Selvaag Bolig ASA

Earnings Release • Nov 12, 2015

Oslo 12 November 2015 Baard Schumann, CEO Sverre Molvik, CFO

Agenda

Highlights

• Operational update
• Financial update
• Market
• Outlook and summary

Highlights Q3 2015 HIGHLIGHTS

• Continued strong margins
• High sales and construction activity
• Continued strong demand in key markets
• Focus on land bank development

Kilenkollen, Fornebu, Greater Oslo

Key financials Q3 2015

HIGHLIGHTS

Agenda

• Highlights
• Operational update
• Financial update
• Market
• Outlook and summary

Continued high sales activity in Q3

OPERATIONAL UPDATE

Total sales value and value per sold unit Residential units sold

Note: All numbers are adjusted for Selvaag Bolig's ownership in joint ventures. * Includes 95 student residences with an average value of NOK 0.7 million (dotted area)

790

Majority of construction starts in Oslo area

OPERATIONAL UPDATE

Construction starts per quarter

67 apartments in Trondheim area

• 104 apartments in Oslo area
• Expected revenue NOK 441 million
• • Expected revenue NOK 216 million
• 33 apartments in Bergen area
• Expected revenue NOK 152 million

High number of units for delivery OPERATIONAL UPDATE

YE 2016: ~80% of construction volume in Greater Oslo

Note: Projects are included when construction start is decided. All numbers are adjusted for Selvaag Bolig's ownership share in joint ventures.

Q3 2015: 78% sold, 57% of construction volume in Greater Oslo Development units under construction Units NOK million 1 347 1 308 1 384 1 394 1 426 5 159 4 689 4 968 4 909 5 077 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Number of units under construction Sales value (NOK million) No of units (net figures) 258 183

Expected completions per quarter

95% of 2015 completions sold by Q3 2015

• 87% of 2016 completions sold by Q3 2015

Agenda

• Highlights
• Operational update
• Financial update
• Market
• Outlook and summary

Operating revenues EBITDA margin

Income statement highlights Q3 2015 (IFRS)

FINANCIAL UPDATE

Income statement highlights Q3 2015 (NGAAP)

FINANCIAL UPDATE

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

Cash flow development Q3 2015

FINANCIAL UPDATE

• Cash flow from operating activities NOK 280m
• Proceeds from sale of associated companies NOK 24m
• Acquisitions, tax and dividend payments reduce cash level in Q4

Condensed cash flow

Balance sheet highlights Q3 2015

		Balance sheet composition
Book value per share NOK 27.2 (40%) 	NOKm
NOK 26.4 in Q2 2015 (40%) 	7 000
Changes since Q2 2015: 	6 000	Non-current assets Non-current assets
Inventories decreased by NOK 32m 	5 000
Trade receivables decreased by  NOK 56m	4 000
Cash increased by NOK 334m 	3 000	Current assets Current assets
Prepayments from customers 	2 000
account for NOK 282m of other	1 000	Cash
current non interest-bearing liabilities	0	Cash

FINANCIAL UPDATE

Assets Equity and Liabilities

Inventories (property) Q3 2015 FINANCIAL UPDATE

Land (undeveloped) Work in progress Finished projects

Q3'15 vs Q2'15	Inventory value development
	NOKm
Land value down NOK 57m  Due to construction starts  Work in progress up NOK 96m 	5 000 136 4 000 2 741 3 000	359 374 2 359 2 360
Finished goods down NOK 71m  Due to delivered units 	2 000 1 000 -

Sound debt structure FINANCIAL UPDATE

Drawn per 30 Sep (NOKm)	Interest rate margin
500	4.75%
0	2.50%
0	2.00%
992	2.00% - 2.50%
1 326	1.90% - 2.50%

Total net interesting bearing debt NOK 2 006 million

Interest bearing debt as at 30 September 2015

Note: Top-up loan of NOK 500m in the table differs form the summed up top up loan in the pie chart (NOK 493m). The difference is due to NOK -7m in amortized cost which is not actual debt.

