The hereby presented report opens up a new decade of publishing non-financial data by Budimex. It is the eleventh consecutive annual report on sustainable development and the third integrated report. In every Budimex report, data concerning business activity and associated risks, environmental protection, employee and social issues are presented in the way allowing for their verification and year-over-year comparison. Reporting of non-financial and financial data has been for many years the form of communication of Budimex and its shareholders and stakeholders, as well as the method for dialogue in a spirit of credibility and transparency. According to the principles of integrated reporting, the current report shows the value creation in a specific time horizon. It should be emphasised that it is another report published only in an electronic version, which is coherent with the environmental protection policy in Budimex.

The report covers the most important activities of the Budimex Group and its three key companies (Budimex SA, Budimex Nieruchomości Sp. z o.o., Mostostal Kraków) between 1 January and 31 December 2018. No significant changes occurred within the scope of reporting as compared to the previous year. Key areas still cover corporate governance and business strategy, responsibility for the safety of employees and subcontractors, minimisation of adverse environmental impact and the biodiversity management, as well as the company's contribution to the development of local communities. As the structure of changes Elektromontaż Poznań SA has been sold in September 2018 in accordance to the assumed strategy.The previous report was published on 21 May 2018.

We are aware of the importance of clear and transparent communication with the environment, therefore we have developed the content of our report in accordance with the guidelines of the GRI Standards (Global Reporting Initiative) in the basic Core option, ISO 26000 standard, principles of the Global Compact, Polish and European legal regulations within the scope of reporting non-financial data, Directive 2014/95/EU concerning the disclosure of non-financial information and information concerning diversity, as well as guidelines of the IIRC (International Integrated Reporting Council) within the scope of integrated reporting. Reliability and compliance of the report with the GRI Guidelines was verified and confirmed by an independent auditor (Deloitte Advisory Sp. z o.o. Sp. k.). In 2017 our non-financial report was awarded in the competition "Social Reports" in the category "Award of the Stock Exchange" and in 2018 in the plebiscite of Company Bulletins in the category "Corporate One-Off Project".

Stakeholders

When developing long-term relationships with stakeholders, we follow our corporate values: responsibility, ethics, cooperation and ambition. The CSR Committee appointed by the Group watches over the assurance that communication with key stakeholder groups is kept in a transparent form, in accordance with the open dialogue principles. We choose communication tools according to the needs of the specific group. We participate in many meetings and business and industry conferences, we have corporate profiles in social media, we use artificial intelligence (chat bot), we implement social projects, we are a member of associations and organisations acting for the construction industry, we conduct surveys for suppliers. In communication, we care a lot about developing direct relations.

The stakeholders map features 6 major groups which have an impact on the Budimex Group and those that the Group has impact on.
These include:

• Employees and social partners (full-time employees, students and potential employees, former employees, trade unions, employees of subcontractors and suppliers, labour inspection and other similar supervision authorities);
• Investors (strategic investor, institutional investors, individual investors, Warsaw Stock Exchange, brokerage houses, banks);
• Customers (GDDKiA, institutional customers, individual customers, business partners, key suppliers, subcontractors, local government and government administration);
• Society (local communities within the investment area, residents and community leaders, universities and academics/students, technical and professional organisations);
• Natural environment (environmental organisations, environmental supervision inspectors, State Forests);
• Media, public opinion.

The CSR Committee is responsible for dialogue with stakeholders, regularly analysing and updating external and internal factors that may affect the dialogue process and the importance of key areas of the Budimex Group's responsibilities.

The Group applies the principle of decentralised dialogue, which means that direct relations with stakeholders prevail. The contact frequency depends on the nature of the given group and its needs. Channels of communication with stakeholders are adapted to the given target group. These include, among others, surveys for suppliers, meetings, conferences, social media, chat bots, social projects, participation in external initiatives, e.g. Agreement for Safety in Construction. The Communication Department, the Spokesperson and the Strategic Analysis Office are responsible for dialogue with external environment.

In 2018, there were no significant changes in dialogue with individual stakeholder groups and in use of channels of communication. Therefore, while defining key areas, earlier results of research and discussions with stakeholders were used. In the opinion of the Group's Management Board, conducting a separate panel of stakeholders for the purposes of developing that report was not necessary. The significant aspects defined in the report are cyclically discussed in internal meetings of the CSR Committee. In light of the above, the Group's Management Board is convinced that the needs of key stakeholder groups and their expectations towards the Budimex Group are addressed adequately.

Importance of issues in the report

Budimex revises key issues to the report under testing, and resumes it cyclically, unless events take place that require earlier performance of the same (e.g. change of business model). The process of defining important aspects was conducted in the Budimex Group for the first time in 2012 as part of comprehensive audit among key managers. The audit was based on the guidelines of the standard PN-ISO 26000 and concerned the analysis with indication of key areas of the Group's responsibility. One year later, the selected areas were re-verified in terms of environmental and financial aspects and then developed by the Budimex CSR Committee established in 2013. Since then, every year these areas have been modified by the Committee, if necessary. During their monitoring, there are applied results of generally available studies and analyses concerning the construction sector, opinions of the Budimex employees, exchange of experience during the Steering Committee meetings at the Agreement for Safety in Construction, associating the largest companies of the construction industry.

Information on the importance of individual aspects of the Group's activity is collected on an ongoing basis. In the process of defining important aspects of this report, feedback from the Ministry of Finance and the Association of Issuers was also taken into account, with regard to the last year's report on non-financial activities of the Budimex Group. Moreover, the significance of these areas is also affected by media information and the company's position on the market.

List of key issues for the Budimex Group's activity:

• employment conditions, occupational health and safety (OHS),
• influence on local environment and biodiversity,
• unethical conduct prevention,
• quality and safety of construction facilities,
• reasonable use of resources and environmental pollution.

The Management Board of Budimex SA decided that there was no need to repeat the significance test for the purposes of this report, since, as compared to the previous year, no important changes in this respect have occurred. Such issues such as accident rates, cooperation with subcontractors, biodiversity are still most often indicated by stakeholders. This results from the unchangeable scope of business activity and environmental and social impact. The currently defined areas are consistent with the 2016-2020 Budimex CSR Strategy.

On the basis of the conducted audit, there was developed the above list of key issues, indicating the level of significance of a given aspect to a given company in the Budimex Group, inside and outside the organisation. The above-mentioned significance test of non-financial issues in the view of stakeholders and in relation to particular companies in the Group has been applied for the purposes of this report. That survey allowed also to identify key non-financial risks.

Key areas in Budimex: