Report Q1 2013 - Veidekke

Report Q1 2013 - Veidekke

FIRST QUARTER REPORT 2013 VEIDEKKE ASA Q1 2013 1 FIRST QUARTER REPORT 2013 VEIDEKKE ASA 2 FROM THE PRESIDENT AND CEO: Veidekke’s performance in ...

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Veidekke in brief
Veidekke in brief. Scandinavian construction and property development company – Norway's largest construction company.

annual report 20oo-q1 - ReportJunction.com
SANSCO SERVICES - Annual Reports Library Services - www.sansco.net. ANNUAL REPORT 2000-01. TRANSPORT. CORPORATION OF. T

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

Q1 2013

1

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

2

FROM THE PRESIDENT AND CEO: Veidekke’s performance in the first quarter indicates that activity is stabilising at a high level. The order backlog has increased slightly, cash flow is positive, whereas the results are somewhat weaker than last year. In Norway, Construction operations reported an improvement in margins, while project write-downs and a slow Swedish market has resulted in weaker performance for Construction Sweden. The housing market in Norway is still good, and we are seeing signs of improvement in Sweden too.

BOARD OF DIRECTORS’ REPORT FOR THE First QUARTER 2013: Q1 2013

Q1 2012

April 2012 - March 2013

2012

2011

1)

4 049.1

4 298.8

20 210.4

20 460.1

17 908.5

Earnings before tax segment 1)

-62.9

-51.8

669.3

680.4

751.3

-0.3

-0.3

3.9

3.9

4.8

-1.6

-1.2

3.3

3.3

4.2

KEY FIGURES (MNOK) * Operating revenues segment Earnings per share segment

1)

Profit margin (%) 1)

4 234.2

4 035.7

20 037.5

19 839.0

17 727.3

EBITDA IFRS

Operating revenues IFRS

-11.0

-50.3

989.4

950.2

982.0

Profit before tax IFRS

-75.8

-95.3

717.8

698.3

772.9

-0.4

-0.5

4.1

3.9

4.9

Earnings per share IFRS (NOK) 2) Net interest-bearing position

-1 358

-946

-1 358

-1 506

-274

Total order backlog 3)

16 808

15 422

16 808

16 518

14 591

1)

The figures are taken from the segment reporting that provides the most accurate overview of the ongoing value creation in the period.

2)

No dilution effect.

3)

The order backlog for Road Services has been included from Q4 2012.

* The comments under highlights and the segment reports relate to figures taken from the segment accounts.

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

3

HIGHLIGHTS

MNOK

CONSTRUCTION OPERATIONS

Q1 2013

Q1 2012

2012

2011

Q1 2013

Q1 2012

2012

2011

Operating revenues

4 049.1

4 298.8

20 460.1

17 908.5

Operating revenues

3 590.4

3 803.0

16 310.9

14 418.9

Earnings before tax

-62.9

-51.8

680.4

751.3

Earnings before tax

46.0

64.6

496.7

301.2

-1.6

-1.2

3.3

4.2

1.3

1.7

3.0

2.1

15 181

14 722

15 007

13 874

GROUP

Profit margin (%)



Turnover levelled off in the first quarter at Group level, ending 6 per cent lower than in the same quarter last yearl. The decline can largely be attributed to construction operations in Norway. The result for the first quarter is slightly lower than for the corresponding quarter last year, and is dominated by a decline in construction activities in Sweden. The Norwegian and Danish construction operations reported improved profit margins. The activity in the Norwegian housing market is still high, and the performance for Property Development in Norway is strong. In Sweden there are cautious signs of recovery in the housing market, resulting in Property Sweden reporting a small improvement compared with Q1 2012. In the Industry Division, the first quarter is always marked by high expenses due to seasonal fluctuations. At the end of the quarter, the Group had a total order backlog of NOK 16.8 billion, which is slightly higher than at year-end and an increase of 9 per cent compared with Q1 2012. The Group had a positive cash flow in the first quarter due to the handover of several residential projects, and the financial position remains strong. Other factors In connection with the forthcoming change of CEO in Veidekke, the company made some adjustments in the corporate management on 15 April entailing changes of responsibilities in the line. To strengthen Veidekke’s position in the Swedish market, all the divisions in Sweden are now under the leadership of Per-Ingemar Persson. Persson is also responsible for operations in Denmark. Dag Andresen continues to head up the four units in Veidekke Entreprenør Norway. The current CFO Jørgen Wiese Porsmyr has been handed responsibility for the Veidekke Industri and Veidekke Eiendom units in Norway. He will continue as CFO until a replacement has been appointed. Deputy President and CEO Arne Giske is directly responsible for the operating units within the Group (COO) until he takes over as President and CEO on 1 July. The Competition Authority case The Competition Authority announced the final decision in the asphalt case on 5 March. Veidekke was granted full leniency, and the case with the Competition Authority is closed.

CONSTRUCTION

MNOK

Profit margin (%) Orders in hand



In Norway and Denmark Veidekke is engaged in nationwide building and construction activities, while activity in Sweden is concentrated in the regions around Stockholm, Gothenburg and Skåne. Construction operations in Norway Construction Norway

MNOK

Q1 2013

Q1 2012

2012

2011

Operating revenues

2 572.6

2 769.6

11 480.2

9 499.0

Earnings before tax

50.3

42.9

356.7

190.2

2.0

1.5

3.1

2.0

11 179

10 760

11 217

10 309

Profit margin (%) Orders-on-hand



Activity levels are high in the building and construction market in most segments, although there are local market variations. In the first quarter, Construction saw a decrease in turnover of 7 per cent compared with the same quarter last year. The decrease is primarily related to lower activity in building operations in some areas. Activity levels are high in the major cities. The profit margin for the quarter was 2.0 per cent, compared with 1.5 per cent for Q1 2012. The increase in profit margin is due to progress in the building operations, primarily as a result of better margins on recent projects. Within civil engineering operations, the profit margin is at the same level as in 2012. At the close of the quarter, Construction had an order backlog of NOK 11.2 billion, which is unchanged from year-end and an increase of 5 per cent compared with Q1 last year. Orders booked in the quarter consist primarily of residential and public building projects. Major contracts signed in first quarter include a contract for the construction of Re care home in Re and Bjønnes nursing home in Nøtterøy in Vestfold, with contract values of NOK 276 million and NOK 165 million respectively. In addition, Veidekke Eiendom is initiating new construction phases in the residential projects Hagebyen in Fornebu and Marienfryd in Oslo with a total contract value of NOK 360 million. Construction operations in Sweden Construction Sweden

MNOK

Q1 2013

Q1 2012

2012

2011

Operating revenues

735.0

722.8

3 555.6

3 383.7

Earnings before tax

-11.6

15.1

87.7

54.8

-1.6

2.1

2.5

1.6

2 995

3 182

2 733

2 545

Profit margin (%) Orders-on-hand



The building and construction market in Sweden remains characterised by uncertainty. Slow sales are affecting the housing market, resulting in small volumes. Despite the financial turmoil,

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

4

there is still good inflow of projects in the market for commercial buildings. The civil engineering market is also strong, despite postponement of several projects. Competition from Europe is putting downward pressure on prices. Turnover is on a par with the same period last year. The result for the quarter was NOK -12 million and is dominated by project write downs of NOK 15 million in building operations in Stockholm. Building operations in Skåne and Gothenburg reported healthy results for the quarter, while there is a seasonal deficit in Industry of NOK -9 millon. At the close of the quarter, the Swedish construction operations had an order backlog of NOK 3.0 billion, compared with NOK 2.7 billion at year-end and NOK 3.2 billion in the first quarter of 2012. Order bookings in the quarter totalled NOK 957 million. New contracts signed in the quarter include the Tummaren residential project in Stockholm for Eiendom Sverige with a contract value of NOK 148 million, civil engineering work on the Lidingö line for the Stockholm County Traffic Management Agency (Trafikförvaltningen) with a contract value of NOK 131 million, and office and business premises in the Dimman Quarter in Malmö for Profi with a contract value of NOK 63 million. Construction operations in Denmark Construction Denmark

