Hello, everyone, and thank you very much for taking the time to join us today with such a short notice. This is Nuria Pascual, Investor Relations and Sustainability Officer, and I'm joined by the senior executive leadership team, chaired by Thomas Glanzmann, our Executive Chairman and CEO, Raimon Grifols Roura, Chief Corporate Officer, Víctor Grifols Deu, Chief Operating Officer, and Alfredo Arroyo, CFO.
This call will last about 45 minutes, and there will be some company remarks of approximately 20 minutes, followed by a Q&A session. For the sell-side, and remember, this is only for the sell-side analyst, if you want to raise a question, press star followed by 5 when the session begins. We will kindly ask you to limit your questions to a maximum of 2. As a reminder, this call is being recorded.
The transcript and webcast replay will also be available on the Investor Relations website within 24 hours after the end of this conference call. With that, I'll turn to Thomas Glanzmann, CEO of Grifols.
Thank you, Nuria, for the introduction. Good afternoon, and good morning to everyone joining us on this call. We convened this call to address the serious and false accusations made by Gotham, a short seller, in the report they issued on January 9. You have probably seen the statements we have sent to the regulators and much of what has already been written.
However, we want you to hear directly from Grifols and receive answers to your questions. We will provide information with the same integrity, transparency, and ethical conduct that has characterized Grifols since its inception in 1909. Additionally, we will be covering the strategic alliance with the Haier Group in China, as well as reassuring Grifols' strong financial position and operational performance in 2023 as we head into 2024. But first, let's focus on Gotham.
It is known that Gotham is speculative and profits from short selling. In our case, they are repurposing financial information that is several years old, already in the public domain, and has already been reviewed, validated, and signed off by regulators and an internationally renowned accounting firm.
What Gotham does is out of pure self-interest and financial gain. Gotham, as the short seller, reduced its short position in Grifols the day the report was issued to 0.06% from 0.6%, thereby financially significantly benefiting from the dramatic fall in our stock. To us, this confirms the speculative nature of the report, which in their report on page 2, even highlights verbatim that Gotham City Research interest is to see the price of the issuer's stock decline.
We take these allegations very seriously and would not want this report and subsequent market reaction to affect our reputation, nor the interests of all our stakeholders, including shareholders, employees, patients, donors, and so many others that have been negatively affected.
For that reason, the board, which is fully aligned and supporting the company, has decided to initiate legal action against Gotham, the short seller. Let me be crystal clear: as a company built on the principles of transparency, integrity, and ethical conduct for more than a hundred years, we categorically deny and reject all of these allegations. With regards to our communication, we try to be clear and open, but there is always room for improvement if you do your best.
Having said that, the Spanish regulator yesterday, in line with their duties, sent us a request for clarifying information that we are in the process of preparing answers to. We will submit our responses shortly. As a publicly traded company, we maintain the highest standards of disclosure and accuracy in our financial reporting.
To this end, our financial statements and controls are robust and subject to rigorous annual audits by a Big Four audit firm, which has consistently, and I repeat, annually released unqualified audit reports. All the related party transaction and disclosures that appear in the report have been fully disclosed and audited since 2018 and reported to the regulators. We pledge to maintain the highest standards in our accounting and reporting practices, and to that end, our audit committee is also only comprised of independent directors.
We are proud of our governance, and as the governance world and the requirements evolve, we will, I can assure you, continue to diligently upgrade our governance as well. Building on our corporate governance focus, let me address Scranton. Scranton has proved to be a long-term shareholder of Grifols, having provided support for the company's international expansion on several occasions.
Scranton is not a Grifols family office. Indeed, Scranton comprises 22 investors, of which only three are members of the Grifols family, holding less than 20% of Scranton. I also want to point out that all interactions with Scranton have been made on arm's length.
Moreover, the links between Scranton and Grifols relate only to two specific collaborations: rentals of the Grifols headquarters, which has been in place since 2012 as a consequence of the Talecris acquisition, and Haema and BPC since 2018.
There are no other links between the companies. Alfredo, in his part, will get into all of the details. Today, I also want to confirm that our underlying performance is very solid and consistently improving. In 2023, we will deliver on all the commitments that we made to the market, including our operational performance, innovation, governance, establishing a performance culture, and signing the China transaction.
