8/8/2024

speaker
Sverre Mollvik
Managing Director

Good morning, and welcome to the second quarter's results presentation for Iselvo Boliv. My name is Sverre Mollvik, I'm the director of the department, and I'm going to go through today's agenda together with financial director Kristoffer Brunvold. We'll start by looking at the highlights from the quarter. Before we look at the operational, Kristoffer will take us through the financial, then we'll take the market, and a little summary, and future prospects at the end. In the second quarter, we actually sold to a record. We have never sold housing for such a high value, almost 1.4 billion. This is a very strong market. We also see that it is a very strong non-profit market. It is actually so far this year. The supply side has fallen from high levels at the end of last year and into this year, to now more normal levels. will be able to continue to fall further down, so a strong second-hand market. We deliver a good result of 85 euros per share, given the market situation. Quite a lot of value added to it, and deliver good margins due to good enterprise conditions. Good morning and welcome to the second quarter's results presentation for Iselvo Boliv. My name is Sverre Mollvik, I am the managing director and I will, together with the financial director Kristoffer Brunvold, go through today's agenda. Let's start by looking at the highlights from the quarter. Before we look at the operational, Kristoffer will take us through the financial, then we will look at the market, a little summary and future prospects at the end. In the second quarter, we actually sold to a record. We have never sold housing for such a high value, almost 1.4 billion, so it is a very strong market. We also see that it is a very strong second-hand market, actually so far this year. The supply side has fallen from high levels in the end of last year and into this year, to now more normal levels, and will likely continue to fall further down, so a strong supply market. We deliver a good result of 85 euros per share, given the market situation. Quite a lot of value added. We deliver good margins due to good enterprise contracts and not least good planning solutions and facilities in our areas. The building cost has stabilized. It is correct enough at a relatively high level due to the euro and capacity in the industry. it is at a relatively high level, but stable, which gives us a predictability and the opportunity to start more projects now than a year ago, which is positive. The board has decided to postpone the exchange for the first six months and make a comprehensive assessment of the year when we see the results instead. It will not go beyond the total size for the year, so it is a periodization, which is due to the uncertainty of the market today, as we see around the world and in the housing market. It is also due to the flow of cash Related to unsold products, of course. We have about 120 unsold products that bind up a lot of capital, which we see going down and will reach a much lower level at the end of the year, and then it will be easier to see what the exchange rate will be at the end of the year. If we look at the key figures, we have a turnover of 620 and a margin of 20% in the quarter. The result is a bit in the way of TS, so the margin is somewhat lower. This is what Christoffer comes back to when it comes to the financial side. But good margins, as I said, despite uncertainty in the market and high interest rates. This is due to the fact that we have locked our enterprises at high and good levels, and at a fixed price, no salary and price increase. And that we have been good at getting a market price, of course, from the market in our projects. The cost of construction is on a stable level. We have contracted a project in Bergen in the quarter to a reasonable price. We see that it is much more stable now, less jump and sped, but a relatively high level. We had hoped that we would get further down, but especially due to the weak and not least good salary, it is difficult to see that we are going to fall under the current level. But the level is at a low level enough for us to start projects with good salary. So it is good and predictable, so we have to make sure that it stays that way in the future. We sold almost 1.4 billion in the quarter, which is very good, and the sale is still good now in Q3. We sold about one house a day through July, which is very good in relation to the fact that July is usually a weak month seasonally. Vi har en del i markedet, over 400 enheter, og har mye gryteklart, gitt at markedet har unna. Så det er positivt. When it comes to the investment of Tomtebank, we have bought some units, 50-60 units up on Bjerke, an additional house we have bought there. This is something we like to do. When we have a large area, we try to buy more units. We have bought a kindergarten and some single homes, which means that we get a larger field on one of our fields on Bjerke. This isolated site gives 50-60 units. In the same way as in Bergen, we have also bought an empty space that is connected to the area where we have a lot of property from before. We have sold a farm in Bærum, Hamang. We had the Equinor farm there, which we bought a few years ago, where we first sold the business building to one actor. Now we have sold the rest of the farm, which we were actually going to build housing on, to Bærum commune. We did that in the quarter. We have also made a adjustment in Trondheim. We have sold a part of the Ringve Plus project. This transaction was carried out in July, in Q3. This is the kind of adjustment we do, and we prioritize our funds in different regions. This means that we grow and invest more in other regions when we sell in that direction. Yes, if you look at the sales in the quarter, we were at almost 1.4 billion, 207 units. That's a very high unit price. It's not a record number of units, it's a record sales sum. 6.7 million, and that's because we sell on a number of projects now, for example at Ballerud, a relatively large share of rental houses. We should have had some rental houses there. The unit price is high. So far this year, or even in Q2, we have sold 346 units, which is almost as much as we sold last year, so the sales pace is very good. It was twice as good as it was last year, which is very positive. It has maintained a good pace in Q4. We have sold 40-50 houses in Q3. Of course, we spread the 12-month scheduling speed when we get such a good quarter, up to over 3 billion. Not back to normal, but it helps a lot on the sales side, which will give good results in the future, provided that everything starts to build. We started building 95 units per quarter and completed 105 units per quarter. The pace is about the same. It's a pity that we don't have a framework permit for everything we have put up for sale. That will come in a few months, but we could of course have started building more with such a good sale than what we have done, given that we had all the permits in place. Despite this, we increase our order reserve in value up to 4.2 billion kroner. which is positive, but there are 661 units under production. We finish in 2024 515 units, which we have guided for quite a long time, and we are still at that. So 80% of this was sold at the beginning of the quarter, and more now. I agree with you on the unsold finished products. We had about 120-125 units out of Q1. Now we have 119 unsold in Q2. We have sold used parts through the holidays. It is important to reduce the value of unsold finished products from the level of around 600 million and get it out of the year. That is the background for that we hold back to see how the market is and will be in the future. Christoffer, can you take the microphone?

