Budimex Group’s results after the first half of 2020

Publication of the Budimex Group’s financial data and plans for the coming quarters.

Market situation:
▪ Construction and assembly production increased in H1. 2020 by 5% to PLN 45.4 billion
▪ The coronavirus pandemic had an impact on the results of the Budimex Group in H1 2019. 2020, especially in the construction segment
▪ Despite the restrictions resulting from the state of epidemic, the Budimex Group maintained business continuity in all operating segments

Budimex Group results:
▪ Sales in the 1st half of the 2020 reached PLN 3.73 billion and was higher than in H1 2020. 2019, m.in. thanks to the consolidation of the results of the FBSerwis Group and higher sales in the construction segment
▪ The gross profit margin of the Budimex Group amounted to 4.1% compared to 3.3% in H1 2019. 2019
▪ Gross profit margin in the construction part in Q2 2020 was close to Q1. 2020. The restrictions related to the introduction of the state of epidemic did not significantly disrupt the Group’s operations in this area
▪ In the development segment, in the last two months, we have recorded a significant increase in the number of notarial agreements concluded, resulting from the schedules of implementation of individual residential investments, but also from the postponement of contracts planned for March and April. After a period of slowdown, demand is rebuilding and monthly pre-sale volumes are rising

Cash position of the Budimex Group:
▪ At the end of June, the Budimex Group’s net cash amounted to PLN 1,903 million
▪ In the first six months of the year, the net cash balance improved by PLN 548 million
▪ The cash position was supported primarily by efficient invoicing of current works and quick payment of receivables by investors

Results of the construction segment of the Budimex Group:
▪ Sales of the construction segment increased by 8%, reaching a dynamics slightly higher than the market
▪ The gross profit margin on the construction part amounted to 2.2% compared to 1.7% in H1 2017. 2019

▪ Since the beginning of the year, we have signed contracts worth PLN 3.8 billion, thanks to which the order book at the end of June increased to PLN 11.6 billion

▪ On 7 July, we signed a contract of key importance for the Budimex Group for the Reconstruction of the Warszawa Zachodnia station, worth PLN 1.8 billion. In addition, there are contracts worth over PLN 1.5 billion in the waiting room
▪ Currently, the implementation of construction contracts is proceeding without major disruptions and cooperation with contracting authorities is at a very good level

Results of the development segment of the Budimex Group:
▪ Budimex Nieruchomości’s customers in the 1st half of the In Q2 2020, they signed 622 notarial deeds, of which 618 agreements in Q2 2020. 2020
▪ The revenues of the real estate development segment amounted to PLN 275 million, and the gross profit reached PLN 61 million
▪ Pre-sale of apartments in the 1st half of the 2020 was 816 units. After a period of slowdown in March and April, we have been recording a gradual increase in interest in apartments for two months, which translates into an increase in pre-sales
▪ The current offer of Budimex Nieruchomości is almost 1,500 apartments in 5 locations

Results of the services segment of the Budimex Group:
▪ Sales of the services segment amounted to PLN 277 million (of which PLN 276 million relates to the FBSerwis Group, whose results have been consolidated using the full method since the second half of 2019)
▪ The segment’s gross profit amounted to PLN 31 million and profitability reached 11.3%

The coming quarters through the eyes of the Budimex Group…
▪ A stable level of the order book allows for fully effective use of resources. The signing of the contract for the Reconstruction of the Warszawa Zachodnia station and the projects in the waiting room will allow us to maintain an appropriate portfolio of orders in the engineering area for at least several months
▪ The challenge in the coming quarters will be to obtain contracts in the cubature part, where there is a visible reduction in new private investments and a partial suspension of planned public investments
▪ The threat related to the spread of the coronavirus was reflected in the change in the rules of work organisation in the Budimex Group companies by m.in. introducing the possibility of remote work, securing disinfectants for employees or reorganizing space to ensure working conditions in accordance with the recommendations of the Chief Sanitary Inspectorate
▪ We estimate that the impact of the coronavirus pandemic on the Budimex Group’s results in the first half of the year is approx. PLN 36 million and mainly concerns additional costs related to the extension of the implementation time of several projects and the costs of adapting the workspace and purchasing personal protective equipment
▪ We positively assess the quality of customer relations in the current reality. Cooperation with public contracting authorities, especially GDDKiA and PKP PLK, as well as the Ministry of Infrastructure, is very good and communication is fast and effective
▪ We have decided to review the strategic options of the development segment. We are considering several scenarios,
including attracting a significant investor, concluding a strategic alliance, introducing the company to the WSE. No
we exclude other options that may arise as a result of the review, including the disposal of assets
▪ We are taking aid measures for hospitals fighting COVID-19. The Budimex Group provides financial and material support to several hospitals in those parts of Poland where the scale of needs is the largest. The total support of the Budimex Group in the fight against COVID-19 has reached the level of approx. PLN 2.6 million
▪ The Budimex Group is consistently involved in long-term social programmes and, despite the demanding market environment, it meets deadlines and commitments, while taking care of the comfort of work and the development of its staff. Recently, we have received the prestigious Golden CSR Leaf of Polityka. At the same time, our efforts in the HR area resulted in taking 4th place in the Universum Most Attractive Employers Poland ranking (in the engineering category)