board of trustees’ report and financial statements … · lessor in finland. in recognition of...

2018

BOARD OF TRUSTEES’ REPORTAND FINANCIAL STATEMENTS

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2018 was a successful year for Y-Foundation in many ways. We strengthened our position as a proponent of the prevention of homelessness and the fourth-largest lessor in Finland. In recognition of our achievements, we received an award from the Association of Tenants and Home Owners in Finland for promoting affordable housing and being a genuinely non-profit operator.

The total number of the Y-Foundation Group’s rental apartments exceeded 17,000. The number of apartments was increased by new construction and purchases of individual shares in housing companies. It is our view that homelessness can be eliminated over the course of two terms of government by building affordable rental apartments.

We expanded our financing base by successfully issuing a EUR 75 million bond. The funds raised by the bond issue will be used to develop and purchase new rental apartments.

International interest in Y-Foundation and the Housing First model used in Finland remained high. Y-Foundation’s position as an internationally recognised expert in reducing homelessness was strengthened further and the expansion of our cooperation network also included new international operators.

In spite of its success, the Housing First model is not the only way to reduce inequality. In accordance with the

Foundation’s principles, we want to also support the economic and social well-being of our tenants. One example of this is the Uuras employment programme aimed at creating new work opportunities for our tenants. Our housing counselling services have proved

significant in resolving eviction situations and the financial difficulties of our tenants. We also organised several tenant events to build a stronger sense of community among our tenants.

The impact of Y-Foundation’s operations is based on its internal cooperation as well as wide-ranging partnerships. In addition to our traditional partners, such as municipalities, we have established new partnerships in areas such as property development projects and the development of services and housing concepts. We will continue to actively seek partnerships that support the objectives outlined in the Foundation’s strategy. We consider the fact that we are the largest recipient of funding in the 2019 of the Funding Centre for Social Welfare and Health Organisations to be a significant form of recognition for the work that we do.

Juha KaakinenCEO

“The Finnish Housing First model is an international export”.

CEO’s review

3Y-FOUNDATION BOARD OF TRUSTEES’ REPORT

2 CEO’s review

3 Table of Contents

4 Foundation’s governance

5 The Foundation’s operations in 2018

5 Reducing homelessness

5 Y-Foundation’s rental apartments

5 M2-Kodit rental apartments

5 Rental operations 6 Property maintenance

6 Economic and social wellbeing of tenants

7 Influence and development

8 Personnel

8 Financial position8 Values and responsibility

9 Risk management

9 Future outlook 10 Note 1: Y-Foundation’s governance

11 Note 2: Related party transactions at Y-Foundation

14 Financial statements

Table of Contents

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The Foundation’s purposeThe purpose of Y-Foundation, in accordance with its by-laws, is to support social and health services by providing decent housing to people capable of normal or nearly normal independent living who are facing difficulties in getting a home. In addition, the Foundation may participate in improving their social and economic circumstances in other ways as well. The Foundation may also support, and engage in, research in its field.

The Foundation acquires and develops rental apartments in accordance with its purpose. The Foundation manages rental and maintenance operations itself. In accordance with its by-laws, the Foundation’s tasks also include arranging and developing services in the Foundation’s line of business.

Foundation’s governanceThe Foundation’s operations are managed by the Board of Trustees and CEO. In accordance with its by-laws, the Foundation also has an administrative body in the form of an annual meeting comprised of its founding members, which elects seven members to the Board of Trustees for a term of two years at a time. Information on the founding members, the members of the Board of Trustees and the company’s management is provided in the notes to the financial statements.

The Foundation and its subsidiaries make up the Y-Foundation Group. The Group’s largest unit engaging in rental operations is Kiinteistö Oy M2-Kodit. Property development activities take place under the limited liability company Y-Säätiön palvelut.

KPMG Oy Ab continued as the auditor in 2018, with Authorised Public Accountant Kai Salli and Authorised Public Accountant Heidi Vierros as the principal auditors.

The related parties of Y-Foundation as referred to in the Foundations Act include the Foundation’s founding members, Board of Trustees, management and auditors, as well as their family members. No grants or other partly or fully gratuitous benefits have been granted to closely-related parties as referred to in the Foundations Act. The fees paid to the members and deputy members of the Board of Trustees and the salaries of the management do not deviate from the ordinary.

The Foundation has not engaged in any other financial transactions with the related parties. The Foundation’s properties or apartments are rented to the founding cities of the Foundation, which are related parties, and their residents under similar terms and conditions as to other parties. Transactions between the Foundations’ Group companies are measured at fair value and disclosed in the notes to the financial statements. Essential related party transactions are reported in the table on related parties in the notes to the financial statements.

The Foundation’s operations in 2018In its strategy extending to 2020, the Board of the Foundation has defined its mission as reducing homelessness, increasing the number of affordable rental apartments and improving the economic and social well-being of tenants. The Foundation’s tasks also include influencing decision-makers to pursue the necessary social development and providing solutions and information in matters relating to property development, housing and well-being.

Reducing homelessness The Foundation reduces homelessness by acquiring and developing rental housing. At the end of the review period, the Y-Foundation Group had a total of 17,012 (16,680) rental apartments. Of these, 10,346 (10,152) were state-subsidised ARA rental apartments under M2-Kodit and 6,666 (6,528) were Y-Kodit apartments for special groups. The Group had a total of 437 (372) apartments under construction.

Y-Foundation’s rental apartmentsOf the individual apartments in housing companies owned by the Foundation, the majority have been rented to the Foundation’s partners. The apartments have been acquired through grants from the Funding Centre for Social Welfare and Health Organisations STEA (formerly Finland’s Slot Machine Association) and the Housing Finance and Development Centre of Finland ARA. The Y-Foundation’s rental apartments are intended for people with difficulties in obtaining a home in the rental market. The acquisitions were focused on growth centres, especially the Helsinki metropolitan area, where the need for housing for special groups is the biggest. A total of 76 (56) apartments were acquired and 24 (30) sold during the year.

There were a total of 6,666 (6,528) apartments reserved for Y-Foundation special groups at the end of the review period. 5,389 (5,337) of them are Y-Kodit homes, which are apartments for independent living in limited liability housing companies.

One property was completed in Espoo in 2018. The property consists of 45 rental apartments, with the tenants selected in cooperation with the City of Espoo. The property is intended for tenants undergoing mental health rehabilitation.

Construction began in 2018 on the Wärttinä II project in Järvenpää, consisting of 91 rental apartments. The project is carried out in cooperation with Diakonissalaitoksen Hoiva Ltd, a subsidiary of the Helsinki Deaconess Institute. In February 2018, construction began on a property in Espoo consisting of 57 rental apartments for young people.

In January 2018, the Foundation acquired the share capital of Kiinteistö Oy Martinuskodit in Tampere in exchange for consideration determined by ARA. KOy Martinuskodit consists of 86 apartments used by the City of Tampere.

Y-Foundation also aims to acquire affordable rental apartments in other ways. In a pilot project on the use of intermediary leasing, the Foundation leased shares in housing companies from private lessors and sublet them to tenants selected in cooperation with the City of Tampere. The collaborative project with the City of Tampere was concluded at the end of 2018.

Other measures to reduce homelessness are described in more detail in the section on development activities.


17,012We own

rental apartments in 54 municipalities

M2-Kodit rental apartmentsThe Foundation’s affordable housing production and supply are a key factor in combating homelessness. At the end of the review period, M2-Kodit had a total of 10,346 (10,152) state-subsidised ARA rental apartments in 30 (29) cities across Finland.

A total of 149 (49) new ARA rental apartments were completed for M2-Kodit in 2018. A new property consisting of 51 rental apartments was completed in Nokia in January 2018. Construction continued on a complex of 119 apartments in Vantaa’s Martinlaakso district, with the first building, consisting of 35 apartments, completed in September 2018 and the remaining 84 apartments set to be completed in February 2019. A property consisting of 63 rental apartments was completed in Härmälänranta, Tampere.

94 rental apartments were under construction in Kruunuvuorenranta, Helsinki. Construction began in June 2018 on a property consisting of 31 rental apartments in Uusikaupunki, representing the Foundation’s first project implemented with a 10-year loan from ARA.

Rental operations The Foundation operates on a cost basis and seeks a lower price level than market rents. Rent adjustments were kept at a moderate level in 2018, with the average adjustment throughout the M2-Kodit’s apartment portfolio being 1.5 per cent.

Y-Foundation received an award from the Association of Tenants and Home Owners in Finland for promoting affordable housing and being a genuinely non-profit operator.

One expected change that occurred in rental operations during the year was the elimination of income limits for applicants for ARA rental apartments in the Helsinki metropolitan area. The elimination of income limits makes it possible to maintain a diverse tenant structure in rental apartment buildings and prevents segregation. It means the apartments can also be more flexibly offered to employed middle-income applicants.

Under construction:

rental apartments

We introduced a new telephone system in early 2018 to improve the customer experience. A robotics-based solution was deployed in the reservation system for parking spots in late 2018.

Rental operations and customer service in the Helsinki metropolitan area were relocated from the Ympyrätalo building to Y-Foundation’s office in Pitkänsillanranta.

Property maintenance We want to take good care of our properties.

