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Procaps Group, S.A. and subsidiaries (The
Unaudited Condensed Consolidated
Interim Financial Statements for the three
months ended March 31, 2023 and 2022
Procaps Group, S.A. and subsidiaries (The Group)
Unaudited Condensed Consolidated Interim Statement
of Profit or Loss and Other Comprehensive Income
For the three ended March 31, 2023 and 2022
(In thousands of United States Dollars, unless
| For the three months ended March 31 | ||||||||||
| Notes | 2023 | 2022 | ||||||||
| Revenue | 5 | $ | 84,162 | $ | 85,630 | |||||
| Cost of sales | (38,100 | ) | (38,508 | ) | ||||||
| Gross profit | 46,062 | 47,122 | ||||||||
| Sales and marketing expenses | (20,670 | ) | (20,157 | ) | ||||||
| Administrative expenses | (22,119 | ) | (24,556 | ) | ||||||
| Finance income, net | 7 | 1,649 | 14,582 | |||||||
| Other income, net | 8 | 3,958 | 5,124 | |||||||
| Income before tax | 8,880 | 22,115 | ||||||||
| Income tax expense | 9 | (2,259 | ) | (5,669 | ) | |||||
| Income for the period | $ | 6,621 | $ | 16,446 | ||||||
| Income for the period attributable to: | ||||||||||
| Owners of the Company | 6,621 | 16,446 | ||||||||
| Non-controlling interests | - | - | ||||||||
| Earnings per share: | ||||||||||
| Basic and diluted, income for the year attributable to ordinary equity holders of the Company 1 | 0.07 | 0.16 |
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
Procaps Group, S.A. and subsidiaries (The Group)
Unaudited Condensed Consolidated Interim Statement
of Profit or Loss and Other Comprehensive Income
For the three ended March 31, 2023 and 2022
(In thousands of United States Dollars, unless
| For the three months ended March 31 | ||||||||
| 2023 | 2022 | |||||||
| Income for the period | $ | 6,621 | $ | 16,446 | ||||
| Other comprehensive income | ||||||||
| Items that will not be reclassified to profit or loss: | ||||||||
| Remeasurement of net defined benefit liability | - | - | ||||||
| Income tax relating to items that will not be reclassified subsequently to profit or loss | - | - | ||||||
| Net of Tax | - | - | ||||||
| Items that will be reclassified subsequently to profit or loss: | ||||||||
| Exchange differences on translation of foreign operations | 426 | 2,234 | ||||||
| Other comprehensive income for the period, net of tax | 426 | 2,234 | ||||||
| Total comprehensive income for the period | $ | 7,047 | $ | 18,680 | ||||
| Total comprehensive income for the period attributable to: | ||||||||
| Owners of the Company | 7,047 | 18,679 | ||||||
| Non-controlling interests | - | 1 |
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
Procaps Group, S.A. and subsidiaries (The Group)
Unaudited Condensed Consolidated
Interim Statement of Financial Position
As of March 31, 2023 and December
(In thousands of United States Dollars, unless
| Notes | As of March 31, 2023 | As of December 31, 2022 | ||||||||
| Assets | ||||||||||
| Non-current assets | ||||||||||
| Property, plant and equipment, net | 11 | 82,450 | 73,965 | |||||||
| Right-of-use assets, net | 39,076 | 39,013 | ||||||||
| Goodwill | 5,790 | 5,791 | ||||||||
| Intangible assets, net | 10 | 34,375 | 32,208 | |||||||
| Investments in joint ventures | 1,717 | 1,505 | ||||||||
| Other financial assets | 218 | 210 | ||||||||
| Deferred tax assets, net | 6,712 | 6,974 | ||||||||
| Other assets | 2,531 | 3,078 | ||||||||
| Total non-current assets | $ | 172,869 | $ | 162,744 | ||||||
| Current assets | ||||||||||
| Cash | 23,033 | 43,003 | ||||||||
| Trade and other receivables, net | 13 | 116,363 | 129,602 | |||||||
| Inventories, net | 12 | 99,149 | 96,833 | |||||||
