Budimex S A Shs

Good morning, we welcome you very warmly to the results conference of the Budimex Group. I welcome you, Martyna Wróbel, Director of the Communication Bureau. I will allow myself to start this meeting today and give the floor to the President for a moment. I just wanted to inform you that today, on this day, our meeting here in this room will take an hour and a half, during which the presidents will present the financial results of the Budimex Group. Then there will be 30 minutes for the part about questions and answers, also those that will be online, because we have more than 60 people with us online as well. And then we will invite you to the networking part and lunch at the bottom, on the ground floor. We invite you there for conversations and meetings. So, have a nice meeting. I pass the floor to the president of the Artur Popko Group.

Good morning to you. I cordially welcome you to our results conference of the Budimex Group. We summarize the financial results for 2022. As you may have noticed, we are today in a slightly stronger team, but it has its strong justification. The Budimex company is constantly developing and it has aroused the natural need to increase our team, the management of the company. about the best experts in their areas. And today's conference will be led by me, Mrs. Ania Karyś, a member of the board for two months, Director of Human Resources Management. Ania has been working with us for 20 years. Mr. Marcin Wygłowski, a member of the board of the Budimex company. Director of Finance Management, Financial and Economic Department in our company, but also a person fulfilling the duties of the president of the FB Service company. Cezary Łysenko, Director, Member of the Board, Director of Infrastructure Responsibility in the Budimex company. He has been working with us for 18 years. Czarek is responsible for infrastructure, but not only in Poland, but also for the Ościenne market, so Czech Republic, Slovakia and Germany. Maciek Kolek. Maciek Kolek is a member of the board, director responsible for railway infrastructure, but also for industrial infrastructure. Maciek has been working with us for 12 years. He is responsible mainly for the Polish market at the moment, but we are also trying to acquire markets in the host countries. Jacek Lech. Jacek Lech is the president of the board of the Mostostal Kraków company. He has also been working with us for 15 years in the company and is responsible for the company Mostostal Kraków. I invite you traditionally to watch the company and sum up the year 2022. We will illustrate what we have done and what our company has done in 2022. Hello. So. . . So. so so You know that despite this difficult year associated with the war in Ukraine and geopolitical and economic challenges, The Budileks Group did a very good job, both economically and financially, but we also kept our word and achieved all the goals set out at the beginning of 2022. I would like to present it to you in detail in the presentation. I will start with the key financial indicators, and then we will move on to the details. The year 2022 was an exceptional year for us when it comes to our results. We broke three records when it comes to our entire company and activity for a few decades. We recorded a record backlog of PLN 13.3 billion. This gives us confidence and stability for the next two years, but also huge solid foundations for the year 2025. And it allows us to make offers responsibly and not aggressively fight for the market. And it gives us great comfort. Another record is the level of cash in our company. 3.1 billion. We did not have such high cash. and we know what is happening on the market at the moment with the cost of money, with inflation and what opportunities it gives us. So it allows us to look at it with great optimism, but it also gives us a chance to develop green energy, which we want to invest in, we invest and we want to continue to invest, but it also gives us a chance to take on other companies and I believe that this will be a good time for some opportunities that, in our opinion, appear on the market. The next record is revenues at the level of PLN 8.6 billion. Despite the fact that we sold the company Budimex Nieruchomości developersko in 2021, our revenues exceeded PLN 8.5 billion. This is a record year. And we kept the EBITDA at the same level, i.e. at a close level of 6.5% by 2021. So, in spite of this difficult situation of rising prices, the chain of supply chain with inflation problems, EBIT is on a very close level to 2021. When it comes to contracts, we signed contracts worth PLN 7.9 billion. But what is very important is that we are currently waiting for the signing of contracts worth PLN 5 billion. We did not have such a year to have such comfort in February that we are waiting for the signing of contracts worth PLN 5 billion. These are contracts where we take the first position at the fairs and at the moment verification is underway, either by the Public Order Office or somewhere. At the moment, it is verified by a given client. What is worth mentioning is that it was a unique year for us, because, as you remember, at the first conference in 2022, we made the decision that we would not sign contracts worth almost PLN 3 billion due to the price increase and we did not sign these contracts consistently. So if we had signed these contracts, today our portfolio would be worth PLN 16 billion. We have made full efforts, we have entered a contract worth PLN 8 billion. This is when it comes to such key financial data, and when it comes to strategic development, a few key information. We are still developing the FB Service company. We have informed you that we want to develop this company, we do not change our opinion and position. We bought one of the companies that we informed you about, so we bought a waste processing company. At the moment, we recognize and continue to work on two more companies. We are also developing organically when it comes to this business and we are increasing our portfolio in the entire company. As for the development of the OZE segment. The year 2022 was the beginning of the development of Woz, but we can already boast of its first successes. We signed and took over two companies. One is a wind farm project with a capacity of 7 MW, the second is a purchase of a photovoltaic farm with a capacity of 14 MW. The wind farm is currently in completion. In the phase of implementation, we are starting to build a photovoltaic farm, but of course we are working on other topics and our goal There is a much wider range when it comes to both energy production and energy sales. But it was also a year associated with electromobility. And here we will present to you in a moment that we came out and started to diversify this segment. We invested in car chargers and we can already boast of success, but we will talk about it in a moment. hydrotechnics. Seeing what is happening on the market, and therefore problems with the housing segment, we put a very big emphasis on hydrotechnics and military trade fairs. Here we also achieved a very big success. In a moment it will be visible in our backlog and portfolio. We will show how it is diversified, but what we had in the housing segment we moved to the military segment. We believe that this is the right direction and allows us First of all, it acquires these contracts, but these contracts are also definitely at a different margin. Corporate successes and changes. As I said at the beginning, we expanded the board of directors. It was necessary to further develop the company. After all, our goal is primarily to develop the company and increase its value. It pushed us to, of course, expand the board, because this board was in a limited four-person unit. At the moment, we have a larger board of companies outside the Polish border. They require a lot of attention and hence our decision. But I would also like to mention that we have opened our branches on these eastern markets, we have completed this process, so in each of the countries, Germany, Slovakia, the Czech Republic, we have established separate companies that are responsible for implementing these tasks. This shows the situation, I would like you to know that we want Budimex not only to be perceived as a construction company, but also as a company entering other segments, other sectors, and from year to year we manage to expand it. Our portfolio is primarily healthy contracts and healthy contracts that allow us to diversify our activities very much. We will move on to the macroeconomic environment. I would like to ask you, Marcin, to discuss this segment, and then we will move on to the results of individual divisions.

Yes, the macroeconomic environment of 2022 was difficult. I would say one word. You know, the outbreak of the war, high inflation, increase in energy prices, raw materials. uncertain uncertain uncertain times. It looks like the situation is stabilizing. However, when it comes to inflation in 2022, the average year is 14.4 and by the end of December and the end of January, around 16-17 percent, it does not sound like optimism. However, there are optimists and pessimists. Optimists say that this inflation will at the end of the year, even up to 10% and below. These pessimists say that we are on a plateau, which is not visible at the end, that inflation will stay with us for longer. Inflation of this size, of course, is not good. In this situation, we, as a company, also have to deal with it. PKB 2022-2038, while what we expect in 2023, is the reduction of the GDP to 0.5%. Inflation, as I said, and these interest rates, if it turns out that inflation will decrease at the end of the year, it is possible that there will also be a 100% decrease, which may also change the investment possibilities, but also the situation of people and companies that have loans. As for the PMI indicator, on the next slide, as you can see, the situation is stabilizing a bit. The worst was July-August, it reached 49, now we have 45, so we still have a little bit to do, to these levels from before the war. However, it seems that this trend is already increasing. When it comes to construction and assembly production, As usual, as the GDP drops, so does the construction and assembly production. Year to year, however, there is an increase of 6.2%, respectively in buildings 11.7%, in specialized works 5.4%, in land engineering 2.8%. However, as we can see already in December, there is a drop of 0.8%. Two factors that are important for our environment in the construction industry, of course, are the salaries. Salaries increase by 10.3%. With inflation, as I said, 14.4% is below. However, in the future, I will show it in the next slides, this factor of human labor is very important for our industry. Its indicators are high. And what happened with inflation growth, 100% growth, there was a breakdown in the housing market, a 50% decline. This is a indicator that maybe does not directly concern us, because we do not build a lot of apartments and we sold Budimex real estate. Nevertheless, this is such an indicator, it shows whether it is going well in the construction industry or not, so we also show this indicator here, even though it does not directly concern Budimex itself. The situation in construction, when it comes to the availability of materials, the situation is stabilizing, the worst was in June. This is the indicator from 16 and 9, I am beginning to decrease from 12 and 2. Of course, to these levels 3 and 6, as if 3, 4 and 2, there is still a long way to go. On the right side we have the cost or prices of building materials and here, due to inflation, as a result of the slowdown and decrease in the prices of materials, directly visible, we see more that there is stabilization. When it comes to the lack of employees, it looks like it's getting better and better. This indicator 36 is on a pretty good level. And when it comes to costs, I've already said that on the one hand, it's about some unemployment in some distant future. However, we don't see it yet, so on the one hand, the wages of employees and expectations increase, and this affects our industry directly. The prices of building materials, as we can see here, main raw materials, concrete, asphalt, steel and diesel, there is either a slight decline or stabilization. However, taking into account the level of inflation, I would rather not expect any major declines here, I would rather see the stabilization of raw material prices on the market. It is only necessary to remember, of course, that what is uncertain is the price of electricity, the price of oil, and these indicators and prices of these raw materials are still very variable, which will directly affect how the prices of construction materials will look. When it comes to marginality in our sector, the year is only the first half of 2022, but as we can see, this level of general performance film like us, i.e. companies that employ more than 250 employees, is at 5%. and the margin of our so-called subcontractors, i.e. smaller companies, has stabilized to such a level that it should be, i.e. between 6% and 8%. So there is a slightly better margin, while the levels that were at 11% were something that was an effect of the lack of these subcontractors. Now the situation is stabilized in our assessment.

