Yearly Report Metrostav a.s. 2015 Contents 4 Company profile 6 Introduction of the Chairman of the Board of Directors 8 2015 in figures and pictures 10 Highlights of 2015 12 Strategic targets of the Company 18 Business development of Metrostav Group 24 Social responsibility priorities 30 Corporate governance 32 Metrostav Group chart 33 Key consolidated figures of Metrostav Group in 2011–2015 34 Contact information Company profile Metrostav, the leading company of the Metrostav Group, in 2015 reaffirmed its position of number one on the Czech construction market and maintained the second place in this field among the countries of Central and Eastern Europe. The Company bores tunnels, builds the metro, bridges, motorways and roads, as well as residential houses and industrial buildings, power plants and wastewater treatment plants. In addition, it renovates historical structures. Its activities 4 account for almost half of domestic underground construction; Metrostav is one of the few companies in the Czech Republic that employ highly specialized, traditional mining methods of construction. Metrostav is well aware that evidence of genuine stability and sustainable business of each company is not just financial results, but also corporate conduct demonstrating their social responsibility. 5 Introduction of the Chairman of the Board of Directors 2015 was another successful year railway tunnels in Ejpovice and we would like The Environmental Impact Assessment (EIA) to use it abroad as well. Act may bury not only new projects under for the Metrostav Group. The preparation, but also the project that are ready Group’s external turnover and Construction of the Blanka tunnel was difficult for tenders. The construction sector in the for us because the tunnel complex became Czech Republic lacks a transparent concept, profit again moderately increased a battleground for politicians and a target for rules and regulations, which makes it difficult year-on-year. I am pleased that we criticism by the media and the public. However, for investors to contract projects and for the criticism turned out to be unfounded and building companies like ours to compete in continue to embody our shared unjustified. I appreciate that Blanka has proved tenders and implement the projects. values for our shareholders and to be a useful, solid and well executed project. It has eased traffic in some parts of Prague, Over the past twenty years, seventeen partners, notably professionalism, as we expected. On the other hand, it has also ministers took office at the Ministry of credibility and stability. Also, last confirmed what we had repeatedly pointed Transport. And I have long considered it out: the tunnel complex lacks connections to a gross mistake to have no construction year was key for us on two counts: the traffic system. To substantially improve ministry at all. Our two largest contracts for the traffic situation in the capital, Prague has to complete the outer and inner ringroads. Compared to other sectors, our industry has the domestic public sector were Blanka has always been and will be an long operated on low margins that often do not completed and Metrostav Group’s extraordinary reference project for Metrostav outweigh the risks entailed in this field. Yet and I am pleased that the Troja Bridge, which many people are convinced that the building production abroad exceeded is part of the Blanka complex, has won several industry has great potential for corruption. 30 percent of total performance. prestigious awards. The Czech Republic has endorsed the law on criminal liability of legal entities, under which I highly value the work of our teams abroad. companies are responsible for the conduct After six years of construction, the extended The shortage of large projects on the domestic of their employees. The Metrostav Group has A metro line from Dejvická to Motol was put market prompted the Metrostav Group to move implemented zero tolerance for any breach into operation in April. Metrostav’s paramount some of its production capacity to foreign of ethical norms and unfair practices. At the project, the Blanka tunnel complex, was put markets. In the Czech Republic, the Metrostav beginning of 2015, we updated the corporate into operation on 19 September after a number Group boasted the largest construction Code of Ethics that must be observed by all of setbacks and obstacles. A day later, we production volume for the fourth year, but in our employees and business partners. In handed over to Poland’s public investor the foreign countries we still rank among smaller September, we also approved the Group’s modernized S8 ringroad in Warsaw, which companies that must compete with local and criminal prevention standard incorporating was a great success, and on 25 September we often stronger competitors. I deeply respect in our organizational and management celebrated the end of boring the Norðfjörður our partners who are capable of winning documentation a program to protect the Group tunnel