Selvaag Bolig ASA

Good morning, and welcome to the fourth quarter's results presentation for Selvo Boli. My name is Sverre Målvik, I'm the administrative director. I'm going to go through today's agenda together with financial director Kristoffer Brunvold. We'll start with some highlights, and then we'll look at the operational. Before Kristoffer goes through the financial, we'll take a look at the market, future prospects, and some Q&A at the end. In the fourth quarter, we delivered a solid result, giving relatively few over-delivered units. The sale was very much influenced by high inflation and high interest rates, so it was a fairly weak sale. We managed to build almost as many units as we had planned. i kvartalet, 146 mot 160, og klarte faktisk å øke årdreserven, fordi enhetene som er byggestartet er høyere priset enn de som vil ferdestilte. Vi ser at byggkostnader fortsetter å falle gjennom kvartalet, og forsovet videre nå på nyåret. which is positive, given that new projects are being launched across our part. We have also carried out an annual assessment of Tomtebanken, i.e. the part of Tomtebanken that is still in the housing balance, i.e. the one that was not sold to Urban Property, and not a co-operative company that is off-balance. There, we had a value of 500 million. It was booked for 700 million, and was valued at 1.2 billion. And then we set up an exchange rate of 2 kroner per share for the second half year. A total of 4 kroner for the year. If we look at the key figures, they were... After IFRS, relatively low, given that we survived to get 669 million kroner in turnover, with a margin of 13%. Last year, 2.9 billion kroner, and a margin of 18%. Løpende avregning tilsvarende lave omsetning på grunn av lavt salg i kvartalet. Da blir jo salgsgraden lav. 526 millioner med en margin på 13,5. Litt opp faktisk. Det er fra forrige kvartal. Også her snev 2,9 milliarder. 13,2 prosent for året etter løpende avregning. Det kommer Kristoffer nærmere inn på i gjennomgangen sin. If we look at the business, it has been challenging, and it is still the case. The building costs went up a lot during the pandemic, and further pressure through the war with... Difficult access to steel, concrete, and so on, and high energy costs, makes the prices go up a lot. They peaked around summer 2022, and have fallen gradually since. A steady, calm fall. It continues, we're experiencing it now. Entrepreneurs have little to do, and the material suppliers can't deliver any goods, so of course there's pressure on the costs. which is positive for us, considering that we have started projects in some areas. And that continues now. What we are doing now, in the meantime, is that we have our operating model where we provide 60% and we close the building costs when we start a project. We will of course continue with that. But the difference now is that we will also take precautions for our customers when we sell projects, with regard to building costs. Not just sales, but also building costs. This means that we can put out projects now and sell, and contract the projects out over the spring and summer, where the building costs are at levels that are feasible. It has already been seen, but we see that it will fall more, so we will wait to contract to something further forward. We will continue to start building with closed building costs, just as I said. There is no difference, the only difference is that we will now medium-term take precautions for our customers about building costs. Se på tomtebanken vår så byggestartet vi 517 enheter i fjor, altså vi tok ut 517 enheter av tomtebanken. Og så har vi kjøpt nye tomter for ca. 800 enheter, så tomtebanken har vokst litt gjennom året. De tomtene har vi kjøpt i Stockholm, Oslo og Drammen. If we look at the sales, as I said, it was a weak sale. We sold 44 houses in the fourth quarter, which is probably the worst I've been involved in, I think. However, it made 220 million kroner, and we sold 448 for the year. What we see now, in the new year, is that the sales rate has risen a lot, and many have come to the fore. And we sell about twice as well as we did last quarter, so far in the quarter. But there is much better activity, and there are far more now who get loans than before. And that is probably due to a large extent to the easing of the housing loan agreement when it comes to stress testing, which then went down to 3% versus 5%, which makes it easier for our customers to get loans, given the ability to serve. Så det ser veldig positivt ut, og det tror vi fortsetter. 12 måneders julerende salg, også ned til 2,3 milliarder på årsfarten, med tanke på grunn av de to relativt svake kvartalene, Q3 og Q4. Trots litt beskjedent salg har vi lykkes med å starte nesten like myk som vi feilstilte. 146 byggestarter mot 160 feilstilte enheter. De har da høyere verdi, de som vi byggestarter, enn de vi ferdestiller, så vi har faktisk økt åretreserven vår med snæve 200 millioner, opp til 6,4 milliarder, som vi har positivt. 67% av dette var solgt i utgangen av kvartalet, og 80% av dette er i Storoslo eller Østlandsregionen. If we look ahead, we have 744 units in 2023, which we also guided on in the previous quarter. 75% of this was sold at the beginning of the quarter, and more now. That means we have very good control over the actual year's results. We also have very good control over 2024. What we are working with now is a start-up that will be completed in 2025. So there are long lines, fortunately, and a lot can be corrected. Despite the two quarters we have had that have been a bit tough when it comes to sales, it can be resumed with good sales and initiatives this year. Then Kristoffer can take us through the financials.