Moving on to the financial results of the Budimex Group, we will start with revenues and, of course, from continuous activity. I would like to explain a little bit in advance, because yesterday we submitted a report and financial results for the stock exchange. There was information that there was a 45% drop in profitability and I would like to clarify this information here a little bit. that the year 2021 was an exceptional year, such a special one for our company, due to the fact that the sale of our developer company Budimex Nieruchomości took place, which gave us a financial effect in the amount of PLN 526 million. And comparing the continued activity, we improved this profitability, so actually a little disproportionate is the comparison of pure profit and pure profitability from 2021 to 2022. So, when we compare EBIT with continuous activity, as you can see, we improve the result on EBIT by 7.6%, excluding the one-off effect of recognizing the margin from real estate contracts, and in net profit we improve this result by as much as 32%. So, we believe that this year is very good in terms of profit and worked out profitability. And here is a request to pay attention to the fact that this 21st year was an exceptional year due to the sale of Budimex for real estate. Income. Income at the level of 8.6 billion, an improvement of 9%, mainly from the construction part. Very good results from Mostostal Kraków. In general, we are increasing our portfolio due to the fact that we are going beyond the Polish border to increase diversification when it comes to our entire activity. This allows us to develop our company in the construction segment. Even comparing it to the moment when we were the owner of Budimex, these revenues have increased at the moment, so we have improved and we see the consequences that this decision was right. and did not make our results worse, but rather improved these results, because today, having such cash, we improve net profit. The net profit improvement here, 32%, results mainly from financial activity. This cash, which we currently have on the account, of course, interest rates significantly improve our results, which we can see here on these bars. Moving on, financial results according to segments. And here, as you can see, looking at 2022 versus 2021 in particular, it is PLN 7,282,000,000 in 2021. Income achieved by the end of 2022 is PLN 7,800,000,000. And here we entered the phase of such implementation, because many of the contracts that we currently have in our portfolio are in the phase of project and build. It was the year when most of the contracts were implemented. The weather conditions were also favorable, so it helped us a lot in revenues, but also a lot of diversification and the beginning of military contracts. EBIT at a very close level in the construction segment, which is a huge success, because as you can see, in 2021 it was 6.1%, and by the end of 2022 we reached 6%. And there is no way not to mention that, however, inflation and the increase in material prices also affected our activity. responsible contracting, a well-thought-out method of hedging materials and this method of operation has allowed our company to maintain this margin for several years, but also to enhance the contract, because I would also like to thank all the applicants from this place, because most of the contracts have been enhanced. Those contracts that did not have a valuation in most of them, we signed the annexation and they were added to the notes on the valuation, but also those that had a valuation in a limited way were increased. As for the service segment, also very good results. In 2021, we improved these sales results by 780 million. EBIT remained at a similar level in 2021, 10%, in 2022, significantly better, 11%. Looking at the contracts signed. Year 2022, 7.9 billion. In individual columns, you can see which divisions, which departments actually had the largest contracts. The road segment is definitely ahead, infrastructure 3.1 billion, the general construction segment 2.9 billion. However, we will come to the details in a moment, but a significant part of this segment consists of military contracts. The hydrotechnical segment is almost a billion zlotys. not a big contract in the railway segment, we know what is happening in the railway segment, I will ask my colleague Maciek here, Maciek will tell you exactly what it looks like in the railway segment and what is very important at the very top of this column, you see 200 million in the housing segment. As Marcin said a moment ago, we have actually left the housing segment, we are greatly limiting our exposure to the housing segment, According to us, it is currently a bit risky activity and you can see what is happening in the housing segment. There is a drastic decline in these investments, so our portfolio is completely independent of this segment. It is very safe and, as you can see, it is very diversified. On the right side we have a head chart. It is described here as 5.8 billion. These are contracts where our offers take first place and in which segment mainly the railway segment of 2.6 billion, so in a moment this pillar will completely change. We are waiting for the signing of contracts in the railway segment of PKP PLK worth 2.6 billion. The road segment is very important, 1.6 billion. The industrial segment is 1 billion zloty. We have actually finished here at the moment, it was the year where we finished these key contracts, the power plant in Turów, the power plant in Wilno. And we really wanted to expand this segment. We did it. We are in first place on a large industrial contract. Looking at the order portfolio, the historical value when it comes to order portfolios is 13.3 billion. As I mentioned before, it is very well diversified and what we do not repeat in this statement is very limited to the housing part. Exposure and when it comes to the level of cash, 3.1 billion, the historical result, this result is currently maintained. It allows us, our activity, it allows, I would say, our stable activity in many segments. As you know, many of the contracts are currently announced in the formula of the Polish Ład. These contracts in the Polish Union require financing of these investments. This definitely helps us in making these offers, because we have these funds, we have secured these funds, but it also helps us a lot in entering green energy. And here this year will be the moment, the beginning of this year will be the moment when we will set up a separate company that deals exclusively with investment in the OZE segment. Our goal for the coming year is to reach 500 MW in our portfolio, but also energy sales. We will also talk about this segment in a moment, but we are also encouraging the government and our strategy is such activity that we would like strongly invest as a private subject also in strategic segments for the country. And of course, we encourage everyone to take advantage of this opportunity. And we see a lot of chance here with such expensive funds to encourage private companies to invest. Moving on to the individual divisions and departments, Czarku, I pass the floor to the person who is responsible for road infrastructure in our structure. Could you tell us a few words about this?

Thank you very much. Good morning. Infrastructure is a strong pillar of Budimex activity on the construction market. and the year 2022 was a year full of challenges and my predecessors emphasized it. The pandemic ended, the war broke out, the beginning of the year was generally very difficult for construction companies, but Budimex was very well prepared for the implementation of work for the 2022 season. I emphasize that we also informed you a year ago that we have full warehouses and we are ready for challenges In the first quarter, as President Artur Popko said, we did not sign agreements that were difficult for us due to the increase in material costs and also market logistics, disturbed due to the war in Ukraine. But as you can see from the figures on the left, Production in infrastructure is a government of over PLN 3 billion. This is about 15% more than we originally planned for the year 2022. The weather has largely helped. The infrastructure is dependent on the weather. This is a very important organizational factor, and the weather in the very first quarter was so good that it allowed us to make nearly 150 million production more than we planned. Regarding the contract, the historical value of the contracts signed in the infrastructure is close to PLN 4.5 billion. We also informed you at the beginning of the year that we are in the final stage of negotiations to acquire the T3 terminal on the Baltic Sea, the container terminal, the largest terminal in the Baltic with the DCT company, currently Baltic Hub. This contract was signed in two stages in July and September. Now we are in the advanced phase of the implementation of this contract. This increased our portfolio by nearly PLN 820 million. We also signed the first contract, ladies and gentlemen, in Slovakia for over PLN 500 million. intersection of roads D1 and D4, highway intersection near Bratislava. This is the largest contract in Slovakia and implemented by Blimex. The acquisition and contractual year was quite difficult, among other things due to the fact that players appeared on the market. from the Turkish and Chinese market. In our opinion, the offers are not quite thought out. We only hope that the orderers will still verify such offers so intimately and scrupulously. We are also waiting for the introduction of certification of performance companies in the Polish market, which takes place in the wholesale markets. This makes it easier to analyze the condition and reliability of companies, and also speeds up the selection in public trade fairs. The portfolio in infrastructure, ladies and gentlemen, you can also see on the historical chart over PLN 7.3 billion and we are ready to implement it. very well prepared. Thank you.

Railway Division Maciek.

Good day to you once again. The railway division in recent years has become one of the pillars of the construction activity of the Budimex Group. It was the same in 2022. We kept the role of the leader of this market. contracts were implemented in a very difficult macroeconomic environment that Mr. President Węgłowski was talking about. However, as mentioned here, years of experience, purchasing strategy, know-how of project implementation allowed us to go through this year with the continuity of production and in such a way that we were able to carry out all the tasks that we had planned. Zakończyliśmy dwa zadania inwestycyjne, modernizację linii E59 oraz linii E30 na odcinku Trzebiniak-Krzeszowice, a także realizowaliśmy strategiczne projekty w naszym portfelu, czyli modernizację stacji Warszawa Zachodnia, modernizację dostępu do portów w Gdyni, modernizację stacji Czechowice-Dziedzice, a także stacji Ełk. Na pewno tutaj such a negative thread in this activity in the year 22 was that despite the declaration from the applicant, unfortunately, on railway contracts, it was not possible to sign agreements that were signed before the outbreak of the war in Ukraine and it was not possible to increase the valuation to 10%, which took place, for example, in the case of the General Directorate of National Routes and Autostrad. These contracts were also implemented under the pressure of increased costs. Moreover, we are satisfied that we managed to achieve the goals we set ourselves. As for the second such topic, as for the year 2022, it was a big challenge to maintain a stable order portfolio. We have made offers in fairs worth over PLN 16 billion, not only on the Polish market, but also on the Czech and Slovak markets. Unfortunately, due to financing problems, because rail investments are very closely related to EU funds, it did not translate into signed contracts. As President Popko mentioned, we have PLN 2.5 billion in projects where our offers take first place. And if these contracts were signed, then this order portfolio would look like it should. However, we hope that the last weeks that brought the signing of the PFR contract with the Ministry of Infrastructure, where there are declarations that from these funds there will be money for pre-financing railway investments until the EU funds are launched, will change this situation. And the next quarters of this year will bring new projects in our portfolio. As for the market, we will have more slides later, I will tell you a little more about abroad.

Thank you. The General Construction Division. Income from sales at the level of almost 2 billion, a very good year. Here you have to say that the division of general construction is characterized by a completely different dynamics than infrastructure and in general the way of implementation. These are medium, small and medium-sized contracts. In Kubatur, as we say, and in general construction, a contract worth 100 million is considered to be too large a contract and it is usually large contracts. As you have seen in the film presentation, we have more than 180 such contracts, so a really big achievement to carry out such contracts at the same time, and in fact there is no city in the country so that we do not carry out these contracts. These are also contracts, also contracts that are strongly conditioned by the change in prices and from subcontractors, so it was not an easy year for us. But look, we made income, we made sales at the level of almost PLN 2 billion. I think it was a huge success, it was a challenge for us. We signed a contract worth over PLN 2.3 billion and our portfolio is PLN 3 billion. A gigantic, when it comes to general construction, a gigantic portfolio. And at the bottom here we showed three key contracts. You saw that we left the apartment building and replaced this segment with a military one. The three largest contracts that were included in 2022 are the military segment. The first is the Military Clinic Hospital in Kraków. The second is the expansion of the Military Complex in Siedlec, there in general in the Siedlec area. We are implementing three large contracts for the same client, the construction of infrastructure to ensure the functioning of the armament, 220 million, so this geopolitical position of Poland in this aspect benefits us when it comes to the possibility of completing this portfolio in the field of general construction. Moving on to dividends, ladies and gentlemen, we are a company that, as you know, for 13 years has been regularly sharing profits with shareholders. In the previous year, in 2022, we announced our dividend policy, we declared that 100% of the dividend will be paid from our funds. We will not change this position, of course, if everything does not reach some critical situation, then of course our plan will be kept. When it comes to the payment, we have already achieved over PLN 4 billion in the paid dividend and it is worth boasting that it is PLN 160 per share at the turn of the last 13 years. Moving on to the subsidiaries for which we are responsible, the FD Service company. Marcin Wygłowski is currently the president of the board of the FD Service company. Marcin, if I may ask you, please tell us the results.

Yes, before I go on to discuss very good results without the Group Service in 2022, maybe before answering your questions, I would like to comment on the situation in which the company was found and the President and a member of the Board were detained. The detention took place at the beginning of February. The matter is explained by state control bodies. It should be noted that this applies only to private individuals. does not concern the proceedings against the FB Service company itself. As the President said, I am playing a double role today. In addition to me, who was delegated from the Board of Directors of the FB Service to fulfill the duties of the President, two more people were supported by the Board. The company works as it has been so far, i.e. there is no risk of danger. The operation continues, the operational activity is in progress, the contracts are being made, we are starting to sell. and above all, we maintain and continue our acquisitions, which we have already started in this situation in previous years. Generally, in our assessment, the good results that we are preparing for 2023, which I cannot say in detail, because we do not give a forecast, but these results, according to my assessment, are not endangered when it comes to the future of this company. And moving on to the results of 2022, the company is 10 years old. These are the best results it has had so far. This is PLN 800 million in revenue. As for EBIT, it is 11.4%, PLN 93 million. This is a level that, compared to the result generated by the entire Budimex Group, is very significant. which is very important for us when it comes to development. We want to be in service. I will also talk about our investment plans. It is also important to say that this company has a slightly different character than a construction company. However, it requires a bit of capital investment. The permanent funds are in the amount of PLN 53 million and here is an important indicator. In contrast to construction, there is EBITDA. This EBITDA is PLN 146 million, 17.9%, which is also record high, so it is a very good company with a very good result, with a good financial standing and above all with a good high cash flow of over PLN 140 million, which we want to allocate for investment. And what do we want to invest in? First of all, we want to invest in the assets that we already have today. We have five installations, we have two components. We want to increase their processing capabilities, so-called capacity, I call it, so that we can still increase the processing power of these installations. However, we want to focus on further investments. First of all, these are in such three areas, material recovery, mainly glass, plastic, paper, metals, wood. What cannot be recovered, this is the second element, we want to recover energy from it by producing fuel, RDF, which is used to burn, for example, in cement plants, but also in other places from which it is possible to use for the production of electricity or heat. Burning sewage waste, as well as it is also important that the production of energy based on the components that we have and the production of biomethane from the waste that is in our warehouses. And the third element that we think about very seriously is also focusing on the so-called neutralization of hazardous waste. But here we don't have any experience yet, but we also want to find it in this area through acquisitions and find ourselves in this segment. So that's it when it comes to service.

Mostostal Kraków, Jacek. Good morning. Ladies and gentlemen, a few words about Mostostal Kraków. For us it was a very difficult, but in the end a very good year. Difficult, because for the whole year we struggled with the dynamic increase in the price of steel and the disrupted, or even interrupted supply chain when it comes to raw materials. Good, because in the end we increased revenues compared to 2021, 51% and we noted income at the level of PLN 488 million. This is a historical value. Never in the history of the Stalkak Bridge has it achieved such a value. What is important, we also signed the historical size of the contracts, the number of contracts for a total value of PLN 535 million. It is also 30% more than in 2021. which, consequently, gave us a very large, because almost 600 million, order portfolio and in an optimistic way we are moving into the year 2023 due to the fact that we have a very safe and good portfolio. When it comes to cash, at the end of the year we had 66 million zlotys of cash, a very decent value of the accumulated funds. When it comes to what was the most difficult last year, i.e. the final result, we also ended the year with an income of 12 million gross margin. What was the most difficult, what I mentioned, is the dynamics of the growth of steel prices. The chart that you can see shows how the price of steel has changed over the year. To illustrate, I would like to add that we, as Mostostal, consume 30,000 tons of steel annually, and each increase in the price of steel directly affects our results. Today, I can say that the price of steel, or the trend, has stabilized. Of course, the price is 20-30% higher than before the outbreak of the war, however, we do not see any growth or decline, so the price is stabilized, which also optimistically allows us to look forward to the future and the results of the steel bridge.

Thank you. Coming to the market and the prospects that are ahead of us, I would like to start with the second-hand market. Czarek.