We will present the 2023 results on February 29, which we are expecting to be very solid and in line with the latest updated guidance. As we end the 2023 on a high note with the signing of a strategic alliance with Haier, we today also want to bring that transaction back into focus, as it will tackle one of the market's current and persistent major concerns, our leverage.
Raimon will shortly walk us through the highlights, but the transaction is of significance, not just from a monetary perspective, but also from realizing and participating in the significant China opportunity going forward. Before doing so, Alfredo will now address the main accounting and financial specificities mentioned in the Gotham report.
Thank you so much. In my section, I'm going to clarify the most significant accounting items included in the Gotham report. First of all, I'm gonna talk about the consolidation of Haema and BPC. IFRS 10 clearly stipulates that if a group has control over a company, it must be consolidated. The assessment of control considers the rights that give an investor power over a company.
Power means, among others, holding voting rights or potential voting rights, which in this case involves having an exclusive call option. Since Grifols holds a call option, it is required to consolidate these two companies. This consolidation has been fully disclosed and audited since 2018 and reported to the Spanish regulator. This call option can be executed and reported at any time, but there is no obligation.
Grifols acquired, back in 2018, Haema and BPC, and subsequently sold these companies to Scranton in the same year for the same price. The total amount was $513 million. The terms of the sale agreement include a call option to acquire these companies back. Again, this is an irrevocable and exclusive call option, not an obligation. If Grifols executes the call option, it will be done at the same price at which it was sold to Scranton.
Same amount, $530 million. Currently, this price is way below the market prices. The consolidation of these two companies added, in 2022, approximately EUR 30 million to the group's EBITDA, which represents around 2% of the consolidated EBITDA. Here, once again, the Gotham report is absolutely wrong and misleading. The associated cash to this EBITDA belongs to Scranton.
The details of this transaction and the rationale of the consolidation were properly disclosed in Note 3, Business Combination of our consolidated annual accounts from 2018 to 2020. The transaction was audited and reviewed by KPMG, and detailed information related to the accounting treatment of this transaction was shared with the Spanish regulator early 2019, per their request.
What was the rationale of this transaction? In 2018, Grifols was short of plasma supply due to the strong underlying demand. As these two companies obtained roughly 2 million liters of plasma on annual basis, this transaction resulted even more important to face later on, the significant COVID impact in our collection. In our collections, everybody remembers, you know, what happened in, in 2020, 2021, 2022 in our collections that, you know, we have a significant hit.
Thanks to these acquisitions, we were able to navigate through those years. In addition, in 2018, the leverage ratio of the company was too tight. So as Thomas explained, Scranton, a long-term, committed, and reliable Grifols shareholder, made the investment.
In connection with this transaction, Grifols signed a vendor loan agreement with Scranton for an amount of $95 million at an interest rate of EURIBOR plus 2, due December 2025. This is a standard financial agreement in which Scranton assumes all financial risk. The details of this agreement were properly disclosed in note 30 of our 2022 consolidated annual accounts. Once again, Gotham report, by saying that this was not disclosed, made a wrong and misleading statement.
Regarding the consolidation of GDS, considering that Grifols has 55% shareholding on GDS, therefore control of the company through majority of voting rights, Grifols consolidate line by line 100% of GDS. Subsequently, the 45% of GDS is eliminated within the non-controlling interest P&L capture.
This applies the same to the Haema and BPC, where that EBITDA is fully eliminated at the bottom line of the company in the caption called Non-Controlling Interest or Minorities, right before the profit attributable to the group. Another item that I wanna share with you is the related party. Thomas just mentioned, you know, the two transactions. So to be more specific, the first one is the plasma supply agreement. In connection with the sale of Haema and BPC, already mentioned, a plasma supply agreement is in place with these two entities.
The plasma purchase price has been set following an arm's length principle, which means at market prices. This has been verified by our external auditors. Please also note that since we consolidate these two companies, these transactions are eliminated in the consolidation process. The second related party transaction relates to the leasing of our corporate offices, are disclosed in note 30 of our 2022 consolidated annual accounts.
Grifols pays on annual basis, a lease amounting to EUR 6.3 million to related party, which is determined based on, once again, market prices. Another item that I wanna share with you is, the leverage. In the Gotham report, they challenge our leverage calculation. So the leverage ratio is calculated on quarterly basis in accordance with the clauses and terms specified in the Credit and Guarantee Agreement dated November 15, 2019.
