Life in Sustainable Cities
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More life in sustainable cities WorldReginfo - 121b8cbb-866d-40d2-a768-03114819f936 Year 2016 / More life / Business operations / Corporate responsibility / Corporate governance / Financial statements / Investors ANNUAL REPORT 2016 Table of contents YEAR 2016 26 Renewed strategy and CORPORATE GOVERNANCE 5 Key figures development programmes 64 Corporate Governance 6 Indicators 28 Financial targets 72 Operating principles and 7 Highlights 29 Capital use and financing solutions control systems 9 President and CEO’s review 32 Megatrends 74 Board of Directors 10 Renewed strategy for 75 Management Board 2017–2019 Our focus areas 13 Operating environment 33 Caring for customers FINANCIAL STATEMENTS 35 Visionary urban 76 Report of the Board of Directors Segment reviews development 98 Consolidated financial statements 14 Housing Finland and CEE 37 Passionate execution 154 Parent company financial statements 15 Housing Russia 39 Inspiring leadership 170 Board of Directors’ proposal 16 Business Premises and for the distribution of distributable Infrastructure Our business segments equity 44 Housing Finland and CEE 171 Auditor’s report MORE LIFE 45 Housing Russia 176 Key financial figures 18 Perspectives on sustainable 46 Business Premises and Infrastructure urban environments INVESTORS 21 Point of view: Urban utopias 47 Risks and risk management 183 YIT aims to create added value then and now for its shareholders CORPORATE RESPONSIBILITY 187 Information for shareholders BUSINESS OPERATIONS 52 Sustainable development at YIT 24 Business model and 54 GRI Index value creation model WE BELIEVE THAT THE URBANISATION TREND WILL CONTINUE AND THAT PEOPLE WILL SEEK TO LIVE IN ATTRACTIVE AREAS AND LOCATIONS WHERE HOMES AND JOBS, SERVICES, HOBBIES AND FUNCTIONAL PUBLIC TRANSPORT MEET IN AN INTERESTING WAY. KARI KAUNISKANGAS, PRESIDENT AND CEO 2 WorldReginfo - 121b8cbb-866d-40d2-a768-03114819f936 Year 2016 / More life / Business operations / Corporate responsibility / Corporate governance / Financial statements / Investors ANNUAL REPORT 2016 YIT in brief YIT creates better living environment by developing and constructing housing, business premises, infrastructure and entire areas. Our vision is to bring more life in sustainable cities. We want to focus on caring for customer, visionary urban development, passionate execution and inspiring Finland leadership. Our growth engine is urban development Russia involving partners. Our operating area covers Finland, Russia, St. Petersburg Estonia Tyumen the Baltic countries, the Czech Republic, Slovakia and Latvia Lithuania Yekaterinburg Poland. Moscow and the Moscow Kazan Poland region Czech Republic Slovakia Rostov- on-Don WATCH THE VIDEO: MORE LIFE We operate in eight countries. In 2016, we launched our first project in Poland, which is our newest operating area. We seek growth particularly from Central Eastern European countries and the growth centres in Finland. 3 WorldReginfo - 121b8cbb-866d-40d2-a768-03114819f936 YEARYear 20162016 / More life / Business operations / Corporate responsibility / Corporate governance / Financial statements / Investors ANNUAL REPORT 2016 YEAR 2016 Key figures 5 Indicators 6 Highlights 7 President and CEO’s review 9 Renewed strategy for 2017–2019 10 Operating environment 13 Segment reviews 14 Housing Finland and CEE 14 Housing Russia 15 Business Premises and Infrastructure 16 ST. PETERSBURG, RUSSIA The job and educational opportunities offered by St. Petersburg attract new residents from other parts of the country, particularly Northern Russia, on a continuous basis. The newcomers require more apartments and new residential areas. 4 4 4 WorldReginfo - 121b8cbb-866d-40d2-a768-03114819f936 YEAR 2016 / More life / Business operations / Corporate responsibility / Corporate governance / Financial statements / Investors ANNUAL REPORT 2016 Key figures Segment reporting, POC 1–12/16 1–12/15 Change Group reporting, IFRS 12/16 12/15 Change Revenue, EUR million 1,783.6 1,651.2 8% Gearing, % 112.3 101.1 Operating profit, EUR million 52.9 65.7 -19% Equity ratio, % 31.2 32.9 Operating profit margin, % 3.0 4.0 Net interest-bearing debt, EUR million 633.1 529.0 20% Adjusted profit, EUR million 79.9 76.0 5% Balance sheet total, EUR million 2,284.0 1,966.6 16% Adjusted profit margin, % 4.5 4.6 Invested capital, EUR million 1,263.4 1,174.3 8% Profit before taxes, EUR million 13.8 27.0 -49% Profit for the review period (attributable to equity holders of the parent company), EUR million 7.4 20.0 -63% Earnings per share, EUR 0.06 0.16 -63% Dividend/share1, EUR 0.22 0.22 DIVIDEND PROPOSAL REVENUE, POC Operating cash flow after investments, EUR million -43.1 183.7 Return on investment (last 12 months), % 4.7 5.3 Equity ratio at end of period, % 35.1 35.5 Order backlog at end of period, EUR million 2,613.1 2,172.9 20% 0.22 € 1,784 Personnel at end of period 5,261 5,340 -1% per share EUR million 1 The figure for 2016 is the Board