YIT publishes additional information (non-ifrs) for continuing operations for 2012 and first quarter of 2013
STOCK EXCHANGE RELEASE MAY 21, 2013 at 12.33 p.m.
YIT PUBLISHES ADDITIONAL INFORMATION (NON-IFRS) FOR CONTINUING OPERATIONS FOR 2012 AND FIRST QUARTER OF 2013
YIT’s Board of Directors approved and published the demerger plan concerning the partial demerger on February 21, 2013. According to the demerger plan, YIT will demerge such that all of the assets and liabilities related to YIT’s Building Systems business will be transferred to a company, to be established in the demerger, named Caverion Corporation. YIT’s Construction Services business will make up the continuing operations.
The demerger will become effective when YIT's Extraordinary General Meeting on June 17, 2013, approves the demerger and its implementation is recorded in the Finnish Trade Register. The planned registration date is June 30, 2013, after which Caverion shares will be admitted for public trading on the NASDAQ OMX Helsinki.
The prospectus relating to Caverion Corporation, an entity to be established in YIT’s partial demerger, will be published by estimated on June 5, 2013 and it will be available on YIT’s website (www.yitgroup.com).
Non-IFRS information for YIT’s continuing operations for 2012 and the first quarter of 2013
Principles followed in preparing unaudited non-IFRS information
The unaudited non-IFRS information illustrates what the result, financial position and cash flow of YIT’s continuing operations would have been had the demerger taken place on January 1, 2012. The financing arrangements negotiated related to demerger have been taken into account when the information has been prepared. The non-IFRS information presented in this release is based on YIT’s consolidated financial statements according to the present structure, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, with the items associated with the Building Systems business omitted. Certain adjustments have been made to the figures, and the rationale for these adjustments is described in this release.
It is the company’s view that the non-IFRS information presented in the release provides a relevant picture of the result of operations, financial position and cash flow of the continuing YIT Group. The adjustments made in preparing the non-IFRS information are based on available information and assumptions. There is no certainty that the assumptions applied in preparing the unaudited non-IFRS information will prove to be correct.
This non-IFRS information is presented solely for illustrative purposes, and it may not be descriptive of the company’s result of operations, financial position or future cash flow after the demerger.
The non-IFRS information presented in the release differs from the official figures prepared according to IFRS 5, which are presented as comparison data for the continuing YIT for 2012 and 2013 after the approval of the demerger. The most significant difference is associated with the balance sheet, which is not adjusted in accordance with IFRS 5, but will also be presented according to the present structure for the reference periods after the approval of the demerger. In the comparison data after the approval of the demerger, prepared in accordance with IFRS 5, the share allocated to Caverion in the income statement and cash flow statement will be presented as discontinued operations, separate from continuing operations.
The non-IFRS information presented is not intended to replace information reported in accordance with IFRS, and this non-IFRS information is not intended to be given more weight than the information presented in accordance with IFRS.
Assumptions applied in the adjustments to capital structure and financial expenses
YIT’s capital structure will change in connection with the demerger. This non-IFRS information presents YIT’s capital structure in accordance with the demerger plan. For the purposes of preparing the non-IFRS information for the continuing YIT Group, the reported financial statements and interim financial statements have been adjusted under the following assumptions:
- The financial expenses of the continuing YIT have been adjusted, considering the cash and cash equivalents and borrowings transferred to Caverion, the effects of the demerger on YIT’s other existing borrowings, and planned changes to YIT’s bond portfolio. The planned changes are presented in a separate stock exchange release, published on May 21, 2013. The adjustments made assume that YIT’s financial expenses will be decreased by the interest on borrowings transferred to Caverion, the decrease in YIT’s other borrowings and exchange rate losses allocated to Caverion. Correspondingly, it has been assumed that financial expenses will increase as a result of the increase in the coupon rate of fixed-rate bonds, the net effect of the refinancing of floating-rate bonds and an increase in the interest rate margin of certain bank loans. In calculating the effect of bonds on financial expenses, it has been assumed that all floating-rate bonds will be redeemed and that the coupon rates of fixed-rate bonds will be increased in accordance with the proposal made to the bond bearers' creditor meeting. The net effect of these various adjustments will decrease the reported financial expenses for 2012 by EUR 5.1 million and the financial expenses for the first quarter of 2013 by EUR 0.6 million.
