The Management Board of Budimex S.A. (the “Issuer” or “Budimex”) informs that on 23 February 2022 Budimex S.A. and FBSerwis S.A. (a wholly-owned subsidiary of Budimex S.A.) (“FBSerwis”) concluded with CIECH S.A., CIECH Soda Polska S.A., EEW Energy from waste GmbH (“EEW”), EEW Energy from waste Polska sp. z o.o. (“EEW Poland”) and the city of Inowrocław (hereinafter jointly referred to as: the “Parties”) a letter of intent on the construction in the city of Inowrocław of a Thermal Waste Treatment Plant with Energy Recovery (“Letter of intent”, “Project”, “Plant” respectively). The plant with a production capacity of 120 MWth is to ensure energy recovery and its primary purpose will be to supply heat to the Mątwy Housing Estate located in the city of Inowrocław and to the Manufacturing Site in Inowrocław owned by CIECH Soda Polska in the amount of approx. 850 GWh per year.

The Letter of Intent was signed to regulate the principles of cooperation between the Parties in connection with the preparation and implementation of the Project. The entity implementing the Project will be a special purpose vehicle whose partner/shareholder will be EEW and FBSerwis, and the participation of other entities in the special purpose vehicle is not excluded. It is planned that the construction of the Plant will start in 2024 and it will take less than three years until the Plant is commissioned in 2026. The Parties unanimously declared that when planning the implementation of the Project they would pay attention to the mitigation of social disruptions caused by the Project.

Apart from obligating the Parties to act in good faith and cooperate loyally with one another to implement the Project, the Letter of Intent creates no further obligations between the Parties. The implementation of the Project depends on the fulfillment of many uncertain conditions, including obtaining a decision on environmental conditions, a building permit and an integrated permit.

As agreed, the Plant will be supplied with a stream of non-hazardous and non-inert waste up to 310.000 tonnes per year, supplied by a FBSerwis Group company. Budimex has agreed to support FBSerwis in the project with its human, technical and financial resources. At the same time, due to its long-term and extensive experience in the implementation of large industrial projects, should the conditions that enable the Project implementation be met, Budimex in the Letter of Intent expressed its interest in implementing the Project as a general contractor.

Budimex assumes that, should all the conditions that enable the Project implementation be met, FBSerwis’ involvement in the Project, in particular thanks to the conclusion of a long-term waste supply agreement, will have a positive impact on the consolidated financial performance of FBSerwis and the Budimex Group, by ensuring continuous collection (at a fixed price) of calorific fraction of waste from the municipal systems operated by the FBSerwis Group companies (indirect subsidiaries of the Issuer), thereby reducing the cost of management of the high-calorific fraction.

At the same time, Budimex, FBSerwis, EEW, EEW Polska, CIECH S.A., CIECH Soda Polska S.A. intend to discontinue the cooperation under the letter of intent concluded on 26 March 2021 on the continuation of cooperation in the construction of a waste incineration plant to supply the process pair to the manufacturing site of CIECH Soda Polska S.A. in Janikowo, of which the Issuer informed in current report No 23/2021.