Pursuant to this agreement, the company issues a compliance certificate to the agent bank on a quarterly basis. These certificates include a detailed breakdown of the calculation conducted in accordance with the terms and conditions of the agreement. The calculation set by the agreement involves the exclusion and inclusion on certain items to both EBITDA and net debt.
The main adjustments made to the EBITDA following the credit agreement are the following: IFRS 16 leases, extraordinary items such as restructuring and transaction costs, as well as cost savings and operating improvements on a run rate basis. For your information, the net impact of these adjustments, that means the difference between the EBITDA reported and the EBITDA used for the leverage calculation, was around EUR 60 million last year. So therefore, this represents less than 5%.
We have consistently reported the leverage ratio over the past years. The resulting leverage ratio over the previous year reflects the de-leverage path of the company, which has reduced from 9x in the first half of 2022 to 6.7x at the end of the third quarter. Just to recap, make it very clear, hundred percent sure that this company have been always follow the IFRS accounting rules. I will be pleased to further clarify anything else in the Q&A. Thank you.
Thank you, Alfredo. This is Raimon Grifols talking, and thank you, all of you, for joining us today. Going back to our key, key business priorities, I would like to touch on the strategic alliance with Haier Group, which tackles two main objectives. Number one. Once executed, the transaction will significantly reduce our debt with the sale of a 20% stake in Shanghai RAAS for close to $1.8 billion cash consideration.
It will accelerate our deleveraging path to reach our target of four times this year. Number two, China. China remains core to our growth strategy as a forward-looking transformational alliance with a global leader in innovation and a growing presence in the healthcare industry. It will strengthen China's healthcare systems, while we drive synergies to contribute to the country's fast-growing plasma market.
Now, going into specifics, the share purchase agreement will result in $1.8 billion in cash, which represents a premium of approximately 15%. The $1.8 billion will be solely used to repay outstanding debt within the framework of the current credit agreement. We will provide further details upon the closing of the transaction. As we will still retain a significant 6.6% stake in Shanghai RAAS and a seat on its board of directors, we will continue to build on the alliance we initiated three years ago, which has successfully allowed Shanghai RAAS to become a top player in the Chinese plasma market.
Considering China's demand for albumin is expected to continue growing significantly in the coming years, we are also excited to lengthen our exclusive distribution agreement for this protein with Shanghai RAAS through at least the next 10 years, and possibly 20. We expect to close the transaction in the first half of 2024, as the completion of the transaction is subject to customary and regulatory approvals. Now, I leave it back to you, Thomas. Thank you.
Thank you, Raimon. Before going into the Q&A, I would like to briefly make some final remarks. Following the 3 announcements we made over the last 2 days, we hope that this call is another evidence of our commitment to continue communicating effectively with you in an open and transparent manner.
We want to make sure that you walk away from this conference call with a clear understanding our univocal stance on Gotham's report, which had clear speculative interests. Our accounting practices and financial disclosures comply with international standards that are certified by the annual approvals of our auditors. That is why the entire board of directors has agreed to pursue legal actions against Gotham City Research to protect the company's reputation, which has been successfully built throughout more than 100 years of history.
Be assured that we are not allowing a report with false allegations derail our turnaround or our consistent focus on creating value for all our stakeholders. We are committed to our customers and our patients, their well-being, and to continue to build a strong, values-driven growth company.
As someone once said, "By doing good, we will do well for all our stakeholders." Looking ahead, as previously mentioned, we anticipate reporting a robust set of results for full year 2023, marking it a year of a significant turnaround. Throughout this period, we have consistently fulfilled our commitments and are poised to continue this journey of successful value creation for all our stakeholders, also in 2024. Thank you once again for your trust and support. I now turn the floor back to Nuria.
Thank you, Thomas, and thank you all for your time. So with that, let's start the Q&A session. Remember, you need to press star five to ask a question. As always, we need to stick to two questions per analyst. If you have follow-ups, you can dial star five again, and we will place you into the list once more. After your question, we may need to put you on mute to avoid background noise. So, with that, our first question comes from, sorry, Guilherme Sampaio from CaixaBank. Hi, Guillermo.
