Company presentation. Baard Schumann, CEO Sverre Molvik, CFO November 2014

Transcription

1 Company presentation Baard Schumann, CEO Sverre Molvik, CFO November 2014

2 Selvaag Bolig is a residential developer that provides targeted housing concepts to suit aspirations of different households in and around the main cities: Oslo, Stavanger, Bergen and Trondheim 2

3 Norway s leading homebuilder Tromsø 155 units Sales in Q3: 259 units Industrial approach to homebuilding Land bank for homes Trondheim 332 units Housing concepts tailored to house buyer requirements Bergen 156 units Stavanger units Greater-Oslo units Stockholm 103 units Other 310 units Note: The numbers represent the size of the land portfolio as at 30. September All numbers are adjusted for Selvaag Bolig s share in joint ventures. 1) Greater Oslo area: Oslo, Akershus, Buskerud, Vestfold and Østfold, 2) 260 units at Stord (Hordaland county) and 50 units at Alfaz Del Sol (Spain), 3) The residential property development portfolio consists of land plots that are to be paid for when planning permission is received. These have a development potential of ~3 700 residential units, whereof the company has purchasing obligations for ~3 200 and purchasing options for ~500. units.

4 Housing for all Housing for all The Gullhaug House homes completed Pluss: Housing with extra service 2012 Modular construction 2011 Listed at Oslo Børs Defined housing concepts 1999 Terraced buildings Løren district 1988 «It is better to build homes for kroner than homes for kroner» 1958 Industrial production Olav Selvaag Veitvet district The Ekeberg House 4

5 Value creation in Selvaag Bolig 6 36 MONTHS 6 12 MONTHS MONTHS 3 9 MONTHS Residential development Acquire and refine land for development Project design Marketing and sale Construction Value creation Zoning Sales start Construction start Deliveries Project optimization Buy (i) options on unzoned land, or (ii) ready to build land Lever acquired land to improve ROE Plan and prepare for construction Target 60% pre-sale before start-up (irrevocable purchase contracts) Prices on remaining 40% increased gradually during sell out phase Fixed price contracts with reputable and solid counterpart Construction costs financed with construction loans Target 100% sale at delivery 5

6 Norwegian housing market Good demand for new homes and persistent population growth in urban areas Low risk for housebuilders Advance sales: banks require that 50-70% of homes are sold before construction starts Binding offers: offer to purchase is a binding sales contract, and requires a 10% minimum cash deposit High level of home ownership 85% (one of the world s highest) Economic benefits for home owners 27% of mortgage loan interest payments are tax-deductible Transfer stamp duty for new houses is lower than for second hand homes Attractive market outlook Strong population growth High level of purchasing power Favourable macro-economic climate and low interest rates Source: Source Selvaag Bolig and Eurostat 6

7 Selvaag Bolig value proposition Selvaag Bolig ASA is a Norwegian residential property developer with no in-house construction arm, which controls the entire value chain from the acquisition of land to the sale of homes. Proven low-cost strategy Very competitive prices ensure a broad customer base No in-house construction arm low building costs fixed construction price reduced risk smaller exposure to market fluctuations Defined housing concepts Aimed at broad consumer categories Profit maximisation in all projects Large land bank Several thousand homes under development in Norway s four fastest growing urban regions 7

8 Three well defined and robust concepts Affordable apartments based on a "no frills" model Low cost land plots situated in fringe zones of large cities Mostly modular based construction Young people in the start-up phase Apartments/small houses situated in high density areas Established housing solutions, solid quality and well planned living environment Modular and on site construction Single people/couples in all ages, with/without children Apartments with attractive, central location in large cities High quality standard coupled with a service concept On site construction Affluent customers who value comfort and convenience 8

