YIT's Financial Statements Bulletin for 2012: Operating profit increased significantly in International Construction Services – the balance sheet strengthened

 

YIT CORPORATION FINANCIAL STATEMENTS BULLETIN                    February 5, 2013 at 8:00 a.m. EET

 

 

YIT'S FINANCIAL STATEMENTS BULLETIN FOR 2012:

Operating profit increased significantly in International Construction Services – the balance sheet strengthened


October 1 – December 31, 2012: All-time high residential sales in Russia during the fourth quarter

  • The operating profit for the segments decreased by 11 percent in October–December compared to the previous year, amounting to EUR 67.5 million (10–12/2011: EUR 76.2 million). The operating profit for International Construction Services increased significantly compared to the previous year. Operating profit also increased in Construction Services Finland compared to the previous year and profitability was at a good level. The profitability of completed projects and projects close to completion in the project business of Building Services Northern Europe was lower than forecasted, and project forecast changes had a negative impact of approximately EUR 20 million on the operating profit for the fourth quarter.
  • The revenue for the segments for the fourth quarter was on a par with the previous year, amounting to EUR 1,277.8 million (10–12/2011: EUR 1,264.5 million). Revenue grew clearly in International Construction Services where the growth of revenue was supported by the high volume of residential production, record-high residential sales in Russia and clearly improved revenue in the Baltic countries and in Central Eastern Europe. Revenue remained on a par with the previous year in Construction Services Finland and Building Services Central Europe, while revenue decreased in Building Services Northern Europe.
  • The Group’s profit before taxes based on segment reporting decreased by 10 percent in October–December from the year before, amounting to EUR 62.0 million (10–12/2011: EUR 68.6 million).
  • The Group’s earnings per share based on segment reporting decreased by 12 percent in October–December from the year before, amounting to EUR 0.36 (10–12/2011: EUR 0.41).


January 1 – December 31, 2012: Good development in Construction Services

  • The operating profit for the segments increased by 3 percent compared to the previous year, amounting to EUR 248.8 million (1–12/2011: EUR 240.5 million). Operating profit almost doubled in International Construction Services and increased by 14 percent in Construction Services Finland.
  • The revenue for the segments for January–December was on a par with the previous year, amounting to EUR 4,675.9 million (1–12/2011: EUR 4,524.7 million). Revenue grew in International Construction Services and Construction Services Finland.
  • The order backlog of the segments was strong, 4 percent higher than a year earlier, amounting to EUR 3,901.5 million (12/2011: EUR 3,752.7 million).
  • The Group’s profit before taxes based on segment reporting increased by 5 percent from the year before, amounting to EUR 227.6 million (1–12/2011: EUR 215.8 million).
  • The Group’s earnings per share based on segment reporting increased by 10 percent from the year before, amounting to EUR 1.37 (1–12/2011: EUR 1.25).


GUIDANCE: The Group revenue based on segment reporting for 2013 to remain at last year’s level and operating profit to grow in 2013


YIT estimates the Group revenue based on segment reporting for 2013 to remain at last year’s level and operating profit to grow in 2013. The uncertainty about the general macroeconomic development is still high and impacting YIT's business operations and customers. The first quarter is typically the weakest quarter due to the normal seasonal fluctuation of business.


DIVIDEND PROPOSAL: The Board of Directors proposes a dividend increase to EUR 0.75 per share


The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.75 per share be paid, representing 55 percent of the Group's net profit for the period based on segment reporting.


Juhani Pitkäkoski, President and CEO: All-time high residential sales in Russia during the fourth quarter


We are satisfied with the continued good development in Construction Services during the fourth quarter. Our business operations in Russia strengthened further and our residential sales reached an all-time record during the fourth quarter: we sold almost 1,300 residential units in Russia. According to our plan the profitability improved and the operating profit grew clearly in International Construction Services, which was by far the most profitable segment of the Group in terms of operating profit margin.


We responded to the continued favourable demand by starting up the construction of in total almost 2,300 residential units during the fourth quarter. In addition to low interest rates, the change in asset transfer tax legislation taking effect at the beginning of March 2013 in Finland will support residential sales in early 2013.


The personnel cuts of 800 employees in Building Services Northern Europe have been completed and we anticipate that the profitability will improve during the current year. Cost adjustments will be continued further during 2013. The profitability of Building Services Central Europe was at a good level in the fourth quarter, in Germany and Austria in particular.


Our cash flow was good during the fourth quarter and our balance sheet strengthened. Our net debt decreased, amounting to EUR 746 million at the end of December. Our equity ratio exceeded our strategic target of 35 percent.

 

 

KEY FIGURES


Development of the Group based on segment reporting (percentage of completion, POC)

 

Revenue, EUR million 1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Building Services Northern Europe 2,089.2 2,097.6 0%   552.7 600.1 -8%
Building Services Central Europe 714.2 779.3 -8%   195.8 200.3 -2%
Construction Services Finland 1,329.0 1,226.9 8%   342.6 335.7 2%
International Construction Services 599.6 489.2 23%   205.0 145.9 41%
Other items -56.1 -68.2     -18.3 -17.5  
Group, total 4,675.9 4,524.7 3%   1,277.8 1,264.5 1%

 

Operating profit, EUR million 1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Building Services Northern Europe 41.7 78.8 -47%   -3.8 23.0  
Building Services Central Europe 26.9 33.3 -19%   10.4 9.3 11%
Construction Services Finland 127.0 111.6 14%   38.1 32.1 19%
International Construction Services 73.9 37.2 99%   28.7 17.4 65%
Other items -20.7 -20.4     -5.7 -5.6  
Group, total 248.8 240.5 3%   67.5 76.2 -11%

 

Operating profit margin, % 1-12/12 1-12/11     10-12/12 10-12/11  
Building Services Northern Europe 2.0 3.8     -0.7 3.8  
Building Services Central Europe 3.8 4.3     5.3 4.6  
Construction Services Finland 9.6 9.1     11.1 9.6  
International Construction Services 12.3 7.6     14.0 11.9  
Group, total 5.3 5.3     5.3 6.0  

 

Order backlog, EUR million 12/12 12/11 Change   12/12 9/12 Change
Building Services Northern Europe 819.0 913.1 -10%   819.0 904.9 -9%
Building Services Central Europe 380.1 449.5 -15%   380.1 435.5 -13%
Construction Services Finland 1,499.0 1,493.6 0%   1,499.0 1,541.0 -3%
International Construction Services 1,266.1 962.5 32%   1,266.1 1,207.4 5%
Other items -62.8 -66.0     -62.8 -70.1  
Group, total 3,901.5 3,752.7 4%   3,901.5 4,018.6 -3%

 

Key ratios of segment reporting (percentage of completion, POC)

 

  1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Profit before taxes, EUR million 227.6 215.8 5%   62.0 68.6 -10%
Profit for the review period, EUR million 1) 171.2 156.7 9%   45.1 51.8 -12%
Earnings/share, EUR 1.37 1.25 10%   0.36 0.41 -12%
Operating cash flow after investments, EUR million 90.4 -17.3     87.3 14.1 519%
Personnel at the end of period 25,283 25,996 -3%   25,283 25,996 -3%

1) attributable to equity holders of the parent company

 

Annual General Meeting 2013


YIT Corporation's Annual General Meeting will be held on Friday, March 15, 2013, starting at 10:00 a.m. (Finnish time, EET) in Finlandia Hall, Conference Wing. Full notice of the meeting, including the Board of Directors’ proposals to the Annual General Meeting, will be published as a separate stock exchange release on February 5, 2013.


Financial information in 2013


The Annual Report, including the financial statements for 2012, will be published on YIT's website in Finnish and English at the latest on February 22, 2013. Interim Reports will be published on April 26, July 26 and October 30, 2013.

 

 

NEWS CONFERENCE, WEBCAST AND CONFERENCE CALL


YIT will hold a news conference on the financial statements bulletin on Tuesday, February 5, 2013, at 10:00 a.m. (Finnish Time, EET). The news conference will be held in English at YIT's head office at Panuntie 11, 00620 Helsinki, Finland. The event is intended for analysts, portfolio managers and the media.


The news conference and the presentation, given by the company’s President and CEO, Juhani Pitkäkoski, can be viewed live on YIT’s website at www.yitgroup.com/webcast. The live webcast will start at 10:00 a.m. (Finnish Time, EET). A recording of the webcast will be available at the same address starting at approximately 12:00 noon (Finnish Time, EET).


It is also possible to participate in the news conference through a conference call. Participants are requested to call the assigned number +44 (0)20 7162 0077 at least five minutes before the conference call begins, at 9:55 a.m. (Finnish time, EET) at the latest. The participants will be asked to provide the following conference ID: 927273. During the webcast and conference call, all questions should be presented in English. At the end of the event, there will also be an opportunity for the media to ask questions in Finnish.


Schedule in different time zones:

 

  Financial Statements Bulletin published News conference, conference call and live webcast Recorded webcast available
EET (Helsinki) 8:00 10:00 12:00
CET (Paris, Stockholm) 7:00 9:00 11:00
GMT (London) 6:00 8:00 10:00
US EST (New York) 1:00 3:00 5:00

 

Financial reports and other investor information are available at YIT's website, www.yitgroup.com/investors. The materials may be ordered via the website, by sending e-mail to InvestorRelations@yit.fi or by telephone on +358 20 433 2257.

 


YIT Corporation


Juhani Pitkäkoski

President and CEO

 


For further information, please contact:

 

Timo Lehtinen, Chief Financial Officer, YIT Corporation, tel. +358 45 670 0626, timo.lehtinen@yit.fi

Hanna-Maria Heikkinen, Vice President, Investor Relations, YIT Corporation, tel. +358 40 826 2172, hanna-maria.heikkinen@yit.fi

Distribution: NASDAQ OMX Helsinki, principal media, www.yitgroup.com


 

 

FINANCIAL STATEMENTS BULLETIN JANUARY 1 – DECEMBER 31, 2012

 

CONTENTS

 

  • Group financial development based on segment reporting
  • Development by business segment
  • Personnel
  • Strategic objectives
  • Group financial development based on Group reporting (IFRS, IFRIC 15)
  • Resolutions passed at the Annual General Meeting
  • Shares and shareholders
  • Most significant short-term business risks and risk management
  • Personnel development as part of corporate responsibility
  • Outlook for 2013
  • Board of Directors' proposal for the use of distributable equity
  • Tables to the Financial Statements Bulletin

 

 

GROUP FINANCIAL DEVELOPMENT BASED ON SEGMENT REPORTING


Accounting principles applied in the financial statements


YIT Corporation’s management follows the development of the company’s business according to the percentage of completion-based reporting method for each segment. Therefore, the descriptive part of the financial statements focuses on describing the company’s performance according to this reporting. YIT also reports on its operations in accordance with IFRS guidelines, where the company applies, for example, the IFRIC 15 guidelines. The effects of the differences of the recognition principles are presented in detail in the tables to the financial statements.


Revenue of the segments on a par with the previous year

 

Revenue, EUR million 1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Building Services Northern Europe 2,089.2 2,097.6 0%   552.7 600.1 -8%
Building Services Central Europe 714.2 779.3 -8%   195.8 200.3 -2%
Construction Services Finland 1,329.0 1,226.9 8%   342.6 335.7 2%
International Construction Services 599.6 489.2 23%   205.0 145.9 41%
Other items -56.1 -68.2     -18.3 -17.5  
Group, total 4,675.9 4,524.7 3%   1,277.8 1,264.5 1%

 

The revenue of YIT's segments was on a par with the previous year in January–December, amounting to EUR 4,675.9 million (1–12/2011: EUR 4,524.7 million). Revenue for the fourth quarter was on a par with the previous year, amounting to EUR 1,277.8 million (10–12/2011: EUR 1,264.5 million). Revenue grew in International Construction Services and in Construction Services Finland in 2012. The growth in revenue was supported by the high volume of housing production, continued good residential sales, own development project sales in business premises construction and favourable development of infrastructure services in Finland. Changes in foreign exchange rates increased the segments' revenue for January–December by EUR 60.6 million and for the fourth quarter by EUR 3.5 million compared to the previous year.


In January–December, Finland accounted for 40 percent (1–12/2011: 40%) of the Group’s revenue according to the segment reporting, Sweden for 15 percent (1–12/2011: 17%), Germany for 12 percent (1–12/2011: 14%), Norway for 12 percent (1–12/2011: 12%), Russia for 10 percent (1–12/2011: 7%), Denmark for 3 percent (1–12/2011: 4%), Austria for 3 percent (1–12/2011: 2%), the Baltic countries for 3 percent (1–12/2011: 2%) and other countries for 1 percent (1–12/2011: 1%).


Operating profit of the segments increased compared to the previous year

 

Operating profit, EUR million 1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Building Services Northern Europe 41.7 78.8 -47%   -3.8 23.0  
Building Services Central Europe 26.9 33.3 -19%   10.4 9.3 11%
Construction Services Finland 127.0 111.6 14%   38.1 32.1 19%
International Construction Services 73.9 37.2 99%   28.7 17.4 65%
Other items -20.7 -20.4     -5.7 -5.6  
Group, total 248.8 240.5 3%   67.5 76.2 -11%

 

Operating profit margin, % 1-12/12 1-12/11     10-12/12 10-12/11  
Building Services Northern Europe 2.0 3.8     -0.7 3.8  
Building Services Central Europe 3.8 4.3     5.3 4.6  
Construction Services Finland 9.6 9.1     11.1 9.6  
International Construction Services 12.3 7.6     14.0 11.9  
Group, total 5.3 5.3     5.3 6.0  

 

YIT's operating profit based on segment reporting increased by 3 percent compared to the previous year, amounting to EUR 248.8 million in January–December (1–12/2011: EUR 240.5 million). The operating profit margin based on segment reporting was 5.3 percent (1–12/2011: 5.3%). The operating profit for the review period includes EUR -13.6 million of borrowing costs according to IAS 23 (1–12/2011: EUR -9.4 million). The IAS 23 standard defines the recording method of borrowing costs in long-term construction projects.


The operating profit for the fourth quarter decreased by 11 percent from the previous year to EUR 67.5 million (10–12/2011: EUR 76.2 million). The operating profit margin based on segment reporting was 5.3 percent (10–12/2011: 6.0%). The operating profit for the fourth quarter includes EUR -4.5 million of borrowing costs according to IAS 23 (10–12/2011: EUR -3.1 million).


In Building Services Northern Europe the profitability of completed projects and projects close to completion in the project business (especially in Sweden, Denmark and Norway) was lower than forecasted, and project forecast changes had a negative impact on results of approximately EUR 20 million during the fourth quarter. The operating profit for Building Services Central Europe, Construction Services Finland and International Construction Services increased from the previous year.


The depreciations booked by YIT amounted to EUR 44.9 million euros during the review period (1-12/2011: EUR 39.6 million). The change in depreciation was particularly due to the increased depreciation related to allocations from business combinations, amounting to EUR 14.5 million euros (1-12/2011: EUR 10.1 million). YIT started reorganisation of operations in Poland during the second quarter, as a result of which a write-down of EUR 0.9 million was made to the goodwill during the third quarter in 2012.


Order backlog remained strong

 

Order backlog, EUR million 12/12 12/11 Change   12/12 9/12 Change
Building Services Northern Europe 819.0 913.1 -10%   819.0 904.9 -9%
Building Services Central Europe 380.1 449.5 -15%   380.1 435.5 -13%
Construction Services Finland 1,499.0 1,493.6 0%   1,499.0 1,541.0 -3%
International Construction Services 1,266.1 962.5 32%   1,266.1 1,207.4 5%
Other items -62.8 -66.0     -62.8 -70.1  
Group, total 3,901.5 3,752.7 4%   3,901.5 4,018.6 -3%

 

The order backlog of YIT's segments was EUR 3,901.5 million at the end of December (12/2011: EUR 3,752.7 million); approximately 4 percent more than at the end of December the previous year. The order backlog decreased by 3 percent from the end of September 2012, at which time it stood at EUR 4,018.6 million.


The order backlog of Building Services Northern Europe decreased on the previous year as the result of a weaker market situation. In addition, the order backlog of Building Services Central Europe decreased compared to the previous year, which was particularly due to a weakened activity in large projects in Germany. The order backlog of International Construction Services grew clearly as a result of residential start-ups.


Capital expenditure and acquisitions


Gross capital expenditure on non-current assets included on the balance sheet totalled EUR 44.6 million (1–12/2011: EUR 48.7 million) during January-December, representing 0.9 percent (1–12/2011: 1.1%) of revenue. Investments in construction equipment amounted to EUR 16.2 million (1–12/2011: EUR 15.5 million) and investments in information technology to EUR 9.2 million (1–12/2011: EUR 9.5 million). Other investments, including acquisitions, amounted to EUR 19.2 million (1–12/2011: EUR 23.7 million).


During 2012, YIT made a total of eight acquisitions. A more detailed description of the acquisitions made during the review period can be found in the tables to the financial statements bulletin. When assessing acquisitions, YIT's goal is to acquire companies that support YIT's strategy of becoming the leading building system service provider in the Nordic countries and Central Europe. The acquired company's business culture, areas of competence and payback time of the purchase price of the acquired company are key criteria.


During the first half of the year 2012, YIT made five acquisitions in the Building Services Northern Europe segment. In Sweden, YIT acquired the share capital of Elektriska Installationer i Finspång AB, a company specialising in electricity, telecommunications, data, alarm and low voltage installations, and its subsidiary Kraftmontage i Finspång AB, specialising in electrical installations in February. In Norway, YIT acquired the share capital of electrical installations specialist Madla Elektro AS in March. The company has around 30 employees. In Sweden, YIT acquired the security business operations of Level5 security in April and the share capital of electrical installations company Dala Elmontage Lindkvist & Bodin AB in May. The company has about 30 employees.


During the first half of the year 2012, YIT made two acquisitions in the Building Services Central Europe segment. In Austria, YIT acquired the share capital of P&P Kältenangebau GmbH, a cooling solutions and services provider, and the share capital of WM Haustechnik GmbH, an HVAC solution provider, in January 2012.


In December 2012 International Construction Services acquired 100% holding in OOO Vesta, a company specialising in contracting and services within technical building systems in Russia. International Construction Services also sold the shares held in a Russian company called UJUT Service. The sale had no significant impact to the results of the YIT Group.


The combined total acquisition price of the above acquisitions amounted to EUR 9.5 million. No goodwill is expected to be recognised as a result of the acquisitions.


Strong cash flow during the fourth quarter


The Group’s operating cash flow after investments for 2012 amounted to EUR 90.4 million (1–12/2011: EUR -17.3 million). Operating cash flow for 2012 was affected particularly by growth in the sales inventory of own development project production, plot investments in Russia and, on the other hand, a strong cash flow in Building Services Northern Europe and in Construction Services Finland.


The operating cash flow after investments for the fourth quarter amounted to EUR 87.3 million (10–12/2011: EUR 14.1 million). Operating cash flow for the fourth quarter 2012 was affected particularly by a strong cash flow in Building Services.


The return on investment based on segment reporting amounted to 14.2 percent for the last 12 months (10/2011–9/2012: 14.6%). At the end of December, the Group's invested capital based on segment reporting amounted to EUR 1,943.0 million (9/2012: EUR 1,959.0 million). Invested capital is calculated by deducting non-interest bearing liabilities from the balance sheet total.


Profit before taxes grew


Profit before taxes based on segment reporting increased by 5 percent compared to the previous year, amounting to EUR 227.6 million in January–December (1–12/2011: EUR 215.8 million). The profit before taxes for the fourth quarter decreased by 10 percent from the previous year to EUR 62.0 million (10–12/2011: EUR 68.6 million).


Earnings per share based on segment reporting increased by 10 percent from the year before in 2012, amounting to EUR 1.37 (1–12/2011: EUR 1.25). Earnings per share based on segment reporting for the fourth quarter decreased by 12 percent from the year before, amounting to EUR 0.36 (10–12/2011: EUR 0.41).


In 2012 the effective tax rate of the Group based on segment reporting was 24.3 percent (1-12/2011: 26.9%). The reasons for the decrease in the tax rate were, among others, a lower corporate tax rate in Finland and the deduction of earlier losses in Russia. Furthermore, a larger portion of profit than before was generated in countries with a lower tax rate.


Dividend proposal                                                                                      


YIT's target for dividend payout is 40–60 percent of net profit for the period. The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.75 per share be paid, representing 55 percent of the Group's net profit for the period based on segment reporting.

 

 

DEVELOPMENT BY BUSINESS SEGMENT


Development by business segment is presented using figures compliant with segment reporting.

 

BUILDING SERVICES NORTHERN EUROPE

 

  1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Revenue, EUR million 2,089.2 2,097.6 0%   552.7 600.1 -8%
Operating profit, EUR million 41.7 78.8 -47%   -3.8 23.0 -
Operating profit margin, % 2.0 3.8     -0.7 3.8 -
Return on operative invested capital (last 12 months), % 12.2 23.8     - - -

 

  12/12 12/11 Change   12/12 9/12 Change
Operative invested capital, EUR million 320.6 372.9 -14%   320.6 394.8 -19%
Order backlog, EUR million 819.0 913.1 -10%   819.0 904.9 -9%

 

Revenue, EUR million 1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Sweden 704.3 706.5 -0%   188.5 213.9 -12%
Finland 600.5 637.2 -6%   150.9 173.1 -13%
Norway 580.4 528.6 10%   155.6 150.7 3%
Denmark 145.6 170.6 -15%   37.8 47.7 -21%
Russia and the Baltic countries 58.5 54.7 7%   20.0 14.7 36%
Total 2,089.2 2,097.6 -0%   552.7 600.1 -8%

 

The revenue for Building Services Northern Europe remained at the level of the previous year in January–December, amounting to EUR 2,089.2 million (1–12/2011: EUR 2,097.6 million). Changes in foreign exchange rates increased the revenue for the review period by EUR 49.8 million compared to the previous year. The revenue for the fourth quarter decreased by 8 percent from the previous year to EUR 552.7 million (10–12/2011: EUR 600.1 million). Changes in foreign exchange rates increased the revenue for the fourth quarter by EUR 16.8 million compared to the previous year.


The segment's operating profit decreased by 47 percent from the previous year to EUR 41.7 million (1–12/2011: EUR 78.8 million). In Building Services Northern Europe the operating loss in the fourth quarter amounted to EUR 3.8 million (operating profit 10–12/2011: EUR 23.0 million). The profitability of completed projects and projects close to completion in the project business (especially in Sweden, Denmark and Norway) was lower than forecasted, and project forecast changes had a negative impact on results of approximately EUR 20 million during the fourth quarter. In addition, costs related to the reorganisation of operations amounted to approximately EUR 3 million during the fourth quarter. The profitability of service and maintenance operations was at a satisfactory level. Contrary to normal seasonality the volume of service and maintenance business remained however lower than expected towards the end of the year as the customers postponed and decreased additional service and maintenance work.


Project operations targeting improvement in profitability


New investments in building systems remained at a relatively low level. The high uncertainty over the general macroeconomic development has had a negative effect on decision-making by YIT's customers and thereby the order backlog of the segment. YIT has accelerated the adjustment of its capacity due to the decreased project demand. In the future, YIT will aim to increase the share of service and maintenance business as well as strengthen its position, particularly in large Design & Build projects.


YIT will continue to focus on improving the profitability of Building Services Northern Europe. The restructuring of operations proceeded during the review period in all countries where Building Services Northern Europe operates. The earlier announced actions to reach cost savings of EUR 40 million have been completed and personnel cuts amounting to 800 employees were finalised. As a result of the actions carried out the company anticipates that the profitability will improve during the current year. The efficiency of the segment’s regional organisations has been enhanced during the review period, and organisation structures have been streamlined in order to improve the control and profitability of operations. YIT has increased the level of international procurement in its project business.


Cost adjustments will be continued particularly in project operations and negotiations are underway for further personnel cuts amounting to approximately 600 employees during 2013. The aim is to improve the profitability of project operations through more careful project selection, increasingly systematic risk management and making procurement more efficient. In addition to these efficiency improvement measures already under way, improvement in profitability is targeted by making the tendering process more efficient and centralising the project business and sufficient competence in centres of excellence. The criteria for the tendering process have been tightened clearly, and the number of offers prepared will be reduced. The systems and software used in offer calculations will be harmonised, and authorisations for approving projects have been made more stringent.


During the fourth quarter, YIT agreed on a total technical supplier project in Tromsø, Norway. The value of the agreement was approximately EUR 6.7 million, and YIT will deliver all technical installations related to electricity, sanitation, heating, ventilation and building automation to a 14,000-square-metre police station. In Eskilstuna, Sweden, YIT has launched a project to supply all installations related to electricity, heating, plumbing, ventilation and sprinklers in the new Brunnsbacken nursing home.


The share of service and maintenance operations on a par with the previous year


YIT's aims to be the leading provider of energy-efficient technical systems, solutions and life-cycle services in the Nordic countries and in Central Europe. The target is to increase service and maintenance operations at a faster rate than other operations.


Service and maintenance operations generated EUR 1,322.6 million (1–12/2011: EUR 1,319.3 million), or 63 percent of the segment's total revenue in January–December (1–12/2011: 63%). During the fourth quarter, service and maintenance operations generated EUR 345.5 million (10–12/2011: EUR 396.5 million), or 63 percent of the segment's total revenue (10–12/2011: 66%).


Several new service and maintenance agreements were reached during the fourth quarter. YIT is responsible for property maintenance at Outokumpu’s Tornio mills, for example. The cooperation covers an area of more than 500,000 square metres, and it includes all technical building installation services, 24-hour on-call duty and property control room services.


Number of energy efficiency projects is increasing


Marketing efforts within energy savings projects resulted in a new major energy efficiency project at the office building Klockan 10 in the centre of Stockholm, Sweden. The major project will be implemented during 2013, and it includes all technical installations related to electricity, piping, ventilation and sprinklers.


In Salo, Finland, YIT will improve energy efficiency in retail chain Suur-Seudun Osuuskauppa’s approximately 100 properties by performing an energy assessment followed by required actions. The target set for energy savings is 15 percent by the year 2016.

 

BUILDING SERVICES CENTRAL EUROPE

 

  1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Revenue, EUR million 714.2 779.3 -8%   195.8 200.3 -2%
Operating profit, EUR million 26.9 33.3 -19%   10.4 9.3 11%
Operating profit margin, % 3.8 4.3     5.3 4.6  
Return on operative invested capital (last 12 months), % 31.5 53.8     - -  

 

  12/12 12/11 Change   12/12 9/12 Change
Operative invested capital, EUR million 98.9 72.0 37%   98.9 113.7 -13%
Order backlog, EUR million 380.1 449.5 -15%   380.1 435.5 -15%

 

Revenue, EUR million 1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Germany 542.2 633.2 -14%   147.8 162.8 -9%
Austria 156.6 107.0 44%   44.4 31.4 41%
Poland, the Czech Republic and other countries 15.3 39.1 -54%   3.6 6.1 -41%
Total 714.2 779.3 -8%   195.8 200.3 -2%

 

The revenue of Building Services Central Europe decreased by 8 percent in January–December compared to the previous year, amounting to EUR 714.2 million (1–12/2011: EUR 779.3 million). Revenue for the fourth quarter was on a par with the previous year, amounting to EUR 195.8 million (10–12/2011: EUR 200.3 million). The decrease in revenue during the year was due to weakening demand, especially in the market for large projects in Germany, reorganisation of operations in Germany and Poland and the low level of activity in Central Eastern Europe. Revenue continued to increase clearly in Austria during the financial period and amounted to EUR 156.6 million (1–12/2011: EUR 107.0 million).


The operating profit for January–December decreased by 19 percent from the previous year to EUR 26.9 million (1–12/2011: EUR 33.3 million). The operating profit for the comparison period was improved by a sales gain of EUR 5 million from the divestment of Hungarian operations. The operating profit for the fourth quarter increased by 11 percent from the previous year to EUR 10.4 million (10–12/2011: EUR 9.3 million). In particular, favourable development in the German and Austrian business improved the profitability in the fourth quarter. During the second quarter of 2012, YIT initiated the restructuring of operations in Poland, aiming to decrease the share of project business and increase the share of profitable service and maintenance operations.


Demand in the Central European building systems market weakened slightly during the fourth quarter. The order backlog amounted to EUR 380.1 million at the end of December (12/2011: EUR 449.5 million). The order backlog at the end of December decreased by 15 percent from the previous year and by 13 percent from the end of September 2012 (9/2012: EUR 435.5 million).


Service and maintenance revenue is growing


Service and maintenance operations generated EUR 219.8 million (1–12/2011: EUR 191.7 million), or 31 percent of the segment's total revenue in January–December (1–12/2011: 25%). The share of service and maintenance was significantly lower in Building Services Central Europe (10–12/2012: 33%) than in Building Services Northern Europe (10–12/2012: 63%), and therefore the opportunities for increasing it in Building Services Central Europe are good. The volume of service and maintenance was already increasing, generating EUR 64.0 million of revenue for the fourth quarter, or 23 percent more than the previous year.


