Commentary by the President of the Management Board of Budimex SA, Dariusz Blocher, on the financial data from the consolidated financial statements of the Budimex Group for the first three quarters of 2014

The third quarter of 2014 is another quarter in which the Budimex Group records an improvement in sales and operating profitability compared to the corresponding period of the previous year. The Group maintains a high level of cash. The positive trend in the housing market made it possible to achieve a high level of pre-sales of apartments, and the contracts signed in the third quarter allowed the order book to be rebuilt.

The value of the Budimex Group’s order book amounted to PLN 4.7 billion at the end of September 2014 and increased by 20% within three months. This was possible thanks to the signing of contracts
worth PLN 2.3 billion, including for the construction of a power unit in Turów. Since the beginning of the year, the Group has signed contracts worth PLN 3.7 billion. Compared to the same period of the previous year, this is 40% higher.

We are observing an increase in the pace of settling road contracts, but these contracts are not signed as quickly as we would expect, which may affect sales in 2015.

So far, 40 tenders have been resolved, of which Budimex SA submitted the most advantageous price offer in eleven of them. Their total value – attributable to Budimex SA – is PLN 2.5 billion. On the other hand, the value of contracts currently awaiting signing by the Budimex Group or signed after 30 September is PLN 1.9 billion, 89% of which are road tenders announced by the General Directorate for National Roads and Motorways. If these contracts are signed by the end of this year, it will be a historically high value of orders obtained for the Budimex Group.

In 2014, the Budimex Group is focusing on acquiring as many contracts as possible from the new EU perspective in order to build a portfolio for the coming years. An important task is to prepare the capital and human resources in connection with the expected accumulation of works in 2016-2018.

The Budimex Group continues to maintain a high level of net cash position, which at the end of September 2014 amounted to PLN 1,178 million and is higher than at the end of September 2013
by 28%.

In the period from January to September, the sales of the Budimex Group increased by 17.8%. In the same period, construction and assembly production in constant prices increased by 5.5% year-on-year.

In the third quarter of 2014, the Budimex Group achieved sales of PLN 1,560 million, which is higher by PLN 307 million, i.e. by 24.5% compared to the corresponding period of 2013 – taking into account comparable data, i.e. without taking into account the revenues of Budimex Danwood sold in December 2013. The sales volume in the third quarter of 2014 was mainly influenced by good weather conditions and the schedule of road contracts.

The operating profit of the Budimex Group generated in the period from January to September increased by 47.2%
compared to the corresponding period of the previous year, compared to the data excluding the results of Budimex Danwood.

Operating profitability amounted to 4.7% and improved by 25% compared to the Group’s profitability recorded in the corresponding period of the previous year.

The improvement in the Group’s profitability results from the improvement of profitability in the construction segment and the high profitability of the development segment recorded in the third quarter of 2014, which was influenced by a positive resolution of the long-term administrative process resulting in the release of the provision in the amount of PLN 10.8 million. The improvement in profitability in the construction segment is a consequence of a decrease in the prices of certain construction materials and the cost of subcontracting services.

In the third quarter of 2014, Budimex Nieruchomości pre-sold 478 apartments, and cumulatively
in the year 1,031. The high pre-sales are the result not only of the ongoing good economic situation on the housing market, but above all of the launch of the Nowe Czyżyny project in Krakow, which meets the criteria of the Apartment for the Young program.

In the period from January to September 2014, Budimex Nieruchomości introduced 1,780 flats to its offer, including nearly 900 flats in the third quarter alone. Currently, Budimex Nieruchomości has 1,240 apartments in its offer.

The current structure of pre-sales and its focus on the market other than Warsaw will translate into
in the future, to change the sales structure. In the period from January to September 2014, Budimex Nieruchomości sold 592 flats by notary, of which only 39% were in Warsaw, while
In the 344 apartments sold by notaries in the corresponding period of the previous year, 60% were apartments on the Warsaw market. Budimex Nieruchomości intensifies its activities
in terms of the purchase of plots in order to ultimately be in the group of the 3 largest developers in the country.

Other activities of the Budimex Group include Elektromontaż Poznań and Budimex Parking Wrocław. The sales plan of Elektromontaż Poznań adopted at the beginning of the year has not changed.

Budimex Parking Wrocław, established to implement the project of building and then managing a car park in Wrocław in the public-private partnership formula, has started
in the third quarter. The Budimex Group gains experience
in contracts implemented in the PPP formula, assuming that in the future it will increase its involvement in this type of activity.

BUDIMEX Group

Selected financial data from the consolidated financial statements of the Budimex Group prepared in accordance with International Financial Reporting Standards (IFRS) for three quarters of 2014 and comparable data for three quarters of 2013.

Results of the reporting segments for the first three quarters of 2014 (in PLN thousand):

Results of the reporting segments for the first three quarters of 2013 (in PLN thousand):

Additional information:

Results for three quarters (in thousands of zlotys) – excluding the results of Budimex Danwood: