Q4
Financial Statements Bulletin 2017 Kari Kauniskangas, President and CEO Contents
1 Group development in Q4/2017
2 Housing Finland and CEE
3 Housing Russia
4 Business Premises and Infrastructure
5 Financial position and key ratios
6 The year 2017
7 Lemminkäinen Financial Statements Bulletin
8 Outlook and guidance
9 Merger
10 Appencides
2 Financial Statements Bulletin 2017 1
Group development in Q4/2017
Lauttis Shopping Centre Helsinki, Finland Key messages in Q4/2017
• Successful quarter on many angles, one of the all time high in profitability on group level
• The closing of co-owned Kasarmikatu 21 office property sale, among others, boosted the profitability of Business Premises and Infrastructure segment
• In Housing Finland and CEE, profitability was on a very good level
• In Housing Russia, apartment sales and profitability improved and profitability was on a satisfactory level
• On January 26, the FCCA approved the merger of YIT and Lemminkäinen unconditionally, and it was completed today Helsingin Fredika residential project Helsinki, Finland
4 Financial Statements Bulletin 2017 Group Profitability on a record high level in Q4
• Revenue increased by 8% in Q4 and by 7% in 2017 • Profitability improved in all segments and was one of the strongest in YIT’s history • Order backlog remained stable on a high level
Revenue and adjusted operating profit margin (EUR million, %) Order backlog (EUR million)
2016: EUR 1,784 million, 4.5% 2017: EUR 1,909 million, 6.4%
8% 2% 2,528 2,569 554 11.00% 514 464 479 444 458 9.00% 417 10.2% 362 5.6% 7.00% 58% 59% 4.3% 5.5% 3.5% 5.00% 5.8% 4.3% 3.00% 3.3% 1.00% 42% 41% -1.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 9/2017 12/2017
Revenue Adjusted operating profit margin Unsold Sold
All figures according to segment reporting (POC) Note: The adjusted operating profit margin does not include material reorganisation costs, impairment or other items impacting comparability 5 Financial Statements Bulletin 2017 EBIT-bridge Q4/2016–Q4/2017
• The closing of co-owned Kasarmikatu 21 office property sale improved the profitability of the Business Premises and Infrastructure segment • In Housing Russia, profitability improved due to increased sales volumes and a start-up in Moscow • Strong consumer sales boosted the profitability in the Housing Finland and CEE segment • Items excluded from adjusted operating profit include EUR 2.0 million costs related to the merger preparations and EUR 14.0 million related to asset revaluations
Adjusted operating profit (EUR million), change Q4/2016–Q4/2017: 97%
56.4 -3.7 0.2 19.6
1.6 0.2 1.7 28.7 7.1 -0.4
YIT Group Volume Profitability Volume Profitability Volume Profitability Other items FX-impact YIT Group Q4/2016 Q4/2017 Housing Finland and CEE Housing Russia Business Premises and Infrastructure
6 Financial Statements Bulletin 2017 2
Housing Finland and CEE
Stein II residential project Bratislava, Slovakia Housing Finland and CEE Operating environment in Finland in Q4
• Consumer confidence was on a record • Consumer demand was on a good • Mortgage interest rates stayed on a low high level level, no signs of overheating, supply level and margins continued to on a high level decrease • Residential investors were more selective, demand focused especially on • Demand for larger apartments improved • The volume of new housing loans capital region, Turku and Tampere in addition to the good demand for increased y-o-y affordable apartments
Prices of old apartments New drawdowns of mortgages and average interest Consumer confidence (index 2010=100) rate (EUR million, %)
30 120 2,000 5.0 1,800 25 115 1,600 4.0 20 1,400 15 110 1,200 3.0 1,000 10 105 800 2.0 5 600 100 0 400 1.0 200 -5 95 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 0 0.0 2013 2014 2015 2016 2017 Consumer confidence Finland Capital region New drawdowns of mortgages, left axis Long-term average Rest of Finland Average interest rate of new loans, right axis
Sources: Statistics Finland and Bank of Finland
8 Financial Statements Bulletin 2017 Housing Finland and CEE Operating environment in the CEE countries in Q4
• Residential demand was on a good level • Prices of new apartments increased • Interest rates of mortgages remained in all countries slightly on average on a low level • Shortage of resources caused cost • Consumers’ access to financing pressure especially in the Czech remained good Republic and Slovakia
Consumer confidence House price index, new dwellings (2010=100) Average interest rate of mortgages (%)
10 220 7.0 5 200 6.0 0 -5 180 5.0 -10 160 4.0 -15 -20 140 3.0 -25 120 2.0 -30 100 -35 1.0 -40 80 0.0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Estonia Latvia Lithuania The Czech Republic Slovakia Poland
Sources: European Commission, Eurostat and National Central Banks
9 Financial Statements Bulletin 2017 Housing Finland and CEE Order backlog increased close to EUR 1 billion
• Revenue remained stable Q4, and improved by 15% in 2017 • In Finland, the lower completion rate of sold apartments had a negative impact on revenue recognition • Order backlog increased by 11% q/q
Revenue (EUR million) Order backlog (EUR million)
2016: EUR 728 million 2017: EUR 835 million
11% -2% 985 245 890 210 200 206 185 184 166 167
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 9/2017 12/2017 2016 2017
All figures according to segment reporting (POC)
10 Financial Statements Bulletin 2017 Housing Finland and CEE Operating profit improved clearly in Q4
• Profitability was excellent in Q4, and also 9.8% in 2017 • Adjustment items of EUR 4.9 million related to revaluation of several plots or balance sheet items booked in Q4 • ROCE on a good level
Adjusted operating profit and adjusted operating profit margin (EUR million, %) Return on capital employed1 (EUR million, %)
2016: EUR 59.9 million, 8.2% 2017: EUR 76.8 million, 9.8%
37% 500.0 453.5 25.0% 431.6 25.1 450.0 417.7 397.3 393.9 400.0 20.0% 17.7% 17.4% 19.4 19.8 350.0 16.9% 18.4 17.5 15.8% 15.8 12.2% 300.0 13.4% 15.0% 12.9 12.9 9.9% 9.5% 250.0 8.5% 8.7% 7.9% 200.0 10.0% 7.7% 7.7% 150.0 75.0 76.8 100.0 59.9 66.4 70.4 5.0% 50.0
0.0 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 12/2016 3/2017 6/2017 9/2017 12/2017 2016 2017 Capital employed Operating profit, 12 month rolling Adjusted operating profit Adjusted operating profit margin Return on capital employed All figures according to segment reporting (POC). 1As of the beginning of 2017, in order to clarify its financial figures terminology, YIT starts to use the terms Capital Employed and Return on Capital Employed (ROCE) for segment reporting instead of previously used Operative Invested Capital and Return on Operative Invested Capital (ROI). The formulas for these financial figures remain untouched. 11 Financial Statements Bulletin 2017 Housing Finland and CEE Sales and start-ups in Finland in Q4
Sold apartments (units) • In 2017, consumer sales increased by 2016: 2,730 2017: 2,986 21% • In Q4, share of units sold to consumers 858 826 789 804 705 was 60% (Q4/2016: 72%) 612 555 240 567 317 328 319 332 92 • 35 apartments sold in bundles to investors 298 264 618 509 461 475 485 (Q4/2016: 72 units) 314 373 291
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • The first apartments in Tripla started up, and were pre-booked in just hours 2016 2017 To consumers To investors (funds) • In January, estimated sales to consumers Apartment start-ups (units) are around 120 units (1/2017: around 150 units) 2016: 2,877 2017: 3,415
1081 964 817 819 790 305 657 284 262 185 584 213 580 277 168 28 776 555 634 577 552 680 380 416
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 To consumers To investors (funds)
12 Financial Statements Bulletin 2017 Housing Finland and CEE Sales and start-ups in the CEE countries in Q4
Sold apartments (units) • Sales on the previous year’s level in Q4, 2016: 1,197 2017: 1,613 increased by 35% in 2017 560 543 462 • Start-ups increased by 74% from previous 240 356 year in Q4 342 252 246 201 235 201 106 • Four projects in Bratislava, Slovakia and 320 201 235 201 250 252 216 201 one project in Prague, the Czech Republic sold to YCE Housing I fund, 342 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 apartments in total 2016 2017 Consumer sales Co-operative or housing fund • In January, estimated sales to consumers Apartment start-ups (units) are around 80 units (1/2017: around 80 units) 2016: 1.300 2017: 1.545 489 402 429 350 364 316 286 209 246 164 489 402 316 286 90 350 200 119 183
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 Consumer start-ups Co-operative or housing fund
13 Financial Statements Bulletin 2017 Housing Finland and CEE Apartment inventory over 7,000 units
• Number of apartments under Apartment inventory (units) construction increased from the 7,010 previous quarter due to high 6,814 6,811 6,432 231 number of start-ups 6,237 262 238 6,152 6,779 5,863 5,971 282 6,552 6,573 335 352 • Number of unsold completed 381 352 6,150 5,817 5,885 apartments continued to decrease 5,482 5,619 • The share of CEE of the sales portfolio (units) 36% (12/2016: 63% 60% 61% 61% 47%) 57% 59% 59% 52%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017
Under construction Completed, unsold Sales rate, %
14 Financial Statements Bulletin 2017 3
Housing Russia
Harmony residential project Kazan, Russia Housing Russia Operating environment in Q4
• Consumers continued to be cautious • Consumer demand for housing is modest, • Mortgage interest rates for new despite of the improvement of the but slightly improved in Moscow and St. apartments continued to decrease and Russian economy Petersburg are below the level of 10%
• Consumer purchase power slightly • Residential prices remained stable on • The key rate cuts further increased improving from a low level average, supply still on a high level expectations of a decrease in interest rates
Prices of new apartments Mortgage stock and average interest rate EUR/RUB exchange rate (index 2012=100) (RUB billion, %) 135 6,000 16.0 95 130 14.0 5,000 85 125 12.0 120 4,000 75 10.0 115 3,000 8.0 65 110 6.0 55 105 2,000 100 4.0 45 1,000 95 Thousands 2.0 35 90 0 0.0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Moscow Yekaterinburg Mortgage stock, left axis Rostov-on-Don Kazan Average interest rate of new loans, right axis St. Petersburg
Sources: Bloomberg, YIT and Central Bank of Russia
16 Financial Statements Bulletin 2017 Housing Russia Revenue increased in Q4
• Revenue was supported by partial sale of Novo Orlosvky plot and improved apartment sales • RUB 1.1 billion (EUR 16 million) related to Novo Orlovsky plot sale recognised as revenue and cash flow in Q4, total value of the deal RUB 2.5 billion (EUR 37 million) • Order backlog declined q-o-q due to low start-ups
Revenue (EUR million) Order backlog (EUR million)
2016: EUR 268 million 2017: EUR 268 million
-7% 14% 374 346
96 84 76 59 58 63 49 52
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 9/2017 12/2017 2016 2017
All figures according to segment reporting (POC)
17 Financial Statements Bulletin 2017 Housing Russia Operating profit improved in Q4
• Profitability was satisfactory, driven by improved sales volumes especially in St. Petersburg and Moscow as well as improved gross margins • The partial sale of Novo Orlovsky plot didn’t have an impact on profit, minor cost related to book value revaluations booked in Q4 • ROCE on previous quarter’s level
Adjusted operating profit and adjusted operating profit margin1 (EUR million, %) Return on capital employed2 (EUR million, %)
2016: EUR -2.3 million, -0.9% 2017: EUR 6.3 million, 2.4%
500 25.0% 121% 430.9 405.1 398.7 416.2 396.8 20.0% 6.1 400
15.0% 300
2.8 10.0% 2.1% 1.2% 6.4% 0.9% 200 3.3% 1.3 5.0% 0.7 -3.1% 0.6 0.8% 0.8% 100 -4.6% 0.0% -6.3% -29.3 -28.0 -24.0 3.0 3.2 0 -1.8 -5.0% -2.7 -3.1 -6.9% -6.1% -100 -7.6% -10.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 12/2016 3/2017 6/2017 9/2017 12/2017 2016 2017 Capital employed Operating profit, 12 month rolling Adjusted operating profit Adjusted operating profit margin Return on capital employed All figures according to segment reporting (POC). 1EUR 27 million cost booked in Q3/2016 result from Housing Russia 2As of the beginning of 2017, in order to clarify its financial figures terminology, YIT starts to use the terms Capital Employed and Return on Capital Employed (ROCE) for segment reporting instead of previously used Operative Invested Capital and Return on Operative Invested Capital (ROI). The formulas for these financial figures remain untouched. 18 Financial Statements Bulletin 2017 Housing Russia Sales and start-ups in Q4
Sold apartments (units) and share of sales financed with mortgage (%) • Number of sold units increased by 2016: 3,523 (51%) 2017: 2,894 (51%) 3% y-o-y
952 892 880 925 826 812 • No changes in price lists
546 584 • Best quarter in two years 54% 56% 50% 52% 49% 52% 48% 51% • Start-ups were on a low level
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 • Share of sales financed with Sold apartments Financed with mortgages, % mortgages increased to 51% Apartment start-ups (units) 2016: 2,782 2017: 2,525 • In January, consumer sales estimated to be almost 200 units (1/2017: 1,125 around 150 units) 782 741 761 486 490 533 389
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017
19 Financial Statements Bulletin 2017 Housing Russia The production volume (units) continued to decrease in Q4
• Number of apartments under Apartment inventory (units) construction continued to decrease 8,895 9,030 8,255 345 449 366 7,040 7,041 8,685 6,123 6,291 • Number of completed unsold 8,446 7,889 414 278 5,601 537 875 6,626 6,763 973 apartments increased due to high 49% 49% 43% 5,586 5,416 37% 4,628 number of projects handed over 33% 30% 30% 25%
• At the end of December, YIT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Service was responsible for the 2016 2017 Under construction Completed, unsold Sales rate, % maintenance and the living services of over 34,000 apartments Apartments under construction by area (units) (9/2017: over 31,000) and in total 8,446 8,685 over 42 000 clients (incl. parking 7,889 6,626 6,763 spaces and business premises) 2,886 3,117 2,452 5,586 5,416 1,660 1,936 4,628 2,349 2,357 2,481 2,147 2,325 2,695 2,556 2,019 2,068 1,720 3,211 3,211 2,956 2,271 2,271 2,021 1,371 1,371 588 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 St. Petersburg Moscow Russian regions
20 Financial Statements Bulletin 2017 4
Business Premises and Infrastructure
Jokeri Light Rail project Helsinki–Espoo, Finland Business Premises and Infrastructure Operating environment in Q4
• Investor demand for business premises in • In Finland, the positive overall market • Investor demand for business premises prime growth centres was on a good level sentiment supported private investments was good in the Baltic countries and in Finland Slovakia and rental levels stayed stable • The Finnish business premises tender • Yield requirements decreased in HMA market and infrastructure market were • Tender market remained mainly stable in and rents of prime properties increased in active especially in the capital region and the Baltic countries Helsinki CBD growth centres
