Selvaag Bolig ASA

Good morning, and welcome to the first quarter's results presentation for Selvåg Bolig. My name is Sverre Målvik, and I am the managing director. Together with the financial director Kristoffer Brunvold, I will go through today's agenda. We will start by looking at some highlights from the quarter, and then we will look at the operational aspects. Then Kristoffer will go through the financial aspects, and then we will look at the market, some future prospects, and some Q&A at the end. Vi had greit salg i første kvartal, gitt forutsetningene, markedssituasjonen, solgt cirka en bolig om dagen, litt mer, solgt i underkant av 120 boliger, nettopp. Vi har et bra resultat, også i forhold til markedssituasjonen. Vi har ganske mange ferdestilte enheter, overleverte enheter, som gir et bedre resultat enn i samme periode i fjor. De dårlige tidene gjør at vi har fått kjøpt mer eiendom, så vi har kjøpt en stor tomt i Bergen og en i Drammen i Kvartalet, som gir muligheter for ca. 850 boliger i påfyll i tomtebanken. Nøkkeltallene, vi hadde... After EFRS, 734 million in turnover, and an EBITDA-adjusted margin of almost 15%. After the current calculation, 595 and 12%. Then Kristoffer comes to go closer through in his transition. If we look at the drift, then it is... As I was saying last time, there has been a slow development in the construction cost through the pandemic, and not least now through the last year, through the war in Ukraine, which has made the construction cost go up a lot and peaked around the summer time last year, and then it has fallen down a bit again. and are now approaching acceptable levels. When I say approaching acceptable levels, I'm thinking of the country as a whole. The building costs are still so high that there is low profitability, for example, in projects, if you start it in Stavanger today, for example, with total enterprise that was negotiated before now, then it would have been poor profitability. So what we do is to wait and have also put out a number of projects in the market and sold before we contract to get contracted at a lower level than the daily level or especially around the year change. So we are out contracting now and see that the prices are falling and the mechanism works well. So we have put out a couple of projects, including one in Ås A plus project that we have sold well on. So there we have a sales rate already that is close enough to the start of construction, but we have not started it yet because we have not contracted it. This also explains why we have relatively few start-ups in the quarter in relation to sales. So we take two precautions now for the customer, not only the ordinary precautions that are sales-related, but we also take precautions for the customer, that we achieve an adequate, profitable, or satisfying total enterprise contract before we start. It is not true that the customer will pay more, but we have reason not to start building. even though we probably would not achieve a satisfactory enterprise in the construction industry today. It is also true, just to remind you of this, that in everything we have under production, there is a closed cost, including wages and price growth. We have no inflation or wages adjustment in our enterprise contracts. Quite an important point. We have also, as I mentioned earlier, bought two properties in the quarter. We bought an old Equinor headquarters in Bergen, which is a large property, which we are very pleased with. And then we have gone into a collaboration in Drammen on a fairly large project of 500 units, where we have half of it, or 50-50, with landowners. We see that there are more opportunities now because of the times, and that is what is positive about a counter-conjuncture like now, which is to fill up the bank. We sold housing for 658 million kvartal, which is the best kvartal since Q1 last year. In terms of value, 116 houses have a slightly higher average value than what we have had in the past. This is due to the fact that we have sold in Storoslo, and among other things also on this plus project in Ås, where there are quite high unit prices. But it is at least permissible that there is improvement in... The 12-month rolling does not look very good, given that there are four relatively low quarters, but you should not read too much into that. We have to see how the world develops in the future, which will be important for how much we manage to get started. It wasn't big in this quarter, five units, almost symbolic, but we started building a new row house in Trondheim, so it's actually four and a half in our share, which shows up here. And that is, as I actually guided on, or tried to guide on in the previous quarter, so this is precisely because we start selling first and contract later to start building more units. In the other half of the year, just to get the effect of lower enterprise costs, which then will mean that you get relatively many days later, that is, you start building later in the year instead of earlier. What is important is the time frame of construction, if we can get filled up, how much we can get delivered in 2025. That's what we're working on now. The year-end reserve has, as a consequence of a few start-ups, fallen, of course, because we have delivered far more than previously. But it is still at 5.6 billion. A small 1100 units in production and a good sales rate, 69% out of the quarter and more now. We guide on the same figures when it comes to finishes this year, 744. 80% of that was sold at the start of the quarter, and more now. Stoffer, you can...

