YIT announces new strategy and financial targets for 2025-2029, introduces a new segment structure
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- Stock Exchange Release
- 29.04.2010 07:00 CET
PROFITABILITY IMPROVED ON THE PREVIOUS YEAR AND DECREASE IN ORDER BACKLOG STOPPED
INTERIM REPORT April 29, 2010 at 8:00 a.m.
YIT's Interim Report January 1 - March 31, 2010: PROFITABILITY IMPROVED ON THE PREVIOUS YEAR AND DECREASE IN ORDER BACKLOG STOPPED
Profitability improved compared to the same period of the previous year. The combined operating profit of YIT's segments increased by 101 per cent to EUR 44.5 million (1-3/2009: EUR 22.1 million). Operating profit margin of the business segments was 5.4 (2.7%). As of the beginning of 2010, the Group figures are accounted using different method in revenue recognition. The Group operating profit increased by 18 per cent compared to the previous year and amounted to EUR 33.9 million (EUR 28.7 million).
The combined revenue of the segments remained at the previous year's level, amounting to EUR 820.8 million (EUR 823.7 million). The Group revenue decreased by 9 per cent compared to previous year and amounted to EUR 765.3 million (EUR 843.2 million).
Decrease in order backlog stopped. The combined order backlog of the segments was EUR 2,837.0 million (EUR 3,045.0 million), while at the end of 2009 it was EUR 2,773.6 million.
The Group's profit before taxes increased by 203 per cent compared to the year before to EUR 26.7 million (EUR 8.8 million). Net financial expenses decreased significantly and amounted to EUR 7.1 million (EUR 19.9 million).
Cash flow from operations remained good. The Group's operating cash flow after investments amounted to EUR 33.8 million (EUR 21.2 million).
The Group's return on investments remained weak, 11.3 per cent (16.5%). Invested capital totalled EUR 1,582.9 million (EUR 1,568.3 million) at the end of March.
The Group's financial position was good at the end of March. The gearing ratio was 65.0 per cent (98.3%).
YIT estimates that in 2010 the Group's revenue will increase and profit before taxes will increase significantly compared to 2009. (The estimate has not been changed after the financial statements bulletin released on February 4, 2010.)
YIT has focused strongly on developing its service concepts according to its customers' needs. In 2010, the Group aims to ensure its position as a housing developer and invest in building system and industrial service and maintenance operations.
Residential sales remained favourable in Finland and Russia during the first months of the year. YIT sold 506 residential units directly to consumers in Finland and 817 residential units in Russia. During the previous quarter, sales to consumers totalled 510 residential units in Finland and 876 in Russia. In order to ensure a sufficient number of apartments on sale, YIT increased the number of residential start-ups already in 2009. During January-March, YIT started up the construction of 570 residential units in Finland, 453 of which are aimed directly at consumers. In Russia, YIT started up the construction of 798 residential units. In addition, first new residential sites for more than two years were started in the Baltic countries, with YIT starting the construction of a total of 111 residential units. In Finland, the focus of development activities has been on increasing housing-related services, and in Russia on facilitating purchasing of apartments and increasing the availability of loans.
The order backlog of Building and Industrial Services picked up during the first quarter, but the demand for investments remained at a low level in January-March. The development of service and maintenance operations remained more stable in Building and Industrial Services, and the share of these services increased to more than 60 per cent of the segment's revenue. YIT has improved the offering of service and maintenance operations that cover several technical systems so that customers can agree on extensive technical entities in a single contract. Target is to strengthen the market position both organically and through acquisitions. During the first months of the year YIT made a total of five minor acquisitions in Sweden, Norway and Denmark.
In Finland, YIT aims to strengthen its position also in business premises and infrastructure in addition to residential construction. In addition to renovation projects, YIT focused on the preparation of own development projects in the construction of business premises. YIT had large-scale road projects underway in infrastructure construction. Several traffic-related projects will begin in the market in 2010, and opportunities will open in road maintenance contracts.
Key figures
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS interpretation from the start of the financial period begun on January 1, 2010. Due to the application of the interpretation, Group reporting and segment reporting will differ.
In segment reporting, the figures will continue to be calculated based on the previous accounting principle, i.e. percentage of completion method will be applied in the recognition of revenue from own residential and commercial real estate development projects. In segment reporting, revenue and operating profit will develop more steadily, and production volume fluctuations will have a faster effect on financial figures than in Group reporting. YIT's management internally monitors the figures of segment reporting.
As from the beginning of 2010, Group reporting will apply the new interpretation. According to the interpretation own residential development projects will be recognised at the time of delivery. Own commercial real estate development projects will be recognized in most cases based on the percentage of completion or alternatively at the time of delivery. In Group reporting, there will be greater fluctuation in revenue and operating profit development depending on the time of completion of development projects. The consolidated balance sheet total will be higher, while at the same time the key figures calculated from the balance sheet will weaken.
YIT published the comparison figures for the financial year 2009 calculated based on the IFRIC 15 interpretation in a stock exchange release on March 23, 2010. The effects of the application of the interpretation on the figures have been explained in more detail in the notes to the Interim Report 1-3/2010.
-------------------------------------------------------------------------------- | | Segment reporting | | Group reporting | -------------------------------------------------------------------------------- | | YIT's | YIT | Chang | | YIT | YIT | Change | | | segmen | Group | e | | Group | Group | | | | ts, | 1-3/09 | | | 1-3/2 | 1-3/09 | | | | total | (repor | | | 010 | (compari | | | | 1-3/2 | ted) | | | | son | | | | 010 | | | | | figure) | | -------------------------------------------------------------------------------- | Revenue, EUR | 820.8 | 823.7 | 0% | | 765.3 | 843.2 | -9% | | million | | | | | | | | -------------------------------------------------------------------------------- | Operating | 44.5 | 22.1 | 101% | | 33.9 | 28.7 | 18% | | profit, EUR | | | | | | | | | million | | | | | | | | -------------------------------------------------------------------------------- | Operating profit | 5.4 | 2.7 | - | | 4.4 | 3.4 | - | | margin, % | | | | | | | | -------------------------------------------------------------------------------- | Profit before | - | 2.2 | - | | 26.7 | 8.8 | 203% | | taxes, EUR | | | | | | | | | million | | | | | | | | -------------------------------------------------------------------------------- | Earnings/share, | - | 0.02 | - | | 0.15 | 0.06 | 150% | | EUR | | | | | | | | -------------------------------------------------------------------------------- | Return on | - | 14.3 | - | | 11.3 | 16.5 | - | | investment (last | | | | | | | | | 12 months), % | | | | | | | | -------------------------------------------------------------------------------- | Gearing ratio at | - | 88.5 | - | | 65.0 | 98.3 | - | | the end of | | | | | | | | | period, % | | | | | | | | -------------------------------------------------------------------------------- | Operating cash | - | 10.3 | - | | 33.8 | 21.2 | 59% | | flow after | | | | | | | | | investments, | | | | | | | | | MEUR | | | | | | | | -------------------------------------------------------------------------------- | Order backlog at | 2,837. | 3,045. | -7% | | 3,152. | 3,256.3 | -3% | | the end of | 0 | 5 | | | 5 | | | | period, EUR | | | | | | | | | million | | | | | | | | -------------------------------------------------------------------------------- | Personnel at end | 23,211 | 25,239 | -8% | | 23,211 | 25,239 | -8% | | of period | | | | | | | | --------------------------------------------------------------------------------
News conference, webcast and conference call
YIT will hold a news conference on the Interim Report for investors, analysts and the media on Thursday, April 29, 2010 at 10:00 a.m. (Finnish time, EEST) at YIT's head office, address Panuntie 11, 00620 Helsinki, Finland. The news conference will be held in English. In the end of the news conference, representatives of the media can also ask questions in Finnish. The presentation material is available in English and Finnish.
The news conference can be viewed as a live webcast on YIT's website, at www.yitgroup.com/webcast. The replay of the webcast will be available at the same address starting at approximately 12:00 noon. To participate in conference call the participants are asked to call the assigned number +44 (0)20 7162 0077 at 9:55 a.m. (Finnish time, EEST) at the latest, i.e. a minimum of 5 minutes before the conference call begins.
Schedule in different time zones:
-------------------------------------------------------------------------------- | | Interim Report | News conference, | Recorded webcast | | | published | conference call | available | | | | and | | | | | live webcast | | -------------------------------------------------------------------------------- | EEST (Helsinki) | 08:00 | 10:00 | 12:00 | -------------------------------------------------------------------------------- | CEST (Paris, | 07:00 | 09:00 | 11:00 | | Stockholm) | | | | -------------------------------------------------------------------------------- | BST (London) | 06:00 | 08:00 | 10:00 | -------------------------------------------------------------------------------- | US EDT (New York) | 01:00 | 03:00 | 05:00 | --------------------------------------------------------------------------------
Financial reports and other investor information are available at YIT's website, www.yitgroup.com/investors. The materials may be ordered via the Internet site, by sending an e-mail to InvestorRelations@yit.fi or by telephone at +358 20 433 2467.
YIT CORPORATION
Juhani Pitkäkoski President and CEO
For further information, please contact: Juhani Pitkäkoski, President and CEO, +358 20 433 3301, juhani.pitkakoski@yit.fi Timo Lehtinen, Chief Financial Officer, +358 20 433 2258, timo.lehtinen@yit.fi
Distribution: NASDAQ OMX Helsinki, main media, www.yitgroup.com INTERIM REPORT JANUARY 1 - MARCH 31, 2010
CONTENTS Application of a new IFRS interpretation as from January 1, 2010 Group's financial development Development by business segment Personnel Resolutions passed at the Annual General Meeting Shares, share options and shareholders Estimate of future development Outlook for 2010 Tables to the Interim Report
APPLICATION OF A NEW IFRS INTERPRETATION AS FROM JANUARY 1, 2010
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS interpretation from the start of the financial period begun on January 1, 2010. Due to the application of the interpretation, Group reporting and segment reporting will differ.
In segment reporting, the figures will continue to be calculated based on the previous accounting principle, i.e. percentage of completion method will be applied in the recognition of revenue from own residential and commercial real estate development projects. In segment reporting, revenue and operating profit will develop more steadily, and production volume fluctuations will have a faster effect on financial figures than in Group reporting. YIT's management internally monitors the figures of segment reporting.
As from the beginning of 2010, Group reporting will apply the new interpretation. According to the interpretation own residential development projects will be recognised at the time of delivery. Own commercial real estate development projects will be recognized in most cases based on the percentage of completion or alternatively at the time of delivery. In Group reporting, there will be greater fluctuation in revenue and operating profit development depending on the time of completion of development projects. The consolidated balance sheet total will be higher, while at the same time the key figures calculated from the balance sheet will weaken.
YIT published the comparison figures for the financial year 2009 calculated based on the IFRIC 15 interpretation in a stock exchange release on March 23, 2010. The effects of the application of the interpretation on the figures have been explained in more detail in the notes to the Interim Report 1-3/2010.
GROUP'S FINANCIAL DEVELOPMENT
The Group's financial performance is presented with both figures compliant with Group reporting and figures compliant with segment reporting, referred to as the segments total or combined figure. The figures for 2010 and 2009 are comparable.
REVENUE DEVELOPMENT VARIED BY SEGMENT
The combined revenue of YIT's segments remained at the previous year's level, amounting to EUR 820.8 million (EUR 823.7 million).
Revenue development varied among the different business segments. Building and Industrial Services, covering all countries in which YIT operates, generated the majority of the revenue. The segment's revenue decreased compared to the previous year due to a decrease in new building system and industrial investments. Compared to the previous year, revenue increased considerably in International Construction Services and also increased in Construction Services Finland.
Following IFRIC 15 adjustments, YIT Group's revenue was EUR 765.3 million (1-3/2009: EUR 843.2 million). The Group's revenue decreased by 9 per cent compared to the previous year. The time of completion of YIT's own development projects has an impact on the recognition of the Group's revenue. In Russia in particular, the number of residential units completed in January-March 2010 was considerably lower than the previous year. Exchange rate changes increased the Group's revenue by EUR 27.8 million. Calculated with the exchange rates of 1-3/09 the Group's revenue in January-March 2010 would have been EUR 737.5 million.
Revenue, EUR million
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | Change | -------------------------------------------------------------------------------- | Building and Industrial Services | 477.0 | 537.9 | -11% | -------------------------------------------------------------------------------- | Construction Services Finland | 252.9 | 239.8 | 5% | -------------------------------------------------------------------------------- | International Construction Services | 106.9 | 61.4 | 74% | -------------------------------------------------------------------------------- | Other items | -16,0 | -15,5 | 3% | -------------------------------------------------------------------------------- | YIT's segments total | 820.8 | 823.7 | 0% | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | IFRIC 15 adjustments | -55.5 | 19.5 | - | -------------------------------------------------------------------------------- | YIT Group, total | 765.3 | 843.2 | -9% | --------------------------------------------------------------------------------
Profitable growth is the YIT's key strategic target. Revenue growth is pursued by a Group structure that is balanced in terms of geography and business operations. The aim is to grow service and maintenance operations, which develop steadily regardless of economic fluctuations, particularly in Building and Industrial Services.
In January-March 2010, Finland accounted for 43 per cent (47%) of the Group's revenue, Sweden for 16 per cent (15%), Norway for 15 per cent (13%), Central Europe for 10 per cent (11%), Russia for 10 per cent (6%), Denmark for 4 per cent (5%) and the Baltic countries for 1 per cent (3%).
