DGAP-News: YIT-s Interim Report January 1 - June 30, 2011: Good profitability in Construction Segments, Building Services in Germany developed strongly

YIT

04.08.2011 07:00
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Helsinki, 2011-08-04 07:00 CEST (GLOBE NEWSWIRE) — YIT CORPORATION
INTERIM REPORT AUGUST 4, 2011, at 8:00 a.m.

YIT–s Interim Report January 1 – June 30, 2011: Good profitability in
Construction Segments, Building Services in Germany developed strongly

SEGMENT REPORTING 1-6/2011 (1-6/2011): Clear growth in revenue

— The operating profit of the segments was 19 percent higher than in the
previous year, amounting to EUR 120.7 million (1-6/2010: EUR 101.6
million). Operating profit was higher in Building Services Central Europe,
Construction Services Finland and International Construction Services.
— Revenue of the segments was 25 percent higher than in the previous year,
increasing to EUR 2,163.8 million (1-6/2010: EUR 1,735.1 million). The
growth of the business was supported by an acquisition in Central Europe
completed at the beginning of September 2010, continuously favourable
residential sales and the picking up of the business premises market in
Finland.
— The order backlog of the segments was 14 percent higher than the year
before, amounting to EUR 3,509.4 million (6/2010: EUR 3,067.4 million). The
order backlog of Building Services Central Europe increased clearly
compared to the previous year, which was largely attributable to the
acquisition completed at the beginning of September 2010. The order backlog
increased from the end of March 2011 in Building Services Northern Europe,
Construction Services Finland and International Construction Services.

SEGMENT REPORTING 4-6/2011 (4-6/2010): Clear growth in operating profit

— The operating profit of the segments was 23 percent higher than in the
previous year, amounting to EUR 70.3 million (4-6/10: EUR 57.1 million).
— Revenue of the segments was 24 percent higher than in the previous year,
amounting to EUR 1,136.9 million (4-6/10: EUR 914.3 million).

GROUP REPORTING 1-6/2011 (1-6/2010): Earnings per share increased significantly

— The Group–s profit before taxes increased by 79 percent from the previous
year to EUR 97.7 million in January-June (1-6/2010: EUR 54.6 million).
— Earnings per share increased by 84 percent to EUR 0.57 (1-6:2010: EUR
0.31).

GUIDANCE: Profitable growth will continue in 2011

YIT Corporation reiterates its estimate issued in connection with the financial
statements for 2010 according to which, in 2011, the combined revenue of the
business segments will grow and operating profit will grow clearly compared to
2010.

YIT estimates residential sales to continue to be good in both Finland and
Russia. In particular, residential construction activity in Russia, German
building services and Building Services Northern Europe will provide
opportunities for improving profitability.

The increased uncertainty of the general macroeconomic development may have a
negative effect also on decision-making by YIT–s customers and thereby the
development and performance of YIT–s business operations.

The profit outlook is based on segment reporting, i.e. recognition of income
based on the percentage of completion.

KEY FIGURES

Development of the segments and the Group

Revenue, EUR million1-6/11 1-6/10 Change 4-6/11 4-6/10 Change
——————————————————————————–
Building Services Northern 985.6 867.6 14% 509.4 460.8 11%
Europe
——————————————————————————–
Building Services Central 368.2 157.2 134% 191.1 86.9 120%
Europe
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Construction Services Finland 621.8 528.1 18% 332.3 275.2 21%
——————————————————————————–
International Construction 220.8 219.0 1% 120.5 112.1 7%
Services
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Other items -32.6 -36.8 -16.4 -20.7
——————————————————————————–
YIT–s segments total 2,163.8 1,735.1 25% 1,136.9 914.3 24%
——————————————————————————–
IFRIC 15 adjustment -56.9 -115.1 0.3 -59.6
——————————————————————————–
YIT Group total 2,106.9 1,620.0 30% 1,137.2 854.7 33%
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Operating profit, EUR million 1-6/11 1-6/10 Change 4-6/11 4-6/10 Change
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Building Services Northern 35.9 44.9 -20% 18.8 25.1 -25%
Europe
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Building Services Central Europe 16.1 4.9 229% 12.1 3.1 290%
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Construction Services Finland 58.4 49.5 18% 32.8 26.4 24%
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International Construction 20.7 12.2 70% 12.3 7.6 62%
Services
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Other items -10.4 -9.9 -5.7 -5.1
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YIT–s segments total 120.7 101.6 19% 70.3 57.1 23%
——————————————————————————–
IFRIC 15 adjustment -13.6 -31.8 -2.4 -21.2
——————————————————————————–
YIT Group total 107.1 69.8 53% 67.9 35.9 89%
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Operating profit margin, % 1-6/11 1-6/10 4-6/11 4-6/10
——————————————————————-
Building Services Northern Europe 3.6 5.2 3.7 5.4
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Building Services Central Europe 4.4 3.1 6.3 3.6
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Construction Services Finland 9.4 9.4 9.9 9.6
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International Construction Services 9.4 5.6 10.2 6.8
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YIT–s segments total 5.6 5.9 6.2 6.2
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YIT Group total 5.1 4.3 6.0 4.2
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Order backlog, EUR million 6/11 6/10 Change 6/11 3/11 Change
——————————————————————————–
Building Services Northern 879.5 748.5 18% 879.5 804.9 9%
Europe
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Building Services Central 554.1 276.8 100% 554.1 573.2 -3%
Europe
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Construction Services 1,239.5 1,154.7 7% 1,239.5 1,176.0 5%
Finland
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International Construction 896.4 946.8 -5% 896.4 862.7 4%
Services
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Other items -60.2 -59.4 -60.2 -61.2
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YIT–s segments total 3,509.4 3,067.4 14% 3,509.4 3,355.6 5%
——————————————————————————–
IFRIC 15 adjustment 287.5 261.8 287.5 343.4
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YIT Group total 3,796.9 3,329.2 14% 3,796.9 3,699.0 3%
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Key figures of Group reporting (IFRIC 15)

