Selvaag Bolig ASA

Earnings Release • Nov 10, 2016

Oslo 10 November 2016 Baard Schumann, CEO Sverre Molvik, CFO

Agenda

Highlights

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

Highlights Q3 2016 HIGHLIGHTS

• Extraordinary strong Oslo market, other core markets balanced
• Stronger margins due to increased sales prices
• High construction activity
• Land acquisitions

Eyvind Lyckes vei 10, Bærum

Key financials Q3 2016

HIGHLIGHTS

Agenda

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

High sales value in Q3 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)

Oslo market driving construction starts

OPERATIONAL UPDATE

Construction starts per quarter

All Q3 construction starts in Greater Oslo

Units

Units under construction increasing

• Q3 2016: 90% of units under constructions sold by Q3 2016
• Q3 2016: 88% of construction volume in Greater Oslo

OPERATIONAL UPDATE

Note: All numbers are adjusted for Selvaag Bolig's ownership share in joint ventures.

Sales value, units under construction

Expected completions per quarter

Expected completions for 2016 as of Q3 16: 836 units Expected completions for 2016 as of Q2 16: 836 units 183 (Q1 16), 295 (Q2 16), 103 (Q3 16), 255 (Q4 16) 98% of 2016 completions sold by Q3 2016

NOK million Units 5 077 4 740 5 031 5 075 5 775 1 426 1 339 1 386 1 344 1 464 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Sales value (NOK million) Number of units under construction

Agenda

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

Income statement highlights Q3 2016 (IFRS)

129 units delivered (202) Revenues NOK 387m (778) Units delivered NOK 365m (763) Other revenues NOK 23m, mainly lease income Project costs NOK 283m (624) Of which NOK 9m are interests Other costs NOK 61m (59) Salaries, sales and marketing key components Adjusted EBITDA NOK 92m (134) Adjusted for financial expenses included in project costs Including NOK 32m land sale EBITDA NOK 84m (111) EPS in the quarter NOK 0.63, YTD NOK 1.98 NOKm 778 882 17% 15% 15% 15%

FINANCIAL UPDATE

Revenues and adjusted EBITDA margin (IFRS)

Income statement highlights Q3 2016 (NGAAP)

FINANCIAL UPDATE

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

Revenues and EBITDA margin (NGAAP)* NOKm NOKm

12 months rolling revenues (NGAAP)*

Cash flow development Q3 2016

FINANCIAL UPDATE

• Cash flow from operations negative with NOK 224m due to high construction activity and land acquisition
• New land and construction loans increased net borrowings by NOK 150m
• Dividend of NOK 61m, NOK 0.65 per share, paid in the quarter

Note: Numbers under NOK 5m are excluded from the cash flow overview

Balance sheet highlights Q3 2016

	Book value stable, NOK 27.5 per share		Balance sheet composition
	Equity ratio 41.7% 	NOKm
	Changes from Q2 2016:	7 000
		6 000	Non-current assets
	Inventories increased by NOK 104m due to  land acquisition and high construction activity	5 000
		4 000
	Trade receivables decreased by NOK 84m  due to fewer deliveries in process – non-risk	3 000	Current assets
	Cash decreased by NOK 137m 	2 000
		1 000
	Prepayments from customers accounts		Cash
	for NOK 416m of other current non interest-bearing liabilities	0

FINANCIAL UPDATE

Inventories (property) Q3 2016

Land (undeveloped) Work in progress Finished projects

FINANCIAL UPDATE

Q3'16 vs Q2'16	Inventory value development
	NOKm
Land value down NOK 108m 	5 000 207 378 359 4 000
Due to construction starts and sale of  Kaldnes Brygge* Work in progress up NOK 283m 	2 369 2 642 3 000 2 630
Due to high construction activity 	2 000 1 000
Finished goods down NOK 71m 	-

*Sold 50% of shares, but as the company is deconsolidated, all inventory values are disposed in the group financial statements

Sound debt structure

FINANCIAL UPDATE

Drawn per 30 Sep. (NOKm)	Interest rate margin
500	4.75%
0	2.00%
0	2.00%
945	2.00% - 2.65%
1 006	1.75% - 2.95%

Total Q3 2016 net interesting bearing debt NOK 1 704 million

Total Q2 2016 net interesting bearing debt NOK 1 454 million

Interest bearing debt as at 30 September 2016

Note: Top-up loan of NOK 500m in the table differs form the summed up top up loan in the pie chart (NOK 496m). The difference is due to NOK -4m in amortized cost which is not actual debt.

