6-K 1 tm217998d1_6k.htm FORM 6-K

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934

 

For the month February 2021

 

(Commission File No. 001-35193)

 

Grifols, S.A.

(Translation of registrant’s name into English)

 

 

 

Avinguda de la Generalitat, 152-158

Parc de Negocis Can Sant Joan

Sant Cugat del Valles 08174

Barcelona, Spain

(Address of registrant’s principal executive office)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F x  Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):

 

Yes ¨  No x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):

 

Yes ¨  No x

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes ¨  No x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-         .                       .

 

 

 

 

 

Grifols, S.A.

 

TABLE OF CONTENTS

 

Item   Sequential Page Number
     
1.                         Press Release, dated February 26, 2021 1
     
2.                         Consolidated Annual Accounts for the year ended December 31, 2020   22

 

 

 

 

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1

 

 

2020 Annual Results

 

Grifols increases its revenues to 5,340 M€ and continues to demonstrate its resilience and commitment to sustainable growth

 

·Grifols increases revenues by 4.7% (6.1% cc1) driven by Bioscience and Diagnostic divisions; an increase of 6.5% (7.9% cc) excluding plasma sales to third parties. Contributions from new products represent more than 50% of its revenue growth

 

·Robust demand for plasma proteins and the launch of new products bolster Bioscience Division revenues by 6.2% (7.6% cc) to EUR 4,243 million

 

·The Diagnostic Division expands by 5.8% (7.3% cc) to EUR 776 million fueled by sales of molecular test to detect SARS-CoV-2

 

·Reported net profit total EUR 619 million, in line with the previous year. Adjusted net profit2 reaches EUR 736 million, a 6.6% increase over 2019

 

·Net operating cash flow generation reaches EUR 1,110 million. The net leverage ratio to EBITDA is 4.5x (4.2x in 2019) and 4.0x excluding COVID-19 impacts

 

·Grifols limited the COVID-19 impact on its net plasma supply to 15% in 2020. In 2021, the company is ready for a rebound in its plasma-collection levels in the wake of vaccination deployments and the easing of pandemic constraints, as well as its current expansion plan, including additional “ready-to-obtain” available plasma

 

·Grifols continues accelerating its R+D+i efforts and appoints new leadership for scientific innovation to continue executing its plan for sustained margin expansion

 

·Noteworthy is the integration of Alkahest’s pipeline, which hold significant commercial potential, through its multiple projects. The company moves forward on its pledge to make AMBAR a viable treatment for Alzheimer’s patients, with plans underway to open Reference Centers worldwide

 

·A team of nearly 24,000 people enable Grifols to continue providing its essential products and services to patients throughout these unprecedented times

 

·Grifols is recognized as one of the world’s most sustainable companies and listed on the Dow Jones Sustainability Index, Euronext Vigeo, FTSE4Good and Bloomberg Gender Equality Index

 

Barcelona, February 26, 2021.- Grifols (MCE:GRF, MCE:GRF.P, NASDAQ:GRFS) continued to demonstrate its resilience and commitment to sustainable growth in 2020. The company’s business strategy aims to drive solid financial performance by focusing on four main objectives: plasma supply, industrial excellence, global expansion and innovation.

 

Grifols closed 2020 with EUR 5,340 million in revenues, a 4.7% (6.1% cc) increase fueled by growth in the Bioscience and Diagnostic divisions. Excluding plasma sales to third parties, revenues increased by 6.5% (7.9% cc). The contribution of new products accounted for more than 50% of revenue growth.

 

The Bioscience Division, the company’s main growth driver, achieved an important milestone in 2020 by marking 10 years of quarterly sales growth. Its revenues grew by 6.2% (7.6% cc) to EUR 4,243 million driven by an upturn in immunoglobulins sales in countries including the United States and Canada; an increase in albumin sales, particularly in the United States and China; and the strong contribution of new products like Xembify®, VISTASEALTM and TAVLESSE®.

 

In the second half of 2020, the Diagnostic Division significantly increased its revenues, reporting strong sales, particularly in Spain, of its TMA (Transcription-Mediated Amplification) molecular test to detect the SARS-CoV-2 virus. The division reported EUR 776 million in sales, a 5.8% (7.3% cc) increase over the previous year.

 

 

1 Operating or constant change (cc) excludes the exchange rate variations of the year. 

2 Excludes non-recurring impacts, including the impacts of COVID-19; amortization of deferred financing costs related to refinancing, amortization of intangibles associated with acquisitions; and IFRS 16.

 

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Hospital Division revenues were impacted by COVID-19, which prompted a slowdown in certain hospital investments and treatments. Revenues totaled EUR 119 million, a 11.7% decrease (10.3% cc) compared to 2019.

 

The Bio Supplies Commercial line, which includes sales of biological products for non-therapeutic use, grew by 65.6% cc in 2020, demonstrating Grifols’ commitment to this market segment. The Bio Supplies Division achieved EUR 224 million in revenues, falling 15.9% (15.3%) from 2019, due primarily to the roll-off of specific third-party plasma sales contracts.

 

As of December 31, 2020, the gross margin was 42.2% (45.9% in 2019), including the EUR 205 million impact to adjust Grifols’ inventory value (non-cash) mainly as a result of COVID-19 effects.

 

In reflection of its commitment to prudence and profitability, Grifols implemented an operating expense containment plan with an estimated positive impact of EUR 112 million in the 2020 profit and loss account. The company is working to make a significant part of it permanent. The plan has no impact on the company’s labor force or innovation investments.

 

Grifols estimates a net impact of EUR 155 million on EBITDA as a result of COVID-19. This figure includes the negative impact on inventory value and lower fourth-quarter sales of the Bioscience Division, as well as the positive impact of the operating expense containment plan and contribution of the SARS-CoV-2 detection test.

 

All in all, reported EBITDA totaled EUR 1,324 million, representing a 24.8% margin over revenues (28.1% in 2019). Excluding the EUR 155 million COVID-19-related impact, EBITDA stands at EUR 1,479 million, a 27.4% margin on revenues.

 

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Grifols’ financial results continued to improve during the year, reaching EUR 178 million. It includes EUR 97 million reduction in net financial expenses, stemming mainly from the completion of the debt-refinancing process in November 2019; a positive EUR 18 million impact from exchange rate differences; and EUR 57 million in capital gains following the closing of the Shanghai RAAS transaction in the first quarter of 2020.

 

The reported net profit totaled EUR 619 million in 2020, a 1.1% decrease compared to the EUR 625 million reported in 2019. Adjusted net profit1 amounted to EUR 736 million (EUR 691 million in 2019).

 

In 2020, Grifols continued to promote innovation and CAPEX investments to promote its sustainable and long-term growth. Net R+D+i investments, including internal, external and investee projects, totaled EUR 298 million (EUR 329 million in 2019).

 

Grifols also moved forward with its capital investments plan, allocating EUR 308 million (EUR 332 million in 2019) to accelerate the expansion of the Bioscience Division’s production capacity and spur growth of its other divisions.

 

Grifols’ strategic investments in recent years to increase its plasma supply, combined with efforts to boost operational efficiencies, were the driving forces behind the company’s growth and robust inventory levels. The company maintained its upward growth trend in 2020 thanks to these investments and effective inventory management.

 

In 2020, Grifols was able to limit its net plasma supply impact by roughly 15% despite COVID-19-related constraints, including social distancing, mobility restrictions and lockdowns. In 2021, the company is ready for a rebound in its plasma-collection levels in the wake of wider vaccination and the easing of COVID-19 constraints. Grifols is also advancing on its efforts to increase its plasma supply through its expansion plan, comprising organic and inorganic growth.

 

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As part of this strategy, it acquired centers in the United States and Europe and three production plants in Canada. Also underway is the construction of 20 plasma centers and production facilities in Egypt, following the alliance signed with the Egyptian government, a partnership that will expand the company’s presence in the Middle East and Africa. In terms of organic growth, the company plans on opening 15 to 20 new plasma centers in 2021

 

As of December 31, 2020, Grifols’ liquidity position stands at close to EUR 1,500 million, including EUR 580 million in cash position and nearly EUR 900 million of undrawn lines of credit.

 

Grifols took additional measures to strengthen its liquidity position in the second quarter, including the upsizing of its multicurrency revolving credit facility from USD 500 million to USD 1,000 million, with maturity in November 2025. This credit facility has similar terms and conditions as those signed in November 2019 and its expansion did not increase the company’s indebtedness.

 

In a context of growth, corporate transactions and sustained levels of CAPEX and R+D investments, Grifols boasts high and sustainable levels of activity and net operating cash flow generation. The optimization of working capital management continued to strengthen Grifols’ financial performance. In 2020, the company generated EUR 1,110 million in operating cash flow (EUR 569 million in 2019), providing the necessary solvency to meet its planned investments amid a context of higher demand.

 

Excluding the impact of IFRS 163, as of December 31, 2020 Grifols’ net financial debt totaled EUR 5,714 million. The net financial debt over EBITDA ratio is 4.5x (4.2x in December 2019) and 4.0x excluding COVID-19 impacts.

 

Following the completion of the debt-refinancing process in November 2019, Grifols does not face significant maturity repayments or down payments until 2025. Optimizing and reducing its debt levels remains a priority for Grifols’ financial management.

 

Grifols is prepared to respond to the demands of the current context and remains committed to its long-term growth strategy. It will continue to monitor any potential impacts on operations and will take all necessary measures to mitigate possible effects on its supply chain.

 

 

 

3 As of December 31, 2020, the impact of IFRS 16 on debt totaled EUR 733 million. 

 

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PERFORMANCE BY DIVISION

 

 

Bioscience leads growth

 

The Bioscience Division reported EUR 4,243 million in revenues, a 6.2% (7.6% cc) increase, fueled by strong demand for the main proteins, especially immunoglobulins and albumin, and the positive performance of new product launches like Xembify®, VISTASEALTM and TAVLESSE®.

 

Immunoglobulins sales remain strong, achieving double-digit growth thanks to solid demand in markets with high per capita consumption, namely, the U.S. and Canada, and several countries in the European Union (EU) and Latin America. Grifols has a range of immunoglobulins for both intravenous and subcutaneous administration (Xembify®) to adapt to patients’ diverse needs.

 

Albumin sales also remain strong amid positive growth in the U.S., Canada and China .

 

Despite the pandemic, alpha-1 antitrypsin revenues continue to grow in the U.S. and Canada, its core markets. The company continued to enhance its portfolio in 2020, integrating new products and presentations, including the FDA-approved Prolastin®-C Liquid in 0.5-gram and 4-gram vials. Grifols currently has three presentations to offer patients more treatment alternatives.

 

In terms of new product launches, of note are the robust sales of the biological sealant, developed and manufactured by Grifols using a combination of two plasma proteins (fibrinogen and thrombin) to control surgical bleeding. Launched in the last quarter of 2019, the product is sold and distributed by Ethicon under the trade name VISTASEALTM. Also worth highlighting is the market launch of TAVLESSE® (fostamatinib) in specific European countries. Sold under an agreement with Rigel Pharmaceuticals, this product is used to treat chronic immune thrombocytopenia (ITP) in adult patients who are refractory to other treatments.

 

Diagnostic accelerates its growth

 

The Diagnostic Division achieved notable results in the second half of the year, reporting a 5.8% (7.3% cc) year-on-year increase in sales to EUR 776 million.

 

Especially noteworthy was the contribution of Grifols’ Transcription Mediated Amplification (TMA) test, used to detect SARS-CoV-2. This diagnostic test was the main driver of NAT systems (Procleix® NAT Solutions) sales, especially in Spain. TMA is a commonly used technique known for its high sensitivity and capacity to automate large sample volumes.

 

Sales of Procleix® NAT Solutions, used to analyze blood donations, were also strong in Japan, Australia, the Philippines and Bulgaria, among other countries. These systems are able to screen for a diversity of pathogens, including the human immunodeficiency virus (HIV), hepatitis viruses (A, B, C and E), West Nile virus, Zika, dengue and the causative agents of babesiosis.


The blood-typing line maintains its upward trend in the U.S. and Latin America, where sales continued to grow in countries such as Argentina. Sales include both analyzers (Erytra®, Erytra Eflexis® and Wadiana®) and reagents (DG-Gel® cards, red blood cells and anti-serums).

 

Hospital prepares its recovery

 

The Hospital Division recorded EUR 119 million in revenues, an 11.7% (10.3% cc) decrease from the previous year. The division’s main business lines were impacted by COVID-19, which caused a slowdown in certain hospital investments and treatments.

 

Grifols is a leading supplier of technology and services for hospitals, clinics and specialized centers. Its leading-edge automated compounding device (KIRO Fill®) and next-generation suite of web- and mobile-based applications (PharmacyKeeper) optimize hospital-pharmacy operations and enhance patient safety by affording greater accuracy and safety in the preparation of intravenous (IV) medications. These advancements improve patient safety and reduce reliance on manual processes.

 

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Grifols’ Pharmatech business line offers comprehensive solutions to enhance hospital pharmacy operations, including the inclusiv® product portfolio, comprised by equipment, software and solutions to improve the safety and quality of sterile compound preparations. The division also consolidated sales of its MedKeeper® and Kiro Grifols® technological solutions.

 

Bio Supplies grows significantly in biological material supply

 

The Bio Supplies Division primarily oversees the sales of biological products for non-therapeutic use and Haema and Biotest’s third-party plasma sales.

 

In 2020, this division reported EUR 224 million in revenues, decreasing by 15.9% (15.3% cc) compared to the previous year. This variation is mainly due to a drop in third-party plasma sales, stemming mainly from the roll-off of supply contracts. As planned, this will enable Grifols to increase its plasma volume to fuel growth of plasma-derived therapies.

 

The Bio Supplies Division grew by 65.5% cc in 2020, demonstrating Grifols’ commitment to this market niche.

 

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FOURTH QUARTER 2020

 

 

Revenues reached EUR 1,309 million, denoting a decline of 3.8% (an increase of 1.9% cc) in relation to the EUR 1,361 million reported for the same period in 2019.

 

The Bioscience Division recorded EUR 1,000 million in sales, a decline of 4.6% (an increase of 1.4% cc) compared to 2019 stemming from the downturn in plasma collections in Q2 and Q3 2020 as a result of COVID-19 mobility restrictions.

 

Demand for the main plasma proteins remains robust. Grifols is working to increase plasma donations, both organically and inorganically. The company’s ongoing efforts are expected to lead to a continued and progressive recovery in plasma donations which, together with plans to expand the number of plasma centers, will lead to higher sales volumes as the supply of plasma for fractionation increases.

 

The Diagnostic Division reported solid revenue growth in the fourth quarter to EUR 229 million (15.1%; 20.1% cc).

 

Grifols’ operating margins in the fourth quarter reflect its efforts to increase its plasma supply, as well as operating expenses associated with corporate transactions, including Green Cross and Alkahest.

 

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INVESTMENT ACTIVITIES: R+D+i, CAPEX, ACQUISITIONS AND CORPORATE TRANSACTIONS

 

 

R+D+i: STRATEGIC APPROACH

 

Grifols’ R+D+i strategy is based on a comprehensive approach encompassing both in-house and investee-led initiatives complementary to its core operations.

 

In 2020, Grifols continued to bolster its R+D+i efforts. Taking into account net investments and excluding equity stakes, the company allocated EUR 298 million to R+D+i, representing 5.6% of revenues. More than EUR 11.5 million were allotted for COVID-19-related research projects. More than 1,100 employees are dedicated to R+D+i.

 

Global response to combat COVID-19

 

As part of its solid commitment to society, Grifols organized a global response to combat COVID-19, leading and participating in more than 25 international research projects.

 

In this regard, the company is collaborating with researchers and health authorities in the United States, Spain and Germany on clinical trials using plasma-derived products such as hyperimmune immunoglobulin, intravenous immunoglobulin, alpha-1 antitrypsin and antithrombin III, as well as convalescent plasma inactivated with methylene blue.

 

Grifols is also spearheading the development of immunoglobulins with specific antibodies against the SARS-CoV-2 virus using plasma from recovered COVID-19 patients. In October 2020, in collaboration with diverse U.S. healthcare agencies and other entities, Grifols launched the Inpatient Treatment with Anti-Coronavirus Immunoglobulin (ITAC) clinical trial, a multicenter, randomized and double-blind study designed to test the efficacy and safety of anti-SARS-CoV-2 hyperimmune plasma in critically ill hospitalized patients.

 

In early 2021, the company initiated a new clinical trial in Spain to assess a subcutaneously administered anti-SARS-CoV-2 immunoglobulin, which would provide immediate protection against the virus. This immunoglobulin would be particularly beneficial for the elderly, healthcare professionals and immunocompromised patients, among others, for whom vaccination is not recommended.

 

Grifols also developed a specialty TMA (Transcription-Mediated Amplification) molecular test to rapidly and accurately detect the SARS-CoV-2 virus in plasma, blood and respiratory samples by generating multiple copies of unique genetic sequences specific to the virus. The test’s sensitivity is the same or even higher than other molecular tests like PCRs (polymerase chain reaction).

 

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Advancing its comprehensive Alzheimer’s strategy

 

Throughout 2020, Grifols continued to strengthen its comprehensive Alzheimer’s strategy. At the same time, Grifols moves forward with its plans to make AMBAR a viable treatment option for Alzheimer’s patients.

 

The results of Grifols’ AMBAR study (Alzheimer Management by Albumin Replacement), which demonstrates a positive impact in reducing the progression of Alzheimer's symptoms in patients treated over a 14-month period compared to untreated patients, were featured in the prestigious peer-reviewed publication Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association.

 

The company is working on opening AMBAR Reference Centers as pilot facilities in collaboration with medical institutions, following the same standard clinical practices established in the AMBAR study. In addition to benefiting AD patients, this initiative would also offer a channel to collect more data and real-world evidence, reinforcing the clinical trial findings.

 

Initially, Grifols will collaborate with several AMBAR centers worldwide. Among these are the Fundació ACE in Barcelona, a key player in the study’s design and development and a Grifols collaborator since 2004, when the company launched its integral Alzheimer’s research strategy.

 

The American Society for Apheresis (ASFA) modified its previous procedure regarding its “Guidelines for Recommendations for the Use of Therapeutic Apheresis in Clinical Practice.” To this end, these will undergo a thorough review in the medium term, without releasing interim recommendations .

 

In parallel, Grifols continues working on future patient reimbursement of the AMBAR treatment, preparing Health Economics & Outcomes Research (HEOR) studies and collaborating with therapy-evaluation committees of diverse medical organizations, including neurological and apheresis associations.

 

Grifols also supports research to discover and develop new therapeutic plasma proteins through Alkahest. This biotech firm currently has four candidates, including two related to potential treatments for AD patients in the advanced stages and another for those in mild and moderate stages.

 

CAPEX

 

Grifols intensified its capital investments in 2020, allocating EUR 308 million to expand and enhance its divisions’ production facilities. This amount is included in the 2018-2022 Capital Investment Plan and reaffirms Grifols’ commitment to growth and long-term vision.

 

In May, the company announced a EUR 130 million investment for the first phase of a project to expand its Barcelona industrial complex. Grifols acquired a 47,274 m2 plot with plans to build a purification and fill-and-finish facility for a new Bioscience Division product and a new R+D+i center, as well as expand the production and logistics capacity of the Diagnostic Division.

 

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Also underway is the expansion of the fibrinogen and topical thrombin sealant production plant in Barcelona. Upon completion of the new purification and dosing facilities, this extension will increase production capacity to 3.3 million equivalent liters of plasma.

 

In the U.S., the company has plans to invest USD 350 million to build a new plasma fractionation plant, a plasma logistics warehouse and service infrastructures on its North Carolina installations. This complex recently completed the construction of a fractionation plant with a capacity to fractionate 6 million liters per year, which will launch productions this year and is expected to be fully operational in 2022.

 

Grifols also continues to advance on the world’s first purification, dosing and sterile filling plant of immunoglobulins in flexible bags, with a production capacity of 6 million equivalent liters of plasma per year. The company expects it to be operational in 2023.


Also noteworthy was the swift construction and launch of a facility dedicated to inactivating pathogens in convalescent plasma using methylene blue. The company also quickly adapted its Clayton emerging-diseases facility to produce an anti-SARS-CoV-2 immunoglobulin. These initiatives allowed the company to quickly respond to COVID-19, demonstrating once again its ability to effectively react and respond in the face of health emergencies.

 

The construction of a new albumin purification, dosing and sterile filling plant in Dublin (Ireland) also continues according to plan. The plant will have an annual production capacity of 6 million equivalent liters of plasma and incorporate a state-of-the-art sterile bag filling technology, owned by Grifols. The plant will build on the company’s efforts to boost its bag production capacity, initiated in Los Angeles (U.S.) plant in the first quarter of 2021.

 

Investments to increase its access to plasma remain a core strategic priority. In this regard, the company is working to expand its network of centers and increase the plasma-collection capacity of existing centers by incorporating more donation equipment, wherever possible. As of December 31, 2020 Grifols operates the largest plasma-center network in the world, with 312 centers.

 

At the same time, Grifols continues its plans to expand the sample testing capacity of its Austin (U.S.) laboratory. The company anticipates reaching a testing capacity of 36 million samples by 2023 thanks to its efforts to expand its U.S. and European facilities. The company is also moving forward to expand its plasma storage and logistics capacity, expecting to reach 12 million liters by 2023.

 

In 2020, the Diagnostic Division centered its efforts on expanding the manufacturing capacity of its immunohematology products, with plans to produce DG Gel® cards, red blood cells and antisera for the first time in the United States. These products will be manufactured in Grifols’ San Francisco (U.S.) facilities. Grifols has also been working on the expansion of the Diagnostic Division’s laboratory capabilities.

 

ACQUISITIONS AND CORPORATE TRANSACTIONS

 

Closing of the alliance with Shanghai RAAS to drive growth in China

 

In March 2020, Grifols and Shanghai RAAS closed a strategic alliance designed to increase the production, sale and development of plasma-derived products and leading-edge transfusion diagnostic solutions in China in adherence with international quality and safety standards.

 

Following this transaction, Grifols is now the largest shareholder in Shanghai RAAS while maintaining operating, political and economic control over its subsidiary, Grifols Diagnostic Solutions (GDS). Specifically, Grifols will have control over a 26.20% stake in Shanghai RAAS’s capital (economic and voting rights) in exchange for Shanghai RAAS having a non-majority share in Grifols Diagnostics Solutions (45% economic and 40% voting rights).

 

For Grifols, the agreement offers an opportunity to bolster its international expansion and build on its long-term, sustainable growth. At present, China is Grifols’ third-largest sales market.

 

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Grifols closes the acquisition of production facilities in Canada and 11 plasma centers in the U.S.

 

In October 2020, Grifols closed its transaction with the South Korean firm, GC Pharma (Group) to acquire a plasma fractionation plant and an immunoglobulin and an albumin purification plant in Montreal (Canada) for USD 370 million. In a separate transaction, it acquired 11 U.S.-based plasma collection centers, property of Green Cross, for USD 90 million.

 

This acquisition is aligned with Grifols’ international sustainable growth strategy aimed at increasing the company’s plasma collection and fractionation capacity. This strategic acquisition will also strengthen Grifols’ presence in Canada, building on a legacy of partnership in Canada’s blood system.

 

Once it obtains the necessary licenses and authorizations, Grifols will become the only large-scale commercial manufacturer of plasma products in Canada, with a fractionation capacity of 1.5 million liters annually. Grifols expects to launch operations in these facilities in 2023, manufacturing IVIG and albumin to supply the Canadian market.

 

Strategic alliance between Grifols and the Egyptian government to boost plasma-derived medicines in the Middle East and Africa

 

In November 2020, Grifols and the Government of Egypt, through the National Service Projects Organization (NSPO), signed a strategic agreement to further develop the Egyptian plasma-derivatives market and promote its self-sufficiency. The operation will ensure national security needs and help strengthen the healthcare system in Egypt.

 

Under this joint venture, owned by NSPO (51%) and Grifols (49%), the parties will join their industrial expertise and financial efforts for the development, construction and operation of 20 plasma collection centers throughout Egypt (with an initial capacity to collect 600,000 liters of plasma per year); manufacturing facilities, including a fractionation plant (with a capacity to fractionate up to 1 million liters of plasma per year) and a purification and fill-and-finish plant; a warehouse and an analysis laboratory. The plasma centers and manufacturing facilities are expected to be operational at the end of 2025.

 

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This partnership will position Grifols as a strategic ally of the Egyptian government and promote its commitment to helping countries reach higher levels of self-sufficiency in the manufacture and procurement of plasma-derived therapies.

 

The transaction will also bolster its presence in the Middle East and Africa, building on its already-solid presence in the United States and Europe and important inroads in China, all core areas of its growth plan.

 

Acquisition of Alkahest to enhance innovation efforts

 

In 2020, Grifols acquired Alkahest’s remaining stock for USD 146 million, bringing its ownership to 100%. The company began investing in Alkahest in 2015.

 

The Silicon Valley-based biotechnology company was founded upon research into the therapeutic use of plasma proteins in age-related diseases. To perform this research, the company is using its omic capabilities as a main discovery tool that enables a complete understanding of the human plasma proteome. In addition, Alkahest works on the clinical development of specific plasma fractions and protein inhibitors.

 

Alkahest has built a unique proteomic platform of targets that will allow the company to unlock new therapeutics and diagnostics; develop new plasma proteins; new indications for currently licensed plasma proteins; biomarkers for diagnostics, recombinant proteins and antibodies; as well as small-molecule drugs.

 

Understanding the plasma proteome is the key to Alkahest’s comprehensive discovery and development platform that delivers transformational therapeutics. Alkahest focuses on proteins with biological impact that change with age.

 

Alkahest has identified more than 8,000 separate proteins to date. Using advanced techniques of molecular analysis at the cellular level, an array of new products are expected to enter Grifols’ discovery and development pipeline and bring new therapeutic medicines to market.

 

Acquisition of remaining 49% stake in MedKeeper

 

In November 2020, Grifols acquired the remaining 49% stake in MedKeeper for USD 60 million.

 

Since 2018, Grifols has owned a 51% equity stake of this U.S.-based technology firm, dedicated to developing and commercializing mobile and web-based technology solutions that enhance quality assurance standards and operational productivity, as well as monitor and track compounding activities. 

 

With this transaction, Grifols complements and strengthens Pharmatech, the Hospital Division’s core business line, boosting its expansion and footprint in the U.S. market.

 

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WORKFORCE: COMMITMENT, EMPLOYMENT QUALITY AND CONTINUOUS TRAINING

 

 

The exceptional circumstances triggered by the COVID-19 pandemic brought out the best in Grifols’ team in 2020, especially employees working in plasma centers and production facilities. Thanks to their dedication, the company has been able to guarantee the supply of life-enhancing therapies, products and services to patients who need them.

 

Grifols’ talent pool has always been its top priority. Throughout the pandemic, the company has been – and will be in the future – fully committed to its employees. COVID-19 has transformed the way the company works and accelerated changes in how it manages its teams and talent. Guided by senior management, Grifols prioritized the safety and physical and emotional well-being of its employees and made important strides in embracing a more humane style of leadership, which has led to greater collaboration and innovation.

 

As of December 31, Grifols had a pool of 23,655 employees. Nearly 4,300 people work in Spain, more than 16,600 in the U.S. and 2,760 in other countries where the company is present (ROW).

 

In 2020, of note is that 72% of new hires and 62% of promotions are women. The company continues to make progress to ensure that women are adequately represented in all professional categories. In 2020, the representation of women on Grifols' Board of Directors is at 31%, and 36% for female directors.

 

In broad lines, Grifols talent pool includes:

 

·60% women and 40% men
·98% of employees have permanent contracts
·52% are 30-50 years old
·93% full-time employees
·88 nationalities reflected

 

Training and professional development is one of the main areas of action of Grifols’ human resource efforts. Grifols aspires to retain and develop its talent through an equal-opportunity policy with regard to remunerations, promotions, professional development and training.

 

Grifols aims to continuously develop its team to equip them with the skills and competencies they need to thrive in their roles, as well as prepare them for positions of greater responsibility. As part of this commitment, in 2009 Grifols established The Grifols Academy, which includes Professional Development Academy, the Academy of Plasmapheresis and the Academy of Transfusion Medicine.

 

Through the Grifols Academy, the company provides educational and professional development opportunities to its global workforce; reinforces its philosophy and corporate values; and provides resources and services to medical professionals dedicated to improving patient care. Grifols Academy partnered with College for America in 2015 to offer Grifols employees the chance to earn college degrees.

 

Despite the pandemic, Grifols continued to dedicate resources to the continuous development of its talent pool. Leveraging virtual platforms, Grifols workforce completed two million training hours, representing an average of 99 hours per person. Of the training hours provided, women received 64% and men received 36%. All in all, the company increased the total number of training hours on health, safety and environmental issues, imparting more than 116,000 hours in 2020, including specific initiatives to better manage and mitigate the effects of COVID-19. 

 

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ENVIRONMENT AND CLIMATE CHANGE

 

 

Grifols makes concerted efforts to minimize its environmental footprint. The company has a range of policies and guidelines to ensure an efficient use of all resources and promote sustainable development.

 

At present, 75% of Grifols’ total production is manufactured in ISO-14001-certified facilities.

 

Grifols’ environmental management is based on the concept of a circular economy. To this end, the company prioritizes waste reduction and the efficient use of material resources, water and energy, while considering the life cycles of its diverse products and services.

 

This strategy supports the transition toward a low-carbon economy to reduce the impact of climate change. Grifols’ management of climate-related risks and opportunities based on Task Force on Climate-Related Financial Disclosures (TCFD) guidelines – focus on four main areas: governance, risk management, strategy, and the establishment of objectives and metrics.

 

Despite the global challenges of 2020, Grifols allocated significant resources to environmental activities to bolster its environmental performance and advance its 2020-2022 Environmental Program objectives.

 

In addition to its environmental programs, Grifols established six main environmental commitments for 2030 as part of its core lines of action. These include reducing greenhouse gas emissions per unit of production by 40%; increasing energy efficiency per unit of production by 15% through the systematic application of eco-efficiency measures in new projects and existing facilities; and consuming 70% of electricity using renewable energies, among others.

 

The outbreak of COVID-19 provoked mobility restrictions for most of the world's population, leading to a dramatic reduction of CO2 emissions. In Grifols’ case, the pandemic significantly reduced airline travel, which fell by 72%, and increased remote connections by 369%. Overall, the implementation of work-from-home initiatives led to a 13% reduction in Grifols' total CO2 emissions in 2020.

 

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In 2020, the joint consumption and emissions of Grifols’ manufacturing plants in Spain, the U.S. and Ireland were as follows: 

 

·Energy consumption decreases by 3% in relation to sales:

-Electric consumption: 428 million kWh, a 5% increase

-Gas consumption: 421 million kWh, down by 4%

·4% reduction in water consumption to 3 million m3

·Total associated emissions: 287,992 T CO2e, down 13% compared to 2019

 

Grifols invested EUR 23 million in environmental initiatives in 2020, a 7% increase over the previous year. Forty percent (40%) was channeled to projects aimed at reducing energy consumption and atmospheric emissions. In terms of environmental expenditures, 73% relate to waste management processes in Grifols’ global facilities.

 

Including both expenses and investments, 66% of resources were allocated to waste management; 26% to water cycle resources; and the remaining 8% to efforts to reduce atmospheric emissions, energy and others.

 

In reflection of its efforts to combat climate change, Grifols participates annually in the Carbon Disclosure Project (CDP), which assesses the firm’s corporate strategy and climate change performance. Grifols improved its valuation in 2020, earning an “A-” management rating.

 

 

ABOUT THE FINANCIAL INFORMATION: The financial information enclosed in this document is part of the company’s financial information.

 

ABOUT THE NON-FINANCIAL INFORMATION: Grifols has carried out a materiality analysis to identify the most relevant economic, environmental and social impacts of the group’s value chain and its impact on stakeholders’ decisions. This information is updated annually and included in the Grifols’ Integrated Annual Report that since 2019 brings together Consolidated Directors’ Report, including financial and non-financial information.

 

All documents are available on Grifols corporate website at www.grifols.com

 

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Investor contact:

 

Investor Relations

inversores@grifols.com - investors@grifols.com

Phone number: +34 93 571 02 21

 

Media contacts:

Raquel Lumbreras raquel_lumbreras@duomocomunicacion.com
Borja Gómez borja_ gomez@duomocomunicacion.com
Duomo Comunicación Grifols PR office

Phone number: +34 91 311 92 89 - 91 311 92 90

 

 

 

 

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About Grifols

 

Grifols is a global healthcare company founded in Barcelona in 1909 committed to improving the health and well-being of people around the world. Its four divisions – Bioscience, Diagnostic, Hospital and Bio Supplies – develop, produce and market innovative solutions and services that are sold in more than 100 countries.

 

Pioneers in the plasma industry, Grifols operates a growing network of donation centers worldwide. It transforms collected plasma into essential medicines to treat rare, chronic and, at times, life-threatening conditions. As a recognized leader in transfusion medicine, Grifols also offers a comprehensive portfolio of solutions designed to enhance safety from donation to transfusion. In addition, the company supplies tools, information and services that enable hospitals, pharmacies and healthcare professionals to efficiently deliver expert medical care.

 

Grifols, with close to 24,000 employees in 30 countries, is committed to a sustainable business model that sets the standard for continuous innovation, quality, safety and ethical leadership.

 

In 2020, Grifols’ economic impact in its core countries of operation was EUR 7.5 billion. The company also generated 140,000 jobs, including indirect and induced jobs.

 

The company’s class A shares are listed on the Spanish Stock Exchange, where they are part of the Ibex-35 (MCE:GRF). Grifols non-voting class B shares are listed on the Mercado Continuo (MCE:GRF.P) and on the U.S. NASDAQ through ADRs (NASDAQ:GRFS).

 

For more information, please visit Grifols.com

 

 

LEGAL DISCLAIMER

 

The facts and figures contained in this report that do not refer to historical data are “future projections and assumptions”. Words and expressions such as “believe”, “hope”, “anticipate”, “predict”, “expect”, “intend”, “should”, “will seek to achieve”, “it is estimated”, “future” and similar expressions, in so far as they relate to the Grifols group, are used to identify future projections and assumptions. These expressions reflect the assumptions, hypotheses, expectations and predictions of the management team at the time of writing this report, and these are subject to a number of factors that mean that the actual results may be materially different. The future results of the Grifols group could be affected by events relating to its own activities, such as a shortage of supplies of raw materials for the manufacture of its products, the appearance of competitor products on the market, or changes to the regulatory framework of the markets in which it operates, among others. At the date of compiling this report, the Grifols group has adopted the necessary measures to mitigate the potential impact of these events. Grifols, S.A. does not accept any obligation to publicly report, revise or update future projections or assumptions to adapt them to events or circumstances subsequent to the date of writing this report, except where expressly required by the applicable legislation. This document does not constitute an offer or invitation to buy or subscribe shares in accordance with the provisions of the following Spanish legislation: Royal Legislative Decree 4/2015, of 23 October, approving recast text of Securities Market Law; Royal Decree Law 5/2005, of 11 March and/or Royal Decree 1310/2005, of 4 November, and any regulations developing this legislation. In addition, this document does not constitute an offer of purchase, sale or exchange, or a request for an offer of purchase, sale or exchange of securities, or a request for any vote or approval in any other jurisdiction. The information included in this document has not been verified nor reviewed by the external auditors of the Grifols group.

 

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7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_01.jpg  Audit Report on Grifols, S.A. and Subsidiaries (Together with the consolidated annual accounts and consolidated directors’ report of Grifols, S.A. and subsidiaries for the year ended 31 December 2020) (Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_02.jpg KPMG Auditores, S.L. Torre Realia Plaça d’Europa, 41-43 08908 L’Hospitalet de Llobregat (Barcelona) Independent Auditor’s Report on the Consolidated Annual Accounts (Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) To the Shareholders of Grifols, S.A. REPORT ON THE CONSOLIDATED ANNUAL ACCOUNTS Opinion We have audited the consolidated annual accounts of Grifols, S.A. (the "Parent") and subsidiaries (together the "Group”), which comprise the consolidated balance sheet at 31 December 2020, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and consolidated notes. In our opinion, the accompanying consolidated annual accounts give a true and fair view, in all material respects, of the consolidated equity and consolidated financial position of the Group at 31 December 2020 and of its consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and other provisions of the financial reporting framework applicable in Spain. Basis for Opinion We conducted our audit in accordance with prevailing legislation regulating the audit of accounts in Spain. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Annual Accounts section of our report. We are independent of the Group in accordance with the ethical requirements, including those regarding independence, that are relevant to our audit of the consolidated annual accounts pursuant to the legislation regulating the audit of accounts in Spain. We have not provided any non-audit services, nor have any situations or circumstances arisen which, under the aforementioned regulations, have affected the required independence such that this has been compromised. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. KPMG Auditores S.L., a limited liability Spanish company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Paseo de la Castellana, 259C 28046 Madrid Reg. Mer Madrid, T. 11.961, F. 90, Sec. 8, H. M -188.007, Inscrip. 9 N.I.F. B-78510153

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_03.jpg 2 (Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the consolidated annual accounts of the current period. These matters were addressed in the context of our audit of the consolidated annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. tested the operating effectiveness of certain internal assessment process, including controls related to the disposals/recoverable amount of the Diagnostic CGU, specialized skills and knowledge, who assisted in: the Diagnostic CGU, by comparing the coherence data for comparable entities. against a discount rate range that was market data for comparable entities. Cash Flow (“DCF”) valuation methodology used Evaluation of the Diagnostic goodwill impairment analysis See notes 4 and 7 to the annual accounts Key audit matter How the matter was addressed in our audit As discussed in Notes 4 and 7 to the consolidated financial statements, the goodwill balance as of December 31, 2020 was Euros 5,332,271 thousand, of which Euros 2,433,032 thousand related to the Diagnostic cash generating unit (CGU). The Group calculates the recoverable amount of goodwill on an annual basis and whenever there is an indication that goodwill may be impaired. We identified the evaluation of the goodwill impairment analysis for the Diagnostic CGU as a key audit matter. Significant director’s judgment was required to evaluate the Company’s impairment test which was performed using a discounted cash flow model. The discounted cash flow model included assumptions related to future cash flows, the perpetual growth rate and the discount rate. Minor changes to these assumptions, particularly perpetual growth rate and the discount rate, could have a significant effect on the Company’s assessment of the carrying value of the goodwill. The primary procedures we performed to address this key audit matter included the following: - We evaluated the design and implementation and controls related the Company’s goodwill impairment determination of the fair value less costs of and the development of the perpetual growth rate and discount rate assumptions. - We have involved a valuation professional with oEvaluating the Group’s perpetual growth rate for of the estimate with publicly available market oEvaluating the discount rate by comparing it independently developed using publicly available oAnalysis of the reasonableness of the Discounted to calculate the recoverable amount. - We challenged the Group’s valuation methodology by performing sensitivity analyses over the perpetual growth rate and discount rate assumptions and comparing the results to the carrying amount. - We have evaluated the Group’s ability to forecast the cash flow projections by comparing the historical projections to actual results and the business plans approved by the Company’s governing bodies. - We have evaluated whether the disclosures in the consolidated Financial Statements meet the requirements of the financial reporting framework applicable to the Group.

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_04.jpg 3 (Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) Other Information: Consolidated Directors’ Report Other information solely comprises the 2020 consolidated directors' report, the preparation of which is the responsibility of the Parent's Directors and which does not form an integral part of the consolidated annual accounts. Our audit opinion on the consolidated annual accounts does not encompass the consolidated directors' report. Our responsibility regarding the information contained in the consolidated directors’ report is defined in the legislation regulating the audit of accounts, as follows: a)Determine, solely, whether the consolidated non-financial information statement and certain information included in the Annual Corporate Governance Report, as specified in the Spanish Audit Law, have been provided in the manner stipulated in the applicable legislation, and if not, to report on this matter. b) Assess and report on the consistency of the rest of the information included in the consolidated directors’ report with the consolidated annual accounts, based on knowledge of the Group obtained during the audit of the aforementioned consolidated annual accounts. Also, assess and report on whether the content and presentation of this part of the consolidated directors’ report are in accordance with applicable legislation. If, based on the work we have performed, we conclude that there are material misstatements, we are required to report them. Based on the work carried out, as described in the preceding paragraph, we have observed that the information mentioned in section a) above has been provided in the manner stipulated in the applicable legislation, that the rest of the information contained in the consolidated directors’ report is consistent with that disclosed in the consolidated annual accounts for 2020, and that the content and presentation of the report are in accordance with applicable legislation. Directors' and Audit Committee's Responsibility for the Consolidated Annual Accounts The Parent's Directors are responsible for the preparation of the accompanying consolidated annual accounts in such a way that they give a true and fair view of the consolidated equity, consolidated financial position and consolidated financial performance of the Group in accordance with IFRS-EU and other provisions of the financial reporting framework applicable to the Group in Spain, and for such internal control as they determine is necessary to enable the preparation of consolidated annual accounts that are free from material misstatement, whether due to fraud or error. In preparing the consolidated annual accounts, the Parent's Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. The Parent's audit committee is responsible for overseeing the preparation and presentation of the consolidated annual accounts.

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_05.jpg 4 (Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) Auditor's Responsibilities for the Audit of the Consolidated Annual Accounts Our objectives are to obtain reasonable assurance about whether the consolidated annual accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with prevailing legislation regulating the audit of accounts in Spain will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence economic decisions of users taken on the basis of these consolidated annual accounts. As part of an audit in accordance with prevailing legislation regulating the audit of accounts in Spain, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: – Identify and assess the risks of material misstatement of the consolidated annual accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. – Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. – Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Parent's Directors. – Conclude on the appropriateness of the Parent's Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated annual accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern. – Evaluate the overall presentation, structure and content of the consolidated annual accounts, including the disclosures, and whether the consolidated annual accounts represent the underlying transactions and events in a manner that achieves a true and fair view. – Obtain sufficient appropriate evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated annual accounts. We are responsible for the management, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_06.jpg 5 (Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) We communicate with the audit committee of the Parent regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Parent's audit committee with a statement that we have complied with the applicable ethical requirements, including those regarding independence, and to communicate with them all matters that may reasonably be thought to bear on our independence and, where applicable, related safeguards. From the matters communicated to the audit committee of the Parent, we determine those that were of most significance in the audit of the consolidated annual accounts of the current period and which are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS European Single Electronic Format We have examined the digital files of Grifols, S.A. and its subsidiaries for 2020 in European Single Electronic Format (ESEF), which comprise the XHTML file that includes the consolidated annual accounts for the aforementioned year and the XBRL files tagged by the Group, which will form part of the annual financial report. The Directors of Grifols, S.A. are responsible for the presentation of the 2020 annual financial report in accordance with the format and mark-up requirements stipulated in the EU Delegated Regulation 2019/815 of December 17, 2018 of the European Commission (hereinafter the “ESEF Regulation”). In this regard, the Annual Corporate Governance Report has been included as a reference in the consolidated directors’ report. Our responsibility consists of examining the digital files prepared by the Directors of the Parent, in accordance with prevailing legislation regulating the audit of accounts in Spain. This legislation requires that we plan and perform our audit procedures to determine whether the content of the consolidated annual accounts included in the aforementioned digital files fully corresponds to the consolidated annual accounts we have audited, and whether the consolidated annual accounts and the aforementioned files have been formatted and marked up, in all material respects, in accordance with the requirements of the ESEF Regulation. In our opinion, the digital files examined fully correspond to the audited consolidated annual accounts, and these are presented and marked up, in all material respects, in accordance with the requirements of the ESEF Regulation. Additional Report to the Audit Committee of the Parent The opinion expressed in this report is consistent with our additional report to the Parent's audit committee dated 25 February 2021.

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_07.jpg 6 (Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.) Contract Period We were appointed as auditor of the Group by the shareholders at the ordinary general meeting on 9 October 2020 for the year ended 31 December 2020. Previously, we had been appointed for a period of three years from 31 July 1990 to 1992, by consensus of the shareholders at their general meeting, and have been auditing the annual accounts since the year ended 31 July 1990. KPMG Auditores, S.L. On the Spanish Official Register of Auditors (“ROAC”) with No. S0702 (Signed on original in Spanish) David Hernanz Sayans On the Spanish Official Register of Auditors (“ROAC”) with No. 20236 25 February 2021

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_08.jpg GRIFOLS, S.A. AND SUBSIDIARIES Consolidated Annual Accounts 31 December 2020 and 2019 SUMMARY (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) • Consolidated financial statements           Consolidated Balance Sheets Consolidated Statements of Profit and Loss Consolidated Statements of Comprehensive Income Consolidated Statements of Cash Flows Statements of Changes in Consolidated Equity • Notes (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (26) (27) (28) (29) Nature, Principal Activities and Subsidiaries Basis of Presentation Business Combinations Significant Accounting Policies Financial Risk Management Policy Segment Reporting Goodwill Other Intangible Assets Leases Property, Plant and Equipment Equity-Accounted Investees Financial Assets Inventories Trade and Other Receivables Cash and Cash Equivalents Equity Earnings per Share Non-Controlling Interests Grants Provisions Financial Liabilities Trade and Other Payables Other Current Liabilities Net Revenues Personnel Expenses Expenses by Nature Finance Result Taxation Other Commitments with Third Parties and Other Contingent Liabilities Financial Instruments Balances and Transactions with Related Parties Environmental Issues Other Information COVID-19 Impact (30) (31) (32) (33) (34)

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_09.jpg GRIFOLS, S.A. AND SUBSIDIARIES Consolidated Annual Accounts 31 December 2020 and 2019 SUMMARY (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) •Appendices   Appendix I and Others Appendix II Appendix III Appendix IV Appendix V Appendix VI Information on Group Companies, Associates           Operating Segments Changes in Other Intangible Assets Movement in Rights of Use Movement in Property, Plant and Equipment Statement of Liquidity for Distribution of Interim Dividend

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_10.jpg GRIFOLS, S.A. AND SUBSIDIARIES Consolidated Balance Sheet at 31 December 2020 and 2019 (Expressed in thousands of Euros) (Free translation from the original Spanish. In the event of discrepancy, the Spanish-language version pre Assets 31/12/20 31/12/19 Goodwill (note 7) Other intangible assets (note8) Rights of use (note 9) Property, plant and equipment (note 10) Investment in equity-accounted investees (note 11) Non-current financial assets Non-current financial assets measured at fair value Non-current financial assets at amortized cost Total non-current financial assets (note 12) Deferred tax assets (note 28) Total non-current assets 5,332,271 1,557,650 678,696 2,324,107 1,869,020 5,507,063 1,433,534 703,858 2,159,545 114,473 3,008 7 195,149 138,923 198,157 138,930 149,921 123,024 12,109,822 10,180,427 Inventories (note 13) Trade and other receivables Trade receivables Other receivables Current income tax assets Trade and other receivables (note 14) Other current financial assets (note 12) Current financial assets measured at fair value Current financial assets at amortized cost Total current financial assets (note 12) Other current Assets Cash and cash equivalents (note 15) Total current assets 2,002,281 2,342,590 383,233 72,360 369,797 82,509 64,565 38,269 520,158 490,575 1,716,738 --11,118 12,188 11,118 51,750 1,728,926 58,111 579,647 741,982 3,164,954 5,362,184 Total assets 15,274,776 15,542,611 The accompanying notes form an integral part of the consolidated annual accounts.

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_11.jpg GRIFOLS, S.A. AND SUBSIDIARIES Consolidated Balance Sheet at 31 December 2020 and 2019 (Expressed in thousands of Euros) (Free translation from the original Spanish. In the event of discrepancy, the Spanish-language version pre Equity and liabilities 31/12/20 31/12/19 Share capital Share premium Reserves Treasury stock Interim dividend Profit for the year attributable to the Parent Total equity 119,604 910,728 3,776,932 (43,734) --119,604 910,728 3,009,599 (49,584) (136,828) 618,546 625,146 5,382,076 4,478,665 Other comprehensive Income Translation differences Other comprehensive expenses Equity attributable to the Parent (note 16) Non-controlling interests (note 18) Total equity (1,155) (903) (272,529) 344,357 (273,684) 5,108,392 343,454 4,822,119 1,611,663 2,023,649 6,720,055 6,845,768 Liabilities Grants (note 19) Provisions (note 20) Non-current financial liabilities (note 21) Other non-current liabilities Deferred tax liabilities (note 28) Total non-current liabilities 17,008 27,271 6,602,100 16,391 11,377 8,030 6,846,068 983 556,813 463,827 7,219,583 7,330,285 Provisions (note 20) Current financial liabilities (note 21) Current debts with related companies Trade and other payables Suppliers Other payables Current income tax liabilities Total trade and other payables (note 22) Other current liabilities (note 23) Total current liabilities 11,175 424,612 --53,109 361,312 1,258 601,618 141,089 581,882 165,632 3,482 5,966 746,189 753,480 153,162 197,399 1,335,138 1,366,558 Total liabilities 8,554,721 8,696,843 Total equity and liabilities 15,274,776 15,542,611 The accompanying notes form an integral part of the consolidated annual accounts.

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_12.jpg GRIFOLS, S.A. AND SUBSIDIARIES Consolidated Statements of Profit and Loss at December 2020, 2019 and 2018 (Expresadas en miles de Euros) (Free translation from the original Spanish. In the event of discrepancy, the Spanish-language version prevails) 31/12/20 31/12/19 31/12/18 Continuing Operations Net revenue (notes 6 and 24) Cost of sales Gross Margin Research and Development Selling, General and Administration expenses Operating Expenses 5,340,038 5,098,691 4,486,724 (3,084,873) (2,757,459) (2,437,164) 2,255,165 (294,216) 2,341,232 (276,018) 2,049,560 (240,661) (985,616) (942,821) (814,775) (1,279,832) (1,218,839) (1,055,436) Profit/(loss) of equity accounted investees with similar activity to that of the Group (note 11) Operating Result Finance income Finance costs Change in fair value of financial instruments Impairment of financial assets at amortized cost Exchange differences Finance result (note 27) Profit/(loss) of equity accounted investees (note 11) Profit before income tax from continuing operations Income tax expense (note 28) Profit after income tax from continuing operations Consolidated profit for the year Profit attributable to the Parent Loss attributable to non-controlling interest (note 18) 20,799 996,132 8,021 (249,639) 55,703 8,972 1,131,365 114,197 (342,965) 1,326 (37,666) --994,124 13,995 (293,273) --30,280 --8,246 (9,616) (8,246) (177,669) (274,724) (257,244) 60,166 (39,538) (11,038) 878,629 817,103 725,842 (169,639) (168,459) (131,436) 708,990 708,990 618,546 90,444 648,644 648,644 625,146 23,498 594,406 594,406 596,642 (2,236) Basic earnings per share (Euros) (see note 17) Diluted earnings per share (Euros) (see note 17) 0.90 0.90 0.91 0.91 0.87 0.87 The accompanying notes form an integral part of the consolidated annual accounts.

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_13.jpg GRIFOLS, S.A. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income for the years ended 31 December 2020, 2019 and 2018 (Expresadas en miles Euros) (Free translation from the original Spanish. In the event of discrepancy, the Spanish-language version prevails) 31/12/20 31/12/19 31/12/18 Consolidated profit for the year Items for reclassification to profit or loss Translation differences Equity accounted investees (note 11) / Translation differences Other 708,990 648,644 594,406 (747,221) 21,916 (252) 33,256 (4,360) (349) 268,557 (9,270) 102 Other comprehensive income for the year, after tax (725,557) 28,547 259,389 Total comprehensive income for the year Total comprehensive income attributable to the Parent (16,567) 677,191 853,795 1,408 641,772 856,598 Total comprehensive income attributable to non-controlling interests (17,975) 35,419 (2,803)

 

 

 

 

7567-2-ba_part 1 of 5 ccaa 2020 opinion y  tablas_page_14.jpg GRIFOLS, S.A. AND SUBSIDIARIES Consolidated Statements of Cash Flows for the years ended December 2020, 2019 and 2018 (Expresados en miles Euros) (Free translation from the original Spanish. In the event of discrepancy, the Spanish-language version prevails) 31/12/20 31/12/19 31/12/18 Cash flows from operating activities Profit before tax Adjustments for: Amortization and depreciation (note 26) Other adjustments: (Profit) / losses on equity accounted investments (note 11) Impairment of assets and net provision charges (Profit) / losses on disposal of fixed assets (note 8, 9 and 10) Government grants taken to income (note 19) Finance cost / (income) Other adjustments Change in operating assets and liabilities Change in inventories Change in trade and other receivables Change in current financial assets and other current assets Change in current trade and other payables Other cash flows used in operating activities Interest paid Interest recovered Income tax (paid) / received Other recovered (paid) Net cash from operating activities 878,629 409,766 321,533 88,233 (80,965) (17,148) 1,067 (1,683) 170,535 16,427 106,283 164,631 (35,429) (20,600) (2,319) (284,342) (155,788) 3,773 (131,510) 817,103 569,960 302,455 267,505 30,566 (19,518) 1,399 (1,388) 255,841 605 (481,537) (323,748) (99,374) (13,871) (44,544) (336,593) (236,179) 9,487 (107,797) 725,842 454,378 228,609 225,769 11,038 (23,657) (6,700) (1,166) 232,962 13,292 (112,639) (231,670) (13,141) (3,092) 135,264 (330,153) (225,146) 6,862 (111,585) (817) (2,104) (284) 1,110,336 568,933 737,428 Cash flows from investing activities Payments for investments Group companies, associates and business units (notes 3, 2 (b) and 11) Property, plant and equipment and intangible assets Property, plant and equipment Intangible assets Other financial assets Proceeds from the sale of investments Property, plant and equipment Other financial assets Net cash used in investing activities (858,387) (468,589) (362,560) (280,154) (82,406) (27,238) 272 272 (551,497) (119,745) (412,305) (310,383) (101,922) (19,447) 2,708 2,708 (852,536) (524,081) (307,722) (231,983) (75,739) (20,733) 70,669 550 ---- 70,119 (858,115) (548,789) (781,867) Cash flows from financing activities Proceeds from and payments for financial liability instruments Issue Redemption and repayment Dividends and interest on other equity instruments Dividends paid Dividends received Other cash flows from / (used in) financing activities Financing costs included on the amortised costs of the debt Other amounts from / (used in) financing activities Transaction with minority interests with no loss of control (note 3) Net cash from/(used in) financing activities Effect of exchange rate fluctuations on cash Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at year end (243,373) 108,541 (351,914) (103,075) (113,230) 10,155 (7,953) (9,227) 1,274 (7,515) 120,079 (127,594) (234,271) (238,740) 4,469 (90,552) (84,346) (6,206) 37,418 179,350 (141,932) (275,783) (278,841) 3,058 4,661 --4,661 --(18) 386,207 (354,401) (60,155) (162,335) 741,982 579,647 (332,356) 20,402 (291,810) 1,033,792 741,982 152,503 39,207 147,271 886,521 1,033,792 The accompanying notes form an integral part of the consolidated annual accounts.

 

 

 

 

GRIFOLS, S.A. AN SUBSIDIARIES Statement of Changes in Consolidated Equity for the years ended 31 December 2020, 2019 and 2018 (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 Equity attributable to Profit attributable to Parent Other comprehensive Non-controlling interests Share Share Reserves Interim dividend Treasury Stock TranslationAvailable for sale Equity Capital Premium differences financial assets income Parent Balance at December 2017 Impact of new IFRS Balance at December 2017 adjusted 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 ---- 29,562 ---- ---- (4,926) --24,636 --24,636 119,604 910,728 2,057,210 662,700 (122,986) (62,422) 89,537 --(656) 3,653,715 4,886 3,658,601 Translation differences Available for sale financial assets Other comprehensive income ---- ---- ---- ---- ---- ---- 259,854 ---- ---- --259,854 --(567) --259,287 ---- ---- ---- ---- --102 102 --102 Other comprehensive income / (expense) for the year ---- ---- ---- 259,854 --102 259,956 (567) 259,389 Profit/(loss) for the year ---- --596,642 ---- ---- --596,642 (2,236) 594,406 Total comprehensive income / (expense) for the year ---- --596,642 ---- 259,854 --102 856,598 (2,803) 853,795 Net change in treasury stock (note 16 (d)) ---- ---- --6,981 ---- --6,981 --6,981 Acquisition / Divestment of non-controlling interests (note 16 (c)) Other changes Interim dividend ---- ---- ---- (3,462) (9,437) ---- ---- ---- (136,747) ---- ---- ---- ---- ---- ---- (3,462) (9,437) (136,747) 469,010 (43) --465,548 (9,480) (136,747) Distribution of 2017 profit: Reserves Dividends Interim dividend ---- ---- ---- 539,714 (142,094) --(539,714) --(122,986) ---- 122,986 ---- ---- ---- ---- ---- ---- --(142,094) ---- ---- --(142,094) --Operations with shareholders or owners ---- 384,721 (662,700) (13,761) 6,981 ---- --(284,759) 468,967 184,208 Balance at 31 December 2018 119,604 910,728 2,441,931 596,642 (136,747) (55,441) 349,391 --(554) 4,225,554 471,050 4,696,604

 

 

 

 

 Attributable to shareholders of the Parent Accumulated other comprehensive income Equity attributable to Profit attributable to Parent Other comprehensive Non-controlling interests Share Share Reserves Interim dividend Treasury Stock TranslationAvailable for sale Equity Capital Premium differences financial assets income Parent Translation differences Other comprehensive income ---- ---- ---- 16,975 ---- 16,975 11,921 28,896 ---- ---- ---- ---- (349) (349) --(349) Other comprehensive income / (expense) for the year ---- ---- ---- 16,975 --(349) 16,626 11,921 28,547 Profit/(loss) for the year ---- --625,146 ---- ---- --625,146 23,498 648,644 Total comprehensive income / (expense) for the year ---- --625,146 ---- 16,975 --(349) 641,772 35,419 677,191 Net change in treasury stock (note 16 (d)) ---- ---- --5,857 ---- --5,857 --5,857 Acquisition / Divestment of non-controlling interests (note 16 (c)) Other changes Interim dividend ---- ---- ---- 220,976 (11,291) ---- ---- ---- (136,828) ---- --(22,009) ---- ---- ---- ---- 198,967 (11,291) (136,828) 1,517,180 ---- 1,716,147 (11,291) (136,828) Distribution of 2018 profit: Reserves Dividends Interim dividend ---- ---- ---- 459,895 (101,912) --(459,895) --(136,747) ---- 136,747 ---- ---- ---- ---- ---- ---- --(101,912) ---- ---- --(101,912) --Operations with shareholders or owners ---- 567,668 (596,642) (81) 5,857 (22,009) ---- (45,207) 1,517,180 1,471,973 Balance at 31 December 2019 119,604 910,728 3,009,599 625,146 (136,828) (49,584) 344,357 --(903) 4,822,119 2,023,649 6,845,768 Translation differences Other comprehensive income ---- ---- ---- (616,886) ---- (616,886) (108,419) (725,305) ---- ---- ---- ---- (252) (252) --(252) Other comprehensive income / (expense) for the year ---- ---- ---- (616,886) --(252) (617,138) (108,419) (725,557) Profit/(loss) for the year ---- --618,546 ---- ---- --618,546 90,444 708,990 Total comprehensive income / (expense) for the year ---- --618,546 ---- (616,886) --(252) 1,408 (17,975) (16,567) Net change in treasury stock (note 16 (d)) ---- ---- --5,850 ---- --5,850 --5,850 Acquisition / Divestment of non-controlling interests (note 16 (c)) Other changes ---- ---- 405,698 (13,453) ---- ---- ---- ---- 405,698 (13,453) (405,698) 11,687 --(1,766) Distribution of 2019 profit: Reserves Dividends Interim dividend Operations with shareholders or owners ---- ---- 488,318 (113,230) (488,318) ---- ---- ---- ---- ---- ---- (113,230) ---- --(113,230) ---- --(136,828) 136,828 ---- ---- ---- ---- --767,333 (625,146) 136,828 5,850 ---- --284,865 (394,011) (109,146) Balance at 31 December 2020 119,604 910,728 3,776,932 618,546 --(43,734) (272,529) --(1,155) 5,108,392 1,611,663 6,720,055

 

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_001.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (1) Nature, Principal Activities and Subsidiaries 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 hemoderivatives. 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). (2) Basis of Presentation 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 2020 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 issued 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 2020, 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 2020 show comparative figures for 2019 and voluntarily show figures for 2018 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. For the purposes of comparing the consolidated statement of profit and loss and the consolidated balance sheet for 2020, 2019 and 2018, the effects of the application new standards described in note 2 must be taken into account. 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 Spanish 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 for 2020 authorized for issue at their meeting held on 19 February 2021, will be approved by the shareholders without any modifications. In accordance with the provision of section 357 of the Irish Companies Act 2014, the Company has irrevocably guaranteed all liabilities of an Irish subsidiary undertaking, Grifols Worldwide Operations Limited (Ireland) (see 1

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_002.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Appendix I), for the financial year ended 31 December 2020 as referred to in subsection 1(b) of that Act, for the purposes of enabling Grifols Worldwide Operations Limited to claim exemption from the requirement to file their own annual accounts in Ireland. (a) Relevant accounting estimates, assumptions and judgments used when applying accounting principles 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.   Assumptions used to test non-current assets and goodwill for impairment. Relevant cash generating units are tested annually for impairment. These are based on risk-adjusted future cash flows discounted using appropriate interest rates. The key assumptions used are specified in note 7. Assumptions relating to risk-adjusted future cash flows and discount rates are based on business forecasts and are therefore inherently subjective. Future events could cause a change in business forecasts, with a consequent adverse effect on the future results of the Group. To the extent considered a reasonably possible change in key assumptions could result in an impairment of goodwill, a sensitivity analysis has been disclosed to show the effect of changes to these assumptions and the effect of the cash generating unit (CGU) on the recoverable amount. Determination the fair value of assets, liabilities and contingent liabilities related to business combinations. Details of the fair value methods used by the Group are provided in note 3. Evaluation of the capitalization of development costs (see note 4(h)). The key assumption is related to the estimation of sufficient future economic benefits of the projects. Evaluation of provisions and contingencies. Key assumptions relate to the evaluation of the likelihood of an outflow of resources due to a past event, as well as to the evaluation of the best estimate of the likely outcome. These estimates take into account the specific circumstances of each dispute and relevant external advice and therefore are inherently subjective and could change substantially over time as new facts arise and each dispute progresses. Details of the status of various uncertainties involved in significant unresolved disputes are set out in note 29. The calculation of the income tax expense requires tax legislation interpretations in the jurisdictions where Grifols operates. The decision as to whether the tax authority will accept a given uncertain tax treatment and the expected outcome of outstanding litigation requires significant estimates and judgements. Likewise, Grifols recognizes deferred tax assets, mainly from tax credits and rights to deduct to the extent that it is probable that sufficient taxable income will be available against which temporary differences can be utilized, based on management assumptions regarding amount and payments of future taxable profits (see notes 4(s) and 28). Determination of chargebacks made to certain customers in the United States (see note 4 r) 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. (b) Basis of consolidation Appendix I shows details of the percentages of direct or indirect ownership of subsidiaries by the Company at 31 December 2020, 2019 and 2018, as well as the consolidation method used in each case for preparation of the accompanying consolidated annual accounts. 2

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_003.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 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. Although the Group holds 30% of the shares with voting rights of Grifols Malaysia Sdn Bhd, it controls the majority of the economic and voting rights of Grifols Malaysia Sdn Bhd through a contract with the other shareholder and a pledge on its shares. As a consequence, it has been fully consolidated. Grifols (Thailand) Ltd. has two classes of shares and it grants the majority of voting rights to the class of shares held by the Group. As a consequence, it has been fully consolidated. Changes in associates and jointly controlled entities are detailed in note 11. Changes in subsidiaries In 2020: Grifols Diagnostic Solutions, Inc. On 30 March 2020, Grifols closed a shares exchange agreement with Shanghai RAAS Blood Products Co. Ltd. (hereinafter SRAAS), through which Grifols delivered 90 shares of its US subsidiary Grifols Diagnostic Solutions Inc. (hereinafter GDS) (representing 45% of the economic rights and 40% of the voting rights), and in exchange received 1,766 million of SRAAS shares (representing 26.2% of the share capital). Thus, Grifols becomes the largest shareholder of SRAAS, while maintaining operational, political and economic control of GDS (see note 11). Plasmavita Healthcare GmbH On 14 April 2020, Grifols made a contribution of Euros 10 million in cash that was recognized as a shareholder contribution in Plasmavita. The equity share of 50% has remained unaffected after the contribution. However, in assessing the existence of control due to the new shareholders’ agreement signed on this date, it can be concluded that Grifols has control over Plasmavita and, therefore, it is considered part of the group and it has been fully consolidated (see note 3). Alkahest, Inc. On 2 September 2020, the Group reached an agreement with the shareholders of Alkahest Inc. (“Alkahest”) to acquire 57.55% of Alkahest’s shares for a total price of US Dollars 146 million, on a debt free basis (see note 3). Green Cross On 20 July 2020, Grifols executed share purchase arrangements with the South Korean-based GC Pharma (Group) (“GC Pharma”) and other investors for the purchase of a plasma fractionation facility and two purification facilities located in the city of Montreal, Canada, (the “Factories”) and 11 plasma collection centers located in the United States (“the “Donation Centers”), for a total consideration of US Dollars 457 million, on a debt free basis. Grifols will not require supplementary financing for this Transaction. On 1 October 2020, the transaction was closed (see note 3). VCN Biosciences, S.L. On 2 December 2020, VCN Biosciences, S.L. carried out a share capital increase of Euros 5 million. Consequently, the Group interest rises from 81.34% to 86.83%. In 2019: 3

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_004.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Interstate Blood Bank 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). The Group also entered into a call option on the remaining shares for a price of US Dollars 100 million, having agreed a payment of US Dollars 10 million (Euros 9,007 thousand) for the call option. 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 26 plasma collection centers, 9 blood donation centers and one laboratory In April 2019, the Group exercised the call option and has completed the acquisition of the remaining shares of the IBBI companies (see note 3). Progenika Biopharma On 24 July 2019, the Group acquired 33 shares of Progenika Biopharma, S.A for an amount of Euros 4 thousand. As a result, the Group increased its interest from 99.99% to 100%. With this acquisition, the Group has the full control of Progenika Biopharma, S.A and therefore it ceased to have non-controlling interest (see notes 18 and 16 (c)). Araclon Biotech, SL On 16 April 2019 and 3 December 2019 Araclon Biotech , S.L carried out two share capital increases of Euros 16.8 million and Euros 5.9 million, respectively. After the latter capital increase Grifols’ interest rises to 75.1% (see notes 18 and 16 (c)). Instituto Grifols, S.A. With effect as of 1 January 2019, Instituto Grifols, S.A. and Gri-Cel, S.A. entered into a merger agreement. The surviving company was Instituto Grifols, S.A. In 2018: Biotest US Corporation and Haema AG On 28 December 2018, Grifols sold Biotest US Corporation and Haema AG to Scranton Enterprises B.V. for a global amount of US Dollars 538,014 thousand. Scranton is an existing shareholder of Grifols (see note 3). Biotest US Corporation On 1 August 2018, Grifols, through its subsidiary Grifols Shared Services North America, Inc. completed the acquisition of 100% of the shares in Biotest US Corporation for a price of US Dollars 286,454 thousand, after obtaining the consent of the US Federal Trade Commission (see note 3). Haema AG On 19 March 2018, Grifols entered into an agreement with Aton GmbH for the purchase of 100% of the shares of German based pharmaceutical company Haema AG, in exchange for a purchase price of Euros 220,191 thousand on a debt free basis. The closing of this transaction took place in June 2018 (see note 3). Goetech LLC On 26 January 2018, Grifols through its subsidiary Grifols Shared Services North America, Inc, subscribed a capital increase in the amount of US Dollars 98 million in the U.S company Goetech LLC, based in Denver, Colorado, trading as Medkeeper. As a result, Grifols reached a 54.76% interest in Medkeeper and a majority position on the board of directors. 4

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_005.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Aigües Minerals de Vilajuïga, S.A. On 12 January 2018 the Group acquired the remaining 50% of the voting rights of Aigües Minerals de Vilajuïga, S.A. and consequently Grifols held 100% of the voting rights for a total amount of Euros 550 thousand. (c) Amendments to IFRS in 2020, 2019 and 2018 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. Effective date in 2018 M andatory ap p lication for annual p eriods beginning on or after: St andards IASB effect ive dat e EU effect ive dat e Revenue from contracts with Customers (issued on 28 M ay 2014) Clarification to IFRS15 Revenue from Contracts with Customers (issued on 12 Ap ril 2016) IFRS 15 1 January 2018 1 January 2018 IFRS 15 1 January 2018 1 January 2018 IFRS 9 Financial instruments (issued on 24 July 2014) 1 January 2018 1 January 2018 Classification and M easurement of Share-based Pay ment Transactions (issued on 20 June 2016) Ap p ly ing IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (issued on 12 Sep tember 2016) IFRS 2 1 January 2018 1 January 2018 IFRS 4 IFRS 9 1 January 2018 1 January 2018 IFRIC 22 Interp retation: Foreign currency translations and Advance Consideration (issued on 8 December 2016) IFRIC 22 1 January 2018 1 January 2018 Amendments to IAS 40: Transfers of Investment Prop erty (issued on 8 December 2016) Annual imp rovements to IFRSs 2014 - 2016 cy cle (issued on 8 December 2016) IAS 40 1 January 2018 1 January 2018 Various 1 January 2018 1 January 2018 The application of these standards and interpretations had some impacts on the consolidated annual accounts for the year ended 31 December 2018, which are detailed below: IFRS 9 Financial Instruments IFRS 9 Financial Instruments was applied on 1 January, 2018 without any restatements of the comparative figures relative for the prior year. The impacts of the first-time adoption, recognized directly in equity, were as follows: - Classification and measurement of financial assets: In general terms, based on the analysis of the new classification based on the business model, the majority of financial assets continued to be measured at amortized cost, the main exception being equity instruments, which are measured at fair value through profit or loss. Impairment of financial assets: - 5

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_006.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) As mentioned in Note 4k, the Group applied the simplified estimated expected loss model to estimate the impairment of “Trade and other receivables”. In this context, the Group defined a methodology to evaluate periodically (annually), firstly, if there are significant variations in the credit risk of the counterparties (commercial customers), to subsequently determine the expected credit loss during the life of the asset considering the low credit risk. At 31 of December 2018, Group management considered that the credit risk for “Trade and other receivables” was low according to the payment behavior of customers, as well as based on the historical experience of credit loss in the Group (2017: 0.19%, 2016: 0.17% and 2015: 0.13%). As a result of applying this methodology, at 31 December 2018, the amount of impairment for estimated loss estimated for “Trade and other receivables” was not significant, nor did it differ significantly from the amount recognized under the impairment model of loss incurred set out in IAS 39. Modification or exchanges of financial liabilities that do not result in derecognition of liabilities - According to the IASB's interpretation published in October 2017, when a financial liability measured at amortized cost is modified or exchanged and does not result in the derecognition of the financial liability, a gain or loss should be recognized in profit or loss, calculated as the difference between the original contractual cash flows from the liability and the new modified cash flows, discounted at the original effective interest rate of the liability. IFRS 9 must be applied retrospectively as of 1 January 2018, therefore any gains or losses from the modification of financial liabilities that arise from applying the new standard in years prior to 1 January 2018 were recognized in reserves at that date and the comparative period was not re-expressed. Grifols retrospectively calculated the impact of adopting IFRS 9 on the refinancing of its senior debt and unsecured senior corporate notes in 2014 and 2017. As a result of these new calculations, the 2014 refinancing of both debts did not cause the derecognition of the respective liabilities, therefore generating an adjustment to profit and loss in that year. Considering the retroactive adjustment generated in 2014, the 2017 refinancing of senior debt did not result in the derecognition of the financial liability either. However, the refinancing of the unsecured senior corporate notes led to derecognition of the liability as it did not pass the new quantitative test. The adoption of IFRS 9 entailed a positive impact on reserves of Euros 24,636 thousand. Details of the impacts on reserves due to the application of IFRS 9 application are follows: 6

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_007.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Thousand of Euros Imp act 01/01/2018 IAS 39 IFRS 9 Senior Unsecured Noted Total Debt Deferred Exp enses 853,667 1,000,000 146,333 (41,035) 105,298 Negative Imp act in reserves Thousand of Euros Imp act 01/01/2018 IAS 39 IFRS 9 Senior Secured Debt Total Debt Deferred Exp enses 3,375,157 3,226,244 (148,913) 18,979 (129,934) Positive imp act in reserves Thousand of Euros Imp act 01/01/2018 IAS 39 IFRS 9 Total Imp act Total Debt Deferred Exp enses 4,228,824 4,226,244 (2,580) (22,056) (24,636) Positive imp act in reserves IFRS 15 Revenue from Contracts with Customers IFRS 15 provides a framework that replaces the previous guides on revenue recognition. According to the new criteria, a five-step model should be used to determine the timing and amounts of revenue recognition: Step 1: Identify the contract. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue. This new model specifies that revenue should be recognized when (or as) control of the goods or services is transferred from an entity to customers, for the amount the entity expects to be entitled to receive. Depending on whether certain criteria are met, revenue is recognized over time, reflecting that the entity has satisfied the performance obligation, or at a point in time, when control of the goods or services is transferred to customers. In order to identify the potential impacts of the application of the revenue recognition model according to IFRS15, the Group’s internal revenue recognition policies for the different types of contracts with customers (contract groups) were analyzed, identifying the performance obligations, the price of the transaction, its allocation to each performance obligation and the determination of their satisfaction schedule. The Group assessed that the contractually agreed performance obligations are independent of each other, where each one has an assigned price in the contract (and that represents the independent sale price), and whose income is recognized at the time that the control is transferred (upon of hemoderivative products; diagnostic and hospital products, and equipment) or at the time when the service is rendered. On the basis of this analysis, no performance obligations were identified whose recognition pattern differed significantly from the income pattern previously applied under IAS 18 (nor does it require new judgments for recognition), concluding that the effect on the consolidated financial statements derived from the application of IFRS 15 was not relevant. 7

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_008.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) On the other hand, based on the application of IFRS 15, no new assets or liabilities for contracts were identified with respect to those already recognized under the previous regulations, except for those referring to commissions for gaining customers, which amounted to Euros 2,934 thousand at 31 of December 2018, and which were considered as costs of obtaining a contract (not as an asset due to a contract). Finally, it should be highlighted that no contracts with financing components were identified. Effective in 2019 M andatory ap p lication for annual p eriods beginning on or after: St andards IASB effect ive dat e EU effect ive dat e IFRS 16 IFRIC 23 Leases (Issued on 13 January 2016) Uncertainty over Income Tax Treatments (issued on 7 June 2017) Prep ay ment Features with Negative Comp ensation (issued on 12 October 2017) 1 January 2019 1 January 2019 1 January 2019 1 January 2019 IFRS 9 1 January 2019 1 January 2019 Long-term interests in Associates and Joint Ventures (issued on 12 October 2017) Annual Imp rovements to IFRS Standards 2015-2017 Cy cle (issued on 12 December 2017) Plan Amendment, Curtailment or Settlement (issued on 7 February 2018) IAS 28 1 January 2019 1 January 2019 Various 1 January 2019 1 January 2019 IAS 19 1 January 2019 1 January 2019 The application of these standards and interpretations has not had any significant impact on the consolidated annual accounts, except for IFRS 16 "Leases", as follows: IFRS 16 “Leases” IFRS 16 brings in a single model for lease accounting by lessees in the statement of financial position. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are optional exemptions for short-term leases and leases of low value items. Lessor accounting remains similar to the current standard. Lessors continue to classify leases as finance or operating leases. IFRS 16 replaces existing guidance on leases, including IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a lease, SIC-15 Operating leases-Incentives and SIC-27 Evaluating the substance of transactions involving the legal form of a lease. The Group adopted IFRS 16 for the first time on 1 January 2019, but did not restated comparative figures for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules were therefore recognized in the opening balance sheet at 1 January 2019. On 1 January 2019 there was no impact on equity due to the first-time application of IFRS 16. The main policies, estimates and criteria for the application of IFRS 16 are as follows: Scope: IFRS 16 evaluation considers all the contracts in which the Group acts as lessee, except for contracts between the Group companies and the cancelable contracts. Transition approach: The Group opted to implement IFRS 16 using the modified retrospective approach, whereby the right-of-use asset was measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the consolidated statement of financial position immediately before the date of initial application. When applying this modified retrospective approach, the Group did not re-express the comparative information. Discount rates: under IFRS 16, a lessee discounts the future lease payments using the interest rate implicit in the lease if that rate can be readily determined. Otherwise, the lessee uses the incremental borrowing rate. 8

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_009.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The Group uses the incremental borrowing rate. This is the rate that a lessee would have to pay at the commencement date of the lease for a loan over a similar term, and with similar security, to obtain an asset of a similar value to the right–of-use asset. At 31 December 2020, an incremental effective interest rate has been applied and varies from 1.55% to 7.21% depending on the geographical area and the term of the lease agreement at the transition date (2.07% to 8.18% at 31 December 2019). The lease term is the non-cancellable period considering the initial term of each contract unless Grifols has a unilateral extension or termination option and there is reasonable certainty that this option will be exercised, in which case the corresponding extension term or early termination will be taken into account. The Group leases several buildings, equipment and vehicles. Leases agreements are usually made for fixed periods, as shown below: Average lease term Buildings and warehouses Donor centers PCs and hardware M achinery Vehicles 10 to 15 y ears 13 to 15 y ears 3 to 5 y ears 4 to 5 y ears 3 to 5 y ears The lease terms of the agreements are negotiated on an individual basis and contain a wide range of terms and conditions. Accounting policies applied during transition: The Group has employed the following practical expedients when applying the simplified method to leases previously carried as operating leases under IAS 17 Leases: oNon-application of IFRS 16 to agreements that were not previously deemed to contain a lease under IAS 17 and IFRIC 4 “Determining whether an arrangement contains a lease”. oExclusion of the initial direct costs from the measurement of the right-of-use asset on the date of first-time adoption. oExclusion of leases that expire within 12 months as from the date of first-time adoption. oExclusion of leases in which the underlying asset has a low value. The reconciliation of lease liabilities for buildings and warehouses in relation to leases which had previously been classified as operating leases under IAS 17 (related to non-cancelable agreements and renewals) and lease liabilities under IFRS 16 at 1 January 2019 is as follows: 01/01/2019 Thousands of Euros Op erating lease commitments existing as at 31 December 2018 Periods covered by an op tion to extend the lease by the Group Discounting using the Group 's incremental borrowing rate finance lease liabilities recognised as at 31 December 2018 Short-term leases recognised on a straight-line basis as exp ense Others 400,579 579,261 (311,116) 1,395 (4,822) (349) Lease liability recognised as at 1 January 2019 664,948 The Group’s activities as a lessor are immaterial, and therefore the application of IFRS 16 did had a significant impact on the consolidated annual accounts. 9

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_010.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) IFRIC 23 - "Uncertainty in the treatment of income taxes” IFRIC 23 "Uncertainty in the treatment of income taxes" clarifies how to apply the recognition and measurement requirements of IAS 12 "Income taxes" when there is uncertainty as to the treatment of income taxes. In this situation, an entity reflects the effect of uncertainty when determining taxable earnings, tax bases, unused tax losses, unused tax credits and tax rates. Grifols did not identify significant uncertain tax lawsuits, and consequently the application of the criteria contained in the mentioned interpretation did not have a significant impact on Grifols for fiscal year 2019. This evaluation consisted of a review of the criteria applied to estimate income tax and the tax loss carryforwards and deductions to be offset, and it was determined that these comply substantially with the current tax regulations where Grifols operates. In this evaluation, it was considered that the deferred tax assets, mainly for tax credits for tax losses carryforwards and deductions to be offset, is the main line item that includes assumptions and uncertainties to estimate their recognition (see note 28(b)). The recognition and/or recoverability of such assets is based on the ability to generate future taxable profits. In this analysis, the following assumptions are considered: Future taxable income based on the economic plans and budgets approved for the various Grifols Group companies, Tax regulation of the different countries in which they operate, Scheduled calendar for reversal of deferred tax liabilities. In this regard, the Group estimated that of the total amount of tax credits for tax losses recognized in the balance sheet as of December 31, 2019 amounting Euros 60.7 million, about Euros 48 million will be recovered in a period of less than 5 years. In relation to the unused deductions , mainly for R&D and donations to non-profit entities, practically the entire amount will be applied in seven years. Finally, a scenario of discrepancies with the taxation authorities that imply the need to make significant adjustments to the tax result or the balances of assets and/or liabilities related to the income tax was considered unlikely based on our experience of the different tax inspections carried out in the different jurisdictions where Grifols operates. Effective in 2020 M andatory ap p lication for annual p eriods St andards EU effect ive dat e IASB effect ive dat e IAS 1 IAS 8 Definition of M aterial (issued on 31 October 2018) Amendments to references to the Concep tual Framework in IFRS Standards (issued on 29 M arch 2018) 1 January 2020 1 January 2020 Various 1 January 2020 1 January 2020 Amendment to IFRS 3 Business Combination (issued on 22 October 2018) Interest rate Benchmark Reform (issued on 26 Sep tember 2019) As a consequence of the Covid 19 - Related Rent concessions (issued on 28 M ay 2020) IFRS 3 IFRS 9 IAS 39 IFRS 7 IFRS 16 1 January 2020 1 January 2020 1 January 2020 1 January 2020 1 June 2020 1 June 2020 10

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_011.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Standards issued but not effective in 2020 M andatory ap p lication for annual p eriods St andards EU effect ive dat e IASB effect ive dat e Amendments to IFRS 4 Insurance Contracts - deferral to IFRS 19 (issued on 25 June 2020) Amendments on 14 M ay 2020 to: - IFRS 3 Business combinations: references to the Concep tual Framework - IAS 16 Prop erty , Plant and equiment: p roceeds before Intended Use - IAS 37 Provisions, Contigent Liabilities and Contigent Assets: Onerous contracts - Cost of Fulfilling a contract - Annual imp rovements 2018-2020: IFRS 1, IFRS 9, IFRS 16 and IAS 41 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Insurance Contracts (issued on 18 M ay 2017); including Amendments to IFRS 17 (issued on 25 June 2020) Classification of Liabilities as Current or Non-Current (issued on 23 January 2020) IFRS 4 Various 1 January 2021 1 January 2021 p ending 1 January 2022 Various p ending 1 January 2021 IFRS 17 p ending 1 January 2023 IAS 1 p ending 1 January 2023 The Group has not applied any of these standards or interpretations in advance of their effective date. The application of these standards and interpretations is not expected to have any significant impact on the consolidated annual accounts. (3) Business Combinations 2020 (a) Plasmavita In November 2017, Grifols established Plasmavita Healthcare GmbH (hereinafter Plasmavita), a joint venture between Grifols (50%) and two other partners (50%) for the construction and operation of 10 plasma donor centers in Germany. On 14 April 2020, Grifols made a contribution of Euros 10 million in cash that was recognized as a shareholder contribution in Plasmavita. The equity share of 50% has remained unchanged after the contribution. However, in assessing the existence of control due to new shareholder agreement signed on this date, the following has been concluded: - Grifols has a casting vote for any decision, determination and approval, with respect to the annual budget of Plasmavita and the distribution of dividends. Grifols has the power to make key business decisions. Grifols is involved in the decision-making related to exposure or rights to variable returns from the investee. Grifols has the casting vote to distribute dividends. - - Considering the above, it can be concluded that Grifols has control over Plasmavita and, therefore, it is considered part of the group and it has been fully consolidated. Details of the aggregate business combination cost, the fair value of the net assets acquired and the goodwill at the acquisition date are provided below: 11

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_012.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) T housands of Euros Consideration paid Cash paid Total consideration paid 10,000 10,000 Fair value of the previous investment in the company 10,674 Fair value of net assets acquired Minority interest 21,374 (10,687) Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) (note 7) 9,987 The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities are as follows: Fair Value T housand of Euros Intangible assets (note 8) Rights of use (note 9) Prop erty , p lant and equip ment (note 10) Investment in group comp anies Non-current financial assets Inventories Trade and other receivables Other current assets Cash and cash equivalents Total assets 177 7,856 6,506 9,548 5,017 1,114 811 333 359 31,721 Deferred tax liabilities Other non current liabilites Current liabilities Total liabilities and contingent liabilities Total net assets acquired (1,364) (7,575) (1,408) (10,347) 21,374 The resulting goodwill has been allocated to the Bioscience segment, and it includes the donor data base, licenses and workforce If the acquisition had taken place on 1 January 2020, the net amount of the Group´s revenue and profit would not have differed significantly. The revenue and consolidated profit of Plasmavita between the acquisition date and 31 December 2020 are not significant for the Group. The difference between the fair value of the previous investment and the book value amounted to Euros 5,357 thousand and has been recognized as income under “Profit/(loss) of equity accounted investees with similar activity to that of the Group” in the consolidated statement of profit and loss. The minority interest’s share of the contribution made amounts to Euros 5 million and has been recognized as a loss under the same line item. (b) Alkahest, Inc. On 2 September 2020, Grifols signed an agreement to acquire all the shares of Alkahest Inc. ("Alkahest") for a total amount of Euros 123,425 thousand (US Dollars 146,000 thousand), which was subject to approval by regulatory authorities. As part of the agreement, the Group had: 12

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_013.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Grifols has a casting vote for any decision, determination and approval, with respect to the annual budget of Alkahest and the distribution of dividends. Grifols has the power to decide on key business decisions. Grifols is involved in the decision-making related to exposure or rights to variable returns from the investee. Considering the above, it can be concluded that Grifols has control over Alkahest and, therefore, it is considered part of the group and it has been fully consolidated. Until that date, the previous 42.45% stake in Alkahest was recorded using the equity method. The difference between the fair value of the previous investment and the book value amounted to Euros 86,743 thousand (US Dollars 102,552 thousand) and was been recognized as income under “Profit/(loss) of equity accounted investees” in the consolidated statement of profit and loss. On 15 October 2020, and as a result of the aforementioned share purchase agreement, Grifols proceeded to acquire 57.55% of the capital of Alkahest. After the transaction, the Group owns 100% of the company's share capital. Given that Grifols already had control of Alkahest, the transaction has been recorded as an agreement with the non-controlling interest, which has meant the recognition of a liability at amortized cost of Euros 121,149 thousand (US Dollars 143,706 thousand) and a decrease in "Non-controlling interests” in the amount of Euros 121,486 thousand (US Dollars 143,307 thousand), net of recorded losses and “Other reserves ”in the amount of Euros 337 thousand (US Dollars 399 thousand). At 31 December 2020, the amount payable totals Euros 100,492 thousand and is presented under the line item “Current financial liabilities”. This amount has been settled on February 1, 2021(see note 21). Details of the aggregate business combination cost, the fair value of the net assets acquired and the goodwill at the acquisition date are provided below: Thousand of US Dollars Thousand of Euros Cost of the business combination First repurchase of non-controlling interests Second repurchase of non-controlling interests (discounted amount) Total business combination cost 18,797 104,628 22,235 123,765 123,425 146,000 Fair value of the previous investment in the company Fair value of net assets acquired Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) 91,023 140,076 107,671 165,696 74,372 87,975 The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities are as follows: 13

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_014.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Fair Value Thousand of US Dollars Thousand of Euros Other Intangible Assets (note 8) Prop erty , p lant and equip ement (note 10) Other non current assets Trade and other reeceivables Other current assets Cash and cash equivalents 265,617 4,970 178 2,552 1,610 7,563 314,198 5,879 210 3,019 1,904 8,946 Total assets 282,489 334,156 Non-current financial liabilities Deferred tax liability Other non-current liabilities Trade and other p ay ables Other current liabilities (42,269) (74,372) (19,644) (1,863) (4,264) (50,000) (87,975) (23,237) (2,204) (5,044) Total Liabilities (142,413) (168,460) Fair value of net assets acquired 140,076 165,696 The resulting goodwill has been allocated to the Others segment and it mainly includes the workforce. The fair value of research and clinical development projects in process that include products for neurodegenerative disorders, neuromuscular and ophthalmologic diseases has been estimated according to an income approach based on risk-adjusted discounted free cash flows. Had the acquisition taken place on 1 January 2020, the net amount of the Group´s revenue would not have changed significantly and the net profit would have decreased by Euros 30,045 thousand. The profit of Alkahest between the acquisition date and 31 December 2020 amounted to Euros (12,317) thousand. The amount of net revenue has not changed significantly. (c) Green Cross On 20 July 2020, Grifols signed share purchase arrangements with the South Korean based GC Pharma Group and other investors for the acquisition of a plasma fractionation facility and two purification facilities located in the city of Montreal, Canada, and 11 plasma collection centers located in the United States, for a total consideration of Euros 387,917 thousand (US Dollars 457,160 thousand), on a debt free basis. On 1 October 2020, the transaction was closed. The consideration was paid with Grifols' own cash resources, and at the close of the Transaction certain equity, working capital and cash targets were guaranteed. The factories are currently in the process of obtaining the required licenses and regulatory approvals from the competent health authorities for the manufacturing of plasma-derived products. When licensed and approved, Grifols will become the only commercial manufacturer of plasma products in Canada, with a fractionation capacity of 1.5 M liters. Grifols plans to be ready to manufacture IVIG and Albumin at the factories to be able to supply the Canadian market starting in 2023. The collection centers achieved a collection volume of 350,000 liters of plasma in 2019. 14

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_015.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Upon the consummation of the Transaction, and by means of a plasma supply agreement, the Group has also committed to supplying certain output of plasma arising out of the collection centers to GC Pharma for a 24-month period. Details of the aggregate business combination cost, the fair value of the net assets acquired and the goodwill at the acquisition date are provided below: Thousand of Euros Thousand of US Dollars Cost of the business combination Cash paid Total business combination cost Fair value of net assets acquired 387,917 457,160 387,917 457,160 203,175 239,442 Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) (note 7) 184,742 217,718 The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities are as follows: Fair Value Thousand of Euros Thousand of US Dollars Other Intangible assets (note 8) Rights of Use (note 9) Property, plant and equipement (note 10) Deferred tax assets Non-current assets Inventories Trade and other receivables Other current assets Cash and cash equivalents 2,011 11,642 173,295 28,616 122 2,999 3,484 943 6,053 2,370 13,720 204,228 33,724 144 3,534 4,106 1,111 7,133 Total assets 229,164 270,070 Non-current financial liabilities Defererd Tax Liabilities Current financial liabilities Trade and other payables (13,150) (868) (797) (11,174) (15,497) (1,023) (939) (13,169) Total liabilities (25,989) (30,628) Total activos netos adquiridos 203,175 239,442 The resulting goodwill was allocated to the Bioscience segment, and it includes the donor data base, current licenses and future authorizations and workforce Had the acquisition taken place on 1 January 2020, the net amount of the Group´s revenue would have increased by Euros 31,197 thousand and the net profit would have decreased by Euros 32,423 thousand. The revenue and profit of Green Cross between the acquisition date and 31 December 2020 amounted to Euros 4,625 thousand and Euros (5,023) thousand respectively. 15

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_016.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 2019 (a) Acquisition of assets used in plasma donor centers On 31 May 2019 the Group, through its subsidiary Haema AG, acquired four plasma donor centers from Kedplasma, GmbH. The agreed purchase price was Euros 20,500 thousand. Aggregate details of the combination cost, fair value of the net assets acquired and goodwill at the acquisition date are as follows: Thousands of Euros Cost of the business combination Payment in cash Total business combination cost Fair value of net assets acquired Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) (note 7) 20,500 20,500 1,620 18,880 The resulting goodwill was allocated to the Bioscience segment and it included the donor data base, FDA licenses and workforce. The fair value of net assets acquired mainly included property, plant and equipment amounting to Euros 1,396 thousand. (b) Acquisition of Interstated Blood Bank, Inc. Group 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”), with headquarters in Memphis, USA, for the price of US Dollars 100 million (Euros 88,215 thousand). The Group also entered into a call option on the remaining shares for a price of US Dollars 100 million, having agreed a payment of US Dollars 10 million (Euros 9,007 thousand) for the call option. 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 26 plasma collection centers, 9 blood donation centers and one laboratory. In April 2019, the Group exercised the call option and has completed the acquisition of the remaining shares of the IBBI group companies. Details of the aggregate business combination cost, the fair value of the net assets acquired and the goodwill at the acquisition date are provided below: T housands of Euros T housands of US Dollars Consideration paid Cash paid Total consideration paid 88,984 100,000 88,984 100,000 Fair value of the previous investment in the company Fair value of the call option 94,126 8,898 105,779 10,000 Fair value of net assets acquired Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) (note 7) 19,345 21,744 172,663 194,035 The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities are as follows: 16

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_017.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Fair value T housands of Euros T housands of US Dollars Intangible assets (note 8) Property, plant and equipment (note 10) Inventories Trade and other receivables Other current assets Cash and cash equivalents Total assets Non-current liabilities Current liabilities Total liabilities and contingent liabilities Total net assets acquired 77 23,724 10,271 12,080 2,015 1,961 87 26,661 11,543 13,575 2,265 2,204 50,128 (10,233) (20,550) 56,335 (11,500) (23,091) (30,783) (34,591) 19,345 21,744 The resulting goodwill was allocated to the Bioscience segment. The difference between the fair value of the previous investment and the book value amounts to Euros 4,521 thousand and was recognized as an income in section “Share of income/(losses) of equity accounted investees with group’s similar activity” in the consolidated statement of profit or loss. Had the acquisition taken place on 1 January 2019, the net amount of the Group´s revenue would have increased by Euros 10,146 thousand and profit would have decreased by Euros 1,436 thousand. IBBI’s net revenue and profit between the acquisition date and 31 December 2019 amounted to Euros 13,364 thousand and Euros 280 thousand, respectively. 2018 (a) Acquisition of assets used in centers from Kedplasma In August and December 2018, the Group, through its company Biomat USA, Inc., acquired six donor centers from Kedplasma LLC. The purchase price agreed was Euros 20,939 thousand and Euros 21,841 thousand, respectively. Aggregate details of the combination cost, fair value of the net assets acquired and goodwill at the acquisition date are as follows: Thousands of Euros Thousands of US Dollars Cost of the business combination Payment in cash Total business combination cost Fair value of net assets acquired Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) 42,780 50,163 42,780 5,042 50,163 5,787 37,738 44,376 The resulting goodwill was allocated to the Bioscience segment and it included the donor data base, FDA licenses and workforce. The fair value of net assets acquired mainly included property, plant and equipment amounting to Euros 4,942 thousand. 17

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_018.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (b) Biotest Acquisition On 1 August 2018, Grifols, through its subsidiary Grifols Shared Services North America, Inc. completed the acquisition of 100% of the shares in Biotest US Corporation for a price of US Dollars 286,454 thousand, after obtaining the consent of the US Federal Trade Commission. Grifols acquired the shares from Biotest Divestiture Trust. Biotest USA owns a plasma collection business in the USA with 24 plasma collection centers throughout the territory. In fiscal year 2017, it obtained approximately 850,000 liters of plasma. Details of the aggregate business combination cost, the fair value of the net assets acquired and goodwill at the acquisition date are provided below: Thousands of Euros Thousands of US Dollars 245,126 114,463 286,454 133,761 Total business combination cost Fair value of net assets acquired Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) 130,663 152,693 The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities were as follows: Fair value Thousands of Euros Thousands of US Dollars Cash and cash equivalents Trade and other receivables Inventories Other assets Intangible assets Goodwill Property, Plant and equipment Deferred tax assets Financial assets Total assets 5,876 15,114 18,235 2,438 19,511 5,571 22,190 33,917 10,975 6,867 17,663 21,309 2,849 22,800 6,510 25,931 39,635 12,825 133,827 156,389 (5,322) (4,249) (4,878) (4,915) (6,219) (4,965) (5,700) (5,744) Trade and other payables Other liabilities Deferred tax liability Long-term liabilities (19,364) (22,628) Total liabilities and contingent liabilities Total net assets acquired Goodwill Total business combination cost 114,463 130,663 133,761 152,693 245,126 286,454 The resulting goodwill was allocated to the Bioscience segment. Had the acquisition taken place on 1 January 2018, the net amount of the Group´s revenue and profit would have increased by Euros 90,216 thousand and Euros 5,592 thousand, respectively. 18

