YIT CORPORATION FINANCIAL STATEMENTS BULLETIN Feb 6, 2009 at 8:00 am
YIT's financial statements for 2008:
REVENUE INCREASED, OPERATING PROFIT DECREASED - QUICK MEASURES TAKEN TO REACT TO
MARKET CHANGES
In 2008:
- Revenue increased by 6 per cent to EUR 3,939.7 million (2007: EUR 3,706.5
million).
- Operating profit decreased by 23 per cent to EUR 260.6 million (EUR 337.8
million).
- Operating profit margin was 6.6 (9.1 %).
- Profit before taxes decreased by 37 per cent to EUR 193.1 million (EUR 305.6
million).
- Earnings per share decreased by 41 per cent to EUR 1.05 (EUR 1.77).
- Return on investment was 17.5 per cent (26.2%).
- Order backlog decreased by 8 per cent to EUR 3,233.7 million (EUR 3,509.3
million). EUR 356 million of order backlog was in housing projects that have
been stopped in Russia.
- At the end of the year, the Group employed 25,784 (24,073) people.
- The Board of Directors proposes to the Annual General Meeting that a dividend
of EUR 0.50 per share (EUR 0.80) be paid for the 2008 financial year.
Fourth quarter:
- Revenue increased by 2 per cent on the previous year to EUR 1,050.7 million
(10-12/2007: EUR 1,027.0 million).
- The steep devaluation of the ruble in November-December resulted in exchange
rate losses totalling EUR 25.0 million (EUR 3.8 million) for the year as a
whole.
- Profit before taxes decreased by 95 per cent to EUR 5.4 million (EUR 98.5
million).
- Operating cash flow after investments amounted to EUR 61.3 million (EUR 75.3
million).
Earnings development and financial standing
Revenue increased in the Building Systems segment. Operating profit increased in
Building Systems and Industrial Services excluding the capital gains of EUR 14.4
million from the sale of the Network Services unit in 2007. Revenue and
operating profit developed favourably also in civil engineering and construction
of business premises.
Construction revenue increased in Russia, remained at the previous year's level
on the whole in Finland and decreased in the Baltic countries. A strong
contraction in housing demand decreased the operating profit of Construction
Services Finland. International Construction Services' operating profit
decreased clearly due to weakened market conditions and non-recurring costs
associated with the projects in the Gorelovo area in Russia. The negative impact
of these projects during the second and third quarters of the year totalled
approximately EUR 20 million. Operating profit decreased by approximately EUR 36
million compared to 2007 in the Baltic countries. In Russia, residential sales
continued favourably during January-September but weakened rapidly during the
last months of the year.
The Group's invested capital increased by EUR 260.5 million during the year.
Capital got tied up especially in ongoing production during 2008. At year's end,
33 per cent (33%), or EUR 545.2 million (EUR 460.0 million), of the invested
capital was tied up in Russia.
The Group's financial position was strengthened during the fourth quarter by
increasing cash reserves by EUR 153.6 million through taking out pension loans
and long-term and short-term bank loans. Good cash flow from operations during
the fourth quarter also increased the cash reserves. At the end of the year,
cash reserves were EUR 201.7 million (EUR 60.2 million). The gearing ratio was
79.8 per cent (62.9%).
Measures to adapt to and leverage market change
The Group implemented several quick-acting measures as the financial market
crisis impacted YIT countries. The Group's financial position was strengthened
during the fourth quarter by increasing cash reserves by taking out pension
loans and long-term and short-term bank loans. The need for capital was reduced
by postponing housing start-ups to a better market situation and considerably
reducing plot acquisition and other investments. In Russia, a decision was made
in October to halt the construction in certain residential projects in the
start-up phase; in these projects the sales had not yet begun. In the Baltic
countries, YIT decreased actively the number of unsold residential units. The
closing of the sales of several business premises were realised successfully at
the end of the year. The Group carried out measures to cut EUR 40 million in
fixed costs on annual level. The effect of these measures will be seen fully by
the third quarter of 2009. In procurement, purchase agreements were adjusted to
the market conditions.
The company's aim is to maintain good competitiveness in the tightening market
conditions. Towards the end of the year, the focus was shifted from adjusting
the cost structure through rapidly effecting measures to strengthening sales and
developing operations. In Finland, agreements were made on housing sales in
larger entities during the latter part of the year and several preliminary
agreements were signed on starting the construction of rental housing during
2009. YIT will continue to reduce production costs through efficient procurement
and by developing work methods. Cost-efficiency will be increased also by
utilising common processes more broadly in business operations as well as
support services. Measures to improve the efficiency of invested capital and
support cash flow will be continued. Market opportunities that are interesting
to YIT will open up as public investments and rental housing production increase
and the refurbishment, servicing and maintenance operations and investments in
energy sector continue brisk.
New strategic targets for the 2009 - 2011 strategy period
On February 5, 2009, the Board of Directors of YIT Corporation confirmed the
financial targets for the strategy period 2009-2011. The cash flow target was
set for the first time at Group level. Operating cash flow after investments
during strategy period must be sufficient for dividend payout and repayment of
debt. The previous numerical revenue growth target of 10 per cent on average per
year was abandoned. The target is positive revenue growth. The return on
investment target was set at 20 per cent by the end of strategy period, versus
the previous target of 22 per cent. The targets for equity ratio and dividend
payout remained unchanged. The operating profit target of 9 per cent of revenue
was abandoned.
Similarly, the separate target set for the Russian operations - average annual
revenue growth of 50 per cent during the period 2006-2009 - was abandoned as the
forecastability of the country's economic development in the next few years has
weakened substantially.
Other targets remained unchanged. Target for equity ratio is 35 per cent and for
dividend payout 40 to 60 per cent of net profit for the period.
In 2008, YIT Group's operating cash flow after investments amounted to EUR -19.4
million, revenue growth was 6 per cent, return on investment was 17.5 per cent,
the equity ratio was 30.7 per cent and the Board's proposal for dividend payout
for 2008 is 47.6 per cent.
Outlook for 2009
Due to the exceptional uncertainties in the general market situation, the
Group's revenue and profit estimate for 2009 will be specified at a later time.
The revenue and profit uncertainties are related to the general economic
environment and its impact on building and repair investments, as well as
housing sales in Finland and Russia.
At the end of 2008, YIT's order backlog was EUR 3.2 billion, of which EUR 356
million was in postponed housing projects in Russia. The order backlog margins
are at normal levels. The order backlog margins of unsold housing production are
dependent on the development of housing prices and construction costs.
Approximately half of the revenue in Building and Industrial Services is derived
from service and maintenance operations, where demand will develop relatively
steadily in spite of the uncertain market conditions. The demand for renovation
will continue to grow. Investments in industry and commercial real estate will
decrease.
In Finland, housing construction is estimated to decrease, and focus will be on
interest-subsidised and market-financed rental housing production. On the other
hand, decreasing interest rates support housing demand. Construction of business
premises is estimated to halve compared to the previous year. On the whole,
building construction will decrease. The number of infrastructure projects will
be steady or grow as a result of public sector stimulus measures in 2009.
In Russia, the strong need for housing and the high volume of YIT's ongoing
housing production provide a basis for increasing revenue. The unpredictability
of revenue and profit development has increased due to the weakening Russian
economy, the ruble exchange rate and consumer confidence. The weak market
situation in the Baltic countries will continue.
Annual General Meeting
YIT Corporation's Annual General Meeting will be held on Wednesday, March 11,
2009, from 1:00 pm (Finnish time, EEST) onwards in Finlandia Hall, Conference
Wing, Hall A, address Mannerheimintie 13, 00100 Helsinki, Finland (entrances M1
and K1). The full notice of the meeting, including the Board of Directors'
proposals to the Annual General Meeting, will be published as a separate stock
exchange release on February 6, 2009.
Annual Report 2008 and Interim Reports in 2009
The Annual Report including financial statements for 2008 will be published on
YIT's Internet site in Finnish and English during the week of Feb 16, 2009.
Interim Reports will be released on April 24, July 24 and October 28, 2009.
Financial reports and other investor information can be viewed on our website,
www.yitgroup.com.
Information sessions, webcast and conference call
On Friday, February 6, an event for analysts and portfolio managers will be held
at YIT's head office at 10:00 am (Finnish time, EEST) in English and a press
conference at 13:00 pm in Finnish. The address is Panuntie 11, 00620 Helsinki,
Finland. Investment analysts and portfolio managers can also participate in the
event through a conference call. Conference call participants are requested to
call a minimum of 5 minutes prior to the start of the event: +44 (0)20 7162
0077.
A webcast of the presentation given by President and CEO Juhani Pitkäkoski in
the analyst and portfolio manager event can be viewed live at
www.yitgroup.com/webcast. The webcast replay will be available at the same
address.
Schedule in different time zones
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| | | presentation | |
| | | will start at | |
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| EEST (Helsinki) | 8:00 a.m. | 10:00 a.m. | 12:00 a.m. |
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| CEST (Paris, | 7:00 a.m. | 9:00 a.m. | 11:00 a.m. |
| Stockholm) | | | |
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| BST (London) | 6:00 a.m. | 8:00 a.m. | 10:00 a.m. |
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| US EDT (New York) | 1:00 a.m. | 3:00 a.m. | 5:00 a.m. |
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YIT CORPORATION
Juhani Pitkäkoski
President and CEO
For further information, please contact:
Sakari Ahdekivi, Chief Financial Officer, +358 20 433 2258,
sakari.ahdekivi@yit.fi
Petra Thorén, Senior Vice President, Investor Relations, +358 40 764 5462,
petra.thoren@yit.fi
Distribution: NASDAQ OMX, main media, www.yitgroup.com
FINANCIAL STATEMENTS BULLETIN JANUARY 1 - DECEMBER 31, 2008
REVENUE INCREASED BY 6 PER CENT
YIT Group's revenue for 2008 grew by 6 per cent to EUR 3,939.7 million (2007:
EUR 3,706.5 million). Building Systems is the largest segment by revenue,
generating a half of YIT Group's revenue and operating profit. Revenue increased
in the Building Systems segment.
Finland accounted for 47% of revenue (52%), other Nordic countries for 33%
(33%), Russia for 10% (9%), Central Europe for 5% and the Baltic countries for
4% (6%). The fastest growth took place in Russia, where revenue increased by 25%
to EUR 402.3 million (EUR 322.6 million).
In Central Europe, the building system operations acquired from Germany,
Austria, Poland, the Czech Republic, Hungary and Romania were transferred to YIT
on August 1, 2008. The property development company acquired in the Czech
Republic was consolidated into YIT Group as of July 1, 2008.
Revenue by segment (MEUR)
--------------------------------------------------------------------------------
| | 2008 | 2007 | Change | % of the |
| | | | | Group's |
| | | | | revenue for |
| | | | | 2008 |
--------------------------------------------------------------------------------
| Building Systems 1) | 1,975.0 | 1,650.0 | 20% | 50% |
--------------------------------------------------------------------------------
| Construction Services | 1,147.9 | 1,158,2 | -1% | 29% |
| Finland | | | | |
--------------------------------------------------------------------------------
| International | 493.5 | 486.1 | 2% | 13% |
| Construction Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services | 429.7 | 489.8 | -12% | 11% |
| 2) | | | | |
--------------------------------------------------------------------------------
| Other items | -106.4 | -77.6 | 37% | -3% |
--------------------------------------------------------------------------------
| YIT Group, total | 3,939.7 | 3,706.5 | 6% | 100% |
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1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008. The revenue of these operations for August-December 2008
amounted to EUR 182.6 million.
2) Revenue for 2007 includes the Network Services unit, which was sold on
December 31, 2007. Network Services revenue for 1-12/2007 amounted to EUR 77
million.
YIT's service chain covers the investments, servicing and maintenance as well as
the modernisation of premises' purpose of use. The extensive service chain aims
at better service capability, business growth and steady income flow. Service
and maintenance of buildings, industry and traditional infrastructure accounts
for a significant proportion of the Group's revenue. In 2008, service and
maintenance operations generated EUR 1,299.2 million (EUR 1,355.8 million), in
other words 33% (37%) of total revenue.
OPERATING PROFIT DECREASED BY 23 PER CENT
The Group's operating profit decreased by 23 per cent to EUR 260.6 million (EUR
337.8 million). Operating profit margin was 6.6 per cent (9.1%). Return on
investment was 17.5% (26.2%).
Operating profit increased in Building Systems and Industrial Services excluding
the capital gains of EUR 14.4 million from the sale of the Network Services unit
in 2007. In Construction Services Finland, revenue and operating profit
developed favourably in civil engineering and construction of business premises,
but the segment's operating profit decreased on the previous year due to a sharp
decline in residential sales.
International Construction Services' operating profit decreased clearly due to
weakened market conditions and non-recurring costs associated with the projects
in the Gorelovo area in Russia. The negative impact of these projects during the
second and third quarters of the year totalled approximately EUR 20 million.
Operating profit decreased by approximately EUR 36 million compared to 2007 in
the Baltic countries. In Russia, residential sales continued favourably during
January-September but weakened rapidly during the last months of the year.
Operating profit by segment (MEUR)
--------------------------------------------------------------------------------
| | 2008 | 2007 | Change | Proportion |
| | | | | of |
| | | | | the Group's |
| | | | | operating |
| | | | | profit |
| | | | | 2008 |
--------------------------------------------------------------------------------
| Building Systems 1) | 131.8 | 112.2 | 17% | 51% |
--------------------------------------------------------------------------------
| Construction Services | 111.7 | 133.5 | -16% | 43% |
| Finland 2) | | | | |
--------------------------------------------------------------------------------
| International | 9.0 | 67.2 | -87% | 3% |
| Construction Services | | | | |
--------------------------------------------------------------------------------
| Industrial Services 3) | 30.2 | 41.2 | -27% | 11% |
--------------------------------------------------------------------------------
| Other items | -22.1 | -16.2 | 35% | -8% |
--------------------------------------------------------------------------------
| YIT Group, total | 260.6 | 337.8 | -23% | 100% |
--------------------------------------------------------------------------------
Operating profit margin by segment
--------------------------------------------------------------------------------
| | 2008 | 2007 |
--------------------------------------------------------------------------------
| Building Systems 1) | 6.7% | 6.8% |
--------------------------------------------------------------------------------
| Construction Services Finland 2) | 9.7% | 11.5% |
--------------------------------------------------------------------------------
| International Construction Services | 1.8% | 13.8% |
--------------------------------------------------------------------------------
| Industrial Services 3) | 7.0% | 8.4% |
--------------------------------------------------------------------------------
| YIT Group, total | 6.6% | 9.1% |
--------------------------------------------------------------------------------
1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008.
2) The Supreme Court issued its ruling on disputes connected with the renovation
of SOK's former head office building on March 10, 2008. The ruling had a
positive effect of EUR 3.5 million on the Construction Services Finland
operating profit for 1-3/2008.
3) The operating profit of the Industrial Services segment for 1-12/2007
includes proceeds from the sale of the Network Services unit in the amount of
EUR +14.4 million and EUR -1.0 million due to restructuring of the Network
Services unit. The Network Services division was divested on December 31, 2007.
EARNINGS PER SHARE EUR 1.05
Profit before taxes decreased by 37 per cent from the previous year to EUR 193.1
million (EUR 305.6 million). Earnings per share decreased by 41 per cent to EUR
1.05 (EUR 1.77).