Volume of new construction in Finland Retail trade confidence in the Baltic countries and Confidence indicators in Finland (index 2010=100) Slovakia 30 140 25 20 130 20 120 10 15 110 10 0 100 5 -10 90 80 0 -20 70 -5 -30 60 -10 -40 50 -15 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Manufacturing Construction Commercial and office premises Estonia Latvia Public service premises Lithuania Slovakia Services Retail trade Industrial and warehouse
Sources: EK Confederation of Finnish Industries, Statistics Finland and European Commission
22 Financial Statements Bulletin 2017 Business Premises and Infrastructure Revenue increased in Q4
• Revenue increased due to closing of co-owned Kasarmikatu 21 office property sale leading also to recognition of earlier eliminated revenue and the closing of Dixi office project sale • Order backlog on previous quarter’s level
Revenue (EUR million) Order backlog (EUR million)
2016: EUR 797 million 2017: EUR 815 million
-2% 15% 1,264 1,238
255 223 222 203 197 179 184 149
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 9/2017 12/2017 2016 2017
All figures according to segment reporting (POC)
23 Financial Statements Bulletin 2017 Business Premises and Infrastructure Operating profit on an exceptionally high level in Q4
• The closing of co-owned Kasarmikatu 21 office property sale boosted the operating profit and profitability of the segment • Cost of EUR 5.9 million related to revaluation of several plots or balance sheet items in Finland booked in Q4 • Capital employed decreased, ROCE on a very good level
Adjusted operating profit and adjusted operating profit margin (EUR million, %) Return on capital employed1 (EUR million, %)
2016: EUR 38.1 million, 4.8% 2017: EUR 56.3 million, 6.9%
190% 300.0 40.0% 248.4 12.7% 35.0% 250.0 217.9 200.5 30.0% 200.0 183.9 182.5 25.0% 19.5% 26.2% 150.0 17.1% 20.0% 5.7% 5.3% 21.6% 15.7% 5.0% 4.7% 15.0% 4.0% 4.0% 32.5 100.0 2.6% 50.4 10.0% 38.1 50.0 36.8 33.4 35.0 12.7 11.2 5.0% 6.0 8.2 4.7 9.3 9.8 0.0 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 12/2016 3/2017 6/2017 9/2017 12/2017 2016 2017 Capital employed Operating profit, 12 month rolling
Adjusted operating profit Adjusted operating profit margin Return on capital employed
All figures according to segment reporting (POC). 1As of the beginning of 2017, in order to clarify its financial figures terminology, YIT starts to use the terms Capital Employed and Return on Capital Employed (ROCE) for segment reporting instead of previously used Operative Invested Capital and Return on Operative Invested Capital (ROI). The formulas for these financial figures remain untouched. 24 Financial Statements Bulletin 2017 Business Premises and Infrastructure Successful activities in Q4
• The sales transaction of the second phase office properties in Dixi completed in December • Regenero acquired Fortum’s old headquarters in Keilaniemi, Espoo, Finland • YIT chosen to carry out the Kuntolaakso life-cycle project in Kuopio, Finland in co-operation with Caverion • The sale of co-owned Kasarmikatu 21 was completed in December • The occupancy rate of Mall of Tripla increased to almost 70% in January ahead of schedule • The first office spaces at Tripla leased • New projects booked in Q4 • The local service centre Hertsi, to be constructed in co-operation with Hartela • Part of EUR 39 million life cycle school projects in Espoo, Finland • Hybrid care facility project in Vantaa, Finland, EUR ~ 21 million • Deep level tunnels of a gold mine in Kittilä, Finland, EUR ~35 million
• Road contract in Helsinki, Finland, EUR ~20 million Kuopion Kuntolaakso life cycle project Kuopio, Finland
25 Financial Statements Bulletin 2017 5
Financial position and key ratios Positive trend in ROI improvement continued Q4
• Invested capital on previous quarter’s level • ROI continued to improve due to improvements in all segments • Target to reduce capital employed in Russia by approximately RUB 6 billion by the end of 2018 (vs. 6/2016)
Invested capital (EUR million) Return on investment1 (%), rolling 12 months
1,400.0 1,202 1,203 1,141 1,175 1,143 1,200.0 1,103 1,131 1,127
1,000.0
800.0 8.8% 8.0%
600.0 5.6% 4.7% 5.0% 4.7% 5.2%
400.0 3.6%
200.0
0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2016 2017
All figures according to segment reporting (POC) 1EUR 27 million cost booked in Q3/2016 result from Housing Russia
27 Financial Statements Bulletin 2017 Net debt EUR 455 million in Q4
• Net debt decreased due to positive cash flow from operations and change in construction stage financing to meet market practice • A new EUR 50 million, 3-year bilateral loan withdrawn in October
Interest-bearing debt (EUR million), IFRS Maturity structure of long-term debt 12/2017 (EUR million)1
209.7
700 701 677 678 668 649 628 35 43 33 39 591 122 40 72 66 32 67 78 35 46 90
626 555 557 578 599 551 573 50.0 50.0 455 10.4 0.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2019 2020 2021 2022 2016 2017
Net debt Cash and cash equivalents Interest-bearing receivables 1 Excluding housing corporation loans and other loans
28 Financial Statements Bulletin 2017 Very strong cash flow in Q4
• Debt was decreased by EUR 123.5 million due to change in construction stage financing practice • Cash flow improved significantly due to good residential sales, the partial sale of the Novo Orlovsky plot and the closing of Kasarmikatu 21 office property sale
Cash flow of plot investments and investment in associated companies and JVs in Operating cash flow after investments, excluding discontinued operations (EUR million) shares (EUR million) Long-term target: Sufficient operating cash flow after investments, excluding discontinued operations, for dividend payout
165 144 26 171
56 16 22 23 42 11 5 -28 7 16 59 26 53 41 9 -25 -23 -21 32 32 7 25 22 -56 14 -43 6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2016 2017
Operating cash flow after investments, Rolling 12 months Cash flow of investments in associated companies and JVs in shares excluding discontinued operations Cash flow of plot investments
29 Financial Statements Bulletin 2017 Financial key ratios clearly improved in Q4
• All key ratios were positively impacted by the decrease in net debt • Improved profitability had a positive effect on Net debt / EBITDA ratio
Gearing (%) Equity ratio (%) Net debt/EBITDA (Multiple, x)
12.3 12.3
118.9 124.0 112.3 115.0 36.4 10.3 108.6 104.8 35.1 35.4 35.1 8.1 103.6 34.1 33.8 34.6 34.3 8.9 88.7 8.6 6.9 6.0 6.5 6.8 6.0 91.8 97.5 32.9 33.2 89.6 87.0 31.5 31.2 31.1 6.1 82.5 83.3 81.8 30.1 30.7 30.6 5.5 3.9 72.8 4.9 3.7
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2016 2017 2016 2017
POC IFRS POC IFRS POC IFRS
Financial covenant tied to gearing (maximum level of 150.0%, Financial covenant tied to the equity ratio (minimum level of IFRS) in the syndicated RCF agreement and in bank loans. 25.0%, IFRS) in bank loans, the syndicated RCF agreement and the bonds issued in 2015 and 2016. 30 Financial Statements Bulletin 2017 Summary of financials in Q4
• Profitability improved in all segments, being very good in Housing Finland and CEE and exceptionally good in Business Premises and Infrastructure
• ROI continued to improve, while capital employed stayed stable