Good morning. We will look at the financial highlights of the quarter. We start as usual with the results-regulation, the IFRS, where the income and costs in our project meet the results by the delivery of the housing to our customers. and delivered 147 units in the quarter, including one unit from co-operative projects, so a total of 147 units, which gives us a turnover of 669 million kroner. This includes 19 million kroner in other revenues, which comes from the operation plus our service centers, and the factored project management in co-operative projects. We see here that the turnover is falling sharply from the starting period last year, and this is of course due to significantly fewer units delivered this year. Last year, we delivered 324 homes in the same quarter. That is more than half of what we deliver now, so it is quite natural for this to fall in turnover. The project costs are 514 million. We still have good project managers who manage the projects well, with good cost control. We deliver enough for a quarter, with costs well within the budget, which means that we manage to deliver a good result in spite of few years of delivery. And when we have fewer deliveries, then of course the fixed costs are less units to divide them over. So we are very pleased with the result from the deliveries we have. The other costs came in at 82 million, which is on the same level as last year. And this is then wages and operating costs, which are on the same level. We report an adjusted EBITDA of 87 million. Here we have corrected these 20 million in financial costs, which are in the stock price after IFRS, for a more clean EBITDA. We report an adjusted EBITDA margin of 13% per quarter. At the bottom, we report a result per share of 48 euros, which is much lower than last year, where it was 2.34 kroner. Again, as a result of fewer overheard units. Then we will look at a pro forma result management, where we have consolidated our share of revenues and costs in our collaboration projects. In the official result management, this is reported net on one line. In this regime, the turnover is the same. 674 million, which was almost no part of the project that was delivered. And a margin of 13%, compared to 1.7 billion, and 19% in the corresponding period last year. Still the same result at the bottom, at 48 euros per share. We have made the contributions for the entire year, 2022. which yielded 585 units, which gave us a turnover of about 3.4 billion, and a adjusted EBITDA margin of 17%. Here, about 1 billion in turnover from 2021, and the debt again yielded 894 units in 2021, and significantly lower this year, with 585 units. Adjusted EBITDA, 562 million in 2022, and 17% margin. All the way down, the result of the share at 3.63 kroner, which is also down from last year at 5.40 kroner. Then we will look at segment reporting, which follows the Norwegian accounting rules, which better reflects the running value creation that happens in the company. This follows this running calculation method, where you then take sales grade times sales grade, and give an excise grade, which gradually takes out revenue and results through the project's lifetime. If we look at this quarter, then the revenue falls to 526 million, and that is of course due to the weak sales in Q4, which then affects the sales degree negatively, and then we get less output of revenue and results in isolated quarters. The margin is reported to be 13%. This is then after overhead costs, which means that we still have good project margins on what is production. a project margin of about 17-18%. If we look at the 12-month rolling turnover, it falls to 2.8 billion, again due to weak sales development in the quarter, and a rolling margin of 13%. If we look at the cash flow, it went into the quarter with 775 million in the bank, The main elements here are negative cash flow from operations, as a result of an increase in goods storage and a change in labor capital. The big thing in finance is negative cash flow from financing, mainly linked to the down payment of construction loans, net at 187 million. In