During the fourth quarter, YIT reached new, minor service and maintenance agreements and several long-term agreements were renewed and extended, such as the facility management contract for technical services to Germany’s national research centre for aeronautics and space.


Lower demand in the German project market


The demand for new building system investments was lower than the previous year. In particular, the level of activity in major projects slowed down in Germany. In spite of the slowing down of the market, YIT secured several significant projects during the fourth quarter. YIT is responsible for the renovation of the famous 29-storey Dreischeibenhaus office building in Düsseldorf. YIT will also deliver sprinkler and ventilation solutions to the new ”Satellite” terminal at Munich Airport, a technically demanding ventilation system to the Goodyear Dunlop production facilities in Fürstenwalde, Germany, and all new all mechanical systems to a new 54,000 square-metre hospital in Mistelbach-Gänserndorf, Austria.

 

CONSTRUCTION SERVICES FINLAND

 

  1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Revenue, EUR million 1,329.0 1,226.9 8%   342.6 335.7 2%
Operating profit, EUR million 127.0 111.6 14%   38.1 32.1 19%
Operating profit excluding IAS 23 adjustment, EUR million 134.1 117.3 14%   40.2 33.8 19%
Operating profit margin, % 9.6 9.1     11.1 9.6  
Operating profit margin excluding IAS 23 adjustment, % 10.1 9.6     11.7 10.1  

 

  12/12 12/11 Change   12/12 9/12 Change
Operative invested capital, EUR million 581.7 558.4 4%   581.7 546.8 6%
- of which plot reserves, MEUR 284.2 294.6          
Order backlog, EUR million 1,499.0 1,493.6 0%   1,499.0 1,541.0 -3%

 

  1-12/12 1-12/11
Return on operative invested capital (last 12 months), % 23.5 24.0

 

The revenue of Construction Services Finland amounted to EUR 1,329.0 million in January–December and it increased by 8 percent from the previous year (1–12/2011: EUR 1,226.9 million). Revenue for the fourth quarter was on a par with the previous year, amounting to EUR 342.6 million (10–12/2011: EUR 335.7 million). The growth in revenue for the fourth quarter was supported by the high volume of housing production, continued good residential sales, own development project sales in business premises construction and increase in the volume of infrastructure services.


The segment’s operating profit increased by 14 percent in January–December compared to the previous year, amounting to EUR 127.0 million (1–12/2011: EUR 111.6 million). The operating profit for the review period includes EUR -7.1 million of borrowing costs according to IAS 23 (1–12/2011: EUR -5.7 million). The operating profit for the fourth quarter increased by 19 percent from the previous year to EUR 38.1 million (10–12/2011: EUR 32.1 million). The operating profit for the fourth quarter includes EUR -2.2 million of borrowing costs according to IAS 23 (10–12/2011: EUR -1.7 million).


YIT has revised its estimate related to the definition of the 10-year liability for construction. The amendment had a positive impact of approximately EUR 6.1 million on the operating profit for the fourth quarter, the provision was EUR 42.5 million at the end of 2012 (12/2011: EUR 44.2 million).


The order backlog at the end of December remained on a par with the previous year, amounting to EUR 1,499.0 million (12/2011 EUR 1,493.6 million). The order backlog remained unchanged from the end of September 2012, at which time it stood at EUR 1,541.0 million.


The segment's capital tied into plot reserves totalled EUR 284.2 million at the end of December (9/2012: EUR 287.8 million). The reserves included 1,796,000 square metres of residential plots (9/2012: 1,824,000) and 877,000 square metres of business premises (9/2012: 598,000).


Good residential sales to consumers continued


Residential sales continued at a good level in the fourth quarter. The demand focused particularly on residential units in the final stages of construction and completed residential units. Housing prices remained stable during the review period. Interest rates remained low during the fourth quarter, but customers’ access to financing became slightly more difficult with banks tightening their credit terms. Development of consumer confidence and loan terms are key factors for the development of residential sales in 2013. In January the company sold approximately 110 residential units to consumers.


Residential construction in Finland, number of residential units

 

  1-12/12 1-12/11 Change   10-12/12 7-9/12 4-6/12 1-3/12
Sold 2,757 2,765 0%   597 668 717 775
- of which directly to consumers 1,869 1,893 -1%   505 414 497 453
Start-ups 2,856 3,221 -11%   531 770 996 559
- of which directly to consumers 1,968 2,349 -16%   439 516 776 237
Completed 2,722 3,674 -26%   579 591 936 616
- of which directly to consumers 2,364 2,477 -5%   427 591 847 499
Under construction* 4,240 4,105 3%   4,240 4,288 4,109 4,049
- of which sold* 2,409 2,208 9%   2,409 2,409 2,293 2,398
For sale* 2,282 2,180 5%   2,282 2,348 2,245 1,966
- of which completed 451 283 59%   451 469 429 315

* At the end of the period.


Changes in the number of residential units may take place after the start of construction due to the division or combination of residences.


The focus for YIT's housing construction is on residential development projects aimed directly at consumers in accordance with market demand. During the fourth quarter, YIT started the construction of 439 residential units as own development projects. In addition, YIT started up the construction of a total of 92 residential units as free funded and subsidised projects as well as tender-based projects in the fourth quarter. 


YIT has actively replenished its plot reserves by acquiring plots and making preliminary agreements on plots in order to also ensure good opportunities for residential start-ups in the future.


Of the residential units under construction, 57 percent have been sold (12/2011: 54%), which reduces YIT's sales risk. The sales inventory is focused on medium-priced residential production: over 70 percent of the residential units for sale are priced at less than EUR 300,000.


YIT is well prepared to adjust its residential production according to the market situation. The costs of completing the current residential and business premises development projects for sale amounted to EUR 274.0 million at the end of December 2012 (12/2011: EUR 346.4 million).


Stable development in the business and office premises market continued


The development of the business and office premises market continued to be stable in the fourth quarter, and the order backlog of YIT's business and office premises operations remained at a favourable level. Competition for business premises contracting became tougher during the second half of the year. The leasing of business and office premises under construction proceeded well in October–December: lease agreements were signed on approximately 8,800 square metres of premises. Rents for business premises and investors’ yield requirements remained stable in the fourth quarter.


YIT and HGR Property Partners sold a historic premium property at Ruoholahdenkatu 23 to Cordea Savills during the fourth quarter. The property has a total floor area of about 7,000 square metres, and the value of the transaction was approximately EUR 27 million. Ruoholahdenkatu 23 was awarded Gold level Certification based on the LEED Core & Shell standards in December.


In addition, the Triotto office building in Käpylä, Helsinki, was acquired by HANSAINVEST, a German-based real estate investor. The newly built building has a total floor area of about 15,500 square metres, and it has head office premises for two tenants. The contract price includes the building plot purchased from the City of Helsinki and totals about EUR 56.5 million. An international Gold level LEED certification has been sought for Triotto.


Road projects proceeded as planned in infrastructure services


The order backlog of infra services at the end of December 2012 decreased from the previous year. Significant on-going road projects proceeded according to plans during the fourth quarter.


INTERNATIONAL CONSTRUCTION SERVICES

 

  1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Revenue, EUR million 599.6 489.2 23%   205.0 145.9 41%
Operating profit, EUR million 73.9 37.2 99%   28.7 17.4 65%
Operating profit excluding IAS 23 adjustment, EUR million 80.4 40.9 97%   31.0 18.9 64%
Operating profit margin, % 12.3 7.6     14.0 11.9  
Operating profit margin excluding IAS 23 adjustment, % 13.4 8.4     15.1 12.9  

 

  12/12 12/11 Change   12/12 9/12 Change
Operative invested capital, EUR million 708.3 602.2 18%   708.2 703.8 1%
- of which plot reserves, MEUR 389.3 349.2 11%   389.3 406.6 -4%
Order backlog, EUR million 1,266.1 962.5 32%   1,266.1 1,207.4 5%

 

                      1-12/12 1-12/11
Return on operative invested capital (last 12 months), % 12.3 6.5

 

The revenue of International Construction Services for January–December increased by 23 percent from the previous year to EUR 599.6 million (1–12/2011: EUR 489.2 million). The revenue for the fourth quarter increased by 41 percent from the previous year to EUR 205 million (10–12/2011: EUR 145.9 million). 


The operating profit for January–December almost doubled from the previous year to EUR 73.9 million (1–12/2011: EUR 37.2 million). The segment’s operating profit for January–December includes EUR -6.5 million of borrowing costs according to IAS 23 (1–12/2011: EUR -3.7 million). The operating profit for the fourth quarter amounted to EUR 28.7 million (10–12/2011: EUR 17.4 million). The operating profit for the fourth quarter includes EUR -2.3 million of borrowing costs according to IAS 23 (10–12/2011: EUR -1.5 million).


Excessive levels of ammonia were found in residential units built by the company in St. Petersburg in September 2011, caused by an additive used by the concrete supplier. YIT made a provision of EUR 10.0 million during the third quarter of 2011 to cover the costs of rectifying the problem. The incurred costs have been lower than expected, due to which the company has cancelled EUR 7.0 million of the said provision in the third quarter of 2012. The costs materialised by the end of 2012 amounted to EUR 2.6 million. The company has received indemnities from its insurance company, covering the costs of research and renovation of the apartments. YIT has adopted increasingly strict procurement guidelines based on which the concrete suppliers are now required to have stricter control measures and delivery responsibilities.


Due to the high number of residential start-ups, the order backlog at the end of December increased by 32 percent on the previous year, amounting to EUR 1,266.1 million (12/2011: EUR 962.5 million). The order backlog increased slightly from the end of September 2012, at which time it stood at EUR 1,207.4 million. The segment's order backlog was partially improved by the strengthening of the ruble, which had an impact of EUR 5.2 million in October–December.


The costs of completing the current residential and business premises development projects for sale amounted to EUR 554 million at the end of December 2012 in International Construction Services (12/2011: EUR 350.0 million).


The segment's capital tied into plot reserves totalled EUR 389.3 million at the end of December (9/2012: EUR 406.6 million). The reserves included 2,590,000 square metres of residential plots (9/2012: 2,622,000) and 574,000 square metres of business premises in Russia, the Baltic countries, the Czech Republic and Slovakia (9/2012: 686,000).


The segment’s return on operative invested capital for the last 12 months improved to 12.3 percent, but was still below the Group’s strategic target (20%). YIT aims to increase the segment’s return on invested capital primarily by increasing the volume of operations, improving profitability and increasing further capital efficiency.


Russian residential sales continued well


Russia generated 77 percent of the revenue of International Construction Services for January–December (1–12 /2011: 80%). Revenue in Russia increased from the previous year to EUR 463.1 million (1–12/2011: EUR 393.2 million).


The capital tied into plot reserves in Russia totalled EUR 302.0 million at the end of December (9/2012: EUR 323.2 million). The reserves included 2,179,000 square metres of residential plots (9/2012: 2,255,000) and 446,000 square metres of business premises (9/2012: 546,000).


Residential construction in Russia, number of residential units

 

  1-12/12 1-12/11 Change   10-12/12 7-9/12 4-6/12 1-3/12
Sold 4,209 3,561 18%   1,288 1,032 934 955
Start-ups 5,487 4,492 22%   1,818 1,006 1,123 1,540
Completed 1) 4,197 1,576 166%   2,217 622 765 593
Under construction* 8,662 7,365 18%   8,662 8,995 8,670 8,313
- of which sold* 3,020 2,632 15%   3,020 3,576 3,159 2,881
For sale* 6,530 5,142 27%   6,530 5,961 5,987 5,799
- of which completed 888 409 117%   888 542 476 367

* At the end of the period.

 

Under construction at the end of the period 1-12/12 1-12/11 Change   10-12/12 7-9/12 4-6/12 1-3/12
St. Petersburg 2,686 2,396 12%   2,686 2,323 2,290 2,102
Moscow region 3,796 3,142 21%   3,796 4,259 4,016 3,882
Yekaterinburg, Kazan, Don Rostov and Moscow 2,180 1,827 19%   2,180 2,413 2,364 2,329

 

1) Completion of the projects requires commissioning by the authorities.


In Russia, the focus of operations is on residential development projects in St. Petersburg, Moscow and cities in the Moscow region, Yekaterinburg, Rostov-on-Don and Kazan. YIT actively continued plot investments in the Moscow region, Yekaterinburg, Rostov-on-Don, Kazan and Tyumen during the fourth quarter.


Residential sales have been supported by YIT's established position as a reliable construction company in Russia, YIT's diverse housing offering, YIT's own marketing and promotion measures and extensive housing loan cooperation with banks. The significance of loan financing has increased in Russia, and, in the fourth quarter, customers have taken out housing loans in 44 percent of YIT's residential sales. Residential sales were also supported by the limited supply of new housing, continued favourable consumer confidence and oil prices. Interest rates for mortgages increased further in Russia during the fourth quarter, but remained at a locally moderate level.


In January 2013 the company sold approximately 240 residential units in Russia. The first quarter of the year is always the weakest in Russia in terms of sales due to the holiday season.


Housing prices continued to increase at a moderate rate during 2012 in Russia, and YIT slightly increased the prices of its residential units in all of its operating cities in Russia.


Based on the favourable demand, YIT has actively started up new residential projects in Russia, and in the fourth quarter start-ups began in St. Petersburg, the Moscow region, Kazan and Yekaterinburg. In 2012, YIT expanded its operations to eight cities in the Moscow region, and during the fourth quarter to Tyumen. Tyumen, a city with almost 700,000 residents famous for its natural gas and oil reserves, is one of the wealthiest cities in Russia, located in Western Siberia approximately 300 kilometres from Yekaterinburg. Several Western companies operate in the city. The construction of a residential block is being planned on the plot acquired by YIT. A total of six 18-storey buildings will be built on the plot, with a total of 890 planned residential units.


In December 2012, YIT and the real estate investor SATO signed an agreement whereby SATO will buy 80 residential units and 25 parking spaces in YIT’s new Novomoskovski residential project located in St. Petersburg. The total value of the contract was approximately EUR 13 million.


The number of residential units for sale has been increased in a controlled manner, and the sales inventory at the end of December was geographically balanced. The number of completed but unsold residential units has increased slightly at the end of the year due to several finished projects. Of the residential units under construction, 35 percent had been sold (12/2011: 36%).


After the delivery of residential projects, YIT offers its customers service and maintenance in St. Petersburg, the Moscow region, Yekaterinburg and Rostov-on-Don. At the end of December 2012, YIT was responsible for the service and maintenance of approximately 14,000 residential units.