9 Low-risk business model Risk profile at start of project De-risking in key stages of projects 100 % 90 % 80 % 10 % 12%-16% 1 - Land purchase conditional on zoning approval Purchase and payment of land takes place after zoning plan approval. If this is not obtained, the purchase is cancelled SBO is in charge of the zoning process 70 % 60 % 50 % 40 % 30 % 100 % 74%-78% 60 % 2 - Land purchase price based on market value at time of zoning approval Purchase price is decided by a land appraisal made by three external consultants at the time of zoning approval The median valuation is used as purchase price 20 % 10 % 0 % Sales price Equity investment Project margin Remaining project cost Minimum pre-sale Selvaag s equity investment in the project and project margin bring the remaining project cost down to 74%-78% With minimum 60% pre-sale, there is limited remaining project risk 76% of units in production are sold per Q Minimum sales rate of 60% before construction 4 Fixed price construction contract Pre-sales of minimum 60% secures the majority of revenue before construction 10% of purchase price paid by the buyer at point of sale, and proof of financing for the remaining amount is required Construction contracts with solid counterparties are made with fixed price Project costs are secured before construction starts 9

10 Industrial approach Modular construction Sub-contractors in Estonia and Poland Modern factories 14 years of experience Profitable Lower construction costs Higher project margins Sensible house prices High quality Reduced risk of faults Technically better homes Energy efficient homes 10

11 OPERATIONAL UPDATE Strong sales development Total sales value and value per sold unit Residential units sold NOKm Units * * ,6 4, ,5 3,4 3,5 Q3 13 Q4 13 Q1 14 Q2 14 Q Q1 Q2 Q3 Q4 Note: All numbers are adjusted for Selvaag Bolig s ownership in joint ventures. * Includes 95 student residences with an average value of NOK 0.7 million (dotted area) 11

12 OPERATIONAL UPDATE Sales development per quarter Total value of units sold per quarter Units sold per quarter MNOK No of units * * Q3 13 Q2 14 Q3 14 Q3 13 Q2 14 Q3 14 Note: All numbers are adjusted for Selvaag Bolig s ownership in joint ventures. * Includes 95 student residences with an average value of NOK (shaded area) 12

13 FINANCIAL UPDATE Income statement highlights Q (NGAAP) Revenues and EBITDA margin (NGAAP)* 12 months rolling revenues (NGAAP)* NOKm NOKm % 11 % 18 % 15 % 17 % Q Q Q Q Q Q Q Q Q Q Operating revenues EBITDA margin * Construction costs are exclusive of financial expenses in the segment reporting (NGAAP) 13

14 FINANCIAL UPDATE Income statement highlights Q (IFRS) Delivery of 279 units (187) Revenues NOK 765 million (677) Including 95 student residences with an average value of NOK 0.7 million Project costs NOK 628 million (536) Other costs NOK 47 million (56) Revenues and EBITDA margin (IFRS) NOKm EBITDA NOK 95 million (91) EBITDA adjusted 125 million Adjusted for financial expenses included in project costs Earnings per share NOK 0.65 Earnings per share year-to-date NOK % % 12 % 4 % 0 % Q Q Q Q Q Operating revenues EBITDA margin 14

15 FINANCIAL UPDATE Cash flow development Q Positive cash flow from operating activities Condensed cash flow NOKm Dividends from JV in Stockholm of NOK 27 million Continued high activity in projects under construction (1) 51 (48) (36) 23 (57) 777 Cash and cash equivalents at 30 June 2014 Profit (loss) before income taxes Depreciation and amortisation Share of profits/ (losses) from associated companies Changes in inventories (property) Changes in trade receivables Other changes in working capital CF from investment activities Net change in borrowings Cash and cash equivalents at 30 September

16 FINANCIAL UPDATE Balance sheet highlights Q Book value per share NOK 24.7 NOK 24.0 in Q Balance sheet composition NOKm Changes since Q2 2014: Non-current assets Trade receivables increased by NOK 48 million Equity Inventories reduced by NOK 32 million Net reduction of NOK 57 million in interest-bearing liabilities Prepayments from customers count for NOK 326 million of other current non interest-bearing liabilities Current assets Cash Assets Non-current liabilities Current liabilities Equity and Liabilities 16

17 FINANCIAL UPDATE Inventories (property) Q Land value increased NOK 20 million from last quarter Acquisition of land at Stabekk for NOK 16.5 million Work in progress decreased by NOK 63 million from last quarter Due to increase in units delivered Inventory value development NOKm Finished goods increased by NOK 12 million from last quarter Due to increase in completed undelivered units (the majority is sold) Q Q Q Q Q Land (undeveloped) Work in progress Finished projects 17

