Annual / Quarterly Financial Statement • Feb 28, 2018
Annual / Quarterly Financial Statement
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| Impairment of Goodwill and Development in Progress Costs See notes 7 and 8 to the consolidated annual accounts |
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|---|---|---|---|---|---|---|
| Key Audit Matter | How the Matter was Addressed in Our Audit | |||||
| The Group has recognised goodwill and development in progress costs of Euros 4,590 million and Euros 183 million, respectively, allocated to the corresponding cash generating units (CGU). The Group calculates the recoverable amount of goodwill and development in progress costs 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. Intangible assets relating to development projects in progress also include the risks regarding technical success and regulatory approval. Due to the high level of judgement, the uncertainty associated with these estimates and the significance of the carrying amount of these intangible assets, 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 and development in progress costs. assessing the reasonableness of the $\bullet$ 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 or project 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 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. |
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(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 2017 and 2016
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Assets | 31/12/17 | 31/12/16 |
|---|---|---|
| Goodwill (note 7) | 4,590,498 | 3,643,995 |
| Other intangible assets (note 8) | 1,269,342 | 1,195,302 |
| Property, plant and equipment (note 9) | 1,760,053 | 1,809,852 |
| Investments in equity-accounted investees (note 10) | 219,009 | 201,345 |
| Non-current financial assets | ||
| Non-current financial assets measured at fair value | 47,046 | 58,864 |
| Non-current financial assets not measured at fair value | 22,843 | 30,681 |
| Total non-current financial assets (note 11) | 69,889 | 89,545 |
| Deferred tax assets (note 27) | 66,157 | 67,219 |
| Total non-current assets | 7,974,948 | 7,007,258 |
| Inventories (note 12) Trade and other receivables |
1,629,293 | 1,642,931 |
| Trade receivables | 286,198 | 413,656 |
| Other receivables | 40,681 | 42,299 |
| Current income tax assets | 59,531 | 77,713 |
| Trade and other receivables (note 13) | 386,410 | 533,668 |
| Other current financial assets (note 11) | 10,738 | 2,582 |
| Other current assets | 32,354 | 48,324 |
| Cash and cash equivalents (note 14) | 886,521 | 895,009 |
| Total current assets | 2,945,316 | 3,122,514 |
| Total assets | 10,920,264 | 10,129,772 |
at 31 December 2017 and 2016
(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 | 31/12/17 | 31/12/16 |
|---|---|---|
| Share capital | 119,604 | 119,604 |
| Share premium | 910,728 | 910,728 |
| Reserves | 2,027,648 | 1,694,245 |
| Treasury stock | (62,422) | (68,710) |
| Interim dividend | (122,986) | (122,908) |
| Profit for the year attributable to the Parent | 662,700 | 545,456 |
| Total equity | 3,535,272 | 3,078,415 |
| Available for sale financial assets | 4,926 | (5,219) |
| Other comprehensive Income | (656) | (642) |
| Translation differences | 89,537 | 648,927 |
| Other comprehensive expenses | 93,807 | 643,066 |
| Equity attributable to the Parent (note 15) | 3,629,079 | 3,721,481 |
| Non-controlling interests (note 17) | 4,886 | 6,497 |
| Total equity | 3,633,965 | 3,727,978 |
| Liabilities | ||
| Grants (note 18) | 11,822 | 12,196 |
| Provisions (note 19) | 5,763 | 5,118 |
| Non-current financial liabilities (note 20) | 5,901,815 | 4,712,071 |
| Deferred tax liabilities (note 27) | 388,912 | 600,646 |
| Total non-current liabilities | 6,308,312 | 5,330,031 |
| Provisions (note 19) | 106,995 | 89,588 |
| Current financial liabilities (note 20) | 155,070 | 230,065 |
| Trade and other payables | ||
| Suppliers | 423,096 | 461,073 |
| Other payables | 141,720 | 142,894 |
| Current income tax liabilities | 6,709 | 7,957 |
| Total trade and other payables (note 21) | 571,525 | 611,924 |
| Other current liabilities (note 22) | 144,397 | 140,186 |
| Total current liabilities | 977,987 | 1,071,763 |
| Total liabilities | 7,286,299 | 6,401,794 |
| Total equity and liabilities | 10,920,264 | 10,129,772 |
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/17 | 31/12/16 | 31/12/15 | |
|---|---|---|---|
| Continuing Operations | |||
| Net revenue (notes 6 and 23) | 4,318,073 | 4,049,830 | 3,934,563 |
| Cost of sales | (2,166,062) | (2,137,539) | (2,003,565) |
| Gross Profit | 2,152,011 | 1,912,291 | 1,930,998 |
| Research and Development (note 8 (e )) | (288,320) | (197,617) | (224,193) |
| Selling, General and Administration expenses | (860,348) | (775,266) | (736,435) |
| Operating Expenses | (1,148,668) | (972,883) | (960,628) |
| Operating Result | 1,003,343 | 939,408 | 970,370 |
| Finance income | 9,678 | 9,934 | 5,841 |
| Finance costs | (263,344) | (244,829) | (240,335) |
| Change in fair value of financial instruments | (3,752) | (7,610) | (25,206) |
| Impairment and gains /(losses) on disposal of financial instruments |
(18,844) | -- | -- |
| Exchange differences | (11,472) | 8,916 | (12,140) |
| Finance result (note 26) | (287,734) | (233,589) | (271,840) |
| Share of losses of equity accounted investees (note 10) | (19,887) | 6,933 | (8,280) |
| Profit before income tax from continuing operations | 695,722 | 712,752 | 690,250 |
| Income tax expense (note 27) | (34,408) | (168,209) | (158,809) |
| Profit after income tax from continuing operations | 661,314 | 544,543 | 531,441 |
| Consolidated profit for the year | 661,314 | 544,543 | 531,441 |
| Profit attributable to the Parent | 662,700 | 545,456 | 532,145 |
| Loss attributable to non-controlling interest (note 17) | (1,386) | (913) | (704) |
| Basic earnings per share (Euros) (see note 16) | 0.97 | 0.80 | 0.78 |
| Diluted earnings per share (Euros) (see note 16) | 0.97 | 0.80 | 0.78 |
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/17 | 31/12/16 | 31/12/15 | |
|---|---|---|---|
| Consolidated profit for the year | 661,314 | 544,543 | 531,441 |
| Items for reclassification to profit or loss | |||
| Translation differences | (532,389) | 103,833 | 290,635 |
| Translation differences / Cash Flow Hedge | -- | (6,809) | -- |
| Available for sale financial Assets | 10,145 | (5,219) | -- |
| Equity accounted investees (note 10) / Translation differences | (27,134) | 10,671 | 2,673 |
| Cash flow hedges - effective part of changes in fair value | -- | 14,501 | 55,305 |
| Cash flow hedges - amounts taken to profit or loss | -- | (7,426) | (25,206) |
| Other comprehensive income | (14) | (4,810) | 4,575 |
| Tax effect | -- | (2,462) | (12,093) |
| Other comprehensive income for the year, after tax | (549,392) | 102,279 | 315,889 |
| Total comprehensive income for the year | 111,922 | 646,822 | 847,330 |
| Total comprehensive income attributable to the Parent | 113,441 | 647,667 | 848,603 |
| Total comprehensive expense attributable to the non-controlling interests | (1,519) | (845) | (1,273) |
(Expressed in thousands of Euros)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/2017 | 31/12/2016 | 31/12/15 | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit before tax | 695,722 | 712,752 | 690,250 |
| Adjustments for: | 556,792 | 391,986 | 460,564 |
| Amortization and depreciation (note 25) | 215,490 | 201,869 | 189,755 |
| Other adjustments: | 341,302 | 190,117 | 270,809 |
| (Profit) / losses on equity accounted investments (note 10) | 19,888 | (6,933) | 8,280 |
| Impairment of assets and net provision charges | 66,047 | (23,079) | (564) |
| (Profit) / losses on disposal of fixed assets | 1,551 | (2,987) | 6,721 |
| Government grants taken to income | (286) | (1,681) | (1,854) |
| Finance cost / (income) | 263,657 | 236,034 | 256,129 |
| Other adjustments | (9,555) | (11,237) | 2,097 |
| Change in operating assets and liabilities | (65,800) | (164,319) | (77,058) |
| Change in inventories | (165,508) | (173,003) | (120,641) |
| Change in trade and other receivables | 80,112 | (25,180) | 144,405 |
| Change in current financial assets and other current assets | (2,691) | (2,610) | (5,565) |
| Change in current trade and other payables | 22,287 | 36,474 | (95,257) |
| Other cash flows used in operating activities | (344,968) | (387,141) | (330,978) |
| Interest paid | (207,079) | (180,497) | (171,380) |
| Interest recovered | 9,492 | 8,685 | 4,316 |
| Income tax (paid) / received | (147,015) | (215,329) | (163,914) |
| Other recovered (paid) | (366) | -- | -- |
| Net cash from operating activities Cash flows from investing activities |
841,746 | 553,278 | 742,778 |
| Payments for investments | (2,209,667) | (509,078) | (647,417) |
| Group companies, associates and business units (notes 3, 2 (b) and 10) | (1,857,210) | (202,727) | (58,609) |
| Property, plant and equipment and intangible assets | (322,973) | (292,690) | (567,020) |
| Property, plant and equipment | (251,507) | (249,416) | (522,587) |
| Intangible assets | (71,466) | (43,274) | (44,433) |
| Other financial assets | (29,484) | (13,661) | (21,788) |
| Proceeds from the sale of investments | 23,787 | 2,426 | 14,307 |
| Property, plant and equipment | 762 | 2,426 | 14,307 |
| Other financial assets | 23,025 | -- | -- |
| Net cash used in investing activities Cash flows from financing activities |
(2,185,880) | (506,652) | (633,110) |
| Proceeds from and payments for equity instruments | 0 | (11,766) | 12,695 |
| Payments for treasury stock (note 15 (d)) | -- | (12,686) | (58,457) |
| Sales of treasury stock (note 15 (d)) | -- | 920 | 71,152 |
| Proceeds from and payments for financial liability instruments | 1,808,771 | (80,149) | 28,953 |
| Issue | 1,912,615 | 81,513 | 178,686 |
| Redemption and repayment | (103,844) | (161,662) | (149,733) |
| Dividends and interest on other equity instruments | (218,260) | (216,151) | (216,772) |
| Dividends paid | (218,260) | (216,151) | (221,772) |
| Dividends received | -- | -- | 5,000 |
| Other cash flows from / (used in) financing activities | (156,446) | (21,492) | 17,086 |
| Financing costs included on the amortised costs of the debt | (142,288) | -- | -- |
| Other amounts from / (used in) financing activities | (14,158) | (21,492) | 17,086 |
| Net cash from/(used in) financing activities | 1,434,065 | (329,558) | (158,038) |
| Effect of exchange rate fluctuations on cash | (98,419) | 35,441 | 111,724 |
| Net increase in cash and cash equivalents | (8,488) | (247,491) | 63,354 |
| Cash and cash equivalents at beginning of the year | 895,009 | 1,142,500 | 1,079,146 |
| Cash and cash equivalents at year end | 886,521 | 895,009 | 1,142,500 |
for the years ended 31 December 2017, 2016 and 2015
(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 2014 | 119,604 | 910,728 | 1,088,337 | 470,253 | (85,944) | (69,252) | 240,614 | -- | (406) | (15,811) | 2,658,123 | 4,765 | 2,662,888 |
| Translation differences | -- | -- | -- | -- | -- | -- | 293,877 | -- | -- | -- | 293,877 | (569) | 293,308 |
| Cash flow hedges (note 15 (f)) | -- | -- | -- | -- | -- | -- | -- | -- | -- | 19,140 | 19,140 | -- | 19,140 |
| Other comprehensive income | -- | -- | -- | -- | -- | -- | -- | -- | 3,441 | -- | 3,441 | -- | 3,441 |
| Other comprehensive income / (expense) for the year | -- | -- | -- | -- | -- | -- | 293,877 | -- | 3,441 | 19,140 | 316,458 | (569) | 315,889 |
| Profit/(loss) for the year | -- | -- | -- | 532,145 | -- | -- | -- | -- | -- | -- | 532,145 | (704) | 531,441 |
| Total comprehensive income / (expense) for the year | -- | -- | -- | 532,145 | -- | -- | 293,877 | -- | 3,441 | 19,140 | 848,603 | (1,273) | 847,330 |
| Net change in treasury stock (note 15 (d)) | -- | -- | 2,018 | -- | -- | 10,677 | -- | -- | -- | -- | 12,695 | -- | 12,695 |
| Acquisition of non-controlling interests (note 15 (c)) Other changes |
-- -- |
-- -- |
(1,770) 324 |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
(1,770) 324 |
1,767 (72) |
(3) 252 |
| Interim dividend | -- | -- | -- | -- | (119,615) | -- | -- | -- | -- | -- | (119,615) | -- | (119,615) |
| Distribution of 2014 profit Reserves |
-- | -- | 368,096 | (368,096) | -- | -- | -- | -- | -- | -- | -- | -- | -- -- |
| Dividends Interim dividend |
-- -- |
-- -- |
-- (85,944) |
(102,157) -- |
-- 85,944 |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
(102,157) -- |
-- -- |
(102,157) -- |
| Operations with shareholders or owners | -- | -- | 282,724 | (470,253) | (33,671) | 10,677 | -- | -- | -- | -- | (210,523) | 1,695 | (208,828) |
| 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 Available for sale financial assets |
-- | -- | -- | -- | -- | -- | 114,436 | -- | -- | -- | 114,436 | 68 | 114,504 |
| Cash flow hedges (note 15 (f)) | -- -- |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
(5,219) -- |
-- -- |
-- (3,329) |
(5,219) (3,329) |
-- -- |
(5,219) (3,329) |
| Other comprehensive income | -- | -- | -- | -- | -- | -- | -- | -- | (3,677) | -- | (3,677) | -- | (3,677) |
| Other comprehensive income / (expense) for the year Profit/(loss) for the year |
-- -- |
-- -- |
-- -- |
-- 545,456 |
-- -- |
-- -- |
114,436 -- |
(5,219) -- |
(3,677) -- |
(3,329) -- |
102,211 545,456 |
68 (913) |
102,279 544,543 |
| 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)) Acquisition of non-controlling interests (note 15 (c)) |
-- -- |
-- -- |
(182) (2,737) |
-- -- |
-- -- |
(10,135) -- |
-- -- |
-- -- |
-- -- |
-- -- |
(10,317) (2,737) |
-- 2,737 |
(10,317) -- |
| Other changes | -- | -- | 6,816 | -- | -- | -- | -- | -- | -- | -- | 6,816 | (582) | 6,234 |
| Interim dividend Distribution of 2015 profit |
-- | -- | -- | -- | (122,908) | -- | -- | -- | -- | -- | (122,908) | -- | (122,908) |
| Reserves | -- | -- | 319,287 | (319,287) | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| Dividends Interim dividend |
-- -- |
-- -- |
-- -- |
(93,243) (119,615) |
-- 119,615 |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
(93,243) -- |
-- -- |
(93,243) -- |
| Operations with shareholders or owners | -- | -- | 323,184 | (532,145) | (3,293) | (10,135) | -- | -- | -- | -- | (222,389) | 2,155 | (220,234) |
| 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 |
| Cash flow hedges (note 15 (f)) | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| 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)) | -- | -- | -- | -- | -- | 6,288 | -- | -- | -- | -- | 6,288 | -- | 6,288 |
| Acquisition of non-controlling interests (note 15 (c)) | -- | -- | (346) | -- | -- | -- | -- | -- | -- | -- | (346) | (43) | (389) |
| Other changes Interim dividend |
-- -- |
-- -- |
6,475 | -- -- |
-- (122,986) |
-- -- |
-- -- |
-- -- |
-- -- |
-- -- |
6,475 (122,986) |
(49) -- |
6,426 (122,986) |
| Distribution of 2016 profit Reserves |
-- | -- | 422,548 | (422,548) | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| Dividends | -- | -- | (95,274) | -- | -- | -- | -- | -- | -- | -- | (95,274) | -- | (95,274) |
| Interim dividend | -- | -- | -- | (122,908) | 122,908 | -- | -- | -- | -- | -- | -- | -- | -- |
| 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 |
(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 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 2017 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 2017, 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 2017 show comparative figures for 2016 and voluntarily show figures for 2015 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 authorized for issue at their meeting held on 23 February 2018, will be approved by the shareholderswithout any modifications.
In accordance with the provision of section 357 of the Irish Companies Act 2014, the Company has irrevocably guaranteed all liabilities of an Irish subsidiary undertaking, Grifols Worldwide Operations Limited (Ireland) (see Appendix I), for the financial year ended 31 December 2017 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
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
own financial statements 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 2017, 2016 and 2015, 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 are detailed in note 10.
In 2017:
In 2016 Grifols incorporated the following companies:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Changes in associates and joint control are detailed in note 10.
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.
| Mandatory application for annual periods beginning on or after: |
|||
|---|---|---|---|
| Standards | IASB effective date | EU effective date | |
| IAS 19 | Defined Benefit Plans: employee contributions (amendments to IAS 19) |
1 July 2014 | 1 February 2015 (*) |
| Various | Annual improvements to IFRSs 2010-2012 cycle | 1 July 2014 | 1 February 2015 (*) |
| Various | Annual improvements to IFRSs 2011-2013 cycle | 1 July 2014 | 1 January 2015 (*) |
| (*) early adopted |
(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 |
| Mandatory application for annual periods beginning | ||||
|---|---|---|---|---|
| on or after: | ||||
| Standards | IASB effective date | EU effective date | ||
| Recognition of Deferred Tax Assets for Unrealized | 1 January 2017 | 1 January 2017 | ||
| IAS 12 | Losses (issued on 19 January 2016) | |||
| 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 | Pending |
The modification to IFRS 12 issued by IASB is pending approval by the EU. Consequently, the Group confirms that despite the existing divergence between IASB-IFRS and IFRS-EU at 31 December 2017, it is a minor difference that requires additional information.
The application of these standards and interpretations has had no material impact on these consolidated annual accounts.
(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 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 | pending | |
| 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 |
1 January 2018 | pending | |
| IAS 40 | Amendments to IAS 40: Transfers of Investment Property |
1 January 2018 | pending | |
| Various | Annual improvements to IFRSs 2014 - 2016 cycle (issued on 8 December 2016) |
1 January 2018 | pending | |
| 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 | pending | |
| IFRS 9 | Prepayment Features with Negative Compensation (issued on 12 October 2017) |
1 January 2019 | pending | |
| 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 7 February 2018) |
1 January 2019 | pending |
At the date of issue of these consolidated annual accounts, the Group is analyzing the impact of the application of the above standards or interpretations published by the International Accounting Standards Board (IASB).
Based on the analysis at the date these consolidated annual accounts were authorized for issue, the expected impacts of adopting IFRS 9 Financial Instruments are summarized below:
In general terms, based on the analysis of the new classification vis-à-vis the business model, no significant impacts are foreseen and the majority of financial assets are expected to continue to be measured at amortized cost, the main exception being equity instruments, which will be measured at fair value.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
For trade receivables the Group will use the simplified approach, estimating lifetime expected credit losses, while for all other financial assets the Group will use 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 will 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 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 will be recognized in reserves at that date. Grifols has retrospectively calculated the impact of adopting IFRS 9 on the refinancing of its senior debt and unsecured senior corporate bonds 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 unsecured senior corporate bonds refinancing did cause the derecognition of the liability as it did not pass the new quantitative test. The adoption of IFRS 9 entails a positive impact on reserves of Euros 24,636 thousand.
Detail of the impact in reserves due to IFRS 9 aplication, were as follows:
| Thousand of Euros | |||||
|---|---|---|---|---|---|
| Impact | |||||
| Senior Unsecured Noted | IAS 39 | IFRS 9 | 01/01/2018 | ||
| Total Debt | 853,667 | 1,000,000 | 146,334 | ||
| Deferred Expenses | (41,036) | ||||
| Negative Impact in reserves | 105,298 | ||||
| Thousand of Euros | |||||
| Impact | |||||
| Senior Secured Debt | IAS 39 | IFRS 9 | 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 | |||||
| Impact | |||||
| Total Impact | IAS 39 | IFRS 9 | 01/01/2018 | ||
| Total Debt | 4,228,823 | 4,226,244 | (2,579) | ||
| Deferred Expenses | (22,056) | ||||
| Positive impact in reserves | (24,636) | ||||
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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:
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 at the date of preparing these consolidated annual accounts, there has been no impact from adopting IFRS 15 Revenue from Contracts with Customers.
Under IFRS 15, entities may adopt the new standard retrospectively or through an adjustment for the accumulated effect at the start of the first year it is applicable. Grifols has opted for the accumulated effect approach as it deems the impact to be immaterial to the financial statements taken as a whole.
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 joint-business between Grifols and Hologic in place since 2014, under which Grifols already owns customer facing activities and records all revenues.
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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 Result of the cancellation of the existing contract |
1,734,077 41,894 |
1,865,000 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) |
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 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 in-process 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 to goodwill. The factors contributing to the recognition of the amount of goodwill were the assembled workforce, cost savings and benefits arising from the vertical integration of the business that will lead to efficiencies of R&D, commercial and manufacturing activities.
The expenses incurred in this transaction in 2017 amount to approximately Euros 13 million (Euros 5.1 million in 2016).
The resulting Goodwil has been allocated to the Diagnostic segment.
(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 |
|||
| R&D in progress Other Intangible assets Property, plant and equipment |
137,756 142,174 24,569 |
148,157 152,908 26,424 |
||
| Deferred Tax Assets (note 27) Inventories |
16,736 30,157 |
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 |
On 25 July 2017 the Group subscribed a capital increase in Kiro Grifols, S.L (formerly Kiro Robotics, S.L.) for an amount of Euros 12.8 million, which represents 40% of the voting and economic rights of Kiro Grifols. In September 2014 the Group had already subscribed a capital increase in Kiro Grifols, S.L (formerly Kiro Robotics, S.L.) for an amount of Euros 21 million, by virtue of which Grifols acquired 50% of Kiro Grifols economic and voting rights. The capital increase was paid by means of a monetary contribution.
As a result, Grifols owns a total of 90% of the voting and economic rights of Kiro Grifols. 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.
At the date of issue of these consolidated annual accounts, the Group is working to determine the definitive fair value of intangible assets, liabilities and contingent liabilities acquired in the business combination.
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 Dollar 47 million. Delivery of these centers has been made in February 2017.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Aggregate details of the combination cost, fair value of the net assets acquired and goodwill at the acquisition date (or surplus net assets acquired over the combination cost) 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) |
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 plasma donor center base, FDA licenses and workforce retained.
At 31 December 2016, the group advanced the sum of US Dollar 15 million related to this acquisition.
On 14 February 2014 and 16 November 2015, the Group company Gri-Cel, S.A, subscribed both share capital increases in the capital of VCN Bioscience, S.L for Euros 700 thousand and Euros 2,549 thousand, respectively. After this capital increase, Grifols' interest rises to 68.01% in 2015 and the company is fully consolidated at year end. Since 2016, the Group company Grifols Innovation and New Technologies Limited centralize the Group's investments in R&D projects in fields of medicine other than its core business.
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 financial statements of consolidated subsidiaries have been prepared as of the same date and for the same reporting period as the financial statements of the Company.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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 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 accounted for using the equity method from the date that significant influence commences until the date that significant influence ceases.
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.
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.
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.
Investments in joint arrangements are accounted for using the equity method.
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.
(i) Initial recognition
Property, plant and equipment are recognized at cost or deemed cost, less accumulated depreciation and any accumulated impairment losses. 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.
At 1 January 2004 the Group opted to apply the exemption regarding fair value and revaluation as deemed cost as permitted by IFRS 1 First time Adoption of International Financial Reporting Standards.
(ii) Depreciation
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.
(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.
(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 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.
(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 the Progenika Group includes the fair value of the currently marketed products sold and which are classified under "Other intangible assets" and "Development costs".
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".
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 | 7% - 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 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
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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.
• 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.
(ii) Leasehold investments
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.
(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:
• If the transaction is established at fair value, any profit and loss on the sale is recognized
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
immediately in the consolidated statement of profit and loss for the year;
• If the sale price is below fair value, any profit and loss is recognized immediately in the consolidated statement of profit and loss. However, if the loss is compensated for by future lease payments at below market price, it is deferred in proportion to the lease payments over the period for which the asset is to be used.
(i) Classification of financial instruments
Financial instruments are classified on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, a financial asset and an equity instrument set out in IAS 32, Financial Instruments: Presentation.
Financial instruments are classified into the following categories for valuation purposes: financial assets and financial liabilities at fair value through profit and loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets and financial liabilities. Financial instruments are classified into different categories based on the nature of the instruments and the Group's intentions on initial recognition.
Regular way purchases and sales of financial assets are recognized using trade date accounting, i.e. when the Group commits itself to purchase or sell an asset.
a) Financial assets and liabilities at fair value through profit and loss
Financial assets and financial liabilities at fair value through profit and loss are those which are classified as held for trading or which the Group designated as such on initial recognition.
A financial asset or financial liability is classified as held for trading if:
• It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
• It forms 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 financial liabilities at fair value through profit and loss are initially recognized at fair value. Transaction costs directly attributable to the acquisition or issue are recognized as an expense when incurred.
After initial recognition, they are recognized at fair value through profit and loss.
The Group does not reclassify any financial assets or liabilities from or to this category while they are recognized in the consolidated balance sheet.
b) Loans and receivables
Loans and receivables are non-derivative financial assets 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 recognized initially at fair value, including transaction costs, and subsequently measured at amortized cost using the effective interest method.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
c) Financial assets and financial liabilities carried at cost
Investments in equity instruments whose fair value cannot be reliably measured and derivative instruments that are linked to these instruments and that must be settled by delivery of such unquoted equity instruments, are measured at cost. Nonetheless, if the financial assets or liabilities can be reliably measured subsequently on an ongoing basis, they are accounted for at fair value and any gain or loss is recognized in accordance with their classification.
(ii) Offsetting principles
A financial asset and a financial liability are offset only when the Group currently has the legally enforceable right to offset the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
(iii) Fair value
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorized within different levels of a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
• Level 2: inputs other than prices included in Level 1 that are observable for the asset or liability, either directly (i.e. derived from prices) or indirectly.
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability are categorized within different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
(iv) Amortized cost
The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction for impairment or uncollectibility.
(v) Impairment of financial assets carried at cost
The amount of the impairment loss on assets carried at cost is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses cannot be reversed and are therefore recognized directly against the value of the asset and not as an allowance account.
(vi) Impairment of financial assets carried at amortized cost
In the case of financial assets carried at amortized cost, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. For variable income financial assets, the effective interest rate corresponding to the measurement date under the contractual conditions is used.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Group recognizes impairment losses and unrecoverable loans and receivables and debt instruments by recognizing an allowance account for financial assets. When impairment and uncollectibility are considered irreversible, their carrying amount is eliminated against the allowance account.
The impairment loss is recognized in profit and loss and may be reversed in subsequent periods if the decrease can be objectively related to an event occurring after the impairment has been recognized. The loss can only be reversed to the limit of the amortized cost of the assets had the impairment loss not been recognized. The impairment loss is reversed against the allowance account.
Available for sale financial assets are those non-derivative financial assets that are designated as available for sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit and loss.
A financial asset that the Group pretends to held to maturity or that it is a loan or receivable can also be designated as available for sale in the initial recognition. This category usually includes all debt securities traded on active markets that have not been designated as held-to-maturity, as well as equity investments that have not been classified as fair value through profit and loss.
A gain or loss on an available for sale financial asset shall be recognized in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognized.
When a decline in the fair value of an available for sale financial asset has been recognized in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized in other comprehensive income shall be reclassified from equity to profit and loss as a reclassification adjustment even though the financial asset has not been derecognized.
Financial liabilities, including trade and other payables, which are not classified at fair value through profit and loss, are initially recognized at fair value less any transaction costs that are directly attributable to the issue of the financial liability. After initial recognition, liabilities classified under this category are measured at amortized cost using the effective interest method.
The Group applies the criteria for derecognition of financial assets to part of a financial asset or part of a group of similar financial assets or to a financial asset or group of similar financial assets.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Where the Group retains the contractual rights to receive cash flows, it only derecognizes financial assets when it has assumed a contractual obligation to pay the cash flows to one or more recipients and if the following requirements are met:
• The cash flows collected on behalf of the eventual recipients are remitted without material delay and the Group is not entitled to reinvest the cash flows. This criterion is not applicable to investments in cash or cash equivalents made by the Group during the settlement period from the collection date to the date of required remittance to the eventual recipients, provided that interest earned on such investments
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
is passed on to the eventual recipients.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, it determines whether it has retained control of the financial asset. In this case:
• If the Group has not retained control, it derecognizes the financial asset and recognizes separately as assets or liabilities any rights and obligations created or retained in the transfer.
• If the Group has retained control, it continues to recognise the financial asset to the extent of its continuing involvement in the financial asset and recognizes an associated liability. The extent of the Group's continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. The associated liability is measured in such a way that the carrying amount of the transferred asset and the associated liability is equal to the amortized cost of the rights and obligations retained by the Group, if the transferred asset is measured at amortized cost, or to the fair value of the rights and obligations retained by the Group, if the transferred asset is measured at fair value. The Group continues to recognise any income arising on the transferred asset to the extent of its continuing involvement and recognizes any expense incurred on the associated liability. Recognized changes in the fair value of the transferred asset and the associated liability are accounted for consistently with each other in profit and loss or equity, following the general recognition criteria described previously, and are not offset.
If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the consideration received is recognized in liabilities. Transaction costs are recognized in profit and loss using the effective interest method.
A financial liability, or part of it, is derecognized when the Group 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 Group and the counterparty or substantial modifications of initially recognized liabilities are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability, providing the instruments have substantially different terms.
The Group considers the terms are 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.
If the exchange is accounted for as an extinguishment of the financial liability, any costs or fees incurred are recognized 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 amortized 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 recognized in profit and 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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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.
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
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
to the lower of the cost and revised net realizable value of the inventories. Write-downs may be reversed with a credit to "Changes in inventories of finished goods and work in progress" and "Supplies".
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.
(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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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.
(iii) Short-term employee benefits
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.
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.
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 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 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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Revenue from the sale of goods or services is measured at the fair value of the consideration received or receivable. Revenue is presented net of VAT and any other amounts or taxes which are effectively collected on the behalf of third parties. Volume or other types of discounts for prompt payment are recognized as a reduction in revenues if considered probable at the time of revenue recognition.
(i) Sale of goods
The Group recognizes revenue from the sale of goods when:
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.
(ii) Services rendered
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,
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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 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.
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;
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
• 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.
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.
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
• 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:
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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 losses incurred 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.
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 consists in 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.
On 18 April 2017 the Group concluded the refinancing process of the Senior Unsecured Notes. The total bond issuance amounted to Euros 1,000 million.
On 5 December 2017 the Group has received an additional loan from the European Investment Bank of up to Euros 85 million at a fixed interest rate for a period of ten years with a grace period of two 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 with the same entity and conditions for a total amount of Euros 100 million. At 31 December 2017, the amount in books for the loan received in 2015 is Euros 85 million.
At 31 December 2017 the Group has total cash and cash equivalents of Euros 887 million (Euros 895 million at 31 December 2016). The Group also has approximately Euros 381 million in unused credit facilities, including Euros 250 million on the revolving credit facility.
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 those countries with long collection periods.
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Group 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 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.
Details of the Group's exposure to currency risk at 31 December 2017 and 2016 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 56% of the Group's total debt in Euros. The additional loans of Euros 170 million received from the European Investment Bank represent approximately 10% 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 2017 and 31 December 2016.
Total fixed-interest debt represents a total of 19% of debt at 31 December 2017 (21% at 31 December 2016 considering total fixed-interest debt).
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). In 2017, the ROE stood at 18% (15% in December 2016). The ROE is calculated by dividing profit attributable to the Parent by the equity attributable to the Parent.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Thousand of Euros | |||
|---|---|---|---|
| 2016 | 2017 | ||
| Profit attributable to the parent | 545,456 | 662,700 | |
| Equity attributable to the Parent | 3,727,978 | 3,633,695 | |
| ROE | 15% | 18% |
The Parent held Class A and B treasury stock equivalent to 0.6% of its capital at 31 December 2017 (0.7% at 31 December 2016). The Group does not have a formal plan for repurchasing shares.
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:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
• Others: including the rendering of manufacturing services to third party companies.
As a result of the creation of the new Bio Supplies segment and Intersegments, the Group has reviewed the allocation of balances and transactions by segments. The comparative figures for years 2016 and 2015 have been restated accordingly.
Details of net sales by groups of products for 2017, 2016 and 2015 are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | ||
| Bioscience | ||||
| Haemoderivatives | 3,429,785 | 3,228,275 | 3,032,111 | |
| Diagnostic | ||||
| Transfusional medicine | 679,692 | 640,443 | 667,886 | |
| Other diagnostic | 23,377 | 23,540 | 23,566 | |
| Hospital | ||||
| Fluid therapy and nutrition | 47,699 | 46,210 | 45,621 | |
| Hospital supplies | 52,466 | 52,373 | 50,624 | |
| Bio supplies | 66,791 | 24,387 | 24,466 | |
| Others | 18,263 | 34,602 | 90,289 | |
| Total | 4,318,073 | 4,049,830 | 3,934,563 |
The Group has concluded that the haemoderivative 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.
Revenues from a Bioscience segment customer represent approximately 11.0% of the Group's total revenues (10.7% in 2016 and 10.1% in 2015).
(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 2016 are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| Balance at | Translation | Balance at | ||
| Segment | 31/12/2015 | differences | 31/12/2016 | |
| Net value | ||||
| Grifols UK.Ltd. (UK) | Bioscience | 9,362 | (1,337) | 8,025 |
| Grifols Italia.S.p.A. (Italy) | Bioscience | 6,118 | -- | 6,118 |
| Biomat USA, Inc.(USA) | Bioscience | 186,907 | 6,132 | 193,039 |
| Grifols Australia Pty Ltd. | ||||
| (Australia) / Medion Diagnostics AG | Diagnostic | 9,961 | 173 | 10,134 |
| (Switzerland) | ||||
| Grifols Therapeutics, Inc. (USA) | Bioscience | 2,041,137 | 67,002 | 2,108,139 |
| Araclon Biotech, S.L. (Spain) | Diagnostic | 6,000 | -- | 6,000 |
| Progenika Biopharma, S.A. (Spain) | Diagnostic | 40,516 | -- | 40,516 |
| Grifols Diagnostic (Novartis) (USA, Switzerland and Hong Kong) |
Diagnostic | 1,232,358 | 39,666 | 1,272,024 |
| 3,532,359 | 111,636 | 3,643,995 |
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) |
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Since the acquisition of Novartis' Diagnostic business unit in 2014, the Group combines Araclon, Progenika, Australia and recently 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 crossselling 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., the Group has decided to group Kiro Grifols S.L. and Laboratorios Grifols S.L. into a single CGU for the Hospital business since the acquisition is 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 2016 were as follows:
| Perpetual Growth rate Pre-tax discount rate | ||
|---|---|---|
| Bioscience | 2% | 8.60% |
| Diagnostic | 2% | 10.30% |
The key assumptions used in calculating impairment of the CGUs for 2017 have been as follows:
| Perpetual Growth rate Pre-tax discount rate | |||
|---|---|---|---|
| Bioscience | 2% | 9.50% | |
| Diagnostic | 2% | 10.60% | |
| Hospital | 1.40% | 13.30% |
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 acquisition of Hologic's NAT donor screening unit share and the acquisition for an additional stake of Kiro Grifols S.L. are recent transactions and as the recoverable amount of the Bioscience CGU is much higher than the
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
carrying amount of the Bioscience segment's net assets, specific information from the impairment test sensitivity analysis is not included.
At 31 December 2017 Grifols' stock market capitalization totals Euros 15,379 million (Euros 12,020 million at 31 December 2016).
Details of other intangible assets and movement during the years ended 31 December 2017 and 2016 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 are 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 2016 is as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| Balance at 31/12/2015 |
Additions | Translation differences |
Balance at 31/12/2016 |
|
| Cost of currently marketed products - Gamunex | 1,102,232 | -- | 36,180 | 1,138,412 |
| Cost of currently marketed products - Progenika | 23,792 | -- | -- | 23,792 |
| Accumulated amortisation of currently marketed products - Gamunex |
(168,397) | (36,062) | (7,412) | (211,871) |
| Accumulated amortisation of currently marketed products - Progenika |
(6,738) | (2,379) | -- | (9,117) |
| Carrying amount of currently marketed products | 950,889 | (38,441) | 28,768 | 941,216 |
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 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 2017 the residual useful life of currently marketed products is 23 years and 5 months (24 years and 5 months at 31 December 2016).
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 2017 the residual useful life of currently marketed products acquired from Progenika is 5 years and 2 months (6 years and 2 months at 31 December 2016).
At 31 December 2017 the Group has recognized Euros 49,782 thousand as self-constructed intangible assets (Euros 29,034 thousand at 31 December 2016).
At 31 December 2017 the Group has intangible asset purchase commitments amounting to Euros 1,199 thousand (Euros 639 thousand at 31 December 2016).
At 31 December 2017 the Group has plasma center licenses with indefinite useful lives under intangible assets for a carrying amount of Euros 26,631 thousand (Euros 30,075 thousand at 31 December 2016).
The Group has also an amount of Euros 183,281 thousand as development costs in progress (Euros 52,272 thousand at 31 December 2016). The main variance corresponds to the assets acquired from Hologic´s business combination (see note 3(a)).
The Group has recognized an amount of Euros 4,235 thousand corresponding to payments relating to license rights due to the Aradigm acquisition (no amount was recognized at 31 December 2016).
Total losses incurred on disposals of intangible assets in 2017 amount to Euros 83 thousand (Euros 7,198 thousand of profit in 2016).
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.
As the Antimicrobial Drugs Advisory Committee of the US Food and Drug Administration did not recommend the approval for LinahiqTM as a treatment for non-cystic fibrosis bronchiectasis patients with chronic lung Pseudomonas aeruginosa infections, the intangible assets referred to it have been totally impaired. As a consequence, the group has impaired a total amount of Euros 63,675 thousand related to this product. This amount has been recognized in the Profit and Loss Statement as a R&D expense. Even that, the company has impaired the investment in this company and the convertible bonds (see notes 10 and 11(a)).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of property, plant and equipment and movement in the consolidated balance sheet at 31 December 2017 and 2016 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 2017 and 2016 mainly comprise investments made to extend the companies' equipment and to increase their productive capacity.
In 2017, the Group has capitalized interests for a total amount of Euros 8,839 thousand (Euros 13,019 thousand in 2016)
Group policy is to contract sufficient insurance coverage for the risk of damage to property, plant and equipment. At 31 December 2017 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 2017 amount to Euros 1,468 thousand (Euros 4,021 thousand in 2016).
The Group contracted the following types of property, plant and equipment under finance leases at 31 December 2016:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| Cost | Accumulated depreciation |
Carrying amount | |||
| Land and buildings | 2,213 | (1,421) | 792 | ||
| Plant and machinery | 13,336 | (4,784) | 8,552 | ||
| 15,549 | (6,205) | 9,344 |
The Group has 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 |
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 2017 the Group has recognized Euros 52,218 thousand as self -constructed property, plant and equipment (Euros 68,529 thousand at 31 December 2016).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At 31 December 2017 the Group has property, plant and equipment purchase commitments amounting to Euros 39,675 thousand (Euros 39,773 thousand at 31 December 2016).
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 12.2% and a perpetual growth rate of 2% (10.3% and 2% respectively in fiscal year 2016).
Details of this caption in the consolidated balance sheet at 31 December 2017 and 2016 are as follows:
| Thousands of Euros |
Thousands of Euros |
|||
|---|---|---|---|---|
| % ownership | 31/12/2017 | % ownership | 31/12/2016 | |
| Aradigm Corporation | 35.13% | -- | 35.13% | 9,291 |
| Kiro Grifols, S.L (see note 3(b | 90.00% | -- | 50.00% | 13,888 |
| Alkahest, Inc. | 47.58% | 30,559 | 47.58% | 35,955 |
| Albajuna Therapeutics, S.L | 30.00% | 1,956 | 30.00% | 3,177 |
| Interstate Blood Bank, Inc. | 49.19% | 27,936 | 49.19% | 31,090 |
| Bio Blood Components Inc. | 48.97% | 32,960 | 48.97% | 38,725 |
| Plasma Biological Services, LL | 48.90% | 23,010 | 48.90% | 25,890 |
| Singulex, Inc. | 19.33% | 29,322 | 20.00% | 43,329 |
| GigaGen, Inc | 43.96% | 29,047 | -- | -- |
| Access Biologicals LLC | 49.00% | 44,219 | -- | -- |
| Aigües de Vilajuïga S.A. | 50.00% | -- | -- | -- |
| 219,009 | 201,345 |
Movement in the investments in equity-accounted investees for the years ended at 31 December 2017, 2016 and 2015 have been as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 2017 | 2016 | 2015 | |
| Balance at 1 January | 201,345 | 76,728 | 54,296 |
| Acquisitions | 80,685 | 136,072 | 33,039 |
| Transfers | (16,000) | (29,059) | -- |
| Share of profit / (losses) Share of other comprehensive income / |
(13,195) | 6,933 | (8,280) |
| translation differences | (27,134) | 10,671 | 2,673 |
| Losses for Impairment | (6,692) | -- | -- |
| Collected dividends | -- | -- | (5,000) |
| Balance at 31 December | 219,009 | 201,345 | 76,728 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
On 5 July 2017, Grifols through its 100% subsidiary Grifols Innovation and New Technologies Limited ("GIANT"), has 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 have also 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.
The summarized financial information of GigaGen, Inc. corresponding to the last available financial statements is included below with the carrying amount of the Group's interest. Information regarding the income statement is included only from the date of acquisition of the participation.
| Thousand of Euros | Thousand of USD | ||
|---|---|---|---|
| 31/12/2017 | 31/12/2017 | ||
| Non-current assets | 404 | 484 | |
| Current assets | 21,910 | 26,277 | |
| Current liabilities | (180) | (216) | |
| Total net assets (100%) | 22,134 | 26,545 | |
| Group's share of net assets (43.96%) | 9,730 | 11,669 | |
| Profit from continuing operations (100%) | (1,830) | (2,183) | |
| Group's share of total comprehensive income (43.96%) | (804) | (960) |
A reconciliation of the summarized financial information with the carrying amount of the Group's interest is as follows:
| Thousand of Euros | ||
|---|---|---|
| 31/12/2017 | ||
| Group's share of net assets | 9,730 | |
| Goodwill of equity method investment | 19,317 | |
| Equity method accounted investment | 29,047 | |
(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 year ended 31 December 2017 is as follows:
| Thousand of Euros | ||
|---|---|---|
| 31/12/2017 | ||
| Balance at 1 January | -- | |
| Acquisitions | 31,752 | |
| Share of profit / (losses) | (804) | |
| Share of other comprehensive income / translation differences | (1,595) | |
| Impairment Losses | (306) | |
| Balance at 31 December | 29,047 |
On 12 January 2017, the group has 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 Dollar 51 million. Grifols has entered into an option agreement to purchase the remaining 51% voting rights in five years, in 2022. Grifols has also signed 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.
The summarized financial information of Access Biologicals LLC. corresponding to the last available financial statements is included below with the carrying amount of the Group's interest. Information regarding the income statement is included only from the date of acquisition of the participation.
| Thousand of Euros 31/12/2017 |
Thousand of USD 31/12/2017 |
|
|---|---|---|
| Non-current assets | 1,221 | 1,464 |
| Current assets | 14,422 | 17,296 |
| Non-current liabilities | (1,284) | (1,540) |
| Current liabilities | (3,023) | (3,626) |
| Total net assets (100%) | 11,336 | 13,594 |
| Group's share of net assets (49%) | 5,555 | 6,661 |
| Profit from continuing operations (100%) | 3,734 | 4,129 |
| Group's share of total comprehensive income (49%) | 1,830 | 2,023 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
A reconciliation of the summarized financial information with the carrying amount of the Group's interest is as follows:
| Thousand of Euros | |
|---|---|
| 31/12/2017 | |
| Group's share of net assets | 5,555 |
| Goodwill of equity method investment | 38,664 |
| Equity method accounted investment | 44,219 |
Movement in Access Biological's equity-accounted investment for the year ended 31 December 2017 is as follows:
| Thousand of Euros | |
|---|---|
| 31/12/2017 | |
| Balance at 1 January | -- |
| Acquisitions | 48,383 |
| Share of profit / (losses) | 1,830 |
| Share of other comprehensive income / translation differences | (5,994) |
| Balance at 31 December | 44,219 |
Aradigm
As the Antimicrobial Drugs Advisory Committee of the US Food and Drug Administration did not recommend the approval for LinahiqTM as a treatment for non-cystic fibrosis bronchiectasis patients with chronic lung Pseudomonas aeruginosa infections, the investment in Aradigm have been totally impaired. Consequently, the investment in Aradigm has been fully impaired for an amount of Euros 5,386 thousand in the statement of profit and loss.
Movement in the investment in Aradigm for the year ended 31 December 2017 and 31 December 2016 is as follows:
| Thousand of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Balance at 1 January | 9,291 | 19,799 | |
| Share of profit / (losses) | (4,324) | (10,185) | |
| Share of other comprehensive income / translation differences | 869 | (323) | |
| Impairment losses | (5,836) | -- | |
| Balance at 31 December | -- | 9,291 |
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
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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.
Movement in Singulex, Inc.'s equity-accounted investment for the years ended 31 December 2016 and December 2017 is as follows:
| Thousand of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Balance at 1 January | 43,329 | -- | |
| Acquisitions | -- | 44,107 | |
| Share of profit / (losses) | (9,335) | (3,890) | |
| Share of other comprehensive income / translation differences | (4,672) | 3,112 | |
| Balance at 31 December | 29,322 | 43,329 |
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 2016 and 2017 is as follows:
| Thousands of Euros 31/12/2017 |
Thousands of Euros | |||||
|---|---|---|---|---|---|---|
| 31/12/2016 | ||||||
| IBBI | Bio-Blood | PBS | IBBI | Bio-Blood | PBS | |
| Balance at 1 January | 31,090 | 38,725 | 25,890 | -- | -- | -- |
| Acquisitions | -- | -- | -- | 28,229 | 36,168 | 23,818 |
| Share of profit / (losses) | 635 | (1,181) | 270 | 695 | (166) | 260 |
| Share of other comprehensive income / translation differences | (3,789) | (4,584) | (3,150) | 2,166 | 2,723 | 1,812 |
| Balance at 31 December | 27,936 | 32,960 | 23,010 | 31,090 | 38,725 | 25,890 |
In January 2016, Grifols acquired 30% of the equity of AlbaJuna Therapeutics, S.L. for Euros 3.75 million in the form of a cash payment to finance the development and production of therapeutic antibodies against HIV. The initial investment will be increased upon achievements of agreed development milestones through two payments for a total amount of Euros 7.25 million.
AlbaJuna Therapeutics is a spin-off from the AIDS Investigation Institute IrsiCaixa, jointly driven by Obra Social "la Caixa" and the Generalitat de Catalunya's Department of Health. It was founded to promote the preclinical and clinical development of monoclonal antibodies that both neutralize the HIV action in the human body and increase the activity of natural killer cells, which are responsible for the destruction of infected cells.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
On 25 July 2017 the Group subscribed a capital increase in Kiro Grifols, S.L (formerly Kiro Robotics, S.L.) for an amount of Euros 12.8 million, which represents 40% of the voting and economic rights of Kiro Grifols. With this new operation, Grifols owns a total of 90% of the voting and economic rights of 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)).
Details of non-current financial assets on the consolidated balance sheet at 31 December 2017 and 2016 are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Convertible Bond (a) | -- | 15,201 | |
| Non-current derivatives (b) (see note 30) | 8,338 | 13,665 | |
| Non-current investment in quoted shares (see note 30) | 38,708 | 29,998 | |
| Total Non-current financial assets measured at fair value | 47,046 | 58,864 | |
| Convertible Bond (a) | -- | 25,000 | |
| Non-current guarantee deposits | 4,820 | 4,603 | |
| Other non-current financial assets | 1,346 | 1,078 | |
| Non-current loans to EEAA (c) (see note 31) | 16,677 | -- | |
| Total Non-current financial assets measured at amortized cost | 22,843 | 30,681 |
Details of other current financial assets on the consolidated balance sheet at 31 December 2017 and 2016 are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | |||
| Deposits and guarantees | 702 | 957 | ||
| Current loans to third parties | 59 | 832 | ||
| Current loans to associates (see note 31) | 9,977 | 793 | ||
| Total other current financial assets | 10,738 | 2,582 |
On 22 April 2016, the Group's subsidiary, Grifols Worldwide Operations Limited, subscribed convertible bonds for an amount of US Dollars 19,950 thousand (Euros 17,997 thousand) issued by Aradigm that bear at an interest rate of 9% and mature in 2021. The Group indirectly owns 35.13% of the common stock of Aradigm. Interest on the convertible bonds is payable on 1 May and 1 November of each year. At the date of these consolidated annual accounts Aradigm has paid the Group an amount of Euros 1,601 thousand on the convertible bonds (Euros 839 thousand at 31 December 2016). Upon the events described in the indenture governing the convertible bonds, the convertible bonds are convertible into common stock of Aradigm. At the date of these consolidated annual accounts, the conversion rate is 191.94 shares of Aradigm common stock per US Dollar 1,000 principal amount of convertible bonds.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
As mentioned in note 8 (a), as the Antimicrobial Drugs Advisory Committee of the US Food and Drug Administration did not recommend approval for LinahiqTM as a treatment for non-cystic fibrosis bronchiectasis patients with chronic lung Pseudomonas aeruginosa infections, the Group has decided to impair all the financial assets referred to it. As a consequence, the financial assets related to the convertible bond of Aradigm have been impaired for a total amount of Euros 14,477 thousand (see note 26). This amount has been recognized in the Profit or Loss Statement as a financial result.
On February 2, 2017 Grifols Worldwide Operations Limited sold to Nomura International PLC the convertible bonds issued by TiGenix that the Group subscribed on March 6, 2015. The settlement amount was Euros 20.5 million resulting in a loss of Euros 5.5 million.
Non-current derivatives includes an amount of Euros 8,338 thousand in respect of the call right for the Interstate Blood Bank, Inc. shares, Bio-Blood Components, Inc. shares and Plasma Biological Services, LLC. units that are not owned by the Group. The call right can be exercised by the Group by delivering written notice of its intention at any time on or after February 1, 2019 and on or before April 30, 2019 (see note 11 (a)).
On December 31, 2017 the implicit derivative to the right of the convertible bond of Aradigm have been totally impaired due to the resolution of the Antimicrobial Drugs Advisory Committee of the US Food and Drug Administration. As a consequence, it has been recognized a financial impairment in the Profit and Loss Statement for a total amount of Euros 3,672 thousand.
On 2 October 2017 the Group's subsidiary Grifols Diagnostic Solutions, Inc. subscribed notes for an amount of US Dollars 20,000 thousand (Euros 16,676 thousand) issued by Singulex, Inc., that bear at an interest rate of 5% and mature in September 19, 2019. The Group indirectly owns 19.33 % of the common stock of Singulex Inc.
Details of inventories at 31 December 2017 and 2016 are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Goods for resale | 105,013 | 166,272 | |
| Raw materials and supplies | 454,371 | 423,326 | |
| Work in progress and semi-finished goods | 592,612 | 584,279 | |
| Finished goods | 477,297 | 469,054 | |
| 1,629,293 | 1,642,931 |
Movement in the inventory provision was as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |
| Balance at 1 January | 33,069 | 22,614 | 15,888 |
| Net charge for the year | 8,232 | 8,878 | 6,099 |
| Cancellations for the year | (357) | (20) | (195) |
| Translation differences | (5,180) | 1,597 | 822 |
| Balance at 31 December | 35,764 | 33,069 | 22,614 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details at 31 December 2017 and 2016 are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Trade receivables | 302,685 | 431,510 | |
| Receivables from associates (note 31) | 3,219 | 133 | |
| Bad debt provision (note 30) | (19,706) | (17,987) | |
| Trade receivables | 286,198 | 413,656 | |
| Other receivables (note 30) | 7,485 | 13,705 | |
| Personnel | 566 | 280 | |
| Advance payments (note 30) | 11,181 | 6,775 | |
| Taxation authorities, VAT recoverable | 20,105 | 17,768 | |
| Other public entities | 1,344 | 3,771 | |
| Other receivables | 40,681 | 42,299 | |
| Current income tax assets | 59,531 | 77,713 | |
| 386,410 | 533,668 |
During 2017, 2016 and 2015 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 1,800 thousand at 31 December 2017 (Euros 2,560 thousand at 31 December 2016), 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 2017 amount to Euros 912 million (Euros 870 million in 2016).
The finance cost of these operations for the Group totals approximately Euros 3,973 thousand which has been recognized under finance result in the consolidated statement of profit and loss for 2017 (Euros 4,885 thousand in 2016 and Euros 6,512 thousand in 2015) (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 2017 and 2016 are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Current deposits | 655,463 | 470,298 | |
| Cash in hand and at banks | 231,058 | 424,711 | |
| Total cash and cash equivalents | 886,521 | 895,009 |
Details of consolidated equity and movement are shown in the consolidated statement of changes in equity.
At 31 December 2017 and 2016, the Company's share capital amounts to Euros 119,603,705 and comprises:
On 4 January 2016 the Company's new shares resulting from the share split ruling on 3 December 2015 by the Company's board of directors started to be traded in accordance with the delegation of authorities by the shareholders at the general shareholders' meeting held on 29 May 2015.
The main characteristics of the Class B shares are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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.
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 2017 and 2016.
At 31 December 2017 and 2016, the number of outstanding shares is equal to the total number of Company shares, less treasury stock.
Movement in outstanding shares during 2016 is as follows:
| Class A shares | Class B shares | |
|---|---|---|
| Balance at 1 January 2016 | 426,129,798 | 257,386,540 |
| (Acquisition) / disposal of treasury stock (note 15 (d)) | -- | (692,165) |
| Balance at 31 December 2016 | 426,129,798 | 256,694,375 |
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 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 2017, Euros 40,061 thousand equivalent to the carrying amount of development costs pending amortization of certain Spanish companies (Euros 50,680 thousand at 31 December 2016) (see note 8) are, in accordance with applicable legislation, restricted reserves which cannot be distributed until these development costs have been amortized.
In May 2015 the company sold 1,967,265 treasury stocks (Class A Shares), generating a profit of Euros 2 million, recognized in reserves.
In June 2015 Araclon Biotech, S.L. increased capital by an amount of Euros 6 million. As a result, the Group has increased its investment from 66.15% to 70.83%. The difference between the share capital increase carried out by the Group and the non-controlling interest had been recognized as a Euros 1.77 million decrease in reserves.
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,
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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.
At 31 December 2017 and 2016 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 2017 and 2016 the legal reserve of the Company amounts to Euros 23,921 thousand.
Distribution of the legal reserves of Spanish companies is subject to the same restrictions as those of the Company and at 31 December 2017 the balance of the legal reserve of other Spanish companies amounts to Euros 2,416 thousand (Euros 1,485 thousand at 31 December 2016).
Other foreign Group companies have a legal reserve amounting to Euros 731 thousand at 31 December 2017 (Euros 650 thousand at 31 December 2016).
At 31 December 2017 and December 2016 the Company does not have any Class A treasury stock.
Movement in Class B treasury stock during 2016 is as follows:
| No. of Class B shares | Thousands of Euros | |
|---|---|---|
| Balance at 1 January 2016 | 4,038,570 | 58,575 |
| Acquisition of Class B shares Non Cash Disposal Class B shares |
1,628,893 (936,728) |
23,720 (13,585) |
| Balance at 31 December 2016 | 4,730,735 | 68,710 |
In July 2016 the Company delivered 59,951 treasury stocks (Class B Shares) to Medion´s non-controlling interests in exchange for the 20% acquired from them.
In March 2016 the Company delivered 876,777 treasury stocks (Class B Shares) to Progenika´s noncontrolling interests in exchange for the 16.46% acquired from them (see note 2(b)).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Class B share acquisitions included the purchase of the Class B shares from the vendor shareholders of Progenika for which Grifols exercised the cash option for an amount of Euros 11,035 thousand. This amount had been considered as cash used in investing activities in the statement of cash flows
Movement in Class B treasury stock during 2017 is 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 |
In March 2017 the company delivered 432,929 treasury stocks (Class B shares) to eligible employees as a compensation of 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 2017 (0.7% at 31 December 2016).
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 2017, and the distribution approved for 2016, presented at the general meeting held on 26 May 2017, is as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | |||
| Legal Reserve | -- | -- | ||
| Voluntary reserve | 76,247 | 103,611 | ||
| Dividends | 265,080 | 218,182 | ||
| Profit of the Parent | 341,327 | 321,793 |
The following dividends were paid in 2016:
| 31/12/2016 | ||||
|---|---|---|---|---|
| % of par value | Euros per share | Thousands of Euros | ||
| Ordinary shares | 53% | 0.13 | 56,493 | |
| Non-voting shares | 265% | 0.13 | 34,136 | |
| Non-voting shares (preferred dividend) | 20% | 0.01 | 2,614 | |
| Total dividends paid | 93,243 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/2016 | ||||
|---|---|---|---|---|
| % 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 | 46,205 | |
| Total interim dividends paid | 122,908 | |||
| 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 |
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.
At the meeting held on 28 October 2016, the Board of Directors of Grifols approved the distribution of interim dividend for 2016 of Euros 0.18 for each Class A and B share, recognizing a total of Euros 122.908 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 26 May 2017 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 2016 and 2017 is presented in the consolidated statement of changes in equity.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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 13,871 thousand (Euros 7,946 thousand in 2016).
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 | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | |||
| Profit for the year attributable to shareholders of the Parent (thousands of Euros) |
662,700 | 545,456 | 532,145 | |
| Weighted average number of ordinary shares outstanding | 684,197,276 | 683,225,815 | 683,549,316 | |
| Basic earnings per share (Euros per share) | 0.97 | 0.80 | 0.78 |
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 | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | ||
| Issued shares outstanding at 1 January | 683,854,491 | 683,516,338 | 683,610,378 | |
| Effect of shares issued | -- | -- | -- | |
| Effect of treasury stock | 342,785 | (290,523) | (61,062) | |
| Average weighted number of ordinary shares outstanding (basic) at 31 December |
684,197,276 | 683,225,815 | 683,549,316 |
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 | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |
| Profit for the year attributable to shareholders of the Parent (thousands of Euros) Weighted average number of ordinary shares outstanding (diluted) |
662,700 684,243,891 |
545,456 684,170,887 |
532,145 683,924,426 |
| Diluted earnings per share (Euros per share) | 0.97 | 0.80 | 0.78 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The weighted average number of ordinary shares outstanding diluted has been calculated as follows:
| Number of shares | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | ||
| Issued shares outstanding at 1 January | 683,854,491 | 683,988,460 | 683,610,378 | |
| Effect of RSU shares | 46,615 | 472,950 | 375,110 | |
| Effect of shares issued | -- | -- | -- | |
| Effect of treasury stock | 342,785 | (290,523) | (61,062) | |
| Average weighted number of ordinary shares outstanding (diluted) at 31 December |
684,243,891 | 684,170,887 | 683,924,426 |
Details of non-controlling interests and movement at 31 December 2016 are as follows:
Thousands of Euros
| Balance at 31/12/2015 Additions |
Disposals | Capital increases | Translation differences |
Balance at 31/12/2016 |
||
|---|---|---|---|---|---|---|
| Grifols (Thailand) Pte Ltd | 2,664 | 778 | (215) | -- | 127 | 3,354 |
| Grifols Malaysia Sdn Bhd | 1,040 | 144 | -- | -- | (12) | 1,172 |
| Araclon Biotech, S.A. | 183 | (1,819) | -- | 1,776 | -- | 140 |
| Medion Grifols Diagnostic AG |
(406) | -- | 406 | -- | -- | -- |
| GRI-CEI S/A Productos para transfusao |
1,146 | -- | (1,146) | -- | -- | -- |
| Progenika Biopharma, S.A. | 1,093 | 165 | -- | -- | (47) | 1,211 |
| Brainco Biopharma, S.L. | (373) | -- | 373 | -- | -- | -- |
| Abyntek Biopharma, S.L. | (93) | 20 | -- | -- | -- | (73) |
| VCN Bioscience, S.L | (67) | (201) | -- | 961 | -- | 693 |
| 5,187 | (913) | (582) | 2,737 | 68 | 6,497 |
(see note 2(b))
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 |
(see note 2(b))
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details are as follows:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2017 | 31/12/2016 | |
| 11,010 | 11,311 | |
| 812 | 885 | |
| 11,822 | 12,196 | |
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 of Euros 323 thousand have been transferred to the consolidated statement of profit and loss during the year ended 31 December 2017 (Euros 1,154 thousand at 31 December 2016 and Euros 1,227 thousand at 31 December 2015).
Details of provisions at 31 December 2017 and 2016 are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| Non-current provisions (a) | 31/12/2017 | 31/12/2016 | ||
| Provisions for pensions and similar obligations | 4,742 | 4,195 | ||
| Other provisions | 1,021 | 923 | ||
| Non-current provisions | 5,763 | 5,118 |
| Thousands of Euros | ||||
|---|---|---|---|---|
| Current provisions (b) | 31/12/2017 | 31/12/2016 | ||
| Trade provisions | 106,995 | 89,588 | ||
| Current provisions | 106,995 | 89,588 |
At 31 December 2017, 2016 and 2015 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 2015 is as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Balance at 31/12/2014 |
Net Charge | Cancellations | Reclassifications | Translation differences |
Balance at 31/12/2015 |
|||
| Non-current provisions |
6,953 | 376 | (1,598) | (600) | (151) | 4,980 | ||
| 6,953 | 376 | (1,598) | (600) | (151) | 4,980 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Movement in provisions during 2016 is 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 is 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 trade provisions during 2015 is as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Balance at 31/12/2014 |
Net Charge | Cancellations | Reclasifications | Translation differences |
Balance at 31/12/2015 |
|||
| Trade provisions |
115,985 | (2,562) | (6,123) | 492 | 15,257 | 123,049 | ||
| 115,985 | (2,562) | (6,123) | 492 | 15,257 | 123,049 |
Movement in trade provisions during 2016 is as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Balance at 31/12/2015 |
Net Charge | Cancellations | Translation differences |
Balance at 31/12/2016 |
||||
| Trade provisions |
123,049 | (28,481) | (6,417) | 1,437 | 89,588 | |||
| 123,049 | (28,481) | (6,417) | 1,437 | 89,588 |
Movement in trade provisions during 2017 is as follows:
| Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|
| Balance at 31/12/2016 |
Business combination |
Net Charge | Cancellations Reclasifications | 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 | |
| (See note 3(a)) |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
This note provides information on the contractual conditions of the loans obtained by the Group, 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.
Details at 31 December 2017 and 2016 are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| Financial liabilities | 31/12/2017 | 31/12/2016 | ||
| Non-current obligations (a) | 853,667 | 831,417 | ||
| Senior secured debt (b) | 4,849,882 | 3,728,695 | ||
| Other loans (b) | 169,214 | 114,898 | ||
| Finance lease liabilities (c) | 5,415 | 6,086 | ||
| Other non-current financial liabilities (e) | 23,637 | 30,975 | ||
| Total non-current financial liabilities | 5,901,815 | 4,712,071 | ||
| Current obligations (a) | 95,538 | 95,524 | ||
| Senior secured debt (b) | 4,057 | 81,273 | ||
| Other loans (b) | 29,527 | 23,288 | ||
| Finance lease liabilities (c) | 3,945 | 3,859 | ||
| Other current financial liabilities (e) | 22,003 | 26,121 | ||
| Total current financial liabilities | 155,070 | 230,065 |
On 06 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 consists in 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.
On 18 April 2017 the Group concluded the refinancing process of the Senior Unsecured Notes. The total bond issuance amounted to Euros 1,000 million.
On 5 December 2017 the Group has received an additional loan from the European Investment Bank of up to Euros 85 million at a fixed interest rate for a period of ten years with a grace period of two 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 with the same entity and conditions for a total amount of Euros 100 million.
On 18 April 2017, Grifols, S.A., issued US Dollars 1,000 million Senior Unsecured Notes (the "Notes") that will mature in 2025 and will bear annual interest at a rate of 3.20%. These notes replaced the 97.1 % of the Senior Unsecured Notes issued in 2014 by Grifols Worldwide Operations Limited, a 100% subsidiary of Grifols S.A., amounting to US Dollars 1,000 million, with a maturity in 2022 and at 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. On 2 May 2017 the Notes have been admitted to listing in the Irish Stock Exchange.
The present value of discounted cash flows of the new Notes under the new agreement, including costs for fees paid and discounted using the original effective interest rate differs by less than 10% of the present value
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
discounted cash flows remaining in the original debt, whereby the new agreement is not substantially different to the original agreement.
The costs of refinancing Senior Unsecured Notes amounted to Euros 57.5 million, including the redemption costs. These costs were included as transaction costs together with other costs deriving from the debt issue and will be taken to profit and loss in accordance with the new effective interest rate. Based on the analysis of the quantitative and qualitative factors, the Group concluded that the renegotiation of conditions of the Senior Unsecured Notes does not trigger a derecognition of the liability. Unamortized financing costs from the Senior Unsecured Notes amount to Euros 146 million at 31 December 2017 (Euros 117 million at 31 December 2016).
Details of movement in the Senior Unsecured Notes at 31 December 2016 are as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Opening outstanding balance 01/01/16 |
Translation differences |
Closing outstanding balance 31/12/16 |
||||
| Senior Unsecured Notes (nominal amount) | 918,527 | 30,150 | 948,677 | |||
| Total | 918,527 | 30,150 | 948,677 |
Details of movement in the Senior Unsecured Notes at 31 December 2017 are as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| Opening outstanding balance 01/01/17 |
Refinancing | Repayments | Translation differences |
Closing outstanding 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 December2017 and 2016 the current obligations caption includes the issue of bearer promissory notes to Group employees, as follows:
| Buy back (Thousands |
Interest pending accrual (Thousands of |
|---|---|
| Euros) | |
| (1,104) | |
| Interest | |
| Buy back | pending accrual |
| (Thousands of | |
| of Euros) | Euros) |
| (909) | |
| of Euros) (789) (Thousands (906) |
(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 2017 and 2016 are as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | |||||||
| 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 | 1,959,476 | 1,959,476 | -- | -- |
| Senior debt - Tranche A | Euros | Euribor + 1.75% | 31/01/2017 | 31/01/2023 | 607,000 | 607,000 | -- | -- |
| Senior debt - Tranche B | US Dollars | Libor + 2.25% | 31/01/2017 | 31/01/2025 | 2,501,459 | 2,457,684 | -- | -- |
| Senior debt - Tranche B | Euros | Euribor + 3% | 27/02/2014 | 28/02/2021 | -- | -- | 400,000 | 385,000 |
| Senior debt - Tranche A | US Dollars | Libor + 2.5% | 27/02/2014 | 29/02/2020 | -- | -- | 664,074 | 527,108 |
| Senior debt - Tranche B | US Dollars | Libor + 3% | 27/02/2014 | 28/02/2021 | -- | -- | 3,055,168 | 2,967,574 |
| Total senior debt | 5,067,935 | 5,024,160 | 4,119,242 | 3,879,682 | ||||
| EIB Loan | Euros | 2.70% | 20/11/2015 | 20/11/2025 | 100,000 | 74,375 | 100,000 | 100,000 |
| EIB Loan | Euros | 2.02% | 22/12/2017 | 22/12/2027 | 85,000 | 85,000 | ||
| Total EIB Loan | 185,000 | 159,375 | 100,000 | 100,000 | ||||
| Revolving Credit | US Dollars | Libor + 1.75% | 31/01/2017 | 31/01/2023 | 250,146 | -- | -- | -- |
| Revolving Credit | US Dollars | Libor + 2.5% | 27/02/2014 | 27/02/2019 | -- | -- | 284,603 | -- |
| Total Revolving Credit | 250,146 | -- | 284,603 | -- | ||||
| Euribor | ||||||||
| Other non-current loans | Euros | Euribor+4% | 19/03/2013 | 30/09/2024 | 33,180 | 9,839 | 33,000 | 14,898 |
| Loan transaction costs | -- | (174,278) | -- | (150,987) | ||||
| Non-current loans and borrowings | 5,536,261 | 5,019,096 | 4,536,845 | 3,843,593 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | |||||||
| 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 | (*) | -- | -- | -- |
| Senior debt - Tranche A | Euros | Euribor + 1.75% | 31/01/2017 | 31/01/2023 | (*) | -- | -- | -- |
| Senior debt - Tranche B | US Dollars | Libor + 2.25% | 31/01/2017 | 31/01/2025 | (*) | 25,015 | -- | -- |
| Senior debt - Tranche B | Euros | Euribor + 3% | 27/02/2014 | 28/02/2021 | -- | -- | (*) | 4,000 |
| Senior debt - Tranche A | US Dollars | Libor + 2.5% | 27/02/2014 | 29/02/2020 | -- | -- | (*) | 49,806 |
| Senior debt - Tranche B | US Dollars | Libor + 3% | 27/02/2014 | 28/02/2021 | -- | -- | (*) | 30,832 |
| Total senior debt | -- | 25,015 | -- | 84,638 | ||||
| BEI Loan | Euros | 2.70% | 20/11/2015 | 20/11/2025 | (*) | 10,625 | -- | -- |
| Total BEI Loan | -- | 10,625 | -- | -- | ||||
| Other current loans | 0.1%-3.74% | 131,700 | 18,902 | 208,105 | 23,288 | |||
| Loan transaction costs | -- | (20,958) | -- | (3,365) | ||||
| Current loans and borrowings | 131,700 | 33,584 | 208,105 | 104,561 |
(*) 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 1,713 thousand as at 31 December 2017 (Euros 596 thousand at 31 December 2016).
