Annual / Quarterly Financial Statement • Feb 28, 2019
Annual / Quarterly Financial Statement
Open in ViewerOpens in native device viewer
| Impairment of Goodwill See note 7 to the consolidated annual accounts |
|
|---|---|
| Key Audit Matter | How the Matter was Addressed in Our Audit |
| The Group has recognised goodwill allocated to the corresponding cash generating units (CGU) of Euros 5,209,230 thousand. The Group calculates the recoverable amount of goodwill on an annual basis to determine whether they have been impaired. These recoverable amounts are determined by applying valuation techniques which require judgement by the Directors and the use of assumptions and estimates in relation to the financial projections and cash flow discounts used. Due to the high level of judgement, the uncertainty associated with these estimates and the significance of the carrying amount of these goodwill, this has been considered a key matter of our audit for the current year. |
Our audit procedures comprised the following: assessing the design and implementation of $\bullet$ the controls linked to the process of evaluating the impairment of goodwill. assessing the reasonableness of the ۰ methodology used to calculate the recoverable amount and the main assumptions, with the involvement of our valuation specialists. comparing the coherence of the estimates $\bullet$ of growth of future cash flows of each CGU included in the calculation of recoverable amount with the business plans approved by the Group's governing bodies. We have also compared the cash flow forecasts of the cash generating units estimated in prior years with the actual cash flows obtained. assessing the sensitivity to reasonably $\bullet$ possible changes in certain assumptions. evaluating whether the disclosures in the $\bullet$ consolidated annual accounts meet the requirements of the financial reporting framework applicable to the Group. |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
at 31 December 2018 and 2017
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Assets | 31/12/18 | 31/12/17 |
|---|---|---|
| Goodwill (note 7) | 5,209,230 | 4,590,498 |
| Other intangible assets (note 8) | 1,385,537 | 1,269,342 |
| Property, plant and equipment (note 9) | 1,951,983 | 1,760,053 |
| Investments in equity-accounted investees (note 10) | 226,905 | 219,009 |
| Non-current financial assets | ||
| Non-current financial assets measured at fair value | 7 | 47,046 |
| Non-current financial assets not measured at fair value | 107,594 | 22,843 |
| Total non-current financial assets (note 11) | 107,601 | 69,889 |
| Deferred tax assets (note 27) | 112,539 | 66,157 |
| Total non-current assets | 8,993,795 | 7,974,948 |
| Inventories (note 12) | 1,949,360 | 1,629,293 |
| Trade and other receivables | ||
| Trade receivables | 269,167 | 286,198 |
| Other receivables | 92,418 | 40,681 |
| Current income tax assets | 42,205 | 59,531 |
| Trade and other receivables (note 13) | 403,790 | 386,410 |
| Other current financial assets (note 11) | ||
| Current financial assets measured at fair value | 19,934 | 0 |
| Current financial assets not measured at fair value | 34,031 | 10,738 |
| Total current financial assets (note 11) | 53,965 | 10,738 |
| Other current assets | 42,344 | 32,354 |
| Cash and cash equivalents (note 14) | 1,033,792 | 886,521 |
| Total current assets | 3,483,251 | 2,945,316 |
| Total assets | 12,477,046 | 10,920,264 |
at 31 December 2018 and 2017
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Equity and liabilities | 31/12/18 | 31/12/17 |
|---|---|---|
| Share capital | 119,604 | 119,604 |
| Share premium | 910,728 | 910,728 |
| Reserves | 2,441,931 | 2,027,648 |
| Treasury stock | (55,441) | (62,422) |
| Interim dividend | (136,747) | (122,986) |
| Profit for the year attributable to the Parent | 596,642 | 662,700 |
| Total equity | 3,876,717 | 3,535,272 |
| Available for sale financial assets | -- | 4,926 |
| Other comprehensive Income | (554) | (656) |
| Translation differences | 349,391 | 89,537 |
| Other comprehensive expenses | 348,837 | 93,807 |
| Equity attributable to the Parent (note 15) | 4,225,554 | 3,629,079 |
| Non-controlling interests (note 17) | 471,050 | 4,886 |
| Total equity | 4,696,604 | 3,633,965 |
| Liabilities | ||
| Grants (note 18) | 11,845 | 11,822 |
| Provisions (note 19) | 6,114 | 5,763 |
| Non-current financial liabilities (note 20) | 6,099,463 | 5,901,815 |
| Other non-current liabilities | 1,301 | -- |
| Deferred tax liabilities (note 27) | 404,398 | 388,912 |
| Total non-current liabilities | 6,523,121 | 6,308,312 |
| Provisions (note 19) | 80,055 | 106,995 |
| Current financial liabilities (note 20) | 277,382 | 155,070 |
| Current debts with related companies | 7,079 | -- |
| Trade and other payables Suppliers |
561,883 | 423,096 |
| Other payables | 159,816 | 141,720 |
| Current income tax liabilities | 1,917 | 6,709 |
| Total trade and other payables (note 21) | 723,616 | 571,525 |
| Other current liabilities (note 22) | 169,189 | 144,397 |
| Total current liabilities | 1,257,321 | 977,987 |
| Total liabilities | 7,780,442 | 7,286,299 |
| Total equity and liabilities | 12,477,046 | 10,920,264 |
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/18 | 31/12/17 | 31/12/16 | |
|---|---|---|---|
| Continuing Operations | |||
| Net revenue (notes 6 and 23) | 4,486,724 | 4,318,073 | 4,049,830 |
| Cost of sales | (2,437,164) | (2,166,062) | (2,137,539) |
| Gross Profit | 2,049,560 | 2,152,011 | 1,912,291 |
| Research and Development | (240,661) | (288,320) | (197,617) |
| Selling, General and Administration expenses | (814,775) | (860,348) | (775,266) |
| Operating Expenses | (1,055,436) | (1,148,668) | (972,883) |
| Operating Result | 994,124 | 1,003,343 | 939,408 |
| Finance income | 13,995 | 9,678 | 9,934 |
| Finance costs | (293,273) | (263,344) | (244,829) |
| Change in fair value of financial instruments | -- | (3,752) | (7,610) |
| Impairment and gains /(losses) on disposal of financial instruments |
30,280 | (18,844) | -- |
| Exchange differences | (8,246) | (11,472) | 8,916 |
| Finance result (note 26) | (257,244) | (287,734) | (233,589) |
| Share of losses of equity accounted investees (note 10) | (11,038) | (19,887) | 6,933 |
| Profit before income tax from continuing operations | 725,842 | 695,722 | 712,752 |
| Income tax expense (note 27) | (131,436) | (34,408) | (168,209) |
| Profit after income tax from continuing operations | 594,406 | 661,314 | 544,543 |
| Consolidated profit for the year | 594,406 | 661,314 | 544,543 |
| Profit attributable to the Parent | 596,642 | 662,700 | 545,456 |
| Loss attributable to non-controlling interest (note 17) | (2,236) | (1,386) | (913) |
| Basic earnings per share (Euros) (see note 16) | 0.87 | 0.97 | 0.80 |
| Diluted earnings per share (Euros) (see note 16) | 0.87 | 0.97 | 0.80 |
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/18 | 31/12/17 | 31/12/16 | |
|---|---|---|---|
| Consolidated profit for the year | 594,406 | 661,314 | 544,543 |
| Items for reclassification to profit or loss | |||
| Translation differences | 268,557 | (532,389) | 103,833 |
| Translation differences / Cash Flow Hedge | -- | -- | (6,809) |
| Available for sale financial Assets | -- | 10,145 | (5,219) |
| Equity accounted investees (note 10) / Translation differences | (9,270) | (27,134) | 10,671 |
| Cash flow hedges - effective part of changes in fair value | -- | -- | 14,501 |
| Cash flow hedges - amounts taken to profit or loss | -- | -- | (7,426) |
| Other comprehensive income | 102 | (14) | (4,810) |
| Tax effect | -- | -- | (2,462) |
| Other comprehensive income for the year, after tax | 259,389 | (549,392) | 102,279 |
| Total comprehensive income for the year | 853,795 | 111,922 | 646,822 |
| Total comprehensive income attributable to the Parent | 856,598 | 113,441 | 647,667 |
| Total comprehensive expense attributable to the non-controlling interests | (2,803) | (1,519) | (845) |
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit before tax | 725,842 | 695,722 | 712,752 |
| Adjustments for: | 454,378 | 556,792 | 391,986 |
| Amortization and depreciation (note 25) | 228,609 | 215,490 | 201,869 |
| Other adjustments: | 225,769 | 341,302 | 190,117 |
| (Profit) / losses on equity accounted investments (note 10) | 11,038 | 19,888 | (6,933) |
| Impairment of assets and net provision charges | (23,657) | 66,047 | (23,079) |
| (Profit) / losses on disposal of fixed assets (note 8 and 9) | (6,700) | 1,551 | (2,987) |
| Government grants taken to income (note 18) | (1,166) | (286) | (1,681) |
| Finance cost / (income) | 232,962 | 263,657 | 236,034 |
| Other adjustments | 13,292 | (9,555) | (11,237) |
| Change in operating assets and liabilities | (112,639) | (65,800) | (164,319) |
| Change in inventories | (231,670) | (165,508) | (173,003) |
| Change in trade and other receivables | (13,141) | 80,112 | (25,180) |
| Change in current financial assets and other current assets | (3,092) | (2,691) | (2,610) |
| Change in current trade and other payables | 135,264 | 22,287 | 36,474 |
| Other cash flows used in operating activities | (330,153) | (344,968) | (387,141) |
| Interest paid | (225,146) | (207,079) | (180,497) |
| Interest recovered | 6,862 | 9,492 | 8,685 |
| Income tax (paid) / received | (111,585) | (147,015) | (215,329) |
| Other recovered (paid) | (284) | (366) | -- |
| Net cash from operating activities | 737,428 | 841,746 | 553,278 |
| Cash flows from investing activities | |||
| Payments for investments | (852,536) | (2,209,667) | (509,078) |
| Group companies, associates and business units (notes 3, 2 (b) and 10) | (524,081) | (1,857,210) | (202,727) |
| Property, plant and equipment and intangible assets | (307,722) | (322,973) | (292,690) |
| Property, plant and equipment | (231,983) | (251,507) | (249,416) |
| Intangible assets | (75,739) | (71,466) | (43,274) |
| Other financial assets | (20,733) | (29,484) | (13,661) |
| Proceeds from the sale of investments | 70,669 | 23,787 | 2,426 |
| Property, plant and equipment | 550 | 762 | 2,426 |
| Other financial assets | 70,119 | 23,025 | -- |
| Net cash used in investing activities | (781,867) | (2,185,880) | (506,652) |
| Cash flows from financing activities | |||
| Proceeds from and payments for equity instruments | -- | -- | (11,766) |
| Payments for treasury stock (note 15 (d)) | -- | -- | (12,686) |
| Sales of treasury stock (note 15 (d)) | -- | -- | 920 |
| Proceeds from and payments for financial liability instruments | 37,418 | 1,808,771 | (80,149) |
| Issue | 179,350 | 1,912,615 | 81,513 |
| Redemption and repayment | (141,932) | (103,844) | (161,662) |
| Dividends and interest on other equity instruments | (275,783) | (218,260) | (216,151) |
| Dividends paid | (278,841) | (218,260) | (216,151) |
| Dividends received | 3,058 | -- | -- |
| Other cash flows from / (used in) financing activities | 4,661 | (156,446) | (21,492) |
| Financing costs included on the amortised costs of the debt | -- | (142,288) | -- |
| Other amounts from / (used in) financing activities | 4,661 | (14,158) | (21,492) |
| Transaction with minority interests with no loss of control (note 3) | 386,207 | -- | -- |
| Net cash from/(used in) financing activities | 152,503 | 1,434,065 | (329,558) |
| Effect of exchange rate fluctuations on cash | 39,207 | (98,419) | 35,441 |
| Net increase in cash and cash equivalents | 147,271 | (8,488) | (247,491) |
| Cash and cash equivalents at beginning of the year | 886,521 | 895,009 | 1,142,500 |
| Cash and cash equivalents at year end | 1,033,792 | 886,521 | 895,009 |
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Attributable to shareholders of the Parent |
|---|
| -------------------------------------------- |
| Accumulated other comprehensive income | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Share capital |
Share premium |
Reserves | Profit attributable to Parent |
Interim dividend |
Treasury stock |
Translation differences |
Available for sale financial assets |
Other comprehensive income |
Cash flow hedges |
Equity attributable to Parent |
Non-controlling interests |
Equity | |
| Balance at 31 December 2015 | 119,604 | 910,728 | 1,371,061 | 532,145 | (119,615) | (58,575) | 534,491 | -- | 3,035 | 3,329 | 3,296,203 | 5,187 | 3,301,390 |
| Translation differences | -- | -- | -- | -- | -- | -- | 114,436 | -- | -- | -- | 114,436 | 68 | 114,504 |
| Available for sale financial assets | -- | -- | -- | -- | -- | -- | -- | (5,219) | -- | -- | (5,219) | -- | (5,219) |
| Cash flow hedges (note 15 (f)) | -- | -- | -- | -- | -- | -- | -- | -- | -- | (3,329) | (3,329) | -- | (3,329) |
| Other comprehensive income | -- | -- | -- | -- | -- | -- | -- | -- | (3,677) | -- | (3,677) | -- | (3,677) |
| Other comprehensive income / (expense) for the year | -- | -- | -- | -- | -- | -- | 114,436 | (5,219) | (3,677) | (3,329) | 102,211 | 68 | 102,279 |
| Profit/(loss) for the year | -- | -- | -- | 545,456 | -- | -- | -- | -- | -- | -- | 545,456 | (913) | 544,543 |
| Total comprehensive income / (expense) for the year | -- | -- | -- | 545,456 | -- | -- | 114,436 | (5,219) | (3,677) | (3,329) | 647,667 | (845) | 646,822 |
| Net change in treasury stock (note 15 (d)) | -- | -- | (182) | -- | -- | (10,135) | -- | -- | -- | -- | (10,317) | -- | (10,317) |
| Acquisition of non-controlling interests (note 15 (c)) | -- | -- | (2,737) | -- | -- | -- | -- | -- | -- | -- | (2,737) | 2,737 | -- |
| Other changes | -- | -- | 6,816 | -- | -- | -- | -- | -- | -- | -- | 6,816 | (582) | 6,234 |
| Interim dividend | -- | -- | -- | -- | (122,908) | -- | -- | -- | -- | -- | (122,908) | -- | (122,908) |
| Distribution of 2015 profit | |||||||||||||
| Reserves Dividends |
-- -- |
-- -- |
319,287 -- |
(319,287) (93,243) |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
-- (93,243) |
-- -- |
-- (93,243) |
| Interim dividend | -- | -- | -- | (119,615) | 119,615 | -- | -- | -- | -- | -- | -- | -- | -- |
| Operations with shareholders or owners | -- | -- | 323,184 | (532,145) | (3,293) | (10,135) | -- | -- | -- | -- | (222,389) | 2,155 | (220,234) |
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Attributable to shareholders of the Parent
| Accumulated other comprehensive income | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Share capital |
Share premium |
Reserves | Profit attributable to Parent |
Interim dividend |
Treasury stock |
Translation differences |
Available for sale financial assets |
Other comprehensive income |
Cash flow hedges |
Equity attributable to Parent |
Non-controlling interests |
Equity | |
| Balance at 31 December 2016 | 119,604 | 910,728 | 1,694,245 | 545,456 | (122,908) | (68,710) | 648,927 | (5,219) | (642) | -- | 3,721,481 | 6,497 | 3,727,978 |
| Translation differences | -- | -- | -- | -- | -- | -- | (559,390) | -- | -- | -- | (559,390) | (133) | (559,523) |
| Available for sale financial assets | -- | -- | -- | -- | -- | -- | -- | 10,145 | -- | -- | 10,145 | -- | 10,145 |
| Other comprehensive income | -- | -- | -- | -- | -- | -- | -- | -- | (14) | -- | (14) | -- | (14) |
| Other comprehensive income / (expense) for the year | -- | -- | -- | -- | -- | -- | (559,390) | 10,145 | (14) | -- | (549,259) | (133) | (549,392) |
| Profit/(loss) for the year | -- | -- | -- | 662,700 | -- | -- | -- | -- | -- | -- | 662,700 | (1,386) | 661,314 |
| Total comprehensive income / (expense) for the year | -- | -- | -- | 662,700 | -- | -- | (559,390) | 10,145 | (14) | -- | 113,441 | (1,519) | 111,922 |
| Net change in treasury stock (note 15 (d)) Acquisition of non-controlling interests (note 15 (c)) Other changes Interim dividend |
-- -- -- -- |
-- -- -- -- |
-- (346) 6,475 |
-- -- -- -- |
-- -- -- (122,986) |
6,288 -- -- -- |
-- -- -- -- |
-- -- -- -- |
-- -- -- -- |
-- -- -- -- |
6,288 (346) 6,475 (122,986) |
-- (43) (49) -- |
6,288 (389) 6,426 (122,986) |
| Distribution of 2016 profit Reserves Dividends Interim dividend |
-- -- -- |
-- -- -- |
422,548 (95,274) -- |
(422,548) -- (122,908) |
-- -- 122,908 |
-- -- -- |
-- -- -- |
-- -- -- |
-- -- -- |
-- -- -- |
-- (95,274) -- |
-- -- -- |
-- (95,274) -- |
| Operations with shareholders or owners | -- | -- | 333,403 | (545,456) | (78) | 6,288 | -- | -- | -- | -- | (205,843) | (92) | (205,935) |
| Balance at 31 December 2017 | 119,604 | 910,728 | 2,027,648 | 662,700 | (122,986) | (62,422) | 89,537 | 4,926 | (656) | -- | 3,629,079 | 4,886 | 3,633,965 |
| Impact of new IFRS (note 2) | -- | -- | 29,562 | -- | -- | -- | -- | (4,926) | -- | -- | 24,636 | -- | 24,636 |
| Balance at 31 December 2017 adjusted | 119,604 | 910,728 | 2,057,210 | 662,700 | (122,986) | (62,422) | 89,537 | 0 | (656) | 0 | 3,653,715 | 4,886 | 3,658,601 |
| Translation differences | -- | -- | -- | -- | -- | -- | 259,854 | -- | -- | -- | 259,854 | (567) | 259,287 |
| Other comprehensive income | -- | -- | -- | -- | -- | -- | -- | -- | 102 | -- | 102 | -- | 102 |
| Other comprehensive income / (expense) for the year | -- | -- | -- | -- | -- | -- | 259,854 | -- | 102 | -- | 259,956 | (567) | 259,389 |
| Profit/(loss) for the year | -- | -- | -- | 596,642 | -- | -- | -- | -- | -- | -- | 596,642 | (2,236) | 594,406 |
| Total comprehensive income / (expense) for the year | -- | -- | -- | 596,642 | -- | -- | 259,854 | -- | 102 | -- | 856,598 | (2,803) | 853,795 |
| Net change in treasury stock (note 15 (d)) Acquisition / Divestment of non-controlling interests (note 15 |
-- | -- | -- | -- | -- | 6,981 | -- | -- | -- | -- | 6,981 | -- | 6,981 |
| (c)) Other changes |
-- -- |
-- -- |
(3,462) (9,437) |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
(3,462) (9,437) |
469,010 (43) |
465,548 (9,480) |
| Interim dividend | -- | -- | -- | (136,747) | -- | -- | -- | -- | -- | (136,747) | -- | (136,747) | |
| Distribution of 2017 profit: | |||||||||||||
| Reserves | -- | -- | 539,714 | (539,714) | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| Dividends | -- | -- | (142,094) | -- | -- | -- | -- | -- | -- | -- | (142,094) | -- | (142,094) |
| Interim dividend | -- | -- | -- | (122,986) | 122,986 | -- | -- | -- | -- | -- | -- | -- | -- |
| Operations with shareholders or owners | -- | -- | 384,721 | (662,700) | (13,761) | 6,981 | -- | -- | -- | -- | (284,759) | 468,967 | 184,208 |
| Balance at 31 December 2018 | 119,604 | 910,728 | 2,441,931 | 596,642 | (136,747) | (55,441) | 349,391 | -- | (554) | -- | 4,225,554 | 471,050 | 4,696,604 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Grifols, S.A. (hereinafter the Company) was incorporated with limited liability under Spanish law on 22 June 1987. Its registered and tax offices are in Barcelona. The Company's statutory activity consists of providing corporate and business administrative, management and control services, as well as investing in assets and property. Its principal activity involves rendering administrative, management and control services to its subsidiaries.
On 17 May 2006 the Company completed its flotation on the Spanish securities market, which was conducted through the public offering of 71,000,000 ordinary shares of Euros 0.50 par value each and a share premium of Euros 3.90 per share. The total capital increase (including the share premium) amounted to Euros 312.4 million, equivalent to a price of Euros 4.40 per share.
The Company's shares were floated on the Spanish stock exchange IBEX-35 index on 2 January 2008.
All of the Company's shares are listed on the Barcelona, Madrid, Valencia and Bilbao securities markets and on the Spanish Automated Quotation System (SIBE/Continuous Market). On 2 June 2011, Class B non-voting shares were listed on the NASDAQ (USA) and on the Spanish Automated Quotation System (SIBE/Continuous Market).
Grifols, S.A. is the Parent of the subsidiaries listed in Appendix I of this note to the consolidated annual accounts.
Grifols, S.A. and subsidiaries (hereinafter the Group) act on an integrated basis and under common management and their principal activity is the procurement, manufacture, preparation and sale of therapeutic products, especially haemoderivatives.
The main factory locations of the Group's Spanish companies are in Parets del Vallés (Barcelona) and Torres de Cotilla (Murcia), while the US companies are located in Los Angeles (California), Clayton (North Carolina), Emeryville (California), and San Diego (California).
The Company aims to reinforce its strategic presence in China. In this regards, Grifols is currently in talks with Shangai RAAS Blood Products to explore a possible corporate transaction and reached an agreement with Boya-Pharmaceutical to open plasma centers in China.
The consolidated annual accounts have been prepared on the basis of the accounting records of Grifols, S.A. and of the Group companies. The consolidated annual accounts for 2018 have been prepared under International Financial Reporting Standards as adopted by the European Union (IFRS-EU) which for Grifols Group purposes, are identical to the standards as endorsed by the International Accounting Standard Board (IFRS-IASB) to present fairly the consolidated equity and consolidated financial position of Grifols, S.A. and subsidiaries at 31 December 2018, as well as the consolidated results from their operations, consolidated cash flows and consolidated changes in equity for the year then ended.
These consolidated annual accounts for 2018 show comparative figures for 2017 and voluntarily show figures for 2016 from the consolidated statement of profit and loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows and their corresponding notes thereto.
The Group adopted IFRS-EU for the first time on 1 January 2004 and has been preparing its annual accounts under International Financial Reporting Standards, as adopted by the European Union (IFRS-EU) as required by capital market regulations governing the presentation of financial statements by companies whose debt or own equity instruments are listed on a regulated market.
The Board of Directors of Grifols, S.A. considers that these consolidated annual accounts of 2018 authorized for issue at their meeting held on 22 February 2019, will be approved by the shareholders without any modifications.
In accordance with the provision of section 357 of the Irish Companies Act 2014, the Company has irrevocably
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
guaranteed all liabilities of an Irish subsidiary undertaking, Grifols Worldwide Operations Limited (Ireland) (see Appendix I), for the financial year ended 31 December 2018 as referred to in subsection 1(b) of that Act, for the purposes of enabling Grifols Worldwide Operations Limited to claim exemption from the requirement to file their own annual accounts in Ireland.
The preparation of the consolidated annual accounts in conformity with IFRS-EU requires management to make judgments, estimates and assumptions that affect the application of Group accounting policies. The following notes include a summary of the relevant accounting estimates and judgments used to apply accounting policies which have the most significant effect on the amounts recognized in the consolidated annual accounts.
No changes have been made to prior year judgments relating to existing uncertainties.
The Group is also exposed to interest rate and currency risks. Refer to sensitivity analysis in note 30.
Appendix I shows details of the percentages of direct or indirect ownership of subsidiaries by the Company at 31 December 2018, 2017 and 2016, as well as the consolidation method used in each case for preparation of the accompanying consolidated annual accounts.
Subsidiaries in which the Company directly or indirectly owns the majority of equity or voting rights have been fully consolidated. Associates in which the Company owns between 20% and 50% of share capital and over which it has no control but does have significant influence, have been accounted for under the equity method.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Although the Group holds 30% of the shares with voting rights of Grifols Malaysia Sdn Bhd, it controls the majority of the economic and voting rights of Grifols Malaysia Sdn Bhd through a contract with the other shareholder and a pledge on its shares. As a consequence it has been fully consolidated.
Grifols (Thailand) Ltd. has two classes of shares and it grants the majority of voting rights to the class of shares held by the Group. As a consequence it has been fully consolidated.
Changes in associates and jointly controlled entities are detailed in note 10.
In 2018:
In 2017:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
In 2016 Grifols incorporated the following companies:
In accordance with IFRS, the following should be noted in connection with the scope of application of IFRS and the preparation of these consolidated annual accounts of the Group.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Mandatory application for annual periods beginning on or after: |
|||
|---|---|---|---|
| Standards | IASB effective date | EU effective date | |
| IAS 16 IAS 38 |
Clarification of Acceptable Methods of Depreciation and Amortisation (issued on 12 May 2014) |
1 January 2016 | 1 January 2016 |
| IFRS 11 | Accounting for Acquisitions of Interests in Joint Operations (issued on 6 May 2014) |
1 January 2016 | 1 January 2016 |
| IAS 27 | Equity Method in Separate Financial Statements (issued on 12 August 2014) |
1 January 2016 | 1 January 2016 |
| Various | Annual Improvements to IFRSs 2012-2014 cycle (issued on 25 September 2014) |
1 January 2016 | 1 January 2016 |
| IAS 1 | Disclosure Initiative (issued on 18 December 2014) | 1 January 2016 | 1 January 2016 |
| Effective date in 2017 | |||
| Mandatory application for annual periods | |||
| beginning on or after: | |||
| Standards | IASB effective date | EU effective date | |
| IAS 12 | Recognition of Deferred Tax Assets for Unrealized Losses (issued on 19 January 2016) |
1 January 2017 | 1 January 2017 |
| IAS 7 | Disclosure Initiative (issued on 29 January 2016) | 1 January 2017 | 1 January 2017 |
| Various | Annual improvements to IFRSs 2014 - 2016 cycle (issued on 8 December 2016) - IFRS 12 |
1 January 2017 | 1 January 2017 |
| Mandatory application for annual periods | |||
|---|---|---|---|
| beginning on or after: | |||
| Standards | IASB effective date | EU effective date | |
| IFRS 15 | Revenue from contracts with Customers (issued on 28 May 2014) | 1 January 2018 | 1 January 2018 |
| IFRS 15 | Clarification to IFRS15 Revenue from Contracts with Customers (issued on 12 April 2016) |
1 January 2018 | 1 January 2018 |
| IFRS 9 | Financial instruments (issued on 24 July 2014) | 1 January 2018 | 1 January 2018 |
| IFRS 2 | Classification and Measurement of Share-based Payment Transactions (issued on 20 June 2016) |
1 January 2018 | 1 January 2018 |
| IFRS 4 IFRS 9 |
Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (issued on 12 September 2016) |
1 January 2018 | 1 January 2018 |
| IFRIC 22 | IFRIC 22 Interpretation: Foreign currency translations and Advance Consideration (issued on 8 December 2016) |
1 January 2018 | 1 January 2018 |
| IAS 40 | Amendments to IAS 40: Transfers of Investment Property (issued on 8 December 2016) |
1 January 2018 | 1 January 2018 |
| Various | Annual improvements to IFRSs 2014 - 2016 cycle (issued on 8 December 2016) |
1 January 2018 | 1 January 2018 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The application of these standards and interpretations has had some impacts on these consolidated annual accounts, which are detailed below:
IFRS 9 Financial Instruments was applied on 1 January, 2018 without any restatements of the comparative figures relative for the prior year. The impacts of the first-time adoption, recognized directly in equity, are as follows:
In general terms, based on the analysis of the new classification based on the business model, the majority of financial assets have continued to be measured at amortized cost, the main exception being equity instruments, which are measured at fair value through profit or loss.
For trade receivables the Group uses the simplified approach, estimating lifetime expected credit losses, while for all other financial assets the Group has used the general approach for calculating expected credit losses. In both cases, due to the customers' credit rating, as well as the internal classification systems currently in place for new customers, and considering that collection periods are mostly under 30 days, the adoption of IFRS 9 does not have a significant impact.
According to the IASB's interpretation published in October 2017, when a financial liability measured at amortized cost is modified or exchanged and does not result in the derecognition of the financial liability, a gain or loss should be recognized in profit or loss, calculated as the difference between the original contractual cash flows from the liability and the new modified cash flows, discounted at the original effective interest rate of the liability.
IFRS 9 must be applied retrospectively as of 1 January 2018, therefore any gains or losses from the modification of financial liabilities that arise from applying the new standard in years prior to 1 January 2018 have been recognized in reserves at that date and the comparative period has not been re-expressed. Grifols has retrospectively calculated the impact of adopting IFRS 9 on the refinancing of its senior debt and unsecured senior corporate notes in 2014 and 2017. As a result of these new calculations, the 2014 refinancing of both debts did not cause the derecognition of the respective liabilities, therefore generating an adjustment to profit and loss in that year. Considering the retroactive adjustment generated in 2014, the 2017 refinancing of senior debt did not result in the derecognition of the financial liability either. However, the refinancing of the unsecured senior corporate notes led to derecognition of the liability as it did not pass the new quantitative test. The adoption of IFRS 9 has entailed a positive impact on reserves of Euros 24,636 thousand.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of the impacts on reserves due to the application of IFRS 9 application are as follows:
| Thousand of Euros | ||||||
|---|---|---|---|---|---|---|
| Senior Unsecured Noted | IAS 39 | IFRS 9 | Impact 01/01/2018 |
|||
| Total Debt | 853,667 | 1,000,000 | 146,333 | |||
| Deferred Expenses | (41,035) | |||||
| Negative Impact in reserves | 105,298 | |||||
| Thousand of Euros | ||||||
| Senior Secured Debt | IAS 39 | IFRS 9 | Impact 01/01/2018 |
|||
| Total Debt | 3,375,157 | 3,226,244 | (148,913) | |||
| Deferred Expenses | 18,979 | |||||
| Positive impact in reserves | (129,934) | |||||
| Thousand of Euros | ||||||
| Total Impact | IAS 39 | IFRS 9 | Impact 01/01/2018 |
|||
| Total Debt | 4,228,824 | 4,226,244 | (2,580) | |||
| Deferred Expenses | (22,056) | |||||
| Positive impact in reserves | (24,636) |
IFRS 15 provides a framework that replaces the previous guides on revenue recognition. According to the new criteria, a five-step model should be used to determine the timing and amounts of revenue recognition:
Step 1: Identify the contract.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue.
This new model specifies that revenue should be recognized when (or as) control of the goods or services is transferred from an entity to customers, for the amount the entity expects to be entitled to receive. Depending on whether certain criteria are met, revenue is recognized over time, reflecting that the entity has satisfied the performance obligation, or at a point in time, when control of the goods or services is transferred to customers.
Based on the analysis and implementation at 1 January 2018, there has been no impact from adopting IFRS 15 Revenue from Contracts with Customers.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Mandatory application for annual periods beginning on or after: |
|||
|---|---|---|---|
| Standards | IASB effective date | EU effective date | |
| IFRS 16 | Leases (Issued on 13 January 2016) | 1 January 2019 | 1 January 2019 |
| IFRIC 23 | Uncertainty over Income Tax Treatments (issued on 7 June 2017) |
1 January 2019 | 1 January 2019 |
| IFRS 9 | Amendment to IFRS 9: Prepayment Features with Negative Compensation (issued on 12 October 2017) |
1 January 2019 | 1 January 2019 |
| IAS 28 | Amendment to IAS 28: Long-term interests in Associates and Joint Ventures (issued on 12 October 2017) |
1 January 2019 | pending |
| Various | Annual Improvements to IFRS Standards 2015-2017 Cycle (issued on 12 December 2017) |
1 January 2019 | pending |
| IFRS 17 | Insurance Contracts (issued on 18 May 2017) | 1 January 2021 | pending |
| IAS 19 | Amendment to IAS19: Plan Amendment, Curtailment or Settlemet (issued on 7 February 2018) |
1 January 2019 | pending |
| IFRS 3 | Amendment to IFRS 3: Definition of a business (issued on 22 October 2018) |
1 January 2020 | pending |
| IAS 1 IAS 8 |
Amendments to IAS 1 and IAS 8: Definition of material (issued on 31 October 2018) |
1 January 2020 | pending |
| IFRS 1 | Amendments to the Conceptual Framework for Financial Reporting (issued on 29 March 2018) |
1 January 2020 | pending |
The application of these standards and interpretations, except for IFRS 16 "Leases", is not expected to have any significant impacts on the consolidated annual accounts.
IFRS 16 brings in a single model for lease accounting by lessees in the statement of financial position. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are optional exemptions for short-term leases and leases of low value items. Lessor accounting remains similar to the current standard. Lessors continue to classify leases as finance or operating leases.
IFRS 16 replaces existing guidance on leases, including IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a lease, SIC-15 Operating leases-Incentives and SIC-27 Evaluating the substance of transactions involving the legal form of a lease.
IFRS 16 is mandatory for all financial years starting on or after 1 January 2019. It may be adopted in advance by companies that already use IFRS 15 Revenue from contracts with customers prior to the date of first-time application of IFRS 16. The Group will first-time adopt IFRS 16 on 1 January 2019 and is in the process of estimating the impact on the consolidated annual accounts. The main policies, estimates and criteria for the application of IFRS 16 are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
borrowing rate. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
An incremental effective interest rate has been applied and varies from 2.07% to 8.18% depending on the geographical area and the term of the lease agreement at the date of initial application.
• Lease term for each agreement: The term considered for the leases depends, fundamentally, on whether or not the lease contract contains a period of mandatory compliance, as well as unilateral termination and or renewal clauses that grant the Group the right to terminate early or to extend the agreements.
The Group leases several buildings, equipment and vehicles. Leases agreements are usually made for fixed periods, as shown below:
| Average lease term | |
|---|---|
| Real Estate and land | 10 to 15 years |
| Donor centers | 13 to 15 years |
| PC's and hardware | 3 to 5 years |
| Machinery | 4 to 5 years |
| Vehicles | 3 to 5 years |
The lease terms of the agreements are negotiated on an individual basis and contain a wide range of terms and conditions.
The Group expects net profit before tax to fall by approximately Euros 15,500 thousand in 2019 due to the adoption of the new Standard for the lease agreements for buildings and warehouses. EBITDA is expected to increase by approximately Euros 60,281 thousand, as the operating lease payments were included in EBITDA but the amortisation charges on right-of-use assets and interest on the lease liability are excluded from this measurement.
Operating cash flows will increase and cash flows from financing will decrease by approximately Euros 60,281 thousand, since the repayment of principal on the lease liabilities and interest will be classified as cash flows from financing activities.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
In addition, Grifols has performed the reconciliation of lease liabilities for buildings and warehouses in relation to leases which had previously been classified as operating leases under IAS 17 (related to non-cancelable agreements and renewals) and lease liabilities under IFRS 16:
| 01/01/2019 | |
|---|---|
| Thousands of Euros | |
| Operating lease commitments existing as at 31 December 2018 | 400,579 |
| Periods covered by an option to extend the lease by the Group | 579,261 |
| Discounting using the Group's incremental borrowing rate | (311,116) |
| finance lease liabilities recognised as at 31 December 2018 | 1,395 |
| Short-term leases recognised on a straight-line basis as expense | (4,822) |
| Others | (349) |
| Lease liability recognised as at 1 January 2019 | 664,948 |
The Group's activities as a lessor are immaterial, and therefore the Group does not expect any significant impact on the consolidated annual accounts.
In August and December of 2018, Grifols through its company Biomat USA, Inc. acquired the assets used in the operation of six donor centers from Kedplasma LLC. The purchase price agreed was Euros 20,939 thousand and Euros 21,841 thousand, respectively. These amounts have been provisionally allocated to goodwill in the consolidated balance sheet, considering that the initial accounting has not been completed at the end of the reporting period.
On 1 August 2018, Grifols, through its subsidiary Grifols Shared Services North America, Inc. completed the acquisition of 100% of the shares in Biotest US Corporation for a price of US Dollars 286,454 thousand, after obtaining the consent of the US Federal Trade Commission. Grifols has acquired the shares from Biotest Divestiture Trust.
Biotest USA owns a plasma collection business in the USA with 24 plasma collection centers throughout the territory. In the preceding financial year, it obtained approximately 850,000 liters of plasma.
Details of the aggregate business combination cost, the fair value of the net assets acquired and goodwill at the acquisition date are provided below:
| Thousands of Euros | Thousands of US Dollars | ||
|---|---|---|---|
| Total business combination cost | 245,126 | 286,454 | |
| Fair value of net assets acquired | 114,463 | 133,761 | |
| Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) |
130,663 | 152,693 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities were as follows:
| Fair value | |||
|---|---|---|---|
| Thousands of Euros | Thousands of US Dollars | ||
| Cash and cash equivalents | 5,876 | 6,867 | |
| Trade and other receivables | 15,114 | 17,663 | |
| Inventories | 18,235 | 21,309 | |
| Other assets | 2,438 | 2,849 | |
| Intangible assets (note 8) | 19,511 | 22,800 | |
| Goodwill | 5,571 | 6,510 | |
| Property, Plant and equipment (note 9) | 22,190 | 25,931 | |
| Deferred tax assets | 33,917 | 39,635 | |
| Financial assets | 10,975 | 12,825 | |
| Total assets | 133,827 | 156,389 | |
| Trade and other payables | (5,322) | (6,219) | |
| Other liabilities | (4,249) | (4,965) | |
| Deferred tax liability | (4,878) | (5,700) | |
| Long-term liabilities | (4,915) | (5,744) | |
| Total liabilities and contingent liabilities | (19,364) | (22,628) | |
| Total net assets acquired | 114,463 | 133,761 | |
| Goodwill (note 7) | 130,663 | 152,693 | |
| Total business combination cost | 245,126 | 286,454 |
The resulting goodwill has been allocated to the Bioscience segment.
If the acquisition had taken place on 1 January 2018, the net amount of the Group´s revenue and profit would have increased by Euros 90,216 thousand and Euros 5,592 thousand, respectively.
The revenue and profit of Biotest between the acquisition date and 31 December 2018 amounted to Euros 73,747 thousand and Euros 7,473 thousand, respectively.
On 28 December 2018, Grifols sold Biotest US Corporation and Haema AG to Scranton Enterprises B.V. for the global amount of US Dollars 538,014 thousand (see note 1), Scranton is an existing shareholder of Grifols (see note 31). The current sale of Biotest and Haema to Scranton took place for the same price, at the current US Dollar/Euro exchange rate, and under the same terms and conditions existing when Grifols acquired both companies.
The sale of Biotest and Haema has not resulted in a loss of control for the Group. In assessing the existence of control, Grifols has considered the potential voting rights to determine whether it has power and therefore control. The Group holds potential voting rights arising from the repurchase options of the shares and they are substantive, based on the following:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The aforementioned are indicators of Grifols' power over these entities, even after their sale, considering that the repurchase options are susceptible to being exercised and Grifols would have the financial capacity to carry them out.
Consequently, the sale of the entities does not result in a loss of control, which is why the entities continue to consolidate, recording the sale as a transaction in equity without any impact on the consolidated statements of profit and loss.
On 19 March 2018, Grifols has entered into an agreement with Aton GmbH for the purchase of 100% of the shares of the German based pharmaceutical company Haema AG, in exchange for a purchase price of Euros 220,191 thousand on a debt free basis. This transaction was closed in June 2018.
With this acquisition, and subject to the conditions being met, Grifols will acquire Haema's business, based on the collection of plasma for fractionation, which includes 35 plasma collection centers located throughout Germany, and three more centers under construction. Haema's headquarters are located in Leipzig measuring approximately 24,000 m² (which include administration, production, storage and power station buildings) and also has a central laboratory in Berlin.
Haema employs about 1,100 people and collected almost 800,000 liters of plasma in the preceding financial year, coming from approximately 1 million donations.
Details of the aggregate business combination cost, the fair value of the net assets acquired and goodwill at the acquisition date are provided below:
| Thousands of Euros | |
|---|---|
| Total business combination cost | 220,191 |
| Fair value of net assets acquired | 49,057 |
| Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) |
171,134 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities were as follows:
| Fair value | |
|---|---|
| Thousands of Euros | |
| Cash and cash equivalents | 7,727 |
| Trade and other receivables | 10,321 |
| Inventories | 5,535 |
| Other assets | 836 |
| Intangible assets (note 8) | 1,518 |
| Property, Plant and equipment (note 9) | 25,407 |
| Total assets | 51,344 |
| Trade and other payables | (1,795) |
| Contingent liabilities | (492) |
| Total liabilities and contingent liabilities | (2,287) |
| Total net assets acquired | 49,057 |
| Goodwill (note 7) | 171,134 |
| Total business combination cost | 220,191 |
The resulting goodwill has been allocated to the Bioscience segment.
If the acquisition had taken place on 1 January, 2018, the net amount of the Group´s revenue would have increased by Euros 39,517 thousand and the Group´s profit would not have deferred significantly.
The revenue and profit of Haema AG between the acquisition date and 31 December 2018 amounted to Euros 46,758 thousand and Euros 53 thousand, respectively.
On 28 December 2018, Grifols sold Haema AG to Scranton Enterprises B.V (see note 3 (b) for more details).
On 26 January 2018, Grifols through its subsidiary Grifols Shared Services North America, Inc, suscribed a capital increase for an amount of US Dollars 98 million in the U.S company Goetech LLC, with headquarters in Denver, Colorado, and trading as Medkeeper. As a result of this transaction, Grifols held 51% interest in Medkeeper and also holds a majority position on the board of directors.
The acquisition agreement includes the repurchase of own shares by Medkeeper from the non-controlling shareholder in the amount of US Dollars 14 million (in 2 business days) and US Dollars 20 million (in two years). The agreement grants a call option to Grifols to acquire the remaining non-controlling stake for a term of three years and Medkeeper has a put option to sell this stake to Grifols, which may be executed at the end of the three-year period.
As the non-controlling shareholders do not currently have access to the economic rewards associated with the underlying ownership interests related to shares under the put and call commitment, we have applied the advance-acquisition method. Under this method we recognize the agreement as an advance acquisition of the underlying non-controlling interest, as if the put option had already been exercised by the non-controlling shareholders.
Medkeeper´s core business is the development and distribution of web and mobile-based platforms for hospital pharmacies that improve quality standards, productivity in the processes, control systems and monitoring different preparations, while increasing patient safety.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
This investment will enhance the activity of the Grifols Hospital Division and it is part of the strategy to underpin this division into the U.S. market.
Details of the aggregate business combination cost, the fair value of the net assets acquired and goodwill at the acquisition date are provided below:
| Thousands of Euros | Thousands of US Dolla | |
|---|---|---|
| Cost of the business combination | ||
| First repurchase of non-controlling interests | 11,475 | 14,000 |
| Second repurchase of non-controlling interests (discounted amount) | 14,952 | 18,241 |
| Purchase of remaining non-controlling interests | 42,998 | 52,458 |
| Total business combination cost | 69,425 | 84,699 |
| Fair value of net assets acquired | 14,104 | 17,207 |
| Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) (note 7) |
55,321 | 67,492 |
The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities were as follows:
| Fair value | ||||
|---|---|---|---|---|
| Thousands of EurosThousands of US Dollars | ||||
| Intangible assets (note 8) | 30,561 | 37,285 | ||
| Property, Plant and equipment (note 9) | 67 | 82 | ||
| Other non-current assets | 2,350 | 2,867 | ||
| Other current assets | 4,453 | 5,433 | ||
| Total assets | 37,432 | 45,667 | ||
| Non-current liabilities | (2,186) | (2,667) | ||
| Current liabilities | (7,711) | (9,407) | ||
| Deferred tax liability | (13,431) | (16,386) | ||
| Total liabilities and contingent liabilities | (23,328) | (28,460) | ||
| Total net assets acquired | 14,104 | 17,207 |
The resulting goodwill has been allocated to the Hospital segment.
If the acquisition had taken place on 1 January, 2018, the net amount of the Group´s revenue and profit would not have deferred significantly.
The revenue and profit of Goetech LLC between the acquisition date and 31 December 2018 amounted to Euros 9,210 thousand and Euros 1,778 thousand, respectively.
In 2017, Grifols incorporated PLASMAVITA GmbH, a joint venture between Grifols (50%) and two European partners (50%). The company aims to set up at least 10 plasma centers in Germany. The share capital amounts to Euros 25,000, divided into 25,000 nominal shares of Euro 1 each, subscribed by both parties at Euros 12,500 each. During 2018, Grifols contributes an amount of Euros 10,000 thousand, which can be increased by an additional Euros 10 million, which will be used to finance the project.
On 1 June 2017 the Group announced the acquisition of 50% of the voting rights in Aigües Minerals de Vilajuïga, S.A. a company based in Vilajuïga, Girona, Spain.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
On 12 January 2018 the Group acquired the remaining 50% of the voting rights and consequently Grifols holds 100% of the voting rights for a total amount of Euros 550 thousand.
Aigües Minerals de Vilajuïga, S.A.'s principal activity is the collection and use of mineral-medicinal waters and the procurement of all necessary administrative concessions in order to facilitate the extraction of these waters and find the best way to exploit them.
2017
On 14 December 2016 Grifols entered into an asset purchase agreement to acquire assets corresponding to Hologic's NAT (Nucleic Acid Testing) business donor screening unit for US Dollars 1,865 million. The transaction was closed on 31 January 2017. The agreement encompasses the acquisition of the Hologic business engaged in research, development and manufacture of assays and instruments based on NAT technology for transfusion and transplantation screening. In addition, it was agreed to cancel the existing jointcollaboration agreement for the commercialization of NAT donor screening products by Grifols. NAT technology makes it possible to detect the presence of infectious agents in blood and plasma donations, contributing to greater transfusion safety.
The transaction is structured through the purchase of assets by Grifols Diagnostic Solutions, Inc., a U.S. incorporated and wholly-owned subsidiary of Grifols, S.A.
The assets acquired comprise a plant in San Diego, California (United States) as well as development rights, licenses to patents and access to product manufacturers.
Grifols consolidates itself as one of the only vertically integrated providers capable of offering comprehensive solutions to blood and plasma donation centers.
This acquisition strengthens cash flows and positively impacts the Group's margins. The sales revenues of the Diagnostic Division will not change as a result of the acquisition due to the existing commercialization agreement between Grifols and Hologic in place since 2014, under which Grifols commercializes this line of business.
It is expected that this acquisition will strengthen the position of the Grifols Diagnostic Division in transfusion medicine and will increase significantly the profitability of Grifols Diagnostic Division having a direct impact on the Group's EBITDA margin. By streamlining and integrating the NAT business, operational efficiency will be in terms of production, R&D, overheads and administrative expenses.
Details of the aggregate business combination cost, the fair value of the net assets acquired and goodwill at the acquisition date are provided below:
| Thousands of Euros | Thousands of US Dollars | ||
|---|---|---|---|
| Cost of the business combination | |||
| Payment in cash | 1,734,077 | 1,865,000 | |
| Result of the cancellation of the existing contract | 41,894 | 45,057 | |
| Total business combination cost | 1,775,971 | 1,910,057 | |
| Fair value of net assets acquired | 309,551 | 332,923 | |
| Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) (see note 7) |
1,466,420 | 1,577,134 |
As part of the purchase price allocation, the Company determined that the identifiable intangible assets were developed technology and IPR&D. The fair value of the intangible assets was estimated using the income approach. The cash flows were based on estimates used to price the transaction and the discount rates applied
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.
The developed technology assets are comprised of know-how, patents and technologies embedded in revenue. The Company applied the Relief-from-Royalty Method to determine its fair value. IPR&D projects relate to inprogress projects that have not reached technological feasibility as of the acquisition date. All of the IPR&D assets were valued using the Multiple-Period Excess Earnings Method approach.
The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill. The factors contributing to the recognition of the amount of goodwill were the acquired workforce, cost savings and benefits arising from the vertical integration of the business that will lead to efficiencies in R&D, commercial and manufacturing activities.
The expenses incurred in this transaction in 2017 amounted to approximately Euros 13 million (Euros 5.1 million in 2016).
The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities were as follows:
| Fair Value | ||
|---|---|---|
| Thousands of Euros | Thousands of US Dollars |
|
| R&D in progress Other Intangible assets |
137,756 142,174 |
148,157 152,908 |
| Property, plant and equipment Deferred Tax Assets (note 27) Inventories |
24,569 16,736 30,157 |
26,424 18,000 32,434 |
| Total Assets | 351,392 | 377,923 |
| Current Provisions (note 19 (b)) | 41,841 | 45,000 |
| Total liabilities and contingent liabilities | 41,841 | 45,000 |
| Total net assets acquired | 309,551 | 332,923 |
The resulting goodwill has been allocated to the Diagnostic segment.
On 25 July 2017 the Group acquired an additional 40% interest in Kiro Grifols, S.L for an amount of Euros 12.8 million. In September 2014 the Group subscribed a capital increase in Kiro Grifols, S.L for an amount of Euros 21 million, by virtue of which Grifols acquired 50% of Kiro Grifols, S.L.'s economic and voting rights.
As a result, Grifols owns a 90% interest in Kiro Grifols. S.L. The remaining 10% will continue to be held by Socios Fundadores Kiro, S.L. a company wholly owned by cooperatives of the Mondragon Corporation.
Grifols also entered into a joint venture & shareholders' agreement (the "Joint Venture Agreement") with Kiro Grifols' partners: Mondragon Innovacion S.P.E, S.A.; Mondragon Assembly, S.Coop. and Agrupación de Fundición y Utillaje, S.Coop.. This agreement governs, among other matters, the capital increase subscribed by Grifols and the managing and governing bodies of Kiro Grifols, whether these are the Board of Directors or any other internal managing and governing bodies.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
On 27 December 2016 Grifols entered into an agreement to acquire six new Plasma Donor Centers to the company Kedplasma, LLC, with a purchase price of US Dollars 47 million. These centers were handed over in February 2017.
Aggregate details of the combination cost, fair value of the net assets acquired and goodwill at the acquisition date are as follows:
| Thousands of Euros | Thousands of US Dollars | ||
|---|---|---|---|
| Cost of the business combination | |||
| Payment in cash | 44,238 | 47,083 | |
| Total business combination cost | 44,238 | 47,083 | |
| Fair value of net assets acquired | 4,137 | 4,403 | |
| Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) (note 7) |
40,101 | 42,680 |
The fair value of net assets acquired includes property, plant and equipment amounting to Euros 3,698 thousand.
Goodwill is allocated to the Bioscience segment and includes the plasma donor data base, FDA licenses and workforce retained.
At 31 December 2016, the Group advanced the sum of US Dollars 15 million related to this acquisition.
2016
During 2016, no significant business combinations were made for the Group.
Subsidiaries are entities, including special purpose entities (SPE), over which the Group exercises control, either directly or indirectly, through subsidiaries. The Group controls a subsidiary when it has the substantive rights in force that provide the ability to manage relevant activities. The Group is exposed or has the right to variable returns for its involvement in the subsidiaries when the returns obtained vary depending on the economic performance of the subsidiaries.
The income, expenses and cash flows of subsidiaries are included in the consolidated annual accounts from the date of acquisition, which is when the Group takes control. Subsidiaries are excluded from the consolidated Group from the date on which control is lost.
Transactions and balances with Group companies and unrealized gains or losses have been eliminated upon consolidation.
The accounting policies of subsidiaries have been adapted to those of the Group for transactions and other events in similar circumstances.
The annual accounts of consolidated subsidiaries have been prepared as of the same date and for the same reporting period as the annual accounts of the Company.
Associates are entities over which the Company, either directly or indirectly through subsidiaries, exercises significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those entities. The existence of potential voting
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
rights that are exercisable or convertible at the end of each reporting period, including potential voting rights held by the Group or other entities, are considered when assessing whether an entity has significant influence.
Investments in associates are initially recognized at acquisition cost, including any cost directly attributable to the acquisition and any consideration receivable or payable contingent on future events or on compliance with certain conditions.
Subsequently, investments in associates are accounted for using the equity method from the date that significant influence commences until the date that significant influence ceases.
The excess of the cost of the investment over the Group's share of the fair values of the identifiable net assets is recognized as goodwill, which is included in the carrying amount of the investment. Any shortfall, once the cost of the investment and the identification and measurement of the associate's net assets have been evaluated, is recognized as income when determining the investor's share of the profit and loss of the associate for the year in which it was acquired.
The accounting policies of associates have been harmonized in terms of timing and measurement, applying the policies described for subsidiaries.
The Group's share of the profit and loss of an associate from the date of acquisition is recognized as an increase or decrease in the value of the investments, with a credit or debit to share of the profit and loss for the year of "equity-accounted investees" in the consolidated statement of profit and loss (consolidated statement of comprehensive income). The Group's share of other comprehensive income of associates from the date of acquisition is recognized as an increase or decrease in the investments in associates with a balancing entry recognized by type in other comprehensive income. The distribution of dividends is recognized as a decrease in the value of the investment. The Group's share of profit and loss, including impairment losses recognized by the associates, is calculated based on income and expenses arising from application of the acquisition method.
When the Group's share of the losses in an investment accounted for using the equity method equals or exceeds its interest in the entity, the Group does not recognize additional losses, unless it has incurred in obligations or made payments on behalf of the other entity.
The Group's share of the profit and loss of an associate and changes in equity is calculated to the extent of the Group's interest in the associate at year end and does not reflect the possible exercise or conversion of potential voting rights. However, the Group's share is calculated taking into account the possible exercise of potential voting rights and other derivative financial instruments which, in substance, currently allow access to the economic benefits associated with the interests held, such as entitlement to a share in future dividends and changes in the value of associates.
Information on the subsidiaries and associates included in the consolidated Group is presented in Appendix I.
On the date of transition to IFRS-EU, 1 January 2004, the Group applied the exception permitted under IFRS 1 "First-time adoption of International Financial Reporting Standards", whereby only those business combinations performed as from 1 January 2004 have been recognized using the acquisition method. Entities acquired prior to that date were recognized in accordance with accounting prevailing at that time, taking into account the necessary corrections and adjustments at the transition date.
The Group applies the revised IFRS 3 "Business combinations" in transactions made subsequent to 1 January 2010.
The Group applies the acquisition method for business combinations.
The acquisition date is the date on which the Group obtains control of the acquiree.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The cost of the business combination is calculated as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred or assumed, equity instruments issued and any additional consideration contingent on future events or the fulfilment of certain conditions, in exchange for control of the acquiree.
The consideration paid excludes all amounts that do not form part of the exchange for the acquired business. Acquisition-related costs are accounted for as expenses when incurred. Share increase costs are recognized as equity when the increase takes place and borrowing costs are deducted from the financial liability when it is recognized.
At the acquisition date the Group recognizes at fair value the assets acquired and liabilities assumed. Liabilities assumed include any contingent liabilities that represent present obligations arising from past events for which the fair value can be reliably measured. The Group also recognizes indemnification assets transferred by the seller at the same time and following the same measurement criteria as the item that is subject to indemnification from the acquired business, taking into consideration, where applicable, the insolvency risk and any contractual limit on the indemnity amount.
This criterion does not include non-current assets or disposal groups of assets which are classified as held for sale, long-term defined benefit employee benefit liabilities, share-based payment transactions, deferred tax assets and liabilities and intangible assets arising from the acquisition of previously transferred rights.
Assumed assets and liabilities are classified and designated for subsequent measurement in accordance with the contractual terms, economic conditions, operating or accounting policies and other factors that exist at the acquisition date, except for leases and insurance contracts.
The excess between the consideration transferred and the value of net assets acquired and liabilities assumed, less the value assigned to non-controlling interests, is recognized as goodwill. Where applicable, any shortfall, after evaluating the consideration transferred, the value assigned to non-controlling interests and the identification and measurement of net assets acquired, is recognized in profit and loss.
When a business combination has been provisionally determined, net identifiable assets have initially been recognized at their provisional value, and any adjustments made during the measurement period have been recorded as if they had been known at that date. Where applicable, comparative figures for the prior year have been restated. Adjustments to the provisional values only reflect information relating to events and circumstances existing at the acquisition date and which, had they been known, would have affected the amounts recognized at that date. Once this period has elapsed, adjustments are only made to initial values when errors must be corrected. Any potential benefits arising from tax losses and other deferred tax assets of the acquiree that have not been recorded as they did not qualify for recognition at the acquisition date, are accounted for as income tax revenue, provided the adjustments were not made during the measurement period.
The contingent consideration is classified in accordance with underlying contractual terms as a financial asset or financial liability, equity instrument or provision. Provided that subsequent changes to the fair value of a financial asset or financial liability do not relate to an adjustment of the measurement period, they are recognized in consolidated profit and loss. The contingent consideration classified, where applicable, as equity is not subject to subsequent change, with settlement being recognized in equity. The contingent consideration classified, where applicable, as a provision is recognized subsequently in accordance with the relevant measurement standard.
The cost of the business combination is calculated as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred or assumed, and equity instruments issued by the Group, in exchange for control of the acquiree, plus any costs directly attributable to the business combination. Any additional consideration contingent on future events or the fulfilment of certain conditions is included in the cost of the combination provided that it is probable that an outflow of resources embodying economic benefits will be required and the amount of the obligation can be reliably estimated. Subsequent recognition of contingent
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
considerations or subsequent variations to contingent considerations is recognized as a prospective adjustment to the cost of the business combination.
Where the cost of the business combination exceeds the Group's interest in the fair value of the identifiable net assets of the entity acquired, the difference is recognized as goodwill, whilst the shortfall, once the costs of the business combination and the fair values of net assets acquired have been reconsidered, is recognized in profit and loss.
Non-controlling interests in subsidiaries acquired after 1 January 2004 are recognized at the acquisition date at the proportional part of the fair value of the identifiable net assets. Non-controlling interests in subsidiaries acquired prior to the transition date were recognized at the proportional part of the equity of the subsidiaries at the date of first consolidation.
Non-controlling interests are disclosed in the consolidated balance sheet under equity separately from equity attributable to the Parent. Non-controlling interests' share in consolidated profit and loss for the year (and in consolidated comprehensive income for the year) is disclosed separately in the consolidated statement of profit and loss (consolidated statement of comprehensive income).
The consolidated profit and loss for the year, consolidated comprehensive income and changes in equity of the subsidiaries attributable to the Group and non-controlling interests after consolidation adjustments and eliminations, is determined in accordance with the percentage ownership at year end, without considering the possible exercise or conversion of potential voting rights. However, Group and non-controlling interests are calculated taking into account the possible exercise of potential voting rights and other derivative financial instruments which, in substance, currently allow access to the economic benefits associated with the interests held, such as entitlement to a share in future dividends and changes in the value of subsidiaries.
Profit and loss and each component of other comprehensive income are assigned to equity attributable to shareholders of the Parent and to non-controlling interests in proportion to their interest, although this implies a balance receivable from non-controlling interests. Agreements signed between the Group and the noncontrolling interests are recognized as a separate transaction.
The increase and reduction of non-controlling interests in a subsidiary in which control is retained is recognized as an equity instrument transaction. Consequently, no new acquisition cost arises on increases, nor is a gain recorded on reductions; rather, the difference between the consideration transferred or received and the carrying amount of the non-controlling interests is recognized in the reserves of the investor, without prejudice to reclassifying consolidation reserves and reallocating other comprehensive income between the Group and the non-controlling interests. When a Group's interest in a subsidiary diminishes, non-controlling interests are recognized at their share of the net consolidated assets, including goodwill.
Joint arrangements are those in which there is a contractual agreement to share the control over an economic activity, in such a way that the decisions over relevant activities require the unanimous consent of the Group and the remaining venturers. Under IFRS 11 "Joint arrangements" investments in joint arrangements are classified as joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than on the legal structure of the joint agreement.
Interests in joint ventures are accounted for using the equity method, after initially being recognized at cost in the consolidated balance sheet.
The acquisition cost of investments in joint arrangements is determined consistently with that established for investments in associates.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The consolidated annual accounts are presented in thousands of Euros, which is the functional and presentation currency of the Parent.
Foreign currency transactions are translated into the functional currency using the previous month's exchange rate for all transactions performed during the current month. This method does not differ significantly from applying the exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies have been translated into thousands of Euros at the closing rate, while non-monetary assets and liabilities measured at historical cost have been translated at the exchange rate prevailing at the transaction date. Non-monetary assets measured at fair value have been translated into thousands of Euros at the exchange rate at the date that the fair value was determined.
In the consolidated statement of cash flows, cash flows from foreign currency transactions have been translated into thousands of Euros at the exchange rates prevailing at the dates the cash flows occur. The effect of exchange rate fluctuations on cash and cash equivalents denominated in foreign currencies is recognized separately in the statement of cash flows as "Effect of exchange rate fluctuations on cash and cash equivalents".
Exchange gains and losses arising on the settlement of foreign currency transactions and the translation into thousands of Euros of monetary assets and liabilities denominated in foreign currencies are recognized in profit and loss.
The translation into thousands of Euros of foreign operations for which the functional currency is not the currency of a hyperinflationary economy is based on the following criteria:
In accordance with IAS 23 "Borrowing Costs", since 1 January 2009 the Group recognizes borrowing costs directly attributable to the purchase, construction or production of qualifying assets as an increase in the value of these assets. Qualifying assets are those which require a substantial period of time before they can be used or sold. To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalization is determined as the actual borrowing costs incurred, less any investment income on the temporary investment of those funds. Capitalized borrowing costs corresponding to general borrowing are calculated as the weighted average of the qualifying assets without considering specific funds. The amount of borrowing costs capitalized cannot exceed the amount of borrowing costs incurred during that period. The capitalized borrowing costs include adjustments to the carrying amount of financial liabilities arising from the effective portion of hedges entered into by the Group.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Group begins capitalizing borrowing costs as part of the cost of a qualifying asset when it incurs expenditure for the asset, interest is accrued, and it undertakes activities that are necessary to prepare the asset for its intended use or sale, and ceases capitalizing borrowing costs when all or substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Nevertheless, capitalization of borrowing costs is suspended when active development is interrupted for extended periods.
The remaining interest costs are recognized as an expense in the year in which they are incurred.
(i) Initial recognition
Property, plant and equipment are recognized at cost or deemed cost, less accumulated depreciation and any accumulated impairment losses. Land is not subject to depreciation. The cost of self-constructed assets is determined using the same principles as for an acquired asset, while also considering the criteria applicable to production costs of inventories. Capitalized production costs are recognized by allocating the costs attributable to the asset to "Self-constructed non-current assets" in the consolidated statement of profit and loss.
Property, plant and equipment are depreciated by allocating the depreciable amount of an asset on a systematic basis over its useful life. The depreciable amount is the cost or deemed cost of an asset, less its residual value. The Group determines the depreciation charge separately for each item for a component of property, plant and equipment with a cost that is significant in relation to the total cost of the asset.
Property, plant and equipment are depreciated using the following criteria:
| Depreciation method | Rates | ||
|---|---|---|---|
| Buildings | Straight line | 1% - 3% | |
| Other property, technical equipment and machinery | Straight line | 4%-10% | |
| Other property, plant and equipment | Straight line | 7% - 33% |
The Group reviews residual values, useful lives and depreciation methods at each financial year end. Changes to initially established criteria are accounted for as a change in accounting estimates.
Subsequent to initial recognition of the asset, only those costs incurred which will probably generate future profits and for which the amount may reliably be measured are capitalized. Costs of day-to-day servicing are recognized in profit and loss as incurred.
Replacements of property, plant and equipment which qualify for capitalization are recognized as a reduction in the carrying amount of the items replaced. Where the cost of the replaced items has not been depreciated independently and it is not possible to determine the respective carrying amount, the replacement cost is used as indicative of the cost of items at the time of acquisition or construction.
(iv) Impairment
The Group tests for impairment and reversals of impairment losses on property, plant and equipment based on the criteria set out in note 4(i) below.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(i) Goodwill
Goodwill is generated on the business combinations and is calculated using the criteria described in the section on business combinations.
Goodwill is not amortized, but is tested for impairment annually or more frequently whenever there is an indication that goodwill may be impaired. Goodwill acquired in business combinations is allocated to the cash-generating units (CGUs) or groups of CGUs which are expected to benefit from the synergies of the business combination and the criteria described in note 7 are applied. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Gains and losses on the sale of an entity include the carrying amount of the goodwill related to the entity sold.
(ii) Internally generated intangible assets
Any research and development expenditure incurred during the research phase of projects is recognized as an expense when incurred.
Costs related with development activities are capitalized when:
The cost of internally generated assets by the Group is calculated using the same criteria established for determining production costs of inventories. The production cost is capitalized by allocating the costs attributable to the asset to self-constructed non-current assets in the consolidated statement of profit and loss.
Expenditure on activities that contribute to increasing the value of the different businesses in which the Group as a whole operates is expensed when incurred. Replacements or subsequent costs incurred on intangible assets are generally recognized as an expense, except where they increase the future economic benefits expected to be generated by the assets.
Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.
(iii) Other intangible assets
Other intangible assets are carried at cost, or at fair value if they arise on business combinations, less accumulated amortization and impairment losses.
Intangible assets with indefinite useful lives are not amortized but tested for impairment at least annually.
(iv) Intangible assets acquired in business combinations
The cost of the identifiable intangible assets acquired in Biotest's business combination includes the fair value of the current contracts.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The cost of identifiable intangible assets acquired in the business combination of Hologic includes the fair value of the R&D projects and the Intellectual Property-Patents.
