 511 223

Project expenses	(2 592 702)	(3 817)	(2 596 519)
Other operating expenses	(61 254)	(169 958)	(231 212)
EBITDA (percentage of completion)	824 914	(141 423)	683 492
Reconciliation EBITDA to operating profit (loss):	-
EBITDA (percentage of completion)	824 914	(141 423)	683 492
Sales revenues (adjustment effect of percentage of completion)	(3 360 929)	-	(3 360 929)
Sales revenues (completed contract)	2 850 214	-	2 850 214
Project expenses (adjustment effect of percentage of completion)	2 562 998	-	2 562 998
Project expenses (completed contract)	(2 346 270)	-	(2 346 270)
Depreciation and amortisation	-	(20 061)	(20 061)
Share of income (losses) from associated companies and joint
ventures	(7 104)	-	(7 104)
Other gain (loss), net	31 563	-	31 563
Operating profit (loss)	555 386	(161 484)	393 903
Units under construction	1 356	N/A	N/A
Units delivered	869	N/A	N/A

5. Inventory - property

The group has property that is land and buildings intended for sale in the ordinary course of business or which is in the process of construction or development for such sale. Inventories thus comprise land, property held for resale,

and property under development and construction. Inventories are measured at the lower of cost and net realisable value.

(figures in NOK 1 000)	Q4 2017	Q3 2017	2016
Land (undeveloped)	1 938 098	1 682 393	1 437 259
Work in progress	2 501 652	2 866 529	2 579 660
Completed units	204 188	229 862	267 092
Carrying amount	4 643 938	4 778 784	4 284 011

6. Project expenses and EBITDA

The group expenses all directly attributable costs in construction projects as project expenses. This includes financial expenses. Below is a specification showing the

project cost and EBITDA including and excluding financial expenses.

(figures in NOK 1 000)	Q4 2017	Q4 2016	2017	2016
Project expenses	(982 915)	(677 035)	(2 432 818)	(2 379 746)
Finance expenses	(27 993)	(35 886)	(77 999)	(100 404)
Other project expenses	(954 922)	(641 149)	(2 354 819)	(2 279 342)

(figures in NOK 1 000)	Q4 2017	Q4 2016	2017	2016
EBITDA	214 486	134 173	547 737	413 964
EBITDA-margin	17.0%	15.2%	17.0%	13.8%
EBITDA excl. financial expenses	242 479	170 059	625 736	514 368
EBITDA-margin excl. financial expenses	19.3%	19.2%	19.4%	17.1%

For further information, please contact:

Baard Schumann, CEO Selvaag Bolig ASA Telephone: +47 940 80 000, e-mail: bs@selvaagbolig.no

Sverre Molvik, CFO Selvaag Bolig ASA Telephone: +47 401 00 585, e-mail: smo@selvaagbolig.no

About Selvaag Bolig

Selvaag Bolig ASA is a residential property developer controlling the entire value chain from acquisition of land to sale of homes. The company has several thousand homes under development at any given time, and focuses on the growth areas in and around Greater Oslo, Bergen, Stavanger and Trondheim. Selvaag Bolig represents a continuation of Selvaag's 70-year history and experience, and offers a broad variety of property types marketed under the brand names Start, Hjem and Pluss. The company is headquartered at Ullern in Oslo.

www.selvaagboligasa.no/en