• Financial key figures improved due to positive cash flow from operations and change in construction stage financing to meet market practice
• Net financial expenses (POC) decreased by 45% y-o-y mainly due to lower interest expenses and currency hedging costs together with valuation gains from interest rate derivatives
Service centre Hertsi Helsinki, Finland
31 Financial Statements Bulletin 2017 6
Year 2017 Highlights in 2017
• The merger of YIT and Lemminkäinen announced • Strong growth and operating profit improvement • Q4 was one of the highest quarter in profitability on group level • CEE had a strong impact on revenue growth with high profitability • Key financial ratios improved to a good level • Financial expenses almost halved, EPS clearly improved • Good progress in mega projects, Partnership properties established • The construction and sale of Kasarmikatu 21 office property completed successfully • Tripla project proceeding ahead of schedule • New projects in pipeline, such as Fortum’s old Headquarters area development project under Regenero • Strategic development programmes proceeding according to plan • Acquisition of Projektipalvelu Talon Tekniikka Oy to support growth in renovation services • Several successful pilots in improving productivity (e.g. Smartti) • Over 40,000 individual clients in Living Services in Russia Koru Vinohradska residential project • Over 800 summer trainees during the year in Finland Prague, the Czech Republic
33 Financial Statements Bulletin 2017 EBIT-bridge 2016 – 2017
• Operating profit improved in all segments, growth boosted both by improved volume and profitability • In Housing Finland and CEE, operating profit was boosted by strong sales and shift from investor sales to consumer sales • In Housing Russia, the operating profit was positive for the whole year • In Business Premises and Infrastructure, good profitability was supported by the sale of co-owned Kasarmikatu 21 office property
Adjusted operating profit (EUR million), change 2016–2017: 53% 122.3 -6.3 17.4 -0.1 0.8 0.2 8.7 13.1 79.9 8.7
YIT Group 2016 Volume Profitability Volume Profitability Volume Profitability Other items FX-impact YIT Group 2017 Housing Finland and CEE Housing Russia Business Premises and Infrastructure
34 Financial Statements Bulletin 2017 Proposal to AGM: Dividend of EUR 0.25
Dividend / share (EUR) Note: Historical figures prior to 2013 are YIT Group pre demerger
The proposed dividend would be EUR 31,453,802.25, corresponding 55.6% of the net 373% result 2017 (IFRS) and 50.0% of net profit 2017 0.80 (POC) which is in accordance with the long-term 0.75 financial targets 0.70 0.65 0.65
0.55 0.50
0.40 0.38 0.35 0.30 0.25 0.22 0.23 0.22 0.22 0.19 0.18 0.15 98% 0.09 0.11 73% 75% 0.07 60% 56% 56% 55% 50% 50% 43% 43% 44% 48% 45% 48% 38% 40% 40% 34% 29% 27% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* * Proposal by the Board of Directors
35 Financial Statements Bulletin 2017 Financial statements bulletin 1 January – 31 December 2017 Group performance Balance sheet, financing and cash flow
37 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Year 2017 in brief
• In June, announced plan to combine with YIT • Net sales 1,847.2 M€ (1,682.7) • Operating profit 41.8 M€ (67.6) • Adjusted operating profit 46.6 M€ (45.1) • Write-downs of deferred tax assets in Norway and Sweden increased the tax expense in the income statement EUR 10.2 million – The write-downs weakened the profit for the period and EPS • Financial position – Interest-bearing debt 185.8 M€ (212.5) – Equity ratio 35.6% (35.4)* – Gearing 57.2% (38.8)* • Cash flow from operating activities -13.6 M€ (131.7) • Order book grew and stood at 1,305.6 M€ (1,265.2) at the end of the period • After the reporting period, the merger of Lemminkäinen and YIT completed on 1 February 2018
38 1 February 2018 Financial statements bulletin 2017 *) If hybrid bonds were treated as debt © LEMMINKÄINEN Q4/2017 in brief
• Net sales 515.1 M€ (477.3) • Operating profit 10.1 M€ (35.0) • Adjusted operating profit 10.8 M€ (12.3) • Plot sales and write-downs of plot inventory had a positive net impact of approximately EUR 7 million in total on operating profit • Cash flow from operating activities -20.4 M€ (38.5)
39 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Group operating profit Q4/2017 vs Q4/2016
Group Paving Infra projects BC Finland Russia Others Group Q4/2016 Q4/2017 Q4/2017 Q4/2017 Q4/2017 Q4/2017 Q4/2017 (Q4/16) (Q4/16) (Q4/16) (Q4/16) (Q4/16) 35.0 -5.0 4.8 11.5 -1.0 -0.2 10.1 (-0.1) (4.9) (10.7) (-4.4) (23.9)
35.0 +3.4 +0.8
-4.9 -0.1
10.1
-24.1
40 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Order book improved year-on-year In December 2017, Lemminkäinen was selected to build the Blominmäki wastewater treatment plant in Espoo, Finland. This 1,600 project of EUR 206 million is not yet included in the order flow or the order book.
1,306 64 1,200 102 271 272
175 Russian operations 1,647 194 M€ 800 1,567 1,496 1,449 1,407 1,455 Infra projects 1,265 Paving
400 795 Building construction Finland 698
0
41 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Paving Q4/2017: profitability challenges, measures continued
Net sales and order inflow quarterly Net sales and operating profit 276 300 268 • Net sales grew due to higher volumes in Paving 198 189 176 Finland 200 145 170 150 149 146 161
M€ 80 72 • Operating profit decreased despite good performance 100 32 47 43 in Finland due to poor profitability in Scandinavia 0 caused by weak operative performance and intense Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 price competition Net sales Order inflow • Continued measures to improve competitiveness in Sweden and Norway
Operating profit and operating margin quarterly 40 30.6 24.5 80 Order inflow and order book 15.6 20 -0.1 8.5 40 -25.4 -24.7 -5.0 • Order book stood at 175 M€ (194) 0 0 % M€ 11.4 0.0 -20 7.9 4.8 8.9 -3.1 -40 -40 -79.4 -57.6 -80 Balance sheet Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 • Operating capital at the end of the period was Operating profit Operating margin 181 M€ (189)
42 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Infra projects Q4/2017: higher net sales and order inflow, lower operating profit
Net sales and operating profit Net sales and order inflow quarterly • Net sales increased due to higher volumes in the Baltic 137 127 139 135 150 117 118 122 109 countries 93 80 88 100 65 65 • Operating profit remained on approximately same level as 52 59 47 M€ 50 the year before 0 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Order inflow and order book Net sales Order inflow • Order book stood at 271 M€ (272) • Order inflow includes an agreement for the rock engineering work in Henriksdal wastewater treatment plant in Stockholm, Sweden, and an agreement for building a Operating profit and operating margin quarterly new parking facility in Skellefteå, Northern Sweden 10 7.3 10 • Lemminkäinen was selected to build the Blominmäki 3.8 4.9 1.8 4.6 4.8 5 5 wastewater treatment plant in Espoo, Finland (project of -3.4 -3.6 0 206 M€ not yet included in order flow or order book) M€ 0 % 3.2 4.2 3.5 -5 -5.3 5.7 1.4 3.3 -5 -4.5 -10 Balance sheet Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 • Operating capital at the end of the period was 71 M€ (30) Operating profit Operating margin
43 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Building construction, Finland Q4/2017: strong residential sales and higher operating profit