On 06 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 consists of a Term Loan A ("TLA"), which amounts to US Dollars 2,350 million and Euros 607 million with a 1.75% margin overLibor and Euribor respectively and maturity in 2023 and quasi-bullet amortization structure, and a Term Loan B ("TLB") that amounts to 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 differs 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 have amounted to Euros 84.8 million. Based on the analysis of the quantitative and qualitative factors, the Group has concluded that the renegotiation of conditions of the senior debt does not trigger a derecognition of the liability. Unamortized financing costs from the senior secured debt amount to Euros 195 million at 31 December 2017 (Euros 154 million at 31 December 2016).
The terms and conditions of the senior secured debt are as follows:
Details of Tranche A by maturity at 31 December 2017 are as follows:
| US Tranche A | Tranche A in Euros | ||||
|---|---|---|---|---|---|
| Principal in thousands | Principal in thousands | Principal in | |||
| Currency | of US Dollars | of Euros | Currency | thousands of Euros | |
| Maturity | |||||
| 2019 | US Dollars | 117,500 | 97,974 | Euros | 30,350 |
| 2020 | US Dollars | 235,000 | 195,948 | Euros | 60,700 |
| 2021 | US Dollars | 235,000 | 195,948 | Euros | 60,700 |
| 2022 | US Dollars | 1,321,875 | 1,102,204 | Euros | 341,437 |
| 2023 | US Dollars | 440,625 | 367,402 | Euros | 113,813 |
| Total | US Dollars | 2,350,000 | 1,959,476 | Euros | 607,000 |
(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 2017 are as follows:
| US Tranche B | ||||
|---|---|---|---|---|
| Principal in thousands of US | Principal in thousands of | |||
| Currency | Dollars | Euros | ||
| Maturity | ||||
| 2018 | US Dollars | 30,000 | 25,015 | |
| 2019 | US Dollars | 30,000 | 25,015 | |
| 2020 | US Dollars | 30,000 | 25,015 | |
| 2021 | US Dollars | 30,000 | 25,015 | |
| 2022 | US Dollars | 30,000 | 25,015 | |
| 2023 | US Dollars | 30,000 | 25,015 | |
| 2024 | US Dollars | 30,000 | 25,015 | |
| 2025 | US Dollars | 2,767,500 | 2,307,594 | |
| Total | US Dollars | 2,977,500 | 2,482,699 |
o US Dollar 300 million committed credit revolving facility: Amount maturing on 2023 and applicable margin of 175 basis points (bp) linked to US Libor. At 31 December 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 2017 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.
(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:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | |||||
| Minimum payments |
Interest | Present Value | Minimum payments |
Interest | Present Value | |
| Maturity at: | ||||||
| Less than one year | 4,305 | 360 | 3,945 | 4,267 | 408 | 3,859 |
| Two years | 2,636 | 179 | 2,457 | 3,636 | 263 | 3,373 |
| Three years | 1,461 | 88 | 1,373 | 1,792 | 88 | 1,704 |
| Four years | 814 | 60 | 754 | 672 | 16 | 656 |
| Five years | 369 | 42 | 327 | 306 | 5 | 301 |
| More than five years | 550 | 46 | 504 | 53 | 1 | 52 |
| Total | 10,135 | 775 | 9,360 | 10,726 | 781 | 9,945 |
In December 2017 and December 2016 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 2017 and December 2016 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 2017 "other financial liabilities" include interest-free loans extended by governmental institutions amounting to Euros 20,306 thousand (Euros 20,543 thousand at 31 December 2016). The portion of the loans considered a grant and still to be taken to profit and loss amounts to Euros 812 thousand (Euros 885 thousand at 31 December 2016) (see note 18).
At 31 December 2017, "other current financial liabilities" include an amount of Euros 5 million related to the remaining call option extended by the Group and the shareholders of Progenika with maturity on 2018.
At 31 December 2017 and 2016 "other current financial liabilities" also include approximately Euros 3,056 thousand and Euros 17,578 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 | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Maturity at: | |||
| Up to one year | 22,003 | 26,121 | |
| Two years | 10,818 | 11,468 | |
| Three years | 3,787 | 6,203 | |
| Four years | 2,794 | 5,802 | |
| Five years | 2,247 | 2,490 | |
| Over five years | 3,991 | 5,012 | |
| 45,640 | 57,096 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details are as follows:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2017 | 31/12/2016 | |
| Suppliers | 423,096 | 461,073 |
| VAT payable | 8,827 | 10,048 |
| Taxation authorities, withholdings payable | 24,084 | 23,700 |
| Social security payable | 11,741 | 11,422 |
| Other public entities | 97,068 | 97,724 |
| Other payables | 141,720 | 142,894 |
| Current income tax liabilities | 6,709 | 7,957 |
| 571,525 | 611,924 | |
| Suppliers |
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 2017 and 2016 information concerning the average payment period to suppliers is included.
| Days | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Average payment period to suppliers | 72.9 | 72.0 | |
| Paid invoices ratio | 74.0 | 71.5 | |
| Outstanding invoices ratio | 62.2 | 76.6 | |
| Thousands of Euros | |||
| 31/12/2017 | 31/12/2016 |
| Total invoices paid | 460,699 | 460,054 |
|---|---|---|
| Total outstanding invoices | 49,339 | 42,490 |
Details at 31 December are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Salaries payable | 129,519 | 132,755 | |
| Other payables | 649 | 427 | |
| Deferred income | 4,284 | 441 | |
| Advances received | 9,945 | 6,563 | |
| Other current liabilities | 144,397 | 140,186 |
(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 2017, 2016 and 2015 by segment is as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |||
| Bioscience | 3,429,785 | 3,195,424 | 3,032,111 | ||
| Diagnostic | 732,369 | 691,701 | 716,838 | ||
| Hospital | 105,649 | 102,251 | 96,245 | ||
| Bio supplies | 66,791 | 57,239 | 24,466 | ||
| Others | 18,263 | 34,601 | 90,289 | ||
| Intersegments | (34,784) | (31,386) | (25,386) | ||
| 4,318,073 | 4,049,830 | 3,934,563 |
As a result of the creation of Bio Supplies segment and Intersegment, the Group has reviewed the allocation of balances and transactions by segments. The comparative figures for years 2016 and 2015 have been restated accordingly.
The geographical distribution of net consolidated revenues is as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |||
| USA and Canada | 2,896,505 | 2,707,579 | 2,604,315 | ||
| Spain | 242,894 | 225,273 | 216,548 | ||
| European Union | 444,089 | 426,223 | 456,919 | ||
| Rest of the world | 734,585 | 690,755 | 656,781 | ||
| Consolidated | 4,318,073 | 4,049,830 | 3,934,563 |
Details of discounts and other reductions in gross income are as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |||
| Gross sales | 5,322,618 | 4,882,615 | 4,579,759 | ||
| Chargebacks | (826,775) | (652,564) | (488,072) | ||
| Cash discounts | (57,512) | (51,953) | (46,150) | ||
| Volume rebates | (43,274) | (51,242) | (49,458) | ||
| Medicare and Medicaid | (41,722) | (47,820) | (25,710) | ||
| Other discounts | (35,262) | (29,206) | (35,806) | ||
| Net sales | 4,318,073 | 4,049,830 | 3,934,563 |
(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 2015 were as follows:
| Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|
| Chargebacks | Cash discounts |
Volume rebates |
Medicare / Medicaid |
Other discounts |
Total | ||
| Balance at 31 December 2014 | 58,431 | 4,738 | 21,030 | 14,823 | 3,174 | 102,196 | |
| Current estimate related to sales made in current and prior year |
488,072 | 46,150 | 49,458 | 25,710 | 35,806 | 645,196 | (1) |
| (Actual returns or credits in current period related to sales made in current period) |
(428,041) | (44,867) | (18,211) | (18,402) | (34,059) | (543,580) (2) | |
| (Actual returns or credits in current period related to sales made in prior periods) |
-- | (246) | (25,051) | (11,257) | (1,791) | (38,345) (3) | |
| Translation differences | 7,716 | 127 | 2,454 | 1,594 | 2,237 | 14,128 | |
| Balance at 31 December 2015 | 126,178 | 5,902 | 29,680 | 12,468 | 5,367 | 179,595 |
Movement in discounts and other reductions to 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 |
(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 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 |
(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 | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |
| Cost of sales | 731,192 | 635,577 | 592,037 |
| Research and development | 90,495 | 77,988 | 76,780 |
| Selling, general & administration expenses | 323,880 | 314,348 | 269,718 |
| 1,145,567 | 1,027,913 | 938,535 |
Details by nature are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | ||
| Wages and salaries | 917,810 | 822,384 | 756,570 | |
| Contributions to pension plans (see note 29) | 20,347 | 18,486 | 14,587 | |
| Other social charges | 27,679 | 25,074 | 22,071 | |
| Social Security | 179,731 | 161,969 | 145,307 | |
| 1,145,567 | 1,027,913 | 938,535 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The average headcount during 2017 and 2016, by department, was approximately as follows:
| Average headcount | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||
| Manufacturing | 12,194 | 10,718 | |
| R&D - technical area | 905 | 790 | |
| Administration and others | 1,070 | 1,053 | |
| General management | 201 | 206 | |
| Marketing | 180 | 161 | |
| Sales and Distribution | 1,211 | 1,123 | |
| 15,761 | 14,051 |
The headcount of the Group and the Company's board of directors at 31 December 2016, by gender, is as follows:
| 31/12/2016 | |||
|---|---|---|---|
| Male | Female | Total number of employees |
|
| Directors | 9 | 4 | 13 |
| Manufacturing | 5,085 | 6,315 | 11,400 |
| Research&development - technical area | 304 | 508 | 812 |
| Administration and others | 607 | 488 | 1,095 |
| General management | 117 | 121 | 238 |
| Marketing | 67 | 101 | 168 |
| Sales and Distribution | 632 | 532 | 1,164 |
| 6,821 | 8,069 | 14,890 |
The headcount of the Group and the Company's board of directors at 31 December 2017, by gender, is 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 |
(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 2017, 2016 and 2015 classified by functions are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |
| Cost of sales | 135,186 | 126,998 | 110,898 |
| Research and development | 14,721 | 13,050 | 13,654 |
| Selling, general & administration expenses | 65,583 | 61,821 | 65,203 |
| 215,490 | 201,869 | 189,755 |
Other operating income and expenses incurred during 2017, 2016 and 2015 by function are as follows:
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |
| Cost of sales | 416,020 | 454,097 | 426,531 |
| Research and development | 129,579 | 113,078 | 118,667 |
| Selling, general & administration expenses | 460,959 | 393,523 | 403,944 |
| 1,006,558 | 960,698 | 949,142 |
| Thousands of Euros | |||
|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |
| Changes in trade provisions | 3,648 | (22,069) | (763) |
| Professional services | 211,579 | 190,003 | 173,990 |
| Commissions | 18,473 | 20,147 | 20,474 |
| Supplies and auxiliary materials | 131,932 | 119,014 | 115,471 |
| Operating leases (note 28) | 80,136 | 74,945 | 70,496 |
| Freight | 105,292 | 96,680 | 83,352 |
| Repair and maintenance expenses | 103,518 | 89,797 | 81,087 |
| Advertising | 49,893 | 51,233 | 47,860 |
| Insurance | 21,529 | 20,008 | 19,501 |
| Royalties | 11,241 | 9,217 | 9,386 |
| Travel expenses | 58,171 | 53,239 | 52,606 |
| External services | 82,699 | 43,231 | 56,743 |
| R&D Expenses | 89,977 | 78,379 | 81,319 |
| Other | 38,470 | 136,874 | 137,620 |
| Other operating income&expenses | 1,006,558 | 960,698 | 949,142 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | ||
| Finance income | 9,678 | 9,934 | 5,841 | |
| Finance cost from Senior Unsecured Notes | (65,189) | (73,491) | (72,783) | |
| Finance cost from senior debt | (193,183) | (168,332) | (161,624) | |
| Finance cost from sale of receivables (note 13) | (3,973) | (4,885) | (6,512) | |
| Capitalized interest | 8,839 | 13,019 | 9,795 | |
| Other finance costs | (9,838) | (11,140) | (9,211) | |
| Finance costs | (263,344) | (244,829) | (240,335) | |
| Change in fair value of financial derivatives (note 30) Impairment and gains / (losses) on disposal of financial |
(3,752) | (7,610) | (25,206) | |
| instruments (note 11) | (18,844) | -- | -- | |
| Exchange differences | (11,472) | 8,916 | (12,140) | |
| Finance result | (287,734) | (233,589) | (271,840) |
During 2017 the Group has capitalized interest at a rate of between 4.26% and 4.87% based on the financing received (between 4.8% and 5.2% during 2016) (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 36.5% 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 | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | ||
| Profit before income tax from continuing | ||||
| operations | 695,722 | 712,752 | 690,250 | |
| Tax at 25% (28% for 2015) | 173,931 | 178,188 | 193,270 | |
| Permanent differences | 17,163 | 8,019 | (2,709) | |
| Effect of different tax rates | 40,981 | 14,509 | (24,524) | |
| Tax credits (deductions) | (16,092) | (20,163) | (19,487) | |
| Impact related to the US tax legistation modific | (171,169) | -- | -- | |
| Prior year income tax expense | (8,614) | 928 | 2,723 | |
| Other income tax expenses/(income) | (1,792) | (13,272) | 9,536 | |
| Total income tax expense | 34,408 | 168,209 | 158,809 | |
| Deferred tax | (149,444) | (40,161) | 24,357 | |
| Current tax | 183,851 | 208,370 | 134,452 | |
| Total income tax expense | 34,407 | 168,209 | 158,809 |
The effect of the different tax rates is basically due to a change of country mix in profits
On December 22, 2017, a tax reform has been approved in the United States that will take effect on January 1, 2018.
The Group has 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 December 31, 2017. In the analysis performed, the main impact comes from the change in tax rates to be applied to deferred taxes as of December 31, 2017, which have gone from a rate of 35% to 21% for fiscal years beginning on or after January 1. of 2018. The impact registered in the "income tax expense" caption amounts to Euros 171 million Euros in the year 2017.The remaining changes in the tax legislation that affect the subsidiaries in the USA have not had a material impact nor have they required relevant judgments and estimates that could lead to significant variations in the estimate made in the future. As a consequence, we consider the estimates made as definitive.
(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:
| Thousands of Euros | ||||
|---|---|---|---|---|
| Tax effect | ||||
| 31/12/2017 | 31/12/2016 | 31/12/2015 | ||
| Assets | ||||
| Provisions | 4,564 | 3,696 | 38,004 | |
| Inventories | 35,619 | 39,297 | 37,141 | |
| Tax credits (deductions) | 49,467 | 37,685 | 42,533 | |
| Tax loss carryforwards | 6,179 | 10,717 | 30,668 | |
| Other | 7,513 | 3,393 | 6,961 | |
| Subtotal, assets | 103,342 | 94,788 | 155,307 | |
| Goodwill | (22,346) | (19,136) | (77,755) | |
| Fixed assets, amortisation and depreciation | (7,780) | (7,062) | (10,409) | |
| Intangible assets | (7,059) | (1,371) | (349) | |
| Subtotal, net liabilities | (37,185) | (27,569) | (88,513) | |
| Deferred assets, net | 66,157 | 67,219 | 66,794 | |
| Liabilities | ||||
| Goodwill | (105,963) | (131,039) | (35,877) | |
| Intangible assets | (201,921) | (392,388) | (404,617) | |
| Fixed assets | (95,029) | (158,060) | (119,858) | |
| Debt cancellation costs | (70,503) | (64,762) | (77,514) | |
| Inventories | 5,063 | (1,175) | (32,351) | |
| Cash flow hedges | -- | -- | (982) | |
| Subtotal, liabilities | (468,353) | (747,424) | (671,199) | |
| Tax loss carryforwards | 15,384 | 40,358 | 7,097 | |
| Provisions | 47,404 | 61,252 | 22,085 | |
| Other | 16,653 | 45,168 | 10,452 | |
| Subtotal, net assets | 79,441 | 146,778 | 39,634 | |
| Net deferred Liabilities | (388,912) | (600,646) | (631,565) |
Movement in deferred tax assets and liabilities is as follows:
| Thousands of Euros | |||
|---|---|---|---|
| Deferred tax assets and liabilities | 31/12/2017 | 31/12/2016 | 31/12/2015 |
| Balance at 1 January | (533,427) | (564,771) | (456,341) |
| Movements during the year | 149,443 | 40,161 | (24,357) |
| Movements in equity during the year | -- | -- | (10,960) |
| Business combination (note 3) | 16,736 | -- | -- |
| Translation differences | 44,493 | (8,817) | (73,113) |
| Balance at 31 December | (322,755) | (533,427) | (564,771) |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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 2017, 2016 and 2015 were recognized in the statement of profit and loss.
Estimated net deferred tax assets to be reversed in a period of less than 12 months amount to Euros 51,930 thousand at 31 December 2017 (Euros 99,897 thousand at 31 December 2016).
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 tax loss carryforwards of Group companies, which amount to Euros 51,169 thousand (Euros 67,044 thousand at 31 December 2016).
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 2017, 2016 and 2015 the Group leases buildings and warehouses from third parties under operating leases.
Operating lease instalments of Euros 80,136 thousand have been recognized as an expense for the year ended at 31 December 2017 (Euros 74,945 thousand at 31 December 2016 and Euros 70,496 thousand at 31 December 2015) and comprise minimum lease payments.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Future minimum payments on non-cancellable operating leases at 31 December 2017, 2016 and 2015 are as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | ||||
| Maturity at: | ||||||
| Up to 1 year | 46,541 | 56,869 | 77,951 | |||
| Between 1 and 5 years | 156,897 | 181,076 | 126,644 | |||
| More than 5 years | 58,905 | 112,986 | 101,319 | |||
| Total future minimum payments | 262,343 | 350,931 | 305,914 |
At 31 December 2017, 2016 and 2015 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 the ones included in note 20.
The Group's annual contribution to defined contribution pension plans of Spanish Group companies for 2017 has amounted to Euros 725 thousand (Euros 674 thousand for 2016).
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 73 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 nine 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 RSUs 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 will not be entitled to the additional RSUs.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At 31 December 2017, the Group has settled the RSU plan of 2014 for an amount of Euros 7,303 thousand.
This commitment is treated as equity-settled and the amount totals Euros 13,871 thousand at 31 December 2017 (Euros 10,594 thousand at 31 December 2016).
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 18.9 million for 2017 (US Dollars 17 million for 2016).
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 was not material for the periods presented.
Details of the Group's commitments at 31 December 2017 are as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| 2018 | 83,782 | |||||
| 2019 | 62,510 | |||||
| 2020 | 56,183 | |||||
| 2021 | 39,765 | |||||
| 2022 | 9,249 | |||||
| 2023 | 780 | |||||
| 2024 | 780 |
Details of legal proceedings in which the Company or Group companies are involved are as follows:
• The Group carried out an internal investigation, already started prior to the acquisition of Talecris, in relation to possible breaches of the Foreign Corrupt Practices Act (FCPA) of which Talecris was aware in the context of a review unrelated to this matter. This FCPA investigation was carried out by an external legal advisor. In principle, the investigation was focused on sales to certain Central and Eastern European countries, specifically Belarus and Russia, although trading practices in Brazil, China, Georgia, Iran and Turkey are also being investigated, in addition to other countries considered necessary.
In July 2009, the Talecris Group voluntarily contacted the U.S. Department of Justice (DOJ) to inform them of an internal investigation that the Group was carrying out regarding possible breaches of the FCPA in certain sales to certain central and East European countries and to offer the Group's collaboration in any investigation that the DOJ wanted to carry out. As a result of this investigation the Group suspended shipments to some of these countries. In certain cases, the Group had safeguards in place which led to terminating collaboration with consultants and suspending or terminating relations with distributors in those countries under investigation as circumstances warranted.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
As a consequence of the investigation, the agreement with Talecris' Turkish distributor was terminated and a settlement agreement was reached between the parties. In November 2012, the Group was notified by the DOJ that the proceedings would be closed, without prejudice to the fact that they could be re-opened in the future should new information arise. The Group continues with the in-depth review of potential irregular practices.
Furthermore, an investigation was opened in Italy, in relation with the criminal prosecution in Naples against 5 employees of the Company, including the former General Manager.
From these 5 employees of the Company initially charged, the Naples Tribunal resolved discharging 3 of them, continuing the judicial process only against the remaining 2 employees. Additionally, the Company has finalized the internal investigation opened in Italy as a consequence of the indicated judicial proceedings, and in November 2015 a meeting took place with the DOJ to report on the conclusions derived from the investigation.
Additionally to the above and as part of the in-depth review of potential irregular practices that the Group is carrying out in relation to its recent acquisitions, the Company opened internal investigations in Mexico as well as in the Czech Republic to review the commercial practices in such countries. Both investigations have finalized, without having detected any significant practice that could imply a breach of the FCPA.
On September 2016, the United States Department of Justice (the "Department") notified the Group that the Department has closed its inquiry into Grifols, concerning possible violations of the U.S. Foreign Corrupt Practices Act. In its notice of declination to prosecute, the Department acknowledged the full cooperation of Grifols in the investigation.
(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 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31/12/2016 | |||||||||
| 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 | 15,201 | -- | 29,998 | -- | 45,199 | 29,998 | 15,201 | -- | 45,199 |
| Financial derivatives | -- | 13,665 | -- | -- | 13,665 | -- | -- | 13,665 | 13,665 |
| Financial assets measured at fair value | 15,201 | 13,665 | 29,998 | -- | 58,864 | ||||
| Non-current financial assets | 30,681 | -- | -- | -- | 30,681 | ||||
| Other current financial assets | 2,582 | -- | -- | -- | 2,582 | ||||
| Trade and other receivables | 434,136 | -- | -- | -- | 434,136 | ||||
| Cash and cash equivalents | 895,009 | -- | -- | -- | 895,009 | ||||
| Financial assets not measured at fair value | 1,362,408 | -- | -- | -- | 1,362,408 | ||||
| Senior Unsecured Notes | -- | -- | -- | (843,868) | (843,868) | (904,377) | -- | -- | (904,377) |
| Promissory Notes | -- | -- | -- | (83,073) | (83,073) | ||||
| Senior secured debt | -- | -- | -- | (3,809,968) | (3,809,968) | -- | (3,811,970) | -- | (3,811,970) |
| Other bank loans | -- | -- | -- | (138,186) | (138,186) | ||||
| Finance lease payables | -- | -- | -- | (9,945) | (9,945) | ||||
| Other financial liabilities | -- | -- | -- | (57,096) | (57,096) | ||||
| Trade and other payables | -- | -- | -- | (461,073) | (461,073) | ||||
| Other current liabilities | -- | -- | -- | (7,431) | (7,431) | ||||
| Financial liabilities not measured at fair value | -- | -- | -- | (5,410,640) | (5,410,640) | ||||
| 1,377,609 | 13,665 | 29,998 | (5,410,640) | (3,989,368) |
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 | 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)
At 31 December 2017 and 2016 the Group has recognized the following derivatives:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Financial derivatives | Currency | Notional amount at 31/12/2017 |
Notional amount at 31/12/2016 |
Value at 31/12/17 |
Value at 31/12/16 |
Maturity |
| Call Option Embedded derivative |
US Dollar US Dollar |
N/A N/A |
N/A N/A |
8,338 -- |
9,487 4,178 |
30/04/2019 31/05/2021 |
| Total | 8,338 | 13,665 | ||||
| Total Assets (notes 10 and 11) | 8,338 | 13,665 |
At 31 December 2017, the Group has totally impaired the amount of the embedded derivative related to the convertible bonds issued by Aradigm due to the no recommendation of approval of LinhaliqTM by the Food and Drug Administration (FDA) (see note 11).
On May 11, 2016 the Group has paid an aggregate amount equal to US Dollars 10 million (Euros 8,960 thousand) in respect of the call right for the Interstate Blood Bank, Inc. shares, Bio-Blood Components, Inc. shares and Plasma Biological Services, LLC. units that are not owned by the Group. The call right can be exercised by the Group by delivering written notice of its intention at any time on or after February 1, 2019 and on or before April 30, 2019 (see note 11).
Financial derivatives are measured based on observable market data (level 2 of fair value hierarchy). Regarding the valuation of derivative instruments, the selection of the appropriate data within the alternatives requires the use of judgement in qualitative factors such as, which methodology and valuation models are used, and in quantitative factors, data required to be included within the chosen models.
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 2017 and 2016 the maximum level of exposure to credit risk is as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Carrying amount | Note | 31/12/2017 | 31/12/2016 | |||
| Non-current financial assets | 11 | 69,889 | 89,545 | |||
| Other current financial assets | 11 | 10,738 | 2,582 | |||
| Trade receivables | 13 | 286,198 | 413,656 | |||
| Other receivables | 13 | 18,666 | 20,480 | |||
| Cash and cash equivalents | 14 | 886,521 | 895,009 | |||
| 1,272,012 | 1,421,272 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The maximum level of exposure to risk associated with receivables at 31 December 2017 and 2016, by geographical area, is as follows.
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| Carrying amount | 31/12/2017 | 31/12/2016 | |||
| Spain | 63,505 | 56,104 | |||
| EU countries | 53,403 | 52,034 | |||
| United States of America | 65,068 | 196,885 | |||
| Other European countries | 5,761 | 13,428 | |||
| Other regions | 117,127 | 115,685 | |||
| 304,864 | 434,136 |
Details of balances receivable by country such as Greece, Italy, Spain and Portugal at 31 December 2016 are as follows:
| Thousands of Euros | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Balances with public entities | Balance with third parties | ||||||||
| Balance (1) | Balance past due |
Provision for doubtful receivables (2) |
Balance (3) |
Balance past due |
Provision for doubtful receivables (4) |
Net debt (1)+(2)+(3)+(4) |
|||
| Greece | -- | -- | -- | 425 | -- | (137) | 288 | ||
| Italy | 7,188 | 2,077 | -- | 12,196 | 7,375 | (3,098) | 16,286 | ||
| Spain | 23,281 | 3,287 | -- | 27,316 | 9,595 | (249) | 50,348 | ||
| Portugal | 2,734 | 1,205 | (356) | 129 | 78 | (27) | 2,480 | ||
| 33,203 | 6,569 | (356) | 40,066 | 17,048 | (3,511) | 69,402 |
Details of balances receivable by country such as Greece, Italy, Spain and Portugal at 31 December 2017 are as follows:
| Thousands of Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Balances with public entities | Balance with third parties | |||||||
| Balance (1) | Balance past due |
Provision for doubtful receivables (2) |
Balance (3) |
Balance past due |
Provision for doubtful receivables (4) |
Net debt (1)+(2)+(3)+(4) |
||
| Greece | -- | -- | -- | 745 | -- | -- | 745 | |
| Italy | 4,020 | 2,348 | -- | 10,614 | 6,342 | (4,016) | 10,618 | |
| Spain | 33,702 | 7,785 | -- | 23,444 | 8,926 | (136) | 57,010 | |
| Portugal | 1,078 | 490 | (296) | 1,972 | 1,085 | (126) | 2,628 | |
| 38,800 | 10,623 | (296) | 36,775 | 16,353 | (4,278) | 71,001 |
Provision has been made for balances receivable from Portuguese public entities on the basis of the best estimate of their expected collection in view of the current situation regarding negotiations. The Group does not currently have any reason to consider that the receivables from public entities in Spain will not be recoverable.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of the maturity of trade receivables, net of impairment provisions are as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||||
| Not matured | 249,652 | 360,018 | |||
| Less than 1 month | 24,302 | 24,650 | |||
| 1 to 4 months | 18,717 | 29,318 | |||
| 4 months to 1 year | 8,092 | 10,045 | |||
| More than one year | 4,101 | 10,105 | |||
| 304,864 | 434,136 |
Unimpaired receivables that are past due mainly relate to public entities.
Movement in the bad debt provision was as follows:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | 31/12/2015 | |||
| Opening balance | 17,987 | 13,210 | 14,092 | ||
| Net charges for the year | 8,003 | 6,411 | 1,800 | ||
| Net cancellations for the year | (4,732) | (2,217) | (2,984) | ||
| Translation differences | (1,552) | 583 | 302 | ||
| Closing balance | 19,706 | 17,987 | 13,210 |
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 31/12/16 |
Contractual flows |
6 months or less |
6 - 12 months |
1-2 years | 2- 5 years | More than 5 years |
| Financial liabilities | ||||||||
| Bank loans | 20 | 3,948,154 | 4,669,325 | 134,918 | 119,476 | 192,059 | 4,183,259 | 39,613 |
| Other financial liabilities | 20 | 57,096 | 57,096 | 23,082 | 3,039 | 11,468 | 16,686 | 2,821 |
| Bonds and other marketable | ||||||||
| securities | 20 | 926,941 | 1,305,680 | 107,975 | 24,903 | 49,806 | 1,122,996 | -- |
| Finance lease payables | 20 | 9,945 | 10,725 | 2,195 | 2,072 | 3,630 | 2,828 | -- |
| Payable to suppliers | 21 | 461,073 | 461,073 | 461,029 | 44 | -- | -- | -- |
| Other current liabilities | 22 | 7,431 | 7,431 | 7,118 | 313 | -- | -- | -- |
| Total | 5,410,640 | 6,511,330 | 736,317 | 149,847 | 256,963 | 5,325,769 | 42,434 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 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 |
Currency risk
The Group's exposure to currency risk is as follows:
| Thousands of Euros 31/12/2016 |
|||||
|---|---|---|---|---|---|
| Euros (*) | Dollars (**) | ||||
| Trade receivables | 5,576 | 7,520 | |||
| Receivables from Group companies | 33,792 | 37,740 | |||
| Loans to Group companies | 597,897 | 1,854 | |||
| Cash and cash equivalents | 32,255 | 21,254 | |||
| Trade payables | (11,188) | (5,062) | |||
| Payables to Group companies | (42,395) | (32,159) | |||
| Loans from Group companies | (268,040) | (4,295) | |||
| Bank loans | (489,000) | -- | |||
| Balance sheet exposure | (141,103) | 26,852 |
(*) Balances in Euros in subsidiaries with US Dollars functional currency
(**) Balances in US Dollars in subsidiaries with Euros functional currency
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2017 | ||||
| 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
The most significant exchange rates applied at 2017 and 2016 year ends are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Closing exchange rate | ||||
|---|---|---|---|---|
| Euros | 31/12/2017 | 31/12/2016 | ||
| US Dollars | 1.1993 | 1.0541 |
A sensitivity analysis for foreign exchange fluctuations is as follows:
Had the US Dollar strengthened by 10% against the Euro at 31 December 2017, equity would have increased by Euros 416,116 thousand (Euros 318,528 thousand at 31 December 2016) and profit due to foreign exchange differences would have increased by Euros 14,615 thousand (would have decreased by Euros 11,425 thousand at 31 December 2016). 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 2017 and 2016 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 | |||||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||||
| Fixed-interest financial instruments | |||||
| Financial liabilities | (1,170,000) | (1,048,676) | |||
| (1,170,000) | (1,048,676) | ||||
| Variable-interest financial instruments | |||||
| Financial liabilities | (5,049,382) | (3,964,320) | |||
| (5,049,382) | (3,964,320) | ||||
| (6,219,382) | (5,012,996) |
If the interest rate had been 100 basis points higher during 2017, the interest expense would have increased by Euros 53 million. As the Group does not have any derivatives in place, the net effect on cash interest payments would have increased by the same amount.
If the interest rate had been 100 basis points higher during 2016, the interest expense would have increased by Euros 40.7 million, the finance cost due to changes in the value of derivatives would have been Euros 2.6 million lower. The impact on equity is not significant because of derivatives close to maturity on 31 March 2016 for Euro swaps and 30 June 2016 for US dollar swaps. Therefore, the net effect on cash interest payments should have been Euros 38.1 million.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of balances with related parties are as follows:
| Thousands of Euros | ||||
|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | |||
| Receivables from associates (note 13) Trade payables associates |
3,219 (4,583) |
133 (4,221) |
||
| Loans to associates (note 11) | 26,654 | 15,994 | ||
| Debts with associates | -- | -- | ||
| Debts with key management personnel | (6,164) | (6,662) | ||
| Payables to members of the board of directors | (463) | -- | ||
| Payables to other related parties | (9,187) | (8,473) | ||
| 9,476 | (3,229) | |||
Payables are included in suppliers and trade payables (see note 21).
