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We present our goals and commitments, we report on progress

Letter from the President

Dear

Undoubtedly, we have come to live in interesting times. In the last year, these words have gained particular power when the rebuilding optimism, after long months marked by the pandemic, was interrupted by Russia’s aggression against Ukraine. This event hit the already weakened global economy, causing one of the biggest crises in history, also in the construction industry. The sudden economic downturn has affected the condition of the sector, which has had a significant share in shaping the state budget for years. However, history shows that a crisis is also an opportunity for a new path in development. We believe that setting ambitious goals and flexibility in action is the only way to survive in unstable times. This report presents the effects of this path, and the results of the analysis carried out last year are already taking into account when planning our next business challenges.

In 2022, with the goal of consistently striving for further diversification and strengthening of the business, we decided to introduce several changes to the structure of the Budimex Group. Along with the newly chosen development directions, we focused on building areas that would allow us to expand our operations in neighboring countries, as well as balance the business activity conducted in Poland. We established three foreign entities: Budimex Bau GmbH, Budimex Construction Prague s.r.o., Budimex Slovakia s.r.o., and throughout the year we actively strengthened our most valuable capital – human capital, which will allow us to strengthen our position on the selected markets.

At Budimex SA, we are aware that constant growth cannot be achieved in isolation from the principles of social responsibility and sustainable development. This is due to both the characteristics of the construction industry and progressive climate change, as well as the management method we prefer. We build with people and for people, putting people and their needs in the centre. This approach is also the basis for the Budimex Group’s current and future ESG activities.

The development directions of the Budimex Group are set out on the basis of the provisions and tasks that we have set for ourselves in the CSR Strategy for 2021-2023. In this document, we have defined six areas that are essential elements of the functioning of every responsible company today – both in the business and social context. They apply to m.in. standards of occupational health and safety, environmental and climate impact, care for the development of employees and their job satisfaction, prevention of abuse, and dialogue and support for local communities. The activities we carried out in 2022, described in the following paragraphs of the letter, are a reflection and consequence of the declarations we made. They will be continued and expanded by the Budimex Group’s ESG Strategy, which is currently being developed.

The energy transition is a commitment enshrined in the EU agendas for the entire business community with a view to the availability of resources and the living conditions of future generations. At Budimex SA, we are fully committed to this process. In 2022, we continued our efforts to reduce our carbon footprint. These included a range of energy-saving solutions implemented on construction sites and the promotion of the right attitudes among employees as part of educational projects. Last year, we also established Circular Construction SA to support our goals in the field of implementing the principles of circular economy. Construction is a highly material-intensive branch of the economy, therefore, with the help of modern technologies, the task of this company is to recycle construction waste in an effective and economical way. This green competence pillar of our Capital Group also includes the acquired companies Magnolia Energy and Fotowoltaika HIG XIV, which in 2022 began the construction of a wind and photovoltaic farm with a combined capacity of over 20 MW. Low-emission transport is also green, and will require appropriate infrastructure in the near future. Therefore, we have established Budimex Mobility (formerly Budimex PPP SA), whose aim is to support commercial entities and local governments in the implementation of tasks resulting from national and EU regulations related to the reduction of CO₂ emissions and the development of clean technologies. In addition, one of the company’s tasks is to contribute to the expansion of the electric vehicle fleet within the largest construction group in Poland. It is worth noting that in less than a year, the company purchased 109 electric charging stations and intends to launch them in the first quarter of 2023. We see the Budimex Group’s share in the RES market as an element of strengthening energy efficiency and the company’s business portfolio. Green energy is an area that will require huge investments in the coming years, and we as a company have the capital that will allow them to be implemented on the necessary scale.

Responsibility towards investors, employees and shareholders means that as a company we must carefully monitor the opportunities and threats resulting from progressive climate change. In 2021 and 2022, we conducted a risk analysis based on the TCFD calculations, thus basing our activities on clear and verified premises. Due to the nature of our business and the amount of waste generated in the course of work, we are aiming to introduce a circular model in the entire value chain of the Budimex Group. These activities include m.in. Choosing building materials from certified sources, increasing the percentage of waste recycled and verifying the sustainability of our suppliers and partners. The protection of natural resources is a commitment and a priority for the Budimex Group. In 2022, we continued to implement further policies and procedures related to respecting biodiversity and securing local ecosystems – both at the design and implementation stages.

