Selvaag Bolig ASA

Earnings Release • Nov 14, 2014

Oslo 14 November 2014 Baard Schumann, CEO Sverre Molvik, CFO

Highlights Q3 2014 HIGHLIGHTS

• Strong sales development in all housing categories
• Construction activity maintained at high levels
• Market conditions continue to improve
• Expected dividend of minimum NOK 1.0 per share for fiscal 2014 Nybyen Økern,

Oslo

Key financials Q3 2014

HIGHLIGHTS

Strong sales development OPERATIONAL UPDATE

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)

Nybyen Økern – good demand on sales start

• 400 units in total
• Sales start with 78 units on 25 October 2014
• 50 units sold on sales start
• Next sales start: 35 units on 17 January 2015

COMPANY OUTLOOK

Nybyen Økern, Oslo

Construction starts on a healthy level

• Construction start on six projects
• Jaasund, Sola
• Aase Gaard, Sandnes
• Kaldnes, Tønsberg
• Lade Allé, Trondheim
• Nyhavn, Bergen
• Bjørnåsen Nord, Oslo

OPERATIONAL UPDATE

Construction starts per quarter

Continued high production activity

• Sales value of units under construction NOK 5 159 million
• 61% of production volume in Greater Oslo
• 76% of the units are sold

OPERATIONAL UPDATE

Note: Projects are included when construction is decided. All numbers are adjusted for Selvaag Bolig's ownership share in joint ventures. Selvaag Bolig currently has 1 379 residential units under construction including joint venture projects.

Production split

Development units under construction Units 1 279 1 474 1 474 1 418 1 347 4 657 5 421 5 547 5 238 5 159 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Number of units under construction Sales value (NOK million) NOK million

Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

Overall construction activity back on good levels

OPERATIONAL UPDATE

Units under construction vs. peers

No of units

Expected deliveries per quarter

1 171 units for delivery next five quarters

• 94% of 2014 completions sold
• Advancements since last quarter
• 32 units at Kaldnes advanced from Q2 2015 to Q1 2015
• 38 units at Bjørnåsen Nord advanced from Q2 2015 to Q1 2015
• 9 units at Kornmoenga advanced from Q2 2015 to Q1 2015
• 89 units at Lillohøyden advanced from Q4 2015 to Q3 2015
• 43 units at Strandkanten advanced from Q4 2015 to Q3 2015

Income statement highlights Q3 2014 (IFRS)

• Delivery of 279 units (187)
• Revenues NOK 765 million (677)
• Including 95 student residences with an average value of NOK 0.7 million
• Project costs NOK 628 million (536)
• Other costs NOK 47 million (56)
• EBITDA NOK 95 million (91)
• EBITDA adjusted 125 million
• Adjusted for financial expenses included in project costs
• Earnings per share NOK 0.65
• Earnings per share year-to-date NOK 1.33

FINANCIAL UPDATE

Operating revenues EBITDA margin

Income statement highlights Q3 2014 (NGAAP)

FINANCIAL UPDATE

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

Cash flow development Q3 2014

FINANCIAL UPDATE

• Positive cash flow from operating activities
• Dividends from JV in Stockholm of NOK 27 million
• Continued high activity in projects under construction

Condensed cash flow

Assets Equity and Liabilities

Balance sheet highlights Q3 2014

7 000	Non-current assets
6 000
5 000
4 000	Current
3 000	assets
2 000
1 000
	Cash
0

• Book value per share NOK 24.7
• NOK 24.0 in Q2 2014
• Changes since Q2 2014:
• Trade receivables increased by NOK 48 million
• Inventories reduced by NOK 32 million
• Net reduction of NOK 57 million in interest-bearing liabilities
• Prepayments from customers count for NOK 326 million of other current non interest-bearing liabilities

FINANCIAL UPDATE

Balance sheet composition

NOKm

17

Inventories (property) Q3 2014

Land (undeveloped) Work in progress Finished projects

FINANCIAL UPDATE

Inventory value development

Sound debt structure FINANCIAL UPDATE

Loan facility

Drawn per 30 Sep (NOKm)	Interest rate margin
500	4.75%
0	2.50%
0	2.00%
1 082	2.20% - 2.50%
1 450	2.00% - 2.50%

• 1 NOK 500 million senior unsecured bond loan maturing in 2018 2 NOK 150 million revolving credit facility from DNB maturing in 2015
• 3 NOK 150 million working capital facility from DNB maturing in 2015
• 4 Land loan facilities from a range of Nordic credit institutions
• 5 Construction loan facilities from a range of Nordic credit institutions

Interest bearing debt as at 30 Sep 2014

Note: Bond loan of NOK 500m differs form the summed up top up loan in the pie chart (NOK 491m). The difference is due to NOK -9m in amortized cost which is not actual debt.

In compliance with financial covenants

FINANCIAL UPDATE

Sales ratio covenant (minimum 70.0%)

Equity ratio covenant (minimum 22.5%)

• Proposed amended terms of bond loan
• Intended to increase operational flexibility and profitability in projects
• Proposed adjustments:
  • Sales ratio covenant reduced to 60.0%
  • Equity ratio covenant increased to 25.0% until end of June 2017 and then to 27.5% until maturity in June 2018
• Subject to approval of bondholders' meeting on 21 November 2014

Source: Eiendomsverdi

MARKET OUTLOOK Oslo and Akershus, October 2007-2014 Rogaland, October 2007-2014 Second-hand market: Sound market in Oslo, challenging in Rogaland

Selected areas: Oslo, Lørenskog, Ski ,Oppgård, Bærum, Asker Selected areas: Stavanger, Sola, Randaberg, Sandnes

Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

COMPANY OUTLOOK

• Good sales development for all players this quarter
• Particularly strong sales for Selvaag Bolig
• Company strategy support market position:
• Low-cost strategy:
  • Selvaag Bolig average price 9M 2014*: NOK 3.5m
  • Total market average price 9M 2014*: flats NOK 3.6m, terraced NOK 4.1m, semidetached NOK 4.3m
• No in-house construction arm
• Defined housing concepts
• Large land bank

Strong number one position

Source: Selvaag Bolig and Eiendomsverdi

^* Selected markets: Oslo, Akershus, Hordaland, Rogaland, Troms and Sør-Trønderlag Housing types Selvaag Bolig: flats, semi-detached and terraced homes

Strong position in improving markets

Nybyen Økern, Oslo

• Good outlook for Selvaag Bolig, given unchanged (or improved) market inventory levels and macro economic conditions
• Rigged with a land bank allowing for future growth
• Well positioned through low cost production and competitive products targeting broad consumer groups

Summary

• Strong sales and improving markets
• High construction activity
• Maintained market position
• Company strategy supports a strong position in a growing market going forward
• Expected dividend of minimum NOK 1.0 per share for fiscal 2014

Nydalen, Oslo

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Norwegian housing market

• Good demand for new homes and persistent population growth in urban areas
• 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
• 27% of mortgage loan interest payments are tax-deductible
• Transfer stamp duty for new houses is lower than for second hand homes
• Attractive market outlook
• Strong population growth
• High level of purchasing power
• Favourable macro-economic climate and low interest rates

Source: Source Selvaag Bolig and Eurostat

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.

• Proven low-cost strategy
• Very competitive prices ensure a broad customer base
• No in-house construction arm
• low 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 land bank
• Several thousand homes under development in Norway's four fastest growing urban regions

	Construction start							Scheduled completion
	Q3 2014	Q4 2014	Q1 2015	Q2 2015	Q3 2015	Q4 2015	Q1 2016
Jaasund	4 Terraced			NOK 19m				Note: all figures in NOKm are expected revenue
Aase Gaard	9 Terraced				NOK 34m			Modular Onsite
Kaldnes	12 Apartments				NOK 65m
Lade Allé	80 Apartments					NOK 215m
Nyhavn	74 Apartments					NOK 215m
Bjørnåsen Nord	24 Terraced					NOK 215m

Total units: 203

Construction start on existing projects

Note: all figures in NOKm are expected revenue

$\vert 1.2 \vert$	16.7	21.4
124.4	162.5	164.1

Income statement IFRS

(figures in NOK million)	Q3 2014	Q3 2013	9M 2014	9M 2013	2013
Total operating revenues	764.7	676.7	1 818.8	1 821.4	2 197.0
Project expenses	(628.3)	(535.7)	(1 507.2)	(1 393.5)	(1 709.6)
Other operating expenses	(41.6)	(50.6)	(135.1)	(151.0)	(208.8)
Other gains (loss)	0.0	0.1	0.0	0.1	(0.4)
Associated companies and joint ventures	0.5	0.5	28.0	10.5	10.9
EBITDA	95.3	91.0	204.5	287.5	289.1
Depreciation and amortisation	(5.1)	(5.5)	(15.5)	(16.7)	(22.1)
EBIT	90.1	85.5	189.0	270.7	267.0
Net financial expenses	(5.9)	(6.1)	(16.7)	(27.1)	(30.0)
Profit/(loss) before taxes	84.3	79.4	172.3	243.6	237.0
Income taxes	(23.4)	(20.3)	(46.7)	(64.3)	(51.4)
Net income	60.9	59.1	125.6	179.3	185.6

Net income for the period attributable to:

Non-controlling interests	0.1	9.0	1.2	16.7	21.4
Shareholders in Selvaag Bolig ASA	60.8	50.0	124.4	162.5	164.1