Financial expenses increased as a result of the devaluation of the ruble, higher
interest rates compared to the previous year and an increase in net debt as a
result of increased capital invested in Russia. The steep devaluation of the
ruble in November-December resulted in exchange rate losses totalling EUR 25.0
million (EUR 3.8 million) for the year as a whole.
DIVIDEND PROPOSAL EUR 0.50
The Board of Directors proposes to the Annual General Meeting that a dividend of
EUR 0.50 per share (EUR 0.80) be paid for the 2008 financial year, representing
47.6 per cent (45.2%) of earnings per share.
The Board of Directors' proposal for the use of distributable equity is
presented at the end of the financial statements.
ORDER BACKLOG EUR 3.2 BILLION
The Group's order backlog decreased by 8 per cent during the year to EUR 3,233.7
million (EUR 3,509.3 million) at the end of the year. EUR 356 million of order
backlog was in housing projects that have been stopped in Russia. The order
backlog has a normal margin. The order backlog margins of unsold housing
production are dependent on the development of housing prices and construction
costs. The order backlog of the Building Systems segment increased as the
operations acquired in Central Europe were transferred to YIT. The order backlog
decreased in the other business segments. In International Construction
Services, the order backlog decreased as a result of the devaluation of the
ruble by approximately EUR 170 million during the fourth quarter.
53 per cent of Building Systems revenue and 48 per cent of Industrial Services
revenue are derived from service and maintenance operations. Due to their
nature, part of the maintenance and servicing operations are not included in the
order backlog. The remainder of the order backlog of these business segments
mainly comprises contracted projects that have been sold in full.
The order backlog of the Construction Services Finland and International
Construction Services business segments comprises tender-based production and
real estate and residential development with a sales risk. Residential
development accounts for the majority of the order backlog of International
Construction Services. In Construction Services Finland, the order backlog is
evenly distributed between tender-based construction and projects with a sales
risk.
The International Construction Services business segment has the biggest order
backlog; the segment's projects are long and their value is high. The
construction time of housing projects is approximately 2.5 years in Russia and
about one year in the Baltic countries and Finland.
Order backlog by segment (MEUR)
--------------------------------------------------------------------------------
| | 2008 | 2007 | Change | Proportion |
| | | | | of |
| | | | | the Group's |
| | | | | order |
| | | | | backlog |
| | | | | 2008 |
--------------------------------------------------------------------------------
| Building Systems 1) | 841.9 | 707.7 | 19% | 26% |
--------------------------------------------------------------------------------
| Construction Services | 874.2 | 1,183.8 | -26% | 27% |
| Finland | | | | |
--------------------------------------------------------------------------------
| International | 1,369.3 | 1,462.7 | -6% | 42% |
| Construction Services 2) | | | | |
--------------------------------------------------------------------------------
| Industrial Services 3) | 208.3 | 219.2 | -5% | 7% |
--------------------------------------------------------------------------------
| Other items | -60.0 | -64.1 | -6% | -2% |
--------------------------------------------------------------------------------
| YIT Group, total | 3,233.7 | 3,509.3 | -8% | 100% |
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1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008. The order backlog of these operations amounted to EUR 265,6
million at the end of 2008.
2) Due to uncertainties in the market situation, YIT has halted the construction
of certain residential projects in the start-up phase in Russia. The sales of
these projects had not yet begun. These projects have 2,485 residential units
and they accounted for approximately EUR 356 million in the order backlog at
year's end.
3) The order backlog 12/2007 does not include the Network Services division,
which was divested on December 31, 2007.
The order backlog includes that portion of customer orders and ongoing
development projects that has not been recognized as income. In accordance with
the IFRS accounting principles, residential development projects are recognised
as income using the formula percentage of completion multiplied by percentage of
sale. Business premise development projects are recognised as income using the
principle percentage of completion multiplied by percentage of sale multiplied
by occupancy rate. Contracted projects are recognised as income based on the
percentage of completion. Contracted projects are sold in full. Business premise
development projects are usually sold to investors either prior to construction
or during an early phase thereof. At the year's end, there was one real estate
development project under construction the selling of which had not been closed.
THE GROUP'S FINANCIAL POSITION WAS STRENGTHENED
Due to the global financial market crisis, the Group's financial position was
strengthened during the fourth quarter by increasing cash reserves by EUR 153.6
million. Cash reserves amounted to EUR 201.7 million (EUR 60.2) at year's end.
The reserves were strengthened by taking out pension loans as well as long-term
and short-term bank loans. Good cash flow from operations during the fourth
quarter also increased the cash reserves.
A significant share of YIT's business operations requires little capital.
Capital is particularly tied to the plot reserves, their development and ongoing
production. At year's end, 33 per cent (33%), or EUR 545.2 million (EUR 460
million), of the Group's invested capital was tied up in Russia.
The gearing ratio was 79.8 per cent (62.9%). Net financing debt increased to EUR
644.5 million (EUR 514.8 million). Operating cash flow after investments during
the fourth quarter amounted to EUR 61.3 million (EUR 75.3 million) and EUR -19.4
million (EUR 71.2 million) in January-December.
Net financial expenses increased to EUR 67.5 million (EUR 32.2 million), or 1.7
per cent (0.9%) of revenue. The steep devaluation of the ruble in
November-December resulted in exchange rate losses, included in net financial
expenses, totalling EUR 25.0 million (EUR 3.8 million). Fixed-interest loans
accounted for 51 per cent (64%) of the Group's entire loan portfolio. Loans
raised directly on the capital and money markets amounted to 32 per cent (56%).
The maturity distribution of the loan portfolio is balanced.
The construction-stage contract receivables sold to financing companies totalled
EUR 163.3 million (EUR 257.7 million) at the end of the period. Of this amount,
EUR 95.5 million (EUR 102.9 million) is included in interest-bearing liabilities
in the balance sheet and the remainder comprises off-balance sheet items in
accordance with IAS 39. The interest on receivables sold to financing companies,
EUR 15.1 million (EUR 10.9 million), is included in financial expenses in its
entirety.
Participations in the housing corporation loans of unsold completed residential
units, EUR 48.2 million (EUR 33.9 million), are also included in
interest-bearing liabilities, but the interest on them of EUR 2.3 million (EUR
1.8 million) is booked in project expenses, as it is included in housing
corporation charges.
The balance sheet total at the end of the review period was EUR 2,973.9 million
(EUR 2,461.3 million).
The Group's equity ratio was 30.7 per cent (36.7%).
CAPITAL EXPENDITURES AND ACQUISITIONS
Gross capital expenditures on non-current assets included in the balance sheet
totalled EUR 85.2 million (EUR 51.6 million) during the financial period,
representing 2.2 per cent (1.4%) of revenue. Investments in construction
equipment amounted to EUR 14.2 million (EUR 15.4 million) and investments in
information technology to EUR 5.5 million (EUR 7.5 million). Other investments
including acquisitions amounted to EUR 65.5 million (EUR 28.7 million). Acquired
and divested business operations are disclosed in the notes to the financial
statements.
The most significant business acquisition during the period was the acquisition
of MCE AG's building system service business in Germany, Austria, Poland, the
Czech Republic, Hungary and Romania in the Building Systems segment. The revenue
of these business operations for 2007 amounted to EUR 355 million, and the
employees transferred to YIT numbered about 2,100. The value of the acquisition
was EUR 55 million. The transaction was finalised on August 1, 2008.
CHANGES IN GROUP STRUCTURE
YIT Group's business operations are divided into business segments, which in
2008 were Building Systems, Construction Services Finland, International
Construction Services and Industrial Services.
YIT Group's business segment structure was revised as of the beginning of 2008,
with Construction Services being divided into two segments: Construction
Services Finland and International Construction Services, which includes the
business operations in Russia, the Baltic countries and Central Eastern Europe.
The Industrial and Network Services segment was renamed Industrial Services as
of January 1, 2008 due to the sale of the Network Services unit.
At the beginning of 2009, the Building Systems and Industrial Services segments
merged into a new segment, Building and Industrial Services.
CHANGES IN GROUP MANAGEMENT
Kari Kauniskangas, M.Sc. (Eng.), B.Sc. (Econ.) was appointed Head of the
International Construction Services segment formed at the beginning of 2008.
Ilpo Jalasjoki, M.Sc. (Eng.) was appointed Head of the Construction Services
Finland segment. Tero Kiviniemi, M.Sc. (Eng.), EMBA was appointed on September
25, 2008 as Head of the Construction Services Finland business segment,
effective from 1 January 2009, as the previous head of the business segment,
Ilpo Jalasjoki, retires on a part-time pension during the spring 2009.
Christel Berghäll, M.Sc. (Econ.) was appointed on August 11, 2008 as Senior Vice
President, Human Resources of YIT Group as of November 3, 2008. Veikko
Myllyperkiö, M.Sc. (Pol.Sc.) was appointed as Senior Vice President, Corporate
Communications of YIT Corporation on December 3, 2008.
The Board of Directors of YIT Corporation appointed on November 20, 2008 Juhani
Pitkäkoski, LL.M. as the President and CEO of YIT Corporation and Kari
Kauniskangas, M.Sc. (Eng.), B.Sc. (Econ.) as his deputy. The former President
and CEO, Hannu Leinonen, left the company. The former Deputy to the President
and CEO, Sakari Toikkanen, assumed the position of Senior Vice President,
Business Development.
In December 2008, the composition of the Group Management Board was decided to
be revised so that effective January 1, 2009 it will comprise: President and CEO
and Head of the Building and Industrial Services business segment, Deputy to the
Group's President and CEO and Head of International Construction Services
business segment, Head of the YIT Construction Services Finland business
segment, Managing Director of YIT's building systems company in Norway, and
Senior Vice President responsible for development in building systems, Head of
industrial services, the Group's Chief Financial Officer, the Group's Senior
Vice President, Business Development, the Group's Senior Vice President, Human
Resources. The Group's Senior Vice President, Administration, serves as the
secretary of the Management Board.
RESOLUTIONS PASSED AT THE ANNUAL GENERAL MEETING
YIT Corporation's Annual General Meeting was held on March 13, 2008. The Annual
General Meeting adopted the 2007 financial statements and discharged the members
of the Board of Directors and the President and CEO from liability, and
confirmed that a dividend of EUR 0.80 would be paid per share, or a total of EUR
101.8 million, in accordance with the Board's proposal. April 2, 2008, was set
as the dividend payout date. The General Meeting confirmed the composition of
the Board of Directors and re-elected PricewaterhouseCoopers Oy, Authorised
Public Accountants, as the company's auditor. YIT Corporation published stock
exchange releases on the resolutions passed at the Annual General Meeting on
March 13, 2008.
YIT Corporation held an Extraordinary General Meeting on October 6, 2008. The
meeting decided to authorise the Board of Directors to purchase the company's
own shares and to dispose of them, as proposed by the Board of Directors. The
authorisation granted to the Board of Directors covers 10% of the company's
shares, i.e. the acquisition of a maximum of 12,722,342 company shares,
purchased with the company's unrestricted equity, and the disposal of the shares
according to conditions described in more detail in the Board of Directors'
proposal. YIT Corporation published a stock exchange release on the resolutions
passed at the Extraordinary General Meeting on October 6, 2008.
LEGAL PROCEEDINGS
On March 10, 2008, the Supreme Court in Finland announced its ruling regarding
the disputes arising from the refurbishing of SOK's former head office,
Kiinteistö Oy Vilhonkatu 7, which was completed in 1999. The ruling had a
positive effect of EUR 5.7 million on YIT's profit before taxes. The sum was
recognised in full in YIT's result for January-March 2008.
The disagreement that has arisen in the final financial settlement for the
mechanical installation works on production line 4, which was completed at Neste
Oil's Porvoo oil refinery in Finland in the summer of 2007, was submitted to the
court of arbitration in April 2008. In September, Neste Oil specified its claims
against YIT Industrial and Network Services in the court of arbitration
proceedings by also claiming compensation for lost production. Neste Oil's
claims amount to a total of EUR 107 million. YIT is contesting Neste Oil's
claims and has presented claims against Neste Oil, mainly based on the
alterations and additional work performed, and the additional costs that arose
from the prolongation of the contract. YIT published stock exchange releases
concerning the matter on April 1, 2008 and September 1, 2008.
In addition, the Group is engaged in other minor legal proceedings that are
connected to ordinary operations and whose outcomes are difficult to predict.
However, these proceedings do not have a significant effect on the Group's
financial standing.
NUMBER OF PERSONNEL WAS ADJUSTED
In 2008, the Group employed 25,057 (23,394) people on average. Of the personnel,
67 per cent (68%) were non-salaried employees and 33 per cent (32%) salaried
employees. A total of 89 per cent (90%) were men and 11 per cent (10%) women.
The number of personnel increased in Building Systems when the operations
acquired in Central Europe were transferred to YIT. The number of employees
decreased in Construction Services Finland and in the Baltic countries.
At the end of the year, the Group had 25,784 employees (24,073). Of YIT's
employees, 39 per cent work in Finland, 36 per cent in the other Nordic
countries, 12 per cent in Russia, 8 per cent in Central Europe and 5 per cent in
the Baltic countries. The largest segment by personnel is Building Systems,
employing nearly 60 per cent of YIT's personnel.
Due to the weakened general market conditions, it was agreed in 2008 to
terminate the employment of about 1,200 people in the Group.
Personnel by business segment
--------------------------------------------------------------------------------
| | 12/2008 | 12/2007 | Share of the |
| | | | Group's |
| | | | employees |
--------------------------------------------------------------------------------
| Building Systems 1) | 15,334 | 12,646 | 59% |
--------------------------------------------------------------------------------
| Construction Services Finland | 3,271 | 3,431 | 13% |
--------------------------------------------------------------------------------
| International Construction | 3,277 | 2,988 | 13% |
| Services | | | |
--------------------------------------------------------------------------------
| Industrial Services 2) | 3,554 | 4,663 | 14% |
--------------------------------------------------------------------------------
| Corporate Services | 348 | 345 | 1% |
--------------------------------------------------------------------------------
| YIT Group, total | 25,784 | 24,073 | 100% |
--------------------------------------------------------------------------------
Personnel by country
--------------------------------------------------------------------------------
| | 12/2008 | 12/2007 | Share of the |
| | | | Group's |
| | | | employees |
--------------------------------------------------------------------------------
| Finland 2) | 10,180 | 11,586 | 39% |
--------------------------------------------------------------------------------
| Sweden | 4,523 | 4,403 | 17% |
--------------------------------------------------------------------------------
| Norway | 3,280 | 3,008 | 13% |
--------------------------------------------------------------------------------
| Russia | 3,089 | 2,154 | 12% |
--------------------------------------------------------------------------------
| Germany, Austria, Poland, the | 2,094 | - | 8% |
| Czech Republic, Hungary, | | | |
| Romania 1) | | | |
--------------------------------------------------------------------------------
| Denmark | 1,448 | 1,267 | 6% |
--------------------------------------------------------------------------------
| Lithuania, Estonia, Latvia | 1,170 | 1,655 | 5% |
--------------------------------------------------------------------------------
| YIT Group, total | 25,784 | 24,073 | 100% |
--------------------------------------------------------------------------------
1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008.
2) As a result of the sale of the Network Services division, approximately 1,000
Finnish employees left YIT, in the Industrial Services segment, at the beginning
of 2008.
