Managing of finance at the Budimex Group

The cash balance of the Budimex Group as at 31 December 2016 amounted to PLN 2 715 134 thousand and was PLN 302 008 thousand higher than as at 31 December 2015. In 2016, Budimex SA paid out a dividend in the amount of PLN 207 815 thousand. In 2016, Budimex Nieruchomości sp. z o.o. also invested PLN 125 086 thousand of own funds in land intended for development activities. Generating cash at the above level, despite the dividend pay-out and the above-mentioned expenditure on land, was possible owing mainly to: the high profitability achieved by Group companies in all segments of business in 2016 as well as to sustained favourable tendencies in working capital in the construction part which took place in the second half of 2016, including an increase in the net balance of inflows from customers in the development part and the maintained high net balance of contract prepayments from customers in the construction 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 entities reported an external debt in respect of bank loans and borrowings and other external sources of finance, including finance lease liabilities, which as at 31 December 2016 amounted to PLN 82 609 thousand and were PLN 18 268 thousand higher than as at 31 December 2015 (see table below). The Group’s debt is mainly composed of: the debt of Budimex SA under finance leases (concluded for the purpose of financing the purchase of property, plant and equipment – primarily machines and equipment for performing road and railway construction contracts) and a loan taken out by Budimex Parking Wrocław sp. z o.o. to finance a car park concession (car park at the Centennial Hall in Wrocław). The aforementioned increase in total debt in 2016 results primarily from an increase in Budimex SA’s debt under finance lease agreements. As at the end of 2016, the Group had no debt under bank loans financing the development activities.

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

As at the end of 2016, the ratios illustrating the Group’s equity structure improved. A significant increase in net profit
and the resulting increase in equity contributed to the decrease in debt ratios and the increase in the equity to assets ratios, despite a significant increase in the Group’s total assets.

Liquidity ratios were also slightly higher than in the previous year.

Owing to the current very good financial standing of the Budimex Group, the cash resources of the Group, access to credit limits and the insignificant level of financial debt, there are no threats to the Group’s ability to finance its business activities in 2017.