Veidekke — Annual Report 2014

Apr 13, 2015

Annual Report 2014

CONTENTS

10 Annual Report

• 18 Annual Accounts for the Group
• 76 Annual Accounts for Veidekke ASA
• 83 Declaration of the Board of Directors
• 84 Corporate Governance
• 90 Auditors' Report
• 92 Shareholder Information
• 96 Articles of Association

FINANCIAL CALENDAR 2014

Publication dates for interim reports:

First quarter: 6 May

Second quarter: 13 August

Third quarter: 12 November

The Annual General Meeting will be held on 5 May

The shares will be quoted ex-dividend on 6 May

Dividend will be distributed to shareholders on 19 May

Introduction by the President and CEO

2014 was a good year for Veidekke with healthy growth and improved profits. It is gratifying to note that all the business areas have strengthened their positions and have had a consistently high level of activity. Although the fall in oil prices has created greater uncertainty in the Norwegian market, we enter 2015 with a strong order backlog, good prospects and solid market and customer positions in most areas.

Construction operations saw the highest growth in Sweden and Denmark in 2014. In Sweden, the acquisition of Arcona has resulted in positive synergies. We were awarded the contract with Fabege for the construction of new offices for SEB in Stockholm, where Arcona, the building construction unit in Stockholm and the building construction unit in Oslo will work together to deliver the project – a prime example of multi-local collaboration in practice.

Despite growth, profitability needs to be improved in Sweden. Thanks to our strong position in commercial buildings and several residential projects under way, the outlook is bright. In addition, the major infrastructure projects in and around Stockholm are finally coming to the market, improving the situation in the civil engineering market significantly. In Denmark Hoffmann has had good experience with negotiated contracts, which compete on other parameters than price alone. Under the motto "the solution-oriented partner" Hoffmann has delivered growth and solid margins in 2014 too. In Norway construction operations have had a high level of activity, but after several years of growth, reduced residential sales and thus fewer initiated residential projects at the beginning of the year, revenue for 2014 was on a par with the previous year. Nevertheless, better project margins have resulted in solid growth in the profit for 2014.

2014 was a good year for our property development operations. After a weak start to the year in Norway, housing sales have been good in both Sweden and Norway, and development gains and sales of shares in residential projects have also made a positive contribution to profits. The fruitful collaboration between Property Development and Construction with joint product development has created good and cost-efficient residential projects, and was one

of the main factors in our success in the last year.

Industrial operations also had a good year, and with significant investments in infrastructure in Norway it has paid off to be strategically well positioned in asphalt, aggregates and road maintenance. Progress was primarily due to measures to improve efficiency in the organisation and good capacity utilisation, coupled with high demand.

The construction and civil engineering industry is often faced with demanding working conditions, and many of the tasks we perform can be dangerous and entail a degree of risk. This requires the very greatest vigilance and care. Growing internationalisation in the industry with new languages and cultures also poses a challenge. Safety is always the highest priority in everything we do, but despite this we lost two colleagues on our construction sites in 2014. We are currently in the process of further strengthening our safety work to prevent similar accidents in the future.

Society is facing some major challenges. Population growth, climate change and internationalisation will affect everybody's daily life and require new buildings and upgrades of central infrastructure, commercial buildings and residential buildings. With qualified workers on our team, we will work with our customers and partners to help to find solutions to these challenges. Our goal is to build the future in a safe, efficient, and environmentally sustainable manner.

This is Veidekke

Veidekke is one of Scandinavia's largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, maintains roads, and produces asphalt and aggregates. Veidekke is listed on the Oslo Stock Exchange. The company has a revenue of NOK 24 billion (2014) and has always posted a profit since it was founded in 1936.

Veidekke ASA's registered head office is in Oslo, and the Group comprises three business areas: Construction, Property Development and Industrial.

The company's operations are characterised by involvement and local knowledge. Involvement through close collaboration with customers and suppliers ensures optimal project execution. Good knowledge of the local market and the ability to draw on the Group's collective resources and expertise enable us to find the best solutions for all the parties involved. The outcome is efficient operations and greater value creation.

KEY FIGURES 1)

NOK million	2014	2013
Revenue, segment	23 863	21 191
Profit before tax, segment	967	776
Segment Construction	549	446
Segment Property Development	280	221
Segment Industrial	210	158
Segment Other	-73	-49
Earnings per share, segment	5.8	4.5
Profit margin, segment (%)	4.1	3.7
Revenue IFRS 3)	24 027	21 781
EBITDA, IFRS	1 383	1 013
Profit before tax, IFRS	1 055	718
Earnings per share, IFRS (NOK) 2)	6.3	4.1
Net interest-bearing position	274	-396
Total order backlog	17 085	18 273

1) The figures are taken from the segment accounts, which provide the most accurate reflection of the continuing value creation in the period.

2) Under IFRS, revenue from residential sales is not recognised until the residential unit is taken over by the buyer. In segment reporting,

revenue is recognised using the formula estimated final profit x sales ratio x stage of completion.

3) No dilutive effect

Veidekke´s business areas

Construction

Veidekke is engaged in nationwide building construction and civil engineering activities in Norway and Denmark, while operations in Sweden are concentrated in and around Stockholm, Gothenburg, Malmö and Helsingborg.

Building construction operations account for 65% of Veidekke's total construction revenue, primarily the construction of commercial buildings, residential buildings, schools and other public buildings. Civil engineering operations account for 35% of Construction's total revenue, and projects include transport (road and rail), hydropower and wind farms, industrial projects and other facilities such as underground car parks, quays and airports.

Most of the building construction and civil engineering work is undertaken through the subsidiaries Veidekke Entreprenør AS (Construction Norway), Hoffmann A/S (Construction Denmark) and Veidekke Entreprenad AB (Construction Sweden).

NOK bill.

Property Development

Veidekke Eiendom AS (Property Development Norway) and Veidekke Bostad AB (Property Development Sweden) purchase land and properties and develop them into residential buildings. Projects are developed by Veidekke or in partnership with other property developers through associated companies and joint ventures. Property development operations are concentrated in and around the largest cities in Norway and Sweden.

(12 months rolling) 13 %

Industrial

Veidekke Industri AS (Veidekke Industrial) is the largest asphalt contractor in Norway and the country's second largest producer of aggregates. Industrial is also a major player in the operation and maintenance of public roads.

Asphalt operations accounted for 67% of Veidekke Industrial's revenue in the 2014 financial year, while road services accounted for 23% and production of aggregates 10%.

Turnover NOK 4.1 billion Profit NOK 210 million Profit margin 5.1 %

The Board of Directors

Annual Report

STRONG GROWTH IN REVENUE AND PROFIT

2014 was a good year for Veidekke with 13% revenue growth and improved profit in most units. Market conditions were largely good, contributing to the increase in activity in the Group. Construction operations had high levels of activity in all three countries. Norway and Denmark showed consistently good margins, while profitability in Sweden is still unsatisfactory. Industrial had high capacity utilisation throughout the year, resulting in a marked improvement in profit. The residential market in Norway picked up in 2014, and the market in Sweden remained stable at a good level. This contributed to a high level of activity in property development operations, which, together with realised gains on the development of sites, resulted in improved profitability. At the close of the year, the order situation was satisfactory, and Veidekke is in a good position in respect of both commercial and residential buildings. A number of major infrastructure projects are coming to the market, and increasing residential sales provide the basis for starting up more residential projects going forwards. Everything is therefore in place for continued positive development.

HIGHLIGHTS – GROUP*

Veidekke is one of Scandinavia's largest construction and property development companies. The Group's head office is in Oslo, and the company has three business areas: Construction, Property Development and Industrial.

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), meaning residential projects are not recognised until they are handed over to the customer. Figures in brackets are for the same period the previous year.

Veidekke's financial statements for 2014 showed revenue of NOK 24.0 (21.8) billion. Profit before tax was NOK 1,055 (718) million. Consolidated profit for the year was NOK 859 (556) million.

The Group's revenue in the segment accounts was NOK 23.9 (21.2) billion, and profit before tax was NOK 967 (776) million.

Most of the revenue growth was attributable to construction operations in Sweden and Denmark. In Sweden, the acquisition of Arcona in December 2013 boosted annual revenues by NOK 1.1 billion. In Denmark, a handful of large commercial building projects contributed to a 36% increase in revenue for 2014. The activity level in Norway is high, but revenue declined by 2% from 2013, following several years of growth. The decline was primarily due to fewer new residential projects as a result of weak sales and few project start-ups in the second half of 2013 and first half of 2014. As a whole construction operations achieved solid growth in earnings, despite profitability challenges in Sweden. The improvements are attributable to improved project margins in operations in Norway and increased activity and improved margins in Denmark. The order backlog showed a decline of 7% in 2014, ending at NOK 17.1 (18.3) billion.

*Unless otherwise specified, all figures in the comments are taken from the segment accounts. Veidekke's business areas report on a percentage of completion basis in the segment accounts.

Revenue and profit for property development operations increased by 28% and 27% respectively compared with 2013. The revenue growth is attributable to increased residential activity in Sweden and sales of shares in residential projects. Norway saw a decline in revenue due to lower residential production and an increased proportion of joint venture projects, which do not generate accounting revenues. The increase in profit in property development operations is linked to higher residential production in Sweden and development gains in both countries.

Revenue for industrial operations increased by 19% and profit by 33% compared with 2013. Most of the improvement was attributable to high demand combined with good capacity utilisation in asphalt operations.

Veidekke's financial position is sound, and the Group had a positive net interest-bearing position of NOK 274 million at year-end, up NOK 669 million from the end of 2013. Generally good project liquidity in construction operations, the handover of residential projects and project sales in Property Development are the main reasons for the Group's positive liquidity growth.

Based on Veidekke's dividend policy and strong financial position, the Board proposes an ordinary dividend of NOK 3.5 per share for the financial year 2014.

The building construction and civil engineering industry is a high-risk sector. Working conditions are demanding. Potential hazards include natural phenomena, working at heights, heavy machinery and dangerous equipment, and health and safety are therefore a top priority at Veidekke. Nevertheless, two fatal accidents occurred on Veidekke sites in 2014. These accidents are a reminder of the importance of the work to continuously ensure awareness and management of risk in this industry.

OPERATIONS IN 2014

Construction

Construction operations reported revenue of NOK 18.5 (17.0) billion. Profit before tax was NOK 549 (446) million, corresponding to a profit margin of 3.0%, compared with 2.6% the previous year.

Norway

There was a high level of activity in the building construction and civil engineering market in 2014. The residential market was still weak at the beginning of 2014 but picked up throughout the year and several new residential projects were initiated. The market for public and private commercial buildings was stable at a good level, albeit with regional variations, whereas the market for private industrial projects remained weak. There was a high level of activity in the civil engineering market, predominantly public transport projects.

Successful project implementation is dependent on having available capacity and expertise, and being able to combine local market knowledge and understanding of the individual customer's needs with the company`s combined resources. One way Veidekke achieves this is by undertaking a number of projects as internal partnerships between the various units.

Revenue for the Norwegian construction operations was NOK 11.9 (12.1) billion. The 2% decline in revenue was mainly due to initiation of fewer residential projects as a result of the weak residential market in the latter half of 2013 and first half of 2014. Some of the decline was also due to the fact that Veidekke was awarded few major transport projects in 2014. Profit before tax amounted to NOK 423 million, compared with NOK 360 million in 2013, resulting in an increase in the profit margin to 3.6% from 3.0% in 2013. The improvement was largely attributable to increased profitability in the building construction operations, where the profit margin rose to 4.2% from 3.2% in 2013. Civil engineering operations achieved a profit on a par with 2013 and a profit margin of 2.3%.

The order backlog at the close of the year amounted to NOK 10.4 billion, down 3% from the previous year (NOK 10.8 billion). The order backlog consisted of 70% building construction projects and 30% civil engineering projects. The order intake for building construction operations was good throughout the year, while the proportion made up by civil engineering projects declined, because so few major transport contracts were awarded in 2014.

Major projects awarded in 2014:

• New main road on classified road 80 in Bodø, for the Norwegian Public Roads Administration (NPRA) – contract value NOK 894 million.
• Jessheim College. Public-private partnership (PPP) contract for Skulebygg AS (Akershus county) – contract value NOK 765 million.
• Prinsens gt. 26 in Oslo, for the Storting's Administration contract value NOK 372 million.
• Bilsentrum in Sandnes for Brødrene Kverneland Eiendom AS – contract value NOK 318 million.
• Repairs to European road E105 in Kirkenes for the Norwegian Public Roads Administration – contract value NOK 269 million.
• Apartment building in Kristiansand for Kjøita Bolig AS– contract value NOK 245 million.

. Sweden

Both the residential market and the market for commercial buildings have performed well in 2014. The civil engineering market has been affected by the postponement of the major infrastructure projects in the Stockholm area, and the subsequent spare capacity among civil engineering contractors has led to fierce competition for other civil engineering projects.

Construction operations in Sweden saw revenues increase by 37% to NOK 4.8 billion from NOK 3.5 billion in 2013. The significant revenue growth is primarily due to the acquisition of Arcona AB, which contributed annual revenues of NOK 1.1 billion in 2014. Despite profit increasing to NOK 19 million (from NOK 11 million), profitability in the Swedish operations was weak. Although several units reported satisfactory results, profitability was dragged down by lower volumes and overcapacity in tunnel operations, and project write-downs in building construction operations in Stockholm.

As a consequence of the low activity in the tunnel market in the last few years and the lack of profitability in Veidekke's tunnel operations, the Swedish civil engineering operations have been reorganised with effect from 2015. Building construction operations in Stockholm have undergone a restructuring and improvement process in 2014.

The order backlog was stable throughout the year and was NOK 4.2 billion at year end, compared with NOK 4.3 billion at the same time the previous year. The order backlog consists of 70% building construction projects and 30% civil engineering projects. Low civil engineering orders have reduced the proportion of the order backlog made up by civil engineering projects. Residential projects accounted for 50% of the building construction projects, and the close, productive collaboration between Construction and Property Development has generated more residential projects in Stockholm, Gothenburg and Malmö in 2014. In northern Sweden, the investment in mining has provided new market opportunities for civil engineering operations. In November 2014, the Group signed a letter of intent with the property company Fabege to build new offices for SEB in Stockholm. The 90,000 m2 building will accommodate 4,500 workplaces and is being developed as a collaborative project between Arcona, Building Construction Stockholm and Construction Norway. Planning is now in progress, and the final contract is expected to be signed in early Q2, with a contract value of approximately NOK 1.7 billion.

Major projects awarded in 2014:

• "Medicinaren", premises for the KTH Royal Institute of Technology in Stockholm for TKV AB – contract value NOK 289 million.
• Torgvågen, remodelling of a business quarter in Stockholm for AxFast – contract value NOK 216 million.
• Glömstad school for Huddinge Municipality contract value NOK 197 million.
• RTR New Facility, production facilities and offices for Rosemount Tank Rider in Gothenburg – contract value NOK 173 million.
• Kvarnbergsplan, apartments in Stockholm for Property Development Sweden – contract value NOK 170 million.
• Winery Hotel in Stockholm for Fabege contract value NOK 155 million.

Denmark

The Danish economy had weaker growth than expected in 2014, and the building construction and civil engineering market was marked by fierce competition on prices.

Hoffmann is continuing with its strategy of focusing on negotiated contracts, which also compete on parameters other than price alone. At the end of 2014, 80% of the order backlog was negotiated contracts. In these projects Hoffmann is involved from a very early phase and works with the customer, architect and technical advisers to find the best solutions for the customer.

Hoffmann's revenue for 2014 was NOK 1.8 billion, corresponding to revenue growth of 36% from the previous year. The increase is largely attributable to a generally high level of production on certain major commercial building projects. Hoffmann reported a profit of NOK 108 (74) million, raising the profit margin to 5.9% from 5.6% in 2013. The increase is due to a high level of activity, good profitability in the project portfolio and better capacity utilisation.

At the end of 2014 Hoffmann had an order backlog of NOK 1.2 (1.7) billion. The order backlog has declined by 35% during 2014, measured in local currency. In Norwegian kroner, the reduction is 29%. The lack of major new contracts in the order backlog means that revenue is expected to be lower in 2015.

The largest project awarded in 2014 was the construction of Midtby School for Århus municipality with a contract value of NOK 242 million.

Property Development

Property development operations picked up in 2014, with a total profit of NOK 280 (221) million. The improvement in profit is mainly attributable to higher residential production in Sweden and development gains from the sale of shares in projects.

Good collaboration between property development and construction operations is a key factor to Veidekke's success. Through collaboration with construction operations, property development operations is engaged in active product development to create cost-efficient housing concepts with a high living standard. Construction operations are involved from the outset when sites are being assessed, thereby helping ensure that all the opportunities and risk factors are identified so that the price and the product are correct. This collaboration results in good risk management and also opens up new business opportunities. Property development provided construction operations with residential projects worth NOK 1.5 billion in 2014.

Another important success factor is a good land bank, and each year considerable resources are spent on acquisition of new sites. At year-end, the land bank comprised a total of 10,900 residential units (Veidekke's share). Property development operations review the portfolio on an ongoing basis to ensure the land bank has an optimum composition.

Capital invested in property operations was NOK 3.0 (3.2) billion at the end of 2014. The performance of property development operations is measured by the return on invested capital, which was 13.0% at the end of 2014, measured on a 12-month rolling basis, up from 8.7% in 2013. Return on invested capital is adjusted for taxes in joint ventures and associated companies.

Norway

Residential sales in Norway were weak in the second half of 2013 and first half of 2014. Although sales picked up during the year, few new projects were initiated, and residential production was therefore significantly lower at the end of 2014 than the previous year.

The Norwegian property development operations reported revenue of NOK 747 (1,070) million. The decline in revenue was mainly due to lower residential production. In addition, the proportion of projects undertaken in joint ventures has risen. Joint ventures are accounted for using the equity method, meaning revenues from these projects do not appear in the accounts.

Profit before tax amounted to NOK 175 (170) million, up slightly from last year, despite the lower residential production. Development gains on the sale of shares in residential projects offset the reduced contributions from residential projects under construction.

Property Development Norway sold a total of 438 (469) residential units in 2014, including joint venture projects. Veidekke's share amounted to 246 (307) units. There were 399 units under construction at 31 December 2014 (Veidekke's share), compared with 749 in 2013, a decline of 47%. The sales ratio for residential units under construction was 68% (71%) at the close of the year. Veidekke's share of unsold units under construction was 127 (216) at the end of 2014.

In 2014, 508 homes were completed (Veidekke's share), and 158 homes were initiated in nine projects. At year-end, 32 of the completed units were unsold (Veidekke's share).

The land bank comprised 4,250 residential units (Veidekke's share) in 41 different projects.

Invested capital amounted to NOK 1.9 (2.0) billion at the end of 2014. Return on invested capital at the close of 2014 was 14.1% on a 12-month rolling basis, up from 10.8% in 2013. Return on invested capital is adjusted for taxes in joint ventures and associated companies.

Sweden

Residential sales in Sweden performed strongly throughout 2014, with high sales in all regions.

The Swedish property development operations reported revenue of NOK 1,529 (713) million. Profit before tax increased to NOK 105 million from NOK 50 million in 2013. The improvement is due to a combination of development gains and increased residential production.

Property Development Sweden sold a total of 536 (440) units, including joint venture projects. Veidekke's share amounted to 524 (382) units. The increase in sales resulted in the start-up of several new projects, but the number of units initiated (394) was nevertheless down from 2013 (485). The sales ratio for residential units under construction was 89% at the close of 2014, compared with 76% the previous year.

In 2014, Property Development Sweden completed 322 residential units (Veidekke's share 284). Residential production increased in 2014, and at year-end the business had 750 residential units (Veidekke's share) under construction in 14 projects, compared with 720 at the end of 2013. Veidekke's share of unsold residential units under construction was 83 (172) at year-end, while Veidekke's share of unsold, completed units was 9 (6).

At the end of the year the land bank comprised 6,650 units (Veidekke's share), of which roughly 70% were options.

Invested capital was NOK 0.9 (1.0) billion at the end of 2014. The return on invested capital increased to 12.8%, on a 12-month rolling basis, compared with 6.3% on 31 December 2013.

Industrial

Revenue for industrial operations amounted to NOK 4,127 million in 2014, compared with NOK 3,476 million in 2013. The revenue growth of 19% was attributable to high demand in asphalt operations and several new maintenance contracts in Road Maintenance.

Profit before tax increased to NOK 210 million from NOK 158 million in 2013. The profit margin was 5.1% (4.6%). The profit growth is largely due to a high level of activity in Asphalt.

Asphalt operations reported revenue of NOK 2,763 (2,355) million in 2014. Asphalt is the largest unit within Veidekke Industrial with 67% of total revenue. Asphalt has nationwide operations and consists of 28 asphalt plants, which together produced 2.6 million tonnes in 2014, an increase of 7% from 2013. Of the total asphalt production 38% went to the resurfacing of national and county roads, 47% went to new construction projects, and the remainder went to municipal authorities and private operators. Profitability was further improved in 2014 as a result of high demand, good capacity utilisation and efficient operation.

Road Maintenance continued to perform well. Revenue in 2014 amounted to NOK 968 (774) million. Road Maintenance accounted for 23% of Veidekke Industrial's total annual revenue and had a portfolio of 23 contracts at year-end. Six of these were awarded in 2014, of which one was a continuation of an existing contract. The business achieved better profitability in 2014.

Aggregates accounted for 10% of Veidekke Industrial's revenue. The business consists of 29 quarries spread across the whole of Norway. The stone materials that are produced are used primarily in the development of infrastructure and general building construction and civil engineering operations. The largest groups of customers are asphalt and concrete producers and machinery contractors. Profit for Aggregates is at a stable, high level.

Other operations

Other operations include Veidekke's PPP role (Public–Private partnership) and operation of the Group's central management and financial administration.

In 2014 Veidekke was awarded two new PPP contracts: Rykkinn School and Jessheim College, with a combined contract cost of NOK 950 million. The contracts comprise the construction and subsequent leasing of the schools for 25 years, plus responsibility for the operation and maintenance of the buildings during the lease period. The projects have been organised as separate legal entities, with Veidekke ASA as the owner. In organisational terms these projects belong to the Other operations segment.

STRATEGIC GOALS

Veidekke's strategic goal is to grow within its current product areas in Scandinavia and be one of the most profitable construction and property development companies in its markets. The company prioritises profitability above volume and attaches great importance to meeting its defined targets for profit margins and returns. This requires prioritisation of which projects the company should take on, and places great demands on assessment of the risks associated with each project.

The strategic goals for the business areas Construction and Industrial are linked to attainment of a profit margin of 5% and 6.5% respectively. For Property Development Veidekke has a goal of a 15% return on invested capital, with a capital budget of NOK 3.5 billion.Veidekke's policy is to pay out dividends corresponding to at least 50% of the profit for the year.

Veidekke shall be a financially robust company and have a gearing ratio of 40–60% at year-end.

Veidekke strives to avoid serious injuries, and the prevention and systematic follow-up of injuries are a top priority. The longterm goal is to eliminate 4 out of 5 injuries.

ORGANISATION

At year-end the Group had 6,384 (6,285) employees in Scandinavia. Of these 3,575 were skilled workers, of whom 88 are women, and 2,809 were administrative staff, of whom 584 are women.

In Norway, there were 4,587 employees: 2,664 skilled workers and 1,923 administrative staff. In Sweden, Veidekke had 1,310 employees: 638 skilled workers and 672 administrative employees. In Denmark, Veidekke employs 487 people: 273 skilled workers and 214 administrative employees.

. Equality and diversity

Veidekke's ability to reach its business goal of profitable growth is dependent on the Group attracting qualified workers. The organisation must, as far as possible, reflect society at large. To this end Veidekke strives to increase diversity in the workforce and recruit broadly from candidates with diverse previous experience and ages, and irrespective of gender, cultural background, nationality and disability.

Veidekke attaches importance to retaining relevant expertise in the company and has developed various schemes to encourage older employees to choose to remain in their positions after they reach the age of 62.

Labour market and attractiveness

Veidekke has a good reputation in the labour market, and surveys confirm that the Group is regarded as an attractive employer among various groups of workers. However, there is growing demand for qualified personnel in the building construction and civil engineering industry, and Veidekke works continuously to further develop the organisation with a view to attracting and retaining the best employees. The building construction and civil engineering industry also faces competition from other industries for the best candidates, and Veidekke is therefore also involved in efforts to encourage young people and students to choose courses that reflect Veidekke's needs.

Professional development and training

Priority is given to improving employees' skills at Veidekke, and there is a wide range of opportunities for professional development for all employee groups. The in-house training academy, Veidekke School, is Veidekke's centre for learning and development, and continuous efforts are made to develop and improve the range of courses and programmes offered to the employees. The academy is a voluntary training centre with courses that are relevant for all employees in the organisation. Courses include project and production management, finance and business administration, contract law, energy and the environment, occupational health and safety, compliance and leadership skills. In 2014, Veidekke School completed a total of 4,622 training days and had a total of 3,111 course participants.

Veidekke has well-established arrangements for trainees and apprentices. In 2014, Veidekke Norway had 163 apprentices, making us one of the largest apprenticeship employers in the country. Denmark and Sweden had 25 and 36 apprentices respectively. Veidekke's two-year trainee scheme combines practical work in projects with theoretical training. At yearend there were 106 trainees in Veidekke; 85 in Norway, 19 in Denmark and two in Sweden.

Protection from harassment

Veidekke attaches importance to creating a working environment characterised by mutual respect and equality and has zero tolerance for any form of harassment of colleagues or business associates or behaviour that can be perceived as threatening or demeaning. Veidekke's Code of Conduct encourages employees to report any actions that may be contrary to legislation, rules or internal procedures. Procedures have been developed for reporting irregular activities ("whistle-blowing"), and such matters can be reported internally or externally.

For more information on Veidekke's work in these areas, see Veidekke's CSR Report on http://veidekke.com/en.

OCCUPATIONAL HEALTH AND SAFETY

The building construction and civil engineering industry is a high-risk business. Health and safety are therefore a top priority at Veidekke, and the goal is an injury-free Veidekke.

In 2014, there were two fatal accidents on Veidekke sites, where two people lost their lives. An investigation team was appointed after each accident, and necessary measures have been implemented to prevent similar accidents from happening again. In recent years the number of less serious injuries in Veidekke has been reduced by over 20%. Unfortunately, this is not the case for the most serious injuries, and the Group is going to further strengthen its preventive work in this area.

Veidekke's lost-time injury (LTI) rate has remained relatively stable in recent years at around 5. The LTI rate for the Group as a whole was 5.5 in 2014.

Each year, Veidekke arranges a group-wide Safety Week. The topic of the 2014 Safety Week was greater personal commitment to health and safety by each individual employee. All Veidekke's projects focused on this through a wide range of activities. Veidekke also awards a special OHS Award each year to a project or initiative that has excelled in the area of safety. The winner of the 2014 OHS Award was the Marienfryd building construction project in Oslo.

Prevention of sickness absence is a high priority at Veidekke, and good procedures for monitoring employees' absence have been established. Veidekke maintains close and productive dialogue with employees on sick leave with a view to enabling them to return to work promptly. The sickness absence rate for the Group as a whole was 4.0% in 2014: 4.3% in Norway, 3.7% in Sweden and 1.5% in Denmark. This is at the same level as in 2013 and can be described as stable and low. At the Group level this is distributed evenly between short-term absence and long-term sick leave. Most cases of long-term sick leave are related to musculoskeletal disorders.

THE EXTERNAL ENVIRONMENT

The building construction and civil engineering industry are responsible for a substantial share of modern society's impact on the environment. As one of Scandinavia's largest construction and property development companies, Veidekke has a responsibility to protect the environment. The ability to manage our impact on the environment and identify and manage the environmental risks in the projects is an important part of Veidekke's corporate social responsibility.

Recent years have brought major changes in the field of environmental protection within both building construction and civil engineering, with a wealth of innovative and energy-efficient new solutions. Veidekke's ambition is to be a leader within our industry in terms of reducing greenhouse gas emissions and protecting the environment by having the best environmental practice. The ability to manage environmental impacts is critical to Veidekke's attractiveness to customers, business partners and employees – and increasingly also to investors. The environment is therefore a priority area in Veidekke's strategy to increase competitiveness.

More stringent regulatory requirements related to energy consumption are expected. Business customers are becoming increasingly environmentally aware and are requesting energy and environmental classification of their buildings. Investors are also setting requirements regarding companies' environmental performance, including through the annual survey by the Carbon Disclosure Project (CDP), which monitors large companies' greenhouse gas emissions and their strategies to reduce emissions.

For more information on Veidekke's environmental work, see Veidekke's CSR Report on http://veidekke.com/en.

CORPORATE GOVERNANCE

Corporate governance in Veidekke is based on the principles laid down in the Norwegian Code of Practice for Corporate Governance of 30 October 2014.