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_019.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The revenue and profit of Biotest between the acquisition date and 31 December 2018 amounted to Euros 73,747 thousand and Euros 7,473 thousand, respectively. On 28 December 2018, Grifols sold Biotest US Corporation and Haema AG to Scranton Enterprises B.V. for a total of US Dollars 538,014 thousand (see note 1). Scranton is an existing shareholder of Grifols (see note 31). The sale of Biotest and Haema to Scranton took place for the same price, at the December 2018 US Dollar/Euro exchange rate, and under the same terms and conditions existing when Grifols acquired both companies. The sale of Biotest and Haema did not result in a loss of control for the Group. In assessing the existence of control, Grifols considered the potential voting rights to determine whether it had power and therefore control. The Group holds potential voting rights arising from the repurchase options of the shares and they are substantive, based on the following: The sale contract includes a call option for Grifols which grants the irrevocable and exclusive right (not an obligation) to be able to acquire the shares sold to Scranton (both at the same time) at any time from the effective date of sale. The purchase option has been negotiated jointly in the same sale agreement of the entities. The price of exercising the call option will be equal to the higher of: a) the price at which Grifols sold them plus costs incurred in the transaction and plus the increase in working capital and (b) the amount of debt that Scranton owns related to this acquisition at the date on which Grifols exercises the option (principal plus interest plus any other cost to be able to cancel said loan). Considering that the projections for the entities are for growth and an improvement in their results is expected, it is concluded that said call option is "in the money" since their market price is estimated to be higher than that agreed in the call option. Even if a nullity clause on the call option is included in the case of default by the buyer (standard clause included in financing agreements), it has been considered remote since Grifols will have the capacity to exercise said call option in the remediation period of 90 days. There are no agreements between shareholders that establish that the relevant decisions are approved in a different manner than by majority vote. There is a commitment from Grifols to provide support services in the plasma collection business of the donation centers for their subsequent sale and thus ensure that these companies will continue to operate effectively, as well as ensuring the continuity and growth of said entities. Likewise, there is a "Plasma Supply Agreement" agreement whereby the plasma to be produced by these entities will be almost entirely to meet the needs of Grifols. There is no exclusivity of sale. The aforementioned are indicators of Grifols' power over these entities, even after their sale, considering that the repurchase options are susceptible to being exercised and Grifols would have the financial capacity to carry them out. Consequently, the sale of the entities did not result in a loss of control, which is why the entities continue to consolidate, recording the sale as a transaction in equity without any impact on the consolidated statements of profit and loss. (c) Haema AG On 19 March 2018, Grifols entered into an agreement with Aton GmbH for the purchase of 100% of the shares of the German based pharmaceutical company Haema AG, in exchange for a purchase price of Euros 220,191 thousand on a debt free basis. This transaction was closed in June 2018. As a result of this acquisition Grifols acquired Haema’s business, based on the collection of plasma for fractionation, which includes 35 plasma collection centers located throughout Germany, and three more centers under construction at the acquisition date. Haema AG’s headquarters are located in Leipzig and measure 19

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_020.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) approximately 24,000 m² (which include administration, production, storage and power station buildings) and it also has a central laboratory in Berlin. Haema AG employs about 1,100 people and collected almost 800,000 liters of plasma in the preceding financial year, coming from approximately 1 million donations. Details of the aggregate business combination cost, the fair value of the net assets acquired and goodwill at the acquisition date are provided below: Thousands of Euros Total business combination cost Fair value of net assets acquired 220,191 49,057 Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) 171,134 The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities were as follows: Fair value Thousands of Euros 7,727 10,321 5,535 836 1,518 25,407 Cash and cash equivalents Trade and other receivables Inventories Other assets Intangible assets Prop erty , Plant and equip ment Total assets 51,344 Trade and other p ay ables Contingent liabilities Total liabilities and contingent liabilities (1,795) (492) (2,287) 49,057 171,134 220,191 Total net assets acquired Goodwill Total business combination cost The resulting goodwill was allocated to the Bioscience segment. Had the acquisition taken place on 1 January 2018, the net amount of the Group´s revenue would have increased by Euros 39,517 thousand and the Group´s profit would not have changed significantly. The revenue and profit of Haema AG between the acquisition date and 31 December 2018 amounted to Euros 46,758 thousand and Euros 53 thousand, respectively. On 28 December 2018, Grifols sold Haema AG to Scranton Enterprises B.V (see note 3 (b) for further details). (d) Goetech, LLC Acquisition (“MedKeeper”) On 26 January 2018, Grifols through its subsidiary Grifols Shared Services North America, Inc, subscribed a capital increase for an amount of US Dollars 98 million in the U.S company Goetech LLC, with headquarters in 20

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_021.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Denver, Colorado, and trading as Medkeeper. As a result of this transaction, Grifols held a 51% interest in Medkeeper and also held a majority position on the board of directors. The acquisition agreement included the repurchase of own shares by Medkeeper from the non-controlling shareholder in the amount of US Dollars 14 million (in 2 business days) and US Dollars 20 million (in two years) (see note 21(d)). The agreement grants a call option to Grifols to acquire the remaining non-controlling stake for a term of three years and Medkeeper has a put option to sell this stake to Grifols, which may be executed at the end of the three-year period. As the non-controlling shareholders did not have access to the economic rewards associated with the underlying ownership interests related to shares under the put and call commitment, we the advance-acquisition method was applied. Under this method the agreement was recognized as an advance acquisition of the underlying non-controlling interest, as if the put option had already been exercised by the non-controlling shareholders. Medkeeper´s core business is the development and distribution of web and mobile-based platforms for hospital pharmacies that improve quality standards, productivity in the processes, control systems and monitoring different preparations, while increasing patient safety. This investment enhances the activity of the Grifols Hospital Division and it is part of the strategy to underpin this division into the U.S. market. Details of the aggregate business combination cost, the fair value of the net assets acquired and goodwill at the acquisition date are provided below: T housands of Euros T housands of US Dollars Cost of the business combination First rep urchase of non-controlling interests Second rep urchase of non-controlling interests (discounted amount) Purchase of remaining non-controlling interests Total business combination cost Fair value of net assets acquired Goodwill (excess of the cost of the business combination over the fair value of net assets acquired) 11,475 14,952 42,998 14,000 18,241 52,458 69,425 84,699 14,104 17,207 55,321 67,492 The amounts determined at the date of acquisition of assets, liabilities and contingent liabilities were as follows: Fair value T housands of Euros T housands of US Dollars Intangible assets Property, Plant and equipment Other non-current assets Other current assets Total assets Non-current liabilities Current liabilities Deferred tax liability Total liabilities and contingent liabilities Total net assets acquired 30,561 67 2,350 37,285 82 2,867 4,453 5,433 37,432 (2,186) (7,711) 45,667 (2,667) (9,407) (13,431) (16,386) (23,328) (28,460) 14,104 17,207 The resulting goodwill was allocated to the Hospital segment. Had the acquisition taken place on 1 January 2018, the net amount of the Group´s revenue and profit would not have changed significantly. 21

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_022.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The revenue and profit of Goetech LLC between the acquisition date and 31 December 2018 amounted to Euros 9,210 thousand and Euros 1,778 thousand, respectively. (e) Aigües Minerals de Vilajuïga, S.A. On 1 June 2017 the Group acquired of 50% of the voting rights in Aigües Minerals de Vilajuïga, S.A. a company based in Vilajuïga, Girona, Spain. On 12 January 2018 the Group acquired the remaining 50% of the voting rights and consequently Grifols holds 100% of the voting rights for a total amount of Euros 550 thousand. Aigües Minerals de Vilajuïga, S.A.’s principal activity is the collection and use of mineral-medicinal waters and the procurement of all necessary administrative concessions in order to facilitate the extraction of these waters and find the best way to exploit them. (4) Significant Accounting Policies (a) Subsidiaries and associates Subsidiaries are entities, including special purpose entities (SPE), over which the Group exercises control, either directly or indirectly, through subsidiaries. The Group controls a subsidiary when it has the substantive rights in force that provide the ability to manage relevant activities. The Group is exposed or has the right to variable returns for its involvement in the subsidiaries when the returns obtained vary depending on the economic performance of the subsidiaries. The income, expenses and cash flows of subsidiaries are included in the consolidated annual accounts from the date of acquisition, which is when the Group takes control. Subsidiaries are excluded from the consolidated Group from the date on which control is lost. Transactions and balances with Group companies and unrealized gains or losses have been eliminated upon consolidation. The accounting policies of subsidiaries have been adapted to those of the Group for transactions and other events in similar circumstances. The annual accounts of consolidated subsidiaries have been prepared as of the same date and for the same reporting period as the annual accounts of the Company. Associates are entities over which the Company, either directly or indirectly through subsidiaries, exercises significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those entities. The existence of potential voting rights that are exercisable or convertible at the end of each reporting period, including potential voting rights held by the Group or other entities, are considered when assessing whether an entity has significant influence. Investments in associates are initially recognized at acquisition cost, including any cost directly attributable to the acquisition and any consideration receivable or payable contingent on future events or on compliance with certain conditions. Subsequently, investments in associates are accounted for using the equity method from the date that significant influence commences until the date that significant influence ceases. The excess of the cost of the investment over the Group’s share of the fair values of the identifiable net assets is recognized as goodwill, which is included in the carrying amount of the investment. Any shortfall, once the cost of the investment and the identification and measurement of the associate’s net assets have been evaluated, is 22

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_023.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) recognized as income when determining the investor’s share of the profit and loss of the associate for the year in which it was acquired. The accounting policies of associates have been harmonized in terms of timing and measurement, applying the policies described for subsidiaries. The Group’s share of the profit and loss of an associate from the date of acquisition is recognized as an increase or decrease in the value of the investments, with a credit or debit to share of the profit and loss for the year of “equity-accounted investees” in the consolidated statement of profit and loss (consolidated statement of comprehensive income). The Group’s share of other comprehensive income of associates from the date of acquisition is recognized as an increase or decrease in the investments in associates with a balancing entry recognized by type in other comprehensive income. The distribution of dividends is recognized as a decrease in the value of the investment. The Group’s share of profit and loss, including impairment losses recognized by the associates, is calculated based on income and expenses arising from application of the acquisition method. When the Group's share of the losses in an investment accounted for using the equity method equals or exceeds its interest in the entity, the Group does not recognize additional losses, unless it has incurred in obligations or made payments on behalf of the other entity. The Group’s share of the profit and loss of an associate and changes in equity is calculated to the extent of the Group’s interest in the associate at year end and does not reflect the possible exercise or conversion of potential voting rights. However, the Group’s share is calculated taking into account the possible exercise of potential voting rights and other derivative financial instruments which, in substance, currently allow access to the economic benefits associated with the interests held, such as entitlement to a share in future dividends and changes in the value of associates. Information on the subsidiaries and associates included in the consolidated Group is presented in Appendix I. (b) Business combinations On the date of transition to IFRS-EU, 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. 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 23

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_024.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 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. (c) Non-controlling interests 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 24

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_025.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) balance receivable from non-controlling interests. Agreements signed between the Group and the non-controlling 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. (d) Joint arrangements Joint arrangements are those in which there is a contractual agreement to share the control over an economic activity, in such a way that the decisions over relevant activities require the unanimous consent of the Group and the remaining venturers. Under IFRS 11 "Joint arrangements" investments in joint arrangements are classified as joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than on the legal structure of the joint agreement. Interests in joint ventures are accounted for using the equity method, after initially being recognized at cost in the consolidated balance sheet. The acquisition cost of investments in joint arrangements is determined consistently with that established for investments in associates. (e) Foreign currency transactions and balances (i) Functional and presentation currency The consolidated annual accounts are presented in thousands of Euros, which is the functional and presentation currency of the Parent. (ii) Foreign currency transactions, balances and cash flows 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. 25

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_026.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (iii) Translation of foreign operations 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: Assets and liabilities, including goodwill and net asset adjustments derived from the acquisition of the operations, including comparative amounts, are translated at the closing rate at the reporting date; Income and expenses, including comparative amounts, are translated using the previous month's exchange rate for all transactions performed during the current month. This method does not differ significantly from using the exchange rate at the date of the transaction; Translation differences resulting from application of the above criteria are recognized in other comprehensive income. (f) Borrowing costs In accordance with IAS 23 “Borrowing Costs”, 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. The Group begins capitalizing borrowing costs as part of the cost of a qualifying asset when it incurs expenditure for the asset, interest is accrued, and it undertakes activities that are necessary to prepare the asset for its intended use or sale, and ceases capitalizing borrowing costs when all or substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Nevertheless, capitalization of borrowing costs is suspended when active development is interrupted for extended periods. The remaining interest costs are recognized as an expense in the year in which they are incurred. (g) Property, plant and equipment (i) Initial recognition Property, plant and equipment are recognized at cost, less accumulated depreciation and any accumulated impairment losses. Land is not subject to depreciation. The cost of self-constructed assets is determined using the same principles as for an acquired asset, while also considering the criteria applicable to production costs of inventories. Capitalized production costs are recognized by allocating the costs attributable to the asset to “Self-constructed non-current assets” in the consolidated statement of profit and loss. (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: 26

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_027.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Dep reciation method Rates Buildings Other p rop erty , technical equip ment and machinery Other p rop erty , p lant and equip ment Straight line Straight line Straight line 1% - 3% 4%-10% 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. (iii) Subsequent recognition 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(j) below. (h) Intangible assets (i) Goodwill Goodwill is generated on the business combinations and is calculated using the criteria described in the section on business combinations. Goodwill is not amortized, but is tested for impairment annually or more frequently whenever there is an indication that goodwill may be impaired. Goodwill acquired in business combinations is allocated to the cash-generating units (CGUs) or groups of CGUs which are expected to benefit from the synergies of the business combination and the criteria described in note 7 are applied. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Gains and losses on the sale of an entity include the carrying amount of the goodwill related to the entity sold. (ii) Internally generated intangible assets Any research and development expenditure incurred during the research phase of projects is recognized as an expense when incurred. Costs related with development activities are capitalized when: The Group has technical studies that demonstrate the feasibility of the production process; The Group has undertaken a commitment to complete production of the asset, to make it available for sale or internal use; The asset will generate sufficient future economic benefits; The Group has sufficient technical and financial resources to complete development of the asset and has devised budget control and cost accounting systems that enable monitoring of budgetary costs, 27

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_028.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) modifications and the expenditure actually attributable to the different projects. The cost of internally generated assets by the Group is calculated using the same criteria established for determining production costs of inventories. The production cost is capitalized by allocating the costs attributable to the asset to self-constructed non-current assets in the consolidated statement of profit and loss. Expenditure on activities that contribute to increasing the value of the different businesses in which the Group as a whole operates is expensed when incurred. Replacements or subsequent costs incurred on intangible assets are generally recognized as an expense, except where they increase the future economic benefits expected to be generated by the assets. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. (iii) Other intangible assets Other intangible assets are carried at cost, or at fair value if they arise on business combinations, less accumulated amortization and impairment losses. Intangible assets with indefinite useful lives are not amortized but tested for impairment at least annually. (iv) Intangible assets acquired in business combinations The cost of the identifiable intangible assets acquired in Biotest's business combination includes the fair value of the current contracts. The cost of identifiable intangible assets acquired in the business combination of Hologic includes the fair value of the R&D projects and the Intellectual Property-Patents. The cost of identifiable intangible assets acquired in the business combination of Novartis includes the fair value of the existing royalty agreements. The cost of identifiable intangible assets acquired in the Progenika business combination includes the fair value of currently marketed products sold and which are classified under “Other intangible assets” and “Research and Development”. The cost of identifiable intangible assets acquired in the Talecris business combination includes the fair value of currently marketed products sold and which are classified under “Other intangible assets”. (v) Useful life and amortization rates The Group assesses whether the useful life of each intangible asset acquired is finite or indefinite. An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset will generate net cash inflows. Intangible assets with finite useful lives are amortized by allocating the depreciable amount of an asset on a systematic basis over its useful life, by applying the following criteria: Amortisation method Rates Develop ment exp enses Concessions, p atents, licences, trademarks and similar Comp uter software Currently marketed p roducts Straight line Straight line Straight line Straight line 10% 4% - 20% 33% 3% - 10% 28

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_029.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 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. (i) Leases The Group changed its accounting policies in relation to leases when it is a lessee as a result of adopting IFRS 16. The new policy is described in note 2(c) and the impact of the change in note 2 (c) and 9. (i) Definitions Lease contracts A lease contract is a contract that fulfills the following conditions: There is an identified asset explicitly specified in the contract or implicitly specified when it is made available for use by the Group. When the asset is a portion of an asset’s capacity it could also be an identified asset if it is physically distinct (a floor of a building, a storage location in a warehouse) or the Group has the right to receive substantially all its of capacity. The lessee has the right to direct the use of the identified asset that means the right to determine how and for what purpose the asset will be used. The lessee has the right to obtain all the economic benefits from that use throughout the period of use. Non-lease contracts Even if an asset is specified in the contract, if the lessor has a substantive substitution right throughout the period of use, the asset is not identified and the contract does not contain a lease. When the lessee does not have the right to control the use of the asset, the contract does not contain a lease. Non-lease contracts are not under this policy and the accounting treatment will be that of a service contract (usually recognized as an expense). (ii) Accounting policies Lease contracts, where the Group acts as lessee, will be recognized at inception of the contract as: A lease liability representing its obligation to make future lease payments and, A right of use representing its right to use the identified asset. Exception: lease contracts that fulfill any of the following conditions will be recognized as monthly expense over the lease term: For lease contracts where the lease term is 12 months or less at the commencement date. For lease contracts where the value of the leased asset (individually), when new, is lower than US Dollars 5,000 or its equivalent in another currency. Lease liability Initial measurement The lease liability corresponds to the present value of the lease payments during the lease term using the interest rate implicit in the lease or, if this cannot be readily determined, the incremental borrowing lending rate, as follows: 29

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_030.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Lease payments Only lease components included in the lease contract are part of the liability calculation: - Fixed payments, less any lease incentives receivable; - Variable lease payments that depend on a known index or a rate; - The exercise price of the purchase option if the lessee is reasonably certain to exercise that option; - Any amount already paid at the contract commencement date must not be included. Non-lease components that could be included in a lease contract (e.g. maintenance services, electricity, water, gas and other services such as surveillance, cleaning, etc.) are not part of the lease liability and must be recognized as an expense as soon as the service is rendered to Grifols using the corresponding account according to its nature. Lease term The lease term is the non-cancellable period considering the initial term of each contract unless Grifols has a unilateral option to extend or terminate the lease and there is reasonable certainty that this option will be exercised, in which case the corresponding extension term or early termination will be taken into account. The lease liability is calculated at the present value of the future lease payments during the lease term, using an incremental discount rate, except for those contracts in which the implicit interest rate is used because it is specifically mentioned in the contract. Discount rate Under IFRS 16, a lessee shall discount the future lease payments using the lease implicit interest rate if this can be reliably determined. Otherwise, the lessee shall use the incremental borrowing rate. The Group uses the incremental borrowing rate. This is the rate that a lessee would have to pay at the commencement date of the lease for a loan of a similar term, and with a similar security, to obtain an asset of similar value to the right-of-use asset in a similar economic environment. The incremental borrowing rate is determined considering the following criteria: - - - - - Geographical areas Financial terms Lease contracts terms Reference rate: Risk free rate Financing spread Subsequent measurement Subsequently, the lease financial liability will be increased by the interest on the lease liability and reduced by the payments made. The liability will be remeasured if there are changes in the amounts payable and the lease terms. Lease liabilities will: Increase the carrying amount to interest on the lease liability; Reduce the carrying amount to reflect the lease payments made; and Remeasure (increase or reduce) the carrying amount to reflect any reassessment or lease modifications. The balancing entry will be a lease expense for retrospective lease payments or right-of-use-assets for future lease payments. The discount rate to be used depends on the event causing the reassessment or modification. 30

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_031.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Right-of-use asset (ROU asset) Initial measurement ROU assets are initially measured at cost, which comprises: The amount of the initial measurement of the lease liability, Any lease payments made to the lessor at or before the commencement date, Estimated costs to dismantle or to remove the underlying asset, Less any discount or incentive received from the lessor. Subsequent measurement The ROU asset is measured at cost, less any accumulated depreciation and any accumulated impairment losses. Net book value of the ROU asset must be adjusted as for any re-measurement of the lease liability. Depreciation method and useful life Depreciation method: straight-line basis. Depreciation starts at the lease commencement date (when the asset is available for use). Useful life: If the purchase option is reasonably certain to be exercised: Useful life of the underlying asset. Otherwise: The earlier of the end of the useful life of the right-of-use asset or the end of the lease term. (j) Impairment of goodwill, other intangible assets and other non-financial assets subject to depreciation or amortization 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, where applicable, 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 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. 31

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_032.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 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. (k) Financial instruments (i) Classification of the financial instruments Financial instruments are classified at the time of their initial recognition as a financial asset, a financial liability or an equity instrument, in accordance with the economic substance of the contractual agreement and with the definitions of financial assets, financial liabilities or equity instruments indicated in IAS 32 “Financial instruments: Presentation”. For purposes of its valuation, the Group classifies financial instruments in the categories of financial assets and financial liabilities at fair value through profit or loss, separating those initially designated from those held for trading or mandatorily measured at fair value through profit or loss, financial assets and financial liabilities valued at amortized cost and financial assets measured at fair value through other comprehensive income, separating the equity instruments designated as such, from other financial assets. The classification depends on the Group's business model to manage the financial assets and the contractual terms of the cash flows. The Group classifies a financial asset at amortized cost if it is held in the framework of a business model whose objective is to hold financial assets to obtain contractual cash flows and the contractual terms of the financial asset give rise, on specified dates, to cash flows which are only principal and interest payments on the outstanding principal amount (OPIP). The Group classifies a financial asset at fair value through changes in other comprehensive income, if it is maintained in the framework of a business model whose objective is achieved by obtaining contractual cash flows and selling financial assets and the contractual conditions of the financial asset give rise to, at specified dates, to cash flows that are OPIP. The business model is determined by the key personnel of the Group and at a level that reflects the way in which they jointly manage groups of financial assets to achieve a specific business objective. The Group's business model represents the way in which it manages its financial assets to generate cash flows. Financial assets that are part of a business model whose objective is to hold assets to receive contractual cash flows are managed to generate cash flows in the form of contractual collections during the life of the instrument. The Group manages the assets held in the portfolio to receive these specific contractual cash flows. To determine whether cash flows are obtained through the collection of contractual cash flows from financial assets, the Group considers the frequency, value and timing of sales in prior years, the reasons for those sales and expectations in relation to with the future sales activity. However, the sales themselves do not determine the business model and, therefore, cannot be considered in isolation. Instead, it is the information on past sales and future sales expectations that provides indicative data on how to achieve the stated objective of the Group with respect to the management of financial assets and, more specifically, the way where cash flows are obtained. 32

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_033.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) For assets measured at fair value, losses and gains will be recognized in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, it will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for investments in equity at fair value through other comprehensive income (COCI). The Group reclassifies investments in debt when and only when its business model to manage those assets changes. (ii) Measurement At the time of initial recognition, the Group values a financial asset at its fair value plus, in the case of a financial asset that is not at fair value through profit or loss, the costs of the transaction that are directly attributable to the acquisition. The transaction costs of financial assets at fair value through profit or loss are taken to results. In order to determine the fair value of financial assets or liabilities, the Group uses market data as much as possible. Based on the factors used for the measurement, the fair values are hierarchized based on the following levels: Level 1: quoted prices (unadjusted) within current markets for assets or liabilities identical to those under consideration. Level 2: factors other than the prices considered in Level 1 that come directly from the asset or liability in question, such as those that may derive directly from the price. Level 3: factors not based on data directly from the market. In the event that the factors used to determine the fair value of an asset or liability are included in different levels of hierarchy, the fair value will be determined in its entirety based on the significant component located at the lowest level of hierarchy. (iii) Offsetting principles A financial asset and a financial liability are offset only when the Group has the legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. (iv) Financial assets and liabilities at fair value through profit or loss Financial assets or liabilities at fair value through profit or loss are those that are classified as held for trading or have been designated from the moment of initial recognition. A financial asset or liability is classified as held for trading if: • It is acquired or incurred mainly for the purpose of selling it or repurchasing it in the near term. • On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent pattern of short-term profit-taking, or • It is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument. Financial assets and liabilities at fair value through profit or loss are initially recognized at fair value. Transaction costs directly attributable to the purchase or issue are recognized as an expense as incurred. After initial recognition, they are recognized at fair value through profit or loss. The fair value is not reduced by the transaction costs that may be incurred by their eventual sale or disposal by other means. 33

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_034.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The Group does not reclassify any financial asset or liability to or from this category as long as it is recognized in the consolidated statement of financial position. (v) Financial assets at amortized cost Financial assets at amortized cost are initially recognized at their fair value, including the transaction costs incurred, and are subsequently measured at amortized cost, using the effective interest method. (vi) Debt instruments The subsequent valuation of the debt instruments depends on the Group's business model to manage the asset and the characteristics of the cash flows of the asset. The Group's debt instruments consist mainly of trade and other receivables, which the Group classifies as financial assets at amortized cost. Financial assets at amortized cost are assets that the Group holds for the collection of contractual cash flows when these cash flows represent only payments of principal and interest, and are valued at amortized cost. Interest income from these financial assets is included in finance income in accordance with the effective interest rate method. (vii) Equity instruments The Group holds financial assets owned, mainly equity instruments, which are measured at fair value. When Group management has chosen to present the gains and losses on the fair value of the equity investments in other comprehensive income, after the initial recognition, the equity instruments are measured at fair value, recognizing the loss or gain in other comprehensive income. The amounts recognized in other comprehensive income are not subject to reclassification to profit or loss, without prejudice to reclassification to reserves at the time when the instruments are derecognized. Dividends from such investments continue to be recognized in income for the year as other income when the Group's right to receive payments is established. (viii) Impairment As of 1 January 2018, the Group evaluates, on a prospective basis, the expected credit losses associated with its debt instruments recorded at amortized cost. The Group uses the practical expedients permitted by IFRS 9 to assess the expected credit losses related to commercial accounts using a simplified approach, eliminating the need to evaluate when there has been a significant increase in credit risk. The simplified approach requires that the expected losses be recorded from the initial recognition of receivables, so that the Group determines expected credit losses as a probability-weighted estimate of such losses over the expected life of the financial instrument. The practical expedient applied is the use of a provision matrix based on the segmentation into groups of homogeneous assets, applying the historical information of percentages of non-payment for said groups and applying reasonable information about the future economic conditions. The percentage of non-payment is calculated according to the current experience of non-payment during the last year, as it is a very dynamic market and is adjusted for the differences between current and historical economic conditions and considering projected information, which is reasonably available. (ix) Derecognition of financial assets The Group applies the criteria for the derecognition of financial assets to a part of a financial asset or to a part of a group of similar financial assets or to a financial asset or a group of similar financial assets. Financial assets are derecognized when the rights to receive cash flows related to them have expired or have been transferred and the Group has substantially transferred the risks and rewards derived from their ownership. 34

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_035.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (x) Financial liabilities at amortized cost Financial liabilities, including trade payables and other accounts payable, that are not classified at fair value through profit or loss, are initially recognized at their fair value, less, if applicable, the transaction costs that are directly attributable to the issue. Subsequent to the initial recognition, liabilities classified under this category are valued at amortized cost using the effective interest rate method. (xi) Derecognition and modification of financial liabilities The Group derecognizes a financial liability or part thereof when it has complied with the obligation contained in the liability, or is legally exempt from the main liability contained in the liability, either by virtue of a judicial process or by the creditor. The Group considers that the conditions are substantially different if the present value of the discounted cash flows under the new conditions, including any commission paid net of any commission received, and using the original effective interest rate to make the discount, differs at least at 10 percent of the discounted present value of the cash flows that still remain of the original financial liability. If the exchange is recorded as a cancellation of the original financial liability, the costs or commissions are recognized in consolidated results forming part of the result of the same. Otherwise, the costs or commissions adjust the carrying amount of the liability and are amortized by the amortized cost method during the remaining life of the modified liability. The Group recognizes the difference between the carrying amount of the financial liability or a part of it that is canceled or assigned to a third party and the consideration paid, including any assigned asset different from the cash or liability assumed in profit or loss. (l) Equity instruments The Group’s acquisition of equity instruments of the Parent is recognized separately at cost of acquisition in the consolidated balance sheet as a reduction in equity, regardless of the motive of the purchase. Any gains or losses on transactions with treasury equity instruments are not recognized in consolidated profit and loss. The subsequent redemption of Parent shares, where applicable, leads to a reduction in share capital in an amount equivalent to the par value of such shares. Any positive or negative difference between the cost of acquisition and the par value of the shares is debited or credited to reserves. Transaction costs related with treasury equity instruments, including issue costs related to a business combination, are accounted for as a reduction in equity, net of any tax effect. (m) Inventories 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 hemoderivatives 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. 35

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_036.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) To the extent that plasma storage costs are necessary to the production process, they are included as cost of inventories. Indirect costs such as general management and administration costs are recognized as expenses in the period in which they are incurred. The cost of raw materials and other supplies and the cost of merchandise are allocated to each inventory unit on a weighted average cost basis. The transformation cost is allocated to each inventory unit on a FIFO (first-in, first-out) basis. The Group uses the same cost model for all inventories of the same nature and with a similar use. Volume discounts extended by suppliers are recognized as a reduction in the cost of inventories when it is probable that the conditions for discounts to be received will be met. Discounts for prompt payment are recognized as a reduction in the cost of the inventories acquired. When the cost of inventories exceeds net realizable value, materials are written down to net realizable value, which is understood to be: For raw materials and other supplies, replacement cost. Nevertheless, raw materials and other supplies are not written down below cost if the finished goods into which they will be incorporated are expected to be sold at or above cost of production; Merchandise and finished goods, estimated selling price less costs to sell; Work in progress, the estimated selling price of related finished goods, less the estimated costs of completion and the estimated costs necessary to make the sale. The previously recognized write-down is reversed against profit and loss when the circumstances that previously caused inventories to be written down no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances. The reversal of the write-down is limited to the lower of the cost and revised net realizable value of the inventories. Write-downs may be reversed with a credit to “Cost of sales”. (n) 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. 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. (o) Government grants 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. 36

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_037.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (ii) Operating grants Operating grants received to offset expenses or losses already incurred, or to provide immediate financial support not related to future disbursements, are recognized in the consolidated statement of profit and loss. (iii) Interest rate grants Financial liabilities comprising implicit assistance in the form of below-market interest rates are initially recognized at fair value. The difference between this value, adjusted where necessary for the issue costs of the financial liability and the amount received, is recognized as a government grant based on the nature of the grant awarded. (p) Employee benefits (i) Defined contribution plans The Group recognizes the contributions payable to a defined contribution plan in exchange for a service in the period in which contributions are accrued. Accrued contributions are recognized as an employee benefit expense in the corresponding consolidated statement of profit and loss in the year that the contribution was made. (ii) Termination benefits Termination benefits are recognized at the earlier of the date when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring that involves the payment of termination benefits. For termination benefits payable as a result of an employee's decision to accept an offer of benefits, the time when the Group can no longer withdraw the offer of termination benefits is the earlier of when the employee accepts the offer and when a restriction on the Group's ability to withdraw the offer takes effect. For termination benefits payable as a result of the Group's decision to make an employee redundant, the Group can no longer withdraw the offer when it has informed the affected employees or union representatives of the plan and the actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made. The plan must identify the number of employees to be made redundant, their job classifications or functions and their locations and the expected completion date. The plan must also establish the termination benefits that employees will receive in sufficient detail that employees can determine the type and amount of benefits they will receive when their employment is terminated. If the Group expects to settle the termination benefits in full more than twelve months after year end, the liability is discounted using the market yield on high quality corporate bonds. (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. 37

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_038.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (iv) Restricted Share Unit Retention Plan (RSU) 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 statement of profit and loss 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. (q) Provisions Provisions are recognized when the Group has a present obligation (legal or implicit) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. No provisions are recognized for future operating losses. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account all risks and uncertainties surrounding the amount to be recognized as a provision and, where the time value of money is material, the financial effect of discounting provided that the expenditure to be made each period can be reliably estimated. The discount rate used to determine the present value is a pre-tax rate that reflects the evaluations that the current market is making of the time value of money and the specific risks of the obligation. The increase in the provision due to the passage of time is recognized as an interest expense. If it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed against the consolidated statement of profit and loss item where the corresponding expense was recognized. (r) Revenue recognition Revenue from the sale of goods or services is recognized at an amount that reflects the consideration that the Group expects to be entitled to receive in exchange for transferring goods or services to a customer, at the time when the customer obtains control of the goods or services rendered, this means when the customer has the ability to direct the use of the asset. The consideration that is committed in a contract with a client can include fixed amounts, variable amounts, or both. The amount of the consideration may vary due to discounts, reimbursements, incentives, performance bonuses, penalties or other similar items. Contingent consideration is included in the transaction price when it is highly probable that the amount of revenue recognized is not subject to future significant reversals. Revenue is presented net of the value added tax and any other amount or tax, which in substance corresponds to amounts received on behalf of third parties. (i) Sale of goods Revenue from the sale of goods is recognized when the Group meets the performance obligation by transferring the assets committed to the customer. An asset is transferred when the customer obtains control of that asset. When evaluating the satisfaction of the performance obligation, the Group considers the following indicators of the transfer of control, which include, but are not limited to the following: The Group has a present right to payment for the asset The customer has the legal right to the asset The Group has transferred the physical possession of the asset The customer has the significant risks and rewards of ownership of the asset 38

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_039.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The customer has accepted the asset The nature of the assets that the Group is committed to transfer is mainly: sale of goods, sale of equipment, fragmentation agreements, maintenance and technical support, training, licenses, royalties and know-how and engineering projects among others. Transaction price is set under the assumption that goods and/or services are transferred in accordance with the contract terms. The committed consideration to customers can include fixed amounts, variable amounts or both. The transaction price must be estimated taking into account the effect of the variable compensation (when applicable) related to returns, chargeback discounts, volume discounts or other incentives, as long as it is highly probable. 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. The amount at closing related to other discounts is settled during the following year within a period of 90 to 180 days depending on the type of provision. (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, 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. (s) Income tax 39

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_040.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 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. Grifols periodically evaluates the positions taken in the tax declarations regarding the situations in which the applicable tax regulations are subject to interpretation and establishes provisions, if necessary, based on the amounts expected to be paid to the taxation authorities, whose provision is reflected in the tax gain (loss). (i) Taxable temporary differences Taxable temporary differences are recognized in all cases except where: They arise from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable income; They are associated with investments in subsidiaries over which the Group is able to control the timing of the reversal of the temporary difference and it is not probable that the temporary difference will reverse in the foreseeable future. (ii) Deductible temporary differences Deductible temporary differences are recognized provided that: It is probable that sufficient taxable income will be available against which the deductible temporary difference can be utilized, unless the differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable income; The temporary differences are associated with investments in subsidiaries to the extent that the difference will reverse in the foreseeable future and sufficient taxable income is expected to be generated against which the temporary difference can be offset. Tax planning opportunities are only considered when assessing the recoverability of deferred tax assets and if the Group intends to use these opportunities or it is probable that they will be utilized. (iii) Measurement Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the years when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted. The tax consequences that would follow from the manner in which the Group expects 40

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_041.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 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. (iv) Offset and classification The Group only offsets current tax assets and current tax liabilities if it has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The Group only offsets deferred tax assets and liabilities where it has a legally enforceable right, where these relate to income taxes levied by the same taxation authority and where the taxation authority permits the entity to settle on a net basis, or to realize the asset and settle the liability simultaneously for each of the future years in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered. Deferred tax assets and liabilities are recognized in the consolidated balance sheet under non-current assets or liabilities, irrespective of the expected date of recovery or settlement. (t) Segment reporting 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. (u) Classification of assets and liabilities as current and non-current The Group classifies assets and liabilities in the consolidated balance sheet as current and non-current. Current assets and liabilities are determined as follows: Assets are classified as current when they are expected to be realized or are intended for sale or consumption in the Group’s normal operating cycle, they are held primarily for the purpose of trading, they are expected to be realized within twelve months after the reporting date or are cash or a cash equivalent, unless the assets may not be exchanged or used to settle a liability for at least twelve months after the reporting date. Liabilities are classified as current when they are expected to be settled in the Group's normal operating cycle, they are held primarily for the purpose of trading, they are due to be settled within twelve months after the reporting date or the Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Financial liabilities are classified as current when they are due to be settled within twelve months after the reporting date, even if the original term was for a period longer than twelve months, and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting date and before the consolidated annual accounts are authorized for issue. 41

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_042.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (v) Environmental issues 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). (5) Financial Risk Management Policy (a) General The Group is exposed to the following risks associated with the use of financial instruments: Credit risk Liquidity risk Market risk: includes interest rate risk, currency risk and other price risks. 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 analyze 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 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. Trade receivables The Group does not predict any significant insolvency risks as a result of delays in receiving payment from some European countries due to their current economic situation. The main risk in these countries is that of late payments, which is mitigated through the possibility of claiming interest as foreseen by prevailing legislation. No significant bad debt or late payment issues have been detected for sales to private entities. The Group recognizes impairment based on its best estimate of the expected losses on trade and other receivables. The main impairment losses recognized are due to specific losses relating to individually identified risks. At year end, these impairment losses are immaterial. 42

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_043.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Concentration of credit risk For trade receivables the Group uses the simplified approach, estimating lifetime expected credit losses, while for all other financial assets the Group uses 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, there is no significant impact for the Group. In this context, Grifols made an assessment of possible changes in the credit risk through the estimation of the expected credit loss model, to ensure that it is reflecting the global economic impact of COVID-19. This assessment took into consideration available information on past events, the current situation and future economic forecasts having a potential impact on the credit risk. The update of the model mainly entailed the application of an incremental coefficient to the historical default rate to reflect the greater uncertainty regarding future economic scenarios and its impact on the expected credit loss. Based on the available information, it was concluded that there is no significant impact on the credit portfolio impairment as a result of the economic consequences of COVID-19. In addition, at 31 December 2020, no significant changes were observed in the payment profile of the main customers with which Grifols holds outstanding balances that are not subject to receivable sales and purchases with financial institutions. Details of exposure to credit risk are disclosed in note 30. Liquidity risk 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 7 May 2020, the Group concluded the upsize of the multi-currency revolving credit facility from US Dollars 500 million to US Dollars 1,000 million with maturity in November 2025. On 15 November 2019 the Group concluded the refinancing process of its senior secured debt for approximately Euros 5,800 million. The new financing includes a Term Loan B for US Dollars 2,500 million and Euros 1,360 million, both aimed at institutional investors; the issue of two bonds for Euros 1,675 million (Senior Secured Notes); and the extension of a multi-currency revolving credit facility up to US Dollars 500 million. In September 2018 the Group received an additional non-current loan from the European Investment Bank totaling Euros 85,000 thousand. The loan will be used to support certain investments in R&D which are mainly focused on searching for new therapeutic for plasmatic proteins. Financial terms include a fixed interest rate for a period of 10 years with a grace period of two years. At 31 December 2020, the carrying amount of the loans obtained from the European Investment Bank is Euros 212,500 thousand (Euros 233,750 thousand at 31 December 2019). At 31 December 2020 the Group has total cash and cash equivalents of Euros 579,647 thousand (Euros 741,982 thousand at 31 December 2019). The Group also has approximately Euros 922,553 thousand in unused credit facilities (Euros 532,169 thousand at 31 December 2019), including Euros 817,394 thousand on the revolving credit facility (Euros 445,434 thousand at 31 December 2019). 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. Market risk 43

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_044.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 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 optimizing returns. (i) Currency risk 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 2020 and 2019 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 Notes) amounts to Euros 2,675 million, which represents approximately 63% of the Group’s total debt in Euros. The additional loans of Euros 212,500 thousand received from the European Investment Bank represent approximately 5% of the Group’s total debt in Euros. Senior debt in Euros represents approximately 40% of the Group’s total Senior debt at 31 December 2020 (38% at 31 December 2019). Total fixed-interest debt represents 46% of total debt at 31 December 2020 (45% at 31 December 2019). (iii) Market price risk Price risk affecting raw materials is mitigated by the vertical integration of the hemoderivatives business in a highly-concentrated sector. (b) Capital management 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: 44

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_045.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The directors control capital performance using rates of returns on equity (ROE). In 2020 the ROE stood at 12% (13% in 2019). The ROE is calculated by dividing profit attributable to the Parent by the equity attributable to the Parent. Thousand of Euros 2020 2019 618,546 5,108,392 625,146 4,822,119 Profit attributable to the p arent Equity attributable to the Parent ROE 12% 13% In accordance with the senior secured debt contract, the Group is subject to compliance with some covenants. At 31 December 2020 and 2019, the Group complies with the covenants in the contract. Consideration of the Company's credit rating (see note 21 (d)). The Parent held Class B treasury stock equivalent to 0.4% of its capital at 31 December 2020 (0.5% at 31 December 2019). The Group does not have a formal plan for repurchasing shares. (6) Segment Reporting 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: Balance sheet: equity, cash and cash equivalents and loans and borrowings. Statement of profit and loss: finance result and income tax. (a) Operating segments The operating segments defined by the steering committee are as follows: Bioscience: including all activities related with products derived from human plasma for therapeutic use. Hospital: comprising all non-biological pharmaceutical products and medical supplies manufactured by Group companies earmarked for hospital pharmacy. Products related with this business which the Group does not manufacture but markets as supplementary to its own products are also included. Diagnostic: including the marketing of diagnostic testing equipment, reagents and other equipment, manufactured by Group or other companies. Bio Supplies: groups together all transactions related to biological products for non-therapeutic use, Kedrion production agreements, and third-party plasma sales channeled through Haema and Biotest. Others: including the rendering of manufacturing services to third party companies and other investing activities. 45

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_046.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The net revenue from the sale of goods and services by groups of products for 2020, 2019 and 2018 is as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Bioscience Haemoderivatives Diagnostic Transfusional medicine Other diagnostic Hosp ital Fluid therap y and nutrition Hosp ital sup p lies Bio sup p lies Others 4,242,502 3,993,462 3,516,704 714,164 27,630 680,766 19,937 650,180 19,797 41,359 58,303 224,090 31,990 47,677 67,489 266,540 22,820 52,574 58,014 167,004 22,451 Total 5,340,038 5,098,691 4,486,724 At December 31, 2020, 97.2% of the income from the sale of goods and services has been recognized at point-in-time (97.2% in 2019 and 97.3% in 2018). The Group has concluded that hemoderivative products are sufficiently alike to be considered as a whole for the following reasons: All these products are human plasma derivatives and are manufactured in a similar way. The customers and methods used to distribute these products are similar. All these products are subject to the same regulations regarding production and the same regulatory environment. (b) Geographical information Geographical information is grouped into four areas: United States of America and Canada Spain Rest of the European Union Rest of the world The definition of these four segments is mainly due to the geographical level that Group management 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. (c) Main customers In 2020, the revenue of one Bioscience segment customer represents approximately 10.38% of the Group’s gross revenues. In 2019, there were no customers representing more than 10% of the Group’s gross revenue. In 2018, the revenue of one Bioscience segment customer represented approximately 10.06% of the Group’s gross revenues. (7) Goodwill 46

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_047.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (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 2019 were as follows: Thousands of Euros B al an ce at Business T ranslat ion B al an ce at S e gm e n t 31/12/2018 Combinat ion differences 31/12/2019 Net value Grifols UK.Ltd. (UK) Grifols Italia.S.p .A. (Italy ) Biomat USA, Inc.(USA) Grifols Australia Pty Ltd. (Australia) / M edion Diagnostics AG (Switzerland) Grifols Therap eutics, Inc. (USA) Araclon Biotech, S.L. (Sp ain) Progenika Biop harma, S.A. (Sp ain) Grifols Diagnostic (Novartis & Hologic) (USA, Sp ain and Hong Kong) Kiro Grifols S.L. (Sp ain) Goetech LLC (USA) Haema AG (Germany ) Bioscience Bioscience Bioscience 7,682 6,118 255,114 ---- (4,278) 425 --5,060 8,107 6,118 255,896 Diagnost ic 9,271 --201 9,472 Bioscience Diagnost ic Diagnost ic 1,940,776 6,000 40,516 ---- --38,902 ---- 1,979,678 6,000 40,516 Diagnost ic 2,550,256 --50,694 2,600,950 Hospit al Hospit al Bioscience 24,376 58,945 171,134 139,042 ---- --18,880 10,943 172,663 --1,181 --2,963 199 24,376 60,126 190,014 152,948 172,862 BPC Plasma, Inc. (formerly Biotest Pharma Corp ; USA) Bioscience Bioscience Interstate Blood Bank, Inc. (USA) 5,209,230 198,208 99,625 5,507,063 (See not e 3) Details of and movement in this caption of the consolidated balance sheet at 31 December 2020 are as follows: Thousands of Euros B al an ce at Business T ranslat ion B al an ce at Disposals Combinat ion differences S e gm e n t 31/12/2019 31/12/2020 Net value Grifols UK.Ltd. (UK) Grifols Italia.S.p .A. (Italy ) Biomat USA, Inc.(USA) Grifols Australia Pty Ltd. (Australia) / M edion Diagnostics AG (Switzerland) Grifols Therap eutics, Inc. (USA) Araclon Biotech, S.L. (Sp ain) Progenika Biop harma, S.A. (Sp ain) Grifols Diagnostic (Novartis & Hologic) (USA, Sp ain and Hong Kong) Kiro Grifols S.L. (Sp ain) Goetech LLC (USA) Haema AG (Germany ) Bioscience Bioscience Bioscience 8,107 6,118 255,896 ---- ---- ---- (433) --(21,105) 7,674 6,118 234,791 Diagnost ic 9,472 ---- 66 9,538 Bioscience Diagnost ic Diagnost ic 1,979,678 6,000 40,516 ---- ---- ---- (163,274) ---- 1,816,404 6,000 40,516 Diagnost ic 2,600,950 --(12,902) (211,070) 2,376,978 Hospit al Hospit al Bioscience 24,376 60,126 190,014 152,948 172,862 ---- ---- ---- ---- --9,987 74,372 133,443 51,299 ---- ---- ---- ---- ---- (4,959) --(12,614) (14,383) --(2,462) 1,126 (1,883) 24,376 55,167 190,014 140,334 158,479 9,987 71,910 134,569 49,416 BPC Plasma, Inc. (formerly Biotest Pharma Corp ; USA) Bioscience Interstate Blood Bank, Inc. (USA) Plasmavita Healthcare GmbH (Germany ) Alkahest, Inc (USA) Green Cross Biotherap eutics, Inc. (Canada) Green Cross America Inc.(USA) Bioscience Bioscience Ot hers Bioscience Bioscience 5,507,063 269,101 (12,902) (430,991) 5,332,271 (See not e 3) Impairment testing: 47

