Interim Report 1–3/2018

1 | Interim Report January 1 – March 31, 2018 |

Interim Report January 1 – March 31, 2018: Integration progressing, result was modest

Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year and are of the same unit. YIT reports in accordance with IFRS principles.

YIT and Lemminkäinen merged on February 1, 2018. In this interim report for January–March 2018, comparison figures are pro forma figures. To illustrate the impacts of the merger on the result of YIT's operations and its financial position and to improve the comparability of the combined company's financial information, YIT has prepared unaudited pro forma financial disclosures. These unaudited pro forma financial disclosures reflect the new segment reporting structure and reporting practices adopted by YIT on the date of completing the merger. The unaudited pro forma financial disclosures are based on YIT's and Lemminkäinen's IFRS-compliant historical financial data, adjusted for the effects of the merger. YIT's actual results may deviate materially from the assumptions used in preparing these audited pro forma disclosures.

Additional information about the historical financial figures of YIT or Lemminkäinen are available in YIT's and Lemminkäinen's audited consolidated financial statements and unaudited interim reports, available on YIT's website at www.yitgroup.com.

In this interim report, the figures for the first quarter 2018, the comparison figures and the figures for year 2017 are presented as pro forma figures. The pro forma balance sheet is presented as if the merger had occurred on December 31, 2017 and as if YIT as the accounting acquirer had consolidated the acquisition balance sheet of Lemminkäinen in its group financial accounts at said time. The pro forma income statements for the accounting period ending December 31, 2017 are presented as if the merger had occurred on January 1, 2017. Pro forma adjustments that do not have a continuing impact on YIT's result are presented in the income statement for the accounting period that ended December 31, 2017. Additional information is available in the stock exchange release published on April 4, 2018 and its appendices.

Due to the merger, YIT's financial information is also reported in the explanatory statement of the interim report so that the financial statements of merged Lemminkäinen for the financial period January 1‒January 31, 2018 are included in the pro forma figures for 2018, and the figures are presented in the tables in the column "Pro forma 1-3/18". Figures including Lemminkäinen's financial statements for the financial period January 1–January 31, 2018 are used in the discussion in the explanatory statement and compared to the pro forma figures January 1 – December 31, 2017. In the interim report tables, the column "Reported 1-3/18" does not include Lemminkäinen's figures for the financial period January 1–January 31, 2018.

Group reporting, IFRS

Residential projects for consumers recognised as income upon completion

January–March

Revenue decreased by 13% to EUR 602.2 million (696.0).
Operating profit amounted to EUR -51.1 million (-52.4) and operating profit margin was -8.5% (-7.5).
Adjusted operating profit1 amounted to EUR -43.2 million (-27.1) and adjusted operating profit margin was -7.2% (-3.9). Adjusting items of EUR -7.8 million during the reporting period are mainly related to merger related fair value cost effects, integration costs and reorganisation of paving operations in Scandinavia.
Earnings per share were EUR -0.25 (-0.23).
Operating cash flow after investments, excluding discontinued operations, amounted to EUR -152.7 million.
Order backlog grew from the level of end of December 2017 and was EUR 4,640.8 million (12/2017: 4,218.3).
The merger of YIT Corporation and Lemminkäinen Corporation was completed on February 1, 2018.
The company estimates the total annual synergies related to the merger to have an impact of EUR 40-50 million by the end of 2020. Of this, EUR 40 million is expected to be achieved starting from the first quarter 2020.

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: Consumer demand for apartments is expected to remain at a good level. Activity among large residential investors is expected to be lower than in the previous years.

Housing Russia: Demand for apartments is expected to remain at the same level as seen on average in the second half of 2017. Residential prices are expected to remain low.

Business premises: Rental demand for business premises is expected to remain at the previous year's level in growth centres. The contracting market is expected to remain active, but contract sizes are expected to decrease on average.

Infrastructure projects: Infrastructure construction market is expected to continue to grow slightly from the level of the year 2017.

Paving: The total volume of the paving market is expected to grow slightly in YIT's area of operation.

Partnership properties: Activity among property investors is expected to remain at a good level, particularly for centrally located projects in the Helsinki metropolitan area and in major growth centres.

Adjusted operating profit1 is expected to fluctuate significantly between the quarters.

In its annual cash flow planning, YIT's target is to have a positive cash flow after dividends have been paid. This applies also to cash flow planning for year 2018.

YIT has adjusted its estimate on the total amount and timing of the synergy benefits of the merger. YIT estimates that the total synergies are larger and they will be achieved sooner than earlier announced. The company estimates the total annual synergies related to the merger to have an impact of EUR 40-50 million million by the end of 2020. Of this, EUR 40 million is expected to be achieved starting from the first quarter 2020. Previously the company estimated the annual total synergies to be EUR 40 million, and they were estimated to be reached in full by the end of 2020.

YIT estimates that in 2018, in Finland and CEE, approximately 5,000 – 5,500 apartments and approximately 3,000 apartments in Russia will be completed, the majority of them during the fourth quarter. During the first months of the year, YIT has signed several significant, long-term lease agreements and estimates to sell several large business premises in the Helsinki metropolitan area during the remainder of the year to final investors.

The adjusted operating profit reflects the result of ordinary course of business and 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 note 4.3 in the tables section.

Kari Kauniskangas, President and CEO:

The most significant event this year so far has been the merger of YIT and Lemminkäinen completed at the

beginning of February. The integration of the companies has proceeded as planned. Business operations have continued normally and all vital operations have continued uninterrupted during the integration phase. The main objective for the first three months spent together is to create an operating model for the new company and to form a functioning organisation, including unit levels. We are satisfied with the progress of the integration.

The pro forma revenue for January–March, including Lemminkäinen's figures in January, was EUR 602.2 million (EUR 696.0 million). Adjusted pro forma operating profit was modest, EUR -43.2 million (EUR -27.1 million). The result was especially affected by the usual seasonality in the Paving and Infrastructure projects segments as well as the relatively low number of housing completions in Russia. In connection with preparing our

new segment structure we evaluated our project portfolio thoroughly. Based on the evaluation, we had to lower the margins in a significant number of projects in the Russian contracting business, Infrastructure projects and Business premises. The adjustments include mainly merger related fair value cost effects, integration costs and items related to the reorganisation of Scandinavian paving operations.

In the Housing Finland and CEE segment, residential demand remained good during the period, and the segment's development was positive due to strong consumer housing sales. Using the POC accounting method, the segment's profitability improved year-on-year. The outlook for the segment is positive: we started several projects targeted at consumers in both Finland and in the CEE countries. In Russia, residential demand has remained stable compared to the second half of last year. In addition to the weaker margins in the contracting business, profitability has been negatively affected by measures taken to ensure meeting the cash flow objective and the increased residential sales in the Moscow area.

In the Business premises segment, we signed significant long-term lease agreements during the reporting period, which we expect to help us sell several large development projects to final investors during the remainder of the year. The segment's result was lower than expected due to aforementioned weakened margins in certain projects. The Tripla project is progressing as planned. At the beginning of the year, we set up the Partnership properties segment in order to increase visibility into the ownership and financing of co-owned development projects. Projects partially owned by YIT, such as the Mall of Tripla, Tietotie 6 and the Hamina–Vaalimaa E18 motorway project, are reported under this segment. The current amount of investments for projects reported under this segment is approximately EUR 147 million. The E18 Hamina–Vaalimaa motorway was taken into operation in its entirety during the period.

I am satisfied with the approximately EUR 206 million contract signed in March with the Helsinki Region Environmental Services Authority HSY for constructing a new underground wastewater treatment plant in Blominmäki, Espoo, Finland. The Infrastructure projects segment's operating profit was weak due to both seasonal fluctuation in the business and weakened margins in certain projects. Overall, the Paving segment's winter planning has worked better than in the previous year. Regarding the Paving segment, we have made sizeable reforms in Scandinavia during the beginning of the year in order to improve the competitiveness of the business in the market area. We have also succeeded well in the paving contract tenders in our area of operation, and the starting position to the actual paving season seems favourable.

In spite of the expectedly modest first quarter, the market environment seems promising, assuming that tensions in the Finnish labour market do not needlessly culminate. We estimate that, in 2018, a total of approximately 5,000– 5,500 new apartments will be completed in Finland and in the CEE countries, and approximately 3,000 apartments in Russia, the majority of them during the fourth quarter. After the successful lease agreements made during the first months of the year, we expect to sell several business premises properties to final investors during the remainder of the year. In our annual cash flow planning, our target is to have a positive cash flow after dividend payout. The same principle also applies to cash flow planning for year 2018. The company estimates the total annual synergies related to the merger to have an impact of EUR 40-50 million by the end of 2020. Of this, EUR 40 million is expected to be achieved starting from the first quarter 2020.

Significant matters

Merger of YIT and Lemminkäinen

YIT and Lemminkäinen merged on February 1, 2018. The combination of YIT and Lemminkäinen creates a financially strong company with urban development as the engine for growth and profitability. The pro forma revenue 2017 for the combined company was over EUR 3.8 billion. Lemminkäinen's shareholders were given as merger consideration 3.6146 new shares in YIT for each share in Lemminkäinen owned by them, i.e. in total 83,876,431 new shares in YIT. As a result of the registration of the completion of the merger, the total number of YIT's shares increased to 211,099,853 shares and the share capital increased by EUR 500,000 to EUR 149,716,748.22. The Extraordinary General Meetings of YIT and Lemminkäinen held on September 12, 2017 approved the merger, and the Finnish Competition and Consumer Authority approved it on January 26, 2018.

The Annual General Meeting of YIT held on March 16, 2018, decided, among other matters, on the composition of the Board of Directors and elected Harri-Pekka Kaukonen as the Chairman of the Board of Directors, Eero Heliövaara as the Vice Chairman, as well as Erkki Järvinen, Olli-Petteri Lehtinen, Inka Mero, Kristina Pentti-von Walzel and Tiina Tuomela as members.

On February 12, 2018, YIT commenced co-operation negotiations in order to reorganise the combined company. The cooperation negotiations ended at the end of the reporting period. The number of redundancies based on eliminating double work in the organisation and streamlining the operations is at the maximum 120 employees in Finland. In addition, the same amount of personnel reduction will be carried out as natural exits, retirements and terminations of fixed-term employment contracts. The reductions do not concern white and blue-collar employees in construction sites in Finland. In other countries of operation, the reorganization related to integration will reduce the number of personnel by 200 employees, mainly in Russia. In addition, the reorganization started in Scandinavia already before the merger has during the beginning of this year resulted in the reduction of 150 FTEs (full time equivalent).

Changes in the Group's reporting practices

Due to the merger, YIT's Board of Directors confirmed the Group's reporting principles. Going forward, YIT will apply IFRS principles in its group reporting as well as in its segment reporting. According to the IFRS accounting principles, revenue from residential projects for consumers is recognised upon completion. Consequently, there may be significant fluctuation in the Group's results between the quarters depending on project completion dates.

Certain figures for the Housing Finland and CEE segment and the Housing Russia segment, such as their revenue and operating result, will also be reported under the percentage of completion (POC) principle in addition to IFRS reporting. Under the POC principle, revenue recognition is based on multiplying the percentage of completion by the percentage of sale. The effects of the differences between the recognition principles are presented in detail in the tables section of the Interim report.

The Group has previously used percentage of completion (POC) segment reporting as its primary reporting principle and the Group's previous financial targets, for example, were based on POC reporting.

As a modification of YIT's previous reporting practice, the company will change the applying method of the IAS 34 Interim Financial Reporting standard in its January-March and January-September interim reports. The interim report for January-March 2018 has been prepared and the January-September 2018 interim report will be prepared according to IFRS recognition and measurement principles, but not all of the IAS 34 Interim Financial Reporting standard requirements will be applied in the preparation of the interim reports. The change influences in particular the information presented in the tables section. In other respects, the interim reports are mainly consistent in their scope with the previous interim reports. All of the IAS 34 Interim Financial Reporting standard requirements are applied in preparation of the half-year report and the financial statements.

Stock exchange releases, the merger prospectus and other merger-related material are available at yitgroup.com/merger.

Key figures

Group reporting, IFRS

	Reported	Pro forma	Pro forma		Pro forma
EUR million	1–3/18	1–3/18	1–3/17	Change1	1–12/17
Revenue	532.3	602.2	696.0	-13%	3 862.5
Housing Finland and CEE	228.5	242.9	258.3	-6%	1 156.2
Housing Russia	34.5	38.3	68.5	-44%	421.0
Business premises	162.5	183.0	198.9	-8%	902.2
Infrastructure projects	71.8	93.7	121.9	-23%	686.0
Paving	42.4	52.7	62.7	-16%	768.9
Partnership properties			0.0
Other items	-7.4	-8.3	-14.3	42%	-71.8
Operating profit	-34.6	-51.1	-52.4	3%	77.4
Operating profit margin, %	-6.5%	-8.5%	-7.5%		2.0%
Adjusted operating profit	-25.3	-43.2	-27.1	-60%	138.9
Housing Finland and CEE	21.3	20.5	8.5	141%	83.0
Housing Russia	-12.9	-13.8	-5.2	-165%	4.9
Business premises	-1.9	-2.2	1.8		51.5
Infrastructure projects	-5.7	-8.6	-1.3	-562%	17.4
Paving	-18.9	-30.8	-25.0	-23%	4.7
Partnership properties	-0.2	-0.2			-0.5
Other items	-6.9	-8.1	-5.8	-40%	-22.0
Adjusted operating profit
margin, %	-4.7%	-7.2%	-3.9%		3.6%
Housing Finland and CEE	9.3%	8.5%	3.3%		7.2%
Housing Russia	-37.5%	-36.1%	-7.6%		1.2%
Business premises	-1.2%	-1.2%	0.9%		5.7%
Infrastructure projects	-8.0%	-9.2%	-1.1%		2.5%
Paving	-44.6%	-58.4%	-39.9%		0.6%
Partnership properties
Adjusting items	9.4	7.8	25.3	-69%	61.5
Profit before taxes	-42.7	-57.8	-58.1	1%	50.7
Profit for the review period2	-35.8	-52.2	-47.3	-10%	26.3
Earnings per share, EUR	-0.20	-0.25	-0.23	-9%	0.13
Operating cash flow after
investments, excluding
discontinued operations	-152.7	n/a	n/a		n/a
Net interest-bearing debt at end of period	813.8	813.8	n/a		668.5
Gearing ratio at end of
period, %	79.8%	n/a	n/a		59.9%
Equity ratio at end of
period, %	39.1%	n/a	n/a		40.2%
Order backlog at end of	4,640.8	4,640.8	4,655.7	0%	4,218.3
period 1 Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of

January 1‒January 31, 2018.

