Investor relations

Report concerns:
Concluding a material agreement

Report’s text:
Acting pursuant to section 5.1.(3) of the Ordinance of the Minister of Finance on current and periodical reporting by issuers of securities of 19 October 2005 (Journal of Laws of 2005 No. 209, item 1744) (henceforth the Ordinance), J.W. Construction Holding S.A., with its seat in Ząbki (henceforth the Company) hereby reports that in the period of 12 months it concluded with J.W. Construction Spółka Akcyjna, with its seat in Ząbki (henceforth the Contractor), a subsidiary, agreements for the total value of PLN 92,307,142. The agreement with the highest value (henceforth the Agreement) concluded on 27 August 2008 has been described below.
The subject of the Agreement is the completion by the Contractor, under the system of general contracting, an investment task which consists in comprehensive construction of a group of multi-family residential buildings together with external infrastructure and service connections on a real estate located in Warsaw at ul. Korkowa, “Osiedle Bursztynowe”, in accordance with the construction permit No. 127/WAW/2008 of 11 April 2008 (henceforth the Investment Project).

The date by which the Contractor is obliged to complete the works has been determined in the Agreement and it is 26 March 2010. The remuneration for carrying out the Agreement has been determined at the amount of PLN 81,256,524 net, and it is the total value of the elements included in the technical and financial schedule of the works. The Contractor’s remuneration will be paid on the basis of invoices received by the Company and issued on the basis of hand-over reports of completed works which meet the quality standards specified in the Agreement and which are accepted as they progress.
The Contractor has granted to the Company a 36-month statutory warranty for the civil structure, and the period shall commence as of the date of the final acceptance of the subject of the Agreement. From each invoice issued by the Contractor, the Company shall retain 2% of the net value of completed and accepted works as the guarantee deposit. The guarantee deposit shall be returned to the Contractor in two equal parts – the first one within 21 days of the final acceptance and removal of possible defects, and the second one upon the expiration of the statutory warranty.

The parties have agreed that the Contractor will be entitled to a contractual penalty in the amount of 10% of the remuneration specified in the Agreement in the event of Contractor's withdrawing from it due to reasons for which the Company takes responsibility. The Contractor may withdraw from the Agreement if: (i) the Company refuses, without a justified reason, to accept the works or sign the hand-over report; (ii) the Company informs the Contractor that due to occurrence of circumstances which could not be predicted in advance, it will not be able to meet its contractual obligations towards the Contractor; (iii) liquidation or bankruptcy proceedings are initiated against the Company.
In the case of delayed payment for invoices, the Company shall pay the Contractor statutory interest.
The parties have agreed that the Company will be entitled to a contractual penalty in the amount of 10% of the value of uncompleted works in the event of withdrawing from the Agreement due to reasons for which the Contractor is to blame. The Company may withdraw from the Agreement if: (i) the Contractor, without a justified reason, fails to continue the works for over 14 days despite having been asked by the Company in writing to continue them; (ii) the Contractor is in delay with part of or the whole Agreement for more than 30 days as compared to the schedule; (iii) liquidation or bankruptcy proceedings are initiated against the Contractor.
For each day of delay in completing the works as compared to the schedule, the Contractor shall pay the Company a contractual penalty in the amount of 0.01% of the remuneration for the delayed phase for each day of delay. For each day of delay in removing faults and defects during the statutory warranty period, the Contractor shall pay the Company a contractual penalty in the amount of 0.01% of the value of the element in which a defect occurred.

The parties have reserved the right to supplementary compensation which transfers the amount of contractual penalties to the amount of the actual damage incurred.

In other respects the terms and conditions of the Agreement do not vary significantly from those generally used in such agreements. The basis for recognizing the Agreement as a binding agreement is section 2.1(5)(a) of the Ordinance, since the value of the concluded agreement exceeds 10% of the Company’s equity.