Selvaag Bolig ASA

Earnings Release • Aug 14, 2019

Oslo 14 August 2019 Rolf Thorsen, CEO Sverre Molvik, CFO

Agenda

• Highlights and sales
• Operational and financial update
• Market
• Outlook and summary

Highlights Q2 2019 HIGHLIGHTS AND SALES

• Good operational performance driven by strong sales
• 1H 2019 dividend of NOK 2.00 per share
• Favourable market conditions, especially in the greater Oslo area
• Well positioned in all regions. Positive market expectations for the second half

Key financials Q2 and H1 2019 HIGHLIGHTS AND SALES

Q2 2019 H1 2019

* EBITDA is profit before interest, taxes, depreciation and amortization. EBITDA adjusted is excluding financial expenses included in project costs

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

Strong sales and increasing value per unit

HIGHLIGHTS AND SALES

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

Rolling sales value and units sold

HIGHLIGHTS AND SALES

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

Sales value: 12 months rolling Units sold: 12 months rolling

Agenda

• Highlights and sales
• Operational and financial update
• Market
• Outlook and summary

Construction starts and completions

OPERATIONAL AND FINANCIAL UPDATE

Units

Construction starts and completions per quarter

Units under construction and completions OPERATIONAL AND FINANCIAL UPDATE

• Q2 2019: 71% of units under construction sold by Q2 2019
• Q2 2019: 82% of construction volume in Oslo Metropolitan Area
• 83% of 2019 completions sold by Q2 2019

▪ Expected completions for the full year 2019: 776 units

Flexibility to optimize value creation

• Pre-sale condition: 60 % sold within 6-9 moths
• Sales price adjustments at construction start
• Sales price adjustment during construction period according to market development
• Target: Last unit sold at project completion Price adjustments

OPERATIONAL AND FINANCIAL UPDATE

Income statement highlights Q2 2019 (IFRS)

• 246 units delivered (243)
• Revenues NOK 1 035m (864)
• Units delivered NOK 1 012m (847)
• Other revenues NOK 23m (16)
• Project costs NOK 705m (646)
• Of which NOK 34m is interest (16)
• Other costs NOK 63m (73)
• Salaries, sales and marketing
• Adjusted EBITDA NOK 316m (178)
• Adjusted for financial expenses included in project costs
• EBITDA NOK 282m (162)
• EPS in the quarter NOK 2.24 (1.26)

OPERATIONAL AND FINANCIAL UPDATE

Operating revenues Adjusted EBITDA margin

Note: EBITDA is profit before interest, taxes, depreciation and amortization. EBITDA adjusted is excluding financial expenses included in project costs

Income statement highlights H1 2019 (IFRS)

• Delivery of 275 units (302)
• Revenues NOK 1 144m (1 244)
• EBITDA adjusted 307m (229)
• Adjusted for financial expenses included in project costs
• Earnings per share H1 2019 NOK 2.08 (1.60)
• Dividend of NOK 2. 00 per share for H1 2019

FINANCIAL UPDATE

NOK million

Revenues and adjusted EBITDA margin (IFRS)

Note: EBITDA is profit before interest, taxes, depreciation and amortization. EBITDA adjusted is excluding financial expenses included in project costs

Income statement highlights Q2 2019 (NGAAP)

OPERATIONAL AND FINANCIAL UPDATE

* Construction costs are exclusive of financial expenses in the segment reporting (NGAAP) Note: EBITDA is operating profit before depreciation, gains (losses) and profit from associated companies

Cash flow development Q2 2019

• Cash flow from operations negative at NOK 128m mainly explained by units delivered in June with payments received in July
• Cash flow from investment activities positive at NOK 10m mainly due to dividends from associated companies
• Cash flow from financing activities positive at NOK 153m mainly due to net increase in loans, partly offset by dividend payment of NOK 232m

Note: Amounts below NOK 15m are excluded from the cash flow overview

232

Dividends paid to equity holders of Selvaag Bolig ASA Cash and cash equivalents at 31 March 2019

OPERATIONAL AND FINANCIAL UPDATE

Balance sheet highlights Q2 2019

Balance sheet composition

Book value of equity slightly down to ▪	NOK million
NOK 32.70 per share	8 000
Equity ratio down to 42.8% following dividend ▪ pay-out	7 000	Non-current assets
Changes from Q1 2019: ▪	6 000
Inventories increased by NOK 186m ▪	5 000
Trade receivables increased by NOK 372m ▪	4 000	Current assets
Cash increased by NOK 35m ▪	3 000
Prepayments from customer's accounts ▪	2 000
for NOK 219m of other current non	1 000
interest-bearing liabilities	0	Cash

