Letter from the President

Dear Sirs,,

We have undoubtedly come to live in interesting times. These words gained particular significance last year, when the resurgent optimism, after long months marked by the pandemic, was shattered by Russia’s attack on Ukraine. This event affected the already weakened global economy by triggering one of the biggest crises in history, including in the construction industry. The sudden downturn affected the condition of a sector that had for years contributed significantly to the state budget. History shows, however, that the crisis is also an opportunity for a new development path. We believe that setting ambitious goals and being flexible is the only way to survive in unstable times. This report presents the results of this path and we are already taking the results of the analyses carried out over the past year into account when planning our next business challenges.

In 2022, setting as our goal the consistent pursuit of further diversification and strengthening of the business, we decided to introduce several changes in the structure of the Budimex Group. Along with the newly chosen directions of development, we have focused on building up areas that allow us to expand our activities in neighbouring countries and also to balance the business activity carried out in Poland. We established three foreign entities – Budimex Bau GmbH, Budimex Construction Prague s.r.o., and Budimex Slovakia s.r.o. – and throughout the year, we actively strengthened our most valuable capital – the human resources that will allow us to strengthen our position in the chosen markets.

At Budimex SA, we are aware that steady growth cannot be realized in isolation from the principles of social responsibility and sustainable development. This is due to both the characteristics of the construction industry and progressive climate change, as well as our preferred method of management. We build with people and for people, putting people and their needs at the center. This approach is at the same time the basis for the Budimex Group’s past and future activities in the ESG area.

The Budimex Group’s development directions are based on the asks we have set ourselves in the CSR Strategy for 2021-2023. We have defined six areas in this document, which for us today are essential elements of the functioning of any responsible company - both in the business and social context. They concern, among other things, standards of safety and occupational health and safety, environmental and climate impact, attention to employee development and job satisfaction, countering abuse, and conducting dialogue and supporting local communities. The actions we have implemented in 2022, described in the following paragraphs of the letter, are a reflection and consequence of the declarations we have made. Their continuation and expansion will be the Budimex Group ESG Strategy currently under development.

Energy transformation is an obligation stipulated in the EU agendas that rests on the entire business community with a focus on resource availability and living conditions for future generations. At Budimex SA, we are wholeheartedly committed to this process. In 2022, we continued our efforts to reduce our carbon footprint. These included a number of energy-saving solutions implemented on construction sites and the promotion of the right attitude among employees through educational projects. Last year, we also established Circular Construction SA to support our goals of implementing the principles of a circular economy. Construction is a highly material-intensive industry, so with the help of modern technologies, the company’s task is to recycle construction waste in an efficient and economic way. This green competence pillar of our Group also includes the acquired company Magnolia Energy and the photovoltaic company HIG XIV, which started construction of a wind and photovoltaic farm with a combined capacity of more than 20 MW in 2022. Low-carbon transport is also green, which requires appropriate infrastructure in the near future. We have therefore set up Budimex Mobility (formerly Budimex PPP SA), which aims to support commercial entities and local governments in the implementation of tasks resulting from national and EU regulations related to the reduction of CO2 emissions and the development of clean technologies. Moreover, one of the company’s objectives is to contribute to the expansion of the electric vehicle fleet inside the largest construction group in Poland. It should be emphasised that the company has purchased 109 electric chargers in less than a year and intends to launch them in the first quarter of 2023. We see the Budimex Group’s participation in the RES market as part of strengthening energy efficiency and the company’s business portfolio. Green energy is an area that requires huge investments in the coming years, and that we as a company have the capital to implement on the necessary scale. 

Our responsibility to investors, employees and shareholders means that, as a company, we need to closely monitor the opportunities and threats arising from advancing climate change. In 2021 and 2022, we conducted a risk analysis based on TCFD guidelines, thereby basing our actions on clear and verified premises. Due to the nature of our business and the amount of waste generated in the course of our work, we are aiming to introduce a circular model throughout the Budimex Group’s value chain. These measures include selecting raw materials for construction from certified sources, increasing the percentage of recycled waste and verifying the compliance of our suppliers and partners with the principles of sustainable development. In the Budimex Group, we are strongly committed to principles such as quality, honesty, timeliness or transparency. We strive to achieve the highest standards in all areas of our business activities. We operate in an ethical manner. This includes compliance with the European Union’s requirements for sustainable business operations and Minimum Safeguards. In this report, we have disclosed for the first time the percentage of turnover, capital expenditure and operating expenses of the Budimex Group linked to the EU taxonomy. We have also indicated the actions taken by the company in terms of procedures and policies upholding human rights in our organisation and preventing corruption, unfair competition and other types of abuse. We are successively training our team members on key compliance issues. We are closely monitoring the European Commission’s directives, including the CSRD, and are already implementing solutions to meet our reporting obligations based on the new rules. As part of the existing CSR Strategy 2021-2023 and the ESG strategy under development, we are committed to expanding the scope of GHG emissions calculations to include a water footprint, among other things. The ESG strategy currently under preparation will cover the period 2023 - 2026.