MNOK

Q1 2013

Q1 2012

2012

2011

282.8

310.6

1 275.1

1 536.2

Earnings before tax

7.3

6.6

52.3

56.2

Profit margin (%)

2.6

2.1

4.1

3.7

1 007

780

1 057

1 020

Operating revenues

Orders-on-hand



Activity remains sluggish in the Danish market. There is slow growth in the Danish economy, consumers are reluctant to spend, and businesses are very reticent to invest. The Danish government has presented a national plan to boost the economy: ”vækstplan.dk.” In addition to plans to lower the corporate tax rate in Denmark, a number of other measures have been proposed to stimulate activity in the building and construction industry. However, it is uncertain whether the public investments will be sufficient to compensate for the decline in private investment, which remains at a historically low level. Turnover in the first three months of the year totalled NOK 283 million, down 7 per cent from the same quarter last year. The profit margin was 2.6 per cent (2.1 per cent). The improvement in profit margin is largely attributable the changes in Hoffmann’s organisation to adapt to the expected level of turnover for the year, and good production on ongoing contracts. At the close of the quarter, Hoffmann had an order backlog of NOK 1.0 billion, compared with NOK 1.1 billion at the beginning of the year and NOK 780 million at the same time last year. A number of minor contracts were secured during the quarter representing a total order booking of NOK 109 million.

PROPERTY DEVELOPMENT MNOK

Property ­development

Q1 2013

Q1 2012

2012

2011

Operating revenues

405.6

394.4

2 110.7

1 525.7

Earnings before tax

44.9

37.9

172.9

281.0

1 381

1 245

1 277

1 105

Number of apartments under construction



Property Development is primarily engaged in the development of residential buildings for the company’s own account and, to a lesser degree, non-residential buildings for private and public customers. Activities are concentrated around the largest cities in Norway and Sweden. Turnover was up 3 per cent from the first quarter last year, while profit before tax increased by 20 per cent to NOK 45 million. Developments are good in both the Norwegian and the Swedish operations. In Norway, the housing market is characterised by high demand and strong sales in and around the major cities. Having been plagued by low sales and uncertainty since 2011, it now appears that the Swedish market has stabilised and is starting to grow. A total of 212 residential units were sold in the first quarter (including Veidekke’s share of jointly-owned projects). Several of the major 100 per cent owned projects are nearing completion and are about to be sold out, resulting in slightly lower residential sales in Norway than in the corresponding quarter of 2012. In Sweden, housing sales are on the rise. At the end of the quarter 1,795 residential units were under construction, of which Veidekke’s share was 1,381 (1,245). The sales ratio in the portfolio was 77 per cent (Veidekke’s share). There were 21 completed, unsold homes (Veidekke’s share), compared with 30 at the end of the first quarter 2012. At the close of the quarter, the Group had a portfolio of sites in Norway and Sweden comprising some 13,200 dwelling units (Veidekke’s share: 10,400), which is the same level as at the same time last year. Property development in Norway

MNOK

Property ­development Norway

Q1 2013

Q1 2012

2012

2011

Operating revenues

290.1

280.9

1 341.1

916.7

Earnings before tax

46.4

44.8

173.8

122.6

Number of apartments under construction

845

761

906

591



The strong demand for homes in the main growth areas has continued through the first quarter 2013. The good market conditions mean a number of sales and building starts may be brought forward. The high activity in the market has led to increased building costs in recent years. The challenge going forward is to keep building costs down and to complete more key projects ready for sale.

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

5

In the first quarter, two projects were initiated with a total of 81 units (Veidekke’s share), and projects comprising 142 units were handed over. In all, 140 dwellings were sold during the quarter. Veidekke’s share amounted to 95. This is slightly weaker than in the first quarter 2012, primarily due to higher joint venture activity and the fact that many of the projects are nearly fully sold. At the end of the quarter, the Norwegian operations had 1,221 dwellings under construction. Veidekke’s share amounted to 845 units (761). The sales rate was 78 per cent. At the end of the quarter the portfolio of sites consisted of 6,300 units, which is the same as one year earlier. Property development in Sweden MNOK

Property ­development Sweden

Q1 2013

Q1 2012

2012

2011

Operating revenues

115.5

113.5

769.6

609.0

Earnings before tax

-1.5

-6.9

-0.8

158.4*

Number of apartments under construction

536

484

371

514

* Includes a net profit of 133 MNOK from the acquisition of the remaining shares in Bouwfonds Veidekke AB.

Property Sweden’s profit before tax for the first quarter was a loss of NOK -1.5 million (NOK -6.9 million). This includes the results from Property Denmark, which from 2013 started reporting under Property Sweden. The result is dominated by low housing sales throughout 2012 and as a consequence few new projects being started up. Turnover amounted to NOK 115.5 million (NOK 113.5 million). The housing market in Sweden has been weak since summer 2011. However, interest in new homes gradually picked up through 2012, and viewings were well attended. It now looks as though the market is beginning to stabilise, and house sales are increasing. In the first quarter, 72 homes were sold (Veidekke’s share: 65), which is an increase from Q1 2012 (56). There are small signs of market recovery, especially in Stockholm. At the end of the quarter Property Sweden had 574 dwellings under construction. Veidekke’s share amounted to 536, compared with 484 one year earlier. The sales ratio is 76 per cent. Three new residential projects were initiated in the first quarter: two in Stockholm and one in Gothenburg. At the end of the quarter, the portfolio of sites consisted of 6,600 units, of which some 70 per cent was options to purchase from private owners and municipal authorities. This is at the same level as at the beginning of the year. Veidekke’s property development operations in Denmark, Hoffmann Ejendomme A/S, have been closed down and the remaining portfolio of sites is now being handled by Veidekke Bostad. The portfolio of sites consists exclusively of residential sites in Jutland and Zealand. The housing market is showing signs of recovery, and there are conditional sale agreements for all the sites. All the completed dwellings have been sold.

INDUSTRY Industry

MNOK

Q1 2013

Q1 2012

2012

2011

Operating revenues

287.5

301.2

3 192.5

3 041.5

Earnings before tax

-140.4

-143.5

38.3

215.52)

41.4

213.1

38.3

215.5

1 627

700

1 511

717

Earnings before tax (12 months rolling)

Orders-on-hand 1)

1)

Order backlog due for completion within 18 months. Includes the effect of the sale of Veidekke Gjenvinning (recycling) for NOK 124 million in Q2 2011.

2)

Veidekke Industri conducts nationwide activities in Norway and comprises the business areas Asphalt, Crushed Stone and Gravel, and Road Services. The increase in the number of public transport infrastructure projects has resulted in favourable market conditions for Veidekke’s industrial operations. The market is expected to remain stable or grow in the future for both Road Services and Asphalt. Veidekke Industri had a total turnover of NOK 287.5 million (NOK 301.2 million) in the first quarter 2013 and a result before tax of NOK -140.4 million (NOK -143.5 million). Asphalt operations The first quarter is always dominated by seasonally low activity and expenses are greater than revenues. In the winter months, there is a strong focus on costs and cost cutting, and in the first quarter 2013 Asphalt has achieved its planned cost savings. Veidekke Industri has secured contracts in the competitive tendering for asphalt laying for the Norwegian Public Roads Administration in 2013, and the outlook in the other customer segments is largely bright. Road Services Road Services has continued its positive growth in road maintenance operations, and the results in the first quarter are a further improvement on last year. The profit margin for the quarter was 1.5 per cent. Recently awarded contracts are progressing as planned, and the effects of the improvement measures have contributed to higher profits. During the spring Veidekke Industri has won four new road service contracts for Norwegian classified and county roads, in addition to a contract for winter maintenance at Oslo Airport. The contracts run for five to six years, and have a total value of NOK 732 million excl. VAT. Crushed Stone and Gravel Crushed Stone and Gravel produced similar volumes in Q1 as in 2012. To yield further improvements in profitability, the division maintains a constant focus on cost cutting and rationalisation. Higher activity related to public transport infrastructure projects has resulted in favourable market conditions for Veidekke’s industrial operations. Activity levels in the market for Road Services and Asphalt are expected to remain stable or rise in the future.