Ladies and gentlemen, here we have the analysis of the road market in 2022. It is worth noting that the amount of sales announced by the General Directorate in 2022 is at the level of PLN 10.3 billion. This figure will be a reference to the investment plans of the largest orderer in Poland in later years. Budimex, as part of these proposed procedures, has already signed the largest contracts in 2022, which I will name, these are S17, task 6, task 9, here on the chart shown by you as Tomasz Lubelski-Rebenne and Zamość East, Zamość South. S1, the cost of buildings, this procedure lasted quite a long time, with a large number of revocations, but finally Budimex also signed them. At the moment, also in the procedure before KIO, our offer has been evaluated at the highest on the Zabierzowa bypass. We are waiting for the order to sign this project. And going, ladies and gentlemen, smoothly to the investment plans. The General Directorate for the year 2023 intends to announce procedures for nearly 565 km of roads, where a year earlier the orders were 230 km. This shows how big the road market is ahead of us. Not only this year, but in a moment I will talk about the next years. Key investments that will be announced this year, 2023, are S7, S8, S11, S12, S16. Today we are in proceedings, ladies and gentlemen, on S16 and S74. What is important in 2022 is that the applicant, in the form of the General Directorate of Country and Autostrad, very rationally approached the coverage of costs resulting from inflation and material costs as a result of the war in Ukraine. We have changed 100% of the agreements with the General Directorate from a 5% limit to 10%. The other road contracts that we have included, also from other applicants, we are talking about regional, municipal, and self-governmental roads, we only have single cases where we were still in the negotiation and valuation phase. The other contracts have been valued, these costs have been partially covered, of course. Sorry, I went too fast. We are still participating in the Polish Council program. Here, President Artur Popko mentioned that these are difficult projects, because these projects require funding from the performer over a longer period of time, but there is also an advantage of these projects, because only companies that have the appropriate background and the appropriate base to implement such contracts start up to these contracts. This allows us to be more effective in offering. We have, as far as the road is concerned, three topics from the Polish Ład. This is Norwida Street in Ełk, Wojewódzka Road 152, Stargardt Świdwin for the amount of 72.7 million zlotys. And at the moment we are selected for the Berdychowska footbridge in Poznań. We are waiting for a call to sign the contract. The year 2022 was also a year of quite big challenges for us in the eastern markets. As you know, we have established our independent companies there. In the Czech Republic Budimex Construction Prague, in Slovakia Budimex Slovakia, and in the German market we operate through the company Budimex Bau. We also have registered and functioning Budimex departments in these markets. I have already told you that we have obtained the D1-D4 contract on the Slovak market. We have the first place at the Shala Obwodnica Fair. It is worth nearly EUR 73 million and our offer to Gapcikowo, i.e. to the Danube River, is in second place. However, with a very big difference to the offer from the first place, we are counting on the verification of the correctness of the offers and we are counting on this contract. Our offer is at the level of 107 million euros when it comes to Slovakia. On the German market, ladies and gentlemen, we are already in the implementation phase on three projects. Last year, we informed you about the first contract, i.e. the Vlipa bridge. This contract is already in a significant phase of implementation advancement. In addition, in 2022, we obtained the bridge to be rebuilt in the town of Odenberg and the Wittstock bridge. So at the moment, in Germany, we have three infrastructural contracts and one more, where we took the first place in the construction of the school in a state of emergency, but here we are waiting for the offer. Proszę Państwa, prognozy inwestycyjne w zakresie infrastruktury. Tutaj oprę się o podstawowe programy inwestycyjne rządowe, które już funkcjonują. A very good message for us was the increase in the value of the National Trust Building Program by the Ministry of Infrastructure to PLN 294 billion by the year 2033. And now on the chart that I am presenting to you, you can see the investment expenses that are planned within this program. Please note that I said that the trade fairs announced in 2022 by the General Directorate were 10 billion 300 million, and by 2023 there are 16 billion 400 million planned. It can be said that in the next two years the number of trade fairs in the General Directorate will double, only in the National Road Construction Program. In addition, development programs related to the functioning of national roads. And for us, as Bulimex, for the infrastructure, there is very good news, because it means that we will be able to use our competencies. Bulimex is ready to carry out more and more infrastructure and road projects. Our staff has gained a lot of experience in recent years and we feel in this category, i.e. road construction, very, very strong and contrary to investors' concerns, whether Polish construction or Polish construction companies are able to cope with this investment challenge, Budimex says yes. In addition, ladies and gentlemen, as you can see, there is a program for the construction of 100 bypasses. I would just like to inform you that Budimex is the manufacturer of the first bypass, which was given into use as part of this program last year. It is a bypass of the Smolajny village in the Warmińsko-Mazurskie Voivodeship. Today we are also participating in the proceedings for these fairs, with the accumulation being in the years 2026-2027. In addition, there are strengthening programs of the national road network. These are, ladies and gentlemen, the construction of the third lanes, the replacement of the surface. We will also participate in these fairs. Bulimex has a very large operational background, especially the bitumen one. And coming to the new topics, where we know that there are new environmental requirements, we are 100% prepared for recycling, i.e. use for production of bituminous materials from profit. 100% of Budimex factories are equipped with the appropriate facilities to meet these challenges.

Thank you very much. Moving smoothly to the railway market, Maciek.

Before I tell you a few words about the prospects for the coming years, I would like to summarize how this market looked in 2022. As you can see, PKP.pl announced a trade-off worth over PLN 14 billion. We made an offer in all the proceedings announced by PKP.pl last year. And in three of these proceedings, our offer is in first place. These are projects related to the modernization of lines 201 and 214 with the Tychy-Most Wisła section on line 65 and with line 104 on the section Hub Nowy Sącz. The year 22 brought a few positive changes in the trade process. The orderer changed the valuation limit for newly signed contracts to 10%, and also after a very long dialogue with the industry, he decided to withdraw from the auction mechanism. the obligatory auction mechanism in its proceedings. What we hope, in conjunction with the reliable budgets updated here by the orderer on a regular basis, will cause this mechanism to be permanently eliminated from these procedures, because as we have repeatedly emphasized on various occasions in conversations with both the orderer and the Ministry, We believe that the auction mechanism does not promote reliable, responsible performers calculating their offers, and gives space to acquire key strategic contracts for entities that do not have any potential. And here I would also like to refer to the fact that, unfortunately, companies that have been function on the Polish market, such as Budimex, which have the potential, which have invested a lot of money. We have invested in equipment and the potential for rail work of over PLN 200 million. Unfortunately, they must compete to obtain these orders with entities outside the European Union. Our observations, even from the local markets, show that it is possible, and in our opinion even necessary, to develop mechanisms which would protect, I would say, companies that are present on the Polish market, they have their potential here, so that these orders that will be made using either our public funds, state or EU funds, were made by companies from the European Union. It is possible, we have an example, for example, of the Rail Baltic trade, which I will tell you a little more about in a moment. where the orderer from the definition rejected, for example, companies with Chinese capital, assuming that the modernization of railway infrastructure as a critical and sensitive infrastructure from the point of view of at least the defense of the state cannot be implemented by these entities. So much about the positives when it comes to this year, but unfortunately, the financing of these investments remains a very big challenge. Unfortunately, unlike this roadblock, there has historically not been a mechanism developed to maintain the liquidity of financing these investments. Railway investments are largely dependent on EU funds, and despite the fact that the main applicant, PKP PLK, has prepared projects, because he initiated these market proceedings, he considered some of them, unfortunately, he cannot sign agreements due to lack of funding. The dialogue was held for a very long time. Here, the industry, industry organizations, in which we also actively participate, encouraged both the Ministry of Finance and the Ministry of Infrastructure to develop some mechanism enabling the pre-financing of these investments. until the time of explaining the matter with EU funds. And it can be said that the culmination of these almost annual discussions was an event two weeks ago, when the Minister of Infrastructure confirmed that the PFR signed an agreement with the Ministry of Infrastructure on the pre-financing of the fairs implemented in the KPO program for the amount of PLN 15 billion. We are currently waiting for details, what part of this amount will be allocated for rail investments, what part of this amount will be allocated for other investments, but I believe that this is a step in a very good direction and it is necessary in the perspective of the next years to consider how to change the way of financing investments carried out by PKP PLK so that such critical situations for the market do not take place. There is a situation where we have these bids and we have the possibility of implementing these projects, ensuring continuous growth for the market, which is very important for the market and which stabilizes it and causes us to avoid any drastic increases, falls in prices and various such, I would say, one-off events. How to develop this mechanism so that the next few years are a little more predictable, because what the rail market in Poland needs the most is stable financing and some stabilization. As for the future, we are based in Poland, on the Polish market, on two, in fact, on one, for now, orderer, in the future, maybe on two. PKP PLK has two flagship investment programs, the national railway program, Stara jego wersja jest już na ukończeniu, 90% ponad realizacji. Czekamy na zatwierdzenie nowego planu, który jest w fazie konsultacji. W tej chwili myślimy, że pierwszy kwartał max, drugi przyniesie jego akceptację. a list of bids and investments with a value of up to PLN 100 billion, which are to be implemented in the perspective of 2030. The second such program, important from the point of view of us as performers, is the Kolej Plus program. Last year, the government raised the value of this program to PLN 11 billion, so we also expect projects here in the coming months. As I said, considering the matter of pre-financing or launching EU funds, because without the launch of these funds, it will not be possible to complete the bidding procedures. The second promising bidder, which appears on the horizon, is the Central Communication Port. We already know that this year the first bidding for construction works will appear. We are a very active participant in all I would say processes that are carried out by the CPK company, both market consultations and we take part in discussions on technical standards. And we hope that the railway component of this project will be one of the foundations and pillars of railway investment in the coming years. It is 1,800 km of new greenfield lines. Skala inwestycji niespotykana w historii Polski i tutaj jako firma czekamy na te projekty, a zainwestowaliśmy, tak jak powiedziałem, przez ostatnie lata bardzo duże środki w to, żeby posiadać kompetencje i możliwości do realizacji tych projektów. Uważamy, że polski rynek kolejowy jest przygotowany do realizacji tych programów równolegle. Jest kilka, a nawet kilkanaście firm with sufficient potential so that we can implement them and so that these rail investments in the coming years can also be the foundation of further development. When it comes to abroad, railway construction is very demanding when it comes to starting its activities in the local markets. Maybe I will discuss individual countries. As for the Baltic countries, we take active part in the fairs related to the Rail Baltica project, which is such a European standard program. Yesterday we made an offer to carry out 250 km of high-speed lines in Latvia. We are there in the consortium, where we have 30% participation. This is a very large offer, I will not reveal the details at the moment, because we are still in the process of proceeding. We are waiting for the invitation of the orderer to negotiate and we are very seriously looking forward to obtaining this order. As for the German market, in September last year we opened a target company RailwayX. The task of this company will be to carry out work related to the traction network on the German market. In November, we launched a unique training program, where people employed by our company in agreement with Deutsche Bahn are educated, gain competencies that allow them to work on an active German railway. These are competencies, both technical and language competencies, because to work on a German railway, employees must be familiar with the language at least level B1. So we started this process. education of our staff. We hope to start such a real operational activity in the second half of this year. As for the Czech Republic and Slovakia, because here I would combine these two hands, we actively take part in the negotiations. These are very demanding hands. They require the fulfillment of many, many, I would say, formal criteria, which are adapted to local needs, so for a company like Dimex, it is not easy to enter such a market and just start the activity. Here, as I said before, it shows that there is a possibility of developing mechanisms that allow companies to protect themselves from the maternity market. And here, for example, in comparison to Poland, where practically everyone can come and make an offer, regardless of whether it is a bag, a company in a bag or a company that has real potential, it is here in the Czech and Slovak markets that very strict criteria must be met, both when it comes to having personnel and showing experience at the pre-market stage. So, in fact, there is no way for a company to come into the bag and get some important order. So, unfortunately, despite the many efforts and work that we have put in, we have not managed to get any orders there yet. We hope that this will change in the coming years. However, to this day, the potential of this market is definitely smaller, because, as I said earlier, while PKP PLK has increased the turnover at the level of PLN 14 billion, so much so that last year we made offers on the Czech and Slovak markets exceeding 1.4 billion. And these were all such large, important fairs in which we could take part. However, what we said earlier, our goal is to diversify our revenues as a company, as a group and in each field and segment of activity, so for sure here the next months will bring further work and efforts aimed at existing on this market.

