SUBSTANTIAL IMPROVEMENT IN PROFITS

Veidekke's turnover for the first six months of the year was NOK 2,259 million compared with NOK 1,779 for the same time last year, giving a pre-tax profit of NOK 146.3 million. This is an increase of NOK 118.2 million on last year, when the profit was NOK 28.1 million.

The Building and Heavy Construction Divisions show profit and profit margin figures that are noticeably better than at the same time last year, while Asphalt reflects the late start of the season and shows a slightly weaker figure than last year. The improvement in profit is also largely the result of a gain of NOK 90 million achieved by Veidekke on the development and sale of its property project Sjølyst Allé at Skøyen in Oslo

Total orders-on-hand for Building and Heavy Construction amounted to NOK 2,411 at the end of the second quarter, compared with NOK 2,251 million at the same time last year and NOK 2,261 million at the end of last year.

Earnings per share were NOK 17.71 as against NOK 3.01 for the same period last year.

Building
The Building Division showed a turnover for the first six months of NOK 1,074 million (NOK 940 million). Profits rose from NOK 20.3 million for the first half of 1996 to NOK 35.1 million this year. Orders-on-hand were NOK 1,255 million compared with NOK 983 million at the same time last year and NOK 1,125 million at the end of last year.

The Division's many ongoing projects include the Skøyen development and the extension of the Strømmen and Sandvika Shopping Centres for the Thon Group. Several new building contracts were signed during the second quarter, such as the housing project Nedre Elvehavn in Trondheim, a bioprotein plant at Tjeldbergodden and renovation work at the Håkonsvern naval base in Bergen.

At the end of the first six months, Veidekke had 128 dwellings under construction for its own account, spread over four projects. The corresponding figure at the same time last year was 136, also spread over four projects.

Heavy Construction
The Heavy Construction Division had a turnover for the first six months of NOK 808 million (NOK 594 million). This gave a profit of NOK 24.1 million (NOK 7.4 million). The profit for the second quarter includes NOK 8 million following the settlement of a dispute over a bridge project in the West of Norway.

The level of activity and production was high in the second quarter. Veidekke's ongoing projects with a high level of production during the summer months include the projects at Gardermoen (the VS Group), the stretch of railway from Såstad to Haug in Østfold and the multi-storey car park for the Gardermoen railway line at the Oslo Central Station. At the North Cape tunnel, work is progressing in accordance with the revised plans. The settlement reached with the Public Roads Administration in Finnmark means that Veidekke will receive compensation amounting to NOK 67 million plus a possible bonus of NOK12 million for punctual completion by 1 June 1999. The project is now progressing in accordance with the revised work schedules. The project is expected to show a profit on the remaining work.

Orders-on-hand have remained stable this year and stood at NOK 1,156 million at the end of June, compared with NOK 1,268 million at the same time last year and NOK 1,136 million at the end of last year. Major contracts signed during the second quarter include roadwork on the E18 highway between Løkenåsen and Saueråsen for the Public Roads Administration in Vestfold, exterior work, tank installation and sand silo at Gardermoen (the VS Group) and a multi-storey carpark for the Holmenkollen Park Hotel.

Veidekke's international operations are mainly carried out by its subsidiary Noremco Construction and the Norwegian Construction Group, Nocon. International contracts gave a turnover of NOK 151 million (NOK 138 million) for the first six months.

Asphalt
The Asphalt Division showed a turnover for the first six months of NOK 278 million (NOK 256 million). In the second quarter, there was considerable production of asphalt for the paving of the eastern runway system at Gardermoen. Activities were otherwise affected by a late start to the season, particularly in Trøndelag and counties further north, giving a loss of NOK 2.0 million for the first six months (+NOK 0.6 million). The level of activity in gravel and crushed stone is somewhat higher than at the same time last year.

A high level of activity is anticipated in the Asphalt Division during the second half of the year, both in connection with the contracts at Gardermoen and in the various geographical areas.

Property
Total rental revenue for the first six months amounted to NOK 15 million (NOK 26 million). The fall in rental revenues is due to sales of completed properties. The total turnover of NOK 105 million includes a gain of NOK 90 million on the sale of Sjølyst Allé at Skøyen, giving the Property Division a profit of NOK 89.7 million (NOK 1.0 million).

Veidekke has initiated the building of a commercial property for its own account at Lysaker. This 5,400 metre building will be completed in spring 1998. Two thirds of the premises have already been let. The Property Division is working on several other development projects in Oslo and neighbouring areas. As of 30 June, Veidekke's properties on lease to external tenants had a book value of NOK 95 million.

Financial standing
Gross investments in machinery and equipment so far this year total NOK 82 million, of which NOK 38 million refers to the Asphalt Division. Sales of machinery and equipment amount to NOK 11 million. The Veidekke Group's total assets at 30 June were NOK 2,328 million(NOK 2,003 million), giving an equity ratio of 32.8% (30.8%).

Veidekke had a positive net interest-bearing position of NOK 42 million (NOK -72 million). Veidekke has unused credit facilities amounting to NOK 301 million (NOK 272 million) of a total limit of NOK 351 million (NOK 372 million).

Shareholders
During the first six months of 1997, 1.8 million Veidekke shares were traded over the Oslo Stock Exchange. There were no major changes among Veidekke's largest shareholders. As part of its policy of encouraging active and broad employee participation in the company, Veidekke is again planning during the third quarter to make an offer to its employees of Veidekke shares acquired on the market. Each employee will be able to purchase up to 200 shares at a discount of 20% on the market price.

Prospects
'We know that the level of activity in building and construction will remain high, but the growth rate will probably fall during the year,' says Veidekke's President and CEO, Terje R. Venold. A continuing high level of activity combined with the quality of our orders-on-hand and our ongoing improvement work, give us a good basis for further improvement in profit margins for Building, Heavy Construction and Asphalt,' he says.


Report for second quarter available for download at http://www.huginonline.no/VEI/DR/vei97k2_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).