total, there is a down payment of 162 million. In the quarter, we have 613 million in the bank. The balance. There are no major changes from last quarter. We have a solid one-capital share of 39.4%. This corresponds to a book value per share of 25.4 kroner. Here it is worth noting that this proposed exchange rate of 2 kroner does not meet this balance. It first meets the balance in Q2, when this is paid out in May. If we look at the stock market, which is up 148 million, the customer supply, the other supply, is down 158. This is due to the fact that we have received a lot of orders in the quarter. Cash went down to 162 million, as we saw at the cash presentation. Our customer feedback is now at 152 million, and is included in other short-term yields. The stock market is slightly up from last quarter. If we look at the split here, the book for empty holdings is now down, and that is due to that we have start-up projects in the quarter, and have no buy-back from Urban Property either in the quarter. Varearbeid is up by 195 million. This is due to high activity and start-ups in the quarter. And then we have the finished goods warehouse, which is up by 40 million. This is due to the fact that we have several finished, unsold units. At the beginning of this quarter, we have 31 unsold units. This is at a comfortable level, and we expect to sell these in the course of the year. It is not something we stress about selling, nor do we put down the prices to get them out as soon as possible. It is up to us to get the prices we want. As Svereve is in, we do an annual value assessment of our empty bank. with external issuers. Booked Tomte-Bolding is 716 million in our balance, and is then valued at 1.2 billion, that is, a value of 502 million. This is about 5.4 kroner per share. And again, these are only the Tomtes in our balance, The main part of our auntie bank is earned property, where we have the option to buy back. If we look at the interest, we have a total of 2.5 billion in interest in the first quarter, where the building loan is the big one, with 1.7 billion. We also have Gjeld Urban Property at 582 million, which includes sales credits and return purchase payments. And then we have some loans on the items that are in the balance at 226 million. No changes in the margins and conditions for these loans. What we have done in the quarter is that we have refinanced our top quality, increased from 150 to 300 million, We have received updated covenants and a fallout at the end of 2025. Pre-facilities on infrastructure at 3 million is over in the quarter. So we still have this 150 million in cash credit in DNB. None of these top facilities are then pulled at the start of the quarter. And we report a net interest rate of 1.9 billion. Let's look at the exchange rate. We have prioritized the exchange rate for our shareholders. On the left, we can see that we have earned and paid on this share in 2017. We have an exchange rate policy that says Minimum 60% of the return on loan is paid out, divided into two payments this year. We paid out 2 kroner for the first half of the year, and the Board now proposes 2 kroner for the second half of the year. A total of 4 kroner for the year. And then we have a result of 3.63 kroner in the period. This means an exchange rate of 110% of the return on loan. If we look at the accumulated data from the exchange rate, we have a total spending of about 53 kroner, and in the period we earned about 57 kroner. This of course includes the 22 kroner that came extra-ordinarily with the Urban Property Transaction in 2020. This is an average of 93% of the results per share accumulated. And we will continue to have as a goal to continue with good direct issuance to our shareholders in the future, as long as the market, the future and the future prospects allow it. The issuance of capital. This is calculated as a 12-month rolling result after tax, and is then divided by the incoming balance of the one-capital. We have 339 million in the last 12 months, and a one-capital return of 14%. Then we will continue with the market update.