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

6

INJURIES/ABSENCE/HSE

TRANSAcTIONS WITH RELATED ­PARTIES

Injury rate Cumulative LTI rate

As of Q1 2013*

As of Q1 2012*

As of Q4 2012*

Norway

6.1

6.1

7.4

Sweden

12.1

8.9

12.4

Denmark

4.0

14.0

10.0

Scandinavia

6.9

7.9

8.4

Veidekke has ongoing transactions with related parties as part of its ordinary operations, including contracts for the development of specific projects. There have not been any significant transactions with related parties in the first quarter 2013. Details are provided on the types of transactions and their extent last year in note 34 to the financial statements for 2012.

* 12-month rolling

The injury rate for the group as a whole decreased in the last quarter. The combined lost-time injury rate for the Scandinavian operations as a whole was 6.9, down from 8.4 the previous quarter. There were ten lost-time injuries in the Norwegian operations in the first quarter and five in the Swedish operations, while the Danish operations reported zero lost-time injuries. Sickness absence As of Q1 2013*

As of Q1 2012*

As of Q4 2012*

All employees in Norway

4.8

5.7

4.9

Skilled workers Norway

5.9

7.1

6.2

All employees in Sweden

3.6

3.7

3.6

Skilled workers Sweden

5.0

5.3

5.1

All employees in Denmark

1.7

2.6

2.0

Skilled workers in Denmark

2.8

3.5

2.9

* 12-month rolling

Sickness absence has been reduced in all three countries compared with the same period last year.

FINANCIAL SITUATION

Investments in machinery and equipment Sale of property. machinery and equipment Total assets Equity share (%) Unused. committed borrow­ ing facilities

Number of million shares traded Largest shareholders OBOS If Skadeförsäkring AB Folketrygdfondet

Q1 2013

Q1 2012

12.4

7.4

Ownership share in % 28.0 9.1 7.7

Veidekke employees

18.5

Foreign shareholders

26.5



Cumulative sickness absence in %

Net interest-­ bearing position

SHAREHOLDER INFORMATION

Q1 2013

Q1 2012

2012

2011

-1 358

-946

-1 506

-274

43

71

449

389

8

40

109

62

11 010

9 853

11 185

9 925

19.6

18.2

19.6

19.0

1 258

1 855

1 099

1 458



The Group’s financial position is satisfactory. The Group’s net interest-bearing position has improved by NOK 147 million in the quarter, primarily as a result of several project handovers in Property operations. The other business areas had a seasonally negative cash flow.

In all, a total of 12.4 million Veidekke shares were traded in the first quarter. The largest shareholders as per 31 March 2013 were OBOS, If Skadeförsäkring AB and Folketrygdfondet. The share price ranged between NOK 44.10 and NOK 48.00 during the quarter. There were no share repurchases in the first quarter 2013.

RISK AND UNCERTAINTY FACTORS

Veidekke’s operations consist of the execution of individual projects. The projects vary greatly in terms of complexity, size and risk. It is essential to Veidekke’s results that project risk is handled in a systematic and professional manner throughout all phases of production. There is a growing number of disputes in the Norwegian civil engineering operations, especially concerning transport infrastructure projects. This has had a negative impact on the Group’s liquidity in 2012. The labour market is tight, especially in the capitals Oslo and Stockholm, which may affect the availability of relevant expertise. Systematic recruitment and development are therefore a priority for the Group. Subcontractor prices have shown an increasing trend. Risks are associated with market developments and are partly handled by entering into long-term collaboration agreements with strategic suppliers, as well as careful analysis and monitoring of key input prices. In Denmark, there has been no change in the market conditions for companies in the building and construction industry, and many companies are struggling financially. Veidekke is therefore focusing on following up its subcontractors’ ability to deliver in ongoing and new projects alike. Financial turmoil in Europe and more limited access to financing for Veidekke’s customers may affect the future development of property

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

7

projects for Veidekke’s own account. Earnings in the property segment depend on the initiation of new projects. Veidekke adheres to the rule that new residential projects shall not be initiated until a sales rate of 50 per cent is achieved. A hesitant housing market may therefore delay residential projects.

MARKET AND COMPETITIVE SITUATION

The Norwegian economy performed well in the first quarter and in line with our expectations. The Swedish economy was affected by the situation in Europe in the first quarter. The weakening of the European economy has had only a minor impact on the Norwegian economy to date, which continues to be driven by high oil prices. In Norway there is good inflow of projects in all segments. However, the regional differences are relatively large and reflect the high level of investment in the oil industry, which is particularly noticeable in western Norway and the Agder counties. Despite the flattening of house prices in the first quarter, the demand for new homes is perceived as good. The market for commercial

buildings is increasing steadily, in the private and public sectors alike. Activity within civil engineering is dominated by major transport infrastructure projects, although we are seeing a slight increase in inflow of industry-related contracts. There is still fierce competition for projects, and the proportion of foreign competitors is stable. The Swedish building and construction market was affected by the recession in Europe in the first quarter, particularly the market for residential and commercial buildings. We are now seeing signs of a recovery in the market, which we expect to continue through the remainder of the year. In Denmark, the market remains weak, especially within residential and private commercial buildings. The government is trying to stimulate activity by investing considerable funds in energy conservation and upgrading of housing. We do not expect to see a recovery in the private building industry in Denmark until 2014. In Norway, we expect a healthy building and construction market in 2013, whereas the market will remain challenging in Sweden and Denmark.

Oslo, 6 May 2013 Board of VEIDEKKE ASA Martin Mæland Chairman Per Otto Dyb Gro Bakstad Annika Billström Ann Christin Gjerdseth Hans von Uthmann Deputy Chairman Odd Andre Olsen Inge Ramsdal Lars Skaare Terje R. Venold President and CEO

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

8

CONSOLIDATED INTERIM ACCOUNTS (UNAUDITED) A. B. C. D. E.