Service and maintenance operations generated EUR 305.2 million (1-3/2009: EUR 288.9 million), in other words, 40 per cent (34%) of Group revenue. The majority of the Group's service and maintenance operations are related to building systems and industrial processes in the Nordic countries and Central Europe, and part to conventional infrastructure in Finland.
OPERATING PROFIT INCREASED AND PROFITABILITY IMPROVED
The combined operating profit of YIT's segments increased by 101 per cent on the previous year to EUR 44.5 million (EUR 22.1 million). The operating profit margin calculated based on the segment figures was 5.4 (2.7%).
Following IFRIC 15 adjustments, YIT Group's operating profit increased by 18 per cent compared to the previous year and was EUR 33.9 million (EUR 28.7 million). The Group's operating profit margin improved, amounting to 4.4 (3.4%).
In particular, the more active residential sales in both Finland and Russia compared to previous year contributed to the improvement of operating profit. The operating profit of Building and Industrial Services decreased due to the low operations volume and the competitive situation remaining tight during the first months of the year.
Operating profit, EUR million
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | Change | -------------------------------------------------------------------------------- | Building and Industrial Services | 21.6 | 28.6 | -24% | -------------------------------------------------------------------------------- | Construction Services Finland | 23.1 | 20.9 | 11% | -------------------------------------------------------------------------------- | International Construction Services | 4.6 | -23.8 | - | -------------------------------------------------------------------------------- | Other items | -4.8 | -3.6 | 33% | -------------------------------------------------------------------------------- | YIT's segments total | 44.5 | 22.1 | 101% | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | IFRIC 15 adjustments | -10.6 | 6.6 | - | -------------------------------------------------------------------------------- | YIT Group, total | 33.9 | 28.7 | 18% | --------------------------------------------------------------------------------
Operating profit margin
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | -------------------------------------------------------------------------------- | Building and Industrial Services | 4.5% | 5.3% | -------------------------------------------------------------------------------- | Construction Services Finland | 9.1% | 8.7% | -------------------------------------------------------------------------------- | International Construction Services | 4.3% | -38.7% | -------------------------------------------------------------------------------- | YIT's segments total | 5.4% | 2.7% | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | YIT Group, total | 4.4% | 3.4% | --------------------------------------------------------------------------------
EARNINGS PER SHARE IMPROVED
The Group's profit before taxes increased by 203 per cent compared to the year before to EUR 26.7 million (EUR 8.8 million). Earnings per share increased by 150 per cent to EUR 0.15 (EUR 0.06).
Financial expenses decreased compared to the previous year's comparison period due to lower hedging costs of the ruble and a decrease in net debt, and generally lower interest rates.
DECREASE IN ORDER BACKLOG STOPPED
Both the segments' combined order backlog and the Group's order backlog increased compared to the end of 2009. The combined order backlog of YIT's segments was EUR 2,837.0 million (EUR 3,045.0 million) while it was EUR 2,773.6 million at the end of the year 2009. Following IFRIC 15 adjustments, YIT Group's order backlog amounted to EUR 3,152.5 million (EUR 3,256.3 million) while it was EUR 2,983.3 million at the end of 2009.
The order backlog turned into growth in January-March 2010 in the Building and Industrial Services segment as a result of YIT's strong market position and slight recovery of the market situation. In International Construction Services the active order backlog increased due to residential start-ups. Exchange rate changes increased the Group's order backlog in January-March by EUR 96.4 million. Calculated with the exchange rates of 12/09 the Group's order backlog would have been EUR 3,056.1 million at the end of March 2010.
Compared with the end of March 2009 the decrease in the combined order backlog of the segments was 7 per cent and in Group's order backlog 3 per cent.
Order backlog, EUR million
-------------------------------------------------------------------------------- | | 3/2010 | 3/2009 | Change | -------------------------------------------------------------------------------- | Building and Industrial Services | 964.2 | 1,048.3 | -8% | -------------------------------------------------------------------------------- | Construction Services Finland | 905.4 | 819.8 | 10% | -------------------------------------------------------------------------------- | International Construction Services | 1,013.2 | 1,239.1 | -18% | -------------------------------------------------------------------------------- | Other items | -45.8 | -62.1 | -26% | -------------------------------------------------------------------------------- | YIT's segments total | 2,837.0 | 3,045.0 | -7% | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | IFRIC 15 adjustments | 315.5 | 211.3 | 49% | -------------------------------------------------------------------------------- | YIT Group, total | 3,152.5 | 3,256.3 | -3% | --------------------------------------------------------------------------------
OPERATING CASH FLOW REMAINED GOOD, INVESTED CAPITAL INCREASED
Operating cash flow was good in January-March due to good residential sales. Operating cash flow after investments amounted to EUR 33.8 million (1-3/2009: EUR 21.2 million).
At the end of March, the Group's invested capital amounted to EUR 1,582.9 million (EUR 1,568.3 million). Return on investment remained weak, amounting to 11.3 per cent for the last 12 months (16.5%).
36 per cent (31%), or EUR 571.3 million (EUR 488.3 million), of the Group's invested capital was in Russia. At the end of 2009, the capital invested in Russia was EUR 557.6 million. Strengthening of the ruble increased the capital invested in Russia by EUR 45.8 million in January-March. The Group's capital invested in Russia is primarily accounted for by the International Construction Services segment.
The invested capital is calculated by deducting non-interest bearing liabilities from the balance sheet total. The balance sheet total at the end of March was EUR 2,994.8 million (EUR 2,998.6 million).
GROUP'S FINANCIAL POSITION REMAINED GOOD
The gearing ratio decreased compared to the previous year, amounting to 65.0 per cent (98.3%) at the end of March 2010. The equity ratio was 30.2 per cent (27.0 %). Net financing debt decreased on the previous year to EUR 496.0 million (EUR 674.1 million). Cash reserves amounted to EUR 323.5 million (EUR 208.6 million) at the end of March.
The capital structure was reinforced in March 2010 by establishing a bond programme of EUR 400 million, under which a EUR 100 million bond targeted at domestic investors, was issued. The five-year bond carries an annual fixed rate coupon of 4.823 per cent.
Net financial expenses decreased to EUR 7.1 million (EUR 19.9 million), or 0.9 per cent (2.4 %) of the Group's revenue. The exchange rate differences included in the net financial expenses, totalling EUR -2.3 million (EUR -9.6 million), were comprised nearly entirely of costs of hedging debt investments in Russia. At the end of March 2010, EUR 192.1 million of the capital invested in Russia comprised debt and EUR 379.2 million were equity investments or similar net investments.
Financial liabilities totalled EUR 819.6 million (EUR 882.6 million) at the end of March, and the average interest rate was 3.5 per cent (4.8%). Fixed-interest loans accounted for 61 per cent (54%) of the Group's financial liabilities. Of the loans, 37 per cent (29 %) had been raised directly on the capital and money markets. The maturity distribution of the long-term loans is balanced.
The construction-stage contract receivables sold to financing companies totalled EUR 101.7 million (EUR 115.3 million). Of this amount, EUR 96.3 million (EUR 96.8 million) is included in interest-bearing liabilities in the balance sheet and the remainder comprises off-balance sheet items in accordance with IAS 39. Interest expenses on receivables sold to financing companies amounted to EUR 0.4 million (EUR 0.8 million) during the review period and they are fully included in the financial expenses of the reported period.
Participations in the housing corporation loans of unsold completed residential units, EUR 43.9 million (EUR 50.3 million) at the end of March, are included in interest-bearing liabilities. The interest on the participations, EUR 0.3 million (EUR 0.8 million), is included in housing corporation charges and is thus booked in project expenses.
CAPITAL EXPENDITURES AND ACQUISITIONS
Gross capital expenditures on non-current assets included in the balance sheet totalled EUR 9.4 million (EUR 6.7 million) during January-March, representing 1.2 per cent (0.8%) of revenue. Investments in construction equipment amounted to EUR 1.8 million (EUR 2.2 million) and investments in information technology to EUR 1.7 million (EUR 2.4 million). Other investments, including acquisitions, amounted to EUR 5.9 million (EUR 2.3 million).
During January-March, YIT made three minor acquisitions in the Building and Industrial Services segment in Sweden, one in Norway and one in Denmark. In International Construction Services, YIT increased its holding in YIT Don to 100 per cent in January.
DEVELOPMENT BY BUSINESS SEGMENT
The development by business segment is presented using figures compliant with segment reporting. The figures for 2010 and 2009 are comparable.
BUILDING AND INDUSTRIAL SERVICES
Revenue decreased by 11 per cent to EUR 477.0 million (EUR 537.9 million) compared to the previous year due to a decrease in new building system and industrial investments. Exchange rate changes increased the revenue by EUR 22.7 million. Calculated with the exchange rates of 1-3/09 the revenue in January-March 2010 would have been EUR 454.3 million.
Operating profit decreased by 24 per cent to EUR 21.6 million (EUR 28.6 million). Operating profit margin was 4.5 (5.3%). The operating profit decreased due to the low operations volume and the competitive situation remaining tight during the first months of the year.
The order backlog turned into growth and amounted to EUR 964.2 million (EUR 1,048.3 million) at the end of March, while at the end of 2009 it was EUR 850.4 million. Order backlog increased by 13 per cent compared to the turn of the year as a result of YIT's strong market position and slight recovery of the market situation. However, the order backlog was still 8 per cent lower than in March 2009. Exchange rate changes increased the order backlog in January-March by EUR 13.1 million. Calculated with the exchange rates of 12/09 the order backlog would have been EUR 951.1 million at the end of March 2010.
Steady revenue in Sweden and Norway - clear decline elsewhere
Building and Industrial Services seeks growth both organically and through acquisitions. Strengthening the local market position through acquisitions continued in early 2010 by making three minor acquisitions in Sweden, one in Norway and one in Denmark.
Revenue remained at the previous year's level in Sweden and Norway in euro terms. In other geographical areas, revenue decreased clearly. Finland accounted for EUR 122.3 million (EUR 161.1 million) of the segment's revenue, Sweden for EUR 125.8 million (EUR 122.7 million), Norway for EUR 111.5 million (EUR 109.8 million), Central Europe for EUR 72.4 million (EUR 87.4 million), Denmark for EUR 30.1 million (EUR 39.0 million), the Baltic countries and Russia for EUR 4.0 million (EUR 8.8 million) and export countries for EUR 10.9 million (EUR 9.1 million).
New investments in building systems remained at a low level. In January-March, YIT agreed to deliver new security systems to the offices of Tapiola and Turva in Tampere, Rovaniemi and Kemi, Finland, new pipelines and climate installations to the Sundsta bathhouse in Karlstad, Sweden, all building systems to the new Leikvang sports arena and admission control to the state prison outside Oslo, Norway, and heating, ventilation and cooling systems to the head office of the General German Automotive Club ADAC in Munich, Germany. In Austria, YIT signed an agreement on the delivery of building systems to the public transport depot in Vienna, and in Denmark for the pharmaceutical company Novo Nordisk.
On the whole, the demand for industrial investments remained soft. In Sweden, YIT will deliver Cryo AB a liquid natural gas storage tank and piping systems to AGA's LNG terminal in Nynäshamn. In Finland, a substation will be built for Fortum in Järvenpää.
Service and maintenance accounted for 61 per cent of the segment's revenue
YIT's goal is to be the leading provider of technical system maintenance in the Nordic countries and Central Europe. The target is to increase service and maintenance operations at a faster rate than other operations. In January-March, service and maintenance operations accounted for 61 per cent (52%), or EUR 290.2 million (EUR 281.2 million) of Building and Industrial Services revenue.
YIT has improved the offering of its service and maintenance operations that cover various technical systems with its YIT ServiFlex concept. The concept, which makes purchasing and contract management easier, will be adopted in all countries where YIT operates. Service and maintenance agreements conforming to the ServiFlex concept were made with in Norway, e.g., Norway Post and the Akershus University Hospital, and after the period under review with Statoil by agreeing on deliveries within ventilation, piping and electrical work as well as outdoor areas and building maintenance of more than 400,000 m2 for three years. In Finland, YIT signed a partnership agreement with Varma Mutual Pension Insurance Company on the building system servicing, maintenance and technical management at more than 80 office properties. In Finland, an agreement was made on the servicing and repair services of fuel station meters at the City of Helsinki's fuelling points, and Outokumpu Tornio Works outsourced the Tornio factory's facility management for a minimum of three years. Agreements were made with Vasakronan for the building system maintenance of e.g. SonyEricsson's office building in Sweden. A service agreement was also made with the University of Vienna's premises in the IZD Tower in Austria. In Russia, an agreement was made with Neste Oil on the building system servicing of more than 50 fuel stations.
With regard to industrial customers, a three-year agreement was signed with Moelven Valåsen AB on the maintenance of the process equipment and premises of a sawmill in Karlskoga, Sweden. In Finland, YIT assumed responsibility for the comprehensive process maintenance of M-real's Kemiart Liners board mill.
New energy-saving agreements were signed during the first quarter
YIT aims to be a forerunner in energy-saving services for buildings and industry. The demand for these services is expected to increase in the next few years.
Energy-saving may be included in both new construction and renovation projects as well as in maintenance agreements. During January-March, agreements on energy-saving projects were made with the Danish Ministry of Finance and the Finnish City of Akaa, among others. German wind power manufacturer Enercon chose YIT to deliver a 10 kilometres long power net to one of the largest wind power plant areas in Europe under construction in Dragaliden, Sweden.