New dividend policy implemented FINANCIAL UPDATE

• To pay dividend twice a year
• Up to 50 per cent of net profit
• The bondholders of the NOK 500m Senior Unsecured Bond 2013/2018 approved amendments to the dividend covenant to allow payments more than once a year
• H1 2015 EPS NOK 1.52
• H1 2015 dividend of NOK 0.7 per share paid in October

Dividend policy

H1 2015 dividend

Approved by bondholders

Agenda

• Highlights
• Operational update
• Financial update

Market

Outlook and summary

Price development in Oslo reflects tight market

MARKET – PRICE DEVELOPMENT

	Rising prices for second-hand homes in Oslo Up 11% last 12 months, up 4% in Q3 	80 000 70 000	+6% 61 698
	Prices for new-built homes have increased less	60 000 50 000
	Up 6% last 12 months, up 1% in Q3  Low reaction/sales time: 35 days in Norway /	40 000 30 000
	17 days in Oslo	20 000 10 000
		0

*Source: DNB Eiendom Nybygg Oslo og Akershus. Nr 3 2015

Price per square meter, NOK

New-build vs second-hand last 12 months

Newbuild Second hand

Q3 2014 Q3 2015

Oslo and Akershus, October 2007-2015

Source: Eiendomsverdi

Selected areas: Oslo, Lørenskog, Ski ,Oppgård, Bærum, Asker

Inventory in Oslo at historical low MARKET – SECOND-HAND

Market inventory second hand homes 31 October Sold units October

New projects with prime locations MARKET – SELVAAG BOLIG PROJECTS

~375 units | 2-4 rooms | ~40-100 sq. m Sales start phase 1 October 2015 40 of the first 70 units sold first week

Sales start October Valle Hovin - growth area in Oslo

Time from acquisition to sales start: 8 months

NOK 220m acquisition in Feb. '15 Sales start Oct. '15

~160 units | 1-4 rooms | 35-111 sq. m Sales start phase 1 24 October 2015 45 of the first 80 units sold first week

Time from acquisition to sales start: 7 months

NOK 156m acquisition March '15 Sales start Oct. '15

Sales start October Kilenkollen, Fornebu - growth area in Greater Oslo

New prime development project in Oslo MARKET – SELVAAG BOLIG ACQUISITION

• Situated in city outskirts, in one of Oslo's most attractive residential areas
• Seeking permission for ~22 000 square metres of housing, up to 350 apartments – all sizes

Acquistion of site at Frysja, Oslo

Political shift in Norway after municipal election MARKET – POLITICAL AND REGULATORY ENVIRONMENT

• The September 2015 election shifted political power from centre/conservative to labour/green/left
• New Oslo city council wants to reclassify more land for residential use
• Can result in new project opportunities

Bergen

Source: Eiendomsverdi

Selected areas: Bergen

Low in Bergen and Trondheim, high in Stavanger

MARKET – SECOND-HAND INVENTORY

October 2007-2015 0 500 1000 1500 2000 2500 3000 Units

Stavanger area October 2007-2015

Selected areas: Stavanger, Sola, Randaberg, Sandnes

Units
2000
1750
1500
1250
1000
750
500
250
0

Market inventory second-hand homes 31 October Sold units October

Market inventory second-hand homes 31 October

Sold units October

October

Sold units October

MARKET – SELVAAG BOLIG POSITION

• High sales reflect Selvaag Bolig's competitive prices and defined housing strategy
• All construction activity put out to competitive tender
• Large land bank in fast growing urban areas
• Selvaag Bolig average price in Q3 2015: NOK 3.6m
• Total market (second-hand) average price in YTD 2015*: flats NOK 3.4m , terraced NOK 4.4m, semi-detached NOK 5.3m

Strong sales compared to peers

Sales activity vs. peers last 5 quarters

* Selected markets: Greater-Oslo, Tromsø, Trondheim, Bergen and Stavanger Housing types Selvaag Bolig: flats, semi-detached and terraced homes

Source: Selvaag Bolig and Eiendomsverdi

27

• Portfolio development adapted to local market demand
• YTD: Acquired land in Greater Oslo for ~1 700 new homes
• New office in Bergen strengthens local presence

