BWG Homes ASA - Cisionmb.cision.com/Main/5033/9326585/60532.pdf · PAGE 4 BWG HOMES PRESENTATION...

Lars Nilsen, CEOBWG Homes ASA

Presentation at SEB Enskilda, Copenhagen 9 January 2008The leading Nordic residential developer

Agenda

Company overview

Financials

Norwegian operation

Swedish operation

The market situation

Key drivers and trends

Focus 2008 - 2009

PAGE 2 BWG HOMES PRESENTATION


BWG Homes – a Nordic player

The business:• Affordable quality housing in least cyclical markets• Broad diversity in project portfolio• Residential projects in the outskirts of urban areas• Continously streamlining of the construction processes• Long-term profitability at moderate risks

Operations in Norway and Sweden

Builds approx. 2,300 houses yearly

1,360 employees including 885 carpenters and production workers


BWG Homes: Organisational structure

Myresjöhus Myresjöhus SmålandsVillanSmålandsVillan

Block Watne AS Block Watne AS BWG Homes ABBWG Homes AB

BWG Homes ASABWG Homes ASA

Hetlandhus ASHetlandhus AS


Financials per 30.09 2007

NOK million 30.09.07 30.09.06 Y/Y 2006Operating revenue – Group 2 342 2 156 8.6%

10.3%7.0%

3.7%15.2%

-12.3%

Segment Norway 1 194 1 0823 0591 5281 529

399249157

13.0%16.3%

Segment Sweden 1 148 1 073

EBIT – Group 281 271Segment Norway 181 158Segment Sweden 99 113

EBIT margin – Group 12.2% 12.5%Segment Norway 15.2% 14.5%

10.3%Segment Sweden 8.7% 10.6%

Pro forma figures as if the Prevesta AB transaction was completed per 1 January 2006


Financials Q3 2007:Revenues: + 1.0 % EBIT: + 12.1 %

0

100

200

300

400

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600

700

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1Q 2Q 3Q 4Q

2006 2007

Revenue Q3-2007: NOK 701 million. Revenue pro forma Q3-2006: NOK 693 million.

0

20

40

60

80

100

120

140

Q106 Q206 Q306 Q406 Q107 Q207 Q3070 %2 %4 %6 %8 %10 %12 %14 %16 %18 %20 %

EBIT EBIT margin

EBIT Q3-2007: NOK 82 million, 11.7% margin. EBIT pro forma Q3-2006: NOK 73 million, 10.6% margin.

The Norwegian operation


The Norwegian operation:Block Watne in brief

Residential project development at affordableprices in the outskirts of larger cities and pressure areas

The strongest brand in the Norwegian market

No downtown construction or vacation homes

Construction at the building site using proven and cost-effective methods

Builds approx. 1,100 houses yearly, and has built in excess of 85,000 houses

Single home portfolio of 45 house models

717 employees; including 480 carpenters


The Norwegian operation:Residential projects represent 86 % of revenues

86 %

6 %8 %

Residential projects

Customers withown landProfessionalcustomers

Share of revenues 2007

Marketing and sales Marketing and sales

Acquisitionof land

Acquisitionof land

Project development

Project development ConstructionConstructionProject

ideaProject

idea DeliveryDelivery

Project planningProject planning

24 %

13 %

63 %

Under development

In acquisition

Ready for sale

Land bank capacity 12,000 units


Interior 2Interior 2Interior 1Interior 1Exterior and roofingExterior and roofing

The Norwegian operation:Highly standardised four phased building process

Specialised two-man carpenter teams in each phase

Only wood-based production executed by own production staff

Employed carpenters and production staff

Piece-rate performance based compensation of carpenters

All infrastructure and concrete contracted project by project

FramingFraming


Low end/Special need

Affordable quality

housing

Highend

Private individuals buying the house/ apartment as their primary home

Outskirts of the larger cities in

south of Norway –the most

populated areas

The Norwegian operation:Focus on volume markets


0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2001

2001

2002

2002

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2006

2007

E

2007

E

2008

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2008

E

2009

E

2009

E

BW areasApartmentsMulti unit housesDetatched houses

Housing starts in Norway 2001 – 2009E

Block Watne key market segments

“BW areasr”: Norge excl. Oslo, Drammen, Tønsberg, Kristiansand, Stavanger, Bergen, Trondheim and Nord-Norge. Source: Prognosesenteret