Group transactions with related parties during 2015 were as follows:
| Thousands of Euros | |||||||
|---|---|---|---|---|---|---|---|
| Associates | Key management personnel |
Other related parties | Board of directors of the Company |
||||
| Net sales | 317 | -- | -- | -- | |||
| Other service expenses | (361) | -- | (6,938) | (845) | |||
| Operating lease expense | -- | -- | (4,900) | -- | |||
| Remuneration | -- | (9,447) | -- | (3,443) | |||
| R&D agreements | (18,400) | -- | -- | -- | |||
| Purchase of Fixed Assets | -- | -- | (276,457) | -- | |||
| Sale of Fixed Assets | -- | -- | 12,000 | -- | |||
| Finance Income | 1,916 | -- | -- | -- | |||
| (16,528) | (9,447) | (276,295) | (4,288) |
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 Income | 1,946 | -- | -- | -- | |||
| (51,209) | (10,287) | (10,606) | (4,573) |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Group transactions with related parties during 2017 are 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 Income | 152 | -- | -- | -- | |||
| (77,136) | (13,672) | (12,526) | (6,694) |
Every year the Group contributes 0.7% of its profits before tax to a non-profit organization.
"Other service expenses" include contributions to non-profit organizations totaling Euros 7,100 thousand in 2017 (Euros 5,325 thousand in 2016 and Euros 5,224 thousand in 2015).
During 2011 one of the Company's directors signed a three-year consulting services contract. The director will receive annual fees of US Dollars 1 million for these services and an additional bonus of US Dollars 2 million for complying with certain conditions. During 2014, this contract was renewed for an additional year for an amount of US Dollars 1 million. In 2015, this contract was extended for two years for an amount of US Dollars 1 million for each year.
Directors representing shareholders´ interests have received remuneration of Euros 1,881 thousand in 2017 (During 2016 the Group did not name any director representing shareholders´ interests and during 2015 the named directors representing shareholders´ interests received Euros 50 thousand).
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The most significant systems, equipment and fixtures for the protection and improvement of the environment at 31 December 2016 are as follows:
| Thousands of Euros | ||||||
|---|---|---|---|---|---|---|
| Project | Cost | Accumulated depreciation |
Net value | |||
| Waste water treatment | 1,472 | (1,072) | 400 | |||
| Waste management | 3,492 | (1,208) | 2,284 | |||
| Reduction of electricity consumption | 10,195 | (2,380) | 7,815 | |||
| Reduction of water consumption | 7,067 | (2,329) | 4,738 | |||
| Energy | 1,296 | -- | 1,296 | |||
| Other | 184 | (7) | 177 | |||
| 23,706 | (6,996) | 16,710 |
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 |
Expenses incurred by the Group for protection and improvement of the environment during 2017 totalled approximately Euros 13.6 million (Euros 12.7 million during 2016 and Euros 11.2 million during 2015).
The Group considers that the environmental risks are adequately controlled by the procedures currently in place.
The Group has not received environmental grants during 2017, 2016 and 2015.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
KPMG Auditores, S.L. has invoiced the following fees and expenses for professional services during 2017 and 2016:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2017 | 31/12/2016 | |
| Audit services | 2,039 | 1,534 |
| Audit-related | 427 | 569 |
| 2,466 | 2,103 |
"Audit services" detailed in the above table include the total fees for services rendered in 2017 and 2016, irrespective of the date of invoice.
"Audit services" include audit services subject to the Spanish Audit Law, amounting to Euros 965 thousand in 2017 (Euros 546 thousand in 2016).
"Audit-related" correspond mainly to services of limited reviews of semi-annual financial statements and comfort letters in relation to debt issues provided by KPMG Auditores, S.L. to Grifols, S.A. during the year ended December 31, 2017. During 2016, they mainly include limited reviews of quarterly financial statements.
Other entities affiliated to KPMG International have invoiced the Group for the following fees and expenses for professional services during 2017 and 2016:
| Thousands of Euros | |||||
|---|---|---|---|---|---|
| 31/12/2017 | 31/12/2016 | ||||
| Audit services | 2,944 | 2,939 | |||
| Audit-related | 199 | -- | |||
| Tax fees | 51 | 72 | |||
| Other services | 7 | 131 | |||
| 3,201 | 3,142 |
Other audit firms have invoiced the Group for the following fees and expenses for professional services during 2017 and 2016:
| Thousands of Euros | ||
|---|---|---|
| 31/12/2017 | 31/12/2016 | |
| Audit services | 52 | 51 |
| -- | 35 | |
| 52 | 86 |
• Goetech, LLC. ("MedKeeper") acquisition
On 26 January 2018 Grifols has subscribed, through its subsidiary Grifols Shared Services North America, Inc., a capital increase in the amount of US dollars 98 million in the U.S. company Goetech, LLC. based in
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Denver, Colorado, doing business as MedKeeper. As a result, Grifols holds a 51 % interest in MedKeeper and holds a majority position on the board of directors.
Furthermore, Grifols has negotiated a call option to acquire the remaining 49% interest, exercisable during a three-year term and MedKeeper has a put option to sell Grifols said interest exercisable at the end of the threeyear period.
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 process, control systems and monitoring different preparations while increasing patient safety.
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Acquisition / | 31/12/2017 | 31/12/2016 | 31/12/2015 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 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% | 99.998% | 0.002% | |
| 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.) |
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% | --- 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% | 80.000% | --- | |
| 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% | ||
| GRI-CEI, S/A Produtos para transfusao (merged with Grifols Brasil, Lda. in 2016) |
Rua Umuarama, 263 Condominio Portal da Serra Vila Perneta CEP 83.325-000 Pinhais Paraná, Brazil |
2012 | Industrial | Production of bags for the extraction, separation, conservation and transfusion of blood components. | --- | --- | --- | --- | 60.000% | --- |
| 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. | --- | 90.230% | --- | 89.250% | 56.150% | --- |
Information on Group Companies, Associates and others for the years ended 31 December 2017, 2016 and 2015 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Acquisition / | 31/12/2017 | 31/12/2016 | 31/12/2015 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Registered | Incorporation | % shares | % shares | % shares | ||||||
| Name | Offices | date | Activity | Statutory Activity | Direct | Indirect | Direct | Indirect | Direct | Indirect |
| Fully Consolidated Companies | ||||||||||
| 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% | --- | 56.150% |
| 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% | --- | 56.150% |
| Brainco Biopharma, S.L. (merged with Progenika Biopharma, S.A in 2016) |
Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain |
2013 | Industrial | Development of products for the treatment and diagnosis of psychiatric illnesses | --- | --- | --- | --- | --- | 28.423% |
| 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% | --- | 45.129% |
| 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. |
--- | 90.230% | --- | 89.250% | --- | 55.336% |
| 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% |
Information on Group Companies, Associates and others for the years ended 31 December 2017, 2016 and 2015 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Acquisition / | 31/12/2017 | 31/12/2016 | 31/12/2015 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Registered | Incorporation | % shares | % shares | % shares | ||||||
| Name | Offices | date | Activity | Statutory Activity | Direct | Indirect | Direct | Indirect | Direct | Indirect |
| Fully Consolidated Companies | ||||||||||
| 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% | --- | |||
| 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% | --- | 80.000% | ||
| 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. |
99.000% | 1.000% | 99.000% | 1.000% | 99.000% | 1.000% |
| 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 |
2014 | Commercial Distribution and sale of diagnostic products. | --- | 100.000% | --- 100.000% | --- 100.000% |
Kong
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Acquisition / Registered Incorporation |
31/12/2017 | 31/12/2016 | 31/12/2015 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name | Offices | date | Activity | Statutory Activity | % shares Direct |
Indirect | % shares Direct |
Indirect | % shares Direct |
Indirect |
| Fully Consolidated Companies | ||||||||||
| 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% | |
| 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% | --- | --- | --- | ||
| 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% | --- | 70.830% |
| 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% | --- | 68.010% |
| 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% | --- | --- | |
| 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% | --- | --- | |
| 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% | --- | --- | --- | --- | --- |
| 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% | --- | --- | --- | --- |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/2017 | 31/12/2016 | 31/12/2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| % shares | % shares | % shares | ||||||||
| Name | Registered Offices | Acquisition / Incorporation date |
Activity | Statutory Activity | Direct | Indirect | Direct | Indirect | Direct | Indirect |
| Equity Method consolidated companies and others | ||||||||||
| Nanotherapix, S.L. | Avenida de la Generalitat 152 Sant Cugat del Valles (Barcelona) Spain |
2010 | Research | Development, validation and production of the technology required to implement the use of genetic and cellular therapy for the treatment of human and animal pathologies. |
--- | --- | --- | --- | --- | 51.000% |
| 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% | 35.000% | --- |
| 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% | --- | 19.280% |
| Mecwins, S.L. | Avenida Fernandos Casas Novoa, 37 Santiago de Compostela Spain |
2013 | Research | Research and production of nanotechnological, biotechnological and chemical solutions. | --- | 8.420% | --- | 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% | --- | 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% | --- | --- |
| Interstate Blood Bank, Inc. | 5700 Pleasantville Road Memphis, Tennessee United States |
2016 | Industrial | Procuring human plasma. | --- | 49.190% | --- | 49.190% | --- | --- |
| Bio Blood Components Inc. | 5700 Pleasantville Road Memphis, Tennessee United States |
2016 | Industrial | Procuring human plasma. | --- | 48.972% | --- | 48.972% | --- | --- |
| Plasma Biological Services, LLC | 5700 Pleasantville Road Memphis, Tennessee United States |
2016 | Industrial | Procuring human plasma. | --- | 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% | --- | 20.000% | --- | --- |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 31/12/2017 % shares |
31/12/2016 % shares |
31/12/2015 % 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% | --- | --- | --- | --- |
| 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% | --- | --- | --- | --- |
| 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% | --- | --- | --- | --- |
| 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% | --- | --- | --- | --- |
| 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% | --- | --- | --- | --- |
| 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% | --- | --- | --- | --- |
(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 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |
| Revenues from external customers | 3,429,785 | 3,195,424 | 3,032,111 | 105,649 | 102,251 | 96,245 | 732,369 | 691,701 | 716,838 | 66,791 | 57,239 | 24,466 | 18,263 | 34,601 | 90,289 (34,784) | (31,386) | (25,386) | 4,318,073 | 4,049,830 | 3,934,563 | |
| Total operating income | 3,429,785 | 3,195,424 | 3,032,111 | 105,649 | 102,251 96,245 | 732,369 | 691,701 716,838 | 66,791 | 57,239 | 24,466 | 18,263 | 34,601 90,289 (34,784) | (31,386) | (25,386) | 4,318,073 | 4,049,830 | 3,934,563 | ||||
| Profit/(Loss) for the segment | 985,495 | 913,840 | 896,032 (9,766) | (8,765) (4,299) | 248,080 | 97,320 | 96,268 | 35,598 | 33,794 | 3,660 | (9,632) | 44,324 | 77,982 (12,305) | (1,316) | (305) | 1,237,470 | 1,079,197 | 1,069,338 | |||
| Unallocated expenses | (234,127) | (139,789) | (98,968) | ||||||||||||||||||
| Operating profit | 1,003,343 | 939,408 | 970,370 | ||||||||||||||||||
| Finance result | (287,734) | (233,589) | (271,840) | ||||||||||||||||||
| Share of profit/(loss) of equity | |||||||||||||||||||||
| accounted investee | (10,434) | (9,396) | -- | 2,112 | (5,611) | -- | (9,335) | -- | -- | 1,830 | -- | -- | (4,060) | 21,940 (8,280) | -- | -- | -- | (19,887) | 6,933 | (8,280) | |
| Income tax expense | (34,408) | (168,209) | (158,809) | ||||||||||||||||||
| Profit for the year after tax | 661,314 | 544,543 | 531,441 | ||||||||||||||||||
| Segment assets | 6,007,153 | 6,524,922 | 6,085,211 | 145,477 | 86,590 | 91,877 | 3,356,185 | 1,909,447 | 1,794,389 | 7,409 | 8,378 | 1,321 | 60,449 | 40,160 | 106,374 (22,196) | (11,964) | (10,240) | 9,554,477 | 8,557,533 | 8,068,932 | |
| Equity accounted investments | 83,905 | 104,996 | -- | -- | 13,888 | -- | 29,322 | 43,330 | -- | 44,220 | -- | -- | 61,562 | 39,132 | 76,728 | -- | -- | -- | 219,009 | 201,346 | 76,728 |
| Unallocated assets | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 1,146,778 | 1,370,893 | 1,456,055 |
| Total assets | 10,920,264 | 10,129,772 | 9,601,715 | ||||||||||||||||||
| Segment liabilities | 423,415 | 411,604 | 387,086 | 13,560 | 8,415 | 3,159 | 192,720 | 186,389 | 192,730 | -- | -- | -- | 26,903 | 1,843 | 209,405 | -- | -- | -- | 656,598 | 608,251 | 792,380 |
| Unallocated liabilities | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 6,629,701 | 5,793,543 | 5,507,946 |
| Total liabilities | 7,286,299 | 6,401,794 | 6,300,326 | ||||||||||||||||||
| Other information: | |||||||||||||||||||||
| Amortisation and depreciation allocated | 157,478 | 152,821 | 137,870 | 6,436 | 5,915 | 5,710 | 40,815 | 32,180 | 31,875 | -- | -- | -- | 2,237 | 3,445 | 6,946 | -- | -- | -- | 206,966 | 194,361 | 182,401 |
| Amortisation and depreciation unallocated | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 8,524 | 7,508 | 7,355 | |||
| Expenses that do not requirecash payments allocated | 7,049 | 16,219 | 627 | (514) | 306 | 108 | (4,423) | (2,001) | 4,630 | -- | -- | -- | -- | (32,534) | -- | -- | -- | -- | 2,112 | (18,010) | 5,365 |
| Expenses that do not require cash payments unallocated |
-- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | (58,752) | 4,608 | 4,794 |
| Additions for the year of property, plant & equipment and intangible assets allocated |
227,635 | 197,741 | 421,020 | 10,429 | 9,193 | 7,972 | 70,032 | 89,760 | 68,740 | 198 | 84 | -- | 20,911 | 13,313 | -- | -- | -- | -- | 329,205 | 310,091 | 497,732 |
| Additions for the year of property, plant & equipment and intangible assets unallocated |
-- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 11,268 | 12,011 | 79,082 |
* 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 figures for years 2016 and 2015 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 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |
| Net Revenue | 242,894 | 225,273 | 216,548 | 444,089 | 426,223 | 456,919 | 2,896,505 | 2,707,579 | 2,604,315 | 734,585 | 690,755 | 656,781 | 4,318,073 | 4,049,830 | 3,934,563 |
| Assets by geographical area | 899,223 | 847,467 | 719,557 | 2,397,200 | 2,467,295 | 2,407,178 | 7,341,174 | 6,535,420 | 6,176,548 | 282,667 | 279,590 | 298,432 | 10,920,264 | 10,129,772 | 9,601,715 |
| Other information: Additions for the year of property, plant & equipment and intangible assets |
62,271 | 73,365 | 113,652 | 80,910 | 39,603 | 51,943 | 188,557 | 190,358 | 400,065 | 8,735 | 18,776 | 11,154 | 340,473 | 322,102 | 576,814 |
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)
| 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 discrepancy, the Spanish-language version prevails)
| Balances at 31/12/2015 |
Additions | Transfers | Disposals | Translation differences |
Balances at 31/12/2016 |
|
|---|---|---|---|---|---|---|
| Development costs | 112,688 | 29,126 | -- | (79) | 958 | 142,693 |
| Concessions, patents, licenses brands & similar |
59,249 | -- | -- | -- | 1,222 | 60,471 |
| Computer software | 144,976 | 18,919 | 1,460 | (420) | 3,688 | 168,623 |
| Currently marketed products | 1,126,024 | -- | -- | -- | 36,180 | 1,162,204 |
| Other intangible assets | 134,068 | 10,469 | -- | (651) | 4,796 | 148,682 |
| Total cost of intangible assets | 1,577,005 | 58,514 | 1,460 | (1,150) | 46,844 | 1,682,673 |
| Accum. amort. of development costs | (67,551) | (4,473) | -- | -- | (49) | (72,073) |
| Accum. amort of concessions, patents, licenses, brands & similar |
(23,957) | (806) | -- | -- | (231) | (24,994) |
| Accum. amort. of computer software | (83,197) | (15,136) | (99) | 419 | (1,914) | (99,927) |
| Accum. amort. of currently marketed products | (175,135) | (38,441) | -- | -- | (7,412) | (220,988) |
| Accum. amort. of other intangible assets | (65,627) | (2,117) | -- | 544 | (2,189) | (69,389) |
| Total accum. amort intangible assets | (415,467) | (60,973) | (99) | 963 | (11,795) | (487,371) |
| Impairment of other intangible assets | 34 | -- | -- | (34) | -- | -- |
| Carrying amount of intangible assets | 1,161,572 | (2,459) | 1,361 | (221) | 35,049 | 1,195,302 |
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 | |||||
|---|---|---|---|---|---|---|---|
| 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)
| Balances at | Translation | Balances at | ||||
|---|---|---|---|---|---|---|
| 31/12/2015 | Additions | Transfers | Disposals | differences | 31/12/2016 | |
| Cost: | ||||||
| Land and buildings | 613,476 | 12,993 | 44,060 | (780) | 18,107 | 687,856 |
| Plant and machinery | 1,431,030 | 87,536 | 116,724 | (19,515) | 40,062 | 1,655,837 |
| Fixed Assets under construction | 263,610 | 163,059 | (162,292) | -- | 10,626 | 275,003 |
| 2,308,116 | 263,588 | (1,508) | (20,295) | 68,795 | 2,618,696 | |
| Accumulated depreciation: | ||||||
| Buildings | (44,057) | (13,777) | (2) | 178 | (1,718) | (59,376) |
| Plant and machinery | (616,369) | (127,119) | 149 | 13,605 | (16,534) | (746,268) |
| (660,426) | (140,896) | 147 | 13,783 | (18,252) | (805,644) | |
| Impairment of other property, plant | ||||||
| and equipment | (3,288) | 147 | -- | -- | (59) | (3,200) |
| Carrying amount | 1,644,402 | 122,839 | (1,361) | (6,512) | 50,484 | 1,809,852 |
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 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.
(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 2016: | |
| Projected profits net of taxes until 31/12/2016 | 319,133 |
| Less, charge required to legal reserve | -- |
| Estimated profits distributable for 2016 | 319,133 |
| Interim dividend distributed | 122,908 |
| Forecast cash for the period 07 December 2016 to 07 December 2017: | |
| Cash balances at 07 December 2016 | 5,521 |
| Projected amounts collected | 497,058 |
| Projected payments, including interim dividend | 471,686 |
| Projected cash balances at 07 December 2017 | 30,893 |
This appendix forms an integral part of note 15 to the consolidated annual accounts.
Grifols is a global healthcare company founded in 1940. For more than 75 years, it has advanced the health and wellbeing of patients through the development of life-saving plasma protein therapies (Bioscience Division), technology-based clinical diagnostics (Diagnostic Division) and pharmacy specialty products for hospital use (Hospital Division).
In 2017, Raimon Grífols Roura and Víctor Grífols Deu concluded a successful first year as co-CEOs of Grifols, reinforcing its path of sustainable growth and position as a solid, diversified and profitable company. Víctor Grífols Roura continues to serve the company as a non-executive chairman on the Grifols Board of Directors.
Grifols successfully completed its 2013-2017 strategic plan and outlined a new roadmap for 2018-2022. The firm's newly defined strategic priorities aim to capitalize its collective knowledge and potential for innovation to continue enhancing patient care and attending healthcare professionals, blending and focusing on technology, safety and efficiency of Grifols divisions.
The 2013-2017 strategic plan, based on a five-pillar growth framework (business diversification, capacity leadership, global expansion, accelerate innovation and business optimization) has enabled the company to grow and advance as planned. The main milestones achieved over this period include:
The completion of these objectives confirms Grifols' clear commitment to growing the company and generating sustainable value for shareholders and investors.
Corporate priorities in 2017 included diversified growth and profitability; driving productive investments and innovation; integrating the newly acquired share in the NAT technology donor-screening unit; increasing cash flow generation; and optimizing the financial structure.
The company supports its long-term growth by dedicating significant investments to improve and expand its productive capacity. Toward this end, it allocated substantial resources to CAPEX and R+D+i to accelerate research projects.
In 2017, Grifols reaped the benefits of years of continuous research and development—a pillar of the company's future growth—by receiving important regulatory approvals. The U.S. Food and Drug Administration (FDA) approved the Bioscience Division's liquid formulation of alpha-1 antitrypsin (Prolastin®-C Liquid). The Division's new biological sealant VeraSeal® (fibrinogen and human thrombin) also received approvals from the FDA and European Medicines Agency (EMA). The Diagnostic Division obtained
FDA approval for a new genetic test for alpha-1 antitrypsin that will improve the diagnosis of its deficiency. The Hospital Division obtained FDA approval for its 500 ml physiological saline solution (0.9% sodium chloride), manufactured at the Grifols' production facility in Murcia, Spain; this approval will facilitate access to the U.S. market and reinforce its global footprint.
The Diagnostic Division continues to make important inroads, including the acquisition and integration of the NAT donor-screening unit, announced at the end of 2016. The transactions strengthened the Division's value chain vertical integration and its leadership position in this segment. Also worth highlighting was the accord signed with Beckman Coulter, a leading provider of diagnostics solutions. This exclusive, long-term agreement includes the global distribution of Grifols hemostasis instruments, reagents and consumables.
Grifols finalized its debt-refinancing process at the start of 2017. The new structure has enhanced the group's results and created value for shareholders by optimizing its financial structure, improving its financial conditions and lengthening its maturity profile.
The 2016-2020 investment plan continues as projected. The company has continued to expand its global network of plasma donation centers by incorporating 19 additional centers in 2017, including six plasma centers acquired from Kedrion. With a platform of 190 centers, Grifols maintains its leadership position in plasma collection centers. The group opened its first production plant in Brazil, dedicated to manufacturing storage and collection bags for blood components, as well as inaugurated a new office building in Clayton, (North Carolina, U.S.) with capacity for 500 employees.
Human capital management has focused on talent attraction and retention, as well as on integrating new employees, improving performance appraisal programs and reinforcing leadership development. The 2017 "500 World's Best Employers" classification by Forbes and Statista recognized Grifols as one of the best companies in the world to work for.
The implementation of the Grifols 2017-2019 Environmental Plan is clear evidence of the company's solid commitment to society and the environment. The plan's core objectives include optimizing and reducing the consumption of electricity, natural gas and water in the group's plants, as well as significantly increasing waste recovery.
Grifols' main business units (Bioscience Division, Diagnostic Division and Hospital Division) are solid, consolidated and complementary. On an operational level, it employs a commercial model specialized by division and transversal from a geographic and functional viewpoint. This model strengthens and expands the group's organic growth.
According to estimates, the blood derivatives market exceeded USD 22,000 million1 in 2016. Grifols remains one of the leading companies in the plasma-derivatives industry, with an estimated market share of 18%1 . Its main products continue to lead the global sales of plasma proteins.
The group continues to consolidate its position in the in-vitro diagnostics sector, continuing as is a global reference in blood and plasma testing systems.
The Hospital Division maintains its leadership position in Spain as a supplier of IV solutions. In 2017, the division introduced its hospital logistics' automation systems in Spain and Latin America through the Pharmatech line, while working to increase its presence in the U.S. market. In January 2018, the group announced the acquisition of a 51% stake in the U.S. firm MedKeeper, a technology firm that develops and markets mobile and web-based applications for hospital pharmacies.
1 Source: Marketing Research Bureau and internal information, 2016.
Grifols closed the 2017 fiscal year with EUR 4,318.1 million in revenues, a 6.6% (7.2% cc2 ) year-on-year growth compared to the EUR 4,049.8 million reported in 2016. The company boasted a significant upturn in revenues in all of its divisions and regions where it operates.
The Bioscience Division achieved EUR 3,429.8 million3 in revenues in 2017, a 7.3% (7.9% cc) increase and higher-than-recent year's average annual growth. The upward trend is evidence of Grifols' solid leadership position.
Demand for main plasma proteins has remained very robust throughout 2017. The increase in volume has been the main driver of growth, with a moderately positive price contribution. The geographic mix has had a negative impact on revenues due to higher sales volumes of blood clotting factors in emerging markets.
The company maintains its global leadership position in immunoglobulin, holding a 23%1 market share. Immunoglobulin volume sales were robust throughout the year, especially in the United States and main European markets, with growing contribution of specific countries such as Australia and Turkey, evidencing its global expansion efforts.
Growing global demand for this plasma protein to treat neurological conditions such as chronic inflammatory demyelinating polyneuropathy (CIDP) was witnessed in core geographies like the United States, where Grifols is the market leader. The company also continues to promote diagnostic programs to identify patients with immunodeficiencies that could benefit from immunoglobulin therapies.
With a 67%1 market share, Grifols is the market leader in alpha-1 antitrypsin, whose sales continue to fuel the division's growth. Higher rates of diagnosis of alpha-1 antitrypsin deficiency, particularly in the United States, Canada and several European countries, have driven higher sales of this protein. Demand also grew in certain Latin American countries, although more incipiently. Grifols' sales strategy focuses on boosting sales in these core markets while progressively expanding its global impact.
Sales of albumin, which holds a 17%1 market share, continue to drive the division's growth, especially in China, the European Union and Latin America. Brazil, Indonesia and several Middle Eastern countries also saw a pick-up in sales thanks to the division's solid commercial efforts.
Sales volume of factor VIII, with a 21%1 market share, continue to grow in a competitive price environment subject to public tenders in certain emerging countries.
Specialty proteins developed by Grifols also evolved positively in 2017. Of note are hyperimmune immunoglobulin sales and the agreement signed with Spain's Ministry of Health to supply tetanus and diphtheria vaccines from April 2017. Grifols markets this vaccine through an accord with MassBiologics of the University of Massachusetts Medical School in the U.S.
The Diagnostic Division earned EUR 732.4 million3 in sales in 2017, a 5.9% (6.8% cc) 3 increase compared to the EUR 691.7 million reported in 2016. The EBITDA margin of the division reached 40.4% in 2017 from
2 Constant currency (cc) excludes the impact of exchange rate movements. 3.Comparable revenues considering intersegment sales and the reclassification of the biological products for nontherapeutic use sales that are reported as Bio Supplies Division from January 2017.
18.7% in 2016, in line with the forecast after acquiring the share of the NAT technology donor-screening business.
Grifols is a global leader in transfusion medicine, the Division's main growth lever. Sales of NAT donorscreening systems (Procleix® NAT Solutions), used to screen blood and plasma donations, were the Division's leading source of revenues. Additional revenue streams included sales of the Zika virus blood screening tests in the United States and greater market penetration in the Asia Pacific region, particularly in Japan, China, Saudi Arabia, Israel and Singapore.
The Division also increased its sales of antigens used to manufacture diagnostic immunoassays, marketed as part of the joint business agreement with Ortho Clinical Diagnostics.
The blood typing and immunohematology line have increased the division's revenues. Sales of blood typing reagents were exceptionally strong in China as a result of the commercial efforts implemented in this key region, as well as in the U.S., a market where Grifols has substantial growth potential. This upward trend was also seen in certain European countries, including Hungary, Italy, Switzerland, Spain and France. Geographic expansion is one of the main drivers of growth.
Specialty diagnostics revenues remained stable, and will benefit as the division progressively expands its clinical diagnostics product portfolio. The company continues to concentrate its efforts on developing new diagnostic tests for personalized medicine through Progenika Biopharma. It has also strengthened the commercialization of Grifols hemostasis line thanks to an exclusive global distribution agreement with Beckman Coulter.
The Hospital Division achieved EUR 105.6 million3 in sales in 2017, growing by 3.3% (3.3% cc) compared to EUR 102.3 million reported in 2016. An upswing in sales in Spain and global expansion efforts in the U.S. and Latin America were the division's main engines of growth.
The division increased sales of its Pharmatech portfolio, which comprises solutions for hospital pharmacies, as well as of its IV Therapy and Nutrition lines. Also notable was the positive trend of third-party manufacturing in the U.S.
As of January 2017, the Bio Supplies Division includes revenues previously included in Raw Materials. The Division records sales of biological products for non-therapeutic use and other biological products, as well as those related to the fractionation and purification agreements signed with Kedrion. The division achieved sales of EUR 66.8 million3 in 2017, compared to EUR 57.2 million in 2016 in comparative terms.
Grifols generated more than 94% of its sales outside Spain. International expansion remains a strategic priority to stimulate the company's organic growth, although each division focuses on specific markets and distinct strategies to optimize sales.
The United States has become a core market for the three main divisions. Revenues in the U.S. and Canada grew by 7.0% (7.7% cc) in 2017 to EUR 2,896.5 million4 . Meanwhile, sales in the European Union rose by 5.4% (5.9% cc) to EUR 687 million4 , headed by growth in countries like Spain, Germany, the United Kingdom and France.
4 Comparable considering the new divisional structure.
Sales in Rest of the World (ROW) also expanded, registering a 6.3% (6.9% cc) increase to EUR 734.6 million4 . Especially noteworthy were the positive sales trends in China and Australia, which led the Asia Pacific region; growth in Latin America, especially Brazil; and the gradual market penetration in Turkey and the Middle East, including Saudi Arabia and Israel.
Sales performance by division:
| In thousands of euros | 12M 2017 | % of Net Revenues |
12M 2016** | % of Net Revenues |
% Var | % Var cc* |
|---|---|---|---|---|---|---|
| BIOSCIENCE | 3,429,785 | 79.4% | 3,195,424 | 78.9% | 7.3% | 7.9% |
| DIAGNOSTIC | 732,369 | 17.0% | 691,701 | 17.1% | 5.9% | 6.8% |
| HOSPITAL | 105,649 | 2.4% | 102,251 | 2.5% | 3.3% | 3.3% |
| BIO SUPPLIES | 66,791 | 1.6% | 57,239 | 1.4% | 16.7% | 18.1% |
| OTHERS | 18,263 | 0.4% | 34,601 | 0.9% | (47.2%) | (45.4%) |
| INTERSEGMENTS | (34,784) | (0.8%) | (31,386) | (0.8%) | 10.8% | 11.3% |
| TOTAL | 4,318,073 | 100.0% | 4,049,830 | 100.0% | 6.6% | 7.2% |
* Constant currency (cc) excludes the impact of exchange rate movements
** Comparable revenues considering intersegment sales and the reclassification of the biological products for non-therapeutic use sales that are reported as Bio Supplies Division sales from January 2017
Sales performance by region:
| In thousands of euros | 12M 2017 | % of Net Revenues |
12M 2016** | % of Net Revenues |
% Var | % Var cc* |
|---|---|---|---|---|---|---|
| US + CANADA | 2,896,505 | 67.1% | 2,707,579 | 66.9% | 7.0% | 7.7% |
| EU | 686,983 | 15.9% | 651,496 | 16.1% | 5.4% | 5.9% |
| ROW | 734,585 | 17.0% | 690,755 | 17.0% | 6.3% | 6.9% |
| TOTAL | 4,318,073 | 100.0% | 4,049,830 | 100.0% | 6.6% | 7.2% |
* Constant currency (cc) excludes the impact of exchange rate movements
** Comparable considering the new divisional structure
Adjusted EBITDA5 reached EUR 1,305.6 million, which represents 30.2% of revenues and a 14.4% upturn compared to the previous year. In 2016, EBITDA margin was 28.2%.
This significant increase in the EBITDA margin by 200 basis points was motivated mainly by the impact of the share in the NAT donor-screening business acquired in January 2017. It also reflects the higher costs of plasma derived from the investment plan to open new plasma collection centers.
Net R+D+i investments rose in 2017. In comparative6 terms to 2016, they increased by 21.0% to EUR 266.3 million, or 6.2% of revenues, including both in-house and external investments, compared to EUR 220.0 million invested in 2016. Total net R+D+i resources reached EUR 310.8 million taking into account the acquisition of equity stakes in research companies.
5 Excludes non-recurring items and associated with recent acquisitions. 6 Excludes non-recurring items and associated with recent acquisition, with the U.S. tax reform and with the reevaluation of Aradigm's assets.
In comparative terms, recurring6 profits increased by 7.8% compared to 2016 to EUR 587.9 million and represented 13.6% of the group's revenues.
The refinancing process allowed the company to optimize its financial structure and the financial costs arising from the higher levels of debt assumed after acquiring the share of the NAT technology donor-screening business, contributing to maximize profits. Comparable financial results6 were EUR 269.3 million, up from the EUR 233.6 million reported in the same period last year.
The normalized6 effective tax rate was 27.3%.
The U.S. corporate tax reform approved on December 22, 2017 prompted Grifols to recognize non-recurring income that significantly affected its tax expense reported for 2017.
The reduction from 35% to 21% on the U.S. Federal Corporate Income Tax Rate (effective starting January 1, 2018) has required a revaluation of Grifols U.S. deferred tax assets and liabilities. The net positive effect on the group's 2017 results is EUR 171.6 million.
In accordance with the conservatism principle, the company also recognized a total impact of EUR 80.0 million derived from the reevaluation of assets associated with its equity stake in the U.S. firm Aradigm. Aradigm's main asset was obtaining the FDA approval to market its LinhaliqTM. Non-approval has led Grifols to recognize the total impairment of the assets associated with Aradigm (equity stake, intangible assets and financial assets).
In addition, in alignment with the impact recognized in previous quarters, Grifols incurred EUR 23.1 million non-recurring gross costs resulting from the acquisition and subsequent integration of its share in the NAT technology donor-screening business.
Taking into account the aforementioned factors, Grifols' reported profit was EUR 662.7 million, an increase of 21.5% compared to 2016.