Focus on growing urban areas MARKET – SELVAAG BOLIG LAND BANK

Note: The numbers represent the size of the land portfolio as at 30. September 2015. All numbers are adjusted for Selvaag Bolig's share in joint ventures. 1) Greater Oslo area: Oslo, Akershus, Buskerud, Vestfold and Østfold, 2) 155 units at Tromsø (Troms county), 3) The residential property development portfolio consists of land plots that are to be paid for when planning permission is received. These have a development potential of ~4 950 residential units, whereof the company has purchasing obligations for ~4 300 and purchasing options for ~650

units

Agenda

• Highlights
• Operational update
• Financial update
• Market
• Outlook and summary

Positive overall outlook for Selvaag Bolig

OUTLOOK

• High sales activity and number of sold units give high future revenues
• Strong demand in core market Greater Oslo, inventory at historical low
• Strong demand in Bergen and Trondheim, low inventory
• Weak Stavanger market has limited effect on Selvaag Bolig due to business model

Lade Allé, Trondheim

Summary

• Continued strong margins
• High sales and construction activity
• Continued strong demand in key markets
• Focus on land bank development

Kilenkollen, Fornebu, Greater Oslo

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Next event: 4 th quarter 15 February 2016

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 10% minimum cash deposit
• High level of home ownership
• 85% (one of the world's highest)
• Economic benefits for home owners
• 26% 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

Selvaag Bolig – value proposition

Selvaag Bolig ASA is a Norwegian residential property developer with no in-house construction arm, which controls the entire value chain from the acquisition of land to the sale of homes.

• Low risk business model
• 60 per cent presale before construction starts
• Only present in fast growing urban regions with high demand and large market depth
• Very competitive prices ensure a broad customer base
• No in-house construction arm
• All construction activity put out to competitive tender
• Lower building costs
• Fixed construction price
• Reduced risk
• Smaller exposure to market fluctuations
• Defined housing concepts
• Aimed at broad consumer categories
• Profit maximisation in all projects
• Large projects with more than 150 apartments
• Large land bank
• Several thousand homes under development in Norway's four fastest growing urban regions

Value creation in Selvaag Bolig

Construction costs financed

Target 100% sale at delivery

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

• With minimum 60% pre-sale, there is limited remaining project risk
• 78% of units in production are sold per Q3'15

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

Income statement IFRS

(figures in NOK million)	Q3 2015	Q3 2014	9M 2015	9M 2014	2014
Total operating revenues	778.4	764.7	2 364.1	1 818.8	2 945.2
Project expenses	(623.9)	(628.3)	(1 892.5)	(1 507.2)	(2 371.8)
Other operating expenses	(53.1)	(41.6)	(158.3)	(135.1)	(215.5)
Other gains (loss)	-	-	-	-	(3.5)
Associated companies and joint ventures	9.4	0.5	19.7	28.0	32.4
EBITDA	110.9	95.3	333.0	204.5	386.9
Depreciation and amortisation	(6.1)	(5.1)	(17.9)	(15.5)	(21.2)
EBIT	104.7	90.1	315.1	189.0	365.7
Net financial expenses	(9.4)	(5.9)	(24.5)	(16.7)	(17.0)
Profit/(loss) before taxes	95.4	84.3	290.6	172.3	348.7
Income taxes	(25.9)	(23.4)	(78.8)	(46.7)	(94.2)
Net income	69.5	60.9	211.8	125.6	254.5
Net income for the period attributable to:
Non-controlling interests	(1.4)	0.1	(1.7)	1.2	1.2
Shareholders in Selvaag Bolig ASA	74.5	60.8	217.1	124.4	253.2

Cash Flow statement

(figures in NOK million)	Q3 2015	Q3 2014	9M 2015	9M 2014	2014
Net cash flow from operating activities	279.7	56.6	316.6	16.1	187.3
Net cash flow from investment activities	28.7	23.1	(20.8)	30.2	(5.7)
Net cash flow from financing activities	26.0	(56.7)	(57.1)	143.6	(202.7)
Net change in cash and cash equivalents Cash and cash equivalents at start of period Cash and cash equivalents at end of period	334.4 470.2 804.6	23.0 754.0 777.0	238.7 565.9 804.6	189.9 587.0 777.0	(21.1) 587.0 565.9