1-6/11 1-6/10 Change 4-6/11 4-6/10 Change
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Profit before taxes, EUR million 97.7 54.6 79% 63.0 27.9 126%
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Profit for the review period, 71.0 39.4 80% 46.1 20.4 126%
EUR million
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Earnings/share, EUR 0.57 0.31 84% 0.37 0.16 131%
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Operating cash flow after 15.9 65.5 -76% -0.2 31.7 -101%
investments, EUR million
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6/11 6/10 Change 6/11 3/11 Change
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Return on investment (last 12 15.6 10.7 15.6 14.0
months) %
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Equity ratio, % 29.7 31.8 29.7 28.5
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Gearing ratio, % 79.9 64.7 79.9 75.2
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Personnel at the end of period 26,807 23,877 12% 26,807 25,748 4%
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Group reporting (IFRIC 15)

YIT has applied the IFRIC 15 Agreements for the Construction of Real Estate
IFRS interpretation from the beginning of 2010. Due to the application of the
interpretation, Group reporting and segment reporting differ. The difference
between the accounting policies is reported as an IFRIC 15 adjustment.

As a result of the accounting policy, Group figures can fluctuate greatly
between quarters. In accordance with the accounting policy, residential
development projects are only recognised in Group figures upon project
delivery, while in segment reporting they are recognised as construction
progresses.

In the case of YIT–s commercial real estate development projects, the
recognition practice will be evaluated on a case-by-case basis and in
accordance with the terms and conditions of each contract. Sold projects are
recognised either when the construction work has started or when the project is
complete. The share of income and expenses to be recognised is calculated by
multiplying the percentage of completion by the percentage of sale multiplied
by the occupancy rate. YIT usually sells commercial real estate development
projects to investors either prior to construction or during an early phase.

Residential sales to consumers remained favourable

YIT–s goal is to be a leader in residential construction in all of its market
areas – Finland, Russia, the Baltic countries and Central Eastern Europe. In
January-June, the focus of residential construction was still on residential
development projects sold directly to consumers. In addition to continued
favourable demand, YIT–s residential sales in Russia were supported by YIT–s
established position as a reliable construction company, YIT–s diverse housing
offering, YIT–s own marketing and promotion activities and extensive housing
loan collaboration with banks.

In January-June, YIT increased the number of residential start-ups compared to
the previous year and started the construction of a total of 3,836 residential
units aimed at consumers (1-6/2010: 3,341). Of the start-ups, 1,945 took place
in April-June (4-6 /2010: 1,979). Of the start-ups in January-June, 1,280 were
in Finland (1-6/2010: 1,236, 2,240 in Russia (1-6/2010: 1 872) and 316 in the
Baltic countries and Central Eastern Europe (1-6/2010: 233).

The residential start-ups responded to favourable demand among consumers and
increased the number of residential units for sale. During January-June, YIT
sold a total of 2,661 residential units directly to consumers (1-6/2010:
2,496), of which 1,394 in April-June (4-6/2010: 1,168). During January-June,
YIT sold a total of 1,048 residential units directly to consumers In Finland
(1-6/2010: 977), 1,457 in Russia (1-6/2010: 1,499) and 156 in the Baltic
countries and Central Eastern Europe (1-6/2010: 20).

YIT has also been active in the Finnish business premises market, which picked
up further during the review period. The decrease in rents stopped in 2010,
interest among foreign investors has increased and investors– yield
requirements have begun to decrease. Leasing of YIT–s commercial development
projects advanced well during the review period, and YIT sold two commercial
development projects during the second quarter.

Improving the profitability in Building Services

As a result of the acquisition completed at the beginning of September 2010,
the significance of Central Europe to the Group has increased clearly. YIT–s
business segment structure was revised from March 1, 2011, with Building and
Industrial Services being divided into two segments: Building Services Northern
Europe and Building Services Central Europe. From March 1, 2011, YIT–s four
business segments are: Building Services Northern Europe, Building Services
Central Europe, Construction Services Finland and International Construction
Services. YIT–s comparable figures for 2010 according to the new business
segment structure were published in a separate stock exchange release on March
24, 2011.