Development of electromobility.

Ladies and gentlemen, a year ago we made a decision that we are entering into electromobility. We see great opportunities here, but also restrictions for people willing to buy electric cars. I think the world is heading in this direction. There is no turning back from the fact that there will be more and more electric cars and they must be charged somewhere. And here we are trying to find niches on the market. This is one of the elements in which we want to develop. I will let Cezary Sence to say that he is also responsible for electromobility in our company.

Ladies and gentlemen, last year we reported that we are entering the world of electromobility with the goal that by the end of 2023 Budimex will have 100 chargers with a target for the year 2026 450. Today, please, Budimex has 114 chargers available, of which 5 are already in use, 109 are in the connection phase. i.e. the goal for the year 2023 has been achieved. Thus, the information that we have given you, we have simply kept the word. This places us, ladies and gentlemen, in the top five in the country. Our goal is to be in the top three. in Poland when it comes to electromobility. And we do everything to achieve this goal. For today, ladies and gentlemen, our chargers will be available in Szczecin, Gorzów Wielkopolski, Bydgoszcz, Poznań. They are also at our production backyards. We also, ladies and gentlemen, equip our backyards sources of energy in the form of photovoltaics, also by storing energy, but this also translates to the fact that our service cars will be able to use this green energy in part through our chargers, also on our production backgrounds, and we introduce this program very intensively this year. In general, Wszystkich większych miastach w Polsce Budimex chce dysponować docelowo ponad 200 ładowarkami. Jeżeli mówimy o ładowarkach miejskich. Dzisiaj jesteśmy w trakcie negocjacji 250 new locations, of which 86 are in the final phase. We have made a huge progress, competent in the last year and we see that this goal, which we set ourselves for the year 2026, is to be achieved.

Thank you. OZE and our investments in OZE. Here, please, Marcin, for your support and telling us what we invested in in 2022 and what are our plans for the future.

Yes, we wanted to show two farms, one wind farm and one photovoltaic farm, which are in the construction phase. One is practically finished, it is a wind farm in Drachów. The power is installed at 7 megawatts. These are two turbines with good productivity, i.e. up to 25 gigawatts per year. We have a certain amount of funding in the form of project finance of 45 million zlotys. There is also a PPA agreement. The project is also starting. We have the first half of the year 2023, and I hope that in April we will already produce electricity, if everything goes well. The second farm is a photovoltaic farm and it is 14 megawatts. Here we do not yet have a PPA agreement, we are working on it. to find a potential client for electric bioenergy and we will also try after signing the BPA agreement to organize financing of the project finance formula, productivity of 15 gigawatts and the planned launch is in the first quarter of 2024. These are two farms that are ready to build, almost soon, as I said, they will work, but at the moment we are working on mainly photovoltaic farms at the level of 100 megawatts, but this process is still a bit long-term, but I hope that soon we will be able to boast of the next farms that will produce electricity.

And here it is impossible not to mention that, of course, we are waiting for the change of the law and this separation law. It will make our work and investment much easier. You see, we have a cash resource. We would very much like to develop dynamically in this segment, but we have difficulties, because of course we have ready projects, but due to the interoperability and also the separation law, part of these elements, part of these projects are suspended. And I believe that after the change of this bill, it will speed up and it will be noticeable, because we are talking about two farms and two investments. Of course, our expectations are completely different. And here we hope to accelerate the dynamics of the development of our company. As I mentioned earlier, at the beginning of this year, at the end of this quarter, a separate joint venture company will be established from the Ferrovial Group, where we will jointly invest I hope that large funds, not only photovoltaics and farms on land, but also, of course, we are looking for an investor, we are looking for a partner in investment in the sea. To sum up, ladies and gentlemen, these investment plans and investment programs. Colleagues here mentioned the programs related to the construction of roads, railways, these key branches that we deal with. However, there is no way not to mention these investments that are planned by our government, which are partially associated with these investments, but also completely separate. And so here is the PSE transmission line reconstruction program, without which today we would not be able to develop as a country. The plan that the government expects is up to PLN 32 billion by 2030. A gigantic amount. And here it is worth mentioning that at the moment we have made an offer for the PSE company to combine Poland with Lithuania. This is a very large project worth PLN 3 billion. We are waiting for the resumption of this tender. But here, of course, we are very concerned about it and we are very looking forward to this market and we believe that we will take part in this market. Eletrownia Atomowa, elektrownia atomowa 200 miliardów złotych. Nie ma odwrotu od tych inwestycji. Mamy podpisane umowy zarówno jako spółka Budimex z Westinghouse, ale mamy jako spółka Mostostal Kraków. Prowadzimy rozmowy i wierzę w to, że również będziemy uczestniczyli w budowie elektrowni atomowej. A to jest rząd wielkości 200 miliardów złotych. I oczywiście wiatraki offshore na morzu. We are negotiating, of course, we are trying to be not only a performer, because I believe that somewhere we will take an active part as a performer, but we would also like to take part here as co-financing these investments. We see what gigantic funds they are, 100 billion zlotys. Our company, Główny Akcjonariusz Ferowial, participates in this type of investments and here, together with them, we would also like to participate in investments in Poland offshore. To sum up all these investments, we reach PLN 1 billion, so looking at the long-term perspective, and in this perspective we mainly analyze, we look with optimism. there will be a question mark whether our country will find funding for this and of course it will not be easy for sure with what is happening today on the market, but I believe that we will find this funding together with private capital, we will be able to participate and implement these investments and look into the future, despite the fact that there has been a drastic decline in housing and private investments. But I think it is time-consuming due to inflation. This moment of holding will probably be for the next three years, so after these three years we will come out of the pit when it comes to housing investments. And here I believe and also count on the fact that it will be an opportunity for us to acquire contracts ready for construction and we will also be able to implement investments in the financing and construction formula in the housing segment. This is a short summary when it comes to what concerns the prospects of investment programs today. When it comes to EU funds and support for these investments, as you know, we have three main pillars. The Phoenix program. If we look at the EU perspective from 2014-2020, the program included 26 billion euros This one for the years 2021-2027 is significantly less than 24 billion. And what concerns us mainly in the railway segment and infrastructure, it is practically at a close level and it should be compared exclusively with the instrument connecting Europe, i.e. the CEF program. These are projects where each country in the European Union has the right to submit its application and when it gets the best score, it gets funding. So if we look at it in general, these programs are actually on a very close level. It's just a matter of launching these funds and starting these investments. And I think this is the turn of the year where these funds will appear. We hope that these funds will appear in the country. And of course, the last program remains, the national reconstruction program. I think I don't have to describe it here. It is so widely commented in the media that we all know that the fulfillment of mile stones is provided. And of course, when it comes to our point of view and the construction industry, we hope that it will be launched as soon as possible, because we cannot forget this program. It must be completed by the end of the year 2026. And if we look at the infrastructural investments, most of these investments, especially large ones, i.e. rail or road, it is the time of implementation of about three years. This is the moment when we have to sign these contracts and start implementing them to obtain these funds and use them well from the national reconstruction program. But this is what the predecessors did. Thanks to these bridge funds from the PFR, we believe that PKP PLK will launch these contracts at the beginning of this year, so we hope that at the end of this quarter there will be a signature and an agreement with PKP PLK, and this, in turn, will launch these funds and provide us with funding, and this will enable us to finish work by the end of 2026. Moving on to CSR and ESG, Ania Karyś will discuss the things we did as a company in 2022.

