YIT CORPORATION INTERIM REPORT April 29, 2010 at 8:00 a.m.
YIT's Interim Report January 1 - March 31, 2010:
PROFITABILITY IMPROVED ON THE PREVIOUS YEAR AND DECREASE IN ORDER BACKLOG
STOPPED
Profitability improved compared to the same period of the previous year. The
combined operating profit of YIT's segments increased by 101 per cent to EUR
44.5 million (1-3/2009: EUR 22.1 million). Operating profit margin of the
business segments was 5.4 (2.7%). As of the beginning of 2010, the Group figures
are accounted using different method in revenue recognition. The Group operating
profit increased by 18 per cent compared to the previous year and amounted to
EUR 33.9 million (EUR 28.7 million).
The combined revenue of the segments remained at the previous year's level,
amounting to EUR 820.8 million (EUR 823.7 million). The Group revenue decreased
by 9 per cent compared to previous year and amounted to EUR 765.3 million (EUR
843.2 million).
Decrease in order backlog stopped. The combined order backlog of the segments
was EUR 2,837.0 million (EUR 3,045.0 million), while at the end of 2009 it was
EUR 2,773.6 million.
The Group's profit before taxes increased by 203 per cent compared to the year
before to EUR 26.7 million (EUR 8.8 million). Net financial expenses decreased
significantly and amounted to EUR 7.1 million (EUR 19.9 million).
Cash flow from operations remained good. The Group's operating cash flow after
investments amounted to EUR 33.8 million (EUR 21.2 million).
The Group's return on investments remained weak, 11.3 per cent (16.5%). Invested
capital totalled EUR 1,582.9 million (EUR 1,568.3 million) at the end of March.
The Group's financial position was good at the end of March. The gearing ratio
was 65.0 per cent (98.3%).
YIT estimates that in 2010 the Group's revenue will increase and profit before
taxes will increase significantly compared to 2009. (The estimate has not been
changed after the financial statements bulletin released on February 4, 2010.)
YIT has focused strongly on developing its service concepts according to its
customers' needs. In 2010, the Group aims to ensure its position as a housing
developer and invest in building system and industrial service and maintenance
operations.
Residential sales remained favourable in Finland and Russia during the first
months of the year. YIT sold 506 residential units directly to consumers in
Finland and 817 residential units in Russia. During the previous quarter, sales
to consumers totalled 510 residential units in Finland and 876 in Russia. In
order to ensure a sufficient number of apartments on sale, YIT increased the
number of residential start-ups already in 2009. During January-March, YIT
started up the construction of 570 residential units in Finland, 453 of which
are aimed directly at consumers. In Russia, YIT started up the construction of
798 residential units. In addition, first new residential sites for more than
two years were started in the Baltic countries, with YIT starting the
construction of a total of 111 residential units. In Finland, the focus of
development activities has been on increasing housing-related services, and in
Russia on facilitating purchasing of apartments and increasing the availability
of loans.
The order backlog of Building and Industrial Services picked up during the first
quarter, but the demand for investments remained at a low level in
January-March. The development of service and maintenance operations remained
more stable in Building and Industrial Services, and the share of these services
increased to more than 60 per cent of the segment's revenue. YIT has improved
the offering of service and maintenance operations that cover several technical
systems so that customers can agree on extensive technical entities in a single
contract. Target is to strengthen the market position both organically and
through acquisitions. During the first months of the year YIT made a total of
five minor acquisitions in Sweden, Norway and Denmark.
In Finland, YIT aims to strengthen its position also in business premises and
infrastructure in addition to residential construction. In addition to
renovation projects, YIT focused on the preparation of own development projects
in the construction of business premises. YIT had large-scale road projects
underway in infrastructure construction. Several traffic-related projects will
begin in the market in 2010, and opportunities will open in road maintenance
contracts.
Key figures
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS
interpretation from the start of the financial period begun on January 1, 2010.
Due to the application of the interpretation, Group reporting and segment
reporting will differ.
In segment reporting, the figures will continue to be calculated based on the
previous accounting principle, i.e. percentage of completion method will be
applied in the recognition of revenue from own residential and commercial real
estate development projects. In segment reporting, revenue and operating profit
will develop more steadily, and production volume fluctuations will have a
faster effect on financial figures than in Group reporting. YIT's management
internally monitors the figures of segment reporting.
As from the beginning of 2010, Group reporting will apply the new
interpretation. According to the interpretation own residential development
projects will be recognised at the time of delivery. Own commercial real estate
development projects will be recognized in most cases based on the percentage of
completion or alternatively at the time of delivery. In Group reporting, there
will be greater fluctuation in revenue and operating profit development
depending on the time of completion of development projects. The consolidated
balance sheet total will be higher, while at the same time the key figures
calculated from the balance sheet will weaken.
YIT published the comparison figures for the financial year 2009 calculated
based on the IFRIC 15 interpretation in a stock exchange release on March 23,
2010. The effects of the application of the interpretation on the figures have
been explained in more detail in the notes to the Interim Report 1-3/2010.
--------------------------------------------------------------------------------
| | Segment reporting | | Group reporting |
--------------------------------------------------------------------------------
| | YIT's | YIT | Chang | | YIT | YIT | Change |
| | segmen | Group | e | | Group | Group | |
| | ts, | 1-3/09 | | | 1-3/2 | 1-3/09 | |
| | total | (repor | | | 010 | (compari | |
| | 1-3/2 | ted) | | | | son | |
| | 010 | | | | | figure) | |
--------------------------------------------------------------------------------
| Revenue, EUR | 820.8 | 823.7 | 0% | | 765.3 | 843.2 | -9% |
| million | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 44.5 | 22.1 | 101% | | 33.9 | 28.7 | 18% |
| profit, EUR | | | | | | | |
| million | | | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 5.4 | 2.7 | - | | 4.4 | 3.4 | - |
| margin, % | | | | | | | |
--------------------------------------------------------------------------------
| Profit before | - | 2.2 | - | | 26.7 | 8.8 | 203% |
| taxes, EUR | | | | | | | |
| million | | | | | | | |
--------------------------------------------------------------------------------
| Earnings/share, | - | 0.02 | - | | 0.15 | 0.06 | 150% |
| EUR | | | | | | | |
--------------------------------------------------------------------------------
| Return on | - | 14.3 | - | | 11.3 | 16.5 | - |
| investment (last | | | | | | | |
| 12 months), % | | | | | | | |
--------------------------------------------------------------------------------
| Gearing ratio at | - | 88.5 | - | | 65.0 | 98.3 | - |
| the end of | | | | | | | |
| period, % | | | | | | | |
--------------------------------------------------------------------------------
| Operating cash | - | 10.3 | - | | 33.8 | 21.2 | 59% |
| flow after | | | | | | | |
| investments, | | | | | | | |
| MEUR | | | | | | | |
--------------------------------------------------------------------------------
| Order backlog at | 2,837. | 3,045. | -7% | | 3,152. | 3,256.3 | -3% |
| the end of | 0 | 5 | | | 5 | | |
| period, EUR | | | | | | | |
| million | | | | | | | |
--------------------------------------------------------------------------------
| Personnel at end | 23,211 | 25,239 | -8% | | 23,211 | 25,239 | -8% |
| of period | | | | | | | |
--------------------------------------------------------------------------------
News conference, webcast and conference call
YIT will hold a news conference on the Interim Report for investors, analysts
and the media on Thursday, April 29, 2010 at 10:00 a.m. (Finnish time, EEST) at
YIT's head office, address Panuntie 11, 00620 Helsinki, Finland. The news
conference will be held in English. In the end of the news conference,
representatives of the media can also ask questions in Finnish. The presentation
material is available in English and Finnish.
The news conference can be viewed as a live webcast on YIT's website, at
www.yitgroup.com/webcast. The replay of the webcast will be available at the
same address starting at approximately 12:00 noon. To participate in conference
call the participants are asked to call the assigned number +44 (0)20 7162 0077
at 9:55 a.m. (Finnish time, EEST) at the latest, i.e. a minimum of 5 minutes
before the conference call begins.
Schedule in different time zones:
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| | Interim Report | News conference, | Recorded webcast |
| | published | conference call | available |
| | | and | |
| | | live webcast | |
--------------------------------------------------------------------------------
| EEST (Helsinki) | 08:00 | 10:00 | 12:00 |
--------------------------------------------------------------------------------
| CEST (Paris, | 07:00 | 09:00 | 11:00 |
| Stockholm) | | | |
--------------------------------------------------------------------------------
| BST (London) | 06:00 | 08:00 | 10:00 |
--------------------------------------------------------------------------------
| US EDT (New York) | 01:00 | 03:00 | 05:00 |
--------------------------------------------------------------------------------
Financial reports and other investor information are available at YIT's website,
www.yitgroup.com/investors. The materials may be ordered via the Internet site,
by sending an e-mail to InvestorRelations@yit.fi or by telephone at +358 20 433
2467.
YIT CORPORATION
Juhani Pitkäkoski
President and CEO
For further information, please contact:
Juhani Pitkäkoski, President and CEO, +358 20 433 3301, juhani.pitkakoski@yit.fi
Timo Lehtinen, Chief Financial Officer, +358 20 433 2258, timo.lehtinen@yit.fi
Distribution: NASDAQ OMX Helsinki, main media, www.yitgroup.com
INTERIM REPORT JANUARY 1 - MARCH 31, 2010
CONTENTS
Application of a new IFRS interpretation as from January 1, 2010
Group's financial development
Development by business segment
Personnel
Resolutions passed at the Annual General Meeting
Shares, share options and shareholders
Estimate of future development
Outlook for 2010
Tables to the Interim Report
APPLICATION OF A NEW IFRS INTERPRETATION AS FROM JANUARY 1, 2010
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS
interpretation from the start of the financial period begun on January 1, 2010.
Due to the application of the interpretation, Group reporting and segment
reporting will differ.
In segment reporting, the figures will continue to be calculated based on the
previous accounting principle, i.e. percentage of completion method will be
applied in the recognition of revenue from own residential and commercial real
estate development projects. In segment reporting, revenue and operating profit
will develop more steadily, and production volume fluctuations will have a
faster effect on financial figures than in Group reporting. YIT's management
internally monitors the figures of segment reporting.
As from the beginning of 2010, Group reporting will apply the new
interpretation. According to the interpretation own residential development
projects will be recognised at the time of delivery. Own commercial real estate
development projects will be recognized in most cases based on the percentage of
completion or alternatively at the time of delivery. In Group reporting, there
will be greater fluctuation in revenue and operating profit development
depending on the time of completion of development projects. The consolidated
balance sheet total will be higher, while at the same time the key figures
calculated from the balance sheet will weaken.
YIT published the comparison figures for the financial year 2009 calculated
based on the IFRIC 15 interpretation in a stock exchange release on March 23,
2010. The effects of the application of the interpretation on the figures have
been explained in more detail in the notes to the Interim Report 1-3/2010.
GROUP'S FINANCIAL DEVELOPMENT
The Group's financial performance is presented with both figures compliant with
Group reporting and figures compliant with segment reporting, referred to as the
segments total or combined figure. The figures for 2010 and 2009 are comparable.
REVENUE DEVELOPMENT VARIED BY SEGMENT
The combined revenue of YIT's segments remained at the previous year's level,
amounting to EUR 820.8 million (EUR 823.7 million).
Revenue development varied among the different business segments. Building and
Industrial Services, covering all countries in which YIT operates, generated the
majority of the revenue. The segment's revenue decreased compared to the
previous year due to a decrease in new building system and industrial
investments. Compared to the previous year, revenue increased considerably in
International Construction Services and also increased in Construction Services
Finland.
Following IFRIC 15 adjustments, YIT Group's revenue was EUR 765.3 million
(1-3/2009: EUR 843.2 million). The Group's revenue decreased by 9 per cent
compared to the previous year. The time of completion of YIT's own development
projects has an impact on the recognition of the Group's revenue. In Russia in
particular, the number of residential units completed in January-March 2010 was
considerably lower than the previous year. Exchange rate changes increased the
Group's revenue by EUR 27.8 million. Calculated with the exchange rates of
1-3/09 the Group's revenue in January-March 2010 would have been EUR 737.5
million.
Revenue, EUR million
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | Change |
--------------------------------------------------------------------------------
| Building and Industrial Services | 477.0 | 537.9 | -11% |
--------------------------------------------------------------------------------
| Construction Services Finland | 252.9 | 239.8 | 5% |
--------------------------------------------------------------------------------
| International Construction Services | 106.9 | 61.4 | 74% |
--------------------------------------------------------------------------------
| Other items | -16,0 | -15,5 | 3% |
--------------------------------------------------------------------------------
| YIT's segments total | 820.8 | 823.7 | 0% |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| IFRIC 15 adjustments | -55.5 | 19.5 | - |
--------------------------------------------------------------------------------
| YIT Group, total | 765.3 | 843.2 | -9% |
--------------------------------------------------------------------------------
Profitable growth is the YIT's key strategic target. Revenue growth is pursued
by a Group structure that is balanced in terms of geography and business
operations. The aim is to grow service and maintenance operations, which develop
steadily regardless of economic fluctuations, particularly in Building and
Industrial Services.
In January-March 2010, Finland accounted for 43 per cent (47%) of the Group's
revenue, Sweden for 16 per cent (15%), Norway for 15 per cent (13%), Central
Europe for 10 per cent (11%), Russia for 10 per cent (6%), Denmark for 4 per
cent (5%) and the Baltic countries for 1 per cent (3%).
