Selvaag Bolig ASA

Earnings Release • Nov 9, 2017

Oslo 9 November 2017 Baard Schumann, CEO Sverre Molvik, CFO

Agenda

▪ Highlights

• Operational update
• Financial update
• Market
• Summary

Key financials Q3 2017

HIGHLIGHTS

Operating revenues

379 NOK million

Equity ratio

per cent

Adjusted EBITDA margin

Highlights Q3 2017 HIGHLIGHTS

• Strong sales in a volatile market
• High margins maintained despite few units delivered
• Acquisition of land at Bjerke (Oslo) with potential of 1 500 units
• High value of units under construction at NOK 7 billion
• 78% sold at 30 September 2017

Bjerke, Oslo

Agenda

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

Sales value and units sold

OPERATIONAL UPDATE

NOK million 443 487 NOK million 1 130 764 984 ⁶³³⁶⁸⁴ 4.1 4.8 5.2 3.8 3.8 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 2 490 3 049 3 215 740 ^{886 935} Total and average sales value Sales value and units sold

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

OPERATIONAL UPDATE

Construction starts per quarter

Hovinenga, Oslo

• 33 apartments in Greater Oslo
• 40 terraced in Oslo
• 4 terraced in Stavanger area

Units under construction and completions

OPERATIONAL UPDATE

*Down from 87% as of Q2 due to a new project added that will be completed in 2018

Sales value: Units under construction Expected completions per quarter

• High value of units under construction
• Q3 2017: 78% of units under construction sold by Q3 2017
• Q3 2017: 97% of construction volume in Greater Oslo
• Of which 70% in Oslo. Remaining in Bærum, Lørenskog, Moss and Tønsberg

▪ Expected completions for 2018 as of Q3 17: 850 units

• 99% of 2017 completions sold by Q3 2017
• 86%* of 2018 completions sold by Q3 2017

Agenda

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

Income statement highlights Q3 2017 (IFRS)

• 75 units delivered (129)
• Revenues NOK 379m (387)
• Units delivered NOK 359m (365)
• Other revenues NOK 20m (23), mainly lease income
• Project costs NOK 279m (283)
• Of which NOK 19m is interest (9)
• Other costs NOK 54m (61)
• Salaries, sales and marketing key components
• Adjusted EBITDA NOK 45m (92)
• Adjusted for financial expenses included in project costs
• EBITDA NOK 26m (84)
• EPS in the quarter NOK 0.18 (0.63)

FINANCIAL UPDATE

Revenues and adjusted EBITDA margin (IFRS)

Operating revenues Adjusted EBITDA margin

Income statement highlights Q3 2017 (NGAAP)

FINANCIAL UPDATE

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

Cash flow development Q3 2017

FINANCIAL UPDATE

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

NOK million

239

Dividends paid to equity holders of Selvaag Bolig ASA

Cash and cash equivalents at 30 September 2017

• Cash flow from operations negative at NOK 163m mainly explained by high construction activity and few units delivered
• Cash flow from investment activities negative at NOK 46m mainly explained by purchase of and loans to associated companies
• Cash flow from financing activities at NOK 107m
• Net increase in loans NOK 217m, mainly construction loans
• Paid dividend of NOK 110m

Balance sheet highlights Q3 2017

FINANCIAL UPDATE

Book value decreased by NOK 1.0 ▪		Balance sheet composition
to NOK 28.6 per share	NOK million
Equity ratio 42.4% ▪ H1 17 dividend payment of NOK 1.20 per share ▪	7 000
Changes from Q2 2017: ▪	6 000	Non-current assets
Inventories increased by NOK 160m ▪	5 000
Trade receivables increased by NOK 33m ▪	4 000
Cash decreased by NOK 102m ▪	3 000	Current assets
Prepayments from customer's accounts ▪ for NOK 477m of other current non	2 000
interest-bearing liabilities	1 000
	0	Cash

Assets Equity and Liabilities

15

Inventories (property) Q3 2017

FINANCIAL UPDATE

Q3 17 vs Q2 17 Inventory value development

• Land value up NOK 10m
• Work in progress up NOK 105m
• Due to high construction activity
• Finished goods up NOK 45m
• Due to an increase in number of unsold units

