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Veidekke Investor Presentation 2010

May 6, 2010

3781_rns_2010-05-06_50de56f4-8873-43cb-8196-8d858849209d.pdf

Investor Presentation

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Q1 2010
Presentation for investors
Thursday, 6 May 2010

www.veidekke.com
VEIDEKKE

VEIDEKKE

Agenda

  • Highlights
    Terje R. Venold, President & CEO

  • Performance of Group and Business Segments
    Jørgen W. Porsmyr, CFO

  • Property Development
    Arne Giske, Executive Vice President, Property Development Scandinavia

  • The Road Ahead
    Terje R. Venold, President & CEO

Q1 2010

Q1 2010

VEIDEKKE

A start to the year as anticipated

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Q1 2010

3

VEIDEKKE

Health, Safety and Environment Steady development in Q1

Injury rate* Absence
Accumulated Q1 2010 Q4 2009 Q1 2010 Q4 2009
Norway 5.1 5.2 5.6% 5.7%
Sweden 9.4 7.6 3.1% 3.1%
Denmark 6.0 6.6 2.5% 2.4%
Total 5.8 5.7

*Injury rate: Number of lost time injuries per million hours worked

Good HSE work is a prerequisite for the company's value creation
- Still too many injuries
- Sickness absence levelling off, but rate still too high in Norway

Our goal is zero injuries and a 3% sickness absence
- Increased focus on all injuries and undesirable incidents in both Veidekke and our sub-contractors
- Increased focus on systematic health work improvement work

Q1 2010

VEIDEKKE

Year to date 2010

  • Demanding market situation
  • Still overcapacity and keen competition in market
  • Hard winter
  • Leading to reduced productive efficiency
  • Brief strike in the building and construction industry in Norway

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Q1 2010

VEIDEKKE

New Accounting Rules for AFP and IFRIC 15

  • New law for contractual early retirement, AFP
  • Successive cost accounting

  • Reversal of previous allocations resulted in a gain of MNOK 95 in the accounts

  • IFRIC 15, housing projects for own account

  • Implemented in the financial accounts, to be recognised in the income statement at time of delivery (pass of legal title)
  • Earnings reduced by MNOK 15 in the financial accounts for Q1 in 2010

  • No changes in segment reporting

  • Financial accounts (income statement, statement of financial position and statement of cash flow), slides 17 – 20, are presented in accordance with IFRIC 15. All other slides are presented as before (IAS 11)

Q1 2010

VEIDEKKE

Highlights Q1

  • Construction: Somewhat lower margins in operations
  • Demanding market
  • Higher winter expenses than normal

  • 2.4% margin in operations, excluding AFP gains (3.5%)

  • Property development: Increasing activity

  • 435 units under production, against 311 units at year end

  • 107 units sold in Q1 compared with 430 units in 2009

  • Industry: Good start to the year

  • Improved results
  • Obtained a high number of public asphalt contracts
  • Q1 is traditionally a quarter of expenditures

Q1 2010

VEIDEKKE

Q1 2010 against Q1 2009

Change in earnings before tax

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Q1 2010

VEIDEKKE

Business Segments Q1

Figures in MNOK Q1 2010 Q1 2009
Operating revenues EBT Margin Operating revenues EBT Margin
Construction Norway 2 032.3 121.6 6.0 % 1 992.2 84.9 4.3 %
Construction Sweden 479.8 11.7 2.4 % 551.8 9.1 1.6 %
Construction Denmark 274.6 5.8 2.1 % 398.3 8.0 2.0 %
Total construction 2 786.7 139.2 5.0 % 2 942.3 102.0 3.5 %
Property development Norway 97.1 0.7 0.7 % 65.3 -36.6 -56.0 %
Property development Sweden 37.2 -9.1 -24.6 % 77.6 6.9 8.9 %
Property development Denmark 0.1 -2.3 - 1.0 -8.5 -
Total property development 134.3 -10.7 -8.0 % 143.9 -38.2 -26.5 %
Veidekke Industry 252.3 -127.0 -50.3 % 274.9 -179.6 -65.3 %
Other operations -25.5 -15.7 - -35.8 -17.7 -
Total 3 147.8 -14.3 -0.5 % 3 325.3 -133.5 -4.0 %

Positive effect of changed AFP scheme in Norway: Construction MNOK 71, Industry MNOK 21, Property Development MNOK 1.5, Other operations MNOK1.5, totalling MNOK 95 before taxation

Q1 2010

VEIDEKKE

Construction Slight decline in orders-on-hand

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Q1 2010:

  • Satisfactory volume of new orders for smaller and medium building projects
  • More housing projects in the order book
  • Low volume of new orders in heavy construction in Norway, but better in Sweden