The comprehensive renovation programme of rental apartments owned by the Foundation continued under the Koti kuntoon concept. The Koti kuntoon programme involves renovating the surfaces, fixtures, equipment and accessories of the apartments. The renovation work is timed to coincide with the midpoint of the properties’ estimated renovation periods. The renovation programme represents a response to customer expectations regarding the high quality of rental apartments. It also reduces the high costs of apartment renovations carried out one by one.

The Foundation has systematically increased the degree to which it uses in-house property management. The properties in Rovaniemi were transferred to be managed by the Foundation’s regional office in Oulu in spring 2018. Property management services are now only outsourced in Salo and Turku.

Indicators for 2018 M2-Kodit Y-Foundation GroupApartments in different cities and municipalities

30 51 54

Number of apartments 10,346 6,666 17,012Average rent €/sqm/month 13.34 12.08 12.97Financial occupancy rate, % 97.1 99.2 97.7Turnover, % 23.64 3.75 16.20Rent income, EUR million 91.9 36.7 129.4Renovation expenses, EUR million 14.8 2.5 18.0Heating, water and electricity, EUR million 12.7 14.1

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437

rental apartments

Participated in tenant activities

M2‑Kodit tenants

Property maintenance was put up for competitive tendering in 2018 in the Helsinki metropolitan area, Tampere and Järvenpää. The contract models took into account the implementation of the new Kihla quality control system.

In-house production of property services began at five properties in Helsinki and Vantaa. The multidisciplinary internal service production team of M2-kiinteistöpalvelut operates at the five properties in question as well as other properties in the Helsinki metropolitan area. It produces landscaping, cleaning, property maintenance and minor repair services at the properties, apartments and business premises owned by the Group. M2-kiinteistöpalvelut also supports the Foundation’s goals related to the creation of employment opportunities and serves as a learning platform for trainees and apprentices.

Economic and social well-being of tenantsOne of Y-Foundation’s principles is to engage in close cooperation with partners as well as tenants. We plan and support successful housing outcomes for our tenants in cooperation with our subletting partners. Swiftly reacting to housing-related problems facilitates successful outcomes from the perspective of the tenant and the neighbourhood alike.

The cooperation network and partnerships secure adequate support measures for the tenants and facilitate independent living.

Cooperation with tenants is also an important part of the day-to-day operations of M2-Kodit. Extensive tenant activity was organised for the tenants of M2-Kodit in cooperation with representatives of the tenants. Cooperation with tenants took place in building committees, regional coordination groups and tenant councils. The operations were centralised regionally and activities were organised under various themes for young people, families with children, people of working age and the elderly. The regional events planned with a tenant-oriented perspective were attended by a total of approximately 2,800 (more than 1,000) M2-Kodit tenants.

M2-Kodit organised an orientation and training day for all building committee chairpersons in May 2018 in Helsinki. The event was attended by nearly 100 committee chairpersons and active tenants from

different parts of the country. Going forward, the event will be organised at two-year intervals in the spring following tenant meetings.

Housing counselling continued during the year under review to promote the social and economic well-being of tenants and prevent homelessness. As part of housing counselling, the M2-Kodit housing counselling development project of M2-Kodit for 2016–2019 was continued with partial funding from ARA. Housing counselling processes were specified further, the availability of the services was improved and more efforts were made to reach customers in rent arrears. We established housing coaching groups for young offenders serving community sanctions and the customers of the Silta coaching programme.

The customers of housing counselling often have problems paying rent due to low incomes and they may be in rent arrears. Their circumstances may also involve a bad credit record, excessive indebtedness and unemployment. Housing counselling has nevertheless been successful in preventing the exacerbation of their problems and avoiding evictions, which saves costs for both the tenant and the lessor. The housing counselling activities have generated significant computational savings, amounting to an estimated EUR 800,000.

The Foundation’s Uuras employment activities have become an established part of the property unit’s operations. Lawn mowing and landscaping work has

Personnel indicators 2018 2018 2017 2017 2016 2016€1,000 Group Parent Group Parent Group ParentPerformance-based pay with fringe benefits 6,872 2,030 6,430 1,860 4,877 1,710

Monetary value of fringe benefit -140 -73 -175 -71 -161 -62Pension expenses 1,331 421 1,215 382 970 351Statutory social security expenses 137 43 121 54 167 64Total 8,201 2,421 7,592 2,225 5,852 2,063Personnel on average 148 35 135 32 113 32Average age 45.4 46.2 46.3 47.3 48.2 48.4


2,800

been performed by seasonal workers. Small repair jobs have continued by a renovation team under the janitor pilot project. The aim is to perform in-house tasks which otherwise would be outsourced.

Cooperation with businesses was introduced as part of the Uuras concept with the aim of finding paths to corporate employment for tenants. Time bank activities were expanded to cover the entire country with the help of the Treamer application.

Influence and developmentThe Foundation’s extensive development work is funded by grants and internal financing. The Foundation participates in the Action Plan for Preventing Homelessness (AUNE) 2016–2019 and coordinates the associated Verkostokehittäjät partnership project with funding from STEA. The project partners are the Helsinki Deaconess Institute Foundation, Sininauhasäätiö, Rauman seudun katulähetys ry and Vailla vakinaista asuntoa ry. The project’s 13 events were attended by a total of 611 people.

The Foundation is involved in several steering groups for development projects under the AUNE action plan. An e-course on housing-related social work implemented in cooperation with the Lahti University of Applied Sciences was prepared in 2018 by Y-Foundation’s network developers, ARA and the AUNE programme director. The course began in early 2019.

STEA continues to provide financial support to Toimekas, a joint project between several NGOs that is coordinated by Y-Foundation. The aim of the project is to develop meaningful activities for day-to-day life and create a systematic social rehabilitation concept in housing services for the homeless. A total of 239 tenants participated in the activities.

Two new partnerships were started with support from STEA: the NEA project focused on women’s homelessness and the Meriheimo sailing project for young people. The NEA project worked with 162 women who are homeless, under threat of homelessness or at risk of repeat homelessness. More than 70 people participated in the project’s group activities in the Helsinki metropolitan area and Tampere. The Foundation also participates in a European Erasmus+ project focused on women’s homelessness.

The Meriheimo project organised eight sailing opportunities for young people who are new to sailing and a training sailing trip for peer instructors (for a combined 55 days at sea). A total of 50 young adults participated in the sailing trips, which ranged from 3 to 11 days in length and took place in the Baltic Sea and the North Sea. In addition to two project workers, about 30 volunteers from Sail Training Association Finland and Sail Trainees of Finland helped organise the sailing trips. Housing First Europe Hub, an international network of homelessness organisations coordinated by Y-Foundation, focused its operations on training instructors, starting research activities and continuing the Housing First for Youth project. Some 30

instructors and support persons have participated in training within the network. Y-Foundation’s operations again achieved considerable international visibility during the year. Foreign experts and policymakers made visits to learn more about Y-Foundation and Finnish work in the field of homelessness on 20 occasions, and several journalists from various media organisations have also visited the Foundation.

The Foundation’s research strategy is to use research to obtain general information on customer satisfaction (joint survey with the members of the Association for Advocating Affordable Rental Housing KOVA), customer well-being (at Y-Kodit homes), rent arrears and affordable housing solutions. The Foundation conducted an ARA homelessness survey in 2017 and produced a report for ARA on development needs related to the collection of statistics.

The Foundation participates in the activities of the Association for Advocating Affordable Rental Housing KOVA and the Finnish Association of Building Owners and Construction Clients RAKLI. Through the Finnish Association for Social Enterprises, the Foundation contributed to improving the operating conditions of social enterprises. Y-Foundation is also involved in the foundation network started by We Foundation, aiming to combine foundations’ resources to resolve significant social problems. Housing First Europe Hub and FEANTSA were the key channels for international cooperation. The Foundation is also a member of the Finnish Business & Society (FiBS) network, the Finnish Federation for Social Affairs and Health SOSTE as well as the Helsinki Region Chamber of Commerce. In development work related to construction and renovations, the Foundation has cooperated with the Metropolia University of Applied Sciences, Aalto University, the Finnish Red Cross and NAL Asunnot Oy.

The Foundation is an active participant in social discussion on the themes of marginalisation and homelessness. One of the key challenges is obtaining plots suitable for new construction in good locations. The objective of the Foundation’s advocacy work is to secure the future of homelessness prevention efforts in the government programme following the Finnish parliamentary elections.

Y-Foundation also supported the production of books on the transformation of homelessness policy. The book Yömajasta omaan asuntoon (From a night shelter to a home of your own) discusses how the problem of homelessness can be resolved and describes the creation of the Housing First model. The book was published by Into Kustannus and authored by Peter Fredriksson, a recognised expert on homelessness. The Foundation produced the second edition of A Home of Your Own, a book aimed at the international audience, and began preparations for Homelessness in 2030, a new book featuring essays by experts.