Key financial metrics 2017:
| Millones de euros excepto % y BPA | 2017 | 2016 | % Var |
|---|---|---|---|
| INGRESOS NETOS (IN) | 4,318.1 | 4,049.8 | 6.6% |
| MARGEN BRUTO | 49.8% | 47.2% | |
| EBITDA | 1,218.8 | 1,141.3 | 6.8% |
| MARGEN EBITDA | 28.2% | 28.2% | |
| EBITDA AJUSTADO(1) | 1,305.6 | 1,141.3 | 14.4% |
| MARGEN EBITDA AJUSTADO | 30.2% | 28.2% | |
| BENEFICIO RECURRENTE(2) DEL GRUPO | 587.9 | 545.5 | 7.8% |
| % IN | 13.6% | 13.5% | |
| BENEFICIO REPORTADO DEL GRUPO | 662.7 | 545.5 | 21.5% |
| % IN | 15.3% | 13.5% | |
| CAPEX | 271.1 | 268.3 | 1.0% |
| INVERSIÓN NETA I+D | 266.3 | 220.0 | 21.0% |
| BENEFICIO POR ACCIÓN (BPA) | 0.97 | 0.80 | 21.5% |
| Diciembre 2017 | Diciembre 2016 | % Var | |
| TOTAL ACTIVO | 10,920.3 | 10,129.8 | 7.8% |
| PATRIMONIO NETO | 3,634.0 | 3,728.0 | (2.5%) |
| EFECTIVO Y OTROS MEDIOS LÍQUIDOS | 886.5 | 895.0 | (0.9%) |
(1) Excluye partidas no recurrentes y relacionadas con adquisiciones recientes
(2) Excluye partidas no recurrentes y relacionadas con adquisiciones recientes, con la reforma fiscal en
RATIO DE ENDEUDAMIENTO 3,96/(4,34 cc)(3) 3,55/(3,45 cc)(3)
EE.UU. y con la reevaluación de los activos de Aradigm
(3) Cambio constante (cc) excluye las variaciones de tipo de cambio. Ratio de endeudamiento 2016 según datos reportados: no incluye el impacto de la financiación de la adqusición de los activos del negocio de NAT
The company's solid performance and positive cash-flow evolution have reinforced the balance sheet in 2017. Total consolidated assets as of December 2017 rose to EUR 10,920.3 million, compared to EUR 10,129.8 million reported in 2016. This positive variance is due mainly to the acquisition of the share in the NAT donorscreening unit; capital investments (CAPEX); the equity stakes acquired in Access Biologicals and GigaGen; and the increase in equity in Kiro Grifols.
Optimizing the company's working-capital management has continued to play a key role in improving its solid financial position.
Inventory levels dropped slightly to EUR 1,629.3 million, while stock turnover stood at 275 days in 2017, compared to 281 days in December 2016, the result of improved inventory management and a strong plasma proteins sales environment.
Average collection period improved significantly, standing at 24 days (37 days in 2016) following the rollout of optimization measures. Meanwhile, the average payment period decreased from 61 days to 53 in 2017.
In terms of the Spanish legal entities within the group, the average payment period to suppliers was 72.9 days, aligned with last year's average payment period of 72 days.
The company continues to sustain a high operating cash-flow generation, which increased by 52.1% to EUR 841.7 million compared to EUR 553.3 million in 2016. Excluding interest paid on debt, net operating cash flow increases by 43.3% to EUR 1,039.3 million compared to EUR 725.1 million in 2016.
Higher profits, improvements in the average collection period, inventory management, and greater efficiency in its financial management have together enabled Grifols to successfully face its planned investments. The company increased the resources earmarked for investments to more than EUR 580 million: EUR 271.1 in capital investments and EUR 310.8 million in direct and indirect R+D+i investments, including the acquisition of equity stakes in research companies.
Total equity as of December 31, 2017 was EUR 3,634.0 million.
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 common shares (Class A) are listed on the Spanish Stock Exchange and are a component of the Ibex-35 (GRF), while non-voting shares (Class B) trade on the Spanish Stock Exchange (GRF.P) and the U.S. NASDAQ exchange (GRFS) through ADR's (American Depositary Receipts).
Two dividends were paid in 2017 for a total of EUR 218.3 million. In the second quarter of 2017, a second dividend, charged to 2016 earnings (gross amount of EUR 0.1356 per share), was paid out as a final dividend, while in December 2017 an interim dividend was paid on account of 2017 earnings (gross amount of EUR 0.18 per share). Grifols remains committed to dividend payments as a way to remunerate its shareholders.
The group's primary liquidity and capital requirements aim to cover operational expenses; those associated with capital investments (CAPEX), including the maintenance and construction of plants; direct and indirect R+D+i investments, including the acquisition of equity stakes in specific companies and research projects in fields other than the group's core business; as well as debt service.
Historically, Grifols has met its liquidity and capital requirements using its own funds generated from its production activities and external financing. In December 2017, the company's cash position was EUR 886.5 million and its liquidity position was more than EUR 1,250 million, taking into consideration undrawn credit lines.
In 2017, cash flows from operating activities increased by 52.1% to EUR 841.7 million. The main impacts on cash flows from operating activities, which grew by more than EUR 288 million, are as follows:
Grifols actively manages its inventory levels in advance to meet its expected growth plans. In this regard, inventory turnover currently stands at 275 days, compared to 281 days as of December 31, 2016.
Net cash flows allocated to investment activities in 2017 reached EUR 2,185.9 million compared to EUR 506.7 million in 2016, an increase derived mainly from strategic acquisitions aimed at strengthening the growth of the Diagnostic Division. These investments include:
The variation of cash flows for financing activities totaled EUR 1,434.1. The variation stemmed primarily from the USD 1,700 million initial financing to acquire the share in the NAT technology donor-screening unit, and from dividend payouts totaling EUR 218.3 million, which include the final 2016 dividend and an interim dividend paid in December on account of 2017 results.
Grifols' net financial debt was EUR 5,170.4 million as of December 2017, including EUR 886.5 million in cash. The company has EUR 400 million available in undrawn credit lines, which increases its liquidity position to EUR 1,250 million.
The group's net financial debt over EBITDA ratio was 3.96x as of December 2017, although this figure increases to 4.34x not taking into account the exchange rate impact.
Leverage management remains a priority for the company. In order to meet this objective, Grifols maintains high, sustainable levels of operational activities and strong cash flow generation.
Grifols refinanced its debt in 2017 for a total of approximately USD 7,300 million. This includes tranche A, tranche B, an undrawn credit line, the additional USD 1,700 million initial term loan to partially finance the acquisition of the share of the NAT donor-screening unit, and the corporate bond.
The successful completion of the refinancing process has enhanced the company's financial structure, improved its average cost of debt and lengthened its maturity profile.
Below is an outline of Grifols' financial structure and conditions after finalizing the refinancing process:
| STRUCTURE | AMOUNT (in millions) |
CONDITIONS |
|---|---|---|
| TOTAL SECURED SENIOR DEBT | ||
| Tranche - Term Loan A (TLA) | USD 3,000 | Interest rate: LIBOR + 175 basis points Maturity: 2023 |
| Tranche - Term Loan B (TLB) | USD 3,000 | Interest rate: LIBOR + 225 basis points Maturity: 2025 |
| Credit line (revolving multi-currency) | USD 300 | Interest rate: LIBOR + 175 basis points Maturity: 2023 |
| TOTAL UNSECURED SENIOR DEBT | ||
| Bond | EUR 1,000 | Coupon: 3.2% Maturity: 2025 |
Following the acquisition of the share of the NAT donor-screening business, the credit ratings from Standard & Poor's remained unchanged. Moody's revised its credit ratings by one notch, while maintaining a "Stable" outlook for the company.
The refinancing process did not trigger any changes, and both rating agencies affirmed their credit ratings. Current credit ratings:
| Moody's | Standard & Poor's | |
|---|---|---|
| Corporate Rating | Ba3 | BB |
| Senior secured debt | Ba2 | BB |
| Senior Unsecured debt | B2 | B+ |
| Outlook | Stable | Stable |
Grifols also signed a EUR 85 million new loan with the European Investment Bank (EIB) to support R+D+i investments. The EIB's favorable financial conditions include a fixed interest rate, maturity in 2027 and a twoyear grace period.
The demand for plasma derivatives continues to grow as a result of enhanced healthcare coverage, longer life expectancies, new indications, and improved diagnosis of some of the rare conditions that are treated with plasma protein therapies. In this context, Grifols' initiatives to create growth opportunities and strengthen its business projection in 2017 centered on the following lines of action:
• Alpha-1 deficiency in the United States and Europe. This rare disease causes genetic emphysema due to low levels of alpha-1 protein. The condition affects approximately 25 out of 100,0007 people and an estimated 90% of cases remain undiagnosed.
The Bioscience Division continues to concentrate its efforts to improve the diagnosis of the disease and, in collaboration with the Diagnostic Division, foster the development of new diagnostic solutions that improve the management of the treatment.
During 2017, Grifols, through Progenika Biopharma, a group company headquartered in Bilbao (Spain), developed a latest-generation test capable of simultaneously analyzing the most prevalent mutations
7 Source: Orphanet Report Series, Rare Diseases collection, May 2014.
associated with alpha-1 antitrypsin deficiency. The test has FDA approval and since December 2016, carries the CE marking for its commercialization in several European countries. It is the first biological molecular test approved by the FDA that uses the DNA of the patient for the diagnostic, and its development spotlights the complementarity strategy among the group's divisions.
8 Source: www.orphanet.net.
In 2017, the volume of plasma obtained was roughly 9.3 million liters. The key activity indicators in 2017 are as follows:
| Number of plasma donation centers | 190 |
|---|---|
| Average number of donations/day | 30,000 |
| No. of donations analyzed (annual capacity) | + 17.5 million donations |
| Liters of plasma obtained | 9.3 million liters |
| No. of fractionation plants | 4 plants |
| Installed fractionation capacity | 13.9 million liters/year |
As a complement to its core business, Grifols puts its installations, technology, expertise and technical team at the disposal of public donation centers and health public organisms to process its surplus plasma, purify the proteins and return them in their entirety as plasma-derived medicines. This area is called "Industrial Plasma Service".
Grifols processes the plasma originating from the Integral Utilization of Hospital Plasma plan, which has been in effect in Spain for more than 25 years; in the Czech Republic and Slovakia for over 17 years; and in Canada. This fractionation service of industrial hospital plasma is formalized through a "fractionation service agreement" with the health center.
The division significantly increased its production output in 2017 and maintained high levels of efficiencies in its production facilities. A record volume of 44 million units of DG® Gel cards were manufactured, as well as reaching maximum supply levels of erythrocyte reagents (red blood cells). The supply of third-party antigens remained stable, while the manufacture of internally developed instruments and analyzers increased slightly.
The division's opportunities for growth and business projection include:
A significant uptick in sales was noted in 2017 thanks to the rollout of several strategic initiatives designed to create new market opportunities and advance the division's business projection. Among the highlights in 2017:
• The FDA approved Grifols' 500 ml physiological saline solution in polypropylene bags (0.9% sodium chloride), manufactured in its Murcia (Spain) plant, allowing the division to market this product in the U.S. market. The FDA approval also ensures the group's self-sufficiency since it will also be used in the Grifols U.S. plasma collection centers to restore the circulatory volume in donors.
The FDA approval reinforces the division's global expansion and marks an important step forward that opens up the possibility of new future authorizations for other products manufactured in the Murcia and Barcelona facilities. Moreover, it expands Grifols' global expansion efforts and confirms its strategy of fostering the complementary of products and services among its divisions.
• Expansion of Grifols Misterium® cleanroom solutions with the incorporation of airinspace®, a medically effective air and surface decontamination systems. As the exclusive distributor of these products in the United States, Grifols is able to offer a broad portfolio of products for U.S. hospital pharmacies and pharmacies specialized in master formulas.
• Relaunch of the enteral nutrition line to position it as a modern and innovative brand within the clinical nutrition sector.
• In 2017, Grifols signed new third-party manufacturing contracts, consolidating its activity in this area. Moreover, the FDA has granted authorization for Grifols to manufacture a prediluted antiplatelet in the U.S. for a Canadian firm.
The net R+D+i investments increased substantially in 2017. In comparative terms, they rose by 21% relative to 2016 to EUR 266.3 million including in-house and external investments and represented 6.2% of total revenues. Total resources allocated to R+D+i reached EUR 310.7 million, including the aforementioned investments and those made to acquire stakes in research companies.
The group's R+D+i strategy is grounded on a holistic approach that supports both in-house research and investee projects whose research lines complement Grifols' core business. This integrated strategy is articulated through the Grifols Innovation Office, whose aim is to evaluate and expedite the development and marketing of innovative therapies, products and services through internal and external investments. Toward this end, it promotes the continuous improvement of existing products and operations and identifies and implements collaborations with various actors in the field of innovation, including academics and researchers.
As of 2017, Grifols is a majority shareholder in Araclon Biotech (73.22% equity stake); Progenika Biopharma (90.23% equity stake); Kiro Grifols (90% equity stake); and VCN Biosciences (81.34% equity stake). It also holds minority positions in Alkahest (47.58% equity stake); Aradigm Corp. (35.13% equity stake); AlbaJuna Therapeutics (30% equity stake); Singulex (19.33% equity stake); and GigaGen (43.96% equity stake).
Grifols R+D+i has received several accolades for its holistic strategy and long-term vision. PwC's "2016 Global Innovation 1000" listing, mentions Grifols among the 1,000 global companies that invest the most in R+D+i.
Grifols has supported Alzheimer's research since 2004 when it began its first research studies. The research projects currently underway reflect a comprehensive approach that addresses three main lines: plasma proteins treatment, prevention, and early diagnosis. The company has expanded its research in this field to include new possible therapies for other aging-related conditions.
To date, Grifols has focused its Alzheimer's research through in-house projects such as AMBAR (Alzheimer Management by Albumin Replacement) and through investee companies like Araclon Biotech and Alkahest.
One of Grifols' most ambitious clinical trials—the AMBAR study—seeks to expand the therapeutic potential of plasma-derived proteins. This international and multicenter clinical trial has enrolled close to 500 patients with mild to moderate Alzheimer's across 40 hospitals in the U.S. and Spain, and randomly assigned them to one of four groups: three treatment groups and a fourth control group.
AMBAR aspires to stabilize the progress of Alzheimer's disease through a process known as plasma exchange, whereby plasma is extracted using the plasmapheresis technique and replaced with Grifols albumin solution (Albutein®). This treatment is based on the hypothesis that most of the amyloid-beta protein—one of the proteins accumulated in the brain of an Alzheimer's patient—is bound to albumin and circulates in plasma. Extracting this plasma might flush amyloid-beta peptide from the brain into the plasma, thus limiting the disease's impact on the patient's cognitive functions.
In November 2015, Grifols unveiled the intermediate results of the AMBAR study at the 8th International Congress of Clinical Trials on Alzheimer's Disease in Barcelona. These results confirmed the treatment's safety and tolerability. The last patient of the study was enrolled in December 2016 and Grifols plans on presenting AMBAR's Phase IIb/III results in 2018.
Through its investee company Araclon Biotech, Grifols sponsors research lines that focus on the early diagnosis of Alzheimer's by detecting and quantifying certain Aβ variants in different fractions of plasma, as well as on immunotherapy (vaccine) to treat this disorder.
In this regard, in 2017, Araclon received authorization from the Spanish Agency of Medicinal Products and Medical Devices (Agencia Española del Medicamento y Productos Sanitarios) to initiate a Phase II clinical trial for its Alzheimer's vaccine (ABvac40). Patient enrollment has already commenced and will include 120 patients diagnosed with the very early stages of Alzheimer's disease across 22 participating centers in several countries. Expected to proceed over the next two years, the Phase II study aims to establish the proper product dosage for subsequent phases, as well as enhance the treatment safety and tolerability data obtained in Phase I. These results, presented in July 2016, indicated a good profile for both variables.
Immunoglobulins: Efforts focused on developing a 20% concentration subcutaneous immunoglobulin, as well as two studies in Phase II and Phase III with Gamunex® to treat (maintenance) myasthenia gravis (MG), a chronic autoimmune neuromuscular disease that leads to varying degrees of skeletal muscle weakness.
Clotting factors: Recruitment of patients underway for a Phase II clinical trial dedicated to evaluating the safety and efficacy of Alphanate® (FVIII/VWF) as an immune tolerance induction therapy (ITI).
Albumin: Further progress on the PRECIOSA study, centered on the use of albumin to treat cirrhosis. Patient recruitment for a Phase II clinical trial has commenced in the United States. The APACHE study, currently in Phase III, also continues to make inroads to explore albumin therapies for patients diagnosed with acute-onchronic liver failure.
Grifols is a leader in transfusion medicine, with a differential portfolio that includes blood typing products, NAT technology and the production of antigens for immunoassay reagents. The company's R+D projects aim to continue to expand its offerings of integral solutions for blood and plasma donation centers.
Of note among its NAT technology (Procleix® NAT Solutions) R+D projects, the clinical trial in the U.S. for a blood test that detects the babesia virus (Procleix® Babesia) and the conclusion of trials on the Zika virus test (Procleix® Zika), which presently has FDA approval as an IND. The company submitted this test, along with Procleix® Ultrio Elite, for FDA approval and expects a positive outcome in 2018. A new version of the Procleix® Xpress (v.3.0) pipette has also been submitted for FDA approval.
In specialty diagnostics, clinical trials have initiated in the United States to expand the portfolio of blood clotting tests and devices. The division also continues its efforts to broaden the Promonitor® line, used to monitor biologic drugs. Grifols expects FDA approval for several products of its hemostasis line in 2018, including its new Q® Smart and Q® Next analyzers, the result of its on-going R+D efforts.
The Hospital Division's R+D projects focus on developing in-house and third-party initiatives for the Pharmatech line, comprised by IV tools and hospital logistics solutions. In this way, the division promotes its global expansion while addressing the specific needs of the Bioscience Division in alignment Grifols strategy to cultivate synergies among its business lines.
With regard to the in-house IV tools products currently in development, the division has submitted an FDA registration extension to include new packaging formats of its physiological saline solution in polypropylene bags, following its approval in May 2017. The division is also in the process of developing a needle-free physiological saline solution in fleboflex bags for the U.S. and European markets.
In terms of third-party manufacturing, the division concluded the development of a red blood cell inactivation set in collaboration with the firm Cerus. At the same time, it has started proceedings to obtain the CE marking and initiated clinical trials in the United States.
Within the Pharmatech line, Grifols continues its efforts on a new prototype of the Grifill® system, used to prepare intravenous mixtures.
Grifols invested EUR 271.1 million in 2017 to expand and enhance the production capacities of all three of its divisions. This figure is included in the 2016-2020 Capital Investment Plan, with EUR 1,200 million allocated, to ensure the group's long-term sustainable growth.
In 2017, Grifols continued its capital investment plans to expand, renovate, relocate and open new plasma donation centers.
The company aspires to continue consolidating its network of centers, which comprised 190 plasma donation centers as of December 2017 and meet its planned target.
A substantial share of the investment plan has been allocated to the Bioscience Division, including:
The Hospital Division's capital investments focused on increasing the production capacity and efficiency of its IV line to meet the anticipated growing demand in new markets, as defined in its international expansion plans.
On a corporate level, Grifols inaugurated a new 10,000 square-meter office building in Clayton (North Carolina, U.S.) with capacity for 500 employees. The company also relocated its head offices in Brazil to a new 1,300 square-meter building that includes both offices and a distribution warehouse.
On January 2017, Grifols completed the transaction of Hologic's share in the NAT donor-screening unit for a final purchase price of USD 1,865 million. The agreement included activities related to the research, development and production of reagents and instruments based on NAT technology. A production plant in San Diego, California, in addition to development rights, licenses to patents and access to product manufacturers, are among the assets acquired.
Grifols invested USD 51 million for a 49% stake in Access Biologicals, a U.S. firm headquartered in San Diego, California.
Founded in 2006, Access Biologicals is an industry leader in the manufacture of biological products including specific sera and plasma reagents that are used by biotechnology and biopharmaceutical companies for in-vitro diagnosis, cell culture, and research and development in the diagnostic field. With a fully integrated manufacturing model, the company has an FDA-licensed plasma donation center in Indianapolis, Indiana and a manufacturing plant in Vista, California.
The agreement includes an option to acquire the remaining 51% of the share capital within a five-year timeframe. In addition, as part of the acquisition, Grifols signed a supply contract with Access Biologicals to sell Grifols biological products for non-therapeutic use.
In February 2017, Grifols' acquisition of six plasma centers from Kedplasma, LLC for USD 47 million became effective.
Grifols acquired a 43.96% equity stake in GigaGen Inc. for USD 35 million. GigaGen is a biopharmaceutical company based in San Francisco, California specialized in the development of pre-clinical biotherapeutics, with a focus on discovering new biological treatments by using antibodies derived from millions of cells within immune repertoires. Among other applications, its innovative technology platform enables identifying and analyzing the genetic diversity of B cells to convert them into polyclonal recombinant antibodies (biotherapeutics) to improve the treatment for patients with severe diseases.
In addition, Grifols and GigaGen have entered into a research and collaboration agreement whereby, in exchange of a collaboration fee of USD 15 million, GigaGen will carry out research activities to develop recombinant polyclonal immunoglobulin therapies derived from human B cells for the treatment of human diseases.
Grifols increased its capital stake in Kiro Grifols to 90%, acquiring 40% for EUR 12.8 million. The Mondragon Corporation controls the remaining 10%.
Kiro Grifols is a technology company that develops automation systems for the hospital sector, in particular, instruments and devices to automate and monitor key steps in hospital processes, especially in the hospital pharmacy. In this way, the system improves the safety of both patients and health professionals while delivering increased process efficiency.
Grifols currently offers the Kiro® Oncology system, which automates the preparation of intravenous chemotherapy medication and thus minimizes the risk involved for healthcare professionals in contact with these products. As part of the transaction, Kiro Grifols and the Mondragon Corporation extended their production and supply agreement for certain quantities of the Kiro® Oncology hardware component.
Grifols S.A. as the parent company of the group defines the corporate policies regarding non-financial information reflected in this report. The consolidated statement of non-financial information included in this section 6 includes the information related to Grifols, S.A. as a legal entity.
Grifols advocates a vertically integrated business model to enable maximum involvement and control in the different phases of the value chain.
In the case of the Bioscience Division, Grifols exercises complete control over the entire value chain. This entails managing all of the division's strategic operations and processes, starting with the collection of plasma as a raw material through its own network of plasma donation centers to the final products. Plasma proteins are specialty medicines that require long, complex and thorough production cycles to guarantee its quality and safety. Grifols' tight control of the entire chain offers the added value of full product traceability.
Grifols controls all of the strategic activities and processes involved in the Diagnostic Division value chain, including the development, production and commercialization of its products. In 2017, the company integrated the share of the NAT donor-screening unit acquired from Hologic, a key partner in the development of NATtechnology-based tests and diagnostics. The acquisition has further reinforced the division's control over its production processes. The Diagnostic Division's business model is built on complete control over the value chain and on a diversification strategy that includes the distribution and commercialization of third-party products. These products enhance the division's product portfolio and offer complementary solutions to the primary diagnostics fields.
The company also exercises complete control over strategic activities of the Hospital Division's value chain, including the development, production and commercialization of its products and services.
Grifols' risk management applies to all the companies of the group, including investees, and contemplates all types of risk, including fiscal risk.
From a general viewpoint, a risk is considered any threat that an event, action, or omission may prevent Grifols from reaching its objectives. The risk factors that affect Grifols are contemplated, on a general basis, in its risk control and management policy 9 . Among them:
9 http://www.grifols.com/documents/10180/14422120/risk-control-and-management-policy-2017-en/aa73d203-0950-46df-970b-494cb610f5a7
Grifols, at the date of preparation of these consolidated financial statements, has taken the necessary measures to mitigate any possible effects arising from the aforementioned events.
The overriding objective of the company's risk control and management policy is to instill greater confidence in the achievement of Grifols objectives among patients, donors, employees, shareholders, customers, vendors and other stakeholders, through the anticipation, control and management of the risks. The risk control and management policy is further developed and supplemented by specific risk policies.
The Board of Directors of Grifols is responsible for approving the risk control and management policy.
The company's Audit Committee supervises the efficiency of the risk control and management system and reviews it periodically. The Internal Audit Department helps the Audit Committee in these functions. The company's top management is responsible for risk management, for identifying and evaluating significant risks, and how to respond to these. In considering its response, the management of Grifols assesses the effects on the business as well as expected costs and benefits.
The risk control and management system is based on the following principles:
Through its rules and procedures of control and risk management, Grifols aims to develop a rigorous and constructive control framework in which all employees understand their functions and obligations.
Article 5 of the consolidated financial statements, included in the annex, outlines the policy for control and management of the principal risks of the company.
Grifols risk control and management policy is also available on Grifols' corporate website .
The objectives and guidelines outlined by the Grifols Corporate Responsibility Policy are founded on integrity and transparency; compliance with regulations and prevention of unlawful conduct; commitment to the environment; health and safety; and social commitment.
Grifols Corporate Responsibility Policy is inspired by Grifols corporate values, which shape our identity as an organization, underpin our actions and manifest our commitment to stakeholders.
Grifols has carried out a materiality analysis as a means to identify the most relevant economic, environmental and social impacts of the group's value chain and its influence on stakeholders' decisions. This information is updated annually and reported in the Grifols' Corporate Responsibility Report. The reporting framework to report on the non-financial information is the sustainability reporting standards of the Global Reporting Initiative (GRI). The full report is available for download on the corporate website at http://www.grifols.com.
The 2017 fiscal year was also remarkable in terms of value creation. Grifols increased its total created valueadded to EUR 4,328 million, which it distributed to meet corporate commitments with its stakeholders. Among them were the more than EUR 35 million in community investments; EUR 768 million in employee compensation; EUR 317 million allocated to financial creditors; EUR 218 million to pay shareholder dividends; and over EUR 680 million in taxes including those paid on behalf third parties.
The Grifols workforce increased 23%, compared to the previous year, to 18,300 employees in 2017. The number of employees in Spain continued its upward trend, growing by 6.3% compared to 2016, to 3,649 jobs at the close of 2017. Also of note is the 29% growth in the United States, where the company has incorporated more than 3,100 employees. Meanwhile, the Grifols workforce in the ROW (rest of the world) grew by 10%. 98% of employees have permanent contracts.
In terms of diversity, Grifols workforce is gender balanced. Women comprise 57% of the Grifols employees, while men the remaining 43%, evidencing the company's ongoing efforts to promote gender equality. Gender diversity is also present at the Board of Directors, where 31% are female. This representation already surpasses the 2020 CNMV recommended level.
The average seniority of Grifols employees is 5.7 years and the average age is 37.8 years. The majority of the labor force (58.4%) is less than 40 years old.
Grifols places great importance on promoting diversity and inclusion in the workplace. The company takes immense pride in its diversified talent pool and commitment to maintaining an environment free of discrimination and harassment regardless of race, religion, nationality, gender, disability, sexual orientation, age or any other reason. Grifols promotes an equal-opportunity policy for all members of the organization with regard to hiring, training, compensation, promotion and professional development based on attitudes and aptitudes.
As a result of its firm commitment to its talent pool, Grifols was distinguished among the best 500 global companies to work for by Forbes magazine. The mention of Grifols on this worldwide ranking confirms its status as an exceptional global employer and a staunch advocate of workplace diversity.
Continuous training and development form the cornerstones of Grifols' human resources efforts. The company promotes talent management and employee retention through an equal pay policy, promotion, professional development and the implementation of specific technical-scientific training, as well as the development of business and managerial competencies.
The company organizes training, career development and competency programs for its various employee groups through its academies, namely the Grifols Academy of Plasmapheresis, the Grifols Academy and the Grifols Academy of Immunohematology. Of note are the employee programs for new hires; employee performance review programs; and the five-year leadership program designed for the company's mid- and toplevel managers throughout the world. The company also reinforced its programs on technical training and standards on specific issues, such as good management practices (GMP), the equality plan and compliance, among others.
In 2017 Grifols professional development initiatives exceeded 590,000 hours and an average of more than 36 training hours per employee.
Grifols Health and Safety Policy strive to constantly apply the strictest health, safety and risk prevention criteria in the workplace. Occupational health and safety activities are systematically carried out in accordance with the Occupational Health and Safety Plan included in the management program.
Moreover, this policy guarantees that all the group's companies and collaborating companies comply with the regulations, rules and provisions applicable in each different country according to the national legislation and also in compliance with Grifols own safety standards.
Grifols Health and Safety management system is grounded on a process of continuous improvement. Among its areas of activity are the adequate definition of the management objectives for each company; the continuous monitoring of prevention planning; and the application of active and reactive controls to evaluate the effectiveness of the system and active participation of the management of each company.
The company continuously monitors the accident rate in its centers as part of its on-going monitoring of health and safety issues. In addition, it has a prevention department that provides services to the entire group. The accident rate has fallen in 2017, mainly due to its reduction in Spain. During the year, a greater number of safety inspections were carried out. The rate corresponding to 2017 will be updated in the Corporate Responsibility Report.
A new behavior-based safety program has been designed which will be implemented in the United States and Spain during 2018. The program frames the issue of safety from a team-leadership perspective and seeks a proactive and collaborative approach between workers and managers to determine safer work processes.
Occupational safety and health training remains an indispensable tool. In 2017, 94,293 hours (68,909 hours in 2016) were allocated to training in Health and Safety and the Environment, which means an average of 5.9 hours of training per employee (4.9 hours per employee in 2016).
In Spain, Grifols work centers are OHSAS 18.001: 2007 certified. International subsidiaries have established their own individual systems in line with corporate policies and adapted to each country.
Environmental management is one of the pillars of the group's corporate responsibility. It is supported by the tenets of the Environmental Policy, approved by the company. Grifols ensures solid environmental management by integrating the applicable environmental regulations into its manufacturing methods and other organizational processes, starting in the design phase. Moreover, it fosters employee training on environmental conservation within its areas of responsibility as well as pinpointing new areas for improvement.
Investments in environmental assets in 2017 for the protection of the environment, including those related to waste, water cycle and atmospheric emissions and energy have amounted to EUR 8.5 million and the expenses attributed to environmental management have been EUR 13.6 million.
In 2017, the total consumption of the group's production facilities10 of its three divisions in Spain, the United States and Ireland were as follows:
10 Includes Grifols plants in U.S (Los Angeles, Emeryville and Clayton), Spain (Barcelona and Murcia) and Ireland (Dublin), integrated in the three divisions.
The main objectives outlined in 2017-2019 Environmental Program include reducing the annual consumption of electricity, natural gas and water in the group's production centers, as well as improving waste management and increasing its recovery. Notable progress has been made during its first year of implementation10. Below are the main objectives set as well as some of the actions developed or in process:
Electricity:
Natural gas:
Enhanced waste management treatment in the group's various production plants:
As in 2016, all of the aforementioned objectives are tied to concrete targets, human resources, economic resources and deadlines.
Grifols main production plants consumed 4.4 million of kWh renewable energies in 2017.
Between 2017 and 2018, the company is carrying out energy audits in its plants in Spain and the U.S. to detect and implement potential energy-efficiency improvements. Furthermore, a feasibility study was executed in the Emeryville installations to install solar panels in some of the buildings.
Every year, Grifols takes part in the Carbon Disclosure Project (CDP), a program that evaluates companies' organizational strategy and performance with regard to climate change. The CDP2016 participant questionnaire, presented in June 2017, gave Grifols the same "B management" mark as in the previous year. This level indicates that Grifols is taking effective measures to reduce its carbon emissions, that it measures and manages its carbon footprint, and that it develops a strategy and policy to implement actions that reduce the adverse environmental effects of climate change.
Also carried out was a verification of scopes I and II, which include direct and indirect emissions associated with the energy consumption of Grifols.
Grifols' environmental management program is certified according to ISO 14001. This certification assures the identification and compliance with all applicable environmental legislation; the identification of the environmental aspects of the company's processes and products and the implementation of measures for pollution prevention.
The Spanish companies are certified since 2004 and Grifols Clayton plant is ISO 14001-certified since 2016. The company continues its efforts to obtain ISO certification for its other plants. In 2017, Grifols focused on implementing ISO 14001:2015 in the Diagnostic Division's Emeryville plant. It has also initiated proceedings to obtain the certification in the Bioscience Division's plant in Los Angeles, creating the Grifols Biologicals Environmental Committee to this end.
As of to date, over half of the total Grifols production is manufactured in ISO 14001 certified plants.
Grifols has corporate policies in place on corporate responsibility, communication with financial market participants, tax compliance and best practices, and an internal code of conduct for matters relating to stock markets. All of these policies have been approved by Grifols' Board of Directors and published on the corporate website.
One of the key areas of focus in transparency in 2017 relates to interactions and transfers of value with healthcare professionals and institutions in the sector. Industry interactions with the medical profession have a profound and positive impact on patient treatment and the company's ongoing research efforts.
Grifols voluntarily adopted the practices defined in the new European Federation of Pharmaceutical Industries and Associations (EFPIA) Disclosure Code on 2015. In 2017, for the second consecutive year, the company disclosed all of its payments and transfers of value made to healthcare professionals and healthcare organizations in 33 countries, including Spain, over the 2016 reporting period.
Although the EFPIA disclosure code applies to medicines, Grifols expanded its scope to include transfers unrelated to medications and to its three main divisions: Bioscience, Diagnostic and Hospital. Grifols applies this policy of transparency in the United States as stipulated by the Centers for Medicaid and Medicare Services (CMS). The company plans on its implementation in other countries including Australia and Japan.
Grifols Anti-Corruption Policy defines the standards of conduct, not only for management and employees, but also for others who collaborate in the company's day-to-day operations. Grifols employs several review processes to pursue compliance, involving local management teams of Grifols subsidiaries and other management team members.
An International Compliance Review Board (ICRB) has been established to oversee and evaluate the implementation and effectiveness of Grifols policies and procedures related to the current and ongoing compliance with applicable anti-corruption laws.
Grifols Anti-Corruption Policy is accessible to all employees through its corporate website. Moreover, the company delivers specific training to employees and governance body members who are more likely to observe instances of corruption.
To ensure compliance with the company's anti-corruption policies and procedures, Grifols business partners must go through a thorough process of due diligence prior to the authorization or undertaking of a commercial transaction.
Grifols commitment to society encompasses patients, donor communities, the scientific and medical communities, clients, employees and local communities.
One of the highlights of 2017 was the donation of 140 million international units of blood clotting factors to the World Federation of Hemophilia (WFH) Humanitarian Aid Program. The donation was the company's most significant contribution to the WFH Humanitarian Aid Program to date. According to the WFH, the donation will secure a projected average of 10,300 doses to treat approximately 6,000 patients per year in developing countries worldwide through 2021, where access to adequate treatment is often lacking or absent.
Grifols also continued its support of the John. W. Walsh Research Fund with a USD 1 million award. Founded in 1995, the foundation funds research projects aimed at improving the health and wellbeing of patients afflicted with Alpha-1 Antitrypsin Deficiency.
The company also channels its social commitment through the Fundació Víctor Grífols and the Fundación Probitas.
The respect for an individual's dignity and the rights inherent to them are an essential requirement for Grifols, whose mission is to improve the health of people around the world. This principle also guides Grifols' commitment to support and foster the wellbeing in the communities where it operates.
For this reason, Grifols' ethical code governs the conduct of employees and collaborators, promoting the strictest compliance of applicable legislation in all its activities and operations. This commitment includes advocating and respecting human rights. Grifols also offers formal channels available for all employees and third parties to anonymously report any possible case of incompliance or misconduct.
The treasury share operations executed in the 2017 fiscal year are outlined in the consolidated annual report enclosed to this report.
Following the close of the fiscal year, Grifols reinforced its Hospital Division by acquiring a 51% stake in the technology firm MedKeeper for USD 98 million.
MedKeeper is a technology firm that develops and markets mobile and web-based technology solutions for the management of hospital pharmacies. Its PharmacyKeeper product portfolio includes solutions to improve efficiency and safety of processes, as well as enhanced compliance and communication throughout the value chain.
The acquisition complements Grifols' Pharmatech line and enhances its presence in the U.S. market.
In 2017, Raimon Grífols Roura and Víctor Grífols Deu concluded their first year as the top executives of Grifols, maintaining its path of growth and consolidation as a solid, diversified and profitable company.
Grifols also finalized its 2013-2017 strategic plan, focused on making the company of one of the most efficient and competitive of the sector. The company's performance, in both qualitative and quantitative terms, confirms its on-going progress and expansion as defined by its strategic growth plan.
From a leadership and management point of view, the company continues its trend of solid, progressive and sustainable development.
Grifols also defined its 2018-2022 plan, which aims to reinforce its role as a global company that explores, drives and capitalizes its acquired know-how and innovation potential to continue improving patient care and support of healthcare professionals through a keen focus on the technology, safety and efficiency of its divisions.
The company maintains its strategy of sustainable growth. The main basis of the road map for the next five years are: innovation, where Grifols will continue to work on the development of a differentiated product portfolio; a focus on the client to respond to patient and health professional needs; advancement in the global expansion of the company, retaining the United States as a priority market; an increase in company growth, both organic and via acquisitions, where enhanced competitiveness will continue to play a pivotal role; and a firm policy of human resources oriented toward talent retention and recruitment and the continuous training of the Grifols professionals.
Grifols Corporate Governance Annual Report for 2017 is part of this Consolidated Directors' Report. It is available on the Grifols corporate website and at the Comisión Nacional del Mercado de Valores (Spanish Stock Exchange Commission) from the date of publication of Grifols consolidated financial statements.
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 | 2017 Recurrent P&L |
Non-recurring items |
2017 Reported P&L |
2016 Recurrent P&L (4) |
% Var 2017 Recurrent vs 2016 Recurrent |
|---|---|---|---|---|---|
| NET REVENUE (NR) | 4,318,073 | 4,318,073 | 4,049,830 | 6.6% | |
| COST OF SALES | (2,164,762) | (1,300) (1) | (2,166,062) | (2,137,539) | 1.3% |
| GROSS MARGIN | 2,153,311 | (1,300) | 2,152,011 | 1,912,291 | 12.6% |
| % NR | 49.9% | 49.8% | 47.2% | ||
| R&D | (223,742) | (64,578) (2) | (288,320) | (197,617) | 13.2% |
| SG&A | (839,480) | (20,868) (1) | (860,348) | (775,266) | 8.3% |
| OPERATING EXPENSES | (1,063,222) | (85,446) | (1,148,668) | (972,883) | 9.3% |
| OPERATING RESULT (EBIT) | 1,090,089 | (86,746) | 1,003,343 | 939,408 | 16.0% |
| % NR | 25.2% | 23.2% | 23.2% | ||
| FINANCIAL RESULT | (269,251) | (18,483) (2) | (287,734) | (233,589) | 15.3% |
| SHARE OF RESULTS OF EQUITY ACCOUNTED INVESTEES | (14,051) | (5,836) (2) | (19,887) | 6,933 | (302.7%) |
| PROFIT BEFORE TAX | 806,787 | (111,065) | 695,722 | 712,752 | 13.2% |
| % NR | 18.7% | 16.1% | 17.6% | ||
| INCOME TAX EXPENSE | (220,236) | 185,828 (3) | (34,408) | (168,209) | 30.9% |
| % OF PRE-TAX INCOME | 27.3% | 4.9% | 23.6% | ||
| CONSOLIDATED PROFIT | 586,551 | 74,763 | 661,314 | 544,543 | 7.7% |
| RESULT ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | (1,386) | (1,386) | (913) | 51.8% | |
| GROUP PROFIT | 587,937 | 74,763 | 662,700 | 545,456 | 7.8% |
| % NR | 13.6% | 15.3% | 13.5% | ||
| NON-RECURRING ITEMS | 74,763 | (74,763) | 0 | ||
| REPORTED GROUP PROFIT | 662,700 | 662,700 | 545,456 | 21.5% | |
| % NR | 15.3% | 15.3% | 13.5% | ||
| DEPRECIATION & AMORTIZATION | 215,490 | 215,490 | 201,869 | 6.7% | |
|---|---|---|---|---|---|
| EBITDA | 1,305,579 | (86,746) | 1,218,833 | 1,141,277 | 14.4% |
| % NR | 30.2% | 28.2% | 28.2% |
(1) Non-recurring items related to the Hologic acquisition
(2) Non-recurring items related to the Aradigm assets reassessment
(3) Non-recurring impact of the U.S. tax reform and tax related to other non-recurring items
(4) As per 2016 P&L reported
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
|---|---|---|---|
| REPORTED NET REVENUES | 4,318,073 | 4,049,830 | 6.6% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 25,122 | ||
| NET REVENUES AT CONSTANT CURRENCY | 4,343,195 | 4,049,830 | 7.2% |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
|---|---|---|---|
| REPORTED BIOSCIENCE NET REVENUES | 3,429,785 | 3,195,424 | 7.3% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 17,757 | ||
| REPORTED BIOSCIENCE NET REVENUES AT CONSTANT CURRENCY | 3,447,542 | 3,195,424 | 7.9% |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
| REPORTED DIAGNOSTIC NET REVENUES | 732,369 | 691,701 | 5.9% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 6,092 | ||
| REPORTED DIAGNOSTIC NET REVENUES AT CONSTANT CURRENCY | 738,461 | 691,701 | 6.8% |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
| REPORTED HOSPITAL NET REVENUES | 105,649 | 102,251 | 3.3% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 23 | ||
| REPORTED HOSPITAL NET REVENUES AT CONSTANT CURRENCY | 105,672 | 102,251 | 3.3% |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
| REPORTED BIO SUPPLIES NET REVENUES | 66,791 | 57,239 | 16.7% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 780 | ||
| REPORTED BIO SUPPLIES NET REVENUES AT CONSTANT CURRENCY | 67,571 | 57,239 | 18.1% |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
| REPORTED OTHERS NET REVENUES | 18,263 | 34,601 | (47.2%) |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 622 | ||
| REPORTED OTHERS NET REVENUES AT CONSTANT CURRENCY | 18,885 | 34,601 | (45.4%) |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
| REPORTED INTERSEGMENTS NET REVENUES | (34,784) | (31,386) | 10.8% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | (152) | ||
| REPORTED INTERSEGMENTS NET REVENUES AT CONSTANT CURRENCY | (34,936) | (31,386) | 11.3% |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
|---|---|---|---|
| REPORTED U.S. + CANADA NET REVENUES | 2,896,505 | 2,707,579 | 7.0% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 18,476 | ||
| U.S. + CANADA NET REVENUES AT CONSTANT CURRENCY | 2,914,981 | 2,707,579 | 7.7% |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
| REPORTED EU NET REVENUES | 686,983 | 651,496 | 5.4% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 3,063 | ||
| EU NET REVENUES AT CONSTANT CURRENCY | 690,046 | 651,496 | 5.9% |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
| REPORTED ROW NET REVENUES | 734,585 | 690,755 | 6.3% |
| VARIATION DUE TO EXCHANGE RATE EFFECTS | 3,582 | ||
| ROW NET REVENUES AT CONSTANT CURRENCY | 738,167 | 690,755 | 6.9% |
| In millions of euros | 12M 2017 | 12M 2016 | % Var |
|---|---|---|---|
| R&D RECURRENT EXPENSES IN P&L | 223.2 | 197.6 | |
| R&D CAPITALIZED | 43.3 | 21.9 | |
| R&D DEPRECIATION & AMORTIZATION & WRITE OFFS | -14.7 | -6.2 | |
| R&D CAPEX FIXED ASSETS | 3.4 | 4.5 | |
| R&D EXTERNAL | 11.0 | 2.2 | |
| R&D NET INVESTMENT | 266.3 | 220.0 | 21.0% |
| In thousands of euros | 12M 2017 | 12M 2016 | % Var |
|---|---|---|---|
| PP&E ADDITIONS | 260,347 | 263,588 | |
| SOFTWARE ADDITIONS | 19,626 | 18,919 | |
| INTEREST CAPITALIZED | (8,839) | (14,020) | |
| CAPEX | 271,134 | 268,487 | 1.0% |
| In millions of euros except ratio | 12M 2017 | 12M 2016 |
|---|---|---|
| NET FINANCIAL DEBT | 5,170.4 | 4,047.1 |
| EBITDA ADJUSTED | 1,305.6 | 1,141.3 |
| LEVERAGE RATIO | 3.96 x | 3.55 x |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At their meeting held on 23 February 2018, 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 2017 to 31 December 2017. The consolidated annual accounts comprise the documents that precede this certification.
| Victor Grifols Roura | Raimon Grifols Roura | Víctor Grifols Deu |
|---|---|---|
| (signed) | (signed) | (signed) |
| President – Board |
Co-Chairman | |
| Co-Chairman | ||
| member | ||
| Carina Szpilka Lázaro | Tomás Dagà Gelabert | Thomas Glanzmann |
| (signed) | (signed) | (signed) |
| Board member | Board member | Board member |
| Iñigo Sánchez-Asiaín | Anna Veiga Lluch | Luis Isasi Fernández de |
| Mardone | Bobadilla | |
| (signed) | (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
| Recoverable Amount of Investments in Group Companies | ||||
|---|---|---|---|---|
| See notes 4 and 12 to the annual accounts | ||||
| Key Audit Matter As described in the notes to the annual accounts, at 31 December 2017 the Company has recognised non-current investments in Group companies and associates totalling Euros 3,124,453 thousand. The Company performs an annual assessment of the existence of indications of impairment of investments in Group companies and estimates the recoverable amount at reporting date of those entities for which indications of impairment exist. The recoverable amount of these investments is |
How the Matter was Addressed in Our Audit Our audit procedures comprised the following: assessing the design and implementation of key controls established by the Company with respect to the process of estimating the recoverable amount of investments in Group companies, evaluating the criteria used by the Company in identifying indications of impairment of investments in Group companies, assessing the reasonableness of the methodology ۰ |
|||
| 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. |
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. |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Note | 2017 | 2016 |
|---|---|---|
| 10,356,819 | ||
| 10,356,819 | ||
| 14,213,035 | ||
| 12,357,764 | ||
| 7,537,882 | 1,855,271 | |
| Note 7 | 56,602,713 | 54,967,172 |
| 7,465,344 | 5,296,479 | |
| 36,184,109 | 36,190,026 | |
| 12,953,260 | 13,480,667 | |
| 1,792,949,086 | ||
| Note 12 | 3,124,452,858 | 1,769,306,094 |
| Note 14 | 1,748,441,128 | 23,642,992 |
| Note 14 | 1,608,091 | 1,600,105 |
| 1,608,091 | 1,600,105 | |
| Note 21 | 10,936,470 | 5,766,817 |
| 4,974,147,971 | 1,879,853,034 | |
| 4,553,191 | ||
| 4,553,191 | ||
| 78,479,084 | ||
| 744,176 | ||
| Note 23 | 19,485,499 | 14,775,638 |
| 352,704 | 152,569 | |
| 117,449 | 94,216 | |
| Note 21 | 48,155,917 | 55,924,688 |
| Note 21 | 6,296,251 | 6,787,797 |
| Note 14 | 97,473,673 | 43,763,271 |
| 43,763,271 | ||
| -- | ||
| 15,883 | ||
| 15,883 | ||
| 6,344,710 | ||
| 12,703,313 | ||
| 12,703,313 | ||
| 193,116,198 | 145,859,452 | |
| 5,167,264,169 | 2,025,712,486 | |
| Note 5 Note 6 Note 14 Note 14 Note 15 |
12,911,968 12,911,968 19,194,743 11,656,861 4,872,893,986 5,216,392 5,216,392 75,412,980 1,005,160 22,474,552 74,999,121 16,033 16,033 6,048,768 8,948,352 8,948,352 |
| Equity and Liabilities | Note | 2017 | 2016 |
|---|---|---|---|
| Capital and reserves | Note 16 | 1,582,702,913 | 1,447,330,445 |
| 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 | 358,660,877 | 254,958,603 | |
| (Treasury stock and equity holdings) | (62,422,309) | (68,710,268) | |
| Profit for the year | 341,327,404 | 321,792,932 | |
| (Interim dividend) | (122,986,278) | (122,908,351) | |
| Other equity instruments | 13,871,154 | 7,945,464 | |
| Grants, donations and bequests | 123,265 | 133,981 | |
| received | |||
| Total equity | 1,582,826,178 | 1,447,464,426 | |
| Non-current payables | Note 19 | 1,679,299,634 | 21,828,930 |
| Promissory notes | 985,248,207 | -- | |
| Loans and borrow ings | 690,441,900 | 12,165,690 | |
| Finance lease payables | Note 8 | 1,861,931 | 2,097,796 |
| Other financial liabilities | 1,747,596 | 7,565,444 | |
| Group companies and associates, | |||
| non-current | Note 19 | 1,790,682,269 | 456,552,495 |
| Deferred tax liabilities | Note 21 | 1,859,414 | 4,972,943 |
| Total non-current liabilities | 3,471,841,317 | 483,354,368 | |
| Current provisions | Note 17 | -- | 517,887 |
| Other provisions | -- | 517,887 | |
| Current payables | Note 19 | 17,569,839 | 7,259,284 |
| Promissory notes | 5,244,444 | -- | |
| Loans and borrow ings | 4,653,935 | 4,258,196 | |
| Finance lease payables | Note 8 | 1,071,228 | 1,031,446 |
| Other financial liabilities | 6,600,232 | 1,969,642 | |
| Group companies and associates, | Note 19 | 19,907,750 | 22,241,355 |
| current Trade and other payables |
Note 19 | 75,119,085 | 64,875,166 |
| Current payables to suppliers | 39,404,813 | 27,515,287 | |
| Suppliers, Group companies and | |||
| associates, current | Note 23 | 5,290,662 | 3,538,981 |
| Personnel (salaries payable) | 9,872,640 | 9,941,501 | |
| Current tax liabilities | Note 21 | -- | 3,255,440 |
| Public entities, other | Note 21 | 20,550,970 | 20,623,957 |
| Total current liabilities | 112,596,674 | 94,893,692 | |
| Total equity and liabilities | 5,167,264,169 | 2,025,712,486 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Note | 2017 | 2016 | |
|---|---|---|---|
| Revenues | 590,907,263 | 518,712,218 | |
| Services rendered | Note 24 | 111,327,946 | 109,268,521 |
| Finance income | Note 13 | 39,070,699 | 20,737,322 |
| Dividends | 440,508,618 | 388,706,375 | |
| Self-constructed assets | 4,719,071 | 1,703,114 | |
| Supplies | (2,357,003) | (2,882,124) | |
| Raw materials and consumables used | Note 24 | (2,469,572) | (2,391,287) |
| Subcontracted w ork | -- | (246,649) | |
| Impairment of merchandise, raw materials and other supplies |
112,569 | (244,188) | |
| Other operating income | 6,629,640 | 4,409,344 | |
| Non-trading and other operating income | 6,464,412 | 4,330,095 | |
| Operating grants taken to income | 165,228 | 79,249 | |
| Personnel expenses | (56,966,231) | (50,498,498) | |
| Salaries and w ages | (46,867,614) | (41,401,532) | |
| Employee benefits expense | Note 24 | (9,931,996) | (9,082,678) |
| Provisions | (166,621) | (14,288) | |
| Other operating expenses | (122,344,136) | (116,064,543) | |
| External services | (120,778,366) | (114,713,385) | |
| Taxes | (267,109) | (241,822) | |
| Other operating expenses | (1,298,661) | (1,109,336) | |
| Amortisation and depreciation | Notes 5, 6 y 7 | (12,793,942) | (11,953,544) |
| Non-financial and other capital grants | 14,289 | 14,289 | |
| Impairment and gains/(losses) on disposal of fixed assets |
Note 24 | (674,446) | (2,142,887) |
| Impairment and losses | Note 12 | (674,446) | (2,142,209) |
| Gains/(losses) on disposal and other | Note 7 | -- | (678) |
| Results from operating activities | 407,134,505 | 341,297,369 | |
| Finance income | 412,522 | 412,119 | |
| Other third parties | Note 13 | 2,913 | 8,992 |
| Capitalised borrow ing costs | Note 6 | 409,609 | 403,127 |
| Finance costs | Note 18 | (103,637,249) | (43,691,107) |
| Group companies and associates | Note 23 | (77,098,571) | (41,887,772) |
| Other third parties | (26,538,678) | (1,803,335) | |
| Exchange losses Net finance cost |
Notes 14 y 19 | 1,402,235 (101,822,492) |
179,540 (43,099,448) |
| Profit before income tax | 305,312,013 | 298,197,921 | |
| Income tax | Note 21 | 36,015,391 | 23,595,011 |
| Profit for the year | 341,327,404 | 321,792,932 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Note | 2017 | 2016 |
|---|---|---|
| Profit for the year | 341,327,404 | 321,792,932 |
| 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) 9,360 |
| Total amounts transferred to the income statement |
(10,716) | (4,929) |
| Total recognised income and expense | 341,316,688 | 321,788,003 |
(Expressed in Euros)
| 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)
| 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 2015 | 119,603,705 | 910,727,619 | 223,358,640 | (58,575,170) | 241,755,884 | (119,615,359) | 3,398,990 | 138,910 | 1,320,793,219 |
| Recognised income and expense | -- | -- | -- | -- | 321,792,932 | -- | -- | (4,929) | 321,788,003 |
| Transactions w ith shareholders or ow ners |
|||||||||
| Net movement in treasury stock | -- | -- | (181,625) | (10,135,098) | -- | -- | -- | -- | (10,316,723) |
| Interim dividend | -- | -- | -- | -- | -- | (122,908,351) | -- | -- | (122,908,351) |
| Restricted share plan | -- | -- | -- | -- | -- | -- | 4,546,474 | -- | 4,546,474 |
| Other movements | -- | -- | 26,804,403 | -- | -- | -- | -- | -- | 26,804,403 |
| Distribution of profit/(Application of loss) for the period 2015 |
|||||||||
| Reserves | -- | -- | 28,897,926 | -- | (28,897,926) | -- | -- | -- | -- |
| Dividends | -- | -- | -- | -- | (212,857,958) | 119,615,359 | -- | -- | (93,242,599) |
| 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 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 2017 | 2016 | |
|---|---|---|
| Cash flows from operating activities | ||
| Profit for the year before tax | 305,312,013 | 298,197,921 |
| Adjustments for: | ||
| Dividend income | (440,508,618) | (388,706,375) |
| Proceeds from disposals and sale of fixed assets | -- | 678 |
| Impairment | 674,446 | 2,142,209 |
| Amortisation and depreciation | 12,793,942 | 11,953,544 |
| Finance income | (39,483,221) | (21,149,441) |
| Finance costs | 102,908,118 | 42,522,368 |
| Change in fair value of financial instruments | -- | 998,606 |
| Other income and expenses | 1,535,603 | (14,289) |
| Changes in operating assets and liabilities Inventories |
(663,201) | (218,208) |
| Trade and other receivables | (5,194,213) | 30,465,157 |
| Other current assets | 295,942 | (1,213,718) |
| Trade and other payables | 14,834,285 | (14,023,114) |
| Other current assets and liabilities | 37,077 | 410,368 |
| Other cash flows from operating activities | ||
| Interest paid | (93,812,559) | (42,526,834) |
| Dividends received | 365,509,497 | 388,706,375 |
| Interest received | 38,947,344 | 21,726,468 |
| Income tax paid (received) | 56,129,584 | (12,925,620) |
| Cash flows from operating activities | 319,316,039 | 316,346,095 |
| Cash flows from investing activities | ||
| Payments for investments | ||
| Group companies and associates | (1,349,494,019) | (166,872,286) |
| Intangible assets | (7,815,892) | (4,349,956) |
| Property, plant and equipment | (8,122,575) | (3,916,733) |
| Investment property | (5,618,263) | (7,999,130) |
| Other financial assets | (16,850) | (51,728) |
| Proceeds from sale of investments | ||
| Group companies and associates | -- | 88,344,008 |
| Other financial assets | 8,715 | 116,911 |
| Cash flows used in investing activities | (1,371,058,884) | (94,728,914) |
| Cash flows from financing activities | ||
| Proceeds from and payments for equity instruments | ||
| Acquisition of own equity instruments | -- | (12,685,523) |
| Sale of own equity instruments | -- | 919,963 |
| Proceeds from and payments for financial liability instruments | ||
| Disposal | ||
| Promissory notes | 1,000,000,000 | |
| Loans and borrowings | 686,761,564 | (2,187,417) |
| Group companies and associates | (392,437,491) | 18,091,328 |
| Financing costs included on the amortised costs of the debt | (28,075,862) | -- |
| Dividends and interest on other equity instruments paid | ||
| Dividends | (218,260,327) | (216,150,950) |
| Cash flows from/(used in) financing activities | 1,047,987,884 | (212,012,599) |
| Net decrease in cash and cash equivalents | (3,754,961) | 9,604,582 |
| Cash and cash equivalents at beginning of year | ||
| 12,703,313 | 3,098,731 |
(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.
During 2015 the Company was merged with Arrahona Optimus S.L. The registered office of Arrahona Optimus S.L. were located in Barcelona and its principal activity comprised the acquisition and disposal of all types of real estate, the administration, operation and urban or other development thereof, whether through leases or any other legally permitted instrument, as well as real estate development of any kind.
The merger project was prepared and signed by the directors of the two companies on 29 May 2015. The merger agreement was approved by the shareholders at their annual general meetings held on 29 May 2015 and duly filed at the Barcelona Mercantile Registry on 3 December 2015. The effective accounting date and acquisition date for the purposes of the merger project was 1 January 2015.
On 23 February 2018 the Company's board of directors authorised for issue the consolidated annual accounts of Grifols, S.A. and subsidiaries for 2017 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 662,700 thousand, total assets 10,920,264 thousand and consolidated equity of Euros 3,633,965 thousand (Euros 545,456 thousand, Euros 10,129,772 thousand and Euros 3,727,978 thousand, respectively, in 2016).
The accompanying annual accounts have been prepared on the basis of the accounting records of Grifols, S.A. The annual accounts for 2017 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 2017 and results of operations, changes in equity, and cash flows for the year then ended.
The directors consider that the annual accounts for 2017, authorised for issue on 23 February 2018, will be approved with no changes by the shareholders at their annual general meeting.
The balance sheet, income statement, statement of changes in equity, statement of cash flows and the notes thereto for 2017 include comparative figures for 2016, which formed part of the annual accounts approved by shareholders at the annual general meeting held on 26 May 2017.
The figures disclosed in the annual accounts are presented in Euros, the Company's functional and presentation currency, rounded off to the nearest Euro.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(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:
(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 2017, 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 2016, approved by the shareholders at their annual general meeting held on 26 May 2017, is as follows:
2016
| Euros | |
|---|---|
| Basis of allocation | |
| Profit for the year | 321,792,932 |
| Distribution | |
| Voluntary reserve | 103,610,532 |
| Mandatory preferred dividend on Class B shares | 2,614,251 |
| Dividends | 215,568,149 |
| 321,792,932 |
At the general meeting held on 26 May 2017, 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 27 October 2017 the Company's board of directors approved the distribution of an interim dividend of Euros 0.18 for every class A and B share with a charge to the 2017 income statement, totalling Euros 122,986 thousand, payable on 5 December 2017. 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 2017 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)
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 31 December non-distributable reserves are as follows:
| 2017 | 2016 | |
|---|---|---|
| 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.
(a) Business combinations
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 |
||
|---|---|---|
| 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 % | ||
|---|---|---|---|
| Buildings | Straight-line | 1‑3 | |
| 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.
(iii) Subsequent costs
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The Company measures and recognises investment property following the policy for property, plant and equipment.
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 Rates % method |
||
|---|---|---|
| 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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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).
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.
(i) Financial instruments
(i) Classification and separation of financial instruments
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(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.
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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.
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.
(xi) Financial liabilities
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(xii) Derecognition and modifications of financial liabilities
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.
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(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.
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 Worldwide Operations Spain S.A. (formerly Logister, 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:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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.
(r) Share-based payment transactions
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 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.
(s) Classification of assets and liabilities as current and non-current
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:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | |
|---|---|
| 2017 | 2016 |
| 25,376,107 | 22,714,923 |
Fully amortised computer software in use at 31 December 2017 and 2016 mainly reflects computer licences.
Details of property, plant and equipment and movement are shown in Appendix II.
During 2017 the Company has capitalised borrowing costs in investments in progress amounting to Euros 410 thousand (Euros 403 thousand in 2016) (see note 4(c)).
Details of the cost of fully depreciated property, plant and equipment in use at 31 December are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Technical installations and machinery | 3,067,451 | 2,659,358 | ||
| Other installations, equipment and furniture | 4,589,425 | 4,308,153 | ||
| Other property, plant and equipment | 8,584,218 | 6,455,583 | ||
| 16,241,094 | 13,423,094 |
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 2017 and 2016 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:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Buildings Other installations |
1,031,791 13,712,960 |
1,031,791 13,278,811 |
|
| 14,744,751 | 14,310,602 |
Details of income and expenses from investment property are as follows:
| Euros | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Assignemet for use income (note 23) Operating expenses From income-generating investments |
15,437,827 (15,548,575) |
15,067,748 (14,966,716) |
|
| Net | (110,748) | 101,032 |
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:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | ||||
|---|---|---|---|---|
| Other property, | ||||
| Land | plant and equipment |
Total | ||
| 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 | |
| Initially recognised at: | ||||
| Fair value | 435,000 | 5,121,690 | 5,556,690 | |
| Accumulated depreciation | (36,164) | (2,449,336) | (2,485,500) | |
| Carrying amount at 31 December 2016 |
398,836 | 2,672,354 | 3,071,190 |
Future minimum lease payments are reconciled with their present value as follows:
| Euros | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Future minimum payments Unaccrued finance costs |
3,211,053 (277,894) |
3,550,825 (421,583) |
|
| Present value | 2,933,159 | 3,129,242 |
Details of minimum payments and the present value of finance lease liabilities, by maturity date, are as follows:
| Euros | |||||
|---|---|---|---|---|---|
| 2017 | 2016 | ||||
| Minimum payments |
Present value | Minimum payments |
Present value | ||
| Less than one year One to five years |
1,242,409 1,968,644 |
1,071,228 1,861,931 |
1,205,697 2,345,128 |
1,031,446 2,097,796 |
|
| 3,211,053 | 2,933,159 | 3,550,825 | 3,129,242 | ||
| Less current portion | (1,242,409) | (1,071,228) | (1,205,697) | (1,031,446) | |
| Total non-current | 1,968,644 | 1,861,931 | 2,345,128 | 2,097,796 |
At 31 December 2017 and 2016, the Company has contracted various office premises and a plot of land under operating leases from third parties, and one related party.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
The most significant lease contracts are as follows:
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.
This contract is valid for 30 years from 1996 and is automatically renewable for five-year periods. One year's notice must be given if either party wishes to cancel the contract.
This contract is valid for 10 years from 2005 and can be renewed for between one and twenty years at the lessee's discretion, which the lessor is obliged to accept, and can be cancelled at any moment in time with four months' notice.
Operating lease payments have been recognised as an expense for the year as follows:
| Euros | ||
|---|---|---|
| 2017 | 2016 | |
| 9,791,091 | 9,770,152 |
Future minimum payments under non-cancellable operating leases are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Less than one year | 6,073,802 | 5,763,500 | ||
| One to five years | 20,975,109 | 20,555,646 | ||
| Over five years | 11,304,386 | 18,679,583 | ||
| 38,353,297 | 44,998,729 |
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)).
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 3,859 thousand at 31 December 2017 (Euros 3,741 thousand in 2016).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(a) Financial risk factors
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 2017 had the US Dollar weakened by 10% against the Euro, with the other variables remaining constant, post-tax profit would have been Euros 96 thousand higher, mainly as a result of converting payables to Group companies (Euros 53 thousand at 31 December 2016).
(iii) Credit risk
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.
(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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At 31 December 2017, had interest rates been 10 basis points higher/lower, with the other variables remaining constant, post-tax profit would have been Euros 1,098 thousand lower/higher, mainly because of higher borrowing costs on variable interest debt (Euros 320 thousand at 31 December 2016).
Details of investments in equity instruments of Group companies are as follows:
| Euros | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Non-current | Non-current | ||
| Group companies Equity investments |
3,136,440,705 | 1,764,016,445 | |
| (11,987,847) | (11,863,401) | ||
| 3,124,452,858 | 1,752,153,044 | ||
| 550,000 | 17,153,050 | ||
| (550,000) | |||
| -- | 17,153,050 | ||
| 3,124,452,858 | 1,769,306,094 |
• 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 has 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, has been recognized as group company equity investment.
• The Company has subscribed to an increase in the capital of Grifols Colombia Ltda contributing an amount of Euros 433,729.
• The Company has 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 has subscribed to an increase in the capital of Grifols Diagnostic Solutions, Inc (hereinafter GDS) contributing an amount of Euros 469,395 thousand.
• The Company has 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 has recognised impairment of Euros (550,000) on the investment based on an analysis of its recoverability.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
• The Company has 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.
• 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 2016, the bonuses accrued in the RSU plan during the year were recognised as an investment by the Company in those subsidiaries with employees adhering to this plan, as it is considered a non-monetary contribution by the shareholder, totalling Euros 3,222 thousand.
• On 3 March 2016 the Company executed the call option on 32.93% of the shares in Progenika Biopharma, S.A. for Euros 25 million following the exercise of call and put options agreed in February 2013. Grifols paid 50% of this investment in Grifols B shares (876,777 shares) and the remaining 50% in cash. The Company guaranteed the selling shareholders the option to repurchase the Class B shares during the first five days following the sale date. As a result, Grifols owned 89.25% of Progenika Biopharma, S.A. share capital subsequent to this transaction.
• In July 2016 the Company 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 this capital increase, Grifols' interest rose to 100% in 2016.
• In 2016, Grifols reorganised its Diagnostic business whereby it contributes to the Group company Grifols Diagnostic Solutions, Inc. (GDS) all interests and investments in subsidiaries dedicated to the Diagnostic business. The Company has transferred the investments in Diagnostic Grifols, S.A, Progenika Biopharma S.A., and Medion Grifols Diagnostic AG to GDS through a non-cash capital contribution amounting to Euros 67,708,136. The difference between the net book value and the group consolidated value of the investments contributed amounts to Euros 29,649,782, which was recognised as an additional investment in GDS against the Company's reserves (see note 4). Additionally, the Company transferred the subordinated loans that it had with Progenika Biopharma S.A, and Medion Grifols Diagnostic AG amounting to Euros 10,609,743 and Euros 3,037,531, respectively, through a capital contribution of Euros 13,647,274 to GDS.
• In 2016, the Grifols Group reorganised its R&D business whereby it contributes to a Group company all interests and investments in subsidiaries dedicated to the R&D business. The Company transferred 35.13% of Aradigm S.A stock to the Group company Grifols Worldwide Operations Limited (GWWO) through a non-cash capital contribution amounting Euros 20,635,872. The difference between the net book value and the group consolidated value of the investments transferred amounts to Euros (2,539,450), which had been recognised as a lower investment in GWWO against Company reserves (see note 4).
• The Company made a capital contribution of Euros 3,934,126 to Grifols Switzerland AG. During 2016 the Company recognised impairment of Euros 3,817,222 thousand on the investment based on an analysis of its recoverability.
• The Company incorporated Grifols Diagnostics Equipment Taiwan Limited for Euros 181 thousand.
• The Company made a cash capital contribution of Euros 19,246,086 to Grifols Brasil Lta and transferred 60% of stock of GRI-CEI, S.A. – Productos para transfusao amounting to Euros 3,339,638. The difference between the net book value of the investments transferred and the value in the Group's consolidated annual accounts amounted to Euros (305,930) which was recognised as a lower investment in Grifols Brasil Lta against Company reserves (see note 4).
• The Company made a non-refundable contribution of Euros 18,000 thousand to Laboratorios Grifols S.A reserves.
• During 2016 the Company recognised an impairment reversal of Euros 1,675 thousand on the investment in Grifols Nordic, A.B based on an analysis of its recoverability.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(a) Investments in Group companies
Details of investments in Group companies are provided in Appendix XV.
Subsidiaries' activities comprise the following:
Industrial activity: consisting of the manufacture, preparation and sale of therapeutic products and other pharmaceutical specialities, particularly hemoderivatives 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 and Grifols Diagnostic Equip Taiwan, Ltd 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.
(i) Net losses and gains by category of financial asset
Net losses and gains by category of financial asset are as follows:
(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 |
| Euros | |||
|---|---|---|---|
| 2016 | Loans and receivables |
Total | |
| Finance income at amortised cost, Group companies Finance income at amortised cost |
20,737,322 8,992 |
20,737,322 8,992 |
|
| Net gains in profit and loss | 20,746,314 | 20,746,314 | |
| Total | 20,746,314 | 20,746,314 |
Details of investments in Group companies and related parties are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Non-current | Current | Non-current | Current | |
| Group | ||||
| Loans | 1,748,441,128 | 3,798,908 | 23,642,992 | 1,676,241 |
| Dividends pending to recover | -- | 74,999,121 | -- | -- |
| Receivables, tax effect (note 21) | -- | 18,380,110 | -- | 41,564,215 |
| Interest | -- | 144,929 | -- | 18,673 |
| Associates | ||||
| Loans | -- | 150,000 | -- | 500,000 |
| Interest | -- | 605 | -- | 4,142 |
| Total | 1,748,441,128 | 97,473,673 | 23,642,992 | 43,763,271 |
At 31 December 2017 the Company has two loans with companies of the group amounting to a total of Euros 1,607,000 thousand, falling due in 2023 and 2025 with an accrue interest at arm's length basis.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At 31 December 2017 the Company has a balance of Euros 141,441 thousand (Euros 23,643 thousand) corresponding to cash pooling accounts with Group companies (see note 19(b)). These receivables accrue interest at a rate of 4.69% (interest rate on the group senior loan plus a spread of 0.75%) and they fall due in 2024 (4.93% interest rate on the group senior loan plus a spread of 0.75% and falling due in 2024 at 31 December 2016).
Details of investments are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Non-current | Current | Non-current | Current | |
| Deposits and guarantees | 1,608,091 | 16,033 | 1,600,105 | 15,883 |
| Total | 1,608,091 | 16,033 | 1,600,105 | 15,883 |
At 31 December 2017 and 2016, 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 614 thousand correspond to leases arranged with a Group company.
Details of trade and other receivables are as follows:
| Euros | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Current | Current | ||
| Group | |||
| Trade receivables (note 23) | 19,485,499 | 14,775,638 | |
| Unrelated parties | |||
| Trade receivables | 1,005,160 | 744,176 | |
| Other receivables | 352,704 | 152,569 | |
| Personnel | 117,449 | 94,216 | |
| Taxation authorities, income tax (note 21) | 48,155,917 | 55,924,688 | |
| Public entities, other (note 21) | 6,296,251 | 6,787,797 | |
| Total | 75,412,980 | 78,479,084 | |
At 31 December 2017 and 2016 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 | |||
|---|---|---|---|
| 2017 | US Dollar | Other | Total |
| Trade and other receivables | |||
| Trade receivables – current | 140,978 | -- | 140,978 |
| Trade receivables from Group companies | 919,956 | 564 | 920,520 |
| and associates – current 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 |
| Euros | ||
|---|---|---|
| US Dollar | Other | Total |
| 1,586 | -- | 1,586 |
| 1,366,564 | ||
| 237,025 | 1,216 | 238,241 |
| 1,604,699 | 1,692 | 1,606,391 |
| 1,604,699 | 1,692 | 1,606,391 |
| 1,366,088 | 476 |
Details of exchange differences recognised in profit or loss on financial instruments, distinguishing between settled and outstanding transactions, are as follows:
| Euros | ||||||
|---|---|---|---|---|---|---|
| 2017 | 2016 | |||||
| Settled | Outstanding | Settled | Outstanding | |||
| Investments in Group companies | ||||||
| Loans to Group companies | 449,354 | (197,159) | (183,796) | -- | ||
| Total non-current financial assets | 449,354 | (197,159) | (183,796) | -- | ||
| Trade and other receivables | ||||||
| Trade receivables – current | 61,990 | 12,833 | 15,557 | 32,252 | ||
| Trade receivables from Group companies – current |
-- | (19,935) | -- | 29,751 | ||
| Current investments | ||||||
| Loans to Group companies | (87,231) | -- | 6,481 | -- | ||
| Total current financial assets | (25,241) | (7,102) | 22,038 | 62,003 | ||
| Total financial assets | 424,113 | (204,261) | (161,758) | 62,003 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At 31 December 2017 and 2016 prepayments include advanced payments for insurance premiums and professional service fees.
Details of equity and movement during the year are shown in the statement of changes in equity.
On 4 January 2016 the Company's new shares resulting from the share split ruling on 3 December 2015 by the Company's board of directors (relevant event nº 231793) started to be traded in accordance with the delegation of authorities by the shareholders at the general shareholders' meeting held on 29 May 2015. This share split entails that the nominal value of the new Class A shares will be Euros 0.25 per share (previously Euros 0.50 per share), whilst the nominal value of the new Class B shares will be Euros 0.05 per share (previously Euros 0.10 per share).
At 31 December 2017 and 2016 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 2017 and 2016.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
This reserve is freely distributable.
Details of reserves and movement during the year are shown in Appendix V.
During 2016 the Company had made several non-cash investments transfers to other Group companies. The difference between the net book value and the Group consolidated value of the investments transferred amounts to Euros 26,804,403 which had been recognised as an investment in Group companies against Company reserves (see notes 4 and 12).
During 2016 the Company had 936,728 delivered treasury stocks ( Class B shares) in exchange for additional noncontrolling interest of the assets of two Group companies giving rise to a loss of Euros 181,625, which was recognised in reserves (see note 12).
During 2017 the Company has settled the RSUS of 2014 giving rise to an increase of Euros 91,742 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.
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 2017 and 2016 the Company does not have any Class A treasury stock.
Movement in Class B treasury stock during 2016 was as follows:
| Number of | ||
|---|---|---|
| Class B shares | Euros | |
| Balance at 1 January 2016 | 4,038,570 | 58,575,170 |
| Acquisitions of Class B shares | 1,628,893 | 23,720,970 |
| Non-cash Disposals of Class B shares | (936,728) | (13,585,872) |
| Balance at 31 December 2016 | 4,730,735 | 68,710,268 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
In July 2016 the Company delivered 59,951 treasury stocks (Class B shares) to Medion´s non-controlling interests in exchange for the 20 % acquired for its subsequent transfer to another Group company (see note 12).
In March 2016 the Company delivered 876,777 treasury stocks (Class B shares) to Progenika Biopharma, S.A. non-controlling interests in exchange for the 16.465% acquired for its subsequent transfer to another Group company (see note 12).
Acquisitions of Class B shares include the purchase of the Class B shares from the vendor shareholders of Progenika Biopharma S.A. for which Grifols exercised the cash option for an amount of Euros 11,035 thousand. This amount was considered as cash used in investing activities in the statement of cash flows
Movement in Class B treasury stock during 2017 is 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 to 0.6% of its capital at 31 December 2017 (0.7% at 31 December 2016).
(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).
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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 has settled the 2014 RSU plan for an amount of Euros 7,303 thousand, of which 3,148 thousand are from the Company.
Because this commitment is settled in shares, it is recognised in equity and it totals Euros 13,871 thousand at 31 December 2017 (Euros 7,945 thousand in 2016).
Movement in other provisions is as follows:
| Euros | |||
|---|---|---|---|
| Provisions for taxes | Total | ||
| At 1 January 2017 | 517,887 | 517,887 | |
| Disposals | (517,887) | (517,887) | |
| At 31 December 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 27 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 also has three contracts with members of senior management who will receive a termination benefit ranging from one to two years' salary, depending on the circumstances.
(a) Classification of financial liabilities by category
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.
(i) Net losses and gains by financial liability category
Net losses and gains by financial liability category are as follows:
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| 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) |
| Euros | |||
|---|---|---|---|
| 2016 | Debts and payables | Total | |
| Finance costs at amortised cost, third parties Finance costs at amortised cost, Group companies |
(1,803,335) (41,887,772) |
(1,803,335) (41,887,772) |
|
| Net losses in profit and loss | (43,691,107) | (43,691,107) | |
| Total | (43,691,107) | (43,691,107) |
Details of Group companies and associates are as follows:
| Euros | ||||||
|---|---|---|---|---|---|---|
| 2017 | 2016 | |||||
| Non-current | Current | Non-current | Current | |||
| Group | ||||||
| Payables | 1,790,682,269 | -- | 456,552,495 | -- | ||
| Loans received | -- | -- | -- | -- | ||
| Payables, tax effect (note 21) | -- | 19,907,750 | -- | 22,241,355 | ||
| Interest | -- | -- | -- | -- | ||
| Associates | ||||||
| Loans received | -- | -- | -- | -- | ||
| Total | 1,790,682,269 | 19,907,750 | 456,552,495 | 22,241,355 |
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Details of payables are as follows:
| Euros | |||||
|---|---|---|---|---|---|
| 2017 | 2016 | ||||
| Non-current | Current | Current | |||
| Unrelated parties | |||||
| Promissory notes | 985,248,207 | 5,244,444 | -- | -- | |
| Loans and borrow ings | 690,441,900 | 4,509,164 | 12,165,690 | 4,226,509 | |
| Interest | -- | 144,771 | -- | 31,687 | |
| Finance lease payables (note 8) | 1,861,931 | 1,071,228 | 2,097,796 | 1,031,446 | |
| Payables | 1,747,596 | 6,593,133 | 7,565,444 | 1,962,543 | |
| Guarantees and deposits received | -- | 7,099 | -- | 7,099 | |
| Total | 1,679,299,634 | 17,569,839 | 21,828,930 | 7,259,284 |
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 3 March 2016 the Company executed the call option on 32.93% of the shares in Progenika Biopharma, S.A. for Euros 25 million following the exercise of call and put options agreed in February 2013. Grifols had paid 50% of this investment in Class B shares (876,777 shares) (see note 16(c)) and the remaining 50% in cash. The Company guaranteed the selling shareholders the option to repurchase the Class B shares during the first five days following the sale date. At 31 December 2017, current payables include an amount of Euros 5 million related to the remaining put and call option pending execution.
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 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:
Details of the maturity of the principal of Term Loan A in Euros at 31 December 2017 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 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 2017 amount to Euros 9,856 thousand (Euros 22.5 thousand at 31 December 2016).
The Company has extended guarantees to banks on behalf of Group companies for Euros 4,014 thousand at 31 December 2017 (Euros 5,960 thousand at 31 December 2016).
Details of trade and other payables are as follows:
| Euros | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Current | Current | ||
| Group | |||
| Suppliers (note 23) | 5,290,662 | 3,538,981 | |
| Related parties | |||
| Suppliers (note 23) | 9,186,754 | 8,282,893 | |
| Unrelated parties | |||
| Suppliers | 30,218,059 | 19,232,394 | |
| Personnel | 9,872,640 | 9,941,501 | |
| Taxation authorities, income tax (note 21) |
-- | 3,255,440 | |
| Public entities, other (note 21) | 20,550,970 | 20,623,957 | |
| Total | 75,119,085 | 64,875,166 |
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 | ||||||
|---|---|---|---|---|---|---|
| 2017 | US Dollar | Argentine Peso |
Brazilian Real |
Other currencies |
Total | |
| Trade and other payables Suppliers Suppliers, Group companies Other financial liabilities |
1,455,143 665,042 140 |
-- 69,160 30 |
-- 167,344 17 |
1,485 634 358 |
1,456,628 902,180 545 |
|
| 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 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | ||||||
|---|---|---|---|---|---|---|
| 2016 | US Dollar | Argentine Peso |
Brazilian Real |
Other currencies |
Total | |
| Trade and other payables | ||||||
| Suppliers | 1,239,712 | 4,602 | -- | (1,860) | 1,242,454 | |
| Suppliers, Group companies | 189,355 | 93,278 | 186,825 | 1,352 | 470,810 | |
| Other financial liabilities | (1,860) | -- | -- | -- | (1,860) | |
| Total current liabilities | 1,427,207 | 97,880 | 186,825 | (508) | 1,711,404 | |
| Total financial liabilities | 1,427,207 | 97,880 | 186,825 | (508) | 1,711,404 |
Details of exchange differences recognised in profit or loss on financial instruments, distinguishing between settled and outstanding transactions, are as follows:
| Euros | ||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Settled | Outstanding | Settled | Outstanding | |
| Current payables | ||||
| Loans and borrow ings | 189,772 | -- | 449,356 | (403,327) |
| Suppliers | 413,180 | 50,299 | 268,372 | (76,413) |
| Group companies | ||||
| Suppliers, Group companies | 445,428 | 83,704 | 12,665 | 28,641 |
| Total current liabilities | 1,048,380 | 134,003 | 730,393 | (451,099) |
| Total financial liabilities | 1,048,380 | 134,003 | 730,393 | (451,099) |
The average payment period to suppliers for fiscal year 2017 and 2016 is 61 days. 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 2017 the Company has made payments of Euros 166,802 thousand (138,148 thousand at 2016). Outstanding payments at 31 December 2017 total Euros 13,320 thousand (9,025 thousand for fiscal year 2016). In 2017 the ratio of paid operations stands at 61 days and the ratio of operations payable stands at 60 days (62 days and 50 days respectively at 2016).
(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 | |||||
|---|---|---|---|---|---|
| 2017 | 2016 | ||||
| Non current |
Current | Non-current | Current | ||
| Assets Deferred tax assets |
10,936,470 | -- | 5,766,817 | -- | |
| Current tax assets Value added tax and similar taxes |
-- -- |
48,155,918 6,296,250 |
-- -- |
55,924,688 6,787,797 |
|
| Total | 10,936,470 | 54,452,168 | 5,766,817 | 62,712,485 | |
| Liabilities | |||||
| Current tax liabilities | -- | -- | -- | 3,255,440 | |
| Deferred tax liabilities | 1,859,414 | -- | 4,972,943 | -- | |
| Social Security | -- | 773,591 | -- | 687,733 | |
| Withholdings | -- | 19,777,379 | -- | 19,936,224 | |
| Total | 1,859,414 | 20,550,970 | 4,972,943 | 23,879,397 |
At 31 December 2016 the Company recognised current Tax liabilities of Euros 3,255,440 in respect of tax payables arising from the 2010 to 2012 Tax inspection closed during 2016. During 2017 these payables have been settled.
Details by company of intercompany receivables and payables resulting from the tax effect of filing consolidated tax returns are as follows:
| Euros | ||
|---|---|---|
| 2017 | 2016 | |
| Current | Current | |
| Receivables (note 14) | ||
| Instituto Grifols,S.A. | 11,568,411 | 29,082,958 |
| Grifols Worldw ide Operations Spain S.A. | 438,372 | 73,180 |
| Biomat,S.A. | 178,902 | 163,107 |
| Grifols International,S.A. | 1,748,464 | 4,298,575 |
| Grifols Movaco,S.A. | 3,904,790 | 4,832,596 |
| Grifols Viajes,S.A. | 61,391 | 125,491 |
| Grifols Engineering,S.A. | 230,386 | 565,106 |
| Diagnostic Grifols S.A. | -- | 2,177,754 |
| Gripdan Invest, S.L | 249,394 | 245,448 |
| 18,380,110 | 41,564,215 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | ||
|---|---|---|
| 2017 | 2016 | |
| Current | Current | |
| Payables (note 19) | ||
| VCN Biosciencies S.L | 314,995 | -- |
| Biomat, S.A. | 290,009 | 126,120 |
| Grifols Viajes, S.A | 6,631 | -- |
| Instituto Grifols,S.A. | 5,123,484 | 5,295,365 |
| Diagnostic Grifols,S.A. | 5,699,196 | 6,420,954 |
| Laboratorios Grifols,S.A. | 4,560,609 | 6,185,503 |
| Grifols Movaco, S.A | 1,061,597 | 607,447 |
| Grifols Worldw ide Operations Spain S.A. | 171,204 | 569,782 |
| Grifols International,S.A. | -- | -- |
| Grifols Engineering,S.A. | 17,557 | 182,093 |
| Gri‑Cel, S.A | 2,574,683 | 2,854,091 |
| Gripdan Invest, S.L | 87,785 | -- |
| 19,907,750 | 22,241,355 |
Balances receivable and payable at 31 December 2017 and 2016 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 | 2013-2017 |
| Value added tax | 2014-2017 |
| Personal income tax | 2014-2017 |
| Capital gains tax | 2014-2017 |
| Tax on Economic Activities | 2014-2017 |
| Social Security | 2014-2017 |
| Non-residents | 2014-2017 |
| Customs duties | 2014-2017 |
Tax inspections on income tax, withholdings and VAT for 2010, 2011 and 2012 were opened in Instituto Grifols, S.A and Grifols Movaco, S.A in July 2014.
In October 2015, an inspection of income tax for 2010, 2011 and 2012 was initiated at Biomat, S.A. as part of the income tax inspection of the aforementioned companies.
At December 2016 the aforementioned Tax inspections were closed. As a result, Euros 838 thousand had been recognised as a loss in the Company's income statement, and additional liabilities of Euros 3, 255,440 arose. During 2017 the payable has been settled.
(a) Income tax
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 Worldwide Operations Spain 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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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:
| Euros | ||
|---|---|---|
| 2017 | 2016 | |
| Current tax Present year |
(32,066,557) | (24,547,939) |
| (32,066,557) | (24,547,939) | |
| Deferred tax | ||
| Source and reversal of temporary differences | ||
| Property, plant and equipment | (229,015) | (232,182) |
| Investments | (7,221) | (954,306) |
| Cost of reducing deferred tax assets recognised in prior years |
(67,141) | (213,117) |
| Deductions generated | (3,232,988) | (2,635,448) |
| Deductions applied | 1,044,945 | 3,512,367 |
| Adjustment of deductions in prior years | (1,457,414) | -- |
| Adjustment of deferred tax assets and liabilities | -- | 1,674,145 |
| Tax provisions | -- | (198,531) |
| (36,015,391) | (23,595,011) |
Details of deferred tax assets and liabilities by type of asset and liability are as follows:
| Euros | |||||||
|---|---|---|---|---|---|---|---|
| Assets | Liabilities | Net | |||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||
| Property, plant and equipment | 247,735 | 237,754 | (1,818,326) | (2,279,795) | (1,570,591) | (2,042,041) | |
| Grants | -- | -- | (41,088) | (44,660) | (41,088) | (44,660) | |
| Restricted share unit retention plan |
1,340,913 | 1,273,775 | -- | (2,648,488) | 1,340,913 | (1,374,713) | |
| Group Financial Investments | 961,526 | 954,306 | -- | -- | 961,526 | 954,306 | |
| Rights to tax deductions and credits |
8,386,296 | 3,300,982 | -- | -- | 8,386,296 | 3,300,982 | |
| Total assets/liabilities | 10,936,470 | 5,766,817 | (1,859,414) | (4,972,943) | 9,077,056 | 793,874 |
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
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
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:
| Euros | ||
|---|---|---|
| 2017 | 2016 | |
| Deferred tax assets relating to temporary differences | 727,111 | 718,291 |
| Total assets | 727,111 | 718,291 |
| Deferred tax liabilities | 1,684,327 | 3,306,889 |
| Net | (957,216) | (2,588,598) |
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 Worldwide Operations Spain S.A., Grifols International, S.A., Grifols Engineering, S.A., Grifols Viajes, S.A., Gri-Cel, S.A. (since 1 January 2009) Gripdant Invest, S.L ( since 1 January 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 | |||
|---|---|---|---|
| 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 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Euros | |||
|---|---|---|---|
| 2016 | |||
| Description | Cost | Accumulated depreciation |
Net |
| Sew age treatment | 141,724 | (64,318) | 77,406 |
| Water saving | 311,021 | (221,420) | 89,601 |
| Electricity saving | 2,053,054 | (664,018) | 1,389,036 |
| Waste management | 243,427 | (236,025) | 7,402 |
| 2,749,226 | (1,185,781) | 1,563,445 |
Environmental expenses amounts to Euros 151,120 in 2017 (Euros 162,280 in 2016).
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 2017 the independent members of the Company's board of director's accrued Euros 925 thousand in their capacity as such (Euros 925 thousand in 2016). In 2017, Directors representing shareholders' interests received remuneration of Euros 1,881 thousand (the Company did not appoint any Directors representing shareholders' interests in 2016). 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 2,951 thousand and Euros 5,739 thousand, respectively (Euros 2,743 thousand and Euros 5,047 thousand in 2016). 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 2017, the Company has paid insurance premiums for civil liability of directors amounting to Euros 190 thousand (Euros 192 thousand in 2016).
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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
(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 | ||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Other supplies used Purchases of spare parts Change in inventories |
3,020,202 (550,630) |
2,853,682 (462,395) |
||
| 2,469,572 | 2,391,287 |
Details of employee benefits expense are as follows:
| Euros | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Employee benefits expense | |||
| Social Security payable by the Company | 7,804,286 | 7,195,003 | |
| Defined contribution plan contributions | 125,026 | 110,807 | |
| Other employee benefits expenses | 2,002,684 | 1,776,868 | |
| Annual contributions | 166,621 | 14,288 | |
| 10,098,617 | 9,096,966 |
The average headcount of the Company, distributed by department, is as follows:
| Number | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Technical area | 84 | 69 | |
| Administration and other | 440 | 413 | |
| General management | 55 | 54 | |
| 579 | 536 |
The average number of Company employees with disability rating of more than 33% distributed by department, is as follows:
40
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
| Number | ||||
|---|---|---|---|---|
| 2017 | 2016 | |||
| Technical area | 1 | 1 | ||
| Administration and other | 5 | 5 | ||
| General management | 1 | 1 | ||
| 7 | 7 |
At 31 December 2017 and 2016 the distribution by gender of Company personnel and the members of the board of directors is as follows:
| Number | ||||||
|---|---|---|---|---|---|---|
| 2017 | 2016 | |||||
| Female | Male | Female | Male | |||
| Technical area | 84 | 14 | 68 | 9 | ||
| Administration and other | 149 | 310 | 149 | 287 | ||
| General management | 26 | 29 | 30 | 26 | ||
| Directors | 4 | 9 | 4 | 9 | ||
| 263 | 362 | 251 | 331 |
KPMG Auditores, S.L. and Grant Thornton S.L as co-auditors of the Company's annual accounts for 2017 have invoiced the Company expenses for professional services amounting to Euros 79,600 (39,800 respectively) during the year ended 31 December 2017.
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 2017 and 2016:
| Euros | ||
|---|---|---|
| 2017 | 2016 | |
| Audit services | 1,571,900 | 1,124,200 |
| Other assurance services | 412,000 | 556,568 |
| 1,983,900 | 1,680,768 |
The amounts in the above table include the total fees for services rendered in 2017 and 2016, irrespectively of the date of invoice.
"Audit services" include the audit services subject to Spanish Audit Law, amounting to Euros 601,500 thousand in 2017 (Euros 259,200 in 2016).
"Other assurance services" mainly includes limited review services for the interim consolidated financial statements, comfort letters related to Debt issuances and a report of agreed procedures provided by KPMG Auditores, S.L to the Company during the year ended 31 December 2017. During the year ended 31 December 2016 mainly includes limited review services for the interim consolidated financial statements.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Grifols, S.A. and subsidiaries Consolidated Annual Accounts at 31 December 2017, includes information regarding other audit services provided by KPMG Auditores, S.L to the Company subsidiaries during the year ended 31 December 2017.
Other entities affiliated to KPMG International have invoiced the Company expenses for other assurance professional services and other professional fees amounting to Euros 66,000 and 7,000 respectively during the year ended 31 December 2017 (Euros 93,000 during 2016).
(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 | - | 0 |
| Transfers | 74,733 | 74,733 |
| Irreversible impairment losses | - | 0 |
| 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 | - | 0 |
| Transfers | - | 0 |
| 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.)
| Computer software |
Emission allowances |
Total | |
|---|---|---|---|
| Cost at 1 January 2016 | 36,417,165 | 139,655 | 36,556,820 |
| Additions | 4,349,176 | 780 | 4,349,956 |
| Disposals | - | (106,836) | (106,836) |
| Transfers | 71,390 | - | 71,390 |
| Irreversible impairment losses | - | (33,599) | (33,599) |
| Cost at 31 December 2016 | 40,837,731 | 0 | 40,837,731 |
| Accumulated amortisation at 1 January 2016 | (25,471,444) | - | (25,471,444) |
| Additions | (5,009,468) | - | (5,009,468) |
| Disposals | - | - | 0 |
| Transfers | - | - | 0 |
| Accumulated amortisation at 31 December 2016 | (30,480,912) | 0 | (30,480,912) |
| Carrying amount at 31 December 2016 | 10,356,819 | 0 | 10,356,819 |
(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 | -- | -- | -- | -- | 0 |
| 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 | |||||
|---|---|---|---|---|---|
| Technical installations and machinery |
Other installations, equipment and furniture |
Under construction and advances |
Other items | Total | |
| Cost at 1 January 2016 | 7,936,384 | 15,133,912 | 5,866,739 | 13,363,182 | 42,300,217 |
| Additions | 1,104 | 372,097 | 1,648,958 | 2,297,701 | 4,319,860 |
| Disposals | (2,626) | (5,800) | -- | (7,005) | (15,431) |
| Transfers | 88,836 | 964,499 | (5,660,426) | 90,853 | (4,516,238) |
| Cost at 31 December 2016 | 8,023,698 | 16,464,708 | 1,855,271 | 15,744,731 | 42,088,408 |
| Accumulated depreciation at 1 January 2016 | (5,708,443) | (9,216,954) | -- | (8,692,294) | (23,617,690) |
| Additions | (619,492) | (1,259,199) | -- | (1,983,527) | (3,862,218) |
| Disposals | 1,948 | 5,800 | -- | 7,005 | 14,753 |
| Transfers | -- | (410,220) | -- | -- | (410,220) |
| Accumulated depreciation at 31 December 2016 | (6,325,987) | (10,880,573) | -- | (10,668,816) | (27,875,375) |
| Carrying amount at 31 December 2016 | 1,697,712 | 5,584,135 | 1,855,271 | 5,075,915 | 14,213,033 |
(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 |
(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 2016 | 5,296,480 | 60,938,463 | 8,101,421 | 74,336,364 | |
| Additions | -- | 427,116 | 7,572,014 | 7,999,130 | |
| Disposals | -- | -- | -- | -- | |
| Transfers | -- | 7,047,836 | (2,192,768) | 4,855,068 | |
| Cost at 31 December 2016 | 5,296,480 | 68,413,415 | 13,480,667 | 87,190,562 | |
| Accumulated depreciation at 1 January 2016 | -- | (29,141,528) | -- | (29,141,528) | |
| Additions | -- | (3,081,861) | -- | (3,081,861) | |
| Disposals | -- | -- | -- | -- | |
| Transfers | -- | -- | -- | -- | |
| Accumulated depreciation at 31 December 2016 | 0 | (32,223,389) | 0 | (32,223,389) | |
| Carrying amount at 31 December 2016 | 5,296,480 | 36,190,026 | 13,480,667 | 54,967,173 |
(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 | ||
| Loans and receivables | |||||||
| Fixed rate | 1,000,000,000 | 1,018,730,000 | 1,000,000,000 | 4,094,442 | 4,094,442 | 4,094,442 | |
| Variable rate | 748,441,128 | 750,262,128 | 748,441,128 | -- | -- | 0 | |
| Dividends receivable | -- | -- | -- | 74,999,121 | 74,999,121 | 74,999,121 | |
| Tax effect | -- | -- | -- | 18,380,110 | 18,380,110 | 18,380,110 | |
| Deposits and guarantees | 1,608,091 | 1,608,091 | 1,608,091 | 16,033 | 16,033 | 16,033 | |
| Other trade receivables | -- | -- | -- | 352,704 | 352,704 | 352,704 | |
| Trade receivables | -- | -- | -- | 20,490,659 | 20,490,659 | 20,490,659 | |
| Other receivables | -- | -- | -- | 117,449 | 117,449 | 117,449 | |
| Total | 1,750,049,219 | 1,770,600,219 | 1,750,049,219 | 118,450,518 | 118,450,518 | 118,450,518 | |
| Total financial assets | 1,750,049,219 | 1,770,600,219 | 1,750,049,219 | 118,450,518 | 118,450,518 | 118,450,518 |
Appendix IV 2 of 2
(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 | ||
| Loans and receivables | |||||||
| Fixed rate | 23,642,992 | 23,642,992 | 23,642,992 | 2,199,056 | 2,199,056 | 2,199,056 | |
| Variable rate | -- | -- | -- | -- | -- | 0 | |
| Tax effect | -- | -- | -- | 41,564,215 | 41,564,215 | 41,564,215 | |
| Deposits and guarantees | 1,600,105 | 1,600,105 | 1,600,105 | 15,883 | 15,883 | 15,883 | |
| Other trade receivables | -- | -- | -- | 152,569 | 152,569 | 152,569 | |
| Trade receivables | -- | -- | -- | 15,519,814 | 15,519,814 | 15,519,814 | |
| Other receivables | -- | -- | -- | 94,216 | 94,216 | 94,216 | |
| Total | 25,243,097 | 25,243,097 | 25,243,097 | 59,545,753 | 59,545,753 | 59,545,753 | |
| Total financial assets | 25,243,097 | 25,243,097 | 25,243,097 | 59,545,753 | 59,545,753 | 59,545,753 |
Appendix V 1 of 2
(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 |
Appendix V 2 of 2
(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 2016 | 23,920,741 | 3,020 | 199,434,879 | 241,755,884 | 465,114,524 |
| Recognised income and expense | -- | -- | -- | 321,792,932 | 321,792,932 |
| Net movement in treasury stock Other movements |
-- -- |
-- -- |
(181,625) 26,804,403 |
-- -- |
(181,625) 26,804,403 |
| Distribution of profit for 2015 | |||||
| Reserves Preferred dividend Interim dividend Dividend |
-- -- -- -- |
-- -- -- -- |
28,897,926 -- -- -- |
(28,897,926) (1,307,126) (119,615,359) (91,935,473) |
-- (1,307,126) (119,615,359) (91,935,473) |
| Balance at 31 December 2016 | 23,920,741 | 3,020 | 254,955,583 | 321,792,932 | 600,672,276 |
(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 debts | -- | -- | -- | 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.)
| Non-current | ||||||
|---|---|---|---|---|---|---|
| At amortised cost or cost | Current At amortised cost or cost |
|||||
| Carrying amount | Fair value | Total | Carrying amount | Fair value | Total | |
| Debts and payables | ||||||
| Variable rate Loans from group companies | 456,552,495 | 456,552,495 | 456,552,495 | -- | -- | -- |
| Variable rate loans and borrowings | 12,165,690 | 12,165,690 | 12,165,690 | 4,258,196 | 4,258,196 | 4,258,196 |
| Finance lease payables | 2,097,796 | 2,097,796 | 2,097,796 | 1,031,446 | 1,031,446 | 1,031,446 |
| Other financial liabilities | 7,565,444 | 7,565,444 | 7,565,444 | 1,969,642 | 1,969,642 | 1,969,642 |
| Group companies and associates, current debts | -- | -- | -- | 22,241,355 | 22,241,355 | 22,241,355 |
| Trade and other payables | ||||||
| Suppliers | -- | -- | -- | 27,515,287 | 27,515,287 | 27,515,287 |
| Suppliers, Group companies | -- | -- | -- | 3,538,981 | 3,538,981 | 3,538,981 |
| Other payables | -- | -- | -- | 9,941,501 | 9,941,501 | 9,941,501 |
| Total | 478,381,425 | 478,381,425 | 478,381,425 | 70,496,408 | 70,496,408 | 70,496,408 |
| Total financial liabilities | 478,381,425 | 478,381,425 | 478,381,425 | 70,496,408 | 70,496,408 | 70,496,408 |
(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 | 0 | 0 | 0 | 0 | (9,872,640) | -- |
| Suppliers, related parties | 9,186,754 | 0 | 0 | 0 | 0 | (9,186,754) | -- |
| Suppliers, Group companies | 5,290,662 | 0 | 0 | 0 | 0 | (5,290,662) | -- |
| Suppliers | 30,218,059 | 0 | 0 | 0 | 0 | (30,218,059) | -- |
| Trade and other payables | |||||||
| Other financial liabilities | 6,600,232 | 993,926 | 753,670 | 0 | 0 | (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 | 0 | 0 | 0 | 985,248,207 | (5,244,444) | 985,248,207 |
| Payables Group companies and associates debts |
19,907,750 | 0 | 0 | 0 | 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.)
| 9,941,501 | -- | -- | -- | -- | (9,941,501) | -- |
|---|---|---|---|---|---|---|
| 8,282,893 | -- | -- | -- | -- | (8,282,893) | -- |
| 3,538,981 | -- | -- | -- | -- | (3,538,981) | -- |
| 19,232,394 | -- | -- | -- | -- | (19,232,394) | -- |
| 22,241,355 | -- | -- | -- | -- | (22,241,355) | 0 |
| 1,969,642 | 6,047,611 | 857,138 | 660,695 | -- | (1,969,642) | 7,565,444 |
| 1,031,446 | 881,343 | 559,710 | 321,207 | 335,536 | (1,031,446) | 2,097,796 |
| 12,165,690 | ||||||
| 456,552,495 | ||||||
| 2017 | 2018 | 2019 | 2020 | Subsequent years | Less current portion | Total |
| 2016 | ||||||
| 22,241,355 4,258,196 |
3,889,507 | Euros 2,645,544 |
1,428,926 | 456,552,495 4,201,713 |
(22,241,355) (4,258,196) |
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 extended | 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 Bond | 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% (to 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.)
| Euros | ||||||||
|---|---|---|---|---|---|---|---|---|
| Loan | Currency | Interest rate | Grant date | Maturity | Amount extended | Total value | Carrying amount Current |
Non-current |
| Group | ||||||||
| Cash pooling (note 19) | EUR | 4,9251% (Group senior debt interest rate + 0,75%) |
2024 | -- | 456,552,495 | -- | 456,552,495 | |
| Unrelated parties | ||||||||
| Banca March | EUR | Euribor + 4% | 10/07/2013 | 01/08/2018 | 6,500,000 | 2,975,203 | 1,676,241 | 1,298,962 |
| Bankinter | EUR | 2,25% (to 2018) | 21/11/2014 | 30/09/2024 | 10,000,000 | 8,104,190 | 942,602 | 7,161,588 |
| Banco Popular | EUR | Euribor + 2,3% | 03/03/2015 | 04/03/2020 | 8,000,000 | 5,299,232 | 1,594,092 | 3,705,140 |
| Credit facilities | EUR | 1,25% - 2,8% | 2017 | 43,050,000 | 13,575 | 13,575 | -- | |
| 67,550,000 | 16,392,200 | 4,226,510 | 12,165,690 | |||||
| 67,550,000 | 472,944,695 | 4,226,510 | 468,718,185 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
| 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 in 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.)
