Selvaag Bolig ASA

Good morning, and welcome to the third quarter's results presentation for Selvåg Bolig. My name is Sjærum Olvik, and together with Kristoffer Brunvold, who is the financial director, we'll go through today's agenda. We'll start with some highlights, then we'll look at the operational, then Brunvold will go through the financial figures, and then we'll look at the market, and some future prospects, and some Q&A at the end. The third quarter was a very good quarter for us in terms of results. We delivered many units and received large revenues. Combined with high margins, the results will be good. We have also sold well the first nine months. Great sales also in the quarter, but especially the first nine months we are well ahead of last year. Sommaren var ganske rolig, så salget i Q3 var lavere enn i Q3 i fjor, men det skyldes at juli i fjor var ekstraordinært bra, mens sommeren i år var mer normalisert. Juli og desember er vanligvis relativt rolige salgsmåneder i nyboligmarkedet. Vi har utviklet flere nye prosjekter gjennom kvartalet, så vi har egentlig en rekordgod pipeline som vi kommer tilbake til, men vi har veldig mye varer i hyllene som vi skal ut med de neste kvartalene, gitt at markedet tar det unna. The results were good, as I said. After IFRS, we delivered a margin of 25% in the quarter. A very solid margin. After the current calculation, we are at the bottom of 15%, which corresponds to a margin on the projects of about 20%, which is good and above expectations. Now we have... Of what is under production, about half of it is now bought back by Urban Property, which we have made a significant profit on, so that is actually, as I said, of overall expectation. If we look at the sales, as I said a little initially, sales of 634 million, which is lower than in the same period last year. But that is mainly due to a much calmer and more normalised July than it has been in the last few years. Year to date, we have sold well again. 5.46, which is much better than last year. So in total this year, we are well ahead. Twelve months rolling down a bit. 826 units to the value of 3.8 billion. We have started building 148 units in the quarter, which is more than in the previous quarter. but less than in the same period last year, and finished at 318 in the quarter. So far this year, we have started building much more than we started last year. And the fact that we started building so few units last year, means that we have taken a lot of it, but not everything. And that means that units under production are going down a little, 1201 units now under production, to 6.2 billion. From this, we have sold 76% at the beginning of the quarter. To comment a little on this, on some of your quarter pages, I guided that we could go down to 1,000 units, in the worst case. We see now that we don't do that. Given that the market continues, On a daily basis, where we operate, it is likely that we will not go under this in the nearest quarters. That is to say that it is more likely that we will go up than down. So that is positive. If we look at the guidance in the future, we will experience, as we have said before, 867 reunions or celebrations this year. And the same as before. Guided. 94% of this was sold at the beginning of the quarter, and more now. Then we have a picture of next year, and then it will be 625 celebrations next year. That's what I have now, so I'll come back again. Then you can come back.