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_048.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) As a result of the acquisition of Talecris in 2011, and for impairment testing purposes, the Group combines the CGUs allocated to the Bioscience segment, grouping them together at segment level, because substantial synergies were expected to arise on the acquisition of Talecris, and due to the vertical integration of the business and the lack of an independent organized market for the products. Because the synergies benefit the Bioscience segment globally they cannot be allocated to individual CGUs. The Bioscience segment represents the lowest level to which goodwill is allocated and is subject to control by Group management for internal control purposes. As a result of the acquisition of Novartis’ Diagnostic business unit in 2014, the Group decided to combine Araclon, Progenika, Australia and Hologic’s share of NAT (later acquired) donor screening unit acquisition into a single CGU for the Diagnostic business as the acquisition is supporting not only the vertically integration business but also cross-selling opportunities. In addition, for management purposes, the Group’s management is focused on the business more than geographical areas or individual companies. Due to the acquisition of an additional 40% stake in Kiro Grifols S.L. and a 51% stake in Goetech LLC (Medkeeper), the Group decided to group Kiro Grifols S.L., Laboratorios Grifols S.A. and Medkeeper into a single CGU for the Hospital business since the acquisitions are supporting cross-selling opportunities. The CGUs established by management are: Bioscience Diagnostic Hospital The COVID-19 pandemic has caused unprecedented turmoil in the global economy, the breadth and duration of which remain unknown. While some industries and companies may be more vulnerable than others, the effects of the pandemic have affected social and economic behavior, increasing the overall uncertainty. Our products from Bioscience CGU are considered lifesaving and have been identified as a strategic industry for most governments and therefore are prevented from being suspended. However, at the preparation date of the financial statements, Grifols has estimated a temporary impact derived from COVID-19 (see note 34). The recoverable amount of the Bioscience CGU and Hospital CGU has been calculated based on its value in use calculated as the present value of the future cash flows approved by the management discounted at a discount rate considering the related inherent risk. In the current uncertain environment, the recoverable amount calculations of the Bioscience and Hospital CGU use expected cash flow projections for five and six years respectively, based on two different scenarios considered in respect of COVID-19 impact (base case and worst case) and the assigned weighting of these scenarios according to the following details: M ain assump tion Assigned weighting Base case Worst case Gradual recovery in 2021 Total recovery in 2022 70% 30% The recoverable amount of the Diagnostic CGU has been calculated based on its fair value less costs of disposal calculated as the present value of the future cash flows for five years approved by the management discounted at a discount rate considering the related inherent risk. In 2019, the fair value less costs of disposal was calculated considering the EBITDA multiple, defined as Operating Result before Interests, Tax and Amortization and Depreciation, used in connection with the agreement for the acquisition of a 45% stake in Grifols Diagnostic Solutions, Inc. by Shanghai RAAS blood products Co, Ltd. In contrast to the Bioscience and Hospital CGUs, new opportunities have arisen from the COVID-19 pandemic which have offset the potential negative impact deriving therefrom. Therefore, the recoverable amount of the Diagnostic CGU has not been calculated using expected cash flow projections based on different scenarios considered in respect of the COVID-19 impact since the different resulting scenarios would be similar in terms of figures. 48

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_049.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Management has determined the gross margin based on past experience and the current situation derived from the COVID-19 pandemic, investments in progress which would imply significant growth in production capacity and its forecast international market development. 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. Perpetual growth rates are consistent with the forecasts included in industry reports. The key assumptions used in impairment testing of the CGUs for 2019 were as follows: Perp et ual Growt h rat e Pre-t ax discount rat e EBITDA mult ip le Bioscience Diagnostic Hosp ital 2% --1.50% 8.80% --10.80% --14.5x --The key assumptions used in impairment testing of the CGUs for 2020 have been as follows: Perp et ual Growt h rat e Pre-t ax discount rat e Bioscience Diagnostic Hosp ital 1.9% 1.9% 1.4% 8.9% 9.5% 10.8% The discount rate used reflects specific risks relating to the CGUs and the countries in which they operate. The main assumptions used for determining the discount rate are as follows: • • • • Risk free rate: normalized government bonds at 10 years Market risk premium: premium based on market research Unlevered beta: average market beta Debt to equity ratio: average market ratio In 2020, the reasonably possible changes considered for the Bioscience, Diagnostic and Hospital CGUs are a variation in the discount rate, as well as in the estimated perpetual growth rate, as follows: Perp et ual Growt h rat e Pre-t ax discount rat e Bioscience Diagnostic Hosp ital +/-50 bp s +/-50 bp s +/-100 bp s +/-50 bp s +/-50 bp s +/-100 bp s In 2019, the reasonably possible changes considered for the Bioscience, Diagnostic and Hospital CGUs are a variation in the discount rate, as well as in the estimated perpetual growth rate, as follows: Perp et ual Growt h rat e Pre-t ax discount rat e EBITDA M argin Bioscience Diagnostic Hosp ital +/-50 bp s - +/-50 bp s +/-50 bp s - +/-50 bp s - +/-250 bp s - The reasonably possible changes in key assumptions considered by management in the calculation of the Bioscience and Diagnostic CGU’s recoverable amount would not cause the carrying amount of the respective CGU to exceed its recoverable amount. The reasonably possible changes in key assumptions considered by management in the calculation of the Hospital CGU’s recoverable amount would cause the carrying amount to exceed its recoverable amount as follows: 49

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_050.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Perp etual Growth rate Pre-tax discount rate -100bp s +100bp s Potential imp airment 3.5% 11.7% At 31 December 2020 Grifols’ stock market capitalization totals Euros 14,207 million (Euros 18,831 million at 31 December 2019). (8) Other Intangible Assets Details of other intangible assets and movement during the years ended 31 December 2020 and 2019 are included in Appendix III, which forms an integral part of these notes to the consolidated annual accounts. Intangible assets acquired from Talecris mainly include currently marketed products. Identifiable intangible assets correspond to Gamunex and have been recognized at fair value at the acquisition date of Talecris and classified as currently marketed products. Intangible assets recognized comprise the rights on the Gamunex product, its commercialization and distribution license, trademark, as well as relations with hospitals. Each of these components is closely linked and fully complementary, are subject to similar risks and have a similar regulatory approval process. Intangible assets acquired from Progenika mainly include currently marketed products. Identifiable intangible assets correspond to blood, immunology and cardiovascular genotyping. These assets have been recognized at fair value at the acquisition date of Progenika and classified as currently marketed products. The cost and accumulated amortization of currently marketed products acquired from Talecris and Progenika at 31 December 2019 was as follows: Thousands of Euros Balance at Translation Balance at 31/12/2018 Addit ions differences 31/12/2019 Cost of currently marketed p roducts - Gamunex Cost of currently marketed p roducts - Progenika 1,048,035 23,792 ---- 21,007 --1,069,042 23,792 Accumulated amortisation of currently marketed p roducts - Gamunex Accumulated amortisation of currently marketed p roducts - Progenika (264,920) (35,661) (5,284) (305,865) (13,875) (2,379) --(16,254) Carry ing amount of currently marketed p roducts 793,032 (38,040) 15,723 770,715 The cost and accumulated amortization of currently marketed products acquired from Talecris and Progenika at 31 December 2020 is as follows: Thousands of Euros Balance at Translation Balance at 31/12/2019 Addit ions differences 31/12/2020 Cost of currently marketed p roducts - Gamunex Cost of currently marketed p roducts - Progenika 1,069,042 23,792 ---- (88,169) --980,873 23,792 Accumulated amortisation of currently marketed p roducts - Gamunex Accumulated amortisation of currently marketed p roducts - Progenika Carry ing amount of currently marketed p roducts (305,865) (35,360) 27,890 (313,335) (16,254) (2,379) 0 (18,633) 770,715 (37,739) (60,279) 672,697 50

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_051.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (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 2020 the residual useful life of currently marketed products is 20 years and 5 months (21 years and 5 months at 31 December 2019). 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 2020 the residual useful life of currently marketed products acquired from Progenika is 2 years and 2 months (3 years and 2 months at 31 December 2019). (a) Self – constructed intangible assets At 31 December 2020 the Group has recognized Euros 32,548 thousand as self-constructed intangible assets (Euros 48,797 thousand at 31 December 2019). (b) Purchase commitments At 31 December 2020 the Group has intangible asset purchase commitments amounting to Euros 9 thousand (Euros 381 thousand at 31 December 2019). (c) Intangible assets with indefinite useful lives and other intangibles in progress At 31 December 2020 the Group recognizes plasma center licenses with indefinite useful lives under intangible assets for a carrying amount of Euros 27,351 thousand (Euros 29,960 thousand at 31 December 2019). The Group has also an amount of Euros 350,626 thousand as development costs in progress (Euros 223,161 thousand at 31 December 2019). In 2019, Grifols reached an agreement with the US biotech company Rigel Pharmaceuticals to exclusively commercialize fostamatinib disodium hexahydrate in all potential future indications in Europe and Turkey. Under terms of the agreement, Grifols made an initial payment of US Dollars 30 million and an additional payment of US Dollars 17.5 million related to compliance with certain regulatory milestones. The Group recognized these payments as an intangible asset in accordance with IAS 38 . This asset has not begun to be commercialized and amortized until 2020, as soon as it has been available for use, that is, after the final approval of the regulator. (d) Results on disposal of intangible assets No profit on disposal and sale of intangible assets has been recognized in 2019 or 2020. (e) Impairment testing 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. 51

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_052.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (9) Leases Details of leases in the consolidated balance sheet at 31 December 2020 and 2019 are as follows: Right-of-use assets Thousands of Euros 31/12/2020 31/12/2019 Land and Buildings M achinery Comp uter equip ment Vehicles 665,002 3,671 3,588 6,435 685,405 4,469 4,324 9,660 678,696 703,858 Lease liabilities Thousands of Euros 31/12/2020 31/12/2019 690,857 42,642 Non-current Current 696,285 44,405 733,499 740,690 Details by maturity are as follows: M aturity : Thousands of Euros 31/12/2020 31/12/2019 42,642 40,961 158,032 491,864 44,464 41,444 155,300 499,482 Up to one y ear Two y ears Between 3 and 5 y ears M ore than 5 y ears 733,499 740,690 At 31 December 2020, the Group has recognized an amount of Euros 75,077 thousand related to additions of right-of-use assets (Euros 747,843 thousand at 31 December 2019, of which Euros 664,948 thousand corresponded to the initial additions). Movements at 31 December 2020 and 2019 are included in Appendix IV, which forms an integral part of these notes to the consolidated annual accounts. At 31 December 2020 and 2019, the amounts recognized in the consolidated statement of profit and loss related to lease agreements are: 52

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_053.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Right-of-use dep reciation Thousands of Euros 31/12/2020 31/12/2019 52,774 1,588 3,012 5,206 49,786 1,768 2,204 4,613 Buildings M achinery Comp uter equip ment Vehicles 62,580 58,371 Thousands of Euros 31/12/2020 31/12/2019 Finance lease exp enses (note 27) 35,205 34,558 35,205 34,558 Thousands of Euros 31/12/2020 31/12/2019 3,569 11,254 13,353 7,397 12,850 12,988 Exp enses related to short-term agreements Exp enses related to low-value agreements Other op erating lease exp enses 28,176 33,235 At 31 December 2020, the Group has paid a total of Euros 79,037 thousand related to lease contracts (Euros 73,785 thousand at 31 December 2019). The total amount recognized in the balance sheet corresponds to lease contracts in which the Group is the lessee. (10) Property, Plant and Equipment Details of property, plant and equipment and movement in the consolidated balance sheet at 31 December 2020 and 2019 are included in Appendix V, which forms an integral part of this note to the consolidated annual accounts. Property, plant and development under construction at 31 December 2020 and 2019 mainly comprise investments made to extend the companies’ equipment and to increase their productive capacity. In 2020, the Group has capitalized interests for a total amount of Euros 16,606 thousand (Euros 14,894 thousand in 2019) a) Insurance Group policy is to contract sufficient insurance coverage for the risk of damage to property, plant and equipment. At 31 December 2020 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. b) Losses on disposal of property, plant and equipment Total losses incurred on disposals of property, plant and equipment for 2020 amount to Euros 150 thousand (losses of Euros 1,408 thousand in 2019). 53

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_054.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) c) Self – constructed property, plant and equipment At 31 December 2020 the Group has recognized Euros 85,691 thousand as self -constructed property, plant and equipment (Euros 102,229 thousand at 31 December 2019). d) Purchase commitments At 31 December 2020 the Group has property, plant and equipment purchase commitments amounting to Euros 44,007 thousand (Euros 52,519 thousand at 31 December 2019). (11) Equity-Accounted Investees Details of this caption in the consolidated balance sheet for equity accounted investees with similar activity to that of the Group at 31 December 2020 and 2019 are as follows: Thousands of Euros Thousands of Euros % ownership 31/12/2020 % ownership 31/12/2019 Access Biologicals LLC Plasmavita HealthCare Shanghai RAAS Blood Products Co., Ltd. 49.00% 50.00% 26.20% 46,782 --1,800,578 49.00% 50.00% --49,922 10,368 --1,847,360 60,290 Movement in the investments in equity-accounted investees with similar activity to that of the Group for the years ended 31 December 2020 and 2019 is as follows: Thousands of Euros 2020 2019 Balance at 1 January 60,290 --Acquisitions Transfer accounted investees with similar activity to that of the Group Transfers Share of p rofit / (losses) Share of other comp rehensive income / translation differences Collected dividends 1,807,351 --(10,674) 20,799 (20,250) (10,156) --147,289 (94,127) 8,972 2,624 (4,468) Balance at 31 December 1,847,360 60,290 Shanghai RAAS Blood Products Co. Ltd. In March 2019, Grifols entered into a share exchange agreement with Shanghai RAAS Blood Products Co. Ltd. (hereinafter SRAAS), through which Grifols would deliver 90 shares of its US subsidiary Grifols Diagnostic Solutions Inc. (hereinafter GDS) (representing 45% of the economic rights and 40% of the voting rights), and in exchange would receive 1,766 million of SRAAS shares (representing 26.2% of the share capital). Therefore, such transaction does not entail a cash flow movement nor has it required any external financing. The exchange ratio determined on that date, was estimated using different valuation methods, among others the stock price for SRAAS and discounted cash flows and market multiples for GDS. 54

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_055.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) At 30 September 2019, Grifols obtained the authorization from the US agency, “Committee on Foreign Investment in the United States” (CFIUS) and on 13 November 2019, Shanghai RAAS Blood Products, Co. Ltd. obtained the authorization from the Chinese Securities Regulatory Commission (CRSC). At 31 December 2019, Grifols delivered 90 shares of its subsidiary GDS in exchange for a contractual right to receive equity instruments in an associate (equivalent to 1,766 million of SRAAS shares), because at that date no shares of SRAAS were received. As a consequence, at 31 December 2019, SRAAS was the minority shareholder owner of 45% of GDS. Such contractual right meets the definition of a financial asset under IFRS 9 – Financial Instruments and was classified as a financial asset at fair value through profit or loss as it did not comply with the principal and interest payment criteria (because shares in SRAAS would be received ). Grifols registered the aforementioned contractual right for the fair value of the GDS shares delivered and subsequently, the right was measured based on its fair value through profit or loss. The delivery of GDS shares had no impact on the consolidated results of the Grifols Group for 2019 in accordance with IFRS 10 – Consolidated Financial Statements, since it is considered a transaction with non-controlling interest where Grifols retained control over GDS. The impact in the consolidated balance sheet at 31 December 2019 resulted in an increase in the following items: Other current financial assets amounting to Euros 1,717 million (note 12); Equity attributable to non-controlling interests amounting to Euros 1,511 million (note 18); Reserves amounting to Euros 227 million (note 16), a decrease in translation differences for an amount of Euros 22 million and a profit in the consolidated statement of profit and loss for 2019 amounting to Euros 1 million due to the change in the contractual right value (note 27). On 30 March 2020, the share exchange agreement was closed and Grifols received SRAAS shares corresponding to 26.2% of its share capital. Therefore, Grifols becomes the largest shareholder of SRAAS, while maintaining operational, political and economic control of GDS. Consequently, the consolidated balance sheet at 31 December 2020, no longer shows any financial asset related to the contractual right, but the interest in SRAAS has been registered as an investment in an associate company because the Group exercises significant influence in accordance with the criteria established in IAS 28 – Investment in Associates and Joint Ventures. SRAAS’ equity-accounted investment has been recognized at the value of the shares at the closing date of the transaction. The difference between the contractual right value recognized at 31 December 2019 and SRAAS quoted value at 30 March 2020 has been Euros 56,526 thousand which has been recognized as finance income in the consolidated statement of profit and loss (see note 27). The impact on the consolidated statement of profit and loss related to the equity method result is included in the Operating Result under “Profit/(loss) of equity accounted investees with similar activity to that of the Group”, since SRAAS is a company dedicated to the plasma product sector. The transaction costs have been recognized as part of the investment value and totaled Euros 34,088 thousand. Movement in SRAAS’ equity-accounted investment for the year ended 31 December 2020 is as follows: Thousand of Euros 31/12/2020 Balance at 1 January --Acquisitions Share of p rofit / (losses) Share of other comp rehensive income / translation differences Collected dividends 1,807,351 11,531 (16,090) (2,214) 1,800,578 Balance at 31 December 55

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_056.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) At 31 December 2020, the quoted value of SRAAS shares was CNY 7.4. In accordance with IAS 28 – Investments in associates and joint ventures, possible indications of losses have been analyzed without detecting objective evidence of impairment in the investment. Plasmavita Healthcare GmbH In 2017, Grifols established PLASMAVITA GmbH, a joint venture between Grifols (50%) and two European partners (50%). On 14 April 2020, Grifols made a contribution of Euros 10 million in cash that was recognized as a shareholder contribution in Plasmavita. The equity share of 50% has remained unchanged after the contribution. However, in assessing the existence of control due to the new shareholder agreement signed on that date, it can be concluded that Grifols has control over Plasmavita and, therefore, it is considered part of the group and it has been fully consolidated (see note 3 (a)). Access Biologicals LLC. On 12 January 2017, the group announced the acquisition of 49% of the voting rights in Access Biologicals LLC, a company based in San Diego, California, USA, for the amount of US Dollars 51 million. Grifols entered into an option agreement to purchase the remaining 51% voting rights in five years, in 2022. Grifols also signed a supply agreement to sell biological products not meant for therapeutic use to Access Biologicals. The principal business activity of Access Biologicals is the collection and manufacturing of an extensive portfolio of biological products. Combined with closed-loop material sourcing, it provides critical support for various markets such as in-vitro diagnostic manufacturing, biopharmaceutical, cell culture and diagnostic research & development. Movement in Access Biological LLC’s investment for the years ended 31 December 2020 and 2019 are as follows: Thousand of Euros 31/12/2020 31/12/2019 Balance at 1 January 49,922 47,742 Share of p rofit / (losses) Share of other comp rehensive income / translation differences Collected dividends 8,962 (4,160) (7,942) 3,938 967 (2,725) 46,782 49,922 Balance at 31 December Details of this caption in the consolidated balance sheet for the rest of equity accounted investees at 31 December 2020 and 2019 are as follows: Thousands of Euros Thousands of Euros % ownership 31/12/2020 % ownership 31/12/2019 Alkahest, Inc. Albajuna Therap eutics, S.L GigaGen, Inc M ecwins, S.A. M edcom Advance, S.A 100.00% 49.00% 43.96% 24.99% 45.00% --3,378 15,677 2,605 --47.58% 49.00% 43.96% 24.99% 45.00% 14,708 5,228 23,997 2,338 7,912 21,660 54,183 56

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_057.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Movement in the investments in the rest of equity-accounted investees at 31 December 2020, 2019 and 2018 is as follows: Thousands of Euros 2020 2019 2018 Balance at 1 January 54,183 79,616 219,009 Acquisitions Transfers Share of p rofit / (losses) Share of other comp rehensive income / translation differences Losses for Imp airment Collected dividends --(91,023) 68,078 (1,666) (7,912) --12,369 --(19,744) 1,736 (19,794) --12,222 500 (11,038) 9,270 --(3,058) Balance at 31 December 21,660 54,183 226,905 Alkahest, Inc. On 2 September 2020, Grifols signed an agreement to acquire all the shares of Alkahest Inc. ("Alkahest") for a total amount of Euros 123,425 thousand (US Dollars 146,000 thousand), which was subject to approval by regulatory authorities. Likewise, as a result of agreements between shareholders, Grifols obtained control of Alkahest on 2 September 2020. Until that date, the previous 42.45% stake in Alkahest was equity accounted. The difference between the fair value of the previous stake and the book value is Euros 86,743 thousand (US Dollars 102,552 thousand), recognizing a profit for such amount under "Profit/(loss) of equity accounted investees" in the statement of profit and loss. As from this date, Alkahest was incorporated into the Group's consolidation perimeter by the full consolidation method. Movement in Alkahest’s equity-accounted investment for the years ended 31 December 2020 and 2019 is as follows: Thousand of Euros 31/12/2020 31/12/2019 Balance at 1 January 14,708 28,336 Transfers Share of p rofit / (losses) Share of other comp rehensive income / translation differences (91,023) 76,414 (99) --(14,218) 590 Balance at 31 December 0 14,708 Medcom Advance, S.A. In February 2019, the Group completed the acquisition of 45% of the shares in Medcom Advance, S.A. for an amount of Euros 8,602 thousand. Medcom Advance, S.A. is a company dedicated to research and development with a view to create proprietary patents using nanotechnology. The company is equity-accounted. At 31 December 2020, this investment is fully impaired. Mecwins, S.A. 57

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_058.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) On 22 October 2018 Grifols allocated Euros 2 million to the capital increase of Mecwins through Progenika Biopharma, reaching 24.99% of the total capital. Mecwins is a spin-off of the Institute of Micro and Nanotechnology of the Center for Scientific Research (CSIC), specialized in the development of innovative nanotechnological analysis tools for the diagnosis and prognosis of diseases. Mecwins has developed ultrasensitive optical reading immunoassay technology from nanosensors for the detection of protein biomarkers in blood. This technology has potential applications in fields such as oncology, cardiovascular and infectious diseases. The injection of capital, in which CRB Inverbio also participated with an additional Euros 2 million, will enable Mecwins to start developing pre-commercial prototypes of this technology and for Grifols to position itself in the field of nanotechnology applied to diagnosis. GigaGen Inc. On 5 July 2017, Grifols through its 100% subsidiary Grifols Innovation and New Technologies Limited (“GIANT”) acquired a 43.96% shareholding in GigaGen, Inc., a company based in San Francisco (USA) for the amount of US Dollars 35 million. GIANT and GigaGen entered into a Research and Collaboration Agreement whereby in exchange of a collaboration fee of US Dollars 15 million in the aggregate, GigaGen will commit to carry out research activities to develop recombinant polyclonal immunoglobulin therapies derived from human B cells for the treatment of human diseases. Movement in Gigagen’s investment for the years ended 31 December 2020 and 2019 is as follows: Thousand of Euros 31/12/2020 31/12/2019 Balance at 1 January 23,997 28,363 Share of p rofit / (losses) Share of other comp rehensive income / translation differences (6,725) (1,595) (5,002) 636 15,677 23,997 Balance at 31 December Singulex, Inc. 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 held a 19.33% common stock interest in Singulex on a fully diluted basis at a pre-money valuation of US Dollars 200 million. Grifols was 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 which has ensured the safety of blood and plasma products. During the second half of 2019, Singulex announced the cease of all its operations, after entering bankruptcy. Therefore, the Group impaired both the investment made and loans granted by Grifols to this company. Movement in Singulex, Inc.’s investment for the year ended 31 December 2019 is as follows: 58

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_059.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) T housand of Euros 31/12/2019 Balance at 1 January 19,256 Share of other comp rehensive income / translation differences Losses for Imp airment 538 (19,794) Balance at 31 December 0 Interstate Blood Bank, Inc. (IBBI) 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”), with headquarters in Memphis, USA, for the price of US Dollars 100 million (Euros 88,215 thousand). The Group also entered into a call option on the remaining shares for a price of US Dollars 100 million, having agreed a payment of US Dollars 10 million (Euros 9,007 thousand) for the call option. 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 26 plasma collection centers, 9 blood donation centers and one laboratory. In April 2019, the Group exercised the call option and completed the acquisition of the remaining shares of the IBBI group companies (see note 3). Movement in Interstate Blood Bank, Inc., Bio-blood Components, Inc. and Plasma Biological Services, LLC.’s investment for the year ended 31 December 2019 is as follows: Thousands of Euros 31/12/2019 IBBI Bio-Blood PBS TOTAL 2019 Balance at 1 January 29,595 38,223 21,809 89,627 Transfers Share of p rofit / (losses) Share of other comp rehensive income / translation differences Collected dividend (31,453) 6,853 (3,251) (1,744) (38,606) (2,543) 2,926 --(24,068) 276 1,983 --(94,127) 4,586 1,658 (1,744) Balance at 31 December 0 0 0 0 The last financial statements available of the main equity-accounted investments of Grifols are the following: Thousand of Euros Access Biologicals S RAAS GigaGen Non-current assets Current assets Cash and cash equivalents Non-current liabilities Non-current financial liabilities Current liabilities Current financial liabilities Net assets 2,617,024 402,876 250,073 (5,074) --(29,088) (969) 2,795 19,619 4,178 (1,497) --(3,670) (1,486) 1,488 5,610 13,483 (8,208) (98) (3,096) (609) 3,234,842 19,939 8,570 59

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_060.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Thousand of Euros Access Biologicals S RAAS GigaGen Net revenue Profit for the y ear 259,429 139,459 50,093 17,221 1,577 (9,030) (12) Financial Assets Details of non-current financial assets on the consolidated balance sheet at 31 December 2020 and 2019 are as follows: Thousands of Euros 31/12/2020 31/12/2019 3,008 7 Financial investments in shares with stock market Total Non-current financial assets measured at fair value 3,008 7 Non-current guarantee dep osits Other non-current financial assets (a) Non-current loans to related p arties (see note 31) Non-current loans to associates (b) (see note 31) Total Non-current financial assets measured at amortized cost 6,268 108,030 80,851 --5,433 29,504 86,363 17,623 195,149 138,923 Details of current financial assets on the consolidated balance sheet at 31 December 2020 and 2019 are as follows: Thousands of Euros 31/12/2020 31/12/2019 --1,716,738 Other current financial assets (c) (see note 30) Total Non-current financial assets measured at fair value --1,716,738 Thousands of Euros 31/12/2020 31/12/2019 Dep osits and guarantees Other current financial assets (a) Current loans to third p arties Current loans to associates (b) (see note 31) Total other current financial assets 162 10,861 95 --713 10,691 65 719 11,118 12,188 (a) Other financial assets The closing balance is mainly related to balances with other related parties (see note 31). (b) Loans to associates During fiscal year 2018, the Group granted a credit line of US Dollars 100 million to Alkahest, which bears interest at an annual rate of 5% and matures in 2021. At 31 December 2019, Alkahest drew down an amount of US Dollars 20 million (Euros 18,342 thousand). As from 2 September 2020, Alkahest is considered part of the group and has 60

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_061.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) been incorporated into the Group’s consolidation perimeter by the full consolidation method instead of the equity method (see notes 3 and 11). (c) Other current financial assets At 31 December 2019, Grifols delivered 90 shares of its subsidiary GDS in exchange for a contractual right resulting in an investment in an associate (equivalent to 1,766 million of SRAAS shares), because at that date no shares of SRAAS were received. As a consequence, at 31 December 2019, SRAAS was the minority shareholder owner of 45% of GDS. Such contractual right meets the definition of a financial asset under IFRS 9 – Financial Instruments and was classified as a financial asset at fair value through profit or loss as it did not comply with the principal and interest payment criteria (because shares in SRAAS would be received). Grifols recognised the aforementioned contractual right for the fair value of the GDS shares delivered and subsequently this right was measured based on its fair value through profit or loss. This asset amounted to Euros 1,717 million (see notes 11 and 30). (13) Inventories Details of inventories at 31 December 2020 and 2019 are as follows: Thousands of Euros 31/12/2020 31/12/2019 Goods for resale Raw materials and sup p lies Work in p rogress and semi-finished goods Finished goods 158,049 595,392 654,724 594,116 139,738 766,089 921,240 515,523 2,002,281 2,342,590 Movement in the inventory provision was as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Balance at 1 January 104,251 48,840 35,764 Net charge for the y ear Cancellations for the y ear Translation differences 42,255 (189) (23,704) 42,096 (118) 13,433 10,398 (558) 3,236 Balance at 31 December 122,613 104,251 48,840 (14) Trade and Other Receivables 61

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_062.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Details at 31 December 2020 and 2019 are as follows: Thousands of Euros 31/12/2020 31/12/2019 Trade receivables Receivables from associates (note 31) Imp airment losses (note 30) 404,771 1,447 (22,985) 390,205 1,883 (22,291) Trade receivables Other receivables (note 30) Personnel Advance p ay ments (note 30) Taxation authorities, VAT recoverable Other p ublic entities O ther receivables Current income tax assets Total trade and other receivables 383,233 8,324 822 16,053 38,747 8,414 369,797 8,403 2,163 20,864 46,561 4,518 72,360 64,565 82,509 38,269 520,158 490,575 Other receivables During 2020, 2019 and 2018 the Grifols Group has sold receivables without recourse to some financial institutions (factors), to which the risks and benefits inherent to the ownership of the assigned credits are substantially transferred. Also, the control over the assigned credits, understood as the factor's ability to sell them to an unrelated third party, unilaterally and without restrictions, has been transferred to the factor. The main conditions of these contracts include the advanced collection of the assigned credits that vary between 70% and 100% of the nominal amount and a percentage of insolvency risk coverage on the factor side that varies between 90% and 100% of the nominal of the assigned credits. These contracts have been considered as without recourse factoring and the amount advanced by the factors has been derecognized from the balance sheet Likewise, in financial year 2020, some receivables assignment contracts were signed with a financial institution, in which Grifols retains the risks and benefits inherent to the ownership of the assigned credits. These contracts have been considered as with resource and the assigned amount remains in the consolidated balance sheet at 31 December 2020 and a short-term debt has been recognized for an amount equal to the consideration received from the factor for the assignment. The amount recognized is Euros 18,264 thousand at 31 December 2020 (see note 21). Total receivables without recourse sold to financial institutions through the aforementioned contracts in 2020 amount to Euros 2,735,973 thousand (Euros 1,593,260 thousand in 2019 and Euros 1,188,216 thousand in 2018). The finance cost of these operations for the Group totals approximately Euros 10,964 thousand which has been recognized under finance costs in the consolidated statement of profit and loss for 2020 (Euros 9,171 thousand in 2019 and Euros 6,053 thousand in 2018) (see note 27). Details of balances with related parties are shown in note 31. (15) Cash and Cash Equivalents 62

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_063.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (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 2020 and 2019 are as follows: Thousands of Euros 31/12/2020 31/12/2019 Current dep osits Cash in hand and at banks 134,875 444,772 63 741,919 Total cash and cash equivalents 579,647 741,982 (16) Equity Details of consolidated equity and movement are shown in the consolidated statement of changes in equity. (a) Share capital At 31 December 2020 and 2019, the Company’s share capital amounts to Euros 119,603,705 and comprises: 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 0.05 Euros 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: Each Class B share entitles its holder to receive a minimum annual preferred dividend out of the distributable profits at the end of each year equal to Euros 0.01 per Class B share provided that the aggregate preferred dividend does not exceed the distributable profits of that year and a distribution of dividends has been approved by the Company’s shareholders. This preferred dividend is not cumulative if sufficient distributable profits are not obtained in the period. Each Class B share is entitled to receive, in addition to the above-mentioned preferred dividend, the same dividends and other distributions as for one Grifols ordinary share. Each Class B share entitles the holder to its redemption under certain circumstances, if a takeover bid for all or part of the shares in the Company has been made, except if holders of Class B shares have been entitled to participate in the bid on the same terms as holders of Class A shares. The redemption terms and conditions reflected in the Company’s by-laws limit the amount that may be redeemed, requiring that sufficient distributable reserves be available, and limit the percentage of shares to be redeemed in line with the ordinary shares to which the bid is addressed. In the event the Company were to be wound up and liquidated, each Class B share entitles the holder to receive, before any amounts are paid to holders of ordinary shares, an amount equal to the sum of (i) the par value of the Class B share, and (ii) the share premium paid for the Class B share when it was subscribed. In addition to the Class B liquidation preference amount, each holder is entitled to receive the same liquidation amount that is paid for each ordinary share. 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. 63

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_064.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The Company’s knowledge of its shareholders is based on information provided voluntarily or in compliance with applicable legislation. According to the information available to the Company, there are no interests representing more than 10% of the Company’s total capital at 31 December 2020 and 2019. At 31 December 2020 and 2019, the number of outstanding shares is equal to the total number of Company shares, less treasury stock. Movement in outstanding shares during 2019 is as follows: Class A shares Class B shares Balance at 1 January 2019 (Acquisition) / disp osal of treasury stock (note 16 (d)) Balance at 31 December 2019 426,129,798 --257,606,659 403,399 426,129,798 258,010,058 Movement in outstanding shares during 2020 is as follows: Class A shares Class B shares Balance at 1 January 2020 (Acquisition) / disp osal of treasury stock (note 16 (d)) Balance at 31 December 2020 426,129,798 258,010,058 --402,888 426,129,798 258,412,946 (b) Share premium 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. (c) Reserves The drawdown of accumulated gains is subject to legislation applicable to each of the Group companies. At 31 December 2020, Euros 40,362 thousand equivalent to the carrying amount of development costs pending amortization of certain Spanish companies (Euros 12,891 thousand at 31 December 2019) (see note 8) are, in accordance with applicable legislation, restricted reserves which cannot be distributed until these development costs have been amortized. In June 2018, Grifols made the decision to divest in TiGenix and participated in the takeover bid made by Takeda in the first half of 2018. This divestment generated a positive impact on reserves of Euros 4,900 thousand and a negative impact of Euros 4,900 thousand in "Other comprehensive income". In June 2018, Grifols executed the purchase option for 6.41% of the shares of Progenika owned by Ekarpen Private Equity, S.A. for an amount of Euros 5,300 thousand. As a result, the Group increased its interest from 90.23% to 96.64%. The difference between the acquisition carried out by the Group and the non-controlling interest was recognized in reserves. In September 2018, the Group acquired 41,387 shares of Progenika Biopharma, S.A for an amount of Euros 4,333 thousand. As a result, the Group increased its interest from 96.64% to 99.99%. The difference between the acquisition carried out by the Group and the non-controlling interest was recognized against reserves. 64

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_065.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) In June 2019, Kiro Grifols, S.L. increased capital by an amount of Euro 7,500 thousand. The Group continues to hold a 90% interest, with an increase in non-controlling interest that corresponds to 10% of the capital increase (see note 18). In July 2019, the Group acquired 33 shares of Progenika Biopharma, S.A for an amount of Euros 4 thousand. As a result, the Group increased its interest from 99.99% to 100%. With this acquisition, the Group has the full control of Progenika Biopharma, S.A and therefore it ceased to have non-controlling interest (see note 18). In April 2019 and December 2019 the Group subscribed two share capital increases in Araclon Biotech, S.L of Euros 16.8 million and Euros 5.9 million, respectively. After the latter capital increase Grifols’ interest rises to 75.1% (see note 18). At 31 December 2019, Grifols delivered 90 shares of its subsidiary Grifols Diagnostic Solutions, Inc. in exchange fora contractual right to receive equity instruments in an associate (equivalent to 1,766 million of SR shares), because at that date no shares of Shanghai RAAS Blood Products Co. Ltd. were received. This transaction generated an impact on reserves of Euros 227 million (see note 11). On 30 March 2020, the share exchange agreement was closed and Grifols received SRAAS shares corresponding to 26.2% of its share capital. Therefore, Grifols becomes the largest shareholder of SRAAS, while maintaining operational, political and economic control of GDS (see notes 11 and 18). This transaction generated an impact in reserves of Euros 408 million. On 14 April 2020, Grifols made a contribution of Euros 10 million in cash that was recognized as a shareholder contribution in Plasmavita. The equity share of 50% has remained unchanged after the contribution. However, with the new shareholder agreement signed on this date, it can be concluded that Grifols has control over Plasmavita and, therefore, it is considered part of the group and it has been fully consolidated (see note 3 (a), notes 11 and 18). On 2 September 2020, Grifols signed an agreement to acquire all the shares of Alkahest Inc. ("Alkahest") for a total amount of Euros 123,425 thousand (US Dollars 146,000 thousand). Likewise, as a result of agreements between shareholders, Grifols obtained control of Alkahest on 2 September 2020. As from this date, Alkahest is considered a group company and it is fully consolidated (see notes 3, 11 and 18). In December 2020 the Group subscribed a share capital increase in VCN Biosciences, S.L. of Euros 5 million. After this capital increase Grifols’ interest rises to 86.827% (see note 18). In December 2020, Kiro Grifols, S.L. increased capital by an amount of Euro 10,000 thousand. The Group continues to hold a 90% interest, with an increase in non-controlling interest that corresponds to 10% of the capital increase (see note 18). At 31 December 2020 and 2019 reserves include the IFRS-EU first-time adoption revaluation reserves and legal reserve of certain Group companies. Legal reserve 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 2020 and 2019 the legal reserve of the Company amounts to Euros 23,921 thousand which corresponds to 20% of the share capital. Distribution of the legal reserves of Spanish companies is subject to the same restrictions as those of the Company and at 31 December 2020 and 2019 the balance of the legal reserve of other Spanish companies amounts to Euros 2,066 thousand. 65

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_066.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Other foreign Group companies have a legal reserve amounting to Euros 3,677 thousand at 31 December 2020 (Euros 892 thousand at 31 December 2019). (d) Treasury stock At 31 December 2020 and December 2019 the Company does not have any Class A treasury stock. Movement in Class B treasury stock during 2019 was as follows: No. of Class B shares Thousands of Euros 3,818,451 55,441 Balance at 1 January 2019 Disp osal Class B shares (403,399) (5,857) 3,415,052 49,584 Balance at 31 December 2019 Movement in Class B treasury stock during 2020 is as follows: No. of Class B shares Thousands of Euros 3,415,052 49,584 Balance at 1 January 2020 Disp osal Class B shares Balance at 31 December 2020 (402,888) (5,850) 3,012,164 43,734 In March 2020 the Group delivered 402,888 treasury stocks (Class B shares) to eligible employees as compensation for the Restricted Share Unit Retention Plan (see note 29). In March 2019 the Group delivered 403,399 treasury stocks (Class B shares) to eligible employees as compensation for the Restricted Share Unit Retention Plan (see note 29). The Parent held Class B treasury stock equivalent to 0.4% of its capital at 31 December 2020 (0.5% at 31 December 2019). (e) Distribution of profit 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 2020, and the distribution of profit approved for 2019, presented at the general meeting held on 8 October 2020, is as follows: Thousands of Euros 31/12/2020 31/12/2019 Voluntary reserve Dividends Profit of the Parent 62,134 2,614 1,380,207 250,058 64,748 1,630,265 66

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_067.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Likewise, the Parent Company will propose a distribution of dividends charged to voluntary reserves for and amount of Euros 247,520 thousand. The following dividends were paid in 2019: 31/12/2019 % of p ar value Euros p er share Thousands of Euros Ordinary shares Non-voting shares Non-voting shares (p referred dividend) 58% 290% 20% 0.15 0.15 0.01 61,850 37,448 2,614 Total dividends p aid 101,912 31/12/2019 % of p ar value Euros p er share Thousands of Euros Ordinary shares (interim dividend) Non-voting shares (interim dividend) 80% 400% 0.20 0.20 85,226 51,602 Total interim dividends p aid 136,828 The following dividends were paid in 2020: 31/12/2020 % of p ar value Euros p er share Thousands of Euros Ordinary shares Non-voting shares Non-voting shares (p referred dividend) Total dividends p aid During 2020 no interim dividend has been paid. 65% 323% 20% 0.16 0.16 0.01 68,859 41,757 2,614 113,230 At the meeting held on 25 October, 2019, the Board of Directors of Grifols approved the distribution of interim dividend for 2019, of Euros 0.20 for each Class A and B share, recognizing a total of Euros 136,828 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 VI. At a general meeting held on 8 and 9 October 2020 the shareholders of Grifols S.A. 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 2019 and 2020 is presented in the consolidated statement of changes in equity. (f) Restricted Share Unit Retention Plan 67

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_068.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (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 13,880 thousand at 31 December 2020 (Euros 12,498 thousand at 31 December 2019). (17) Earnings Per Share 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 31/12/2020 31/12/2019 31/12/2018 Profit for the y ear attributable to shareholders of the Parent (thousands of Euros) Weighted average number of ordinary shares outstanding 618,546 625,146 596,642 685,515,740 685,115,836 684,709,377 Basic earnings p er share (Euros p er share) 0.90 0.91 0.87 The weighted average of the ordinary shares outstanding (basic) is as follows: Number of shares 31/12/2020 31/12/2019 31/12/2018 Issued shares outstanding at 1 January Effect of shares issued Effect of treasury stock 685,198,238 --317,502 684,794,839 --320,997 684,346,294 --363,083 Average weighted number of ordinary shares outstanding (basic) at 31 December 685,515,740 685,115,836 684,709,377 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 31/12/2020 31/12/2019 31/12/2018 Profit for the y ear attributable to shareholders of the Parent (thousands of Euros) Weighted average number of ordinary shares outstanding (diluted) Diluted earnings p er share (Euros p er share) 618,546 625,146 596,642 685,142,749 684,719,195 684,686,164 0.90 0.91 0.87 The weighted average number of ordinary shares outstanding diluted has been calculated as follows: 68

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_069.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Number of shares 31/12/2020 31/12/2019 31/12/2018 Issued shares outstanding at 1 January Effect of RSU shares Effect of shares issued 685,198,238 (372,991) --684,794,839 (396,641) --684,346,294 (23,213) --Effect of treasury stock 317,502 320,997 363,083 Average weighted number of ordinary shares outstanding (diluted) at 31 December 685,142,749 684,719,195 684,686,164 (18) Non-Controlling Interests Details of non-controlling interests and movement at 31 December 2019 are as follows: Thousands of Euros Business combinations / Perimeter Balance at 31/12/2018 Translation differences Balance at 31/12/2019 Additions Disp osals addit ions Grifols (Thailand) Pte Ltd Grifols M alay sia Sdn Bhd Araclon Biotech, S.A. Progenika Biop harma, S.A. VCN Bioscience, S.L Kiro Grifols , S.L. Haema AG BPC Plasma, Inc (formerly Biotest US Corp oration) Grifols Diagnostic Solutions, Inc. 3,935 1,735 (3,488) 9 140 (352) 220,190 248,881 193 380 (1,975) --(292) (374) 5,881 19,685 ---- --(9) ---- ---- ---- 5,892 ---- 750 ---- 421 56 ---- ---- --11,444 4,549 2,171 429 0 (152) 24 226,071 280,010 --1,510,547 ---- --1,510,547 471,050 1,534,045 (9) 6,642 11,921 2,023,649 Details of non-controlling interests and movement at 31 December 2020 are as follows: Thousands of Euros Business combinations / Perimeter Balance at 31/12/2019 Translation differences Balance at 31/12/2020 Additions addit ions Grifols (Thailand) Pte Ltd Grifols M alay sia Sdn Bhd Araclon Biotech, S.A. VCN Bioscience, S.L Kiro Grifols , S.L. Haema AG BPC Plasma, Inc (formerly Biotest US Corp oration) Grifols Diagnostic Solutions, Inc. Plasmavita Healthcare (see note 3) Alkahest, Inc. 4,549 2,171 429 (152) 24 226,071 221 932 (1,517) (235) (426) 5,213 ---- 0 703 1,000 --(432) (180) ---- ---- 4,338 2,923 (1,088) 316 598 231,284 280,010 19,032 --(24,047) 274,995 1,510,547 ---- 69,520 (22) (2,274) (408,675) 10,687 2,274 (83,760) ---- 1,087,632 10,665 0 2,023,649 90,444 (394,011) (108,419) 1,611,663 69

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_070.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) At 31 December 2020 and 2019, the summary financial information on the non-controlling interests of Haema AG and BPC Plasma, Inc., is as follows: Thousands of Euros Thousands of Euros 31/12/2020 31/12/2019 BPC Plasma, Inc Haema AG (formerly Biotest US Corporation) BPC Plasma, Inc (formerly Biotest US Corporation) Haema AG Non-current assets Current assets Total Assets 249,806 336,321 244,107 299,045 31,237 43,750 32,576 60,099 281,043 380,071 276,683 359,144 Non-current liabilities Current liabilities Total Liabilities 27,123 52,977 22,226 56,425 22,636 52,099 28,386 22,709 49,759 105,076 50,612 79,134 Total equity 231,284 274,995 226,071 280,010 At 31 December 2020 and 2019, the summary financial information on the non-controlling interests of GDS Group is as follows: T housands of Euros T housands of USD T housands of Euros T housands of USD 31/12/2020 31/12/2020 31/12/2019 31/12/2019 Non-current assets Current assets Total Assets 3,393,188 4,151,227 3,416,366 3,834,871 277,834 339,902 273,259 306,734 3,671,022 4,491,129 3,689,625 4,141,605 Non-current liabilities Current liabilities Total Liabilities 256,244 313,489 224,635 252,153 131,754 161,187 108,220 121,478 387,998 474,676 332,855 373,631 Total equity 3,283,024 4,016,453 3,356,770 3,767,974 (19) Grants Details are as follows: Thousands of Euros 31/12/2020 31/12/2019 Cap ital grants Interest rate grants (p reference loans) (See note 21 (d)) 16,509 499 10,785 592 17,008 11,377 Interest-rate grants (preference loans) reflect the implicit interest on loans extended by the Spanish Ministry of Science and Technology as these are interest free. Grants totaling Euros 1,683 thousand have been recognized in the consolidated statement of profit and loss for the year ended 31 December 2020 (Euros 1,388 thousand for the year ended 31 December 2019). (20) Provisions 70

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_071.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Details of provisions at 31 December 2020 and 2019 are as follows: Thousands of Euros Non-current provisions (a) 31/12/2020 31/12/2019 Provisions for p ensions and similar obligations Other p rovisions 6,767 20,504 5,991 2,039 Non-current p rovisions 27,271 8,030 T housands of Euros Current provisions (b) 31/12/2020 31/12/2019 Trade p rovisions 11,175 53,109 Current p rovisions 11,175 53,109 (a) Non-current provisions At 31 December 2020, 2019 and 2018 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 2018 was as follows: Thousands of Euros Balance at 31/12/2017 Translation differences Balance at 31/12/2018 Net charge Cancellations Reclassifications Non-current p rovisions 5,763 635 (565) 277 4 6,114 5,763 635 (565) 277 4 6,114 Movement in provisions during 2019 was as follows: Thousands of Euros Balance at 31/12/2018 Translation differences Balance at 31/12/2019 Net charge Cancellations Reclassifications Non-current p rovisions 6,114 1,467 (30) 464 15 8,030 6,114 1,467 (30) 464 15 8,030 Movement in provisions during 2020 is as follows: Thousands of Euros Balance at 31/12/2019 Translation differences Balance at 31/12/2020 Net charge Cancellations Reclassifications Non-current p rovisions 8,030 414 (175) 20,527 (1,525) 27,271 8,030 414 (175) 20,527 (1,525) 27,271 71

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_072.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (b) Current provisions Movement in trade provisions during 2018 was as follows: Thousands of Euros Balance at 31/12/2017 Translation differences Balance at 31/12/2018 Net charge Cancellations Trade p rovisions 106,995 (30,668) (290) 4,018 80,055 106,995 (30,668) (290) 4,018 80,055 Movement in trade provisions during 2019 was as follows: Thousands of Euros Balance at 31/12/2018 Translation differences Balance at 31/12/2019 Net charge Cancellations Trade p rovisions 80,055 (25,249) (3,142) 1,445 53,109 80,055 (25,249) (3,142) 1,445 53,109 Movement in trade provisions during 2020 is as follows: Thousands of Euros Balance at 31/12/2019 Business combination Translation differences Balance at 31/12/2020 Net charge Cancellations Reclassifications Trade p rovisions 53,109 954 (21,998) (247) (20,059) (584) 11,175 53,109 954 (21,998) (247) (20,059) (584) 11,175 (21) Financial Liabilities This note provides information on the contractual conditions of the Group’s financial liabilities, which are measured at amortized cost. For further information on exposure to interest rate risk, currency risk and liquidity risk and the fair values of financial liabilities, please refer to note 30. Details at 31 December 2020 and 2019 are as follows: 72