| Income statement | Income and expense recognised in equity | |||||||
|---|---|---|---|---|---|---|---|---|
| Increases | Decreases | Net | Increases | Decreases | Net | Total | ||
| Income and expenses for the period | 321,792,932 | 14,289 | -- | 14,289 | 321,807,221 | |||
| Income tax Income tax, prior years |
(23,386,246) (208,765) |
(9,360) | -- | (9,360) | (23,395,606) (208,765) |
|||
| Profit before income tax Permanent differences |
298,197,921 | 4,929 | 4,929 | 298,202,850 | ||||
| Individual company Tax consolidation adjustments |
7,464,329 -- |
388,706,374 -- |
(381,242,045) -- |
-- -- |
-- -- |
-- -- |
(381,242,045) -- |
|
| Temporary differences Individual company |
||||||||
| Unrecognised temporary differences in assets originating in current year |
4,646,426 | -- | 4,646,426 | (4,929) | -- | (4,929) | 4,641,497 | |
| originating in prior years Tax loss |
951,991 | -- | 951,991 (77,445,707) |
-- | -- | -- -- |
951,991 (77,445,707) |
(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 entities 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 | |||||||
|---|---|---|---|---|---|---|---|
| Profit and loss | Equity | Total | |||||
| Income and expenses for the period before tax | 298,197,920 | 4,929 | 298,202,849 | ||||
| Tax at 25% | 74,549,480 | 1,232 | 74,550,712 | ||||
| Non-taxable income | |||||||
| Dividends from group companies | (31,948,762) | -- | (31,948,762) | ||||
| Dividends, double taxation (exemption) | (65,227,832) | -- | (65,227,832) | ||||
| Non-deductible expenses | |||||||
| Donations | 1,864,937 | -- | 1,864,937 | ||||
| Sanctions and fines | 1,146 | -- | 1,146 | ||||
| Tax-deductible expenses | |||||||
| Deductions and credits for the current year | (2,635,449) | -- | (2,635,449) | ||||
| Prior years' adjustments | (198,531) | -- | (198,531) | ||||
| Taxable income/(tax loss) | (23,595,011) | 1,232 | (23,593,779) |
(Free translation from the original in Spanish, In the event of discrepancy, the Spanish-language version prevails,)
| Euros | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Group companies |
Associates companies |
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 Trade and other payables (note 20) |
19.907.750 | -- | -- | -- | 19.907.750 | ||||
| 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 |
Associates companies |
Other related parties |
Total | |||||
| Non-current investments in Group companies | ||||||||
| Loans to companies | 23.642.992 | -- | -- | 23.642.992 | ||||
| Deposits and guarantees | 614.313 | -- | 831.966 | 1.446.279 | ||||
| Total non-current assets | 24.257.305 | -- | 831.966 | 25.089.271 | ||||
| Trade and other receivables | ||||||||
| Trade receivables – current | 14.775.638 | -- | -- | 14.775.638 | ||||
| Current investments in Group companies and associates |
||||||||
| Loans to companies | 43.259.129 | 504.142 | -- | 43.763.271 | ||||
| Total current assets | 58.034.767 | 504.142 | -- | 58.538.909 | ||||
| Total assets | 82.292.072 | 504.142 | 831.966 | 83.628.180 | ||||
| Non-current payables to Group companies | 456.552.495 | -- | -- | 456.552.495 | ||||
| Total non-current liabilities | 456.552.495 | -- | -- | 456.552.495 | ||||
| Current payables to Group companies and associates |
22.241.355 | -- | -- | 22.241.355 | ||||
| Trade and other payables (note 21) | ||||||||
| Suppliers | -- | -- | 8.282.893 | 8.282.893 | ||||
| Suppliers, Group companies and associates | 3.538.981 | -- | -- | 3.538.981 | ||||
| Total current liabilities | 25.780.336 | -- | 8.282.893 | 34.063.229 | ||||
| Total liabilities | 482.332.831 | -- | 8.282.893 | 490.615.724 |
(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 | -- | 1.890.000 | 939.585 | 14.442.523 |
| Personnel expenses | -- | 13.671.670 | 2.845.872 | -- | 16.517.542 |
| Finance costs | 77.098.571 | -- | -- | -- | 77.098.571 |
| Total expenses | 92.292.704 | 13.671.670 | 4.735.872 | 13.465.462 | 124.165.708 |
| 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 | |||||
|---|---|---|---|---|---|
| Group companies |
Key management personnel |
Directors | Other related parties |
Total | |
| Income | |||||
| Licencing income | 15.067.748 | -- | -- | -- | 15.067.748 |
| Other services rendered | 93.749.674 | -- | -- | -- | 93.749.674 |
| Finance income | 20.737.322 | -- | -- | -- | 20.737.322 |
| Dividends | 388.706.375 | -- | -- | -- | 388.706.375 |
| Total income | 518.261.119 | -- | -- | -- | 518.261.119 |
| Expenses | |||||
| Operating lease expenses | 3.736.805 | -- | -- | 5.281.104 | 9.017.909 |
| Contributions to foundations | -- | -- | -- | 5.324.750 | 5.324.750 |
| Other services received | 14.455.705 | -- | 925.000 | 905.018 | 16.285.723 |
| Personnel expenses | -- | 5.046.830 | 2.743.243 | -- | 7.790.073 |
| Finance costs | 41.887.772 | -- | -- | -- | 41.887.772 |
| Total expenses | 60.080.282 | 5.046.830 | 3.668.243 | 11.510.872 | 80.306.227 |
| Investments | |||||
| Cost of assets acquired Buildings and other installations |
466.460 | -- | -- | -- | 466.460 |
| Total investments | 466.460 | -- | -- | -- | 466.460 |
(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 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 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) (Expressed in Euros)
| '% ownership | Profit/(loss) for the | Carrying amount of | Dividends received | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Registered office | Activity | Dir | Ind | Total | Share capital | Reserves | Other equity items Interim dividend | year | Total equity | investment | in 2017 | |
| Alkahest, Inc. | United States | Research | -- | 47.580 | 47.580 | 5,670 | 17,936,296 | (2,834,153) | 15,107,813 | -- | -- | ||
| 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 | -- |
| TiGenix N.V. | Belgium | Research | 14.180 | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| Aradigm Corporation | United States | Research | -- | 35.130 | 35.130 | 369,095,306 | (365,562,411) | -- | -- | (13,772,200) | (10,239,306) | -- | -- |
| VCN Biosciences, S.L. | Spain | Research | -- | 81.340 | 81.340 | 152,421 | 3,563,954 | -- | -- | (1,459,312) | 2,257,063 | -- | -- |
| Progenika Inc. | |||||||||||||
| (Merged with Grifols Diagnostics | United States | Industrial | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| Solutions Inc. in 2017) | |||||||||||||
| Progenika Latina ,S.A. de CV | Mexico | Industrial | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| Abyntek Biopharma, S.L | Spain | Industrial | -- | -- | -- | -- | -- | -- | -- | 201,780 | 201,780 | -- | -- |
| Progenika Biopharma, S.A. Asociación I+D Progenika |
Spain Spain |
Industrial Industrial |
-- -- |
90.230 90.230 |
90.230 90.230 |
615,374 196,000 |
16,165,942 50,330 |
-- -- |
-- -- |
(792,794) (24,694) |
15,988,521 221,636 |
-- -- |
-- -- |
| Instituto Grifols, S.A. | Spain | Industrial | 99.998 | 0.002 | 100.000 | 1,537,989 | 18,799,129 | 527,119 | -- | 137,728,421 | 158,592,658 | 2,065,109 | 267,472,955 |
| Diagnostic Grifols,s.A. | Spain | Industrial | -- | 100.000 | 100.000 | 336,560 | 34,099,418 | 98,766 | -- | 8,317,625 | 42,852,369 | -- | -- |
| Grifols Movaco,S.A. | Spain | Commercial | 99.999 | 0.001 | 100.000 | 2,404,601 | 1,841,887 | 130,403 | -- | 400,397 | 4,777,289 | 4,035,023 | -- |
| Grifols Worldwide Operations Spain, | |||||||||||||
| S.A | Spain | Services | -- | 100.000 | 100.000 | 105,325 | 1,903,675 | 411,641 | -- | 1,403,434 | 3,824,076 | -- | -- |
| (formerly Logister, S.A.) | |||||||||||||
| 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 | -- |
| 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 |
| Biomat,S.A. Grifols International,S.A. |
Spain Spain |
Industrial Commercial |
99.900 99.998 |
0.100 0.002 |
100.000 100.000 |
60,110 2,860,154 |
1,640,405 6,362,434 |
94,513 1,086,522 |
-- -- |
571,179 11,292,821 |
2,366,206 21,601,932 |
154,554 3,946,616 |
591,218 12,199,744 |
| 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 |
| Grifols Viajes,S.A. | Spain | Services | 99.900 | 0.100 | 100.000 | 60,110 | 782,370 | -- | -- | 86,078 | 928,558 | 60,041 | -- |
| Gri-Cel, S.A. | Spain | Research | 0.001 | 99.999 | 100.000 | 15,060,102 | (258,220) | 19,601,938 | -- | 1,316,033 | 35,719,853 | 1 | -- |
| Araclon Biotech, S.L. | Spain | Research | -- | 73.220 | 73.220 | 11,215 | 513,023 | -- | -- | (6,039,813) | (5,515,574) | -- | -- |
| Grifols Worldwide Operations USA | 1 | 2,249,013 | (383,062) | -- | (895,039) | 970,913 | -- | ||||||
| Inc. | United States | Industrial | -- | 100.000 | -- | -- | |||||||
| Grifols Chile,S.A. | Chile | Commercial | 99.000 | -- | 99.000 | 385,453 | 20,978,052 | (258,109) | -- | 2,290,682 | 23,396,078 | 385,454 | -- |
| Grifols Argentina,S.A. | Argentina | Commercial | 95.010 | 4.990 | 100.000 | 955,675 | 21,568,605 | (14,564,734) | -- | (221,547) | 7,738,000 | 6,563,003 | -- |
| Logística Grifols,S.A. de CV Grifols Portugal Productos |
Mexico | Commercial | 99.990 | 0.010 | 100.000 | 92,279 | 3,136,542 | (661,054) | -- | 374,408 | 2,942,175 | 235,258 | -- |
| Farmacéutiocs e Hospitalares,Lda. | Portugal | Commercial | 0.010 | 99.990 | 100.000 | 511,806 | 6,595,826 | -- | -- | 381,445 | 7,489,077 | -- | -- |
| 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 | -- |
| Grifols USA, LLC | United States | Commercial | -- | 100.000 | 100.000 | 561,686 | 223,624,765 | (7,603,820) | -- | 78,159,632 | 294,742,264 | -- | -- |
| Grifols UK,Ltd. | United Kingdom | Commercial | 100.000 | -- | 100.000 | 4,285 | 4,654,663 | (791,372) | -- | 374,182 | 4,241,759 | 21,167,620 | 2,269,761 |
| Grifols Italia,S.p.A. Grifols Brasil,Lda. |
Italy Brazil |
Commercial Commercial |
100.000 100.000 |
-- -- |
100.000 100.000 |
2,496,000 46,110,919 |
9,196,071 (2,848,397) |
-- (4,169,658) |
-- -- |
1,981,236 1,214,366 |
13,673,307 40,307,229 |
12,862,540 42,381,263 |
-- -- |
| 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 | -- |
| Biomat USA,Inc. | -- | 308,665,932 | (3,141,819) | -- | 41,933,278 | 347,457,390 | -- | ||||||
| United States | Industrial | -- | 100.000 | 100.000 | -- | ||||||||
| 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 | -- | -- |
| 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 | 100.000 | -- | 100.000 | -- | 330,634,515 | 153,448,812 | -- | (93,652,115) | 390,431,213 | 1,032,704,254 | -- | ||
| America, Inc. (formerly Grifols Inc.) |
United States | Services | |||||||||||
| Grifols Asia Pacific Pte. Ltd. Grifols (Thailand), Ltd. |
Singapore Thailand |
Commercial Commercial |
100.000 -- |
-- 48.000 |
100.000 48.000 |
362,387 61,198 |
3,095,480 5,548,428 |
393,056 439,955 |
-- -- |
2,802,824 832,378 |
6,653,747 6,881,958 |
714,769 -- |
10,096,761 -- |
| Grifols Malaysia Sdn Bhd | Malaysia | Commercial | -- | 30.000 | 30.000 | 30,283 | 1,758,941 | (156,502) | -- | 327,780 | 1,960,501 | -- | -- |
| 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 | -- |
| 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 | -- |
| Grifols Australia Pty Ltd | Australia Switzerland |
Industrial Industrial |
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 | -- -- |
| Medion Diagnostic Grifols AG Medion Diagnostic GmbH |
Germany | Commercial | -- -- |
100.000 100.000 |
100.000 100.000 |
1,500,000 | (1,005,873) | -- | -- | -- | 494,127 | -- -- |
-- |
| Grifols Colombia, Ltda. | Colombia | Commercial | 99.000 | 1.000 | 100.000 | 822,620 | (101,829) | (166,734) | -- | (72,933) | 481,124 | 575,032 | -- |
| Grifols Nordic AB | Sweden | Commercial | 100.000 | -- | 100.000 | 10,392 | 1,921,181 | (126,793) | -- | (164,735) | 1,640,045 | 1,579,452 | -- |
| 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 |
| Grifols Therapeutic LLC. Talecris Plasma Resources Inc. |
United States United States |
Industrial Industrial |
-- -- |
100.000 100.000 |
100.000 100.000 |
7 | (2,885,734) 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 |
-- -- |
-- -- |
| 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 |
| Grifols Pharmaceutical Technology | |||||||||||||
| (Shanghai) Co., Ltd. (formerly Grifols | China | Commercial | 100.000 | -- | 100.000 | 1,000,000 | 2,994,696 | (259,981) | -- | 1,815,013 | 5,549,727 | 1,000,000 | -- |
| Pharmaceutical Consulting (Shanghai) Co., Ltd.) |
|||||||||||||
| Grifols Switzerland, AG | Switzerland | Commercial | 100.000 | -- | 100.000 | 81,189 | (240,517) | 336,241 | -- | (1,896) | 175,017 | 169,208 | -- |
| Grifols Diagnostics Solutions Inc | 37 | 923,571,607 | (28,550,291) | -- | 107,496,400 | 1,002,517,752 | -- | ||||||
| (formerly G-C Diagnostics Corp.) | United States | Industrial | 100.000 | -- | 100.000 | 875,354,371 -- | |||||||
| 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 | -- | -- |
| Grifols Japan KK | Japan | Commercial | 100.000 | -- | 100.000 | 354,409 | 500,412 | 27,872 | -- | 72,410 | 955,102 | 708,818 | -- |
| Grifols Pharmaceutical Technology | China | Commercial | 100.000 | -- | 100.000 | -- | (2,084,931) | 187,517 | -- | (1,184,554) | (3,081,968) | -- | -- |
| Co., Ltd. Beijing Branch | |||||||||||||
| Grifols India Healthcare Private Ltd | India | Commercial | 99.990 | 0.010 | 100.000 | 1,688 | 641,489 | (62,414) | -- | 65,985 | 646,749 | 599,086 | -- |
| Grifols Canadá, Ltd. | Canada | Industrial | -- | 100.000 | 100.000 | 6 | 20,230,562 | (2,879,681) | -- | 4,243,260 | 21,594,147 | -- | -- |
| Grifols Diagnostics Equipment Taiwan Limited Grifols Innovation and New Technologies Limite |
Taiwan Ireland |
Commercial Research |
100.000 -- |
-- 100.000 |
100.000 100.000 |
181,343 1 |
170,253 169,407,849 |
(185) (6,403,463) |
-- -- |
255,321 (92,849,074) |
606,732 70,155,313 |
181,061 -- |
-- -- |
| AlbaJuna Therapeutics, S.L | Spain | Research | -- | 30.000 | 30.000 | 7,143 | 3,824,469 | (1,384,316) | 2,447,295 | -- | -- | ||
| 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 | -- | -- |
| Bio Blood Components Inc. | United States | Industrial | -- | 48.972 | 48.972 | 11,507 | 7,101,024 | 655,554 | -- | (1,153,615) | 6,614,470 | -- | -- |
| Singulex, Inc. | United States | Research | -- | 19.330 | 19.330 | 3,335 | (161,630,118) | (27,718,669) | (189,345,452) | -- | -- | ||
| PBS Acquisition Corp. 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) |
-- -- |
-- -- |
| Chiquito Acquisition Corp. | United States | Corporate | -- | 100.000 | 100.000 | -- | 48,059,553 | (5,526,067) | -- | -- | 42,533,486 | -- | -- |
| Access Biologicals, LLC. and Subsidiaries. | United States | Industrial | -- | 49.000 | 49.000 | -- | 7,839,027 | -- | 3,496,885 | 11,335,912 | -- | -- | |
| Aigües Minerals Vilajuïga | Spain | Industrial | 50.000 | -- | 50.000 | 75,000 | 275,136 | 231,262 | -- | (467,009) | 114,389 | -- | -- |
| GigaGen Inc. | United States | Industrial | -- | 43.960 | 43.960 | 1,117 | 29,303,768 | 896 | (3,002,866) | 26,302,915 | -- | -- |
This appendix forms an integral part of note 12 to the annual accounts, in conjunction with which it should be read
3,124,452,858 440,508,618
1,769,306,094 388,706,374
| Name | Registered office | Activity | Dir | % ownership Ind |
Total | Share capital | Reserves | Other equity items Interim dividend | Profit/(loss) for the year |
Total equity | Carrying amount of investment |
Dividends received in 2016 |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Alkahest, Inc. TiGenix N.V. (reclassified to assets |
United States | Research | -- | 47.580 | 47.580 | 2,846 | 20,037,947 | -- | -- | (179,300) | 19,861,493 | -- | -- |
| available for sale) | Belgium | Research | -- | 16.130 | 16.130 | -- | -- | -- | -- | -- | -- | -- | -- |
| Aradigm Corporation | United States | Research | -- | 35.130 | 35.130 | 416,855,137 | (384,670,335) | -- | -- | -31,208,614 | 976,188 | -- | -- |
| Nanotherapix, S.L. | Spain | Research | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | |
| VCN Biosciences, S.L. | Spain | Research | -- | 81.340 | 81.340 | 152,421 | 4,638,871 | -- | -- | (1,074,918) | 3,716,375 | -- | -- |
| Kiro Grifols S.L (formerly Kiro Robotics S.L) |
Spain | Research | 50.000 | -- | 50.000 | 4,000,000 | 5,380,859 | 74,136 | -- | (3,441,151) | 6,013,844 | 17,153,050 | -- |
| Progenika Inc | United States | Industrial | -- | 89.250 | 89.250 | 758 | 805,807 | (901,017) | -- | 66,793 | (27,658) | -- | -- |
| Progenika Latina ,S.A. de CV | Mexico | Industrial | -- | 89.250 | 89.250 | 4,324,871 | (4,337,518) | 134,260 | -- | (121,020) | 593 | -- | -- |
| Brainco Biopharma, S.L. | |||||||||||||
| (merged with Progenika Biopharma, | Spain | -- | -- | -- | -- | -- | -- | -- | |||||
| S.A in 2016) Abyntek Biopharma, S.L |
Spain | Industrial Industrial |
-- -- |
-- 71.730 |
-- 71.730 |
3,002 | (431,853) | -- | -- | 102,180 | (326,671) | -- | -- |
| Progenika Biopharma, S.L | Spain | Industrial | -- | 89.250 | 89.250 | 615,374 | 10,115,364 | -- | -- | 6,050,577 | 16,781,314 | -- | -- |
| Asociación I+D Progenika | Spain | Industrial | -- | 89.250 | 89.250 | 166,000 | 9,415 | -- | -- | 40,915 | 216,330 | -- | -- |
| Instituto Grifols, S.A. | Spain | Industrial | 99.998 | 0.002 | 100.000 | 1,537,989 | 142,322,131 | 405,298 | -- 143,954,940 | 288,220,358 | 1,943,288 | 125,195,582 | |
| Diagnostic Grifols,s.A. Grifols Movaco,S.A. |
Spain Spain |
Industrial Commercial |
-- 99.999 |
100.000 0.001 |
100.000 100.000 |
336,560 2,404,601 |
28,011,653 3,288,031 |
28,005 80,926 |
-- -- |
6,087,765 (1,446,144) |
34,463,984 4,327,414 |
-- 3,985,546 |
-- -- |
| Grifols Worldwide Operations | |||||||||||||
| Spain, S.A (formerly |
Spain | 105,325 | 1,015,080 | -- | -- | 888,595 | 2,009,000 | -- | -- | ||||
| Logister, S.A.) | Services | -- | 100.000 | 100.000 | |||||||||
| Laboratorios Grifols,S.A. | Spain | Industrial | 99.999 | 0.001 | 100.000 | 21,798,360 | 8,183,022 | 137,901 | -- | (10,293,139) | 19,826,144 | 64,936,267 | -- |
| Gripdan, S.L | Spain Spain |
Services | 100.000 | -- | 100.000 | 3,006,000 60,110 |
29,195,592 1,640,405 |
-- 83,533 |
-- -- |
2,152,076 591,810 |
34,353,668 2,375,858 |
46,677,094 143,574 |
-- -- |
| Biomat,S.A. Grifols International,S.A. |
Spain | Industrial Commercial |
99.900 99.998 |
0.100 0.002 |
100.000 100.000 |
2,860,154 | 6,390,436 | 652,926 | -- | 12,171,999 | 22,075,514 | 3,513,020 | -- |
| Grifols Engineering,S.A. | Spain | Industrial | 99.950 | 0.050 | 100.000 | 60,120 | 2,810,273 | 26,209 | -- | 941,193 | 3,837,795 | 86,299 | 2,599,464 |
| Grifols Viajes,S.A. | Spain | Services | 99.900 | 0.100 | 100.000 | 60,110 | 766,094 | -- | -- | 16,276 | 842,480 | 60,041 | -- |
| Gri-Cel, S.A. | Spain | Research | 0.001 | 99.999 | 100.000 | 15,060,102 | (3,550,030) | 11,693,502 | -- | 3,291,810 | 26,495,384 | 1 | -- |
| Araclon Biotech, S.L. | Spain | Research | -- | 73.220 | 73.220 | 11,215 | 7,305,021 | -- | -- | (6,791,998) | 524,238 | -- | -- |
| Grifols Worldwide Operations USA Inc. |
United States | Industrial | -- | 100.000 | -- | 1 | 2,322,877 | (762,129) | -- | (73,864) | 1,486,885 | -- | -- |
| Grifols Chile,S.A. | Chile | Commercial | 99.000 | -- | 99.000 | 385,453 | 19,123,105 | 613,702 | -- | 1,857,847 | 21,980,107 | 385,454 | -- |
| Grifols Argentina,S.A. | Argentina | Commercial | 95.010 | 4.990 | 100.000 | 955,675 | 19,524,936 | (11,776,754) | -- | 2,043,669 | 10,747,527 | 6,563,003 | -- |
| Logística Grifols,S.A. de CV | Mexico | Commercial | 99.990 | 0.010 | 100.000 | 92,279 | 2,859,188 | (403,938) | -- | 277,352 | 2,824,881 | 235,258 | -- |
| Grifols Portugal Productos | 511,806 | 6,098,886 | -- | -- | 496,940 | 7,107,632 | -- | -- | |||||
| Farmacéutiocs e Hospitalares,Lda. | Portugal | Commercial | 0.010 | 99.990 | 100.000 | ||||||||
| Grifols, s.r.o. | Czech Republic Commercial | 100.000 | -- | 100.000 | 51,597 | 11,645,766 | (102,976) | -- | 538,079 | 12,132,466 | 51,600 | -- | |
| Grifols USA, LLC Grifols UK,Ltd. |
United States Commercial United Kingdom Commercial |
-- 100.000 |
100.000 -- |
100.000 100.000 |
561,686 4,285 |
144,779,381 5,872,276 |
28,822,178 (528,608) |
-- -- |
78,845,388 1,034,889 |
253,008,633 6,382,843 |
-- 21,167,620 |
-- 7,669,692 |
|
| Grifols Italia,S.p.A. | Italia | Commercial | 100.000 | -- | 100.000 | 2,496,000 | 6,268,961 | -- | -- | 2,927,110 | 11,692,071 | 12,862,540 | -- |
| Grifols Brasil,Ltda. | Brazil | Commercial | 100.000 | -- | 100.000 | 30,112,198 | (2,523,811) | 703,931 | -- | (324,584) | 27,967,734 | 26,663,759 | -- |
| Grifols France,S.A.R.L. | France | Commercial | 99.990 | 0.010 | 100.000 | 657,734 | 616,189 | -- | -- | 1,575,141 | 2,849,064 | 657,657 | -- |
| Squadron Reinsurance Designated | |||||||||||||
| Activity Company (formerly Squadron Reinsurance |
0 | 251,427,791 | 41,652,457 | -- | 57,238,132 | 350,318,380 | -- | -- | |||||
| Ltd.) | United States | Industrial | -- | 100.000 | 100.000 | ||||||||
| Biomat USA,Inc. | Ireland | Services | -- | 100.000 | 100.000 | 635,001 | 44,010,549 | -- | -- | 6,104,579 | 50,750,129 | -- | -- |
| Grifols Biologicals, Inc. | United States | Industrial | -- | 100.000 | 100.000 | 1 | 290,077,553 | 70,320,281 | -- | 11,956,930 | 372,354,765 | -- | -- |
| Grifols Shared Services North | |||||||||||||
| America, Inc. | -- | 381,111,370 | 202,161,790 | -- | (50,476,854) | 532,796,305 | 1,029,141,297 | -- | |||||
| (formerly Grifols Inc.) Grifols Asia Pacific Pte. Ltd. |
United States Singapore |
Services Commercial |
100.000 100.000 |
-- -- |
100.000 100.000 |
362,387 | 9,651,868 | 2,396,294 | -- | 3,666,819 | 16,077,368 | 714,769 | 4,417,351 |
| Grifols (Thailand), Ltd. | Thailand | Commercial | -- | 48.000 | 48.000 | 61,198 | 4,208,779 | 684,456 | -- | 1,496,473 | 6,450,906 | -- | -- |
| Grifols Malaysia Sdn Bhd | Malaysia | Commercial | -- | 30.000 | 30.000 | 30,283 | 1,553,880 | (114,904) | -- | 205,060 | 1,674,320 | -- | -- |
| Grifols Polska, Sp.z.o.o. | Poland | Commercial | 100.000 | -- | 100.000 | 10,714 | 2,353,463 | 82,923 | -- | 122,029 | 2,569,129 | 10,714 | -- |
| Grifols México,S.A. de CV | Mexico | Commercial | 99.980 | 0.020 | 100.000 | 461,397 | 11,727,109 | (2,612,230) | -- | 4,079,964 | 13,656,240 | 461,224 | -- |
| Grifols Australia Pty Ltd | Australia | Industrial | 100.000 | -- | 100.000 | 1,695,072 | 5,195,690 | (1,169,874) | -- | 1,409,155 | 7,130,043 | 34,974,212 | -- |
| Medion Diagnostic Grifols AG Medion Diagnostic GmbH |
Switzerland Germany |
Industrial Commercial |
100.000 -- |
-- 100.000 |
100.000 100.000 |
2,487,150 1,500,000 |
2,552,455 (1,005,873) |
(436,921) -- |
-- -- |
(1,592,463) -- |
3,010,221 494,127 |
-- -- |
-- -- |
| Grifols Colombia, Ltda. | Colombia | Commercial | 99.000 | 1.000 | 100.000 | 822,563 | (581,514) | (130,501) | -- | 52,150 | 162,699 | 141,303 | -- |
| Grifols Nordic AB | Sweden | Commercial | 100.000 | -- | 100.000 | 10,392 | 824,558 | (67,155) | -- | 1,084,491 | 1,852,286 | 1,675,013 | -- |
| GRI-CEI, S/A Produtos para | |||||||||||||
| transfusao | -- | (68,183) | -- | 222,087 | 153,904 | -- | |||||||
| (merged with Grifols Brasil, Ltda. in 2016) |
Brazil | Industrial | -- | -- | -- | ||||||||
| Grifols Deutschland,GmbH | Germany | Commercial | 100.000 | -- | 100.000 | 25,000 | 10,202,980 | (596,222) | -- | 8,014,247 | 17,646,005 | 12,710,731 | 7,780,561 |
| Grifols Therapeutic Inc. | United States | Industrial | -- | 100.000 | 100.000 | 12,686,461 | 2,051,883,805 | 610,085,388 | -- 161,198,153 2,835,853,808 | -- | -- | ||
| Talecris Plasma Resources Inc. | United States | Industrial | -- | 100.000 | 100.000 | 7 | (17,631,745) | 8,306,159 | -- | (537,046) | (9,862,625) | -- | -- |
| Grifols Canadá, Ltd. | Canada | Industrial | -- | 100.000 | 100.000 | 6 | 16,738,481 | (488,739) | -- | 3,492,081 | 19,741,829 | -- | -- |
| Grifols Worldwide Operations Limited |
Ireland | Industrial | 100.000 | -- | 100.000 | 1 | 85,316,655 | 62,228,440 (241,043,724) 182,347,963 | 88,849,335 | 74,937,037 | 241,043,724 | ||
| Grifols Pharmaceutical Technology (Shanghai) Co., Ltd. (formerly |
|||||||||||||
| Grifols Pharmaceutical Consulting | 1,000,000 | 1,384,718 | 52,282 | -- | 1,609,978 | 4,046,978 | 1,000,000 | -- | |||||
| (Shanghai) Co., Ltd.) | China | Commercial | 100.000 | -- | 100.000 | ||||||||
| Grifols Switzerland, AG | Switzerland | Commercial | 100.000 | -- | 100.000 | 81,189 | (326,129) | 351,692 | -- | 85,613 | 192,364 | 198,093 | -- |
| Grifols Diagnostics Solutions Inc | 37 | 428,273,978 | 99,350,594 | -- | 21,084,048 | 548,708,658 | -- | ||||||
| (formerly G-C Diagnostics Corp.) | United States | Industrial | 100.000 | -- | 100.000 | 405,365,453 -- | |||||||
| Grifols (H.K.), Limited | Hong Kong | Commercial | -- | 100.000 | 100.000 | 37,899,374 | 4,440,125 | 11,400,435 | -- | 9,374,927 | 63,114,861 | -- | -- |
| Grifols Japan KK | Japan | Commercial | 100.000 | -- | 100.000 | 354,409 1,300 |
425,945 45,762 |
113,558 (13,695) |
-- -- |
74,467 6,748 |
968,379 40,115 |
708,818 1,300 |
-- -- |
| Grifols India Healthcare Private Ltd Grifols Diagnostics Equipment Taiwan Limited |
India Taiwan |
Commercial Commercial |
99.990 100.000 |
0.010 -- |
100.000 100.000 |
181,343 | -- | 38,772 | -- | 170,253 | 390,368 | 181,060 | -- |
| Grifols Innovation and New Technologies Limited | Ireland | Research | -- | 100.000 | 100.000 | 1 | 150,337,588 | 10,339,525 | -- | (16,551,790) | 144,125,324 | -- | -- |
| PBS Acquisition Corp. | United States | Industrial | -- | 100.000 | 100.000 | (196,179) | 26,435,246 | 1,936,628 | -- | -- | 28,175,695 | -- | -- |
| Interstate Blood Bank, Inc. | United States | Industrial | -- | 49.190 | 49.190 | 91,120 | 6,960,453 | (1,473,337) | -- | 1,645,061 | 7,223,298 | -- | -- |
| Bio Blood Components Inc. | United States | Industrial | -- | 48.972 | 48.972 | 13,092 | 9,527,753 | (745,855) | -- | (1,047,267) | 7,747,722 | -- | -- |
| Plasma Biological Services, LLC | United States | Industrial | -- | 48.900 | 48.900 | 8,538 | -- | (7,346,881) | -- | 611,611 | (6,726,732) | -- | -- |
| AlbaJuna Therapeutics, S.L | Spain | Research | -- | 30.000 | 30.000 | 7,143 4,743 |
3,824,357 (156,441,514) |
-- | -- -- |
(618,476) | 3,213,024 (30,988,521) (187,425,292) |
-- -- |
-- -- |
| Singulex, Inc. | United States | Research | -- | 20.000 | 20.000 |
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
To the shareholders:
Grifols, S.A. is a Spanish holding company specialising 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 relating 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 authorisation 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 2017, the Company has treasury stock of Euros 62,422,309, as described in note 16 to the accompanying annual accounts. Transactions involving treasury stock in 2017 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.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails)
At their meeting held on 23 February 2018, 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 2017 to 31 December 2017. The annual accounts comprise the documents that precede this certification.
| Victor Grifols Roura (signed) President – Board Member |
Raimon Grifols Roura (signed) Co-Chairman |
Víctor Grifols Deu (signed) Co-Chairman |
||
|---|---|---|---|---|
| Carina Szpilka Lázaro (signed) Board member |
Tomás Dagà Gelabert (signed) Board member |
Thomas Glanzmann (signed) Board member |
||
| Iñigo Sánchez-Asiaín Mardone (signed) Board member |
Anna Veiga Lluch (signed) Board member |
Luis Isasi Fernández de Bobadilla (signed) Board member |
||
| Steven F. Mayer (signed) Board member |
Belen Villalonga Morenés (signed) Board member |
Marla E. Salmon (signed) Board member |
||
| Ramón Riera Roca (signed) Board Member |
Nuria Martín Barnés (signed) Secretary to the Board |
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 2017, 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 2018 In Barcelona, on 27 February 2018
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 2017, 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 Ferández de Bobadilla (signed) Board member |
Steven F. Mayer (signed) Board member |
|||
|---|---|---|---|---|---|
| Belén Villalonga Morenés (signed) Board member |
Núria Martín Barnés (signed) Secretary |
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