Veidekke — Annual Report 2015

Apr 19, 2016

Annual report 2015

CONTENTS

4	ABOUT VEIDEKKE
3	From the President and CEO
5	Key figures
6	Business areas
9	Project execution in Veidekke
10	Selected projects in 2015
14	The Board of Directors of Veidekke ASA
17	The Corporate Management of Veidekke ASA
19	BOARD OF DIRECTORS' REPORT
19	Construction operations
21	Property development operations
22	Industrial operations
22	Other operations
22	Strategic goals
23	Organisation
24	Occupational health and safety
25	The external environment
26	Corporate governance
26	Remuneration of senior executives
26	Shareholders and the stock market
26	Financial structure and capital structure
26	Risk and uncertainty factors, market situation
28	Post balance sheet events
30	ANNUAL FINANCIAL STATEMENT VEIDEKKE GROUP
30	Income statement Veidekke Group
31	Statement of financial position Group
32	Statement ot changes in equity Group
33	Statement of cash flows Group
35	NOTES VEIDEKKE GROUP
90	ANNUAL FINANCIAL STATEMENT VEIDEKKE ASA
90	Income statement Veidekke ASA
91	Statement of financial position Veidekke ASA
93	NOTES VEIDEKKE ASA
98	CORPORATE GOVERNANCE
104	AUDITOR'S REPORT
106	SHAREHOLDER INFORMATION
109	ARTICLES OF ASSICIATIONS VEIDEKKE ASA

STEADY COURSE AHEAD

There was a high level of activity in the construction and civil engineering market in 2015, and through good customer solutions, coordinated teamwork with our partners and solid work throughout the entire organisation we have achieved good results and strengthened our positions.

2015 was a year of growth and progress for Veidekke, in terms of both revenue and profi t. Activity levels were high in residential development and construction, non-residential construction and infrastructure, and strong customer positions and much solid work has resulted in a historically large order backlog. The Group's fi nancial position is good, and this combined with healthy profi ts means we have great fl exibility and a sound basis for increased dividends to our shareholders.

In Norway Veidekke is a leader in transport infrastructure projects, both newbuild and maintenance. We are well under way with the construction of the new four-lane motorway on national highway E39 between Os and Bergen,

which is Norway's largest ever road contract, and in 2015 we were awarded major road projects in Bodø and Kongsberg too. Industrial continues to have a high level of activity and deliver good results. During the course of the year Veidekke produced and laid some 2.3 million tonnes of asphalt on Norwegian roads. Building construction operations also continued to make good progress with stable healthy margins and an order backlog that at year-end was 40% higher than the previous year. A large part of this was residential building projects. All in all we sold homes for over NOK 6.5

billion in Sweden and Norway in 2015 – double the fi gure from the previous year!

Good collaboration between our property development and construction operations right from the outset, with acquisition of land and property and concept development, is an important key to our success in the residential market. We still regard the markets in and around the largest cities as very attractive, and during the year we have therefore invested in land and property that will provide new activity in the coming years.

Sweden is Scandinavia's largest construction and civil engineering market, and through targeted efforts in recent years we have strengthened our market positions in residential buildings, non-residential buildings and civil engineering. We are now one of the major players in the industry, providing us with good business opportunities and better access to expertise. The focus on residential projects has paid off, and last year we sold over 1,000 units in Sweden. This is a fourfold increase from three years ago. We have now started construction of SEB's new offi ces in Stockholm. With a fl oor area of 90,000 m2, this is one of Sweden's largest ever offi ce buildings and is being built jointly by our Swedish and Norwegian construction operations.

Veidekke's construction operations in Denmark have maintained their good profi tability. Early involvement of and close collaboration with customers and partners gives good results for both us and our customers, and the proof of the success of this strategy is the fact that customers keep returning with new, demanding projects.

Veidekke is working diligently and systematically to improve occupational health and safety, and our absolute fi rst priority is a safe workplace. Last year we saw a 22% decrease in the number of injuries, and I am delighted that we are now reaping the fruits of our tireless, long-term health and safety work.

Within the area of climate change too, we took a number of important steps forward in 2015, including committing to the UN climate change goals. This means that Veidekke will help reduce greenhouse gas emissions by offering sustainable solutions to our customers and that we will reduce emissions from our own production.

Looking ahead, we expect growth in the Scandinavian market. In Norway activity is still high in the construction and civil engineering market, but we are seeing growing regional differences and a decline in the market in areas affected by the decline in the oil sector. In Sweden we expect a continued good market in all sectors, and in Denmark there are indications that the market is moving in the right direction after several years of recession. the

We currently have a solid order situation, positive market prospects and the fi nancial strength to be able to take advantage of new opportunities. Nevertheless, our most valuable resource is our 7,000 employees. Together, this gives us plenty of room to manoeuvre and good momentum as we head into 2016.

We are very proud of the fact that every day we are helping build the future.

Arne Giske President and CEO

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, develops residential projects, maintains roads, and produces asphalt and aggregates. Veidekke is listed on the Oslo Stock Exchange. The company has a revenue of NOK 24.5 billion (2015) and has always posted a profi t since it was founded in 1936.

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

The company's operations are built on three solid pillars: People, involvement and multi-local.

People are the company's most important resource. Targeted recruitment and internal training and skills development programmes ensure that the business can be run effi ciently and well.

Involvement means we give priority to close collaboration with our customers, suppliers and consultants in all phases of a project, thereby ensuring good process fl ow, effi cient use of resources and good customer solutions.

The concept multi-local refl ects Veidekke's strong local roots and good local knowledge, at the same time as we have both the strength and the expertise to execute complex projects throughout the whole of Scandinavia.

PROFIT BEFORE TAX NOK 1 BILLION PROFIT MARGIN 4.3%

VEIDEKKE'S HISTORY

Veidekke was founded in 1936 as a cobblestone cutting and laying company in Østfold county. The business gradually expanded and took on road improvement projects in several municipalities and counties in eastern Norway. The real breakthrough came in 1948, when the small company was awarded the major civil engineering contract for the construction of Sola Airport in Stavanger. With time Veidekke became a central player in airport construction in Norway, and in the late 1950s it undertook its fi rst overseas assignment: construction of an airport in Ethiopia.

Large civil engineering projects accounted for the bulk of the business in the 1960s and '70s, and in the following decades the company became a sizeable road builder. Other major civil engineering projects, such as construction of power stations and large industrial facilities for the oil sector, were also added as new market areas.

The 1980s were marked by structural changes in the construction industry, with several of the larger construction companies merged. Veidekke's strategy was to continue to develop as an independent company, marking the beginning of an era of acquisitions. A total of ten companies were merged into the Group during this decade. Since then, over 70 other companies have joined the Group. In the 1980s Veidekke started expanding into the residential and non-residential construction market. Veidekke was listed on the Oslo Stock Exchange in 1986.

KEY FIGURES 1)

NOK million	2015	2014
Revenue, segment	24 509	23 863
Profit before tax, segment	1 043	967
Business area Construction	644	549
Business area Property Development	306	280
Business area Industrial	190	210
Business area Other	-97	-73
Earnings per share, segment	6.5	5.8
Dividend per share	4.0	3.5
Profit margin, segment (per cent)	4.3	4.1
Revenue, IFRS 2)	24 225	24 027
EBITDA, IFRS	1 316	1 383
EBIT, IFRS	944	1 045
Profit before tax, IFRS	950	1 055
Earnings per share, IFRS (NOK) 3)	5.7	6.3
Net interest-bearing debt	606	-274
Total order backlog 4)	24 814	16 792

1) The comments in the report relate to figures taken from the segment accounts. Comments to the IFRS accounts are specified in the text.

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.

4) 18-month asphalt ordrers under the Industrial segment have been omitted from Q1 2015, and precious years' figures have been restated.

The acquisition of Aker Entreprenør in 1991 resulted in a doubling of the company's revenue. Property development was also added as a new business area during this decade. In 1998 the company established civil engineering operations in Gothenburg in partnership with local players, and this marked the beginning of Veidekke's development as a Scandinavian construction company. In 2000 Veidekke acquired Denmark's oldest and fourth largest construction company, Hoffmann A/S, and in the same year the company also established construction and property development operations in Sweden.

Today Veidekke is Norway's largest and Scandinavia's fourth largest construction and property development company. The ambition is to continue to develop the company within the existing product and market segments, based on a strategy of profitable growth.

BUSINESS AREAS

CONSTRUCTION OPERATIONS

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 in the south and Kiruna in the north.

Building Construction builds private and public non-residential buildings and residential buildings. Private non-residential buildings are mainly offi ce buildings, shopping centres and hotels. Public non-residential buildings are primarily schools and healthcare buildings. Building construction operations account for 50% of Veidekke's total revenue and include residential projects for Veidekke's property development operations.

Civil Engineering accounts for 27% of Veidekke's total

revenue. Transport infrastructure projects (road and rail) provide the majority of Civil Engineering's revenue. The portfolio also includes hydropower and wind farm projects, industrial plants and other facilities such as underground car parks, airports and quays, for example.

Construction and civil engineering activities are carried out through Veidekke Entreprenør AS (Construction Norway) in Norway, Veidekke Entreprenad AB (Construction Sweden) in Sweden and Hoffmann A/S (Construction Denmark) in Denmark.

REVENUE NOK 19.8 BILLION

PROFIT BEFORE TAX NOK 644 MILLION PROFIT MARGIN 3.3%

PROPERTY DEVELOPMENT

Veidekke's property development operations are concentrated in and around the largest cities in Norway and Sweden. Veidekke Eiendom AS (Property Development Norway) in Norway and Veidekke Bostad AB (Property Development Sweden) in Sweden purchase sites and develop them into residential buildings for sale to the end customer, while Veidekke's construction operations are responsible for the construction of the residential buildings. Construction operations in Norway and Sweden are involved from the earliest phase, before the site has even been purchased, to ensure identifi cation of opportunities and risks. The close collaboration between Veidekke's property development and construction operations provides synergies and is central to good profi tability in Veidekke's residential segment.

Together the construction and development of residential buildings constitute 21% of Veidekke's total revenue. In Sweden Veidekke is generally the sole owner of residential projects, while in Norway most of the projects are done with partners. The choice of business model is assessed individually for each project, and the project's scope and risk are the decisive factors.

Property Development has a long-term perspective. It takes several years from a site being purchased to the home being handed over to the buyer. For this reason, the land bank is strategically important and it is optimised through purchases and sales in accordance with the current strategy. At year-end 2015 the Group's land bank consisted of 11,800 units: 5,050 units in Norway and 6,750 in Sweden.

PROFIT BEFORE TAX NOK 306 MILLION RETURN ON INVESTED KAPITAL 13.1%

INDUSTRIAL

Veidekke Industri AS (Industrial) is the largest asphalt contractor in Norway and the second largest producer of aggregates. Industrial is also a major player in the operation and maintenance of public roads in Norway. In 2015 Industrial accounted for approximately 16% of Veidekke's total revenue.

Industrial's revenue for the 2015 fi nancial year is distributed between the three business units as follows: Asphalt 59%, Road Maintenance 29% and Aggregates 12%.

The business area Industrial has 28 asphalt plants and 29 quarries located across Norway. In 2015 the company laid more than 2.3 million tonnes of asphalt, had 26 ongoing road maintenance contracts, and sold 7.3 million tonnes of aggregates. The Norwegian Public Roads Administration is Industrial's largest single customer.

PROJECT EXECUTION IN VEIDEKKE

Veidekke's operations consist largely of project-based activities. The company's primary tasks are therefore obtaining projects and executing them. Thorough work on preparing tenders, project design and planning, and execution are essential for the company to operate profitably.

Each year Veidekke submits an average of about 1,500 tenders, has around 500 ongoing projects, and hands over some 350 completed projects to customers. To ensure good project execution, we must follow specific working methods and use good tools.

Veidekke has adopted a participative approach based on the LEAN Construction principles. This means that we strive for close collaboration with customers, architects, consultants and subcontractors right from the planning and design phase. In this way we can pave the way for optimal solutions for the customer and good production flow with efficient and safe operations.

Veidekke's working methods include Participative Planning and Building Information Modelling (BIM) in the design, planning and execution phases.

PARTICIPATIVE PLANNING

Participative Planning is a project progress planning methodology that has been further developed by Veidekke on the basis of the LEAN Construction principles and entails plans being drawn up jointly by all parties involved. The objective is to minimise delays, avoid adverse events and improve the flow of production.

Participative Planning builds on five main elements:

• Planning is done within both long-term and short-term frameworks.
• Systematic analyses are conducted to identify and avoid any barriers to production.

• Each strategic plan consists of several detailed operational plans.

• There is a highly defined meeting structure.

• There are continuous, systematic risk analyses.

The widespread use of Participative Planning in Veidekke has resulted in increased efficiency and improved project economy, as well as ensuring greater wellbeing and less stress for the people on the ground. Veidekke won the Norwegian building industry's 2015 Innovation Award for its work on this methodology.

BUILDING INFORMATION MODELLING (BIM) AND VIRTUAL DESIGN AND CONSTRUCTION (VDC)

Building Information Modelling (BIM) is a technology that facilitates exchange of information between the various parties involved in a construction project. Digital models of the construction are prepared containing the detailed specifications for all the various disciplines in the project, including estimates and calculations. Visualisation enables analysis of various issues and makes it easier to communicate what needs to be built and how. BIM is used both within and across the individual disciplines.

Virtual Design and Construction (VDC) is a strategy for how the potential inherent in the BIM model can best be used. It involves three-dimensional models (3D) of the building and models that visualise the progress of the actual construction process (4D). The organisation, work processes, materials, etc. are defined in the model.

Veidekke collaborates with Stanford University on training in VDC. At the close of 2015, 37 Veidekke employees are certified in this methodology, and 30 more are scheduled to be certified in summer 2016.

SELECTED PROJECTS IN 2015

KLÄTTERTREDET IN KVILLEBÄCKEN, GOTHENBURG

• Client: Veidekke Bostad AB (Property Development Sweden)
• Architect: Semrén & Månsson
• Contractor: Veidekke Entreprenad AB (Construction Sweden)
• Construction period: 2011–2017
• Scope: 256 apartments in three phases: Cyklisten (75), Klätterträdet (81), and Greenroof (100)

PIONEERING URBAN DEVELOPMENT IN GOTHENBURG

On the island of Hisingen outside Gothenburg, a brand new neighbourhood is springing up, planned and built according to stringent environmental requirements. Several developers are involved, and by 2017 2,000 apartments will be completed and a number of restaurants and shops will be in operation. Veidekke is a key player in this ambitious development project.

Klätterträdet is classified according to the Sweden Green Building Council (Miljøbyggnad)'s Silver standard, entailing very strict standards regarding choice of materials and energy consumption. For the residents, this will mean minimal heat loss and excellent soundproofing. The project is rated energy class A. There will be low car parking coverage, but excellent arrangements for other, more environment-friendly means of transport; for example each apartment will have several bicycle parking spaces.

A 400 m2 roof terrace will provide the residents with space to grow vegetables and for social and recreational activities. The green roof is the first of its kind in Gothenburg and is a defining feature of the project. The new suburb meets home buyers' wishes for a central location, good quality and high environmental standards, and easy access to green spaces.

VEIDEKKE AWARDED NORWAY'S LARGEST ROAD CONTRACT

National highway E39 between Svegatjørn and Rådal is part of the new main road between Os and Bergen. The 12.7 km stretch that Veidekke is going to build is the largest road contract ever awarded in Norway.

The contract comprises the construction of two two-bore tunnels: the Skogafjell tunnel, which is 1.5 km in length, and the Lyshorn tunnel (9.2 km) as well as 2 km of four-lane main road. Veidekke is also going to build two intersections with flyovers, a 1.7 km water tunnel, bridges, portals and supporting walls, as well as an extensive water and drainage facility. Veidekke's industrial operations will be responsible for laying the asphalt.

At the most, a team of 250 people will be working on this project on a daily basis. Three temporary building units with a total of 130 rooms will house construction workers, an administrative team of 45 and a cooking team of six.

As one of Norway's largest apprenticeship employers, Veidekke will have between five and ten apprentices working in connection with this contract. In addition, four trainees will work on the project.

NATIONAL HIGHWAY E39 SVEGATJØRN–RÅDAL

• Client: Norwegian Public Roads Administration
• Contractor: Veidekke Entreprenør AS (Construction Norway)
• Construction period: 2015–2020
• Contract value: NOK 2.3 billion

ROAD MAINTENANCE CONTRACT 2003 – NORTH CAPE

• Client: Norwegian Public Roads Administration
• Contractor: Veidekke Entreprenør AS (Construction
• Norway) and Veidekke Industri AS (Industrial)
• Maintenance period: 2011–2016
• Contract value: NOK 204 million

NORWAY'S NORTHERNMOST ROAD MAINTENANCE CONTRACT

In 2011 Veidekke was awarded the contract to maintain 376.5 km of road in the municipalities of Porsanger, Kvalsund, Måsøy and Nordkapp until 2016. Average daily traffi c on the stretches of road covered by the contract varies between 30 and 4,500 vehicles.

A maintenance contract in Norway's northernmost county entails special challenges during the winter months. Wind and drifting snow, combined with rapidly changing conditions and a high risk of avalanches, make for extremely demanding working conditions. Even when the sun is shining, wind and drifting snow can make it diffi cult to keep the roads open. The contract encompasses six stretches that can only be passed in convoy behind a snow plough. One of these convoy stretches (Skarsvåg–Nordkapp, 12.5 km) is closed all winter apart from two daily convoy departures, conditions permitting.

A single winter season involves approximately 850 hours of convoys, 9,400 tonnes of grit for spreading and 850 tonnes of sand for warm wetted sanding to keep roads navigable and safe. In places, the snow berm can be up to 5 m high, and although most roads are usually snow-free from April or May, there is snow on the roads in the highest mountains until late summer.

GREEN URBAN DEVELOPMENT IN TRONDHEIM

A 10-hectare plot in a disused industrial area between Lade and central Trondheim is being given a new lease of life – Veidekke and Lilleby Eiendom AS are developing a new neighbourhood called Nye Lilleby.

A polluted industrial area is being transformed into a green oasis with car-free residential areas and 3.8 hectares of parks and natural areas. The project is centrally located with easy access to both urban service facilities and countryside. Nye Lilleby has a high environmental profi le with low car parking coverage as part of Trondheim's increasing commitment to ecological solutions. The architecture features exciting designs and extensive use of timber. At year-end, construction work had started on approximately 100 units, and work will start on another 60 during the course of Q1 2016.

NYE LILLEBY IN TRONDHEIM

• Client: Lilleby Eiendom AS (in which Property Development Norway has a 50% share)
• Architect: Lund Hagen Arkitekter / HUS Arkitekter AS
• Contractor: Veidekke Entreprenør AS (Construction Norway)
• Construction period: 2015–2026
• Scope: 1,200 apartments and small houses

Nye Lilleby is a learning arena for new employees, and two apprentices and two trainees will work on the project.

VEIDEKKE IN NORWAY AND SWEDEN COLLABORATING ON HUGE PROJECT IN STOCKHOLM

Veidekke's building construction operations in Sweden and Norway have been awarded the turnkey contract for what will be one of Sweden's largest office buildings.

Office premises with a floor area of 90,000 m2 will accommodate 4,500 office workspaces, as well as restaurants and cafés in three buildings. The buildings are being constructed in compliance with the BREEAM Excellent standard, which encompasses and sets requirements to the entire process – such as the demolition of existing buildings, energy consumption, indoor air quality, waste management, community impact and promotion of sustainable travel choices.

A construction project of this magnitude is complex and very demanding in terms of planning and organisation, coordination,

PYRAMIDEN - OFFICES FOR SEB IN ARENASTADEN, STOCKHOLM

• Client: Fabege
• Architect: Alessandro Ripellino Arkitekter / Arkitekterna Krook & Tjäder AB
• Contractor: Veidekke Entreprenad AB (Construction Sweden) and Veidekke Entreprenør AS (Construction Norway)
• Construction period: 2014–2018

expertise and communication. At the most, 600 workers from some ten countries and 40 different companies will be working on the project at the same time.

DANISH CENTRE FOR PARTICLE THERAPY (DCPT), AARHUS UNIVERSITY HOSPITAL

• Client: Region Midtjylland
• Architect: aarhus arkitekterne, Alectia and Royal Haskoning DHV
• Contractor: Hoffmann A/S (Construction Denmark)
• Construction period: 2016–2018

HOFFMANN BUILDING STATE-OF-THE-ART CANCER CENTRE IN AARHUS

The Oncology Department at Aarhus University Hospital is getting

a new national research and treatment centre that will use particle radiotherapy to treat cancer. The centre will be the first of its kind in Denmark. It will be able to provide 30,000 treatments a year, which equates to around 1,200 patients a year.

The 9,500 m2 centre has to be built according to very special building specifications in order to prevent radiation emission to the surrounding environment. The clinical part of the centre will have CT and MRI scanners, and an underground bunker is being built to house a proton accelerator and three beam delivery units. The concrete walls will be 4 m thick and will feature advanced solutions for ventilation, cooling and collection of waste water.

