Selvaag Bolig ASA

Good morning, and welcome to the first quarter's results presentation for Selvåg Bolig. My name is Sverre Målvig, and I am the director of administration, and I have with me Kristoffer Brunvold, who is the financial director, and we will together go through today's agenda. I'll start with some highlights from the quarter. Then we'll look at the trend. Then Brunvold takes us through the financial, before we look at the market and future prospects, and finally some Q&A. The first quarter was the best Q1 in the company's history when it comes to sales, sales value. We sold housing for 1.25 billion kroner, which is Very strong. We have, as a consequence of that, started building more homes than we have sold. We have increased the number of units under production. It was also a very good result, especially given that we had relatively few deliveries in the quarter. We have also revised our exchange policy, which I will come back to in a moment. And we have got a new financial director, Kristoffer Brunvold, who has started. He is not new to the company. He has worked in the company for almost ten years in total. Many of the years he has reported to me. He has been a chief controller. He has also been a year in Urban Property as administrative director there. Urban Property is our strategic cooperation partner. The Tomtebank company that we sold our Tomtebank to last year. So han er vel godt kjent med selskapet og nøkkel- eller strategiske samarbeidspartner som banker og samtebanksselskapet. Så det blir nok bra. We had, as I mentioned, delivered very strong margins in the quarter. We gave two deliveries, almost 23% margin. Kristoffer will come back to the details around this. The current calculation also lowered DEA by 17.2%. Project margin by about 22%. If we look at... On the operational side, we have some events in the quarter. We won a case against the Oslo municipality in Høysteredd, where we were asked to build a natural path on Mortensrøy, connected to a building we had there. What we meant to be unreasonable, we got used to. It may not sound so dramatic, but in principle it is very important. This means that in the future, we, along with other builders, will not be able to meet that type of unreasonable requirements, that is to say, Only things that are directly a consequence of the construction will be allowed to be built and built out. For example, nearby corridors and so on, but not things that are far away and are not triggered by the construction itself. So it's an important victory. We have revised our exchange policy and increased the minimum exchange rate in relation to the result per share from 40 to 60 percent and removed our own capital. from the exchange policy, so now it is only at least 60% of net results that will be paid for by the exchange. In practice, we have been above this, but it still indicates that we are lifting the list. If we look at Tomte Kjøp, we have bought out a partner in Bergen, a project we have here, which corresponds to about 100 units on our hand. I would also like to mention that the collaboration with Urban Property is now in the Evergreen phase, and we have a great collaboration. We have converted A to C, and it works just as it should. Very good. Yes, if we look at the figures, we had the best first quarter ever in value, almost 1.25 billion, 248 units, so it is a very strong start of the year in terms of sales. The 12-month ruling is up to an annual speed of 3.859, almost 900 units. Vi har byggestartet flere enheter enn vi færdigstilte i kvartalet. 134 mot 95, ca. 40 mer, som gjør at farten i selskapet har økt. Årdreserven er oppe i dag 6,627,000 av 1349 enheter som er oppe fra forrige kvartal. 82% of this was sold at the beginning of the quarter. Over 90% of this is still in the Østland region. We have had sales start in Bergen and will start building more there, so this will probably be below 90% in the next quarter, which is pleasant. It's nice to get our regions started again. It will also be more in Trondheim, so it will be exciting to see in the future. We will come back to that later. If we look at the completion in the future, we will look at the same as in the previous quarter. 867 units. We have no reason to believe that we are facing any challenges because of COVID now. We have had very few of them, and I think our entrepreneurs have control over it, over the demand. 93% of these 867 units were sold at the beginning of the quarter, so a very high sales rate for what is delivered or finished this year. That was what I had. Then Kristoffer takes over and takes us through the financial.

