Full Press Release Details
Procaps Group, S.A. and subsidiaries (The Group)
Unaudited Condensed Consolidated
Interim Financial Statements
For the three and nine months ended September
Procaps Group, S.A. and subsidiaries (The Group)
Unaudited Condensed Consolidated Interim Statement
of Profit or Loss and Other Comprehensive Income
For the three and nine months ended September 30, 2023 and 2022
(In thousands of United
States Dollars, unless otherwise stated)
| For the three months ended September 30 | For the nine months ended September 30 | ||||||||||||||||||
| Notes | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Revenue | 5 | $ | 118,410 | $ | 110,403 | $ | 312,629 | $ | 308,453 | ||||||||||
| Cost of sales | (50,007 | ) | (42,845 | ) | (136,976 | ) | (121,139 | ) | |||||||||||
| Gross profit | 68,403 | 67,558 | 175,653 | 187,314 | |||||||||||||||
| Sales and marketing expenses | (29,440 | ) | (25,875 | ) | (71,608 | ) | (71,697 | ) | |||||||||||
| Administrative expenses | (25,779 | ) | (24,337 | ) | (72,500 | ) | (77,737 | ) | |||||||||||
| Finance (expenses) income, net | 7 | (2,968 | ) | 22,748 | (8,099 | ) | 18,539 | ||||||||||||
| Other income (expenses), net | 8 | 1,218 | (9,706 | ) | 34,803 | (13,209 | ) | ||||||||||||
| Income before tax | 11,434 | 30,388 | 58,249 | 43,210 | |||||||||||||||
| Income tax expense | 9 | (3,235 | ) | (7,808 | ) | (16,475 | ) | (11,104 | ) | ||||||||||
| Income for the period | $ | 8,199 | $ | 22,580 | $ | 41,774 | $ | 32,106 | |||||||||||
| Income for the period attributable to: | |||||||||||||||||||
| Owners of the Company | 8,194 | 22,580 | 41,769 | 32,106 | |||||||||||||||
| Non-controlling interests | 5 | - | 5 | - | |||||||||||||||
| Earnings per share: | |||||||||||||||||||
| Basic and diluted, income for the period attributable to ordinary equity holders of the Company (USD) 1 | 0.08 | 0.22 | 0.41 | 0.32 |
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 and nine months ended September
(In thousands of United
States Dollars, unless otherwise stated)
| For the three months ended September 30 | For the nine months ended September 30 | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Income for the period | $ | 8,199 | $ | 22,580 | $ | 41,774 | $ | 32,106 | ||||||||
| Other comprehensive income/(loss) | ||||||||||||||||
| Items that will not be reclassified to profit or loss: | ||||||||||||||||
| Remeasurement of net defined benefit liability | (69 | ) | - | (152 | ) | - | ||||||||||
| Items that will be reclassified subsequently to profit or loss: | ||||||||||||||||
| Exchange differences on translation of foreign operations | 113 | (3,513 | ) | 3,137 | (4,279 | ) | ||||||||||
| Net investment hedge | (1,010 | ) | - | (3,482 | ) | - | ||||||||||
| Other comprehensive income/(loss) for the period | (966 | ) | (3,513 | ) | (497 | ) | (4,279 | ) | ||||||||
| Total comprehensive income for the period | $ | 7,233 | $ | 19,067 | $ | 41,277 | $ | 27,827 | ||||||||
| Total comprehensive income/(loss) for the period attributable to: | ||||||||||||||||
| Owners of the Company | 7,228 | 19,077 | 41,272 | 27,827 | ||||||||||||
| Non-controlling interests | 5 | (10 | ) | 5 | - |
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 September 30, 2023 and December 31, 2022
(In thousands of United
States Dollars, unless otherwise stated)
| Notes | As of September 30, 2023 | As of December 31, 2022 | |||||||||
| Assets | |||||||||||
| Non-current assets | |||||||||||
| Property, plant and equipment, net | 11 | 97,194 | 73,965 | ||||||||
| Right-of-use assets, net | 40,163 | 39,013 | |||||||||
| Goodwill | 5,790 | 5,791 | |||||||||
| Intangible assets, net | 10 | 41,315 | 32,208 | ||||||||
| Investments in joint ventures | 2,028 | 1,505 | |||||||||
| Other financial assets | 4,127 | 210 | |||||||||
| Deferred tax assets, net | 7,398 | 6,974 | |||||||||
| Other assets | 2,185 | 3,078 | |||||||||
| Total non-current assets | $ | 200,200 | $ | 162,744 | |||||||
| Current assets | |||||||||||
| Cash | 17,558 | 43,003 | |||||||||
| Trade and other receivables, net | 13 | 143,050 | 129,602 | ||||||||
| Inventories, net | 12 | 98,242 | 96,833 | ||||||||
| Amounts owed by related parties, net | 2,158 | 2,474 | |||||||||
| Current tax assets, net | 25,662 | 21,187 | |||||||||
| Other current assets | 3,411 | 4,344 | |||||||||
| Other financial assets | 8,273 | - | |||||||||
| Total current assets | $ | 298,354 | $ | 297,443 | |||||||
| Total assets | $ | 498,554 | $ | 460,187 | |||||||
| Liabilities and Stockholders' Equity (Deficit) | |||||||||||
| Equity (Deficit) | |||||||||||
| Share capital | 1,011 | 1,011 | |||||||||
| Share premium | 377,677 | 377,677 | |||||||||
| Reserves | 49,288 | 45,743 | |||||||||
| Accumulated deficit | (354,234 | ) | (391,513 | ) | |||||||
| Accumulated other comprehensive loss | (34,356 | ) | (33,859 | ) | |||||||
| Equity (deficit) attributable to owners of the company | $ | 39,386 | $ | (941 | ) | ||||||
| Non-controlling interest | (932 | ) | (937 | ) | |||||||
| Total equity (deficit) | $ | 38,454 | $ | (1,878 | ) | ||||||
| Non-Current liabilities | |||||||||||
| Borrowings | 14 | 220,682 | 28,410 | ||||||||
| Warrant liabilities | 16 | 2,861 | 10,916 | ||||||||
| Shares held in escrow | 17 | 23,312 | 40,064 | ||||||||
| Deferred tax liabilities, net | 3,373 | 7,821 | |||||||||
| Other liabilities | 6,942 | 6,480 | |||||||||
| Total non-current liabilities | $ | 257,170 | $ | 93,691 | |||||||
| Current liabilities | |||||||||||
| Borrowings | 14 | 69,238 | 257,525 | ||||||||
| Derivative financial liabilities | 3,114 | - | |||||||||
| Trade and other payables | 89,759 | 90,187 | |||||||||
| Amounts owed to related parties | 4,122 | 2,914 | |||||||||
| Current tax liabilities, net | 23,619 | 6,133 | |||||||||
| Provisions | 15 | 138 | 138 | ||||||||
| Other liabilities | 12,940 | 11,477 | |||||||||
| Total current liabilities | $ | 202,930 | $ | 368,374 | |||||||
| Total liabilities and stockholders' equity (deficit) | $ | 498,554 | $ | 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 and nine months ended September
(In thousands of United States Dollars, unless otherwise stated)
| Attributable to equity holders of the Group | ||||||||||||||||||||||||||||||||||||
| Issued Capital | Share premium | Treasury shares reserve 1 | Reserves 2 | 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 | - | - | - | - | 32,106 | - | 32,106 | - | 32,106 | |||||||||||||||||||||||||||
| Transfer reserves | - | - | - | 2,994 | (2,994 | ) | - | - | - | - | ||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | (4,279 | ) | (4,279 | ) | - | (4,279 | ) | ||||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | 1,011 | $ | 377,677 | $ | - | $ | 45,743 | $ | (401,947 | ) | $ | (32,057 | ) | $ | (9,573 | ) | $ | (940 | ) | $ | (10,513 | ) | |||||||||||||
| Balance as of January 1, 2023 | 1,011 | 377,677 | - | 45,743 | (391,513 | ) | (33,859 | ) | (941 | ) | (937 | ) | (1,878 | ) | ||||||||||||||||||||||
| Income for the period | - | - | - | - | 41,769 | - | 41,769 | 5 | 41,774 | |||||||||||||||||||||||||||
| Transfer reserves | - | - | - | 4,495 | (4,495 | ) | - | - | - | - | ||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | - | (497 | ) | (497 | ) | - | (497 | ) | ||||||||||||||||||||||||
| Non-controlling interest | - | - | - | - | 5 | - | 5 | - | 5 | |||||||||||||||||||||||||||
| Treasury shares acquired | - | - | (950 | ) | - | - | - | (950 | ) | - | (950 | ) | ||||||||||||||||||||||||
| Balance as of September 30, 2023 | 1,011 | 377,677 | (950 | ) | 50,238 | (354,234 | ) | (34,356 | ) | 39,386 | (932 | ) | 38,454 |
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 nine months ended September
(In thousands of United States Dollars, unless
| For the nine months ended September 30 | |||||||||||
| Notes | 2023 | 2022 | |||||||||
| Operating activities | |||||||||||
| Income for the period | $ | 41,774 | $ | 32,106 | |||||||
| Adjustments to reconcile net income with cash flow from operating activities before changes in working capital: | |||||||||||
| Depreciation of property, plant and equipment | 11 | 4,196 | 4,481 | ||||||||
| Depreciation of right-of-use assets | 4,671 | 4,539 | |||||||||
| Amortization of intangibles | 10 | 4,136 | 3,365 | ||||||||
| Income tax expense | 9 | 16,475 | 11,104 | ||||||||
| Finance expenses, net | 7 | 8,099 | (18,539 | ) | |||||||
| Unrealized currency exchange rate differences | (15,178 | ) | - | ||||||||
| Share of result of joint ventures | (503 | ) | 239 | ||||||||
| Net loss (gain) on sale and disposal of property, plant and equipment | 11 | 48 | (503 | ) | |||||||
| Net loss on disposal of intangibles | 10 | 51 | - | ||||||||
| Inventory provision | 12 | 8,446 | 2,475 | ||||||||
| Provision for bad debt | 13 | 1,878 | 1,830 | ||||||||
| Provisions | 15 | 90 | 9 | ||||||||
| Cash flow from operating activities before changes in working capital | 74,183 | 41,106 | |||||||||
| Changes in working capital: | |||||||||||
| Trade and other receivables, net | (3,729 | ) | (13,020 | ) | |||||||
| Amounts owed by related parties, net | 1,325 | (1,555 | ) | ||||||||
| Inventories, net | 5,254 | (22,851 | ) | ||||||||
| Current tax assets, net | (1,440 | ) | (10,073 | ) | |||||||
| Other current assets | 928 | (5,803 | ) | ||||||||
| Trade and other payables | 11,407 | 32,800 | |||||||||
| Amounts owed to related parties | 563 | 1,637 | |||||||||
| Current tax liabilities, net | 1,259 | (1,625 | ) | ||||||||
| Other liabilities | 271 | 7,573 | |||||||||
| Provisions | 15 | (99 | ) | (408 | ) | ||||||
| Other financial assets | (12,190 | ) | 36 | ||||||||
| Other assets | 1,233 | 83 | |||||||||
| Cash generated from operations | 78,965 | 27,900 | |||||||||
| Interest paid | (2,565 | ) | (1,261 | ) | |||||||
| Income tax paid | (5,468 | ) | (4,589 | ) | |||||||
| Cash flow provided by operating activities | $ | 70,932 | $ | 22,050 | |||||||
| Investing activities | |||||||||||
| Acquisition of property, plant and equipment | 11 | (11,421 | ) | (15,293 | ) | ||||||
| Proceeds from sale of property, plant and equipment | - | 2,653 | |||||||||
| Acquisition of intangibles | 10 | (8,979 | ) | (7,757 | ) | ||||||
| Advances to related parties | - | (138 | ) | ||||||||
| Proceeds from related parties | 29 | - | |||||||||
| Cash flow used in investing activities | $ | (20,371 | ) | $ | (20,535 | ) | |||||
| Financing activities | |||||||||||
| Proceeds from borrowings | 14 | 69,742 | 77,253 | ||||||||
| Payments on borrowings | 14 | (112,470 | ) | (97,290 | ) | ||||||
| Payments to related parties | - | (6,625 | ) | ||||||||
| Interest paid on borrowings | 14 | (24,569 | ) | (10,028 | ) | ||||||
| Payment of lease liabilities | 14 | (4,866 | ) | (4,858 | ) | ||||||
| Repurchase of treasury shares | (950 | ) | - | ||||||||
| Payments of derivative financial liabilities | (368 | ) | - | ||||||||
| Cash flow used in financing activities | $ | (73,481 | ) | $ | (41,548 | ) | |||||
| Net decrease in cash | (22,920 | ) | (40,033 | ) | |||||||
| Cash at beginning of the period | 43,003 | 72,112 | |||||||||
| Effect of exchange rate fluctuations | (2,525 | ) | (4,864 | ) | |||||||
| Cash at end of the period | $ | 17,558 | $ | 27,215 | |||||||
| Non-cash financing and investing activities 1 | $ | 43,924 | $ | 42,328 |
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 and nine months ended September
(In thousands of United
States Dollars, unless otherwise stated)
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
September 30, 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 | Ownership interests held by: | |||||||||||||||||||
| business/country | The Group | Non-controlling interests | ||||||||||||||||||
| Name of entity | of incorporation | 2023 | 2022 | 2023 | 2022 | Principal activities | ||||||||||||||
| Procaps S.A. | Colombia | 100 | % | 100 | % | - | % | - | % | Manufacturing and distribution of prescription and over-the-counter pharmaceutical products. | ||||||||||
| C.I. Procaps S.A. | Colombia | 100 | % | 100 | % | - | % | - | % | |||||||||||
| 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 and nine months ended September 30, 2023 and 2022 comprise the Group and its interest in joint ventures,
investments and operations.
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
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. In 2023, a
subsidiary of the Group located in Colombia entered into a standard, arms-length commercial agreement with a Russian entity and began
the sale and shipment of goods to Russia, which is permissible under the current US sanctions to Russia as established by the Office of
Foreign Assets Control (OFAC). The Group does not hold any investments or assets in Russia and the sales to Russia for the nine months
ended September 30, 2022 represent less than 1% of the total sales of the Group. The Group performed an initial compliance diligence before
engaging in transactions and as of September 30, 2023, management evaluated if any risk associated with these transactions existed and
concluded that there were no financial or any other risks identified. The Group does not have any other direct exposure to Ukraine, Russia
or Belarus considering there are not any additional existing operations or sales in those locations, but management will continue to monitor
new implementations of US restrictions and prohibitions related to transactions with Russia.
Procaps Group, S.A. and subsidiaries (The Group)
Notes to Unaudited Condensed Consolidated Interim
Financial Statements
For the three and nine months ended September
(In thousands of United
States Dollars, unless otherwise stated)
The duration and severity of the effects on the
Group 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 Unaudited Condensed Consolidated Interim 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 (the "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.