Assets Equity and Liabilities

Inventories (property) Q2 2019 OPERATIONAL AND FINANCIAL UPDATE

NOK million

• Due to land acquisitions, partly offset by constructions starts
• Work in progress down NOK 67m
• Mainly du to units delivered
• Finished goods up NOK 187m
• Due to high volume of units completed
• 43% of finished projects sold

Interest-bearing debt as at 30 June 2019

	Loan facility	Drawn at 30 Jun. (NOKm)	Interest rate margin
1	NOK 500 million revolving credit facility from DNB maturing in 2022	0	3.40%
2	NOK 150 million working capital facility from DNB maturing in 2019	0	2.00%
3	Land loan facilities from a range of Nordic credit institutions	1 606	2.00% - 2.50%
4	Construction loan facilities from a range of Nordic credit institutions	1 359	1.75% - 2.60%

Total Q2 2019 net interest-bearing debt NOK 2 365 million

Total Q1 2019 net interest-bearing debt NOK 1 996 million

Debt structure OPERATIONAL AND FINANCIAL UPDATE

NOK million

Return on equity (IFRS) OPERATIONAL AND 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 at the start of the period (attributed to shareholders in Selvaag Bolig ASA)

Earnings and dividend per share

OPERATIONAL AND FINANCIAL UPDATE

Bi-annual dividend and earnings per share

20

Agenda

• Highlights and sales

• Operational and financial update

• Market

• Outlook and summary

Increasing share of population growth in Oslo and Akershus

Source: Statistics Norway

MARKET

MARKET

Source: Statistics Norway (Actual completions), Prognosesenteret (Forecasted housing need based on Statistics Norway low immigration alternative), Ny Analyse (Forecasted completions) Note: Housing demand calculated on parameters such as number of persons per household, lag on housing development, housing demolition Note: Completions exclusive of student- and senior housing

* Only 800 units zoned in Oslo in 2018 and 950 units YtD 2019

Number of units completed in Oslo and Akershus, 2006-2018

Expected completions lower than forecasted housing demand in Oslo and Akershus

MARKET

High activity in the second-hand market in Oslo

Second-hand market update Oslo

MARKET

Sources: Eiendomsverdi, Eiendom Norge and finn.no

Price change

50% of total inventory

Newbuild market update

1 947 1 909 671 709 Available 01.01.18 Supplied to market* Sold Available 30.06.18 Available 01.01.19 Supplied to market* H1 2018 (Oslo) H1 2019 (Oslo)

Source: Røisland & Co

MARKET

Second-hand market update other core markets

MARKET

Sources: Eiendomsverdi, Eiendom Norge and finn.no

* Stavanger-area include: Stavanger, Sola, Randaberg and Sandnes

1 500
1 250
1 000
750
500
250
0
	Jul.	Jul.	Jul.	Jul.	Jul.	Jul.	Jul.	Jul.	Jul.	Jul.
	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
	Inventory second-hand								Units sold second-hand

	Stavanger-area*, July 2019		Bergen, July 2019		Trondheim, July 2019
1 500		1 500		1 500
1 250		1 250		1 250
1 000		1 000		1 000
750		750		750
500		500		500
250		250		250
0	Jul. Jul. Jul. Jul. Jul. Jul. Jul. Jul. Jul. Jul.	0	Jul. Jul. Jul. Jul. Jul. Jul. Jul. Jul. Jul. Jul.	0
	2010 2011 2012 2013 2014 2015 2016 2017 2018 2019		2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
	Inventory second-hand Units sold second-hand		Inventory second-hand Units sold second-hand

• Price increase January-July: 2.3% (1.9%)
• New homes available for sale at 7 August 2019: 1 127 units

• 56% of total inventory

• Price increase January-July: 7.2% (8.2%)

• New homes available for sale at 7 August 2019: 1 072 units
• 61% of total inventory

▪ Price increase January-July: 5.2% (3.3%)

▪ New homes available for sale at 7 August 2019: 1 114 units

59% of total inventory

Peers

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

MARKET

Agenda

• Highlights and sales
• Operational and financial update
• Market

• Outlook and summary

• Stable and moderate interest rates

• High employment
• Balanced supply and demand
• Urbanization and population growth
• Possible supply deficit in Oslo in 2021