Interest-bearing debt as at 30 September 2017

Drawn at 30 Sep. (NOKm)	Interest rate margin
0	2.90%
17	2.00%
1 193	2.00% - 2.50%
1 287	1.75% - 2.70%

Total Q3 2017 net interest-bearing debt NOK 2 258 million

Total Q2 2017 net interest-bearing debt NOK 1 929 million

Sound debt structure

FINANCIAL UPDATE

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 attributed to shareholders in Selvaag Bolig ASA

Agenda

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

Oslo market

MARKET

Oslo, October* 2008-2017 Oslo, October 2017 summed-up

Second-hand – average

• Sales price: NOK 65 900 per m²
• Turnover time: 31 days
• Price decrease October: 1.8%
• Price decrease last 12 months: 2.8%
• Units available for sale (31.10): ~ 3 170
• Second-hand sales October: 1 850

New homes (not built)

*Unsold units that have been withdrawn from the market are marked as inventory for 9 months before being removed Sources: Eiendomsverdi, Eiendom Norge, Finn.no and Selvaag Bolig

Oslo market

MARKET

*Unsold units that have been withdrawn from the market are marked as inventory for 3 months before being removed Sources: Eiendomsverdi

Newbuild market in Oslo

MARKET

Source: Røisland & Co

MARKET

Forecasted annual housing and medium) alternatives

Number of units completed in Oslo, 2001-2016

Housing demand higher than completions

Stavanger market

MARKET

Stavanger area, October* 2008-2017 Stavanger, October 2017 summed-up

Second hand market: Stavanger, Sola, Randaberg and Sandnes New homes market: Stavanger

Second-hand (Stavanger only) – average

• Sales price: NOK 38 300 per m²
• Turnover time: 59 days
• Price decrease October: 0.4%
• Price increase last 12 months: 0.9%
• Units available for sale (31.10): ~ 750
• Second-hand sales October: 240 units (October 16: 200 units)

New homes (not built)

▪ Units available for sale (31.10): ~ 280

* Unsold units that have been withdrawn from the market are marked as inventory for 9 months before being removed

Sources: Eiendomsverdi, Eiendom Norge, Finn.no and Selvaag Bolig

Bergen market

MARKET

Bergen, October* 2008-2017 Bergen, October 2017 summed-up

Second-hand – average

• Sales price: NOK 40 100 per m²
• Turnover time: 32 days
• Price decrease October: 1.5%
• Price decrease last 12 months: 2.6%
• Units available for sale (31.10): ~ 1 100

New homes (not built)

▪ Units available for sale (31.10): ~ 1 000

*Unsold units that have been withdrawn from the market are marked as inventory for 9 months before being removed Sources: Eiendomsverdi, Eiendom Norge, Finn.no and Selvaag Bolig

Trondheim market

MARKET

Trondheim, October* 2008-2017 Trondheim, October 2017 summed-up

Second-hand – average

• Sales price: NOK 42 900 per m²
• Turnover time: 27 days
• Price decrease October: 1.1%
• Price decrease last 12 months: 0.4%
• Units available for sale (31.10): ~ 885

New homes (not built)

▪ Units available for sale (31.10): ~ 1 100

*Unsold units that have been withdrawn from the market are marked as inventory for 9 months before being removed Sources: Eiendomsverdi, Eiendom Norge, Finn.no and Selvaag Bolig

Strong 2017 sales versus peers

MARKET

Sales activity vs. peers

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

Land acquired at Bjerke in Oslo ▪ Approximately 1 500 units ▪ Sales start expected in 2020

Agenda

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

Summary

• Strong sales in a volatile market
• High margins maintained despite few units delivered
• Acquisition of land at Bjerke (Oslo) with potential of 1 500 units
• High value of units under construction at NOK 7 billion
• 78% sold at 30 September 2017

Hovinenga, Oslo

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Next event: 4 th quarter 2017 13 February 2018

Appendix

Earnings and dividend per share

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

Selvaag Bolig's aim is to manage the group's resources so that shareholders secure a return in the form of dividend and the rise in the share price. This return will be competitive with other investments.

