Veidekke’s combined operations in Norway (construction, property development, and industry) had operating revenues for the fourth quarter MNOK 3 105.2.

Construction operations

From Økern subway project, Oslo

Veidekke’s building and construction operations achieved a turnover for the fourth quarter of MNOK 2,515 (MNOK 2,934). These nationwide operations showed a pre-tax profit of
MNOK 223.1 (MNOK 294.6), and a profit margin of 8.9 per cent (10.0 per cent).

Although somewhat lower than for the same quarter last year, these results are highly satisfactory, as they to some extent reflect certain non-recurring matters. The positive results may be ascribed to good project margins, a high level of activity and successful utilisation of the production resources, as well as the company’s ongoing improvement process.

The market situation has become significantly more hesitant, with increasing regional and market related variations. The uncertainty attached to the market development is particularly great within the private sector, while the prospects within the public sector are positive for both building and construction projects.

At the end of the quarter, Veidekke Entreprenør’s order books showed a total of MNOK 6,579, as against MNOK 9,030 at 31 January 2007.

New contracts signed in the fourth quarter, include Statens Hus in Stavanger with a contract sum of approx. MNOK 240, and ground and concrete work in connection with the rebuilding of the Holmenkollen Ski Jump with a contract sum of approx. MNOK 114.

Property development

From Victoriagaarden, Sandvika Norway

The Property Division is engaged in the development of dwellings for Veidekke’s own account as well as non-residential buildings for private and public enterprises. These operations are concentrated in and around the largest towns in Norway.

In the fourth quarter, the Property Division achieved a turnover of MNOK 71.5 (MNOK 278). The pre-tax profit was MNOK 7.7, as against MNOK 242.1 for the same quarter in 2007. The result reflects a difficult housing market and low housing sales, as well as depreciations of dwellings that are not yet sold and paid for. These depreciations reduce the quarterly result by MNOK 15.

A gain of MNOK 60 made from the sale of a non-residential project at Skøyen in Oslo, was entered as profit in this quarter´s accounts. Furthermore, the shareholding in Hansa Property Group ASA has been devaluated by MNOK 24 in addition to the devaluation of MNOK 69 made in the third quarter.

Following several years of high activity, the housing market declined in autumn 2007, and the demand for new dwellings has been low throughout 2008. This applies particularly to flats in apartment buildings, which is Veidekke’s most important product in the housing sector. As a consequence, Veidekke has not started any new projects of significance in 2008. The market for town houses and small dwellings is somewhat stronger, and the housing projects that have been started up in 2008, are within this market segment. Five projects were completed in the fourth quarter, and none were started up.

At the end of the quarter, the division had 185 dwellings under construction in six projects. The equivalent numbers for the third quarter was 454 dwellings in 11 projects. 72 (88) dwellings under construction remain unsold. In addition, 110 (96) completed dwellings remained unsold at the end of the quarter spread over eight projects. Of these, 69 dwellings are leased at present. Debt exposure is regarded as relatively low, and it is anticipated that this will be reduced by sales in the coming year.

In the non-residential market, two projects were started up earlier this year for Veidekke’s own account, covering a total of 13 000 m². These projects are located in Skien and Porsgrunn, and have been leased to public enterprises.

In Norway, the portfolio of development sites constitutes 3,300 dwelling units at the end of the quarter. Priority has been assigned to continuing to develop this portfolio so that the projects are ready for sale and construction when demand picks up in the future. The value of the portfolio of development sites was assessed in connection with the year-end closing of accounts, and it was not deemed necessary to perform depreciations.

Industry

Road maintenance, Vestfold Øst Norway

The Industry Division’s operations are spread throughout Norway and its business areas are asphalt, crushed stone and gravel, road maintenance, demolition and plant contracting, and recycling of industrial waste.

The division’s total turnover for the fourth quarter amounted to MNOK 719 (MNOK 838 for the fourth quarter of 2007), giving a pre-tax result of MNOK -28.5, as against MNOK +26.2 for the fourth quarter of 2007.

As a result of slower demand from public customers, the production volume of asphalt operations was significantly reduced in the fourth quarter compared with the same quarter in 2007. This lead to a quarterly result that was considerably lower than expected. For the year as a whole, the asphalt volume remained at the 2007 level. Kolo Veidekke maintained its market share and achieved profit growth in spite of increased production costs.

For ongoing contracts, road maintenance operations reported negative results for the fourth quarter. In addition, allocations of MNOK 30 have been made for future loss on certain contracts. In order to ensure the further development of this area, the competence and organisation of the division has been strengthened.

Operations within crushed stone and gravel have strong market positions, and are still showing good results despite a slight drop in private demand. The results presented by the recycling segment are as expected.

All of the division’s business areas are experiencing a decline in demand from the private sector, but expect a positive development in the demand from public customers.

As of 1 January 2009, all operations within demolition and plant contracting were transferred to the Norwegian construction operations. In 2008, this segment had a turnover of approx. MNOK 365.