Service and maintenance operations generated EUR 305.2 million (1-3/2009: EUR
288.9 million), in other words, 40 per cent (34%) of Group revenue. The majority
of the Group's service and maintenance operations are related to building
systems and industrial processes in the Nordic countries and Central Europe, and
part to conventional infrastructure in Finland.
OPERATING PROFIT INCREASED AND PROFITABILITY IMPROVED
The combined operating profit of YIT's segments increased by 101 per cent on the
previous year to EUR 44.5 million (EUR 22.1 million). The operating profit
margin calculated based on the segment figures was 5.4 (2.7%).
Following IFRIC 15 adjustments, YIT Group's operating profit increased by 18 per
cent compared to the previous year and was EUR 33.9 million (EUR 28.7 million).
The Group's operating profit margin improved, amounting to 4.4 (3.4%).
In particular, the more active residential sales in both Finland and Russia
compared to previous year contributed to the improvement of operating profit.
The operating profit of Building and Industrial Services decreased due to the
low operations volume and the competitive situation remaining tight during the
first months of the year.
Operating profit, EUR million
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | Change |
--------------------------------------------------------------------------------
| Building and Industrial Services | 21.6 | 28.6 | -24% |
--------------------------------------------------------------------------------
| Construction Services Finland | 23.1 | 20.9 | 11% |
--------------------------------------------------------------------------------
| International Construction Services | 4.6 | -23.8 | - |
--------------------------------------------------------------------------------
| Other items | -4.8 | -3.6 | 33% |
--------------------------------------------------------------------------------
| YIT's segments total | 44.5 | 22.1 | 101% |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| IFRIC 15 adjustments | -10.6 | 6.6 | - |
--------------------------------------------------------------------------------
| YIT Group, total | 33.9 | 28.7 | 18% |
--------------------------------------------------------------------------------
Operating profit margin
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 |
--------------------------------------------------------------------------------
| Building and Industrial Services | 4.5% | 5.3% |
--------------------------------------------------------------------------------
| Construction Services Finland | 9.1% | 8.7% |
--------------------------------------------------------------------------------
| International Construction Services | 4.3% | -38.7% |
--------------------------------------------------------------------------------
| YIT's segments total | 5.4% | 2.7% |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| YIT Group, total | 4.4% | 3.4% |
--------------------------------------------------------------------------------
EARNINGS PER SHARE IMPROVED
The Group's profit before taxes increased by 203 per cent compared to the year
before to EUR 26.7 million (EUR 8.8 million). Earnings per share increased by
150 per cent to EUR 0.15 (EUR 0.06).
Financial expenses decreased compared to the previous year's comparison period
due to lower hedging costs of the ruble and a decrease in net debt, and
generally lower interest rates.
DECREASE IN ORDER BACKLOG STOPPED
Both the segments' combined order backlog and the Group's order backlog
increased compared to the end of 2009. The combined order backlog of YIT's
segments was EUR 2,837.0 million (EUR 3,045.0 million) while it was EUR 2,773.6
million at the end of the year 2009. Following IFRIC 15 adjustments, YIT Group's
order backlog amounted to EUR 3,152.5 million (EUR 3,256.3 million) while it was
EUR 2,983.3 million at the end of 2009.
The order backlog turned into growth in January-March 2010 in the Building and
Industrial Services segment as a result of YIT's strong market position and
slight recovery of the market situation. In International Construction Services
the active order backlog increased due to residential start-ups.
Exchange rate changes increased the Group's order backlog in January-March by
EUR 96.4 million. Calculated with the exchange rates of 12/09 the Group's order
backlog would have been EUR 3,056.1 million at the end of March 2010.
Compared with the end of March 2009 the decrease in the combined order backlog
of the segments was 7 per cent and in Group's order backlog 3 per cent.
Order backlog, EUR million
--------------------------------------------------------------------------------
| | 3/2010 | 3/2009 | Change |
--------------------------------------------------------------------------------
| Building and Industrial Services | 964.2 | 1,048.3 | -8% |
--------------------------------------------------------------------------------
| Construction Services Finland | 905.4 | 819.8 | 10% |
--------------------------------------------------------------------------------
| International Construction Services | 1,013.2 | 1,239.1 | -18% |
--------------------------------------------------------------------------------
| Other items | -45.8 | -62.1 | -26% |
--------------------------------------------------------------------------------
| YIT's segments total | 2,837.0 | 3,045.0 | -7% |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| IFRIC 15 adjustments | 315.5 | 211.3 | 49% |
--------------------------------------------------------------------------------
| YIT Group, total | 3,152.5 | 3,256.3 | -3% |
--------------------------------------------------------------------------------
OPERATING CASH FLOW REMAINED GOOD, INVESTED CAPITAL INCREASED
Operating cash flow was good in January-March due to good residential sales.
Operating cash flow after investments amounted to EUR 33.8 million (1-3/2009:
EUR 21.2 million).
At the end of March, the Group's invested capital amounted to EUR 1,582.9
million (EUR 1,568.3 million). Return on investment remained weak, amounting to
11.3 per cent for the last 12 months (16.5%).
36 per cent (31%), or EUR 571.3 million (EUR 488.3 million), of the Group's
invested capital was in Russia. At the end of 2009, the capital invested in
Russia was EUR 557.6 million. Strengthening of the ruble increased the capital
invested in Russia by EUR 45.8 million in January-March. The Group's capital
invested in Russia is primarily accounted for by the International Construction
Services segment.
The invested capital is calculated by deducting non-interest bearing liabilities
from the balance sheet total. The balance sheet total at the end of March was
EUR 2,994.8 million (EUR 2,998.6 million).
GROUP'S FINANCIAL POSITION REMAINED GOOD
The gearing ratio decreased compared to the previous year, amounting to 65.0 per
cent (98.3%) at the end of March 2010. The equity ratio was 30.2 per cent (27.0
%). Net financing debt decreased on the previous year to EUR 496.0 million (EUR
674.1 million). Cash reserves amounted to EUR 323.5 million (EUR 208.6 million)
at the end of March.
The capital structure was reinforced in March 2010 by establishing a bond
programme of EUR 400 million, under which a EUR 100 million bond targeted at
domestic investors, was issued. The five-year bond carries an annual fixed rate
coupon of 4.823 per cent.
Net financial expenses decreased to EUR 7.1 million (EUR 19.9 million), or 0.9
per cent (2.4 %) of the Group's revenue. The exchange rate differences included
in the net financial expenses, totalling EUR -2.3 million (EUR -9.6 million),
were comprised nearly entirely of costs of hedging debt investments in Russia.
At the end of March 2010, EUR 192.1 million of the capital invested in Russia
comprised debt and EUR 379.2 million were equity investments or similar net
investments.
Financial liabilities totalled EUR 819.6 million (EUR 882.6 million) at the end
of March, and the average interest rate was 3.5 per cent (4.8%). Fixed-interest
loans accounted for 61 per cent (54%) of the Group's financial liabilities. Of
the loans, 37 per cent (29 %) had been raised directly on the capital and money
markets. The maturity distribution of the long-term loans is balanced.
The construction-stage contract receivables sold to financing companies totalled
EUR 101.7 million (EUR 115.3 million). Of this amount, EUR 96.3 million (EUR
96.8 million) is included in interest-bearing liabilities in the balance sheet
and the remainder comprises off-balance sheet items in accordance with IAS 39.
Interest expenses on receivables sold to financing companies amounted to EUR 0.4
million (EUR 0.8 million) during the review period and they are fully included
in the financial expenses of the reported period.
Participations in the housing corporation loans of unsold completed residential
units, EUR 43.9 million (EUR 50.3 million) at the end of March, are included in
interest-bearing liabilities. The interest on the participations, EUR 0.3
million (EUR 0.8 million), is included in housing corporation charges and is
thus booked in project expenses.
CAPITAL EXPENDITURES AND ACQUISITIONS
Gross capital expenditures on non-current assets included in the balance sheet
totalled EUR 9.4 million (EUR 6.7 million) during January-March, representing
1.2 per cent (0.8%) of revenue. Investments in construction equipment amounted
to EUR 1.8 million (EUR 2.2 million) and investments in information technology
to EUR 1.7 million (EUR 2.4 million). Other investments, including acquisitions,
amounted to EUR 5.9 million (EUR 2.3 million).
During January-March, YIT made three minor acquisitions in the Building and
Industrial Services segment in Sweden, one in Norway and one in Denmark. In
International Construction Services, YIT increased its holding in YIT Don to 100
per cent in January.
DEVELOPMENT BY BUSINESS SEGMENT
The development by business segment is presented using figures compliant with
segment reporting. The figures for 2010 and 2009 are comparable.
BUILDING AND INDUSTRIAL SERVICES
Revenue decreased by 11 per cent to EUR 477.0 million (EUR 537.9 million)
compared to the previous year due to a decrease in new building system and
industrial investments. Exchange rate changes increased the revenue by EUR 22.7
million. Calculated with the exchange rates of 1-3/09 the revenue in
January-March 2010 would have been EUR 454.3 million.
Operating profit decreased by 24 per cent to EUR 21.6 million (EUR 28.6
million). Operating profit margin was 4.5 (5.3%). The operating profit decreased
due to the low operations volume and the competitive situation remaining tight
during the first months of the year.
The order backlog turned into growth and amounted to EUR 964.2 million (EUR
1,048.3 million) at the end of March, while at the end of 2009 it was EUR 850.4
million. Order backlog increased by 13 per cent compared to the turn of the year
as a result of YIT's strong market position and slight recovery of the market
situation. However, the order backlog was still 8 per cent lower than in March
2009. Exchange rate changes increased the order backlog in January-March by EUR
13.1 million. Calculated with the exchange rates of 12/09 the order backlog
would have been EUR 951.1 million at the end of March 2010.
Steady revenue in Sweden and Norway - clear decline elsewhere
Building and Industrial Services seeks growth both organically and through
acquisitions. Strengthening the local market position through acquisitions
continued in early 2010 by making three minor acquisitions in Sweden, one in
Norway and one in Denmark.
Revenue remained at the previous year's level in Sweden and Norway in euro
terms. In other geographical areas, revenue decreased clearly. Finland accounted
for EUR 122.3 million (EUR 161.1 million) of the segment's revenue, Sweden for
EUR 125.8 million (EUR 122.7 million), Norway for EUR 111.5 million (EUR 109.8
million), Central Europe for EUR 72.4 million (EUR 87.4 million), Denmark for
EUR 30.1 million (EUR 39.0 million), the Baltic countries and Russia for EUR 4.0
million (EUR 8.8 million) and export countries for EUR 10.9 million (EUR 9.1
million).
New investments in building systems remained at a low level. In January-March,
YIT agreed to deliver new security systems to the offices of Tapiola and Turva
in Tampere, Rovaniemi and Kemi, Finland, new pipelines and climate installations
to the Sundsta bathhouse in Karlstad, Sweden, all building systems to the new
Leikvang sports arena and admission control to the state prison outside Oslo,
Norway, and heating, ventilation and cooling systems to the head office of the
General German Automotive Club ADAC in Munich, Germany. In Austria, YIT signed
an agreement on the delivery of building systems to the public transport depot
in Vienna, and in Denmark for the pharmaceutical company Novo Nordisk.
On the whole, the demand for industrial investments remained soft. In Sweden,
YIT will deliver Cryo AB a liquid natural gas storage tank and piping systems to
AGA's LNG terminal in Nynäshamn. In Finland, a substation will be built for
Fortum in Järvenpää.
Service and maintenance accounted for 61 per cent of the segment's revenue
YIT's goal is to be the leading provider of technical system maintenance in the
Nordic countries and Central Europe. The target is to increase service and
maintenance operations at a faster rate than other operations. In January-March,
service and maintenance operations accounted for 61 per cent (52%), or EUR 290.2
million (EUR 281.2 million) of Building and Industrial Services revenue.
YIT has improved the offering of its service and maintenance operations that
cover various technical systems with its YIT ServiFlex concept. The concept,
which makes purchasing and contract management easier, will be adopted in all
countries where YIT operates. Service and maintenance agreements conforming to
the ServiFlex concept were made with in Norway, e.g., Norway Post and the
Akershus University Hospital, and after the period under review with Statoil by
agreeing on deliveries within ventilation, piping and electrical work as well as
outdoor areas and building maintenance of more than 400,000 m2 for three years.
In Finland, YIT signed a partnership agreement with Varma Mutual Pension
Insurance Company on the building system servicing, maintenance and technical
management at more than 80 office properties. In Finland, an agreement was made
on the servicing and repair services of fuel station meters at the City of
Helsinki's fuelling points, and Outokumpu Tornio Works outsourced the Tornio
factory's facility management for a minimum of three years. Agreements were made
with Vasakronan for the building system maintenance of e.g. SonyEricsson's
office building in Sweden. A service agreement was also made with the University
of Vienna's premises in the IZD Tower in Austria. In Russia, an agreement was
made with Neste Oil on the building system servicing of more than 50 fuel
stations.
With regard to industrial customers, a three-year agreement was signed with
Moelven Valåsen AB on the maintenance of the process equipment and premises of a
sawmill in Karlskoga, Sweden. In Finland, YIT assumed responsibility for the
comprehensive process maintenance of M-real's Kemiart Liners board mill.
New energy-saving agreements were signed during the first quarter
YIT aims to be a forerunner in energy-saving services for buildings and
industry. The demand for these services is expected to increase in the next few
years.
Energy-saving may be included in both new construction and renovation projects
as well as in maintenance agreements. During January-March, agreements on
energy-saving projects were made with the Danish Ministry of Finance and the
Finnish City of Akaa, among others. German wind power manufacturer Enercon chose
YIT to deliver a 10 kilometres long power net to one of the largest wind power
plant areas in Europe under construction in Dragaliden, Sweden.
CONSTRUCTION SERVICES FINLAND
Revenue increased by 6 per cent to EUR 252.9 million (EUR 239.8 million) as a
result of more active residential sales compared to the previous year.
Operating profit increased by 11 per cent to EUR 23.1 million (EUR 20.9
million). Profitability remained good, with an operating profit margin of 9.1
(8.7%).
The order backlog increased by 10 per cent compared to the previous year to EUR
905.4 million (EUR 819.8 million), particularly due to residential projects
started up in 2009. At the turn of the year the segment's order backlog was EUR
1,007.5 million.
The segment's capital invested in plot reserves totalled EUR 298.4 million (EUR
363.2 million) at the end of March. The plot reserves included 1,582,000
(1,767,000) m2 of floor area of residential plots and 908,000 (808,000) m2 of
floor area of plots for business premises.
Residential sales remained good
YIT's aim is to strengthen its position as the largest housing developer in
Finland. The focus of housing construction has been shifted back to own
residential development projects. In 2009, plenty of rental housing production
was also started.
Residential sales remained good in January-March. In Finland, YIT sold a total
of 623 (436) residential units, of them 506 (276) directly to consumers. In
October-December, 510 residential units were sold directly to consumers. Housing
prices are rising in the market.
As a result of picked up residential sales, the number of apartments on sale
decreased, and at the end of March, YIT had 1,011 (921) unsold residential
units, of them 168 (366) completed.
In the first quarter, the number of residential units completed was lower than
the year before, and the number of residential units under construction remained
at a record-high level amounting to 3,975 (1,686) residential units. YIT started
to increase the number of residential start-ups already in 2009 in order to
ensure a sufficient number of apartments on sale. In January-March, YIT started
the construction of 453 (90) residential units aimed at consumers. This was
considerably more than during the corresponding period the previous year. During
the first quarter, residential development projects aimed at consumers were
started in, e.g., Riihimäki, Nurmijärvi, Mikkeli and Seinäjoki. With regard to
rental housing projects, the construction of two multi-storey buildings in
Jyväskylä for ICECAPITAL HousingFund II Ky began in accordance with the
agreement signed at the end of 2008.
Residential construction in Finland, number of residential units
--------------------------------------------------------------------------------
| | 1-3/10 | 1-3/09 | Change |
--------------------------------------------------------------------------------
| Sold | 623 | 436 | 43% |
--------------------------------------------------------------------------------
| - of which directly to | 506 | 276 | 83% |
| consumers | | | |
--------------------------------------------------------------------------------
| Start-ups | 570 | 239 | 138% |
--------------------------------------------------------------------------------
| - of which aimed directly | 453 | 90 | 403% |
| at consumers | | | |
--------------------------------------------------------------------------------
| Completed | 368 | 440 | -16% |
--------------------------------------------------------------------------------
| - of which aimed directly | 103 | 440 | -77% |
| at consumers | | | |
--------------------------------------------------------------------------------
| Under construction at the | 3,975 | 1,686 | 136% |
| end of the period | | | |
--------------------------------------------------------------------------------
| - of which sold at the end | 3,132 | 1,131 | 177% |
| of the period | | | |
--------------------------------------------------------------------------------
| Unsold at the end of the | 1,011 | 921 | 10% |
| period | | | |
--------------------------------------------------------------------------------
| - of which completed | 168 | 366 | -54% |
--------------------------------------------------------------------------------
Own development projects were prepared in business premises construction
In business premises construction, YIT focused on developing and renovating
existing buildings. In addition, the rental and project development activity of
own development projects was intensified according to customer needs, and sales
to investors were activated.
With regard to renovation projects, the implementation of office premises for
Instru Optiikka Oy started in Sinimäki, Espoo as did the conversion of an old
building to nursing use in Kilonkallio, Espoo. In Kontula, Helsinki, YIT entered
into an agreement on the facade contract of a residential building owned by the
City of Helsinki. As for new buildings, the construction of retail premises for
Motonet, a specialist in automotive supplies, began in Konala, Helsinki. In
Koskelo, Espoo, YIT is constructing an office and production premises for Fennia
Life. After the review period, YIT made an agreement with Kesko on constructing
new premises for K-citymarket in the centre of Hyvinkää.
Several major projects were completed in January-March. As for development
projects, the sports and wellness centre of 20,000 m2 sold to Varma Mutual
Pension Insurance Company in Salmisaari, the third phase of the Viinikkala
logistics centre in Vantaa and the renovation of the office and business
premises on Teollisuuskatu, Helsinki, were completed. A new head office for the
Tapiola Group, covering more than 70,000 m2, was completed in Espoo. In Vantaa,
the second phase of the Avia Line office complex was sold to the German real
estate investor IVG Institutional Funds during the period. Two further phases
will follow in the area.
Large-scale road projects underway in infrastructure services
The competitive situation in infrastructure construction was tight due to the
weakening of municipal finances and the continued low levels of new commercial
real estate construction. In 2010, new infrastructure projects related to basic
road and railway maintenance are expected as a result of state stimulus
measures. Opportunities will also open in connection with road and regional
maintenance contracts. YIT aims to strengthen its market position in
infrastructure services and increase the maintenance of infrastructure. The
Group has special expertise in infrastructure in, e.g., rock engineering,
maintenance and technical services offered to municipalities.
During the first quarter, YIT had large-scale road projects underway in
infrastructure services, such as the major project related to the improvement of
Kehä I ring road, a project involving bridge and road work in Savonlinna and
tunnel project for the Kehärata (Ring line) project in Vantaa. With regard to
road maintenance, YIT secured contracts in Lieto and Alavus during the period.
INTERNATIONAL CONSTRUCTION SERVICES
Revenue increased by 74 per cent to EUR 106.9 million (EUR 61.4 million).
Revenue increased due to the residential sales continued good in Russia and
construction works progressed. Exchange rate changes increased the revenue by
EUR 7.0 million. Calculated with the exchange rates of 1-3/09 the revenue in
January-March 2010 would have been EUR 99.9 million.
Operating profit increased to EUR 4.6 million (EUR -23.8 million) as a result of
good residential sales. Operating profit margin was 4.3 (-38.7%).
The order backlog amounted to EUR 1,013.2 million (EUR 1,239.1 million) at the
end of March, while at the turn of the year it was EUR 960.1 million. Exchange
rate changes increased the order backlog in January-March by EUR 71.3 million.
Calculated with the exchange rates of 12/09 the order backlog would have been
EUR 941.9 million at the end of March 2010. The order backlog includes housing
projects whose construction was suspended in Russia in October 2008 due to
market uncertainties. At the end of March 2010, the value of the projects that
were still suspended amounted to EUR 235 million (3/09: EUR 322 million) and EUR
282 at the end of the year 2009.
The segment's capital invested in plot reserves totalled EUR 283.1 million (EUR
218.7 million) at the end of March. The plot reserves included 2,312,000
(2,654,000) m2 of floor area of residential plots and 699,000 (627,000) m2 of
floor area of plots for business premises in Russia, the Baltic countries and
the Czech Republic.
Good residential sales continued in Russia
Russia accounted for 96 per cent (75%) of the segment's revenue. Revenue
increased by 122 per cent in Russia compared to the previous year to EUR 102.2
million (EUR 45.9 million). The capital invested in plot reserves in Russia
totalled EUR 207.2 million (EUR 136.1 million) at the end of March. The plot
reserves included 1,959,000 (2,256,000) m2 of floor area of residential plots
and 563,000 (565,000) m2 of floor area of plots for business premises.
Residential sales remained favourable in Russia during the first months of the
year. The preparation of business premise projects continued in St. Petersburg
and the Moscow region. Premises for Dermosil and extension works in Atria
production plant in the Gorelovo area in the St. Petersburg Oblast were in
implementation phase.
In January-March, YIT sold 817 (323) residential units in Russia. In
October-December, YIT sold 966 residential units, 90 of which to the Ministry of
Defence. Residential sales increased compared to previous year due to the
gradual improvement of the economy, decreased housing loan interest rates and
increased availability of loans to customers as well as YIT's own marketing and
sales promotion activities and housing loan collaboration with banks. By the end
of March YIT had started the price increases in residential production in all
cities where it operates - in St Petersburg, cities in the Moscow region,
Moscow, Yekaterinburg, Rostov-on-Don and Kazan.
YIT began to start up residential projects in Russia in late 2009 as the demand
was recovering. In January-March, the construction of a total of 798 (0)
residential units was started up in Moscow and St. Petersburg. Of the start-ups
a total of 678 residential units were in residential projects whose construction
had been suspended in autumn 2008 due to market uncertainties. At the end of
March, there were 4,671 (6,874) residential units under construction and 3,585
(5,218) unsold residential units, of which 900 (867) were completed.
Residential construction in Russia 1-3/2010 (1-3/2009), number of residential
units
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | Change |
--------------------------------------------------------------------------------
| Sold | 817 | 323 | 153% |
--------------------------------------------------------------------------------
| Start-ups | 798 | 0 | 100% |
--------------------------------------------------------------------------------
| Completed | 321 | 1,524 | -79% |
--------------------------------------------------------------------------------
| Under construction at | 4,671 | 6,874 | -32% |
| the end of the period | | | |
| 1) | | | |
--------------------------------------------------------------------------------
| - of which sold at the | 1,986 | 2,523 | -21% |
| end of the period | | | |
--------------------------------------------------------------------------------
| Unsold at the end of | 3,585 | 5,218 | -31% |
| the period | | | |
--------------------------------------------------------------------------------
| - of which completed | 900 | 867 | 4% |
--------------------------------------------------------------------------------
1) At the end of March 2010, YIT had 1,467 (2,485) residential units in Russia
in projects whose construction was suspended in autumn 2008. These residential
units are not included in the residential units under construction in the table.
Changes in the number of residential units may take place after the start of
construction due to the division or combination of residences.
The work reserves strengthened in Baltic countries and new residential projects
were started up
Lithuania, Estonia, Latvia and the Czech Republic generated 4 per cent (24%) of
the segment's revenue for January-March. Revenue generated by these units
decreased by 75 per cent compared to the previous year to EUR 4.7 million (EUR
15.4 million). In the Baltic countries, capital invested in plot reserves
amounted to EUR 72.7 million (EUR 82.6 million) at the end of March. The plot
reserves included 345,000 (398,000) m2 of floor area of residential plots and
136,000 (62,000) m2 of floor area of plots for business premises.
In Baltic countries, the market situation in residential construction recovered
slightly during the first quarter. YIT started up its first new residential
projects for more than two years, starting the construction of a total of 111
(1-3/09: 0) residential units. YIT's number of residential units on sale is low
in the Baltic countries. During the first quarter, 5 (53) residential units were
sold in Lithuania, Estonia and Latvia. 0 (505) residential units were completed
during the period. At the end of March, there were 111 (87) residential units
under construction, of which 0 (19) had been sold. There were 146 (243) unsold
residential units, 35 (175) of them completed.
During the first quarter of 2010, YIT secured a few significant business premise
projects. In Riga, Latvia, YIT agreed on the construction of the framework and
façade of two towers with offices, hotel and retail facilities for SIA Towers
Construction Management. The value of the contract is approximately EUR 40
million in the first phase, and it will be determined ultimately based on the
extent of the project. In Lithuania, YIT agreed on a project of EUR 19 million
whereby YIT will realise the first buildings of the new Vilnius University
campus. Additionally YIT made an agreement to build a new shopping centre in
Kaunas.
PERSONNEL
In January-March 2010, the Group employed 23,199 (25,405) people on average. At
the end of the period, the Group employed 23,211 (25,239) people. The number of
personnel decreased in all segments compared to the previous year. The biggest
relative decrease in the number of personnel took place in the Baltic countries
and Russia.
Of YIT's employees, 39 per cent (39%) worked in Finland, 37 per cent (37%) in
the other Nordic countries, 11 per cent (12%) in Russia, 9 per cent (8%) in
Central Europe and 4 per cent (4%) in the Baltic countries.
YIT aims to ensure sufficient and skilled personnel by investing in the
development and well-being at work of its current employees as well as its
employer image.
During the review period, it was decided to adopt a new share-based incentive
scheme, aimed to support the company's strategy of profitable growth and
supplement the already available incentive schemes. In 2010, the performance
criteria will be return on investment and revenue growth, and the incentive
scheme covers approximately 250 employees. The Board of the company annually
decides on the performance criteria and the employees included in the scope of
the incentive scheme.