In the Budimex Group, sustainable and responsible management also means constant care for relations with internal and external stakeholders. We are an inclusive and open company. We strive to provide our employees not only with a stable place of employment, but also with space for unlimited development. We encourage young people at the beginning of their professional career to build their future in the construction industry. In 2022, 279 apprentices took advantage of Budimex’s offer. We promote gender equality in pay and working conditions. Last year, we successively increased the parity of women in managerial positions and supported them in acquiring competences. We also calculated the adjusted pay gap, which amounted to -1.9%. The Budimex Group is growing thanks to the commitment and ingenuity of the people it has been allowing to develop in its structures for years. Each year, she identifies talents in the organization and helps them acquire new skills and successfully pursue their chosen career path. As a result, at the end of 2022, the Supervisory Board decided to expand the composition of the Group’s Management Board by three new members, whose long-term and diversified experience enriches the group’s management competences.

Respect and care for employees in the Budimex Group means, above all, care for their safety. Our unwavering priority is to set the highest standards in the field of health and safety for the construction industry. We have a number of policies and programs for our team members and partners, in which our entire industry environment actively participates, e.g.: “Safety Week”. In 2022, we improved and increased the effectiveness of solutions related to incident detection and analysis, and we used the conclusions from them in the course of updating existing procedures and effective improvements in the area of our projects. We have recorded m.in. A decrease in the accident severity index from 0.32 to 0.17, and we have also completed a number of safety training courses for our employees.

We want to be a good neighbor. When implementing construction projects, we pay great attention to the needs of local communities. We want to leave added value in addition to the benefits of a new facility or element of infrastructure, thus affecting the comfort of life of local residents. In 2022, we held 24 dialogue sessions with local stakeholders, and conducted a number of information campaigns on the investments entrusted to us. As part of social activities, we have carried out m.in. the second edition of one of our flagship projects – “House from the Heart”. We have also invited our employees to join in helping Ukraine through a volunteering program.

In the Budimex Group, we are strongly attached to principles such as quality, honesty, timeliness and transparency. We strive to achieve the highest standards in all areas of our business activity. We act ethically. This also applies to compliance with the European Union’s requirements for sustainable business and minimum guarantees. In this report, we have disclosed the percentage of turnover, capital expenditures and operating expenditures of the Budimex Group related to the EU taxonomy. We also indicated the activities undertaken by the company in the field of procedures and policies to ensure compliance with human rights in our organization and to prevent corruption, unfair competition and other types of abuse. We successively train our team members in key compliance issues. In the Budimex Group, we are closely monitoring the European Commission’s directives, including the CSRD, and we are already implementing solutions that will allow us to comply with the reporting obligation under the new rules. As part of the current CSR Strategy for 2021-2023 and the ESG strategy being developed, we commit to expand the scope of the calculation of GHG emissions m.in. about the water footprint. The ESG strategy currently being prepared will cover the years 2023 – 2026.

We want to act in accordance with the applicable legislation, but above all in a responsible manner, with respect for our employees, partners, as well as beneficiaries of the investments carried out and their environment. People and the quality of life are the foundation on which we will build our potential in the coming years. It is with great pride that I present to you our non-financial report for 2022. Despite unfavourable circumstances and mounting challenges, thanks to the great commitment and experience of the people who make up the Budimex Group, we are going beyond the scheme of a traditional construction company towards a modern company that responds to people’s needs and improves their quality of life. We set ourselves new business goals, develop in a sustainable and innovative way, gradually building our commitment to the energy transition. I would like to thank all the employees of the Group for your invaluable contribution, daily work and everything we have managed to achieve together.

Yours sincerely,

President of the Management Board of Budimex SA Artur Popko