Agenda

Highlights Operational update Financial update

Market

Outlook and summary

Oslo, October 2007-2016

Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig

Extraordinary low supply in Oslo

MARKET

October 2016 Oslo sum-up

SECOND HAND – AVERAGE

• Sales price: NOK 69 847 per m²
• Turnover time: 13 days
• Price increase October: 1.8%
• Price increase last 12 months: 21.7%
• Units available for sale (31.10): ~1 200

NEW HOMES (NOT BUILT)

Units available for sale (31.10): ~350

SELVAAG BOLIG HAS ~130 UNITS AVAILABLE FOR SALE (~35% MARKET SHARE)

Keep calm and carry on

MARKET

Source: www.numbero.com

Selected European cities

High price-spread within Oslo region MARKET

20

Total: 430-500 units | 1-4 rooms | 35-119 m² 138 of 148 units sold per 03 November 2016 Time from acquisition to sales start: 11 months

Sales start May '16

8-month price growth 42 m2, 1 bedroom apartment Lørenporten, Oslo

21

Total: 430-500 units | 1-4 rooms | 35-119 m² 138 of 148 units sold per 03 November 2016 Time from acquisition to sales start: 11 months

Sales start May '16

8-month price growth 89 m2, 3 bedroom apartment Lørenporten, Oslo

Bergen, October 2007-2016

Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig

Sound supply/demand in Bergen

MARKET

October 2016 sum-up

• SECOND HAND AVERAGE
• Sales price: NOK 39 446 per m²
• Turnover time: 24 days
• Price decrease October: 0.3%
• Price increase last 12 months: 4.5%
• Units available for sale (31.10): ~760
• NEW HOMES (NOT BUILT)
• Units available for sale (31.10): ~500

Stavanger area, October 2007-2016

Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig

Reduced inventory in Stavanger

MARKET

October 2016 sum-up

SECOND HAND (STAVANGER ONLY) – AVERAGE

• Sales price: NOK 37 590 per m²
• Turnover time: 78 days
• Price decrease October: 0.6%
• Price decrease last 12 months: 3.9%
• Units available for sale (31.10): ~520

NEW HOMES (NOT BUILT)

• Units available for sale (31.10): ~375

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

Trondheim, October 2007-2016

Source: Eiendomsverdi, Eiendom Norge and Selvaag Bolig

Balanced market in Trondheim

MARKET

• October 2016 sum-up
• SECOND HAND AVERAGE
• Sales price: NOK 42 388 per m²
• Turnover time: 22 days
• Price increase October: 0.2%
• Price increase last 12 months: 10.1%
• Units available for sale (31.10): ~450
• NEW HOMES (NOT BUILT)
• Units available for sale (31.10): ~550

Adding new acquisitions to land bank

MARKET – SELVAAG BOLIG ACQUISITIONS

• Lade Allé 65, Trondheim
• Approximately 100 units
• Sales start expected in H1 2017
• Sandsliåsen 57, Bergen 50/50 JV with Odfjell
• Approximately 180 units
• Sales start expected in H2 2018
• Eyvind Lyckes vei 10, Bærum
• Approximately 280 units
• Sales start expected in H2 2019

Eyvind Lyckes vei 10, Bærum

Three new projects

Reducing exposure in Tønsberg MARKET – SELVAAG BOLIG DISPOSALS

• Reduced ownership from 100% to 50%
• Net result NOK 32 million in Q3
• According to strategy resources made available for investments in other markets

Kaldnes Brygge, Tønsberg

Reduced ownership in Kaldnes Brygge

Agenda

Positive outlook for Selvaag Bolig

OUTLOOK

• Positive market outlook and strong demand in core markets
• SBO strengthening market position measured in sales
• High sales activity at high prices secure revenue increase going forward
• 1 464 units under construction
• Sales value NOK ~ 5.8 billion
• Focus on continued land bank development

Lørenporten, Oslo

Summary

• Extraordinary strong Oslo market, other core markets balanced
• Stronger margins due to increased sales prices
• High construction activity
• Land acquisitions

Eyvind Lyckes vei 10, Bærum

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Next event: 4 th quarter 15 February 2017

Share performance since IPO in June 2012

SHARE INFORMATION

Source: Oslo Børs

	$%$ share
--	-----------

53.5%
5.6%
2.9%
$2.8\%$
$2.2\%$
1.7%
$1.5\%$
1.3%
1.3%
1.0%
1.0%
$0.9\%$
$0.9\%$
$0.8\%$
$0.7\%$
$0.7\%$
$0.7\%$
$0.6\%$
$0.6\%$
$0.6\%$
81.3%
18.7%
100.0%