Personnel by business segment
--------------------------------------------------------------------------------
| | 3/2010 | 3/2009 | Change | Share of |
| | | | | the |
| | | | | Group's |
| | | | | employees |
| | | | | 3/2010 |
--------------------------------------------------------------------------------
| Building and Industrial | 17,355 | 18,527 | -6% | 75% |
| Services | | | | |
--------------------------------------------------------------------------------
| Construction Services | 3,014 | 3,119 | -3% | 13% |
| Finland | | | | |
--------------------------------------------------------------------------------
| International | 2,498 | 3,214 | -22% | 11% |
| Construction Services | | | | |
--------------------------------------------------------------------------------
| Corporate Services | 344 | 379 | -9% | 1% |
--------------------------------------------------------------------------------
| YIT Group, total | 23,211 | 25,239 | -8% | 100% |
--------------------------------------------------------------------------------
Personnel by country
--------------------------------------------------------------------------------
| | 3/2010 | 3/2009 | Change | Share of |
| | | | | the |
| | | | | Group's |
| | | | | employees |
| | | | | 3/2010 |
--------------------------------------------------------------------------------
| Finland | 9,160 | 9,843 | -7% | 39% |
--------------------------------------------------------------------------------
| Sweden | 4,149 | 4,438 | -7% | 18% |
--------------------------------------------------------------------------------
| Norway | 3,246 | 3,257 | 0% | 14% |
--------------------------------------------------------------------------------
| Russia | 2,448 | 3,064 | -20% | 11% |
--------------------------------------------------------------------------------
| Germany, Austria, Poland, | 2,059 | 2,139 | -4% | 9% |
| the Czech Republic, | | | | |
| Hungary, Romania | | | | |
--------------------------------------------------------------------------------
| Denmark | 1,224 | 1,399 | -13% | 5% |
--------------------------------------------------------------------------------
| Lithuania, Estonia, | 925 | 1,099 | -16% | 4% |
| Latvia | | | | |
--------------------------------------------------------------------------------
| YIT Group, total | 23,211 | 25,239 | -8% | 100% |
--------------------------------------------------------------------------------
RESOLUTIONS PASSED AT THE ANNUAL GENERAL MEETING
YIT Corporation's Annual General Meeting was held on March 10, 2010. The Annual
General Meeting adopted the 2009 financial statements and discharged the members
of the Board of Directors and the President and CEO from liability. It was
decided that a dividend of EUR 0.40 will be paid per share, or a total of EUR
50.0 million, as proposed by the Board of Directors. March 15, 2010, was set as
the record date and April 7, 2010, as the payout date. No dividend will be paid
to treasury shares. The Annual General Meeting decided to grant the Board the
authority to donate the sum of no more than EUR 500,000 to support activities of
universities and other higher education institutions.
The Annual General Meeting resolved to elect a Chairman, Vice Chairman and five
ordinary members to the Board of Directors. Henrik Ehrnrooth was elected as the
Chairman and Reino Hanhinen as the Vice Chairman. Kim Gran, Eino Halonen, Antti
Herlin, Satu Huber and Lauri Ratia were elected as members. It was decided to
keep the Board of Directors' fees unchanged.
In its organisational meeting on March 10, 2010, the Board elected Lauri Ratia
as Chairman and Eino Halonen and Satu Huber as members of the Audit Committee
from among its number. The Board elected Henrik Ehrnrooth as Chairman and Eino
Halonen, Reino Hanhinen and Antti Herlin as members of the Nomination and
Rewards Committee from among its number.
The Annual General Meeting re-elected PricewaterhouseCoopers Oy, Authorised
Public Accountants, to audit the administration and accounts of the current
financial period. Heikki Lassila, Authorised Public Accountant, appointed by
PricewaterhouseCoopers Oy, will continue as chief auditor.
The Annual General Meeting authorised the Board of Directors to decide on the
purchase of the company's shares, share issues and disposal of treasury shares,
as proposed by the Board of Directors. The key contents of the resolutions are
described under Own shares and authorisations of the Board of Directors.
YIT Corporation published stock exchange releases on the resolutions passed at
the Annual General Meeting and the organisation of the Board of Directors on
March 10, 2010.
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 can be subscribed for in 2010 under the Series N share options issued by
YIT Corporation in 2006 between April 1 and November 30, 2010. No shares were
subscribed for during the period with the share options.
Share capital and number of shares
YIT Corporation's share capital was EUR 149,216,748.22 at the beginning of the
review period (EUR 149,216,748.22), and the number of shares outstanding was
127,223,422 (127,223,422). The share capital and number of shares did not change
during the review period.
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 held 2,145,000 of its own shares at the beginning of the review
period, purchased based on the authorisation given by the General Meeting of
October 6, 2008. The number of shares held by the company did not change during
the review period. During the period, no shares in the parent company were owned
by subsidiaries.
The Annual General Meeting of YIT Corporation resolved on March 10, 2010, to
authorise the Board of Directors to purchase the company's shares as proposed by
the Board of Directors. The authorisation covers the purchasing of a maximum of
10,500,000 company shares using the company's unrestricted equity. The
authorisation is valid for 18 months after its granting. The authorisation
overrides the authorisation to purchase the company's own shares issued by the
Annual General Meeting on March 11, 2009.
The Annual General Meeting authorised the Board of Directors to decide on share
issues as proposed by the Board of Directors. The authorisation can be used in
full or partially by issuing shares in the company in one or more share issues
so that the maximum number of shares issued is 25,000,000.
The share issue authorisation also includes the Board of Director's
authorisation to decide on the transfer of a maximum of 12,645,000 treasury
shares and on all of the terms and conditions of the transfer. The authorisation
is valid for five years after its granting. The authorisation overrides the
authorisation to dispose of the company's own shares issued by the Annual
General Meeting on March 11, 2009.
There were no share issues during the period and the company did not float
convertible bonds or bonds with warrants. At the end of the period, the parent
company's Board of Directors did not have authorisations to issue convertible
bonds or bonds with warrants.
Trading in the shares and share options
On the last trading day of the review period, March 31, 2010, the closing rate
of YIT's share was EUR 17.10 (March 31, 2009: EUR 5.05). YIT's share price
increased by 18 per cent during the period. The highest price of the share
during January-March 2010 was EUR 17.80 (EUR 6.02), the lowest EUR 14.44 (EUR
4.31). The average price was EUR 16.32 (EUR 5.08).
Market capitalisation at the end of the period was EUR 2,138.8 million (EUR
631.6 million). The market capitalisation has been calculated excluding the
shares held by the company.
Share turnover in January-March 2010 amounted to 36,277,021 shares (56,323,596).
The value of share turnover was EUR 593.0 million (EUR 287.1 million). The
average daily turnover was 585,113 shares (908,445).
A total of 7,910 Series N share options issued in 2006 were traded in
January-March at an average price of EUR 1.16.
Number of shareholders
At the beginning of the review period, the number of registered shareholders was
29,678 (25,515) and 30,187 (28,135) at the end of the period. The number of
private investors increased by slightly under 500 in January-March. At the
beginning of the year, a total of 38.7 per cent (36.5%) of the shares were owned
by nominee-registered and non-Finnish investors, while this figure was 38.3 per
cent (35.9%) at the end of the period.
ESTIMATE OF FUTURE DEVELOPMENT
Market situation
In the Building and Industrial Services segment, the slight growth in the demand
for building system service and maintenance will continue. The increasing amount
of technology in buildings and low new investments will increase the need for
service and maintenance operations. The economic recession will open new
opportunities for outsourcing building services. The demand for
energy-efficiency services will increase in the next few years in the Nordic
countries, Germany and Austria in particular with public sector stimulus
measures and renewal of environmental legislation. New investments in office and
business properties will remain slight. In new construction projects, public
sector investments will be realised. The increase in the demand for renovation
and modernisation projects will continue with the support of public sector
stimulus measures and renovation subsidies. Industrial investments are at a low
level in Finland, but the demand for industrial maintenance services will remain
relatively stable.
With regard to Construction Services Finland, housing demand is expected to
remain good, construction of business premises to remain low as a whole and
infrastructure construction to remain relatively steady. The demand for
owner-occupied housing will be supported by low interest rates, an increase in
consumer confidence and the scarcity of housing supply. The need for new housing
is also maintained by the smaller family size, migration and population growth.
Decreased employment rates and rising interest rates may increase uncertainty in
the housing market in the future. With regard to the business premises market,
construction of offices and industrial premises will remain at a low level.
Demand for retail and warehouse premises will remain moderate. The need for
renovation will rise steadily. Public sector stimulus measures will increase the
number of construction projects in the public sector, but the weakness of
municipal finances will lead to uncertainty concerning the number of public
sector construction projects. In the Finnish infrastructure market, new
traffic-related projects will begin in 2010 at the same time with decreasing
demand in the municipal sector. Opportunities will also open in connection with
road and regional maintenance contracts. Capacity underutilisation in
infrastructure construction keeps the competitive situation tight.
With regard to International Construction Services, housing demand in Russia is
expected to remain stable. There is still a great need for housing in Russia,
and the demand outlook for residential units aimed at YIT's customer segment is
unchanged in the long term. Russia's economic situation and consumer behaviour
are strongly dependent on the development of oil prices and the ruble exchange
rate. In addition, the development of the housing loan market, interest rates,
employment rates and purchasing power and expectations of inflation will have an
impact on residential sales. YIT expects consumer demand to strengthen gradually
if the economy continues to recover, and the development of housing prices to
follow the development of inflation. In Russia, the underutilisation rate of
offices is high and their construction is low, but the demand for industrial and
retail premises is increasing as retail chains continue to be active and
property investors are returning to the market. In the Baltic countries, there
has been a slight picking up in housing demand, and the prices have turned into
growth in central locations due to the lack of supply. Also other areas of
construction have started to grow slightly. Due to the extensive impact of the
recession, no significant improvement of the market conditions can be expected
in the near future.
Strategic targets
YIT Corporation's Board of Directors confirmed the Group's strategy for
2010-2012 on August 19, 2009. The Group's strategic target levels are: average
annual revenue growth of 5-10 per cent, return on investment of 20 per cent,
operating cash flow after investments must be sufficient for dividend payout and
reduction of debt, equity ratio of 35 per cent and dividend payout of 40 to 60
per cent of net profit for the period.
In Building and Industrial Services, YIT aims to be the leading provider of
technical system maintenance and a forerunner in energy-saving services in the
Nordic countries and Central Europe. The target is to increase service and
maintenance operations at a rate exceeding that of other operations. Growth is
sought both organically and through acquisitions.
In Construction Services Finland, YIT's aim is to reinforce its position in all
of its three key construction segments - housing, business premises and
infrastructure.
In the International Construction Services segment, YIT aims to increase housing
production according to market demand. The strong need for housing has not
decreased in Russia, and the demand outlook for residential units aimed at YIT's
customer segment is favourable in the long term, which provides opportunities
for growth. Also in the Baltic countries and Central Eastern Europe, YIT will
aim to take advantage of emerging market opportunities. The segment will also
aim at more efficient use of capital and higher profitability.
Most significant business risks and uncertainties
YIT has specified the major risk factors and their management from the point of
view of the Group as a whole, taking the special characteristics of YIT's
business operations and environment into consideration. Risks are divided into
strategic, operational, financial and event risks. A more detailed account of
YIT's risk management policy and the most significant risks has been published
in the Annual Report 2009. Financing risks are described in more detail in the
notes to the financial statements for 2009.
The most significant operational short-term business risks and uncertainties are
connected with the development in building systems and industrial project demand
as well as the continuity of the favourable development of residential sales and
the sales and price risk of the order backlog mainly due to unsold residential
units. At the end of March 2010, YIT's unsold residential units that are under
construction or completed totalled 3,585 in Russia, 1,011 in Finland and 146 in
the Baltic countries. In addition, there are 1,467 residential units in Russia
in projects whose construction has been suspended. YIT manages sales risk by
matching the number of housing start-ups with the estimated residential demand
and the number of unsold residential units. The housing production figures are
presented under Development by business segment.
YIT is exposed to a currency risk related to ruble denominated investments.
Investments in Russia totalled EUR 571.3 million at the end of the period. Net
investments amounted to EUR 379.2 million at the end of the period. Net
investments in the Russian subsidiaries are unhedged in accordance with the
treasury policy, and the possible devaluation of the ruble would have a
corresponding negative impact on the Group's shareholders' equity. Debt
investments amounted to EUR 192.1 million at the end of the period, and this
exposure was hedged in full. The interest rate difference between euro and ruble
have an effect on hedging costs and thus net financial expenses.
YIT tests the value of its plots as required by the IFRS accounting principles.
Plot reserves are measured at acquisition cost and the value is impaired 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.
OUTLOOK FOR 2010
YIT estimates that in 2010 the Group's revenue will increase and profit before
taxes will increase significantly compared to 2009. (The estimate has not been
changed after the financial statements bulletin released on February 4, 2010.)
The demand for housing is expected to remain at a favourable level in 2010 in
Finland as well as Russia.
In Finland, the demand is supported by low interest rates, increased consumer
confidence and structural factors, such as migration, population growth and
decreasing family size. Housing prices are rising in the market. There is a low
supply of new residential units in the market. YIT had 3,975 residential units
under construction at the end of March 2010. 1,011 residential units were on
sale, of them 168 completed. Good plot reserves and geographically extensive
operations enable increasing residential development activity in 2010.
There is a great need for new housing in Russia, and therefore the demand
outlook for residential units aimed at YIT's customer segment is unchanged in
the long term. By the end of March YIT had started the price increases in
residential production in all cities where it operates. Consumer confidence has
strengthened. Increasing financing and mortgage opportunities support the
apartment sales. New residential projects have been started up in the market,
but the supply is still limited. YIT had 4,671 residential units under
construction at the end of March 2010. There were 3,585 residential units on
sale, of which 900 had been completed. Residential start-ups will be increased
in 2010 according to the demand.
The development of consumer confidence, employment rates and interest rates
influence housing demand in Finland and Russia. In Russia, housing demand is
also dependent on oil prices and the ruble exchange rate.
The opportunities of organic growth in Building and Industrial Services are
supported by the need for service and maintenance as well as renovation and
public sector projects. There are many small companies operating in the
technical building system market, and the consolidation of the market will
provide opportunities for acquisitions. Industrial investments are at a low
level in Finland, but the demand for industrial maintenance services will remain
relatively stable. New investments in technical building systems will remain low
in all YIT markets, particularly due to the low volumes of business premises
construction. YIT has an extensive network of local offices in the markets where
it operates and a solid market position in building system and industrial
service and maintenance operations, projects and energy-efficiency services.
In the Finnish infrastructure market, new traffic-related projects will begin in
2010 at the same time with decreasing demand in the municipal sector.
Opportunities will also open in connection with road and regional maintenance
contracts. YIT has large-scale road projects underway in infrastructure
services. The Group has special expertise in infrastructure and a solid position
as the largest private provider of road maintenance services in Finland.
Helsinki, April 28, 2010
Board of Directors
INTERIM REPORT JAN 1 - MAR 31, 2010: TABLES
(The information presented in the Interim Report has not been audited.)
1. Key figures of YIT Group
Key figures
YIT Group figures by quarter
Segment information by quarter
2. Consolidated financial statements January 1 - March 31, 2010
Consolidated income statement
Statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
3. Notes
Accounting principles of the Interim Report
Financial risk management
Segment information
Unusual items affecting operating profit
Acquired and divested businesses
Changes in property, plant and equipment
Inventories
Notes on equity
Borrowings
Change in contingent liabilities and assets and commitments
Transactions with associated companies
1. KEY FIGURES OF YIT GROUP
As from the beginning of 2010, Group reporting will apply the new IFRIC 15
interpretation, according to which own residential development projects will be
recognised at the time of delivery and own commercial real estate development
projects based on the percentage of completion or at the time of delivery. The
figures for 2010 and 2009 are comparable.
KEY FIGURES
--------------------------------------------------------------------------------
| | 3/2010 | 3/2009 | change, | 12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.15 | 0.06 | 150 | 0.55 |
--------------------------------------------------------------------------------
| Diluted earnings per share, EUR | 0.15 | 0.06 | 150 | 0.55 |
--------------------------------------------------------------------------------
| Equity per share, EUR | 6.08 | 5.46 | 11 | 6.09 |
--------------------------------------------------------------------------------
| Average share price during the | 16.32 | 5.08 | 221 | 8.52 |
| period, EUR | | | | |
--------------------------------------------------------------------------------
| Share price at end of period, | 17.10 | 5.05 | 239 | 14.45 |
| EUR | | | | |
--------------------------------------------------------------------------------
| Market capitalization at end of | 2,138.8 | 631.6 | 239 | 1,807.4 |
| period, MEUR | | | | |
--------------------------------------------------------------------------------
| Weighted average share-issue | 125,078 | 125,432 | 0 | 125,167 |
| adjusted number of shares | | | | |
| outstanding, thousands | | | | |
--------------------------------------------------------------------------------
| Weighted average share-issue | 125,078 | 125,432 | 0 | 125,167 |
| adjusted number of shares | | | | |
| outstanding, thousands, diluted | | | | |
--------------------------------------------------------------------------------
| Share-issue adjusted number of | 125,078 | 125,078 | 0 | 125,078 |
| shares outstanding at end of | | | | |
| period, thousands | | | | |
--------------------------------------------------------------------------------
| Net interest-bearing debt at | 496.0 | 674.1 | -26 | 529.1 |
| end of period, MEUR | | | | |
--------------------------------------------------------------------------------
| Return on investment, from the | 11.3 | 16.5 | -32 | 11.0 |
| last 12 months, % | | | | |
--------------------------------------------------------------------------------
| Equity ratio, % | 30.2 | 27.0 | 12 | 32.4 |
--------------------------------------------------------------------------------
| Gearing ratio, % | 65.0 | 98.3 | -34 | 69.2 |
--------------------------------------------------------------------------------
| Gross capital expenditures, | 9.4 | 6.7 | 40 | 27.9 |
| MEUR | | | | |
--------------------------------------------------------------------------------
| % of revenue | 1.2 | 0.8 | 50 | 0.8 |
--------------------------------------------------------------------------------
| Order backlog at end of period, | 3,152.5 | 3,256.3 | -3 | 2,983.3 |
| MEUR 1) | | | | |
--------------------------------------------------------------------------------
| of which order backlog outside | 1.637.1 | 1.983.6 | -17 | 1,885.7 |
| Finland | | | | |
--------------------------------------------------------------------------------
| Average number of personnel | 23,199 | 25,405 | -9 | 24,497 |
--------------------------------------------------------------------------------
1) Portion of binding orders and own development projects not recognized as
income.
YIT GROUP FIGURES BY QUARTER
--------------------------------------------------------------------------------
| | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 |
| | | | 9 | | |
--------------------------------------------------------------------------------
| Revenue, MEUR | 843.2 | 862.8 | 754.3 | 1,025.3 | 765.3 |
--------------------------------------------------------------------------------
| Operating profit, MEUR | 28.7 | 43.3 | 32.8 | 63.3 | 33.9 |
--------------------------------------------------------------------------------
| % of revenue | 3.4 | 5.0 | 4.3 | 6.2 | 4.4 |
--------------------------------------------------------------------------------
| Financial income, MEUR | 1.3 | 0.4 | 0.9 | 1.9 | 0.7 |
--------------------------------------------------------------------------------
| Exchange rate | -9.6 | -5.1 | -7.8 | -5.9 | -2.3 |
| differences, MEUR | | | | | |
--------------------------------------------------------------------------------
| Financial expenses, MEUR | -11.6 | -8.2 | -8.8 | -6.2 | -5.6 |
--------------------------------------------------------------------------------
| Profit before taxes, MEUR | 8.8 | 30.4 | 17.1 | 53.1 | 26.7 |
--------------------------------------------------------------------------------
| % of revenue | 1.0 | 3.5 | 2.3 | 5.2 | 3.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balance sheet total, MEUR | 2,998. | 2,993.3 | 3,041.6 | 2,777.1 | 2,994.8 |
| | 6 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.06 | 0.15 | 0.08 | 0.26 | 0.15 |
--------------------------------------------------------------------------------
| Equity per share, EUR | 5.46 | 5.67 | 5.78 | 6.09 | 6.08 |
--------------------------------------------------------------------------------
| Share price at end of | 5.05 | 7.40 | 13.01 | 14.45 | 17.10 |
| period, EUR | | | | | |
--------------------------------------------------------------------------------
| Market capitalization at | 631.6 | 925.6 | 1,627.0 | 1,807.4 | 2,138.8 |
| end of period, MEUR | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on investment, | 16.5 | 11.5 | 11.1 | 11.0 | 11.3 |
| from the last 12 months, | | | | | |
| % | | | | | |
--------------------------------------------------------------------------------
| Equity ratio, % | 27.0 | 28.1 | 28.2 | 32.4 | 30.2 |
--------------------------------------------------------------------------------
| Net interest-bearing debt | 674.1 | 699.7 | 674.4 | 529.1 | 496.0 |
| at end of period, MEUR | | | | | |
--------------------------------------------------------------------------------
| Gearing ratio, % | 98.3 | 98.1 | 92.9 | 69.2 | 65.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross capital | 6.7 | 3.9 | 5.1 | 12.2 | 9.4 |
| expenditures, MEUR | | | | | |
--------------------------------------------------------------------------------
| Order backlog at end of | 3,256. | 3,120.0 | 3,059.6 | 2,983.3 | 3,152.5 |
| period, MEUR | 3 | | | | |
--------------------------------------------------------------------------------
| Personnel at end of | 25,239 | 24,763 | 24,003 | 23,480 | 23,211 |
| period | | | | | |
--------------------------------------------------------------------------------
SEGMENT INFORMATION BY QUARTER
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS
interpretation from the start of the financial period begun on January 1, 2010.
Due to the application of the interpretation, Group reporting and segment
reporting will differ.
In segment reporting, the figures will continue to be calculated based on the
previous accounting principle, i.e. percentage of completion will be applied in
the recognition of revenue from own residential and commercial real estate
development projects.
As from the beginning of 2010, Group reporting will apply the new
interpretation. According to the interpretation own residential development
projects will be recognised at the time of delivery. Own commercial real estate
development projects will be recognized in most cases based on the percentage of
completion or alternatively at the time of delivery.
Figures for 2010 and 2009 are comparable.
Revenue by business segment (EUR million)
--------------------------------------------------------------------------------
| | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 |
| | | | 9 | | |
--------------------------------------------------------------------------------
| Building and Industrial | 537.9 | 529.2 | 483.9 | 573.9 | 477.0 |
| Services | | | | | |
--------------------------------------------------------------------------------
| Construction Services | 239.8 | 253.0 | 246.3 | 290.6 | 252.9 |
| Finland | | | | | |
--------------------------------------------------------------------------------
| International | 61.4 | 87.4 | 97.6 | 113.0 | 106.9 |
| Construction Services | | | | | |
--------------------------------------------------------------------------------
| Other items | -15.5 | -16.4 | -12.8 | -17.0 | -16.0 |
--------------------------------------------------------------------------------
| YIT's segments total | 823.7 | 853.2 | 815.0 | 960.5 | 820.8 |
--------------------------------------------------------------------------------
| IFRIC 15 adjustments | 19.5 | 9.7 | -60.7 | 64.7 | -55.5 |
--------------------------------------------------------------------------------
| YIT Group, total | 843.2 | 862.8 | 754.3 | 1 025.3 | 765.3 |
--------------------------------------------------------------------------------
Operating profit by business segment (EUR million)
--------------------------------------------------------------------------------
| | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 |
| | | | 9 | | |
--------------------------------------------------------------------------------
| Building and Industrial | 28.6 | 28.2 | 24.9 | 37.6 | 21.6 |
| Services 1) | | | | | |
--------------------------------------------------------------------------------
| Construction Services | 20.9 | 19.9 | 20.8 | 20.3 | 23.1 |
| Finland | | | | | |
--------------------------------------------------------------------------------
| International | -23.8 | -5.2 | 3.7 | 7.5 | 4.6 |
| Construction Services | | | | | |
--------------------------------------------------------------------------------
| Other items | -3.6 | -4.8 | -3.8 | -5.7 | -4.8 |
--------------------------------------------------------------------------------
| YIT's segments total | 22.1 | 38.1 | 45.6 | 59.7 | 44.5 |
--------------------------------------------------------------------------------
| IFRIC 15 adjustments | 6.6 | 5.2 | -12.8 | 3.6 | -10.6 |
--------------------------------------------------------------------------------
| YIT Group, total | 28.7 | 43.3 | 32.8 | 63.3 | 33.9 |
--------------------------------------------------------------------------------
Operating profit margin by business segment (%)
--------------------------------------------------------------------------------
| | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 |
| | | | 9 | | |
--------------------------------------------------------------------------------
| Building and Industrial | 5.3% | 5.3% | 5.1% | 6.6% | 4.5% |
| Services 1) | | | | | |
--------------------------------------------------------------------------------
| Construction Services | 8.7% | 7.9% | 8.4% | 7.0% | 9.1% |
| Finland | | | | | |
--------------------------------------------------------------------------------
| International | -38.7% | -5.9% | 3.8% | 6.6% | 4.3% |
| Construction Services | | | | | |
--------------------------------------------------------------------------------
| YIT's segments total | 2.7% | 4.5% | 5.6% | 6.2% | 5.4% |
--------------------------------------------------------------------------------
| YIT Group, total | 3.4% | 5.0% | 4.3% | 6.2% | 4.4% |
--------------------------------------------------------------------------------
1b) On September 30, 2009, the court of arbitration issued its ruling in the
dispute concerning the mechanical installation contract YIT carried out for
Neste Oil's Porvoo oil refinery. The effect of the ruling on Building and
Industrial Services' operating profit for 7-9/2009 was EUR -3.2 million.
Order backlog by business segment at end of period (EUR million)
--------------------------------------------------------------------------------
| | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 |
| | | | 9 | | |
--------------------------------------------------------------------------------
| Building and Industrial | 1,048.3 | 984.7 | 946.7 | 850.4 | 964.2 |
| Services | | | | | |
--------------------------------------------------------------------------------
| Construction Services | 819.8 | 846.9 | 909.9 | 1,007.5 | 905.4 |
| Finland | | | | | |
--------------------------------------------------------------------------------
| International | 1,239.1 | 1,126.8 | 998.4 | 960.1 | 1,013.2 |
| Construction Services 1) | | | | | |
--------------------------------------------------------------------------------
| Other items | -62.1 | -41.9 | -54.2 | -44.4 | -45.8 |
--------------------------------------------------------------------------------
| YIT's segments total | 3,045.0 | 2,916.5 | 2,800.8 | 2,773.6 | 2,837.0 |
--------------------------------------------------------------------------------
| IFRIC 15 adjustments | 211.3 | 203.6 | 258.8 | 209.7 | 315.5 |
--------------------------------------------------------------------------------
| YIT Group, total | 3,256.3 | 3,120.1 | 3,059.6 | 2,983.3 | 3,152.5 |
--------------------------------------------------------------------------------
1) The order backlog includes housing projects whose construction was suspended
in Russia in October 2008 due to market uncertainties. At the end of March 2010,
the projects that were still suspended included 1,467 (2,485) residential units
and the value of the projects amounted to EUR 235 million (3/09: EUR 322
million) in the order backlog.
2. CONSOLIDATED FINANCIAL STATEMENTS JANUARY 1 - MARCH 31, 2010
As from the beginning of 2010, Group reporting will apply the new IFRIC15
interpretation, according to which own residential development projects will be
recognised at the time of delivery and own commercial real estate development
projects based on the percentage of completion or at the time of delivery. The
figures for 2010 and 2009 are comparable.
CONSOLIDATED INCOME STATEMENT (EUR million)
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Revenue | 765.3 | 843.2 | -9 | 3 485.6 |
--------------------------------------------------------------------------------
| of which activities outside | 436.9 | 441.6 | -1 | 1 885.7 |
| Finland | | | | |
--------------------------------------------------------------------------------
| Other operating income and | -722.5 | -806.1 | -10 | -3 283.3 |
| expenses | | | | |
--------------------------------------------------------------------------------
| Share of results of associated | -0.4 | 0 | - | -0.6 |
| companies | | | | |
--------------------------------------------------------------------------------
| Depreciation and write-downs | -8.5 | -8.4 | 1 | -33.6 |
--------------------------------------------------------------------------------
| Operating profit 1) | 33.9 | 28.7 | 18 | 168.1 |
--------------------------------------------------------------------------------
| % of revenue | 4.4 | 3.4 | 30 | 4.8 |
--------------------------------------------------------------------------------
| Financial income | 0.7 | 1.3 | -46 | 4.5 |
--------------------------------------------------------------------------------
| Exchange rate differences | -2.3 | -9.6 | -76 | -28.4 |
--------------------------------------------------------------------------------
| Financial expenses | -5.6 | -11.6 | -52 | -34.7 |
--------------------------------------------------------------------------------
| Profit before taxes | 26.7 | 8.8 | 203 | 109.5 |
--------------------------------------------------------------------------------
| % of revenue | 3.5 | 1.0 | 250 | 3.1 |
--------------------------------------------------------------------------------
| Income taxes | -7.8 | -2.0 | 290 | -41.4 |
--------------------------------------------------------------------------------
| Profit for the report period | 18.9 | 6.8 | 178 | 68.1 |
--------------------------------------------------------------------------------
| % of revenue | 2.5 | 0.8 | 213 | 2.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to | | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | 18.8 | 7.1 | 165 | 68.3 |
| company | | | | |
--------------------------------------------------------------------------------
| Non-controlling interest | 0.1 | -0.3 | -133 | -0.2 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Earnings per share attributable | | | | |
| to the equity holders of the | | | | |
| parent company | | | | |
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.15 | 0.06 | 150 | 0.55 |
--------------------------------------------------------------------------------
| Diluted earnings per share, EUR | 0.15 | 0.06 | 150 | 0.55 |
--------------------------------------------------------------------------------
1) The operating profit 2009 includes EUR -3.2 million due to the ruling issued
by the court of arbitration on September 30, 2009 concerning the mechanical
installation contract YIT carried out for Neste Oil's Porvoo oil refinery.
STATEMENT OF COMPREHENSIVE INCOME (EUR million)
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Profit for the report period | 18.9 | 6.8 | 178 | 68.1 |
--------------------------------------------------------------------------------
| Other comprehensive income and | | | | |
| expenses | | | | |
--------------------------------------------------------------------------------
| - Change in the fair value of | -3.9 | -1.6 | -144 | -3.1 |
| interest derivatives | | | | |
--------------------------------------------------------------------------------
| -- Deferred tax | 0.7 | 0.6 | 17 | 0.0 |
--------------------------------------------------------------------------------
| -- Transferred to income | 1.3 | - | - | 3.1 |
| statement | | | | |
--------------------------------------------------------------------------------
| - Change in translation | 32.9 | -21.5 | - | -5.8 |
| differences | | | | |
--------------------------------------------------------------------------------
| - Other change | 0 | 0.1 | -100 | -0.0 |
--------------------------------------------------------------------------------
| Other comprehensive income, | 31.0 | -22.4 | - | -5.8 |
| total | | | | |
--------------------------------------------------------------------------------
| Total comprehensive income | 49.9 | -15.6 | - | 62.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to | | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | 49.4 | -14.8 | - | 63.1 |
| company | | | | |
--------------------------------------------------------------------------------
| Non-controlling interest | 0.5 | -0.8 | - | -0.8 |
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET (EUR million)
--------------------------------------------------------------------------------
| | 3/2010 | 3/2009 | change | 31.12.20 | 1.1.200 |
| | | | 3/2009-3 | 09 | 9 |
| | | | /2010, % | | |
--------------------------------------------------------------------------------
| ASSETS | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | | | |
--------------------------------------------------------------------------------
| Property, plant and | 98.8 | 101.2 | -2 | 99.8 | 104.6 |
| equipment | | | | | |
--------------------------------------------------------------------------------
| Goodwill | 291.0 | 291.0 | 0 | 291.0 | 291.0 |
--------------------------------------------------------------------------------
| Other intangible assets | 34.6 | 35.4 | -2 | 32.8 | 35.1 |
--------------------------------------------------------------------------------
| Shares in associated | 2.8 | 3.6 | -22 | 3.2 | 3.8 |
| companies | | | | | |
--------------------------------------------------------------------------------
| Other investments | 2.0 | 2.6 | -23 | 2.0 | 2.5 |
--------------------------------------------------------------------------------
| Other receivables | 14.1 | 14.5 | -3 | 14.4 | 12.7 |
--------------------------------------------------------------------------------
| Deferred tax assets | 50.5 | 43.9 | 15 | 43.1 | 40.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | | | |
--------------------------------------------------------------------------------
| Inventories | 1,527. | 1,612. | -5 | 1,477.6 | 1,715.4 |
| | 4 | 9 | | | |
--------------------------------------------------------------------------------
| Trade and other | 650.1 | 685.0 | -5 | 640.1 | 731.2 |
| receivables | | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 323.5 | 208.5 | 55 | 173.1 | 201.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 2,994. | 2,998. | 0 | 2,777.1 | 3,138.4 |
| | 8 | 6 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to | | | | | |
| equity holders of the | | | | | |
| parent company | | | | | |
--------------------------------------------------------------------------------
| Share capital | 149.2 | 149.2 | 0 | 149.2 | 149.2 |
--------------------------------------------------------------------------------
| Other equity | 611.5 | 534.3 | 14 | 612.7 | 615.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-controlling interest | 2.7 | 2.2 | 23 | 2.2 | 3.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity | 763.4 | 685.7 | 11 | 764.1 | 768.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 73.7 | 63.9 | 15 | 66.8 | 63.2 |
--------------------------------------------------------------------------------
| Pension liabilities | 17.2 | 18.8 | -9 | 17.6 | 19.7 |
--------------------------------------------------------------------------------
| Provisions | 49.8 | 47.0 | 6 | 49.0 | 45.0 |
--------------------------------------------------------------------------------
| Interest-bearing | 595.8 | 563.8 | 6 | 502.0 | 516.2 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| Other liabilities | 6.1 | 4.3 | 42 | 3.3 | 4.0 |
--------------------------------------------------------------------------------
| | , | | | | |
--------------------------------------------------------------------------------
| Current liabilities | | | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 1,224. | 1,243. | -2 | 1,133.5 | 1,298.2 |
| | 6 | 4 | | | |
--------------------------------------------------------------------------------
| Provisions | 40.4 | 52.9 | -24 | 40.6 | 43.6 |
--------------------------------------------------------------------------------
| Interest-bearing current | 223.8 | 318.8 | -30 | 200.2 | 379.9 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity and | 2,994. | 2,998. | 0 | 2,777.1 | 3,138.4 |
| liabilities | 8 | 6 | | | |
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR million)
--------------------------------------------------------------------------------
| | Sha | Leg | Ot | Cumu | Fair | Tre | Ret | Tot | Non- | Tota |
| | re | al | he | lati | valu | asu | ain | al | cont | l |
| | cap | res | r | ve | e | ry | ed | | roll | equi |
| | ita | erv | re | tran | rese | sha | ear | | ing | ty |
| | l | e | se | slat | rve | res | nin | | inte | |
| | | | rv | ion | | | gs | | rest | |
| | | | e | diff | | | | | | |
| | | | | eren | | | | | | |
| | | | | ces | | | | | | |
--------------------------------------------------------------------------------
| Balance at 1 | 149 | 1.7 | 11 | -41. | -1.7 | -10 | 653 | 761 | 2.2 | 764. |
| January 2010 | .2 | | .6 | 5 | | .6 | .2 | .9 | | 1 |
--------------------------------------------------------------------------------
| Comprehensive | - | - | - | - | - | - | | - | - | - |
| income | | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | - | - | - | - | - | - | 18. | - | 0.1 | 18.9 |
| the period | | | | | | | 8 | | | |
--------------------------------------------------------------------------------
| Other | - | - | - | - | - | - | - | - | - | |
| comprehensive | | | | | | | | | | |
| income | | | | | | | | | | |
--------------------------------------------------------------------------------
| Change in the | - | - | - | - | -3.9 | - | - | - | - | -3.9 |
| fair value of | | | | | | | | | | |
| interest | | | | | | | | | | |
| derivatives | | | | | | | | | | |
--------------------------------------------------------------------------------
| - Deferred | - | - | - | - | 0.6 | - | - | - | - | 0.6 |
| tax asset | | | | | | | | | | |
--------------------------------------------------------------------------------
| - Transferred | - | - | - | - | 1.3 | - | - | - | - | 1.3 |
| to income | | | | | | | | | | |
| statement | | | | | | | | | | |
--------------------------------------------------------------------------------
| Change in | - | - | - | 31.1 | - | - | 1.4 | - | 0.4 | 32.9 |
| translation | | | | | | | | | | |
| differences | | | | | | | | | | |
--------------------------------------------------------------------------------
| Other change | - | - | - | - | - | - | - | - | - | - |
--------------------------------------------------------------------------------
| Comprehensive | 0.0 | 0.0 | 0. | 31.1 | -2.0 | 0.0 | 20. | 49. | 0.5 | 49.8 |
| income, total | | | 0 | | | | 2 | 3 | | |
--------------------------------------------------------------------------------
| Transactions | - | - | - | - | - | - | - | - | - | - |
| with owners | | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend paid | - | - | - | - | - | - | -50 | - | - | -50. |
| | | | | | | | .5 | | | 5 |
--------------------------------------------------------------------------------
| Purchase of | - | - | - | - | - | - | - | - | - | - |
| treasury | | | | | | | | | | |
| shares | | | | | | | | | | |
--------------------------------------------------------------------------------
| Transfer from | - | - | - | - | - | - | - | - | - | - |
| retained | | | | | | | | | | |
| earnings | | | | | | | | | | |
--------------------------------------------------------------------------------
| Employee | - | - | - | - | - | - | - | - | - | 0.0 |
| share option | | | | | | | | | | |
| scheme | | | | | | | | | | |
--------------------------------------------------------------------------------
| Transactions | 0.0 | 0.0 | 0. | 0.0 | 0.0 | 0.0 | -50 | -50 | 0.0 | -50. |
| with owners, | | | 0 | | | | .5 | .5 | | 5 |
| total | | | | | | | | | | |
--------------------------------------------------------------------------------
| Balance at 31 | 149 | 1.7 | 11 | -10. | -3.7 | -10 | 622 | 760 | 2.7 | 763. |
| March 2010 | .2 | | .6 | 4 | | .6 | .9 | .7 | | 4 |
--------------------------------------------------------------------------------
| | | | | | | | | | | |
--------------------------------------------------------------------------------
| Restated | 149 | 1.4 | 13 | -35. | -1.7 | -6. | 643 | 764 | 3.8 | 768. |
| equity | .2 | | .9 | 2 | | 6 | .8 | .8 | | 6 |
| balance at 1 | | | | | | | | | | |
| January 2009 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive | - | - | - | - | - | - | - | - | - | - |
| income | | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit for | - | - | - | - | - | - | 7.1 | - | -0.3 | 6.8 |
| the period | | | | | | | | | | |
--------------------------------------------------------------------------------
| Other | - | - | - | - | - | - | - | - | - | - |
| comprehensive | | | | | | | | | | |
| income | | | | | | | | | | |
--------------------------------------------------------------------------------
| Change in the | - | - | - | - | -1.6 | - | - | - | - | -1.6 |
| fair value of | | | | | | | | | | |
| interest | | | | | | | | | | |
| derivatives | | | | | | | | | | |
--------------------------------------------------------------------------------
| - Deferred | - | - | - | - | 0.6 | - | - | - | - | 0.6 |
| tax asset | | | | | | | | | | |
--------------------------------------------------------------------------------
| - Transferred | - | - | - | - | 0.0 | - | - | - | - | - |
| to income | | | | | | | | | | |
| statement | | | | | | | | | | |
--------------------------------------------------------------------------------
| Change in | - | - | - | -21. | - | - | | - | -0.2 | -21. |
| translation | | | | 3 | | | | | | 5 |
| differences | | | | | | | | | | |
--------------------------------------------------------------------------------
| Other change | - | - | - | | - | - | 0,4 | - | -0,3 | 0.1 |
--------------------------------------------------------------------------------
| Comprehensive | - | - | - | -21. | -1.0 | - | 7.5 | 14. | -0.8 | -15. |
| income, total | | | | 3 | | | | 8 | | 6 |
--------------------------------------------------------------------------------
| Transactions | - | - | - | - | - | - | - | - | - | - |
| with owners | | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividend paid | - | - | - | - | - | - | -62 | - | -0.8 | -63. |
| | | | | | | | .5 | | | 3 |
--------------------------------------------------------------------------------
| Purchase of | - | - | - | - | - | -4. | - | - | - | -4.0 |
| treasury | | | | | | 0 | | | | |
| shares | | | | | | | | | | |
--------------------------------------------------------------------------------
| Transfer from | - | 0.2 | - | - | - | - | -0. | - | - | 0.0 |
| retained | | | | | | | 2 | | | |
| earnings | | | | | | | | | | |
--------------------------------------------------------------------------------
| Employee | - | - | -2 | - | - | - | 2.3 | - | - | 0.0 |
| share option | | | .3 | | | | | | | |
| scheme | | | | | | | | | | |
--------------------------------------------------------------------------------
| Transactions | 0.0 | 0.2 | -2 | 0.0 | 0.0 | -4. | -60 | 0.0 | -0.8 | -67. |
| with owners, | | | .3 | | | 0 | .4 | | | 3 |
| total | | | | | | | | | | |
--------------------------------------------------------------------------------
