The engineering company Duro Felguera will restate the annual accounts for the years 2022 and 2023 and will reformulate the consolidated interim financial statements as of June 30, 2024, which it intends to complete next week, after provisioning 100 million euros in its accounts for the Project Djelfa, consisting of the construction of a combined cycle power plant in Algeria.
Thus, Asturian engineering has informed the National Securities Market Commission (CNMV) that the board of directors will meet next week to approve the 2024 interim financial statements.
Duro Felguera recorded losses of 26.3 million euros in the first half of the year, compared to profits of 1.56 million obtained in the same period of the previous year.
The provision derives from a “more conservative” accounting treatment in terms of the interpretation of the different possible scenarios that were identified in the Djelfa Project, in accordance with the accounting criteria of the company’s external auditors, also confirmed by the CNMV.
“This change in criteria on the accounting treatment of the Djelfa Project is based on the execution scenario of the entire project, which considers the updating of costs of the initial budget without any type of economic rebalancing on the part of the client and the maximum amount of penalty for the delay that has been in dispute since fiscal year 2021, entails the provision of a provision of approximately 100 million euros,” details Duro Felguera.
Net worth, positive
However, despite the aforementioned provision, the net equity of the parent company as of June 30, 2024 “remains positive for commercial purposes.”
The CNMV agreed on Monday to suspend the listing of Duro Felguera’s shares on the Continuous Market after the Algerian energy company Sonelgaz presented a request for arbitration against the Asturian engineering company before the Algerian Chamber of Commerce and Industry for the suspension of the contract. from Djelfa.
In this request, Sonelgaz asks to lift the suspension of the contract and resume work, as well as compensation of around 413 million euros.
In another relevant fact released this Friday, Duro Felguera has indicated that the suspension, by the Asturian company itself, of the contract by which Societé de Production de l’Electricité (SPE), a subsidiary company of Sonelgaz, awarded them the construction of a combined cycle plant in Algeria is “in accordance with the law due to the non-compliance incurred by SPE.”
In addition, the Asturian company intends to request compensation for any damages caused that may apply and “the amount of which has yet to be defined.”
The plant that was going to be built in Djelfa had 4 gas turbines and two steam turbines and a generation capacity of 1,400 MW, with a completion period of 40 months.
However, Duro Felguera has alleged “different non-compliance” by SPE since the beginning of the execution that motivated Duro Felguera to present two claims totaling 178 million euros. To this, he has added the impact of the covid-19 crisis and the breakdown of the Treaty of Friendship between Algeria and Spain.
Finally, in 2024 Duro Felguera informed the client of the suspension of the work and began working on the reactivation of arbitration. On November 10, 2024, the company received notification of the arbitration request presented by SPE against Duro Felguera before the CACI, requesting the lifting of the suspension of the contract, the resumption of work and compensation for damages.
Legal route and negotiation
For its part, Duro Felguera will present its written opposition to the arbitration request before December 10, rejecting SPE’s claim, understanding that the suspension of the contract is in accordance with the law.
Likewise, in relation to the Djelfa Project, the company states that, in addition to the legal defense of its rights through judicial or arbitration, “it will continue to carry out all the necessary actions to achieve a negotiated solution beneficial for Duro Felguera” .
As reported by the Asturian company on November 8, the CEO of Duro Felguera, Jaime Argüelles, presented his voluntary resignation from the position with effect from November 6, which has led the company to now begin a selection process for appoint his replacement.
Likewise, Duro Felguera has appointed Eduardo Espinosa, until now vice president of the company, as the new president, replacing Jaime Isita, who will now become vice president.
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