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_073.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) T housands of Euros Fi nanci al l i abi l i ti e s 31/12/2020 31/12/2019 Non-current obligations (a) Senior secured debt (b) Other loans (b) Other non-current financial liabilities (d) Non-current lease liabilities (note 9) Loan transaction costs 2,675,000 3,335,415 183,771 10,272 690,857 (293,215) 2,675,000 3,551,300 216,686 59,981 696,285 (353,184) Total non-current financial liabilities 6,602,100 6,846,068 Current obligations (a) Senior secured debt (b) Other loans (b) Other current financial liabilities (d) Current lease liabilities (note 9) Loan transaction costs 125,843 34,035 170,730 105,041 42,642 (53,679) 111,378 35,872 184,164 41,768 44,405 (56,275) Total current financial liabilities 424,612 361,312 On 7 May 2020, the Group concluded the upsize of the multi-currency revolving credit facility from US Dollars 500 million to US Dollars 1,000 million with maturity in November 2025. On 15 November 2019 the Group concluded the refinancing process of its senior secured debt for Euros 5,800 million. The new financing includes a Term Loan B for US Dollars 2,500 million and Euros 1,360 million, both aimed at institutional investors; the issue of two bonds for Euros 1,675 million (Senior Secured Notes); and the extension of a multi-currency revolving credit facility up to US Dollars 500 million. Grifols calculated the impact of the IFRS 9 in the new financing process concluding that it did not result in a derecognition of the liability as it has not passed the 10% quantitative test. According to the IASB’s interpretation, 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. Following the standard, the Group recognized an income of Euros 97,850 thousand in the 2019 statement of profit and loss (see note 27). In September 2018, Grifols obtained a new non-current loan from the European Investment Bank totaling Euros 85,000 thousand that will be used by Grifols to support its investments in R&D, mainly focused on the search for new therapeutic indications for plasma-derived protein therapies. The financial terms include a fixed interest rate, a maturity of 10 years with a grace period of 2 years. On 5 December 2017 and 28 October 2015, the Group arranged loans with the same entity and with the same conditions for amounts of Euros 85,000 thousand and Euros 100,000 thousand, respectively. At 31 December 2020, the carrying amount of the loans obtained from the European Investment Bank amounts to Euros 212,500 thousand (Euros 233,750 thousand at 31 December, 2019). (a) Senior Notes On 15 November 2019, as part of its refinancing process, Grifols, S.A. issued Euros 1,675 million of Senior Secured Notes segmented in two notes of Euros 770 million and Euros 905 million. These notes will mature in 2027 and 2025 and will bear annual interest at a rate of 2.25% and 1.625%, respectively. On 15 November 2019 the notes were admitted to listing on the Irish Stock Exchange. 73

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_074.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) On 18 April 2017, Grifols, S.A., issued Euros 1,000 million of Senior Unsecured Notes that will mature in 2025 and will bear annual interest at a rate of 3.20%. On 2 May 2017 the Notes were admitted to listing on the Irish Stock Exchange. There has been no movement regarding the Senior Notes in 2020. Details of movement in the Senior Notes at 31 December 2019 are as follows: Thousands of Euros Op ening outstanding Closing outstanding balance 01/01/19 Refinancing balance 31/12/19 Senior Unsecured Notes (nominal amount) Senior Secured Notes (nominal amount) Total 1,000,000 ---- 1,675,000 1,000,000 1,675,000 1,000,000 1,675,000 2,675,000 At 31 December 2020 and 2019 the current obligations caption includes the issue of bearer promissory notes to Group employees, as follows: 31/12/2019 Promissory Interest Nominal amount of p romissory notes (Euros) Buy back (Thousands of Euros) notes subscribed (Thousands of p ending accrual (Thousands of M aturity date Interest rate Issue date Euros) Euros) Issue of bearer p romissory notes 05/05/19 04/05/20 3,000 5.00% 103,122 (1,170) (1,686) 31/12/2020 Promissory notes subscribed (Thousands of Interest p ending accrual (Thousands of Nominal amount of p romissory notes (Euros) Buy back (Thousands of Euros) M aturity date Interest rate Issue date Euros) Euros) Issue of bearer p romissory notes 04/05/20 04/05/21 3,000 3.00% 116,352 (3,612) (1,118) 74

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_075.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (b) Loans and borrowings Details of loans and borrowings at 31 December 2020 and 2019 are as follows: Thousands of Euros 31/12/2020 31/12/2019 Credit Currency Interest rate Date awarded M aturity date Amount extended Carry ing amount Amount extended Carry ing amount Senior debt - Tranche B Senior debt - Tranche B Total senior debt Euros US Dollars Euribor + 2.25% Libor + 2.00% 15/11/2019 15/11/2019 15/11/2027 15/11/2027 1,360,000 2,227,171 1,332,800 2,002,615 1,360,000 2,227,171 1,346,400 2,204,900 3,587,171 3,335,415 3,587,171 3,551,300 EIB Loan EIB Loan EIB Loan Total EIB Loan Euros Euros Euros 2.40% 2.02% 2.15% 20/11/2015 22/12/2017 25/09/2018 20/11/2025 22/12/2027 25/09/2028 100,000 85,000 85,000 42,500 63,750 74,375 100,000 85,000 85,000 53,125 74,375 85,000 270,000 180,625 270,000 212,500 Revolving Credit Total Revolving Credit US Dollars Libor + 1.5% 15/11/2019 15/11/2025 817,394 --445,434 --817,394 --445,434 --Other non-current loans Euros 1.93% 21/11/2014 30/09/2024 10,000 3,146 10,000 4,186 Loan transaction costs --(223,944) --(266,214) Non-curre nt loans and borrowings 4,684,565 3,295,242 4,312,605 3,501,772 75

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_076.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Thousands of Euros 31/12/2020 31/12/2019 Interest rate Date awarded M aturity date Amount extended Carry ing amount Amount extended Carry ing amount Credit Currency Senior debt - Tranche B Senior debt - Tranche B Total senior debt Euros US Dollars Euribor + 2.25% Libor + 2.00% 15/11/2019 15/11/2019 15/11/2027 15/11/2027 (*) (*) 13,600 20,435 (*) (*) 13,600 22,271 --34,035 --35,871 Euros Euros 2.40% 2.02% EIB Loan EIB Loan 20/11/2015 22/12/2017 20/11/2025 22/12/2027 (*) (*) 10,625 21,250 (*) (*) 10,625 10,625 Total EIB Loan --31,875 --21,250 0.10% - 4.06% Other current loans 241,895 138,855 239,782 162,914 Loan transaction costs --(35,209) --(34,068) Curre nt loans and borrowings (*) See amount granted under non-current debt 241,895 169,556 239,782 185,967 76

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_077.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (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 7,262 thousand at 31 December 2020 (Euros 6,266 thousand at 31 December 2019). On 15 November 2019 the Group refinanced its Senior Secured Debt with the existing lenders. The new senior debt consists of a Term Loan B (“TLB”), which amount US Dollars 2,500 million and Euros 1,360 million with a 2.00% margin pegged to Libor and a 2.25% margin pegged to Euribor respectively, maturity in 2027 and quasi-bullet repayment structure. The borrowers of the total senior debt are Grifols, S.A. and Grifols Worldwide Operations USA, Inc. The present value discounted from cash flows under the new agreement, including any fees paid and discounted using the original effective interest rate differed by less than 10% of the present value discounted from cash flows remaining in the original debt, whereby it was considered that the debt instrument was not been substantially modified. The costs of refinancing the senior debt have amounted to Euros 84.4 million. Based on an analysis of the quantitative and qualitative factors, the Group concluded that the renegotiation of the terms of the senior debt did not imply a derecognition of the liability. 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. Following the standard, the Group recognized income of Euros 97,850 thousand in the statement of profit and loss for the year 2019 (see note 27). The terms and conditions of the senior secured debt are as follows: Tranche B: eight-year loan divided into two tranches: US Tranche B and Tranche B in Euros: o ▪ Tranche B in US Dollars: Original principal amount of US Dollars 2,500 million. Applicable margin of 200 basis points (bp) pegged to US Libor. Quasi-bullet repayment structure. Maturity in 2027. ▪ Tranche B in Euros: Original principal amount of Euros 1,360 million. Applicable margin of 225 basis points (bp) pegged to Euribor. Quasi-bullet repayment structure. Maturity in 2027. Details of Tranche B by maturity at 31 December 2020 are as follows: US Tranche B Tranche B in Euros Amortization in thous ands of US Dollars Amortization in thous ands of Euros Amortization in thousands of Euros Currency Currency Maturity 2021 2022 2023 2024 2025 2026 2027 US Dollars US Dollars US Dollars US Dollars US Dollars US Dollars US Dollars 25,000 25,000 25,000 25,000 25,000 25,000 2,325,000 20,435 20,435 20,435 20,435 20,435 20,435 1,900,441 Euros Euros Euros Euros Euros Euros Euros 13,600 13,600 13,600 13,600 13,600 13,600 1,264,800 Total US Dollars 2,475,000 2,023,051 Euros 1,346,400 77

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_078.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) o US Dollar 1,000 million senior revolving credit facility: On 7 May 2020, the Group concluded the upsize of the multi-currency revolving credit facility from US Dollars 500 million to US Dollars 1,000 million with maturity in November 2025 and an applicable margin of 150 basis points (bp) pegged to US Libor. At 31 December 2020 no amount has been drawn down on this facility. The costs of refinancing of the revolving credit facility have amounted to Euros 9.3 million Both the Senior Term Loans and the Revolving Loans are secured by Grifols, S.A. and certain significant subsidiaries of Grifols, S.A., which together with Grifols, S.A., represent, in the aggregate, at least 70% of the consolidated EBITDA of the Group. The Notes have been issued by Grifols S.A. and are guaranteed on a senior secured 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., Talecris Plasma Resources, Inc.., Grifols Therapeutics, Inc., Instituto Grifols, S.A., Grifols Worldwide Operations USA, Inc., Grifols USA, Llc. and Grifols International, S.A. (c) Credit rating In December 2020 and December 2019 Moody’s Investors Service confirmed the ‘Ba3’ corporate family rating, ‘Ba2’ rating to the senior secured bank debt that was used to refinance the existing debt structure. The outlook is downgraded to negative (stable in December 2019). The credit rating of the senior unsecured notes is B2. In December 2020 and December 2019 Standard & Poor’s has confirmed its ‘BB’ rating on Grifols and has assigned 'BB+ ratings to Grifols' senior secured debt that was used to refinance the existing debt structure. The outlook for the rating is stable. The credit rating of the senior unsecured notes is B+. (d) Other financial liabilities At 31 December 2020 “other financial liabilities” include interest-free loans extended by governmental institutions amounting to Euros 12,060 thousand (Euros 14,787 thousand at 31 December 2019). The portion of the loans considered a grant and still to be taken to profit and loss amounts to Euros 499 thousand (Euros 592 thousand at 31 December 2019) (see note 19). At 31 December 2020 “other current financial liabilities” include mainly the amount payable relating to the Alkahest, Inc. acquisition amounting to Euros 100,492 thousand (see note 3). At 31 December 2019, it mainly included the purchase option of Goetech, LLC amounting to US Dollars 20 million and an outstanding balance with a related party. Details of the maturity of other financial liabilities are as follows: T housands of Euros 31/12/2020 31/12/2019 M aturity at: Up to one y ear Two y ears Three y ears Four y ears Five y ears Over five y ears 105,041 3,945 1,976 1,580 1,141 1,630 41,768 50,585 2,977 1,870 1,420 3,129 115,313 101,749 78

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_079.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (e) Changes in liabilities derived from financing activities Thousand of Euros Senior Secured debt & Other Finance lease Other financial Obligations Total liabilities liabilities loans Book value at January 1, 2019 1,102,978 5,165,765 12,885 95,217 6,376,845 New financing Refunds Bear of interests Other movements (note 2) Collection / Pay ment of interests Business combination (note 3) Foreign exchange differences 1,778,218 (100,215) 37,095 (108,874) (32,000) ---- (1,522,466) (145,261) 171,535 24,121 (204,179) 10,233 187,991 --(73,785) 34,558 761,682 ---- 5,350 12,249 (8,152) 1,166 ---- --1,269 268,001 (327,413) 244,354 676,929 (236,179) 10,233 194,610 Balance at December 31, 2019 2,677,202 3,687,739 740,690 101,749 7,207,380 New financing Refunds Bear of interests Other movements Collection / Pay ment of interests Business combination (note 3) Foreign exchange differences 116,352 (105,564) 81,880 --(60,355) ---- --(66,047) 124,840 (10,468) (95,433) --(172,246) --(79,037) 35,084 88,867 ---- (52,105) --(22,681) 2,073 4,837 --34,778 (5,443) 116,352 (273,329) 243,877 83,236 (155,788) 34,778 (229,794) Balance at December 31, 2020 2,709,515 3,468,385 733,499 115,313 7,026,712 79

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_080.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (22) Trade and Other Payables Details are as follows: Thousands of Euros 31/12/2020 31/12/2019 S uppliers 601,618 581,882 VAT p ay able Taxation authorities, withholdings p ay able Social security p ay able Other p ublic entities 11,694 6,829 32,640 89,926 9,999 26,839 15,150 113,644 Other payables 141,089 165,632 Current income tax liabilities 3,482 5,966 746,189 753,480 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, for fiscal years 2020 and 2019 information concerning the average payment period to suppliers is included. Day s 31/12/2020 31/12/2019 Average p ay ment p eriod to sup p liers Paid invoices ratio Outstanding invoices ratio 71.56 72.5 65.7 72.9 74.0 65.3 T housands of Euros 31/12/2020 31/12/2019 Total invoices p aid Total outstanding invoices 635,214 96,121 577,017 85,550 (23) Other Current Liabilities Details at 31 December are as follows: Thousands of Euros 31/12/2020 31/12/2019 Salaries p ay able Other p ay ables Deferred income Advances received Other current liabilities 121,972 1,046 22,934 7,210 175,079 847 9,791 11,682 153,162 197,399 80

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_081.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (24) Net Revenues Net revenues are mainly generated from the sale of goods. The distribution of net consolidated revenues for 2020, 2019 and 2018 by segment is as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Bioscience Diagnostic Hosp ital Bio sup p lies Others Intersegments 4,242,502 775,889 118,675 224,090 31,989 (53,107) 3,993,462 733,604 134,441 266,540 22,820 (52,176) 3,516,704 702,265 119,454 167,004 22,451 (41,154) 5,340,038 5,098,691 4,486,724 The geographical distribution of net consolidated revenues is as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 USA and Canada Sp ain Europ ean Union Rest of the world Consolidated 3,599,746 339,169 495,323 905,800 3,390,811 268,287 588,375 851,218 2,974,429 264,913 535,361 712,021 5,340,038 5,098,691 4,486,724 Details of discounts and other reductions in gross income are as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Gross sales 6,806,005 6,429,762 5,588,257 Chargebacks Cash discounts Volume rebates M edicare and M edicaid Other discounts Net sales (1,247,153) (68,912) (57,858) (61,089) (30,955) (1,119,540) (70,340) (56,426) (50,442) (34,323) (923,023) (62,518) (46,922) (40,343) (28,727) 5,340,038 5,098,691 4,486,724 81

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_082.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (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 2018 were as follows: Thousands of Euros Cash Volume M edicare / Other Chargebacks Total discount s rebat es M edicaid discount s Balance at 31 December 2017 105,890 5,114 17,991 16,204 10,143 155,342 Current estimate related to sales made in current and p rior y ear (Actual returns or credits in current p eriod related to sales made in current p eriod) (Actual returns or credits in current p eriod related to sales made in p rior p eriods) 923,023 62,518 46,922 40,343 28,727 1,101,533 (1) (957,695) (56,568) (24,648) (21,324) (26,493) (1,086,728) (2) --(4,909) (16,384) (13,232) (3,781) (38,306) (3) Translation differences 3,957 286 916 950 241 6,350 Balance at 31 December 2018 75,175 6,441 24,797 22,941 8,837 138,191 Movement in discounts and other reductions to gross income during 2019 was as follows: Thousands of Euros Cash Volume M edicare / Other Chargebacks Total discount s rebat es M edicaid discount s Balance at 31 December 2018 75,175 6,441 24,797 22,941 8,837 138,191 Current estimate related to sales made in current and p rior y ear (Actual returns or credits in current p eriod related to sales made in current p eriod) (Actual returns or credits in current p eriod related to sales made in p rior p eriods) 1,119,540 70,340 56,426 50,442 34,323 1,331,071 (1) (1,104,493) (64,523) (28,014) (34,486) (22,490) (1,254,006) (2) 275 (6,385) (25,050) (20,375) (5,652) (57,187) (3) Translation differences (9) 24 546 389 53 1,003 Balance at 31 December 2019 90,488 5,897 28,705 18,911 15,071 159,072 Movement in discounts and other reductions to gross income during 2020 was as follows: 82

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_083.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Thousands of Euros Cash discounts Volume rebates M edicare / M edicaid Other discounts Chargebacks Total Balance at 31 December 2019 90,488 5,897 28,705 18,911 15,071 159,072 Current estimate related to sales made in current and p rior y ear (Actual returns or credits in current p eriod related to sales made in current p eriod) (Actual returns or credits in current p eriod related to sales made in p rior p eriods) Translation differences 1,247,153 68,912 57,858 61,089 30,955 1,465,966 (1) (1,033,053) (61,387) (27,798) (34,564) (30,509) (1,187,311) (2) (97,504) (6,030) (26,481) (14,526) (3,615) (148,156) (3) (16,215) (597) (2,614) (2,459) (139) (22,023) Balance at 31 December 2020 190,869 6,795 29,670 28,451 11,763 267,548 (1) Net imp act in income statement: estimate for the current y ear p lus p rior y ears' adjustments. Adjustments made during the y ear corresp onding to p rior y ears' estimates have not been significant. (2) Amounts credited and p osted against p rovisions for current p eriod (3) Amounts credited and p osted against p rovisions for p rior p eriod (25) Personnel Expenses Details of personnel expenses by function are as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Cost of sales Research and develop ment Selling, general & administration exp enses 1,058,132 110,682 988,689 106,472 810,512 93,817 383,851 382,472 345,224 1,552,665 1,477,633 1,249,553 Details by nature are as follows: T housands of Euros 31/12/2020 31/12/2019 31/12/2018 Wages and salaries Contributions to p ension p lans Other social charges Social Security 1,234,761 33,226 27,462 1,178,527 29,941 28,785 1,000,682 21,363 29,055 (see note 29) 257,216 240,380 198,453 1,552,665 1,477,633 1,249,553 83

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_084.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The average headcount during 2020 and 2019, by department, was approximately as follows: Average headcount 31/12/2020 31/12/2019 M anufacturing R&D - technical area Administration and others General management M arketing Sales and Distribution 17,697 1,050 1,550 288 205 17,027 994 1,405 252 187 1,305 1,282 22,095 21,147 The headcount of the Group employees and the Company’s directors at 31 December 2019, by gender, was as follows: 31/12/2019 Total number of M ale Female emp loy ees Directors M anufacturing Research&develop ment - technical area Administration and others General management M arketing Sales and Distribution 9 7,303 406 887 157 75 4 12,380 623 587 157 120 13 19,683 1,029 1,474 314 195 682 626 1,308 9,519 14,497 24,016 The headcount of the Group employees and the Company’s directors at 31 December 2020, by gender, is as follows: 31/12/2020 Total number of M ale Female emp loy ees Directors M anufacturing Research&develop ment - technical area Administration and others General management M arketing Sales and Distribution 9 7,169 427 992 145 89 4 11,880 688 669 156 130 13 19,049 1,115 1,661 301 219 691 619 1,310 9,522 14,146 23,668 (26) Expenses by Nature (a) Amortization and depreciation Expenses for the amortization and depreciation of intangible assets, right of use assets and property, plant and equipment, incurred during 2020, 2019 and 2018 classified by functions are as follows: 84

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_085.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Cost of sales Research and develop ment Selling, general & administration exp enses 198,310 32,814 90,409 193,081 22,471 86,903 146,530 19,836 62,243 321,533 302,455 228,609 (b) Other operating income and expenses Other operating income and expenses incurred during 2020, 2019 and 2018 by function are as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Cost of sales Research and develop ment Selling, general & administration exp enses 500,415 156,994 499,218 467,705 166,177 457,921 432,803 152,670 410,753 1,156,627 1,091,803 996,226 Details by nature are as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Changes in trade p rovisions Professional services Commissions Sup p lies and auxiliary materials Op erating leases (note 9) Freight Rep air and maintenance exp enses Advertising Insurance Roy alties Travel exp enses External services R&D Exp enses Other Other operating income&expenses (14,059) 265,539 27,147 187,370 28,176 137,466 147,039 55,073 30,776 40,634 23,005 71,240 101,410 55,811 (19,811) 244,355 32,178 170,021 33,235 130,663 136,377 59,063 25,647 10,674 61,346 64,099 103,053 40,903 (23,125) 211,305 21,941 149,831 84,299 112,340 107,806 44,659 22,632 10,726 51,428 53,391 100,889 48,104 1,156,627 1,091,803 996,226 85

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_086.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (27) Finance Result Details are as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Finance income 8,021 114,197 13,995 Finance cost from Senior Unsecured Notes Finance cost from senior debt (note 21 (b)) Finance cost from sale of receivables (note 14) Cap italized interest (note 10) Finance lease exp ense (note 9) Other finance costs Finance costs (85,182) (119,140) (10,964) 16,606 (35,205) (15,754) (41,920) (262,797) (9,171) 14,894 (34,558) (9,413) (35,471) (247,646) (6,053) 8,955 --(13,058) (249,639) (342,965) (293,273) --(37,666) 30,280 Imp airment and gains / (losses) on disp osal of financial instruments Change in fair value of financial instruments (note 11) Exchange differences Finance result 55,703 8,246 1,326 (9,616) --(8,246) (177,669) (274,724) (257,244) 2019 finance income from senior debt includes an income of Euros 97,850 thousand related to the refinancing effect (see note 21). During 2020 the Group has capitalized interest at a rate of between 3.72% and 4.70% based on the financing received (between 5.34% and 5.46% during 2019) (see note 4 (f)). “Change in fair value of financial instruments” includes the difference between the contractual right value recognized at 31 December 2019 and SRAAS quoted value at 30 March 2020 for an amount of Euros 56,526 thousand (see note 11). At 31 December 2019, as part of the share exchange agreement with Shanghai RAAS Blood Products Co. Ltd., Grifols delivered 90 shares of its subsidiary Grifols Diagnostic Solutions, Inc. in exchange for a contractual right to receive equity instruments in an associate, which generated a profit related to the measurement of the contractual right amounting to Euros 1 million at 31 December 2019 (see note 11). (28) Taxation Grifols, S.A. is authorized to file consolidated tax returns in Spain with Grifols Movaco, S.A., Laboratorios Grifols, S.A., Instituto Grifols, S.A., Biomat, S.A., Grifols Viajes, S.A., Grifols International, S.A., Grifols Engineering, S.A., Gripdan Invest, S.L., Araclon Biotech, Aigües Minerals de Vilajuiga, S.A. 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., Talecris Plasma Resources, Inc, Interstate Blood Bank, Inc. and Goetech, LLC.. The profits of the companies domiciled in the USA, determined in accordance with prevailing tax legislation, are subject to tax of approximately 22% of taxable income, which may be reduced by certain deductions. 86

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_087.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Grifols assesses the effect of uncertain tax treatments and recognizes the effect of the uncertainty on taxable earnings. At 31 of December 2020, the potential obligations deriving from tax claims are properly covered. There are no lawsuits or uncertain tax treatments that are individually material. (a) Reconciliation of accounting and taxable income Details of the income tax expense and income tax related to profit for the year are as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Profit before income tax from continuing op erations 725,842 878,629 817,103 Tax at 25% Permanent differences Effect of different tax rates Tax credits (deductions) Prior y ear income tax exp ense Other income tax exp enses/(income) Total income tax exp ense 181,461 (2,000) (29,543) (18,226) 381 (637) 219,657 (7,181) (30,686) (14,980) 517 2,312 204,276 6,104 (22,564) (12,702) (3,722) (2,933) 169,639 168,459 131,436 Deferred tax Current tax Total income tax exp ense (21,189) 152,625 43,138 126,501 58,275 110,184 169,639 168,459 131,436 The effect of the different tax rates is basically due to a change of country mix in profits (b) Deferred tax assets and liabilities Details of deferred tax assets and liabilities are as follows: 87

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_088.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Thousands of Euros Tax effect 31/12/2020 31/12/2019 31/12/2018 Assets Provisions Inventories Tax credits (deductions) Tax loss carry forwards Other 3,942 59,129 57,896 53,063 11,004 6,228 51,838 61,476 36,066 6,531 7,936 41,029 57,357 32,769 8,611 Subtotal, assets 185,034 162,139 147,702 Goodwill Fixed assets, amortisation and dep reciation Intangible assets (30,040) (3,011) (2,062) (27,721) (2,821) (8,573) (24,691) (3,922) (6,550) Subtotal, net liabilities Deferred assets, net (35,113) (39,115) (35,163) 149,921 123,024 112,539 Liabilities Goodwill Intangible assets Fixed assets Debt cancellation costs (215,907) (270,145) (78,325) (66,720) (194,964) (214,993) (88,498) (65,967) (150,644) (220,752) (99,819) (42,319) Subtotal, liabilities (631,097) (564,422) (513,534) Tax loss carry forwards Inventories Provisions Other 12,024 1,673 36,663 23,924 24,734 2,408 39,366 34,087 20,833 5,644 53,290 29,369 Subtotal, net assets Net deferred Liabilities 74,284 100,595 109,135 (556,813) (463,827) (404,398) Movement in deferred tax assets and liabilities is as follows: Thousands of Euros Deferred tax assets and liabilities 31/12/2020 31/12/2019 31/12/2018 Balance at 1 January M ovements during the y ear Business combination (note 3) Translation differences Balance at 31 December (340,803) (43,138) (47,988) 25,037 (291,859) (58,275) --9,331 (322,755) 21,189 21,328 (11,621) (406,892) (340,803) (291,859) 88

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_089.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Detail of assets and liabilities by jurisdiction at 31 December 2020 are as follows: US A S pain Other Total 31/12/2020 31/12/2020 31/12/2020 31/12/2020 Net deferred tax Tax credit rigths Tax loss carry forwards (466,961) --(36,298) 57,861 (26,616) 35 (529,875) 57,896 21,277 4,928 38,882 65,087 (445,684) 26,491 12,301 (406,892) Detail of assets and liabilities by jurisdiction at 31 December 2019 are as follows: US A S pain Other Total 31/12/2019 31/12/2019 31/12/2019 31/12/2019 Net deferred tax Tax credit rigths Tax loss carry forwards (392,040) 54,340 (35,117) 5,162 (35,921) 1,297 (463,078) 60,799 --61,476 --61,476 (337,700) 31,521 (34,624) (340,803) Detail of assets and liabilities by jurisdiction at 31 December 2018 are as follows: US A S pain Other Total 31/12/2018 31/12/2018 31/12/2018 31/12/2018 Net deferred tax Tax credit rigths Tax loss carry forwards (353,116) 46,722 (34,441) 5,669 (15,260) 1,210 (402,817) 53,601 --57,357 --57,357 (306,394) 28,585 (14,050) (291,859) 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 2020, 2019 and 2018 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 89,750 thousand at 31 December 2020 (Euros 26,840 thousand at 31 December 2019). The majority of the tax deductions pending application from Spanish companies related mainly to research and development, mature in 18 years. Likewise, the Group estimates that practically the entire amount will be applied in 5 years. Tax loss carryforwards pending to be offset derived from the US companies are available for 20 years from their date of origin whilst tax losses carryforwards pending to be offset from Spanish companies registered in the Basque Country are available for 15 years and there is no maturity date for other remaining Spanish companies. The Group estimates that of the total amount of tax credits for tax losses recognized in the balance sheet at 31 December 2020 for an amount of Euros 65,087 thousand, approximately Euros 42,363 thousand will be recovered in a period of less than 5 years. 89

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_090.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The Group has not recognized as deferred tax assets the tax effect of the unused tax loss carryforwards of Group companies, which amount to Euros 93,585 thousand (Euros 66,364 thousand at 31 December 2019). The commitments from Spanish companies from the reversal of deferred tax related to provisions of investments in subsidiaries are not significant. (c) Years open to inspection 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: Grifols Shared Services North America, Inc. and subsidiaries: In 2020 notification of an inspection was received relating to the State Income Tax for the fiscals year 2017 and 2018. Grifols, S.A., Grifols Movaco, S.A., Diagnostic Grifols, S.A. and Instituto Grifols, S.A: In 2019 notification of an inspection has been received from 2014 to 2016 for corporate income tax and from 2015 to 2016 for VAT and withholding tax. Group management does not expect any significant liability to derive from these inspections. Based on its experience of the different tax inspections in the different jurisdictions in which Grifols operates, the Group considers it unlikely that there will be a scenario of discrepancy with the taxation authorities that will require significant adjustments to be made to the tax result or to the asset and/or liability balances relating to corporate income tax. (29) Other Commitments with Third Parties and Other Contingent Liabilities (a) Guarantees The Group has no significant guarantees extended to third parties. (b) Guarantees committed with third parties The Group has no significant guarantees extended to third parties, except for those described in note 21. (c) Obligations with personnel The Group’s annual contribution to defined contribution pension plans of Spanish Group companies for 2020 has amounted to Euros 896 thousand (Euros 833 thousand for 2019). 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 57 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 five executives entitling them to termination benefits ranging from one to four years of their salary in different circumstances. Restricted Share Unit Retention Plan 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 90

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_091.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Class B ordinary shares (Grifols Class B Shares) or Grifols American Depositary Shares (Grifols ADS), and the Group will match this with an additional 50% of the employee’s choice of RSUs. Grifols Class B Shares and Grifols ADS are valued at grant date. These RSU’s will have a vesting period of 2 years and 1 day and, subsequently, the RSU's will be exchanged for Grifols Class B Shares or Grifols ADS (American Depositary Share representing 1 Class B Share). If an eligible employee leaves the Company or is terminated before the vesting period, he/she will not be entitled to the additional RSU’s. At 31 December 2020, the Group has settled the RSU plan of 2017 for an amount of Euros 7,552 thousand (Euros 8,546 thousand at 31 December 2019 corresponding to the RSU plan of 2016). This commitment is treated as equity instrument and the amount totals Euros 13,880 thousand at 31 December 2020 (Euros 12,498 thousand at 31 December 2019). Savings plan and profit-sharing plan 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 4% 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 32.2 million in 2020 (US Dollars 29.4 million in 2019). Other plans The Group has a defined benefit pension plan for certain former Talecris Biotherapeutics, GmbH employees in Germany as required by statutory law. The pension cost relating to this plan is not material for the periods presented. (d) Purchase commitments Details of the Group’s raw material purchase commitments s at 31 December 2020 are as follows: Thousands of Euros 2021 2022 2023 2024 2025 M ore than 5 y ears 182,710 113,555 77,385 1,033 1,033 603 91

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_092.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (e) Judicial procedures and arbitration Details of legal proceedings in which the Company or Group companies are involved are as follows: ORTHO-CLINICAL DIAGNOSTICS, INC., GRIFOLS DIAGNOSTIC SOLUTIONS, INC. adv. SIEMENS HEALTHCARE DIAGNOSTICS, INC. Served: 20 November 2018 Contract Dispute Ortho-Clinical Diagnostics, Inc. ("Ortho") and Grifols Diagnostic Solutions, Inc. ("GDS") dispute with Siemens Healthcare Diagnostics, Inc. ("Siemens") regarding sales and commissions under the Supply and Agency Agreement. NEXT ACTION: Dispute Resolution initiated per the Supply and Agency Agreement. Common Interest and Joint Defense Agreement entered between Ortho and GDS. Several meetings with executives and counsel took place in June, September and October 2019. Notice of arbitration filed on 4 December 2019. Siemens filed counterclaims on 10 December 2019. Arbitration panel selected and schedule established. Expert reports are due to be filed and expert discovery concluded by mid-February. Motion practice to limit arguments also underway and expected to be heard in March. ABBOTT LABORATORIES v. GRIFOLS DIAGNOSTIC SOLUTIONS INC., GRIFOLS WORLDWIDE OPERATIONS LIMITED AND NOVARTIS VACCINES AND DIAGNOSTICS, INC. Served: 8 October 2019 US District Court, Northern District of Illinois Patent Infringement, Civil Action No. 1:19-cv-6587 Abbott Laboratories (“Abbott”), GDS, GWWO and Novartis Vaccines and Diagnostics, Inc. are in dispute over unpaid royalties payable by Abbott to GDS and Ortho-Clinical Diagnostics (“Ortho”) under an HIV License and Option agreement dated 16 August 2019 (the “HIV License”). On 12 September 2019, GDS and Ortho filed Notice of Arbitration. On 3 October 2019, Abbott terminated the HIV License and filed for Declaratory Relief seeking to invalidate the licensed patent. GDS filed Motions to Dismiss and to Compel Arbitration, but the Court continued all pending Motions and referred the parties to a magistrate for a mandatory settlement conference. On 5 February 2020 the parties attended a Mandatory Settlement Conference ordered by the District Judge, with the Magistrate Judge presiding. No satisfactory settlement was reached. On 16 March , 2020, Grifols and Ortho filed an answer and counterclaim to the litigation, while simultaneously pursuing arbitration for the pre-termination amount owed by Abbot. The arbitration hearing was 15-16 June, 2020. As a result, the arbitrator awarded Grifols/Ortho US Dollars 4 Million. The court litigation is continuing. Abbott’s Motion to Dismiss was denied on 1 December, 2020. Discovery is now underway. 92

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_093.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (30) Financial Instruments Classification Disclosure of financial instruments by nature, category and fair value is as follows: T housand of Euros 31/12/2019 Carrying amount Fair Value Financial assets at amortised costs Financial assets at FV to profit or loss Financial liabilities at amortised costs Financial assets at FV to OCI Other financial liabilities Total Level 1 Level 2 Level 3 Total Non-current financial assets Current Financial derivatives Trade receivables Financial assets measured at fair value Non-current financial assets Other current financial assets Trade and other receivables Cash and cash equivalents Financial assets not measured at fair value ---- 7 1,716,738 ---- ---- ---- 7 1,716,738 7 ---- ---- 298,346 --1,716,738 --7 1,716,738 298,346 ---- 298,346 ---- 298,346 --1,716,745 298,346 ---- 2,015,091 138,923 12,188 153,960 ---- ---- ---- ---- ---- ---- 138,923 12,188 153,960 741,982 ---- ---- 741,982 1,047,053 ---- ---- 1,047,053 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- --(2,576,935) (100,267) (3,286,889) (400,850) (740,690) (101,749) (1,258) --(747,514) ---- ---- ---- --(983) --(2,576,935) (100,267) (3,286,889) (400,850) (740,690) (101,749) (1,258) (983) (747,514) (2,749,557) ---- (2,749,557) Senior Unsecured Notes Promissory Notes Senior secured debt Other bank loans Finance lease p ay ables Other financial liabilities Debts with associates Other non-current debts Trade and other p ay ables Other current liabilities Financial liabilities not measured at fair value --(3,623,233) --(3,623,233) ---- ---- (197,399) (197,399) ---- --(7,956,152) (198,382) (8,154,534) 1,047,053 1,716,745 298,346 (7,956,152) (198,382) (5,092,390) 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. 93

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_094.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Thousand of Euros 31/12/2020 Carrying amount Fair Value Financial assets at amortised Financial assets at FV to profit or Financial liabilities at amortised Financial assets at FV Other financial Total Level 1 Level 2 Level 3 Total to OCI liabilities costs l oss costs Non-current financial assets Trade receivables Financial assets measured at fair value Non-current financial assets Other current financial assets Trade and other receivables Cash and cash equivalents Financial assets not measured at fair value Senior Unsecured & Secured Notes Promissory Notes Senior secured debt Other bank loans Lease liabilities Other financial liabilities Other non-current debts Trade and other p ay ables Other current liabilities Financial liabilities not measured at fair value --1,128 1,880 ---- 3,008 1,128 ---- 308,485 1,880 --3,008 308,485 ---- 308,485 ---- 308,485 --1,128 310,365 ---- 311,493 195,149 11,118 147,108 ---- ---- ---- ---- ---- ---- 195,149 11,118 147,108 579,647 ---- ---- 579,647 933,022 ---- ---- 933,022 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- (2,601,479) (111,622) (3,110,298) (354,501) (733,499) (115,313) --(742,707) ---- ---- ---- (16,391) --(2,601,479) (111,622) (3,110,298) (354,501) (733,499) (115,313) (16,391) (742,707) (2,705,437) ---- (2,705,437) --(3,358,729) --(3,358,729) ---- ---- (153,162) (153,162) ---- --(7,769,419) (169,553) (7,938,972) 933,022 1,128 310,365 (7,769,419) (169,553) (6,694,457) 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. 94

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_095.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Credit risk (a) Exposure to credit risk The carrying amount of financial assets represents the maximum exposure to credit risk. At 31 December 2020 and 2019 the maximum level of exposure to credit risk is as follows: Thousands of Euros Carry ing amount Note 31/12/2020 31/12/2019 Non-current financial assets Other current financial assets Trade receivables Other receivables Cash and cash equivalents 12 12 14 14 198,157 11,118 383,233 24,377 138,930 1,728,926 369,797 29,267 15 579,647 741,982 1,196,532 3,008,902 The maximum level of exposure to risk associated with receivables at 31 December 2020 and 2019, by geographical area, is as follows. Thousands of Euros Carry ing amount 31/12/2020 31/12/2019 Sp ain EU countries United States of America Other Europ ean countries Other regions 62,358 84,962 157,395 10,525 58,363 44,887 171,345 13,485 92,370 110,984 407,610 399,064 (b) Impairment losses A breakdown of the trade and other receivables net of the bad debt provision by ageing as of 31 December 2019 is as follows: T housands of Euros Total net trade receivable third party Total gross carrying amount ECL Rate Provision Not matured Past due 0-30 day s Past due 31-60 day s Past due 61-90 day s Past due 91-180 day s Past due 181-365 day s M ore than one y ear Customers with objective evidence of imp airment 0.19% 0.19% 0.62% 2.03% 3.01% 8.52% 100.00% 285,942 48,212 15,831 10,364 8,606 2,216 3,056 17,861 (585) (57) (101) (156) (243) (232) (3,056) (17,861) 285,357 48,155 15,730 10,208 8,363 1,984 ---- 392,088 (22,291) 369,797 95

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_096.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) A breakdown of the trade and other receivables net of the bad debt provision by seniority at 31 December 2020 is as follows: T housands of Euros Total net trade Provision receivable third Total gross carrying ECL Rate amount party Not matured Past due 0-30 day s Past due 31-60 day s Past due 61-90 day s Past due 91-180 day s Past due 181-365 day s M ore than one y ear Customers with objective evidence of imp airment 0.19% 0.19% 0.62% 2.03% 3.01% 8.52% 100.00% 283,612 34,282 9,157 6,155 16,546 34,768 4,861 (515) (54) (57) (125) (211) (325) (4,861) 283,097 34,228 9,100 6,030 16,335 34,443 --16,837 (16,837) --406,218 (22,985) 383,233 Unimpaired receivables that are past due mainly relate to public entities. Movement in the bad debt provision was as follows: Thousands of Euros 31/12/2020 31/12/2019 31/12/2018 Op ening balance Net charges for the y ear Net cancellations for the y ear Transfers Translation differences Closing balance 22,291 2,436 (124) (29) (1,589) 20,531 4,971 (3,142) (19) (50) 19,706 6,443 (5,650) --32 22,985 22,291 20,531 An analysis of the concentration of credit risk is provided in note 5 (a). 96

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_097.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Liquidity risk 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 Note amount at Contractual 6 months 6 - 12 1-2 More than Carry ing amount 2-5 years flows or less months years 5 years 31/12/19 Financial liabilities Bank loans Other financial liabilities Bonds and other marketable securities Finance lease p ay ables Debts with associates Pay able to sup p liers Other current liabilities 3,687,739 101,749 204,851 21,000 100,083 20,708 183,525 50,646 715,443 7,416 3,622,384 1,979 21 21 4,826,286 101,749 2,677,202 740,690 1,258 581,882 22,320 128,606 22,334 --581,867 21,612 32,016 22,130 1,258 15 708 64,031 41,444 ---- --2,137,772 155,300 ---- --804,650 499,482 ---- --21 21 31 22 23 3,167,075 740,690 1,258 581,882 22,320 Total 7,812,840 9,441,260 980,270 176,918 339,646 3,015,931 4,928,495 Thousands of Euros Carrying amount at 31/12/20 Contractual flows 6 months or less 6 - 12 months 1-2 years More than 5 years Carry ing amount Note 2-5 years Financial liabilities Bank loans Other financial liabilities Bonds and other marketable securities Lease liabilities Pay able to sup p liers Other current liabilities 3,464,799 115,313 4,176,075 115,314 190,659 103,397 89,704 1,645 134,789 3,372 502,605 5,515 3,258,318 1,385 21 21 2,713,101 3,119,194 144,756 32,016 64,031 2,091,066 787,325 21 21 22 23 733,499 601,618 31,190 733,499 601,618 31,190 21,896 601,585 30,369 20,746 33 821 40,961 ---- 158,032 ---- 491,864 ---- Total 7,659,520 8,776,890 1,092,662 144,965 243,153 2,757,218 4,538,892 Currency risk 97

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_098.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) The Group’s exposure to currency risk is as follows: T housands of Euros 31/12/2019 Euros (*) Dollars (**) Trade receivables Receivables from Group comp anies Loans to Group comp anies Cash and cash equivalents Trade p ay ables Pay ables to Group comp anies Loans from Group comp anies Bank loans Balance sheet exp osure 4,978 101,685 16,053 (8,603) (18,908) (75,435) (42,388) (63,750) 29,022 3,829 595 1,698 (13,826) (93,713) (4,151) --(86,368) (76,546) (*) Balances in Euros in subsidiaries with US Dollars functional currency (**) Balances in US Dollars in subsidiaries with Euros functional currency T housands of Euros 31/12/2020 Euros (*) Dollars (**) Trade receivables Receivables from Group comp anies Loans to Group comp anies Cash and cash equivalents Trade p ay ables Pay ables to Group comp anies Loans from Group comp anies Bank loans 1,468 112,442 221,135 35,034 (46,318) (61,421) (18,391) (53,125) 19,938 6,140 55 416 (10,822) (72,693) (1,726) --Balance sheet exp osure 190,824 (58,692) (*) 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 2020 and 2019 year ends are as follows: Closing exchange rate Euros 31/12/2020 31/12/2019 US Dollars 1.2234 1.1225 A sensitivity analysis for foreign exchange fluctuations is as follows: Had the US Dollar strengthened by 10% against the Euro at 31 December 2020, equity would have increased by Euros 750,646 thousand (Euros 799,565 thousand at 31 December 2019) and profit due to foreign exchange differences would have increased by Euros 13,213 thousand (would have decreased by Euros 16,291 thousand at 31 December 2019). 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 2020 and 2019 would have had the opposite effect for the amounts shown above, all other variables being held constant. Interest rate risk 98

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_099.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) (a) Interest-rate profile To date, the profile of interest on interest-bearing financial instruments is as follows: Thousands of Euros 31/12/2020 31/12/2019 Fixed-interest financial instruments Financial liabilities (2,887,500) (2,908,750) (2,887,500) (2,908,750) Variable-interest financial instruments Financial liabilities (3,369,451) (3,587,171) (3,369,451) (3,587,171) (6,256,951) (6,495,921) (b) Sensitivity analysis If the interest rate had been 100 basis points higher at 31 December 2020, the interest expense would have increased by Euros 36,153 thousand. As the Group does not have any hedging 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 at 31 December 2019, the interest expense would have increased by Euros 51,412 thousand. As the Group does not have any hedging derivatives in place, the net effect on cash interest payments would have increased by the same amount. (31) Balances and Transactions with Related Parties Details of balances with related parties are as follows: Thousands of Euros 31/12/2020 31/12/2019 Receivables from associates (note 14) Trade payables associates Loans to associates (note 12) Loans to other related parties (note 12) Other financial assets with other related parties Debts with associates Debts with key management personnel Payables to members of the board of directors Payables to other related parties Other financial liabilities with other related parties 1,447 (133) --80,851 114,825 --(5,934) --(6,613) --1,883 (114) 18,342 86,363 34,367 (1,258) (4,005) --(4,878) (13,000) 184,443 117,700 Payables are included in trade and other payables (see note 22). (a) Group transactions with related parties Group transactions with related parties during 2018 were as follows: 99

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_100.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Thousands of Euros Key management Other related Board of directors Associates p ersonnel p art ies of t he Comp any Net sales Purchases Other service exp enses Op erating lease exp ense Remuneration R&D agreements Sale of investments (note 3) Finance income Finance cost 5,846 (97,941) (21,065) ---- (50) --3,951 (579) ---- ---- (16,070) ---- ---- ---- (4,282) (5,469) ---- 469,881 ---- ---- (844) --(5,848) ---- ---- (109,838) (16,070) 460,130 (6,692) Group transactions with related parties during 2019 were as follows: Thousands of Euros Key management p ersonnel Other related p arties Board of directors of the Comp any Associates Net sales Purchases Other service exp enses Remuneration Pay ments for rights of use Finance income Finance cost 10,196 (48,300) (25,638) ---- 2,265 (158) ---- --(16,795) ---- ---- --(5,586) --(7,104) ---- ---- (220) (5,517) ---- --(61,635) (16,795) (12,690) (5,737) Group transactions with related parties during 2020 are as follows: Thousands of Euros Key management Other related Board of directors Associates p ersonnel p art ies of t he Comp any Net sales Purchases Other service exp enses Remuneration Pay ments for rights of use Purchase of p rop erty , p lant and equip ment Finance income 10,522 (459) (15,010) ---- ---- --(17,164) ---- --(10,344) --(5,137) ---- --(4,966) ---- --(13,500) --10,939 ---- --5,992 (17,164) (28,981) (4,966) Every year the Group contributes 0.7% of its profits before tax to a non-profit organization. 100

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_101.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) “Other service expenses” include contributions to non-profit organizations totaling Euros 10,344 thousand in 2020 (Euros 5,586 thousand in 2019 and Euros 4,282 thousand in 2018). During 2011 one of the Company’s directors signed a three-year consulting services contract. The director received annual fees of US Dollars 1 million for these services and an additional bonus of US Dollars 2 million for complying with certain conditions. In the years 2014, 2015, 2017 and 2018 the contract was renewed and the amount of the fees corresponded to US Dollars 1 million per year. The contract expired on 31 March 2019 and during 2019 the fees amounted to US Dollars 250 thousand. On 28 December 2018, the Group sold Biotest and Haema to Scranton Enterprises B.V (shareholder of Grifols) for US Dollars 538,014 thousand (see note 3). For the payment of the mentioned amount of the sale, Scranton signed a loan contract dated 28 December 2018 for an amount of US Dollars 95,000 thousand (Euros 82,969 thousand) with Grifols Worldwide Operations Limited. The compensation is 2%+EURIBOR and due on 28 December 2025. Directors representing shareholders´ interests have received remuneration of Euros 965 thousand in 2020 (Euros 1,501 thousand in 2019). 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)). (b) Conflicts of interest concerning the directors 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. (32) Environmental Issues The most significant systems, equipment and fixtures for the protection and improvement of the environment at 31 December 2019 were as follows: Thousands of Euros Accumulated dep reciation Project Cost Net value Waste water treatment Waste management Reduction of electricity consump tion Reduction of water consump tion Energy Other 10,588 4,189 14,172 13,887 300 6,763 (3,038) (1,860) (5,135) (4,329) (6) (1,155) 7,550 2,329 9,037 9,558 294 5,608 49,899 (15,523) 34,376 101

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_102.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (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 2020 are as follows: Thousands of Euros Accumulated dep reciation Project Cost Net value Waste water treatment Waste management Reduction of electricity consump tion Reduction of water consump tion Energy Other 10,646 4,735 14,247 14,664 374 7,798 (3,673) (2,098) (6,181) (5,164) (23) (1,673) 6,973 2,637 8,066 9,500 351 6,125 52,464 (18,812) 33,652 Expenses incurred by the Group for protection and improvement of the environment during 2020 totaled approximately Euros 20,495 thousand (Euros 19,521 thousand during 2019 and Euros 15,474 thousand during 2018). The Group considers that the environmental risks are adequately controlled by the procedures currently in place. The Group has not received environmental grants during 2020, 2019 and 2018. (33) Other Information Audit fees: KPMG Auditores, S.L. has invoiced the following fees for professional services during 2020 and 2019: Thousands of Euros 31/12/2020 31/12/2019 Audit services Audit-related services 1,644 572 1,615 880 2,216 2,495 Amounts included in table above, includes the total amount of fees related to services incurred during 2020 and 2019 without considering the invoice date. Other assurance services in 2020 and 2019 include limited reviews of the interim financial statements, the audit of the consolidated financial statements under PCAOB, the audit of the consolidated financial statements of Grifols Diagnostic solutions and agreed-upon procedures. Other entities affiliated to KPMG International have invoiced the Group for the following fees for professional services during 2020 and 2019: 102

 

 

 

 

8052-1-bk_part 2 of 5 consolidated 2020_page_103.jpg GRIFOLS, S.A. AND SUBSIDIARIES Notes to the Consolidated Annual Accounts (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Thousands of Euros 31/12/2020 31/12/2019 Audit services Audit-related Tax advisory fees Other services 3,044 706 11 105 3,036 200 53 87 3,866 3,376 Other audit firms have invoiced the Group for the following fees for professional services during 2020 and 2019: Thousands of Euros 31/12/2020 31/12/2019 Audit services 58 62 58 62 (34) COVID-19 Impact In 2020, Grifols has continued to demonstrate its resilience and commitment to sustainable growth during the COVID-19 pandemic. Grifols keeps its plasma centers, production facilities and the supply of products and services operational. In addition, to continue strengthening its commitment to society, Grifols works through its talent pool, R&D projects and capital expenditures to continue helping to fight the pandemic. Due to these unprecedented times and in accordance to IAS 2 “Inventories”, Grifols recognized a total estimated impact of Euros 205 million to adjust Grifols’ inventory value primarily during the COVID-19 pandemic in the second quarter of the year. In addition, in line with its prudence and commitment to profitability, Grifols has implemented an operating expense containment plan to yield a positive impact of Euros 112 million in the statement of profit and loss for 2020. The plan has no impact on the company’s labor force or innovation investments. Noteworthy is the contribution mainly in Spain of the specific diagnostic test developed by Grifols for the detection of SARS-CoV-2.With all this, Grifols estimates that the net impact on operating result caused by the COVID-19 pandemic amounts to Euros 155 million. This figure includes the negative impact on inventory value and the reduced revenues from the Bioscience Division, and the positive impact of the operating expense containment plan and the contribution of the molecular test for the detection of the SARS-CoV-2 virus. At 31 December, 2020 Grifols’ liquidity position stands at close to Euros 1,500 million, including Euros 580 million corresponding to the cash position and nearly Euros 900 million of undrawn lines of credit. The company is equipped to respond to the demands of the current context and remains committed to its long-term growth strategy. Grifols will continue to monitor any potential impacts on operations and will take all necessary actions to mitigate any potential effect on its supply chain. 103

 

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_01.jpg APPENDIX I GRIFOLS, S.A. AND SUBSIDIARIES Information on Group Companies, Associates and others for the years ended 31 December 2020, 2019 and 2018 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 31/12/2020 31/12/2019 31/12/2018 Acquisition / Incorporation date Registered Office % shares % shares % shares Name Activity Statutory Activity Direct Indirect Direct Indirect Direct Indirect Fully Consolidated Companies Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain Diagnostic Grifols, S.A. 1987 Industrial Development and manufacture of diagnostic equipment, instruments and reagents. ---100.000% ---100.000% ---100.000% Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain Instituto Grifols, S.A. 1987 Industrial Plasma fractioning and the manufacture of haemoderivative pharmaceutical products. 99.998% 0.002% 99.998% 0.002% 99.998% 0.002% Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain Grifols Worldwide Operations Spain, S.A (formerly Logister, S.A.) Merged with Grifols International in 2018 Manufacture, sale and purchase, commercialisation and distribution of all types of computer products and materials. 1987 Services ------------------Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain Production of glass-and plastic-packaged parenteral solutions, parenteral and enteral nutrition products and blood extraction equipment and bags. Laboratorios Grifols, S.A. 1989 Industrial 98.600% 1.400% 98.600% 1.400% 98.600% 1.400% Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain 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). Biomat, S.A. 1991 Industrial 99.900% 0.100% 99.900% 0.100% 99.900% 0.100% Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain 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. Grifols Engineering, S.A. 2000 Industrial 99.950% 0.050% 99.950% 0.050% 99.950% 0.050% 2410 Lillyvale Avenue Los Angeles (California) United States Biomat USA, Inc. 2002 Industrial Procuring human plasma. ---100.000% ---100.000% ---100.000% 5555 Valley Boulevard Los Angeles (California) United States Grifols Biologicals LLC. 2003 Industrial Plasma fractioning and the production of haemoderivatives. ---100.000% ---100.000% ---100.000% Unit 5/80 Fairbank Clayton South Victoria 3149 Australia Distribution of pharmaceutical products and the development and manufacture of reagents for diagnostics. Grifols Australia Pty Ltd. 2009 Industrial 100.000% ---100.000% ---100.000% ---Bonnstrasse,9 3186 Dügingen Switzerland Medion Grifols Diagnostic AG 2009 Industrial ---55.000% ---55.000% ---100.000% Development and manufacturing activities in the area of biotechnology and diagnostics. 4101 Research Commons (Principal Address), 79 T.W. Alexander Drive, Research Triangle Park, North Carolina 277709, United States Grifols Therapeutics LLC. 2011 Industrial Plasma fractioning and the production of haemoderivatives. ---100.000% ---100.000% ---100.000% 4101 Research Commons (Principal Address), 79 T.W. Alexander Drive, Research Triangle Park, North Carolina 277709, United States Talecris Plasma Resources, Inc. 2011 Industrial ---100.000% ---100.000% ---100.000% Procurement of human plasma. Grange Castle Business Park, Grange Castle , Clondalkin, Dublin 22, Ireland Grifols Worldwide Operations Limited Packaging, labelling, storage, distribution, manufacture and development of pharmaceutical products and rendering of financial services to Group companies. 2012 Industrial 100.000% ---100.000% ---100.000% ---Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain Progenika Biopharma, S.A. 2013 Industrial Development, production and commercialisation of biotechnological solutions. 91.880% 8.120% 91.880% 8.120% 99.998% ---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. Asociación I+D Progenika 2013 Industrial ---------------99.998% 4560 Horton Street 94608 Emeryville, California United States Grifols Diagnostics Solutions Inc (formerly G-C Diagnostics Corp.) 2013 Industrial Manufacture and sale of blood testing products ---55.000% ---55.000% 100.000% ---This appendix forms an integral part of note 2 to the consolidated annual accounts.