CONSTRUCTION SERVICES FINLAND
Revenue increased by 6 per cent to EUR 252.9 million (EUR 239.8 million) as a result of more active residential sales compared to the previous year.
Operating profit increased by 11 per cent to EUR 23.1 million (EUR 20.9 million). Profitability remained good, with an operating profit margin of 9.1 (8.7%).
The order backlog increased by 10 per cent compared to the previous year to EUR 905.4 million (EUR 819.8 million), particularly due to residential projects started up in 2009. At the turn of the year the segment's order backlog was EUR 1,007.5 million.
The segment's capital invested in plot reserves totalled EUR 298.4 million (EUR 363.2 million) at the end of March. The plot reserves included 1,582,000 (1,767,000) m2 of floor area of residential plots and 908,000 (808,000) m2 of floor area of plots for business premises.
Residential sales remained good
YIT's aim is to strengthen its position as the largest housing developer in Finland. The focus of housing construction has been shifted back to own residential development projects. In 2009, plenty of rental housing production was also started.
Residential sales remained good in January-March. In Finland, YIT sold a total of 623 (436) residential units, of them 506 (276) directly to consumers. In October-December, 510 residential units were sold directly to consumers. Housing prices are rising in the market.
As a result of picked up residential sales, the number of apartments on sale decreased, and at the end of March, YIT had 1,011 (921) unsold residential units, of them 168 (366) completed.
In the first quarter, the number of residential units completed was lower than the year before, and the number of residential units under construction remained at a record-high level amounting to 3,975 (1,686) residential units. YIT started to increase the number of residential start-ups already in 2009 in order to ensure a sufficient number of apartments on sale. In January-March, YIT started the construction of 453 (90) residential units aimed at consumers. This was considerably more than during the corresponding period the previous year. During the first quarter, residential development projects aimed at consumers were started in, e.g., Riihimäki, Nurmijärvi, Mikkeli and Seinäjoki. With regard to rental housing projects, the construction of two multi-storey buildings in Jyväskylä for ICECAPITAL HousingFund II Ky began in accordance with the agreement signed at the end of 2008.
Residential construction in Finland, number of residential units
-------------------------------------------------------------------------------- | | 1-3/10 | 1-3/09 | Change | -------------------------------------------------------------------------------- | Sold | 623 | 436 | 43% | -------------------------------------------------------------------------------- | - of which directly to | 506 | 276 | 83% | | consumers | | | | -------------------------------------------------------------------------------- | Start-ups | 570 | 239 | 138% | -------------------------------------------------------------------------------- | - of which aimed directly | 453 | 90 | 403% | | at consumers | | | | -------------------------------------------------------------------------------- | Completed | 368 | 440 | -16% | -------------------------------------------------------------------------------- | - of which aimed directly | 103 | 440 | -77% | | at consumers | | | | -------------------------------------------------------------------------------- | Under construction at the | 3,975 | 1,686 | 136% | | end of the period | | | | -------------------------------------------------------------------------------- | - of which sold at the end | 3,132 | 1,131 | 177% | | of the period | | | | -------------------------------------------------------------------------------- | Unsold at the end of the | 1,011 | 921 | 10% | | period | | | | -------------------------------------------------------------------------------- | - of which completed | 168 | 366 | -54% | --------------------------------------------------------------------------------
Own development projects were prepared in business premises construction
In business premises construction, YIT focused on developing and renovating existing buildings. In addition, the rental and project development activity of own development projects was intensified according to customer needs, and sales to investors were activated.
With regard to renovation projects, the implementation of office premises for Instru Optiikka Oy started in Sinimäki, Espoo as did the conversion of an old building to nursing use in Kilonkallio, Espoo. In Kontula, Helsinki, YIT entered into an agreement on the facade contract of a residential building owned by the City of Helsinki. As for new buildings, the construction of retail premises for Motonet, a specialist in automotive supplies, began in Konala, Helsinki. In Koskelo, Espoo, YIT is constructing an office and production premises for Fennia Life. After the review period, YIT made an agreement with Kesko on constructing new premises for K-citymarket in the centre of Hyvinkää.
Several major projects were completed in January-March. As for development projects, the sports and wellness centre of 20,000 m2 sold to Varma Mutual Pension Insurance Company in Salmisaari, the third phase of the Viinikkala logistics centre in Vantaa and the renovation of the office and business premises on Teollisuuskatu, Helsinki, were completed. A new head office for the Tapiola Group, covering more than 70,000 m2, was completed in Espoo. In Vantaa, the second phase of the Avia Line office complex was sold to the German real estate investor IVG Institutional Funds during the period. Two further phases will follow in the area.
Large-scale road projects underway in infrastructure services
The competitive situation in infrastructure construction was tight due to the weakening of municipal finances and the continued low levels of new commercial real estate construction. In 2010, new infrastructure projects related to basic road and railway maintenance are expected as a result of state stimulus measures. Opportunities will also open in connection with road and regional maintenance contracts. YIT aims to strengthen its market position in infrastructure services and increase the maintenance of infrastructure. The Group has special expertise in infrastructure in, e.g., rock engineering, maintenance and technical services offered to municipalities.
During the first quarter, YIT had large-scale road projects underway in infrastructure services, such as the major project related to the improvement of Kehä I ring road, a project involving bridge and road work in Savonlinna and tunnel project for the Kehärata (Ring line) project in Vantaa. With regard to road maintenance, YIT secured contracts in Lieto and Alavus during the period.
INTERNATIONAL CONSTRUCTION SERVICES
Revenue increased by 74 per cent to EUR 106.9 million (EUR 61.4 million). Revenue increased due to the residential sales continued good in Russia and construction works progressed. Exchange rate changes increased the revenue by EUR 7.0 million. Calculated with the exchange rates of 1-3/09 the revenue in January-March 2010 would have been EUR 99.9 million.
Operating profit increased to EUR 4.6 million (EUR -23.8 million) as a result of good residential sales. Operating profit margin was 4.3 (-38.7%).
The order backlog amounted to EUR 1,013.2 million (EUR 1,239.1 million) at the end of March, while at the turn of the year it was EUR 960.1 million. Exchange rate changes increased the order backlog in January-March by EUR 71.3 million. Calculated with the exchange rates of 12/09 the order backlog would have been EUR 941.9 million at the end of March 2010. The order backlog includes housing projects whose construction was suspended in Russia in October 2008 due to market uncertainties. At the end of March 2010, the value of the projects that were still suspended amounted to EUR 235 million (3/09: EUR 322 million) and EUR 282 at the end of the year 2009.
The segment's capital invested in plot reserves totalled EUR 283.1 million (EUR 218.7 million) at the end of March. The plot reserves included 2,312,000 (2,654,000) m2 of floor area of residential plots and 699,000 (627,000) m2 of floor area of plots for business premises in Russia, the Baltic countries and the Czech Republic.
Good residential sales continued in Russia
Russia accounted for 96 per cent (75%) of the segment's revenue. Revenue increased by 122 per cent in Russia compared to the previous year to EUR 102.2 million (EUR 45.9 million). The capital invested in plot reserves in Russia totalled EUR 207.2 million (EUR 136.1 million) at the end of March. The plot reserves included 1,959,000 (2,256,000) m2 of floor area of residential plots and 563,000 (565,000) m2 of floor area of plots for business premises.
Residential sales remained favourable in Russia during the first months of the year. The preparation of business premise projects continued in St. Petersburg and the Moscow region. Premises for Dermosil and extension works in Atria production plant in the Gorelovo area in the St. Petersburg Oblast were in implementation phase.
In January-March, YIT sold 817 (323) residential units in Russia. In October-December, YIT sold 966 residential units, 90 of which to the Ministry of Defence. Residential sales increased compared to previous year due to the gradual improvement of the economy, decreased housing loan interest rates and increased availability of loans to customers as well as YIT's own marketing and sales promotion activities and housing loan collaboration with banks. By the end of March YIT had started the price increases in residential production in all cities where it operates - in St Petersburg, cities in the Moscow region, Moscow, Yekaterinburg, Rostov-on-Don and Kazan.
YIT began to start up residential projects in Russia in late 2009 as the demand was recovering. In January-March, the construction of a total of 798 (0) residential units was started up in Moscow and St. Petersburg. Of the start-ups a total of 678 residential units were in residential projects whose construction had been suspended in autumn 2008 due to market uncertainties. At the end of March, there were 4,671 (6,874) residential units under construction and 3,585 (5,218) unsold residential units, of which 900 (867) were completed.
Residential construction in Russia 1-3/2010 (1-3/2009), number of residential units
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | Change | -------------------------------------------------------------------------------- | Sold | 817 | 323 | 153% | -------------------------------------------------------------------------------- | Start-ups | 798 | 0 | 100% | -------------------------------------------------------------------------------- | Completed | 321 | 1,524 | -79% | -------------------------------------------------------------------------------- | Under construction at | 4,671 | 6,874 | -32% | | the end of the period | | | | | 1) | | | | -------------------------------------------------------------------------------- | - of which sold at the | 1,986 | 2,523 | -21% | | end of the period | | | | -------------------------------------------------------------------------------- | Unsold at the end of | 3,585 | 5,218 | -31% | | the period | | | | -------------------------------------------------------------------------------- | - of which completed | 900 | 867 | 4% | --------------------------------------------------------------------------------
1) At the end of March 2010, YIT had 1,467 (2,485) residential units in Russia in projects whose construction was suspended in autumn 2008. These residential units are not included in the residential units under construction in the table.
Changes in the number of residential units may take place after the start of construction due to the division or combination of residences.
The work reserves strengthened in Baltic countries and new residential projects were started up Lithuania, Estonia, Latvia and the Czech Republic generated 4 per cent (24%) of the segment's revenue for January-March. Revenue generated by these units decreased by 75 per cent compared to the previous year to EUR 4.7 million (EUR 15.4 million). In the Baltic countries, capital invested in plot reserves amounted to EUR 72.7 million (EUR 82.6 million) at the end of March. The plot reserves included 345,000 (398,000) m2 of floor area of residential plots and 136,000 (62,000) m2 of floor area of plots for business premises.
In Baltic countries, the market situation in residential construction recovered slightly during the first quarter. YIT started up its first new residential projects for more than two years, starting the construction of a total of 111 (1-3/09: 0) residential units. YIT's number of residential units on sale is low in the Baltic countries. During the first quarter, 5 (53) residential units were sold in Lithuania, Estonia and Latvia. 0 (505) residential units were completed during the period. At the end of March, there were 111 (87) residential units under construction, of which 0 (19) had been sold. There were 146 (243) unsold residential units, 35 (175) of them completed.
During the first quarter of 2010, YIT secured a few significant business premise projects. In Riga, Latvia, YIT agreed on the construction of the framework and façade of two towers with offices, hotel and retail facilities for SIA Towers Construction Management. The value of the contract is approximately EUR 40 million in the first phase, and it will be determined ultimately based on the extent of the project. In Lithuania, YIT agreed on a project of EUR 19 million whereby YIT will realise the first buildings of the new Vilnius University campus. Additionally YIT made an agreement to build a new shopping centre in Kaunas.
PERSONNEL
In January-March 2010, the Group employed 23,199 (25,405) people on average. At the end of the period, the Group employed 23,211 (25,239) people. The number of personnel decreased in all segments compared to the previous year. The biggest relative decrease in the number of personnel took place in the Baltic countries and Russia.
Of YIT's employees, 39 per cent (39%) worked in Finland, 37 per cent (37%) in the other Nordic countries, 11 per cent (12%) in Russia, 9 per cent (8%) in Central Europe and 4 per cent (4%) in the Baltic countries.
YIT aims to ensure sufficient and skilled personnel by investing in the development and well-being at work of its current employees as well as its employer image.
During the review period, it was decided to adopt a new share-based incentive scheme, aimed to support the company's strategy of profitable growth and supplement the already available incentive schemes. In 2010, the performance criteria will be return on investment and revenue growth, and the incentive scheme covers approximately 250 employees. The Board of the company annually decides on the performance criteria and the employees included in the scope of the incentive scheme.
Personnel by business segment
-------------------------------------------------------------------------------- | | 3/2010 | 3/2009 | Change | Share of | | | | | | the | | | | | | Group's | | | | | | employees | | | | | | 3/2010 | -------------------------------------------------------------------------------- | Building and Industrial | 17,355 | 18,527 | -6% | 75% | | Services | | | | | -------------------------------------------------------------------------------- | Construction Services | 3,014 | 3,119 | -3% | 13% | | Finland | | | | | -------------------------------------------------------------------------------- | International | 2,498 | 3,214 | -22% | 11% | | Construction Services | | | | | -------------------------------------------------------------------------------- | Corporate Services | 344 | 379 | -9% | 1% | -------------------------------------------------------------------------------- | YIT Group, total | 23,211 | 25,239 | -8% | 100% | --------------------------------------------------------------------------------
Personnel by country
-------------------------------------------------------------------------------- | | 3/2010 | 3/2009 | Change | Share of | | | | | | the | | | | | | Group's | | | | | | employees | | | | | | 3/2010 | -------------------------------------------------------------------------------- | Finland | 9,160 | 9,843 | -7% | 39% | -------------------------------------------------------------------------------- | Sweden | 4,149 | 4,438 | -7% | 18% | -------------------------------------------------------------------------------- | Norway | 3,246 | 3,257 | 0% | 14% | -------------------------------------------------------------------------------- | Russia | 2,448 | 3,064 | -20% | 11% | -------------------------------------------------------------------------------- | Germany, Austria, Poland, | 2,059 | 2,139 | -4% | 9% | | the Czech Republic, | | | | | | Hungary, Romania | | | | | -------------------------------------------------------------------------------- | Denmark | 1,224 | 1,399 | -13% | 5% | -------------------------------------------------------------------------------- | Lithuania, Estonia, | 925 | 1,099 | -16% | 4% | | Latvia | | | | | -------------------------------------------------------------------------------- | YIT Group, total | 23,211 | 25,239 | -8% | 100% | --------------------------------------------------------------------------------
RESOLUTIONS PASSED AT THE ANNUAL GENERAL MEETING
YIT Corporation's Annual General Meeting was held on March 10, 2010. The Annual General Meeting adopted the 2009 financial statements and discharged the members of the Board of Directors and the President and CEO from liability. It was decided that a dividend of EUR 0.40 will be paid per share, or a total of EUR 50.0 million, as proposed by the Board of Directors. March 15, 2010, was set as the record date and April 7, 2010, as the payout date. No dividend will be paid to treasury shares. The Annual General Meeting decided to grant the Board the authority to donate the sum of no more than EUR 500,000 to support activities of universities and other higher education institutions.
