Sofgen Pharma S.A 6-K, filed Jun 15, 2022

Sofgen Pharma S.A. (PROCF)

6-K 2022-06-15 For: 2022-06-15

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Added on April 06, 2026

About this 6-K

Sofgen Pharma S.A filed this 6-K on June 15, 2022.

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Exhibit Number		Exhibit Title
99.1		The Unaudited Condensed Consolidated Interim Financial Statements of the Procaps Group, S.A. as of March 31, 2022 and for the three months ended March 31, 2022 and 2021.

	PROCAPS GROUP, S.A.

	By:	/s/ Ruben Minski
	Name:	Ruben Minski
	Title:	Chief Executive Officer
Dated: June 15, 2022

		For the three months ended March 31
	Notes	2022			2021
Revenue	5	$	85,630		$	77,442
Cost of sales			(38,508	)		(37,755	)
Gross profit			47,122			39,687

Sales and marketing expenses			(20,157	)		(19,481	)
Administrative expenses			(24,556	)		(20,578	)
Finance income (expenses), net	7		14,582			(14,237	)
Other income (expenses), net	8		5,124			(535	)
Income (loss) before tax			22,115			(15,144	)

Income tax expense	9		(5,669	)		(1,894	)
Income (loss) for the year		$	16,446		$	(17,038	)

Income (loss) for the year attributable to:
Owners of the Company			16,446			(17,319	)
Non-controlling interests			—			281

Earnings per share:
Basic, income (loss) for the period attributable to ordinary equity holders of the Company¹			0.16			(0.18	)

	For the three months ended March 31
	2022		2021
Income (loss) for the year	$	16,446	$	(17,038	)

Other comprehensive income/(loss)
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations		2,234		(4,782	)
Other comprehensive income (loss) for the year, net of tax		2,234		(4,782	)
Total comprehensive income (loss) for the year	$	18,680	$	(21,820	)

Total comprehensive income (loss) for the year attributable to:
Owners of the Company		18,679		(22,101	)
Non-controlling interests		1		281

	Notes	As of March 31, 2022			As of December 31, 2021
Assets
Non-current assets
Property, plant and equipment, net	11		77,296			72,638
Right-of-use assets			40,898			40,167
Goodwill			6,864			6,803
Intangible assets	10		32,707			30,171
Investments in joint ventures			2,335			2,443
Other financial assets			269			256
Deferred tax assets			7,891			7,067
Other assets			5,072			4,531
Total non-current assets		$	173,332		$	164,076
Current assets
Cash			65,644			72,112
Trade and other receivables, net	13		111,561			117,449
Inventories, net	12		98,343			79,430
Amounts owed by related parties			1,804			1,147
Current tax assets			28,839			22,082
Other current assets			3,747			5,839
Total current assets		$	309,938		$	298,059
Total assets		$	483,270		$	462,135

Liabilities and Stockholders’ Equity (Deficit)
Equity (Deficit)
Share capital			1,011			1,011
Share premium			377,677			377,677
Reserves			45,743			42,749
Accumulated deficit			(417,607	)		(431,059	)
Accumulated other comprehensive loss			(25,544	)		(27,778	)
Equity (deficit) attributable to owners of the company		$	(18,720	)	$	(37,400	)
Non-controlling interest			(939	)		(940	)
Total equity (deficit)		$	(19,659	)	$	(38,340	)
Non-Current liabilities
Borrowings	14		168,631			178,720
Amounts owed to related parties			—			—
Warrant liabilities	16		21,384			23,112
Shares held in escrow	17		83,349			101,859
Deferred tax liabilities			6,393			6,070
Other liabilities			2,061			2,750
Total non-current liabilities		$	281,818		$	312,511
Current liabilities
Borrowings	14		100,100			74,646
Trade and other payables, net			90,282			85,381
Amounts owed to related parties			6,465			8,450
Current tax liabilities			18,323			11,756
Provisions	15		578			501
Other liabilities			5,363			7,230
Total current liabilities		$	221,111		$	187,964
Total liabilities and stockholders’ equity (deficit)		$	483,270		$	462,135

	Attributable to equity holders of the Group
	Issued Capital		Share premium		Reserves¹			Accumulated deficit			Other Comprehensive Income			Total			Non- controlling interest			Total equity (deficit)
Balance as of January 1, 2021	$	2,001	$	54,412	$	39,897		$	(327,344	)	$	(24,421	)	$	(255,455	)	$	777		$	(254,678	)
Loss for the period		—		—		—			(17,319	)		—			(17,319	)		281			(17,038	)
Transfer reserves		—		—		(8	)		8			—			—			—			—
Other comprehensive income		—		—		—			—			(4,782	)		(4,782	)		—			(4,782	)
Non-controlling interest		—		—		—			281			—			281			—			281
Balance as of March 31, 2021	$	2,001	$	54,412	$	39,889		$	(344,374	)	$	(29,203	)	$	(277,275	)	$	1,058		$	(276,217	)

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
Balance as of March 31, 2022	$	1,011	$	377,677	$	45,743		$	(417,607	)	$	(25,544	)	$	(18,720	)	$	(939	)	$	(19,659	)

	Place of	Ownership interests held by:
Name of entity	business/country of incorporation	The Group						Non-controlling interests						Principal activities
		2022			2021			2022			2021
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 (previously Laboratorios Lopez 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.

	a.	OpCo formed Holdco, a public limited liability company (société anonyme) governed by the laws of the Grand Duchy of Luxembourg, which issued redeemable A shares of Holdco (the “Holdco Redeemable A Shares”) to OpCo. Holdco then formed Merger Sub, an exempted company incorporated under the laws of the Cayman Islands.

	b.	Merger Sub merged with and into the SPAC, with SPAC surviving such merger and becoming a direct wholly-owned subsidiary of Holdco (the “Merger”) and, in the context of the Merger, (a) all SPAC Ordinary Shares outstanding were exchanged with Holdco for the right to receive Holdco Ordinary Shares pursuant to a share capital increase of Holdco and (b) the issued and outstanding SPAC warrants that became warrants of Holdco exercisable for Holdco Ordinary Shares, on substantially the same terms as the SPAC warrants.

	c.	Immediately following consummation of the Merger and pursuant to those certain individual Contribution and Exchange Agreements, each dated as of March 31, 2021, each of the shareholders of OpCo, immediately prior to the consummation of the Transaction (the “Opco Shareholders”), had contributed their respective ordinary shares of OpCo, nominal value $1.00 per share (the “OpCo Ordinary Shares”) to Holdco in exchange for Holdco Ordinary Shares, and in the case of the International Finance Corporation (“IFC”), for Holdco Ordinary Shares and 4.5 million redeemable B shares of Holdco, nominal value $0.01 per share (the “Holdco Redeemable B Shares”) which were subscribed for by each OpCo Shareholder (such contributions and exchanges of OpCo Ordinary Shares for Holdco Ordinary Shares and, in the case of IFC, Holdco Ordinary Shares and Holdco Redeemable B Shares, collectively, the “Exchange”). The Exchange transaction was termed as a common control transaction due to the fact both OpCo and Holdco are ultimately controlled by the same party or parties, that are all controlled by the Minski family, both before and after the transaction, and that control is not transitory.

	d.	Immediately following the consummation of the Merger but prior to the Exchange, Holdco redeemed all Holdco Redeemable A Shares held by OpCo.

	e.	Immediately following the Exchange, Holdco redeemed 4.5 million Holdco Redeemable B Shares for a total purchase price of $45 million in accordance with that certain Share Redemption Agreement entered into by and between Holdco and IFC on March 31, 2021.

	●	the last day of the first fiscal year (a) following the fifth anniversary of a public equity offering, (b) in which its annual gross revenue totals at least $1.07 billion or (c) when the Company is deemed to be a large accelerated filer, which means the market value of the Company’s ordinary shares held by non-affiliates exceeds $700.0 million as of the prior June 30th; and

	–	As of March 31, 2021, the Group decreased Trade and other payables, net and increased Borrowings (current) by $2,942.