Yes. Good morning. We will go through the main financial points of the quarter. We start as usual with the official results of the IFRS, where the income and costs of our projects meet the results of the delivery of housing to our customers. We covered 314 units netto, of which 89 were from collaboration projects, mainly Kallnes Bridge in Tønsberg, and Tidemannsparken, which we have on the same road on Ensjø in Oslo. The revenues came in at 887 million, including 19 million in other revenues. This is from the operation of our plus service centers, and factored project management to collaboration companies. The project costs amounted to 699 million kroner. We have talented project managers who deliver costs within budget, enough in a quarter, which means that we manage to deliver good margins in an isolated quarter. Other costs amounted to 56 million kroner, down from 64 million kroner last year. This is because last year we had some one-time effects on wages. We have fewer employees, and there are reduced consultant costs in the quarter. Then we report an adjusted EBITDA, as we have done in recent years. Here we have adjusted these financial costs, which are in the project costs according to IFRS, at 32 million. This brings us to an adjusted EBITDA of 222 million, and a margin of 25%. This is compared to 706 million revenues last year, and an EBITDA margin of 18%. At the bottom, we have a result per share of 1.64 kroner versus 1.10 kroner last year. Next, we will look at a pro forma result system, where we consolidate our share of income and costs in the collaboration projects. In the official IFRS result system, this meets its own line net and after tax. While here we have bruttified it, which means that we get more comparable results quarter by quarter. If we look here, we had a turnover of 1.3 billion, and a margin of 19%. Then compared with 861 million in turnover in Q3 2020, and a margin of 15%. Still the same result at the bottom, with the result per share of 1.64 kroner. More information on this can also be found in the quarterly report for those who are interested. Then we will look at the segment reporting. This follows Norwegian regulatory rules. Then the running calculation method, which better reflects the running value creation that happens in the company. The current calculation is that we take sales degree times sales degree in the projects, which gives an output degree, which means that we are gradually taking out the results in the project's lifetime. The turnover in Q3 2021 is 774 million, and a margin of 15%. This is after overhead costs, so we still deliver good project margins for what is in production, about 20%. On 12 months of rolling revenues, it is up to 3.5 million, and an EBITDA margin of 17%. Let's look at the cash flow development in the quarter. We entered the quarter with 580 million. We have positive operational cash flow at 174. Many years of delivery, good results. We have positive cash flow from investments. This is mainly exchange rate from our cooperating companies at 133 million. And then we have negative cash flow from financing. The main reasons are that we have paid an exchange rate of 2 kroner, equivalent to 187 million per quarter. Net and change at 30 million up, so we go at the beginning of the quarter out with 610 million in cash bonding. Let's take a look at the balance. No significant change in the balance sheet. We have a bookmarked income share of 23.8 kroner, corresponding to an income share of about 35 percent. This is now down in the quarter, and is partly due to the fact that we have paid for this exchange that hits the balance in the quarter. We expect some higher income share in the next quarter, where we have a lot of surplus and do not report the exchange. The stock market is a bit down, but we will get back to that. The increase in customer demand is 75 million. This is due to the fact that we delivered homes towards the end of the quarter, where the results first came in in October of the following quarter. Cash is up by 30 million, as we mentioned. Then there is 299 million included in another short-term part, which is the supply from the customers, and it is on the same level as before. If we look at the stock storage, it is on the same level as in the previous quarter. We have started building a bit, and we have bought back tomatoes from Urban Property. We see that the tomato harvest is going down a bit from the previous quarter, and this is actually part of the stock work since we started building. The finished goods storage is on the same level as before, 109 million, on a low and comfortable level. We have 16 unsold finished homes that we are comfortable with, considering selling them in the following quarters. Then we will look at the yield. No changes in the sum of the interest rates in the yield. 2.9 billion at the beginning of the quarter, where 1.9 of this is construction tax. Then we have a loan from Urban Property for 733 million. This is then connected to purchase agreements and sales credits. In addition, we have a loan for 250 million, which is on these loans that we have in the balance, which we did not sell to Urban Property. There are no changes in the margins and conditions in these loans, and at the beginning of the quarter, we had not raised any of these top facilities this year. If we look at the cash, at the beginning of the quarter, we have a net profit margin of 2.3 billion. Finally, we will look at the deduction on the income tax. This is estimated as a 12-month rolling income. We have 530 million in revenue after tax, the last 12-month period. If we divide that by the incoming balance of the income tax in that 12-month period, we get an income tax reduction of 24%, which is solid. Now we have gone through the financial part. Now we will move on with an update on the market.