The centre is scheduled to start treating patients in autumn 2018.

THE BOARD OF DIRECTORS OF VEIDEKKE ASA

Born 1949

Chair

Mæland has been a member of the Board of Directors since 2002 and its chair since 2009. He was previously President and CEO of OBOS and currently sits on a number of boards.

Born 1966

Bakstad has been a member of the Board of Directors since 2010. She is Executive Vice President, Division Mail, at Norway Post.

MARTIN MÆLAND GRO BAKSTAD HANS VON UTHMANN

Born1958

Von Uthmann has been a member of the Board of Directors since 2010. He is a senior partner in the consulting firm Neuman & Nydahl in Stockholm.

Born 1956

Billström has been a member of the Board of Directors since 2010. She is the CEO and owner of the recruitment company Inchefia AB in Stockholm.

Born 1955 Deputy chair

Dyb has been a member of the Board of Directors since 2012. Previous positions include President and CEO of Siemens Norway and he currently sits on a number of boards.

ANNIKA BILLSTRÖM PER OTTO DYB ANN CHRISTIN GJERDSETH

Born 1966

Gjerdseth has been a member of the Board of Directors since 2012. She is Director – Controls and Data Management at FMC Technologies.

Born 1962

Employee representative Ramsdal has been a member of the Board of Directors since 2008. He previously worked as a crane operator and concrete worker in Construction Norway.

INGE RAMSDAL ODD ANDRE OLSEN ARVE FLUDAL

Born 1961

Employee representative

Olsen has been a member of the Board of Directors since 2011. He previously worked as an iron fixer in Construction Norway.

Born 1970

Employee representative Fludal has been a member of the Board of Directors since 2015. He is a construction manager in Construction Norway.

THE CORPORATE MANAGEMENT OF VEIDEKKE ASA

ARNE GISKE

Born 1957 President and CEO

Arne Giske has been President and CEO since 1 July 2013. He joined Veidekke as Executive Vice President/CFO in 2001. Giske has a Master's degree in Business and Economics from BI Norwegian Business School and an MBA from the University of Wisconsin.

DAG ANDRESEN

Born 1962 Executive Vice President Construction Norway

Dag Andresen has been employed at Veidekke since 1986 and has been Executive Vice President since 1994. Andresen has a Master's degree in Business and Economics from BI Norwegian Business School.

JØRGEN WIESE PORSMYR

Born 1972 Executive Vice President Industrial, Property Development & Denmark

Jørgen Wiese Porsmyr has been employed at Veidekke since 1995 and has been Executive Vice President since 2006. Wiese Porsmyr holds a Master's degree in Business and Economics from the Norwegian School of Economics (NHH).

JIMMY BENGTSSON

Born 1966 Executive Vice President Sweden

Jimmy Bengtsson headed Arcona AB from 2007 to 2015. He took over as Executive Vice President on 1 January 2016. Bengtsson is a graduate engineer from the Royal Institute of Technology in Stockholm.

HEGE SCHØYEN DILLNER

Born 1967

Executive Vice President, responsible for HR, Health and Safety, Environment, Communications and Legal

Hege Schøyen Dillner has been Executive Vice President since 2013. She holds a Master's degree in education from the University of Oslo.

TERJE LARSEN

Born 1961

Executive Vice President, responsible for Accounting & Finance, IT, Procurement and Strategy

Terje Larsen has been employed at Veidekke since 2001 and has been Executive Vice President since 2013. Larsen has a Master's in Business and Economics from BI Norwegian Business School and an MBA from the University of Wisconsin.

BOARD OF DIRECTORS' REPORT

Veidekke achieved good results in 2015. Revenue growth was 3%, and profit before tax was up 8% compared with 2014.

The construction and civil engineering market was good in Norway and Sweden in 2015, with several new projects in both the public and the private sector. In Norway, investments in the construction and civil engineering market were at a high level, but growth was weaker than in previous years due to reduced activity in the markets in southern and western Norway that have been strongly impacted by the decline in the oil sector. In Sweden, the economic upturn led to investment growth in all the market segments, and particularly in residential buildings. In Denmark, investments in the construction and civil engineering market remained at a low level throughout the year, despite the continued recovery in the Danish economy after several years of recession.

HIGHLIGHTS - GROUP

Veidekke'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. Unless otherwise specified, all the figures in the annual report are taken from the segment accounts, in which residential projects are accounted for on a continuing basis.

The Group had revenue of NOK 24.5 billion in 2015, up from NOK 23.9 billion in 2014, and profit before tax increased to NOK 1,043 million from NOK 967 million in 2014.

Construction operations saw revenue growth of 7% in 2015 after a strong increase in the order backlog in the second half of 2014 and first part of 2015. The growth was in building construction operations in Norway and Sweden, while civil engineering operations in both countries had slightly lower revenue compared with 2014. In Denmark, revenue decreased as a result of the fact that several major building construction projects were completed during the year, but no new projects of a similar size were initiated. In terms of profit, Construction performed very well in 2015, with a combined increase of 17% from 2014. This profit growth is primarily attributable to the Norwegian operations and is due to increased volumes in building construction operations and improved profitability in civil engineering operations. Profitability was generally good in the construction projects in Norway and Denmark, while Construction Sweden had low profitability in 2015.

Residential sales were very good in both Norway and Sweden, and the number of residential units sold increased by 84% in 2015 compared with 2014. The high demand led to a 51% increase in residential production in 2015. The increase was greatest in the Swedish operations, which had approximately 60% more units under construction at the close of 2015 than the previous year. The increase in sales and production contributed to profit growth of 9% in Property Development.

Industrial reported stable revenue compared with 2014. Activity within Asphalt fell slightly, mainly due to fewer deliveries to new road projects, while Road Maintenance and Aggregates saw higher levels of activity. The profit for Industrial as a whole was 10% lower in 2015 than the previous year. Both Asphalt and Aggregates achieved good profitability, but poor profitability in parts of the project portfolio in Road Maintenance dragged the combined figure down.

High order intake in both Building Construction and Civil Engineering resulted in a 48% increase in the order backlog in 2015, compared with the end of 2014. However, there are major regional differences, and in the markets that are most strongly affected by the decline in the oil sector, orders have been significantly lower in 2015 than in previous years.

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), and profit before tax in accordance with IFRS was NOK 950 million for 2015. This figure is lower than the profit before tax in the segment accounts, and the difference is due to the increase in the number of residential units under construction and few project handovers during the year (see note 2).

Veidekke had net interest-bearing debt of NOK 606 million at the end of 2015, an increase of NOK 880 million from the close of 2014. The increase in net interest-bearing debt is partly an effect of several acquisitions in 2015, with a combined purchase price of NOK 411 million.

In line with Veidekke's dividend policy and as a result of its strong financial position, the Board proposes an ordinary dividend of NOK 4.0 per share for the 2015 financial year. This corresponds to a dividend pay-out ratio of 70%.

OPERATIONS IN 2015

CONSTRUCTION OPERATIONS

Veidekke's construction operations saw revenue increase by 7% in 2015. Much of the revenue growth is due to strong growth in the Swedish construction and civil engineering market.

Profit before tax rose 17% to NOK 644 million. The profit growth is attributable to increased activity in the Norwegian and Swedish operations and increased profitability in civil engineering operations in both countries. The profit margin was 3.3%, compared with 3.0% in 2014.

The order backlog for Construction operations increased by 50% to NOK 23.7 billion, from NOK 15.8 billion at the close of 2014. The growth was in building construction operations in Norway and Sweden. The order backlog for the Danish operations was at the same level as at the beginning of the year. Order intake in 2015 was NOK 27.4 billion.

CONSTRUCTION NORWAY

There was growth in the construction and civil engineering sector in 2015 with an upswing in the residential market and increased civil engineering activity. However, the decline in the oil sector led to increased regional differences in activity levels. The number of new residential projects increased through the year, while activity in public and private non-residential buildings remained stable. In recent years, construction and civil engineering projects have increased in size and complexity. This places high demands on organisation, planning, expertise and ability to perform. Further growth is expected in the construction and civil engineering market in the future, driven mainly by investments in transport infrastructure.

The Norwegian construction operations had revenue of NOK 12.0 billion in 2015, which is on a par with the revenue in 2014. There was good growth in building construction operations, while civil engineering operations saw a decline due to low order intake of major infrastructure projects in 2014.

Profit before tax increased to NOK 493 million in 2015 from NOK 423 million in 2014. This profit growth is primarily attributable to increased volumes in building construction operations and improved profitability in civil engineering operations. The profit margin rose to 4.1% from 3.6%, with a profit margin of 4.4% (4.2%) in Building Construction and 3.3% (2.3%) in Civil Engineering.

The order backlog was strengthened significantly and totalled NOK 15.2 billion at the end of the year, compared with NOK 10.4 billion at the end of 2014. Civil Engineering had the highest order intake. The order backlog at the close of 2015 consisted of 65% (70%) building construction projects and 35% (30%) civil engineering projects. Several major transport, residential and non-residential building projects were awarded during the year.

Major projects awarded in 2015:

• National highway E39 Svegatjørn Rådal for the Norwegian Public Roads Administration. 12.7 km stretch with tunnels, open roads, bridges, water and sewage installations, etc. Contract value NOK 2.3 billion.
• Portalen in Lillestrøm. Hotel, shops and residential buildings for OBOS. Contract value NOK 900 million.
• National highway E134 Damåsen Saggrenda for the Norwegian Public Roads Administration. 5 km stretch with tunnels, open roads, bridges, intersections with flyovers, etc. Contract value NOK 727 million.
• Oppsal Centre in Oslo, residential units and commercial premises for OBOS. Contract value NOK 525 million.
• Moholt 50 50. Student accommodation for the Student Welfare Organisation in Trondheim.
• Contract value NOK 451 million.
• Kvartal 33 in Lillestrøm. Residential buildings for Veidekke Eiendom AS (Property Development Norway) and Nedre Romerike AS. Contract value NOK 300 million.

Construction Norway completed two acquisitions in 2015. In Q3 the company acquired the onshore construction operations of Reinertsen AS, which has building construction operations in Bodø, Trondheim and Oslo as well as mobile civil engineering operations. The acquisition was a purchase of assets and liabilities and comprised taking over three major projects with a total order backlog of NOK 594 million and 215 employees.

The acquisition of 80% of the shares in the civil engineering contractor Leif Grimsrud AS and its subsidiaries Leif Grimsrud Entreprenad AB and Øst AS was completed in Q4. The company primarily operates in Østfold county. The three companies have 260 employees, and the acquisition increased the order backlog by NOK 597 million.

In Q4 Veidekke also signed a letter of intent to acquire 80% of the shares in the civil engineering contractor Tore Løkke AS. This company primarily operates in Trøndelag, but also has mobile resources that undertake assignments all over Norway. Tore Løkke AS has 78 employees and had revenue of NOK 200 million in 2014. The transaction was completed in January 2016.

CONSTRUCTION SWEDEN

The Swedish economy saw strong growth in 2015, particularly in the construction and civil engineering sector. The residential market performed very well, and there was good access to non-residential building projects. During the year several of the major infrastructure projects in Stockholm and Gothenburg were initiated, giving prospects of growth in the civil engineering sector in 2016 and 2017.

Construction operations in Sweden saw revenues increase by 28% to NOK 6.2 billion from NOK 4.8 billion in 2014. The revenue growth was in building construction operations, while civil engineering operations had slightly lower revenue. While the growth in building construction operations put pressure on Veidekke's capacity, especially in the Stockholm area, civil engineering operations still have the capacity to undertake new major infrastructure projects.

Profit before tax increased to NOK 56 million from NOK 19 million in 2014. The profit margin was 0.9%, compared with 0.4% the previous year. Despite the substantial growth, there was no significant improvement in profitability in building construction operations compared with the previous year. The weak profitability is mainly due to write-downs on some residential projects during the year. The profit in civil engineering operations increased significantly from last year, primarily because the results for 2014 included a major write-down on an infrastructure project. Profitability in civil engineering operations was satisfactory, but spare capacity and high costs related to tendering work dragged the result for the year down.

The order backlog increased by 58% measured in local currency and was NOK 7.2 billion at year-end, compared with NOK 4.2 billion at the end of 2014. The order backlog consisted of 75% (70%) building construction projects and 25% (30%) civil engineering projects. Building Construction had the highest order intake, winning several major contracts in both public and private non-residential buildings in 2015. Growth in the residential market and collaboration with Veidekke's property development operations in Sweden have also boosted the order intake of residential projects during the year.

Major projects awarded in 2015:

• SEB-huset in Stockholm for Fabege AB. Three office buildings with a total area of 90,000 m2 and 4,400 workplaces. This is a joint project with Veidekke Entreprenør AS (Construction Norway), and the total contract value is NOK 1.7 billion. The share of the Swedish operations amounts to NOK 1.4 billion, while the share of the Norwegian operations amounts to NOK 338 million.
• Medicinaren 25. Research facilities in Huddinge for TKV Fastighets AB. Contract value NOK 496 million.
• SÖS By 72. Hospital in Stockholm for Stockholm County Council. Contract value NOK 430 million.
• Skansen 18 in Stockholm. Remodelling of a hotel and shops for Stena Fastigheter. Contract value NOK 330 million.
• Samhällsbyggnad Chalmers in Gothenburg. Construction of a technical college for Akademiska Hus. Contract value NOK 262 million.

CONSTRUCTION DENMARK

There was virtually zero growth in investments in the Danish construction and civil engineering market in 2015, contributing to protracted, challenging competition.

Revenue in 2015 amounted to NOK 1.6 billion, a decrease of 12% from the previous year. The decline is due to the fact that several major construction projects on Zealand were completed during the year, but no new projects of a similar size were initiated.

Profit before tax amounted to NOK 96 million, down from NOK 108 million in 2014. The decline in profit is due to lower activity. The profit margin was 6.0%, which is on a par with 2014. There was consistently good profitability in the project portfolio.

At the end of 2015 Hoffmann had an order backlog of NOK 1.3 billion, up from NOK 1.2 billion at the beginning of the year. This corresponds to an increase of 4% in local currency.

Major projects awarded in 2015:

• The Danish Centre for Particle Therapy (DCPT) in Aarhus for Region Midtjylland. Contract value NOK 358 million.
• Linak Deskline. New office and production facilities for Linak AS. Contract value NOK 176 million.
• UC Syd. Campus for University College Syddanmark Aabrenraa. Contract value NOK 132 million.

PROPERTY DEVELOPMENT

Veidekke strengthened its property development operations in 2015, as a result of high demand for new homes in both Norway and Sweden. Growth was strongest in Sweden, where the market for new homes has picked up sharply in the last year.

The close collaboration between Veidekke's property development and construction operations is key to efficient and profitable projects. Involvement of the contractor from the earliest stages, such as acquisition of sites and concept design, allows early identification of risk factors and ensures broader consideration of the various options. Veidekke's construction operations build almost all the residential projects developed by Property Development. Property Development provided Construction with residential projects worth a total of approximately NOK 2.0 billion in 2015.

For several years Property Development has had an investment limit of NOK 3.5 billion. In order to further strengthen Veidekke's position in property development, the investment limit is being raised to NOK 4.0 billion towards 2018. The higher limit will enable increased activity in residential development and acquisition of new sites over the next two years.

Revenue from property development operations amounted to NOK 2.1 billion, compared with NOK 2.3 billion in 2014. Profit before tax was NOK 306 million, up from NOK 280 million at the close of 2014.

A total of 1,804 units were sold in 2015, of which Veidekke's share was 1,416. This was a marked increase from 2014 when 1,410 units were sold and Veidekke's share was 770. Residential units worth NOK 6.5 billion were sold in 2015. Veidekke strengthened its land bank during the year through the purchase of several sites in and around the capitals Oslo and Stockholm and by entering into alliances with partners. At the close of the year, the land bank consisted of 14,850 residential units, of which Veidekke's share was 11,800 units. This is an increase from 14,100 units in 2014, of which Veidekke's share was 10,900.

Invested capital was NOK 3.0 billion at the end of 2015. Property development operations are measured by return on invested capital, which was 13.1% at the close of 2015, at the same level as the previous year. Over the last five years return on invested capital has averaged 10.4%.

PROPERTY DEVELOPMENT NORWAY

Residential sales in Norway have developed positively throughout the whole of 2015. There was high demand in Veidekke's projects, especially in and around Oslo. This resulted in increased sales and production throughout the year.

Revenue totalled NOK 413 million, compared with NOK 747 million in 2014. The decline in revenue is attributed to the fact that most of the projects are now carried out in joint venture operations, which do not generate accounting revenues in Veidekke's consolidated financial statements.

Profit before tax amounted to NOK 146 million, compared with NOK 175 million in 2014. The decline in profit was mainly due to lower residential production in the first half of 2015 as a result of the fact that few projects were started up in 2014. A large proportion of the projects are still in the early stages with a low degree of completion. Property development gains from the sale of sites and shares in residential projects made a positive contribution to the profit in 2015 and amounted to NOK 61 million, compared with NOK 76 million in 2014.

A total of 794 units were sold (Veidekke's share was 406) in 2015, up from 430 in 2014 (Veidekke's share was 246). The value of the residential units sold in 2015 amounted to NOK 3.4 billion. The increased residential sales resulted in the initiation of more projects, and 17 projects with a total of 390 units were started up in 2015. Most of these projects were in eastern Norway. By comparison, ten projects were initiated in 2014 with 158 units. In 2015, 247 residential units were completed.

Residential production increased, and there were 1,140 units under construction at year-end, of which Veidekke's share was 541, which is an increase of 666 units (Veidekke's share 399) at the end of 2014. The sales ratio for residential units under construction rose to 71% from 68% at the close of 2014.

Veidekke's share of unsold units under construction was 158 (127) at year-end 2015, while 16 out of 248 completed units were still unsold, compared with 32 at the end of 2014.

The land bank comprised 7,650 units at the end of the year (Veidekke's share was 5,050 units) in 40 projects. Sites worth a total of NOK 760 million were recognised in the statement of financial position for 2015. The land bank was strengthened in 2015 through acquisition of several sites both for Veidekke's own account and in joint ventures with partners. Most of the sites are in and around Oslo.

The largest acquisitions in 2015:

• Nedre Skøyen vei in Skøyen, Oslo. New headquarters for Veidekke, business premises and approx. 400 residential units. Takeover of the property is in 2019.
• Sinsenveien 45-49 in Løren, Oslo, in partnership with Selvaag Bolig, with approx. 400 residential units.
• Peter Møllers vei in Løren, Oslo, in partnership with OBOS, with approx. 400 residential units.
• Portalen in Lillestrøm, in partnership with OBOS, with 144 residential units.

Invested capital amounted to NOK 1.8 billion at the end of 2015. Return on invested capital at the close of 2015 was 11.8%, down from 14.1% in 2014. The return is adjusted for taxes in joint ventures.

PROPERTY DEVELOPMENT SWEDEN

The residential market in Sweden has been excellent throughout 2015 and the high demand for new homes contributed to very high residential sales in all Veidekke's markets, and especially in the Stockholm area.

Revenue amounted to NOK 1.7 billion in 2015, up from NOK 1.5 billion in 2014. Most of the projects are carried out as own-account projects. Profit before tax increased to NOK 159 million from NOK 105 million in 2014. The improvement is attributable to the increase in residential production. Property development gains from the sale of shares in residential projects amounted to NOK 25 million, unchanged from 2014.

Altogether the Swedish property development operations sold a total of 1,010 residential units with a value of NOK 3.1 billion, almost double the number from 2014, when 536 units were sold. The increase in sales resulted in the initiation of more projects. Ten new projects with a total of 517 units were started up in 2015, of which 55% are located in the Stockholm metropolitan area.

Residential production increased, and at year-end there were 1,246 units under construction in 20 different projects. Veidekke's share of the units under construction was 1,198, up from 750 at the end of 2014. The projects under construction are almost fully sold, with a sales ratio of 98%, compared with 89% the previous year. Veidekke's share of unsold completed units under construction was 2 at year-end, down from 9 at the close of 2014. A total of 174 residential units were completed during 2015

At the end of the year the land bank comprised 7,200 units (Veidekke's share was 6,750), of which roughly 70% were options. Sites worth a total of NOK 1.4 billion were recognised in the statement of financial position at the end of 2015. This figure includes sites in Denmark worth NOK 130 million. The sites in Denmark have been put up for sale. The land bank in Sweden was strengthened in 2015 through acquisition of several sites both for Veidekke's own account and in joint ventures with partners. Most of the sites are in and around Stockholm.

The largest acquisitions in 2015:

• Veddesta in Järfälla municipality. Approx. 900 residential units.
• Solnavägen in Solna, in partnership with ICA Fastigheter, with approx. 250 residential units.
• ICA Årsta in Stockholm, in partnership with ICA Fastigheter, with approx. 200 residential units.
• Rosendal in Uppsala. Approx. 110 residential units.
• Hallonporten, Enen 1 in Sundbyberg, Stockholm. Partnership with Rikshem, with approx. 100 residential units.

Invested capital amounted to NOK 1.0 billion at the end of 2015. Return on invested capital rose to 18.0% from 12.8% at the close of 2014.

INDUSTRIAL

High activity in the infrastructure market contributed to a very high level of activity in all three business units in Veidekke Industrial in 2015 as well.

Revenue amounted to NOK 4.0 billion in 2015, compared with NOK 4.1 billion in 2014. Road Maintenance had a higher level of activity throughout the year, while Asphalt saw a slight decline in demand.

Profit before tax amounted to NOK 190 million, down from NOK 210 million in 2014. The profit margin was 4.7%, compared with 5.1% in 2014.

Asphalt's revenue amounted to NOK 2,4 billion, compared with NOK 2,8 billion in 2014, which is a decrease of 13%. The decline is due to fewer deliveries to new road projects compared with 2014 and reduced activity in the markets that are most affected by the decline in the oil sector. Nevertheless, profitability improved, and the profit margin rose to 6.2% from 5.2% at the beginning of the year. A good project portfolio, efficient operations and favourable developments in prices of raw materials contributed to improved profitability in 2015.

Road Maintenance saw its revenues increase to NOK 1.2 billion from NOK 968 million in 2014. The 19% increase is attributable to more contracts in the portfolio than a year ago. This unit had weak profitability in 2015, and the profit margin was -1.2% for 2015, down from 2.2% in 2014. The decline is due to losses on a few contracts and low profitability in parts of the project portfolio. The project portfolio consisted of 26 contracts at year-end.

Aggregates increased its revenue to NOK 487 million in 2015 from NOK 396 million in 2014. The growth in revenue is mainly related to the purchase of the remaining 50% of Martin Haraldstad AS. Profitability in the business unit is stable at a high level. The profit margin was 11.2%, which is at the same level as in 2014.

OTHER OPERATIONS

Other operations consist of the unallocated costs associated with the Group's corporate administration and financial management, the Group's ownership role in Public–Private Partnerships (PPP) and the elimination of intra-group profits.

This unit posted a result of NOK -97 million in 2015, of which NOK -28 million was elimination of intra-group profits. By comparison, the result for 2014 was NOK -73 million.

STRATEGIC GOALS

Veidekke's main strategic goal is to grow within its current business areas in Scandinavia and be one of the most profitable construction and property development companies in its markets.

In line with its goal for growth, Veidekke acquired four companies in 2015: Martin Haraldstad AS, Reinertsen's onshore construction operations, and Leif Grimsrud AS in Norway, and Rekab AB's operations in Uppsala in Sweden. In addition, Veidekke signed a letter of intent to acquire the civil engineering contractor Tore Løkke AS in Norway, with final takeover in January 2016. These acquisitions will help strengthen Veidekke's position and

competitiveness, both locally and regionally. These acquisitions boosted Veidekke's order backlog by 8%, which increased by a total of approximately 50% in 2015 compared with 2014. Veidekke has thus laid a solid foundation for further growth in 2016.

Strategic financial goals have been defined for Veidekke's three business areas. The 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. At the close of 2015, Construction had a profit margin of 3.3%, while Industrial achieved a margin of 4.7%. Property Development achieved a return on invested capital of 13.1%.

Veidekke aims to give its shareholders a stable, high return on their investment in the company and has a policy of paying out dividends corresponding to at least 50% of the profit for the year. Investment in shares in Veidekke yielded a return of 51.9% (including dividends) in 2015. By comparison, the return on the Oslo Stock Exchange was 5.9%. The Board proposes a dividend for the 2015 financial year of NOK 4.0, which corresponds to a pay-out ratio of 70%.

In order to be able to exploit opportunities for expansion and ensure a good return, Veidekke needs to be a financially robust company. The company therefore aims to have a gearing ratio (net interest-bearing debt as a percentage of equity) of 40–60% at year-end. At the close of 2015, Veidekke had a gearing ratio of 19%.

Veidekke works continuously to improve safety in all its operations. The Group has a target of zero serious injuries and reduction of the total number of injuries by 80%. Work on prevention and systematic follow-up of all types of injury is therefore a top priority. The number of serious injuries in the Group was reduced by 37% in 2015 compared with the previous year, while the total number of injuries was reduced by 22%. Although there is still a long way to go to achieving the targets, this positive trend reflects improved safety.

ORGANISATION

EMPLOYEES

The employees are Veidekke's most important resource, and the company's attainment of its commercial goals depends on its ability to attract, retain and develop qualified employees. Priority is therefore given to offering good training courses and skills development programmes to the company's own employees, and the Group has made its recruitment work more targeted in recent years.

In 2015, 1,400 new employees joined Veidekke. Approximately 60% were employed through recruitment, while the remainder came as a result of acquisitions in Norway and Sweden. At the end of 2015, the Group had 6,995 (6,384) permanent employees in Scandinavia, which translates into a net increase of 10% during the year. Employee turnover in the Group was 12%.

	Skilled workers	Administrative staff	Total
Norway	2,912 (2,664)	2,088 (1,923)	5,000 (4,587)
Sweden	727 (638)	829 (672)	1,556 (1,310)
Denmark	234 (273)	205 (214)	439 (487)
Total	3,873 (3,575)	3,122 (2,809)	6,995 (6,384)

Number of employees in Veidekke. Last year's figures in brackets.

Veidekke's targeted recruitment programme is mainly aimed at students and recent graduates. The company is well represented at careers days at colleges and universities throughout Scandinavia. In autumn 2015 a campaign was launched on social media in Norway, aimed specifically at engineering students and young engineers. In addition to increasing knowledge about Veidekke, the campaign contributed to more inquiries and a 50% increase in the number of applications for traineeships compared with 2014.

Veidekke is a major apprenticeship company. In 2015 there were 168 apprentices in the Norwegian operations, while the Danish and Swedish operations had 27 and 34 apprentices respectively. The company trains its own skilled workers in 11 fields, and candidates who pass the trade examination are qualified to work in the company on completion of their apprenticeship.

Veidekke's two-year trainee scheme combines practical work in projects with theoretical training. At year-end there were a total of 100 trainees in Veidekke: primarily engineers, but also financial and administrative personnel. 80 of the trainees were in Norway, 16 in Denmark and 4 in Sweden.

Veidekke has a good reputation in the labour market, and in Universum's annual survey in Norway in 2015, Veidekke was voted the industry's most attractive employer among young engineers. Similar surveys in Sweden and Denmark also revealed an increase in attractiveness. In addition, Veidekke won a number of prestigious awards this year (the Lean Builder of the Year prize in Sweden, the Working Environment Award in Denmark, and the Innovation Prize for its participative planning methodology in Norway), contributing to increased awareness about the company and providing Veidekke with positive publicity as an innovative and professional player in the industry.

Training and development of own employees is a high priority, and the Veidekke School in Sweden and Norway offers a wide range of courses and programmes to all employees in subjects such as project and production management, finance, contract law, energy and the environment, occupational health and safety, compliance and leadership skills. Moreover, Veidekke collaborates with Stanford University on training in and the use of BIM (Building Information Modelling) and VDC (Virtual Design and Construction), where new project managers are certified each year. Veidekke currently has 37 certified VDC users.

In 2015 the Veidekke School completed a total of 5,055 training days and had a total of 3,890 course participants. Hoffman works systematically to develop young project managers through its Next Generation programme. In this programme, employees are given the opportunity to head up projects on their own, with good guidance and support from experienced colleagues.

Veidekke aims for diversity and breadth among its employees, and no-one should be discriminated against on grounds of race, gender, age, disability, sexual orientation, language, religion, political or other opinion, national or social background. There is generally a low proportion of women in the construction and civil engineering industry. This also applies to Veidekke, where the proportion of women is 10%: some 20% of the administrative staff are women, while this fi gure is 2% for skilled workers.

The company attaches importance to creating a working environment characterised by mutual respect and equality and has zero tolerance of any form of harassment of colleagues or business associates and behaviour that can be perceived as threatening or demeaning. Veidekke's ethical guidelines 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.com/en/corporate-governance/.

MANAGEMENT

At the end of 2015 Veidekke's corporate management comprised the President and CEO, two executive vice presidents for central staff functions and three executive vice presidents for the business areas. There were no changes in the corporate management in 2015. The executive vice president in charge of the Swedish operations, Per-Ingemar Persson, chose to retire with effect from 1 January 2016. Jimmy Bengtsson, former head of Veidekke's subsidiary Arcona AB, was appointed new executive vice president from the same date.

OCCUPATIONAL HEALTH AND SAFETY

Veidekke has a duty to safeguard the health and safety of everyone who works at the company's workplaces. As one of Scandinavia's largest construction and property development companies, Veidekke also has an obligation to be a driving force in changing attitudes in the industry. In this context, Veidekke has been one of the initiators behind the Safety Charter in the Norwegian construction industry, which has a vision of zero injuries and accidents. Construction companies, public and private customers, architects and consultants have unanimously endorsed this charter.

Occupational health and safety is a priority in all parts of Veidekke's operations, and for many years the company has worked systematically to modify and improve routines and practices. Good planning, use of correct equipment and proper training were focus areas in 2015, resulting in a 22% decline in the total number of injuries from last year, and a 37% decrease in the number of serious injuries. The Group is upholding its goal of zero serious injuries and prevention of four out of fi ve injuries.

Total number if injuries, own employees and subcontractors.

The Group's lost-time injury (LTI) rate has remained relatively stable in recent years at around 5. At the end of 2015, the LTI rate was 4.5, down from 5.5 at the end of 2014.

Lost-time injury rate: The number of lost-time injuries per million hours worked, own employees.

Prevention of sickness absence is a high priority, and good routines have been established for close follow-up of employees on sick leave to facilitate their prompt return to work. Sickness absence was 3.9%, down from 4.0% the previous year. The rates for the individual countries were: Norway 4.2% (4.3%), Sweden 3.6% (3.7%) and Denmark 1.9% (1.5%). This is below the average for the industry in Norway and Denmark, but slightly higher than the industry average in Sweden. The low sickness absence rate is also linked to high job satisfaction, which the annual working environment surveys confi rm.

Development in sickness absence, own employees.

Each year Veidekke arranges a group-wide Safety Week to highlight the work on safety and good attitudes across the various businesses. The topic of the 2015 Safety Week was «zero serious injuries,» and various measures to achieve this were discussed and debated. All Veidekke's projects focused on this topic through a wide range of activities. During Safety Week candidates are nominated for Veidekke's annual Health and Safety Award, which is awarded to a project or an initiative that has excelled in the area of safety. The winner of 2015 Health and Safety Award was the Swedish civil engineering project «Stenungsund ethane storage tank». Through consistent, targeted efforts, the project management has succeeded in fostering a significant commitment to occupational health and safety, resulting in safety routines that minimised the probability of injury.

Veidekke also received two external occupational health and safety awards in 2015. The Marienfryd residential project in Oslo received the SHA Award for the best work on occupational health and safety. The award was granted by the Norwegian public contracting clients: the Norwegian Defence Estates Agency, the Directorate of Public Construction and Property (Statsbygg), the Norwegian Public Roads Administration and the Norwegian National Rail Administration, in partnership with the Labour Inspection Authority. The project won the award for its participative and innovative work on occupational health and safety. The same project also received Veidekke's internal Health and Safety Award in 2014. In Denmark Hoffmann was the first construction company to receive the Danish Working Environment Award, awarded by the Danish Working Environment Council. The Award was given for Hoffmann's initiative to promote pleasure and pride in work through its «Job satisfaction pays» campaign, with particular focus on involvement of the employees in the work process to create a safety culture marked by openness and where everyone's voice counts.

THE EXTERNAL ENVIRONMENT

The construction and civil engineering industry is associated with significant impacts on the climate and the natural environment, and Veidekke – in line with the industry in general – has a responsibility to minimise these negative effects. Consumption of energy and natural resources, greenhouse gas emissions and large amounts of waste result in a sizeable ecological footprint. The ability to manage the company's impact on the environment and identify and manage the environmental risks in the work is an important part of Veidekke's corporate social responsibility. These elements are also key drivers for long-term profitability in the company. Investments in innovative and sustainable solutions will yield savings in the long run. Veidekke's environmental profile is also significant for the company's attractiveness to employees, customers, partners and increasingly also investors. In addition, more stringent regulatory requirements related to energy consumption and emissions 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 environmental measures, including through the annual Carbon Disclosure Project survey, which monitors large companies' greenhouse gas emissions and their strategies to reduce emissions. The environment is one of the defined areas in Veidekke's strategy to increase its competitiveness, and it is the company's stated ambition to demonstrate practical environmental excellence.

Veidekke reduced carbon emissions from its own operations, including purchased energy, by 9% from 2014 to 2015. Veidekke's industrial operations account for over half of the Group's CO2 emissions, and the decline in emissions is due to a combination of several factors. For example, Industrial has implemented various climate-change mitigation measures, produced less asphalt and increased its production of low-temperature asphalt (LTA).

In keeping with the Group's environmental ambition, Veidekke's business areas all contribute to reducing the company's environmental impact in varying ways:

• In 2015 Veidekke Industrial has adopted an investment programme with measures to save energy and reduce carbon emissions. Furthermore, a target has been set that by 2020 40% of all the asphalt produced shall be low-temperature asphalt. In addition, the business, under the auspices of Zero and along with 70 other Norwegian companies, signed an environmental declaration for a green shift towards renewable heavy transport solutions in October 2015.
• Property Development defined greenhouse gas emissions as a separate area of responsibility for building clients in Norway. In Sweden Veidekke Bostad is building Swan-labelled apartments, which have reduced total emissions by approximately 1,000 kg of CO2 per apartment per year.
• Construction operations in Norway and parts of the construction operations in Sweden are environmentally certified in accordance with ISO 14001 and are delivering a growing number of projects that meet various environmental certification standards (BREEAM, FutureBuilt, the «Swan» Nordic Ecolabel, etc.).

In November 2015 Veidekke held its fourth annual Environment Day. The topic of this year's event was trends towards 2020. Veidekke's Environmental Award is awarded to a unit, group or project that demonstrates a special commitment to the environment. The 2015 Award went to the Bjørnsletta school project, which is Oslo's first passive house school. The documented climate and environmental gains, combined with the project's excellent coordination and interdisciplinary involvement, meant this was a very successful environmental project.

Veidekke has committed to operate in accordance with the UN's two-degree target, whereby the global temperature in 2100 must not be more than two degrees Celsius higher than it was in 1850. This commitment entails that Veidekke's businesses must define and implement various concrete environmental measures. This work will be initiated in 2016.

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 important 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 17.8% 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 15.4% of the shares, but no individual employee holds more than 0.3% of the shares.

For a complete account of corporate governance in Veidekke, see chapter on Corporate Governance in this report.

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 in this report.

SHAREHOLDERS AND THE STOCK MARKET

At year-end Veidekke had 8,704 shareholders. The largest shareholders in the company were OBOS BBL (17.8%), Folketrygdfondet (11.6%) and IF Skadeförsäkring AB (7.5%). Foreign ownership was 28.7% (28.4%).

A total of 37.3 million Veidekke shares were traded on the Oslo Stock Exchange in 2015, representing a turnover rate of 27.9%. There were 77,679 trades of Veidekke shares during the year. The share price ranged between NOK 69.50 at the lowest and NOK 109.00 at the highest. The return including dividends for the year was 51.9%. By comparison, the Oslo Stock Exchange Benchmark Index had a return of 5.9%. 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 2015. The shares have a lock-in period of three and two years respectively. After this year's sale, 3,460 employees own a combined total of 20.6 million Veidekke shares. This means that 49.4% of the employees own 15.4% of the company.

For more information on the share scheme for employees, see Shareholder information in this report.

SHARE BUY-BACK

On 10 May 2015 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 2015. 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

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.

The Group had a strong financial position at the end of 2015. Net interest-bearing debt was NOK 606 million at year-end, an increase of NOK 880 million compared with the close of 2014. The change in liquidity is a result of several acquisitions, interim financing of PPPs (Public–Private Partnerships), and increased capital tied up in civil engineering operations in Norway. Capital invested in property development operations totalled NOK 3.0 billion, which is on a par with the previous year.

Total investments in operating equipment amounted to NOK 516 million (NOK 489 million). The increase in investments is an effect of higher activity in the Group. Non-current assets totalling NOK 59 million (NOK 87 million) were sold. Expansion investments amounted to NOK 411 million and were related to the acquisition of Reinertsen Entreprenør, which is Reinertsen AS's onshore construction and civil engineering operations, and the civil engineering contractor Leif Grimsrud AS in Norway and Rekab AB's contracting operations in Uppsala in Sweden. The remaining 50% of the shares in the aggregates company Martin Haraldstad AS was also acquired in 2015 (Veidekke already owned 50%).

The Group's net cash flow from operations for the year was NOK 0.8 billion (NOK 1.8 billion). The Group had total assets of NOK 14.8 billion (NOK 12.4 billion). Total equity was NOK 3.2 billion (NOK 2.7 billion), corresponding to an equity ratio of 21.8% (22.2%).

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. Correct expertise is a important success factor for good operational efficiency and project execution. To ensure that the Group has sound and updated knowledge, Veidekke devotes significant resources to skills development for employees through its internal course and training programmes and continuously works on recruitment initiatives throughout the Group.

The composition of the project 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. Revenue recognition is therefore assessed cautiously until potential risks have been clarified. Transport infrastructure projects have complex contract terms, allowing room for different interpretations of what constitutes proper fulfilment of the contract. As a result, disagreement may arise about the final settlement between the contractor and the contracting client. At the close of the year Veidekke had several unresolved final settlements related to infrastructure projects. Outstanding claims after deductions for recognised provisions and assessment of uncertain income were in the order of NOK 400 million (excl. VAT) at 31 December 2015. The outcome of the individual disputes, positive or negative, may have an effect on the 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 the profit from property development is very closely related to new project start-ups. A weak residential market may affect the future development of Veidekke's 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 debt. These risks are classified as credit, market and liquidity risks. For a more detailed presentation of the company's financial risk, see note 29 to this year's Annual Report.

MARKET DEVELOPMENT IN 2015 AND OUTLOOK FOR 2016

Growth in the global economy was around 3% in 2015, which is a moderate decrease from 2014. The main trading partners in the EU and the USA had an overall moderately positive development, at the same time Norway and Sweden's competitiveness was boosted by a weaker krone. The moderate increase in the growth rate in the Eurozone is expected to continue in 2016, with stable good growth in the USA and UK. Decreasing demand for commodities in China, combined with a strong supply side, is fuelling a downturn in the commodities markets, which will have consequences for the parts of Norway dependent on the oil industry and for the mining industry in northern Sweden and Norway.

NORWAY

The Norwegian economy took a downturn in 2015 due to the reduced activity in the oil sector, and GDP growth for mainland Norway is estimated at 1.0%. The decline was greatest in the markets in south-western Norway, but other parts of the country also saw a slowdown. Unemployment rose and was about 4.5% at the end of 2015. Interest rates were lowered twice during the year, and Norges Bank's key policy rate was 0.75% at the beginning of 2016. Growth in the construction and civil engineering market was 2% and was mainly driven by continued strong growth in the civil engineering market and an upswing in the residential market.

For 2016 continued moderate growth is expected in Norway, with estimated GDP growth in the mainland economy of 1.5%. The indicators point towards a weaker labour market. The signs of a geographic divide in the economy that were observed in 2015 are likely to grow stronger, with a continued decline in the areas most exposed to the oil sector and a moderately positive outlook in regions dominated by other types of industry, such as tourism and onshore industry. Further interest rate cuts can be expected, to tackle weaknesses in the labour market.

The construction and civil engineering market is expected to continue to grow, driven mainly by investments in transport infrastructure and the power sector. There is great uncertainty about private segments in residential and non-residential building construction in 2016. The economic downturn will impact these markets, although at present the low interest rates are contributing to continued high demand for investment in regions not directly affected by the decline in the oil sector. 2016 is expected to be a good year for the residential market with a moderate rise in house prices, albeit with large regional differences. A decline is expected in the market for private non-residential buildings, mainly due to rising office vacancy rates and diminishing consumption growth.

SWEDEN

The Swedish economy grew by almost 4% in 2015, with growth in both domestic demand and the export sector. The strong growth indicates that the Swedish economy is heading towards a boom period for the first time since the 2008 financial crisis. Unemployment fell by 1.3% and is continuing to fall. Riksbanken lowered the interest rate to a negative level for the first time in 2015, and the low interest rates have had a significant impact, not least on households' investment demand. Sweden received an estimated 150,000 asylum seekers in 2015, which is expected to have an expansionary effect on the Swedish economy, initially through increased government spending.

The upturn in Sweden is expected to continue in 2016 with GDP growth of close to 4% and a continued strong employment market. The key interest rates will probably remain unchanged throughout 2016 and then gradually be raised through 2017.

The Swedish construction and civil engineering market grew by an estimated 11% in 2015, driven mainly by the residential sector where investments in new homes rose by some 30%. In regions with particularly high growth, such as Stockholm and Mälardalen, the upturn led to capacity problems. These capacity problems may constrain further growth. Growth in the construction and civil engineering market is expected to be 4% in 2016. Private segments within residential and non-residential buildings will continue to be growth drivers, but increasing activity in the major infrastructure projects in Stockholm and Gothenburg will contribute to continued growth in the civil engineering market too.

