Commentary of 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 half of 2014

The year 2014 is the first year of the new EU budget for 2014-2020. Building a portfolio of orders for future years by acquiring as many road contracts as possible and entering new business segments are currently the main tasks of the Budimex Group.

The value of the Budimex Group’s order book amounted to PLN 3.93 billion at the end of June 2014 and is lower than its value at the end of 2013 by 9.4%. Value of contracts signed
In the first half of 2014, it amounted to PLN 1.41 billion, i.e. PLN 746 million less than in the corresponding period of the previous year.

The relatively low value of the portfolio of orders and contracts signed in the first half of 2014 is temporary and results from a slower than expected pace of contract signing
from a new perspective. The total value of contracts currently awaiting signing by the Budimex Group or signed after 30 June 2014 is PLN 2.8 billion.

The main part of this amount are road tenders announced by GDDKiA, including projects financed from the new EU perspective. So far, 25 tenders have been resolved, of which
in seven of them, Budimex SA submitted the most advantageous price offer. Their total value – attributable to Budimex SA – is PLN 1.7 billion.

In addition, on 10 July 2014, a contract was signed for the construction of a new power unit of the Power Plant
in Turów, in which Budimex SA’s share in the consortium is 22.31% (PLN 725 million). This is the first contract of this type in the history of the Budimex Group. Budimex is interested in the implementation of further energy contracts. It carefully analyzes planned investments (including
in CCGT units at the Żerań CHP Plant and the Łagisza Power Plant) and participates in several tender procedures in the energy sector (for the construction of a CCGT unit
at the Grudziądz Power Plant, for the construction of a desulphurisation installation at the Ostrołęka CHP Plant).
Therefore, the Budimex Group plans to increase the employment of specialists in the energy sector.

In the first half of 2014, the Group improved sales and profitability at every level. It maintained a high level of cash, despite the payment of a dividend in May with a historically highest value of PLN 303 million, and achieved the highest level of pre-sales of apartments in years.

In the analysed half of 2014, the Budimex Group achieved sales higher by 13.4% 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. In the same period, construction and assembly production increased by 9.8% year-on-year.

The operating profit of the Budimex Group generated in the first half of the year increased by 42.4% compared to the previous year, compared to the data not including the results of Budimex Danwood. Profitability at all other levels of the result was also significantly higher.

The improvement in the Group’s profitability is a consequence of the increase in margins in the construction segment as a result of a decrease in the prices of construction materials and subcontractors’ services.

In the first half of the year, the Budimex Group maintained a very high level of its net cash position, which amounted to nearly PLN 913 million at the end of June. This means an increase of 43% compared to June 2013. The Group’s good cash position is mainly due to its development activities.

The improving situation on the housing market contributed to the achievement in the first half of 2014 of the highest level of pre-sales of apartments in several years. During this period, Budimex Nieruchomości pre-sold 553 apartments, which is nearly twice as many as 
in the same period last year.

In the first half of 2014, Budimex Nieruchomości introduced nearly 900 flats to its offer on six new projects. In the second half of 2014, it plans to introduce another 1,600 apartments to its offer, including over 1,000 in the next, four stages of the Nowe Czyżyny project in Krakow. This project is our company’s response to the needs of the Krakow market. It meets the criteria of the Apartment for the Young program, which has so far been used only to a small extent in this city. Thanks to the preparation of an attractive offer, Budimex Nieruchomości can pre-sell about 1500 apartments throughout 2014.

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 completed the
In the first half of the year, construction works will be carried out in accordance with the adopted schedule.

When planning the development of this type of activity, the Budimex Group is currently looking at several projects
worth PLN 30-50 million each.

BUDIMEX Group

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

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

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

Additional information:

Results for the first half of the year (in thousands of zlotys) – excluding the results of Budimex Danwood: