First quarter results

Transcription

1 Q First quarter results

2 Highlights of the first quarter 2017 Operating revenues of NOK 456 million (NOK 624 million) Adjusted EBITDA* of NOK 94 million (NOK 91 million) and ordinary EBITDA of NOK 82 million (NOK 69 million) 190 units sold (280) and sales started for 345 (384) Construction started on 186 units (230) 63 units completed (183) and 85 delivered (179) A total of units (1 386) under construction at 31 March, with 86 per cent (80 per cent) of these sold at a combined sales value of NOK million (NOK million) 99 per cent of units to be completed in 2017 are sold, 87 per cent of 2018 completions are sold Sold commercial site in Oslo for NOK 140 million Four sites purchased in Oslo, Ski and Trondheim will provide some 750 new units net (Selvaag Bolig s share) (Figures in brackets relate to the same period of the year before) * Adjusted EBITDA is less financial expenses included in project costs. Key figures (figures in NOK 1 000) Q Q IFRS main figures Operating revenues EBITDA EBITDA adjusted* Operating profit/(loss) Profit/(loss) before taxes Cash flow from operating activities ( ) Net cash flow ( ) (64 538) Interest-bearing liabilities Total assets Equity Equity ratio 43.0% 42.5% 42.1% Earnings per share in NOK Segment reporting (NGAAP): Operating revenues EBITDA** EBITDA margin 24.8% 16.1% 19.5% Key figures: Number of units sold Number of construction starts Number of units delivered Number of units completed * EBITDA adjusted is excluding financial expenses included in project costs, see note 6 for details. ** EBITDA is operating profit before depreciation, gains (losses) and profit from associated companies. 1

3 Financial review Summary of overall results (figures in NOK 1 000) Q Q Total operating revenues Project expenses ( ) ( ) ( ) Other operating expenses, salaries and personnel cost, depreciation and amortisation (59 149) (58 183) ( ) Associated companies and other gains (loss) (4 222) (1 320) Total operating expenses ( ) ( ) ( ) Operating profit Net financial expenses (9 238) (6 932) (29 321) Profit before taxes Income taxes (14 205) (63 694) Net income Results for the first quarter of 2017 (Figures in brackets relate to the corresponding period of The figures are unaudited.) Selvaag Bolig had operating revenues of NOK million (NOK million) in the first quarter. Revenues from units delivered accounted for NOK million (NOK million) of this total. Furthermore, a commercial site was sold in Oslo for NOK 140 million. Other revenues derived from non-core activities, mainly rental of commercial premises. A total of 85 units (179) were delivered in the quarter, with 84 (178) from consolidated project companies. Project costs for the quarter totalled NOK 312 million (NOK million), of which NOK 11.9 million (NOK 21.8 million) represented previously capitalised financial expenses. Total project expenses primarily represented construction costs for units delivered as well as costs in projects which did not qualify for capitalisation as inventory. Operating costs excluding project costs and the share of results from associated companies totalled NOK 59.1 million (NOK 58.2 million) for the period. Payroll costs accounted for NOK 28.7 million (NOK 25.4 million) of this figure. A further NOK 5.6 million (NOK 7.3 million) in payroll costs related to housing under construction was capitalised during the period and will be expensed as project costs on future delivery. Other operating costs came to NOK 29.4 million (NOK 26.7 million) for the quarter, including NOK 11.4 million (NOK 9.4 million) for sales and marketing. The share of results from associates and joint ventures was negative at NOK 4.2 million (NOK 1.3 million). This decline reflected a number of part-owned projects where units remain to be delivered. EBITDA adjusted for financial expenses included in project costs came to NOK 93.6 million (NOK 90.9 million), corresponding to a margin of 20.5 per cent (14.6 per cent). Ordinary EBITDA was NOK 81.8 million (NOK 69.1 million), corresponding to a margin of 17.9 per cent (11.1 per cent). Consolidated depreciation and amortisation totalled NOK 1.1 million (NOK 6.2 million). This decline primarily reflected full depreciation of intangible assets in Consolidated operating profit for the quarter thereby came to NOK 80.7 million (NOK 62.9 million). Net financial expenses amounted to NOK 9.2 million (NOK 6.9 million), so that pre-tax profit for the quarter came to NOK 71.4 million (NOK 56 million). Net tax income is estimated at NOK 4.8 million (expense of NOK 14.2 million) for the quarter. The positive tax effect reflects the disposal of a commercial site carried out as the sale of shares using the exemption method. Consolidated net profit consequently came to NOK 76.2 million (NOK 41.8 million). NOK 76 million (NOK 41.8 million) of the profit was 2

4 attributable to the shareholders of Selvaag Bolig ASA, and NOK 0.2 (NOK 0) to non-controlling shareholders. Cash flow Consolidated net cash flow from operational activities was negative at NOK million (positive at NOK million) for the first quarter. The decrease from the same period of 2016 related primarily to the takeover of a site at Eyvind Lyches vei in Bærum, a high level of building activity and advance tax payments. See note 5 on inventories for more information. Net cash flow from investing activities was negative at NOK 25.8 million (NOK 3 million) for the quarter. The change from the same period of 2016 primarily reflected increased investment in joint ventures and loans made to these. Net cash flow from financing activities was NOK 93.3 million (negative at NOK million) for the quarter. The change from the same period of 2016 primarily reflected a substantial net draw down of construction loans as against net repayment in the comparable period. Repurchase of the company s own shares in connection with the employee share programme and the sale of shares to employees represented a net cash outflow of NOK 34 million (NOK 5.6 million) during the quarter. The group s holding of cash and cash equivalents at 31 March totalled NOK million (NOK million), down by NOK million from 31 December. Cash flow summary (figures in NOK 1 000) Q Q Profit before taxes Net cash flow from operating activities ( ) Net cash flow from investment activities (25 841) (2 956) (14 818) Net cash flow from financing activities ( ) ( ) Net change in cash and cash equivalents ( ) (64 538) Cash and cash equivalents at start of period Cash and cash equivalents at end of period Financial position The carrying amount of Selvaag Bolig s total inventories (land, units under construction and completed units) at 31 March was NOK million, compared with NOK million at 31 December and NOK million a year earlier. The increase during the quarter primarily reflected the takeover of a site in Bærum and high building activity. See note 5 for a further specification of inventories. Equity was NOK million (NOK million) at 31 March, corresponding to an equity ratio of 43 per cent (42.5 per cent). Selvaag Bolig ASA spent NOK 48.5 million (NOK 5.8 million) during the quarter on purchasing its own shares in connection with the company s share programme for employees. Sales of shares to employees through the programme amounted to NOK 23.5 million (NOK 10.2 million) during the quarter. Non-controlling interests amounted to NOK 9.5 million (NOK 9.6 million) of equity. Other current non-interest-bearing liabilities for the group totalled NOK million (NOK million) at 31 March, of which NOK million (NOK million) represented advance payments from customers. At 31 March, consolidated interest-bearing debt amounted to NOK million (NOK million), of which NOK million (NOK million) was non-current and NOK million (NOK million) was current. The proportion of current debt increased during the quarter because Selvaag Bolig ASA decided to exercise its call option to redeem the company s unsecured bond loan of NOK 500 million a year before it originally fell due. The loan has been reclassified from non-current to current in the balance sheet. The group had land loans totalling NOK 844 million (NOK million) at 31 March. These are normally converted to 3

5 construction loans in line with the progress of the respective construction projects. Two undrawn overdraft facilities of NOK 150 million each were held by the group at 31 March. The group has an unsecured bond loan of NOK 500 million, listed on the Oslo Stock Exchange in the third quarter of This has a five-year term and quarterly interest payments from 27 September Interest on the loan is three months Nibor plus 475 basis points. The bond incorporates covenants which require the company to maintain 1) a minimum equity ratio of 25 per cent until 31 March 2017 and then 27.5 per cent until maturity in June 2018 and 2) a sales ratio of at least 60 per cent for units under construction. Both covenants were fulfilled at 31 March 2017, with an equity ratio of 43 per cent and a sales ratio of 86 per cent. The loan incorporates a call option which entitles the company to redeem the loan one year before its original due date. Selvaag Bolig ASA has decided to exercise this option, and the loan will be redeemed in June See the stock exchange announcement of 4 April 2017 for further information. Net interest-bearing debt (figures in NOK 1 000) Q Q Non-current interest-bearing debt Current interest-bearing debt Cash and cash equivalents ( ) ( ) ( ) Net interest-bearing debt The group s interest-bearing debt falls primarily into three categories: 1) top-up loans, which are liabilities in parent company Selvaag Bolig ASA, 2) land loans and 3) construction loans. At 31 March, the group had a top-up loan of NOK 498 million, land loans of NOK 844 million and construction loans of NOK million. The top-up loan consisted of a bond carried at a net amortised cost of NOK 498 million. Interest-bearing debt at 31 March 2017 (NOK mill) construction period and recognised under cost of sales in the same way. At 31 March, interest on NOK 503 million in land loans had been capitalised, while interest charges relating to NOK 341 million in land loans were recognised in profit and loss. Loans with interest charges recognised in profit and loss (NOK mill) Top-up loan Land loanconstruction loan Total Interest costs on land loans are normally recognised in profit and loss until the site secures planning permission. They are capitalised against the site from the day the project secures planning permission, and recognised in profit and loss as part of the cost of sales when the units are delivered. Interest charges on construction loans are capitalised during the 4

6 Operational reporting Each project is followed up individually in daily operations, and operational reporting accordingly comprises one main segment housing development. Reporting also comprises the other business segment. The latter primarily includes service deliveries in completed Pluss projects as well as group administration not allocated to the other segments. Operational reporting utilises the percentage of completion method for recognising revenues and profit, which differs from the IFRS where profit is recognised on delivery. Note 4 to the financial statements presents segment information reconciled with the financial reporting figures (IFRS). Segments first quarter 2017 Operating revenues EBITDA Operating profit/loss (figures in NOK 1 000) Q1 17 Q1 16 Q1 17 Q1 16 Q1 17 Q1 16 Property development Other (37 482) (32 685) (38 599) (33 714) IFRS adjustments ( ) ( ) ( ) (62 486) ( ) (42 758) Total group Housing development This segment comprises all Selvaag Bolig s projects regardless of geographical location, since each project is followed up individually. Operating revenues for the first quarter were NOK million (NOK million). They derived from 26 projects currently in production and the sale of a commercial site in Oslo for NOK 140 million. Operating costs, primarily for construction and sales, are directly related to the projects and amounted to NOK million (NOK million) for the first quarter. Construction costs in the segment reporting are exclusive of directlyrelated financial expenses (interest on construction loans). This differs from the IFRS accounts, where financial expenses are included in project costs on delivery. EBITDA presents operating profit (loss) before depreciation, gain (loss), and share of profit (loss) from associates. It came to NOK million (NOK million) for the quarter, corresponding to a profit margin of 29.7 per cent (20.3 per cent). The margin also includes the sale of a commercial site. Other business unallocated The other business segment comprises a number of activities in the group which are not regarded as part of the core business on a stand-alone basis. It also includes administration and management which cannot be attributed directly to the projects and are accordingly not allocated to the housing development segment. Operating revenues for the segment in the first quarter came to NOK 7.8 million (NOK 6 million), while operating costs amounted to NOK 45.3 million (NOK 38.7 million). Costs relate largely to pay for the administration and management, as well as to central marketing. EBITDA was thereby negative at NOK 37.5 million (NOK 32.7 million). 5

7 Review of operations Operations A total of 190 units with a combined value of NOK 984 million were sold during the quarter. The housing market was particularly strong in Greater Oslo, where the group currently has the majority of its projects. To manifest value creation in the group, segment reporting shows revenue and costs in the various projects using the percentage of completion method as its accounting principle. Activity in the group was at a high level, and construction started on 186 units during the first quarter. Projects The company has projects in Oslo, Bærum, Asker, Lørenskog, Moss, Oppegård, Stavanger, Sandnes, Sola, Tønsberg, Trondheim, Bergen and Stockholm. However, no projects were under construction in Stockholm, Asker, Stavanger, Sandnes or Sola during the first quarter. Quarterly development of the project portfolio Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Number of units sold Number of construction starts Number of units completed Number of units delivered Number of units under construction Proportion of sold units under construction 80 % 83 % 90 % 85 % 86 % Number of completed unsold units Sales value of units under construction (NOK million) Purchase and sale of land Selvaag Bolig has entered into agreements on purchasing sites at Haakon VII gate 4 in Trondheim and in Pottemakerveien in Oslo s Groruddalen district through joint ventures. Furthermore, agreements have been entered into to purchase land at Langhussenteret 3B in Ski and Travbanevegen 6 in Trondheim. The commercial site at Maria Dehlis vei in Oslo was sold during the quarter. Market trends Selvaag Bolig sold 190 residential units (280) during the first quarter. These sales comprise Selvaag Bolig s consolidated project companies as well as its relative share of homes sold in part-owned projects. 6

8 Units sold Value of units sold (NOK mill) Q1 Q2 Q3 Q4 # units 280 # units 326 # units 277 # units 161 # units 190 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Total sales, including Selvaag Bolig s relative share of joint ventures, amounted to 190 units during the first quarter. The combined sales value of the 190 units sold during the quarter was NOK 984 million. Sales during the same period of 2016 totalled 280 units with a value of NOK million. Selvaag Bolig started sales during the quarter in nine projects comprising a total of 345 residential units (384). Sales starts in the quarter Project # of units Category Region Jaasund 8 Flat Rogaland Lade Alle Flat Trondheim Hovinenga 64 Flat Greater Oslo Kaldnes 25 Flat Greater Oslo Lørenskog Stasjonsby 33 Terraced Greater Oslo Lørenskog Stasjonsby 40 Flat Greater Oslo Bispelua 24 Terraced Greater Oslo Tiedemannsfabrikken 20 Flat Greater Oslo Svea Serenad 65 Flat Stocholm Total 345 Construction began on 186 (230) units during the quarter. Construction starts can vary substantially from quarter to quarter, since construction normally only begins when 60 per cent of the value in a project has been sold. Construction starts (no of units) Project # units Category Region Kilenkollen 9 Flat Greater Oslo Lørenskog Stasjonsby 48 Flat Greater Oslo Lørenskog Stasjonsby 50 Terraced Greater Oslo Tiedemannsfabrikken 79 Flat Greater Oslo Total 186 At 31 March, Selvaag Bolig had (1 386) units under construction. They included units in Greater Oslo and 112 in the rest of Norway. The order backlog at 31 March in other words, the sales value of the (1 386) units then under construction was NOK million (NOK million). A total of 63 (183) units were completed in the first quarter, and 85 (179) including ones completed earlier were 7

9 delivered. The completed units were divided between two projects Lade Allé, and Løren 5. A total of 32 (58) completed units were unsold at 31 March. Consolidated project companies accounted for 84 (178) of the units delivered, while one (one) was in a part-owned project company. Expected number of completions Units completed by project Project # units Category Region Lade Alle 27 Flat Trondheim Løren 5 36 Flat Stor-Oslo Total 63 Based on expected progress for the projects, 210 units are forecast to be completed in the second quarter of Estimated completions for the full year amount to 690 units. Q Q Q Q Q Expected completions, partly owned units Expected completions, wholly owned units Share information The company had million issued shares at 31 March, divided between shareholders. The 20 largest shareholders controlled 81.5 per cent of the total number of issued shares. The largest shareholder was Selvaag Gruppen, with a 53.5 per cent holding. During the quarter, the Selvaag Bolig share varied in price from NOK to NOK The closing price at 31 March was NOK 36.70, compared with NOK at 31 December. The share price accordingly declined by eight per cent over the quarter. A total of 5.1 million shares, or 5.4 per cent of the total outstanding, were traded during the period. Share turnover totalled NOK million during the quarter, corresponding to an average daily figure of roughly NOK 3 million. 20 largest shareholders at 31 March 2017 Shareholder # of shares % share SELVAAG GRUPPEN AS % SKANDINAVISKA ENSKILDA BANKEN AB *) % MORGAN STANLEY & CO. INT. PLC. *) % FLPS - ALL SECTOR SUB % PARETO AS % VERDIPAPIRFONDET PARETO INVESTMENT % HOLBERG NORGE % SELVAAG BOLIG ASA **) % HOLTA INVEST AS % VERDIPAPIRFONDET ALFRED BERG GAMBA % REGENTS OF THE UNIVERSITY OF MICHI % EVERMORE GLOBAL VALUE FUND % JPMORGAN CHASE BANK, N.A., LONDON *) % MP PENSJON PK % SEB PRIME SOLUTIONS SISSENER CANOP % STATE STREET BANK AND TRUST COMP *) % STOREBRAND NORGE I VERDIPAPIRFOND % BANAN II AS % JPMORGAN CHASE BANK, N.A., LONDON *) % J.P. MORGAN SECURITIES LLC *) % Total 20 largest shareholders % Other shareholders % Total number of shares % *) Further information regarding nominee accounts is presented at: **) The shares were purchased for the company's share programmes for employees 8

10 Risk and uncertainty factors As a housing developer, Selvaag Bolig is exposed to risks which could affect the group s business and financial position. Risk factors relate to land development, sales, and the execution of housing projects, and can be divided into market, operational and financial categories. The group gives priority to work on managing and dealing with risk, and has established routines and control systems to limit and control risk exposure. Macro-economic conditions, particularly unemployment and interest rates as well as demographic changes, are factors which affect the group s progress. See the company s annual report, available on its website, for a more detailed explanation of the risk and uncertainty factors it faces. Transactions with related parties Selvaag Bolig had no significant transactions with related parties during the quarter. See note 23 to the group s annual reports for detailed information on transactions with related parties in earlier years. Housing market House prices increased during the first quarter. According to Statistics Norway (SSB), overall seasonally adjusted Norwegian house prices at 31 March were on average 1.9 per cent higher than at 31 December and up by 10.3 per cent from 31 March Price developments were positive in all Selvaag Bolig s core areas during the quarter. Overall prices rose by three per cent in Oslo including Bærum, and were 21 per cent higher than at 31 March In Akershus county excluding Bærum, prices were up by 3.8 per cent from the previous quarter and had risen 16 per cent since 31 March Prices in Stavanger rose by two per cent and were up 5.4 per cent from 31 March They increased by 0.2 per cent in Bergen and were 4.5 per cent higher than a year earlier, while they rose by 1.3 per cent in Trondheim and were up by 7.4 per cent from 31 March The government adopted new residential mortgage regulations with effect from 1 January These set a loan cap of 60 per cent of the house value for loans for secondary homes in Oslo. The existing loan cap of 85 per cent on such homes is maintained for the rest of the country. The government also introduced a loan cap on a mortgagee s total where loans are limited to maximum five times their gross income. Terms for instalment-free periods have also been tightened somewhat. The loan cap requirement of 6o per cent of the house value has so far had little effect, while the restriction on maximum overall borrowing has helped to moderate price growth in Oslo. However, the regulatory change has had little effect in markets where house prices are lower than in Oslo. The banks still have flexibility in granting mortgages, but this is applied differently by the various lenders. 9

11 Interim financial statements (IFRS) Statement of comprehensive income (figures in NOK 1 000, except earnings per share) Q Q Revenues Other revenues Total operating revenues Project expenses ( ) ( ) ( ) Salaries and personnel costs (28 673) (25 352) ( ) Depreciation and amortisation (1 126) (6 158) (20 061) Other operating expenses (29 350) (26 673) ( ) Other gains (losses), net Associated companies and joint ventures (4 222) (1 320) (7 104) Total operating expenses ( ) ( ) ( ) Operating profit Financial income Financial expenses (12 057) (9 027) (37 585) Net financial expenses (9 238) (6 932) (29 321) Profit/(loss) before taxes Income taxes (14 205) (63 694) Net income Other comprehensive income/expenses Translation differences 210 (1 187) (3 095) Total comprehensive income/(loss) for the period Net income for the period attributable to: Non-controlling interests (267) Shareholders in Selvaag Bolig ASA Total comprehensive income/(loss) for the period attributable to: Non-controlling interests (267) Shareholders in Selvaag Bolig ASA Earnings per share for net income/(loss) attributed to shareholders in Selvaag Bolig ASA: Earnings per share (basic and diluted) in NOK The consolidated financial information has not been audited 10

12 Statement of financial position (figures in NOK 1 000) Note Q Q ASSETS Non-current assets Goodwill Other intangible assets Property, plant and equipment Investments in associated companies and joint ventures Loans to associated companies and joint ventures Other non-current assets Total non-current assets Current assets Inventories (property) Trade receivables Other current receivables Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity attributed to shareholders in Selvaag Bolig ASA Non-controlling interests Total equity LIABILITIES Non-current liabilities Pension liabilities Deferred tax liabilities Provisions Other non-current non interest-bearing liabilities Non-current interest-bearing liabilities Total non-current liabilities Current liabilities Current interest-bearing liabilities Trade payables Current tax payables Other current non interest-bearing liabilities Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES The consolidated financial information has not been audited 11

13 Statement of changes in equity Share Other Cumulative Share premium paid-in translation capital account capital differences Other reserves Equity attributed Retained to shareholders in earnings Selvaag Bolig ASA Noncontrolling Total interests equity EQUITY AS OF 1 JANUARY *) Transactions with owners: Share buy back (2 454) (46 035) (48 489) - (48 489) Employee share program Total comprehensive income/(loss) for the period: Net income/(loss) for the period Other comprehensive income/(loss) for the period EQUITY AS OF 31 MARCH *) EQUITY AS OF 1 JANUARY *) Transactions with owners: Share buy back (453) (5 374) (5 827) (5 827) Employee share program Total comprehensive income/(loss) for the period: Net income/(loss) for the period Other comprehensive income/(loss) for the period (1 187) - - (1 187) - (1 187) EQUITY AS OF 31 MARCH *) Transactions with owners: Dividend ( ) ( ) - ( ) Share buy back (966) (17 041) (18 007) - (18 007) Employee share program Total comprehensive income/(loss) for the period: Net income/(loss) for the period (310) Other comprehensive income/(loss) for the period (1 908) - - (1 908) - (1 908) EQUITY AS OF 31 DECEMBER The consolidated financial information has not been audited *) Non-controlling interests includes tax from profits in companies subject to partnership taxation. Income taxes in the Group does not include taxes from tax subjects outside the Selvaag Bolig Group. 12

14 Statement of cash flow (figures in NOK 1 000) Q Q CASH FLOW FROM OPERATING ACTIVITIES Profit/(loss) before taxes Income taxes paid (57 472) - ( ) Depreciation and amortisation Other gains (losses), net - - (31 679) Share of profits/(losses) from associated companies and joint ventures Changes in inventories (property) ( ) Changes in trade receivables (38 147) (2 373) Changes in trade payables ( ) (40 127) Changes in other operating working capital assets (3 129) (67 062) Changes in other operating working capital liabilities Net cash flow from operating activities ( ) CASH FLOW FROM INVESTMENT ACTIVITIES Proceeds from sale of property, plant and equipment and intangible assets Purchases of PPE and intangible assets (176) (324) (408) Proceeds from disposal of businesses and subsidiaries, net of cash disposed Purchases of businesses and subsidiaries, net of cash acquired Proceeds from sale of associated companies Purchases of associated companies and joint ventures (20) - (12 835) Proceeds from sale of other investments and repayment of loans Purchases of other investments and loans (44 242) (8 882) (32 954) Dividends and disbursements from associated companies and joint ventures Net cash flow from investment activities (25 841) (2 956) (14 818) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings Repayments of borrowings ( ) ( ) ( ) Net change in bank overdrafts Dividends paid to equity holders of Selvaag Bolig ASA - - ( ) Share buy back Selvaag Bolig ASA (48 489) (5 827) (23 834) Proceeds from disposal of shares Selvaag Bolig ASA Net cash flow from financing activities ( ) ( ) Net change in cash and cash equivalents ( ) (64 538) Cash and cash equivalents at start of period Cash and cash equivalents at end of period The consolidated financial information has not been audited 13