speaker
Kristoffer Brunvold
Financial Director

Yes, good morning. Now we will look at the the financial highlights of the quarter. It starts as usual with the results of the IFRS, where the income and costs in the housing projects meet the results by the delivery of the housing to our customers. We delivered 127 units in the quarter, some down from the same quarter last year, where we had 155. Of these 127, 58 units were from collaboration projects, which did not contribute to the turnover in the official quarter budget, which I will return to. We got a total income of 620 million, and the main turnover in the quarter is Sintsenveien in Oslo, Skårebyen in Lønnskog, and then we have Ringved Plus in Trondheim. And the average price for these consolidated units, which are in the 620, is about 5.3 million. Included in these 620 million, we have sold two properties, a farm in Hamang in Sandvika, and a pre-built kindergarten in Skårebyen in Lønnskog, together with 230 million in revenues. In addition to that, we have 20 million in other income, which comes from factored project management, and Drifta plus, our service center, which we have quite a few of now. The project cost is now 490 million. We have good project managers who manage the project well and deliver enough per quarter for the budget. And we have, as Sverre was also talking about, FASB contracts that were introduced over two years ago on good levels, which means that we can deliver satisfactory margins per quarter. Other costs amount to 16 million, slightly higher from the same period last year. We have a stable cost base with a stable number of employees. A slight increase here is due to the fact that we have also put a salary increase behind us from last year. We report an adjusted EBITDA of 124 million, with a margin of 20%. In this adjusted EBITDA, we have adjusted these 25 million in financial costs, which are included in the goods cost after IFRS. This is done to get a more clean EBITDA without finances. So we are satisfied with the margins we deliver here, totally isolated. At the very bottom, we report the results of the auction at 85 euros, up from 55 euros for Rodefjord, and a lot of blame here that we have these one-offs on sales of property in the quarter that we did not have last year. Let's have a look at a pro-forma results report for the quarter. Here we have included our share, gross, of the collaboration projects. In the official results, this is reported to Netto after tax on its own line. Here we have grossed it to get a comparison between the numbers, quarter by quarter. Here we see that we delivered 127 units. This gave us revenue of 979 million, and a margin of 17%. Compared to KUTO in 2023, where we had 841 million, and a margin of 12%. Here we see that the turnover is rising, and this is due to the loss of sales ownership, which we did not have last quarter. The adjusted EBITDA is 170 million here, against 99 million last year. The same result in the bottom, with 85 euros against 55 euros last year. Let's have a look at the half-year schedule. We'll start with the official IFRS. and delivered 306 units in the first half of the year against 305 last year, where 110 of them were from co-operative projects. In comparison with the first half of the year in 2023, we see that the turnover falls a bit, from 1.6 billion to 1.2 billion. This is due to the fact that there is a much larger shareholder projects that are not consolidated, so the turnover falls. We will come back to a pro forma on this as well. Adjusted EBITDA at 230 million versus 205 million last year. Adjusted EBITDA margin at 18% versus 13% last year. Result at the bottom, we deliver 1.45 kroner for the first half year versus 1.25 kroner last year. This increase is due to the fact that we have sold two properties that we did not have last year. In response, we have a pro-forma result strategy for the half-year, where we again have consolidated our share of the co-operative projects to get a more comparable number. Half-year to half-year, and we have 306 units, total revenue of 1.8 billion, against 1.6 billion in response to the half-year last year. The turnover went up again due to the one-offs on the property sales, with 234 million. The EBITDA was adjusted at 305 million, significantly up from 210 million, and a margin of 17% vs. 13% in the first half of last year. Again, the same result at the bottom, 1.45 kroner vs. 1.25 kroner. More information about these pro forma results can be found in the quarterly report, if you are interested in that. Then we will go over to segment reporting, which then follows Norwegian rules of travel and this running calculation method of our projects. The current calculation is that we take all the projects in production, then we take sales degree times sales degree, which gives an output degree, which means that we continuously take out turnover and results through the project's execution time. In this regime, we have a turnover of 603 million in the quarter, up from 547 million in the previous quarter, and a margin of 8%. This is after overhead costs, This means that we still have good project margins for what is in production. If we look at 12 months rolling, we are up to 2.2 billion in revenue and a rolling margin of 8%. The margin we see here has come under pressure as a result of volume. We have much less housing production now, and we have a building loss that has gone up a lot. Therefore, the margins here have come under pressure over time. The cash flow went into the quarter with 208 million in the bank. The main point in the cash flow is that we have positive cash flow from operations at 87 million, driven by annual deliveries and reduced goods storage. The second main point is negative cash flow from financing, and this is the exchange rate that was paid out in May at 94 million. So the net change is small at about 9 million and brings us out of the quarter with 199 million in the bank at 36. The balance. Here we have a total balance of 4.5 billion, quite unchanged from the previous quarter. We have a recorded income of 25 kroner per share. This corresponds to an income tax ratio of 51.7%. Here we have included the exchange rate, so the income tax ratio is slightly lower than in the previous quarter. The exchange rate meets the balance in this quarter. The total balance is also much lower, because we have much less housing production, which also means that the income tax ratio increases significantly. Other changes come back to the warehouse, which is a bit lower, or with less changes to the supplies and cash we were talking about. And then we also have these discounts from our customers, which must amount to 24 million, and are included in other short-term accounts in this balance sheet. Let's look at the warehouse. Not a big change from last quarter, but we have some changes in the empty storage, which is down by 29 million. This is due to the start of construction and sale of property. Warehouse work is up by 990 million. Much of the annual delivery of the quarter is from the shareholder. We're not talking about this warehouse, but we have and the factoring from the entrepreneurs has gone well in Q2. Therefore, we have increased the value of work by 190 million. And then we have this finished goods warehouse, which is down from 844 million to 648 million. This decline is due to the fact that we have delivered finished, unsold units. And then we also have this kindergarten, which was a finished goods warehouse in the previous quarter, which has been delivered. Then we get a major decline in the finished goods warehouse. Every 36 units, we have 119 finished, unsold units. And in addition to that, we have 41 sold, finished units, but which are then handed over to Q3 and Q4, which are coming now. The sum of this makes up this finished warehouse of 648 million, which we have on our own balance, and then binds capital, as Sverre mentioned. Let's look at the yield. The interest rate per 36 was 1.2 billion. The big one here is the construction loans with 746 million. In addition, we have, as usual, Yield Turbine Property, which inscribes sales credits and back-purchase agreements at 437 million. In addition, a little The loan for the tomten we have in our own balance is now at 35 million, after we lowered a loan in connection with the sale of Tomten Bahamang in Sandvinkla. So there are only 35 million left now. Otherwise, there are no changes in the margin picture on these loans, and we have not raised any of our top facilities at the beginning of the quarter. In total, we report a net profit margin of 1 billion, which is on the same level as last quarter. Let's look at the exchange rate. Selvo Bolie has prioritized the exchange rate of the shareholder over time. through our exchange policy, which says that we will pay 60% of the tax return to the shareholders each year. If we look at the history here, we have earned about 61 kroner per share, and we have paid about 55 kroner. This includes the Urban Proper Transaction in 2020, where the exchange rate was 22 kroner. Back to what we said at the beginning, the board has decided to postpone the decision to exchange for the year as a whole, based on what we have seen in the last two years with the falling volume production. We have from 1,500 homes to now down to 660 homes. In addition, we also have a lot of finished sales in the balance, including capital. There is no change in and we have as a goal to prioritize good exchanges for our shareholders in the future. Finally, we will look at the return on net capital. This is calculated in 12 months net result, divided by the incoming balance on net capital in that period. In the last 12 months, we have delivered 263 million in net result, which corresponds to a net capital return of 12%. Then we were through with the financial part. Now we will continue with the market update.

