YIT announces new strategy and financial targets for 2025-2029, introduces a new segment structure
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- Stock Exchange Release
- 04.04.2018 14:00 CET
YIT publishes pro forma financial information for 2016 and 2017
YIT Corporation Stock Exchange Release April 4, 2018 at 3:00 p.m.
YIT publishes pro forma financial information for 2016, 2017 and for each quarter of 2017. YIT has prepared the following unaudited pro forma financial information to illustrate the effects of the merger of YIT and Lemminkäinen to its results of operations and financial position and to facilitate the comparability of the combined company’s financial information. Pro forma financial information includes key figures, income statement and balance sheet as well as notes to pro forma financial information that explains the basis of presentation and segment information.
The merger of YIT and Lemminkäinen was completed on February 1, 2018, creating the largest construction company in Finland and a major player in Northern Europe. The combined company’s pro forma revenue was EUR 3,862.5 million and adjusted pro forma operating profit was EUR 138.9 million in 2017.
The unaudited pro forma financial information is based on the historical financial information of YIT and Lemminkäinen presented in accordance with IFRS adjusted for the impact of the merger. This unaudited pro forma financial information assumes the new segment reporting structure and the reporting practices adopted by YIT at the effective date of the merger.
Residential sales
YIT reports residential sales in units by market areas for Finland, CEE countries and Russia. The sold apartments have been divided by sales from projects initially started to consumers and projects started to investors. Sales from projects initially started to consumers comprise also sales from projects initially started to consumers with separate units sold to institutional investors. The number sales of these units have also been reported separately. Sales from projects started to investors comprise sales of whole projects to housing funds or other institutional players. YIT does not report the number of apartments from residential contracting. The presented residential sales figures are based on historical figures reported by YIT and Lemminkäinen and they are not a part of pro forma financial figures.
In the CEE countries, YIT improves its capital efficiency by selling residential projects to YCE Housing I fund. The projects sold to the fund, which was established during the last quarter of 2016, have been reported as investor sales. YIT acts as an estate agent for the fund and sells the apartments from the projects owned by the fund to consumers.
The reporting practices of the merged companies and especially the grouping into consumer and investor sales have been harmonised as a part of the unification of reporting. The principles used earlier have differed somewhat from each other and therefore the consumer sales of the first quarter 2017 differ slightly from the information published in the Investor news, March 16, 2018. The specified apartment sales figures for the first quarter will be published in connection with the first quarter 2018.
| Annual | Additional quarterly information | |||||
| Units | 1–12/17 | 1–12/16 | 10–12/17 | 7–9/17 | 4–6/17 | 1–3/17 |
| Finland | ||||||
| of which initially started to consumers, YIT* |
2,156 | 1,838 | 520 | 539 | 484 | 613 |
| investors, YIT | 830 | 892 | 284 | 28 | 305 | 213 |
| Total, YIT | 2,986 | 2,730 | 804 | 567 | 789 | 826 |
| of which initially started to consumers, Lemminkäinen** |
1,344 | 1,003 | 403 | 362 | 267 | 312 |
| investors, Lemminkäinen | 234 | 235 | 42 | 77 | 71 | 44 |
| Total, Lemminkäinen | 1,578 | 1,238 | 445 | 439 | 338 | 356 |
| Total | 4,564 | 3,968 | 1,249 | 1,006 | 1,127 | 1,182 |
| CEE | ||||||
| consumers, YIT | 919 | 957 | 201 | 216 | 252 | 250 |
| investors, YIT | 694 | 240 | 342 | 246 | 0 | 106 |
| Total | 1,613 | 1,197 | 543 | 462 | 252 | 356 |
| consumer sales from the projects earlier sold to investors*** |
253 | 0 | 107 | 50 | 66 | 30 |
| Russia | ||||||
| sold, YIT | 2,894 | 3,523 | 952 | 812 | 584 | 546 |
