Dekpol S A : Good results of the DEKPOL GROUP in 1-3Q 2022 thanks to diversified business operations

• Consolidated revenue in 1-3Q 2022 at PLN 997.6 million, +37% y/y
• Operating profit of PLN 78.2 million, +26% y/y
• Net profit of PLN 48.8 million, +35 y/y
• solid results of the General Contracting segment (Dekpol Budownictwo)
• and segment of Production of accessories for construction machines (Dekpol Steel) after 9 months of this year compensate for lower contribution of the Property development segment (Dekpol Deweloper) related to the schedule of investment realization
• Group's stable cash position - cash balance at the end of September 2022: PLN 145.2 million
• Safe level of debt - LTM net debt/EBITDA ratio at the end of September 2022 at the level of 1.41

The DEKPOL Group, which operates in the areas of general contracting, property development and the manufacture of buckets and construction equipment, has published its financial results for 3 quarters of 2022. The Group's revenues amounted to PLN 997.6 million in the period, up 36% year-on-year. The Group's operating profit after 3 quarters of 2022 amounted to PLN 78.2 million, up 26% year-on-year. The Group ended nine months of 2022 with a net profit of PLN 48.8 million, up 35% y/y.

At the end of the third quarter of 2022, the Group's cash balance was PLN 145.2 million, and the LTM net debt/EBITDA ratio was at a safe level of 1.41.

General contracting segment

The general contracting (GW) segment is DEKPOL Group's largest business segment, with a revenue share of more than 76% in Q1-3 2022. GW segment revenue in the period under review amounted to PLN 759.4 million, up 52% year-on-year, and operating profit amounted to PLN 52 million (+61% year-on-year).

At the end of September 2022, contracts for third parties with a total contractual value of more than PLN 1.3 billion net were being executed. Projects with a total net value of approximately PLN 323 million remained to be executed after reporting period. In addition, within the GW segment, there are intra-group property development projects with a total value of PLN 395 million, and projects with a total value of about PLN 156 million remained to be executed after reporting period. The majority of Dekpol Construction's contracts are carried out on behalf of private investors and have a value of up to PLN 50 million, and, as of the end of September this year, GW segment had 9 contracts in its portfolio with a value exceeding PLN 70 million.

Property Development segment

In 1-3Q 2022, the revenue of the property development segment amounted to PLN 75.8 million (8% share in Group's revenues), and the operating result amounted to PLN 9.7 million (compared to PLN 120.2 million and PLN 31.1 million in 1-3Q 2021, respectively). During the nine months of 2022, contracting of the property development segment in terms of preliminary, development and reservation agreements amounted to 262 units (vs. 408 in 1-3Q 2021).

The segment's revenue in the discussed period recognized sales of 122 units (in 1-3Q 2021 it was 257 units, among other things due to the commissioning of 180 units under the first phase of Osiedle Pastelowe in Gdańsk) as well as partial revenue (performed in accordance with the progress of works on construction site) from implementation of a project with an institutional investor in Wrocław on Braniborska Street.

As of the end of September 2022, 746 units were available in Dekpol Deweloper's sales offer.

Segment of production of accessories for construction machines

Segment of production of accessories for construction machines (Dekpol Steel) accounted in Q1-3 2022 for 12% of the Group's revenues and remained the second largest business segment in terms of contribution to sales. Dekpol Steel's revenues in the period reached PLN 122.9 million (+46%), while operating profit amounted to PLN 10 million (+10% y-o-y).

Starting in May this year, utilizing experience and credentials of the Intek plant acquired in Q4 last year, diversification of production took place. Still the "core" business of Dekpol Steel together with Intek Sp. z o.o. remained production of buckets and accessories for construction machines, while products for the offshore industry are becoming an additional area of business activity. In addition, Dekpol Steel is already in certification process aiming obtaining a license for production for the defense industry.