- In connection with the demerger, part of YIT's existing borrowings will transfer to Caverion. These borrowings have been adjusted from the balance sheet of the continuing YIT. The borrowings of YIT have also been adjusted for the EUR 140 million loan drawn before the demerger, which will be used to repay YIT’s borrowings and will be transferred to Caverion in connection with the demerger.
This non-IFRS information is presented based on the above assumptions concerning the effects of the demerger.
The non-IFRS information illustrating the effects of the rearrangement of financing is based on assumptions concerning the amount of cash and cash equivalents and borrowings transferred to Caverion and the above assumptions concerning changes in YIT’s bond portfolio. The final amount of cash and cash equivalents and borrowings transferred to Caverion in the demerger and the effect of the changes in the bond portfolio may materially deviate from those presented in this non-IFRS information, as the amounts of cash and cash equivalents and borrowings transferred to Caverion upon the execution of the demerger are based on the balance sheet values at the date of the demerger and the changes in the bond portfolio depend on the decision of the bond bearers to approve the offer to redeem and/or proposed changes to the terms and conditions. This may result in significant changes to the result of operations and financial position of the continuing YIT presented in this non-IFRS information.
Cash flow statement
The cash flow statement has been prepared by taking into account the items allocated to YIT’s continuing operations from the YIT Group figures reported based on the present structure. The cash flow statement does not take into account the rearrangement of financing described above and related changes in financial expenses.
1. SEGMENT REPORTING
1.1 Adjusted Group figures by quarter, segment reporting
|Revenue, EUR million||452.0||444.4||488.9||470.3||555.4||1,959.0|
|Operating profit, EUR million||35.9||37.2||43.4||52.5||68.0||201.1|
|% of revenue||7.9||8.4||8.9||11.2||12.2||10.3|
|Profit before taxes, EUR million||30.1||29.8||35.3||44.2||58.3||167.6|
|Profit for the review period, EUR million 1)||23.0||22.7||28.6||34.8||44.3||130.4|
|IFRIC 15 adjustment||-0.5||2.6||6.2||-2.5||4.3||10.6|
|Profit for review period, adjusted IFRIC 1)||22.5||25.3||34.8||32.3||48.6||141.0|
|Diluted earnings per share, EUR||0.18||0.18||0.23||0.28||0.35||1.04|
|Return on investment, last 12 months, %||14.9||-||-||-||14.9||14.9|
|Equity ratio, %||40.7||35.9||37.0||37.9||43.1||43.1|
|Order backlog at end of period, EUR million||2,710.2||2,570.9||2,686.6||2,748.4||2,765.1||2,765.1|
|Average number of personnel||6,658||6,508||6,813||6,860||6,741||6,730|
|Personnel at end of period||6,689||6,505||7,001||6,756||6,691||6,691|
1) attributable to equity holders of the parent company
1.2. Adjusted segment information by quarter, segment reporting
Revenue by business segment
|Construction Services Finland||326.0||329.5||347.9||308.9||342.6||1,329.0|
|International Construction Services||119.0||107.9||133.4||153.3||205.0||599.6|
|Revenue in total, segment reporting||452.0||444.4||488.9||470.3||555.4||1,959.0|
Operating profit by business segment
|Construction Services Finland||26.5||31.4||33.5||28.9||40.2||134.1|
|International Construction Services||11.6||9.7||14.1||25.7||31.0||80.4|
|Operating profit total, segment reporting||35.9||37.2||43.4||52.5||68.0||201.1|
Operating profit margin by business segment
|Construction Services Finland||8.1||9.5||9.6||9.3||11.7||10.1|
|International Construction Services||9.8||9.0||10.6||16.7||15.1||13.4|
Order backlog by business segment
|Construction Services Finland||1,424.9||1,428.0||1,499.9||1,541.0||1,499.0|
|International Construction Services||1,285.3||1,142.9||1,186.7||1,207.4||1,266.1|
|Order backlog total, segment reporting||2,710.2||2,570.9||2,686.6||2,748.4||2,765.1|
Operative invested capital*)
|Construction Services Finland||584.2||552.1||515.3||546.8||581.7|
|International Construction Services||718.7||651.8||655.7||703.8||708.3|
Return on operative invested capital*)
|Last 12 months, %||3/13||3/12||6/12||9/12||12/12|
|Construction Services Finland||22.7||24.6||25.0||24.3||23.5|
|International Construction Services||12.0||6.1||6.5||10.5||12.3|
*) Only operational items are taken into account in calculating the segments’ invested capital.
