Budimex S A Shs

Good morning, I welcome you all very warmly. Thank you very much for coming here personally. I welcome you all present in the room. I also welcome you all present remotely and participating with us via Teams. We would like to present to you the results for the third quarter of 2022. Traditio stało się to, że mamy krótkie podsumowanie filmowe na temat tego, co się wydarzyło po tych trzech miesiącach i chcielibyśmy od tego rozpocząć. Zapraszam serdecznie na krótki film. so so so so so so so Oh, so so Thank you very much. We showed these three months in short. These were three months, it should be emphasized, of hard work, intensive work on our contracts. We gave away many key investments, both for us and for you, because we finished two key gas pipelines connecting Poland with Denmark and Slovakia, but we have also completed many large investments such as the Łagiewnica route. This was a contract implemented 4 years ago. At the moment, we are in the phase of giving one of the largest, I would say, key investments in the center of large urban corporations in Kraków. But it was also a year, three months, these last three months were also a period when we signed many interesting contracts. And such a key contract that we would like to boast about is the construction of the DCT embankment. It will be the largest container port on the Baltic Sea and which we plan to start at the end of November. So we will come to the results and then we will try to discuss these key things with you. There are my colleagues and co-workers with me. Marcin Węgłowski, a member of the Board of Directors of Financial Affairs. Artur Pielech, president of the FB Service Group. Jacek Lech, president of the Stal Kraków Company. Marcin, how can I ask you to discuss macroeconomic data?

We will start with the macroeconomic environment. A difficult topic, because it is uncertain, we do not quite know in which direction the world is heading. We will start with inflation, everyone is talking about it. The plan for this year is close to 14% and the year 2023 looks like this inflation will stay with us for longer. Percentage stops are growing 6.75%. We'll see what happens on Wednesday. Will Mr. President Glapiński change his mind, will he increase these stops further and how it will affect our economy, but it looks like that this PKB, however, in 2023 will give us 0.5. The worst thing is this uncertainty. This uncertainty, which is associated with administrative regulations, with the pressure on employees. Of course, the price of this is also from 4.9 to between 4.6 and 4.9, so it's really not quite known in which direction it will go. Some believe in 4.7 euros, some 5 and over 5, so it's really hard for the business environment. There are also even our estimates, which used to be three years ahead, that we closed only in 2023, because we don't really know how these next years could be. When it comes to the PMI indicator, it was a strong drop, which was noted from February 50 to 52, even at level 40. I will remind you that this period of the April 2020 pandemic was the lowest it was, it was so total that everything was standing, it was about 30. It fell to 40, among other things, it remains at this level. We will see how it will have an impact on our economy further. Growth in construction and assembly production. In total, the growth is not so bad, because from January to September it increased by 8.9%. In Kubotura construction, 20%. In specialist robots, 4.8%. In road engineering, 2.9%. But if we look at September itself, it's practically zero. So you can see that this construction and assembly production is going down and reached the level of only 0.3% in September. So you can expect that in the next few months this trend in construction, i.e. in the construction and assembly production, will continue, however, down. On the next slide, we have two indicators that are important for us. The first is, of course, the change in revenue. 14.5% of the average revenue in Poland, in this part of the revenue in production. it is lower than inflation. However, this level of 14.5 shows, however, that this inflationary pressure of salary growth will be very large, there will be a lot of savings, especially since there is an increase in employment by 2.7%, i.e. this slowdown that is being prepared for us. On the other hand, the drop in GDP does not cause a drop in employment at the moment, i.e. this pay pressure will affect further inflationary growth. And an additional slide below what you see is a drop in housing sales. 50% is a lot. This is of course mainly due to large interest rates, high uncertainty, but also high housing cost. This is also the first indicator that will affect construction, especially at the beginning of housing and cubature construction. This is where the problems of companies that specialize only in housing or cubature construction will begin. Situation in construction. We have two indicators. This is how the costs and availability of materials influence. on construction, as well as human resources and income growth. As we can see, there have been these large increases since the beginning of the year when it comes to the availability of building materials. it looks like the situation is stabilizing. There is a drop of 16.9 to 14.8. The costs remained at the same level of 70-odd percent. However, when it comes to the availability of employees and salaries, they remain at a similar level. I will only remind you that in construction, this pressure on salaries was much earlier, much earlier due to the fact that construction was developing very well in Poland. This pressure on salaries in the construction sector it was felt by us much, much, much, much earlier. Prices of selected raw materials. Here we show, as usual, concrete, steel, asphalt and oil products. It looks like we already have these large growths behind us. Of course, in what way the oil will be and the prices of oil will be based on the market, it will only be revealed, but it looks like today the energy resources, due to the fact that Autumn in Europe is relatively mild, which caused some stabilization of the prices of these energy resources. I am talking about gas here, probably also in Europe. When it comes to such building materials as steel or concrete, we achieved a certain peak here. It is especially visible on the steel that this level as it happens in the third quarter, quite a big drop, by the way, Mr. President Lech will talk about it, how the price of steel affects his business and there will be a more detailed analysis of individual elements of construction materials, steel materials. The March of Construction Films is quite an interesting slide, because it shows three types of films. The first are small companies, 10-55 employees, 50-250 employees, and those like ours, more than 250 employees. And you can see that the more the slowdown goes, which we see here, especially in the construction of small contracts, the profitability of small companies begins to decline. And we see here this decline between the first quarter of 2021 and the quarter of 2022, that there is a decline in profitability. Bigger companies, due to the fact that they have longer contracts, are still inert. And here, the bigger the company, the more difficult the construction market is, i.e. when these backlogs start to fall, these companies with a large backlog, such as Budimex, are able to improve their profitability and their inertia to survive through difficult times. And that's basically it when it comes to macroeconomic environment.

