Avax S A : Annual Financial Report 31.12.2023 in xHTML

39. Joint Venture Projects with J&P (Overseas) Ltd

1a. Roadworks in Qatar

1b. Qatar Foundation Stadium

2. Jordan

The project has been completed and is in a use stage

The bank guarantees of advance payment & of performance for the project of current total value € 12,4 mil. have been issued solely by our company,

they have been reduced to € 0,98 mil and are expected to be refudend by the end of November

The independent engineer, in his missive dated 5/4/2024, addressed to the client, informs them that the performance guarantees must be returned

due to the contractor's fulfillment of obligations and the expiration of the warranty period without any outstanding issues, with the simultaneous

obligation of the client to release the retention of performance

The QFS project was carried out on a joint venture between the Company and former subsidiaries of J&P (Overseas) Ltd, which came under the control

of AVAX ME. The Company indirectly increased its participation in the execution of the project. The remaining projects were acquired through the

acquisition that involved large-scale E / M subcontracting for third party clients in Qatar.

On 11.10.2018, it was announced that international contractor J&P (Overseas) Limited, incorporated in Guernsey, filed for liquidation to address the

deficits and liquidity problems it faced. Given that the Company participated in four joint venture projects with J&P (Overseas) Limited in Jordan and

Qatar, it was necessary to review the respective contracts with the clients and banks involved in these projects. The Company made, and still does,

every effort to continue and complete these projects (except the two road projects and QFS in QATAR that have already been completed) in the most

technically perfect way, to ensure the Company's future presence in the construction market of the wider Arab world as well as its access to the local

banking system.

A detailed report on this matter may be found in the Report of the Board of Directors for the Annual Financial Report 2018, under the "Important post

balance sheet date Developments & Events" section.

More specifically, the status of each project is as follows:

The projects have been completed

The Group fully consolidated, for the first time the activities in Qatar, through the consolidation of AVAX ME in the financial statements on

30.06.2019, as it essentially replaced the J&P (Overseas) Ltd group, which had already been liquidated, in order to ensure the completion of local

projects, with the main one being the Qatar Foundation Stadium, which has been completed and hosted the 2022 World Cup.

With this agreement, AVAX SA fully undertook the continuation of the project

This project regards the upgrade of the baggage management system in Queen Alia International Airport (Amman), and is an extension of an earlier

contract signed by the local government to build a modern airport. The contract was signed on 12.04.2018 representing a value of € 24.8 million for

our Company, which corresponds to a 50% participation.

During the consolidation process, significant loan liabilities and outstanding project balances were initially identified. However, the course of the

liquidation of J&P (Overseas) Ltd made difficult the financial position of the Group. A relevant report had been made in the Company's Prospectus on

20.01.2020, where it was recorded that the inability to collect receivables from projects totaling approximately $ 140m. created conditions of

temporary cash constraints for which the Company was considering since the end of 2019 various possible actions, including discussions with the

local partner Fahad Trading W.L.L. (who owned 51%), for a full acquisition of these companies.

Eventually, due to the continuous deterioration of cash liquidity, the Company proceeded to this solution, ie it decided to sell these companies to the

local partner with whom a draft contract of sale was made. Specifically, according to the draft contract of sale, the Group of companies of AVAX SA.

will have to pay a compensation for the sale to the local partner of € 29.4m. (QAR 120m.), for which a provision has already been made in the

Financial Statements of 31.12.2019 and it will be settled with a payment of € 21.0m. from AVAX SA, while the remaining amount of € 8.4m. will be

given by AVAX S.A. for the share Capital increase of "AVAX INTERNATIONAL LIMITED" (100% subsidiary of AVAX SA), which will be a sale compensation

for the sale of AVAX ME subsidiaries in Qatar.

The local partner Fahad Trading WLL, has essentially taken over the management of the projects in question since the beginning of 2020, has full and

exclusive communication with the banks, the communication with the customers and the receipts and payments of the project. As a result, the

companies Conspel Qatar WLL and J&P Qatar WLL as well as the project 'Education City Stadium' (24% belongs to AVAX SA) are not included in the

financial statements of the Group.

Due to several lawsuits against the J/V, it has been stipulated in the sales agreement that all legal cases of the J/V will be handled by the local

partner. On 19/10/2023, the agreement with the local partner was signed, with the agreement that installments would begin in 60 business days. Up

to today, three installments of QAR 30 million each (approximately €7.5 million) have been given. The fourth installment will be given 2 months after

the completion of AVAX's exit process from the J/V, as anticipated. Following that, the next 6 installments of QAR 60 million each (approximately €15

million) will continue until completed in 31/12/2024.

The balance of around €7.5 million will be paid when Group Companies, Conspel Qatar and J&P Qatar, participating with a 49% stake in Avax Middle

East (inactive subsidiary of Avax International), are transferred to the local partner, provided the procedure is completed over the next 18 months.

Failing that the company guarantee provided by AVAX to Qatar National Bank will lapse with no payments made. The liability for the agreed amounts

have been recognised in past periods

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