Comment of the Management Board of Mostostal Warszawa S.A. - to the consolidated financial statements of the Mostostal Warszawa Group for the 3Q of 2018

After three quarters of 2018, Mostostal Warszawa Group earned a sales revenue of PLN 683 million and suffered a net loss of PLN 33 million. The decrease in revenue in the period from 01/01/2018 to 30/09/2018, as compared to the corresponding period of 2017, was caused by the declining throughputs on the project for construction of power units in Opole in line with the schedule as well as lower than expected volume of contracts. Losses recorded by the Group are the effect of the negative valuation of exchange rate differences for loans denominated in EUR and significant increases in the prices of materials and services of subcontractors whose scale was difficult to predict when valuing contracts signed in 2016-2017.

From the beginning of 2018, we have concluded new contracts with a total value of PLN 1,357 million. The Group's backlog comprises mainly contracts from the general construction, industrial, energy and infrastructure sectors. The current value of the Group's portfolio is PLN 1,946 million.

The financial debt profile has not changed compared to last year and is still very beneficial for us. Only PLN 30 million from PLN 275 million are bank loans and leasing (PLN 29 million as at December 31, 2017). The remaining amount is loans received from the parent company - Acciona Construccion based in Madrid.

As at 30/09/2018, total equity of Mostostal Warszawa Group amounted to PLN 106 million. Employment reached the level of 1,490 employees, remaining at a similar level as compared to the end of 2017.

Our goal for 2018 is to further increase the order portfolio and improve the profitability of our contracts despite unfavorable external conditions independent of the Group.

The financial statements of the Mostostal Warszawa Group for the first half of 2018 are available on the website of Mostostal Warszawa S.A. in the Periodic Reports tab.

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