2 Attributable to the equity holders of the parent company.

Group financial development

Revenue

Residential projects for consumers recognized as income upon completion

					Exchange
	Reported	Pro forma	Pro forma		rate	Pro forma
EUR million	1–3/18	1–3/18	1–3/17	Change 1	impact 2	1–12/17
Revenue	532.3	602.2	696.0	-13%	1%	3,862.5
Housing Finland and CEE	228.5	242.9	258.3	-6%		1,156.2
Housing Russia	34.5	38.3	68.5	-44%	11%	421.0
Business premises	162.5	183.0	198.9	-8%		902.2
Infrastructure
projects	71.8	93.7	121.9	-23%		686.0
Paving	42.4	52.7	62.7	-16%		768.9
Partnership properties
Other items	-7.4	-8.3	-14.3	42%		-71.8

1 Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

Reported 1-3/18 with comparable currency exchange rates.

January–March

The Group's revenue decreased 13% year-on-year. In the housing segments, revenue decreased due to a low number of project completions in Russia in particular.

In the Business premises segment, revenue decrease was due to completions of certain large projects during last year.

In the Infrastructure projects segment, revenue decreased particularly due to high project completion rate and lower year-on-year volumes in Finland. In the Paving segment, revenue decreased due to lower yearon-year volumes in the mineral aggregates business.

Due to the operating model, revenue in the Partnership properties segment was EUR 0.

Result

EUR million	Reported	Pro forma 1–3/18	Pro forma 1–3/17	Change 1	Pro forma 1–12/17
	1–3/18 -34.6	-51.1	-52.4	3%	77.4
Operating profit
Operating profit margin,%	-6.5%	-8.5%	-7.5%		2.0%
Adjusting items	9.4	7.8	25.3	-69%	-61.5
Adjusted operating profit	-25.3	-43.2	-27.1	-60%	138.9
Housing Finland and CEE	21.3	20.5	8.5	141%	83.0
Housing Russia	-12.9	-13.8	-5.2	-165%	4.9
Business premises	-1.9	-2.2	1.8		51.5
Infrastructure projects	-5.7	-8.6	-1.3	-562%	17.4
Paving	-18.9	-30.8	-25.0	-23%	4.7
Partnership properties	-0.2	-0.2	0.0		-0.5
Other items	-6.9	-8.1	-5.8	-40%	-22.0
Adjusted operating profit	-4.7 %	-7.2%	-3.9 %		3.6%
margin, %
Housing Finland and CEE	9.3 %	8.5 %	3.3 %		7.2%
Housing Russia	-37.5 %	-36.1 %	-7.6 %		1.2%
Business premises	-1.2 %	-1.2 %	0.9 %		5.7%
Infrastructure projects	-8.0 %	-9.2 %	-1.1 %		2.5%
Paving	-44.6 %	-58.4 %	-39.9 %		0.6%
Partnership properties

1 Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

EUR million	Reported 1–3/18	Pro forma 1–3/18	Pro forma 1–3/17	Change1	Pro forma 1–12/17
Profit before taxes	-42.7	-57.8	-58.1	1%	50.7
Profit for the review period2	-35.8	-52.2	-47.3	-10%	26.3
Earnings per share, EUR	-0.20	-0.25	-0.23	-9%	0.13
Effective tax rate, %	16.3%

1 Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

2 Attributable to the equity holders of the parent company.

January–March

The Group's operating profit was EUR -51.1 million, and the operating profit margin was -8.5%. The operating profit includes adjusting items of EUR -7.8 million mainly related to merger related fair value costs effects (more information in note 4.3). In addition, costs related to achieving the synergy benefits are included in the adjusting items as well as costs related to the reorganization of the Scandinavian operations.

Adjusted operating profit was EUR -43.2 million, and adjusted operating profit margin was -7.2%. Adjusted operating profit decreased mainly due to lowered margins in certain projects in the contracting business in Russia as well as in Infrastructure projects and Business premises.

Profit before taxes was EUR -57.8 million and profit for the review period was EUR -52.2 million.

Impacts of the merger on reporting

As a result of the merger, goodwill amounting to EUR 298.3 million was recorded on YIT's balance sheet. Thereof EUR 245.1 million was formed at the merger and EUR 53.2 million was Lemminkäinen's historical goodwill. Assets and debts acquired at the merger have been booked at fair value of the merger date. The most significant of these bookings are:

Adjustment of EUR 37.7 million to the fair value of tangible assets (carrying value at the time of acquisition EUR 164.4 million). This adjustment is mainly related to industrial properties, asphalt stations and machines as well as to mineral aggregate pits.
An adjustment totalling EUR 44.7 million has been recorded in intangible assets on the acquisition date balance sheet (carrying value at the time of acquisition EUR 50.9 million). The item includes intangible assets relating to customer relationships, brands and order backlog.
An adjustment of EUR 22.6 million has been recorded in the fair value of inventories on the balance sheet at the time of the acquisition,

Synergies and integration costs

The merger of YIT and Lemminkäinen is expected to create significant value for the shareholders of the merged company. When planning the merger, the total synergies were estimated to be approximately EUR 40 million annually, and they were expected to materialise in full by the end of 2020. Once the companies had merged, the sources of the synergies and the plans made could be verified and detailed further. New sources of synergies were also found. The company has now adjusted its estimate on the total amount and timing of the synergy benefits of the merger. The company estimates the total annual synergies related to the merger to have an impact of EUR 40-50 million million by the end of 2020. Of this, EUR 40 million is expected to be achieved starting from the first quarter 2020.

The savings are mainly attributable to a decrease in fixed expenses. The biggest individual sources of synergies include eliminating overlaps in the merged company, shared and more efficient business premises and lower IT expenses. In addition, for example increasing the efficiency of operating methods and their reflecting the fair value of the inventories acquired, EUR 415.5 million.

Lemminkäinen's hybrid loan with a carrying value of EUR 35.2 million is reported in short-term borrowings on January 31, 2018.
The fair value of Lemminkäinen's bond, EUR 109.1 million, includes an adjustment of fair value amounting to EUR 9.7 million, after which the bond has been recorded at the selling rate on January 31, 2018.
YIT has recorded an adjustment of EUR 20.0 with which contingent liabilities arising from legal proceedings have been recorded at fair values. The adjustment reflects the fair value of the contingent liabilities for which liability was assumed, taking into consideration the reasonable risk premium associated with such liabilities.

Merger related fair value cost effects and goodwill have not been allocated to the segments' capital employed but are reported in segment level in "other items and eliminations". Therefore, adjustments due to merger related items have no impact on the segments' results

harmonisation, lower financing costs, adoption of best practices, economies of scale in procurement and more efficient plot turnover rate create synergy benefits.

The synergy benefits recorded as materialised by the end of March amounted to approximately EUR 3 million. The company estimates that it will reach cumulative annual synergy benefits impacting the result of approximately EUR 14–20 million by the end of 2018, approximately EUR 32–40 million by the end of 2019 and approximately EUR 40–50 million by the end of 2020.

Integration expenses are estimated to result in a nonrecurring negative cash flow effect and an effect on the result of approximately EUR 40 million, mainly during 2017–2019. In January–March 2018, merger-related adjustment items totalled approximately EUR 1.0 million, including the expenses recorded for Lemminkäinen in January. The company estimates that the majority of the integration expenses will be allocated to 2018.

The integration expenses will burden the operating profit, but have no effect on adjusted operating profit.

		1–12/17
Integration costs, total 1	1.0	3.8

1 Integration costs exclude transaction costs.

Acquisitions and capital expenditure

The merger of YIT Corporation and Lemminkäinen Corporation was completed on February 1, 2018. Lemminkäinen's shareholders were given as merger consideration 3.6146 new shares of YIT for each share of Lemminkäinen they owned, in total 83,876,431 new

shares of YIT. In addition, YIT acquired the majority of Projektipalvelu Talon Tekniikka Oy.

Gross investments amounted to EUR 24.3 million, or 4.6% of revenue. The investments consisted of investments in building equipment, information technology and joint ventures, among other things.

Capital structure and liquidity position

EUR million	Reported 3/18	Pro forma 12/17	Change
Net interest-bearing debt	813.8	668.5	22%
Cash and cash equivalents	65.2	111.3	-41%
Interest-bearing receivables	53.6	46.0	17%
Interest-bearing debts	932.6	825.8	13%
Bonds	292.9	n/a
Commercial papers	228.0	n/a
Pension loans	55.5	n/a
Loans from financial institutions	135.8	n/a
Housing corporation loans	166.2	n/a
Finance lease liabilities	19.8	n/a
Other loans	34.3	n/a
Available committed revolving credit facilities	300.0	n/a
Available overdraft facilities	73.8	n/a
Equity ratio, %	39.1%	40.2%
Gearing ratio, %1	79.8%	59.9%

1 Comparisons include sold receivables from housing development.

EUR million	Reported 1–3/18	Pro forma 1–3/17	Pro forma 1–12/17
Operative cash flow after investments, excluding discontinued operations	-152.7	n/a	n/a
Cash flow from plot investments	-46.1	n/a	n/a
Cash flow from investments to associated companies and joint ventures	-21.2	n/a	n/a
Net financing costs	-8.1	-6.8	n/a

At the end of March, YIT's cash and cash equivalents amounted to EUR 65.2 million, in addition to which YIT had undrawn overdraft facilities amounting to EUR 73.8 million. Additionally, YIT's committed revolving credit facility of EUR 300 million was completely undrawn, and undrawn and committed housing corporation loan agreements related to domestic apartment projects amounted to EUR 346.4 million.

During the reporting period, YIT cancelled its previous EUR 200 million committed revolving credit facility as well as Lemminkäinen's previous EUR 200 million revolving credit facility simultaneously as its new EUR 300 million revolving credit facility became available on February 1, 2018. YIT has also cancelled its EUR 240 million bridge financing agreement as unnecessary. In January, before the merger, Lemminkäinen announced that it would redeem the outstanding share of EUR 35.2 million of its hybrid bond in accordance with the terms and conditions of the hybrid bond on March 30, 2018, and as a result thereof the payment took place on April 3, 2018.

At the end of March, the Group's equity ratio was 39.1% and the gearing ratio was 79.8%.

Interest-bearing debts amounted to EUR 932.6 million and interest-bearing net debt to EUR 813.8 million at the end of March.

Pro forma net finance costs amounted to EUR 6.8 million (5.7).

At the end of March, net debt/adjusted pro forma EBITDA ratio was 4.8 and at the end of year 2017, 3.6.

At the end of March, EUR 18.0 million of capital invested in Russia consisted debt investments on net basis and EUR 388.4 million was equity investments or similar permanent net investments.

Operative cash flow after investments, excluding discontinued operations, was EUR -152.7 million. Cash flow was burdened by the investments of the Business premises segment, plot investments and seasonality of the paving business.

Cash flow from plot investments was EUR -46.1 million. Cash flow from investments to associated companies and joint ventures was EUR -21.2 million.

Order backlog

	Reported	Pro forma
EUR million	3/18	12/17	Change
Order backlog	4,640.8	4,218.3	10%
Housing Finland and CEE	1,719.9	1,580.1	9%
Housing Russia	465.9	448.6	4%
Business premises	1,250.3	1,306.8	-4%
Infrastructure projects	672.0	471.0	43%
Paving	532.7	411.8	29%
Partnership properties

The order backlog grew by 10% from the level of end of December 2017 and amounted to EUR 4,640.8. At the end of March, 67% of the order backlog was sold.

The most significant single project recorded in the order backlog during the reporting period was the wastewater treatment plant project in Blominmäki, Espoo, Finland.

Segments

The six reported segments of YIT Corporation with effect from February 1, are Housing Finland and CEE, Housing Russia, Business premises, Infrastructure projects, Paving and Partnership properties.

Housing Finland and CEE

The Housing Finland and CEE segment consists of YIT's former Housing Finland and CEE segment and the residential construction business of Lemminkäinen's Building Construction, Finland segment. The segment's business comprises the development and construction of apartments and entire residential areas as well as leisure-time residences. The segment's main focus is on self-developed projects, and YIT mainly sells the

Operating environment

Consumer confidence in Finland during the beginning of the year was strong, which was reflected in good consumer demand for apartments. Supply was on a high level; nevertheless there were no signs of overheating.

constructed apartments to both consumers and investors. Additionally, YIT develops and offers various living services and concepts. The segment's geographical markets are Finland, the Czech Republic, Slovakia, Poland, Estonia, Latvia and Lithuania.

In addition to the good demand for affordable apartments in growth centres, demand for larger apartments improved.

Residential investor demand focused in particular in the Helsinki metropolitan area, Turku and Tampere.

In the CEE countries, in particular in the Czech Republic, consumer confidence continued to be strong. Demand for apartments in the CEE countries was mainly brisk.

Prices of new apartments were on average stable both in Finland and in the CEE countries, and shortage of resources due to increased construction volume caused cost pressure during the reporting period.

Mortgage interest rates were on a low level in all countries of operation, and the availability of financing was good. In Finland, new mortgages continued to be actively drawn.

Housing Finland and CEE EUR million	Reported 1–3/18	Pro forma 1–3/18	Pro forma 1–3/17	Change 1	Pro forma 1–12/17
Revenue	228.5	242.9	258.3	-6%	1,156.2
Operating profit	21.3	20.5	8.5	141%	78.1
Operating profit margin %	9.3%	8.5%	3.3%		6.8%
Adjusted operating profit	21.3	20.5	8.5	141%	83.0
Adjusted operating profit margin %	9.3%	8.5%	3.3%		7.2%
Order backlog at end of period	1,719.9	1,719.9	1,434.1	20%	1,580.1

1 Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

January–March, IFRS

The segment's revenue was EUR 242.9 million (258.3), the operating profit was EUR 20.5 million (8.5) and the operating profit margin was 8.5% (3.3). The segment's operating profit improved due to housing completions. During the quarter, YIT completed 972

apartments in Finland and 162 apartments in the CEE countries.

Housing Finland and CEE POC, EUR million	Reported 1–3/18	Pro forma 1–3/18	Pro forma 1–3/17	Change1	Pro forma 1–12/17
Revenue	239.5	261.7	326.2	-20%	1,185.9
Adjusted operating profit	22.1	22.6	23.4	-3%	101.5
Adjusted operating profit margin %	9.2%	8.6 %	7.2%		8.6%
Adjustment items					4.9
Order backlog at end of period	1,326.1	1,326.1	1,381.1	-4%	1,337.4
1

Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

January–March, POC

The segment's revenue decreased by 20% year-onyear due to capital release measures done in the comparison period and amounted to EUR 261.7 million (326.2).

