2011-07-28
Hydrobudowa Polska Board's comment on current situation in the HBP Group
Dear Shareholders and Investors,
Having considered the numerous inquiries regarding the price development of Hydrobudowa Polska in recent times and the reasons for a downward trend, I would like to briefly outline the current situation of the Company. We understand why the Investors find the price development of the shares of Hydrobudowa Polska alarming; however, we see no fundamental basis for the reported declines. In our opinion, this is not related to any adverse event that has or could have occurred and had a significant impact on a reduction in its price. While assessing the current financial situation of HBP Group, we can say that it is good and the prospects for the market on which we operate provide the basis for an optimistic look into the future. The HBP Group has been gradually expanding its portfolio of contracts. We signed such contracts as: for the performance of Słowacki Route in Gdańsk, worth a net sum of over PLN 129 million, for the construction of the hall in Toruń, worth a net sum of PLN 99 million, for the execution of water and sewerage infrastructure in Dąbrowa Górnicza, worth a net sum of over PLN 52 mln, for the construction of an interactive history centre of Ostrów Tumski in Poznań, worth a net sum of over PLN 39 million, for the modernization of waste water treatment plants in Gniezno, worth nearly a net sum of PLN 32 million, and the waste water treatment plant in Hajdów, located near Lublin, worth almost a net sum of PLN 26 million, as well as the construction of the Regional Waste Management Plant in Dębowiec, worth a net sum of over PLN 38 million. Total value of new orders has exceeded PLN 400 million. Moreover, we expect the invitation to sign agreements in the first price auctions related to the construction of a tunnel under the Dead Vistula River in Gdańsk, with a net value of PLN 720 million, the rebuilding of Kaponiera Roundabout junction in Poznań, for a net value over PLN 170 mln, the reconstruction of the Grunwaldzka Street in Poznań, with a net value of approximately PLN 87.5 million, and the reconstruction of a waste management plant in Bełżyce, with a net value of over PLN 30 mln. The value of all contracts, including the participation of consortium members, equals over PLN 1 billion net. Let me only mention that the value of HBP Group contracts was almost PLN 2.2 mld at the beginning of the second quarter. This provides us with revenue not only for this year, but also partly, for the following one. At the time being, we are working to initiate tender proceedings for the value of PL 4 billion. We are also devoted to private contracts (such as connected with the construction of LNG terminal in Świnoujście). We plan to enter into new market segments - such as the energy market, which seems to be very prospective. This will be achieved through membership of the PBG Group. PBG has also provided a role for Hydrobudowa Polska in a complex offer as the general contractor. This is mainly associated with the construction works and installations. PBG participates in virtually all large energy tenders. The market is estimated to be worth between PLN 150 and 200 billion by 2020. Every success of PBG on this particular market means an opportunity for orders for Hydrobudowa as well.
We took steps to make the best use of the resources of our Group in the second quarter this year. We also continue the process of absorption of Hydrobudowa 9 by Hydrobudowa Polska, which should be completed at the beginning of 2012. We have a common Management Board for both of these entities. At the same time, we carry out organizational changes aimed at reducing fixed costs and increasing efficiency, even through the outsourcing of well functioning operations of Hydrobudowa or liquidation of overlapping organizational structures, especially in the area of ??administration.
According to our forecasts, the Capital Group of Hydrobudowa Polska shall earn about PLN 50 million with revenues estimated on the level of about PLN 1.6 billion. Our forecasts are conservative and based mostly on contracts already in the portfolio of contracts. At present, we see no threat to the success of our forecasts.
Yours sincerely - Jerzy Ciechanowski, Chairman of the Management Board