Karl-Walter Schuster (61) was appointed as the head of Building Services
Central Europe and as a member of the Group Management Board as of March 1,
2011. Matti Malmberg (51) was appointed as the head of Building Services
Northern Europe and as a member of the Group Management Board as of June 29,
2011.

The Group–s strategic goal is to increase building system, industrial service
and maintenance operations in the Nordic countries and Central Europe. Service
and maintenance revenue in Building Services Northern Europe was EUR 610.6
million (1-6/2010: EUR 588.8 million) and in Building Services Central Europe
EUR 94.3 million (1-6/2010: EUR 44.5 million). During the review period, the
share of service and maintenance was significantly lower in Building Services
Central Europe (26%) than in Building Services Northern Europe (62%), and
therefore the opportunities for increasing it in Building Services Central
Europe are good.

The operating profit of Building Services Northern Europe was weakened by tight
price competition, especially in project operations, and the continued
relatively low level of new investments in building systems and demand for
industrial services. The profitability of the Building Services Northern Europe
segment was also burdened by a provision of EUR 3.0 million related to an
individual customer project. The profitability of building services in Denmark
and industrial services in Finland continued to be low during the second
quarter. Building Services Northern Europe is undergoing a restructuring of
operations in industrial services in Finland and in Building Services Denmark.
The aim is to improve profitability at the segment level also through
rearrangements of the branch office network, selective project acquisition and
making procurement more efficient.

The profitability of the business operations acquired in Central Europe at the
beginning of September 2010 was below YIT–s average profitability, but efforts
to improve their profitability have succeeded according to plans.

Annual growth objective was raised to more than 10 percent

In August 2010, the Group–s strategic annual revenue growth target was
increased to more than 10 percent on average. In Russia, YIT–s strong market
position and improved operating environment enable growth; therefore, the
number of residential start-ups was increased clearly during 2010, and
increasing the number also continued during the review period. In Finland, the
focus continues to be on projects sold directly to consumers and, following the
revival of the market, also on own-based business premises development.

YIT has a diverse residential offering under construction in both Finland and
Russia, and the number of start-ups will increase during 2011 compared to the
previous year. In Building Services, the focus of business operations will be
shifted to service and maintenance. The recovery of investments in building
systems, especially in Germany, will also offer opportunities for project
operations.

NEWS CONFERENCE, WEBCAST AND CONFERENCE CALL

YIT will hold a news conference on the interim report on Thursday, August 4,
2011, at 10:00 a.m. (Finnish Time, EEST). The news conference will be held in
English and will be held at YIT–s head office at Panuntie 11, 00620 Helsinki,
Finland. The event is intended for analysts, portfolio managers and the media.

The news conference and the presentation, given by the company–s President and
CEO, Juhani Pitkäkoski, can be viewed live on YIT–s website at
www.yitgroup.com/webcast. The live webcast will start at 10:00 a.m. The webcast
replay will be available at the same address starting at approximately 12:00
noon.

It is also possible to participate in the event through a conference call.
Participants are requested to call the assigned number (+44 (0)20 7162 0077) at
least five minutes before the conference call begins, at 9:55 a.m. (Finnish
time, EEST) at the latest.

During the webcast and conference call, questions must be asked in English.
After the session, there will also be an opportunity for the media to ask
questions in Finnish.

Schedule in different time zones:

Interim The investor and analyst event, Recorded
Report conference call and live webcast webcast
published available
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EEST 8:00 10:00 12:00
(Helsinki)
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CEST (Paris, 7:00 9:00 11:00
Stockholm)
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BST (London) 6:00 8:00 10:00
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US EDT (New 1:00 3:00 5:00
York)
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Financial reports and other investor information are available at YIT–s
website, www.yitgroup.com/investors. The materials may be ordered via the
website, by sending an e-mail to InvestorRelations@yit.fi or by telephone on
+358 20 433 2257.

YIT Corporation

Juhani Pitkäkoski
President and CEO

For further information, please contact:

Timo Lehtinen, Chief Financial Officer, YIT Corporation, tel. +358 45 670 0626,
timo.lehtinen@yit.fi
Hanna-Maria Heikkinen, Vice President, Investor Relations, YIT Corporation,
tel. +358 40 826 2172, hanna-maria.heikkinen@yit.fi

Distribution: NASDAQ OMX Helsinki, principal media, www.yitgroup.com

INTERIM REPORT JANUARY 1 – JUNE 30, 2011

CONTENTS

— Group–s financial development
— Strategic objectives
— Development by business segment
— Personnel
— Resolutions passed at the Annual General Meeting
— Shares, share options and shareholders
— Most significant short-term business risks and risk management
— Outlook for 2011
— Events after the review period
— Tables to the Interim Report

GROUP–S FINANCIAL DEVELOPMENT

Changes in organisational structure and Group management

As a result of the acquisition completed at the beginning of September 2010,
the significance of Central Europe to the Group has increased significantly.
YIT–s business segment structure was revised from March 1, 2011, with Building
and Industrial Services being divided into two segments: Building Services
Northern Europe and Building Services Central Europe. From March 1, 2011, YIT–s
four business segments are: Building Services Northern Europe, Building
Services Central Europe, Construction Services Finland and International
Construction Services. YIT–s comparable figures for 2010 according to the new
business segment structure were published in a separate stock exchange release
on March 24, 2011.

Karl-Walter Schuster (61) was appointed as the head of Building Services
Central Europe and as a member of the Group Management Board as of March 1,
2011. Previously, he acted as the head of the Central Europe division within
the Building and Industrial Services business segment. Matti Malmberg (51) was
appointed as the head of Building Services Northern Europe and as a member of
the Group Management Board as of June 29, 2011. Previously, he acted as the
Senior Vice President in charge of Building Systems Finland, Russia and the
Baltic countries.

During the second quarter, YIT Corporation–s Board of Directors established a
new committee with the purpose of assisting the Board in matters related to the
development of YIT–s business. The members of this Working Committee are the
Board of Directors– chairman Henrik Ehrnrooth (chair) and vice chairman Reino
Hanhinen, as well as Michael Rosenlew, appointed by the Board of Directors from
among its number.

Application of IFRIC 15 interpretation

YIT has applied the IFRIC 15 Agreements for the Construction of Real Estate
IFRS interpretation from the start of the financial period that began on
January 1, 2010. Due to the application of the interpretation,Group reporting
and segment reporting differ. The key difference is that residential
developments are only recognised in Group figures upon project delivery, while
in segment reporting they are recognised as construction progresses.

The Group–s financial performance is presented using both figures compliant
with Group reporting and figures compliant with segment reporting, referred to
as the performance of the segments or the segments total figure. The difference
between the accounting policies is reported as an IFRIC 15 adjustment.

Revenue of the segments increased by a quarter on the previous year

Revenue, EUR million 1-6/11 1-6/10 Change 4-6/11 4-6/10 Change
——————————————————————————–
Building Services Northern 985.6 867.6 14% 509.4 460.8 11%
Europe
——————————————————————————–
Building Services Central 368.2 157.2 134% 191.1 86.9 120%
Europe
——————————————————————————–
Construction Services Finland 621.8 528.1 18% 332.3 275.2 21%
——————————————————————————–
International Construction 220.8 219.0 1% 120.5 112.1 7%
Services
——————————————————————————–
Other items -32.6 -36.8 -16.4 -20.7
——————————————————————————–
YIT–s segments total 2,163.8 1,735.1 25% 1,136.9 914.3 24%
——————————————————————————–
IFRIC 15 adjustment -56.9 -115.1 0.3 -59.6
——————————————————————————–
YIT Group total 2,106.9 1,620.0 30% 1,137.2 854.7 33%
——————————————————————————–

Revenue of YIT–s segments increased by 25 percent in January-June compared to
the previous year, amounting to EUR 2,163.8 million (1-6/2010: EUR 1,735.1
million). Revenue increased across all segments. The revenue of Building
Services Central Europe increased compared to the year before mainly as the
result of the acquisition completed in September 2010. Changes in foreign
exchange rates increased the segments– revenue for the review period by EUR
33.2 million compared to the previous year.

Following the IFRIC 15 adjustment, YIT Group–s revenue increased by 30 percent
from the previous year and was EUR 2,106.9 million for January-June (1-6/2010:
EUR 1,620.0 million). The completion schedules of property development projects
affect the Group–s revenue recognition, and therefore Group figures may
fluctuate greatly between different quarters. In January-June, the number of
residential units completed in Russia was lower than the year before, while in
Finland, the Baltic Countries and Central Eastern Europe, more residential
units were completed than the year before.

In January-June 2011, Finland accounted for 42 percent (44%) of the Group–s
revenue, Sweden for 16 percent (17%), Germany for 13 percent (6%), Norway for
12 percent (14%), Russia for 7 percent (9%), Denmark for 4 percent (4%), the
Baltic countries for 1 percent (1%) and other countries for 5 percent (5%).

Operating profit of the segments increased clearly during the second quarter

The operating profit of YIT–s segments increased by 19 percent in January-June
compared to the previous year, amounting to EUR 120.7 million (1-6/2010: EUR
101.6 million). The operating profit margin calculated on the basis of the
segment figures was 5.6 percent (1-6/2010: 5,9 %). The operating profit of the
segments includes EUR -4.4 million (1-6/2010: EUR -1.0 million) of borrowing
costs according to IAS 23. The IAS 23 standard defines the recording method of
borrowing costs in long-term construction projects.

Profitability was improved by the focus of operations on residential
development projects in Construction Services Finland and the sale of two
commercial development projects during the second quarter. The profitability of
International Construction Services improved through growth in residential
sales and an increase in housing prices in Russia. As for Building Services
Central Europe, operating profit improved particularly with the German
operations improving their performance. The profitability of Building Services
Central Europe improved also as the result of the divestment of operations in
Hungary in the second quarter, with an effect of EUR 5.0 million on the
segment–s operating profit.

In Building Services Northern Europe, the operating profit fell short of the
previous year due to tight price competition, especially in project operations,
and the relatively low level of investments in building systems and demand for
industrial services. The profitability of the Building Services Northern Europe
segment was also burdened by a provision of EUR 3.0 million related to an
individual customer project.

In Group reporting, residential development projects are only recognised as
income upon project delivery. Following the IFRIC 15 adjustment, the Group–s
operating profit increased by 53 percent compared to the previous year,
amounting to EUR 107.1 million (1-6/2010: EUR 69.8 million). Following the
IFRIC 15 adjustment, the Group–s operating profit margin was 5.1 (1-6/2010:
4.3%).

Earnings per share improved significantly

Financial expenses decreased compared to the previous year, mainly due to the
increasingly lower hedging costs of the ruble and higher IAS 23 adjustment.

The Group–s profit before taxes increased by 79 percent from the previous year
to EUR 97.7 million in January-June (1-6/2010: EUR 54.6 million).

Earnings per share increased by 84 percent from the previous year to EUR 0.57
(1-6:2010: EUR 0.31).

Order backlog continued to strengthen

The order backlog of YIT–s segments was EUR 3,509.4 million at the end of June
(6/2010: EUR 3,067.4 million); approximately 14 percent more than at the end of
June the previous year. The order backlog increased by 5 percent from the end
of March 2011, at which time it stood at EUR 3,355.6 million.

The order backlog of Building Services Central Europe increased significantly
compared to the previous year as a result of the acquisition completed at the
beginning of September 2010. The order backlog increased from the end of March
2011 in Building Services Northern Europe, Construction Services Finland and
International Construction Services. The order backlog of Construction Services
increased particularly as a result of increasing residential development
projects and an increase in the volume of business premises construction in
Finland.

Following the IFRIC 15 adjustment, YIT Group–s order backlog was EUR 3,796.9
million at the end of June (6/2010: EUR 3,329.2 million).

Capital expenditure and acquisitions

Gross capital expenditure on non-current assets included on the balance sheet
totalled EUR 23.3 million (1-6/2010: EUR 18.1 million) during January-June,
representing 1.1 percent (1-6/2010: 1.1%) of revenue. Investments in
construction equipment amounted to EUR 7.1 million (1-6/2010: EUR 4.2 million)
and investments in information technology to EUR 4.9 million (1-6/2010: EUR 4.1
million). Other investments, including acquisitions, amounted to EUR 11.3
million (1-6/2010: EUR 9.8 million).

When assessing acquisitions, YIT–s goal is to acquire companies that support
YIT–s strategy of becoming the leading building system service provider in the
Nordic countries and Europe. The acquired company–s business culture, areas of
competence and payback time of the purchase price of the acquired company are
key criteria.

During the second quarter, YIT completed three acquisitions in the Nordic
countries and entered into agreements on further two acquisitions. In Sweden,
YIT acquired Orad i Sydost AB, a company specialising in industrial pipeworks
with an annual revenue of approximately EUR 1.5 million. The company has 13
employees. YIT also acquired Johnson Control–s Commercial Refrigeration
business in Sweden, with annual revenue of approximately EUR 15 million. The
acquired unit is one of the leading refrigeration companies in Sweden, with
more than 100 employees across Sweden. YIT also acquired Frisk Ventilation, a
supplier of ventilation-related services, in Sweden, with annual revenue of
approximately EUR 7 million and 23 employees.

During the review period, the company agreed on the acquisition of MISAB
Sprinkler&VVS AB in Sweden. The company provides complete solutions for
plumbing and sprinkler, ventilation, fire protection and industrial systems.
The company–s annual revenue is approximately EUR 7 million and it employs 40
people. The acquisition took effect on July 1, 2011.

In Finland, during the review period, YIT entered into an agreement on the
acquisition of the business operations of Sakari Timonen Oy, a specialist in
refrigeration engineering. In addition to the business operations, the
company–s personnel will also be transferred to YIT. The company–s annual
revenue is approximately EUR 1 million. The business acquisition took effect on
July 1, 2011.

During the second quarter, YIT implemented its strategy by selling its holding
in the German company AGO AG and its Hungarian business operations. The shares
in AGO AG were part of the acquisition that took effect at the beginning of
September 2010, whereby YIT acquired a holding of 59.25 percent in the German
company specialising in the production and sales of energy, with annual revenue
of approximately EUR 50 million. The revenue of the Hungarian operations
divested by YIT during the second quarter amounted to approximately EUR 10
million in 2010.

Business acquisitions and companies consolidated into the Group are discussed
in more detail in the tables to the interim report.