Increased tax revenues and lending related to the inflow of asylum seekers is likely to manifest itself in the form of further investment growth in public non-residential buildings, a segment that is already at a high level.

DENMARK

The Danish economy grew by 1.2% in 2015, up marginally from 2014. There was weak investment growth in most sectors and moderate growth in public sector spending. At the same time, the labour market continued to develop in a positive direction with growth in employment and declining unemployment. Unemployment in Denmark is now lower than in Norway, for example. The construction and civil engineering market grew by 1%, driven primarily by growth in the civil engineering sector. Private and public non-residential buildings saw a weak development, with declining investments. House prices in the capital region rose sharply, and the recovery in the residential market seems to be spreading further afield than previously.

The forecasts for the Danish economy indicate a continued moderate increase in GDP of 2% for 2016. Investments, especially in businesses and households, are expected to grow more rapidly due to the economic upturn and continued low interest rates. The construction and civil engineering market is predicted to grow by 3%, albeit from a low level. The growth will mainly be driven by investments in residential and non-residential buildings in the private sector, boosted by the public sector in the form of investments in hospitals and educational buildings.

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 50 (54) employees, of whom 23 (24) are women. Veidekke ASA's accounts are prepared in compliance with NGAAP (Norwegian accounting rules).

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

The company's operating result was a loss of NOK -37 (-56) million. Dividends and group contributions from subsidiaries totalled NOK 851 million (NOK 300 million).

The Board proposes an ordinary dividend of NOK 4.0 per share for the 2015 financial year. This corresponds to a pay-out ratio of 70%, which is in line with the dividend policy of a minimum of 50% of earnings per share.

The parent company, Veidekke ASA, reported a profit for the year of NOK 739 million (NOK 217 million). At the Annual General Meeting on 10 May 2016, the Board will propose that the profit be distributed as follows:

Profit for the year	739
Transferred to other equity	204
Allocated to dividend	535
	NOK million

GOING CONCERN

In accordance with section 3-3a of the Norwegian Accounting Act, the Board confirms that the company is a going concern. The financial statements for 2015 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 2015.

Oslo, 30 March 2016 The Board of Directors

Martin Mæland Chair

Deputy Chair

Per Otto Dyb Gro Bakstad Annika Billström Ann Christin Gjerdseth Hans von Uthmann

Odd Andre Olsen Inge Ramsdal Arve Fludal

Arne Giske President and CEO

INCOME STATEMENT VEIDEKKE GROUP

Figures in NOK million	Note	2015	2014
Revenue	2, 3, 7, 31, 33	24 225	24 027
Subcontractors		-11 561	-10 811
Cost of materials		-3 673	-4 154
Personnel expenses	4, 5, 21, 30	-5 233	-5 022
Other operating expenses		-2 573	-2 873
Depreciation	11	-372	-338
Operating expenses		-23 412	-23 199
Share of net income from joint ventures	13, 33	130	217
Operating profit		944	1 045
Financial income	6, 29	94	93
Financial costs	6, 29	-88	-83
Profit before tax		950	1 055
Income tax expense	22	-167	-196
Profit for the year		782	859
Profit for the year attributable to:
Equity holders of Veidekke ASA		765	843
Non-controlling interests		18	16
Total		782	859
Earnings per share (NOK) (ordinary / diluted)	8	5.7	6.3

STATEMENT OF COMPREHENSIVE INCOME

Figures in NOK million	Note	2015	2014
Profit for the year		782	859
Revaluations of pensions after tax	21, 22	25	-151
Net items that will not be reclassified subsequently to profit or loss		25	-151
Currency translation differences Fair value adjustment of financial assets after tax	22, 29	97 -	43 -10
Net items that will be reclassified subsequently to profit or loss		97	33
Total other income and expenses after tax		123	-118
Comprehensive income		905	741
Comprehensive income attributable to:
Equity holders of Veidekke ASA		885	725
Non-controlling interests		20	16
Total		905	741

STATEMENT OF FINANCIAL POSITION VEIDEKKE GROUP AT 31 DECEMBER

Figures in NOK million	Note	2015	2014
ASSETS
Non-current assets
Goodwill	9, 12	1 151	804
Other intangible assets	10	104	110
Deferred tax assets	22	65	54
Land and buildings	11	556	501
Plant and machinery	11	1 689	1 389
Investments in joint ventures	13	1 134	1 151
Financial assets	15	852	408
Total non-current assets		5 550	4 416
Current assets
Residential projects	16	3 355	2 797
Inventories	17	310	255
Trade receivables	18	4 597	3 504
Other receivables		574	564
Financial assets	29	-	412
Cash and cash equivalents	19	402	435
Total current assets		9 238	7 966
Total assets		14 788	12 382
EQUITY AND LIABILITIES
Equity
Share capital	20	67	67
Other equity		3 006	2 606
Non-controlling interests	12	145	71
Total equity		3 218	2 744
Non-current liabilities
Pension liabilities Deferred tax liabilities	21 22	512 427	523 222
Bonds	23	750	750
Debts to credit institutions	23	517	73
Other non-current liabilities	23	103	104
Total non-current liabilities		2 309	1 671
Current liabilities
Debts to credit institutions		43	55
Trade payables	24	3 778	3 132
Public duties		689	605
Warranty provisions	25	848	825
Taxes payable	22	71	241
Other current liabilites	24	3 832	3 109
Total current liabilities		9 261	7 967
Total equity and liabilities		14 788	12 382

STATEMENT OF CHANGES IN EQUITY VEIDEKKE GROUP

EQUITY HOLDERS OF VEIDEKKE ASA
Figures in NOK million	Note	Share capital	Other paid-in capital 1)	Currency translation differences	Other retained earnings	Fair value adjustment 2)	Total	Non-con trolling interests	Total
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
Equity at 01 January 2015		67	305	26	2 369	-94	2 673	71	2 744
Profit for the year		-	-	-	765	-	765	18	782
Other comprehensive income		-	-	95	25	-	121	2	123
IFRS 2 - share-based transactions

(employees) 5 - - - -17 - -17 - -17

interests - - - -1 - -1 - -1

non-controlling interests 12 - - - - - - 75 75 Changes in non-controlling interests - - - - - - -3 -3 Dividend 20 - - - -468 - -468 -17 -485 Equity at 31 December 2015 67 305 122 2 674 -94 3 073 145 3 218

2) Change in fair value of available-for-sale shares and hedging instruments that qualify for hedge accounting. See note 29 for details.

Transactions with non-controlling

Additions from business acquisition -

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

STATEMENT OF CASH FLOWS VEIDEKKE GROUP

OPERATING ACTIVITIES Profit before tax 950 1 055 Net interest items 6 36 31 Tax paid 22 -226 -89 Depreciation, amortisation and impairments 10, 11 372 338 Gains on sale of property, machinery etc. 11 -39 -40 Share-based transactions directly over equity 5, 22 -17 -13 Profit and loss items without cash effect -105 -11 Generated from this year's activities 960 1 272 Change in residential projects 16 -471 282 Change in trade receivables 18 -885 -335 Change in other current receivables -99 -149 Change in trade payables etc. 24 530 102 Change in other current liabilities 737 581 Net cash flow from operating activities (A) 771 1 753 INVESTING ACTIVITIES Acquisition of tangible, non-current assets 9, 10, 11 -516 -489 Disposal of tangible, non-current assets 11 59 87 Acquisition of subsidiaries 12 -317 -218 Disposal of subsidiaries - -14 Sale of other shares 15 - Interest received 6 32 60 Sale/purchase of interest-bearing investment 15, 29 407 -400 Investments in Public-Private Partnership projects (PPP) 14 -384 -29 Net cash flow other investments 15 54 32 Net cash flow from investing activities (B) -648 -969 FINANCING ACTIVITIES New long-term borrowing 23 386 5 New short-term borrowing - 51 Repayment of current liabilities -12 -668 Interest paid 6 -68 -91 Dividend paid to non-controlling interests 20 -17 -8 Dividend paid 20 -468 -401 Net cash flow from financing activities (C) -178 -1 114 TOTAL NET CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) -55 -330 Cash and cash equivalents at 1 January 435 764 Exchange rate adjustments cash and cash equivalents 22 2 Cash and cash equivalents at 31 December 402 435 Additional information: Long-term borrowing facility 3 600 3 100	Figures in NOK million	2015	2014
	Used committed borrowing facilities at 31 December	168	51

TABLE OF CONTENTS NOTES VEIDEKKE GROUP

• Accounting policies Veidekke Group
• Segment information
• Revenues
• Personnel expenses
• Shares to employees
• Financial income / financial costs
• Projects in progress
• Earnings per share
• Goodwill
• Other intangible assets
• Plant, machinery, land and buildings
• Acquisitions and disposals of businesses
• Investments in joint ventures
• PPP projects
• Financial assets
• Residential projects
• Inventories
• Trade receivables
• Cash and cash equivalents
• Number of shares, shareholders etc.
• Pensions
• Income tax expense and deferred tax
• Non-current liabilities
• Trade payables and other current liabilities
• Warranty provisions etc.
• Mortgages, guarantees and joint and several liability
• Capital management
• Financial risk
• Financial instruments
• Compensation to senior executives
• Leasing commitments and rental income
• Disputes and claims related to projects
• Related party transactions
• Events after the reporting date
• 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 company's address is Skabos vei 4, NO-0214 Oslo, Norway. The consolidated accounts were approved by the Board of Directors on 30 March 2016.

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 2015 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 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 in note 12 for a more detailed presentation.

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

No new accounting principles have been implemented in the presentation of the financial statements for 2015. The accounting principles applied are consistent with those applied in the previous financial year.

Material accounting assessments, estimates and assumptions Veidekke's operations primarily consist 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	Carrying amount
Trade receivables / Trade payables (creditors) / Warranty provisions	At 31 December 2015 project assessments had been carried out for all projects. They comprise an assessment focusing on the expected earnings of the individual project on completion. The assessment is based on estimates, experience and professional judgement.	7, 18, 24, 25, 32	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 1,151 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 2,137 million
Pension liabilities	The Group's pension liabilities are calculated by an actuary. The calculations are based on a number of actuarial assumptions.	21	NOK 512 million

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 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 entered 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 entered, 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 recognised in profit and loss.

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 purchase 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.

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.

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 that 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 purchase of assets and liabilities, the acquisition of companies, or mergers and are accounted for using the purchase 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, and acquisition costs are expensed. Identifiable excess value in connection with acquisitions 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 undetermined lifespan are tested annually for impairment.

Conditional consideration is recognised in the statement of financial position at fair value on the acquisition date. Any subsequent changes in the conditional consideration are recognised in the income statement.

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.

Joint ventures

Veidekke is also engaged in operations with other enterprises, called joint ventures. 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 the activities 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 associated company is recognised in the income statement. Any share of other income and expenses is included in the financial statements. 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 on the acquisition date, 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 on the acquisition date and internal gains are taken into account.

Negative equity in the company is recognised when the Group is obligated to cover such loss, or when there are agreements making it likely that Veidekke will have to inject new equity into the company.

Joint operations

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, and the partners are jointly and severally liable for the working partnership's obligations. Activities within a working partnership are often organised as a general partnership. 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 Group is actively involved 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, and requires unanimity on important decisions.

Veidekke has jointly controlled operating arrangements in its property development operations. This type of arrangement is used in connection with major investments in sites where the risk is reduced when the site is purchased jointly with partners.

For working partnerships and jointly controlled operating arrangements, Veidekke recognises its share of assets, liabilities and revenues in line with the arrangements specified in the agreement (usually 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.

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 into Veidekke's consolidated accounts.

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, which is 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.

The revenue recognition for additional claims against the client and disputed amounts with a high level of uncertainty is based on assessments of the likely outcome of the dispute and elements that can be measured reliably. The degree of uncertainty in the estimates will affect the proportion of the claim that is recognised in the income statement. 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 related to tenders and other costs related to obtaining projects 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 (preagreed payment plans) is booked under trade receivables (Work invoiced in advance / not recognised). Only one of these items may be applied per project. If the item «Work invoiced in advance» is a larger negative amount 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 entered under «Warranty provisions etc."» Please refer to note 7 Projects in progress, note 18 Trade receivables, note 24 Trade payables and other current liabilities, note 25 Warranty provisions etc., and note 32 Uncertainties.

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 sales ratio of 50% measured in value must be achieved 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 recognised 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 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 a term of five 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

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. Veidekke recognises financial assets and financial liabilities in the statement of financial position when the enterprise becomes a party to the provisions of the contract. On initial recognition, Veidekke measures a financial asset or financial liability at fair value plus – in the case of a financial asset or a financial liability not at fair value through profit or loss – transaction costs that are directly attributable to the acquisition or issue of the financial asset or liability.

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 these kinds of investments. 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. Assets that are available for sale are measured at fair value. Any 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.

5. Other financial liabilities

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 short-term 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 historic 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 debt 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 hedging 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 or where there are inefficiencies in the hedge are recognised 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 provides loans to the employees. Accounting of these loans is performed in accordance with IAS 39 for 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. Interest on these is currently 0%, 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. The 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, including 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 cost 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, Veidekke bears the risk for the return on the pension assets.

Defined-benefit plans are measured at the present value of the future pension payments that for accounting purposes are regarded as accrued on the balance sheet date. The pension assets are recognised 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 actual return on the pension assets might be different from the estimate. 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 as an expense in the accounts. 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. Goodwill is not amortised, but is tested for impairment at least annually. See note 9 Goodwill.

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 of a non-current asset 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. If there is an indication that the asset is impaired in value, the recoverable amount is used and the necessary impairment is recorded.

Intangible non-current assets with indeterminable life and goodwill are tested for impairment 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. A cash-generating unit is determined as the smallest identifiable group of assets that generates incoming cash flows and that in all essence is independent of incoming cash flows from other assets or groups of assets. Units with significant synergies and that perform 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 units, 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 taken 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 work under guarantee 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 2 November 2020. If this overdraft facility is used, the loan is classified as a non-current liability.

Other amounts due 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.

Warranty provisions are closely related to the supply of goods and are therefore classified as current liabilities even if it is likely that large parts of the item will be due for payment after more than 12 months.

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 personnel 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 19 under the area «Estimates». 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 are recognised in the income statement as they incur

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 2015 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. The new standard will most likely allow recognition of revenue on a percentage of completion basis, measured with reference to the sales ratio and stage of completion. If the standard is introduced, 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 coming year. Veidekke is expected to implement the new standard from 1 January 2018.

IFRS 16 Leases

The new standard requires recognition of the assets and liabilities for all leases with a term of more than 12 months and depreciation of lease assets separately from interest on lease liabilities in the income statement.

Veidekke leases equipment in connection with the construction of buildings and civil engineering projects. A large portion of these agreements have a term of less than 12 months. The new standard will have negligible consequences for the Group's accounting of these agreements. There is also a significant amount of leased operating equipment for which the term is more than 12 months. The assets and liabilities related to these leases will be capitalised. The final standard was approved in January 2016. It has not yet been analysed in detail what consequences the new standard will have for Veidekke's accounts. The standard has not yet been approved by the EU. The most likely implementation date is 1 January 2019.

NOTE 2. SEGMENT INFORMATION

The segment information is divided up into the business areas as they are reported to the President and CEO and the corporate management, who are the Group's top operative management and decision-making body. The business areas are based on the type of delivery and the market being served. The business area Construction operates construction and civil engineering activities in Norway, Denmark, and in and around the major cities in Sweden. Construction builds non-residential and residential buildings, schools, infrastructure projects, hydropower and wind farms, industrial facilities, and quays and airports.

The business area Property Development operates primarily in and around the largest cities in Norway and Sweden. Property Development buys land and properties and develops them into homes. Many of the projects are run in partnership with other property developers. The business area Industrial is engaged in the production and laying of asphalt and is a major producer of aggregates. Industrial is also a major player in the operation and maintenance of public roads. 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. Revenue and internal profit between the segments are eliminated under the item Eliminations.

BUSINESS AREAS

Figures in NOK million	Construction		Property Development
Income statement	2015	2014	2015	2014
Revenue	19 795	18 502	2 126	2 276
Operating expenses	-18 981	-17 823	-1 935	-2 115
Depreciation	-217	-192	-1	-1
Share of net income from joint ventures	14	2	115	134
Operating profit	611	489	305	293
Financial income	73	99	27	47
Financial costs	-40	-39	-25	-60
Profit before tax	644	549	306	280
Statement of financial position at 31 December
Non-current assets	2 471	1 921	1 321	1 167
Current assets	4 918	3 662	2 924	2 819
Cash and cash equivalents	2 261	2 494	119	240
Total assets	9 651	8 077	4 364	4 225
Equity	2 003	1 611	1 203	1 157
Non-current liability	932	746	1 447	1 523
Current liabilities	6 716	5 721	1 714	1 545
Total equity and liabilities	9 651	8 077	4 364	4 225
Other information at 31 December
Operational cash flow	218	823	389	652
Cash flow from investments	-400	-376	-47	71
Investments in non-current assets 1)	288	288	5	1
Capital invested 2)	-	-	3 004	3 010
Investments in joint ventures	79	63	1 092	1 049
- due for completion within 12 months	15 932	11 297	-	-
Number of employees Order backlog	5 732 23 686	5 133 15 810	117 -	115 -

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.

DEFERRED INCOME REPORTING ON RESIDENTIAL PROJECTS

Under IFRS, interpretation IFRIC 15, income and earnings from the construction and sale of a property shall not be recognised in the accounts until the property is handed over to the buyer. Interpretation IFRIC 15 governs the accounting of contracts for completed residential units. According to this interpretation, revenue and profit from the sale of completed residential units shall not be recognised in the accounts until the property has been contractually handed over to the buyer. In Veidekke's internal follow-up of residential projects, measurements are conducted using percentage of completion reporting, whereby revenue and profit are recognised in line with the estimated final outcome of 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. See also the comment under the table on IFRIC 15 adjustments.

LARGE CUSTOMERS

The largest single customer, the Norwegian Public Roads Administration, accounts for 12% of the Group's total revenues in 2015: NOK 3,041 million (NOK 3,302 million). This revenue is presented under the business areas Industrial and Construction Norway. Veidekke does not regard the Norwegian government as an enterprise group.

Industrial		Other operations		Eliminations		Group
2015	2014	2015	2014	2015	2014	2015	2014
4 033	4 127	1	2	-1 444	-1 044	24 509	23 863
-3 684	-3 762	-74	-71	1 413	1 037	-23 261	-22 734
-154	-145	-	-	-	-	-372	-338
17	19	15	12	-	-	161	167
211	239	-59	-57	-32	-6	1 037	957
7	7	66	79	-79	-139	94	93
-29	-36	-76	-80	82	131	-88	-83
190	210	-69	-59	-28	-14	1 043	967
1 154	1 093	1 974	1 570	-1 278	-1 276	5 641	4 475
690	592	764	526	-1 587	-1 102	7 709	6 496
14	21	2	426	-1 995	-2 334	402	847
1 858	1 706	2 739	2 522	-4 860	-4 713	13 752	11 818
575	392	1 206	1 073	-1 445	-1 286	3 541	2 947
649	543	1 321	1 306	-2 033	-2 430	2 316	1 687
634	771	212	144	-1 382	-997	7 895	7 184
1 858	1 706	2 739	2 522	-4 860	-4 713	13 752	11 818
278	327	-113	-49	-	-	771	1 753
-188	-172	-13	-493	-	-	-648	-969
223	198	-	1	-	-	516
1 114	1 000	-	-	-	-	4 795	3 717
53	98	-	-	-	-	1 224	1 210
1 096	1 082	50	54	-	-	6 995	6 384
1 128	1 274	-	-	-	-	24 814	17 085
752	1 030	-	-	-	-	16 684	12 327

CONSTRUCTION

Figures in NOK million	Norway		Sweden		Denmark		Total Construction
Income statement	2015	2014	2015	2014	2015	2014	2015	2014
Revenue	12 031	11 878	6 156	4 804	1 608	1 820	19 795	18 502
Operating expenses	-11 439	-11 396	-6 032	-4 712	-1 510	-1 714	-18 981	-17 823
Depreciation	-142	-125	-67	-59	-8	-7	-217	-192
Share of net income
from joint ventures	4	-	9	3	-	-	14	2
Operating profit	454	356	66	35	91	98	611	489
Net financial items	38	67	-10	-16	5	10	33	60
Profit before tax	493	423	56	19	96	108	644	549
Statement of financial position at 31 December
Non-current assets	1 533	1 011	745	729	193	181	2 471	1 921
Current assets	3 153	2 492	1 433	922	333	249	4 918	3 662
Cash and cash equivalents	1 615	2 008	77	-162	569	648	2 261	2 494
Total assets	6 300	5 511	2 255	1 489	1 095	1 078	9 651	8 077
Equity	1 210	962	446	341	347	307	2 003	1 611
Non-current liability	777	576	142	130	13	39	932	746
Current liabilities	4 313	3 972	1 668	1 017	735	731	6 716	5 721
Total equity and liabilities	6 300	5 511	2 255	1 489	1 095	1 078	9 651	8 077
Other information at 31 December
Investments in non-current assets	228	182	51	99	8	8	288	288
Investments in joint ventures	28	23	51	40	-	-	79	63
Number of employees	3 798	3 394	1 496	1 253	438	486	5 732	5 133
Order backlog	15 195	10 437	7 160	4 164	1 331	1 209	23 686	15 810
- due for completion within 12
months	10 294	6 896	4 714	3 268	923	1 132	15 932	11 297

PROPERTY DEVELOPMENT

Figures in NOK million	Norway		Sweden1)		Total Property Development
Income statement	2015	2014	2015	2014	2015	2014
Revenue	413	747	1 712	1 529	2 126	2 276
Operating expenses	-362	-687	-1 573	-1 428	-1 935	-2 115
Depreciation	-1	-1	-1	-1	-1	-1
Share of net income
from joint ventures	100	126	15	8	115	134
Operating profit	150	185	155	108	305	293
Net financial items	-4	-10	5	-3	1	-13
Profit before tax	146	175	159	105	306	280
Statement of financial position at 31 December
Non-current assets	1 079	1 021	242	146	1 321	1 167
Current assets Cash and cash equivalents	919 29	1 038 139	2 006 90	1 781 101	2 924 119	2 819 240
Total assets	2 026	2 197	2 338	2 028	4 364	4 225
Equity	623	648	580	510	1 203	1 157
Non-current liability	1 051	1 155	395	368	1 447	1 523
Current liabilities	352	395	1 362	1 150	1 714	1 545
Total equity and liabilities	2 026	2 197	2 338	2 028	4 364	4 225
Other information at 31 December
Capital invested	1 818	1 947	1 186	1 063	3 004	3 010
Investments in joint ventures	1 011	988	81	62	1 092	1 049
Number of employees	56	57	61	58	117	115

1) Property Development Sweden also includes some remaining activity in Denmark, with sites recognised at NOK 130 million.

