Selvaag Bolig ASA

Good morning, and welcome to the fourth quarter's presentation of results for Selva Boli. My name is Sverre Moldvik, I am the director of the department, and I will, together with the financial director Kristoffer Brunvå, go through today's agenda. We start with the highlights for the quarter, the year, and then we look at the operational, and then Brunvå takes us through the financial, before we take the market, future prospects, and some Q&A at the end. In the fourth quarter, we had a satisfactory sales and results, given the market circumstances, the market situation. Sold quite linearly, sold better in the fourth quarter than is usual for the season, and not least the circumstances I will return to. We see that the building costs have fallen through the year, and we have contracted a by the end of the year, or in the fourth quarter, and more now in the new year, to levels that will allow us to start selling and building more projects in the future. We have had the annual external value assessment of our cash bank, that is, what is in the balance of the housing itself, and it shows a value of about 470 million. On the basis of the results from two and a half years, we are investing 1 kroner for two and a half years, that is 2 kroner in total for the year. If we look at the key figures, we had a revenue after IFRS in the quarter of 1.25 billion, and a margin adjusted to EBITDA of 16.3%. And the current calculation is 5.65% and 7%. Kristoffer will come back to more reasons why the margin is so low when he goes through the financials. This year it was 3.25 billion, 13.9% after IFRS, 2.2% and 9.4% after the current calculation. Last year, at the same time, we reported Q4 2022, and I said that we would change our operational model a bit. We have done that, and we have done that. That is to say, we took precautions at the start of sales for the customers on many projects. We were going to enter a contract with the enterprise. That is to say, we started selling the project and then we established the enterprise contract at the end of the year. That turned out to be strange. We have introduced a lot of contracts in Q4 to significantly lower levels than in Q1 this year. So it has been a success. It will be exciting to see how it goes in the future with the construction costs, but it is at least now at a level that makes it possible to start sales and realize more projects than a year ago. So that's positive. At the same time, if you look at the statistics, it can look like price growth in terms of materials and wages, of course, but it is marginally in the value chain that makes the cost of building come down. Entrepreneurs have little to do these days. We have about 400 units out in the market, both in finished units and projects that are delivered in 2025, 2026 and the coming year. So we have something for every taste. We also have the opportunity to release a lot in the future. So we are clearly doing a lot of projects that we are going to launch in a market that is even better than it is now, as we can see. If we look at the sales in the quarter, we sold 88 units on our side, to a value of 531 million. That is a good fourth quarter. As you can see, it is for example twice as good as in the same period last year. So that is positive, even though it was very bad last year. But we also see that it is better than the last two quarters as well. So, it's a bit early to say if this is a trend, that it means that it will be much better in the future, but we have faith in it. In relation to the interest rate curve and prognoses from the macro picture in the future. We saw 360 homes, as I said, one home a day roughly last year, which is relatively good given the market circumstances. The annual turnover over the last three quarters has increased by 2.1 billion. We started with 130 units and finished with 331 units in the quarter. That means that we are now at 784 units under production, up to 4.5 billion. 62% of this was sold at the start of the quarter. and more now. The sales pace is still at the same level as it was at the end of last year. So pretty good sales pace throughout the day, also now into 2024, which is actually good, since usually the first two or three weeks in January are usually quite quiet. If we look at, we are guiding sales this year at 515 units, Of that, 69% was sold at the start of Q4. I also put in a new little guiding here, since we have so many unsold items on 95 units. The results are created in IFRS when you deliver the housing to the customer. That means that if we sell out all the 515 units that are delivered, or if all the 515 units are completed this year, then it is also possible to get 95 of these here that are unsold completed at the end of the year. Also into that, so that would just affect the results a bit. There are also 30 units that are sold last year and will be delivered this year. So we already have a little balance in place. So it's always a spend of 125 units that we have with us that can also be completed this year, in addition to the 515 potential. So that's what I'm able to do. Kristoffer, you can take over.