| Amounts owed by related parties, net | 2,610 | 2,474 | ||||||||
| Current tax assets, net | 23,997 | 21,187 | ||||||||
| Other current assets, net | 3,695 | 4,344 | ||||||||
| Total current assets | $ | 268,847 | $ | 297,443 | ||||||
| Total assets | $ | 441,716 | $ | 460,187 | ||||||
| Liabilities and Stockholders' Equity (Deficit) | ||||||||||
| Equity (Deficit) | ||||||||||
| Share capital | 1,011 | 1,011 | ||||||||
| Share premium | 377,677 | 377,677 | ||||||||
| Reserves | 45,743 | 45,743 | ||||||||
| Accumulated deficit | (384,892 | ) | (391,513 | ) | ||||||
| Accumulated other comprehensive loss | (33,433 | ) | (33,859 | ) | ||||||
| Equity (deficit) attributable to owners of the company | $ | 6,106 | $ | (941 | ) | |||||
| Non-controlling interest | (937 | ) | (937 | ) | ||||||
| Total equity (deficit) | $ | 5,169 | $ | (1,878 | ) | |||||
| Non-Current liabilities | ||||||||||
| Borrowings | 14 | 150,011 | 28,410 | |||||||
| Warrant liabilities | 16 | 6,971 | 10,916 | |||||||
| Shares held in escrow | 17 | 32,859 | 40,064 | |||||||
| Deferred tax liabilities | 6,616 | 7,821 | ||||||||
| Other liabilities | 6,626 | 6,480 | ||||||||
| Total non-current liabilities | $ | 203,083 | $ | 93,691 | ||||||
| Current liabilities | ||||||||||
| Borrowings | 14 | 135,112 | 257,525 | |||||||
| Trade and other payables | 79,909 | 90,187 | ||||||||
| Amounts owed to related parties | 3,320 | 2,914 | ||||||||
| Current tax liabilities, net | 7,411 | 6,133 | ||||||||
| Provisions | 15 | 162 | 138 | |||||||
| Other liabilities | 7,550 | 11,477 | ||||||||
| Total current liabilities | $ | 233,464 | $ | 368,374 | ||||||
| Total liabilities and stockholders' equity (deficit) | $ | 441,716 | $ | 460,187 |
The accompanying notes are an integral part of these unaudited condensed
consolidated interim financial statements.
Procaps Group, S.A. and subsidiaries (The Group)
Unaudited Condensed Consolidated
Interim Statement of Changes in Equity
For the three months ended March
(In thousands of United States Dollars, unless
| Attributable to equity holders of the Group | ||||||||||||||||||||||||||||||||
| Issued Capital | Share premium | Reserves 1 | Accumulated deficit | Other Comprehensive Income | Total | Non-controlling interest | Total equity (deficit) | |||||||||||||||||||||||||
| Balance as of January 1, 2022 | $ | 1,011 | $ | 377,677 | $ | 42,749 | $ | (431,059 | ) | $ | (27,778 | ) | $ | (37,400 | ) | $ | (940 | ) | $ | (38,340 | ) | |||||||||||
| Income for the period | - | - | - | 16,446 | - | 16,446 | - | 16,446 | ||||||||||||||||||||||||
| Transfer reserves | - | - | 2,994 | (2,994 | ) | - | - | - | - | |||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | 2,233 | 2,233 | 1 | 2,234 | ||||||||||||||||||||||||
| Non-controlling interest | - | - | - | - | 1 | 1 | - | 1 | ||||||||||||||||||||||||
| Others | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | 1,011 | $ | 377,677 | $ | 45,743 | $ | (417,607 | ) | $ | (25,544 | ) | $ | (18,720 | ) | $ | (939 | ) | $ | (19,659 | ) | |||||||||||
| Balance as of January 1, 2023 | 1,011 | 377,677 | 45,743 | (391,513 | ) | (33,859 | ) | (941 | ) | (937 | ) | (1,878 | ) | |||||||||||||||||||
| Income for the period | - | - | - | 6,621 | - | 6,621 | - | 6,621 | ||||||||||||||||||||||||
| Transfer reserves | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | 426 | 426 | - | 426 | ||||||||||||||||||||||||
| Balance as of March 31, 2023 | 1,011 | 377,677 | 45,743 | (384,892 | ) | (33,433 | ) | 6,106 | (937 | ) | 5,169 |
The accompanying notes are an integral part of
these unaudited condensed consolidated interim financial statements.
Procaps Group, S.A. and subsidiaries (The Group)
Unaudited Condensed Consolidated Interim Statement
For the three months ended March
(In thousands of United States Dollars, unless
| For the three months ended March 31 | ||||||||||
| Notes | 2023 | 2022 | ||||||||
| Operating activities | ||||||||||
| Income for the period | $ | 6,621 | $ | 16,446 | ||||||
| Adjustments to reconcile net income with cash flow from operating activities before changes in working capital: | ||||||||||
| Depreciation of property, plant and equipment | 11 | 1,275 | 1,452 | |||||||
| Depreciation of right-of-use assets | 1,502 | 1,230 | ||||||||
| Amortization of intangibles | 10 | 929 | 818 | |||||||
| Income tax expense | 9 | 2,259 | 5,669 | |||||||
| Finance income | 7 | (1,649 | ) | (14,582 | ) | |||||
| Unrealized currency exchange rate differences | 2,590 | - | ||||||||
| Share of result of joint ventures | (199 | ) | 100 | |||||||
| Net loss on sale and disposal of property, plant and equipment | 11 | 48 | 33 | |||||||
| Inventory provision | 12 | 996 | 591 | |||||||
| Provision for bad debt | 13 | 1,157 | 314 | |||||||
| Provisions | 15 | 29 | - | |||||||
| Cash flow from operating activities before changes in working capital | 15,558 | 12,071 | ||||||||
| (Increase)/decrease in operating assets and liabilities: | ||||||||||
| Trade and other receivables, net | 11,751 | 5,573 | ||||||||
| Amounts owed by related parties | 255 | (521 | ) | |||||||
| Inventories, net | (813 | ) | (19,830 | ) | ||||||
| Current tax assets, net | (2,809 | ) | (6,757 | ) | ||||||
| Other current assets, net | 649 | 2,092 | ||||||||
| Trade and other payables | (15,330 | ) | 16,814 | |||||||
| Amounts owed to related parties | 322 | 333 | ||||||||
| Current tax liabilities, net | 166 | 1,442 | ||||||||
| Other liabilities | (4,158 | ) | (2,843 | ) | ||||||
| Provisions | 15 | (6 | ) | (7 | ) | |||||
| Other financial assets | (8 | ) | (12 | ) | ||||||
| Other assets | 525 | (541 | ) | |||||||
| Cash generated from operations | 6,102 | 7,814 | ||||||||
| Interest paid | (905 | ) | (434 | ) | ||||||
| Income tax paid | (2,089 | ) | (1,046 | ) | ||||||
| Cash flow provided by operating activities | $ | 3,108 | $ | 6,334 | ||||||
| Investing activities | ||||||||||
| Acquisition of property, plant and equipment | 11 | (3,282 | ) | (2,197 | ) | |||||
| Acquisition of intangibles | 10 | (1,582 | ) | (1,827 | ) | |||||
| Advances to related parties | (163 | ) | (136 | ) | ||||||
| Cash flow used in investing activities | $ | (5,027 | ) | $ | (4,160 | ) | ||||
| Financing activities | ||||||||||
| Proceeds from borrowings | 14 | 16,360 | 30,334 | |||||||
| Payments on borrowings | 14 | (26,403 | ) | (33,624 | ) | |||||
| Payments to related parties | - | (2,359 | ) | |||||||
| Interest paid on borrowings | 14 | (6,887 | ) | (3,924 | ) | |||||
| Payment of lease liabilities | 14 | (1,660 | ) | (587 | ) | |||||
| Cash flow used in financing activities | $ | (18,590 | ) | $ | (10,160 | ) | ||||
| Net decrease in cash | (20,509 | ) | (7,986 | ) | ||||||
| Cash at beginning of the period | 43,003 | 72,112 | ||||||||
| Effect of exchange rate fluctuations | 539 | 1,518 | ||||||||
| Cash at end of the period | $ | 23,033 | $ | 65,644 | ||||||
| Non-cash financing and investing activities 1 | $ | 8,825 | $ | 13,463 |
The accompanying notes are
an integral part of these unaudited condensed consolidated interim financial statements.
Procaps Group, S.A. and subsidiaries (The Group)
Notes to Unaudited Condensed Consolidated Interim
Financial Statements
For the three months ended March
(In thousands of United States Dollars, unless
Note 1. General Company Information
Procaps Group, S.A, (the "Company"),
a public limited liability company (soci t anonyme) governed by the laws of the Grand Duchy of Luxembourg and its subsidiaries
(collectively "the Group") primarily engages in developing, producing, and marketing pharmaceutical solutions. Further information
about the Group's business activities, reportable segments and key management personnel of the Group is included in Note 5. Revenue, Note
6. Segment reporting and Note 19. Key management personnel, respectively.
The Group's principal subsidiaries as of March
31, 2023 and December 31, 2022, are set out below. Unless otherwise stated, they have share capital consisting solely of ordinary shares
that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group. The country
of incorporation or registration is also their principal place of business.
| Place of business/ | Ownership interests held by: | |||||||||||||||||||
| country of | The Group | Non-controlling interests | Principal | |||||||||||||||||
| Name of entity | incorporation | 2023 | 2022 | 2023 | 2022 | activities | ||||||||||||||
| Procaps S.A. | Colombia | 100 | % | 100 | % | - | % | - | % | Manufacturing and distribution of prescription and over-the-counter | ||||||||||
| C.I. Procaps S.A. | Colombia | 100 | % | 100 | % | - | % | - | % | pharmaceutical products. | ||||||||||
| Procaps S.A. de C.V | El Salvador | 100 | % | 100 | % | - | % | - | % | |||||||||||
| Softcaps - Colbras | Brazil | 100 | % | 100 | % | - | % | - | % | |||||||||||
| Diabetrics Healthcare S.A.S. | Colombia | 100 | % | 100 | % | - | % | - | % | Diabetes solutions and chronic disease management tool. |
There are no significant restrictions on the ability
of the Group to access or use assets to settle liabilities.
The unaudited condensed consolidated interim financial
statements of the Group for the three months ended March 31, 2023 and 2022 comprise the Group and its interest in joint ventures, investments
The unaudited condensed consolidated interim financial
statements are presented in USD (the Group's presentation currency) and all amounts are rounded to the nearest thousands of USD, unless
Emerging Growth Company Status
The Group is an emerging growth company, as defined
in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). The Group will remain an emerging growth company until
Procaps Group, S.A. and subsidiaries (The Group)
Notes to Unaudited Condensed Consolidated Interim
Financial Statements
For the three months ended March
(In thousands of United States Dollars, unless
Ongoing Military Operation in Ukraine and
The ongoing military operation in Ukraine and
the related sanctions targeted against the Russian Federation have disrupted international commerce and the global economy. The Group
does not have any direct exposure to Ukraine, Russia or Belarus considering there are not any existing operations or sales in those locations.
Although the Group does not currently operate
in Ukraine or Russia, the duration and severity of the effects on its business and the global economy are inherently unpredictable. Management
will continue to monitor the effects of the war in Ukraine and its potential further impacts, including global supply chain disruptions,
inflation, and rising interest rates, when making certain estimates and judgments relating to the preparation of the Consolidated Financial
Statements of the Group.
Grupo Somar and Pearl Mexico Acquisition
Refer to the last annual consolidated financial
statements as of and for the year ended December 31, 2022 ("last annual financial statements") for background information
on the Acquisition of Grupo Somar and Pearl Mexico. Following the failure of the transaction to close on December 31, 2022, the Group
provided the sellers a formal notice on January 1, 2023 terminating the Stock Purchase Agreement (the "SPA") in accordance
with the terms thereof.
Bridge Loan Credit Agreement
Following the Group's termination of the SPA,
the Group advised the joint arrangers and book runners on January 1, 2023 of its desire to terminate the transaction documents (including,
without limitation, the commitments under the bridge credit agreement and, for the avoidance of doubt, any commitments under the commitment
letter) and pay all outstanding obligations, amounting to $5,719, under the bridge credit agreement and any other transaction document
as of January 10, 2023.
Note 2. Basis of preparation and accounting
These unaudited condensed consolidated interim
financial statements of the Group as of March 31, 2023 have been prepared on a going concern basis, and in accordance with IAS 34 Interim
Financial Reporting, and should be read in conjunction with the last annual financial statements. They do not include all of the information
required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are
included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position