The segment's adjusted operating profit decreased 3% year-on-year, and the adjusted operating profit margin was 8.6% (7.2). The segment's operating profit was supported by measures taken to improve operational efficiency and by strong consumer sales. The share of consumer sales was 79%.

In the first quarter, YIT started 949 apartments in Finland and 449 apartments in CEE countries. In January–March, YIT sold 38 apartments to investors as bundle deals in Finland. In the CEE countries, unit sales in January-March was 172 apartments. Additionally, YIT sold to consumers approximately 113 apartments of projects previously sold to the YCE Housing I fund (Q1/2017: 30).

Residential construction in Finland, units	1–3/181	1–3/171	Change	1–12/171
Sold	876	1,182	-26%	4,564
of which initially started for consumers2	732	925	-21%	3,500
Start-ups	1,093	1,061	3%	5,036
of which for consumers	949	804	18%	3,972
Completed	972	888	9%	4,308
of which for consumers	835	503	66%	2,816
Under construction at end of period	6,140	4,967	24%	6,019
of which sold at end of period, %	60%	66%		62%
For sale at end of period	2,708	1,901	42%	2,490
of which completed	251	320	-22%	203
Plot reserve in the balance sheet at end of period, EUR million	288	n/a		n/a
Plot reserve at end of period3, floor square metres	1,810,700	n/a		n/a
Cost of completion at end of period, EUR million	515	n/a		n/a
1 Combined figures of YIT and Lemminkäinen.

2 Includes apartments sold to residential funds: 1–3/18: 38 units; 1–3/17: 192 units; 1–12/17: 487 units.

3 Includes pre-agreements, rental plots and own plots.

Residential construction in
the CEE countries, units	1–3/18	1–3/17	Change	1–12/17
Sold	172	356	-52%	1,613
of which for consumers	172	250	-31%	919
fund sales to consumers1	113	30	277%	253
Start-ups	449	402	12%	1,545
Completed	162	176	-8%	1,100
Under construction at end of
period	2,771	2,269	22%	2,489
of which sold at end of period, %	53%	54%		63%
For sale at end of period	1 411	1 166	21%	1,054
of which completed	113	128	-12%	140
Plot reserve in the balance sheet at end of period, EUR million	124.1	n/a		n/a
Plot reserve at end of period3, floor square metres	633,900	n/a		n/a
Cost of completion at end of period, EUR million	152	n/a		n/a

1 Apartments sold to consumers in projects that YIT has previously sold to the YCE Housing I fund and already before reported as sales.

Housing Russia

The Housing Russia segment consists of the selfdeveloped residential construction business and living services of YIT's former Housing Russia segment and Lemminkäinen's residential contracting and property management business in Russia. The segment's business comprises development and construction of apartments and entire residential areas in Russia. YIT

Operating environment

Despite the improving economy, Russian consumers continued to be cautious with their apartment buying decisions. Consumer confidence remained stable on a low level. Residential demand remained on the level of end of 2017, although it improved slightly especially in the Moscow region. Residential price level was stable or slightly declining due to the supply peak preceding the changes in housing sale legislation coming in the summer.

has operated in Russia in over 55 years with both selfdeveloped and contracting projects. YIT focuses on selfdeveloped housing construction, while maintenance, property management as well as additional services have lately become increasingly important in residential construction projects. Additionally, YIT has two industrial park projects in Russia.

During January-March, the Russian Central Bank lowered its key rate a couple of times. The interest rates for mortgages for new apartments stayed under 10 per cent. The Russian government continues to further the citizens' apartment-buying among other things with the interest support program for families with children launched in the beginning of the year.

Housing Russia,	Reported	Pro forma	Pro forma		Pro forma
EUR million	1–3/18	1–3/18	1–3/17	Change1	1–12/17
Revenue	34.5	38.3	68.5	-44%	421.0
Operating profit	-13.1	-14.0	-5.2	-169%	1.7
Operating profit margin %	-37.9%	-36.5%	-7.6%		0.4%
Adjusted operating profit	-12.9	-13.8	-5.2	-165%	4.9
Adjusted operating profit margin %	-37.5%	-36.1%	-7.6%		1.2%
Order backlog at end of period	465.9	465.9	729.9	-36%	448.6

Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

January–March, IFRS

The segment's revenue was EUR 38.3 million (68.5), the operating profit was EUR -14.0 million (-5.2) and the operating profit margin was -36.5% (-7.6).

The segment's result decreased due to weakened margins in projects in the contracting business. At comparable exchange rates, reported revenue was EUR 38.4 million and reported operating profit at comparable exchange rates was EUR -14.4 million.

During the reporting period, housing completions decreased by 61% year-on-year. 233 apartments were completed in Russia. The share of residential deals financed with mortgages was 49% (52). At the end of March, YIT was responsible for the service and maintenance of almost 37,000 apartments, 7,000 parking spaces and 2,000 business premises in Russia, totalling over 46,000 clients.

Housing Russia	Reported	Pro forma	Pro forma 1–		Pro forma
POC, EUR million	1–3/18	1–3/18	3/17	Change1	1–12/17
Revenue	53.2	57.0	65.6	-13%	320.3
Adjusted operating profit	-9.2	-9.9	-2.0	-395%	4.6
Adjusted operating profit %	-17.2%	-17.4%	-3.0%		1.4%
Adjustment items	-0.2	0.2			3.2
Order backlog at end of period	396.0	396.0	562.5	-30%	396.1

1 Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

January–March, POC

The segment's revenue decreased 13% year-on year due to the low average price of apartments sold and amounted to EUR 57.0 million. At comparable exchange rates, reported revenue was EUR 59.3 million.

The segment's adjusted operating profit was EUR -9.9 million (-2.0) and the adjusted operating profit margin was -17.4% (-3.0). The segment's adjusted operating profit decreased year-on-year due to

weakened margins in contracting projects contracting as well as due to intensified apartment sales actions. Reported operating profit was EUR -9.0 million.

YIT started new projects in St. Petersburg, in the Moscow region and in Yekaterinburg.

In Russia, unit sales in January-March was 779 apartments.

Residential construction in Russia,
units	1–3/18	1–3/17	Change	1–12/17
Sold	779	548	42%	2,899
Start-ups	815	741	10%	2,525
Completed1	233	604	-61%	4,523
Under construction at end of period	5,1862	6,763	-23%	4,628
of which sold at end of period, %	34%	25%		30%
For sale at end of period	4,241	4,794	-12%	4,228
of which completed	813	278	192%	974
Plot reserve in the balance sheet at end of period2, EUR million	204.9	n/a	n/a	n/a
Plot reserve at end of period3, floor square metres	2,131,000	n/a	n/a	n/a
Cost of completion at end of period, EUR million	116	n/a	n/a	n/a
1 Completion of residential projects requires commissioning by the authorities.

Compared to the situation on January 31, 2017, 24 apartments have been converted to business premises.

3 Figures include Gorelovo industrial park.

Under construction at end of period, units	3/18	3/17	Change	3/18	12/17	Change
St. Petersburg	979	2,271	-57%	979	588	66%
Moscow	2,310	2,556	-10%	2,310	2,021	14%
Russian regions	1,897	1,936	-2%	1,897	2,019	-6%

Business premises

The Business premises segment consists of the business premises construction and project development businesses that were previously under YIT's Business Premises and Infrastructure segment, along with the commercial construction, project development and commercial property and facilities management businesses of Lemminkäinen's Building Construction segment. The majority of the revenue is generated in Finland. In this segment YIT pursues both self-developed projects and contracting. For its self-

Operating environment

The favourable market climate in Finland supported public and private investments. The volume of construction continued to be on a high level. The business premises contracting market continued to be active in growth centres in Finland and especially in the Helsinki metropolitan area that is also the main market of investor demand. The rental levels of business

developed projects YIT acquires users and tenants for the premises as well as develops, constructs and divests the premises. Self-developed projects typically include offices, retail premises, as well as logistics or care sector premises. In contracting, projects typically include public facilities, industrial properties and business premises. In addition to new construction, YIT also carries out renovation projects. The segment's geographical markets are Finland, Estonia, Latvia, Lithuania and Slovakia.

premises remained on a good level in Finland and in the Baltic countries.

In the Baltic countries and in Slovakia, investor demand for business premises was strong. The contracting market has remained stable in the Baltic countries.

Business premises, EUR million	Reported 1–3/18	Pro forma 1–3/18	Pro forma 1–3/17	Change1	Pro forma 1–12/17
Revenue	162.5	183.0	198.9	-8%	902.2
Operating profit	-1.9	-2.2	1.8		45.6
Operating profit margin %	-1.2%	-1.2%	0.9%		5.1%
Adjusted operating profit	-1.9	-2.2	1.8		51.5
Adjusted operating profit margin %	-1.2%	-1.2%	0.9%		5.7%
Order backlog at end of period	1,250.3	1,250.3	1,437.2	-13%	1,306.8

Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

Business premises, EUR million	3/18	12/171
Plot reserve in the balance sheet	96.6	n/a
Plot reserve, floor square metres	720,200	n/a
Cost of completion	13	n/a
1 YIT and Lemminkäinen combined

January–March

The segment's revenue decreased by 8% year-onyear. Revenue decrease was due to completions of certain large projects in the comparison period.

The segment's operating profit decreased year-onyear to EUR -2.2 million, and operating profit margin

was -1.2%. The result was burdened by weakened margins in certain projects.

Large projects such as the Tripla one progressed as planned.

Largest ongoing business premises projects

Project, location	Total value, EUR million	Project type	Completion rate, %	Estimated completion	Sold/ for sale/ contracting
					YIT owns
Mall of Tripla, Helsinki	600	retail	52%	9/19	38.75%

Finavia air terminal
expansion, Vantaa	200	airport	47%	12/19	contracting

TYL Freeway logistics	148 (YIT's
centre	share 74)	logistics	97%	10/18	contracting

Tripla hotel, Helsinki	88	hotel	26%	3/20	sold

The Myllypuro		public
campus, Helsinki	73	premises	40%	8/19	contracting

Infrastructure projects

The Infrastructure projects segment consists of the Infra Services division of YIT's Business Premises and Infrastructure segment, excluding the Maintenance unit, and Lemminkäinen's Infra projects segment. The operations cover the construction of roads, bridges, railways and metro stations as well as building power

Operating environment

Urbanisation, industrial investments and investments in energy and traffic infrastructure kept the demand for complex infrastructure construction on a good level. Especially in Sweden and Norway, the market remained strong, and there are several major infra projects ongoing or planned in both countries. In Finland, construction was supported by major infrastructure construction projects in urban growth centres and the

plants, water supply and industrial plants. YIT also offers wind power plant foundation solutions as well as related services and maintenance. Additionally, YIT excavates tunnels and mines and reinforces soil using various methods. The segment operates in Finland, Sweden, Norway, Estonia, Latvia and Lithuania.

overall construction market growth. In the Baltic countries, the market has continued to grow.

Infrastructure projects EUR million	Reported 1–3/18	Pro forma 1–3/18	Pro forma 1–3/17	Change1	Pro forma 1–12/17
Revenue	71.8	93.7	121.9	-23%	686.0
Operating profit	-5.7	-8.6	-1.3	-562%	17.4
Operating profit margin %	-8.0%	-9.2%	-1.1%		2.5%
Adjusted operating profit	-5.7	-8.6	-1.3	-562%	17.4
Adjusted operating profit margin %	-8.0%	-9.2%	-1.1 %		2.5%
Order backlog at end of period	672.0	672.0	549.4	22%	471.0

1 Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

January–March

The segment's revenue decreased by 23% year-onyear and amounted to EUR 93.7 million. Revenue decreased in particular due to high project completion rate and lower year-on-year volumes in Finland.

The segment's operating profit decreased year-onyear to EUR -8.6 million (-1.3), and operating profit margin was -9.2% (-1.1). Operating profit decreased year-on-year because of lower margins caused by lower revenue and due to weakened margins in certain projects. The slow winter season was another reason for the result.

In March, YIT and Helsinki Region Environmental Services HSY signed an agreement on the construction of a new underground wastewater treatment plant in Blominmäki, Espoo, Finland. The value of the contract is approximately EUR 206 million. YIT and City of Valmiera signed an agreement on construction of an athletics stadium and arena in Valmiera, northeast Latvia. The value of the contract is approximately EUR 18 million. Large projects such as the Tampere light railway project proceeded as planned.

Largest ongoing infrastructure contracting projects

Project, location	Total value of the project, EUR million	Completion rate, %	Estimated completion
E 18 Hamina-Vaalimaa motorway, Finland	~260	96%	12/18
Blominmäki wastewater treatment plant, Espoo, Finland	~206	0.3%	02/22
The Rantatunneli alliance project, Tampere, Finland	~180	99%	11/18
The Light railway alliance, Tampere, Finland	~110	29%	12/21
Blominmäki, excavation project, Espoo, Finland	~60	99.7%	05/18

Paving

The Paving segment consists of Lemminkäinen's Paving segment and YIT's Maintenance unit. The segment's operations include paving and production of mineral aggregates as well as stabilisation, crushing and waterproofing. The segment also maintains road and street networks. The company cooperates with its customers to produce paving for especially demanding works, such as airport runways with extremely high

Operating environment

Because of weather conditions, paving is practically non-existent in YIT's area of operation during the first quarter of the year.

quality demands. Approximately half of the segment's revenue originates from public procurement by states and municipalities. Paving and mineral aggregate production are capital-intensive businesses tying capital into machinery and equipment, plots and current assets The Paving segment operates in Finland, Sweden, Norway, Denmark and Russia.

In Finland, the state investments declined slightly from the level of the previous year. In Sweden, the market was solid, and in Norway the state investments increased. In Denmark, price competition remained intense.

Paving	Reported	Pro forma	Pro forma		Pro forma
EUR million	1–3/18	1–3/18	1–3/17	Change1	1–12/17
Revenue	42.4	52.7	62.7	-16%	768.9
Operating profit	-22.3	-36.1	-25.0	-44%	4.7
Operating profit margin %	-52.6%	-68.4%	-39.9%		0.6%
Adjusted operating profit	-18.9	-30.8	-25.0	-23%	4.7
Adjusted operating profit margin %	-44.6%	-58.4%	-39.9%		0.6%
Order backlog at end of period	532.7	532.7	504.9	6%	411.8

Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

January–March

The segment's revenue decreased by 16% year-onyear and amounted to EUR 52.7 million. Revenue decreased due to lower year-on-year volumes particularly in the mineral aggregates business.

The segment's operating profit was EUR -36.1 million. The operating profit includes EUR 5.3 million adjustment items related to the reorganization of the Scandinavian business operations. In Sweden and Norway, sizeable measures were taken to improve operational efficiency, and during the first months of the year, personnel reductions totalled approximately 150 full-time equivalents (FTEs), among other things.