The Annual General Meeting resolved to elect a Chairman, Vice Chairman and five ordinary members to the Board of Directors. Henrik Ehrnrooth was elected as the Chairman and Reino Hanhinen as the Vice Chairman. Kim Gran, Eino Halonen, Antti Herlin, Satu Huber and Lauri Ratia were elected as members. It was decided to keep the Board of Directors' fees unchanged.
In its organisational meeting on March 10, 2010, the Board elected Lauri Ratia as Chairman and Eino Halonen and Satu Huber as members of the Audit Committee from among its number. The Board elected Henrik Ehrnrooth as Chairman and Eino Halonen, Reino Hanhinen and Antti Herlin as members of the Nomination and Rewards Committee from among its number.
The Annual General Meeting re-elected PricewaterhouseCoopers Oy, Authorised Public Accountants, to audit the administration and accounts of the current financial period. Heikki Lassila, Authorised Public Accountant, appointed by PricewaterhouseCoopers Oy, will continue as chief auditor.
The Annual General Meeting authorised the Board of Directors to decide on the purchase of the company's shares, share issues and disposal of treasury shares, as proposed by the Board of Directors. The key contents of the resolutions are described under Own shares and authorisations of the Board of Directors.
YIT Corporation published stock exchange releases on the resolutions passed at the Annual General Meeting and the organisation of the Board of Directors on March 10, 2010.
SHARES, SHARE OPTIONS AND SHAREHOLDERS
The company has one series of shares. Each share carries one vote and confers an equal right to a dividend.
Shares can be subscribed for in 2010 under the Series N share options issued by YIT Corporation in 2006 between April 1 and November 30, 2010. No shares were subscribed for during the period with the share options.
Share capital and number of shares
YIT Corporation's share capital was EUR 149,216,748.22 at the beginning of the review period (EUR 149,216,748.22), and the number of shares outstanding was 127,223,422 (127,223,422). The share capital and number of shares did not change during the review period.
Own shares and authorisations of the Board of Directors
In accordance with the Companies Act, the General Meeting decides on the buyback and conveyance of shares, as well as any decisions leading to changes in the share capital.
YIT Corporation held 2,145,000 of its own shares at the beginning of the review period, purchased based on the authorisation given by the General Meeting of October 6, 2008. The number of shares held by the company did not change during the review period. During the period, no shares in the parent company were owned by subsidiaries.
The Annual General Meeting of YIT Corporation resolved on March 10, 2010, to authorise the Board of Directors to purchase the company's shares as proposed by the Board of Directors. The authorisation covers the purchasing of a maximum of 10,500,000 company shares using the company's unrestricted equity. The authorisation is valid for 18 months after its granting. The authorisation overrides the authorisation to purchase the company's own shares issued by the Annual General Meeting on March 11, 2009.
The Annual General Meeting authorised the Board of Directors to decide on share issues as proposed by the Board of Directors. The authorisation can be used in full or partially by issuing shares in the company in one or more share issues so that the maximum number of shares issued is 25,000,000.
The share issue authorisation also includes the Board of Director's authorisation to decide on the transfer of a maximum of 12,645,000 treasury shares and on all of the terms and conditions of the transfer. The authorisation is valid for five years after its granting. The authorisation overrides the authorisation to dispose of the company's own shares issued by the Annual General Meeting on March 11, 2009.
There were no share issues during the period and the company did not float convertible bonds or bonds with warrants. At the end of the period, the parent company's Board of Directors did not have authorisations to issue convertible bonds or bonds with warrants.
Trading in the shares and share options
On the last trading day of the review period, March 31, 2010, the closing rate of YIT's share was EUR 17.10 (March 31, 2009: EUR 5.05). YIT's share price increased by 18 per cent during the period. The highest price of the share during January-March 2010 was EUR 17.80 (EUR 6.02), the lowest EUR 14.44 (EUR 4.31). The average price was EUR 16.32 (EUR 5.08).
Market capitalisation at the end of the period was EUR 2,138.8 million (EUR 631.6 million). The market capitalisation has been calculated excluding the shares held by the company.
Share turnover in January-March 2010 amounted to 36,277,021 shares (56,323,596).
The value of share turnover was EUR 593.0 million (EUR 287.1 million). The average daily turnover was 585,113 shares (908,445).
A total of 7,910 Series N share options issued in 2006 were traded in January-March at an average price of EUR 1.16.
Number of shareholders
At the beginning of the review period, the number of registered shareholders was 29,678 (25,515) and 30,187 (28,135) at the end of the period. The number of private investors increased by slightly under 500 in January-March. At the beginning of the year, a total of 38.7 per cent (36.5%) of the shares were owned by nominee-registered and non-Finnish investors, while this figure was 38.3 per cent (35.9%) at the end of the period.
ESTIMATE OF FUTURE DEVELOPMENT
Market situation
In the Building and Industrial Services segment, the slight growth in the demand for building system service and maintenance will continue. The increasing amount of technology in buildings and low new investments will increase the need for service and maintenance operations. The economic recession will open new opportunities for outsourcing building services. The demand for energy-efficiency services will increase in the next few years in the Nordic countries, Germany and Austria in particular with public sector stimulus measures and renewal of environmental legislation. New investments in office and business properties will remain slight. In new construction projects, public sector investments will be realised. The increase in the demand for renovation and modernisation projects will continue with the support of public sector stimulus measures and renovation subsidies. Industrial investments are at a low level in Finland, but the demand for industrial maintenance services will remain relatively stable.
With regard to Construction Services Finland, housing demand is expected to remain good, construction of business premises to remain low as a whole and infrastructure construction to remain relatively steady. The demand for owner-occupied housing will be supported by low interest rates, an increase in consumer confidence and the scarcity of housing supply. The need for new housing is also maintained by the smaller family size, migration and population growth. Decreased employment rates and rising interest rates may increase uncertainty in the housing market in the future. With regard to the business premises market, construction of offices and industrial premises will remain at a low level. Demand for retail and warehouse premises will remain moderate. The need for renovation will rise steadily. Public sector stimulus measures will increase the number of construction projects in the public sector, but the weakness of municipal finances will lead to uncertainty concerning the number of public sector construction projects. In the Finnish infrastructure market, new traffic-related projects will begin in 2010 at the same time with decreasing demand in the municipal sector. Opportunities will also open in connection with road and regional maintenance contracts. Capacity underutilisation in infrastructure construction keeps the competitive situation tight.
With regard to International Construction Services, housing demand in Russia is expected to remain stable. There is still a great need for housing in Russia, and the demand outlook for residential units aimed at YIT's customer segment is unchanged in the long term. Russia's economic situation and consumer behaviour are strongly dependent on the development of oil prices and the ruble exchange rate. In addition, the development of the housing loan market, interest rates, employment rates and purchasing power and expectations of inflation will have an impact on residential sales. YIT expects consumer demand to strengthen gradually if the economy continues to recover, and the development of housing prices to follow the development of inflation. In Russia, the underutilisation rate of offices is high and their construction is low, but the demand for industrial and retail premises is increasing as retail chains continue to be active and property investors are returning to the market. In the Baltic countries, there has been a slight picking up in housing demand, and the prices have turned into growth in central locations due to the lack of supply. Also other areas of construction have started to grow slightly. Due to the extensive impact of the recession, no significant improvement of the market conditions can be expected in the near future.
Strategic targets
YIT Corporation's Board of Directors confirmed the Group's strategy for 2010-2012 on August 19, 2009. The Group's strategic target levels are: average annual revenue growth of 5-10 per cent, return on investment of 20 per cent, operating cash flow after investments must be sufficient for dividend payout and reduction of debt, equity ratio of 35 per cent and dividend payout of 40 to 60 per cent of net profit for the period.
In Building and Industrial Services, YIT aims to be the leading provider of technical system maintenance and a forerunner in energy-saving services in the Nordic countries and Central Europe. The target is to increase service and maintenance operations at a rate exceeding that of other operations. Growth is sought both organically and through acquisitions.
In Construction Services Finland, YIT's aim is to reinforce its position in all of its three key construction segments - housing, business premises and infrastructure.
In the International Construction Services segment, YIT aims to increase housing production according to market demand. The strong need for housing has not decreased in Russia, and the demand outlook for residential units aimed at YIT's customer segment is favourable in the long term, which provides opportunities for growth. Also in the Baltic countries and Central Eastern Europe, YIT will aim to take advantage of emerging market opportunities. The segment will also aim at more efficient use of capital and higher profitability.
Most significant business risks and uncertainties
YIT has specified the major risk factors and their management from the point of view of the Group as a whole, taking the special characteristics of YIT's business operations and environment into consideration. Risks are divided into strategic, operational, financial and event risks. A more detailed account of YIT's risk management policy and the most significant risks has been published in the Annual Report 2009. Financing risks are described in more detail in the notes to the financial statements for 2009.
The most significant operational short-term business risks and uncertainties are connected with the development in building systems and industrial project demand as well as the continuity of the favourable development of residential sales and the sales and price risk of the order backlog mainly due to unsold residential units. At the end of March 2010, YIT's unsold residential units that are under construction or completed totalled 3,585 in Russia, 1,011 in Finland and 146 in the Baltic countries. In addition, there are 1,467 residential units in Russia in projects whose construction has been suspended. YIT manages sales risk by matching the number of housing start-ups with the estimated residential demand and the number of unsold residential units. The housing production figures are presented under Development by business segment.
YIT is exposed to a currency risk related to ruble denominated investments. Investments in Russia totalled EUR 571.3 million at the end of the period. Net investments amounted to EUR 379.2 million at the end of the period. Net investments in the Russian subsidiaries are unhedged in accordance with the treasury policy, and the possible devaluation of the ruble would have a corresponding negative impact on the Group's shareholders' equity. Debt investments amounted to EUR 192.1 million at the end of the period, and this exposure was hedged in full. The interest rate difference between euro and ruble have an effect on hedging costs and thus net financial expenses.
YIT tests the value of its plots as required by the IFRS accounting principles. Plot reserves are measured at acquisition cost and the value is impaired when it is estimated that the building being constructed on the plot will be sold at a price lower than the sum of the price of the plot and the construction costs.
OUTLOOK FOR 2010
YIT estimates that in 2010 the Group's revenue will increase and profit before taxes will increase significantly compared to 2009. (The estimate has not been changed after the financial statements bulletin released on February 4, 2010.)
The demand for housing is expected to remain at a favourable level in 2010 in Finland as well as Russia.
In Finland, the demand is supported by low interest rates, increased consumer confidence and structural factors, such as migration, population growth and decreasing family size. Housing prices are rising in the market. There is a low supply of new residential units in the market. YIT had 3,975 residential units under construction at the end of March 2010. 1,011 residential units were on sale, of them 168 completed. Good plot reserves and geographically extensive operations enable increasing residential development activity in 2010.
There is a great need for new housing in Russia, and therefore the demand outlook for residential units aimed at YIT's customer segment is unchanged in the long term. By the end of March YIT had started the price increases in residential production in all cities where it operates. Consumer confidence has strengthened. Increasing financing and mortgage opportunities support the apartment sales. New residential projects have been started up in the market, but the supply is still limited. YIT had 4,671 residential units under construction at the end of March 2010. There were 3,585 residential units on sale, of which 900 had been completed. Residential start-ups will be increased in 2010 according to the demand.
The development of consumer confidence, employment rates and interest rates influence housing demand in Finland and Russia. In Russia, housing demand is also dependent on oil prices and the ruble exchange rate. The opportunities of organic growth in Building and Industrial Services are supported by the need for service and maintenance as well as renovation and public sector projects. There are many small companies operating in the technical building system market, and the consolidation of the market will provide opportunities for acquisitions. Industrial investments are at a low level in Finland, but the demand for industrial maintenance services will remain relatively stable. New investments in technical building systems will remain low in all YIT markets, particularly due to the low volumes of business premises construction. YIT has an extensive network of local offices in the markets where it operates and a solid market position in building system and industrial service and maintenance operations, projects and energy-efficiency services.
In the Finnish infrastructure market, new traffic-related projects will begin in 2010 at the same time with decreasing demand in the municipal sector. Opportunities will also open in connection with road and regional maintenance contracts. YIT has large-scale road projects underway in infrastructure services. The Group has special expertise in infrastructure and a solid position as the largest private provider of road maintenance services in Finland.