RECONCILIATION OF SEGMENT ACCOUNTS AND FINANCIAL ACCOUNTS

Figures in NOK million	Segment accounts		IFRIC 15 adjustments		Financial accounts
Income statement	2015	2014	2015	2014	2015	2014
Revenue	24 509	23 863	-284	165	24 225	24 027
Operating expenses	-23 261	-22 734	222	-127	-23 039	-22 861
Depreciation	-372	-338	-	-	-372	-338
Share of net income
from joint ventures	161	167	-30	50	130	217
Operating profit	1 037	957	-93	88	944	1 045
Net financial items	6	10	-	-	6	10
Profit before tax	1 043	967	-93	88	950	1 055
Statement of financial position
at 31 December
Non-current assets	5 641	4 475	-91	-59	5 550	4 416
Current assets	7 709	6 496	1 127	623	8 836	7 119
Cash and cash equivalents	402	847	-	-	402	847
Total assets	13 752	11 818	1 036	564	14 788	12 382
Equity	3 541	2 947	-323	-203	3 218	2 744
Non-current liability	2 316	1 687	-7	-16	2 309	1 671
Current liabilities	7 895	7 184	1 366	783	9 261	7 967
Total equity and liabilities	13 752	11 818	1 036	564	14 788	12 382

SUMMARY OF REVENUE AND PROFIT BEFORE TAX (EBT) RECOGNISED IN THE SEGMENT REPORTING (NOK MILLION)

REVENUE	2015	2014
Accumulated revenue from non-delivered projects at start of period	956	1 103
+ Revenue from non-delivered projects during the period	1 573	1 286
- Revenue from delivered projects during the period	-1 289	-1 451
Net IFRIC 15 adjustments to revenues	284	-165
+/- Currency translation differences	112	17
Accumulated revenue from non-delivered projects at end of period	1 352	956
PROFIT BEFORE TAX	2015	2014
Accumulated profit before tax from non-delivered projects at start of period	219	304
+ Profit before tax from non-delivered projects during the period	435	400
- Profit before tax from delivered projects during the period	-342	-488
Net IFRIC 15 adjustments to profit before tax	93	-88
+/- Currency translation differences	19	2
Accumulated profit before tax from non-delivered projects at end of period	330	219

The statement above is to be understood such that at 31 December 2015, revenue of NOK 1,352 million and profit before tax of NOK 330 million had accrued on sales of 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.

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).

Figures in NOK million	Norway		Sweden		Denmark		Shared		Group
	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014
Income statement
Revenue	16 112	16 596	6 473	5 636	1 653	1 834	-13	-39	24 225	24 027
Operating profit	789	890	146	113	92	99	-82	-57	944	1 045
Profit before tax	802	918	143	96	95	106	-89	-66	950	1 055
Statement of financial position at 31 December
Total non-current assets	3 695	3 101	967	840	193	181	695	294	5 550	4 416
Capital invested	2 734	1 777	1 290	1 319	447	405	1	13	4 472	3 514
Number of employees	5 000	4 587	1 556	1 310	439	487	-	-	6 995	6 384
Order backlog	16 323	11 712	7 160	4 164	1 331	1 209	-	-	24 814	17 085
- due for completion within
12 months	11 046	7 926	4 714	3 268	923	1 132	-	-	16 684	12 327

INTRA-GROUP SALES BY SEGMENT (NOK MILLION )

		Construction		Property Development		Industrial		Other operations		Eliminations	Group
	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014	2015	2014
External revenue	18 591	17 687	2 121	2 251	3 767	3 910	1	2	29	14	24 509	23 863
Internal revenue	1 204	815	4	25	265	217	-	-	-1 473	-1 057
Total revenue	19 795	18 502	2 126	2 276	4 033	4 127	1	2	-1 444	-1 044	24 509	23 863

NOTE 3. REVENUE

Figures in NOK million	2015	2014
Ordinary revenue	24 082	23 918
Other revenue	143	109
Revenue	24 225	24 027

SPECIFICATION OF OTHER REVENUE

Figures in NOK million	2015	2014
Gains on sale of operating equipment 1)	50	46
Rental revenue	26	15
Other income	67	48
Other revenue	143	109

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

NOTE 4. PERSONNEL EXPENSES

Figures in NOK million	2015	2014
Payroll	4 142	4 002
Pension costs 1)	293	312
Employer's National Insurance contributions	648	611
Other payroll costs (social benefits etc)	150	97
Personnel expenses	5 233	5 022
	2015	2014
Number of full time equivalents	6 593	6 287
Number of employees at 31 December	6 995	6 384

1) See note 21.

NOTE 5. SHARES TO EMPLOYEES

Twice a year Veidekke sells shares to its employees at a discount to the current market price. In the spring, senior executives are given the opportunity to buy shares with a three year lock-in period, and in the autumn, all the employees can buy shares with a two-year lock-in period. 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 and historical fluctuations in the share price. The value of the option is calculated using the Black-Scholes model.

The portion of the discount that is not expensed is recognised directly in equity in accordance with IFRS 2.

Loans to senior executives are currently interest-free and repaid at 5% a year. The loans are revocable after ten 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.

Calculated interest expenses related to the long-term interest-free loans are classified as payroll expenses. See notes 6 and 30.

SALES OF SHARES TO EMPLOYEES	2015	2014
Sales of shares to employees (number of shares)	1 282 895	1 960 648
Expensed discount after tax	8	13
Discount entered directly as a reduction in equity related to the Group's share programme	17	13

SHARE LOANS TO EMPLOYEES	2015	2014
Loans to senior executives for purchases of Veidekke shares	160	174
Expensed change in the present value of the share loan	5	7
Number of executives with loans	563	581
Share scheme loans for all employees	15	19
Number of employees with loans	862	876

NOTE 6. FINANCIAL INCOME AND FINANCIAL COSTS

Figures in NOK million	2015	2014
Interest income	10	25
Interest income from joint ventures	19	27
Other interest income from non-financial institutions	18	25
Foreign currency gains	18	10
Dividends received	5	2
Financial income from long-term PPP project's receivables	10	1
Other financial income	14	2
Financial income	94	93
Interest costs 1)	-36	-36
Interest charges from non-financial institutions	-5	-5
Foreign currency losses	-23	-17
Impairment of financial instruments	-20	-24
Other financial costs	-5	-1
Financial costs	-88	-83
Net financial items	6	10

1) Interest income for loans to employees is presented as reduced interest costs. Expensed advances on pay are presented as personnel expenses (see note 15). For 2015 this represents NOK 5 million. The corresponding figure for 2014 was NOK 7 million.

SPECIFICATION OF CAPITALISED INTEREST

Figures in NOK million	2015	2014
Capitalised interest at 1 January	39	68
Capitalised interest charges for the year	17	47
Realisation of assets	-11	-38
Disposals on sales of companies	-	-38
Currency translation differences	1	-
Capitalised interest at 31 December	46	39
The capitalised interest charges relate to the following assets:
Sites under development	42	34
Property development projects under construction	-	1
Operating equipment	5	5
Capitalised interest at 31 December	46	39
Interest capitalisation rate	2.3 %	3.2 %

NOTE 7. PROJECTS IN PROGRESS

Figures in NOK million	2015	2014
Allocation of revenue
Project revenues	21 864	21 133
Sales of residential units in own projects	1 732	2 389
Sales of goods / services (raw materials)	487	396
Other revenue	143	109
Total revenue	24 225	24 027
Detailed project revenue
Income recognised from projects in progress at 31 December
Accumulated income	25 497	19 616
Accumulated profit	1 973	1 651
Loss-making projects in progress - remaining income 1)	741	430
Due from customers	557	523

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

Order backlog	2015	2014
Construction	23 686	15 810
Road maintenance (due for completion within 18 months)	1 128	982
Total order backlog1)	24 814	16 793
- of which due to be completed within the next 12 months	16 672	11 297

Earned, not invoiced income 1 054 734 Advance payments from customers 755 829

1) Asphalt is no longer included in the order backlog. The 2014 figures have been restated.

NOTE 8. EARNINGS PER SHARE

	2015	2014
Earnings per share (NOK)	5,7	6.3
Profit for the year	782	859
Equity holders of Veidekke ASA's share of the profit for the year	765	843
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

Figures in NOK million
At 1 January	2015	2014
Original cost	1 074	1 045
Accumulated depriciation and impairment	-270	-270
Carrying amount at 1 January	804	775
Accounting year
Carrying amount at 1 January	804	775
Currency translation differences	37	9
Additions	310	42
Disposals		- -23
Carrying amount at 31 December	1 151	804
At 31 December
Original cost	1 420	1 074
Accumulated depreciation	-251	-251
Accumulated impairment	-18	-18
Carrying amount at 31 December	1 151	804

The Group has recognised goodwill from the acquisition of a total of 47 businesses. Each goodwill item is allocated to a cash-generating unit. When an acquired 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 as a single cash-generating unit. This is the case when acquired operations are integrated with an existing Veidekke company or when an acquired business is operatively closely linked to 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 27 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 (NOK million)	31.12.15	31.12.14
By cash-generating unit in order of size:
Construction Norway - Leif Grimsrud AS	221	-
Construction Sweden - Arcona AB	104	95
Construction Denmark - Hoffmann A/S	97	91
Construction Sweden - Veidekke Entreprenad AB, Region Väst	95	87
Construction Norway - Reinertsen's land based construction unit	88	-
Industrial - Aggregates	79	79
Industrial - Asphalt	73	73
Construction Norway - Veidekke Agder	71	71
Total goodwill items > NOK 50 million	828	496
Goodwill items < NOK 50 million (19 units)	323	308
Total goodwill	1 151	804

Total for each business area:
Construction Norway	529	219
Construction Sweden	359	328
Industrial	152	152
Construction Denmark	97	91
Property Development Sweden	14	13
Total goodwill	1 151	804

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 capital invested for the unit in question. When the recoverable amount exceeds capital invested, the carrying value of the goodwill is upheld.

ASSUMPTIONS USED IN IMPAIRMENT TESTING

1. Revenue and profit margin in the next three years The calculations are based on the management's approved budget and strategy for the next three years, which in turn are based on current revenue and margins and 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 marginally higher growth than is expected in the Scandinavian economy. The calculation is based on a nominal growth rate of 2.5% per year. This calculation assumes a terminal value after five years based on the Gordon model.

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 businesses' expected earnings for the next three years.

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 capital cost 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	7.7%	7.8%	6.7%
Before-tax discount rate for calculation of the terminal value	9.1%	9.2%	8.1%

4. Investment needs / reinvestment

The unit's anticipated future investment needs in order to maintain current levels are reflected in the calculations. These are set according to 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 in all essence 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 2014 were largely achieved.

DETAILS OF GOODWILL ITEMS WITH A CARRYING AMOUNT EXCEEDING NOK 50 MILLION

				Impairment
	CGU revenue for	Margin achieved	Revenue growth	indicator: Profit
Figures in NOK million	2015 1)	2015	after 2015 2)	margin over time 3)
Construction Norway - Leif Grimsrud AS	683	5.1%	2.5%	3.2%
Construction Sweden - Arcona AB	1 372	2.8%	2.5%	0.9%
Construction Denmark - Hoffmann A/S	1 608	6.0%	2.5%	1.3%
Construction Sweden - Veidekke Entreprenad
Region Väst	1 346	0.9%	2.5%	0.4%
Construction Norway - Reinertsen	9 521	3.3%	2.5%	4)
Industrial - Aggregates	494	11.9%	2.5%	5.9%
Industrial - Asphalt	2 424	6.8%	2.5%	1.8%
Construction Norway - Veidekke Agder	2 847	1.8%	2.5%	0.2%

1) Revenue in the cash-generating unit (CGU).

2) Expected growth in revenue used in tests at 31 December 2015.

3) «Break-even» level. If the future expected profit margin (over time) is lower than the stated profit margin in the table, this indicates that goodwill impairment is necessary.

4) For the Reinertsen acquisition, other indicators will determine whether impairment is necessary.

SENSITIVITY ANALYSIS FOR GOODWILL ITEMS WITH A VALUE OF OVER NOK 50 MILLION

The Group has carried out sensitivity analyses to assess the calculated present values for each cash-generating unit with goodwill in excess of NOK 50 million. No indications of impairment have been identified. 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 sensitivity calculations are based on a reasonable outcome range. A reduction in revenue of over 20% is considered 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.

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	-	-	-	-	-	-

1) Margins maintained.

NOTE 10. OTHER INTANGIBLE ASSETS

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

Figures in NOK million	2015	2014
Carrying amount at 1 January	110	104
Original cost at 1 January	143	127
Additions in purchase of companies	13	20
Original cost of sold companies/disposals	-	-6
Translation differences original cost	8	2
Original cost at 31 December	154	143
Accumulated depreciation and impairments 1 January	-33	-23
Accumulated depreciation sold companies	-	4
Depreciation	-14	-14
Reclassification/other changes	-	-1
Translation differences depreciation	-3	-1
Accumulated depreciation and impairments at 31 December	-50	-33
Carrying amount at 31 December	104	110

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

	2015			2014
Figures in NOK million	Plant and machinery	Land and buildings	Total	Plant and machinery	Land and buildings	Total
Carrying amount at 1 January	1 389	501	1 889	1 230	499	1 729
Original cost at 1 January	3 817	761	4 578	3 478	744	4 222
Additions	493	19	512	476	13	489
Additions from acquisition of operations	135	55	189	18	17	35
Disposals original cost	-238	-2	-240	-166	-17	-183
Disposals original cost sales of operations	-	-	-	-3	-	-3
Reclassification/other changes	9	-9	-	-	-6	-6
Translation differences original cost	54	11	66	13	10	23
Original cost at 31 december	4 270	835	5 105	3 817	761	4 578
Accum. depreciation/impairments at 1 January	-2 428	-260	-2 689	-2 249	-245	-2 493
Accum. depreciation disposal operating equipment	221	-	221	137	2	139
Depreciation for the year	-344	-15	-359	-310	-15	-324
Reclassification/other changes	-	-	-	1	1	2
Translation differences depreciation	-29	-3	-33	-8	-4	-11
Accumulated depreciation/impairments
at 31 December	-2 581	-279	-2 859	-2 428	-260	-2 689
Carrying amount at 31 December	1 689	556	2 245	1 389	501	1 889
Depreciation method	Linear	Linear		Linear	Linear
Depreciation rate	7–25%	2–5%		7–25%	2–5%

Under «Plant and machinery» NOK 47 million has been capitalised related to financial leasing. The Group has entered into contracts worth NOK 91 million on delivery of operating equipment, which are due for delivery in 2016.

ADDITIONS AND DISPOSALS (SALES PRICE)

	2015		2014
Figures in NOK million	Additions	Disposals	Additions	Disposals
Plant and machinery	493	31	476	68
Land and buildings	19	28	13	16
Additions and disposals (sales price)	512	59	489	84

NET GAIN (LOSS) ON SALE OF OPERATING EQUIPMENT 1)

Figures i NOK million	2015	2014
Plant and machinery	14	39
Land and buildings	25	1
Total net gain on sales	39	40

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 BUSINESSES

ACQUISITIONS

Acquisitions in 2015 and 2014 are summarised in the table below:

Year of purchase			2014
	Leif		Martin	REKAB	Recess
Company	Grimsrud AS	Reinertsen	Haraldstad AS	i Uppsala	V-Prefab AB
Acquisition date	13 November	1 September	1 March	1 July	27 June
Share purchased (%)	80	Assets and	50	Assets and	70
		liabilities		liabilities
Acquisition cost (NOK million)	300	77	34	0	53
Carrying amounts on the acquisition date:
Intangible assets	2	-	8	-	19
Plant and machinery, land and buildings	124	9	55	-	27
Trade and other receivables	208	52	16	20	34
Pension and deferred tax liabilities	-56	-9	-8	-	-4
Long-term debt	-51	-	-	-	-27
Trade payables and other current liabilities	-122	-62	-12	-21	-34
Cash	48	-	9	-	-
Non-controlling interests	-	-	-	-	-4
Net identified assets and liabilities	154	-11	67	-1	10
Value 100% of shares / Assets acquired	375	77	67	-	53
Excess value	221	88	-	1	42
Goodwill	221	88	-	1	42
Revenue after takeover	100	-	-	-	34
Profit before tax after takeover	1	-	-	-	3
Revenue before takeover	583	-	5	-	-
Profit before tax before takeover	34	-	-3	-	-

Leif Grimsrud AS

On 13 November 2015 Construction Norway acquired 80% of the shares in the civil engineering contractor Leif Grimsrud AS and its subsidiaries Leif Grimsrud AB and Øst AS. The transaction includes 230 employees in Østfold county in Norway and 30 employees in Strömstad in Sweden. The order backlog on the acquisition date was NOK 597 million. The recognised goodwill of NOK 221 million also includes the non-controlling party's share of goodwill. Goodwill is related to the organisation and its ability to carry out profitable projects over time, as well as synergies with Veidekke's regional operations. A purchase option for the remaining 20% of the shares has been entered into. This liability has been recognised at NOK 0 on 31 December 2015. Transaction costs of NOK 1.1 million have been expensed related to the acquisition. The purchase price allocation is preliminary.

Reinertsen

On 1 September 2015 Construction Norway acquired Reinertsen AS's onshore construction and civil engineering operations. This business undertakes construction work in eastern Norway, Trøndelag and Nordland, and civil engineering projects all over Norway. The transaction includes 215 employees. The order backlog on the acquisition date was NOK 594 million.

Goodwill is related to the employees' expertise and competencies, established project teams, and the reinforcing effect the acquisition will have on Veidekke's organisation. The goodwill is tax deductible. The purchase price allocation is preliminary.

Martin Haraldstad AS

On 1 March 2015 Veidekke Industri AS (Industrial) bought the remaining 50% of the aggregates company Martin Haraldstad AS, which is based in Vestfold. The company had revenues of NOK 57 million and profit before tax of NOK 7 million in 2014. In 2015 the company was merged into Veidekke Industri AS. As a result of this transaction the previous ownership share has been recognised at fair value, generating a gain in the financial statements of NOK 8 million. The gain has been entered under the item «Profit/loss from investments in associates and joint ventures».

Rekab Entreprenad AB

With effect from 1 July 2015 Veidekke took over Lemminkäinen's contracting business Rekab Entreprenad AB in Uppsala. On the acquisition date the business had 17 administrative employees, 30 skilled workers and annual revenue of NOK 150 million. The agreed purchase price for the business is NOK 1.

Recess V-Prefab AB

On 27 June 2014 Veidekke acquired 70% 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% of the shares has been entered into, and the seller has a put option. This has been recognised as a liability of NOK 46 million in the financial statements at 31 December 2015. For more information on recognition of liabilities in connection with options, see note 23.

Accounting effects of this year's acquisitions:

Figures in NOK million	Acquisition
Cash and bank deposits	57
Other intangible assets	10
Machinery, buildings etc.	188
Trade and other receivables	258
Pension and deferred tax liabilities	-72
Non-current liabilities	-52
Trade payables and other current liabilities	-221
Net identified assets and liabilities	168
Goodwill at time of acquisition	310
Non-controlling interests	-75
Joint venture realisation, step by step acquisition	8
Purchase price	411
Agreed purchase price	411
Net Receivables/debts received when buying assets	-37
Cash received	-57
Net cash outflow	317

Business combinations after 31 December 2015:

On 11 January 2016 Construction Norway acquired 80% of the shares in the civil engineering contractor Tore Løkke AS in Sør-Trøndelag. This company undertakes assignments all over Norway and has 78 employees. The financial statements reported revenue of NOK 132 million and a profit before tax of NOK 2 million. The expected purchase price for 80% of the shares is NOK 80 million. NOK 68 million was paid on the acquisition date.