Net sales and operating profit Net sales and order inflow quarterly • Net sales growth driven by higher volumes in residential 300 development outside the capital region 196 185 179 188 198 200 141 131148 156 • Operating profit improved due to higher volumes and better 11398 94 114 102 135 margins in residential development M€ 100 82 • Plot sales and write-downs of plot inventory had a positive net 0 impact of approximately EUR 7 million in total on operating profit Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 • 6 residential development projects (7) completed during Q4, totalling 323 units (300) Net sales Order inflow
Order inflow and order book Operating profit and operating margin quarterly • Order book stood at 795 M€ (698) • Order inflow includes 8 new residential development projects as 20 16.7 20 10.7 7.9 11.5 well as a contract on building the Hiltulanlahti school in Kuopio, in 10 3.7 3.5 10 Eastern Finland, using the PPP model 0.6 %
M€ -0.8 0 0 • Lemminkäinen is part of project group selected to design and 2.6 2.7 5.8 -0.7 5.4 0.5 5.0 8.9 construct a new building of Vaasa Central Hospital through a -10 -10 project alliance contract with the Vaasa Hospital District in Finland Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 (not included in order flow or order book)
Operating profit Operating margin Balance sheet • Operating capital at the end of the period was 218 M€ (216) 44 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Residential development in Finland: In 2017, the number of completed units was higher than in 2016
Unsold apartments, at the end of the quarter 31 December 2017 1000 • Number of unsold completed units decreased to 112 (185) 142 112 500 253 244 191 185 166 151 386 365 403 433 365 551 467 543 • Number of unsold units under construction 0 increased to 543 (433) Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17
Unsold, under construction Unsold, completed Q4/2017 • 8 new residential development projects started, totalling 443 units (401) Start-ups and sold apartments, during the quarter • Number of sold development units was 403 (379) 500 • Share of investor sales during Q4 was 13% (12) 401 443 231 154 379 310 429 360 403 123 123 239 227 264 288 0 224 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Start-ups Sold
45 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Russian operations Q4/2017: strategy change implementation continued
Net sales and order inflow quarterly Net sales and operating profit • Volumes grew in building construction 100 71 • Operating profit was -1.0 MEUR (-4.4) 50 38 32 30 M€ 20 21 22 • Reaching the financial targets after the strategy change in 6 12 1512 10 10 12 4 5 2015 will still take some time 0 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 • The number of unsold completed units on 31 December 2017 in Russia was 1 (2) Net sales Order inflow • The impact of currency exchange rates Q4/2017: – Net sales +1.0 M€ Operating profit and operating margin quarterly – Operating profit -0.2 M€ 5 30 1.8 Order inflow and order book 1.3 15 -4.4 -1.0 0.0 -1.0 %
0 -0.6 -0.6 8.5 0 • Order inflow includes a contract on the construction M€ -0.2 4.2 -3.4 -15 of the second phase of a business premise in -10.1 -5.3 -10.5 -5 -29.2 -30 St. Petersburg and new orders for paving Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 • Order book stood at 64 M€ (102) Operating profit Operating margin Balance sheet • Operating capital at the end of the period was 45 M€ (24) 46 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Group performance Balance sheet, financing and cash flow
47 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Borrowings and financial position
Equity ratio, % Operating capital, EUR million 590 554 547 60 41 40 40 600 486 475 450 446 443 37 38 33 35 36 34 34 37 35 37 395 388 393 421 405 40 400 20 200 0 0
Note! If hybrid bonds were recognized as debt, equity ratio 12/17 would be 36% (12/16: 35%)
Gearing, % Interest-bearing debt, EUR million 100 400 57 62 52 51 52 48 53 300 134 42 34 40 146 123 102 50 24 24 32 200 147 128 116 192 131 78 56 88 58 100 214 199 212 187 165 154 127 82 81 138 157 105 128 0 0
Note! If hybrid bonds were recognized as debt, gearing 12/17 would be 57% (12/16: 39%) IB net debt, M€ Liquid funds, M€
48 1 February 2018 Financial statements bulletin 2017 © LEMMINKÄINEN Cash flow from operating activities
140 124 132 120 106 107 101 86 100 88 80 80 75 60 86 45 40 57 By quarter, M€ 50 39 4 20 2 24 30 26 52 0 Rolling 12 months, M€ -20 -14 -40 -18 -49 -21 -60 Q1/15Q2/15Q3/15Q4/15Q1/16Q2/16Q3/16Q4/16Q1/17Q2/17Q3/17Q4/17
Cash flow from operating activities and free cash flow, EUR million Q4/2017 Q4/2016 1-12/2017 1-12/2016
Operating profit (excl. share of the profit of associates and joint ventures) 10.3 34.0 41.6 66.1
Depreciation and impairment 8.0 9.6 31.8 34.5 Provisions and other non-cash items 3.6 -1.1 2.9 -9.0
Cash flow from financing items and taxes -3.7 -5.9 -20.5 -32.7 Change in working capital -38.6 1.9 -69.5 72.8 Cash flow from operating activities -20.4 38.5 -13.6 131.7
Cash flow from investing activities1) -2.5 4.2 -12.4 1.3 Free cash flow -22.8 42.7 -26.0 133.0
49 1 February 2018 Financial statements bulletin 2017 1) excluding the effect of investments in available-for-sale financial assets © LEMMINKÄINEN 8
Outlook and guidance Market outlook stable in the next 12 months
Housing Finland and Housing Business Infrastructure Partnership CEE Russia premises projects Paving properties
Finland
Russia
The CEE countries
The Baltic countries
The Czech Republic, Slovakia, Poland
Scandinavia
Sweden
Norway
Denmark
Weakened outlook compared to the past Unchanged outlook compared to the past Improved outlook compared to the past 12 months’ development 12 months’ development 12 months’ development 51 Financial Statements Bulletin 2017 Outlook for 2018
• Due to the merger of YIT and Lemminkäinen, YIT does not issue numerical guidance for the Group but is issuing a general outlook that describes future development instead. • YIT’s outlook is based on assumptions and the management’s estimates of the development of demand in the Group’s operating environment and segments. • The Board of Directors will assess, and later announce, whether it is appropriate to issue numerical guidance for the merged company.
Housing Finland and CEE Business premises Paving
Consumer demand for apartments is expected to The rental demand for business premises is The total volume of the paving market is expected remain at a good level. Activity among large expected to remain at the previous year’s level in to grow slightly in YIT’s operating area residential investors is expected to be lower than in growth centres. The contracting market is expected the previous years. to remain active, but contract sizes are expected to decrease on average.
Housing Russia Infrastructure projects Partnership properties
The demand for apartments is expected to remain Infrastructure construction market is expected to Activity among property investors is expected to at the same level as seen on average in the second continue to grow slightly from the level of the year remain at a good level, particularly for centrally half of 2017. Residential prices are expected to 2017. located projects in the Helsinki metropolitan area remain low. and in major growth centres.
The adjusted operating profit1 is expected to fluctuate significantly between the quarters. The adjusted operating profit for the first quarter of 2018 is expected to be low due to normal seasonal variation of the combined company.
1Adjusted operating profit reflects the result of ordinary course of business and it does not include material reorganisation costs, impairment charges or other items affecting comparability. Adjusted operating profit is disclosed to improve comparability between reporting periods. Adjusting items are defined more precisely in the tables in the Financial Statements Bulletin 2017. 52 Financial Statements Bulletin 2017 9
Merger Deal rationale
• Target to become a leader in urban development Strong platform for • More balanced business portfolio 1 growth (Infrastructure projects, Housing, Business Premises, Partnership Properties) • Wider geographical presence in several economic regions
Synergies and • Good references and wide pool of professional people 2 improved • Potential for profitability improvement competitiveness • Wider opportunities for specialization and scale
Improved financial • Counter cyclicality of businesses and geographies 3 position and reduced • Lower financing costs risk profile • Lower dependency on investment demand
Enhanced investment • Significant market value, good liquidity of the share 4 • Balanced and improved risk profile case • Growing dividend expectation
54 Financial Statements Bulletin 2017 Combined portfolio 2017
Geographic revenue split, 2017* (EURm) Illustrative combined revenue splits 2017* FINLAND Paving Revenue: 2,654.1 Geographic split* Operational split* No of personnel: 5,847 Infrastructure projects Baltics, CEE Paving and and others maintenance Russia Housing Business premises SCANDINAVIA Revenue: 391.1 RUSSIA Scandinavia Partnership No of personnel: 980 Revenue: 462.0 properties No of personnel: 2,096 Finland Infrastructure Housing projects Business premises
BALTIC COUNTRIES CEE COUNTRIES Revenue: 273.8 Business logic split* Revenue: 110.2 No of personnel: 1,255 Real estate development No of personnel: 248
New contracting
Own based Residential development Contracting- based Maintenance, * Preliminary combined high level illustrative estimates for the geographical, operational and business renovation and paving logic splits reflect the external and internal reporting of YIT and Lemminkäinen prepared under IFRS principles for the year 2017. Illustrative high level estimates of splits presented are based on a hypothetical situation and are not intended to project the revenue split of the Combined entity in the future. The illustrative information should not be viewed as pro forma information.
55 Financial Statements Bulletin 2017 Combined income statement information (IFRS)
IFRS 1–12/2017 1.1 - 31.3.2017
EUR million Combined YIT Lemminkäinen Combined YIT Lemminkäinen
Revenue 3,841.0 1,993.8 1,847.2 692,5 452,2 240,3
Adjusted operating 152.2 105.6 46.6 -28,1 4,7 -32,9 profit Adjusted operating 4.0% 5.3% 2.5% -4,1 % 1,0 % -13,7 % profit % of net sales1)
Gearing 59.3% 88.7 % 40.0 %
Order backlog 4,218.3 2,912.7 1,305.6 -3,6 % 1,0 % -12,3 %
Average number of 10,431 5,233 5,198 personnel 20172)
The combined illustrative financial information is presented for illustrative purposes only and they should not be regarded as pro forma financial information. The combined illustrative income statement information and key figures are presented as if the business operations would have been in the same Group starting from the beginning of the year 2017. 1) Adjustments in the Combined adjusted operating profit are based on YIT’s and Lemminkäinen’s published financial statement information. 2) Number of personnel varies somewhat during a year due to the seasonal nature of the businesses. 56 Financial Statements Bulletin 2017 Board of Directors as of February 1, 2018
Matti Vuoria Berndt Brunow Erkki Järvinen Harri-Pekka Chairman of Vice Chairman Member of the Kaukonen the Board of the Board Board Member of the Board
Inka Mero Juhani Mäkinen Kristina Tiina Tuomela Member of Member of the Pentti-von Member of the the Board Board Walzel Board Member of the Board
57 Financial Statements Bulletin 2017 YIT Group organisation as of February 1, 2018
President and CEO Kari Kauniskangas
Urban Paving Infrastructure Business Partnership Housing Housing Russia development Heikki projects premises properties Finland Teemu Juha Kostiainen Vuorenmaa Harri Kailasalo Esa Neuvonen Esa Neuvonen and CEE Helppolainen Antti Inkilä Finance Ilkka Salonen
Personnel Pii Raulo
Strategy and development Jan Gustafsson
Integration Juhani Nummi
58 Financial Statements Bulletin 2017 Group Management Team as of February 1, 2018
Kari Kauniskangas Ilkka Salonen Jan Gustafsson Teemu Helppolainen President and CEO CFO EVP, Strategy and EVP, Housing Russia Deputy to CEO development
Antti Inkilä Harri Kailasalo Juha Kostiainen Esa Neuvonen EVP, Housing EVP, EVP, Urban EVP, Business Finland and CEE Infrastructure development premises and projects Partnership properties
Juhani Nummi Pii Raulo Heikki Vuorenmaa EVP, Integration EVP, Human EVP, Paving resources
59 Financial Statements Bulletin 2017 Urban development boosts the growth of balanced business portfolio
ASPECTS OF URBAN DEVELOPMENT Project development HOUSING Execution Ownership and services Urban INFRASTRUCTURE Development BUSINESS PROJECTS PREMISES
PARTNER- PAVING SHIP PROPERTIES
60 Financial Statements Bulletin 2017 Synergy development to be disclosed starting from Q1 Interim Report
Description • One top management and Group administration, savings from being one stock listed company • Lowered financing costs based on improved key figures Short-term • Harmonizing the IT systems and diminishing the number of systems synergies • Combined premises • Unified operations and functions in overlapping areas • Economies of scale in indirect and direct sourcing
• The improved turnover of the plot portfolio and enhancement of development capabilities by increasing self developed business Operational • Best practices from both sides, common processes and tools synergies • Economies of scale in using digitalization • Better use and higher volume of international sourcing
Full EBIT improvement potential per annum EUR 40 million by the end of 2020, target set in June 2017
61 Financial Statements Bulletin 2017 Timetable
2018 Feb 1 Mar 16 Mar 20 Apr 11 Apr 26
Merger AGM Lemminkäinen Lemminkäinen Interim Report completed final accounts shareholders’ Jan-Mar 2018 meeting
Voluntary pro forma information will be given before Q1 results
62 Financial Statements Bulletin 2017 Our offering to customers
HOUSING INFRA- PAVING BUSINESS PARTNERSHIP Functional homes STRUCTURE People, homes and PREMISES PROPERTIES and easy living for offices connected Attractive and Profitable solutions everyone PROJECTS through good road tailored office, retail, for investors and Smooth traffic flows network logistics and owners and sustainable living production as well as environments care and health 63 Financial Statements Bulletin 2017 premises More information
Ilkka Salonen Chief Financial Officer (CFO) +358 40 570 1313 [email protected]
Hanna Jaakkola Vice President, Investor Relations +358 40 566 6070 [email protected]
Follow YIT on Twitter @YITInvestors
64 Financial Statements Bulletin 2017 10
Appendices
Avian Elämänkaarikodit hybrid care facility project Vantaa, Finland Appendices
I. Key figures and additional information about financial position
II. Ownership
III. General economic indicators
IV. Housing indicators
V. Business premises and infrastructure indicators