It is interesting to add that the level of the market for construction is then equalized, because this chart also shows the situation on the market very well. And when there is a lot of work on the market, the subcontractors impose their margins and this margin is over 12%, we can even see it in some years, and it was in 2021, in 2018. And then, when we were missing a year to work, of course, we went down with our margins. Now this margin is kind of in the middle of all segments, all these companies, so in small and large ones, we are at the same level, more or less, between 5% and 8%. But I think these 5% are real margins achieved by larger companies. What are the financial results of our company like? revenues this year over PLN 6.4 billion. It is a very good year when it comes to our production and sales in general. We estimate that it will be a historic year when it comes to sales. We will reach PLN 8 billion, or maybe we will even exceed it, which is very important, because it should be emphasized here that the year 2021 was a difficult year for us. It was the year when we sold the Budimex real estate company. We sold the company and we had a turnover of about 700 million. We filled our portfolio with other shares. Not only did we fill it, but we will even exceed the estimated income we had in previous years. We are growing smoothly all the time. When it comes to EBIT, the EBIT is comparable to the previous year, 21.6.5%. Everyone is probably wondering where it came from, because with this difficult situation related to COVID Later, with the outbreak of the war in Ukraine, we achieved the same level. It should be emphasized here that we have just finished and we were mainly based on contracts at the moment, which are implemented at the end of each of the contracts. These are contracts signed in 2020. And we also completed these key elements, key contracts, which I mentioned here at the end of our film, i.e. gas contracts. A very good level of net profit. 670 million, here it gives us a lot and improves a lot that we have a very good supply of cash, over 2.5 billion at the moment when it comes to cash, so the percentage has a significant impact on our net profit. If we look at revenues according to segments, as I said, in the construction part, after three quarters, there is a 13% increase. and here these problems related to the design phase have been resolved and here many contracts are currently in the phase of implementation. The weather conditions, which are a very important element for us in construction, also help us significantly, so we expect much greater sales at the end of the year than was even planned. As for the service segment, the level is more or less comparable to previous years. Artur Pielech will later tell the president of the FB Service about it. This is also a very good contract in the maintenance segment. We have obtained many contracts in the road segment and this will also improve our profitability later. As for EBIT, significant improvement compared to previous years in the construction segment. We have an improvement of 6 to 7%. What I said, these key strategic contracts were quite profitable contracts, i.e. gas contracts and those that required a lot of effort and contribution, I would say, and equipment potential. We finished and improved the results there. These are also contracts, and it should also be emphasized that I think that with our scales were well carried out, because we had shopping departments, we thought a little strategically, we had most of the materials on the construction sites, it allowed us to make sure that somewhere these disrupted supply chains would avoid it or somehow mitigate it, so it allowed us to maintain this production and also maintain its profitability. In the service segment, the margin is more or less on the same level as in previous years. When it comes to the level of cash, 2.2 billion, it should be emphasized that we paid 600 million in dividends in June this year. As I said earlier, at the end of the year, we expect significant improvements when it comes to cash, we should reach 3 billion zlotys. This will help us very much in this situation that we see on the market. Of course, we want to continue to invest in these funds. We want to invest in diversification of our portfolio, not based only on the construction part. We have a strategy plan for the FB Service company. Here, President Pielech will also say something about this company. We would like to increase the value of this and sales in this segment, but also increase the value of our company through waste collection and become a little independent of this situation that we see on the market. For 13 years, we have been steadily paying dividends. We also gave you information that in the company's strategy we predicted that if nothing unusual happens on the market, 100% of the dividend will be paid. For these 13 years, we have paid more than PLN 4 billion in dividends. When it comes to the order portfolio, which is a very important element in our activity, over 12.5 billion is very well diversified. Actually, there is no segment in which we would not exist when it comes to Poland. Here is an interesting element that we shared it for you to illustrate it more is that you see, we actually left the apartment building. And our actions, I think you can see that the actions that were taken were taken reasonably and strategically, we were right. Since 2019, we have received 700 million z przerobu na mieszkaniówce. At the moment, this housing estate in our portfolio is only 200 million zloty, so almost nothing. So even this situation related to housing and this decline in housing sales does not affect our activity at all. which is very important. We have switched to military contracts, we have also switched to other hydrotechnical segments, which, in our opinion, have a lot of chances of development when it comes to the geopolitical position of Poland. And 12.5 billion is a stable portfolio that gives us such peace and the fact that we do not have to compete at the fairs. This is a portfolio that will fill us with work for the next two years. When it comes to contracts signed after three quarters, it is 4.6 billion. And here we cannot forget that at the beginning of the year we made a decision after the outbreak of the war in Ukraine that we would not sign contracts worth 3 billion zlotys. For us it was a very painful decision, because 3 billion is a very large range of our jobs, because every year the value of signed contracts is about 7 billion, so we can realize that 3 billion is actually half of our backlog for a given year. I think it was a very good decision that we did not sign these 3 billion, because after counting, every time we count again, if the choice of our offer lasts more than three months, we sit down every time and count again what is happening on the market and whether this offer is current. In our opinion, it was a very good decision. Despite the lack of these 3.5 billion, we signed 4.6 billion and we still have 3 billion in the so-called waiting room. Here we mean the contracts where we took the first place, but at the moment they are still verified, analyzed by the orderers. This is also a way of verifying WZP. To sum up, because this is the end of the year, to sum up this year, if we had signed everything, we would have had a historical contract, we would have reached 10 billion. But with great effort, we will still have more than 7.5 billion, which I consider to be a huge success for the entire Budimex team. Also, what is important, going back to this slide, you can also notice that the housing estate in our portfolio and actually in our offer is a very small range, and we have moved a lot to other industries. Let's move on to the FB Service. Artur.

Thank you, Artur. Good morning to you. The results of the FB Service in three quarters. As you can see, we are actually slightly above last year. However, when it comes to EBITDA and EBITDA, there is a slight decline. In a moment I will tell you what it mainly results in. I think it will be easier for me to tell you about it here on this slide. As you know, our most profitable business is the waste management business, which has not developed as well as in previous years. or even a decline. However, the road business, which President Popek has already mentioned, is developing brilliantly. A huge increase, I think it will be an increase of about 50% year-on-year. It is, of course, a little less profitable, hence, on the one hand, the increase in the participation of this less profitable business in the overall company's results and a drop in profitability, and on the other hand, in this waste business, we had a fall in prices this year, which is the result of a contract that took place at the end of last year. In FMs, i.e. maintenance of technical buildings, We are at the level of three quarters last year, but I think that the fourth quarter will also be better than last year. I will refer to what the President said about roads. In fact, this year we have a historic contract of new road contracts. So far, we have signed contracts with the General Directorate for about PLN 300 million. And this year we will finish the portfolio of contracts in this area for about PLN 800 million, which would indicate, since these are 4-year contracts on average, so it's about PLN 200 million of income for the next 4 years and only with the general direction. Interestingly, there are contracts, I am convinced, very well contracted and well calculated. We have just contracted these contracts at a very uninteresting moment, because these were offers made at the beginning of this year, some of them right after the outbreak of the war in Ukraine. We calculate these contracts in a fairly constant way, without giving in to any emotional situation. And it turned out that we were able to win these contracts, sometimes literally about the so-called hair with competition. Why am I telling you about it? Well, because today we are making exactly the same offer at the end of the year. We are in the last places. which would mean that the competition, when the dust has fallen, will dramatically try to win these contracts for prices that are already, I think, much less attractive than the ones we were able to contract during this period of great uncertainty. I will also remind you that all these contracts are provided with a valuation clause, i.e. for these 4 years we can value them up to 10% of the value. And in the first months, the implementation of these new contracts, also in a new maintenance formula, i.e. not a ryczałt formula, but a measuring formula, i.e. the orderer orders us and pays for everything what he orders. They are really very promising. So I hope that, as the president said, that next year, just from this activity, we can also work out a very nice result. And I wanted to say one more thing, which is not in the background of problems related to the war in Ukraine, but also the embargo, for example, on trade with Belarus. One of the main materials used to maintain roads is road salt. This is the salt that every winter or winter season we just have to either preventively or even when there are rains, sprinkle on the roads. We use about 25,000 tons of this salt as a service company annually, only on our own contracts. The market, as you can see here, uses 1,300,000 tons of it. And the problem suddenly turned out to be that the Polish market, as we knew, is practically in the middle, even more than half, dependent on imports. And this is import from two eastern directions, from Ukraine and Belarus. This import simply died out overnight. We are just a company that supplies salt in late spring and early summer. Unlike our competitors, who rather buy it in the winter, so as not to freeze the cash for too long. We already knew in the spring that there would be a problem, so we quickly found alternative sources of this salt. We brought a lot more of this salt than we needed. We brought almost 52,000 of it, only a small part of these 52,000 tons that we brought was from outside Europe. will go to our warehouses. The rest of this salt, because we had our own warehouses from previous years, but on the other hand, we also had contracted salt from the local producer of salt mines in Kłodawa, so most of this salt will be sold or we have already sold. We can expect that we will get this salt by the end of this year and in the first quarter of the next year about 30 million such extra sales, because the current price on the market, you can see it on the upper left corner, has exploded from 230 zlotys today on the market at the CUL fairs. In my opinion, it is colloquially between 500 and 700 zlotys. Is this the business we will stay in? We'll see. At the moment, we are glad that we could take advantage of this opportunity and I think it will work.

But it also allows us to increase our competitiveness in these maintenance contracts. This is also important.

Exactly. I think that what the president said about our main business, I talked about it at the previous meeting in two quarters. and that we will actually invest a lot here and in the adoption of new companies in the field of waste management as well as in our own facilities. However, today I am not able to tell you any news on this topic, apart from the fact that things are happening, so I will not extend it to my colleague Jacek Lech.

Thank you very much. Good morning to you. Traditionally, a few words about the results of the steel bridge. Ladies and gentlemen, after three quarters, Mostostal Kraków recorded 362 million sales. This is 64% more than in the analogous period, i.e. after three quarters of 2001. This is a historic result and we look forward with optimism. As for the level of cash or NTP index, after the third quarter we recorded 69 million zlotys. very good indicator. As for the contract, 469 million, just like the historical sales, the historical number, which, consequently, allows us to have an even larger portfolio. At the moment, we have a portfolio of around 600 million zlotys and thanks to this, we are very calmly looking into the future and the next quarter. When it comes to the margin, as we have recently presented, the bridge remained very difficult for the first half of the year. This, of course, resulted from the increase in the price range from PLN 4 to PLN 12. We had to deal with it and unfortunately we had to buy at such prices. This, of course, had an impact on the results of the first quarter, but as we announced a quarter ago, the third quarter is much, much better. We also look with optimism at the end of the year. We plan to improve the EBIT margin in the fourth quarter. As President Węglowski said, a few words about steel, probably also traditionally. The third quarter brought stabilization on the steel market. In fact, it was possible to note falls depending on the species or type of steel from a few to several dozen percent. Nevertheless, I would like to emphasize that these lower prices are still between 20 and 100 percent more expensive than on the day of the outbreak of the war, i.e. from February this year. Unfortunately, we do not expect prices to drop. This, of course, is due to the high prices of energy and fuel, which will consequently translate into high prices in the coming quarters. And what is happening in the farm market, i.e. shutting down large ovens in order to reduce supply on the market, will also have an impact on to maintain high prices of steel in the next quarter. As for what happened in the last quarter, we consistently implement the strategy that we adopted in the company for the years 2022-2024. We are developing our factories. We want to increase both the size of production at our plants, but also, of course, the effectiveness so that we can produce cheaper and better. In the previous quarter, we installed, among other things, photovoltaic panels, such a start-up installation of 200 kilowatt-picks. This is the first stage. In the next year, we want to mount from 1.2 to 1.6 kilowatt-picks, which will consequently result in The balance that we achieve will be 50% of the energy that we use, we will produce from our own sources at the plants. Of course, we invest in various other things. We have bought a modern CNC line for the profile service, but we also invest in software programming at the factories. All this, consequently, will make our factories produce more and cheaper. I think that's all. Thank you.