NOK 38 million has been allocated to goodwill, which includes the non-controlling party's share. At the acquisition date the company had NOK 12 million in cash and cash equivalents. There are purchase and put options for the remaining 20% of the shares. The price will be determined on the basis of future earnings and is expected to be around NOK 20 million. The purchase price allocation is preliminary.

NOTE 13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

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

	Joint ventures		Associates		Total
	2015	2014	2015	2014	2015	2014
Carrying value of investment on 1 Jan.	1 060	786	91	122	1 151	908
Share of the profit for the year	121	208	10	8	130	217
Dividends	-150	-73	-2	-8	-152	-81
Capital increases	466	233	0	14	466	247
Disposals	-104	-32	-15	-50	-119	-81
Change in subordinated loans	-340	-51	1	2	-339	-48
Change in value recognised directly to equity	-13	-13	-	-	-13	-13
Currency translation differences	7	1	2	2	9	3
Carrying value of investment
on 31 Dec.	1 046	1 060	87	91	1 134	1 151

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 statement has been prepared in accordance with the Group's accounting policies for segment reporting.

Figures in NOK million	Construction	Property	Industrial	PPP projects	Total
Income statement
Revenue	439	1 165	104	16	1 725
Expenses	-421	-1 015	-88	-	-1 524
Profit before tax	18	150	16	16	201
Statement of financial position
Non-current assets	83	143	48	726	1 000
Current assets	163	3 385	46	58	3 652
Total assets	246	3 528	94	784	4 652
Liabilities	61	1 237	20	753	2 071
Non-current liabilites	107	1 329	21	32	1 489
Current liabilities	167	2 567	41	785	3 559
Net assets	79	961	53	0	1 093
Subordinated loans	-	131	-	-	131
IFRIC 15 adjustments	-	-91	-	-	-91
Investments in associates and joint
ventures	79	1 002	53	0	1 134

Figures in NOK million	Construction	Property	Industrial	PPP projects	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
Non-current assets	80	201	80	711	1 072
Current assets	108	3 048	57	57	3 271
Total assets	188	3 250	137	768	4 343
Liabilities	53	1 674	18	754	2 500
Non-current liabilites	71	996	21	14	1 103
Current liabilities	125	2 671	39	768	3 603
Net assets	63	579	98	0	740
Subordinated loans	-	470	-	-	470
IFRIC 15 adjustments	-	-59	-	-	-59
Investments in associates and joint
ventures	63	990	98	0	1 151

Reconciliation between profit in the companies' accounts and accounting in Veidekke's consolidated financial statements:

		Profit
Figures in NOK million	2015	2014
Profit before tax in associates and joint ventures	201	214
Tax on profit for the year	-46	-47
Profit after tax in associates and joint ventures	155	167
Sale of shares and value adjustments	8	-
Profit after tax associates and joint ventures, segment reporting (note 2)	163	167
Adjustment of profit in accordance with IFRIC 15	-30	50
Share of net income from associates and joint ventures	130	217
Other comprehensive income	2	-13
Total comprehensive income	132	203

DETAILS OF SIGNIFICANT INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

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

	Lilleby	M17	D1a	Lørenvangen
Company	Eiendom AS	Utvikling AS	Utvikling AS	Utvikling AS	Allfarveg AS 1)
Business area	Property Norway	Property Norway	Property Norway	Property Norway	Other
Type of company	JV	JV	JV	JV	JV
Business office	Trondheim	Oslo	Oslo	Oslo	Oslo
Dividend paid to the shareholders	20	-	-	-	25
Revenue	98	67	706	382	-
Depreciation	-	-	-	-	-
Other costs	-88	-3	-574	-306	-
Operating profit	10	64	132	76	-
Interest income	1	1	-	-	1
Interest costs	-7	-27	-42	-26	-
Other net financial items	-	-	-	-	25
Profit before tax	3	38	90	50	26
Income tax expense	1	-10	-23	-13	-2
Profit after tax	4	28	67	37	23
Other comprehensive income	-	3	-	-	0
Total comprehensive income	4	31	67	37	23
Non-current assets	-	-	-	23	1 103
Cash and cash equivalents	31	75	1	76	77
Short-term receivables/
Property projects	784	845	1 055	548	12
Current assets	815	919	1 056	624	90
Non-current financial liabilities	456	656	-	-	1 153
Other non-current liabilites	13	9	2	6	15
Non-current liabilities	469	665	2	6	1 168
Current financial liabilities	-	-	730	515	-
Other current liabilities	18	8	102	4	25
Current liabilities	18	8	832	518	25
Total equity	329	245	222	122	0
The Group's ownership share (%)	50 %	50 %	50 %	50 %	50 %
The Group's share of equity	164	123	111	61	0
Carrying value at 31 Dec. 2015	164	123	111	61	0

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

NOTE 14. PUBLIC-PRIVATE PARTNERSHIP PROJECTS (PPP)

Veidekke has interests in three PPP projects: Jessheim College (100%), Rykkinn School (100%) and the road project National highway E39 Lyngdal–Flekkefjord (50%).

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. For Veidekke this involves the establishment of a limited liability company («AS») company, which assumes the role of client, performs the project planning and design, and is responsible for the construction, financing, operation and maintenance during a given lease period. In connection with the school projects, Veidekke Entreprenør AS (Construction Norway) is responsible for both the construction and the operation and maintenance of the buildings during the lease period, while for the road project, the construction work is carried out by Veidekke Entreprenør AS (Construction Norway), while Veidekke Industri AS (Industrial) undertakes the operation and maintenance work.

The companies Skulebygg AS and Skuleveg AS have assumed the role of owner for the projects Jessheim College 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 area's income statement. Veidekke's share of the profit during the construction period is eliminated at group level and recognised in the income statement over the lifetime of the project.

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	Lease period	Construction	Ownership share	Share of profit
		contract
Jessheim College	2017–2042	0.8 bn.	100 %	100 %
Rykkinn School	2016–2041	0.2 bn.	100 %	100 %
E39 Lyngdal-Flekkefjord	2006–2031	1.2 bn.	50 %	63.5 %

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

Income statement (NOK million)	2015	2014
Other financial income	10	1
Other financial costs	-6	-
Share of net income from joint venture	15	12
Statement of financial position (NOK million)	2015	2014
Non-current assets 1)	416	29
Current assets	17	15
Equity 2)	4	1
Non-current liabilities	383	-
Current liabilities	3	-

1) At 31 December 2015 Veidekke's ownership interest in the joint venture Allfarveg AS has been recorded as NOK 0. This is because the associated interest rate swap contracts 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 of 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 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 National highway E39 Lyngdal–Flekkefjord

Figures in NOK million	Nominal value	Due date	Fair value
Financing - Loans	622	February 2030	622
Hedging - Interest rate swaps	612	February 2030	794
Hedging has had the following effect on equity:
Figures in NOK million		2015	2014
Hedge reserve at 1 January		-142	-92
This year's changes in the hedge reserve		5	-50
Hedge reserve at 31 December		-137	-142
Adjustment of hedge reserve by not including negative equity		62	-65

Hegde reserve at 31 December included in the financial statements -74 -77

This table shows that at 31 December 2015 Veidekke's share of the fair value of the interest rate derivative has been reduced by NOK 137 million, of which NOK 86 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:
Figures in NOK million	2015	2014
Carrying value at 1 January	-	-
Recognised revenue	15	12
Dividends	-15	-15
Adjustments for fair value, long-term interest rate swaps	5	-50
Adjustment by not including negative equity from joint venture	-5	-52
Carrying value at 31 December	-	-

The PPP projects Jessheim College and Rykkinn School

The two contracts were signed in 2014 and are currently under construction. Long-term financing has been obtained for the projects. For the construction phase, external financing has been arranged for Jessheim College, while Rykkinn School is being financed internally.

Figures in NOK million	Nominal value	Due date	Fair value
Financing - Fixed rate loan1)	779	Aug. 2042	868
Financing - Fixed rate loan1)	191	Aug. 2041	215
Hedging - Interest rate swaps	748	Aug. 2017	756

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

Figures in NOK million	2015	2014
Share loans to employees	160	174
Financial investments	123	124
Financial assets PPP projects 1)	416	29
Other non-current receivables	144	75
Other shares	8	7
Financial assets	852	408

1) See note 14.

NOK 123 million has been invested in a bond fund. The funds are to cover pension liabilities and have been pledged. The investment is regarded as available for sale.

Other shares are financial instruments available for sale and 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:

Figures in NOK million	2015	2014
Loans to employees at fair value	138	146
Long-term advance to employees	22	27
Carrying value of share loans to employees	160	174

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 3.0% (3.5%) after tax and an assumed average remaining term of five years.

The difference between the carrying value 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.

NOTE 16. RESIDENTIAL PROJECTS

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.

Figures in NOK million	2015	2014
Sites under development	2 137	1 865
Projects under construction	1 158	840
Unsold completed units	48	64
Non-residential projects	12	28
Total carrying amount residential projects	3 355	2 797

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 the investment limit, as well as providing a larger volume of projects for the Group's construction operations.

Figures in NOK million	2015	2014
Residential projects in joint ventures	971	956
Residential projects in associates	31	39
Carrying value residential projects in Associates and Joint Ventures (partly owned)	1 002	995

Geographical category

		2015
			Total wholly	Total
Sites under	Under	Unsold	owned	Associates
development	construction	completed	projects	and JV's
765	33	44	841	944
147	1		147	-
1 225	1 125	5	2 355	59
2 137	1 158	48	3 343	1 002

	2014
				Total wholly	Total
	Sites under	Under	Unsold	owned	Associates
Residential projects at 31 December	development	construction	completed	projects	and JV's
Norway	646	245	29	920	968
Denmark	154	-	3	157	-
Sweden	1 065	595	33	1 692	26
Total	1 865	840	64	2 769	995

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, 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 2015 Veidekke's portfolio of sites in Scandinavia comprised altogether 11,800 residential units. A substantial share of the portfolio consists of purchase options, primarily linked to the Swedish property development operations. 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	Owned by Veidekke 1)	Call options	Total
Norway	4 416	634	5 050
Sweden	1 650	5 100	6 750
Total	6 066	5 734	11 800

1) Veidekke's share of wholly and partly owned projects.

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

	Ownership	Purchase price	Rental income	Price per
	share	NOK mill. 1)	2015 (NOK mill.)	GFAS2) (NOK)	No.of units
Nycoveien 2, Oslo	100%	215	10	12 337	267
Nya Hovås, Stockholm	100%	118		22 626	240
Skogsnarveien, Oslo	100%	100		10 311	125
Middeltunet, Oslo	50%	414	33	28 527	190
Lilleby, Trondheim	50%	283		7 564	523
Sinsenveien , Oslo	50%	193	15	14 154	203
Peter Møllers vei, Oslo	50%	152		11 626	192
Projects Norway
(purchase price < NOK 100 mill.)		743		3 086	1 594
Projects Sweden
(purchase price < NOK 100 mill.)		565		5 555	6 523
Projects Denmark
(purchase price < NOK 100 mill.) 3)		212		2 541
Sum		2 994

1) Purchase prices may be adjusted based on the final permits.

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

3)NOK 65 million of the purchase price for Denmark has already been written down.

The carrying amount at 31 December 2015 is NOK 147 million. The sites have been put up for sale.

Discretionary judgement

Valuation of sites involves 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 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 projects not yet initiated will fall. Write-downs will most likely be around NOK 250 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.

Deferred payment in connection with the purchase of sites In many cases, some time passes between a site being purchased and takeover of the site. During this period, a binding purchase agreement has been signed, but since Veidekke has not taken over control of the site, the site is not recognised in Veidekke's statement of financial position.

It is also common in connection with the purchase of land to agree to postpone part of the payment until the official land-use regulation of the site has been finalised.

Wholly owned projects (NOK million)	2016	2017	2018	2019	Later
Deferred payment for site purchases 1)	190	42	12	749	62

1) Includes only site obligations Veidekke is obligated to fulfill.

Veidekke has signed an agreement for the purchase of Nedre Skøyenvei 24–26 in Oslo with handover in March 2019. The site will house a new head office for Veidekke and development of around 400 residential units.

The agreed purchase price is NOK 799 million. An advance payment of NOK 50 million has been paid, which has been recognised under «Other current receivables» in the statement of financial position. The outstanding sum will be paid in 2019.

UNITS UNDER CONSTRUCTION AND UNSOLD COMPLETED UNITS

Carrying amount wholly owned projects (NOK million)	2015	2014
Units under construction	1 158	840
Unsold completed units	48	64
Total	1 206	904

Number of units under construction and unsold completed units at 31 December 2015:

	Residential units under	Unsold residen tial units under	Unsold comple ted residential	Average sales	Average stage of
	construction	construction	units	ratio 1)	completion 2)
Projects in Norway -
wholly owned	12	1	11	92%	59%
Projects in Norway -
JV (Veidekke's share) 2)	529	157	5	70%	49%
Projects Sweden -
wholly owned	1 149	20	2	98%	63%
Projects in Sweden - JV
(Veidekke's share) 2)	49	-	-	100%	95%
Total number/
total sales ratio	1 739	178	18	90%

1) For units under construction.

2)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 revenue or profit are recognised in the income statement until the property 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 whether the remaining units under construction will be sold.

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 helps ensure that the management at all times has a good overview of activities.

Earnings from sold units under construction 1)

			Recognised in the seg				Difference financial
Business area	No. of units under con struction sold on 31 Dec.		ment accounts before tax (note 2)1)		Recognised in the financial statements		statements and seg ment accounts
	2015	2014	2015	2014	2015	2014	2015	2014
Property Norway	383	272	63	46	0	-1	63	47
Construction Norway			47	35	0	0	47	35
Property Sweden	1 178	667	215	122	-18	-15	233	137
Construction Sweden			-13	-1	0	0	-13	-1
Total	1 561	939	312	203	-18	-16	-330	-219

1) Revenues and profit 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 are considered to provide the most accurate picture of the ongoing value creation.

The table shall be read as follows: Veidekke has 1,561 sold units under construction at 31 December 2015. In the financial statements Veidekke has recorded a loss of NOK -18 million for these projects, while the segment accounts show a profit of NOK 312 million.

The difference of NOK 330 million will be recognised in the financial statements when the units are handed over to the buyer. 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 transaction has had a significant impact on the financial statements for 2015:

			Effect on opera
Project	Unit	Accounting line	ting revenue	Effect on profit
Site for development in region Vest.		Revenue, cost of
Partial sale from 100% to 50%	Property Norway	materials	84	37

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 materials (crushed stone, gravel and bitumen).

Figures in NOK million	2015	2014
Inventory for industrial operations	155	102
Inventory in construction operations	155	153
Total inventory	310	255

NOTE 18. TRADE RECEIVABLES

Trade receivables in the statement of financial position at 31 December consist of the following elements:

Figures in NOK million	2015	2014
Invoiced trade receivables	4 976	4 088
Provisions for bad debts	-28	-30
Due from customers	557	523
Accrued revenue	1 217	900
Work invoiced in advance (not recognised income)	-2 126	-1 977
Trade receivables	4 597	3 504

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:

Figures in NOK million	2015	2014
Receivables not due for payment	2 564	2 342
Less than 30 days since due date	630	558
30–60 days since due date	590	131
60–90 days since due date	119	141
90–80 days since due date	256	173
More than 180 days since due date 1)	817	742
Invoiced trade receivables	4 976	4 088

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 evaluation of the project's likely outcome (estimated final result). See note 32 Disputes and claims related to projects.

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

Figures in NOK million	2015	2014
Provisions at 1 January	30	30
Translation differences	-	-
Provisions made during the year	23	24
Provisions used during the year	-2	-
Provisions reversed during the year	-23	-24
Provisions at 31 December	28	30

Provisions are mainly made on a group basis.

Credit risk exposure

Credit risk is the risk that Veidekke will incur a loss as a result of a customer's inability to fulfil their obligations (bankruptcy risk).

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

Figures in NOK million	2015	2014
Trade receivables	4 597	3 504
Of which:
Received bank guarantees to trade receivables	403	365
Other guarantees	192	284
Receivables from public authorities (state and municipal level) 1)	3 426	2 004
Total secure receivables	4 021	2 654
Maximum unhedged credit risk in the trade receivables	575	850

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 consist of bank deposits. At 31 December 2015 the Group has NOK 36 million in restricted cash.

NOTE 20. NUMBER OF SHARES, SHAREHOLDERS, ETC.

Veidekke ASA's largest shareholders at 31 December 2015 are presentet in the following table:

OBOS BBL 23 769 440 Folketrygdfondet 15 535 418 IF Skadeförsäkring AB 9 969 320 Handelsbanken Aksjefond 3 735 715 Verdipapirfondet DNB Norge (IV) 3 032 058 MP Pensjon PK 2 742 000 Must Invest AS 2 560 250 Swedbank Robur (Smabolagsfondnorden) 2 551 379 Danske Invest Norske Instit. II. 2 164 700 LF Fastighetsfonden 2 052 534 Odin Norge 1 210 832 Danske Invest Norske Instit. II 1 196 200 Morgan Stanley & co Internat. PLC (NOM) 1 192 142 State Street Bank and Trust CO. (NOM) 1 160 288 DNB Livsforsikring ASA 1 086 418 Total 15 largest shareholders 73 958 694 Employees (3 460 individuals) 20 634 678 Others 39 111 570 Total 133 704 942	No. of shares	Ownership share
		17.8%
		11.6%
		7.5%
		2.8%
		2.3%
		2.1%
		1.9%
		1.9%
		1.6%
		1.5%
		0.9%
		0.9%
		0.9%
		0.9%
		0.8%
		55.3%
		15.4%
		29.3%
		100%

Change in number of shares
No. of shares 1 January 2015	133 704 942
No. of shares 31 December 2015	133 704 942

Each share has a nominal value of 0,50.

Shares owned by senior executives at 31 December 2015:

The Board of Directors	No. of shares
Martin Mæland, chair 1)	10 000
Per-Otto Dyb, deputy chair	-
Gro Bakstad	13 000
Hans von Uthmann	-
Annika Billström	-
Ann-Christin Gjerdseth	2 000
Inge Ramsdal	6 925
Odd Andre Olsen	3 125
Arve Fludal	11 955
Shares owned by board members	47 005
Members of the corporate management
Arne Giske	184 805
Dag Andresen	175 650
Jørgen Wiese Porsmyr	102 320
Per-Ingemar Persson	106 105
Terje Larsen	104 455
Hege Schøyen Dillner	6 705
Total shares owned by corporate management	680 040
Total	727 045

1) Former CEO of OBOS.

Own shares

Veidekke does not own any of its own shares.

Dividend

The dividend for financial year 2014, which was paid out in 2015, amounted to NOK 468 million (NOK 3.5 per share). The proposed dividend for the 2015 financial year is NOK 535 million (NOK 4.0 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

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, Veidekke 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 60 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% of the pay; for salaries between 6G and 12G the contribution is 8%. 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 60 years who worked in Veidekke on 31 December 2012. In the defined-benefit plan Veidekke has committed to paying a pension of a specified amount, 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% of the employee's salary on retirement, assuming a full service period. Pension credit is only earned on salary above 12G (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. The Norwegian group companies 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 on the accounts. The premium for 2015 was 2.4% of salaries between 1G and 7.1G. The premium is expected to rise to 2.5% in 2016.

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% 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 60 or older there is a scheme that, assuming a full service period, provides a retirement pension amounting to roughly 60% 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 earliest retirement age is 67, and the pension will be paid for life. The pension scheme is financed through operations. The scheme is closed. For other employees there is an allocation scheme where 20% 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 years at the earliest and for ten years from when it is first drawn. These pension schemes are financed through operations.

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.

Termination of pension plan 2015

In 2015 the Norwegian company Block Berge Bygg AS completed the transition from a defined-benefit to a defined-contribution pension scheme for its employees. The employees now have a pension plan that is very similar to the general defined-contribution plan for Veidekke employees in Norway. Veidekke has discontinued one other defined-benefit pension scheme in Norway too. The changes resulted in a gain in the financial statements of NOK 40 million.

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% of the salary. The retirement age in Denmark is between 65 and 69 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% of the salary.