Investments in growth impaired cash flow

The Group–s operating cash flow for the review period after investments
amounted to EUR 15.9 million (1-6/2010: EUR 65.5 million). In April-June, the
Group–s operating cash flow for the review period after investments amounted to
EUR -0.2 million (4-6/2010: EUR 31.7 million). Operating cash flow in the
second quarter was affected particularly by growth in development production
under construction, plot investments and seasonal increase in receivables in
Building Services.

At the end of June, the Group–s invested capital amounted to EUR 1,816.1
million (3/2011: EUR 1,726.6 million). Of the Group–s invested capital, 29
percent (3/2011: 32%), or EUR 531.9 million (3/2011: EUR 558.2 million) was
invested in Russia. Exchange rate changes of the ruble decreased the capital
invested in Russia by EUR 1.5 million in April-June.

The Group–s capital invested in Russia is primarily accounted for by the
International Construction Services segment. Capital invested in Russia
decreased in spite of an increase in residential production. The use of capital
has been made more efficient by decreasing the size of projects, selling
apartments at an earlier construction phase and increasing the share of
mortgage deals.

Return on investment improved, amounting to 15.6 percent for the last 12 months
(4/2010-3/2011: 14.0%). Invested capital is calculated by deducting
non-interest bearing liabilities from the balance sheet total. The balance
sheet total at the end of June was EUR 3,387.4 million (3/2011: EUR 3,274.8
million).

The Group–s financial position enables the implementation of the growth strategy

YIT has a diverse capital structure and a strong liquidity position. Cash
reserves amounted to EUR 234.1 million (3/2011: EUR 267.6 million) at the end
of June. In addition, committed credit and overdraft facilities amounting to a
total of EUR 223,9 are available. The committed limit agreements do not include
an obligation to maintain financial key ratios, i.e. covenants.

The gearing ratio increased slightly compared to the end of March 2011,
amounting to 79.9 percent at the end of June 2011 (3/2011: 75.2%). The equity
ratio improved to 29.7 percent (3/2011: 28.5%). Net financing debt increased
from the end of March 2011 to EUR 702.7 million (3/2011: EUR 626.1 million).

Net financial expenses decreased to EUR 9.4 million during the review period
(1-6/2010: EUR 15.1 million), or 0.4 percent (1-6/2010: 0.9%) of the Group–s
revenue. The net financial expenses include EUR 6.3 million (1-6/2010: EUR 2.8
million) of capitalisations in compliance with IAS 23. The exchange rate
differences included in the net financial expenses, totalling EUR -2.1 million
(1-6/2010: EUR -4.2 million), were comprised almost entirely of costs of
hedging debt investments in Russia. At the end of June 2011, EUR 117.9 million
(3/2011: EUR 140.3 million) of the capital invested in Russia were comprised of
debt investments and EUR 414.4 million (3/2011: EUR 417.9 million) were equity
investments or similar fixed net investments. In accordance with YIT–s hedging
policy, the debt investments are hedged against exchange rate risk, while
equity investments are not hedged due to their permanent nature.

Financial liabilities amounted to EUR 936.8 million (3/2011: EUR 893.8 million)
at the end of June, and their average interest rate was 3.5 percent (3/2011:
3.2%). Fixed-interest loans accounted for 58 percent (3/2011: 52%) of the
Group–s financial liabilities. Of the loans, 41 percent (3/2011: 32%) had been
raised directly from the capital and money markets. The maturity distribution
of long-term loans is balanced. A total of EUR 74.1 million of long-term loans
will mature during the latter half of 2011.

During the second quarter, YIT issued, under the company–s programme for
issuance of notes, a EUR 100 million bond targeted at institutional and other
selected investors. Due June 20, 2016, the bond carries an annual fixed coupon
rate of 4.750 percent and has an issue price of 99.843 percent. The effective
yield of the bond is 4.786 percent.

Large residential projects were completed during the second quarter in Finland,
and the total amount of construction-stage contract receivables sold to
financial institutions decreased from the end of March 2011 as a result. The
total amount of construction-stage contract receivables sold to financial
institutions amounted to EUR 197.8 million at the end of June (3/2011: EUR
252.4 million). Of this amount, EUR 190.6 million (3/2011: EUR 237.9 million)
is included in interest-bearing liabilities on the balance sheet and the
remainder comprises off-balance sheet items in accordance with IAS 39. Interest
expenses on receivables sold to financing companies amounted to EUR 2.2 million
(1-6/2010: EUR 0.9 million) during the review period and these are fully
included in the financial expenses of the review period.

Participations in the housing corporation loans of unsold completed residential
units amounted to EUR 37.3 million (3/2011: EUR 25.2 million) at the end of
June, and they are included in interest-bearing liabilities. The interest on
the participations, EUR 0.5 million (1-6/2010: EUR 0.5 million), is included in
housing corporation charges and is thus booked in project expenses.

YIT paid out dividends of EUR 81.3 million for 2010 during the second quarter
in compliance with the resolution of the Annual General Meeting.

The Group–s balanced business structure and solid financial position enable the
implementation of YIT–s growth strategy and the acquisitions and plot
investments required by it.