MotorCenter Oulunkylä Helsinki, Finland
66 Financial Statements Bulletin 2017 I
Key figures and additional information about financial position
Vantaan Säihke residential project Vantaa, Finland Key figures
EUR million 10–12/2017 10–12/2016 Change 1–12/2017 1–12/2016 Change Revenue 554.3 513.7 8% 1,908.6 1,783.6 7% Operating profit 40.4 28.7 41% 102.3 52.9 93% Operating profit margin, % 7.3% 5.6% 5.4% 3.0% Adjusted operating profit 56.4 28.7 97% 122.3 79.9 53% Adjusted operating profit margin, % 10.2% 5.6% 6.4% 4.5% Adjustments -16.0 -20.0 -27.0 40% Order backlog 2,568.5 2,613.1 -2% 2,568.5 2,613.1 -2% Profit before taxes 33.7 21.3 59% 81.2 13.8 489% Profit for the review period1 26.0 16.1 62% 62.8 7.4 748% Earnings per share, EUR 0.21 0.13 61% 0.50 0.06 747% Operating cash flow after investments, excluding discontinued 171.0 -21.4 164.5 -43.1 operations Return on investment, last 12 months, % 8.8% 4.7% 8.8% 4.7% Equity ratio, % 35.1% 35.1% 35.1% 35.1% Interest-bearing net debt (IFRS) 455.0 598.6 -24% 455.0 598.6 -24% Gearing (IFRS), % 88.7% 112.3% 88.7% 112.3% Personnel at the end of the period 5,427 5,261 3% 5,427 5,261 3%
1Attributable to equity holders of the parent company All figures according to segment reporting (POC), unless otherwise noted Note: The adjusted operating profit does not include material reorganisation costs or impairment 68 Financial Statements Bulletin 2017 Ruble weakened in Q4
Revenue split 10-12/2017 (POC) Principles of managing currency risks:
RUB • Sales and project costs typically in same currency, all foreign currency items hedged 17% no transaction impact Other • Currency positions affecting the income statement, such as loans to 3% subsidiaries, are hedged • Equity and equity-like investments in foreign currency not hedged EUR • Considered to be of permanent nature 80% • FX changes recognized as translation difference in equity • Invested capital in Russia in 12/2017: • Equity and equity-like investments: EUR 384.1 million Impact of changes in foreign exchange rates (EUR million) • Loans to subsidiaries: EUR 27.4 million Q4/2017 1–12/2017
Revenue, POC1 5.1 30.5 EUR/RUB exchange rates Adjusted EBIT, POC1 0.5 1.2 1–12/2017 1–12/2016 Order backlog, POC2 -3.7 -3.7 Average rate 65.9183 74.1466 Equity, IFRS (translation difference)2 -7.3 -7.3 Quarter-end rate 69.3920 64.3000
1 Compared to the corresponding period in 2016 2 Compared to the end of previous quarter
69 Financial Statements Bulletin 2017 Plots in the balance sheet by segments and geography
Plot reservesreserves in in the the balance balance sheet sheet 12/2017, 12/2017, (EUR (EUR million) million) Division by geography in Finnish housing
In total EUR 570 million
30%
70% 2151 153 276 123 HMA, incl. Tripla residential Rest of Finland 79 Division by geography in Business Premises and Infrastructure
10%
Business Premises and Infrastructure 30% Housing Russia 60% Housing Finland and CEE Finnish housing CEE housing
HMA, incl. Tripla Rest of Finland CEE 1Includes Gorelovo industrial park
70 Financial Statements Bulletin 2017 Plot reserve consists of own plots, pre-agreements and rental plots
Plot reserve in thousand floor square metres 12/2017, consists of own plots, pre-agreements and rental plots, 4.7 million floor sq. m in total (Q3/2017: 5.3)
Finnish housing, total 1.8 million floor sq.m Housing Russia, total 1.8 million floor sq.m
Average annual use of plot Average annual use of plot reserves ~150,000–200,000 reserves ~150,000–200,000 floor sq.m. 25% floor sq.m. 40% 35% ~ 75% of the own and rental plots have confirmed zoning
75% 25%
CEE housing, total 0.6 million floor sq.m Business Premises and Infrastructure, total 0.5 million floor sq.m
10% 5% Average annual use of plot 5% Average annual use of plot reserves ~80,000–120,000 reserves ~30,000–70,000 floor sq.m. floor sq.m.
90% 90%
Own Rental Pre-agreements
71 Financial Statements Bulletin 2017 Balanced debt portfolio
Debt portfolio at the end of the period 12/2017, EUR 590.7 million Maturity structure at the end of the period 12/2017
Maturity profile, excluding housing corporation loans and other loans (EUR million) Commercial papers, 26% Bonds, 25% Bank loans, 20% Housing corporation loans, 14% 500 450 Commercial papers Pension loans, 9% 400 Pension loans Other loans, 6% 350 Bank loans 300 250 Bonds 200 150 100 Floating rate, 8% 50 Average interest rate 3.24% 0 12/2017 12/2018 12/2019 12/2020 12/2021 Fixed rate, 92% Average interest rate 3.14%
Average interest rate: 3.15%
72 Financial Statements Bulletin 2017 Cash flow of plot investments
302
37
192 135 17 171 158 13 135 138 139 15 105 5 79 119 70 51 98 38 95 39 11 60 16 7 73 3 10 39 63 13 130 32 13 35 96 93 91 88 79 65 62 59 60 58 45
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Finland Russia The CEE countries
73 Financial Statements Bulletin 2017 II
Share ownership
Helsingin Emil residential project Helsinki, Finland YIT’s major shareholders
December 29, 2017
Shareholder Shares % of share capital 1. Varma Mutual Pension Insurance Company 12,000,000 9.43 2. OP funds 5,101,871 4.01 3. Herlin Antti 4,710,180 3.70 4. Elo Mutual Pension Insurance Company 3,335,468 2.62 5. The State Pension Fund 3,275,000 2.57 6. Danske Invest funds 3,253,169 2.56 7. Virala Oy Ab 3,124,054 2.46 8. Ilmarinen Mutual Pension Insurance Company 2,120,000 1.67 9. Föreningen Konstsamfundet r.f. 1,623,000 1.28 10. Aktia funds 1,530,000 1.20 Ten largest total 40,072,742 31.50 Nominee registered shares 19,481,458 15.31 Other shareholders 67,669,222 53.19 Total 127,223,422 100.00
75 Financial Statements Bulletin 2017 More than 43,000 shareholders
Number of shareholders and share of non-Finnish ownership, December 2017
43,752 44,312 43,619 41,944 40,016
36,547 36,064
32,476 29,678 52.9% 25,515 45.9%
39.9% 38.7% 36.5% 37.9% 34.8% 32.2% 33.8% 15,265 29.3% 29.5% 27.9% 14,364 24.8% 26.3% 22.1% 9,368 16.0% 7,456 4,928 3,271
12/2002 12/2003 12/2004 12/2005 12/2006 12/2007 12/2008 12/2009 12/2010 12/2011 12/2012 12/2013 12/2014 12/2015 12/2016 12/2017
Number of shareholders Non-Finnish ownership, % of share capital
76 Financial Statements Bulletin 2017 III
General economic indicators
Vantaan Loiste residential project Vantaa, Finland Growth expected to continue in Slovakia
GDP growth in YIT’s operating countries, %
5%
3%
1%
2016 2017E 2018E 2019E -1% Finland Estonia Latvia Lithuania The Czech Republic Slovakia Poland Russia
Unemployment rate in YIT’s operating countries, %
20%
15%
10%
5%
0% 2010 2011 2012 2013 2014 2015 2016 2017E 2018E Finland Estonia Latvia Lithuania The Czech Republic Slovakia Poland Russia Sources: GDP growth: Bloomberg consensus, Unemployment: IMF
78 Financial Statements Bulletin 2017 IV
Housing indicators Finland The CEE countries Russia
Aalto residential project Moscow, Russia Finland Start-ups expected to decrease in 2018 and 2019
Residential start-ups (units) Consumers’ views on economic situation in one year’s time (balance)
40,500 30 36,600 35,500 Own economy 32,033 33,52532,807 32,400 7,700 20 29,842 6,700 30,500 27,778 8,300 26,273 6,500 10 23,36123,385 12,477 11,614 8,100 15,337 9,772 8,117 6,870 0 9,283 11,493 32,800 29,900 -10 25,900 27,200 21,048 21,193 20,070 22,400 16,696 19,661 19,403 Finland’s economy 11,868 14,102 -20 -30 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F Block of flats and terraced houses Single family houses and other