Q1 2010

VEIDEKKE

Annual General Meeting on 5 May 2010

New board members

  • Gro Bakstad, CFO in Posten Norge
  • Annika Billström, Managing Director of Inchefia AB, previous positions i.a. Mayor (Finansborgarråd) in Stockholm
  • Hans von Uthmann, Industrial Advisor EQT, previous positions i.a. Managing Director of Vattenfall

Dividend of NOK 2.50 per share adopted

  • Total dividends MNOK 334.3
  • To be paid on 20 May

Authorisations to buy back shares and conduct share issues renewed

Q1 2010

VEIDEKKE

Results Q 1

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The Hamsun Centre in Hamarøy

Q1 2010
12

VEIDEKKE

Gain due to changes in AFP scheme

Gain of MNOK 95 in the accounts

  • New law for contractual early retirement (AFP) adopted on 19 February 2010, effective from 2010
  • In accordance with recommendation of The Norwegian Accounting Standards Board, allocations in previous years will be re-allocated

Annual costs for old scheme were MNOK 15

Costs for the new AFP scheme will be recorded in line with premium payments

The new scheme is expected to affect the accounts by MNOK 16 in 2010, increasing to MNOK 25 in 2014

Q1 2010

IFRIC 15 Main principles

VEIDEKKE

  • We are implementing the principles in the financial accounts only

  • Residential projects will be recognised in income statement upon delivery

  • All important management parameters for the property development segment remain unchanged

  • Project contribution, cash flow and risk assessment

  • Segment reporting as before

  • To provide a best possible picture of current value creation in the reporting domestically and to the financial market
  • Project contribution margin per date = Final contribution margin x sales rate x production rate

Q1 2010

IFRIC 15

VEIDEKKE

Delayed recognition in Financial accounts

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  • Projects will be recognised earlier in the segment reporting than in the financial accounts
  • Normal project period 1.5 years
  • Differences in periods of activity variations
  • Increased activity: segment reporting> Financial accounts
  • Decreased activity: segment reporting< Financial accounts

Q1 2010

IFRIC 15

Reconciliation of results

VEIDEKKE

Figures in MNOK Q1 2010 Q1 2009 Year 2009
Operating revenues EBT Operating revenues EBT Operating revenues EBT
Segment reporting 3 147.8 -14.3 3 325.3 -133.5 15 558.0 523.1
Effect of IFRIC 15 Property Development -37.3 -11.7 32.4 -0.7 365.4 88.2
Effect of IFRIC 15 Construction - -3.0 - -3.6 - 17.1
Financial accounts 3 110.5 -29.0 3 357.7 -137.8 15 923.4 628.4

Q1 2010

VEIDEKKE

In accordance with IFRIC 15 Income Statement

Q1 2009 Q1 2010 Figures in MNOK 2009 2008
3 357.7 3 110.5 Operating revenues 15 923.4 20 225.7
-3 374.2 -3 055.0 Operating expenses -14 994.9 -18 959.3
-80.5 -84.8 Ordinary depreciation -335.6 -296.0
-97.0 -29.3 Operating profit (EBIT) 592.9 970.4
-9.5 -1.6 Profit, associated companies 46.7 135.4
-31.3 1.9 Net financial items -11.2 -97.1
-137.8 -29.0 Earnings before tax (EBT) 628.4 1 008.7
26.2 7.3 Tax -118.5 -221.9
-111.6 -21.7 Profit for the year 509.9 786.8
0.7 0.3 Of which, minorities 9.2 4.2
-112.3 -22.0 Net profit for the year 500.7 782.6
-0.8 -0.2 Earnings per share (NOK) 3.7 5.8

Q1 2010

VEIDEKKE

In accordance with IFRIC 15 Balance sheet - Assets

Figures in MNOK 31 March 2010 31 Dec. 2009 31 March 2009
Goodwill and intangible assets 548.3 549.7 562.4
Buildings/land 507.2 510.5 571.4
Machinery, etc. 1 195.5 1 206.2 1 250.0
Investments in associated companies 650.5 637.7 505.3
Deferred tax asset 79.3 79.3 35.9
Financial items 324.6 317.1 299.6
Total fixed assets 3 305.4 3 300.5 3 224.6
Non-residential and residential projects (sites included) 1 919.8 1 909.2 2 132.3
Inventories 469.1 265.9 315.2
Debtors 2 420.5 2 240.5 2 567.0
Cash and cash equivalents 179.1 144.1 196.0
Total current assets 4 988.5 4 559.7 5 210.5
Total assets 8 293.9 7 860.2 8 435.1