The segment's adjusted operating profit decreased by 23% year-on year to EUR -30.8 million, and the adjusted operating profit margin was -58.4% (-39.9). Several actions are ongoing to reorganise the segment had on impact also on the adjusted operating profit. The winter shutdown and the costs for maintenance and repair were on the same level as in the previous year.

Order backlog at the end of the reporting period was EUR 532.7 (504.9).

Partnership properties

The Partnership Properties segment was established on January 1, 2018. The income for the segment derives from investments, i.e. from rental income and increased value of the assets following their completion. Additionally, the segment will potentially have revenue from diverse service agreements associated with the possession or acquisition of its partially owned assets. The income from assets transferred to this segment have been close to zero until early 2018. The adjusted

Operating environment

Investors' interest in business premises located in Finland's major growth centres was at a good level. The yield requirements of office and retail properties

operating profit for the financial period ended December 31, 2017 was EUR -0.5 million.

The objective of the segment is to improve visibility on the reporting of partnership projects, to improve the capability to execute major projects together with partners and to facilitate the creation of a project portfolio generating rental revenue cash flows. In the long term, YIT aims to continue its practice of divesting its holdings to final investors at the time it sees fit.

decreased in the Helsinki metropolitan area, and the rental levels for prime office properties increased in central Helsinki.

Partnership properties EUR million	Reported 1–3/18	Pro forma 1–3/18	Pro forma 1–12/17
Revenue
Share of results of associated companies and joint ventures	-0.2	-0.2	-0.5
Operating profit	-0.2	-0.2	-0.5

Adjusted operating profit

Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1‒January 31, 2018.

	Reported	Pro forma
EUR million	3/18	12/17	Change
Equity investments and investment
commitments	152	n/a	n/a
of which already invested in associated
companies	137	n/a	n/a

Projects

Co-operation model	Ownership structure	YIT's equity investment commitments	Total investment capacity estimate, EUR million	YIT's ownership	Additional information
Regenero Oy	Project development company	121	n/a	50%	Owned by YIT and HGR Property Partners. Regenero owns a head quarter property in Keilaniemi, Espoo, and an office property in Tietotie 6, Otaniemi, Espoo, both in Finland. The occupancy rate of the Keilaniemi property is approximately 50% and that of Tietotie 6 over 40%.
Mall of Tripla	Shopping centre property company	117	600	38.75%	Hybrid project Tripla's shopping centre part in Central Pasila, Helsinki, Finland. The joint venture is formed by YIT, Ilmarinen (38.75%), Onvest (15%) and Fennia (7.5%). Occupancy rate of the project is 70%, leasable area 85,000 square metres.
E18 Hamina Vaalimaa motorway	Road company	5	235	20%	Meridiam Infrastructure Finance II S.á.r.l. holds 80% and YIT 20% of the company. Maintenance contract until 2034.
YCE Housing I fund Project	development fund	15	100	40%	Residential projects in Slovakia, the Czech Republic, Lithuania and Estonia. YIT constructs the projects owned by the fund and is responsible for selling the apartments further to consumers. Other investors include Ilmarinen (30%) and a group of Finnish investors. The fund's equity is approximately EUR 37 million.

1 YIT's current equity investment in Regenero

January–March

Due to the operating model, the revenue of the segment was EUR 0, as no service agreements were in force yet. The segment may receive revenue from diverse service agreements associated with the possession or acquisition of its partly owned assets. On the other hand, rental revenue received by joint ventures or associated companies, such as fund structures, or changes in the value of properties owned by them or capital gains from their realisation are reported in the income statement of the segment under revenue in "Share of results in associated companies". This item accounts for the majority of the segment's revenue. The

segment may also receive interest income when funding its associated companies with loan capital.

The E18 Hamina-Vaalimaa motorway project was commissioned early in the year. The project was executed using the life-cycle model (PPP). Meridiam Infrastructure Finance II S.á.r.l holds 80 per cent of Tieyhtiö Vaalimaa, and YIT holds 20 per cent of the company. In addition to the completed construction project, Tieyhtiö Vaalimaa has signed contracts on maintenance with YIT. The road construction company will be responsible for the maintenance of the motorway until 2034.

The biggest project reported under the Partnership Properties segment is Mall of Tripla. The project progressed as planned during the reporting period, and its occupancy rate was approximately 70 per cent at the end of the period.

YIT's holding in the associated company Regenero created for project development and holding is reported as part of the Partnership Properties segment. In March, Regenero signed a lease on the business premises of the Tietotie 6 office property with the City of Espoo. The floor area of the leased premises is approximately 11,000 square metres, and following the lease, the occupancy rate of the property as a whole will increase to approximately 42 per cent.

Regenero also signed an agreement with Accountor Holding Oy on leasing office premises in a tower building to be renovated located in Keilaniemi, Espoo. Accountor will be the anchor tenant in the premises with a long-term lease. The floor area of the premises leased to Accountor is approximately 11,000 square metres. Following the lease, the occupancy rate of the tower building increased to approximately 50 per cent.

The holding of the YCE Housing I fund established by YIT and a group of Finnish investors is reported as part of the Partnership Properties segment. The investors in the fund are YIT (40%), Ilmarinen (30%) and a group of Finnish private investment companies, and it invests in

housing development projects in the Czech Republic, Slovakia, Poland, Estonia, Latvia and Lithuania. The fund's equity is approximately EUR 37 million. During the next few years, the fund is expected to carry out more than 10 projects and develop approximately 1,000 apartments to be sold primarily to private buyers with YIT as the agent. YIT recognises the profits of the fund as revenue in proportion to its holdings, and the profit is reported under the Partnership Properties segment.

After the reporting period in April, YIT took part in establishing a fund investing in residential plots in Finland. YIT's partners in the fund are Ålandsbanken and Varma Mutual Pension Insurance Company. The investment capacity of the established plot fund is EUR 100 million, of which equity accounts for EUR 50 million. The fund's equity investors are YIT (20%), Varma (40%) and Ålandsbanken (40%); Ålandsbanken manages the fund. YIT is responsible for finding investment-grade plots for the fund, and Ålandsbanken makes the investments as the manager. YIT recognises the profits of the fund as revenue in proportion to its holdings. In addition, YIT will build self-developed residential buildings on plots owned by the fund. The customers will have the possibility to redeem their share of the plot in part or full at the time they want, and this makes it possible to provide more temporal flexibility in a housing investment.

Personnel

			Change, nr
Personnel per segment	3/18	12/17	of persons
Housing Finland and CEE	2,203	2,250	-47
Housing Russia	1,643	1,763	-120
Business premises	1,754	1,733	23
Infra projects	1,819	1,793	26
Paving	1,536	1,822	-286
Partnership properties	2
Group services	339	360	-21
Group total	9,296	9,721	-425

Personnel per geographic area	3/18	12/17	Change, nr of persons
Finland	5,300	5,398	-98
Russia	1,819	2,048	-229
CEE countries	1,437	1,442	-5
Scandinavia	740	833	-93
Group total	9,296	9,721	-425

During January–March, the Group employed on average 9,203 people (9,166). Personnel expenses totalled EUR 105.4 million. The cost effect of YIT's share-based incentive scheme was EUR 1 million.

YIT uses attending employee figures in reporting its number of personnel.

In February, YIT announced that it would start cooperation negotiations to organise the combined

company. The co-operation negotiations ended after the reporting period.

The accident frequency (number of accidents per one million working hours) decreased to the level of 8.4 (3/2017: 9.9). The accident frequency is calculated with 12 months rolling average.

Preliminary strategic objectives

The financial targets of the combined company will be specified during the ongoing strategy process and will be published later during 2018.

Preliminary long-term financial objectives	Target level
Return on capital employed (ROCE)	>12%
Equity ratio	>40%
Cash flow	Positive after dividend payout
Dividend per share	Annually growing

Resolutions passed at the Annual General Meeting

The Annual General Meeting of YIT Corporation was held on March 16, 2018. The Annual General Meeting adopted the 2017 financial statements and discharged the members of the Board of Directors and the President and CEO from liability. The Annual General Meeting decided on the dividend payout, the composition of the Board of Directors and their fees, the election of the auditor and its fees as well as authorising the Board of Directors to decide on the repurchase of company shares and share issues. The Annual General Meeting resolved to elect a Chairman, Vice Chairman and five ordinary members to the Board of Directors for a term ending at the close of the next Annual General Meeting

following their election, namely: Harri-Pekka Kaukonen as the Chairman, Eero Heliövaara (new) as the Vice Chairman and Erkki Järvinen, Olli-Petteri Lehtinen (new), Inka Mero, Kristina Pentti-von Walzel and Tiina Tuomela as members. In its organizational meeting on March 16, 2018, the Board decided on the composition of the Personnel Committee and the Audit Committee. YIT published stock exchange releases on the resolutions of the Annual General Meeting and on the organizational meeting of the Board of Directors on March 16, 2018. The stock exchange releases and introductions of the members of the Board of Directors are available on YIT's web pages.

Shares and shareholders

The company has one series of shares. Each share carries one vote and confers an equal right to a dividend.

Share capital and number of shares

In connection with the registration of the completed merger on February 1, 2018, the number of YIT's shares outstanding was increased to in total 211,099,853 shares and the share capital was increased by EUR

500,000 to EUR 149,716,748.22. Lemminkäinen's shareholders were given as merger consideration 3.6146 new shares in YIT for each share in Lemminkäinen owned by them, i.e. in total 83,876,431 new shares in YIT.

YIT Corporation's share capital was 149,216,748.22 euros in the beginning of 2018 (2017: 149,216,748.22) and the number of shares outstanding was 127,223,422 (2017: 127,223,422). At the end of the period, on March

31, 2018, the number of shares was in total 211,099,853.

Treasury shares and authorisations of the Board of Directors

The Annual General Meeting of YIT Corporation resolved on March 16, 2018, to authorise the Board of Directors to decide on the repurchase of company shares and share issues as proposed by the Board of Directors. The authorisation is valid until June 30, 2019.

YIT Corporation held 1,408,213 treasury shares at the beginning of the year 2018.

No shares were returned to the company during the review period.

Trading on shares

The opening price of YIT's share was EUR 6.40 on the first trading day of 2018. The closing price of the share on the last trading day of the reporting period on March 29, 2018 was EUR 6.80. YIT's share price increased by approximately 6% during the reporting period. The highest price of the share during the reporting period was EUR 7.27, the lowest EUR 6.32 and the average price was EUR 6.80. Share turnover on Nasdaq Helsinki during the reporting period was approximately 50.0 million (42.1) shares. The value of the share turnover was approximately EUR 339.6 million (289.3), source: Nasdaq Helsinki.

During the reporting period, approximately 50.1 million (41.7) YIT Corporation shares changed hands in alternative market places, corresponding to approximately 50% (50) of the total share trade, source: Fidessa Fragmentation Index.

YIT Corporation's market capitalisation on the last trading day of the reporting period on March 29, 2018 was EUR 1,425.9 million (796.2). The market capitalisation has been calculated excluding the shares held by the company.

Number of shareholders and flagging notifications

At the end of March, the number of registered shareholders was 46,230 (42,206). A total of 19.9% of the shares were owned by nominee-registered and non-Finnish investors (22.8).

On February 1, 2018, YIT Corporation received an announcement under Chapter 9, Section 5 of the Securities Markets Act, according to which the holding of PNT Group Oy in YIT has exceeded the threshold of 5 per cent.

Managers' transactions

YIT's managers' transactions during the reporting period have been published as stock exchange releases, and they are available on YIT's website at www.yitgroup.com/.

Most significant short-term business risks

The general economic development, functioning of the financial markets and the political environment in YIT's operating countries have a significant impact on the company's business. Negative development in consumers' purchasing power, consumer or business confidence, the availability of financing for consumer or business, or general interest rate level would likely weaken the demand for YIT's products and services. A drop in residential prices or an increase in investors' yield requirements would pose a risk for the profitability of the company, should these factors materialise.

There is still significant uncertainty related to the economic development of Russia, although the situation seems to have improved. The volatility of the oil price and the ruble, geopolitical tensions and inflation may have an influence on the demand for apartments due to a weakening in purchasing power and consumer confidence. Declining purchasing power and oversupply of apartments also impact the development of residential prices.

At the end of March, Finland accounted for the majority of the company's revenue, which highlights the significance of Finland's economic development for YIT's business. The slowing growth of the Finnish economy and the indebtedness of the public sector may weaken consumers' purchasing power and general confidence, which would have a negative impact on the demand for apartments and business premises. An increase of public sector debt could also make it more difficult to finance infrastructure investments. Investors have played a central role in YIT's Finnish business in recent years. An increase in price levels, rental accommodation offering and/or weakening in tenant demand on the business premises or residential market and better yield of alternative investments could lead to a significant decrease in investor demand. Increased supply and slowdown of population growth or depopulation can pose a local risk for residential demand. Tension in the Finnish labour market, should it escalate, could generally affect the functionality of the labour market and the company's business operations and profitability.

Ensuring competitive products and services corresponding to customer demand is critical for YIT's business. Changes in customer preferences and in the competitors' offerings present risks related to the demand for the company's products and services. New competitors, business models and products on the housing market may present risks related to the demand for the company's products and services.

Fluctuations in the price of raw materials may have an impact on financial performance. One of YIT's single most significant purchased raw materials is bitumen,

and its price mainly depends on the world market price of oil. The company manages the bitumen price risk with contractual terms and derivatives.

Especially in Finland and the CEE countries, the availability of the resources needed for the increased production volume might prevent increasing the production as planned. Competitors' need for resources also presents a risk of losing key personnel and expertise. The overheating of market, should it materialise, would have an impact on price levels and availability of resources.

The preparation of the planned merger takes time from key personnel, causes uncertainty among employees and activates competitors to recruitment attempts. The company has taken measures as planned to mitigate these risks. The company expects the annual total synergies related to the merger to have an impact of EUR 40-50 million million by the end of 2020. Of this, EUR 40 million is expected to be achieved starting from the first quarter 2020.

The assumptions related to the synergy benefits and integration costs are by nature uncertain and liable to numerous significant risks and uncertainties related to business, economy and competition. More detailed information on the risks related to the merger is published in the merger prospectus. The merger prospectus is available on YIT's website at www.yitgroup.com/.

Most of the company's business is project business, meaning that successful project management plays an integral role in ensuring the company's profit. The most significant project management risks are related to factors such as pricing, planning, scheduling, procurement, cost management and, in the company's self-developed business, also the management of sales risk. YIT's major business premises and infrastructure projects in Finland, such as the Tripla project, make up a significant share of the company's expected revenue in coming years, meaning that successful project management in the projects is integral.