Good morning. I will look at the financial highlights. Starting as usual with the results in IFRS, where the revenues and costs meet the results of the delivery of the homes to our customers. We delivered 276 units, 28 of which were from collaboration projects. The main delivery this quarter was a plus project in Skårebyen, which was quite large. We have a project in Ski. and one in Langehus, and we have also delivered a project on Kalnes Bridge in Tønsberg. We received revenues of a total of 1.247 billion, which is significantly higher than last year. This is of course due to the fact that we deliver many more units, 276 units compared to 147 last year. These revenues amount to about 17 million, which comes from our DRIFTA plus service centers and our project management and collaboration projects. The project costs came in at the top of 1 billion. It is important to point out that we have fixed-priced contracts with our suppliers, which means that we manage to deliver The margin we guide along the way, and we have project managers who control this with strict cost control, then it helps that we manage to deliver good margins. And it is very good that we have fixed price contracts. It would have looked quite different if we had not had it. Other costs came in at 84 million, at the same level as last year. We have a stable cost base with a stable number of employees and other fixed costs. A slight increase from last year is due to increased sales and marketing costs. It reports an adjusted EBITDA of 203 million, excluding the financial costs in the stock market after IFRS, which is 72 million. These are financial costs such as rent on construction loans, rent on sales credit, and option premiums, i.e. financing costs, to allow tenants to live in urban property. It reports an adjusted EBITDA margin of 16% against 13% in the same period last year. At the bottom we have a result per share in the quarter of 1,16 kroner, which is up from 48 kroner last year, and this is also due to many more over-delivered units. Let's look at the year as a whole. Here we have taken Proforma, where we include our share of income and costs in the collaboration projects. This gives a more comparable picture year over year. Here we delivered 655 units in 2023, and gave an income of about 3.5 billion, and reported an adjusted EBITDA of 477 million, with a margin of 14%. This is comparable to last year, with a 3.4 billion turnover and a margin of 17%. The margin is falling due to the fact that the projects that have been implemented this year have a significantly lower margin than in 2022, where we had many projects with a margin of over 20% in the portfolio. There were not as many of them in 2023. That is why you see the fall in the results, despite the fact that we have implemented more events compared to last year. On the bottom, we report a result on the share at 2.62 kroner. It was down about 1 kroner last year at 3.63 kroner. Let's move on to segment reporting, which follows Norwegian rules. This is a running calculation method. You take sales degree times completion degree in all projects in production, which gives you an exit degree. This means that you take out revenue and results in the course of time, as the projects write it down in the project's lifetime. Here we have an increase in revenue from last quarter, from 451 million to 565 million. This is mainly due to the fact that we have some construction starters in the quarter. Q4 is a bit special. Here we have some extra overhead costs, as a result of increased interest rates, and as a result of the bonus share price, which means that the margin is under pressure. At the same time, we have less housing production, and sales growth in the quarter has developed quite weakly, which means that there is less contribution from the projects to cover fixed costs. That is why you see this margin drop. If we look at the 12-month rolling turnover, it is slightly higher, up to 2.153 billion, and a margin of 9%. Let's look at the cash flow. It went into the quarter with 193 million in the bank. The main point in the quarter is that we have a positive cash flow from DRIFT, which is driven by a reduced stock market, as a result of the fact that we have exceeded a lot of units in the quarter. The second main point is a negative cash flow from financing at 764 million, where the main thing is the net down payment of the building loan, as a result of many exceeded units in the quarter. A net change of 74 million brings us out of the quarter with a cash bond of 267 million. Let's look at the balance. There are no major changes in the sum of these, but the total balance is falling a bit as a result of the fact that we have exceeded a lot of units and have relatively fewer start-ups, which makes the total balance fall from over 5 billion to 4.7 billion. Given that we have a stable income tax of 2.3 million, we get a solid income tax ratio of 48.5%. This corresponds to a bookkeeping value per share on the income tax of 24.50 kroner. The stock market is down by 750 million, I will come back to that. Other demands are down to 47 million, due to the fact that we have received support from a number of units that have been helped by TAMPEN by Q3. The cash was up to 74 million, as we have been through. And per starting quarter, our customers received 21 million, including other non-profit organizations. If we look at the goods storage, this is much lower than in the previous quarter. Bookkeeping and retail sales are down by 26 million, mainly construction starters. The goods storage, or goods and labor, is down by 933 million, and this is due to, again, many old units. A little less construction starters, which they are not very interested in yet. And then we have this hardware warehouse, which is up by 209 million. And this is due to, as Sverre was saying, that we now have 95 unsold hardware units in the portfolio. In addition, we have 30 that are sold, but which are not sold, which come in 24. This gives us a solid increase in hardware warehouse, which is at a high level. But given that these houses are in areas with low supply of new houses, then we look forward to selling out this in the coming quarters, so we are not worried about that. This will also give us more deliveries in 2024, potentially in 2025, which we will not guide on in the final stages. Then we will look at the value evaluation of the empty bank. We have a number of empty balances that are not sold to them properly. This is largely an unregulated property, which can give us a lot more value in the future. This shows that we had a book-reported empty balance of 667 million kroner. The real value in relation to the external value set is 1.1 billion kroner. That is to say a more value of 471 million kroner. This adds up to about 5 kroner per share. This will be values that will be regulated in the future and will give us more value for the shareholders. Let's take a look at the interest rate. There is no change in the sum. The interest rate is down to 1.4 billion, which is followed by a lot of down payment of building loans. The building loan is the big one, with 910 million. Then we have the interest rate for urban property at 405 million. This is sales credits and return purchase agreements in portfolio B. And then we have some interest on the interest we have in our own balance of 95 million. There are no changes in the conditions of these loans, and we have not pulled up any of the top facilities this year either. We report a net interest rate of 1.1 billion, which is significantly lower than last quarter, where it was 2 billion. Let's look at the exchange rate. The housing sector has prioritized higher exchange rates for the shareholders. We have a policy to pay out at least 60% of the net result, divided by two payments. We paid out one kroner in August for the first half of the year. Now we propose one more kroner for the second half of the year, together two kroner for the year 2023. This gives an exchange rate of 76% of the result. If we look at the history, we have paid for solid exchanges, including the Urban Properly transaction. We have earned 59 kroner per share and distributed 55 kroner. That is about 93%. If we adjust for Urban Properly, it is 68% of the average of EPS that is delivered. Our goal is to continue to give a good discount to our shareholders, and the exchange will of course lead up to future prospects, our solidity and liquidity forecasts. Then we will look at the discount on the net capital. This is calculated with a 12-month rolling net profit after tax, divided by the net capital in the beginning of the 12-month period. In the last 12 months, we have delivered 245 million in net profit, which gives a discount of 10% at the beginning of Q3 2023. Then we go through the financials. Then, unfortunately, we will go through the market update.