Good morning. Let's take a look at the financial highlights for the quarter. We start as usual with the result management at IFRS, where we get the revenue and costs of the projects when they are delivered to our customers. We managed 150 units against 77 last year, and 13 of these were from our collaboration projects. The main revenues for this quarter are first in line with Skårebyen Plus in Lønnskog, and a project just outside of Ski. The revenues came in at 734 million, including 17 million in other revenues from Drifta plus our service centres. and factored project management for collaboration projects. The project costs are 580 million, including 22 million of interest costs, which are included in the commodity costs according to IFRS. We deliver a quarter of costs within the budget. We have good project managers and good contracts with our entrepreneurs, which means that we deliver a quarter with solid margins. The other costs are up to 60 million, up from 49 million last year. This is due to increased wages and staff costs. There are now more employees, and there have been wages and pension increases and unemployment. At the same time, we have increased market share costs compared to last year, to try to sell in a slightly heavier market. We report an adjusted EBITDA of 110 million, excluding the 22 million in the stock price we mentioned. This gives a margin of 15%, compared to 17% in the same period last year. Normal EBITDA of 88 million, and at the bottom we deliver 70 euros per share, against 40 euros in the same period last year. This is due to the fact that we have much more transfers compared to in the corresponding quarter last year. An increased result per share. Then we will look at segment reporting, which then follows the Norwegian Regulatory Regulation, that is, the running calculation method. The current calculation is that we take all the projects we have under construction, we take the completion rate and sales rate of these, which gives a weekly rate, that is to say that we continuously take out revenues and margins every quarter of these projects and until the projects are completed. This then gives the results ahead in time, but this shows the better value creation that occurs at that time every quarter. A turnover of 595 million, which is up from last quarter. Still down, because we have less project reproduction and a slightly lower sales rate. And a margin of 12%. And this margin is after overrated costs. That means that we still have a solid margin of what is in the project margins. If we look at 12 months of rolling turnover, it is down to 2.7 million. Something falling here, of course due to a decline in housing reproduction. and a rolling margin of 13%. Let's look at cash flow. We entered the quarter with 613 million in the bank. We have positive cash flow from operations and 39 million driven by a decline in goods, as a result of deliveries and small start-ups. We have negative cash flow from investments. We have given some loans to our co-operative projects, where we have development opportunities. And then we have negative cash flow from financing, as a result of the fact that we have a lot of older tenants, and then just paid down the building loan with about 179 million. Just a drop in cash at 202 million, which brings us to 411 million in the bank per 31.3.2023. If we look at the balance, there are no major changes in the sum of this. The total balance is 5.7 billion kroner. The total net profit is 2.4 billion kroner, corresponding to a net profit of 25.7 kroner per share. A solid net profit ratio of 42% at the beginning of the quarter. Here it is worth noting that the exchange rate for the second half of 2022 was paid out in May. on 2 kroner per share, totaling 187 million. This hits the balance first in the second quarter, i.e. at the time of payment. If that had happened, we would have had a lower economic share, around 39.5-40%. The change from Q4-22 is the decline in the stock market, which we will come back to. The customer expectations are a bit high, a bit unchanged, actually. Cash down to 202 million, which was through. And then we have a forecast from our customers, which is included in another short-term account, at 96 million at the beginning of the quarter. Let's look at the stock market. Not much change here from last quarter. Booked empty holdings at 726 million, which is on the same level. The value of the work is down by 96 million. This is of course due to the few start-ups and the fact that we have delivered a good number of units in the quarter. And then we have a finished warehouse that is down by 22 million to 148 million. And this is due to the fact that we have delivered previously finished and unsold units. At the start of the quarter, we have 37 units that have already been sold, and we expect to sell this out in the next few months. There is a low supply side around the areas we are in, and we expect good prices for those we have already sold. Then we will look at the yield. No major changes in the sum of it. We have a total revenue yield of 2.3 billion. Where the big one here is of course the construction loans of 1.5 billion. We also have the GFD, which is responsible for sales loans and other repurchase agreements of 587 million. We have not bought back an empty Furran this quarter, so it is quite stable, this GFD. Then we have some empty loans, which are again on The property we have in our own balance is at 205 million. Most of it is sold over to Ørnpropli, but we still have some for a longer period of time. There are no changes in the conditions for these loans, and we have not yet pulled up any of our top facilities, which are at a total of 450 million. We report a total net income of 1.9 billion kroner per quarter, which is on the same level as last quarter. If we look at the return on income, which has been high for the last five years, as we can see here, this is calculated in net income after tax in the last 12 months. and divided the net capital at the beginning of the 12-month period. We have delivered 366 million results in the last 12 months, and a net capital loss of 15%. Now we will continue with the market update.