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_02.jpg APPENDIX I GRIFOLS, S.A. AND SUBSIDIARIES Information on Group Companies, Associates and others for the years ended 31 December 2020, 2019 and 2018 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 31/12/2020 31/12/2019 31/12/2018 Acquisition / Incorporation date Registered Office % shares % shares % shares Name Activity Statutory Activity Direct Indirect Direct Indirect Direct Indirect Fully Consolidated Companies 13111 Temple Avenue, City of Industry, California 91746-1510 Estados Unidos Grifols Worldwide Operations USA Inc. 2014 Industrial The manufacture, warehousing, and logistical support for biological products. ---100.000% ---100.000% ---100.000% 501 Orchard Road nº20-01 238880 Wheelock Place, Singapore Grifols Asia Pacific Pte, Ltd 2003 Commercial Distribution and sale of medical and pharmaceutical products. 100.000% ---100.000% ---100.000% ---Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain 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. Grifols Movaco, S.A. 1987 Commercial 99.999% 0.001% 99.999% 0.001% 99.999% 0.001% Rua de Sao Sebastiao,2 Zona Industrial Cabra Figa 2635-448 Rio de Mouro Portugal Grifols Portugal Productos Farmacéuticos e Hospitalares, Lda. Import, export and commercialisation of pharmaceutical and hospital equipment and products, particularly Grifols products. 1988 Commercial 0.010% 99.990% 0.010% 99.990% 0.010% 99.990% Avda. Americo Vespucio, 2242 Comuna de Conchali Santiago de Chile Chile Development of pharmaceutical businesses, which can involve the import, production, commercialisation and export of related products. Grifols Chile, S.A. 1990 Commercial 99.000% ---99.000% ---99.000% ---2410 Lillyvale Avenue Los Angeles (California) United States Grifols USA, LLC. 1990 Commercial Distribution and marketing of company products. ---100.000% ---100.000% ---100.000% Bartolomé Mitre 3690/3790, CPB1605BUT Munro Partido de Vicente Lopez Argentina Clinical and biological research. Preparation of reagents and therapeutic and diet products. Manufacture and commercialisation of other pharmaceutical specialities. Grifols Argentina, S.A. 1991 Commercial 95.010% 4.990% 95.010% 4.990% 95.010% 4.990% Calle Zitna,2 Prague Czech Republic Grifols s.r.o. 1992 Commercial Purchase, sale and distribution of chemical-pharmaceutical products, including human plasma. 100.000% ---100.000% ---100.000% ---191 Silom Complex Building, 21st Follor, Silom Road, Silom, Bangrak 10500 Bangkok Thailand Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur Malaysia Grifols (Thailand) Ltd 2003 Commercial Import, export and distribution of pharmaceutical products. ---48.000% ---48.000% ---48.000% Grifols Malaysia Sdn Bhd 2003 Commercial Distribution and sale of pharmaceutical products. ---30.000% ---30.000% ---30.000% Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain Coordination of the marketing, sales and logistics for all the Group’s subsidiaries operating in other countries. Grifols International, S.A. 1997 Commercial 99.998% 0.002% 99.998% 0.002% 99.998% 0.002% Via Carducci, 62d 56010 Ghezzano Pisa, Italy Grifols Italia S.p.A 1997 Commercial Purchase, sale and distribution of chemical-pharmaceutical products. 100.000% ---100.000% ---100.000% ---Gregory Rowcliffe & Milners, 1 Bedford Row, London WC1R 4BZ United Kingdom Grifols UK Ltd. 1997 Commercial Distribution and sale of therapeutic and other pharmaceutical products, especially haemoderivatives. 100.000% ---100.000% ---100.000% ---Rua Umuarama, 263 Condominio Portal da Serra Vila Perneta CEP 83.325-000 Pinhais Paraná, Brazil Import and export, preparation, distribution and sale of pharmaceutical and chemical products for laboratory and hospital use, and medical-surgical equipment and instruments. Grifols Brasil, Lda. 1998 Commercial 100.000% 0.000% 100.000% 0.000% 100.000% ---Arteparc, Rue de la Belle du Canet, Bât. D, Route de la Côte d'Azur, 13590 Meyreuil France Grifols France, S.A.R.L. 1999 Commercial Commercialisation of chemical and healthcare products. 99.990% 0.010% 99.990% 0.010% 99.990% 0.010% Grzybowska 87 street00-844 Warsaw, Poland Grifols Polska Sp.z.o.o. 2003 Commercial Distribution and sale of pharmaceutical, cosmetic and other products. 100.000% ---100.000% ---100.000% ---Calle Eugenio Cuzin, nº 909-913 Parque Industrial Belenes Norte 45150 Zapopán Jalisco, Mexico Logística Grifols, S.A. de C.V. 2008 Commercial 99.990% 0.010% 99.990% 0.010% 99.990% 0.010% Manufacture and commercialisation of pharmaceutical products for human and veterinary use. This appendix forms an integral part of note 2 to the consolidated annual accounts.

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_03.jpg APPENDIX I GRIFOLS, S.A. AND SUBSIDIARIES Information on Group Companies, Associates and others for the years ended 31 December 2020, 2019 and 2018 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Acquisition / Incorporation date 31/12/2020 % shares 31/12/2019 % shares 31/12/2018 % shares Registered Office Name Activity Statutory Activity Direct Indirect Direct Indirect Direct Indirect Fully Consolidated Companies Calle Eugenio Cuzin, nº 909-913 Parque Industrial Belenes Norte 45150 Zapopán Jalisco, Mexico 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. Grifols México, S.A. de C.V. 1993 Commercial 99.980% 0.020% 99.980% 0.020% 99.980% 0.020% Lochamer Schlag, 12D 82166 Gräfelfing Germany Medion Diagnostics GmbH 2009 Commercial Distribution and sale of biotechnological and diagnostic products. ---------------100.000% Sveavägen 166 11346 Stockholm Sweden Research and development, production and marketing of pharmaceutical products, medical devices and any other asset deriving from the aforementioned activities. Grifols Nordic, AB 2010 Commercial 100.000% ---100.000% ---100.000% ---Carrera 7 No. 71 52 Torre B piso 9 Bogotá. D.C. Colombia 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. Grifols Colombia, Ltda 2010 Commercial 99.990% 0.010% 99.990% 0.010% 99.990% 0.010% 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. Lyoner Strasse 15, D-60528 Frankfurt am Main Germany Grifols Deutschland GmbH 2011 Commercial 100.000% ---100.000% ---100.000% ---5060 Spectrum Way, Suite 405 (Principal Address) Mississauga, Ontario L4W 5N5 Canada Grifols Canada, Ltd. 2011 Commercial Distribution and sale of biotechnological products. ---100.000% ---100.000% ---100.000% Unit 901-902, Tower 2, No. 1539, West Nanjing Rd., Jing’an District, Shanghai 200040 China Grifols Pharmaceutical Technology (Shanghai) Co., Ltd. (formerly Grifols Pharmaceutical Consulting (Shanghai) Co., Ltd.) Pharmaceutical consultancy services (except for diagnosis), technical and logistical consultancy services, business management and marketing consultancy services. 2013 Commercial 100.000% ---100.000% ---100.000% ---Steinengraben, 5 40003 Basel Switzerland Research, development, import and export and commercialisation of pharmaceutical products, devices and diagnostic instruments. Grifols Switzerland AG 2013 Commercial 100.000% ---100.000% ---100.000% ---Units 1505-7 BerKshire House, 25 Westlands Road Hong Kong Grifols (H.K.), Limited 2014 Commercial Distribution and sale of diagnostic products. ---100.000% ---100.000% ---100.000% Hilton Plaza West Office Tower, 19th floor. 2-2, Umeda 2-chome, Kita-ku Osaka-shi Japan Research, development, import and export and commercialisation of pharmaceutical products, devices and diagnostic instruments. Grifols Japan K.K. 2014 Commercial 100.000% ---100.000% ---100.000% ---Regus Business Centre Pvt.Ltd.,Level15,Dev Corpora, Plot No.463,Nr. Khajana East.Exp.Highway,Thane (W), Mumbai - 400604, Maharashtra India Grifols India Healthcare Private Ltd 2014 Commercial Distribution and sale of pharmaceutical products. 99.984% 0.016% 99.984% 0.016% 99.984% 0.016% 8F., No.367, Fuxing N. RD., Songshang Dist., Taipei City 10543, Taiwan Grifols Diagnostics Equipment Taiwan Limited 2016 Commercial Distribution and sale of diagnostic products. 100.000% ---100.000% ---100.000% ---Can Guasch, 2 08150 Parets del Vallès Barcelona, Spain Grifols Viajes, S.A. 1995 Services 99.900% 0.100% 99.900% 0.100% 99.900% 0.100% Travel agency exclusively serving Group companies. The Metropolitan Building, 3rd Fl. James Joyce Street, Dublin Ireland Squadron Reinsurance Designated Activity Company (formerly Squadron Reinsurance Ltd.) 2003 Services Reinsurance of Group companies’ insurance policies. ---100.000% ---100.000% ---100.000% 2410 Lillivale Avenue 90032 Los Angeles, California United States Grifols Shared Services North America, Inc. (formerly Grifols Inc.) Support services for the collection, manufacture, sale and distribution of plasma derivatives and related products. 2011 Services 100.000% ---100.000% ---100.000% ---Avenida Diagonal 477 Barcelona, Spain Gripdan Invest, S.L 2015 Services Rental of industrial buildings 100.000% ---100.000% ---100.000% ---Avenida de la Generalitat 152 Sant Cugat del Valles (Barcelona) Spain 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. Gri-Cel, S.A. (merged with Instituto Grifols, S.A. in 2019) 2009 Research ------------0.001% 99.999% This appendix forms an integral part of note 2 to the consolidated annual accounts.

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_04.jpg APPENDIX I GRIFOLS, S.A. AND SUBSIDIARIES Information on Group Companies, Associates and others for the years ended 31 December 2020, 2019 and 2018 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Acquisition / Incorporation date 31/12/2020 % shares 31/12/2019 % shares 31/12/2018 % shares Registered Office Name Activity Statutory Activity Direct Indirect Direct Indirect Direct Indirect Fully Consolidated Companies Paseo de Sagasta, 17 2º izqda. Zaragoza, Spain Creation and commercialisation of a blood diagnosis kit for the detection of Alzheimer's and development of effective immunotherapy (vaccine) against this disease. Araclon Biotech, S.L. 2012 Research ---75.100% ---75.100% ---73.220% Avenida de la Generalitat 152 Sant Cugat del Valles (Barcelona) Spain Research and development of therapeutic approaches for tumours for which there is currently no effective treatment. VCN Bioscience, S.L. 2012 Research ---86.830% ---81.340% ---81.340% Grange Castle Business Park, Grange Castle , Clondalkin, Dublin 22, Ireland Grifols Innovation and New Technologies Limited 2016 Research Biotechnology research and development ---100.000% ---100.000% ---100.000% 2711 Centerville Road Suite 400, Wilmington, Delaware, New Castle County United States Engage in any lawful act or activity for which corporations may be organized under the DGCL (Delaware Code) 2016 Services ---------------100.000% PBS Acquisition Corp. (merged with IBBI in 2019) Polígono Bainuetxe, 5, 2º planta, Aretxabaleta, Guipúzcoa Spain 2711 Centerville Road Suite 400, Wilmington, Delaware, New Castle County, United States Kiro Grifols S.L (formerly Kiro Robotics S.L) Development of machines and equipment to automate and control key points of hospital processes, and hospital pharmacy processes. 2014 Research 90.000% ---90.000% ---90.000% ---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"). Chiquito Acquisition Corp. 2017 Corporate ---100.000% ---100.000% ---100.000% Collection and use of mineral-medicinal waters and obtainment of all necessary administrative concessions for the optimum and widest use of these. Carrer Sant Sebastià, 2, 17493 Vilajuïga, Girona Aigües Minerals de Vilajuiga, S.A. 2017 Industrial 99.990% 0.010% 99.990% 0.010% 100.000% ---7600 Grandview Avenue, Suite 2 10, Arvada, CO 80002, United States Goetech LLC (D/B/A Medkeeper) 2018 Industrial Development and distribution of web and mobile-based platforms for hospital pharmacies ---100.000% ---54.760% ---54.760% 5700 Pleasantville Road Memphis, Tennessee United States Interstate Blood Bank, Inc. 2016 Industrial Procuring human plasma. ---100.000% ---100.000% ------LandsteinerstraBe 1, 04103 Leipzig - Germany 901 Yamato Rd., Suite 101, Boca Raton FL 33431 - USA Haema, AG 2018 Industrial Procurement of human plasma. ------------------BPC Plasma, Inc (formerly Biotest Pharma Corp) 2018 Industrial Procurement of human plasma. ------------------3500 South DuPont Hwy, Dover, County of Kent United States Development novel plasma-based products for the treatment of cognitive decline in aging and disorders of the central nervous system (CNS). Alkahest, Inc. 2015 Research ---42.450% ------------Colmarer Strasse 22, 60528 Frankfurt am Main - Germany Plasmavita Healthcare GmbH 2018 Industrial Procurement of human plasma. ---50.000% ------------Garnisongasse 4/12, 1090 Vienn a, Austria Plasmavita Healthcare II GmbH 2019 Industrial Procurement of human plasma. ---50.000% ------------2911 Avenue Marie Curie, Arrondissement de Saint-Laurent, Quebec Canada Green Cross Biotherapeutics 2020 Industrial Conducting business in Pharmceuticals and Medicines Industry ---100.000% ---------1561 E Orangethorpe Ave #205, Fullerton, CA 92831 USA Green Cross America Inc. 2020 Industrial Procurement of human plasma. ---100.000% ---------Corporation Trust Center, 1209, Orange Street, Wilmington, New Castle Country, Delaware, 19801 Estados Unidos 302 Teheran-ro, Gangnam-gu, Seoul (Yeoksam-dong) To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware Grifols Laboratory Solutions, Inc 2020 Services ---100.000% ---------Grifols Korea Co., Ltd. 2020 Commercial Import, export of diagnostic in vitro products and solutions. 100.000% ------------Korea This appendix forms an integral part of note 2 to the consolidated annual accounts.

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_05.jpg APPENDIX I GRIFOLS, S.A. AND SUBSIDIARIES Information on Group Companies, Associates and others for the years ended 31 December 2020, 2019 and 2018 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 31/12/2020 31/12/2019 31/12/2018 % shares % shares % shares Acquisition / Incorporation date Name Registered Office Activity Statutory Activity Direct Indirect Direct Indirect Direct Indirect Equity-accounted investees and others 3929 Point Eden Way Hayward, California United States Development and commercialisation of drugs delivered by inhalation for the prevention and treatment of severe respiratory diseases. Aradigm Corporation 2013 Research ---35.130% ---35.130% ---35.130% Romeinse straat 12 bus 2, 3001 Leuven, Belgium TiGenix N.V. 2013 Research Research and development of therapies based on stem cells taken from adipose tissue. ------------------Avenida Fernandos Casas Novoa, 37 Santiago de Compostela Spain 3500 South DuPont Hwy, Dover, County of Kent United States Hospital Germans Trias i Pujol, carretera de Canyet, s/n, Badalona Spain Mecwins, S.L. 2013 Research Research and production of nanotechnological, biotechnological and chemical solutions. ---24.990% ---24.990% ---24.990% Development novel plasma-based products for the treatment of cognitive decline in aging and disorders of the central nervous system (CNS). Alkahest, Inc. 2015 Research ---------47.580% ---47.580% Albajuna Therapeutics, S.L 2016 Research Development and manufacture of therapeutic antibodies against HIV. ---49.000% ---49.000% ---30.000% 5700 Pleasantville Road Memphis, Tennessee United States 2016 Industrial ---------------49.190% Interstate Blood Bank, Inc. Procurement of human plasma. 5700 Pleasantville Road Memphis, Tennessee United States Bio Blood Components Inc. 2016 Industrial Procurement of human plasma. ---------------48.972% 5700 Pleasantville Road Memphis, Tennessee United States Plasma Biological Services, LLC 2016 Industrial Procurement of human plasma. ---------------48.900% 4041 Forest Park Avenue St. Louis, Missouri United States Development of the Single Molecule Counting (SMC™) technology for clinical diagnostic and scientific discovery. Singulex, Inc. 2016 Research ---19.330% ---19.330% ---19.330% 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. 995 Park Center Dr, Vista, CA 92081, USA 2017 Industrial ---49.000% ---49.000% ---49.000% Access Biologicals, LLC. 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. 995 Park Center Dr, Vista, CA 92081, USA Access Biologicals IC-DISC, Inc. 2017 Industrial ---49.000% ---49.000% ---49.000% 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. 995 Park Center Dr, Vista, CA 92081, USA Access Cell Culture, LLC. 2017 Industrial ---49.000% ---49.000% ---49.000% 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. 995 Park Center Dr, Vista, CA 92081, USA Access Manufacturing, LLC. 2017 Industrial ---------------49.000% 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. 995 Park Center Dr, Vista, CA 92081, USA 2017 Industrial ---49.000% ---49.000% ---49.000% Access Plasma, LLC. 407 Cabot Road South San Francisco, CA 94080, USA Engage in any lawful act or activity for which corporations may be organized under General Corporation Law. GigaGen Inc. 2017 Industrial ---43.960% ---43.960% ---43.960% Colmarer Strasse 22, 60528 Frankfurt am Main - Germany Plasmavita Healthcare GmbH 2018 Industrial Procurement of human plasma. ---------50.000% ---50.000% Av. Roma, 35 Entresuelo 1, 08018 Barcelona; Spain Medcom Advance, S.A 2019 Research Research and development of nanotechnological solutions. ---45.000% ---45.000% ------This appendix forms an integral part of note 2 to the consolidated annual accounts.

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_06.jpg APPENDIX I GRIFOLS, S.A. AND SUBSIDIARIES Information on Group Companies, Associates and others for the years ended 31 December 2020, 2019 and 2018 (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) 31/12/2020 31/12/2019 31/12/2018 % shares % shares % shares Acquisition / Incorporation date Name Registered Office Activity Statutory Activity Direct Indirect Direct Indirect Direct Indirect Equity-accounted investees and others Garnisongasse 4/12, 1090 Vienna, Austria Plasmavita Healthcare II GmbH 2019 Industrial Procurement of human plasma. ---------50.000% ------2009 Wangyuan Road, Shanghai RAAS Blood Products Co. Ltd. Fengxian District, Shanghai Introducing advanced and applicable technologies, instruments and scientific management systems for manufacturing and diagnosis of blood products, in order to raise the production capacity and enhance quality standards of blood products to the international level. 2020 Industrial 26.200% ---------------This appendix forms an integral part of note 2 to the consolidated annual accounts.

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_07.jpg APPENDIX II GRIFOLS, S.A. AND SUBSIDIARIES Operating Segments for the years ended 31 December 2020, 2019 and 2018 (Expressed in thousands of Euros) (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Bioscience 2019 Hospital 2019 Diagnostic 2019 Bio Supplies 2019 Others 2019 Intersegments 2019 Consolidated 2019 2020 2018 2020 2018 2020 2018 2020 2018 2020 2018 2020 2018 2020 2018 Revenues from external customers 4,242,502 3,993,462 3,516,704 118,675 134,441 119,454 775,889 733,604 702,265 224,090 266,540 167,004 31,989 22,820 22,451 (53,107) (52,176) (41,154) 5,340,038 5,098,691 4,486,724 Total operating income 4,242,502 3,993,462 3,516,704 118,675 134,441 119,454 775,889 733,604 702,265 224,090 266,540 167,004 31,989 22,820 22,451 (53,107) (52,176) (41,154) 5,340,038 5,098,691 4,486,724 Profit/(Loss) for the segment 949,989 1,079,216 902,402 (12,504) (8,674) (12,587) 215,793 215,828 215,990 19,871 16,246 36,824 2,241 1,279 19,788 4,428 (3,094) (5,764) 1,179,818 1,300,801 1,156,653 Unallocated expenses Operating profit/(loss) Finance result (183,686) (169,436) (162,529) 996,132 (177,669) 1,131,365 (274,724) 994,124 (257,244) Share of profit/(loss) of equity-accounted investee Income tax expense Profit for the year after tax ---- 2,839 ---- ---- (19,794) (10,975) ---- 3,039 60,166 (19,744) (5,941) ---- 60,166 (39,538) (11,038) (169,639) (168,459) (131,436) 708,990 648,644 594,406 Segment assets Equity-accounted investments Unallocated assets 7,975,667 ---- 8,416,922 10,368 --6,928,220 99,547 --257,360 ---- 274,250 ---- 250,543 ---- 3,371,125 ---- 3,676,011 ---- 3,526,136 19,256 --251,551 46,782 --226,814 49,922 --117,673 47,742 --383,981 1,822,238 --77,501 54,183 --54,363 60,360 --(26,773) ---- (32,892) ---- (29,281) ---- 12,212,911 1,869,020 1,192,845 12,638,606 114,473 2,789,532 10,847,654 226,905 1,402,487 Total assets 15,274,776 15,542,611 12,477,046 Segment liabilities Unallocated liabilities 1,222,664 --1,371,352 --764,377 --32,179 --53,441 --32,767 --372,461 --351,799 --230,517 --120,787 --126,289 --6,427 --121,334 --35,581 --34,698 ---- ---- ---- --1,869,425 6,685,296 1,938,462 6,758,381 1,068,786 6,711,656 Total liabilities 8,554,721 8,696,843 7,780,442 Other information: Allocated amortisation and depreciation 201,087 196,335 156,893 12,443 11,686 10,819 63,053 52,224 44,030 21,846 20,415 5,656 2,820 2,147 1,941 ---- --301,249 282,807 219,339 Unallocated amortisation and depreciation ---- ---- ---- ---- ---- ---- ---- ---- ---- 20,284 19,648 9,270 Allocated expenses that do not require cash payments 38,955 43,524 172,648 529 (289) 297 (21,335) (22,873) (27,651) 3 393 28 (2,977) ---- ---- --15,175 20,755 145,322 Unallocated expenses that do not require cash payments ---- ---- ---- ---- ---- ---- ---- ---- ---- 4,924 2,416 1,339 Allocated additions for the year of property, plant & equipment, intangible assets and rights of use 289,062 868,103 220,531 11,548 62,298 15,354 34,516 103,911 58,064 10,915 65,448 2,050 1,150 1,768 883 ---- --347,191 1,101,528 296,882 Unallocated additions for the year of property, plant & equipment, intangible assets and rights of use ---- ---- ---- ---- ---- ---- ---- ---- ---- 107,178 73,544 19,795 This appendix forms an integral part of note 6 to the consolidated annual accounts. 1 of 2

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_08.jpg APPENDIX II GRIFOLS, S.A. AND SUBSIDIARIES Reporting by geographical area for the years ended 31 December 2020, 2019 and 2018 (Expressed in thousands of Euros) (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Spain 2019 Rest of European Union 2019 USA + Canada 2019 Rest of World 2019 Consolidated 2019 2020 2018 2020 2018 2020 2018 2020 2018 2020 2018 Net Revenue 339,169 268,287 264,913 495,323 588,375 535,361 3,599,746 3,390,811 2,974,429 905,800 851,218 712,021 5,340,038 5,098,691 4,486,724 Assets by geographical area 1,117,647 2,764,054 898,599 2,927,198 3,425,874 3,177,781 9,138,360 9,059,674 8,133,108 2,091,571 293,009 267,558 15,274,776 15,542,611 12,477,046 Other information: Additions for the year of property, plant & equipment, intangible assets and rights of use 93,787 183,891 70,639 92,873 181,736 69,534 253,442 787,586 166,353 14,267 21,859 10,151 454,369 1,175,072 316,677 This appendix forms an integral part of note 6 to the consolidated annual accounts. 2 of 2

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_09.jpg APPENDIX III GRIFOLS, S.A. AND SUBSIDIARIES Changes in Other Intangible Assets for the year ended 31 December 2020 (Expressed in thousands of Euros) (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Balance at 31/12/2019 Business combinations Translation differences Balance at 31/12/2020 Additions Transfers Disposals --(6) Development costs Concessions, patents, licenses brands & similar Computer software Currently marketed products Other intangible assets 435,339 229,997 258,597 1,092,834 178,359 35,301 16,174 265,571 5 ---- (34,821) (18,147) 701,390 228,023 279,651 1,004,665 156,644 27,939 --3,118 2,229 ---- 3,963 --(399) (11) --(10,233) (13,066) (88,169) (14,201) Total cost of intangible assets 2,195,126 82,532 267,805 3,558 (10,244) (168,404) 2,370,373 Accum. amort. of development costs Accum. amort of concessions, patents, licenses, b Accum. amort. of computer software Accum. amort. of currently marketed products Accum. amort. of other intangible assets (103,531) (43,656) (143,806) (322,119) (80,836) (23,810) (8,221) (19,198) (37,739) (6,844) ---- ---- ---- (1,732) (9,833) --9,389 ---- 12 --214 1,466 2,412 5,701 27,890 6,647 (125,875) (51,197) (167,124) (331,968) (71,430) Total accum. amort intangible assets Impairment of other intangible assets (693,948) (67,644) (95,812) (2,977) ---- (2,176) --226 --44,116 5,492 (747,593) (65,130) Carrying amount of intangible assets 1,433,534 (16,257) 267,805 1,382 (10,018) (118,796) 1,557,650 (See note 3) This appendix forms an integral part of note 8 to the consolidated annual accounts. 1 of 2

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_10.jpg APPENDIX III GRIFOLS, S.A. AND SUBSIDIARIES Changes in Other Intangible Assets for the year ended 31 December 2019 (Expressed in thousands of Euros) (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) Balance at 31/12/2018 Business combinations Translation differences Balance at 31/12/2019 Additions Transfers Disposals ---- Development costs Concessions, patents, licenses brands & similar Computer software Currently marketed products Other intangible assets 377,312 196,410 234,423 1,071,827 174,768 53,847 26,222 21,846 --8 -591 --4,771 4,485 2,934 21,007 3,437 435,339 229,997 258,597 1,092,834 178,359 2,587 17 ---365 293 -518 --516 -105 ---5 Total cost of intangible assets 2,054,740 101,923 2,239 291 (701) 36,634 2,195,126 Accum. amort. of development costs Accum. amort of concessions, patents, licenses, b Accum. amort. of computer software Accum. amort. of currently marketed products Accum. amort. of other intangible assets (90,107) (36,760) (126,653) (278,795) (70,553) (13,357) (6,386) (15,963) (38,040) (8,144) ---- ---- ---- --(278) --(763) ---- 60 ---- (67) (510) (972) (5,284) (1,376) (103,531) (43,656) (143,806) (322,119) (80,836) Total accum. amort intangible assets Impairment of other intangible assets (602,868) (66,335) (81,890) ---- --(1,041) --60 --(8,209) (1,309) (693,948) (67,644) Carrying amount of intangible assets 1,385,537 20,033 2,239 (750) (641) 27,116 1,433,534 (See note 3) This appendix forms an integral part of note 8 to the consolidated annual accounts. 2 of 2

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_11.jpg APPENDIX IV GRIFOLS, S.A. AND SUBSIDIARIES Movement in Rights of Use for the year ended 31 December 2020 (Expressed in thousands of Euros) (Free translation from the original in Spanish. In the event of any discrepancy, the Spanish-language version prevails) Balance at 31/12/2019 Business combinations Translation differences Balance at 31/12/2020 Additions Transfers Disposals Land and buildings 734,846 68,172 19,424 --(10,935) (52,387) 759,120 Machinery 6,167 1,775 --(1,846) (59) (130) 5,907 Computer equipment 6,504 2,449 --(37) (347) (341) 8,228 Vehicles 14,030 2,681 74 (10) (1,914) (709) 14,152 Total cost of rights of use 761,547 75,077 19,498 (1,893) (13,255) (53,567) 787,407 Accum. amort. of land and buildings (49,441) (52,774) --(2) 2,341 5,758 (94,118) Accum. amort of machinery (1,698) (1,588) --955 55 40 (2,236) Accum. amort. of computer equipment (2,180) (3,012) --37 347 168 (4,640) Accum. amort. of vehicles (4,370) (5,206) --7 1,529 323 (7,717) Total accum. amort of rights of use (57,689) (62,580) --997 4,272 6,289 (108,711) Carrying amount of rights of use 703,858 12,497 19,498 (896) (8,983) (47,278) 678,696 This appendix forms an integral part of note 9 to the consolidated annual accounts. 1 de 2

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_12.jpg APPENDIX IV GRIFOLS, S.A. AND SUBSIDIARIES Movement in Rights of Use for the year ended 31 December 2019 (Expressed in thousands of Euros) (Free translation from the original in Spanish. In the event of any discrepancy, the Spanish-language version prevails) Balance at 31/12/2018 Business combinations Translation differences Balance at 31/12/2019 Additions Transfers Disposals Land and buildings --728,246 --381 (531) 6,750 734,846 Machinery --1,957 --4,209 --1 6,167 Computer equipment --3,324 --3,156 (4) 28 6,504 Vehicles --14,346 --20 (371) 35 14,030 Total cost of rights of use --747,873 --7,766 (906) 6,814 761,547 Accum. amort. of land and buildings --(49,786) ---- 287 58 (49,441) Accum. amort of machinery --(1,768) --69 1 (1,698) Accum. amort. of computer equipment --(2,204) --21 3 --(2,180) Accum. amort. of vehicles --(4,613) ---- 231 12 (4,370) Total accum. amort of rights of use --(58,371) --90 521 71 (57,689) Carrying amount of rights of use --689,502 --7,856 (385) 6,885 703,858 This appendix forms an integral part of note 9 to the consolidated annual accounts. 2 de 2

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_13.jpg APPENDIX V GRIFOLS, S.A. AND SUBSIDIARIES Movement in Property, Plant and Equipment for the year ended 31 December 2020 (Expressed in thousands of Euros) (Free translation from the original in Spanish. In the event of any discrepancy, the Spanish-language version prevails) Balances at Translation Balances at Business 31/12/2019 Additions combination Transfers Disposals differences 31/12/2020 Cost: Land and buildings Plant and machinery Fixed Assets under construction 807,195 2,141,611 497,164 19,843 50,825 226,092 14,964 48,408 121,399 (6,050) 103,594 (99,616) (211) (23,830) --(55,561) (120,179) (40,457) 780,180 2,200,429 704,582 3,445,970 296,760 184,771 (2,072) (24,041) (216,197) 3,685,191 Accumulated depreciation: Buildings (108,638) (17,974) --(3,826) 171 7,319 (122,948) Plant and machinery (1,175,075) (145,167) --5,412 22,590 56,757 (1,235,483) (1,283,713) (163,141) --1,586 22,761 64,076 (1,358,431) Impairment of other property, plant and equipment (2,712) 21 ---- --38 (2,653) 2,159,545 133,640 184,771 (486) (1,280) (152,083) 2,324,107 Carrying amount (See note 3) This appendix forms an integral part of note 10 to the consolidated annual accounts. 1 of 2

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_14.jpg APPENDIX V GRIFOLS, S.A. AND SUBSIDIARIES Movement in Property, Plant and Equipment for the year ended 31 December 2019 (Expressed in thousands of Euros) (Free translation from the original in Spanish. In the event of any discrepancy, the Spanish-language version prevails) Balance at Translation Balance at Business combination 31/12/2018 Additions Transfers Disposals differences 31/12/2019 Cost: Land and buildings Plant and machinery Fixed assets under construction 726,412 1,984,853 345,391 30,209 55,957 239,111 30,346 19,079 926 10,866 68,107 (91,788) (2,078) (13,892) (55) 11,440 27,507 3,579 807,195 2,141,611 497,164 3,056,656 325,277 50,351 (12,815) (16,025) 42,526 3,445,970 Accumulated depreciation: Buildings (89,378) (18,108) (23,288) 23,111 657 (1,632) (108,638) Plant and machinery (1,012,735) (144,086) --(17,402) 11,901 (12,753) (1,175,075) (1,102,113) (162,194) (23,288) 5,709 12,558 (14,385) (1,283,713) Impairment of other property, plant and equipment (2,560) (113) ---- --(39) (2,712) 1,951,983 162,970 27,063 (7,106) (3,467) 28,102 2,159,545 Carrying amount (See note 3) This appendix forms an integral part of note 10 to the consolidated annual accounts. 2 of 2

 

 

 

 

7567-2-bc_part 3 of 5 2020 appendices fs_page_15.jpg APPENDIX VI GRIFOLS, S.A. AND SUBSIDIARIES Statement of Liquidity for Distribution of Interim Dividend 2019 (Expressed in thousands of Euros) (Free translation from the original in Spanish. In the event of any discrepancy, the Spanish-language version prevails) Thousands of Euros Forecast distributable profit for 2019: Projected profit after tax until 31/12/2019 Less, provision required to legal reserve 827,684 --827,684 Estimated distributable profit for 2019 136,828 Interim dividends distributed Forecast cash for the period 25 October 2019 to 25 October 2020: Cash balances at 25 October 2019 Projected collections Projected payments, including interim dividend --1,157,200 557,000 600,200 Projected cash balances at 25 October 2020 This appendix forms an integral part of note 16 to the consolidated annual accounts.

 

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_01.jpg CONSOLIDATED DIRECTORS’ REPORT 2020

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_03.jpg A CENTURY-OLD COMPANY RECOGNIZED AMONG THE WORLD’S MOST SUSTAINABLE COMPANIES THAT CONTINUES TO ADVANCE ITS MISSION OF HELPING PEOPLE LIVE LONGER AND BETTER LIVES, INCLUDING IN THE FIGHT AGAINST COVID-19 2021

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_04.jpg INTRODUCTION I CHAIRMAN LETTER I 5 2020 CONSOLIDATED DIRECTORS’ REPORT Grifols’ Board of Directors and workforce, led by its co-CEOs, successfully managed an exceptionally challenging year, while achieving notable corporate objectives. For this reason, I would first like to express my sincerest thanks, admiration and pride for each and every one of the nearly 24,000 people who form part of the Grifols team. Working together, from all of our countries of operation, you ensured that we were able to continue supplying life-saving medicines and products to patients and healthcare professionals. At the same time, my appreciation and thoughts also go to those who are no longer with us. who have recovered from the disease can serve as an effective treatment in the fight against SARS-CoV-2. a heightened awareness of the need to increase their self-sufficiency of plasma and plasma-derived medicines. We will continue to work in this direction, always acting in an ethical and responsible manner in accordance with our mission. Accordingly, we are focusing our efforts in several different ways: collaborating in campaigns and appeals to collect plasma; inactivating convalescent plasma for its use in direct transfusions; developing specialty plasma-derived medicines; and financing promising research projects and initiatives. Guided by this sense of responsibility, Grifols continues to place sustainability as a core strategic pillar. In 2020, Grifols was distinguished as one of the world’s most sustainable countries by the most important global indices. We also created a Sustainability Committee delegated by the Board of Directors to reinforce our actions as a responsible company, that is transparent in our interactions and committed to creating value for our diverse stakeholders. We have also made significant advancements in other high-impact research projects, most notably the AMBAR (Alzheimer Management by Albumin Replacement) study. We marked an amazing milestone in 2020, when the prestigious scientific journal Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association published the results of this clinical trial. We continue to move forward with our plan to make this treatment a reality and are setting up centers of excellence in several countries. In the current climate of uncertainty, I would like to send a message of hope and optimism to everyone on the outstanding team that makes Grifols possible: a project launched in 1909 with the proven capacity to emerge stronger from challenging situations, driven by a spirit of excellence and innovation that defines us as a company. At Grifols, our capacity to progress and innovate grows in the face of difficulties. Over the last year, we mobilized significant human and economic resources to find solutions to this new challenge, in alignment with our mission to promote the health and wellbeing of patients and society as a whole. Ethics, health and the environment are tightly interconnected, which is why we strive to ensure our operations are consistent with the needs of society and sustainable in their approach, even in such difficult times as the ones we are living in. SINCE 1909 GRIFOLS HAS DEMONSTRATED ITS PROVEN CAPACITY TO EMERGE STRONGER FROM CHALLENGING SITUATIONS, DRIVEN BY A SPIRIT OF EXCELLENCE AND INNOVATION THAT DEFINES US AS A COMPANY. Meanwhile, we continue to drive plasma science by fostering scientific knowledge on the proteome of human plasma and supporting research to explore its full potential through Alkahest, addition to other studies to combat age-related diseases and other pathologies. Thank you for your continued support. VÍCTOR GRÍFOLS ROURA CHAIRMAN Even before the pandemic was declared, we began collaborating with governments and healthcare authorities to put all of our expertise and experience at their disposal. As a pioneer in the development of plasma-derived therapies with a vocation and capacity to respond to health emergencies, as evidenced during the Ebola epidemic, we believe plasma from people In 2020, society as a whole became more aware of the word “plasma” and the critical importance of donations and donors in the production of life-saving plasma-based medicines. We have also made progress at an institutional level, in the European Union and other regions, to ensure COMMITMENT, INNOVATION AND A SPIRIT OF EXCELLENCE

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_05.jpg INTRODUCTION I CEOs LETTER I 6 2020 CONSOLIDATED DIRECTORS’ REPORT Ethics, responsibility, commitment, and resilience driven by a great team is what guided our leadership in 2020, and has allowed us to continue strengthening our growth as a company in a sustainable manner. Similarly, we also signed a strategic alliance with the Egyptian government, entailing the development of 20 plasma centers and the construction of new manufacturing facilities. Offering an extraordinary bridge for collaboration, this partnership will reinforce Egypt’s healthcare system by promoting the country’s self-sufficiency in plasma-based therapies, while widening Grifols’ presence in the Middle East and Africa. At Grifols, we continue to do our best to move forward in an environment of immense challenges and uncertainty imposed by COVID-19. Thanks to our exceptional workforce, we were able to overcome adversity, adapt to change, ensure a continuous supply of our essential medicines, products and services, and count on each and every one of our employees to promote our core mission of enhancing the health and well-being of people. We also reinforced our operations in China by closing a strategic alliance with Shanghai RAAS. China holds tremendous growth potential for plasma products and transfusion diagnostic solutions. Working hand in hand with our strategic partner, we look forward to forging a solid presence in the Chinese market. We are proud of our response as a company and pleased by the increased focus on plasma and plasma donors whose generosity is more relevant today than ever before. While their generosity has always been critical to saving lives, it now has even greater meaning. The pandemic has heightened the need for broadscale scientific collaboration to find a joint and global solution against COVID-19. At Grifols, we were able to rapidly deploy resources to develop a SARS-CoV-2 detection test in record time, as well as a range of potential treatments based on the therapeutic properties of hyperimmune plasma and specific antibodies concentrated in immunoglobulins, in addition to other plasma-based therapies. At present, we are leading and participating in more than 25 research initiatives and projects to address this urgent social need. For this reason, we also remain steadfast in our pursuit to expand our network of plasma donation centers, as well as forge strategic alliances to boost other countries’ self-sufficiency in plasma-derived medicines. To reflect these aims, in 2020 we acquired centers in the U.S. and Europe and three production facilities in Canada. WE HAVE BOTH THE CAPACITY AND THE WILL TO MAKE A POSITIVE DIFFERENCE IN SOCIETY AND WE FIRMLY BELIEVE IN DEVELOPING OUR BUSINESS MODEL SUSTAINABLY ETHICS, RESPONSIBILITY, RESILIENCE AND A LONG-TERM VISION

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_06.jpg INTRODUCTION I CEOs LETTER I 7 2020 CONSOLIDATED DIRECTORS’ REPORT In 2020, we upheld our R+D+i investment levels by allocating close to EUR 300 million. We also enhanced our innovation ecosystem by integrating companies like Alkahest, with which we began collaborating in 2015. All of these accomplishments and more are highlighted throughout this report, which underscores our unwavering quest to drive sustainable and long-term growth. And, as mentioned earlier, this stems directly from a vision of responsible leadership and the dedicated efforts of Grifols’ talent pool, made up of close to 24,000 employees from 88 nationalities. Without any doubt, our team is our greatest asset. Grifols further contributes to the Sustainable Development Goals through an array of initiatives, combining economic gain with social and environmental value creation. We believe business investment can serve as a powerful driver for positive social change, since corporate investments and positive social impact are not a zero-sum game. In 2020, Grifols was recognized as one of the world’s most sustainable companies by highly prestigious indices including Dow Jones Sustainability Index, Euronext Vigeo, FTSE4Good and Bloomberg Gender-Equality Index, which assess corporate performances on the basis of environmental, social and corporate governance criteria. These awards undoubtedly encourage us to continue working in the same direction. Their research will lead to greater knowledge of the human plasma proteome and enable us to promote innovative therapies for age-related diseases, among others, while contributing to scientific plasma progress. In the coming years, the impact of a deeper understanding of the human proteome in the field of bioscience could be as great as the discovery of the human genome sequence. To this end, in 2020 we decided to quantify the total socioeconomic impact generated by our operations in the U.S., Spain, Germany and Ireland in terms of job creation and GDP contribution, which totaled EUR 7,500 million. We also measured the social value generated by our U.S. plasma donation centers for the first time: more than EUR 6,200 million of impact was generated for donors, patients and local communities where the centers are based. In this regard, our progress to promote greater diversity, equality and talent development is indeed a source of pride. We continue to make progress on gender pay equality, female leadership and anti-harassment policies and campaigns to support women, among others. The new Diversity and Inclusion Plan will help us to continue to make progress in this area. For yet another year, we remained true to our values, our principles and our long-term vision. We truly appreciate your continued support. As a result of our innovation strategy, in 2020 we had a significant contribution to revenue growth from new products. Of note are Xembify® in the U.S. market, our subcutaneous immunoglobulin to treat primary immunodeficiencies; VistsealTM, a biological sealant developed in collaboration with Ethicon to control surgical bleeding; and Tavlesse® (fostamatinib), a therapeutic alternative for chronic immune thrombocytopenia (ITP) patients who are refractory to other treatments, following the agreement with Rigel Pharmaceutical. RAIMON GRÍFOLS ROURA CO-CEO VÍCTOR GRÍFOLS DEU CO-CEO In terms of economic results, we attained close to EUR 5,400 million in revenues. Our financial performance and business strategy provided the necessary strength to meet our planned capital investments, as well as expand and strengthen our cash position. In addition, we maintained our manufacturing operations while advancing on our 2030 environmental objectives, with the aim of minimizing our impact. We have both the capacity and the calling to make a positive difference in the society and firmly believe in developing our business model in a sustainable manner. We also continued to support various programs to promote health and wellness, education, environment and local community development, both directly and through our foundations. In 2020, we allocated EUR 41 million towards these programs. Beyond plasma-derived products, Grifols is also fostering innovation to offer more treatment options for patients and healthcare professionals in specific therapeutic areas, such as hematology, immunology, pulmonology, autoimmune diseases and neurodegenerative disorders. Our new sustainability policy outlines the primary principles and commitments regarding our social and environmental responsibility and offers a framework to integrate them globally and unequivocally into our business model.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_07.jpg INTRODUCTION I OUR COMMITMENT DURING COVID-19 I 8 2020 CONSOLIDATED DIRECTORS’ REPORT z OUR RESPONSIBILITY TO OUR EMPLOYEES z OUR COMMITMENT TO DONORS AND PATIENTS z COLLABORATION WITH HEALTHCARE AUTHORITIES z INNOVATION IN RESPONSE TO COVID-19 z SOLID FINANCIAL MANAGEMENT Grifols has done everything possible to protect its employees and guarantee their health and safety. Serving patients and society are core Since the outbreak of COVID-19, Grifols has been working closely with healthcare authorities in its main countries of Grifols is leading a number of projects to discover new treatments. It developed a TMA molecular test to detect the SARS-CoV-2 virus in plasma, blood and respiratory samples. In 2020, Grifols took all necessary measures to further bolster its already-solid financial position. As of December 31, 2020, Grifols’ treasury positions stood at EUR 580 million, which, when added to the EUR 1,000 million in undrawn lines of credit, brings its liquidity position to roughly EUR 1,500 million. priorities for Grifols, whose life-enhancing products and services are essential for patients and healthcare professionals around the world. The company is doing everything within its reach to increase its plasma supply, plasma-derived therapies, SARS-CoV-2 tests and other products to make sure patients continue to receive the treatment and healthcare they require. operation, including the United Spain and China, among others. States, The company was determined to retain its workforce and took no measures, temporary or permanent, reduce headcount. Grifols has shared its broad knowledge and technology about plasma inactivation for transfusions and convalescent plasma (antibody-rich plasma from recovered COVID-19 patients) to develop and produce a potential immunoglobulin-based treatment. Among its current initiatives is the development of immunoglobulins with anti-SARS-CoV-2 antibodies produced from plasma recovered from COVID-19 patients. It also promotes and collaborates with clinical trials that allow the use of inactivated convalescent plasma, along with additional trials to assess the potential benefits of other plasma-derived products. Grifols’ intense process of digital transformation in recent years was key to ensuring the continuity of its operations. Consequently, the company implemented a remote-work policy and reached flexibility agreements in order to sustain its manufacturing operations. In November 2019, Grifols optimized its financial structure with the completion of its debt refinancing process, which extended average maturity to seven years and provided greater flexibility in cov-lite terms. The company is also reinforcing its long-term commitment to donors, who play a fundamental role in the production of plasma-derived medicines. . . More details on Grifols’ management, impact and measures relating to COVID-19 are highlighted in every chapter of this report. OUR COMMITMENT DURING COVID-19