Among other measures, the company has continued to manage risks related to its business and to capital employed by utilizing associated companies and joint ventures in its business operations. Being a party to associated companies and joint ventures is nevertheless subject to risks typical to them relating to, among other things, potential disagreements regarding decision making, financing and business operating, as well as distribution of liabilities among other parties.

Generally increased activity in cyber criminality may cause risks for the company's operations and information security. Malpractices of personnel may

cause losses, financial or other, or risks to other employees.

Changes in legislation and authorities' permit processes may slow down the progress of projects or prevent them from being realised. There are uncertainty factors related to authorities' actions, permit processes and their efficiency particularly in Russia and the CEE countries.

The improvement of the capital turnover will continue as a part of normal business. The company's target is to decrease the capital employed in Russia by RUB 6 billion by the end of 2018 compared to the situation of the end of June 2016. Measures to release capital in a

Legal proceedings

As a result of the execution of the merger between YIT and Lemminkäinen, all the all assets, debts and liabilities of Lemminkäinen, including on-going litigations, were transferred to YIT. The litigations are covered more extensively in Lemminkäinen's Financial Statements 2017 bulletin, which is available on YIT's internet-pages: www.yitgroup.com.

Damages related to the asphalt cartel

On September 6, 2017, the Supreme Court of Finland announced that it had granted leave to appeal to Lemminkäinen and certain cities regarding the legal proceedings concerning the damages related to the asphalt cartel.

On October 20, 2016, the Court of Appeal of Helsinki gave its decisions in the legal proceedings concerning the damages related to the asphalt cartel. According to the decisions, Lemminkäinen was entitled to receive refunds (based on Lemminkäinen's own share and those shares of other defendants that Lemminkäinen has paid) in total approximately EUR 19 million consisting of capital as well as interest and legal expenses.

The company deems as such the claims for damages unfounded.

In addition, Lemminkäinen has been served summons regarding 21 claims against the company and other asphalt companies for damages. The capital amount of these claims is approximately EUR 26 million. For these claims, the company has made a provision worth approximately EUR 3.2 million based on the Helsinki Court of Appeal's decisions and the subsequent Supreme Court's decisions regarding the applications for leave to appeal.

Quotas related to the use of recycled asphalt

On April 11, 2017, the Helsinki Court of Appeal gave its decision concerning environmental infraction charges. The decision is related to the quotas for the amount of recycled asphalt used in asphalt mass

challenging market situation involve the risk of financial losses.

The most significant financial risks are the risks related to foreign exchange rate development and the availability of financing. The availability of financing may be affected by negative development in Scandinavian residential construction market. The Group's most significant currency risk is related to ruble-denominated investments that are discussed in more detail in YIT's Financial Statements 2017 in the "Capital structure and liquidity position" section. Additional information on financial risks and their management is provided in Note 28 to the Financial Statements.

production, as defined in the environmental permits of the Lemminkäinen's Sammonmäki asphalt plant in Finland.

As the District Court, the Court of Appeal viewed that the use of recycled asphalt in asphalt production does not spoil the environment. However, two Lemminkäinen employees were sentenced to fines for breaching the environmental protection law as the asphalt plant had used more recycled asphalt than allowed in the environmental permit. In addition, Lemminkäinen was sentenced to a confiscation of illegal profit of EUR 3.4 million.

Lemminkäinen deemed the claim without foundation. Lemminkäinen and one of its employees requested leave to appeal from the Supreme Court concerning Helsinki Court of Appeal's decision. In the Supreme Court's decision, leave to appeal was nevertheless rejected, which means that the verdict by the Court of Appeal will remain valid and enforceable.

Quality concerns related to ready-mixed concrete

Ready-mixed concrete, among other things, has been used in construction business as a raw material. During the year 2016, especially in some infrastructure projects, suspicions have arisen that the ready-mixed concrete used in Finland would not entirely fulfil the predetermined quality requirements.

The Hospital District of Southwest Finland, as client in the project for the construction of the concrete deck of the T3 building of Turku University Hospital, has presented claims for damages to Lemminkäinen relating to the quality of the ready-mixed concrete. The capital amount of these claims is currently approximately EUR 17 million.

According to the company, the responsible party for the quality of the concrete is the supplier. Consequently, the company has filed a claim for compensation from the supplier regarding the expenses relating to possible

quality deviations. The capital amount of the claim is currently approximately EUR 20 million.

Events after the review period

In January, before the merger, Lemminkäinen announced that it would redeem the outstanding share of EUR 35.2 million of its hybrid bond in accordance with the terms and conditions of the hybrid bond on March 30, 2018, and as a result thereof the payment took place on April 3, 2018.

YIT is taking part in establishing a fund investing in residential plots in Finland. The plot fund is part of the Partnership properties segment. YIT's partners in the fund are Ålandsbanken and Varma Mutual Pension Insurance Company. The investment capacity of the established plot fund is EUR 100 million, of which equity accounts for EUR 50 million. The fund's equity investors are YIT (20%), Varma (40%) and Ålandsbanken (40%); Ålandsbanken manages the fund.

YIT concluded the cooperation negotiations on the reorganisation of the combined company in Finland. The number of redundancies based on eliminating double work in the organisation and streamlining the operations is at the maximum 120 employees in Finland. In addition, the same amount of personnel reduction will be carried out as natural exits, retirements and terminations of fixed-term employment contracts.

In April, residential sales to consumers are estimated to be around 190 units in Finland (4/17: around 170), around 80 units in the CEE countries (4/17: around 80) and over 250 units in Russia (4/17: below 200). Additionally, YIT estimates to sell further to consumers approximately 40 apartments of projects previously sold to the YCE Housing I fund (4/17: 6).

Outlook for 2018

Outlook by segment

Housing Finland and CEE: Consumer demand for apartments is expected to remain at a good level. Activity among large residential investors is expected to be lower than in the previous years.

Housing Russia: Demand for apartments is expected to remain at the same level as seen on average in the second half of 2017. Residential prices are expected to remain low.

Infrastructure projects: Infrastructure construction market is expected to continue to grow slightly from the level of the year 2017.

Paving: The total volume of the paving market is expected to grow slightly in YIT's area of operation.

The adjusted operating profit is expected to fluctuate significantly between the quarters.

In its annual cash flow planning, YIT targets to a positive cash flow after the dividend payout. The same principle applies to planning the 2018 cash flow.

million by the end of 2020. Of this, EUR 40 million is expected to be achieved starting from the first quarter 2020. Previously the company estimated the annual total synergies to be EUR 40 million, and they were estimated to be reached in full by the end of 2020.

YIT estimates that in 2018 approximately 5,000 – 5,500 apartments in Finland and CEE, and approximately 3,000 apartments in Russia will be completed, most of them during the last quarter of 2018. In the beginning of the year, YIT has signed several significant long-term lease agreements and estimates to sell several large business premises to final investors in the Helsinki metropolitan area during the remainder of the year.

Outlook by region

Finland

Consumer demand for apartments is expected to remain at a good level. Activity among large residential investors is expected to be lower than in the previous years. Location and the price level will continue to play a key role.

The divergent development of apartment prices and demand between growth centres and the rest of Finland is expected to continue. The availability of mortgages is expected to remain good. The increased supply of apartments is anticipated to prevent the overheating of the market and therefore the rise of housing prices.

The rental demand for business premises is expected to remain at the previous year's level in growth centres. Activity among property investors is expected to remain at a good level, particularly for centrally located projects in the Helsinki metropolitan area and in major growth centres. The contracting market is expected to remain active, but contract sizes are expected to decrease on average.

Renovation is expected to grow moderately due to increasing urbanisation and aging of building stock.

High construction activity has led to increased competition for skilled professionals and the situation is expected to continue. Construction costs are estimated to increase slightly. Construction volume is expected to remain at a high level.

The increased regulation and higher capital requirements imposed on financial institutions may affect construction and property development.

Infrastructure construction market is expected to continue to grow slightly from the level of the year 2017. The Government's decisions regarding transport projects in the General Government Fiscal Plan as well as major cities' investments in infrastructure improve the

outlook for both paving and infra projects. The state's planned investments in basic road maintenance are expected to keep demand relatively stable for paving in 2018. Demand for infra projects is maintained by complex infrastructure projects in urban growth centres as well as transport projects and industrial investments.

Russia

The demand for apartments is expected to remain at the same level as seen on average in the second half of 2017. In Russia, the low point of the economic cycle is now in the past, but residential demand is anticipated to only improve slowly and price levels are expected to remain low. The improved economic situation is anticipated to have a cautiously favourable impact on the residential market. Expectations of interest rate cuts are expected to influence consumer behaviour.

Expectations for lower interest rates are estimated to affect consumer behaviour. Changes in regulation concerning residential transactions are expected to lead to increased volatility in supply and demand for apartments as well as changes in sales practices. Demand is expected to focus primarily on affordable apartments also in Russia. Inflation in construction costs is expected to remain moderate.

Construction and repair projects on major roads are expected to maintain demand for paving.

The Baltic countries and CEE countries

Residential demand is expected to remain at a good level. Residential prices are estimated to increase further. The prices of plots have increased and competition for plots is expected to remain intense. The availability of financing and low interest rates are expected to continue to support residential demand. The shortage of resources is expected to increase inflation in construction costs. The contracting market for business premises is expected to remain at the current level or decrease slightly in the Baltic countries.

In the Baltic countries, the volume of infrastructure construction is expected to continue to grow due to the states' investments in improving urban and transport infrastructure.

Scandinavia

In Norway and Sweden, infrastructure construction is boosted by multi-year, state-funded traffic infrastructure development programmes. In both countries, infrastructure construction is expected to grow in 2018. Large-scale road and railway projects are ongoing or planned in Sweden and Norway, which will increase demand for infra projects and paving. In addition, especially Norway is investing in the development and renewal of energy production.

In Denmark, demand for paving is expected to decline as public investments in road infrastructure are decreasing.

Factors affecting the guidance

The most significant factors with which YIT can answer the market demand are sales and pricing, project and project risk management, product development and the product offering, measures to reduce production costs, cost management and measures affecting the capital efficiency.

Factors outside of YIT's sphere of influence are mainly related to global economic development, the functionality of financing markets and the interest rate, the political environment, economic development in areas of operation, changes in demand for apartments and business premises, the availability of resources such as key persons, the functionality of the labour markets, changes in public and private sector investments and changes in legislation, permit and authorisation processes and the duration thereof, as well as the development of foreign exchange rates.

Due to the long-term nature of construction and urban development projects, the changes in demand may be quicker than the company's ability to adapt its offering.

Market outlook, next 12 months

Weakened outlook compared to the past 12 months' development.
Unchanged outlook compared to the last 12 months' development.
Improved outlook compared to the past 12 months' development.

	Housing Finland and CEE	Housing Russia	Business premises	Infra projects	Paving	Partnership properties
Finland
Russia
The CEE Countries
The Baltic Countries
Czech Republic, Slovakia, Poland
Scandinavia
Sweden
Norway
Denmark

1		ACCOUNTING PRINCIPLES OF THE INTERIM REPORT 31
	1.1	Most relevant currency exchange rates used in the Interim Report 31
2		SUMMARY OF FINANCIAL STATEMENTS 32
	2.1	Consolidated income statement 32
	2.2	Statement of comprehensive income, IFRS 32
	2.3	Consolidated statement of financial position 33
	2.4	Consolidated cash flow statement, IFRS 34
	2.5	Consolidated statement of changes in equity, IFRS 35
3		NOTES 36
	3.1	Segment information 36
	3.2	Merger 39
	3.3	Inventories, IFRS 40
	3.4	Change in contingent liabilities and assets and commitments 41
4		ADDITIONAL INFORMATION 41
	4.1	New standards 41
	4.2	Key figures 45
	4.3	Reconciliation of certain key figures 46
	4.4	The definitions of financial key performance indicators 49

1 ACCOUNTING PRINCIPLES OF THE INTERIM REPORT

This Interim report has been prepared in accordance with the International Financial Reporting Standards (IFRS), but all the requirements of the IAS 34: Interim Financial Reporting have not been met. This Interim report should be read together with the YIT Corporation's Financial Statements 2017. The figures presented in the Interim report are unaudited. In the Interim report the figures are presented in million euros doing the rounding on each line, which may cause some rounding inaccuracies in column and total sums.

The adoption of IFRS 9 and IFRS 15 on January 1, 2018 did not have a material impact on YIT's consolidated financial statements. More information on the adoption of IFRS 15 and IFRS 9 can be found in the note 4.1. of this interim report.

Pro Forma information

Lemminkäinen merged into YIT on February 1, 2018. YIT as the accounting acquirer of Lemminkäinen has used the acquisition method of accounting to account for the merger. The identifiable assets acquired and liabilities assumed of Lemminkäinen have been recognised at their fair values as of the merger date, with excess of the purchase consideration over the provisional fair value of identifiable net assets acquired recognised as goodwill. Detailed information on Pro Forma financial information can be found in the Pro forma stock exchange release published on April 4, 2018.

The historical financial information of YIT Corporation doesn't give investors a comparable base for financial information of the present combined company. To increase the comparability, certain financial information is presented as pro forma financial information to represent the impact of the merger as if it had occurred at an earlier date. Pro forma information is presented only for illustrative purposes and the information doesn't represent the actual historical result of YIT Corporation's operations.

The pro forma balance sheet is presented as if the merger had occurred on December 31, 2017. The pro forma income statements for the year ended on December 31, 2017 and for the quarter ended on March 31, 2018 are presented as if the merger had occurred on January 1, 2017.

