Commentary of the President of the Management Board Dariusz Blocher on the financial data from the consolidated financial statements of the Budimex Group for the first quarter of 2013

In this quarter, the Group generated an operating profit higher than in the corresponding period of the previous year, i.e. in the amount of PLN 43 million compared to PLN 37 million obtained last year.

The profits generated at the next levels include gross profit of PLN 43 million and net profit
in the amount of PLN 35 million, compared to PLN 48 million of gross profit and PLN 37 million of net  profit in the corresponding period of 2012, respectively.

On the other hand, the sales generated by the Budimex Group in the first quarter at the level of PLN 853 million were lower by 21% than the sales achieved in the corresponding period of 2012. The main reason for this was a longer than usual winter, resulting in a decline in sales in the construction segment
from PLN 1,044 million in the first quarter of 2012 to PLN 694 million in the first quarter of this year. i.e. by 34%.

The decline in sales in the construction segment determined its results. In the first quarter
2013 Operating profit and gross profit in this segment amounted to PLN 14 million and net profit at the level of PLN 10 million, compared to profits of PLN 31 million, PLN 38 million and PLN 29 million in the corresponding period of 2012, respectively.

Budimex, on the other hand, managed to improve profitability in this segment at the level of gross margin from 6.9%
in the first quarter of 2012 to 7.3% in the first quarter of this year.

Due to lower sales, the profitability at the level of operating profit amounted to 2.0% compared to the profitability of 2.9% achieved in the corresponding period of 2012, which is a consequence of significantly lower sales than in the comparable period of the previous year.

In the first quarter of this year. The Budimex Group has signed contracts worth nearly PLN 0.5 billion (PLN 480 million). This is comparable to the corresponding period of the previous year (PLN 499 million).
As a result, the Group’s order book at the end of March this year. amounted to PLN 4.8 billion, compared to PLN 4.9 billion at the end of 2012. At the same time, we are waiting for the signing of further contracts worth PLN 1.4 billion (on the basis of tenders in which the bids of the Budimex Group companies were awarded first places).

The net cash position of the Budimex Group, including its own cash and short-term securities less external sources of financing, remains at a level similar to that of the corresponding period of 2012. At the end of March 2013 it amounted to PLN 718 million, while at the end of the first quarter of 2012 it was PLN 752 million.

The first quarter of each year in the construction segment is the quarter when we observe a decrease in cash compared to the end of the year. This is a cyclical phenomenon resulting from cash  management in this segment. The decrease in the net cash position in the first quarter of 2013 amounted to 40% and was lower than the decrease recorded in the corresponding period of the previous year in the amount of 52%.

The amount of gross and net profits in the first quarter was positively influenced by the results of the real estate development segment, which recorded a gross profit of PLN 15 million and a net profit of PLN 12 million, respectively
compared to PLN 4 million of gross profit and PLN 3 million of net profit generated in the 1st quarter of 2012, respectively. The higher profits of the real estate development segment were the result of an almost threefold increase in sales of Budimex Nieruchomości compared to the corresponding period of 2012. In the quarter in question, Budimex Nieruchomości sold 204 flats by notary, while in the same period of 2012 it sold 75 flats. The sales carried out by this Company depend on the dates of completion of construction projects and handing over finished apartments to customers and is not a seasonal phenomenon, therefore comparing sales from the corresponding quarters of individual years is not justified.

At the same time, in the first quarter of this year. Budimex Nieruchomości pre-sold 121 apartments (excluding reservations), while in the same period last year 98 units.

The Budimex Group’s sales level was also positively affected by the segment of other operations. In the first quarter of this year. Sales revenues in this segment reached PLN 97 million, while in the first quarter of last year it was PLN 59 million. The increase in these sales is primarily the result of the dynamic development of Budimex Danwood, a 100% subsidiary of Budimex SA, which manufactures and assembles houses in timber frame construction.”