DEVELOPMENT BY BUSINESS SEGMENT
Building Systems
In 2008:
- Building Systems' revenue increased by 20% to EUR 1,975.0 million (EUR 1,650.0
million).
- Service and maintenance operations accounted for 53 per cent (63%) of the
segment's revenue.
- Operating profit increased by 17 per cent to EUR 131.8 million (EUR 112.2
million).
- Operating profit margin was 6.7 per cent (6.8%).
- Return on investment was 51.8 per cent (55.3%). The method of presenting
intra-Group financial items in the segments has been revised. The comparison
figures have been adjusted according to the same principle.
- Order backlog increased by 19 per cent to EUR 841.9 million (EUR 707.7
million) at the end of the year.
- At the end of the year, the segment had 15,334 employees (12,646).
Fourth quarter:
- Building Systems' revenue increased by 25% to EUR 597.5 million (EUR 479.7
million).
- Operating profit decreased by 9 per cent to EUR 37.2 million (EUR 41.1
million).
Building Systems revenue by country, MEUR
--------------------------------------------------------------------------------
| | 1-12/ | 1-12/ | Change | Share of the |
| | 2008 | 2007 | | segment's |
| | | | | revenue for |
| | | | | 1-12/2008 |
--------------------------------------------------------------------------------
| Sweden | 632.6 | 606.4 | 4% | 32% |
--------------------------------------------------------------------------------
| Norway | 490.1 | 440.4 | 11% | 25% |
--------------------------------------------------------------------------------
| Finland | 428.3 | 384.9 | 11% | 22% |
--------------------------------------------------------------------------------
| Denmark | 169.9 | 165.6 | 3% | 9% |
--------------------------------------------------------------------------------
| Germany, | 182.6 | - | - | 9% |
| Austria, | | | | |
| Poland, the | | | | |
| Czech | | | | |
| Republic, | | | | |
| Hungary and | | | | |
| Romania 1) | | | | |
--------------------------------------------------------------------------------
| Lithuania, | 71.4 | 52.7 | 35% | 3% |
| Estonia, | | | | |
| Latvia and | | | | |
| Russia | | | | |
--------------------------------------------------------------------------------
| Total | 1,975.0 | 1,650.0 | 20% | 100% |
--------------------------------------------------------------------------------
1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008.
Strengthening market position
In the Building Systems segment, YIT acquired MCE AG's building system service
business in Germany, Austria, Poland, the Czech Republic, Hungary and Romania.
The revenue of these business operations for 2007 amounted to EUR 355 million,
and the employees transferred to YIT numbered about 2,100. The transaction was
finalised on August 1, 2008. The acquisition provided YIT with a foothold in new
markets. The profitability of the acquired operations can be improved by
shifting operations towards long-term service agreements and maintenance and
servicing operations. Synergy benefits are achieved from the harmonisation of
operations, expanded service offering and in procurement activities. The
integration of the acquired operations was carried out successfully during 2008.
The revenue of the operations acquired in Central Europe for August-December
amounted to EUR 182.6 million. At the end of the year, the order backlog of
these operations was EUR 265.6 million and their employees numbered 2,094.
In addition, minor company and business acquisitions were made in Finland,
Norway, Sweden and Denmark. Competence was strengthened particularly in piping
deliveries and as a supplier of energy efficiency solutions by acquiring a
company specialising in building automation in Finland.
In Finland, the business operations in the areas of investor, lease management
and financial administration services for property management were sold.
Demand for building systems levelled off
The building system service market development continued favourably during the
first half of the year, and the demand for technical system installations was
good. The demand for building equipment system services levelled off towards the
end of the year in the Nordic countries, Central Europe and Russia and decreased
in the Baltic countries.
Good demand for service agreements continued
The demand for building system repair and maintenance work and various service
agreements remained stable in the Nordic countries and Russia. The demand for
repair and maintenance work was also good in Central Europe. The demand for
property management services remained good.
Growing demand for energy services
Increasing attention has been paid to the energy efficiency of buildings and
their building systems due to an increase in regulations. Improving the energy
efficiency of the existing building stock boosts the number of repair and
modernisation projects and the need for real estate maintenance services.
In the Nordic countries, several agreements were made on building system
investments that increase energy efficiency. The costs will be funded by the
realised energy saving. Energy consumption management is also included in
several service agreements.
Construction Services Finland
In 2008:
- Construction Services Finland's revenue remained at the previous year‘s level
and was EUR 1,147.9 million (EUR 1,158.2 million).
- Maintenance business accounted for 6 per cent (5%) of revenue.
- Operating profit decreased by 16 per cent to EUR 111.7 million (EUR 133.5
million).
- Operating profit margin was 9.7 (11.5%).
- Return on investment was 28.0 per cent (35.3 %). The method of presenting
intra-Group financial items in the segments has been revised. The comparison
figures have been adjusted according to the same principle.
- Order backlog decreased by 26 per cent to EUR 874.2 million (EUR 1,183.8
million).
- Capital tied into plot reserves in Finland amounted to EUR 350.5 million (EUR
344.3 million) at the end of the year.
- At the end of the year, the segment had 3,271 employees (3,431).
Fourth quarter:
- Construction Services Finland's revenue decreased by 6 per cent to EUR 268.6
million (EUR 287.2 million).
- Operating profit decreased by 35 per cent to EUR 18.8 million (EUR 29.0
million).
The figures for 2007 are comparison figures calculated as the business segment
structure changed on January 1, 2008.
In Construction Services Finland, revenue and operating profit developed
favourably in civil engineering and construction of business premises, but the
segment's operating profit decreased on the previous year due to a sharp decline
in residential sales.
The Supreme Court issued its ruling on disputes connected with the renovation of
SOK's former head office building on March 10, 2008. The ruling had a positive
effect of EUR 3.5 million on the Construction Services Finland operating profit
for 1-3/2008.
Construction of business premises continued
Office, business and logistics premise construction was brisk. In the Helsinki
region, the demand for new business premises remained favourable as companies
invested in the quality, functionality and cost-efficiency of their premises.
In early 2008, YIT started the construction of the Maalitori office building in
Vantaa, the Graanintie 6 business premise in Mikkeli, the Koskelo Trade Park
logistics centre in Espoo, and the construction of a shopping centre in
Piispanristi in Turku as real estate development projects. In addition,
agreements were signed on several tender-based projects: an office building is
constructed for Lindström Invest in Helsinki and head office premises for
Tapiola in Espoo. No new property development projects were started towards the
end of the year, but preparations for them continued.
Sales of several office premises with start-ups in 2007 were closed in
accordance with what was agreed previously. YIT sold the Entresse shopping
centre in Espoo, extension of YIT's head office and the Duetto premises in
Helsinki and the Porttipuisto shopping centre and Avia Line office buildings in
Vantaa to real estate investors. Tapiola became the final investor in the Atomi
block in Riihimäki.
Housing sales decreased compared to previous year
The number of sold residences decreased compared to last year. During the first
months of the year, YIT had an exceptionally high number of premium sites on
sale, which kept the value of the sales steady. Towards the end of the year,
housing sales decreased considerably and their value decreased as housing sales
concentrated on smaller residential units and more economical sites. YIT sold
residential units to investors as larger entities in different parts of Finland
and succeeded in keeping the number of completed but unsold residential units
low. Both individual private investors and investor groups purchased YIT Homes
during the last months of the year.
Two significant preliminary agreements were made towards the end of the year on
the construction of rental housing; with IceCapital concerning more than 700
residential units and with VVO concerning more than 200. Construction of
leisure-time residences and centres continued in different locations in Finland.
Agreements were signed, for instance, on the construction of a leisure facility
at Levi and cooperation in the development of the Vanajanlinna area in
Hämeenlinna during the year.
Housing start-ups were decreased due to market uncertainties. A total of 1,920
(2,733) residential units were sold in Finland, 1,542 (2,424) were started and
2,464 (3,011) were completed. At the end of the year, there were 1,887 (2,809)
residential units under construction, of which 760 (1,189) had not been sold.
There were 358 (280) completed but unsold residential units. In Finland, the
construction time of housing projects is approximately a year.
YIT decided to adopt low-energy building in its entire residential development
in Finland. All YIT Homes sold to customers planned in 2008 or later will be
built as low-energy houses.
Favourable demand in infrastructure construction
The demand for civil engineering remained good. An agreement was signed with the
Finnish Road Administration, Uusimaa Region, on a sizeable four-year road
construction project to improve the functioning of the Kehä I ring road in
Leppävaara, Espoo. The value of the agreement including the traffic control
systems is EUR 88 million.
In the municipal sector, a first-of-a-kind agreement was made, according to
which the municipality of Inkoo outsourced all production and personnel of its
technical administration to YIT. A joint venture was established with the city
of Mikkeli that offers services related to the technical infrastructure in
Eastern Finland. YIT is the largest private maintainer of roads in Finland.
YIT's market share of maintenance of the state-owned roads is 20 per cent,
including a total of 14 contracts for Road Administration.
Plot reserve
Capital tied into plot reserves in Finland amounted to EUR 350.5 million (EUR
344.3 million) at the end of the year. The plot reserve included residential
plots with 1,770,000 m2 (1,735,000 m2) of floor area and business premise plots
with 827,000 m2 (839,000 m2) of floor area. Plot investments were decreased.
Plot reserves include plots that have been planned and an estimate of the
potential building rights on areas that are under land use planning. The
building rights provided by regional development agreements made with landowners
remain as off-balance sheet items until the construction of each phase of the
plan being implemented begins or YIT pays for the plots in accordance with the
agreements.
International Construction Services
In 2008:
- International Construction Services' revenue remained on the previous year's
level and was EUR 493.5 million (EUR 486.1 million).
- Revenue increased by 27 per cent in Russia and decreased by 38 per cent in the
Baltic countries.
- Operating profit decreased by 87 per cent to EUR 9.0 million (EUR 67.2
million).
- Operating profit margin decreased to 1.8 per cent (13.8%).
- Return on investment was 1.7 per cent (13.9 %). The method of presenting
intra-Group financial items in the segments has been revised. The comparison
figures have been adjusted according to the same principle.
- Order backlog decreased by 6 per cent to EUR 1,369.3 million (EUR 1,462.7
million). EUR 356 million of order backlog was in housing projects that have
been stopped in Russia.
- International Construction Services' capital tied into plot reserves amounted
to EUR 228.9 million (EUR 233.2 million) at the end of the year.
- At the end
of the year, the segment had 3,277 employees (2,988).
Fourth quarter:
- International Construction Services' revenue decreased by 37 per cent to EUR
96.4 million (EUR 152.0 million).
- Operating result was EUR -9.2 million (EUR 21.7 million).
The figures for 2007 are comparison figures calculated as the business segment
structure changed on January 1, 2008.
International Construction Services' operating profit decreased clearly due to
weakened market conditions and non-recurring costs associated with the projects
in the Gorelovo area in Russia. The negative impact of these projects totalled
approximately EUR 20 million during the year. During the second quarter, costs
were recognised in the operating profit of International Construction Services
due to a delay in the property development projects in the Gorelovo area. During
the third quarter, additional costs were recognised for the projects in the
Gorelovo area due to increased costs related to infrastructure and
specifications in their allocation. Operating profit decreased by approximately
EUR 36 million compared to 2007 in the Baltic countries. In Russia, residential
sales continued favourably during January-September but weakened rapidly during
the last months of the year.
The order backlog of International Construction Services decreased by
approximately EUR 170 million during the fourth quarter as a result of the
devaluation of the ruble. Due to uncertainties in the market situation, YIT made
in October a decision to halt the construction of certain residential projects
in the start-up phase in Russia. The sales of these projects had not yet begun.
These projects have 2,485 residential units and they accounted for approximately
EUR 356 million in the order backlog at year's end.
International Construction Services revenue by country, MEUR
--------------------------------------------------------------------------------
| | 2008 | 2007 | Change | Share of the |
| | | | | segment's |
| | | | | revenue |
| | | | | 1-12/2008 |
--------------------------------------------------------------------------------
| Russia | 368.2 | 290.8 | 27% | 75% |
--------------------------------------------------------------------------------
| Estonia, | 118.7 | 192.2 | -38% | 24% |
| Latvia, | | | | |
| Lithuania | | | | |
--------------------------------------------------------------------------------
| Other | 6.6 | 3.1 | 113% | 1% |
| countries | | | | |
--------------------------------------------------------------------------------
| Total | 493.5 | 486.1 | 2% | 100% |
--------------------------------------------------------------------------------
Acquisition in the Czech Republic
YIT Construction Ltd signed an agreement on May 29, 2008, on a business
acquisition that aims to expand housing production to the Czech Republic. The
effective date of the transaction was July 1, 2008. YIT's holding in the
acquired YIT Stavo company is initially 85 per cent, while private shareholders
working in the company hold 15 per cent of its shares.
Residential sales continued favourably for most of the year
In Russia, residential sales continued favourably during January-September but
weakened rapidly during the last months of the year. The impact of the global
financial market crisis on the Russian market and tightening loan terms for
companies caused several players to accelerate their residential sales from
October; this stopped the increase in housing prices that had continued for a
long time. In some areas, nominal prices declined. The rapid increase in
interest rates, tightening terms of housing loans and estimates of future price
trends weakened consumer confidence and made them refrain from buying
residential units. The positive income trends of households and the need to
improve the quality of living will support the demand for housing in Russia in
the long term.
In Russia, 2,793 (2,168) residential units were sold, 3,622 (4,441) were started
and 2,600 (1,573) were completed. At the end of the year, there were 8,407
(9,870) residential units under construction, of which 5,287 (7,179) had not
been sold. There were 247 (11) completed but unsold residential units.
Slight changes in the number of residential units may take place after the start
of construction due to the dividing or combining of residences. The definition
of completed but unsold residential units has been specified at the turn of the
year. The revision increased the number of completed but unsold residential
units by 136. Due to uncertainties in the market situation, YIT has halted the
construction of certain residential projects in the start-up phase in Russia.
The sales of these projects had not yet begun. These projects have 2,485
residential units. These residential units are not included in the under
construction figures above.
YIT has ongoing housing development projects in St. Petersburg, eleven cities in
the Moscow region, Moscow, Yaroslavl, Yekaterinburg, Rostov-on-Don and Kazan.
Permits to make Gorelovo sites operational
In St. Petersburg, the construction of real estate development projects on
YIT-owned plots that started at the beginning of 2007 continued.
YIT's new office building in St. Petersburg was completed, and operations began
during the year. The final sales agreement on the site was signed with Evli
funds in December.
In September, the local authorities of the Leningrad region granted YIT the
official permits for putting into operation the Gorigo logistics centre and the
Atria logistics centre. The food plant completed in the Gorelovo area requires
the building technical solution and implementation of the final water and drain
connections before it can be put into operation.
Construction of new real estate development projects were not started in 2008.
In St. Petersburg the development of plots continued. In order to commence the
construction of business and office premises, a company named ZAO YIT Properties
was established in the Moscow region.
Active housing sales in the Baltic countries
The market situation in the Baltic countries softened considerably. The markets
were weak in Estonia, Latvia and Lithuania. Demand for housing remained low and
the activities of construction companies have focused on tender-based contracts.
The overall volume of construction decreased clearly. Some public investments
were postponed and suspended due to the weakened economic situation.