Q1 2010

VEIDEKKE

In accordance with IFRIC 15

Balance sheet – Equity and liabilities

Figures in MNOK 31 March 2010 31 Dec. 2009 31 March 2009
Equity 1 976.5 2 021.7 1 797.4
Pension commitments and deferred tax 327.3 424.0 342.9
Debt to credit-issuing institutions 872.3 306.7 555.5
Creditors 3 439.4 3 336.3 3 499.5
Unpaid government charges 284.6 436.6 524.9
Other liabilities 1 393.8 1 334.9 1 714.9
Total liabilities 6 317.4 5 838.5 6 637.7
Total equity and liabilities 8 293.9 7 860.2 8 435.1
Net interest-bearing position -431.9 101.5 -161.6
--- --- --- ---
Equity ratio (%) 23.8 25.7 21.5

Q1 2010

VEIDEKKE

In accordance with IFRIC 15

Cash flows1 January – 31 March 2010

Figures in MNOK Construction/ Other operations Property development Industry Group
Earnings before tax 108.7 -10.7 -127.0 -29.0
Depreciation 41.6 1.7 41.0 84.3
Other working capital, etc. -429.1 -159.4 80.2 -508.3
Other operating capital etc. -278.8 -168.4 -5.8 -453.0
Investments in property, plant and equipment net -28.7 - -45.3 -74.0
Other investing activities -11.7 3.2 3.0 -5.5
Cash flow from investing activities -40.4 3.2 -42.3 -79.5
Repurchase of own shares - - - -
Other items -2.8 2.0 - -0.8
Cash flow from financing activities -2.8 2.0 - -0.8
Change net interest-bearing position -322.0 -163.2 -48.1 -533.3
Capital invested at 31 March 2010 -531 2 362 1 018 2 849

Q1 2010

VEIDEKKE

Business Segments

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The Holmenkollen ski jump, Oslo

Q1 2010
21

VEIDEKKE

Construction, Norway

Good results, but pressure on margins

  • AFP gain of MNOK 71
  • As anticipated, margin pressure in Q1
  • Adjusted for AFP, the profit margin is 2.5 % (4.3 %)
  • Demanding market
  • In general, prices in suppliers' market no longer decreasing
  • Slightly lower productive efficiency due to hard winter
  • Stable turnover
  • Slight reduction in order volume
Figures in MNOK Q1 2010 Q1 2009 Year 2009
Operating revenues 2 032.3 1 992.2 8 121.4
Operating expenses -1 894.1 -1 910.2 -7 549.6
Depreciation -29.6 -27.8 -118.5
Operating profit (EBIT) 108.6 54.2 453.3
Profit, associated companies - - 1.3
Net financial items 13.0 30.7 69.1
Earnings before tax (EBT) 121.6 84.9 523.7
Profit margin (%) 6.0 4.3 6.4

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Thor Heyerdahl upper secondary school, Larvik

Q1 2010

VEIDEKKE

Construction, Sweden Improving results

Margin 2.4% (1.6%)

  • Still strong margins in Stockholm
  • Negative figures, but some bright spots in West Sweden

Somewhat lower activity

  • Turnover down by 13%

Increasing volume of new orders

  • The Gothenburg region is challenging

Market situation

  • Good heavy construction market
  • Weak building market
  • Tough price competition
Figures in MNOK Q1 2010 Q1 2009 Year 2009
Operating revenues 479.8 551.8 2 355.0
Operating expenses -462.0 -536.3 -2 299.4
Depreciation -6.1 -5.0 -22.3
Operating profit (EBIT) 11.7 10.5 33.3
Profit, associated companies -0.1 - -
Net financial items 0.1 -1.4 3.1
Earnings before tax (EBT) 11.7 9.1 36.4
Profit margin (%) 2.4 1.6 1.5
--- --- --- ---

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Pelarbacken, Stockholm

Q1 2010

VEIDEKKE

Construction, Denmark Demanding market

  • Stable and good results
  • Margin 2.1% (2.0%)
  • Turnover down by 31% compared with Q1 2009
  • 22% in local currency
  • Stable order backlog
  • Maintained margin requirement
  • No loss projects
  • Still keen competition
Figures in MNGK Q1 2010 Q1 2009 Year 2009
Operating revenues 274.6 398.3 1 618.5
Operating expenses -268.5 -388.8 -1 578.3
Depreciation -2.1 -2.5 -9.7
Operating profit (EBIT) 3.9 7.0 30.5
Profit, associated companies - - 1.4
Net financial items 1.9 1.0 13.7
Earnings before tax (EBT) 5.8 8.0 45.6
Profit margin(%) 2.1 2.0 2.8
--- --- --- ---