If we look at the market, we can look at Oslo first, as we usually do. If we look at what we have completed, not we, but what the new housing market has done in the last 15 years, there are an average of 3,000 new homes that have been completed in the last 15 years each year. Which has been varying a little bit, but as you can see from the graph here. De neste årene så blir det 1.800 i år, 1.600 neste år, og ligger an til litt over 2.000 enheter i 2023. Det prognosesenteret prognostiserer er behovet i et medium case, det vil si medium vekstcase, med passe innvandring og så videre, er 4.000 enheter. That is to say, twice as much as what will be completed. And this is the main reason for what we read about in the newspaper the other day, that there is a high price pressure in Oslo. The offer is not in the vicinity of meeting the demand. If we look further at the old Akershus, which is the former bus stop in Østfold, So, I have a picture of 3,750 in average in the last 15 years. Here we also see that the units, or the delivered units, fall in relation to the last years. 3,950 this year, 4,1 next year, and then it falls considerably in 2023. Here it is an estimated need of 4,900 units this year. So you see, these areas must be seen as collected, since those who do not get to buy what they want in Oslo, they go to Lønnskog, Lillestrøm, Follow, these areas around the city, around Oslo. And that is also the reason why the whole region has a higher price increase than the rest of the country. It's unbalanced, and it's not the other regions. We'll get back to that later. We see this here as well. During the year shift in Oslo, about 1,000 units were sold. About 1,600 units were added in the year of new homes. More than that has been sold. In Oslo, with 700,000 residents, 840 new homes were sold at the beginning of October. Not many years ago, these areas, these two markets here, Akershus and Oslo, were about the same size in the population. They have been the same size for many years, but not the last few years. In Akershus, there are 3-2 out by the end of the year. They have been added over 4,500 and sold a little below that, so there it has increased a little, but there are 3,500 homes there, which is a more healthy offer in relation to the population than it is in Oslo. If you look at the other cities we are in, Bergen has an offer that is the size of Oslo, even though the cities are much smaller. It has been put out quite little in Bergen this year, sold much more than what has been put out, so the offer has actually gone down a bit and has become quite low in relation to the population there. Trondheim is much more balanced, but note that there are 911 homes. There are as many new homes for sale in Trondheim, but a little more than there in Oslo. Same in Stavanger Sandnes. This one illustrates this even better. In Oslo there are 700,000 people. 840 homes for sale, new homes. Akershus, about the same number, a little less actually, 670,000. 3,400 or 3,500 homes. So Bergen... As you can see, Bergen, Trondheim and Stavanger are quite even. If you look at the available new homes per 1,000 people, Oslo is in the fifth place of the other cities in Ørflid, if you take it as an overview. Bergen is also a bit low, but despite that, there are twice as many good offers in relation to the population. And this could perhaps be believed to be a trend that applies generally to housing, but it is not. So if you look at used housing, then we have quite a similar movement pattern in Norway, whether you live in Bergen, Trondheim, Stavanger or Oslo. It is that people move. And if we look here, it fits quite well. If we look at the second-hand market, it is quite similar in these cities. That is, affordable housing in Finland per capita is quite similar. It is around two. There is very little variation in relation to the new housing market. This is the main driver for the price picture. These slides here again, a little quickly summarized, is the supply or revenue in general, year to date, used in the big beginning years, record high, driven by the rent picture most likely, and perhaps a little pandemic, and people think that now we are going to move, now we have time, we have been at home a lot, and think that there is a little more revenue now than usual. There is probably a small factor also due to the pandemic. But a healthy supply chain lies on the average. It's a very well-functioning market, I would say. In general, in these areas of ours. If we look at the price picture, which is interesting on the other hand, we can see how skewed it is. Year to date in Oslo, we only have 2.4 percent price growth. Men det er jo ikke bare. Det er 1950 kroner per kvadratmeter. Hvis vi ser for eksempel i Stavanger, så er det 9% cirka. Det tilsvarer da 3300, så bare marginalt mer altså. Selv om prosenten høres ut som er nesten fire ganger, så er det ikke det. Tilfellig kroner naturligvis. En gjennomsnittlig kvadratmeter i Stavanger i bruktmarkedet koster altså 39 000 kroner. I underkant av det. While in Oslo it costs 84. So it's twice as expensive per square meter in Oslo as it is in Stavanger. Twice as expensive. The building cost is the same. If you want to build a new square meter in Stavanger, it costs roughly the same as a new square meter in Oslo. So the same tendency you see in Stavanger, as well as in Bergen, is relatively reasonable compared to Oslo. 49,000. Kvm 52. Det blir jo litt unøyaktig i tall, for det tyder nok på at det har blitt solgt mer store boliger, for eksempel, i Stavanger, enn det har i Oslo, for eksempel. Men tendensen er jo der. Kvadratmeterprisen sier jo sitt. Yes. If we look now at what we have to offer, then we have, as I said initially, we have a lot of exciting projects underway. We have also had some sales starters now in Q4, as I can mention. It is sales in general, I can say, that even though it It was quiet in July, and in connection with the increase in interest rates, it is gone now, and we have had a very good start on Q4. So it depends on whether we get a better Q4 sales than we had in Q3. We have also started sales around Sider, a plus project in Trondheim. last week, and it went well. We made the first 70 units and sold about half of them. So we have started in Trondheim again. That's nice. It's a big project, so we have a lot ready that we will release in the future. We have a lot in Skåreby, where we have sold a lot, but we have created a new project also there in the quarter, and we will come with the following construction trends, so that the market takes a turn. The same goes for Lørenskog station town. Lørenskog has generally become the largest market for us, after Oslo has been late in regulating the fields we have here. When that is said, we have managed to get through one field now on Sinsenveien, which we are laying out early in the new year. So that's good. We also have more in Stavanger. We have more in Bergen. which is very clear, given that the market is moving away. So we have a lot, we have 450-500 units ready to be put out in addition to the 500 we have in the market. So we have a solid pipeline, so if the market continues to be good, then it promises to be good to be able to increase the speed in Skuta. Other big projects that are coming are Fredrikstad, har vi et svært prosjekt sammen med Jotne som er i detaljregulering nå. Går den detaljreguleringen gjennom nå i løpet av et års tid, så kan vi være ute i salg i slutten av neste år. Så har vi i Sverige fått tak i tomt som vi skal snu og begynne å selge på rundt sommerstid til sommeren. which is good. Come on there and build organic organization and Tomtebank in Sweden. Bjerke, 1,200 units will come again, I dare not to promise now, but we hope in 2024. It depends very much on how long we use to regulate this, I dare not to say. Now it has been very, very slow processes in Oslo, I must say. Hopefully it will get better. Fornebo, the track has started. We will build up on the T-Bahn station, so it has to be built first. But we hope that we can start laying out the first one in 2024. If we look ahead, as I said earlier, these interest rates, if they come at the pace they are foreshadowed, and Flater ut på de nivåene som er forespeilet, så er det ikke det som ligger på kritisk linje for våre gjennomsnittsenheter på 5 millioner. Det er fem ganger inntekt som er det kundene våre sliter med, det vil si boligvansforskriften. Ikke betjeningsevnen. Det lønner seg fortsatt å kjøpe en bolig av oss kontra det å leie, selv om rentenivået skulle bli 1% eller 1,5%. So it looks very good, and we have a lot to add to all of our markets. So we look positive for the future. In terms of estimates, it was a very good quarter in terms of results. Many good units. The sales were okay in the quarter, but it went so far this year, much better than last year. And we have a pipeline, sales-wise and project-wise, that is better than in many years. So that's good. And even though we are down in units under production, it is... less than what we were guided on for a quarter of a year ago. Or higher than what we were guided on for a quarter of a year ago. So given a good market, given a normal market, we will be able to increase unit production. That was all I had, so we can ask some questions if there are any.

