1. Financially strong player even in volatile operating environment
CONFIDENTIAL
17 November 2017
Financially strong player even in volatile operating environment
YIT Capital Markets Day | September 22, 2011
St. Petersburg, Russia
Timo Lehtinen, CFO
YIT | 1 | CMD 2011
YIT CORPORATION

2. Contents YIT’s financial synergies
CONFIDENTIAL
Contents
17 November 2017
YIT’s financial synergies
YIT’s track record through business cycles
YIT’s finance strategy, financial position and risk management in volatile economic environment
Cost management and profitability drivers
YIT | 2 | CMD 2011
YIT CORPORATION

3. YIT’s financial synergies
CONFIDENTIAL
17 November 2017
YIT’s financial synergies
YIT CORPORATION

4. Business portfolio Performance of YIT business segments in 2010
CONFIDENTIAL
Business portfolio Performance of YIT business segments in 2010
17 November 2017
Building Services Northern Europe
Building Services Central Europe
Construction Services Finland
International Construction Services
2010
2010
2010
2010
2009
2009
Revenue
46%
14%
28%
12%
29%
10%
2010
2010
2010
2010
2009
2009
EBIT
36% 6%
44%
14%
41%
Neg.
2010
2010
2010
2010
2009
2009
Capital
invested
29% 3%
22%
46%
22%
48%
ROI
21.7%
44.7%
34.3%
20.5%
5.2%
-2.7%
* All figures based on segment reporting (POC=Percentage of completion)
YIT | 4 | CMD 2011
YIT CORPORATION

5. Financial synergies at YIT
CONFIDENTIAL
17 November 2017
Positive cash flow invested in land bank, its development and construction
Building and Industrial Services Contracting
Low capital requirement
High return on investment
Debt financing
Gearing 79.9% (06/11)
Higher margin possibilities Higher capital requirement Lower return on investment
Residential development Real estate development
Dividend to shareholders, payout ratio 40-60%
Equity ratio 29.7% (06/11)
YIT | 5 | CMD 2011 5
YIT CORPORATION

6. YIT’s track record through business cycles
CONFIDENTIAL
17 November 2017
YIT’s track record through business cycles
YIT CORPORATION

7. Revenue growth despite of economic cycles
CONFIDENTIAL
Revenue growth despite of economic cycles
17 November 2017
Group revenue
EUR million 6%
-12%
11%
13% 9% 9%
16%
36% 9%
31%
: according to FAS, : according to IFRS
YIT | 7 | CMD 2011
YIT CORPORATION

8. CONFIDENTIAL
Group profitability has been on relatively good level also in downturns
17 November 2017
Operating profit
EUR million
Operating profit (POC)
Operating profit (IFRIC 15)
% of revenue
: according to FAS, : according to IFRS
YIT | 8 | CMD 2011
YIT CORPORATION

9. Counter-cyclical cash flow
CONFIDENTIAL
Counter-cyclical cash flow
17 November 2017
Cash flow after investments
Cash flow driven especially by plot acquisitions, utilization of existing land bank and housing production volume
In 2006, cash flow affected by the growth in the Russian housing
Major acquisitions have also affected cash flow
2003: ABB
Cumulative cash flow in EUR 193 million
EUR million
2000
2005
2006
2007
2008
2009
2010
2004
2001
2003
2002
YIT | 9 | CMD 2011
: according to FAS, : according to IFRS, : according to IFRIC 15
YIT CORPORATION

10. Equity ratio has been kept strong
CONFIDENTIAL
Equity ratio has been kept strong
17 November 2017
Equity ratio
Strategic target: Equity ratio 35% %
YIT | 10 | CMD 2011
: according to FAS, : according to IFRS, : according to IFRIC 15
YIT CORPORATION

11. Equity ratio is among highest in peer group
CONFIDENTIAL
Equity ratio is among highest in peer group
17 November 2017
Equity ratio %
YIT according to IFRS
Skanska according to IFRS
NCC according to IFRS
Lemminkäinen according to IFRS
SRV according to IFRS
YIT | 11 | CMD 2011
YIT CORPORATION

12. YIT’s debt service ability compared to its peers
CONFIDENTIAL
YIT’s debt service ability compared to its peers
17 November 2017
Net debt/EBITDA
Net debt/EBITDA ratio between 2006 and 2010
YIT according IFRS
Skanska according IFRS
NCC according IFRS
Lemminkäinen accoding IFRS
SRV according IFRS
YIT | 12 | CMD 2011
YIT CORPORATION

13. Plot reserves vs. net debt
CONFIDENTIAL
Plot reserves vs. net debt
17 November 2017
Plot reserves and net debt at the end of the period
EUR million
: according to FAS, : according to IFRS
: YIT did not report its plot reserves in euros
YIT | 13 | CMD 2011
YIT CORPORATION

14. Flexibility and good timing in housing start-ups
CONFIDENTIAL
Flexibility and good timing in housing start-ups
17 November 2017
Housing start-ups
number
7,590
7,406
7,257
6,695
6,590
5,164
4,119
4,135
3,459
3,169
3,278
2,944
YIT | 14 | CMD 2011
YIT CORPORATION

15. Acquisitions over the cycle
CONFIDENTIAL
Acquisitions over the cycle
17 November 2017
YIT’s M&A criteria
Return on investment > 20 %
Good strategic fit (geographical coverage, business portfolio, customer sectors)
Complementary skills & resources
Business culture
Value creation potential
Profitability turn-around
Strong local market position which works as add-on to YIT’s existing market presence
Cash flow effect of YIT’s acquisitions
Largest acquisitions (purchase price)
2001: Calor Sweden (EUR 57 million)
2003: ABB (EUR 203 million)
2008: MCE (EUR 55 million)
2010: Caverion (EUR 73 million)
EUR million
YIT | 15 | CMD 2011
YIT CORPORATION

16. CONFIDENTIAL
17 November 2017
YIT’s finance strategy, financial position and risk management in volatile economic environment
YIT CORPORATION

17. Versatile sources in debt financing
CONFIDENTIAL
Versatile sources in debt financing
17 November 2017
Debt capital market for short term and long term issues is important funding source
The aim of debt financing is to maintain diversified sources of debt and balanced maturity profile
According to the treasury policy ¼ of long term debt is allowed to become due in a calendar year
YIT | 17 | CMD 2011
YIT CORPORATION

18. Active in debt capital markets
CONFIDENTIAL
17 November 2017
Commercial papers
Bond programme
YIT has a commercial paper programme of EUR 200 million targeted at domestic market
YIT is an active issuer of CPs under this programme
A bond programme of EUR 400 million established in March 2010
Two issues:
EUR 100 million in March 2010 and in June 2011
Establishment of a bond programme for the long term debt allows issuance of versatile debt instruments, private placements and public bonds
YIT | 18 | CMD 2011
YIT CORPORATION

19. Well-managed maturity structure
CONFIDENTIAL
17 November 2017
Finnish non-rated emissions
Maturity structure of the long-term debt 6/2011
Date
Company
Coupon, %
Maturity, years
Spread
Amount, EUR million
YIT
4.823 5
240
100
Sponda
3.000
230
Amer Sports
325
150
Rettig
4.375
300
Outokumpu
5.375
310
250
Neste Oil
5.000
290
Lemminkäinen
5.125 4
295 60
Ahlstrom
4.875
4.250
210
Uponor
6mE + 175 20
6mE + 205 7 80
EUR million 1) 2)
2011
2012
2013
2014
2015
2016
2017
2018-
Bond issued 03/10, EUR 100 million
Bond issued 06/11, EUR 100 million
YIT | 19 | CMD 2011
YIT CORPORATION

20. Balanced debt portfolio
CONFIDENTIAL
Balanced debt portfolio
17 November 2017
Net debt portfolio 6/2011, total EUR 937 million (3/2011: 894 million)
Average interest rate 3.5% (3/2011: 3.2%)
Fixed interest rate 58%
Average interest rate 4.2%
Markets
41%
Others 1%
Insurance companies
14%
Banks
20%
Project financing in
Construction Services Finland
24%
Floating interest rate 42%
Average interest rate 2.6%
YIT | 20 | CMD 2011
YIT CORPORATION

