Selvaag Bolig ASA

Good morning and welcome to the third quarter's presentation of the results for Selvo Boli. My name is Sverre Mollvik and I am the managing director. Together with the financial director Kristoffer Brunvold, we will go through today's agenda. We will start by looking at the highlights of the quarter, then we will go through the operational, then Kristoffer will also go through the financial, then we will take a look at the market, future prospects and some questions at the end. We sold quite well in Q3 in relation to the market situation and the circumstances in the world. 600 million kroner, about a house a day. So far this year we have sold for 2.3 billion. Again, we are pleased with that in relation to the market situation. We also get user-friendly results compared to relatively few experiences in the quarter. Again, we manage this with good cost control. It is a very difficult market with very high building costs. We have to do everything right through the entire value chain. And we have proven that we are good at it, through all these three so-called heavy crisis years. If we have a good business model and outsource what should be outsourced, then we do it in an effective, good way. So we maintain a good order reserve, even though we are not starting to build in the quarter. And we have a lot of deliveries, so we have an order reserve of 7.5 billion out in the order reserve. If you look at the key figures, the proforma figures include, on the income and cost side, our share of cooperating companies. We own 50-50, some JVs. We have taken them with us to show which illustrates it in a better way, both in terms of turnover and margin. Compared to before, where we put it on the TES line, it doesn't make sense to have it this way, so Kristoffer is coming back to that. But we had a turnover of 659, including these cooperating companies, and a margin of 13.7 percent, according to IFRS, in relation to the delivered units in the quarter. After GAP, which is the current calculation, we had 785 million in revenue and a margin of 10.2%. As I said, Kristoffer will go through this later. When it comes to sales, we sold 85 units in the quarter, and that is not something that we think is fantastic, but in relation to the market situation, it is actually very heavy on the day. And then there was July, which is usually a bit boring, we had 23 sales, if I remember correctly, so we have actually been a little over 1 on the day in August and September, and the pace has continued in Q4, so we are on PT a little over one a day. So it looks like it will be a good year, and much better than the worst, but far from the best of course, but a good year. It looks like it will be. 600 million, as I said, on average at 7.1 million. The 12-month turnover is about the same as in the previous quarter, but slightly lower, 3.2 billion kroner per year. We are not starting anything in Q3, and have completed 114 units, which means that we have dropped slightly compared to the previous quarter in annual reserves, down to 7.5 billion, 1,051 units in production. 64% of it was sold at the beginning of the quarter, and more now. Then we have quite a lot of failures in Q4, as you can see, 261. Of this, 90% was sold at the beginning of the quarter, and more now. What we are now working with is of course to sell as much as possible, so we can start building as much as possible, to avoid falling too much in the reserve year. Try to keep the speed in the scooter as well as we can. As I said, not so easy, but we will manage. We have also added a first quarter without failures. So we will be able to maintain a good pace, especially out of Q1. We now have an overview of how many finishes there will be in 2023. We will keep the guidance on that. And in 2026, it is completely up to me. It has been so many bad years, it takes most of the time. In 2026, we will have 657 exhibitions, which is what we have now, which is more than we actually dared to hope for, but that is due to the fact that we have also had a good pace in production, so we are promoting some of the projects. So also significantly more exhibitions next year than this year. Kristoffer, can you go through that, Silve?