Veidekke's operations consist of a large number of ongoing projects. Veidekke is a multi-local organisation with a high degree of local responsibility and autonomy, allowing us to meet our customers' needs and ensure project performance and value creation in the different projects. Control and oversight are maintained through the Group's management and quality assurance systems and through systematic reporting from the individual projects. Reporting is performed ten times per year and covers financial and non-financial matters. The profitability and risk associated with each individual project are central control parameters.

Veidekke is owned primarily by financial investors, and independence from the shareholders is therefore not a significant issue. An exception is OBOS, which owns 23% of the shares. To ensure independence from OBOS, the same individuals are never involved in owner representation and project collaboration. Employees hold a combined total of 17.2% of the shares, but no individual employee holds more than 0.3% of the shares. See page 84 for a complete account of corporate governance in Veidekke.

REMUNERATION OF SENIOR EXECUTIVES

The Board has appointed a Remuneration Committee that deals with all matters concerning the salary and other remuneration of the President and CEO and gives advice to the President and CEO on salaries and compensation schemes for the management. The Committee reports to the Board of Directors.

For more information on salaries and remuneration of executives, see note 30 on page 71.

SHAREHOLDERS AND THE STOCK MARKET

At year-end Veidekke had 7,328 shareholders. The largest shareholders in the company were OBOS (23%), Folketrygdfondet (9.6%) and IF Skadeförsäkring AB (9.1%). Foreign ownership was 28.4% (26.2%).

A total of 31.9 million Veidekke shares were traded on the Oslo Stock Exchange in 2014, representing a turnover rate of 23.9%. There were 43,099 trades of Veidekke shares during the year. The share price ranged between NOK 46.00 at the lowest and NOK 74.25 at the highest. The return including dividends for the year was 57.3%. By comparison, the Oslo Stock Exchange Benchmark Index had a return of 5.0%. All Veidekke shares are freely transferable, cf. Section 5-8a of the Securities Trading Act.

Share issues to employees

In line with Veidekke's strategy to connect more closely with employees through co-ownership of the company, discount sales of shares to employees were carried out in May and November 2014. The shares have a lock-in period of three and two years respectively. After this year's sale, 3,247 employees own a combined total of 23 million Veidekke shares.

For more information on the share scheme for employees, see page 92 on Shareholder information.

Share buy-back

On 7 May 2014, the Annual General Meeting renewed the Board's authorisation to buy back own shares corresponding to just under 10% of the share capital. The company did not buy back any of its own shares in 2014. The buy-back of shares is considered on an ongoing basis in connection with the work to ensure an optimal financial structure for the Group

FINANCIAL SITUATION AND CAPITAL STRUCTURE

The Group strengthened its financial position in 2014. Veidekke had a positive net interest-bearing position of NOK 274 million at year-end, an improvement of NOK 669 million compared with the end of 2013. The positive development in liquidity is a result of consistently higher profitability, increased project liquidity in Construction operations, and reduced capital tied up in Property Development operations. Capital invested in property operations was reduced as a result of the handover of several projects and individual project sales, and amounted to NOK 3.0 billion at the close of 2014, compared with NOK 3.2 billion at 31 December 2013.

Total investments in operating equipment amounted to NOK 489 (259) million, while sales of non-current assets totalled NOK 87 (122) million. Expansion investments amounted to NOK 218 million and were related to the acquisition of

AB Recess, a manufacturer of concrete modules and elements in Sweden, and settlement of the acquisition of Arcona in December 2013.

The Group's net cash flow from operations for the year was NOK 1.8 billion (NOK 1.6 billion). The Group had total assets of NOK 12.4 (11.7) billion. Total equity was NOK 2.7 (2.5) billion, corresponding to an equity ratio of 22.2% (21.1%).

Veidekke aims to maintain a strong financial position. This can best be achieved through good operational management, low risk exposure and sound management of the parameters that exert an influence on the company's financial risk. Financial development is an integral part of the Group's strategy process, and the Group's financial policy governs the management of financial risk.

RISK AND UNCERTAINTY FACTORS, MARKET SITUATION

Risk and uncertainty factors

Veidekke's operations consist of individual projects. Orders vary greatly in terms of complexity, size, duration and risk, meaning that systematic risk management in all parts of the business is of crucial importance. Veidekke analyses and assesses risk at the tendering stage, and risk is managed systematically by the businesses throughout the entire implementation phase. The Audit Committee reviews the general management and governance of the businesses.

The composition of the portfolios can affect the risk faced by the individual businesses, and the risk of known and unknown factors must be reflected in the financial reporting. In high-risk projects, revenue recognition is therefore assessed cautiously until the risk factors have been clarified. At 31 December 2014, Veidekke's civil engineering business in Norway was involved in a significant number of disputes in several projects where the Norwegian Public Roads Administration is the client, as a result of demanding contract terms in transport projects. The outcome of the individual disputes, positive or negative, may have an effect on results.

Veidekke is a major property developer, and the Group's overall results depend on good financial performance in Property Development. The residential market is cyclical, and profit from property development is very closely related to new project start-ups. A weak residential market may affect the future development of property projects that are Veidekke's own projects and the value of Veidekke's property portfolio. To reduce the risk associated with unsold projects, Veidekke will not, as a general principle, initiate new residential projects until a sales ratio of 50% is achieved. Consequently, slow residential sales may delay residential projects.

Veidekke is primarily exposed to financial risks associated with financial instruments such as trade receivables, liquidity and interest-bearing liabilities. These risks are classified as credit, market and liquidity risks. For a more detailed presentation of the company's financial risk, see note 28 to this year's Annual Report.

Market development in 2014 and market outlook for 2015.

International economies showed positive growth in 2014, but growth in the EU was weak and there were further interest rate cuts. Recent turmoil in the currency and commodity markets will affect economic growth in the period ahead.

Norway

Growth in the Norwegian economy in 2014 was at the same level as the previous year. The sharp fall in oil prices means the outlook for the Norwegian economy is clearly weaker than previously predicted. Unemployment increased slightly, while household consumption continued to increase during the last half of 2014. Activity in the civil engineering sector was at the same level as in 2013. Public investments in the development and renewal of infrastructure helped maintain activity levels. The residential market has been good throughout the year with growth in house prices of 8%. Sales of new homes also developed positively after a weak start to the year. The number of housing starts declined from about 30,000 in 2013 to 27,000 in 2014 and contributed to a 10% fall in residential investments. The household economic situation has been robust throughout 2014, resulting in high demand for residential buildings – both new and resale.

The decline in the Norwegian economy is expected to affect the overall activity level in the building construction and civil engineering sector in 2015. How much weaker the market growth will be depends on the extent and duration of the fall in oil prices, and this will have a greater effect in regions that are highly vulnerable to the oil sector decline. Low interest rates, stronger competitiveness and a growing willingness to invest in traditional industries and tourism as a result of the weakened krone may contribute positively as a counterweight to the slowdown.

Building construction and civil engineering is expected to show total growth of 2% in 2015, driven mainly by the transport segment (7–8%) and public commercial buildings segment (4%). An unchanged level of housing starts is expected to result in a moderate growth in residential investments of around 1% in 2015. The market for private commercial buildings is expected to remain largely unchanged in 2015.

Sweden

GDP growth in Sweden was weaker than expected in 2014, primarily as a result of low export growth. At the same time, domestic demand was strong, particularly from households.

The building construction and civil engineering market grew rapidly in 2014, driven by a marked rise in residential investments and public commercial buildings. Private commercial buildings showed more moderate growth as a result of weaker economic growth than anticipated. Civil engineering saw good growth in most segments, but postponement of a number of major infrastructure projects in Stockholm has resulted in overcapacity and keen competition for other projects. There was increased demand in the power sector, the municipal sector and parts of the industrial market.

An improved economic climate is expected in 2015. GDP growth of around 2.5–3% is expected. The key interest rate is predicted to remain at zero percent, and forecasts indicate only a slight rise in interest rates in the years to come.

The building construction and civil engineering market is predicted to grow some 4% in 2015, driven primarily by growth in the residential segment and the private commercial buildings segment. We expect a levelling off or slight decline in growth for the public commercial buildings segment in 2015, in part due to cutbacks in the municipal sector. The civil engineering market is expected to see a moderate market development in 2015. A flat market development is predicted for the transport segment, partly as a result of changes in priorities as a result of the parliamentary elections in autumn 2014. The major infrastructure project, the "Förbifarten" ring road around Stockholm, is however expected to start in 2015. Slight investment growth is expected in the municipal sector and in the mining industry, while the power sector, which has been a strong driving force for several years now, is expected to perform well in 2015 too.

Denmark

In Denmark too, GDP growth was weaker than expected in 2014 due to the economic slowdown among the major trading partners. Market growth in building construction and civil engineering was also weaker than expected in 2014, with the exception of the Copenhagen region, which showed signs of recovery. House prices in several parts of Denmark have developed positively over the last year, although this has not as yet resulted in growth in the new-build segment.

Growth in the Danish economy is expected to be moderate in 2015 too, with GDP growth of 1.5–2%. There are signs that the recovery that has so far been confined to the Copenhagen region is now also going to spread to other parts of the country.

Total growth in the building construction and civil engineering market is expected to be 2%, albeit from a low level. In respect of residential investments, the gradual improvement in the resale homes market is expected to provide growth from the current record-low levels, especially in the new-build segment. Growth is also expected within the private commercial buildings segment in 2015, whereas the public sector has announced cuts in its investment level within both building construction and civil engineering.

POST BALANCE SHEET EVENTS

No events have occurred after the balance sheet date that have any significant effect on the submitted accounts.

THE PARENT COMPANY VEIDEKKE ASA

The primary task of the parent company Veidekke ASA is to exercise ownership over the operative entities in the Group. The company has 54 (53) employees, of whom 24 (24) are women.

Veidekke ASA performs a number of Group functions for the Group companies, including services related to financial management, IT infrastructure, the Group's insurance schemes, legal assistance, and communication and public relations. Veidekke ASA invoices each of the subsidiaries for these services.

Veidekke ASA's accounts are prepared in compliance with NGAAP (Norwegian accounting rules).

The company's operating result was a loss of NOK -56 (-56) million. Dividends and group contributions from subsidiaries totalled NOK 300 million (NOK 505 million).

The Board proposes an ordinary dividend of NOK 3.5 per share for the 2014 financial year. This corresponds to a pay-out ratio of 55%, which is in line with the dividend policy of a minimum of 50% of earnings per share. The Board also refers to the more detailed presentation of the company's dividend policy, described under Shareholder information on page 92.

The parent company, Veidekke ASA, reported a profit for the year of NOK 217 (415) million. At the Annual General Meeting on 5 May 2015, the Board will propose that the profit be distributed as follows:

	(NOK million)
Allocated to dividend	468
Transferred from other equity	-251
Profit for the year	217

GOING CONCERN

In accordance with section 3-3 of the Norwegian Accounting Act, the Board confirms that the company is a going concern. The financial statements for 2014 have been prepared on the basis of this assumption. A statement on corporate governance has been prepared in accordance with section 3-3b of the Norwegian Accounting Act. This statement is included in this report as a separate document. An account of Veidekke's corporate social responsibility work has been prepared in accordance with section 3-3c of the Norwegian Accounting Act. See Veidekke's CSR Report for 2014.

Oslo, 26 March 2015 The Board of Directors of VEIDEKKE ASA

Martin Mæland Chairman

Gro Bakstad Annika Billström Ann Christin Gjerdseth

Per Otto Dyb Deputy Chairman

Hans von Uthmann Odd Andre Olsen Inge Ramsdal Lars S. Skaare

Arne Giske President and CEO

Income Statement Veidekke Group

(Figures in NOK million)	Note	2014	2013
Revenue	2, 3, 7, 31, 33	24 027	21 781
Subcontractors		-10 811	-9 448
Cost of materials		-4 154	-5 001
Personnel expenses	4, 5, 21, 30	-5 022	-4 450
Other operating expenses		-2 873	-1 934
Impairment of non-current assets	10, 11	-0	-11
Depreciation	11	-338	-310
Operating expenses		-23 199	-21 154
Share of net income from associates and joint ventures	13, 33	217	65
Operating profit		1 045	692
Financial income	6, 29	93	81
Financial costs	6, 29	-83	-54
Profit before tax		1 055	718
Income tax expense	22	-196	-163
Profit for the year		859	556
Profit for the year attributable to:
Equity holders of Veidekke ASA		843	544
Non-controlling interests		16	12
Total		859	556
Earnings per share (NOK) (ordinary / diluted)	8	6.3	4.1

Statement of comprehensive income

(Figures in NOK million)	Note	2014	2013
Profit for the year		859	556
Revaluations of pensions after tax	21, 22	-151	-4
Net items that will not be reclassified subsequently to profit or loss		-151	-4
Currency translation differences		43	91
Fair value adjustment of financial assets after tax	22, 29	-10	4
Net items that will be reclassified subsequently to profit or loss		33	95
Total other income and expenses after tax		-118	91
Comprehensive income		741	647
Comprehensive income attributable to:
Equity holders of Veidekke ASA		725	632
Non-controlling interests		16	15
Total		741	647

Statement of financial position Veidekke Group at 31 December

(Figures in NOK million)	Note	2014	2013
ASSETS
Non-current assets
Goodwill	9, 12	804	775
Other intangible assets	10	110	104
Deferred tax assets	22	54	55
Land and buildings	11	501	499
Plant and machinery	11	1 389	1 230
Investments in associates and joint ventures	13	1 151	908
Financial assets	15	408	417
Total non-current assets		4 416	3 990
Current assets
Residential projects	16	2 797	3 148
Inventories	17	255	308
Trade receivables	18	3 504	3 174
Other receivables		564	283
Financial assets	29	412	-
Cash and cash equivalents	19	435	764
Total current assets		7 966	7 676
Total assets		12 382	11 666
EQUITY AND LIABILITIES
Equity
Share capital	20	67	67
Other equity		2 606	2 338
Non-controlling interests	12	71	62
Total equity		2 744	2 466
Non-current liabilities
Pension liabilities	21	523	216
Deferred tax liabilities	22	222	342
Bonds	23	750	750
Amounts due to credit institutions	23	73	53
Other non-current liabilities	23	104	36
Total non-current liabilities		1 671	1 398
Current liabilities
Commercial papers and debt to credit institutions		55	672
Trade payables	24	3 132	3 029
Public duties		605	580
Warranty provisions	25	825	740
Taxes payable	22	241	90
Other current liabilites	24	3 109	2 691
Total current liabilities		7 967	7 802
Total equity and liabilities		12 382	11 666

Statement of changes in equity Veidekke Group

	Equity holders of Veidekke ASA
		Share	Other paid	Currency translation	Other retained	Fair value adjust		Non controlling
(Figures in NOK million)	Note	capital	in capital 1)	differences	earnings	ment 2)	Total	interests	Total
Equity at 01 January 2013		67	305	-105	1 939	-88	2 118	65	2 183
Profit for the year		-	-	-	544	-	544	12	556
Other comprehensive income		-	-	88	-4	4	88	3	91
IFRS 2 - share-based transactions (employees)	5	-	-	-	-13	-	-13	-	-13
Transactions with non-controlling interests		-	-	-	1	-	1	-	1
Changes in non-controlling interests	12	-	-	-	-	-	-	-7	-7
Dividend	20				-334		-334	-10	-344
Equity at 31 December 2013		67	305	-17	2 134	-84	2 404	62	2 466
Equity at 01 January 2014		67	305	-17	2 134	-84	2 404	62	2 466
Profit for the year		-	-	-	843	-	843	16	859
Other comprehensive income		-	-	43	-151	-10	-118		-118
IFRS 2 - share-based transactions (employees)	5	-	-	-	-13	-	-13	-	-13
Options - non-controlling interests		-	-	-	-42	-	-42	-	-42
Changes in non-controlling interests	12	-	-	-	-	-	-	1	1
Dividend	20	-	-	-	-401	-	-401	-8	-410
Equity at 31 December 2014		67	305	26	2 369	-94	2 673	71	2 744

1) Paid-in capital over and above nominal value of shares.

2) Change in fair value of available-for-sale shares and hedging instruments that qualify for hedge accounting.

Statement of Cash Flow

OPERATING ACTIVITIES Profit before tax 1 055 718 Net interest items 6 31 45 Tax paid 22 -89 -18 Depreciation, amortisation and impairments 10, 11 338 321 Gains on sale of property, machinery etc. 11 -40 -31 Share-based transactions directly over equity 5, 22 -13 -13 Profit and loss items without cash effect 2 -11 -113 Generated from this year's activities 1 272 910 Change in residential projects 16 282 322 Change in trade receivables 18 -335 -159 Change in other current receivables -149 218 Change in trade payables etc. 24 102 232 Change in other current liabilities 581 126 Net cash flow from operating activities (A) 1 753 1 648 INVESTING ACTIVITIES Acquisition of tangible, non current assets 9, 10, 11 -489 -259 Disposal of tangible, non current assets 11 87 122 Aquisition of subsidiaries 12 -218 -6 Disposal of subsidiaries -14 - Purchase of other shares - -10 Interest received 6 60 39 Aquisition of interest-bearing investment 29 -400 - Change in interest-bearing receivables 15 0 45 Net cash-flow other investments 15 3 10 Net cash flow from investing activities (B) -969 -59 FINANCING AVTIVITIES New long-term borrowing 23 5 733 Repayment of non-current liabilities 23 - -1 802 New short-term borrowing 51 455 Repayment of current liabilities -668 - Interest paid 6 -84 -91 Dividend payment to non-controlling interests 20 -8 -10 Dividend paid 20 -401 -334 Net cash flow from financing activities (C) -1 114 -1 043 TOTAL NET CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) -330 547 Cash and cash equivalents at 1 January 764 206 Exchange rate adjustments cash and cash equivalents 2 12 Cash and cash equivalents at 31 December 435 764 Additional information: Long-term borrowing facility1) 3 100 3 100 Used committed borrowing facilities at 31 December 655 51	(Figures in NOK million)	Note	2014	2013

1) The borrowing facility is due in November 2015 and withdrawals from this account are therefore presented as current liabilities.

Contents Notes to Accounts Veidekke Group

• 1. Accounting policies Veidekke Group
• 1. Segment information
• 1. Revenues
• 1. Personnel expenses
• 1. Shares to employees
• 1. Financial income/financial costs
• 1. Projects in progress
• 1. Earnings per share
• 1. Goodwill
• 1. Other intangible assets
• 1. Plant, machinery, land and buildings
• 1. Acquisitions and disposals of businesses
• 1. Investments in associated and joint ventures
• 1. PPP Project
• 1. Financial assets
• 1. Residential projects
• 1. Inventory
• 1. Trade receivable
• 1. Cash and cash equivalents
• 1. Number of shares, shareholders, etc.
• 1. Pensions
• 1. Income tax expense and deferred tax
• 1. Non-current liabilities
• 1. Trade payables and other current liabilities
• 1. Warranty provisions etc.
• 1. Mortgages, guarantees and joint and several liability
• 1. Capital management
• 1. Financial risk
• 1. Financial instruments
• 1. Compensation to senior executives
• 1. Leasing commitments and rental income
• 1. Uncertainties
• 1. Related party transactions
• 1. Subsequent events
• 1. Corporate structure

Note 1. Accounting policies – Veidekke Group

INTRODUCTION

Corporate information

Veidekke is a Scandinavian construction and property development company headquartered in Oslo. The company operates nationwide in Norway and Denmark and has operations in central regions in Sweden. Veidekke ASA is domiciled in Norway and is listed on the Oslo Stock Exchange with the ticker VEI. The consolidated accounts were approved by the Board of Directors on 26 March 2015.

Basis for preparation of the accounts

Veidekke's consolidated accounts have been prepared in accordance with EU approved International Financial Reporting Standards (IFRS) and Interpretations, together with the disclosure requirements stipulated by the Norwegian Accounting Act. Only standards that are effective on 31 December 2014 have been applied.

The consolidated accounts have been prepared on a historical cost basis, with the exception of certain financial instruments that are measured at fair value. Transactions related to step acquisitions and disposals are measured at fair value on the transaction date if the transaction has entailed a change in control of the company. See the separate section on page 25 for a more detailed presentation.

Unless otherwise specified, all the figures in the financial statements and notes are presented in millions of kroner. All amounts have been rounded off to the nearest million in the notes.

The accounting policies applied are consistent with those used in the previous financial year, with the exception of the amendments in IFRS that have been adopted by the Group in the current financial year. Below is a list of the changes in IFRS that have been relevant for the Group and that affect the 2014 financial statements.

Implementation of new accounting standards and interpretations

On 1 January 2014 Veidekke implemented IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, amendments to IAS 28 Investments in Associates and Joint Ventures, and IFRS 12 Disclosure of Interests in Other Entities. The implementation of these standards has had little effect on Veidekke's accounts.

IFRS 10 Consolidated Financial Statements

IFRS 10 establishes a model for assessing whether a company has accounting control over another company such that consolidation must take place. The concept of control has been amended from IAS 27. Control exists when an investor has influence over a company, is exposed or has rights to variable returns from the company, and has the ability to affect those returns to a significant degree by using its power to control activities in the company. The new standard requires a higher degree of judgement in determining which entities are controlled by the company. The change in the definition of the concept of control has not had an impact on Veidekke's accounts.

IFRS 11 - Joint Arrangements

IFRS 11 applies to joint arrangements and provides guidance on accounting for two different types of joint arrangements – joint operations and joint ventures. Pursuant to IFRS 11, joint ventures shall be accounted for using the equity method. In joint operations, parties shall recognise their share of assets, liabilities, revenue and expenses in which they have a common interest. The assets and liabilities each party has alone shall be recognised in full. The profit from a joint operation shall be recognised by the parties equivalent to their respective share in the operation. Veidekke uses joint arrangements that qualify as joint operations in some construction projects. These are often referred to as a working partnership. In working partnerships the parties normally have equal stakes in assets, liabilities and revenue. The new standard means that Veidekke recognises its share of assets, liabilities and revenue in line with its interest in the project. This is in line with previous practice, meaning the implementation of this standard has thus not resulted in any changes in the consolidated accounts.

Veidekke's Swedish property development operations have a small joint operation. Previously this business would have been accounted for in accordance with the equity method, but according to the new standard it must be recognised as a joint operation. Implementation of this standard resulted in an increase in the Group's overall financial position at 31 December 2014 of NOK 92 million. The impact on the financial statements at 1 January 2013 was negligible, so the financial statements for 2013 have not been restated. Implementation of this standard has not affected the Group's equity or profit. A large share of the Norwegian property development operations are conducted in joint ventures. Implementation of the new standard had no effect on the financial statements for this part of the business.

IAS 28 Investments in Associates and Joint Ventures The scope of IAS 28 has been expanded to include investments in joint ventures. Implementation of this standard has not had any effect on the financial statements.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 applies to entities that have interests in subsidiaries, joint ventures, associates and unconsolidated structured entities. The standard replaces the disclosure requirements previously entailed by IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates, and IAS 31 Interests in Joint Ventures. In addition, it introduced a number of new disclosure requirements related to IFRS 10 and IFRS 11. Implementation of the new standard only affects the note disclosures in the annual report for 2014.

Material accounting assessments, estimates and assumptions

Veidekke's operations consist primarily of construction work. For its projects, Veidekke recognises revenue using the percentage of completion method, based on the anticipated final profit (final outcome) and stage of completion. This means that income is recognised as work progresses.

The percentage of completion method entails some uncertainty, since it is based on estimates and assessments. For projects under construction, there is uncertainty associated with the progress of ongoing work, disputes, final outcome, etc. The final profit may therefore differ from the anticipated profit. For completed projects, there is uncertainty about hidden deficiencies, including guarantee work, and the outcome of possible disputes with the client.

Areas characterised by significant estimation uncertainty:

Accounting items with significant estimation uncertainty	Estimates/assumptions	Discussed in the following notes	Book value
Trade receivables/Trade payables (creditors)/warranty provisions	At 31 December 2014 project assessments had been carried out for all projects. They comprise an assessment focusing on the expected earn ings of the individual project on completion. The assessment is based on estimates, experience and professional judgement.	7, 18, 24, 25	Most of the Group's current assets and current liabilities are related to projects.
Goodwill	Calculation of the present value of future cash flow. The main assumption in this calculation is expected future earnings.	9	NOK 804 million
Sites under development	Valuation of the land bank is based on estimates concerning expected degree of utilisation, how long it will take to get planning permission, and thus before construction can start, and expected sales price.	16	NOK 1 865 million
Pension liabilities	The Group's pension liabilities are calculated by an actuary. The calculations are based on a series of actuarial assumptions.	21	NOK 523 million

CONSOLIDATION

Consolidated accounts

The consolidated accounts include Veidekke ASA (the parent company) and all of its subsidiaries. Subsidiaries are defined as companies in which Veidekke has a controlling interest. Controlling interest is normally achieved, directly or indirectly, when the Group owns more than 50% of the shares in the company, or when the Group is in a position to exercise actual control over the company. Control of a company can also be achieved through agreements or articles of association. In assessing control, currently exercisable voting rights are also taken into account. In terms of accounting "control" is defined as when one company has influence over another company, is exposed or has rights to variable returns from the company, and has the ability to affect those returns to a significant degree by using its power to control activities in the company.

Group formation can be achieved by establishing new companies, by purchasing companies or through mergers. Subsidiaries are consolidated in the accounts when a controlling interest is achieved and continue to be so until it ceases.

The consolidated accounts show the Group's profit and financial position as if they are one legal entity and are a collective statement of all the companies in the Group. The companies' accounts are consolidated line by line. The consolidated accounts are prepared in accordance with uniform accounting standards.

Partly owned subsidiaries are incorporated in the consolidated accounts in their entirety. The non-controlling share of the subsidiary's equity constitutes part of the Group's equity. The share of the profit attributable to non-controlling interests is included in the consolidated profit for the year. The non-controlling share of the profit and equity are presented as separate items in the accounts. When purchasing a subsidiary with non-controlling interests, 100% of the identifiable assets and liabilities are recorded in the consolidated statement of financial position, whereas in terms of goodwill a decision can be made for each individual acquisition as to whether only the parent's (Veidekke's) share of goodwill is recognised, or whether the non-controlling party's share of goodwill will also be recognised.

When Veidekke acquires a non-controlling interest in a subsidiary, the purchase price beyond the non-controlling party's share of the book value is recorded as a reduction in the equity of the owners of the parent company. In connection with the sale of shares in a subsidiary where the controlling interest is retained, this must be accounted for as an equity transaction. Such transactions, therefore, involve no change in goodwill or other assets or liabilities and thus are not recognized in profit and loss. The share of the negative equity in subsidiaries is included in the non-controlling interest.

All intra-group transactions and balances are eliminated. Furthermore, intra-group profit and unrealised gains are eliminated.

Step acquisitions and disposals

In connection with the acquisition and sale of companies, it will normally be assessed whether the transaction is an asset transaction or a business transaction. In Veidekke's construction and industrial operations, the purchase and sale of companies will normally be treated as a business transaction. In Veidekke's property development operations, the purchase and sale of companies will normally be treated as an asset transaction.

Step acquisitions/disposals in companies related to the business

When a company defined as a business is acquired in steps such that the status changes from having a non-controlling stake in the company to it becoming a subsidiary, the previously held stake is valued at fair value and the gain or loss is recognised in the income statement. The fair value of the previous non-controlling ownership interest is included in the calculation of goodwill.

When part of a subsidiary that is a business is sold such that Veidekke retains more than 50% of the shares, no gain or loss is recognised in the income statement. If the sale results in a loss of control, normally when there is a stake of 50% or lower, the gain or loss is recognised in the income statement as if the entire company had been sold. This means that the remaining ownership interest is accounted for at fair value.

Step acquisitions/disposals in companies related to assets In connection with step acquisitions related to assets such that the status changes from having a non-controlling stake in a company to it becoming a subsidiary, the original cost price is allocated to the identifiable assets and liabilities based on their relative fair value on the acquisition date.

When shares in a subsidiary which is an asset are sold and more than 50% of the shares are retained, no gain or loss is recognised in the income statement. If the sale results in loss of control, normally when there is a stake of 50% or lower, a gain or loss is recognised in the income statement corresponding to the realised asset.

Business combinations

Business combinations may be achieved through the acquisition of a company's operations, the acquisition of companies, or mergers and are accounted for using the acquisition method. Under this method of accounting, the identifiable assets and liabilities are recognised at fair value. Identifiable assets also include intangible assets, such as patents, licences, trademarks, logos, and customer portfolios.

That part of the price that exceeds the fair value of identifiable assets and liabilities constitutes goodwill. Only acquired goodwill is recorded in the statement of financial position. Acquisition costs are expensed. Identifiable excess value is included in the calculation of deferred tax, whereas no provision is made for deferred tax in the case of goodwill. The fair value of tangible assets is depreciated systematically, while goodwill and intangible assets with an indeterminable lifespan are tested annually for impairment.

Any contingent consideration is measured at fair value in the acquisition analysis, and any future changes are recognised over profit and loss.