I'll start by looking at the Oslo market as usual. Here we have a demand for 3300 units. Same as we had in the previous quarter. In 2023, as you can see, there is still an estimate for 2023, but that is because SSB has not yet been able to count the numbers from 2023. So we assume that they will end up on the same. So it's not a typo, but it has not actually been counted yet. So the estimate for 2023 is well below with a couple of hundred units, that is to say 3200 units is the estimate. Then it falls quite a lot in 2024, or this year, and then it falls down to almost half of the prognosticated need in 2025. And 2026 stands for 1950, but that is completely dependent on what is being built this year. So there was a big gap, or an increasing gap, between supply and demand in the Oslo market. Instead of Akershus, it is natural to look at Akershus together with the Oslo market. The supply side, or demand, is at 5.7, and it is almost completed this year, 5.6 approximately, and a little more than that this year. a little less than it was last year. But in 2025 and 2026, there will also be a large support in relation to the demand. So in total, for the region, for the Oslo region, the Storoslo region, there will be a support for housing. And there will be a price pressure, most likely as a consequence of that, in the Storoslo region, is our assessment. If we look at the market in more detail, this is the status of what happened last year, from the total until 31.12. It was sold in Oslo a little more than what was put out, but there is a low supply side in Oslo at around 1,000 units after the spring shift. That is very little in relation to the population. Akershus, like many people, is a fairly usable supply side. It is sold without much attention. The supply side remains solid. The two regions that I usually say should be the same size, they were back in the day. It would have been healthy if they came back to maybe 3,500 in Oslo as well. In Bergen, it is a bit of the same as in Oslo. There is slow regulation and little that comes out. It was put out very little last year and sold much more than it was put out. So the supply side in Bergen also, in relation to the population, is low. PT. Trondheim is a bit the opposite. There it was put out a lot and sold a little less than it was put out. So there is an increasing supply side and a little more in the buyer's market. Stavanger is a bit influenced by Oljebyen, and there it is still sold out of what comes out, and actually a usable supply side. We see this summarized here. Now it's suddenly the first February number we're looking at. The reason we didn't drive it from first to first year to first to second year is that there is so little volume that has been put out, so the numbers would have been low. So that's why we'd rather take a momentary picture now and look at February. How the February market is now, on availability of new homes, compared to February 1st earlier this year. We see that in Oslo, as I have said many times, there has been a rebound, that there is a very low supply side. 1.4 homes per 1,000 capita is almost record low. In Akershus, a more healthy supply side, 4.8 homes per thousand capita. And then we see that Bergen is now on the same low level as Oslo, almost, a very low level on the supply side, 450 units out and 1.6 per thousand capita. Trondheim, there it is more in the buyer's market, as I said, up to almost 6, 12, 6 houses per 1,000. So it is a good offer in relation to this question. Stavanger has come down to a level that makes us... This also looks very positive on the market in the future. We have noticed that sales have started in these regions, and we have noticed that we have sold very well on what we put out in Stavanger in the beginning of 2023. Looking at the annual market, Also here, I can repeat the Q3 report. In November, we reported a fairly strong increase in the supply side of the used warehouse. It has gone down quite quickly. This increase is mainly due to the fact that people go from buying housing first to selling first. Then you get a shift in the market. So much of the supply side has already been taken away. The red circles were significantly higher in November than they are now. So it's really a normalized supply side. It will be exciting to see how it develops over the year. I believe that if the market follows the rate path that has been estimated with a cut in the year, then the supply side will be squashed more, and there will be price pressure because of the low supply side again, both used and new. We can see the trend towards used prices. We are now at almost 92,000 used prices per square meter in Oslo, twice as high as in Stavanger. If we go back to 2011-2012, it was almost the same square meter price in Stavanger and Oslo. So 3% nominal growth in Oslo, 5% in Bergen for January, and 4.3% in Stavanger, 2.6% in Trondheim. Seasonally adjusted, Trondheim is the only one with negative price development. So a strong price restart this year, given the interest rate. This