Financial accounts for the first quarter Segment accounts Geographic segments Statement of changes in equity Notes to the interim accounts

Declaration by the Board of Directors and Group Director

We hereby confirm that to the best of our knowledge the enclosed interim financial statements have been prepared in accordance with applicable accounting standards and that the accounts give a true and fair view of the consolidated entity’s assets, liabilities, financial position and operational results. Oslo, 6 May 2013 Board of VEIDEKKE ASA Martin Mæland Chairman Per Otto Dyb Gro Bakstad Annika Billström Ann Christin Gjerdseth Hans von Uthmann Deputy Chairman Odd Andre Olsen Inge Ramsdal Lars Skaare Terje R. Venold President and CEO

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

9

A. Financial Accounts for the First Quarter 2013 PROFIT AND LOSS

MNOK

Q1 2013

Q1 2012

2012

2011

Operating revenues

4 234.2

4 035.7

19 839.0

17 727.3

Operating expenses

-4 247.5

-4 087.5

-18 924.1

-16 974.5

Result from investments in associated companies and joint ventures

2.3

1.5

35.2

229.2

Operating profit before ­depreciation (EBITDA)

-11.0

-50.3

950.2

982.0

-

-

-2.7

-5.1

Depreciation

Impairment of non-current asset

-73.2

-70.7

-302.5

-322.2

Operating profit (EBIT)

-84.2

-121.0

645.0

654.7

Financial income

16.9

32.7

82.7

149.6

Financial expenses

-8.5

-7.0

-29.4

-31.4

Earnings before tax

-75.8

-95.3

698.3

772.9

Income tax expense

17.1

21.5

-160.2

-110.0

-58.7

-73.8

538.0

662.9

of which earnings non-controlling interests

-3.7

-1.2

10.8

7.1

Earnings per share (NOK) *

-0.4

-0.5

3.9

4.9

Q1 2013

Q1 2012

2012

2011

-58.7

-73.8

538

662.9

-

-

189.3

99.0

Currency conversion differences

29.3

-10.8

-25.8

0.2

Fair value adjustment of financial assets

-3.2

5.6

8.6

-40.8

-32.6

-79.0

710.1

721.3

-2.2

-1.5

10.5

7.1

1 Jan - 31 March 2013

1 Jan - 31 March 2012

-75.8

-95.3

-6.5

0.8

Earnings after tax

*No dilution effect

EXTENDED PROFIT AND LOSS ­ACCOUNT ­ACCORDING TO IAS 1 Earnings after tax Other income and cost: Revaluation pension

Total comprehensive income of which non-controlling interests

STATEMENT OF CASH FLOWS Earnings before tax Tax paid Depreciation/impairment

73.2

70.7

Other operational items

214.7

-244.9

Cash flow from operating activities

205.6

-268.7

Purchase/sale of tangible non-current assets

-34.9

-30.6

Other investment activities

-16.8

-48.5

Change in interest-bearing receivables

43.7

1.9

Cash flow from investment activities

-8.0

-77.2

-258.0

571.1

-

-

Change in interest-bearing debt Dividend paid Purchases own shares Change other long-term liabilities Other financial items

-

-

0.1

-289.5

-12.0

-34.7

-269.9

246.9

Change in cash and cash equivalents

-72.3

-99.0

Cash and cash equivalents, start of period

205.5

276.0

Cash flow from financing activities

Exchange rate adjustment foreign liquid reserves Cash and cash equivalents, 31 March

5.2

0.2

138.5

177.2

FIRST QUARTER REPORT 2013 VEIDEKKE ASA NET INTEREST-BEARING POSITION Cash and cash equivalents Interest-bearing assets (long-term)

10 As at 31.3.2013

As at 31.3.2012

As at 31.12.2012

MNOK As at 31.12.2011

138.5

177.2

205.5

276.0

318.1

252.6

361.9

251.0

Interest-bearing liabilities

-1 815.0

-1 376.0

-2 073.0

-801.4

Net interest-bearing position

-1 358.4

-946.2

-1 505.6

-274.4

147.3

-671.8

-1 231.2

-112.9

16 808

15 422

16 518

14 591

19.6

18.2

19.6

19.0

6 185

6 033

6 253

6 121

As at 31.3.2013

As at 31.3.2012

As at 31.12.2012

As at 31.12.2011

641.2

543.0

631.0

546.3

46.0

33.6

46.0

34.2

Change in net interest-bearing position (from 1 January)

OTHER KEY FIGURES Orders-on-hand (MNOK) Equity ratio (%) Number of employees

STATEMENT OF FINANCIAL POSITION ASSETS Non-current assets Goodwill Other intangible assets Deferred tax assets Buildings/land Machinery etc. Investments in associated companies and joint ventures Financial assets

62.4

67.4

62.4

67.4

512.3

446.2

511.7

488.0

1 210.4

1 135.1

1 234.8

1 136.8

748.1

654.8

755.0

515.1

414.8

338.7

394.1

280.1

3 635.3

3 218.8

3 635.0

3 067.9

3 465.1

3 463.7

3 623.9

3 261.8

358.2

287.1

330.0

264.2

3 412.9

2 706.6

3 390.2

3 055.3

138.5

177.2

205.5

276.0

7 374.6

6 634.6

7 549.7

6 857.3

11 009.9

9 853.4

11 184.7

9 925.2

Share capital

66.9

66.9

66.9

66.9

Other equity

2 033.8

1 678.2

2 064.3

1 755.7

62.3

50.3

64.5

64.1

2 163.0

1 795.4

2 195.7

1 886.7

Total non-current assets Current assets Non-residential and residential projects Inventories Accounts receivable and other receivables Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Equity

Non-controlling interests Total equity Long-term liabilities Pension liability and deferred tax Debt to credit institutions etc. Other long-term liabilities Total long-term liabilities

448.3

783.9

470.8

794.6

1 198.1

1 274.5

1 855.6

803.0

28.3

90.5

28.0

380.0

1 674.6

2 148.9

2 354.40

1 977.6

Short-term liabilities Certificate debts and debt to credit institutions Creditors, guarantee funds Unpaid government charges, tax payable

616.9

101.5

217.5

1.9

3 450.7

3 362.5

3 585.9

3 536.8

433.7

398.9

369.7

336.9

Other short-term liabilities

2 671.0

2 046.2

2 461.7

2 185.3

Total short-term liabilities

7 172.3

5 909.1

6 634.7

6 060.9

Total equity and liabilities

11 009.9

9 853.4

11 184.7

9 925.2



FIRST QUARTER REPORT 2013 VEIDEKKE ASA

B. BUSINESS SEGMENT ACCOUNTS

11

Q1 2013

Q1 2012

2012

MNOK 2011

Construction (specification page 13) Operating revenues

3 590.4

3 803.0

16 310.9

14 418.9

Operating expenses

-3 515.5

-3 719.8

-15 704.4

-14 010.0

-38.2

-37.0

-161.3

-160.2

-1.3

-1.4

1.9

10.9

Operating profit (EBIT)

35.4

44.8

447.1

259.6

Net financial items

10.5

19.8

49.5

41.6

Depreciation/impairment Result from associated companies and joint ventures

Earnings before tax (EBT)

46.0

64.6

496.7

301.2

6 270.8

5 681.6

6 154.6

5 977.2

Operating revenues

405.6

394.4

2 110.7

1 525.7

Operating expenses

-1 407.0

Total assets business segment Property (specification page 14)

-388.3

-367.0

-1 990.2

Depreciation/impairment

-0.9

-1.0

-5.3

-10.4

Result from associated companies and joint ventures

26.9

3.2

44.6

181.2

Operating profit (EBIT)

43.4

29.6

159.9

289.5

1.6

8.3

13.1

-8.5

Net financial items Earnings before tax (EBT) Total assets business segment

44.9

37.9

172.9

281.0

4 265.1

4 068.8

4 485.0

3 834.9

Industry Operating revenues

287.5

301.2

3 192.5

3 041.5

Operating expenses

-384.4

-403.4

-3 001.3

-2 765.4

-34.0

-32.7

-138.4

-155.8

-4.4

-3.7

11.3

9.4

-135.3

-138.6

64.0

129.7

-5.2

-4.9

-25.7

85.8

-140.4

-143.5

38.3

215.5

1 423.6

1 303.4

1 601.2

1 442.0

Depreciation/impairment Result from associated companies and joint ventures Operating profit (EBIT) Net financial items Earnings before tax (EBT) Total assets business segment

Other operations 1) Operating revenues

0.3

-

0.5

16.7

Operating expenses

-18.0

-17.1

-55.5

-73.8

-0.1

-

-0.2

-0.9

Depreciation/impairment Result from associated companies and joint ventures Operating profit (EBIT) Net financial items Earnings before tax (EBT) 1)

3.0

2.8

12.6

11.3

-14.8

-14.3

-42.6

-46.7

1.5

2.5

16.4

-0.7

-13.4

-11.8

-26.2

-47.4

Other operations include the Group’s net financial items, central unassigned costs and earnings from the Group’s operations outside Scandinavia.

Group eliminations Operating revenues

-234.7

-199.8

-1 154.5

-1 094.3

Operating expenses

234.7

200.8

1 153.1

1 095.3

Depreciation/impairment

-

-

-

-

Result from associated companies and joint ventures

-

-

-

-

Operating profit (EBIT)

-

1.0

-1.4

1.0

Net financial items

-

-

-

-

Earnings before tax (EBT)

-

1.0

-1.4

1.0

TOTAL VEIDEKKE GROUP SEGMENT ACCOUNT Operating revenues

4 049.1

4 298.8

20 460.1

17 908.5

Operating expenses

-4 071.4

-4 306.5

-19 598.3

-17 160.9

-73.2

-70.7

-305.2

-327.3

Depreciation/impairment Result from associated companies and joint ventures

24.2

0.9

70.4

212.8

Operating profit (EBIT)

-71.3

-77.5

627.1

633.1

Net financial items Earnings before tax (EBT) Total assets segment

8.4

25.7

53.3

118.2

-62.9

-51.8

680.4

751.3

10 498.3

9 427.5

10 761.6

9 470.4

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

12

RECONCILIATION SEGMENT ACCOUNTS VERSUS FINANCIAL ACCOUNTS Q1 2013

Q1 2012

2012

MNOK 2011

TOTAL VEIDEKKE GROUP SEGMENT ACCOUNT Operating revenues

4 049.1

4 298.8

20 460.1

17 908.5

Operating expenses

-4 071.4

-4 306.5

-19 598.3

-17 160.9

Depreciation/impairment

-73.2

-70.7

-305.2

-327.3

Result from associated companies and joint ventures

24.2

0.9

70.4

212.8

Operating profit (EBIT)

-71.3

-77.5

627.1

633.1

8.4

25.7

53.3

118.2

Net financial items

Earnings before tax (EBT)

-62.9

-51.8

680.4

751.3

10 498.3

9 427.5

10 761.6

9 470.4

Operating revenues

185.1

-263.1

-621.1

-181.2

Operating expenses

-176.1

216.2

562.8

161.2

-

-

-

-

Result from associated companies and joint ventures

-21.9

0.6

-35.2

16.4

Operating profit (EBIT)

-12.9

-46.3

-93.5

-3.6

-

-

-

-

Total assets segment IFRIC 15 ADJUSTMENT 1) 2)

Depreciation/impairment

Net financial items Earnings before tax (EBT)

-12.9

-46.3

-93.5

-3.6

Total assets segment

511.6

425.9

423.1

454.8

1)

According to IFRS, income and earnings for fully developed dwellings shall not be recognised in the income statement till the time when the apartment

is delivered to the buyer (pass of legal title). In the internal monitoring of housing projects the reporting is done according to successive income reporting. This means that revenues and earnings are recognised in accordance with the final forecast for the project * rate of completion * sales rate. 2)

See also the accompanying notes, item 2 Accounting policies.

Q1 2013

Q1 2012

2012

2011

New rules for pension in the ­financial statements (see note 9) Operating revenues

-

-

-

-

Operating expenses

-

2.8

111.4

25.2

Depreciation/impairment

-

-

-

-

Result from associated companies and joint ventures

-

-

-

-

Operating profit (EBIT)

-

2.8

111.4

25.2

Net financial items

-

-

-

-

Earnings before tax (EBT)

-

2.8

111.4

25.2

Q1 2013

Q1 2012

2012

2011

TOTAL VEIDEKKE GROUP Operating revenues

4 234.2

4 035.7

19 839.0

17 727.3

Operating expenses

-4 247.5

-4 087.5

-18 924.1

-16 974.5

-73.2

-70.7

-305.2

-327.3

2.3

1.5

35.2

229.2

-84.2

-121.0

645.0

654.7

8.4

25.7

53.3

118.2

Depreciation/impairment Result from associated companies and joint ventures

Operating profit (EBIT) Net financial items

Earnings before tax (EBT) Total assets Group

-75.8

-95.3

698.3

772.9

11 009.9

9 853.4

11 184.7

9 925.2

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

13

Construction operations by country MNOK CONSTRUCTION NORWAY

Q1 2013

Q1 2012

2012

2011

Operating revenues

2 572.6

2 769.6

11 480.2

9 499.0

Operating expenses

-2 503.0

-2 717.9

-11 048.0

-9 230.2

-27.6

-28.1

-121.1

-118.9

Depreciation/impairment Result from associated companies and joint ventures Operating profit (EBIT) Net financial items Earnings before tax (EBT)

-

-0.1

1.6

2.1

42.0

23.5

312.7

152.0

8.3

19.4

44.0

38.2

50.3

42.9

356.7

190.2

4 623.3

4 148.3

4 500.2

4 349.0

Operating revenues

735.0

722.8

3 555.6

3 383.7

Operating expenses

Total assets business segment CONSTRUCTION SWEDEN

-737.2

-698.3

-3 431.4

-3 294.5

Depreciation/impairment

-9.1

-7.0

-33.1

-33.6

Result from associated companies and joint ventures

-1.3

-1.3

-

1.9

-12.6

16.2

91.2

57.5

0.9

-1.1

-3.5

-2.7

Operating profit (EBIT) Net financial items Earnings before tax (EBT)

-11.6

15.1

87.7

54.8

870.2

792.9

929.1

837.8

Operating revenues

282.8

310.6

1 275.1

1 536.2

Operating expenses

-275.3

-303.6

-1 225.0

-1 485.3

-1.5

-1.9

-7.1

-7.7

Total assets business segment CONSTRUCTION DENMARK

Depreciation/impairment Result from associated companies and joint ventures

-

-

0.3

6.9

Operating profit (EBIT)

6.0

5.1

43.3

50.1

Net financial items

1.3

1.5

9.0

6.1

Earnings before tax (EBT)

7.3

6.6

52.3

56.2

777.3

740.4

725.3

790.4

Operating revenues

3 590.4

3 803.0

16 310.9

14 418.9

Operating expenses

-3 515.5

-3 719.8

-15 704.4

-14 010.0

-38.2

-37.0

-161.3

-160.2

Total assets business segment Total Construction

Depreciation/impairment Result from associated companies and joint ventures Operating profit (EBIT)

-1.3

-1.4

1.9

10.9

35.4

44.8

447.1

259.6

Net financial items

10.5

19.8

49.5

41.6

Earnings before tax (EBT)

46.0

64.6

496.7

301.2

6 270.8

5 681.6

6 154.6

5 977.2

Total assets business segment

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

14

Property development by country MNOK Property development Norway

Q1 2013

Q1 2012

2012

2011

Operating revenues

290.1

280.9

1 341.1

916.7

Operating expenses

-271.1

-251.6

-1 216.9

-832.0

Depreciation/impairment

-0.8

-1.0

-5.1

-10.3

Result from associated companies and joint ventures

23.4

3.2

30.7

48.6

Operating profit (EBIT)

41.6

31.5

149.9

123.0

4.8

13.3

23.9

-0.4

Net financial items Earnings before tax (EBT) Total assets business segment

46.4

44.8

173.8

122.6

2 178.3

2 093.4

2 464.2

1 914.1

Property development Sweden* Operating revenues

115.5

113.5

769.6

609.0

Operating expenses

-117.2

-115.4

-773.3

-575.0

Depreciation/impairment

-0.1

-

-0.2

-0.1

Result from associated companies and joint ventures

3.6

-

13.9

132.6

1.8

-1.9

10.0

166.5

-3.2

-5.0

-10.8

-8.1

Operating profit (EBIT) Net financial items Earnings before tax (EBT) Total assets business segment *)

-1.5

-6.9

-0.8

158.4

2 086.8

1 975.4

2 020.7

1 920.8

Property Denmark is included under Sweden from 2013. Previous years accounts hav been restated.