Prices of new dwellings (index 2010=100) Volume of new mortgages and average interest rate (EUR million, %)
130 3,500 16
125 3,000 14 12 120 2,500 115 10 2,000 110 8 1,500 105 6 1,000 100 4 500 95 2 0 0 90 2010 2011 2012 2013 2014 2015 2016 2017 Finland Capital region Rest of Finland New drawdowns of housing loans, left axis Average interest rate of new housing loans, right axis Sources: Residential start-ups: 2006-2014 Statistics Finland; 2015 – 2018F Euroconstruct, December 2017, Consumer confidence: Statistics Finland, Residential prices: Statistics Finland, Loans and Interest rates: Bank of Finland 80 Financial Statements Bulletin 2017 Finland Housing indicators have improved slightly
Unsold completed units (residential development projects) Residential building permits, start-ups and completions (million m3)
Construction cost index (2005=100) Construction confidence (balance)
130 40 125 20 120 0 115
110 -20
105 -40
100 -60
95 -80 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total index Labour Materials Other inputs Unsold completed units: Confederation of Finnish Construction Industries RT, Residential building permits, Start-ups and completions: Confederation of Finnish Construction Industries RT, Construction cost index: Statistics Finland, Construction confidence: Confederation of Finnish Industries EK 81 Financial Statements Bulletin 2017 The Baltic Countries Residential construction is expected to level off
Residential completions in Estonia (units) Residential completions in Latvia (units)
5,700 5,900 5,600 4,732 1,500 1,600 3,969 1,700 4,200 1,511 3,000 2,756 1,270 2,800 1,800 2,662 2,631 2,500 2,300 2,237 2,242 2,200 2,200 1,000 1,918 1,990 2,079 1,900 2,087 976 4,300 800 4,200 3,900 1,022 1,392 1,500 3,221 1,136 1,134 1,400 710 870 966 2,699 1,371 1,376 1,200 2,000 2,400 1,500 1,500 1,780 1,640 1,208 1,120 1,113 1,239 1,106 1,066 1,000 1,100 1,300 400 716 861 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F Block of flats Single family houses Block of flats Single family houses Residential completions in Lithuania (units) New residential construction volume (EUR million)
14,600 1,800 12,703 13,000 Lithuania 11,900 1,600 10,177 1,400 9,400 8,200 1,200 7,624 7,524 7,200 7,500 1,000 4,000 5,926 6,118 5,066 5,221 800 Latvia 3,700 4,691 600 3,342 3,597 3,815 6,400 5,800 400 Estonia 5,400 3,000 5,179 4,400 2,933 4,059 200 1,251 1,879 2,329 700 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2013 2014 2015 2016 2017 2018F 2019F Block of flats Single family houses Source: Euroconstruct, December 2017
82 Financial Statements Bulletin 2017 The Czech Republic, Slovakia and Poland Start-ups forecasted to grow in the Czech Republic
Residential start-ups in the Czech Republic (units) Residential start-ups in Slovakia (units)
37,300 34,500 36,300 31,200 21,400 20,300 21,300 20,100 28,200 27,500 26,400 27,200 19,600 19,300 24,400 20,700 23,800 22,100 16,200 15,800 21,100 22,100 14,700 19,300 12,700 13,100 11,100 11,100 13,000 12,700 12,300 18,400 18,900 15,000 17,200 12,000 13,700 9,600 16,000 13,700 9,200 9,600 9,400 9,100 16,600 11,400 11,900 13,400 14,200 9,200 8,500 8,400 8,600 9,800 8,600 7,800 8,400 10,700 10,000 6,600 6,200 7,800 7,300 3,300 4,000 5,500 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F Block of flats Single family houses Block of flats Single family houses Residential start-ups in Poland (units) New residential construction volume (EUR million) 230,000220,000 206,000 5,000 12,000 168,400173,900 10,000 158,100162,200 105,000 4,000 142,900 141,800 148,100 105,000 127,400 96,000 8,000 3,000 79,200 83,600 86,500 90,500 6,000 79,700 74,700 89,800 72,700 2,000 4,000 110,000 125,000 115,000 90,300 1,000 71,600 71,700 73,400 89,200 2,000 53,100 62,100 54,700 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2013 2014 2015 2016 2017F 2018F 2019F Block of flats Single family houses Czech Republic Slovakia Poland, right axis Source: Euroconstruct, December 2017
83 Financial Statements Bulletin 2017 Russia Housing indicators
House prices in primary markets (thousand RUB per sq. m.) New residential construction volume (EUR billion*) 110 240 55 100 50 90 190 45 80 70 40 140 60 35 50 30 40 90 30 25 20 40 20 2013 2014 2015 2016 2017F 2018F 2019F
Yekaterinburg Rostov-on-Don Kazan *At 2016 prices, excluding taxes. 1 EUR = 74.144 rubles St. Petersburg Moscow (right axis) Inflation in building materials (%) Consumer confidence
12% 0 10% -5
8% -10 -15 6% -20 4% -25 2% -30
0% -35 -40 3/2009 3/2010 3/2011 3/2012 3/2013 3/2014 3/2015 3/2016 3/2017 Consumer confidence Long-term average** Sources: House prices: YIT, New residential construction volume: Euroconstruct, December 2017, Inflation in building materials: PMR Construction review, December 2017, Consumer confidence: Bloomberg **Average 12/1998-12/2017 84 Financial Statements Bulletin 2017 V
Business Premises Finland The Baltic countries Slovakia
Infrastructure Finland
Naantali CHP plant Naantali, Finland The Baltic countries New non-residential construction forecasted to continue on a steady level
New non-residential construction volumes (index 2013=100) New non-residential construction in Finland (EUR million) 240 1,600 220 1,400 200 1,200 180 1,000 160 140 800 120 600 100 400 80 200 60 0 40 2013 2014 2015 2016 2017E 2018F 2019F 2013 2014 2015 2016 2017E 2018F 2019F Office buildings Commercial buildings Industrial buildings Finland Estonia Latvia Lithuania Slovakia
New non-residential construction in the Baltic countries (EUR million) New non-residential construction in Slovakia (EUR million)
1,200 700 1,000 600 500 800 400 600 300 400 200 200 100 0 0 2013 2014 2015 2016 2017E 2018F 2019F 2013 2014 2015 2016 2017E 2018F 2019F
Estonia Latvia Lithuania Office buildings Commercial buildings Industrial buildings
Sources: Euroconstruct and Forecon, December 2017
86 Financial Statements Bulletin 2017 Finland Prime yields expected to decrease slightly
Prime yields in Helsinki Metropolitan Area (%) Vacancy rates in Helsinki Metropolitan Area (%)
Vacancy rates in selected districts in Helsinki Metropolitan Area, % Prime office yields in Finland, %
Source: Catella Finland Market Indicator, September 2017
87 Financial Statements Bulletin 2017 The Baltic countries Yields are expected decrease slightly
Prime office yields in the Baltic countries (%) Prime office rents in the Baltic countries, (%, EUR / sq. m. / year)
Average Annual Rental Growth 2011-2016 (left axis.) Rent Level 2017E (right axis.) Tallinn Riga Vilnius Average Annual Rental Growth 2017E-2019E (left axis.) Prime retail yields in the Baltic countries (%) Prime retail rents in the Baltic countries, (%, EUR / sq. m. / year)
Tallinn Riga Vilnius Average Annual Rental Growth 2011-2016 (left axis.) Rent Level 2017E (right axis.) Source: Newsec Property Outlook, October 2017 Average Annual Rental Growth 2017E-2019E (left axis.) 88 Financial Statements Bulletin 2017 Infrastructure construction in Finland Market expected to remain stable in 2018
Infrastructure market in Finland (EUR million) Infrastructure sectors in Finland (2017)
7,000 Other 11% 6,000
5,000 Roads 36% 4,000 Energy & water works 3,000 25%
2,000
1,000
0 Telecom- Railways 2013 2014 2015 2016 2017E 2018F 2019F munications Other transport 12% 12% 4% New Renovation
Sources: Euroconstruct, December 2017
89 Financial Statements Bulletin 2017 Disclaimer
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90 Financial Statements Bulletin 2017