is about future prospects and the interest rate. I will just go through some of the selected projects, what we have to offer. When the market turns, we have things in the market in these projects, and more than that. We have that, and then we have following trends. Lønnskog Stationsby, for example, we came up with a new field, or a new trend, with a plus project. on a couple hundred units by the side of Snø and Lundskog station town. In Skårebyen we launched a project at the end of Q3, beginning of Q4, which we have sold well. That is a good interest. We also came up with the following line as soon as we started building the line that is out. At Landås we came up with both a new plus project and an original project during the spring. At Kalnes we have a couple of new fields, around 500 units under regulation. We don't plan to release it this year, but it will probably be released next year. At Ringvig Trondheim, we have several ready-made lines that will be released as soon as we sell them, or as soon as the market approves them. We will likely have a new project now in the course of the spring quarter. At Lervik we have laid out a channel tunnel that is being built, and we will come up with a new trend now in the course of the end of the month or the beginning of March. Solbergskogen is the same. We started building there in the first part, and we are moving it out as the market moves away. In addition, we have a number of new projects that we are looking forward to moving out. One selection of these is the one that is here. In 2024, we will also come up with a new project in Bergen, on Mindet. a plus project. We have several projects going on. This will be regulated and hopefully ready to be published in a few months. Lønvangen, or in general, as far as the Oslo projects are concerned, the new city council has taken over its job. We have a good dialogue there, and we see that there will be speed in the regulations in Oslo, or at least that's what it looks like now. So it will be very exciting to see how that goes. Lønvangen is now under treatment at Rådhuset, and will probably come out this year. antageligvis etter ferien. Fredrikstad er et stort prosjekt som vi forventer også reguleres nå, om ikke så lenge, og at vi kommer også ut med det i år, gitt at det reguleres i henhold til tidsplanen. Neste år så ser vi for oss at Bjerke kommer ut, har egentlig The last time I reported it, I said it came in 2026, but it looks like we're getting there soon. Because of what I said about a completely different dialogue with both Plan og Bygg and Rådhuset now than what we've had in the last eight years. It's also about a project on Lilleaker, which we are also now out to a limited hearing and should also go through regulation quite quickly. It can even come in 2024. In Fornebu, we still have the same plan for the start of sales in 2025. We have a number of projects that will show that. In Stockholm, we have the opportunity to launch in 2025, 2026, 2027, where we have market announcements. In Stockholm, we also have several other new market announcements in progress. So, it looks very positive in the future, or I would say much better than it has been. I don't think it takes full advantage of it, but I think the interest rate is reached. that it will mean that many will buy a house that is finished in the future, and assume that it will be more worth it than it is today, and that they will get more for their own house when they sell it, than they expect now. That the market will get better, all in all. There is a low supply side, both in Oslo, Bergen and Stavanger, in relation to the demand. There is of course a large demand for houses in Stockholm, and so on. And of course, people have to get funding. But the total sum of that makes it very positive in terms of supply and demand. The imbalance, we call it, in most of the regions we operate in. The interest rate, as I mentioned, looks to have topped out, and most likely will either be flat or down during the year. That is also very positive for what we are doing. And we have good products that we can release to normalize the market. So we look positively at the future. Summing up the quarter, we have delivered both sales and results in relation to the situation for both the quarter and the year. It is largely due to the fact that we have also locked wages and interest rates on our enterprise contracts. We have had this as a policy throughout the year. And that is of course a lot of the reason why we are able to maintain these good margins. Tomtebanken har vi hatt en ekstern vurdering på, på den som ligger i egne bøker, på cirka 470 millioner av merverdi. Vi ser at byggekostnaden er på et nivå nå som gjør at det er mer sannsynlig at vi får lagt ut mer prosjekter i flere områder enn det det var for et år siden. Så får vi se hvordan det utvikler seg videre, skjemover. Og vi betaler som sagt en krone utbytte for antall år, og to kroner av for året. Det var det vi hadde i dag, så hvis du har noen spyrkesmål, så tar vi det.

