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Spain's supervisor CNMV finds no significant errors in Grifols accounts

FILE PHOTO: Logo of the Spanish pharmaceuticals company Grifols is pictured on its facilities in Parets del Valles

By David Latona and Jesús Aguado

MADRID (Reuters) - Beleaguered Spanish drugmaker Grifols will not be required to restate its accounts for the years 2021 and 2022, market supervisor CNMV said on Thursday, as its investigation found no significant errors in the amounts it had reported.

CNMV also found "no evidence that the financial debt reported by Grifols does not correspond to reality," it said.

Since early January, short-sheller Gotham City Research had released three reports repeatedly accusing Grifols of overstating earnings and understating debt in its financial accounts. The pharmaceutical company's market value since then has shed billions of euros.


Grifols has repeatedly denied Gotham City's accusations, saying it had already replied to all the questions raised in the latter's reports.

Although CNMV said Grifols' reported indebtedness was accurate, it also identified "deficiencies in the detail and accuracy of breakdowns and explanatory notes in some years".

CNMV said Grifols could have presented greater detail in the presentation of its earnings before interest, taxes, depreciation and amortisation (EBITDA) and the debt-to-EBITDA ratio.

"These deficiencies ... as a whole must be considered significant, to the extent that in some years they have hindered the ability of investors to adequately understand the financial situation, results and cash flows of the transmitter," it said.

Gotham had questioned Grifols' reported EBITDA, and leverage ratio of 6.7 times in the third quarter of 2023. It said the leverage ratio was close to 10 to 13 times EBITDA.

The Spanish supervisor has been examining recent information submitted by Grifols in response to the allegations of false accounting made by Gotham, while also analysing the actions of the short-seller.

CNMV said it considered as "not appropriate" the accounting treatment given to the integration of a junior venture with firm ImmunoTek in Grifols' 2022 and 2021 reports.

According to the regulator, the deal should have been recorded as a joint operation instead of as a financial investment. CNMV said this could lead to a re-expression of the comparative figures in the company's first half or first quarter accounts of 2024.

Grifols said in a statement it was "committed to improving and expanding the disclosures in its financial information in line with the regulator's recommendations".

The CNMV also said on Thursday it had not undertaken in-depth assessment of liabilities from Gotham's actions related to market abuse, that might be determined at a later stage.

(Reporting by David Latona and Jesus Aguado; Editing by Andrei Khalip and Daniel Wallis)