speaker
Sverre Mollvik
Managing Director

Yes, we are starting to look at the Oslo market as usual. It is more or less the same story, it just gets worse. There is a housing need in Oslo that is a publication based on what has been completed. It is estimated to be 3,300 units annually for the next three years. The number of facilities in Oslo this year is estimated to be below 2,300 units, and next year below 1,700 units. There will be a huge gap, and this has been intensified for many years, and it will only get worse and worse. The law on regulated activities It's getting better and better, and it's getting worse and worse, unfortunately. So there's a very big gap in Oslo. What's special is that now the same thing happens in Akershus. Akershus has taken over the Oslo market in recent years, especially in municipalities like Lørensko, which have built a lot. Now they have also had problems with infrastructure, schools, kindergartens and so on, so there is also a break in regulation, which means that the supply side also falls in Akershus. It is not at a high level, but here we see that the need is at 5,700, and it is now being completed this year, less than last year, far more than in 2022, and well below 5,700, 4,900 units. And then it will fall again next year, and probably lower again in 2026. So in total now, the gap in what is called Storoslo, which can be argued to be the same market, is a significant undercurrent in the coming years. Of course, this will give a lot of pressure, and it should give a lot of pressure on politicians to take action and regulate a lot in the Storosjø region in the future. Otherwise, this health care index will be quite hopeless in the future. For those of us who have an interest in these areas, it is not necessarily so negative. We have to take part in the price pressure that will inevitably come. We can already see that in the July month, which is usually quite bad, the prices are rising, which we will come back to later. If we look at it in more detail, we see that the Oslo market is at the same level as it has been in the last couple of years, at around 1,000 units, which is a critical minimum. That is to say, it is probably slack. That is to say, it is what is unsold in projects during production, which, like us, raises prices, ensuring that it is at a certain level. I doubt that it will be lower than 1,000 units. Akershus is still on a good level, but it is also on a very low level in Oslo. Akershus is still usable, but it is falling. Bergen and Stavanger and Trondheim are also relatively good. The big difference here is that the Trondheim market has a very high supply side, so it is more of a buyer's market. Six units per thousand capital versus 1.4 in Oslo, so a huge difference in supply side and pressure in the market. So there are good markets in most of these markets, while there are perhaps more buyers in Trondheim. The reason why Akershus is perceived as a new press area is that it has to be compared to Oslo to a greater extent than, for example, Trondheim, which is more for itself. The used market has been strong lately. We talked about this in connection with the Q4 and Q3 reports last year. There was a very high supply side It has now fallen, and that is due to the fact that many have sold their homes. And more and more are now going back to buying first instead of selling first. Since you are more optimistic about the future in relation to this with the interest rate level. That it will probably fall, more likely than rise. And that we will try to secure housing, but it will be less and less in the market in addition, of course. More sense of urgency in relation to low supply, and the demand increases. So this is also positive, and this is also what we have estimated would happen, predicted. And then we will see in the future how much of these unsold finished products we manage to sell, and how low the discounts are, or whether we have to give any discounts at all. That is the question. And we already see that we have started selling a lot more of them now in the last quarter than we did in January. So we have already profited from it. So we have to make sure that this continues out over the autumn and that there are no global disturbances that affect this in a negative direction. If we look at the price development as a consequence of what we have just seen, the Oslo market is very strong. It is priced at 98. About 1,000 per square meter in the Oslo used market, which is a fairly high price. If you compare it with Stavanger, which has 47,000, there are enormous differences here. In Stavanger, there is a much larger proportion of small houses and larger average sizes, which means that the numbers are not completely comparable. Nevertheless, there are big differences. The price growth in July has been strong historically. From Oslo, down in Bergen, Trondheim down 1.8, and in Stavanger 1.7. Traditionally, there are usually quite large markets in July when people are on vacation. We did not see that this year. We saw 30 units, which is almost On the other hand, all-time high is one of the best