Good morning. Let's take a look at the main financial points for this quarter. We start with the IFRS results, where revenues and costs meet the results of the delivery of housing to our customers. We focus on the pro forma figures, where we include our share of revenues and costs in the collaborative projects, brutto. In the official results, as you can see on our website, In line with the contribution from the co-operative projects after the tax. This gives a more comparable picture over time, given that we have a good number of co-operative projects in our portfolio. We delivered 98 units in the quarter, of which 10 were from co-operative projects. The main delivery in the quarter was Langehus in Nordre Foldo, and the first steps on Solbergskogen Plus in Ås. We received revenue of 659 million, including other revenue of 23 million, which comes from the factored project management to collaboration projects and the operation of our plus service centers. The project cost came in at 569 million, including 57 million in financial costs. These financial costs are building loan interest, interest on sales credit and auctions premiums to the European Union, so it is a significant financial element in the cost of goods. We have strict cost control, fixed price contracts and good project managers who manage the projects. This means that we are able to deliver a quarter with satisfactory margins. If we had not had fixed price contracts, this would have looked much worse. The other costs are 60 million, down from 64 million last year. We have a stable cost base with a fixed number of employees, and have managed to cut some operating costs. We are pleased with this in a challenging market. We reported an adjusted EBITDA of 90 million, with a margin of 14 percent, which is significantly better compared to the same period last year, where we had a revenue of 332 million and a margin of 6 percent. This increase from last year, of course, is due to the fact that we have exceeded many more homes. 98 units against 54 in the corresponding period last year. At the bottom, A result per share of 25 euros. And from last year, we had an undercut of 5 euros. Again, several covered units this year. Let's look at the first nine months. The same result for FRS, including our share of co-operative projects. 172 covered units. Gave us revenue of 1.2 billion. and project costs of 1 billion, of which 95 million is financial costs. The margin is 9 percent in the first nine months, compared to a 2.2 billion turnover and a margin of 15 percent in the first nine months of last year. The decline from last year was due to a much lower number of overvalued units. The annual revenue was 360 units in the first nine months of last year, against only 172 in the first nine months of this year. The adjusted revenue is then 107 million, down a result of 5 euros per share, which is then very low from 1.40 euros in the corresponding period last year. Worth noting here is that we deliver 172 units in the first 9 months and manage to deliver a plus result. This indicates that given that we deliver a good next quarter, we will get a good result, but call it a break-even result of 240 units. Now let's look at segment reporting, which follows Norwegian regulation rules. This is the ongoing calculation method, where we take the projects that are in production, and the sales grade times the sales grade, which gives an excursion grade. We think that we are constantly taking out the value creation of revenue and results through the life time of the projects. Here we also have Proforma, where we have included our share of the co-operative projects. In this regime, we have a turnover of 785 million kroner per quarter, and a margin of 10% after overhead costs. This means that we still have good project margins for what is in production, of about 15%. If we look at the 12-month turnover, it increases to 3.4 billion kroner per quarter, and a margin of 11%. The cash flow entered the quarter with 264 million in the bank. The main points are negative cash flow from operations at 125 million, which is due to high activity in the company and the construction of goods. We have net negative cash flow from investments, linked to loans to co-operative projects of 21 million. This is for the financing of development in co-operative projects. And the last key point is a positive cash flow from financing of 82 million, in addition to a net increase in building loans to finance this increased stock market. Net, a decline of 63 million in the quarter, brings us out of the quarter with 201 million in the bank. If we look at the balance, there is no big change in the balance sheet. There is high activity, and the total balance grows to 6.8 billion kroner. And we have a recorded turnover of 24.3 kroner per share, corresponding to a turnover share of 33.7%. The stock market is increased by 236 million kroner. Requirements are up to 29 million, due to the fact that we delivered units at the end of the quarter, where the amount first came in in October. The cash went through, which is down to 63 million. And then we have these budgets from our customers, which are now at 55 million, and are included in other short-term funds. If we look at the warehouse, which is up by 236 million. The book for empty storage is down by 11 million. This is due to the early quarter construction starts, which is then flipped over to goods and labor. Goods and labor is up by 260 million. This is due to high accuracy. We have started many projects in the first half year, even though we did not have any in this quarter. There is high accuracy, good progress and good production of enterprise costs, which makes this warehouse grow. The goods storage is down 14 million from last quarter. We now have 38 finished unsold units. That is significantly down. We are very pleased with that. It is clear that selling goods storage is good. On the corresponding period last year, we had 87 units. In addition, we have 28 units that have been sold, but will be delivered in Q4, and some in Q1. Given where these finished units are, we are confident that these will be sold in the following quarters, when we see the supply side of new homes in these areas. Let's take a look at the yield. The yield is a total of 3.2 billion kroner. Of course, the building loan is the big one, which increases to 2.5 billion kroner. This indicates good speed and production in the company, which is positive. The yield of Ölm Properly is 753 million kroner. sales credits and return purchase agreements. In addition, we have 33 million in interest on some of the properties that are in our own balance and have not been sold to Ørlund Property. This is an unregulated property. We do not have any changes in the margin picture and the conditions in the loan. We have also not increased any of our top facilities. In total, the net income per annum is 3 billion, up 200 million, because it was 2.8 billion last quarter. The return on the income tax is calculated as the net income per annum for the last 12 months after tax, divided by the income per annum in this 12-month period. The net income per annum for the last 12 months is 50 million, and this is very much influenced by the crisis we have had in 2022-2023, where there were very few start-ups, which means that we have had few successful units in the last 12 months. This contributes to a low result. We expect this to tick up when we get started with more successes in the future. Then we went through the financial part, and now we will move on to the market.

Yes. We start by looking at the Oslo market as usual. There are some changes. We have the so-called need, which is estimated to be 3,800 sales this year. However, what has changed is the actual completion rates for next year and 2027. In the previous year, the estimate for 2025 was significantly higher than what we see now. It was even worse in terms of completion rates in Oslo. I'm not going to throw away the numbers we get from under the bus, but there is quite a lot of uncertainty in it, and it won't get any better than what is reported. And some of the builders who report in may not have been able to make it as planned. So there is also a lot of uncertainty around the numbers in 2026 and 2027, especially 2027, where only half of the 2,778 units are actually for sale and are about to be built. So there can also be very big changes. I'm just saying this so you don't think we have a lot of varying numbers here. So there is at least uncertainty around it. I think there will be much lower numbers, both in 2026 and 2027, than what we see here. From what I know, what is going on in the city here. If you look at Akershus, there is the same trend, but a little better here. But in any case, there is also the need to adjust something. The 5,400 units per year was a little higher in the previous report. But again, it is very low this year, and then it goes up in 2026 and 2027, and then we'll see what happens. In total, in the region, we are still below the estimated need, and I think that will last for a long time. Unfortunately, I have no faith that there will be a quick fix, that there will be many who will suddenly start projects in the region as such. All that time is regulated. Many of the regulated areas in Oslo are at a price level in terms of costs, which means that very large volumes are not going to be invested there. So there is no immediate speed in the new housing market in Oslo. In Bergen there is also a big deviation. I think it was up to 800 units estimated in 2025. Here it is 508 units that looks to be completed this year. Very little in relation to the need. So it is still about as poorly placed in Bergen as in Oslo in relation to completion in the future. And we notice that, of course, so it is also reflected in the price growth in Bergen. In Stavanger, more needs have been set up. The need has also been adjusted, so there are 1,600 left. The numbers must be taken with a pinch of salt, but here it has been put more out for sale, so we will see how much of it is being built. If we look at it more thoroughly, we see that there are some changes. In Oslo, they have put out, so far this year, about 1,700 units. Sold a little more than 1,400, so it increases a little. If you go to Finn now, you have a little more new homes to choose from than you had at the beginning of the year. There are some larger projects in Gråredalen that bring this up. Oboe, Storoslo and others have put out some projects that have sold something, but I don't know how much of it is unsold. I haven't looked into it, but that's what makes these numbers go up. In Akershus, the same trend. The sales are a little less than what has been laid out. I guess it also has a consequence that when you lay out, as a developer of a project, you want to try, or not try, you have to try to get a very high income to get the project done. And then there are probably some who try to have a cost plus strategy, and that they guess that the income may be a little higher than what the customers will pay. Then there will be several houses on the offer side, but they will not be sold. In Bergen, it is sold more than it is put out. We also notice that. We sell well in Bergen and build well. There are other things that I would like to point out. In Bergen, you build much cheaper than you do in Oslo for the same product. It's a bit easier to get started in Bergen, especially now that there is an offer squeeze, because the revenues have gone up quite a bit. The costs are significantly lower in Bergen, on the enterprise side, than they are in Oslo or the eastern region. Trondheim has a large supply side. Stavanger is quite stable. If we look at the new housing market in relation to the population, there is still a very low supply side in Oslo, even though it has increased a little. Bergen is very low, Stavanger fits, and there is also a huge supply side and buyer market in Trondheim, as you can see, up to seven units per thousand capital, and usable in Akershus. Then there is the use of housing prices, or the use of the availability of housing. For those of you who have heard from the Q1 or Q4 report, I have guided that these red soils will be lower over the course of the year, and they will be now. With the exception of Oslo, where there is an increase in rental units, which is a consequence of the tax problem, especially on the form tax side, on the private side of those who own these rental properties. So they are sold in large