YIT engaged actively in housing sales and managed to decrease the number of
unsold residential units compared to the previous year. There were no new
housing start-ups. In 2008, 733 (372) residential units were sold in Estonia,
Latvia and Lithuania, 0 (541) were started and 736 (1,090) were completed. At
the end of the year, there were 592 (1,328) residential units under
construction, of which 115 (929) had not been sold. There were 181 (100)
completed but unsold residential units. The definition of completed but unsold
residential units has been specified at the turn of the year. The revision
increased the number of completed but unsold residential units by 84. In the
Baltic countries, the construction time of housing projects is approximately a
year.
Plot reserve
Capital tied up in plot reserves in Russia amounted to EUR 145.7 million (EUR
162.9 million) at the end of the year. The plot reserve included residential
plots with 2,256,000 m2 (1,915,000 m2) of floor area and business premise plots
with 565,000 m2 (521,000 m2) of floor area. Plot acquisitions were decreased but
the development of existing plots continued. YIT signed a few preliminary
agreements on plot acquisitions that will be paid in instalments as the projects
are realised.
Capital tied up in plot reserves in the Baltic countries amounted to EUR 83.2
million (EUR 70.3 million) at the end of the year. Plot development costs have
been added to the capital tied up in plot reserves in 2007. The plot reserve
included residential plots with 398,000 m2 (420,000 m2) of floor area and
business premise plots with 62,000 m2 (23,000 m2) of floor area. Some plots were
acquired in the Baltic countries according to previously signed agreements and
plot development continued.
Plot reserves include plots that have been planned and an estimate of the
potential building rights on areas that are under land use planning. The
building rights provided by regional development agreements made with landowners
remain as off-balance sheet items until the construction of each phase of the
plan being implemented begins or YIT pays for the plots in accordance with the
agreements.
Industrial Services
In 2008:
- Industrial Services' revenue amounted to EUR 429.7 million (EUR 489.8
million).
- Service and maintenance operations accounted for 48 per cent (58%) of revenue.
- Finland accounted for 88 per cent of revenue, Russia for 2 per cent and
England, Sweden and other export countries for 10 per cent.
- Operating profit was EUR 30.2 million (EUR 41.2 million).
- Operating profit margin was 7.0 per cent (8.4%).
- Return on investment was 74.6 per cent (102.1%). The method of presenting
intra-Group financial items in the segments has been revised. The comparison
figures have been adjusted according to the same principle.
- The order backlog amounted to EUR 208.3 million (EUR 219.2 million) at the end
of the year.
- At the end of the year, the segment had 3,554 employees (4,663).
Fourth quarter:
- Industrial Services' revenue amounted to EUR 119.2 million (EUR 130.8
million).
- Operating profit was EUR 8.7 million (EUR 22.3 million).
The figures for 2007, excluding the order backlog, include the figures for the
Network Services division, which was sold on December 31, 2007. Network Services
revenue for 1-12/2007 amounted to EUR 77 million. The operating profit for
1-12/2007 includes proceeds from the sale of the Network Services unit in the
amount of EUR +14.4 million and EUR -1.0 million due to restructuring of the
Network Services unit. Approximately 1,000 people left YIT as a result of the
divestment of Network Services.
Steady demand for industrial maintenance services
Demand for maintenance services remained steady. Maintenance agreements were
made and extended with Borealis, UPM's Seikku sawmill and Altia's Rajamäki
factory as well as on the annual maintenance of the Loviisa nuclear power plant.
Shutdown maintenance was carried out in all Finnish nuclear power plants, all of
Botnia's pulp mills in Finland and several other industrial plants. YIT's and
Botnia's joint venture Botnia Mill Service is responsible for the maintenance of
all of Botnia's pulp mills in Finland.
Demand for investments varied by industry
In Finland, demand for industrial investment projects decreased in the forest
industry due to financial problems in the sector. Demand for industrial
investments remained good in the energy, steel and mining industries in early
2008 but softened towards the end of the year. Deliveries were agreed with
Rautaruukki, Outokumpu Steel and the Talvivaara Mine Project. Interest in energy
efficiency was on the rise in the industry. New comprehensive energy-saving
projects were conducted, for example with Kemira Pigments and Ovako Wire.
Export deliveries were agreed in Sweden, United Kingdom, Portugal and Ukraine.
Agreements on new deliveries to export destinations of Finnish forest industry
companies were signed as well.
In Russia, deliveries included machine and equipment installations to the
SaratovStroiSteklo glassworks.
SHARES, SHARE OPTIONS AND SHAREHOLDERS
The company has one series of shares. Each share carries one vote and confers an
equal right to a dividend.
Shares in YIT Corporation could be subscribed for in 2008 under the Series K, L
and M share options issued in 2006 between April 1 and November 30, 2008. The
subscription period with the Series K and L share options ended on November 30,
2008.
Share capital and number of shares
YIT Corporation's share capital was EUR 149,104,766.72 at the beginning of the
review period and the number of shares outstanding was 127,217,872.
A total of 5,550 shares were subscribed for with the Series K, L and M share
options from 2006 in 2008. As a result of the subscriptions, the share capital
was increased by EUR 111,981.50 on April 29, 2008.
At the end of the period, the share capital amounted to EUR 149,216,748.22 and
the number of shares was 127,223,422.
Own shares and authorisations of the Board of Directors
In accordance with the Companies Act, the General Meeting decides on the buyback
and conveyance of shares, as well as any decisions leading to changes in the
share capital.
YIT Corporation did not hold any of its own shares at the beginning of 2008.
YIT Corporation held an Extraordinary General Meeting on October 6, 2008. The
meeting decided to authorise the Board of Directors to purchase the company's
shares within 18 months of the authorisation and to dispose them within five
years from the authorisation. The authorisation granted to the Board of
Directors covers 10% of the company's shares, i.e. the acquisition of a maximum
of 12,722,342 company shares, purchased with the company's unrestricted equity,
and the disposal of the shares according to conditions described in more detail
in the Board of Directors' proposal.
During 2008, YIT purchased 1,425,000 of its own shares in accordance with the
authorisation granted by the Extraordinary General Meeting on October 6, 2008.
Shares were acquired in four batches during 2008: November 28 (470,000 shares at
an average price of EUR 4.67), December 1 (430,000 shares at an average price of
EUR 4.68), December 2 (450,000 shares at an average price of EUR 4.57), December
3 (75,000 shares at an average price of EUR 4.54).
At the end of 2008, YIT Corporation held 1,425,000 of its own shares. During
2008, no shares in the parent company were owned by subsidiaries.
No share issues were organised during the period and the company did not float
convertible bonds or bonds with warrants. At the end of the year, the Board of
Directors of the parent company did not have valid share issue authorisations or
authorisations to issue convertible bonds or bonds with warrants.
Trading in the share
At the end of 2008, the closing rate of YIT's share was EUR 4.58 (2007: EUR
14.99). YIT's share price decreased by 69 per cent during 2007.
The highest price of the share during 2008 was EUR 19.99 (27.90) and the lowest
was EUR 3.70 (EUR 14.79). The average price was EUR 10.89 (EUR 22.15). YIT
Corporation's market capitalisation at the end of the year was EUR 576.2 million
(EUR 1,907.0 million). Market capitalisation at the end of the year 2008
excludes the own shares held by YIT Corporation.
Share turnover in 2008 amounted to 295,155,593 shares (245,671,719). The value
of share turnover was EUR 3,221.4 million (EUR 5,448.3 million). The average
daily turnover was 1,166,623 shares (982,687).
Trading with share options
During the report year, 81,662 Series K share options were traded at an average
price of EUR 0.96, 150,180 Series L share options were traded at an average
price of EUR 0.96 and 67,240 Series M share options were traded at an average
price of EUR 2.15.
Number of shareholders increased
During 2008, the number of registered shareholders rose from 15,265 to 25,515,
that is, by 67 per cent. The number of private investors increased by more than
9,500. At the beginning of the year, a total of 52.9 per cent (45.9%) of the
shares were owned by nominee-registered and non-Finnish investors, while this
figure was 36.5 per cent (52.9%) at year's end.
During 2008, five so-called flagging notifications of change in ownership were
made in accordance with Chapter 2, section 9 of the Securities Market Act.
Julius Baer Holding Ltd announced on May 19, 2008, that the fraction of YIT
Corporation shares and votes held by companies belonging to it had increased to
over 5 per cent and on July 15, 2008, that the fraction had decreased to under 5
per cent.
Corbis S.A and Fennogens Investments S.A announced on October 3, 2008, that
their combined holdings had increased to 5.70 per cent of YIT Corporation's
shares and votes. The companies are owned by the same parties. Fennogens
Investments S.A announced on November 7, 2008, that its holding had increased to
5.85 per cent of YIT Corporation's shares and votes. Structor S.A announced on
November 25, 2008, that its holding had increased to 10.02 per cent of YIT
Corporation's shares and votes. At the same time it was notified that YIT
Corporation shares owned by Fennogens Investments S.A and Corbis S.A have been
transferred to Structor S.A, and thus these two companies no longer hold YIT
shares.
MARKET SITUATION IN JANUARY 2009
The world economy is in recession. The OECD composite leading indicators
published in mid-January show a deep recession in all significant financial
areas in the world this year. The OECD predicts that the economy of the eurozone
will continue to decline during the first half of this year and that economic
growth will remain under the long-term average until mid-2010. At the end of
January, the European Commission expected that the GDP of the Eurozone will
decrease by 1.8 per cent this year and increase by 0.5 per cent in 2010.
According to Euroconstruct's December forecast, the construction of new housing
and business premises will decrease in all Nordic countries both this and next
year. Servicing and maintenance, renovation of housing and energy-saving
investments will develop steadily. Public investments will increase. The
economic situation in civil engineering will remain stable. Construction as a
whole will decrease this year in the Nordic countries and level off or turn to
moderate growth in 2010 apart from Finland.
The Russian Ministry of Economic Development and Trade predicted this year's GDP
to decrease by 0.3 per cent. The forecast is based on a price of USD 41 per
barrel of Urals oil and the implementation of the revival measures prepared by
the government. The Baltic economies weakened considerably in 2008. Nordea
predicts GDP to decrease by 4.5 per cent in Estonia, 6.0 in Latvia and 3.0 in
Lithuania this year. The rate of decrease is expected to slow down in all Baltic
economies next year.
The German economy will decrease by more than 2 per cent this year according to
IFO's December estimate, and a slight decline will continue in 2010. The
Austrian Institute of Economic Research, WIFO, predicts that GDP will decrease
by 0.5 per cent this year and grow by 0.9 per cent next year. Growth prospects
in the Central Eastern Europe countries have weakened due to tightened
international financing, current account deficits and slump of European export
countries.
SHORT-TERM AND LONG-TERM TARGETS
At the end of September 2008, YIT Group's strategic focus was shifted towards
improving cash flow, adjusting the cost structure and ensuring the financial
position after the economic conditions and the global financial market crisis
had impacted YIT countries. The Group implemented several quick-acting measures.
The Group's financial position was strengthened during the fourth quarter by
increasing cash reserves by taking out pension loans and long-term and
short-term bank loans. The need for capital was reduced by postponing housing
start-ups to a better market situation and considerably reducing plot
acquisition and other investments. In Russia, a decision was made in October to
halt the construction in certain residential projects in the start-up phase; in
these projects the sales had not yet begun. In the Baltic countries, YIT
decreased actively the number of unsold residential units. The closing of the
sales of several business premises were realised successfully at the end of the
year. The Group carried out measures to cut EUR 40 million in fixed costs on
annual level. The effect of these measures will be seen fully by the third
quarter of 2009. In procurement, purchase agreements were adjusted to the market
conditions.
The company's aim is to maintain good competitiveness in the tightening market
conditions. Towards the end of the year, the focus was shifted from adjusting
the cost structure through rapidly effecting measures to strengthening sales and
developing operations. In Finland, agreements were made on housing sales in
larger entities during the latter part of the year and several preliminary
agreements were signed on starting the construction of rental housing during
2009. YIT will continue to reduce production costs through efficient procurement
and by developing work methods. Cost-efficiency will be increased also by
utilising common processes more broadly in business operations as well as
support services. Measures to improve the efficiency of invested capital and
support cash flow will be continued. Market opportunities that are interesting
to YIT will open up as public investments and rental housing production increase
and the refurbishment, servicing and maintenance operations and investments in
energy sector continue brisk.
After the review period on February 5, 2009, the Board of Directors of YIT
Corporation confirmed the financial targets for the strategy period 2009-2011.
The cash flow target was set for the first time at Group level. Operating cash
flow after investments during strategy period must be sufficient for dividend
payout and repayment of debt. The previous numerical revenue growth target of 10
per cent on average per year was abandoned. The target is positive revenue
growth. The return on investment target was set at 20 per cent by the end of
strategy period, versus the previous target of 22 per cent. The targets for
equity ratio and dividend payout remained unchanged. The operating profit target
of 9 per cent of revenue was abandoned.
Similarly, the separate target set for the Russian operations - average annual
revenue growth of 50 per cent during the period 2006-2009 - was abandoned as the
forecastability of the country's economic development in the next few years has
weakened substantially.
Other targets remained unchanged. Target for equity ratio is 35 per cent and for
dividend payout 40 to 60 per cent of net profit for the period.
In 2008, YIT Group's operating cash flow after investments amounted to EUR -19.4
million, revenue growth was 6 per cent, return on investment was 17.5 per cent,
the equity ratio was 30.7 per cent and the Board's proposal for dividend payout
for 2008 is 47.6 per cent.
MAJOR BUSINESS RISKS AND UNCERTAINTIES IN THE NEAR FUTURE
The most significant short-term business risks and uncertainties are connected
with the sales risk of the order backlog and foreseeing and reacting to changes
in the operating environment. The most important changes in the operating
environment are oil price, which has a strong impact on the economic situation
in Russia, and consumer confidence in Finland and Russia.
The sales risk included in the order backlog is mainly comprised of residential
units under construction and completed but unsold residential units. At the end
of the year, YIT's residential units under construction or completed but unsold
residential units totalled 5,534 in Russia, 1,118 in Finland and 296 in the
Baltic countries. In addition, there are 2,485 residential units in Russia whose
construction was halted in the start-up phase. The development of consumer
confidence brings uncertainty in the development of housing sales. Sales risk is
managed by matching the number of housing start-ups with the number of sold
residential units. A more detailed account of the structure of the order backlog
is presented above under Order backlog and of housing production and measures
under Development by business segment.
In Russia, the devaluation of the ruble originating in the financial market
crisis has continued rapidly after the turn of the year. The ruble may lose 18
per cent of its value of the turn of the year within the limits of the ruble
basket announced by the Bank of Russia on January 22.
The equities of the Russian subsidiaries, EUR 163.7 million, are unhedged in
accordance with the finance policy, and the devaluation of the ruble has a
negative impact equal to the amount of equity on the Group's shareholders'
equity. Net equity investments in Russia were increased at the turn of the year.
If the devaluation of the ruble continues, this will have a decreasing impact on
YIT's revenue and operating profit and an increasing impact on financial
expenses in 2009. The decision to increase net equity investments in Russia will
decrease the impact of fluctuations in the exchange rate of the ruble on
financial expenses. On the other hand, financial expenses are increased by an
exchange rate loss of EUR 10.5 million due to the valuation of the ruble forward
position at the turn of the year, mainly allocated to the first quarter of 2009.