Hello once again. In 2021, Budimex announced the CSR strategy for 2021-2023, which refers to the goals of equalized development. Today I will present only a few initiatives that we carry out as part of CSR. There is a lot of it in Budimex. Budimex runs projects throughout the ESG value chain. We put a huge emphasis on equality of work and wages, on safe working conditions for our employees. and also to good social contracts with the environment in which we carry out our investments. One of such exemplary CSR projects is the Parent Zone. The Parent Zone is a project that we have been carrying out since 2012. We have already implemented 40 Parent Zones last year. It is a project that aims to allow parents to spend time with children staying in hospitals in friendly, comfortable and comfortable conditions. It is based on the fact that we repair rooms in hospitals, we do it voluntarily with the support of our employees who are strongly engaged in the repair of these rooms. Last year, we gave two more parent zones in the Piszcz and Bydgoszcz hospitals. Our employees spent more than 300 hours on support and preparation of these zones, 14 people helped us in this and about 1000 beneficiaries already used these rooms. The second important project that we are carrying out as part of CSR is the Home from the Heart campaign. Last year, we have already carried out the second edition of this project. Dom z Serca 2. This is a project that aims to support multi-parent families in a difficult material situation. Last year, we supported an eight-person family from the town of Brus in the Pomeranian Voivodeship. A family that had big financial problems and also two children with serious diseases. Unfortunately, they had to finish the house they started. We, with the support of a few of our partners and, of course, the involvement of our employees. We renovated this house, we finished this house by the key, we gave the family a beautiful, comfortable, functional and energy-saving house in which they can now realize their next dreams. One of our projects is our authorial project Hello Eyes – Budimek with children, which we have been implementing since 2019. And here we support and educate educational facilities, which are located near our investments, which we implement. As part of this project, we organize meetings with children and young people in schools, where we share our experience in terms of safe life in the public movement, but we also teach, for example, we educate in terms of first aid. We invite these meetings, police representatives, firefighters and through playing, organizing various types of quiz games, we educate children in this area. We also got a patronage last year from the Ministry sports and tourism, and this year we are planning to expand the scope of this project about micro mobility and we want to educate children also in terms of safe use of electric scooters, among others. We are aware that we have a strong influence on the environment around which we carry out our investments and we try to maintain good social contacts with people who live nearby. We are open to dialogue with local communities, we engage in supporting these local communities, we listen to their needs, we carry out many initiatives together with them. One of such exemplary initiatives, which we have already started and will continue during the implementation of our tram construction contract on the route to Wilanów. There is an action to plant 400 trees. We have about 16 events planned as part of this action, which, together with the local community from the Wilanów and Mokotów areas, In April, we are already launching the first planting of 130 trees. Where we are, of course, we are also trying to cooperate with local schools, technical institutions, universities. and to invite students, students of these facilities to work with us in practice, internships, and in the final effect also to work with us, preparing them for the profession they have decided on. Last year we visited 85 universities, I mean we organized 85 meetings for students. We visited over 200 technicians throughout Poland. It was our biggest action that we have been involved in so far, which is to support technicians, but also to reach students who are learning to promote construction there. to encourage development in this industry. Last year, we employed 270 people to practice, of which half, in fact, 49% were women, because here we also carry out one of our of our important goals, i.e. the promotion of women in construction. Half of the practitioners, as I say, were women last year. Year to year, Budimex invites about 250-300 people to practice, of which about 30% usually stays with us and carries out our contracts. Another important CSR activity is our grant program for volunteers, which our employees are very intensively engaged in. Last year, it was strongly based on the help of Ukraine. Our employees organized many important initiatives, including financial and material support, Ukraine and in total we have allocated about PLN 3 million for this support. In our activity, as I mentioned, CSR, but in general in the whole activity, we are strongly guided by the principles of balanced development, taking into account the needs of local communities, but also the changing natural environment. Last year, we joined the partnership to achieve the goals of balanced development. which is carried out by the Ministry of Development and Technology. Agenda 2030 is a world development strategy for 2030, which contains 17 goals of balanced development. And through our further activities in this direction, we will still want to implement them. This year, we will switch CSR strategies to ESG strategies and in the first half of the year we will announce this strategy, in accordance with what we announced last year. Thank you.

Thank you, Ania. Ladies and gentlemen, to sum up, in general, the year 22 as the management of the company, we believe that it was a very good year for the company. It allowed us to diversify our company in an even greater way, lead it to further development and achieve further goals. What was established, especially the three main pillars, i.e. going outside Poland, outside the Polish border, was done. As we said, we have already included significant value in contracts, we have established companies there, so the goal has been achieved. We hope that these contracts will be made with a positive margin, because we do not make aggressive offers. These offers are for very, I would say, responsible and balanced prices, analyzing what is going on in general in these cross-strait markets. We have recognized these markets. Most of the time, when we make offers, we already take place in the first three, so we have already recognized this market, we have cooperated with subcontractors, partners in these markets. We also expect a gigantic increase in our value and the scale of the REI Baltica contract in Latvia. As Maciej said, this is a contract in which we participate with a value of over PLN 20 billion, so very significant. but also the connection between Poland and Błotwo is a contract worth another PLN 3 billion. These goals that we set ourselves when it comes to going abroad, we have even exceeded, we did not expect that we would go so far. When it comes to the next goal of entering the market and obtaining contracts in green energy, it has also been achieved, which is very We have already acquired the company, so this goal has been achieved. As for the goals for 2023, unfortunately, we cannot show the numbers here, of course, due to the fact that these are forecasts and here we have internal goals set, but I would like to bring you closer to what What goals have we set for 2023? Of course, stable further development of the company when it comes to the construction segment, maintaining the position of the leader on this market, which is very important for us, but also the possibility of further development abroad. And here our forecasts, looking at what we already have in the first quarter, actually not the ending quarter, but the number of contracts, the number of signed contracts and also the expected ones, gives us such a vision that we expect this year to be even better than the year 2022. As for the expansion of activity, another goal. This is the foundation of our position in these markets. And here we want to focus on the Czech Republic, because for us at the moment the Czech Republic will be an important market to gain this market. Slovakia, I think that this year, if contracts are included where we expect to sign these agreements, we will be the leader in the Slovak market. And this is also significant, because a year ago in Slovakia or in the Czech Republic, everyone knew what the Budimex company was, but actually It didn't matter much because, of course, they knew us from the Polish market. At the moment, we are a recognizable brand and I believe that the Czech Republic will also be a moment and a breakthrough year 2023. The FB Service company, as Marcin Wygłowski said, further expansion of competencies in this company and development both in our areas, which we have, but also acquisition and further development of the FB Service company. And of course, the next and last goal is the development of renewable energy sources in the segment. And here, after changing this bill, of course, I believe that we will dynamically develop our new company, which we will sign and set up at the turn of this quarter. Ladies and gentlemen, we close this part of our conference presentation. I invite you to ask us questions. We are at your disposal. The Q&A session will be led by the press secretary, Michał Wrzosek. Michał, please, I give you the floor.

Thank you very much. I will have the pleasure of moderating questions, both from the room and those asked online. So, of course, we invite you. My name is Michał Wrzosek, I am a press secretary at Budimex. I would also like to introduce you to my colleague from FB Service. Magdalena Nowicka, press secretary of the FB Service, will also be available to you in terms of information. We will start with questions traditionally from the room, from our guests. Please, because the question is submitted with a short introduction as well.

Tomasz Dziuba, M-Bank, good morning.

You have mentioned the expectation of certifications of construction companies on the Polish market. I could ask you about the development decision, when, possibly, who will issue it and what are the criteria?

Yes, we are talking about certification, because for several years we have been talking mainly with the General Directorate of State and Autostrada about the fact that performance companies on the Polish market are certified, just as it is on the Czech or Slovak market. In general, it is about the fact that a certified company must show up on time with certain references, experiences, but also with the ability to document its business activities. This shortens the way later when verifying such a company, but at the same time allows you to assess at the beginning in the pre-qualifications, or even further in the pre-market procedure, whether the company starting to proceed is able to perform a given task. From the declaration of the General Directorate, which works on this with the Ministry of Infrastructure, it turns out that the works are advanced. We hope that they will end in 2023.

Thank you very much. Next question.

Katarzyna Kapczyńska, Puls Biznesu. I wanted to ask about this armory segment, which replaces the apartment building. Do you assume that in 2023-2024 this level of the portfolio in the armory will be similar, it will grow? How will it develop in the coming years?

Thank you very much for these questions, but I am not able to give an answer. I must admit that budgets and plans are presented by the main clients, the General Directorate or PKP PLK. Here, in the military segment, part of the contracts are covered by a secret and this segment and these plans are completely inaccessible. We expect, of course, that it will be maintained at the same level, and even be increased, There is some information about new bases for NATO troops and the enlargement of this segment. However, in no way am I able to relate to this question. I'm sorry very much.

And it can also be related to this military segment. From what I know, it's just that investments in NATO needs require certain certificates. I will now mention their names. but I think there are such certificates from two Polish companies. Do you have something like that, will they ever appear?

Yes, and this is a complicated process. More companies have these certificates, of course, depending on the level of investment. However, we have these certificates, it is a long-term and long-term process, so from here Not every company can start and offer in these procedures. It is related to quite restrictive requirements in relation to companies, but also to people. Because the situation is so complicated that you can imagine that in these contracts citizens from outside Poland cannot work. Even from the field, or also outside Poland. I don't know how it is taken outside whether it is taken from outside NATO, but for sure it must be Polish employees. Because, for example, if we wanted to hire an employee from Ukraine, we have a total ban, so on the one hand it is a little easier, I would say the competitiveness and the possibility of obtaining these contracts is definitely better and the effectiveness of our company is better, but later running these contracts is not so easy. However, yes, responding to the question, we have certificates for making these offers. There are more companies. I don't know exactly what the number is, but I think that within the 10 companies, it certainly has such a range of certifications.

Thank you very much. We are waiting for more questions from the room.

If there are none at the moment, we will go to the questions.

Good morning, Magda Bąkowska-Lewicka, BNP Paribas. I have a question for the FB Service company. Do you carry out internal control of the charges filed against Mr. Artur? If so, are there any conclusions?

Have we started to control the processes that are in the FB Service? However, this is not a matter specifically related to the suspension, of course, but we do not know exactly the charges that are imposed on private individuals who were the president and members of the FB Service Board. However, yes, we started internal control and it is in progress.

Thank you very much.

We ask to ask questions. If there is no room at the moment, then maybe I will go to the questions asked online.

Good morning, Hans Michał from this side. I would like to ask about the preliminary results published yesterday by you. First of all, what is so low effective tax rate in the fourth quarter?

I mean, it is caused, as it were, it is the tax scale in Poland, as you know, is 19%. And it depends on how these taxes are paid between the years. However, it reflects the tax result, which is the basis of taxation for a given year.

Maybe I'll ask a question.

Because here, too, there is a visible positive impact of the balance on the remaining income of operating costs and what it results from.

It is as usual, as usual, from the activities, remaining operational activities. We have imposed penalties or resolved reserves, which are related to penalties. There are shown results related to with won disputes. So this is a position that is characterized by the fact that it is sometimes very narrow, sometimes it is very additive, but it is related to the matters that the company has been conducting for many years. And this is a mix at the moment. As far as we know, it is 11 million, this is the effect of received compensation, 10 million is the effect of forwards, and 3 million is from machine sales. Thank you very much.

We will also move on to questions asked online. We only have about 10 questions here. First question. Assuming the lack of blocking funds from the KPO in 2023 and the very limited activity of the PLK in terms of signing new contracts in 2022, in the opinion of the Board, what can the PLK's contract look like in 2023?

Answering the question, This is a very dark scenario. I hope it will not come true, because this year has been very difficult for producers, so it seems to me that it is not very likely, given that this agreement between the PFR and the Ministry of Infrastructure has been signed. The target agreement, about which there was a long discussion, which is to be used to finance these bids and investments that await funding from the European Union. So we assume that these 15 billion will be directly directed to financing these investments, which will allow these tenders, which have already been announced and extended to some extent, to sign the contract, as well as to finance the next tenders that have been announced for this year, because at the same time as we announced the signing of this contract, we all found out that this year the planned I would say the portfolio of orders that PLK intends to announce is between 15 and 20 billion PLN. In addition, it should be remembered that KPO is not the only fund from which these investments are financed. PLK is very effective when it comes to obtaining EU funds also from the CEF fund. Some of these bids that are announced are also financed from this fund, where the procedure is a bit different. a competition is won for a specific investment, so it seems to me that the combination of these two elements will cause these contracts to be signed in the near future. After all, as we said ourselves, we expect to sign these contracts worth PLN 2.5 billion.

Thank you very much for the answer. The next question is about the profitability of contracts. Are there still contracts in the portfolio whose implementation is threatened, generate significant losses. If so, please give the names of these contracts and their impact on financial results.

Yes, we have such contracts. These are contracts signed at the moment of COVID-19 functioning, but in this very difficult period for us. This is the contract of the Museum of History of Poland. As you remember, we have been implementing this contract for over three years. The contract will be completed in the month of July this year, but handed over to the applicant by the end of the year, so the final phase will be the end of 2023. It is a very difficult contract for us, the largest museum in Poland. The value of the contract is about PLN 300 million. We signed an agreement with the applicant, but in fact it is a contract on which we incur a lot of losses. financial, but we made a reservation. Of course, we considered this financial result in the company's results. The next two contracts that we still have in our portfolio, which are signed at this unfortunate moment before the start of the war in Ukraine, is a contract in Gorzów Wielkopolski, the sports hall, where we have big problems when it comes to losses in this contract, and the contract in Lublin, ZCK, the integrated communication center. This is also a contract, but both of these contracts are currently in the negotiation phase with the General Prosecutor's Office, where we talk and determine the amount of payment due to the valuation. However, answering the question, we have such contracts, Looking at the scale of the entire company, they are, I would say, single cases, because, as I mentioned at the beginning, we implement about 200 contracts every year. So, out of 200 contracts, if we look at these active contracts, three are actually contracts still in the implementation phase, but which certainly cause us trouble when it comes to the financial result.

Thank you very much for the answer. The next question is about the margin. In the government's opinion, what can the gross sales margin look like in the construction segment this year? In the context of the lack of materialization of risk parts, it is possible to significantly reduce the reserve balance for losses in construction contracts.

Ladies and gentlemen, we cannot give you a forecast for this year, but I expect that the financial result and profitability will certainly not be worse than in 2022. I would not expect the margin to worsen, unless something unexpected happens on the market, which we may not know about, Looking at recent years, we have already experienced a lot of turbulence, covid, war in Ukraine, inflation. As you can see, we still maintain the same stable margin level. I believe that we are such a diversified company and already on such 50-year-old traditions that it is rather difficult for me to predict a situation in which there would be a deterioration, so I expect, we certainly do not expect a worse result than achieved in 2022.

Thank you very much for the answer. The next question concerns the power in terms of renewable energy sources. By which year is Budimex planning to complete a 500 MW portfolio of its own projects? How much can the average annual investment costs from the implementation of these plans?

Of course, we would like to do it as soon as possible, but of course the legal conditions do not allow it. In particular, it is very difficult if there is a connection. I have already said that we are currently working on 100 megawatts, which, I hope, in the next two years, we will be able to finalize. Of course, we are starting work on others. I think that a change in the bill would give us a chance that in the future maybe even three years, we would be able to achieve 500 megawatts. I am not very optimistic in my statement, but we would like that. However, there are a lot of legal rankings, unfortunately, in Poland, which are still technical, when it comes to energy delivery and connection.

I mean, we have much bigger plans and here I think we are coming up with some kind of security and when it comes to our predictions, set goals. Of course, it all depends on the Act and the possibility of obtaining a connection on the market. We look with great optimism and hope in the future, because by joining forces with Ferrovia LEMS, the company that is our main shareholder, we will be able to sell energy throughout Europe. And here we have a great chance, investing together in large projects. We do not want to focus on small projects, 1 megawatt, 2 megawatt. At the moment, as you can see, we started last year with projects of 7 megawatts. These are not big topics for us. We want to focus on big topics. But it was a moment when we said, OK, I check, I enter, I learn from this business, I start selling this energy to external companies and on this basis I build experience by entering into big topics. And this is this year and the next two or three years, where we will develop this branch very strongly and dynamically. These 500 megawatts are really not an ambitious goal for us and here we are putting ourselves much higher. However, there are a lot of elements that we have no influence on and it is difficult for us to declare at what date we will achieve it, because otherwise we would say that these 500 megawatts are to be achieved at the end of this year. Because it does not block us, for sure, from the investment cash and investment in the area, I would say, financial and legal, but it blocks us from obtaining these contracts on the Polish market.

Thank you very much. Now a question related to the railway construction segment. What part of the PLK's 14 million PLK contracts ended with the signing of contracts?

I would not like to guess here, but if I remember correctly, it was probably one contract last year that was signed and was to be signed. Thank you very much for the answer.

Another question about renewable energy sources. You are talking about OZE as an investor. And what about the production phase for external investors? Is Budimex interested in being a general producer of photovoltaic and onshore and offshore farms?

Of course we are interested. We were the company that built the first wind farm in Poland. At the moment In recent years, as you have seen, we have fallen out of this market, but due to the margin on these contracts, it was very difficult for us to compete with smaller companies and acquire these contracts. At the moment, we hope that, especially in these large offshore topics, we will have a chance to function and exist, but here we are mainly concerned with the land part. As for the part of the foundation on the sea, we do not have a ship and equipment to carry out these investments, so we support and offer our support in terms of engineering and design, but we will focus on offering our services, but on the land part.

Thank you very much. A question also in terms of energy construction, but more about the entire market. Polish energy networks are going to invest over PLN 32 billion, but the market of modernization of enterprises dealing with energy distribution is a bigger cake. And here in the question, this energy was estimated at PLN 130 billion. Does the company want to exist in this area?

Looking at the annual expenses of these investments, this is an amount of about PLN 8 billion. Of course, we analyze these investments. Usually, at least looking at the previous years, these are low-value investments, a few million. We do not have a chance, on our scale, to compete with small companies on such investments. So, if there is only a contract with a higher value, a larger scale, because we have a really gigantic reconstruction of the entire energy network in the country, so if there are more contracts, we will definitely want to participate in them.

Thank you very much for the answer. Any questions from the audience? Any interest? Okay, I can't see. Okay, then we'll continue with the online questions. A question about the gas system trade-offs. The company is quite actively participating in the gas system fairs. What are the prospects of this market in the face of changes in gas flow directions? What about investments in Pern? Is there anything known about the fair on the construction of the second rope of the railroad?

We were the leader when it comes to the construction of the Baltic Pipe gas pipeline. We completed three episodes, and this was before, in 2022 and we consider this a huge success. We are very interested in what the gas system will announce at the moment. At the moment, from the information we have, it has stopped with investments due to the lack of funding. However, if these investments appear, we will of course be very happy to participate, because the Kraków Steel Bridge supports us in these investments, it has a welding machine, the so-called head of these investments, and here we are very competitive in this segment. We know about this contract. This is a contract with a length of 240 kilometers with a diameter of 800 millimeters. However, at the moment it is not announced. However, if it is announced, we will certainly be interested in it.

Thank you very much. And here is a question that was also asked by investors and analysts just about the Kraków steel bridge. Is the current fall trend of steel prices, or at least the lack of growth, creates a prospect of improving the margin for the steel bridge business.