of Directors' proposal to the AGM REVENUE BY SEGMENT, POC1 1 ADJUSTED OPERATING PROFIT BY SEGMENT, POC, EUR MILLION 2 REVENUE BY GEOGRAPHICAL AREA, POC 3 59.9 11% 74% Housing Finland and CEE, EUR 727.9 Finland, EUR 1,316.0 Housing Finland million 38.1 million and CEE 15% 44% 41% Housing Russia, Russia, EUR 269.0 Housing Russia EUR 267.9 million million Business Premises Business Premises CEE, EUR 198.5 -2.3 and Infrastructure and Infrastructure, million EUR 797.4 million 15% 1 %-shares excluding other items 5 WorldReginfo - 121b8cbb-866d-40d2-a768-03114819f936 YEAR 2016 / More life / Business operations / Corporate responsibility / Corporate governance / Financial statements / Investors ANNUAL REPORT 2016 Indicators ACCESSIBILITY OF SERVICES FROM OUR APARTMENTS YIT'S QUALITY INDICATORS YIT'S SUSTAINABLE URBAN ENVIRONMENTS DISTANCE FROM A GROCERY SHOP INDICATORS 60% 58% Q-FACTOR 8 NUMBER OF EMPLOYEES ACCESSIBILITY OF SERVICES FROM OUR APARTMENTS AT THE END OF YEAR DISTANCE FROM A GROCERY SHOP 35% 100% 32% 92% 88% 87% Q-factor reflects the proportion of consumer 60% 58% customers who have no complaints when the 7% 7% apartment is handed 5,261 over. Flawless handovers 35% less than less than over 32% are a strategic objective 500 m 1,200 m 1,200 m for us. 2014 2015 2016 Goal ACCESSIBILITY2015 OF SERVICES FROM OUR APARTMENTS 7% 7% DISTANCE2016 FROM A GROCERY SHOP less than less than over ACCIDENT FREQUENCY RATE WEIGHTED NPS 4 7 500 m 1,200 m 1,200 m 60% 58% 59% 60% 62% >60% ACCESSIBILITY2015 OF SERVICES FROM OUR APARTMENTS 12 NPS, or Net Promoter Score DISTANCE2016 FROM PUBLIC TRANSPORTATION 35% 10 10 10 (scale -100%....100%), 32% No. of reportable reflects the degree to which 65% accidents at work per customers are prepared to 60% million working hours. recommend the company Our goal is 0 accidents. that has implemented the 7% 7% The number of sick project in question. The leave days caused by score is affected by the 32% less than less than over accidents decreased by proportion of Promoters 500 m 1,200 m 1,200 m 2013 2014 2015 2016 45% during 2016. 2014 2015 2016 Goal and Detractors among all 25% respondents. Weighted NPS has been calculated 10% 2015 from segment specific 7% 2016 results weighted by revenue volumes. less than less than over NUMBER OF TRAINEES 300 m 750 m 750 m AND THESIS WORKERS 2015 DURING 2016 OVER Our biggest impact on the society comes from our products, or apartments, business premises and infrastructure creating urban environment. We 700 2016 follow Sustainable Urban Environments indicators especially in self-developed residential production. The figures include all the apartment building projects in all of our operative countries that have received a start-up decision during the year. 6 WorldReginfo - 121b8cbb-866d-40d2-a768-03114819f936 YEAR 2016 / More life / Business operations / Corporate responsibility / Corporate governance / Financial statements / Investors ANNUAL REPORT 2016 Highlights Kasarmikatu 21 office building in First residential project Flexible Smartti homes launched EUR 300 million financing package central Helsinki in Poland in the market for the Tripla shopping mall project In March, YIT signed a contract for the YIT established its Poland unit in autumn YIT introduced its new affordable and flexible The Tripla project in Pasila, Helsinki, took a demolition of two old office properties and the 2015 to strengthen its presence in the Smartti housing concept in May. The con- significant step forward in June with the construction of a new office building in the CEE countries. The first residential project struction of the first Smartti project began in signing of financing contracts for the heart of Helsinki. The real estate company is in Poland, Nordic Mokotów, started in May Lahti in July. At the end of the year, more than shopping mall, which meant the contracts a joint venture between Ahlström Capital, HGR 2016. Read more 400 Smartti homes were under construction under which the construction of the Mall of Property Partners and YIT. Read more across Finland. Read more Tripla will be carried out in the form of a joint venture became effective. Read more YIT chosen to construct the Helsinki YIT’s largest area project in Slovakia YIT awarded a BREEAM certificate in Tampere light rail project Central Library Oodi started Kazan, Russia implementation contract In July, YIT signed a project management In September, YIT started the first YIT’s residential building in Kazan, Russia, YIT, VR Track and Pöyry signed an agreement contract with the City of Helsinki regarding phase of the Nuppu area development project was awarded a BREEAM certificate for with the City of Tampere in November the construction of the Helsinki Central in Slovakia. With a project value exceeding ecological efficiency in September. It is the regarding the implementation of the Tampere Library. The construction was started in EUR 100 million and more than 1,000 apart- first building in the Kazan property market to light rail project.