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Q1 2010

Grenaa harbour, Jutland

VEIDEKKE

Industry A good Q1

  • Profit improvement of MNOK 53
  • Positive effect on 2010 figures of MNOK 21 due to AFP
  • Negative effect on 2009 figures of MNOK 27 due to write-downs
  • Good cash flow
  • In general, Q1 is a quarter of expenditure
  • Turnover down by 8% due to late start of the season
  • Improvement work progressing according to plan
  • Good cost control throughout quarter
  • Large share of new contracts for Public Roads Administration
Figures in MNOK Q1 2010 Q1 2009 Year 2009
Operating revenues 252.3 274.9 2 968.0
Operating expenses -328.4 -395.6 -2 777.3
Depreciation -41.6 -39.4 -162.4
Operating profit (EBIT) -117.7 -160.1 28.3
Profit, associated companies -3.1 -5.6 10.5
Net financial items -6.2 -13.9 -31.7
Earnings before tax (EBT) -127.0 -179.6 7.1
Profit margin (%) -50.3 -65.3 0.2
--- --- --- ---

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Asfalt plant, Hovinmoen
Q1 2010

VEIDEKKE

Bid opened on 11 March for public asphalt contracts: Large share of contracts, good basis for year

2010 2009 2008
Company Tonnes Share Tonnes Share Tonnes Share
Kolo Veidekke 982 000 53% 520 000 28% 652 000 39%
NCC Roads 386 000 21% 137 000 7% 391 000 24%
Lemminkäinen 174 000 9% 325 000 17% 210 000 13%
Skanska Asfalt 4 000 0% 135 000 7% 65 000 4%
Mesta 90 000 5% 643 000 34% 254 000 15%
Others 204 000 11% 116 000 6% 82 000 5%
Total 1 840 000 100% 1 876 000 100% 1 654 000 100%

Q1 2010

VEIDEKKE

Property development, Scandinavia Upward activity trend

Improvement

  • However, results are still marked by low activity

Gradually increased start-up of new contracts

  • 151 (45) units started in Q1
  • Start-up of 750 units planned in 2010

Steady sales through the winter

  • Increasing since Easter
  • Relates to areas surrounding the capitals
Figures in MNOK Q1 2010 Q1 2009 Year 2009
Operating revenues 134.3 143.9 711.2
Operating expenses -140.5 -152.0 -726.7
Depreciation -1.7 -1.6 -6.2
Operating profit (EBIT) -7.8 -9.7 -21.7
Profit, associated companies 0.4 -0.2 2.9
Net financial items -3.3 -28.3 --55.1
Earnings before tax (EBT) -10.7 -38.2 -73.9
Capital invested 2 362 2 204 2 219
--- --- --- ---

Q1 2010

VEIDEKKE

Property development, Scandinavia

Figures in MNOK Q1 2010 Q1 2009 2009
Operating revenues EBT Margin Operating revenues EBT Margin Operating revenues EBT Margin
Property development, Norway 97.1 0.7 0.7% 65.3 -36.6 -56.0% 349.1 -47.9 -13.7%
Property development, Sweden 37.2 -9.1 -2.4% 77.6 6.9 8.% 359.3 21.2 5.9%
Property development, Denmark 0.1 -2.3 - 1.0 -8.5 - 2.8 -47.2 -
Total property development 134.4 -10.7 -8.0% 143.9 -38.2 -26.5% 711.2 -73.9 -10.4%

Q1 2010

VEIDEKKE

Property development, Scandinavia

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Topics:

  • Organisation, value creation and success factors
  • Status Q1
  • Our project possibilities
  • Prospects

Q1 2010

VEIDEKKE

Property development, Scandinavia

Building owner for Veidekke’s own projects

  • Our business is property development

  • Not property management and operation

  • Our main business is the housing segment

  • To some extent non-residential buildings (often in connection with residential projects)

  • Our main business is apartment buildings

  • In increasing rate also dense/low buildings (wooden houses) (Sweden 30%)

Q1 2010
30

VEIDEKKE

Property development, Scandinavia

Making use of the Group's resources

  • Independent business area
  • Exploits the Group's resources
  • Expertise
  • Capital
  • Close cooperation with Veidekke's construction operations produces high value creation
  • Construction engaged from beginning of site acquisition process
  • Gives an efficient development and building process
  • Risk reduced due to state-of-the-art competence in all stages

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Q1 2010

VEIDEKKE

Property development, Scandinavia Organisation

  • Norway: Veidekke Eiendom
  • 45 employees
  • Sweden: Veidekke Bostad
  • 50 employees
  • Focus on growth areas
  • Site portfolio: 7 800 housing units