I mean, as I said before, the fact that the steel market or the steel purchase market has stabilized gives us the basis to look more optimistically at the results of the steel bridge this year.

Thank you very much. Another question that was also asked by analysts earlier. What is the reserve level for loss on contracts? What are the prospects in this area this year?

When it comes to the reserves on the contracts, they colorate to the contracts that we sign and to the size of the backlog. We will try to reserve all the risks that we see, so that there is no negative surprise on the impact on the result of our company. In 2022, the growth of these reserves took place. not to mention a specific amount, because I don't think I can, this increase occurred above, in the third quarter the most, and in the third quarter it is above 250, about 250 million zlotys, and this level in the third quarter has not changed much, because I would say that it gave information a bit around that. As for 2023, if this backlog increases very much, then each contract that we sign always carries with it some risks that we always analyze before making an offer. We are aware of these risks. They are always reserved for us so that they are already in this result, to be safe and always be on the safe side. And depending on how we can sign these contracts in 2023, this reserve will probably either grow slightly or maintain the same level.

Thank you very much. A question about the railway market and the valuation of old contracts. Does the company expect to increase the valuation of old contracts, as it did in the case of the communication of other companies in the railway sector?

Yes, according to the declarations of both our orderer and the Ministry, The valuation of old contracts is to be introduced in all PKP.pl projects. This process has already begun, the first in a single number, but the annex was signed quite recently with one of the companies implementing contracts for PKP.pl and we assume that this process will be continued. Here, as in the case of financing investments, there is a slightly different mechanism for financing these annexes. Also, according to what the orderer declares, a little patience. However, all contracts that were implemented at the time of the outbreak of the war are to be valued with a valuation limit of up to 10%.

Thank you very much. The question this time is aimed at the road area. Are the investment plans of the General Directorate of Land, Infrastructure and Autostrada in 2023 real when it comes to implementation?

In this regard, the General Directorate should speak. However, looking at how intensively the General Directorate has started, start with the fairs this year, already in February, it can be seen that the General Directorate is determined to keep these plans. Funding for all these investments is guaranteed. The only thing that can keep the effectiveness of closing the fair proceedings is recalling at the fair stage at the elections of individual performers. But I believe that in the fact that the investment plans of the General Directorate for 2023 will be achieved. We will probably find out about the details at such a summary meeting, which the General Directorate organizes cyclically and it will take place in the first half of March. Thank you.

Thank you for the answer. A question about the Ukrainian market. Is the company preparing for a possible entry into the Ukrainian market after the end of the war? If so, what are these preparations focused on?

The company is certainly waiting and observing what will happen and what is happening. Of course, we hope that these war activities will end as soon as possible and I think that we all care about the country for it to end. However, looking at our activities, we have conversations with our government and with organizations, mainly through organizations, but also directly about support and finding funding to prepare projects for Ukraine. Because we came up with the idea that when there is a fight in Ukraine right now, that this is the moment not to waste time preparing projects. and about key investments that will have to be started after stopping this phase of the war. And here we believe that the stage of financing these projects and the project cost government is more or less 3% in the scale of the entire investment is insignificant and we could as a country or as a European Union think about it so that Ukraine would not waste time and at the time of the cessation of this war she could enter and carry out these contracts. Not only that, we could then support Polish companies with our goal, our idea, our technology so that later it will be possible to implement, to have knowledge of what will be implemented, in what way it will be implemented, from what materials it will be implemented. So we encourage the government to either delegate a special unit that will deal with it, or a new ministry that would be responsible for it, but we believe that this plan to rebuild Ukraine is so gigantic that as a whole construction industry, we hope that Polish companies will take part in this reconstruction. And not only Polish companies as performance companies, but also project companies with our knowledge. Today Poland is one of the great construction sites and we really have a huge amount of knowledge, designers, engineers, technology, and we have nothing to be ashamed of, and we can operate here in Ukraine with ready-made projects. as a country, so we conduct such a conversation, we encourage it, we need support and investment, both from internal funds and from the European Union. Thank you for the answer.

A question about competition. What is the status of competition on the market? Are there still companies that offer aggressively? And here is a question about foreign entities.

The level of competition is very high, of course, in every other segment. In the road segment, it is mainly our competition, because of course we are not afraid of competition and it is very good that there is this competition. However, a big challenge for us is that there are companies that do not have the potential and equipment, and only the declarations of this equipment, i.e. Turkish companies, Chinese companies, where, apart from declarations, they do not provide any other added value. And here we are counting, as Cezary Łysenko said, we are counting on the support of the applicants, that these companies will be thoroughly checked and verified. And this is our main emphasis. Based on our experience in the foreign markets, we provide examples from other countries and prepare such expertise for our government. On the example of Łódź, where the government of Łódź divided its investments into different levels due to the strategy. And here is a good example, so strategic railway investments or investments in ports cannot be carried out by entities outside NATO, because they have access to confidential information. but also very closely treated entities, very, I would say, fairly treated entities outside the European Union. Whether they have this equipment, whether it is not only, I would say, a statement brought on paper, whether it is also necessary to show off this equipment, it is necessary to show off and have human resources at the time of making an offer. In Poland, at the moment, the company that makes the offer must fulfill the so-called JETS. In this JETS, it is enough to put a cross, declaring that the company has equipment and human potential. When it is the cheapest company and takes the first position, then the search for people on the Polish market or equipment on the Polish market begins. According to us, this is an irresponsible action and what we come across on these coastal markets, in the Czech Republic, in Slovakia, in Latvia, it is treated completely differently, because we must now, as a company with experience, fight with these companies, document and show that in KIO these companies do not have this potential. And there are curious cases that The company goes with the applicant to the court, so it goes to the appeal committee and wins the dispute with the applicant. When the applicant asks a question, she says, I don't have to answer this question to explain whether I have this potential or what is included in the offer. So we would like to, we encourage the government and we are working to develop a company certification system. and a system that will allow the orderer to verify these offers and the companies that make these offers.

Thank you very much. The last question is from the questions submitted earlier by analysts. The question concerns the hydrotechnical segment. What is the development, what is the perspective of this market in Poland?

The hydro-technical market in Poland is very promising. Budimex is present today in practically every segment of the hydro-technical market, both in ports and on rivers, also on reservoirs. As you know, we have recently completed the largest retention reservoir in Poland, Racibórz. Today we are present on more than 100 km of the Odra River, strengthening the waterway. We are also building the second stage of the Elbląg River, the so-called Mierzeja II. And the T3 terminal on DCT mentioned earlier, the largest container terminal And the perspective of the hydrotechnical market development promised by government institutions is also impressive, because the program for the development of ports by 2030 was expected to invest at the level of PLN 40 billion. Land roads are supposed to be covered by an investment program at the level of PLN 70 billion. Today, these budgets must be verified due to the situation that took place in Ukraine and our commitment to the defense of the country, but we believe as a company that this is a very promising market for us and we are preparing ourselves for it, and we have the competencies in every hydrotechnical area.

Here we cannot also, to complement Czarka's statement, remember that we have a great investment ahead of us when it comes to ports for offshore construction. So I believe that these projects will be created, some concepts have been presented by PG as well as Orlen companies, but we have very little time to build these ports and I hope that these wind farms will be built from Polish ports, and not from ports from Denmark, because there are also emergency plans B and we know that part of these installations is to be built in the event of failure or failure to implement these ports in Poland from other countries, so we believe that these projects will be prepared quite quickly and we will of course very actively want to participate in the construction and implementation of these offshore ports. In terms of hydropower.

Thank you very much for the answer. We have drawn up a list of questions here, when it comes to online, when it comes to questions submitted earlier.

Does anyone in the room have any more questions? Good morning. I have one more question. How does the Board assess the cost perspective of the company? What level of efficiency is possible to achieve in connection with the current weakness of subcontractors? and when the effects may be visible in the results.

Could you repeat the question?

How does the Board assess the cost perspective of the company? This is mainly about the weakness of the subcontractors. Will it somehow affect the cost perspective? I understand.

Thank you for the question. Even looking at it from this perspective, we believe that the situation on the market will improve, because the main building industry, In the construction industry, there are over 450,000 employees. And now a large part of these employees is supplied by the housing segment. Because in the housing segment we need as many years to work. It is difficult to switch to machines and do these jobs. And I hope that in the next two years it will be just such a reflection in the infrastructure and industrial segment, where these people, in the absence of such a housing segment, to the infrastructural segments. So I think that this situation with subcontractors or with the companies we cooperate with will improve. And we showed it on the presentation, because it may be worth emphasizing, because according to the GUS data from the first quarter of 2022, we can see that the prices of companies employing up to 9 people on the Polish market are falling. Previously, in previous years, the margin in these companies was two-digit, sometimes up to 15%. At the moment, it is falling to a similar level of the main performers, so I have it in my head, but it is about 6%, so we believe that these costs will be reduced.

Thank you very much. Any other questions from the audience?

Okay, ladies and gentlemen, thank you very much. Our meeting here at this level has come to an end. Thank you very much for all the questions and for your patience. Now we invite all of you to lunch for the time spent with our members of the board. They are at your disposal. There will also be meetings with the media that we have planned. We also cordially invite you. I will also remind you that for all questions The press secretary Michał Wrzosek will answer the Budimex question. The next speaker is Magdalena Nowicka.