Hallo? I wondered about the 515 units that will be completed in 2024. Is that what you get completed, or can you expect that there will be more in 2024?

No, that's what you get when it's finished. There's nothing more than that. It's very unlikely. It can come a little further from those that are finished in Q1. But it's very unlikely now. When it's so close, we have a pretty good overview of it. So that's probably what's finished. But what's finished must not be confused with what's delivered. That's why I mentioned that there are these... The potential for oversold units that give a result effect, these 30 that are sold this year, will come at least. And then there is a potential for how many of the 95 that are finished will be sold and delivered in 2024. And how many of the 515 that are finished this year will be delivered this year. Right? You have to differentiate between finished and delivered.

If you look at the level of construction versus what you have done in the last ten years, it is much lower than the average construction. How do you see it for you, or what thoughts do you have about it? For 2025 and 2026, will we be up to 8-900 units again, or will it take some more time, as you see it now?

Yes, it will take some more time to get it in 2025. So what we have been working on this year is to change the business model by selling with a prevention of construction costs and so on. This is just to ensure completion in 2025. We have succeeded in starting a number of projects that will be completed in 2025 to save the result. But you don't get the speed up so fast that we get 800-900 units then, even though we would have liked that. It will take some time, but we have done relatively well in terms of initiatives. We would have liked to have started building even more last year, but we will start building in the future as well. So what I see for me is that we will get there, but then we have to have more sales and volume before we can build it up. We have to start building enough so that it will be completed in the future.

If you look at the magic of IFRS, it went down from 2002 to 2023. How do you expect the magic of what you are now overcoming in 2024 to be versus 2023?

In 2024, we'll have to look at single projects, so there won't be much of a difference. We won't comment on single projects in that way, but in general, the cost picture has changed. The financial costs have increased. All the costs in a calculation have increased, and the revenues have been flat, with a relatively small increase. So everything else is the same. In general, you can say that it is a marginal increase in the industry, and that is the reason why we are falling now. But between 2023 and 2024, it may not be such a big difference.

But in 2025, there should be something better than the fact that the building costs have become lower, right?

The building costs have been significantly lower than they were earlier this year, but the building costs in the beginning of 2023 are still much higher than they were in the beginning of 2022. So that will be a simplification. In the industry, the main reason why we are starting to build very little now is mainly because the builders are not able to afford it. So it's hard to expect a higher margin than what we've had on what's being delivered now. Remember that it was built two years ago and contracted before the war.

