Commentary on selected financial data for the first half of 2012

“In the first half of this year. The Budimex Group generated sales of PLN 2,884 million, i.e. 28% higher than the sales achieved in the corresponding period of 2011.

The Budimex Group owes this growth primarily to the construction segment, whose sales increased by nearly 34% in comparable periods.

In the first half of this year. The Group generated an operating profit of over PLN 101 million, while in the corresponding period of 2011 it was over PLN 145 million. The main reason for the decline in operating profit are one-off costs and provisions related to the restructuring of PNI (approximately PLN 30 million) and lower profit of development activities, resulting from lower sales of apartments. The decrease in profitability was also influenced by a significant increase in the costs of performance of road contracts (an unpredictable increase in the prices of construction materials by 40% at the time of signing the contracts).

In the first half of 2012, due to the cautious approach regarding the possibility of settling differences reducing the basis for calculating income tax in PNI Sp. z o.o. in the following years, the Budimex Group did not recognise deferred income tax assets in the amount of PLN 12 million, which resulted in a deterioration of the Group’s net result in the same amount.

In the first half of this year. the real estate development segment recorded a nearly 54% drop in sales compared to the same period of 2011, despite the fact that in the first half of this year the District Development segment recorded a nearly 54% drop in sales. Budimex Nieruchomości sold 243 flats by notary, while in the same period of 2011 it sold 267. The decrease in sales revenues is due to a large share in sales in the first half of this year. of the Kraków and Poznań markets, which are characterised by much lower prices of residential premises compared to the Warsaw market, whose share in sales in the first half of 2011 amounted to 100%.

In the first half of this year. Budimex Nieruchomości pre-sold 210 apartments (excluding reservations), while in the same period last year 405 units. In the whole year 2012, I do not exclude pre-sales of apartments at a level up to 20% lower than in 2011, but I expect higher sales revenues than last year.

In the first half of this year. Budimex SA signed contracts worth PLN 921 million, while in the corresponding period of 2011 they were worth PLN 2.9 billion, which results from our care for a “healthy” portfolio and a very selective approach to contracts and bidding. The group’s order book at the end of June this year amounted to PLN 6.9bn. Currently, however, we are waiting for the signing of further contracts worth PLN 1.3 billion (on the basis of tenders in which the bids of the Budimex Group companies received first places).

The net cash position of the Budimex Group, including its own cash and short-term securities less external sources of financing, decreased by PLN  340 million at the end of June 2012 compared to the level at the end of June 2011, but it should be remembered that in May 2012 the Budimex Group had increased its net cash position. Budimex paid a dividend of PLN 280 million.”

Results of the reporting segments for the first half of 2012 (in PLN thousands):

Results of the reporting segments for the first half of 2011 (in PLN thousand):