City centre apartments

Block Watne market position:Stable market combined with large volumes


The ten largest players in Norway in 2006

Rank Company Market share Ownership1 Mesterhus 6.2 % Chain

Chain

Chain

Chain

Chain

BWG Homes ASA

Selvaag Gruppen

Skanska AB

10 Systemhus Norge 1.9 % Chain

Total 10 largest 34.6 %

2 Nordbohus 5.0 %

3 Blink 3.4 %

4 Byggmann Gruppen 3.3 %

5 Norgeshus 3.3 %

6 Block Watne 3.2 %

7 Selvaagbygg 2.9 %

8 Skanska Bolig 2.8 %

% of a total of 33,000 started homes in 2006. Source: Prognosesenteret

The Swedish operation


The Swedish operation:BWG Homes AB in brief

Developing and production of prefabricated single and multi family homes

Two strong brands – Myresjöhus and SmålandsVillan

No downtown construction or vacation homes

Modern production facilities in Myresjö, Vrigstadand Sundsvall producing volume panels and box units

Builds approx. 1,200 houses yearly, and has built in excess of 80,000 houses

Single home portfolio of 50 Myresjöhus house models and 7 SmålandsVillan house models

643 employees, incl. 405 production workers


Size m2:

House models:

101-239

50

82-120 (up to 200 incl. loft)

7

Target customer: Middle-income families

Couples age 30-45

Often second-time buyers

Concept: Panel-based production, allowing a high degree of customisation

SEK 1.8 mill (excl. land and VAT)Average price:

Moderate-income families

Couples age 25-40

First-time buyers

Standardized box-unit production with a limited degree of customisation, but very competitive prices

SEK 1.0 mill (excl. land and VAT)

Myresjöhus and SmålandsVillan:Complementary brands


The Swedish operation:Focus on the outskirts of the larger cities

80 % of Myresjöhus customers with own land choose turn key contracts

SmålandsVillan: 98 % to customers with own land

Low end/Special need

Myresjöhus“freedom of choice”

Highend

SmålandsVillan“standardization”

45 %

15 %

40 %

Residential projects

Customers withown landProfessionalcustomers

Myresjöhus projects:

All infrastructure, concrete and finish contracted project by project


Housing starts in Sweden 1992 – 2010

Source: Prognosesenteret

5 000

10 000

15 000

20 000

25 000

30 000

35 000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Detatched housesMulti unit housesTotal


The Swedish residential house building market:Housing starts 1960 - 2005

Source: SCB

010 00020 00030 00040 00050 00060 00070 00080 00090 000

100 000110 000

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005Detatched houses Multi unit houses Total


A leading position in the Swedish single family homes’ market segment

Source: Byggfakta 2007-11. Market shares based on number of building permit applications. Excluding the large construction companies that focus on apartment buildings

Market share

Other35.6%

Custom stick22.1%

Älvsbyhus8.7%

Myresjöhus + SmålandsVillan11.7%

Trivselhus7.0%

Fiskarheden5.0%

Eksjöhus3.1%

Hjältevadshus3.1%

LB-Hus3.7%

The market situation and key drivers


The current market situation

Recent interest hikes in Norway and Sweden have had a larger impacton the households’ investment behaviour than normally expected, due to volatile markets as a result of US subprime and internationalfinancial issues

Potential buyers prefer to sell their current home before buying a newone

Increased number of used and new homes for sale

Short term pressure on prices on used homes is expected

Pressure on prices on apartments in high pressure/down town areas is expected due to inflated production costs and oversupply

This situation will exist until the market situation is normalized throughabsorption at market prices


The market situation – positive factors

A build-up of consumer reserve will eventually enter the market as buyers

A decrease of new apartment projects primarily located in down town areas in Norway and Sweden, is expected

Norway: Building costs demand very high sales prices and result in a decreased customer base.Sweden: Governmental support incentives for apartment building arediscontinued.

Decreased pressure on price on materials and sub-contractors ?