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

Present value of the years earning (service cost)	52	49
Interest charges on net pension liabilities	13	7
Termination of defined-benefit scheme in Norway	-40	0
Total costs (defined-benefint schemes)	25	56
Cost of defined-contribution plan	268	256
Pension costs	293	312
Composition of net pension liabilities	2015	2014
Pension liability - defined-benefit schemes	-1 350	-1 414
Pension assets	885	923
Net pension liability defined-benefit schemes	-465	-490
Pension liability - other schemes	-47	-32
Pension liability at 31 December	-512	-523
Change in gross pension liability during the year	2015	2014
Gross pension liability at 1 January	-1 414	-1 152
Service cost (present value)	-52	-49
Interest cost	-33	-46
Additions from acquisition of companies	-55	0
Termination of defined-benefit schemes	114	0
Actuarial gains and losses are recognised in comprehensive income	41	-211
Employer's National Insurance contributions paid	4	4
Payments during the year	45	39
Gross pension liability at 31 December	-1 350	-1 414
Change in pension assets during the year	2015	2014
Pension assets at 1 January	923	971
Expected return	20	38
Additions from acquisition of companies	46	0
Transfer of pension assets to defined-contribution fund	-74	0
Contributions	27	32
Transfer of pension assets to defined-contribution premium fund	-8	-89
Year's actuarial gains and losses recognised in total comprehensive income	-7	4
Payments during the year	-42	-33
Pension assets at 31 December	885	923

Pension costs (NOK million) 2015 2014

OVERVIEW OF NET PENSION LIABILITIES AND ACTUARIAL GAINS AND LOSSES (NOK MILLION)

	2015	2014
Gross pension liabilities	-1 350	-1 414
Pension assets	885	923
Net pension liability defined-benefit schemes	-465	-490
Overview of actuarial gains and losses - defined-benefit schemes
Liabilities:
Changes in economic assumptions	34	-186
Changes in population and demographic assumptions	8	-25
Pension assets:
Actual return v. actuarial assumption	-7	4
Year's actuarial gains and losses recognised in total comprehensive income	34	-207
Financial assumptions	2015	2014
Discount rate/return on pension investments	2.5%	2.3%
Annual wage growth	2.5%	2.75%
Annual adjustment of G	2.25%	2.5%
Annual adjustment of pensions under payment	0.0%	0.0%
Mortality table	K2013	K2013
Pension assets	2015	2014
Investment
Property	12%	11%
Bonds	55%	65%
Short-term investments	24%	17%
Shares	9%	7%
Total investments	100%	100%
Return
Book return	5.4%	5.4%
Adjusted return	3.9%	6.6%

Pensions 2016

The estimated premium for defined-benefit plans for 2016 is approx. NOK 50 million.

The cost of defined-benefit pension plans for 2016 is expected to be approx. NOK 55 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	2015	2014
Tax payable	60	272
Change in deferred tax	105	-70
Adjustments previous years	2	-6
Total	167	196
Reconciliation of the Group's tax rate	2015	2014
Calculated income tax based on Norway's current tax rate, 27%	256	285
Actual income tax expense	167	196
Difference	89	89
Explanation difference income tax expense
Tax from activity in joint ventures 1)	31	58
Tax-excempted sales of companies 2)	13	31
Other permanent differences:
Non-deductible expenses	-18	-13
Effect of changes in the tax rate 3)	37	1
Deferred tax asset, not previously recognised	29	-3
Lower tax rate in Sweden and Denmark	9	9
Other items	-13	6
Total	89	89
Effective tax rate	17.6%	18.5%

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

3)For 2015, the effect is related to the lowering of the tax rate in Norway from 27% to 25%.

Deferred tax liabilities

Deferred tax	2015	2014
Current items 1)	609	472
Total current items	609	472
Operating equipment - accelerated depreciation	119	82
Other non-current items	57	54
Provisions for liabilities	-205	-222
Pension liabilities	-122	-135
Total non-current items	-151	-222
Losses carried forward	-96	-82
Net deferred tax liabilities	362	168

1) In Norway and Denmark construction projects in progress are not taxed until completion and handover.

Given stable orders, this will provide a permanent tax credit of approx. NOK 600 million.

Presentation of deferred tax in the statement of financial position

	2015	2014
Deferred tax assets 1) 2)	-65	-54
Deferred tax liabilities	427	222
Net deferred tax liabilities	362	168

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

2) At 31 December 2015 Veidekke had NOK 65 million (NOK 54 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 deferred tax assets in Sweden with a nominal value of NOK 59 million that had not been recognised on 31 December 2015.

Change in deferred tax

	2015	2014
Current items	138	-51
Non-current items - accelerated depreciation	37	26
Other non-current items	3	-21
Provisions for liabilities	17	-23
Pension liabilities	14	-79
Losses carried forward	-14	29
Change in deferred tax	194	-118
Currency translation differences	-2	1
Deferred tax in connection with acquisition/sale of companies	-56	-12
Corrections previous years	-21	0
Change in deferred tax recognised in total comprehensive income	-9	59
Change in deferred tax in the income statement	105	-70

Tax incorporated into total comprehensive income

		2015			2014
Statement of	Profit before	Income tax	Comprehen	Profit before	Income tax	Comprehen
comprehensive income	tax	expense	sive income	tax	expense	sive income
From the income statement	950	167	782	1 055	196	859
Other income recognised in comprehensive income:
Revaluation, pensions	34	9	25	-207	-56	-151
Currency translation differences	97	-	97	43	-	43
Fair value adjustments of
financial assets	-	-	-	-14	-4	-10
Total comprehensive income	1 081	176	905	877	136	741

Tax recognised directly in equity

In 2015 NOK 6 million (NOK 4 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.

	2015	2014
Bonds	750	750
Non-current loans from credit institutions	473	44
Non-current loans from others	44	29
Non-current interest bearing liabilities	1 267	823

Other non-current liabilities, non-interest bearing

	2015	2014
Option agreement Seby AS and Hammerfest Entreprenør AS 1)	13	13
Option agreement Recess AB 1)	46	42
Other non-current liabilities	44	49
Other non-current liabilities	103	104

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%, 70% and 83% 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	2015	2014
Trade payables	1 994	1 571
Provision for accrued costs	1 785	1 561
Total trade payables	3 778	3 132
Other current liabilities	2015	2014
Advance payments from customers	2 400	1 830
Other liabilities	1 431	1 279
Other current liabilites	3 832	3 109

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

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).

	2015	2014
Warranty provisions etc. at 1 January	825	740
Currency translation differences	17	13
+ new warranty provisions (additions)	438	453
- reversed warranty provisions (disposals)	-231	-185
- actual claims expenses (consumption)	-200	-195
Warranty provisions etc. at 31 December	848	825

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	2015	2014
Recorded liabilities secured by mortgages etc.	78	16
Book value of mortgaged assets	183	160
Guarantees	2015	2014
Guarantees to joint ventures and associates	60	17
Guarantees to other companies	18	21

Guarantees can only be enforced if the joint venture or associated company 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 123 million at 31 December 2015 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 and long term. The goal is to have a financial structure that promotes profitability and value creation throughout the entire Group and thus provides 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 least 50% of the profit after tax over time. Shareholders shall receive continuous returns that are directly correlated with results. The average pay-out ratio for the last ten years is 66%.

Veidekke ASA can use 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% of the outstanding shares. In recent years Veidekke has prioritised dividend pay-outs and operational investments rather than repurchase of own

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 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 the guidelines for the handling of financial risk management.

Veidekke has a central finance department 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 debt.

(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 attached to trade receivables is related to the customer's ability to pay, not shares. The Board is authorised to repurchase up to 10% 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. In October 2015 Veidekke signed a new five-year loan agreement with DNB ASA, with a credit limit of NOK 3.6 billion. In addition Veidekke has a bond loan of NOK 750 million, which matures in 2018. The Group had no outstanding commercial papers at 31 December 2015. Veidekke has no official credit rating, but has «investment grade» shadow ratings of BBB from SEB and of BBB- from DNB.

The Group has substantial amounts of capital tied up in its property development operations in the form of sites and residential units under construction in Norway and Sweden. In order to strengthen Veidekke's position in property development, the limit for capital invested is being increased from NOK 3.5 billion to NOK 4.0 billion towards 2018. At year-end capital invested was NOK 3.0 billion (NOK 3.1 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 through the various forms of collaboration with external partners, including joint ventures.

At 31 December 2015 Veidekke had net interest-bearing debt of NOK 606 million. At year-end the Group had undrawn committed borrowing facilities of NOK 3.4 billion (NOK 3.0 billion). The maturity and repayment structure are discussed in note 29.

the customer's willingness to pay (project risk).

The Group has a substantial share of public-sector customers (approx. 35%), for whom the credit risk is considered very low. For our private customers (approx. 65%), we seek to handle the credit risk within the Group's various divisions 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% 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 seeks to minimise risk through advance payments and by ensuring that handover does not take place until full payment 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 19 Trade receivables and note 32 Disputes and claims related to the projects.

(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 2015 undrawn committed borrowing facilities amounted to NOK 3.4 billion (NOK 3.0 billion). 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 own-account risk in residential and non-residential projects. Veidekke meets all the requirements 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 risks in the company's own-account projects within property development operations, the main rule is that residential projects shall not be started until the sales ratio exceeds 50%.

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) divided by EBITDA (the Group's operating profit plus depreciation, amortisation and impairment) for the last four quarters shall not exceed 3.5. At 31 December 2015, the ratio was 0.5.

(ii) The Group's share of own projects (the value of started, unsold residential and non-residential 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 never exceed 75% of the Group's book equity. At 31 December 2015, share of own projects was 6%.

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% sales.

See note 19 for information on cash and cash equivalents, note 23 on current interest-bearing liabilities, note 26 for information on mortgages and guarantees and note 29 for information on sensitivity analysis and maturity structure.

(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 a part of the Group's investment strategy. Veidekke prioritises investments in companies and projects which allow the Group considerable influence on future operations and development.

The Group has financial investments classified as available for sale of NOK 131 million at 31 December 2015, of which NOK 123 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 2015 Veidekke had entered into hedging contracts for six projects where work will be performed up to two years into the future.

(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 June 2013 Veidekke ASA signed a fiveyear fixed rate agreement for NOK 500 million. Under this agreement, Veidekke pays a fixed interest rate of 2.22% plus a loan margin until June 2018. 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: Jessheim College (100%), Rykkinn School (100%) and the road project E39 Lyngdal–Flekkefjord (50%). Long-term fixed-rate financing agreements have been signed for all three projects. Interest rate risk is eliminated by linking the agreed financing to signed lease contracts. There is a more detailed presentation of the PPP projects in note 14.

The current interest rate level is expected to have a significant effect 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 sales of homes for Property Development. Fluctuations in currency rates have little direct influence on Veidekke, as its 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 2015 amounted to NOK 5.0 million (NOK 7.4 million)

NOTE 29. FINANCIAL INSTRUMENTS

The carrying value of assets and liabilities can be broken down into the following categories:

	Statement of fi	Financial assets
	nancial position at 31 December 2015	and liabilities at fair value through profit and loss	Loans and receivables	Available-for-sale financial assets	Other financial liabilities
Non-current financial assets	852	-	721	131	-
Trade and other receivables	5 171	-	5 171	-	-
Current financial assets		-	-	-	-
Cash and cash equivalents	402	-	402	-	-
Total financial assets	6 425	-	6 294	131	-
Non-current interest-bearing liabilities	1 267	2	-	-	1 264
Other non-current liabilities	103	-	-	-	103
Current interest-bearing liabilities	43	-	-	-	43
Tax payable	71	-	-	-	71
Other current liabilities	8 299	-	-	-	8 299
Total financial liabilities	9 783	2	-	-	9 781

Financial instruments at fair value

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

		Financial assets at fair value
	Financial assets available for sale	through profit and loss	Interest rate derivatives	Total
Financial instruments at 1 Jan. 2015	131	412	-784	-241
Additions	6	-	-232	-226
Sales / deduction	-	-400	268	-132
Gains (losses) recognised in Other	2	-	-8	-6
comprehensive income
Gains (losses) recognised in the income statement	-7	-12	-2	-22
Financial instruments at 31 December 2015	131	-	-758	-627

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	-	124	7	131
Financial assets at fair value through profit	-	412	-	412
Interest rate derivative	-	-784	-	-784
Total at 31 December 2014	-	-249	7	-241
Financial assets available for sale	-	123	8	131
Interest rate derivate	-	-758	-	-758
Total at 31 December 2015	-	-634	8	-627

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.

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, trade payables (creditors), unpaid government charges and tax and other current liabilities.

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:

	Carrying	Maturity structure			After	Total con tractual cash
	value	2016	2017	2018	2019	2019	flows
Bonds 1)	750	27	27	761	-	-	816
Non-current bank loans 2)	168	-	-	-	-	183	183
Other loans, credit institutions	305	12	250	21	10	29	323
Non-current interest-bearing loans to	44	-	-	35	-	15	50
others
Other non-current liabilities	103	2	19	23	35	28	106
Total	1 370	41	297	840	45	254	1 477

1) Total contractual cash flows include accumulated interest paid up until the loan expires on 4 June 2018.

2)The Group has a long-term credit facility with DNB with a credit limit of NOK 3.6 billion, of which NOK 168 million had been utilised on 31 December 2015.

Effective interest rates for selected financial instruments:

	31.12.20151)	2015 2)	20142)
Liquidity	0.4%	0.6%	1.9%
Current interest-bearing liabilities	1.9%	2.2%	3.1%
Non-current interest-bearing liabilities	1.9%	2.2%	3.1%

1) Actual interest rates at 31 December 2015. The stated interest rates are exclusive of interest rate swaps.

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

At 31 December 2015 the Group had undrawn committed borrowing facilities of NOK 3,432 million (NOK 3,049 million at 31 December 2014

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 2015 withdrawals from the group account were classified as non-current liabilities, as a new five-year agreement was signed in autumn 2015.

At 31 December 2015 the Group has two such interest rate derivatives. See the table below for details.

Interest rate agreement	Nominal value	Due date	Swap interest rate	Fair value (before tax)	Change in value 2015
	increasing to
Skulebygg AS - 2.5-year hedge	708	August 2017	1.9 %	-8	-8
Veidekke ASA - 5-year hedge	500	June 2018	2.2 %	-17	1

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 revaluation over Other comprehensive income.

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:

			Maturity structure
2015	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	2	-	2	-	-	2
Other current interest-bearing liabilities	42	-	1	39	2	42
Trade payables 1)	3 778	1 813	1 936	19	10	3 778
Unpaid government charges	689	-	574	112	3	689
Tax payable	71	-	3	68	-	71
Current liabilities	3 832	299	817	2 140	576	3 832
Total current liabilities	8 413	2 112	3 333	2 378	591	8 413

			Maturity structure
2014	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	52	-	-	52	-	52
Other current interest-bearing liabilities	3	-	1	-	2	3
Trade payables 1)	3 132	1 375	1 749	-2	9	3 132
Unpaid government charges	605	-	549	54	2	605
Tax payable	241	-	8	233	-	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

1) When the due date is not set for trade payables, this is largely related to project accrual due to invoices 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.

Items that are adjusted to fair value in the equity note

Based on average interest-bearing liabilities in 2015, our estimate is that a general increase in interest rates of 1 percentage point would lead to a NOK 10 million decrease in profit before tax for the year. A 1 percentage point decrease in interest rates would cause a corresponding improvement in profit before tax. The assessment does not include the investments in joint ventures.

Fair value after tax	2015	2014
Hedge reserve PPP project E39 Lyngdal Flekkefjord 1)	-74	-77
Other interest swap agreements	-22	-14
Financial assets available for sale, fair value adjustments	-	-3
Foreign exchange contracts	2	-
Total	-94	-94

1) See note 14.

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 2016 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 in 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% of the 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% of the annual salary, while the maximum bonus linked to fulfilment of the targets in individual action plans is 10%.

The bonus for achievement of financial results is based on defined margin targets, where half of the bonus for the business leaders is linked to the consolidated profit and half linked to the business unit's profit. The bonus for the heads of staff 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 2015 and effects for the company and the shareholders of agreements both entered into and revised

The salary adjustments in 2015 have been made in accordance with the declaration that was submitted to the Annual General Meeting on 5 May 2015. There have been no significant changes in the salary conditions for senior executives. For 2015 the company had a bonus scheme for the President and CEO and senior executives with a maximum achievable bonus of 30% 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%, 20% was bonus linked to Group and business unit performance and 10% was bonus based on targets defined in individual action plans.

President and CEO

Veidekke has established a bonus scheme for the President and CEO with a maximum achievable bonus of 30% of his annual salary. 20% of the bonus is calculated based on the Group's results measured by profit margin, and 10% 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% of his salary per year until he turns 60. A deduction will be made from this guaranteed salary for any salary or other remuneration he 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% 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% 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 the 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 1,455 shares through the programme in 2015. 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 1.23 million at 31 December 2015. 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% 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% 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% of his salary.

After the age of 65, his pension will come from a defined-contribution plan, to which Veidekke has paid 35% of his salary in annual premiums. Per-Ingemar Persson has chosen to exercise the option to retire at age 60 years. He left his position as Managing Director of the operations in Sweden on 31 December 2015.

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 21 for more information about Veidekke's pension arrangements.

The corporate management participates in Veidekke's employee share programme and purchased a total of 10,220 shares through the programme in 2015. 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 3.9 million at 31 December 2015. A list of loans to members of the corporate management team is shown in the table on the next page. The loans are currently interest-free and are secured by collateral in the shares.

Compensation to the President and CEO and the corporate management team

Figures in NOK thousand			2015		2014
		Paid	Car, phone, interest	Total	Total
	Salary	bonus	rate advantage etc.	compensation	compensation
President and CEO
Arne Giske	3 555	600	285	4 440	4 158
Corporate management
Dag Andresen	2 934	550	277	3 762	3 452
Hege Schøyen Dillner	2 065	350	179	2 594	2 175
Jørgen Wiese Porsmyr	2 567	550	218	3 335	3 151
Per-Ingemar Persson	3 389	479	65	3 933	3 793
Terje Larsen	2 356	400	178	2 934	2 620
Total CEO and corpo
rate management	16 867	2 929	1 202	20 998	19 350

			2015
Figures i NOK thousand	Year's change in pension rights	Present value of pension liabilities	Premium pension plan	Loan for share purchases	Earned bonus
President and CEO
Arne Giske	2 783	23 037		1 233	700
Corporate management
Dag Andresen	1 695	18 066		787	650
Hege Schøyen Dillner			254	65	400
Jørgen Wiese Porsmyr 1)	(413)	12 099		640	550
Per-Ingemar Persson	2 975	11 345	388	458	733
Terje Larsen	1 474	11 663		732	500
Total CEO and corpo
rate management	8 515	76 210	642	3 916	3 533

1) This year's change in pension rights is negative as a result of changes in the actuarial assumptions, including an increase in the discount rate. See note 21 Pensions.

Compensation to the Board of Directors:

			Total	Loan for share
Figures in NOK thousand	Fees	Salary 1)	compensation	purchases
Martin Mæland (chair)	570		570
Per Otto Dyb (deputy chair)	330		330
Hans von Uthmann	330		330
Annika Billström	282		282
Gro Bakstad	309		309
Ann-Christin Gjerdseth	282		282
Inge Ramsdal (employee representative)	234	696	930
Lars Sevald Skaare (employee representative) 2)	234	401	635	434
Odd Andre Olsen (employee representative)	234	870	1 104
Arve Fludal (employee representative) 3)		533	533	404
Total Board of Directors	2 805	2 500	5 305	838

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

2) Board member until 12 May 2015. Salary compensation during term of board service.

3) Board member from 12 May 2015. Salary compensation in period after appointment to the Board.

Veidekke has established audit, 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:
Figures in NOK thousand	2015	2014
Statutory audit including audit-related assistance	12 718	12 978
Tax-related assistance	695	597
Other services in addition to auditing	886	603
Total remuneration to auditors	14 299	14 178

Remuneration excludes VAT.

NOTE 31. LEASE 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:

		Operating equipment 1) Rent		Other commitments
Leasing commitments for Veidekke	2015	2014	2015	2014	2015	2014
Expenses this year	127	118	48	36	2	1
Expenses next year	104	95	27	17	0	0
Total expenses next 2–5 years	304	273	41	25	0	0
Total expenses after 5 years	121	161	0	0	0	0

1) Operating equipment that has been leased for a building construction project and where the lease expires during the construction period are not included in this statement.

Rental income

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

Veidekke's income from lease of properties	2015	2014
Rental income this year	24	19
Rental income next year	35	8
Total rental income next 2–5 år	56	23
Total rental income after 5 år	0	0

NOTE 32. DISPUTES AND CLAIMS RELATED TO PROJECTS

Through its ongoing operations, Veidekke is occasionally involved in disputes with contracting clients regarding the interpretation and understanding of signed contracts. This applies particularly to transport infrastructure projects where the contract terms are demanding, the projects are complex, and large sums of money are involved. 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:

«The revenue recognition for additional claims against the client and disputed amounts with a high level of uncertainty is based on assessments of the likely outcome of the dispute. The degree of uncertainty in the estimates will affect the proportion of the claim that is recognised in the income statement.»

At year-end Veidekke was involved in nine disputes for claims over NOK 10 million, which are being processed by the judicial system. A total of 17 disputes were resolved during the year, either through a court ruling or through negotiations with the contracting client.

At year-end 2015 Veidekke had several unresolved final settlements related to infrastructure projects. Outstanding claims after deductions for recognised provisions and assessment of uncertain income in these projects were in the range of NOK 400 million (excl. VAT) at 31 December 2015.