quantities. I think they have sold about 15,000 units only in Oslo. So the supply side will of course be squished on the outside side. But at least that is the reason, the logical explanation of why the supply side is larger in Oslo. It's being taken away in large numbers. It's being sold a lot. A lot of people are just getting a new apartment that is cheap. A slightly older apartment that has been in the rental market for many years. And that is positive. What is not positive is that there are few rentals in the city that squeeze the rental prices to the sky. In Akershus, the supply has become lower, so it has been sold out well. This is also something we notice on display. There are many who buy new housing and would like to sell their own first. They are motivated for several reasons. Among other things, the banks give a little extra kick to the loan. Since you have sold the house and have a mortgage, you can borrow more in the bank on the new house you buy. And of course, there is a personal sense of security for how much you have to deal with. In Bergen there are a record few, and in Stavanger as well. So there is a lot of market buzz in those regions, and we can see that reflected here. The supply-demand imbalance controls everything, as I usually say, and we can see that in Bergen and Stavanger the prices are much higher, and that is of course a natural consequence. When it is difficult to get something that many want, it becomes expensive. In Oslo, the development so far this year is 3.6 percent, coincidentally the same as in Bergen. Now we don't have the square meter price numbers here, but there is of course a huge difference there, with 3.6 percent price growth in Oslo at around 100,000, which is something other than in Stavanger, where it is in the middle, so there are big differences. It is not the same that it is very easy to start something in Stavanger today either, because the price is still at a relatively moderate level on the new housing market, maybe around 80-90,000, while in Oslo on the new housing market it is around 120,000 on the ring road on average, so it is a completely different price range anyway. In October, in the nominal figure in Oslo, it was 0.2. It was 0.4 up if you adjust the season, so a very strong development, given that the record number of rental units was pumped out. And that there has been record high volume, it has generally been in the consumer market, if I remember correctly, throughout Norway this year, which actually tends to be very stable at around plus or minus a few percent, but this year I think it is up 8-9 percent. So there is a lot that is actually being invested in the consumer market. Bergen is the strongest of the cities, or in addition to Stavanger, which is nominally flat, or up 0.2 as in Stavanger, and that would say quite a lot up seasonally. Trondheim is weak, and again it is due to the large supply and purchase market also used in Trondheim. We have projects that are ongoing. At Snøbyen we have a plus project that we are putting out new lines on, since the ongoing lines sell enough to start building. We are working on that and have several lines that will come down the road. We have one more regulated field that we are going to put out next year. The same with Landås. We had a sales start on a new project a couple of weeks ago. We sold over 100 million on that sale start. 12 units, both very expensive, some in the area of around 17 million, among other things. Some reasonable, but around 100 million. We would have liked to have sold more, but we also sold sales starts in a dark month, where it is much heavier than in the new year. What counts is that we get enough sold in the course of, for example, the first quarter, hopefully, to start building. Skårebyen, where we have There is a lot going on in the market today, and I think it is selling very well. The last couple of trades this week have been some of the last ones. The Solheimsvannet in Bergen is where we put out the last trades these days, before we come up with new projects in the near future, with a new project on this side and on myndet. Solbergskogen has been a very popular plus project that we get a lot of attention around. We also have a regular home project with smaller apartments that we sell and tickle very well. Svansli in Bergen is also an area where we have one, two, we are going out with a third project actually on Svansli, so tickling there is going very well. It is exciting to see the new projects that are coming in the new year. We have chosen not to release the Lørnvagn in the fourth quarter. As I mentioned, it is much better to start sales now, when it comes to lighter times, so we will start that before the next report, if I remember correctly. I think it is in January that we will start sales. Rådhushagen is a ski project that will be launched in January-February. Terrassen in Stockholm is a large project, 170 units. It is located in