in Iceland. We continued to work on foreign contracts and then timely execute companies against liability risks pursuant to international projects in Norway, Germany, them in good quality despite the harsh climatic the law on criminal liability of legal entities. Serbia, Hungary and other countries. Even conditions, especially in the Scandinavian though we began to bore a railway tunnel in countries. We have also been successful in I look forward to celebrating this year 45 years Ejpovice near Plzeň at the beginning of the Poland, where a month before the contracted since founding Metrostav. I am convinced year, our project portfolio has been changing deadline we handed over the renovated city that we can build upon our past achievements as large-scale projects for public investors in expressway S8 and subsequently we signed both in the Czech Republic and abroad and the Czech Republic are being replaced with a contract for construction of the S7 motorway overcome all setbacks facing the Company now smaller regional projects and foreign contracts. in Gdansk. or in the future, as we have always managed before. Construction of the Prague Metro has always To succeed in foreign markets also been a matter of prestige for the Company means to get to know and comply with I wish all shareholders, colleagues and and a flagship project valued by both industry local building legislation and regulations partners good luck and professional success. professionals and the general public. I am glad governing the construction industry. We that we have completed the construction of the have been getting better and better at that. V.A metro line in excellent quality and to the Conversely, the situation in Czech legislation satisfaction of all parties. Thanks to Metrostav’s is still unsatisfactory. This year we expect Division 5 team we were able to demonstrate amendments to key laws that badly need fixing. the effectiveness of the TBM method and I previously described the Public Contracts Act incorporate it in our core technologies. This as flawed and at the moment it doesn’t look Jiří Bělohlav technology is currently deployed for boring like it might be turned into a quality product. Chairman of the Board of Directors 6 7 2015 in figures and pictures Metrostav a.s. Production 19.2 CZK bill. Operating profit 409 CZK mill. Employees 2,934 Operating in countries 8 7 Metrostav Group Operating income 31.6 CZK bill. Operating profit 922 CZK mill. Employees 5,068 Operating in countries 17 9 Highlights of 2015 Acquisition of the Vögele Super 2100-3i finisher allowing to pave the width of 13 metres with the output of 13,000 m2/day for the Asphalt Paving Centre. Inauguration of the Handover of the small tunnelling shield S-799 hydroelectric power plant Viktorie for boring the in Štětí on the Elbe to the Ejpovice tunnels, diameter non-profit organization 10 m, length 114 m and Energeia. weight 1,800 tonnes. II Handover of the Meteor Handover of the service administrative building zone at the Kozlovichi border in Prague 8 to investor terminal in Belarus to CPI Property Group. Approval of the updated investor Beltamožservis. Code of Ethics of the Metrostav Group by Opening of the InnoCrystal the Metrostav Board of I Innovation Centre in Directors. Zlatníky-Hodkovice near Prague. Completion ceremony for the reconstruction of the Central Military Archives Launch of the operation in Prague-Ruzyně. of a six-kilometre section of the V.A metro line from Laying the foundation Dejvice to Motol. stone of a production III facility for manufacture Incorporation of Metrostav of Busch vacuum pumps Polska Spolka Akcyjna in Liberec. based in Warsaw in the Polish commercial register. Signing of the contract for the reconstruction of IV the National Museum Signing of the contract Historical Building in for the modernization Prague. of a 5-kilometre section of the D1 motorway between Hvězdonice and Signing of the contract Ostředek. for the construction of the Adoption of the Decathlon shopping centre Criminal Compliance in Košice for investor comprehensive White ouse s.r.o. programme and its Handover of the expanded implementation by wastewater treatment all Metrostav Group plant in Pelhřimov for use. V companies. Winning the title Czech Obtaining the Safe Transport Construction Company certification 2014 and two other (sixth) awarded by the VI professional awards State Labour Inspection for the “Pedestrian Office. bridge across the Elbe” in Čelákovice. 10 Signing of the contract for the reconstruction of rooms housing the irradiator at the Vinohrady Teaching Hospital in Prague. Completion of boring an Winning the tender for 860-metre-long Poľana the construction of the tunnel, which is part of Jobergtunnelen tunnel in the Slovak D3 motorway Norway (in association with near the border with the Bertelsen & Garpestad). Czech Republic. Opening of the “N” pavilion Signing of the contract VII of internal medicine at the for the construction Silesian Hospital in Opava of the Jobergtunnelen six months in advance.