	Unaudited Condensed Consolidated Interim Statement of Financial Position As of March 31, 2021
Balance Sheet, restated	As reported		Restatement Adjustments			As restated
Current liabilities
Borrowings		102,204		18,077			120,281
Trade and other payables, net		106,580		(18,077	)		88,503

		For the three months ended March 31
	Notes	2022			2021 As restated¹
Operating activities
Loss for the year		$	16,446		$	(17,038	)
Adjustments to reconcile net loss with net cash from operating activities:
Depreciation of property, plant and equipment	11		1,452			1,598
Depreciation of right-of-use			1,230			1,137
Amortization of intangibles	10		818			1,800
Income tax expense	9		5,669			1,894
Finance (income) expenses	7		(14,582	)		14,237
Share of result of joint ventures			100			(129	)
Net (gain)/loss on sale of property, plant and equipment	11		33			2
Inventory provision	12		591			906
Provision for bad debt	13		314			(299	)
Provisions	15		—			1,083
Cash flow from operating activities before changes in working capital			12,071			5,191

(Increase)/decrease in operating assets and liabilities:
Trade and other receivables			5,573			2,675
Amounts owed by related parties			(521	)		520
Inventories			(19,830	)		1,513
Current tax assets			(6,757	)		(1,272	)
Other current assets			2,092			(1,219	)
Trade and other payables			16,814			4,701
Amounts owed to related parties			333			(354	)
Current tax liabilities			1,442			1,807
Other liabilities			(2,843	)		(413	)
Provisions	15		(7	)		(1,083	)
Other financial assets			(12	)		297
Other assets			(541	)		(1,726	)
Cash generated from operations			7,814			10,637

Interest paid			(434	)		(525	)
Income tax paid			(1,046	)		(319	)

Cash flow from (used in) operating activities		$	6,334		$	9,793

Investing activities
Acquisition of property, plant and equipment	11		(2,197	)		(1,785	)
Acquisition of intangibles	10		(1,827	)		(1,452	)

	Unaudited Condensed Consolidated Interim Statement of Cash Flows
	For the three month period ending March 31, 2021
	As reported			Restatement Adjustments¹			Other Reclassifications			As restated
Operating activities
Adjustments to reconcile net loss with net cash from operating activities:
Amortization of intangibles		1,090						710			1,800
(Increase)/decrease in operating assets and liabilities:
Trade and other payables		(1,192	)		5,893			—			4,701
Amounts owed to related parties		(3,309	)					2,955			(354	)
Interest paid		—			(525	)		—			(525	)
Cash flow provided by (used in) operating activities		759			5,368			3,665			9,793

Investing activities
Acquisition of intangibles		(56	)					(1,396	)		(1,452	)
Cash flow provided by (used in) investing activities		(1,841	)		—			(1,396	)		(3,237	)

Financing activities:
Proceeds from borrowings		48,612			607			—			49,219
Payments on borrowings		(34,442	)		(6,288	)		—			(40,730	)
Payments to related parties		1,477						(2,954	)		(1,477	)
Interest paid on borrowings		(2,922	)		313			—			(2,609	)
Cash Flow generated from (used in) financing activities		11,521			(5,368	)		(2,954	)		3,199

Net increase in Cash		10,439			—			(684	)		9,755
Cash less bank overdrafts at beginning of the period		4,229			—			—			4,229
Effect of exchange rate in fluctuations		(7,069	)		—			684			(6,385	)
Cash less bank overdraft at the end of the period		7,599			—			—			7,599

	Reportable segments
For the three months ended March 31, 2022	NextGel			Procaps Colombia		CAN			CASAND			Diabetrics			Total

Segment revenue		58,155			31,549		15,400			16,525			7,594			129,223
Intra-segment revenue		(32,818	)		309		(4,130	)		(3,963	)		(2,991	)		(43,593	)
Revenue from contracts with customers		25,337			31,858		11,270			12,562			4,603			85,630

Timing of revenue recognition
Goods transferred at a point in time		24,486			31,858		11,270			12,111			4,603			84,328
Services transferred over time		851			—		—			451			—			1,302
Total revenue from contracts with customers		25,337			31,858		11,270			12,562			4,603			85,630

	Reportable segments
For the three months ended March 31, 2021	NextGel			Procaps Colombia			CAN			CASAND			Diabetrics			Total

Segment revenue		48,456			27,430			11,241			13,653			9,826			110,606
Intra-segment revenue		(23,457	)		(290	)		(2,901	)		(3,166	)		(3,350	)		(33,164	)
Revenue from contracts with customers		24,999			27,140			8,340			10,487			6,476			77,442

Timing of revenue recognition
Goods transferred at a point in time		24,426			27,140			8,340			10,487			6,476			76,869
Services transferred over time		573			—			—			—			—			573
Total revenue from contracts with customers		24,999			27,140			8,340			10,487			6,476			77,442

	NextGel							Procaps Colombia						CAN							CASAND
For the three months ended March 31, 2022	Total		Inter- segment eliminations			External		Total		Inter- segment eliminations		External		Total		Inter- segment eliminations			External		Total		Inter- segment eliminations			External
Revenue		58,155		(32,818	)		25,337		31,549		309		31,858		15,400		(4,130	)		11,270		16,525		(3,963	)		12,562
Contribution margin ¹		17,731		(7,519	)		10,212		8,901		850		9,751		2,765		(631	)		2,134		1,594		3,305			4,899

	Diabetrics								Corporate									Total
For the three months ended March 31, 2022	Total		Inter- segment eliminations			External			Total			Inter- segment eliminations			External			Total			Inter- segment eliminations			External
Revenue		7,594		(2,991	)		4,603			—			—			—			129,223			(43,593	)		85,630
Contribution margin ¹		49		(133	)		(84	)		1,496			(1,443	)		53			32,536			(5,571	)		26,965
Administrative expenses		—		—			—			24,556			—			24,556			24,556			—			24,556
Finance expenses (income)		—		—			—			(14,582	)		—			(14,582	)		(14,582	)		—			(14,582	)
Other expenses		—		—			—			(5,124	)		—			(5,124	)		(5,124	)		—			(5,124	)
Income (loss) before tax		49		(133	)		(84	)		(3,354	)		(1,443	)		(4,797	)		27,686			(5,571	)		22,115

	For the three months ended March 31
	2022		2021
South America		59,200		55,597
Central America		16,281		11,834
North America		8,232		7,596
Europe		1,917		2,415
Total		85,630		77,442

Cost	Total
Balance as of January 1, 2021		48,622
Additions		162
Additions from internal developments		1,290
Foreign currency exchange		(3,028	)
Reclassifications		(135	)
Balance as of March 31, 2021		46,911

Balance as of January 1, 2022		53,926
Additions		294
Additions from internal developments		1,533
Foreign currency exchange		2,590
Balance as of March 31, 2022		58,343

Accumulated amortization and impairment loss	Total
Balance as of January 1, 2021		21,039
Amortization expense		1,800
Foreign currency exchange		(754	)
Balance as of March 31, 2021		22,085

Balance as of January 1, 2022		23,755
Amortization expense		818
Foreign currency exchange		1,063
Balance as of March 31, 2022		25,636

As of March 31, 2021
Net book value		24,826
As of March 31, 2022
Net book value		32,707

Cost or valuation	Total
Balance as of January 1, 2021		115,291
Additions		1,785
Disposals		(12	)
Effect of exchange differences in foreign currency		(6,338	)
Reclassifications		(741	)
Balance as of March 31, 2021		109,985

Balance as of January 1, 2022		116,654
Additions		2,197
Disposals		(41	)
Effect of exchange differences in foreign currency		6,540
Balance as of March 31, 2022		125,350

Accumulated depreciation	Total
Balance as of January 1, 2021		44,956
Disposals		(10	)
Depreciation expense		1,598
Effect of exchange differences in foreign currency		(1,159	)
Balance as of March 31, 2021		45,385

Balance as of January 1, 2022		44,016
Disposals		(8	)
Depreciation expense		1,452
Effect of exchange differences in foreign currency		2,594
Balance as of March 31, 2022		48,054

As of March 31, 2021
Net book value		64,600
As of March 31, 2022
Net book value		77,296

	As of March 31, 2022			As of December 31, 2021
Raw materials and supplies	$	44,853		$	38,024
Products in process		9,466			6,240
Finished products and merchandise		37,261			31,791
Inventory in transit		12,739			9,645
Subtotal		104,319			85,700
Less: Provision		(5,976	)		(6,270	)
Total	$	98,343		$	79,430

	As of March 31, 2022			As of December 31, 2021
Trade receivables, net of discounts¹	$	102,545		$	111,071
Impairment of trade receivables		(9,069	)		(8,755	)
Other receivables		18,086			15,133
Trade receivables, net of discounts and impairment	$	111,562		$	117,449