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  1. kvartal 2010

VEIDEKKE

Property development, Scandinavia

Our value creation

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Purchase of site Ideas/concept Regulation Sale Construction Handover
Value creation, property development X X X X (X) (X)
Location
Price
Possibilities
Risk What
For whom
Design Utilisation Pricing Quality Costs Flawless handover
Value creation, construction (X) (X) X X
--- --- --- --- --- --- ---

Q1 2010

VEIDEKKE

Property development, Scandinavia

Most important success and risk factors

Success factors

  • Acquisition of the right sites
  • Price, location, regulation, ground conditions, etc.
  • Right product and concept for the market
  • Competence throughout value chain

Risk reducing factors

  • Achieve largest possible presale before start-up (minimum 50%)
  • Secure all cost elements (never had excess of significance)
  • Use joint venture partners
  • Avoid extreme positions (too expensive, too big and complex projects)

Q1 2010

VEIDEKKE

Property development, Scandinavia

A cyclical business

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Earnings

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Housing units under production

Q1 2010
35

VEIDEKKE

Property development, Scandinavia

A cyclical business

img-5.jpeg
Earnings

img-6.jpeg
Return on capital invested

Average past 5 years: 14%

Q1 2010
36

VEIDEKKE

Property development, Scandinavia

Strategy and goals

  • Allocated capital: BNOK 2.5 in capital invested
  • Goal: 15% return on capital invested
  • Average over past five years: 14.1%

What does this mean?

  • BNOK 2.5 x 15% = MNOK 375 (EBIT)
  • Financial cost - MNOK 100 (BNOK 2 x 5%)
  • EBT goal = MNOK 275

Q1 2010

VEIDEKKE

Property development, Scandinavia

Strategy and goal – calculation

  • An average flat gives a contribution of MNOK 0.35
    (3 MNOK x 12%)
  • EBT goal: MNOK 275

  • Overhead: + MNOK 75 (including capitalised financial expenses)
    MNOK 350 (covered by projects)

  • We must have MNOK 350/MNOK 0.35 = approximately 1 000 flats under production/delivered to achieve our goal

  • This implies: A production level of approximately 1 500 flats

  • kvartal 2010

VEIDEKKE

Property development, Scandinavia

Based on the land bank

No. of housing units Direct purchases Purchase options Total
Norway 2 900 800 3 700
Sweden 1 100 3 000 4 100
Total 4 000 3 800 7 800

These are scheduled to be ready for construction as follows:

No. of housing units Scheduled for construction
2010 2011 2012 Senere Sum
Norway 500 500 600 2 100 3 700
Sweden 500 600 1 100 1 900 4 100
Total 1 000 1 100 1 700 4 000 7 800

Requires 50% pre-sale

Q1 2010

VEIDEKKE

Property development, Scandinavia

Our most promising project possibilities

Q1 2010
40

Property development, Scandinavia
Freia – Chocolate factory, Oslo

VEIDEKKE

"Child-friendly in city centre"

  • Rodeløkka
  • 250 flats
  • Subterranean parking
  • 6 floors
  • Sales start for phase 1 with 84 flats: 27 May

img-7.jpeg

Q1 2010

VEIDEKKE

Property development, Scandinavia

Marienfryd at Ensjø, Oslo

  • 380 flats, distributed over 5-7 building phases
  • First building phase: reconstruction of Narvesen's old head office
  • 81 flats
  • 14 floors
  • 52% sold
  • Construction start: May 2010

"Unique view, located in the centre of the park"

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Q1 2010

VEIDEKKE

Property development, Scandinavia

Fornebu, Bærum

  • 50/50 partnership with Fornebu Utvikling AS
  • 309 flats and terraced houses
  • Regulation completed in Q1 2011
  • Phase 1: 60 units
  • Sales start: Q2 2011

"Flats for families with children"

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Q1 2010

VEIDEKKE

Property development, Scandinavia

Kalkbrottet, Malmo

  • In all 150 flats
  • 1st building phase: Korallen BRF (housing cooperative)
  • 29 flats
  • Design phase started
  • Planned construction start: Q3 2010

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Q1 2010
44

Property development, Scandinavia
Sädesärlan, Stockholm
VEIDEKKE

img-11.jpeg

  • Prestige project
  • Upper Östermalm
  • In all, 74 flats in the project
  • Sport centre and gym
  • Sales start of 45 flats in Q1 2011
  • 50/50 partnership with Selvaag Pluss