We would like to talk a little about market prospects, as we see it from our side. So, speaking of the two main applicants, the General Directorate and PKP PLK. The General Directorate is going with its plan, a stable plan, and here the openness of the General Directorate can be observed every month. The strategy it has set up and the plan is maintained year after year. The General Plan is a stable order level of about PLN 10 billion. Everything depends, of course, on how we will compare the offer with the competition. We see that the 22nd year, three quarters later, is PLN 9.3 billion. But as I said, it is a stable orderer, largely independent of EU funds, so we do not see any threat here. What is important and worth emphasizing is that in the case of maintenance contracts, as President Bielech said, you can see that our competition is very aggressive, there are a lot of new companies and players on the Polish market. These are mainly Turkish companies, but there are also companies from the Chinese market, so we see somewhere that this level of risk that is included in the offers is quite dangerous and in the next two years we expect a really difficult situation when it comes to public orders in the general segment and PKP. When it comes to PKP, After the first three quarters, we have made very large contracts worth over PLN 11 billion. However, we cannot forget that these contracts are currently, apart from the fact that they have been announced and it is known who is in the first places, they are not signed. And here, after talks with both the Ministry and the management of PKP PLK, there is clear information that without EU funds, these contracts will not be able to be signed. PLK did not wait, did not waste time, announced these procedures. It should also be emphasized that these procedures in PLK are two-stage. Companies are first obliged to submit an offer, then there is an auction. These auctions are quite difficult and difficult for us. It comes down to the fact that the level of aggression in our competition is also very high. And so the price pressure is very significant. And here, as we know, at the fairs, later during this auction, we compete with Chinese companies. We have a big problem, because Chinese companies look at our company and know that we are the leader. And so they say OK, if Budimex is able to do it for the X amount, we are able to do it for the X amount minus one progress. And so it very much limits our ability to make offers. And this is how we treat and explain to the orderer that this is, in our opinion, a very irrational approach, because we spend money, we prepare these offers rationally, we prepare to evaluate these offers, to prepare all this, and in the end we fight with a company that actually has no potential on the Polish market and does not even have this offer exactly calculated, but it is based on what we make and how we count it, which is very sad, because putting together such offers and this year it was large contracts of over PLN 3 billion, where we started twice and we lost to a Chinese company, the level of preparation of such an offer is the government of the size, the cost that we pay is the government of the size of PLN 2-3 million, so a significant part of the funds is allocated to prepare for this offer. We are waiting for EU funds and I think this will be a key element. We are also encouraging our client to find the same as in the general direction, the possibility of co-financing this from budget funds. Refinancing at least until the time of the lack of EU funds. And what is worth emphasizing is that as soon as these EU funds come in, and I believe that they will come in, because in general we do not even take into account that there will be no such funds, we have to expect that these funds will come into the Polish market in 2024. And here, on our part, as a Budimex company, we feel quite safe because our portfolio, which is over PLN 12 billion, allows us to calmly, without any price fight, without pressure of this price, to survive these two years and, as these funds appeared on the Polish market in 2024, to normally make an offer. So, of course, we are verifying it on a regular basis, but I think it will be two quite difficult years. When it comes to foreign markets, here we are mainly looking at the Czech and Slovak markets, but we also do not hide, of course, that we have entered the German market. We have more than 1,000 employees in the German market. We are currently implementing three contracts there. These three contracts are worth about PLN 150 million, but these contracts in the German market are characterized by the fact that these are contracts with small values. Due to the fact that it is a mature market, we do not offer large, complicated contracts there. We want to start with small ones to learn at the beginning on these small contracts and also learn regulations on this German market. We are very focused on the Czech and Slovak market. You can see that we have made an offer of over PLN 5 billion. On the Slovak market, we can boast that we have been selected for the largest contract. This is the D1-D7 node. Obwodnica Bratysławy, Autostrada, the largest contract in Slovakia. On the Czech market, we have the cheapest offer on one of the railway contracts worth about PLN 60 million. The orderer is currently asking us questions, we'll see what happens, will he finally choose us to sign this contract or not. What is important is that we have established companies after a year, we have teams, we have dedicated people to prepare these offers. And putting it all together, it is no longer the case that we take the final place somewhere there, but we usually place ourselves in the top three, which is very important. So we have already recognized this price. We have found cooperators and companies with whom we cooperate on these markets. They trusted us, they want and see the future with us, so it gives us such a stable portfolio to implement, because of course we want to base on our equipment on these markets, but we also want to have local companies that will support us so that we do not make mistakes somewhere. When it comes to EU funds, we are based on three main pillars, of course, on the KPO, we are based on the Phoenix program and on CEF funds, i.e. funds that apply to all EU countries where these contracts are rated and this mainly applies to PKP PLK at the moment. We are participating in two such contracts during the pre-trade process, where PKP PLK received a guarantee from these funds that these funds will hit the Polish market. And the key segment for us when it comes to financing is, of course, the Phoenix program. Here, when it comes to the railway part, this is exactly the perspective of the Union 21-27. This is the same amount as in 2014-20, 4.8 billion euros. If we look at the road infrastructure, it is significantly less. and 9.2 billion euro, but here it should be combined with the funds from CEF, so when we combine these two funds, I think that the most important thing is that these funds flow into the Polish market as soon as possible, because then the possibility of a greater number of proceedings at our clients will open up. What we are paying attention to and what we want to focus on in the next two years, when there is no market progress in PKP and to complete our portfolio, of course, we focus on the hydrotechnical market. Here, many investments are in the private sector. What I said at the beginning, we have obtained a DCT contract worth almost a billion zlotys. This is a very important contract for us, the largest container port on the Baltic Sea. And it is important for two reasons. The first is that, of course, in terms of value, it is very significant in our portfolio. The second gives us such a perspective for the future, because references are also very important, so that we can make offers with these references, both on the Polish market and on the domestic market. The second segment is the military segment. Today we are also signing a hospital for the army worth over PLN 200 million. Exactly at the moment. However, this is a very important segment when it comes to our backlog. At the moment, seeing what is happening on the market and in general, the entire geopolitical situation, we have focused very much on this segment. In our portfolio at the moment it is over 1.5 billion orders in this military segment. We do not think that this is such a promising moment to diversify our activities. The energy market. We informed you at previous meetings that we entered this energy market. We want to be not only a performer, but also an investor. Our plan is, our plan assumes that by 2026 we will be the owner a farm with a value of over 500 megawatts and we have such an assumption at the moment. At the moment, we are finishing one wind farm with a power of 7 megawatts, Magnolia. However, in the phase at the moment of various stages, we have signed a contract for mainly photovoltaic farms with a power of almost 150 megawatts. And so they are currently in the Greenfield phase. They are in different stages of the stage, because these are three contracts. where we develop them, but they have the opportunity to enter the phase of implementation in the next year, i.e. in 2023, at least part of these farms. And of course, we do not give up when it comes to CPK. We also proposed to the CPK Board that we would like to be a co-financing company together with our main shareholder, the Ferowial company. but also, of course, we are after the pre-qualifications for preparatory work for CPK. As for the rest of the activities, let's summarize before we move on to the CSR, as far as we can see, the whole market. Of course, we are seeing risks and we are seeing these risks and we are trying to mitigate them. The main risk is, of course, the availability of EU funds and the deadline when they will enter the Polish market. As I said, our way to do this is, of course, to go outside Poland, but also to enter segments where we have not yet been. So here, mainly focusing on the military segment, but also entry into contracts where we will be co-financing in logistics centers and everywhere where we can exist and finance our own investments. Inflation and the next risk is of course inflation and the price of materials. And here I think that what we have been doing so far, so hedging these materials and collecting these materials on construction sites, such a strategy and the consequences in this action have helped us a lot and we would like to continue. We focus on the valuation of contracts where we have not yet valued them. It should be emphasized that the contracts of the General Directorate have all been valued. At the moment, talks are being held with PKP PLK. As soon as the EU funds appear, we are sure that these contracts will also be valued. But we also have conversations with private investors. Many of them, many of these contracts have been valued. Some are still in talks and negotiations with those who order. It should be emphasized that we have 190 valid contracts, so there is something to do. As for the next risk, it is of course the aggressive price pressure of our competition. And here we do not want to put pressure on each other. I think that the fact that we did not sign these contracts, as I said earlier, was a very good decision. We will go at our own pace, we will not make offers aggressively and we would like to move forward safely all the time. And the cyclicality of the construction market in Poland. And here, coming out of this cyclicality a bit, I said that we don't want Budimex to be seen only as a construction company. We want Budimex to be seen as a service company, so we want to invest very strongly in the next years in FB Service, in the processing of waste. And here we are doing a lot in this segment. We want to invest about a billion zloty in the waste segment, which will allow us to be a little independent of what is happening in the construction industry, but also, of course, entry into the truck and entry into the car loading points. And of course, looking at the whole quarter, I summed up this quarter, we put a lot of work into it to achieve these results, but we believe that it was a really good quarter for our company. and also the quarter in which we entered significant contracts, when it comes to future contracts, i.e. the construction of an atomic power plant, because we signed, as you saw, such cooperation agreements with Westinghouse, i.e. with a company that will be selected for the construction of an atomic power plant. When it comes to our non-constructional activity, our applicants appreciated our contracts. Seven of our contracts received awards as building of the year. which is also very important for us. Seven key buildings, including the building for the Orlen company, the building of the Centrum Laboratorium, the key laboratory for Orlen. A very important investment that we want to boast about. We also received two awards when it comes to the modernization of the year. We received the award of the Leader of Equal Development in Poland, which is also very important for our company, for which we thank you very much. judges who appreciated our work. And of course, we faced many other challenges when it comes to all activities outside of construction. So here we have completed the construction of the Heart House. This is the second house built for a multi-parent family, so we would like to continue it and in the coming years it will continue to cooperate. This is the second house built for a multi-parent family, an eight-person family with two very sick children. but also the next parent zones are the 41st, 42nd parent zone, where a couple of these zones will be in hospitals year by year. This year, one of the zones will be non-typical, it will be built for children outside the hospital. Outside the hospital, there will be a center where these children will be able to go outside the hospital and, in good weather, of course, also have a nice time with their parents. Ladies and gentlemen, we have talked about these results, we are at your disposal when it comes to questions. We will try to answer all these questions, so maybe we will start with you here in the room. We are available if you have questions in the room, if not, we will come later, I understand, to these questions from our partners remotely.