18 FINANCIAL UPDATE Sound debt structure Interest bearing debt as at 30 Sep Loan facility 1 NOK 500 million senior unsecured bond loan maturing in NOK 150 million revolving credit facility from DNB maturing in 2015 Drawn per 30 Sep (NOKm) Interest rate margin % % NOK million NOK 150 million working capital facility from DNB maturing in Land loan facilities from a range of Nordic credit institutions 5 Construction loan facilities from a range of Nordic credit institutions % % % % % Top-up loan Land Loan Construction loan Note: Bond loan of NOK 500m differs form the summed up top up loan in the pie chart (NOK 491m). The difference is due to NOK -9m in amortized cost which is not actual debt. 18

19 OPERATIONAL UPDATE Continued high production activity Development units under construction Production split Units NOK million % Units 42 % Module On-site Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Number of units under construction Sales value (NOK million) Note: Projects are included when construction is decided. All numbers are adjusted for Selvaag Bolig s ownership share in joint ventures. Selvaag Bolig currently has residential units under construction including joint venture projects. Sales value of units under construction NOK million 61% of production volume in Greater Oslo 76% of the units are sold 19

20 COMPANY OUTLOOK Strong number one position Good sales development for all players this quarter Particularly strong sales for Selvaag Bolig Company strategy support market position: Sales activity vs. peers Units 300 Low-cost strategy: Selvaag Bolig average price 9M 2014*: NOK 3.5m Total market average price 9M 2014*: flats NOK 3.6m, terraced NOK 4.1m, semidetached NOK 4.3m No in-house construction arm Defined housing concepts Large land bank * Selected markets: Oslo, Akershus, Hordaland, Rogaland, Troms and Sør-Trønderlag Housing types Selvaag Bolig: flats, semi-detached and terraced homes Q Q Q Q Q Source: Selvaag Bolig and Eiendomsverdi 20

21 COMPANY OUTLOOK Overall construction activity back on good levels Units under construction vs. peers No of units Q Q Q Q Q

22 COMPANY OUTLOOK Construction starts increasing Construction starts vs. peers No of units Q Q Q Q Q

23 COMPANY OUTLOOK High level of completions compared to market Completed units vs. peers No of units Q Q Q Q Q

24 COMPANY OUTLOOK Second-hand market: Sound market in Oslo, challenging in Rogaland Oslo and Akershus, October Rogaland, October Units Units Market inventory secondary homes 31 October Market inventory secondary homes 31 October 2014 Sold units October 2014 Sold units October 2014 Selected areas: Oslo, Lørenskog, Ski,Oppgård, Bærum, Asker Selected areas: Stavanger, Sola, Randaberg, Sandnes Source: Eiendomsverdi 24

25 Appendix 25

26 Income statement IFRS (figures in NOK million) Q Q M M Total operating revenues Project expenses (628.3) (535.7) ( ) ( ) ( ) Other operating expenses (41.6) (50.6) (135.1) (151.0) (208.8) Other gains (loss) (0.4) Associated companies and joint ventures EBITDA Depreciation and amortisation (5.1) (5.5) (15.5) (16.7) (22.1) EBIT Net financial expenses (5.9) (6.1) (16.7) (27.1) (30.0) Profit/(loss) before taxes Income taxes (23.4) (20.3) (46.7) (64.3) (51.4) Net income Net income for the period attributable to: Non-controlling interests Shareholders in Selvaag Bolig ASA

27 Cash Flow statement (figures in NOK million) Q Q M M Net cash flow from operating activities 56.6 (215.1) Net cash flow from investment activities Net cash flow from financing activities (56.7) (313.2) (123.7) Net change in cash and cash equivalents 23.0 (154.1) (5.1) 29.1 Cash and cash equivalents at start of period Cash and cash equivalents at end of period