Good morning. Thank you for holding this call. So the questions that I have, the first one is your—on your actual plans to repurchase Haema and Biotest US from Scranton. I know that you're not obliged to, but I would like to know whether you have plans for buying. The second question is related to how you see onwards.
Guillermo, sorry, we could not hear your second question. It was cracking. The noise was cracking a little bit. Can you repeat the second one, please?
Yes. My second question is, how do you see the importance of Scranton as a partner for Grifols beyond the future holding in the future?
You've been cutting out, but did you say, how do we see Scranton as a partner in the future?
Right.
Okay. The, mm-hmm. For the repurchase of
Okay.
Haema and BPC?
Yeah, yeah, right now, we are not planning to repurchase the shares of Haema and Biotest Plasma Collection. And your question, too, Scranton. Scranton is a major shareholder for us. We've done these cooperations with them in the past, but right now there is nothing that we are contemplating.
Okay. Thank you, Thomas. And, now we have, Tom Jones from, Berenberg. Hello, Tom.
Hello, and thank you for taking my questions, and they're kind of related, and one of them is somewhat of a follow-up. But thank you for all the additional detail you've given us. I guess the sort of the bigger picture question I wanted to ask is, you know, Grifols is a business that, you know, I've been following for a long time, and over the years it has become sort of slightly more complex in its holdings.
And as you're well aware, that's become an issue for investors, and you had already begun the journey to improve the governance of the company and to simplify its structure. To what extent do you think or do you feel that the recent attack by this short seller has perhaps given you fresh impetus to improve, further improve, I should say, the corporate governance of the company and perhaps accelerate the simplification of the corporate structure of the company?
You know, because, you know, those are clearly two issues that you're well aware of and have been starting to address, and I'm sure will continue to. But I guess the question is, to what extent do you think the events of the last few days have given you fresh impetus to get on with the job and get it done quicker, I would say?
Thank you, Tom. To your first questions, clearly, you know, the company is working to simplify, you know, the structure of the company. And moving forward, you know, all the transactions that will be done will be kind of plain vanilla. This good example is this divestment of the 20% of Shanghai RAAS shares, which is a very straightforward transaction. And, you know, that's on one hand.
On the other hand, the best way to counterattack those, I would say, reports, is, you know, to deliver our operational results, to deliver our EBITDA top line, to deliver, you know, the delivery rates, and to generate cash flow. So those are the main arguments against any of those short sellers' attack.
Perfect. And then my second question, I think I already know the answer, but it's one I've received from a lot of investors, so it'd be good for you to give an answer as well. To, in your minds, has the events of the last couple of days created any incremental risk to the potential closure of the Shanghai RAAS transaction from either a regulatory or approvals standpoint? I certainly can't think of any, but a lot of investors have asked me that question, so I thought I'd give you the opportunity to answer it as well.
Okay, Tom, thank you. This is Raimon. You are correct. We see no issue or no problem in closing this transaction.
Perfect. I'll, I'll jump back in the queue and, let someone else ask a question.
Thank you, Tom. Now, we have questions from Thibault Boutherin from Morgan Stanley. Hi, Thibault.
Hello, hi. Thank you for taking my questions. The first one is on the outlook for cash generation improvements in 2024. So probably the best way to address investor concerns in the midterm around the quality of profit is through improving cash generation. And we saw the margin improvements through 2023, and our expectations from the market of further margin improvement this year.
But I just wanted to know if you could comment on the kind of profile for cash flow generation improvement through this year. So basically, kind of maybe the weight of cash generation between quarters. And I guess basically the question is, at what point this year do you expect that the picture will become clear in terms of cash flow generation improving? The second question is on the debt repayment priorities.
Just if you could share with us which bonds or loans you would prioritize the repayments for, with the proceeds from the sales of the stake in Shanghai RAAS. So would you focus on the 2025 maturities, or is there anything in your creditor agreements that would make you repay some of the later maturities, like 2027, for example? Thank you.
Okay, so related to the cash generation, 2023, 2024, you know, basically it's the same, the same approach, where basically the, the main driver of the cash flow, as you know, is the EBITDA generation. The EBITDA improvement in 2023 versus 2022 and 2024 versus 2023, is and will be very significant. Therefore, this will have a very positive impact on the cash flow.
And another item that, you know, that we always take a close look is the inventory variance. And, and, and as we speak, you know, we have put in place, this year, you know, a, a plan, to improve, the inventory, reducing the cycle, on one hand. On the other hand, the, the lower cost of plasma is, you know, is one of the main drivers of reducing the, the inventory.
So that's about the cash flow. Regarding the debt repayments, all I can tell you right now is that, 100% of the cash proceeds coming from the sale of the 20% of Shanghai RAAS shares will be used, fully used to repay debt... you know, when the time comes, you know, we will, we'll figure out based on, the market dynamics.
You know, if we, we will repay the 25, secure, the unsecured, we, we can refinance the, the unsecured, can repay, you know, the also the, pro rata basis, the secure. So there are many, many options that when the time comes, you know, we, we'll tackle that. But clearly, the two, maturities that are now, you know, on, on our way, which is in 2025, will be, removed.
Thank you, Alfredo.
Yeah.
Next questions are coming from Neil Alexander from Deutsche Bank. Hi. Hello?
Hi, Neil Alexander from Deutsche Bank. Can you guys hear me?
Thank you.
Thank you.
Hi. Thanks for taking my questions, and apologies if this has been already stated, but just wanting to confirm if Grifols plans to provide the exact contribution of consolidated entities such as BPC and Haema to their consolidated group EBITDA or if you'll provide a split of the earnings to non-controlling interest for those respective companies.
So that's the first question. And then second question, I know you just slightly touched on in the previous one, but again, operating working capital and inventories was somewhat material drag on negative cash flow. So I'm just wondering when this is exactly going to begin reversing. Thanks.
Okay, so the EBITDA contribution of these two companies at EBITDA consolidated level is around EUR 30 million. And then, you know, remember, this is at EBITDA, so at the non-controlling interest, just to everybody understand, you know, what is the accounting standards, we eliminate the net profit of the non-controlling share of the company.
What it means that for the, in the case of Haema and Biotest, we eliminate 100% of the net profit of these two companies, and in the case of GDS, 45% of the net profit of these companies, and the, under the, you know, on, under the caption "Non-Controlling Interest." Regarding your second question, the inventories, this year, the 2023, basically, and some in 2024, the reduction or the contention of the inventory increase basically is based on the cost reduction.
However, in 2024, as we said that, you know, this plan in place, the approach is to reduce, you know, the, the. Usually we talk about 10 months. So we're trying to squeeze, you know, this inventory cycle to optimize our working capital. This will take place in 2024. We're fully devoted to optimize our inventory levels.
Okay, and, now we have, Álvaro Lenze from, Alantra Equities. Álvaro, hello.
Hi, thanks for taking my questions and holding this call. My first one would be, if I understand the accounting principles of your non-controlling interest, I think that the bigger question that is raised here is: What is the balance sheet situation at the parent company and the group that does not have non-controlling interest?
So if you could provide the separation between the net debt at those subsidiaries in which you do not have full control, and what is the free cash flow generation at the parent company, to see how easily you can meet the upcoming maturities, which are 100% concentrated at the parent company,
I think that would really help put the concern to rest, regardless of the accounting policies that you're using. And the second, just a follow-up on the previous question. So, I understand that you're looking to reduce the inventory levels for this. Just to understand whether-
That's correct.
... free cash flow outflows from working capital will revert into working capital inflows, or are you still looking to some additional investment in working capital, although smaller than-
No, no
What we have in the last couple of years?
We're, you know, we are trying, you know, to for the 2024 to balance in the liter. So basically, you know, make the two main proteins growing, you know, in line in order to avoid, you know, excess of inventory, at the same time trying to adjust our collections to the required, you know, plasma supply to meet our demand.
Sorry, Alfredo, the first question was on the balance sheet.
Well, you know that, you know, in the balance sheet, you have the details on the within the Non-Controlling Interest, which is part of, you know, part of the equity. So it's same disclosure that we have in the P&L, in the line before the profit at the group. We have same, you know, for, for instance, in case of GDS, this is, you know, part of the equity of the company, where we disclose the Non-Controlling Interest.
Okay. Next, we have Jaime Escribano from Banco Santander.
Hi, hi, good afternoon. So, one question I get from, also from investors is: What would be the, the minorities, contribution, in terms of EBITDA of, Grifols Diagnostics, so of the 45%?... percent.