Ja, vi ser på markedet og begynner med, som vanlig, vi ser på Oslo-markedet, tilbuds og etterspørsels, vi kaller det ubalansen der. De siste ti årene så har det blitt ferdestilt 2.900 nye boliger i Oslo i gjennomsnitt. I 2022 nå så ble det ferdestilt 1.800 et eller annet, 1.850 ish. Det har jo gaida nå i forrige år, Kvartal, så stod det fortsatt 2400 der. Så fikk vi nye oppdaterte tall fra SSB nå, og da har de falt veldig. So it's not because of our wrong reporting, but it's even worse. That's the conclusion. It's even worse with the fairing in Oslo than we thought in November. So there's a big gap between the fairing and the demand, which is estimated to be 3,300 units per year. And this will not get any better. Now it looks like it will be 3,000 after what SSB says this year, and 2,780 in 2024. So we'll see what happens, but what is quite certain is that it is essentially under what is needed. And that continues to be the case. We still experience that regulations of our units in Oslo are unfortunately slow. And we are not alone in experiencing this. So I don't think there will be a quick fix, unfortunately. If we look at Akershus, it is a much more balanced market. The need is estimated to be at 5,400 in the next few years. Det har blitt ferdestilt noe mer enn det i 2022, og blir også noe mer, ser det ut som, i år, og cirka det samme neste år. Men også her er det fallende ferdestillelser. Det skyldes også at det har blitt regulert noe mindre nå i disse store maskinene som har vært i Lørenskog og Lillestrøm, at det bygges mindre der nå, fremover. In total, when you look at Storoslo, there will still be a so-called understudy situation, which means that there is pressure on the prices to go up. And we also see that on the rental market these days. There is pressure to go up, which actually follows the interest rate, because people want to live urban. That's just the way it is. And then the rental income increases when they don't get to buy a house because of the poor supply side. If we look at how the market has been through 2022, which must be defined as a crisis year, with rising interest rates, war, huge or record high inflation, we see that it still, in Oslo, it was out to about 1,100 homes by the end of 2021-2022. It was put out around 1,900 and sold about the same. A little less than 100. So it's about 1,200 homes in the market. This should have been around 3-3,500 homes. That was 12-13 years ago. If you look at Akershus, it's a healthier market. There are 3,500 people in these two regions. They put out 3,600 and sold about the same. Or sold more than that, actually. This is in a market where you have inflation and very rising interest rates. So it's not exactly... It's ticking and going, what's being put out through the year. If we look at Bergen, Trondheim and Stavanger, Bergen has the same trend as in Oslo. Here there is also slow regulation. If we look at Trondheim and Stavanger, it looks like it has sold much more than it has put out. And that is probably due to the fact that it has not put out much, perhaps almost nothing, in the last half year last year, because of high construction costs. That the prices in those areas are too low to be able to get profitability in starting projects, as the construction costs were in Oslo. i andre halvår. Det vi nå ser er jo at byggekosten begynner å komme såpass ned at det vil bli mulig å legge ut prosjekter igjen og byggestart til det i løpet av året, om det skjer nå i de første seks månedene eller om det tar ni måneder, det får vi se. Men vi ser jo at det er mulig å regne ting hjemme nå allerede i regioner som var umulig i august-september. We also see here on the supply side in relation to the population in these regions we operate in, we see that there is still an extremely low supply side in Oslo. There are 700,000 people in Oslo, and there are also 1.6 new homes per thousand capita. Jakkershus, about the same population. There it is more balanced, 5, which is probably a healthy key number, around plus or minus 5. Bergen is also low. This is also due to regulation issues. In Trondheim, we are still at 3.9, which is not so bad. Stavanger and Sandnes as well, but this is due to the fact that nothing has been put out. If it had been a normal cost market, it is regulated enough and would probably have been around 5. What has changed a lot since last quarter is the used market. When the interest rate has risen as much as it has now, and the banks have had their rules to comply with, there are far more now who have had to start selling their own housing before they buy new, so they know what they have to deal with. And that's the kind of shift we see when the interest rate goes up or down. We see a shift from the interest rate of one or the other. That is to say, it goes from buying first to selling first. Now a lot of people have gone over to selling their home first. We see an enormous increase, or a violent increase, in the use of the warehouse, in the use of the warehouse in all areas, actually. Maybe Stavanger is moderate, and that is also the reason why Stavanger is a bit special, because there is pressure in the labor market, and a lot of people are moving in at the moment. If we look at how the prices developed in total last year, there was still price growth in Oslo at 1.8%. Bergen 0.5%, Trondheim also growth, and Stavanger was the one that came out of it best at 3.7%. Reflecting a little on what I said about the fact that the labour market has risen a lot, and then the market comes from a very low level. It has been tough times in Stavanger since 2013-2014. And then for the year's price development, it is the case that in the housing market, the second half of the year is much worse than the first half of the year, market times and so on. But the spring and new year have a tendency to rise, and we see that this year as well. We see Oslo 2.8% up, Bergen 3.2%. 