As usual, the market is starting to look at the Oslo market. Here it has been the same saga for many quarters. It is still characterized by an offer side that is much lower than the need. The need is predicted to be at 3,300 units in the next three years, or yearly in the next three years. The way it is calculated is that they take the starting point in what, among other things, is completed and delivered in the previous years. So it is actually a A strange way to put it, if you ask me. The real demand is much greater than these 3,300 units. In addition, it has been produced too little over many years, so it is a very big demand, or a very big demand, if you call it that, instead of demand. No one has a strict demand for living in Oslo. But a big demand in relation to the supply side. And we notice that well. This year, it is estimated that 3,000 units will be completed. These figures also have a tendency to be slightly higher than they actually end up being. In 2022, 1875 was completed. Earlier this year, the forecast was that far more would be completed. So I suspect that these figures will not be completely accurate, just as it is expected. But in any case, the message is that there is a lower supply side and less that will be produced in the future than what is estimated need. If you look at Akershus, you naturally get what is called a spillover effect. So here it is produced theoretically perhaps a little more than what is theoretical need. And we notice that well. We have a lot of units in Akershus or old Akershus. Løgnskog, Ski and so on, and there they are selling well, and at prices that are driven up a bit by the lack of offers in Oslo. So you have to look at that region as a whole. In 2023, it is estimated that 5,700 fairs will be held. in Akershus, to a demand of 5.4. But in the sum of these regions, especially with regard to shipping, the supply is too low in relation to the demand. And that will continue, and we also see that the supply side is falling, which I will come back to. If we look more concretely at how the market has been up to On the 1st of May, there were about 1,200 units in the market in Oslo at the turn of the year. Only 335 have been sold, and more than that. So now there are about 1,100 houses in the market in Oslo, a city with 700,000 inhabitants. Akershus, as we have defined it here, is on the same level, quite similar, as many people. There were 3,500 roughly in the market. As I said before, these markets are about the same size, and there should be 3,500-ish in both markets, to have a healthy supply side. In Akershus, it has only been put out 565, and then it is sold far more than what has been put out, so you get a big drop. This is probably not due to the fact that the projects are not available, but it is probably due to the fact that there are many places in this area where it is not profitable to start building due to the high building costs, and a little depending on how large the empty entrances the builders have. So this already in Akershus, the big Akershus, there will probably be some projects that are put on ice due to poor profitability. But the message is that the offer side again falls And the fact that the supply side is falling, and the demand is still there, and the need is there, makes the prices stay very good in this region. This also applies to Bergen, Trondheim and Stavanger. It's the same, but here it's to an even greater extent. The reason why it's being put out so little is that it's much more difficult to calculate the projects at home, all the while the sales price in these markets is much lower than it is in Oslo. Of course, when you have a building cost of around 50, and an empty cost of maybe 15, and then a sales price of 75-80 in each of these regions, then there will be poor profitability or no profitability. Therefore, new things do not come out into the market The building costs fall, as they do, but not enough yet. In Bergen, only 63 houses have been built in the first four months. 209 houses have been sold, 510 houses in the market. Trondheim is more balanced, and Stavanger Sandnes has also sold a little more than what has been built, but here also built relatively little. So when you compare these new housing markets and compare them to the population in the beginning, the history in Oslo is that there is a very low supply side in relation to the population. 1.6 housing per thousand capita. Akershus is better, 4.4. It has been around 5 in the last few years. So there is actually a pretty good supply side there. Low in Bergen again is a combination of both construction costs and the lack of resources to regulate, both in Oslo and Bergen. In Trondheim and Stavanger, it is definitely the construction costs that have made it impossible to put out more in the last year. In Stavanger, for example, there will be more projects, because the cost of construction has gone down significantly. They are quite quick to turn around and are used to having heavy times through the oil crisis, among other things, so it is a little more effective than the rest of the country so far. If we look at the used land, it is also quite interesting. Last quarter, when we had this slide, the supply side was much higher in used housing. The hypothesis is that there are more who sell before they buy. But since the supply side is so low, it has fallen straight down again. So you don't get the waste of used housing that you usually get in an ordinary healthy market. So the supply side also in the second-hand market is low. And of course, a cocktail with a low supply side, both on the used market and on the new housing market, is special. And that, in sum, means that we get this development in spite of increasing interest rates, which is very unusual. When you get increasing interest rates and the like, the use prices fall, of course, because you get lower operating costs. It hasn't happened. The opposite has happened. It's a combination of the low supply side again, so you don't get the natural exchange in the so-called value chain to the housing market, by switching in again, and others buy used housing and so on, so you have this economy going. But Oslo, regardless, in the first four months, 6.2% up. It's about 5,000 kroner per square meter. It's around 90. Stavanger is 10% higher, but it's below the kroner rate. It's only from 0.40, so it's maybe 4,000 kroner per square meter, which is important to see in comparison to the unit price. Trondheim and Bergen, respectively, are from much lower levels than in Oslo. But anyway, it's not just price growth in Oslo, but it's in the whole country, despite the fact that the interest rate is rising, which is special. We also see that there has been growth in April, in isolation, at around 1%. It will be exciting to see how that continue to develop now. If you don't get any bigger supply side in Oslo, for example, as I have estimated, I don't think there will be any negative price development in Oslo in 2023, at all, even if the interest rate stays and maybe goes up a little, because of the extremely low supply side. It could be that something falls in other regions, but not in Oslo. If we take a look at the projects we are working on and that are ready in the future, we have a selection of those that we thought we would go through as usual. We have Lønnsjok Stasjonsby. There we have a large project going on. There we come up with new projects that we will put out in autumn, or after another half year. We have, among other things, been able to regulate a new plus project there. We have about 800 units left. and build it at Lønnskog Stasjonsby, or sell it. At Skåreby, another large project, we have about 400 N3N. We will also launch a new project this autumn. These are large projects, so we don't take the ordinary risk I mentioned earlier. We will contract first, and then sell. That's why we will do it this autumn. Bjerke, we are regulating It takes, unfortunately, too much time, so we do not dare to guide you on the sale start before 2026. There is no way that it should go faster, but I do not have any faith in that, unfortunately. Fornebu, a large area, 2,000 hectares. It is the biggest. You have probably read about the big hole there. We are going to build up to the end station to Fornebu-banen. Sale start estimated there is also 2025. We have a plus project, a big plus project in Trondheim, which we are doing now. We are going to put out more there. Just note that it is modern for it. The sales pace is quite slow, so we still have 500 units to sell on. It will be a very nice project. We have put out some row houses this week, so we will see how that goes. Sandsley Bergen is a project that is going very well. It is also reasonable that we have bought new Tomt on these about 600 units. In Bergen, we have sold completely ordinarily, as if nothing had happened. The ticker goes completely as usual. It is probably also due to the low supply side in Bergen. We also have a new project on myndet, along the byway, which will hopefully be regulated in two or three months. It will be released in the fall. A very exciting, big question mark and interest for that project. In Fredrikstad we have a large project that we expect to be regulated in the course of the year, and then we will release that project. It is a very large plan of around 2,000 units. It is one of the largest regulations that the municipality has handled. It will take some time. In Landås we have about 400 units. We also have a plus project. We have a future build project that is also coming. There is also tree regulation, but we hope that it will be implemented. in Q3, and that we will release either at the end of the year or early next year. The Solberg forest has 300 units. We released the first 34 units a month ago. Yesterday, we sold over 50% of the value of the 18 units that have been released. There will be another block, but the first building line is already in BOKS. It is one of the projects where we run maintenance at enterprise cost. I am 99.9% sure that we will not use it. It will be okay and will be built in the course of the year. Whether it will be Q2 or Q3, I am not sure. In Kalnäs, we have about 500 units left. We only have a few units in the market, and the rest is under regulation. We have a clear project in Stockholm, where we have an interesting list ready, and everything is actually clear. There we build so-called BRFs, or housing rights associations. There we will not take a loan for the customer, so we have to contract first, and that is what we are doing these days. It will be exciting to see what the enterprise cost will be. If it ends up at the right level, we will start selling it in Q3, or right after the holiday. Yes, we have Lilleaker on Ullern, or on Lilleaker, which we have under regulation. It is a project that hopefully will also be regulated relatively soon. We dare not to promise anything. It is the Oslo municipality that... So we'll see. We've been regulating the Lørenvagn for almost eight years. The Oslo municipality came up with an alternative proposal, so we won't have to promise a sales start before 2024. That's the old head office where we had the head office before. Ballerud is an exciting project with about 90 apartments