21. Net financial costs decreasing
CONFIDENTIAL
Net financial costs decreasing
17 November 2017
Net financial costs
Main factors impacting the decrease of net financial costs
EUR million
Reduction of interest rate difference between rouble and euro
 Lower hedging costs
Bigger IAS 23 booking
67.5
58.6
Debt portfolio
25.3
6/11: EUR 937 million, average interest rate 3.5%
12/10: EUR 789 million, average interest rate 3.4%
6/10: EUR 786 million, average interest rate 3.4%
9.4
Net financial costs
Hedging costs
IAS 23
YIT | 21 | CMD 2011
YIT CORPORATION

22. Currency risk of debt portfolio managed well
CONFIDENTIAL
Currency risk of debt portfolio managed well
17 November 2017
Principles of managing currency risks
Debt portfolio and forward agreements 6/2011
Items affecting the income statement by exchange rates are hedged
Net investments in the balance sheet are not hedged.
Loans taken by parent company as a rule EUR-denominated
Loans made available to subsidiaries denominated in foreign currencies are fully hedged
Due to unexpected disturbance in the forward agreement market for the relevant currency, hedging may vary between %
EUR 84%
SEK 1%
CZK 1%
LTL 3%
RUB 11%
YIT | 22 | CMD 2011
YIT CORPORATION

23. Capital invested in Russia
CONFIDENTIAL
17 November 2017
Capital invested in Russia 2006-Q2/2011
Capital invested and assets in Russia
EUR million
EUR million
656
545
532
2006
2007
2008
2009
2010
Q1/2011
Q2/2011
2008: according to POC, : according to IFRIC 15
Equity and equity-liked fixed net investments
Completed apartments
Work in progress
Debt
Land bank
According to IFRIC 15
YIT | 23 | CMD 2011
YIT CORPORATION

24. Risk management in capital allocation
CONFIDENTIAL
Risk management in capital allocation
17 November 2017
Key issues in capital allocation:
ROI key issue in capital allocation
Housing: sales risk of unsold inventory
Acquisitions: payback time
Good finance and liquidity position
Construction costs remaining 6/2011 in total EUR 614 million
Construction Services Finland
Housing EUR 309 million
Business Premises EUR 10 million
International Construction Services
Housing EUR 295 million
Long-term debt maturing in H2/2011 EUR 74 million
Cash as per end of June 2011 EUR 234 million, committed credit facilities EUR 224 million
Additional credit facility of EUR 100 million signed in September 2011
No financial covenants
YIT | 24 | CMD 2011
YIT CORPORATION

25. Financial position enables growth strategy execution
CONFIDENTIAL
Financial position enables growth strategy execution
17 November 2017
Gearing ratio %
YIT | 25 | CMD 2011
: according to FAS, : according to IFRS, : according to IFRIC 15
YIT CORPORATION

26. Cost management and profitability drivers
CONFIDENTIAL
17 November 2017
Cost management and profitability drivers
YIT CORPORATION

27. Potential for profitability improvement
CONFIDENTIAL
Potential for profitability improvement
17 November 2017
Building Services Northern Europe
Actions to get BS Northern Europe back to track
Increasing share of service and maintenance
Acquired companies’ initial profitability providing upside potential
Building Services Central Europe
Business portfolio development
Good volume in Business premises
H2/2011 expected to be stronger in Infra services
International sourcing
Construction Services Finland
Successful price increases in H1/2011, prices expected to increase further in H2/2011
Improving capital efficiency
Smaller projects
Shorter construction times
International Construction Services
YIT | 27 | CMD 2011
YIT CORPORATION

28. Lessons learnt from the financial crisis
CONFIDENTIAL
17 November 2017
No breaks in start-ups
No breaks in acquisitions
No breaks in plot acquisitions
Liquidity position must be kept strong
Cash and committed credit and overdraft facilities amounted to EUR 458 million at the end of June 2011
Additional facility of EUR 100 million arranged in September 2011
YIT | 28 | CMD 2011
YIT CORPORATION

29. CONFIDENTIAL
Summary
17 November 2017
YIT is financially strong player also in volatile business environment
YIT has succeeded relatively well through-out business cycles
YIT is well prepared also for weaker times
YIT | 29 | CMD 2011
YIT CORPORATION

30. CONFIDENTIAL
17 November 2017
YIT | 30 | CMD 2011
YIT CORPORATION