Hello, my name is Kristoffer and I will take us through the financial main points for the first quarter. I start with the results of the IFRS, where income and costs in the projects meet the results of the transfer of the homes to our customers. We overcame 124 units in the quarter, of which 10 were from collaboration projects, mainly our PLUS project in Stockholm. Income reached 568 million kroner in the quarter. Of this, the other income is 15 million kroner. This includes income from the operation of our PLUS service centre and the factoring of project management into collaboration projects. The project cost ended at 401 million. We have strict cost control in the company and deliver costs well under budget, which means that we manage to deliver good margins in the quarter. Other costs came in at 57 million, a small increase from the same period last year. This can be attributed to increased sales and marketing costs due to high sales activity in the quarter. We report an adjusted EBITDA, where we then correct previously activated financial statements that are in the goods costs after IFRS. This is 11 million in the quarter. This brings us down to an adjusted EBITDA of 129 million. The doubtful margin is 23%. This is not entirely comparable to the same quarter last year, because then we had many deliveries from collaboration projects. We'll get back to that on the next slide. The result for the share ended up at 82 euros compared to 1.07 in the same period last year, corrected for the UP transaction that occurred in the first quarter of 2020. We have recently received a lot of travel projects, and on this slide we will show a pro forma result where we have consolidated our share of revenues and costs in these projects. Then we get more comparable figures in the result. Here we see that in Q1 2021 we delivered 636 million in revenue and a margin of 21%. Compared to the same period last year, where we had 584 million in revenue and a margin of 26%. We have of course in the bottom the same result on the share at 82 euros. More information related to this can also be found in the quarterly report in a separate note for those who are interested. Then we look at the current calculation, that is, the segment reporting, where we report to Norwegian regulatory regulations that better reflect the value creation that happens in the company. This is calculated by taking the sales grade times the completion grade in the projects, and getting an output grade when we run the projects through the project's lifetime. The turnover in Kartala is 858 million, and a margin of 17%. This is after the overhead costs. If we look at the 12-month turnover, it is 3.3 million, about the same as previously. as we can see here, and a margin of 19%. We are still able to deliver good margins, and the project margin is still high. If we look at the 12-month rolling revenues in the projects, we are at 3.3 billion, and a 12-month rolling margin of 24%, which we are very pleased with. Let's look at the development of the cash-law in the quarter. We entered the quarter with a maintenance of 885 million. The main point is that we have paid an investment tax of 88 million, which is the main reason for a negative operational cash-law. In addition, we have just paid 92 million in building loans this year. This is the main reason for a negative cash-law from financing. At the start of the quarter, we are down to 698 million kroner in cash holdings. Let's look at the balance sheet. There is no major change in the balance sheet. We still have a high net income on the right side of 41 percent. Booked net income is 26.7 kroner. It is important to point out here that the exchange rate of 3 kroner, equivalent to 281 million, which was paid out in May, is not included in this balance. It hits the balance first at the time of payment, that is, in the second quarter. Other changes are the stock storage. I will come back to this on the next slide. Otherwise, smaller changes. The cash is down 187 million, as we saw during the cash flow development. And then we have this with revenue from our customers, which is now at 276 million. This is included in other short-term yields and is on the same level as before. No major changes here. If we look at the stock market, this is something from last quarter. This is mainly due to the fact that we have bought our collaboration partner on a project in Bergen, which means that the tonneholding goes up by 99 million, which means that we consolidate the entire property in our accounts. The value of the work is up by 72 million, and can then be attributed to some increased construction starts in the quarter. In addition, the finished warehouse has gone up by 61 million, and this is due to the fact that we have finished some units that were not delivered within the quarter, but came first following the quarter. We have 17 finished unsold houses, which are on a low and comfortable level, and we expect to sell them throughout the year. Let's look at the yield. There are no major changes in the balance sheet. The total interest rate is 2.4 billion kroner. The building loan is the large share with 1.5 billion kroner. There is no change in the conditions of these building loans. We have also yielded to Urban Property at 661 million kroner, which is attributed to purchase agreements and sale credits. In addition, we have an empty loan of 249 million NOK on the properties that we did not sell to Urban Property. A novelty in the quarter is that we have launched a new facility for financing infrastructure. We have large projects going on both in Lørenskog and in Asker, where this infrastructure facility is a landmark. Ingen av toppfaciliteten er trukket på ved utgangen av kvartalet. Dette bringes til at vi har en netto rentebærende gjeld på 1,7 milliarder kroner. So let's look at the return on the income tax. This is calculated as 12 months of recurring income after tax, and then divides the income tax by the start of this 12 month period. Here we see the result after tax of 471 million in the last four quarters, and an income tax return of 19%, something we think is good. Yes, look at the market starting at