Basically, if you can refute that the, the minority interest contribution in terms of EBITDA, that Gotham is saying of EUR 270 million, what's the number, what's the true number that compares to this, two hundred and seventy? Then I think it would be, it would give comfort, on the Shanghai RAAS deal if you can confirm, that there is, penalties in place, if for whatever reason, Haier decides to, to break the deal.
And also if you have hedged the price at $1.8 billion. Then a final question, if I may. I also got the question, if you can explain the acquisition of BPC in 2021, which initially it seems it was gonna be acquired by Scranton, but in the end, it was Grifols that end up acquiring these collection centers. Thank you very much.
Okay. Regarding the EBITDA, GDS, you know, clearly, you know, these Gotham guys has no clue about, you know, the business and about the numbers. So they invent everything. But just to tell you that the GDS EBITDA is below $200 million, right? So therefore, you know, the 45% is clearly below $100 million. So I don't know why, you know why they come up with that number, okay? That's at EBITDA level. Remember, that we eliminate the non-controlling interest is the 45%, again, of the net income, okay? So it's a high rise who takes the-
I will take it. This is Raimon. Just to confirm, there are no penalties.
Sorry, before Alfredo answers, Jaime, you have been the only one to ask three questions, but okay, for this time, we will let you answer, ask the third one.
Yeah, sorry about that.
Okay, I mean, regarding the BPC, you know, again, we talk about Grifols and, you know, we acquire, you know, the donor centers of BPC at the market value and market price with a independent third party, and that's what I'm gonna tell you. I mean, I don't know. I don't know about the others. Thank you.
Okay. Okay, we have JJoaquín García-Quirós from JB Capital. Hi, Joaquín.
Yes, hello. Thank you for taking my questions. I have two.
Yes.
The first one is, does Grifols has loaned more money to Scranton aside the $95 million that's been talked about, for the deal between Haier Medical and BPC? And then, if you could provide us any update on the A to B structure, if this report and this turmoil has changed or accelerated the ideas of the company, or if the company remains with the same of the idea of doing it in the future once the stock reaches a certain level, bit higher than it is right now. Thank you.
You know, to the first one, as I said, disclosing the financial statements, our Vendor Loan remains in $95 million. Regarding the A/B shares consolidation, you know, as you said, you know, well, you know mentioned, you know, not at these levels, but, it will be, you know, it's on the table. So when the stock prices, you know, comes back and we'll see what we think about it.
Okay, thank you. We have also a couple of questions. Sorry, a couple of emails coming from sell-side analysts who had some issues with the connection. We have from Graham Parry , from Bank of America. First question, timing of submission of request and review of clarification points requested by a Spanish regulator.
That's one, and a second one, the related party transactions with Scranton being discussed mostly took place prior to last year management and board structure change. So while these were audited and in compliance with IFRS, they are perhaps not to the taste of many investors. Can you explain the company's current stance of such transactions going forward, or even give an undertaking that such transactions won't take place going forward?
I'll take the first one. The regulators, we got the questions yesterday. We have 10 days to respond, and we will respond ASAP.
Okay, and,
So, regarding these related party transactions that we have, I already mentioned to you, you know, it's a coincidence that, you know, they took place, you know, before, you know, changes in the board. And, as I explained, you know, right now, we are, you know, these transactions are audited and compliant with IFRS, and it will be, you know, the corruption; it will be executed when the company decide.
Thank you, Alfredo. There was a third question by Graham, but I think this has already been answered, so we can skip that one. So we have from Álvaro Lenze again from Alantra Equities. Sorry, I was surprised to see you again so soon. Hi, Álvaro.
Hi, thanks for allowing me to jump back into the queue. Just wanted to maybe rephrase the question I made earlier. I fully understand your thinking in terms of consolidation. Just Wanted to know how confident are you that the cash flow generation at the parent company, plus the dividends that you can pay, maybe, for example, from GDS, you can pay the 55% of dividends will go to the parent company.
How confident are you with the current cash position and free cash flow, plus the proceeds from Shanghai RAAS at the parent company, that you are able to meet the upcoming debt maturities? Thank you.
