Veidekke ASA : New pension scheme introduced in Norway - changes in the effect of new accounting principles

Veidekke has modified its pension scheme for Norwegian employees with effect from the beginning of the year, switching from a defined-benefit to a defined-contribution plan.

The reason for the change is the expected change in the rules for occupational pensions and the introduction of new accounting rules for defined-benefit pension schemes, which came into force on 1 January 2013. The new scheme provides greater financial certainty for the company and has been designed in close cooperation with the company's representatives.

We refer to the stock exchange announcement dated 8 November 2012, presenting the estimated effect on the accounts, including a positive effect on pre-tax earnings of almost NOK 190 million in the fourth quarter of 2012.

On 4 January 2013, the Norwegian Accounting Standards Board updated its recommended pension assumptions of 31 December 2012, announcing that the market interest rate for covered bonds ("obligasjoner med fortrinnsrett" - OMF) can now be used as the discount rate when estimating the future pension liabilities. Veidekke finds it appropriate to use the market interest rate for covered bonds as the discount rate for its pension liability. In its calculations of 31 December 2012 Veidekke therefore used a discount rate of 3.9%, whereas it had previously used a discount rate of 2.3%.

The change in the calculation assumptions entails that the final effect on the accounts of the switch to a new pension scheme is different to that announced in the stock exchange announcement of 8 November 2012.

The effect on the profit / loss account for the fourth quarter 2012 in connection with the termination of the old scheme is a positive effect on pre-tax earnings of NOK 140 million. This effect must be seen in light of the fact that the ordinary pension cost for 2012 includes the expensing of actuarial differences of NOK 27 million. Taking this into account, the net positive effect on earnings amounts to NOK 113 million, distributed as follows over the different business areas: Entreprenør Norge NOK 94 million, Industri NOK 18 million and Eiendom Norge NOK 1 million.

A new accounting standard for pensions was introduced on 1 January 2013, requiring that pension obligations be recorded at fair value. The change in the discount rate used to measure the liability also affects the impact of this new accounting standard for Veidekke. The updated calculations based on a discount rate of 3.9% indicate that Veidekke will scale down its equity by NOK 150 million in the first quarter of 2013. In the stock exchange announcement of 8 November, this effect was estimated at approx. NOK 300 million.

For more information, please contact:
Executive Vice President and CFO, Jørgen Wiese Porsmyr, tel. +47 21 05 76 44 / +47 90 75 90 58,
jorgen-wiese.porsmyr@veidekke.no
Financial director, Jørgen Michelet, tel. +47 21 05 77 22 / +47 91 74 38 56, jorgen.michelet@veidekke.no
Executive Vice president, Communication, Kai Krüger Henriksen, tel. +47 21 05 77 04 / +47 90 51 93 60, kai.henriksen@veidekke.no

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.