FURTHER PROGRESS FOR VEIDEKKE IN FIRST QUARTER 1997

Veidekke had a turnover for the first quarter of 1997 of NOK 930 million as against NOK 783 million for the same period last year. Its pre-tax profit was NOK 100.3 million, compared with NOK 3.6 million for the first quarter of 1996. This figure is largely a reflection of the development and sale of Veidekke's property development project, Sjølyst Allé, at Skøyen in Oslo, and a continuing upward trend in the profits of the Building and Construction Divisions. The figures for the Asphalt Division were on a par with last year.

Total orders-on-hand for Building and Heavy Construction stood at NOK 2,583 million at the end of the first quarter. This is NOK 322 million higher than at the beginning of the year and NOK 731 million higher than at the same time last year.

Earnings per share for the first quarter were NOK 12.43 as against NOK 0.52 for the same period last year.

In order to give a clearer and more correct picture of the figures for the Asphalt Division throughout the year, the accounting principles for the accrual of costs of repairs and maintenance and for depreciation of machinery have been changed. Depreciation was previously spread evenly over the year, while the costs of repairs and maintenance were entered as they were incurred, primarily during the winter months. We are now charging these cost elements to income on a linear basis in the production months of May to October. The company's profit for the year will not be affected by this change, but figures for the 1996 quarters have been reclassified.

Building
Building achieved a turnover for the first quarter of NOK 488.7 million (NOK 482.2 million), giving a profit of NOK 15.2 million (NOK 10.1 million). Orders-on-hand amounted to NOK 1,325 million, as against NOK 1,125 million at the beginning of the year.

In the course of the first three months of the year, Veidekke signed contracts for the building of two new shopping centres in Strømmen (NOK 140 million) and Halden (NOK 110 million) and for an office building at Skøyen (NOK 122 million). At the end of the first quarter, 144 (163) dwellings were under construction for Veidekke's own account, spread over 5 (7) projects. Unsold dwellings now number 49 (28).

Veidekke took over 70% of the shares of Seby AS, building contractors in Romerike, with effect in the accounts from 1 January 1997. Seby AS had a turnover of NOK 26.7 million for the first quarter of 1997.

Heavy construction
In the first quarter of 1997, the Heavy Construction Division showed a turnover of NOK 315.5 million (NOK 280 million) and a profit of NOK 6.2 million (NOK 2.4 million). The Division's profit trend is favourable in spite of the negative impact of the North Cape tunnel. Veidekke has taken legal action against the client in order to obtain payment for the extra costs involved and the case is due to come up before the Hammerfest District Court in June this year. Allowance has been made in the accounts for the uncertainty relating to this project.

Orders-on-hand rose from NOK 1,136 million at the beginning of the year to NOK 1,258 million at the end of the first quarter. The largest contract signed during the period is for a multi-storey car park for the Gardermoen Line at the Oslo Central Station (NOK 120 million).

Most of Veidekke's international operations take place through its subsidiary Noremco Construction and through Norwegian Construction Group, Nocon. International turnover contributed NOK 76 million (NOK 72 million) to Heavy Construction's total turnover for the first quarter.

Asphalt
As usual, the initial months of the year in the Asphalt Division were characterised by maintenance and preparation for the operating season which begins in April or May. The turnover for the first quarter, amounting to NOK 30.3 million (NOK 22.5 million), derived mainly from the sale of gravel and crushed stone.

Operations gave a loss for the first quarter of NOK 11.4 million (- NOK 9.0 million). This is a somewhat weaker result than for the same period last year and is due to an increase in fixed costs relating to the companies that were acquired in 1996. The production of asphalt for the paving of the eastern and western runway systems at Gardermoen will be carried out during the summer months. 1997 is expected to be the best production year in the history of the Veidekke Group.

Property
Total rental revenues for the first quarter were NOK 8.5 million (NOK 12 million). The fall in revenues compared with last year is due to the sale of properties. The turnover figure also includes a profit of NOK 90 million from the development and sale of the Sjølyst Allé project at Skøyen. The profit realised here is a reflection of value added over several years. The Property Division posted a profit for the first quarter of NOK 89.7 million (NOK 0.2 million).

During the first quarter, a small, completed property was sold for NOK 6.5 million at book value. In April, a further two properties, Fornebuveien 1-3 at Lysaker and Tordenskioldsgt. 10 in Holmestrand, were sold for a total of NOK 59 million, giving a total profit of NOK 9 million which has been used to write down existing, completed non-residential properties.

Financial standing
At the end of the first quarter, liquid assets stood at NOK 305 million (NOK 231 million). Veidekke has unused credit facilities amounting to NOK 351 million (NOK 322 million) of a total limit of NOK 373 million (NOK 372 million). Veidekke had a positive net interest-bearing position at the end of the quarter of NOK 250 million (- NOK 52 million). This improvement is due largely to the sale of Sjølyst Allé.

Gross investments in machinery and equipment so far this year amount to NOK 26 million, of which NOK11 million was invested in the Asphalt Division. Sales of machinery and equipment amount to NOK 5 million. The Group's total assets were NOK 2,047 million (NOK 1,912 million) at the end of the first quarter, giving an equity ratio of 35.8% (31.5%).

During the first quarter, 900,000 Veidekke shares were traded over the stock exchange (1.2 million). There have been no major changes in ownership during the period.

Health, safety and environment
The positive trend in the injury rate continued in the first quarter. The number of lost-time injuries per million working hours was 15.5 at the end of the quarter, as against 21.2 at the same time last year. Absence among hourly-paid employees increased slightly to 5.7% compared with 5.6% at the same time last year. Veidekke's targets for 1997 are an injury rate of maximum 12 and an absence rate of 5% or less.

Prospects
'The first quarter has given us a good start to the year, as regards both financial results and volume and quality of orders-on-hand. The market trend is positive and there are indications that the high level of activity will continue,' says President and CEO Terje Venold.

'By continuing to focus on improving efficiency in production and on selectivity in choice of projects, Veidekke should be well equipped to achieve its profit targets for the year. As a result of the substantial profits from the sale of our property development project at Skøyen, the company will raise the level of its ambitions for the present year beyond the original goal of 5%,' says Mr. Venold.


The quarterly report is available from http://www.huginonline.no/VEI/DR/vei97k1_e.pdf

For further information, please contact:

Terje R. Venold, president and CEO phone + 47 66 98 54 05 or + 47 905 82 323 (mobile).
Jørgen G. Michelet, Senior Vice President, Finance and Investor Relations phone +47 66 98 54 40 or + 47 906 91 117 (mobile).