Largest shareholders at 30 September 2016

Shareholder	# of shares	% share
SELVAAG GRUPPEN AS	50 180 087	53.5%
SKANDINAVISKA ENSKILDA BANKEN AB *)	5 271 003	5.6%
MORGAN STANLEY & CO. INTERNATIONAL *)	2 750 778	2.9%
FLPS - ALL SECTOR SUB	2 590 700	2.8%
PARETO AS	2 065 624	2.2%
VERDIPAPIRFONDET PARETO INVESTMENT	1 596 000	1.7%
MP PENSJON PK	1 426 221	1.5%
THE BANK OF NEW YORK MELLON *)	1 209 817	1.3%
HOLTA INVEST AS	1 200 000	1.3%
STOREBRAND NORGE I	983 944	1.0%
US BK EVERMORE GLO VAL FUND	892 805	1.0%
J.P. MORGAN CHASE BANK N.A. LONDON *)	859 229	0.9%
JPMORGAN CLEARING CORP. *)	809 029	0.9%
JPMORGAN CHASE BANK NA, LONDON *)	769 073	0.8%
FIDELITY SELECT PORTFOLIOS: FIDELI	702 900	0.7%
UTHALDEN A/S	637 306	0.7%
STATE STREET BANK AND TRUST CO. *)	635 185	0.7%
VERDIPAPIRFONDET ALFRED BERG GAMBA	598 102	0.6%
BANAN II AS	555 190	0.6%
HOLBERG NORDEN	523 705	0.6%
Total 20 largest shareholders	76 256 698	81.3%
Other shareholders	17 508 990	18.7%
Total number of shares	93 765 688	100.0%

*) Updated shareholder list and further information regarding nominee accounts is presented at: http://sboasa.no/en/Aksjeinformasjon/Aksjonarer.aspx

34

areas continues

MARKET – SELVAAG BOLIG LAND BANK DISTRIBUTION

Note: The numbers represent the size of the land portfolio as at 30. September 2016. 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. These have a development potential of ~4 400 residential units, whereof the company has purchasing obligations for ~3 800 and purchasing options for ~600 units

• Oslo, Stavanger, Bergen and Trondheim
• All among top 15 in the Nordics

Selected projects in Oslo 2016 MARKET – SELVAAG BOLIG PROJECTS

*Sales update November 2016

Value creation in Selvaag Bolig

Construction costs financed

Target 100% sale at delivery

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
• 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

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

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

90% of units in production are sold at end Q3'16

Risk profile at start of a MNOK 550 project De-risking in key stages of projects

Dividend FINANCIAL UPDATE

		NOK
	Dividend policy	2.00
	Up to 50 percent of net profit 	1.75
	Dividend pay-out twice a year from H1 2015 	1.50
		1.25
	1H'16 dividend of NOK 0.65 per share	1.00
		0.75
	48% of EPS 	0.50		0.50
	1H'16 EPS NOK 1.35	0.25
		0.00	0.00

Independent land bank valuation from Q4 2015

OPERATIONAL UPDATE

Book value vs. external valuation

Income statement IFRS

(figures in NOK million)	Q3 2016	Q3 2015	9M 2016	9M 2015	2015
Total operating revenues	387.3	778.4	2 114.8	2 364.1	3 246.0
Project expenses	(282.7)	(623.9)	(1 702.7)	(1 892.5)	(2 608.5)
Other operating expenses	(54.9)	(53.1)	(162.1)	(158.3)	(217.4)
Other gains (loss)	31.6	-	31.6	-	-
Associated companies and joint ventures	2.3	9.4	(1.8)	19.7	8.3
EBITDA	83.5	110.9	279.8	333.0	428.4
Depreciation and amortisation	(6.1)	(6.1)	(18.2)	(17.9)	(24.1)
EBIT	77.5	104.7	261.5	315.1	404.3
Net financial expenses	(9.8)	(9.4)	(24.4)	(24.5)	(33.1)
Profit/(loss) before taxes	67.7	95.4	237.1	290.6	371.2
Income taxes	(8.5)	(25.9)	(52.0)	(78.8)	(91.8)
Net income	59.2	69.5	185.1	211.8	279.4
Net income for the period attributable to:
Non-controlling interests	0.0	(1.4)	(0.4)	(1.7)	(1.8)
Shareholders in Selvaag Bolig ASA	59.1	70.9	185.5	213.5	281.1

Cash Flow statement

(figures in NOK million)	Q3 2016	Q3 2015	9M 2016	9M 2015	2015
Net cash flow from operating activities	(223.8)	279.7	363.2	316.6	465.9
Net cash flow from investment activities	6.8	28.7	(3.7)	(20.8)	(15.5)
Net cash flow from financing activities	79.8	26.0	(288.5)	(57.1)	(344.1)
Net change in cash and cash equivalents Cash and cash equivalents at start of period Cash and cash equivalents at end of period	(137.2) 880.5 743.3	334.4 470.2 804.6	71.0 672.3 743.3	238.7 565.9 804.6	106.4 565.9 672.3