Helsinki, April 28, 2010
Board of Directors
INTERIM REPORT JAN 1 - MAR 31, 2010: TABLES (The information presented in the Interim Report has not been audited.)
1. Key figures of YIT Group
Key figures YIT Group figures by quarter Segment information by quarter
2. Consolidated financial statements January 1 - March 31, 2010
Consolidated income statement Statement of comprehensive income Consolidated balance sheet Consolidated statement of changes in equity Consolidated cash flow statement
3. Notes
Accounting principles of the Interim Report Financial risk management Segment information Unusual items affecting operating profit Acquired and divested businesses Changes in property, plant and equipment Inventories Notes on equity Borrowings Change in contingent liabilities and assets and commitments Transactions with associated companies
1. KEY FIGURES OF YIT GROUP
As from the beginning of 2010, Group reporting will apply the new IFRIC 15 interpretation, according to which own residential development projects will be recognised at the time of delivery and own commercial real estate development projects based on the percentage of completion or at the time of delivery. The figures for 2010 and 2009 are comparable.
KEY FIGURES
-------------------------------------------------------------------------------- | | 3/2010 | 3/2009 | change, | 12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.15 | 0.06 | 150 | 0.55 | -------------------------------------------------------------------------------- | Diluted earnings per share, EUR | 0.15 | 0.06 | 150 | 0.55 | -------------------------------------------------------------------------------- | Equity per share, EUR | 6.08 | 5.46 | 11 | 6.09 | -------------------------------------------------------------------------------- | Average share price during the | 16.32 | 5.08 | 221 | 8.52 | | period, EUR | | | | | -------------------------------------------------------------------------------- | Share price at end of period, | 17.10 | 5.05 | 239 | 14.45 | | EUR | | | | | -------------------------------------------------------------------------------- | Market capitalization at end of | 2,138.8 | 631.6 | 239 | 1,807.4 | | period, MEUR | | | | | -------------------------------------------------------------------------------- | Weighted average share-issue | 125,078 | 125,432 | 0 | 125,167 | | adjusted number of shares | | | | | | outstanding, thousands | | | | | -------------------------------------------------------------------------------- | Weighted average share-issue | 125,078 | 125,432 | 0 | 125,167 | | adjusted number of shares | | | | | | outstanding, thousands, diluted | | | | | -------------------------------------------------------------------------------- | Share-issue adjusted number of | 125,078 | 125,078 | 0 | 125,078 | | shares outstanding at end of | | | | | | period, thousands | | | | | -------------------------------------------------------------------------------- | Net interest-bearing debt at | 496.0 | 674.1 | -26 | 529.1 | | end of period, MEUR | | | | | -------------------------------------------------------------------------------- | Return on investment, from the | 11.3 | 16.5 | -32 | 11.0 | | last 12 months, % | | | | | -------------------------------------------------------------------------------- | Equity ratio, % | 30.2 | 27.0 | 12 | 32.4 | -------------------------------------------------------------------------------- | Gearing ratio, % | 65.0 | 98.3 | -34 | 69.2 | -------------------------------------------------------------------------------- | Gross capital expenditures, | 9.4 | 6.7 | 40 | 27.9 | | MEUR | | | | | -------------------------------------------------------------------------------- | % of revenue | 1.2 | 0.8 | 50 | 0.8 | -------------------------------------------------------------------------------- | Order backlog at end of period, | 3,152.5 | 3,256.3 | -3 | 2,983.3 | | MEUR 1) | | | | | -------------------------------------------------------------------------------- | of which order backlog outside | 1.637.1 | 1.983.6 | -17 | 1,885.7 | | Finland | | | | | -------------------------------------------------------------------------------- | Average number of personnel | 23,199 | 25,405 | -9 | 24,497 | --------------------------------------------------------------------------------
1) Portion of binding orders and own development projects not recognized as income.
YIT GROUP FIGURES BY QUARTER
-------------------------------------------------------------------------------- | | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 | | | | | 9 | | | -------------------------------------------------------------------------------- | Revenue, MEUR | 843.2 | 862.8 | 754.3 | 1,025.3 | 765.3 | -------------------------------------------------------------------------------- | Operating profit, MEUR | 28.7 | 43.3 | 32.8 | 63.3 | 33.9 | -------------------------------------------------------------------------------- | % of revenue | 3.4 | 5.0 | 4.3 | 6.2 | 4.4 | -------------------------------------------------------------------------------- | Financial income, MEUR | 1.3 | 0.4 | 0.9 | 1.9 | 0.7 | -------------------------------------------------------------------------------- | Exchange rate | -9.6 | -5.1 | -7.8 | -5.9 | -2.3 | | differences, MEUR | | | | | | -------------------------------------------------------------------------------- | Financial expenses, MEUR | -11.6 | -8.2 | -8.8 | -6.2 | -5.6 | -------------------------------------------------------------------------------- | Profit before taxes, MEUR | 8.8 | 30.4 | 17.1 | 53.1 | 26.7 | -------------------------------------------------------------------------------- | % of revenue | 1.0 | 3.5 | 2.3 | 5.2 | 3.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet total, MEUR | 2,998. | 2,993.3 | 3,041.6 | 2,777.1 | 2,994.8 | | | 6 | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.06 | 0.15 | 0.08 | 0.26 | 0.15 | -------------------------------------------------------------------------------- | Equity per share, EUR | 5.46 | 5.67 | 5.78 | 6.09 | 6.08 | -------------------------------------------------------------------------------- | Share price at end of | 5.05 | 7.40 | 13.01 | 14.45 | 17.10 | | period, EUR | | | | | | -------------------------------------------------------------------------------- | Market capitalization at | 631.6 | 925.6 | 1,627.0 | 1,807.4 | 2,138.8 | | end of period, MEUR | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on investment, | 16.5 | 11.5 | 11.1 | 11.0 | 11.3 | | from the last 12 months, | | | | | | | % | | | | | | -------------------------------------------------------------------------------- | Equity ratio, % | 27.0 | 28.1 | 28.2 | 32.4 | 30.2 | -------------------------------------------------------------------------------- | Net interest-bearing debt | 674.1 | 699.7 | 674.4 | 529.1 | 496.0 | | at end of period, MEUR | | | | | | -------------------------------------------------------------------------------- | Gearing ratio, % | 98.3 | 98.1 | 92.9 | 69.2 | 65.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross capital | 6.7 | 3.9 | 5.1 | 12.2 | 9.4 | | expenditures, MEUR | | | | | | -------------------------------------------------------------------------------- | Order backlog at end of | 3,256. | 3,120.0 | 3,059.6 | 2,983.3 | 3,152.5 | | period, MEUR | 3 | | | | | -------------------------------------------------------------------------------- | Personnel at end of | 25,239 | 24,763 | 24,003 | 23,480 | 23,211 | | period | | | | | | --------------------------------------------------------------------------------
SEGMENT INFORMATION BY QUARTER
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS interpretation from the start of the financial period begun on January 1, 2010. Due to the application of the interpretation, Group reporting and segment reporting will differ.
In segment reporting, the figures will continue to be calculated based on the previous accounting principle, i.e. percentage of completion will be applied in the recognition of revenue from own residential and commercial real estate development projects.
As from the beginning of 2010, Group reporting will apply the new interpretation. According to the interpretation own residential development projects will be recognised at the time of delivery. Own commercial real estate development projects will be recognized in most cases based on the percentage of completion or alternatively at the time of delivery.
Figures for 2010 and 2009 are comparable.
Revenue by business segment (EUR million)
-------------------------------------------------------------------------------- | | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 | | | | | 9 | | | -------------------------------------------------------------------------------- | Building and Industrial | 537.9 | 529.2 | 483.9 | 573.9 | 477.0 | | Services | | | | | | -------------------------------------------------------------------------------- | Construction Services | 239.8 | 253.0 | 246.3 | 290.6 | 252.9 | | Finland | | | | | | -------------------------------------------------------------------------------- | International | 61.4 | 87.4 | 97.6 | 113.0 | 106.9 | | Construction Services | | | | | | -------------------------------------------------------------------------------- | Other items | -15.5 | -16.4 | -12.8 | -17.0 | -16.0 | -------------------------------------------------------------------------------- | YIT's segments total | 823.7 | 853.2 | 815.0 | 960.5 | 820.8 | -------------------------------------------------------------------------------- | IFRIC 15 adjustments | 19.5 | 9.7 | -60.7 | 64.7 | -55.5 | -------------------------------------------------------------------------------- | YIT Group, total | 843.2 | 862.8 | 754.3 | 1 025.3 | 765.3 | --------------------------------------------------------------------------------
Operating profit by business segment (EUR million)
-------------------------------------------------------------------------------- | | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 | | | | | 9 | | | -------------------------------------------------------------------------------- | Building and Industrial | 28.6 | 28.2 | 24.9 | 37.6 | 21.6 | | Services 1) | | | | | | -------------------------------------------------------------------------------- | Construction Services | 20.9 | 19.9 | 20.8 | 20.3 | 23.1 | | Finland | | | | | | -------------------------------------------------------------------------------- | International | -23.8 | -5.2 | 3.7 | 7.5 | 4.6 | | Construction Services | | | | | | -------------------------------------------------------------------------------- | Other items | -3.6 | -4.8 | -3.8 | -5.7 | -4.8 | -------------------------------------------------------------------------------- | YIT's segments total | 22.1 | 38.1 | 45.6 | 59.7 | 44.5 | -------------------------------------------------------------------------------- | IFRIC 15 adjustments | 6.6 | 5.2 | -12.8 | 3.6 | -10.6 | -------------------------------------------------------------------------------- | YIT Group, total | 28.7 | 43.3 | 32.8 | 63.3 | 33.9 | --------------------------------------------------------------------------------
Operating profit margin by business segment (%)
-------------------------------------------------------------------------------- | | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 | | | | | 9 | | | -------------------------------------------------------------------------------- | Building and Industrial | 5.3% | 5.3% | 5.1% | 6.6% | 4.5% | | Services 1) | | | | | | -------------------------------------------------------------------------------- | Construction Services | 8.7% | 7.9% | 8.4% | 7.0% | 9.1% | | Finland | | | | | | -------------------------------------------------------------------------------- | International | -38.7% | -5.9% | 3.8% | 6.6% | 4.3% | | Construction Services | | | | | | -------------------------------------------------------------------------------- | YIT's segments total | 2.7% | 4.5% | 5.6% | 6.2% | 5.4% | -------------------------------------------------------------------------------- | YIT Group, total | 3.4% | 5.0% | 4.3% | 6.2% | 4.4% | --------------------------------------------------------------------------------
1b) On September 30, 2009, the court of arbitration issued its ruling in the dispute concerning the mechanical installation contract YIT carried out for Neste Oil's Porvoo oil refinery. The effect of the ruling on Building and Industrial Services' operating profit for 7-9/2009 was EUR -3.2 million.
Order backlog by business segment at end of period (EUR million)
-------------------------------------------------------------------------------- | | I/2009 | II/2009 | III/200 | IV/2009 | I/2010 | | | | | 9 | | | -------------------------------------------------------------------------------- | Building and Industrial | 1,048.3 | 984.7 | 946.7 | 850.4 | 964.2 | | Services | | | | | | -------------------------------------------------------------------------------- | Construction Services | 819.8 | 846.9 | 909.9 | 1,007.5 | 905.4 | | Finland | | | | | | -------------------------------------------------------------------------------- | International | 1,239.1 | 1,126.8 | 998.4 | 960.1 | 1,013.2 | | Construction Services 1) | | | | | | -------------------------------------------------------------------------------- | Other items | -62.1 | -41.9 | -54.2 | -44.4 | -45.8 | -------------------------------------------------------------------------------- | YIT's segments total | 3,045.0 | 2,916.5 | 2,800.8 | 2,773.6 | 2,837.0 | -------------------------------------------------------------------------------- | IFRIC 15 adjustments | 211.3 | 203.6 | 258.8 | 209.7 | 315.5 | -------------------------------------------------------------------------------- | YIT Group, total | 3,256.3 | 3,120.1 | 3,059.6 | 2,983.3 | 3,152.5 | --------------------------------------------------------------------------------
1) The order backlog includes housing projects whose construction was suspended in Russia in October 2008 due to market uncertainties. At the end of March 2010, the projects that were still suspended included 1,467 (2,485) residential units and the value of the projects amounted to EUR 235 million (3/09: EUR 322 million) in the order backlog.
2. CONSOLIDATED FINANCIAL STATEMENTS JANUARY 1 - MARCH 31, 2010
As from the beginning of 2010, Group reporting will apply the new IFRIC15 interpretation, according to which own residential development projects will be recognised at the time of delivery and own commercial real estate development projects based on the percentage of completion or at the time of delivery. The figures for 2010 and 2009 are comparable.