the north of Djurgårdstan in Stockholm. It will be launched in January-February. And then the regulation will depend on when we get the Fornebu first line regulated. I think it will be a plus or minus year shift. If the development continues in the municipality, it will also come early. At least the first half year, we hope. Next year is a very exciting project that we will have to lay out a new line for many years. In Fredrikstad we are missing a development agreement, for example, before we start. We'll see if that happens next year. It also depends on the municipality. There are a number of requirements, development agreements, which unfortunately are difficult in many places, including in Fredrikstad. This also applies to Lillevakeveien, where there are small discussions about the development agreement, which should land by the end of the year. It will be regulated, and it will also be released next year. It is a nice project in Oslo Vest, which is very rare to see now, so we are also looking forward to it being released on the market. Bjerke should be regulated faster than 27, but it is unlikely. The regulation processes in this country are very complicated. It takes a lot of time, so I do not dare to promise that it will be 27, but it will be a great project when it comes. Very nice, 1500-ish houses. And then we have more in Stockholm, where it will also be exciting to see. We can start with this point here, if we look at future prospects, then it is promising signs in time now in Sweden. The interest rate is low, 1.75, the interest rate against the upper double in Norway. And then it is what is exciting is that the unemployment looks to fall. BNP has grown in October. I hope it will not be so strong that it goes beyond the interest rate level, but at least the Swedish market is on the way up, and that is positive. There is also a housing issue in Sweden, which will probably change in April. In many ways, it is a proposal, a law proposal change, which will be adopted in April, among other things, to allow people to borrow a higher percentage of the housing value from 85 to 90 percent, for example. So that is something that will have an impact on sales, just because it takes so long. We also have a general shortage in the production of new homes in the areas we operate in, especially Stavanger, Bergen and the Storoslo region. Storoslo in the medium term, There is an increase in the supply side due to the massive sale of rented apartments that are made available to the housing authorities and pumped into the market. This is a medium-term effect. It will not last and it will be a good pressure, which will be an advantage of the so-called housing shortage. Unfavorable for ordinary people who want to buy a home, unfortunately. But this is a cheap policy. Or at least they haven't been aware of the consequences. Otherwise, we have a portfolio that is good. We have enough to be able to put out in the market, provided that it goes away. So we'll see if the Norwegian Bank keeps its interest rate, or if it gets better. That's the kind of thing we want to hit the market with, and if the politicians are able to understand that it's important to do something about some of these unnecessary cost drivers we have in our projects, to increase the difference between income and costs, to get started with more boards. If there's going to be any volume, that has to be added. Summing up, I would say that JNN has done well in terms of the difficult times. Sold consumables in the quarter, and so far this year. And we manage to earn money, because we manage to do the right thing through the whole value chain, because that is what it is all about, to be able to earn money in this industry in the meantime. And we have a good order reserve, and we will continue with good sales starts and hopefully increase our volume well over the next year, or at least keep it. That was that. Now we are ready for questions if there are any.

Has there been any changes in how you see progress since the last time we talked about regulation?

No, and that's not the point of talking negatively about Bærum, because they are actually very good and easy to get in touch with, and they deserve a rose for that, because it is actually one of the few municipalities where it is possible to have a good dialogue. No, there is no change. There is no reason to believe that the first part of this will not be regulated in the first quarter, and perhaps a little earlier.

So that is positive. There is no change. Another question. You talked about the fact that you have cut some operating costs. What specific measures have you taken?

There is less use of external lawyers, cut something on sales and marketing, and other general operating costs on IT costs and things like that.

I understand. Thank you. I can move on. Others here? Then there are no more questions.

No. Good. Then we say thank you for us, and see you in a couple of days.