12 February 2020/08.30 CET – Q4 2019/Selvaag Bolig ASA earnings presentation

Translation from the original Norwegian, which remains the definitive version

Corporate participants Rolf Thorsen, CEO, Selvaag Bolig ASA Sverre Molvik, CFO, Selvaag Bolig ASA

Presentation

Rolf Thorsen, CEO, Selvaag Bolig ASA I would like to wish you heartily welcome to the fourth-quarter presentation for Selvaag Bolig. My name is Rolf Thorsen, CEO of Selvaag Bolig. Together with Sverre Molvik, our CFO, I will be presenting the results for the fourth quarter of 2019 and the full year. We’ll cut straight to the chase. There will be a Q&A session at the end, so that it would be good if you try to save up your questions until then. And those who’re following this streamed presentation on the web will also have the opportunity to send in questions, so we’ll try to collect these at the end. I’ll start by saying a few words about the overarching picture and a bit about sales. Sverre will then follow with masses of details about financial aspects and operational data. I will then return and talk a bit about the market and sum up at the end. We have had a very good 2019. We issued a stock exchange announcement this morning with the headline “record result and dividend”, and that’s quite correct, of course. Sverre will come back to the exact figures on this. But it has been a very strong year, based naturally on the fact that we have managed to sell and build a lot. It’s as simple as that. And then we have the fact that 2019 has also been very affected by this Urban Property transaction. That’s demanded a lot from us in the form of work, of course, perhaps particularly in the second half when much attention was devoted to it. And we can undoubtedly say now that this looks absolutely as if it could be a success. It has also allowed us to pay an extraordinary dividend of NOK 22 per share, which appears to have been much appreciated by both shareholders and analysts. And it’s also the case that, based on our results for 2019, the board has proposed that we pay an ordinary dividend of NOK 3.00 per share for the second half of 2019. That’s in addition to the NOK 2.00 which has already been paid. This means that, viewed overall, 2019 was a quite incredibly good year in terms of dividend. But it’s also the case that this Urban Property transaction has been implemented precisely so that we can maintain the dividend strategy and policy which we’ve had. It’s absolutely not our intention to pay out NOK 27.00 per year for the future, but to maintain a good level of dividend in the years to come. So to a few details. I won’t weary you with too many, but nevertheless provide some. Results for the quarter in accordance with the IFRS are a turnover of NOK 1.4 billion and a margin of 28 per cent, and for the full year are a turnover of almost NOK 3.4 billion and a record margin of 28.5 per cent. Sverre will provide more details here, but those of you who’re good at mental arithmetic can amuse themselves by multiplying NOK 3.4 billion with 28.5 per cent and seeing what the result comes to. Results for the quarter in accordance with NGAAP are a turnover just over NOK 1 billion and a margin of almost 22 per cent, and for the full year a turnover of 23.6 per cent and almost NOK 3.3 billion in operating revenue. So the business is doing well, we’re making good money and are actually working at full speed ahead. That’s been driven to a pretty considerable extent by good sales. Looking at the volume, the value of sales we made in the fourth quarter came to NOK 705 million, and the graph of units sold show that they totalled 140 in the fourth quarter and 752 for the full year. These are net figures, so they report only our share of joint ventures. The gross figure is 908 units actually been sold. If you then look at the 12-month rolling figures for the same, I think this is a pretty impressive performance – a rising value even though our sales have been relatively flat over the past couple of years. This means that we must not become obsessed with the number of units alone, to the exclusion of their value. We see that the latter has then risen somewhat – not sharply, but moving steadily up a little. That has something to do both with what we offer and with the general price trend in the market. Viewed overall, therefore, a strong quarter and a strong year. Now Sverre will take us further into the details.

Sverre Molvik, CFO, Selvaag Bolig ASA I’ll start by taking a little look at operations. We had almost as many construction starts and completions in the fourth quarter as in 2018 – 248 as against 254. That means our pace was almost identical compared with the previous quarter. A total of 1 504 units were in production, down by six from the third quarter but with a value just over NOK 30 million lower at NOK 7 155 million. So a very good tempo. This is the order backlog, of course, results and turnover which will come down the road. Of this, 70 per cent was sold at 31 December and those of you who have kept abreast of media reports will undoubtedly have seen that the market remains liquid this year, so that we now naturally have a higher sales ratio already. Of this roughly NOK 7.2 billion, 91 per cent is in the Greater area or the east Norwegian region. So you can see for yourselves that when we get , and Trondheim restored to a normal level – and perhaps also – this has a very good potential. Looking ahead, our guidance on completions for the present year is the same as in the previous quarter, at 745 units with the bulk in the fourth quarter as is usually the case. Of this, 75 per cent was sold at 31 December and that proportion is now larger. By comparison, our overall sales ratio in the final quarter of 2018 was 66 per cent. So the sales ratio, all other things being equal, was higher during fourth quarter of last year. And the market is actually developing better, as Rolf will return to later. When putting projects on sale, we’re noticing that things have improved this year compared with the same time last year. That’s positive. As we usually say, we’re selling on a straight-line basis between the start to construction and completion. We thereby obtain the market price. Sales should actually be completely linear. In that respect, we’re very well placed with regard to the sales ratio and in line with where we are supposed to be. If we look at the financial results in accordance with the IFRS first, we had fewer deliveries in the fourth quarter than the year before – 214 compared with 421. The value of the units delivered was NOK 1 069 million compared with NOK 1 596. So the value was much lower. But we have had a couple of one-offs. These include the sale of a commercial property at Hamang – the old Statoil building there – because we failed to secure planning permission for the change of use we had envisaged and because there was demand in the rental market there and we have then sold this as a yield property. The transaction has been recognised as turnover because the property was registered as a warehouse when we acquired it and has been sold on with the same designation. It has not been requalified, for those of you who wondered about that. In addition, we have sold an option contract in Asker which we would have developed if we had been able to participate in it. So that’s why we’ve sold – we haven’t got rid of land we could otherwise have used in our core business. We’ve disposed of property and we’ve also achieved a good and sensible margin on these sales, even though it’s not as good as the one we have in the rest of our ordinary operations. Other revenues include normal Pluss service earnings and rental income, totalling NOK 26 million. Overall, therefore, despite fewer deliveries, we ended up with revenues more or less unchanged from the year before. Not that bad, at any rate, at NOK 1 414 million compared with NOK 1 625 million for the record fourth quarter of 2018. Project costs at NOK 937 million were in line with the forecasts for the final result we make when starting sales. As I usually say, we’re very good at managing our projects. When we start sales in a project, the costs we enter in our calculations usually end up lower by the time we complete construction. We also add in a little as a safeguard, unforeseen items and so forth, in these calculations. Project costs included interest expenses of NOK 23 million related to the units delivered. Other expenses came to NOK 92 million and were a good bit higher than the NOK 83 million for the same period of 2018. That was almost entirely because of NOK 12 million in consultancy fees related to the Urban Property transaction. Apart from that, other expenses were at a normal level. No comments are otherwise required on sales, marketing and payroll costs in relation to the fourth quarter. Viewed in isolation, I must say that other expenses in this period were higher in part because bonus payments were made during the quarter, which also otherwise weaken the results. We report an adjusted EBITDA, of course. We do this in order to manifest those financial expenses which form part of project costs with IFRS accounting – as I’ve said on many occasions, but which I repeat for those who haven’t heard it before. This ended up then at NOK 398 million, corresponding to a margin of 8.2 per cent. That’s good and very solid, particularly given the fact that we took a little impairment charge during the quarter on a joint venture in Trondheim which wasn’t doing very well. The market at Heimdal is a

little sluggish at the moment. Earnings per share came to NOK 3.00 for the quarter, and we will be recommending a dividend of NOK 3.00 per share for the second half. I’ll come back to that. If we look at results for the full year, we delivered fewer units but, because of the one-offs I mentioned just now, we ended up with a frighteningly similar top line of NOK 3 369 million compared with NOK 3 342 million – more or less the same turnover, but with an improvement of about 15 per cent in overall profitability to just under NOK 1 billion. We didn’t quite hit the billion in adjusted EBITDA, which came to NOK 959 million. We are very satisfied with that, of course. Earnings per share came to NOK 7.04, which represents an improvement of 15-16 per cent from the record year in 2018. So it’s another record year and a very good result, with a margin of 29 per cent based on adjusted EBITDA. Let us look at results based on the percentage of completion method, which reflects value creation more accurately overall as a function of both sales and completion ratios. That is better than the IFRS, where profit is recognised 100 per cent on delivery to the final customer. It provides a steady flow which gives a better presentation of reality. Turnover ended up here as NOK 1 062 million with a margin of 22 per cent. The latter is a little lower than in the previous quarter, partly because of the bonus provisions in the fourth quarter but primarily because there were a fairly large number of completions and construction starts. When we launch new projects, they normally start off with a margin of 12 per cent. The project managers like to hedge their bets a little by letting the margins lie fairly low to begin with, and we then obtain more and more as we see how the projects are progressing in terms of sales and other uncertainties. If you go back in time, you can perceive that tendency fairly clearly. We had a significantly better margin in the fourth quarter of 2019 than in the same period of 2018. It was actually even stronger in 2018 because we then had around 440 deliveries and starts, and that effect made its mark even more strongly. But in any event we had very good margins and lie at a very good and strong level. It is the pipeline of NOK 7 billion which has this margin – this pot of projects. I have said on a number of occasions that it is theoretically unsustainable to maintain such a high margin as we do and have done over a very long time. This shows that it actually is sustainable. But it’s strange that we manage to carry on in this way. It isn’t usually normal in a market where we have such a big share that nobody takes a bite of that cake. That’s the way it is. Where cash flow is concerned, we had an opening balance of NOK 488 million and no less than NOK 944 million in positive cash flow from operations. A little of a perfect storm, which includes profit, one-off sales and the improvement in accounts receivable. It’s naturally a great deal. Investment activity was negative at NOK 10 million, and we have redeemed a good deal of debt. We thereby end up with a cash flow of NOK 1 179 million. That’s very considerable, of course. We’ve allowed that cash to lie there comfortably since the dividend bill comes just a month later. If you might think this showed poor cash management, that’s not the case. It was very temporary. Looking at the balance sheet, equity per share has risen by roughly NOK 1.30 over the quarter to NOK 36.00. This corresponds to an equity ratio of 48.9 per cent, which is very solid. That’s naturally before the Urban Property transaction. I will come back later a little to the effect of that. It actually comes up right away with inventory, which is down by NOK 1 018 million. I’ll also come back to that later. Accounts receivable decreased by NOK 175 million, reflecting normalised deliveries during the quarter. That’s also typical for the fourth quarter, when you try to deliver a bit in good time before Christmas and thereby get the money out of the estate agent accounts. As a result, this quarter is better than the previous one. That varies, of course, it moves up and down by NOK 250 million. Cash in hand increased by NOK 690 million, while prepayments from customers amounted to NOK 207 million of other current non-interest-bearing liabilities. So let us look at inventory. A reclassification has been carried out here with the assets allocated as held for sale to Urban Property. That’s this NOK 663 million, which is the main reason for the massive reduction. In addition come the sale of the commercial property at Hamang and our share of this Asker project. Work in progress was otherwise more or less flat despite a decline of NOK 37 million, because the amounts involved are so large. Finished goods were up by NOK 12 million to lie actually at a normalised level in relation to our size. Where debt structure is concerned, this is unchanged for the time being. We have a top-up loan facility which is untouched, plus land and construction loans which were down at 31 December by about NOK 250 million to NOK 2 253 million. Net interest-bearing debt lay at a record-low level of NOK 1 075 million because of the cash flow I mentioned earlier.

Looking at return on equity, this is 21 per cent for the quarter as we define it. Earnings per share for the year, as I mentioned earlier, were NOK 7.04. We paid out NOK 2.00 for the first half and will pay NOK 3.00 now, making NOK 5.00 in all or about 70 per cent of profit for the year. Our dividend policy remains unchanged, at least for the time being. It’s a bit important to mention that the new Urban Property structure means there’s nothing to prevent us once we have stabilised the company’s equity threshold – call it that, we’ll have to see whether this is NOK 1.5 billion or NOK 2 billion over time – paying out 100 per cent of profit as dividend, since we no longer need equity for making land purchases. That’s part of this new Urban Property structure, which I’ll come back to a bit, and which is naturally a big advantage. I’ve included the extraordinary dividend of NOK 22.00 per share, which was paid in January. It’s not actually part of the quarterly figures. But there’s starting to be a lot of accumulated dividend since our IPO – far more than we promised, in any event. That was what I had to say about the ordinary financial figures, but I thought it would be sensible to say something about the Urban Property transaction as a small reminder to those of you who have not heard so much about it. What we’ve done, then, is to enter into a strategic collaboration with a company called Urban Property, which we have established ourselves and found shareholders for. The idea behind this is that Urban Property has both purchased the bulk of our property portfolio and will buy all future land exclusively for Selvaag Bolig. Earlier, we bought a site during the acquisition phase in the value chain which then remained unused for an average of perhaps five years on our balance sheet before we got the money out. That adds up to a lot of equity, and we had to allocate a lot of equity to buying more land. So what we’re going to do now is to work in exactly the same way on land acquisition, with the only difference being that Urban Property buys the site and allows this to be carried on its own balance sheet and we then buy it back so that we avoid tying up equity in property viewed overall. In a sector where the equity requirement largely involves precisely that, this is very favourable because we dramatically reduce our need for equity in Selvaag Bolig. The price we’re paying for that is also modest compared with the costs we have through using our equity combined with loan capital. It will end up at an option premium of roughly five per cent per annum – that’s 3.75 per cent plus Nibor, which at the moment is 5.5 per cent – which we pay on the total capital tied up in land purchases now, plus a transaction structure of 0.5 per cent when the land is purchased and two per cent when it’s bought back. I’ll illustrate in a little more detail what this will mean in an average project. Traditionally, we have bought land by injecting the income in the site – we’ll continue to do that, naturally – along with the construction costs and then adding a base margin. This has traditionally been 12 per cent, but can vary a little from developer to developer. You then calculate what you can afford to pay for the cost of land. In the example presented here, this is found to be NOK 69.7 million for the property and you offer up to that. In the future, then, you earn this base 12 per cent, corresponding to NOK 41.7 million. There’s also an IRR requirement of 12 per cent in the projects. What happens when we make this change is that the margin declines slightly by 1.2 per cent or to NOK 37.7 million on the bottom line for buying the same site. But the return on total equity in the project increases dramatically – and that’s the intention. This equity is the shareholder’s money, so that’s very favourable. So, in other words, when we’re buying in new projects together with Urban Property in the future, the margin will decline somewhat. Many of you will have seen the value chain diagram, which I’ve gone through a number of times. This is the way we buy land. This 12 per cent which I just mentioned is the column on the extreme left, at the start of our value chain. We then create the same added value throughout this chain as we have done before. There’s no change in the way we will be planning and designing our homes, in the way we award contracts, in the way we screw up prices during the construction phase and secure our margin, which has traditionally been 20 per cent in a flat market. As I have said, all other things being equal, this will go down by 1.2, perhaps two per cent. That’s very little. A little confusion prevails over what the margin picture will be in the future, and you must by all means speculate about that, but there’s no reason why it should go down by more than two per cent long term. So we’ve then sold a good deal of property to Urban Property, of course. What phase these are in naturally varies a little. If we have sold across something at 12 per cent to Urban in the phase immediately before construction starts, that margin will naturally be somewhat lower because we haven’t secured that

development influence. Otherwise, however, all other things being equal and in the long term, with an evergreen case, the margin will be slightly lower. I then have a balance sheet presenting the implications of the extraordinary dividend which are perhaps interesting for the analyst. This shows the effect of the one-off transaction. What’s important to note is that we have secured NOK 1.8 billion in free liquidity. We’ve paid out roughly NOK 2 055 million in dividend, which means that we have weakened the equity ratio from 49 to 41 per cent. The balance sheet effect is actually fairly marginal and, as some have commented, equity remains very solid – which is correct. We’ll then have to see what the long-term effect will be on the level of equity in Selvaag Bolig. I will then hand back to Rolf.

Rolf Thorsen, CEO, Selvaag Bolig ASA Thank you, Sverre. I’m going to say a little about the market and will start by showing a slide on price developments in and selected regions. We have tried to derive a kind of index of these trends for house prices in Oslo and the other major cities – the Norwegian markets we are in. There are two points I actually want to make with this slide. One is that being involved in housebuilding has been a good business. If we go back to 2005 and compare that year with today, we see that house prices in Oslo have risen by 140-150 per cent – in other words, they have more than doubled in 13-15 years. That is good in one way, of course, but not necessarily for the buyers. The other point, which is not actually directly illustrated here, is that the balance between supply and demand is what drives house prices – whether up or down. A great deal of discussion is being conducted over this in the media and – as those who follow such matters will have seen – in the Oslo city council. But our crystal-clear position is that the most important driver of house prices is the balance between supply and demand. This naturally assumes that the macroeconomic position and the overall economy are more or less positive. And that is actually emphasised by the fact that, if we had presented a graph here of completed homes per new resident, a direct correlation would have been seen between price developments and the supply of residential units in relation to the growth of these cities. We see that Stavanger grew very strongly up to 2016. At that point, 4.5 homes per new resident moving in were under construction in the city. This has resulted in a development which you can see for yourselves. At the same point in time, and actually fairly steadily over the final phase of this cycle, Oslo has seen new deliveries in the order of 0.5 homes per new resident moving in. And, assuming that about 1.7 people live in each home, you can see for yourselves that this creates a shortage of supply which actually drives prices up. And if we look a little more closely, and narrow this down to produce the same index for the past four- five years, we see that – although Oslo is in a way the strongest – there hasn’t been any massive development. We then say that this curve, which is already trending upwards, will turn even further up. And that is connected with the fact that the planning process in Oslo is keeping the construction of few homes far too low for the time being. In 2018, planning permission was awarded for land to be developed with 814 residential units. Last year, that figure was in the order of 2 000. I haven’t seen the final figure. And demand is much greater than that. If we look at both time series and forecasts, we can see that 2 900 units on average have been built annually in Oslo over this period. These are figures from Statistics Norway. And what we see for the next few years (the 2019 column is still marked as “estimated” because the final figures have yet to be released, but we’re pretty confident about these figures) is that we’ll actually be delivering fewer units in 2021 and 2022. This is known. Things may be a bit more uncertain for 2022, but the 2020-21 figures relate to projects which are under way if they’re going to be delivered in this period. The Prognosesenteret forecasting centre has calculated that housing need is in the order of 4 500- 5 000 homes per annum. So our modest assertion is that prices in Oslo will rise. And the result of this will be that Greater Oslo will also come under bigger housing pressure. People will be squeezed out. And we have already seen that effect. I will come back to that a little at the end. If we take a little look at the second-hand market, we can see that the pace of transactions is high here – in the order of 4 000 units in the fourth quarter – and that the inventory, at least in recent years, is contracting. The second-hand housing stock in Oslo is around 2 000 units, corresponding to half a quarterly housing turnover. So the inventory in the city is relatively small.

