Veidekke — Investor Presentation 2021

May 6, 2021

Capital Markets Update Veidekke towards 2025

6 May 2021

Foto: Hundven-Clements Photography

Streamlined construction business with ambitions

Streamlined and focused construction business

High ambitions and C large potential

Growth, improvement and high ambitions Historical development and future targets

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© Veidekke

Clear order book development over past five years From Norwegian to Scandinavian contractor

A more balanced project portfolio Shift towards public sector customers

© Veidekke

Annual revenue growth 2022–2025 Margin before tax in 2025 Dividend ratio

4-6% >5% >70%

Veidekke towards 2025 A streamlined contractor – with a clear focus

• A passionate relationship with the customer and their project
• Long-term customer relationships, early involvement and valuecreating interaction

The green shift

• Play an active role in the transition to a low-emission society
• Contribute cutting-edge expertise and practical solutions

• Focus on taking, controlling and managing risk at all levels of the organisation
• Systematic risk management before and during project execution

! Risk management Collaborative culture

• Involve customers, suppliers and employees in valuecreating interaction
• Consistent efforts to develop work methods and competence to ensure safe and efficient execution

Project profitability Organisation

!

Value-creating interaction: Focus on delivering customer value – in

collaboration with the customer

Skills: Understanding and competence to solve the customer's most important challenges

Climate challenges are among the most demanding issues for the industry – also for customers

Selectivity: Selection of project and customer – early involvement and long-term customer relationships

Risk: Take, manage and handle risk at all levels of the organisation

Competence: Commercial understanding of risk management during implementation

= Veidekke's profitability

+ Calculated project margin +/- Sliding margin - Structural and overhead cost

Structure: Organisational structure that ensures proximity to customers in relevant markets

Competence: Manage and leverage expertise across the organisation

Measures and improvements 2018 to 2020 Many units on the right track – but with large potential

		Veidekke	Veidekke Infrastructure		Veidekke Sweden
		Construction	Civ. Engineering	Industrial	Construction	Civ. Engineering	Hoffmann
2018		3.4%	-13.2%	0.8%	1.0%	4.0%	6.6%
2020	CMU	4.0%	1.5%	3.5%	2.0%	4.0%	>5%
2020	Actual	3.6%	1.6%	3.6%	2.2%	3.0%	7.5%

• Business restructuring
• From generalist to specialist
• Selective project strategy

● Risk management

• Selective project strategy
• Less capital tied up and overhead costs
• Safeguarding results and turnaround in Civ. Eng. and Maintenance yield results
• Profitability before growth
• Improved residential production and portfolio adjustments
• Built competence and leadership capacity
• Strengthened competitiveness
• Clear customer strategy
• Further developed the collaboration model
• Focus on technical and service

Clearly better portfolio composition than in 2019 About 2 percentage points higher portfolio margin

Fewer loss-making projects and improved margin

Project revenue in ongoing projects ranked by profitability, quintiles

• Extensive improvement in portfolio composition over the past two years
• The improvement is expected to have a further effect on earnings in 2021 and 2022
• Large potential by further reducing the number of projects with low and negative margins
• Focus on core activities;
  • Selecting the right project
  • Understanding and managing risk
  • Effective execution

Veidekke towards 2025 A streamlined contractor – with a clear focus

• A passionate relationship with the customer and their project
• Long-term customer relationships, early involvement and valuecreating interaction

The green shift

• Play an active role in the transition to a low-emission society
• Contribute cutting-edge expertise and practical solutions

• Focus on taking, controlling and managing risk at all levels of the organisation
• Systematic risk management before and during project execution

! Risk management Collaborative culture

• Involve customers, suppliers and employees in valuecreating interaction
• Consistent efforts to develop work methods and competence to ensure safe and efficient execution

Passionate relationship with customer and project Create mutual success by value-creating interaction

Selectivity – which customers should we work for

• Long-lasting customer relationships based on mutual trust
• Opportunity for early involvement
• Customer relationships based on Veidekke's strengths

Commerciality in value-creating interaction

• Contribute to optimal solutions which in turn ensure added value for the customer
• Veidekke's expertise and competence benefit the customer

Photo: Københavns Udvikling og Nybyggerier

Climate challenges are more than responsibility An opportunity in several parts of the value chain

An active role in the green shift A clear commercial and responsible position

Prioritisation of projects

• Prioritise customers and projects where we can utilise our expertise to reduce the environmental footprint throughout the value chain
• Climate issues require early involvement and cooperation with the client and consultants

Opportunities in the green shift

• Climate issues are more than a social responsibility – they are an opportunity
• Innovation, collaboration and selective investments that support climate-friendly solutions

! Focus on taking control and managing risk A commercial benefit for Veidekke and customers

Project selectivity

• Through consistent risk management, Veidekke can identify potential deviations
• Makes it possible to identify projects that suit Veidekke's expertise and resources

