The CNMV yesterday sent Grifols its conclusions and recommendations on its results in recent years, with a series of requests for new information, the breakdown of certain items and the reworking of the way in which it presents the main profitability and debt metrics. The supervisor did exempt, however, from reformulating the accounts despite requesting corrections to the “relevant deficiencies” and “omissions” they observed in relation to subsidiaries such as Inmunotek, Haema and BPC Plasma that involve their shareholder Scranton Enterprises.
The shipment occurred at 2:32 p.m. on Thursday with the explicit order for its publication before 8:00 p.m., before the closing of Wall Street but with trading on the Spanish Stock Exchange closed. The ADR (dollar version of the Grifols share) soared 7.7% in less than an hour in a first speculative reaction that featured the hedge funds that operate short on the pharmaceutical company. Today, Grifols’ price plummets by 7% in the Spanish market and threatens falls of more than 10% on Wall Street.
Millennium International Management, a manager with more than 60 billion euros in assets under management, took advantage of the temporary window to reinforce its bearish bet against the company. As notified today to the CNMV, Israel Englander’s hedge fund yesterday increased its short position from -0.52% to -0.61% of Grifols’ capital, a position valued at more than 30 million euros. He is the first major short investor to move after the CNMV report. In the previous days, other funds have built shorts such as Ako Capital, which again exceeded -0.5% of capital, Marshall Wace (-0.6%), Qubbe (-0.96%) and Janus (-0 .53%).
The CNMV has concluded that Grifols’ accounts hamper “the ability of investors to adequately understand the financial situation, results and cash flows.”
What the CNMV asks for
In its report, the CNMV has asked Grifols to reduce the excessive personalization of its financial metrics, since these can cause general confusion, and to give more relevance in its future communications to more conventional and standardized figures, such as the company’s profitability or debt. company. In addition, the supervisor has demanded the correction of the impacts of the Inmunotek operation, a joint venture in the US that Grifols accounts for as a financial investment and that was not consolidating the losses it generated.
In general, the CNMV has detected “relevant deficiencies” in Grifols’ annual accounts, especially in the detail and precision of the breakdowns and explanatory notes that support the figures. However, the supervisor has not found “significant errors” in the results so far, so it has not determined the need to restate the financial statements. Among the omissions noted, the CNMV identifies related transactions worth 400 million euros in five years with its shareholder Scranton, which should have been included in the annual and corporate governance reports but were not.
In relation to these deficiencies, the supervisor has specifically referred to the financial information for certain years during the period analyzed and the presentation of alternative performance measures (APM), such as gross operating profit (Ebitda). . ) and the debt/Ebitda ratio. The CNMV has concluded that Grifols’ accounts hamper “the ability of investors to adequately understand the financial situation, results and cash flows of the issuer.”
