Comments from Dariusz Blocher, President of the Management Board of Budimex SA, on selected financial data for 2013

Sales declines in 2013 are not a surprise to the market. It's the year of the expected slowdown and waiting for a new EU budget for 2014-2020, which was finally approved in November of 2013.
Year 2013 was another year in which the construction - assembly production notes the negative growth (-13.6% yoy), mainly due to the situation in the infrastructure segment, which declined by 18.6%. Infrastructure construction accounted for 59% of sales from construction segment of the Budimex Group in 2013 and 63% in 2012.
In 2013, the Group reported profit from operations at the level of PLN 333 million with yield of 7% compared to operating profitability achieved in 2012 at 3%.
The results were influenced by the sale of a subsidiary Budimex Danwood, a market leader in the production of single-family homes in the frame construction. Sales of the company was part of the implementation strategy of focusing on core business of the Budimex Group and the preparation of its structure to the new market situation in the coming years.
The driving force of a generated results was the construction segment in 2013, which improved profitability at every level. Profitability of the segment at the level of gross margin is 7.3%
compared to 6.4% achieved profitability in 2012. Operating yield reached 3.3% compared to 2.0% in 2012. This situation results mainly from the decrease in prices of construction materials, attention to the quality of signed contracts and the fact that the most difficult highway contracts have already been completed.
Year 2013 was a good year for real estate development activities in terms of the pre-sale. Changes in credit requirements, relatively low interest rates, resulting in a relatively low-cost financing and unattractive interest rates on bank deposits resulted in a significant increase in pre-sale. In 2013, Budimex Real Estate pre-sold 742 apartments in comparison to the pre-sold 515 apartments in 2012, recording 44% growth. The level of pre-sale recorded in 2013, is the level close to that of the boom in the housing market.
In 2013, Budimex Real Estate sold 495 housing notarized, while in the same period of 2012 years has sold 740 premises. Please note that the sale of notarial housing depends on the deadlines for the completion of construction projects and the transfer of completed units to customers, there is a seasonal phenomenon and the comparable year-to-year.
The drop in sales has not affected the profitability of the property development business, which at the level of gross margin is 20.0%, compared to 22.8% profitability achieved in the previous year.
In 2013 there was made a review of the assets in the development sector, which resulted in the write-off of part of its land in the amount of 61.8 million. A write-off was made mainly on the two largest parcels owned by the company Budimex Nieruchomości. It has no effect on the level of cash. This will however prepare attractive offer for customers, significantly speeding up the launch of new projects and their presale.
As a result of the write-off the net score of the development segment is negative and amounts to 23.4 million.
In 2013, Budimex Real Estate continues to focus its activities in three locations: Warsaw, Krakow, Poznan. It currently has in its offer 700 apartments ready for sale.
 
The Group managed to maintain a very high level of cash position, which at the end of the year amounted to 1.56 billion zloty (recorded year on year: 31%). The impact on the cash position was mainly a very good level of cash in the property development segment, due to the high level of pre-sale of flats and sale of Danwood.
In 2013, you could already see an increase in the average value of new projects. The average value of the bid submitted by Budimex SA market infrastructure was in 2013 PLN 55 million, while in 2012 it was 32 ??million dollars. However, the total value of contracts settled in 2013 was comparable to the value of 2012.
Thanks to the efforts and increase of the effectiveness of offerings, the Group reported in 2013 signed contracts worth 3.3 billion zł. This value is higher than the value of contracts signed in 2012 by nearly 0.5 billion dollars. Order portfolio at the end of 2013 amounted to 4.3 billion zł.
From a new perspective of the EU there have been already announced road contracts worth over 40 billion dollars. The Group appeared at the prequalifications in all announced tenders so far. Currently, our goal is to obtain the highest possible value of contracts while ensuring their profitability. We also want to prepare well for the implementation of contracts won by putting in the near future to develop and maintain the best managing personnel.
In 2013, Budimex remains the most valuable construction company listed on the Warsaw Stock Exchange. The proof of the trust which we are being given are not only received awards, but primarily an increase in the value of shares of Budimex SA recorded in 2013 (an increase of 89% from 70 PLN to 132 PLN per share).