CONSOLIDATED INCOME STATEMENT (EUR million)
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Revenue | 765.3 | 843.2 | -9 | 3 485.6 | -------------------------------------------------------------------------------- | of which activities outside | 436.9 | 441.6 | -1 | 1 885.7 | | Finland | | | | | -------------------------------------------------------------------------------- | Other operating income and | -722.5 | -806.1 | -10 | -3 283.3 | | expenses | | | | | -------------------------------------------------------------------------------- | Share of results of associated | -0.4 | 0 | - | -0.6 | | companies | | | | | -------------------------------------------------------------------------------- | Depreciation and write-downs | -8.5 | -8.4 | 1 | -33.6 | -------------------------------------------------------------------------------- | Operating profit 1) | 33.9 | 28.7 | 18 | 168.1 | -------------------------------------------------------------------------------- | % of revenue | 4.4 | 3.4 | 30 | 4.8 | -------------------------------------------------------------------------------- | Financial income | 0.7 | 1.3 | -46 | 4.5 | -------------------------------------------------------------------------------- | Exchange rate differences | -2.3 | -9.6 | -76 | -28.4 | -------------------------------------------------------------------------------- | Financial expenses | -5.6 | -11.6 | -52 | -34.7 | -------------------------------------------------------------------------------- | Profit before taxes | 26.7 | 8.8 | 203 | 109.5 | -------------------------------------------------------------------------------- | % of revenue | 3.5 | 1.0 | 250 | 3.1 | -------------------------------------------------------------------------------- | Income taxes | -7.8 | -2.0 | 290 | -41.4 | -------------------------------------------------------------------------------- | Profit for the report period | 18.9 | 6.8 | 178 | 68.1 | -------------------------------------------------------------------------------- | % of revenue | 2.5 | 0.8 | 213 | 2.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to | | | | | -------------------------------------------------------------------------------- | Equity holders of the parent | 18.8 | 7.1 | 165 | 68.3 | | company | | | | | -------------------------------------------------------------------------------- | Non-controlling interest | 0.1 | -0.3 | -133 | -0.2 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Earnings per share attributable | | | | | | to the equity holders of the | | | | | | parent company | | | | | -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.15 | 0.06 | 150 | 0.55 | -------------------------------------------------------------------------------- | Diluted earnings per share, EUR | 0.15 | 0.06 | 150 | 0.55 | --------------------------------------------------------------------------------
1) The operating profit 2009 includes EUR -3.2 million due to the ruling issued by the court of arbitration on September 30, 2009 concerning the mechanical installation contract YIT carried out for Neste Oil's Porvoo oil refinery.
STATEMENT OF COMPREHENSIVE INCOME (EUR million)
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Profit for the report period | 18.9 | 6.8 | 178 | 68.1 | -------------------------------------------------------------------------------- | Other comprehensive income and | | | | | | expenses | | | | | -------------------------------------------------------------------------------- | - Change in the fair value of | -3.9 | -1.6 | -144 | -3.1 | | interest derivatives | | | | | -------------------------------------------------------------------------------- | -- Deferred tax | 0.7 | 0.6 | 17 | 0.0 | -------------------------------------------------------------------------------- | -- Transferred to income | 1.3 | - | - | 3.1 | | statement | | | | | -------------------------------------------------------------------------------- | - Change in translation | 32.9 | -21.5 | - | -5.8 | | differences | | | | | -------------------------------------------------------------------------------- | - Other change | 0 | 0.1 | -100 | -0.0 | -------------------------------------------------------------------------------- | Other comprehensive income, | 31.0 | -22.4 | - | -5.8 | | total | | | | | -------------------------------------------------------------------------------- | Total comprehensive income | 49.9 | -15.6 | - | 62.3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to | | | | | -------------------------------------------------------------------------------- | Equity holders of the parent | 49.4 | -14.8 | - | 63.1 | | company | | | | | -------------------------------------------------------------------------------- | Non-controlling interest | 0.5 | -0.8 | - | -0.8 | --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET (EUR million)
-------------------------------------------------------------------------------- | | 3/2010 | 3/2009 | change | 31.12.20 | 1.1.200 | | | | | 3/2009-3 | 09 | 9 | | | | | /2010, % | | | -------------------------------------------------------------------------------- | ASSETS | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current assets | | | | | | -------------------------------------------------------------------------------- | Property, plant and | 98.8 | 101.2 | -2 | 99.8 | 104.6 | | equipment | | | | | | -------------------------------------------------------------------------------- | Goodwill | 291.0 | 291.0 | 0 | 291.0 | 291.0 | -------------------------------------------------------------------------------- | Other intangible assets | 34.6 | 35.4 | -2 | 32.8 | 35.1 | -------------------------------------------------------------------------------- | Shares in associated | 2.8 | 3.6 | -22 | 3.2 | 3.8 | | companies | | | | | | -------------------------------------------------------------------------------- | Other investments | 2.0 | 2.6 | -23 | 2.0 | 2.5 | -------------------------------------------------------------------------------- | Other receivables | 14.1 | 14.5 | -3 | 14.4 | 12.7 | -------------------------------------------------------------------------------- | Deferred tax assets | 50.5 | 43.9 | 15 | 43.1 | 40.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | | | | -------------------------------------------------------------------------------- | Inventories | 1,527. | 1,612. | -5 | 1,477.6 | 1,715.4 | | | 4 | 9 | | | | -------------------------------------------------------------------------------- | Trade and other | 650.1 | 685.0 | -5 | 640.1 | 731.2 | | receivables | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 323.5 | 208.5 | 55 | 173.1 | 201.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | 2,994. | 2,998. | 0 | 2,777.1 | 3,138.4 | | | 8 | 6 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EQUITY AND LIABILITIES | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity attributable to | | | | | | | equity holders of the | | | | | | | parent company | | | | | | -------------------------------------------------------------------------------- | Share capital | 149.2 | 149.2 | 0 | 149.2 | 149.2 | -------------------------------------------------------------------------------- | Other equity | 611.5 | 534.3 | 14 | 612.7 | 615.6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-controlling interest | 2.7 | 2.2 | 23 | 2.2 | 3.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity | 763.4 | 685.7 | 11 | 764.1 | 768.6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current liabilities | | | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 73.7 | 63.9 | 15 | 66.8 | 63.2 | -------------------------------------------------------------------------------- | Pension liabilities | 17.2 | 18.8 | -9 | 17.6 | 19.7 | -------------------------------------------------------------------------------- | Provisions | 49.8 | 47.0 | 6 | 49.0 | 45.0 | -------------------------------------------------------------------------------- | Interest-bearing | 595.8 | 563.8 | 6 | 502.0 | 516.2 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Other liabilities | 6.1 | 4.3 | 42 | 3.3 | 4.0 | -------------------------------------------------------------------------------- | | , | | | | | -------------------------------------------------------------------------------- | Current liabilities | | | | | | -------------------------------------------------------------------------------- | Trade and other payables | 1,224. | 1,243. | -2 | 1,133.5 | 1,298.2 | | | 6 | 4 | | | | -------------------------------------------------------------------------------- | Provisions | 40.4 | 52.9 | -24 | 40.6 | 43.6 | -------------------------------------------------------------------------------- | Interest-bearing current | 223.8 | 318.8 | -30 | 200.2 | 379.9 | | liabilities | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity and | 2,994. | 2,998. | 0 | 2,777.1 | 3,138.4 | | liabilities | 8 | 6 | | | | --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR million)
-------------------------------------------------------------------------------- | | Sha | Leg | Ot | Cumu | Fair | Tre | Ret | Tot | Non- | Tota | | | re | al | he | lati | valu | asu | ain | al | cont | l | | | cap | res | r | ve | e | ry | ed | | roll | equi | | | ita | erv | re | tran | rese | sha | ear | | ing | ty | | | l | e | se | slat | rve | res | nin | | inte | | | | | | rv | ion | | | gs | | rest | | | | | | e | diff | | | | | | | | | | | | eren | | | | | | | | | | | | ces | | | | | | | -------------------------------------------------------------------------------- | Balance at 1 | 149 | 1.7 | 11 | -41. | -1.7 | -10 | 653 | 761 | 2.2 | 764. | | January 2010 | .2 | | .6 | 5 | | .6 | .2 | .9 | | 1 | -------------------------------------------------------------------------------- | Comprehensive | - | - | - | - | - | - | | - | - | - | | income | | | | | | | | | | | -------------------------------------------------------------------------------- | Profit for | - | - | - | - | - | - | 18. | - | 0.1 | 18.9 | | the period | | | | | | | 8 | | | | -------------------------------------------------------------------------------- | Other | - | - | - | - | - | - | - | - | - | | | comprehensive | | | | | | | | | | | | income | | | | | | | | | | | -------------------------------------------------------------------------------- | Change in the | - | - | - | - | -3.9 | - | - | - | - | -3.9 | | fair value of | | | | | | | | | | | | interest | | | | | | | | | | | | derivatives | | | | | | | | | | | -------------------------------------------------------------------------------- | - Deferred | - | - | - | - | 0.6 | - | - | - | - | 0.6 | | tax asset | | | | | | | | | | | -------------------------------------------------------------------------------- | - Transferred | - | - | - | - | 1.3 | - | - | - | - | 1.3 | | to income | | | | | | | | | | | | statement | | | | | | | | | | | -------------------------------------------------------------------------------- | Change in | - | - | - | 31.1 | - | - | 1.4 | - | 0.4 | 32.9 | | translation | | | | | | | | | | | | differences | | | | | | | | | | | -------------------------------------------------------------------------------- | Other change | - | - | - | - | - | - | - | - | - | - | -------------------------------------------------------------------------------- | Comprehensive | 0.0 | 0.0 | 0. | 31.1 | -2.0 | 0.0 | 20. | 49. | 0.5 | 49.8 | | income, total | | | 0 | | | | 2 | 3 | | | -------------------------------------------------------------------------------- | Transactions | - | - | - | - | - | - | - | - | - | - | | with owners | | | | | | | | | | | -------------------------------------------------------------------------------- | Dividend paid | - | - | - | - | - | - | -50 | - | - | -50. | | | | | | | | | .5 | | | 5 | -------------------------------------------------------------------------------- | Purchase of | - | - | - | - | - | - | - | - | - | - | | treasury | | | | | | | | | | | | shares | | | | | | | | | | | -------------------------------------------------------------------------------- | Transfer from | - | - | - | - | - | - | - | - | - | - | | retained | | | | | | | | | | | | earnings | | | | | | | | | | | -------------------------------------------------------------------------------- | Employee | - | - | - | - | - | - | - | - | - | 0.0 | | share option | | | | | | | | | | | | scheme | | | | | | | | | | | -------------------------------------------------------------------------------- | Transactions | 0.0 | 0.0 | 0. | 0.0 | 0.0 | 0.0 | -50 | -50 | 0.0 | -50. | | with owners, | | | 0 | | | | .5 | .5 | | 5 | | total | | | | | | | | | | | -------------------------------------------------------------------------------- | Balance at 31 | 149 | 1.7 | 11 | -10. | -3.7 | -10 | 622 | 760 | 2.7 | 763. | | March 2010 | .2 | | .6 | 4 | | .6 | .9 | .7 | | 4 | -------------------------------------------------------------------------------- | | | | | | | | | | | | -------------------------------------------------------------------------------- | Restated | 149 | 1.4 | 13 | -35. | -1.7 | -6. | 643 | 764 | 3.8 | 768. | | equity | .2 | | .9 | 2 | | 6 | .8 | .8 | | 6 | | balance at 1 | | | | | | | | | | | | January 2009 | | | | | | | | | | | -------------------------------------------------------------------------------- | Comprehensive | - | - | - | - | - | - | - | - | - | - | | income | | | | | | | | | | | -------------------------------------------------------------------------------- | Profit for | - | - | - | - | - | - | 7.1 | - | -0.3 | 6.8 | | the period | | | | | | | | | | | -------------------------------------------------------------------------------- | Other | - | - | - | - | - | - | - | - | - | - | | comprehensive | | | | | | | | | | | | income | | | | | | | | | | | -------------------------------------------------------------------------------- | Change in the | - | - | - | - | -1.6 | - | - | - | - | -1.6 | | fair value of | | | | | | | | | | | | interest | | | | | | | | | | | | derivatives | | | | | | | | | | | -------------------------------------------------------------------------------- | - Deferred | - | - | - | - | 0.6 | - | - | - | - | 0.6 | | tax asset | | | | | | | | | | | -------------------------------------------------------------------------------- | - Transferred | - | - | - | - | 0.0 | - | - | - | - | - | | to income | | | | | | | | | | | | statement | | | | | | | | | | | -------------------------------------------------------------------------------- | Change in | - | - | - | -21. | - | - | | - | -0.2 | -21. | | translation | | | | 3 | | | | | | 5 | | differences | | | | | | | | | | | -------------------------------------------------------------------------------- | Other change | - | - | - | | - | - | 0,4 | - | -0,3 | 0.1 | -------------------------------------------------------------------------------- | Comprehensive | - | - | - | -21. | -1.0 | - | 7.5 | 14. | -0.8 | -15. | | income, total | | | | 3 | | | | 8 | | 6 | -------------------------------------------------------------------------------- | Transactions | - | - | - | - | - | - | - | - | - | - | | with owners | | | | | | | | | | | -------------------------------------------------------------------------------- | Dividend paid | - | - | - | - | - | - | -62 | - | -0.8 | -63. | | | | | | | | | .5 | | | 3 | -------------------------------------------------------------------------------- | Purchase of | - | - | - | - | - | -4. | - | - | - | -4.0 | | treasury | | | | | | 0 | | | | | | shares | | | | | | | | | | | -------------------------------------------------------------------------------- | Transfer from | - | 0.2 | - | - | - | - | -0. | - | - | 0.0 | | retained | | | | | | | 2 | | | | | earnings | | | | | | | | | | | -------------------------------------------------------------------------------- | Employee | - | - | -2 | - | - | - | 2.3 | - | - | 0.0 | | share option | | | .3 | | | | | | | | | scheme | | | | | | | | | | | -------------------------------------------------------------------------------- | Transactions | 0.0 | 0.2 | -2 | 0.0 | 0.0 | -4. | -60 | 0.0 | -0.8 | -67. | | with owners, | | | .3 | | | 0 | .4 | | | 3 | | total | | | | | | | | | | | -------------------------------------------------------------------------------- | Balance at 31 | 149 | 1.6 | 11 | -56. | -2.7 | -10 | 590 | 750 | 2.2 | 685. | | March 2009 | .2 | | .6 | 5 | | .6 | .9 | .0 | | 7 | -------------------------------------------------------------------------------- | | | | | | | | | | | | -------------------------------------------------------------------------------- | Equity | 149 | 1.4 | 13 | -35. | -1.7 | -6. | 682 | 803 | 4.6 | 807. | | balance at 1 | .2 | | .9 | 2 | | 6 | .1 | .1 | | 7 | | January 2009 | | | | | | | | | | | -------------------------------------------------------------------------------- | The effects | - | - | - | - | - | - | -38 | -38 | -0.8 | -39. | | of | | | | | | | .3 | .3 | | 1 | | application | | | | | | | | | | | | of IFRIC 15 | | | | | | | | | | | -------------------------------------------------------------------------------- | Restated | 149 | 1.4 | 13 | -35. | -1.7 | -6. | 643 | 764 | 3.8 | 768. | | equity | .2 | | .9 | 2 | | 6 | .8 | .8 | | 6 | | balance at 1 | | | | | | | | | | | | January 2009 | | | | | | | | | | | --------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT (EUR million)
