Grifols published on Friday its consolidated 2023 annual accounts, signed by its auditor KPMG, with noted caveats, according to a company disclosure to the National Securities Market Commission. The group had presented its 2023 results to the market on February 29 without an audit, and faced a Friday deadline for the auditor to sign off on the report. The stock rose as high as 22.6% near 11:30 a.m. local time.
The company states that the annual accounts include the integration of ImmunoTek and that the pro forma leverage ratio stands at 6.3x. Specifically, the total assets of Grifols, including ImmunoTek and now audited, reach 21.44 billion euros, versus 21.32 billion euros reported in the February 29 accounts. [Citation: Grifols press release / CNMV filing]
On Thursday, February 29, Grifols decided to present its quarterly results without the customary signed auditor report, despite being subject to an ongoing review by the National Securities Market Commission for alleged accounting practices. The company has faced a sharp hit to its share price this year, with a decline exceeding 42%, and has drawn heavy criticism for its opaque presentations to analysts. It also faces potential legal actions in the United States and Spain. [Citation: CNMV investigation updates]
It is unusual for a company to release unaudited accounts, especially for a firm that sits at the center of investor skepticism and analyst doubts. A notable historic parallel is Bankia, which in the spring of 2012 released unaudited accounts on the last day of the filing window, and weeks later saw its president resign.
Change of auditor
These are the final audited results for Grifols under KPMG, as the board agreed to appoint Deloitte to take over the audit of the consolidated annual accounts starting in 2024. The company noted that the legal requirement to change auditors, for the review of the consolidated annual accounts from 2024 onward, means the new auditor will begin work at the start of the 2024 fiscal year. The three-year period covers the 2024, 2025, and 2026 financial years, with the audit for those years to be conducted by the new firm. [Citation: Board minutes / AGM resolutions]
These have also been the final annual results for Grifols with Raimon Grifols, Víctor Grifols Deu, and Albert Grifols Coma-Cros serving in executive roles within the board, all within a context shaped by a crisis in the plasma-derived products company after the latest moves by Gotham City Research, which claimed that Haema and BPC may have a financing arrangement with the family office Scranton. [Citation: Gotham City Research reports / Grifols responses]
Bearish campaign and Moody’s assessment
The short-seller has issued three attacks against the plasma company (January 9, February 20, and March 6) and warned in its latest report that Haema and BPC, Grifols subsidiaries, might have a financing arrangement with the family office Scranton, which appears on the accounts under related party transactions, prompting renewed questions about the company’s transparency and ethics. [Citation: Short seller reports / Grifols responses]
Meanwhile, Moody’s decided to place Grifols’ rating under review for a potential downgrade due to weaker cash generation and delays in publishing audited accounts. The move is also linked to approaching debt maturities, including a bond due in February 2025, another in May 2025, and a $1,000 million revolving credit facility in November 2025. [Citation: Moody’s rating review notes]
Additionally, the president of the National Securities Market Commission, Rodrigo Buenaventura, affirmed that the analysis of the information requested from Grifols is well advanced and that the authority intends to publish its conclusions as soon as possible. [Citation: CNMV statements]