Grifols suffers a 6% penalty after the CNMV report on its accounts

Despite this Friday's punishment, the company recovers 5.

Grifols suffers a 6% penalty after the CNMV report on its accounts

Despite this Friday's punishment, the company recovers 5.1% in the weekly count


Grifols shares posted the most bearish result of the Ibex 35 this Friday with a fall of 6.03%, reaching its unit price at 7.91 euros, after the National Securities Market Commission (CNMV) detected "deficiencies relevant" in the annual accounts of the blood products firm, although the supervisor, as noted yesterday with the market already closed, has not considered its reformulation necessary.

The Catalan blood products company has experienced a day marked by volatility, since at the opening it led the rises of the main indicator of the Spanish market with increases of 8% - taking the action above 9 euros -, although they have It was the sales that ended up prevailing.

Despite the falls in this session, Grifols has concluded the weekly count with an advance of 5.1% (the fifth best result in the week); However, the pharmaceutical company continues to be the most penalized value so far this year within the Ibex 35 with an accumulated stock market depreciation of 48.79%, placing its market capitalization at the close of this day at 4,850 million euros.

Once the market closed yesterday, the CNMV released its report, in which it detected "relevant deficiencies" - if evaluated as a whole - "in the detail and accuracy of the breakdowns and explanatory notes that support the figures of financial information in some years of the period analyzed".

The regulator has spoken out after the investment fund Gotham City Research accused Grifols, on more than one occasion, of doctoring its accounts at the beginning of January, after which the company has lost close to half of its market capitalization.

The supervisor has also found deficiencies in the presentation of alternative performance measures (APM), in particular the gross operating profit (Ebitda) and the debt-to-Ebitda ratio.

For this reason, the CNMV has considered that these deficiencies, "complex to assess individually and separately", must be considered "significant" as a whole, given that in some years they have hindered the ability of investors to adequately understand the financial situation, results and cash flows of Grifols.

Thus, it has assured that it will continue working on the Grifols issue with the "greatest speed" and that it will try to provide "maximum transparency" at the conclusion of its actions, if these lead to sanctioning measures in the terms permitted by the applicable regulations. .

The supervisor has indicated that the sanction is not "the priority at this time", since the CNMV has its focus on "the clarification of the financial information available to investors", given the social and market attention generated.

However, the CNMV has stated that "it would make public the initiation of any sanctioning proceedings in the event that it arose from the analyzes carried out so far or those that remain to be concluded."

The supervisor has clarified that it does not plan to publish additional information about future supervisory actions regarding Gotham, Grifols or any other person, nor about other possible consequences thereof.

Despite these deficiencies, the CNMV has stressed that it does not currently identify the need to carry out any reformulation of Grifols' accounts, while "the need to proceed with a restatement is not appreciated, with the exception of the eventual impact of the review of the Inmunotek operation, when the analysis of this point is concluded".

However, the supervisor has required Grifols to include, to the extent that they continue to be applicable, all the breakdowns of information indicated in the entity's future consolidated financial statements.

Likewise, the CNMV has urged the company to publish, within a period of fifteen days, a detail of the Ebitda and the net financial debts - for the years 2022 and 2023 - of those most relevant entities where there are non-profit holdings. controlled companies, so that an investor can calculate the leverage ratio considering, or excluding, the Ebitda and the debt that corresponds to the participation in its subsidiaries.

For example, the supervisor has indicated that in the consolidated annual financial report for the year 2023 the entity "still does not incorporate into the accounts the information on the breakdowns of the consolidated assets and liabilities of BPC Plasma, Haema AG and Biotest AG, despite having provided additional information.

The supervisor has also urged Grifols to publicly detail within 15 days the commitments it will assume to adapt the use of alternative performance measures (APM) in the next financial information reports.

In response to the conclusions reached by the CNMV, Grifols has committed to improving its transparency and expanding the breakdowns of its financial information following the regulator's recommendations.

Given this carousel of events, Bankinter analysts have assessed that the CNMV's objections are a "warning about the limited information" that Grifols provides in relevant aspects, as well as opting for a consolidation criterion in the subsidiary InmunoTek, an element that makes it possible to "provide little information about this company."

Thus, since the CNMV "does not enter into discussions about Gotham's way of acting or how it has presented its conclusions", for Bankinter the main problems are the damage to the company's credibility that this episode has caused, the high debt and the lack of positive free cash flow in recent years.

"If the lack of free cash flow is not corrected, the company will be forced to sell more assets and could go so far as to be cut up," the firm argued to reiterate its recommendation to sell while keeping its target price under review. "waiting to know the scope and changes that the 2022/23 financial statements will incorporate when they are published restated."

For Renta 4's analysis department, the CNMV report has been "hard" in terms of assessing the way in which the company has presented its financial information.

"However, at no time does the report conclude that the company has, as we believe is manifested in Gotham's statements, committed fraud on its shareholders," Renta 4 has pointed out, while they do not foresee that this point [in reference to InmunoTek] is of special relevance and its modification in the consolidation of the accounts will have a relevant impact.

For their part, Banco Sabadell experts see no impact on the valuation of this report taking into account that there are no errors in the reported financial debt or in the consolidation of Haema and BPC, which "is not surprising considering that "This is audited information."

For its part, the XTB analysis team has maintained after the publication of the stock market supervisor's report that investor confidence in the company "is quite damaged and it will take time to recover it."

Likewise, they have focused on the fact that "we must not forget that Grifols continues to have debt problems and that it has difficulties generating free cash flow."

"Until the market digests the report, we will not know what will happen to Grifols' stock; in fact, in the short term we could see a lot of speculative movement, with positions closing both in one direction and another. Later we will see the confidence of investors in the medium and long term about the company", they have stressed from XTB.