15 Selected notes to the quarterly financial statements 1. General information and accounting policies Selvaag Bolig ASA (the "company") and its subsidiaries (together the group ) is a property development group, involved in the construction of residential property for sale in the ordinary course of business. The condensed consolidated interim financial information consists of the group and the group s interest in associated companies and jointly controlled entities. The group's consolidated financial information have been prepared in accordance with IAS 34 Interim Financial Reporting. The report does not include all the information and disclosures required for annual financial statements and should be read in conjunction with the group s consolidated financial statements for The accounting policies applied in preparing these interim condensed consolidated financial statements are consistent with those applied in the group s consolidated financial statements for the year ended 31 December Group management has not yet evaluated the impact of implementing new, revised and amended standards with a later date of adoption. 2. Accounting judgements, estimates and assumptions The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting principles and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. In preparing this consolidated interim financial information, the significant judgements made by management in applying the group s accounting policies and the key sources of estimation uncertainty were largely the same as those that applied in the consolidated financial statements for the year ended 31 December Transactions with related parties See note 23 in the group's Consolidated Financial Statements for 2015 for detailed information on related party transactions in previous years. 4. Segment information The main segment is defined as Property development. In addition the Other segment consists of Services and Estate Agent, as well as unallocated revenues and costs. The group utilises the percentage of completion method in its internal reporting for which the degree of completion is estimated based on expenses incurred relative to total estimated costs and sales rate. Operating profit (loss) under the percentage of completion method also includes an estimated profit element. The group consolidated income statement is based on the completed contract method, in which revenue is recognised at the time of transfer of risk and control, being the point of delivery of the property. A reconciliation of this effect (from stage of completion to completed contract) can be found in the segment reporting under "Reconciliation EBITDA to operating profit (loss)". Group management considers segment results based on the percentage of completion method for determining EBITDA. The method of measurement is defined as operating profit (loss) before Depreciation and amortisation, Other gain (loss), net, and Share of income (losses) from disposals from associated companies and joint ventures. Financial income and expenses are not allocated to operating segments since this type of activity is managed by a central finance function focused on managing the group s liquidity. 14

16 First quarter 2017 (figures in NOK 1 000) Property development Other Total Operating revenues Project expenses ( ) (412) ( ) Other operating expenses (13 121) (44 902) (58 023) EBITDA (percentage of completion) (37 482) Reconciliation EBITDA to operating profit (loss): EBITDA (percentage of completion) (37 482) Sales revenues (adjustment effect of percentage of completion) ( ) - ( ) Sales revenues (completed contract) Project expenses (adjustment effect of percentage of completion) Project expenses (completed contract) ( ) - ( ) Depreciation and amortisation - (1 126) (1 126) Share of income (losses) from associated companies and joint ventures (4 222) - (4 222) Other gain (loss), net Operating profit (loss) (38 608) Units under construction N/A N/A Units delivered 85 N/A N/A First quarter 2016 (figures in NOK 1 000) Property development Other Total Operating revenues Project expenses ( ) (1 058) ( ) Other operating expenses (14 374) (37 651) (52 025) EBITDA (percentage of completion) (32 685) Reconciliation EBITDA to operating profit (loss): EBITDA (percentage of completion) (32 685) Sales revenues (adjustment effect of percentage of completion) ( ) - ( ) Sales revenues (completed contract) Project expenses (adjustment effect of percentage of completion) Project expenses (completed contract) ( ) - ( ) Depreciation and amortisation - (6 158) (6 158) Share of income (losses) from associated companies and joint ventures (1 320) - (1 320) Other gain (loss), net Operating profit (loss) (38 843) Units under construction N/A N/A Units delivered 179 N/A N/A 15

17 5. Inventory - property The group has property that is land and buildings intended for sale in the ordinary course of business or which is in the process of construction or development for such sale. Inventories thus comprise land, property held for resale, and property under development and construction. Inventories are measured at the lower of cost and net realisable value. (figures in NOK 1 000) Q Q Land (undeveloped) Work in progress Completed units Carrying amount Project expenses and EBITDA The group expenses all directly attributable costs in construction projects as project expenses. This includes financial expenses. Below is a specification showing the project cost and EBITDA including and excluding financial expenses. (figures in NOK 1 000) Q Q Project expenses ( ) ( ) ( ) Finance expenses (11 854) (21 775) ( ) Other project expenses ( ) ( ) ( ) (figures in NOK 1 000) Q Q EBITDA EBITDA-margin 17.9% 11.1% 13.8% EBITDA excl. financial expenses EBITDA-margin excl. financial expenses 20.5% 14.6% 17.1% 16

18 For further information, please contact: Baard Schumann, CEO Selvaag Bolig ASA Telephone: , Sverre Molvik, CFO Selvaag Bolig ASA Telephone: , About Selvaag Bolig Selvaag Bolig ASA is a residential property developer controlling the entire value chain from acquisition of land to sale of homes. The company has several thousand homes under development at any given time, and focuses on the growth areas in and around Greater Oslo, Bergen, Stavanger and Trondheim. Selvaag Bolig represents a continuation of Selvaag s 70-year history and experience, and offers a broad variety of property types marketed under the brand names Start, Hjem and Pluss. The company is headquartered at Ullern in Oslo.