2. GROUP REPORTING, IFRIC
2.1. Adjusted Group figures by quarter, IFRIC
|Revenue, EUR million||445.6||444.5||523.3||458.6||562.5||1,988.9|
|Other operating income and expenses||-409.4||-402.3||-470.7||-408.7||-488.6||-1,770.3|
|Depreciation, amortisation and impairment||-5.2||-5.1||-5.1||-5.4||-5.0||-20.6|
|Operating profit, EUR million||31.0||37.2||47.4||44.5||68.9||198.0|
|% of revenue||7.0||8.4||9.1||9.7||12.2||10.0|
|Financial income, EUR million||0.4||1.1||2.7||0.0||0.8||4.6|
|Exchange rate differences, EUR million||-0.1||-1.0||-1.5||-1.4||-1.7||-5.5|
|Financial expenses, EUR million||-1.5||-3.9||-5.0||-2.3||-4.1||-15.3|
|Profit before taxes, EUR million||29.8||33.5||43.6||40.8||63.9||181.8|
|% of revenue||6.7||7.5||8.3||8.9||11.4||9.1|
|Profit for the period||22.5||25.7||34.5||32.6||49.3||142.1|
|% of revenue||5.0||5.8||6.6||7.1||8.8||7.1|
|Equity holders of the parent company||22.5||25.3||34.8||32.3||48.6||141.0|
|Earnings/share, diluted, EUR||0.18||0.20||0.28||0.26||0.39||1.12|
|Equity ratio, %||37.3||31.5||33.4||34.6||39.8||39.8|
|Net interest-bearing debt at end of period, EUR million||677.7||657.5||674.1||685.9||616.0||616.0|
|Net interest-bearing debt at end of period / EBITDA, EUR million||3.0||-||-||-||-||2.7|
|Gearing ratio, %||94.0||112.0||109.7||106.1||80.9||80.9|
|Gross capital expenditure, EUR million||8.8||6.0||6.5||7.9||8.0||28.4|
|% of revenue||2.0||1.4||1.2||1.7||1.4||1.4|
|Unrecognised order backlog at end of period, EUR million||3,045.9||2,990.7||3,050.5||3,191.8||3,108.6||3,108.6|
|Personnel at end of period||6,689||6,505||7,001||6,756||6,691||6,691|
2.2. Adjusted consolidated balance sheet, IFRIC
|Other intangible assets||22.6||22.5||23.2||22.3||22.8|
|Shares in associated companies||0.4||3.0||0.4||0.3||0.4|
|Deferred tax receivables||46.6||54.9||47.3||49.9||44.3|
|Trade and other receivables||250.7||294.7||316.5||298.9||244.9|
|Cash and cash equivalents||63.9||65.1||60.2||56.2||74.9|
|Equity and liabilities|
|Equity attributable to equity holders of the parent company||720.4||584.4||613.0||644.8||759.0|
|Deferred tax liabilities||24.5||16.9||16.4||17.8||20.7|
|Trade and other liabilities||357.6||415.0||359.2||362.9||345.6|
|Total equity and liabilities||2,388.2||2,256.7||2,261.4||2,331.5||2,341.3|
2.3. Cash flow statement
|Cash flows from operating activities|
|Net profit for the financial period||22.5||25.7||34.5||32.6||49.3||142.1|
|Reversal of accrual-based items||13.0||23.4||24.3||14.1||24.2||86.0|
|Change in working capital|
|Change in current receivables||-2.1||-40.3||-5.8||10.4||42.1||6.4|
|Change in inventories||-39.6||-46.9||-37.5||-62.3||-51.4||-198.0|
|Change in current liabilities||18.7||57.1||61.9||14.1||-39.5||93.6|
|Change in working capital, total||-23.0||-30.1||18.6||-37.7||-48.8||-98.0|
|Other financial items, net||-1.6||-4.4||-0.6||-1.9||0.3||-6.6|
|Net cash generated from operating activities||-2.8||-8.0||65.6||-0.1||14.7||72.2|
|Cash flow from investing activities|
|Purchases of property, plant and equipment||-2.4||-3.7||-4.5||-7.3||-6.0||-21.5|
|Purchases of intangible assets||-1.2||-2.5||-2.3||-0.7||-2.0||-7.5|
|Proceeds from sale of shares in associated companies||2.9||2.9|
|Proceeds from sale of tangible and intangible assets||1.0||0.0||2.2||0.3|| |
|Sale of investments||0.1||0.1|
|Net cash used in investing activities||-2.6||-6.1||-4.6||-4.9||-6.8||-22.4|
|Operating cash flow after investments||-5.4||-14.1||61.0||-5.0||8.0||49.8|