Thank you. Daniel Haugland, ABG Senior Colleague. I have three questions. First of all, the NGAP EBITDA margin has trended down over a quarter of a year, and it refers to urban property as a reason for that. I'm just wondering if there is anything else in the mix of projects or other things that also do that, or is it mainly urban property?

It is mainly urban property. At the same time, we have had a decline in some Oslo projects that are also involved in affecting that. It is no secret that there has been a super profit on some Oslo projects. It has. But it also applies, or mainly... This relates itself to the guidance I gave earlier, that the margins would go down in connection with the urban property deal, of course, when you take out such a big profit on the tombs, and sell it at full price instead of a short time back and buy it back again, then the margin on them will be worse than it would have been if it had been lying. That's the point.

Yes. So question number two, Sweden. You have a project that you can hopefully start next year. But after that, I understood that there is a small time gap before the next possible projects in Sweden can come. So the question is, how do you possibly work to fill up that gap? Or first of all, is it something you are actively working towards? And in any case, how are you dealing with it?

Yes, first of all, it is almost a miracle that we have gotten hold of the first tomato we have there, which we can turn so quickly. Usually you buy tomatoes that are unregulated and have to work annually, like the other tomatoes we have. We can start with them in 2016. So the Barkarbystad Tomten is very good for us. We work very much against the municipalities in Stockholm and surrounding towns and municipalities with getting market announcements. And we also work to get Tomten in the private sector. So that's what we're working on. Our main plan is to get more tomatoes and grow organically there. We have exciting interests and opportunities there, so let's see if we succeed with that. But as you say, we are going to fill up that gap. The goal is to continuously grow. So we start with, before we get there, we should just increase production and increase the number of units under production. But it's not easy to take a break, of course. But we're on the right track. We've managed to succeed quite well so far in the last year.

So that's good. Good. And then the last question from me. Now you're at around 1,200 units under construction. So you're finishing a good part now in Q4. So how are we going to think about building starts in the first half of the year? Are you going to... Do you think that the unity under construction can rise significantly in the first half of the year, or will it be more than what you might want to see towards the end of the year, possibly by 2023?

There are two things. First of all, we are in charge of the company. That is to say, we will have a reasonable sales grade on one-to-one production. It is also Covenant that we have. As you saw now, we have a sales grade of 75%-ish. And we have sold well in the quarter, so we will probably get started. The goal for the first half is to get as many as we finish in Q4, which is a lot. If we get to that, that's good. And if the market, as I said earlier, continues to take a part, then it is natural to think that we will increase in the first half of the year. But of course it depends on the market. But that's what I dare to guide on. The market must be there. And then I think and hope that we have bound out. That's what I can say. We naturally want to work to get a huge growth. But if we get it, that's... Yes. Da takker vi for oss, og ses igjen forhåpentligvis 15. februar. KU4 rapporterer.