Looking at Bergen, we see a slightly different picture. But the trend is not so very different from Oslo. The tempo is actually fairly good. The second-hand inventory here is larger, of course, and represents a bigger share of the market. In Trondheim, we get this position strengthened a little further – a good level of activity, but quite a large supply side from a fairly big inventory. If we had gone back and looked at price developments, we would have seen that the relationship is fairly direct. The position in Stavanger is more or less the same, and actually pretty similar to Trondheim. So Bergen stands out perhaps a little, Oslo quite a lot, while we could say that Trondheim and Stavanger are more or less in balance and perhaps inclining a little towards being a buyers’ market. Turning to price developments, what we can actually say here is that Oslo was not alone during 2019 in with a trend which beat the growth in the consumer price index. Bergen was close to seeing the same progress. But the other markets here are, after all, quite simply a little too weak – two per cent in Trondheim and actually negative in Stavanger. Prices for January were presented about a week ago, and we saw that Stavanger is picking up again. It will be interesting to see how things continue to develop there. Employment growth in Stavanger is pretty strong and unemployment is declining, which is likely to exert an influence in the longer term. But a large inventory needs to be absorbed. Where newbuilds are concerned, Oslo displays a market which shows some of what I’ve been saying. There’s nothing dramatic here, but we’re nevertheless reducing the stockpile. We entered 2020 with a lower inventory than we had a year earlier. So we have a market where homes are being sold. That’s what’s actually coming. There’s basically nothing dramatic in Akershus county, either, but the picture is slightly different in that we’re building up a little more inventory. We see, for example, that the supply side in the Follo district is increasing quite a lot. So it’ll be very interesting to follow what’s happening to prices in that market during the time to come. In the other cities, I’d say that Bergen and Trondheim have a balance between supply and demand. We also see that some inventory is still being built up in Stavanger, but the volume there is small with few sales on the newbuild side. Activity is higher for second-hand homes. I thought I would show you some examples which illustrate that we are well positioned for the future. I’ll present some projects which are under way and some which will be coming down the road. First, Lørenskog Stasjonsby – a very exciting development. I was asked by Dagens Næringsliv this morning whether I had any favourite projects, and I then mentioned this as at least one that I like a lot. This is, of course, an example of a development where we’re actually creating a destination – including in a housing context – really out of nothing. We’ve had a fantastic journey already with the roughly 500 homes we’ve delivered so far, and we have about the same number under construction right now. We’re also going to build yet another 1 000 homes in this area. And it’s clear that the Selvaag system has initiated the building of this skiing centre, and not least the cluster of affiliated industrial activities which are coming here. That helps to enhance the attractiveness of this area. The price per square metre for homes here has doubled in the space of just a few years. The next is Tiedemannsparken, an example of a project which we became involved in at a high land cost. It’s a 50-50 joint venture with Ferd, has also been a really good development for us, and is one where we’re in full flow. It’s selling well, is very attractive, and will be completed in the course of 2022. Skårerbyen is also very exciting. We are due to deliver more than 1 000 units at Skårer, where we’re in a relatively early phase. We’re starting up right now. This is also actually an example of a destination development, where we see that the adjacent highway will be the main artery in this area. We’ll be supporting that through our project, which is a long-term development due to extend over many years. I’m mentioning Landås in Asker because we’re concentrating here on our Pluss concept. We’ll be building Pluss residences in the development, and I’ve said in a number of other contexts that this is a jewel which we’ll be polishing a lot in coming years. We see that combining product and services is something which will cut across all industries, and is also speeding like a bullet into the housing sector. For us, it’s so far been a concept associated with senior citizens. But, for example, we also have a project like this in Stockholm where we see that we’re managing to attract quite a number of families with children. In fact, we actually have 50 children in this Stockholm project, and they swarm on the ground floor – we have homework rooms, a chill-out area for youngsters and so forth. We have started sales with the Landås project, and will be starting to build there very soon. The next really large project of ours is at Fornebu. The terminus for the new Fornebu metro line will be located beneath our site – God willing, I was about to say, since the development is still in the balance, as

you have heard. This means that the project here will be one of the most complex construction sites ever in Norway. The development will cover not only be the terminus, but also a main workshop for the whole metro system located under our land. And that means the way this is built will be very, very important. Work on the Fornebu line development is due to start immediately after the summer as matters now look, and – as I’ve said – will be a huge construction job. We will once again be building a destination here. We’re collaborating with the Selvaag family on also constructing what we have so far called a marine centre with an aquarium out here, and hope it will prove possible to accomplish this. A very exciting and interesting job, at least, is being done on this at the moment, where we must also work with the politicians. And it’s clear that this will also help to enhance the attractiveness of this area significantly. It will become an urban/marine structure, inspired to some extent by Aker Brygge if not on the same scale. This will also mean a great deal for what we can establish of commercial activity along the axis which is to run through the area when the project eventually gets going. And then Bjerke, another forthcoming project. You will recognise the Bjerke race track. We are in the process of planning, designing and regulating this area now. We also have an option to buy the area below. This is a fantastic site. Those who have not been up here must simply take a trip out and take a look. Incredibly fine views and actually close to everything. This will also become a very good and exciting project where, as you can see, we’ll be building more than 1 000 homes over the next 10 years or so. That brings us to a project in the home stretch – Sinsenveien, which naturally enough lies at Sinsen. We own the site together with Veidekke in a 50-50 joint venture where 350 units are to be built. This is a project which we hope to get going with this year in terms of starting sales. We’re actually working in a planning permission phase here in order to begin sales, and eventually construction. A little of the same applies for this project, which is called Lørenvangen and actually lies close to Sinsenveien. It involves 160 units, and we hope to get started next year with selling. This will be part of that important pipeline which we’ll have in coming years and which we’ll be living off in that time. This and Sinsenveien are then both relatively close to getting started. So I feel I can sum up this part of the presentation by saying that we feel well positioned. We have good projects. I was also asked by Dagens Næringsliv this morning why we have such good results, and I would say that I believe that this is quite simply because we have good projects but in addition because we work very well with these. I would say that our project managers, as Sverre mentioned, are quite simple extremely good at kneading the developments, getting the maximum out of them and creating attractive layouts and units, while simultaneously utilising every single square metre in the best possible way. So I think part of the secret lies here. That brings us to the outlook. The market is absolutely OK. We can’t say it’s a bonanza, but it’s good. We have very good projects which we will be selling and are in the process of selling in all the markets where we operate. And then we see, as Sverre also touched on, that a potential exists that the other markets – Stavanger, Bergen and Trondheim – can improve. In that context, we perhaps have particular faith in the short term for Bergen, where we also have a very strong pipeline of projects. And we are poised to work well in that coming market. So then I think we’ll throw the floor open for questions and comments, to the extent that there are any?