Excess value and goodwill are established at the time of group establishment. If there are subsequent changes in ownership, the changes will not affect goodwill or identified excess value as they are locked from the acquisition date. However, the change in ownership will affect allocations between controlling and non-controlling interests.

Associates

Veidekke has investments in associates. Associates are companies in which the investing company can exercise significant influence over financial and operating policies, but which are not subsidiaries or joint ventures. Significant influence will normally mean that the investing company holds between 20% and 50% of the shares in the company.

Veidekke uses the equity method of accounting for associates. Associates are accounted for using the equity method from the date that significant influence commences until the significant influence ceases. The accounts of associates are adapted to IFRS, in keeping with Veidekke's accounting policies, before they are incorporated in Veidekke's consolidated accounts.

Joint ventures

Veidekke is also engaged in operations in collaboration with other enterprises, called joint ventures. Some of these operations are managed through separate legal entities, which may be limited companies or general partnerships. Joint venture companies are primarily used in property development, but also for investments in PPP (public–private partnership) companies. In joint ventures, joint control of the company is typically governed by an agreement. Joint control requires unanimity among the participants on important decisions. Veidekke uses the equity method to account for joint ventures, and they are included from the date that joint control of the company commences and until the joint control ceases. The accounts of joint ventures are adapted to IFRS, in keeping with Veidekke's accounting policies, before they are incorporated in Veidekke's consolidated financial statements.

Under the equity method, investments are measured as the share of the equity in the company, and the share of the profit of the company is recognised in the income statement (profit after tax). When a portion of a company is acquired, the investment is reported at original cost, i.e. the share of the equity measured at fair value at the time of the purchase, including goodwill. The share of the profit is recognised on a separate line under operating profit on the income statement. The investment is classified as non-current assets in the statement of financial position. Any subordinated loan is presented as part of the investment. Profit less distributions is added to the investment in the statement of financial position. When calculating the share of the profit, depreciation of the fair value of tangible assets at the time of purchase and internal gains are taken into account. Negative equity in the company is recognised when the Group is obligated to make good such loss, or when there are agreements making it likely that Veidekke will have to inject new equity into the company.

Joint operations – Working partnerships

Veidekke also runs operations along with other enterprises through working partnerships. A working partnership is a collaboration between two or more participants who undertake a construction project together, and where they share the risk in the project (profit and loss). Separate accounts are kept for working partnerships. Activities within a working partnership are often organised as a general partnership ("ansvarlig selskap"). The fact that the activities are organised in a legal company does not affect the participants' joint and several responsibilities to fulfil the contractual obligations that the working partnership has undertaken. Working partnerships constitute part of Veidekke's ordinary activities, and the company takes an active part in the management of these entities. A working partnership is a jointly controlled activity, and it is regarded as joint operations. This means that the participants control operations jointly, as laid down in an agreement. This requires unanimity on important decisions.

For working partnerships Veidekke recognises its share of assets, liabilities and revenues in line with its interest in the project. This means that Veidekke includes its share of the partnership's accounts, and each line in the income statement and statement of financial position is incorporated. Intra-group transactions are eliminated with a proportionate share.

Put options in non-controlling interests

The present value of the future purchase price related to non-controlling interests' put options on shares in subsidiaries is accounted for as liabilities, see note 23. The liabilities are recognised using estimated value, and the estimate may change in future periods since the amounts to be paid relate to future fair value and/or future profits.

Translation of foreign operations

The Group presents its financial statements in Norwegian kroner. This is also the functional currency of the parent company and its Norwegian subsidiaries. The accounts of foreign companies with a different functional currency are converted as follows:

• Assets and liabilities are converted at the exchange rate on the balance sheet date
• Income statement items are converted at the average exchange rate for the month
• Currency translation differences are recognised in other income and expenses in total comprehensive income

Translation differences are recorded on an ongoing basis against other income and expenses in total comprehensive income. In the case of disposal of a foreign entity, the accumulated currency translation differences are recognised in the income statement. Sale and liquidation of a company, repayment of capital etc. count as disposal.

Goodwill on the purchase is considered part of the foreign entity and is treated as an item in foreign currency.

REVENUE RECOGNITION

Construction projects

Veidekke's operations consist largely of the execution of all kinds of construction and civil engineering projects lasting anything from a few months to three or four years. For reporting of projects Veidekke primarily uses the stage of completion method, based on the estimated final profit. This means that income is reported in line with production, based on the stage of completion.

Additional claims against the client and disputed amounts with a high level of uncertainty are normally not taken to income until agreement has been reached or a legally binding court ruling has been handed down. Nevertheless, in the event of claims with a low level of uncertainty regarding Veidekke's likelihood of winning and where the uncertainty is primarily related to the outcome in kroner, part of the claim is taken to income based on the best estimate. Provision is made for guarantee work based on historical experience and identified risks. The guarantee period is normally from three to five years.

For projects that are expected to make a loss, the whole loss is recognised in the income statement at the time it has been identified. Costs relating to tenders and other preparatory work are recognised as expenses as they are incurred. The stage of completion is determined on the basis of the work completed and is normally calculated as the ratio of accrued expenses to date to estimated total expenses for the project. Accrued expenses to date are equal to book expenses adjusted for time lag in invoicing (Accrued but not recorded). Income to date is equal to total anticipated expenses plus project contributions multiplied by the stage of completion.

Accrual accounting is used for both income and expenses. Non-invoiced earned income is booked under trade receivables (Work done, but not invoiced). Unearned invoiced income (pre-agreed payment plans) is also booked under trade receivables (Work invoiced in advance). Only one of these items may be applied per project. If the item "Work invoiced in advance" is larger than invoiced trade receivables for the project, the surplus is recorded as advance payment from customers (Other current liabilities). Each project thus shows either a net receivable from the customer or a net debt to the customer. Cost accruals ("Accrued, not recorded") are recorded under trade payables, while provisions for guarantee work on completed projects are recorded under Warranty provisions etc.

Please refer to note 7 Projects in progress, note 18 Trade receivables, note 24 Trade payables and other current liabilities and note 25 Warranty provisions etc.

These accounting principles also apply largely to projects in Veidekke's asphalt operations.

Residential projects

Residential projects comprise the development and construction of residential buildings for sale for Veidekke's own account. Sites that are acquired with a view to constructing residential buildings for sale are classified as current assets – residential projects. Sites are capitalised when control over future economic benefits related to them is taken over. A residential project consists of many units and, normally, a minimum of 50% of the units must be pre-sold before the project begins.

Projects under development

From the time a right is gained, by either buying a site or entering into an option agreement, costs associated with the development of the site are capitalised. Interest costs are included in the acquisition cost and are capitalised on the property from the time value is added to the property. Interest costs are capitalised as long as there is development activity on the property. The property is valued at the lower of acquisition cost (including development costs and interest expenses) and fair value. If acquisition cost exceeds fair value, an impairment loss is recorded for the site.

Projects under construction

Revenue and profits from the sales of fully developed residential buildings for Veidekke's own account are not recognized in the accounts until an apartment is complete and is contractually handed over to the buyer. This means that all costs except general sales and administration costs are capitalised as part of the acquisition costs as current assets under the item Residential projects. This principle follows from interpretation IFRIC 15 and results in deferred revenue recognition compared with the percentage of completion method. Prepayments from customers are recorded as current liabilities. Interest costs related to residential projects under construction are capitalised on an ongoing basis and are included in the project's initial cost. This means that at the time of handover, interest is expensed as a part of the project costs and is classified as operating expenses.

Unsold units and sites for development

Unsold completed units and sites under development are capitalised under Residential projects. The fair value of sites and unsold units is based on specific individual assessments. If the fair value is considered to be lower than the cost price, the site is written down to fair value.

Accounting policies for property development projects in the segment accounts (note 2)

In the segment accounts, projects under construction are accounted for using the stage of completion method. Profit is accrued in accordance with the project's estimated final profit multiplied by the sales ratio multiplied by the stage of completion. Profit to date is also calculated in this way. When calculating the estimated final profit, only directly attributable costs are regarded as project costs, including interest costs. Loss-making projects are charged to income in the period they are identified. Veidekke adheres to the principle that the final decision regarding whether to go ahead with a project is not normally made until a minimum sales ratio of 50% (measured in value) has been reached. Starting construction on a project before the minimum sales ratio has been reached usually entails a high level of market uncertainty linked to the final outcome in terms of profit. Projects are therefore not recognised in the accounts before the sales ratio (measured in value) exceeds 50%.

Long-term contracts for the operation and maintenance of public roads

Operation and maintenance contracts usually have duration of five to seven years. In general, the same accounting principles are applied to operation and maintenance contracts as

to construction projects. For projects that are expected to show a net loss in the remaining contract period, the loss is recognised as soon as it is identified. The loss shall cover the remaining ordinary term.

PPP projects

Veidekke has ownership shares in PPP projects (public–private partnerships) involving the construction of roads and schools with a subsequent operation and maintenance period. The PPP contracts are accounted for according to IFRIC 12 Service Concession Arrangements ("The Financial Asset Model"), as a financial asset at cost amortised over the contract period. This is discussed in more detail in note 14.

Veidekke's owner function in the PPP companies is reported in the business area "Other operations". Services in the form of construction or operation are reported under the business areas Construction or Industrial. Construction services are accounted for as an ordinary building construction project. Any profit is eliminated at the group level. Profit is recognised in income over the entire lease period in line with the ownership interest. Deliveries related to maintenance are expensed as they are incurred.

Other operations

Income from sales of products (aggregates, asphalt, etc.) is recognised on delivery. For leasing operations the agreed rental fee is recognised on a straight-line basis. This also applies to services rendered, consultancy work, etc. Sales of non-current assets are recognised in the income statement on delivery.

FINANCIAL INSTRUMENTS

The Group classifies financial investments in the following categories::

1. Financial assets at fair value through profit or loss A financial asset is classified in this category if it is acquired primarily with the intention of selling it in the short term. Gains and losses on investments held for sale are recognised as they occur.

2. Held-to-maturity investments

Veidekke does not undertake such investments, and this category is therefore not described in any further detail.

3. Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortised cost using the effective rate of interest method, with a deduction for any impairment. Gains and losses are charged to income when loans or receivables are derecognised or impaired. Effective interest on loans and receivables is recognised as interest income.

4. Financial assets available for sale

Available-for-sale financial assets are financial investments that are either designated in this category or cannot be classified in the other categories. After initial recognition, investments available for sale are measured at fair value, whereby changes in value are recognised in total comprehensive income as a separate component, until the investment is sold or it is determined that an impairment loss must be recognised for the

investment. At this point, the accumulated values that were previously recognised in total comprehensive income are transferred to the income statement. When an investment is derecognised, the accumulated gain or loss is transferred to income under financial items. Dividends and interest income on investments in financial instruments are recognised as financial income when the Group's right to the dividends or interest income is determined.

Financial liabilities not included in the above categories are classified as other financial liabilities. The category other liabilities is included in the following items in the statement of financial position: Non-current interest-bearing liabilities, Other non-current liabilities, Current interest-bearing liabilities and Other current liabilities. On initial recognition other financial liabilities are measured at fair value. After initial recognition, other financial liabilities are measured at amortised cost using the effective rate of interest method. Effective interest is recognised as financial costs. For practical reasons, effective interest is not calculated for financial liabilities that are shortterm by nature.

Impairment of financial assets

If there are indications of impairment relating to loans and receivables that are measured at amortised cost, the need to record an impairment loss shall be considered. The impairment amount is calculated as the difference between the asset's recognised value and the present value of anticipated future cash flows. The impairment amount is charged to income.

Veidekke has two types of financial risks relating to the Group's trade receivables: credit risk and project risk. Credit risk relates to the customer's ability to pay. This risk has always been low at Veidekke in part because contracts normally require guarantees related to the underlying contract. Provision for such losses is made using a separate "Provision for bad debts" account. Provisions are made based on historical experience related to various customer groups. Specific debts are impaired when the company regards them as non-recoverable, based on a specific assessment. Project risk relates to the customer's willingness to pay. The risk that the customer is unwilling to pay is treated as part of the individual project's valuation. In the accounts, such impairment will be presented as a reduction of the trade receivables. In the note, this risk will be presented as part of the item "Work invoiced in advance". See notes 18 and 29 for more details.

If a financial asset classified as available for sale based on objective criteria has been the object of impairment, the loss is expensed in the income statement as impairment. A reversal of the impairment of available-for-sale equity instruments is not recognised in the income statement, but is recognised directly in the Group's total comprehensive income. A reversal of the impairment of available-for-sale debt instruments is recognised in the income statement.

Derivatives and hedging transactions

On initial recognition, derivatives are recognised at fair value. Thereafter, the item is valued at each balance sheet date. On entering into a derivative agreement, the Group defines whether this is a fair value hedge of an accounting item or hedging of an obligation (a cash flow hedge).

Changes in the fair value of derivatives that are both defined as hedging and satisfy the requirements for hedge accounting are recognised in total comprehensive income. Equity items are reversed and recognised as income or expenses during the period the hedged obligation or transaction affects the income statement. Changes in the fair value of derivatives that do not qualify as hedging are recognised in the income statement as they occur.

IAS 39 defines special rules with respect to fair value accounting for financial derivatives where an agreement has been concluded but no withdrawals have been made. This type of financial instrument should only be recognised at fair value once withdrawals are made. For Veidekke this means that fixed rate loans that have been granted, but where no withdrawals have been made against the facility, are recorded at NOK 0. See the more detailed discussion in note 14.

Financial obligations – Loans

Loans are reported in the accounts by recognising the amount that is received less directly related transaction costs. The loan is then measured at amortised cost using the effective rate of interest method.

Deduction of financial assets and obligations

A financial asset is derecognised if the right to receive cash flows from the asset no longer exists. Similarly, a financial obligation is deducted if the obligation has been honoured, cancelled or has expired as agreed.

Financial income and expenses

Financial income includes interest income on financial investments, dividends received and group contributions, currency gains and gains from available-for-sale financial assets. Financial income also includes changes in the fair value of financial assets classified as financial assets at fair value through other comprehensive income and gains from hedging instruments recognised in the income statement.

Financial costs include interest charges on loans, currency losses, changes in the fair value of financial assets at fair value through other comprehensive income, impairment of financial assets and recognised losses on hedging instruments. All loan expenses are recognised using the effective rate of interest method.

Financial expenses on residential projects are capitalised and expensed at handover as an operating expense.

Interest expenses in connection with loans to senior executives

In connection with the Group's share programme for senior executives, Veidekke makes loans to the employees. Accounting of these loans is performed in accordance with IAS 39 at amortised cost. Interest costs are measured using the effective rate of interest method based on estimated market interest rates and are classified as payroll expenses. These loans are currently interest-free, and the difference between the nominal value of the loans and their fair value, based on discounting the future cash flow by the estimated market interest rate, represents the prepaid benefit to employees. These prepaid benefits are recognised in the income statement over the period from when a loan is granted until it is paid off.

OTHER POLICIES

Pensions

Veidekke has pension schemes for all its employees in Scandinavia, which include both defined-contribution and defined-benefit plans. In defined-contribution plans the employer makes a contribution to the employee's pension savings. The future pension depends on the size of the contribution and the return on the pension assets. In defined-contribution pensions the costs to the company is equal to the contributions for the year, and the company's only commitment is to make an annual contribution. Thus, no liability is recorded in the statement of financial position.

In the case of defined-benefit plans, the company commits itself to providing a pension of a specified size. An actuarial calculation is made each year of the pension costs and pension liabilities. Pension liabilities equal the present value of the accrued pension rights. The employees' pension rights are recognised as costs as they are earned, and provision is made for pension liabilities in the statement of financial position. The pension calculation takes into account estimated wage growth, and pension costs are recognised on a straight-line basis over the employment period. Here, the Group bears the risk for the return on the pension assets.

Defined-benefit plans are recorded in the accounts at fair value. The net of pension liabilities and pension assets is recognised as non-current debt or receivables. Pension assets consist of a premium fund and a share of the life assurance company's funds (premium reserves). Pension costs consist of the present value of the year's earning plus interest on the net pension liabilities. This means that the cost is calculated using the same discount rate for pension liabilities as is used to calculate expected return on pension assets.

In defined-benefit plans, an annual difference arises between the estimated and actual return on pension assets and between estimated and actual pension liabilities, called actuarial gains and losses. Actuarial gains and losses may arise as a result of discrepancies and changes in the assumptions on which estimates were based; for example the return of the pension assets might be different from the figures used in the estimates. Actuarial gains and losses are recognised in total comprehensive income. Any changes in plans are recognised in profit and loss when they are adopted, unless the change depends on the employees remaining in the Group, in which case the change is amortised over the remaining service period.

Most companies in Norway have contractual early retirement schemes (AFP) for their employees. Although the AFP pension scheme is a defined-benefit multi-company scheme, because the administrator is not in a position to procure reliable calculations concerning accrued rights, the accounting for the scheme will be conducted as for a defined-contribution scheme. This is discussed in more detail in note 21.

Tax

Income taxes are tax on the Group's profit. Tax is treated in the accounts as an expense and is accrued in the normal way. Tax payable and deferred tax relating to items recorded as other income and expenses in total comprehensive income are recognised in total comprehensive income. The income tax expense for the year consists of payable tax, deferred tax and

adjustments from previous years. Payable tax is calculated based on the company's taxable profit for the year. Deferred tax is a provision (accrual) for future payable tax.

Deferred tax liabilities/assets are recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences arise because some items are accrued differently in the financial accounts and the tax accounts. Both tax-increasing and tax-reducing timing differences occur. Deferred tax is calculated on net temporary differences, i.e. by offsetting tax-increasing against tax-reducing differences. Deferred tax is measured on the basis of the current future tax rate in those companies in the Group where temporary differences have arisen. Deferred tax is recognised at the nominal rate and is classified as a non-current asset or non-current liability.

Deferred tax assets relating to loss carry-forwards are recognised in the accounts only when it is probable that the company will be able to make use of the advantage.

Tax payable and deferred tax are recognised in the income statement, unless the tax is related to a transaction or event that has already been recognised in total comprehensive income or directly in equity, or it is related to a merger. Tax items relating to unrealised intra-group gains are eliminated along with these.

Goodwill

Goodwill arises when the Group acquires a business. Goodwill includes synergies, organisation, know-how, market position, etc. Goodwill is calculated as the fair value of the purchase price at the time of the acquisition less the fair value of the acquired company's identified assets, liabilities and contingent liabilities. If the acquisition does not involve 100% ownership for the parent company, it is possible to use the entire fair value as the basis for determining goodwill. This entails the non-controlling party's share of goodwill being recognised as goodwill. The principle used for measurement of non-controlling interests is determined separately for each business combination.

Other intangible assets

Intangible assets with a determinable useful life are measured at original purchase price less accumulated amortisation and impairment losses. This applies, among other things, to extraction rights for aggregates, for which amortisation is determined based on actual extractions.

Tangible non-current assets

Tangible non-current assets consist of plants, buildings, machinery and equipment, etc. Veidekke accounts for tangible non-current assets using a historical cost model. This means that tangible non-current assets are measured at original cost less accumulated depreciation and impairments. Tangible non-current assets are recognised when it is probable that future economic benefits linked to the asset will accrue to the company and the original cost can be measured reliably. This applies both to first-time purchases of operating equipment and to subsequent changes, conversions, overhauls, etc. Other repairs and maintenance are recognised as expenses as they arise. Tangible non-current assets are depreciated on a straight-line basis over their estimated useful lives.

The estimated expected useful lives for the current period and comparable periods are as follows:

• Vehicles: 5 years
• Machinery etc.: 5–7 years
• Asphalt plants: 10–15 years
• Bitumen tanks: 15 years
• Buildings: 20–50 years

The depreciation period and residual value are assessed annually. Gains and losses on disposals of non-current assets are recognised and represent the difference between sales price and carrying value. Gains on sales of non-current assets are presented under operating revenues, while losses on sales of assets are presented under other operating expenses.

Impairment of non-current assets

If there is an indication of impairment in value of a tangible non-current asset, the recoverable amount is calculated. An impairment loss is recognised if the recoverable amount is less than its carrying amount. The recoverable amount is the higher of net sales value and value in use. Value in use is the present value of the future cash flows that the asset is expected to generate.

Intangible non-current assets with an indeterminable life and goodwill are tested for impairment in the fourth quarter each year and the necessary impairment, if any, is recorded. Impairment testing may also be performed on a quarterly basis if there are indications of impairment. The value in use is calculated for each cash-generating unit (CGU). If a CGU is impaired, goodwill is written down first. Other assets are then written down proportionately. If the value of impaired intangible non-current assets rises again later, the impairment may be reversed; however, impairment of goodwill is not reversed.

The calculation of the value in use of a CGU is based on future estimated cash flows for the unit, discounted at a suitable rate in light of the Group's required rate of return. The calculation is based on the CGU's budgets and forecasts, including terminal value. Maintenance costs and replacement investments are also taken into account, but not investments for expansion. Financing expenses and tax are not included in the calculation. In the establishment of cash-generating units, the basis is taken as being the smallest identifiable group of assets that generates incoming cash flows and which in all essence is independent of incoming cash flows from other assets or groups of assets. Units with significant synergies and similar types of activities are considered cash-generating units. Within construction operations a cash-generating unit will normally be on the company level, whereas for industrial operations, they will normally encompass business areas, for example Asphalt or Aggregates.

Financial lease agreements

Financial lease agreements (leasing) are agreements in which the significant risks and rewards of the leased asset have been transferred to the lessee. Financial lease arrangements for equipment are recognised and depreciated in the normal way, but not over a longer period of time than the underlying lease, whilst the leasing commitments are presented as amounts due to credit institutions. The lease commitment is recognised at the lower of the present value of the leasing payments and the fair value of the leased asset. The year's

leasing payment consists of interest, which is presented in interest expenses, and repayment of capital, which is presented as repayment of debts.

Operating lease agreements

Lease agreements where the significant risks and rewards have not passed to the lessee are classified as operating lease agreements. For operating lease agreements, lease payments are expensed on a straight-line basis over the lease period and the liabilities are not recognised

Currency transactions

Transactions involving foreign currency are converted at the exchange rate at the time of the transaction. Monetary items in foreign currency are assessed at the exchange rate on the balance sheet date, and related currency gains or losses are recognised in the income statement. Monetary items are items that will be settled at a fixed nominal amount. This applies to liquid assets, receivables, debts, etc. For non-monetary items, the exchange rate at the time of the transaction is used as the basis for the original cost, i.e. there is no subsequent retranslation. This applies to tangible non-current assets, inventory, etc.

Inventories

Inventories consist of the project inventories and the inventory for industrial operations. Project inventories are included in project valuations. The inventory for industrial operations is measured at the lower of total production costs and net sales price.

Warranty provisions etc.

A provision is made in the accounts when the Group has an obligation (legal or self-imposed) as a result of a previous event, and it is probable that a financial settlement will take place as a result of that obligation, and the amount can be measured reliably. Provisions are made for confirmed guarantee work and for probable concealed deficiencies. See note 25.

Cash and cash equivalents

These consist of cash and cash equivalents and bank deposits, including deposits subject to certain conditions, and short-term liquid investments with a maximum term of three months, which can be converted into cash immediately.

Classification

Assets and liabilities relating to the supply of goods (projects) are classified as current assets and current liabilities. Veidekke has an agreement with a credit institution in the form of a line of credit that is used to finance both non-current assets (investments) and working capital. The agreed due date is 30 November 2015. If this overdraft facility is used, the loan is normally classified as non-current. Since at 31 December 2014 there is less than a year to maturity this has been classified as a current liability. Other debts to credit institutions that are taken up to finance non-current assets (investments) and that have a maturity of more than 12 months are classified as non-current liabilities. Loans that are taken up to finance working capital (current assets) are classified as current liabilities. Other receivables and amounts due for payment after more than a year are classified as non-current assets and non-current liabilities.

Share discounts

Veidekke purchases its own shares and then sells them to the employees at a discount. These sales of shares are reported in accordance with IFRS 2 on share-based payments. The discount is recognised in the income statement at fair value at the time of issue, taking into account the lock-in period. The discount is calculated according to an option-pricing model. The fair value of the discount is charged to payroll expenses. See note 5.

Proposed dividend

Proposed dividends are not recognised as liabilities in the accounts until they have been approved by the Annual General Meeting.

Contingent liabilities

Veidekke's profits from projects are strongly influenced by estimates, entailing some uncertainty. See the discussion on page 24 under "Material accounting assessments, estimates and assumptions". Information on contingencies is provided in note 32.

Borrowing costs

Borrowing costs that are directly attributable to the procurement, manufacturing or production of a qualified asset are recorded as part of the acquisition cost of the asset concerned. For Veidekke, this involves capitalising interest costs in connection with the company's own property development projects. In connection with the purchasing of operating equipment where it takes a long time before the operating equipment can be used for its intended purpose, interest will also be capitalised. This concerns, for example, construction of an asphalt plant. Other borrowing costs will be recognised in the income statement on an ongoing basis.

Earnings per share

Earnings per share is calculated by dividing the profit for the period attributable to the owners of the parent company by the weighted average number of outstanding shares in the period.

Statement of cash flows

The statement of cash flows is prepared using the indirect method.

In the property development divisions, investments are made continuously in new development projects, including sites. Investments also include acquisitions of companies. Investments in the property development segment are regarded as part of the operating activities and are presented under operating activities in the statement of cash flows. Associates and joint ventures are also used as part of the operating activities for the development of property development projects. Both acquisitions and sales of associates and joint ventures are regarded as operating activities. In the other parts of the Group, acquisitions and sales of companies are classified as investment activities.

Segment reporting (note 2)

The Group's business segments are presented in accordance with the internal financial reporting that is presented to the Group's most senior decision-maker.

In essence, internal financial reporting follows current IFRS rules with one exception – accounting for residential projects for own account. For these projects profit is recognised in accordance with the project's estimated final profit, multiplied by the sales ratio, multiplied by the stage of completion. Revenue to date is also calculated in this way. When calculating the estimated final profit, only directly attributable costs are regarded as project costs, including interest costs. No profit is recognised in the accounts before the sales ratio measured in value exceeds 50%. Project losses are expensed immediately.

See the segment note (note 2) for further information. See also the detailed description under income recognition for residential projects.

IFRS STANDARDS AND IFRIC INTERPRETATIONS NOT YET EFFECTIVE

IASB has adopted a number of new standards, interpretations and amendments to existing standards and interpretations that were not effective for the financial year ending 31 December 2014 and that have not been applied in the preparation of these consolidated financial statements. Standards and interpretations that are expected to have an effect on the Group's financial position, profit or disclosures are discussed below:

IFRS 15 Revenue from Contracts with Customers

IASB and FASB have issued a new common standard for revenue recognition, IFRS 15. The standard replaces all the existing standards and interpretations on revenue recognition. The core principle of IFRS 15 is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard applies to all revenue contracts and provides a model for the recognition and measurement of sales of some non-financial assets. The standard has not yet been approved by the EU.

Preliminary assessments indicate that the new standard will not have a major impact on the accounting for ordinary projects in construction operations compared with current principles. However, the new standard may have an impact on revenue recognition for projects that have disputed claims. In such cases the new standard may require postponement of revenue recognition, even in cases where there is a high degree of probability that the claim will be satisfied. By contrast, this standard may have a greater impact on accounting for the Group's property development operations. According to the current principles revenue from the sale of a residential unit is not recognised until it is handed over to the buyer. It is possible that the new standard will allow for recognition of revenue on a percentage of completion basis, measured with reference to the sales ratio and stage of completion. In this case Veidekke's segment accounts and financial statements would be identical. The impact of the new standard will depend on assessments and conclusions made on the industry level in the next few years. It currently appears that the earliest possible date for the introduction of the new standard in the EU is 1 January 2018. For entities outside the EU/EEA, the standard will apply with effect from the financial year beginning 1 January 2017.

NOTE 2. Segment information

The segment information is divided into the business areas as they are reported to the corporate management and the CEO, who are the Group's top operative management and decision-making body. The business area Construction includes both construction and civil engineering activities. The business area Property Development comprises the development of sites, property development and the sale of residential units. The business area Industrial produces asphalt and aggregates and performs road maintenance. The business area Other operations includes the Group's public–private partnership work and administrative costs linked to operation of the holding company Veidekke ASA. For a more detailed description of the business areas, please see pages 10–17 of the Annual Report.

Business areas

	Construction		Property Development
Income statement	2014	2013	2014	2013
Revenue	18 502	16 968	2 276	1 783
Operating expenses	-17 823	-16 389	-2 115	-1 657
Impairment of non-current assets	-	-	-	-5
Depreciation	-192	-169	-1	-3
Profit / loss from investments in associates
and joint ventures	2	3	134	97
Operating profit	489	412	293	215
Net financial items	60	33	-13	6
Profit before tax	549	446	280	221
Statement of financial position at 31 December
Non-current assets	1 921	1 763	1 167	990
Current assets	3 662	3 438	2 819	3 099
Cash and cash equivalents	2 494	2 164	240	53
Total assets	8 077	7 365	4 225	4 142
Equity	1 611	1 342	1 157	1 160
Non-current liabilities	746	521	1 523	1 913
Current liabilities	5 721	5 501	1 545	1 069
Total equity and liabilities	8 077	7 365	4 225	4 142
Other information at 31 December
Investments in non-current assets 1)	288	171	1	3
Capital invested 2)			3 010	3 224
Investments in associates and joint ventures	63	54	1 049	868
Number of employees	5 133	5 162	115	110
Income statement items with no effect on cash flow
(beyond depreciation, amortisation and impairments) 3)	138	-27	-136	-94
Order backlog	15 810	16 728	-	-
- due for completion within 12 months	11 297	12 110	-	-

1) Does not include investments in companies or financial assets.

2) Capital invested is only listed for the two capital-intensive business areas Property Development and Industrial. See note 27 on capital management.

3) The item "Income statement items with no effect on cash flow" includes the change in warranty provisions, impairment of financial assets, recognised changes in pension liabilities and share of net income from associates and joint ventures. A negative figure is normally a result of items recognised as income, but without this improving liquidity. See the statement of cash flows.

Industrial		Other		Eliminations		Group
2014	2013	2014	2013	2014	2013	2014	2013
4 127	3 476	2	1	-1 044	-1 036	23 863	21 191
-3 762	-3 173	-71	-69	1 037	1 036	-22 734	-20 253
-	-6	-	-	-	-	-	-11
-145	-138	-	-	-	-	-338	-310
19	19	12	13	-	-	167	132
239	178	-57	-56	-6	-	957	749
-29	-20	-1	7	-8	-	10	27
210	158	-59	-49	-14	-	967	776
1 093	1 044	1 570	1 520	-1 276	-1 218	4 475	4 099
592	495	526	276	-1 102	-791	6 496	6 516
21	36	426	953	-2 334	-2 442	847	764
1 706	1 574	2 522	2 748	-4 713	-4 452	11 818	11 378
392	384	1 073	1 069	-1 286	-1 222	2 947	2 733
543	612	1 306	841	-2 430	-2 453	1 687	1 435
771	578	144	838	-997	-777	7 184	7 210
1 706	1 574	2 522	2 748	-4 713	-4 452	11 818	11 378
198	94	1	-	-	-	489	267
1 000	982	-	-	-	-	3 717	4 209
98	96	-	-	-	-	1 210	1 017
1 082	961	54	53	-	-	6 384	6 286
							-113
27	-43	-39	51	-	-	-11
1 274	1 545	-	-	-	-	17 085	18 273
1 030	1 217	-	-	-	-	12 327	13 327

Construction

	Construction Norway		Construction Sweden
Income statement	2014	2013	2014	2013
Revenue	11 878	12 132	4 804	3 499
Operating expenses	-11 396	-11 678	-4 712	-3 447
Impairment of non-current assets	-	-	-	-
Depreciation	-125	-122	-59	-40
Profit / loss from investments in associates
and joint ventures	-	2	3	1
Operating profit	356	334	35	13
Net financial items	67	26	-16	-1
Profit before tax	423	360	19	11
Statement of financial position at 31 December
Non-current assets	1 011	1 038	729	556
Current assets	2 492	2 412	922	717
Cash and cash equivalents	2 008	1 676	-162	106
Total assets	5 511	5 126	1 489	1 379
Equity	962	879	341	209
Non-current liabilities	576	443	130	52
Current liabilities	3 972	3 804	1 017	1 119
Total equity and liabilities	5 511	5 126	1 489	1 379
Other information at 31 December
Investment in non-current assets	182	127	99	39
Investments in associates and joint ventures	23	26	40	28
Number of employees	3 394	3 570	1 253	1 188
Order backlog	10 437	10 768	4 164	4 250
- due for completion within 12 months	6 896	7 909	3 268	2 819

Property Development

	Property Development Norway		Property Development Sweden1)
Income statement	2014	2013	2014	2013
Revenue	747	1 070	1 529	713
Operating expenses	-687	-974	-1 428	-683
Impairment of non-current assets	-	-5	-	-
Depreciation	-1	-2	-1	-1
Profit / loss from investments in associates
and joint ventures	126	71	8	26
Operating profit	185	160	108	54
Net financial items	-10	10	-3	-4
Profit before tax	175	170	105	50
Statement of financial position at 31 December
Non-current assets	1 021	824	146	166
Current assets	1 038	1 417	1 781	1 681
Cash and cash equivalents	139	24	101	29
Total assets	2 197	2 265	2 028	1 877
Equity	648	654	510	506
Non-current liabilities	1 155	1 344	368	569
Current liabilities	395	268	1 150	801
Total equity and liabilities	2 197	2 265	2 028	1 877
Other information at 31 December
Investment in non-current assets	-	-	1	3
Capital invested	1 947	2 017	1 063	1 207
Investments in associates and joint ventures	988	787	62	81
Number of employees	57	58	58	52

1) Property Development Sweden also includes some plots in Denmark, which have been recognised at NOK 157 million.

Construction Denmark Construction
2014 2013 2014	2013
1 820 1 336 18 502	16 968
-1 714 -1 264 -17 823	-16 389
- - -	-
-7 -7 -192	-169
- - 2	3
66 98 489	412
10 9 60	33
108 74 549	446
181 168 1 921	1 763
249 310 3 662	3 438
648 382 2 494	2 164
1 078 860 8 077	7 365
307 255 1 611	1 342
39 27 746	521
731 579 5 721	5 501
1 078 860 8 077	7 365
8 5 288	171
- - 63	54
486 404 5 133	5 162
1 709 1 209 15 810	16 728
1 132 1 381 11 297	12 110

Property Development Sweden1) Property Development Norway	Property Development
Income statement 2014 2013 2014 2013 2014	2013
Revenue 747 1 070 1 529 713 2 276	1 783
Operating expenses -687 -974 -1 428 -683 -2 115	-1 657
Impairment of non-current assets - -5 - -	- -5
Depreciation -1 -2 -1 -1	-1 -3
Profit / loss from investments in associates
and joint ventures 126 71 8 26	134 97
Operating profit 185 160 108 54	293 215
Net financial items -10 10 -3 -4	-13 6
Profit before tax 175 170 105 50	280 221
Statement of financial position at 31 December
Non-current assets 1 021 824 146 166 1 167	990
Current assets 1 038 1 417 1 781 1 681 2 819	3 099
Cash and cash equivalents 139 24 101 29	240 53
Total assets 2 197 2 265 2 028 1 877 4 225	4 142
648 654 510 506 1 157	1 160
Non-current liabilities 1 344 569 1 155 368 1 523	1 913
Current liabilities 395 268 1 150 801 1 545	1 069
Total equity and liabilities 2 197 2 265 2 028 1 877 4 225	4 142
Other information at 31 December
Investment in non-current assets - - 1 3	1 3
Capital invested 1 947 2 017 1 063 1 207 3 010	3 224
Investments in associates and joint ventures 988 787 62 81 1 049	868
Number of employees 57 58 58 52	115 110

Reconciliation of segment accounts and financial accounts

		Segment accounts IFRIC-15 adjustments			Financial accounts
Income statement	2014	2013	2014	2013	2014	2013
Revenue	23 863	21 191	165	590	24 027	21 781
Operating expenses	-22 734	-20 253	-127	-581	-22 861	-20 833
Impairment of non-current assets	-	-11	-	-	-	-11
Depreciation	-338	-310	-	-	-338	-310
Profit / loss from investments in associates and joint ventures	167	132	50	-67	217	65
Operating profit	957	749	88	-57	1 045	692
Net financial items	10	27	-	-	10	27
Profit before tax	967	776	88	-57	1 055	718
Statement of financial position at 31 December
Non-current assets	4 475	4 099	-59	-108	4 416	3 990
Current assets	6 496	6 516	623	397	7 119	6 913
Cash and cash equivalents	847	764	-	-	847	764
Total assets	11 818	11 378	564	289	12 382	11 666
Equity	2 947	2 733	-203	-267	2 744	2 466
Non-current liabilities	1 687	1 435	-16	-37	1 671	1 398
Current liabilities	7 184	7 210	783	593	7 967	7 802
Total equity and liabilities	11 818	11 378	564	289	12 382	11 666

Deferred income reporting on property development projects in accordance with IFRIC 15

Interpretation IFRIC 15 governs the accounting of contracts for completed residential units. According to this interpretation, income and earnings from the sale of completed residential units shall not be recognised in the accounts until the property has been contractually delivered to the buyer (pass of legal title). As part of Veidekke's internal follow-up of residential projects, measurements are conducted in line with percentage of completion reporting. This means that revenue and profit are recognised in accordance with the estimated final profit for the project, stage of completion and sales ratio. Veidekke's segment reporting follows these principles. IFRIC 15 adjustments apply to the business areas Property Development and Construction.

REVENUE	2014	2013
Accumulated revenue from non-delivered projects at start of period	1 103	1 645
Additions – acquisitions of companies	-	-
+ Revenue from non-delivered projects during the period	1 286	1 496
- Revenue from delivered projects during the period	-1 451	-2 086
Net IFRIC 15 adjustments to revenues	-165	-590
+/- Currency translation differences	17	49
Accumulated revenue from non-delivered projects at end of period	956	1 103
PROFIT BEFORE TAX
Accumulated profit before tax from non-delivered projects at start of period	304	247
Additions – acquisitions of companies	-	-9
+ Profit before tax from non-delivered projects during the period	400	384
- Profit before tax from delivered projects during the period	-488	-326
Net IFRIC 15 adjustments to profit before tax	-88	57
+/- Currency translation differences	2	9
Accumulated profit before tax from non-delivered projects at end of period	219	304

Summary of revenue and profit before tax (EBT) recognised under the segment accounts

The statement above is to be understood such that at 31 December 2014 revenue of NOK 956 million and profit before tax of NOK 219 million had accrued on sales of residential units under construction. These results cannot be recognised in accordance with IFRS, and will be recognised in the financial statements when the individual units are handed over to the buyer. Uncertainty related to the final results is low because only sold units are included in the statement above, the sales price is fixed, and the project is normally at such an advanced stage that there is very little risk associated with the final building costs. It normally takes about 18 months from production start until a residential building is handed over.

Segment reporting

Criteria for segment classification

The operating segments are based on the type of product delivery, market, risk situation and earnings. Segments are reported as they are submitted to the chief operational management.

Presentation of segments

Profit and cash flow from projects constitute a substantial part of the net financial items for Veidekke. In addition, net income from associates and joint ventures constitutes a substantial part of the operating segments. For this reason, profit before tax provides a more realistic picture of the earnings in the segments than operating profit or loss does. Therefore, financial items and profit before tax are presented in addition to the operating profit. Furthermore, complete statements of financial position are presented for each segment.

Unassigned items

Some Group costs are not allocated to a specific operational segment. The same applies to a number of financial items. Unassigned items are shown under "Other".

Large customers

The largest single customer, the Norwegian Public Roads Administration, accounts for 14 per cent of the Group's total revenues in 2014 (NOK 3,302 million). Revenues relate to the segments Industrial and Construction Norway. Veidekke does not regard the Norwegian government as an enterprise group.

Geographical segments

The geographical distribution of the Group's activities corresponds to the geographical location of the resources used for the respective activities. This corresponds in the main to the geographical location of the customers. The statement has been prepared in accordance with the accounting policies used in the income statement (IFRS).

	Norway			Sweden	Denmark		Shared		Group
Income statement	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013
Revenue	16 596	16 409	5 636	4 017	1 834	1 348	-39	7	24 027	21 781
Operating profit	890	687	113	63	99	63	-57	-122	1 045	692
Profit before tax	918	672	96	26	106	69	-66	-49	1 055	718
Statement of financial position at 31 December
Total non-current assets	3 101	2 843	840	676	181	169	294	302	4 416	3 990
Capital invested	1 777	2 378	1 319	1 164	405	357	13	43	3 514	3 942
Number of employees Order backlog	4 587 11 712	4 642 12 314	1 310 4 164	1 239 4 250	487 1 209	405 1 709	- -	- -	6 384 17 085	6 286 18 273
- due for completion within 12 months	7 926	9 126	3 268	2 819	1 132	1 381	-	-	12 327	13 327

Note 3. Revenue

	2014	2013
Ordinary revenue	23 918	21 680
Other revenue	109	101
Revenue	24 027	21 781
Specification of other revenue	2014	2013
Gains on sale of operating equipment 1)	46	36
Rental revenue	15	45
Income	48	20
Other revenue	109	101

1) Only gains are presented under other revenue; any losses are presented under other operating expenses.

Note 4. Personnel expenses

	2014	2013
Payroll	4 002	3 429
Pension costs	312	263
Employer's National Insurance contributions	611	569
Other payroll costs (social benefits etc)	97	189
Personnel expenses	5 022	4 450
	2014	2013
Number of full time equivalents	6 287	6 121
Number of employees at 31 December	6 384	6 286

Note 5. Shares to employees

Each year Veidekke sells shares to its employees at a discount to the current market price. The shares are subject to two and three-year lock-in periods. These sales of shares are reported in accordance with IFRS 2 on share-based payments. The recognised discount is calculated as the difference between market price and purchase price at the time of purchase, taking into account the agreed lock-in period for the shares. The effect of the agreed lock-in period is calculated as the value of a put option using the Black-Scholes model.

The assumptions relating to volatility are based on the actual fluctuations in the price of Veidekke shares. Loans to senior executives are currently interest-free and repaid at 5 per cent a year. The loans are revocable after 10 years and are secured by collateral in the shares.

The loans to employees in connection with the share scheme for all employees are also interest-free and secured by collateral in the shares. The loan term is up to one year. This year's offer included an extra discount for people who paid in cash, hence the decrease in the number of employees with loans compared with last year.

Expensed changes in the present value of the long-term interest-free loans are classified as payroll expenses. See notes 6 and 30.

SALES OF SHARES TO EMPLOYEES	2014	2013
Sales of shares to employees (number of shares)	1 960 648	2 763 785
Expensed discount after tax	13	10
Discount entered directly as a reduction in equity related to the Group's share programme	13	13
SHARE LOANS TO EMPLOYEES	2014	2013
Loans to senior executives for purchases of Veidekke shares	174	186
Expensed change in the present value of the share loan	7	8
Number of executives with loans	581	576
Share scheme loans for all employees	19	44
Number of employees with loans	876	1 576

Note 6. Financial income/financial costs

	2014	2013
Interest income	25	12
Interest income from joint ventures	27	22
Other interest income from non-financial institutions	25	21
Foreign currency gains	10	12
Dividends received	2	2
Other financial income	3	12
Financial income	93	81
Interest costs 1)	-36	-26
Interest charges from non-financial institutions	-5	-6
Foreign currency losses	-17	-15
Impairment of financial instruments 2)	-24	-
Other financial costs	-1	-7
Financial costs	-83	-54
Net financial items	10	27

1) Interest income for loans to employees is presented as reduced interest costs. Expensed advances on pay are presented as personell expences, see note 15. For 2014 this represents NOK 7 million. The corresponding figure for 2013 was NOK 9 million.

2) In 2014 the Group has expensed a loss of NOK 16 million related to an interest rate swap that did not satisfy the requirements for hedge accounting. See notes 28 and 29.

Specification of capitalised interest

	2014	2013
Capitalised interest at 1 January	68	65
Capitalised interest charges for year	47	57
Realisation of assets	-38	-56
Disposals on sales of companies	-38	-
Currency translation differences	-	1
Capitalised interest at 31 December	39	68
The capitalised interest charges relate to the following assets:
Sites under development	34	43
Property development projects under construction	1	21
Operating equipment	5	3
Capitalised interest at 31 December	39	68
Interest capitalisation rate	3.2%	3.2%

Note 7. Project in progress

	2014	2013
Allocation of revenue
Project revenues	21 109	18 996
Sales of residential units in own projects	2 389	2 316
Sales of goods / services (raw materials)	396	368
Other revenue	134	101
Total revenue	24 027	21 781
Detailed project revenue Income recognised from projects in progress at 31 December
Accumulated income	19 616	19 627
Accumulated profit	1 651	1 309
Loss-making projects in progress – remaining revenue1)	430	379
Due from customers	523	687
Earned, not invoiced income	734	479
Advance payments from customers	829	682

1) Anticipated losses on these projects have been charged to income.

Order backlog	2014	2013
Construction	15 810	16 728
Road maintenance (due for completion within 18 months)	982	986
Asphalt (due for completion within 18 months)	292	560
Total order backlog	17 085	18 273
- of which due to be completed within the next 12 months	12 327	13 327

Road maintenance contracts

Veidekke has 20 maintenance contracts for national and regional roads for the Norwegian Public Roads Administration. These contracts have a duration of up to six years. In addition Veidekke has one contract for Avinor and two contracts for PPP companies.

	2014	2013
Revenue from road maintenance contracts	1 030	854
Number of contracts	23	20
Order backlog maintenance contracts 18 months	982	986
Order backlog maintenance contracts longer than 18 months	1 497	1 031
Total order backlog maintenance contracts	2 479	2 016
Remaining revenue from unprofitable contracts 1)	105	-
Number of unprofitable contracts	1	-

1) The remaining revenue from unprofitable contracts in this table is also included in the table above for the Group as a whole.

Note 8. Earnings per share

	2014	2013
Earnings per share (NOK)	6.3	4.1
Profit for the year	859	556
Equity holders of Veidekke ASA's share of the profit for the year	843	544
Average no. of shares (million)	133.7	133.7
No. of shares at 1 January (million)	133.7	133.7
No. of shares at 31 December (million)	133.7	133.7

Veidekke does not have any financial instruments that have a diluting effect.

Note 9. Goodwill

	2014	2013
At 1 January
Original cost	1 045	889
Accumulated depreciation and impairment	-270	-259
Carrying value at 1 January	775	631
Accounting year
Carrying value at 1 January	775	631
Currency translation differences	9	30
Impairment	-	-11
Additions	42	125
Disposals	-23	-
Carrying value at 31 December	804	775
At 31 December
Original cost	1 074	1 045
Accumulated depreciation	-251	-251
Accumulated impairment	-18	-18
Carrying value at 31 December	804	775

The Group has recognised goodwill arising from the acquisition of 44 businesses. Each goodwill item is allocated to a cash-generating unit. When a purchased business continues to be operated as an independent unit, this business is designated the cash-generating unit. Units with significant synergy effects and which carry out similar activities are considered a single cashgenerating unit. This is the case when acquired operations are integrated with an existing Veidekke company or when an acquired business is linked closely in operations with an existing Veidekke company. In these cases, the combined business is considered the cash-generating unit for which goodwill is measured and followed-up. The Group has recorded 25 cash-generating units associated with goodwill.

The Group's largest goodwill items, plus the goodwill for each business area, are specified in the table below:

Carrying value	31.12.14	31.12.13
By cash-generating unit in order of size
Construction Sweden – Arcona AB	95	120
Construction Denmark – Hoffmann A/S	91	85
Construction Sweden – Veidekke Entreprenad AB, Region Väst	87	86
Industrial – Aggregates	79	79
Industrial – Asphalt	73	73
Construction Norway – Veidekke Agder AS	71	71
Goodwill items > NOK 40 mill.	496	514
Goodwill items < NOK 40 mill. (19 units)	308	262
Total goodwill	804	775
Total for each business area
Construction Sweden	328	306
Construction Norway	219	219
Industrial	152	152
Construction Denmark	91	85
Property Development Sweden	13	13
Total goodwill	804	775

Testing goodwill for impairment

Goodwill is not amortised, but is tested for impairment in the fourth quarter each year. In the event of a particular indication of possible impairment, the test is carried out on a quarterly basis. The test is carried out by comparing the estimated recoverable amount with the capital invested for the unit in question. When the recoverable amount exceeds capital invested, the carrying value of the goodwill is upheld. When the recoverable amount is lower than capital invested, the carrying value is impaired to the estimated recoverable amount. Capital invested is the unit's total capital less interest-free current and non-current liabilities. The recoverable amount is the estimated present value of future cash flows for the unit and is based on the figures in the management's approved budget and strategy for the next three years.

Assumptions used in impairment testing

1. Revenue and profit margin in the next three years

In accordance with the management's approved budget and strategy for the next three years. These are estimated on the basis of current revenue and margins and the expected market development.

2. Revenue and profit margin in the subsequent periods

Assumed annual growth used in the cash flows in years 4 and 5 corresponds to anticipated general growth in the economy (nominal 2.5 per cent p.a.). This calculation assumes a terminal value after five years based on the Gordon model.

3. Discount rate

The discount rate is based on the weighted average cost of capital (WACC) method. The nominal discount rate before tax is based on the Group's estimated cost of capital calculated as a weighted average of the cost for the Group's equity and the cost of its debt. The discount rate takes into account the debt interest rate, risk-free rate, debt ratio, risk premium and a liquidity premium. The discount rates applied to cash flow and terminal value are presented in the following table:

	Norway	Sweden	Denmark
Discount rate (WACC) before tax	9.3%	8.7%	8.1%
Before-tax discount rate for calculation of the terminal value	10.6%	10.1%	9.4%

4. Investment needs / reinvestment

The unit's expected future investment needs are reflected in the calculations. These are set according to the management's approved budget and strategy for the next three years. For the period beyond the next three years, reinvestment requirements are assumed to correspond to expected depreciation. Changes in working capital needs have been assessed and largely set at NOK 0.

Assessment of the assumptions forming the basis for last year's estimates

The assumptions used in the calculations made at the end of 2013 were largely achieved.

Details of goodwill items with a value of over NOK 40 million

	Revenue for 2014	Margin achieved in 2014	Revenue growth after 2015 1)	Impairment indicator: Profit margin over time 2)
Construction Sweden – Arcona AB	1 057	2.1%	2.5%	1.0%
Construction Sweden – Veidekke Entreprenad AB, Region Väst	961	1.0%	2.5%	0.7%
Construction Denmark – Hoffmann A/S	1 817	5.9%	2.5%	1.3%
Industrial – Aggregates	396	11.7%	2.5%	10.4%
Industrial – Asphalt	2 780	6.1%	2.5%	2.5%
Construction Norway – Veidekke Agder AS	630	2.4%	1-2.5%	1.8%

1) Expected growth in revenue used in tests at 31 December 2014.

2) One impairment indicator is if the future expected profit margin is consistently lower than the stated profit margin.

Sensitivity analysis for goodwill items with a value of over NOK 40 million

The Group has carried out sensitivity analyses to assess the calculated present values for each cash-generating unit in excess of NOK 40 million. This shows that a decline in the profit margin of 20 and 40 per cent may result in a need for impairment in Industrial, Aggregates (> -20%) and Veidekke Agder (> -40%). The sensitivity analysis is based on the assumptions described above. Calculations are made on the basis that one of the estimated financial assumptions changes and that the remaining assumptions remain the same.

The following table shows impairment for changes in the assumptions used in the sensitivity analysis:

	Discount rate		Revenue1)		Profit margin
Change in assumption	+100 bp	+200 bp	-10%	-20%	-20%	-40%
Impairment need	-	-	-	-	49	97

1) Margins maintained.

In the sensitivity calculations we have assumed a reasonable outcome range. We consider a reduction in revenue in excess of 20 per cent unlikely. However, if this were to occur, such a reduction could have a significant impact on the units' performance and would most likely result in impairment.

Note 10. Other intangible assets

Other intangible assets include extraction rights in the business area Aggregates and purchased customer relations and brands.

	2014	2013
Carrying amount at 1 January	104	46
Original cost at 1 January	127	60
Additions in purchase of companies	20	62
Original cost of sold companies/disposals	-6	-
Translation differences original cost	2	5
Original cost at 31 December	143	127
Accumulated depreciation and impairments 1 January	-23	-14
Accumulated depreciation sold companies	4	-
Depreciation	-14	-8
Reclassification/other changes	-1	-
Translation differences depreciation	-1	-1
Accumulated depreciation and impairments 31 December	-33	-23
Carrying amount at 31 December	110	104

Depreciation of the right to extract crushed stone and gravel is determined on the basis of extraction of gravel. Customer relations are depreciated on a straight-line basis over four to five years.

Note 11. Plant, machinery, land and buildings

	2014				2013
	Plant and	Land and		Plant and	Land and
	machinery	buildings	Total	machinery	buildings	Total
Carrying amount at 1 January	1 230	499	1 729	1 235	512	1 747
Original cost at 1 January	3 478	744	4 222	3 291	745	4 036
Additions	476	13	489	259	8	266
Additions from acquisition of operations	18	17	35	33	49	81
Disposals original cost	-166	-17	-183	-142	-76	-218
Disposals original cost sales of operations	-3	-	-3	-	-	-
Reclassification/other changes	-	-6	-6	-	-	-
Translation differences original cost	13	10	23	38	19	57
Original cost at 31 december	3 817	761	4 578	3 478	744	4 222
Accum. depreciation/impairments at 1 January	-2 249	-245	-2 493	-2 056	-234	-2 289
Accum. depreciation disposal operating equipment	137	2	139	116	10	126
Depreciation for the year	-310	-15	-324	-286	-16	-302
Reclassification/other changes	1	1	2	-	-	-
Translation differences depreciation	-8	-4	-11	-23	-5	-28
Accumulated depreciation/impairments	-2 428	-260	-2 689	-2 249	-245	-2 493
at 31 December
Carrying amount at 31 December	1 389	501	1 889	1 230	499	1 729
Depreciation method	Linear	Linear		Linear	Linear
Depreciation rate	7-25%	2-5%		7-25%	2-5%

Under "Plant and machinery" NOK 17 million has been capitalised related to financial leasing. The Group has entered into contracts worth NOK 37 million on delivery of operating equipment, which are due for delivery in 2015.

Additions and disposals (sales price)

	2014		2013
	Additions	Disposals	Additions	Disposals
Plant and machinery	476	68	259	42
Land and buildings	13	16	8	80
Additions and disposals (sales price)	489	84	266	122
Net gain (loss) on sale of operating equipment 1)	2014	2013
Plant and machinery	39	17
Land and buildings	1	14
Total net gain on sales	40	31

1) Gains on sale of operating equipment are included in revenues. Losses on sale of operating equipment are included in operating expenses.

Note 12. Acquisitions and disposals of business

Acquisitions

Veidekke's acquisitions of businesses in 2013 and 2014 are summarised in the table below:

Year of purchase	2014	2013
Company	Recess V-Prefab AB1)	Arcona AB2)	Skedsmo Pukkverk AS	Tullin Ree & Sønner AS3)	Small companies (total)
Purchase date	27 June	31 December	1 July	1 November
Shares purchased (%)	70	100	100	50	100
Acquisition cost (NOK million)	53	165	60	15	3
Excess value	53	131	43	27	2
Other intangible assets	19	19	10	31	1
Land and buildings	-	-	46	-	-
Plant and machinery	-	-	4	-	-
Liabilities	-	-5	-	-	-
Non-controlling interests	-4	-	-	-	-
Deferred tax liabilities	-4	-3	-17	-9	-
Goodwill	42	120	-	3	2
Revenue after takeover	34	-	15	21	-
Profit before tax after takeover	3	-	-4	-	-
Revenue before takeover	-	990	16	5	-
Profit before tax before takeover	-	25	-1	-	-

1) On 27 June 2014 Veidekke acquired 70 per cent of the shares in the Swedish concrete element factory Recess V-Prefab AB. The factory is located outside Stockholm and manufactures prefabricated concrete elements and modules. Veidekke and Recess have worked closely to develop modules that will provide higher efficiency and bring cost savings in residential projects. Goodwill is only related to Veidekke's share and arises from synergies with Veidekke's residential activities. A purchase option for the remaining 30 per cent of the shares has been entered into, and the seller has a put option. This has been recognised as a liability of NOK 42 million in the financial statements. The acquisition analysis is preliminary.

2) Arcona AB is a Stockholm-based contractor. The purchase price was paid in January 2014, and therefore affects the cash flow in 2014.

3) Prior to the transaction Veidekke owned 50 per cent of the company, meaning it has gone from being an investment in a joint venture to a subsidiary.

Excess value analysis of the companies acquired and consolidated in 2014 in a single statement:

	Carrying value of acquired company	Net excess value	Acquisition
Cash and bank deposits	-	-	-
Other intangible assets	-	19	19
Plant and machinery	27	-	27
Trade and other receivables	34	-	34
Pensions and deferred tax liabilities	-	-4	-4
Non-current liabilities	-27	-	-27
Trade payables and other current liabilities	-34	-	-34
Net identified assets and liabilities	-	15	15
Goodwill at time of acquisition			42
Non-controlling interests			-4
Purchase price			53
Agreed purchase price			53
Payment for acquisition of Arcona AB			165
Cash received			-
Net cash outflow			218

Sales of businesses

The acquisition of Arcona AB also included the wholly-owned subsidiary BSK Arkitekter AB. On 30 June 2014 Veidekke sold 49 per cent of the shares to the employees in BSK Architects AB, and the company is now to be regarded as a joint venture. This means that BSK Arkitekter AB was deconsolidated from 30 June 2014. The book value of goodwill arising from the acquisition of Arcona was NOK 95 million at 31 December 2014. A gain of NOK 1 million on the sale of the shares in BSK Arkitekter AB was recognised.