| sold, Lemminkäinen | 5 | 49 | - | 1 | 3 | 1 |
| Total | 2,899 | 3,572 | 952 | 813 | 587 | 547 |
* Includes apartments sold to investors in bundles: 1-12/17: 226 units; 1-12/16: 242 units; 10-12/17: 35 units; 7-9/17: 64 units; 4-6/17: 23 units; 1-3/17: 104 units
** Includes apartments sold to investors in bundles: 1-12/17: 261 units; 1-12/16: 241 units; 10-12/17: 77 units; 7-9/17: 66 units; 4-6/17: 30 units; 1-3/17: 88 units
*** Apartments sold to customers in the projects that YIT has earlier sold to YCE Housing I fund and reported them then as investor sales
Pro forma performance related key figures for the years 2017 and 2016 and quarters 2017
| Annual | Additional quarterly information | |||||
| EUR million | 1–12/17 | 1–12/16 | 10–12/17 | 7–9/17 | 4–6/17 | 1–3/17 |
| Revenue | 3,862.5 | 3,387.0 | 1,123.6 | 1,059.5 | 983.4 | 696.0 |
| Operating profit | 77.4 | 73.8 | 37.1 | 60.1 | 32.6 | -52.4 |
| Operating profit margin, % | 2.0% | 2.2% | 3.3% | 5.7% | 3.3% | -7.5% |
| Adjusted operating profit | 138.9 | 89.8 | 60.4 | 66.1 | 39.5 | -27.1 |
| Adjusted operating profit margin, % | 3.6% | 2.6% | 5.4% | 6.2% | 4.0% | -3.9% |
| Earnings per share – basic, EUR | 0.13 | 0.14 | 0.05 | 0.21 | 0.09 | -0.23 |
| Adjusted earnings per share, EUR | 0.35 | 0.18 | 0.14 | 0.23 | 0.11 | -0.12 |
| Order backlog at the end of period | 4,218.3 | 4,313.4 | 4,218.3 | 4,378.9 | 4,617.1 | 4,655.7 |
Pro forma capital structure related key figures
| As at December 31, 2017 | |
| Interest-bearing net debt, EUR million | 668.5 |
| Gearing*, % | 59.9% |
| Equity ratio, % | 40.2% |
*YIT has changed the definition of gearing on January 1, 2018 to include interest-bearing receivables in the calculation of this key figure. The pro forma gearing for the comparison period is given according to the new definition.
Pro forma segment information
Pro forma segment information has been prepared to reflect the Group’s new segment structure consisting of six reportable segments: Housing Finland and CEE, Housing Russia, Business premises, Infrastructure projects, Paving and Partnership properties. Pro forma segment information is based on historical financial information of YIT and Lemminkäinen prepared under IFRS, adjusted for changes in the composition of the segments, the established new segment Partnership properties and elimination of intercompany items between YIT and Lemminkäinen and new segments.
The Housing Finland and CEE segment consists of YIT’s former Housing Finland and CEE segment and the Finnish residential construction business of Lemminkäinen’s Building Construction Finland segment. Segment’s business comprises of the development and construction of apartments, entire residential areas and leisure-time residences. The segment’s main focus is on self-developed projects and YIT mainly sells the constructed apartments themselves to both consumers and investors. YIT also offers and develops different living services and concepts. The segment’s geographical markets are Finland, the Czech Republic, Slovakia, Poland, Estonia, Latvia and Lithuania.
| Housing Finland and CEE pro forma, EUR million |
1–12/17 | 1–12/16 | 10–12/17 | 7–9/17 | 4–6/17 | 1–3/17 |
| Revenue | 1,156.2 | 929.4 | 270.7 | 329.1 | 298.2 | 258.3 |
| Revenue from external customers | 1,156.1 | 929.3 | 270.7 | 329.1 | 298.2 | 258.2 |
| Revenue Group internal | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 |
| Depreciation, amortisation and impairment | -1.6 | -2.5 | -0.4 | -0.5 | -0.4 | -0.4 |
| Operating profit | 78.1 | 38.5 | 10.4 | 33.2 | 25.9 | 8.5 |
| Operating profit margin, % | 6.8% | 4.1% | 3.9% | 10.1% | 8.7% | 3.3% |
| Adjusting items | 4.9 | - | 4.9 | - | - | - |
| Adjusted operating profit | 83.0 | 38.5 | 15.3 | 33.2 | 25.9 | 8.5 |
| Adjusted operating profit margin, % | 7.2% | 4.1% | 5.7% | 10.1% | 8.7% | 3.3% |
| Order backlog at the end of the period | 1,580.1 | 1,378.5 | 1,580.1 | 1,438.8 | 1,521.4 | 1,434.1 |
The table below presents the segment’s business according to the percentage of completion (POC) based reporting which is additional information used by the management to follow the development of the segment’s business.