The company's goal is to pay dividends twice a year totalling up to 50 per cent of its net profit

Previous dividend policy New dividend policy

Share performance since IPO in June 2012

SHARE INFORMATION

$%$ share

53.5%
5.6%
2.9%
$2.3\%$
2.2%
$1.8\%$
$1.8\%$
2.0%
$1.6\%$
1.3%
1.3%
$1.3\%$
$1.1\%$
$0.9\%$
$0.9\%$
$0.6\%$
$0.6\%$
$0.6\%$
$0.5\%$
$0.5\%$
83.4%
16.6%
100.0%

Largest shareholders at 30 September 2017

Shareholder	# of shares	% share
SELVAAG GRUPPEN AS	50 180 087	53.5%
SKANDINAVISKA ENSKILDA BANKEN AB *)	5 278 334	5.6%
MORGAN STANLEY & CO. INT. PLC. *)	2 752 820	2.9%
SELVAAG BOLIG ASA **)	2 150 794	2.3%
PARETO AS	2 065 624	2.2%
VERDIPAPIRFONDET PARETO INVESTMENT	1 696 000	1.8%
HOLBERG NORGE	1 669 764	1.8%
HOLBERG NORDEN	1 919 004	2.0%
SEB PRIME SOLUTIONS SISSENER CANOP	1 502 510	1.6%
FLPS - ALL SECTOR SUB	1 221 000	1.3%
STATE STREET BANK AND TRUST COMP *)	1 216 135	1.3%
HOLTA INVEST AS	1 200 000	1.3%
REGENTS OF THE UNIVERSITY OF MICHI	1 045 000	1.1%
JPMORGAN CHASE BANK, N.A., LONDON *)	858 932	0.9%
VERDIPAPIRFONDET ALFRED BERG GAMBA	811 201	0.9%
STOREBRAND NORGE I VERDIPAPIRFOND	599 932	0.6%
BANAN II AS	555 190	0.6%
JPMORGAN CHASE BANK, N.A., LONDON *)	519 073	0.6%
TORSTEIN TVENGE	500 000	0.5%
BAARD SCHUMANN	480 937	0.5%
TOTAL 20 LARGEST SHAREHOLDERS	78 222 337	83.4%
OTHER SHAREHOLDERS	15 543 351	16.6%
TOTAL NUMBER OF SHARES	93 765 688	100.0%

* Updated shareholder list and further information regarding nominee accounts are presented at: http://sboasa.no/en/Aksjeinformasjon/Aksjonarer.aspx ** The shares were purchased for the company's share programmes for employees

Land bank valuation

• Book value of NOK 1.4 billion
• Value generated through project development
• Average portfolio 20% value added
• Third-party market valuation of NOK 2.7 billion 1 437

Book value at time of valuation (Nov 2016)

Eiendom

Q4 16: Book value vs. external valuation

NOK million

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
• 25% 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
• 78% of units in production are sold at end Q3'17

▪ 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 2017	Q3 2016	2016
Total operating revenues	379.4	387.3	3 000.3
Project expenses	(297.4)	(282.7)	(2 379.7)
Other operating expenses	(52.5)	(54.9)	(231.2)
Other gains (loss)	-	31.6	31.7
Associated companies and joint ventures	(3.3)	2.3	(7.1)
EBITDA	26.1	83.5	414.0
Depreciation and amortisation	(1.0)	(6.1)	(20.1)
EBIT	25.1	77.5	393.9
Net financial expenses	(5.1)	(9.8)	(29.3)
Profit/(loss) before taxes	20.1	67.7	364.6
Income taxes	(3.7)	(8.5)	(63.7)
Net income	16.4	59.2	300.9
Net income for the period attributable to:
Non-controlling interests	(0.0)	0.0	(0.3)
Shareholders in Selvaag Bolig ASA	16.4	59.1	301.2