1% in Trondheim and 5% in Stavanger. And this is due to a lot of psychology, big changes. This is in line with what we experience. There are many who go on display. Easier to close. And then, of course, it is with the housing law, the reduction of stress testing. and eco-requisites for secondary housing in Oslo, which also helps. We also notice that investors are more open-minded and want to start investing again. And that is also based on expectations that the interest rate will reach its peak. Many people think that, and we'll see, there will be some inflation rates today, but many people think and mean something about it. You notice that, especially investors, who probably speculate the most about it. But at least a good or strong price growth already so far this year. We have many projects, big projects in progress, and we have a lot to be able to put out to the market. We can put out, given that the market is accepting, about 1100 units this year. Then the market will turn a lot, we will be able to succeed with all that, but we have at least a lot of work done in all our projects. Lønnskog Stasjonsby is a large project we have, 2,000 units. We have also regulated a large new plus project. It is 250 units, not 200, but it will also be 230. It will be in the course of the year. We are laying out a new field at Skårebyen in the course of the year. Bjerke is going to be regulated, so there won't be anything before... Yes, we don't know. It's unpredictable, unfortunately. But I've written here, it's gone from 24 to 26 now. So we don't dare to promise so much there. Fornebu will come... There we have held 25, that's what we expect. There we have a big project together with Trond Mohn, Trond og Fredrik Mohn. It is a project that is also off-balance, by the way, which has nothing to do with these values. We are looking forward to that when we get the final station on Fornebebanen around Sider. Ringve is a project we have out in the market now, a big plus project. We are going to lay out a new field if the market allows it during the year, we have made that clear. Sansli Bergen is a project that goes as normal, a big project. We are also going to lay out a new field during the year. There are big differences in how the market has been. This project has been sold normally for a couple of weeks throughout Q4. Normal sales pace. This bad market has affected a lot of things. Minde is a big project that is exciting in Bergen. We expect sales to start in Q3. Fredriks is a big project that we hope to get regulated this year and start selling in Q4. On Landås in Asker, we have completed a plus project now. We have been able to regulate the rest of the area in these days. We will probably start selling in Q2, a new field there. We will have a plus project in the course of 14 days, three weeks, out in Ski, which we are putting out now. In Kallnes we regulate the last fields, and then we have a project that is ready to go to Stockholm, where we wait. Byggekost is also a plus project. There the byggekost has to go down a little more, but we are already approaching it, so we are going to run a competition on the enterprise and outside our part. We are regulating a project on Lillehaker, which we expect to start next year. Lørenvangen, our old headquarters, we have used almost eight years to regulate. We expect that to be regulated in the course of the year, and that we can start selling it next year. Vi kommer til å legge ut et prosjekt på Ballerud, som er 90 rekkehus og 80-ish leiligheter. Kommer til å legge ut i løpet av våren, eller Q2. Spennende prosjekt. Lervik kommer til å ha et nytt felt, som vi også kommer til å legge ut nå i løpet av, antageligvis, i løpet av tre til seks måneder, avhengig, litt avhengig av byggkost. This is to mention some of the problems that we will try to solve over time. And then we will see how many sales terms we can put out. It is of course dependent on how the market takes it. So if we look at the future prospects, then it is still the same conclusion that we have had here in the last few quarters, and that is that The low supply side in Oslo is impacting the whole of the Eastern region, both in terms of price and demand. We see very high demand and busy shows in January, fortunately. Far, far better than last year, and actually quite normalized interest. And of course, there is still a little lower closing than what it is in normal times. But much higher closing than what was in Q4, after all. Sold about the same already this year, as far this year as we did in the entire Q4. We see that this is largely affected by the construction tax, which is positive for us, and positive for those who can buy instead of having to rent at a cost that is more expensive than buying. We also see that the building costs continue to fall. We will use this and see that we will be able to close and carry out good projects, given that this continues out of our part. We will consider this by changing our business model a little bit in relation to that we take precautions about building costs for our customers. We have a lot in the pipeline to be able to lay out, which is sales-ready, given that the market is taking action. We have a sales start already this week, and have the potential to lay out. It's not goods in the shelves, it's the market, to put it that way. We have things ready. So to sum up, we have delivered a good result, given a few units that we have been talking about. We have fixed costs at the beginning. We see that there was a bad sales market in Q4 for us, as for all others. We have started to build and increased our pipeline, managed to start to build well in relation to the market situation. Byggåsnaden faller. Vi har merverdier i tomtebanken som ligger igjen i balansen vår. Her nevner vi som sagt ikke merverdier i de eventuelle samarbeidsselskapene vi har, eller tomtebank for øvrig. Vi betaler da et utbytte på to kroner, eller instiller på et utbytte på to kroner for annet halvår, det vil si fire kroner for året. Det var vel... What we had today, and we can hear questions if there are any.