The cost of identifiable intangible assets acquired in the business combination of Novartis includes the fair value of the existing royalty agreements.
The cost of identifiable intangible assets acquired in the Progenika business combination includes the fair value of currently marketed products sold and which are classified under "Other intangible assets"and "Research and Development".
The cost of identifiable intangible assets acquired in the Talecris business combination includes the fair value of currently marketed products sold and which are classified under "Other intangible assets".
(v) Useful life and amortization rates
The Group assesses whether the useful life of each intangible asset acquired is finite or indefinite. An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset will generate net cash inflows.
Intangible assets with finite useful lives are amortized by allocating the depreciable amount of an asset on a systematic basis over its useful life, by applying the following criteria:
| Amortisation method Rates |
||
|---|---|---|
| Development expenses | Straight line | 10% |
| Concessions, patents, licences, trademarks and similar | Straight line | 4% - 20% |
| Computer software | Straight line | 33% |
| Currently marketed products | Straight line | 3% - 10% |
The depreciable amount is the cost or deemed cost of an asset, less its residual value.
The Group does not consider the residual value of its intangible assets to be material. The Group reviews the residual value, useful life and amortization method for intangible assets at each financial year end. Changes to initially established criteria are accounted for as a change in accounting estimates.
The Group evaluates whether there are indications of possible impairment losses on non-financial assets subject to amortization or depreciation, to verify whether the carrying amount of these assets exceeds the recoverable amount.
The Group tests goodwill, intangible assets with indefinite useful lives and intangible assets with finite useful lives that are not available for use for potential impairment at least annually, irrespective of whether there is any indication that the assets may be impaired.
The recoverable amount of the assets is the higher of their fair value less costs of disposal and their value in use. An asset's value in use is calculated based on an estimate of the future cash flows expected to derive from the use of the asset, expectations about possible variations in the amount or timing of those future cash flows, the time value of money, the price for bearing the uncertainty inherent in the asset and other factors that market participants would reflect in pricing the future cash flows deriving from the asset.
Negative differences arising from comparison of the carrying amounts of the assets with their recoverable amounts are recognized in the consolidated statement of profit and loss. Recoverable amount is determined for each individual asset, unless the asset does not generate cash inflows that are largely independent of those from
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
other assets or groups of assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs.
Impairment losses recognized for cash-generating units are first allocated to reduce, where applicable, the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro rata on the basis of the carrying amount of each asset. The carrying amount of each asset may not be reduced below the highest of its fair value less costs of disposal, its value in use and zero.
At the end of each reporting period the Group assesses whether there is any indication that an impairment loss recognized in prior periods may no longer exist or may have decreased. Impairment losses on goodwill are not reversible. Impairment losses on other assets are only reversed if there has been a change in the estimates used to calculate the recoverable amount of the asset.
A reversal of an impairment loss is recognized in consolidated profit and loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss may not exceed the carrying amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognized.
A reversal of an impairment loss for a CGU is allocated to the assets of each unit, except goodwill, pro rata with the carrying amounts of those assets. The carrying amount of an asset may not be increased above the lower of its recoverable amount and the carrying amount that would have been disclosed, net of amortization or depreciation, had no impairment loss been recognized.
(i) Lessee accounting records
The Group has rights to use certain assets through lease contracts.
Leases in which the Group assumes substantially all the risks and rewards incidental to ownership are classified as finance leases, otherwise they are classified as operating leases.
• Finance leases
At the commencement of the lease term, the Group recognizes finance leases as assets and liabilities at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Initial direct costs are added to the asset's carrying amount. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are recognized as an expense in the years in which they are incurred. Property, plant and equipment acquired through a finance lease is amortized over the useful life of the asset or within the term of the lease, whichever is less, if there is no reasonable certainty that the group will obtain the property at the end of the term of the lease.
• Operating leases
Lease payments under an operating lease (excluding incentives) are recognized as an expense on a straight-line basis unless another systematic basis is representative of the time pattern of the user's benefit.
Non-current investments in properties leased from third parties are recognized on the basis of the same criteria for property, plant and equipment. Investments are amortized over the lower of their useful lives and the term of the lease contract. The lease term is consistent with that established for recognition of the lease.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(iii) Sale and leaseback transactions
Any profit on sale and leaseback transactions that meet the conditions of a finance lease is deferred over the term of the lease.
When the leaseback is classified as an operating lease:
(i) Classification of the financial instruments
Financial instruments are classified at the time of their initial recognition as a financial asset, a financial liability or an equity instrument, in accordance with the economic substance of the contractual agreement and with the definitions of financial assets, financial liabilities or equity instruments indicated in IAS 32 "Financial instruments: Presentation".
For purposes of its valuation, the Group classifies financial instruments in the categories of financial assets and financial liabilities at fair value through profit or loss, separating those initially designated from those held for trading or mandatorily measured at fair value through profit or loss, financial assets and financial liabilities valued at amortized cost and financial assets measured at fair value through other comprehensive income, separating the equity instruments designated as such, from other financial assets. The classification depends on the Group's business model to manage the financial assets and the contractual terms of the cash flows.
The Group classifies a financial asset at amortized cost if it is held in the framework of a business model whose objective is to hold financial assets to obtain contractual cash flows and the contractual terms of the financial asset give rise, on specified dates, to cash flows which are only principal and interest payments on the outstanding principal amount (OPIP).
The Group classifies a financial asset at fair value through changes in other comprehensive income, if it is maintained in the framework of a business model whose objective is achieved by obtaining contractual cash flows and selling financial assets and the contractual conditions of the financial asset give rise to, at specified dates, to cash flows that are OPIP.
The business model is determined by the key personnel of the Group and at a level that reflects the way in which they jointly manage groups of financial assets to achieve a specific business objective. The Group's business model represents the way in which it manages its financial assets to generate cash flows.
Financial assets that are part of a business model whose objective is to hold assets to receive contractual cash flows are managed to generate cash flows in the form of contractual collections during the life of the instrument. The Group manages the assets held in the portfolio to receive these specific contractual cash flows. To determine whether cash flows are obtained through the collection of contractual cash flows from financial assets, the Group considers the frequency, value and timing of sales in prior years, the reasons for those sales and expectations in relation to with the future sales activity. However, the sales themselves do not determine the business model and, therefore, cannot be considered in isolation. Instead, it is the information on past sales and future sales expectations that provides indicative data on how to achieve the stated objective of the Group with respect to the management of financial assets and, more specifically, the way where cash flows are obtained.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
For assets measured at fair value, losses and gains will be recognized in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, it will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for investments in equity at fair value through other comprehensive income (COCI).
The Group reclassifies investments in debt when and only when its business model to manage those assets changes.
At the time of initial recognition, the Group values a financial asset at its fair value plus, in the case of a financial asset that is not at fair value through profit or loss, the costs of the transaction that are directly attributable to the acquisition. The transaction costs of financial assets at fair value through profit or loss are taken to results.
In order to determine the fair value of financial assets or liabilities, the Group uses market data as much as possible. Based on the factors used for the measurement, the fair values are hierarchized based on the following levels:
In the event that the factors used to determine the fair value of an asset or liability are included in different levels of hierarchy, the fair value will be determined in its entirety based on the significant component located at the lowest level of hierarchy.
A financial asset and a financial liability are offset only when the Group has the legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
(iv) Financial assets and liabilities at fair value through profit or loss
Financial assets or liabilities at fair value through profit or loss are those that are classified as held for trading or have been designated from the moment of initial recognition.
A financial asset or liability is classified as held for trading if:
• It is acquired or incurred mainly for the purpose of selling it or repurchasing it in the near term.
• On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent pattern of short-term profit-taking, or
• It is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument.
Financial assets and liabilities at fair value through profit or loss are initially recognized at fair value. Transaction costs directly attributable to the purchase or issue are recognized as an expense as incurred.
After initial recognition, they are recognized at fair value through profit or loss. The fair value is not reduced by the transaction costs that may be incurred by their eventual sale or disposal by other means.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Group does not reclassify any financial asset or liability to or from this category as long as it is recognized in the consolidated statement of financial position.
Financial assets at amortized cost are initially recognized at their fair value, including the transaction costs incurred, and are subsequently valued at amortized cost, using the effective interest rate method.
(vi) Debt instruments
The subsequent valuation of the debt instruments depends on the Group's business model to manage the asset and the characteristics of the cash flows of the asset. The Group's debt instruments consist mainly of trade and other receivables, which the Group classifies as financial assets at amortized cost.
Financial assets at amortized cost are assets that the Group holds for the collection of contractual cash flows when these cash flows represent only payments of principal and interest, and are valued at amortized cost. Interest income from these financial assets is included in finance income in accordance with the effective interest rate method.
The Group holds financial assets owned, mainly equity instruments, which are measured at fair value. When Group management has chosen to present the gains and losses on the fair value of the equity investments in other comprehensive income, after the initial recognition, the equity instruments are measured at fair value, recognizing the loss or gain in other comprehensive income. The amounts recognized in other comprehensive income are not subject to reclassification to profit or loss, without prejudice to reclassification to reserves at the time when the instruments are derecognized. Dividends from such investments continue to be recognized in income for the year as other income when the Group's right to receive payments is established.
As of 1 January, 2018, the Group evaluates, on a prospective basis, the expected credit losses associated with its debt instruments recorded at amortized cost. The Group uses the practical solutions permitted by IFRS 9 to assess the expected credit losses related to commercial accounts using a simplified approach, eliminating the need to evaluate when there has been a significant increase in credit risk. The simplified approach requires that the expected losses be recorded from the initial recognition of receivables, so that the Group determines expected credit losses as a probability-weighted estimate of such losses over the expected life of the financial instrument.
The practical solution applied is the use of a provision matrix based on the segmentation into groups of homogeneous assets, applying the historical information of percentages of non-payment for said groups and applying reasonable information about the future economic conditions.
The percentage of non-payment is calculated according to the current experience of non-payment during the last year, as it is a very dynamic market and is adjusted for the differences between current and historical economic conditions and considering projected information, which is reasonably available.
The Group applies the criteria for the derecognition of financial assets to a part of a financial asset or to a part of a group of similar financial assets or to a financial asset or a group of similar financial assets.
Financial assets are derecognised when the rights to receive cash flows related to them have expired or have been transferred and the Group has substantially transferred the risks and rewards derived from their ownership.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Financial liabilities, including trade payables and other accounts payable, that are not classified at fair value through profit or loss, are initially recognized at their fair value, less, if applicable, the transaction costs that are directly attributable to the issue. Subsequent to the initial recognition, liabilities classified under this category are valued at amortized cost using the effective interest rate method.
The Group derecognises a financial liability or part thereof when it has complied with the obligation contained in the liability, or is legally exempt from the main liability contained in the liability, either by virtue of a judicial process or by the creditor.
The Group considers that the conditions are substantially different if the present value of the discounted cash flows under the new conditions, including any commission paid net of any commission received, and using the original effective interest rate to make the discount, differs at least at 10 percent of the discounted present value of the cash flows that still remain of the original financial liability.
If the exchange is recorded as a cancellation of the original financial liability, the costs or commissions are recognized in consolidated results forming part of the result of the same. Otherwise, the costs or commissions adjust the carrying amount of the liability and are amortized by the amortized cost method during the remaining life of the modified liability.
The Group recognizes the difference between the carrying amount of the financial liability or a part of it that is canceled or assigned to a third party and the consideration paid, including any assigned asset different from the cash or liability assumed in profit or loss.
The Group's acquisition of equity instruments of the Parent is recognized separately at cost of acquisition in the consolidated balance sheet as a reduction in equity, regardless of the motive of the purchase. Any gains or losses on transactions with treasury equity instruments are not recognized in consolidated profit and loss.
The subsequent redemption of Parent shares, where applicable, leads to a reduction in share capital in an amount equivalent to the par value of such shares. Any positive or negative difference between the cost of acquisition and the par value of the shares is debited or credited to reserves. Transaction costs related with treasury equity instruments, including issue costs related to a business combination, are accounted for as a reduction in equity, net of any tax effect.
Inventories are measured at the lower of cost and net realizable value. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
The costs of conversion of inventories include costs directly related to the units of production and a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. The allocation of fixed indirect overheads is based on the higher of normal production capacity or actual production.
The raw material used to produce haemoderivatives is human plasma, which is obtained from our donation centers using the plasmapheresis method. The cost of inventories includes the amount paid to plasma donors, or the amount billed by the seller when purchased from third parties, as well as the cost of products and devices used in the collection process, rental expenses and storage. This plasma has to be stored before use, which is an essential part of the production process. During the storage period, the plasma undergoes various virological tests and should be kept in quarantine in accordance with FDA and European Medicines Agency regulations, in order to guarantee that all the plasma is suitable for use in the production process.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
To the extent that plasma storage costs are necessary to the production process, they are included as cost of inventories.
Indirect costs such as general management and administration costs are recognized as expenses in the period in which they are incurred.
The cost of raw materials and other supplies and the cost of merchandise are allocated to each inventory unit on a weighted average cost basis.
The transformation cost is allocated to each inventory unit on a FIFO (first-in, first-out) basis.
The Group uses the same cost model for all inventories of the same nature and with a similar use.
Volume discounts extended by suppliers are recognized as a reduction in the cost of inventories when it is probable that the conditions for discounts to be received will be met. Discounts for prompt payment are recognized as a reduction in the cost of the inventories acquired.
When the cost of inventories exceeds net realizable value, materials are written down to net realizable value, which is understood to be:
The previously recognized write-down is reversed against profit and loss when the circumstances that previously caused inventories to be written down no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances. The reversal of the write-down is limited to the lower of the cost and revised net realizable value of the inventories. Write-downs may be reversed with a credit to "Cost of Sales".
Cash and cash equivalents include cash on hand and demand deposits in financial institutions. They also include other short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. An investment normally qualifies as a cash equivalent when it has a maturity of less than three months from the date of acquisition.
The Group classifies cash flows relating to interest received and paid as operating activities, and dividends received and distributed are classified under investing and financing activities, respectively.
Government grants are recognized when there is reasonable assurance that they will be received and that the Group will comply with the conditions attached.
(i) Capital grants
Outright capital grants are initially recognized as deferred income in the consolidated balance sheet. Income from capital grants is recognized in the consolidated statement of profit and loss in line with the depreciation of the corresponding financed assets.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(ii) Operating grants
Operating grants received to offset expenses or losses already incurred, or to provide immediate financial support not related to future disbursements, are recognized in the consolidated statement of profit and loss.
(iii) Interest rate grants
Financial liabilities comprising implicit assistance in the form of below-market interest rates are initially recognized at fair value. The difference between this value, adjusted where necessary for the issue costs of the financial liability and the amount received, is recognized as a government grant based on the nature of the grant awarded.
The Group recognizes the contributions payable to a defined contribution plan in exchange for a service in the period in which contributions are accrued. Accrued contributions are recognized as an employee benefit expense in the corresponding consolidated statement of profit and loss in the year that the contribution was made.
(ii) Termination benefits
Termination benefits are recognized at the earlier of the date when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring that involves the payment of termination benefits.
For termination benefits payable as a result of an employee's decision to accept an offer of benefits, the time when the Group can no longer withdraw the offer of termination benefits is the earlier of when the employee accepts the offer and when a restriction on the Group's ability to withdraw the offer takes effect.
For termination benefits payable as a result of the Group's decision to make an employee redundant, the Group can no longer withdraw the offer when it has informed the affected employees or union representatives of the plan and the actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made. The plan must identify the number of employees to be made redundant, their job classifications or functions and their locations and the expected completion date. The plan must also establish the termination benefits that employees will receive in sufficient detail that employees can determine the type and amount of benefits they will receive when their employment is terminated.
If the Group expects to settle the termination benefits in full more than twelve months after year end, the liability is discounted using the market yield on high quality corporate bonds.
The Group recognizes the expected cost of short-term employee benefits in the form of accumulating compensated absences when the employees render service that increases their entitlement to future compensated absences. In the case of non-accumulating compensated absences, the expense is recognized when the absences occur.
The Group recognizes the expected cost of profit-sharing and bonus plans when it has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Group gives share-based payments to certain employees who render services to the Company. The fair value of the services received is determined based on the estimated fair value of the shares given at the grant date. Because the equity instruments granted do not vest until the employees complete a specified period of service, those services are accounted for during the vesting period in the income statement as an expense for the year, with the corresponding increase in equity. The amount recognized corresponds to that settled once the agreed terms have been met and it will not be adjusted or revalued during the accrual period, as the commitment is settled in the form of shares.
The total amount recognized is calculated based on the incentive payable in shares, increasing in line with percentages agreed by the Group. If an employee decides to leave his/her job prior to the end of the accrual period, he/she will only receive the agreed incentive in the form of shares and the Company will be able to choose whether to settle in cash or using equity instruments.
Provisions are recognized when the Group has a present obligation (legal or implicit) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. No provisions are recognized for future operating losses.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account all risks and uncertainties surrounding the amount to be recognized as a provision and, where the time value of money is material, the financial effect of discounting provided that the expenditure to be made each period can be reliably estimated. The discount rate used to determine the present value is a pre-tax rate that reflects the evaluations that the current market is making of the time value of money and the specific risks of the obligation. The increase in the provision due to the passage of time is recognized as an interest expense.
If it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed against the consolidated statement of profit and loss item where the corresponding expense was recognized.
Revenue from the sale of goods or services is recognized at an amount that reflects the consideration that the Group expects to be entitled to receive in exchange for transferring goods or services to a customer, at the time when the customer obtains control of the goods or services rendered. The consideration that is committed in a contract with a client can include fixed amounts, variable amounts, or both. The amount of the consideration may vary due to discounts, reimbursements, incentives, performance bonuses, penalties or other similar items. Contingent consideration is included in the transaction price when it is highly probable that the amount of revenue recognized is not subject to future significant reversals. Revenue is presented net of the value added tax and any other amount or tax, which in substance corresponds to amounts received on behalf of third parties.
Revenue from the sale of goods is recognized when the Group meets the performance obligation by transferring the assets committed to the customer. An asset is transferred when the customer obtains control of that asset. When evaluating the satisfaction of the performance obligation, the Group considers the following indicators of the transfer of control, which include, but are not limited to the following:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Group participates in the government-managed Medicaid programs in the United States, accounting for Medicaid rebates by recognizing an accrual at the time a sale is recorded for an amount equal to the estimated claims for Medicaid rebates attributable to the sale. Medicaid rebates are estimated based on historical experience, legal interpretations of the applicable laws relating to the Medicaid program and any new information regarding changes in the program regulations and guidelines that would affect rebate amounts. Outstanding Medicaid claims, Medicaid payments and inventory levels are analyzed for each distribution channel and the accrual is adjusted periodically to reflect actual experience. While rebate payments are generally made in the following or subsequent quarter, any adjustments for actual experience have not been material.
As is common practice in the sector, the purchase contracts signed by some customers with the Group entitle these customers to price discounts for a minimum purchase volume, volume discounts or prompt payment discounts. The Group recognizes these discounts as a reduction in sales and receivables in the same month that the corresponding sales are invoiced based on the customer's actual purchase figures or on past experience when the customer's actual purchases will not be known until a later date.
In the USA, the Group enters into agreements with certain customers to establish contract pricing for the products, which these entities purchase from the authorized wholesaler or distributor (collectively, wholesalers) of their choice. Consequently, when the products are purchased from wholesalers by these entities at the contract price which is less than the price charged by the Group to the wholesaler, the Group provides the wholesaler with a credit referred to as a chargeback. The Group records the chargeback accrual at the time of the sale. The allowance for chargebacks is based on Group's estimate of the wholesaler inventory levels, and the expected sell-through of the products by the wholesalers at the contract price based on historical chargeback experience and other factors. The Group periodically monitors the factors that influence the provision for chargebacks, and makes adjustments when it considers that actual chargebacks may differ from established allowances. These adjustments occur in a relatively short period of time. As these chargebacks are typically settled within 30 to 45 days of the sale, adjustments for actual experience have not been material.
Revenues associated with the rendering of service transactions are recognized by reference to the stage of completion at the consolidated balance sheet date when the outcome of the transaction can be estimated reliably. The outcome of a transaction can be estimated reliably when revenues, the stage of completion, the costs incurred and the costs to complete the transaction can be estimated reliably and it is probable that the economic benefits derived from the transaction will flow to the Group.
When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognized only to the extent of costs incurred that are recoverable.
Until June 2012 the Group has been recognizing interest receivable from the different Social Security affiliated bodies in Spain, to which it provides goods or services, on an accrual basis, and only for those bodies to which historically claims have been made and from which interest has been collected. As a result of the terms imposed by the Spanish Government in 2012 regarding the waiver of late payment interest on overdue receivables, the Group modified its estimate regarding late payment interest. Since June 2012 the Group has only been recognizing late payment interest on receivables from Social Security affiliated bodies on the date on which delayed invoices are collected, as it is highly likely that they will be collected as of that date provided.
The income tax expense or tax income for the year comprises current tax and deferred tax.
Current tax is the amount of income taxes payable or recoverable in respect of the consolidated taxable profit or consolidated tax loss for the year. Current tax assets or liabilities are measured at the amount expected to be
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences, whereas deferred tax assets are the amounts of income taxes recoverable in future periods in respect of deductible temporary differences, the carryforward of unused tax losses, and the carryforward of unused tax credits. Temporary differences are differences between the carrying amount of an asset or liability in the balance sheet and its tax base.
Current and deferred tax are recognized as income or an expense and included in profit and loss for the year, except to the extent that the tax arises from a transaction or event which is recognized, in the same or a different year, directly in equity, or from a business combination.
(i) Taxable temporary differences
Taxable temporary differences are recognized in all cases except where:
• They arise from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable income;
• They are associated with investments in subsidiaries over which the Group is able to control the timing of the reversal of the temporary difference and it is not probable that the temporary difference will reverse in the foreseeable future.
(ii) Deductible temporary differences
Deductible temporary differences are recognized provided that:
• It is probable that sufficient taxable income will be available against which the deductible temporary difference can be utilized, unless the differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable income;
• The temporary differences are associated with investments in subsidiaries to the extent that the difference will reverse in the foreseeable future and sufficient taxable income is expected to be generated against which the temporary difference can be offset.
Tax planning opportunities are only considered when assessing the recoverability of deferred tax assets and if the Group intends to use these opportunities or it is probable that they will be utilized.
(iii) Measurement
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the years when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted. The tax consequences that would follow from the manner in which the Group expects to recover or settle the carrying amount of its assets or liabilities are also reflected in the measurement of deferred tax assets and liabilities.
At year end the Group reviews the fair value of deferred tax assets to write down the balance if it is not probable that sufficient taxable income will be available to apply the tax asset.
Deferred tax assets which do not meet the above conditions are not recognized in the consolidated balance sheet. At year end the Group assesses whether deferred tax assets which were previously not recognized now meet the conditions for recognition.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(iv) Offset and classification
The Group only offsets current tax assets and current tax liabilities if it has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
The Group only offsets deferred tax assets and liabilities where it has a legally enforceable right, where these relate to income taxes levied by the same taxation authority and where the taxation authority permits the entity to settle on a net basis, or to realize the asset and settle the liability simultaneously for each of the future years in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
Deferred tax assets and liabilities are recognized in the consolidated balance sheet under non-current assets or liabilities, irrespective of the expected date of recovery or settlement.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about resources to be allocated to the segment, assess its performance and, based on which, differentiated financial information is available.
The Group classifies assets and liabilities in the consolidated balance sheet as current and non-current. Current assets and liabilities are determined as follows:
• Assets are classified as current when they are expected to be realized or are intended for sale or consumption in the Group's normal operating cycle, they are held primarily for the purpose of trading, they are expected to be realized within twelve months after the reporting date or are cash or a cash equivalent, unless the assets may not be exchanged or used to settle a liability for at least twelve months after the reporting date.
• Liabilities are classified as current when they are expected to be settled in the Group's normal operating cycle, they are held primarily for the purpose of trading, they are due to be settled within twelve months after the reporting date or the Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
• Financial liabilities are classified as current when they are due to be settled within twelve months after the reporting date, even if the original term was for a period longer than twelve months, and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting date and before the consolidated annual accounts are authorized for issue.
The Group takes measures to prevent, reduce or repair the damage caused to the environment by its activities. Property, plant and equipment acquired by the Group for long-term use to minimize the environmental impact of its activity and protect and improve the environment, including the reduction and elimination of future pollution from the Group's operations, are recognized as assets applying the measurement, presentation and disclosure criteria described in note 4(g).
The Group is exposed to the following risks associated with the use of financial instruments:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
This note provides information on the Group's exposure to each of these risks, the Group's objectives and procedures to measure and mitigate this risk, and the Group's capital management strategy. More exhaustive quantitative information is disclosed in note 30 to the consolidated annual accounts.
The Group's risk management policies are established to identify and analyse the risks faced by the Group, define appropriate risk limits and controls and to control risks and comply with limits. Risk management policies and procedures are reviewed regularly so that they reflect changes in market conditions and the Group's activities. The Group's management procedures and rules are designed to create a strict and constructive control environment in which all employees understand their duties and obligations.
The Group's Audit Committee supervises how management controls compliance with the Group's risk management procedures and policies and reviews whether the risk management policy is suitable considering the risks to which the Group is exposed. This committee is assisted by Internal Audit which acts as supervisor. Internal Audit performs regular and ad hoc reviews of the risk management controls and procedures and reports its findings to the Audit Committee.
Credit risk is the risk to which the Group is exposed in the event that a customer or counterparty to a financial instrument fails to discharge a contractual obligation, and mainly results from trade receivables and the Group's investments in financial assets.
The Group does not predict any significant insolvency risks as a result of delays in receiving payment from some European countries due to their current economic situation. The main risk in these countries is that of late payments, which is mitigated through the possibility of claiming interest as foreseen by prevailing legislation. No significant bad debt or late payment issues have been detected for sales to private entities.
The Group recognizes impairment based on its best estimate of the expected losses on trade and other receivables. The main impairment losses recognized are due to specific losses relating to individually identified risks. At year end, these impairment losses are immaterial.
Details of exposure to credit risk are disclosed in note 30.
Liquidity risk is the risk that the Group cannot meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure where possible, that it always has sufficient liquidity to settle its obligations at the maturity date, both in normal conditions and in times of tension, to avoid incurring unacceptable losses or tarnishing the Group's reputation.
The Group manages liquidity risk on a prudent basis, based on availability of cash and sufficient committed unused long-term credit facilities, enabling the Group to implement its business plans and carry out operations using stable and secure sources of financing.
At 31 December 2018 the Group has total cash and cash equivalents of Euros 1,033,792 thousand (Euros 886,521 thousand at 31 December 2017). The Group also has approximately Euros 404,808 thousand in unused credit facilities (Euros 381,165 thousand at 31 December 2017), including Euros 262,008 thousand on the revolving credit facility (Euros 250,146 thousand at 31 December 2017).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The structure of the Group's debt consists mainly of a non-current loan of US Dollars 5,992 million with institutional investors and banks divided into two tranches (Tranche A and Tranche B), in a US Dollars 300 million undrawn revolving credit facility and unsecured senior corporate notes for an amount of Euros 1,000 million.
As in previous years, the Group continues with its quarterly program for optimization of working capital, which is mainly based on contracts to sell receivables without recourse.
In September 2018 the Group received an additional non-current loan from the European Investment Bank totaling Euros 85,000 thousand. The loan will be used to support certain investments in R&D which are mainly focused on searching for new therapeutic for plasmatic proteins. Financial terms include a fixed interest rate for a period of 10 years with a grace period of two years. At 31 December 2018, the carrying amount of the loans obtained from the European Investment Bank is Euros 244,375 thousand (Euros 170,000 thousand at 31 December 2017).
On 5 December 2017 the Group received an additional loan from the European Investment Bank of up to Euros 85,000 thousand at a fixed interest rate for a period of 10 years with a grace period of 2 years. The loan will be used to support certain investments in R&D which are mainly focused on searching for new applications for plasmatic proteins. On 28 October 2015, the Group received its first loan from the same entity under the same terms, for a total amount of Euros 100,000 thousand.
On 18 April 2017 the Group concluded the refinancing process of the Senior Unsecured Notes. The total note issuance amounted to Euros 1,000 million.
On 6 February 2017 the Group concluded the refinancing process of its senior debt. The total debt refinanced amounts to US Dollars 6,300 million (Euros 5,800 million), including the US Dollars 1,816 million loan obtained for the acquisition of Hologic's transfusional diagnostics unit. Following the refinancing process, Grifols' debt structure consisted of a US Dollars 6,000 million long-term loan with institutional investors and banks segmented in two tranches (Term Loan A and Term Loan B), and a US Dollars 300 million undrawn revolving credit facility.
Market risk comprises the risk of changes in market prices, for example, exchange rates, interest rates, or the prices of equity instruments affecting the Group's revenues or the value of financial instruments it holds. The objective of managing market risk is to manage and control the Group's exposure to this risk within reasonable parameters at the same time as optimising returns.
The Group operates internationally and is therefore exposed to currency risk when operating with foreign currencies, especially with regard to the US Dollar which is used in a significant percentage of transactions in foreign functional currencies. Currency risk is associated with future commercial transactions, recognized assets and liabilities, and net investments in foreign operations.
The Group holds significant investments in foreign operations, the net assets of which are exposed to currency risk. The conversion risk affecting net assets of the Group's foreign operations in US Dollars is mitigated primarily through borrowings in this foreign currency.
The Group's main exposure to currency risk is with regard to the US Dollar, which is used in a significant percentage of transactions in foreign functional currencies.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of the Group's exposure to currency risk at 31 December 2018 and 2017 of the most significant financial instruments are shown in note 30.
(ii) Interest rate risk
The Group's interest rate risks arise from current and non-current borrowings. Borrowings at variable interest rates expose the Group to cash flow interest rate risks. Fixed-rate borrowings expose the Group to fair value interest rate risk.
The objective of the management of interest rate risk is to achieve a balance in the structure of the debt, keeping part of the external resources issued at a fixed rate and covering part of the variable rate debt through hedges.
A significant part of the financing obtained accrues interest at fixed rates. This fixed interest debt (Senior Unsecured Notes) amounts to Euros 1,000 million, which represents approximately 54% of the Group's total debt in Euros. The additional loans of Euros 244,375 thousand received from the European Investment Bank represent approximately 13% of the Group's total debt in Euros.
Senior debt in Euros represents approximately 12% of the Group's total Senior debt at 31 December 2018 and 31 December 2017.
Total fixed-interest debt represents 19% of total debt at 31 December 2018 (19% at 31 December 2017).
(iii) Market price risk
Price risk affecting raw materials is mitigated by the vertical integration of the haemoderivatives business in a highly-concentrated sector.
The directors' policy is to maintain a solid capital base in order to ensure investor, creditor and market confidence and sustain future business development. The board of directors defines and proposes the level of dividends paid to shareholders.
The directors consider various arguments to calculate capital structure:
• The directors control capital performance using rates of returns on equity (ROE). At 31 December 2018 the ROE stood at 14% (18% at 31 December 2017). The ROE is calculated by dividing profit attributable to the Parent by the equity attributable to the Parent.
| Thousand of Euros | ||
|---|---|---|
| 2018 2017 |
||
| Profit attributable to the parent | 596,642 | 662,700 |
| Equity attributable to the Parent | 4,225,554 | 3,629,079 |
| ROE | 14% | 18% |
The Parent held Class A and B treasury stock equivalent to 0.6% of its capital at 31 December 2018 (0.6% at 31 December 2017). The Group does not have a formal plan for repurchasing shares.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
In accordance with IFRS 8 "Operating Segments", financial information for operating segments is reported in the accompanying Appendix II, which forms an integral part of this note to the consolidated annual accounts.
Group companies are divided into four areas: companies from the industrial area, companies from the commercial area, companies from the services area and companies from the research area. Within each of these areas, activities are organized based on the nature of the products and services manufactured and marketed.
Assets, liabilities, income and expenses for segments include directly and reliably attributable items. Items which are not attributed to segments by the Group are:
The operating segments defined by the steering committee are as follows:
As a result of the creation of the new Bio Supplies segment and the Intersegments, the Group has reviewed the allocation of balances and transactions by segments. The comparative figures for 2016 have been restated accordingly.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of net sales by groups of products for 2018, 2017 and 2016 are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |
| Bioscience | |||
| Haemoderivatives | 3,516,704 | 3,429,785 | 3,228,275 |
| Diagnostic | |||
| Transfusional medicine | 650,180 | 679,692 | 640,443 |
| Other diagnostic | 19,797 | 23,377 | 23,540 |
| Hospital | |||
| Fluid therapy and nutrition | 52,574 | 47,699 | 46,210 |
| Hospital supplies | 58,014 | 52,466 | 52,373 |
| Bio supplies | 167,004 | 66,791 | 24,387 |
| Others | 22,451 | 18,263 | 34,602 |
| Total | 4,486,724 | 4,318,073 | 4,049,830 |
The Group has concluded that hemoderivative products are sufficiently alike to be considered as a whole for the following reasons:
Geographical information is grouped into four areas:
The definition of these four segments is mainly due to the geographical level that the Group sets to manage its revenue as they respond to specific economic scenarios. The main framework of the Group is consistent with this geographical segment grouping, including the monitoring of its commercial operations and its information systems.
The financial information reported for geographical areas is based on sales to third parties in these markets as well as the location of assets.
In 2018 the revenue of two Bioscience segment customers represents approximately 23.1% of the Group's total revenues. For 2017 and 2016 one Bioscience segment customer represented 11.0% and 10.7% of the Group's total revenue, respectively.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of and movement in this caption of the consolidated balance sheet at 31 December 2017 are as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| Balance at | Business | Translation | Balance at | ||
| Segment | 31/12/2016 | Combination | differences | 31/12/2017 | |
| Net value | |||||
| Grifols UK.Ltd. (UK) | Bioscience | 8,025 | -- | (280) | 7,745 |
| Grifols Italia.S.p.A. (Italy) | Bioscience | 6,118 | -- | -- | 6,118 |
| Biomat USA, Inc.(USA) | Bioscience | 193,039 | 40,101 | (27,886) | 205,254 |
| Grifols Australia Pty Ltd. (Australia) / Medion Diagnostics AG (Switzerland) |
Diagnostic | 10,134 | -- | (591) | 9,543 |
| Grifols Therapeutics, Inc. (USA) | Bioscience | 2,108,139 | -- | (255,234) | 1,852,905 |
| Araclon Biotech, S.L. (Spain) | Diagnostic | 6,000 | -- | -- | 6,000 |
| Progenika Biopharma, S.A. (Spain) | Diagnostic | 40,516 | -- | -- | 40,516 |
| Grifols Diagnostic (Novartis & Hologic) (USA, Spain and Hong Kong) |
Diagnostic | 1,272,024 | 1,466,420 | (302,537) | 2,435,907 |
| Kiro Grifols S.L. (Spain) | Hospital | -- | 26,510 | -- | 26,510 |
| 3,643,995 | 1,533,031 | (586,528) | 4,590,498 | ||
(See note 3)
Details of and movement in this caption of the consolidated balance sheet at 31 December 2018 are as follows:
| Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|
| Balance at | Business | Translation | Balance at | ||||
| Segment | 31/12/2017 | Combination | Disposals | differences | 31/12/2018 | ||
| Net value | |||||||
| Grifols UK.Ltd. (UK) | Bioscience | 7,745 | -- | -- | (63) | 7,682 | |
| Grifols Italia.S.p.A. (Italy) | Bioscience | 6,118 | -- | -- | -- | 6,118 | |
| Biomat USA, Inc.(USA) | Bioscience | 205,254 | 42,780 | (2,827) | 9,907 | 255,114 | |
| Grifols Australia Pty Ltd. (Australia) / Medion Diagnostics AG (Switzerland) |
Diagnostic | 9,543 | -- | -- | (272) | 9,271 | |
| Grifols Therapeutics, Inc. (USA) | Bioscience | 1,852,905 | -- | -- | 87,871 | 1,940,776 | |
| Araclon Biotech, S.L. (Spain) | Diagnostic | 6,000 | -- | -- | -- | 6,000 | |
| Progenika Biopharma, S.A. (Spain) | Diagnostic | 40,516 | -- | -- | -- | 40,516 | |
| Grifols Diagnostic (Novartis & Hologic) (USA, Spain and Hong Kong) |
Diagnostic | 2,435,907 | -- | -- | 114,349 | 2,550,256 | |
| Kiro Grifols S.L. (Spain) | Hospital | 26,510 | (2,134) | -- | -- | 24,376 | |
| Goetech LLC (USA) | Hospital | -- | 55,321 | -- | 3,624 | 58,945 | |
| Haema AG (Germany) | Bioscience | -- | 171,134 | -- | -- | 171,134 | |
| Biotest Pharma Corp (USA) | Bioscience | -- | 136,234 | -- | 2,808 | 139,042 | |
| 4,590,498 | 403,335 | (2,827) | 218,224 | 5,209,230 |
(See note 3)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
As a result of the acquisition of Talecris in 2011, and for impairment testing purposes, the Group combines the CGUs allocated to the Bioscience segment, grouping them together at segment level, because substantial synergies were expected to arise on the acquisition of Talecris, and due to the vertical integration of the business and the lack of an independent organized market for the products. Because the synergies benefit the Bioscience segment globally they cannot be allocated to individual CGUs. The Bioscience segment represents the lowest level to which goodwill is allocated and is subject to control by Group management for internal control purposes.
Since the acquisition of Novartis' Diagnostic business unit in 2014, the Group combines Araclon, Progenika, Australia and Hologic's share of NAT donor screening unit acquisition into a single CGU for the Diagnostic business as the acquisition is supporting not only the vertically integration business but also cross-selling opportunities. In addition, for management purposes, the Group's management is focused on the business more than geographical areas or individual companies.
Due to the acquisition of an additional 40% stake of Kiro Grifols S.L. and a 51% stake of Goetech LLC (Medkeeper), the Group decided to group Kiro Grifols S.L., Laboratorios Grifols S.L. and Medkeeper into a single CGU for the Hospital business since the acquisitions are supporting cross-selling opportunities.
The CGUs established by Management are:
The recoverable amount of the Bioscience CGU was calculated based on its value in use calculated as the present value of the future cash flows discounted at a discount rate considering the related inherent risk.
The recoverable amount of the Diagnostic CGU was calculated based on its fair value less costs of disposal calculated as the present value of the future cash flows discounted at a discount rate considering the related inherent risk.
The recoverable amount of the Hospital CGU was calculated based on its fair value less costs of disposal calculated as the present value of the future cash flows discounted at a discount rate considering the related inherent risk.
This value in use and fair value less costs of disposal calculations use cash flow projections for five years based on the financial budgets approved by management. Cash flows estimated as of the year in which stable growth in the CGU has been reached are extrapolated using the estimated growth rates indicated below.
The key assumptions used in calculating impairment of the CGUs for 2017 were as follows:
| Perpetual Growth rate Pre-tax discount rate | |||
|---|---|---|---|
| Bioscience | 2% | 9.50% | |
| Diagnostic | 2% | 10.60% | |
| Hospital | 1.40% | 13.30% |
The key assumptions used in calculating impairment of the CGUs for 2018 have been as follows:
| Perpetual Growth rate Pre-tax discount rate | |||
|---|---|---|---|
| Bioscience | 2% | 8.90% | |
| Diagnostic | 2% | 9.40% | |
| Hospital | 1.50% | 13.10% |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Management determined budgeted gross margins based on past experience, investments in progress which would imply significant growth in production capacity and its forecast international market development. Perpetual growth rates are coherent with the forecasts included in industry reports. The discount rate used reflects specific risks related to the CGU.
As the recoverable amount of the Bioscience CGU is much higher than the carrying amount of the Bioscience segment's assets, specific information from the impairment test sensitivity analysis is not included.
At 31 December 2018 Grifols' stock market capitalization totals Euros 13,978 million (Euros 15,379 million at 31 December 2017).
Details of other intangible assets and movement during the years ended 31 December 2018 and 2017 are included in Appendix III, which forms an integral part of these notes to the consolidated annual accounts.
Intangible assets acquired from Talecris mainly include currently marketed products. Identifiable intangible assets correspond to Gamunex and have been recognized at fair value at the acquisition date of Talecris and classified as currently marketed products. Intangible assets recognized comprise the rights on the Gamunex product, its commercialization and distribution license, trademark, as well as relations with hospitals. Each of these components is closely linked and fully complementary, are subject to similar risks and have a similar regulatory approval process.
Intangible assets acquired from Progenika mainly include currently marketed products. Identifiable intangible assets correspond to blood, immunology and cardiovascular genotyping. These assets have been recognized at fair value at the acquisition date of Progenika and classified as currently marketed products.
The cost and accumulated amortization of currently marketed products acquired from Talecris and Progenika at 31 December 2017 is as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Balance at 31/12/2016 |
Additions | Translation differences |
Balance at 31/12/2017 |
|||
| Cost of currently marketed products - Gamunex | 1,138,412 | -- | (137,828) | 1,000,584 | ||
| Cost of currently marketed products - Progenika | 23,792 | -- | -- | 23,792 | ||
| Accumulated amortisation of currently marketed products - Gamunex |
(211,871) | (35,837) | 28,136 | (219,572) | ||
| Accumulated amortisation of currently marketed products - Progenika |
(9,117) | (2,379) | -- | (11,496) | ||
| Carrying amount of currently marketed products | 941,216 | (38,216) | (109,692) | 793,308 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The cost and accumulated amortization of currently marketed products acquired from Talecris and Progenika at 31 December 2018 is as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Balance at 31/12/2017 |
Additions | Translation differences |
Balance at 31/12/2018 |
|||
| Cost of currently marketed products - Gamunex | 1,000,584 | -- | 47,451 | 1,048,035 | ||
| Cost of currently marketed products - Progenika | 23,792 | -- | -- | 23,792 | ||
| Accumulated amortisation of currently marketed products - Gamunex |
(219,572) | (33,775) | (11,573) | (264,920) | ||
| Accumulated amortisation of currently marketed products - Progenika |
(11,496) | (2,379) | -- | (13,875) | ||
| Carrying amount of currently marketed products | 793,308 | (36,154) | 35,878 | 793,032 |
The estimated useful life of the currently marketed products acquired from Talecris is considered limited, has been estimated at 30 years on the basis of the expected life cycle of the product (Gamunex) and is amortized on a straight-line basis.
At 31 December 2018 the residual useful life of currently marketed products is 22 years and 5 months (23 years and 5 months at 31 December 2017).
The estimated useful life of the currently marketed products acquired from Progenika is considered limited, has been estimated at 10 years on the basis of the expected life cycle of the product and is amortized on a straight-line basis.
At 31 December 2018 the residual useful life of currently marketed products acquired from Progenika is 4 years and 2 months (5 years and 2 months at 31 December 2017).
At 31 December 2018 the Group has recognized Euros 58,254 thousand as self-constructed intangible assets (Euros 49,782 thousand at 31 December 2017).
At 31 December 2018 the Group has intangible asset purchase commitments amounting to Euros 589 thousand (Euros 1,199 thousand at 31 December 2017).
At 31 December 2018 the Group recognizes plasma center licenses with indefinite useful lives under intangible assets for a carrying amount of Euros 26,917 thousand (Euros 26,631 thousand at 31 December 2017).
The Group has also an amount of Euros 206,087 thousand as development costs in progress (Euros 183,281 thousand at 31 December 2017).
Total profit on disposals of intangible assets in 2018 amount to Euros 8,101 thousand (Euros 83 thousand of loss in 2017) and mainly corresponds to the sale of plasma centers to Kedplasma.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Indefinite-lived intangible assets have been allocated to the cash-generating unit (CGU) of the Bioscience segment. These assets have been tested for impairment together with goodwill (see note 7).
Impairment testing has been analyzed for each of the intangible assets in progress by calculating its recoverable amount based on their fair value.
On 29 January 2018 (prior to the date that the 2017 consolidated annual accounts were authorized for issued) Aradigm communicated that it had not obtained the approval of the Antimicrobial Drugs Advisory Committee of the US Food and Drug Administration (FDA) for LinahiqTM. As the Committee did not recommend it as a treatment for non-cystic fibrosis bronchiectasis patients with chronic lung Pseudomonas aeruginosa infections, the intangible assets related to the product have been totally impaired and recognized as R&D expense in the statement of profit and loss for 2017 for an amount of Euros 63,675 thousand. In 2017 the investment in this company and the bonds that the Group held with the company were impaired.
Details of property, plant and equipment and movement in the consolidated balance sheet at 31 December 2018 and 2017 are included in Appendix IV, which forms an integral part of this note to the consolidated annual accounts. Property, plant and development under construction at 31 December 2018 and 2017 mainly comprise investments made to extend the companies' equipment and to increase their productive capacity.
In 2018, the Group has capitalized interests for a total amount of Euros 8,955 thousand (Euros 8,839 thousand in 2017)
Group policy is to contract sufficient insurance coverage for the risk of damage to property, plant and equipment. At 31 December 2018 the Group has a combined insurance policy for all Group companies, which more than adequately covers the carrying amount of all the Group's assets.
Total losses incurred on disposals of property, plant and equipment for 2018 amount to Euros 1,401 thousand (Euros 1,468 thousand of loss in 2017).
The Group contracted the following types of property, plant and equipment under finance leases at 31 December 2017:
| Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|
| Cost | Accumulated depreciation |
Carrying amount | |||||
| Land and buildings | 2,545 | (815) | 1,730 | ||||
| Plant and machinery | 14,249 | (6,564) | 7,685 | ||||
| 16,794 | (7,379) | 9,415 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Group has contracted the following types of property, plant and equipment under finance leases at 31 December 2018:
| Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|
| Cost | Accumulated depreciation |
Carrying amount | |||||
| Land and buildings | 2,389 | (898) | 1,491 | ||||
| Plant and machinery | 15,690 | (7,237) | 8,453 | ||||
| 18,079 | (8,135) | 9,944 |
Details of minimum lease payments and the present value of finance lease liabilities, disclosed by maturity date, are detailed in note 20 (c).
At 31 December 2018 the Group has recognized Euros 66,995 thousand as self -constructed property, plant and equipment (Euros 52,218 thousand at 31 December 2017).
At 31 December 2018 the Group has property, plant and equipment purchase commitments amounting to Euros 47,148 thousand (Euros 39,675 thousand at 31 December 2017).
A group of assets forming part of the Hospital segment has been tested for impairment due to the decrease in the results of the segment and no impairment has been observed. The recoverable amount of the aforementioned assets is calculated based on the fair value less cost of disposal, using cash flow projections based on five-year financial budgets approved by management. Cash flows estimated as of the year in which stable growth has been reached by the assets are extrapolated using a pre-tax discount rate of 10.1% and a perpetual growth rate of 2% (12.2% and 2% respectively in fiscal year 2017).
Details of this caption in the consolidated balance sheet at 31 December 2018 and 2017 are as follows:
| Thousands of Euros | Thousands of Euros | |||
|---|---|---|---|---|
| % ownership | 31/12/2018 | % ownership | 31/12/2017 | |
| Alkahest, Inc. | 47.58% | 28,336 | 47.58% | 30,559 |
| Albajuna Therapeutics, S.L | 30.00% | 1,106 | 30.00% | 1,956 |
| Interstate Blood Bank, Inc. | 49.19% | 29,595 | 49.19% | 27,936 |
| Bio Blood Components Inc. | 48.97% | 38,223 | 48.97% | 32,960 |
| Plasma Biological Services, LLC | 48.90% | 21,809 | 48.90% | 23,010 |
| Singulex, Inc. | 19.33% | 19,256 | 19.33% | 29,322 |
| GigaGen, Inc | 43.96% | 28,363 | 43.96% | 29,047 |
| Access Biologicals LLC | 49.00% | 47,742 | 49.00% | 44,219 |
| Aigües de Vilajuïga, S.A. | -- | -- | 50.00% | -- |
| Plasmavita HealthCare | 50.00% | 9,920 | -- | -- |
| Mecwins, S.A. | 24.99% | 2,555 | -- | -- |
| 226,905 | 219,009 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Movement in the investments in equity-accounted investees for the years ended at 31 December 2018, 2017 and 2016 have been as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 2018 | 2017 | 2016 | ||
| Balance at 1 January | 219,009 | 201,345 | 76,728 | |
| Acquisitions | 12,222 | 80,685 | 136,072 | |
| Transfers | 500 | (16,000) | (29,059) | |
| Share of profit / (losses) Share of other comprehensive income / translation |
(11,038) | (13,195) | 6,933 | |
| differences | 9,270 | (27,134) | 10,671 | |
| Losses for Impairment | -- | (6,692) | -- | |
| Collected dividends | (3,058) | -- | -- | |
| Balance at 31 December | 226,905 | 219,009 | 201,345 |
On 22 October, 2018 Grifols has allocated Euros 2 million to the capital increase of Mecwins through Progenika Biopharma, reaching 24.99% of the total capital.
Mecwins is a spin-off of the Institute of Micro and Nanotechnology of the Center for Scientific Research (CSIC), specialized in the development of innovative nanotechnological analysis tools for the diagnosis and prognosis of diseases.
Mecwins has developed ultrasensitive optical reading immunoassay technology from nanosensors for the detection of protein biomarkers in blood. This technology has potential applications in fields such as oncology, cardiovascular and infectious diseases.
The injection of capital, in which CRB Inverbio has also participated with an additional Euros 2 million, will enable Mecwins to start developing pre-commercial prototypes of this technology and for Grifols to position itself in the field of nanotechnology applied to diagnosis.
Refer to note 3 for details of this investment.
On 5 July 2017, Grifols through its 100% subsidiary Grifols Innovation and New Technologies Limited ("GIANT") acquired a 43.96% shareholding in GigaGen, Inc., a company based in San Francisco (USA) for the amount of US Dollars 35 million.
GIANT and GigaGen entered into a Research and Collaboration Agreement whereby in exchange of a collaboration fee of US Dollars 15 million in the aggregate, GigaGen will commit to carry out research activities to develop recombinant polyclonal immunoglobulin therapies derived from human B cells for the treatment of human diseases.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Movement in Gigagen's equity-accounted investment for the years ended 31 December 2018 and 2017 is as follows:
| Thousand of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||
| Balance at 1 January | 29,047 | -- | ||
| Acquisitions | -- | 31,752 | ||
| Share of profit / (losses) | (1,562) | (804) | ||
| Share of other comprehensive income / translation differences | 878 | (1,595) | ||
| Pérdidas por deterioro de valor | -- | (306) | ||
| Balance at 31 December | 28,363 | 29,047 |
On 12 January 2017, the group announced the acquisition of 49% of the voting rights in Access Biologicals LLC, a company based in San Diego, California, USA, for the amount of US Dollars 51 million. Grifols entered into an option agreement to purchase the remaining 51% voting rights in five years, in 2022. Grifols alsosigned a supply agreement to sell to Access Biologicals biological products not meant for therapeutic use.
The principal business activity of Access Biologicals is the collection and manufacturing of an extensive portfolio of biologicals products. Combined with closed-loop material sourcing, it provides critical support for various markets such as in-vitro diagnostic manufacturing, biopharmaceutical, cell culture and diagnostic research & development.
Movement in Access Biological's equity-accounted investment for the years ended 31 December 2017 and 2018 is as follows:
| Thousand of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||
| Balance at 1 January | 44,219 | -- | ||
| Acquisitions | -- | 48,383 | ||
| Share of profit / (losses) | 3,039 | 1,830 | ||
| Share of other comprehensive income / translation differences | 2,073 | (5,994) | ||
| Collected dividends | (1,589) | -- | ||
| Balance at 31 December | 47,742 | 44,219 |
On 17 May 2016 Grifols subscribed and paid a capital increase for an amount of US Dollars 50 million (Euros 44,107 thousand) in the US company Singulex, Inc. ("Singulex"). As a result, Grifols holds a 19.33% common stock interest in Singulex on a fully diluted basis at a pre-money valuation of US Dollars 200 million. Grifols will be entitled to appoint a director to serve the board of directors of Singulex. As a result, Singulex granted Grifols an exclusive worldwide license for the use and sale of Singulex' technology for the blood donor and plasma screening to further ensure the safety of blood and plasma products.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Movement in Singulex, Inc.'s equity-accounted investment for the years ended 31 December 2018 and 2017 is as follows:
| Thousand of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||
| Balance at 1 January | 29,322 | 43,329 | ||
| Share of profit / (losses) | (10,975) | (9,335) | ||
| Share of other comprehensive income / translation differences | 909 | (4,672) | ||
| Balance at 31 December | 19,256 | 29,322 |
On 11 May 2016 Grifols acquired a 49.19% stake in Interstate Blood Bank, Inc. (IBBI), 48.97% of Bio-Blood Components, Inc. (Bio-Blood) and 48.90% of Plasma Biological Services, LLC. (PBS) ("IBBI Group"), a group based in Memphis, USA, for the price of US Dollars 100 million (Euros 88,215 thousand). GWWO also entered into an option agreement to purchase the remaining stakes for a price of US Dollars 100 million for an option price of US Dollars 10 million (Euros 9,007 thousand) (see notes 11 and 30). The purchase price and the call right were paid upon signature of the contract. The principal business activity of IBBI and its affiliates is the collection of plasma for the plasma fractionation industry, with 23 plasma collection centers, 9 blood donation centers and one laboratory.
Movement in Interstate Blood Bank, Inc., Bio-blood Components, Inc. and Plasma Biological Services, LLC.'s equity-accounted investment for the years ended 31 December 2017 and 2018 is as follows:
| Thousands of Euros | Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||||||
| IBBI | Bio-Blood | PBS | IBBI | Bio-Blood | PBS | TOTAL 2018 | TOTAL 2017 | |
| Balance at 1 January | 27,936 | 32,960 | 23,010 | 31,090 | 38,725 | 25,890 | 83,906 | 95,705 |
| Share of profit / (losses) | 1,830 | 3,492 (2,181) | 635 | (1,181) | 270 | 3,141 | (276) | |
| Share of other comprehensive income / translation differences |
1,298 | 1,771 | 980 | (3,789) | (4,584) | (3,150) | 4,049 | (11,523) |
| Collected dividend | (1,469) | -- | -- | -- | -- | -- | (1,469) | -- |
| Balance at 31 December | 29,595 | 38,223 | 21,809 | 27,936 | 32,960 | 23,010 | 89,627 | 83,906 |
On 25 July 2017 the Group acquired an additional 40% interest in Kiro Grifols, S.L (formerly Kiro Robotics, S.L.) for an amount of Euros 12.8 million. With this new acquisition, Grifols owns 90% in Kiro Grifols S.L., which is now considered part of the group, and starts using the global consolidation method instead of the equity method (see note 3(b)).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of non-current financial assets on the consolidated balance sheet at 31 December 2018 and 2017 are as follows:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Non-current derivatives (see note 30) | -- | 8,338 |
| Financial investments in shares with stock market (a) | 7 | 38,708 |
| Total Non-current financial assets measured at fair value | 7 | 47,046 |
| Non-current guarantee deposits | 5,566 | 4,820 |
| Other non-current financial assets | 1,908 | 1,346 |
| Non-current loans to related parties (see note 31) | 82,969 | -- |
| Non-current loans to EEAA (c) (see note 31) | 17,151 | 16,677 |
| Total Non-current financial assets measured at amortized cost | 107,594 | 22,843 |
Details of other current financial assets on the consolidated balance sheet at 31 December 2018 and 2017 are as follows:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Current derivatives (b) (see note 30) | 19,934 | -- |
| Total Non-current financial assets measured at fair value | 19,934 | -- |
| Thousands of Euros | ||
| 31/12/2018 | 31/12/2017 | |
| Deposits and guarantees | 822 | 702 |
| Current loans to third parties | 56 | 59 |
| Current loans to associates (c) (see note 31) | 33,153 | 9,977 |
| Total other current financial assets | 34,031 | 10,738 |
Within the framework of its integrated R & D & I strategy, which assesses the adequacy of the various projects, Grifols made the decision to divest in TiGenix and participated in the takeover bid by Takeda in the first half of 2018. Divestment has generated a cash inflow of Euros 70.1 million and a positive impact on the consolidated profit of Euros 32 million (see note 26).
At 31 December 2018, current derivatives correspond to the purchase options described below:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
On 2 October 2017 the Group's subsidiary Grifols Diagnostic Solutions, Inc. granted a loan of US Dollars 20,000 thousand (Euros 16,676 thousand), that bear at an interest rate of 5% and mature on 19 September 2019. In the first half of 2018, the Group made an additional contribution amounting to US Dollars 12,339 (Euros 11,063 thousand). The Group owns 19.33 % of the common stock of Singulex Inc.
On 8 February 2017, the subsidiary Grifols Worldwide Operations granted a loan of US Dollars 11,000 thousand (Euros 10,809 thousand) to Interstate Blood Bank Inc, with interest at a rate of 4% and due on 6 February 2022. The Group owns 49.19% of the capital of Interstate Blood Bank Inc.
Details of inventories at 31 December 2018 and 2017 are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | ||
| Goods for resale | 118,876 | 105,013 | |
| Raw materials and supplies | 647,399 | 454,371 | |
| Work in progress and semi-finished goods | 744,436 | 592,612 | |
| Finished goods | 438,649 | 477,297 | |
| 1,949,360 | 1,629,293 |
Movement in the inventory provision was as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |
| Balance at 1 January | 35,764 | 33,069 | 22,614 |
| Net charge for the year | 10,398 | 8,232 | 8,878 |
| Cancellations for the year | (558) | (357) | (20) |
| Translation differences | 3,236 | (5,180) | 1,597 |
| Balance at 31 December | 48,840 | 35,764 | 33,069 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details at 31 December 2018 and 2017 are as follows:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Trade receivables | 289,316 | 302,685 |
| Receivables from associates (note 31) | 382 | 3,219 |
| Bad debt provision (note 30) | (20,531) | (19,706) |
| Trade receivables | 269,167 | 286,198 |
| Other receivables (note 30) | 9,901 | 7,485 |
| Personnel | 2,082 | 566 |
| Advance payments (note 30) | 35,426 | 11,181 |
| Taxation authorities, VAT recoverable | 42,707 | 20,105 |
| Other public entities | 2,302 | 1,344 |
| Other receivables | 92,418 | 40,681 |
| Current income tax assets | 42,205 | 59,531 |
| 403,790 | 386,410 |
During 2018, 2017 and 2016 certain companies of the Grifols Group have sold receivables from several public entities, without recourse, to certain financial institutions. Under some of these contracts, the Group receives an initial payment which usually amounts to 90% of the nominal amount of the receivables sold less the associated sale and purchase costs. The deferred collection (equivalent to the rest of the nominal amount) will be made by the Group once the financial institution has collected the nominal amount of the receivables (or the interest, if the balances are received after more than 36 months, depending on the terms of each particular contract) and this amount is recognized in the consolidated balance sheet as a balance receivable from the financial institution. The deferred amount (equivalent to the continuing involvement) totals Euros 1,220 thousand at 31 December 2018 (Euros 1,800 thousand at 31 December 2017), which does not differ significantly from its fair value and coincides with the amount of maximum exposure to losses. The financial institution makes the initial payment when the sale is completed and therefore, the bad debt risk associated with this part of the nominal amount of the receivables is transferred. The Group has transferred the credit risk and control of the receivables to certain financial institutions and has therefore derecognized the asset transferred in the consolidated balance sheet, as the risks and rewards inherent to ownership have not been substantially retained.
Certain foreign Group companies have also entered into a contract to sell receivables without recourse to various financial institutions.
Total balances receivable without recourse sold to financial institutions through the aforementioned contracts in 2018 amount to Euros 1,188,216 thousand (Euros 912,204 thousand in 2017 and Euros 870,324 thousand in 2016).
The finance cost of these operations for the Group totals approximately Euros 6,053 thousand which has been recognized under finance costs in the consolidated statement of profit and loss for 2018 (Euros 3,973 thousand in 2017 and Euros 4,885 thousand in 2016) (see note 26).
Details of balances with related parties are shown in note 31.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of this caption of the consolidated balance sheet at 31 December 2018 and 2017 are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | ||
| Current deposits | 441,614 | 655,463 | |
| Cash in hand and at banks | 592,178 | 231,058 | |
| Total cash and cash equivalents | 1,033,792 | 886,521 |
Details of consolidated equity and movement are shown in the consolidated statement of changes in equity.
At 31 December 2018 and 2017, the Company's share capital amounts to Euros 119,603,705 and comprises:
The main characteristics of the Class B shares are as follows:
These shares are freely transferable.
Since 23 July 2012 the ADSs (American Depositary Shares) representing Grifols' Class B shares (non-voting shares) have had an exchange ratio of 1:1 in relation to Class B shares, ie.1 ADS represents 1 Class B share. The previous rate was 2 ADS per 1 Class B share.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Company's knowledge of its shareholders is based on information provided voluntarily or in compliance with applicable legislation. According to the information available to the Company, there are no interests representing more than 10% of the Company's total capital at 31 December 2018 and 2017.
At 31 December 2018 and 2017, the number of outstanding shares is equal to the total number of Company shares, less treasury stock.
Movement in outstanding shares during 2017 is as follows:
| Class A shares | Class B shares | |
|---|---|---|
| Balance at 1 January 2017 | 426,129,798 | 256,694,375 |
| (Acquisition) / disposal of treasury stock (note 15 (d)) | -- | 432,929 |
| Balance at 31 December 2017 | 426,129,798 | 257,127,304 |
| Movement in outstanding shares during 2018 is as follows: | ||
| Class A shares | Class B shares | |
| Balance at 1 January 2018 | 426,129,798 | 257,127,304 |
|---|---|---|
| (Acquisition) / disposal of treasury stock (note 15 (d)) | -- | 479,355 |
| Balance at 31 December 2018 | 426,129,798 | 257,606,659 |
Movement in the share premium is described in the consolidated statement of changes in equity, which forms an integral part of this note to the consolidated annual accounts.
The drawdown of accumulated gains is subject to legislation applicable to each of the Group companies. At 31 December 2018, Euros 35,613 thousand equivalent to the carrying amount of development costs pending amortization of certain Spanish companies (Euros 40,061 thousand at 31 December 2017) (see note 8) are, in accordance with applicable legislation, restricted reserves which cannot be distributed until these development costs have been amortized.
In July 2016 the Group acquired an additional 20% of the assets of Medion Diagnostics AG in exchange for 59,951 treasury stocks (Class B Shares) from its non-controlling interests. After these capital increases, Grifols' interest rose to 100% in 2016. The difference between the share capital increase carried out by the Group and the non-controlling interest was recognized as a Euros 0.6 million decrease in reserves.
In August 2016 Araclon Biotech, S.L. increased capital by an amount of Euros 6.7 million. As a result, the Group increased its investment from 70.83% to 73.22%. The difference between the share capital increase carried out by the Group and the non-controlling interest was recognized as a Euros 1.7 million decrease in reserves.
On 12 December 2016, the Group subscribed a share capital increase in the capital of VCN Biosciences, S.L. of Euros 5 million. After this capital increase, Grifols interest rose to 81.34% in 2016. The difference between the share capital increase carried out by the Group and the non-controlling interest was recognized as a Euros 1 million decrease in reserves.
In October 2017, the Group acquired 12,020 Progenika Biopharma, S.A. shares As a result, the Group has increased its investment from 89.25% to 90.23%. The difference between the share capital increase carried out by the Group and the non-controlling interest has been recognized as a Euros 374 thousand decrease in reserves.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
In June 2018, Grifols made the decision to divest in TiGenix and participated in the takeover bid made by Takeda in the first half of 2018. This divestment has generated a positive impact on reserves of Euros 4,900 thousand and a negative impact of Euros 4,900 thousand in "Other comprehensive income".
In June 2018, Grifols executed the purchase option for 6.41% of the shares of Progenika owned by Ekarpen Private Equity, S.A. for an amount of Euros 5,300 thousand. As a result, the Group increased its interest from 90.23% to 96.64%. The difference between the acquisition carried out by the Group and the non-controlling interest was recognized in reserves.
In September 2018, the Group acquired 41,387 shares of Progenika Biopharma, S.A for an amount of Euros 4,333 thousand. As a result, the Group increased its interest from 96.64% to 99.99%. The difference between the acquisition carried out by the Group and the non-controlling interest was recognized against reserves.
At 31 December 2018 and 2017 reserves include the IFRS-EU first-time adoption revaluation reserves and legal reserve of certain Group companies.
Companies in Spain are obliged to transfer 10% of each year's profits to a legal reserve until this reserve reaches an amount equal to 20% of share capital. This reserve is not distributable to shareholders and may only be used to offset losses if no other reserves are available. Under certain conditions it may be used to increase share capital provided that the balance left on the reserve is at least equal to 10% of the nominal value of the total share capital after the increase.
At 31 December 2018 and 2017 the legal reserve of the Company amounts to Euros 23,921 thousand, which corresponds to 20% of the share capital.
Distribution of the legal reserves of Spanish companies is subject to the same restrictions as those of the Company and at 31 December 2018 the balance of the legal reserve of other Spanish companies amounts to Euros 2,527 thousand (Euros 2,416 thousand at 31 December 2017).
Other foreign Group companies have a legal reserve amounting to Euros 843 thousand at 31 December 2018 (Euros 731 thousand at 31 December 2017).
At 31 December 2018 and December 2017 the Company does not have any Class A treasury stock.
