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Selvaag Bolig ASA: Q1 2020: good start to the year

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Selvaag Bolig had 1 431 homes worth NOK 6 742 million under construction at 31 March. Seventy-six per cent of these, and 82 per cent of the ones due for completion in 2020, had been sold.

“Results for the quarter were in line with our expectations,” says Rolf Thorsen, CEO of Selvaag Bolig.

“Value creation in the projects is good, we delivered homes with good margins and the sales ratio for homes under construction has increased.

“Sales have also been good, given the challenging times. A target campaign has yielded positive results, and we’ve sold homes close to completion as well as in projects where construction has yet to start.”

This performance has continued after the end of the quarter, he reports, and adds that the company is making virtually normal progress at its construction sites.

“Demand for housing is high in our core areas, and doesn’t disappear because of Covid-19. The government has also relaxed the residential mortgage rules, the base rate has been set at zero and we’re heading for a reopening of workplaces.

“It’s important to remember that residences are homes, not just pure investment objects. People don’t sell their homes at a loss unless they’re forced to, and there is little sign that many will be.

“We have more than 700 homes on sale, and expect to see a normalisation of the housing market in the time to come.”

The profit margin in the first quarter is not directly comparable with the same period of 2019, since the company has largely delivered homes from joint ventures this year.

Selvaag Bolig’s share of profits from such collaboration projects are recognised net, while turnover is unaffected. That yields a high EBITDA margin.

In addition, the sale of large parts of Selvaag Bolig’s land bank to Urban Property was implemented during the first quarter.      
    

Highlights of the first quarter 2020 (first quarter 2019)

  • Construction under way on 1 431 homes net (1 534) with a combined sales value of NOK 6 742 million (NOK 7 097 million).
  • 76 per cent (70 per cent) of homes under construction sold at 31 March.
  • 82 per cent of homes for completion in 2020 are sold.
  • Implemented transaction with Urban Property covering the sale of large parts of the land bank, giving an accounting gain of NOK 1 029 million****.
  • Pre-tax profit of NOK 1 137 million (loss of NOK 21 million)****.
  • IFRS**: Operating revenues of NOK 209 million (NOK 109 million), EBITDA adjusted for financial expenses NOK 117 million (negative at NOK 9 million), corresponding to a margin of 56 per cent (negative at 8.2 per cent).
  • Earnings per share: NOK 12.80 (negative at NOK 0.61).
  • NGAAP***: Operating revenues of NOK 756 million (NOK 680 million), EBITDA of NOK 160 million (NOK 154 million), corresponding to a margin of 21.1 per cent (22.7 per cent).
  • Construction starts for 15 homes net (97), completions of 89 net (12) and deliveries of 114 net (29) to buyers.
  • Gross sales* amounted to 196 homes (270) with a sales value of NOK 1 031 million (NOK 1 320 million).
  • Net sales were 164 homes (243) with a sales value of NOK 840 million (NOK 1 183 million).

* Net sales include Selvaag Bolig’s share of joint venture projects. Gross sales include all homes in joint venture projects.

** Pursuant to the IFRS, all profit is recognised when the homes are delivered to the buyer. Profit pursuant to the IFRS accordingly derives primarily from homes which began to be built roughly two years ago.

*** The accounts pursuant to Norwegian generally accepted accounting principles (NGAAP) utilise the percentage of completion method. This means that profits are recognised on the basis of construction progress and sales in the projects. That presents ongoing value creation in the company.

**** The Urban Property transaction has a one-off effect on the company’s pre-tax profit of NOK 1 029 million. The rest of the pre-tax profit came to NOK 108 million.

The live webcast can be viewed from 08.30 here. An English transcript of the presentation will be made available on the company’s website by 21 May.

Further information from
Rolf Thorsen, CEO, Selvaag Bolig ASA
Telephone: +47 901 19 373, e-mail: rt@selvaagbolig.no

Sverre Molvik, CFO, Selvaag Bolig ASA
Telephone: +47 401 00 585, e-mail: smo@selvaagbolig.no

Kristoffer Gregersen, vice president communication and marketing, Selvaag Bolig ASA
Telephone: +47 957 75 593, e-mail: kgr@selvaagbolig.no


 
Selvaag Bolig ASA is a residential property developer which controls the entire value chain from acquisition of land to sale of turnkey 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. The company’s head office is at Ullern in Oslo.

www.selvaagboligasa.no
 

This information is subject to the disclosure requirements specified in section 5-12 of the Norwegian Securities Trading Act.

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