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_08.jpg INTRODUCTION I PLASMA: AN ESSENTIAL ASSET TO ENSURING PATIENTS’ QUALITY OF LIFE I 9 2020 CONSOLIDATED DIRECTORS’ REPORT PATIENTS’ QUALITY OF LIFE During these unprecedented times, Grifols continues working hard to minimize supply chain delays in its products and services, which are critical for patients and healthcare professionals around the world. plasma as a raw material in the manufacture of plasma-derived treatments; as well as hyperimmune or convalescent plasma from people who have recovered from COVID-19, which is rich in anti-SARS-CoV-2 antibodies. In recent years, Grifols has forged a global network of 312 plasma centers in the U.S. and Europe, allowing it to expand and diversify its access to plasma. The company will continue its global efforts to raise awareness on the need for plasma. Grifols continues to stress the strategic relevance of plasma-derived medicines to guarantee people’s health and well-being worldwide as part of its efforts to raise awareness of plasma and its potential to treat COVID-19. In this regard, the company added its voice to the plea made by the Protein Therapeutics Association (PPTA) urging European healthcare authorities to take decisive action to encourage more plasma donations. Grifols has joined forces with diverse healthcare authorities and organizations to encourage people to donate plasma, including several outreach, educational and promotional campaigns on the importance of GRIFOLS LEADS VARIOUS EFFORTS TO RAISE AWARENESS ON THE ESSENTIAL ROLE OF PLASMA TO PRODUCE LIFE-SAVING MEDICINES PLASMA: AN ESSENTIAL ASSET TO ENSURING

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_09.jpg INTRODUCTION I HIGHLIGHTS I 10 2020 CONSOLIDATED DIRECTORS’ REPORT HIGHLIGHTS GROWTH INVESTMENT AND INNOVATION NET REVENUE NET INCOME INVESTMENTS CAPEX 308 M€ I+D NET INVESTMENT 298 M€ 5.6% of net revenue 619 M€ 5,340 M€ EBITDA PLASMA CENTERS +6.1% cc* 312 1,324 M€ U.S. 264 Europe 48 PATENTS & TRADE MARKS 3,600 +7.1% cc NORTH AMERICA 834 +4.5% cc EU 906 +3.4% cc ROW 6,505 North America 470 Europe 2,691 ROW 3,344 * At constant currency.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_10.jpg INTRODUCTION I HIGHLIGHTS I 11 2020 CONSOLIDATED DIRECTORS’ REPORT TALENT AND DIVERSITY RESPONSIBILITY HUMAN CAPITAL 23,655 6,421 27% EU ENVIRONMENTAL COST & INVESTMENTS COMMUNITY INVESTMENTS 23 M€ 41 M€ 16,604 70% NORTH AMERICA 630 3% ROW ECONOMIC IMPACT JOBS CREATED 7,500 M€ 140,000 EQUAL OPPORTUNITY 98% PERMANENT CONTRACTS SOCIAL VALUE 14,142 60% WOMEN 9,513 40% MEN 88 NATIONALITIES 6,200 M€

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_11.jpg INTRODUCTION I 2020 MILESTONES I 12 2020 CONSOLIDATED DIRECTORS’ REPORT APRIL • Start of the hyperimmune plasma campaign in the U.S. to develop and produce an anti-SARS-CoV-2 immunoglobulin as a potential treatment • Launch of a new format of HyperRAB®, a high-potency anti-rabies immunoglobulin for rabies postexposure prophylaxis JANUARY • The European Commission approves TAVLESSE® (fostamatinib) to treat immune thrombocytopenia (ITP) in adult patients who are refractory to other treatments MARCH • Grifols and Shanghai RAAS close their strategic alliance to promote the growth of plasma-derived products and diagnostic solutions in China • The FDA authorizes the sale of a second QSmart hemostasis analyzer • Multilateral agreement signed with diverse U.S. health authorities to develop the first treatment aimed specifically at combating COVID-19 with hyperimmune plasma JUNE MAY • Grifols R&D receives an “excellent” rating in the Profarma Program, spearheaded by the Spanish Ministry of Industry, Trade and Tourism • Completion of the development of a high-sensitivity molecular test to detect the SARS-CoV-2 virus in plasma, blood and respiratory samples • Start of the production of a hyperimmune immunoglobulin as a potential passive immunotherapy against COVID-19 FEBRUARY • Voluntary disclosure of transfers of value made in 2019 to European healthcare professionals and organizations • Liquidity position strengthened by the expansion of multicurrency revolving credit line, from USD 500M to 1,000M • The PharmacyKeeper application earns the top award for innovation from KLAS Research, an independent healthcare IT data and insights company • “The Sustainability Yearbook 2020,” published by S&P Global, includes Grifols among the 10 most sustainable biotech companies • The FDA approves Procleix® Panther® with Automation Ready Technology (ART) for blood screening 2020 MILESTONES

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_12.jpg INTRODUCTION I 2020 MILESTONES I 13 2020 CONSOLIDATED DIRECTORS’ REPORT OCTOBER • Closing of acquisition of assets in the U.S. and Canada. Grifols becomes the only large-scale manufacturer of plasma-derived products in Canada AUGUST • The FDA grants emergency use authorization for convalescent plasma to treat patients with COVID-19 • Start of the clinical trial of anti-SARS-CoV-2 hyperimmune immunoglobulin in COVID-19 patients, with Grifols participation • During its Annual Shareholders’ Meeting, Grifols joins the PPTA’s global appeal for the need to increase plasma donations • Plasmavita opens its first center in the German state of Saarland JULY SEPTEMBER • Delivery of the first batch of anti-SARS-CoV-2 hyperimmune immunoglobulin for use in clinical trials • Agreement to acquire the remaining stake in Alkahest to boost Grifols’ R&D efforts • Strategic agreement reached to acquire manufacturing facilities in Canada and 11 plasma centers in the U.S. from Green Cross (GC Pharma) NOVEMBER DECEMBER • Feature article on AMBAR findings in the scientific journal Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association • Strategic alliance between Grifols and the Egyptian government to promote self-sufficiency of plasma-derived medicines in the Middle East and Africa • Grifols creates a Sustainability Committee to strengthen its corporate governance structure and long-term sustainable growth model • Expansion of product portfolio with the European market launch of TAVLESSE® • The Dow Jones Sustainability Index recognizes Grifols as one of the world’s most sustainable companies • Grifols is included for the first time in the Euronext Vigeo Europe 120 and Euronext Vigeo Eurozone 120 indices

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_13.jpg Grifols is a centenary company that has fostered innovation since its origins, building its business on solid values and ethical principles with the aim of enhancing people’s health and well-being. The company’s commitment to society is grounded on a long-term business model that creates value in alignment with the Sustainable Development Goals. This social dimension has enabled it to advance on its path of growth, while earning the distinction as one of the world’s most sustainable firms. GRIFOLS ESTABLISHED 1909 BUSINESS AREAS 4 divisions

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_14.jpg ABOUT GRIFOLS

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_15.jpg ABOUT GRIFOLS I A CENTURY-OLD COMPANY I 16 2020 CONSOLIDATED DIRECTORS’ REPORT First plasma fractionation plant in Spain begins operations. 1958 1973 Grifols opens its new production facility in Barcelona. 1909 1943 Production of the first single-donor lyophilized plasma in continental Europe. Grifols patents this process in Spain and develops a lyophilizer and complementary devices to later inject plasma as a therapy. Dr. Josep Antoni Grífols i Roig sets up Instituto Central de Análisis Clínicos, Bacteriológicos y Químicos in Barcelona, prior to Laboratorios Grifols. 1995 Led by Dr. Víctor Grífols i Lucas, Grifols becomes the first non-U.S. company to obtain an FDA establishment license and an FDA licence for a biological product (albumin). 1945 Grifols opens the first private blood bank in Spain. 1940 Dr. Grífols i Roig, and his sons Josep Antoni and Víctor Grífols i Lucas, establish Laboratorios Grifols in Barcelona, a company specialized in clinical analyses and the preparation of lyophilized plasma. 1951 Dr. Josep Antoni Grífols i Lucas develops the plasmapheresis technique. A CENTURY-OLD COMPANY

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_16.jpg ABOUT GRIFOLS I A CENTURY-OLD COMPANY I 17 2020 CONSOLIDATED DIRECTORS’ REPORT Grifols acquires the assets of Alpha Therapeutic Corporation-Mitsubishi, including its plasma therapy manufacturing plant in Los Angeles, California. Acquisition of Hologic’s share of NAT donor screening unit. 2003 2019 2016 Latest findings released from the AMBAR clinical trial in the fight against Alzheimer’s FDA grants approval for immunoglobulin Barcelona plant (IVIG). 2006 Strategic alliance with Shanghai RAAS in China Grifols is listed on the Spanish stock exchange. 2002 2020 Grifols closes the acquisition of a fractionation plant in Canada and 11 plasma centers in the U.S. from Green Cross. Grifols acquires Talecris Biotherapeutics to become the third-largest global manufacturer of plasma-derived protein therapies. Grifols acquires the U.S.-based company SeraCare, currently Biomat USA, along with its 43 donor centers. 2011 Acquisition of the remaining capital of Alkahest to enhance discovery, research and development to identify innovative therapies based on the understanding of the human plasma proteome. Grifols is listed on the NASDAQ stock exchange. 2014 Strategic agreement to develop the plasma derivatives market with the opening of 20 plasma centers and the construction of production facilities in Egypt. Acquisition of the transfusional diagnostic assets from Novartis.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_17.jpg ABOUT GRIFOLS I OUR SUSTAINABLE BUSINESS MODEL I 18 2020 CONSOLIDATED DIRECTORS’ REPORT z GRIFOLS BUILDS ON SOLID VALUES z RECOGNIZED AS ONE OF THE MOST SUSTAINABLE COMPANIES IN THE WORLD Grifols’ corporate values underline the importance of teamwork, responsibility, innovation, sustainability, strategic vision and long-term value creation. Grifols’ history reflects these values, the commitments they represent and a pioneering spirit to lead in scientific progress. In 2020, Grifols was included for the first time ever in the Dow Jones Sustainability Index (DJSI) and the DJSI Europe. These core values form the basis of Grifols’ sustainable growth model and overarching mission to improve the well-being of people worldwide. The company aspires to create value for its diverse stakeholders by generating stable employment, driving leading-edge research, promoting economic development, and building trust among its shareholders and investors. Our Sustainability Policy outlines the firm’s fundamental principles and commitments regarding its social and environmental responsibility and offers a framework to solidly integrate them throughout the business model. Grifols was listed on the Euronext Vigeo Europe 120 and Euronext Vigeo Eurozone 120 indices for the first time in 2020 following an assessment by Vigeo Eiris. Grifols has been listed on FTSE4Good Global, FTSE4Good Europe and FTSE4Good Ibex since 2018. For the first time, Grifols is included in the 2021 Bloomberg Gender-Equality Index (GEI), demonstrating Grifols’ commitment to addressing gender inequality. 2021 Grifols improved its score to “A-“ on the Carbon Disclosure Project (CDP), in recognition of its leadership in reducing emissions and for its solid climate-change strategy. GRIFOLS IS GUIDED BY THE PRINCIPLES OF BIOETHICS In reflection of its ongoing quest to advancing scientific and social progress, Grifols believes science must be firmly committed to life, in all its facets, shapes and dimensions. By definition, scientific progress aims to improve the quality of life of human beings and humanity as a whole. Part of Grifols’ DNA since its origins has been the fundamental tenets of bioethics, which guide the development, production and marketing of all Grifols’ products to ensure the safety and dignity of patients and donors, while serving as a beacon to effectively address the ethical issues raised by healthcare advancements. Inspired by this philosophy, the Víctor Grífols i Lucas Foundation was created in 1998 to encourage cross-disciplinary debate and dialogue on bioethics among healthcare companies, organizations and professionals. The Foundation serves as a vibrant platform for new ideas, insights and perspectives on the ethics of life. OUR SUSTAINABLE BUSINESS MODEL

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_18.jpg ABOUT GRIFOLS I OUR SUSTAINABLE BUSINESS MODEL I 19 2020 CONSOLIDATED DIRECTORS’ REPORT VERTICAL INTEGRATION GUIDED BY ITS CORE VALUES, GRIFOLS SERVES SOCIETY SUSTAINABLY AND ETHICALLY A VERTICALLY INTEGRATED BUSINESS MODEL PROMOTES GLOBAL EXPANSION AND COMPLEMENTARY PRODUCTS AND SERVICES SDG GLOBAL EXPANSION GRIFOLS’ BUSINESS MODEL IS ALIGNED WITH THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS AND FOCUSED TOWARD VALUE CREATION VALUE CREATION RECONOCIDO INTERNACIONALMENTE P N

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_19.jpg ABOUT GRIFOLS I OUR SUSTAINABLE BUSINESS MODEL I 20 2020 CONSOLIDATED DIRECTORS’ REPORT z GRIFOLS’ BUSINESS MODEL SUPPORTS SUSTAINABLE DEVELOPMENT GOALS WE ACTIVELY PROMOTE EFFORTS TO ACHIEVE SDGs Grifols first identified and prioritized SDGs to evaluate its potential contributions, enabling it to pinpoint where it could create the most value and offer solutions based on its operations, industry and geographical scope. Adopted by the United Nations in 2015, the 2030 Agenda for Sustainable Development offers a shared global vision to promote peace and prosperity for people and the planet. The Agenda advocates 17 Sustainable Development Goals, which together promote a holistic approach to address and manage critical global challenges, including the eradication of hunger and poverty, access to high-quality education, gender equality, decent work opportunities and the fight against climate change. The SDGs have been broken down into 169 concrete and measurable targets to enable their implementation. Grifols carried out a materiality analysis to rank the objectives, identifying five SDGs where it could have the greatest impact, and four additional SDGs where it could make significant contributions. Grifols also supports SDG17 – Partnerships for the Goals – by collaborating with different interest groups (social and educational institutions, governments, organizations, entities and other companies) to jointly spearhead initiatives in the education, innovation and healthcare domains, among others. Grifols recognizes the vital role companies play on the path toward sustainable development. For this reason, it partners with and supports the actions of numerous agents engaged in this global pursuit, reflecting its commitment to making a positive impact on society. The numerous actions by which Grifols supports these concrete SDGs are highlighted throughout this report.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_20.jpg ABOUT GRIFOLS I OUR SUSTAINABLE BUSINESS MODEL I 21 2020 CONSOLIDATED DIRECTORS’ REPORT Sustainable activity. With SDG 3 and SDG 10 as the main focuses of attention, the Foundation’s objective is to improve the health of the most vulnerable Goals Year program started 2012 2018 2010 2010 2020 Countries where the programs are Spain/ impact on objectives 1, 2, 4, 6, 7, 8, 9 and 17. Spain Spain 11 countries 41 countries Throughout 2020, Probitas promoted health and nutrition programs from a variety of sources, including through to provide adequate and predictable means for 4 4 4 4 4 It has also collaborated with research centers, hospitals, foundations and other partners in the field of mental health, providing services countries, to implement programmes and policies agreed targets on stunting and wasting in children providing funding, the foundation has also coordinated, directed and trained various local collaborators so that they can be self-sufficient 4 needs of adolescent girls, pregnant and lactating 4 4 efficiency and advanced and cleaner fossil-fuel PROBITAS FOUNDATION’S CONTRIBUTION TO THE SUSTAINABLE DEVELOPMENT GOALS The Probitas Foundation is aligned with the general guidelines set by the World Health Organization (WHO) and contributes to the achievement of the Sustainable Development Goals (SDG) with its Development populations around the world, although its actions also have an implemented Senegal 1.a Ensure significant mobilization of resources to improve the well-being of vulnerable children and young people.enhanced development cooperation, in order developing countries, in particular least developed not included in the public health system. In 2020, the foundation alsoto end poverty in all its dimensions endorsed international sustainable health projects and programs that 2.2 By 2030, end all forms of malnutrition, target the most vulnerable populations. Furthermore, rather than just including achieving, by 2025, the internationally under 5 years of age, and address the nutritional in the near future. women and older persons 6.b Support and strengthen the participation of local communities in improving water and44 sanitation management 7.a By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy technology, and promote investment in energy infrastructure and clean energy technology To learn more about Probitas and its core programs, please visit http://www.fundacionprobitas.org

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_21.jpg ABOUT GRIFOLS I OUR SUSTAINABLE BUSINESS MODEL I 22 2020 CONSOLIDATED DIRECTORS’ REPORT GRIFOLS’ PRIORITIZATION OF SDGs Sustainable Development Goals Outstanding contributions in 2020 - Grifols leads more than 25 international initiatives dedicated to research potential COVID-19 diagnosis and treatment with plasma-derived medicines - Production of plasma-derived medicines to treat patients with diseases such as primary immunodeficiencies (PID), coagulation disorders and alpha-1 antitrypsin deficiency (AATD). FDA approves Prolastin®-C Liquid in 0,5g and 4g vial format for the treatment of AATD - Progression in the clinical trials for the use of albumin to treat cirrhosis (ph. III PRECIOSA) and acute-on-chronic liver failure (ph. III APACHE) - Market launch of new product formulations and indications that address patients and healthcare professionals’ needs (Xembify®, HyperRAB® or Veraseal®) and TAVLESSE® in certain European countries - AMBAR’s efficacy in slowing down the progression of Alzheimer’s disease in patients with mild-to-moderate AD is confirmed and publication of the clinical trial results in the scientific journal Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association - New diagnostic test to increase the safety of blood transfusions. Procleix Panther System with Automation Ready Technology (ART) receives FDA approval to be used in conjunction with tests approved for screening Zika virus, HIV and hepatitis viruses - Grifols and Shanghai RAAS close a strategic agreement which will help to increase transfusion safety standards of donation centers in China - Development of new molecular diagnostic tests and immunoassays for in vitro diagnostics, prognosis, response prediction and monitorization of biologic drugs for respiratory diseases, oncology, autoimmunity, cardiovascular medicine, and neurodegeneration - Alkahest acquisition to enhance research projects focused on treating age-related diseases and to bolster the development of innovative therapies based on the knowledge of the human plasma proteome - Economic impact of EUR 7,500 million and creation of 140,000 jobs in the U.S., Spain, Germany and Ireland - In response to COVID-19, commitment to employment stability, prioritization of employees’ health, safety and well-being, and implementation of prevention measures (teleworking, flexibility agreements, contingency and de-escalation plans, COVID tests for Spanish employees, free external psychological care services, etc.) - Commitment to stable and quality employment: 98% of permanent contracts and 93% full-time - Reinforcement of a diverse and discrimination-free talent pool to drive value creation: more than 88 nationalities, 52% of staff are 30-50 years old and 599 employees with some type of disability - Implementation of a strategic plan in 2021 to further promote diversity and inclusion - New “People Experience Hub” area established by HHRR to boost employee commitment and motivation and extending work-life balance measures to different countries - Commitment to the well-being of all employees reflected on the increase in training hours on safety, health, and environmental issues (>116,000 hours) and on the launch of health and wellness initiatives - Launch of two global surveys: one specific to COVID-19 sent to 7,858 employees and another general survey, sent to 22,217 employees - More than EUR 16.8 million in R+D+i resources and more than 30 people dedicated to the R&D of COVID-19 treatments and screening tests - R+D+i investment totaling EUR 298 million, representing 5.6% of revenues and denoting an innovation intensity 4 times greater than the European average - Employees dedicated to R+D+i increase to more than 1,100 people - More than USD 10 million allocated over the last 5 years to pre-clinical and clinical research projects through the ISR program - More than EUR 14 million allocated over the last 5 years to drive research projects on liver disease under the umbrella of the Grifols Chair - Promotion of scientific dissemination by allocating EUR 4 million to scientific awards, investigation, and education in 2020 - More than EUR 308 million to improve production facilities - Completion of the projects related to the Beyond Trust software, which allows secure remote access to immunohematology instruments, and the BT Manager software, which allows the remote management of tests and results - Strategic agreement with National Service Projects Organization (NSPO) for the construction and operation of 20 plasma collection centers and other production facilities. - Strategic acquisition of production facilities in Canada to produce immunoglobulin and albumin to supply the Canadian market starting from 2023 - EUR 23.2 million allocated to environmental initiatives (+6.9% compared to 2019) - Boosting circular economy in all phases of the life cycle - 3% reduction in energy intensity compared to 2019 thanks to the implementation of energy efficiency measures - 4% reduction in water consumption compared to 2019 and roll-out of savings measures in 75% of production centers - Maintenance of the Gold Certification in the “Zero Waste to Landfill” program (first pharmaceutical company in the U.S. to receive it in 2019) - Prioritization of waste revalorization, preventing 98% of waste generated in U.S. (Clayton, NC) facilities from reaching landfills - Waste recovery: 74% in production facilities and 6% in other facilities including donation centers - Goal of increasing recycling volumes by 500 tons more per year; achieved 100% by 2020. - 2030 commitment to enhance energy efficiency by 15% per production unit through the systematic application of eco-efficiency measures - Measurement and disclosure of carbon footprint in scopes 1, 2 and 3 in accordance with the GHG Protocol - Application of TCFD recommendations to identify and disclose risks and opportunities stemming from climate change - Significant progress towards achieving the 2030 target of reducing greenhouse gas emissions per unit of production by 40%: reduction of 8.1% CO emissions per unit of sale (scopes 1 and 2) in 2020 2 - Progress on energy decarbonization to achieve the goal of consuming 70% of energy from renewable sources by 2030: construction of a photovoltaic plant (nominal power output 100kW) in Murcia (Spain) and purchase renewable energy. - Total emissions reduced by 12.9% in 2020 due to the increase of teleworking and the reduction of business trips arising from the COVID-19 pandemic - 15.8% savings in primary energy and reduction of 3,840 tons of CO emissions from the Bioscience Division’s cogeneration plant. 2 - Distinction of level “Two Green Globes” of the Green Globe Certification in the new Clayton fractionation plant. - Objective to reduce CO e by 1,860 tons per year through eco-efficiency projects in new facilities 2 - Diagnostic Division has launched the “Secure Remote Support” project (full deployment planned by 2021) which enables to remotely solve customer claims and thus lower emissions from the use of different means of transport PRIORITY GOALS

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_22.jpg ABOUT GRIFOLS I OUR SUSTAINABLE BUSINESS MODEL I 23 2020 CONSOLIDATED DIRECTORS’ REPORT Sustainable Development Goals Outstanding contributions in 2020 - More than 2 million training hours in 2020, an average of 99 hours per employee. - Major commitment to online training during COVID-19: 6,400 hours of telematic training through the Grifols Academy (Professional Development), adapting on-site courses to a virtual format; virtual sessions delivered by experts to help deal with the situation; creation of an internal global portal with a wide range of resources available, etc. - More than 1.7 million training hours for employees to bolster their career paths - More than 13,400 collaborators and professionals received training and professional development through Grifols Academy programs and initiatives - Reinforcement of strategic alliances to promote education, including the executive leadership program for senior managers in collaboration with ESADE Business School (Barcelona) and the University of Georgetown’s McDonough School of Business (Washington, D.C.) - Since 2013, 86 Grifols employees have graduated and 59 are in the process of earning a degree thanks to the collaboration with Southern New Hampshire University’s College for America program - More than 30% of the Board of Directors are women, following CNMV recommendations for 2020. Grifols is working to increase this percentage. - Progress on female representation in professional categories with executive duties: 36% of women in Director roles and 26% of women in Executive roles - 98% of female employees have permanent contracts and 92% work full-time - Design of plans to increase employment of women and members of minority groups, with 83 action measures in place in 2020 (106 in 2019). - Adjusted salary gap stands at 2.2% in the U.S.,3.1% in Spain and 1.3% in Germany. Significant progress has been made in the salary gap study and in the identification of possible causes for wage inequality; development of action measures that will be included in the Global Diversity Plan 2021 – 2023 - Within the COVID-19 framework: organization of food and personal protection equipment campaigns; technical and logistical support to hospitals; 1,000 economically vulnerable families receive an assortment of food and other products thanks to the “Donate your Christmas basket to Twin Families” campaign - Community investments of more than EUR 41 million - Donation of more than 43 million IU of clotting factors and a commitment to donate more than 200 million from 2014 to 2021 - More than 2,000 social initiatives in communities where Grifols’ plasma centers are located - Average of 1,900 employees in Grifols plasma donation centers took part in non-profit fundraising and volunteering activities, dedicating more than 10,000 hours - EUR 6.3 million donation to the Probitas Foundation to promote the healthy development of children and young people at risk of social exclusion, as well as their physical, psychological and emotional well-being, offering one meal a day. Support for various sustainable health projects aimed at the most vulnerable populations and countries. - No known cases of corruption - Increase in communication and development activities related to anticorruption, reaching 92% of at risk employees - Review of 3,044 interactions between employees and public servants or other professionals, focusing on higher risk operations - Reinforcement of transparency: disclosure of transfers of value in Europe and the U.S. (in accordance with the EFPIA Disclosure Code and U.S. Open Payments Program) and contributions made in the U.S. according to the Lobbying Disclosure Act - Member of the European Union’s Lobby Transparency Register - More than 30 public, public-private, academic, and civil society partnerships to promote and enhance access to health, and to research and develop new medicines that contribute to extend and enhance patients’ quality of life - Important alliance with the Egyptian government to boost self-sufficiency of plasma-derived medicines in the Middle East and Africa - Contribution to the use of surplus plasma from blood donations in various countries. Estimated savings of EUR 67 million for the Spanish public healthcare system arising from the industrial hospital-plasma fractionation service - Generation of alliances and synergies, notably in the health sector, through memberships in more than 20 companies and other associations - More than 15 private and public partnerships with the objective of minimizing the negative impact of Grifols’ activities in the environment - More than 10 partnerships to promote access and quality of education in general, and more specifically in the biopharmaceutical sector - Promoting multisectoral alliances to improve the living conditions of groups at risk of exclusion by reducing inequalities. Promoting their social and economic inclusion by driving diversity and inclusion into the corporate culture CROSS-CUTTING GOALS RELEVANT GOALS

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_23.jpg ABOUT GRIFOLS I OUR SUSTAINABLE BUSINESS MODEL I 24 2020 CONSOLIDATED DIRECTORS’ REPORT z A BUSINESS MODEL FOCUSED ON SUSTAINABLE VALUE CREATION Grifols’ value creation is driven by its four main divisions and ongoing pursuit to offer cross-cutting services that enhance organizational dynamics and generate new opportunities. BIOSCIENCE DIAGNOSTIC HOSPITAL BIO SUPPLIES Leaders in the production of plasma-derived medicines Leaders in cutting-edge diagnostic solutions to analyze blood and plasma, including the development and production of reagents and medical devices Pharmaceutical specialty products for hospital use and innovative technology, software and service solutions to optimize hospital pharmacy operations. Biological products for non-therapeutic use 79% OF REVENUES 15% OF REVENUES 2% OF REVENUES 4% OF REVENUES GRIFOLS ENGINEERING Since its origins, Grifols has focused its efforts on in-house engineering as a lever to innovate and continuously improve its industrial productivity. Grifols Engineering is dedicated to designing and constructing specialty machinery, as well as providing specialized engineering solutions to optimize biotech processes and manufacturing systems. GRIFOLS TRAVEL AGENCY As an international company with a strong U.S. presence and subsidiaries in 30 countries, Grifols decided to establish its own travel agency – Grifols Viajes – in order to better manage the global mobility of its workforce. Grifols Viajes offers employees the flexibility they need to plan their trips and optimize work-life balance.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_24.jpg ABOUT GRIFOLS I OUR SUSTAINABLE BUSINESS MODEL I 25 2020 CONSOLIDATED DIRECTORS’ REPORT GRIFOLS’ VERTICALLY INTEGRATED BUSINESS MODEL GUARANTEES MAXIMUM QUALITY AND CONTROL IN ALL OF ITS DIVISIONS INNOVATION DONORS AND PATIENTS ARE AT THE CORE OF GRIFOLS’ VALUE CHAIN WE TRANSFORM DONORS’ GENEROSITY INTO LIFE-SAVING TREATMENTS FOR PATIENTS AROUND THE WORLD INNOVATION

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_25.jpg ABOUT GRIFOLS I GRIFOLS CREATES VALUE BEYOND ITS FINANCIAL PERFORMANCE I 26 2020 CONSOLIDATED DIRECTORS’ REPORT GRIFOLS’ SOCIOECONOMIC IMPACT IN 2020 TOTAL ECONOMIC IMPACT TOTAL JOB CREATION 7,500 M€ 140,000 GRIFOLS’ DIRECT 40% OF GRIFOLS’ IMPACT GRIFOLS GENERATES 60% OF JOBS ARE LINKED ECONOMIC IMPACT STEMS FROM ITS PLASMA 140,000 JOBS IN TOTAL, TO GRIFOLS’ PLASMA AMOUNTS TO EUR 4,000 CENTERS NETWORK INCLUDING 115,000CENTERS NETWORK MILLION. ADDITIONALLY,INDIRECT AND INDUCED GRIFOLS GENERATES AN JOBS INDIRECT AND INDUCED IMPACT OF EUR 3,500GRIFOLS GENERATES MILLION 5.2 JOBS FOR EVERY 1 JOB IT CREATES GRIFOLS CREATES VALUE BEYOND ITS FINANCIAL PERFORMANCE

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_26.jpg ABOUT GRIFOLS I GRIFOLS CREATES VALUE BEYOND ITS FINANCIAL PERFORMANCE I 27 2020 CONSOLIDATED DIRECTORS’ REPORT GRIFOLS GENERATES 2.9 JOBS IN MULTIPLER IMPACT GRIFOLS GENERATES 2.9 JOBS MULTIPLER IMPACT More information on Grifols’ sustainability markers, see Corporate Stewardship Reports | Grifols SOCIOECONOMIC IMPACT IN IRELAND ECONOMIC IMPACT JOB CREATION 210 M€ 930 x2.0 x3.9 IN THE IRISH ECONOMY FOR EVERY 1 JOB IT CREATES SOCIOECONOMIC IMPACT IN GERMANY ECONOMIC IMPACT JOB CREATION 330 M€ 3,500 72% FROM PLASMA CENTERS x1.9x2.3 MULTIPLER IMPACT GRIFOLS GENERATES 1.3 JOBS IN THE GERMAN ECONOMY FOR EVERY 1 JOB IT CREATES SOCIOECONOMIC IMPACT IN SPAIN ECONOMIC IMPACT JOB CREATION 1,500 M€ 16,000 x2.1x3.9 THE SPANISH ECONOMY FOR EVERY 1 JOB IT CREATES SOCIOECONOMIC IMPACT IN THE UNITED STATES ECONOMIC IMPACT JOB CREATION 6,100 M$ 120,000 49% FROM PLASMA CENTERS x1.9x7.1 MULTIPLER IMPACT GRIFOLS GENERATES 6.1 JOBS IN THE U.S. ECONOMY FOR EVERY 1 JOB IT CREATES

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_27.jpg ABOUT GRIFOLS I GRIFOLS CREATES VALUE BEYOND ITS FINANCIAL PERFORMANCE I 28 2020 CONSOLIDATED DIRECTORS’ REPORT z SOCIAL RETURN ON INVESTMENT (SROI) In 2020, Grifols concluded its first SROI analysis to measure and quantify its contribution towards enhancing social welfare. This method provides Grifols’ leadership team and investors with a framework for evaluation and decision making. Measuring its social value allows Grifols to boost its awareness of how its operations impact key stakeholders, as well as gain insight to better serve their needs. The SROI focused on measuring the social value generated in 2019 by its 252 U.S. plasma centers by analyzing and quantifying their impact on donors, patients and the local communities where they are based. To this end, Grifols used the Social Return on Investment (SROI) methodology, a process which entails understanding, measuring and communicating the social, environmental and economic values created by a company. More information on the main sustainability markers, see Corporate Stewardship Reports | Grifols GRIFOLS MEASURED THE SOCIAL VALUE GENERATED BY ITS U.S. PLASMA CENTERS ACROSS ITS DONORS, PATIENTS AND LOCAL COMMUNITIES

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_28.jpg ABOUT GRIFOLS I GRIFOLS CREATES VALUE BEYOND ITS FINANCIAL PERFORMANCE I 29 2020 CONSOLIDATED DIRECTORS’ REPORT IMPROVEMENT DONOR PSYCHOLOGICAL AWARENESS LIFE EXPENSES STABILITY LIVES SOCIAL VALUE CREATED BY GRIFOLS TOTAL IMPACT 6.2B€ TOTAL SROI 2.1x DONORS LOCAL COMMUNITIES PATIENTS 1,828 M€ 722 M€ 3,636 M€ ECONOMIC PHYSICAL AND EDUCATIONAL FINANCIAL HEALTHIERHEALTHCAREIMPACT IN IN QUALITY OF WELLBEINGCOMMUNITIES

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_29.jpg ABOUT GRIFOLS I GRIFOLS AROUND THE WORLD  I 30 2020 CONSOLIDATED DIRECTORS’ REPORT U.S. PLASMA CENTERS 264 Montreal San Carlos Emeryville Los Angeles San Diego Denver Raleigh-Durham Clayton Memphis Brazil Melbourne l GRIFOLS AFFILIATES l PRESENCE THROUGH DISTRIBUTORS Corporate Headquarters 1 Industrial Facilities 16 R&D Centers Bioscience Division Centers 6 Diagnostic Division Centers 8 Hospital Division Centers 3 Bio Supplies Division Centers 2 10 GRIFOLS AROUND THE WORLD

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_30.jpg ABOUT GRIFOLS I GRIFOLS AROUND THE WORLD  I 31 2020 CONSOLIDATED DIRECTORS’ REPORT REVENUES U.S. AND CANADA EU ROW 3,600 M€ 67% of total 834 M€ 16% of total 906 M€ 17% of total CHINA PLASMA CENTERS THROUGH SHANGHAI RAAS 22 EUROPEAN PLASMA CENTERS 48 Leipzig San Sebastián Zaragoza Murcia Barcelona Bilbao Dublín Düdingen

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_31.jpg ABOUT GRIFOLS I FUTURE STRATEGY  I 32 2020 CONSOLIDATED DIRECTORS’ REPORT Grifols’ core strategic pillar is the pursuit of sustainable growth to promote long-term corporate success. Guided by solid corporate governance, the company aspires to turn risks into opportunities while addressing critical social and environmental challenges, especially climate change, through an organization-wide approach. Grifols has pursued a long-term sustainable growth strategy since its creation more than 110 years ago. Thanks to this vision, Grifols today stands at the forefront of innovation and global efforts to enhance the ethical, technical and safety standards of plasma-derived medicines, blood transfusions and healthcare solutions. IN NEW MARKETABLE proteins; develop biomarkers for diagnostics, recombinant proteins and antibodies, and small-Aware of the need for multifaceted, transversal solutions to addressing these complex issues, Grifols has established several efforts throughout the organization to promote a long-term sustainable future aligned with its founding values. GRIFOLS STRENGTHENS ITS EFFORTS IN INNOVATION In 2020, Grifols signed an agreement to acquire the remaining equity in Alkahest, which the company has been investing in since 2015, for USD 146 million, bringing its ownership to 100%. ALKAHEST HAS Headquartered in Silicon Valley, this biotechnology company was founded with the aim of exploring IDENTIFIED MORE THAN the therapeutic use of plasma proteins in combating age-related diseases. In addition to the 8,000 PROTEINS FROM clinical development of specific plasma fractions and protein inhibitors, Alkahest is also focused on developing a complete understanding of the human plasma proteome. THE HUMAN PLASMA PROTEOME, SOME OF Alkahest has generated a unique proteomic platform of targets to: unlock new therapies and WHICH COULD RESULT diagnostics; develop new plasma proteins and new indications for currently licensed plasma molecule drugs. MEDICINES Understanding the plasma proteome is the key to Alkahest’s comprehensive discovery and development platform delivering transformational therapeutics. The firm will focus its efforts on proteins with a biological impact that change with age. To date, more than 8,000 proteins have been identified by Alkahest and, using advanced molecular analysis techniques at the cellular level, are expected to enter Grifols’ discovery and development pipeline and bring new therapeutic medicines to the market. More information on Alkahest is available in Chapters 2. Sustainable Growth and 5. Innovation FUTURE STRATEGY

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_32.jpg ABOUT GRIFOLS I FUTURE STRATEGY  I 33 2020 CONSOLIDATED DIRECTORS’ REPORT BUSINESS OPTIMIZATION CUSTOMER CENTRICITY INNOVATION Enhance organization-wide focus on meeting and exceeding customer needs to build sustainable competitive advantage Identify opportunities to improve productivity and optimize value Enhance portfolio of differential products through in-house and investee projects TALENT PROMOTION TRANSFORMATION EXPANSION Strengthen HR policy focused on recruiting and retaining the best talent Build digital capabilities to deliver better outcomes Accelerate global expansion through a strategic focus on high-growth markets like China Corporate governance, social, environmental and climate change “ONE GRIFOLS” SUSTAINABLE GROWTH

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_33.jpg Since 1909, Grifols has created value and employment by investing in innovation and production installations with a long-term vision. A robust business strategy and responsible approach has bolstered the company’s resilience and capacity to respond to exceptional challenges like COVID-19. Grifols’ solid financial management also reinforced its economic performance, generating growth, profitability and trust with its main stakeholders. TAINABLE GROWTH REVENUES 5,340 M€ INVESTMENT EFFORTS +600 M€ in R+D+i and CAPEX

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_34.jpg SUSTAINABLE GROWTH

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_35.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 36 2020 CONSOLIDATED DIRECTORS’ REPORT Grifols’ business strategy aims to achieve solid financial results around four main objectives: plasma supply, industrial excellence, global expansion and innovation. In the second half of 2020, the Diagnostic Division significantly increased its revenues thanks to strong sales, especially in Spain, of its TMA (Transcription Mediated Amplification) test, used to detect the SARS CoV-2 virus. The division reported EUR 776 million in sales, a 5.8% (-7.3% cc) increase over the previous year. with an estimated positive impact of EUR 112 million in the 2020 profit and loss account. The company is working to make a significant part of it permanent. The plan has no impact on the company’s labor force or innovation investments. Grifols continued with its expansion plans for its plasma donation centers. This included the acquisition of plasma centers in the United States and Europe and three production plants in Canada. The construction of 20 plasma centers and production facilities in Egypt is also underway following the alliance signed with the Egyptian government, which will contribute to strengthening the company’s presence in the Middle East and Africa. In 2020, Grifols has continued to demonstrate its resilience and commitment to sustainable growth during 2020. The company closed the financial year with revenues of EUR 5,340 million, representing an increase of 4.7% (+6.1% cc 1), driven by the Bioscience and Diagnostic Divisions. Excluding plasma sales to third parties, revenues increased by 6.5% (+7.9% cc). The contribution of new products accounted for more than 50% of the revenue growth. With regards to COVID-19 impacts, Grifols estimates a net impact on EBITDA of EUR 155 million. This figure includes the negative impact on inventory value and the limited sales growth of the Bioscience Division, and the positive impact of the operating expense containment plan and the contribution of the molecular test for the detection of the SARS-CoV-2 virus. All in all, the reported EBITDA reached EUR 1,324 million, representing a margin of 24.8% on revenues (28.1% in 2019). Excluding the EUR 155 million COVID-19 net impact, EBITDA amounted to EUR 1,479 million, a 27.4% margin on revenues. Hospital Division revenues were impacted by COVID-19, which caused a slowdown in certain investments and treatments in hospitals. Revenues totaled EUR 119 million, representing a 11.7% decrease (-10.3% cc). The Bio Supplies Commercial Division, which includes sales of biological products for non-therapeutic use, grew by 65.6% cc during 2020, demonstrating Grifols’ commitment to this niche market. The Bio Supplies Division achieved EUR 224 million in revenues, a 15.9% (-15.3%) decrease from 2019, primarily due to the roll-off of specific third-party plasma sales contracts. In 2020, the company was able to limit its net plasma supply decline by 15% despite COVID-19-related constraints, including social distancing, mobility restrictions and lockdowns. Plasma collections are expected to return to normal as long as transmissions ease and vaccination plans are deployed. The Bioscience Division marks a milestone, delivering 10 years of quarterly sales growth, and continues to be Grifols’ main growth engine. Its revenues have increased by 6.2% (+7.6% cc) to EUR 4,243 million due to the dynamism of immunoglobulins in countries such as the United States and Canada; as well as the growth of albumin, particularly in the United States and China; and the strong contribution of new products such as Xembify®, VISTASEALTM and TAVLESSE®. In parallel, Grifols’ efforts to increase its plasma supply are reflected on its expansion program, which includes both organic and inorganic growth. As part of its organic efforts, the company plans to open between 15 and 20 new plasma centers in 2021. In 2020, Grifols continued to promote innovation and CAPEX investments as leverage for its sustainable and long-term growth. Net total investments in R+D+I amounted to EUR 298 million, including internal, external and investee projects. Grifols also advanced on its expected capital investments plan. A total of EUR 308 million was allocated to accelerate the expansion of the Bioscience Division’s production capacity and to the growth of the other divisions. As of December 31, 2020, the gross margin was 42.2% (45.9% in 2019). This figure includes the total estimated impact of EUR 205 million to adjust Grifols’ inventory value (non-cash) mainly due to COVID-19 impacts. In addition, in line with its prudence and commitment to sustainable growth, Grifols has implemented an operating expense containment plan Net profit amounted to EUR 619 million, in line with the previous year. Adjusted net profit2 amounted to EUR 736 million, increasing a +6.6% compared to 2019. (1) Operating and constant currency (cc) excludes exchange rate fluctuations over the period. (2) Excludes non-recurring impacts, including the impacts of COVID-19; amortization of deferred financing costs related to refinancing, amortization of intangibles associated with acquisitions; and IFRS 16 COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_36.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 37 2020 CONSOLIDATED DIRECTORS’ REPORT OPERATING SALES GROWTH IN ALL GEOGRAPHICAL AREAS In millions of euros except % and EPS 2020 2019 % Var NET REVENUES 5,340.0 5,098.7 4.7% ROW 3.4% NORTH AMERICA +7.1% EU 4.5% EBITDA REPORTED 1,324.0 1,433.8 -7.7% % Net revenues 24.8% 28.1% GROUP PROFIT 618.5 625.1 -1.1% % Net revenues 11.6% 12.3% ADJUSTED(1) GROUP PROFIT 736.4 690.9 6.6% % Net revenues 13.8% 13.6% CAPEX 308.1 332.2 -7.3% R&D NET INVESTMENT 298.3 329.0 -9.3% INVESTMENT EFFORTS PERSIST EARNINGS PER SHARE (EPS) REPORTED 0.90 0.91 -1.1% MORE THAN December 2020 December 2019 % Var TOTAL ASSETS 15,274.8 15,542.6 -1.5% 600 M€ TOTAL EQUITY 6,720.1 6,845.8 -1.8% CASH & CASH EQUIVALENTS 579.6 742.0 -21.9% LEVERAGE RATIO 4.52 (4.63cc) (2) 4.17/(4.14cc) (2) FOR R+D+i AND CAPEX INVESTMENTS (1) Excludes non-recurring items, including COVID-19 impacts; amortization of deferred expenses associated to the refinancing, amortization of intangible assets related to acquisitions and IFRS 16. (2) Constant currency (cc) excludes exchange rate fluctuations over the period. SOLID FINANCIAL RESULTS DESPITE COVID-19 TOTAL REVENUES BIOSCIENCE DIVISION DIAGNOSTIC DIVISION 5,340 M€ +4.7% / +6.1% cc 4,243 M€ +6.2% / +7.6% cc 776 M€ +5.8% / +7.3% cc