|Cash flow from financing activities|
|Change in loan receivables||2.4||-8.1||-3.7||5.5||-7.6||-13.9|
|Change in current liabilities||57.2||28.6||21.9||14.3||-99.6||-34.9|
|Proceeds from borrowings||50.0||50.0||50.0||150.0|
|Repayment of borrowings||-5.3||-55.3||-60.3||-5.6||-0.5||-121.6|
|Payments of financial leasing debts||-0.1||-0.1||0.0||-0.1||0.0||-0.2|
|Equity financing to Caverion Group *)||28.7||13.2||12.9||-12.6||68.4||81.9|
|Net cash used in financing activities||-5.1||28.3||-67.2||1.4||10.7||-26.8|
|Net change in cash and cash equivalents||-10.5||14.2||-6.3||-3.6||18.7||23.0|
|Cash and cash equivalents at beginning of period||73.8||50.3||65.1||58.3||55.5||50.3|
|Change in the fair value of cash equivalents||0.5||0.6||-0.4||0.8||-0.3||0.6|
|Cash and cash equivalents at end of period||63.9||65.1||58.3||55.5||73.8||73.8|
*) In the cash flow statement, changes in the net assets allocated to Caverion are presented as a separate item of cash flow from financing activities, illustrating the internal financing between YIT Group and Caverion Group during the presented periods.
2.4 Exceptional items affecting operating profit
|International Construction Services||7.0||7.0|
The operating profit for International Construction Services for the third quarter of 2012 was improved by the cancellation of a EUR 7 million cost provision due to the ammonia issue in St. Petersburg. YIT made a provision of EUR 10 million during the third quarter of 2011 to cover the costs of rectifying the problem.
For further information, please contact:
Timo Lehtinen, Chief Financial Officer, +358 45 6700 626, email@example.com
Janne Tallqvist, Vice President, Group Treasury, +358 50 5124913, firstname.lastname@example.org
Hanna-Maria Heikkinen, Vice President, Investor Relations, +358 40 826 2172, email@example.com
Vice President, Investor Relations
Distribution: NASDAQ OMX, principal media, www.yitgroup.com
YIT is a leading European service company in building systems, construction services and services for industry. Our 25,000 professionals serve customers in 14 countries in the Nordic and Baltic countries, Russia and Central Europe. For over one hundred years we have grown together with our customers and developed our services in line with the changes taking place in different societies. We intend to continue on that track. Our vision is to lead the way in creating and maintaining good living environments. In 2012, YIT’s revenue was approximately EUR 4.7 billion. YIT’s shares are listed on the NASDAQ OMX Helsinki. www.yitgroup.com
This announcement is not an offer of securities for sale in any jurisdiction.
No securities are being registered under the US Securities Act of 1933 and may not be offered or sold in the United States absent registration or an exemption from registration. No public offering of securities is being made in the United States.
This release includes forward-looking statements. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this communication, including, without limitation, those regarding the demerger plan and its execution. By their nature, forward looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Such statements are based on numerous assumptions and may differ materially from (and be significantly more negative than) those made in, or suggested by, the forward-looking statements contained in this release.