TOTAL PROPERTY DEVELOPMENT Operating revenues

405.6

394.4

2 110.7

1 525.7

Operating expenses

-388.3

-367.0

-1 990.2

-1 407.0

Depreciation/impairment

-0.9

-1.0

-5.3

-10.4

Result from associated companies and joint ventures

26.9

3.2

44.6

181.2

Operating profit (EBIT)

43.4

29.6

159.9

289.5

Net financial items Earnings before tax (EBT) Total assets business segment

1.6

8.3

13.1

-8.5

44.9

37.9

172.9

281.0

4 265.1

4 068.8

4 485.0

3 834.9

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

15

C. GEOGRAPHIC SEGMENTS MNOK Q1 2013

Q1 2012

2012

2011

2 998.8

3 236.4

15 225.8

12 903.9

-43.8

-55.8

568.8

528.3

788.0

747.8

3 989.9

3 581.2

-11.4

10.1

92.3

220.8

284.1

316.0

1 299.2

1 544.0

5.7

4.7

46.8

48.6

Operating revenues

-21.9

-1.4

-54.8

-120.6

Earnings before tax (EBT)

-13.4

-10.8

-27.6

-46.4

NORWAY Operating revenues Earnings before tax (EBT) SWEDEN Operating revenues Earnings before tax (EBT) DENMARK Operating revenues Earnings before tax (EBT) OTHER

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

16

D. STATEMENT OF CHANGES IN EQUITY

Equity at 31 December 2011

Controlling interest

Share capital

Other equity*

Foreign currency differences

Other retained earnings

Change in fair value **

Total

Noncontrolling interests

Total

66.9

304.8

-79.5

2 032.0

-96.5

2 227.7

66.8

2 294.4

-405.0

-2.7

-407.7

1 822.7

64.1

1 886.7

-72.6

-1.2

-73.8

5.6

-4.9

-0.3

-5.2

-405.0

Implementation new principles ­pension IAS19 Equity at 01 January 2012

66.9

304.8

-79.5

Earnings for the period

1 627.0

-96.5

-72.6

Other comprehensive income:

-10.5

Change in non-controlling interests

-12.3

-12.3

Equity at 31 March 2012

66.9

304.8

-90.0

1 554.4

-90.9

1 745.2

50.3

1 795.4

Equity at 01 January 2012

66.9

304.8

-79.5

1 627.0

-96.5

1 822.7

64.1

1 886.7

527.2

10.8

538.0

-25.5

188.3

8.6

171.4

0.7

172.1

5.7

5.7

Earnings for the year

527.2

Other comprehensive income: Change in non-controlling interests IFRS 2 – Share-based transactions employees

-11.3

-11.3

Transactions with non-controlling interests

-7.0

-7.0

Options non-controlling interests Dividend

-11.3 -7.4

-14.4

-4.2

-4.2

-367.7

-367.7

-9.4

-377.1

-4.2

Equity at 31 December 2012

66.9

304.8

-105.0

1 952.5

-87.9

2 131.3

64.5

2 195.7

Equity at 01 January 2013

66.9

304.8

-105.0

1 952.5

-87.9

2 131.3

64.5

2 195.7

-55.0

-3.7

-58.7

-3.2

24.5

1.5

26.0

-91.1

2 100.8

62.3

2 163.0

Earnings for the period

-55.0

Other comprehensive income:

27.8

Change in non-controlling interests Equity at 31 March 2013

66.9

304.8

-77.2

* Fully paid capital over and above nominal value of shares. ** Changes in the fair value of instruments available for sale and hedging instruments.

There have been no purchases of own shares in the first quarter 2013.

1 897.5

-

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

17

E. NOTES TO THE INTERIM ACCOUNTS 1. General information Veidekke is a Scandinavian construction and property development company headquartered in Oslo. The consolidated accounts for the first quarter 2013 include Veidekke ASA (the parent company) and all of its subsidiaries as well as the Group’s share of associated companies and joint ventures. At the end of the first quarter 2013, the Group consisted of the same entities as reported in the annual accounts for 2012. 2. Accounting principles The Group’s financial reporting is carried out in accordance with the EU-approved International Financial Reporting Standards (IFRS). The quarterly accounts have been prepared in accordance with IAS 34 Interim Financial Reporting and the Stock Exchange Rules. The quarterly accounts have largely been prepared in accordance with the same accounting policies as the annual accounts for 2012. The main changes in the accounting policies relate to the adoption of new accounting rules for pensions and amended classification of profits from joint ventures in the income statement. From 1 January 2013, pension commitments must be recorded at fair value. Up until 31 December 2012, Veidekke used the ”corridor method” to record actuarial gains and losses on pensions. This is no longer allowed. The elimination of the corridor method entails that actuarial gains and losses must be recognised in other comprehensive income (OCI) in the period in which they arise. Under the new rules, gains and losses of this nature are thus not recognised in Veidekke’s ordinary income statement. The implementation of new rules has resulted in the Group’s equity at 1 January 2013 being reduced by NOK 138 million. Historical accounting figures for previous years have been restated, resulting in an increase in the profit for 2012 of NOK 111 million. Of this, NOK 100 million relates to an increase in revenue recognition in connection with termination of the former pension plan in Norway, while the remaining NOK 11 million relates to changes in the principles for expensing actuarial differences and returns on pension assets. The Group has decided from 2013 to classify revenue from investments in joint ventures under operating profit. Previously this was shown after operating profit. Joint ventures are primarily used in the Group’s property operations. Veidekke’s follow-up and use of joint ventures are of an operational, as opposed to financial, nature. These projects are mostly followed up in the same way as wholly owned projects, except for the fact that the investment was made with an equal partner. It has therefore been deemed more appropriate to classify this type of revenue as part of the operating profit. Previous years’ financial statements have been restated.

See note 15 for more details concerning the effect on the accounts of the new accounting principles. The interpretation IFRIC 15 has significant impact on Veidekke’s accounting of completed residential projects that are sold for its own account. There are no changes in this accounting rule compared with previous years. The interpretation clarifies which activities come under the rules for construction contracts (IAS 11) and which activities are to be treated as sales of goods (IAS 18). The interpretation also clarifies the time at which revenue and earnings from property development projects are to be recognised in the accounts. This means that revenue and earnings from the sale of completed residential projects shall be recognised at the time at which the unit(s) is contractually delivered to the buyer. Veidekke has elected to use current project reporting in line with the final forecast for the project, stage of completion and sales rate, in the segment reporting. This is done to provide the most accurate picture of the ongoing value creation within the development of residential properties and ensure conformity with the Group’s internal management reporting. The interim financial statements do not include all the information required in a full annual report and should therefore be read in conjunction with the Group’s financial accounts for 2012, which can be obtained by contacting the company or online at www.veidekke.com. 3. Segment reporting The Group consists of three segments: Construction, Property Development and Industry. The segment results for the first quarter 2013 are presented in the table on page 11. 4. Estimates Construction and property development projects form a large part of Veidekke’s operations. The accounting of project activities is, to a large degree, based on estimates. The material assessments made in the application of the Group’s accounting policies and the most important sources of uncertainty in the estimates are the same for the first quarter 2013 as those presented in the annual accounts for 2012. 5. Operations with significant seasonal fluctuations Owing to climatic conditions, the Group’s asphalt and aggregate operations are subject to seasonal fluctuations. Most production takes place between April and October, and turnover from these operations therefore accrues during these months. However, expenses relating to operations and maintenance of the production organisation and depreciation are spread over the whole year. As a result, there will normally be significant fluctuations in the quarterly accounts for the industry division, and the reports for the first, second and third quarters therefore also include figures for a rolling 12-month period for the Group and for the Industry division.

