YIT restates consolidated income statements and segment results for 2018 and Q1 2019 reflecting sale of Nordic paving and mineral aggregates operations
YIT has restated its consolidated income statements and segment results for 2018 and the first quarter of 2019 reflecting the planned sales of its Nordic paving and mineral aggregates business to Peab. In connection with the transaction, YIT has classified the related operations as held-for-sale assets and reports them as discontinued operations. In its segment reporting, YIT reports only continuing operations, which means that the former Paving segment is no longer reported.
||Pro forma, restated 1-3/2018
|Adjusted operating profit
Five reported segments
With effect from the second quarter of 2019, YIT Corporation’s continuing operations include five reported segments: Housing Finland and CEE, Housing Russia, Business premises, Infrastructure projects and Partnership properties. The Nordic paving and mineral aggregates operations of the former Paving segment are presented as Discontinued operations in financial reporting and are not included in segment reporting. The paving business in Russia is reported under Other items in segment reporting. The Finnish road maintenance operations of the former Paving segment are reported as part of the Infrastructure projects segment.
The Housing Finland and CEE segment’s business comprises 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 itself 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.
The Housing Russia segment’s business comprises development and construction of apartments and entire residential areas in Russia. On June 20, 2019, YIT announced its decision to discontinue residential construction in Moscow, the Moscow region and Rostov-on-Don, as well as contracting and paving in Russia. From the second quarter on, operating profit or loss from the businesses to be closed down or sold in Russia will be recorded in adjusting items and will not be presented in adjusted operating profit.
The Business premises segment consists of business premises construction, project development and commercial property and facilities management businesses. Majority of the revenue comes from Finnish operations. In this segment, YIT pursues both self-developed projects and contracting. The segment’s geographical markets are Finland, Estonia, Latvia, Lithuania and Slovakia.
The Infrastructure projects segment’s operations include construction of roads, bridges, railway and metro stations and ports and parking facilities as well as energy and water supply facilities and industrial plants. YIT also offers wind power plant foundation solutions with related services and maintenance. Additionally, YIT quarries tunnels and mines and reinforces soil using different methods and provides road maintenance services in Finland. The segment operates in Finland, Sweden, Norway, Estonia, Latvia and Lithuania.
The Partnership properties segment’s income derives from investments, i.e. from rental income (cash flow from rents) and increased value of the assets. Additionally, the segment has revenue from different service agreements related to managing or sourcing the assets it partially owns.
Other items in segment reporting include the paving business in Russia. YIT plans to exit the paving business in Russia either by closing down or by selling the operations by the end of 2019. From the second quarter on, operating profit or loss from the businesses to be closed down or sold in Russia will be recorded in adjusting items and will not be presented in adjusted operating profit. Additionally, other items include Group internal services, rental revenue from external customers and Group level unallocated costs. Merger related fair value allocations and goodwill have not been allocated to the segments’ capital employed but are reported in segment level in “Other items”.
Discontinued operations include the paving and mineral aggregations businesses in Finland, Sweden, Norway and Denmark. On July 4, 2019, YIT announced having signed an agreement for the sale of these businesses to Peab. The transaction comprises the operations of the company’s Paving segment with the exclusion of the road maintenance business in Finland and paving business in Russia. The transaction is expected to be completed on January 1, 2020. YIT’s paving operations will continue their business normally as part of YIT until the end of year 2019, when the terms and conditions of the transaction are expected to be fulfilled.
Basis of preparation
YIT applies the requirements of IFRS 5 Non‑current Assets Held for Sale and Discontinued Operations in classifying, presenting and accounting for the sale of its Nordic paving and mineral aggregates business. YIT has classified the operations as held-for-sale assets and reports them as discontinued operations in the half-year report 2019 because the sale was considered as highly probable on June 30, 2019 and presents a major line of business of the Group. Result from discontinued operations is reported separately from income and expenses from continuing operations in the consolidated income statement, with prior periods restated accordingly. Intra-group revenues and expenses between continuing and discontinued operations are eliminated, except for those revenues and expenses that are considered to continue after the disposal of the discontinued operations. The statement of financial position is not restated for prior periods. The assets and liabilities related to the discontinued operations are presented as separate line items in the statement of financial position on June 30, 2019.
Unaudited pro forma financial information
YIT has previously published unaudited pro forma financial information to illustrate the effects of the merger of YIT and Lemminkäinen to its results of operations and financial position. Following the classification of the Nordic paving and mineral aggegrates business as discontinued operations in YIT’s half-year report 2019, YIT has restated the unaudited pro forma financial information to reflect the reporting of continuing and discontinued operations. 2018 published pro forma financial information is restated by separating the profits of the operations planned to be sold separately from continuing operations for the full year and quarterly reporting in 2018. Pro forma information is presented for illustrative purposes only and is unaudited.
YIT Corporation’s restated consolidated income statement and segment financial results
The following tables present the restated consolidated income statement and segment financial results as well as certain key ratios on an unaudited basis for all four quarters of 2018 separately and full year 2018, as well as for the first quarter of 2019. Discontinued operations have no other impact on other comprehensive income than change in translation differences which is not material.
For further information, please contact:
Hanna Jaakkola, Vice President, Investor Relations, YIT Corporation, tel. +358 40 5666 070, firstname.lastname@example.org
Ilkka Salonen, CFO, YIT Corporation, tel. +358 45 359 4434 , email@example.com
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 and living services, business premises and entire areas. We are also specialised in demanding infrastructure construction and paving. Together with our customers, our nearly 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 restated pro forma revenue for 2018 was approximately EUR 3.2 billion. YIT Corporation's share is listed on Nasdaq Helsinki Oy. www.yitgroup.com