Note 13. Investments in associates and joint venture

The movements for the year for investments in associates and joint ventures are presented in the table below:

	Joint ventures		Associates		Total
	2014	2013	2014	2013	2014	2013
Carrying value of investment on 1 Jan.	786	647	122	108	908	755
Share of the profit for the year	208	53	8	12	217	65
Dividends	-73	-35	-8	-2	-81	-36
Capital increases	233	4	14	1	247	5
Disposals	-32	-57	-50	-	-81	-57
Change in subordinated loans	-51	180	2	-2	-48	177
Change in value recognised directly to equity	-13	-8	-	-	-13	-8
Currency translation differences	1	1	2	6	3	7
Carrying value of investment on 31 Dec.	1 060	786	91	122	1 151	908

The Group's total share of assets, liabilities, revenue and expenses related to investments in associates and joint ventures is presented in the table below. The information has been taken from the IFRS accounts of the respective companies.

		2014
		Property Public–Private
	Construction	Development	Industrial	Partnerships	Total
Income statement
Revenue	291	1 040	195	17	1 543
Expenses	-288	-869	-172	-	-1 329
Profit before tax	3	171	23	17	214
Statement of financial position
Assets
Non-current assets	80	201	80	711	1 072
Current assets	108	3 048	57	57	3 271
Liabilities
Non-current liabilities	53	1 674	18	754	2 500
Current liabilities	71	996	21	14	1 103
Net assets	63	579	98	-	740
Subordinated loans	-	470	-	-	470
IFRIC 15 adjustments	-	-59	-	-	-59
Investments in associates and joint ventures	63	990	98	-	1 151
Consolidation method	Equity method

	2013
		Property Public–Private
	Construction	Development	Industrial	Partnerships	Total
Income statement
Revenue	207	986	212	16	1 421
Expenses	-199	-858	-186	-	-1 243
Profit before tax	8	128	26	16	178
Statement of financial position
Assets
Non-current assets	55	120	89	729	992
Current assets	57	2 222	76	58	2 414
Liabilities
Non-current liabilities	33	1 424	34	768	2 259
Current liabilities	26	626	35	19	706
Net assets	54	291	96	-	441
Subordinated loans	-	576	-	-	576
IFRIC 15 adjustments	-	-108	-	-	-108
Investments in associates and joint ventures	54	759	96	-	909
Consolidation method	Equity method

Reconciliation between profit in the companies' IFRS accounts and accounting in Veidekke's consolidated accounts

		Profit
	2014	2013
Profit before tax in associates and joint ventures	214	178
Tax on the profit for the year	-47	-45
Profit after tax in associates and joint ventures	167	133
Sale of shares and value adjustments	-	1
Adjustment of profit in accordance with IFRIC 15	50	-67
Other items	-	-3
Share of net income from associates and joint ventures	217	65
Other comprehensive income	-13	-8
Total comprehensive income	203	57

Details of significant investments in associates and joint ventures

The figures in the table are from the companies' IFRS accounts and are presented 100 per cent. All investments are consolidated using the equity method.

Company	Veifor AS	D1a Utvikling AS	M17 Utvikling AS	Lilleby Eiendom AS	Allfarveg AS1)
Business area	Property Norway	Property Norway	Property Norway	Property Norway	Other
Type of company	JV	JV	JV	JV	JV
Business office	Oslo	Oslo	Oslo	Trondheim	Oslo
Dividend paid to the shareholders	-	-	-	-	25
Revenue	429	-	65	123	-
Depreciation	-	-	-	-	-
Other costs	-337	-4	-3	-17	-
Operating profit	92	-4	62	106	-
Interest income	4	-	1	-	1
Interest costs	-19	-	-41	-1	-
Other net financial items	-	-	-	-	26
Profit before tax	77	-4	22	105	27
Income tax expense	-21	1	-6	-27	-7
Profit after tax	56	-3	16	77	20
Other comprehensive income	-	-	-2	-	-79
Total comprehensive income	56	-3	14	77	-60
Non-current assets	-	5	-	-	1 224
Cash and cash equivalents	15	4	68	117	92
Short-term receivables	357	743	831	654	1
Current assets	372	746	899	771	92
Non-current financial liabilities	18	-	6	367	1 345
Other non-current liabilities	-	-	-	29	53
Non-current liabilities	18	-	6	396	1 398
Current financial liabilities	79	739	855	-	-
Other current liabilities	98	21	21	11	23
Current liabilities	177	760	876	11	23
Total equity	177	-8	18	364	-105
The Group's ownership share (%)	50%	50%	50%	50%	50%
The Group's share of equity	88	-4	9	182	-52
Subordinated loans	40	110	103	-	-
Carrying value 31 December 2014	128	106	112	182	-

1) See note 14 for more details on the accounting of Allfarveg AS

Note 14. PPP Project

Veidekke has interests in three PPP projects: Jessheim College (100 per cent), Rykkinn school (100 per cent) and a 50 per cent interest in the E39 Lyngdal–Flekkefjord PPP project.

PPP (Public–Private partnership) projects are a collaboration between a public and a private operator on a building construction project, where a municipality or government agency orders a service, which in Veidekke's case relates to the lease of a road or school for an agreed lease period. This involves the establishment of a PPP company, which assumes the role of client, performs the project planning and design, and is responsible for the construction, financing, operation and maintenance during the lease period. In Veidekke this is organised by establishing a separate limited liability company that obtains the necessary financing. The actual construction work is done by the subsidiary Veidekke Entreprenør AS (Construction), while operation and maintenance are carried out by Veidekke Industri AS (Industrial) in transport projects or Veidekke Entreprenør AS in building construction projects.

The companies Skulebygg AS and Skuleveg AS have assumed the role of owner for the projects Jessheim upper secondary school and Rykkinn school respectively. Allfarveg is the owner of the road PPP project E39 Lyngdal–Flekkefjord. Figures for the performance of the owner role for the three projects are reported under the segment "Other operations". The actual construction and operation are accounted for in the same way as for ordinary projects and are included in the respective business areas' income statement. Profits during the construction period are eliminated at group level and are recognised in the income statement during the lease period.

The PPP contracts are entered in the accounts as financial assets according to IFRIC 12 Service Concession Arrangements ("The Financial Asset Model") and are accounted for using the amortised cost method. Income from the operation and maintenance contract is recognised over the operation period, as the work is done.

Overview of PPP contracts

Contract	Lease period	Construction contract	Ownership share	Share of profit
Jessheim College	2017–2042	NOK 0.8 bill.	100%	100%
Rykkinn school	2016–2041	NOK 0.2 bill.	100%	100%
E39 Lyngdal–Flekkefjord	2006–2031	NOK 1.2 bill.	50%	62.8%

In the financial statements, activities are recognised on the following lines:

Income statement	2014	2013
Other financial income	1	-
Share of net income from associates and joint ventures	12	13
Statement of financial position	2014	2013
Non-current assets 1)	29	-
Current assets	15	-
Equity 2)	1	-
Non-current liabilities	-	-
Current liabilities	-	-

1) At 31 December 2014 Veidekke's ownership interest in the joint venture Allfarveg AS has been recorded as NOK 0. This is because the associated interest rate swap contract must be recognised in the accounts at fair value and there has been a large reduction in the long-term interest rates since the contract was signed. This is discussed in more detail below.

2) Retained earnings

Financial Instruments – financing PPP projects

Dedicated funding has been obtained for the three projects in the construction and lease period. To ensure predictability in the lease period, interest rate agreements have been entered into. These agreements run over the lifetime of the projects as a result of the fact that the rental income from the state or municipality for the entire lease period is determined at the signing of the contract. This makes it expedient to hedge the project's interest expense over the same period, reducing the overall financial risk for this type of contract. The interest rate hedges are designed to satisfy the requirements for hedge accounting. Key figures for loans and interest rate swaps are shown in the table below.

PPP project E39 Lyngdal–Flekkefjord

	Nominal value	Due date	Fair value
Financing – Loans	642	Februay 2030	642
Hedging – Interest rate swaps	634	Februay 2030	828

Hedge accounting has had the following effect on equity:

	2014	2013
Hedge reserve at 1 January	-92	-107
Year's changes in the hedge reserve	-50	15
Hedge reserve at 31 December	-142	-92
Adjustment of hedge reserve by not including negative equity	52	18
Hedge reserve at 31 December included in the financial statements	-89	-74

This table shows that at 31 December 2014 Veidekke's share of the fair value of the interest rate derivative has fallen by NOK 142 million after tax, of which NOK 89 million is included in the financial statements as a reduction of the investment in a joint venture.

A sensitivity analysis has been conducted of the effect of a possible change in interest rates by 100 basis points up or down. A change of this magnitude would not have an effect on the accounts.

Reconciliation movements

	2014	2013
Carrying value at 1 January	-	-
Recognised revenue	12	13
Dividends	-15	-14
Adjustment for fair value, long-term interest-rate swaps	-50	15
Adjustment by not including negative equity from joint ventures	52	-13
Carrying value at 31 December	-	-

The PPP projects Jessheim upper secondary school and Rykkinn school

These two contracts were signed in 2014. The projects are in an early phase, and at 31 December 2014 no withdrawals had been made on the borrowing facilities granted for execution of the projects.

	Nominal value	Due date	Fair value
Financing – Fixed rate loan1)	779	Aug. 2042	846
Financing – Fixed rate loan1)	191	Aug. 2041	209
Hedging – Interest rate swaps	748	Aug. 2017	754

1) No withdrawals have been made on the loans, and it therefore follows from IAS 39 that in terms of accounting the loans shall not be recognised at fair value until a withdrawal is made.

Note 15. Financial assets

	2014	2013
Share loans to employees	174	186
Financial investments 1)	124	112
Other non-current receivables	103	111
Other shares 2)	7	8
Financial assets	408	417

1) NOK 124 million has been invested in a bond fund. The funds are to cover pension liabilities and have been pledged. The investment is regard ed as available for sale.

2) Other shares are financial instruments available for sale and are recognised in the accounts at fair value. The original cost prices are used as an estimate of fair value.

Share loans to employees can be subdivided into the following categories:

	2014	2013
Loans to employees at fair value	146	153
Long-term advance to employees	27	33
Carrying value of share loans to employees	174	186

Loans to employees are recognised at fair value in accordance with the principles of IAS 39. The loans are interest-free. Carrying value is estimated by discounting the expected future repayments by an estimated market interest rate. The estimations are based on an assumed market interest rate of 3.5 per cent (4.0 per cent) after tax and an assumed average remaining term of five years. The difference between the carrying and the nominal value of the loans is treated as advance payments to employees. In the statement of financial position the advance payment is presented together with an estimated fair value of the loans. Satisfactory security has been furnished for the loans. See note 5.

Note16. Residential projects

	2014	2013
Residential projects	2 769	3 064
Non-residential projects	28	84
Total	2 797	3 148

Residential projects involve the construction of residential buildings for sale for Veidekke's own account. Costs incurred in respect of sites for development and units under construction are recognised under this item. Many of the projects run for longer than 12 months, and assets may therefore not be realised and settled until after more than 12 months have passed. Sites for development will normally be realised after 12 months. In terms of accounting, sites and projects are presented as inventory.

	2014	2013
Sites under development	1 865	1 991
Projects under construction	840	1 005
Unsold completed units	64	68
Residential projects (wholly owned)	2 769	3 064

Residential projects are developed both as own projects (wholly owned) and in collaboration with others. When projects are undertaken with others, a company is generally established in which Veidekke has a 50% holding. More projects are now undertaken in joint ventures because this ensures risk sharing and better utilisation of capital budgets, as well as providing a larger volume of projects for the Group's construction operations.

	2014	2013
Residential projects in joint ventures	956	694
Residential projects in associates	39	58
Residential projects in joint ventures and associates (partly owned)	995	752

Geographical category

Residential projects
at 31 December	2014
	Sites under	Under	Unsold	Total residental projekts	Residential projects in JV and ass.
	development	construction	completed	(wholly owned)	(partly owned)
Projects, Norway	646	245	29	920	968
Projects, Denmark	154	-	3	157	-
Projects, Sweden	1 065	595	33	1 692	26
Total	1 865	840	64	2 769	995

Residential projects
at 31 December			2013
	Sites under development	Under construction	Unsold completed	Total residental projekts (wholly owned)	Residential projects in JV and ass. (partly owned)
Projects, Norway	569	653	23	1 245	727
Projects, Denmark	151	-	-	151	-
Projects, Sweden	1 270	352	45	1 668	25
Total	1 991	1 005	68	3 064	752

Valuation of sites for development

All the sites in the portfolio are valued each year. The carrying amount includes the purchase price of the site, development costs incurred, capitalised interest charges and any deferred payments in connection with the purchase of the site. If a site has a purchase option whereby Veidekke can decide at a later date whether to exercise the option, the purchase price of the site is not capitalised until the option is exercised.

Veidekke performs an internal valuation of all its properties. A model has been developed to calculate the value of development sites. The model calculates the present value of the sites on the basis of a number of assumptions, such as expected utilisation of the site measured as gross floor area for sale (GFAS), expected construction costs, construction start date and length of construction period. All the cash flows in the model are discounted by the Group's required rate of return for property investment, which is 15%.

The site portfolio

At the end of 2014 Veidekke's portfolio of sites in Scandinavia comprised altogether 10,900 residential units. A substantial share of the portfolio consists of purchase options, especially in Sweden where the local authorities own a large number of sites and offer property developers options (called "markanvisninger"). The portfolio of sites comprises only sites under development, whereas sites under construction are not included in the figures. The sites are distributed as shown in the following table:

Residential units Veidekke-owned 1)		Purchase options		Total
Norway	3 800		450	4 250
Sweden	1 305	5 345		6 650
Total	5 105	5 795		10 900
1) Veidekke's share
Expected construction start date:
Residential units		2015	2016	Later	Number
Norway		400	700	3 150	4 250
Sweden		600	850	5 200	6 650
Total		1 000	1 550	8 350	10 900

Overview of sites with a purchase price exceeding NOK 100 million (Veidekke's share):

	Ownership	Purchase price	Rental income 2014	Price per
	share	NOK mill. 1)	(NOK mill.)	GFAS2) (NOK)	No. of units
Nycoveien 2	100%	215	-	13 206	247
Sveaordern	100%	145	-	5 801	70
Lövholmen 13 (Kolsyrefabriken)	50%	149	-	4 472	58
Middeltunsgate	50%	414	17	28 527	190
Gartnerløkka	50%	105	4	4 146	372
Lilleby	50%	350	1	8 269	514
Sinsenveien	31%	117	-	14 154	124
Projects, Norway (purchase price < NOK 100 mill.)		650	4	6 762	2 353
Projects, Sweden (purchase price < NOK 100 mill.)		533	-	7 418	1 178
Projects, Denmark (purchase price < NOK 100 mill.) 3)		224	-	3 007	-
Total		2 146	25		5 105

1) Some of the purchase prices may be adjusted based on the final permits.

2) GFAS is the units' expected gross floor area for sale.

3) NOK 73 million of the purchase price for Denmark has already been written down. The carrying amount at 31 December 2014 is NOK 151 million. The sites in Denmark have been put up for sale.

Discretionary judgement

Valuation of sites involves a high degree of discretionary judgement such as expected utilisation of the site measured as gross floor area for sale (GFAS), construction costs, interest rates, expected construction start date, project costs and sales price.

Sensitivity analysis of site value

In connection with the value assessment, the following parameters were considered: construction start date, sales price and construction costs. It is as difficult to quantify the excess value of a development portfolio as it is to identify exactly the effects of changes in the market. Nevertheless, the effect of a few scenarios can be described as follows:

1. Moderate fall in sales prices (10–15%)

There is a correlation between variations in sales prices and construction costs, but it is not parallel. If sales prices go down, the construction costs will eventually follow, as both depend on activity. This means that there is a correlation between fluctuations in sales prices and construction costs, although they do not develop in parallel. If the sales prices go down, construction costs will gradually fall in line with the declining number of residential projects. This means that it is possible to keep profit margins in residential projects relatively stable even if sales prices fall. The impact on the project profit margin is smaller if the cost of the site is a relatively small part of the project costs. This means that the book value of the sites generally remains intact.

2. Dramatic fall in sales prices (25–30%)

Although there is a correlation between sales prices and construction costs, there is a limit to how far construction costs can fall. Furthermore, the cost of the site as a percentage of the project costs will increase with a dramatic fall in prices. The value of the sites will decrease, and the total effect will most likely be around NOK 100 million.

3. Delays in the start-up of construction projects

With a required rate of return of 15%, the value of a site will be affected by changes in the construction start date. In the calculations performed when a site is purchased, assumptions are made regarding how long it will take to get planning permission, and thus before sales and construction start. All else being equal, a one-year delay in the construction start date will reduce the value of the portfolio by 15%. Therefore, only delays of two to three years will have a significant impact on the valuation.

Units under construction and unsold completed units

Subsidiaries	2014	2013
Total units under construction	840	1 005
Unsold completed units	64	68
Total	904	1 073

Number of units under construction and unsold completed units at 31 December 2014:

	Residential units under construction	Unsold residential units under construction	Unsold completed residential units 1)	Average sales ratio2)	Average stage of completion 2)
Projects, Norway – subsidiaries	131	22	6	83%	68%
Projects, Norway – joint ventures (Veidekke's share) 3)	268	105	26	61%	54%
Projects, Sweden – subsidiaries	703	83	9	88%	53%
Projects, Sweden – joint ventures (Veidekke's share) 3)	47	-	-	100%	71%
Total number / total sales ratio	1 149	210	41	82%	56%

1) Also includes unsold units that are temporarily let.

2) For units under construction

3) Shares in joint ventures are reported in the statement of financial position under Investments in joint ventures. See note 13.

In terms of accounting, sold units under construction are part of Veidekke's inventory throughout the entire construction period. This means that no profit or revenue is recorded in the income statement related to this type of activity; rather income and profit are only recognised on the date the unit is handed over to the buyer.

By the time a residential project is initiated, there is normally only limited uncertainty regarding the financial outcome of the project. At this point the main risk is generally related to selling the remaining units under construction. There is limited risk regarding the construction costs, as most of the main purchases have already been agreed upon at an early stage in the construction phase. To ensure good corporate governance Veidekke's property development units report on project contributions on an ongoing basis in the segment reporting. In the segment accounts (note 2) the projects report progress using the following principle: estimated final profit of the project x sales ratio x stage of completion. This ensures that the management at all times has a good overview of activities and results.

Earnings from sold units under construction 1)

Business area	No. units under construction sold on 31 Dec.		Recognised Recognised in the in the segment accounts financial statements before tax (note 2)1)		Difference financial statements and segment accounts
	2014	2013	2014	2013	2014	2013	2014	2013
Property Development Norway	272	533	46	139	-1	-2	47	141
Construction Norway	-	-	35	52	-	-	35	52
Property Development Sweden	667	541	122	95	-15	-8	137	103
Construction Sweden	-	-	-1	8	-	-	-1	8
Total	939	1 074	203	294	-16	-10	-219	-304

1) Revenues and earnings from the construction and sale of completed residential projects are recognised in the accounts on the date the unit is handed over to the buyer in accordance with the contract. In the segment accounts, profit is taken to income in line with the estimated final profit, sales ratio and stage of completion. The segment accounts provide the most accurate picture of the ongoing value creation.

The table shall be read as follows: Veidekke has 939 units under construction that were sold on 31 December 2014. In the financial statements Veidekke has recorded a loss of NOK -16 million for these projects, while the segment accounts show a profit of NOK 203 million.

The financial statements show a loss because the administrative costs and costs of sales are expensed as they are incurred in the financial statements.

Development gains

Veidekke optimises the portfolio of sites on an ongoing basis. This means that assessments relating to sales or partial sales of projects are part of the operating activities.

The following transactions have had a significant impact on the financial statements for 2014:

			Effect on operating	Effect
Project	Unit	Accounting line	revenue	on profit
Sale of Svea Fanfar II	Property Development Sweden	Revenue, cost of materials	202	35
Sale of Svea Fanfar III	Property Development Sweden	Revenue, cost of materials	279	52
Sale of site Lilleby Trondheim	Property Development Norway	Profit from joint ventures	-	40

Note 17. Inventory

Inventory includes project inventories in Construction and the inventory for Industrial operations. Project inventories in Construction consist of materials, spare parts, small equipment, etc., while the inventory for Industrial operations consists of raw goods and materials (crushed stone, gravel and bitumen).

	2014	2013
Inventory for Industrial operations	102	102
Inventory in Conctruction operations	153	206
Total inventory	255	308

Note 18. Trade receivable

Trade receivables at 31 December consist of the following elements:

	2014	2013
Invoiced trade receivables	4 088	3 947
Provisions for bad debts	-30	-30
Due from customers	523	687
Work done, but not invoiced	900	565
Work invoiced in advance	-1 977	-1 996
Trade receivables	3 504	3 174

See the section on revenue recognition in the presentation of the accounting policies for more detailed information on invoicing and accrual of projects.

Maturity structure of invoiced trade receivables at 31 December:

	2014	2013
Receivables not due for payment	2 342	2 378
Less than 30 days since due date	558	545
30–60 days since due date	131	76
60–90 days since due date	141	63
90–180 days since due date	173	235
More than 180 days since due date 1)	742	650
Invoiced trade receivables	4 088	3 947

1) Receivables that are overdue by more than 180 days comprise significant sums. These are generally related to disputes, which take time to resolve and which, in some cases, have to be resolved in a court of law. Any impairment of a receivable is based on project risk and is included in the individual evaluation of the project's likely outcome (estimated final profit).

Changes in the provisions for impairment related to credit risk from trade receivables:

30 - -	36 - -
24	23
-	-4
-24	-25
30	30

Provisions are mainly made on a group basis.

Credit risk exposure

Credit risk is the risk of a customer becoming insolvent and not being able to settle its debts with Veidekke (bankruptcy risk).

Unhedged credit risk for trade receivables is calculated using the following table:

	2014	2013
Trade receivables	3 504	3 174
- Received bank guarantees related to trade receivables	365	275
- Other guarantees	284	375
- Receivables from public authorities (state and municipal level) 1)	2 004	1 597
Maximum unhedged credit risk in the trade receivables	850	927

1) Receivables from public authorities in Scandinavia are assumed to have zero credit risk.

Note 19. Cash and cash equivalents

The Group's cash and cash equivalents consists of bank deposits. At 31 December 2014 the Group has NOK 138 million in tied up cash. The Group does not have any short-term investments.

Note 20. Number of shares, shareholders, etc

Veidekke ASA' s largest shareholders at 31 December 2014 are presented in the following table:

	No. of shares	Ownership share
OBOS BBL	30 769 440	23.0%
Folketrygdfondet	12 793 333	9.6%
IF Skadeförsäkring AB	12 111 648	9.1%
Skandinaviska Enskilda Banken (NOM)	4 302 624	3.2%
MP Pensjon PK	3 000 000	2.2%
Verdipapirfondet DNB NORGE (IV)	2 916 967	2.2%
JP Morgan Chase (NOM)	2 560 715	1.9%
Must Invest AS	2 560 250	1.9%
Danske Invest Norske Instit. II	1 573 267	1.2%
JP Morgan Chase Bank N.A. London (NOM)	1 520 000	1.1%
Odin Norge	1 409 029	1.1%
Morgan Stanley & co Internat. PLC (NOM)	1 227 733	0.9%
Nordea Bank Danmark AS (NOM)	985 340	0.7%
KLP Aksje Norge Indeks VPF	978 676	0.7%
Skandinaviska Enskilda Banken AB (NOM)	978 637	0.7%
Total 15 largest shareholders	79 687 659	59.6%
Employees (3 247 individuals)	23 042 751	17.2%
Other	30 974 532	23.2%
Total	133 704 942	100%
Changes in the number of shares
No. of shares 1 January 2014		133 704 942
No. of shares 31 December 2014		133 704 942

Each share has a nominal value of NOK 0.50.

Shares owned by senior executives at 31 December 2014:

The Board	No. of shares
Martin Mæland, Chairman 1) 2)	30 769 440
Per-Otto Dyb, deputy chair	-
Gro Bakstad	13 000
Hans von Uthmann	-
Annika Billström	-
Ann-Christin Gjerdseth	2 000
Inge Ramsdal	6 700
Odd Andre Olsen	2 900
Lars Sevald Skaare	57 875
Shares owned by board members	30 851 915
Members of the corporate management team
Arne Giske	183 350
Dag Andresen	224 375
Jørgen Wiese Porsmyr	100 395
Per-Ingemar Persson 1)	152 100
Terje Larsen	103 000
Hege Schøyen Dillner	4 400
Shares owned by corporate management	767 620
Total	31 619 535

1) Includes shares owned by related parties and close associates 2) CEO of OBOS

Own shares

Veidekke does not own any of its own shares.

Dividend

Dividend for financial year 2013, which was paid in 2014, amounted to NOK 401 million (NOK 3.0 per share). Proposed dividend for the 2014 financial year is NOK 468 million (NOK 3.5 per share).

Payment of dividend to the holding company's shareholders does not affect the company's tax payable or deferred tax.

Note 21. Pensions

Pension schemes

Veidekke has both defined-contribution and defined-benefit pension plans. In the defined-contribution plans, the cost is equal to the contributions towards the employees' pension savings made during in the period. The future pension depends on the size of the contribution and the return on the pension savings. In defined-benefit plans, the company is responsible for paying an agreed pension to an employee on the basis of expected final salary. The cost for the period shows the employees' pension accrual in the financial year. Most of Veidekke's pension plans are defined-contribution schemes, but there are defined-benefit plans for employees over the age of 59 years in Norway and for some Norwegian managers.

Norway

In Norway, Veidekke has the following pension schemes:

• General pension scheme
• Contractual early retirement scheme (AFP)
• Early retirement scheme for executives
• Additional pension for employees with salaries exceeding 12G

General pension scheme

Veidekke has a defined-contribution scheme, whereby Veidekke pays a fixed monthly contribution into the individual employee's pension account. The size of the contribution depends on the employee's salary. For salaries between 1G and 6G, the contribution is equal to 5 per cent of the pay; for salaries between 6G and 12G the contribution is 8 per cent. The employees can choose the risk profile for the management of their pension funds. In the event of death, the pension account accrues to the employee's survivors.

There is a defined-benefit scheme for employees older than 59 years who worked in the company on 31 December 2012. In the defined-benefit plan Veidekke has committed to paying a pension of a specified size, and the company bears the risk for the return on the pension funds. The service period for a full retirement pension under this pension scheme is a minimum of 30 years.

Veidekke's pension plan is a supplemental pension which, together with the National Insurance pension, provides a retirement pension of roughly 60 per cent of the employee's salary on retirement, assuming a full service period. Pension credit is only earned on salary above 12 G (the National Insurance basic amount) in this plan. Both retirement pensions – from the National Insurance scheme and Veidekke's defined-benefit pension – are life-long. The pension is financed by funds accumulated in a life insurance company, which manages the funds and administers the scheme.

Prior to 1 January 2013 Veidekke had a defined-benefit pension scheme for all its employees. In connection with the transition to a defined-contribution pension, a compensation scheme was introduced for employees who would lose out as a result of the switch to the new pension plan. Provisions have been made in the accounts for this scheme.

Contractual early retirement scheme (AFP)

The private-sector early retirement scheme is a life-long supplement to the public retirement pension scheme and is paid no earlier than age 62. Most of the companies in Veidekke in Norway have AFP early retirement pensions for their employees. Employees must satisfy a number of conditions to be eligible for early retirement under the AFP scheme.

The AFP scheme is a defined-benefit multi-employer pension plan and is financed through premiums, which are determined as a percentage of the salary. There is currently no reliable measurement and allocation of liabilities and assets in the scheme. For accounting purposes, the scheme is treated as a defined-contribution plan for which premium payments are expensed as incurred, and no provisions are made in the accounts. If the scheme had been capitalised, its implementation would have had significant impact. The premium for 2014 was 2.2 per cent of salaries between 1 G and 7.1 G. The premium is expected to rise to 2.4 per cent in 2015. There is no accumulation of capital in the scheme, and further increases in the premium level are expected over the coming years.

Early retirement scheme for executives

Veidekke has an early retirement scheme for some of its senior executives in Norway covering retirement between the ages of 64 and 67. It is a defined-benefit plan and has 18 members. These individuals have the right to retire at the age of 64, with an early retirement pension that is 60 per cent of their final salary, financed through operations. The scheme is closed. For further details, see note 30.

Pensions on salaries over 12G

Veidekke has a pension scheme for employees in Norway with salaries exceeding 12G giving pension credit for salary above 12G. The scheme covers retirement pension, disability pension and children's pension, and consists of two parts. For employees aged 59 or older there is a scheme that, assuming a full service period, provides a retirement pension amounting to roughly 60 per cent of the salary on retirement, including National Insurance pension benefits and Veidekke's general pension scheme. The service period for the full retirement pension is 15 years from the year in which the salary exceeds 12G and the employee joined the scheme. The retirement age is 67, and the pension will be paid for life. This pension scheme is financed through operations. The scheme is closed. For other employees there is an allocation scheme where 20 per cent of salary over 12G is set aside. The allocated amount is adjusted each year in line with defined indices. The pension is paid from 67 to 77 years, and is financed through operations. The scheme is treated as a defined-benefit plan.

Risk cover

Veidekke has a pension scheme for its employees covering disability and providing a children's pension in the event of death. These insurance schemes include accrual of paid-up policy rights and are therefore to be regarded as a defined-benefit scheme.

Denmark and Sweden

Veidekke ASA has defined-contribution pension schemes for its employees in Denmark and Sweden whereby the company makes a monthly contribution to the scheme, while the employees bear the risk for the return on the pension funds. The pension funds are placed in life insurance companies, which manage the funds and administer the schemes. The pension schemes cover retirement and disability pension.

In Denmark Veidekke pays two-thirds of the contributions, while the employee pays the remaining third. The employer's contribution constitutes 8 per cent of the salary, The retirement age in Denmark is either 65 years or 67 years, depending on year of birth. The payment of the retirement pension is very flexible, and, in the event of death before retirement, the pension is payable to surviving dependants. There is a corresponding defined-contribution scheme for the management of the Danish company, but in this scheme the employer's contribution is 10 per cent of the salary.

In Sweden Veidekke pays a contribution for all employees of 10 per cent of their salary. Pensionable age in Sweden is 65. The payment of the retirement pension is very flexible, and, in the event of death, the pension is payable to surviving dependants.

Pension costs
	2014	2013
Present value of the year's earning (service cost)	49	40
Interest charges on net pension liabilities	7	8
Termination of defined-benefit scheme in Norway	-	-7
Total costs (defined-benefit schemes)	56	42
Cost of defined-contribution plans	256	222
Pension costs	312	263
Composition of net pension liabilities
	2014	2013
Pension liability – defined-benefit schemes	-1 414	-1 152
Pension assets	923	972
Net pension liability defined-benefit schemes	-490	-180
Pension liability – other schemes	-32	-35
Pension liability at 31 December	-523	-216
Change in gross pension liability during the year
	2014	2013
Gross pension liability at 1 January	-1 152	-1 037
Service cost (present value)	-49	-40
Interest cost	-46	-38
Actuarial gains and losses are recognised in total comprehensive income.	-211	-89
Employer's National Insurance contributions paid	4	8
Payments during the year	39	44
Gross pension liability at 31 December	-1 414	-1 152
Change in pension assets during the year
	2014	2013
Pension assets at 1 January	971	827
Expected return	38	30
Contributions	32	68
Transfer of pension assets to defined-contribution premium fund	-89	-
Year's actuarial gains and losses recognised in total comprehensive income	4	84
Payments during the year	-33	-37
Pension assets at 31 December	923	972
Overview of net pension liabilities and actuarial gains and losses
	2014	2013
Gross pension liabilities	-1 414	-1 152
Pension assets	923	972
Net pension liability defined-benefit schemes	-491	-180
Overview of actuarial gains and losses – defined-benefit schemes
Liabilities:
Changes in economic assumptions	-186	-5
Changes in population and demographic assumptions	-25	-83
Pension assets:
Actual return vs. actuarial assumption	4	84
Year's actuarial gains and losses recognised in total comprehensive income	-207	-5

Financial assumptions	2014	2013
Discount rate/Return on pension investments	2.3%	4.1%
Annual wage growth	2.75%	3.75%
Annual adjustment of G	2.5%	3.5%
Annual adjustment of pensions under payment	0%	0.6%
Mortality table	K2013	K2013
Pension assets	2014	2013
Investment
Property	11%	13%
Bonds	65%	45%
Short-term investments	17%	19%
Shares	7%	23%
Total investment	100%	100%
Return
Book return	5.4%	8.7%
Adjusted return	6.6%	8.7%

Pensions 2015

The estimated premium for defined-benefit plans for 2015 is approx. NOK 60 million.

The cost of defined-benefit pension plans for 2015 is expected to be approx. NOK 65 million. The future annual cost of the defined-benefit schemes depends on a number of factors beyond actual wage growth. Annual service cost is calculated using actuarial assumptions, which have a major impact on the cost. This includes expectations concerning future wage growth, future adjustments of the National Insurance basic amount ("G"), future pension adjustments, the discount rate and mortality tables.

Sensitivity analysis

Veidekke's defined-benefit pension schemes are mostly arranged as asset-based pension schemes managed by life insurance companies. This means that the life insurance company at all times has premiums in line with the accrued pension rights. Approximately half of the recognised pension liabilities and assets are related to asset-based schemes for former employees who are now retired. For this group, it is expected that the life insurance company will not require additional premium payments in the event of changes in the underlying economic and demographic assumptions. Any changes made in the economic assumptions that are categorised as "probable" will not have a significant impact on the ordinary income statement. The effect on the statement of financial position may be larger, as pension liabilities are recognised at fair value. Changes in actuarial assumptions may entail differences in the Group's equity of up to NOK 100 million.

Note 22. Income tax expense and deferred tax

Income tax expense	2014		2013
Tax payable	272		102
Change in deferred tax	-70		66
Adjustments previous years	-6		-6
Income tax expense	196		163
Reconciliation of the Group's tax rate	2014		2013
27% (2013: 28%) of profit before tax	285	27.0%	201	28.0%
Actual income tax expense	196	18.5%	163	22.6%
Difference	89	8.5%	38	5.4%
Explanation difference income tax expense
Tax from activity in joint ventures 1)	58		17
Tax-free sales of companies 2)	31		25
Other permanent differences:
Non-deductible expenses	-13		-21
Effect of changes in the tax rate	1		13
Taxable losses, not recognised	-3		-12
Lower tax rate in Sweden and Denmark	9		6
Other items	6		12
Total	89		38

1) Profit from associates and joint ventures are recognised in the income statement after tax and therefore do not affect the Group's recognised tax expense.

2) Relates primarily to sales of companies in the Group's property development operations.

Deferred tax liabilities

Deferred tax	2014	2013
Current items 1)	472	522
Total current items	472	522
Operating equipment – accelerated depreciation	82	56
Other non-current items	54	75
Provisions for liabilities	-222	-199
Pension liabilities	-135	-57
Total non-current items	-222	-125
Losses carried forward	-82	-111
Net deferred tax liabilities	168	287

1) In Norway and Denmark construction projects in progress are not taxed until completion and handover. Given stable or steadily rising orders, this will provide a permanent tax credit of approx. NOK 500 million.

Presentation of deferred tax in the statement of financial position

Deferred tax assets 1) 2)	-54	-55
Deferred tax liabilities	222	342
Net deferred tax liabilities	168	287

1) Tax assets that cannot be offset against deferred tax.

2) At 31 December 2014 Veidekke had NOK 54 million (NOK 55 million) in deferred tax assets in Sweden. The amount is net after calculation of tax liabilities. The loss carry-forwards in Sweden have no time limit. In addition Veidekke has loss carry-forwards in Sweden with a nominal value of NOK 77 million that had not been recognised on 31 December 2014.

Change in deferred tax	2014	2013
Current items	-51	55
Non-current assets – accelerated depreciation	26	27
Other non-current items	-21	11
Provisions for liabilities	-23	-19
Pension liabilities	-79	4
Losses carried forward	29	12
Change in deferred tax	-118	91
Currency translation differences	1	3
Deferred tax in connection with acquisition/sale of companies	-12	-28
Change in deferred tax recognised in total comprehensive income	59	1
Change in deferred tax in the income statement	-70	66

Tax incorporated into total comprehensive income

		2014		2013
Statement of total comprehensive income	Profit before tax	Income tax expense	Total com prehensive income	Profit before tax	Income tax expense	Total com prehensive income
From the income statement	1 055	196	859	718	163	556
Other income recognised in total comprehensive income:
Revaluation, pensions	-207	-56	-151	-5	-2	-4
Currency translation differences	43		43	91		91
Fair value adjustment of financial assets	-14	-4	-10	5	1	4
Total comprehensive income	877	136	741	809	162	647

Tax recognised directly in equity

In 2014 NOK 4 million (NOK 5 million) was recorded as a reduction in tax payable and an increase in equity related to sale of own shares at a discount to Group employees. See note 4.

Note 23. Non-current liabilities

Non-current liabilities to bondholders and credit institutions, etc.

	2014	2013
Bonds	750	750
Non-current loans to credit institutions	44	53
Non-current loans to others	29	-
Non-current interest-bearing liabilities	823	803

Other non-current liabilities, non-interest-bearing

	2014	2013
Option agreement Seby AS and Hammerfest Entreprenør AS 1)	13	13
Option agreement Recess AB 1)	42	-
Other non-current liabilities	49	23
Other non-current liabilities	104	36

Instalment profile details can be found in note 29

1) Veidekke has a stake in the subsidiaries Recess AB, Seby AS and Hammerfest Entreprenør AS of 70 per cent, 70 per cent and 83 per cent respectively. For these companies, there are option agreements with the non-controlling interests whereby Veidekke has a right to buy the shares and the non-controlling interests have a right to sell the shares covered by the option.

Note 24. Trade payables and other current liabilities

Trade payables	2014	2013
Recorded trade payables	1 571	1 543
Provision for accrued costs	1 561	1 487
Trade payables	3 132	3 029
Other current liabilities	2014	2013
Advance payments from customers	1 830	1 408
Other liabilities	1 279	1 284
Other current liabilities	3 109	2 691

Advance payments from customers include both unearned invoiced income on projects (Work invoiced in advance) and advance payments from customers in connection with residential purchases.

Other liabilities are mainly payable holiday pay and deferred payments in connection with the purchase of sites.

Note 25. Warranty provisions etc.

Provision is made for guarantee work under the item Warranty provisions etc., for example to remedy any defects or omissions on completed projects. Warranty provisions etc. also covers other liabilities, such as claims from subcontractors, claims from third parties, etc. Provisions are made to cover both accrued warranty liabilities and contingent liabilities etc. Among other things the provisions must cover future expenses for the remedy of hidden defects, i.e. defects and omissions that have not been detected. In addition, they must also cover issues that are detected, but where there is uncertainty regarding the scope, responsibility, costs, etc. (disputes).

	2014	2013
Warranty provisions etc. at 1 January	740	695
Currency translation difference	13	27
+ new warranty provisions (additions)	453	350
- reversed warranty provisions (disposals)	-185	-218
- actual claims expenses (consumption)	-195	-115
Warranty provisions etc. at 31 December	825	740

Liability for material defects

All projects shall be handed over to the customer in accordance with the contract. If defects or omissions are detected in projects that have been handed over, the contractor may be liable to remedy them at no extra charge. The projects have different warranty periods, but the norm is three to five years. During the warranty period the contractor is liable for hidden defects and omissions. After the warranty period has expired the contractor is only liable for hidden defects/ omissions that were intentional or due to gross negligence. The final limitation period is 13 years.

Note 26. Mortgages, guarantees and joint and several liability

Mortgages	2014	2013
Recorded liabilities secured by mortgages etc.	16	21
Book value of mortgaged assets	160	181
Guarantees	2014	2013
Guarantees to joint ventures and associates	17	52
Guarantees to other companies	21	40

Guarantees can only be enforced if the joint venture or associate is unable to meet its obligations.

The Group has given a negative pledge for loans and guarantees.

As a result of its participation in partnerships and joint ventures, Veidekke could become liable for other participants' inability to fulfil their obligations. However, Veidekke is not liable until the company in question is unable to meet its obligations.

Veidekke has pledged financial assets with a carrying amount of NOK 124 million at 31 December 2014 to cover pension liabilities incurred. See note 15 Financial assets.

Note 27. Capital management

The aim of the Group's capital management is to ensure sufficient financial flexibility for the Group to be able to undertake operational and strategic actions in the short term and in the long term. The goal is to have a financial structure that promotes profitability and value creation throughout the entire Group and thus provide the shareholders with a high return.

Veidekke aims to have a strong financial position. Key parameters in the efforts to ensure a solid capital structure are the Group's equity, its level of and developments in net interest-bearing debt, ongoing cash flow and financial constraints. The Group's liquidity is strongly affected by seasonal variations with the highest debt burden through the summer half of the year due to the high activity levels. The Group's capital management is adapted to take these variations into account.

Veidekke's dividend policy calls for a pay-out ratio of at least 50 per cent of the profit after tax. Shareholders shall receive continuous returns that are directly correlated with results. The existing dividend policy was introduced in 2002, and since then the average pay-out ratio has been 62 per cent of earnings per share. Including extraordinary dividends and repurchase of own shares, the average pay-out ratio has been 73 per cent of earnings per share. Since 2002 Veidekke has paid out NOK 4.9 billion in dividends to shareholders.

Veidekke ASA uses repurchase of own shares as an instrument to optimise the capital structure of the company during periods in which the Group has a strong financial position. Repurchase of own shares is thus a supplement to the current dividend policy. Repurchase of own shares is only considered if the share price is considered to be below actual market value. Between 2006 and 2008 Veidekke repurchased 6.7 per cent of the outstanding shares. In recent years Veidekke has prioritised dividend pay-outs and operational investments rather than repurchase of own shares. The Board is authorised to repurchase up to 10 per cent of the company's share capital.

Operations are financed at the Group level. Veidekke has a differentiated portfolio of loans with respect to both sources of loans and maturity structure. The Group uses the bank, bond and commercial paper markets as sources of financing. Veidekke has no official credit rating, but actively monitors quantitative and qualitative factors that affect the Group's credit worthiness.

The Group has substantial amounts of capital tied up in its property operations in the form of sites and residential projects in its construction operations in Norway and Sweden. A limit of NOK 3.5 billion has been set for invested capital in this business area. At year-end capital invested was NOK 3.0 billion (NOK 3.2 billion). Capital management is based on the risk exposure in both the various different market segments according to geography, product (type of housing, sales ratio, land bank, etc.) and the various forms of collaboration with external partners, including joint ventures.

At 31 December 2014 the Group had an equity ratio of 22.2 per cent (21.1 per cent) and no net interest-bearing liabilities. At year-end the Group had undrawn committed borrowing facilities of NOK 3,049 million (NOK 2,445 million). The maturity and repayment structure are discussed in note 29.

Note 28. Financial risk

Veidekke aims to maintain a strong financial position. This can best be achieved through good operational management, low risk exposure and sound management of the parameters that exert an influence on the company's financial risk. Financial management and control are an integral part of the Group's strategy process, and the Group's financial policy sets guidelines for the handling of financial risk management.

Veidekke has a central finance unit that shall ensure the Group financial flexibility in the short term and the long term and monitor and manage financial risk in collaboration with the individual companies. The guidelines for the finance unit are laid down in the Group's financial policy, as adopted by the Board. The finance unit is responsible for tasks relating to financing and management of interest-rate and currency risk, while the business areas manage the risks relating to ongoing operations, including credit risk and payment conditions. Veidekke is primarily exposed to risks related to trade receivables, liquidity and interest-bearing liabilities.

(1) Credit risk

Credit risk is the risk of financial losses due to the inability of a customer or the counterparty of a financial instrument to fulfil their contractual obligations. The Group's credit risk is mainly related to the settlement of receivables, the largest risk of which is inherent in the Group's trade receivables. The credit risk linked to trade receivables is related to the customer's ability to pay, and not the customer's willingness to pay (project risk).

The Group has a substantial share of public-sector customers (35 per cent), for whom the credit risk is considered very low. For our private customers (65 per cent), we seek to handle the credit risk within the Group's various business areas through the contracts with our client and good credit follow-up routines. The Group's largest single customer, measured by revenue, is the Norwegian Public Roads Administration.

On signing contracts, the credit risk depends on the specific design of agreements with the client. As a part of Veidekke's risk management, the management systems contain clear procedures for the drafting of contracts, including specifications stating that agreed payment plans shall be closely linked to planned progress. In addition, turnkey contracts are, to a large extent, based on national standards (e.g. Standards Norway), which contain requirements regarding the client's provision of security for the contract price (Standards Norway requires up to 17.5 per cent of the contract price during the building period). Together these two measures mean that exposure to credit risk within ordinary construction projects is regarded as low. In Sweden there is no national standard provision for bank guarantees making the risk somewhat higher in this market. In the business area Industrial, which has a considerably larger number of customers, importance is placed on procedures for credit rating, timely invoicing, guarantees and active follow-up of outstanding claims.

Property development operations seeks to minimise risk through advance payments and by ensuring that handover does not take place until full payment for the units has been received. The Group has no significant credit risk relating to any one party. The Group has not acted as guarantor for any third party's debts with the exception of the matters discussed in note 26. There is always a risk that a customer may not be willing to settle its debts. This is regarded as an operating risk and not a financial risk, and is handled as part of the ordinary project valuation. For further details relating to the accounting, see note 18 Trade receivables.

(2) Liquidity risk

Liquidity risk is the risk that Veidekke will not be able to fulfil its payment obligations when they fall due. Liquidity risk management has high priority as an element in the objective of financial flexibility. Good liquidity is an important prerequisite to profitability in Veidekke and the company's ability to invest and take risks in capital-intensive activities. Management, measurement and control of liquidity are carried out from the project level and on through all the levels of the organisation.

At the end of 2014 undrawn committed borrowing facilities amounted to NOK 3,049 million (NOK 2,445 million). The borrowing facilities are based on a negative mortgage declaration and are conditional on Veidekke's financial key figures (covenants), sales of significant assets without consent, and share of own projects in non-residential and residential projects. Veidekke meets all the conditions laid down in the loan agreement with a clear margin and has satisfactory financial flexibility.

The Group also has other substantial borrowing facilities available to it to meet its current performance guarantees for construction projects.

In order to handle liquidity risk in the company's own projects within property development operations, the main rule is that residential projects shall not be started until the sales ratio exceeds 50 per cent.

Key financial figures for the loan agreement (covenants):

(I) Net interest-bearing liabilities (the Group's current and non-current interest-bearing liabilities minus the Group's cash and cash equivalents and interest-bearing receivables) shall not exceed EBITDA (the Group's operating profit plus depreciation, amortisation and impairment) for the previous four quarters multiplied by three, with the exception of Q2 and Q3 of each year, when the ratio shall not exceed 3.5. At 31 December 2014 this figure was 0.

(ii) The Group's share of own projects (the value of started, unsold residential and commercial buildings in projects implemented under the control of the borrower or another Group company, calculated on the basis of the expected sales price, with a minimum cost price) shall not at any time exceed 60 per cent of the Group's book equity. At 31 December 2014 the Group's share of own projects was 14 per cent.

If Veidekke approaches the limits of the key financial figures, the following will be implemented:

• Net interest-bearing debt will be reduced through the sale of assets in the two capital-intensive business areas: Industrial and Property Development.

• Share of own projects will be reduced by stopping or delaying the start-up of new projects that have not achieved 100 per cent sales.

See note 19 for information on cash and cash equivalents, note 23 on non-current interest-bearing liabilities, and note 26 for information about mortgages and guarantees.

3) Market price risk

Shares

The Group is exposed to price risk related to equity instruments through investments classified as available for sale. This applies primarily to shares. This type of investment is normally not part of the Group's investment strategy. Veidekke prioritises investments in companies and projects that allow the Group considerable influence on future operations and development. At 31 December 2014 Veidekke has NOK 412 million invested in the bond fund Pareto Høyrente. This fund invests in corporate bonds and loans to financial institutions with an average credit rating in the portfolio of BBB. The bond fund is recognised in the accounts as a financial asset. The Group has financial investments that are classified as held for sale of NOK 131 million at 31 December 2014, of which NOK 124 million has been invested in a bond fund. The investment is related to funds to cover pension liabilities.

Hedging of raw material costs

Veidekke has little hedging of input factors for use in production, and then only after an order has been placed. The petroleum product bitumen is an important input factor for the asphalt operations in the business area Industrial. The price of this product is closely linked with developments in oil prices. However, bitumen costs are rarely hedged. The reason for this is that our largest customer, the Norwegian Public Roads Administration, contractually bears the risk related to changes in the price of bitumen. As regards deliveries to other customers, the time between order placement and execution is usually short, thus reducing the risk of price changes. At 31 December 2014 Veidekke had entered into a few contracts where the work will be performed several years into the future, and in these cases, the price of bitumen price is guaranteed.

(4) Interest rate and currency risk

Veidekke's interest rate risk is linked to the Group's portfolio of debt. This risk is managed on the Group level. The various business areas are exposed to interest rate risk, and in some partly-owned companies, interest derivatives are used to reduce considerable long-term interest risk.

Historically the Group has used interest rate derivatives to some extent to reduce fluctuations in profit figures arising from changes in interest rate levels, i.e. interest rate swaps as cash flow hedges of loans. In November 2011 Veidekke ASA signed a six-year fixed rate agreement for NOK 250 million. Under this agreement Veidekke pays a fixed interest rate of 3.3 per cent plus a loan margin until November 2017. Hedge accounting for this agreement was discontinued in December 2014, entailing recognition of a loss of NOK 16 million before tax. The interest rate agreement was terminated in January 2015. In June 2013 Veidekke ASA signed a five-year fixed rate agreement for NOK 500 million. Under this agreement, Veidekke pays a fixed interest rate of 2.22 per cent plus a loan margin until June 2018, and this agreement is recorded as hedging.

The value of the Group's interest rate swaps is estimated using the forward rate on the balance sheet date and is confirmed by the financial institution with which the agreement is signed.

Veidekke has interests in three PPP projects. In addition to the 100 per cent PPP projects Jessheim College and Rykkinn school, Veidekke also has a 50 per cent stake in the PPP project E39 Lyngdal–Flekkefjord. Long-term fixed-rate financing agreements have been signed for all the projects. Interest rate risk is eliminated by linking the agreed financing to signed lease contracts. This is presented in more detail in note 29.

The current interest rate level is expected to have a significant impact on the demand for the Group's products, particularly among private customers. Therefore, an indirect interest rate risk is inherent in the general market risk. Rising interest rates normally result in lower activity for the Group's building and construction operations and also reduce residential sales for Property Development.

Fluctuations in currency rates have little direct influence on Veidekke, as operations are largely national in character and the project cash flows are normally in the same currency. Any substantial currency risks that arise are hedged through forward exchange contracts or similar arrangements.

Equity in foreign subsidiaries is not hedged, and any changes will affect the Group's total comprehensive income. Net currency losses in 2014 amounted to NOK 7.4 million (NOK 2.4 million).

Note 29. Financial instruments

The carrying value of financial instruments can be broken down into the following categories:

	Statement of financial	Financial assets and
	position at	liabilities at fair value	Loans and	Available-for-sale	Other financial
	31 December 2014	through profit and loss	receivables	financial assets	liabilities
Non-current financial assets	408	-	277	131	-
Trade and other receivables	4 068	-	4 068	-	-
Current financial assets	412	412	-	-	-
Cash and cash equivalents	435	-	435	-	-
Total financial assets	5 322	412	4 779	131	-
Non-current interest-bearing liabilities	823	16	-	-	807
Other non-current liabilities	104	-	-	-	104
Current interest-bearing liabilities	55	-	-	-	55
Tax payable	241	-	-	-	241
Other current liabilities	6 846	-	-	-	6 846
Total financial liabilities	8 069	16	-	-	8 053

Financial instruments at fair value

Veidekke's financial instruments recorded at fair value are reconciled in the following table:

	Financial assets available for sale	Financial assets at fair value through profit and loss	Interest rate derivatives	Total
Financial instruments at 1 Jan. 2014	121	-	-759	-638
Additions	15	400	-	415
Sales / deduction	-1	-	-	-1
Gains (losses) recognised in Other
comprehensive income	-4	-	-9	-13
Gains (losses) recognised in the income statement	-	12	-16	-4
Financial instruments at 31 Dec. 2014	131	412	-784	-241

The table below analyses financial instruments recorded at fair value according to valuation method. The different levels are defined as follows:

Level 1: Fair value is measured using quoted prices from active markets for identical financial instruments. No adjustment is made for these prices.

Level 2: Fair value is measured using other observable input than that used in level 1, either directly (prices) or indirectly (derived from the prices).

Level 3: Fair value is measured using input that is not based on observable market data.

	Level 1	Level 2	Level 3	Total
Financial assets available for sale	-	113	8	121
Financial assets at fair value through profit	-	-	-	-
Interest rate derivative	-	-759	-	-759
Total at 31 Dec. 2013	-	-646	8	-638
Financial assets available for sale	-	124	7	131
Financial assets at fair value through profit	-	412	-	412
Interest rate derivative	-	-784	-	-784
Total at 31 Dec. 2014	-	-249	7	-241

Financial instruments not recognised at fair value

The following financial instruments are not recognised at fair value: cash and cash equivalents, trade receivables and other current receivables, debt to credit institutions, short-term certificate debt, trade payables (creditors), unpaid government charges and tax and other current liabilities.

The carrying value of cash and cash equivalents and liabilities to credit institutions is virtually the same as their fair value, since these instruments have a short maturity term. Correspondingly, the carrying value of trade receivables and trade payables are virtually the same as the fair value, as they are agreed upon under "normal" terms. This also applies to unpaid government charges, tax payable and current liabilities. Non-current liabilities have variable interest rates and continuous interest rate adjustment, and therefore, the carrying value is substantially the same as the fair value. The fair value of the Group's interest rate hedging is estimated using the forward rate on the balance sheet date and is confirmed by the financial institution with which the agreement is signed.

For details concerning maturity structure and credit risk for trade receivables, see note 18 Trade receivables.

The Group's long-term financing

Maturity structure and contractual cash flows for the Group's non-current liabilities are presented in the following table:

		Maturity structure				Total contractual
	Carrying value	2015	2016	2017	2018	After 2018	cash flows
Bonds 1)	750	-	-	-	857	-	857
Other loans, credit institutions	44	8	11	8	11	9	47
Non-current interest-bearing loans to others	29	-	-	-	-	32	32
Other non-current liabilities	104	-	-	19	18	67	104
Total	927	8	11	27	886	108	1 041

1) Total contractual cash flows include accumulated interest rates up until the loan expires on 4 June 2018. The statement is based on the assumption that no interest is paid before the agreement expires.

Effective interest rates for selected financial instruments:

	31 Dec. 20141 )	20142 )	20132)
Liquidity	1.4%	1.9%	2.0%
Current interest-bearing liabilities	2.4%	3.1%	3.3%
Non-current interest-bearing liabilities	2.4%	3.1%	3.3%

1) Actual interest rates at 31 December 2014.

2) Average effective interest rate is calculated as the average of the rates applicable through the year.

At 31 December 2014 the Group had undrawn committed borrowing facilities of NOK 3,149 million (NOK 2,445 million at 31 December 2013). At 31 December 2014 withdrawals from the group account are classified as current liabilities as the credit facility expires on 2 November 2015.

Interest rate derivatives

The Group uses interest rate derivatives to hedge against fluctuations in profit as a result of changes in interest rates, i.e. interest rate swaps as cash flow hedging of loans. At 31 December 2014 the Group has two such interest rate derivatives. See the table below for details.

Interest rate agreement			Interest rate	Fair value	Change in value
	Nominal value	Due date	(incl. margin)	(before tax)	in 2014
Veidekke ASA – 6-year hedge	-250	Nov. 2017	3.3%	-16	-5
Veidekke ASA – 5-year hedge	-500	Juni 2018	2.2%	-18	-20

It was decided to terminate hedge accounting of the interest rate agreement with a nominal value of NOK 250 million on 31 December 2014, and the Group has expensed NOK 16 million before tax related to this. This interest rate agreement was terminated in January 2015. The Group uses hedge accounting for the interest rate agreement with a nominal value of NOK 500 million, and it is recorded in the statement of financial position at fair value with revaluations over Other comprehensive income. In 2014 it was recognised a loss of NOK 20 million related to this agreement.

See the description of interest rate derivatives in PPP companies in note 14.

The Group's short-term financing

Maturity structure and expected cash flow for the Group's current liabilities are presented in the following table:

2014		Maturity structure
	Carrying value	Payable on demand/ due date not set	0-3 months	3-12 months	Over 12 months	Anticipated cash flow
Current liabilities to credit institutions 1)	52	-	-	52	-	52
Other current interest-bearing liabilities	3	-	1	-	2	3
Trade payables2)	3 132	1 375	1 749	-2	9	3 132
Unpaid government charges	605	-	549	54	2	605
Tax payable	241	-	8	234	-1	241
Current liabilities	3 109	479	659	1 339	633	3 109
Total current liabilities	7 141	1 854	2 965	1 677	645	7 141

2013		Maturity structure
	Carrying	Payable on demand/		3-12	Over	Anticipated
	value	due date not set	0-3 months	months	12 months	cash flow
Current liabilities to credit institutions 1)	14	-	1	2	12	14
Other current interest-bearing liabilities	658	-	-	655	3	658
Trade payables2)	3 029	1 276	1 588	157	8	3 029
Unpaid government charges	580	2	523	53	2	580
Tax payable	90	-	23	66	-	90
Current liabilities	2 691	406	888	1 129	269	2 691
Total current liabilities	7 062	1 685	3 022	2 062	294	7 062

1) At 31 December 2014 withdrawals from the Group account are classified as current liabilities as the credit facility expires on 2 November 2015. 2) When the due date is not set for trade payables, this is largely related to project accrual due to invoice not having been received.