| Housing Finland and CEE pro forma, EUR million |
1–12/17 | 1–12/16 | 10–12/17 | 7–9/17 | 4–6/17 | 1–3/17 |
| Revenue (POC) | 1,185.9 | 1,045.0 | 299.1 | 278.8 | 281.7 | 326.2 |
| Operating profit (POC) | 96.6 | 73.5 | 20.1 | 27.3 | 25.8 | 23.4 |
| Operating profit margin (POC), % | 8.1% | 7.0% | 6.7% | 9.8% | 9.2% | 7.2% |
| Adjusting items (POC) | 4.9 | - | 4.9 | - | - | - |
| Adjusted operating profit (POC) | 101.5 | 73.5 | 25.0 | 27.3 | 25.8 | 23.4 |
| Adjusted operating profit margin (POC), % | 8.6% | 7.0% | 8.4% | 9.8% | 9.2% | 7.2% |
| Order backlog at the end of the period (POC) | 1,337.4 | 1,148.4 | 1,337.4 | 1,245.6 | 1,298.9 | 1,381.1 |
The Housing Russia segment consists of YIT’s former Housing Russia segment and Lemminkäinen’s residential construction and property management business in Russia. Segment’s business comprises development and construction of apartments and entire residential areas in Russia. YIT has operated in Russia over 55 years. YIT pursues both self-developed projects and contracting. YIT focuses on self-developed housing construction, while the role of providing maintenance, property management and additional services has increased during the recent years, in respect of residential projects.
| Housing Russia pro forma, EUR million |
1–12/17 | 1–12/16 | 10–12/17 | 7–9/17 | 4–6/17 | 1–3/17 |
| Revenue | 421.0 | 287.8 | 200.3 | 45.1 | 107.1 | 68.5 |
| Revenue from external customers | 421.0 | 287.8 | 200.3 | 45.1 | 107.1 | 68.5 |
| Revenue Group internal | - | - | - | - | - | - |
| Depreciation, amortisation and impairment | -1.1 | -3.2 | -0.2 | -0.4 | -0.2 | -0.2 |
| Operating profit | 1.7 | -37.6 | 15.3 | -6.9 | -1.5 | -5.2 |
| Operating profit margin, % | 0.4% | -13.0% | 7.6% | -15.2% | -1.4% | -7.6% |
| Adjusting items | 3.2 | 30.5 | 3.2 | - | - | - |
| Adjusted operating profit | 4.9 | -7.1 | 18.5 | -6.9 | -1.5 | -5.2 |
| Adjusted operating profit margin, % | 1.2% | -2.5% | 9.2% | -15.2% | -1.4% | -7.6% |
| Order backlog at the end of the period | 448.6 | 702.1 | 448.6 | 576.2 | 585.4 | 729.9 |
The table below presents the segment’s business according to the percentage of completion (POC) based reporting which is additional information used by the management to follow the development of the segment’s business.