three years we have had in July. Price development so far this year, with higher interest rates and higher living costs, is abnormal. I don't think we see this in the other cities around Europe. It causes a lot of damage to the market, and of course combined with the high building costs, which means that very little new buildings are being built. But high price growth, 6-7% in Oslo, Bergen at a very high level at 9%, Rolire in Trondheim, That comes from the higher supply side, and Stavanger is strong. So there are good markets for development in our cities. on price development. Let's take a look at some of the projects we are working on. Lønnsjøl Stasjonsby, where we recently created a new project on the snow town. We created a trend of 60-70 units here in Lønnsjøl. June, May-June, and have sold under 30 of them in PT. So it's good to be at a 40-45% sales rate in a short time. That's right after the school book. There we have, and then we will put out the following trends successively, as long as the market, or now the market takes a round. In Skårebyen, we also put out the Matilde-tunnel last year and sold well, and are also putting out the following building plans, since the market is moving away, we have achieved sufficient sales to get funding to move forward. In Lannås we have also set out a route a couple of months ago, where we have achieved very well. We have already set out two routes and achieved a sufficient sales growth, but we are lacking in the scope of delivery, which we hope will arrive in Q3. In the worst case, it will not arrive before Q4. There are some instructions on some dams and other things that will be sent to the village headman, and then it will take time. So we have the Kalnes Bridge, where we have 500 units under regulation. We also got a small remodeling of the first floors. It will also be a very nice project. Barkaby is out in the market. It's in Stockholm. It's a heavy market. We've sold about 10 units of some of the 40 we have out. We're waiting for a rent reduction, which hopefully will come soon. The market is much heavier in Sweden on new homes than it is in Norway. But it will be solved as long as you get the purchasing power to lower the rent. We have launched a new project in Bergen just before the holidays. We have sold 9 out of 59 apartments and apartments. A very good project alongside a project we have just completed. There we also have more, and as I said, we also bought an empty space there now, which is pre-regulated, which is to support our project. So there will be projects successively, as long as the market goes away. We have started building Stavanger, regardless of 100 units. There we make a simple regulation change now, and we will probably also come up with that before Christmas, as it goes through, or it will be in the ninth year. Solbergskogen has started one step and will continue to do so for a relatively short period of time. We have also sold enough to start building. If you look at some projects that are not regulated and that are coming up, the new one is Solheimsvannet, which is located on Mindybergen. A very nice project, where it is on public trial, unfortunately. It is also something that will be put out immediately when it passes, hopefully now, in a very short time. Lønvangen, for those of you who have been here several times, has been a return for many years now. I had hoped that it would already be on the market now, which was allowed in connection with the political change here in Oslo. That has not happened, unfortunately. I hope it will happen during the year. But in the worst case, it will not come before Q1. Or in the worst case, I can't say, of course, because it depends on political treatment, but I really hope that it will go through soon. It is on the ninth year there now, on regulation in relation to the regional plan, which is called Especially Fredrikstad, a large project that will also be regulated over the course of the year. Most likely we will launch a very nice project next year in Fredrikstad, which we will be working on for many years. Lilleakre in Oslo is the same as Lørenvangen. We haven't been working on it for a long time, but there is also some regulation coming out in the new year. Fornebu is a big project. We are about to start sales in 2025. It is the regulation that matters. Formbanen is on track, and the orderly requirements are not the hindrance. It is more about getting the first field we are going to use regulated. Bjerke, as I mentioned, has bought some additional properties. We have three large areas that are regulated in parallel. Bjerke Sør, Bjerke Nord and Bjerke Svingen, as they are called. We have expanded one of those areas through the purchase of single homes and childcare. It will be a very nice big project that will hopefully come out later, I would say in 2026. It's a pretty good We have to step up the building plan when it is deserved, and there is a good collaboration now. So that's good. Hopefully, they won't be switched out with salt treatment in the future. Then everything would be fine, because we would get a relatively quick