Sensitivity analysis of cash flow for financial instruments

Veidekke generally has its strongest financial position at the end of the year. There are seasonal fluctuations in some parts of the organisation, which in turn have an effect on the Group's financial instruments. There may be considerable variation in the Group's contract types and terms of payment. Overall, this means that there are a number of risk factors linked to estimating sensitivity to changes in interest rates. Based on average interest-bearing liabilities in 2014, our estimate is that a general increase in interest rates of 1 percentage point would lead to a NOK 5 million decrease in profit before tax for the year (NOK 10 million in 2013). A 1 percentage point decrease in interest rates would cause a similar improvement in profit before tax. The assessment does not include investments in joint ventures.

Note 30. Compensation to senior executives

Declaration to the Annual General Meeting on the principles for determining management salaries

The Board of Directors must report to the Annual General Meeting on how salaries and other compensation to senior executives are determined, as laid down in Section 6-16a of the Public Limited Companies Act. The declaration for 2015 will be enclosed with the Notice of the Annual General Meeting.

Salaries for the Group's senior executives are determined on the basis of information obtained from wage statistics and the responsibilities and complexity of their positions, as well as comparisons with pay levels for other enterprises within and outside the industry. The company's strategy is to offer salaries that are competitive, but not above those of other similar companies. A bonus programme has been established under which the maximum payment is set at 30 per cent of annual salary. This is based on budgets and target achievement in relation to agreed action plans. The bonus consists of two parts: the maximum bonus for achievement of financial results is 20 per cent of the annual salary, while the maximum bonus linked to fulfilment of the targets in individual action plans is 10 per cent. The bonus for achievement of financial results is based on defined margin targets, where the business leaders have half of the bonus linked to the consolidated profit and half linked to the business unit's profit. The bonus for the heads of staff functions related to financial performance is based on the consolidated results. Veidekke's managers also participate in the company's general programme of offering shares to senior executives at discount prices. Veidekke has no share option schemes.

Implemented management compensation policy for 2014 and effects for the company and the shareholders of agreements both entered into and revised

The salary adjustments in 2014 have been made in accordance with the declaration that was submitted to the Annual General Meeting on 7 May 2014. There have been no significant changes in the salary conditions for senior executives. For 2014 the company had a bonus scheme for the CEO and senior executives with a maximum achievable bonus of 30 per cent of their annual salary. The bonus is calculated on the basis of the company's and the individual business unit's results in terms of margin, as well as achievement of individual goals. Of the maximum bonus achievement of 30 per cent, 20 per cent was bonus linked to Group and business unit performance and 10 per cent was bonus based on targets defined in individual action plans.

Compensation to the President and CEO and the corporate management team

		2013
	Salary	Paid bonus	Car, phone, interest rate advantage etc.	Total compensation	Total compensation
President and CEO
Arne Giske	3.4	0.5	0.3	4.2	3.1
Terje Venold 2)	-	-	-	-	2.5
Corporate management
Dag Andresen	2.8	0.4	0.3	3.5	3.2
Jørgen Wiese Porsmyr	2.4	0.5	0.2	3.2	2.8
Per-Ingemar Persson	3.2	0.5	0.1	3.8	3.4
Terje Larsen 1)	2.1	0.4	0.2	2.6	0.9
Hege Schøyen Dillner 1)	1.9	0.1	0.2	2.2	0.7
Bente Lillestøl 2)	-	-	-	-	1.1
Kai Krüger Henriksen 2)	-	-	-	-	1.2
Total CEO and corporate management	15.8	2.2	1.3	19.3	18.7

2014
Year's changes in pension rights	Present value of pension liabilities	Premiums pension plan	Loan for share purchases	Earned bonus
4.3	20.3		1.3	0.6
3.7	16.4		0.9	0.6
4.5	12.5		0.7	0.6
2.3	7.7	0.9	0.5	0.5
2.9	10.2		0.8	0.4
-	-	0.2	-	0.4
17.8	67.0	1.2	4.2	2.9

1) Member of the corporate management team from 1 September 2013

2) Member of the corporate management team until 30 June 2013

President and CEO

Veidekke has established a bonus scheme for the CEO and senior executives with a maximum achievable bonus of 30 per cent of their annual salary. 20 per cent of the bonus is calculated based on the Group's results measured by profit margin, and 10 per cent of the bonus is based on individual goals.

There is a 12 month mutual period of notice for the President and CEO. On termination of employment he is guaranteed a further 12 months' salary. If his contract is terminated by the company before he reaches the age of 60, he is also covered by an extended guarantee of 50 per cent of his salary per year until he turns 60. A deduction will be made from this guaranteed salary for any salary or other remuneration the President and CEO may receive from any new employers.

The President and CEO has a right to resign from his position on reaching the age of 64. The annual early retirement pension shall, from the date of retirement and until he reaches 67 years of age, account for 60 per cent of the salary on retirement from the position of President and CEO. Any payments from the National Insurance, the early retirement scheme (AFP), collective insurance schemes and paid-up policies will be deducted from the guaranteed pension. A retirement pension will be paid for life from the age of 67. This life-long pension constitutes 60 per cent of his salary above 12G. For salary up to 12G, a pension is earned in accordance with the ordinary pension scheme for employees in Norway. The annual early retirement and retirement pension for salaries exceeding 12G are adjusted each year according to the annual increase in the consumer price index from the date of retirement. If Veidekke's annual pay settlement is lower than the annual increase in the consumer price index, this rate can be used as the basis for adjustment instead.

The President and CEO participates in Veidekke's employee share programme and purchased a total of 2,650 shares through the programme in 2014. This share programme is discussed in more detail in note 5. The Group does not have a share option scheme. Veidekke has granted a loan to the President and CEO for the purchase of Veidekke shares amounting to NOK 1.35 million at 31 December 2014. The loan is currently interest-free, is being repaid on an ongoing basis and is secured by collateral in the shares. The interest-rate advantage has been reported to the tax authorities.

Corporate management

With one exception, members of the corporate management have employment contracts stipulating a mutual notice period of six months. Upon termination, they are guaranteed salary for a further 12 months. Salaries and other remuneration received from potential new employers will be deducted from the guaranteed salary.

Dag Andresen, Terje Larsen and Jørgen Wiese Porsmyr have the right to take early retirement from the age of 64. During the period from resignation to the age of 67, an annual pension will be paid equivalent to 60 per cent of the pensionable salary on retirement from the position of executive vice president. A retirement pension will be paid for life from the age of 67 and will be the equivalent of 60 per cent of the pensionable salary on retirement. The annual early retirement and retirement pension are adjusted each year according to the annual increase in the consumer price index from the date of retirement. If Veidekke's annual pay settlement is lower than the annual increase in the consumer price index, this rate can be used as the basis for adjustment instead. Any payments from the National Insurance, the early retirement scheme (AFP), collective insurance schemes and paid-up policies will be deducted from the guaranteed pension.

Per-Ingemar Persson has an individual agreement and will accordingly receive resignation compensation for 18 months in addition to the six-month notice period. He also has a pension agreement which enters into effect at the age of 60. From age 60 to 65, he will receive a pension equivalent to 70 per cent of his salary. After the age of 65, his pension will come from a defined-contribution plan, to which Veidekke has paid 35 per cent of his salary in annual premiums.

Hege Schøyen Dillner is entitled to retire at the age of 67 and will receive a pension in accordance with the ordinary pension scheme for employees in Norway. See note 22 for more information about Veidekke's pension arrangements.

The corporate management team participates in Veidekke's employee share programme and purchased a total of 17,850 shares through the programme in 2014. This share programme is discussed in more detail in note 5. Veidekke has no share option schemes.

Veidekke has granted loans to members of the corporate management for the purchase of Veidekke shares amounting to NOK 4.2 million at 31 December 2014. A list of loans to members of the corporate management team is shown in the table above. The loans are currently interest-free, and they are secured by collateral in the shares.

Compensation to Board members:

	Fees	Pay 1)	Total compensation	Loan for share purchases
Martin Mæland (Chairman)	0.6	0.0	0.6	-
Per Otto Dyb (Deputy Chairman)	0.3	0.0	0.3	-
Hans von Uthmann	0.3	0.0	0.3	-
Annika Billström	0.3	0.0	0.3	-
Gro Bakstad	0.3	0.0	0.3	-
Ann-Christin Gjerdseth	0.3	0.0	0.3	-
Inge Ramsdal (elected by employees)	0.2	0.7	0.9	-
Lars Sevald Skaare (elected by employees)	0.2	1.1	1.3	0.5
Odd Andre Olsen (elected by employees)	0.2	0.7	1.0	-
Total for the Board	2.7	2.5	5.3	0.5

1) Total salary compensation for work other than board-related work done for Veidekke during term of service.

Veidekke has established auditing, compensation and property committees. Compensation for participation in these committees is included in the Board members' fees.

For an overview of corporate management and Board shareholdings, see note 20.

Remuneration to auditors

	2014	2013
Statutory audit including audit-related assistance	13.0	10.1
Tax-related assistance	0.6	1.0
Other services in addition to auditing	0.6	0.7
Total remuneration to auditors	14.2	11.8

Remuneration excludes VAT.

Note 31. Leasing commitments and rental income

Leasing commitments

Veidekke has various non-cancellable lease agreements linked to properties, sites, operating equipment, etc. The lease agreements are due for payment as shown in the table below:

Rent				Other commitments
2014	2013	2014	2013	2014	2013
118	115	36	20	1	-
95	112	17	17	-	-
273	219	25	31	-	1
161	104	-	-	-	-
				Operating equipment

Rental income

Veidekke has various lease agreements linked to properties, sites, operating equipment, etc. Income from these kinds of leases in the last two years is presented in the table below:

Veidekke's income from the lease of real property	2014	2013
Rental income this year	19	33
Rental income next year	8	26
Total rental income the next 2–5 years	23	83
Total rental income after more than 5 years	-	2

Note 32. Contingencies

Through its ongoing operations, Veidekke is occasionally involved in disputes with customers regarding the interpretation and understanding of signed contracts. Veidekke strives to resolve these kinds of disputes outside the courts whenever possible, but some cases must nevertheless be decided by arbitration or in court. Disputes may be Veidekke's claims on customers (additional claims) and customers' claims on Veidekke (remedy of defects, compensation, etc.). Thorough assessments are conducted in connection with disputed claims to ensure the most correct reporting in the accounts. Reference is made to the Group's accounting policies:

"Additional claims against a client and disputed amounts with a high level of uncertainty are normally not taken to income until agreement has been reached or a legally binding court ruling has been handed down. Nevertheless, in the event of claims with a low level of uncertainty regarding Veidekke's likelihood of winning and where the uncertainty is primarily related to the outcome in kroner, part of the claim is taken to income based on the best estimate. Provision is made for guarantee work based on historical experience and identified risks."

As a result of demanding contract terms in transport projects, there is, at 31 December 2014, a significant level of disputes in a number of projects where the Norwegian Public Roads Administration is the owner. Recognition of revenue from the relevant projects is cautious as a whole, but positive and negative outcomes of individual disputes may have an effect on future results.

At year-end Veidekke was involved in 14 disputes for claims over NOK 10 million, which are being processed by the judicial system.

Note 33. Related party transactions

Veidekke's related parties include associates and joint ventures (see note 13), Veidekke's shareholders, members of the Board and senior executives in Veidekke. Veidekke has stakes in associates and joint ventures, and these are reported in Veidekke's accounts using the equity method.

Transactions with associates and joint ventures:

	2014
	Ass.	JV	Ass.	JV
Revenue
Construction	2	689	15	946
Industrial	-	53	-	40
Other	-	40	6	20
Total revenue	2	782	21	1 006
Statement of financial posistion at 31 December
Receivables	1	190	5	149
Liabilities	9	33	8	4

OBOS BBL has a 23 per cent stake in Veidekke and is also a major business partner. The collaboration with OBOS consists in the joint development of residential projects and in deliveries by Veidekke to companies within the OBOS Group.

The residential projects developed in partnership with OBOS are undertaken through the establishment of joint ventures. At the end of 2014 there are 12 companies that are jointly controlled by Veidekke and OBOS:

Transactions with OBOS:

	Revenue	Receivables
	2014	31.12.2014
OBOS	148	15
Joint ventures 1)	339	56

1) 50% OBOS, 50% Veidekke Property Development

Other than this, Veidekke does not have any significant agreements or transactions with related parties.

Note 34. Subsequent events

No events have occured after the balance sheet date that have significant effect on the financial statements.

Note 35. Corporate structure

Overview of the main subsidiaries in the Group:

				Ownership share
Company	Business area	Head office	2014	2013
Veidekke Entreprenør AS	Construction	Oslo, Norway	100%	100%
- Veidekke Agder AS	Construction	Kristiansand, Norway	100%	100%
- Block Berge Bygg AS	Construction	Klepp, Norway	100%	100%
Hoffmann A/S	Construction	Glostrup, Denmark	100%	100%
Veidekke Sverige AB	Construction	Stockholm, Sweden	100%	100%
- Veidekke Entreprenad AB	Construction	Stockholm, Sweden	100%	100%
- Arcona AB	Construction	Stockholm, Sweden	100%	100%
- Veidekke Bostad AB	Property Development	Stockholm, Sweden	100%	100%
- VeiBo Group AB	Property Development	Stockholm, Sweden	100%	100%
Veidekke Eiendom AS	Property Development	Oslo, Norway	100%	100%
- Veidekke Bolig AS	Property Development	Oslo, Norway	100%	100%
Veidekke Industri AS	Industrial	Oslo, Norway	100%	100%

Altogether the Group consists of approx. 50 operative subsidiaries owned directly or indirectly by Veidekke ASA.

No subsidiaries have non-controlling interests of a size that is significant for the Group.

Income statement Veidekke ASA

(Figures in NOK million)	Note	2014	2013
Revenue		111	102
Personnel expenses	1	-94	-82
Other operating expenses	3	-73	-75
Depreciation	4	-1	-1
Total operating expenses		-168	-158
Operating profit		-56	-56
Dividends and group contributions from subsidiaries	2	300	505
Other financial income	2	86	62
Financial costs	2	-56	-45
Profit before tax		273	466
Income tax expense	10	-55	-52
Profit for the year		217	415
Allocation of profit
Dividends		468	401
Other equity		-251	13
Total		217	415

Statement of financial position Veidekke ASA

(Figures in NOK million)	Note	2014	2013
ASSETS
Non-current assets
Deferred tax assets	10	30	17
Land and buildings	4	11	14
Plant and machinery	4	1	1
Investments in subsidiaries	5	2 032	1 522
Investments in associates and joint ventures	6	66	66
Financial investments	7	125	110
Other non-current receivables	7	174	189
Total non-current assets		2 439	1 918
Current assets
Receivables from Group companies		301	527
Financial investments	8	412	-
Other receivables		13	15
Cash and cash equivalents		-	1 154
Total current assets		726	1 696
Total assets		3 165	3 614
EQUITY AND LIABILITIES
Equity
Share capital		67	67
Other equity		1 195	1 459
Total equity	9	1 262	1 526
Non-current liabilities
Pension liabilities	11	131	90
Bonds	12	750	750
Total non-current liabilities		881	840
Current liabilities
Amounts due to credit institutions	14	364	-
Certificate loans		-	655
Trade payables		44	56
Unpaid government charges		6	4
Taxes payable	10	39	31
Dividends payable	9	468	401
Current liabilities to Group companies		94	96
Other current liabilities		6	6
Total current liabilities		1 022	1 248
Total equity and liabilities		3 165	3 614

Statement of cash flow Veidekke ASA

OPERATING ACTIVITIES Profit before tax 273 466 Recognised dividends and group contributions, not yet paid -300 -505 Received dividends and group contributions from subsidiaries 517 398 Group contributions to subsidiaries -94 -59 Tax paid 10 -31 - Depreciation 4 1 1 Gains / losses on sale of non-current assets 4 -1 - Pensions, difference expensed / paid 1 5 22 Generated from this year's activities 387 307 Change in other current assets -12 31 Change in other items -11 -38 Net cash flow from operating activities (A) 363 300 INVESTING ACTIVITIES Acquisition of tangible non-current assets 4 -1 - Sales of non-current assets 4 4 - Equity contribution in subsidiaries 5 -443 - Acquisition of financial investments 8 -400 - Net cash flow from investing activities (B) -840 - FINANCING ACTIVITIES New long-term loans - 750 Repayment of long-term loans - -35 New certificate loans 455 Repayment of certificate loans -655 - New current liabilities 364 - Dividends received from joint ventures 15 15 Dividends paid -401 -334 Net cash flow from financing activities (C) -677 850 TOTAL NET CHANGE IN CASH AND CASH EQUIVALENTS (A + B + C) -1 154 1 150 Cash and cash equivalents at 1 January 1 154 4 Cash and cash equivalents at 31 December - 1 154 Supplementary information Borrowing facility DNB 1) 3 100 3 100 Used committed borrowing facilities at 31 December 51 655	(Figures in NOK million)	Note	2014	2013

1) The borrowing facility is due in November 2015 and withdrawals from this account are therefore presented as current liabilities.

Notes Veidekke ASA

Accounting policies

The parent company Veidekke ASA is a holding company with no operations. Its activities consist of investments in subsidiaries and associates, and its income consists of dividends and group contributions from these companies. In addition, Veidekke ASA invoices its subsidiaries for their share of costs related to administration of the Group. Veidekke ASA prepares its financial statements in accordance with Norwegian accounting standards.

Investments in subsidiaries are accounted for using the cost method. This means that investments are booked at cost price, and only distributions from the companies are recognised in income. Investments are written down if the carrying value exceeds fair value.

The parent company applies the same accounting policies as the Group, except for the point in time when dividends and group contributions and financial instruments (interest swaps) are recognised in the accounts.

Group contributions are recognised in the income statement in the same year as they are accrued by the subsidiary. Dividends from subsidiaries are recognised in the income statement in the same year as they are allocated in the subsidiary (the year before distribution). The dividend proposed in Veidekke ASA was recognised as a liability on 31 December 2014.

Unless otherwise specified, all amounts are in NOK millions.

Note 1. Personnel expenses

	2014	2013
Payroll	67	58
Pension costs	14	12
National Insurance contributions	7	7
Other payroll costs (social benefits etc.)	6	5
Total	94	82
Number of fulltime equivalents	51	49
Number of employees at 31 December	54	53

Note 2. Financial income/financial expenses

	2014	2013
Dividend and group contributions from subsidiaries	300	505
Interest income	71	48
Dividends from joint ventures	15	15
Total other financial income	86	62
Interest costs	-49	-46
Currency losses	-2	1
Other financial costs	-5	-
Financial costs	-56	-45
Net financial items	329	522

Note 3. Remuneration to auditors

In 2014 remuneration to the auditors was NOK 0.9 million for auditing, NOK 0.2 million for audit-related assistance, NOK 0.1 million for other assistance and NOK 0.1 million for tax-related assistance. All amounts are stated excluding VAT.

Note 4. Plant, machinery, land and buildings

14 63	1	14	15
	12	76	76
-	1	1	-
-3	-	-3	-
-13	-	-13	-
48	13	61	76
-50	-12	-62	-61
-	-	-1	-1
-	-	-	-
13	-	13	-
-37	-12	-49	-62
			14
Linear	Linear
2–5%	10–25%
	11	1	12

Sales price of sold land and buildings amounted to NOK 4 million in 2014. Gains are included under the item "Revenue".

Note 5. Shares in subsidiaries

Company	Location	Ownership share %	Value in the statement of financial position 1)
Veidekke Entreprenør AS	Oslo	100	631
Hoffmann A/S	Copenhagen	100	366
Veidekke Danmark AS	Copenhagen	100	22
Veidekke Industri AS	Oslo	100	214
Hovinmoen Utvikling AS	Oslo	100	18
Veidekke Sverige AB	Lund	100	259
Veidekke Eiendom AS	Oslo	100	470
AS Noremco Construction	Oslo	100	9
Veidekke Internasjonal AS	Oslo	100	1
Skuleveg AS	Oslo	100	2
Skulebygg AS	Oslo	100	41
Total			2 032

1) Carrying value in Veidekke ASA's accounts at 31 December 2014 (cost method).

Note 6. Shares in associates and joint ventures

Company	Location	Ownership share %	Value in the statement of financial position 1)
Allfarveg AS	Oslo	50	66
Total			66

1) Carrying value in Veidekke ASA's accounts at 31 December 2014 (cost method).

Note 7. Non-current receivables

	2014	2013
Loans to employees	174	186
Financial assets 1)	125	110
Other non-current receivables	-	3
Total	299	299

1) The investment is related to funds to cover pension liabilities.

Note 8. Financial assets

At 31 December 2014 the company has NOK 412 million invested in a bond fund with a credit rating of BBB.

Note 9. Reconciliation

	2014	2013
Equity at 1 January	1 526	1 531
Profit for the year	217	415
Dividends payable	-468	-401
Change in value of pension assets	-14	-18
Equity at 31 December	1 262	1 526

	Share capital	Total issued share capital	Other equity	Total equity
Equity at 1 January 2014	67	304	1 155	1 526
Profit for the year	-	-	217	217
Dividends payable	-	-	-468	-468
Change in value of pension assets	-	-	-14	-14
Equity at 31 December 2014	67	304	891	1 262

Note 10. Income tax expense and deferred tax

Income tax expense	2014	2013
Tax payable in the statement of financial position	39	31
Change in deferred tax	-8	-4
Tax on group contribution paid	25	26
Adjustment previous year	-	-2
Total income tax expense	55	52
Difference in income tax expense	2014	2013
27% (2013: 28%) of profit before tax	74	131
Actual income tax expense	55	52
Difference	18	79
Explanation difference in income tax expense
Non-deductible expenses	-	-
Tax-exempted dividends	19	78
Other permanent differences	-	-
Effect of change in tax rate	-	-
Adjustments previous years	-	2
Total	18	79
Deferred tax	2014	2013
Temporary differences
Current items	-6	-2
Gains and loss account	28	34
Operating equipment	-3	-3
Pensions	-131	-90
Basis for deferred tax	-112	-62
Recognised deferred tax (- deferred tax asset)	-30	-17

Note 11. Pensions

	2014	2013
Pension costs
Present value of the year's earning (service cost)	9	6
Interest charges on net pension liabilities	4	3
Cost of defined-benefit plan	12	9
Cost of defined-contribution plans	2	3
Pension costs	14	12
Pension liabilities	-219	-177
Pension assets	87	88
Net pension liability	-131	-90
Change in value (actuarial gains and losses)	-19	-25
Change in value after tax recognised directly in equity	-14	-18

The company is required by law to have occupational pension arrangements under the Norwegian Mandatory Occupational Pension Act. The company's pension plans comply with the statutory requirements laid down in this Act. See the accounting policies and the presentation of the schemes in note 21 to the consolidated accounts.

Note 12. Non-current liabilities

At 31 December 2014 the non-current liability recorded in the accounts consists of bond loans. For further details see notes 28 and 29 to the consolidated accounts.

Note 13. Guarantees

At 31 December 2014 Veidekke ASA has provided guarantees for its subsidiaries totalling approx. NOK 1,800 million in connection with specific construction projects for Group companies. The company has a current bank guarantee to cover payroll tax obligations.

Note 14. Current liabilities

Current liabilities to credit institutions consist of withdrawals from the group account. The Group has committed borrowing facilities in DNB of NOK 3,100 million at 31 December 2014, which run until 2 November 2015. Veidekke ASA is responsible for the Group's total withdrawals from the group account, which at 31 December 2014 totalled NOK 51 million and is classified as current liabilities. For further details see notes 28 and 29 to the consolidated accounts.

Note 15. Other notes

The following requirements are covered in the notes to the consolidated accounts:

• Note 20: Number of shares, shareholders etc.
• Note 28: Financial risk
• Note 29: Financial instruments
• Note 30: Compensation to senior executives

Declaration in accordance with § 5-5 of the Securities Trading Act

We hereby confirm that, to the best of our knowledge and belief, the Group and company financial statements for 2014 have been prepared in compliance with current accounting standards, and that the information in the accounts gives a true and fair view of the Group and company assets, liabilities and financial position, as well as the results of their operations in their entirety.

The Board of Directors' Annual Report gives a true and fair view of the Group and company development, result and position, as well as of the main risk and uncertainty factors the Group is faced with.

Oslo, 26 March 2015 The Board of Directors of VEIDEKKE ASA

Martin Mæland Chairman

Per Otto Dyb Gro Bakstad Annika Billström Ann Christin Gjerdseth

Deputy Chairman

Hans von Uthmann Odd Andre Olsen Inge Ramsdal Lars S. Skaare

Arne Giske President and CEO

Corporate governance

Veidekke aims to secure a high and stable return for its shareholders by operating construction and property development activities in Scandinavia. Veidekke believes that a number of important parameters must form the foundation for both the company and its employees in order for the business as a whole to achieve its objectives over time. At the core of this foundation is the company's strong corporate culture with its emphasis on profitability and risk management.

1. STATEMENT ON CORPORATE GOVERNANCE

Veidekke strives to ensure good management and corporate governance and bases its reporting on the most recent version of the "Norwegian Code of Practice for Corporate Governance", dated 30 October 2014.

Veidekke aims to be professional, honest, enthusiastic and ground-breaking. These are the company's core values, which shall guide all employees at Veidekke and be reflected in our behaviour in all relationships. Veidekke has developed its own ethical guidelines and policies for compliance with the Competition Act, which are available on the company's website under "Corporate Governance".

The company's objectives and main strategy are described in more detail on our website veidekke.com/en.

2. OPERATIONS

Veidekke's operations are defined in its Articles of Association, which are available on Veidekke's website under "Corporate Governance".

Veidekke ASA is a public limited company. Its registered head office is in Oslo, and the Group has operations in Norway, Sweden and Denmark. Veidekke's operations are managed by Veidekke Entreprenør (Construction), Veidekke Eiendom (Property Development) and Veidekke Industri (Industrial), all in Norway, and Veidekke Sverige in Sweden and Hoffmann in Denmark. Each business area is further broken down into regions, districts and departments.

Veidekke's operations in Norway and Sweden include construction and civil engineering projects, renovation, specialised civil engineering contracts and development of residential properties. In Norway, Veidekke is also engaged in asphalt operations, production of aggregates, and road maintenance. In Denmark, operations mainly comprise construction and renovation projects.

The Group has a decentralised business model in terms of distribution of responsibilities and authority, implying a high degree of responsibility and authority in the various units. This ensures closer proximity to our customers and suppliers, which has proven to be an advantage for Veidekke in the competition for contracts and business opportunities.

Corporate management

The corporate management team consists of the President and CEO, the heads of the three business areas (Construction, Property Development and Industrial) and the two heads of the central staff functions: finance, business administration, procurements, IT, strategy / human resources, occupational health, safety and working environment, protection of the external environment, communications and legal.

3. EQUITY AND DIVIDENDS

At 31 December 2014 the Group had an equity ratio of 22.2 per cent. This is within an acceptable range with regard to capital strength, optimised risk-adjusted yield and future investment requirements. In the event of any capital increases, plans for the employment of the capital are presented to the company's Annual General Meeting.

The Group's growth is expected to be primarily based on organic growth, but Veidekke also considers acquisition opportunities among small or medium-sized companies in the Group's business and geographical areas. Veidekke has a strong financial position and uses its own financial resources to carry out such acquisitions.

Veidekke aims to give its shareholders a stable, high return on their investment in the company. We will achieve this by each unit striving to achieve ambitious strategic goals. Construction has set a goal of a profit margin of 5.0 per cent, while the actual profit margin for 2014 was 3.0 per cent. Operations in Norway reported a profit margin of 3.6 per cent, operations in Sweden had a profit margin of 0.4 per cent, while operations in Denmark achieved a profit margin of 5.9 per cent. The business area Industrial has a goal of a profit margin of 6.5 per cent. Industrial's profit margin goal is higher than that for Construction because of this business area's higher proportion of tied-up capital. Industrial achieved a profit margin of 5.1 per cent in 2014. Property Development has set itself the goal of a return on invested capital of 15 per cent. Return on invested capital was 13 per cent in 2014. The Group must have a strong financial position, and with its current balance sheet structure, a gearing ratio of 40–60 per cent at year-end would fulfil these minimum requirements. At 31 December 2014 the Group had a gearing ratio of 0 per cent. Veidekke is working on a number of measures to ensure profitability through improved competitiveness. This includes control of risk exposure and capital efficiency, as well as participative planning processes and other measures to improve efficiency.