| Housing Russia pro forma, EUR million |
1–12/17 | 1–12/16 | 10–12/17 | 7–9/17 | 4–6/17 | 1–3/17 |
| Revenue (POC) | 320.3 | 284.1 | 115.2 | 66.2 | 73.3 | 65.6 |
| Operating profit (POC) | 1.4 | -35.3 | 2.1 | 0.1 | 1.1 | -2.0 |
| Operating profit margin (POC), % | 0.4% | -12.4% | 1.8% | 0.2% | 1.5% | -3.0% |
| Adjusting items (POC) | 3.2 | 30.5 | 3.2 | - | - | - |
| Adjusted operating profit (POC) | 4.6 | -4.8 | 5.3 | 0.1 | 1.1 | -2.0 |
| Adjusted operating profit margin (POC), % | 1.4% | -1.7% | 4.6% | 0.2% | 1.5% | -3.0% |
| Order backlog at the end of the period (POC) | 396.1 | 542.2 | 396.1 | 440.4 | 467.3 | 562.5 |
The Business premises segment consists of the business premises construction and project development businesses that were previously under YIT’s Business premises and Infrastructure segment, along with the commercial construction, project development and commercial property and facilities management businesses of Lemminkäinen’s Building Construction Finland segment. The majority of the revenue comes from the Finnish operations. In this segment, YIT pursues both self-developed projects and contracting. For self-developed projects YIT acquires users and tenants for the premises, and develops, constructs and divests the premises. Self-developed projects are typically offices, retail premises or logistics or care sector premises. In contracting, projects are typically public facilities, industrial properties and business premises. In addition to new construction, YIT carries out renovation projects. The segment’s geographical markets are Finland, Estonia, Latvia, Lithuania and Slovakia.
| Business premises pro forma, EUR million |
1–12/17 | 1–12/16 | 10–12/17 | 7–9/17 | 4–6/17 | 1–3/17 |
| Revenue | 902.2 | 825.9 | 279.7 | 203.5 | 220.1 | 198.9 |
| Revenue from external customers | 894.2 | 818.1 | 278.5 | 201.4 | 217.5 | 196.8 |
| Revenue Group internal | 8.0 | 7.8 | 1.2 | 2.0 | 2.6 | 2.1 |
| Depreciation, amortisation and impairment | -0.2 | -0.2 | -0.0 | -0.0 | -0.0 | -0.0 |
| Operating profit | 45.6 | 27.5 | 28.9 | 8.0 | 6.8 | 1.8 |
| Operating profit margin, % | 5.1% | 3.3% | 10.3% | 4.0% | 3.1% | 0.9% |
| Adjusting items | 5.9 | - | 5.9 | - | - | - |
| Adjusted operating profit | 51.5 | 27.5 | 34.7 | 8.0 | 6.8 | 1.8 |
| Adjusted operating profit margin, % | 5.7% | 3.3% | 12.4% | 4.0% | 3.1% | 0.9% |
| Order backlog at the end of the period | 1,306.8 | 1,365.7 | 1,306.8 | 1,380.5 | 1,476.0 | 1,437.2 |
The Infrastructure projects segment consists of the Infra Services division of YIT’s Business premises and Infrastructure segment, excluding the Maintenance unit, and Lemminkäinen’s Infra Projects segment. The operations include construction of roads, bridges, railway and metro stations and ports and parking facilities as well as energy, water supply and industrial plants. YIT also offers wind power plant foundation solutions with related services and maintenance. YIT also quarries tunnels and mines and reinforce the soil using different methods. The segment operates in Finland, Sweden, Norway, Estonia, Latvia and Lithuania.
| Infrastructure projects pro forma, EUR million |
1–12/17 | 1–12/16 | 10–12/17 | 7–9/17 | 4–6/17 | 1–3/17 |
| Revenue | 686.0 | 676.6 | 202.7 | 186.2 | 175.2 | 121.9 |
| Revenue from external customers | 651.2 | 628.4 | 191.0 | 179.4 | 166.0 | 114.7 |
| Revenue Group internal | 34.8 | 48.2 | 11.7 | 6.7 | 9.2 | 7.2 |
| Depreciation, amortisation and impairment | -13.3 | -13.9 | -3.2 | -3.5 | -3.3 | -3.3 |
| Operating profit | 17.4 | 27.7 | 5.8 | 7.6 | 5.2 | -1.3 |
| Operating profit margin, % | 2.5% | 4.1% | 2.9% | 4.1% | 3.0% | -1.1% |
| Adjusting items | - | - | - | - | - | - |
| Adjusted operating profit | 17.4 | 27.7 | 5.8 | 7.6 | 5.2 | -1.3 |
| Adjusted operating profit margin, % | 2.5% | 4.1% | 2.9% | 4.1% | 3.0% | -1.1% |
| Order backlog at the end of the period | 471.0 | 467.6 | 471.0 | 471.7 | 553.7 | 549.4 |
The Paving segment consists of Lemminkäinen’s Paving segment and YIT’s Maintenance unit. The operations of the segment include paving and mineral aggregate production as well as stabilisation, milling and waterproofing. The segment’s operations also include road and street network maintenance. The company cooperates with its customers to produce pavements for especially demanding works, such as airport runways with special quality demands. Approximately half of the segment’s revenue originate from public procurement by states and municipalities. Paving and mineral aggregate production are capital-intensive businesses that tie capital to machinery and equipment, land areas and current assets. The Paving segment operates in Finland, Sweden, Norway, Denmark and Russia.