	As of March 31, 2022		As of December 31, 2021
Unsecured borrowings at amortized cost
Syndicated term loan (1)	$	49,316	$	46,505
Other term loan (2)		67,571		51,593
Lease liabilities (3)		31,805		31,747
Factoring obligations (4)		7,287		10,609
Bank overdrafts (5)		38		55
Notes (6)		112,714		112,857
Total Interest bearing liabilities	$	268,731	$	253,366

Current		100,100		74,646
Non- Current	$	168,631		178,720

	Currency		Range of Interest	Maturity Year		As of March 31, 2022			As of December 31, 2021
Syndicated term loan		COP	IBR+ 5.3%, IBR+ 4.75% (Variable)		2025	$	50,146			39,521
Syndicated term loan		USD	Libor+ 4.8% (Variable)		2025		—			7,850
Amortized cost		COP	N/A		2025		(830	)		(866	)
Total Syndicated term loan							49,316			46,505

	2022			2021
Contingencies
Balance as of January 1	$	501		$	1,829
Effect of changes in foreign exchange rates		84			(777	)
Provisions made		—			1,083
Provisions used		(7	)		(1,083	)
Balance as of March 31	$	578		$	1,052

	As of March 31, 2022		As of December 31, 2021
Public warrants	$	15,000	$	16,000
Private warrants¹		6,384		7,112
	$	21,384	$	23,112

	As of March 31, 2022			As of December 31, 2021
As of January 1	$	16,000		$	—
Acquired public warrants	$	—		$	21,600
Warrants exercised	$	—		$	—
Fair value remeasurement	$	(1,000	)	$	(5,600	)
As of March 31/December 31	$	15,000		$	16,000

	●	Level 1: inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

	●	Level 2: inputs are observable either directly (e.g. as prices) or indirectly (e.g. derived from prices).

	As of March 31, 2022				As of December 31, 2021
	FVTPL¹		Amortized cost²		FVTPL¹		Amortized cost²
Financial assets not measured at fair value
Trade and other receivables, net		—		111,562		—		117,449
Amounts owed by related parties		—		—		—		—
Cash		—		65,644		—		72,112
Other financial assets		—		269		—		256
Total financial assets not measured at fair value		—		177,475		—		189,817

Financial liabilities measured at fair value
Warrant liabilities		21,384		—		23,112		—
Shares held in escrow		83,349		—		101,859		—
Total financial liabilities measured at fair value		104,733		—		124,971		—
Financial liabilities not measured at fair value
Borrowings		—		268,731		—		253,365
Trade and other payables, net		—		90,282		—		85,381
Amounts owed to related parties		—		6,465		—		8,450
Total financial liabilities not measured at fair value		—		365,478		—		347,196

Type	Valuation Technique	Significant unobservable input	Inter-relationship between significant unobservable input and fair value measurement
Warrants	The fair value of the Private Warrants is estimated using the Black-Scholes option pricing formula for European calls, since the underlying stock is not expected to pay dividends over the term of the Warrants.	Volatility	The estimated fair value would increase (decrease) if the expected volatility were higher (lower).
Shares held in escrow	The fair value of the shares to be delivered is estimated using Monte Carlo simulation in a risk-neutral framework assuming a Geometric Brownian Motion for the future stock price.	Volatility	The estimated fair value would increase (decrease) if the expected volatility were higher (lower).

March 31, 2022	Current (not past due)			1-30 days past due			31-60 days past due			61-90 days past due			91-120 days past due			More than 120 days past due			Total
Weighted-average loss rate		0.58	%		1.20	%		2.05	%		2.26	%		4.85	%		63.84	%		15.34	%
Gross carrying amount		78,242			18,190			7,709			4,691			1,586			32,847			143,265
Impairment loss allowance		(454	)		(219	)		(158	)		(106	)		(77	)		(20,970	)		(21,984	)
		77,788			17,971			7,551			4,585			1,509			11,877			121,281

December 31, 2021	Current (not past due)			1-30 days past due			31-60 days past due			61-90 days past due			91-120 days past due			More than 120 days past due			Total
Weighted-average loss rate		0.60	%		2.11	%		2.35	%		3.38	%		3.26	%		67.43	%		14.67	%
Gross carrying amount		98,776			11,265			3,147			1,981			1,843			30,578			147,590
Impairment loss allowance		(591	)		(238	)		(74	)		(67	)		(60	)		(20,620	)		(21,650	)
		98,185			11,027			3,073			1,914			1,783			9,958			125,940