Conclusion by a consortium of companies with the participation of the subsidiary Izostal SA of an agreement for the supply of pipes and bends to PERN SA

In reference to the current report No. 15/2020 of 24 June 2020, the Management Board of STALPROFIL SA (Company) informs that on 14 July 2020, a Consortium of companies with the participation of the subsidiary Izostal SA (Consortium Partner) and Ferrum SA (Consortium Leader) concluded with PERN SA with its registered office in Płock (Ordering Party), a contract for "Deliveries and storage of pipes and bends for the construction of the Boronów-Trzebinia product pipeline".
The subject of the contract includes obligatory deliveries and 6-month storage of insulated steel pipes: DN250, DN500 and DN700 and bends DN250. The agreement gives PERN SA the right to extend the subject of the agreement in terms of supplies and optional storage for a period of up to 24 months from the date of selected deliveries, and the decision to exercise this right should be submitted to the Consortium in writing by the Ordering Party before the expiry of the 6-month obligatory storage period.
Pursuant to the contract, obligatory deliveries will be made by 31 March 2021.
The maximum remuneration for the performance of the subject of the contract, including deliveries and obligatory storage, as well as deliveries and optional storage, amounts to approx. PLN 34.33 million net, including the value of obligatory deliveries is PLN 31.32 million net.
The participation of the parties to the Consortium in the performance of the contract will result from the actual involvement of Izostal SA and Ferrum SA, respectively, in individual stages of preparation and delivery. As at the date of conclusion of the contract, the majority share of the Consortium Leader in the performance of the contract is estimated, however, taking into account the time perspective of the delivery as well as the logistic requirements related to it, the involvement of the Consortium parties in the performance of the contract is not permanent and may be changed.
The agreement provides for contractual penalties for PERN SA: for delays not exceeding 30 days in the delivery of optional deliveries in the amount of 0.1% of the net remuneration due to the Consortium for the execution of these deliveries for each day of delay; for delays exceeding 30 days in the performance of supplies or optional supplies in the amount of 0.2% of the net remuneration due to the Consortium for the performance of these supplies for each day of delay; for delays in removing defects found during acceptance, in the amount of 0.1% of the net remuneration due to the Consortium for the respective deliveries. The total amount of contractual penalties may not exceed 20% of the net value of the obligatory deliveries.
The subject of the contract is covered by a 48-month quality guarantee. To ensure the proper performance of the contract, the Consortium will provide a performance bond in the amount of 10% of the Remuneration specified in the contract.
The remaining terms of the agreement do not differ from the standard terms and conditions applied in this type of agreement.
The Management Board of the Company considers the described agreement to be significant due to its high value. The implementation of the aforementioned agreement will have an impact on the increase in revenues of the STALPROFIL SA Capital Group.