Hello, I will have the pleasure of moderating questions asked remotely. Of course, we also invite you to ask questions in the room. We will do it one by one, so we will have such an interactive form here. As for the questions from the analysts who were sent to us earlier, The question is about the update of the market situation in PKP PLK and the General Directorate of National Trusts and motorways, including our comment on funding, funding sources from the European Union. How do we look at it? How do we see it in the future? The question was from PKP PLK. Mr. Piotr Zybała.

I think I have already answered a lot of questions in this part describing the situation in PKP. The situation is difficult. PKP is prepared to announce the fairs, which showed and proved, so it is ready and has a lot of projects prepared. The problem, of course, is financing. And this KPO, this part for infrastructure in the road segment, it was PLN 3 billion. When we look at the entire road segment in general, it was a small part. but very large funds. However, in turn, it was over 12.5 billion zloty. And without these funds, we have the information that the PKP officially gives us. Without these funds, the PKP is not able to finalize and sign these agreements. So at the moment, out of the dozen contracts that have been announced, we took first place in one procedure. And if these funds are found, will there be refinancing of budget funds, then this contract will be included. If not, then probably these proceedings will be announced similarly. I think it's a matter of time and I believe that these funds, when it comes to EU funds, will probably appear in 2024 or in the end of 2023 in Poland, so it will block the possibility of signing and including these contracts. What we are dealing with and of course what we encourage the Ministry and the PKP to do is to refinance it, just as it takes place in the General Directorate. However, when it comes to price pressure, it should be emphasized that it is really significant. We have never seen such a situation with railway contracts that so many companies appear. The latest market progress is over 16 companies, of which 4, if I'm not mistaken, were from the Chinese market, which I think is really, for us, it's a very big competition, but it's not even about competition. Competition, as I mentioned earlier, these companies, in our opinion, have a big problem with preparing a reliable offer and later it may end up being a problem for the customer, but we also follow what is happening in the wholesale markets and I will tell you that We have been qualified to carry out proceedings on the Łódź market. This is a REI Baltica contract, a contract worth PLN 8 billion, so very significant for our company. It is also two-stage. We have passed the pre-qualifications in this contract procedure. And it's interesting because, of course, we are gathering experience from these foreign markets. In the Chinese market, no company outside of the countries that are in NATO has the right to make an offer, because these companies then have access to strategic information, so Chinese companies are not allowed to proceed with trade. on the Polish market, we are a very open market when it comes to the possibility of making offers. And the level of prices made is, in our opinion, really very low, and many times we see that the level of offers made does not cover the direct cost of these offers. So it's not a good thing when it comes to the future.