| Balance at 31 | 149 | 1.6 | 11 | -56. | -2.7 | -10 | 590 | 750 | 2.2 | 685. |
| March 2009 | .2 | | .6 | 5 | | .6 | .9 | .0 | | 7 |
--------------------------------------------------------------------------------
| | | | | | | | | | | |
--------------------------------------------------------------------------------
| Equity | 149 | 1.4 | 13 | -35. | -1.7 | -6. | 682 | 803 | 4.6 | 807. |
| balance at 1 | .2 | | .9 | 2 | | 6 | .1 | .1 | | 7 |
| January 2009 | | | | | | | | | | |
--------------------------------------------------------------------------------
| The effects | - | - | - | - | - | - | -38 | -38 | -0.8 | -39. |
| of | | | | | | | .3 | .3 | | 1 |
| application | | | | | | | | | | |
| of IFRIC 15 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Restated | 149 | 1.4 | 13 | -35. | -1.7 | -6. | 643 | 764 | 3.8 | 768. |
| equity | .2 | | .9 | 2 | | 6 | .8 | .8 | | 6 |
| balance at 1 | | | | | | | | | | |
| January 2009 | | | | | | | | | | |
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT (EUR million)
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Cash flows from operating | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Net profit for the period | 19.0 | 6.8 | 179 | 68.3 |
--------------------------------------------------------------------------------
| Reversal of accrual-based items | 24.6 | 57.1 | -57 | 166.4 |
--------------------------------------------------------------------------------
| Change in working capital | | | | |
--------------------------------------------------------------------------------
| Change in trade and other | 15.1 | 41.7 | -61 | 98.1 |
| receivables | | | | |
--------------------------------------------------------------------------------
| Change in inventories | 15.0 | 28.5 | -47 | 173.5 |
--------------------------------------------------------------------------------
| Change in current liabilities | 0.0 | -95.2 | -100 | -154.1 |
--------------------------------------------------------------------------------
| Change in working capital, | 30.1 | -25.0 | - | 117.5 |
| total | | | | |
--------------------------------------------------------------------------------
| Interest paid | -6.7 | -8.7 | -23 | -35.3 |
--------------------------------------------------------------------------------
| Other financial items, net | -15.1 | 16.4 | - | -22 |
--------------------------------------------------------------------------------
| Interest received | 0.7 | 1.0 | -30 | 4.7 |
--------------------------------------------------------------------------------
| Taxes paid | -11.8 | -12.3 | -4 | -38.7 |
--------------------------------------------------------------------------------
| Net cash generated from | 40.8 | 35.3 | 15 | 260.9 |
| operating activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flows from investing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Acquisition of subsidiaries, | -2.9 | -7.5 | -61 | -7.5 |
| net of cash | | | | |
--------------------------------------------------------------------------------
| Purchase of property, plant and | -3.9 | -4.5 | -13 | -20.8 |
| equipment | | | | |
--------------------------------------------------------------------------------
| Purchase of intangible assets | -1.7 | -2.2 | -23 | -7.2 |
--------------------------------------------------------------------------------
| Proceeds from sale of tangible | 1.6 | 0.1 | 1500 | 4.1 |
| and intangible assets | | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of other | -0.1 | 0 | -100 | 0.3 |
| investments | | | | |
--------------------------------------------------------------------------------
| Net cash used in investing | -7.0 | -14.1 | -50 | -31.1 |
| activities | | | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Operating cash flow after | 33.8 | 21.2 | 59 | 229.8 |
| investments | | | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Cash flow from financing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Change in current liabilities | 23.1 | -70.6 | -133 | -138.6 |
--------------------------------------------------------------------------------
| Proceeds from borrowings | 100.0 | 60.0 | 67 | 60.0 |
--------------------------------------------------------------------------------
| Repayments of borrowings | -8.8 | -0.4 | 2100 | -110.6 |
--------------------------------------------------------------------------------
| Payments of financial leasing | -0.1 | -0.1 | 0 | -0.3 |
| debts | | | | |
--------------------------------------------------------------------------------
| Purchase of treasury shares | 0.0 | -4.0 | 100 | -4.0 |
--------------------------------------------------------------------------------
| Dividends paid | 0.0 | 0.0 | - | -63.4 |
--------------------------------------------------------------------------------
| Net cash used in financing | 114.2 | -15.1 | -856 | -256.9 |
| activities | | | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Net change in cash and cash | 148.0 | 6.2 | 2285 | -27.1 |
| equivalents | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | 173.1 | 197.7 | -12 | 197.7 |
| the beginning of the period | | | | |
--------------------------------------------------------------------------------
| Change in the fair value of the | 2.4 | -0.4 | - | 2.5 |
| cash equivalents | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | 323.5 | 203.5 | 59 | 173.1 |
| the end of the period | | | | |
--------------------------------------------------------------------------------
3. NOTES
ACCOUNTING PRINCIPLES OF THE INTERIM REPORT
YIT Corporation's Interim Report for January 1 - March 31, 2010 has been drawn
up in line with IAS 34: Interim Financial Reporting. The information presented
in the Interim Report has not been audited. YIT has applied the same accounting
policy and IFRS standards and interpretations in the drafting of the Interim
Report as in its annual financial statements for 2009. However, the following
new standards, interpretations and amendments on current standards that have
been approved by EU have been applied as of January 1, 2010.
IFRIC 15 Agreements for the Construction of Real Estate
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS
interpretation from the start of the financial period beginning on January 1,
2010. The IFRIC 15 interpretation contains guidelines on when the revenue
generated by the construction of real estate must be recognised on the basis of
the delivery of the building and when the percentage of completion method can be
applied. In YIT, the new interpretation will have an impact on the recognition
of own development projects involving residential and commercial real estate.
The interpretation will not have any impact on construction contracting or
building and industrial services.
In Group-level reports, the revenue generated by YIT's own residential
development projects will be recognised when the project is complete i.e. when
the residential units are ready to be handed over to the client. The share of
income and expenses to be recognized will be calculated also in the future by
multiplying the percentage of completion by the percentage of sale. Under the
old practice, the revenue recognition began when the building work started using
the percentage of completion method.
In YIT's own commercial real estate development projects, the recognition
practice will be evaluated on a case-by-case basis and in accordance with the
terms and conditions of each contract. The projects already sold will be
recognised when the construction work has started or when the project is
complete. The share of income and expenses to be recognized will be calculated
also in the future by using the formula percentage of completion multiplied by
the percentage of sale multiplied by the occupancy rate. Under the old practice,
the recognition of sold projects was possible to start always immediately when
the building work started. YIT usually sells its commercial real estate
development projects to investors before the start of construction or during the
early stages of the construction work, which together with other facts means
that in most cases the revenue of these projects can be recognised in accordance
with the old practice also in the future.
In Finland, YIT finances its projects by selling construction-stage contract
receivables to financing companies. According to the new interpretation, sold
residential units from own development projects will be recognised as revenue
when the project is complete. As a result, all construction-stage contract
receivables related to residential production and sold to financing companies
must be reported as part of the interest-bearing liabilities on the balance
sheet. Under the old practice, part of construction-stage contract receivables
related to residential production was reported as off-balance sheet items.
Due to applying the interpretation the items in consolidated income statement,
consolidated balance sheet and consolidated cash flow statement for the previous
periods have been adjusted for comparability as follows:
Changes in consolidated income statement (EUR million)
--------------------------------------------------------------------------------
| | 1-3/ | 4-6/ | 7-9/ | 10-12/ | | 1-3/0 | 1-6/0 | 1-9/0 | 1-12/ |
| | 09 | 09 | 09 | 09 | | 9 | 9 | 9 | 09 |
--------------------------------------------------------------------------------
| Revenue | 19.5 | 9.7 | -60. | 64.7 | | 19.5 | 29.2 | -31.5 | 33.2 |
| | | | 7 | | | | | | |
--------------------------------------------------------------------------------
| Operating | 6.6 | 5.2 | -12. | 3.6 | | 6.6 | 11.8 | -1.0 | 2.6 |
| profit | | | 8 | | | | | | |
--------------------------------------------------------------------------------
| Profit | 6.6 | 5.2 | -12. | 3.6 | | 6.6 | 11.8 | -1.0 | 2.6 |
| before | | | 8 | | | | | | |
| taxes | | | | | | | | | |
--------------------------------------------------------------------------------
| Deferred | -1.3 | -1.1 | 2.8 | -1.1 | | -1.3 | -2.4 | 0.4 | -0.7 |
| taxes | | | | | | | | | |
--------------------------------------------------------------------------------
| Profit | 5.3 | 4.1 | -10. | 2.5 | | 5.3 | 9.4 | -0.6 | 1.9 |
| for the | | | 0 | | | | | | |
| period | | | | | | | | | |
--------------------------------------------------------------------------------
Changes in consolidated balance sheet (EUR million)
--------------------------------------------------------------------------------
| | 1.1.2009 | 3/09 | 6/09 | 9/09 | 12/09 |
--------------------------------------------------------------------------------
| Inventories | 205.5 | 186.1 | 183.0 | 230.8 | 168.1 |
--------------------------------------------------------------------------------
| Trade and other | -46.8 | -33.6 | -33.7 | -43.9 | -20.7 |
| receivables | | | | | |
--------------------------------------------------------------------------------
| Deferred tax | 5.8 | 6.4 | 6.1 | 8.8 | 3.3 |
| receivables | | | | | |
--------------------------------------------------------------------------------
| Equity | -39.1 | -31.8 | -28.1 | -38.2 | -36.5 |
--------------------------------------------------------------------------------
| Current | 49.8 | 38.9 | 28.3 | 34.0 | 31.4 |
| borrowings | | | | | |
--------------------------------------------------------------------------------
| Trade and other | 157.4 | 149.2 | 152.3 | 197.6 | 162.0 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| Provisions | 1.6 | 5.4 | 5.0 | 4.6 | 0.6 |
--------------------------------------------------------------------------------
| Deferred tax | -5.2 | -2.8 | -2.1 | -2.3 | -6.8 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| Balance sheet | 164.5 | 158.9 | 155.4 | 195.7 | 150.7 |
| total | | | | | |
--------------------------------------------------------------------------------
Changes in consolidated cash flow statement (EUR million)
--------------------------------------------------------------------------------
| | 1-3/09 | 1-6/09 | 1-9/09 | 1-12/09 |
--------------------------------------------------------------------------------
| Net cash generated from | 10.9 | 21.5 | 15.7 | 18.4 |
| operating activities | | | | |
--------------------------------------------------------------------------------
| Operating cash flow after | 10.9 | 21.5 | 15.7 | 18.4 |
| investments | | | | |
--------------------------------------------------------------------------------
| Net cash used in financing | -10.9 | -21.5 | -15.7 | -18.4 |
| activities | | | | |
--------------------------------------------------------------------------------
Under the new practice, the quarterly revenue and profits of the YIT Group will
now fluctuate more in accordance with the completion dates of development
projects. The new revenue recognition practice also means that it will take more
time for the Group's financial figures to reflect changes in production volumes.
The adoption of the interpretation will not have any impact on the figures
covering YIT's segments published by the Group as the information will continue
to be calculated in accordance with existing accounting principles.
YIT published the comparison figures for consolidated income statement,
consolidated balance sheet, consolidated cash flow statement and key figures for
2009 in a stock exchange release published on March 23, 2010.
Other standards and interpretations
Other standards and interpretations that have been applied as of January 1, 2010
have minor or no effects on YIT during the report period, and they include:
IFRS3 (revised): Business Combinations. All the acquisition-related costs have
been expensed during the period, which had an insignificant impact on reported
figures.
IAS 27 (revised): Consolidated and Separate Financial Statements
IFRIC 12: Service Concession Arrangements
IFRIC 16: Net Investment in a Foreign Operation
IFRIC 17: Distribution of non cash assets to owners
IFRIC 18: Transfers of Assets from Customers
IFRIC 9 ja IAS 39 (Amendment): Reassessment of embedded derivatives on
reclassification
IAS 39 (Amendment): Financial Instruments: Recognition and measurement -
Eligible Hedged Items'
IFRS 2 (Amendment): Share based payments
Improvements to IFRS-amendments 2009
Currency exchange rates used in the Interim Report
--------------------------------------------------------------------------------
| | | Average rate | Balance sheet rate |
| | | 1-3/2010 | March 31, 2010 |
--------------------------------------------------------------------------------
| 1 EUR = | SEK | 9.9576 | 9.7135 |
--------------------------------------------------------------------------------
| | NOK | 8.1055 | 8.0135 |
--------------------------------------------------------------------------------
| | DKK | 7.4426 | 7.4447 |
--------------------------------------------------------------------------------
| | EEK | 15.6466 | 15.6466 |
--------------------------------------------------------------------------------
| | LVL | 0.7028 | 0.7028 |
--------------------------------------------------------------------------------
| | LTL | 3.4528 | 3.4528 |
--------------------------------------------------------------------------------
| | RUB | 41.3285 | 39.695 |
--------------------------------------------------------------------------------
| | HUF | 268.60 | 265.75 |
--------------------------------------------------------------------------------
| | CZK | 25.881 | 25.440 |
--------------------------------------------------------------------------------
| | PLN | 3.9910 | 3.8673 |
--------------------------------------------------------------------------------
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 and units.
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 investments and the amount of working capital tied to business
operations.
A more detailed account of financial risks has been published in the notes to
the financial statements for 2009.
SEGMENT INFORMATION
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS
interpretation from the start of the financial period begun on January 1, 2010.
Due to the application of the interpretation, Group reporting and segment
reporting will differ.
In segment reporting, the figures will continue to be calculated based on the
previous accounting principle, i.e. percentage of completion will be applied in
the recognition of revenue from own residential and commercial real estate
development projects.
As from the beginning of 2010, Group reporting will apply the new
interpretation. According to the interpretation own residential development
projects will be recognised at the time of delivery. Own commercial real estate
development projects will be recognized in most cases based on the percentage of
completion or alternatively at the time of delivery.
The figures for 2010 and 2009 are comparable.
The chief operating decision-maker has been identified as the YIT Group's
Management Board, which review the Group's internal reporting in order to assess
performance and allocate resources to the segments.
Revenue by business segment (EUR million)
--------------------------------------------------------------------------------
| | 1-3/201 | 1-3/2009 | change, | 1-12/2009 |
| | 0 | | % | |
--------------------------------------------------------------------------------
| Building and Industrial Services | 477.0 | 537.9 | -11 | 2,124.9 |
--------------------------------------------------------------------------------
| - Group internal | -15.1 | -15.2 | -1 | -58.6 |
--------------------------------------------------------------------------------
| - external | 461.9 | 522.7 | -12 | 2,066.3 |
--------------------------------------------------------------------------------
| Construction Services Finland | 252.9 | 239.8 | 5 | 1,029.7 |
--------------------------------------------------------------------------------
| - Group internal | -0.3 | -0.5 | -40 | -1.8 |
--------------------------------------------------------------------------------
| - external | 252.6 | 239.3 | 6 | 1,028.0 |
--------------------------------------------------------------------------------
| International Construction | 106.9 | 61.4 | 74 | 359.4 |
| Services | | | | |
--------------------------------------------------------------------------------
| - Group internal | -0.8 | -0.5 | 60 | -3.1 |
--------------------------------------------------------------------------------
| - external | 106.1 | 60.9 | 74 | 356.3 |
--------------------------------------------------------------------------------
| Other items | 0.2 | 0.7 | -71 | 1.8 |
--------------------------------------------------------------------------------
| YIT's segments total | 820.8 | 823.7 | 0 | 3,452.4 |
--------------------------------------------------------------------------------
| IFRIC 15 adjustments | -55.5 | 19.5 | -385 | 33.2 |
--------------------------------------------------------------------------------
| YIT Group, total - external | 765.3 | 843.2 | -9 | 3,485.6 |
--------------------------------------------------------------------------------
Operating profit by business segment (EUR million)
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Building and Industrial | 21.6 | 28.6 | -24 | 119.3 |
| Services 1) | | | | |
--------------------------------------------------------------------------------
| Construction Services Finland | 23.1 | 20.9 | 11 | 81.9 |
--------------------------------------------------------------------------------
| International Construction | 4.6 | -23.8 | - | -17.8 |
| Services | | | | |
--------------------------------------------------------------------------------
| Other items | -4.8 | -3.6 | 33 | -17.9 |
--------------------------------------------------------------------------------
| YIT's segments total | 44.5 | 22.1 | 101 | 165.5 |
--------------------------------------------------------------------------------
| IFRIC 15 adjustments | -10.6 | 6.6 | - | 2.6 |
--------------------------------------------------------------------------------
| YIT Group, total | 33.9 | 28.7 | 18 | 168.1 |
--------------------------------------------------------------------------------
1) On September 30, 2009, the court of arbitration issued its ruling in the
dispute concerning the mechanical installation contract YIT carried out for
Neste Oil's Porvoo oil refinery. The effect of the ruling on Building and
Industrial Services' operating profit for 7-9/2009 was EUR -3.2 million.
Order backlog by business segment at end of period (EUR million)
--------------------------------------------------------------------------------
| | 3/2010 | 3/2009 | change, | 12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Building and Industrial | 964.2 | 1,048.3 | -8 | 850.4 |
| Services | | | | |
--------------------------------------------------------------------------------
| Construction Services Finland | 905.4 | 819.8 | 10 | 1,007.5 |
--------------------------------------------------------------------------------
| International Construction | 1,013.2 | 1,239.1 | -18 | 960.1 |
| Services 1) | | | | |
--------------------------------------------------------------------------------
| Other items | -45.8 | -62.1 | -26 | -44.4 |
--------------------------------------------------------------------------------
| YIT's segments total | 2,837.0 | 3,045.0 | -7 | 2,773.6 |
--------------------------------------------------------------------------------
| IFRIC 15 adjustments | 315.5 | 211.3 | 49 | 209.7 |
--------------------------------------------------------------------------------
| YIT Group, total | 3,152.5 | 3,256.3 | -3 | 2,983.3 |
--------------------------------------------------------------------------------
1) The order backlog includes housing projects whose construction was suspended
in Russia in October 2008 due to market uncertainties. At the end of March 2010,
the projects that were still suspended included 1,467 (2,485) residential units
and the value of the projects amounted to EUR 235 million (3/09: EUR 322
million) in the order backlog.
UNUSUAL ITEMS AFFECTING OPERATING PROFIT (EUR million)
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Building and Industrial | 0 | - | - | -3.2 |
| Services | | | | |
--------------------------------------------------------------------------------
| Total | 0 | - | - | -3.2 |
--------------------------------------------------------------------------------
On September 30, 2009, the court of arbitration issued its ruling in the dispute
concerning the mechanical installation contract YIT carried out for Neste Oil's
Porvoo oil refinery. The effect of the ruling on Building and Industrial
Services' operating profit for 7-9/2009 was EUR -3.2 million.
ACQUIRED AND DIVESTED BUSINESSES (EUR million)
During January-March, YIT made three minor acquisitions in the Building and
Industrial Services segment in Sweden, one in Norway and one in Denmark. The
acquired companies were in Sweden Br Björk Elservice, Fristad rör & el AB and
G:sson Teleteknik AB, in Norway Ugelvik Nesset and in Denmark Brdr. Petersens
Eftf. A/S. In International Construction Services, YIT increased its holding in
YIT Don to 100 per cent in January.
During the review period there were no divestments.
--------------------------------------------------------------------------------
| | 1-3/2010 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consideration | |
--------------------------------------------------------------------------------
| Paid in cash | 3.5 |
--------------------------------------------------------------------------------
| Contingent consideration | 0.3 |
--------------------------------------------------------------------------------
| Total consideration, transferred | 3.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition - related costs (expensed) | 0.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Recognised amounts of identifiable assets acquired and | |
| liabilities assumed | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents | 0.7 |
--------------------------------------------------------------------------------
| Tangible assets | 0.4 |
--------------------------------------------------------------------------------
| Customer relations and contract bases | 2.4 |
--------------------------------------------------------------------------------
| Inventories | 0.4 |
--------------------------------------------------------------------------------
| Trade and other receivables | 0.9 |
--------------------------------------------------------------------------------
| Trade and other payables | -1.0 |
--------------------------------------------------------------------------------
| Total identifiable net assets | 3.8 |
--------------------------------------------------------------------------------
| Non- controlling interest | 0 |
--------------------------------------------------------------------------------
| Goodwill | 0 |
--------------------------------------------------------------------------------
| Total entity value | 3.8 |
--------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT (EUR million)
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Carrying value at the beginning | 99.8 | 104.6 | -5 | 104.6 |
| of period | | | | |
--------------------------------------------------------------------------------
| Increase | 4.0 | 4.6 | -13 | 21.5 |
--------------------------------------------------------------------------------
| Increase through acquisitions | 0.4 | 0 | 100 | 0.0 |
--------------------------------------------------------------------------------
| Decrease | -1.4 | -1.3 | 8 | -3.4 |
--------------------------------------------------------------------------------
| Depreciation and value | -5.8 | -5.7 | 2 | -22.9 |
| adjustments | | | | |
--------------------------------------------------------------------------------
| Reclassification | 1.8 | -1.0 | - | 0.0 |
--------------------------------------------------------------------------------
| Carrying value at the end of | 98.8 | 101.2 | -2 | 99.8 |
| period | | | | |
--------------------------------------------------------------------------------
INVENTORIES (EUR million)
--------------------------------------------------------------------------------
| | 3/2010 | 3/2009 | change, | 12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Raw materials and consumables | 20.1 | 18.5 | 9 | 18.8 |
--------------------------------------------------------------------------------
| Work in progress | 667.9 | 774.1 | -14 | 610.0 |
--------------------------------------------------------------------------------
| Land areas and plot owing | 581.5 | 581.5 | 0 | 572.1 |
| companies | | | | |
--------------------------------------------------------------------------------
| Shares in completed housing and | 209.0 | 181.9 | 15 | 224.8 |
| real estate companies | | | | |
--------------------------------------------------------------------------------
| Advance payments | 47.7 | 56.3 | -15 | 51.5 |
--------------------------------------------------------------------------------
| Other inventories | 1.2 | 0.6 | 100 | 0.4 |
--------------------------------------------------------------------------------
| Total inventories | 1,527.4 | 1,612.9 | -5 | 1,477.6 |
--------------------------------------------------------------------------------
NOTES ON EQUITY
--------------------------------------------------------------------------------
| Share capital and share premium | Number of | Share | Treasury |
| reserve | shares | capital | shares (EUR |
| | | (EUR | million) |
| | | million) | |
--------------------------------------------------------------------------------
| January 1, 2010 | 125,078,422 | 149.2 | -10.6 |
--------------------------------------------------------------------------------
| March 31, 2010 | 125,078,422 | 149.2 | -10.6 |
--------------------------------------------------------------------------------
BORROWINGS (EUR million)
--------------------------------------------------------------------------------
| | Fair | Carrying | Nominal value |
| | value | value | |
--------------------------------------------------------------------------------
| Bonds in financial statements | 189.2 | 199.9 | 200.0 |
| December 31, 2009 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Valuation of the above bonds on | 188.3 | 196.3 | 200.0 |
| March 31, 2010 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bonds raised during the review | | | |
| period: | | | |
--------------------------------------------------------------------------------
| Fixed-rate bonds | | | |
--------------------------------------------------------------------------------
| 1/2010-2015, interest rate 4.823% | 100.4 | 99.8 | 100.0 |
| 1) | | | |
--------------------------------------------------------------------------------
| Total bonds March 31, 2010 | 288.7 | 296.1 | 300.0 |
--------------------------------------------------------------------------------
Terms of the bonds raised during the revenue period in brief:
1) Loan period March 26, 2010 - March 26, 2015, interest payments in arrear at
March 26, annually.
The bond is unsecured. ISIN code FI4000012067.
CHANGE IN CONTINGENT LIABILITIES AND ASSETS AND COMMITMENTS (EUR million)
--------------------------------------------------------------------------------
| | 3/2010 | 3/2009 | change, | 12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Collateral given for own | | | | |
| commitments | | | | |
--------------------------------------------------------------------------------
| Corporate mortgages | 29.3 | 29.3 | 0 | 29.3 |
--------------------------------------------------------------------------------
| Other pledged assets | 53.2 | - | 100 | 45.2 |
--------------------------------------------------------------------------------
| Other commitments | | | | |
--------------------------------------------------------------------------------
| Repurchase commitments | 119.3 | 126.2 | -5 | 106.4 |
--------------------------------------------------------------------------------
| Operating leases | 308.2 | 340.0 | -9 | 321.9 |
--------------------------------------------------------------------------------
| Rental guarantees for clients | 8.6 | 12.3 | -30 | 9.2 |
--------------------------------------------------------------------------------
| Other contingent liabilities | 0.5 | 0.8 | -38 | 0.4 |
--------------------------------------------------------------------------------
| Guarantees given | 0.2 | - | 100 | - |
--------------------------------------------------------------------------------
| Liability under derivative | | | | |
| contracts | | | | |
--------------------------------------------------------------------------------
| Value of underlying instruments | | | | |
--------------------------------------------------------------------------------
| Interest rate derivatives | 308.8 | 239.9 | 29 | 362.3 |
--------------------------------------------------------------------------------
| Foreign exchange derivatives | 304.0 | 84.1 | 261 | 83.5 |
--------------------------------------------------------------------------------
| Market value | | | | |
--------------------------------------------------------------------------------
| Interest rate derivatives | -9.5 | -7.9 | 20 | -5.9 |
--------------------------------------------------------------------------------
| Foreign exchange derivatives | -10.0 | 16.5 | - | -9.4 |
--------------------------------------------------------------------------------
TRANSACTIONS WITH ASSOCIATED COMPANIES (EUR million)
--------------------------------------------------------------------------------
| | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 |
| | | | % | |
--------------------------------------------------------------------------------
| Sales to associated companies | 0.4 | 1.0 | -60 | 1.3 |
--------------------------------------------------------------------------------
| Purchases from associated | 0.0 | 0.7 | -100 | 0.2 |
| companies | | | | |
--------------------------------------------------------------------------------
| Trade and other receivables | 0.0 | 0.1 | -100 | 0.1 |
--------------------------------------------------------------------------------
| Trade and other liabilities | 0.0 | 0.6 | -100 | 0.1 |
--------------------------------------------------------------------------------