			Average rates		End rates
		1–3/18	1–3/17	1-12/17	3/18	3/17	12/17
1 EUR =	CZK	25.4030	27.0210	27.0342	25.4250	27.0300	27.0210
	PLN	4.1797	4.3212	4.3635	4.2106	4.2265	4.4103
	RUB	69.9378	62.5321	74.1466	70.8897	60.3130	64.3000
	SEK	9.9742	n/a	n/a	10.2843	n/a	n/a
	NOK	9.6329	n/a	n/a	9.6770	n/a	n/a
	DKK	7.4468	n/a	n/a	7.4530	n/a	n/a

1.1 Most relevant currency exchange rates used in the Interim Report

2 SUMMARY OF FINANCIAL STATEMENTS

2.1 Consolidated income statement

	Reported	Reported	Reported	Pro forma	Pro forma	Pro forma
EUR million	1-3/2018	1-3/2017	1-12/2017	1-3/2018	1-3/2017	1-12/2017
Revenue	532.3	452.2	1,993.8	602.2	696.0	3,862.5
Other operating income	4.7	1.9	37.4	5.2	4.1	45.7
Change in inventories of finished goods and in work in progress	59.5	4.6	-83.1	64.2	21.4	-97.9
Production for own use	0.2	0.1	0.7	0.2	0.2	0.9
Materials and supplies	-115.0	-55.4	-276.8	-126.9	-116.7	-776.5
External services	-309.1	-229.9	-985.9	-359.3	-371.7	-1.815.3
Personnel expenses	-105.4	-65.8	-275.7	-124.6	-125.4	-588.5
Other operating expenses	-93.3	-99.5	-309.7	-102.6	-148.9	-493.1
Share of results in associated companies and joint ventures	-0.2	0.2	-0.9	-0.7	-0.5	-0.7
Depreciation, amortisation and impairment	-8.3	-3.5	-14.2	-8.9	-11.0	-59.7
Operating profit	-34,6	4.7	85.5	-51.1	-52.4	77.4
Financial income	1.6	0.5	1.9	1.6	0.6	2.3
Exchange rate differences (net)	-0.1	2.1	2.6	-0.0	1.9	0.7
Financial expenses	-9.5	-2.8	-19.1	-8.3	-8.1	-29.7
Financial income and expenses, total	-8.1	-0.3	-14.6	-6.8	-5.7	-26.7
Result before taxes	-42.7	4.5	70.9	-57.8	-58.1	50.7
Income taxes	7.0	-1.0	-14.3	5.7	10.8	-24.3
Result for the period	-35.8	3.4	56.6	-52.2	-47.3	26.3
Attributable to
Equity holders of the parent
company	-35.8	3.4	56.6	-52.2	-47.3	26.3
Non-controlling interest
Earnings per share, attributable to the equity holders of the parent company
Basic, EUR	-0.20	0.03	0.45	-0.25	-0.23	0.13
Diluted, EUR	-0.20	0.03	0.44	n/a	n/a	n/a

2.2 Statement of comprehensive income, IFRS

	Reported	Reported	Reported
EUR million	1-3/2018	1-3/2017	1-12/2017
Result for the period	-35.8	3.4	56.6
Items that may be reclassified subsequently to profit/loss:
Cash flow hedges	0.0	0.1	0.3
- Deferred tax from previous	-0.0	0.0-00.--0.0	-0.1
Change in translation differences	-9.8	29.4	31.4
Items that may be reclassified
subsequently to profit/loss, total	-9.8	29.5	-31.1
Total comprehensive result	-45.5	33.0	25.5
Attributable to equity holders of the
parent company	-45.5	33.0	25.5
Attributable to non-controlling interest

2.3 Consolidated statement of financial position

EUR million	Reported 3/2018	Reported 3/2017	Reported 12/2017	Pro forma 12/2017
ASSETS
Non-current assets
Property, plant and equipment	214.2	55.0	54.8	219.2
Goodwill	311.3	8.1	8.1	306.4
Other intangible assets	58.5	12.5	11.3	62.2
Investments in associated companies and joint ventures	142.0	75.1	120.1	124.2
Equity investments	2.3	0.4	0.4	2.3
Interest-bearing receivables	38.4	39.1	46.0	46.0
Other receivables	1.7	2.9	1.6	1.9
Deferred tax assets	72.5	55.4	53.2	61.5
Non-current assets total	840.8	248.5	295.6	823.7
Current assets
Inventories	2,081.0	1,793.2	1,592.5	2,008.0
Trade and other receivables	440.2	206.2	211.8	466.5
Interest-bearing receivables	15.2	0.8	1.6
Income tax receivables	6.2	8.5	2.1	3.1
Cash and cash equivalents	65.2	77.7	89.7	111.3
Current assets total	2,607.8	2,086.5	1,897.8	2,589.0
Total assets	3,448.6	2,335.0	2,193.3	3,412.7
EQUITY AND LIABILITIES Total equity attributable to non-controlling interest
Total equity attributable to the equity holders of the
parent company	1,019.9	569.6	564.7	1,116.6
Equity total	1,019.9	569.6	564.7	1,116.6
Non-current liabilities
Deferred tax liabilities	37.1	15.8	9.9	32.6
Pension obligations	2.4	2.1	2.1	2.4
Provisions	82.4	46.6	46.0	83.4
Borrowings	483.5	247.4	344.5	467.9
Other liabilities	56.6	73.9	53.7	53.8
Total non-current liabilities	661.9	385.7	456.2	640.1
Current liabilities
Advances received	842.5	488.9	494.3	634.2
Trade and other payables	424.9	429.6	392.7	611.1
Income tax payables	5.0	6.8	13.0	12.9
Provisions	45.3	33.9	26.3	40.0
Borrowings	449.0	420.5	246.3	357.9
Total current liabilities	1,766.8	1,379.7	1,172.5	1,656.0
Liabilities total	2,428.7	1,765.5	1,628.7	2,296.1
Total equity and liabilities	3,448.6	2,335.0	2,193.3	3,412.7

	Reported	Reported	Reported
EUR million	1-3/2018	1-3/2017	1-12/2017
Result for the period	-35.8	3.4	56.6
Reversal of accrual-based items	21.5	16.9	47.1
Adjustments
Change in trade and other receivables	41.6	27.1	32.3
Change in inventories	-102.7	-10.5	100.6
Change in current liabilities	-25.3	35.8	34.9
Change in working capital, total	-86.4	52.4	167.8
Cash flow of financial items	-12.6	-12.6	-26.7
Taxes paid	-11.9	-2.6	-9.4
Net cash generated from operating activities	-125.1	57.6	235.2
Acquisition of subsidiaries and		-11.4-11
associated companies, net of cash	-26.6	-11.4	-60.0
Disposal of subsidiaries, associated companies and joint ventures	1.0	-0.0	4.5
Cash outflow from investing
activities	-3.5	-6.0	-18.7
Cash inflow from investing
activities	1.6	0.6	3.3
Net cash used in investing activities	-27.6	-16.8	-70.9
Operating cash flow after investments	-152.7	40.8	164.3
Change in loan receivables	-5.7	1.0	0.1
Change in current liabilities	93.4	-31.6	-109.2
Proceeds from borrowings	20.0		110.0
Repayments of borrowings	0.0	-1.8	-112.9
Payments of financial leasing debts	-0.9	-0.0
Dividends paid			-27.6
Net cash used in financing activities	106.8	-32.4	-139.6
Net change in cash and cash equivalents	-45.9	8.4	24.7
Cash and cash equivalents
at the beginning of the period	89.7	66.4	66.4
Cash generated from merger Change in the fair value of the cash	21.6
equivalents	-0.3	2.9	-1.5
Cash and cash equivalents
at the end of the period	65.2	77.7	89.7

2.4 Consolidated cash flow statement, IFRS

2.5 Consolidated statement of changes in equity, IFRS

	Equity attributable to equity holders of the parent company
EUR million	Share capital	Legal reserve	reserves Other	Translation differences	Fair value reserve	Treasury shares	Retained earnings	Total	Non controlling interest	Equity total
Equity on January 1, 2018	149.2	1.5	0.7	-216.5	-0.0	-7.2	636.9	564.7		564.7
IFRS 9 adjustment							-0.7	-0.7		-0.7
Adjusted equity on January 1, 2018	149.2	1.5	0.7	-216.5	-0.0	-7.2	636.3	564.0		564.0
Comprehensive income
Result for the period							-35.8	-35.8		-35.8
Other comprehensive income:
Cash flow hedges					0.0			0.0		0.0
-Deferred tax from previous					-0.0			-0.0		-0.0
Translation differences				-9.8				-9.8		-9.8
Comprehensive income, total				-9.8	0.0		-35.8	-45.5		-45.5
Transactions with owners
Merger	0.5		554.8					555.3		555.3
Cost related to share issue			-1.4					-1.4		-1.4
Dividend distribution							-52.4	-52.4		-52.4
Share-based incentive schemes							-0.0	-0.0		-0.0
Transactions with owners, total	0.5		553.3				-52.4	501.4		501.4
Equity on March 31, 2018	149.7	1.5	554.1	-226.2	-0.0	-7.2	548.1	1,019.9		1,019.9

	Equity attributable to equity holders of the parent company
EUR million	Share capital	Legal reserve	Translation differences	Fair value reserve	Treasury shares	Retained earnings	Total	Non controlling interest	Equity total
Equity on January 1, 2017	149.2	1.5	-185.0	-0.3	-8.3	606.7	563.9		563.9
Comprehensive income
Result for the period						3.4	3.4		3.4
Other comprehensive income:
Cash flow hedges				0.1			0.1		0.1
- Deferred tax from previous				-0.0			-0.0		-0.0
Translation differences			29.4				29.4		29.4
Comprehensive income, total			29.4	0.1		3.4	33.0		33.0
Transactions with owners
Dividend distribution						-27.6	-27.6		-27.6
Share-based incentive schemes						0.4	0.4		0.4
Transactions with owners, total						-27.3	-27.3		-27.3
Equity on March 31, 2017	149.2	1.5	-155.6	-0.2	-8.3	582.9	569.6		569.6

EUR million	Share capital	Legal reserve	reserves Other	Translation differences	Fair value reserve	Treasury shares	Retained earnings	Total	Equity total
Equity on January 1, 2017	149.2	1.5		-185.0	-0.3	-8.3	606.7	563.9	563.9
Comprehensive income
Result for the period							56.6	56.6	56.6
Other comprehensive income:
Cash flow hedges					0.3			0.3	0.3
- Deferred tax from previous					-0.1			-0.1	-0.1
Translation differences				-31.4				-31.4	-31.4
Comprehensive income, total				-31.4	0.3		56.6	25.5	25.5
Transactions with owners
Dividend distribution							-27.6	-27.6	-27.6
Share-based incentive schemes			0.7			1.1	1.2	3.0	3.0
Transactions with owners, total			0.7			1.1	-26.4	-24.6	-24.6
Equity on December 31, 2017	149.2	1.5	0.7	-216.5	-0.0	-7.2	636.9	564.7	564.7

3 NOTES

3.1 Segment information

Segment information is reported according to management reporting for the Group Management Board. The chief operating decision-maker is the YIT Group's Management Board, which is responsible for the allocation of resources to the segments and the assessment of the segments' performance.

The Housing Finland and CEE segment's business comprises of 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 themselves 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.

The Business premises segment consists of business premises construction, project development and commercial property and facilities management businesses. The majority of the revenue comes from the 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, water supply and industrial plants. YIT also offers wind power plant foundation solutions with related services and maintenance. YIT also quarries tunnels and mines and reinforce the soil using different methods. The segment operates in Finland, Sweden, Norway, Estonia, Latvia and Lithuania.

The Paving segment's operations include paving and mineral aggregate production as well as stabilisation, milling and waterproofing. The segment's operations also include road and street network maintenance. The company cooperates with its customers to produce pavements for especially demanding works, such as airport runways with special quality demands. Approximately half of the segment's revenue originate from public procurement by states and municipalities. Paving and mineral aggregate production are capital-intensive businesses that tie capital to machinery and equipment, land areas and current assets. The Paving segment operates in Finland, Sweden, Norway, Denmark and Russia.

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 will potentially have revenue from different service agreements related to managing or sourcing the assets it partially owns.

Other items

Other items include Group internal services, rental revenue from external customers and Group level unallocated costs.

Segment reporting accounting principles

YIT Corporation has prepared segment and group reporting in accordance with the International Financial Reporting Standards (IFRS). Housing Finland and CEE and Housing Russia segments have prepared some figures, as revenue and operating result, according to the percentage of completion (POC) based reporting in addition to IFRS. According to the percentage of completion method, the revenue is recognized by multiplying the degree of completion and the degree of sale.

YIT reports regularly revenue, depreciation and operating profit by segment to the management. In addition, capital employed by segment is reported.

The historical segment information of YIT doesn't give investors a comparable base for financial information of the present combined company. To add comparability the comparative figures are presented as pro forma figures which expresses the effect of the merger as if it had happened on January 1, 2017.

Seasonality of business

Seasonality of certain operations of the company affects the company's profit and its timing. According to the IFRS accounting principles, revenue from the company's own residential construction projects is recognised on completion. As a result, the profit of the company can fluctuate greatly between quarters depending on the completion of the projects.

Weather conditions influence the length of the Paving segment's working season, which affects the company's profit and its timing. In addition, there may be some seasonality in the Infrastructure projects segment's foundation engineering business due to the timing of building construction projects.

Segment financial information

1-3/2018 reported
EUR million	Housing Finland and CEE	Housing Russia	Business premises	Infrastructure projects	Paving	Partnership properties	Other items and eliminations	Group, IFRS
Revenue	228.5	34.5	162.5	71.8	42.4		-7.4	532.3
Revenue from external customers	228.5	34.3	162.1	65.9	42.3		-0.8	532.3
Revenue Group internal	0.0	0.1	0.4	5.9	0.1		-6.5
Depreciation, amortisation and impairment	-0.3	-0.2	-0.1	-2.9	-1.0		-3.9	-8.3
Operating profit	21.3	-13.1	-1.9	-5.7	-22.3	-0.2	-12.7	-34.6
Operating profit margin, %	9.3%	-37.9%	-1.2%	-8.0%	-52.6%			-6.5%
Adjusting items		0.2			3.4		5.9	9.4
Adjusted operating profit	21.3	-12.9	-1.9	-5.7	-18.9	-0.2	-6.9	-25.3
Adjusted operating profit margin, %	9.3%	-37.5%	-1.2%	-8.0%	-44.6%			-4.7%
Invested capital	571.4	393.2	122.3	97.5	143.3	137.0	389.5	1,854.2

				1-3/2018 pro forma
EUR million	Housing Finland and CEE	Housing Russia	Business premises	Infrastructure projects	Paving	Partnership properties	Other items and eliminations	Group. IFRS
Revenue	242.9	38.3	183.0	93.7	52.7		-8.3	602.2
Revenue from external customers	242.9	38.2	182.3	87.5	52.2		-0.8	602.2
Revenue Group internal		0.1	0.7	6.2	0.5		-7.2
Depreciation, amortisation and impairment	-0.3	-0.2	-0.1	-3.3	-1.6		-3.5	-8.9
Operating profit	20.5	-14.0	-2.2	-8.6	-36.1	-0.2	-10.5	-51.1
Operating profit margin, %	8.5%	-36.5%	-1.2%	-9.2%	-68.4%			-8.5%
Adjusting items		0.2			5.3		2.4	7.8
Adjusted operating profit	20.5	-13.8	-2.2	-8.6	-30.8	-0.2	-8.1	-43.2
Adjusted operating profit margin, %	8.5%	-36.1%	1.2%	-9.2%	-58.4%			-7.2%
Invested capital	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a