Q&A

Bengt Jonassen, ABG Sundal Collier Two questions. One: if we were to reflect on the NGAAP margin for the fourth quarter of 2020, should we expect this would be close to the fourth quarter of 2019 on a year-by-year comparison or on quarter-by- quarter in order in a way to pick up what we can call the underlying trend for the company here. And question two: we have previously reflected a little over what kind of level equity should be at after the Urban Property transaction has been completed. Because we have perhaps thought along the lines of NOK 1.5, 1.6 , 1.7 billion. You now indicate NOK 2 350 million. So perhaps you could let us have your reflections around this reasoning?

Molvik I can perhaps begin to answer. With regard to your first point, there are several reasons why we’re making a lot of money. We don’t need to make a long story out of that. It’s in part because our project managers are also good at delivering better than they promise internally, and this is reflected in our ability to deliver better than we promise externally.

What happens is that, when you start construction in a project, its manager actually makes a commitment to management that they will deliver one or other result. And you’re naturally more cautious about that when you have a construction start than when you’re a week from completion. This means that when you have many starts, as we did in the second and third quarters, the NGAAP gets a little dip. That’s the main reason. This is why you must compare quarter by quarter. That’s not always the case – you can sometimes suddenly get an aberrant quarter – but as a rule it is, particularly because the fourth quarter in our company has traditionally had many starts and completions. So it’s best to compare with the same period in the previous year. But you must obviously also take a little look at the preceding quarter. That was why I tried to explain earlier that a connection does exist, and you can also see this clearly from last year. When the first quarter came, the margin rose. I can’t promise that now, but this has at least been a tradition before. Where your second question is concerned, the fact that we now have NOK 2 350 million, as you noted, is naturally far in excess of the requirement we have given this Urban Property structure. That’s quite correct. And if I’m going to reflect a little on what would be a requirement on the basis of this structure, it would be down to the levels you describe – perhaps actually a maximum of NOK 1.5 billion. But we’re then conservative, of course, and will undoubtedly come to lie somewhere between NOK 1.5 billion and NOK 2 billion in the longer term. Another reason why we have NOK 2 350 million now is that we say we’re going to pay NOK 3.00 per share in dividend. The figure is really NOK 2 070-2 080 million, I imagine, after NOK 280 million in dividend. And we are naturally conservative and cautious when we’re going to get the Urban Property structure up and running. The transaction has been implemented, of course, but it must also get under way. There’s no reason to believe that it won’t, but there’s no point in splashing out until we’re certain.

Thorsen Just to amplify that – Sverre said when describing the Urban Property structure here that margins would decline marginally. But part of the point here is that we won’t be using a lot of money to buy land, so we can devote a larger proportion of our profit to paying dividend. That’s actually a fundamental part of the idea behind Urban Property. And our policy with regard to dividend remains unaltered. We’ll be making payouts to the extent we can, and it looks as if we can.

Molvik Let me just add that the difference before and after is precisely that this will be more predictable. As things were before, you have not had any view about how much we’ve been able to pay in dividend because we didn’t know how much of the equity ratio we needed to use to acquire land. But things will be much simple now, because we’ve established that threshold, as it were. If we say that this lies between NOK 1.5 billion and NOK 2 billion, we can grow a lot without it being at the expense of that – the equity can be constant in the time to come and we can pay out up to 100 per cent of EPS. You can simply speculate about EPS and actually be much more accurate about the level of dividend.

Thorsen Without claiming that accuracy has been low, though.

Any more questions? Then I think we’ll just say many thanks for attending. Once again, we’re proud of our results.