12 months rolling as at 31.3.2013

12 months rolling as at 31.3.2012

2012

3 178.8

3 031.7

3 192.5

41.4

213.1

38.3

20 210.4

18 669.2

20 460.1

669.3

768.6

680.4

IndustrY Turnover Earnings before tax Group* Turnover Earnings before tax

* The figures are taken from the segment accounts.

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

18

6. Non-current assets Property, other intangible assets, machinery, etc. Book value at start of period Additions Additions, acquisition of operations Depreciation

Q1 2013

Q1 2012

2012

2011

1 792.5

1 659.0

1 659.0

1 729.2

43.1

71.0

448.5

389.1

-

-

49.6

65.5

-73.3

-70.7

-305.2

-327.3

Currency conversion differences, etc.

11.7

-3.9

26.8

-0.2

Disposals non-current assets/sale of operations

-5.4

-40.5

-86.1

-197.3

1 768.7

1 614.9

1 792.5

1 659.0

Book value at end of period Other intangible assets

46.0

33.6

46.0

34.2

512.3

446.2

511.7

488.0

Machinery, etc.

1 210.4

1 135.1

1 234.8

1 136.8

Book value at end of period

1 768.7

1 614.9

1 792.50

1 659.0

Q1 2013

Q1 2012

2012

2011

Property



Goodwill Book value at start of period

631.0

546.3

546.3

558.1

Additions

-

-

91.6

29.2

Impairment

-

-

-

-

10.3

-3.3

-6.9

-0.5

-

-

-

-40.5

641.2

543.0

631.0

546.3

Currency conversion differences Disposals Book value at end of period



FIRST QUARTER REPORT 2013 VEIDEKKE ASA

7. Acquisitions, sales of operations Veidekke has not undertaken any significant acquisitions or sales of businesses in Q1 2013. 8. Financial instruments No significant changes were made during the period related to financial risk or the Group’s use of financial instruments. Further details can be found in the Annual Report for 2012. 9. Pension liabilities With effect from 31 December 2013, Veidekke modified its pension arrangements for Norwegian employees, entailing that employees under the age of 57 years switched from a defined-benefit to a defined-contribution plan. The ordinary defined-benefit pension scheme for this group was terminated by issuing paid-up policies for previously accrued pension rights. The discontinuation of the scheme resulted in an accounting gain in the financial statements of NOK 240 million, which was recorded in the fourth quarter 2012. A gain of NOK 140 million was recognised in the segment accounts. The difference between the two figures is due to the adoption of new accounting rules for pensions from 1 January 2013. The financial accounts for 2012 have been restated in accordance with the new rules, resulting in an increase of NOK 100 million in the gain related to the discontinuation of the former scheme. Previous years’ segment accounts have not been restated. See note 2 for information about changes in accounting rules. 10. The Competition Authority case On the basis of a report from Veidekke in January 2010, the Competition Authority initiated investigations into suspected competition law breaches at Veidekke’s asphalt operations in central Norway. Veidekke cooperated fully with the Competition Authority throughout the Authority’s investigation. The Competition Authority therefore announced that the legal conditions for leniency were satisfied. Provided that Veidekke continued to cooperate fully with the Competition Authority and that no information became available indicating that Veidekke had given the Authority misleading or incorrect information, Veidekke would be exempt from a fine. The final decision was announced on 5 March 2013. Veidekke was granted full leniency and therefore exempted from a fine of NOK 220 million. 11. Dividend Proposed dividends are not entered as liabilities in the accounts until the Annual General Meeting has approved them. For fiscal year 2012, the Board of Directors proposed a dividend of NOK 2.50 per share, totalling NOK 334 million. The dividend must be approved by the Annual General Meeting on 6 May 2013 and will therefore be recorded in the second quarter 2013.

19

12. Post balance sheet events No events have occurred after the balance sheet date that have any significant effect on the submitted accounts. 13. Key financial figures for loan agreement (covenants) Key financial figures for the loan agreement (covenants) Veidekke has available credit facilities of NOK 3.1 billion which expire on 2 November 2015. At 31 March 2013 undrawn credit amounted to NOK 1,258 million. The following covenants are associated with the loan agreement and DNB Bank ASA: 1. Net interest-bearing debt divided by EBITDA for the previous four quarters should not exceed 3.0, with the exception of the second and third quarters of each year when the ratio should not exceed 3.5. At 31 March 2013 this ratio was 1.4. 2. The Group’s own account exposure shall not at any time exceed 60 per cent of the Group’s book equity. At 31 March 2013, own account exposure was 19 per cent. Definitions: Net debt is defined as the Group’s short-and long-term debt minus the Group’s liquid assets and interest-bearing receivables. EBITDA is defined as operating profit plus depreciation and amortisation. Own-account exposure is defined as the value of on-going unsold dwellings and commercial buildings in projects implemented under the auspices of the borrower or another company within the Group, calculated on the basis of anticipated sales price, with a minimum cost. 14. Deferred income recording on projects for own account within housing development according to IFRIC 15 Interpretation IFRIC 15 governs the accounting of contracts for fully developed dwellings for Veidekke. According to this interpretation, revenues and gains from the sale of housing for a company shall not be recognised in the accounts until the property has been contractually delivered to the buyer (pass of legal title). As part of Veidekke’s internal follow-up of projects of this type, measurements are conducted in line with successive income reporting. This means that revenues and earnings are recognised in accordance with the final forecast for the project, percentage of completion and sales rate. Our segment reporting follows these principles.

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

20

Overview of operating revenue and earnings before tax (EBT) recognised under the segment accounts: MNOK

OPERATING REVENUES

Q1 2013

Q1 2012

2012

1 644.6

1 033.0

1 033.0

371.6

335.8

1 660.8

-556.7

-72.4

-1 039.7

Net IFRIC 15 adjustments to operating revenues

-185.1

263.1

621.1

+/- Translation differences

25.7

-6.7

-9.4

1 485.2

1 289.7

1 644.6

Q1 2013

Q1 2012

2012

246.8

154.1

154.1

Accumulated operating revenues from projects not delivered to buyer at start of period.

+

Operating revenues from projects not ­ delivered to buyer in the period

-

Operating revenues from projects delivered to buyer in the period

Accumulated operating revenues from ­projects not delivered to buyer at end of period

EARNINGS BEFORE TAX Accumulated earned income before tax on projects not delivered to buyer at start of period +

Earnings before tax from projects not ­ delivered to buyer in the period

89.5

57.6

247.6

-

Earnings before tax from projects delivered to buyer in the period

-76.6

-11.2

-154.1

Net IFRIC 15 adjustments to earnings before tax

12.9

46.3

93.5

+/- Translation differences

2.9

-0.8

-0.8

262.6

199.6

246.8

Accumulated earned income before tax on projects not delivered to buyer at end of period



As per the statement, at 31 March 2013 an income of NOK 1,485 million and a profit before tax of NOK 263 million were earned on sales of dwellings under construction. These results are recorded as income in the segment reporting, but cannot be recognised in accordance with IFRS. Revenues will be recognised in the financial statements when the individual sold dwellings are handed over.

