Grifols announced to the market this Friday that it already has the KPMG audit report to publish its 2023 annual accounts. The Catalan blood products company, in the spotlight since the publication in January of a devastating report from the hedge fund American Gotham City, announces that the auditor has finally signed the accounts without qualifications.
On February 29, Grifols published its 2023 results, but without the auditor's report or the signature of one of its directors, James Costos. In these accounts, the company reported a 71% cut in net profit, in addition to having closed the year with negative cash flow and a 2.5% increase in debt. This fact caused a new wave of distrust in the market towards the company, which lost 35% of its stock market value in that session. Since then it has fallen 40%, although this Friday it rose almost 20%, to 19.7%.
The company now communicates that it already has the signature of the auditor and that the auditor's report, which is still KPMG but for the next year will become Deloitte, does not present any reservations. It does introduce an emphasis paragraph, in which it warns of the investigation opened by the CNMV on the company in relation to the accusations made by Gotham City, which stated that the company had artificially inflated its EBITDA and reduced debt to disguise its accounts. The company informs that all its directors have already signed the accounts, including Costs.
Grifols, however, reformulates the figures published just a week ago by calculating a joint venture with its partner in the US Inmunotek. This agreement, signed in 2021, involved the construction and joint management of 21 plasma collection centers, later expanded to 28. ImmunoTek builds and manages these centers with resources from Grifols, which adds them to its network. The Catalans have 75% of the joint venture, compared to 25% of the Americans. Grifols has agreed to acquire the plasma centers three years after they were built for a total of 500 million euros in total. In addition, it has already paid some 140 million in advances and another 233 million in payments for the acquisition of the collected plasma.
The adjustment, which the company claims has no impact on the profit and loss account or on metrics such as the leverage ratio or cash flow, means increasing the company's assets by 115 million, up to 21,441 million. At the same time, it cuts its net worth by 39 million, to 7,972 million due to a cut in reserves and increases non-current liabilities, which usually include financial debt, by 108 million, to 11,153 million.
Until now, Grifols has given a zero value to its participation in the company, while recognizing the advances to Immunotek as an asset, since it anticipates that they will be deducted from the purchase price, according to the annual accounts. It also indicates that, from 2023, Grifols also computes the losses attributed to its partner, which will be canceled when the purchases close.
The Catalan company manages to close the new crisis that opened last week. The lack of the audit report made the market believe that Gotham City's accusations had more basis than expected. Moody's, for example, threatened to lower the company's rating, currently at B2, if it did not present the audited accounts. Other analysis houses have joined in in recent days and have withdrawn confidence in the value.
The debt situation is key for Grifols. The company faces the maturity of 2,900 million of its large liabilities next year, of which 2,000 million are bonds. Therefore, the Catalan company must face refinancing this year, for which it plans to raise the money from sales of subsidiaries. It has agreed with the multinational Haier to sell 20% of its Asian business, Shanghai RAAS, for 1.6 billion, which it hopes to dedicate entirely to repaying debt.
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