Financial Position of Budimex Group

Managing of finance at the Budimex Group

The cash balance of the Budimex Group as at 31 December 2014 amounted to PLN 1,831,652 thousand and was by PLN 172,869 thousand higher than as at 31 December 2013. In 2014, Budimex SA paid out a dividend in the amount of PLN 302,532 thousand. This amount was close to the amount of net profit of this company for 2013 (PLN 302,599 thousand). The generation of cash at the above level, despite the dividend payout, was possible owing to maintained positive profitability of Group companies in all business segments in 2014, as well as to: sustained favourable tendencies in working capital in the construction segment during the second half of 2014, including advance payments on contracts received from customers, and an increase in the balance of payments received from customers in the development segment.

In accordance with the Group’s policy, cash surpluses were placed as bank deposits at banks with a good rating. In addition, Budimex SA used cash surpluses to finance its suppliers of services and raw materials. This had a positive effect on the financial liquidity of these suppliers, and generated extra finance income for Budimex SA.

The Budimex Group companies reported an external debt in respect of bank loans and borrowings and other external sources of financing, including finance lease liabilities, which as at 31 December 2014 amounted to PLN 67,700 thousand, hence it was by PLN 13,616 thousand higher than as at 31 December 2013 (see table below). The Group’s debt is mainly composed of: loan incurred by Budimex Parking Wrocław Sp. o.o. to finance the car park concession (car park at Hala Stulecia in Wrocław) and the liabilities of Budimex SA under finance lease agreements (concluded in order to finance purchases of property, plant and equipment — primarily machines and equipment for performing roadwork contracts). As at the end of 2014, the Group had no debt in respect of bank loans to finance the development business.

Liabilities due to bank loans and borrowings and other external sources of financing (PLN thousand):	31.12.2014	31.12.2013	31.12.2012
- long-term	46 298	34 355	75 967
- short-term	21 402	19 729	17 718
Total	67 700	54 084	93 685

The following ratios illustrate the structure of finance at the Budimex Group:

Ratio	31.12.2014	31.12.2013	31.12.2012
Equity to assets ratio: (shareholders’ equity attributable to the shareholders of the Parent Company) / (total assets)	0,13	0,17	0,13
Equity to non-current assets ratio: (shareholders’ equity attributable to the shareholders of the Parent Company) / (non-current assets)	0,77	1,01	0,77
Debt ratio: (total assets - shareholders’ equity attributable to the shareholders of the Parent Company) / (total assets)	0,87	0,83	0,87
Assets to equity ratio: (total assets - shareholders’ equity attributable to the shareholders of the Parent Company) / (shareholders’ equity attributable to the shareholders of the Parent Company)	6,43	4,89	6,96

At the end of 2014, ratios illustrating the Group’s equity structure returned to levels close to those recorded at the end of 2012. A significantly improved level of these ratios as at 31 December 2013 was related to a one-off increase in the Group’s net profit (resulting in an increase in the Group’s equity) in 2013, resulting from the sale of shares in Budimex Danwood sp. z o.o.

Liquidity ratios, although they were lower than as at the end of 2013 when — due to the occurrence of the exceptional factors mentioned above — they were significantly high, remain at the level close to the level recorded at the end of 2012.

Ratio	31.12.2014	31.12.2013	31.12.2012
Current ratio (current assets) / (current liabilities)	1,09	1,14	1,10
Quick ratio (current assets - inventories) / (current liabilities)	0,87	0,88	0,76

Due to the current very good financial standing of the Budimex Group, cash resources and insignificant level of financial debt, there are no threats to the Group’s ability to finance its business activities in 2015.