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

21

15. Transition from old to new accounting policies

2012

Restatement pensions

Reclass. result AC and JV

Restatement pensions

Reclass. result AC and JV

New 2012

2011

Operating revenue

19 839.0

19 839.0

17 727.3

17 727.3

Subcontractors

-9 052.6

-9 052.6

-7 318.6

-7 318.6

Cost of materials

-3 784.7

-3 784.7

-3 863.0

Personnel expenses

-4 253.0

-4 141.5

-4 161.7

Other operating expenses

-1 945.3

-1 945.3

-1 656.4

-1 656.4

Depreciation/impairments

-305.2

-305.2

-327.3

-327.3

Result from investment in associated companies and joint ventures Operating profit Result from investment in associated companies

111.4

498.3

111.4

35.2

35.2

35.2

35.2

645.0

400.3

-35.2

-

229.2

New 2011

-3 863.0 25.2

25.2

-4 136.5

229.2

229.2

229.2

654.7

-229.2

-

Financial income

82.7

82.7

149.6

149.6

Financial expenses

-29.4

-29.4

-31.4

-31.4

Profit before tax

586.8

111.4

698.3

747.7

25.2

Income tax expense

-129.0

-31.2

-160.2

-102.9

-7.1

Profit for the year

457.8

80.2

538.0

644.8

18.1

Earnings per share

3.4

3.9

4.8



-

-

-

772.9 -110.0

-

662.9 4.9

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

Restatement

New Q2 2012 4 971.2

5 258.5

-4 774.3

2.8

-4 771.4

1.5

-

-1.8

-50.3

196.9

1.0

-

-

-

-

-70.7

-70.7

-71.4

-71.4

-73.1

-121.0

125.5

126.6

224.3

Q1 2012 Operating revenue

4 035.7

Operating expenses

-4 090.3

Result from investment in ­associated companies Operating profit before depreciation Impairment of non-current assets Depreciation Operating profit

22

-54.6

-125.3

Resta­ tement

New Q1 2012 4 035.7

4 971.2

2.8

-4 087.5

1.5

4.3

4.3

Q2 2012

1.0

Restatement

New Q2 2012

-4 961.1

2.8

-4 958.3

-1.8

-

16.1

16.1

197.9

297.4

18.9

316.3

Q2 2012

5 258.5

-73.1 18.9

243.2 -

Result from investment in ­associated companies Financial income Financial expenses Profit before tax Income tax expense Profit

1.5

-1.5

-

-1.8

32.7

32.7

13.4

13.4

11.3

11.3

-7.0

-7.0

-6.0

-6.0

-15.4

-15.4

2.8

134.0

236.3

2.8

239.1

22.1

-0.6

21.5

-29.5

-0.6

-30.2

-59.9

-0.7

-60.5

-76.0

2.2

-73.8

101.6

2.2

103.8

176.4

2.1

178.6

Q4 2012

Resta­ tement

New Q4 2012

New 2012

5 573.6

19 839.0

102.9

-5 106.9

-18 924.1

-

19.4

19.4

35.2

363.8

122.3

486.1

950.2

Operating profit

-2.7

-2.7

-2.7

-87.3

-87.3

-302.5

273.8

122.3

396.2

645.0

Result from investment in ­associated companies

19.4

-19.4

-

-

Financial income

25.3

25.3

82.7

-1.0

-1.0

-29.4

Financial expenses Profit before tax

317.6

102.9

420.5

698.3

Income tax expense

-61.7

-29.2

-91.0

-160.2

255.8

73.7

329.5

538.0

Profit



-

131.1

-5 209.8

Depreciation

-16.1

-95.3

Operating expenses

Impairment of non-current assets

16.1

2.8

5 573.6

Operating profit before depreciation

-

-98.1

Operating revenue Result from investment in ­associated companies

1.8

FIRST QUARTER REPORT 2013 VEIDEKKE ASA

As at 31.12.2012

23

Restatement pensions

New 31.12.2012

As at 31.12.2011

Restatement pensions

New 31.12.2011

631.0

631.0

546.3

546.3

46.0

46.0

34.2

34.2

ASSETS Non-current assets Goodwill Other intagible assets Deffered tax assets Property Machinery etc.

62.4

62.4

67.4

67.4

511.7

511.7

488.0

488.0

1 234.8

1 234.8

1 136.8

1 136.8

Investment in associated companies and joint ventures

755.0

755.0

515.1

515.1

Financial assets

394.1

394.1

280.1

280.1

3 635.0

3 635.0

3 067.9

3 067.9

Current assets properties - Non-residential

81.9

81.9

42.3

42.3

Current assets properties - Residential

3 542.0

3 542.0

3 219.5

3 219.5

Total non-current assets Current assets

Inventory Accounts receivable

330.0

330.0

264.2

264.2

2 913.8

2 913.8

2 640.5

2 640.5

Other receivable

476.5

476.5

414.8

414.8

Cash and cash equivalents

205.5

205.5

276.0

276.0

7 549.7

7 549.7

6 857.3

6 857.3

11 184.7

11 184.7

9 925.2

9 925.2

Share capital

66.9

66.9

66.9

66.9

Other equity

2 201.9

-137.6

2 064.3

2 160.7

-393.4

1 767.3

65.2

-0.7

64.5

66.8

-2.7

64.1

2 333.9

-138.2

2 195.7

2 294.4

-396.1

1 898.3

15.4

192.0

207.4

167.0

550.2

717.2

317.2

-53.8

263.4

219.9

-154.1

1 855.6

803.0

Total current assets Total assets Equity and liablities Equity

Non-controlling interests Total equity Non-current liabilities Pension liabilities Deffered tax liabilities Debt to credit institutions Other non-current liabilities Total non-current liabilities

1 855.6 28.0

65.8 803.0

28.0

380.0

2 354.4

1 569.9

217.5

217.5

1.9

1.9

2 216.1

138.2

380.0 396.1

1 966.0

Current liablilities Certificate debts and debts to credit institutions Trade payables and accruals

2 797.5

2 797.5

2 820.4

2 820.4

Unpaid government charges

355.3

355.3

320.0

320.0

Provisions

788.4

788.4

716.4

716.4

14.4

14.4

16.9

16.9

Other current liablitites

Tax payable

2 461.7

2 461.7

2 185.3

2 185.3

Total current liabilities

6 634.7

6 634.7

6 060.9

6 060.9

11 184.7

11 184.7

9 925.2

9 925.2

20.9 %

19.6 %

23.1 %

19.1 %

Total equity and liabilities Equityshare



FIRST QUARTER REPORT 2013 VEIDEKKE ASA

24

Information about the company Veidekke ASA P.O. Box 505 Skøyen 0214 Oslo, Norway Telephone: Home page: E-mail:

+ 47 21 05 50 00 en.veidekke.com/ir [email protected]

Business registration number: 917103801 Founded: 1936 Skabos vei 4, Skøyen, 0278 Oslo Headquarters: Veidekke’s Articles of Association and the company’s policy for corporate governance are accessible at http://en.veidekke.com/investor-relations/corporate_governance/ The Board of Directors consists of: Martin Mæland (Chairman) Per Otto Dyb (Deputy Chairman) Gro Bakstad Annika Billström Ann Christin Gjerdseth Hans von Uthmann Odd Andre Olsen, employee representative Inge Ramsdal, employee representative Lars Skaare, employee representative Corporate management team: President and CEO Terje R. Venold Arne Giske Deputy President and CEO, COO Executive Vice President, responsible for construction operations in Dag Andresen Norway Executive Vice President, responsible for construction operations in Per-Ingemar Persson Sweden and Denmark Executive Vice President, CFO, responsible for Industry and Jørgen Wiese Porsmyr Property Norway Executive Vice President, responsible for HR, HSE and Environment Bente Lillestøl Executive Vice President, for communication and contact with the Kai Krüger Henriksen authorities Investor Relations: Financial director Jørgen G. Michelet Telephone: +47 21 05 77 22 E-mail: [email protected] Financial calendar: Publication of the quarterly financial statements: Q2 2013: 15 August Q3 2013: 7 November