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Cash flows from operating | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Net profit for the period | 19.0 | 6.8 | 179 | 68.3 | -------------------------------------------------------------------------------- | Reversal of accrual-based items | 24.6 | 57.1 | -57 | 166.4 | -------------------------------------------------------------------------------- | Change in working capital | | | | | -------------------------------------------------------------------------------- | Change in trade and other | 15.1 | 41.7 | -61 | 98.1 | | receivables | | | | | -------------------------------------------------------------------------------- | Change in inventories | 15.0 | 28.5 | -47 | 173.5 | -------------------------------------------------------------------------------- | Change in current liabilities | 0.0 | -95.2 | -100 | -154.1 | -------------------------------------------------------------------------------- | Change in working capital, | 30.1 | -25.0 | - | 117.5 | | total | | | | | -------------------------------------------------------------------------------- | Interest paid | -6.7 | -8.7 | -23 | -35.3 | -------------------------------------------------------------------------------- | Other financial items, net | -15.1 | 16.4 | - | -22 | -------------------------------------------------------------------------------- | Interest received | 0.7 | 1.0 | -30 | 4.7 | -------------------------------------------------------------------------------- | Taxes paid | -11.8 | -12.3 | -4 | -38.7 | -------------------------------------------------------------------------------- | Net cash generated from | 40.8 | 35.3 | 15 | 260.9 | | operating activities | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flows from investing | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Acquisition of subsidiaries, | -2.9 | -7.5 | -61 | -7.5 | | net of cash | | | | | -------------------------------------------------------------------------------- | Purchase of property, plant and | -3.9 | -4.5 | -13 | -20.8 | | equipment | | | | | -------------------------------------------------------------------------------- | Purchase of intangible assets | -1.7 | -2.2 | -23 | -7.2 | -------------------------------------------------------------------------------- | Proceeds from sale of tangible | 1.6 | 0.1 | 1500 | 4.1 | | and intangible assets | | | | | -------------------------------------------------------------------------------- | Proceeds from sale of other | -0.1 | 0 | -100 | 0.3 | | investments | | | | | -------------------------------------------------------------------------------- | Net cash used in investing | -7.0 | -14.1 | -50 | -31.1 | | activities | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Operating cash flow after | 33.8 | 21.2 | 59 | 229.8 | | investments | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Cash flow from financing | | | | | | activities | | | | | -------------------------------------------------------------------------------- | Change in current liabilities | 23.1 | -70.6 | -133 | -138.6 | -------------------------------------------------------------------------------- | Proceeds from borrowings | 100.0 | 60.0 | 67 | 60.0 | -------------------------------------------------------------------------------- | Repayments of borrowings | -8.8 | -0.4 | 2100 | -110.6 | -------------------------------------------------------------------------------- | Payments of financial leasing | -0.1 | -0.1 | 0 | -0.3 | | debts | | | | | -------------------------------------------------------------------------------- | Purchase of treasury shares | 0.0 | -4.0 | 100 | -4.0 | -------------------------------------------------------------------------------- | Dividends paid | 0.0 | 0.0 | - | -63.4 | -------------------------------------------------------------------------------- | Net cash used in financing | 114.2 | -15.1 | -856 | -256.9 | | activities | | | | | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Net change in cash and cash | 148.0 | 6.2 | 2285 | -27.1 | | equivalents | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at | 173.1 | 197.7 | -12 | 197.7 | | the beginning of the period | | | | | -------------------------------------------------------------------------------- | Change in the fair value of the | 2.4 | -0.4 | - | 2.5 | | cash equivalents | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at | 323.5 | 203.5 | 59 | 173.1 | | the end of the period | | | | | --------------------------------------------------------------------------------
3. NOTES
ACCOUNTING PRINCIPLES OF THE INTERIM REPORT
YIT Corporation's Interim Report for January 1 - March 31, 2010 has been drawn up in line with IAS 34: Interim Financial Reporting. The information presented in the Interim Report has not been audited. YIT has applied the same accounting policy and IFRS standards and interpretations in the drafting of the Interim Report as in its annual financial statements for 2009. However, the following new standards, interpretations and amendments on current standards that have been approved by EU have been applied as of January 1, 2010.
IFRIC 15 Agreements for the Construction of Real Estate
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS interpretation from the start of the financial period beginning on January 1, 2010. The IFRIC 15 interpretation contains guidelines on when the revenue generated by the construction of real estate must be recognised on the basis of the delivery of the building and when the percentage of completion method can be applied. In YIT, the new interpretation will have an impact on the recognition of own development projects involving residential and commercial real estate. The interpretation will not have any impact on construction contracting or building and industrial services.
In Group-level reports, the revenue generated by YIT's own residential development projects will be recognised when the project is complete i.e. when the residential units are ready to be handed over to the client. The share of income and expenses to be recognized will be calculated also in the future by multiplying the percentage of completion by the percentage of sale. Under the old practice, the revenue recognition began when the building work started using the percentage of completion method. In YIT's own commercial real estate development projects, the recognition practice will be evaluated on a case-by-case basis and in accordance with the terms and conditions of each contract. The projects already sold will be recognised when the construction work has started or when the project is complete. The share of income and expenses to be recognized will be calculated also in the future by using the formula percentage of completion multiplied by the percentage of sale multiplied by the occupancy rate. Under the old practice, the recognition of sold projects was possible to start always immediately when the building work started. YIT usually sells its commercial real estate development projects to investors before the start of construction or during the early stages of the construction work, which together with other facts means that in most cases the revenue of these projects can be recognised in accordance with the old practice also in the future.
In Finland, YIT finances its projects by selling construction-stage contract receivables to financing companies. According to the new interpretation, sold residential units from own development projects will be recognised as revenue when the project is complete. As a result, all construction-stage contract receivables related to residential production and sold to financing companies must be reported as part of the interest-bearing liabilities on the balance sheet. Under the old practice, part of construction-stage contract receivables related to residential production was reported as off-balance sheet items.
Due to applying the interpretation the items in consolidated income statement, consolidated balance sheet and consolidated cash flow statement for the previous periods have been adjusted for comparability as follows:
Changes in consolidated income statement (EUR million)
-------------------------------------------------------------------------------- | | 1-3/ | 4-6/ | 7-9/ | 10-12/ | | 1-3/0 | 1-6/0 | 1-9/0 | 1-12/ | | | 09 | 09 | 09 | 09 | | 9 | 9 | 9 | 09 | -------------------------------------------------------------------------------- | Revenue | 19.5 | 9.7 | -60. | 64.7 | | 19.5 | 29.2 | -31.5 | 33.2 | | | | | 7 | | | | | | | -------------------------------------------------------------------------------- | Operating | 6.6 | 5.2 | -12. | 3.6 | | 6.6 | 11.8 | -1.0 | 2.6 | | profit | | | 8 | | | | | | | -------------------------------------------------------------------------------- | Profit | 6.6 | 5.2 | -12. | 3.6 | | 6.6 | 11.8 | -1.0 | 2.6 | | before | | | 8 | | | | | | | | taxes | | | | | | | | | | -------------------------------------------------------------------------------- | Deferred | -1.3 | -1.1 | 2.8 | -1.1 | | -1.3 | -2.4 | 0.4 | -0.7 | | taxes | | | | | | | | | | -------------------------------------------------------------------------------- | Profit | 5.3 | 4.1 | -10. | 2.5 | | 5.3 | 9.4 | -0.6 | 1.9 | | for the | | | 0 | | | | | | | | period | | | | | | | | | | --------------------------------------------------------------------------------
Changes in consolidated balance sheet (EUR million)
-------------------------------------------------------------------------------- | | 1.1.2009 | 3/09 | 6/09 | 9/09 | 12/09 | -------------------------------------------------------------------------------- | Inventories | 205.5 | 186.1 | 183.0 | 230.8 | 168.1 | -------------------------------------------------------------------------------- | Trade and other | -46.8 | -33.6 | -33.7 | -43.9 | -20.7 | | receivables | | | | | | -------------------------------------------------------------------------------- | Deferred tax | 5.8 | 6.4 | 6.1 | 8.8 | 3.3 | | receivables | | | | | | -------------------------------------------------------------------------------- | Equity | -39.1 | -31.8 | -28.1 | -38.2 | -36.5 | -------------------------------------------------------------------------------- | Current | 49.8 | 38.9 | 28.3 | 34.0 | 31.4 | | borrowings | | | | | | -------------------------------------------------------------------------------- | Trade and other | 157.4 | 149.2 | 152.3 | 197.6 | 162.0 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Provisions | 1.6 | 5.4 | 5.0 | 4.6 | 0.6 | -------------------------------------------------------------------------------- | Deferred tax | -5.2 | -2.8 | -2.1 | -2.3 | -6.8 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Balance sheet | 164.5 | 158.9 | 155.4 | 195.7 | 150.7 | | total | | | | | | --------------------------------------------------------------------------------
Changes in consolidated cash flow statement (EUR million)
-------------------------------------------------------------------------------- | | 1-3/09 | 1-6/09 | 1-9/09 | 1-12/09 | -------------------------------------------------------------------------------- | Net cash generated from | 10.9 | 21.5 | 15.7 | 18.4 | | operating activities | | | | | -------------------------------------------------------------------------------- | Operating cash flow after | 10.9 | 21.5 | 15.7 | 18.4 | | investments | | | | | -------------------------------------------------------------------------------- | Net cash used in financing | -10.9 | -21.5 | -15.7 | -18.4 | | activities | | | | | --------------------------------------------------------------------------------
Under the new practice, the quarterly revenue and profits of the YIT Group will now fluctuate more in accordance with the completion dates of development projects. The new revenue recognition practice also means that it will take more time for the Group's financial figures to reflect changes in production volumes.
The adoption of the interpretation will not have any impact on the figures covering YIT's segments published by the Group as the information will continue to be calculated in accordance with existing accounting principles.
YIT published the comparison figures for consolidated income statement, consolidated balance sheet, consolidated cash flow statement and key figures for 2009 in a stock exchange release published on March 23, 2010.
Other standards and interpretations
Other standards and interpretations that have been applied as of January 1, 2010 have minor or no effects on YIT during the report period, and they include:
IFRS3 (revised): Business Combinations. All the acquisition-related costs have been expensed during the period, which had an insignificant impact on reported figures. IAS 27 (revised): Consolidated and Separate Financial Statements IFRIC 12: Service Concession Arrangements IFRIC 16: Net Investment in a Foreign Operation IFRIC 17: Distribution of non cash assets to owners IFRIC 18: Transfers of Assets from Customers IFRIC 9 ja IAS 39 (Amendment): Reassessment of embedded derivatives on reclassification IAS 39 (Amendment): Financial Instruments: Recognition and measurement - Eligible Hedged Items' IFRS 2 (Amendment): Share based payments Improvements to IFRS-amendments 2009
Currency exchange rates used in the Interim Report
-------------------------------------------------------------------------------- | | | Average rate | Balance sheet rate | | | | 1-3/2010 | March 31, 2010 | -------------------------------------------------------------------------------- | 1 EUR = | SEK | 9.9576 | 9.7135 | -------------------------------------------------------------------------------- | | NOK | 8.1055 | 8.0135 | -------------------------------------------------------------------------------- | | DKK | 7.4426 | 7.4447 | -------------------------------------------------------------------------------- | | EEK | 15.6466 | 15.6466 | -------------------------------------------------------------------------------- | | LVL | 0.7028 | 0.7028 | -------------------------------------------------------------------------------- | | LTL | 3.4528 | 3.4528 | -------------------------------------------------------------------------------- | | RUB | 41.3285 | 39.695 | -------------------------------------------------------------------------------- | | HUF | 268.60 | 265.75 | -------------------------------------------------------------------------------- | | CZK | 25.881 | 25.440 | -------------------------------------------------------------------------------- | | PLN | 3.9910 | 3.8673 | --------------------------------------------------------------------------------
FINANCIAL RISK MANAGEMENT
Financial risks include liquidity, interest rate, currency and credit risk, and their management is a part of the Group's financing policy. The Board of Directors has approved the Corporate Finance Policy. The Group's Finance Department is responsible for the practical implementation of the policy in association with the business segments and units.