45

(figures in NOK million)	Q3 2016	Q2 2016	Q3 2015	2015
Intangible assets	383.4	388.0	401.8	397.2
Property, plant and equipment	11.8	17.4	21.4	20.3
Investments in associated companies and joint ventures	279.5	180.1	192.3	183.4
Other non-current assets	259.4	126.8	122.2	114.6
Total non-current assets	934.1	712.2	737.8	715.5
Inventories (property)	4 390.4	4 286.6	4 663.3	4 715.4
- Land	1 434.7	1 542.9	1 814.1	1 968.8
- Work in progress	2 653.5	2 370.6	2 641.9	2 368.5
- Finished goods	302.3	373.1	207.4	378.1
Other current receivables	139.7	232.9	280.3	147.9
Cash and cash equivalents	743.3	880.5	804.6	672.3
Total current assets	5 273.5	5 400.1	5 748.2	5 535.5
TOTAL ASSETS	6 207.6	6 112.3	6 486.0	6 251.1
Equity attributed to shareholders in Selvaag Bolig ASA	2 577.6	2 590.5	2 547.1	2 539.6
Non-controlling interests	9.2	9.2	13.1	9.6
Total equity	2 586.8	2 599.7	2 560.2	2 549.2
Non-current interest-bearing liabilities	2 145.4	1 648.6	2 470.1	1 846.7
Other non-current non interest-bearing liabilities	202.9	260.2	309.1	262.2
Total non-current liabilities	2 348.2	1 908.8	2 779.2	2 108.9
Current interest-bearing liabilities	301.7	686.2	340.4	771.3
Other current non interest-bearing liabilities	970.8	917.6	806.2	821.7
Total current liabilities	1 272.5	1 603.8	1 146.6	1 593.0
TOTAL EQUITY AND LIABILITIES	6 207.6	6 112.3	6 486.0	6 251.1

Balance sheet

* Corresponding to a book value of NOK 27.5 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 2016

Units

balance sheet

• 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 2016: NOK 4.1m

Strong overall sales

Sales activity vs. peers last 4 quarters

Maintaining strong market position

Units under construction vs. peers (net figures)

Market presence as of Q4 15 MARKET – SALES DISTRIBUTION

• Fragmented activity in 2012-2014

• Land purchases in core markets only

• Bergen and Trondheim key markets

• Marginal sales in Rogaland

Solid positions est. in Bergen/ Trondheim Rogaland expected to recover

Core markets outside Greater Oslo

All core markets

Construction starts in the quarter

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

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

Kaldnes Dockside D (Modular)	52 apartments	NOK 118m
Lørenporten (Onsite)	148 apartments	NOK 599m
Kaldnes Signaturen (Onsite)	23 apartments	NOK 214m

Operational highlights – key operating figures

	Q3 15	Q4 15	Q1 15	Q2 16	Q3 16
Number of units sold	208	209	280	326	277
Number of construction starts	204	171	230	253	223
Number of units completed	172	258	183	295	103
Number of units delivered	202	235	179	307	129
Number of units under construction	1 426	1 339	1 386	1 344	1 464
Proportion of sold units under construction	78%	79%	80%	83%	90%
Number of completed unsold units	25	65	58	54	48
Sales value of units under construction (NOK million)	5 077	4 740	5 031	5 075	5 775
Number of employees	99	99	100	100	100

IFRS EBITDA Q3 2016

387.4

(figures in NOK million)	Property development	Other	Total
IFRS EBITDA for the quarter, per segment
Operating revenues	376.9	10.5	387.4
Project expenses	(283.6)	0.8	(282.8)
Other operating expenses	(13.5)	(41.4)	(54.9)
Share of income (losses) from associated companies and joint ventures	2.3	-	2.3
Other gain (loss), net	31.6	-	31.6
EBITDA	113.6	(30.1)	83.5

Operational reporting Q3 2016

(figures in NOK million)	Property development	Other	Total
Operating revenues	930.4	10.5	940.9
Project expenses	(683.8)	0.8	(683.0)
Other operating expenses	(13.5)	(41.4)	(54.9)
EBITDA (percentage of completion)	233.0	(30.1)	203.0

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

Land loan interests on the P&L

• Total land loans are NOK 945 million of which NOK 537 million are loans where interest cost are activated
• Land loan interests activated at regulation
• At 30 September interests connected to land loans of NOK 408 million was charged on the P&L

Loans recognised in profit and loss at 30.09.2016

NOKm

Norway: A robust economy

Source: IMF, Statistics Norway, Statistics Sweden, Statistics France, Statistics Germany, Statistics UK, Eurostat

Increased disposable income

Source: 1993- 2013 Eff, Pöyry. 2014-2015 NyAnalyse. Interest payments on new home loans with the home as collateral is considered