Further interest level increases are not expected in neither Norway nor Sweden. Interest rates going forward at reasonable levels

Employment rate expected stable in 2008 and 2009

Expectations for a stable and stronger market within the ”affordable” segment due to positive macro figures


Norway and Sweden:Macro factors and key drivers

Macroeconomy

Macroeconomy

GDP 2008E: 3.6 (N), 3.8 (S) 2009E: 2.4 (N), 3.1 (S)

Inflation 2008E: 3.25 (N), 2.5 (S) 2009E: 2.25 (N), 2.8 (S)

Labourimmigration

Labourimmigration

Net immigration Norway:2006: 24,000, 2007E: 37,150Net immigation Sweden:2006: 51,000, 2007E: 55,000

ReplacementsReplacementsApprox. units/year:15 000 (N)20 000 (S)Increasing need

EmploymentEmploymentUnemployment rate:2008E: 2.6 (N), 3.9 (S) 2009E: 2.6 (N), 3.6 (S)

Interestrates

Interestrates

2008E: 5.25 (N), 4.75 (S) 2009E: 5.25 (N), 4.75 (S)

“Boy meetsgirl”

“Boy meetsgirl”

The “need factor”Stabilizing towards

economy

Sources: Statistics Norway, Statistics Sweden, Konjunkturinstitutet, Prognosesenteret


0

5000

10000

15000

20000

25000

30000

35000

40000

1992

1993

1994

1995

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1997

1998

1999

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2001

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E2007

E2008

E2009

NorwaySweden

• Level of construction in Sweden still low in a historical context and relative to neighbouring countries

• Homes built per 1 000 inhabitants 2007:

• Sweden: 4.2• Norway: 6.0

Source: Prognosesenteret – Norway, Sweden

Operations in two differing markets reduce the group’s cyclical exposure

Total housing starts in Norway and Sweden 1992 - 2009E


Monthly development in sales:Norway 2006, 2007 Sweden 2006, 2007

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2006 2007

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MNOK MNOK

Segment Norway – down 14.7 % per December 2007 Segment Sweden – up 23.9 % per December 2007


Positioning being the key:Diversified projects in the outskirts of city centres

Macro-economic factors arepositive

Focus on the ”affordable homes” segment as it tends to be less affected by market fluctuations

Average sales price per m² in Block Watne residential projects: NOK 20,000

Average cost price per m² in downtown apartment construction: NOK 30,000 – 40,000 Low end/Special need

Myresjöhus

Highend

SmålandsVillanHetlandhus

Block Watne

Affordable homes,attractive living

Standardization,value for money


Focus 2008 and 2009

Utilization of production efficiency and capacity • Further standardization of SmålandsVillan• Introduce highly production efficient models within

Myresjöhus• Introduce Hetlandhus in Norway based on

SmålandsVillan in the first half of 2008.Highly standardized product in the “value for money” segment

• Utilize synergies in 2008 and 2009

Increase residential project development• Myresjöhus, from 45% to 70%, within 2010• SmålandsVillan, from 0% to 20%, within 2009

Solid order backlog. BWG Homes can sustain fluctuations in sales

Sales activities intensified

Controlled growth and strong margins are expected


Thank you for your attention!

Appendix


Listed at Oslo Børs March 2006:Shareholder Information

CEO Lars Nilsen has 36% holding through his companies

10 LARGEST SHAREHOLDERS PER 07.01.2008 % TOTAL

Lani Industrier AS 30.62%Lani Development AS 5.22%Pareto Aksje Norge 5.06%Bank of New York, Brussels Br, S/A Alpine 3.53%Vital Forsikring ASA 3.17%Industri Kapital 2004, II 2.53%

Bank of New York, Brussels Br, S/A Equity 2.20%

Industri Kapital 2004, I 2.09%

Industri Kapital 2004, III 2.31%

Pareto Aktiv 2.16%


Sales to end customersSales to end customers

Value chain:Comparison of the three brands

Own sales forceProject partnersAgents29 sales offices/ agents

Own sales force22 regional offices

Agents32 sales offices/ agents

( )

( )

On-site constructionOn-site constructionPrefabricationPrefabricationAcquisition of

landAcquisition of land

Land developmentLand development

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