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 (Ass.) and joint ventures (JV):

		2015		2014
Figures in NOK million	Ass.	JV	Ass.	JV
Revenue
Construction operations	115	977	2	689
Industrial operations	-	11	-	53
Property development operations	-	225	-	40
Total revenue	115	1 213	2	782
Statement of financial position at 31 December
Receivables	42	302	1	190
Liabilities	10	3	9	33

OBOS BBL has a 17.8% 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 2015 there are 12 companies that are jointly controlled by OBOS and Veidekke:

Transactions with selected parties

	Revenue	Receivables
Figures in NOK million	2015	31.12 2015
OBOS	464	58
Joint ventures 1)	77	18
1) 50% owned by OBOS.

Veidekke also acquired 50% of the shares in Portalen Bolig AS in 2015, with a purchase price of NOK 38.5 million.

NOTE 34. EVENTS AFTER THE REPORTING DATE

No events have occurred 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	2015	2014
Veidekke Entreprenør AS	Construction	Oslo, Norway	100%	100%
-Veidekke Agder AS	Construction	Kristiansand, Norway	1)	100%
-Block Berge Bygg AS	Construction	Klepp, Norway	100%	100%
-Leif Grimsrud AS	Construction	Halden, Norway	80%	0%
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%

1) Veidekke Agder AS was merged into Veidekke Entreprenør AS in 2015.

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

INCOME STATEMENT VEIDEKKE ASA

Figures i NOK million	Note	2015	2014
Revenue		133	111
Personell expenses	1, 10	-95	-94
Other operationg expenses	3	-75	-73
Depreciation		-1	-1
Total operating expenses		-170	-168
Operation profit		-37	-56
Dividends and group contributions from subsidiaries	2	851	300
Other financial income	2	45	86
Financial costs	2	-67	-56
Profit before tax		792	273
Income tax expense	9	-53	-55
Profit for the year		739	217
Allocation of profit
Dividend		535	468
Other equity		204	-251
Total		739	217

STATEMENT OF FINANCIAL POSITION VEIDEKKE ASA AT 31 DECEMBER

Figures in NOK million	Note	2015	2014
ASSETS
Non-current assets
Deferred tax assets	9	23	30
Property and machinery	4	9	12
Investments in subsidiaries	5	2 255	2 032
Investments in associates and joint ventures	6	66	66
Financial investments	7	131	125
Other non-current receivables	7	160	174
Total non-current assets		2 644	2 439
Current assets
Receivables from group companies		851	301
Financial investments		-	412
Other receivables		29	13
Total current assets		880	726
Total assets		3 524	3 165

EQUITY AND LIABILITIES

Equity
Share capital	67	67
Other equity	1 405	1 195
Total equity 8	1 472	1 262
Non-current liabilities
Pension liabilities 10	128	131
Bonds 11	750	750
Debts to credit institutions 11	306	-
Total non-current liabilities	1 184	881
Current liabilities
Debts to credit institutions 13	-	364
Trade payables	43	44
Taxes payable 9	2	39
Dividends payable 8	535	468
Current liabilities to group companies	279	94
Other current liabilities	11	13
Total current liabilities	869	1 022
Total equity and liabilities	3 524	3 165

STATEMENT OF CASH FLOWS VEIDEKKE ASA

Figures in NOK million	Note	2015	2014
OPERATING ACTIVITIES
Profit before tax		792	273
Recognised dividends and group contributions, not yet paid		-849	-300
Received dividends and group contributions from subsidiaries		309	517
Group contributions to subsidiaries		-92	-94
Tax paid	9	-39	-31
Depreciation		1	1
Gains / losses on sale of property	4	-25	-1
Pensions, difference expensed/paid		-4	22
Generated from this year's activities		101	387
Change in other current assets		-1	-12
Change in other items		-23	-11
Net cash flow from operating activities (A)		77	363
INVESTING ACTIVITIES
Acquisition of tangible non-current assets	4	-	-1
Sale of property	4	27	4
Equity contributions in subsidiaries		-	-443
Cash flow from financial investments	7	407	-400
Net cash flow from investing activities (B)		434	-840
FINANCING ACTIVITIES
New long-term loans		306	-
Repayment of certificate loans		-	-655
Repayment/new current liabilities		-364	364
Dividends received from joint ventures		15	15
Dividends paid		-468	-401
Net cash flow from financing activities (C)		-511	-677
TOTAL NET CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C)		0	-1 154
Cash and cash equivalents at 1 January		0	1 154
Cash and cash equivalents at 31 December		0	0
Supplementary information
Borrowing facility DNB 1)		3 600	3 100
Used committed borrowing facilities at 31 December		168	51

ACCOUNTING POLICIES

The parent company Veidekke ASA is a holding company with no operations. Its activities consist of investments in subsidiaries and associated companies, 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 2015.

Unless otherwise specified, all amounts are in NOK million.

NOTE 1. PERSONNEL EXPENSES

Figures in NOK million	2015	2014
Payroll	69	67
Pension costs	10	14
National Insurance contributions	9	7
Other payroll costs (social benefits etc.)	6	6
Total	95	94
	2015	2014
Number of fulltime equivalents	49	51
Number of employees at 31 December	50	54

NOTE 2. FINANCIAL INCOME AND FINANCIAL EXPENSES

Figures in NOK million	2015	2014
Dividend and group contributions from subsidiaries	851	300
Interest income	29	71
Dividends from joint ventures	15	15
Currency gains	1	-
Total other financial income	45	86
Interest costs	-49	-49
Currency losses	-	-2
Other financial costs	-18	-5
Total financial costs	-67	-56
Net financial items	829	329

NOTE 3. REMUNERATION TO AUDITORS

In 2015 remuneration to the auditors was NOK 0.8 million for auditing, NOK 0.1 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

The company owns recreational cabins recognised at NOK 8 million. Sales price of sold land and buildings amounted to NOK 27 million in 2015. Gains of NOK 25 million have been included under the item «Revenue».

NOTE 5. SHARES IN SUBSIDIARIES

Company	Location	Ownership share (%)	Value in the state ment of financial position 1)
Veidekke Entreprenør AS	Oslo	100	718
Veidekke Eiendom AS	Oslo	100	470
Hoffmann A/S	Copenhagen	100	366
Veidekke Industri AS	Oslo	100	322
Veidekke Sverige AB	Lund	100	296
Skulebygg AS	Oslo	100	41
Veidekke Danmark AS	Copenhagen	100	22
Hovinmoen Utvikling AS	Oslo	100	18
Skuleveg AS	Oslo	100	2
Total			2 255

1) Carrying value in Veidekke ASA' s accounts at 31 December 2015 (cost method).

NOTE 6. SHARES IN ASSOCIATES AND JOINT VENTURES

			Value in the sta
Company	Location	Ownership	tement of finan
		share (%)	cial position 1)
Allfarveg AS	Oslo	50	66
Total			66

1) Carrying value in Veidekke ASA' s accounts at 31 December 2015 (cost method).

NOTE 7. FINANCIAL INVESTMENTS / NON-CURRENT RECEIVABLES

	2015	2014
Share loans to employees	160	174
Financial assets	131	125
Total	291	299

See note 15 to the group statements for further information on share loans to group employees.

The company has invested NOK 123 million in a combination fund consisting of both bonds and shares. The investment is intended to cover incurred pension liabilities and has been pledged.

NOTE 8. RECONCILIATION OF EQUITY

Equity at 31 December	1 472	1 262
Change in value of net pension assets	6	-14
Dividends payable	-535	-468
Profit for the year	739	217
Equity at 1 January	1 262	1 526
	2015	2014

	Share capital	Share premium	Other equity	Total equity
Equity at 1 January 2015	67	304	891	1 262
Profit for the year			739	739
Dividends payable			-535	-535
Change in value of net pension assets			6	6
Equity at 31 December 2015	67	304	1 101	1 472

NOTE 9. INCOME TAX EXPENSE AND DEFERRED TAX

Income tax expense	2015	2014
Tax payable in the statement of financial position	2	39
Tax payable on group contribution paid	46	25
Change in deferred tax	6	-8
Adjustment previous years	-	-
Total income tax expense	53	55
Reconciliation of the Group's tax rate	2015	2014
27% of profit before tax	214	74
Actual income tax expense	53	55
Difference	161	18
Explanation difference in income tax expense
Non-deductible expenses	-	-
Tax-exempted dividends in subsidiaries	163	18
Effect of change in tax rate	-2	-
Total	161	18
Deferred tax	2015	2014
Temporary differences
Current items	-3	-6
Gains and loss account	42	28
Operating equipment	-2	-3
Pensions	-128	-131
Basis for deferred tax	-91	-112
Deferred tax (25%)	-23	-30
Recognised deferred tax (- deferred tax asset)	-23	-30

NOTE 10. PENSIONS

	2015	2014
Pension costs
Present value of the year's earning (service cost)	3	9
Interest charges on net pension liabilities	3	4
Cost of defined-benefit plan	6	12
Cost of defined-contribution plans	4	2
Pension costs	10	14
Pension liabilities	209	219
Pension assets	-81	-87
Net pension liability	128	131
Change in value (actuarial gains and losses)	8	-19
Change in value after tax recognised directly in equity	6	-14

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 11. NON-CURRENT LIABILITIES

At 31 December 2015 the recorded non-current liability consists of bond loans and drawings on the Group's account. See also note 13. For further details see notes 28 and 29 to the consolidated accounts.

NOTE 12. GUARANTEES

At 31 December 2015 Veidekke ASA has provided guarantees for its subsidiaries totalling approx. NOK 2,400 million in connection with specific construction projects for Group companies. The company has a current bank guarantee to cover payroll tax obligations.

NOTE 13. CURRENT LIABILITIES

In 2015, a new agreement was signed with DNB for borrowing facilities of NOK 3,600 million, which will run until 2 November 2020. Veidekke ASA is responsible for the Group's total withdrawals from the group account, which at 31 December 2015 totalled NOK 168 million. In 2015, this was classified as a non-current liability. For further details see notes 28 and 29 to the consolidated accounts.

NOTE 14. OTHER NOTES

The following requirements are covered in 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 ARTICLE 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 2015 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 Director's 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 unceirtanty factors the Group is faced with.

Oslo, 30 March 2016 The Board of Directors of Veidekke ASA

Martin Mæland Chair

Deputy chair

Per Otto Dyb Gro Bakstad Annika Billström Ann Christin Gjerdseth

Hans von Uthmann Odd Andre Olsen Inge Ramsdal Arve Fludal

Arne Giske

President and CEO

CORPORATE GOVERNANCE

Veidekke aims to secure a high and stable return for its shareholders and strives to ensure good management and corporate governance of the business at all times.

For the Group to achieve its objectives over time, a number of important parameters must form the foundation for both the company and its employees. At the core of this foundation is Veidekke's strong corporate culture with an emphasis on profitability and risk management.

1. STATEMENT ON CORPORATE GOVERNANCE

Veidekke's core values are professional, honest, enthusiastic and ground-breaking. These values 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 Social Responsibility».

Veidekke's reporting is in accordance with the most recent version of the «Norwegian Code of Practice for Corporate Governance», dated 30 October 2014. 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.

Veidekke's operations in Norway and Sweden include building construction and civil engineering projects, renovation and specialised civil engineering contracts, as well as development of sites and construction of residential and non-residential buildings. In Norway, Veidekke is also engaged in asphalt operations, production of aggregates, and road maintenance. In Denmark, operations mainly comprise building 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), the head of the operations in Sweden, and the two heads of the central staff functions.

3. EQUITY AND DIVIDENDS

At 31 December 2015 Veidekke had an equity ratio of 21.8%. This is within the defined target 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 businesses in the Group's business areas in Scandinavia. 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. To achieve this, ambitious strategic targets have been set at the unit level. The target for Construction is a profit margin of 5.0%, while the actual profit margin for 2015 was 3.3%. Operations in Norway reported a profit margin of 4.1%, operations in Sweden had a profit margin of 0.9%, while operations in Denmark achieved a profit margin of 6.0%. The goal for the business area Industrial is a profit margin of 6.5%. 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 4.7% in 2015.

The goal for Property Development is a return on invested capital of 15%. Return on invested capital was 13.1% in 2015. The Group must have a strong financial position, and with its current balance sheet structure, a gearing ratio of 40–60% at year-end would fulfil these minimum requirements. At 31 December 2015 the Group had a gearing ratio of 19%. 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% of the Group's profit for the year to the shareholders. A dividend of NOK 4.0 per share is proposed for the 2015 financial year. This corresponds to a dividend pay-out ratio of 70%. 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% 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 buy back 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.

4. EQUAL TREATMENT OF SHAREHOLDERS AND TRANSAC TIONS 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 17.8%. 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%. 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 pre-emptive rights in the event of capital increases.

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

Employees as owners

Veidekke regards the involvement of its employees as shareholders as an important and positive element in the development of the company. Veidekke works continuously to maintain the employees' ownership share, and strives each year to give the employees the opportunity to buy shares at a discount. The company's aim is for at least half of its employees to hold shares in the company, totalling at least 15% of the shares. 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 2015, 3,460 employees held a combined 15.4% stake in the company. It also wishes each of its senior executives (892 people) to hold a significant number of shares in the company. This group currently has a combined stake of 10.7%.

The Group abides by the Oslo Stock Exchange's insider trading rules and trade restrictions. See «Shareholder information» in this report 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 2015, 37.3 million shares were traded on the Oslo Stock Exchange, with a turnover rate of 27.9%. 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 also «Shareholder information» in this report.

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 2016 the Annual General Meeting will be held on 10 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. Shareholders wishing to attend can register using the reply slip provided or on Veidekke's website, 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 Chair 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 Chair 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 2015 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 deputy-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 Scandinavian 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 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" in this report.

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.

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 in the Group. The Committee reports to the Board of Directors.

In 2015 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 2015 the Remuneration Committee consisted of Martin Mæland (chair), Per Otto Dyb and Hans von Uthmann.

The Property Committee

The Property 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 Property Committee reviews all major investment decisions to ensure good internal control and sufficient checks in connection with major purchases of land for development. In 2015 the Property Committee consisted of Annika Billström (chair), Gro Bakstad 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 on 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, liquidity, 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 businesses provide clear guidelines for risk management in the tendering phase and 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 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 completed units and unsold units under construction, 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 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 «annual planning wheel». A fixed agenda is defined throughout the year for the production of framework documents, strategy plans, budgets and 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 in the businesses, which have clear requirements regarding profitability and cash flow. In Construction and Industrial, requirements are set for the projects' profit margins, including financial items. Property Development is a capital-intensive business, and performance here is measured by return on invested capital.

Financial reporting

Veidekke's Group accounts are prepared in accordance with the applicable IFRS regulations. The Group's chosen accounting policies are communicated to the businesses 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 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. For example, courses are held in relevant financial and management systems.

Ethical guidelines

With reference to the company's core values – professional, honest, enthusiastic and ground-breaking – Veidekke has drawn up ethical guidelines for its employees. 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 ethical guidelines are available 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. The guidelines are available on Veidekke's intranet.

Compliance with competition law

Veidekke has a comprehensive compliance programme which gives the employees 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

Remuneration of 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% 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» in this report.

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».

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 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 amount of the services provided.

16. CORPORATE SOCIAL RESPONSIBILITY

Veidekke requires that all business units in the company abide by the respective national laws and regulations in 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 ISO26000 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 veidekke.com/en.

SHAREHOLDER INFORMATION

• Shareholder value will be created through good profitability across the Group.
• Dividends shall constitute at least 50% of the annual profit.
• Veidekke is and shall be a financially robust company.
• Employee co-ownership increases the employees' loyalty and commitment, motivation, and understanding of the business.

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.

Veidekke aims to give its shareholders a stable, high return on their investment in the company. The return on Veidekke shares was 51.9% including dividends in 2015, compared with 5.9% for the Oslo Stock Exchange.

2015 saw a total of 37.3 million Veidekke shares traded on the Oslo Stock Exchange, yielding a turnover rate of 27.9%. By comparison, 31.9 million shares were traded in 2014, yielding a turnover rate of 23.9%. There were 77,679 trades of Veidekke shares during the year, compared with 43,099 the previous year.

DIVIDEND

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

The Board proposes a dividend of NOK 4.0 per share for the 2015 financial year, compared with NOK 3.5 for 2014, corresponding to a pay-out ratio of 70%, compared with 55% in 2014. Shareholders will thus receive a direct return of 3.7%, based on the share price at the end of the year, which was NOK 108.50. The dividend will be paid on 24 May 2016 to all the shareholders who are registered as owners on the date of the Annual General Meeting, which has been set for 10 May 2016.

OWNERSHIP STRUCTURE

At the close of the year Veidekke had 8,704 shareholders, compared with 7,328 at the beginning of the year. The largest shareholders in the company are OBOS (17.8%), Folketrygdfondet (11.6%) and IF Skadeförsäkring AB (7.5%). A total of 3,460 employees own shares in the company, with a combined stake of 15.4%, compared with 17.2% in 2014. During the year foreign ownership rose to 28.7% from 28.4%.

Veidekke's share capital at 31 December 2015 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 is shown in the table on page 108.

EMPLOYEE CO-OWNERSHIP

Employee ownership has always been a priority in Veidekke, ever since its initial public offering in 1986. The management firmly believes that employee co-ownership promotes increased loyalty and commitment, motivation, and understanding of the business. The employees benefit from the company's value creation and gain a long-term perspective both in terms of the company's development and as employees. All trainees who join Veidekke are given shares worth NOK 10,000.

In 2015 too, the employees were given the opportunity to buy shares at a discounted price – senior executives in May and all permanent employees in November. The discount for share purchases without financial assistance was 30% of the market price of the shares; the discount with financial assistance was 20%. Shares for senior executives have a three-year lock-in period, while shares for all permanent employees have a lock-in period of two years.

A total of 2,597 employees bought shares under the scheme in 2015, and shares worth NOK 1.29 million were awarded, after rationalisation. The discounted purchase price was NOK 64.38 (30% discount) and NOK 73.58 (20% discount) in May, while in November it was NOK 73.22 (30% discount) and 83.68 (20% discount).

AUTHORISATION TO ISSUE SHARES AND PURCHASE OF 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. This authorisation has not been used since 2004.

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% of the share capital. This authorisation has not been used since 2009. See also the section on corporate governance for more information on the Board's authorisations.

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.

THE INVESTOR MARKET

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, up-to-date lists of shareholders and analysts who follow the Veidekke share can be found on our website at: http://veidekke.com/en/.

Largest shareholders at 31 December 2015	Ownership share in%
OBOS BBL	17.8
Folketrygdfondet	11.6
IF Skadeförsäkring AB	7.5
Handelsbanken Aksjefond	2.8
Verdipapirfondet DNB Norge (IV)	2.3
MP Pensjon PK	2.1
Must Invest AS	1.9
Swedbank Robur (Smabolagsfondnorden)	1.9
Danske Invest Norske Instit. II.	1.6
LF Fastighetsfonden	1.5
Total ten largest shareholders	51.0
Employees (3,460 shareholders)	15.4
Others	33.6
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.

Share distribution at 31 December 2015:

Shareholding

From	To	No. of shareholders	No. of shares	%
1	100	1 782	84 307	0.1
101	1 000	3 286	1 582 649	1.2
1 001	10 000	2 758	9 848 497	7.4
10 001	100 000	760	20 349 509	15.2
100 001		118	101 839 980	76.2
Total		8 704	133 704 942	100.00

		Amount paid in	No. of shares after	Share capital	Adjustment
Form of issue		(NOK millioner)	increase (1,000)	after increase	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
	Merger Stoltz Røthing
1991	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	2015	2014	2013	2012	2011
Market price at 31 December	108.50	73.75	48.8	44.0	38.7
- high	109.00	74.25	51.25	48.8	54.0
- low	69.50	46.0	43.5	37.9	33.7
Earnings per share1)	5.7	6.3	4.1	3.9	4.8
Market price/earnings (P/E)	19.0	11.7	11.9	11.3	8.1
Market price/book value
per share (P/B)	4.5	3.6	2.7	2.7	2.7
Dividend per share	4.0	3.5	3.0	2.5	2.75
Pay-out ratio (%)	70	55.5	73.2	64.1	57.3
Turnover rate (%)	27.9	23.9	20.1	15.1	17.2
Earnings yeld (%)	3.7	4.7	6.1	5.7	7.1
Outstanding shares
(average million)	133.7	133.7	133.7	133.7	133.7
Market price at
31 December (NOK million)	14 507	9 861	6 525	5 883	5 174
No. of shareholders at 31
December	8 704	7 328	7 356	7 306	7 163

1) No dilutive effect.

ARTICLES OF ASSOCIATION FOR VEIDEKKE ASA

(Effective from 7 May 2014)

• Article 1 The name of the Company is Veidekke ASA. The Company is a public limited company. The Company's purpose is construction and property development activities, and other economic activities related with the aforementioned. Activities may be conducted by the Company itself, by subsidiaries at home and abroad, or through participation in other companies or in cooperation with others.
• 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 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.
• 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 inde pendent 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.