The risks in Gorelovo are connected with the final costs of implementing the
technical solution of the water and sewer connections of the area. Negotiations
on the connections are underway. The final costs arising from the delay of the
inauguration of the food factory being built to the area will be specified later
in accordance with the terms of the agreement made with the customer.
At the end of the year, the value of plots was tested in accordance with the
requirements of the IFRS accounting principles. The testing did not result in
any material changes in the value of plot reserves. Plot reserves are measured
at acquisition cost and the value is impaired only when it is estimated that the
building being constructed on the plot will be sold at a price lower than the
sum of the price of the plot and the construction costs. If the poor market
conditions continue, the risk of write-offs to plot values increases.
YIT's risk management policy defines the Group's most significant risks and
methods of managing them from the point of view of the entire Group. A more
detailed account of YIT's risk management policy and the most significant risks
is published in the Annual Report 2008 and of the financing risk in the notes to
the financial statements for 2008.
OUTLOOK FOR 2009
Due to the exceptional uncertainties in the general market situation, the
Group's revenue and profit estimate for 2009 will be specified at a later time.
The revenue and profit uncertainties are related to the general economic
environment and its impact on building and repair investments, as well as
housing sales in Finland and Russia.
At the end of 2008, YIT's order backlog was EUR 3.2 billion, of which EUR 356
million was in postponed housing projects in Russia. The order backlog margins
are at normal levels. The order backlog margins of unsold housing production are
dependent on the development of housing prices and construction costs.
Approximately half of the revenue in Building and Industrial Services is derived
from service and maintenance operations, where demand will develop relatively
steadily in spite of the uncertain market conditions. The demand for renovation
will continue to grow. Investments in industry and commercial real estate will
decrease.
In Finland, housing construction is estimated to decrease, and focus will be on
interest-subsidised and market-financed rental housing production. On the other
hand, decreasing interest rates support housing demand. Construction of business
premises is estimated to halve compared to the previous year. On the whole,
building construction will decrease. The number of infrastructure projects will
be steady or grow as a result of public sector stimulus measures in 2009.
In Russia, the strong need for housing and the high volume of YIT's ongoing
housing production provide a basis for increasing revenue. The unpredictability
of revenue and profit development has increased due to the weakening Russian
economy, the ruble exchange rate and consumer confidence. The weak market
situation in the Baltic countries will continue.
EVENTS AFTER THE END OF THE REVIEW PERIOD
On February 5, 2009, the Board of Directors of YIT Corporation confirmed the
financial targets for the strategy period 2009-2011. The cash flow target was
set for the first time at Group level. Operating cash flow after investments
during strategy period must be sufficient for dividend payout and repayment of
debt. The previous numerical revenue growth target of 10 per cent on average per
year was abandoned. The target is positive revenue growth. The return on
investment target was set at 20 per cent by the end of strategy period, versus
the previous target of 22 per cent. The targets for equity ratio and dividend
payout remained unchanged. The operating profit target of 9 per cent of revenue
was abandoned.
Similarly, the separate target set for the Russian operations - average annual
revenue growth of 50 per cent during the period 2006-2009 - was abandoned as the
forecastability of the country's economic development in the next few years has
weakened substantially.
Other targets remained unchanged. Target for equity ratio is 35 per cent and for
dividend payout 40 to 60 per cent of net profit for the period.
BOARD OF DIRECTORS' PROPOSAL FOR THE USE OF DISTRIBUTABLE EQUITY
The distributable equity of YIT Corporation on December 31, 2008 amounts
240.378.235,50 euros, of which profit for the financial year 2008 is
78.522.970,02 euros.
The Board of directors proposes that the profit be disposed of as follows:
- Payment of a dividend
EUR 0,50 per share to shareholders 62.899.211,00
- Remains in distributable equity 177.479.024,50
240.378.235,50
No significant changes have taken place in the company's financial position
after the end of the financial year. The company's liquidity is good and in the
view of Board of Directors the proposed dividend payout does not jeopardise the
company's solvency.
Helsinki, February 5, 2009
Reino Hanhinen Eino Halonen
Chairman Vice chairman
Antti Herlin Teuvo Salminen
Kim Gran Juhani Pitkäkoski
President and CEO
FINANCIAL STATEMENTS BULLETIN JAN 1 - DEC 31, 2008: TABLES -
(The financial statements bulletin is based on the audited financial statements
for 2008.)
1. Key figures of YIT Group
Key figures
YIT Group figures by quarter
Segment information by quarter
2. Consolidated financial statements January 1 - December 31, 2008
Consolidated income statement January 1 - December 31, 2008
Consolidated income statement October 1 - December 31, 2008
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
3. Notes
Accounting principles of the financial statements bulletin
Financial risk management
Segment information
Unusual items affecting operating profit
Acquired businesses
Divested businesses
Changes in property, plant and equipment
Inventories
Notes on equity
Interest-bearing liabilities
Change in contingent liabilities and assets and commitments
Transactions with associated companies
Events after the review period
1. KEY FIGURES OF YIT GROUP
KEY FIGURES
--------------------------------------------------------------------------------
| | 12/2008 | 12/2007 | Change, % |
--------------------------------------------------------------------------------
| Earnings per share, EUR 1) | 1.05 | 1.77 | -41 |
--------------------------------------------------------------------------------
| Diluted earnings per share, EUR 1) | 1.05 | 1.77 | -41 |
--------------------------------------------------------------------------------
| Equity per share, EUR | 6.38 | 6.40 | - |
--------------------------------------------------------------------------------
| Average share price during the | 10.89 | 22.15 | -51 |
| period, EUR | | | |
--------------------------------------------------------------------------------
| Share price at end of period, EUR | 4.58 | 14.99 | -69 |
--------------------------------------------------------------------------------
| Market capitalization at end of | 576.2 | 1,907.0 | -70 |
| period, MEUR | | | |
--------------------------------------------------------------------------------
| Weighted average share-issue adjusted | 127,104 | 126,872 | - |
| number of shares outstanding, | | | |
| thousands | | | |
--------------------------------------------------------------------------------
| Weighted average share-issue adjusted | 127,104 | 127,028 | - |
| number of shares outstanding, | | | |
| thousands, diluted | | | |
--------------------------------------------------------------------------------
| Share-issue adjusted number of shares | 125,798 | 127,218 | -1 |
| outstanding at end of period, | | | |
| thousands | | | |
--------------------------------------------------------------------------------
| Net interest-bearing debt at end of | 644.5 | 514.8 | 25 |
| period, MEUR | | | |
--------------------------------------------------------------------------------
| Return on investment, from the last | 17.5 | 26.2 | -33 |
| 12 months, % | | | |
--------------------------------------------------------------------------------
| Return on equity, % | 16.5 | 30.5 | -46 |
--------------------------------------------------------------------------------
| Equity ratio, % | 30.7 | 36.7 | -16 |
--------------------------------------------------------------------------------
| Gearing ratio, % | 79.8 | 62.9 | 27 |
--------------------------------------------------------------------------------
| Gross capital expenditures, MEUR | 85.2 | 51.6 | 63 |
--------------------------------------------------------------------------------
| % of revenue | 2.2 | 1.4 | 50 |
--------------------------------------------------------------------------------
| Order backlog at end of period, MEUR | 3,233.7 | 3,509.3 | -8 |
| 2) | | | |
--------------------------------------------------------------------------------
| of which order backlog outside | 2,118.9 | 1,999.2 | 6 |
| Finland | | | |
--------------------------------------------------------------------------------
| Average number of personnel | 25,057 | 23,394 | 7 |
--------------------------------------------------------------------------------
1) The net profit for October-December/2007 includes non-recurring positive
items of EUR 9.0 million due to the sale of the Network Services division on
December 31, 2007.
2) Portion of binding orders not recognized as income.
*) Change over 100%.
YIT GROUP FIGURES BY QUARTER
--------------------------------------------------------------------------------
| | I/20 | II/20 | III/2 | IV/20 | I/200 | II/20 | III/2 | IV/20 |
| | 07 | 07 | 007 | 07 | 8 | 08 | 008 | 08 |
--------------------------------------------------------------------------------
| Revenue, MEUR | 833. | 939.3 | 906.8 | 1,027 | 927.0 | 991.2 | 970.8 | 1,050 |
| | 5 | | | .0 | | | | .7 |
--------------------------------------------------------------------------------
| Operating | 61.2 | 78.5 | 89.4 | 108.7 | 78.6 | 70.5 | 63.1 | 48.4 |
| profit, MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| % of revenue | 7.3 | 8.4 | 9.9 | 10.6 | 8.5 | 7.1 | 6.5 | 4.6 |
--------------------------------------------------------------------------------
| Financial | 0.6 | 0.5 | 0.6 | 0.8 | 3.2 | 0.6 | 0.9 | 1.2 |
| income, MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Exchange rate | -0.1 | -1.6 | 0.5 | -2.6 | -0.8 | -2.6 | 6.0 | -27.6 |
| differences, | | | | | | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Financial | -6.9 | -7.6 | -8.1 | -8.4 | -10.7 | -8.0 | -13.0 | -16.7 |
| expenses, | | | | | | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Profit before | 54.8 | 69.8 | 82.4 | 98.5 | 70.3 | 60.5 | 56.9 | 5.4 |
| taxes, MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| % of revenue | 6.6 | 7.4 | 9.1 | 9.6 | 7.6, | 6.1 | 5.9 | 0.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balance sheet | 2,15 | 2,346 | 2,418 | 2,461 | 2,525 | 2,605 | 2,868 | 2,973 |
| total, MEUR | 5.9 | .1 | .4 | .3 | .8 | .5 | .5 | .9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings/shar | 0.31 | 0.42 | 0.47 | 0.57 | 0.40 | 0.33 | 0.29 | 0.03 |
| e, EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Equity per | 4.95 | 5.38 | 5.85 | 6.40 | 5.97 | 6.32 | 6.61 | 6.38 |
| share, EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Share price | 25.8 | 23.35 | 20.84 | 14.99 | 17.97 | 15.98 | 7.30 | 4.58 |
| at end of | 0 | | | | | | | |
| period, EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Market | 3,27 | 2,963 | 2,644 | 1,907 | 2,286 | 2,033 | 928.7 | 576.2 |
| capitalizatio | 0.8 | .1 | .7 | .0 | .1 | .0 | | |
| n at end of | | | | | | | | |
| period, MEUR | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on | 25.4 | 25.7 | 25.8 | 26.2 | 28.1 | 25.6 | 21.9 | 17.5 |
| investment, | | | | | | | | |
| from the last | | | | | | | | |
| 12 months, % | | | | | | | | |
--------------------------------------------------------------------------------
| Equity ratio, | 31.8 | 32.4 | 33.8 | 36.7 | 33.3 | 34.5 | 33.4 | 30.7 |
| % | | | | | | | | |
--------------------------------------------------------------------------------
| Net | 540. | 548.9 | 591.4 | 514.8 | 462.7 | 625.2 | 696.9 | 644.5 |
| interest-bear | 9 | | | | | | | |
| ing debt at | | | | | | | | |
| end of | | | | | | | | |
| period, MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Gearing | 85.6 | 79.8 | 79.1 | 62.9 | 60.6 | 77.2 | 82.5 | 79.8 |
| ratio, % | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross capital | 15.8 | 5.7 | 12.0 | 18.1 | 11.8 | 14.0 | 51.1 | 8.3 |
| expenditures, | | | | | | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Order backlog | 2,99 | 3,275 | 3,172 | 3,509 | 3,627 | 3,670 | 3,964 | 3,233 |
| at end of | 5.4 | .2 | .5 | .3 | .0 | .4 | .9 | .7 |
| period, MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Personnel at | 22,4 | 23,47 | 23,83 | 24,07 | 23,64 | 24,97 | 26,68 | 25,78 |
| end of period | 18 | 4 | 6 | 3 | 4 | 8 | 8 | 4 |
--------------------------------------------------------------------------------
SEGMENT INFORMATION BY QUARTER
Revenue by business segment (EUR million)
--------------------------------------------------------------------------------
| | I/20 | II/2 | III/ | IV/20 | I/200 | II/20 | III/2 | IV/20 |
| | 07 | 007 | 2007 | 07 | 8 | 08 | 008 | 08 |
--------------------------------------------------------------------------------
| Building | 367. | 410. | 392. | 479.7 | 418.1 | 480.5 | 478.9 | 597.5 |
| Systems 1) | 7 | 3 | 3 | | | | | |
--------------------------------------------------------------------------------
| Construction | 291. | 307. | 272. | 287.2 | 284.9 | 308.6 | 285.8 | 268.6 |
| Services | 5 | 0 | 5 | | | | | |
| Finland | | | | | | | | |
--------------------------------------------------------------------------------
| International | 79.3 | 115. | 139. | 152.0 | 154.3 | 119.5 | 123.3 | 96.4 |
| Construction | | 2 | 6 | | | | | |
| Services | | | | | | | | |
--------------------------------------------------------------------------------
| Industrial | 110. | 129. | 118. | 130.8 | 90.9 | 110.9 | 108.7 | 119.2 |
| Services 2) | 7 | 6 | 7 | | | | | |
--------------------------------------------------------------------------------
| Other items | -14. | -22. | -16. | -22.7 | -21.2 | -28.3 | -25.9 | -31.0 |
| | 1 | 8 | 4 | | | | | |
--------------------------------------------------------------------------------
| YIT Group, | 833. | 939. | 906. | 1 | 927.0 | 991.2 | 970.8 | 1,050 |
| total | 5 | 3 | 7 | 027.0 | | | | .7 |
--------------------------------------------------------------------------------
1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008. The revenue of these operations for August-December 2008
amounted to EUR 182.6 million.
2) Revenue for 2007 includes the Network Services unit, which was sold on
December 31, 2007. Network Services revenue for 1-12/2007 amounted to EUR 77
million.
Operating profit by business segment (EUR million)
--------------------------------------------------------------------------------
| | I/20 | II/2 | III/ | IV/20 | I/200 | II/20 | III/2 | IV/20 |
| | 07 | 007 | 2007 | 07 | 8 | 08 | 008 | 08 |
--------------------------------------------------------------------------------
| Building | 18.8 | 25.6 | 26.7 | 41.1 | 26.3 | 32.6 | 35.7 | 37.2 |
| Systems 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Construction | 35.6 | 35.5 | 33.4 | 29.0 | 35.4 | 29.4 | 28.1 | 18.8 |
| Services | | | | | | | | |
| Finland 2) | | | | | | | | |
--------------------------------------------------------------------------------
| International | 5.6 | 16.0 | 23.9 | 21.7 | 16.1 | 6.1 | -4.0 | -9.2 |
| Construction | | | | | | | | |
| Services | | | | | | | | |
--------------------------------------------------------------------------------
| Industrial | 5.0 | 5.8 | 8.1 | 22.3 | 5.2 | 8.5 | 7.8 | 8.7 |
| Services 3) | | | | | | | | |
--------------------------------------------------------------------------------
| Other items | -3.8 | -4.4 | -2.7 | -5.4 | -4.4 | -6.1 | -4.5 | -7.0 |
--------------------------------------------------------------------------------
| YIT Group, | 61.2 | 78.5 | 89.4 | 108.7 | 78.6 | 70.5 | 63.1 | 48.5 |
| total | | | | | | | | |
--------------------------------------------------------------------------------
Operating profit margin by segment, %
--------------------------------------------------------------------------------
| | I/20 | II/2 | III/ | IV/20 | I/200 | II/20 | III/2 | IV/20 |
| | 07 | 007 | 2007 | 07 | 8 | 08 | 008 | 08 |
--------------------------------------------------------------------------------
| Building | 5.1% | 6.2% | 6.8% | 8.6% | 6.3% | 6.8% | 7.5% | 6.2% |
| Systems 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Construction | 12.2 | 11.6 | 12.3 | 10.1% | 12.4% | 9.5% | 9.8% | 7.0% |
| Services | % | % | % | | | | | |
| Finland 2) | | | | | | | | |
--------------------------------------------------------------------------------
| International | 7.1% | 13.9 | 17.1 | 14.3% | 10.4% | 5.1% | -3.2% | -9.5% |
| Construction | | % | % | | | | | |
| Services | | | | | | | | |
--------------------------------------------------------------------------------
| Industrial | 4.5% | 4.5% | 6.8% | 17.0% | 5.7% | 7.7% | 7.2% | 7.3% |
| Services 3) | | | | | | | | |
--------------------------------------------------------------------------------
| YIT Group, | 7.3% | 8.4% | 9.9% | 10.6% | 8.5% | 7.1% | 6.5% | 4.6% |
| total | | | | | | | | |
--------------------------------------------------------------------------------
1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008.
2) The Supreme Court issued its ruling on disputes connected with the renovation
of SOK's former head office building on March 10, 2008. The ruling had a
positive effect of EUR 3.5 million on the Construction Services Finland
operating profit for January-March/2008.
3) Operating profit for 2007 includes the Network Services unit, which was sold
on December 31, 2007. Operating profit for January-March/2007 includes EUR -1.0
million in costs for the downsizing of Network Services. The operating profit
for October-December/2007 includes positive non-recurring items of EUR 14.4
million from the divestment of Network Services division.
Order backlog by business segment at end of period (EUR million)
--------------------------------------------------------------------------------
| | I/20 | II/2 | III/ | IV/20 | I/200 | II/20 | III/2 | IV/20 |
| | 07 | 007 | 2007 | 07 | 8 | 08 | 008 | 08 |
--------------------------------------------------------------------------------
| Building | 670. | 721. | 740. | 707.7 | 825.3 | 799.9 | 1,046 | 841.9 |
| Systems 1) | 3 | 8 | 5 | | | | .4 | |
--------------------------------------------------------------------------------
| Construction | 1,02 | 1,19 | 1,12 | 1,183 | 1,306 | 1,264 | 1,085 | 874.2 |
| Services | 6.1 | 3.1 | 8.9 | .8 | .4 | .8 | .9 | |
| Finland | | | | | | | | |
--------------------------------------------------------------------------------
| International | 1,11 | 1,18 | 1,13 | 1,462 | 1,381 | 1,483 | 1,678 | 1,369 |
| Construction | 1.8 | 5.2 | 4.4 | .7 | .7 | .7 | .2 | .3 |
| Services | | | | | | | | |
--------------------------------------------------------------------------------
| Industrial | 228. | 213. | 221. | 219.2 | 224.3 | 222.8 | 238 | 208.3 |
| Services 2) | 8 | 6 | 7 | | | | | |
--------------------------------------------------------------------------------
| Other items | -41. | -38. | -53. | -64.1 | -110. | -100. | -83.6 | -60.0 |
| | 6 | 5 | 0 | | 7 | 8 | | , |
--------------------------------------------------------------------------------
| YIT Group, | 2,99 | 3,27 | 3,17 | 3,509 | 3,627 | 3,670 | 3,964 | 3,233 |
| total | 5.4 | 5.2 | 2.5 | .3 | .0 | .4 | .9 | .7 |
--------------------------------------------------------------------------------
1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008.
2) The order backlog I/2007, II/2007 and III/2007 include the Network Services
division, which was divested on December 31, 2007.
2. CONSOLIDATED FINANCIAL STATEMENTS JANUARY 1 - DECEMBER 31, 2008
CONSOLDIATED INCOME STATEMENT JANUARY 1 - DECEMBER 31, 2008 (EUR million)
--------------------------------------------------------------------------------
| | 1-12/2008 | 1-12/2007 | Change, % |
--------------------------------------------------------------------------------
| Revenue | 3,939.7 | 3,706.5 | 6 |
--------------------------------------------------------------------------------
| of which activities outside Finland | 2,072.9 | 1,798.5 | 15 |
--------------------------------------------------------------------------------
| Operating income and expenses | -3,647.2 | -3,342.7 | 9 |
--------------------------------------------------------------------------------
| Share of results of associated | -0.1 | 1.2 | *) |
| companies | | | |
--------------------------------------------------------------------------------
| Depreciation and write-downs | -31.8 | -27.2 | 17 |
--------------------------------------------------------------------------------
| Operating profit | 260.6 | 337.8 | -23 |
--------------------------------------------------------------------------------
| % of revenue | 6.6 | 9.1 | -27 |
--------------------------------------------------------------------------------
| Financial income 1) | 5.9 | 2.6 | *) |
--------------------------------------------------------------------------------
| Exchange rate differences | -25.0 | -3.8 | *) |
--------------------------------------------------------------------------------
| Financial expenses | -48.4 | -31.0 | 56 |
--------------------------------------------------------------------------------
| Profit before taxes | 193.1 | 305.6 | -37 |
--------------------------------------------------------------------------------
| % of revenue | 4.9 | 8.2 | -41 |
--------------------------------------------------------------------------------
| Income taxes | -58.8 | -77.6 | -24 |
--------------------------------------------------------------------------------
| Profit for the report period | 134.3 | 228.0 | -41 |
--------------------------------------------------------------------------------
| % of revenue | 3.4 | 6.2 | -45 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent company | 132.9 | 224.9 | -41 |
--------------------------------------------------------------------------------
| Minority interests | 1.4 | 3.1 | -55 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share attributable to | | | |
| the equity holders of the parent | | | |
| company | | | |
--------------------------------------------------------------------------------
| Earnings per share, EUR | 1.05 | 1.77 | -41 |
--------------------------------------------------------------------------------
| Diluted earnings per share, EUR | 1.05 | 1.77 | -41 |
--------------------------------------------------------------------------------
1) The financial income of the period January-March/2008 includes EUR +2.2
million due to the ruling of the Supreme Court of disputes over the refurbishing
of SOK's former head office in Finland.
*) Change over 100%.
CONSOLIDATED INCOME STATEMENT OCTOBER 1 - DECEMBER 31, 2008 (EUR million)
--------------------------------------------------------------------------------
| | 10-12/2008 | 10-12/2007 | Change, % |
--------------------------------------------------------------------------------
| Revenue | 1,050.7 | 1,027.0 | 2 |
--------------------------------------------------------------------------------
| of which activities outside Finland | 586.8 | 529.7 | 11 |
--------------------------------------------------------------------------------
| Operating income and expenses | -993.5 | -910.7 | 9 |
--------------------------------------------------------------------------------
| Share of results of associated | -0.1 | 0.2 | *) |
| companies | | | |
--------------------------------------------------------------------------------
| Depreciation and write-downs | -8.7 | -7.8 | 12 |
--------------------------------------------------------------------------------
| Operating profit 1) | 48.4 | 108.7 | -55 |
--------------------------------------------------------------------------------
| % of revenue | 4.6 | 10.6 | -56 |
--------------------------------------------------------------------------------
| Financial income | 1.2 | 0.8 | 50 |
--------------------------------------------------------------------------------
| Exchange rate differences | -27.6 | -2.6 | *) |
--------------------------------------------------------------------------------
| Financial expenses | -16.7 | -8.4 | 99 |
--------------------------------------------------------------------------------
| Profit before taxes | 5.4 | 98.5 | -95 |
--------------------------------------------------------------------------------
| % of revenue | 0.5 | 9.6 | -95 |
--------------------------------------------------------------------------------
| Income taxes | -2.6 | -24.6 | -89 |
--------------------------------------------------------------------------------
| Profit for the report period 2) | 2.8 | 73.9 | -96 |
--------------------------------------------------------------------------------
| % of revenue | 0.3 | 7.2 | -96 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent company | 2.7 | 72.8 | -96 |
--------------------------------------------------------------------------------
| Minority interests | 0.1 | 1.1 | -91 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share attributable to | | | |
| the equity holders of the parent | | | |
| company | | | |
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.03 | 0.57 | -95 |
--------------------------------------------------------------------------------
| Diluted earnings per share, EUR | 0.03 | 0.58 | -95 |
--------------------------------------------------------------------------------
1) The operating profit for October-December/2007 includes positive
non-recurring items of EUR 14.4 million from the divestment of Network Services
division on December 31, 2007.
2) The net profit for October-December/2007 includes non-recurring items of EUR
9.0 million due to the sale of the Network Services division on December 31,
2007.
*) Change over 100%.
CONSOLIDATED BALANCE SHEET (EUR million)
--------------------------------------------------------------------------------
| | 12/2008 | 12/2007 | Change, % |
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Property, plant and equipment | 104.6 | 92.5 | 13 |
--------------------------------------------------------------------------------
| Goodwill | 291.0 | 240.6 | 21 |
--------------------------------------------------------------------------------
| Other intangible assets | 35.1 | 27.1 | 30 |
--------------------------------------------------------------------------------
| Shares in associated companies | 3.8 | 3.6 | 6 |
--------------------------------------------------------------------------------
| Investments | 2.5 | 2.5 | - |
--------------------------------------------------------------------------------
| Receivables | 12.7 | 15.1 | -16 |
--------------------------------------------------------------------------------
| Deferred tax assets | 34.6 | 27.2 | 27 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | 1,509.9 | 1,265.0 | 19 |
--------------------------------------------------------------------------------
| Trade and other receivables | 778.0 | 727.6 | 7 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 201.7 | 60.2 | *) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 2,973.9 | 2,461.3 | 21 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to equity holders | | | |
| of the parent company | | | |
--------------------------------------------------------------------------------
| Share capital | 149.2 | 149.1 | 0 |
--------------------------------------------------------------------------------
| Other equity | 653.9 | 665.4 | -2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Minority interests | 4.6 | 3.8 | 21 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity | 807.7 | 818.3 | -1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 68.4 | 71.5 | -4 |
--------------------------------------------------------------------------------
| Pension liabilities | 19.7 | 7.5 | *) |
--------------------------------------------------------------------------------
| Provisions | 45.0 | 34.2 | 32 |
--------------------------------------------------------------------------------
| Financing liabilities | 516.2 | 356.9 | 45 |
--------------------------------------------------------------------------------
| Other liabilities | 4.0 | 1.7 | *) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 1,140.8 | 928.4 | 23 |
--------------------------------------------------------------------------------
| Provisions | 42.0 | 24.8 | 69 |
--------------------------------------------------------------------------------
| Current financing liabilities | 330.1 | 218.1 | 51 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity and liabilities | 2,973.9 | 2,461.3 | 21 |
--------------------------------------------------------------------------------
*) Change over 100%.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR million)
--------------------------------------------------------------------------------
| | Sha | Sha | Lega | Othe | Cumul | Fair | Own | Reta | Mino | Tota |
| | re | re | l | r | ative | valu | share | ined | rity | l |
| | cap | pre | rese | rese | trans | e | s | earn | inte | equi |
| | ita | miu | rve | rves | latio | rese | | ings | rest | ty |
| | l | m | | | n | rve | | | | |
| | | res | | | diffe | | | | | |
| | | erv | | | rence | | | | | |
| | | e | | | s | | | | | |
--------------------------------------------------------------------------------
| Equity | 149 | - | 1.0 | 13.9 | -9.0 | 2.0 | 0.0 | 657. | 3.8 | 818. |
| on Jan | .1 | | | | | | | 5 | | 3 |
| 1, | | | | | | | | | | |
| 2008 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Items | | | | | | | | | | |
| entere | | | | | | | | | | |
| d | | | | | | | | | | |
| direct | | | | | | | | | | |
| ly in | | | | | | | | | | |
| shareh | | | | | | | | | | |
| olders | | | | | | | | | | |
| ' | | | | | | | | | | |
| equity | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | - | - | - | - | -4.8 | - | - | - | -4.8 |
| Change | | | | | | | | | | |
| in the | | | | | | | | | | |
| fair | | | | | | | | | | |
| value | | | | | | | | | | |
| of | | | | | | | | | | |
| intere | | | | | | | | | | |
| st | | | | | | | | | | |
| deriva | | | | | | | | | | |
| tives | | | | | | | | | | |
--------------------------------------------------------------------------------
| -- | - | - | - | - | - | 1.2 | - | - | - | 1.2 |
| Deferr | | | | | | | | | | |
| ed | | | | | | | | | | |
| taxes | | | | | | | | | | |
--------------------------------------------------------------------------------
| Change | | | | | | -0.1 | | | | -0.1 |
| in | | | | | | | | | | |
| fair | | | | | | | | | | |
| value | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | - | - | - | -26.2 | - | - | -9.6 | - | -35. |
| Change | | | | | | | | | | 8 |
| in | | | | | | | | | | |
| transl | | | | | | | | | | |
| ation | | | | | | | | | | |
| differ | | | | | | | | | | |
| ences | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | - | 0.4 | - | - | - | - | | -0.4 | - |
| Other | | | | | | | | | | |
| change | | | | | | | | | | |
--------------------------------------------------------------------------------
| Items | '- | - | 0.4 | | -26.2 | -3.7 | | -9.6 | -0.4 | -39. |
| entere | | | | | | | | | | 5 |
| d | | | | | | | | | | |
| direct | | | | | | | | | | |
| ly in | | | | | | | | | | |
| shareh | | | | | | | | | | |
| olders | | | | | | | | | | |
| ' | | | | | | | | | | |
| equity | | | | | | | | | | |
| , | | | | | | | | | | |
| total | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | - | - | - | - | - | - | - | 132. | 1.4 | 134. |
| profit | | | | | | | | 9 | | 3 |
| for | | | | | | | | | | |
| the | | | | | | | | | | |
| period | | | | | | | | | | |
--------------------------------------------------------------------------------
| Income | | | 0.4 | | -26.2 | -3.7 | | 123. | 1.1 | 94.8 |
| and | | | | | | | | 2 | | |
| expens | | | | | | | | | | |
| es | | | | | | | | | | |
| entere | | | | | | | | | | |
| d | | | | | | | | | | |
| during | | | | | | | | | | |
| the | | | | | | | | | | |
| period | | | | | | | | | | |
| total | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | - | - | - | - | - | - | -101 | -0.2 | -102 |
| Divide | | | | | | | | .8 | | .0 |
| nd | | | | | | | | | | |
| paid, | | | | | | | | | | |
| EUR | | | | | | | | | | |
| 0.80 | | | | | | | | | | |
| per | | | | | | | | | | |
| share | | | | | | | | | | |
--------------------------------------------------------------------------------
| - Own | - | - | - | - | - | - | -6.6 | - | - | -6.6 |
| share | | | | | | | | | | - |
| buybac | | | | | | | | | | |
| k | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | 0.1 | - | - | - | - | - | - | - | - | 0.1 |
| Shares | | | | | | | | | | |
| subscr | | | | | | | | | | |
| ibed | | | | | | | | | | |
| with | | | | | | | | | | |
| option | | | | | | | | | | |
| s | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | - | - | - | - | - | - | 3.1 | - | 3.1 |
| Employ | | | | | | | | | | |
| ee | | | | | | | | | | |
| share | | | | | | | | | | |
| option | | | | | | | | | | |
| scheme | | | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 149 | - | 1.4 | 13.9 | -35.2 | -1.7 | -6.6 | 682. | 4.6 | 807. |
| on Dec | .2 | | | | | | | 1 | | 7 |
| 1, | | | | | | | | | | |
| 2008 | | | | | | | | | | |
--------------------------------------------------------------------------------
| | Sha | Sha | Lega | Othe | Cumul | Fair | Own | Reta | Mino | Tota |
| | re | re | l | r | ative | valu | share | ined | rity | l |
| | cap | pre | rese | rese | trans | e | s | earn | inte | equi |
| | ita | miu | rve | rves | latio | rese | | ings | rest | ty |
| | l | m | | | n | rve | | | | |
| | | res | | | diffe | | | | | |
| | | erv | | | rence | | | | | |
| | | e | | | s | | | | | |
--------------------------------------------------------------------------------
| Equity | 63. | 83. | 0.8 | 13.7 | -4.5 | 1.0 | - | 512. | 3.9 | 674. |
| on Jan | 4 | 8 | | | | | | 3 | | 4 |
| 1, | | | | | | | | | | |
| 2007 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Items | | | | | | | | | | |
| entere | | | | | | | | | | |
| d | | | | | | | | | | |
| direct | | | | | | | | | | |
| ly in | | | | | | | | | | |
| shareh | | | | | | | | | | |
| olders | | | | | | | | | | |
| ' | | | | | | | | | | |
| equity | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | - | - | - | - | 1.3 | - | - | - | 1.3 |
| Change | | | | | | | | | | |
| in the | | | | | | | | | | |
| fair | | | | | | | | | | |
| value | | | | | | | | | | |
| of | | | | | | | | | | |
| intere | | | | | | | | | | |
| st | | | | | | | | | | |
| deriva | | | | | | | | | | |
| tives | | | | | | | | | | |
--------------------------------------------------------------------------------
| -- | - | - | - | - | - | -0.3 | - | - | - | -0.3 |
| Deferr | | | | | | | | | | |
| ed | | | | | | | | | | |
| taxes | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | - | - | - | -4.5 | - | - | -1.3 | - | -5.8 |
| Change | | | | | | | | | | |
| in | | | | | | | | | | |
| transl | | | | | | | | | | |
| ation | | | | | | | | | | |
| differ | | | | | | | | | | |
| ences | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | -1. | 0.2 | 0.0 | - | - | - | -0.2 | -2.9 | -3.9 |
| Other | | 0 | | | | | | | | |
| change | | | | | | | | | | |
--------------------------------------------------------------------------------
| Items | | -1. | 0.2 | | -4.5 | 1.0 | | -1.5 | -2.9 | -8.7 |
| entere | | 0 | | | | | | | | |
| d | | | | | | | | | | |
| direct | | | | | | | | | | |
| ly in | | | | | | | | | | |
| shareh | | | | | | | | | | |
| olders | | | | | | | | | | |
| ' | | | | | | | | | | |
| equity | | | | | | | | | | |
| , | | | | | | | | | | |
| total | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | - | - | - | - | - | - | - | 224. | 3.0 | 227. |
| profit | | | | | | | | 9 | | 9 |
| for | | | | | | | | | | |
| the | | | | | | | | | | |
| period | | | | | | | | | | |
--------------------------------------------------------------------------------
| Income | | -1. | 0.2 | | -4.5 | 1.0 | 0.0 | 223. | | - |
| and | | 0 | | | | | | 4 | | |
| expens | | | | | | | | | | |
| es | | | | | | | | | | |
| entere | | | | | | | | | | |
| d | | | | | | | | | | |
| during | | | | | | | | | | |
| the | | | | | | | | | | |
| period | | | | | | | | | | |
| total | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | - | - | - | - | - | - | -82. | -0.1 | 82.5 |
| Divide | | | | | | | | 4 | | |
| nd | | | | | | | | | | |
| paid, | | | | | | | | | | |
| EUR | | | | | | | | | | |
| 0.65 | | | | | | | | | | |
| per | | | | | | | | | | |
| share | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | 82. | -82 | - | - | - | - | - | - | - | - |
| Bonus | 8 | .8 | | | | | | | | |
| issue | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | 2.9 | - | - | - | - | - | - | - | - | 2.9 |
| Shares | | | | | | | | | | |
| subscr | | | | | | | | | | |
| ibed | | | | | | | | | | |
| with | | | | | | | | | | |
| option | | | | | | | | | | |
| s | | | | | | | | | | |
--------------------------------------------------------------------------------
| - | - | - | - | 0.2 | - | - | - | 4.2 | - | - |
| Employ | | | | | | | | | | |
| ee | | | | | | | | | | |
| share | | | | | | | | | | |
| option | | | | | | | | | | |
| scheme | | | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 149 | 0.0 | 1.0 | 13.9 | -9.0 | 2.0 | 0.0 | 657. | 3.8 | 818. |
| on Dec | .1 | | | | | | | 5 | | 3 |
| 1, | | | | | | | | | | |
| 2007 | | | | | | | | | | |
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT (EUR million)
--------------------------------------------------------------------------------
| | 1-12/2008 | 1-12/2007 | Change, % |
--------------------------------------------------------------------------------
| Cash flow from operating activities | | | |
--------------------------------------------------------------------------------
| Net profit for the period | 134.3 | 228.0 | -41 |
--------------------------------------------------------------------------------
| Reversal of accrual-based items | 197.1 | 125.0 | 47 |
--------------------------------------------------------------------------------
| Change in working capital | | | |
--------------------------------------------------------------------------------
| Change in trade and other receivables | 4.5 | -32.9 | -95 |
--------------------------------------------------------------------------------
| Change in inventories | -318.2 | -259.8 | 21 |
--------------------------------------------------------------------------------
| Change in current liabilities | 132.4 | 114.9 | 15 |
--------------------------------------------------------------------------------
| Change in working capital, total | -181.3 | -177.8 | 4 |
--------------------------------------------------------------------------------
| Interest paid | -45.5 | -28.8 | 67 |
--------------------------------------------------------------------------------
| Realised exchange rate gains and | 2.7 | 1.5 | 80 |
| losses | | | |
--------------------------------------------------------------------------------
| Interest received | 5.7 | 2.4 | *) |
--------------------------------------------------------------------------------
| Taxes paid | -65.3 | -66.2 | -19 |
--------------------------------------------------------------------------------
| Net cash generated from operating | 47.8 | 84.1 | -49 |
| activities | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Cash flow from investing activities | | | |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries, net of | -38.9 | -14.1 | *) |
| cash | | | |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries | -0.2 | 0.0 | - |
--------------------------------------------------------------------------------
| Proceeds from sale of shares in | 0 | 0.4 | *) |
| associated companies | | | |
--------------------------------------------------------------------------------
| Purchase of property, plant and | -33.5 | -28.7 | 17 |
| equipment | | | |
--------------------------------------------------------------------------------
| Purchase of intangible assets | -4.1 | -6.4 | -36 |
--------------------------------------------------------------------------------
| Increases in other investments | 0 | -0.1 | *) |
--------------------------------------------------------------------------------
| Disposals of subsidiaries and | 4.2 | 31.7 | -87 |
| businesses | | | |
--------------------------------------------------------------------------------
| Disposals of subsidiaries and | 0 | 4.4 | *) |
| businesses | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of tangible and | 4.7 | 0.0 | - |
| intangible assets | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of investments | 0.6 | - | - |
--------------------------------------------------------------------------------
| Net cash used in investing activities | -67.2 | -12.9 | *) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating cash flow after investments | -19.4 | 71.2 | *) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing activities | | | |
--------------------------------------------------------------------------------
| Proceeds from share issues | 0.1 | 2.9 | -97 |
--------------------------------------------------------------------------------
| Decrease in loan receivables | 0.0 | 0.1 | *) |
--------------------------------------------------------------------------------
| Change in current liabilities | 103.3 | -50.1 | *) |
--------------------------------------------------------------------------------
| Proceeds from borrowings | 265.0 | 168.1 | 58 |
--------------------------------------------------------------------------------
| Repayments of borrowings | -97.5 | -74.2 | 31 |
--------------------------------------------------------------------------------
| Payments of financial leasing debts | -0.5 | -1.4 | -64 |
--------------------------------------------------------------------------------
| Own share buyback | -6.6 | - | - |
--------------------------------------------------------------------------------
| Dividends paid | -102.0 | -82.6 | 23 |
--------------------------------------------------------------------------------
| Net cash used in financing activities | 161.8 | -37.2 | *) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net change in cash and cash | 142.4 | 34.0 | *) |
| equivalents | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at the | 59.2 | 25.9 | *) |
| beginning of the period | | | |
--------------------------------------------------------------------------------
| Change in the fair value of the cash | -3.9 | -0.7 | *) |
| equivalents | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at the end | 197.7 | 59.2 | *) |
| of the period | | | |
--------------------------------------------------------------------------------
*) Change over 100%.
3. NOTES
ACCOUNTING PRINCIPLES APPLIED IN THE FINANCIAL STATEMENT
YIT Corporation's financial statements for January 1 - December 31, 2008 have
been drafted in line with the IAS 34 Interim Financial Reporting standard. The
consolidated financial statements have been drafted in compliance with the
International Financial Reporting Standards, and the IAS/IFRS standards approved
by the EU Commission by December 31, 2008 and SIC and IFRIC interpretations have
been complied with in the drafting of the statements. Standard amendments or new
interpretations that took effect in 2008 have not had a significant effect on
the Group's financial statements for 2008. The financial statements bulletin is
based on the audited financial statements for 2008.
Evaluation of the future effect of new standards and interpretations
IASB has published the following new or revised standards and interpretations
that the EU Commission has not endorsed by December 31, 2008, and which the
Group has not yet applied. The Group will, however, adopt them as from the
effective date of each standard or interpretation or the beginning of the
following financial period. According to the Group management's evaluation the
following revised standards and interpretations will have a significant effect
on the Group's financial reporting.
IAS 23 (revised) Borrowing Costs: The revised standard requires that borrowing
costs that are directly attributable to the acquisition, construction or
production of a qualifying asset, such as a construction project, shall be
capitalised as part of the cost of that asset The Group has previously expensed
borrowing costs in the period during which they have emerged, which was
previously approved. The revision of the standard impacts YIT Group such that
borrowing costs attributable to construction projects that begin on January 1,
2009, or thereafter, will be allocated to the project and capitalised in the
balance sheet. Capitalised borrowing costs are recognised through profit and
loss with an effect on operating profit when the project revenue is recognised.
IFRIC 15 Agreements for the Construction of Real Estate: The interpretation
provides guidance on when to account for revenue from the construction of real
estate based on delivery according to the IAS 18 standard and when the
percentage of completion method can be used in accordance with the IAS 11
standard. The entry into force of the interpretation will change YIT Group's
revenue recognition from housing developer contracting to take place mainly at
the time of delivery, while so far revenue and operating profit have been
recognised based on the percentage of completion and percentage of sale. In this
respect, the amendment will mainly have an impact on the reporting of revenue,
operating profit, profit for the period, inventories, advances received,
interest-bearing liabilities, shareholders' equity and balance sheet total. The
amendment will also have an impact on the indicators. Application of the
percentage of completion method may continue in other construction projects
while terms according to IAS 18:14 are fulfilled continuously as the
construction progresses. The impression at the closing date was that the EU
Commission will enforce the interpretation during early 2009 and that it should
be applied to the financial period starting on January 1, 2010.
Other revised standards and interpretations that are described in the accounting
principles of the Financial Statements 2008 will have a minor or no effect on
the Group's financial reporting.
FINANCIAL RISK MANAGEMENT
Financial risks include liquidity, interest rate, currency and credit risk, and
their management is a part of the Group's financing policy. The Board of
Directors has approved the Corporate Finance Policy. The Group's Finance
Department is responsible for the practical implementation of the policy in
association with the business segments. During October-December/2008, the
foreign exchange hedging policy was revised so that ruble hedging is replaced by
hedging against the ruble basket, up to the counter value of EUR 165 million, as
ruble forward contracts expire.
The Group's strategic financial targets guide the use and management of the
Group's capital. Achieving the strategic targets is supported by maintaining an
optimum Group capital structure. Capital structure is mainly influenced by
controlling the amount of working capital tied to business operations.
A more detailed account of financial risks will be published in the notes to the
financial statements for 2008.
SEGMENT INFORMATION
YIT's business operations were divided into four business segments: Building
Systems, Construction Services Finland, International Construction Services and
Industrial Services.
YIT Group's business segment structure was revised as of the beginning of 2008,
with Construction Services being divided into two segments: Construction
Services Finland and International Construction Services, which includes the
business operations in Russia, the Baltic countries and Central Eastern Europe.
The figures for 2007 are comparison figures calculated as the business segment
structure changed on January 1, 2008.
Revenue by business segment (EUR million)
--------------------------------------------------------------------------------
| | 1-12/2008 | 1-12/2007 | Change, % |
--------------------------------------------------------------------------------
| Building Systems 1) | 1,975.0 | 1,650.0 | 20% |
--------------------------------------------------------------------------------
| Construction Services Finland | 1,147.9 | 1,158.2 | -1% |
--------------------------------------------------------------------------------
| International Construction Services | 493.5 | 486.1 | 2% |
--------------------------------------------------------------------------------
| Industrial Services 2) | 429.7 | 489.8 | -12% |
--------------------------------------------------------------------------------
| Other items | -106.4 | -77.6 | 37% |
--------------------------------------------------------------------------------
| YIT Group, total | 3,939.7 | 3,706.5 | 6% |
--------------------------------------------------------------------------------
1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008. The revenue of these operations for August-December 2008
amounted to EUR 182.6 million.
2) Revenue for 2007 includes the Network Services unit, which was sold on
December 31, 2007. Network Services revenue for 1-12/2007 amounted to EUR 77
million.
Operating profit by business segment (EUR million)
--------------------------------------------------------------------------------
| | 1-12/2008 | 1-12/2007 | Change, % |
--------------------------------------------------------------------------------
| Building Systems 1) | 131.8 | 112.2 | 17% |
--------------------------------------------------------------------------------
| Construction Services Finland 2) | 111.7 | 133.5 | -16% |
--------------------------------------------------------------------------------
| International Construction Services | 9.0 | 67.2 | -87% |
--------------------------------------------------------------------------------
| Industrial Services 3) | 30.2 | 41.2 | -27% |
--------------------------------------------------------------------------------
| Other items | -22.1 | -16.23 | 35% |
--------------------------------------------------------------------------------
| YIT Group, total | 260.6 | 337.8 | -23% |
--------------------------------------------------------------------------------
1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008.
2) The Supreme Court issued its ruling on disputes connected with the renovation
of SOK's former head office building on March 10, 2008. The ruling had a
positive effect of EUR 3.5 million on the Construction Services Finland
operating profit for January-March/2008.