| Paving pro forma, EUR million |
1–12/17 | 1–12/16 | 10–12/17 | 7–9/17 | 4–6/17 | 1–3/17 |
| Revenue | 768.9 | 753.1 | 191.2 | 312.7 | 202.3 | 62.7 |
| Revenue from external customers | 740.3 | 721.2 | 183.2 | 304.7 | 194.8 | 57.7 |
| Revenue Group internal | 28.6 | 31.9 | 8.0 | 8.0 | 7.5 | 5.0 |
| Depreciation, amortisation and impairment | -22.1 | -21.4 | -5.5 | -8.8 | -5.8 | -2.0 |
| Operating profit | 4.7 | 23.9 | -6.9 | 27.4 | 9.1 | -25.0 |
| Operating profit margin, % | 0.6% | 3.2% | -3.6% | 8.8% | 4.5% | -39.9% |
| Adjusting items | - | - | - | - | - | - |
| Adjusted operating profit | 4.7 | 23.9 | -6.9 | 27.4 | 9.1 | -25.0 |
| Adjusted operating profit margin, % | 0.6% | 3.2% | -3.6% | 8.8% | 4.5% | -39.9% |
| Order backlog at the end of the period | 411.8 | 399.6 | 411.8 | 511.8 | 480.5 | 504.9 |
Partnership properties segment was established on January 1, 2018. The income for the segment derives from investments, i.e. from rental income (cash flow from rents) and increased value of the assets. Additionally, the segment will potentially have revenue from different service agreements related to managing or sourcing the assets it partially owns. Until the beginning of 2018, the income has been close to zero from the assets transferred under this segment. The adjusted operating profit amounted to EUR -0.5 million for the year ended December 31, 2017.
The objective of the segment is to improve visibility on the reporting of partnership projects, improve the capability of executing large projects together with partners and to enable the creation of a project portfolio of rental cash flow. In the long run, YIT’s aim is to continue its practice of divesting its holdings to final investors at the time it sees fit.
Appendix: Unaudited pro forma financial information
For further information, please contact:
Hanna Jaakkola, Vice President, Investor Relations, YIT Corporation, tel. +358 40 5666 070, hanna.jaakkola@yit.fi
Ilkka Salonen, Chief Financial Officer, YIT Corporation, tel. +358 45 359 4434, ilkka.salonen@yit.fi
YIT CORPORATION
Hanna Jaakkola
Vice President, Investor Relations
Distribution: Nasdaq Helsinki, major media, www.yitgroup.com
YIT is the largest Finnish and significant North European construction company. We develop and build apartments, business premises and entire areas. We are also specialised in demanding infrastructure construction and paving. Together with our customers our 10,000 professionals are creating more functional, more attractive and more sustainable cities and environments. We work in 11 countries: Finland, Russia, Scandinavia, the Baltic States, the Czech Republic, Slovakia and Poland. The new YIT was born when over 100-year-old YIT Corporation and Lemminkäinen Corporation merged on February 1, 2018. Our pro forma revenue for 2017 was over EUR 3.8 billion. YIT Corporation's share is listed on Nasdaq Helsinki Oy. www.yitgroup.com