STRATEGIC OBJECTIVES

YIT Corporation–s Board of Directors confirmed the Group–s strategy for
2011-2013 on August 18, 2010. The key strategic objective is profitable growth.
The Group–s annual revenue growth target was increased to more than 10 percent
on average. The prior target was an average annual revenue growth of 5-10
percent. The Group–s other strategic target levels remain unchanged: return on
investment of 20 percent, operating cash flow after investments must be
sufficient for dividend payout and the reduction of debt, equity ratio of 35
percent and dividend payout of 40-60 percent of net profit for the period.

In terms of business operations, the focus areas of YIT–s growth are building
system service and maintenance operations and residential construction. Growth
will be sought both organically and through acquisitions. YIT seeks growth by
strengthening its local market position and through geographical expansion to
new countries. Building system services will be increased in the Nordic
countries and Central Europe and residential construction in Finland, Russia,
the Baltic countries and Central Eastern Europe. The Group–s potential new
market areas are the United Kingdom, the Netherlands and Belgium in building
system services and Poland in construction services.

YIT published a stock exchange release on the confirmation of the strategy on
August 19, 2010, and materials for the Capital Market Day focusing on the
strategic focus areas on September 2, 2010.

DEVELOPMENT BY BUSINESS SEGMENT

The development by business segment is presented using figures compliant with
segment reporting.

BUILDING SERVICES NORTHERN EUROPE

Key figures

1-6/11 1-6/10 Change 4-6/11 4-6/10 Change
—————————————————————————–
Revenue, EUR million 985.6 867.6 14% 509.4 460.8 11%
—————————————————————————–
Operating profit, EUR million 35.9 44.9 -20% 18.8 25.1 -25%
—————————————————————————–
Operating profit margin, % 3.6 5.2 3.7 5.4
—————————————————————————–

6/11 6/10 Change 6/11 3/11 Change
———————————————————————-
Order backlog, EUR million 879.5 748.5 18% 879.5 804.9 9%
———————————————————————-

Revenue, EUR million 1-6/11 1-6/10 Change 4-6/11 4-6/10 Change
——————————————————————————-
Finland 299.3 282.1 6% 159.5 151.9 5%
——————————————————————————-
Sweden 325.1 266.8 22% 169.4 142.9 19%
——————————————————————————-
Norway 255.7 236.7 8% 128.3 122.5 5%
——————————————————————————-
Denmark 80.8 62.7 29% 39.4 32.5 21%
——————————————————————————-
Russia and the Baltic countries24.7 19.3 28% 12.8 11.0 16%
——————————————————————————-
Total 985.6 867.6 14% 509.4 460.8 11%
——————————————————————————-

The revenue of Building Services Northern Europe increased by 14 percent in
January-June compared to the previous year, amounting to EUR 985.6 million
(1-6/2010: EUR 867.6 million). Revenue for the second quarter increased by 11
percent to EUR 509.4 million (4-6/2010: EUR 460.8 million). Changes in foreign
exchange rates increased the revenue for January-June by EUR 34.0 million
compared to the previous year. The increase in revenue was widespread: revenue
increased in all countries.

The segment–s operating profit fell short of the year before due to strict
price competition, especially in project operations and the relatively low
level of new investments in building systems and demand for industrial
services. The segment–s operating profit for the second quarter was burdened by
a provision of EUR 3.0 million related to an individual customer project.

Profitability was highest in Norway during the review period: increasing the
share of service and maintenance operations has had a positive impact on
profitability in Norway. Profitability remained at a moderate level also in
Finland and Sweden during the review period. The profitability of building
system services in Denmark and industrial services in Finland continued to be
low during the second quarter.

Building Services Northern Europe is undergoing a restructuring of operations
in industrial services in Finland and in building services Denmark. The aim is
to improve profitability at the segment level also through rearrangements of
the branch office network, selective project acquisition and making procurement
more efficient.

The order backlog at the end of June was 18 percent higher than the year
before, and 9 percent higher than at the end of March 2011. The order backlog
increased in all countries except for Denmark.

During the second quarter, YIT completed three acquisitions in Sweden and
entered into agreements on two further acquisitions. The acquisitions
complemented YIT–s offering, competence portfolio and geographical service
network. The combined revenue of the acquired business operations was
approximately EUR 30 million in 2010.

Service and maintenance revenue grew during the first half of 2011

YIT–s goal is to be the leading provider of technical system maintenance in the
Nordic countries and Central Europe. The target is to increase service and
maintenance operations at a faster rate than other operations.

Service and maintenance operations generated EUR 610.6 million (1-6/2010: EUR
588.8 million), or 62 percent (1-6/2010: 68%) of the segment–s total revenue.

YIT has improved the offering of service and maintenance operations by
developing a ServiFlex concept where customers can agree on extensive service
entities in a single contract. The iServiflex service was launched in
industrial services during the first quarter. Customers increasingly appreciate
simplicity in purchasing services, and the number of extensive service
agreements is estimated to increase.

During the second quarter, YIT entered into a ServiFlex agreement with the
SILVAN retailer chain, among others. The agreement covers electrical work and
services related to pipework and ventilation in the chain–s 39 outlets in
Denmark. The agreement is an extension of the cooperation between YIT and the
SILVAN chain, whereby YIT implements energy-saving solutions at eight of the
chain–s outlets. In Finland, YIT signed more than 20 new ServiFlex agreements
during the second quarter on the servicing and maintenance of various office
and residential buildings, business properties and production plants across the
country.

During the second quarter, YIT signed a contract on pipeline collection systems
for waste in the new Kalasatama and Jätkäsaari residential areas in Helsinki
with companies owned by the City of Helsinki. YIT will design and construct
automatic Envac pipeline systems for waste collection in the areas and assume
responsibility for their care and maintenance after commissioning. The
investments will be realised in 2012-2030 as the construction of the areas
proceeds, and the maintenance period will be about 20 years from the completion
of the investments. The installation work will begin in Jätkäsaari in July and
the system is estimated to be in use in 2012. The Kalasatama system will be in
use in 2014. The value of the investments will be around EUR 80 million and
maintenance around EUR 20 million.

YIT signed a four-year nationwide framework agreement with DSB (Danish State
Railways) during the second quarter on the maintenance of refrigeration and
ventilation systems in all DSB buildings across Denmark, including railway
stations, office buildings and workshops. The agreement can be extended by one
year.

In addition, during the second quarter YIT entered into several agreements on
the delivery of building system services to Finnish schools and public
buildings.

New investments still relatively low

New investments in building systems recovered slightly during the review
period, but still remained at a relatively low level. Demand among industrial
customers was also focused on service and maintenance, and the demand for new
investments remained at a low level during the second quarter.

In Denmark, an extensive student housing complex will be constructed at Aalborg
University, with 130 new residential units for students. YIT will implement the
pipework and ventilation solutions as a subcontractor as a result of the order
secured during the second quarter. In addition, 142 residential units for
students will be renovated in the Aalborg area, with YIT responsible for the
delivery of the building system solutions. The agreement covers electrical,
piping and ventilation work.

In Norway, YIT signed an agreement on the delivery of an automatic Envac
pipeline system for waste collection in the Ranheim residential area with the
Trondheim municipality during the second quarter. The waste collection system
will cover 2,000 households and one school.

In Kiruna, Sweden, YIT will install 40 kilometres of new pipeline systems at an
LKAB (state-owned Swedish mining company) mine located 1,365 metres below sea
level. The pipeline is intended for water, pressurised air, gases and grease.
During the second quarter, YIT also agreed with PEAB on the implementation of
building system solutions at the new Siemens premises in Finspång, Sweden, for
750 employees after completion. The premises will be certified according to the
LEED certificate. YIT also agreed during the second quarter on the installation
of a new security system platform at all Swedish branch offices of one of the
world–s leading pharmaceutical companies. The project will be implemented in
several phases, continuing until 2017.

YIT Industrial Services agreed with Andritz Oy on the delivery of 21
module-structured air treatment machines to a pulp mill built in Punta Pereira
in Uruguay. The module-structured air treatment machines will be used for
cooling the electrical rooms of the pulp mills and for pressurising the
facilities with chemically treated air. The machines will be delivered to
Uruguay in December 2011, and installed in early 2012.

BUILDING SERVICES CENTRAL EUROPE

Key figures

1-6/11 1-6/10 Change 4-6/11 4-6/10 Change
—————————————————————————–
Revenue, EUR million 368.2 157.2 134% 191.1 86.9 120%
—————————————————————————–
Operating profit, EUR million 16.1 4.9 229% 12.1 3.1 290%
—————————————————————————–
Operating profit margin, % 4.4 3.1 6.3 3.6
—————————————————————————–

6/11 6/10 Change 6/11 3/11 Change
———————————————————————-
Order backlog, EUR million 554.1 276.8 100% 554.1 573.2 -3%
———————————————————————-

Revenue, EUR million 1-6/11 1-6/10 Change 4-6/11 4-6/10 Change
——————————————————————————–
Germany 296.8 102.1 191% 155.7 58.1 168%
——————————————————————————–
Austria 46.6 46.5 0% 24.7 25.0 -1%
——————————————————————————–
Poland, the Czech Republic, 24.8 8.6 188% 10.7 3.8 182%
Hungary and other countries
——————————————————————————–
Total 368.2 157.2 134% 191.1 86.9 120%
——————————————————————————–

Building Services Central Europe revenue more than doubled in January-June
compared to the previous year, mainly as the result of an acquisition that took
effect at the beginning of September 2010. An increase in new building system
investments also contributed to the growth of the revenue for the review
period. Changes in foreign exchange rates did not have a substantial impact on
the revenue compared to the year before.

In Building Services Central Europe, operating profit improved particularly
with

DGAP-News: YIT–s Interim Report January 1 – June 30, 2011: Good profitability in Construction Segments, Building Services in Germany developed strongly hinzugefügt von Presse am 4. August 2011
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