Veidekke

Regulatory Filings • Nov 13, 2019

Veidekke ASA: Facilitates new ownership structure for the property development operation

Veidekke ASA: Facilitates new ownership structure for the property development operation

The board of directors in Veidekke has at today's board meeting decided to split

the group into two separate entities and establish the property development

operation under a new ownership structure. The decision is the result of a

strategic review of the group's composition and an assessment of growth and

development opportunities for Veidekke's various business areas.

The board of directors of Veidekke has mandated the group management to prepare

a plan for how a split of Veidekke into two entities can be carried out in order

to provide the best possible basis for growth and development in its business

units and to optimise shareholder value over time. In the opinion of the board

of directors, Veidekke's current valuation does not fully reflect the value of

today's business and a split is believed to contribute to increasing the

company's shareholder values. This is supported by a recently received request

from a serious player with a specific interest in purchasing the property

development operation.

The driving forces for value creation for the property development operation

diverge from those of Veidekke's other business areas. Changes in the

organisation and ownership structure will expand the operational and financial

scope for action. The mandate provided by the board of directors implies that

alternatives under consideration include a stock exchange listing, distribution

of the shares to Veidekke's shareholders, and divestment of all or part of the

property development operation. Veidekke has retained ABG Sundal Collier and the

law firm Schjødt as the company's financial and legal advisers.

"Veidekke continuously strives to optimally develop and position all our

business areas for long-term strategic and financial success. A split of

Veidekke into two focused entities will enable each entity to pursue growth

strategies tailored to their markets, resulting in profitable growth that

creates value for customers, employees and shareholders alike, says Jimmy

Bengtsson, CEO of Veidekke.

"After many years of solid growth and profits, Veidekke is at a crossroads where

we believe further development is best safeguarded through two independent

companies. The board's decision thus marks a major step forward in facilitating

increased long-term value creation for Veidekke's shareholders, says Svein

Richard Brandtzæg, board chair of Veidekke.

Veidekke's property development operation is one of Scandinavia's largest

residential developers, with a land bank of more than 18,000 units in and around

the largest population centres of Norway and Sweden. As at 30 September, the

book value of the company's assets was NOK 8.2 billion and total invested

capital amounted to NOK 6.6 billion. At year-end 2018, Veidekke estimated the

market value of the land plots owned by the company to significantly exceed the

book value, with excess value being mainly related to the Norwegian property

development operation. The company has initiated recalculation of the value of

the total land bank and residential portfolio.

"The time has come to give the property development operation a more independent

role. Establishing two separate entities could provide a more optimal financing

structure and scope, and thus facilitate increased value creation and growth for

both entities," says Jørgen Wiese Porsmyr, Executive Vice President and

responsible for project development in Scandinavia.

The board expects to make a final decision on the transaction model in the first

half of 2020. Additional information about Veidekke's property development

operation will be integrated in the company's third quarter 2019 presentation,

which will be published tomorrow.

Key figures Veidekke's property development operation (Veidekke's share):

+------------------+---------+---------+---------+---------+---------+---------+

|  |Q3   19  |Q2 19  |Q1   19  |Q4   18  |Q3   18  |2018  |

+------------------+---------+---------+---------+---------+---------+---------+

|Number of units |170  |206  |274  |161  |153  |567  |

|sold | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Norway   |68  |75  |162  |52  |73  |288  |

+------------------+---------+---------+---------+---------+---------+---------+

|Sweden  |102  |131  |112  |109  |80  |279  |

+------------------+---------+---------+---------+---------+---------+---------+

|  | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Number of units |1   676  |2   144  |2   214  |2   116  |2?189   |2   116  |

|under construction| | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Norway   |932  |785  |643  |599  |576  |599  |

+------------------+---------+---------+---------+---------+---------+---------+

|Sweden  |744  |1   359  |1   571  |1   517  |1   613  |1   517  |

+------------------+---------+---------+---------+---------+---------+---------+

|  | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Number of units in|15   100 |14   700 |14   800 |15   100 |15   340 |15   100 |

|land bank  | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Norway  |5   000  |5   200  |5   300  |5   400  |5   350  |5   400  |

+------------------+---------+---------+---------+---------+---------+---------+

|Sweden |10   100 |9   500  |9   500  |9   700  |9   990  |9   700  |

+------------------+---------+---------+---------+---------+---------+---------+

|  | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Sales ratio, units|81%  |84%  |84%  |80%  |80%  |80%  |

|under construction| | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Invested capital  |6.6  |6.1  |6.1  |4.7  |4.1  |4.7  |

|(NOK bill.)  | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Return on invested|10.1%  |10.2%  |10.2%  |11.3%  |10.6%  |11.3%  |

|capital (12m)  | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|  | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Revenue 12m (NOK  |3   083  |2   953  |2   984  |2   899  |2   738  |2   899  |

|mill.)  | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

|Profit before tax |410  |396  |373  |388  |339  |388  |

|  12m (NOK mill.) | | | | | | |

+------------------+---------+---------+---------+---------+---------+---------+

For more information, please contact:

EVP Project Development Scandinavia Jørgen Wiese Porsmyr, tel. +47 907 59058,

jorgen.wiese-porsmyr@veidekke.no

EVP Communications and Public Affairs Lars Erik Lund, tel. +47 413 31 369,

lars.lund@veidekke.no

SVP Finance Jørgen G. Michelet, , tel. +47 917 43 856,

jorgen.michelet@veidekke.no

For press images, see https://veidekke.fotoware.cloud/fotoweb/archives/5028

-Pressebilder-Veidekke/

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This information is subject to a disclosure duty pursuant to section 5-12 of the

Securities Trading Act.

Veidekke is one of Scandinavia's largest construction and property development

companies. The company undertakes all types of building construction and civil

engineering contracts, develops residential projects, maintains roads, and

produces asphalt and aggregates. The company is known for its involvement and

local knowledge. Its annual turnover is approximately NOK 36 billion, and half

of its 8,600 employees own shares in the company. Veidekke is listed on the Oslo

Stock Exchange and has always posted a profit since it was founded in 1936.