Q1 2010
45

VEIDEKKE

Property development, Scandinavia

Svea Fanfar, Stockholm Centre

  • Partnership with Akademiska Hus
  • Includes construction of the Royal College of Music
  • 380 flats
  • 1 500 m² shops
  • Plan approval in Q4 2010
  • First construction phase:
  • 120 flats
  • Construction start 2012

img-12.jpeg

img-13.jpeg
Sektion A-4 akula 1:500

img-14.jpeg
Situationsplan med sektionsmarkeringen

img-15.jpeg
Vy länge Valtiallanigen mot föreslagna bostäder samt Kungliga Musikhögskolan

img-16.jpeg
Vy över den nya kvartensketyggelsen i bakgrunden ses Bärdesbetyggelsen

img-17.jpeg
Vy in mot en bostadsgård med partik som leder till Svea Artilleri

Q1 2010

Property development, Scandinavia
Tellhus — Ytterskär, Brf Snökristallen, Stockholm
VEIDEKKE

  • First TellHus project
  • Veidekke's climate-smart housing concept
  • "Fill in project" in Stockholm
  • 36 flats
  • Construction work in progress
  • Ready for occupancy in Q3 2011

img-18.jpeg

Q1 2010
47

VEIDEKKE

Status

Property Development, Scandinavia

Q1 2010
48

VEIDEKKE

Property development, Scandinavia

Housing market and Veidekke

At Q1 2010:
- Market is improving, but no boom
- Market best for family dwellings
- Terraced housing, larger flats
- Lower construction costs and increased prices in second hand market makes it more profitable with new construction
- Prospects of increased interest rates

Q1 2010
49

VEIDEKKE

Property development in Norway and Sweden Housing sales

Norway Sweden Denmark Total
2007 289 699 5 993
Average in quarter 72 175 1 248
2008 41 86 3 130
Average in quarter 10 21 1 32
2009 215 215 0 430
Average in quarter 54 54 0 108
2010 – Q1 68 39 0 107

Q1 2010

VEIDEKKE

Veidekke's housing portfolio

| Property
Housing portfolio - Veidekke's share | In production
at 31.12.08 | Completed
2009 | Start-up
2009 | In production
at 31.12.09 | Completed
2010 | Start-up
2010 | In production
31.03.2010 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| In production - number of units | | | | | | | |
| Norway | 185 | -172 | 50 | 63 | | 127 | 190 |
| Sweden | 453 | -391 | 185 | 247 | -27 | 24 | 244 |
| Total in production | 638 | -563 | 235 | 310 | -27 | 151 | 434 |
| Of which sold | | | | | | | |
| Norway | 113 | | | 60 | | | 136 |
| Sweden | 424 | | | 232 | | | 236 |
| Total sold in production | 537 | | | 292 | | | 372 |
| Sales rate % | 84 % | | | 94 % | | | 86 % |
| Completed unsold housing units | | | | | | | |
| Norway | 110 | | | 91 | | | 75 |
| Sweden | 3 | | | - | | | - |
| Denmark | 17 | | | 17 | | | 17 |
| Total completed unsold units | 130 | | | 108 | | | 92 |
| Number of projects in production | | | | | | | |
| Norway | 6 | -5 | 3 | 4 | | 5 | 9 |
| Sweden | 11 | -7 | 5 | 9 | -2 | - | 7 |
| Total projects in production | 17 | -12 | 8 | 13 | -2 | 5 | 16 |

Q1 2010

VEIDEKKE

Property Development, Scandinavia

Capital tied up at 31 March 2010 (MNOK)

Property Development Scandinavia
Assets (MNOK) Norway Sweden Denmark Total
Investment in TKS 375 102 478
Non-residential property 535 42 577
Residential projects 639 354 249 1 243
Unsold completed units 149 149
Other assets 161 230 25 416
Total assets 1 859 728 274 2 863
Capital invested (MNOK) 1 610 512 241 2 362

Properties for sale:

  • Non-residential properties, Norway MNOK 400
  • Building in Porsgrunn sold in Q2 for MNOK 108
  • Properties in Denmark:
  • MNOK 249
  • Unsold completed flats:

  • MNOK 149

  • Kvartal 2010

VEIDEKKE

Prospects for Property development, Scandinavia

Q1 2010
53

VEIDEKKE

Housing market in the long perspective

Analyses:

  • Need for housing is clearly greater than the construction of houses
  • Especially in large city areas with population growth
  • High birth rate
  • Longer lifetime (elderly boom)
  • New arrivals and immigration
  • Large population of young people
  • This is the basis for our positioning and efforts in this area

Q1 2010

Building and construction market in Norway Slight increase anticipated in housing construction

VEIDEKKE

img-19.jpeg

  • 19 500 started in 2009
  • 23 000 in 2010 (own estimates)
  • 25 000 i 2011 (own estimates)

  • Long-term need estimated at approx. 35 000

  • kvartal 2010

55

VEIDEKKE

Building and construction market in Sweden Housing start-ups

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Number of housing units started

  • Started 15 000 in 2009
  • 18 000 in 2010 (own estimates)
  • 27 000 in 2011 (own estimates)