Thank you very much. We see that there is a question here.

Good morning, Michał Majerski, PT Alliance. I have a follow-up to this question, because you say that by the end of 2003-2024 you are safe, because there is a backlog. However, when you listen to representatives of the ruling party, that not only KPO may not be, but also, I don't know, cohesion funds, CEF, we had, for example, KK from Hungary, where the EU funds have probably already been held. I would like to ask in such a black scenario, how much of your backlog of 12.5 billion can be endangered if there is any suspension of all EU funds for Poland, for example?

No, from our contracts, I am more than 100% sure that none is endangered, because the orderer, signing an agreement with us, is obliged to have these funds. Only these contracts for the future could be endangered here. Really, looking from my perspective and how we analyze it, these funds will go to Poland. I do not assume this and we do not assume it together as a company that these funds may not hit the Polish market. They will certainly come with some delay, because we will finally meet the milestone that we have and somewhere it will reach an agreement with the Union and I believe that these funds will be on the Polish market. So these funds, these contracts that we have today are not at all threatened when it comes to financing these funds. But of course, we are looking at it in the future and looking at this turning point, we are looking and acting consistently in these directions. And we also did it with Budimex real estate. We saw what was happening with the housing segment, but we also went outside the Polish market. I believe that a significant part of our portfolio over the next few years will also be contracts outside of Poland.

Thank you very much.

And since I don't see any questions from the room now, here's another question asked earlier by analysts. This is a question from the from the Beskidsky Maklerski Office. A question about the prospect of a margin in subsequent periods. For Wodimex.

I mean, we have a very healthy portfolio and as I said, we don't want to compete and we will never compete on the basis that we will get contracts just to have them in the portfolio and then implement them with a minimum margin. And so we have been working for many, many years in the same way. We set the same margin level and the contracts that we currently have in our portfolio are exactly on the same margin level. Of course, a big threat for us is what is happening when it comes to material prices. But what is worth emphasizing, what we also presented at the beginning, is that material prices have stabilized in the Polish market and we can even see a drop in these prices, which is a very important element for us. And so the price of materials is starting to drop, because of course companies see that there are fewer and fewer orders. And so we also see a drop in prices and a drop in prices among producers, which may only positively affect our prices. What is of course a threat is inflation, but in our case it is also not a threat, so it is actually a chance that we see. Because having such a level of cash, we don't have a problem here that we have to finance some contracts from borrowed funds. So here I also don't see such a threat when it comes to our risk. So I see more opportunities for our company than threats when it comes to it. So we want to borrow this cash well and do it skillfully to increase, actually enter such a segment where we can finance it, get more contracts at a higher margin. because today we will be, I think, such a beneficiary of financing, because there are many orderers who are looking for companies with cash. And I think that today we can and we will want to, I don't even think about it, but we will want to take advantage of this moment and get a contract with a higher margin.

Thank you very much. We invite you to ask questions in the room, traditionally. If not now, the next question. which was previously announced by the Beskid Mining Office. How does Pudimex predict its development in the renewable energy resources segment?

Please, don't say it yourself, Marcin, I can ask you.

We have already answered the presentation. Our goal is to have more than 500 megawatts. We do it in different ways, we try to look for such projects that are practically ready to be built. Although they are not cheap, we compete a lot with funds here, but we also try to develop projects ourselves. For now, most of the photovoltaic list, because we are waiting for the change in the so-called wind law. We are in the process of building our first wind power plants, Magnolia. We are negotiating the next ones. So I think that in a few years, this level of over 500 megawatts is real to achieve.

But here it is worth emphasizing one more important thing, because we signed an agreement with the EDF company, a French company for the construction of wind farms. We have submitted our offer to the concession for wind farms on the sea. And of course, I think this is the largest energy company in France, which has a lot of experience in wind farms. We hope that one of these contracts and concessions will be acquired by EDF. If this happens, of course, we will also be a co-financer and the executor of this wind farm. But here, of course, looking at what is happening and the announcement of our government with this financing, then we believe that maybe not only if we do not get this concession from the EDF company, then maybe in the future we will support some other investor financially, or they would like to function somewhere, because we would like to participate in farms at sea. And here we also see a lot of opportunities when it comes to this segment. As for energy. Thank you very much. Michał, wait, we have a gentleman here.

Good morning, Adrian Zwolak, Hayton Bank. In reference to what the President said about partnership talks with a potential manufacturer of an atomic power plant, I would like to ask what order of contracts and what kind of labor range did you offer in such a project of the past construction of the power plant?

I mean, we haven't talked to Westinghouse about the exact range, because today it is simply impossible. These are such gigantic funds for the nuclear power plant, it is a government of 180 billion, that it is difficult to talk about specifics. However, we will certainly not be able to offer something in technology, because we do not have this technology. However, we will certainly want to be a significant performer when it comes to construction work. And here, I don't know if we were the first company, but we had a contract signed with Westinghouse even a few years ago, earlier, on the topic of such broad cooperation and, of course, the pace and expectations of our government regarding the pace of the construction of this power plant. certainly imposes the fact that Westinghouse or the contractor in general will have to rely on reliable and large entities, because there won't be a moment of delay here. Hence, I think, also the desire to cooperate with Westinghouse, with our company, because I think we can provide and show it every day that we keep up with these deadlines. So I think it should be a significant element in our future activities. But it will happen in four years, to be clear. At the moment, we are preparing documentation, environmental decisions and in fact, in four years we will be able to enter the construction site.

The construction itself is one thing, but on the other hand, the entire infrastructure around it is being built. Roads, cubature buildings, backyards. So it will be a huge investment that will earn many companies.

I also wanted to ask, you mentioned investment, capital engagement in CPK. In what order can there be exposure to Budimex, Ferrovial and possibly what ARR do you expect from it?

I can't answer this question yet. These are so initial at the moment, we haven't even started these conversations, because This information that the CPK is looking for a co-financing investor, when it comes to financing, appeared recently, but this is too early to discuss at all. I mean, to give anything, when it comes to such details. Wow, that's a lot of money when it comes to the budget, because now the question is whether we are talking about the airport itself, whether we are talking about these famous spruces when it comes to How much is it? 30 billion zloty, right? So what CPK said last time, I'm looking for about 20-30% of the co-financing for this investment.