Okay, you know, on one hand, you know, these are the, the two main streams and sources of cash. One would be the around $1.8 million coming from the 20% sale of Shanghai RAAS. And then currently, as we disclose in the Q3 numbers, our liquidity is above EUR 1 billion. So with these two, you know, would be enough to settle these two maturities in 2025.
Thank you.
Okay, thank you. We have, Charles, we have you here, I think, on the line. Charles Pitman from Barclays. I was going to read your email, but, you can, proceed with your questions, but, remember, we need to limit to two, please.
Yep. No, no worries. Thank you very much for taking my questions, and apologies for the confusion, and apologies if I've missed any of this. But if you could just maybe... One of the key things you've been highlighting is that, you know, everything has been signed off by your auditor.
I was just wondering if in line with trying to offer best practice and build confidence with investors, if you could just confirm what your policy is around regularly rotating your chosen auditor, as is considered best practice as far as ESG factors are concerned. And then just one of the other things that we've been speaking a lot to investors about is just in terms of trying to simplify the accounts, which you mentioned earlier.
I was just hoping if you could provide some insight into kind of what practices you would be looking to improve now that, you know, the overhang of, debt has been roundly kind of addressed with the Shanghai RAAS, and, you know, if you could just give some insight into, you know, are you looking to address your number of EBITDA reported metrics? When could we expect you to report solely on an inclusive buyer test perspective? Interested to your thoughts. Thank you.
Okay, so many things, but, you know, I'm gonna try to tackle your questions. Regarding auditor rotation, since, you know, this is gonna be the last year that KPMG will audit the consolidated accounts.
Starting a couple of years ago, Deloitte start auditing the individual accounts, and in 2024, Deloitte will be the auditor for both individual and consolidated accounts, following the general practice of auditor rotation in Spain. Regarding simplifying, you know, the accounting, I mean, basically, as we said, we have SOX control. We fully comply with all the SOX compliances and internal controls.
In addition to that, a few years ago, we set up, you know, a very strong technical accounting department, and also, we engage for complex transactions with third-party, I would say, accounting advisor. And then for the EBITDA, you know, as we're following the ESMA and the European regulator and Spanish regulator rules, lately, we have improved the detailed reconciliation of the EBITDA reported and adjusted.
Okay, and then, since we are coming to the end of our call today, we have a final question from Abhishek Raval from AlphaValue . Hello.
Oh, thank you for taking my question. So my first question is that an issue of non-controlling interest being a high proportion of the bottom line was raised by Gotham. So regarding that, in your adjusted numbers, 2023 adjusted numbers, 45% of the bottom line was contributed by non-controlling interest.
So I just wanted to have some clarity on if there are any issues or temporary issues going on at 100%-owned subsidiaries, or are we going to see this 45% of total profits being contributed by non-controlling interest as a sort of near- to medium-term trend? This is my first question, and the second question is regarding debt maturity.
So, from what I can understand, EUR 2 billion of debt is about to mature in 2025, and another EUR 4 billion and EUR 2 billion in 2027 and 2028. So, regarding debt maturities in 2027 and 2028, do you see chances of Grifols having to restructure those debts? Or, are you confident of the cash flows from internal cash flows as well as the divestments? Are you confident that these cash flows would be able to service those debt obligations in 2027, 2028?
Okay, you know, regarding the NCI, the non-controlling interest, I mean, we can have a separate meeting to provide you a full reconciliation of what are the items included there. But I already explained, you know, the math and how this is, you know, this minority line is composed, okay?
Regarding the debt, the maturity, the debt maturity in 2025, which is EUR 1.8 billion, this will be, as I said, you know, we'll use those, basically, the Shanghai RAAS cash proceeds from the sale. And then, to your questions, but we are not planning, just to make it clear, we're not planning to refinance the existing debt.
That will not, that is not due in 2025, because we have great terms, okay? So when the time comes in 2027, we'll take a look at, you know, the... Obviously, the cash flow position of the company will be strong, and then we'll take a look at the markets, and then we'll decide what to do. You know, how much will be, you know, a pay off or pay down, and then how much will be refinance. But, you know, still, you know, a way to go to, 2027.
Okay, thank you, Alfredo.
Oh, thank you.
Thank you all that have been joining us in the call today. As always, the IR team, we remain at your disposal should you have additional questions, and hope to speak to you all very soon. Thank you all.