Q1 2010

Property development, Scandinavia
Flats in production – delivery 2010

VEIDEKKE

Flats in production in Q1 435
Prognosis start-ups Q2-Q4 approx. 750
Deliveries in 2010 approx. 185
Prognosis 31 December 2010 approx. 1 000

Approx. 25 projects, 50/50 Norway/Sweden

50% to be delivered in 2011
50% to be delivered in 2012

Q1 2010
57

Property development, Scandinavia Summary

VEIDEKKE

Our goal is to get the best possible return (15%) on capital

  • To achieve this, we must
  • Deliver cost effective, high quality projects
  • Have expertise on regulation, market and product
  • Have a capital effective land bank and a continuous supply of new good sites
  • Market analyses show
  • A long-term need for housing in excess of house construction
  • Increased start-up of housing projects in 2010 and 2011
  • Therefore, the prospects for Property Development Scandinavia are fairly good

Q1 2010

VEIDEKKE

The road ahead

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Q1 2010
59

VEIDEKKE

Building and construction market Scandinavia

Probably new growth from the end of 2010

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Accessible market: Total market in BNOK less public work for own account executed by smaller companies

Norway:

  • Market down by 2% in 2010
  • Improved housing market from 2010
  • Still decline in private non-residential buildings
  • Increase in public road and railway projects

Sweden:

  • Weak growth in market in 2010
  • Private non-residential building weighing down
  • Heavy construction on high level, 4% increase
  • Housing investments up by 4%

Denmark:

  • Continued decline this year
  • Weak housing market, but signs of levelling off
  • Heavy construction unchanged
  • Public building also weak in future

Q1 2010

VEIDEKKE

Our position is still strong

  • Passed safely through the financial crisis
  • Market still demanding
  • Pressure on construction margins
  • Satisfactory volume of new orders
  • Good basis for optimism
  • Increasing housing production and good prospects for property development
  • Considerable lag in public investments in road and railway

Q1 2010

VEIDEKKE

Veidekke in Q1 – Summary

  • Result of MNOK -14 before tax
  • AFP gain of MNOK 95 recognised in income statement
  • As anticipated, somewhat lower margins in construction segment
  • Prospects of higher production in Property Development
  • High number of new asphalt contracts in the Industry segment

Q1 2010
62

VEIDEKKE

See our IR pages at veidekke.com/ir

Web version of Annual and CSR report 2009

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"veidekkehuset" – our ethics portal
Social aspects

Including our subcontractors
Health, safety and environment

School-on-Site
John and Lancer

ANNUAL REPORT

A good result for Veidekke in 2009

Veidekke achieved earnings before the of M6/04/2011 for 2009, with a profit margin of 3.4 percent. The Group's total turnover for 2009 was M4/04/10 70%, compared with M4/04/10 50% in 2009. Fixed more...

  • The Board of Directors
  • Business areas
  • Market conditions and uncertainty

Including our subcontractors

Health, safety and environment

School-on-Site
John and Lancer

COMMUNITY REPORT 2009

Veidekke's community report

In Veidekke, we believe that a modern understanding of corporate social responsibility – in which people important take note of current social challenges, is under to create value both for themselves and for their environment – produces significant competitive advantage over time. Fixed more...

  • CEO on corporate responsibility
  • Observations
  • Environmental performance

INFLUENCING THEIR FACT

Veidekke's community report

Veidekke has been a part of the organization for the 2009 European Union and has been a member of the European Union's 2009 European Union and has been a member of the European Union's 2009 European Union.

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PRESENT AND CEO TERJE P. VEHOLD

From the President and CEO
David Draper
David Draper

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CEO ON CORPORATE RESPONSIBILITY

HSE, always at the top of the agenda

Veidekke intensified its HSE efforts throughout the '80s, setting new and leading standards for the industry. We did this not only because we wanted to create a good and safe workplace... Fixed more...

VEIDEKKEHUSET ETHICS PORTAL

Veidekke has taken collective responsibility to ensure that the company, as a Group, as individual companies and as individuals acts in accordance with applicable laws and regulations, and does up to Veidekke's values and ethical guidelines. An important prerequisite to our success in this is being consistent with what is right and wrong, and of which other than we may face. Veidekke's interactive ethics portal on the web provides training and guidance for dealing with ethical dilemmas. Fixed more...

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INCLUDING SUBCONTRACTORS IN HSE WORK

Veidekke subcontractors often conclude a large proportion of employees on construction projects. When consulting happens on a construction site, they are... Fixed more...