Outlook OUTLOOK AND SUMMARY

• Good operational performance driven by strong sales
• 1H 2019 dividend of NOK 2.00 per share
• Favourable market conditions, especially in the greater Oslo area
• Well positioned in all regions where we operate, and positive market expectations for the second half

Summary OUTLOOK AND SUMMARY

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Next event: 3rd quarter 2019 13 November 2019

Appendix

Share performance since IPO in June 2012 APPENDIX

Source: Oslo Børs

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 OPERATIONAL AND FINANCIAL UPDATE

Earnings and dividend per share since IPO

OPERATIONAL AND FINANCIAL UPDATE

Accumulated earnings and earnings per share

Largest shareholders at 30 June 2019

APPENDIX

* Further information regarding shareholders is presented at: http://sboasa.no/en

** The shares were purchased for the company's share programmes for employees

# of shares	% share
50 180 087	53,5%
5 653 788	6,0%
2 741 751	2,9%
2 065 624	2,2%
1 900 000	2,0%
1 588 000	1,7%
1 079 763	1,2%
1 000 000	1,1%
938 100	1,0%
880 000	0,9%
841 619	0,9%
837 068	0,9%
729 340	0,8%
649 697	0,7%
601 069	0,6%
600 000	0,6%
600 000	0,6%
565 127	0,6%
507 750	0,5%
500 000	0,5%
74 458 783	79,4%
19 306 905	20,6%
93 765 688	100,0%

Substantial land bank in Norway's four largest

growing urban areas

APPENDIX

▪ Acquire the right mix of zoned and unzoned

land in suitable locations ▪ Land acquisitions in defined core areas

• High degree of site utilisation and strategic
• land development
• Substantial land bank to accommodate targets/growth in core areas

▪ Good infrastructure and public transport

▪ Joint ventures (JVs)

Land bank exposure

Trondheim

Geographical spread

Stockholm 40 units

980 units

Bergen 516 units

Land-bank strategy

Note: The numbers represent the size of the land portfolio as at 31 March 2019. 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. The portfolio has a development potential of ~5 400 residential units, whereof the company has purchasing obligations for ~4 900 and purchasing options for ~500 units.

Land bank in Oslo and Greater Oslo

APPENDIX

Lørenskog 2 297 units Lørenskog Stasjonsby 764 units Skårer bolig 945 units LSV 300 units Luhrtoppen 288 units

2 297 units

Oslo South 315 units Gjertsrud Stensrud 315 units

Follo 957 units Langhus 255 units Solberg 242 units Ski 75 units Grenseveien 385 units

Lillestrøm

Bjerke 1 000 units

Land bank in Stavanger area APPENDIX

Land bank in Bergen, Trondheim and Stockholm APPENDIX

Substantial portfolio for development

APPENDIX

Total land bank portfolio at 30 June 2019

Units

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

MARKET

MARKET Project margin development

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

** Project margins are exclusive of overhead costs

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
• 23% 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
• 70% of units in production are sold at end Q1'19

▪ 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

APPENDIX

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

APPENDIX

				2018
				3 342.1
				(2 421.6)
				(268.1)
				-
				101.8
282.007	161.950	270.502	207.342	754.187
(3.3)	(0.9)	(6.6)	(1.9)	(3.7)
278.7	161.0	263.9	205.5	750.5
(3.8)	(8.3)	(9.6)	(11.9)	(18.0)
274.9	152.7	254.3	193.6	732.5
(66.7)	(36.8)	(61.3)	(46.5)	(165.6)
208.3	115.8	193.0	147.1	566.8
	Q2 2019 1 035.2 (705.2) (60.1) - 12.1	Q2 2018 863.6 (646.3) (71.7) - 16.4	1H 2019 1 144.3 (774.7) (116.9) - 17.7	1H 2018 1 244.2 (922.3) (129.1) - 14.5

Net income for the period attributable to:

Non-controlling interests	-	(0.1)	-	(0.1)	(0.1)
Shareholders in Selvaag Bolig ASA	208.3	115.9	193.0	147.2	566.9

Cash flow statement

(figures in NOK million)	Q2 2019	Q2 2018	1H 2019	1H 2018	2018
Net cash flow from operating activities	(128.1)	(139.2)	(486.2)	(450.9)	427.0
Net cash flow from investment activities	9.6	(1.6)	49.3	32.4	20.6
Net cash flow from financing activities	153.3	234.5	379.7	366.1	(276.1)
Net change in cash and cash equivalents	34.9	93.7	(57.1)	(52.4)	171.5
Cash and cash equivalents at start of period	565.0	339.5	657.0	485.6	485.6
Cash and cash equivalents at end of period	599.9	433.2	599.9	433.2	657.0