28 Balance sheet (figures in NOK million) Q Q Q Intangible assets Property, plant and equipment Investments in associated companies and joint ventures Other non-current assets Total non-current assets Inventories (property) Land Work in progress Finished goods Other current receivables Cash and cash equivalents Total current assets TOTAL ASSETS Equity attributed to shareholders in Selvaag Bolig ASA* Non-controlling interests Total equity Non-current interest-bearing liabilities Other non-current non interest-bearing liabilities Total non-current liabilities Current interest-bearing liabilities Other current non interest-bearing liabilities Total current liabilities TOTAL EQUITY AND LIABILITIES * Corresponding to a book value of NOK 24.7 per share 28

29 Operational highlights key operating figures (number of residential units, unless otherwise stated) Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 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% 75% 76% 76% 76% Number of completed unsold units Sales value of units under construction (NOK million) Number of employees

30 FINANCIAL UPDATE Land bank valuation External valuation vs. booked value Independent land valuation, by Akershus Eiendom. NOKm Valuation is mainly based on a calculated profit from sales of fully developed housing units For projects under development, remaining costs are split on developer and buyer, affecting value distribution 690 DCF valuation method is applied on residents for lease Booked value Added value Valuation Akershus Eiendom 30

31 FINANCIAL UPDATE Substantial portfolio for development Total land bank portfolio at 30. September No of units 31

32 Underlying demand remains strong Housing shortage in Norway - annualized forecast as of Q2 No of units Favourable macro environment Continued low interest rates Low unemployment Income growth Favourable demographic conditions High population growth, high immigration More small households More young adults, more elders Housing need Housing construction Housing shortage Substantial housing need Supply outpaced by population growth Demand in cities dampened by high prices Strong sales in suburbs Source: Prognosesenteret 32

33 Concepts are complementary when creating new urban neighbourhoods Lervig Brygge (Stavanger) Løren (Oslo) Løren Start No of apartments Lørenpynten 88 No of apartments Løren Torg 127 No of apartments Hageby Start 108 No of apartments Sjøkvartalet 36 No of apartments 1224 flats delivered to customers 185 flats delivered to customers 127 flats under construction 188 flats under construction 56 flats where sale has started Addition 500 units in phase II Addition 235 units at Løren 5 and 171 units at Lørenvangen Lervig Brygge Pluss 67 No of apartments 188

34 PROJECT PORTFOLIO AND LAND BANK Land bank - Løvholmen Location of plot at Løvholmen 34

35 Norway: A robust economy GDP growth e 6% 4% 2% 0% -2% -4% Unemployment e 12% 10% 8% 6% 4% 2% -6% e 2013e 2014e 2015e 0% e 2013e 2014e 2015e France Germany UK Sweden Norway France Germany UK Sweden Norway Population growth e Public net debt/gdp e 100% Norway 23.0% 50% Sweden 12.0% 0% UK 12.0% -50% -100% France 8.0% -150% Germany -5.0% -200% e 2013e 2014e 2015e France Germany UK Sweden Norway Source: IMF, Statistics Norway, Statistics Sweden, Statistics France, Statistics Germany, Statistics UK, Eurostat 35

36 MARKET OUTLOOK Price increase deflated by purchasing power High gap between nominal and real price development past ten years Housing price development in Norway Index 700 Price increase since 1985: Nominal: 6.3x Adjusted for CPI: 3.0x Adjusted for disposable income: 1.5x The increase in purchasing power explains much of the nominal growth in housing prices Nominal prices CPI adjusted prices Prices adjusted for disposable income per capita Source: Norges Bank 36

37 Purchase power stronger than ten year average Household interest payments after tax as a proportion of post-tax earned income 40 % 2013 Single 21 % 30 % Young couple 20 % 12 % 10 % 0 % Established couple 7 % Single Young couple Established couple Source: Statistics Norway 37

38 Housing completions and population growth Housing completions Population growth Source: Statistics Norway 38

39 Population growth Low High Medium Source: Statistics Norway 39

40 Breakdown for medium population growth Immigration Other growth Source: Statistics Norway 40

41 Origin of current Norwegian immigrants There are first or second generation immigrants in Norway 3 % 3 % 0 % Immigrants account for 13 per cent of the population Most represented countries are Poland and Sweden 31 % 52 % Europe Africa Asia North America South America Labour immigrants settle in and around the Major cities 11 % Oceania Source: Statistics Norway 41