1-3/2017 pro forma
EUR million	Housing Finland and CEE	Housing Russia	Business premises	Infrastructure projects	Paving	Partnership properties	Other items and eliminations	Group. IFRS
Revenue	258.3	68.5	198.9	121.9	62.7		-14.3	696.0
Revenue from external customers	258.2	68.5	196.8	114.7	57.7		-0.0	696.0
Revenue Group internal	0.0		2.1	7.2	5.0		-14.3
Depreciation, amortisation and impairment	-0.4	-0.2	-0.0	-3.3	-2.0		-7.1	-11.0
Operating profit	8.5	-5.2	1.8	-1.3	-25.0		-31.1	-52.4
Operating profit margin, %	3.3%	-7.6%	0.9%	-1.1%	-39.9%			-7.5%
Adjusting items							25.3	25.3
Adjusted operating profit	8.5	-5.2	1.8	-1.3	-25.0		-5.8	-27.1
Adjusted operating profit margin, %	3.3%	-7.6%	0.9%	-1.1%	-39.9%			-3.9%
Invested capital	n/a	n/a	n/a	n/a	n/a		n/a	n/a

1-12/2017 pro forma
EUR million	Housing Finland and CEE	Housing Russia	Business premises	Infrastructure projects	Paving	Partnership properties	Other items and eliminations	Group. IFRS
Revenue	1,156.2	421.0	902.2	686.0	768.9		-71.8	3,862.5
Revenue from external customers	1,156.1	421.0	894.2	651.2	740.3		-0.3	3,862.5
Revenue Group internal	0.1		8.0	34.8	28.6		-71.5
Depreciation, amortisation and impairment	-1.6	-1.1	-0.2	-13.3	-22.1		-21.5	-59.7
Operating profit	78.1	1.7	45.6	17.4	4.7	-0.5	-69.6	77.4
Operating profit margin, %	6.8%	0.4%	5.1%	2.5%	0.6%			2.0%
Adjusting items	4.9	3.2	5.9				47.6	61.5
Adjusted operating profit	83.0	4.9	51.5	17.4	4.7	-0.5	-22.0	138.9
Adjusted operating profit margin, %	7.2%	1.2%	5.7%	2.5%	0.6%			3.6%
Invested capital	526.0	417.9	82.6	99.2	148.2	116.6	382.8	1,773.3

Order backlog at the end of the period

		Reported Pro forma	Pro forma
EUR million	1-3/2018	1-3/2017	1–12/2017
Housing Finland and CEE	1,719.9	1,434.1	1,580.1
Housing Russia	465.9	729.9	448.6
Business premises	1,250.3	1,437.2	1,306.8
Infrastructure projects	672.0	549.4	471.0
Paving	532.7	504.9	411.8
Partnership properties
Order backlog, total	4,640.8	4,655.7	4,218.3

3.2 Merger

Lemminkäinen merged into YIT on February 1, 2018. New shares issued to Lemminkäinen's shareholders as merger consideration were admitted to trading to Nasdaq Helsinki on February 1, 2018. YIT as the accounting acquirer of Lemminkäinen has used the acquisition method of accounting to account for the merger. The identifiable assets acquired and liabilities assumed of Lemminkäinen have been recognised at their fair values as of the merger date, with excess of the purchase consideration over the provisional fair value of identifiable net assets acquired recognised as goodwill.

EUR million	Acquired assets and assumed liabilities at fair value
Property, plant and equipment	164.4
Goodwill
Other intangible assets	50.9
Investments in associated companies and joint ventures	4.1
Equity investments	1.8
Interest-bearing receivables
Other receivables	0.3
Deferred tax assets	8.2
Total non-current assets	229.7
Inventories	415.5
Trade and other receivables	255.8
Income tax receivables	1.1
Cash and cash equivalents	21.6
Total current assets	694.0
Total assets	923.7
Deferred tax liabilities	22.7
Pension obligations	0.3
Provisions	37.5
Borrowings	123.5
Other liabilities	0.0
Total non-current liabilities	183.9
Advances received	139.9
Trade and other payables	215.7
Income tax liabilities	0.5
Provisions	13.7
Borrowings	111.6
Total current liabilities	481.4
Total liabilities	665.4
Net assets acquired	258.4
Non-controlling interest	0.0
Goodwill	298.3
Purchase consideration	556.7

The Company has no other relevant business combinations.

3.3 Inventories, IFRS

	Reported	Reported
EUR million	3/2018	3/2017
Raw materials and consumables	62.4	5.8
Work in progress	1,012.0	945.9
Land areas and plot owning companies	713.7	644.5
Shares in completed housing and real estate companies	227.6	157.9
Advance payments	36.1	37.6
Other inventories	29.2	1.6
Total inventories	2,081.0	1,793.2

	Reported	Reported	Reported
EUR Million	3/2018	3/2017	12/2017
Collateral given for own commitments
Guarantees on behalf of its associated
companies	5.0	5.0	5.0
Other commitments
Investment commitments	8.3	51.0	22.4
Repurchase commitments	306.4	265.0	265.2
Operating leases	157.8	115.4	97.8
Rental guarantees for clients	4.2	5.8	4.4

Liability under derivative contracts
Value of underlying instruments
Interest rate derivatives	295.0	335.0	275.0
Foreign exchange derivatives	131.5	76.8	22.4
Commodity derivatives	9.3
Fair value
Interest rate derivatives	-3.6	-5.6	-3.8
Foreign exchange derivatives	0.9	0.6
Commodity derivatives	0.1

YIT Corporation's guarantees on
behalf of its subsidiaries	1,475.6	1,464.5	1,023.7

3.4 Change in contingent liabilities and assets and commitments

As a result of the partial demerger registered on June 30, 2013, YIT Corporation had secondary liability for guarantees transferred to Caverion Corporation, with a maximum total amount of on March 31, 2018 EUR 18.0 million.

Legal proceedings

As a result of the execution of the merger of YIT and Lemminkäinen, all the assets, debts and liabilities of Lemminkäinen, including on-going litigations, are transferred to YIT. The litigations are covered more extensively in this interim bulletin in the section Lemminkäinen's legal proceedings.

4 ADDITIONAL INFORMATION

4.1 New standards

IFRS 15

Initial application of IFRS 15

YIT adopted IFRS 15 as of 1 January 2018 using a retrospective method and all available transition relief options. In accordance with the retrospective method, the company adjusted the disclosures for the comparative period to comply with IFRS 15. However, adoption of IFRS 15 did not result in adjustments to comparative period or comparative period's opening balance of retained earnings.

The company did not adjust contracts fully satisfied and completed during the year 2017. In addition, the company did not adjust contracts completed at the date of initial application of 1 January 2017, did not adjust the variable consideration for the comparative period for contracts that were completed at the end of the year 2017, and did not restate contract modifications made before the transition date. The company considered the cumulative impact of contract modifications when determining the transaction price, assessing satisfied and unsatisfied performance obligations and allocating the transaction price to the performance obligations. The company does not disclose the amount of transaction price allocated to the unsatisfied performance obligations as at 31 December 2017 nor provide a more detailed description of satisfying the performance obligations.

Recognition of revenue from contracts with customers

YIT discloses net sales as revenues from contracts with customers less indirect taxes and discounts. Transaction price expected to be received from the customer, including variable amounts such as penalties and bonus payments based on performance, is determined at the contract inception. Some or all of the amount of the variable consideration estimated is included in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Estimated transaction price is updated at the end of each reporting period. YIT does not have incremental costs of obtaining a contract. All costs generated before the inception of a contract are expensed once incurred. YIT capitalises costs to fulfil contracts, that meet the criteria of capitalisation, and costs to fulfil contracts are amortised according to project's measure of progress. For YIT costs to fulfil contracts are typically land plot related costs in construction projects in which land plot and construction service are one performance obligation. Costs to fulfil contracts are presented in statement of financial position in line item inventories. In some specific contracts with customers, there is a significant timing difference between the payment from the customer and the transfer of promised goods or services to the customer. YIT applies a practical expedient and does not adjust the promised amount of consideration for the effects of a significant financing component, when the period between when the payment from the customer and the transfer of promised goods or services to the customer is expected to be one year or less. Significant financing component is accounted for if the timing difference is more than one year and the annual average interest expense is significant with respect to the contract. For most of the contracts, payments received from customers are mainly in line with how the work progresses.

Revenue is recognised mainly by separate performance obligations based on materiality principles of YIT. When a contract contains more than one performance obligation, transaction price is allocated based on stand-alone selling prices. Several performance obligations are identified mainly in the Housing Finland and CEE and the Business premises segments where a contract may cover the construction of several separate buildings. In the Business premises and in the Infrastructure projects segment's life cycle projects construction services and maintenance services are separate performance obligations. In a case where YIT has committed to warranty periods that are longer than what has been defined in legislation or in general terms and conditions, the excess warranty period may be considered as a separate performance obligation and the transaction price allocated to it is recognised as revenue when the service is performed. YIT has offered a small number of warranty periods exceeding the general terms and conditions which are low in value. Therefore, based on management's materiality assessment, they have not been accounted for as separate performance obligations. Warranties offered due to legislation are accounted for as provisions, which are described in more detail under the section Provisions in Accounting principles of the Financial Statement. Contract modifications consist of project extensions and amendments, which are accounted for as part of the original contract. These are not usually identified as separate performance obligations and the assessment is made based on materiality principles of YIT.

Revenue is recognised when or as the control of the promised good or service is transferred to the customer. YIT recognises revenue both over time and at a point in time. Over time revenue recognition is based on measure of progress, which is input or output based. In a case where it is not possible to measure the progress of satisfying a performance obligation and the costs are expected to be covered, revenue is recognised only to the extent of realised costs. If it is probable that the total costs to complete a project included in the order backlog will exceed the transaction price to be received from the project, the expected loss is expensed and recognised as a provision. At the end of the reporting period, if the project billing is less than the revenue recognised based on the measured progress of the project, the difference is presented in statement of financial position as a contract asset in trade and other receivables. At the end of the reporting period, if the project billing exceeds the revenue recognised based on the measured progress of the project, the difference is presented in statement of financial position as a contract liability in current liabilities in line items advances received and trade and other liabilities.

Housing Finland and CEE and Housing Russia

Revenue recognition over time

Revenue from construction service is recognised over time, if the customer controls the assets for which the construction service is provided, or if the construction service does not create an asset with an alternative use to YIT and YIT has an enforceable right to payment for performance completed to date. YIT uses an input method to determine the measure of progress of construction service. The measure of progress is determined in proportion of realised costs at time of reporting to estimated total costs or stage of physical completion, which is determined in proportion of cost incurred from completed stages of construction to estimated total costs.

Additionally, the Housing Russia segment has maintenance contracts of which revenues are recognised over time as the customer simultaneously receives and consumes the benefits of the provided service. Revenue recognition is based on maintenance contract and is invoiced monthly according to the contract.

Revenue recognition at a point in time

The revenue from residential development projects, where the criteria for revenue recognition over time are not met, is recognised at a point in time when the control of the asset is transferred to the customer i.e. the asset is completed and handed over to the customer. Revenue recognition of completed projects is based on the degree of sale. Residential development projects are projects developed by YIT which are not sold as construction begins and of which individual apartments are sold instead of entire buildings.

In a case where a land plot is sold without providing construction service, revenue is recognised at a point in time when the control of the land plot transfers to the customer.

Business premises and Infrastructure projects

Revenue recognition over time

Revenue from construction services in Business premises and Infrastructure projects segments is recognised over time, if the customer controls the assets for which the construction service is provided, or if the construction service does not create an asset with an alternative use to YIT and YIT has an enforceable right to payment for performance completed to date. In commercial real estate development projects the criteria for recognising revenue over time are evaluated by the terms and conditions of each project on a case-by-case basis. Criteria for revenue recognition over time is met in majority of YIT's Business premises and Infrastructure projects segments' construction services. YIT uses an input method to measure the progress of building construction and infra projects. The measure of progress is determined in proportion of realised costs at time of reporting to estimated total costs or stage of physical completion, which is determined in proportion of cost incurred from completed stages of construction to estimated total costs. In Business premises segment possible lease liability commitments of commercial real estate construction are included in the transaction price as a variable consideration, and their amount and probability is estimated as a project progresses.

In life-cycle projects, YIT builds or improves the infrastructure used for service provision, such as a school or road network, and provides operation services for the infrastructure. The operation service period is typically 25 years. The company recognises revenue from construction and improvement services as well as from operation services over time as separate performance obligations.

Revenue recognition at a point in time

The revenue from commercial real estate development projects, where the criteria for revenue recognition over time are not met, is recognised at a point in time when the control of the asset is transferred to the customer i.e. the asset is completed and handed over to the customer. Revenue recognition of completed projects is based on the degree of sale.

YIT produces and sells asphalt mass in Infrastructure projects segment in Baltic countries. The company recognises revenue from the sale of goods at a point in time when the control transfers and the goods are delivered to the customer.

Paving

Revenue recognition over time

Criteria for revenue recognition over time is always met in paving services, as the services is performed on a land area owned by the customer, i.e. the customer controls the asset for which the paving service is performed. Revenue from long term paving projects is recognised over time using either input or output method. The measure of progress using the input method is based on realised costs in proportion to estimated total costs. The measure of progress using the output method is based on realised units, such as produced asphalt mass tonnes in proportion to estimated total tonnes or achieved milestones compared to determined milestones of the whole paving project. Revenue from short term paving projects is recognised over time using output method based on milestones. Paving services are performed within a short term period except for occasional long term projects.

Revenue from mineral aggregates quarrying and crushing business performed on land area owned by the customer is recognised over time as the customer simultaneously receives and consumes the benefits provided by the quarrying and crushing service of YIT. Revenue from the service is recognised using an output method. The lifespan of the quarrying and crushing service is relatively short.

Revenue recognition at a point in time

YIT produces and sells mineral aggregates and asphalt mass. The company recognises revenue from the sale of goods at a point in time when the control transfers and the goods are delivered to the customer.

Partnership properties

Revenue recognition over time

Segment's revenue generated through different type service contracts, that are related to assets partially owned or acquired, is recognised over time as the customer simultaneously receives and consumes the benefits of service provided.

Revenue recognition at a point in time

Possible property sales are recognised as YIT transfers control of property to buyer.

Management judgement and estimates

Recognition of revenue from construction projects

Revenue recognition over time is based on estimates of the project's transaction price, i.e. expected revenue and costs as well as on the reliable measurement of progress of the project. In order to make a reliable estimate, the project's costs are determined and itemised as accurately as possible. To determine revenue, management has to estimate factors affecting the transaction price expected to be received from the customer, including variable components such as penalties and bonus payments based on performance. Calculation of the total income of projects includes estimates on the total expenditure required to complete the project. Due to estimates included in the revenue recognition of construction services and service contracts, revenue recognised by measure of progress and profit presented by financial period only rarely correspond to the equal distribution of the total profit over the duration of the project.