PersonnelY-Foundation’s number of personnel continued to grow and amounted to 149 (130) employees at the end of 2018. Of this total, 15 (15) were fixed-term

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employees. Fixed-term employment relationships were related to project activities and substitute positions. Five (5) employees worked part-time. The increase in the number of personnel was due to insourcing previously outsourced services, new positions required for the implementation of strategy and the Foundation’s employment promotion activities. M2-Kodit accounted for the majority of the increase in personnel. M2-Kodit has 107 (94) employees. Y-Foundation’s number of personnel increased to 37 (31) as a result of new projects supported by STEA. A total of 29 (24) employees work at the regional offices. The majority of the employees work at the Pitkänsillanranta office in Hakaniemi, Helsinki. Women accounted for 70 per cent of employees, men for 30 per cent.

The Group belongs to Real Estate Employers, which is part of the Confederation of Finnish Industries EK. The Group applies the collective labour agreements pertaining to salaried and non-salaried employees in the real estate sector. The systematic development of the growing organisation’s culture and operating processes continued in the early part of the year.

Financial position

Acquisition of apartments in line with the Foundation’s basic task is funded with STEA grants, loans from financial institutions, the state’s interest subsidy loans, investment grants and partly with Y-Foundation’s internal financing. The Foundation’s equity ratio target is 30 per cent, or 40 per cent at fair value, which enables investments over a period of a few years.

Y-Foundation Group’s finances grew according to plan during the first half of the year. Revenue amounted to EUR 129.4 (127.4) million. The consolidated balance sheet total exceeded EUR 1.2 (1.1) billion.

The Foundation uses Housing Finance and Development Centre of Finland (ARA) interest subsidy loans and grants for funding new construction and renovation investments. At the Group level, investments amounted to EUR 61.2 (43.6) million. Expenditure on repairs amounted to EUR 18.0 (18.8) million during the review

period.The Foundation continued to receive grants from

the Funding Centre for Social Welfare and Health Organisations (STEA). The grants are intended for acquiring individual support apartments, and they account for 50 per cent of the cost. The Foundation received approximately EUR 5.2 (4.0) million in STEA grants to fund its investments.

During the first half of the year, the Foundation invested approximately EUR 9.8 (7.7) million in acquiring apartments.

In addition to STEA and ARA financing, the Group uses its own capital to finance investments. Due to maintenance and repair expenses, construction and repayment of loans, the Group again increased the amount of loans from financial institutions in 2018. Loans amounting to EUR 116.8 (23.3) million were withdrawn for the apartment acquisition purposes and construction investments. Repayments of loans amounted to EUR 28.5 (28.0) million. The average maturity of the loans was 21.2 (22.7) years and the average interest rate was 1.4 (1.6) per cent.

The foundation was the first foundation in Finland to issue an unsecured five-year bond of EUR 75 million in October 2018. Investors were interested in the issue. Nordic investors also subscribed the bond.

The finances of the Foundation Group developed steadily and according to plan. Interest rates remained low, which was reflected in, among other things, a decrease in the interest rates of state-subsidised loans compared to the previous year. The Foundation has hedged most of its bank loans through interest rate swaps. The hedging ratio of the loans will be kept at around 75 per cent of the Group’s entire loan portfolio in accordance with the strategy.

Rental income increased considerably compared to 2017 and exceeded EUR 129.4 (127.4) million. The Group-level occupancy rate was 97.7 (98.2) per cent. Net administrative expenses amounted to 5.4 (5.6) per cent of rental income. The surplus from the Group’s own operations was EUR 16.8 (22.2) million. The Group’s financial position is moderate and the equity ratio on the consolidated balance sheet was 29.0 (30.1) per cent, which enables continued investments in the future. Based on fair value measurements, the equity ratio is 40,5 (41.7) per cent.

Key figures 2018 2017Revenue EUR 129.4 million EUR 127.4 millionRent margin 29.6% 31.9%Administrative expenses, net 5.4% 5.6%Cash and cash equivalents EUR 99.7 million EUR 27.2 millionEquity ratio at book values/at fair values 29.0%/40.5% 30.1%/41.7%


The Foundation complies with the provisions of the Act on State-Subsidised Housing Loans in setting the rents of apartments financed with state-subsidised and interest subsidy loans. The rents of apartments not financed through state-subsidised loans are primarily tied to the cost index of property maintenance. The rents of apartments continue to be kept moderate compared to the general level of rents in the area.

Values and responsibility At Y-Foundation Group, we implement social responsibility pursuant to the Foundation’s charitable purpose. We prevent and reduce homelessness by offering rental apartments to people in various life situations.

The goal of our work is to provide good housing to the tenant. Good housing starts with the fair selection of tenants using transparent and equal selection criteria. Providing good housing includes designing and developing the apartments in a tenant-oriented manner, looking after the condition and comfort of the apartments professionally and providing the tenants with housing-based opportunities for engagement. When the lessor terminates the lease, it is done on lawful and ethically sustainable grounds, taking the tenant’s life circumstances into account.

Our values are tenant orientation, a genuine non-profit operating model and being solutions-oriented. The goal of good housing guides our day-to-day work. We treat everyone within the sphere of our operations fairly and equally, including employees, tenants, customers and partners. This is based on equally respecting universal human dignity.

We ensure that our operating practices and structures support economic and productive work and sustainability. We use the Foundation’s funds responsibly and exclusively for the purpose stipulated by our mission. We do not accept unlawful or fraudulent activity in our own work or by our partners.

Our social responsibility is based on the principles of the ISO26000 standard. We ensure that the organisation’s governance supports responsibility and that our operating practices are fair. We take into consideration the equal basic and human rights of everyone in our sphere of influence and promote the right to housing. We reduce the environmental load of our operations particularly by developing the energy consumption and life cycle management of our properties. Risk management is an essential part of our sustainability. We take part in developing residential areas and close communities. We share our expertise and experience with social decision-makers and organisations aiming to reduce and eliminate homelessness.

We extensively monitor the lawfulness, ethics, responsibility and compliance of our operations. We address any shortcomings without delay. We require our employees and partners to act responsibly.

The Foundation will continue as a member of the Rental Property Action Plan on Energy Efficiency (VAETS) during the period from 2017 to 2025. In accordance with the plan, the Foundation is committed to energy efficiency measures whose calculated savings

will amount to 4 per cent of the energy consumption at the time of joining by 2020 and 7.5 per cent by 2025. The Foundation reports annually on its actions to improve energy efficiency.

The chosen objectives of the first phase of the Ekokompassi environmental management system, which facilitates the management of environmental aspects at Y-Foundation, are reducing the amount of waste and achieving energy savings related to the consumption of heating, electricity and water. The project covers ten pilot properties in the Helsinki metropolitan area and the Foundation’s offices in Helsinki. The certificate was obtained in October 2018.

The Foundation’s properties use various solutions to decrease heating consumption with the aim of reducing environmental impacts and mitigating climate change. These include the Leanheat service, the Ouman HeatGuard service and, at three properties, the Enermix smart heating control system as part of the Kiradigi programme. The consumption meters at all properties have been upgraded to enable remote readings and more than 60 properties are monitored remotely by Vahanen Monitoring Services Oy. These measures have enabled the Foundation to reduce heating consumption by 2.7 per cent, water consumption by 1.1 per cent and electricity consumption by 1.1 per cent.

Risk managementDuring 2017, the Foundation carried out an extensive survey of financial and strategic risks. In relation to the bond issue, the Foundation conducted an extensive risk assessment of its operations and operating environment in summer 2018 to support investors’ decision-making.

One of the most significant risks is the risk of an increase in interest rates, which is typical of the industry. The Foundation has prepared for changes through interest rate hedging. The identified financial risks included the consequences of any delays in construction schedules and extraordinary costs resulting from them. The need for renovations of properties in recessionary municipalities in proportion to the demand for housing may also increase cost-related risks. Credit loss risks were low during the year and they are managed through tenant monitoring and housing counselling. The development of reporting tools continued in early 2018, which supports risk prevention in rental operations, among other things. For example, the occupancy rate of properties outside growth centres is actively monitored, and challenges are reacted to through marketing, among other measures.

The strategic risks of the Foundation are related to changes in the operating environment. Migration to growth centres and the resulting challenges regarding plots and construction costs make new construction more difficult. The uncertainty surrounding the reform of social and health services in Finland makes the long-term planning of operations more difficult and may change the future network of partners.

The Foundation has prepared for accident risks through full value insurance of properties and diverse operational insurance policies.

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Future outlookThe Foundation’s operating environment involves a number of uncertainties at present. The operating conditions of the real estate sector are particularly affected by the planned changes to tax legislation. Other key factors include potential changes to the housing subsidy system as well as uncertainty regarding the reform of social and health services, which affects the operations of municipalities and NGOs.

In spite of the uncertainties of the operating environment, the Foundation’s outlook for the short and long term is positive. Developments related to the elimination of homelessness have remained favourable. There is still strong social demand for the work performed by Y-Foundation.

The Foundation’s strong finances and diverse funding provide good preconditions for implementing the strategic objectives. The Foundation’s cooperation network has also strengthened both nationally and internationally, while active engagement has increased. There are still challenges associated with the shortage of land for the production of affordable rental apartments, for example. While the property sector has a long cycle, the Foundation must be proactive and swift in reacting to changes in the operating environment. This requires continuous development of monitoring and ERP systems, analysis of data relating to changes in the operating environment and the development of forecasting tools.

Y-Foundation’s property portfolio will grow at a moderate rate in the next few years. However, the Foundation has the capacity to accelerate the growth of its housing portfolio if necessary. Increasing effectiveness is emphasised in developing operations, and developing the quality of housing and new housing concepts is essentially associated with it.


Pursuant to the by-laws of Y-Foundation, the founding members that attend its annual meeting are:1. City of Espoo2. City of Helsinki3. Church Council 4. Finnish Construction Trade Union5. Confederation of Finnish Construction Industries RT6. Association of Finnish Local and Regional Authorities7. Finnish Association for Mental Health 8. Finnish Red Cross9. City of Tampere10. City of Turku11. City of Vantaa

The term of office of the Foundation’s Board of Trustees is two years. The term of office commenced at the annual meeting of 21 April 2016 and ended at the annual meeting of 26 April 2018. The representatives of the City of Helsinki and the Confederation of Finnish Construction Industries RT were replaced and the representatives of the cities of Espoo and Vantaa were replaced by representatives of the cities of Tampere and Turku in accordance with the Foundation’s rotation policy.

Board of Trustees until 26 April 2018

1. Harjuniemi Matti, Finnish Construction Trade Union, chairman of the Board of Directors2. Kankkonen Stig, City of Espoo3. Kämäräinen Leena, Finnish Red Cross, vice chair of the Board of Directors4. Lallinaho Jari, Finnish Association for Mental Health5. Pipatti Tarmo, Confederation of Finnish Construction Industries RT6. Sellman Erkki, City of Turku7. Randell Mari, City of Helsinki

The Board of Trustees from 26 April 2018 until the 2020 Annual Meeting

1. Harjuniemi Matti, Finnish Construction Trade Union, chairman of the Board of Directors2. Kämäräinen Leena, Finnish Red Cross, vice chair of the Board of Directors3. Lallinaho Jari, Finnish Association for Mental Health4. Mäki Tiina, City of Helsinki5. Närhi Maritta, City of Tampere6. Randell Aleksi, The Confederation of Finnish Construction Industries RT7. Salminen Jukka T, City of Vantaa

The Foundation’s Management Team consists of eight members

1. Kaakinen Juha, CEO2. Kampman Pekka, Development Director3. Komu Kari, CFO4. Mutalahti Timo, Corporate Lawyer5. Niskanen Juha, Property Director6 Tammisalo Eeva, Director of Rental Activities7. Tikkanen Sari, Acting Communications Manager8. Timonen Sari, Development Manager

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Note 1: Y-Foundation’s governance

Note 2: Related party transactions at Y-Foundation

In addition to the Foundations Act, the by-laws of Y-Foundation and the guidelines issued by the authorities, Y-Foundation complies with the Good Governance of Foundations guideline published by the Council of Finnish Foundations in 2015. Based on it, the Foundation’s Board of Trustees ratified the related party guidelines on 14 April 2016. The related parties of Y-Foundation as referred to in chapter 1, section 8 the Foundations Act include the Foundation’s founding members, Board of Trustees, management and auditors, as well as their family members. At Y-Foundation, management refers to the CEO and the Management Team.

Related party transactions refer to legal transactions with related parties with or without consideration, regardless of their subjects or designations. These can include purchasing services from related parties, selling services to related parties, benefits and salaries received by related parties, providing a grant or various contracts.

At Y-Foundation, related parties are not given grants or other partly or fully gratuitous benefits unless they are given as part of the Foundation’s activities pursuant to its purpose and the terms and conditions of giving them do not deviate from the terms and conditions applied to outsiders. The Foundation also does not engage in any related party transactions deviating from the ordinary. The Foundation’s properties or apartments are rented to the founding cities of the Foundation, which are related parties, and their residents under similar terms and conditions as to other parties at fair values. The fees paid to the members of the Board of Trustees and the salaries of the management are reasonable and do not deviate from the ordinary.

Related party table Nature of related party relationshipTransactions or financial benefits (EUR) 1 2 3 4 5

A. The management’s salaries, fees and pension commitments

- 434,373 564,140 - -

B. Contracts see 1B below

- - - -

C. Assistance granted - - - -

D. Loans, liabilities and contingent liabilities given

84,949,704 - - - -

Explanations1. The founding members of Y-Foundation and their subsidiaries and subsidiary foundations,

Y-Foundation Group companies2. A member or deputy member of the Board of Trustees or supervisory board, CEO and his

deputy, general partner and auditor of Y-Foundation or an organisation mentioned in item 13. Y-Foundation’s Management Team4. Family member of a person referred to in items 1–35. Entity or foundation controlled by persons referred to in items 1–4

1B. Y-Foundation pays ordinary fees relating to the maintenance of properties to its founding members (Espoo, Helsinki, Tampere, Turku, Vantaa), such as property taxes, street fees and building permits. The founding members pay a fair rent for the apartments owned by the Foundation they rent.1D. Y-Foundation has granted loans to its subsidiaries for the construction of residential buildings and acquisition of residential properties for use pursuant to the Foundation’s purpose.2A. Salaries and fees paid to members of Y-Foundation’s Board of Trustees, the CEO and his deputy and auditors.3A. Salaries of Y-Foundation’s Management Team.

Related party transactions with the Foundation’s group companies are measured at fair value. The measurement of fair value is based on own expertise, auditors’ views, investigating the market situation and, if necessary, external expert opinions. If related party transactions are contrary to the Foundations Act, rules, regulations issued by the authorities or the related party guidelines take place, they are cancelled. Related party transactions deviating from the guideline which are in the benefit of the Foundation are decided on by the Board of Trustees or the CEO within their mandate. In addition to the Board of Trustees and the CEO, the Foundation’s management and financial administration monitor related party transactions.


14

Table of Contents15 Income statement 16 Balance sheet18 Cash flow statement 19 Notes to the financial statements

FINANCIAL STATEMENTS 2018


INCOME STATEMENT 1 January–31 December 2018

Group

1 January–31 December 2017

Group


Parent


Parent

Actual operations

Lease operationsRent and maintenance charge income 128,925,380.66 126,982,253.91 36,672,925.97 36,046,762.72Charges for consumption income 458,318.58 415,132.08 53,404.21 29,455.85Other income 8,578.19 5,229.22Capital gains 1,515.80Total income from lease operations 129,383,699.24 127,407,479.98 36,726,330.18 36,081,447.79Income from property management services 38,077.20

Property maintenance expensesPersonnel expenses -5,807,082.59 -5,395,100.93Depreciation and amortisation -17,294,611.98 -13,790,998.61Rent and maintenance charge expenses -20,595,987.14 -20,305,390.26 -20,936,093.37 -19,763,185.37Other maintenance expenses -47,001,091.35 -46,864,131.46 -2,580,134.57 -3,283,175.43Total expenses of lease operations -90,698,773.06 -86,355,621.26 -23,516,227.94 -23,046,360.80Construction expenses -409,388.41 -408,437.09Lease operations, total 38,313,614.97 40,643,421.63 13,210,102.24 13,035,086.99

Central administration and other operationsIncome 2,067,587.22 1,034,899.33 1,616,399.91 796,845.32ExpensesPersonnel expenses -2,518,857.83 -2,266,958.72 -2,518,857.83 -2,266,958.72Depreciation and amortisation -298,495.62 -271,405.66 -298,495.62 -271,405.66Other expenses -6,176,926.87 -5,673,259.94 -2,926,852.00 -2,437,025.00Central administration and other operations total -6,926,693.10 -7,,176,724.99 -4,127,805.54 -4,178,544.06

Share of profit from associated companies -2,305,223.62 815,909.23

Operating surplus 29,081,698.25 34,282,605.87 9,082,296.70 8,856,542.93

Investment and financing activitiesIncomeInterest and dividend income 194,194.45 136,792.27 3,240,530.42 3,379,564.94Other income 228,375.28 553,584.47 61,329.89 75,059.15Total income 422,569.73 690,376.74 3,301,860.31 3,454,624.09Impairment of fixed assets -39,026.42 -26,357.34 -39,026.42 -26,357.34

ExpensesInterest expenses -12,130,564.44 -12,196,723.14 -3,163,197.53 -2,512,327.91Other expenses -542,617.95 -566,781.89 -2,687,977.43 -2,635,921.21Total expenses -12,673,182.39 -12,763,505.03 -5,851,174.96 -5,148,249.12Investment and financing activities -12,289,639.08 -12,099,485.63 -2,588,341.07 -1,719,982.37Surplus 16,792,059.17 22,183,120.24 6,493,955.63 7,136,560.56

General grantsInvestment grants STEA 5,183,619.00 4,023,088.00 5,183,619.00 4,023,088.00Other investment grants 109,000.00 109,000.00 109,000.00 109,000.00Other grants 1,292,645.10 647,028.22 1,292,645.10 647,028.22TransfersTransfer to cover expenses -1,292,645.10 -647,028.22 -1,292,645.10 -647,028.22Transfer to apartment acquisition reserve -5,183,619.00 -4,023,088.00 -5,183,619.00 -4,023,088.00Transfer to general-purpose reserve -109,000.00 -109,000.00 -109,000.00 -109,000.00General grants total 0.00 0.00 0.00 0.00

Direct taxesIncome taxes -8,483.96 -10,628.83Deferred taxes -2,669,581.68 -2,853,197.17Minority interest -32,357.42 -36,606.35Surplus/deficit for the financial year 14,081,636.11 19,282,687.89 6,493,955.63 7,136,560.56

16

BALANCE SHEETAssets

31 December 2018

Group

31 December 2017

Group

31 December2018

Parent

31 December 2017

ParentNon-current assetsIntangible assetsIntangible rights 2,948,621.02 3,252,684.48Goodwill 225,900.00 301,200.00Other capitalised long-term expenditure 1,705,129.22 1,504,255.52 1,703,951.90 1,488,061.47Intangible assets total 4,879,650.24 5,058,140.00 1,703,951.90 1,488,061.47

Tangible assetsLand and waters 64,833,105.70 63,847,160.74Connection fees 9,489,477.79 8,978,301.68Property leases 146,846.65Buildings 678,166,597.59 642,734,084.94Machinery and equipment 1,355,439.53 1,251,469.56 19,324.79 67,147.86Other tangible assets 963,062.99 1,566,151.19 4,650.00 4,650.00Advance payments and construction in progress 26,531,253.10 25,823,850.44

Tangible assets total 781,485,783.35 744,201,018.55 23,974.79 71,797.86

InvestmentsShares in housing companies 338,136,370.74 329,322,973.68 338,136,370.74 329,322,973.68Subsidiaries 14,480,552.42 14,350,089.29Shares in associated companies 4,392,089.96 6,698,397.51 3,578,789.60 3,578,789.60Other shares 1,109,536.29 1,108,452.36 3,315.75 3,315.75Investments total 343,637,996.99 337,129,823.55 356,199,028.51 347,255,168.32

Non-current assets 1,130,003,430.58 1,086,388,982.10 357,926,955.20 348,815,027.65

Current assetsReceivablesLong-term receivablesLoan receivables 5,091.75 3,754,125.16 5,091.75 79,125.16Receivables from group companies 80,378,959.45 76,524,893.28Receivables from associated companies 19,795.72 19,795.72Other receivables 60,533.31 44,038.31 28,552.00 27,499.00Long-term receivables total 85,420.78 3,817,959.19 80,412,603.20 76,631,517.44

Short-term receivablesRent receivables 1,762,353.91 1,648,440.88 163,441.73 110,741.58Loan receivables 416,309.64 400,000.00Prepayments and accrued income 1,218,407.43 701,557.13 958,871.47 295,353.00Receivables from group companies 4,841,699.27 4,108,108.41Receivables from associated companies 14,747.93 4,520.89 8,042.83Other receivables 712,935.04 1,114,056.84 41,844.00 68,426.24Short-term receivables total 4,124,753.95 3,868,575.74 6,013,899.30 4,582,629.23

Shares and holdings 1,966,731.31 4,002,678.13 2,206,278.31 4,002,678.13Cash in hand and with banks 97,753,827.50 23,201,997.92 72,262,212.98 6,084,924.36

Current assets 103,930,733.54 34,891,210.98 160,894,993.79 91,301,749.16

Assets 1,233,934,164.12 1,121,280,193.08 518,821,948.99 440,116,776.81


BALANCE SHEETEquity and liabilities

31 December 2018

Group

31 December 2017

Group

31 December 2018

Parent

31 December 2017

ParentCapital and reservesInitial capital 20,182.55 20,182.55 20,182.55 20,182.55Apartment acquisition reserve 180,443,149.85 175,745,059.54 180,443,149.85 175,745,059.54Other reserves 10,200,032.71 10,200,032.71 10,120,428.68 10,120,428.68General-purpose reserve 33,863,592.79 33,269,064.10 33,863,592.79 33,269,064.10Redemption reserve 61,420,223.19 54,283,662.63 61,414,058.92 54,277,498.36Investment reserve 30,932,010.64 30,932,010.64 30,932,010.64 30,932,010.64Surplus/deficit from previous financial years 23,288,949.26 11,142,821.93 256,557.26 256,557.26

Surplus/deficit for the financial year 14,081,636.11 19,282,687.89 6,493,955.63 7,136,560.56Capital and reserves total 354,249,777.10 334,875,521.99 323,543,936.32 311,757,361.69

Minority interest 2,153,616.66 2,116,359.24

LiabilitiesLong-term liabilitiesSubordinated loans 76,391.25Loans from financial institutions 817,036,645.76 730,504,613.01 178,375,349.93 117,396,626.72Advances received 1,650,563.88 1,693,281.82 339,180.74 316,181.58Other liabilities 707,220.42 4,382,220.42Accrued expenses and deferred income 160.00 30,867.00Deferred tax liabilities 9,428,467.07 6,743,678.67Long-term liabilities total 828,823,057.13 743,431,052.17 178,714,530.67 117,712,808.30

Short-term liabilitiesLoans from financial institutions 33,646,848.24 28,022,061.66 13,911,891.34 8,778,697.87Advances received 1,848,199.74 1,533,033.27 232,775.41 127,578.70Accounts payable 7,606,412.39 5,836,796.37 317,798.66 499,364.20Other liabilities to group companies 14,624.87 39,024.92Liabilities to associated companies 1,475.00Other liabilities 158,733.59 787,692.01 56,025.84 59,457.76Accrued expenses and deferred income 5,446,044.26 4,677,676.37 2,030,365.88 1,142,483.37Short-term liabilities total 48,707,713.22 40,857,259.68 16,563,482.00 10,646,606.82Liabilities total 877,530,770.35 784,288,311.85 195,278,012.67 128,359,415.12

Equity and liabilities 1,233,934,164.12 1,121,280,193.08 518,821,948.99 440,116,776.81

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CASH FLOW STATEMENT

Y-Foundation Group2018 2017 2018 2017

Group Group Parent ParentCash flow from operating activitiesProfit/loss for the financial year 14,081,636.11 19,282,687.89 6,493,955.63 7,136,560.56Adjustments:Depreciation, amortisation and impairment 17,593,107.60 14,062,404.27 298,495.62 271,405.66Capital gains/losses on non-current assets 176,663.65 350,968.81 176,663.65 352,484.61Share of profit from associated companies 2,305,223.62 -815,909.23Financial income and expenses 12,112,975.43 11,747,001.02 2,411,677.42 1,367,497.76Income taxes 2,678,065.64 2,863,826.00Minority interest 32,357.42 36,606.35Other adjustments -3,093,512.43Cash flow before change in working capital 48,980,029.47 44,434,072.68 9,380,792.32 9,127,948.59

Change in working capitalChanges in receivables -1,199,297.14 1,448,914.00 -1,703,141.74 1,024,751.79Changes in liabilities 838,634.36 -2,947,831.71 124,915.94 -1,678,090.14Cash flow before financial items and taxes 48,619,366.69 42,935,154.97 7,802,566.52 8,474,610.24

Interest paid -11,631,818.22 -11,930,643.45 -2,481,553.22 -2,454,398.53Dividends received 3,113.55 2,830.50 3,113.55 2,830.50Interest received 186,757.36 131,378.32 3,371,257.68 3,430,905.72Other financial items -137,579.02 339,287.19 -2,449,983.89 -2,208,377.45Taxes paid -40,507.79 81,882.24 120.62 41,827.88Loans granted -400,000.00Net cash flow from operating activities 36,999,332.57 31,159,889.77 6,245,521.26 7,287,398.36

Cash flow from investing activitiesInvestments in non-current assets -49,680,482.94 -25,453,394.88 -466,562.98 -395,534.30Proceeds from sale of non-current assets 87,678.13 -4,784.84 -161,037.54Shares in housing and real estate companies -9,828,369.44 -7,688,263.28 -9,828,369.44 -7,688,263.28Sale of shares in housing companies 799,282.31 1,006,757.13 799,282.31 1,006,757.13Shares in subsidiaries bought 486,997.64 -130,463.13Shares in subsidiaries sold 189,933.72STEA’s investment grants 5,183,619.00 4,023,088.00 5,183,619.00 4,023,088.00Grants to be returned -150,577.53 -150,577.53Other investment grants 109,000.00 109,000.00 109,000.00 109,000.00Loans to own real estate companies -11,813,136.96 -2,879,200.00Instalments of own companies 8,096,048.65 5,936,401.21Repayment of loans receivable 74,033.41 74,033.41Net cash flow from investing activities -52,768,241.89 -28,158,175.40 -7,976,549.14 -9,432.59

Cash flow from financial activitiesShares and holdings 2,035,946.82 -2,000,000.00 1,796,399.82 -2,000,000.00Minority venture capital 4,900.00Increase in long-term loans 116,793,193.25 23,315,952.00 75,000,000.00Repayment of long-term loans -28,513,301.17 -28,043,316.25 -8,888,083.32 -8,201,111.32Increase in short-term loans 2,895,246.31 2,000,000.00 2,895,246.31 2,000,000.00Repayment of short-term loans -2,895,246.31 -2,000,000.00 -2,895,246.31 -2,000,000.00Net cash flow from financial activities 90,320,738.90 -6,727,364.25 67,908,316.50 -10,201,111.32

Change in cash and cash equivalents 74,551,829.58 -3,725,649.88 66,177,288.62 -2,923,145.55Cash and cash equivalents 1 January 23,201,997.92 26,927,647.80 6,084,924.36 9,008,069.91Cash and cash equivalents 31 December 97,753,827.50 23,201,997.92 72,262,212.98 6,084,924.36


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Group’s parent foundation Y-Foundation is a charitable entity whose domicile is Helsinki and registered address is Pitkänsillanranta 3 A, 00530 Helsinki. Copies of the consolidated financial statements are available at the parent foundation’s head office.

Consolidation principles of the consolidated financial statements

General The Group’s accounting principles have been applied uniformly to the separate financial statements of the group companies. The consolidated financial statements have been prepared by consolidating the financial statements of the separate companies, and it includes housing companies, real estate companies and limited liability companies in which the holding is over 50 per cent.

Internal shareholding has been eliminated in accordance with the acquisition cost method. The difference in capital and reserves corresponding to the acquisition cost of subsidiaries and acquired share and the resulting deferred tax liabilities have been allocated to buildings. Companies acquired during the financial year are included in the consolidated financial statements as of the date of acquisition or as of the Group obtaining control, and divested subsidiaries up to when control is lost.

Intra-group business transactions, receivables and liabilities and essential internal margins have been eliminated in the consolidated financial statements. The allocation of profit for the financial period to equity holders of the parent company and minority interests is disclosed in the income statement, and the capital and reserves attributable to minority interest is disclosed as a separate item on the balance sheet.Partly-owned companies belonging to the Group in which the parent foundation has a holding of more than 50% but less than 100% have been consolidated by disclosing the profit deviating from the holding as a separate item. Correspondingly, the capital and reserves attributable to the companies in question are disclosed as a separate item. The minority interest included in the loans in the consolidated financial statements has been taken into consideration in calculating the indicators.

Associated companies are companies belonging to the Group over which the parent foundation has direct or indirect considerable control. Considerable control takes place when the Group holds a minimum of 20 per cent of the votes conferred by shares in the company or the Group otherwise exerts considerable influence, but does not have control. Associated companies are consolidated using the equity method.

The share of associated companies’ profit for the financial period pursuant to the Group’s holding is disclosed as a separate item in the income statement. Associated companies in which capital and reserves based on shareholding exceeded the acquisition cost were acquired in 2016. The resulting unrecognised Group reserve of these companies will be recognised as income over ten years. The loss of associated companies in the consolidated financial statements of 2018 consists primarily of the recovery of residential building provisions used in repair activities.

Consolidated income statement

The income statement of the consolidated financial statements has been prepared based on the income statement formula of the parent, a charitable foundation. All of the Group’s subsidiaries and joint ventures that are real estate and limited liability housing companies are consolidated in the financial statements. The income from properties and their maintenance expenses have been considered to be closely associated with the parent foundation’s actual operations, letting. Therefore, all of the income and expenses of the subsidiaries and joint venture have been consolidated into the income and expenses of lease operations. By their nature, financial income and expenses are disclosed as part of financial and investing activities.

Consolidated balance sheet

The consolidated balance sheet has been prepared using the balance sheet formula of chapter 1, section 6 of the Accounting Decree, which is the same for all parties with an accounting obligation. The Foundation’s initial capital and other capital and reserves items, subsidiaries’ and joint ventures’ share capital, reserves, surplus/deficit from previous years and surplus/deficient for the financial year have been consolidated under capital and reserves. The capital and reserves remaining after group eliminations comprises the Foundation’s initial capital and reserves. The apartment acquisition reserve includes grants received; the grants involve conditions of return.

Consolidated cash flow statement

The consolidated cash flow statement has been prepared based on the income statement and balance sheet, taking into account intra-group items where applicable.

Accumulated appropriations

Accumulated appropriations comprise residential building provisions and accumulated depreciation difference. In the separate financial statements of the subsidiaries, the difference between depreciation according to plan and taxational depreciation is

Account of grounds of planned depreciation and changes in them

Asset Years/per cent Depreciation methodIntangible assets 4-10 years straight-line depreciationBuildings 67 years straight-line depreciationBuildings 25-40 years straight-line depreciationMachinery and equipment in buildngs 20-50 years straight-line depreciationMachinery and equipment 25% reducing method of depreciationMachinery and equipment 4 years straight-line depreciationOther tangible assets 10-30 years straight-line depreciation

20

disclosed as an appropriation on the income statement and accumulated appropriations on the balance sheet. In the consolidated balance sheet, accumulated appropriations are divided between capital and reserves, minority interest and deferred tax liabilities. The change in residential building provisions and depreciation difference during the financial period is divided in the income statement between change in deferred tax liabilities, minority interest and profit for the financial year.

Measurement of non-current assets

Intangible and tangible assets are recognised on the balance sheet at original cost less planned depreciation and impairment with regard to ordinary subsidiaries. Mutual companies do not follow a pre-made depreciation plan, but all depreciations are recognised according to the limits of the profit made. The planned depreciation of buildings not recognised by the separate companies has been recognised in the consolidated financial statements. The portion of depreciations in the profit has grown significantly from the comparison year. A fixed asset programme was implemented this financial year, and retention periods and depreciations plans were specified further. Grants associated with the acquisition of property, plant and equipment are deducted from the acquisition cost of the asset in the subsidiaries, and in them, grants are recognised as income in the form of smaller depreciation over the useful life of the asset.

In addition to acquisition costs and the asset transfer tax, the value of shares in housing companies held by the parent foundation includes the repair, share of loans and other acquisition expenses specified in the acquisition cost concerned by the grant issued by STEA. As of the beginning of 2015, acquisition repairs have been measured in long-term expenses on the balance sheet, and they are depreciated over 10 years.

Accounting for general grants in the parent foundation: - Project grants have been transferred to income for the project concerned- Grants for the acquisition for apartments granted

by STEA are recognised in the apartment acquisition reserve. Grants for apartments subject to terms of return sold are transferred to accrued expenses and deferred income, and reused grants are returned to the reserve. - The construction reserve includes STEA’s and Housing Finance and Development Centre of Finland’s investment grants for equity investments of real estate companies.- Grants from municipalities and parishes are recognised in the general-purpose reserve. Grants received for apartments released from right of use restrictions are transferred to the general-purpose reserve.- The amount of loans repaid during the previous financial year is transferred as internal transfers to the redemption reserve from the surplus for the previous financial year. - The proportion of internal financing of investments during the previous year is transferred to the investment reserve from the surplus for the previous year, if possible. - The consolidated goodwill and group reserve allocated to buildings is depreciated over 67 years in the case of new properties and for subsidiaries acquired prior to 1 January 2015 over the estimated remaining useful life, which in this case is 40 years. Minor asset purchases whose costs are below EUR 1,000 are recognised as expenses for the year.

Subsequently arising expenses are included in the book value of a tangible asset only if it is likely that the future economic benefit relating to the asset will be to the benefit of the Group. Other repair and maintenance expenses are recognised through profit or loss as they materialise.

Deferred tax assets and liabilities

Deferred tax liabilities and assets are recognised as temporary differences between taxation and financial statements using the tax rate for the following years confirmed on the closing date. As of acquisitions made in 2015, deferred tax liabilities have also been calculated for allocated consolidation assets, no liabilities have been recognised for acquisitions made prior to this.

No deferred tax liabilities have been accounted for confirmed losses of subsidiaries in line with the prudence principle.


Notes to the income statementGroup 2018 Group 2017 Parent 2018 Parent 2017

Income from lease operations 129,383,699.24 127,407,479.98 36,726,330.18 36,081,447.79Income from property management services 38,077.20

Notes concerning the personnel and members of the administrative organs

Personnel expensesPerformance-based pay with fringe benefits 6,872,198.76 6,429,946.52 2,030,236.28 1,860,201.38Monetary value of fringe benefit -140,021.79 -174,593.83 -73,194.49 -70,943.96Pension expenses 1,331,278.45 1,215,290.12 421,267.67 381,952.74Statutory social security expenses 137,415.00 121,216.84 42,598.37 53,948.56Total 8,200,870.42 7,591,859.65 2,420,907.83 2,225,158.72

Average number of personnel 148 135 35 32

Fees paid to auditors 93,347.21 207,313.75 56,289.80 80,844.59

Fees paid to members of the Board of Trustees and Delegation 54,000.00 45,000.00 49,500.00 41,000.00

Depreciation, amortisation and impairmentDepreciation, amortisation and impairment for the financial year 17,593,107.60 14,062,404.27 298,495.62 271,405.66

The group has recognised a total of EUR 2.2 million in depreciation, according to plan, concerning buildings not recorded by the separatePlot lease times are 0-60 years and in2018 their rents were EUR 2.7 million.

Financial income and expensesFinancial incomeInterest and dividend income from others 194,194.45 136,792.27 17,094.29 12,621.42Interest income from group companies 3,223,436.13 3,366,943.52Other financial income 228,375.28 553,584.47 61,329.89 75,059.15Financial income total 422,569.73 690,376.74 3,301,860.31 3,454,624.09

Impairment of fixed assets -39,026.42 -26,357.34 -39,026.42 -26,357.34

Financial expensesInterest expenses to others -12,130,564.44 -12,196,723.14 -3,163,197.53 -2,512,327.91Other financial expenses -542,617.95 -566,781.89 -2,687,977.43 -2,635,921.21Financial expenses total -12,673,182.39 -12,763,505.03 -5,851,174.96 -5,148,249.12

Financial income and expenses total -12,289,639.08 -12,099,485.63 -2,588,341.07 -1,719,982.37

Direct taxesDirect taxes on ordinary activities -8,483.96 -10,628.83Change in deferred taxes -2,669,581.68 -2,853,197.17

22

Notes concerning the assets on the balance sheet

Group 2018 Group 2017 Parent 2018 Parent 2017

Interest capitalised during the financial year and information about undepreciated capitalised interest expense

Construction-time interest has been included in the cost of a residential building.The undepreciated part of capitalised interest income in the balance sheet items “Buildings” comprises the following:

Capitalised during the financial year 21,417.69 101,460.80Capitalised during previous financial years 718,093.26 616,632.46Depreciated -257,071.32 -173,706.53Undepreciated item 31 December 482,439.63 544,386.73

Group 2018 Group 2017 Parent 2018 Parent 2017Intangible rightsBalance 1 January 3,430,622.06 3,397,023.02Decrease -60,780.29Transfers between items 61,925.20 94,379.33Balance 31 December 3,492,547.26 3,430,622.06Depreciation for the financial year -351,592.20 -105,576.71Accumulated depreciation and amortisation 1 January -177,937.58 -72,360.87

Accumulated transfers between items -14,396.46Accumulated 31 December -543,926.24 -177,937.58Net expenditure 31 December 2,948,621.02 3,252,684.48

GoodwillBalance 1 January 376,500.00 376,500.00Balance 31 December 376,500.00 376,500.00Depreciation for the financial year -75,300.00 -75,300.00Accumulated depreciation and amortisation 1 January -75,300.00

Accumulated 31 December -150,600.00 -75,300.00Net expenditure 31 December 225,900.00 301,200.00

Other capitalised long-term expenditureBalance 1 January 1,984,870.85 1,607,155.35 1,968,676.80 1,574,655.30Increase 466,562.98 394,021.50 466,562.98 394,021.50Transfers between items -15,016.73 -16,306.00Balance 31 December 2,436,417.10 1,984,870.85 2,435,239.78 1,968,676.80Depreciation for the financial year -250,672.55 -210,613.63 -250,672.55 -210,613.63Accumulated depreciation and amortisation 1 January -480,615.33 -271,632.30 -480,615.33 -270,001.70

Accumulated transfers between items 1,630.60Accumulated 31 December -731,287.88 -480,615.33 -731,287.88 -480,615.33Net expenditure 31 December 1,705,129.22 1,504,255.52 1,703,951.90 1,488,061.47

Intangible assets total 4,879,650.24 5,058,140.00 1,703,951.90 1,488,061.47


Group 2018 Group 2017 Parent 2018 Parent 2017Land and watersBalance 1 January 63,847,160.74 63,238,460.38Increase 985,944.96 301,196.01Decrease -80,335.65Transfers between items 387,840.00Balance 31 December 64,833,105.70 63,847,160.74

Connection feesBalance 1 January 8,978,301.68 8,921,804.88New sites 50,878.96Increase 350,901.09 31,278.65Properties sold -5,817.08Decrease -15,012.07Transfers between items 109,396.06 46,047.30Balance 31 December 9,489,477.79 8,978,301.68

Property leasesBalance 1 January 0.00Transfers between items 146,846.65Balance 31 December 146,846.65

BuildingsBalance 1 January 670,941,174.75 657,611,221.57Grants -557,790.00 605,149.00New sites 3,262,359.89Increase 36,637,571.60 4,163,299.35Properties sold -333,870.33Decrease -198,53.56 -6,875,410.18Transfers between items 12,252,615.03 15,770,785.34Balance 31 December 722,516,077.71 670,941,174.75Depreciation for the financial year -15,219,438.41 -13,301,095.15Accumulated depreciation and amortisation 1 January -28,207,089.81 -14,694,044.01Increase in the accumulated -209,087.86Accumulated transfers between items -58,264.05 -2,862.79Impairments -864,687.85Accumulated 31 December -44,349,480.12 -28,207,089.81Net expenditure 31 December 678,166,597.59 642,734,084.94

Machinery and equipmentBalance 1 January 1,985,878.11 1,954,482.14 255,414.33 253,901.53New sites 9,583.54Increase 232,084.16 50,485.48 1,512.80Properties sold -40,207.02Transfers between items 186,077.45 21,117.51Balance 31 December 2,413,623.26 1,985,878.11 255,414.33 255,414.33Depreciation for the financial year -415,497.22 -158,486.46 -47,823.07 -60,792.03Accumulated depreciation and amortisation 1 January -734,408.55 -581,162.34 -188,266.47 -127,474.44Increase in the accumulated -181.81Properties sold 5,422.06Decrease in the accumulated 22,579.30Accumulated transfers between items 69,469.44Impairments -326.70Accumulated 31 December -1,058,183.73 -734,408.55 -236,089.54 -188,266.47Net expenditure 31 December 1,355,439.53 1,251,469.56 19,324.79 67,147.86

24

Other tangible assetsBalance 1 January 2,186,119.08 2,175,664.31 4,650.00 4,650.00New sites 11,021.52Increase 47,800.00 564.77Transfers between items -385,444.87 9,890.00Balance 31 December 1,859,495.73 2,186,119.08 4,650.00 4,650.00Depreciation for the financial year -415,592.60 -211,332.32Accumulated depreciation and amortisation 1 January -619,967.89 -409,641.86Increase in the accumulated -225.90Accumulated transfers between items 139,127.75 1,232.19Accumulated 31 December -896,432.74 -619,967.89 0.00 0.00Net expenditure 31 December 963,062.99 1,566,151.19 4,650.00 4,650.00

Advance payments and construction in progressBalance 1 January 25,823,850.44 3,949,134.73Grants -3,349,915.00Increase 16,640,057.00 38,222,336.34Properties sold -33,867.15Decrease -90,403.87Transfers between items -12,492,335.47 -16,313,753.48Balance 31 December 26,531,253.10 25,823,850.44

Tangible assets total 781,485,783.35 744,201,018.55 23,974.79 71,797.86

Shares in housing companiesBalance 1 January 329,322,973.68 322,667,824.87 329,322,973.68 322,667,824.87Increase 9,870,517.70 7,707,331.64 9,870,517.70 7,707,331.64Properties sold -975,945.96 -1,006,757.13 -975,945.96 -1,006,757.13Decrease -81,174.68 -45,425.70 -81,174.68 -45,425.70Balance 31 December 338,136,370.74 329,322,973.68 338,136,370.74 329,322,973.68

Shares in subsidiariesBalance 1 January 14,350,089.29 14,581,470.08New sites 54,473.72Increase 75,989.41 150,000.00Properties sold -381,380.79Balance 31 December 14,480,552.42 14,350,089.29

Shares in associated companiesBalance 1 January 6,698,397.51 5,882,488.28 3,578,789.60 3,578,789.60Transfers between items -1,083.93Share of profit from associated companies -2,305,223.62 815,909.23Balance 31 December 4,392,089.96 6,698,397.51 3,578,789.60 3,578,789.60

Other shares and participationsBalance 1 January 1,108,452.36 1,108,452.36 3,315.75 3,315.75Transfers between items 1,083.93Balance 31 December 1,109,536.29 1,108,452.36 3,315.75 3,315.75

Investments 343,637,996.99 337,129,823.55 356,199,028.51 347,255,168.32

Parent 2018 Parent 2017Group 2018 Group 2017


Shares and participations held by Y-Foundation

Shares in group companies Domicile Group’s holding, % Parent company’s holding, %

SubsidiariesKiinteistö Oy Keiteleentie 3 Helsinki 100.00 100.00Kiinteistö Oy Yypari Kouvola 100.00 100.00Kiinteistö Oy Y-Kara Kouvola 100.00 100.00Kiinteistö Oy Y-Säätiön Pienasunnot Tampere 100.00 100.00Asunto Oy Enon Havupuisto Joensuu 100.00 100.00Kiinteistö Oy Ylöjärven Kuusistontie 9 Ylöjärvi 100.00 100.00Kiinteistö Oy Keuruun Juurikkaniemi Keuruu 100.00 100.00Kiinteistö Oy Hiittenhovi Harjavalta 100.00 100.00Kiinteistö Oy Y-Säätiön Palvelutalot Helsinki 100.00 100.00Kiinteistö Oy Joensuun Senioriparkki Joensuu 51.60 51.60Kiinteistö Oy Kotkan Tietotalo Kotka 100.00 100.00Asunto Oy Fleminginkatu 9 a Helsinki 100.00 100.00Y-Säätiön Palvelut Oy Helsinki 100.00 100.00Asunto Oy Tuusulan Korkintie 1 Tuusula 80.14 80.14Kiinteistö Oy Martinuskodit Tampere 100.00 100.00Kiinteistö Oy Uudenkaupungin Lukkosepänkatu 1 Helsinki 51.00 51.00

Associated companiesKiinteistö Oy Haagan Kumppanit Helsinki 39.10 39.10Kiinteistö Oy Rukki Turku 48.01 48.01Kiinteistö Oy Petäjäveden Ankkuri Petäjävesi 33.04 33.04Asunto Oy Kolmas linja 25 Bostads Ab Helsinki 49.23 49.23

Subgroup, Y-Foundation’s holding 100%Kiinteistö Oy M2-Kodit Helsinki 100.00 100.00Kiinteistö Oy Helsingin Muurahaisenpolku 6 Helsinki 64.36 64.36Kiinteistö Oy Helsingin Jallukka Helsinki 64.40 64.40Asunto Oy Päivöläntie 25 Helsinki 93.86 93.86Asunto Oy Espoon Klariksentie 2 Espoo 92.75 92.75Kiinteistö Oy M2-Vuokrakodit Vantaa 100.00 100.00Kiinteistö Oy Lappeenrannan Koulukatu 1 Lappeenranta 75.55 75.55Asunto Oy Nokian Rantahelmi 1 Nokia 100.00 100.00

Associated companiesAsunto Oy Satotaival Kerava 34.65 34.65Kiinteistö Oy Salpalohi Kerava 33.33 33.33As. Oy Järvenpään Jampanpaju Järvenpää 41.35 41.35Hatanpäänhovin Pysäköinti Oy Tampere 20.63 20.63Kiinteistö Oy Tampereen Taijan Parkki Tampere 49.17 49.17Kiinteistö Oy Vantaan Puunhaltijankujan Parkki Vantaa 44.62 44.62Mummunkujan pysäköinti Oy Tampere 26.51 26.51Tamppi Pysäköinti Oy Tampere 23.21 23.21Veturitallin Parkki Oy Jyväskylä 37.50 37.50Kiinteistö Oy Jyrkkälänpolku Turku 28.85 28.85Kiinteistö Oy Ahdinluoto Espoo 34.50 34.50

Parent 2017

26

Capital and reserves Group 2018 Group 2017 Parent 2018 Parent 2017

Initial capital 1 January 20,182.55 20,182.55 20,182.55 20,182.55Initial capital 31 December 20,182.55 20,182.55 20,182.55 20,182.55

Apartment acquisition reserve 1 January 175,745,059.54 172,110,870.30 175,745,059.54 172,110,870.30Transfer of grants 5,183,619.00 4,023,088.00 5,183,619.00 4,023,088.00Decrease -485,528.69 -388,898.76 -485,528.69 -388,898.76Apartment acquisition reserve 31 December 180,443,149.85 175,745,059.54 180,443,149.85 175,745,059.54

Construction reserve 1 January 8,603,294.26 8,523,690.23 8,523,690.23 8,523,690.23Adjustments 79,604.03Construction reserve 31 December 8,603,294.26 8,603,294.26 8,523,690.23 8,523,690.23

Grant reserve 1 January 1,593,272.10 1,593,272.10 1,593,272.10 1,593,272.10Grant reserve 31 December 1,593,272.10 1,593,272.10 1,593,272.10 1,593,272.10

Homelessness and marginalisation research reserve 1 January 3,466.35 3,466.35 3,466.35 3,466.35Homelessness and marginalisation research reserve 31 December 3,466.35 3,466.35 3,466.35 3,466.35

General-purpose reserve 1 January 33,269,064.10 32,921,742.87 33,269,064.10 32,921,742.87Transfer from acquisition reserve 485,528.69 238,321.23 485,528.69 238,321.23Transfers of other investment grants 109,000.00 109,000.00 109,000.00 109,000.00General-purpose reserve 31 December 33,863,592.79 33,269,064.10 33,863,592.79 33,269,064.10

Redemption reserve 1 January 54,283,662.63 48,273,338.36 54,277,498.36 48,273,338.36Accumulated 7,136,560.56 6,010,324.27 7,136,560.56 60,04,160.00Redemption reserve 31 December 61,420,223.19 54,283,662.63 61,414,058.92 54,277,498.36

Investment reserve 1 January 30,932,010.64 29,311,999.83 30,932,010.64 29,311,999.83Accumulated 1,620,010.81 1,620,010.81Investment reserve 31 December 30,932,010.64 30,932,010.64 30,932,010.64 30,932,010.64

Surplus/deficit from previous financial years 23,288,949.26 11,142,821.93 256,557.26 256,557.26

Profit for the financial year 14,081,636.11 19,282,687.89 6,493,955.63 7,136,560.56

Capital and reserves total 354,249,777.10 334,875,521.99 323,543,936.32 311,757,361.69

Minority interest 1 January 2,116,359.24Right issue 4,900.00Increase in holdings in subsidiaries 2,079,752.89Profit/loss for the financial year 32,357.42 36,606.35Minority interest 31 December 2,153,616.66 2,116,359.24

Deferred tax liabilities 1 January 6,743,678.67 3,862,530.48Changes 2,684,788.40 2,881,148.19Deferred tax liabilities 31 December 9,428,467.07 6,743,678.67

Financing loansSubordinated loans 76,391.25

State Treasury loans 209,093,097.71 222,975,698.04 20,962,181.27 23,360,104.59

Municipal Finance loans 346,836,701.18 320,509,008.40

Financial institutions 219,753,695.11 215,041,968.23 96,325,060.00 102,815,220.00

Bonds 75,000,000.00 75,000,000.00Total 850,683,494.00 758,603,065.92 192,287,241.27 126,175,324.59The minority interest included in the loans in the consolidated financial statements amounts to EUR 7.3 million.


Group 2018 Group 2017 Parent 2018 Parent 2017Financing loans maturing in more than five yearsState Treasury 140,211,493.17 152,254,634.30 11,536,259.32 13,093,002.04Municipal Finance Plc 345,904,639.14 328,175,802.54Financial institutions 168,578,292.14 161,416,878.25 53,732,500.00 58,543,500.00BondsTotal 654,694,424.45 641,847,315.09 65,268,759.32 71,636,502.04

Grants granted but not withdrawnSTEA 443,293.00 476,912.00 443,293.00 476,912.00

Pledged assets and contingent liabilities Group 2018 Group 2017 Parent 2018 Parent 2017

Liabilities for which assets have been pledged as collat-eral

Loans 850,683,494.00 758,603,065.92 192,287,241.27 126,175,324.59Mortgages given 1,106,323,412.89 1,076,298,393.66Shares in limited liability housing companies 217,294,693.00 217,294,693.00 217,294,693.00 217,294,693.00

Other assets pledged

Mortgages have been pledges as collateral for property leasestotal 32,541,840.17 32,124,815.66 0.00 0.00

CommitmentsY-Foundation’s absolute guaranteesobligations 3,200,000.00 3,200,000.00 3,200,000.00 3,200,000.00

Lease liabilities In 2018 In 2019 Years 2020–2024 TotalLease liabilities, parent foundation 186,534.45 623,658.62 1,056,293.64 1,679,952.26Lease liabilities, group 380,423.64 1,366,339.69 1,732,820.22 3,099,159.91

Derivative instruments, group

Y-Foundation uses interest-rate derivatives to hedge cash flows in case of an increase in market interest rates.Nominal values of derivative instruments 253,737,731.48 201,494,416.29 106,722,960.48 101,856,678.48Market values -3,564,419.00 -364,080.00 -2,302,605.00 -1,885,539.00interest rate options not included in hedge accounting 92,486,967.59 100,462,861.00 10,000,000.00 20,877,282.00

Market values -2,521,388.00 -2,043,240.00 -228,563.00 -2,629,348.00The difference between the nominal value and fair value has been expensed through profit or loss 0.00 -29,847.00

Revolving credit facilityThe foundation has a revolving credit facility of EUR 2,000,000.00 from Danske Bank,of which undrawn on the closing date 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00The foundation has a revolving credit facility of EUR 5,000,000.00 from Handelsbanken,of which undrawn on the closing date 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00

Assets subject to condition of return

28

Balance sheet value Group 2018 Group 2017 Parent 2018 Parent 2017

Shares in housing companies 186,027,415.50 183,431,572.91 186,027,415.50 183,431,572.91Shares in real estate companies 7,070,318.00 7,070,318.00 7,070,318.00 7,070,318.00Total 193,097,733.50 190,501,890.91 193,097,733.50 190,501,890.91of which covered by grants 113,713,688.10 113,489,298.20 113,713,688.10 113,489,298.20

Other operations supported by Stea

Housing counsellors, AUNE - Networking for Develop-ment, AUNE - Toimekas, Meriheimo, Women’s home-lessnessStea’s grants 1,292,645.10 647,028.22 1,292,645.10 647,028.22operating expenses -1,301,039.40 -647,640.31 -1,301,039.40 -647,640.31

The expenses of STEA-supported activities are included in the expenses of central administration.

Shares pledges as collateral for loans Group 2018 Group 2017 Parent 2018 Parent 2017State Treasury 47,776,011.52 47,776,011.52 47,776,011.52 47,776,011.52financial instruments book value 135,962,206.00 135,962,206.00 135,962,206.00 135,962,206.00pledged at fair value 217,294,693.00 217,294,693.00 217,294,693.00 217,294,693.00

Y‑Foundation

P.O.Box 322 | Pitkänsillanranta 3A

00531 Helsinki

ysaatio.fi | m2kodit.fi

09 7742 5540

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