Customer interest in energy efficiency is increasing in Russia. A pilot project focusing on energy efficiency has been continued and solar panels deployed in the first residential project in Yekaterinburg.


YIT's volume in the Russian business premises market remained low during the fourth quarter of the year. YIT signed an agreement on the sale of a four-hectare plot to Siemens in the Gorelovo industrial park in St. Petersburg in the fourth quarter.


Revival of the residential market is slow in the Baltic countries and Central Eastern Europe


Estonia, Latvia, Lithuania, the Czech Republic and Slovakia accounted for 23 percent of the revenue of International Construction Services for January–December (1–12/2011: 20%). Revenue generated in these countries increased by 42 percent compared to the year before to EUR 136.5 million (1–12/2011: EUR 96.0 million). The capital tied into plot reserves in the Baltic countries, the Czech Republic and Slovakia totalled EUR 87.3 million at the end of December (9/2012: EUR 83.4 million). The reserves included 411,000 square metres of residential plots (9/2012: 367,000) and 128,000 square metres of business premises (9/2012: 140,000).


Profitability improved in the Baltic countries and Central Eastern Europe in the fourth quarter, but was still below the segment average YIT aims to shift the focus of operations from tender-based production to own residential development projects in order to improve profitability as residential demand revives.


Residential construction in the Baltic countries and Central Eastern Europe, number of residential units

 

  1-12/12 1-12/11 Change   10-12/12 7-9/12 4-6/12 1-3/12
Sold 384 364 5%   118 99 92 75
Start-ups 530 526 1%   0 246 284 0
Completed 421 288 46%   107 35 47 232
Under construction* 715 614 16%   715 822 615 378
- of which sold* 108 171 -37%   108 131 110 104
For sale* 743 611 22%   743 861 718 526
- of which completed 136 168 -19%   136 170 213 252

* At the end of the period.


The construction of 530 residential units was started in Estonia, Latvia, Lithuania, the Czech Republic and Slovakia during 2012 (1–12/2011: 526). At the end of December, there were 715 residential units under construction (12/2011: 614). During the review period, housing prices increased slightly in the Baltic countries and remained stable in the Czech Republic and Slovakia.


YIT's residential sales inventory has grown in the Baltic countries, the Czech Republic and Slovakia, and YIT aims to increase the number of residential units for sale in accordance with demand. In January–December, a total of 384 residential units were sold in these countries (1–12/2011: 364), of which 118 were sold in October–December (10–12 /2011: 97). At the end of December, there were 743 residential units for sale (12/2011: 611), of these 136 were completed (12/2011: 168). The number of residential units completed during 2012 was 421 (1–12/2011: 288). YIT’s Hajek residential construction project was nominated the best residential construction project of the year in Prague, the Czech Republic.


Construction of business premises in the Baltic countries and Central Eastern Europe


During the fourth quarter, YIT started up the construction of a new office building in Vilnius, Lithuania. Several tender-based projects have also been delivered to customers in the Baltic countries (University of Tartu in Estonia and the library of the Vilnius University in Lithuania).

 

 

PERSONNEL

 

Personnel by business segment 12/12 12/11 Change   12/12 9/12 Change
Building Services Northern Europe 15,159 15,900 -5%   15,159 15,538 -2%
Building Services Central Europe 3,380 3,506 -4%   3,380 3,441 -2%
Construction Services Finland 3,540 3,429 3%   3,540 3,635 -3%
International Construction Services 2,808 2,753 2%   2,808 2,782 1%
Corporate Services 396 408 -3%   396 392 1%
Group, total 25,283 25,996 -3%   25,283 25,788 -2%

 

Personnel by country/region 12/12 12/11 Change   12/12 9/12 Change
Finland 8,868 9,165 -3%   8,868 9,160 -3%
Sweden 4,492 4,770 -6%   4,492 4,542 -1%
Norway 3,642 3,602 1%   3,642 3,708 -2%
Germany 2,450 2,627 -7%   2,450 2,502 -2%
Russia 2,650 2,498 6%   2,650 2,647 0%
Denmark 1,104 1,218 -9%   1,104 1,158 -5%
Baltic countries 991 1,067 -7%   991 972 2%
Other countries (Central Europe excluding Germany) 1,086 1,049 4%   1,086 1,099 -1%
Group, total 25,283 25,996 -3%   25,283 25,788 -2%

 

In 2012, the Group employed 25,833 people on average (1–12/2011: 26,254). At the end of the year, the Group employed 25,283 people (12/2011: 25,996). At the end of 2012, 87 percent of the Group’s personnel were male (2011: 88%) and 13 percent female (2011: 12%). The personnel expenses for 2012 amounted to a total of EUR 1,410.6 million (1–12/2011: EUR 1,357.2 million).


YIT employed over 2,000 trainees during 2012. The trainees worked in a variety of production-related and administrative tasks at YIT in construction, building services, industrial and corporate services functions.


The cost effect of YIT’s share-based incentive scheme was about EUR 5.1 million in January–December 2012 (1–12/2011: EUR 3.4 million).

 

 

STRATEGIC OBJECTIVES


YIT Corporation's Board of Directors confirmed the Group's strategy for 2013–2014 on September 20, 2012. The key strategic objective is increasingly focused, balanced and profitable growth. It was decided that the Group’s strategic long-term targets are kept unchanged: average annual revenue growth of more than 10 percent, return on investment of 20 percent, operating cash flow after investments sufficient for dividend payout and reduction of debt, equity ratio of 35 percent and dividend payout of 40–60 percent of net profit for the period. The target levels are based on figures reported by the company on the basis of the percentage of completion in accordance with the current emphasis. When determining the target levels, the assumption was made that economic growth in YIT’s market areas will continue.


Achievement of strategic targets

 

YIT’s financial targets   Target level Performance in 2012*
Revenue growth More than 10 percent annually on average 3%
Return on investment 20 percent 14.2%
Operating cash flow after investments Sufficient for dividend payout and reduction of debt EUR 90.4 million
Equity ratio 35 percent 35.4%
Dividend payout 40-60 percent of net profit for the period 54.9%**)

 

*) Based on segment reporting

**) Board of Director’s proposal to the Annual General Meeting to be held on March 15, 2013.


In terms of business operations, the focus areas of YIT’s growth continue to be building systems service and maintenance operations and residential construction. Growth is being sought organically and through acquisitions. Particular focus areas for growth include residential construction in Russia and building services in Germany.


To support its strategic goals, YIT has launched three development programmes which focus on energy-efficient solutions, best quality living experience and efficient building services. Building Services Northern Europe will focus on improving profitability and strengthening cash flow. In addition to increasing the share of service and maintenance business, Building Services Central Europe will seek to strengthen its position during the strategy period, particularly in large Design & Build projects. In residential construction, YIT is investing in innovative solutions and strengthening its forerunner status. In Construction Services Finland, YIT is responding to customer demand by particularly increasing the production of moderately priced housing during the strategy period. YIT aims to expand in building system services in the German-speaking region further. In International Construction Services, the company is focussing on expanding in Russia. The focus of operations in all construction business areas is on increasing the share of own development production.


YIT published a stock exchange release on the confirmation of the strategy on September 21, 2012, and materials for the Capital Market Day focusing on the strategic focus areas on September 25, 2012.

 

 

GROUP FINANCIAL DEVELOPMENT BASED ON GROUP REPORTING (IFRS, IFRIC 15)

 

  1-12/12 1-12/11 Change   10-12/12 10-12/11 Change
Revenue, EUR million 4,705.9 4,382.1 7%   1,284.9 1,190.4 8%
Operating profit, EUR million 259.2 200.0 30%   72.8 57.5 27%
Operating profit margin, % 5.5 4.6     5.7 4.8  
Profit before taxes, EUR million 238.0 175.2 36%   67.3 49.9 35%
Profit for the review period, EUR million 1) 178.7 124.4 44%   49.1 34.9 41%
Earnings/share, EUR 1.43 0.99 44%   0.39 0.27 44%
Operating cash flow after investments, EUR million 90.4 -17.3     87.3 14.1 519%

1) attributable to equity holders of the parent company

 

  12/12 12/11 Change   12/12 9/12 Change
Order backlog, EUR million 4,245.1 4,148.6 2%   4,245.1 4,462.0 -5%
Return on investment (last 12 months) % 14.6 12.0     14.6 13.7  
Equity ratio, % 33.2 30.2     33.2 31.6  
Gearing ratio, % 72.1 80.4     72.1 83.7  

 

Revenue based on Group reporting increased by 7 percent compared to the previous year, amounting to EUR 4,705.9 million in January–December (1–12/2011: EUR 4,382.1 million). The revenue for the fourth quarter increased by 8 percent compared to the previous year, amounting to EUR 1,284.9 million (10–12/2011 EUR 1,190.4 million). In Group-level reporting, own residential development projects are only recognised as income upon project delivery. The completion schedules for own development projects affect the Group's revenue recognition, and therefore Group-level figures may fluctuate greatly between different quarters. The number of residential units completed during the fourth quarter was higher than the previous year. The number of residential units completed in Russia and Finland was clearly higher than the year before, while in the Baltic countries and Central Eastern Europe the number of residential units completed was lower than the year before.


Following the IFRIC 15 adjustment, the Group's operating profit for January–December increased by 30 percent compared to the previous year, amounting to EUR 259.2 million (1–12/2011: EUR 200.0 million). Following the IFRIC 15 adjustment, the Group's operating profit margin for January–December was 5.5 percent (1–12/2011: 4.6%). The operating profit for the fourth quarter increased by 27 percent from the previous year to EUR 72.8 million (10–12/2011: EUR 57.5 million). The operating profit margin for the fourth quarter was 5.7 percent (10–12/2011: 4.8%).


Profit before taxes based on Group reporting increased by 36 percent compared to the previous year, amounting to EUR 238.0 million in January–December (1–12/2011: EUR 175.2 million). Profit before taxes for the fourth quarter grew clearly and amounted to EUR 67.3 million (10–12/2011: EUR 49.9 million).


Earnings per share based on Group reporting increased by 44 percent from the year before in January–December, amounting to EUR 1.43 (1–12/2011: EUR 0.99). Earnings per share for the fourth quarter grew clearly and amounted to EUR 0.39 (10–12/2011: EUR 0.27).


In 2012 the effective tax rate of the Group was 24.4 percent (1-12/2011: 28.7%). The reasons for the decrease in the tax rate were, among others, a lower corporate tax rate in Finland and the deduction of earlier losses in Russia. Furthermore, a larger portion of profit than before was generated in countries with a lower tax rate.


The order backlog based on Group reporting amounted to EUR 4,245.1 million at the end of December (12/2011: EUR 4,148.6 million).


Return on investment amounted to 14.6 percent for the last 12 months (10/2011–9/2012: 13.7%). At the end of December, the Group's invested capital amounted to EUR 1,941.0 million (12/2011: EUR 1,855.8 million). Invested capital is calculated by deducting non-interest bearing liabilities from the balance sheet total. The balance sheet total at the end of December was EUR 3,682.0 million (9/2012: EUR 3,722.3 million).


Of the Group's invested capital, 30 percent (9/2012: 28%), or EUR 585.2 million (9/2012: EUR 550.7 million) was invested in Russia. The amount of capital invested in Russia increased slightly compared to the end of September, and the exchange rate changes of the ruble decreased the capital invested by EUR 2.8 million in October–December. Smaller project sizes, gradual building in projects, sales of residential units at an earlier construction phase, improved terms of payment and an increased share of mortgage deals all increase capital efficiency.


The equity ratio increased compared to the end of September 2012, amounting to 33.2 percent (9/2012: 31.6%).

 

Diverse capital structure and good liquidity position


YIT’s financing consists of diverse sources of financing and its liquidity position remained good at the end of December 2012. Cash and cash equivalents amounted to EUR 175.7 million at the end of December (9/2012: EUR 150.0 million). In addition, undrawn overdraft facilities and committed credit facilities amounted to a total of EUR 358.7 million. YIT had a total of EUR 280 million in committed credit facilities, of which EUR 30 million falls due in December 2014 and EUR 250 million in December 2015. These committed credit facilities do not include an obligation to maintain financial key ratios, i.e. covenants.


The gearing ratio decreased clearly compared with the end of September 2012 as the result of the good cash flow, amounting to 72.1 percent at the end of December (9/2012: 83.7%). Net interest-bearing debt decreased and amounted to EUR 746.2 million at the end of December (9/2012: EUR 827.3 million).


Net financial expenses decreased in January–December compared to the previous year and amounted to EUR 21.2 million (1–12/2011: EUR 24.8 million), or 0.5 percent of the Group's revenue (1–12/2011: 0.6%). The net financial expenses include EUR 17.4 million of capitalisations of interest expenses in compliance with IAS 23 (1–12/2011: EUR 12.2 million). The exchange rate differences included in the net financial expenses, totalling EUR -5.8 million (1–12/2011: EUR -4.1 million), were comprised almost entirely of costs of hedging debt investments in Russia.


Net financial expenses decreased in the fourth quarter compared to the previous year and amounted to EUR 5.5 million (10–12/2011: EUR 7.6 million), or 0.4 percent (10–12/2011: 0.6%) of the Group's revenue. The net financial expenses include EUR 4.9 million of capitalisations of interest expenses in compliance with IAS 23 (10–12/2011: EUR 2.9 million). The exchange rate differences included in the net financial expenses totalled EUR -1.3 million (10–12/2011: EUR -2.1 million).


The hedged ruble exposure increased from the end of September 2012. At the end of December 2012, EUR 125.2 million of the capital invested in Russia were comprised of debt investments (9/2012: EUR 118.2 million) and EUR 460.0 million were equity investments or similar fixed net investments (9/2012: EUR 432.5 million). In accordance with YIT's hedging policy, the debt investments are hedged against exchange rate risk, while equity investments are not hedged due to their permanent nature. 


Borrowings decreased and amounted to EUR 921.9 million at the end of December (9/2012: EUR 977.3 million), and the average interest rate was 3.1 percent (9/2012: 3.0%). Fixed-rate loans accounted for approximately 75 percent of the Group’s borrowings (9/2012: 64%). Of the loans, approximately 40 percent had been raised directly from the capital and money markets (9/2012: 50%), approximately 45 percent from banks and other financial institutions (9/2012: 39%) and approximately 15 percent from insurance companies (9/2012: 11%).


The maturity distribution of long-term loans was balanced. A total of EUR 106.0 million of long-term loans will mature during 2013. Long-term fixed-rate TyEL loans and new interest hedges increased the proportion of fixed interest rates in YIT’s loan portfolio during the fourth quarter.


The total amount of construction-stage contract receivables sold to financial institutions decreased slightly from the end of September 2012, amounting to EUR 265.5 million at the end of December (9/2012: EUR 269.5 million). Of this amount, EUR 175.4 million was included in current borrowings on the balance sheet (9/2012: EUR 152.9 million) and the remainder comprises off-balance sheet items in accordance with IAS 39. Interest expenses on receivables sold to financial institutions amounted to EUR 4.0 million during the review period (1–12/2011: EUR 5.1 million), of which EUR 0.5 million in the fourth quarter (10–12/2011: EUR 1.3 million) and these are fully included in the financial expenses.


Participations in the housing corporation loans of unsold completed residential units amounted to EUR 77.5 million at the end of December (9/2012: EUR 75.1 million), and they are included in current borrowings. The interest on the participations was included in housing corporation charges and was thus booked in project expenses. Interest on the participations amounted to EUR 2.2 million in the review period (1–12/2011: EUR 1.4 million) and EUR 0.7 million during the fourth quarter (10–12/2011: EUR 0.4 million).


During the second quarter, YIT Corporation paid out dividends of EUR 87.7 million for 2011 in compliance with the resolution of the Annual General Meeting.


The Group's solid financial position enables the implementation of YIT's growth strategy and the acquisitions and plot investments required by it. On the other hand, the Group has also prepared for macroeconomic uncertainty by diversifying the sources of financing and maintaining a strong liquidity position.

 

RESOLUTIONS PASSED AT THE ANNUAL GENERAL MEETING


YIT Corporation’s Annual General Meeting was held on March 13, 2012. The Annual General Meeting adopted the 2011 financial statements, discharged the members of the Board of Directors and the President and CEO from liability, confirmed the dividend as proposed by the Board of Directors, decided on the Board of Directors' fees and elected the auditor. The Annual General Meeting confirmed the composition of the Board of Directors: Henrik Ehrnrooth (Chairman), Reino Hanhinen (Vice Chairman), Kim Gran, Antti Herlin, Satu Huber and Michael Rosenlew were re-elected as Board members.


At its organisational meeting on March 13, 2012, the Board elected the chairmen and members of the Audit Committee, Personnel Committee as well as the Working Committee from among its number.


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 13, 2012. The stock exchange releases and a presentation of the members of the Board of Directors are available at YIT's website: www.yitgroup.com.

 

 

SHARES AND SHAREHOLDERS


The company has one series of shares. Each share carries one vote and confers an equal right to a dividend.


Share capital and number of shares


YIT Corporation's share capital and the number of shares outstanding did not change during the review period. YIT Corporation’s share capital was EUR 149,216,748.22 at the beginning of 2012 (2011: EUR 149,216,748.22), and the number of shares outstanding was 127,223,422 (2011: 127,223,422).


Treasury shares and authorisations of the Board of Directors


In accordance with the Limited Liability 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. The Annual General Meeting of YIT Corporation resolved on March 13, 2012, to authorise the Board of Directors to purchase the company's shares as proposed by the Board of Directors. In addition to this, the Board of Directors has a valid share issue authorisation issued by YIT’s Annual General Meeting on March 10, 2010. The authorisation is valid for five years after its granting. The share issue authorisation also includes an authorisation to decide on the conveyance of treasury shares.


YIT Corporation held 1,952,414 treasury shares at the beginning of the review period purchased on the basis of the authorisation given by the General Meeting of October 6, 2008.


YIT Corporation's Board of Directors confirmed the rewards for the 2011 earning period under the share-based incentive scheme for YIT's management on April 26, 2012, which were conveyed as a directed share issue without consideration. In the share issue, 130,976 YIT Corporation shares were issued and conveyed without consideration to the key persons participating in the Share Ownership Plan according to the terms and conditions of the plan.


During 2012, 18,139 shares were returned to the company in accordance with the terms and conditions of the share-based incentive scheme, after which the company held 1,839,577 treasury shares at the end of December 2012.


Trading in shares


The price of YIT's share was EUR 12.38 at the beginning of the year (January 1, 2011: EUR 18.65). The closing rate of the share on the last trading day of the year on December 28, 2012, was EUR 14.78 (December 30, 2011: EUR 12.38). The share price increased by approximately 19 percent during January–December. The highest price of the share in 2012 was EUR 17.25 (1–12/2011: EUR 21.92), the lowest was EUR 11.87 (1–12/2011: EUR 10.04) and the average price was EUR 14.90 (1–12/2011: EUR 15.28). Share turnover on Nasdaq OMX in January–December amounted to 96,887 thousand shares (1–12/2011: 151,023 thousand). The value of turnover was EUR 1,443.9 million (1–12:2011: EUR 2,314.0 million), source: Nasdaq OMX.


In addition to the Helsinki Stock Exchange, YIT shares are also traded in other market places, such as Chi-X, BATS and Turquoise. The share of trade volume on alternative market places increased slightly compared to the previous year during the review period. During January–December, 31,183 thousand YIT Corporation shares changed hands in alternative market places (1–12/2011: 36,621 thousand), corresponding to approximately 25 percent of the total share trade (1–12/2011: 21%). Of the alternative market places, YIT shares changed hands particularly in Chi-X, source: Fidessa Fragmentation Index.


YIT Corporation’s market capitalisation at the end of the review period was EUR 1,853.2 million (12/2011: EUR 1,550.9 million). The market capitalisation has been calculated excluding the shares held by the company.


Number of shareholders and flagging notifications


At the end of December 2012, the number of registered shareholders was 35,258 (12/2011: 36,547). At the end of December, a total of 34.8 percent of the shares were owned by nominee-registered and non-Finnish investors (12/2011: 32.2%).


During the review period, the company received no "flagging notifications" of changes in ownership in YIT Corporation in accordance with Chapter 2, section 9 of the Securities Market Act.

 

 

MOST SIGNIFICANT SHORT-TERM BUSINESS RISKS AND RISK MANAGEMENT


YIT classifies as risks those factors that might endanger the achievement of the Group's strategic and financial goals if they should materialise. Risks are divided into strategic, operational, financial and event risks. The identification and management of risk factors take into account the special features of the business and operating environment. Risk management is an integral part of the Group’s management, monitoring and reporting systems. The nature and probability of strategic risks is continuously monitored and reported on. A strategic risk assessment is carried out at Group level once a year in connection with the review of the strategy.


YIT has developed the Group's business structure to be balanced and more tolerant of economic fluctuations. The share of steadily developing service and maintenance operations has been increased. The business model has also been developed so that the construction services can operate independently. Continuous monitoring and analysis make it possible to react quickly to changes in the operating environment and to utilise the new business opportunities provided by them.


The Group's aim is to grow profitably, both organically and through acquisitions. Risks associated with acquisitions and outsourcing are managed by selecting projects according to strict criteria and effective integration processes that familiarise new employees with YIT's values, operating methods and strategy. The Group has a uniform process and guideline for the implementation of acquisitions.


YIT's typical operational risks include risks related to plot investments, sales risk of residential and commercial development projects and risks related to contract tenders, service agreements, project management and personnel. 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 figures for residential production are presented under Development by business segment) and by normally securing key tenants and/or the investor prior to starting a commercial development project. Changes in the availability of housing loans and real estate financing are key risks related to the demand for residential units.


No write-offs were made to plots in 2012. YIT tests the value of its plots as required by IFRS accounting principles. Plot reserves are measured at acquisition cost and the plot 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.


Financial risks include risks related to the sufficiency of financing, currency and interest rates, credit and counterparty risks and risks related to the reporting process. Financial risks are managed through accounting and financing policies as well as internal and external auditing.


Approximately 60 percent of the revenue of YIT during the review period was derived from euro countries. The other key currencies are the Swedish krona and the Norwegian krone as well as the Russian ruble. The Group’s most significant currency risk is related to investments denominated in rubles. Capital invested in Russia totalled EUR 585.2 million at the end of the period (9/2012: EUR 550.7 million). The amount of equity or equivalent net investments at the end of the period was EUR 460.0 million (9/2012: EUR 432.5 million). The equity investments in the Russian subsidiaries are unhedged in accordance with the treasury policy, and a potential devaluation of the ruble would have an equal negative impact on the Group's shareholders' equity. Debt investments amounted to EUR 125.2 million at the end of the period (9/2012: EUR 118.2 million), and this exposure was hedged in full. The differences in the interest rates between the euro and ruble have an effect on hedging costs and therefore net financial expenses.


Possible event risks include accidents related to personal or information security and sudden and unforeseen material damage to premises, project sites and other property resulting, for example, from fire, collapse or theft. YIT complies with a group-wide security policy covering the different areas of security.


A more detailed account of YIT's risk management policy and the most significant risks will be published in the Annual Report 2012. Financing risks are described in more detail in the notes to the Financial Statements for 2012.

 

 

PERSONNEL DEVELOPMENT AS PART OF CORPORATE RESPONSIBILITY


Personnel development has been a key focus for YIT in 2012. YIT commits, motivates and develops its personnel in several ways in different countries. Opportunities for professional development and extending competence are provided through the company's internal and external training, reflective methods (such as mentoring, 360 degrees), vocational degree training, on-the-job learning and career development by means of active job rotation. The aim is to be a desired employer also in the future. The key areas of development in 2012 were the development of operations and supervisory work in accordance with YIT’s values, responsible and long-term orientation of new recruits, systematic cooperation with educational institutions, identification and development of critical talent and potential successors as well as promoting productive, safe and healthy work in our company. YIT has also focused on managerial training, and 70% of managers in critical positions attended management training in 2012. During 2012, the foundation was laid for more uniform talent management and a joint personnel survey, YIT Voice, with both supervisor and commitment indices, was launched. YIT Kausta was certified as a successfully working company in Lithuania in 2012. YIT has also been rewarded as the most responsible employer of summer trainees in Finland in 2011 and 2012.


The occupational safety and well-being at work of employees has been promoted by supporting supervisors’ managerial skills, harmonising guidelines, piloting new or developing existing systems, investing in predictive and early intervention and emphasising the importance of the example of the management and attitude in general. Monitoring of the development of occupational safety and accident rates is an integral part of the work of YIT's Managerial Board. Occupational safety is measured using a common indicator (number of accidents per one million hours worked). In 2012, the accident frequency was 11 (1–12/2011: 14).


The organisation of well-being at work and occupational health care varies by country, but this theme has become part of Managerial Board discussions and closer follow-up during 2012. In Finland, the country with the highest number of employees, the early intervention model has been implemented in the line organisation and a disability risk monitoring system is being piloted. Performance and development discussions are a channel of influence included in YIT’s corporate culture, contributing to well-being at work. The new personnel survey makes it possible to monitor the usefulness of these discussions. Awareness of corporate culture, values and leadership has been increased, and a related workshop has been arranged in five countries during 2012.

 

 

OUTLOOK FOR 2013


YIT estimates the Group revenue based on segment reporting for 2013 to remain at last year’s level and operating profit to grow in 2013. The uncertainty about the general macroeconomic development is still high and impacting YIT's business operations and customers. The first quarter is typically the weakest quarter due to the normal seasonal fluctuation of business.


Building Services Northern Europe


The market situation in building services varies by country in the Nordic countries in 2013.


The service and maintenance market is estimated to remain stable or even grow slightly in all countries in 2013. The increase in technology in buildings increases the need for new services, and the demand for energy efficiency services is expected to remain stable. The service and maintenance market is expected to grow particularly in Norway by 3–4 percent.


Demand in the project market is expected to weaken further in 2013 in Finland, Sweden and Denmark. The size of the Swedish project market as a whole is expected to decrease by approximately 5 percent during 2013, mainly due to weakening demand. In Norway, the project market is estimated to remain stable and the demand for infrastructure projects to grow during 2013.


In the Baltic countries and Russia, both the project and service market demand is estimated to remain low.


Building Services Central Europe


In Building Services Central Europe, the service and maintenance market is expected to grow at a moderate rate. The opportunities for growth in service and maintenance are still quite favourable, particularly in Germany and Austria. In Poland, the building system services market will continue to grow but suffer from oversupply, which will have a negative impact on prices. The building system services market in the rest of Central Eastern Europe (the Czech Republic and Romania) is developing slowly with a low level of activity.


Uncertainty in the project market has increased in the Central European countries in which YIT operates. Decision-making on new investments has been slowed down and the start-ups of certain projects have been postponed, partially due to the lack of funding. New building system investments are estimated to remain at the current level in Germany and Austria, whereas in Central Eastern Europe they are estimated to decrease slightly.


Growth in the demand for energy-efficient services is possible over the next few years with high energy prices and tightening environmental legislation, particularly in Germany and Austria. Services related to the maintenance of traffic infrastructure are also estimated to develop favourably.


Construction Services Finland


With regard to Construction Services Finland, housing demand is expected to continue to be good, with the need for new housing remaining high. Residential demand continues to be supported by continued low interest rates, relatively stable employment rates and migration to growth centres. Furthermore, the population and the number of household-dwelling units will increase with continued migration and the increasing number of one-person households. Residential sales during the first quarter may also be partly supported by the change in asset transfer tax legislation taking force in March 2013, increasing the asset transfer tax from the current 1.6% level to 2.0%. The tax will be calculated from the debt-free price in the future.


According to Euroconstruct’s December 2012 estimate, the construction of 25,000 residential units will start in Finland during 2013. According to a report published by VTT in January 2012, the annual need for the production of new residential units amounts to 24,000–29,000 residential units over the long term. YIT's goal is to strengthen its position as the leading housing developer in Finland.


YIT estimates that housing prices will remain stable in 2013. Construction costs are estimated to increase, mainly due to new energy regulations, but the increase is expected to be moderate in 2013.


With regard to the construction of business premises, real estate investors are still cautious due to the general economic situation, and in order to control risks the Helsinki metropolitan area and good tenants are appreciated. The very low level of long-term interest rates increases investors’ interest in high-yield properties. According to Euroconstruct’s December 2012 estimate, construction of business premises will decrease by approximately 19 percent in Finland during 2013. Vacancy rates for offices are still rather high, with the vacant building stock also including relatively old office premises in poor condition. YIT estimates that the demand will focus on modern and energy-efficient offices. YIT estimates that renovation of business premises will grow in 2013.


According to Euroconstruct’s December 2012 estimate, commercial construction will decrease by approximately 12 percent in Finland during 2013. The shift of the retail trade towards ever larger business properties and the expansion of foreign retail chains in Finland will support construction activity. Vacancy rates for commercial premises are rather low.