A question from Simen Mortensen in DNB. Preparation for building costs. Is this going both ways? That is, for customers both lower and higher prices, if this swings, how will it work? Can you say more about that?

The customer gets a fixed price regardless. What we do is that we take precautions about that we achieve a certain level of construction costs. It will be set so high that it is very unlikely that we will use that precaution. So the customer pays his fixed sum of No variation from the customer. The only thing the customer can experience is that if we do not achieve this building cost, we say no, sorry, we do not start the project. Here you have your money back. Come back next time when we put it out again.

A question about a little of the same. Does this mean that you will not start if the prices do not fall? Or that the customer must pay more? Or that you do not start if the building cost increases? How extensive is this in the industry from before, and how extensive are you with this?

It is quite extensive in the industry from before. Last year, there were several who drew projects on it. We have not used to do it, but we do it now because there is so much uncertainty around the construction costs. We will put the threshold so high that it will probably be the price we estimate that the prices are at the time we put it out. Then we must either have made a mistake around that, that is to say that what we experience and contract will be higher than what we have assumed, which is at a high level. That is to say that there is a lot more to it if we don't do it. That is to say, the answer is that it is actually a little higher than the price level we think it is at the time we put it out.

Hvordan jobber dere med priser om dagen, og hvordan har nyboligsalget gått så langt i år? Dere sier det går tregt, men kan dere være mer precise?

Ja, det som jeg sa, vi selger cirka en bolig om dagen nå, og i Q4 så solgte vi cirka en bolig andre dag, så det er en dobbelt så høy salgstakt som det vi hadde i Q4. Så det er ikke enormt, men det er omtrent det samme som vi hadde i Q3, så det er langt bedre enn i Q4, og det er dobbelt så bra som i Q4 da. We work with prices, we have kept the same prices, we have not released anything new in Q4. We keep the prices as they are, and we run some white goods packs included, and that type of incentives. But we have used very little of our market share, as you can see. This is of course due to the high demand, and very little new is released.

Great. Then there is nothing more from the web.

Niall Kleiven, ABG. The NGAP margin is up 1.3% on a quarter over a quarter. Is it possible to give a little more meat on the leg on why it is so much better now, a quarter after Q3?

Should I take that? I can say that the NGAP margin, it goes... It depends on the margin of failure that comes from the beginning. There are also some upstart effects when you start a project. There is not much else to say about that. As usual, we do not go into details on the project margin level. That is the general effect.

And if we talk a little more generally about building costs, how much more is the building cost before you experience it naturally and contract quite a lot?

You can say that if you... The building cost, it's not smart to contract so much, given that you are quite confident that the building cost will go down. It is already now, when we have run some mini-competitions, but which are not strictly calculated. We have already got indicators that it is That you can count home with decent margins, which we in the worst case would have done. But there is no point in going for that, when you know that there are still very few like Byggestarten now, and that the prices... with a 90% chance of falling further. That's why we're doing that, but we're not going to use ourselves to speculate and play with our customers on this, so we're going to be very confident in what we're going to do, but regardless, we have to take that advantage in terms of the possibility that it will increase. We don't know what will happen in Ukraine and what the consequences will be, or if it will escalate beyond our understanding. That's why we have to take that advantage. Ja, da sier vi takk for i dag, takk for oppmøtet. Hyggelig at det var såpass mange som kom. Og så ses vi igjen 24. mai.