(figures in NOK million)	Q2 2019	Q1 2019	Q2 2018	2018
Intangible assets	383.4	383.4	383.4	383.4
Property, plant and equipment	6.7	7.6	9.6	8.6
Investments in associated companies and joint ventures	393.5	398.9	308.8	415.3
Other non-current assets	489.1	430.9	358.2	445.4
Total non-current assets	1 272.7	1 220.8	1 060.0	1 252.6
Inventories (property)	4 801.2	4 614.9	4 784.8	4 306.3
- Land	1 656.5	1 590.7	1 899.5	1 600.3
- Work in progress	2 856.3	2 922.8	2 757.5	2 539.8
- Finished goods	288.4	101.4	127.7	166.2
Other current receivables	505.9	131.5	547.0	275.2
Cash and cash equivalents	599.9	565.0	433.2	657.0
Total current assets	5 907.0	5 311.4	5 765.0	5 238.5
TOTAL ASSETS	7 179.6	6 532.2	6 824.9	6 491.1
Equity attributed to shareholders in Selvaag Bolig ASA*	3 067.5	3 091.5	2 850.9	3 106.8
Non-controlling interests	7.9	7.9	9.3	9.4
Total equity	3 075.3	3 099.4	2 860.3	3 116.1
Non-current interest-bearing liabilities	1 932.7	1 942.8	2 172.1	1 795.8
Other non-current non interest-bearing liabilities	195.8	156.5	147.2	156.9
Total non-current liabilities	2 128.5	2 099.3	2 319.3	1 952.7
Current interest-bearing liabilities	1 032.3	618.1	583.1	520.5
Other current non interest-bearing liabilities	943.5	715.7	1 062.3	901.8
Total current liabilities	1 975.8	1 333.8	1 645.4	1 422.3
TOTAL EQUITY AND LIABILITIES	7 179.6	6 532.5	6 824.9	6 491.1

Balance sheet

* Corresponding to a book value of NOK 32.70 per share

Land bank book value vs. external valuation APPENDIX

Note: Joint ventures and land options not included in the valuation

Operational highlights – key operating figures

	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19
Number of units sold	181	182	148	243	210
Number of construction starts	234	102	402	97	311
Number of units completed	242	117	441	12	307
Number of units delivered	243	126	421	29	246
Number of units under construction	1 503	1 488	1 449	1 534	1 538
Proportion of sold units under construction	72 %	74 %	66 %	70 %	71 %
Number of completed unsold units	18	12	26	13	48
Sales value of units under construction (NOK million)	7 076	6 908	6 712	7 097	7 039
Number of employees	95	91	91	91	91

EBITDA Q2 2019 APPENDIX

	Property
(figures in NOK million)	development	Other	Total
Operating revenues	853.4	14.2	867.6
Project expenses	(593.2)	(0.2)	(593.4)
Other operating expenses	(23.9)	(38.9)	(62.8)
EBITDA (percentage of completion)	236.3	(24.9)	211.4
Note: Construction costs are exclusive of financial expenses in the segment reporting.
IFRS EBITDA for the quarter, per segment
Operating revenues	1 021.0	14.2	1 035.2
Project expenses	(705.0)	(0.2)	(705.2)
Other operating expenses	(21.3)	(38.9)	(60.1)
Share of income (losses) from associated companies
			12.1
			282.0
and joint ventures EBITDA	12.1 306.9	- (24.9)
Note: EBITDA is operating profit before depreciation, gains (losses) and profit from associated companies

Value of units sold - gross and net

APPENDIX

209

Sales value of units sold

614 1183 1106 862 861 660

1,320

1,393

Number of units sold - gross and net APPENDIX

Number of units sold

Untis sold net Units sold gross

Immigration increases demand over time APPENDIX

of years in Norway

Homeownership rate among immigrants in Norway (per year living in Norway)

Norway – robust economic conditions

Population growth 2018 - 2030e and 2040e Interest rates 2012 - 2021e

APPENDIX

GDP growth 2012 - 2021e Unemployment 2012 - 2021e 0% 2% 4% 6% 8% 10% 12% 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e Norway Sweden Germany UK France 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e Norway Sweden EU

60

Total household debt and homeownership APPENDIX