treatment. In Sweden, we have our projects that are emerging in the 27th stage in Slakthus, Hornsberg and Nakka. In addition, we are working with a lot of There are now many potential projects that some other actors are not able to carry out. It will be exciting to see how it develops in the Stockholm market in the future. I am very optimistic about that. If we look at the future prospects, we are very positive about that. There is a large supply chain in Oslo that has included Akershus in this. is good for us who have a lot of property in Oslo and Akershus. So it will be good, and good for us as sellers and pricers, and not so good for those who need housing Vi forventer jo at rentene kommer ned. Markedet, jeg ser vi skriver litt av hvert, men vi, eller jeg, forventer i hvert fall at rentene kommer ned i år allerede. Jeg tror det blir verre i høst, sånn markedet totalt sett, som gjør at den kommer til å komme ned. Vi ser jo at markedet generelt... is better in terms of use, which means that we are looking positively at removing our unsold products to full price, or close to full price, over the autumn, by the fact that the supply side in terms of use, as I mentioned, will drop further, and those who are in that market are looking at unsold products that are by definition in the same category. Another important thing is that the purchasing power of all people will be strengthened by the fact that the increase in wages this year has increased since July 1st, and hopefully many of those who go and secure a financial certificate will be better than they were before the increase in wages. So that combined with, hopefully, lower interest rates, and one should not overlook the fact that something was done with the housing legislation last year from January 1st. One should of course have looked at it before, but I doubt it will happen, but it would have been fine. But there are at least a whole lot of factors that make us positive for the housing market in the future. And then we'll see if we get the right idea. Anyway, in summary, at least the quarter gave war and global issues very well. When you sell a record, you can't complain so much. We have a... and a balanced supply side in the areas we operate in. We deliver a good result, which means that we are good at our strategy, contract on time, bind the enterprise, lock costs, including wages and price increases. If we hadn't done that, we wouldn't have had any results today. We have also done a couple of one-offs, Barnehage and Tomp on Hamang, which helps a bit with the numbers, but the underlying operation is very good. We see that the building cost is stable, at least. That's positive. We manage to start building projects without writing down any agreements with acceptable margins. As I mentioned earlier, we have made the decision to switch. This will not change the size of the exchange in any way. This is a periodization. There is no reason to have any drama around it, but there is a responsibility around it in that we do not want to be in a crisis in that we are sitting with a lot of unfinished projects. We have been able to start building more, given that we had built framework permits and public approvals. If all of these things were to go wrong, then it is not something we would like to sit idly by if we had paid too much liquidity to exchange unnecessarily early. That is why we are waiting. It is very unlikely that these things will go wrong, just to take the questions in front of us, that we will not get framework permits and will not be able to sell unsolved failures. But that's not something we're betting on. That's what we had. Any questions?

speaker
Webcast Moderator
Host

It's a question from the web, from Njol Kleiten. Can you count the profit from sales in Bærum and Lønnskog? Can you say more about the sale of Ringve? Are there more values that are recorded in Q3, or is the sale neutral? We can take one at a time. Can you count the profit from sales in Bærum and Lønnskog?

speaker
Sverre Mollvik
Managing Director

We can, of course, but we never do that. We don't talk about single...

speaker
Audience Member
Q&A Participant

Transactions or problems. In a real project. Can you tell us a little more about the sales of Ingve? Is there more value for its culture, or is the sales... Thank you. Thank you. Thank you. ... ... ... ... ... in today's market situation?

speaker
Sverre Mollvik
Managing Director

Through the day, on average, the second half of the year, given that July and December are usually... We usually budget with zero in those months. But now we have already sold through the day, through July, so of course... I'm never satisfied, I have to say. But of course, we should sell as well as in the first half of the year. It will be what it will be. We are doing our best. We are satisfied. If we manage to start building enough units, I think it is right to say. That is to say, not falling any lower than we are now. Then I would have been satisfied. Plus that we sell a lot of unsold finished products. That would be great.

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