Commentary of Management Board regarding results for Q1-Q3 2022 and prospects for ongoing quarters

The Group's growth strategy of basing its operations on three pillars: general contracting (Dekpol Budownictwo), manufacturing of accessories for construction machines (Dekpol Steel) and the property development segment (Dekpol Deweloper) allows the Group to generate a solid level of results in a volatile and dynamically changing environment. The highest contribution to earnings in Q1-3 2022 came from Dekpol Budownictwo, which increased revenues by 52% y/y. The company is coping well with high material and labor costs, constantly monitoring the market environment and skillfully bidding. GW's advantage in the demanding market is the execution of short-term contracts and the use of its own resources. Over the past year, the ability to ensure the availability of precast concrete products produced by our Betpref Company proved to be crucial to the execution of orders.

Additional support for this area will come from Kombet Działdowo, a plant with a similar profile, which we managed to acquire during the third quarter. Dekpol Construction is focusing on acquiring contracts in the logistics, industrial, and cubature segments in a growing area of Poland, and has begun to diversify by offering in the "Design and Build" model. The company recently secured its first order under this formula from a public entity investor.

The segment of production of accessories for construction machines, i.e., the company Dekpol Steel, successfully realized a high level of orders in 1H 2022. In 3Q 2022 the company noticed a slowdown in orders across the industry, due to global geopolitics and growing concerns over the global recession. Ultimately, Dekpol Steel generated PLN 122.9 million in revenues during 9M 2022 (+46% y/y), accounting for 12% of the Group's sales. Similarly, as in the pandemic period, the Company took advantage of the time of reduced order occupancy to intensify activities focused on optimizing internal processes, among other things. The Company's efforts to improve the level of orders observed in the third quarter focused largely on acquiring new customers and markets. In particular, Dekpol Steel observes its business opportunities in the trend of Western Europe and the US economies to become less dependent on supplies from China and Russia.

The Group's two business segments above compensate lower contribution from the property development segment this year. The schedule of execution of individual investments, the date when a finished building is put into use, directly translates into recognized revenues, hence their level in this segment may fluctuate on a quarterly basis. Taking into account the changes that have taken place on the real-estate development market as a result of interest rate hikes, Dekpol Deweloper's intention is to achieve sales of 320 units in 2022 and to recognize revenues of PLN 190 million, which will consist of sales of approx. 390 units as well as revenues from implementation of the investment on Braniborska Street. - says Mariusz Tuchlin, CEO of DEKPOL S.A.

Thanks to diversified business operations, DEKPOL is achieving solid results in a difficult market. We do not operate in isolation from changes in the global economies and especially in the third quarter it was clear how important it is balancing of three segments within the Group. We are increasing the scale of our business operations and maintaining a strong market position, while constantly working on the cost sphere, as the market situation demands of us. This includes both operating costs and financing growth in a high interest rate environment. We are paying redoubled attention to maintaining optimal and safe levels of debt and receivables, preserving our ability to grow our business in a challenging environment. - adds Katarzyna Szymczak-Dampc, Vice President of Management Board, Chief Financial Officer of DEKPOL S.A.

Contact for media:

Katarzyna Sadowska

cc group

katarzyna.sadowska@ccgroup.pl

tel. +48 697-613-020

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Dekpol Capital Group is dynamically developing in construction and property development industry as well as in production of accessories for construction machines. The company was established in 1993. It owns a modern machine park and highly qualified staff. From the beginning of its business activities, it has ambition and determination to further dynamic development with usage of modern technologies. Business activities of the Dekpol Capital Group are based on three main segments. General Contracting services provide the largest share of the Group's revenues. The offer covers a very wide range of activities. The company has extensive experience in implementation of industrial, logistic, commercial, public, sports and recreational facilities, as well as environmental protection facilities. It also carries out road, sanitary and hydrotechnical works. The company has an established leadership position in Northern Poland and is one of the largest general contracting companies for cubature facilities on a national scale. In turn, Dekpol Steel, the part of the Dekpol Capital Group, is a manufacturer of buckets and accessories for construction machines. It cooperates with the world's largest manufacturers of construction machinery. The products are sold to Norway, Sweden, Germany, the USA and Great Britain, and even to Morocco and Australia. The third dynamically developing segment of the Dekpol Capital Group is the property development activity, which, from the beginning of 2019, as a part of Dekpol Deweloper Sp. z o.o. offers flats, apartments and commercial premises. Since January 2015, the shares of Dekpol S.A. are listed on the Warsaw Stock Exchange.

More information available at: https://dekpol.pl/