It can be added from where, as if funding Budimex, or as if part of our participant is in Ferrovia, but as if it is in this concession business airport, as if it has at the moment, as far as I remember, 25% of the Heathrow airport. This is the core business of our main participant. If there was a possibility and a desire of an investor to have some external financier, it would not only give money, but also help in the management of the airport.

Thank you very much. I do not see any questions from the room at the moment, so we will move on to the questions asked by the teams during the conference. A question from the Reuters media. What are the plans for possible acquisitions or issuance of shares? This is the first question, I will ask the second part in the next round.

I mean, when it comes to the emission of shares, we don't think about it yet. I mean, the level of cash that we have, which is approaching, I hope, by the end of the year, about PLN 3 billion, shows that we have to spend the money we have first, and then we have to think about how, if the investment really increases in value, we will then think about other sources of financing, maybe emissions in the future, we do not exclude this, but not today. However, the main impact I think will be investments in the field of Artur Pielecha, as Artur could say, because you have a vision of it, but here we are thinking about quite large investments on a fairly large scale, in order to build the value of this company. I don't want to say too much, but well above a billion in the value of the Evesalis company.

Yes, indeed, out of this billion, let's say today, we would like to spend about 30% on receptions, and probably most of it on our own greenfield investments, while we were already doing financial simulations. I don't think it's going to be that big, it's going to be distributed over the years, it's not going to be that big of a one-off need for funding, so that we don't have to talk about the issuance of shares. We finance it with our own funds and partially with debt, but I don't think we're considering the issue of the issuance of shares for investments in the need of service.

Thank you for the answer. And the second question is from Reuters. What are the plans regarding the amount of dividends for the year 2022 and the amount of dividends for this year?

We did not plan to pay dividends. I admit that this year 2021 was an exceptional year, because we sold a lot of real estate and we wanted to share this profit a little earlier. and the majority of shareholders suggested to us to partially share this profit. Therefore, this dividend payment was also made in 2021 in the fall. However, when it comes to dividend payments for 2022, as you know, we have announced our dividend policy, which says that as soon as it is possible, Budimex wants to share 100% of the profit worked out by Budimex S.A. through the mother company. And to this day, I don't see any restrictions that could cause us not to implement the dividend policy that we announced.

Thank you very much. Another question asked here by an anonymous user. However, the question is about Ukraine. Purely hypothetically, in the event of the end of the war in Ukraine in the near future. Would we treat it as a must to take part in the reconstruction of infrastructure in Ukraine, or would we rather approach it selectively?

The topic of Ukraine, of course, is being analyzed by our company all the time. Personally, I was in Kiev four weeks ago. and we conducted talks as the only construction company in Ukraine on the subject of cooperation. Today it is too early to discuss this topic. We have made a proposal to prepare at the moment, during the duration of these military projects, to be prepared for investment later. This is the proposal we received. Of course, funding for this type of activity must be found, but whether it will ever be mass, we are not able to say today. I think that today it is still too early to talk about such concrete cooperation and what can be done in Ukraine. We support them as a company, in fact, our employees and the whole country supports Ukraine. Of course, this pain and what is happening there, of course, we would like it to end as soon as possible, and only then will we cooperate and think about how to rebuild it. However, today we are certainly engaged in preparing ourselves for to these investments. What is also worth emphasizing, of course, we encourage and talk to the government to somehow do everything to make sure that these funds pass through Poland, so that we have some kind of control over it, because we realize that when these funds go through other countries, it will be rather difficult for us to cooperate there as Poles in Ukraine.

Thank you very much for the answer. Another question. asked online. Are there any Czech or Slovak companies on the Czech or Slovak market that offer in Poland?

This is a very interesting question. There are no Slovak companies outside the European Union on the Slovak market. At the moment, there is a procedure which in general will have only countries on its list and only countries from which these countries will be able to make offers under the notes. Countries that have this so-called agreement cooperation with the Slovak market, so when companies in Slovakia can make offers there, the same balance will be similar to those of other countries, so both Turkish and Chinese companies are not allowed to make offers on the Slovak market, which is very interesting. On the Czech market, I admit that for over a year when we were making offers, I did not see any Chinese and Turkish companies. So these markets are much more limited. The German market is very limited at all. It seems to be open, but it should be emphasized that we have never seen a Chinese or Turkish company market. So, I would say this is the freedom to make offers only when we look at these eastern markets. In fact, Poland is a very open country for such partners outside the European Union.

Thank you very much. A question about the Romanian market. from the Bezkiewski Makarski Bureau. How does the Board perceive the Romanian market? Does one of the competitors on the railway offer strongly on this market, or can Budimex also appear there in the future?

We analyzed the Romanian market. It looks, when it comes to the value of contracts, it looks quite promising. I cannot say anything in detail when it comes to what is happening exactly in Romania. However, in the near future, we do not plan to make offers in Romania due to the fact that we would spread across many countries, which would be a bit of a threat for us, because we prefer to focus on a few countries and be present there and really act on the basis of such responsibility, because we know that entering every market is a very difficult element. First of all, training staff and gaining staff there and gaining experience. These first years are usually the years where you have to invest and usually these contracts are not profitable. So we don't think about Romania in the coming years.

Thank you very much for the answer. A question from the Maklerski Trigon house. In the first and third quarter of 2022, the company has made a lot of reserves for losses in contracts. How will policy look like in this regard in the near future, or in the context of correction of censors and greater availability of subcontractors, it is possible to solve part of the reserves and raise the gross margin in this way?

Anyone who asked a question gave an answer right away, so thank you very much for that. Yes, exactly. We do not change our national policy, it is always very careful. We have to assume, however, despite the fact that there is already a stabilization on the censor market, but we must take into account the fact that there is still inflation. We will see how our subcontractors and their margins will be, whether they will fall, whether something will stabilize. So the market is very uncertain and we must be sure that these The margins on the contracts that we are planning are a reflection of the reality that we believe we will achieve. So these losses on the contracts that are on our balance sheet, they really are. However, as you asked the question and answered yourself, indeed, if the situation were to turn around a bit, that is, if the margins of our subcontractors fell and we went into a strong recession, and the price of materials will also drop, then these companies that have a large backlog, such as Budimex, will have a chance to improve their profitability. Part of this profitability, this improvement will of course probably be in some part related to these reserves, if it comes to such a situation.

Thank you very much. The next question is also from the Trigon homeowner. What can investment investments look like in Budimex itself, and what about FP Service in the next two years?

We have already talked about it, that is, somewhere there is such a long-term plan, when it comes to FB Service, it is up to a billion zlotys, but extended in such a period, you can even say a few good years, so it will not be some investments. that we would not be able to afford, when it comes to cash, which is the same in B-Service and in Budimex. In Budimex, we generally do not invest much in permanent funds. We are thinking about investing some machines in the German market. We are thinking about, to be honest, buying a few companies that are but I don't want to say anything about it today, but we are analyzing, which would supplement our portfolio, more to supplement the people of the machine park. We held on to acquisitions in the Czech and Slovak markets due to the war. In fact, we still held on, we wanted, we were actively looking for that companies on these markets, however, the war caused us to say that we will observe and see how it will turn out for us in terms of making offers. I don't know if I should say something more, Artur? No, this is actually the key point. Well, of course, OZE, yes, that is, OZE is what will be financed by our companies, depending on the size. I'm not talking about what is offshore here, about such an agreement in ZDF, just a lot of money and then we will be thinking about financing, if it comes to that, However, investments for these 500 megawatts in the perspective of two, three, four years, I think these are investments that will come from Budimex.

Thank you very much. The next question is from the Reuters media. Another question. What impact on the record sales was the level of inflation in the current year?

Actually small. Because the contracts that are signed are at a constant level. The only thing we have valued from the orderers is the 5% size of the government, so the inflation level had nothing to do with the sales level. This is actually the fact that some of the contracts and the implementation of these contracts accelerated from the planned plans, but we also got a larger number of contracts, and we accelerated some of the contracts due to the weather conditions.

Thank you very much. Another question here from the Maklerski Bureau. Will the Board consider, in the foreseeable future, the publication of FB Service on the value-added securities exchange or the sale of shares to an external investor? We don't plan that yet.

We focus on the development of FB Service. Today, we estimate that this company Maybe it's worth about 600 million zlotys. I'm exaggerating. Maybe, however, our goal would be to build. Maybe more. I'm always careful about it financially. However, the goal is to build the company's value, which would have 2 billion values. No, I was talking about three.

We can scale up and then, if we can really invest, we will be able to pick up the trigger and move to between 2 and 3 billion values in a few years. And that's our goal. As the president says, one and the other is a great potential for the company's value growth and it's probably not a good time for sales today, if of course we will be able to use this money.

Thank you very much. Now a question from an anonymous user and here is the topic of the company's presence outside the European Union. As you can see, this topic is popular. Do European law and EU regulations limit In what way is it possible to expand Budimex on the markets of Western European countries? Do we see such barriers or not?

The EU law, of course, does not make it difficult for us. However, there are other regulations in particular countries that make it very difficult for us to make these offers. It is done in a rather intelligent way by various customers, because of course we start with various customers in these eastern countries. And so, for example, in the Czech market, these regulations that are introduced in the trade procedures, these references concerning both equipment and people, the potential that we have to show, cause that many companies do not have the opportunity to make this offer. So they are very much limited by various other registered documents in the pre-market documentation. And this makes it very difficult for companies to collect these offers, which is key. And they are on the Czech market, for example, when it comes to SRK, even this chain managed, when it comes to traction, of course, There is one company that actually decides on the Czech market and without this company it is very difficult to make an offer there, so there are different regulations. Each country has, it is completely related to other restrictions.

Thank you very much. We have the last question on the T-miss. Also a question from the Maklerski House, Trigon. How, in the context of the planned growth of power, in the OZE segment, i.e. these 500 megawatts in 2026. We are currently looking at unsuitable connection conditions. Can this affect the slowdown in this segment in any way?

It can certainly affect it, but we cannot forget that the Polish network must expand. has a planned investment of PLN 30 billion, which is a very important element. And here we also see our chance when it comes to cooperation with PSA. We already have cooperation with PSA and we are building for them. At the moment, we are in one of the progress of the Hermony Link fair. This is the energy connection between Poland and Lithuania. And here I believe that in the coming years, through the expansion of this network, there will be more opportunities to switch photovoltaics and also renewable energy sources to Polish networks. So in time, we will develop, but the network will also improve. because life will force us to do it and it will allow it, but at the moment it is actually a very big challenge, because it is probably not the case that financing is blocking us at the moment and we would not want to have 500 megawatts during the year, we would probably want to have a giga during the year, but we are just blocked by the possibility of switching and here it is, it blocks us actually in all of this, so without the possibility of switching to the network, we do not have the possibility to prepare such a project, so it is easy to get the ground, it is easy to buy this photovoltaic, or also try to find this place on the windmill. However, there is actually no switch, but I believe that as we improve the network, which I hope we will also participate in, we will also have greater opportunities for development of OZE.

Thank you for this answer. Well, we still have one more question, so nobody is the last one. It seems that the last one is not really the last one. A question for Mostostal Kraków. A question about what the level of investment is planned for next year and what is the market assessment and market forecast for Mostostal when it comes to next year.

Maybe from the market perspective. We assess the market very stable and well. Of course, the decline in the market related to General or Spelka may consequently have an impact on the bridge facilities that we are implementing, but in general we are very much rooted in the industry and this industry is developing quite well at the moment. As for investments, of course, we will invest in our machine park, i.e. in the one and the other wind farm that I mentioned. Last month we reached the first, what I also said, C&C line. We are planning another one next year. We are approaching, that is, according to our strategy, we are approaching a rapid growth in production size. If such a situation, such an opportunity will be on the market, we will certainly also take advantage of the possibilities of accepting such a company.

Thank you very much. We have exhausted all the answers and questions asked online, or any questions from the room are still appearing. This part we can consider as finished. If so, thank you very much.

We invite you to a little snack, to even smell the smells. At least I wanted to come here. So we invite you. And here in the corridors, of course, you can still ask questions and we will gladly answer them.

Thank you very much again for your participation. Thank you very much.