In the Budimex Group, by sustainable and responsible management, we also mean constant care for the relationship with internal and external stakeholders. We are an inclusive and open company. We aim to provide our employees not only with a steady job, but also with space for unlimited development. We encourage young people standing at the beginning of their careers to build their future in the construction industry. In 2022, 279 apprentices took advantage of Budimex’s offer. We promote gender equality in terms of pay and working conditions. In the past year, we have successively increased the parity of women in management positions, supported them in acquiring competencies. We also carried out a calculation of the adjusted wage gap, which was -1.9%. Budimex Group is growing thanks to the commitment and ingenuity of the people it has been developing within its structures for years. Every year, it identifies talents and helps them acquire new skills and successfully pursue their chosen career path. . As a result, at the end of 2022, the Management Board of the Group was expanded by a decision of the Supervisory Board to include three new members, whose long-standing and diversified experience enriches the Group’s management competence. 

At Budimex Group, respect and care for the employee means first and foremost caring for their safety. Our unchanging priority has always been to set the highest health and safety standards for the construction industry. We have a number of policies and programmes aimed at our team members and partners, in which our entire industry community actively participates, e.g. ‘Safety Week’. In 2022, we have been streamlining and increasing the effectiveness of our incident detection and analysis solutions, and applying the conclusions in the course of updating existing procedures and making effective improvements on our project sites. Among other things, we recorded a decrease in the accident severity rate from 0.32 to 0.17, and we also implemented a number of safety training courses for our employees.

We want to be a good neighbour. We pay a lot of attention to the needs of local communities when implementing construction projects. We are keen to ensure that, in addition to the benefits offered by a new facility or piece of infrastructure, we leave added value by affecting the comfort of life for local residents. In 2022 we held 24 dialogue sessions with local stakeholders, and conducted a number of information campaigns on the investments that we have been entrusted with. Our community activities included the second edition of one of our flagship projects, ‘House from the Heart’. We also invited our employees to join in helping Ukraine through a volunteer programme.

In the Budimex Group, we are strongly committed to principles such as quality, honesty, timeliness or transparency. We strive to achieve the highest standards in all areas of our business activities. We operate in an ethical manner. This includes compliance with the European Union’s requirements for sustainable business operations and Minimum Safeguards. In this report, we have disclosed for the first time the percentage of turnover, capital expenditure and operating expenses of the Budimex Group linked to the EU taxonomy. We have also indicated the actions taken by the company in terms of procedures and policies upholding human rights in our organisation and preventing corruption, unfair competition and other types of abuse. We are successively training our team members on key compliance issues. We are closely monitoring the European Commission’s directives, including the CSRD, and are already implementing solutions to meet our reporting obligations based on the new rules. As part of the existing CSR Strategy 2021-2023 and the ESG strategy under development, we are committed to expanding the scope of GHG emissions calculations to include a water footprint, among other things. The ESG strategy currently under preparation will cover the period 2023 - 2026.

We want to act in accordance with current legislation, but above all in a responsible manner, respecting our employees, partners, as well as the beneficiaries of our investments and their environment. People and quality of life are the foundation on which we will build our potential in the coming years. I am very proud to present to you our non-financial report for 2022. Despite the unfavourable circumstances and mounting challenges, thanks to the great commitment and experience of the people who make up the Budimex Group, we are going beyond the pattern of a traditional construction company towards a modern enterprise that responds to people’s needs and improves their quality of life. We are setting new business goals, growing in a sustainable and innovative way, and successively building our commitment to energy transformation. I would like to thank to all employees of the Group for your invaluable contribution, your daily work and all that we have been able to achieve together.