The infrastructure construction market is expected to remain stable and at the same level as in 2012 (Euroconstruct, December 2012). Rail and metro construction will continue to increase in 2013, and several major road projects will be underway in 2013–2014. The market situation of rock construction is expected to remain favourable. There will be a shift from rock excavation to trim and structural engineering work. The road maintenance market is expected to remain stable, and new tenders will create opportunities for YIT.


International Construction Services


The volume of residential construction is estimated to increase in Russia in 2013. However, the growth is expected to slow down slightly compared to the previous year.


Moscow, the Moscow region and St. Petersburg make up the largest residential markets in Russia: these areas account for approximately one-fifth of all residential construction. Residential demand has been supported by the good economic development in Russia, good consumer confidence and favourable development in the housing loan market, even though housing loan interest rates began to increase at the end of 2011. The increase in interest rates continued further during 2012 and the increase is expected to continue also in 2013.


The future outlook for Russian residential construction is good. Living space per person is still clearly lower than in Western Europe and housing is in poor condition, which creates the need for new, high-quality housing. Furthermore, the middle class is expected to grow in proportion to the population and the number of household-dwelling units is expected to increase. The development of the housing loan market in Russia has also contributed to the expansion of the potential buyer base. YIT has promoted the availability of loans to consumers through extensive cooperation with banks. YIT expects housing prices to increase in Russia in 2013, but at a slower rate than in 2012.


The volume of business premises construction is expected to grow moderately in 2013 according to VTT’s statistics. YIT’s largest individual market is St. Petersburg, where YIT will continue the marketing and sales of the Gorelovo industrial park.


In the Baltic countries, residential demand has been supported by improved consumer confidence and the employment situation. Residential construction is expected to remain at the level of the previous year in the Czech Republic and Slovakia in 2013. Economic growth has come to a standstill and the country has increased the value added tax on housing sales as of the beginning of 2013. In Slovakia the housing market is supported by the stable price level of housing, moderate economic growth and interest rates remaining low, the growing unemployment is seen as a risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF DISTRIBUTABLE EQUITY

 


The distributable equity of YIT Corporation on December 31, 2012 is:


 

Retained earnings 219,690,906.87
Profit for the period 269,650,764.99
Retained earnings, total 489,341,671.86
Non-restricted equity reserve 3,823,677.13
Distributable equity, total 493,165,348.99

 

 

The Board of Directors proposes to the Annual General Meeting that the distributable equity be disposed of as follows:


 

Payment of a dividend from retained earnings EUR 0,75 per share to shareholders 94,037,883.75
Remains in distributable equity 399,127,465.24


 

No significant changes have taken place in the company’s financial position after the end of the financial year. The company’s liquidity is good and, in the view of the Board of Directors, the proposed dividend payout does not jeopardise the company’s solvency.


 

Signature of the Report of the Board of Directors and financial statements


 

Helsinki, February 4, 2013


 

Henrik Ehrnrooth                                     Reino Hanhinen

Chairman                                                 Vice Chairman


 

Kim Gran                                                 Antti Herlin


 

Satu Huber                                              Michael Rosenlew


 

Juhani Pitkäkoski

President and CEO


 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL STATEMENTS BULLETIN JAN 1 – DEC 31, 2012: TABLES


The financial statements bulletin is based on the audited financial statements for 2012.


1. SEGMENT REPORTING

1.1 Segment reporting accounting principles

1.2 Key figures, segment reporting

1.3 Revenue, segment reporting

1.4 Operating profit and Profit for the review period, segment reporting

1.5 Order backlog, segment reporting

1.6 YIT Group figures by quarter, segment reporting

1.7 Segment information by quarter, segment reporting

1.8 Reconciliation of the segment reporting and the group reporting


2. GROUP REPORTING, IFRS

2.1 Key figures, IFRS

2.2 YIT Group figures by quarter, IFRS

2.3 Consolidated income statement Jan 1 - Dec 31, 2012, IFRS

2.4 Statement of comprehensive income Jan 1 - Dec 31, 2012, IFRS

2.5 Consolidated income statement Oct 1 - Dec 31, 2012, IFRS

2.6 Consolidated balance sheet, IFRS

2.7 Consolidated statement of changes in equity

2.8 Consolidated cash flow statement

2.9 Accounting principles of the Financial Statements Bulletin

2.10 Definitions of key financial figures

2.11 Financial risk management

2.12 Unusual items affecting operating profit

2.13 Business combinations and disposals

2.14 Changes in property, plant and equipment

2.15 Inventories

2.16 Notes on equity

2.17 Borrowings

2.18 Change in contingent liabilities and assets and commitments

2.19 Transactions with associated companies

 


1. SEGMENT REPORTING


1.1 Accounting principles of segment reporting


Building Services Northern Europe and Building Services Central Europe segments’ reporting to YIT Group’s management board is based on YIT Group’s accounting principles. In the reporting of Construction Services Finland segment and International Construction Services segment, the revenue from own residential and commercial development projects is recognised on the basis of the percentage of degree of completion and the degree of sale, using percentage of completion method, which does not fully comply with Group’s IFRS accounting principles. According to Group’s IFRS accounting principles revenue from own residential and commercial development projects is recognised at the completion. In the case of YIT’s 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. Sold projects are recognised either when the construction work has started or when the project is complete. The share of income and expenses to be recognised is calculated by multiplying the percentage of completion by the percentage of sale multiplied by the occupancy rate. YIT usually sells commercial real estate development projects to investors either prior to construction or during an early phase. The impact on revenue and operating profit of two revenue recognition principles is shown in the line IFRIC 15 adjustment. As a result of the accounting policy, Group figures can fluctuate greatly between quarters. 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.


1.2 Key figures, segment reporting

 

  1-12/12 1-12/11 Change
Revenue, EUR million 4,675.9 4,524.7 3%
Operating profit, EUR million 248.8 240.5 3%
 % of revenue 5.3 5.3  
Profit before taxes, EUR million 227.6 215.8 5%
Profit for the report period, EUR million 1) 171.2 156.7 9%
Earnings per share, EUR 1.37 1.25 10%
Diluted earnings per share, EUR 1.37 1.25 10%
Equity per share, EUR 8,78 7,93 11%
Return on investment, from the last 12 months, % 14.2 14.8 -4%
Equity ratio, % 35.4 32.9 8%
Order backlog at the end of the period, EUR million 3,901.5 3,752.7 4%
Average number of personnel 25,833 26,254 -2%

1) Attributable to equity holders of the parent company


1.3 Revenue, segment reporting

 

EUR million 1-12/12 1-12/11 Change
Building Services Northern Europe 2,089.2 2,097.6 0%
- Group internal -55.1 -63.2  
- external 2,034.2 2,034.4 0%
Building Services Central Europe 714.2 779.3 -8%
- Group internal -0.8 -0.3  
- external 713.4 779.0 -8%
Construction Services Finland 1,329.0 1,226.9 8%
- Group internal -1.8 -1.9  
- external 1,327.2 1,225.0 8%
International Construction Services 599.6 489.2 23%
- Group internal -0.3 -4.2  
- external 599.3 485.0 24%
Other items 1.8 1.5  
Revenue in total, segment reporting 4,675.9 4,524.7 3%
IFRIC 15 adjustments 29.9 -142.6  
Revenue in total, IFRS 4,705.9 4,382.1 7%

 

1.4 Operating profit and Profit for the review period, segment reporting

 

EUR million 1-12/12 1-12/11 Change
Building Services Northern Europe 41.7 78.8 -47%
Building Services Central Europe  26.9 33.3 -19%
Construction Services Finland 127.0 111.6 14%
International Construction Services 73.9 37.2 99%
Other items -20.7 -20.4 2%
Operating profit total, segment reporting 248.8 240.5 3%
Financial income and expenses -21.2 -24.8 -14%
Profit before taxes, segment reporting 227.6 215.8 5%
Taxes -55.3 -58.0 -5%
Attributable to non-controlling interests -1.0 -1.0 4%
Profit for the review period, segment reporting 171.2 156.7 9%
IFRIC 15 adjustments 7.5 -32.3  
Profit for the review period, IFRS 178.7 124.4 44%


Operating profit margin, segment reporting

 

% 1-12/12 1-12/11
Building Services Northern Europe 2.0 3.8
Building Services Central Europe 3.8 4.3
Construction Services Finland 9.6 9.1
International Construction Services  12.3 7.6
Operating profit, segment reporting 5.3 5.3

 

1.5 Order backlog, segment reporting

 

EUR million 12/12 12/11 Change
Building Services Northern Europe 819.0 913.1 -10%
Building Services Central Europe 380.1 449.5 -15%
Construction Services Finland 1,499.0 1,493.6 0%
International Construction Services  1,266.1 962.5 32%
Other items -62.8 -66.0  
Order backlog total, segment reporting 3,901.5 3,752.7 4%
IFRIC 15 adjustments 343.5 395.9  
Order backlog, IFRS 4,245.1 4,148.6 2%

 

1.6 YIT Group figures by quarter, segment reporting

 

  10-12/12 7-9/12 4-6/12 1-3/12 10-12/11 7-9/11 4-6/11 1-3/11
Revenue, EUR million 1,277.8 1,115.3 1,184.5 1,098.3 1,264.5 1,096.5 1,136.9 1,026.9
Operating profit, EUR million 67.5 68.4 60.5 52.3 76.2 43.6 70.3 50.4
 % of revenue 5.3 6.1 5.1 4.8 6.0 4.0 6.2 4.9
Profit before taxes, EUR million 62.0 64.0 54.5 47.1 68.6 35.8 65.5 45.9
Profit for the review period, EUR million 1) 45.6 49.8 41.7 34.6 51.8 24.5 47.6 32.7
Earnings/share, EUR 0.36 0.40 0.33 0.28 0.41 0.20 0.38 0.26
Diluted earnings/share, EUR 0.36 0.40 0.33 0.28 0.41 0.20 0.38 0.26
Equity/share, EUR 8.78 8.44 7.91 7.74 7.93 7.38 7.42 7.05
Return on investment, from the last 12 months, % 14.2 14.6 13.7 14.8 14.8 14.4 15.4 15.1
Equity ratio, % 35.4 33.8 32.2 31.5 32.9 31.4 31.8 31.0
Order backlog at the end of the period, EUR million 3,901.5 4,018.6 4,045.4 3,965.5 3,752.7 3,489.0 3,509.4 3,355.6
Average number of personnel 25,478 26,002 25,998 25,821 26,245 23,796 26,021 25,754
Personnel at the end of the period 25,283 25,788 26,255 25,703 25,996 26,502 26,807 25,748

1) Attributable to equity holders of the parent company


1.7. Segment information by quarter, segment reporting


Revenue by business segment

 

EUR million 10-12/12 7-9/12 4-6/12 1-3/12 10-12/11 7-9/11 4-6/11 1-3/11
Building Services
Northern Europe
552.7 485.3 538.1 513.1 600.1 511.9 509.4 476.2
Building Services
Central Europe
195.8 179.5 179.5 159.4 200.3 210.8 191.1 177.1
Construction Services Finland 342.6 308.9 347.9 329.5 335.7 269.4 332.3 289.5
International Construction Services 205.0 153.3 133.4 107.9 145.9 122.5 120.5 100.3
Other items -18.3 -11.7 -14.4 -11.6 -17.5 -18.1 -16.4 -16.2
Revenue in total,
segment reporting
1,277.8 1,115.3 1,184.5 1,098.3 1,264.5 1,096.5 1,136.9 1,026.9

 

Operating profit by business segment

 

EUR million 10-12/12 7-9/12 4-6/12 1-3/12 10-12/11 7-9/11 4-6/11 1-3/11
Building Services
Northern Europe
-3.8 15.6 15.3 14.6 23.0 19.9 18.8 17.1
Building Services
Central Europe
10.4 4.8 6.6 5.2 9.3 7.9 12.1 4.0
Construction Services Finland 38.1 27.2 32.0 29.7 32.1 21.1 32.8 25.6
International Construction Services 28.7 24.0 12.7 8.5 17.4 -0.9 12.3 8.4
Other items -5.7 -3.2 -6.1 -5.7 -5.6 -4.4 -5.7 -4.7
Operating profit in total, segment reporting 67.5 68.4 60.5 52.3 76.2 43.6 70.3 50.4

 

Operating profit margin by business segment

 

% 10-12/12 7-9/12 4-6/12 1-3/12 10-12/11 7-9/11 4-6/11 1-3/11
Building Services
Northern Europe
-0.7 3.2 2.8 2.9 3.8 3.9 3.7 3.6
Building Services
Central Europe
5.3 2.6 3.7 3.3 4.6 3.7 6.3 2.3
Construction Services Finland 11.1 8.8 9.2 9.0 9.6 7.8 9.9 8.8
International Construction Services 14.0 15.7 9.5 7.9 11.9 -0.7 10.2 8.4

 

Order backlog by business segment

 

EUR million 12/12 9/12 6/12 3/12 12/11 9/11 6/11 3/11
Building Services
Northern Europe
819.0 904.9 955.1 969.4 913.1 886.1 879.5 804.9
Building Services
Central Europe
380.1 435.5 473.4 500.5 449.5 523.9 554.1 573.2
Construction Services Finland 1,499.0 1,541.0 1,499.9 1,428.0 1,493.6 1,289.3 1,239.5 1,176.0
International Construction Services  1,266.1 1,207.4 1,186.7 1,142.9 962.5 850.1 896.4 862.7
Other items -62.8 -70.1 -69.7 -75.3 -66.0 -60.3 -60.2 -61.2
Order backlog, segment reporting 3,901.5 4,018.6 4,045.4 3,965.5 3,752.7 3,489.0 3,509.4 3,355.6

 

Operative invested capital*)

 

EUR million 12/12 9/12 6/12 3/12 12/11 9/11 6/11 3/11
Building Services
Northern Europe
320.6 394.8 357.8 339.4 372.9 375.6 323.5 282.8
Building Services
Central Europe
98.9 113.7 106.5 96.5 72.0 56.0 40.8 18.9
Construction Services Finland 581.7 546.8 515.3 552.1 558.4 503.0 451.7 436.1
International Construction Services  708.3 703.8 655.7 651.8 602.2 601.5 668.3 720.0

 

Return on operative invested capital*)

 

Last 12 months, % 12/12 9/12 6/12 3/12 12/11 9/11 6/11 3/11
Building Services
Northern Europe
12.2 17.8 21.4 24.5 23.8 23.5 28.6 34.8
Building Services
Central Europe
31.5 30.4 39.4 59.7 53.8 58.5 91.7 83.1
Construction Services Finland 23.5 24.3 25.0 24.6 24.0 26.3 30.9 28.3
International Construction Services  12.3 10.5 6.5 6.1 6.5 5.8 6.7 5.8

 

*) Only operational items are taken into account in calculating the segments’ invested capital.