Cash Flow statement

(figures in NOK million)	Q3 2014	Q3 2013	9M 2014	9M 2013	2013
Net cash flow from operating activities	56.6	(215.1)	16.1	256.8	104.0
Net cash flow from investment activities	23.1	13.3	30.2	51.3	48.8
Net cash flow from financing activities	(56.7)	47.8	143.6	(313.2)	(123.7)
Net change in cash and cash equivalents Cash and cash equivalents at start of period	23.0 754.0	(154.1) 707.0	189.9 587.0	(5.1) 558.0	29.1 558.0
Cash and cash equivalents at end of period	777.0	552.9	777.0	552.9	587.0

(figures in NOK million)	Q3 2014	Q2 2014	Q3 2013	2013
Intangible assets	420.3	425.0	439.3	434.5
Property, plant and equipment	7.9	4.0	5.3	4.9
Investments in associated companies and joint ventures	144.0	170.9	143.5	150.7
Other non-current assets	125.5	172.5	166.1	166.6
Total non-current assets	697.7	772.4	754.3	756.7
Inventories (property)	4 550.1	4 582.0	3 865.2	4 283.9
- Land	1 673.4	1 653.7	1 778.4	1 753.4
- Work in progress	2 740.6	2 790.8	1 881.6	2 398.8
- Finished goods	136.0	137.5	205.2	131.6
Other current receivables	291.9	257.1	531.0	342.3
Cash and cash equivalents	777.0	754.0	552.9	587.0
Total current assets	5 618.9	5 593.1	4 949.1	5 213.2
1 TOTAL ASSETS	6 316.6	6 365.5	5 703.4	5 969.8
1112131 Equity attributed to shareholders in Selvaag Bolig ASA*	2 313.8	2 253.0	2 234.7	2 236.3
Non-controlling interests	23.9	23.8	27.0	22.7
Total equity	2 337.7	2 276.8	2 261.7	2 259.0
Non-current interest-bearing liabilities	2 295.0	2 470.0	1 831.2	2 116.2
Other non-current non interest-bearing liabilities	302.9	279.3	283.3	258.1
Total non-current liabilities	2 598.0	2 749.4	2 114.5	2 374.3
Current interest-bearing liabilities	728.1	595.8	755.5	669.0
Other current non interest-bearing liabilities	652.8	743.5	571.7	667.5
Total current liabilities	1 380.9	1 339.3	1 327.2	1 336.6
TOTAL EQUITY AND LIABILITIES	6 316.6	6 365.5	5 703.4	5 969.8

Balance sheet

* Corresponding to a book value of NOK 24.7 per share

Q1 14	Q 2 14	Q3 14
139	255	259
77	197	203
77	253	274
80	236	279
1474	1418	1 347
76%	76%	76%
8	17	18
5 5 4 7	5 2 3 8	5 1 5 9
99	100	100

Operational highlights – key operating figures

(number of residential units, unless otherwise stated)	Q3 13	Q4 13	Q1 14	Q2 14	Q3 14
Number of units sold	236	61	139	255	259
Number of construction starts	335	296	77	197	203
Number of units completed	188	101	77	253	274
Number of units delivered	187	118	80	236	279
Number of units under construction	1 279	1 474	1 474	1 418	1 347
Proportion of sold units under construction	80%	75%	76%	76%	76%
Number of completed unsold units	22	8	8	17	18
Sales value of units under construction (NOK million)	4 657	5 421	5 547	5 238	5 159
Number of employees	97	98	99	100	100

IFRS EBITDA Q3 2014

		Property development
(figures in NOK million) IFRS EBITDA for the quarter, per segment	Greater Oslo	Rest of Norway	Other countries	Other	Total
Operating revenues	686.6	71.2	0.9	4.4	763.1
Project expenses	(574.1)	(52.3)	-	(0.2)	(626.6)
Other operating expenses Share of income (losses) from associated companies and joint	(8.7)	(6.4)	(1.0)	(25.6)	(41.7)
ventures	(0.1)	0.8	(0.2)	-	0.5
Other gain (loss), net	-	-	-	-	-
EBITDA	103.7	13.4	(0.3)	(21.4)	95.3

Operational reporting Q3 2014

	Property development	Other	Total
(figures in NOK million) Operating revenues	Greater Oslo Rest of Norway Other countries
	1 569.5	653.6	1.8	17.2	2 242.2
Project expenses	(1 209.8)	(530.6)	-	(1.6)	(1 742.0)
Other operating expenses	(25.6)	(16.2)	(2.2)	(91.3)	(135.4)
EBITDA (percentage of completion)	334.0	106.8	(0.4)	(75.7)	364.7

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

Land loan interests on the P&L

• Total land loans are NOK 1 082 million of which NOK 719 million are loans where interest cost are activated
• Land loan interests activated at regulation
• As at 30 September interests connected to land loans of NOK 363 million was charged on the P&L

Loans recognised in profit and loss at 30.09.2014

NOKm