			2014
401.8	406.4	420.3	415.6
21.4	22.6	7.9	17.4
192.3	209.0	144.0	156.7
122.2	123.5	125.5	121.8
737.8	761.5	697.7	711.5
			4 348.8
			1 614.4
			2 360.3
			374.1
280.3	350.1	291.9	588.0
804.6	470.2	777.0	565.9
5 748.2	5 515.6	5 618.9	5 502.8
6 486.0	6 277.1	6 316.6	6 214.2
2 547.1	2 472.6	2 313.8	2 442.6
13.1	14.5	23.9	14.7
2 560.2	2 487.1	2 337.7	2 457.3
2 470.1	2 018.5	2 295.0	1 752.4
309.1	308.4	302.9	293.6
2 779.2	2 326.9	2 598.0	2 046.0
			959.5
			751.4
1 146.6	1 463.1	1 380.9	1 710.9
6 486.0	6 277.1	6 316.6	6 214.2
	Q3 2015 4 663.3 1 814.1 2 641.9 207.4 340.4 806.2	Q2 2015 4 695.3 1 871.2 2 546.0 278.1 748.9 714.2	Q3 2014 4 550.1 1 673.4 2 740.6 136.0 728.1 652.8

Balance sheet

* Corresponding to a book value of NOK 27.2 per share

In compliance with financial covenants

Sales ratio covenant (minimum 60.0%) Equity ratio covenant (minimum 25.0%)

Substantial portfolio for development

Total land bank portfolio at 30 September 2015

No of units

Maintaining strong market position

Units under construction vs. peers (net figures)

Construction starts in the quarter

Construction starts, scheduled completion and expected revenue Quarterly, expected revenues (IFRS) in NOK million

Operational highlights – key operating figures

	Q3 14	Q4 14	Q1 15	Q2 15	Q3 15
Number of units sold	259	233	308	210	208
Number of construction starts	203	280	284	199	204
Number of units completed	274	319	208	190	172
Number of units delivered	279	266	224	232	202
Number of units under construction	1 347	1 308	1 384	1 394	1 426
Proportion of sold units under construction	76%	77%	81%	80%	78%
Number of completed unsold units	18	39	40	31	25
Sales value of units under construction (NOK million)	5 159	4 689	4 968	4 909	5 077
Number of employees	100	99	99	99	99

110.9	(31.4)
9.4
(53.1)	(37.0)
(623.6)	(1.0)
778.2	6.6
Total	Other

IFRS EBITDA Q3 2015

(figures in NOK million)	Property development	Other	Total
IFRS EBITDA for the quarter, per segment
Operating revenues	771.6	6.6	778.2
Project expenses	(622.6)	(1.0)	(623.6)
Other operating expenses	(16.1)	(37.0)	(53.1)
Share of income (losses) from associated companies and joint ventures	9.4	-	9.4
Other gain (loss), net	-	-	-
EBITDA	142.2	(31.4)	110.9

Operational reporting Q3 2015

(figures in NOK million)	Property development	Other	Total
Operating revenues	819.0	6.6	825.6
Project expenses	(649.4)	(1.0)	(650.4)
Other operating expenses	(16.1)	(37.0)	(53.1)
EBITDA (percentage of completion)	153.5	(31.4)	122.2

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

Land loan interests on the P&L

• Total land loans are NOK 992 million of which NOK 573 million are loans where interest cost are activated
• Land loan interests activated at regulation
• At 3O September interests connected to land loans of NOK 419 million was charged on the P&L

Loans recognised in profit and loss at 30.09.2015

Book value at time of valuation (Nov 2014)

• Independent land valuation, by Akershus Eiendom.
• Valuation is mainly based on a calculated profit from sales of fully developed housing units
• For projects under development, remaining costs are split on developer and buyer, affecting value distribution
• DCF valuation method is applied on residents for lease

Land bank valuation from Q4 2014

NOKm

External valuation vs. book value