3) Operating profit for 2007 includes the Network Services unit, which was sold
on December 31, 2007. Operating profit for January-March/2007 includes EUR -1.0
million in costs for the downsizing of Network Services. The operating profit
for October-December/2007 includes positive non-recurring items of EUR 14.4
million from the divestment of Network Services division.
Order backlog by business segment at end of period (EUR million)
--------------------------------------------------------------------------------
| | 12/2008 | 12/2007 | Change, % |
--------------------------------------------------------------------------------
| Building Systems 1) | 841.9 | 707.7 | 19% |
--------------------------------------------------------------------------------
| Construction Services Finland | 874.2 | 1,183.8 | -26% |
--------------------------------------------------------------------------------
| International Construction Services | 1,369.3 | 1,462.7 | -6% |
--------------------------------------------------------------------------------
| Industrial Services 2) | 208.3 | 219.2 | -5% |
--------------------------------------------------------------------------------
| Other items | -60.0 | -64.1 | -6% |
--------------------------------------------------------------------------------
| YIT Group, total | 3,233.7 | 3,509.3 | -8% |
--------------------------------------------------------------------------------
1) The business operations acquired from Central Europe transferred to YIT on
August 1, 2008.
2) The order backlog 12/2007 does not include the Network Services division,
which was divested on December 31, 2007.
UNUSUAL ITEMS AFFECTING OPERATING PROFIT (EUR million)
--------------------------------------------------------------------------------
| | 1-12/2008 | 1-12/2007 |
--------------------------------------------------------------------------------
| Industrial Services | | |
--------------------------------------------------------------------------------
| Rearrangements | - | -1.0 |
--------------------------------------------------------------------------------
| Divestment of Network Services division | - | 14.4 |
--------------------------------------------------------------------------------
| Construction Services Finland | 3.5 | - |
--------------------------------------------------------------------------------
| Total | 3.5 | 13.4 |
--------------------------------------------------------------------------------
The operating profit for the Industrial Services segment for January-March/2007
includes EUR -1.0 million due to costs from restructuring of the Network
Services division. The Network Services division was divested on December 31,
2007.
The Supreme Court issued its ruling on disputes connected with the renovation of
SOK's former head office building on March 10, 2008. The ruling had a positive
effect of EUR 3.5 million on the Construction Services Finland operating profit
for January-March/2008.
ACQUIRED BUSINESSES (MEUR)
In the Building Systems segment, YIT acquired MCE AG's building system service
business in Germany, Austria, Poland, the Czech Republic, Hungary and Romania.
The transaction was finalised on August 1, 2008. The value of the acquisition
was EUR 55 million, after contractual liabilities and obligations the purchase
price is EUR 36.1 million. Expert fees of EUR 1.6 million were included in the
purchase price. The purchase price was paid in cash. Of the paid premium, EUR
5.4 million was allocated to customer acquisition in the servicing business. The
transaction resulted in preliminary goodwill of EUR 50.4 million. According to
the management's estimate, the goodwill is based on the foothold on new market
areas provided by the MCE subgroup and the opportunities of directing business
operations towards long-term service and maintenance agreements and servicing
and maintenance work. These measures make it possible to improve the
profitability of the operations. In addition, possible synergy benefits are seen
to be achieved from the harmonisation of processes, expanded service offering
and in procurement activities. The MCE subgroup's effect on YIT Group's revenue
for 2008 is EUR 182.6 million. Revenue of the MCE subgroup for 2008 as a whole
would have amounted to EUR 387.3 million.
The effect of the acquisition of MCE subgroup in 2008 on the Group's net assets
is presented below:
--------------------------------------------------------------------------------
| | The fair value | Seller's |
| | in balance | carrying amount |
| | sheet | before the |
| | | consolidation |
--------------------------------------------------------------------------------
| The effect on balance sheet assets and | | |
| liabilities: | | |
--------------------------------------------------------------------------------
| Property, plant and equipment | 5.2 | 6.3 |
--------------------------------------------------------------------------------
| Intangible assets | 5.4 | 10.6 |
--------------------------------------------------------------------------------
| Inventories | 1.7 | 1.7 |
--------------------------------------------------------------------------------
| Trade and other receivables | 98.2 | 104.2 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 0.9 | 0.9 |
--------------------------------------------------------------------------------
| Other liabilities | -124.8 | -124.4 |
--------------------------------------------------------------------------------
| Acquired net assets | -14.3 | -1.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total consideration | 36.1 | |
--------------------------------------------------------------------------------
| Goodwill | 50.4 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The effect on cash flow: | | |
--------------------------------------------------------------------------------
| Paid in cash | 36.1 | |
--------------------------------------------------------------------------------
| Cash and cash equivalents in acquired | 0.0 | |
| entity | | |
--------------------------------------------------------------------------------
| Cash flow on acquisitions | 36.1 | |
--------------------------------------------------------------------------------
| Unpaid items | -7.5 | |
--------------------------------------------------------------------------------
| Cash flow on acquisitions | 28.5 | |
--------------------------------------------------------------------------------
In addition, YIT Group made smaller business acquisitions. Competence as a
supplier of energy efficiency solutions was strengthened in the Building Systems
segment by acquiring Computec, an expert in building automation, in Finland, and
other acquisitions were made in Finland, Norway, Sweden and Denmark. YIT
Construction Ltd acquired an 85% share of the Czech company Euro Stavokonsult
s.r.o. on July 1, 2008.
The total cost of acquisitions made during the financial period amounted to EUR
47.4 million. The minor acquisitions did not result in goodwill. The paid
premiums were allocated to intangible assets.
The effect of the other acquisitions made in 2008 on the Group's net assets is
presented below:
--------------------------------------------------------------------------------
| | The fair value | Seller's |
| | in balance | carrying amount |
| | sheet | before the |
| | | consolidation |
--------------------------------------------------------------------------------
| The effect on balance sheet assets and | | |
| liabilities: | | |
--------------------------------------------------------------------------------
| Property, plant and equipment | 0.9 | 0.9 |
--------------------------------------------------------------------------------
| Intangible assets | 1.0 | 1.0 |
--------------------------------------------------------------------------------
| Inventories | 9.5 | 0.4 |
--------------------------------------------------------------------------------
| Trade and other receivables | 1.4 | 1.4 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 3.5 | 3.5 |
--------------------------------------------------------------------------------
| Other liabilities | -5.0 | -4.7 |
--------------------------------------------------------------------------------
| Acquired net assets | 11.3 | 2.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total consideration | 11.3 | |
--------------------------------------------------------------------------------
| Goodwill | 0.0 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The effect on cash flow: | | |
--------------------------------------------------------------------------------
| Paid in cash | 11.3 | |
--------------------------------------------------------------------------------
| Cash and cash equivalents in acquired | 0.9 | |
| entity | | |
--------------------------------------------------------------------------------
| Cash flow on acquisitions | 10.4 | |
--------------------------------------------------------------------------------
DIVESTED BUSINESSES (MEUR)
YIT Kiinteistötekniikka Oy sold the business operations in the areas of
investor, lease management and financial administration services for property
management. The effective date of the transaction was July 1, 2008.
--------------------------------------------------------------------------------
| | Jan 1 - Dec 31, |
| | 2008 |
--------------------------------------------------------------------------------
| The effect on revenue and net profit: | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Revenue | 5.9 |
--------------------------------------------------------------------------------
| Operating expenses | -5.1 |
--------------------------------------------------------------------------------
| Profit before taxes | 0.8 |
--------------------------------------------------------------------------------
| Taxes | -0.2 |
--------------------------------------------------------------------------------
| Net profit | 0.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The effect on balance sheet assets and liabilities: | |
--------------------------------------------------------------------------------
| | |
--------------------------------------------------------------------------------
| Property, plant and equipment | 0 |
--------------------------------------------------------------------------------
| Intangible assets | 0 |
--------------------------------------------------------------------------------
| Inventories | 0 |
--------------------------------------------------------------------------------
| Trade and other receivables | 0 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 0 |
--------------------------------------------------------------------------------
| Trade and other payables | 0 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 0 |
--------------------------------------------------------------------------------
| Net assets | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The effect on cash flow: | |
--------------------------------------------------------------------------------
| Received in cash | 5.3 |
--------------------------------------------------------------------------------
| Direct costs related to disposals | -1.1 |
--------------------------------------------------------------------------------
| Cash and cash equivalents in disposed entity | 0 |
--------------------------------------------------------------------------------
| Cash flow on disposals | 4.2 |
--------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT (MEUR)
--------------------------------------------------------------------------------
| | 1-12/2008 | 1-12/2007 | Change, % |
--------------------------------------------------------------------------------
| Carrying value at the beginning of | 92.5 | 91.8 | 1 |
| period | | | |
--------------------------------------------------------------------------------
| Increase | 33.2 | 29.4 | 13 |
--------------------------------------------------------------------------------
| Increase through acquisitions | 6.2 | 1.1 | *) |
--------------------------------------------------------------------------------
| Decrease | -3.4 | -4.0 | -15 |
--------------------------------------------------------------------------------
| Decrease through disposals | 0.0 | -2.4 | *) |
--------------------------------------------------------------------------------
| Depreciation and value adjustments | -24.6 | -20.3 | 21 |
--------------------------------------------------------------------------------
| Reclassification | 0.7 | -3.1 | *) |
--------------------------------------------------------------------------------
| Carrying value at the end of period | 104.6 | 92.5 | 13 |
--------------------------------------------------------------------------------
*) Change over 100%.
INVENTORIES (MEUR)
--------------------------------------------------------------------------------
| | 1-12/2008 | 1-12/2007 | Change, % |
--------------------------------------------------------------------------------
| Raw materials and consumables | 20.1 | 19.4 | 4 |
--------------------------------------------------------------------------------
| Work in progress | 690.5 | 488.3 | 41 |
--------------------------------------------------------------------------------
| Land areas and plot owning companies | 579.3 | 567.1 | 2 |
--------------------------------------------------------------------------------
| Shares in completed housing and real | 135.9 | 80.0 | 70 |
| estate companies | | | |
--------------------------------------------------------------------------------
| Advance payments | 83.7 | 104.4 | -20 |
--------------------------------------------------------------------------------
| Other inventories | 0.4 | 5.8 | -93 |
--------------------------------------------------------------------------------
| Total inventories | 1 509.9 | 1 265.1 | 19 |
--------------------------------------------------------------------------------
*) Change over 100%.
NOTES ON EQUITY (MEUR)
--------------------------------------------------------------------------------
| Share capital and treasury | Number | Share | Treasury | Total |
| shares | of | capital | shares | |
| | shares | | | |
--------------------------------------------------------------------------------
| Jan 1, 2008 | 127,217, | 149.1 | - | 149.1 |
| | 872 | | | |
--------------------------------------------------------------------------------
| Share subscription with options | 5,550 | 0.1 | - | 0.1 |
--------------------------------------------------------------------------------
| Own share buyback | -1,425,0 | - | -6.6 | -6.6 |
| | 00 | | | |
--------------------------------------------------------------------------------
| Dec 31, 2008 | 125,798, | 149.2 | -6.6 | 142.6 |
| | 422 | | | |
--------------------------------------------------------------------------------
INTEREST-BEARING LIABILITIES (MEUR)
No bonds were raised during the review period.
CHANGE IN CONTINGENT LIABILITIES AND ASSETS AND COMMITMENTS (MEUR)
--------------------------------------------------------------------------------
| | 12/2008 | 12/2007 | Change, % |
--------------------------------------------------------------------------------
| Collateral given for own commitments | | | |
--------------------------------------------------------------------------------
| Corporate mortgages | 29.3 | 29.3 | 0 |
--------------------------------------------------------------------------------
| Other commitments | | | |
--------------------------------------------------------------------------------
| Repurchase commitments | 139.1 | 202.9 | -31 |
--------------------------------------------------------------------------------
| Operating leases | 352.2 | 294.3 | 20 |
--------------------------------------------------------------------------------
| Rental guarantees for clients | 11.0 | 7.8 | 41 |
--------------------------------------------------------------------------------
| Other contingent liabilities | - | 0.7 | - |
--------------------------------------------------------------------------------
| Other guarantees | - | 12.4 | - |
--------------------------------------------------------------------------------
| Liability under derivative contracts | | | |
--------------------------------------------------------------------------------
| Value of underlying instruments | | | |
--------------------------------------------------------------------------------
| Interest rate derivatives | 239.2 | 399.8 | -40 |
--------------------------------------------------------------------------------
| Foreign currency derivatives | 213.7 | 245.5 | -13 |
--------------------------------------------------------------------------------
| Market value | | | |
--------------------------------------------------------------------------------
| Interest rate derivatives | -5.3 | 3.5 | *) |
--------------------------------------------------------------------------------
| Foreign currency derivatives | 26.8 | 3.6 | *) |
--------------------------------------------------------------------------------
| Contingent assets | | | |
--------------------------------------------------------------------------------
| Legal proceedings | 0.0 | 11.1 | *) |
--------------------------------------------------------------------------------
*) Change over 100%.
The disagreement that has arisen in the final financial settlement for the
mechanical installation works on production line 4, which was completed at Neste
Oil's Porvoo oil refinery in Finland in the summer of 2007, was submitted to the
court of arbitration in April 2008. In September, Neste Oil specified its claims
against YIT Industrial and Network Services in the court of arbitration
proceedings by also claiming compensation for lost production. Neste Oil's
claims amount to a total of EUR 107 million. YIT is contesting Neste Oil's
claims and has presented claims against Neste Oil, mainly based on the
alterations and additional work performed, and the additional costs that arose
from the prolongation of the contract. No provision is recognised in the
financial statements for 2008 due to claims against YIT.
TRANSACTIONS WITH ASSOCIATED COMPANIES (MEUR)
--------------------------------------------------------------------------------
| | 1-12/2008 | 1-12/2007 | Change, % |
--------------------------------------------------------------------------------
| Sales to associated companies | 3.6 | 4.8 | -25 |
--------------------------------------------------------------------------------
| Purchases from associated companies | 14.4 | 40.1 | -64 |
--------------------------------------------------------------------------------
| Trade and other receivables | 0.1 | 0.1 | - |
--------------------------------------------------------------------------------
| Trade and other liabilities | 0.5 | 0.8 | -38 |
--------------------------------------------------------------------------------
*) Change over 100%.
EVENTS AFTER THE END OF THE REVIEW PERIOD
On February 5, 2009, the Board of Directors of YIT Corporation confirmed the
financial targets for the strategy period 2009-2011. The cash flow target was
set for the first time at Group level. Operating cash flow after investments
during strategy period must be sufficient for dividend payout and repayment of
debt. The previous numerical revenue growth target of 10 per cent on average per
year was abandoned. The target is positive revenue growth. The return on
investment target was set at 20 per cent by the end of strategy period, versus
the previous target of 22 per cent. The targets for equity ratio and dividend
payout remained unchanged. The operating profit target of 9 per cent of revenue
was abandoned.
Similarly, the separate target set for the Russian operations - average annual
revenue growth of 50 per cent during the period 2006-2009 - was abandoned as the
forecastability of the country's economic development in the next few years has
weakened substantially.
Other targets remained unchanged. Target for equity ratio is 35 per cent and for
dividend payout 40 to 60 per cent of net profit for the period.
REVENUE INCREASED, OPERATING PROFIT DECREASED - QUICK MEASURES TAKEN TO REACT TO MARKET CHANGES
| Source: YIT
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