1.8 Reconciliation of the segment reporting and the group reporting

 

Reporting period 1-12/12      1-12/11
Income statement,
EUR million
Segment reporting IFRIC 15 adjustments IFRS Segment reporting IFRIC 15 adjustments IFRS
Revenue 4,675.9 29.9 4,705.9 4,524.7 -142.6 4,382.1
Other operating income and expenses -4,382.3 -19.5 -4,401.8 -4,244.6 102.1 -4,142.5
Depreciation -44.9   -44.9 -39.6   -39.6
Operating profit 248.8 10.5 259.2 240.5 -40.5 200.0
Financial income and expenses -21.2   -21.2 -24.8   -24.8
Profit before taxes 227.6 10.5 238.0 215.8 -40.5 175.2
Income taxes -55.3 -2.8 -58.1 -58.0 -7.8 -50.2
Profit for the review period 172.2 7.7 179.9 157.7 -32.7 125.0
Attributable to:            
Equity holders of the parent company 171.2 7.5 178.7 156.7 -32.3 124.4
Non-controlling interests 1.0 0.2 1.2 1.0 -0.4 0.6
             
Earnings/share, EUR 1.37   1.43 1.25   0.99
Diluted earnings/share, EUR 1.37   1.43 1.25   0.99

 

Quarter 10-12/12      10-12/11
Income statement,
EUR million
Segment reporting IFRIC 15 adjustments IFRS Segment reporting IFRIC 15 adjustments IFRS
Revenue 1,277.8 7.1 1,284.9 1,264.4 -74.1 1,190.3
Other operating income and expenses -1,199.6 -1.9 -1,201.5 -1,178.2 55.4 -1,122.8
Depreciation -10.7   -10.7 -10.0   -10.0
Operating profit 67.5 5.3 72.8 76.2 -18.7 57.5
Financial income and expenses -5.5   -5.5 -7.6   -7.6
Profit before taxes 62.0 5.3 67.3 68.6 -18.7 49.9
Income taxes -16.4 -1.0 -17.4 -16.5 1.6 -14.9
Profit for the review period 45.6 4.2 49.8 52.1 -17.0 35.1
Attributable to:            
Equity holders of the parent company 45.1 4.0 49.1 51.8 -16.9 34.9
Non-controlling interests 0.5 0.3 0.8 0.3 -0.1 0.2
             
Earnings/share, EUR 0.36   0.39 0.41   0.27
Diluted earnings/share, EUR 0.36   0.39 0.41   0.27

 

  12/12        12/11
Balance sheet,
EUR million
Segment reporting IFRIC 15 adjustments IFRS Segment reporting IFRIC 15 adjustments IFRS
Non-current assets            
  Other non-current assets 539.5   539.5 538.1   538.1
  Deferred tax assets 40.7 9.1 49.8 47.2 13.1 60.3
             
Current assets            
  Inventories 1,590.9 310.6 1,901.5 1,348.2 324.4 1,672.6
Trade and other
receivables
1,082.3 -66.8 1,015.5 1,122.0 -94.7 1,027.3
Cash and cash
equivalents
175.7   175.7 206.1   206.1
Total assets 3,429.0 252.9 3,682.0 3,261.6 242.9 3,504.5
             
Equity 1,104.6 -69.3 1,035.4 996.7 -75.6 921.1
             
Non-current liabilities            
Financial liabilities 517.1   517.1 522.9   522.9
Other non-current
liabilities
108.0   108.0 128.5   128.5
Deferred tax liabilities 108.6 -9.9 98.7 96.6 -8.3 88.3
             
Current liabilities            
Financial liabilities 332.9 72.0 404.9 325.2 98.4 423.6
Advances received 305.5 261.1 566.6 231.3 227.0 458.3
Other current liabilities 952.4 -1.1 951.3 960.4 1.2 961.6
Total equity and liabilities 3,429.0 252.9 3,682.0 3,261.6 242.9 3,504.5

 

 

2. GROUP REPORTING, IFRS


2.1 Key figures, IFRS

 

  12/12 12/11 Change
Earnings/share, EUR 1.43 0.99 44%
Diluted earnings/share, EUR 1.43 0.99 44%
Equity/share, EUR 8.23 7.33 12%
Average share price during the period, EUR 14.90 15.28 -2%
Share price at the end of the period, EUR 14.78 12.38 19%
Market capitalization at the end of the period, EUR million 1,853.2 1,550.9 19%
Weighted average share-issue adjusted number of shares outstanding, thousands 125,352 125,210 0%
Weighted average share-issue adjusted number of shares outstanding, thousands, diluted 125,352 125,210 0%
Share-issue adjusted number of shares outstanding at the end of the period, thousands 125,384 125,271 0%
Net interest-bearing debt at the end of the period, EUR million 746.2 740.4 1%
Return on investment, from the last 12 months, % 14.6 12.0  
Equity ratio, % 33.2 30.2  
Gearing ratio, % 72.1 80.4  
Gross capital expenditures, EUR million 44.6 48.7 -8%
  % of revenue 0.9 1.1  
Unrecognised order backlog at the end of the period, EUR million 4,245.1 4,148.6 2%
  of which order backlog outside Finland 2,273.3 2,066.9 10%
Average number of personnel 25,833 26,254 -2%

 

2.2 YIT Group figures by quarter, IFRS

 

EUR million 10-12/12 7-9/12 4-6/12 1-3/12 10-12/11 7-9/11 4-6/11 1-3/11
Revenue, EUR million 1,284.9 1,103.6 1,218.9 1,098.4 1,190.4 1,084.8 1,137.2 969.7
Operating profit, EUR million 72.8 63.6 67.7 55.2 57.5 35.4 67.9 39.2
  % of revenue 5.7 5.8 5.6 5.0 4.8 3.3 6.0 4.0
Financial income, EUR million 1.2 0.1 2.8 1.4 1.4 0.0 0.3 2.4
Exchange rate differences, EUR million -1.3 -1.8 -1.6 -1.0 -2.1 0.0 -0.8 -1.3
Financial expenses, EUR million -5.5 -2.6 -7.3 -5.7 -6.9 -7.8 -4.4 -5.6
Profit before taxes, EUR million 67.3 59.2 61.6 49.9 49.9 27.6 63.0 34.7
  % of revenue 5.2 5.4 5.1 4.5 4.2 2.5 5.5 3.6
                 
Balance sheet total, EUR million 3,682.0 3,722.3 3,646.9 3,631.9 3,504.5 3,418.6 3,387.4 3,274.8
                 
Earnings/share, EUR 0.39 0.37 0.37 0.29 0.27 0.15 0.37 0.20
Equity/share, EUR 8.23 7.86 7.37 7.14 7.33 6.93 7.00 6.64
Share price at the end of the period, EUR 14.78 14.93 13.38 16.12 12.38 11.33 17.24 20.92
Market capitalization, EUR million 1,853.2 1,872.0 1,677.7 2,019.3 1,550.9 1,419.3 2,159.7 2,616.6
                 
Return on investment, from the last 12 months, % 14.6 13.7 12.5 12.8 12.0 15.6 15.7 14.0
Equity ratio, % 33.2 31.6 30.0 28.8 30.2 29.2 29.7 28.5
Net interest-bearing debt at the end of the period, MEUR 746.2 827.3 803.1 755.9 740.4 755.0 702.7 632.6
Gearing ratio, % 72.1 83.7 86.7 84.2 80.4 86.8 79.9 75.2
                 
Gross capital expenditures, EUR million 10.3 10.1 10.6 13.6 7.1 18.3 14.6 8.7
 % of revenue 0.8 0.9 0.9 1.2 0.6 1.7 1.3 0.9
Unrecognised order backlog at the end of the period, EUR million 4,245.1 4,462.0 4,409.3 4,385.3 4,148.6 3,738.3 3,796.9 3,699.0
Personnel at the end of the period 25,283 25,788 26,255 25,703 25,996 26,502 26,807 25,748

 

2.3 Consolidated income statement Jan 1 - Dec 31, 2012, IFRS

 

EUR million 1-12/12 1-12/11 Change
Revenue 4,705.9 4,382.1 7%
  of which activities outside Finland 2,777.3 2,607.7 7%
Other operating income and expenses -4,402.0 -4,142.9 6%
Share of results of associated companies 0.2 0.4 -39%
Depreciation and impairments -44.9 -39.6 13%
Operating profit 259.2 200.0 30%
 % of revenue 5.5 4.6  
Financial income 5.5 4.3 29%
Exchange rate differences -5.8 -4.1 42%
Financial expenses -21.0 -24.8 -16%
Profit before taxes 238.0 175.2 36%
  % of revenue 5.1 4.0  
Income taxes -58.1 -50.2 16%
Profit for the review period 179.9 125.0 44%
 % of revenue 3.8 2.9  
       
Attributable to      
Equity holders of the parent company 178.7 124.4 44%
Non-controlling interests 1.2 0.6 100%
       
Earnings per share attributable to the equity holders of the parent company      
Earnings/share, EUR 1.43 0.99 44%
Diluted earnings/share, EUR 1.43 0.99 44%

 

2.4 Statement of comprehensive income Jan 1 - Dec 31, 2012, IFRS

 

EUR million 1-12/12 1-12/11 Change
Profit for the review period 179.9 125.0 44%
Other comprehensive income      
- Cash flow hedges 0.6 -2.0  
-- Deferrred tax -0.1 0.4  
- Change in fair value for available for sale investments -0.4 0.5  
-- Deferrred tax 0.1 -0.1  
- Change in translation differences 17.4 -8.5  
- Other change   -0.1  
Other comprehensive income, total 17.6 -9.7  
Total comprehensive result 197.5 115.3 71%
       
Attributable to      
Equity holders of the parent company 196.3 114.5 71%
Non-controlling interest 1.2 0.8 50%

 

2.5 Consolidated income statement Oct 1 - Dec 31, 2012, IFRS

 

EUR million 10-12/12 10-12/11 Change
Revenue 1,284.9 1,190.3 8%
  of which activities outside Finland 828.0 734.5 13%
Other operating income and expenses -1,201.6 -1,123.3 7%
Share of results of associated companies 0.2 0.5 -69%
Depreciation and impairments -10.7 -10.0 7%
Operating profit 72.8 57.5 27%
  % of revenue 5.7 4.8  
Financial income 1.2 1.4 -14%
Exchange rate differences -1.3 -2.1 -39%
Financial expenses -5.5 -6.9 -21%
Profit before taxes 67.3 49.9 35%
  % of revenue 5.2 4.2  
Income taxes -17.4 -14.9 17%
Profit for the review period 49.8 35.1 42%
 % of revenue 3.9 2.9  
       
Attributable to      
Equity holders of the parent company 49.1 34.9 41%
Non-controlling interests 1.2 0.2 500%
       
Earnings per share attributable to the equity holders of the parent company      
Earnings/share, EUR 0.39 0.27 44%
Diluted earnings/share, EUR 0.39 0.27 44%

 

2.6 Consolidated balance sheet, IFRS

 

EUR million 12/12 12/11 Change
Assets      
       
Non-current assets      
Property, plant and equipment 110.6 110.8 0%
Goodwill 346.6 347.5 0%
Other intangible assets 61.8 54.1 14%
Shares in associated companies 0.6 3.1 -82%
Other investments 3.4 3.8 -11%
Other receivables 16.6 18.8 -11%
Deferred tax assets 49.8 60.3 -17%
       
Current assets      
Inventories 1,901.5 1,672.6 14%
Trade and other receivables 1,015.5 1,027.3 -1%
Cash and cash equivalents 175.7 206.1 -15%
Total assets 3,682.0 3,504.5 5%
       
Equity and liabilities      
       
Equity attributable to equity holders of the parent company      
Share capital 149.2 149.2 0%
Other equity 882.8 769.5 15%
       
Non-controlling interest 3.3 2.5 33%
       
Total equity 1,035.4 921.1 12%
       
Non-current liabilities      
Deferred tax liabilities 98.7 88.3 12%
Pension liabilities 27.0 26.5 2%
Provisions 48.5 54.1 -10%
Borrowings 517.1 522.9 -1%
Other liabilities 32.6 47.9 -32%
       
Current liabilities      
Advances received 566.6 458.3 24%
Trade and other payables 896.1 909.3 -1%
Provisions 55.3 52.3 6%
Current borrowings 404.9 423.6 -4%
       
Total equity and liabilities 3,682.0 3,504.5 5 %

 

2.7 Consolidated statement of changes in equity

 

  Attributable to equity holders of the parent company    
EUR million Share
capital
Legal
reserve
Other
reserve
Cumulative translation
differences
Fair value
reserve
Treasury
shares
Retained
earnings
Total Non-controlling
interest
Total
equity
Equity on
January 1, 2012
149.2 1.9 2.8 -23.4 -3.6 -9.7 801.5 918.7 2.5 921.1
Comprehensive income                    
    Profit for the period             178.7 178.7 1.2 179.9
    Other comprehensive income:                    
       Cash flow hedges         0.6     0.6   0.6
          - Deferred tax         -0.1     -0.1   -0.1
Change in fair value of
available-for-sale assets
        -0.4     -0.4   -0.4
          - Deferred tax         0.1     0.1   0.1
   Change in translation differences       17.4       17.4   17.4
Comprehensive income,
total
      17.4 0.2 0.0 178.7 196.3 1.2 197.5
Transactions with
owners
                   
    Dividend paid             -87.7 -87.7 -0.4 -88.1
    Share-based incentive schemes     1.0     0.5 3.3 4.8   4.8
Transactions with
owners, total
    1.0 0.0 0.0 0.5 -84.4 -82.9 -0.4 -83.3
Equity on
December 31, 2012
149.2 1.9 3.8 -6.2 -3.4 -9.2 895.9 1,032.1 3.3 1,035.4

 

  Attributable to equity holders of the parent company    
EUR million Share
capital
Legal
reserve
Other
reserve
Cumulative translation
differences
Fair value
reserve
Treasury
shares
Retained
earnings
Total Non-controlling
interest
Total
equity
Equity on
January 1, 2011
149.2 2.0 0.0 -14.2 -2.4 -10.6 756.1 880.1 2.8 882.9
Comprehensive
income
                   
    Profit for the period             124.4 124.4 0.6 125.1
    Other comprehensive income:                    
       Cash flow hedges         -2.0     -2.0   -2.0
        - Deferred tax         0.4     0.4   0.4
Change in fair value of
available-for-sale assets
        0.5     0.5   0.5
        - Deferred tax         -0.1     -0.1   -0.1
Change in translation
differences
      -9.1     0.4 -8.7 0.2 -8.4
Other change   -0.1           -0.1   -0.1
Comprehensive income,
total
  -0.1   -9.1 -1.2   124.9 114.5 0.8 115.4
Transactions with
owners
                   
    Dividend paid             -81.3 -81.3 -0.2 -81.5
    Share-based incentive scheme     2.8     0.9 0.7 4.4   4.4
Transactions with owners, total     2.8     0.9 -80.6 -76.9 -0.2 -77.1
Changes in ownership shares
in subsidiaries
                   
    Changes in group ownership
shares in subsidiaries - no loss of
control
            1.0 1.0 -1.0 0.0
Non-controlling interests from
business combinations
                0.0 0.0
Changes in ownership shares
in subsidiaries, total
            1.0 1.0 -1.0 0.0
Equity on
December 31, 2011
149.2 1.9 2.8 -23.4 -3.6 -9.7 801.5 918.7 2.5 921.1

 

2.8 Consolidated cash flow statement

 

EUR million 10-12/12 10-12/11 Change 1-12/12 1-12/11 Change
Cash flow from
operating activities
           
Net profit for the period 49.8 35.1 42% 179.9 125.0 44%
Reversal of accrual-based items 29.6 51.9 -43% 127.5 143.5 -11%
Change in working capital            
Change in trade and
other receivables
79.7 -289.3   50.5 -159.2  
Change in inventories -46.6 -79.0 -41% -197.6 -196.3 1%
Change in current
liabilities
-15.2 55.6   43.9 189.4 -77%
Change in working
capital, total
18.0 -52.5   -103.2 -166.1 -38%
Interest paid -8.0 -7.6 5% -35.4 -34.3 3%
Other financial items, net 0.5 -5.7   -9.9 -5.3 86%
Interest received 1.7 1.3 32% 4.5 4.1 10%
Taxes paid 2.1 0.1 over thousand -42.0 -49.7 -16%
Net cash generated
from operating activities
93.7 22.4 318% 121.5 17.4 598%
             
Cash flow from investing activities            
Acquisition of subsidiaries,
net of cash
0.0 0.1 -119% -7.3 -8.9 -18%
Purchase of property,
plant and equipment
-7.6 -4.7 61% -26.7 -30.0 -11%
Purchase of intangible
assets
-2.2 -2.9 -24% -8.4 -9.0 -7%
Increases in other
investments
0.0 -0.1   0.0 -0.1  
Disposal of subsidiaries,
net of cash
0.0     0.0 5.9  
Disposal of affiliated
companies
      2.9    
Proceeds from sale of
fixed assets
3.4 -1.0   7.7 4.5 70%
Proceeds from sale of
other investments
0.0 0.1 -112% 0.7 2.7 -74%
Net cash used in
investing activities
-6.4 -8.5 -25% -31.2 -34.7 -10%
Operating cash flow
after investments
87.3 14.1 519% 90.4 -17.3  
             
Cash flow from
financing activities
           
Change in loan receivables -7.6     -13.9    
Change in current
liabilities
-99.6 -19.6 408% -34.9 139.4  
Proceeds from
borrowings
50.0 0.0   150.0 175.0 -14%
Repayments of
borrowings
-4.5 -15.5 -71% -136.6 -157.4 -13%
Payments of financial
leasing debts
-0.2 0.5   -0.7 -0.9 -20%
Dividends paid and other distribution of assets       -88.1 -81.5 8%
Net cash used in
financing activities
-61.9 -34.6 79% -124.2 74.6  
             
Net change in cash and
cash equivalents
25.4 -20.5   -33.9 57.4  
Cash and cash equivalents
at the beginning of the period
149.3 224.1 -33% 204.8 147.6 39%
Change in the fair value
of the cash equivalents
-0.1 1.1   3.8 -0.2  
Cash and cash equivalents
at the end of the period
174.6 204.7 -15% 174.6 204.8 -15%

 

2.9 Accounting principles of the Financial Statements Bulletin


YIT Corporation’s financial statements bulletin for January 1 - December 31, 2012 has been drawn up in line with IAS 34: Interim Financial Reporting. The consolidated financial statement have been prepared in compliance with the International Financial Reporting standards, and IAS/IFRS standards approved the EU Commission by December 31, 2012 and SIC and IFRIC interpretations have been complied with in the drafting of the financial statements for 2012.


The standards and interpretations that have been applied as of January 1, 2012 have minor effects on YIT during the report period. The effects are described in the accounting principles of financial statements for the year 2012.


In the Financial Statements Bulletin the figures are presented in million euros doing the rounding on each line, which may cause some rounding inaccuracies in column and total sums.


Currency exchange rates used in the Financial Statements Bulletin

 

    Average rate
Jan-Dec, 2012
Average rate
Jan-Dec, 2011
  Balance sheet rate
Dec 31, 2012
Balance sheet rate
Dec 31, 2011
1 EUR = CZK 25.1460 24.5910   25.1510 25.7870
  DKK 7.4438 7.4506   7.4610 7.4342
  HUF 289.3200 279.7800   292.3000 314.5800
  MYR 3.9687 4.2555   4.0347 4.1055
  NOK 7.4752 7.7929   7.3483 7.7540
  PLN 4.1843 4.1196   4.0740 4.4580
  RUB 39.9239 40.8816   40.3295 41.7650
  SEK 8.7061 9.0289   8.5820 8.9120
  SGD 1.6059 1.7490   1.6111 1.6819
  USD 1.2854 1.3918   1.3194 1.2939
  LTL 3.4528 3.4528   3.4528 3.4528
  LVL 0.6973 0.7028   0.6977 0.7028

 

2.10 Definitions of key financial figures

 

 
Return on investment (ROI %) =
 
 
Group’s profit before taxes + interest expenses + other  financial expenses +/- exchange rate differences x 100                                                         
Balance sheet total - capitalised interest - non-interest bearing liabilities (average)
 
 
 
Segment’s operative invested capital =
 
Tangible and intangible assets + goodwill + shares in associated companies + investments + inventories + trade receivables + other non-interest bearing operational receivables *) - provisions - trade payables - advances received - non-interest bearing liabilities *)
 
*) excl. items associated with taxes, distribution of profit and financial items
 
 
Return on operative invested capital (%) =
 
 
Segment’s operating profit + interest included in operating profit
Segment’s operative invested capital (average)
 
Equity ratio (%) =
 
Equity + non-controlling interest x 100
Balance sheet total - advances received
 
 
Gearing ratio (%) =
 
Interest-bearing liabilities - cash and cash equivalents x 100
Shareholder’s equity + non-controlling interest
 
 
Segment reporting, earnings / share (EUR) =
 
 
 
Net profit for the period (attributable for equity holders), segment reporting
Share issue-adjusted average number of outstanding shares during the period
 
 
Group IFRS reporting, earnings/ share (EUR) =
 
Net profit for the period (attributable for equity holders), group reporting
Share issue-adjusted average number of outstanding shares during the period
 
 
 
Equity/share (EUR) =
 
Shareholders’ equity
Share issue-adjusted average number of outstanding shares at the end of period
 
 
Market capitalization =
 
 
(Number of shares - treasury shares) x share price on the closing date by share series

 

2.11 Financial risk management


Financial risks include liquidity, interest rate, currency and credit risk, and their management is a part of the Group's treasury policy. The Board of Directors has approved this policy. The Group Treasury 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 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 2012.

 

2.12 Unusual items affecting operating profit

 

EUR million 1-12/12 1-12/11 Change
Building Services Northern Europe -5,8 -3.0 93%
Building Services Central Europe -0,9 5.0  
International Construction Services 7,0 -10.0  
YIT Group, total 3,3 -8.0  

 

Building Services Northern Europe entered costs related to the reorganisation of operations amounted to approximately EUR 3.0 million during the fourth quarter.


The operating profit for International Construction Services for the third quarter of 2012 was improved by the cancellation of a EUR 7.0 million cost provision due to the ammonia issue in St. Petersburg. YIT made a provision of EUR 10.0 during the third quarter of 2011 to cover the costs of rectifying the problem.


YIT started the restructuring of operations in Poland during the second quarter of 2012 and made a write-down of EUR 0.9 million in goodwill in the third quarter of 2012 as the result.


During the second quarter of 2012, the operating profit for Building Services Northern Europe was burdened by a non-recurring expense of EUR 2.8 million associated with the final financial report of a customer project completed in 2011. Building Services Northern Europe booked a provision of EUR 3.0 million associated with the same project in the second quarter of 2011.


The operating profit for Building Services Central Europe for the second quarter of 2011 was improved by a sales gain of EUR 5.0 million from the divestment of Hungarian operations.

 

2.13 Business combinations and disposals


In Sweden, YIT acquired the share capital of Elektriska Installationer i Finspång AB, a company specialising in electricity, telecommunications, data, alarm and low voltage installations, and its sister company Kraftmontage i Finspång AB, specialising in electrical installations in February. In Norway, YIT acquired the share capital of electrical installations specialist Madla Elektro AS in March. In Sweden, YIT acquired the security business operations of Level5 security in April and the share capital of electrical installations company Dala Elmontage Lindkvist & Bodin AB in May.


During the first half of the year 2012, YIT made two acquisitions in the Building Services Central Europe segment. In Austria, YIT acquired the share capital of P&P Kältenangebau GmbH, a cooling solutions and services provider, and the share capital of WM Haustechnik GmbH, an HVAC solution provider, in January 2012.


In December 2012 International Construction Services acquired 100% holding in OOO Vesta, a company specialising in contracting and services within technical building systems in Russia.


The total acquisition price amounted to EUR 9.5 million. The acquisition is not expected to result in goodwill.


Composition of acquired net assets and goodwill

 

EUR million 12/12
Consideration  
Cash 8.5
Contingent consideration 1.1
Total consideration 9.5
   
Acquisition -related  costs,
(recognised as other operating expenses)
0.2
   
Recognised amounts of identifiable assets acquired and liabilities assumed  
Cash and cash equivalents 1.1
Tangible assets 0.5
Intangible rights:  
Customer base 1.6
Order backlog 4.5
Other intangible rights 12.9
Inventories 0.9
Trade and other receivables 6.6
Deferred tax liabilities, net -2.0
Trade and other payables -16.6
Total identifiable net assets 9.5
Non-controlling interest (minority share)  
Goodwill  
Total entity value 9.5


International Construction Services also sold the shares held in a Russian company called UJUT Service. The sale had no significant relevance to the YIT Group.


2.14 Changes in property, plant and equipment

 

EUR million 1-12/12 1-12/11 Change
Carrying value at the beginning of the period 110.8 106.7 4%
Increase 27.7 30.4 -9%
Increase through acquisitions 0.5 0.9 -40%
Decrease -4.2 -3.7 14%
Decrease through disposals 0.0 -0.1  
Depreciation and value adjustments -23.8 -23.9 0%
Reclassifications -1.6 0.6  
Carrying value at the end of the period 110.6 110.8 0%

 

2.15 Inventories

 

EUR million 12/12 12/11 Change
Raw materials and consumables 36.2 27.6 31%
Work in progress 894.8 792.8 13%
Land areas and plot owning companies 673.5 643.8 5%
Shares in completed housing and real estate companies 232.0 158.2 47%
Advance payments 64.1 49.5 30%
Other inventories 0.9 0.7 30%
Total inventories 1,901.5 1,672.6 14%

 

2.16 Notes on equity

 

Share capital and share premium account Number
   of outstanding shares
Share capital (EUR million) Treasury shares
(EUR million)
January 1, 2012 125,271,008 149.2 -9.7
Return of treasury shares, 1.1.- 31.3.2012 -4,131    
Return of treasury shares, 1.4.- 30.6.2012 -8,541    
Return of treasury shares, 1.7.- 30.9.2012 -3,204    
Return of treasury shares, 1.10.- 31.12.2012 -2,263    
Transfer of treasury shares 130,976   0.6
December 31, 2012 125,383,845 149.2 -9.2

 

2.17 Borrowings

 

EUR million Fair value Carrying value Nominal value
Bonds in financial statements December 31, 2011 330.8 335.1 335.7
       
Valuation of the above bonds on December 31, 2012 287.2 278.1 278.6
       
Bonds raised during the review period:      
Floating-rate bonds      
1/2012-2014, Euribor 3 month +1,75% 1) 50.0 49.9 50.0
Total bonds on December 31, 2012 337.2 328.0 328.6

 

Terms of the bonds raised during the review period in brief:


1) Loan period February 17, 2012 - August 18, 2014, interest payments annually February 17, May 17, August 17 and November 17 in arrear. The bond is unsecured and its ISIN code is FI4000037874.


2.18 Change in contingent liabilities and assets and commitments

 

EUR million 12/12 12/11 Change
Collateral given for own commitments      
- Corporate mortgages 29.3 31.2 -6%
- Other pledged assets   0.9  
Other commitments to associated companies 7.0 7.0 0%
Other commitments      
- Repurchase commitments 349.3 293.1 19%
- Operating leases 355,0 330.7 7%
- Rental guarantees for clients 2.1 4.1 -49%
- Other contingent liabilities 1.3 1.5 -13%
- Guarantees given 0.0 0.0  
Liability under derivative contracts      
- Value of underlying instruments      
-- Interest rate derivatives 579.6 329.4 76%
-- Foreign exchange derivatives 220.4 194.1 14%
-- Commodity derivatives 1.9    
- Market values      
-- Interest rate derivatives -13.6 -11.9 14%
-- Foreign exchange derivatives -1.6 1.1  
-- Commodity derivatives -0.9    
YIT Corporation’s guarantees on behalf of its subsidiaries 1,537.3 1,515.4 1%

 

2.19 Transactions with associated companies

 

EUR million 1-12/12 1-12/11 Change
Sales to associated companies 1.5 1.5 2%
Purchases from associated companies 0.1 0.1 47%
Trade and other receivables 0.1 0.0  
Trade and other liabilities 0.0 0.0  

 

 

About Us

YIT is the largest Finnish and significant North European construction company. We develop and build apartments, business premises and entire areas. We are also specialised in demanding infrastructure construction and paving. Together with our customers our 10,000 professionals are creating more functional, more attractive and more sustainable cities and environments. We work in 11 countries: Finland, Russia, Scandinavia, the Baltic States, the Czech Republic, Slovakia and Poland. The new YIT was born when over 100-year-old YIT Corporation and Lemminkäinen Corporation merged on February 1, 2018. Our pro forma revenue for 2017 was over EUR 3.8 billion. YIT Corporation's share is listed on Nasdaq Helsinki Oy. www.yitgroup.com

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