The Group's strategic financial targets guide the use and management of the Group's capital. Achieving the strategic targets is supported by maintaining an optimum Group capital structure. Capital structure is mainly influenced by controlling the investments and the amount of working capital tied to business operations.
A more detailed account of financial risks has been published in the notes to the financial statements for 2009.
SEGMENT INFORMATION
YIT applies the IFRIC 15 Agreements for the Construction of Real Estate IFRS interpretation from the start of the financial period begun on January 1, 2010. Due to the application of the interpretation, Group reporting and segment reporting will differ.
In segment reporting, the figures will continue to be calculated based on the previous accounting principle, i.e. percentage of completion will be applied in the recognition of revenue from own residential and commercial real estate development projects.
As from the beginning of 2010, Group reporting will apply the new interpretation. According to the interpretation own residential development projects will be recognised at the time of delivery. Own commercial real estate development projects will be recognized in most cases based on the percentage of completion or alternatively at the time of delivery.
The figures for 2010 and 2009 are comparable.
The chief operating decision-maker has been identified as the YIT Group's Management Board, which review the Group's internal reporting in order to assess performance and allocate resources to the segments.
Revenue by business segment (EUR million)
-------------------------------------------------------------------------------- | | 1-3/201 | 1-3/2009 | change, | 1-12/2009 | | | 0 | | % | | -------------------------------------------------------------------------------- | Building and Industrial Services | 477.0 | 537.9 | -11 | 2,124.9 | -------------------------------------------------------------------------------- | - Group internal | -15.1 | -15.2 | -1 | -58.6 | -------------------------------------------------------------------------------- | - external | 461.9 | 522.7 | -12 | 2,066.3 | -------------------------------------------------------------------------------- | Construction Services Finland | 252.9 | 239.8 | 5 | 1,029.7 | -------------------------------------------------------------------------------- | - Group internal | -0.3 | -0.5 | -40 | -1.8 | -------------------------------------------------------------------------------- | - external | 252.6 | 239.3 | 6 | 1,028.0 | -------------------------------------------------------------------------------- | International Construction | 106.9 | 61.4 | 74 | 359.4 | | Services | | | | | -------------------------------------------------------------------------------- | - Group internal | -0.8 | -0.5 | 60 | -3.1 | -------------------------------------------------------------------------------- | - external | 106.1 | 60.9 | 74 | 356.3 | -------------------------------------------------------------------------------- | Other items | 0.2 | 0.7 | -71 | 1.8 | -------------------------------------------------------------------------------- | YIT's segments total | 820.8 | 823.7 | 0 | 3,452.4 | -------------------------------------------------------------------------------- | IFRIC 15 adjustments | -55.5 | 19.5 | -385 | 33.2 | -------------------------------------------------------------------------------- | YIT Group, total - external | 765.3 | 843.2 | -9 | 3,485.6 | --------------------------------------------------------------------------------
Operating profit by business segment (EUR million)
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Building and Industrial | 21.6 | 28.6 | -24 | 119.3 | | Services 1) | | | | | -------------------------------------------------------------------------------- | Construction Services Finland | 23.1 | 20.9 | 11 | 81.9 | -------------------------------------------------------------------------------- | International Construction | 4.6 | -23.8 | - | -17.8 | | Services | | | | | -------------------------------------------------------------------------------- | Other items | -4.8 | -3.6 | 33 | -17.9 | -------------------------------------------------------------------------------- | YIT's segments total | 44.5 | 22.1 | 101 | 165.5 | -------------------------------------------------------------------------------- | IFRIC 15 adjustments | -10.6 | 6.6 | - | 2.6 | -------------------------------------------------------------------------------- | YIT Group, total | 33.9 | 28.7 | 18 | 168.1 | --------------------------------------------------------------------------------
1) On September 30, 2009, the court of arbitration issued its ruling in the dispute concerning the mechanical installation contract YIT carried out for Neste Oil's Porvoo oil refinery. The effect of the ruling on Building and Industrial Services' operating profit for 7-9/2009 was EUR -3.2 million.
Order backlog by business segment at end of period (EUR million)
-------------------------------------------------------------------------------- | | 3/2010 | 3/2009 | change, | 12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Building and Industrial | 964.2 | 1,048.3 | -8 | 850.4 | | Services | | | | | -------------------------------------------------------------------------------- | Construction Services Finland | 905.4 | 819.8 | 10 | 1,007.5 | -------------------------------------------------------------------------------- | International Construction | 1,013.2 | 1,239.1 | -18 | 960.1 | | Services 1) | | | | | -------------------------------------------------------------------------------- | Other items | -45.8 | -62.1 | -26 | -44.4 | -------------------------------------------------------------------------------- | YIT's segments total | 2,837.0 | 3,045.0 | -7 | 2,773.6 | -------------------------------------------------------------------------------- | IFRIC 15 adjustments | 315.5 | 211.3 | 49 | 209.7 | -------------------------------------------------------------------------------- | YIT Group, total | 3,152.5 | 3,256.3 | -3 | 2,983.3 | --------------------------------------------------------------------------------
1) The order backlog includes housing projects whose construction was suspended in Russia in October 2008 due to market uncertainties. At the end of March 2010, the projects that were still suspended included 1,467 (2,485) residential units and the value of the projects amounted to EUR 235 million (3/09: EUR 322 million) in the order backlog.
UNUSUAL ITEMS AFFECTING OPERATING PROFIT (EUR million)
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Building and Industrial | 0 | - | - | -3.2 | | Services | | | | | -------------------------------------------------------------------------------- | Total | 0 | - | - | -3.2 | --------------------------------------------------------------------------------
On September 30, 2009, the court of arbitration issued its ruling in the dispute concerning the mechanical installation contract YIT carried out for Neste Oil's Porvoo oil refinery. The effect of the ruling on Building and Industrial Services' operating profit for 7-9/2009 was EUR -3.2 million.
ACQUIRED AND DIVESTED BUSINESSES (EUR million)
During January-March, YIT made three minor acquisitions in the Building and Industrial Services segment in Sweden, one in Norway and one in Denmark. The acquired companies were in Sweden Br Björk Elservice, Fristad rör & el AB and G:sson Teleteknik AB, in Norway Ugelvik Nesset and in Denmark Brdr. Petersens Eftf. A/S. In International Construction Services, YIT increased its holding in YIT Don to 100 per cent in January.
During the review period there were no divestments.
-------------------------------------------------------------------------------- | | 1-3/2010 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Consideration | | -------------------------------------------------------------------------------- | Paid in cash | 3.5 | -------------------------------------------------------------------------------- | Contingent consideration | 0.3 | -------------------------------------------------------------------------------- | Total consideration, transferred | 3.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Acquisition - related costs (expensed) | 0.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Recognised amounts of identifiable assets acquired and | | | liabilities assumed | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash and cash equivalents | 0.7 | -------------------------------------------------------------------------------- | Tangible assets | 0.4 | -------------------------------------------------------------------------------- | Customer relations and contract bases | 2.4 | -------------------------------------------------------------------------------- | Inventories | 0.4 | -------------------------------------------------------------------------------- | Trade and other receivables | 0.9 | -------------------------------------------------------------------------------- | Trade and other payables | -1.0 | -------------------------------------------------------------------------------- | Total identifiable net assets | 3.8 | -------------------------------------------------------------------------------- | Non- controlling interest | 0 | -------------------------------------------------------------------------------- | Goodwill | 0 | -------------------------------------------------------------------------------- | Total entity value | 3.8 | --------------------------------------------------------------------------------
CHANGES IN PROPERTY, PLANT AND EQUIPMENT (EUR million)
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Carrying value at the beginning | 99.8 | 104.6 | -5 | 104.6 | | of period | | | | | -------------------------------------------------------------------------------- | Increase | 4.0 | 4.6 | -13 | 21.5 | -------------------------------------------------------------------------------- | Increase through acquisitions | 0.4 | 0 | 100 | 0.0 | -------------------------------------------------------------------------------- | Decrease | -1.4 | -1.3 | 8 | -3.4 | -------------------------------------------------------------------------------- | Depreciation and value | -5.8 | -5.7 | 2 | -22.9 | | adjustments | | | | | -------------------------------------------------------------------------------- | Reclassification | 1.8 | -1.0 | - | 0.0 | -------------------------------------------------------------------------------- | Carrying value at the end of | 98.8 | 101.2 | -2 | 99.8 | | period | | | | | --------------------------------------------------------------------------------
INVENTORIES (EUR million)
-------------------------------------------------------------------------------- | | 3/2010 | 3/2009 | change, | 12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Raw materials and consumables | 20.1 | 18.5 | 9 | 18.8 | -------------------------------------------------------------------------------- | Work in progress | 667.9 | 774.1 | -14 | 610.0 | -------------------------------------------------------------------------------- | Land areas and plot owing | 581.5 | 581.5 | 0 | 572.1 | | companies | | | | | -------------------------------------------------------------------------------- | Shares in completed housing and | 209.0 | 181.9 | 15 | 224.8 | | real estate companies | | | | | -------------------------------------------------------------------------------- | Advance payments | 47.7 | 56.3 | -15 | 51.5 | -------------------------------------------------------------------------------- | Other inventories | 1.2 | 0.6 | 100 | 0.4 | -------------------------------------------------------------------------------- | Total inventories | 1,527.4 | 1,612.9 | -5 | 1,477.6 | --------------------------------------------------------------------------------
NOTES ON EQUITY
-------------------------------------------------------------------------------- | Share capital and share premium | Number of | Share | Treasury | | reserve | shares | capital | shares (EUR | | | | (EUR | million) | | | | million) | | -------------------------------------------------------------------------------- | January 1, 2010 | 125,078,422 | 149.2 | -10.6 | -------------------------------------------------------------------------------- | March 31, 2010 | 125,078,422 | 149.2 | -10.6 | --------------------------------------------------------------------------------
BORROWINGS (EUR million)
-------------------------------------------------------------------------------- | | Fair | Carrying | Nominal value | | | value | value | | -------------------------------------------------------------------------------- | Bonds in financial statements | 189.2 | 199.9 | 200.0 | | December 31, 2009 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Valuation of the above bonds on | 188.3 | 196.3 | 200.0 | | March 31, 2010 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Bonds raised during the review | | | | | period: | | | | -------------------------------------------------------------------------------- | Fixed-rate bonds | | | | -------------------------------------------------------------------------------- | 1/2010-2015, interest rate 4.823% | 100.4 | 99.8 | 100.0 | | 1) | | | | -------------------------------------------------------------------------------- | Total bonds March 31, 2010 | 288.7 | 296.1 | 300.0 | --------------------------------------------------------------------------------
Terms of the bonds raised during the revenue period in brief: 1) Loan period March 26, 2010 - March 26, 2015, interest payments in arrear at March 26, annually. The bond is unsecured. ISIN code FI4000012067.
CHANGE IN CONTINGENT LIABILITIES AND ASSETS AND COMMITMENTS (EUR million)
-------------------------------------------------------------------------------- | | 3/2010 | 3/2009 | change, | 12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Collateral given for own | | | | | | commitments | | | | | -------------------------------------------------------------------------------- | Corporate mortgages | 29.3 | 29.3 | 0 | 29.3 | -------------------------------------------------------------------------------- | Other pledged assets | 53.2 | - | 100 | 45.2 | -------------------------------------------------------------------------------- | Other commitments | | | | | -------------------------------------------------------------------------------- | Repurchase commitments | 119.3 | 126.2 | -5 | 106.4 | -------------------------------------------------------------------------------- | Operating leases | 308.2 | 340.0 | -9 | 321.9 | -------------------------------------------------------------------------------- | Rental guarantees for clients | 8.6 | 12.3 | -30 | 9.2 | -------------------------------------------------------------------------------- | Other contingent liabilities | 0.5 | 0.8 | -38 | 0.4 | -------------------------------------------------------------------------------- | Guarantees given | 0.2 | - | 100 | - | -------------------------------------------------------------------------------- | Liability under derivative | | | | | | contracts | | | | | -------------------------------------------------------------------------------- | Value of underlying instruments | | | | | -------------------------------------------------------------------------------- | Interest rate derivatives | 308.8 | 239.9 | 29 | 362.3 | -------------------------------------------------------------------------------- | Foreign exchange derivatives | 304.0 | 84.1 | 261 | 83.5 | -------------------------------------------------------------------------------- | Market value | | | | | -------------------------------------------------------------------------------- | Interest rate derivatives | -9.5 | -7.9 | 20 | -5.9 | -------------------------------------------------------------------------------- | Foreign exchange derivatives | -10.0 | 16.5 | - | -9.4 | --------------------------------------------------------------------------------
TRANSACTIONS WITH ASSOCIATED COMPANIES (EUR million)
-------------------------------------------------------------------------------- | | 1-3/2010 | 1-3/2009 | change, | 1-12/2009 | | | | | % | | -------------------------------------------------------------------------------- | Sales to associated companies | 0.4 | 1.0 | -60 | 1.3 | -------------------------------------------------------------------------------- | Purchases from associated | 0.0 | 0.7 | -100 | 0.2 | | companies | | | | | -------------------------------------------------------------------------------- | Trade and other receivables | 0.0 | 0.1 | -100 | 0.1 | -------------------------------------------------------------------------------- | Trade and other liabilities | 0.0 | 0.6 | -100 | 0.1 | --------------------------------------------------------------------------------