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Letter from the President of the Management Board

Ladies and Gentlemen,
Dear Shareholders,

It is with great satisfaction that I present ELEKTROBUDOWA Group Annual Report for the financial year 2017 which was exceptionally successful for the Group. We took bold decisions and were implementing them consistently throughout the year. In effect, we initiated the events that not only strengthened the position of our Company in the market but also facilitated progress in our business activity. It refers both to creating new design solutions and to innovative modernization of the existing products.

“Businesses that grow by development and improvement do not die. But when a business ceases to be creative, when it believes it has reached perfection and needs to do nothing but produce - it is done.” The words by Henry Ford adequately reflect a contemporary approach to business and in the best way sum up our activity in 2017 which could be described in two words: innovation and development. The above finds its proof in concrete facts: during the jubilee International Power Industry Fair ENERGETAB 2017 in Bielsko-Biała our SF6-insulated medium voltage switchgear OPTIMA-24 was awarded the Ministry of Energy Cup. The name of the switchgear links to its “elder sister”, high voltage GIS OPTIMA 145. Designed and manufactured in the Production Plant in Konin, OPTIMA-24 is intended for distribution of electrical energy up to the voltage level of 24kV. The switchgear can find its application in the distribution network of power sector and in other industries, in factories and self-operated stations. Its design ensures safety of operation, at least 30-year useful life and provides the highest class of internal arc protection AFLR. The success of the solution is proved by the fact that in 2017 our customers order as many as 270 panels of OPTIMA-24.

Implementation of innovative challenges is one of determinants of business development. The project concerning extension of the existing 110kV GIS switchgear by adding bays made by another manufacturer was such a challenge for ELEKTROBUDOWA. Our company, as the first in Poland, has taken on the challenge. To the existing, more than 20-year-old switch bays produced by another manufacturer, the new, considerably different switch bays from ELEKTROBUDOWA SA were connected. The successful connection of the functional bays with different standards of busbars in respect of dimensions of gas compartments, busbar gauge, pressure in the gas compartments, etc. required spectacular solutions. I am proud to emphasize that we successfully performed this project owing to the genuine commitment and considerable experience of the designers, the production and installation personnel. All works were performed professionally, complying with the safety requirements, with continual participation of Investor’s representatives.

There is no doubt that development and delivery of products manufactured by the Company have been and will be possible thanks to successive winning of contracts relating to the construction of the new and modernization of the existing electrical substations. Contracts awarded to the Company during the previous financial year will provide us more than 100 million PLN of revenue from performance of orders in the transmission and distribution segment. I wish to add that outlooks for development of this market are promising.

Presenting this Report I would like to mention a kind of a jubilee and a notable success, concerning our presence, for ten years by now, at the construction site of the nuclear power plant Olkiluoto 3 in Finland. Following the contract amendments signed with AREVA GmbH, which increased the value of our works performed at the site, the contract has become the biggest ever project performed by ELEKTROBUDOWA, and its value approximates 168 million EUR. It is notable that the value of the contract has risen five times since its beginning, compared with the initial price. Another year of the Investor’s confidence we enjoy, confirms my belief that the Company has great competence, high standards of quality and expertise in managing projects in the nuclear sector, what makes the Company unique in the market in this respect.

Our presence at construction of facilities strategic for the national power system is marked by performance of works for such projects as the construction of a new supercritical 910MW power unit at the Jaworzno III power plant. Total amount of orders relating to the project exceeds 230 million PLN, the project completion is planned for 2019.

In the past year we received orders for performance of works relating to the construction of a new 450MW power unit in the Turów power plant; they consist of two big electrical packages to be completed by 2019.

The financial results for the last year prove that we have chosen the right course of corporate development. The Group ended the financial year 2017 with net sales revenue on the level of 902.9 million PLN and net profit of 58.6 million PLN. It is a signal that our decisions and following them actions bring the effect which all of us expect. In this situation and in consistence with the adopted policy, the Management recommends to pay out dividend for the financial year 2017 to the Shareholders.

The financial results are very important but we do not forget about other values by which the Company should be guided in conducting its business. Among them are openness, transparency, respect for sustainable development principles and social responsibility we assume when we are performing our tasks. We have been building confidence in our Company for years, reducing to minimum any risks arising out of our activity, both in the social and environmental contexts. We undertake various initiatives in the CSR area to compensate our environmental impacts. Our efforts and involvement in environmental, ethical, social, employee, corporate governance issues have been appreciated by including ELEKTROBUDOWA SA in the eleventh edition of the prestigious ranking of socially responsible companies, RESPECT Index. Our uninterrupted presence in composition of the index has been lasting since 2009. It means that the Company is managed in the responsible and sustainable way, and on the other hand it is an entity attractive for investors, showing high quality of reporting and high level of investor relations.

In 2018 ELEKTROBUDOWA SA is celebrating its jubilee. In January there was the 65th anniversary of its foundation and such moments always encourage reflection. I am convinced that since 1992, when the state-owned enterprise was transformed into the public company, we have managed to go skillfully through the period of political and economic transformation in Poland. At present we are active not only in the Polish market but also in foreign markets. We are always ready to accept new challenges and we successfully respond to them, which is our asset and competitive advantage. I believe that our past activity has given us solid foundations for further development, and development implies secure future for our organization and for each employee of ELEKTROBUDOWA Group.

On behalf of the entire Management Board I sincerely thank all people who contributed to the achievements of ELEKTROBUDOWA Group – our Shareholders and Customers, Members of the Supervisory Board and employees. Thank You for your trust in our Company and your loyalty to our brand. I assure You that we will make every effort to sustain continuous improvement and growth in value for our present and prospective Shareholders.

Sincerely yours

Janusz Juszczyk
President of the Management Board

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