Nyboligmarkedet i Oslo, som vanlig, det er jo det markedet som er mest i ubalanse for tiden. Hvis vi ser så er det ferdestilt 3000 boliger i gjennomsnitt de siste 15 årene i Oslo, de siste 18 til og med. Og så ser vi da fremover de neste to årene, som er relativt lite feilmargin på, så skal det ferdestilles 1800 og 1650 boliger. In the next two years, the Prognosis Centre has made a population survey and estimated a need for 4,000 units in Oslo per year. So there is a huge gap between need and supply. So that is a problem that we read about daily. If we take with us and look at which ex-Buskerø and Østfold, that is, the old Akershus, Raffli, Here it has been completed 3,750 in average since 2012, and in the next few years it will be 3,900 and 3,100. So here it goes down enough under what has been completed in average and under the estimated need for 4,900 units in relation to the prognosis center's estimates. So the conclusion is that Storoslo will have a slightly unbalanced supply side in relation to the demand. I also see here that if you look at the Oslo market, it was out of the year shift 970 homes. In the first four months, 953 houses have been added, and more have been sold, which means that the supply now per 1 May is lower than it was January 1, down to 841 homes, which is extremely small in Oslo with the population here. It should have been on the same level as Vikenex, Buskerud and Østfold. There it was at 3,181, put out a little over 1,300 and sold almost 1,500, so also here the trend is down, so that the supply side has also gone down with a couple of hundred units roughly since the year shift until May 1st. These two markets should probably be seen in connection, which is then at under 4,000 units in connection, that is low. If you look at Bergen, Trondheim and Stavanger, the trend is the same here. The warehouse goes down, but if you look at the level here, the level of supply in Bergen, Trondheim and Stavanger, Ballpark, is the same as in Oslo, which of course means that everything is too low in Oslo, and probably quite sensible here, quite in balance. But the market has risen, especially in Stavanger and Bergen. So there are good markets that are probably driven by low interest rates to a large extent. If we look at the Oslo and Anåns markets, there are record sales in the first quarter. The stock market is relatively low, slightly below the average in the last four years, and down to the 15-16 level. Bergen also sells a lot, and the stock market here is also at a relatively low level. we see in Trondheim and Stavanger. Especially in Stavanger we notice that things are starting to happen, because there has been a very large increase in terms of market size, and we notice this both when prices start to go up and it starts to become more normalized in the Stavanger area. After the oil crisis, there has been a very large shift, and that has begun to Coming back again, the level of employment is quite high. Many positions are vacant. It is beginning to be understood that there will be population growth there. If we look at the price development, we see that in Oslo, from so far this year, at 4.3%. You might think that it is not that much, but it is quite a lot, given that we are moving from a high level. Bergen 8%, Trondheim 7.6% and almost 10% in Stavanger. But remember, here you come to a completely different level. In Stavanger, the average price is, I think, for a new home, 55-60. And of course, that is a low level compared to Oslo, where you are at over 90, perhaps, on average. So high price growth, of course driven by the interest rate situation. So there is still good employment. I thought I would go through some other things, and that is to see how the population develops. The elderly are the population group. The elderly are the ones who grow the most. That group is over 75 years old. There is no doubt about that. But it has been forgotten that the population group between 24 and 34 is the biggest in the cities. When it comes to urbanization and work immigration, it is often young people who move to the cities. And they have not been taken into account in relation to the housing needs that the group has. If we look at the columns all the way to the right, it illustrates quite well that there are far more one-person households today than there were before. It is a growing trend, especially in the cities. In Norway, if we take the country as a whole, in the 1930s there were four people per household. And now there is a population of half, that is two people. And in Oslo, as you can see, it is almost 50%, that is 47-48% of the population that is one-person population. Of the population that is one-person population. If we look at the amount of housing that is adapted to one-person housing, that is, apartments under 50 square meters, it is only about 25 percent. So it is a huge gap, and I am here to explain why it is so expensive to buy small apartments. And difficult to get hold of. The same applies to the other cities. It is urbanization that has hit, and that you doubt a lot of apartment standards around and actually build wrong products. We have of course planned to do something with this. We have done something with it as well. We are trying to do something with it. We have our plus concept, Selvvåg Plus, which is lifestyle homes with ordinary apartments that are connected to a shared area. Reception, lounge, big kitchen with a manned reception, as you can see in the background here, and guest apartments, training rooms, etc. It is very popular. We have built many of them. Now we have come up with a new concept, which we call Cellbox City, which is based on this PLUS project, or PLUS concept, which is actually the same common areas, but we have compact apartments instead of ordinary large apartments. This is something that will contribute to the gap between one-person households and actually a lot of housing today, since we are allowed to build it by, for example, Oslo municipality. The apartment is intended to be between 20 and 30 square meters, compact apartments that are loose and smart. That's what we're working on. Plus the concept, we've built in all the areas we operate in, plus Kristiansand and other places as well. Over 2,000 units. Big success. They're sold in the advertising market for very high prices, and they're rarely advertised, because there are so many who want them and are in the queue to get hold of them. We now have over 3,000 under development and several projects in progress. We have projects in progress in Asker and Lørnskog, and we will come out with more that I will come back to. Let's take a look at the projects that are coming up. We have 850 units in Lønnskog station town. There will also be a plus project of 250 units. Skårebyen is a project we started building two and a half years ago. We have already completed the first one in this quarter. 250 plus units, or 246 plus units. We have already sold half of them. Very popular there at Skåresletta. We have about 750 homes to sell there. Bjerke is a big project that is coming. We hope to get it regulated. We are working on it as well as we can. The sales start in 2024. A very exciting area. It is nice and high up on the old Bjerkebanen. Fornebu will have a collaboration project with Trond Mohn and Fredrik Mohn. That's 2,000 units. We are also planning a lot of pluses, both ordinary pluses and city pluses. We expect sales to start in 2024, depending on the progress on Fornebu-banen. Ringve is a project I mentioned a few years ago. It was stopped by Fylkesmannen. It is now back on track again. It was a series of requirements on some roads that have been resolved. So it is estimated that it will come out for sale in the autumn. It is a plus project, large parts of it. So it will be exciting. First day in Trondheim. We have 600 units in total in Bergen. We will start building every moment there. It will be nice to start in Bergen again. Here we are also planning a plus project on some of our last projects that we have now. Elveparken in Stavanger, 600 units. Here we also think plus. Fredrikstad, a large project we have done together. No, they are at 1,500 units. We expect sales to start at the end of 2022, perhaps the beginning of 2023. Here we also plan a lot of plus, both ordinarily and sitting. Last week, we had roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, we have roughly 400 units in the market, and next quarter, Trondheim is good, Bergen is good. Our regions have the potential to rise after several years with a calm market. We have projects ready, which is very positive, and we are also looking at new areas, both in the eastern region and around, where we can grow. So, all in all, very good. The price growth is likely to be around the wage growth in the future, since the interest rate has not much to go down. So, in summary, the best Q1 in history in terms of sales value. We have increased units under production. We again deliver very strong margins, especially since we had few delivered units. New exchange policy and new CFO. That was actually it. Q&A.

Question from ABG, Bengt Jonasen. The sales price in the last six months is approximately 5 million kroner, which is almost unchanged as it was one year ago. This, while the housing prices have generally increased a lot, was the explanation behind the unchanged average price.

The price is very random in relation to what you have sold. Sometimes you have, for example, some drink house projects that have a high unit price, or large apartments, depending on where you sell. So it's a number that's not really relevant to look at. We don't have enough volume for it to be described that we haven't shot up the prices. Because we have done that. So it has nothing to do with that. It has something to do with the weighting of where we have sold.

By removing the equity covenant, what should we think about a reasonable long-term equity ratio? Today it is too strong at 41.4%.

Yes, it is. It is at 41.4%, but it is ex-exchangeable. We pay out 3 kroner in exchange, which means that it will be lowered to 7.38 maybe. It is still high. What we can think of is that it will go down, as I have said before, and that will happen. But the fact that we have removed it from... The exchange policy does not mean that we will not have a good one-capital, but should be between 30 and 35 percent in the long term.

The stock market and price development show that the activity in Bergen, Trondheim and Stavanger can be fast. What do you think about new projects in these regions now?

We think positively about that and have several projects in Kjømda now. In Bergen we have a new line in May, beginning of June. Line 2 on Sandsli has sold well on line 1. We have also adjusted the prices on line 2, so we look positively at that. In Stavanger we are also putting out a new line now. Det er veldig gledelig at det løsner i de markedene, og som sagt så kommer vi også på Ringve forhåpentligvis etter ferien.

Simon Mortensen, DNB Markets. Reguleringstiden i Oslo, er det blitt noe bedre?

Nei, det vil jeg vel ikke si at vi har merket noe til enn så lenge. Det kan vi ikke si.

Hvordan er snittprisene påvirket av geografi?

The average price is quite strongly affected by geography. We are actually building roughly the same size of housing in our projects. So if you say that the average housing is around 70 square meters, that is 10,000 kroner per square meter in difference, then that is reflected in the unit price. A bit like that, simply put.

Segment EBIT margin falls now in the quarter, year on year and quarter on quarter. What can you guide here in the future?

As I said before, it is not sustainable before Urban Property, and we have sold Tomtebank to Urban Property, where you basically reset the value chain again, that is to say that you basically start at 10-12%. I don't know how far down it will go. It can be that it doesn't go any further down, or it can be that it goes a little further down. I can't guide you on that. It depends on how much we manage to raise the prices in the future and how much investment you get from new projects. We have many projects that are a collaboration without urban property and rent and other things compared to when we sold... Tomte Banken har også godt kall det vår vei, så marginene er jo gode, og selv om du ser på prosjektmarginene, så er de jo på en par og tjue prosent isolert sett. Du kan legge på en fire-fem prosent på engreppmarginene. Så det er ikke bekymret for at den skal gå veldig langt ned, men vi styrer jo nå etter ørningspurser og utbytte. Det er Volum også som slår inn her på en litt annen måte enn før.

There have been no further questions.