Movement in Class B treasury stock during 2017 was as follows:
| No. of Class B shares | Thousands of Euros | |
|---|---|---|
| Balance at 1 January 2017 | 4,730,735 | 68,710 |
| Disposal Class B shares | (432,929) | (6,288) |
| Balance at 31 December 2017 | 4,297,806 | 62,422 |
Movement in Class B treasury stock during 2018 is as follows:
| No. of Class B shares | Thousands of Euros | |
|---|---|---|
| Balance at 1 January 2018 | 4,297,806 | 62,422 |
| Disposal Class B shares | (479,355) | (6,981) |
| Balance at 31 December 2018 | 3,818,451 | 55,441 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
In March 2018 the Group delivered 480,661 treasury stocks (Class B shares) to eligible employees as compensation for the Restricted Share Unit Retention Plan (see note 29).
In March 2017 the Group delivered 432,929 treasury stocks (Class B shares) to eligible employees as a compensation for the Restricted Share Unit Retention Plan (see note 29).
The Parent held Class B treasury stock equivalent to 0.6% of its capital at 31 December 2018 (0.6% at 31 December 2017).
The profits of Grifols, S.A. and subsidiaries will be distributed as agreed by respective shareholders at their general meetings.
The proposed distribution of profit of the Parent Grifols, S.A. for the years ended 31 December 2018, and the distribution of profit approved for 2017, presented at the general meeting held on 25 May 2018, is as follows:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Voluntary reserve | 91,059 | 76,247 |
| Dividends | 238,659 | 265,080 |
| Profit of the Parent | 329,718 | 341,327 |
The following dividends were paid in 2017:
| 31/12/2017 | |||
|---|---|---|---|
| % of par value | Euros per share | Thousands of Euros | |
| Ordinary shares | 54% | 0.14 | 57,790 |
| Non-voting shares | 271% | 0.14 | 34,870 |
| Non-voting shares (preferred dividend) | 20% | 0.01 | 2,614 |
| Total dividends paid | 95,274 | ||
| 31/12/2017 | |||
| % of par value | Euros per share | Thousands of Euros | |
| Ordinary shares (interim dividend) | 72% | 0.18 | 76,703 |
| Non-voting shares (interim dividend) | 360% | 0.18 | 46,283 |
| Total interim dividends paid | 122,986 | ||
| The following dividends were paid in 2018: |
| 31/12/2018 | ||
|---|---|---|
| % of par value | Euros per share | Thousands of Euros |
| 82% | 0.20 | 86,929 |
| 408% | 0.20 | 52,551 |
| 20% | 0.01 | 2,614 |
| 142,094 | ||
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/2018 | |||
|---|---|---|---|
| % of par value | Euros per share | Thousands of Euros | |
| Ordinary shares (interim dividend) | 80% | 0.2 | 85,226 |
| Non-voting shares (interim dividend) | 400% | 0.2 | 51,521 |
| Total interim dividends paid | 136,747 |
At the meeting held on 26 October, 2018, the Board of Directors of Grifols approved the distribution of interim dividend for 2018, of Euros 0.20 for each Class A and B share, recognizing a total of Euros 136,747 thousand as interim dividend.
At the meeting held on 27 October 2017, the Board of Directors of Grifols approved the distribution of interim dividend for 2017 of Euros 0.18 for each Class A and B share, recognizing a total of Euros 122,986 thousand as interim dividend.
These amounts to be distributed did not exceed the profits generated by the Company since the end of the last reporting period, less the estimated income tax payable on these profits, in accordance with article 277 of the Revised Spanish Companies Act.
The Statement of Liquidity for Distribution of Interim Dividend of Grifols, S.A. prepared in accordance with legal requirements and which shows the existence of sufficient liquidity to be able to distribute the aforementioned interim dividend is provided in Appendix V.
At a general meeting held on 25 May 2018 the shareholders approved the distribution of a preferred dividend of Euros 0.01 for every Class B non-voting share.
The distribution of the profit for the years ended 31 December 2017 and 2018 is presented in the consolidated statement of changes in equity.
The Group has set up a Restricted Share Unit Retention Plan (hereinafter RSU Plan) for certain employees (see note 29). This commitment will be settled using equity instruments and the cumulative accrual amounts to Euros 12,652 thousand at 31 December 2018 (Euros 13,871 thousand at 31 December 2017).
The calculation of basic earnings per share is based on the profit for the year attributable to the shareholders of the Parent divided by the weighted average number of ordinary shares in circulation throughout the year, excluding treasury stock.
Details of the calculation of basic earnings per share are as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||||
| Profit for the year attributable to shareholders of the Parent (thousands of Euros) |
596,642 | 662,700 | 545,456 | |||
| Weighted average number of ordinary shares outstanding | 684,709,377 | 684,197,276 | 683,225,815 | |||
| Basic earnings per share (Euros per share) | 0.87 | 0.97 | 0.80 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The weighted average of the ordinary shares outstanding (basic) has been calculated taking into consideration the share split carried out on 4 January 2016 as follows:
| Number of shares | |||||
|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |||
| Issued shares outstanding at 1 January | 684,346,294 | 683,854,491 | 683,516,338 | ||
| Effect of shares issued | -- | -- | -- | ||
| Effect of treasury stock | 363,083 | 342,785 | (290,523) | ||
| Average weighted number of ordinary shares outstanding (basic) at 31 December |
684,709,377 | 684,197,276 | 683,225,815 |
Diluted earnings per share are calculated by dividing profit for the year attributable to shareholders of the Parent by the weighted average number of ordinary shares in circulation considering the diluting effects of potential ordinary shares.
The RSU Plan granted by the Group and payable in shares, assumes the existence of dilutive potential shares. Diluted earnings per share have been calculated as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||
| Profit for the year attributable to shareholders of the Parent (thousands of Euros) Weighted average number of ordinary shares outstanding |
596,642 684,686,164 |
662,700 684,243,891 |
545,456 684,170,887 |
|
| (diluted) | ||||
| Diluted earnings per share (Euros per share) | 0.87 | 0.97 | 0.80 |
The weighted average number of ordinary shares outstanding diluted has been calculated as follows:
| Number of shares | |||||
|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |||
| Issued shares outstanding at 1 January | 684,346,294 | 683,854,491 | 683,988,460 | ||
| Effect of RSU shares | (23,213) | 46,615 | 472,950 | ||
| Effect of shares issued | -- | -- | -- | ||
| Effect of treasury stock | 363,083 | 342,785 | (290,523) | ||
| Average weighted number of ordinary shares outstanding (diluted) at 31 December |
684,686,164 | 684,243,891 | 684,170,887 | ||
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of non-controlling interests and movement at 31 December 2017 are as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Balance at 31/12/2016 |
Additions | Disposals | Business Combination / Additions to Consolidated Group |
Translation differences |
Balance at 31/12/2017 |
|||
| Grifols (Thailand) Pte Ltd | 3,354 | 433 | (77) | -- | (131) | 3,579 | ||
| Grifols Malaysia Sdn Bhd | 1,172 | 229 | -- | -- | (29) | 1,372 | ||
| Araclon Biotech, S.A. | 140 | (1,617) | -- | -- | -- | (1,477) | ||
| Progenika Biopharma, S.A. | 1,211 | (60) | (298) | -- | 27 | 880 | ||
| Abyntek Biopharma, S.L. | (73) | 45 | 28 | -- | -- | -- | ||
| VCN Bioscience, S.L | 693 | (272) | -- | -- | -- | 421 | ||
| Kiro Grifols , S.L. | -- | (144) | -- | 255 | -- | 111 | ||
| 6,497 | (1,386) | (347) | 255 | (133) | 4,886 |
Details of non-controlling interests and movement at 31 December 2018 are as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Balance at 31/12/2017 |
Additions | Disposals | Business Combination / Additions to Consolidated Group |
Translation differences |
Balance at 31/12/2018 |
|||
| Grifols (Thailand) Pte Ltd | 3,579 | 193 | (43) | -- | 206 | 3,935 | ||
| Grifols Malaysia Sdn Bhd | 1,372 | 326 | -- | -- | 37 | 1,735 | ||
| Araclon Biotech, S.A. | (1,477) | (2,011) | -- | -- | -- | (3,488) | ||
| Progenika Biopharma, S.A. | 880 | -- | (871) | -- | -- | 9 | ||
| VCN Bioscience, S.L | 421 | (281) | -- | -- | -- | 140 | ||
| Kiro Grifols , S.L. | 111 | (463) | -- | -- | -- | (352) | ||
| Haema AG | -- | -- | -- | 220,190 | -- | 220,190 | ||
| Biotest Pharma Corp | -- | -- | -- | 249,691 | (810) | 248,881 | ||
| 4,886 | (2,236) | (914) | 469,881 | (567) | 471,050 |
Details are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||
| Capital grants | 11,149 | 11,010 | ||
| Interest rate grants (preference loans) (See note 20 (e)) | 696 | 812 | ||
| 11,845 | 11,822 |
Interest-rate grants (preference loans) reflect the implicit interest on loans extended by the Spanish Ministry of Science and Technology as these are interest free.
Grants totaling Euros 1,166 thousand have been recognized in the consolidated statement of profit and loss for the year ended at 31 December 2018 (Euros 323 thousand for the year ended at 31 December 2017).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of provisions at 31 December 2018 and 2017 are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| Non-current provisions (a) | 31/12/2018 | 31/12/2017 | ||
| Provisions for pensions and similar obligations | 5,296 | 4,742 | ||
| Other provisions | 818 | 1,021 | ||
| Non-current provisions | 6,114 | 5,763 |
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| Current provisions (b) | 31/12/2018 | 31/12/2017 | |||
| Trade provisions | 80,055 | 106,995 | |||
| Current provisions | 80,055 | 106,995 |
At 31 December 2018, 2017 and 2016 provisions for pensions and similar obligations mainly comprise a provision made by certain foreign subsidiaries in respect of labor commitments with certain employees.
Movement in provisions during 2016 was as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Balance at 31/12/2015 |
Net charge | Cancellations | Reclassifications | Translation differences |
Balance at 31/12/2016 |
|||
| Non-current provisions | 4,980 | (399) | (281) | 814 | 4 | 5,118 | ||
| 4,980 | (399) | (281) | 814 | 4 | 5,118 |
Movement in provisions during 2017 was as follows:
| Thousands of Euros | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Balance at 31/12/2016 |
Business combination |
Net charge | Cancellations Reclassifications | Translation differences |
Balance at 31/12/2017 |
||||
| Non-current provisions |
5,118 | 23 | 422 | (23) | 290 | (67) | 5,763 | ||
| 5,118 | 23 | 422 | (23) | 290 | (67) | 5,763 |
Movement in provisions during 2018 is as follows:
| Thousands of Euros | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Balance at 31/12/2017 |
Net charge | Cancellations | Reclassifications | Translation differences |
Balance at 31/12/2018 |
||||
| Non-current provisions | 5,763 | 635 | (565) | 277 | 4 | 6,114 | |||
| 5,763 | 635 | (565) | 277 | 4 | 6,114 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Movement in trade provisions during 2016 was as follows:
| Translation differences | Balance at 31/12/2016 |
|---|---|
| 1,437 | 89,588 |
| 89,588 | |
| 1,437 |
Movement in trade provisions during 2017 was as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Balance at 31/12/2016 |
Business Combination |
Net charge | Cancellations Reclassification Translation | differences | Balance at 31/12/2017 |
|||
| Trade provisions | 89,588 | 41,841 | (4,812) | (2,886) | (2,600) | (14,136) | 106,995 | |
| 89,588 | 41,841 | (4,812) | (2,886) | (2,600) | (14,136) | 106,995 |
Movement in trade provisions during 2018 is as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Balance at 31/12/2017 |
Net charge | Cancellations | Translation differences | Balance at 31/12/2018 |
||
| 106,995 | (30,668) | (290) | 4,018 | 80,055 | ||
| 106,995 | (30,668) | (290) | 4,018 | 80,055 | ||
This note provides information on the contractual conditions of the Group's financial liabilities, which are measured at amortized cost. For further information on exposure to interest rate risk, currency risk and liquidity risk and the fair values of financial liabilities, please refer to note 30.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details at 31 December 2018 and 2017 are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| Financial liabilities | 31/12/2018 | 31/12/2017 | ||
| Non-current obligations (a) | 1,000,000 | 853,667 | ||
| Senior secured debt (b) | 4,771,285 | 4,849,882 | ||
| Other loans (b) | 239,686 | 169,214 | ||
| Finance lease liabilities (c) | 9,537 | 5,415 | ||
| Other non-current financial liabilities (e) | 78,955 | 23,637 | ||
| Total non-current financial liabilities | 6,099,463 | 5,901,815 | ||
| Current obligations (a) | 102,978 | 95,538 | ||
| Senior secured debt (b) | 129,955 | 4,057 | ||
| Other loans (b) | 24,839 | 29,527 | ||
| Finance lease liabilities (c) | 3,348 | 3,945 | ||
| Other current financial liabilities (e) | 16,262 | 22,003 | ||
| Total current financial liabilities | 277,382 | 155,070 |
In September 2018, Grifols obtained a new non-current loan from the European Investment Bank totaling Euros 85,000 thousand that will be used by Grifols to support its investments in R&D, mainly focused on the search for new therapeutic indications for plasma-derived protein therapies. The financial terms include a fixed interest rate, a maturity of 10 years with a grace period of 2 years. At 31 December 2018, the carrying amount of the loans obtained from the European Investment Bank amounts to Euros 244,375 thousand (Euros 170,000 thousand at 31 December, 2017).
On 5 December 2017 the Group received a loan from the European Investment Bank totaling Euros 85 million, falling due in 10 years, at a fixed rate and with a grace period of 2 years. The loan will be used to support certain investments the Group's R&D which are mainly focused on searching for new applications for plasmatic proteins.
On 28 October 2015, the Group received its first loan from the same entity and with the same terms for a total amount of Euros 100 million.
On 18 April 2017 the Group concluded the refinancing process of the Senior Unsecured Notes. The total note issuance amounted to Euros 1,000 million.
On 6 February 2017 the Group concluded the refinancing process of its senior debt. The total debt refinanced amounts to US Dollars 6,300 million (Euros 5,800 million), including the US Dollars 1,816 million loan obtained for the acquisition of Hologic's transfusional diagnostics unit. Following the refinancing process, Grifols' debt structure consisted of a US Dollars 6,000 million non-current loan from institutional investors and banks segmented in two tranches (Term Loan A and Term Loan B), and a US Dollars 300 million undrawn revolving credit facility.
Retrospectively as of 1 January 2018, Grifols has calculated the impact of the entry into force of the new IFRS 9 on the refinancing process of the Senior Unsecured Notes and the Senior debt, concluding that the refinancing of the notes caused a derecognition of the liability as they did not pass the new quantitative test, whereas the senior debt did not result in a derecognition of the liability.
According to the IASB's interpretation published in October 2017, when a financial liability measured at amortized cost is modified or exchanged and does not result in the derecognition of the financial liability, a gain or loss should be recognized in profit or loss, calculated as the difference between the original contractual cash flows from the liability and the modified cash flows, discounted at the original effective interest rate of the liability. Due to the retrospective effect of IFRS 9, any gains or losses from the modification of financial liabilities that arise from
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
applying the new standard in years prior to 1 January 2018 have been recognized in reserves, generating a positive net impact of Euros 24,636 thousand (see note 2 (c)).
On 18 April 2017, Grifols, S.A., issued US Dollars 1,000 million of Senior Unsecured Notes (the "Notes") that will mature in 2025 and will bear annual interest at a rate of 3.20%. These notes replaced 97.1 % of the Senior Unsecured Notes issued in 2014 by Grifols Worldwide Operations Limited, a wholly-owned subsidiary of Grifols S.A., amounting to US Dollars 1,000 million, with a maturity in 2022 and with interest rate of 5.25% that was owned by a financial institution. The remaining 2.9% of the existing notes was redeemed before the exchange by an amount of Euros 26,618 thousand. The corresponding deferred costs of the notes have been recognized in profit and loss in 2017. On 2 May 2017 the Notes were admitted to listing on the Irish Stock Exchange.
Due to the implementation of IFRS 9, the refinancing of unsecured corporate notes has resulted in the decrease of liabilities by not passing the new quantitative test (see note 2).
Details of movement in the Senior Unsecured Notes at 31 December 2017 are as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Opening outstanding | Refinancing Repayments |
Translation | Closing outstanding | |||
| balance 01/01/17 | differences | balance 31/12/17 | ||||
| Senior Unsecured Notes (nominal amount) |
948,677 | 108,597 | (26,618) | (30,656) | 1,000,000 | |
| Total | 948,677 | 108,597 | (26,618) | (30,656) | 1,000,000 |
At 31 December 2018 and 2017 the current obligations caption includes the issue of bearer promissory notes to Group employees, as follows:
| 31/12/2017 | |||||||
|---|---|---|---|---|---|---|---|
| Issue date Maturity | date | Nominal amount of promissory notes (Euros) |
Interest rate |
Promissory notes subscribed (Thousands of Euros) |
Buy back (Thousands of Euros) |
Interest pending accrual (Thousands of Euros) |
|
| Issue of bearer promissory notes |
05/05/17 | 04/05/18 | 3,000 | 3.00% | 92,109 | (906) | (909) |
| 31/12/2018 | |||||||
| Issue date Maturity | date | Nominal amount of promissory notes (Euros) |
Interest rate |
Promissory notes subscribed (Thousands of Euros) |
Buy back (Thousands of Euros) |
Interest pending accrual (Thousands of Euros) |
|
| Issue of bearer promissory notes |
05/05/18 | 04/05/19 | 3,000 | 4.00% | 99,990 | (1,041) | (1,304) |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of loans and borrowings at 31 December 2018 and 2017 are as follows:
| Thousands of Euros | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | ||||||||
| Credit | Currency | Interest rate | Date awarded | Maturity date | Amount extended | Carrying amount | Amount extended | Carrying amount | |
| Senior debt - Tranche A | US Dollars | Libor + 1.75% | 31/01/2017 | 31/01/2023 | 2,052,403 | 1,949,782 | 1,959,476 | 1,959,476 | |
| Senior debt - Tranche A | Euros | Euribor + 1.75% | 31/01/2017 | 31/01/2023 | 607,000 | 576,650 | 607,000 | 607,000 | |
| Senior debt - Tranche B | US Dollars | Libor + 2.25% | 31/01/2017 | 31/01/2025 | 2,620,087 | 2,548,035 | 2,501,459 | 2,457,684 | |
| Total senior debt | 5,279,490 | 5,074,467 | 5,067,935 | 5,024,160 | |||||
| EIB Loan | Euros | 2.40% | 20/11/2015 | 20/11/2025 | 100,000 | 63,750 | 100,000 | 74,375 | |
| EIB Loan | Euros | 2.02% | 22/12/2017 | 22/12/2027 | 85,000 | 85,000 | 85,000 | 85,000 | |
| EIB Loan | Euros | 2.15% | 25/09/2018 | 25/09/2028 | 85,000 | 85,000 | -- | -- | |
| Total EIB Loan | 270,000 | 233,750 | 185,000 | 159,375 | |||||
| Revolving Credit | US Dollars | Libor + 1.75% | 31/01/2017 | 31/01/2023 | 262,009 | -- | 250,146 | -- | |
| Total Revolving Credit | 262,009 | -- | 250,146 | -- | |||||
| Other non-current loans | Euros | Euribor Euribor+2.30% |
25/03/2010 | 30/09/2024 | 26,680 | 5,936 | 33,180 | 9,839 | |
| Loan transaction costs | -- | (303,182) | -- | (174,278) | |||||
| Non-current loans and borrowings | 5,838,179 | 5,010,971 | 5,536,261 | 5,019,096 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||||||
| Credit | Currency | Interest rate | Date awarded | Maturity date | Amount extended | Carrying amount | Amount extended | Carrying amount |
| Senior debt - Tranche A | US Dollars | Libor + 1.75% | 31/01/2017 | 31/01/2023 | (*) | 102,621 | (*) | -- |
| Senior debt - Tranche A | Euros | Euribor + 1.75% | 31/01/2017 | 31/01/2023 | (*) | 30,350 | (*) | -- |
| Senior debt - Tranche B | US Dollars | Libor + 2.25% | 31/01/2017 | 31/01/2025 | (*) | 26,201 | (*) | 25,015 |
| Total senior debt | -- | 159,172 | -- | 25,015 | ||||
| EIB Loan | Euros | 2.40% | 20/11/2015 | 20/11/2025 | (*) | 10,625 | (*) | 10,625 |
| Total EIB Loan | -- | 10,625 | -- | 10,625 | ||||
| Other current loans | 0,10% - 4,62% | 144,571 | 14,214 | 131,700 | 18,902 | |||
| Loan transaction costs | -- | (29,217) | -- | (20,958) | ||||
| Current loans and borrowings | 144,571 | 154,794 | 131,700 | 33,584 |
(*) See amount granted under non-current debt
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Current loans and borrowings include accrued interest amounting to Euros 2,546 thousand at 31 December 2018 (Euros 1,713 thousand at 31 December 2017).
On 6 February 2017 the Group refinanced its Senior Secured Debt with the existing lenders and obtained the additional debt for the acquisition of Hologic by an amount of US Dollars 1,816 million. The new senior debt consisted of a Term Loan A ("TLA"), which amounted US Dollars 2,350 million and Euros 607 million with a 1.75% margin over Libor and Euribor respectively and maturity in 2023 and quasi-bullet amortization structure, and a Term Loan B ("TLB") which amounted US Dollars 3,000 million with a 2.25% margin over Libor and maturity in 2025. The borrowers of the total debt are Grifols Worldwide Operations Limited and Grifols, S.A. for the Term Loan A and Grifols Worldwide Operations USA, Inc. for the Term Loan B.
The present value discounted from cash flows under the new agreement, including any fees paid and discounted using the original effective interest rate differed by less than 10% of the present value discounted from cash flows remaining in the original debt, whereby it is considered that the debt instrument has not been substantially modified.
The costs of refinancing the senior debt amounted to Euros 84.8 million. Based on an analysis of the quantitative and qualitative factors, the Group concluded that the renegotiation of the terms of the senior debt did not imply a derecognition of the liability. The difference between the amortized cost of the debt applying the new IFRS 9 is Euros 332,399 thousand less than its nominal amount.
The terms and conditions of the senior secured debt are as follows:
Details of Tranche A by maturity at 31 December 2018 are as follows:
| US Tranche A | Tranche A in Euros | ||
|---|---|---|---|
| Principal in thousands of US Dollars | Principal in thousands of Euros | Principal in thousands of Euros | |
| Maturity | |||
| 2019 | 117,500 | 102,621 | 30,350 |
| 2020 | 235,000 | 205,240 | 60,700 |
| 2021 | 235,000 | 205,240 | 60,700 |
| 2022 | 1,321,875 | 1,154,476 | 341,437 |
| 2023 | 440,625 | 384,826 | 113,813 |
| Total | 2,350,000 | 2,052,403 | 607,000 |
o Tranche B: Senior Debt Loan repayable in eight years.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of Tranche B by maturity at 31 December 2018 are as follows:
| US Tranche B | |||||
|---|---|---|---|---|---|
| Currency | Principal in thousands of US Dollars |
Principal in thousands of Euros |
|||
| Maturity | |||||
| 2019 | US Dollars | 30,000 | 26,201 | ||
| 2020 | US Dollars | 30,000 | 26,201 | ||
| 2021 | US Dollars | 30,000 | 26,201 | ||
| 2022 | US Dollars | 30,000 | 26,201 | ||
| 2023 | US Dollars | 30,000 | 26,201 | ||
| 2024 | US Dollars | 30,000 | 26,201 | ||
| 2025 | US Dollars | 2,767,500 | 2,417,030 | ||
| Total | US Dollars | 2,947,500 | 2,574,236 |
o US Dollars 300 million committed credit revolving facility: Amount maturing on 2023 and applicable margin of 175 basis points (bp) pegged to US Libor. At 31 December 2018 and 2017 no amount has been drawn down on this facility.
The issue of senior unsecured notes and senior secured debt is subject to compliance with a leverage ratio covenant. At 31 December 2018 the Group complies with this covenant.
Both the Senior Term Loans and the Revolving Loans are guaranteed by Grifols, S.A. and certain significant subsidiaries of Grifols, S.A. that together with Grifols, S.A. represent, in the aggregate, at least 80% of the consolidated assets and consolidated EBITDA of Grifols, S.A. and its subsidiaries.
The Notes have been issued by Grifols S.A. and are guaranteed on a senior unsecured basis by subsidiaries of Grifols, S.A. that are guarantors and co-borrower under the New Credit Facilities. The guarantors are Grifols Worldwide Operations Limited, Biomat USA, Inc., Grifols Biologicals Inc., Grifols Shared Services North America, Inc., Grifols Diagnostic Solutions Inc., Grifols Therapeutics, Inc., Instituto Grifols, S.A., Grifols Worldwide Operations USA, Inc and Grifols USA, Llc.
Details of minimum payments and the present value of finance lease liabilities, by maturity date, are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | ||||||
| Minimum payments |
Interest | Present Value | Minimum payments |
Interest | Present Value | ||
| Maturity at: | |||||||
| Less than one year | 3,576 | 228 | 3,348 | 4,305 | 360 | 3,945 | |
| Two years | 3,339 | 123 | 3,216 | 2,636 | 179 | 2,457 | |
| Three years | 2,606 | 82 | 2,524 | 1,461 | 88 | 1,373 | |
| Four years | 1,971 | 53 | 1,918 | 814 | 60 | 754 | |
| Five years | 1,578 | 32 | 1,546 | 369 | 42 | 327 | |
| More than five years | 351 | 18 | 333 | 550 | 46 | 504 | |
| Total | 13,421 | 536 | 12,885 | 10,135 | 775 | 9,360 |
In December 2018 and December 2017 Moody's Investors Service has confirmed the 'Ba3' corporate family rating, 'Ba2' rating to the senior secured bank debt and 'B2' rating to the unsecured notes that were used to refinance the existing debt structure. The outlook is confirmed as stable.
In December 2018 and December 2017 Standard & Poor's has confirmed its 'BB' rating on Grifols and has assigned 'BB+' and 'B+' issue ratings to Grifols' senior secured debt and senior unsecured notes that were used to refinance the existing debt structure. The outlook for the rating is stable.
At 31 December 2018 "other financial liabilities" include interest-free loans extended by governmental institutions amounting to Euros 16,559 thousand (Euros 20,306 thousand at 31 December 2017). The portion of the loans considered a grant and still to be taken to profit and loss amounts to Euros 696 thousand (Euros 812 thousand at 31 December 2017) (see note 18).
At 31 December 2017, "other current financial liabilities" included an amount of Euros 5,000 thousand related to the remaining call option extended by the Group and the shareholders of Progenika with maturity in 2018. This option was executed in June 2018.
At 31 December 2018 and 2017 "other current financial liabilities" also include approximately Euros 6,704 thousand and Euros 3,056 thousand, respectively, which have been collected directly from Spanish Social Security affiliated bodies and transferred to financial institutions (see note 13).
Details of the maturity of other financial liabilities are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||
| Maturity at: | ||||
| Up to one year | 16,262 | 22,003 | ||
| Two years | 21,460 | 10,818 | ||
| Three years | 49,602 | 3,787 | ||
| Four years | 2,916 | 2,794 | ||
| Five years | 1,799 | 2,247 | ||
| Over five years | 3,178 | 3,991 | ||
| 95,217 | 45,640 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Thousand of Euros | ||||||
|---|---|---|---|---|---|---|
| Obligations | Senior Secured debt & Other loans |
Finance lease liabilities |
Other financial liabilities |
Total | ||
| Book value at January 1, 2017 | 926,941 | 3,948,154 | 9,945 | 57,096 | 4,942,136 | |
| New financing | 1,092,109 | 5,666,300 | -- | 8,661 | 6,767,070 | |
| Refunds | (1,003,104) | (3,936,799) | (780) | (21,838) | (4,962,521) | |
| Bear of interests | 61,944 | 198,588 | 505 | 1,020 | 262,057 | |
| Other movements | (57,484) | (84,917) | -- | -- | (142,401) | |
| Collection / Payment of interests | (44,432) | (162,647) | -- | -- | (207,079) | |
| Business combination | -- | -- | -- | 2,163 | 2,163 | |
| Foreign exchange differences | (26,769) | (575,999) | (310) | (1,462) | (604,540) | |
| Balance at December 31, 2017 | 949,205 | 5,052,680 | 9,360 | 45,640 | 6,056,885 | |
| New financing | 99,990 | 85,000 | -- | 6,789 | 191,779 | |
| Refunds | (92,244) | (45,225) | (1,001) | (20,041) | (158,511) | |
| Bear of interests | 31,694 | 253,673 | 409 | 865 | 286,641 | |
| Other movements (note 2) | 146,333 | (141,998) | -- | -- | 4,335 | |
| Collection / Payment of interests | (32,000) | (193,146) | -- | -- | (225,146) | |
| Business combination | -- | -- | 4,007 | 57,816 | 61,823 | |
| Foreign exchange differences | -- | 154,781 | 110 | 4,148 | 159,039 | |
| Balance at December 31, 2018 | 1,102,978 | 5,165,765 | 12,885 | 95,217 | 6,376,845 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details are as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | ||||
| Suppliers | 561,883 | 423,096 | |||
| VAT payable | 8,954 | 8,827 | |||
| Taxation authorities, withholdings payable | 26,299 | 24,084 | |||
| Social security payable | 12,787 | 11,741 | |||
| Other public entities | 111,776 | 97,068 | |||
| Other payables | 159,816 | 141,720 | |||
| Current income tax liabilities | 1,917 | 6,709 | |||
| 723,616 | 571,525 |
Details of balances with related parties are shown in note 31.
The Group's exposure to currency risk and liquidity risk associated with trade and other payables is described in note 30.
In accordance with the second final provision of Law 31/2014 that amends Law 15/2010 of 5 July 2010, for fiscal years 2018 and 2017 information concerning the average payment period to suppliers is included.
| Days | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | ||
| Average payment period to suppliers | 72.6 | 72.9 | |
| Paid invoices ratio | 74.2 | 74.0 | |
| Outstanding invoices ratio | 63.4 | 62.2 |
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||
| Total invoices paid | 454,995 | 460,699 | ||
| Total outstanding invoices | 82,740 | 49,339 |
Details at 31 December are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | ||
| Salaries payable | 153,160 | 129,519 | |
| Other payables | 504 | 649 | |
| Deferred income | 8,912 | 4,284 | |
| Advances received | 6,613 | 9,945 | |
| Other current liabilities | 169,189 | 144,397 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Net revenues are mainly generated from the sale of goods.
The distribution of net consolidated revenues for 2018, 2017 and 2016 by segment is as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||
| Bioscience | 3,516,704 | 3,429,785 | 3,195,424 | |
| Diagnostic | 702,265 | 732,369 | 691,701 | |
| Hospital | 119,454 | 105,649 | 102,251 | |
| Bio supplies | 167,004 | 66,791 | 57,239 | |
| Others | 22,451 | 18,263 | 34,601 | |
| Intersegments | (41,154) | (34,784) | (31,386) | |
| 4,486,724 | 4,318,073 | 4,049,830 |
As a result of the creation of Bio Supplies segment and the Intersegments in 2017 , the Group has reviewed the allocation of balances and transactions by segments. The comparative figures for 2016 have been restated accordingly.
The geographical distribution of net consolidated revenues is as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |
| USA and Canada | 2,974,429 | 2,896,505 | 2,707,579 |
| Spain | 264,913 | 242,894 | 225,273 |
| European Union | 535,361 | 444,089 | 426,223 |
| Rest of the world | 712,021 | 734,585 | 690,755 |
| Consolidated | 4,486,724 | 4,318,073 | 4,049,830 |
Details of discounts and other reductions in gross income are as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |||
| Gross sales | 5,588,257 | 5,322,618 | 4,882,615 | ||
| Chargebacks | (923,023) | (826,775) | (652,564) | ||
| Cash discounts | (62,518) | (57,512) | (51,953) | ||
| Volume rebates | (46,922) | (43,274) | (51,242) | ||
| Medicare and Medicaid | (40,343) | (41,722) | (47,820) | ||
| Other discounts | (28,727) | (35,262) | (29,206) | ||
| Net sales | 4,486,724 | 4,318,073 | 4,049,830 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Movement in discounts and other reductions in gross income during 2016 were as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Chargebacks | Cash discounts |
Volume rebates |
Medicare / Medicaid |
Other discounts |
Total | |
| Balance at 31 December 2015 | 126,178 | 5,902 | 29,680 | 12,468 | 5,367 | 179,595 |
| Current estimate related to sales made in current and prior year |
652,564 | 51,953 | 51,242 | 47,820 | 29,206 | 832,785 (1) |
| (Actual returns or credits in current period related to sales made in current period) |
(693,458) | (51,733) | (27,409) | (24,988) | (27,243) | (824,831) (2) |
| (Actual returns or credits in current period related to sales made in prior periods) |
-- | (248) | (27,732) | (14,401) | (2,986) | (45,367) (3) |
| Translation differences | 1,965 | 758 | 726 | 858 | 98 | 4,405 |
| Balance at 31 December 2016 | 87,249 | 6,632 | 26,507 | 21,757 | 4,442 | 146,587 |
Movement in discounts and other reductions to gross income during 2017 were as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Chargebacks | Cash discounts |
Volume rebates |
Medicare / Medicaid |
Other discounts |
Total | |
| Balance at 31 December 2016 | 87,249 | 6,632 | 26,507 | 21,757 | 4,442 | 146,587 |
| Current estimate related to sales made in current and prior year |
826,775 | 57,512 | 43,274 | 41,722 | 35,262 | 1,004,545 (1) |
| (Actual returns or credits in current period related to sales made in current period) |
(795,449) | (52,270) | (28,976) | (28,198) | (26,072) | (930,965) (2) |
| (Actual returns or credits in current period related to sales made in prior periods) |
31 | (6,024) | (20,210) | (16,659) | (2,864) | (45,726) (3) |
| Translation differences | (12,716) | (736) | (2,604) | (2,418) | (625) | (19,099) |
| Balance at 31 December 2017 | 105,890 | 5,114 | 17,991 | 16,204 | 10,143 | 155,342 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Movement in discounts and other reductions to gross income during 2018 were as follows:
| Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|
| Chargebacks | Cash discounts |
Volume rebates |
Medicare / Medicaid |
Other discounts |
Total | ||
| Balance at 31 December 2017 | 105,890 | 5,114 | 17,991 | 16,204 | 10,143 | 155,342 | |
| Current estimate related to sales made in current and prior year |
923,023 | 62,518 | 46,922 | 40,343 | 28,727 | 1,101,533 | (1) |
| (Actual returns or credits in current period related to sales made in current period) |
(957,695) | (56,568) | (24,648) | (21,324) | (26,493) (1,086,728) (2) | ||
| (Actual returns or credits in current period related to sales made in prior periods) |
-- | (4,909) | (16,384) | (13,232) | (3,781) | (38,306) (3) | |
| Translation differences | 3,957 | 286 | 916 | 950 | 241 | 6,350 | |
| Balance at 31 December 2018 | 75,175 | 6,441 | 24,797 | 22,941 | 8,837 | 138,191 |
(1) Net impact in income statement: estimate for the current year plus prior years' adjustments. Adjustments made during the year corresponding to prior years' estimates have not been significant.
(2) Amounts credited and posted against provisions for current period
(3) Amounts credited and posted against provisions for prior period
Details of personnel expenses by function are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |
| Cost of sales | 810,512 | 731,192 | 635,577 |
| Research and development | 93,817 | 90,495 | 77,988 |
| Selling, general & administration expenses | 345,224 | 323,880 | 314,348 |
| 1,249,553 | 1,145,567 | 1,027,913 |
Details by nature are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |
| Wages and salaries | 1,000,682 | 917,810 | 822,384 |
| Contributions to pension plans (see note 29) | 21,363 | 20,347 | 18,486 |
| Other social charges | 29,055 | 27,679 | 25,074 |
| Social Security | 198,453 | 179,731 | 161,969 |
| 1,249,553 | 1,145,567 | 1,027,913 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The average headcount during 2018 and 2017, by department, was approximately as follows:
| Average headcount | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||
| Manufacturing | 14,576 | 12,194 | ||
| R&D - technical area | 945 | 905 | ||
| Administration and others | 1,316 | 1,070 | ||
| General management | 212 | 201 | ||
| Marketing | 184 | 180 | ||
| Sales and Distribution | 1,223 | 1,211 | ||
| 18,456 | 15,761 |
The headcount of the Group employees and the Company's directors at 31 December 2017, by gender, was as follows:
| 31/12/2017 | |||
|---|---|---|---|
| Male | Female | Total number of employees |
|
| Directors | 9 | 4 | 13 |
| Manufacturing | 5,933 | 8,644 | 14,577 |
| Research&development - technical area | 373 | 590 | 963 |
| Administration and others | 631 | 481 | 1,112 |
| General management | 119 | 111 | 230 |
| Marketing | 78 | 109 | 187 |
| Sales and Distribution | 647 | 580 | 1,227 |
| 7,790 | 10,519 | 18,309 |
The headcount of the Group employees and the Company's directors at 31 December 2018, by gender, is as follows:
| 31/12/2018 | ||||
|---|---|---|---|---|
| Male | Female | Total number of employees |
||
| Directors | 9 | 4 | 13 | |
| Manufacturing | 6,591 | 10,556 | 17,147 | |
| Research&development - technical area | 368 | 616 | 984 | |
| Administration and others | 842 | 554 | 1,396 | |
| General management | 129 | 125 | 254 | |
| Marketing | 76 | 108 | 184 | |
| Sales and Distribution | 658 | 607 | 1,265 | |
| 8,673 | 12,570 | 21,243 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Expenses for the amortization and depreciation of intangible assets and property, plant and equipment, incurred during 2018, 2017 and 2016 classified by functions are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |
| Cost of sales | 146,530 | 135,186 | 126,998 |
| Research and development | 19,836 | 14,721 | 13,050 |
| Selling, general & administration expenses | 62,243 | 65,583 | 61,821 |
| 228,609 | 215,490 | 201,869 |
Other operating income and expenses incurred during 2018, 2017 and 2016 by function are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | |
| Cost of sales | 432,803 | 416,020 | 454,097 |
| Research and development | 152,670 | 129,579 | 113,078 |
| Selling, general & administration expenses | 410,753 | 460,959 | 393,523 |
| 996,226 | 1,006,558 | 960,698 |
Details by nature are as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||||
| Changes in trade provisions | (23,125) | 3,648 | (22,069) | |||
| Professional services | 211,305 | 211,579 | 190,003 | |||
| Commissions | 21,941 | 18,473 | 20,147 | |||
| Supplies and auxiliary materials | 149,831 | 131,932 | 119,014 | |||
| Operating leases (note 28) | 84,299 | 80,136 | 74,945 | |||
| Freight | 112,340 | 105,292 | 96,680 | |||
| Repair and maintenance expenses | 107,806 | 103,518 | 89,797 | |||
| Advertising | 44,659 | 49,893 | 51,233 | |||
| Insurance | 22,632 | 21,529 | 20,008 | |||
| Royalties | 10,726 | 11,241 | 9,217 | |||
| Travel expenses | 51,428 | 58,171 | 53,239 | |||
| External services | 53,391 | 82,699 | 43,231 | |||
| R&D Expenses | 100,889 | 89,977 | 78,379 | |||
| Other | 48,104 | 38,470 | 136,874 | |||
| Other operating income&expenses | 996,226 | 1,006,558 | 960,698 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||
| Finance income | 13,995 | 9,678 | 9,934 | |
| Finance cost from Senior Unsecured Notes | (35,471) | (65,189) | (73,491) | |
| Finance cost from senior debt | (247,646) | (193,183) | (168,332) | |
| Finance cost from sale of receivables (note 13) | (6,053) | (3,973) | (4,885) | |
| Capitalized interest | 8,955 | 8,839 | 13,019 | |
| Other finance costs | (13,058) | (9,838) | (11,140) | |
| Finance costs | (293,273) | (263,344) | (244,829) | |
| Change in fair value of financial derivatives (note 30) Impairment and gains / (losses) on disposal of financial |
-- | (3,752) | (7,610) | |
| instruments | 30,280 | (18,844) | -- | |
| Exchange differences | (8,246) | (11,472) | 8,916 | |
| Finance result | (257,244) | (287,734) | (233,589) |
On 29 January 2018 (prior to the date on which the 2017 consolidated annual accounts were authorized to issue) Aradigm communicated that it had not obtained the approval of the Antimicrobial Drugs Advisory Committee of the US Food and Drug Administration for LinahiqTM. As a result, the financial assets related to the convertible note of Aradigm have been totally impaired totaling Euros 14,477 thousand at 31 December 2017. This amount was recognized in "Impairment and gains/(losses) on disposal of financial instruments" in the consolidated statement of profit and loss.
During 2018 the Group has capitalized interest at a rate of between 4.61% and 5.18% based on the financing received (between 4.26% and 4.87% during 2017) (see note 4 (f)).
Grifols, S.A. is authorized to file consolidated tax returns in Spain with Diagnostic Grifols, S.A., Grifols Movaco, S.A., Laboratorios Grifols, S.A., Instituto Grifols, S.A., Grifols Worldwide Operations Spain, S.A. (formerly Logister, S.A), Biomat, S.A., Grifols Viajes, S.A., Grifols International, S.A., Grifols Engineering, S.A., Gri-Cel, S.A., Gripdan Invest, S.L. and VCN Biosciences, S.L. Grifols, S.A., in its capacity as Parent, is responsible for the filing and settlement of the consolidated tax return. Under prevailing tax law, Spanish companies pay 25% tax, which may be reduced by certain deductions.
The North American company Grifols Shared Services North America, Inc. is also authorized to file consolidated tax returns in the USA with Grifols Biologicals Inc., Grifols USA, LLC., Biomat USA, Inc., Grifols Therapeutics Inc. and Talecris Plasma Resources, Inc. The profits of the companies domiciled in the USA, determined in accordance with prevailing tax legislation, are subject to tax of approximately 22.4% of taxable income, which may be reduced by certain deductions.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of the income tax expense and income tax related to profit for the year are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||
| Profit before income tax from continuing operations |
725,842 | 695,722 | 712,752 | |
| Tax at 25% | 181,461 | 173,931 | 178,188 | |
| Permanent differences | (2,000) | 17,163 | 8,019 | |
| Effect of different tax rates | (29,543) | 40,981 | 14,509 | |
| Tax credits (deductions) | (18,226) | (16,092) | (20,163) | |
| Impact related to the US tax legistation modifications |
-- | (171,169) | -- | |
| Prior year income tax expense | 381 | (8,614) | 928 | |
| Other income tax expenses/(income) | (637) | (1,792) | (13,272) | |
| Total income tax expense | 131,436 | 34,408 | 168,209 | |
| Deferred tax | (21,189) | (149,444) | (40,161) | |
| Current tax | 152,625 | 183,851 | 208,370 | |
| Total income tax expense | 131,436 | 34,407 | 168,209 |
The effect of the different tax rates is basically due to a change of country mix in profits
On 22 December 2017, a tax reform was approved in the United States that took effect on 1 January 2018.
The Group carried out an exercise to identify changes in the tax reform affecting its subsidiaries in the USA and an assessment of the impact that these changes will have on the manner in which the deferred taxes will revert as of 31 December 2017. In the analysis performed, the main impact comes from the change in tax rates to be applied to deferred taxes as of 31 December 2017, which have fallen from a rate of 35% to 21% for fiscal years beginning on or after 1 January 2018. The impact recorded in the "income tax expense" caption amounted to Euros 171 million in 2017.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of deferred tax assets and liabilities are as follows:
| Miles de Euros | ||||||
|---|---|---|---|---|---|---|
| Efecto impositivo | ||||||
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||||
| Activos | ||||||
| Provisiones | 7,936 | 4,564 | 3,696 | |||
| Existencias | 41,029 | 35,619 | 39,297 | |||
| Derechos por deducciones | 57,357 | 49,467 | 37,685 | |||
| Créditos por pérdidas a compensar | 32,769 | 6,179 | 10,717 | |||
| Otros | 8,611 | 7,513 | 3,393 | |||
| Subtotal Activos | 147,702 | 103,342 | 94,788 | |||
| Fondo de comercio | (24,691) | (22,346) | (19,136) | |||
| Activos fijos y amortización | (3,922) | (7,780) | (7,062) | |||
| Activos intangibles | (6,550) | (7,059) | (1,371) | |||
| Subtotal Pasivos neteados | (35,163) | (37,185) | (27,569) | |||
| Activos diferidos netos | 112,539 | 66,157 | 67,219 | |||
| Pasivos | ||||||
| Fondo de comercio | (150,644) | (105,963) | (131,039) | |||
| Activos intangibles | (220,752) | (201,921) | (392,388) | |||
| Activos fijos | (99,819) | (95,029) | (158,060) | |||
| Costes amortización deuda | (42,319) | (70,503) | (64,762) | |||
| Existencias | -- | -- | (1,175) | |||
| Subtotal Pasivos | (513,534) | (473,416) | (747,424) | |||
| Créditos por pérdidas a compensar | 20,833 | 15,384 | 40,358 | |||
| Existencias | 5,644 | 5,063 | -- | |||
| Provisiones | 53,290 | 47,404 | 61,252 | |||
| Otros | 29,369 | 16,653 | 45,168 | |||
| Subtotal Activos neteados | 109,135 | 84,504 | 146,778 | |||
| Pasivos diferidos netos | (404,398) | (388,912) | (600,646) |
Movement in deferred tax assets and liabilities is as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| Deferred tax assets and liabilities | 31/12/2018 | 31/12/2017 | 31/12/2016 | ||
| Balance at 1 January | (322,755) | (533,427) | (564,771) | ||
| Movements during the year | 21,189 | 149,444 | 40,161 | ||
| Movements in equity during the year | -- | -- | -- | ||
| Business combination (note 3) | 21,328 | 16,736 | -- | ||
| Translation differences | (11,621) | 44,492 | (8,817) | ||
| Balance at 31 December | (291,859) | (322,755) | (533,427) |
The Spanish companies have opted to apply accelerated depreciation to certain additions to property, plant and equipment, which has resulted in the corresponding deferred tax liability.
The remaining assets and liabilities recognized in 2018, 2017 and 2016 were recognized in the statement of profit and loss.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Estimated net deferred tax assets to be reversed in a period of less than 12 months amount to Euros 27,097 thousand at 31 December 2018 (Euros 51,930 thousand at 31 December 2017).
The majority of the tax deductions pending application from Spanish companies related mainly to research and development, mature in 18 years.
Tax credits derived from the US companies are available for 20 years from their date of origin whilst tax credits from Spanish companies registered in the Basque Country are available for 15 and other remaining Spanish companies have no maturity date.
The Group has not recognized as deferred tax assets the tax effect of the unused tax loss carryforwards of Group companies, which amount to Euros 55,282 thousand (Euros 51,169 thousand at 31 December 2017).
The commitments from Spanish companies from the reversal of deferred tax related to provisions of investments in subsidiaries are not significant.
Under prevailing legislation, taxes cannot be considered to be definitively settled until the returns filed have been inspected by the taxation authorities, or the prescription period has elapsed.
The main tax audits currently open in the Group are as follows:
Group management does not expect any significant liability to derive from these inspections.
At 31 December 2018, 2017 and 2016 the Group leases buildings and warehouses from third parties under operating leases.
Operating lease instalments of Euros 84,299 thousand were recognized as an expense in 2018 (Euros 80,136 thousand in 2017 and Euros 74,945 thousand in 2016) and fully comprise minimum lease payments.
Future minimum payments on non-cancellable operating leases at 31 December 2018, 2017 and 2016 are as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||||
| Maturity at: | ||||||
| Up to 1 year | 63,959 | 46,541 | 56,869 | |||
| Between 1 and 5 years | 200,156 | 156,897 | 181,076 | |||
| More than 5 years | 136,464 | 58,905 | 112,986 | |||
| Total future minimum payments | 400,579 | 262,343 | 350,931 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At 31 December 2018, 2017 and 2016 the Group has no lease contracts as lessor.
The Group has no significant guarantees extended to third parties.
The Group has no significant guarantees extended to third parties, except for those described in note 20.
The Group's annual contribution to defined contribution pension plans of Spanish Group companies for 2018 has amounted to Euros 777 thousand (Euros 725 thousand for 2017).
In successive years this contribution will be defined through labor negotiations.
In the event that control is taken of the Company, the Group has agreements with 69 employees/directors whereby they can unilaterally rescind their employment contracts with the Company and are entitled to termination benefits ranging from 2 to 5 years' salary.
The Group has contracts with six executives entitling them to termination benefits ranging from one to four years of their salary in different circumstances.
For the annual bonus, the Group established a Restricted Share Unit Retention Plan (RSU Plan), for eligible employees. Under this plan, employees can choose to receive up to 50% of their yearly bonus in non-voting Class B ordinary shares (Grifols Class B Shares) or Grifols American Depositary Shares (Grifols ADS), and the Group will match this with an additional 50% of the employee's choice of RSUs.
Grifols Class B Shares and Grifols ADS are valued at grant date.
These RSU's will have a vesting period of 2 years and 1 day and, subsequently, the RSU's will be exchanged for Grifols Class B Shares or Grifols ADS (American Depositary Share representing 1 Class B Share).
If an eligible employee leaves the Company or is terminated before the vesting period, he/she will not be entitled to the additional RSU's.
At 31 December 2018, the Group has settled the RSU plan of 2015 for an amount of Euros 7,914 thousand.
This commitment is treated as equity instrument and the amount totals Euros 12,652 thousand at 31 December 2018 (Euros 13,871 thousand at 31 December 2017).
The Group has a defined contribution plan (savings plan), which qualifies as a deferred salary arrangement under Section 401 (k) of the Internal Revenue Code (IRC). Once eligible, employees may elect to contribute a portion of their salaries to the savings plan, subject to certain limitations. The Group matches 100% of the first 3% of employee contributions and 50% of the next 2%. Group and employee contributions are fully vested when contributed. The total cost of matching contributions to the savings plan was US Dollars 20.7 million for 2018 (US Dollars 18.9 million in 2017).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Group has a defined benefit pension plan for certain Talecris Biotherapeutics, GmbH employees in Germany as required by statutory law. The pension cost relating to this plan is not material for the periods presented.
Details of the Group's commitments at 31 December 2018 are as follows:
| Thousands of Euros | |
|---|---|
| 2019 | 179,766 |
| 2020 | 166,163 |
| 2021 | 149,318 |
| 2022 | 4,143 |
| 2023 | 1,067 |
| More than 5 years | 893 |
Details of legal proceedings in which the Company or Group companies are involved are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Opinion on Claim Construction narrowing the scope of the '581 Patent claims such that the products at issue would not infringe the '581 Patent. On 5 November 2018, the Court entered final judgement in favor of Hologic, GSA and GDS following the filing of a Joint Stipulation of Noninfringement. Enzo intends to appeal the Court's claim construction ruling. Based on the amounts as of today's date, the Group does not believe that the aforementioned litigation could result in a material impact on these financial statements.
• Concerning the acquisition in 2014 of the transfusional Diagnostic unit and after an internal investigation by the Company, no abnormal commercial or contractual practices have been found.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Disclosure of financial instruments by nature, category and fair value is as follows:
| Thousand of Euros | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31/12/2017 | |||||||||
| Carrying amount | Fair Value | ||||||||
| Loans and receivables |
Financial instruments held for trading |
Available for sale financial assets |
Debts and payables |
Total | Level 1 | Level 2 | Level 3 | Total | |
| Non-current financial assets | -- | -- | 38,708 | -- | 38,708 | 38,708 | -- | -- | 38,708 |
| Financial derivatives | -- | 8,338 | -- | -- | 8,338 | -- | -- | 8,338 | 8,338 |
| Financial assets measured at fair value | -- | 8,338 | 38,708 | -- | 47,046 | ||||
| Non-current financial assets | 22,843 | -- | -- | -- | 22,843 | ||||
| Other current financial assets | 10,738 | -- | -- | -- | 10,738 | ||||
| Trade and other receivables | 304,864 | -- | -- | -- | 304,864 | ||||
| Cash and cash equivalents | 886,521 | -- | -- | -- | 886,521 | ||||
| Financial assets not measured at fair value | 1,224,966 | -- | -- | -- | 1,224,966 | ||||
| Senior Unsecured Notes | -- | -- | -- | (858,911) | (858,911) | (1,018,130) | -- | -- | (1,018,130) |
| Promissory Notes | -- | -- | -- | (90,294) | (90,294) | ||||
| Senior secured debt | -- | -- | -- | (4,853,939) | (4,853,939) | -- | (5,063,769) | -- | (5,063,769) |
| Other bank loans | -- | -- | -- | (198,741) | (198,741) | ||||
| Finance lease payables | -- | -- | -- | (9,360) | (9,360) | ||||
| Other financial liabilities | -- | -- | -- | (45,640) | (45,640) | ||||
| Trade and other payables | -- | -- | -- | (423,096) | (423,096) | ||||
| Other current liabilities | -- | -- | -- | (14,879) | (14,879) | ||||
| Financial liabilities not measured at fair value | -- | -- | -- | (6,494,860) | (6,494,860) | ||||
| 1,224,966 | 8,338 | 38,708 | (6,494,860) | (5,222,848) |
The Group does not provide details of the fair value of certain financial instruments as their carrying amount is very similar to their fair value because of its short term.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Thousand of Euros | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Carrying amount | 31/12/2018 | Fair Value | |||||||
| Financial assets at amortised costs |
Financial assets at FVTPL |
Financial liabilities at amortised costs |
Other financial liabilities |
Total | Level 1 | Level 2 | Level 3 | Total | |
| Non-current financial assets | -- | 7 | -- | -- | 7 | 7 | -- | -- | 7 |
| Current Financial derivatives | -- | 19,934 | -- | -- | 19,934 | -- | -- | 19,934 | 19,934 |
| Financial assets measured at fair value | -- | 19,941 | -- | -- | 19,941 | ||||
| Non-current financial assets | 107,594 | -- | -- | -- | 107,594 | ||||
| Other current financial assets | 34,031 | -- | -- | -- | 34,031 | ||||
| Trade and other receivables | 361,585 | -- | -- | -- | 361,585 | ||||
| Cash and cash equivalents | 1,033,792 | -- | -- | -- | 1,033,792 | ||||
| Financial assets not measured at fair value | 1,537,002 | -- | -- | -- | 1,537,002 | ||||
| Senior Unsecured Notes | -- | -- | (1,005,333) | -- | (1,005,333) | (985,480) | -- | -- | (985,480) |
| Promissory Notes | -- | -- | (97,645) | -- | (97,645) | ||||
| Senior secured debt | -- | -- | (4,901,240) | -- | (4,901,240) | -- | (5,055,323) | -- | (5,055,323) |
| Other bank loans | -- | -- | (264,525) | -- | (264,525) | ||||
| Finance lease payables | -- | -- | (12,885) | -- | (12,885) | ||||
| Other financial liabilities | -- | -- | (95,217) | -- | (95,217) | ||||
| Debts with associates | -- | -- | (7,079) | -- | (7,079) | ||||
| Other non-current debts | -- | -- | -- | (1,301) | (1,301) | ||||
| Trade and other payables | -- | -- | -- | (721,699) | (721,699) | ||||
| Other current liabilities | -- | -- | -- | (169,189) | (169,189) | ||||
| Financial liabilities not measured at fair valu | -- | -- | (6,383,924) | (892,189) | (7,276,113) | ||||
| 1,537,002 | 19,941 | (6,383,924) | (892,189) | (5,719,170) |
The Group does not provide details of the fair value of certain financial instruments as their carrying amount is very similar to their fair value because of its short term.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At 31 December 2018 and 2017 the Group has recognized the following derivatives:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Financial derivatives | Currency | Notional amount at 31/12/2018 |
Notional amount at 31/12/2017 |
Value at 31/12/18 |
Value at 31/12/17 |
Maturity |
| Call Option (Interstate Blood Bank, Inc., Bio-Blood Components, Inc and Plasma Biological Services, LLC) |
US Dollar | N/A | N/A | 8,733 | 8,338 | 30/04/2019 |
| Call Option (ADMA Centers) | US Dollar | N/A | N/A | 11,201 | -- | 01/01/2019 |
| Total Assets | 19,934 | 8,338 |
On 11 May 2016 the Group paid an aggregate amount equal to US Dollars 10,000 thousand (Euros 8,960 thousand at the exchange rate at the date of acquisition) in respect of the call option for the Interstate Blood Bank, Inc. shares, Bio-Blood Components, Inc. shares and Plasma Biological Services, LLC. shares that are not owned by the Group. The call option can be exercised by the Group by delivering written notice of its intention at any time on or after 1 February 2019 and on or before 30 April 2019 (see note 11).
On 6 June 2017, Biotest Pharmaceuticals Corporation agreed to purchase from ADMA Biologics all of its rights, titles and interests in two donation centers located in Georgia, USA. On 1 August 2018, Grifols acquired Biotest and its net assets (including the purchase option). The execution of the purchase option was carried out on 1 January 2019.
Financial derivatives are valued based on generally accepted valuation techniques (level 3 in the fair value hierarchy), using to the greatest extent data from the market and to a lesser extent specific data of the Group.
Derivative financial instruments that do not meet the hedge accounting requirements are classified and measured as financial assets or financial liabilities at fair value through profit and loss.
The carrying amount of financial assets represents the maximum exposure to credit risk. At 31 December 2018 and 2017 the maximum level of exposure to credit risk is as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| Carrying amount | Note | 31/12/2018 | 31/12/2017 | |
| Non-current financial assets | 11 | 107,601 | 69,889 | |
| Other current financial assets | 11 | 53,965 | 10,738 | |
| Trade receivables | 13 | 269,167 | 286,198 | |
| Other receivables | 13 | 45,327 | 18,666 | |
| Cash and cash equivalents | 14 | 1,033,792 | 886,521 | |
| 1,509,852 | 1,272,012 |
The maximum level of exposure to risk associated with receivables at 31 December 2018 and 2017, by geographical area, is as follows.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Thousands of Euros | |||
|---|---|---|---|
| Carrying amount | 31/12/2018 | 31/12/2017 | |
| Spain | 46,025 | 63,505 | |
| EU countries | 48,354 | 53,403 | |
| United States of America | 79,829 | 65,068 | |
| Other European countries | 14,289 | 5,761 | |
| Other regions | 125,997 | 117,127 | |
| 314,494 | 304,864 |
A breakdown of the trade receivables net of the bad debt provision by ageing as of 31 December 2017 is as follows:
| Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|
| ECL Rate | Total gross carrying amount |
Provision | Total net trade receivable third party |
||||
| Not matured | 0.19% | 224,476 | (35) | 224,441 | |||
| Past due 0-30 days | 0.19% | 41,145 | (7,476) | 33,669 | |||
| Past due 31-60 days | 0.62% | 12,904 | (3) | 12,901 | |||
| Past due 61-90 days | 2.03% | 715 | (8) | 707 | |||
| Past due 91-180 days | 3.01% | 4,293 | (35) | 4,258 | |||
| Past due 181-365 days | 8.52% | 7,468 | (2,110) | 5,358 | |||
| More than one year | 100.00% | 7,260 | (2,971) | 4,289 | |||
| Customers with objective evidence of | |||||||
| impairment | 7,643 | (7,068) | 575 | ||||
| 305,904 | (19,706) | 286,198 |
A breakdown of the trade receivables net of the bad debt provision by seniority as of December 31, 2018 is as follows:
| Thousands of Euros |
||||||
|---|---|---|---|---|---|---|
| ECL Rate | Total gross carrying amount |
Provision | Total net trade receivable third party |
|||
| Not matured | 0.19% | 180,448 | (335) | 180,113 | ||
| Past due 0-30 days | 0.19% | 52,310 | (92) | 52,218 | ||
| Past due 31-60 days | 0.62% | 11,125 | (67) | 11,058 | ||
| Past due 61-90 days | 2.03% | 10,729 | (208) | 10,521 | ||
| Past due 91-180 days | 3.01% | 12,158 | (353) | 11,805 | ||
| Past due 181-365 days | 8.52% | 4,158 | (1,222) | 2,936 | ||
| More than one year | 100.00% | 7,549 | (7,033) | 516 | ||
| Customers with objective evidence of impairment | 11,221 | (11,221) | -- | |||
| 289,698 | (20,531) | 269,167 |
Unimpaired receivables that are past due mainly relate to public entities.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Movement in the bad debt provision was as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||
| Opening balance | 19,706 | 17,987 | 13,210 | |
| Net charges for the year | 6,443 | 8,003 | 6,411 | |
| Net cancellations for the year | (5,650) | (4,732) | (2,217) | |
| Translation differences | 32 | (1,552) | 583 | |
| Closing balance | 20,531 | 19,706 | 17,987 |
An analysis of the concentration of credit risk is provided in note 5 (a).
The management of the liquidity risk is explained in note 5.
Details of the contractual maturity dates of financial liabilities including committed interest calculated using interest rate forward curves are as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Carrying amount | Note | Carrying amount at 31/12/17 |
Contractual flows |
6 months or less |
6 - 12 months |
1-2 years |
2- 5 years |
More than 5 years |
| Financial liabilities | ||||||||
| Bank loans | 20 | 5,052,680 | 6,138,673 | 105,584 | 106,492 | 322,421 | 3,115,887 | 2,488,289 |
| Other financial liabilities | 20 | 45,640 | 45,642 | 19,393 | 2,610 | 10,758 | 10,497 | 2,384 |
| Bonds and other marketable securities |
20 | 949,205 | 1,331,203 | 107,203 | 16,000 | 32,000 | 128,000 | 1,048,000 |
| Finance lease payables | 20 | 9,360 | 10,136 | 2,192 | 2,113 | 2,602 | 2,790 | 439 |
| Payable to suppliers | 21 | 423,096 | 423,096 | 423,020 | 76 | -- | -- | -- |
| Other current liabilities | 22 | 14,878 | 14,878 | 14,462 | 416 | -- | -- | -- |
| Total | 6,494,859 | 7,963,628 | 671,854 | 127,707 | 367,781 | 3,257,174 | 3,539,112 |
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Carrying amount | Note | Carrying amount at 31/12/18 |
Contractual flows |
6 months or less |
6 - 12 months |
1-2 years |
2- 5 years More than 5 years |
|
| Financial liabilities | ||||||||
| Bank loans | 20 | 5,165,765 | 6,522,083 | 195,568 | 202,437 | 522,040 | 3,086,734 | 2,515,304 |
| Other financial liabilities | 20 | 95,217 | 95,218 | 14,167 | 2,095 | 21,324 | 55,863 | 1,769 |
| Bonds and other | ||||||||
| marketable securities | 20 | 1,102,978 | 1,305,645 | 113,645 | 16,000 | 32,000 | 128,000 | 1,016,000 |
| Finance lease payables | 20 | 12,885 | 13,423 | 1,946 | 1,630 | 3,367 | 5,655 | 825 |
| Debts with associates | 31 | 7,079 | 7,079 | -- | 7,079 | -- | -- | -- |
| Payable to suppliers | 21 | 561,883 | 561,884 | 561,559 | 325 | -- | -- | -- |
| Other current liabilities | 22 | 16,029 | 16,028 | 15,861 | 167 | -- | -- | -- |
| Total | 6,961,836 | 8,521,360 | 902,746 | 229,733 | 578,731 | 3,276,252 | 3,533,898 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Group's exposure to currency risk is as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2017 | ||||
| Euros (*) | Dollars (**) | |||
| Trade receivables | 3,596 | 22,936 | ||
| Receivables from Group companies | 103,338 | 7,619 | ||
| Loans to Group companies | 34,140 | 91,566 | ||
| Cash and cash equivalents | 63,981 | 2,172 | ||
| Trade payables | (14,213) | (3,582) | ||
| Payables to Group companies | (42,296) | (11,241) | ||
| Loans from Group companies | (22,913) | (3,953) | ||
| Bank loans | (85,000) | -- | ||
| Balance sheet exposure | 40,633 | 105,517 |
(*) Balances in Euros in subsidiaries with US Dollars functional currency
(**) Balances in US Dollars in subsidiaries with Euros functional currency
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | |||
| Euros (*) | Dollars (**) | ||
| Trade receivables | 2,691 | 45,801 | |
| Receivables from Group companies | 54,903 | 6,291 | |
| Loans to Group companies | 40,387 | 4,343 | |
| Cash and cash equivalents | 120,281 | 1,296 | |
| Trade payables | (13,354) | (6,113) | |
| Payables to Group companies | (60,363) | (63,932) | |
| Loans from Group companies | (94,771) | (4,336) | |
| Bank loans | (74,375) | -- | |
| Balance sheet exposure | (24,601) | (16,650) |
(*) Balances in Euros in subsidiaries with US Dollars functional currency
(**) Balances in US Dollars in subsidiaries with Euros functional currency
The most significant exchange rates applied at 2018 and 2017 year ends are as follows:
| Closing exchange rate | |||
|---|---|---|---|
| Euros | 31/12/2018 | 31/12/2017 | |
| US Dollars | 1.1450 | 1.1993 |
A sensitivity analysis for foreign exchange fluctuations is as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Had the US Dollar strengthened by 10% against the Euro at 31 December 2018, equity would have increased by Euros 506,131 thousand (Euros 416,116 thousand at 31 December 2017) and profit due to foreign exchange differences would have increased by Euros 4,125 thousand (Euros 14,615 thousand at 31 December 2017). This analysis assumes that all other variables are held constant, especially that interest rates remain constant.
A 10% weakening of the US Dollar against the Euro at 31 December 2018 and 2017 would have had the opposite effect for the amounts shown above, all other variables being held constant.
To date, the profile of interest on interest-bearing financial instruments is as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||
| Fixed-interest financial instruments | ||||
| Financial liabilities | (1,244,375) | (1,170,000) | ||
| (1,244,375) | (1,170,000) | |||
| Variable-interest financial instruments | ||||
| Financial liabilities | (5,233,638) | (5,049,382) | ||
| (5,233,638) | (5,049,382) | |||
| (6,478,013) | (6,219,382) | |||
If the interest rate had been 100 basis points higher during 2018, the interest expense would have increased by Euros 53,082 thousand.