2016	Q3 2016
440.3	(223.8)
(14.8)	6.8
(211.5)	79.8
213.9 672.3 886.2	(137.2) 880.5 743.3

Cash flow statement

(figures in NOK million)	Q3 2017	Q3 2016	2016
Net cash flow from operating activities	(163.4)	(223.8)	440.3
Net cash flow from investment activities	(45.7)	6.8	(14.8)
Net cash flow from financing activities	107.2	79.8	(211.5)
Net change in cash and cash equivalents Cash and cash equivalents at start of period Cash and cash equivalents at end of period	(102.0) 341.1 239.1	(137.2) 880.5 743.3	213.9 672.3 886.2

44

Q3 2017	Q3 2016	2016
383.4	383.4	383.4
8.5	11.8	10.9
307.6	279.5	289.8
372.1	259.4	261.1
1 071.5	934.1	945.1
4 778.8	4 390.4	4 284.0
1 682.4	1 434.7	1 437.3
2 866.5	2 653.5	2 579.7
229.9	302.3	267.1
247.9	139.7	293.3
239.1	743.3	886.2
5 265.8	5 273.5	5 463.5
6 337.4	6 207.6	6 408.7
		2 689.9
9.4	9.2	9.3
2 688.7	2 586.8	2 699.2
1 923.0	2 145.4	2 038.7
167.5	202.9	167.1
2 090.4	2 348.2	2 205.8
573.7	301.7	534.7
984.6	970.8	969.1
1 558.3	1 272.5	1 503.7
6 337.4	6 207.6	6 408.7
	2 679.2	2 577.6

Balance sheet

Substantial portfolio for development

Units

Total land bank portfolio at 30 September 2017

4 300

Operational highlights – key operating figures

	Q3 16	Q4 16	Q1 17	Q2 17	Q3 17
Number of units sold	277	161	190	165	178
Number of construction starts	223	196	186	318	77
Number of units completed	103	255	63	210	81
Number of units delivered	129	254	85	222	75
Number of units under construction	1 464	1 356	1 479	1 586	1 582
Proportion of sold units under construction	90%	85%	86%	78%	78%
Number of completed unsold units	48	43	32	24	30
Sales value of units under construction (NOK million)	5 775	5 709	6 340	7 074	7 047
Number of employees	100	100	100	100	100

(29.2)	26.1
	(3.3)
(39.1)	(52.5)
(0.1)	(297.4)
10.0	379.4
Other	Total

IFRS EBITDA Q3 2017

(figures in NOK million)	Property development	Other	Total
IFRS EBITDA for the quarter, per segment
Operating revenues	369.3	10.0	379.4
Project expenses	(297.3)	(0.1)	(297.4)
Other operating expenses	(13.4)	(39.1)	(52.5)
Share of income (losses) from associated companies and joint ventures	(3.3)	-	(3.3)
Other gain (loss), net	-	-	-
EBITDA	55.3	(29.2)	26.1

Operational reporting Q3 2017

(figures in NOK million)	Property development	Other	Total
Operating revenues	487.6	10.0	497.7
Project expenses	(342.1)	(0.1)	(332.2)
Other operating expenses	(13.4)	(39.1)	(52.5)
EBITDA (percentage of completion)	132.1	(29.2)	102.9

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

Growth areas in Greater Oslo

• Regional areas for labour-intensive activities
• Priority areas for commercial and urban development
• Regional public transport hubs
• Public transport connecting regional cities and office locations

Sources: Plansamarbeidet Oslo-Akershus, Selvaag Bolig Note: The figures are not adjusted for Selvaag Bolig's interest in joint ventures

MARKET – SELVAAG BOLIG PROJECTS

50

Total household debt and homeownership

MARKET

Source: OECD, Prognosesenteret

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

Urbanisation in Greater Oslo towards 2040

Source: Statistics Norway Greater Oslo municipalities include: Ski, Ås, Oppegård, Bærum, Asker, Lørenskog, Skedsmo, Ullensaker

▪ Rapid population growth in Oslo followed by stable development

• 30% population growth expected from 2017 to 2040
• Stable population growth to municipalities surrounding Oslo
• 28% population growth expected from 2017 to 2040

> 80 000 next five years

MARKET

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