SCHOOL-ON-SITE

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School-on-Site, started by Veidekke and NAV in 1997 to ensure recruitment in the concrete trade, or today a pioneering model for adult vocational training. By moving training out of the classroom and into the workplace, the feeling of being able to cope increases and students become motivated to learn more. During the twelve years Veidekke has run School-on-Site, over one hundred skilled workers (new town trainee) and have since started an intense, in different companies... Fixed more...

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Q1 2010

Our Washington International Healthcare Social-Renovance (Contact: Fathomand, Contact: Taga-Nava)

Code: Tommy Johansen, Editor-in-Chief: Karhogart-Hendson, Veidekke-Karhogart, Veidekke.uir, Telfinans de, Veidekke.com, Annual Report 2009, Community Report 2009

VEIDEKKE

Financial Calendar

  • The share is noted ex dividend on 6 May 2010
  • Dividend to be paid: 20 May 2010
  • Publication dates in 2010
  • Q2: 12 August
  • Q3: 4 November

Q1 2010
64

VEIDEKKE

Appendices

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Q1 2010
65

IFRIC 15

Financial key figures

VEIDEKKE

Q1 2010 Q1 2009 2009 2008
Equity (MNOK)
Investments 76 151 455 714
Net-interest bearing items -432 -162 102 -260
Equity 1 977 1 797 2 022 1 973
Equity ratio (%) 23.8 21.3 25.7 21.5
Profitability (%)
Operating profit margin -0.9 -2.9 3.7 4.8
Profit margin -0.9 -4.1 3.9 5.0
Return on equity -1.1 -5.9 25.5 36.9
Shares
Earnings per share (NOK) -0.2 -0.8 3.7 5.8
Share price (NOK) 48.5 30.0 49.8 22.3
Market price (MNOK) 6 485 4 011 6 659 2 982
Outstanding shares (average no. in millions) 133.7 133.7 133.7 135.2

Q1 2010

VEIDEKKE

Status – Orders-on-hand

Figures in MNOK 31 March 2010 31 Dec. 2009 31 March 2009 Change past 12 months
Norway 7 938 8 581 6 487 22 %
Sweden 3 122 2 764 2 215 41 %
Denmark 983 978 1 147 -14 %
Other operations 2 11 92
Total orders-on-hand 12 045 12 334 9 941 21 %

Q1 2010

VEIDEKKE

Major ongoing projects

Project Type Turnover
Norway:
Økern project Communication/infra structure MNOK 1 485
Gulskogen Senter Shopping centre MNOK 860
Sky-Langangen Highway MNOK 635
Sørlandssenteret Shopping centre MNOK 570
FMC Kongsberg Offices MNOK 520
E6 Boksrud - Minnesund Highway MNOK 392
Dobbeltspor Lysaker – Sandvika (LS01/LS02) Railway projects MNOK 388
Nydalen Videregående Skole School building MNOK 333
Hardangerbrua Communication/infra structure MNOK 327
Vossapakko Communication/infra structure MNOK 311
Swedeb:
Norra Länken 33/34 Tunnel projects MSEK 1 142
Tvärbanan Infrastructure MSEK 470
E210 Rinkeby Infrastructure MSEK 319
Kv. Bocken Office building MSEK 307
Pelarbacken Renovation MSEK 307
Agnesb-Marieholm E13 Railway project MSEK 255
Kulla Gulla Dwellings MSEK 235
Strandbogatan Railway project MSEK 166
Denmark:
AAB/AB Silkeborg Renovation MDKK 325
Glostrup Storcenter Shopping centre MDKK 219
Thors Bakke Housing for the elderly MDKK 157
Dr. Ingrids Hjem Retirement centre MDKK 115
Siemens Wind Power Non-residential building MDKK 109

Q1 2010

VEIDEKKE

Construction, Norway

Margin development

■ Margin ■ Project margin ■ Overhead costs

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Project Margin

  • Decline expected in 2010 due to keen competition in the market since 2009

Margin

  • Pressure on margins in 2010 as decline in project margin is larger than the reduction in overhead costs

Overhead costs

  • Slight improvement in 2010 following cost adaptations and increased turnover

Q1 2010

VEIDEKKE

Property development Scandinavia

Unsold apartments at 31 March 2010

No. of unsold units at 31 Dec. 2008 No. of unsold units at 31 Dec. 2009 No. of unsold units at 31 March 2010 Original sales price MNOK Market value MNOK Book value MNOK Number of units hired out
In production 101 19 63 207 207 176 -
Completed 130 108 92 237 217 190 68
Total 231 127 155 444 424 366 68
  • Valuation of each apartment based on own and external assessments
  • Sold apartments have been sold at market price
  • Main part of unsold, completed apartments have been hired out

Q1 2010

IFRIC 15

VEIDEKKE

Result in Property Development in accordance with new principle (EBT)

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Q1 2010

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