If the interest rate had been 100 basis points higher during 2017, the interest expense would have increased by Euros 52,999 thousand. As the Group does not have any derivatives in place, the net effect on cash interest payments would have increased by the same amount.
Details of balances with related parties are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2018 | 31/12/2017 | ||
| Receivables from associates (note 13) | 382 | 3,219 | |
| Trade payables associates | (15,796) | (4,583) | |
| Loans to associates (note 11) | 50,304 | 26,654 | |
| Loans to other related parties (note 11) | 82,969 | -- | |
| Debts with associates | (7,079) | -- | |
| Debts with key management personnel | (4,425) | (6,164) | |
| Payables to members of the board of directors | -- | (463) | |
| Payables to other related parties | (7,706) | (9,187) | |
| 98,649 | 9,476 |
Payables are included in trade and other payables (see note 21).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Group transactions with related parties during 2016 were as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| Associates | Key management personnel |
Other related parties |
Board of directors of the Company |
||
| Net sales | 193 | -- | -- | -- | |
| Purchases | (35,569) | -- | -- | -- | |
| Other service expenses | (7,591) | -- | (5,325) | (905) | |
| Operating lease expense | -- | -- | (5,281) | -- | |
| Remuneration | -- | (10,287) | -- | (3,668) | |
| R&D agreements | (10,188) | -- | -- | -- | |
| Finance result | 1,946 | -- | -- | -- | |
| (51,209) | (10,287) | (10,606) | (4,573) |
Group transactions with related parties during 2017 were as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| Associates | Key management personnel |
Other related parties |
Board of directors of the Company |
||
| Net sales | 3,009 | -- | -- | -- | |
| Purchases | (68,335) | -- | -- | -- | |
| Other service expenses | (11,798) | -- | (7,100) | (939) | |
| Operating lease expense | -- | -- | (5,426) | -- | |
| Remuneration | -- | (13,672) | -- | (5,755) | |
| R&D agreements | (164) | -- | -- | -- | |
| Finance Result | 152 | -- | -- | -- | |
| (77,136) | (13,672) | (12,526) | (6,694) |
Group transactions with related parties during 2018 are as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| Associates | Key management personnel |
Other related parties |
Board of directors of the Company |
||
| Net sales | 5,846 | -- | -- | -- | |
| Purchases | (97,941) | -- | -- | -- | |
| Other service expenses | (21,065) | -- | (4,282) | (844) | |
| Operating lease expense | -- | -- | (5,469) | -- | |
| Remuneration | -- | (16,070) | -- | (5,848) | |
| R&D agreements | (50) | -- | -- | -- | |
| Sale of investments (note 3) | -- | -- | 469,881 | -- | |
| Finance result | 3,372 | -- | -- | -- | |
| (109,838) | (16,070) | 460,130 | (6,692) |
Every year the Group contributes 0.7% of its profits before tax to a non-profit organization.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
"Other service expenses" include contributions to non-profit organizations totaling Euros 4,282 thousand in 2018 (Euros 7,100 thousand in 2017 and Euros 5,325 thousand in 2016).
During 2011 one of the Company's directors signed a three-year consulting services contract. The director received annual fees of US Dollars 1 million for these services and an additional bonus of US Dollars 2 million for complying with certain conditions. In the years 2014, 2015, 2017 and 2018 the contract has been renewed, the amount of the fees corresponds to US Dollars 1 million per year. The contract has an expiration date of 31 March 2019.
On 28 December 2018, the Group sold Biotest and Haema to Scranton Enterprises B.V (shareholder of Grifols) for US Dollars 538,014 thousand (see note 3). For the payment of the mentioned amount of the sale, Scranton signed a loan contract dated 28 December 2018 for an amount of US Dollars 95,000 thousand (Euros 82,969 thousand) with Grifols Worldwide Operations Limited. The compensation is 2%+EURIBOR and due on 28 December 2025.
Directors representing shareholders´ interests have received remuneration of Euros 1,640 thousand in 2018 (Euros 1,881 thousand in 2017).
The Group has not extended any advances or loans to the members of the board of directors or key management personnel nor has it assumed any guarantee commitments on their behalf. It has also not assumed any pension or life insurance obligations on behalf of former or current members of the board of directors or key management personnel. In addition, certain Company directors and key management personnel have termination benefit commitments (see note 29 (c)).
The Company's directors and their related parties have not entered into any conflict of interest that should have been reported in accordance with article 229 of the revised Spanish Companies Act.
The most significant systems, equipment and fixtures for the protection and improvement of the environment at 31 December 2017 are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| Project | Cost | Accumulated depreciation |
Net value |
| Waste water treatment | 7,990 | (1,976) | 6,014 |
| Waste management | 5,060 | (1,573) | 3,487 |
| Reduction of electricity consumption | 13,606 | (3,169) | 10,437 |
| Reduction of water consumption | 12,948 | (2,936) | 10,012 |
| Energy | 6,051 | (317) | 5,734 |
| Other | 1,164 | (135) | 1,029 |
| 46,819 | (10,106) | 36,713 |
The most significant systems, equipment and fixtures for the protection and improvement of the environment at 31 December 2018 are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Thousands of Euros | ||||
|---|---|---|---|---|
| Project | Cost | Accumulated depreciation |
Net value | |
| Waste water treatment | 13,467 | (2,599) | 10,868 | |
| Waste management | 6,399 | (1,920) | 4,479 | |
| Reduction of electricity consumption | 13,210 | (4,002) | 9,208 | |
| Reduction of water consumption | 18,815 | (3,404) | 15,411 | |
| Energy | 13,819 | (564) | 13,255 | |
| Other | 2,320 | (262) | 2,058 | |
| 68,030 | (12,751) | 55,279 |
Expenses incurred by the Group for protection and improvement of the environment during 2018 totalled approximately Euros 15,474 thousand (Euros 13,554 thousand during 2017 and Euros 12,718 thousand during 2016).
The Group considers that the environmental risks are adequately controlled by the procedures currently in place.
The Group has not received environmental grants during 2018, 2017 and 2016.
KPMG Auditores, S.L. has invoiced the following fees for professional services during 2018 and 2017:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2018 | 31/12/2017 | |||
| Audit services | 1,534 | 1,844 | ||
| Audit-related services | 601 | 712 | ||
| 2,135 | 2,556 |
Amounts included in table above, includes the total amount of fees related to services incurred during 2018 and 2017 without considering the invoice date.
Audit-related services in 2018 include limited reviews of the semi-annual financial statements, the audit of the consolidated financial statements under PCAOB, the audit of GDS and reports of agreed-upon procedures.
Audit-related services in 2018 include limited reviews of the semi-annual financial statements, the audit of the consolidated financial statements under PCAOB, comfort letters in relation to debt issues and reports of agreed-upon procedures.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Other entities affiliated to KPMG International have invoiced the Group for the following fees for professional services during 2018 and 2017:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Audit services | 2,559 | 2,783 |
| Audit-related | 679 | 270 |
| Tax advisory fees | 232 | 51 |
| Other services | 228 | 7 |
| 3,698 | 3,111 |
Other audit firms have invoiced the Group for the following fees for professional services during 2018 and 2017:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2018 | 31/12/2017 | |
| Audit services | 83 | 52 |
| 83 | 52 | |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Acquisition / | 31/12/2018 | 31/12/2017 | 31/12/2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Registered | Incorporation | % shares | % shares | % shares | ||||||
| Name | Offices | date | Activity | Statutory Activity | Direct | Indirect | Direct | Indirect | Direct | Indirect |
| Fully Consolidated Companies | ||||||||||
| Diagnostic Grifols, S.A. | Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain |
1987 | Industrial | Development and manufacture of diagnostic equipment, instruments and reagents. | --- | 100.000% | --- 100.000% | --- 100.000% | ||
| Instituto Grifols, S.A. | Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain |
1987 | Industrial | Plasma fractioning and the manufacture of haemoderivative pharmaceutical products. | 99.998% | 0.002% | 99.998% | 0.002% | 99.998% | 0.002% |
| Grifols Worldwide Operations Spain, S.A (formerly Logister, S.A.) Merged with Grifols International in 2018 |
Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain |
1987 | Services | Manufacture, sale and purchase, commercialisation and distribution of all types of computer products and materials. |
--- | --- | --- 100.000% | --- 100.000% | ||
| Laboratorios Grifols, S.A. | Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain |
1989 | Industrial | Production of glass- and plastic-packaged parenteral solutions, parenteral and enteral nutrition products and blood extraction equipment and bags. |
99.999% | 0.001% | 99.999% | 0.001% | 99.999% | 0.001% |
| Biomat, S.A. | Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain |
1991 | Industrial | Analysis and certification of the quality of plasma used by Instituto Grifols, S.A. It also provides transfusion centres with plasma virus inactivation services (I.P.T.H). |
99.900% | 0.100% | 99.900% | 0.100% | 99.900% | 0.100% |
| Grifols Engineering, S.A. | Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain |
2000 | Industrial | Design and development of the Group's manufacturing installations and part of the equipment and machinery used at these premises. The company also renders engineering services to external companies. |
99.950% | 0.050% | 99.950% | 0.050% | 99.950% | 0.050% |
| Biomat USA, Inc. | 2410 Lillyvale Avenue Los Angeles (California) United States |
2002 | Industrial | Procuring human plasma. | --- | 100.000% | --- 100.000% | --- 100.000% | ||
| Grifols Biologicals LLC. | 5555 Valley Boulevard Los Angeles (California) United States |
2003 | Industrial | Plasma fractioning and the production of haemoderivatives. | --- | 100.000% | --- 100.000% | --- 100.000% | ||
| Grifols Australia Pty Ltd. | Unit 5/80 Fairbank Clayton South Victoria 3149 Australia |
2009 | Industrial | Distribution of pharmaceutical products and the development and manufacture of reagents for diagnostics. |
100.000% | --- 100.000% | --- 100.000% | --- | ||
| Medion Grifols Diagnostic AG | Bonnstrasse,9 3186 Dügingen Switzerland |
2009 | Industrial | Development and manufacturing activities in the area of biotechnology and diagnostics. | --- | 100.000% | --- 100.000% | --- 100.000% | ||
| Grifols Therapeutics LLC. | 4101 Research Commons (Principal Address), 79 T.W. Alexander Drive, Research Triangle Park, North Carolina 277709, United States |
2011 | Industrial | Plasma fractioning and the production of haemoderivatives. | --- | 100.000% | --- 100.000% | --- 100.000% | ||
| Talecris Plasma Resources, Inc. | 4101 Research Commons (Principal Address), 79 T.W. Alexander Drive, Research Triangle Park, North Carolina 277709, United States |
2011 | Industrial | Procuring human plasma. | --- | 100.000% | --- 100.000% | --- 100.000% | ||
| Grifols Worldwide Operations Limited | Grange Castle Business Park, Grange Castle , Clondalkin, Dublin 22, Ireland |
2012 | Industrial | Packaging, labelling, storage, distribution, manufacture and development of pharmaceutical products and rendering of financial services to Group companies. |
100.000% | --- 100.000% | --- 100.000% | --- | ||
| Progenika Biopharma, S.A. | Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain |
2013 | Industrial | Development, production and commercialisation of biotechnological solutions. | 99.998% | --- | --- | 90.230% | --- | 89.250% |
| Progenika Latina, S.A. de CV | Periferico Sur Nº 4118 Int 8 Col. Jardines del Pedregal CP 01900 Alvaro Obregon DF Mexico |
2013 | Industrial | Development, production and commercialisation of biotechnological solutions. | --- | --- | --- | --- | --- | 89.250% |
Information on Group Companies, Associates and others for the years ended 31 December 2018, 2017 and 2016 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Acquisition / | 31/12/2018 | 31/12/2017 | 31/12/2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name | Registered Offices |
Incorporation date |
Activity | Statutory Activity | Direct | % shares Indirect |
% shares Direct |
Indirect | % shares Direct |
Indirect |
| Fully Consolidated Companies | ||||||||||
| Progenika Inc. (Merged with Grifols Diagnostic Solutions Inc. in 2017) |
Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, DE 19808 United States |
2013 | Industrial | Development, production and commercialisation of genetic tools, diagnostic equipment and therapeutic systems and products for personalised medicine and the highest quality healthcare in general. |
--- | --- | --- | --- | --- | 89.250% |
| Abyntek Biopharma, S.L. | Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain |
2013 | Industrial | Research, development and transfer of biotechnological products and processes, as well as the commercialiation of products and services related to the biosciences. |
--- | --- | --- | --- | --- | 80.370% |
| Asociación I+D Progenika | Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain |
2013 | Industrial | Coordination, representation, management and promotion of the common interests of associated companies, in addition to contributing to the development, growth and internationalisation of its associates and of the biosciences sector in the Basque Country. |
--- | 99.998% | --- | 90.230% | --- | 89.250% |
| Grifols Diagnostics Solutions Inc (formerly G-C Diagnostics Corp.) |
4560 Horton Street 94608 Emeryville, California United States |
2013 | Industrial | Manufacture and sale of blood testing products | 100.000% | --- 100.000% | --- 100.000% | --- | ||
| Grifols Worldwide Operations USA Inc. | 13111 Temple Avenue, City of Industry, California 91746-1510 Estados Unidos |
2014 | Industrial | The manufacture, warehousing, and logistical support for biological products. | --- | 100.000% | --- 100.000% | --- 100.000% | ||
| Grifols Asia Pacific Pte, Ltd | 501 Orchard Road nº20-01 238880 Wheelock Place, Singapore |
2003 | Commercial Distribution and sale of medical and pharmaceutical products. | 100.000% | --- 100.000% | --- 100.000% | --- | |||
| Grifols Movaco, S.A. | Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain |
1987 | Commercial Distribution and sale of reagents, chemical products and other pharmaceutical specialities, and of medical and surgical materials, equipment and instruments for use by laboratories and health centres. |
99.999% | 0.001% | 99.999% | 0.001% | 99.999% | 0.001% | |
| Grifols Portugal Productos Farmacéuticos e Hospitalares, Lda. | Rua de Sao Sebastiao,2 Zona Industrial Cabra Figa 2635-448 Rio de Mouro Portugal |
1988 | Commercial Import, export and commercialisation of pharmaceutical and hospital equipment and products, particularly Grifols products. |
0.010% | 99.990% | 0.010% | 99.990% | 0.010% | 99.990% | |
| Grifols Chile, S.A. | Avda. Americo Vespucio, 2242 Comuna de Conchali Santiago de Chile Chile |
1990 | Commercial Development of pharmaceutical businesses, which can involve the import, production, commercialisation and export of related products. |
99.000% | --- | 99.000% | --- | 99.000% | --- | |
| Grifols USA, LLC. | 2410 Lillyvale Avenue Los Angeles (California) Estados Unidos |
1990 | Commercial Distribution and marketing of company products. | --- | 100.000% | --- 100.000% | --- 100.000% | |||
| Grifols Argentina, S.A. | Bartolomé Mitre 3690/3790, CPB1605BUT Munro Partido de Vicente Lopez Argentina |
1991 | Commercial Clinical and biological research. Preparation of reagents and therapeutic and diet products. Manufacture and commercialisation of other pharmaceutical specialities. |
95.010% | 4.990% | 95.010% | 4.990% | 95.010% | 4.990% | |
| Grifols s.r.o. | Calle Zitna,2 Prague Czech Republic |
1992 | Commercial Purchase, sale and distribution of chemical-pharmaceutical products, including human plasma. | 100.000% | --- 100.000% | --- 100.000% | --- | |||
| Grifols (Thailand) Ltd | 191 Silom Complex Building, 21st Follor, Silom Road, Silom, Bangrak 10500 Bangkok Thailand |
2003 | Commercial Import, export and distribution of pharmaceutical products. | --- | 48.000% | --- | 48.000% | --- | 48.000% | |
| Grifols Malaysia Sdn Bhd | Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur Malaysia |
2003 | Commercial Distribution and sale of pharmaceutical products. | --- | 30.000% | --- | 30.000% | --- | 30.000% | |
| Grifols International, S.A. | Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain |
1997 | Commercial Coordination of the marketing, sales and logistics for all the Group's subsidiaries operating in other countries. |
99.998% | 0.002% | 99.998% | 0.002% | 99.998% | 0.002% | |
| Grifols Italia S.p.A | Via Carducci, 62d 56010 Ghezzano Pisa, Italy |
1997 | Commercial Purchase, sale and distribution of chemical-pharmaceutical products. | 100.000% | --- 100.000% | --- 100.000% | --- | |||
| Grifols UK Ltd. | Gregory Rowcliffe & Milners, 1 Bedford Row, London WC1R 4BZ United Kingdom |
1997 | Commercial Distribution and sale of therapeutic and other pharmaceutical products, especially haemoderivatives. | 100.000% | --- 100.000% | --- 100.000% | --- |
Information on Group Companies, Associates and others for the years ended 31 December 2018, 2017 and 2016 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Acquisition / | 31/12/2018 % shares |
31/12/2017 % shares |
31/12/2016 % shares |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name | Registered Offices |
Incorporation date |
Activity | Statutory Activity | Direct | Indirect | Direct | Indirect | Direct | Indirect |
| Fully Consolidated Companies | ||||||||||
| Grifols Brasil, Lda. | Rua Umuarama, 263 Condominio Portal da Serra Vila Perneta CEP 83.325-000 Pinhais Paraná, Brazil |
1998 | Commercial Import and export, preparation, distribution and sale of pharmaceutical and chemical products for laboratory and hospital use, and medical-surgical equipment and instruments. |
100.000% | --- 100.000% | --- 100.000% | --- | |||
| Grifols France, S.A.R.L. | Arteparc, Rue de la Belle du Canet, Bât. D, Route de la Côte d'Azur, 13590 Meyreuil France |
1999 | Commercial Commercialisation of chemical and healthcare products. | 99.990% | 0.010% | 99.990% | 0.010% | 99.990% | 0.010% | |
| Grifols Polska Sp.z.o.o. | Grzybowska 87 street00-844 Warsaw, Poland |
2003 | Commercial Distribution and sale of pharmaceutical, cosmetic and other products. | 100.000% | --- 100.000% | --- 100.000% | --- | |||
| Logística Grifols, S.A. de C.V. | Calle Eugenio Cuzin, nº 909-913 Parque Industrial Belenes Norte 45150 Zapopán Jalisco, Mexico |
2008 | Commercial Manufacture and commercialisation of pharmaceutical products for human and veterinary use. | 99.990% | 0.010% | 99.990% | 0.010% | 99.990% | 0.010% | |
| Grifols México, S.A. de C.V. | Calle Eugenio Cuzin, nº 909-913 Parque Industrial Belenes Norte 45150 Zapopán Jalisco, Mexico |
1993 | Commercial | Production, manufacture, adaptation, conditioning, sale and purchase, commissioning, representation and consignment of all kinds of pharmaceutical products and the acquisition of machinery, equipment, raw materials, tools, movable goods and property for the aforementioned purposes. |
99.980% | 0.020% | 99.980% | 0.020% | 99.980% | 0.020% |
| Medion Diagnostics GmbH | Lochamer Schlag, 12D 82166 Gräfelfing Germany |
2009 | Commercial Distribution and sale of biotechnological and diagnostic products. | --- | 100.000% | --- 100.000% | --- 100.000% | |||
| Grifols Nordic, AB | Sveavägen 166 11346 Stockholm Sweden |
2010 | Commercial Research and development, production and marketing of pharmaceutical products, medical devices and any other asset deriving from the aforementioned activities. |
100.000% | --- 100.000% | --- 100.000% | --- | |||
| Grifols Colombia, Ltda | Carrera 7 No. 71 52 Torre B piso 9 Bogotá. D.C. Colombia |
2010 | Commercial | Sale, commercialisation and distribution of medicines, pharmaceutical (including but not limited to haemoderivatives) and hospital products, medical devices, biomedical equipment, laboratory instruments and reagents for diagnosis and/or healthcare software. |
99.990% | 0.010% | 99.990% | 0.010% | 99.990% | 0.010% |
| Grifols Deutschland GmbH | Lyoner Strasse 15, D 60528 Frankfurt am Main Germany |
2011 | Commercial | Procurement of the official permits and necessary approval for the production, commercialisation and distribution of products deriving from blood plasma, as well as the import, export, distribution and sale of reagents and chemical and pharmaceutical products, especially for laboratories and health centres and surgical and medical equipment and instruments. |
100.000% | --- 100.000% | --- 100.000% | --- | ||
| Grifols Canada, Ltd. | 5060 Spectrum Way, Suite 405 (Principal Address) Mississauga, Ontario L4W 5N5 Canada |
2011 | Commercial Distribution and sale of biotechnological products. | --- | 100.000% | --- 100.000% | --- 100.000% | |||
| Grifols Pharmaceutical Technology (Shanghai) Co., Ltd. (formerly Grifols Pharmaceutical Consulting (Shanghai) Co., Ltd.) |
Unit 901-902, Tower 2, No. 1539, West Nanjing Rd., Jing'an District, Shanghai 200040 China |
2013 | Commercial Pharmaceutical consultancy services (except for diagnosis), technical and logistical consultancy services, business management and marketing consultancy services. |
100.000% | --- 100.000% | --- 100.000% | --- | |||
| Grifols Switzerland AG | Steinengraben, 5 40003 Basel Switzerland |
2013 | Commercial Research, development, import and export and commercialisation of pharmaceutical products, devices and diagnostic instruments. |
100.000% | --- 100.000% | --- 100.000% | --- | |||
| Grifols (H.K.), Limited | Units 1505-7 Bershire House, 25 Westlands Road Hong Kong |
2014 | Commercial Distribution and sale of diagnostic products. | --- | 100.000% | --- 100.000% | --- 100.000% | |||
| Grifols Japan K.K. | Hilton Plaza West Office Tower, 19th floor. 2-2, Umeda 2-chome, Kita-ku Osaka-shi Japan |
2014 | Commercial Research, development, import and export and commercialisation of pharmaceutical products, devices and diagnostic instruments. |
100.000% | --- 100.000% | --- 100.000% | --- | |||
| Grifols India Healthcare Private Ltd | Regus Business Centre Pvt.Ltd.,Level15,Dev Corpora, Plot No.463,Nr. Khajana East.Exp.Highway,Thane (W), Mumbai - 400604, Maharashtra India |
2014 | Commercial Distribution and sale of pharmaceutical products. | 99.990% | 0.010% | 99.990% | 0.010% | 99.990% | 0.010% |
Information on Group Companies, Associates and others for the years ended 31 December 2018, 2017 and 2016 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Acquisition / | 31/12/2018 | 31/12/2017 | 31/12/2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Registered | Incorporation | % shares | % shares | % shares | ||||||
| Name | Offices | date | Activity | Statutory Activity | Direct | Indirect | Direct | Indirect | Direct | Indirect |
| Fully Consolidated Companies | ||||||||||
| Grifols Diagnostics Equipment Taiwan Limited | 8F., No.367, Fuxing N. RD., Songshang Dist., Taipei City 10543, Taiwan |
2016 | Commercial Distribution and sale of diagnostic products. | 100.000% | --- 100.000% | --- 100.000% | --- | |||
| Grifols Viajes, S.A. | Can Guasch, 2 08150 Parets del Vallès Barcelona, Spain |
1995 | Services | Travel agency exclusively serving Group companies. | 99.900% | 0.100% | 99.900% | 0.100% | 99.900% | 0.100% |
| Squadron Reinsurance Designated Activity Company (formerly Squadron Reinsurance Ltd.) |
The Metropolitan Building, 3rd Fl. James Joyce Street, Dublin Ireland |
2003 | Services | Reinsurance of Group companies' insurance policies. | --- | 100.000% | --- 100.000% | --- 100.000% | ||
| Grifols Shared Services North America, Inc. (formerly Grifols Inc.) |
2410 Lillivale Avenue 90032 Los Angeles, California United States |
2011 | Services | Support services for the collection, manufacture, sale and distribution of plasma derivatives and related products. |
100.000% | --- 100.000% | --- 100.000% | --- | ||
| Gripdan Invest, S.L | Avenida Diagonal 477 Barcelona, Spain |
2015 | Services | Manufacturing buildings for rent | 100.000% | --- 100.000% | --- 100.000% | --- | ||
| Gri-Cel, S.A. | Avenida de la Generalitat 152 Sant Cugat del Valles (Barcelona) Spain |
2009 | Research | Research and development in the field of regenerative medicine, awarding of research grants, subscription to collaboration agreements with entities and participation in projects in the area of regenerative medicine. |
0.001% | 99.999% | 0.001% | 99.999% | 0.001% | 99.999% |
| Araclon Biotech, S.L. | Paseo de Sagasta, 17 2º izqda. Zaragoza, Spain |
2012 | Research | Creation and commercialisation of a blood diagnosis kit for the detection of Alzheimer's and development of effective immunotherapy (vaccine) against this disease. |
--- | 73.220% | --- | 73.220% | --- | 73.220% |
| VCN Bioscience, S.L. | Avenida de la Generalitat 152 Sant Cugat del Valles (Barcelona) Spain |
2012 | Research | Research and development of therapeutic approaches for tumours for which there is currently no effective treatment. |
--- | 81.340% | --- | 81.340% | --- | 81.340% |
| Grifols Innovation and New Technologies Limited | Grange Castle Business Park, Grange Castle , Clondalkin, Dublin 22, Ireland |
2016 | Research | Research and experimental development on biotechnology | --- | 100.000% | --- 100.000% | --- 100.000% | ||
| PBS Acquisition Corp. | 2711 Centerville Road Suite 400, Wilmington, Delaware, New Castle County United States |
2016 | Services | Engage in any lawful act or activity for which corporations may be organized under the DGCL (Delaware Code) |
--- | 100.000% | --- 100.000% | --- 100.000% | ||
| Kiro Grifols S.L (formerly Kiro Robotics S.L) |
Polígono Bainuetxe, 5, 2º planta, Aretxabaleta, Guipúzcoa Spain |
2014 | Research | Development of machines and equipment to automate and control key points of hospital processes, and hospital pharmacy processes. |
90.000% | --- | 90.000% | --- | --- | --- |
| Chiquito Acquisition Corp. | 2711 Centerville Road Suite 400, Wilmington, Delaware, County of New Castle, United States |
2017 | Corporate | Engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware, as amended from time to time (the "DGCL"). |
--- | 100.000% | --- 100.000% | --- | --- | |
| Aigües Minerals de Vilajuiga, S.A. | Carrer Sant Sebastià, 2, 17493 Vilajuïga, Girona |
2017 | Industrial | Collection and use of mineral-medicinal waters and achievement of all necessary administrative concessions in order to facilitate their industrial extraction and find the best way to take advantage of them. |
100.000% | --- | --- | --- | --- | --- |
| Goetech LLC (D/B/A Medkeeper) | 7600 Grandview Avenue, Suite 21 0, Arvada, CO 80002 |
2018 | Industrial | Development and distribution of web and mobile-based platforms for hospital pharmacies | --- | 54.760% | --- | --- | --- | --- |
| Haema, AG | LandsteinerstraBe 1, 04103 Leipzig - Germany |
2018 | Industrial | Procuring human plasma. | --- | --- | --- | --- | --- | |
| Biotest Pharmaceutical Corporation | 901 Yamato Rd., Suite 101, Boca Raton FL 33431 - USA |
2018 | Industrial | Obtención de plasma humano. | --- | --- | --- | --- | --- | --- |
| Biotest US Corporation | 901 Yamato Rd., Suite 101, Boca Raton FL 33431 - USA |
2018 | Corporativo Corporate services to Biotest Pharmaceutical Corporation | --- | --- | --- | --- | --- | --- |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/2018 | 31/12/2017 | 31/12/2016 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| % shares | % shares | % shares | ||||||||
| Name | Registered Offices | Acquisition / Incorporation date |
Activity | Statutory Activity | Direct | Indirect | Direct | Indirect | Direct | Indirect |
| Equity Method consolidated companies and others | ||||||||||
| Aradigm Corporation | 3929 Point Eden Way Hayward, California United States |
2013 | Research | Development and commercialisation of drugs delivered by inhalation for the prevention and treatment of severe respiratory diseases. |
--- | 35.130% | --- | 35.130% | --- | 35.130% |
| TiGenix N.V. | Romeinse straat 12 bus 2, 3001 Leuven, Belgium |
2013 | Research | Research and development of therapies based on stem cells taken from adipose tissue. | --- | --- | --- | 14.180% | --- | 16.130% |
| Mecwins, S.L. | Avenida Fernandos Casas Novoa, 37 Santiago de Compostela Spain |
2013 | Research | Research and production of nanotechnological, biotechnological and chemical solutions. | --- | 24.990% | --- | 8.420% | --- | 8.420% |
| Kiro Grifols S.L (formerly Kiro Robotics S.L) |
Polígono Bainuetxe, 5, 2º planta, Aretxabaleta, Guipúzcoa Spain |
2014 | Research | Development of machines and equipment to automate and control key points of hospital processes, and hospital pharmacy processes. |
--- | --- | --- | --- | 50.000% | --- |
| Alkahest, Inc. | 3500 South DuPont Hwy, Dover, County of Kent United States |
2015 | Research | Development novel plasma-based products for the treatment of cognitive decline in aging and disorders of the central nervous system (CNS). |
--- | 47.580% | --- | 47.580% | --- | 47.580% |
| Albajuna Therapeutics, S.L | Hospital Germans Trias i Pujol, carretera de Canyet, s/n, Badalona Spain |
2016 | Research | Development and manufacture of therapeutic antibodies against HIV. | --- | 30.000% | --- | 30.000% | --- | 30.000% |
| Interstate Blood Bank, Inc. | 5700 Pleasantville Road Memphis, Tennessee United States |
2016 | Industrial | Procuring human plasma. | --- | 49.190% | --- | 49.190% | --- | 49.190% |
| Bio Blood Components Inc. | 5700 Pleasantville Road Memphis, Tennessee United States |
2016 | Industrial | Procuring human plasma. | --- | 48.972% | --- | 48.972% | --- | 48.972% |
| Plasma Biological Services, LLC | 5700 Pleasantville Road Memphis, Tennessee United States |
2016 | Industrial | Procuring human plasma. | --- | 48.900% | --- | 48.900% | --- | 48.900% |
| Singulex, Inc. | 4041 Forest Park Avenue St. Louis, Missouri United States |
2016 | Research | Development of the Single Molecule Counting (SMC™) technology for clinical diagnostic and scientific discovery. |
--- | 19.330% | --- | 19.330% | --- | 20.000% |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/2018 % shares |
31/12/2017 % shares |
31/12/2016 % shares |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name | Registered Offices | Acquisition / Incorporation date |
Activity | Statutory Activity | Direct | Indirect | Direct | Indirect | Direct | Indirect |
| Equity Method consolidated companies and others | ||||||||||
| Aigües Minerals de Vilajuiga, S.A. | Carrer Sant Sebastià, 2, 17493 Vilajuïga, Girona |
2017 | Industrial | Collection and use of mineral-medicinal waters and achievement of all necessary administrative concessions in order to facilitate their industrial extraction and find the best way to take advantage of them. |
--- | --- | 50.000% | --- | --- | --- |
| Access Biologicals, LLC. | 995 Park Center Dr, Vista, CA 92081, USA |
2017 | Industrial | Manufacture of biological products, including specific sera and plasma-derived reagents, which are used by biotechnology and biopharmaceutical companies for in-vitro diagnostics, cell culture, and research and development in the diagnostic field. |
--- | 49.000% | --- | 49.000% | --- | --- |
| Access Biologicals IC-DISC, Inc. | 995 Park Center Dr, Vista, CA 92081, USA |
2017 | Industrial | Manufacture of biological products, including specific sera and plasma-derived reagents, which are used by biotechnology and biopharmaceutical companies for in-vitro diagnostics, cell culture, and research and development in the diagnostic field. |
--- | 49.000% | --- | 49.000% | --- | --- |
| Access Cell Culture, LLC. | 995 Park Center Dr, Vista, CA 92081, USA |
2017 | Industrial | Manufacture of biological products, including specific sera and plasma-derived reagents, which are used by biotechnology and biopharmaceutical companies for in-vitro diagnostics, cell culture, and research and development in the diagnostic field. |
--- | 49.000% | --- | 49.000% | --- | --- |
| Access Manufacturing, LLC. | 995 Park Center Dr, Vista, CA 92081, USA |
2017 | Industrial | Manufacture of biological products, including specific sera and plasma-derived reagents, which are used by biotechnology and biopharmaceutical companies for in-vitro diagnostics, cell culture, and research and development in the diagnostic field. |
--- | 49.000% | --- | 49.000% | --- | --- |
| Access Plasma, LLC. | 995 Park Center Dr, Vista, CA 92081, USA |
2017 | Industrial | Manufacture of biological products, including specific sera and plasma-derived reagents, which are used by biotechnology and biopharmaceutical companies for in-vitro diagnostics, cell culture, and research and development in the diagnostic field. |
--- | 49.000% | --- | 49.000% | --- | --- |
| GigaGen Inc. | 407 Cabot Road South San Francisco, CA 94080, USA |
2017 | Industrial | Engage in any lawful act or activity for which corporations may be organized under General Corporation Law. |
--- | 43.960% | --- | 43.960% | --- | --- |
| Colmarer Strasse 22, 60528 Frankfurt am Main - Germany |
2018 | Industrial | Procuring human plasma. | --- | 50.000% | --- | --- | --- | --- |
Plasmavita Healthcare GmbH
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Bioscience | Hospital | Diagnostic | Bio Supplies | Others | Intersegments | Consolidated | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | |
| Revenues from external customers | 3,516,704 | 3,429,785 | 3,195,424 | 119,454 | 105,649 | 102,251 | 702,265 | 732,369 | 691,701 | 167,004 | 66,791 | 57,239 | 22,451 | 18,263 | 34,601 (41,154) | (34,784) | (31,386) | 4,486,724 | 4,318,073 | 4,049,830 | |
| Total operating income | 3,516,704 | 3,429,785 | 3,195,424 | 119,454 | 105,649 102,251 | 702,265 | 732,369 691,701 | 167,004 | 66,791 | 57,239 | 22,451 | 18,263 34,601 (41,154) | (34,784) | (31,386) | 4,486,724 | 4,318,073 | 4,049,830 | ||||
| Profit/(Loss) for the segment | 902,402 | 985,495 | 913,840 (12,587) | (9,766) (8,765) | 215,990 | 248,080 | 97,320 | 36,824 | 35,598 | 33,794 | 19,788 | (9,632) | 44,324 (5,764) | (12,305) | (1,316) | 1,156,653 | 1,237,470 | 1,079,197 | |||
| Unallocated expenses | (162,529) | (234,127) | (139,789) | ||||||||||||||||||
| Operating profit | 994,124 | 1,003,343 | 939,408 | ||||||||||||||||||
| Finance result | (257,244) | (287,734) | (233,589) | ||||||||||||||||||
| Share of profit/(loss) of equity | |||||||||||||||||||||
| accounted investee | 2,839 | (10,434) | (9,396) | -- | 2,112 (5,611) | (10,975) | (9,335) | -- | 3,039 | 1,830 | -- | (5,941) | (4,060) 21,940 | -- | -- | -- | (11,038) | (19,887) | 6,933 | ||
| Income tax expense Profit for the year after tax |
(131,436) 594,406 |
(34,408) 661,314 |
(168,209) 544,543 |
||||||||||||||||||
| Segment assets | 6,928,220 | 6,007,153 | 6,524,922 | 250,543 | 145,477 | 86,590 | 3,526,136 | 3,356,185 | 1,909,447 117,673 | 7,409 | 8,378 | 54,363 | 60,449 | 40,160 (29,281) | (22,196) | (11,964) | 10,847,654 | 9,554,477 | 8,557,533 | ||
| Equity accounted investments | 99,547 | 83,905 | 104,996 | -- | -- 13,888 | 19,256 | 29,322 | 43,330 | 47,742 | 44,220 | -- | 60,360 | 61,562 | 39,131 | -- | -- | -- | 226,905 | 219,009 | 201,345 | |
| Unallocated assets | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 1,402,487 | 1,146,778 | 1,370,894 |
| Total assets | 12,477,046 | 10,920,264 | 10,129,772 | ||||||||||||||||||
| Segment liabilities | 764,377 | 423,415 | 411,604 | 32,767 | 13,560 | 8,415 | 230,517 | 192,720 | 186,389 | 6,427 | -- | -- | 34,698 | 26,903 | 1,843 | -- | -- | -- | 1,068,786 | 656,598 | 608,251 |
| Unallocated liabilities | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 6,711,656 | 6,629,701 | 5,793,543 |
| Total liabilities | 7,780,442 | 7,286,299 | 6,401,794 | ||||||||||||||||||
| Other information: | |||||||||||||||||||||
| Amortisation and depreciation allocated | 156,893 | 157,478 | 152,821 | 10,819 | 6,436 | 5,915 | 44,030 | 40,815 | 32,180 | 5,656 | -- | -- | 1,941 | 2,237 | 3,445 | -- | -- | -- | 219,339 | 206,966 | 194,361 |
| Amortisation and depreciation unallocated | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 9,270 | 8,524 | 7,508 |
| Expenses that do not require cash payments allocated |
172,648 | 7,049 | 16,219 | 297 | (514) | 306 | (27,651) | (4,423) | (2,001) | 28 | -- | -- | -- | -- (32,534) | -- | -- | -- | 145,322 | 2,112 | (18,010) | |
| Expenses that do not require cash payments unallocated |
-- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 1,339 | (58,752) | 4,608 |
| Additions for the year of property, plant & equipment and intangible assets allocated |
220,531 | 227,635 | 197,741 | 15,354 | 10,429 | 9,193 | 58,064 | 70,032 | 89,760 | 2,050 | 198 | 84 | 883 | 20,911 | 13,313 | -- | -- | -- | 296,882 | 329,205 | 310,091 |
| Additions for the year of property, plant & equipment and intangible assets unallocated |
-- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 19,795 | 11,268 | 12,011 |
* As a result of the creation of Bio Supplies segment and intersegments, the Group has reviewed the allocation of balances and transactions by segments. The comparative figure for year 2016 have been restated accordingly.
This appendix forms an integral part of note 6 to the consolidated annual accounts.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Spain | Rest of European Union | USA + Canada | Rest of World | Consolidated | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | |
| Net Revenue | 264,913 | 242,894 | 225,273 | 535,361 | 444,089 | 426,223 | 2,974,429 | 2,896,505 | 2,707,579 | 712,021 | 734,585 | 690,755 | 4,486,724 | 4,318,073 | 4,049,830 |
| Assets by geographical area | 898,599 | 899,223 | 847,467 | 3,177,781 | 2,397,200 | 2,467,295 | 8,133,108 | 7,341,174 | 6,535,420 | 267,558 | 282,667 | 279,590 | 12,477,046 | 10,920,264 | 10,129,772 |
| Other information: Additions for the year of property, plant & equipment and intangible assets |
70,639 | 62,271 | 73,365 | 69,534 | 80,910 | 39,603 | 166,353 | 188,557 | 190,358 | 10,151 | 8,735 | 18,776 | 316,677 | 340,473 | 322,102 |
This appendix forms an integral part of note 6 to the consolidated annual accounts.
| Balances at 31/12/2017 |
Additions | Business combinations |
Transfers | Disposals | Translation differences |
Balances at 31/12/2018 |
|
|---|---|---|---|---|---|---|---|
| Development costs | 311,694 | 55,439 | -- | -- | (36) | 10,215 | 377,312 |
| Concessions, patents, licenses brands & similar |
182,885 | -- | 6,225 | -- | (757) | 8,057 | 196,410 |
| Computer software | 174,945 | 20,252 | 34,319 | (762) | (1,116) | 6,785 | 234,423 |
| Currently marketed products | 1,024,376 | -- | -- | -- | -- | 47,451 | 1,071,827 |
| Other intangible assets | 147,307 | 48 | 19,749 | -- | -- | 7,664 | 174,768 |
| Total cost of intangible assets | 1,841,207 | 75,739 | 60,293 | (762) | (1,909) | 80,172 | 2,054,740 |
| Accum. amort. of development costs | (79,349) | (10,660) | -- | -- | -- | (98) | (90,107) |
| Accum. amort of concessions, patents, licenses, brands & similar |
(29,783) | (6,132) | -- | -- | -- | (845) | (36,760) |
| Accum. amort. of computer software | (106,319) | (12,918) | (5,872) | -- | 1,116 | (2,660) | (126,653) |
| Accum. amort. of currently marketed products | (231,068) | (36,154) | -- | -- | -- | (11,573) | (278,795) |
| Accum. amort. of other intangible assets | (61,966) | (5,536) | -- | 246 | -- | (3,297) | (70,553) |
| Total accum. amort intangible assets | (508,485) | (71,400) | (5,872) | 246 | 1,116 | (18,473) | (602,868) |
| Impairment of other intangible assets | (63,380) | -- | -- | -- | -- | (2,955) | (66,335) |
| Carrying amount of intangible assets | 1,269,342 | 4,339 | 54,421 | (516) | (793) | 58,744 | 1,385,537 |
(See note 3)
This appendix forms an integral part of note 8 to the consolidated annual accounts.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Balances at 31/12/2016 |
Additions | Business combinations * |
Transfers | Disposals | Translation differences |
Balances at 31/12/2017 |
|
|---|---|---|---|---|---|---|---|
| Development costs | 142,693 | 43,152 | 142,529 | -- | (81) | (16,599) | 311,694 |
| Concessions, patents, licenses | |||||||
| brands & similar | 60,471 | -- | 142,174 | -- | -- | (19,760) | 182,885 |
| Computer software | 168,623 | 19,626 | 26 | 529 | (126) | (13,733) | 174,945 |
| Currently marketed products | 1,162,204 | -- | -- | -- | -- | (137,828) | 1,024,376 |
| Other intangible assets | 148,682 | 17,348 | -- | -- | -- | (18,723) | 147,307 |
| Total cost of intangible assets | 1,682,673 | 80,126 | 284,729 | 529 | (207) | (206,643) | 1,841,207 |
| Accum. amort. of development costs | (72,073) | (5,834) | -- | -- | -- | (1,442) | (79,349) |
| Accum. amort of concessions, patents, licenses, brands & similar |
(24,994) | (6,004) | -- | -- | -- | 1,215 | (29,783) |
| Accum. amort. of computer software | (99,927) | (13,549) | -- | -- | 111 | 7,046 | (106,319) |
| Accum. amort. of currently marketed products | (220,988) | (38,216) | -- | -- | -- | 28,136 | (231,068) |
| Accum. amort. of other intangible assets | (69,389) | (865) | -- | -- | -- | 8,288 | (61,966) |
| Total accum. amort intangible assets | (487,371) | (64,468) | -- | -- | 111 | 43,243 | (508,485) |
| Impairment of other intangible assets | -- | (64,734) | -- | -- | -- | 1,354 | (63,380) |
| Carrying amount of intangible assets | 1,195,302 | (49,076) | 284,729 | 529 | (96) | (162,046) | 1,269,342 |
(See note 3)
This appendix forms an integral part of note 8 to the consolidated annual accounts.
(Free translation from the original in Spanish. In the event of any discrepancy, the Spanish-language version prevails)
| Balances at | Translation | Balances at | |||||
|---|---|---|---|---|---|---|---|
| 31/12/2017 | Additions | Business combination |
Transfers | Disposals | differences | 31/12/2018 | |
| Cost: | |||||||
| Land and buildings | 673,534 | 1,223 | 19,344 | 6,051 | (280) | 26,540 | 726,412 |
| Plant and machinery | 1,704,679 | 57,699 | 79,003 | 100,961 | (15,855) | 58,366 | 1,984,853 |
| Fixed Assets under construction | 262,119 | 182,016 | 1,746 | (106,473) | -- | 5,983 | 345,391 |
| 2,640,332 | 240,938 | 100,093 | 539 | (16,135) | 90,889 | 3,056,656 | |
| Accumulated depreciation: | |||||||
| Buildings | (66,765) | (15,224) | (4,682) | -- | 222 | (2,929) | (89,378) |
| Plant and machinery | (810,782) | (141,985) | (46,995) | (23) | 13,025 | (25,975) | (1,012,735) |
| (877,547) | (157,209) | (51,677) | (23) | 13,247 | (28,904) | (1,102,113) | |
| Impairment of other property, plant and equipment |
(2,732) | 81 | -- | -- | -- | 91 | (2,560) |
| Carrying amount | 1,760,053 | 83,810 | 48,416 | 516 | (2,888) | 62,076 | 1,951,983 |
(See note 3)
This appendix forms an integral part of note 9 to the consolidated annual accounts.
(Free translation from the original in Spanish. In the event of any discrepancy, the Spanish-language version prevails)
| Balances at | Translation | Balances at | |||||
|---|---|---|---|---|---|---|---|
| Business | |||||||
| 31/12/2016 | Additions | combination | Transfers | Disposals | differences | 31/12/2017 | |
| Cost: | |||||||
| Land and buildings | 687,856 | 28,503 | 19,628 | 12,694 | (823) | (74,324) | 673,534 |
| Plant and machinery | 1,655,837 | 82,234 | 9,068 | 123,816 | (10,098) | (156,178) | 1,704,679 |
| Fixed Assets under construction | 275,003 | 149,610 | 555 | (137,073) | -- | (25,976) | 262,119 |
| 2,618,696 | 260,347 | 29,251 | (563) | (10,921) | (256,478) | 2,640,332 | |
| Accumulated depreciation: | |||||||
| Buildings | (59,376) | (14,708) | -- | -- | 710 | 6,609 | (66,765) |
| Plant and machinery | (746,268) | (136,314) | -- | 34 | 7,993 | 63,773 | (810,782) |
| (805,644) | (151,022) | -- | 34 | 8,703 | 70,382 | (877,547) | |
| Impairment of other property, plant and equipment |
(3,200) | 258 | -- | -- | -- | 210 | (2,732) |
| Carrying amount | 1,809,852 | 109,583 | 29,251 | (529) | (2,218) | (185,886) | 1,760,053 |
(See note 3)
This appendix forms an integral part of note 9 to the consolidated annual accounts.
(Free translation from the original in Spanish. In the event of any discrepancy, the Spanish-language version prevails)
| Thousands of Euros | |
|---|---|
| Forecast profits distributable for 2018: | |
| Projected profits net of taxes until 31/12/2018 | 258,091 |
| Less, charge required to legal reserve | -- |
| Estimated profits distributable for 2018 | 258,091 |
| Interim dividend distributed | 136,747 |
| Forecast cash for the period 26 October 2018 to 26 October 2019: | |
| Cash balances at 26 October 2018 | -- |
| Projected amounts collected | 572,263 |
| Projected payments, including interim dividend | 544,112 |
| Projected cash balances at 26 October 2019 | 28,151 |
This appendix forms an integral part of note 15 to the consolidated annual accounts.
(Free translation from the original in Spanish. In the event of any discrepancy, the Spanish-language version prevails)
| Thousands of Euros | |
|---|---|
| Forecast profits distributable for 2017: | |
| Projected profits net of taxes until 31/12/2017 | 273,472 |
| Less, charge required to legal reserve | -- |
| Estimated profits distributable for 2017 | 273,472 |
| Interim dividend distributed | 122,986 |
| Forecast cash for the period 15 December 2017 to 15 December 2018: | |
| Cash balances at 15 December 2017 | -- |
| Projected amounts collected | 475,209 |
| Projected payments, including interim dividend | 468,117 |
| Projected cash balances at 15 December 2018 | 7,092 |
This appendix forms an integral part of note 15 to the consolidated annual accounts.
Grifols is a global healthcare leader dedicated to enhancing the health and well-being of patients worldwide. Founded in 1940, the company develops plasma protein therapies (Bioscience Division), leading-edge diagnostic solutions (Diagnostic Division), specialty pharmaceuticals for hospital use (Hospital Division), and biological products for research purposes (Bio Supplies Division).
Grifols has roughly 21,000 employees in more than 30 subsidiaries, operations in over 100 countries and manufacturing plants in six.
For more information on "Grifols today" see "Non-Financial Information Statement".
Grifols' 2018-2022 strategic plan is grounded on six main pillars: development of "One Grifols", business optimization, innovation, digitalization, enhanced customer focus and talent development. In 2018, Grifols concentrated its efforts in the following areas in order to advance these corporate priorities:
- Sustainable growth and global expansion: A higher sales volume in the Bioscience Division was the primary driver of corporate growth. The Diagnostic Division consolidated its performance, while the Hospital Division laid important groundwork for future expansion.
The United States (U.S.) and main European countries remain key markets for the group. The company aims to reinforce its strategic presence in China. In this regard, Grifols initiated talks with Shanghai RAAS Blood Products to explore a possible corporate transaction and also reached an agreement with Boya-Pharmaceutical to open plasma centers in China. In addition, the Bioscience Division recently established operations in India.
- Leadership, expansion and diversification of plasma centers: As outlined in its strategic plan, Grifols made efforts to expand its network of plasma centers via both organic and corporate transactions to meet the growing demand of its plasma products. Grifols leads the market in plasma centers, managing 256 sites worldwide, including 35 in Europe.
In 2018, the company collected 12 million liters of plasma, approximately a 30% increase over the previous year.
- Innovation: Grifols remains firmly committed to fostering innovation. In 2018, the company allocated EUR 291.4 million toward R+D+i, a 9.4% increase compared to 2017. The company made further inroads to enhance integration among its diverse manufacturing, sales and R+D operations through the Grifols Innovation Office.
In October 2018, the company presented the top-line results of the AMBAR (Alzheimer Management by Albumin Replacement) clinical trial, which indicated a significant improvement in slowing down the disease's progression in patients with moderate AD. These findings mark an important step forward in the treatment of Alzheimer's, as well as a major breakthrough in Grifols' 15 years of AD research.
Grifols' leadership focuses on collaboration, intrapreneurship, performance and accountability. The company promotes the concept of "One Grifols" to encourage transversal projects and knowledge sharing that contribute to greater innovation and business opportunities.
The company is firmly committed to the environment and contributing to social progress. Detailed information on its key areas of focus is available in "Non-Financial Information Statement".
Grifols' main achievements in 2018 are as follows (in EUR million except for workforce):
| Value generated | 4,501.2 | |
|---|---|---|
| Growth | Net profit | 596.6 |
| Headcount increase | 2,808 | |
| Diversity & Talent | Talent pool | 21,230 |
| R+D+i investment | 291.4 | |
| Innovation | Investment in manufacturing installations | 252.2 |
| Resources allocated to environmental issues | 18.2 | |
| Sustainability | Community investments | 33.3 |
| Fiscal contributions | 624.3 | |
| Contributions | Employee salaries | 849.5 |
| Dividends | 242.6 |
Estimates for the global hemoderivatives indicate it is worth more than EUR 20,600 million1 for 2017. Grifols remains an industry forerunner, with an estimated market share of more than 18%2 . The group's main products lead global sales in the hemoderivatives market:
| Global market | Global market | ||
|---|---|---|---|
| share | position | ||
| Imnmunoglobulin | 23% | 1 | |
| Alfa-1 antitrypsin | 67% | 1 | |
| Albumin | 18% | 2 | |
| Factor VIII | 20% | 1 |
Grifols continues to expand its in-vitro diagnostics sector through the Diagnostics Division. The company is an international player in blood and plasma analysis systems (transfusional diagnostics), a market estimated at USD 4,000 million2 . The company leads the segment in nucleic acid technology (NAT) processing systems, with a 55%2 global market share. Grifols is also a global reference in the manufacture of antigens for immunoassays and in the blood typing and immunohematology segment.
The Hospital Division leads the Spanish market as an IV solutions provider. The division recently continues to offer a broad portfolio of hospital pharmacy solutions in Spain and Latin America, while expanding its business in the U.S.
1 Source: Marketing Research Bureau (MRB) and internal information, 2017.
2 Source: Internal information.
Grifols reported EUR 4,486.7 million in revenues at the close of 2018, growing by 9.2%3 cc (3.9% taking into account exchange rate variations). The company reported growth in all of its divisions and geographic regions where it operates.
The division grew by 8.0% cc in 2018 (2.5% taking exchange rate fluctuations into account), to EUR 3,516.7 million. Robust sales of the main plasma proteins – immunoglobulin, albumin and alpha-1 antitrypsin – were the main drivers of revenue growth throughout the year. Of note are higher sales and price points of immunoglobulin in some markets. Sales growth of these plasma proteins, together with certain specialty immunoglobulins, offset the decline in sales of factor VIII. The renewal processes of certain licenses in China suffered delays in the last quarter of 2018, impacting sales.
The demand for immunoglobulin remains strong in Grifols' core markets, especially in the U.S. and main EU countries led by Spain, Germany and the United Kingdom. Sales also grew in Turkey, Brazil and Australia, where, in addition to primary immunodeficiencies, immunoglobulins are also used to treat secondary immunodeficiencies and neurological diseases like chronic inflammatory demyelinating polyneuropathy (CIPD), a market segment that Grifols leads.
Grifols achieved double-digit growth in immunoglobulin sales in 2018 and plans on launching a 20% subcutaneous immunoglobulin in the second half of 2019 that will expand its immunoglobulin franchise.
Albumin sales grew markedly in the U.S. and in several European countries including Italy, the United Kingdom and Turkey. China is a market with significant underlying demand and remains a core focus in Grifols' global sales strategy.
Grifols continues to lead in alpha-1 antitrypsin sales. Market penetration of this plasma protein grew in the U.S. and main EU markets thanks to effective sales strategies and an increase in the number of diagnosed patients.
Also of note is Grifols' FDA-approved genetic test for alpha-1 deficiency and Prolastin®-C Liquid, recently introduced in the U.S. This liquid formulation enhances Grifols' respiratory franchise and offers a new treatment alternative for patients.
Sales of factor VIII dropped notably in 2018 due to their declining use to treat patients with inhibitors. The company positions factor VIII as the best treatment for Hemophilia A patients, concentrating its efforts in the U.S. and emerging markets.
Grifols continues to promote its specialty proteins to enhance its differential product portfolio. Two new formulations helped boost sales in the specialty hyperimmunoglobulins segment: an anti-rabies immunoglobulin (HyperRAB®), with a twice the potency (300 IU/mL) of currently available rabies immune globulin options; and GamaSTAN®, an intramuscular immunoglobulin for patients exposed to hepatitis A or measles. Both products earned FDA approval in the first half of 2018.
The Diagnostic Division reported EUR 702.3 million in revenues, a 0.7% cc year-on-year increase and -4.1% considering exchange rate variations. Grifols is the worldwide leader in transfusional diagnostics, the division's main engine for growth in 2018. This business area includes NAT donor-screening diagnostics (Procleix® NAT Solutions), blood-typing solutions and the production of antigens for immunoassays.
Higher NAT solutions sales were driven mainly by a greater volume of plasma donations and increasing use of the Zika-virus screening test (Procleix® Zika Virus). The company also broadened its product portfolio with
3 Operative or constant currency (cc) excludes exchange rate variations of the year.
newly FDA-approved reagents to detect HIV, hepatitis B and C virus (Procleix® Ultrio Elite), and the West Nile virus (Procleix® WNV), among others.
In addition to the U.S., sales of this leading-edge technology were also strong in Latin America, Poland and Indonesia. The company continues its efforts to raise its presence in the Middle East.
The blood-typing line notably contributed to the division's overall performance, particularly in the U.S., core markets in Latin America, Europe and Saudi Arabia.
European sales of Erytra Eflexis® gained traction, with more than 200 units sold since its launch in June 2017. Grifols already introduced the product in the U.S. in 2019 after earning FDA approval. Also of note in 2018 was the release of a new line of conventional antiserums, which broadened the product portfolio after earning FDA approval.
The company further consolidated its line of antigens to produce immunoassays in 2018.
Revenues in specialty diagnostics remained stable and are expected to rise as Grifols widens its clinical diagnostics offerings. In 2018, the FDA approved two diagnostic products designed to detect autoimmune diseases. Both were developed by AESKU and distributed by Grifols on the Helios platform.
The company is committed to developing new diagnostic tests for personalized medicine through Progenika Biopharma. Its molecular diagnostic ID CORE XT for genotyping blood groups recently earned FDA approval.
The Hospital Division earned EUR 119.5 million in revenues in 2018, growing 16% cc and 13.1% taking into account exchange rate variations.
Sales of all business lines grew, especially its Pharmatech line in the U.S. market. A key strategic area for future growth, this business line offers integral services to hospital pharmacies for IV compounding, including MedKeeper and Kiro Oncology products.
The division also reported stronger IV solutions sales, especially the physiological saline solution manufactured in the Murcia (Spain) plant. The product was introduced in the U.S. market after obtaining FDA approval and is also used in Grifols' own network of plasma centers. These milestones allowed the division to bolster its presence in the United States and support the group's global expansion strategy.
Sales of the Nutrition and Medical Devices lines also increased, accompanied by an increase in third-party manufacturing services.
This division oversees three main areas: sales of biological products for non-therapeutic uses, Kedrion production agreements, and third-party plasma sales channeled through Haema and Biotest, which represent EUR 80.3 million. Bio Supplies earned EUR 167.0 million in revenues in 2018, a substantial increase from the EUR 66.8 million reported in 2017.
| In thousands of euros | 12M 2018 | % of Net Revenues |
12M 2017 | % of Net Revenues |
% Var | % Var cc* |
|---|---|---|---|---|---|---|
| BIOSCIENCE | 3,516,704 | 78.4% | 3,429,785 | 79.4% | 2.5% | 8.0% |
| DIAGNOSTIC | 702,265 | 15.6% | 732,369 | 17.0% | (4.1%) | 0.7% |
| HOSPITAL | 119,454 | 2.7% | 105,649 | 2.4% | 13.1% | 16.0% |
| BIO SUPPLIES | 167,004 | 3.7% | 66,791 | 1.6% | 150.0% | 154.9% |
| OTHERS | 22,451 | 0.5% | 18,263 | 0.4% | 22.9% | 29.6% |
| INTERSEGMENTS | (41,154) | (0.9%) | (34,784) | (0.8%) | 18.3% | 24.8% |
| TOTAL | 4,486,724 | 100.0% | 4,318,073 | 100.0% | 3.9% | 9.2% |
* Constant currency (cc) excludes the impact of exchange rate movements
| In thousands of euros | 12M 2018 | % of Net Revenues |
12M 2017 | % of Net Revenues |
% Var | % Var cc* |
|---|---|---|---|---|---|---|
| US + CANADA | 2,974,429 | 66.3% | 2,896,505 | 67.1% | 2.7% | 8.7% |
| EU | 800,274 | 17.8% | 686,983 | 15.9% | 16.5% | 16.7% |
| ROW | 712,021 | 15.9% | 734,585 | 17.0% | (3.1%) | 4.0% |
| TOTAL | 4,486,724 | 100.0% | 4,318,073 | 100.0% | 3.9% | 9.2% |
* Constant currency (cc) excludes the impact of exchange rate movements
Underlying EBITDA4 rose to EUR 1,218.4 million, representing a 27.7% margin. Gross margin continues impacted by higher plasma procurement costs related to the company's efforts, both organic and inorganic, to increase its plasma supply and meet the solid demand of its plasma-derived therapies.
Grifols operates the largest plasma collection network in the world, with 256 centers. This network includes the acquisition of six Kedplasma centers; 24 Biotest US centers in the U.S.; 35 Haema centers in Germany; and a newly inaugurated center, also in Germany, as part of its joint venture with Plasmavita Healthcare.
The last quarter of the year saw a significantly higher demand for immunoglobulin, especially in the United States, where Grifols works on the launch of 20% subcutaneous immunoglobulin. This upturn has affected the utilization of liters of plasma. Gross margin was also affected by temporary albumin sales restriction in China; by the geographic mix of factor VIII sales, tender volatility; and the product mix of the Diagnostic Division, which reported stronger demand for antigens used to produce immunoassays and transfusion-medicine diagnostic instruments.
In terms of operating expenses, Grifols decided to increase its R+D+i investment in certain projects, specifically those related to albumin, in light of the positive results of the AMBAR trial and trials on liver diseases (PRECIOSA and APACHE studies). Corporate operations, including Haema and Biotest acquisitions, as well as the negotiations with Shanghai RAAS, caused related operating expenses to rise.
Grifols' annual financial results totaled EUR 257.2 million. This figure includes an influx of EUR 32.0 million following the expected divestment in Tigenix executed in the second quarter of 2018. The effective tax rate was 18.1%. The decline from previous years owes mainly to the U.S. tax reform approved in December 2017.
4 Underlying EBITDA excludes the impact derived from Haema and Biotest third-party sales.
Excluding non-recurrent expenses5 recognized at the end of 2017, Grifols' net profit increased by 1.5% to EUR 596.6 million, compared to EUR 587.9 million in 2017. Net profits represent 13.3% of revenues.
Grifols' solid performance and positive cash flow trend helped reinforce the balance sheet. Consolidated assets as of December 2018 totaled EUR 12,477.0 million (EUR 10,920.3 million in 2017). This upturn was fueled primarily by the Bioscience Division, which grew both organically and via corporate transactions, and capital investments carried out.
Optimizing working capital remained a priority to strengthen the company's financial position.
Inventory levels increased to EUR 1,949.4 million, with a turnover of 292 days compared to 275 days in December 2017 after the implementation of several initiatives to better anticipate and meet the solid demand for plasma-derived products.
The average collection period improved to 22 days (24 days in 2017), reflecting the success of these measures. The average payment period is 65 days, a slight increase from the 53-day period in 2017.
With regard to the group's Spanish subsidiaries, the average payment period to suppliers was 72.6 days, reflecting a similar trend as last year's average of 72.9 days.
Grifols' cash position was EUR 1,033.8 million (EUR 886.5 million in 2017) on December 31, 2018. The company maintained a high and sustainable operational cash-flow generation in view of the current context of growth and investment increases. The EUR 737.4 million cash flow from operating activities allows the firm to effectively assume its planned investments.
In 2018, Grifols allocated EUR 252.2 million (EUR 271.1 in 2017) toward CAPEX and EUR 291.4 million (EUR 266.3 million in 2017) of net investments toward R+D+i. The company remains firmly committed to future growth and its long-term strategic vision.
At the close of 2018, Grifols agreed to sell Haema AG and Biotest US Corporation to Scranton Enterprises, B.V. for USD 538 million to monetize earlier these investments and reinforce its financial structure. Grifols maintains operational control of the plasma centers and holds an exclusive and irrevocable call option for both companies.
The company's equity was EUR 4,696.6 million as of December 31, 2018.
The share capital includes 426,129,798 common shares (Class A), with a nominal value of EUR 0.25 per share, and 261,425,110 non-voting shares (Class B), with a nominal value of EUR 0.05 per share
Grifols' ordinary shares (Class A) are listed on the Spanish Stock Market and form part of the Ibex-35, while its non-voting shares (Class B) are traded on both the Spanish Stock Exchange (GRF.P) and the U.S. NASDAQ exchange (GRFS) via ADRs (American Depositary Receipts).
Two dividend payments totaling EUR 278.8 million were distributed in 2018. A second dividend, charged against 2017 earnings, was paid out as a final dividend in the second quarter and an interim dividend was paid in December 2018. Grifols remains committed to compensating its shareholders with dividend payouts.
5 It relates to the Hologic acquisition; the Aradigm assets reassessment; and the U.S. tax reform.
The group's main liquidity and capital resources requirements aim to cover operating costs, capital expenditures, including the maintenance and construction of manufacturing facilities; direct and indirect R+D+i investments; and debt service.
Historically, the company has met its liquidity and capital requirements using resources generated from its operating activities and long-term external financing. As of December 2018, Grifols' cash position was EUR 1,033.8 million and its liquidity position was roughly EUR 1,400 million.
Cash flows from operating activities remained robust in 2018, reaching EUR 737.4 million as a result of the following initiatives:
Cash flows from investment activities reached EUR 781.9 million derived mainly from actions to optimize and monetize earlier specific investments made during the fiscal year:
Cash flows for financing activities totaled EUR 152.5 million in 2018. This comprises dividend payouts of EUR 278.8 million and the subsequent sale of Haema and Biotest on the same terms and conditions as their acquisition. Grifols maintains operating control of the plasma centers and holds an exclusive and irrevocable call option for both companies.
Grifols' net financial debt was EUR 5,343.1 million, including EUR 1,033.8 million (EUR 886.5 million in 2017) in cash. The company has nearly EUR 400 million in undrawn lines of credit, which increase its liquidity position to nearly EUR 1,400 million.
The group's net financial debt over EBITDA ratio was 4.32x as of December 2018. This figure drops to 4.19x excluding the impact of exchange rate variations.
Leverage management remains among the company's top priorities. To this end, Grifols maintains high, sustainable levels of operational activities and strong cash flow generation. The EUR 737.4 million cash flow from operating activities allows the firm to effectively assume its planned investments in view of the current context of growth and investment increases.
In 2018, Grifols signed a new loan for EUR 85 million with the European Investment Bank (EIB) to support its R+D+i investments. The financial terms included a fixed interest rate, maturity in 2028 and a two-year grace period. This is Grifols' third agreement with BEI within the framework of the Investment Plan for Europe.
The credit ratings issued by Standard and Poor's and Moody's remained unchanged in 2018.
Grifols advocates an integrated R+D+i strategy that comprises both in-house initiatives and external projects in investee companies whose research complements its core business. This dual approach and long-term vision earned Grifols the distinction as one of the top 1,000 global firms that dedicate the most resources to R+D in "2018 Global Innovation 1000" by Strategy&, the consulting arm of PwC.
The company's integrated R+D+i strategy is managed through the Grifols Innovation Office, which evaluates and expedites research projects, and promotes the on-going development and marketing of innovative treatments, products and services. It also aims to promote the continuous improvement of existing products and activities, and foster collaboration in the company's innovation ecosystem, including academic and research institutions.