Experts in dealing with risk

• Risk is not exclusively a contractor challenge
• Involvement of customer and consultants helps discover risks for all parties

The most important factor for Veidekke's success Competent and committed employees

Involved, committed and enthusiastic

• People are the most important driver for value creation in construction
• In Veidekke, we build agile teams; efficient teams that build schools, bridges and operate tunnels
• Involvement is a key to creating ownership of direction and ambitions

Commercial understanding across the board

• Commercial competence and insight are key to remaining relevant
• Co-ownership creates commercial insight

Co-worker and co-owner Veidekke employees are also owners

• The employees have broadly participated in Veidekke's high value creation since the introduction of the share program for employees in 1986
• Veidekke prioritises co-ownership for employees, and the company wants as many as possible to have the opportunity to own shares
• Annually, all employees in Veidekke receive an offer to buy shares in the company with a 20% discount – and with a two-year commitment period
• Almost half of all employees currently own shares, and they represent 11% of the company's owners

Number of employees with shares in Veidekke

About 47% of employees own shares

Expansion in the coming years Selective growth in our main markets

Mainly organically driven growth

• Further develop existing customer positions
• Strengthening project owner management and leadership
• Development of Veidekke's structural capital

Targeted expansion investments

• Project investments and structural transactions
• Strengthening positions within relevant geographic markets and product segments
• Expand Veidekke's position in the value chain
• Business which contributes to the green shift

Financial strategy

Jørgen Wiese Porsmyr, CFO Capital Markets Update, 6 May 2021

Improve result margin and grow profitably Higher ambitions towards 2025

Profitability targets for 2022 remains, with raised ambitions towards 2025

기 1

Capital efficiency with return on invested capital above 15%

Selective growth in all three countries

2016-2020*	2020	2022	2025
Revenue growth p.a.	Revenue growth p.a	Revenue growth p.a. 2021 - 2022	Revenue growth p.a. 2023 - 2025
6%	4%	0% - 2%	4% - 6%
Average margin	Margin 2020	Margin target 2022	Margin target 2025
2.1%	3.0%	>4%	>5%

* Historical pro forma figures, adjusted for the sale of Veidekke's Property Development business in 2020

Veidekke's financial strategy Balance investments, dividend and solidity

Strong financial position and capital-light business New capital structure after the sale of Property Dev.

two-thirds of Veidekke's turnover

• Limited fixed assets
• Negative working capital as a result of good project liquidity

Infrastructure – a more capital-intensive business: one-third of Veidekke's turnover

• Asphalt and aggregates with long-term positions and machinery
• Special machines for larger projects, as well as local machine contractors
• Capital-light projects

Development in net interest-bearing position Construction – a capital NOK million -light business:

Priorities ahead Capital discipline and selective investments

Priorities

• Continue the work from previous years
• Limited investments in fixed assets
• Prioritisation of contracts without major own investments
• Disputes / accounts receivable, operating properties and unprofitable business

acquisitions

• Strengthens positions and existing business
• Accretive profitability
• Quickly achieve good profitability
• Return on invested capital >15%
• Moderate integration risk and possibilities for synergies

Debt structure and financing Robust position and financial capacity for growth

Debt and debt facilities

• Refinancing in fourth quarter 2020 after sale of Property Development
  • New bank financing with DNB and SEB
  • Bond loan of NOK 1 000 million redeemed
• Veidekke has a large financing capacity

Bond loan (VEI10) NOK 0.6 bill. Maturity: 2025	Covenant: NIBD / EBITDA < 3.0 over time
Overdraft facility in DNB NOK 1.75 bill. Maturity: rolling 364-day facility	Covenant: NIBD / EBITDA < 3.0 over time
Credit facility in SEB NOK 0.75 bill. Maturity: 3 +1 +1 years	Covenant: NIBD / EBITDA < 3.0 over time Includes sustainability targets: 50 % reductions of CO emissions by 2030 2 Zero serious injuries

Veidekke shall be financially solid

• Targeted equity ratio > 15%
• Solidity target decided by :
  • Capital-efficient business models
  • Requirements from customers for project tenders
  • Basis for bank financing and guarantees
• Solidity target impacts dividend payment ability

Development in equity ratio

Percent

High and attractive dividends

• Veidekke's ambition is to provide shareholders with a competitive return, in the form of a combination of dividend and share price development
• Dividend target of above 70% of net result
• In the short term, the financial position indicates that Veidekke plans to pay out a higher than 70% share

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Dividends NOK per share 2.50 3,00 3.50 4.00 4.50 5.00 5.00 2.50 5.75 0% 20% 40% 60% 80% 100% 120% 140% 2012 2013 2014 2015 2016 2017 2018 2019 2020 NOK 20/share Ordinary dividends Extraordinary dividends Pay-out ratio ordinary dividends

© Veidekke

Annual revenue growth 2022–2025 Margin before tax in 2025 Dividend ratio

4-6% >5% >70%