and 70 apartments. We're putting that out after the holidays. There is a lot of interest. There is a lot of pressure on small houses in Oslo, since you can't build anything from it, apart from what is regulated, including this. So it will be exciting to see how it goes. We are also contracting that these days. Lervik Bridge we have a couple of hundred units. We will most likely lay out a trend after the holiday and probably prepare for construction costs to see how the market is there. That was some of the projects we have. As we look at the future, it's a bit like I said before. It's this imbalance between supply and demand that keeps prices up. There are other factors that we see or are confirmed by now. There are many people who want to buy new properties regardless of the interest rate. They want an energy-efficient new apartment. They want an apartment that they don't need to clean up. To a much greater extent than before, where you had to be more handy and put a price on the puzzle and sparkles and paint a little. People are not so eager to do that anymore. And not least this with energy efficiency and willing to drive. All of these factors speak for. And then, as we all know, it is heavy with respect to interest rates. We don't know when the interest rate will reach its peak. That's because it's slowing down again. But our estimate is that this will be a good market in the future. What we see is that it's good with people coming. It takes a long time for many to get funding. Much longer than before. But it's being sold. But it's ticking away. We sell about a house a day. A half a day, which we had for another half a year. The pace we have gotten is quite helped this year by the reduction of the housing tax on stress tests. I think so, because we have sold several two-room apartments, especially in Oslo, where there are more people who can afford to buy. But these things combined with lower construction costs, which must happen, in relation to the fact that construction is started in the country in general, about half of what has been started a year earlier, then it will be terribly little to do for all construction workers, the less you sell to get down the construction costs. So that must happen. Then there will be a lot of unemployment. We have a lot in the market, and we have a lot ready to go, so it shouldn't depend on that. We are able to submit, but we will not submit with fewer projects, unless we are very sure that we will be able to carry out, of course. So, the building costs down. The market prices will keep up again, we see. There is something up, probably. That is the message. We will see how the building costs develop. That is what is most exciting in the future. In summary, the quarter was a good consideration for the sales situation. Resultatene fortsetter vi og leverer gode resultater. Det gjør vi fordi vi har gode kontrakter med blant annet innkapslet lønns- og prisstigning i kontraktene våre. Ellers hadde det vært slitsomt noen dager. De har gitt oss og gir oss fortsatt gode muligheter til å øke tomtebanken. Det er mye som rører seg i markedet på den fronten. Det var det vi... Hadde jeg, da har vi klart for litt spørsmål, hvis det er noen.

Niol Kleiven, ABG. Dere sier at dere har ca. 750 enheter gryteklare for Q2-Q4, avhengig av markedsforhold. Er det mulig å si noe om trendpål som kan være realistisk å få lagt ut i resten av 2023, og gitt det rentenivået man har, og flate boligpriser resten av året?

You can say that we are going to add at least one step to all the projects I mentioned. For Ballpark it will be a minimum of 300. But of course you don't add any follow-up steps, since you don't sell successfully from the start to the first step. So if it doesn't go well, if it doesn't get well received, then it's hard to say. And that's the point with what you say about Intel, because it's so market-dependent, what happens. And it also depends, of course, on, for example, in Stockholm, it depends on the interest rate, on what they've put out. If we get that to a good level, so that we can sell our plus concept in competition with others to Båpark's same price, then I'm not very worried about that. Then that would most likely go well. However, if the building cost is so high that you have to be very, very high above many competitors, then it might be smart to wait. So it's not so easy to give any conclusions on it.

A follow-up question on building costs and on contractuality. Is it How much lower must the cost of construction be before you start to contract larger volumes? Now we know that this depends on both the region and the project, if you could say something in general about it.

What you can say in general, if you think that the income is similar to Ballpark, or maybe a little higher, and then the cost of construction is up about 5,000 square meters since the start of the war, that's about where it is. So it's just about what kind of margin do we accept to start at? Should we accept to start at 8%, 10%, 12%? What should we start at? So that's the vague answer. I would say that we can't do this without making good money. That's the assumption. And then we'll see. It's getting very close. And then we'll drive something with a part-time enterprise, and that will be good. But as I said, we have several competitions out there now, and then it will be exciting to see. I guess there will be a big break. Some entrepreneurs have ordered a reserve, maybe one more year. Others are empty until Christmas. It depends on how hungry they get. We'll see. Ingen spørsmål fra Webb? Greit. Da sier vi takk for i dag, og så ses vi igjen i august.