Dividend policy

Veidekke's target is to distribute at least 50 per cent of the profit for the year to the shareholders. A dividend of NOK 3.5 per share is proposed for the 2014 financial year. This corresponds to a dividend pay-out ratio of 55 per cent. The Board justifies this proposal on the basis of the company's dividend policy and the company's strong financial position.

Board authorisation – capital expansion

The Board of Directors has been authorised by the Annual General Meeting to increase the share capital by up to NOK 6.5 million, which corresponds to approx. 10 per cent of the company's share capital. This authorisation may be used when deemed necessary, for example in connection with corporate take-overs, the company's schemes whereby employees can buy shares in the company, and for investment in real property. The authorisation helps ensure that the company can undertake necessary transactions quickly and efficiently, as needs dictate. The reasoning behind the authorisation also dictates waiver of the shareholders' pre-emptive rights. Should the Board decide to waive the shareholders' pre-emptive rights, the reasons for this decision must be explained for the individual case in hand. Authorisation to increase the share capital is subject to the approval of the Annual General Meeting and is valid until the next Annual General Meeting or until 31 May at the latest.

Board authorisation – buyback of own shares

The Board of Directors has been authorised by the Annual General Meeting to buy back Veidekke shares. The reason for this authorisation is to ensure the highest possible return for the shareholders over time and, if the share price appears favourable, purchase of own shares will be a good supplement to dividends. Share buyback may also be relevant if the equity and liquidity situation is good and there are limited other attractive investment opportunities. It is the company's intention to cancel these shares at the next Annual General Meeting. Authorisation to repurchase Veidekke shares is subject to the approval of the Annual General Meeting and is valid until the next Annual General Meeting or until 31 May at the latest.

Veidekke works continuously to make the necessary arrangements to maintain the employees' ownership share, and strives each year to give the employees the opportunity to buy shares at a discount. Veidekke offers financial assistance for share purchases. Financed purchases are subject to a lock-in period of two to three years. At the end of 2014, 3,247 employees held a combined 17.2 per cent stake in the company.

4. EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH RELATED PARTIES

It is the company's policy to treat all shareholders equally.

Veidekke's main shareholder is OBOS, which has an ownership share of 23 per cent. There are rules regarding impartiality, which ensure that resolutions do not favour the main shareholder in any contexts. OBOS is a major property developer, and for several years OBOS and Veidekke have worked together on the development of a number of property projects. In order to ensure that all terms and conditions and agreements are based on commercial terms, it has been the practice of the two parties, Veidekke and OBOS, to set up a

company of which they each own 50 per cent. These companies develop and sell projects.

This also helps ensure that the main shareholder does not gain an unfair advantage at the expense of the other shareholders.

If significant transactions are carried out with major shareholders over and above ordinary commercial contracts, independent consultants are engaged to ensure a correct valuation.

Whenever possible, existing shareholders have preemptive rights in the event of capital increases.

The Board's rules of procedure provide guidelines concerning the duty of board members and the CEO to disclose any conflicts of interest. The board members have a duty to disclose any conflicts of interest.

Employees as owners

Compared with other listed companies Veidekke has a very high number of employee owners. Veidekke regards the involvement of its employees as shareholders as an important and positive element in the development of the company. The company's aim is for at least half of its employees to hold shares in the company, totalling at least 15 per cent of the shares. At the end of 2014, 51 per cent of Veidekke's employees owned 17.2 per cent of the company together. It also wishes each of its senior executives (837 people) to hold a significant number of shares in the company. This group currently has a combined stake of 11.6 per cent. The Group has strict insider trading rules and trade restrictions. See "Shareholder information" on page 95 for more details about the insider trading rules for employees.

5. FREELY NEGOTIABLE SHARES

Veidekke has one class of shares, and there are no marketing restrictions for trading. In 2014, 31.9 million shares were traded on the Oslo Stock Exchange, with a turnover rate of 23.9 per cent. The Group works continuously to maintain satisfactory liquidity in Veidekke shares. This is done primarily through good ongoing communication with investors and the market.For further information, see "Shareholder information" on page 95.

6. ANNUAL GENERAL MEETING

Veidekke strives to ensure that as many shareholders as possible can exercise their rights by participating in the Annual General Meeting and that it is an effective meeting place for shareholders and the Board. The Annual General Meeting is held in May each year. In 2015 the Annual General Meeting will be held on 5 May.

Notice of the meeting and case documents are published on the company's website no later than three weeks before the Annual General Meeting is held. Registration is possible via written feedback, fax or internet, and the registration deadline is two working days prior to the meeting. Shareholders who are not able to attend in person have the opportunity to vote by proxy. Proxy forms are distributed with the notice of the meeting.

In addition to the company's management, the Board of Directors, the Nomination Committee and the auditor attend the Annual General Meeting. The Chairman of the Board usually opens the meeting and asks the meeting to propose a chair for the meeting. If no proposals are made, it is standard practice for the Chairman of the Board to offer to chair the meeting.

7. NOMINATION COMMITTEE

Use of a nomination committee is stipulated in the Company's Articles of Association. The Nomination Committee submits recommendations to the Annual General Meeting on the election of members for the Board of Directors and for the Nomination Committee. Candidates who are nominated for the Board should be shareholders or representatives of shareholders. The Nomination Committee contacts managers, board members and relevant shareholders in connection with preparing recommendations.

The Nomination Committee shall have at least three members. The majority of the Nomination Committee must be independent of the Board of Directors and the company's management. The company's chief executive officer or other senior executives may not be members of the Nomination Committee.

The Annual General Meeting elects the Nomination Committee's chair and other members. Since it is the responsibility of the Nomination Committee to propose candidates for the Board of Directors, there is no deadline for the submission of such proposals to the Nomination Committee. Shareholders can submit Board candidate proposals to the Nomination Committee via the company's website. In 2014 the Nomination Committee consisted of Harald Norvik (chair), Jan Tore Berg-Knutsen, Erik Must and Olaug Svarva.

8. CORPORATE ASSEMBLY, BOARD OF DIRECTORS, COMPOSITION AND INDEPENDENCE

The Board of Directors is Veidekke's highest administrative body and is responsible directly to the Annual General Meeting. Six members are elected by the shareholders, and three are elected by and from among the employees. The shareholder-elected board members are elected for one year at a time.

In 2003 Veidekke entered into an agreement with its employees that the company would not have a corporate assembly. In return, the employees' representation on the Board of Directors was increased. Since the Group does not have a corporate assembly, the Board elects its own chair as laid down in the Public Companies Act. The Board also elects its own vice-chair.

In determining the composition of the Board, importance is attached to safeguarding the joint interests of the shareholders and the skills, capacity and diversity of the company. Effort is made to have board members from all three Scandinacian countries. The composition of the Board of Directors of Veidekke ASA complies with the provisions of the Public Companies Act regarding the percentage of women in listed companies.

The composition of the Board of Directors ensures that it is able to act independently of the shareholders' special interests. The Board's rules of procedure also contain instructions for dealing with issues in which a board member has a vested interest. The rules in the Articles of Association governing the election of the Nomination Committee help to ensure the Board of Directors' independence.

All board members who are elected by the shareholders are independent of the company's management. For further information on existing board authorisations, see "Shareholder information" on page 93.

9. THE WORK OF THE BOARD OF DIRECTORS

The Board of Directors defines targets, lays down strategies and budgets, and actively contributes expertise and experience. In accordance with adopted plans, the Board carries out an annual review of the company's business areas, and follows a systematic annual plan for matters to be discussed at board meetings. Nine board meetings are held each year. At least one of the meetings is held alternatingly in Sweden and Denmark, and two meetings are combined with a visit to a district or branch office and one of its projects in Scandinavia.

The work of the Board is laid down in its rules of procedure, and each year it evaluates its own work and competence.

The Audit Committee

The Audit Committee is composed of three board members elected by the shareholders, and its work is governed by mandates and instructions that have been approved by the Board. The task of the Audit Committee is to develop the collaboration between the Board and the management, and between the Board and the external auditors. On behalf of the Board, the Audit Committee shall make itself familiar with and develop insight into and knowledge of accounting and financial matters, supervision and risk management. The Committee reports to the Board of Directors.

In 2014 the Audit Committee consisted of Gro Bakstad (chair), Hans von Uthmann and Ann Christin Gjerdseth.

The Remuneration Committee

The Remuneration Committee is composed of three board members elected by the shareholders, and its work is governed by mandates and instructions that have been approved by the Board. The Committee submits proposals to the Board on salaries and compensation schemes for the President and CEO. The Committee also gives advice to the President and CEO on salaries and compensation schemes for the management. The Committee reports to the Board of Directors.

In 2014 the Remuneration Committee consisted of Martin Mæland (chair), Per Otto Dyb and Hans von Uthmann.

The Property Committee

The Property Committee is composed of two board members elected by the shareholders, and its work is governed by mandates and instructions that have been approved by the Board. The Property Committee reviews all major investment decisions to ensure good internal control with regard to starting any new own-account projects and purchase of land for development. In 2014 the Property Committee consisted of Annika Billström (chair) and Martin Mæland.

10. RISK MANAGEMENT AND INTERNAL CONTROL

The ability to plan, structure, execute and evaluate building processes is a key skill at Veidekke. Effective management is a central critical success factor for the company and an integrated part of the running of the business. With a large number of projects in progress at any time in the Group's three business areas (Construction, Property Development and Industrial), systematic reporting from each project to each division is needed, from where it can be passed to the Group management and Board. Reporting is performed ten times per year and covers financial and non-financial parameters. Each project must focus on profitability, risk, injuries, absence and the environment.

The management continuously monitors the overall portfolio of projects to ensure an acceptable level of risk exposure and a sound basis for profitability. The management systems for the different entities provide clear guidelines for how projects are to be carried out with regard to quality, progress, cost-effectiveness, health, safety and the environment. These tools play an important part in ensuring quality in our order backlog and a uniformly high standard in the execution of projects. The status and profitability of the order backlog is an important fixed item on the agenda for the divisional management teams, the corporate management and the Board of Directors.

Risk exposure in the Property Development division, through unsold units under construction and any completed units, is measured continuously. The start-up of new property development projects will be postponed if the risk for Veidekke's own account is deemed to be too high. The Board's Property Committee helps ensure good internal control with regard to starting any new projects for own account and site acquisitions.

Veidekke's financial policy provides guidelines for the different entities' financial management and activities. The objective of the guidelines is to avoid, limit, control and measure financial risk, promote capital rationalisation and optimise the Group's financial resources.

Planning

Veidekke's financial and strategic planning is based on the company's "planning wheel". A fixed agenda is defined throughout the year for the production of framework documents, strategy plans, budgets and subsequent monitoring of the businesses.

Financial management

The Group is governed by clear financial objectives linked to profit margins, capital yield and capital structure. These objectives are then broken down and translated into achievable targets for the different companies, divisions and projects. The projects have clear requirements regarding profitability and cash flow. In Construction, requirements are set for the projects' profit margins, including financial items. Property Development and Industrial are capital-intensive areas, and these projects are also measured by return on employed capital.

Financial reporting

Veidekke's Group accounts are prepared in accordance with the applicable IFRS regulations. The Group's chosen accounting policies are communicated down through the divisions with particular emphasis on new and significant standards and any amendments to them. Accounting information is reported through the Group's common reporting system. All companies report to the Group ten times a year based on output from their own ERP systems. The reporting system has an overall chart of accounts and has built-in control systems to ensure consistency of information. Reporting is expanded for year-end financial reporting to meet the different disclosure requirements.

Consolidation and control of accounting information takes place at several levels of the organisation, in accordance with Veidekke's decentralised business model. Each unit is responsible for compliance with the applicable laws and regulations for financial reporting, and for seeking assistance from the division and/or corporate staff in cases requiring significant judgement or transactions outside the ordinary course of business. The Group has a special procedure that it follows in connection with the purchase and sale of businesses.

The greatest risk in a project-based organisation is associated with financial reporting related to the correct status and risk assessment of projects. Veidekke therefore attaches importance to ensuring we have the necessary project reporting expertise. Courses are held in relevant financial and management systems, and it is a requirement that all project managers and site managers have completed a three-module course in business management or equivalent.

Ethical guidelines

With reference to the company's core values – professional, honest, enthusiastic and ground-breaking – Veidekke has drawn up a Code of Conduct for its employees in collaboration with the Confederation of Norwegian Enterprise (NHO), the basic principle of which is freedom with responsibility. The guidelines are implemented through the active participation of the employee in the process, discussions and involvement in ethical issues that the company's activities raise. The company's Code of Conduct is accessible on Veidekke's intranet and website.

Reporting irregular activities

In-house rules have been drawn up for reporting irregular activities ("whistle-blowing") in the company, and an external ombudsman has been appointed. These guidelines are accessible on Veidekke's intranet.

Compliance with competition law

Veidekke has a comprehensive compliance programme which gives relevant employees an insight into the basic rules of competition law that apply to Veidekke's activities. The purpose of the programme is to increase understanding of and ensure compliance with relevant laws and regulations. This compliance programme is accessible on Veidekke's intranet and website.

11. REMUNERATION OF BOARD MEMBERS

The remuneration of the board members is determined by the Annual General Meeting based on the recommendations of the Nomination Committee. The remuneration reflects the Board's responsibility, expertise and time commitment, and is independent of the company's financial results.

None of the board members elected by the shareholders has special responsibilities over and above what follows from their office. See also note 30.

Several of the board members hold shares in Veidekke. These members are listed in note 20.

12. REMUNERATION OF SENIOR EXECUTIVES

A statement is given to the Annual General Meeting each year regarding the company's guidelines for remuneration of senior executives.

Salaries for the company's executives are based on information obtained from comparative statistics showing pay levels in other enterprises in the industry and other relevant enterprises. The company's strategy is to offer salaries that are competitive, but not above those of other similar companies. A bonus scheme has also been established in which the maximum payment to each individual is set at 30 per cent of their annual salary, based on budgets and target achievement in a pre-determined action plan.

Managers also participate in Veidekke's general share programme under which employees are invited each year to purchase Veidekke shares at a discount price and with financial assistance. See also "Shareholder information" on page 92.

Veidekke has no share option schemes. See also notes 5 and 30.

13. INFORMATION AND COMMUNICATION

Investor relations have a central place in Veidekke. The company attaches importance to providing high-quality information based on openness and transparency in a timely manner, thus ensuring that the share price reflects the assets of the company.

The management meets investors and the financial market both in Norway and abroad several times a year and makes active use of the feedback from these meetings. See also "Shareholder information" on page 92.

14. CORPORATE TAKEOVER

If an offer is received to take over the company's shares, the company's Board of Directors should not use authorisations or pass other resolutions that obstruct the offer unless this has been approved by the Annual General Meeting after the offer is known.

15. AUDITOR

The external auditor attends at least two board meetings a year, including the meetings dealing with the annual accounts and audit summary. Arrangements are made to ensure that the Board of Directors has the opportunity to ask the auditor questions without the management being present.

The auditor attends all the meetings of the Audit Committee. The plan for the execution of the audit is presented to the Audit Committee. At these meetings, the auditor also presents a report from the interim audit and a report for the annual accounts, in which the auditor gives his/her opinion on the quality of the internal control in all parts of the Group and discusses any accounting problems revealed by the audit.

Veidekke has guidelines for the scope and type of additional services provided by the auditor. Each year the auditor confirms to the Board of Directors in writing that he/she meets the stipulated requirements regarding independence.

See note 30 for more detailed information about the scope of the services provided.

16. CORPORATE SOCIAL RESPONSIBILITY

Veidekke requires that all business units in the company abide by the national laws and regulations in its three markets: Norway, Sweden and Denmark. A number of guidelines and models have been established that govern the company's behaviour in society, and the company works to continuously improve and implement these across the organisation.

The ISO guidance standard on social responsibility, ISO 26000, which was launched in December 2010, provides advice on how to integrate CSR into the organisation and how companies can best contribute to sustainable development through their activities. Veidekke uses ISO 26000 as inspiration and guidance for continuous improvement and systematisation of its corporate social responsibility work.

Veidekke uses the Global Reporting Initiative (GRI) as the basis for its corporate social responsibility reporting. For more information on corporate social responsibility in Veidekke, see Veidekke's CSR Report on http://veidekke.com/en.

Shareholder information

• • Shareholder value will be created through good profitability across the Group.
• • Dividends shall constitute at least 50 per cent of the annual profit.
• • Veidekke is and shall be a financially robust company.
• • Employee co-ownership is one of the keys to Veidekke's success.

Shareholder value

There is often a clear correlation between return on shares (measured by rising share prices and dividends) and the company's value creation over time. Value creation is primarily reflected in the company's current financial results.

Return on investment

Veidekke aims to give its shareholders a stable, high return on their investment in the company. Veidekke's return in 2014 was 57.3 per cent, compared with 5.0 per cent for the Oslo Stock Exchange.

2014 saw a total of 31.9 million Veidekke shares traded on the Oslo Stock Exchange, yielding a turnover rate of 23.9 per cent. By comparison, 26.9 million shares were traded in 2013, yielding a turnover rate of 20.1 per cent. There were 40,099 trades of Veidekke shares during the year, compared with 25,416 the previous year.

Dividend

Veidekke's dividend policy calls for a pay-out ratio of least 50 per cent of the profit for the year (pay-out ratio).

The Board proposes a dividend of NOK 3.5 per share for the 2014 financial year, compared with NOK 3.0 for 2013, corresponding to a pay-out ratio of 55 per cent, compared with 74 per cent in 2013. Shareholders will thus receive a direct return of 4.4 per cent, based on the share price at the end of the year, which was NOK 73.75. The dividend will be paid on 19 May 2015 to all the shareholders who are registered as owners on the date of the Annual General Meeting, which has been set for 5 May 2015.

Ownership structure

At the close of the year Veidekke had 7,328 shareholders, compared with 7,356 at the beginning of the year. The largest shareholders in the company are OBOS (23.0 per cent), Folketrygdfondet (9.6 per cent) and IF Skadeförsäkring AB (9.1 per cent). A total of 3,247 employees own shares in the company, with a combined stake of 17.2 per cent, compared with 18.4 per cent in 2013. During the year foreign ownership rose by 2.2 percentage points from 26.2 per cent to 28.4 per cent.

Veidekke's share capital at 31 December 2014 was NOK 66,852,471, divided into 133,704,942 shares of NOK 0.50 each. Veidekke has one share class, and each share carries one vote.

The development of the share capital since its initial public offering in 1986 is shown in the table on page 94.

Share distribution at 31 December 2014

To	No. of shareholders	No. of shares	Per cent
100	1 251	53 140	0.04
1 000	2 481	1 310 132	0.98
10 000	2 681	9 576 520	7.16
100 000	804	21 770 393	16.28
	111	100 994 757	75.54
	7 328	133 704 942	100.00

Employee co-ownership

Employee co-ownership has been one of the keys to Veidekke's success for several decades. Co-ownership fosters commitment and ensures an increased focus on risk and profitability. As co-owners the employees benefit from the company's value creation and gain a long-term perspective as both shareholders and employees. In line with Veidekke's strategy of employee co-ownership of the company, a sale of shares to employees was carried out in 2014 too. Two offers to the employees were organised in 2014: one for senior executives and one for all permanent employees. In May a total of 837 senior executives in Veidekke were offered the opportunity to purchase between 50 and 3,500 Veidekke shares each, with a choice between three options: option A with a 20 per cent discount and partial financial assistance (1,500–3,500 shares), option B with a 30 per cent discount and no financial assistance (1,500–3,500 shares) and option C with a 20 per cent discount and full financial assistance (50–1,500 shares). Some 46 per cent took advantage of the offer and ordered a total of 0.9 million shares among them. After rationalisation (in option A) the employees were awarded a total of 0.9 million shares. The shares were purchased at a price of NOK 52.19 and NOK 45.67, which corresponded to a discount on the average market price during the subscription period of 20 per cent and 30 per cent respectively. The shares in the offer to senior executives have a three-year lock-in period.

Largest shareholders at 31 December 2014

Name	Ownership share (%)
OBOS BBL	23.0
Folketrygdfondet	9.6
IF Skadeförsäkring AB	9.1
Skandinaviska Enskilda Banken a/c
Clients Account (NOM)	3.2
MP Pensjon PK	2.2
Verdipapirfondet DNB Norge (IV)	2.2
JP Morgan Chase Bank (Handelsbanken
Nordic Custody) (NOM)	1.9
Must Invest AS	1.9
Danske Invest Norske Instit. II.	1.2
JP Morgan Chase Bank London (NOM)	1.1
Total 10 largest	55.4
Employees (3 247 shareholders)	17.2
Other	27.4
Total	100.0

There is a list of the 20 largest shareholders on Veidekke's website, which is updated each week. The company's share registrar is Nordea.

In November the company offered shares to all permanent employees in Veidekke. The offer to buy between 50 and 1,700 shares in the company was extended to 6,130 employees. In all 1,944 employees took advantage of the offer and purchased a total of 1.0 million shares, after rationalisation of 0.5 million shares. This year, for the first time, people who paid cash were given a 30 per cent discount. The purchase price including a 20 per cent / 30 per cent discount on the average market price during the subscription period was NOK 51.64 / NOK 45.18 respectively. The shares in the offer to all permanent employees have a two-year lock-in period.

Authorisation to issue shares and purchase own shares

The Annual General Meeting has authorised the Board of Directors to issue up to 13 million shares. Since 1986 this authorisation has been successively renewed. The authorisation has primarily been used in connection with issues of shares to employees and minor mergers.

The Board of Directors is also authorised to acquire the company's own shares for a total nominal value of up to NOK 6.5 million, equivalent to just under 10 per cent of the share capital. Between 2006 and 2008 Veidekke bought back 9.3 million shares for NOK 421 million.

See also the section on corporate governance on page x for more information on the Board's authorisations.

		Amount paid in	No. of shares after	Share capital after
Form of issue		(NOK	increase (1,000)	increase (NOK million)	Adjustment factor
1986	Dispersion issue, price NOK 11.71	25.3	3 053	30.5
1986	Issue employees, price NOK 10.54	3.1	3 113	31.1
1988	Bonus issue 5:1		3 736	37.4	0.833
1989	Merger Hesselberg Vei		4 693	46.9
1989	Dividend shares	0.5	4 746	47.5	0.998
1990	Merger Folke A. Axelson A/S		4 802	48.0
1990	Dividend shares	0.6	4 861	48.6	0.999
1991	Merger Stoltz Røthing Haugesund A/S		4 912	49.1
1991	Merger Aker Entreprenør A/S		5 623	56.2
1995	Issue employees, price NOK 26.24	8.0	5 698	57.0
1998	Share split 1:2		11 396	57.0
2000	Share split 1:2		22 791	57.0
2000	Rights issue 6:1	191.2	26 590	66.5	0.981
2001	Issue employees, price NOK 42.00	19.0	27 039	67.6
2002	Issue employees, price NOK 43.00	11.6	27 309	68.3
2003	Issue employees, price NOK 44.00	13.2	27 609	69.0
2004	Issue employees, price NOK 66.00	66.0	28 609	71.5
2007	Share split 1:5		143 045	71.5
2007	Cancellation of shares		140 164	70.1
2008	Cancellation of shares		135 959	68.0
2009	Cancellation of shares		133 705	66.9

KEY FIGURES FOR THE VEIDEKKE SHARE	2014	2013	2012	2011	2010	2009
Market price at 31 December	73.75	48.8	44.0	38.7	52.5	49.8
- high	74.25	51.25	48.8	54.0	53.5	53.5
- low	46.0	43.5	37.9	33.7	38.0	23.0
Earnings per share1)	6.3	4.1	3.9	4.8	2.6	3.0
Market price/earnings (P/E)	11.7	11.9	11.3	8.1	20.2	16.6
Market price/book value per share (P/B)	3.6	2.7	2.7	2.7	3.4	3.3
Dividend per share	3.5	3.0	2.5	2.75	2.5	2.5
Pay-out ratio (%)	55.5	73.2	64.1	57.3	96.2	83.3
Turnover rate (%)	23.9	20.1	15.1	17.2	16.3	46.1
Earnings yield (%)	4.7	6.1	5.7	7.1	4.8	5.0
Outstanding shares (average million)	133.7	133.7	133.7	133.7	133.7	133.7
Market price at 31 December (NOK million)	9 861	6 525	5 883	5 174	7 020	6 659
No. of shareholders at 31 December	7 328	7 356	7 306	7 163	7 059	7 208

1) No dilution effect.

Inside information

The company's internal insider trading rules are stricter than is required by the Securities Trading Act. In addition to the extended statutory duty to investigate, the company observes the duty to obtain clearance for primary insiders, in order to ensure more thorough compliance with the duty to investigate. This is in keeping with the recommendations of the Oslo Stock Exchange. Veidekke has also drawn up internal rules, which apply to all employees in key positions and to senior union representatives. These rules entail, among other things, that trading in Veidekke shares is prohibited during the four weeks prior to the publication of the interim results and that employees must exercise great caution at all times when buying and selling Veidekke shares.

Investor relations

Veidekke's main aim for its investor market work is to build trust by ensuring that all parties are treated equally in terms of equal access to identical financial information. Dialogue with investors, analysts and other stakeholders in the financial markets helps ensure that the Group's underlying values are reflected in the pricing of the Veidekke share.

Interim results are reported in accordance with the financial calendar printed on the inside cover of this Annual Report. Veidekke holds presentations for shareholders, brokers, analysts, debt investors, the press and employees in connection with the disclosure of the annual and interim results. These presentations can be followed via webcast.

The company publishes information in Norwegian and English. Veidekke's quarterly reports, analyst presentations, economic activity reports, and other important press releases and presentations, as well as information about the Veidekke share, share price, shareholder information, and up-to-date lists of shareholders and analysts who follow the Veidekke share can be found on our website at: veidekke.com/en.

Articles of Association for Veidekke ASA

((Effective from 5 May 2010)

Article 1 The name of the Company is Veidekke ASA. The Company is a public limited company.

The Company's object is to engage in contracting activities, and other financial activities, including participation in other companies by investing in shares or in other manner.

• Article 2 The Company's registered office is in Oslo.
• Article 3 The Company's share capital is NOK 66 852 471 divided into 133 704 942 shares, each with a nominal value of NOK 0.50 fully paid and registered by name. The Company's shares shall be registered in the Norwegian Central Securities Depository.
• Article 4 Each share carries one vote at the Annual General Meeting of the Company.
• Article 5 The Company's Board of Directors shall have from seven to nine members. A maximum of six members and any alternates shall be elected by the Annual General Meeting. A maximum of three members and alternates for those members shall be elected by and from among the Company's employees in accordance with regulations issued in pursuance of provisions in the Public Limited Companies Act [Norway] relating to employee representation on the board of directors of public limited companies. The period of office is one year.

The Board of Directors elects its chairperson.

The age limit for Board members is set at 70. Any Board member attaining the age of 70 shall remain in office until the next Annual General Meeting.

Article 6 The Company shall have a nomination committee. The committee shall have at least three members. The Annual General Meeting shall elect the nomination committee's chairperson and other members and determine the remuneration of the committee's members. The term of office is one year.

The nomination committee shall submit a recommendation to the Annual General Meeting on the election of members to the nomination committee. Nominated candidates should be shareholders or representatives of shareholders. The proposal for a new nomination committee shall be such that the majority of the new nomination committee is independent of the Board of Directors and senior executives of the Company. The nomination committee may not propose the Company's chief executive officer or other senior executives as members of the nomination committee.

The Board of Directors shall submit a recommendation to the Annual General Meeting on the remuneration of the nomination committee's members.

The nomination committee shall submit a recommendation to the Annual General Meeting on the election of and fees to be paid to members of the Board of Directors. The nomination committee shall justify its recommendations.

• Article 7 Two members of the Board jointly or one member of the Board and the President and CEO jointly shall have the right to sign on behalf of the Company.
• Article 8 The Annual General Meeting is held each year no later than the end of May at a time and place determined by the Board of Directors. Notice shall be sent in writing at least three weeks in advance. The notice shall be accompanied by the agenda.

Shareholders or proxies for those shareholders who wish to attend and vote at the Annual General Meeting must give notification to this effect to the Company before the deadline stated in the notice. The deadline must not expire more than five days prior to the Annual General Meeting.

The Annual General Meeting shall:

• Adopt the annual accounts and annual report, including employment of profit or covering of loss, and approve the distribution of a dividend
• Elect members of the nomination committee
• Determine the number of Board members, elect the Board members who by law shall not be elected by the employees and any alternates for the Board members elected by the shareholders
• Consider the Board of Directors' statement on remuneration to senior executives
• Deal with other business that is by law to be addressed by the General Meeting.
• Article 9 Unless otherwise provided for in these Articles of Association, the provisions in the Public Limited Companies Act [Norway] shall apply.

veidekke.com/en

Investor Relations Telefon +47 21 05 77 22