You mentioned that the building costs have gone down, and that you have had success in waiting to sign the contracts. Do you see that this development is now stopping? Or do you see that the building costs are still going down due to low construction?

You gave a bit of an answer there, and I see the form of that. The margin will survive until the big entrepreneurs have something to do. So it will be a margin for a while. And then you turn pretty fast again when the demand rises and the entrepreneurs have filled up their order books. And then I'm anxious that it will be... competence flight, of course, from that industry, which makes it less of the entrepreneurs who invest in housing construction. Then you can get less capacity in the market again, which makes it easier to get squished again on the cost side. But the main answer is that inflation is not low enough yet. The crown is weak. Irritatingly weak, so to speak. And there is a wage increase in the country. These things indicate that it is marginally that we have lower building costs now than we had a year ago. Not the investment factors, unfortunately. But that can hopefully get better. But it depends on what happens geopolitically and politically in this country compared to other countries. It's difficult to say. I expect that the building cost will stay at the level it is now. Until it takes off again, and hopefully then something will happen with inflation. If it doesn't stay at that level, then almost nothing will be built in the future, I can say that. We have big projects, and one of the few that manage to start projects, because we have to draw rationally to get low building costs. And we have the margins we have. So it will be difficult for the large volumes to start if we don't get low building costs. It depends on that, actually.

I have a few questions.

We started five projects after a small project in Lørenskog. There were 18 units, and we sold 16 or 17 of them at ETE. So I'm very pleased with that. Maybe sold a little too much. We started a project in Stavanger on the Kanaltune at the age of 64. Both of them have already started building. We had a sales start on another project at Lørenskog, Mathildetune. We have put out some 40 units this year. I don't remember the exact number. Also sold well. Will start building soon. We have some sales that we will start building soon. We have started a sale on 24 apartments and 15 apartments in Ballerud. Sold very well on the apartments. Sold half of the apartments we have put out. And 3-4 of the apartments. So that's always good, I think, in today's market. at high prices. I have launched a project in Stockholm, 40 units sold, seven and some are on their way in. The Stockholm market is heavier, but good interest, and we see that it will turn in the first half of the year. I think that was all. So all in all, yes, very good, and especially in relation to the year we launched it. So very pleased with that. We are putting out a new trend now on the canal tunnel in Stavanger. So that means that we will probably start building around 100 units with a pre-sale period of half a year instead of a field of 100 units. So that's very good, I think, in today's market. Just on the Stavanger project.

A question about empty purchases. Not so many empty purchases in 2023. Can we expect more empty purchases in 2024? Are the calculations more exciting now than they were a year ago?

Yes, they are more exciting, and then there are the price expectations for the customers, or for the sellers, when you consider what will probably be the situation in the future, that is to say a different cost level than what we had before the war, before the Ukraine war. And then you have to have a salary post, you also have a higher interest rate, so the willingness to pay is there maybe, but the ability to pay is at a certain level. If you calculate in the long run, it is a different retail price in most markets. It takes some time before retail sellers and buyers get the realistic picture. But there are a lot of opportunities out there. Let's see what lands and what is good for us. There has also been an increasing degree of risk around regulation. There are lower revenues, especially in areas where there is a high risk of regulation, such as Oslo and Bergen. Very few people want to buy and take regulation risk. Then the existing business will continue. It will be less converted.

One more question. When it comes to the investor market, have there been any changes lately? Is it higher? Do you have activity with the investor market now? Are there any changes?

Yes, there is higher activity. The investor market is the first to be out. I don't have a complete overview of what we have sold now that is the investor market. And the investor market is so many. The investor market is also those who buy for their children, for example, and have it hanging on it. And then it happens that they sell it before it's finished. But as the rental market has become now, most investors buy now because they are going to flip it before it's finished, for example, because they assume that the price is higher. And there is a higher interest now, but it has never been rising through Q3, maybe even started in Q2.

There are questions on the web from Petter Nilsen. Two of them have already been answered, so I'll take the last one. I see that sales in Barkarby have gone slow in relation to projects in Norway. How long have those who have signed a contract been bound, as it turns out that it will take a long time to decide to start building?

In Barkarby, they have been bound out for a year. That's a good time. Then there are no more questions. No. Then we thank you for us and see you