Grifols intensified its net R+D+i investments in 2018 by 9.4% to EUR 291.4 million, taking into account net investments for both internal and external research initiatives. This investment represents 6.5% of 2018 revenues.
Grifols presented the top-line results of the phase IIb/IIII of its AMBAR (Alzheimer Management By Albumin Replacement) clinical trial in October 2018 at the Clinical Trials on Alzheimer's Disease Congress.
AMBAR is an international, multicenter and double-blind clinical trial designed to evaluate the efficacy and safety of plasma exchange – a procedure combining periodic extractions of plasma through plasmapheresis and its replacement with albumin – to slow down the progression of Alzheimer's disease (AD) in patients in mild to moderate stages.
The trial results demonstrated a statistically significant 61% slowdown in the disease's progression among patients with moderate AD and fulfillment of its primary endpoints: improvement in cognitive function (measured on the ADAS Cog scale) and ability to carry out daily activities (measured on the ADCS-ADL scale).
These results mark an important milestone in Alzheimer's research and inspire the company to continue its research on the benefits of plasma exchange with Grifols albumin toward slowing down the progression of AD.
In 2014, Grifols launched a non-profit initiative to produce anti-Ebola immunoglobulin to treat afflicted populations in West African countries. The project's research forms part of a long-term clinical trial to evaluate
whether plasma from healthy Ebola survivors can boost the immune response in afflicted patients and help them overcome the disease.
Grifols fully financed the project, which included the collaboration of the Liberian government, the FDA, World Health Organization (WHO) and various NGOs. The initiative centered on three main efforts: the construction of a modular convalescent-plasma center in Liberia similar to other Grifols plasma centers; the construction of an isolated plant to fractionate and purify anti-Ebola immunoglobulin at the Clayton complex, authorized by the FDA under its "import for export" provision; and specific training in Grifols Academies to equip staff with the necessary tools to help in the plasma-collection process and offer support to local communities.
Grifols began processing the first batch of plasma from Ebola survivors at the end of 2018 and anticipates delivering the first anti-Ebola immunoglobulins to the Republic of Liberia in the first quarter of 2019.
Grifols successfully completed the clinical research phase of a new 20% subcutaneous immunoglobulin to treat patients with primary immunodeficiencies. The product has been submitted to the FDA for marketing authorization.
The company also developed a new predictive model for population pharmacokinetics (PopPK) to administer subcutaneous immunoglobulin in patients with primary immunodeficiencies, which would inform the proper dosing of this plasma-derived product and guide its treatment usage.
Grifols continues its research on Gamunex® as maintenance therapy for myasthenia gravis (MG), a chronic autoimmune neuromuscular disease. The company plans to submit the application for EMA marketing authorization in 2019.
Research continues on the phase III PRECIOSA study on the potential benefits of albumin to treat liver cirrhosis, as well as the phase III APACHE trial on its use to treat acute-on-chronic liver failure (ACLF). Additionally, the product's new flexible packaging format is presently in the registration stage.
Grifols' blood test to detect the babesiosis parasite (Procleix® Babesia) was submitted for FDA approval, expected in the first quarter of 2019. The product is currently available as an IND (Investigational New Drug). Clinical trials also continue in China on the Procleix® Ultrio Elite line.
The FDA approved Erytra Eflexis®, a new medium-sized and totally automated analyzer. The company continues to expand its portfolio of recombinant proteins.
Grifols presented two new products for FDA approval: a physiological saline solution in a needle-free Fleboflex® container, which, in addition to enhancing the product portfolio, can be utilized in Kiro-Grifols robotics; and an anti-coagulant in a bag format that will be used in Grifols' plasma centers and expand the third-party product portfolio.
Grifols protects the intellectual property of its main products through ownership, co-proprietorship and patent licenses. An international department manages the company's patents and trademarks, supervises their maintenance and monitors any possible breaches.
The following tables summarize the total number of patents, applications, and patents in the final approval process, as well as a geographic overview of patents and trademarks completed in 2018.
| 2018 | |
|---|---|
| Total number of patents and applications | 2,965 |
| Patents in the final authorization phase | 600 |
| Patents | Trademarks | |
|---|---|---|
| USA | 258 | 162 |
| Europe | 1,615 | 1,029 |
| RoW | 1,092 | 1,997 |
| Total | 2,965 | 3,188 |
Grifols invested EUR 252.2 million in 2018 as part of its continuous efforts to expand and enhance its manufacturing facilities. This figure is stipulated in the 2016-2020 Capital Investment Plan, endowed with EUR 1,200 million to ensure the company's long-term sustainable growth. The main investments include:
As of December 2018, Grifols operated the largest plasma network in the world, with 256 centers. Thanks to its capital investments, the company increased its average number of daily donations to 39,000 and total volume of plasma obtained for fractionation to nearly 12 million liters. This volume is a 30% increase compared to 2017.
Construction on a new plasma fractionation plant at Grifols' North Carolina (USA) complex continues according to plan. The facility will have a fractionation capacity of 6 million liters per year, double its current volume. Construction is also underway on a new purification, dosing and sterile filling plant of immunoglobulin in flexible containers. The facility will have an annual capacity of 6 million equivalent liters of plasma per year.
The industrial complex in Los Angeles (California, USA) obtained FDA approval for a second immunoglobulin (Gamunex®) purification, dosing and sterile filling line. This addition will enable the facility to double its annual production capacity to 5.1 million equivalent liters of plasma per year. Also worth noting is the sterile filling plant of albumin in flexible containers, whose validation process finalized in 2018. The plant has an annual production capacity of 1.5 million equivalent liters of plasma per year.
The construction of a new albumin purification, dosing and sterile filling plant in Dublin (Ireland) continues as planned. The plant will have an annual production capacity of 6 million equivalent liters of plasma per year and incorporate state-of-the-art filling technology to boost productivity.
The Barcelona industrial complex completed the validation process of the alpha-1 antitrypsin purification, dosing and sterile filling plant. The site is equipped with Grifols' next-generation filling technology and has an annual production capacity of 4.3 million equivalent liters of plasma per year.
This complex is also moving forward on the construction of a manufacturing plant to produce fibrin sealant and topical thrombin. The facility will have a production capacity of 1.7 million units per year.
The Emeryville (California, USA) plant received FDA approval for its new installations to manufacture recombinant proteins and a recombinant antigen for hepatitis C. The company plans to submit additional FDA applications in 2019 to relocate the production of 21 antigens to its new facilities.
The validation process of the San Diego (California, USA) installation is underway, following renovations to consolidate production of the NAT product line.
The Brazil plant, dedicated to the manufacture of collection, separation, storage and transfusion bags for blood components, is nearing the end of the validation stage. The installation currently has a production capacity of 2 million units per year, scalable to 4 million units.
The division's capital investments were dedicated to expanding the capacity and productivity of its intravenous lines at its Barcelona and Murcia (Spain) complexes in order to meet the expected growth of this segment.
Grifols strengthened its leadership position in global plasma supply following the 100% acquisitions of Haema AG, headquartered in Germany, and Biotest US Corporation.
The Haema acquisition has enabled Grifols to operate its first plasma centers outside the U.S. The transaction included 35 centers and three under construction; a 24,000-square-meter building in Leipzig which houses Haema's corporate headquarters; and a central laboratory located in Berlin.
For its part, the Biotest US Corporation acquisition included 24 U.S.-based plasma centers and two under construction, as well as diverse assets.
Subsequent to these acquisitions, Grifols sold both companies under the same terms and conditions to strengthen its financial structure. The company holds an exclusive and irrevocable call option to be executed at any time for both Haema and Biotest, and maintains operating control of their plasma centers.
In 2018, Grifols signed an agreement with Boya Bio-Pharmaceutical, a producer of plasma-derived medicines in China, to build and manage plasma centers in the country. The plasma obtained from these centers will be used for Boya Bio-Pharmaceutical, although Grifols will be able to access up to 50% of the total collected when the applicable Chinese legislation allows.
Grifols acquired six plasma centers from Kedplasma in 2018.
In line with the Hospital Division's strategic growth plan, Grifols acquired a 51% stake in MedKeeper, a U.S. technology firm that develops and markets mobile and web-based software applications to optimize the efficiency and safety of hospital pharmacies. The agreement includes a call option to acquire the remaining 49% interest within a three-year timeframe.
Consolidated Directors' Report
Grifols' mission is to ethically and responsibly provide life-saving treatments and essential, leading-edge diagnostic and hospital solutions for patients and healthcare professionals around the world. It aspires to continually advance its current commitments while staying true to its corporate values:
| Corporate values | Commitments |
|---|---|
| Safety | Safety and quality throughout the value chain |
| Effort | Economic performance |
| Commitment | Social outreach |
| Teamwork | Employment |
| Innovation and improvement | R+D+i |
| Pride | Ethical approach, transparency and legal compliance |
| Excellence | Environemntal management |
Grifols' Corporate Responsibility Policy is guided by its corporate values, which underpin its identity, operational principles and commitment to stakeholders.
The objectives and norms in the Corporate Responsibility Policy are inspired by an ethos of integrity and transparency; legal compliance and prevention of unlawful actions; staunch commitment to the environment; safety and health; and a commitment to society as a whole.
Grifols has carried out a materiality analysis to identify the most significant economic, environmental and social impacts of Grifols' value chain as defined by its business model. This analysis is updated on an annual basis.
As a result of this report, Grifols has identified 18 of the most noteworthy material issues that stem from its corporate commitments. Detailed information is available in "Basis for the preparation of the Non-Financial Information Statement".
Grifols promotes a vertically integrated business model in its divisions to maximize involvement and control of the various phases of its value chain.
Grifols exercises complete control of the division's value chain, controlling all strategic activities and processes, from plasma collection to the finished product. Plasma proteins are specialty medicines that require long, complex and extensive production processes to guarantee their quality and safety. Complete control of the value chain ensures product quality and safety, as well as complete traceability.
The demand for plasma proteins has increased as a result of improved healthcare coverage, longer life expectancies, new indications, and enhanced diagnostics for certain rare diseases treated with plasma proteins.
Within this context, Grifols' lines of action in 2018 aimed to generate growth opportunities and bolster the projection of this division, centering its efforts in the following areas:
Grifols controls all of the strategic operations and processes that make up the Diagnostic Division's value chain, including the development, production and marketing of its products. The division's business model reinforces its value chain through a diversification strategy based on distributing and marketing third-party products complementary to its product portfolio.
In 2018, the company focused its efforts on the following areas to bolster the division's growth opportunities and market expansion:
The company also controls the strategic operations of the Hospital Division's value chain, including the development, production and marketing of its product and services.
International expansion, particularly its marketing positioning in the U.S. market, forms the basis of the division's growth strategy. The most noteworthy initiatives to growth-generation opportunities include:
For a global company like Grifols, a reliable and robust corporate governance structure is vital to creating long-term value. Integrity, honesty, transparency and compliance with the highest ethical standards are the core values that guide Grifols' corporate culture and governance.
Grifols S.A., as incorporated in Spain and listed on the Spanish stock market, complies with the Spanish Companies Act and other relevant Spanish regulations. Furthermore, as a foreign private issuer of securities listed in the United States, Grifols complies with the requirements established by the U.S. Securities and
Exchange Commission, the NASDAQ Corporate Governance Rules, and the U.S. Sarbanes-Oxley law of 2002.
For Grifols, mere legal compliance is not enough. The company has built a corporate governance based on integrity, honesty and transparency, which, in practical terms, translate into the following corporate policies:
| Corporate Responsability | Corporate Responsibility guidelines: integrity and transparency, compliance with regulations and prevention of unlawful conducts, commitment with the environment, security and health, social commitment |
|---|---|
| Communication with Financial Markets | General principles: transparency, veracity, equality, symmetry in information disclosure, compliance with applicable legislation |
| Internal code of conduct for matters relating to stock markets |
Determines conduct and action criteria, must be followed by the affected person, covers the handling, use and disclosure of confidential insider and Relevant Information |
| Tax compliance and best practices | Corporate tax policy principles: responsible taxation, prudence, collaboration with competent tax authorities, no presence in tax havens, compliance with the strictest legal framework applicable in each legislation, aligned with OECD and EU principles |
| Risk control and Management Policy | Established on: a zero-tolerance risk framework, leadership of senior management to allocate the necessary resources, integration of strategic and planning management processes, segregation of duties, holistic and harmonized management approach, continuous improvements through periodic reviews |
| Director's remuneration policy | The Directors' Remuneration Report was approved by the Ordinary General Shareholders Meeting held on May 26, 2017 and will be valid for the next three years unless amended by the Grifols General Shareholders Meeting. |
The General Shareholders' Meeting serves as Grifols' governing body and represents all shareholders on matters within its competence. Grifols welcomes all shareholders, with no minimum number of shares required to attend.
The Board of Directors is Grifols' highest decision-making body, with the exception of matters that fall under the competence of the General Shareholders' Meeting. Grifols Board of Directors is responsible for approving the company's corporate strategy and execution. To this end, it guides and controls the actions of Grifols management to ensure it achieves established objectives and satisfies stakeholder expectations.
The company has an Audit Committee and Appointments and Remuneration Committee that both include a secretary and three members appointed based on their knowledge, skills and experience in committee matters. All committee members are non-executive directors and at least two must be independent directors. Committee presidents are independent directors.
6 Information on the powers granted to the Grifols General Shareholders' Meeting and other issues regarding the last meeting and published on www.grifols.com
7 Detailed information on the responsibilities of Grifols Board of Directors and Board Committees are available on www.grifols.com
Beyond legal requirements, and in alignment with best practices in corporate governance, Grifols' Board of Directors has a lead independent director who coordinates the independent directors and safeguards ensures independence between the company's governance and management functions.
Board of Directors' profile:
| Name | Board of Directors |
|---|---|
| Víctor Grífols Roura | Non-executive Chairman / Proprietary |
| Raimon Grífols Roura | Co-CEO / Executive |
| Víctor Grífols Deu | Co-CEO / Executive |
| Ramón Riera Roca | Director/ Other external |
| Tomás Dagá Gelabert | Director and Vice Secretary/ Other external |
| Thomas Glanzmann | Non-Executive Vice Chairman/ Other external |
| Anna Veiga Lluch | Director/ Independent |
| Steven F. Mayer | Director/ Independent |
| Luis Isasi Fernández de Bobadilla | Director/ Independent |
| Belén Villalonga Morenés | Director/ Independent |
| Marla E. Salmon | Director/ Independent |
| Iñigo Sánchez- Asiaín Mardones | Lead Independent Director / Independent |
| Carina Szpilka Lázaro | Director/ Independent |
| Nuria Martín Barnés | Secretary/Non member |
Grifols' risk management system applies to all companies that make up the group, including investees.
The company's risk control and management policy aims to provide greater security to patients, donors, employees, shareholders, clients, suppliers and other stakeholders by anticipating, controlling and managing risks that could prevent Grifols from achieving its objectives. It comprises specific risk policies that are formulated within a risk control and assurance framework.
Grifols' Board of Directors is responsible for approving the company's risk control and management policy.
For its part, the Audit Committee supervises the efficiency of the risk control and management system, including periodic evaluations. The Internal Audit Department supports the committee in these functions. At the same time, the senior management team oversees the risk management process by identifying and evaluating relevant risks and determining appropriate responses, taking into account the potential business impact, costs and benefits.
The primary risk factors that Grifols is subject to are outlined, in general terms, in its risk control and assurance policy8 . These include:
8 http://www.grifols.com/documents/10180/14422120/risk-control-and-management-policy-2017-es/362de5d6-8f36-4c3caedd-10811f8dd3ec
At the date of formal preparation of these consolidated financial statements, Grifols adopted measures to mitigate any possible effects arising from the aforementioned events.
Grifols' risk control and management system is grounded on the following principles:
By establishing and enforcing these norms and control procedures, the group aspires to cultivate an atmosphere of strict and constructive control throughout the organization in which all employees fully understand their roles and obligations.
More information on Grifols' risk control and management policy may be found in the annex, in Note 5 of its annual consolidated financial statements.
Grifols minimizes the potential impact of its operations on the environment. In alignment with its commitment to sustainable development, the company has diverse policies and standard guidelines in place to ensure efficient resources management. Communicated across the organization at the behest of Grifols' top management, they define and articulate the company's environmental management efforts:
| Environmental Policy | Defines organization-wide guidelines, principles and commitments to control and improve Grifols' environmental impact |
|---|---|
| Energy Policy | Defines organization-wide guidelines and operational principles to optimize the use of energy resources |
| Corporate Environmental Manual | Manual applicable for most manufacturing centers and others certified with the international ISO 14001 standard. It serves as an organization-wide reference for environmental behavior. |
| Environmental Programs | Includes specific lines of action for each business area to reach overall objectives. The 2017- 2019 ENVIRONMENTAL PLAN is currently in force. |
| - Participation of senior management of each ISO 14001-certified company (or in the certification process) and of Grifols Committee, S.A., which encompasses the environmental management of all companies. |
|
| - Control and follow-up of the environmental management system | |
| Environmental Committees | - Proposal, follow-up and supervision of environmental programs. |
| - Review of follow-up indicators, application of corrective measures and compliance of the current legal framework |
|
| - Identification of areas for improvement. |
Grifols' environmental management includes a range of initiatives to optimize its resource management and mitigate any potential environmental impact caused by its operations. These include:
| Ecoefficiency | Integration of environmental criteria in the design systems of projects, products and services in order to incorporate adequate prevention and eco-efficiency measures that minimize the environmental impact. The R+D, Engineering and Grifols Engineering Departments study and apply the most eco-efficient alternatives from a life cycle perspective. |
|---|---|
| Prevention | - Periodic review of preventive measures to minimize the potential impact of environmental risks identified by the company. - Perform periodic simulations in manufacturing plants to evaluate the reaction capacity in case of emergencies or incidents with environmental impact. - Specific training for employees. |
| Development of specific self protection plans for each installation |
Define action plans in case of emergencies with environmental implications and appoint teams responsible for their implementation. |
| Legal compliance | Legislative monitoring systems allow identifying the legal requirements that each facility must comply with and periodic compliance assessments. |
| Communication | Internal and external communication procedures to guarantee an adequate response for each type communication received within a stipulated timeframe. |
Grifols' environmental management system is certified by the international ISO 14001 standard, which ensures the company has procedures in place to prevent environmental risk and minimize the environmental impact of its operations.
The company aspires to obtain ISO 14001 certification in all of its manufacturing facilities. Grifols' plants in Spain have been ISO-14001-certified since 2004 and 2005, while the Clayton (North Carolina, USA) hemoderivatives plant was certified in 2016. In 2018, the company worked to earn certification for the Diagnostic Division's Emeryville plant (obtained in June) and initiated the certification process for the Bioscience Division plant in Los Angeles. All certified plants have adopted the new ISO 14001:2015 standard. To date, 75% of Grifols' total production is manufactured in ISO-14001-certified installations.
In 2018, the Clayton plant was also distinguished with the Leadership in Energy and Environmental (LEED) for its sustainable design. The Grifols facility became the first to receive this distinction in Johnston County.
Grifols has civil responsibility insurance to cover accidental contamination of the environment, understood as the disturbance of the natural state of air, groundwater, flora or fauna (or any other situation legally deemed as environmentally harmful), caused by emissions from Grifols installations due to accidental, sudden and unforeseen consequences. Grifols' responsibility extends to all of its companies, manufacturing facilities and sales offices in all of the countries where it operates.
In 2018, Grifols received no fines or economic sanctions related to its environmental management.
Grifols carried out notable investments in 2018 to improve its environmental performance and meet its 2017- 2019 Environmental Program Policy objectives.
In 2018, investments focused primarily on reducing water consumption and emissions from refrigerant gases. Corporate investment in environmental assets reached EUR 2.7 million (EUR 8.5 million in 2017). Costs rose to EUR 15.5 million, compared to the EUR 13.6 million reported in 2017.
The difference in comparison with previous years derives from a change in accounting criteria for this type of investments. In previous years, only the portion of the project carried out during the year was listed for accounting purposes; starting in 2018, the entire investment is recorded in the year the project is finalized. The main environmental costs related to waste management and the treatment of wastewater.
On the whole, including costs and investments, 63% of resources were allocated toward waste management; 32% were related to managing the water cycle; and the remaining 5% were allocated to reducing atmospheric emissions, energy and others.
| In thousands of euros | 2016 | 2017 | 2018 |
|---|---|---|---|
| Waste management | 9,073.5 | 9,621.9 | 11,419.2 |
| Water cycle | 3,195.8 | 3,636.6 | 3,718.2 |
| Reducing atmospheric emissions, energy | 186.1 | 54.7 | 74.2 |
| Others | 262.5 | 241.1 | 290.3 |
| Total | 12,717.9 | 13,554.3 | 15,501.9 |
| In thousands of euros | 2016 | 2017 | 2018 |
|---|---|---|---|
| Waste management | 389.2 | 420.8 | 52.6 |
| Water cycle | 2,064.4 | 4,002.2 | 2,084.6 |
| Reducing atmospheric emissions, energy | 2,600.3 | 3,723.6 | 121.5 |
| Others | 96.8 | 347.9 | 474.0 |
| Total | 5,150.7 | 8,494.5 | 2,732.7 |
Grifols' 2017-2019 Environmental Program outlines its environmental goals and targets for this two-year period. Specific action items are attached to all objectives, which are carried out in Grifols' various manufacturing facilities.
The following table details the overall objectives of the 2017-2019 Environmental Program. The degree of fulfillment refers to the extent to which the objectives have been implemented.
| 2017 - 2019 OBJECTIVES | DEGREE OF FULFILLMENT OF OBJECTIVES ( 2018 OVERVIEW) |
|---|---|
| ENERGY | |
| Reduction of electrical consumption by 2.06 million kWh per year in specific installation |
15.1% |
| Reduction in electrical demand in new installations by 6.2 million kWh per year |
44.9% |
| Decrease in the consumption of heat energy by 19.7 million kWh per year in specific buildings |
99.4% |
| Reduction in natural gas consumption in the construction of new installations by 0.92 million kWh per year |
25.3% |
| WATER | |
| Reduction in water consumption by 265,000 m3 per year in specific installations |
36.0% |
| WASTE | |
| Reduction in the volume of waste by 450 T per year in specific installations |
79.5% |
| Increase in waste recycling by 270 T per year in specific installations | 100% - COMPLETED |
| CONSUMPTION | |
| Reduction in the consumption of raw materials in specific installations | 16.7% |
| OTHERS | |
| Standardization of the environmental management system in specific installations |
78.0% |
| Reduction of atmospheric gas emissions in specific installations | 38.0% |
| Environmental awareness in specific installations | 100% - COMPLETED |
| ENERGY | ||||
|---|---|---|---|---|
| Continuity on projects aimed to decrease electrical consumption by more than 800,000 kWh in current installations |
Increase in number of energy audits in manufacturing centers (Ireland) and subsidiaries (Germany and France) Decrease electrical consumption in cooling capacity systems in Bioscience Division installations (Barcelona) Modelling for electrical consumption of air conditioning in headquarters (Barcelona) |
|||
| Projects to decrease natural gas consumption by 4.1million kWh per year in existing installations |
Enhance efficiency of heaters and condensation recovery systems in the Bioscience Division installations (Barcelona and Clayton) |
|||
| Optimization of natural gas consumption | Installation of a high-efficiency heater in the Bioscience Division's installations in Ireland. Estimated savings of 1.12 million kWh per year compared to a conventional heater |
|||
| WATER | ||||
| Reducción del consumo anual de agua en 6.500 m3 |
Installation of water and condensation recovery systems in Bioscience Division installations (Clayton) |
|||
| ATMOSPHERIC EMISSIONS | ||||
| Incorporation of new cold gas refrigerant installations with lower GWP or GWP=0 (Global Warming Potential) Study on installation of solar-energy plants in Hospital Division (Murcia) and Bioscience Division (Clayton) installations |
Like all Program objectives, these targets are supported by concrete metrics, execution deadlines, human and financial resources, as well as deadlines for implementation.
Grifols calculated its carbon footprint to identify greenhouse gas emissions generated by its operations and their impact on the environment. Calculations follow the Greenhouse Gas Protocol (GHG Protocol) methodology, the international standard used to measure and report greenhouse gas emissions.
Total emissions in 2018 were 296,000 tons of CO2 equivalent, 0.4% higher than the previous year. Broken down by scopes according to the GHG, as follows:
| Scope 1 | Scope 2 | Scope 3 | ||
|---|---|---|---|---|
| Direct emissions generated by the activity itself, mainly through consumption of natural gas and other fuels, and fugitive emissions such as refrigerant leaks. |
Indirect emissions from electricity consumption. |
Other indirect emissions: business travel, employee commuting and transportation, as well as emissions resulting from waste treatment and recovery. |
||
| Fuel (Gasoline and Diesel) | Electricity | Transportation (Imports and exports managed from Grifols International) |
||
| 2,512 | 120,493 | 8,665 | ||
| Fugitive emissions 19,975 |
Waste management 16,112 |
|||
| Natural Gas 75,556 |
Business travel 12,535 |
|||
| Employee commuting 40,076 |
||||
| TOTAL Emissions 295,924 |
| 2016 | 2017 | 2018 | |
|---|---|---|---|
| HCFC (T) | 1.68 | 0.28 | 0.34 |
| HFC (T) | 6.18 | 7.93 | 5.75 |
| Otros (T) | 0.01 | 0.01 | 0.01 |
| 2016 | 2017 | 2018 | |
|---|---|---|---|
| NOx (T) | 68.0 | 68.3 | 66.5 |
| CO (T) | 11.5 | 58.5 | 58.5 |
| SO2 (T) | 1.0 | 1.2 | 1.4 |
Grifols' waste management strategy prioritizes preventing and minimizing waste and encouraging recovery whenever possible, as opposed to landfill or incineration. Grifols' commitment to optimize waste management includes recycling, anaerobic digestion and energy recovery.
| 2016 | 2017 | 2018 | ||
|---|---|---|---|---|
| Total weight of hazardous waste (T) | Energy recovery and by-products | 1,476 | 1,707 | 2,093 |
| Reused and recycled | 2,440 | 2,706 | 2,963 | |
| Disposed of | 3,935 | 4,275 | 5,007 | |
| Total weight of non-hazardous waste (T) | Energy recovery and by-products | 3,971 | 5,138 | 4,762 |
| Composted | 394 | 29 | 50 | |
| Reused and recycled | 4,407 | 5,494 | 7,402 | |
| Other | 869 | *0 | *0 | |
| Disposed of | 14,258 | 15,974 | 18,947 | |
| Other (non-hazardous/hazardous waste) (T) | Disposed of | 2,135 | 2,648 | *0 |
| Total | 33,885 | 37,971 | 41,224 |
*Waste classified as "Other" in previous years has been reclassified with greater detail into other categories.
In 2018, water consumption totaled 3,320,383 m3, a 1.8% increase compared to 2017.
| By source | % of consumption on | ||||
|---|---|---|---|---|---|
| Third-party | water-stressed | ||||
| Total | Groundwater | water | regions* | ||
| Bioscience | 3,059,184 | 175,817 | 2,883,367 | 17.9% | |
| Diagnostic | 177,106 | 177,106 | 84.7% | ||
| Water consumed (m3) | Hospital | 84,093 | 79,612 | 4,481 | 0.1% |
| Total | 3,320,383 | 255,429 | 3,064,954 | 21.0% |
*High and high-hazard risk areas according to World Resource Institute.
Grifols operates in geographic regions where controlling water consumption is a necessity. To this end, the company applies preventive measures when it designs new facilities and modifies existing facilities to reduce water consumption. Among the measures implemented are recovering clean water used in production processes for auxiliary uses and using automated CIP cleaning systems to reduce the amount of water used to clean reactors.
Grifols complies with all relevant regulations and authorizations applicable to the elimination of wastewater in its facilities. Wastewater is managed in proprietary or municipal treatment systems. In 2018, 2,647,969 m3 of wastewater was discharged into the public sewer system. Of the water consumed, 79.7% is transformed into wastewater, while the remaining 20.3% is used in auxiliary processes that do not involve discharge, such as the cooling towers, or incorporated into the product during the manufacturing process. The Bioscience Division's facilities in Barcelona and Clayton treat wastewater with biological systems prior to discharge.
| By destination | By treatment | By region | |||
|---|---|---|---|---|---|
| Total (Public sewer system) |
No treatment | Biological systems prior to discharge |
% of consumption on water-stressed regions* |
||
| Bioscience | 2,408,593 | 1,415,348 | 993,245 | 11.7% | |
| Diagnostic | 182,955 | 182,955 | 75.3% | ||
| Water discharged (m3) | Hospital | 56,421 | 56,421 | 0.1% | |
| Total | 2,647,969 | 1,654,724 | 993,245 | 15.9% |
*High and high-hazard risk areas according to World Resource Institute.
| Main materials consumed Bioscience - Absolute value (T) |
2016 | 2017 | 2018 | Variation |
|---|---|---|---|---|
| Sorbitol | 1,672 | 1,420 | 1,994 | 40.4% |
| Ethanol | 3,024 | 2,953 | 2,781 | -5.8% |
| Polyethylene glycol | 1,635 | 1,914 | 2,245 | 17.3% |
| Glass packaging | 253 | 262 | 325 | 24.0% |
| Total | 6,584 | 6,549 | 7,345 | 12.2% |
| Main materials consumed Diagnostic - Absolute value (T) |
2016 (*) | 2017 (*) | 2018 | Variation |
|---|---|---|---|---|
| Circuit boards (units) | 31,680 | 30,115 | 31,991 | 6.2% |
| PP Plastic Cards | 192 | 177 | 248 | 40.1% |
| Glass packaging | 1 9 |
1 7 |
2 0 |
17.6% |
| Plastic reagent packaging | 2 5 |
2 2 |
2 3 |
4.5% |
| Red cell reagents (liters) | 254,836 | 249,205 | 274,034 | 10.0% |
| PVC pellets, flat tubes and sheets | 623 | 429 | 573 | 33.5% |
| Total | 859 | 645 | 864 | 34.0% |
(*) Figures updated according to new consolidation criteria. Starting in 2018, all types are consolidated into a single PCV category.
| Main materials consumed Hospital - Absolute value (T) |
2016 | 2017 | 2018 | Variation |
|---|---|---|---|---|
| PP, pellets and flat tubes | 219 | 522 | 618 | 18.4% |
| Glucose | 79 | 254 | 206 | -18.9% |
| Sodium chloride | 165 | 176 | 212 | 20.5% |
| Glass packaging | 1,355 | 1,117 | 800 | -28.4% |
| Total | 1,818 | 2,069 | 1,836 | -11.3% |
In 2018, Grifols consumed a total of 384.0 million kWh, compared to 353.6 million kWh in 2017. The Bioscience Division represents 87% of Grifols' total energy consumption. Higher consumption in absolute values stems from production increases and expansion of the plasma donation network. The Diagnostic Division's electricity usage was 34.3 million kWh, a 5% increase compared to 2017. The Hospital Division accounts for the remaining 4.2% of electricity consumed. Its energy consumption in absolute values was 16.3 million kWh, a 7% increase compared to 2017 despite a 16% increase in productive output. The Division improved its energy efficiency by relocating most of its manufacturing operations from the oldest plant in Murcia to a newer, more modern and efficient plant.
In terms of renewable energy, 4,905,592 kWh were consumed in Spain, Ireland and Italy.
| 2016 | 2017 | 2018 | |
|---|---|---|---|
| Bioscience | 303,698,495 | 305,509,272 | 333,293,034 |
| Diagnostic | 24,020,385 | 32,816,148 | 34,367,035 |
| Hospital | 14,371,821 | 15,296,445 | 16,380,793 |
| Total | 342,090,701 | 353,621,865 | 384,040,862 |
| Aigües de Vilajuïga | 6,716 | ||
| TOTAL | 384,047,578 |
| Cogeneration figures | 2016 | 2017 | 2018 |
|---|---|---|---|
| Natural gas consumed (kwh) | 101,044,947 | 85,979,380 | 89,417,050 |
| Total electricity generated (kwh) | 37,802,940 | 35,024,990 | 32,984,680 |
| Useful heat recovered (kwh) | 27,335,440 | 23,134,790 | 25,266,980 |
| Global output | 71.5% | 68.0% | 71.6% |
| Primary energy saving (pes) | 18.9% | 17.0% | 17.6% |
| Co2 emissions (t) | 18,101 | 15,612 | 16,315 |
| Co2 emissions savings (t) | 3,416 | 3,277 | 3,492 |
The consumption of natural gas in 2018 totaled 415 million kWh, a 6% increase over the previous year. Most consumption derives from the Bioscience Division, which represented 87% of the total in 2018. The division increased its usage by 5% due to higher production output and expansion of the plasma center network. The Diagnostic Division also increased its consumption following validations for the Emeryville plant. The Hospital Division's consumption remained stable despite increasing its yearly manufacturing output. The division relocated most of its operations to a newer, more energy-efficient plant in Murcia, Spain.
In terms of geographic regions, 62% is consumed in the United States.
| 2016 | 2017 | 2018 | |
|---|---|---|---|
| Bioscience | 336,692,316 | 342,916,221 | 358,704,138 |
| Diagnostic | 13,347,316 | 28,247,569 | 35,149,360 |
| Hospital | 19,761,841 | 20,451,580 | 20,886,079 |
| Total | 369,801,473 | 391,615,370 | 414,739,577 |
The Bioscience Division also consumes other fuels including diesel, gasoline and propane, which are used in its own generators, equipment and vehicles. In 2018, 8,306 MWh were consumed, a 6% increase compared to the previous year due mainly to greater diesel consumption.
Grifols implements preventive pollution strategies to mitigate the environmental impact of its operations and the effects of climate change.
The company participates in the Carbon Disclosure Project (CDP), an annual program that evaluates the organization's strategy and performance with respect to climate change. The company received the CDP2018 participation questionnaire in June. Grifols obtained a "B Management" grade in 2018, the same score as last year. This rating indicates the company's strides to minimize atmospheric emissions by assessing its impacts, risks and opportunities, as well as the effectiveness of its policy and strategy framework toward reducing the negative impact of climate change.
Grifols' success resides in the dedication and commitment of its workforce, which the company considers among its most important assets.
The company advocates an equal-opportunity policy in its selection processes, training initiatives, remuneration, promotions and professional development efforts, and fosters a culture of diversity, inclusion, equal opportunities and non-discrimination. To this end, Grifols has a range of standard, organization-wide of policies and guidelines:
"Grifols Academy" in 2009 to enhance the skillset and leadership potential of its talent pool and cultivate dynamic forums for learning and knowledge-sharing.
Every role at Grifols requires specific skillsets, competencies and attitudes that align with the company's values. Grifols places a high value on teamwork, honesty, integrity, ethics and compliance at all levels of the organization. The Board of Directors and top-level executive team actively promote these values as mainstays of the corporate culture through:
The diversity in Grifols' workforce is grounded on a respect for individual differences including ethnicity, race, color, gender, age, physical appearance and ability/disability, and underlying characteristics like attitudes, religion and beliefs, education, nationality and personal trajectories. Diversity also encompasses sexual orientation, marriage and civil partnerships, gender identity and/or expression and other personal aspects.
Grifols is proud of the diverse talents and abilities in its global talent pool. The sum of employees' individual differences, life experiences, knowledge, singular abilities and talents undoubtedly enhance Grifols' corporate culture and organizational outcomes.
As a result of the company's efforts to maintain a discrimination-free workplace, only 33 incidents of discrimination were reported in 2018 out of a total of 21,230 employees, compared to 48 incidents out of 18,296 employees in 2017 and 25 incidents out of 14.877 employees in 2016. Grifols thoroughly reviewed these claims, and although none was considered discriminatory in legal terms, there were actions taken including admonition, counseling and training to guarantee a discrimination-free environment.
The company is committed to hiring individuals with disabilities. Grifols adopts alternative measures when accommodating a disabled individual is not possible for technical or organizational reasons, as established in the General Law on Persons With Disabilities, applicable to private and public-sector firms in Spain. As of 2018, 461 people with some type of disability form part of Grifols' talent pool (61 in Spain and 400 in the U.S.11).
Grifols promotes universal access to people with disabilities. Its accessibility principles include the removal of architectural barriers and pledge of equal opportunities for persons with disabilities. The company's new buildings and installations comply with current legislation and necessary structural reforms are carried out when necessary.
9 See https://www.grifols.com/documents/51507592/51526483/internal-code-of-conduct-2016-en.pdf/d03bff73-e6cc-481abdfa-32eb6efb6ac9
10 Available at https://www.grifols.com/en/corporate-policies
11 This indicator scope excludes Biotest USA and Goetech companies.
Grifols makes no distinction between men and women in its hiring practices, compensation or benefits packages. In accordance with the Grifols Equal Opportunities philosophy, salaries for new incorporations are the same regardless of gender.
The company has equal-opportunity programs in place in alignment with its policy of non-discrimination and equal opportunity, and in compliance with the Equality Act 3/2007 of 22 March.
As outlined in Grifols' Equality Program, the Equality Committee is responsible for monitoring the system, including periodical and objective evaluations. Among the actions included since it was set in 2014 are:
These actions align with the core principles established in Grifols Code of Conduct and Code of Ethics for Executives.
The company continues to focus on a range of areas of intervention. These include actions to advance equalitarian organizational management; increase female representation in management bodies; contribute to eliminating pay gaps in positions of equal value; promote flexible work and work-life balance policies; and ensure internal and external communications use inclusive language and convey a gender-neutral approach, as established in the company's official information channels on equal opportunities and the importance of language.
Effective equality is promoted through work-life balance measures that allow employees to reconcile their professional and personal commitments. Grifols continues to integrate work-life balance policies in the organization. In 2018, the company rolled out two important measures: A Friday workday of 8 a.m.-3 p.m. in Grifols' centers in Spain for employees with standard business hours; and the option of dividing up one vacation day per year. In the U.S., all vacation days may be divided into half-day allotments. Grifols does not have "right to disconnect" policies.
The company complies with the Office of Federal Contract Compliance Programs (OFCCP) of the U.S. Department of Labor, which requires employers like Grifols to take active steps to ensure equal-opportunity employment and prevent discrimination based on race, gender and disability, among others. These Affirmative Action Plans (AAPs) to promote the employment of women and legally protected minority groups apply to companies with more than 50 employees.
In 2018, Grifols' AAPs led to 96 concrete action plans, a 40% increase compared to 2017 (57 action plans).
In 2018, Grifols' workforce included 21,230 employees, growing more than 16% compared to the previous year (18,296 employees in 2017). The number of women increased in all professional categories, especially in occupational positions (+37%), to 1,379 women; management (+25%) to 590 women; and top management (+24%) to 172 women.
The evolution of Grifols' workforce in 2018 and the positive impact of its proactive talent management strategies are summarized in the following data:
| Employees | % | |
|---|---|---|
| Spain | 3,858 | 18.2% |
| USA | 15,299 | 72.1% |
| Rest of the World | 2,073 | 9.8% |
| Total | 21,230 | 100.0% |
| 2016 | 2017 | 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Permanent | Temporary | Total | Permanent | Temporary | Total | Permanent | Temporary | Total | |
| Women | 7,889 | 176 | 8,065 | 10,329 | 186 | 10,515 | 12,402 | 164 | 12,566 |
| Men | 6,577 | 235 | 6,812 | 7,548 | 233 | 7,781 | 8,464 | 200 | 8,664 |
| Total | 14,466 | 411 | 14,877 | 17,877 | 419 | 18,296 | 20,866 | 364 | 21,230 |
| % | 97.2% | 2.8% | 100.0% | 97.7% | 2.3% | 100.0% | 98.3% | 1.7% | 100.0% |
| 2016 | 2017 | 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Permanent | Temporary | Total | Permanent | Temporary | Total | Permanent | Temporary | Total | |
| North America | 10,553 | 3 | 10,556 | 13,670 | 1 | 13,671 | 15,330 | 0 | 15,330 |
| Europe | 3,540 | 385 | 3,925 | 3,829 | 386 | 4,215 | 5,119 | 348 | 5,467 |
| Rest of the world | 373 | 23 | 396 | 378 | 32 | 410 | 417 | 16 | 433 |
| Total | 14,466 | 411 | 14,877 | 17,877 | 419 | 18,296 | 20,866 | 364 | 21,230 |
| 2016 | 2017 | 2018 | |
|---|---|---|---|
| <30 | 3,871 | 5,503 | 6,528 |
| 30-50 | 8,378 | 9,754 | 10,988 |
| >50 | 2,628 | 3,039 | 3,714 |
| Total | 14,877 | 18,296 | 21,230 |
| 2016 | 2017 | 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Full-time | Part-time | Total | Full-time | Part-time | Total | Full-time | Part-time | Total | |
| Women | 7,477 | 588 | 8,065 | 9,861 | 654 | 10,515 | 11,610 | 956 | 12,566 |
| Men | 6,625 | 187 | 6,812 | 7,571 | 210 | 7,781 | 8,306 | 358 | 8,664 |
| Total | 14,102 | 775 | 14,877 | 17,432 | 864 | 18,296 | 19,916 | 1,314 | 21,230 |
| % | 94.8% | 5.2% | 100.0% | 95.3% | 4.7% | 100.0% | 93.8% | 6.2% | 100.0% |
| 2017 | 2018 | |||||
|---|---|---|---|---|---|---|
| Women | Men | Total | Women | Men | Total | |
| Top management | 29.0% | 71.0% | 472 | 32.0% | 68.0% | 542 |
| Senior management | 40.0% | 60.0% | 490 | 41.0% | 59.0% | 495 |
| Management | 44.0% | 56.0% | 1,074 | 48.0% | 52.0% | 1,224 |
| Senior professional | 45.0% | 55.0% | 1,631 | 47.0% | 53.0% | 1,816 |
| Professional | 51.0% | 49.0% | 1,978 | 56.0% | 44.0% | 2,474 |
| Administratives/ Manufacturing operators |
63.0% | 37.0% | 12,651 | 64.0% | 36.0% | 14,679 |
| Total | 57.0% | 43.0% | 18,296 | 59.0% | 41.0% | 21,230 |
| 2017 | 2018 | |||||||
|---|---|---|---|---|---|---|---|---|
| <30 | 30-50 | >50 | Total | <30 | 30-50 | >50 | Total | |
| Top management | 0.0% | 46.0% | 54.0% | 472 | 1.0% | 40.0% | 59.0% | 542 |
| Senior management | 0.0% | 63.0% | 37.0% | 490 | 0.0% | 59.0% | 41.0% | 495 |
| Management | 2.0% | 68.0% | 30.0% | 1,074 | 2.0% | 63.0% | 35.0% | 1,224 |
| Senior professional | 6.0% | 70.0% | 24.0% | 1,631 | 6.0% | 69.0% | 25.0% | 1,816 |
| Professional | 15.0% | 68.0% | 17.0% | 1,978 | 15.0% | 67.0% | 18.0% | 2,474 |
| Administratives/ Manufacturing operators |
40.0% | 48.0% | 12.0% | 12,651 | 41.0% | 46.0% | 13.0% | 14,679 |
| Total | 30.0% | 53.0% | 17.0% | 18,296 | 31.0% | 52.0% | 17.0% | 21,230 |
The U.S. and Spain represent 90.2% of Grifols' workforce. In these countries, there were 1,255 dismissals in 2018: 25 in Spain and 1,230 in the United States6
| 2018 | ||||||
|---|---|---|---|---|---|---|
| Women | Men | Total | ||||
| SPAIN | 13 | 12 | 25 | |||
| USA | 840 | 390 | 1,230 | |||
| Total | 853 | 402 | 1,255 | |||
| % | 68.0% | 32.0% | 100.0% |
| 2018 | ||||
|---|---|---|---|---|
| <30 | 30-50 | >50 | TOTAL | |
| SPAIN | 3 | 16 | 6 | 25 |
| USA | 590 | 515 | 125 | 1,230 |
| Total | 593 | 531 | 131 | 1,255 |
| % | 47.3% | 42.3% | 10.4% | 100.0% |
| 2018 | SPAIN | USA |
|---|---|---|
| Top management | 1 | 8 |
| Senior management | 4 | 4 |
| Management | 3 | 10 |
| Senior professional | 5 | 16 |
| Professional | 4 | 31 |
| Administratives/ Manufacturing operators |
8 | 1,161 |
| Total | 25 | 1,230 |
The gender pay gap refers to the difference between men's and women's wages and salaries, calculated as the differential between the average salary of both divided by the average salary of men.
Grifols provides gender pay gap information per professional category of its workforce in Spain and the U.S., which together represent more than 90% of the group's workforce.
The last report of the World Economic Forum (WEF) places the gender pay gap at 68%. This means that, on average, there is still a gap of 32% to close. To date, no country has reached parity and only seven countries have closed at least 80% of the gap. In Spain, the latest available data from Eurostat12 places the gender pay gap adjusted per hour at 14.2%.
In the United States, the U.S. Census Bureau reported that full-time female employees receive, on average, 80% of salaries paid to male employees. The OECD13, on the other hand, data places the gender pay gap at 18.2%.
Grifols is committed to effective equality, which includes equal pay for work of equal value. The data reported in 2018 highlight the company's efforts to gradually reduce the gap across all professional categories:
| Job Category | Gender gap 2018 | Gender gap 2017 |
|---|---|---|
| Top management | 13.8% | 27.1% |
| Senior management | 5.4% | 9.3% |
| Management | 9.7% | 12.3% |
| Senior professional | 9.0% | 9.7% |
| Professional | 6.3% | 8.5% |
| Admin./Manuf. Operators | 2.8% | 3.3% |
| Job Category | Gender gap 2018 | Gender gap 2017 |
|---|---|---|
| Top management | 3.0% | 11.6% |
| Senior management | 1.2% | 3.9% |
| Management | 9.5% | 1.1% |
| Senior professional | 3.3% | 1.5% |
| Professional | 6.8% | 6.0% |
| Admin./Manuf. Operators | 0.0% | -1.5% |
| Job Category | Gender gap 2018 | Gender gap 2017 |
|---|---|---|
| Top management | 11.3% | 15.8% |
| Senior management | 1.6% | 2.9% |
| Management | 4.5% | 4.7% |
| Senior professional | 2.6% | 2.2% |
| Professional | 5.2% | 3.1% |
| Admin./Manuf. Operators | 4.7% | 4.2% |
Salary differences between men and women are often indicative of the company's organizational structure. Grifols has proportionally more women than men in its plasma collection centers and, proportionally, with
12 Source: Eurostat 2016. https://ec.europa.eu/eurostat/web/equality/overview
13 Source: Organisation for Economic Co-operation and Development. Gender Wage Gap OECD, 2017
more men in its senior leadership team. Most of the gender pay gap is attributable to this organizational profile.
The company is committed to gradually improving this situation and plans to deepen its understanding of its root causes in 2019. Based on this analysis, the action plan will be updated to implement solutions that are practical and beneficial for Grifols' talent pool.
| Job Category | Fixed Wage average 2018 |
Fixed Wage average 2017 |
|
|---|---|---|---|
| Women | 134,008.0 € | 107,557.8 € | |
| Top management | Men | 155,492.2 € | 150,585.0 € |
| Women | 76,002.9 € | 72,133.4 € | |
| Senior management | Men | 80,315.1 € | 77,055.0 € |
| Women | 51,989.7 € | 49,121.8 € | |
| Management | Men | 57,588.3 € | 55,165.6 € |
| Women | 39,644.6 € | 37,733.9 € | |
| Senior professional | Men | 43,565.1 € | 41,302.0 € |
| Women | 34,304.5 € | 32,889.7 € | |
| Professional | Men | 36,628.8 € | 35,895.2 € |
| Women | 25,558.4 € | 24,834.2 € | |
| Admin./Manuf. Operators | Men | 26,290.0 € | 25,621.2 € |
| UNITED STATES DONOR CENTERS | |||
|---|---|---|---|
| Fixed Wage | Fixed Wage | ||
| Job Category | average 2018 | average 2017 | |
| Women | \$221,983.7 | \$200,139.7 | |
| Top management | Men | \$228,951.5 | \$226,335.0 |
| Senior management | Women | \$122,292.4 | \$165,157.7 |
| Men | \$123,810.3 | \$171,934.4 | |
| Women | \$97,009.0 | \$102,137.6 | |
| Management | Men | \$107,175.5 | \$103,319.9 |
| Women | \$85,205.8 | \$88,640.2 | |
| Senior professional | Men | \$88,145.0 | \$90,029.1 |
| Women | \$63,334.0 | \$62,199.8 | |
| Professional | Men | \$67,937.4 | \$66,202.0 |
| Women | \$34,075.4 | \$33,722.4 | |
| Admin./Manuf. Operators | Men | \$34,060.5 | \$33,228.4 |
14 To avoid distorting the results, the average fixed salary excludes salaries based on seniority or individual/personal events.
| UNITED STATES OTHER ACTIVITIES | |||||
|---|---|---|---|---|---|
| Fixed Wage | Fixed Wage | ||||
| Job Category | average 2018 | average 2017 | |||
| Women | \$208,103.9 | \$208,363.0 | |||
| Top management | Men | \$234,554.7 | \$247,426.3 | ||
| Senior management | Women | \$159,042.8 | \$155,342.7 | ||
| Men | \$161,570.1 | \$159,904.8 | |||
| Women | \$121,734.5 | \$118,288.1 | |||
| Management | Men | \$127,429.6 | \$124,162.7 | ||
| Women | \$100,294.3 | \$97,407.7 | |||
| Senior professional | Men | \$102,983.8 | \$99,616.8 | ||
| Women | \$71,395.5 | \$70,395.3 | |||
| Professional | Men | \$75,281.2 | \$72,612.4 | ||
| Admin./Manuf. Operators | Women | \$53,490.9 | \$53,461.9 | ||
| Men | \$56,142.5 | \$55,777.4 |
| Age | Fixed Wage average 2018 |
Fixed Wage average 2017 |
|---|---|---|
| <30 | 27,513.1 € | 28,310.4 € |
| 30-50 | 36,491.9 € | 37,174.0 € |
| >50 | 53,363.3 € | 53,587.2 € |
| Age | Fixed Wage average 2018 |
Fixed Wage average 2017 |
|---|---|---|
| <30 | \$32,877.5 | \$31,022.7 |
| 30-50 | \$57,849.5 | \$56,864.3 |
| >50 | \$84,747.4 | \$86,057.3 |
| In Euros | Women | Men | Total |
|---|---|---|---|
| Average total wage | 222,289.4 | 279,777.4 | 261,371.2 |
| Directive employees and BoD | |||
| members | 146 | 310 | 456 |
| Gender Gap | 20,5% |
In Spain, retirement savings form part of a public social protection system. The U.S. model offers a very limited range of basic services, transferring pension coverage to the private sector and individuals' own initiative.
Considering the characteristics of each country's model and current legislation, Grifols' contributions toward pension plans in 2018 may be summarized as follows6 :
| In thousands of euros | Men | Women | Total |
|---|---|---|---|
| SPAIN | 437.2 | 339.9 | 777.1 |
| USA | 9,301.2 | 8,135.4 | 17,436.6 |
| Total | 9,738.4 | 8,475.3 | 18,213.7 |
| % | 53.5% | 46.5% | 100.0% |
| 32 |
Grifols' Health and Safety Policy advocates a rigorous system of occupational health, safety and riskprevention in the workplace. The policy guarantees that all of the group's companies, as well as collaborating companies, act in accordance with country-specific regulations, rules, provisions and legislation, as well as with Grifols' own health and safety standards.
The Occupational Health and Safety Department establishes corporate objectives and each center determines its annual safety and health initiatives. The department also monitors the Occupational Health and Safety Systems of Grifols subsidiaries through corporate audits. International subsidiaries employ their own individual systems in line with their specific markets and corporate policies.
Grifols employees actively participate in the company's occupational health and safety teams and committees to help identify and control risks, and promote new ideas surrounding the issue.
Grifols' centers in Spain are OHSAS 18.001:2007-certified. International subsidiaries employ their own systems in accordance with their corporate policies and specific countries.
Grifols' risk-prevention department offers guidance to the entire group, monitoring the occupational safety and health program on three distinct levels:
| Identification of risks | Integrated during the design phase of new installations, modification of production processes and acquisition of new equipment. |
|---|---|
| Training and awareness programs on occupational health and safety |
Guarantees that all employees receive information and training on risk prevention. Offered to new hires, employees with new job responsibilities and in the case of operational changes. Training is adapted to function and workplace. |
| Employee health and well-being initiatives |
Grifols has various programs to promote the wellbeing of its employees in the main countries where it operates. In this U.S., this includes a personal health advisor, biometrics, etc. In Spain, health programs are reinforced with medical teams and physiotherapists in the field. In addition, during a week is foccus on health and safety where sports activities are supported. |
Grifols' employees in Spain and the U.S. represent 90,2% of its workforce. The accident rate15 in 2018 is as follows:
| USA 2018 | Spain 2018 | ||||
|---|---|---|---|---|---|
| Women | Men | Women | Men | Formula | |
| No. of work accidents with sick leave* (LTI) without sick leave (NLTI) and first aids (FA) |
532 | 232 | 96 | 143 | Total no. of work-related accidents with sick leave (non itinere); without sick leave and first aids |
| Total number of work-related accidents resulting in sick leave* (LTI) |
39 | 27 | 28 | 51 | No. of work accidents with sick leave (non itinere) |
| Accident frequency rate | 2.8 | 2.5 | 10.7 | 15.1 | No. of work accidents with sick leave (non itinere)/no. total hours of real hours worked *10^6 |
| Degree of severity | 0.08 0.4 |
0.4 | No. of days not worked for work accidents with sick leave (non itinere)/no. Total real hours worked *10^3 No. of lost days is calculated as the difference between calendar days (not including weekends and holidays) between the leaving date and the entry date |
||
| * Within the accidents calculation, occupational diseases occurring in Spain are included: 1 for men and 1 for women |
15 The severity index breakdown by gender is not available in this reporting period in the US.
Grifols investigates all accidents, both with and without sick leave, minor incidents and accidents on work commutes in countries where it is regulated as part of its on-going efforts to improve its prevention systems.
In 2018, Grifols launch a corporate program Behavioral Based Safety (BBS) to encourage managers to support safety behaviors amongst its teams. This program has been implemented in productive companies and is scheduled to be implemented in Ireland and Spain in 2019.
In Grifols' manufacturing plants, plasma-related processes follow strict protocols. Technical, organizational and personal prevention measures are adhered to at all times, resulting in a low frequency of occupational disease. Plasma centers pose a potential risk of contagion from contact with blood at the time of extraction. For this reason, Grifols has implemented an exposure control program to foresee and efficiently act in case of an incident.
The occupational health, safety and wellbeing of Grifols' employees have a direct impact on absentee rates. The company works with an absenteeism management model with established benchmarks to quantify its cost impact. Grifols implemented several measures to foster the integrated health management of its workforce in order to address the root causes of absenteeism. These measures include complementing accident insurance and corporate medical services with physiotherapy sessions to prevent musculoskeletal injuries. The company also carries out awareness sessions, return-to-work interviews after extended sick leaves, and communication protocols for employee absences.
Breakdown of absenteeism hours in Spain16:
| Illness | Illness. Hospit. | Work accident | Maternity/Paternity | Paid Leave | Unpaid Leave | TOTAL | |
|---|---|---|---|---|---|---|---|
| Women | 114,632 | 12,153 | 11,041 | 54,978 | 27,582 | 1,334 | 221,720 |
| Men | 87,196 | 24,282 | 9,764 | 14,719 | 26,001 | 3,636 | 165,598 |
| Total | 201,828 | 36,435 | 20,805 | 69,697 | 53,583 | 4,970 | 387,318 |
Grifols recognizes the importance of professional development to remain competitive in today's dynamic international environment.
In 201817, Grifols employees collectively received 2.5 million training hours. Women received 65.9% of total training hours and men received the remaining 34.1%.
In terms of areas of focus in 2018, the company concentrated its efforts on promoting Grifols' corporate culture, developing leadership competencies, and maintaining its trademark high standards of quality, safety and technical excellence.
Grifols Academy offers ongoing educational opportunities in Spain and the United States focused along three main lines: professional development, plasmapheresis and immunohematology.
In 2018, roughly half of Grifols managers took part in at least one leadership development offering. The company also runs an executive development program in collaboration with ESADE (Barcelona) and Georgetown University's McDonough School of Business, now in its second year. The program enables Grifols employees to enhance their strategic thinking, better anticipate change and elevate their leadership potential. The company offers other leadership-competency programs that explore emotional intelligence, problem resolution and decision-making.
16 Due to regulatory differences between countries, only the absenteeism rate is reported in Spain, where it set a material issue.
17 In 2018 there was a change in the reporting criteria, including as of this year the total number of hours of on-job training in the USA plasma centers. This figure is therefore not comparable to that reported in 2017.
| 2018 | |||
|---|---|---|---|
| Women | Men | Total | |
| Top management | 5,574 | 11,901 | 17,475 |
| Senior management | 7,853 | 12,157 | 20,010 |
| Management | 17,151 | 24,455 | 41,606 |
| Senior professional | 41,691 | 60,673 | 102,364 |
| Professional | 46,262 | 53,488 | 99,750 |
| Administratives/ Manufacturing operators |
1,556,125 | 705,134 | 2,261,259 |
| Total | 1,674,656 | 867,808 | 2,542,464 |
In 2018, Grifols' Human Resources and Corporate Communications finalized the design of the Employee Value Proposition (EVP). This initiative reinforces Grifols' branding and market position as a top employer.
The EVP communication campaign targeting employees and job candidates will launch in 2019 using a multichannel approach to bolster Grifols' position as an outstanding employer.
The Spanish labor system establishes two classifications of employee representatives: union representatives and unit representatives, who serve as members of employee committees and personnel delegates.
Grifols has corporate committees in several of the group's companies and union delegates that oversee specific duties in accordance with current legislation. The company advocates an open and transparent flow of communication with employee representatives. To the extent possible, Grifols strives to centralize crosscutting issues that require collective bargaining. For this reason, Grifols created a forum in 2018 aimed at encouraging dialogue among committee members.
Employees in some of Grifols' subsidiaries in Spain, Germany, Italy, France, Argentina and Brazil are covered under collective agreements. In 2018, 4,246 employees were covered under this type of agreement, representing 20% of Grifols' workforce.
In 2018, in the framework of the collective labor agreement in Spain, the "variable remuneration agreement" was signed, in which it was included three specific points related to health.
In Spain, Chile and Germany, where labor committees are required by law, Grifols has employees designated on occupational health and safety risk prevention committees. OHS meetings ensure regular communication in these countries.
In 2018, 66% of employees in Spain have been represented by a joint occupational health and safety committee. In Chile and Germany, 100% of employees have been represented in these meetings. In
subsidiaries with no formal representation, Grifols regularly communicates and consults with its workers, who establish committees that encourage employees participation and input. Each subsidiary decides on the frequency of these meetings and establishes follow-up plans, action items and concrete measures that stem from them.
Protecting and respecting human rights forms an intrinsic part of Grifols, guided by its mission to enhance the health and wellbeing of people worldwide and it staunch commitment to promote the wellbeing of residents in the communities where it operates.
Using international frameworks as reference points (United Nations Global Compact, UN Guiding Principles on Business and Human Rights, OECD guidelines for multinational companies, ILO declaration on multinational enterprises), the company does its utmost to support and promote human rights in everything it does. The company takes concrete actions to avoid infringing on the rights of third parties and prevent any potential adverse impacts.
Grifols' Code of Ethics applies to all activities and operations carried out by employees and collaborators on the company's behalf to ensure strict compliance with current legislation. This commitment also includes protecting human rights. To this end, the company offers a Grifols Ethics Helpline open to employees and third parties to report any concerns regarding human rights violations or cases of ethical misconduct. All allegations follow a standard operating procedure to ensure that all claims are properly investigated and resolved, and that corrective actions are taken, if necessary.
The Grifols Ethics Helpline received 230 calls in 2018 (170 calls in 2017). The company actively encourages people to use the helpline in all of its countries of operation.
Breakdown of helpline calls in 2018:
Grifols is a global company committed to strict compliance with all applicable laws and norms in the countries where it operates. Supervised by the International Compliance Review Board, the compliance program includes policies and procedures to foster ethical conduct and fulfillment of anti-corruption norms throughout the organization (Ethics & Compliance). Promoting integrity and transparency regarding data processing, money laundering, conflicts of interest and third-party interactions are among its main priorities.
The Grifols Code of Ethics for Directors and Senior Executives, the Grifols Code of Conduct, and the Grifols Anti-Corruption Policy form the foundation of the company's compliance program. Other policies and
procedures related to explicit legal domains, compliance risks and country-specific requirements complement this program. Among this area's achievements in 2018 was the approval of the crime-prevention policy.
In 2018, Grifols' Board of Directors approved the crime prevention policy, aimed at reinforcing the company's unequivocal rejection of the commission of crimes, criminal acts or any other type of unethical behavior, and its steadfast determination to prevent and combat these actions.
The Crime Prevention Policy is available to all employees and third parties on the Grifols corporate website. This policy was developed through the roll-out of the Crime Risk Management System, or CRSM.
The objective of the CRMS is to assure public administrations, judicial and administrative ,and third parties that Grifols effectively exercises the requisite supervision, monitoring and control over board members, executives, employees, subsidiaries and other individuals by establishing measures to prevent crime or reduce their risk of commission.
In accordance with current legislation, an independent expert annually reviews the CRMS to ensure an effective crime-prevention system is in place, with appropriate crime-detection and prevention control measures, both in terms of design and operative efficiency.
Approved by the Board of Directors' Audit Committee, Grifols' Anti-Corruption Policy establishes appropriate standards of behavior for executives, employees and third parties that collaborate in the company's day-to-day operations. Grifols reinforces compliance through various review processes. The leadership teams in Grifols' subsidiaries and other members of the executive team ensure that the policy is implemented in their areas of responsibility.
Grifols Anti-Corruption Policy is available to all employees on the corporate website. Specific training is offered to Grifols employees and members of its corporate governance board whose roles make them more likely to witness ethical breaches.
Grifols enforces a "zero-tolerance" approach to acts of bribery and corruption by any and all members of the company and third parties. Violations of Grifols Anti-Corruption Policy may lead to disciplinary actions including termination of employment. In 2018, Grifols had no confirmed incidents of corruption in where it operates.
To guarantee compliance with anti-corruption policies and procedures, Grifols' business associates are subject to a thorough process of due diligence prior to any authorization or completion of commercial transactions.
Similarly, contracts include an annex on Grifols' current anti-corruption policy and international distributors carry out mandatory annual online training on the Foreign Corrupt Practices Act (FCPA). Distributors are also required to provide annual certifications of compliance with Grifols' anti-corruption policy, signed by the general manager or similar. Distributor contracts include clauses that grant Grifols the right to perform audits on an as-needed basis. These clauses stipulate the termination of business relationships if Grifols determines any breach of its anti-corruption rules.
Grifols has established mechanisms, procedures and policies to prevent money laundering and respond to any possible breaches detected in the course of their business dealings.
Prevention: The Code of Ethics, Code of Conduct and Anti-Corruption Policy include measures for the prevention of money laundering applicable all Grifols' employees and activities.
Detection: Some of the aforementioned policies and procedures also permit taking concrete actions to detect the risk of money laundering. The company has a communication channel open to employees and third parties to anonymously report any concerns of possible ethical misconduct (Grifols Ethics Helpline).
Reaction and response: Grifols has a reaction and response protocol, as well as a sanctions system, to amend any claims of unethical behavior or irregularities using all means possible, and if necessary, take corrective actions to prevent them from happening in the future. Grifols also collaborates with the competent authorities in each country to combat money laundering and the financing of terrorist activities. To this end, it is committed to providing all information requested in accordance with current legislation and reporting any suspicious transactions.
As a global healthcare company, patients and medical professionals are at the very heart of Grifols' activities. For this reason, the company ensures that all of its processes integrate the highest standards of quality and safety. Each division adheres to rigorous policies and procedures to guarantee the safety and quality of Grifols' products throughout the value chain. The firm's vertically integrated business model permits even greater control over its production processes.
Each Grifols division has qualified suppliers whose technical, management and control capabilities have been previously evaluated and approved by the corresponding control overseers. The company subjects all suppliers of materials or services that could impact the quality of Grifols' products to a prior authorization process. Qualifications are granted for a specific material or service.
Grifols carries out on-going evaluation procedures for suppliers that vary depending on the level of risk their material or service and its impact on the value chain. The company conducts routine audits to evaluate and monitor new suppliers. The following audits were conducted in 2018:
| DIVISION / AREA | TYPE OF SUPPLIER | NO. OF QUALITY AUDITS IN 2018 |
RESULTS |
|---|---|---|---|
| 174 Favorable | |||
| 1 NoT Favorable | |||
| Raw material suppliers | 179 | Rest pending evaluation | |
| and final report | |||
| Bioscience Division | Service suppliers (cleaning services, | 57 Favorable | |
| analysis, warehouse, transport, CROs for | 63 | 1 No Favorable | |
| clinical trials) | Rest pending evaluation | ||
| and final report | |||
| Raw material suppliers | 15 | 15 Favorable | |
| Diagnostic Division | Service suppliers (manufacturers of semi finished or finished goods, warehouses, etc.) |
4 | 4 Favorable |
| Raw material suppliers | 8 | 8 Favorable | |
| Hospital Division | Service suppliers | 2 | 2 Favorable |
| 73 | 56 Favorable | ||
| Distributors | Rest pending evaluation | ||
| and final report | |||
| 18 | 12 Favorable | ||
| Transport companies | 2 No Favorable | ||
| Grifols global subsidiaries | Rest pending evaluation | ||
| and final report | |||
| 21 Favorable | |||
| Service suppliers (warehouse, courier | 25 | 1 No Favorable | |
| services, analytical labs, etc.) | Rest pending evaluation | ||
| and final report | |||
| Others (Grifols Engineering, | Service suppliers (engineering firms, | 35 | 35 Favorable |
| GWWO,Kiro) | transport companies, etc.) | ||
| 384 Favorable | |||
| TOTAL | 422 | 5 Not Favorable | |
| 38 | 33 pending evaluation | ||
| and final report |
The audits conducted on raw material and service providers focus on the quality and safety of the products and services supplied. Some Grifols companies require their suppliers to have environmental certifications such as ISO 14000 (for environmental management systems) ad OSHAS (for occupational health and safety management).
Plasma is the main raw material used by the Bioscience Division. The generosity of donors allows the company to produce life-saving medications for patients.
Grifols only uses plasma from qualified donors collected in centers that have been approved by the competent health authorities. Donors undergo annual medical exams and routine health screenings before every donation. Eighteen (18) analyses certify the safety and quality of the plasma collected.
Grifols does not discriminate on the basis of race, gender or socioeconomic status. The company only accepts healthy donors who are committed to the donation process, have proof of a permanent local residence and meet rigorous health and safety criteria.
The manufacture of medicines and medical devices is regulated. Rigorous legislation, both in Europe and globally, ensures proper patient protection. Furthermore, the company is exceptionally transparent with regard to its interactions with healthcare professionals and healthcare organizations.
Grifols has a pharmacovigilance system to monitor adverse reactions from the administration of its plasmaderived medicines and a surveillance system to control adverse reactions arising from the use of its medical devices.
All activities and requirements of the Pharmacovigilance System and Medical Device Surveillance System are described in Grifols Standardized Operating Procedures, which are periodically updated to adapt to current legislation.
Grifols also conducts periodic internal audits on both systems as part of its quality-control compliance framework. These systems are subject to external inspections by the competent health authorities.
Breakdown of its application by division:
| DIVISION / AREA | TYPE OF PRODUCT | PHARMACOVIGILANCE SYSTEM |
MEDICAL DEVICE SURVEILLANCE SYSTEM |
|---|---|---|---|
| Bioscience | Medicines | Applicable | Not applicable |
| Diagnostic | Medical devices | Not applicable | Applicable |
| Hospital | Medicines and medical devices | Applicable | Applicable |
Pharmacovigilance encompasses all activities related to the detection, evaluation, understanding and prevention of adverse effects or other problems arising from the use of medicinal products. Grifols has a robust and consolidated pharmacovigilance system. Each division has a manager responsible for establishing and maintaining the system. In this role, they also guarantee 24/7 availability to attend health inspections requested by the competent authorities and respond to issues regarding the safety of Grifols' medicines or pharmacovigilance. Grifols complies with all applicable legislation
Manufacturers of medical devices are required to establish and maintain procedures to identify and monitor any adverse effects resulting from the use of these products. The divisions subject to this system each have a trained professional or technical director in charge of its maintenance. Grifols Medical Device Surveillance Systems complies with all legislation in force.
Grifols does not outsource its core Pharmacovigilance or Medical Device Surveillance activities to third parties.
The information contained in product leaflets and labels complies with the standards and regulations applicable in each country where Grifols' products are marketed, including EU Medicines Directive 2001/83/EC and the U.S. 21 CFR Chapter 1, Subchapters C, D, F.
The possible adverse effects and contraindications described in the leaflets are based on data obtained from clinical studies conducted prior to the product's commercialization. These studies are approved and evaluated by the competent health authorities.
For medical devices, the information contained in the leaflets and labels is established in accordance with the standards and regulations applicable in each country.
The labeling and prospectus also include any mitigating effects identified by risk analyses, carried out in accordance with the application of risk management to medical devices (EN ISO 14971: 2012 Medical Devices), or those requirements communicated by health authorities following the review of the product licensing process.
Grifols' three divisions have claims systems established to register and review all notifications received from healthcare centers, patients and users with consumer appraisals regarding possible defects in product quality.
In each division, a trained professional or technical director is appointed to evaluate all claims received, including carrying out the appropriate inquiries and implementing corrective and preventative measures, if necessary.
| DIVISION / AREA | CLAIMS RECEIVED / NO. OF UNITS PRODUCTS DISTRIBUTED |
|
|---|---|---|
| Bioscience Division | 1 claim for every 34,592 units distributed | |
| (Medicines) | ||
| Hospital Division | 1 claim for every 1,831,402 units distributed | |
| (Medicines) | ||
| Hospital Division | ||
| (Medical Devices) | 1 claim for every 84,087 units distributed | |
| Diagnostic Division | ||
| (Medical Devices) | N/A* |
*Ratio not applicable for the type of product manufactured by the Diagnostic Division.
Each division has a Product Recall System to address confirmed critical defects in the quality or safety of products. The trained individual or technical director is responsible for managing the product withdrawal, including relevant communication with healthcare authorities.
The claims and product withdrawal systems are outlined in the Standard Operating Procedures. The company internally audits them to verify their effectiveness and adaptation to current legislation. In addition, they are inspected by the competent health authorities.
Interactions between the healthcare sector and healthcare professionals have an undeniably positive impact to advance patient care and research, creating tangible value and furthering the efforts of everyone involved.
Grifols voluntarily adopted the European Federation of Pharmaceutical Industries and Associations (EFPIA) Disclosure Code in 2015. In 2018, for the third consecutive year, the company disclosed all payments and other transfers of value made in 2017 to healthcare professionals and organizations in 33 European countries, including Spain.
Grifols publishes a Methodology Note, as well as the country-specific reports on transfers of value made by Grifols to healthcare professionals and organizations during 201718. Transfers of value made in 2018 will be published on Grifols' website on July 1, 2019: www.grifols.com.
Although the EFPIA Code applies to medicines, Grifols voluntarily decided to extend this transparency initiative to transfers unrelated to medicines and to its three divisions: Bioscience, Diagnostic and Hospital.
In the U.S., the PPS Act or Open Payment Program Law obliges manufacturers of biological products and medical devices to disclose all the information related to payments and transfers of value made to certain professionals and organizations, including doctors and health professionals and university hospitals.
Grifols applies this transparency policy in the U.S.19 as stipulated by the competent authority (Centers for Medicaid and Medicare Services, or CMS). In addition to the U.S. and Europe, the company plans to implement transparency initiatives in other countries, including Australia and Japan.
"Educate, advocate, engage and support" are the four values that underline Grifols' social engagement, which extends to its diverse stakeholders, including patients, donor communities, medical and scientific communities, clients, employees and local communities.
In 2018, the company allocated EUR 33.3 million toward community outreach initiatives including EUR 2.1 million to the Ebola Project.
In line with Grifols' commitment to patients and patient organizations, the company develops and actively promotes educational, awareness and patient-protection programs and services. It also supports patient advocacy groups through product-donation programs and facilitating access to its treatments. These collaborations adhere to the principles of transparency and country-specific regulations, which define the types of information that must be publicly disclosed.
In 2018, Grifols donated 25 million international units (IU) of factor VIII to the WFH Humanitarian Aid Program as part of its commitment to donate 140 million IU over a five-year timeframe. The donation will
18 Information available at https://www.grifols.com/documents/51507592/51526521/methodology-note-en-2017.pdf/17101a4c-0cf8-4567-be5c-638d5a8ac852
19 Information on transfer of value to healthcare professional in the U.S. in conformity with the Open Payments Program is available at www.cms.gov/OpenPayments/index.html according to local regulations
provide an average of 10,300 doses to treat 6,000 patients every year until 2021 in emerging markets, where access to adequate treatment is frequently lacking or non-existent.
Grifols' commitment to plasma donors extends to the communities where its centers are located. Plasma centers create added value for communities by generating employment, contributing taxes and stimulating the local economy. Grifols organizes community engagement events and gives back through charitable donations and volunteer programs.
The active involvement of Grifols' workforces in supporting local communities has been extremely significant. Collectively, Grifols' employees have participated in hundreds of initiatives, including collecting supplies for U.S. schools, organizing Open Days and supporting communities affected by Hurricane Florence in North Caroline.
The company also channels its social commitment through its two foundations: Víctor Grífols i Lucas Foundation and the Probitas Foundation.
Detailed information on the scope of Grifols' social engagement initiatives is available on the corporate website in the Corporate Responsibility Report: www.grifols.com
Grifols is member in the following industry associations20:
• FENIN: Federación Española de Empresas de Tecnología Sanitaria
• MedTech Europe: European Trade Association representing the medical technology industries, Diagnosis and Medical Devices manufacturers.
• EURORDIS: non-profit alliance of 826 rare disease patient organisations from 70 countries that work together to improve the lives of the 30 million people living with a rare disease in Europe.
• The United States-Spain Council: an organization in which the US and Spanish leaders promote stronger ties between two countries
• EUCOPE: Trade Association representing Small to Medium-Sized Companies Active in Pharmaceuticals & Medical Technologies in Europe
• PPTA: Plasma Protein Therapeutics Association
• ASEBIO: Asociación Española de Bioempresas
• American Chamber of Commerce in Spain
• AEF: Asociación Española de Farmacología
• AES: Asociación de la Economía de la Salud
• SESPAS: Sociedad Española de Salud Pública y Administración Sanitaria
• SEFH: Sociedad Española de Farmacia Hospitalaria
• SIGRE: Sistema Integrado de Gestión de Residuos de la Industria Farmacéutica
• ISPE: International Society for Pharmaceutical Engineering
• WHC: Wildlife Habitat Council
• ESI: Environmental Stewardship Initiative of the North Carolina Department of Environmental and Natural Resources
• ACS: American Chemical Society
• Farmafluid: Asociación Española de Laboratorios Farmacéuticos de Fluidoterapia y Nutrición Parenteral
• National Health Council (EEUU)
• Biotechnology Innovation Organization (BIO)
• AENE: Asociación Española de Fabricantes y Distribuidores de Productos de Nutrición Enteral
• SENPE: Sociedad Española de Nutrición Parenteral y Enteral
20 It includes the most relevant organizations in which Grifols is a member.
Grifols focuses its strategy on long-term profit and value creation. Toward this end, the company strives to create wealth for its various stakeholder groups by generating stable employment opportunities, promoting research, fostering the economic development in regions where it operates, and gaining the trust of stakeholders and investors to guarantee sustainable growth in line with its overriding mission to improve the health of patients.
Grifols' value creation in 2018 reached EUR 4,501.2 million, a 4% increase over the previous year. Nineteen percent (21%) of the value generated was allocated to its global talent pool, which grew by 15% in 2018 to 21,230 employees. Resources channeled to innovation totaled EUR 197.5 million and represent 5% to total generated value, while community investments totaled more than EUR 33,3 million. This figure includes research awards, educational programs and scholarships to promote global research; donations to foundations and NGOs; and a range of social outreach activities aimed at patients and local communities. The company contributed EUR 624.3 million in taxes, which represents 16% of total value generated.
The following tables offer an overview of Grifols' creation and distribution of economic value. As a whole, they highlight the company's efforts to ethically and responsibly manage its resources in strict compliance with the legislation in the countries where it operates:
| Thousands of euros | 2018 |
|---|---|
| Value generated | 4,501.2 |
| Value distributed | 4,023.8 |
| Value retained | 477.4 |
Ninety percent (90%) of Grifols' generated value in 2018 was distributed by the company:
| Thousands of euros | Amount | % over total |
|---|---|---|
| Remunerations | 849.4 | 21.1% |
| Tax contributions* | 624.3 | 15.5% |
| Financial creditors*** | 360.2 | 9.0% |
| Dividends**** | 242.6 | 6.0% |
| Community investments | 33.3 | 0.8% |
| Innovation** | 197.5 | 4.9% |
| Purchase of raw materials and others | 1,716.5 | 42.7% |
| TOTAL | 4,023.8 |
* Direct taxes, indirect taxes and taxes collected on behalf of third parties in Spain and the U.S. These include employee income taxes and taxes on shareholder dividends, among others.
** Innovation investments exclude personnel costs recorded in the "Worker retributions" section.
*** Payments to financial creditors include interest and capital.
**** Net dividend paid.
Grifols upholds its commitment to contributing toward economic, social and industrial development through rigorous compliance with the tax laws in force in each jurisdiction and in line with OECD Guidelines for Multinational Enterprises.
Its diverse operations generate direct and collected taxes that are paid to tax authorities.
The company's direct tax contributions for the 2018 fiscal year totaled approximately EUR 372 million. This amount includes direct taxes such as corporate income tax, social security payments and taxes on products and services, as well as environmental taxes, which are paid in the countries where Grifols operates.
Grifols also contributes by collecting taxes derived from its operations on behalf of governmental authorities. In 2018, the company withhold EUR 252.2 million in third-party taxes, which were paid to the corresponding governmental authorities in the U.S. and Spain. These amounts primarily include income taxes and dividend taxes. Value added tax (VAT) and other taxes are not included in the tax contribution for 2018.
The principles that underpin the group's tax strategy are manifest in its contributions.
Grifols is taxed on the profits generated in the territories where it operates. Spain and the United States account for approximately 70% of the group's global revenues and the main industrial and R+D+i complexes are mainly located in these countries.
| Thousands of euros | Profit* | Taxes paid** |
|---|---|---|
| Spain | 9.7 | 1.8 |
| United States | 462.3 | 102.7 |
| Ireland | 40.3 | 14.7 |
| Rest of the world | 25.0 | 8.7 |
* After-tax profits in 2018 excluding dividends.
** Net tax payable related to fiscal year 2018.
In Spain, during fiscal year 2018, EUR 24 million were refunded as a result of anticipated tax payments above the net tax payable corresponding to previous years.
On October 26, 2018, the Board of Directors of Grifols adhered to the Code of Good Tax Practices.
| Thousands of euros | Subsidies |
|---|---|
| Spain | 448.0 |
| United States | 1,624.0 |
| Rest of the world | 603.0 |
The grants received in Spain correspond mainly to initiatives related to the training of workers.
In compliance with Law 11/2018, of December 28, regarding non-financial information and diversity, Grifols includes its Non-Financial Information Statement (EINF, for its initials in Spanish) in the Consolidated Management Report for the period January 1 to December 31, 2018. This EINF has been prepared taking into account the standards of the Global Reporting Initiative (GRI). For this, Grifols has defined its content taking into account the inclusion of stakeholders, the context of sustainability and the principles of materiality and completeness.
In order to examine Grifols' most significant non-financial aspects, the company performs an annual materiality analysis to identify the most relevant non-financial risks and issues which could impact its stakeholders. The detail on the followed methodology and the results of the materiality analysis are included annually in Grifols' Corporate Responsibility Report. The topics cited by Law 11/2018 of December 28 regarding non-financial information and diversity which the company has identified as material are outlined in the following table.
For the purposes of this consolidated EINF, Grifols S.A. and all its subsidiaries are considered as "Grifols". The reporting scope coincides with that of the financial statement and the consolidated management report taking into account the following considerations:
The non-financial indicators selected by Grifols comply with the principles of comparability, materiality, relevance and reliability and the information is accurate, comparable and verified by an independent provider of verification services. The independent assurance report, which includes the objectives and scope of the process, as well as the review procedures used and their conclusions, is attached as an annex to this report.
| Law 11/2018 contents | Materiality | Placement in this report | Assurance on law 11/2018 | Reporting framework* | |
|---|---|---|---|---|---|
| Brief description of the | contents | ||||
| group's business model (business environment and organization) |
Material | Grifols' Business Model | ✓ | GRI 102-2 GRI 102-6 |
|
| General information | Geographic presence | Material | Geographic presence | ✓ | GRI 102-3 GRI 102-4 GRI 102-6 |
| Objectives and strategies of the organization |
Material | Grifols' Business Model | ✓ | GRI 103 | |
| Main factors and trends that may affect its future evolution |
Material | Risks and uncertainties | ✓ | GRI 102-15 GRI 103 |
|
| Management approach | Material | Grifols' General framew ork for environmental action |
✓ | GRI 103 | |
| Grifols' General framew ork for environmental action |
|||||
| Environmental management | Material | Evolution and action lines in 2018 |
✓ | GRI 103 | |
| Pollution | Material | Emissions | ✓ | GRI 305-6 GRI 305-7 |
|
| Circular economy and w aste prevention and |
Material | Waste Sustainable use of resources |
✓ | GRI 306-1 GRI 306-2 |
|
| Environmental issues | management | ||||
| Sustainable use of resources |
Material | Sustainable use of resources | ✓ | GRI 301-1 GRI 302-1 GRI 302-4 GRI 303-1 (2016) |
|
| GRI 201-2 | |||||
| Climate change | Material | Emissions | ✓ | GRI 305-1 GRI 305-2 |
|
| Climate change | GRI 305-3 GRI 305-5 |
||||
| Protection of biodiversity | No material | Not reported because it is a non material topic for the company. |
Not applicable (non-material topic) | ||
| Management approach | Material | Personnel management at Grifols |
✓ | GRI 103 | |
| Personnel management at | |||||
| Grifols Grifols' w orkforce |
|||||
| Gender Pay Gap | |||||
| Average w age by category and gender |
GRI 102-8 GRI 103 |
||||
| Employment | Material | Average w age by age |
✓ | GRI 201-3 | |
| Average retribution of board | GRI 405-1 | ||||
| members and executives by gender |
GRI 405-2 | ||||
| Contributions to long-term | |||||
| savings systems Absenteeism |
|||||
| Social and employee related issues | Work organization and w ork-life |
GRI 103 | |||
| Work organization | Material | balance Collective labor relations |
✓ | GRI 403-2 (2016) | |
| Health & safety | Material | Health and safety | ✓ | GRI 103 GRI 403-2 (2016) |
|
| GRI 403-3 (2016) | |||||
| Social relations | Material | Work organization and w ork-life |
✓ | GRI 103 GRI 102-41 |
|
| balance | GRI 102-43 | ||||
| Training | Material | Professional development and training |
✓ | GRI 103 GRI 404-1 |
|
| Diversity includes labor | |||||
| Universal accessibility for people w ith disabilities |
Material | integration of persons w ith disabilities |
✓ | GRI 103 | |
| Diversity, inclusion, equal | ✓ | GRI 103 | |||
| Equality | Material | opportunity and non discrimination: core aspects |
GRI 405-1 GRI 406-1 |
||
| Management approach | No material | Human Rights | ✓ | GRI 103 | |
| Respect for human rights | Human Rights | No material | Human Rights | ✓ | GRI 102-16 GRI 102-17 GRI 103 |
| Management approach | Material | Combatting corruption and bribery |
✓ | GRI 103 | |
| Fight against corruption and bribery | Combatting corruption and | GRI 102-16 | |||
| Corruption and bribery | Material | bribery Community contributions and |
✓ | GRI 102-17 GRI 103 |
|
| Management approach | Material | sponsorship Social commitment |
✓ | GRI 205-1 GRI 103 |
|
| Company's commitment w ith |
Community contributions and | GRI 102-43 | |||
| sustainable development | Material | sponsorship | ✓ | GRI 103 GRI 413-1 |
|
| Subcontracting and | Material | Supplier relations | ✓ | GRI 102-9 | |
| suppliers | GRI 103 GRI 103 |
||||
| Information related to society | Consumers | Material | Consumer relations: patients and healthcare professionals |
✓ | GRI 416-1 GRI 416-2 |
| Fiscal overview : contributions, principles and best practices |
|||||
| Fiscal information | Material | 2018 | ✓ | GRI 103 GRI 201-4 |
|
| Public grants |
Index of contents required by Law 11/2018, of December 28, regarding non-financial information and diversity.
* In the case in which the GRI standard or GRI specific content does not cover the entire Law 11/2018 requirement, the reporting criteria selected by Grifols has been followed in order to comply with the provisions of the aforementioned Law.
The operations carried out in 2018 with treasury stock are described in the annual accounts included as an annex to this report.
No relevant subsequent events took place after the year-end 2018.
Raimon Grífols Roura and Víctor Grífols Deu concluded their second year as co-CEOs, building on the track record of solid growth and consolidation as a diversified and profitable firm.
True to its mission, Grifols aspires to grow and evolve as a global company capable of leveraging its wealth of collective knowledge and innovative spirit to improve patient care and support healthcare professionals. To reach this overriding objective, the company centers its efforts on business optimization, globalization, innovation, digitalization, talent development, and outstanding customer service.
The company is committed to a path of sustainable growth. The cornerstones of its five-year strategic plan are innovation, to continue developing a differential product portfolio; enhanced customer centricity, to successfully address the evolving needs of global healthcare professionals and patients; global expansion, especially in the U.S. as a key market and emerging markets like China; corporate growth, via organic growth and corporate transactions amid in an increasingly competitive market; a robust human resources strategy focused on employee retention, talent development and on-going training; and promotion of the "One Grifols" philosophy to cultivate the continuous quest for knowledge and innovation through value-creating activities and transversal teams.
More details on the trends and opportunities of the company's diverse business areas and divisions may be found in "Non-Financial Information Statement" as part of the 2018 Consolidated Directors' Report.
The Grifols 2018 Annual Corporate Governance Report forms part of this Consolidated Directors' Report. From the date of publication of Grifols' consolidated financial statements, it is available on Grifols' corporate website and the Comisión Nacional del Mercado de Valores (Spanish Stock Exchange Commission) website.
Section E of the aforementioned report includes an analysis of the company's risk controls and management systems, and section F includes details of the internal control and risk management systems in relation to the financial information issuing process ("SCIIF").
| In thousands of euros | 2018 | 2017(1) | % Var |
|---|---|---|---|
| NET REVENUES | 4,486,724 | 4,318,073 | 3.9% |
| COST OF SALES | (2,437,164) | (2,164,762) | 12.6% |
| GROSS MARGIN | 2,049,560 | 2,153,311 | (4.8%) |
| % Net revenues | 45.7% | 49.9% | |
| R&D | (240,661) | (223,742) | 7.6% |
| SG&A | (814,775) | (839,480) | (2.9%) |
| OPERATING EXPENSES | (1,055,436) | (1,063,222) | (0.7%) |
| OPERATING RESULT (EBIT) | 994,124 | 1,090,089 | (8.8%) |
| % Net revenues | 22.2% | 25.2% | |
| FINANCIAL RESULT | (257,244) | (269,251) | (4.5%) |
| SHARE OF RESULTS OF EQUITY ACCOUNTED INVESTEES | (11,038) | (14,051) | (21.4%) |
| PROFIT BEFORE TAX | 725,842 | 806,787 | (10.0%) |
| % Net revenues | 16.2% | 18.7% | |
| INCOME TAX EXPENSE | (131,436) | (220,236) | (40.3%) |
| % of pre-tax income | 18.1% | 27.3% | |
| CONSOLIDATED PROFIT | 594,406 | 586,551 | 1.3% |
| RESULT ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | (2,236) | (1,386) | 61.3% |
| GROUP PROFIT | 596,642 | 587,937 | 1.5% |
| % Net revenues | 13.3% | 13.6% | |
| NON-RECURRING ITEMS | |||
| Non-recurring items related to the Hologic acquisition | - | (22,168) | |
| Non-recurring items related to the Aradigm assets reassessment | - | (88,897) | |
| Non-recurring items related to the U.S. tax reform and tax related to other | |||
| non-recurring items | - | 185,828 | |
| REPORTED GROUP PROFIT | 596,642 | 662,700 | (10.0%) |
(1) Relates to the "2017 Recurrent P&L". The details of the non-recurrent items are disclosed below.
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
|---|---|---|---|
| REPORTED NET REVENUES | 4,486,724 | 4,318,073 | 3.9% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 226,534 | ||
| NET REVENUES AT CONSTANT CURRENCY | 4,713,258 | 4,318,073 | 9.2% |
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
|---|---|---|---|
| REPORTED BIOSCIENCE NET REVENUES | 3,516,704 | 3,429,785 | 2.5% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 186,084 | ||
| REPORTED BIOSCIENCE NET REVENUES AT CONSTANT CURRENCY | 3,702,788 | 3,429,785 | 8.0% |
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
| REPORTED DIAGNOSTIC NET REVENUES | 702,265 | 732,369 | (4.1%) |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 35,079 | ||
| REPORTED DIAGNOSTIC NET REVENUES AT CONSTANT CURRENCY | 737,344 | 732,369 | 0.7% |
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
| REPORTED HOSPITAL NET REVENUES | 119,454 | 105,649 | 13.1% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 3,137 | ||
| REPORTED HOSPITAL NET REVENUES AT CONSTANT CURRENCY | 122,591 | 105,649 | 16.0% |
| In thousands of euros | |||
| 12M 2018 | 12M 2017 | % Var | |
| REPORTED BIO SUPPLIES NET REVENUES | 167,004 | 66,791 | 150.0% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 3,272 | ||
| REPORTED BIO SUPPLIES NET REVENUES AT CONSTANT CURRENCY | 170,276 | 66,791 | 154.9% |
| In thousands of euros | |||
| 12M 2018 | 12M 2017 | % Var | |
| REPORTED OTHERS NET REVENUES | 22,451 | 18,263 | 22.9% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS REPORTED OTHERS NET REVENUES AT CONSTANT CURRENCY |
1,226 23,677 |
18,263 | 29.6% |
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
| REPORTED INTERSEGMENTS NET REVENUES | (41,154) | (34,784) | 18.3% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | (2,264) |
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
|---|---|---|---|
| REPORTED U.S. + CANADA NET REVENUES | 2,974,429 | 2,896,505 | 2.7% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 173,578 | ||
| U.S. + CANADA NET REVENUES AT CONSTANT CURRENCY | 3,148,007 | 2,896,505 | 8.7% |
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
| REPORTED EU NET REVENUES | 800,274 | 686,983 | 16.5% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 1,119 | ||
| EU NET REVENUES AT CONSTANT CURRENCY | 801,393 | 686,983 | 16.7% |
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
| REPORTED ROW NET REVENUES | 712,021 | 734,585 | (3.1%) |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 51,837 | ||
| ROW NET REVENUES AT CONSTANT CURRENCY | 763,858 | 734,585 | 4.0% |
| In millions of euros | 12M 2018 | 12M 2017 | % Var |
|---|---|---|---|
| R&D RECURRENT EXPENSES IN P&L | 240.6 | 223.2 | |
| R&D CAPITALIZED | 55.4 | 43.3 | |
| R&D DEPRECIATION & AMORTIZATION & WRITE OFFS | (19.8) | (14.7) | |
| R&D CAPEX FIXED ASSETS | 4.9 | 3.4 | |
| R&D EXTERNAL | 10.3 | 11.0 | |
| R&D NET INVESTMENT | 291.4 | 266.2 | 9.5% |
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
|---|---|---|---|
| PP&E ADDITIONS | 240,938 | 260,347 | |
| SOFTWARE ADDITIONS | 20,252 | 19,626 | |
| INTEREST CAPITALIZED | (8,955) | (8,839) | |
| CAPEX | 252,235 | 271,134 | (7.0%) |
| In millions of euros except ratio | 12M 2018 | 12M 2017 |
|---|---|---|
| NET FINANCIAL DEBT | 5,343.1 | 5,170.4 |
| EBITDA EXCL. NON-RECURRING ITEMS | 1,236.0 | 1,305.6 |
| NET LEVERAGE RATIO | 4.32 x | 3.96 x |
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
|---|---|---|---|
| EBIT REPORTED | 994,124 | 1,003,343 | |
| D&A | 228,609 | 215,490 | |
| NON-RECURRING ITEMS(1) | 13,243 | 86,746 | |
| EBITDA EXCL. NON-RECURRING ITEMS | 1,235,976 | 1,305,579 | (5.3%) |
(1) Non-recurring items related to acquisitions; the Aradigm assets reassessment and the U.S. tax reform and tax related to other nonrecurring items in 2017
| In thousands of euros | 12M 2018 | 12M 2017 | % Var |
|---|---|---|---|
| EBIT REPORTED | 994,124 | 1,003,343 | (0.9%) |
| D&A | 228,609 | 215,490 | |
| IMPACT OF PLASMA SOLD TO THIRD PARTIES | (4,323) | - | |
| EBITDA UNDERLYING | 1,218,410 | 1,218,833 | (0.0%) |
| % Net revenues | 27.7% | 28.2% |
52
KPMG Asesores, S.L. Torre Realia Plaça d'Europa, 41-43 08908 L'Hospitalet de Llobregat Barcelona
(Free translation from the original in Spanish. In case of discrepancy, the Spanish language version prevails.)
To the shareholders of Grifols, S.A.:
Pursuant to article 49 of the Spanish Code of Commerce, we have provided limited assurance on the consolidated Non-Financial Information Statement (hereinafter NFIS) for the year ended 31 December 2018, of Grifols S.A. (hereinafter the Parent Company) and its subsidiaries (hereinafter the Group) which forms part of the Group's 2018 consolidated Directors' Report.
The contents of the consolidated Directors' Report includes additional information to that required by prevailing mercantile legislation on non-financial information which it is not possible to provide assurance. In this regard, our assurance work was limited only to providing assurance on the information contained in table "Index of contents required by Law 11/2018, of December 28, regarding non-financial information and diversity".
The Parent Company's Board of Directors is responsible for the preparation and presentation of the NFIS included in the Group's Consolidated Directors' Report. The NFIS has been prepared in accordance with prevailing mercantile legislation and selected Sustainability Reporting Standards of the Global Reporting Initiative (GRI Standards), in accordance with that mentioned for each subject area in table "Index of contents required by Law 11/2018, of December 28, regarding non-financial information and diversity" of said Consolidated Directors' Report.
This responsibility also encompasses the design, implementation and maintenance of internal control deemed necessary to ensure that the NFIS is free from material misstatement, whether due to fraud or error.
The Parent Company's Directors are also responsible for defining, implementing, adapting and maintaining the management systems from which the information necessary for preparing the NFIS was obtained.
We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
Our firm applies International Standard on Quality Control 1 (ISQC1) and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
The engagement team was comprised of professionals specialised in reviews of non-financial information and, specifically, in information on economic, social and environmental performance.
Our responsibility is to express our conclusions in an independent limited assurance report based on the work performed that refers exclusively to the year 2018. The data for previous years were not subject to the assurance foreseen in the mercantile legislation in force.
We conducted our review engagement in accordance with International Standard on Assurance Engagements, "Assurance Engagements other than Audits or Reviews of Historical Financial Information" (ISAE 3000), issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) and with the Performance Guide on assurance engagements on the Non-Financial Information Statement issued by the Spanish Institute of Registered Auditors (ICJCE).
The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement, and consequently, the level of assurance provided is also lower.
Our work consisted of making inquiries of management, as well as of the different units and responsible areas of the Group that participated in the preparation of the NFIS, in the review of the processes for compiling and validating the information presented in the NFIS and in the application of certain analytical procedures and sample review testing described below:
Review of the information relative to the risks, policies and management approaches applied in relation to the material aspects presented in the NFIS.
Corroboration, through sample testing, of the information relative to the content of the NFIS for 2018 and whether it has been adequately compiled based on data provided by internal and external information sources or third party reports.
Based on the assurance procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe that the NFIS of Grifols, S.A. and its subsidiaries for the year ended 31 December 2018 has not been prepared, in all material respects, in accordance with prevailing mercantile legislation and the content of the selected GRI Standards, in accordance with that mentioned for each subject area in the table "Index of contents required by Law 11/2018, of December 28, regarding non-financial information and diversity" included in the Consolidated Directors' Report.
This report has been prepared in response to the requirement established in prevailing mercantile legislation in Spain, and thus may not be suitable for other purposes and jurisdictions.
KPMG Asesores, S.L.
(Signed)
Patricia Reverter Guillot 27 February 2019
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At their meeting held on 22 February 2019, pursuant to legal requirements, the Directors of Grifols, S.A. authorised for issue the consolidated annual accounts and consolidated directors' report for the period from 1 January 2018 to 31 December 2018. The consolidated annual accounts comprise the documents that precede this certification.
| Victor Grifols Roura (signed) |
Raimon Grifols Roura (signed) |
Víctor Grifols Deu (signed) |
|---|---|---|
| President – Board member |
Chief Executive Officer | Chief Executive Officer |
| Carina Szpilka Lázaro | Tomás Dagà Gelabert | Thomas Glanzmann |
| (signed) | (signed) | (signed) |
| Board member | Board member | Vice-Chairman |
| Iñigo Sánchez-Asiaín | Anna Veiga Lluch | Luis Isasi Fernández de |
| Mardone (*) |
(signed) | Bobadilla (signed) |
| Board member | Board member | Board member |
| Steven F. Mayer | Belen Villalonga Morenés |
Marla E. Salmon |
| (signed) | (signed) | (signed) |
| Board member | Board member | Board member |
| Ramón Riera Roca |
Nuria Martín Barnés | |
| (signed) | (signed) | |
| Board Member | Secretary to the Board |
(*) Absent on a business trip, attended the meeting by conference call and did not express any disconformity with the documentation.
| Recoverable Amount of Investments in Group Companies See notes 4 and 12 to the annual accounts |
|
|---|---|
| Key Audit Matters | How the Matter was Addressed in Our Audit |
| As described in the notes to the annual accounts, at 31 December 2018 the Company has recognised non-current investments in Group companies and associates totalling Euros 3,270,828 thousand. The Company performs an annual assessment of the existence of objective evidence of impairment of investments in Group companies and estimates the recoverable amount at reporting date of those entities for which objective evidence of impairment exist. The recoverable amount of these investments is determined by applying valuation techniques that require the Directors' judgement and the use of assumptions and estimates. Due to the uncertainty and judgement associated with these assumptions and estimates, as well as the significance of the carrying amount of the investments in Group companies, we have considered this valuation as a key audit matter. |
Our audit procedures comprised the following: assessing the design and implementation of $\bullet$ key controls established by the Company with respect to the process of estimating the recoverable amount of investments in Group companies, the evaluation of criteria used by the Company $\bullet$ to assess the existence of objective evidence of impairment of the value of investments in Group companies identified by the Company. assessing the reasonableness of the $\bullet$ methodology and assumptions used by the Company in estimating the recoverable amount of investments in Group companies, in collaboration with our valuation specialists. We have compared the cash flow forecasts estimated in prior years with actual flows obtained by the investees. We have also performed an analysis of the sensitivity of the estimates of recoverable amount to relevant assumptions and judgements, such as the discount rate, expected future growth rate and future cash flows. We have also assessed whether the disclosures in the annual accounts meet requirements of the financial reporting framework applicable to the Company. |
Annual Accounts and Directors' Report for the year
31 December 2018
(With Independent Auditor's Report Thereon)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Assets | Note | 2018 | 2017 |
|---|---|---|---|
| Intangible assets | Note 5 | 14,534,419 | 12,911,968 |
| Computer softw are | 14,534,419 | 12,911,968 | |
| Property, plant and equipment | Note 6 | 22,894,137 | 19,194,743 |
| Technical installations, machinery, | |||
| equipment, furniture and other items | 16,526,040 | 11,656,861 | |
| Under construction and advances | 6,368,097 | 7,537,882 | |
| Investment property | Note 7 | 54,820,824 | 56,602,713 |
| Land | 7,465,344 | 7,465,344 | |
| Buildings | 40,723,584 | 36,184,109 | |
| Investments in adaptation and advances | 6,631,896 | 12,953,260 | |
| Non-current investments in Group | |||
| companies and associates | 4,864,254,923 | 4,872,893,986 | |
| Equity instruments | Note 12 | 3,270,828,231 | 3,124,452,858 |
| Loans to companies | Note 14 | 1,593,426,692 | 1,748,441,128 |
| Non-current investments | Note 14 | 1,622,650 | 1,608,091 |
| Other financial assets | 1,622,650 | 1,608,091 | |
| Deferred tax assets | Note 21 | 13,996,465 | 10,936,470 |
| Total non-current assets | 4,972,123,418 | 4,974,147,971 | |
| Inventories | 6,223,503 | 5,216,392 | |
| Raw materials and other supplies | 6,223,503 | 5,216,392 | |
| Trade and other receivables | Note 14 | 58,285,542 | 75,412,980 |
| Trade receivables – current | 874,963 | 1,005,160 | |
| Trade receivables from Group companies | Note 23 | 19,526,804 | 19,485,499 |
| and associates – current | |||
| Other receivables | 378,527 | 352,704 | |
| Personnel | 173,455 | 117,449 | |
| Current tax assets | Note 21 | 25,911,844 | 48,155,917 |
| Public entities, other | Note 21 | 11,419,949 | 6,296,251 |
| Current investments in Group companies and associates |
Note 14 | 91,209,026 | 97,473,673 |
| Loans to companies | 91,209,026 | 22,474,552 | |
| Other financial assets | -- | 74,999,121 | |
| Current investments | Note 14 | 4,306 | 16,033 |
| Other financial assets | 4,306 | 16,033 | |
| Prepayments for current assets | Note 15 | 6,360,153 | 6,048,768 |
| Cash and cash equivalents | 2,432,907 | 8,948,352 | |
| Cash | 2,432,907 | 8,948,352 | |
| Total current assets | 164,515,437 | 193,116,198 | |
| Total assets | 5,136,638,855 | 5,167,264,169 |
| Equity and Liabilities | Note | 2018 | 2017 |
|---|---|---|---|
| Capital and reserves | Note 16 | 1,719,323,992 | 1,582,702,913 |
| Capital | |||
| Registered capital | 119,603,705 | 119,603,705 | |
| Share premium | 910,727,619 | 910,727,619 | |
| Reserves | |||
| Legal and statutory reserves | 23,920,741 | 23,920,741 | |
| Other reserves | 514,890,169 | 358,660,877 | |
| (Treasury stock and equity holdings) | (55,441,210) | (62,422,309) | |
| Profit for the year | 329,718,263 | 341,327,404 | |
| (Interim dividend) | (136,747,291) | (122,986,278) | |
| Other equity instruments | 12,651,996 | 13,871,154 | |
| Grants, donations and bequests | |||
| received | 112,549 | 123,265 | |
| Total equity | 1,719,436,541 | 1,582,826,178 | |
| Non-current payables | Note 19 | 1,739,694,842 | 1,679,299,634 |
| Promissory notes | 987,249,676 | 985,248,207 | |
| Loans and borrow ings | 747,069,488 | 690,441,900 | |
| Finance lease payables | Note 8 | 2,496,750 | 1,861,931 |
| Other financial liabilities | 2,878,928 | 1,747,596 | |
| Group companies and associates, | Note 19 | 1,512,716,087 | 1,790,682,269 |
| non-current Deferred tax liabilities |
Note 21 | 1,691,193 | 1,859,414 |
| Total non-current liabilities | 3,254,102,122 | 3,471,841,317 | |
| Current payables | Note 19 | 39,800,087 | 17,569,839 |
| Promissory notes | 5,333,333 | 5,244,444 | |
| Loans and borrow ings | 31,296,281 | 4,653,935 | |
| Finance lease payables | Note 8 | 1,119,117 | 1,071,228 |
| Other financial liabilities | 2,051,356 | 6,600,232 | |
| Group companies and associates, current |
Note 19 | 39,766,089 | 19,907,750 |
| Trade and other payables | Note 19 | 83,534,016 | 75,119,085 |
| Current payables to suppliers | 42,530,365 | 39,404,813 | |
| Suppliers, Group companies and | |||
| associates, current | Note 23 | 8,032,244 | 5,290,662 |
| Personnel (salaries payable) | 10,100,816 | 9,872,640 | |
| Public entities, other | Note 21 | 22,870,591 | 20,550,970 |
| Total current liabilities | 163,100,192 | 112,596,674 | |
| Total equity and liabilities | 5,136,638,855 | 5,167,264,169 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Note | 2018 | 2017 | |
|---|---|---|---|
| Revenues | 647,280,993 | 590,907,263 | |
| Services rendered | Note 24 | 116,197,231 | 111,327,946 |
| Finance income | Note 13 and 23 |
52,115,757 | 39,070,699 |
| Dividends | 478,968,005 | 440,508,618 | |
| Self-constructed assets | 2,198,881 | 4,719,071 | |
| Supplies | (2,614,325) | (2,357,003) | |
| Raw materials and consumables used | Note 24 | (2,577,734) | (2,469,572) |
| Subcontracted w ork | (766) | -- | |
| Impairment of merchandise, raw materials and other supplies |
(35,825) | 112,569 | |
| Other operating income | 6,623,910 | 6,629,640 | |
| Non-trading and other operating income | 6,466,963 | 6,464,412 | |
| Operating grants taken to income | 156,947 | 165,228 | |
| Personnel expenses | (61,889,453) | (56,966,231) | |
| Salaries and w ages | (50,556,677) | (46,867,614) | |
| Employee benefits expense | Note 24 | (11,105,836) | (9,931,996) |
| Provisions | (226,940) | (166,621) | |
| Other operating expenses | (127,386,959) | (122,344,136) | |
| External services | (126,486,261) | (120,778,366) | |
| Taxes | (228,873) | (267,109) | |
| Other operating expenses | (671,825) | (1,298,661) | |
| Amortisation and depreciation | Notes 5, 6 and 7 |
(13,065,662) | (12,793,942) |
| Non-financial and other capital grants | 14,289 | 14,289 | |
| Impairment and gains/(losses) on disposal of fixed assets |
(26,248,587) | (674,446) | |
| Impairment and losses | Note 12 | (26,039,347) | (674,446) |
| Gains/(losses) on disposal and other | Note 7 | (209,240) | -- |
| Results from operating activities | 424,913,087 | 407,134,505 | |
| Finance income | 360,023 | 412,522 | |
| Other third parties | Note 13 | 3,122 | 2,913 |
| Capitalised borrow ing costs | Note 6 | 356,901 | 409,609 |
| Finance costs | Note 18 | (137,809,892) | (103,637,249) |
| Group companies and associates Other third parties |
Note 23 | (86,972,977) (50,836,915) |
(77,098,571) (26,538,678) |
| Notes 14 and | |||
| Exchange losses | 19 | (712,374) | 1,402,235 |
| Net finance cost | (138,162,243) | (101,822,492) | |
| Profit before income tax | 286,750,844 | 305,312,013 | |
| Income tax | Note 21 | 42,967,419 | 36,015,391 |
| Profit for the year | 329,718,263 | 341,327,404 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Note | 2018 | 2017 |
|---|---|---|
| Profit for the year | 329,718,263 | 341,327,404 |
| Income and expense recognised directly in equity |
||
| Grants, donations and bequests Tax effect |
-- -- |
-- -- |
| Total income and expense recognised directly in equity |
-- | -- |
| Amounts transferred to the income statement Grants, donations and bequests Tax effect |
(14,289) 3,573 |
(14,289) 3,573 |
| Total amounts transferred to the income statement |
(10,716) | (10,716) |
| Total recognised income and expense | 329,707,547 | 341,316,688 |
(Expressed in Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Registered capital |
Share premium |
Reserves | Treasury stock |
Profit for the year |
Interim dividend |
Other equity instruments |
Grants, donations and bequests received |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 31 December 2017 | 119,603,705 | 910,727,619 | 382,581,618 | (62,422,309) | 341,327,404 | (122,986,278) | 13,871,154 | 123,265 | 1,582,826,178 |
| Recognised income and expense | -- | -- | -- | -- | 329,718,263 | -- | -- | (10,716) | 329,707,547 |
| Transactions w ith shareholders or ow ners |
|||||||||
| Net movement in treasury stock | -- | -- | -- | 6,981,099 | -- | -- | -- | -- | 6,981,099 |
| Interim dividend | -- | -- | -- | -- | -- | (136,747,291) | -- | -- | (136,747,291) |
| Restricted share plan | -- | -- | (318,879) | -- | -- | -- | (1,219,158) | -- | (1,538,037) |
| Other movements | -- | -- | 80,301,167 | -- | -- | -- | -- | -- | 80,301,167 |
| Distribution of profit/(Application of loss) for the period 2017 |
|||||||||
| Reserves | -- | -- | 76,247,004 | -- | (76,247,004) | -- | -- | -- | -- |
| Dividends | -- | -- | -- | -- | (265,080,400) | 122,986,278 | -- | -- | (142,094,122) -- |
| Balance at 31 December 2018 | 119,603,705 | 910,727,619 | 538,810,910 | (55,441,210) | 329,718,263 | (136,747,291) | 12,651,996 | 112,549 | 1,719,436,541 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Registered capital |
Share premium |
Reserves | Treasury stock |
Profit for the year |
Interim dividend |
Other equity instruments |
Grants, donations and bequests received |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 31 December 2016 | 119,603,705 | 910,727,619 | 278,879,344 | (68,710,268) | 321,792,932 | (122,908,351) | 7,945,464 | 133,981 | 1,447,464,426 |
| Recognised income and expense | -- | -- | -- | -- | 341,327,404 | -- | -- | (10,716) | 341,316,688 |
| Transactions w ith shareholders or ow ners |
|||||||||
| Net movement in treasury stock | -- | -- | -- | 6,287,959 | -- | -- | -- | -- | 6,287,959 |
| Interim dividend | -- | -- | -- | -- | -- | (122,986,278) | -- | -- | (122,986,278) |
| Restricted share plan | -- | -- | -- | -- | -- | -- | 5,925,690 | -- | 5,925,690 |
| Other movements | -- | -- | 91,742 | -- | -- | -- | -- | -- | 91,742 |
| Distribution of profit/(Application of loss) for the period 2016 |
|||||||||
| Reserves | -- | -- | 103,610,532 | -- | (103,610,532) | -- | -- | -- | -- |
| Dividends | -- | -- | -- | -- | (218,182,400) | 122,908,351 | -- | -- | (95,274,049) |
| Balance at 31 December 2017 | 119,603,705 | 910,727,619 | 382,581,618 | (62,422,309) | 341,327,404 | (122,986,278) | 13,871,154 | 123,265 | -- 1,582,826,178 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 2018 | 2017 | |
|---|---|---|
| Cash flows from operating activities | ||
| Profit for the year before tax | 286,750,844 | 305,312,013 |
| Adjustments for: | ||
| Dividend income | (478,968,005) | (440,508,618) |
| Impairment | 26,039,347 | 674,446 |
| Amortisation and depreciation | 13,065,662 | 12,793,942 |
| Finance income | (52,472,658) | (39,483,221) |
| Finance costs | 110,257,698 | 102,908,118 |
| Change in fair value of financial instruments | 209,240 | -- |
| Other income and expenses | 1,245,155 | 1,535,603 |
| Changes in operating assets and liabilities | ||
| Inventories | (1,007,111) | (663,201) |
| Trade and other receivables | 7,063 | (5,194,213) |
| Other current assets | (311,385) | 295,942 |
| Trade and other payables | 6,523,628 | 14,834,285 |
| Other current assets and liabilities | 1,239,165 | 37,077 |
| Other cash flows from operating activities | ||
| Interest paid | (98,145,695) | (93,812,559) |
| Dividends received | 401,693,670 | 365,509,497 |
| Interest received | 52,060,671 | 38,947,344 |
| Income tax paid (received) | 57,737,477 | 56,129,584 |
| Cash flows from operating activities | 325,924,766 | 319,316,039 |
| Cash flows from investing activities | ||
| Payments for investments | ||
| Group companies and associates | (28,195,954) | (1,349,494,019) |
| Intangible assets | (6,941,270) | (7,815,892) |
| Property, plant and equipment | (9,694,395) | (8,122,575) |
| Investment property | -- | (5,618,263) |
| Other financial assets | (14,561) | (16,850) |
| Proceeds from sale of investments | ||
| Group companies and associates | 177,704 | -- |
| Other financial assets | 11,727 | 8,715 |
| Cash flows used in investing activities | (44,656,749) | (1,371,058,884) |
| Cash flows from financing activities | ||
| Proceeds from and payments for financial liability instruments | ||
| Disposal | ||
| Promissory notes | -- | 1,000,000,000 |
| Loans and borrow ings | 83,004,887 | 686,761,564 |
| Group companies and associates | (91,946,935) | (392,437,491) |
| Financing costs included on the amortised costs of the debt | -- | (28,075,862) |
| Dividends and interest on other equity instruments paid | ||
| Dividends | (278,841,414) | (218,260,327) |
| Cash flows from/(used in) financing activities | (287,783,462) | 1,047,987,884 |
| Net decrease in cash and cash equivalents | (6,515,445) | (3,754,961) |
| Cash and cash equivalents at beginning of year | 8,948,352 | 12,703,313 |
| Cash and cash equivalents at year end | 2,432,907 | 8,948,352 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Grifols, S.A. (hereinafter the Company) was incorporated with limited liability under Spanish law on 22 June 1987. Its registered office is in Barcelona. The Company's statutory activity consists of providing corporate and business administrative, management and control services, as well as investing in assets and property. Its principal activity involves rendering administrative, management and control services to its subsidiaries.
Its main facilities are located in Sant Cugat del Vallés (Barcelona) and Parets del Vallés (Barcelona).
Grifols, S.A.'s shares are listed on the Barcelona, Madrid, Valencia and Bilbao stock exchanges and on the electronic stock market. As of 2 June 2011 the class B non-voting shares were listed on the NASDAQ (USA) and the Automated Quotation System (SIBE/Continuous Market).
In accordance with prevailing legislation, the Company is the Parent of a Group comprising the Company and the subsidiaries listed in note 12. In accordance with generally accepted accounting principles in Spain, consolidated annual accounts must be prepared to give a true and fair view of the financial position of the Group, the results of operations and changes in its equity and cash flows. Details of investments in Group companies are provided in Appendix XV.
On 22 February 2019 the Company's board of directors authorised for issue the consolidated annual accounts of Grifols, S.A. and subsidiaries for 2018 prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU), which show consolidated profit attributable to the Parent of Euros 596,642 thousand, total assets 12,477,046 thousand and consolidated equity of Euros 4,696,604 thousand (Euros 662,700 thousand, Euros 10,920,264 thousand and Euros 3,633,965 thousand, respectively, in 2017).
(a) True and fair view
The accompanying annual accounts have been prepared on the basis of the accounting records of Grifols, S.A. The annual accounts for 2018 have been prepared in accordance with prevailing legislation and the Spanish General Chart of Accounts to give a true and fair view of the equity and financial position of the Company at 31 December 2018 and results of operations, changes in equity, and cash flows for the year then ended.
The directors consider that the annual accounts for 2018, authorised for issue on 22 February 2019, will be approved with no changes by the shareholders at their annual general meeting.
(b) Comparative information
The balance sheet, income statement, statement of changes in equity, statement of cash flows and the notes thereto for 2018 include comparative figures for 2017, which formed part of the annual accounts approved by shareholders at the annual general meeting held on 25 May 2018.
(c) Functional and presentation currency
The figures disclosed in the annual accounts are presented in Euros, the Company's functional and presentation currency, rounded off to the nearest Euro.
(d) Critical issues regarding the valuation and estimation of relevant uncertainties and judgements used when applying accounting principles.
Relevant accounting estimates and judgements and other estimates and assumptions have to be made when applying the Company's accounting principles to prepare the annual accounts. A summary of the items requiring a greater degree of judgement or which are more complex, or where the assumptions and estimates made are significant to the preparation of the annual accounts, is as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(i) Relevant accounting estimates and assumptions
The Company tests investments in Group companies for impairment on an annual basis when the net value of the investment exceeds the carrying amount of the subsidiary and where indications of impairment exist. Fair value of the investment used as recoverable value is measured based on estimates made by management. The Company generally uses cash flow discounting methods to calculate this value. Cash flow discounting calculations are based on the 5-year projections of the budgets approved by management. The cash flows take into consideration past experience and represent management's best estimate of future market performance. From the fifth year cash flows are extrapolated using individual growth rates. The key assumptions employed to calculate the fair value include growth rates and the discount rate. The estimates, including the methodology used, could have a significant impact on values and impairment.
(ii) Changes in accounting estimates
Although estimates are calculated by the Company's directors based on the best information available at 31 December 2018, future events may require changes to these estimates in subsequent years. Any effect on the annual accounts of adjustments to be made in subsequent years would be recognised prospectively. Grifols, S.A. management does not consider that there are any assumptions or sources of uncertainty that would have a significant risk of resulting in a material adjustment within the next financial year.
The distribution of profit and reserves of the Company for the year ended 31 December 2017, approved by the shareholders at their annual general meeting held on 25 May 2018, is as follows:
2017
| Euros | |
|---|---|
| Basis of allocation | |
| Profit for the year | 341,327,404 |
| Distribution | |
| Voluntary reserve | 76,247,004 |
| Mandatory preferred dividend on Class B shares | 2,614,251 |
| Dividends | 262,466,149 |
| 341,327,404 |
At the general meeting held on 25 May 2018, the shareholders of Grifols, S.A. approved the distribution of a mandatory preferred dividend of Euros 0.01 for every Class B share, for a total amount of Euros 2,614,251.
On 26 October 2018 the Company's board of directors approved the distribution of an interim dividend of Euros 0.20 for every class A and B share with a charge to the 2018 income statement, totalling Euros 136,747 thousand, payable on 4 December 2018. The amount distributed did not exceed the profits reported by the Company since the end of the previous reporting period, after deducting the estimated income tax payable on these profits, as required by article 277 of the revised Spanish Companies Act. The provisional accounting statement prepared in accordance with statutory requirements demonstrating that sufficient cash was available for distribution of the aforementioned dividend is provided in Appendix XlV.
The proposed distribution of profit for the year ended 31 December 2018 to be submitted to the shareholders for approval at their annual general meeting is as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
2018
| Euros | |
|---|---|
| Basis of allocation | |
| Profit for the year | 329,718,263 |
| Distribution | |
| Voluntary reserve | 91,059,463 |
| Mandatory preferred dividend on Class B shares | 2,614,251 |
| Dividends | 236,044,549 |
| 329,718,263 |
At 31 December 2018 and 2017 non-distributable reserves are as follows:
| 2018 | 2017 | |
|---|---|---|
| Non-distributable reserves | ||
| Legal reserve | 23,920,741 | 23,920,741 |
| Other | 3,020 | 3,020 |
| 23,923,761 | 23,923,761 |
Profit recognised directly in equity cannot be distributed, either directly or indirectly.
As the Company applied the third transitional provision of Royal Decree 1514/2007, only those business combinations that occurred on or after 1 January 2008, the date of transition to the Spanish General Chart of Accounts, have been recognised using the acquisition method. Business combinations that occurred prior to that date were recognised in accordance with accounting principles prevailing at that time, taking into account the necessary corrections and adjustments at the transition date.
Business combinations carried out since 1 January 2010 are recognised by applying the acquisition method established in Recognition and Measurement Standard 19 of the Spanish General Chart of Accounts amended by article 4 of Royal Decree 1159/2010, which approves the standards for the preparation of consolidated annual accounts and amends the Spanish General Chart of Accounts.
The Company applies the acquisition method for business combinations, except for mergers, spin-offs and nonmonetary contributions of a business between group entities.
The acquisition date is the date on which the Company obtains control of the acquiree.
The cost of the business combination is calculated as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred or assumed, the equity instruments issued and any consideration contingent on future events or compliance with certain conditions in exchange for control of the acquiree.
The cost of a business combination excludes any payments that do not form part of the consideration given in exchange for the acquiree. Acquisition costs are recognised as an expense when incurred.
The costs of issuing equity and liability instruments are recognised using the measurement criteria applicable to these transactions.
The Company recognises the assets acquired and liabilities assumed at their acquisition-date fair value. Liabilities assumed include any contingent liabilities that represent present obligations arising from past events for which the fair value can be reliably measured. The Company also recognises indemnification assets transferred by the seller at the same time and following the same measurement criteria as the item that is subject to indemnification from the acquiree, taking into consideration, where applicable, the insolvency risk and any contractual limitations on the indemnified amount.
(i) Foreign currency transactions, balances and cash flows
Foreign currency transactions have been translated into Euros using average exchange rates for the prior month for all foreign currency transactions during the current month. This method does not differ significantly from applying the exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies have been translated into Euros at the closing rate, while non-monetary assets and liabilities measured at historical cost have been translated at the exchange rate prevailing at the transaction date.
In the statement of cash flows, cash flows from foreign currency transactions have been translated into Euros using the average exchange rates for the prior month for all flows that occur during the following month. This method does not differ significantly from applying the exchange rate at the date of the transaction.
Exchange gains and losses arising on the settlement of foreign currency transactions and the translation into Euros of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
In accordance with the second transitional provision of Royal Decree 1514/2007 enacting the Spanish General Chart of Accounts, the Company has opted to apply this accounting policy to work in progress at 1 January 2008 which will not be available for use, capable of operating or available for sale for more than one year. Until that date, the Company opted to recognise borrowing costs as an expense as they were incurred.
Borrowing costs related to specific and general financing that are directly attributable to the acquisition, construction or production of intangible assets, property, plant and equipment and investment property that will not be available for use, capable of operating or available for sale for more than one year are included in the cost of the asset.
To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined as the actual borrowing costs incurred. Non-commercial general borrowing costs eligible for capitalisation are calculated as the weighted average of the borrowing costs applicable to the Company's outstanding borrowings during the period, other than those specifically for the purpose of obtaining a qualifying asset and the portion financed using equity. The borrowing costs capitalised cannot exceed the borrowing costs incurred during that period.
The Company begins capitalising borrowing costs as part of the cost of a qualifying asset when it incurs expenditures for the asset, interest is accrued, and it undertakes activities that are necessary to prepare the asset for its intended use, operation or sale, and ceases capitalising borrowing costs when all or substantially all the activities necessary to prepare the qualifying asset for its intended use, operation or sale are complete, even though the necessary administrative permits may not have been obtained. Interruptions in the active development of a qualifying asset are not considered. Nonetheless, restated advances on account are not qualifying assets for the purpose of capitalising borrowing costs.
Capitalised borrowing costs are recognised in the income statement under capitalised borrowing costs.
(d) Intangible assets
Intangible assets are measured at cost or cost of production. Capitalised production costs are recognised under selfconstructed assets in the income statement. Intangible assets are carried at cost, less any accumulated amortisation and impairment.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Advances on account of fixed assets are initially measured at cost. In subsequent years, advances accrue interest at the supplier's incremental borrowing rate when the period between payment and the receipt of the asset exceeds one year.
Cost of production of intangible assets comprises the purchase price and any costs directly related to production.
Expenditure on activities that contribute to increasing the value of the Company's business as a whole, such as goodwill, trademarks and other similar items generated internally, as well as establishment costs, are recognised as expenses when incurred.
(i) Computer software
Computer software acquired and developed by the Company is recognised to the extent that costs can be clearly allocated, expensed and distributed over time to each project, and when there is evidence of technical success and economic viability. Computer software maintenance costs are charged as expenses when incurred.
(ii) Subsequent costs
Subsequent costs incurred on intangible assets are recognised in profit and loss, unless they increase the expected future economic benefits attributable to the intangible asset.
(iii) Useful life and amortisation rates
Intangible assets with finite useful lives are amortised by allocating the depreciable amount of an asset on a systematic basis over its useful life, by applying the following criteria:
| Amortisation method |
Rates % | |
|---|---|---|
| Computer softw are | Straight-line | 16‑33 |
The depreciable amount is the acquisition or production cost of an asset.
The Company considers that the residual value of the assets is zero unless:
The Company reviews the useful life and amortisation method for intangible assets at each financial year end. Changes to initially established criteria are accounted for as a change in accounting estimates.
(iv) Impairment losses
The Company measures and determines impairment to be recognised or reversed based on the criteria in section (g) Impairment of non-financial assets subject to amortisation or depreciation.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Property, plant and equipment are measured at cost of acquisition or production, using the same criteria as for determining the cost of production of intangible assets. Capitalised production costs are recognised under "Selfconstructed assets" in the income statement. Property, plant and equipment are carried at cost less any accumulated depreciation and impairment.
The cost of an item of property, plant and equipment includes the estimated costs of its dismantling or removal and restoration of the site on which it is located, provided that the obligation is incurred as a consequence of having used the item.
(ii) Depreciation
Property, plant and equipment are depreciated by allocating the depreciable amount of the asset on a systematic basis over its useful life. The depreciable amount is the cost of an asset. The Company determines the depreciation charge separately for each component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset and with a useful life that differs from the remainder of the asset.
Property, plant and equipment are depreciated using the following criteria:
| Amortisation method |
Rates % | |
|---|---|---|
| Technical installations and machinery | Straight-line | 10 |
| Other installations, equipment and furniture | Straight-line | 4‑10 |
| Other property, plant and equipment | Straight-line | 7‑33 |
The Company reviews useful lives and depreciation methods at each financial year end. Changes to initially established criteria are accounted for as a change in accounting estimates.
Subsequent to initial recognition of the asset, only the costs incurred which increase capacity or productivity or which lengthen the useful life of the asset are capitalised. The carrying amount of parts that are replaced is derecognised. Costs of day-to-day servicing are recognised in profit and loss as incurred.
Replacements of property, plant and equipment that qualify for capitalisation are recognised as a reduction in the carrying amount of the items replaced. Where the cost of the replaced items has not been depreciated independently and it is not possible to determine the respective carrying amount, the replacement cost is used as indicative of the cost of items at the time of acquisition or construction.
(iv) Impairment
The Company measures and determines impairment to be recognised or reversed based on the criteria in section (g) Impairment of non-financial assets subject to amortisation or depreciation.
The Company classifies property leased to its subsidiaries under this caption. All property is earmarked exclusively for own use or the use of Group companies.
Property that is being constructed or developed for future use as investment property is classified as property, plant and equipment under development until construction or development is complete. Nevertheless, redevelopment work to extend or improve property is classified as investment property.
The Company measures and recognises investment property following the policy for property, plant and equipment.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Company reclassifies property, plant and equipment to investment property when it ceases to use the building in the production or supply of goods or services, for administrative purposes or when it is held to earn rentals or for capital appreciation or both.
Investment property is depreciated applying the following policies:
| Amortisation method |
Rates % | |
|---|---|---|
| Buildings and other installations | Straight-line | 1‑10 |
The Company evaluates whether there are indications of possible impairment losses on non-financial assets subject to amortisation or depreciation to verify whether the carrying amount of these assets exceeds the recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use.
Impairment losses are recognised in the income statement.
At the end of each reporting period the Company assesses whether there is any indication that an impairment loss recognised in prior periods may no longer exist or may have decreased. Impairment losses on goodwill are not reversible. Impairment losses on other assets are only reversed if there has been a change in the estimates used to calculate the recoverable amount of the asset.
A reversal of an impairment loss is recognised in the income statement. The increased carrying amount of an asset attributable to a reversal of an impairment loss may not exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised.
After an impairment loss or reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the asset is adjusted in future periods based on its new carrying amount.
However, if the specific circumstances of the assets indicate an irreversible loss, this is recognised directly in losses on the disposal of fixed assets in the income statement.
(i) Lessor accounting
Leases which, on inception, transfer to third parties substantially all the risks and rewards incidental to ownership of the assets are classified as finance leases, otherwise they are classified as operating leases.
(ii) Lessee accounting
Leases in which, upon inception, the Company assumes substantially all the risks and rewards incidental to ownership are classified as finance leases, otherwise they are classified as operating leases.
At the commencement of the lease term, the Company recognises finance leases as assets and liabilities at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Initial direct costs are added to the asset's carrying amount. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. Interest is expensed using the effective interest method.
Contingent rents are recognised as an expense when it is probable that they will be incurred.
The accounting policies applied to the assets used by the Company by virtue of finance lease contracts are the same as those set out in sections (e) and (f) (Property, plant and equipment or Investment Property).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Lease payments under an operating lease, net of incentives received, are recognised as an expense on a straight-line basis over the lease term.
Contingent rents are recognised as an expense when it is probable that they will be incurred.
Financial instruments are classified on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the economic substance of the contractual arrangement and the definitions of a financial asset, a financial liability and an equity instrument.
The Company classifies financial instruments into different categories based on the nature of the instruments and the Company's intentions on initial recognition.
(ii) Offsetting principles
A financial asset and a financial liability are offset only when the Company currently has the legally enforceable right to offset the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
(iii) Financial assets and financial liabilities held for trading
Financial assets or financial liabilities held for trading are those which are classified as held for trading from initial recognition.
A financial asset or financial liability is classified as held for trading if it:
Financial assets and financial liabilities held for trading are initially recognised at fair value. Transaction costs directly attributable to the acquisition or issue are recognised as an expense when incurred.
After initial recognition, they are recognised at fair value through profit or loss. Fair value is not reduced by transaction costs incurred on sale or disposal. Accrual interest and dividends are recognised separately.
The Company does not reclassify any financial asset or financial liability into or out of this category while it is recognised in the balance sheet, except when there is a change in the classification of hedging financial instruments.
(iv) Financial assets and financial liabilities at fair value through profit or loss
Financial assets and financial liabilities at fair value through profit or loss, which comprise derivatives, are initially recognised at fair value and after initial recognition are recognised at fair value through profit or loss.
(v) Loans and receivables
Loans and receivables comprise trade and non-trade receivables with fixed or determinable payments that are not quoted in an active market other than those classified in other financial asset categories. These assets are initially recognised at fair value, including transaction costs, and are subsequently measured at amortised cost using the effective interest method.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Nevertheless, financial assets which have no established interest rate, which mature or are expected to be received in the short term, and for which the effect of discounting is immaterial, are measured at their nominal amount.
(vi) Available-for-sale financial assets
The Company classifies in this category debt securities and equity instruments which do not qualify for inclusion in the aforementioned categories.
Available-for-sale financial assets are initially recognised at fair value plus transaction costs directly attributable to the acquisition.
After initial recognition, financial assets classified in this category are measured at fair value and any gain or loss is accounted for in income and expenses recognised in equity. On disposal of the financial assets, amounts recognised in equity or the impairment loss are reclassified to profit or loss.
(vii) Investments in Group companies and associates
Group companies are those over which the Company, either directly, or indirectly through subsidiaries, exercises control as defined in article 42 of the Spanish Code of Commerce, or when the companies are controlled by one or more individuals or entities acting jointly or under the same management through agreements or statutory clauses.
Control is the power to govern the financial and operating policies of an entity or business so as to obtain benefits from its activities. In assessing control, potential voting rights held by the Company or other entities that are exercisable or convertible at the end of each reporting period are considered.
Associates are entities over which the Company, either directly, or indirectly through subsidiaries, exercises significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The existence of potential voting rights that are exercisable or convertible at the end of each reporting period, including potential voting rights held by the Company or other entities, are considered when assessing whether an entity has significant influence.
Investments in Group companies and associates are initially recognised at cost, which is equivalent to the fair value of the consideration given, including transaction costs in the case of investments in associates, and are subsequently measured at cost net of any accumulated impairment. The cost of investments in Group companies acquired before 1 January 2010 includes any transaction costs incurred.
If an investment no longer qualifies for classification under this category, it is reclassified as available-for-sale and is measured as such from the reclassification date.
(viii) Non-monetary contributions in exchange for investments in the equity of other companies
However, in non-monetary contributions of businesses (including investments in Group companies) to other Group companies, equity investments received are measured at the transaction date at the higher of the carrying amount of the assets and liabilities transferred in the individual annual accounts of the contributing company and the amount representative of the percentage of interest in the equity of the business contributed. Gains or losses deferred in recognised income and expense associated with the assets and liabilities conveyed continue to be recognised in equity but are linked to the investment received.
(ix) Interest and dividends
Interest is recognised using the effective interest method.
Dividends from investments in equity instruments are recognised when the Company is entitled to receive them. If the dividends are clearly derived from profits generated prior to the acquisition date because amounts higher than the profits generated by the investment since acquisition have been distributed, the carrying amount of the investment is reduced.
Interest and dividend income are classified as revenue when they form part of the Company's ordinary activity.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
A financial asset or a group of financial assets is impaired and impairment losses are incurred if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and the event or events have an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The Company recognises impairment of loans and receivables and debt instruments when estimated future cash flows are reduced or delayed due to debtor insolvency.
For equity instruments, objective evidence of impairment exists when the carrying amount of an asset is uncollectible due to a significant or prolonged decline in its fair value.
Impairment is calculated by comparing the carrying amount of the net investment in the associate with its recoverable amount. The recoverable amount is the higher of value in use and fair value less costs to sell.
Value in use is calculated based on the Company's share of the present value of future cash flows expected to be derived from ordinary activities and from the disposal of the asset. Unless better evidence is available, the investee's equity is taken into consideration, corrected for any unrealised gains existing at the measurement date.
In subsequent years, reversals of impairment losses in the form of increases in the recoverable amount are recognised, up to the limit of the carrying amount that would have been determined for the investment if no impairment loss had been recognised.
The recognition or reversal of an impairment loss is disclosed in the income statement unless it should be recognised in equity.
Impairment of an investment is limited to the amount of the investment, except when contractual, legal or constructive obligations have been assumed by the Company or payments have been made on behalf of the companies. In the latter case, provision is made.
Financial liabilities, including trade and other payables, that are not classified as held for trading or as financial liabilities at fair value through profit or loss are initially recognised at fair value less any transaction costs directly attributable to the issue of the financial liability. After initial recognition, liabilities classified under this category are measured at amortised cost using the effective interest method.
Nevertheless, financial liabilities which have no established interest rate, which mature or are expected to be settled in the short term, and for which the effect of discounting is immaterial, are measured at their nominal amount.
The Company measures financial liabilities at amortised cost provided that reliable estimates of cash flows can be made based on the contractual terms.
The Company derecognises all or part of a financial liability when it either discharges the liability by paying the creditor, or is legally released from primary responsibility for the liability either by process of law or by the creditor. The exchange of debt instruments between the Company and the counterparty or substantial modifications of initially recognised liabilities are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability, provided that the instruments have substantially different terms.
The Company considers the terms to be substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
If the exchange is accounted for as an extinguishment of the financial liability, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
The difference between the carrying amount of a financial liability, or part of a financial liability, extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
(xiii) Reverse factoring
The Company has contracted reverse factoring facilities with various financial institutions to manage payments to suppliers. Trade payables settled under the management of financial institutions are recognised under trade and other payables in the balance sheet until they are settled, repaid or have expired.
(j) Own equity instruments held by the Company.
Equity instruments acquired by the Company are shown separately at cost of acquisition as a reduction in capital and reserves in the balance sheet. Any gains or losses on transactions with own equity instruments are not recognised in profit or loss.
Transaction costs related to own equity instruments, including issue costs related to a business combination, are accounted for as a deduction from reserves, net of any tax effect.
(k) Inventories
Inventories are measured using the FIFO (first in, first out) method. When the cost of inventories exceeds replacement value, materials are written down to net realisable value.
Inventories are mainly spare parts used to maintain the Company's buildings and facilities.
(i) Emission allowances
Emission allowances acquired are recognised and measured using the inventories accounting policies.
(l) Cash and cash equivalents
Cash and cash equivalents include cash on hand and demand deposits in financial institutions. They also include other short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. An investment normally qualifies as a cash equivalent when it has a maturity of less than three months from the date of acquisition.
(m) Grants
Grants are recorded in recognised income and expense when, where applicable, they have been officially awarded and the conditions attached to them have been met or there is reasonable assurance that they will be received.
(n) Defined contribution plans
The Company recognises the contributions payable to a defined contribution plan in exchange for a service when an employee has rendered service to the Company. The contributions payable are recognised as an expense for employee remuneration and as a liability after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the end of the period, the Company only recognises that excess as an asset (prepaid expense) to the extent that the prepayments will lead to, for example, a reduction in future payments or cash refund.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Provisions are recognised when the Company has a present obligation (legal, contractual, constructive or tacit) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account all risks and uncertainties surrounding the amount to be recognised as a provision and, where the time value of money is material, the financial effect of discounting provided that the expenditure to be made each period can be reliably estimated. The discount rate is a pre-tax rate that reflects the time value of money and the specific risks for which future cash flows associated with the provision have not been adjusted at each reporting date.
If it is not probable that an outflow of resources will be required to settle an obligation, the provision is reversed.
(ii) Provisions for taxes
Provisions for taxes are measured at the estimated amount of tax debt calculated in accordance with the aforementioned criteria. Provision is made with a charge to income tax for the tax expense for the year, to finance costs for the late payment interest, and to other income for the penalty. The effects of changes in estimates of prior years' provisions are recognised according to their nature, unless they involve the correction of an error.
(p) Revenue from the rendering of services
Revenue from the rendering of services is measured at the fair value of the consideration received or receivable.
Practically all services are rendered to Group companies.
(q) Income tax
The income tax expense or tax income for the year comprises current tax and deferred tax.
Current tax assets or liabilities are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
Current and deferred tax are recognised as income or an expense and included in profit or loss for the year, except to the extent that the tax arises from a transaction or event which is recognised, in the same or a different year, directly in equity, or from a business combination.
Government assistance provided in the form of deductions and other tax relief applicable to income tax payable is recognised as a reduction in the income tax expense in the year in which it is accrued.
The Company files consolidated tax returns with its Spanish subsidiaries: Laboratorios Grifols, S.A., Instituto Grifols, S.A., Diagnostic Grifols, S.A., Grifols Movaco, S.A., Biomat, S.A., Grifols International, S.A., Grifols Engineering, S.A., Grifols Viajes S.A., Gri-Cel, S.A., Gripdan Invest, S.L. and VCN Biosciencies, S.L..
In addition to the factors to be considered for individual taxation, set out previously, the following factors are taken into account when determining the accrued income tax expense for the companies forming the consolidated tax group:
Temporary differences arising from the elimination of profits and losses on transactions between tax group companies are allocated to the company which recognised the profit/loss and are valued using the tax rate of that company.
A reciprocal credit and debit arises between the companies that contribute tax losses to the consolidated Group and the rest of the companies that offset those losses. Where a tax loss cannot be offset by the other consolidated Group companies, these tax credits for loss carryforwards are recognised as deferred tax assets using the applicable recognition criteria, considering the tax group as a taxable entity.
The Parent of the Group records the total consolidated income tax payable with a debit to receivables from Group companies.
The amount of the debt relating to the subsidiaries is recognised with a credit to payables to Group companies.
(i) Deferred Tax liabilities
Deferred tax liabilities derived from taxable temporary differences are recognised in all cases except where they arise from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable income.
(ii) Deferred Tax assets
Deferred tax assets derived from deductible temporary differences are recognised provided that it is probable that sufficient taxable income will be available against which they can be utilised. Nonetheless, assets arising from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable income, are not recognised.
(iii) Measurement
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the years when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted. The tax consequences that would follow from the manner in which the Company expects to recover or settle the carrying amount of its assets or liabilities are also reflected in the measurement of deferred tax assets and liabilities.
(iv) Offset and classification
The Company only offsets tax assets and liabilities if it has a legally enforceable right to offset the recognised amounts and intends either to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
Deferred tax assets and liabilities are recognised in the balance sheet under non-current assets or liabilities, irrespective of the expected date of recovery or settlement.
The Group headed by the Company extends share-based payments to certain employees currently rendering services. The fair value of the services received is calculated by estimating the fair value of the shares extended at the grant date. As the equity instruments granted do not vest until the employees complete a specified period of service, those services are accounted for in the income statement as an expense for the year during the vesting period, with a corresponding increase in other equity instruments. The amount recognised reflects the amount that will be settled once the agreed conditions are met, and will not be revised or remeasured during the vesting period, as the commitment was settled through shares.
The total amount recognised is calculated based on the incentive payable in shares plus a percentage defined by the Company. If an employee leaves his job before the vesting period is completed, only the agreed share-based incentive is received, and the Company can decide whether to pay the incentive in cash or in shares.
The Company has a share option plan over its own equity instruments for employees of several Group companies, the cost of which is assumed by the Company. The Company recognises the transaction as a contribution to the subsidiary in the form of remuneration for services received settled through equity instruments. In accordance with the aforementioned criteria, the Company therefore recognises the accrued cost of the plan as an increase in the
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
value of the investment in the subsidiary with a credit to other equity instruments.
The Company is paid by the subsidiary for the intrinsic value of the cost assumed. The payment arrangement is recognised separately from the option plan as a return of the investment and with a charge to a loan to Group companies, when the subsidiary's commitment effectively arises.
The Company classifies assets and liabilities in the balance sheet as current and non-current. Current assets and liabilities are determined as follows:
The Company takes measures to prevent, reduce or repair the damage caused to the environment by its activities.
Expenses derived from environmental activities are recognised as other operating expenses in the period in which they are incurred.
Property, plant and equipment acquired by the Company to minimise the environmental impact of its activity and protect and improve the environment, including the reduction and elimination of future pollution from the Company's activities, are recognised as assets applying the measurement, presentation and disclosure criteria described in section (e) Property, plant and equipment.
(u) Transactions between Group companies
Transactions between Group companies, other than mergers, spin-offs and non-cash contributions, are recognised at the fair value of the consideration given or received. The difference between this value and the amount agreed is recognised in line with the underlying economic substance of the transaction.
In non-cash contributions to Group companies, the contributor will value its interests at the carrying amount of the equity investments, in the consolidated annual accounts at the date the transaction occurred.
Any difference between thevalue assigned to the interest received by the contributor and the carrying amount of the investments contributed will be recognised in reserves.
The cost of fully amortised intangible assets in use at 31 December is as follows:
| Euros | |||
|---|---|---|---|
| 2018 | 2017 | ||
| Computer softw are | 36,335,118 | 25,376,107 |
Fully amortised computer software in use at 31 December 2018 and 2017 mainly reflects computer licences.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(a) General
Details of property, plant and equipment and movement are shown in Appendix II.
During 2018 the Company has capitalised borrowing costs in investments in progress amounting to Euros 357 thousand (Euros 410 thousand in 2017) (see note 4 (c)).
Details of the cost of fully depreciated property, plant and equipment in use at 31 December are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Technical installations and machinery | 5,821,895 | 3,067,451 | ||
| Other installations, equipment and furniture | 7,758,067 | 4,589,425 | ||
| Other property, plant and equipment | 11,512,576 | 8,584,218 | ||
| 25,092,538 | 16,241,094 |
The Company has taken out insurance policies to cover the risk of damage to its property, plant and equipment. These policies amply cover the net carrying amount of the Company's assets.
Details of and movement in investment property are shown in Appendix III.
At 31 December 2018 and 2017 additions comprise the investments incurred to expand the Company's facilities.
The cost of fully depreciated investment property in use at 31 December is as follows:
| Euros | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Buildings Other installations |
1,031,791 15,256,715 |
1,031,791 13,712,960 |
||
| 16,288,506 | 14,744,751 |
Details of income and expenses from investment property are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Assignemet for use income (note 23) Operating expenses |
16,626,213 | 15,437,827 | ||
| From income-generating investments | (17,205,701) | (15,548,575) | ||
| Net | (579,488) | (110,748) |
The Company assigns the use of the premises and installations that it owns and leases from third parties to its Spanish subsidiaries (see notes 9, 10 and 23).
The Company has taken out insurance policies to cover the risk of damage to its investment property. The coverage of these policies is considered sufficient.
The Company has leased the following types of property, plant and equipment and investment property under finance leases:
| Euros | |||
|---|---|---|---|
| Land | Other property, plant and equipment |
Total | |
| Initially recognised at: | |||
| Fair value | 435,000 | 6,276,244 | 6,711,244 |
| Accumulated depreciation | (53,876) | (3,402,262) | (3,456,138) |
| Carrying amount at 31 December 2018 |
381,124 | 2,873,982 | 3,255,106 |
| Initially recognised at: | |||
| Fair value | 435,000 | 6,057,063 | 6,492,063 |
| Accumulated depreciation | (45,020) | (3,782,563) | (3,827,583) |
| Carrying amount at 31 December 2017 |
389,980 | 2,274,500 | 2,664,480 |
Future minimum lease payments are reconciled with their present value as follows:
| Euros | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Future minimum payments Unaccrued finance costs |
3,794,242 (178,375) |
3,211,053 (277,894) |
||
| Present value | 3,615,867 | 2,933,159 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of minimum payments and the present value of finance lease liabilities, by maturity date, are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Minimum payments |
Present value | Minimum payments |
Present value | |
| Less than one year | 1,225,427 | 1,119,117 | 1,242,409 | 1,071,228 |
| One to five years | 2,568,815 | 2,496,750 | 1,968,644 | 1,861,931 |
| 3,794,242 | 3,615,867 | 3,211,053 | 2,933,159 | |
| Less current portion | (1,225,427) | (1,119,117) | (1,242,409) | (1,071,228) |
| Total non-current | 2,568,815 | 2,496,750 | 1,968,644 | 1,861,931 |
At 31 December 2018 and 2017, the Company has contracted various office premises and a plot of land under operating leases from third parties, and one related party.
The most significant lease contracts are as follows:
Offices located in Sant Cugat del Vallès (Barcelona) and Barcelona, leased from a related party
This contract is valid for a mandatory period of 10 years from 2015 and is automatically renewable for five-year periods from year 10 onwards until 2035.
Offices located in Barcelona, Jesus y Maria, 6 (Barcelona), leased from a third party.
This contract is valid for 5 years from 2011 and is automatically renewable for five-year periods, unless one of the parties, cancels the contract giving notice of 6 months in advance.
Operating lease payments have been recognised as an expense for the year as follows:
| Euros | |||
|---|---|---|---|
| 2018 | 2017 | ||
| Lease payments (recognised as an expense) | 9,975,445 | 9,791,091 |
Future minimum payments under non-cancellable operating leases are as follows:
| Euros | |||
|---|---|---|---|
| 2018 | 2017 | ||
| Less than one year | 6,132,837 | 6,073,802 | |
| One to five years | 21,164,966 | 20,975,109 | |
| Over five years | 32,100,877 | 11,304,386 | |
| 59,398,680 | 38,353,297 |
The Company uses part of these premises for its own use and the rest are assigned for use to its Spanish subsidiaries (see note 7 (c)).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
As described in note 7 (c), note 9 and note 23, the Company assigns the use of the premises and installations that it owns and leases from third parties to its Spanish subsidiaries.
Services included in the assignment for use agreements are: surveillance, cleaning of common areas, greeting and messaging, maintenance and water, energy and gas supply. In order to take advantage of these services, the Spanish subsidiaries will use the premises in accordance with the statutory activity.
Contracts signed with its subsidiaries are renewed automatically on an annual basis and can be cancelled at any time with three months' prior notice. The minimum non-cancellable amount receivable totals Euros 4,157 thousand at 31 December 2018 (Euros 3,859 thousand in 2017).
The Company's activities are exposed to various financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk, and cash flow interest rate risk. The Company's global risk management programme focuses on uncertainty in the financial markets and aims to minimise potential adverse effects on the Company's profits. The Company's risk management policies are established in order to identify and analyse the risks to which the Company is exposed, establish suitable risk limits and controls, and control risks and compliance with limits. Risk management procedures and policies are regularly reviewed to ensure they take into account changes in market conditions and in the Company's activities. The Company's management procedures and rules are designed to create a strict and constructive control environment in which all employees understand their duties and obligations.
The Group's Audit Committee supervises how management controls compliance with the Group's risk management procedures and policies and reviews whether the risk management policy is suitable considering the risks to which the Group is exposed. This committee is assisted by Internal Audit which acts as supervisor. Internal Audit performs regular and ad hoc reviews of the risk management controls and procedures and reports its findings to the Audit Committee.
(i) Market risk
The Company is not exposed to market risks associated with non-financial assets.
(ii) Currency risk
The Company operates internationally and is therefore exposed to currency risk when operating with foreign currencies, especially with regard to the US Dollar. Currency risk is associated with recognised assets and liabilities, and net investments in foreign operations.
The Company holds several investments in foreign operations, the net assets of which are exposed to currency risk. Currency risk affecting net assets of the Company's foreign operations in US Dollars is mitigated primarily through borrowings in the corresponding foreign currency.
Details of financial monetary assets and liabilities in foreign currencies and transactions in foreign currencies are provided in notes 14 (d) and 19 (f).
At 31 December 2018 had the US Dollar weakened by 10% against the Euro, with the other variables remaining constant, post-tax profit would have been Euros 283 thousand lower, mainly as a result of converting payables to Group companies (Euros 96 thousand at 31 December 2017).
The Company's financial assets mainly comprise the trade receivables from and loans to Group companies.
The Company considers that its financial assets are not significantly exposed to credit risk.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(iv) Liquidity risk
The Company applies a prudent policy to cover its liquidity risks based on having sufficient cash, as well as sufficient financing through credit facilities, to settle market positions.
Details of financial liabilities by contractual maturity date are provided in notes 14 and 19 (e).
(v) Cash flow and fair value interest rate risks
Interest rate risk arises on loans extended to Group companies and current and non-current borrowings. Borrowings and loans extended at variable interest rates expose the Company to cash flow interest rate risks. The Company's policy involves contracting borrowings and extending loans to Group companies at variable interest rates.
At 31 December 2018, had interest rates been 10% higher/lower, with the other variables remaining constant, post-tax profit would have been Euros 1,245 thousand lower/higher, mainly because of higher borrowing costs on variable interest debt (Euros 1,098 thousand at 31 December 2017).
Details of investments in equity instruments of Group companies are as follows:
| Euros | |||
|---|---|---|---|
| 2018 | 2017 | ||
| Non-current | Non-current | ||
| Group companies Equity investments |
3,287,312,325 | 3,136,440,705 | |
| Impairment | (16,484,094) | (11,987,847) | |
| 3,270,828,231 | 3,124,452,858 | ||
| Associates | |||
| Equity investments | -- | 550,000 | |
| Impairment | -- | (550,000) | |
| -- | -- | ||
| Total | 3,270,828,231 | 3,124,452,858 | |
• In 2015, for the annual bonus of certain eligible employees, the Group set up a Restricted Share Unit Retention Plan (hereinafter RSU plan) (see note 16). In 2018 the bonuses accrued in the RSU plan during the period were recognised as an investment by the Company in those subsidiaries with employees adhering to this plan, as it is considered as a non-cash contribution from the shareholder totalling Euros 3,755 thousand.
• In 2018 there was a transfer of Progenika Biopharma, S.A.'s shares through a distribution in kind effective 31 December 2018 with a net book value of US Dollars 76,982,493 (Euros 67,724,547). Additionally, Grifols Diagnostics Solutions has transferred two participative loans agreements granted to Progenika Biopharma, S.A. for a total of US Dollars 11,900,332 (Euros 10,487,221) as principal and US Dollars 1,511,917 (Euros 1,321,266) as interests. An amount of Euros 79,523,834 has been recognized in the Company reserves related to the investment in Progenika Biopharma,S.A..
• The Company has subscribed to an increase in the capital of Laboratorios Grifols, S.A. contributing an amount of Euros 18,000 thousands.
• In January 2018 the Company acquired a 50% interest in Aigües de Vilajuïga S.A. for a purchase of shares of 37,500. From the total amount of shares, 37,499 are acquired by Grifols, S.A. and 1 share is acquired by Grifols International, S.A.. The total price amounts Euros 549,985 for Grifols,S.A. and Euros 15 for Grifols International, S.A.. With this new shares acquisition, Aigües de Vilajuïga, S.A. is now part of the Group. During 2018 the Company has recognised impairment of Euros (549,985) on the investment based on an analysis of its recoverability.
• In December 2018 the Company Grifols Diagnostic Solutions transferred Singulex shares to Grifols, S.A. through a distribution in kind. The fair value at 31 December 2018 is US Dollars 50 Million (Euros 43,987 thousands). Transfer of three loan agreements with GDS as a lender and Singulex as the borrower for a total amount of US Dollars 35,849,289 (Euros 31,538,039) as principal and US Dollars 1,988,448 (Euros 1,749,316) as interests. The second transaction done was between Grifols, S.A. and Grifols Shared Services North America Inc., with a transfer of shares through a capital contribution. The fair value of Singulex shares and loans has been recognized in the Company as a dividend amounting Euros 77,274,335.
• In 2015, for the annual bonus of certain eligible employees, the Group set up a Restricted Share Unit Retention Plan (hereinafter RSU plan) (see note 16). In 2017 the bonuses accrued in the RSU plan during the period were recognised as an investment by the Company in those subsidiaries with employees adhering to this plan, as it is considered as a non-cash contribution from the shareholder totalling Euros 6,327 thousand.
• On 24 July 2017, Grifols acquired an additional 40% interest in Kiro Grifols, S.L. for a purchase price of Euros 12,800 thousand. In September 2014 Grifols subscribed to a capital increase by virtue of which it acquired 50% of Kiro Grifols, S.L.'s economic and voting rights. With this new acquisition, Grifols reached a 90% interest in Kiro Grifols, S.L. The remaining 10% will continue to be held by Socios Fundadores Kiro, S.L. a company wholly owned by cooperatives of the Mondragon Corporation. Associate investment before the acquisition amounting Euros 17,153 thousand, was recognized as group company equity investment.
• The Company subscribed to an increase in the capital of Grifols Colombia Ltda contributing an amount of Euros 433,729.
• The Company subscribed two increases in the capital of Grifols Worldwide Operations Limited (hereinafter GWWO) contributing an amount of Euros 700,000 thousand and 150,000 thousand respectively.
• The Company subscribed to an increase in the capital of Grifols Diagnostic Solutions, Inc (hereinafter GDS) contributing an amount of Euros 469,395 thousand.
• The Company subscribed to an increase in the capital of Grifols India Healthcare Private Ltd. contributing an amount of Euros 597,786.
• In June 2017 the Company acquired a 50% interest in Aigües de Vilajüiga S.A. for a purchase price of Euros 475,000. In October 2017 the Company made an additional capital contribution of Euros 75,000. During 2017 the Company recognised impairment of Euros (550,000) on the investment based on an analysis of its recoverability.
• The Company subscribed to an increase in the capital of Grifols Brasil Ltda contributing an amount of Euros 15,717,504.
• During 2017 the Company recognised impairment of Euros 95.5 thousand on the investment in Grifols Nordic, A.B based on an analysis of its recoverability.
• During 2017 the Company recognised impairment of Euros 28.8 thousand on the investment in Grifols Switzerland, A.G based on an analysis of its recoverability.
Details of investments in Group companies are provided in Appendix XV.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Subsidiaries' activities comprise the following:
Industrial activity: consisting of the manufacture, preparation and sale of therapeutic products and other pharmaceutical specialities, particularly haemoderivatives and parenteral solutions, reagents, chemical products for use in laboratories and healthcare centres, and medical-surgical materials, equipment and instruments; the collection and analysis of products of biological origin, and the procurement of human plasma.
Commercial activity: consisting primarily of the marketing of products manufactured by the industrial Group companies.
Service activity: comprising the management of business trips for Group companies, the preparation and implementation of engineering projects for both the Group and third parties, and the rendering of centralised services such as accounting, human resources, marketing, etc. This activity also includes the reinsurance of the Group's insurance policies.
The percentage ownerships included in Appendix XV reconcile with the voting rights the Company has in its subsidiaries, except for: Grifols Thailand, Ltd. (48% ownership) and Grifols Malaysia Sdn Bhd (30% ownership), in which the Company has majority voting rights through the type of shares it holds in Grifols Thailand, Ltd and a contract entered into with the other shareholder and the pledging of this shareholder's shares in Grifols Malaysia.
(i) Foreign currency
The functional currencies of foreign operations are the currencies of the countries in which they are domiciled, except for Grifols Worldwide Operations Limited, the functional currency of which is the US Dollar.
(b) Other Information
The subsidiaries have been audited/reviewed by the associates of KPMG International in the countries in which they are domiciled, with the exception of Grifols Argentina, S.A. (audited by Alexia Consulting group, S.R.L.).
Grifols Viajes, S.A., Gri-Cel, S.A., VCN Biosciencies, S.L., Kiro Grifols, S.L., Medion Diagnostics GmbH, Grifols Japan K.K., Grifols Switzerland A.G,Grifols Diagnostic Equip Taiwan, Ltd and Aigües de Vilajuïga, S.A. have not been audited.
(a) Classification of financial assets by category
The classification of financial assets by category and class and a comparison of the fair value and the carrying amount are provided in Appendix IV.
Net losses and gains by category of financial asset are as follows:
| Euros | |||
|---|---|---|---|
| 2018 | Loans and receivables |
Total | |
| Finance income at amortised cost, Group companies Finance income at amortised cost |
52,115,757 3,122 |
52,115,757 3,122 |
|
| Net gains in profit and loss | 52,118,879 | 52,118,879 | |
| Total | 52,118,879 | 52,118,879 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | |||
|---|---|---|---|
| 2017 | Loans and receivables |
Total | |
| Finance income at amortised cost, Group companies Finance income at amortised cost |
39,070,699 2,913 |
39,070,699 2,913 |
|
| Net gains in profit and loss | 39,073,612 | 39,073,612 | |
| Total | 39,073,612 | 39,073,612 |
Details of investments in Group companies and related parties are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Non-current | Current | Non-current | Current | |
| Group | ||||
| Loans | 1,593,426,692 | 57,813,083 | 1,748,441,128 | 3,798,908 |
| Dividends pending to recover | -- | -- | 74,999,121 | |
| Receivables, tax effect (note 21) | 31,253,153 | -- | 18,380,110 | |
| Interest | 2,142,790 | -- | 144,929 | |
| Associates | ||||
| Loans | -- | -- | 150,000 | |
| Interest | -- | -- | 605 | |
| Total | 1,593,426,692 | 91,209,026 | 1,748,441,128 | 97,473,673 |
At 31 December 2018 the Company has three loans with group companies. The two most significant loans amounts Euros 1,607,000 thousand, falling due in 2023 and 2025 with an accrue interest at arm's length basis. The third loan amounts Euros 10,487 thousand and falls due in 2019.
At 31 December 2018 the Company has a balance of Euros 21,847 thousand (Euros 141,441 thousand in 2017) corresponding to cash pooling accounts with Group companies (see note 19 (b)). These receivables accrue interest at a rate of 5.37% (interest rate on the group senior loan plus a spread of 0.75%) and they fall due in 2025 (4.69% interest rate on the group senior loan plus a spread of 0.75% and falling due in 2024 at 31 December 2017).
Details of investments are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | ||||||
|---|---|---|---|---|---|---|
| 2018 2017 |
||||||
| Non-current | Current | Non-current | Current | |||
| Deposits and guarantees | 1,622,650 | 4,306 | 1,608,091 | 16,033 | ||
| Total | 1,622,650 | 4,306 | 1,608,091 | 16,033 |
At 31 December 2018 and 2017, Euros 832 thousand of guarantees and deposits are associated with leases with Centurion Real State S.A (formerly Scranton Enterprise B.V.), a related party of Grifols S.A. (see note 23) and Euros 559 thousand correspond to leases arranged with a Group company.
Details of trade and other receivables are as follows:
| Euros | |||
|---|---|---|---|
| 2018 | 2017 | ||
| Current | Current | ||
| Group | |||
| Trade receivables (note 23) | 19,526,804 | 19,485,499 | |
| Unrelated parties | |||
| Trade receivables | 874,963 | 1,005,160 | |
| Other receivables | 378,527 | 352,704 | |
| Personnel | 173,455 | 117,449 | |
| Taxation authorities, income tax (note 21) | 25,911,844 | 48,155,917 | |
| Public entities, other (note 21) | 11,419,949 | 6,296,251 | |
| Total | 58,285,542 | 75,412,980 |
At 31 December 2018 and 2017 public entities, other predominantly comprise recoverable value added tax. The Company files consolidated VAT and income tax returns.
Details of monetary financial assets denominated in foreign currencies are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | |||
|---|---|---|---|
| 2018 | US Dollar | Other | Total |
| Trade and other receivables | |||
| Trade receivables – current | 147,664 | -- | 147,664 |
| Trade receivables from Group companies and associates – current |
860,756 | 112 | 860,868 |
| Other receivables | 8,246 | 1,631 | 9,877 |
| Total current financial assets | 1,016,666 | 1,743 | 1,018,409 |
| Total financial assets | 1,016,666 | 1,743 | 1,018,409 |
| Euros | |||
| 2017 | US Dollar | Other | Total |
| Trade and other receivables | |||
| Trade receivables – current | 140,978 | -- | 140,978 |
| Trade receivables from Group companies and associates – current |
919,956 | 564 | 920,520 |
| Other receivables | 6,329 | 914 | 7,243 |
|---|---|---|---|
| Total current financial assets | 1,067,263 | 1,478 | 1,068,741 |
| Total financial assets | 1,067,263 | 1,478 | 1,068,741 |
Details of exchange differences recognised in profit or loss on financial instruments, distinguishing between settled and outstanding transactions, are as follows:
| Euros | |||||
|---|---|---|---|---|---|
| 2018 | 2017 | ||||
| Settled | Outstanding | Settled | Outstanding | ||
| Investments in Group companies | |||||
| Loans to Group companies | (1,413) | (31,658) | 449,354 | (197,159) | |
| Total non-current financial assets | (1,413) | (31,658) | 449,354 | (197,159) | |
| Trade and other receivables | |||||
| Trade receivables – current | (19,174) | 19,464 | 61,990 | 12,833 | |
| Trade receivables from Group companies – current |
-- | (6,247) | -- | (19,935) | |
| Current investments | |||||
| Loans to Group companies | 39,092 | -- | (87,231) | -- | |
| Total current financial assets | 19,918 | 13,217 | (25,241) | (7,102) | |
| Total financial assets | 18,505 | (18,441) | 424,113 | (204,261) |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At 31 December 2018 and 2017 prepayments include advanced payments for insurance premiums and maintenance fees.
Details of equity and movement during the year are shown in the statement of changes in equity.
(a) Capital
At 31 December 2018 and 2017 the share capital of Grifols S.A. amounts to Euros 119,603,705 and is represented by:
Class A shares: 426,129,798 ordinary shares of Euros 0.25 par value each, subscribed and fully paid and of the same class and series.
Class B shares: 261,425,110 non-voting preference shares of Euros 0.05 par value each, of the same class and series, and with the preferential rights set forth in the Company's by-laws.
The main characteristics of the Class B shares are as follows:
The Company's knowledge of its shareholders is based on information provided voluntarily or in compliance with applicable legislation. According to the information available to the Company, there are no interests higher than 10% with voting rights at 31 December 2018 and 2017.
(b) Share premium
This reserve is freely distributable.
(c) Reserves
Details of reserves and movement during the year are shown in Appendix V.
During 2017 the Company settled the RSUS of 2014 giving rise to an increase of Euros 91,742 in reserves. In 2018
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
the Company has settled the RSUS of 2015 giving rise to an increase of Euros 318,879 in reserves.
(i) Legal reserve
The legal reserve has been appropriated in compliance with article 274 of the Spanish Companies Act, which requires that companies transfer 10% of profits for the year to a legal reserve until this reserve reaches an amount equal to 20% of share capital. At 31 December 2018 and 2017, legal reserve is 20% of share capital.
The legal reserve is not distributable to shareholders and if it is used to offset losses, in the event that no other reserves are available, the reserve must be replenished with future profits.
(ii) Treasury stock and reserve for Company shares
At the ordinary general meeting held on 29 May 2015 the shareholders of the Company agreed to authorise the acquisition of a maximum of treasury stock equivalent to 10% of the Company's share capital at a minimum price equal to the par value of shares and a maximum equal to the price quoted on the stock exchange on the date of acquisition or, where applicable, the price authorised by the Spanish National Securities Market Commission.
This acquisition has been authorised for a period of five years from the date this decision was taken. Shares acquired may be handed over to the Group's employees or directors either directly or as a result of them exercising share options they may hold.
At 31 December 2018 and 2017 the Company does not have any Class A treasury stock.
Movement in Class B treasury stock during 2017 was as follows:
| Number of | ||
|---|---|---|
| Class B shares | Euros | |
| Balance at 1 January 2017 | 4,730,735 | 68,710,268 |
| Disposals of Class B shares | (432,929) | (6,287,959) |
| Balance at 31 December 2017 | 4,297,806 | 62,422,309 |
In March 2017 the Group delivered 432,929 treasury stocks (Class B shares) to eligible employees as compensation for the Restricted Share Unit Retention Plan, of which 198,863 treasury stocks were given to Company employees (see note 16 (d)).
The Parent held Class B treasury stock equivalent 0.6% of its capital at 31 December 2017 (0.7% at 31 December 2016).
Movement in Class B treasury stock during 2018 is as follows:
| Number of | ||
|---|---|---|
| Class B shares | Euros | |
| Balance at 1 January 2018 | 4,297,806 | 62,422,309 |
| Disposals of Class B shares | (479,355) | (6,981,099) |
| Balance at 31 December 2018 | 3,818,451 | 55,441,210 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
In March 2018 the Group delivered 480,661treasury stocks (Class B shares) to eligible employees as compensation for the Restricted Share Unit Retention Plan, of which 193,606 treasury stocks were given to Company employees (see note 16 (d)).
The Parent held Class B treasury stock equivalent to 0.6% of its capital at 31 December 2018 (0.6% at 31 December 2017).
(iii) Differences on redenomination of capital to Euros
This reserve is not distributable.
(iv) Voluntary reserves
These reserves are freely distributable.
(d) Other own equity instruments
For the annual bonus, the Group has set up a Restricted Share Unit Retention Plan (RSU Plan), for certain employees. Under this plan, employees can choose to receive up to 50% of their yearly bonus as non-voting Class B ordinary shares (Grifols Class B Shares) or Grifols American Depositary Shares (Grifols ADS), and the Company will match this with an additional 50% in RSU.
Grifols Class B Shares and Grifols ADS are valued at bonus grant date.
These RSU will have a vesting period of two years and one day and, subsequently, they will be exchanged for Grifols Class B Shares or Grifols ADS (American Depositary Share representing 1 Class B Share).
If an eligible employee leaves the Company or is terminated with cause before the vesting period, he/she will not be entitled to the additional RSU.
At 31 December 2017, the Company settled the 2014 RSU plan for an amount of Euros 7,303 thousand, of which 3,148 thousand were from the Company.
At 31 December 2018, the Company has settled the 2015 RSU plan for an amount of Euros 6,662 thousand, of which 2,681 thousand are from the Company.
Because this commitment is settled in shares, it is recognised in equity and it totals Euros 12,652 thousand at 31 December 2018 (Euros 13,871 thousand in 2017).
Contingent liabilities for bank and other guarantees are disclosed in note 19. The Company does not expect any significant liabilities to arise from these guarantees.
In the event of a takeover, the Company has agreements with 26 employees/directors whereby they can unilaterally rescind their employment contracts with the Company and are entitled to termination benefits ranging from two to five years' salary.
The Company has three contracts with three members of senior management who will receive a termination benefit ranging from one to two years' salary, depending on the circumstances.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The classification of financial liabilities by category and class and a comparison of the fair value with the carrying amount are provided in Appendix VI.
Net losses and gains by financial liability category are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2018 | Debts and payables | Total | ||
| Finance costs at amortised cost, third parties Finance costs at amortised cost, Group companies |
(50,836,915) (86,972,977) |
(50,836,915) (86,972,977) |
||
| Net losses in profit and loss | (137,809,892) | (137,809,892) | ||
| Total | (137,809,892) | (137,809,892) | ||
| Euros | ||||
| 2017 | Debts and payables | Total | ||
| Finance costs at amortised cost, third parties Finance costs at amortised cost, Group companies |
(26,538,678) (77,098,571) |
(26,538,678) (77,098,571) |
||
| Net losses in profit and loss | (103,637,249) | (103,637,249) |
Total (103,637,249) (103,637,249)
Details of Group companies and associates are as follows:
| Euros | |||||
|---|---|---|---|---|---|
| 2018 | 2017 | ||||
| Non-current Current |
Non-current | Current | |||
| Group | |||||
| Payables | 1,512,716,087 | -- | 1,790,682,269 | -- | |
| Loans received | -- | -- | -- | ||
| Payables, tax effect (note 21) | -- | 32,574,660 | -- | 19,907,750 | |
| Interest | -- | 7,191,429 | -- | -- | |
| Associates | |||||
| Loans received | -- | -- | -- | -- | |
| Total | 1,512,716,087 | 39,766,089 | 1,790,682,269 | 19,907,750 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of payables to Group companies do not include trade payables to Group companies, details of which are provided in section d) of this note.
Details of payables are as follows:
| Euros | |||||
|---|---|---|---|---|---|
| 2018 | 2017 | ||||
| Non-current Current |
Non-current | Current | |||
| Unrelated parties | |||||
| Promissory notes | 987,249,676 | 5,333,333 | 985,248,207 | 5,244,444 | |
| Loans and borrow ings | 747,069,488 | 30,681,772 | 690,441,900 | 4,509,164 | |
| Interest | 614,509 | -- | 144,771 | ||
| Finance lease payables (note 8) | 2,496,750 | 1,119,117 | 1,861,931 | 1,071,228 | |
| Payables | 2,878,928 | 2,044,257 | 1,747,596 | 6,593,133 | |
| Guarantees and deposits received | -- | 7,099 | -- | 7,099 | |
| Total | 1,739,694,842 | 39,800,087 | 1,679,299,634 | 17,569,839 |
On 6 February 2017 the Group refinanced its senior secured debt with the existing lenders and obtained the additional debt required for the acquisition of Hologic for an amount of US Dollars 1,816 million. The new senior debt consists of a Term Loan A ("TLA"), which amounts to US Dollars 2,350 million and Euros 607 million with a 1.75% margin over Libor and Euribor respectively, falling due in 2023 and a quasi-bullet repayment structure, and a Term Loan B ("TLB") totalling US Dollars 3,000 million with a 2.25% margin over Libor, falling due in 2025 and a quasi-bullet repayment structure.
The Company is the borrower of the Term Loan A in Euros, the principal of which amounts to Euros 607 million.
Grifols Worldwide Operations Limited is the borrower of the Term Loan A in US Dollars and for the Term Loan B the borrower is Grifols Worldwide Operations USA, Inc. Both these companies are wholly-owned by the Company.
On 18 April 2017, the Company issued Euros 1,000 million of senior unsecured notes, falling due in 2025 and bearing an annual coupon of 3.20%.
On 5 December 2017 the Company received a fixed-interest rate loan from the European Investment Bank for total of Euros 85 million, falling due in 10 years and with an interest-free period of two years. The loan will be used to support some of the Grifols Group's R&D investments which are mainly focused on searching for new applications for plasmatic proteins.
On September 7, 2018, Grifols obtained a new long-term loan from the European Investment Bank totaling Euros 85,000 thousand that will be used by Grifols to support its investments in R&D, mainly focused on the search for new therapeutic indications for plasma-derived protein therapies. The financial conditions include a fixed interest rate for a tenor of 10 years and a two-year grace period.
At 31 December 2017, "other current financial liabilities" included an amount of Euros 5,000 thousand related to the remaining call option extended by the Group and the shareholders of Progenika with maturity on 2018. This option was executed in June 2018.
On 18 April 2017, Grifols, S.A. issued Euros 1,000 million of senior unsecured notes, falling due in 2025 and bearing an annual coupon of 3.20%. These notes have been exchanged with 97.1% of the senior unsecured notes issued in 2014 by Grifols Worldwide Operations Limited, a wholly-owned subsidiary of the Company. On 2 May 2017 the notes have been listed on the Irish Stock Exchange.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The transaction costs of the senior unsecured notes have amounted to Euros 16.1 million. These finance costs, together with other costs deriving from the debt issue will be taken to profit or loss in accordance with the new effective interest rate. Unamortised financing costs from the senior unsecured notes amount to Euros 12.8 million at 31 December 2018 (Euros 14.8 million at 31 December 2017).
The notes have been issued by Grifols, S.A. and are guaranteed on a senior unsecured basis by subsidiaries of Grifols, S.A. that are guarantors and co-borrowers under the New Credit Facilities agreement. The guarantors are Grifols Worldwide Operations Limited, Biomat USA, Inc., Grifols Biologicals Inc., Grifols Shared Services North America, Inc., Grifols Diagnostic Solutions Inc., Grifols Therapeutics, Inc., Instituto Grifols, S.A. Grifols Worldwide Operations USA, Inc. and Grifols USA, Llc
On 6 February 2017 the Group refinanced its senior secured debt, with the Company being the borrower of the Term Loan A in Euros, the principal of which amounts to Euros 607 million.
The terms and conditions of the Euros Tranche A senior secured debt are as follows:
Detail of the maturity of the principal of Term Loan A in Euros at 31 December 2018 is as follows:
| Thousand of Euros | ||
|---|---|---|
| Principal | ||
| Maturity | ||
| 2019 | 30,350 | |
| 2020 | 60,700 | |
| 2021 | 60,700 | |
| 2022 | 341,437 | |
| 2023 | 113,813 | |
| Total | 607,000 |
The transaction costs of Tranche A of the senior unsecured debt in Euros amount to Euros 11.9 million. These finance costs, together with other costs deriving from the debt issue will be taken to profit or loss in accordance with the new effective interest rate. Unamortised financing costs from the Tranche A in Euros amount to Euros 7.5 million at 31 December 2018 (Euros 9.8 million at 31 December 2017).
Both the senior term loans and the revolving loans of the Grifols Group are secured by the Company and other significant Group companies which, in conjunction with Grifols, S.A. represent, in the aggregate, at least 80% of the consolidated assets and consolidated EBITDA of the Group.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The terms and conditions of loans and payables are provided in Appendix VIII.
Non-current and current loans and borrowings are presented net of loan arrangement costs, which at 31 December 2018 amount to Euros 7,524 thousand (Euros 9,856 thousand at 31 December 2017).
The Company has extended guarantees to banks on behalf of Group companies for Euros 2,438 thousand at 31 December 2018 (Euros 4,014 thousand at 31 December 2017).
Details of trade and other payables are as follows:
| Euros | |||
|---|---|---|---|
| 2018 | 2017 | ||
| Current | Current | ||
| Group | |||
| Suppliers (note 23) | 8,032,244 | 5,290,662 | |
| Related parties | |||
| Suppliers (note 23) | 7,531,508 | 9,186,754 | |
| Unrelated parties | |||
| Suppliers | 34,998,857 | 30,218,059 | |
| Personnel | 10,100,816 | 9,872,640 | |
| Taxation authorities, income tax (note | |||
| 21) | -- | -- | |
| Public entities, other (note 21) | 22,870,591 | 20,550,970 | |
| Total | 83,534,016 | 75,119,085 |
The classification of financial liabilities by maturity is included in Appendix VII.
The Euro value of monetary financial liabilities denominated in foreign currencies is as follows:
| Euros | |||||
|---|---|---|---|---|---|
| 2018 | US Dollar | Argentine Peso |
Brazilian Real |
Other currencies |
Total |
| Trade and other payables | |||||
| Suppliers | 1,977,100 | 131 | -- | 33,618 | 2,010,849 |
| Suppliers, Group companies | 263,364 | 2 | 170 | 582 | 264,118 |
| Other financial liabilities | 89 | -- | -- | 195 | 284 |
| Total current liabilities | 2,240,553 | 133 | 170 | 34,395 | 2,275,251 |
| Total financial liabilities | 2,240,553 | 133 | 170 | 34,395 | 2,275,251 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | |||||
|---|---|---|---|---|---|
| 2017 | US Dollar | Argentine Peso |
Brazilian Real |
Other currencies |
Total |
| Trade and other payables Suppliers |
1,455,143 | -- | -- | 1,485 | 1,456,628 |
| Suppliers, Group companies Other financial liabilities |
665,042 140 |
69,160 30 |
167,344 17 |
634 358 |
902,180 545 |
| Total current liabilities | 2,120,325 | 69,190 | 167,361 | 2,477 | 2,359,353 |
| Total financial liabilities | 2,120,325 | 69,190 | 167,361 | 2,477 | 2,359,353 |
Details of exchange differences recognised in profit or loss on financial instruments, distinguishing between settled and outstanding transactions, are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Settled | Outstanding | Settled | Outstanding | |
| Current payables | ||||
| Loans and borrow ings | (519,706) | (13,638) | 189,772 | -- |
| Suppliers | (80,885) | (34,153) | 413,180 | 50,299 |
| Group companies | ||||
| Suppliers, Group companies | (65,007) | 951 | 445,428 | 83,704 |
| Total current liabilities | (665,598) | (46,840) | 1,048,380 | 134,003 |
| Total financial liabilities | (665,598) | (46,840) | 1,048,380 | 134,003 |
The average payment period to suppliers for fiscal year 2018 is 64 days (61 days for fiscal year 2017). The total average is obtained by dividing the resulting amount of weighting the number of days between the payment date and the issuance date of each invoice with the total amount of each of the invoices, among total amount of invoices.
During 2018 the Company has made payments of Euros 154,305 thousand (Euros 166,802 thousand at 2017). Outstanding payments at 31 December 2018 total Euros 17,273 thousand (Euros 13,320 thousand for fiscal year 2017). In 2018 the ratio of paid operations stands at 64 days and the ratio of operations payable stands at 60 days (61 days and 60 days respectively at 2017).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of balances with public entities are as follows:
| Euros | |||||
|---|---|---|---|---|---|
| 2018 | 2017 | ||||
| Non Current current |
Non-current | Current | |||
| Assets | |||||
| Deferred tax assets Current tax assets |
13,996,465 -- |
-- 25,911,844 |
10,936,470 -- |
-- 48,155,918 |
|
| Value added tax and similar taxes | -- | 11,419,949 | -- | 6,296,250 | |
| Total | 13,996,465 | 37,331,793 | 10,936,470 | 54,452,168 | |
| Liabilities | |||||
| Current tax liabilities | -- | -- | -- | -- | |
| Deferred tax liabilities | 1,691,193 | -- | 1,859,414 | -- | |
| Social Security | -- | 825,007 | -- | 773,591 | |
| Withholdings | -- | 22,045,584 | -- | 19,777,379 | |
| Total | 1,691,193 | 22,870,591 | 1,859,414 | 20,550,970 |
Details by company of intercompany receivables and payables resulting from the tax effect of filing consolidated tax returns are as follows:
| Euros | ||
|---|---|---|
| 2018 | 2017 | |
| Current | Current | |
| Receivables (note 14) | ||
| Instituto Grifols,S.A. | 21,748,510 | 11,568,411 |
| Grifols Worldw ide Operations Spain S.A. | -- | 438,372 |
| Biomat,S.A. | 298,154 | 178,902 |
| Grifols International,S.A. | 3,923,729 | 1,748,464 |
| Grifols Movaco,S.A. | 4,273,654 | 3,904,790 |
| Grifols Viajes,S.A. | 85,103 | 61,391 |
| Grifols Engineering,S.A. | 614,549 | 230,386 |
| Diagnostic Grifols S.A. | -- | -- |
| Gripdan Invest, S.L | 309,454 | 249,394 |
| 31,253,153 | 18,380,110 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | ||
|---|---|---|
| 2018 | 2017 | |
| Current | Current | |
| Payables (note 19) | ||
| VCN Biosciencies S.L | 891,302 | 314,995 |
| Biomat, S.A. | 241,494 | 290,009 |
| Grifols Viajes, S.A | 14,924 | 6,631 |
| Instituto Grifols,S.A. | 8,821,679 | 5,123,484 |
| Diagnostic Grifols,S.A. | 5,524,621 | 5,699,196 |
| Laboratorios Grifols,S.A. | 5,013,503 | 4,560,609 |
| Grifols Movaco, S.A | 1,035,879 | 1,061,597 |
| Grifols Worldw ide Operations Spain S.A. | -- | 171,204 |
| Grifols International,S.A. | 245,815 | -- |
| Grifols Engineering,S.A. | 148,360 | 17,557 |
| Gri‑Cel, S.A | 10,435,174 | 2,574,683 |
| Gripdan Invest, S.L | 201,909 | 87,785 |
| 32,574,660 | 19,907,750 |
Balances receivable and payable at 31 December 2018 and 2017 comprise accrued income tax and value added tax.
The Company has the following main applicable taxes open to inspection by the Spanish taxation authorities:
| Tax | Years open to inspection |
|---|---|
| Income tax | 2014-2018 |
| Value added tax | 2015-2018 |
| Personal income tax | 2015-2018 |
| Capital gains tax | 2015-2018 |
| Tax on Economic Activities | 2015-2018 |
| Social Security | 2015-2018 |
| Non-residents | 2015-2018 |
| Customs duties | 2015-2018 |
There are no tax inspections opened in 2018.
The Company files consolidated tax returns with Instituto Grifols, S.A., Laboratorios Grifols, S.A., Diagnostic Grifols, S.A., Grifols Movaco, S.A., Biomat, S.A., Grifols International, S.A., Grifols Engineering, S.A., Grifols Viajes, S.A., Gripdant Invest, S.L., Gri-Cel, S.A. and VCN Biosciencies, S.L.
A reconciliation of net income and expenses for the year with the taxable income is provided in Appendix IX.
The relationship between the tax income and accounting profit for the year is shown in Appendix X.
Details of the tax income recognised in the income statement are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | ||
|---|---|---|
| 2018 | 2017 | |
| Current tax Present year |
(39,754,655) | (32,066,557) |
| (39,754,655) | (32,066,557) | |
| Deferred tax | ||
| Source and reversal of temporary differences | ||
| Property, plant and equipment | (185,097) | (229,015) |
| Investments | 89,262 | (7,221) |
| Cost of reducing deferred tax assets recognised in prior years |
170,561 | (67,141) |
| Deductions generated | (4,187,460) | (3,232,988) |
| Deductions applied | 621,300 | 1,044,945 |
| Adjustment of deductions in prior years | 278,670 | (1,457,414) |
| Adjustment of deferred tax assets and liabilities | -- | -- |
| Tax provisions | -- | -- |
| (42,967,419) | (36,015,391) |
Details of deferred tax assets and liabilities by type of asset and liability are as follows:
| Euros | ||||||
|---|---|---|---|---|---|---|
| Assets | Liabilities | Net | ||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |
| Property, plant and equipment | 105,692 | 247,735 | (1,653,677) | (1,818,326) | (1,547,985) | (1,570,591) |
| Grants | -- | (37,516) | (41,088) | (37,516) | (41,088) | |
| Restricted share unit retention |
||||||
| plan | 1,671,951 | 1,340,913 | -- | -- | 1,671,951 | 1,340,913 |
| Group Financial Investments | 961,527 | 961,526 | -- | -- | 961,527 | 961,526 |
| Rights to tax deductions and credits |
11,257,295 | 8,386,296 | -- | -- | 11,257,295 | 8,386,296 |
| Total assets/liabilities | 13,996,465 | 10,936,470 | (1,691,193) | (1,859,414) | 12,305,272 | 9,077,056 |
In accordance with prevailing tax legislation in Spain, share-based payments to employees are income tax deductible for the intrinsic amount of the share options when they are exercised, thus giving rise to a deductible temporary difference for the difference between the amount the taxation authorities will admit as a future deduction and the zero carrying amounts of the share-based payments. At the close of the reporting period, the Company estimates the future tax deduction based on the price of the shares at that time. The amount of the tax deduction is recognised as current or deferred income tax with a balancing entry in the income statement.
Details of deferred tax assets and liabilities that are expected to be realised or reversed in periods exceeding 12 months are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | ||
|---|---|---|
| 2018 | 2017 | |
| Deferred tax assets relating to temporary differences | 2,739,170 | 727,111 |
| Total assets | 2,739,170 | 727,111 |
| Deferred tax liabilities | 1,691,193 | 1,684,327 |
| Net | 1,047,977 | (957,216) |
The commitments from the reversal of deferred tax related to provisions of investments in subsidiaries are not significant.
Since 1 January 2008, the Company has filed consolidated tax returns with Instituto Grifols, S.A., Laboratorios Grifols, S.A., Diagnostic Grifols, S.A., Grifols Movaco, S.A., Biomat, S.A., Grifols International, S.A., Grifols Engineering, S.A., Grifols Viajes, S.A., Gri-Cel, S.A. (since 2009), Gripdan Invest, S.L. (since 2016) and VCN Biosciencies, S.L. (since 2017).
Details at 31 December of property, plant and equipment used to minimise the Company's impact on the environment are as follows:
| Euros | |||
|---|---|---|---|
| 2018 | |||
| Description | Cost | Accumulated depreciation |
Net |
| Sew age treatment | 141,724 | (91,625) | 50,099 |
| Water saving | 311,021 | (275,181) | 35,840 |
| Electricity saving Waste management |
3,375,890 352,524 |
(1,000,843) (251,644) |
2,375,047 100,880 |
| Others | 164,551 | (17,743) | 146,808 |
| 4,345,710 | (1,637,036) | 2,708,674 | |
| Euros | |||
| 2017 | |||
| Description | Cost | Accumulated depreciation |
Net |
| Sew age treatment | 494,248 | (316,805) | 177,443 |
| Water saving | 311,022 | (248,301) | 62,721 |
| Electricity saving | 2,836,222 | (799,457) | 2,036,765 |
| Waste management | 125,726 | (2,096) | 123,630 |
| 3,767,218 | (1,366,659) | 2,400,559 |
Environmental expenses amounts to Euros 163,155 in 2018 (Euros 151,120 in 2017).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(a) Related party balances
Details of balances receivable from and payable to Group companies and related parties and the main characteristics are disclosed in notes 14 and 19.
Details of balances by category are provided in Appendix XI.
(b) Related party transactions
Details of the Company's transactions with related parties are provided in Appendix XII.
Services are normally negotiated with Group companies to include a mark-up of between 5% and 10%.
The Company contributes 0.7% of pre-tax consolidated profits for each year to a non-profit organisation.
Transactions with other related parties are conducted at arm's length.
(c) Information on the Company's directors and senior management personnel
In 2018 the independent members of the Company's board of director's accrued Euros 925 thousand in their capacity as such (Euros 925 thousand in 2017). In 2018, Directors representing shareholders' interests received remuneration of Euros 1,610 thousand (Euros 1,881 thousand in 2017). The members of the Company's board of directors who have a labour relationship with the Company and senior management personnel received total remuneration of Euros 3,240 thousand and Euros 6,566 thousand, respectively (Euros 2,951 thousand and Euros 5,739 thousand in 2017). Members of the board of directors have not received any loans or advances nor has the Company extended any guarantees on their behalf. The Company has no pension or life insurance obligations with its former or current directors or senior management personnel. In addition, termination benefit commitments are in place for certain Company directors and senior management personnel (see note 17).
During fiscal year 2018, the Company has paid insurance premiums for civil liability of directors amounting to Euros 175 thousand (Euros 190 thousand in 2017).
(d) Conflicts of interest concerning the directors
The directors of the Company and their related parties have had no conflicts of interest requiring disclosure in accordance with article 229 of the Revised Spanish Companies Act.
(a) Revenues
Details of revenues by category of activity and geographical market are shown in Appendix XIII.
(b) Supplies
Details of other supplies used are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2018 | 2017 | |||
| Other supplies used Purchases of spare parts Change in inventories |
3,620,670 (1,042,936) |
3,020,202 (550,630) |
||
| 2,577,734 | 2,469,572 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of employee benefits expense are as follows:
| Euros | ||
|---|---|---|
| 2018 | 2017 | |
| Employee benefits expense | ||
| Social Security payable by the Company | 8,457,327 | 7,804,286 |
| Defined contribution plan contributions | 134,284 | 125,026 |
| Other employee benefits expenses | 2,514,225 | 2,002,684 |
| Annual contributions | 226,940 | 166,621 |
| 11,332,776 | 10,098,617 |
The average headcount of the Company, distributed by department, is as follows:
| Number | |||
|---|---|---|---|
| 2018 | 2017 | ||
| Technical area | 98 | 84 | |
| Administration and other | 462 | 440 | |
| General management | 59 | 55 | |
| 619 | 579 |
The average number of Company employees with disability rating of more than 33% distributed by department, is as follows:
| Number | |||
|---|---|---|---|
| 2018 | 2017 | ||
| Technical area | 3 | 1 | |
| Administration and other | 7 | 5 | |
| General management | -- | 1 | |
| 10 | 7 |
At 31 December 2018 and 2017 the distribution by gender of Company personnel and the members of the board of directors is as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Number | |||||
|---|---|---|---|---|---|
| 2018 | 2017 | ||||
| Female | Male | Female | Male | ||
| Technical area | 90 | 16 | 84 | 14 | |
| Administration and other | 155 | 328 | 149 | 310 | |
| General management | 33 | 28 | 26 | 29 | |
| Directors | 4 | 9 | 4 | 9 | |
| 282 | 381 | 263 | 362 |
KPMG Auditores, S.L. and Grant Thornton S.L as co-auditors of the Company's annual accounts for 2018 have invoiced the Company expenses for professional services amounting to a total of Euros 75,635 during the year ended 31 December 2018 (a total of Euros 79,600 in 2017), to be split in half every year.
Additionally, KPMG Auditores, S.L. has invoiced the Company the following fees for professional service regarding the Company's annual accounts during the year ended 31 December 2018 and 2017:
| Euros | ||||||
|---|---|---|---|---|---|---|
| 2018 | 2017 | |||||
| Audit services | 968,700 | 1,300,790 | ||||
| Other assurance services | 493,018 | 683,110 | ||||
| 1,461,718 | 1,983,900 |
The amounts in the above table include the total fees for services rendered in 2018 and 2017, irrespectively of the date of invoice.
During the year ended 31 December 2018 "Other assurance services" includes audit services for the PCAOB, semianual limited review services of the financial statements, and two reports of agreed-upon procedures by KPMG Auditores, S.L. to Grifols, S.A. During the year end 31 December 2017, included the audit services for the PCAOB, semianual limited review services of the financial statements, comfort letters related to Debt issuances and a report of agreed procedures provided by KPMG Auditores, S.L to the Company. Grifols, S.A.