Estimates related to projects revenue recognition are regularly and reliably updated. If the estimates of the end result of a project recognised as revenue over time change, the sales and profits recognised are adjusted in the reporting period when the change first became known and could be estimated. If it is probable that the total expenditure required to complete a project will exceed the total income from the project, the expected loss is expensed immediately.

IFRS 9

Financial assets

The Group has applied IFRS 9 Financial Instruments standard retrospectively from 1 January 2018. In accordance with the transitional provisions, comparative figures have not been restated, and the comparative information provided continues to be accounted for in accordance with the group's previous accounting policy.

Financial assets are recognised on the settlement date. The Group classifies financial assets on initial recognition into the following measurement categories: financial assets measured at amortised cost, financial assets measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income. The classification depends on the business model for managing the financial assets and the contractual terms of the cash flows. The IFRS 9 classification did not cause relevant changes in handling these items. The most relevant items are trade receivables, other receivables and cash and cash equivalents measured at amortised cost and derivative assets measured at fair value through profit or loss. Financial assets are derecognised once the Group has lost the contractual right to their cash flows or when it has substantially transferred their risks and rewards to a party outside the Group.

Impairment of financial assets

The impairment model for financial assets is based on expected credit losses, where customer's credit risk is taken into account. Simplified approach of expected credit losses is used for trade receivables and customer contract assets in accordance with IFRS 15, when expected credit losses from these assets are recognised based on historical information with adjustment concerning expectations of the future.

In addition, on every reporting date, the Group assesses whether there is any objective evidence of impairment of the value of a financial asset or a group of financial assets. If there is objective evidence of impairment, the amount recoverable from the financial asset, which is the fair value of the asset, is estimated and the impairment loss is recognised wherever the carrying amount exceeds the recoverable amount. Impairment losses are recognised in the income statement. For example, when a debtor is in significant financial difficulties, any probable bankruptcy, delinquent payments, or payments that are more than 90 days overdue constitute evidence of possible impairment of the receivables.

The impact of adoption of IFRS 9 standard to YIT Corporation's opening balance January 1, 2018 was 0.7 million euros.

Reconciliation calculation of opening balance January 1, 2018

EUR Million	31 Dec 2017	Adjustment on adoption of IFRS 9	1 Jan 2018
Deferred tax receivables	53.2	0.1	53.4
Trade receivables	114.3	-0.7	113.6
Customer contracts in accordance with IFRS 15	21.2	-0.1	21.2
Total assets	2,193.3	-0.7	2,192.7

Retained earnings	580.3	-0.7	636.3
Profit for the period	56.6
Total equity	564.7	-0.7	564.0

4.2 Key figures

	Reported 3/2018	Reported 12/2017	Reported 3/2017	Pro forma 3/2018	Pro forma 12/2017	Pro forma 3/2017
Equity ratio, %	39.1%	33.2%	31.1%	n/a	40.2%	n/a
Net interest-bearing debt, EUR million1	813.8	453.4	550.2	813.8	668.5	n/a
Net debt/ adjusted pro forma ebitda	n/a	n/a	n/a	4.8	3.6	n/a
Gearing ratio, %1	79.8%	80.3%	96.6%	n/a	59.9%	n/a
Unrecognised order backlog at the end of the period, EUR
million - of which activities outside	4,640.8	2,912.7	3,088.9	4,640.8	4,218.3	n/a
Finland, EUR million	1,124.8	803.1	1,005.6	1,124.8	n/a	n/a
Personnel at the end of the period	9,296	5,427	5,407	9,296	9,721	n/a
Gross capital expenditures. EUR million	24.3	30.5	17.3	n/a	n/a	n/a
% of revenue	4.6%	5.0%	3.8%	n/a	n/a	n/a
Average share price during the period, EUR	6.80	6.94	6.88	n/a	n/a	n/a
Share price at the end of the period, EUR	6.80	6.37	6.34	n/a	n/a	n/a
Market capitalisation at the end of the period, EUR million	1,425.9	801.4	796.2	n/a	n/a	n/a
Equity per share, EUR	4.86	4.49	4.54	n/a	n/a	n/a
Adjusted earnings per share pro forma, EUR	n/a	n/a	n/a	-0,22	0,35	-0.12
Weighted average number of shares outstanding – basic, 1,000 pcs	180,801	125,730	125,577	209,692	209,606	209,453
Weighted average number of shares outstanding. Diluted,
1,000 pcs	180,801	127,656	127,366	n/a	n/a	n/a
Number of shares at end of period, 1,000 pcs	209,692	125,815	125,577	n/a	n/a	n/a

1 YIT has changed the definition of gearing and net debt on January 1, 2018. The comparison period figures are adjusted.

4.3 Reconciliation of certain key figures

Reconciliation of adjusted operating profit

	Reported	Reported	Reported	Pro forma	Pro forma	Pro forma
Million EUR	1-3/2018	1-12/2017	1-3/2017	1-3/2018	1-12/2017	1-3/2017
Operating profit (IFRS)	-34.6	85.5	4.7	-51.1	77.4	-52.4
Adjusting items
Write-down of inventories		14.0			14.0
Impairment of goodwill
Restructurings and divestments1	2.0			3.9
Transaction costs related to merger	1.4	6.1			15.1	15.1
Integration costs related to merger	1.0			1.0	3.8
Costs. compensations and reimbursements related to court proceedings					1.4	3.4
Write-downs related to non-core businesses
Inventory fair value adjustment from PPA2	2.4			0.9	13.7	3.4
Depreciation and amortisation expenses from PPA 2	2.5			1.9	13.7	3.4
Adjusting items, total	9.4	20.1		7.8	61.5	25.3
Adjusted operating profit	-25.3	105.6	4.7	-43.2	138.9	-27.1

1 Restructurings and divestments concern business reorganisations of Norway and Sweden. This adjusting item is focused at both Paving segment and other items and reconciliations.

2 PPA refers to merger related fair value adjustments.

Reconciliation of adjusted pro forma ebitda

Million EUR	1-3/2018	1-12/2017
Adjusted operating profit	-43.2	138.9
Depreciations and amortisations	8.9	59.7
Depreciation and amortisation expenses from PPA	-1.9	-13.7
Adjusted pro forma ebitda	-36.3	185.3

Pro forma adjusted earnings per share
EUR million, unless otherwise
noted	1-3/2018	1-12/2017	1-3/2017
Pro forma result for the period attributable to the equity holders of the parent company, EUR million	-52.2	26.3	-47.3
Adjusting items, total (included in operating profit) 1	7.8	61.5	25.3
Adjusting items related to merger included in financial expenses
Bond consent solicitation fees in the income statement		0.9	0.9
Fees and expenses related to bridge financing facility		1.4	1.4
Arrangement fee from the old revolving credit facility		0.7	0.7
Reduction of financial expenses due to the Lemminkäinen bond fair value adjustment	-1.1	-4.7	-1.2
Adjusting items related to merger included in financial expenses, total	-1.1	-1.8	1.7
Adjusting items. total (included in operating profit)1 and Adjusting items related to merger included
in financial expenses, total	6.7	59.7	27.0
Tax impact	-0.6	-11.8	-4.8
Pro forma adjusted result for the period attributable to the equity holders of the parent company,
EUR million	-46.0	74.3	-25.0
Pro forma weighted average number of shares outstanding – basic, 1,000 pcs	209,692	209,606	209,453
Pro forma adjusted earnings per share attributable to the equity holders of the parent company –
basic, EUR	-0.22	0.35	-0.12

¹ Adjusting items, total (included in operating profit) are presented in the table Reconciliation of pro forma adjusted operating profit.

Pro forma Revenue (POC) and Adjusted operating profit (POC) reconciliation

Housing Finland and CEE pro forma, EUR million	Pro forma 1–3/2018	Pro forma 1–12/2017	Pro forma 1–3/2017
Revenue (IFRS)	242.9	1,156.2	258.3
POC adjustments	18.8	29.7	67.9
Revenue (POC)	261.7	1,185.9	326.2

Operating profit (IFRS)	20.5	78.1	8.5
Adjusting items		4.9
Adjusted operating profit (IFRS)	20.5	83.0	8.5
POC adjustments	2.1	18.5	14.9
Adjusted operating profit (POC)	22.6	101.5	23.4

Housing Russia pro forma. EUR million	Pro forma 1–3/2018	Pro forma 1–12/2017	Pro forma 1–3/2017
Revenue (IFRS)	38.3	421.0	68.5
POC adjustments	18.7	-100.7	-2.9
Revenue (POC)	57.0	320.3	65.6

Operating profit (IFRS)	-14.0	1.7	-5.2
Adjusting items	0.2	3.2
Adjusted operating profit (IFRS)	-13.8	4.9	-5.2
POC adjustments	3.9	-0.3	3.3
Adjusted operating profit (POC)	-9.9	4.6	-2.0

Key figure	Definitions	Reason for use
Operating profit	Result for the period before taxes and finance expenses and finance income equaling to the subtotal presented in the consolidated income statement.	Operating profit shows result generated by operating activities excluding finance and tax related items.
Adjusted operating profit	Operating profit excluding adjusting items.
Adjusting items	Adjusting items are material items outside ordinary course of business such as write-down of inventories, impairment of goodwill, integration costs related to merger, transaction costs related to merger, costs, compensations and reimbursements related to court proceedings, write-downs related to non-core businesses, gains or losses arising from the divestments of a business or part of a business, costs on the basis of statutory personnel negotiations and adaption measures, and cost impacts of the fair value adjustments from purchase price allocation, such as fair value adjustments on acquired inventory, depreciation of fair value adjustments on acquired property, plant and equipment and amortisation of fair value adjustments on acquired intangible assets relating to business combination accounting under the provisions of IFRS 3, referred to as purchase price allocation ("PPA").	Adjusted operating profit is presented in addition to operating profit to reflect the underlying core business performance and to enhance comparability from period to period. Management believes that this alternative performance measure provides meaningful supplemental information by excluding items not part of YIT's core business operations thus improving comparability from period to period.
Interest-bearing debt	Non-current borrowings and current borrowings	Interest-bearing debt is a key figure to measure YIT's total debt financing.
Interest-bearing net debt	Interest-bearing debt less cash and cash equivalents and interest-bearing receivables	Interest-bearing net debt is an indicator to measure YIT's net debt financing.
Equity ratio, %	Total equity / total assets less advances received	Equity ratio is one of YIT's key longterm financial targets and is a key figure to measure the relative proportion of equity used to finance YIT's assets.
Gearing, %	Interest-bearing debt less cash and cash equivalents and interest-bearing receivables / total equity (YIT has changed the definition of gearing on January 1, 2018 to include interest-bearing receivables in the calculation of this key figure.)	Gearing ratio helps to understand how much debt YIT is using to finance its assets relative to the value of its equity.
Revenue (POC)	In revenue (POC), revenue is recognised in housing segments by multiplying the degree of completion and the degree of sale, i.e. according to the percentage of completion method.	Revenue (POC) and adjusted operating profit (POC) are used as additional information by the management in housing segments. Management believes that revenue
Adjusted operating profit (POC)	Adjusted operating profit (POC) is measured according to the percentage of completion method. In addition, in adjusted operating profit (POC), interest expenses are not capitalised which causes a difference between adjusted operating profit (POC) and adjusted operating profit (IFRS).	(POC) and adjusted operating profit (POC) provide meaningful supplemental information to the financial measures presented in the segment information prepared in accordance with IFRS.

4.4 The definitions of financial key performance indicators

Adjusted earnings per share	Earnings per share excluding adjusting items included in the operating profit and adjusting items related to merger included in financial expenses including tax impact.	Adjusted earnings per share is presented in addition to earnings per share in order to enhance comparability from period to period. Management believes that this alternative performance measure provides meaningful supplemental information by excluding items not part of YIT's core business operations thus improving comparability from period to period.
Operating cash flow after investments, excluding discontinued operations	Operating cash flow presented in cash flow statement after investments considering operating cash flow from discontinued operations
Gross capital expenditures	Investments in tangible and intangible assets, excluding additions in financial leases and inventments in associated companies and joint ventures.
Equity per share (EUR)	Total equity divided by number of outstanding shares at the end of the period
Net debt / adjusted pro forma ebitda, rolling 12 months	Net debt divided by rolling adjusted pro forma earnings before depreciations and amortisations	Net debt to adjusted pro forma ebitda gives investor information on ability to service debt.
Market capitalisation	(Number of shares – treasury shares) multiplied by share price on the closing date by share series
Average share price	EUR value of shares traded during period divided by number of shares traded during period

AI assistant

YIT Oyj — Interim / Quarterly Report 2018

3249_10-q_2018-04-26_0ded782f-6214-4b18-999d-ee51824ab55a.pdf

Interim Report 1–3/2018

Interim Report January 1 – March 31, 2018: Integration progressing, result was modest

Group reporting, IFRS

January–March

Outlook for 2018

Kari Kauniskangas, President and CEO:

Significant matters

Merger of YIT and Lemminkäinen

Changes in the Group's reporting practices

Key figures

Group reporting, IFRS

Group financial development

Revenue

January–March

Result

January–March

Impacts of the merger on reporting

Synergies and integration costs

Acquisitions and capital expenditure

Capital structure and liquidity position

Order backlog

Segments

Housing Finland and CEE

Operating environment

January–March, IFRS

January–March, POC

Housing Russia

Operating environment

January–March, IFRS

January–March, POC

Business premises

Operating environment

January–March

Largest ongoing business premises projects

Infrastructure projects

Operating environment

January–March

Largest ongoing infrastructure contracting projects

Paving

Operating environment

January–March

Partnership properties

Operating environment

Adjusted operating profit

Projects

January–March

Personnel

Preliminary strategic objectives

Resolutions passed at the Annual General Meeting

Shares and shareholders

Share capital and number of shares

Treasury shares and authorisations of the Board of Directors

Trading on shares

Number of shareholders and flagging notifications

Managers' transactions

Most significant short-term business risks

Legal proceedings

Damages related to the asphalt cartel

Quotas related to the use of recycled asphalt

Quality concerns related to ready-mixed concrete

Events after the review period

Outlook for 2018

Outlook by segment

Outlook by region

Finland

Russia

The Baltic countries and CEE countries

Scandinavia

Factors affecting the guidance

Market outlook, next 12 months

1 ACCOUNTING PRINCIPLES OF THE INTERIM REPORT

Pro Forma information

1.1 Most relevant currency exchange rates used in the Interim Report

2 SUMMARY OF FINANCIAL STATEMENTS

2.1 Consolidated income statement

2.2 Statement of comprehensive income, IFRS

2.3 Consolidated statement of financial position

YIT Oyj Interim / Quarterly Report 2018