Other entities affiliated to KPMG International have invoiced the Company expenses for other assurance professional services amounting to Euros 25,000 during the year ended 31 December 2018 (Euros 73,000 during 2017).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Computer | ||
|---|---|---|
| software | Total | |
| Cost at 1 January 2018 | 48,728,356 | 48,728,356 |
| Additions | 6,941,270 | 6,941,270 |
| Disposals | -- | -- |
| Transfers | 80,519 | 80,519 |
| Irreversible impairment losses | -- | -- |
| Cost at 31 December 2018 | 55,750,145 | 55,750,145 |
| Accumulated amortisation at 1 January 2018 | (35,816,388) | (35,816,388) |
| Additions | (5,399,338) | (5,399,338) |
| Disposals | -- | -- |
| Accumulated amortisation at 31 December 2018 | (41,215,726) | (41,215,726) |
| Carrying amount at 31 December 2018 | 14,534,419 | 14,534,419 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Computer | ||
|---|---|---|
| software | Total | |
| Cost at 1 January 2017 | 40,837,731 | 40,837,731 |
| Additions | 7,815,892 | 7,815,892 |
| Disposals | -- | -- |
| Transfers | 74,733 | 74,733 |
| Irreversible impairment losses | -- | -- |
| Cost at 31 December 2017 | 48,728,356 | 48,728,356 |
| Accumulated amortisation at 1 January 2017 | (30,480,912) | (30,480,912) |
| Additions | (5,335,476) | (5,335,476) |
| Disposals | -- | -- |
| Accumulated amortisation at 31 December 2017 | (35,816,388) | (35,816,388) |
| Carrying amount at 31 December 2017 | 12,911,968 | 12,911,968 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | |||||
|---|---|---|---|---|---|
| Technical installations and machinery |
Other installations, equipment and furniture |
Under construction and advances |
Other items | Total | |
| Cost at 1 January 2018 | 8,244,329 | 17,630,336 | 7,537,882 | 17,924,168 | 51,336,715 |
| Additions | 295,200 | 465,364 | 847,752 | 3,830,830 | 5,439,146 |
| Disposals | (875,425) | (1,953) | -- | (27,046) | (904,424) |
| Transfers | 882,301 | 3,444,475 | (2,017,537) | 400,105 | 2,709,344 |
| Cost at 31 December 2018 | 8,546,405 | 21,538,222 | 6,368,097 | 22,128,057 | 58,580,781 |
| Accumulated depreciation at 1 January 2018 | (6,841,933) | (12,156,064) | -- | (13,143,975) | (32,141,972) |
| Additions | (432,678) | (1,359,945) | -- | (2,477,828) | (4,270,451) |
| Disposals | 697,821 | 1,953 | -- | 27,046 | 726,820 |
| Transfers | -- | (1,041) | -- | -- | (1,041) |
| Accumulated depreciation at 31 December 2018 | (6,576,790) | (13,515,097) | -- | (15,594,757) | (35,686,644) |
| Carrying amount at 31 December 2018 | 1,969,615 | 8,023,125 | 6,368,097 | 6,533,300 | 22,894,137 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | |||||
|---|---|---|---|---|---|
| Technical installations and machinery |
Other installations, equipment and furniture |
Under construction and advances |
Other items | Total | |
| Cost at 1 January 2017 | 8,023,698 | 16,464,708 | 1,855,271 | 15,744,731 | 42,088,408 |
| Additions | 116,618 | 247,360 | 6,116,195 | 2,052,011 | 8,532,184 |
| Disposals | -- | (1,400) | -- | (2,982) | (4,382) |
| Transfers | 104,013 | 919,668 | (433,584) | 130,408 | 720,505 |
| Cost at 31 December 2017 | 8,244,329 | 17,630,336 | 7,537,882 | 17,924,168 | 51,336,715 |
| Accumulated depreciation at 1 January 2017 | (6,325,987) | (10,880,573) | -- | (10,668,815) | (27,875,375) |
| Additions | (515,946) | (1,276,894) | -- | (2,478,141) | (4,270,981) |
| Disposals | -- | 1,403 | -- | 2,981 | 4,384 |
| Transfers | -- | -- | -- | -- | -- |
| Accumulated depreciation at 31 December 2017 | (6,841,933) | (12,156,064) | -- | (13,143,975) | (32,141,972) |
| Carrying amount at 31 December 2017 | 1,402,396 | 5,474,272 | 7,537,882 | 4,780,193 | 19,194,743 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||
|---|---|---|---|---|---|---|
| Land | Buildings and other installations |
Investments in adaptation and advances |
Total | |||
| Cost at 1 January 2018 | 7,465,344 | 71,594,983 | 12,953,260 | 92,013,587 | ||
| Additions | -- | 749,476 | 3,862,674 | 4,612,150 | ||
| Disposals | -- | (223,347) | -- | (223,347) | ||
| Transfers | -- | 7,394,174 | (10,184,038) | (2,789,864) | ||
| Cost at 31 December 2018 | 7,465,344 | 79,515,286 | 6,631,896 | 93,612,526 | ||
| Accumulated depreciation at 1 January 2018 | -- | (35,410,874) | -- | (35,410,874) | ||
| Additions | -- | (3,395,877) | -- | (3,395,877) | ||
| Disposals | -- | 14,008 | -- | 14,008 | ||
| Transfers | -- | 1,041 | -- | 1,041 | ||
| Accumulated depreciation at 31 December 2018 | 0 | (38,791,702) | 0 | (38,791,702) | ||
| Carrying amount at 31 December 2018 | 7,465,344 | 40,723,584 | 6,631,896 | 54,820,824 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||
|---|---|---|---|---|---|---|
| Land | Buildings and other installations |
Investments in adaptation and advances |
Total | |||
| Cost at 1 January 2017 | 5,296,480 | 68,413,415 | 13,480,667 | 87,190,562 | ||
| Additions | 2,168,864 | 248,724 | 3,200,675 | 5,618,263 | ||
| Disposals | -- | -- | -- | -- | ||
| Transfers | -- | 2,932,844 | (3,728,082) | (795,238) | ||
| Cost at 31 December 2017 | 7,465,344 | 71,594,983 | 12,953,260 | 92,013,587 | ||
| Accumulated depreciation at 1 January 2017 | -- | (32,223,389) | -- | (32,223,389) | ||
| Additions | -- | (3,187,485) | -- | (3,187,485) | ||
| Disposals | -- | -- | -- | -- | ||
| Transfers | -- | -- | -- | -- | ||
| Accumulated depreciation at 31 December 2017 | 0 | (35,410,874) | 0 | (35,410,874) | ||
| Carrying amount at 31 December 2017 | 7,465,344 | 36,184,109 | 12,953,260 | 56,602,713 |
Appendix IV 1 of 2
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| At amortised cost or cost | Non-current | At amortised cost or cost | Current | |||
|---|---|---|---|---|---|---|
| Fair value | Total | Carrying amount | Fair value | Total | ||
| 59,955,873 | ||||||
| -- | ||||||
| -- | ||||||
| 31,253,153 | ||||||
| 4,306 | ||||||
| 378,527 | ||||||
| 20,401,767 | ||||||
| -- | -- | -- | 173,455 | 173,455 | 173,455 | |
| 1,595,049,342 | 1,595,049,342 | 1,595,049,342 | 112,167,081 | 112,167,081 | 112,167,081 | |
| 1,595,049,342 | 1,595,049,342 | 1,595,049,342 | 112,167,081 | 112,167,081 | 112,167,081 | |
| Carrying amount 1,000,000,000 593,426,692 -- -- 1,622,650 -- -- |
1,000,000,000 593,426,692 -- -- 1,622,650 -- -- |
1,000,000,000 593,426,692 -- -- 1,622,650 -- -- |
59,955,873 -- -- 31,253,153 4,306 378,527 20,401,767 |
59,955,873 -- -- 31,253,153 4,306 378,527 20,401,767 |
Appendix IV 2 of 2
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Fair value Total |
|---|
| 4,094,442 4,094,442 |
| -- -- |
| 74,999,121 74,999,121 |
| 18,380,110 18,380,110 |
| 16,033 16,033 |
| 352,704 352,704 |
| 20,490,659 20,490,659 |
| 117,449 117,449 |
| 118,450,518 118,450,518 |
| 118,450,518 118,450,518 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Legal and statutory reserves |
Differences on translation of capital to Euros |
Voluntary reserves |
Profit for the year |
Total | ||||
| Balance at 1 January 2018 | 23,920,741 | 3,020 | 358,657,857 | 341,327,404 | 723,909,022 | |||
| Recognised income and expense | -- | -- | -- | 329,718,263 | 329,718,263 | |||
| Net movement in treasury stock Other movements |
-- -- |
-- -- |
-- 79,982,288 |
-- -- |
-- 79,982,288 |
|||
| Distribution of profit for 2017 | ||||||||
| Reserves Preferred dividend Interim dividend Dividend |
-- -- -- -- |
-- -- -- -- |
76,247,004 -- -- -- |
(76,247,004) (2,614,251) (122,986,278) (139,479,871) |
-- (2,614,251) (122,986,278) (139,479,871) |
|||
| Balance at 31 December 2018 | 23,920,741 | 3,020 | 514,887,149 | 329,718,263 | 868,529,173 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Legal and statutory reserves |
Differences on translation of capital to Euros |
Voluntary reserves |
Profit for the year |
Total | ||||
| Balance at 1 January 2017 | 23,920,741 | 3,020 | 254,955,583 | 321,792,932 | 600,672,276 | |||
| Recognised income and expense | -- | -- | -- | 341,327,404 | 341,327,404 | |||
| Net movement in treasury stock Other movements |
-- -- |
-- -- |
-- 91,742 |
-- -- |
-- 91,742 |
|||
| Distribution of profit for 2016 | ||||||||
| Reserves Preferred dividend Interim dividend Dividend |
-- -- -- -- |
-- -- -- -- |
103,610,532 -- -- -- |
(103,610,532) (2,614,251) (122,908,351) (92,659,798) |
-- (2,614,251) (122,908,351) (92,659,798) |
|||
| Balance at 31 December 2017 | 23,920,741 | 3,020 | 358,657,857 | 341,327,404 | 723,909,022 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Non-current | Current | |||||||
|---|---|---|---|---|---|---|---|---|
| At amortised cost or cost | At amortised cost or cost | |||||||
| Carrying amount | Fair value | Total | Carrying amount | Fair value | Total | |||
| Debts and payables | ||||||||
| Fixed rate Bonds and other marketable securities | 987,249,676 | 985,480,000 | 987,249,676 | 5,333,333 | 5,333,333 | 5,333,333 | ||
| Variable rate Loans from group companies | 1,512,716,087 | 1,512,716,087 | 1,512,716,087 | -- | -- | -- | ||
| Variable rate loans and borrowings | 577,069,488 | 577,069,488 | 577,069,488 | 31,296,281 | 31,296,281 | 31,296,281 | ||
| Fixed rate loans and borrowings | 170,000,000 | 170,000,000 | 170,000,000 | |||||
| Finance lease payables | 2,496,750 | 2,496,750 | 2,496,750 | 1,119,117 | 1,119,117 | 1,119,117 | ||
| Other financial liabilities | 2,878,928 | 2,878,928 | 2,878,928 | 2,051,356 | 2,051,356 | 2,051,356 | ||
| Group companies and associates, current | -- | -- | -- | 39,766,089 | 39,766,089 | 39,766,089 | ||
| Trade and other payables | ||||||||
| Suppliers | -- | -- | -- | 42,530,365 | 42,530,365 | 42,530,365 | ||
| Suppliers, Group companies | -- | -- | -- | 8,032,244 | 8,032,244 | 8,032,244 | ||
| Other payables | -- | -- | -- | 10,100,816 | 10,100,816 | 10,100,816 | ||
| Total | 3,252,410,929 | 3,250,641,253 | 3,252,410,929 | 140,229,601 | 140,229,601 | 140,229,601 | ||
| Total financial liabilities | 3,252,410,929 | 3,250,641,253 | 3,252,410,929 | 140,229,601 | 140,229,601 | 140,229,601 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Non-current | Current | |||||
|---|---|---|---|---|---|---|
| At amortised cost or cost | At amortised cost or cost | |||||
| Carrying amount | Fair value | Total | Carrying amount | Fair value | Total | |
| Debts and payables | ||||||
| Fix rate Bonds and other marketable securities | 985,248,207 | 1,018,730,000 | 985,248,207 | 5,244,444 | 5,244,444 | 5,244,444 |
| Variable rate Loans from group companies | 1,790,682,269 | 1,790,682,269 | 1,790,682,269 | -- | -- | -- |
| Variable rate loans and borrowings | 690,441,900 | 690,441,900 | 690,441,900 | 4,653,935 | 4,653,935 | 4,653,935 |
| Finance lease payables | 1,861,931 | 1,861,931 | 1,861,931 | 1,071,228 | 1,071,228 | 1,071,228 |
| Other financial liabilities | 1,747,596 | 1,747,596 | 1,747,596 | 6,600,232 | 6,600,232 | 6,600,232 |
| Group companies and associates, current | -- | -- | -- | 19,907,750 | 19,907,750 | 19,907,750 |
| Trade and other payables | ||||||
| Suppliers | -- | -- | -- | 39,404,813 | 39,404,813 | 39,404,813 |
| Suppliers, Group companies | -- | -- | -- | 5,290,662 | 5,290,662 | 5,290,662 |
| Other payables | -- | -- | -- | 9,872,640 | 9,872,640 | 9,872,640 |
| Total | 3,469,981,903 | 3,503,463,696 | 3,469,981,903 | 92,045,704 | 92,045,704 | 92,045,704 |
| Total financial liabilities | 3,469,981,903 | 3,503,463,696 | 3,469,981,903 | 92,045,704 | 92,045,704 | 92,045,704 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| 140,229,600 | 73,110,320 | 82,772,181 | 363,565,376 | 2,732,963,052 | (140,229,600) | 3,252,410,929 |
|---|---|---|---|---|---|---|
| 10,100,817 | -- | -- | -- | -- | (10,100,817) | -- |
| 7,606,181 | -- | -- | -- | -- | (7,606,181) | -- |
| 8,032,244 | -- | -- | -- | -- | (8,032,244) | -- |
| 34,924,182 | -- | -- | -- | -- | (34,924,182) | -- |
| 2,051,356 | 1,610,520 | 838,664 | 429,744 | -- | (2,051,356) | 2,878,928 |
| 1,119,117 | 890,374 | 862,194 | 493,799 | 250,383 | (1,119,117) | 2,496,750 |
| 31,296,281 | 70,609,426 | 81,071,323 | 362,641,833 | 232,746,906 | (31,296,281) | 747,069,488 |
| 5,333,333 | (5,333,333) | 987,249,676 | ||||
| 1,512,716,087 | ||||||
| Total | ||||||
| 2018 | ||||||
| 2019 39,766,089 |
2020 -- -- |
Euros 2021 -- -- |
2022 -- -- |
Subsequent years 1,512,716,087 987,249,676 |
Less current portion (39,766,089) |
This appendix forms an integral part of note 19 to the annual accounts, in conjunction with which it should be read.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Total financial liabilities | 92,045,704 | 32,409,623 | 71,728,172 | 70,691,686 | 3,295,152,422 | (92,045,704) | 3,469,981,903 |
|---|---|---|---|---|---|---|---|
| Personnel | 9,872,640 | -- | -- | -- | -- | (9,872,640) | -- |
| Suppliers, related parties | 9,186,754 | -- | -- | -- | -- | (9,186,754) | -- |
| Suppliers, Group companies | 5,290,662 | -- | -- | -- | -- | (5,290,662) | -- |
| Suppliers | 30,218,059 | -- | -- | -- | -- | (30,218,059) | -- |
| Trade and other payables | |||||||
| Other financial liabilities | 6,600,232 | 993,926 | 753,670 | -- | -- | (6,600,232) | 1,747,596 |
| Finance lease payables | 1,071,228 | 752,965 | 517,791 | 483,170 | 108,005 | (1,071,228) | 1,861,931 |
| Loans and borrowings | 4,653,935 | 30,662,732 | 70,456,711 | 70,208,516 | 519,113,941 | (4,653,935) | 690,441,900 |
| Bonds and other marketable securities | 5,244,444 | -- | -- | -- | 985,248,207 | (5,244,444) | 985,248,207 |
| Payables Group companies and associates |
19,907,750 | -- | -- | -- | 1,790,682,269 | (19,907,750) | 1,790,682,269 |
| 2018 | 2019 | 2020 | 2021 | Subsequent years | Less current portion | Total | |
| Euros 2017 |
|||||||
This appendix forms an integral part of note 19 to the annual accounts, in conjunction with which it should be read.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Loan | Currency | Interest rate | Grant date | Maturity | Amount received | Carrying amount | ||
| Total value | Current | Non-current | ||||||
| Group | ||||||||
| Cash pooling (note 19) | EUR | 5,3685% (Group senior debt interest rate + 0,75%) |
2025 | -- | 1,512,716,087 | -- | 1,512,716,087 | |
| Unrelated parties | ||||||||
| Senior Unsecured Notes | EUR | 3.20% | 26/04/2017 | 26/04/2025 | 1,000,000,000 | 987,249,676 | -- | 987,249,676 |
| Senior Debt. Tranche A | EUR | Euribor + 1,75% | 31/01/2017 | 31/01/2023 | 607,000,000 | 599,564,465 | 28,118,722 | 571,445,743 |
| European Investment Bank | EUR | 2.02% | 22/12/2017 | 22/12/2027 | 85,000,000 | 85,000,000 | 38,137 | 85,000,000 |
| European Investment Bank | EUR | 2.15% | 25/09/2018 | 25/09/2028 | 85,000,000 | 85,000,000 | 481,136 | 85,000,000 |
| Bankinter | EUR | 2,25% (until 2018) | 21/11/2014 | 30/09/2024 | 10,000,000 | 6,199,987 | 996,185 | 5,203,802 |
| Banco Popular | EUR | Euribor + 2,3% | 03/03/2015 | 04/03/2020 | 8,000,000 | 2,078,926 | 1,662,101 | 419,943 |
| 795,000,000 | 777,843,378 | 31,296,281 | 747,069,488 | |||||
| 1,795,000,000 | 3,277,809,141 | 31,296,281 | 3,247,035,251 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Loan | Currency | Interest rate | Grant date | Maturity | Amount received | Total value | Carrying amount Current |
Non-current |
| Group | ||||||||
| Cash pooling (note 19) | EUR | 4,6877% (Group senior debt interest rate + 0,75%) |
2024 | -- | 1,790,682,269 | -- | 1,790,682,269 | |
| Unrelated parties | ||||||||
| Senior Unsecured Notes | EUR | 3.20% | 26/04/2017 | 26/04/2025 | 1,000,000,000 | 985,248,207 | -- | 985,248,207 |
| Senior Debt. Tranche A | EUR | Euribor + 1,75% | 31/01/2017 | 31/01/2023 | 607,000,000 | 597,165,716 | -- | 597,165,716 |
| European Investment Bank | EUR | 2.02% | 22/12/2017 | 22/12/2027 | 85,000,000 | 85,000,000 | -- | 85,000,000 |
| Banca March | EUR | Euribor + 4% | 10/07/2013 | 01/08/2018 | 6,500,000 | 1,298,962 | 1,298,962 | -- |
| Bankinter | EUR | 2,25% (until 2018) | 21/11/2014 | 30/09/2024 | 10,000,000 | 7,161,588 | 964,330 | 6,197,258 |
| Banco Popular | EUR | Euribor + 2,3% | 03/03/2015 | 04/03/2020 | 8,000,000 | 3,705,140 | 1,626,214 | 2,078,926 |
| Credit facilities | EUR | 1,25% - 2,8% | 2018 | 43,050,000 | 619,711 | 619,711 | -- | |
| 759,550,000 | 694,951,117 | 4,509,217 | 690,441,900 | |||||
| 1,759,550,000 | 3,470,881,593 | 4,509,217 | 3,466,372,376 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Income statement | |||||||
|---|---|---|---|---|---|---|---|
| Increases | Decreases | Net | Increases | Decreases | Net | Total | |
| Income and expenses for the period | 329,718,263 | 14,289 | -- | 14,289 | 329,732,552 | ||
| Income tax Income tax, prior years |
(43,254,163) 286,744 |
(3,572) | -- | (3,572) | (43,257,735) 286,744 |
||
| Profit before income tax Permanent differences |
286,750,844 | 10,716 | -- | 10,716 | 286,761,560 | ||
| Individual company | 13,207,303 | 165,788,929 | (152,581,626) | -- | -- | -- | (152,581,626) |
| Tax consolidation adjustments | 22,093,101 | 313,179,076 | (291,085,975) | -- | -- | -- | (291,085,975) |
| Temporary differences Individual company |
|||||||
| Unrecognised temporary differences (assets) | |||||||
| originating in current year | 2,541,435 | 42,390 | 2,499,045 | -- | -- | 0 | 2,499,045 |
| originating in prior years | 1,534,566 | 3,650,273 | (2,115,707) | -- | -- | -- | (2,115,707) |
| Tax loss | (156,533,419) | 10,716 | (156,522,703) |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Income statement | Income and expense recognised in equity | |||||||
|---|---|---|---|---|---|---|---|---|
| Increases | Decreases | Net | Increases | Decreases | Net | Total | ||
| Income and expenses for the period | 341,327,404 | 14,289 | -- | 14,289 | 341,341,693 | |||
| Income tax Income tax, prior years |
(34,728,489) (1,286,902) |
(3,573) | -- | (3,573) | (34,732,062) (1,286,902) |
|||
| Profit before income tax Permanent differences |
305,312,013 | 10,716 | -- | 10,716 | 305,322,729 | |||
| Individual company | 9,896,846 | 129,304,162 | (119,407,316) | -- | -- | -- | (119,407,316) | |
| Tax consolidation adjustments | -- | 311,204,456 | (311,204,456) | -- | -- | -- | (311,204,456) | |
| Temporary differences Individual company |
||||||||
| Unrecognised temporary differences (assets) | ||||||||
| originating in current year | 297,448 | 23,265 | 274,183 | (10,716) | -- | (10,716) | 263,467 | |
| originating in prior years | 1,069,986 | 301,221 | 768,765 | -- | -- | -- | 768,765 | |
| Tax loss | (124,256,811) | -- | (124,256,811) |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||
|---|---|---|---|---|---|---|
| Profit and loss | Equity | Total | ||||
| Income and expenses for the period before tax | 286,750,844 | 14,289 | 286,765,133 | |||
| Tax at 25% | 71,687,711 | 3,572 | 71,691,283 | |||
| Non-taxable income | ||||||
| Dividends from group companies | (97,613,353) | -- | (97,613,353) | |||
| Dividends, double taxation (exemption) | (22,128,648) | -- | (22,128,648) | |||
| Non-deductible expenses | ||||||
| Donations | 2,172,848 | -- | 2,172,848 | |||
| Provision for investments in group companies | 6,652,092 | -- | 6,652,092 | |||
| Sanctions and fines | 161 | -- | 161 | |||
| Tax-deductible expenses | ||||||
| Deductions and credits for the current year | (4,187,460) | -- | (4,187,460) | |||
| Prior years' adjustments | 449,230 | -- | 449,230 | |||
| Taxable income/(tax loss) | (42,967,419) | 3,572 | (42,963,847) |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||
|---|---|---|---|---|---|---|
| Profit and loss | Equity | Total | ||||
| Income and expenses for the period before tax | 305,312,013 | 10,716 | 305,322,729 | |||
| Tax at 25% | 76,328,003 | 2,679 | 76,330,682 | |||
| Non-taxable income Dividends from group companies Dividends, double taxation (exemption) |
(77,801,114) (32,326,041) |
-- -- |
(77,801,114) (32,326,041) |
|||
| Non-deductible expenses Donations Provision for investments in group companies Sanctions and fines |
2,298,647 170,388 5,177 |
-- -- -- |
2,298,647 170,388 5,177 |
|||
| Tax-deductible expenses | ||||||
| Deductions and credits for the current year | (3,232,988) | -- | (3,232,988) | |||
| Prior years' adjustments | (1,457,463) | -- | (1,457,463) | |||
| Taxable income/(tax loss) | (36,015,391) | 2,679 | (36,012,712) |
(Free translation from the original in Spanish, In the event of discrepancy, the Spanish-language version prevails,)
| Euros | |||||
|---|---|---|---|---|---|
| Group companies |
Associates | Directors | Other related parties |
Total | |
| Non-current investments in Group companies | |||||
| Loans to companies | 1,593,426,692 | -- | -- | -- | 1,593,426,692 |
| Deposits and guarantees | 614,313 | -- | -- | 831,996 | 1,446,309 |
| Total non-current assets | 1,594,041,005 | -- | -- | 831,996 | 1,594,873,001 |
| Trade and other receivables | |||||
| Trade receivables – current | 19,526,804 | -- | -- | -- | 19,526,804 |
| Current investments in Group companies and associates |
|||||
| Loans to companies | 91,209,026 | -- | -- | 91,209,026 | |
| Total current assets | 110,735,830 | -- | -- | -- | 110,735,830 |
| Total assets | 1,704,776,835 | -- | -- | 831,996 | 1,705,608,831 |
| Non-current payables to Group companies | 1,512,716,087 | -- | -- | -- | 1,512,716,087 |
| Total non-current liabilities | 1,512,716,087 | -- | -- | -- | 1,512,716,087 |
| Current payables to Group companies and associates Trade and other payables (note 20) |
39,766,089 | -- | -- | -- | 39,766,089 |
| Suppliers | -- | -- | -- | 7,531,508 | 7,531,508 |
| Suppliers, Group companies and associates | 8,032,244 | -- | -- | -- | 8,032,244 |
| Total current liabilities | 47,798,333 | -- | 0 | 7,531,508 | 55,329,841 |
| Total liabilities | 1,560,514,420 | -- | 0 | 7,531,508 | 1,568,045,928 |
(Free translation from the original in Spanish, In the event of discrepancy, the Spanish-language version prevails,)
| Euros | |||||
|---|---|---|---|---|---|
| Group companies |
Associates | Directors | Other related parties |
Total | |
| Non-current investments in Group companies | |||||
| Loans to companies | 1,748,441,128 | -- | -- | -- | 1,748,441,128 |
| Deposits and guarantees | 614,313 | -- | -- | 831,996 | 1,446,309 |
| Total non-current assets | 1,749,055,441 | -- | -- | 831,996 | 1,749,887,437 |
| Trade and other receivables | |||||
| Trade receivables – current | 19,485,499 | -- | -- | -- | 19,485,499 |
| Current investments in Group companies and associates |
|||||
| Loans to companies | 97,323,068 | 150,605 | -- | -- | 97,473,673 |
| Total current assets | 116,808,567 | 150,605 | -- | -- | 116,959,172 |
| Total assets | 1,865,864,008 | 150,605 | -- | 831,996 | 1,866,846,609 |
| Non-current payables to Group companies | 1,790,682,269 | -- | -- | -- | 1,790,682,269 |
| Total non-current liabilities | 1,790,682,269 | -- | -- | -- | 1,790,682,269 |
| Current payables to Group companies and associates |
19,907,750 | -- | -- | -- | 19,907,750 |
| Trade and other payables (note 20) Suppliers |
-- | -- | 462,500 | 8,997,018 | 9,459,518 |
| Suppliers, Group companies and associates | 5,290,662 | -- | -- | -- | 5,290,662 |
| Total current liabilities | 25,198,412 | -- | 462,500 | 8,997,018 | 34,657,930 |
| Total liabilities | 1,815,880,681 | -- | 462,500 | 8,997,018 | 1,825,340,199 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | |||||
|---|---|---|---|---|---|
| Group companies |
Key management personnel |
Directors | Other related parties |
Total | |
| Income Licencing income Other services rendered Finance income Dividends |
16,626,213 99,571,018 52,115,757 478,968,005 |
-- -- -- -- |
-- -- -- -- |
-- -- -- -- |
16,626,213 99,571,018 52,115,757 478,968,005 |
| Total income | 647,280,993 | -- | -- | -- | 647,280,993 |
| Expenses Operating lease expenses Contributions to foundations Other services received Personnel expenses Finance costs |
3,707,540 -- 11,604,755 -- 86,972,977 |
-- -- -- 6,565,512 -- |
-- -- 2,535,000 3,240,246 -- |
5,468,710 4,282,050 844,364 -- -- |
9,176,250 4,282,050 14,984,119 9,805,758 86,972,977 |
| Total expenses | 102,285,272 | 6,565,512 | 5,775,246 | 10,595,124 | 125,221,154 |
| Investments Cost of assets acquired Buildings and other installations Income of assets acquired Buildings and other installations |
348,621 (177,604) |
-- -- |
-- -- |
-- -- |
348,621 (177,604) |
| Total investments | 171,017 | -- | -- | -- | 171,017 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Group companies |
Key management personnel |
Directors | Other related parties |
Total | |||||
| Income | |||||||||
| Licencing income | 15,437,827 | -- | -- | -- | 15,437,827 | ||||
| Other services rendered | 95,880,343 | -- | -- | -- | 95,880,343 | ||||
| Finance income | 39,070,699 | -- | -- | -- | 39,070,699 | ||||
| Dividends | 440,508,618 | -- | -- | -- | 440,508,618 | ||||
| Total income | 590,897,487 | -- | -- | -- | 590,897,487 | ||||
| Expenses | |||||||||
| Operating lease expenses | 3,581,195 | -- | -- | 5,425,609 | 9,006,804 | ||||
| Contributions to foundations | -- | -- | -- | 7,100,268 | 7,100,268 | ||||
| Other services received | 11,612,938 | -- | 2,806,000 | 939,585 | 15,358,523 | ||||
| Personnel expenses | -- | 5,738,519 | 2,845,872 | -- | 8,584,391 | ||||
| Finance costs | 77,098,571 | -- | -- | -- | 77,098,571 | ||||
| Total expenses | 92,292,704 | 5,738,519 | 5,651,872 | 13,465,462 | 117,148,557 | ||||
| Investments Cost of assets acquired |
|||||||||
| Buildings and other installations | 531,672 | -- | -- | -- | 531,672 | ||||
| Total investments | 531,672 | -- | -- | -- | 531,672 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Domestic | Rest of European Union | United States | Rest of the world | Total | ||||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |
| Revenue from the rendering of services | 57,700,659 | 41,230,851 | 17,829,911 | 22,366,688 | 22,132,062 | 30,050,248 | 1,908,386 | 2,242,332 | 99,571,018 | 95,890,119 |
| Licencing income | 16,626,213 | 15,437,827 | -- | -- | -- | -- | -- | -- | 16,626,213 | 15,437,827 |
| Finance income | 4,940,904 | 3,978,074 | 47,177,975 | 35,092,625 | -- | -- | -- | 52,118,879 | 39,070,699 | |
| Dividends | 390,453,411 | 311,204,455 | 88,514,594 | 116,937,641 | -- | -- | -- | 12,366,522 | 478,968,005 | 440,508,618 |
| 469,721,187 | 371,851,207 | 153,522,480 | 174,396,954 | 22,132,062 | 30,050,248 | 1,908,386 | 14,608,854 | 647,284,115 | 590,907,263 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Euros | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Domestic | Rest of European Union United States |
Rest of the world | Total | |||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |
| Revenue from the rendering of services | 41,230,851 | 43,495,642 | 22,366,688 | 22,096,415 | 30,050,248 | 25,997,309 | 2,242,332 | 2,611,407 | 95,890,119 | 94,200,773 |
| Licencing income | 15,437,827 | 15,067,748 | -- | -- | -- | -- | -- | -- | 15,437,827 | 15,067,748 |
| Finance income | 3,978,074 | 20,707,923 | 35,092,625 | -- | -- | -- | -- | 29,399 | 39,070,699 | 20,737,322 |
| Dividends | 311,204,455 | 127,795,046 | 116,937,641 | 256,493,977 | -- | -- | 12,366,522 | 4,417,352 | 440,508,618 | 388,706,375 |
| 371,851,207 | 207,066,359 | 174,396,954 | 278,590,392 | 30,050,248 | 25,997,309 | 14,608,854 | 7,058,158 | 590,907,263 | 518,712,218 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Thousands of Euros | |
|---|---|
| Forecast distributable profit for 2018: | |
| Projected profit after income tax to 31/12/2018 Less, provision required for legal reserve |
258.091.000 -- |
| Estimated distributable profit for 2018 | 258.091.000 |
| Interim dividend distributed | 136.747.291 |
| Forecast cash for the period from 26 October 2018 to 26 October 2019: | |
| Cash balances at 26 October 2018 | -- |
| Projected collections | 572.263.000 |
| Projected payments, including interim dividend | (544.112.000) |
| Projected cash balances at 26 October 2019 | 28.151.000 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| Thousands of Euros | |
|---|---|
| Forecast distributable profit for 2017: | |
| Projected profit after income tax to 31/12/2017 | 273.472.000 |
| Less, provision required for legal reserve | -- |
| Estimated distributable profit for 2017 | 273.472.000 |
| Interim dividend distributed | 122.986.278 |
| Forecast cash for the period from 15 December 2017 to 15 December 2018: | |
| Cash balances at 15 December 2018 | -- |
| Projected collections | 475.209.000 |
| Projected payments, including interim dividend | (468.117.000) |
| Projected cash balances at 15 December 2018 | 7.092.000 |
GRIFOLS, S.A. Information on Group Companies, Associates and others 31 December 2018
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) (Expressed in Euros)
| % ownership | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Registered office | Activity | Dir | Ind | Total | Share capital | Reserves | Other equity items | Interim dividend | Profit/(loss) for the year | Total equity | Carrying amount of investment |
Dividends received in 2018 | |
| 0016 Alkahest, Inc. | United States | Research | -- | 47.580 | 47.580 | 5,930 | 14,909,323 | (3,404,707) | 11,510,547 | -- | -- | |||
| 0017 Kiro Grifols S.L | ||||||||||||||
| (formerly Kiro Robotics S.L.) | Spain | Research | 90.000 | -- | 90.000 | 4,000,000 | (2,890,375) | -- | -- | (4,629,751) | (3,520,127) | 29,953,050 | -- | |
| 0019 Aradigm Corporation | United States | Research | -- | 35.130 | 35.130 | 386,599,127 | (382,898,690) | -- | -- | (14,425,328) | (10,724,891) | -- | -- | |
| 0021 VCN Biosciences, S.L. | Spain | Research | -- | 81.340 | 81.340 | 152,421 | 2,104,642 | -- | -- | (1,505,640) | 751,423 | -- | -- | |
| 0029 Progenika Biopharma, S.A. | Spain | Industrial | 99.998 | 0 | 99.998 | 615,374 | 15,373,147 | -- | -- | 691,283 | 16,679,803 | 67,724,547 | -- | |
| 0030 Asociación I+D Progenika | Spain | Industrial | -- | 99.998 | 99.998 | 196,000 | 25,636 | -- | -- | 6,724 | 228,361 | -- | -- | |
| 0032 Instituto Grifols, S.A. | Spain | Industrial | 99.998 | 0.002 | 100.000 | 1,537,989 | 16,497,121 | 717,803 | (156,000,000) | 169,165,043 | 31,917,956 | 2,255,793 | 296,024,581 | |
| 0033 Diagnostic Grifols,s.A. | Spain | Industrial | -- | 100.000 | 100.000 | 336,560 | 42,417,027 | 106,659 | -- | 4,959,830 | 47,820,075 | -- | -- | |
| 0034 Grifols Movaco,S.A. | Spain | Commercial | 99.999 | 0.001 | 100.000 | 2,404,601 | 2,242,284 | 180,711 | -- | 1,395,502 | 6,223,098 | 4,085,334 | -- | |
| 0037 Laboratorios Grifols,S.A. | Spain | Industrial | 99.999 | 0.001 | 100.000 | 21,798,360 | 5,769,578 | 267,750 | -- | (9,169,101) | 18,666,588 | 83,066,117 | -- | |
| 0039 Gripdan Invest, S.L | Spain | Services | 100.000 | -- | 100.000 | 3,006,000 | 1,347,668 | -- | -- | 1,590,454 | 5,944,122 | 24,583,993 | 2,292,790 | |
| 0040 Biomat,S.A. | Spain | Industrial | 99.900 | 0.100 | 100.000 | 60,110 | 1,640,405 | 95,909 | -- | 761,396 | 2,557,820 | 155,950 | 570,607 | |
| 0041 Grifols International,S.A. | Spain | Commercial | 99.998 | 0.002 | 100.000 | 2,860,154 | 7,090,864 | 1,882,833 | -- | 12,850,540 | 24,684,390 | 4,555,179 | 11,292,595 | |
| 0042 Grifols Engineering,S.A. | Spain | Industrial | 99.950 | 0.050 | 100.000 | 60,120 | 745,340 | 51,805 | -- | 908,061 | 1,765,327 | 111,895 | 2,998,500 | |
| 0045 Grifols Viajes,S.A. | Spain | Services | 99.900 | 0.100 | 100.000 | 60,110 | 868,448 | -- | -- | 23,038 | 951,596 | 60,041 | -- | |
| 0047 Gri-Cel, S.A. | Spain | Research | 0.001 | 99.999 | 100.000 | 15,060,102 | 20,659,751 | -- | (37,000,000) | 27,476,168 | 26,196,021 | 1 | -- | |
| 0048 Araclon Biotech, S.L. | Spain | Research | -- | 73.220 | 73.220 | 11,215 | (5,526,789) | -- | -- | (7,510,565) | (13,026,140) | -- | -- | |
| 0050 Grifols Worldwide Operations USA | ||||||||||||||
| Inc. | United States | Industrial | -- | 100.000 | 100.000 | 1 | 38,010,865 | 2,351,776 | -- | 206,395 | 40,569,037 | -- | -- | |
| 385,453 | 23,268,736 | (1,878,005) | -- | (481,209) | 21,294,974 | -- | ||||||||
| 0051 Grifols Chile,S.A. | Chile | Commercial | 99.000 | -- | 99.000 | 385,454 | ||||||||
| 0052 Grifols Argentina,S.A. | Argentina | Commercial | 95.010 | 4.990 | 100.000 | 955,675 92,279 |
21,347,057 3,510,951 |
(18,159,865) (514,229) |
-- -- |
166,676 203,179 |
4,309,544 3,292,181 |
4,502,857 | -- -- |
|
| 0054 Logística Grifols,S.A. de CV | Mexico | Commercial | 99.990 | 0.010 | 100.000 | 235,258 | ||||||||
| 0055 Grifols Portugal Productos Farmacéutiocs e Hospitalares,Lda. |
Portugal | Commercial | 0.010 | 99.990 | 100.000 | 511,806 | 6,977,271 | -- | -- | 603,392 | 8,092,470 | -- | -- | |
| 0056 Grifols, s.r.o. | Czech Republic | Commercial | 100.000 | -- | 100.000 | 51,597 | 12,754,775 | 513,215 | -- | 1,092,657 | 14,412,244 | 51,600 | -- | |
| 0057 Grifols USA, LLC | United States | Commercial | -- | 100.000 | 100.000 | 561,686 | 18,337,686 | (11,642,569) | -- | 92,335,003 | 99,591,806 | -- | -- | |
| 0058 Grifols UK,Ltd. | United Kingdom | Commercial | 100.000 | -- | 100.000 | 4,285 | 5,028,843 | (833,217) | -- | 331,875 | 4,531,786 | 21,167,620 | -- | |
| 0059 Grifols Italia,S.p.A. | Italy | Commercial | 100.000 | -- | 100.000 | 2,496,000 | 11,177,307 | -- | -- | 2,467,569 | 16,140,877 | 12,862,540 | -- | |
| 0062 Grifols Brasil,Lda. | Brazil | Commercial | 100.000 | -- | 100.000 | 46,110,919 | (1,634,032) | (8,382,373) | -- | 197,826 | 36,292,339 | 41,045,148 | -- | |
| 0063 Grifols France,S.A.R.L. | France | Commercial | 99.990 | 0.010 | 100.000 | 657,734 | 1,898,302 | -- | -- | 745,793 | 3,301,829 | 657,657 | -- | |
| 0065 Biomat USA,Inc. | United States | Industrial | -- | 100.000 | 100.000 | 0 | 416,196,901 | 20,958,786 | -- | 74,030,619 | 511,186,307 | -- | -- | |
| Squadron Reinsurance Designated | ||||||||||||||
| 0066 | Activity Company | Ireland | Services | -- | 100.000 | 100.000 | 635,000 | 55,421,545 | (3,906,423) | -- | 6,732,693 | 58,882,815 | -- | |
| (formerly Squadron Reinsurance Ltd.) | ||||||||||||||
| -- | ||||||||||||||
| 0067 Grifols Biologicals, LLC. | 1 | 128,114,113 | 26,236,952 | -- | 13,733,523 | 168,084,588 | -- | |||||||
| United States | Industrial | -- | 100.000 | 100.000 | -- | |||||||||
| Grifols Shared Services North | ||||||||||||||
| 0068 | America, Inc. | United States | Services | 100.000 | -- | 100.000 | (1) | 314,256,737 | 318,279,023 | -- | 1,943,404,715 | 2,575,940,473 | -- | |
| (formerly Grifols Inc.) | ||||||||||||||
| 1,112,596,665 | ||||||||||||||
| 0071 Grifols Asia Pacific Pte. Ltd. | Singapore | Commercial | 100.000 | -- | 100.000 | 362,387 | 5,898,305 | 859,613 | -- | 2,640,949 | 9,761,254 | 749,709 | -- | |
| 0072 Grifols (Thailand), Ltd. | Thailand | Commercial | -- | 48.000 | 48.000 | 61,198 | 6,298,780 | 837,005 | -- | 371,717 | 7,568,701 | -- | -- | |
| 0074 Grifols Malaysia Sdn Bhd | Malaysia | Commercial | -- | 30.000 | 30.000 | 30,283 | 2,086,645 | (104,084) | -- | 465,692 | 2,478,536 | -- | -- | |
| 0075 Grifols Polska, Sp.z.o.o. | Poland | Commercial | 100.000 | -- | 100.000 | 10,714 | 2,737,178 | 153,979 | -- | (230,082) | 2,671,789 | 10,714 | -- | |
| 0078 Grifols México,S.A. de CV | Mexico | Commercial | 99.980 | 0.020 | 100.000 | 461,397 1,695,072 |
14,057,296 9,248,429 |
(3,024,798) (2,179,314) |
-- -- |
1,170,279 399,946 |
12,664,174 9,164,134 |
461,224 | -- -- |
|
| 0081 Grifols Australia Pty Ltd 0084 Medion Diagnostic Grifols AG |
Australia Switzerland |
Industrial Industrial |
100.000 -- |
-- 100.000 |
100.000 100.000 |
2,487,150 | 1,373,333 | (534,290) | -- | 1,085,202 | 4,411,395 | 34,974,212 -- |
-- | |
| 0085 Medion Diagnostic GmbH | Germany | Commercial | -- | 100.000 | 100.000 | 1,500,000 | (1,005,873) | -- | -- | -- | 494,127 | -- | -- | |
| 0086 Grifols Colombia, Ltda. | Colombia | Commercial | 99.000 | 1.000 | 100.000 | 822,620 | (174,762) | (212,407) | -- | 403,361 | 838,813 | 575,032 | -- | |
| 0087 Grifols Nordic AB | Sweden | Commercial | 100.000 | -- | 100.000 | 10,392 | 1,756,608 | (191,156) | -- | 606,831 | 2,182,675 | 1,579,452 | -- | |
| 0089 Grifols Deutschland,GmbH | Germany | Commercial | 100.000 | -- | 100.000 | 25,000 | 4,349,883 | (481,969) | (3,000,000) | 6,006,637 | 6,899,551 | 12,736,312 | 7,000,000 | |
| 0090 Grifols Therapeutic LLC. | United States | Industrial | -- | 100.000 | 100.000 | (2,885,734) | 1,021,551,915 | 277,750,750 | -- | 204,664,824 | 1,501,081,755 | -- | -- | |
| 0091 Talecris Plasma Resources Inc. | United States | Industrial | -- | 100.000 | 100.000 | 7 | 41,369,463 | 13,575,445 | -- | 12,633,967 | 67,578,882 | -- | -- | |
| 0094 Grifols Worldwide Operations Limited | Ireland | Industrial | 100.000 | -- | 100.000 | 1 | 874,754,772 | 2,107,588 | (45,018,530) | 59,019,234 | 890,863,065 | 926,044,178 | 81,514,594 | |
| Grifols Pharmaceutical Technology | ||||||||||||||
| (Shanghai) Co., Ltd. (formerly Grifols | ||||||||||||||
| 0095 | Pharmaceutical Consulting | China | Commercial | 100.000 | -- | 100.000 | 1,000,000 | 4,809,708 | (326,421) | -- | 1,596,027 | 7,079,313 | -- | |
| (Shanghai) Co., Ltd.) | 1,000,000 | |||||||||||||
| 81,189 | (242,413) | 342,637 | -- | (3,500) | 177,912 | -- | ||||||||
| 0097 Grifols Switzerland, AG | Switzerland | Commercial | 100.000 | -- | 100.000 | 169,208 | ||||||||
| 0096 Grifols Diagnostics Solutions Inc | 37 | 878,603,861 | 24,188,992 | -- | 96,268,649 | 999,061,539 | -- | |||||||
| (formerly G-C Diagnostics Corp.) | United States | Industrial | 100.000 | -- | 100.000 | 880,982,529 -- | ||||||||
| 0098 Grifols (H.K.), Limited | 37,899,374 | 21,638,440 | 5,397,582 | -- | 4,488,632 | 69,424,028 | -- | |||||||
| Hong Kong | Commercial | -- | 100.000 | 100.000 | -- | -- | ||||||||
| 0099 Grifols Japan KK | Japan | Commercial | 100.000 | -- | 100.000 | 354,409 | 572,822 | 100,707 | -- | 86,108 | 1,114,045 | 708,818 | ||
| 00A1 Grifols Pharmaceutical Technology | China | Commercial | 100.000 | -- | 100.000 | -- | (3,269,486) | 225,392 | -- | (1,120,512) | (4,164,606) | -- | ||
| Co., Ltd. Beijing Branch | -- | |||||||||||||
| 00A2 Grifols India Healthcare Private Ltd | India | Commercial | 99.990 | 0.010 | 100.000 | 1,688 | 706,450 | (91,170) | -- | (74,450) | 542,518 | 599,086 | -- | |
| 00A4 Grifols Canadá, Ltd. | Canada | Industrial | -- | 100.000 | 100.000 | 6 | 24,473,822 | (1,389,826) | -- | 1,737,805 | 24,821,807 | -- | -- | |
| 00A5 Grifols Diagnostics Equipment Taiwan Limit | Taiwan | Commercial | 100.000 | -- | 100.000 | 181,343 | 425,574 | 39,379 | -- | 103,332 | 749,629 | 181,060 | -- | |
| 00A6 Grifols Innovation and New Technologies Li | Ireland | Research | -- | 100.000 | 100.000 | 1 | 76,558,775 | (4,100,220) | -- | (24,078,187) | 48,380,369 | -- | -- | |
| 00A7 AlbaJuna Therapeutics, S.L | Spain | Research | -- | 30.000 | 30.000 | 7,143 | 6,107,818 | (2,283,349) | 3,831,612 | -- | -- | |||
| 00A8 Interstate Blood Bank, Inc. | United States | Industrial | -- | 49.190 | 49.190 | 83,886 | 7,029,481 | 1,356,371 | -- | 1,859,161 | 10,328,900 | -- | -- | |
| 00A9 Bio Blood Components Inc. | United States | Industrial | -- | 48.972 | 48.972 | 12,052 | 9,468,016 | 686,643 | -- | 2,332,003 | 12,498,714 | -- | -- | |
| 00B1 Singulex, Inc. | United States | Research | -- | 19.330 | 19.330 | 4,169 | (275,653,786) | 48,458 | (275,601,159) | -- | 77,274,335 | |||
| 00B2 PBS Acquisition Corp. | United States | Industrial | -- | 100.000 | 100.000 | (196,179) | 26,435,246 | (300,202) | -- | -- | 25,938,865 | -- | -- | |
| 00B3 Plasma Biological Services, LLC. | United States | Industrial | -- | 48.900 | 48.900 | 7,860 0 |
(7,912,108) 48,059,553 |
-- (3,386,032) |
(3,066,334) -- |
266,286 1,588,846 |
(10,704,296) 46,262,367 |
-- | -- -- |
|
| 00B4 Chiquito Acquisition Corp. 00B5 Access Biologicals, LLC. and Subsidiaries. |
United States United States |
Corporate Industrial |
-- | 100.000 | 100.000 | -- | -- | -- | -- | -- | -- | -- | ||
| 00B7 Aigües Minerals Vilajuïga | Spain | Industrial | -- 99.990 |
49.000 0.010 |
49.000 100.000 |
75,000 | 36,127 | -- | -- | (1,002,168) | (891,041) | -- -- |
-- | |
| 00B8 GigaGen Inc. | United States | Industrial | -- | 43.960 | 43.960 | 1,172 | 26,640,662 | -- | -- | 789,573 | 27,431,406 | -- | -- | |
| 00B9 Plasmavita Healthcare GmbH | Germany | Industrial | -- | 50.000 | 50.000 | 10,025 | 564,262 | -- | -- | (564,887) | 9,400 | |||
| 00C1 Goetech LLC (D/B/A Medkeeper) | United States | Industrial | -- | 54.760 | 54.760 | -- | 45,562,218 | 3,629,296 | -- | 1,778,263 | 50,969,777 | -- | -- | |
| 00C2 Haema AG | Germany | Industrial | -- | -- | -- | 15,000,000 | 34,058,096 | (989) | -- | (16,122) | 49,040,985 | -- | -- | |
| 00C3 Biotest Pharma Corp | United States | Industrial | -- | -- | -- | 183,148,729 | (120,762,497) | (175) | -- | 31,224,868 | 93,610,925 | -- | -- | |
| 00C4 Biotest US Corporation | United States | Services | -- | -- | -- | 87,077,673 | 97,007,293 | 546,628 | -- | -- | 184,631,594 | -- | -- |
00C5 Mecwins, S.A. Spain Industrial -- 24.990 24.990 126,000 5,361,642 85,581 -- (498,996) 5,074,227 -- --
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) (Expressed in Euros)
| '% ownership | Carrying amount of | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Registered office | Activity | Dir | Ind | Total | Share capital | Reserves | Other equity items | Interim dividend | Profit/(loss) for the year | Total equity | investment | Dividends received in 2017 | |
| 0016 Alkahest, Inc. | United States | Research | -- | 47.580 | 47.580 | 5,670 | 17,936,296 | (2,834,153) | 15,107,813 | -- | -- | |||
| 0017 Kiro Grifols S.L (formerly Kiro Robotics S.L.) |
Spain | Research | 90.000 | -- | 90.000 | 4,000,000 | (1,455,607) | -- | -- | (1,434,768) | 1,109,625 | 29,953,050 | -- | |
| 0018 TiGenix N.V. | Belgium | Research | 14.180 | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | |
| 0019 Aradigm Corporation | United States | Research | -- | 35.130 | 35.130 | 369,095,306 | (365,562,411) | -- | -- | (13,772,200) | (10,239,306) | -- | -- | |
| 0021 VCN Biosciences, S.L. | Spain | Research | -- | 81.340 | 81.340 | 152,421 | 3,563,954 | -- | -- | (1,459,312) | 2,257,063 | -- | -- | |
| 0022 | Progenika Inc. (Merged with Grifols Diagnostics Solutions Inc. in 2017) |
United States | Industrial | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| 0023 Progenika Latina ,S.A. de CV | Mexico | Industrial | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | |
| 0027 Abyntek Biopharma, S.L | Spain | Industrial | -- | -- | -- | -- | -- | -- | -- | 201,780 | 201,780 | -- | -- | |
| 0029 Progenika Biopharma, S.A. | Spain | Industrial | -- | 90.230 | 90.230 | 615,374 | 16,165,942 | -- | -- | (792,794) | 15,988,521 | -- | -- | |
| 0030 Asociación I+D Progenika | Spain | Industrial | -- | 90.230 | 90.230 | 196,000 | 50,330 | -- | -- | (24,694) | 221,636 | -- | -- | |
| 0032 Instituto Grifols, S.A. | Spain Spain |
Industrial Industrial |
99.998 | 0.002 | 100.000 | 1,537,989 336,560 |
18,799,129 34,099,418 |
527,119 98,766 |
-- -- |
137,728,421 8,317,625 |
158,592,658 42,852,369 |
2,065,109 | 267,472,955 -- |
|
| 0033 Diagnostic Grifols,s.A. | -- | 100.000 | 100.000 | 2,404,601 | 1,841,887 | 130,403 | -- | 400,397 | 4,777,289 | -- | -- | |||
| 0034 Grifols Movaco,S.A. | Spain | Commercial | 99.999 | 0.001 | 100.000 | 4,035,023 | ||||||||
| 0036 | Grifols Worldwide Operations Spain, S.A (formerly Logister, S.A.) |
Spain | Services | -- | 100.000 | 100.000 | 105,325 | 1,903,675 | 411,641 | -- | 1,403,434 | 3,824,076 | -- | -- |
| 0037 Laboratorios Grifols,S.A. | Spain | Industrial | 99.999 | 0.001 | 100.000 | 21,798,360 | (2,110,117) | 235,393 | -- | (10,120,304) | 9,803,332 | 65,033,759 | -- | |
| 0039 Gripdan Invest, S.L | Spain | Services | 100.000 | -- | 100.000 | 3,006,000 | 1,347,668 | -- | -- | 2,292,790 | 6,646,458 | 46,677,094 | 30,000,000 | |
| 0040 Biomat,S.A. | Spain | Industrial | 99.900 | 0.100 | 100.000 | 60,110 | 1,640,405 | 94,513 | -- | 571,179 | 2,366,206 | 154,554 | 591,218 | |
| 0041 Grifols International,S.A. | Spain | Commercial | 99.998 | 0.002 | 100.000 | 2,860,154 | 6,362,434 | 1,086,522 | -- | 11,292,821 | 21,601,932 | 3,946,616 | 12,199,744 | |
| 0042 Grifols Engineering,S.A. | Spain | Industrial | 99.950 | 0.050 | 100.000 | 60,120 | 2,810,273 | 47,643 | -- | 935,067 | 3,853,103 | 107,733 | 940,539 | |
| 0045 Grifols Viajes,S.A. | Spain | Services | 99.900 | 0.100 | 100.000 | 60,110 | 782,370 | -- | -- | 86,078 | 928,558 | 60,041 | -- | |
| 0047 Gri-Cel, S.A. 0048 Araclon Biotech, S.L. |
Spain Spain |
Research Research |
0.001 -- |
99.999 73.220 |
100.000 73.220 |
15,060,102 11,215 |
(258,220) 513,023 |
19,601,938 -- |
-- -- |
1,316,033 (6,039,813) |
35,719,853 (5,515,574) |
1 -- |
-- -- |
|
| 0050 Grifols Worldwide Operations USA Inc. |
United States | Industrial | -- | 100.000 | -- | 1 | 2,249,013 | (383,062) | -- | (895,039) | 970,913 | -- | -- | |
| 385,453 | 20,978,052 | (258,109) | -- | 2,290,682 | 23,396,078 | -- | ||||||||
| 0051 Grifols Chile,S.A. 0052 Grifols Argentina,S.A. |
Chile Argentina |
Commercial Commercial |
99.000 95.010 |
-- 4.990 |
99.000 100.000 |
955,675 | 21,568,605 | (14,564,734) | -- | (221,547) | 7,738,000 | 385,454 6,563,003 |
-- | |
| 0054 Logística Grifols,S.A. de CV | Mexico | Commercial | 99.990 | 0.010 | 100.000 | 92,279 | 3,136,542 | (661,054) | -- | 374,408 | 2,942,175 | 235,258 | -- | |
| 0055 Grifols Portugal Productos | ||||||||||||||
| Farmacéutiocs e Hospitalares,Lda. | Portugal | Commercial | 0.010 | 99.990 | 100.000 | 511,806 | 6,595,826 | -- | -- | 381,445 | 7,489,077 | -- | -- | |
| 0056 Grifols, s.r.o. | Czech Republic | Commercial | 100.000 | -- | 100.000 | 51,597 | 12,183,846 | 615,360 | -- | 570,927 | 13,421,729 | 51,600 | -- | |
| 0057 Grifols USA, LLC | United States | Commercial | -- | 100.000 | 100.000 | 561,686 | 223,624,765 | (7,603,820) | -- | 78,159,632 | 294,742,264 | -- | -- | |
| 0058 Grifols UK,Ltd. 0059 Grifols Italia,S.p.A. |
United Kingdom Italy |
Commercial Commercial |
100.000 100.000 |
-- -- |
100.000 100.000 |
4,285 2,496,000 |
4,654,663 9,196,071 |
(791,372) -- |
-- -- |
374,182 1,981,236 |
4,241,759 13,673,307 |
21,167,620 12,862,540 |
2,269,761 -- |
|
| 0062 Grifols Brasil,Lda. | Brazil | Commercial | 100.000 | -- | 100.000 | 46,110,919 | (2,848,397) | (4,169,658) | -- | 1,214,366 | 40,307,229 | 42,381,263 | -- | |
| 0063 Grifols France,S.A.R.L. | France | Commercial | 99.990 | 0.010 | 100.000 | 657,734 | 2,191,330 | -- | -- | (293,028) | 2,556,036 | 657,657 | -- | |
| 0065 Biomat USA,Inc. | United States | Industrial | -- | 100.000 | 100.000 | -- | 308,665,932 | (3,141,819) | -- | 41,933,278 | 347,457,390 | -- | -- | |
| 0066 | Squadron Reinsurance Designated Activity Company (formerly Squadron Reinsurance Ltd.) |
Ireland | Services | -- | 100.000 | 100.000 | 635,000 | 50,113,972 | (6,492,257) | -- | 5,307,573 | 49,564,288 | -- | -- |
| 0067 Grifols Biologicals, LLC. | United States | Industrial | -- | 100.000 | 100.000 | 1 | 302,034,490 | 24,086,481 | -- | 20,443,082 | 346,564,054 | -- | -- | |
| Grifols Shared Services North | ||||||||||||||
| 0068 | America, Inc. (formerly Grifols Inc.) |
United States | Services | 100.000 | -- | 100.000 | -- | 330,634,515 | 153,448,812 | -- | (93,652,115) | 390,431,213 | 1,032,704,254 | -- |
| 0071 Grifols Asia Pacific Pte. Ltd. | Singapore | Commercial | 100.000 | -- | 100.000 | 362,387 | 3,095,480 | 393,056 | -- | 2,802,824 | 6,653,747 | 714,769 | 10,096,761 | |
| 0072 Grifols (Thailand), Ltd. | Thailand | Commercial | -- | 48.000 | 48.000 | 61,198 | 5,548,428 | 439,955 | -- | 832,378 | 6,881,958 | -- | -- | |
| 0074 Grifols Malaysia Sdn Bhd | Malaysia | Commercial | -- | 30.000 | 30.000 | 30,283 | 1,758,941 | (156,502) | -- | 327,780 | 1,960,501 | -- | -- | |
| 0075 Grifols Polska, Sp.z.o.o. | Poland | Commercial | 100.000 | -- | 100.000 | 10,714 | 2,475,493 | 231,889 | -- | 261,714 | 2,979,809 | 10,714 | -- | |
| 0078 Grifols México,S.A. de CV | Mexico | Commercial | 99.980 | 0.020 | 100.000 | 461,397 | 15,807,075 | (3,572,157) | -- | (1,749,778) | 10,946,536 | 461,224 | -- | |
| 0081 Grifols Australia Pty Ltd 0084 Medion Diagnostic Grifols AG |
Australia Switzerland |
Industrial Industrial |
100.000 -- |
-- 100.000 |
100.000 100.000 |
1,695,072 2,487,150 |
6,604,848 959,998 |
(1,640,304) (613,000) |
-- -- |
2,643,604 (2,181,295) |
9,303,220 652,853 |
34,974,212 -- |
-- -- |
|
| 0085 Medion Diagnostic GmbH | Germany | Commercial | -- | 100.000 | 100.000 | 1,500,000 | (1,005,873) | -- | -- | -- | 494,127 | -- | -- | |
| 0086 Grifols Colombia, Ltda. | Colombia | Commercial | 99.000 | 1.000 | 100.000 | 822,620 | (101,829) | (166,734) | -- | (72,933) | 481,124 | 575,032 | -- | |
| 0087 Grifols Nordic AB | Sweden | Commercial | 100.000 | -- | 100.000 | 10,392 | 1,921,181 | (126,793) | -- | (164,735) | 1,640,045 | 1,579,452 | -- | |
| 0089 Grifols Deutschland,GmbH | Germany | Commercial | 100.000 | -- | 100.000 | 25,000 | 4,279,587 | (604,367) | (3,000,000) | 7,070,296 | 7,770,515 | 12,716,099 | 16,937,641 | |
| 0090 Grifols Therapeutic LLC. 0091 Talecris Plasma Resources Inc. |
United States United States |
Industrial Industrial |
-- -- |
100.000 100.000 |
100.000 100.000 |
(2,885,734) 7 |
2,228,654,149 (18,168,778) |
248,881,319 9,182,229 |
-- -- |
323,727,951 14,186,774 |
2,798,377,685 5,200,232 |
-- -- |
-- -- |
|
| 0094 Grifols Worldwide Operations Limited | Ireland | Industrial | 100.000 | -- | 100.000 | 1 | 874,407,707 | (40,925,983) | (100,000,000) | 115,425,412 | 848,907,138 | 926,367,184 | 100,000,000 | |
| 0095 | Grifols Pharmaceutical Technology (Shanghai) Co., Ltd. (formerly Grifols Pharmaceutical Consulting |
China | Commercial | 100.000 | -- | 100.000 | 1,000,000 | 2,994,696 | (259,981) | -- | 1,815,013 | 5,549,727 | 1,000,000 | -- |
| (Shanghai) Co., Ltd.) 0097 Grifols Switzerland, AG |
Switzerland | Commercial | 100.000 | -- | 100.000 | 81,189 | (240,517) | 336,241 | -- | (1,896) | 175,017 | 169,208 | -- | |
| 0096 Grifols Diagnostics Solutions Inc (formerly G-C Diagnostics Corp.) |
United States | Industrial | 100.000 | -- | 100.000 | 37 | 923,571,607 | (28,550,291) | -- | 107,496,400 | 1,002,517,752 | 875,354,371 -- | -- | |
| 0098 Grifols (H.K.), Limited | Hong Kong | Commercial | -- | 100.000 | 100.000 | 37,899,374 | 13,815,054 | 2,290,092 | -- | 7,823,384 | 61,827,904 | -- | -- | |
| 0099 Grifols Japan KK | Japan | Commercial | 100.000 | -- | 100.000 | 354,409 | 500,412 | 27,872 | -- | 72,410 | 955,102 | 708,818 | -- | |
| 00A1 Grifols Pharmaceutical Technology Co., Ltd. Beijing Branch |
China | Commercial | 100.000 | -- | 100.000 | -- | (2,084,931) | 187,517 | -- | (1,184,554) | (3,081,968) | -- | -- | |
| 00A2 Grifols India Healthcare Private Ltd 00A4 Grifols Canadá, Ltd. |
India Canada |
Commercial Industrial |
99.990 -- |
0.010 100.000 |
100.000 100.000 |
1,688 6 |
641,489 20,230,562 |
(62,414) (2,879,681) |
-- -- |
65,985 4,243,260 |
646,749 21,594,147 |
599,086 -- |
-- -- |
|
| 00A5 Grifols Diagnostics Equipment Taiwan Limited | Taiwan | Commercial | 100.000 | -- | 100.000 | 181,343 | 170,253 | (185) | -- | 255,321 | 606,732 | 181,061 | -- | |
| 00A6 Grifols Innovation and New Technologies Limite | Ireland | Research | -- | 100.000 | 100.000 | 1 | 169,407,849 | (6,403,463) | -- | (92,849,074) | 70,155,313 | -- | -- | |
| 00A7 AlbaJuna Therapeutics, S.L | Spain | Research | -- | 30.000 | 30.000 | 7,143 | 3,824,469 | (1,384,316) | 2,447,295 | -- | -- | |||
| 00A8 Interstate Blood Bank, Inc. | United States | Industrial | -- | 49.190 | 49.190 | 80,088 | 7,607,601 | 1,294,960 | -- | 1,181,026 | 10,163,675 | -- | -- | |
| 00A9 Bio Blood Components Inc. | United States | Industrial | -- | 48.972 | 48.972 | 11,507 | 7,101,024 | 655,554 | -- | (1,153,615) | 6,614,470 | -- | -- | |
| 00B1 Singulex, Inc. | United States | Research | -- | 19.330 | 19.330 | 3,335 | (161,630,118) | (27,718,669) | (189,345,452) | -- | -- | |||
| 00B2 PBS Acquisition Corp. 00B3 Plasma Biological Services, LLC. |
United States United States |
Industrial Industrial |
-- -- |
100.000 48.900 |
100.000 48.900 |
(196,179) 7,504 |
26,435,246 (6,313,242) |
(1,474,621) -- |
-- -- |
-- 644,972 |
24,764,446 (5,660,765) |
-- -- |
-- -- |
|
| 00B4 Chiquito Acquisition Corp. | United States | Corporate | -- | 100.000 | 100.000 | -- | 48,059,553 | (5,526,067) | -- | -- | 42,533,486 | -- | -- | |
| 00B5 Access Biologicals, LLC. and Subsidiaries. | United States | Industrial | -- | 49.000 | 49.000 | -- | 7,839,027 | -- | 3,496,885 | 11,335,912 | -- | -- | ||
| 00B7 Aigües Minerals Vilajuïga | Spain | Industrial | 50.000 | -- | 50.000 | 75,000 | 275,136 | 231,262 | -- | (467,009) | 114,389 | -- | -- |
00B8 GigaGen Inc. United States Industrial -- 43.960 43.960 1,117 29,303,768 896 (3,002,866) 26,302,915 -- --
To the shareholders:
Grifols, S.A. is a Spanish holding company specialized in the pharmaceutical-clinical sector. It is the Parent of the Grifols Group and its principal activities are as follows:
Planning future investments by entering new markets or through product diversification
Providing support to the various functional areas in each Group company (products division, technical division, marketing/sales division, scientific division, financial division and planning and control division)
Leasing buildings to Group companies.
Rendering services to subsidiaries such as personnel recruitment and management, communications and corporate image, IT services and maintenance.
The Company obtains its income from leasing its buildings and rendering services, and through dividends from its subsidiaries.
The Company's profits could be affected by events related to the activities of its subsidiaries, such as a lack of raw materials for product manufacturing, the arrival of competitor products on the market or regulatory changes in the markets in which it operates.
At the date of authorization for issue of these annual accounts, the Company has taken the measures it considers appropriate to mitigate any possible effects arising from the aforementioned events.
At 31 December 2018, the Company has treasury stock of Euros 55,441,210, as described in note 16 to the accompanying annual accounts. Transactions involving treasury stock in 2018 are described in note 16 to the accompanying annual accounts.
The Company does not conduct any research and development activities.
The Company's financial risk management policy is detailed in note 11 to the accompanying annual accounts.
As indicated in note 20 to these annual accounts, and as the average payment period is greater than the maximum period established in late payment legislation, the Company is studying best practices to reduce the average number of days.
The non-financial information statement is presented in the consolidated directors' report of the Grifols, S.A and Subsidiaries Group of which the Company forms part, and has been prepared in line with the requirements set out in Law 11/2018 of 28 December 2018 on non-financial information and diversity, approved on 13 December 2018 by the Spanish Congress of Representatives, amending the Spanish Code of Commerce, the Revised Spanish Companies Act approved by Royal Legislative Decree 1/2010 of 2 July 2010 and Spanish Audit Law 22/2015 of 20 July 2015, as regards non-financial information and diversity (under Royal-Decree Law 18/2017 of 24 November 2017).
The annual corporate governance report of Grifols, S.A. forms part of this directors' report and is available at www.grifols.es. It is also published Significant Events on the Spanish National Securities Market Commission (CNMV) website
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At their meeting held on 22 February 2019, pursuant to the requirements of article 253.2 pf the Revised Spanish Companies Act and article 37 of the Spanish Code of commerce, the Directors of Grifols, S.A. authorised for issue the annual accounts and directors' report for the period from 1 January 2018 to 31 December 2018. The annual accounts comprise the documents that precede this certification.
| Victor Grifols Roura | Raimon Grifols Roura | Víctor Grifols Deu | ||
|---|---|---|---|---|
| (signed) | (signed) | (signed) | ||
| President – Board |
Chief Executive Officer | Chief Executive Officer | ||
| Member | ||||
| Carina Szpilka Lázaro | Tomás Dagà Gelabert | Thomas Glanzmann | ||
| (signed) | (signed) | (signed) | ||
| Board member | Board member | Vice-Chairman | ||
| Iñigo Sánchez-Asiaín | Anna Veiga Lluch | Luis Isasi Fernández de | ||
| Mardone | Bobadilla | |||
| (*) | (signed) | (signed) | ||
| Board member | Board member | Board member | ||
| Steven F. Mayer | Belen Villalonga | Marla E. Salmon | ||
| Morenés | ||||
| (signed) | (signed) | (signed) | ||
| Board member | Board member | Board member | ||
| Ramón Riera Roca | Nuria Martín Barnés | |||
| (signed) | (signed) | |||
| Board Member | Secretary to the Board |
(*) Absent on a business trip, attended the meeting by conference call and did not express any disconformity with the documentation.
De conformidad con lo dispuesto en el artículo 8.1.b del Real Decreto 1362/2007, de 19 de octubre, los consejeros de Grifols, S.A. (la "Sociedad")
Bajo su responsabilidad que, hasta donde alcanza su conocimiento, las cuentas anuales del ejercicio cerrado a 31 de diciembre de 2018, elaboradas con arreglo a los principios de contabilidad aplicables, ofrecen la imagen fiel del patrimonio, de la situación financiera y de los resultados de la Sociedad y de las empresas comprendidas en la consolidación tomados en su conjunto, y que el informe de gestión incluye un análisis fiel de la evolución y los resultados empresariales y de la posición de la Sociedad y de las empresas comprendidas en la consolidación tomadas en su conjunto, junto con la descripción de los principales riesgos e incertidumbres a que se enfrentan.
En Barcelona, a 27 de febrero 2019 In Barcelona, on 27 February 2019
Pursuant to the provisions of article 8.1.b of Royal Decree 1362/2007, of 19 October, the directors of Grifols, S.A. (the "Company")
On their own responsibility that, to the Best of their knowledge, the annual accounts for the fiscal year ended on 31 December 2018, prepared in accordance with applicable accounting standards, give a fair view of the net worth, financial situation and results of the Company and of the companies included in its consolidation scope, considered as a whole, and that the director's report contains an accurate analysis of the evolution, business results and position of the Company and of the companies included in its consolidate scope, taken as a whole, together with a description of the main risks and uncertainties which they face.
Firmado By:
| Victor Grifols Roura (signed) Chairman |
Raimon Grifols Roura (signed) Board Member |
Víctor Grifols Deu (signed) Board Member |
|||
|---|---|---|---|---|---|
| Ramón Riera Roca (signed) Board member |
Thomas Glanzmann (signed) Board Member |
Tomás Dagá Gelabert (signed) Board member |
|||
| Carina Szpilka Lázaro (signed) Board member |
Íñigo Sánchez-Asiaín Mardones (signed) Board member |
Marla E. Salmon (signed) Board member |
| Anna Veiga Lluch (signed) Board member |
Luis Isasi Fernández de Bobadilla (signed) Board member |
Steven F. Mayer (signed) Board member |
|---|---|---|
| Belén Villalonga Morenés (signed) Board member |
Núria Martín Barnés (signed) Secretary |
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.