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_37.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 38 2020 CONSOLIDATED DIRECTORS’ REPORT z THE BIOSCIENCE DIVISION LEADS GROWTH Revenues for the Bioscience Division totaled EUR 4,243 million. The division’s revenue growth was underpinned by a strong demand for key proteins, especially immunoglobulins and albumin, coupled with the solid progress of new product launches such as Xembify®, VISTASEALTM and TAVLESSE®. Albumin sales also remain on trend, driven by growth in the U.S., Canada and China. proteins (fibrinogen and thrombin). Launched in the last quarter of 2019, the product is sold and distributed by Ethicon under the trade name VISTASEALTM. The market launch of TAVLESSE® (fostamatinib) in certain European countries is also worth highlighting. Included within Grifols’ agreement with Rigel Pharmaceuticals, this product is used to treat chronic immune thrombocytopenia (ITP) in adult patients who are refractory to other treatments. PLASMA PROTEINS HAVE DEMONSTRATED THERAPEUTIC POTENTIAL AGAINST COVID-19 Despite the pandemic, alpha-1 antitrypsin revenues continued to grow in its main markets: the U.S. and Canada. The company has continued to make progress in offering new products and presentations and in 2020, the FDA approved Prolastin®-C Liquid in 0.5g and 4g vials. Grifols currently has three presentations that adapt treatments to patients’ needs. Demand for immunoglobulins remains very solid, supported by markets with the highest per capita consumption, including the U.S. and Canada; and and several countries in the European Union (EU) and Latin America. It reported double-digit growth. To adapt to patients’ needs, Grifols has a range of immunoglobulins for both intravenous and subcutaneous administration (Xembify®). REVENUES 4,243 M€ In terms of new product launches, of note are the sales of Grifols’ biological sealant, developed and manufactured by the company as a surgical bleeding-control solution using a combination of two plasma GRIFOLS’ FIRST PLASMA PROTEIN-BASED BIOSURGERY SOLUTION VISTASEALTM is a fibrin sealant developed by Grifols for bio surgical bleeding-control and is marketed and distributed by Ethicon as the result of a strategic collaboration. VISTASEALTM is the result of Grifols’ innovation aimed to expand the potential of plasma proteins into new fields. VISTASEALTM combines human fibrinogen and thrombin and is administered through an innovative Ethicon device. XEMBIFY®: GRIFOLS’ SUBCUTANEOUS IMMUNOGLOBULIN IN THE U.S. In 2020, Grifols launched its 20% concentration subcutaneous immunoglobulin (Xembify®), developed to respond to the needs of patients and healthcare professionals. In 2019, Xembify® obtained U.S. Food and Drug Administration (FDA) approval for the treatment of primary immunodeficiencies. Grifols is currently working with health authorities to obtain approval in Europe and other global markets. START OF TAVLESSE® COMMERCIALIZATION IN EUROPE TAVLESSE® (fostamatinib), used to treat chronic immune thrombocytopenia (ITP) in adult patients refractory to other treatments, is already available in selected countries in Europe. Grifols Bioscience Division’s first non-plasma oral therapy allows the company to expand and diversify its product portfolio to benefit patients and offer more therapeutic options through licensing agreements with third parties.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_38.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 39 2020 CONSOLIDATED DIRECTORS’ REPORT z THE DIAGNOSTIC DIVISION ACCELERATES ITS GROWTH The Diagnostic Division achieved notable results in the second half of the year, which contributed to a 5.8% (+7.3% cc) year-on-year increase in sales to EUR 776 million. Sales of Procleix® NAT Solutions, used to analyze blood donations, were also strong in Japan, Australia, the Philippines and Bulgaria, among other countries. These systems are able to screen for a diversity of pathogens, including the human immunodeficiency virus (HIV), hepatitis viruses (A, B, C and E), West Nile virus, Zika, dengue and the agents that cause babesiosis. THE MOLECULAR TEST FOR SARS-COV-2 DETECTION BOOSTS DIVISION’S GROWTH Especially noteworthy was the contribution of the Transcription Mediated Amplification (TMA) test, used to detect SARS CoV 2, developed by Grifols. This diagnostic test was the main driver of NAT system sales (Procleix® NAT Solutions), especially in Spain. TMA is a commonly used technique known for its high sensitivity and capacity to automate large sample volumes. The blood-typing line maintains its positive trend in the U.S. and Latin America, where sales have continued to grow in countries such as Argentina. Sales include both analyzers (Erytra®, Erytra Eflexis® y Wadiana®) and reagents (DG-Gel® cards, red blood cells and anti-serums). REVENUES 776 M€ INNOVATION EFFORTS ENABLED THE DEVELOPMENT AND PRODUCTION OF A NAT-TECHNOLOGY MOLECULAR DETECTION TEST FOR SARS-COV-2 IN RECORD TIME TRANSFUSION DIAGNOSTICS AT THE SERVICE OF EMERGING VIRUS DETECTION: SARS-COV-2 Grifols continues to lead in transfusion medicine. Its vast experience in molecular NAT-based diagnostic systems fueled the development of a SARS CoV-2 detection test in record time. Grifols’ systems leverage TMA, whose sensitivity and specificity is similar to that of other molecular tests such as PCRs.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_39.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 40 2020 CONSOLIDATED DIRECTORS’ REPORT z THE HOSPITAL DIVISION PREPARES TO GET BACK TO NORMAL The Hospital Division recorded EUR 119 million in revenues, a decrease of 11.7% (-10.3% cc) from the previous year. The division’s main business lines were impacted by the slowdown in certain investments and treatments in hospitals as a result of COVID-19. greater accuracy and safety in the preparation of intravenous (IV) medications. These advancements improve patient safety and reduce reliance on manual processes. THE PHARMATECH LINE STRENGHTENS AS HOSPITAL INVESTMENTS RECOVER Grifols’ Pharmatech business line offers comprehensive solutions to enhance hospital pharmacy operations, including the Inclusiv® product portfolio, comprised by equipment, software and solutions to improve the safety and quality of sterile compound preparations. The Division also consolidated sales of its MedKeeper® and Kiro Grifols® technological solutions. Grifols is a leading supplier of technology and services for hospitals, clinics and specialized centers. The launch of its leading-edge system for automated compounding of intravenous treatments (KIRO Fill®) and software enhancements to the workflow platform for intravenous preparations (PharmacyKeeper) optimize hospital-pharmacy operations by affording REVENUES 119 M€ COVID-19 IMPACTED SALES PERFORMANCE IN 2020 GRIFOLS STRENGHTENS THE PHARMATECH LINE Grifols maintains its international expansion of the Hospital Division by growing its U.S. presence. Although the pandemic hindered hospital investments, the division continued to reinforce its Pharmatech solutions, its main business line, by acquiring the remaining capital of MedKeeper. This company offers specialty equipment and technology solutions that automate and control key points in hospital processes, increasing the safety and patients and healthcare professionals.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_40.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 41 2020 CONSOLIDATED DIRECTORS’ REPORT z THE BIO SUPPLIES DIVISION GROWS SIGNIFICANTLY IN BIOLOGICAL MATERIAL SUPPLY In 2020, revenues of the Bio Supplies Division amounted to EUR 224 million, decreasing by 15.9% (-15.3% cc) in comparison to the previous year. This variation is due to the decline experienced in plasma sales to third parties, mainly due to the roll-off of supply contracts. As planned, this will enable Grifols to manage additional plasma volume to fuel growth of plasma-derived therapies. REMARKABLE INCREASE IN SALES OF BIOLOGICS FOR NON-THERAPEUTIC USE The Bio Supplies Division Commercial, which includes sales of biological products for non-therapeutic use, grew by 65.6% cc during 2020, demonstrating Grifols’ commitment to this niche market. REVENUES 224 M€ ADDITIONAL PLASMA FOR GRIFOLS FOLLOWING THE ROLL-OFF OF SUPPLY CONTRACTS SUPPLY OF BIOLOGICAL MATERIALS TO DRIVE RESEARCH The Bio Supplies Division provides biological materials for life sciences research, clinical trials and the manufacture of pharmaceutical and diagnostic products, such as reagents and controls.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_41.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 42 2020 CONSOLIDATED DIRECTORS’ REPORT NET REVENUE BY DIVISION In thousands of euros 12M 2020 % of Net Revenues 12M 2019 % of Net Revenues % Var % Var cc* Bioscience 4,242,502 79.5% 3,993,462 78.3% 6.2% 7.6% Diagnostic 775,889 14.5% 733,604 14.4% 5.8% 7.3% Hospital 118,675 2.2% 134,441 2.6% (11.7%) (10.3%) Bio Supplies 224,090 4.2% 266,540 5.2% (15.9%) (15.3%) Others 31,989 0.6% 22,820 0.5% 40.2% 40.4% Intersegments (53,107) (1.0%) (52,176) (1.0%) 1.8% (2.7%) TOTAL 5,340,038 100.0% 5,098,691 100.0% 4.7% 6.1% NET REVENUE BY REGION In thousands of euros 12M 2020 % of Net Revenues 12M 2019** % of Net Revenues % Var % Var cc* U.S. + CANADA 3,599,746 67.4% 3,390,811 66.5% 6.2% 7.1% EU 834,492 15.6% 799,460 15.7% 4.4% 4.5% ROW 905,800 17.0% 908,420 17.8% (0.3%) 3.4% TOTAL 5,340,038 100.0% 5,098,691 100.0% 4.7% 6.1% * Constant currency (cc) excludes exchange rate fluctuations over the period. ** For comparison purposes, 2019 UK figures have been reclassified from EU to ROW.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_42.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 43 2020 CONSOLIDATED DIRECTORS’ REPORT z SOLID BALANCE SHEET As of December 31, 2020, Grifols had a solid balance sheet totaling EUR 15,302 million (EUR 15,543 million in December 2019). With regard to the group’s Spanish subsidiaries, the average payment period to suppliers was 71.6 days, similar to last year’s 72.9 days. EQUITY OPERATING CASH FLOW GENERATION OF EUR 1,110 MILLION IN 2020 The company’s equity was EUR 6,720,055 million as of December 31, 2020. 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. Strategic investments in recent years to boost plasma procurement and the increased efforts to improve operations have been the most relevant factors in strengthening the group’s growth and increasing inventory levels. These investments, coupled with inventory management, enabled the Group to maintain a significant growth volume throughout the 2020 financial year. As of December 31, 2020, Grifols’ liquidity position stands at close to EUR 1,500 million, including EUR 580 million corresponding to the cash position (EUR 742 million in 2019) and nearly EUR 900 million of undrawn lines of credit. The Group continues to have high and sustainable levels of activity and operating cash generation in the scope of growth, the closing of corporate transactions and the continuity of capital expenditures and R&D. Grifols’ ordinary shares (Class A) are listed on the Spanish Stock Market and are part of the Ibex-35, while its non-voting shares (Class B) are traded on both the Spanish Stock Exchange (GRF.P) and the U.S. NASDAQ exchange (GRFS) via ADRs (American Depositary Receipts). GRIFOLS MAINTAINS ITS PAY-OUT AT 40% OF THE GROUP’S CONSOLIDATED NET PROFIT The optimization of working capital management has continued to act as a leverage for improving the Group’s financial strength. Operating cash flow generation reached EUR 1,110 million. The EUR 1,110 million reported in 2020 (EUR 569 million in 2019) enabled the company to allocate to its CAPEX investments EUR 308 million (EUR 332 million in 2019) and to net R+D+i investments EUR 298 million (EUR 329 million in 2019). The company remains firmly committed to sustainable growth and its long-term strategic vision. In the fourth quarter of 2020, the second dividend payment, totaling EUR 111 million related to the 2019 fiscal year, was distributed. Grifols remains committed to compensating its shareholders with dividends. OVER THE LAST FIVE YEARS, GRIFOLS HAS ALLOCATED MORE THAN EUR 1,200 MILLION TO DIVIDENDS IN LINE WITH ITS COMMITMENT TO GENERATING SHAREHOLDER VALUE Inventory levels decreased to EUR 2,002 million with a turnover of 237 days compared to 310 days at the end of December 2019, as a result of the COVID-19 impact on plasma volumes collected during the year. Average collection and payment periods remained stable at 27 days (26 days in 2019) and 62 days (60 days in 2019), respectively.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_43.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 44 2020 CONSOLIDATED DIRECTORS’ REPORT z LIQUIDITY AND CAPITAL RESOURCES Grifols meets its liquidity and capital requirements using resources generated from its operating activities and long-term external financing. As of December 31, 2020, Grifols’ cash position was EUR 580 million and its liquidity position was close to EUR 1,500 million. CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTMENT ACTIVITIES CASH FLOW FOR FINANCING ACTIVITIES In 2020, net cash flows from operating activities amounted to EUR 1,110 million. The main impact on working capital, which increased by EUR 159 million, was due to the decrease in stock levels by EUR 165 million as the result of the use of inventories built up strategically over the last few years, which were drawn down to respond to patients’ needs during the ongoing COVID-19 pandemic. Cash flow from investment activities totaled EUR 858 million. The most important variations were due to the following operations: • Acquisition of the remaining 49% equity interest in the MedKeeper technology company for USD 60 million. Cash flow for financing activities totaled EUR 354 million in 2020, primarily consisting of EUR 243 million debt payment and dividend payouts of EUR 103 million. • Closing the acquisition of a plasma fractionation plant, an immunoglobulin purification plant and an albumin purification plant in Montreal (Canada) for USD 370 million from the South Korean GC Pharma (Group), as well as, in a separate transaction, 11 plasma centers in the U.S. owned by Green Cross for USD 90 million. • Capital investments (CAPEX) totaling EUR 308 million mainly focused on new production facilities in the Bioscience Division. These include a new fractionation plant in Clayton; a new immunoglobulin purification plant in Clayton; a new albumin purification plant in Dublin, Ireland; openings of new plasma centers; the expansion, renovation and relocation of existing centers; IT investments; and digitization. • Initial payment of USD 20 million as part of the closing of the transaction to acquire the remaining shares of Alkahest, Inc. (approximately 55%) for a total amount of USD 146 million.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_44.jpg SUSTAINABLE GROWTH  I COMMITMENT TO SUSTAINABLE GROWTH AND INNOVATION I 45 2020 CONSOLIDATED DIRECTORS’ REPORT CAPITAL RESOURCES AND CREDIT RATINGS GRIFOLS DOES NOT FACE SIGNIFICANT MATURITY REPAYMENTS OR DOWN PAYMENTS UNTIL 2025 Excluding the impact of IFRS 162, as of December 31, 2020, Grifols’ net financial debt totaled EUR 5,714 million. The net debt leverage ratio is at 4.5x. Excluding COVID-19 impact, the ratio stands at 4.0x. Grifols’ liquidity position stands at close to EUR 1,500 million as of December 31, 2020, including EUR 580 million corresponding to the cash position and nearly EUR 900 million of undrawn lines of credit. After the refinancing process closed in November 2019, Grifols does not face significant maturity repayments or down payments until 2025. The company is equipped to respond to the demands of the current context and remains committed to its long-term growth strategy. Grifols will continue to monitor any potential impacts on operations and will take all necessary actions to mitigate any potential effect on its supply chain. During the second quarter of the year, Grifols took additional measures to strengthen its liquidity position, which included the upsizing of its multicurrency revolving credit facility from USD 500 million to USD 1,000 million, with maturity in November 2025. The expansion of this credit facility has not increased the company’s indebtedness and its terms and conditions are in line with the ones signed in November 2019. Optimizing and reducing debt levels continues to be a priority for Grifols’ financial management. In order to meet this objective, the company maintains sustainable levels of operating activity and strong net operating cash flow generation. The reported EUR 858 million enabled the company to undertake investment THE COMPANY HAS DEMONSTRATED ITS RESILIENCE AND CAPACITY TO RESPOND TO COVID-19 CHALLENGES activities in order to continue expected growth in demand. responding to the CREDIT AGENCIES MAINTAIN THEIR CREDIT RATINGS Moody’s Standard & Poor’s Corporate rating Ba3 BB Senior secured debt Ba2 BB+ Senior unsecured debt B2 B+ Outlook Negative Stable (2) As of December 31, 2020, the impact of the application of IFRS 16 on the amount of debt amounts to 733 million euros.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_45.jpg SUSTAINABLE GROWTH  I CAPEX AND INDUSTRIAL ACTIVITY  I 46 2020 CONSOLIDATED DIRECTORS’ REPORT In 2020, Grifols intensified its capital expenditures and allocated EUR 308 million to expand and enhance its divisions’ production facilities. This amount is included in the Capital Investment Plan for 2018-2022 and reaffirms Grifols’ commitment to growth and its long-term vision. BIOSCIENCE DIVISION BIOSCIENCE DIVISION: LARGER CAPACITY FOR PROTEIN FRACTIONATION AND PURIFICATION INVESTMENT TO INCREASE ACCESS TO PLASMA In May, the Group announced an investment of EUR 130 million in the first phase of the expansion of its Barcelona industrial complex. Grifols acquired a 47,274 m2 plot of land on which it plans to build, among others, a purification and fill-and-finish facility for a new Bioscience Division product, a new R+D+i center, as well as expanding the production and logistics capacity of the Diagnostic Division. Construction of a new plasma fractionation plant on the North Carolina (U.S.) complex continues as planned. With a fractionation capacity of 6 million liters per year, the construction of the fractionation plant has been completed, and it is expected to start production this year and to be fully operational by 2022. The facilities will include two parallel plasma fractionation and grouping lines to maximize flexibility and efficiency. Clayton emerging disease-specific facility to produce an anti-SARS-CoV-2 immunoglobulin. This isolated facility was initially designed and built for the Ebola outbreak. As of December 31, 2020, Grifols operated the largest plasma center network in the world, with 312 centers. Throughout the year, the Group worked to add more centers to the network, as well as to increase the plasma collection capacity of its existing centers by incorporating more donation equipment, where possible. The construction of a new albumin purification, dosing and sterile filling plant in Dublin (Ireland) continues according to plan. The plant will have an annual production capacity of 6 million equivalent liters of plasma and incorporate a state-of-the-art sterile bag filling technology, owned by Grifols. This will expand the bag production capacity that, as of the first quarter of 2021, has been initiated at the Los Angeles facility. In addition, an investment of more than USD 350 million is planned in the North Carolina (U.S.) complex for the construction of a new plasma fractionation plant, a plasma logistics warehouse and service infrastructures. At the same time, plans to expand the sample testing capacity of the Austin laboratory are being pursued. The company anticipates that the expansion of facilities in both the U.S. and Europe will enable the company to reach a testing capacity of 36 million samples by 2023. Plans to expand plasma storage and logistics capacity are also ongoing, expecting to reach 12 million liters by 2023. Construction of the world’s first purification, dosing and sterile filling plant of immunoglobulins in flexible bags also moves forward. The plant will have an annual production capacity of 6 million equivalent liters of plasma and is expected to be operational by 2023. Investment highlights in 2020 include the following: Expansion of the fibrinogen and topical thrombin sealant production plant is also underway at the Barcelona industrial complex. Upon completion of the new purification and dosing facilities, this extension will increase production capacity to 3.3 million equivalent liters of plasma. Also noteworthy is the swift construction and set-up of a facility for the inactivation of pathogens in convalescent plasma using methylene blue, which has enabled Grifols to quickly respond to COVID-19, demonstrating its commitment to health emergencies. In this respect, the Group has rapidly adapted its CAPEX AND INDUSTRIAL ACTIVITY

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_46.jpg SUSTAINABLE GROWTH  I CAPEX AND INDUSTRIAL ACTIVITY  I 47 2020 CONSOLIDATED DIRECTORS’ REPORT HOSPITAL DIVISION DIAGNOSTIC DIVISION In 2020, the company focused its efforts on expanding its production capacity for immunohematology products. For the first time it will produce them in the U.S., using the company’s existing facilities in San Francisco (U.S.) to manufacture DG-Gel cards, red blood cells and antisera. This Division’s capital investments are focused on increasing capacity and productivity of its intravenous solutions, manufactured in its industrial complexes in Barcelona and Murcia. These improvements will enable the Division to meet expected growth in this product segment, as outlined in its internationalization plan.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_47.jpg SUSTAINABLE GROWTH  I ACQUISITIONS AND CORPORATE TRANSACTIONS  I 48 2020 CONSOLIDATED DIRECTORS’ REPORT z CLOSING OF THE STRATEGIC ALLIANCE WITH SHANGHAI RAAS TO DRIVE GROWTH IN CHINA z GRIFOLS CLOSES THE ACQUISITION OF PRODUCTION FACILITIES IN CANADA AND 11 PLASMA CENTERS IN THE U.S. In March 2020, Grifols and Shanghai RAAS closed their strategic alliance in China, a transaction that will increase the production, sales and development of plasma-derived products and the latest transfusion diagnostic solutions in China, in adherence with international quality and safety standards. In October 2020, Grifols closed its transaction with the South Korean firm GC Pharma (Group) to acquire a plasma fractionation plant, an immunoglobulin plant and an albumin purification plant in Montreal (Canada) for USD 370 million, and, in a separate transaction, 11 plasma collection centers in the United States, property of Green Cross for USD 90 million. Following this transaction, Grifols is now the largest shareholder in Shanghai RAAS while maintaining operating, political and economic control over its subsidiary, Grifols Diagnostic Solutions (GDS). More specifically, Grifols controls over a 26.20% stake in Shanghai RAAS’s capital (economic and voting rights) in exchange for Shanghai RAAS having a non-majority share in Grifols Diagnostics Solutions (45% economic and 40% voting rights). This acquisition is aligned with Grifols’ international sustainable growth strategy aimed at increasing the company’s plasma collection and fractionation capacity to ensure safe access to life-sustaining plasma-derived medicines for patients around the world. This strategic acquisition will also strengthen Grifols’ presence in Canada, building on a legacy of partnership in Canada’s blood system. For Grifols, the agreement offers an opportunity to bolster its international expansion and build on its long-term, sustainable growth. At present, China is Grifols’ third-largest sales market. For more than three decades, Grifols has been a fractionator of Canadian plasma under contract manufacturing services, providing trusted plasma-derived medicines for Canadian patients and their healthcare providers based on firsthand knowledge of the country’s healthcare system. This transaction further highlights Grifols’ commitment to support countries to attain self-sufficiency of essential plasma-derived medicines. Once it obtains the necessary licenses and authorizations, Grifols will become the only large-scale commercial manufacturer of plasma products in Canada, with a fractionation capacity of 1.5 million liters annually. Grifols expects to launch operations in these facilities in 2023, manufacturing IVIG and albumin. ACQUISITIONS AND CORPORATE TRANSACTIONS

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_48.jpg ACQUISITIONS AND CORPORATE TRANSACTIONS SUSTAINABLE GROWTH  I ACQUISITIONS AND CORPORATE TRANSACTIONS  I 49 z STRATEGIC ALLIANCE BETWEEN GRIFOLS AND THE EGYPTIAN GOVERNMENT z GRIFOLS ACQUIRES THE REMAINING 49% STAKE OF MEDKEEPER z GRIFOLS ACQUIRES 10% STAKE IN BLOODBUY In November 2020, Grifols and the Government of Egypt, through the National Service Projects Organization (NSPO), signed a strategic agreement (Master Joint Venture Agreement) to further develop the Egyptian plasma-derivatives market and promote its self-sufficiency. The operation will ensure national security needs and help strengthen the healthcare system in Egypt. In November 2020, Grifols acquired the remaining 49% stake in MedKeeper for USD 60 million. In July 2020, Grifols acquired 10% of Bloodbuy (BloodSolutions, LLC), a cloud-based marketplace that facilitates the buying and selling of blood components in the U.S. Bloodbuy’s proprietary technology platform and computer-based algorithms enable regional blood-collection centers to expand their customer base across the U.S., while providing hospitals and other healthcare providers greater access to vital blood components in an efficient and efficacious manner connecting supply and demand. Since 2018, Grifols had already owned a 51% equity stake of this U.S.-based technology firm, dedicated to developing and commercializing mobile and web-based technology solutions that enhance quality assurance standards and operational productivity, as well as monitor and track compounding activities. Under this joint venture, owned by NSPO (51%) and Grifols (49%), the parties will join their industrial expertise and financial efforts for the development, construction and operation of 20 plasma collection centers throughout Egypt (with an initial capacity to collect 600,000 liters of plasma per year); manufacturing facilities, including a fractionation plant (with a capacity to fractionate up to 1 million liters of plasma per year) and a purification and fill-and-finish plant; a warehouse and an analysis laboratory. The plasma centers and manufacturing facilities are expected to be operational at the end of 2025. Along with this equity investment, Grifols will obtain a seat on the Bloodbuy Board of Directors where it will be able to not only contribute to Bloodbuy’s growth but also closely analyze the blood-component-product marketplace, potentially allowing the company to make further investments in the digital healthcare space. With this transaction, Grifols continues to move forward with its strategic plans to drive long-term sustainable growth in all of its divisions. MedKeeper’s attributes complement and strengthen Pharmatech, the Hospital Division’s core business line. The transaction also boosts the division’s international expansion and footprint in the U.S. market. Bloodbuy’s cloud-based marketplace is available across the United States for all qualified hospitals, medical centers, integrated delivery networks, and blood collection centers. Bloodbuy’s current participants include some of the most prestigious medical institutions in the country, as well as nearly 30 independent blood collection centers. Through this agreement, Grifols will become a strategic ally of the Egyptian government, while building on its commitment to help countries reach higher self-sufficiency levels in the manufacture and procurement of plasma-derived therapies. The transaction supports Grifols’ globally focused, long-term sustainable growth strategy, whose core objectives include increasing the company’s supply of plasma and reinforcing its global expansion. The transaction will allow Grifols to bolster its presence in the Middle East and Africa after establishing a solid presence in the United States and Europe and making important inroads in China, all core areas of its growth plan.

 

 

 

 

7998-1-mm_part 4 of 5 2020 consolidated directors' report_part1_page_49.jpg SUSTAINABLE GROWTH  I ADDITIONAL INFORMATION  I 50 2020 CONSOLIDATED DIRECTORS’ REPORT z TREASURY STOCK z FORESEEABLE DEVELOPMENTS OF THE GROUP z ANNUAL CORPORATE GOVERNANCE REPORT The operations carried out with the treasury stock during the fiscal year 2020 are described in the consolidated annual accounts. Grifols continues its roadmap to drive, explore and leverage its wealth of collective knowledge and innovative spirit to continue improving patient care and further support healthcare professionals. To reach this overriding objective, the company centers its efforts on business optimization, globalization, innovation, digitalization, talent development, outstanding customer service and sustainability. successfully address the evolving needs of global healthcare professionals and patients; continued global expansion, especially in the U.S. as a key market and emerging markets like China; corporate growth, via organic growth and corporate transactions amid an increasingly competitive market; a robust human resources strategy focused on talent development and on-going training, and the continuous quest for knowledge and innovation through value-creating activities and transversal teams; and the drive for sustainability, to continue bolstering a long-term business model that recognizes and fosters an environmental, social and corporate governance (ESG) approach. z SUBSEQUENT EVENTS There were no subsequent events relevant to 2020. The Grifols 2020 Annual Corporate Governance Report forms part of the Integrated Annual Report. It is available on Grifols’ corporate website and the Comisión Nacional del Mercado de Valores (Spanish Stock Exchange Commission) website from the date of publication of Grifols’ consolidated financial statements. The company is committed to a path of sustainable growth. The cornerstones of its five-year strategic plan are innovation, in order to continue developing a differential product portfolio; enhanced customer centricity, to ADDITIONAL INFORMATION

 

 

 

 

SUSTAINABLE GROWTH  I ADDITIONAL INFORMATION  I 50 2020 CONSOLIDATED DIRECTORS’ REPORT z TREASURY STOCK z FORESEEABLE DEVELOPMENTS OF THE GROUP z ANNUAL CORPORATE GOVERNANCE REPORT The operations carried out with the treasury stock during the fiscal year 2020 are described in the consolidated annual accounts. Grifols continues its roadmap to drive, explore and leverage its wealth of collective knowledge and innovative spirit to continue improving patient care and further support healthcare professionals. To reach this overriding objective, the company centers its efforts on business optimization, globalization, innovation, digitalization, talent development, outstanding customer service and sustainability. successfully address the evolving needs of global healthcare professionals and patients; continued global expansion, especially in the U.S. as a key market and emerging markets like China; corporate growth, via organic growth and corporate transactions amid an increasingly competitive market; a robust human resources strategy focused on talent development and on-going training, and the continuous quest for knowledge and innovation through value-creating activities and transversal teams; and the drive for sustainability, to continue bolstering a long-term business model that recognizes and fosters an environmental, social and corporate governance (ESG) approach. z SUBSEQUENT EVENTS There were no subsequent events relevant to 2020. The Grifols 2020 Annual Corporate Governance Report forms part of the Integrated Annual Report. It is available on Grifols’ corporate website and the Comisión Nacional del Mercado de Valores (Spanish Stock Exchange Commission) website from the date of publication of Grifols’ consolidated financial statements. The company is committed to a path of sustainable growth. The cornerstones of its five-year strategic plan are innovation, in order to continue developing a differential product portfolio; enhanced customer centricity, to ADDITIONAL INFORMATION

 

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_01.jpg SUSTAINABLE GROWTH  I TAXES IN 2020: CONTRIBUTIONS, PRINCIPLES AND GOOD PRACTICES  I 51 2020 CONSOLIDATED DIRECTORS’ REPORT z COMMITMENT TO GOOD TAX PRACTICES z GOVERNANCE Grifols upholds its commitment to contributing toward economic, social and industrial development through rigorous compliance with the tax laws in force in each jurisdiction and paying its fair share in those jurisdictions where it creates value. Its diverse operations generate direct and collected taxes, which are paid to tax authorities, and the group’s tax strategy is guided by ethical principles which are reflected in its contributions. Grifols uses corporate structures based on commercial and industrial grounds, aligned with its business activity and having real substance. Grifols has no operations in territories qualified as tax havens. other parts of the company involved in routine and non-routine tasks. The Board of Directors has the competence of approving the Control and Management of Risk Policy, which sets forth the main principles and overall framework for action for the identification, evaluation, control and management of risks, of all nature, including tax risks, which the company and the companies of its Group encounters. • To provide a guarantee in relation to management of risk processes and the correct evaluation of the same, and To the extent possible, the company seeks to develop cooperative relationships with tax authorities based on respect, transparency and mutual trust. In this regard, on October 26, 2018, Grifols’ Board of Directors adhered to Spain’s Code of Good Tax Practices, reaffirming the company’s unequivocal commitment to transparency, good faith and cooperation with the tax agency. • To evaluate management of risk processes, including the overseeing of controls and procedures. The Corporate Risk Committee oversees management’s responsibilities for assessing, managing and controlling risks and the integration of risk management at Grifols, through the Company’s risk management process. The company’s Audit Committee supervises the efficiency and reviews the company’s internal control, internal audit and management of risk systems, including those related to tax matters, so that any principal risks are identified, dealt with and adequately recognized. In alignment with its commitment to transparency, Grifols does its utmost to provide information on its tax strategy and taxes paid. The company also reports and details disputes and possible litigations in tax matters, if any, in the Consolidated Financial Statements and in the 20F required by the SEC. Grifols’ Tax Policy establishes the principles governing Grifols’ tax management. The Audit Committee is assisted by the Internal Audit Department in these functions. The activities inherent to the Internal Audit Department in relation to the company’s management of risk systems are: As a core element of corporate responsibility, taxation, including the approval, regular monitoring of the group’s Tax Policy and its alignment with the reality of the business and its commitment to sustainability, is overseen by Grifols’ Board of Directors. The development of the tax strategy and tax compliance framework are the responsibility of senior management, under the supervision of the Board of Directors. Nonetheless, implementation may implicate . TAXES IN 2020: CONTRIBUTIONS, PRINCIPLES AND GOOD PRACTICES

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_02.jpg SUSTAINABLE GROWTH  I TAXES IN 2020: CONTRIBUTIONS, PRINCIPLES AND GOOD PRACTICES  I 52 2020 CONSOLIDATED DIRECTORS’ REPORT z REGULATORY COMPLIANCE z TAX CONTRIBUTION z PUBLIC GRANTS Grifols complies with the tax laws in force in each jurisdiction and in line with OECD Guidelines for Multinational Enterprises. In the U.S., the company submits the Tax Control Framework Questionnaire (2019) developed by the U.S. Treasury Department (IRS). This initiative complements the OECD Model Control of Task Risks standard by including a self-assessment component of the company’s tax risk management and control systems. The principles of Grifols’ risk management and control system are applicable to tax risks, embedded in the legal and regulatory risks category. Grifols’ diverse operations generate direct collected taxes, which are paid to tax authorities. and States generate approximately 81% of the group’s global revenues, as the main industrial and R+D+i facilities are located in these countries. Grants received correspond mainly to employee-training and retention of workers efforts. The Group’s tax strategy is guided by ethical principles which are reflected in its contributions. Thousands of euros Subsidies In Spain, EUR 17.2 million was paid in the 2020 fiscal year as a result of anticipated tax payments. Spain 458 Grifols is taxed on the profits generated in the United States 438 territories where it operates. Spain and the United CONTRIBUTION BY GEOGRAPHIC AREA Million of euros Profit * Taxes paid ** Spain 115.4 10.0 United States 414.9 64.3 Ireland (158.3) 1.2 Rest of the world 23.4 12.7 * After-tax profits in 2020 excluding dividends and impairments ** Net tax payable related to fiscal year 2020

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_03.jpg SUSTAINABLE GROWTH  I TAXES IN 2020: CONTRIBUTIONS, PRINCIPLES AND GOOD PRACTICES  I 53 2020 CONSOLIDATED DIRECTORS’ REPORT z GRIFOLS’ FISCAL POLICY • For Grifols, tax compliance is a core element, as well as a pillar of its economic contribution and social commitment. To this end, it has a policy of compliance and good practices in tax matters, which is publicly available on its website. The payment of required taxes fully aligns with the economic activities in all jurisdictions where the Group operates. Grifols has no operations in territories qualified as tax havens. Its commercial operations with third parties based in such territories, or any others, are carried out as part of its ordinary industrial or commercial activity. In line with international taxation principles and recommendations by the OECD Committee on Tax Matters, Grifols rejects artificially shifting results to such territories or taking advantage of the information opacity that these territories may offer. Transparency in tax-related matters is a cornerstone of Grifols’ tax policy. Grifols’ system of internal information and control procedures significantly mitigates fiscal risk which allows the management of tax matters with expertise and in an orderly manner. • Grifols’ tax policy is guided by a reasonable and prudent interpretation of the tax regulations in force in each jurisdiction. The company consults with reputable independent tax advisors before making business decisions that could have a tax impact. Grifols follows a transfer pricing policy for all operations with related parties that aligns with the principles of the main competent international organizations. This policy is reviewed on an annual basis to avoid any deviation from these principles. Grifols understands and supports tax contributions that adequately correlate with the structure and location of its activities, resources and human resources, as well as materials and business risks assumed. Grifols does not use artificial structures unrelated to its activity to reduce the tax burden or for profit-shifting. Grifols fosters a cooperative and fluid relationship with tax authorities based on respect for the law, trust, good faith, reciprocity and cooperation. • Grifols collaborates with the competent tax authorities to seek solutions to achieve certainty and stability in the fiscal criteria to be applied by the administration and to give priority to non-litigious dispute resolution channels. In alignment with its commitment to transparency, Grifols does its utmost to provide complete information and documentation requested by tax administrations in the shortest timeframe possible. On October 26, 2018, the Board of Directors of Grifols adhered to the Code of Good Tax Practices. GRIFOLS ADHERES TO THE GOOD TAX PRACTICES CODE • • • GRIFOLS HAS NO PRESENCE IN TERRITORIES CLASSIFIED AS TAX HAVENS. ALL ITS OPERATIONS ARE REPORTED IN ITS ORDINARY INDUSTRIAL AND COMMERCIAL ACTIVITY • • • • • • •

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_04.jpg SUSTAINABLE GROWTH  I OUR COMPETITIVE ADVANTAGES  I 54 2020 CONSOLIDATED DIRECTORS’ REPORT 1. SYNERGIES ACROSS DIVISIONS 3. VERTICAL INTEGRATION 2. MANUFACTURING EFFICIENCY A LEADER IN PROMOTING COMPLEMENTARY PRODUCTS AND SERVICES PLASMA-DERIVED MEDICINES CAN BE PRODUCED INTERCHANGEABLY IN PLANTS IN SPAIN AND IN THE U.S. CONTROLLING THE VALUE CHAIN ENSURES QUALITY, SAFETY AND SUPPLY GRIFOLS’ COMPETITIVE ADVANTAGES ENABLE IT TO RESPOND TO CURRENT CHALLENGES Over the years, Grifols has been an industry reference for its capacity to successfully leverage synergies among its divisions’ products and services. Keenly aware of the potential of its global workforce, the company has progressively promoted cross-functional work teams that collaborate to identify needs and promote new initiatives. Most Grifols’ protein fractionation, purification and dosing plants are licensed by diverse regulators, including the FDA, offering the company the flexibility to perform these processes interchangeably in any one of them. The result is a leading-edge production system aimed at maximizing efficiency and optimizing profitability per liter of plasma, while guaranteeing the highest standards of quality and safety. Grifols’ vertically integrated business model guarantees quality and control at every stage of its divisions’ value chain. This model also adds value by ensuring continuity of supply and reducing transactional costs, among other benefits. Grifols is a leading global manufacturer of plasma-derived medicines, with a solid reputation built on its ability to compete in dynamic, fast-paced environments. OUR COMPETITIVE ADVANTAGES

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_05.jpg SUSTAINABLE GROWTH  I OUR COMPETITIVE ADVANTAGES I 55 2020 CONSOLIDATED DIRECTORS’ REPORT 5. EXPERIENCE IN INTEGRATING COMPANIES 4. IN-HOUSE ENGINEERING 6. INNOVATION 7. SCALABILITY GRIFOLS ENGINEERING, ON THE CUTTING EDGE OF INNOVATION ADDING TALENT TO MULTIPLY RESULTS AN ESSENTIAL COMPONENT OF GRIFOLS’ DNA SINCE 1909 PREPARED FOR CONTINUED GROWTH The production process to obtain plasma products requires advanced technology and ongoing innovation.The company relies on Grifols Engineering to spearhead its diverse manufacturing projects and facilities. Specialized in engineering solutions for pharmaceutical and biotechnology processes, this company represents a differential value in terms of costs, project execution and the quality of integrated innovations, including trailblazing technologies to reduce environmental impact. Inorganic growth has been a cornerstone of Pioneers pave the way and actively create processes that drive change. This quest for ongoing innovation has formed part of Grifols’ DNA since 1909. In alignment with its pioneering spirit, the company is committed to exploring the therapeutic properties of blood, plasma and proteins; serving as an industry leader; and supporting science, scientific projects and those who make them possible. For this reason, Grifols’ R+D+i strategy is far-reaching, encompassing both internal and external resources to address innovation based on specific therapeutic areas such as hematology, immunology, pneumology, and autoimmune and neurodegenerative diseases Grifols has the necessary infrastructure and experience in planning future needs to maintain a path of sustainable growth based on continuous improvement and the optimization of processes and costs. Its solid manufacturing presence in the United States, Spain, China and Germany has enabled a scaled global dimension with a distinctly global dimension. Today, the company markets its products in more than 100 countries, with plans to bolster its presence in China, Canada, the Middle East and Africa through its alliances and strategic partners. Grifols’ success. Since its origins, the company has successfully integrated acquisitions as drivers of its corporate growth, providing access to new markets, expanding production and supply capabilities, promoting innovation and offering new technologies. The company has also proven experience in integrating people. By promoting teamwork, Grifols has been able to instill a robust corporate team and capitalize on its global talent pool. The acquisitions of Talecris (2011), Novartis transfusion diagnostic divisions (2014), Hologic (2017), Haema and Biotest (2018), IBBI (2019) and the Shanghai RAAS strategic alliance (2020) are examples of this pioneering strategy.

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_06.jpg Since its origins, Grifols has believed in the power of “doing things right” to generating corporate value. Led by a diverse, professional and independent board of directors, the company’s corporate governance structure strives to continue creating long-term, sustainable value. Honesty, ethics, integrity, independence, respect for human rights and regulatory compliance form the pillars of Grifols’ business model. Every day, the company works to ensure these values permeate the entire organization. CORPORATE GOVERNANCE FEMALE BOARD MEMBERS 31% INDEPENDENT DIRECTORS 54%

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_07.jpg CORPORATE GOVERNANCE

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_08.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 58 For global organizations, a robust corporate governance structure with a strategic vision is crucial to generating long-term value for stakeholders and society. At Grifols, integrity, honesty, transparency and compliance with the highest ethical standards form the cornerstones of its organizational culture and corporate governance framework. specifically include the option of attending the General Shareholders’ Meeting by telematic means to facilitate the participation of shareholders and their representatives in the future. interests. As of January 1, 2017, the group’s top executive and management responsibilities are shared by co-CEOs Raimon Grífols Roura and Víctor Grífols Deu. The Board of Directors is Grifols’ highest decision-making body except for matters that are the exclusive competence of the General Shareholders’ Meeting. The Board of Directors establishes general policies, corporate strategy and basic management guidelines, as well as supervises and monitors the actions of Grifols’ management to ensure the company attains its objectives and meets stakeholder expectations. Every year, Grifols publishes its Corporate Governance Report, which is subject to approval by the Board of Directors. This report outlines Grifols’ ownership The General Shareholders’ Meeting serves as Grifols’ governing body and is the final decision-making authority in all matters that correspond to it. Grifols encourages all shareholders to participate, requiring no minimum number of shares to attend the meeting. structure, management framework, related parties transactions, risk control systems, General Shareholders’ Meeting, internal control and risk management systems regarding the disclosure of financial information (SCIIF), degree of compliance with corporate governance recommendations and other relevant information. In light of the COVID-19 pandemic and in accordance with the law, Grifols held its 2020 Ordinary General Shareholders’ Meeting exclusively by telematic means on October 9, without the physical presence of shareholders or their representatives, through a remote connection and live broadcasting on the company’s corporate website. The meeting’s participants reflected 73.6% of stock capital with voting rights. The votes delegated to the Board represented 78.3% of the quorum and 57.6% of the share capital. Among the issues approved, the shareholders agreed to amend the company’s articles of association to In 2020, Grifols continued to reinforce its corporate governance bodies with the creation of the Sustainability Committee, delegated by the Board of Directors. This newly formed committee will advance Grifols’ efforts as a company renowned for its sense of responsibility, transparency and commitment to stakeholders. The roles of the President and CEO are separated at Grifols. Víctor Grifols Roura holds the role of non-executive chairman, offering his strategic vision and vast experience to ensure shareholders’ long-term More information on Grifols’ corporate governance: www.grifols.com SOLID AND STRATEGIC CORPORATE GOVERNANCE

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_09.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 59 STATUTORY OR CONCERTED ACTIONS EUR 0.25, listed on the Barcelona, Madrid, Valencia and Bilbao stock exchanges Class A, 62% and Management LEGAL FRAMEWORK As a listed company in Spain and the United States, Grifols complies with all applicable legislation in both countries. The company periodically reviews its regulations to incorporate new guidelines and best practices into its regulatory frameworks. External regulatory frameworkInternal regulatory framework • Companies Act (Ley de Sociedades de Capital), Securities • Articles of association Market Act (Ley del Mercado de Valores) and other applicable • Regulations of the Board of Directors Spanish regulations • Internal codes and regulations (see section) • Spain’s National Securities Market Commission’s (CNMV)• Corporate policies (see section) Good Governance Code of Listed Companies • CNMV’s 3/2017 Technical Guide on Audit Committees at Public-Interest Entities • CNMV’s Technical Guide 1/2019 on Nomination and Remuneration Committees at Public-Interest Entities • U.S. Securities and Exchange Commission (SEC) guidelines • NASDAQ Guidelines on Corporate Governance • U.S. 2002 Sarbanes-Oxley Act A LISTED COMPANY, WITH NO EXTRA-The share capital of Grifols S.A. currently stands at EUR 119,603,705, represented by: • Class A shares: 426,129,798 ordinary shares with voting rights and par value of and Continuous Market (SIBE). • Class B shares: 261,425,110 shares with non-voting rights with some economic preferential rights and par value of EUR 0.05, listed on the Barcelona, Madrid, Valencia and Bilbao stock exchanges and Continuous Market (SIBE). These shares have a preferred dividend of EUR 0.01 per share. Grifols has two American Depository Receipt (ADR) programs in the U.S: Level I ADR for its Class A Shares and Level III ADR for Class B Shares. Level I ADR trade in U.S. dollars on OTC markets and Level III ADRs are traded in U.S. dollars on the NASDAQ exchange. In addition, Grifols’ articles of association provide that, in order to protect the rights of the Class B shares, corporate resolutions on specific “Extraordinary Matters”, such as any resolution or amendment to the company’s bylaws that directly or indirectly undermine or adversely affect the rights, preferences or privileges of Class B shares, require, in addition to their approval in accordance with the bylaws’ Article 17 provisions (adoption of resolutions by simple majority of the capital present and/ or represented), the approval of the majority of currently outstanding Class B shares. There are no extra-statutory agreements or concerted actions between shareholders. Furthermore, there are no restrictions (statutory, legislative or otherwise) on the transferability of securities and/or any restriction on voting rights. SHAREHOLDER STRUCTURE Free Float, Class B, 38% 59.1% Related or Associated Shareholders and Board of Directors, 30.8% Treasury Stock, 0.4% Blackrock, Inc, 4.5% Capital Research Company, 3.0% Fidelity International Limited, 2.2% Source: 2020 Annual Corporate Governance Report.

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_10.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 60 z COMPLIANCE AND CHARACTER: OUR ETHICAL APPROACH Mere legal compliance is not enough for Grifols, which is why it goes a step further by integrating the highest standards of integrity, honesty and transparency in its corporate governance structure. This framework is embodied within our internal codes and regulations which are routinely reviewed and updated to adapt to the company’s changing reality. INTERNAL CODES AND REGULATIONS Grifols’ Code of Ethics, Code of Conduct, Crime Prevention Policy and Anti-Corruption Policy are the central components of its global compliance program, which is complemented by additional policies and procedures regarding specific legal domains, compliance risks and country-specific requirements. GRIFOLS CODE OF ETHICS GRIFOLS CODE OF CONDUCT CORPORATE POLICIES In 2020, Grifols’ Board of Directors further reinforced its corporate governance with the approval of a Sustainability Policy and a Policy on Communications and Contacts with shareholders, institutional investors and proxy advisors. • Governs the behavior of all Grifols employees, senior-level executives and administrative bodies Explicitly endorsed and signed every year by board members, executives, managers and area/ division heads The breach of any of Grifols’ ethical principles could result in disciplinary measures, including dismissal • Adhered to in writing by all employees, including senior executives and board members New hires receive specific training The code is public and accessible to the entire workforce via Grifols’ corporate website and the employee portal Any breach of the Code of Conduct by any member of the Grifols’ workforce will be considered as a serious violation of their duties to the company and could be motivation for disciplinary action, including dismissal Grifols’ organization-wide corporate policies serve to communicate its ethical principles: • • • • Sustainability Policy (previously known as “Corporate Social Responsibility Policy”) Policy on Communication and Contacts with stakeholders, institutional investors and proxy advisors Internal Code of Conduct for matters relating to the stock markets Tax Compliance and Best Practices Risk Control and Management Policy Board of Directors Remuneration Policy Crime Prevention Policy Anti-Corruption Policy Policy on Director Diversity in the Composition of the Board of Directors (previously known as “Selection Policy for Directors and Diversity on the Board of Directors”) Environmental Policy Energy Policy • • ETHICAL PRINCIPLES • Grifols’ operations and stakeholder commitments • are built on honesty, ethics, transparency, integrity and legal compliance, all deeply rooted values in the company’s history. The Board of Directors and senior management team actively promote these principles and lead by example. • • • • • • • • More information on Grifols’ internal codes and regulations: www.grifols.com More information on Grifols’ corporate policies: www.grifols.com

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_11.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 61 and non-financial ESG (environmental, social and governance) criteria. COMMITTEE SUSTAINABILITY AS A STRATEGY SUSTAINABILITY COMMITTEE Firmly committed to creating value for its stakeholders and improving its economic, social, environmental and corporate governance performance, Grifols bolstered its corporate governance structure in 2020 with the creation of a Sustainability Committee to show Grifols’ dedication in being a responsible and transparent company. Delegated by Grifols’ Board of Directors, the Sustainability Committee will outline the firm’s core principles and commitments regarding its environmental and social responsibility, as well as the inclusion of financial The establishment of this committee, integrated into the business model to amplify value-creation and the positive impact of its global operations, is a clear testament to Grifols’ commitment to long-term sustainability and its staunch support of the United Nations Sustainable Development Goals (SDGs). The Sustainability Committee includes three members: Thomas Glanzmann (Chairman), Íñigo Sánchez-Asiaín Mardones and Enriqueta Felip Font. Núria Martín Barnés serves as the committee’s non-member secretary. SUSTAINABILITY POLICY Grifols’ Board of Directors also approved a new Sustainability Policy to reinforce the firm’s fundamental principles and commitments regarding its environmental and social responsibility and to provide a framework for their integration into Grifols’ business model. CORPORATE GOVERNANCE STRUCTURE GENERAL SHAREHOLDERS MEETING CO-CEOS DIRECTOR APPOINTMENTS AUDIT SUSTAINABILITY & REMUNERATION COMMITTEE COMMITTEE EXECUTIVE TEAM LEAD BOAR D OF INDEPENDENT DIREC TORS

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_12.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 62 z GRIFOLS LEADERSHIP: A WELL-BALANCED BOARD OF DIRECTORS LEAD INDEPENDENT DIRECTOR BELÉN VILLALONGA MORENÉS CARINA SZPILKA LÁZARO ÍÑIGO SÁNCHEZ-ASIAÍN MARDONES MARLA E. SALMON JAMES COSTOS CHAIRPERSON CHAIRPERSON RAIMON GRÍFOLS ROURA Co-CEO VÍCTOR GRÍFOLS ROURA CHAIRMAN NON-EXECUTIVE VÍCTOR GRÍFOLS DEU Co-CEO CHAIRPERSON SECRETARY / NON-MEMBER SECRETARY / NON-MEMBER THOMAS GLANZMANN TOMÁS DAGÁ GELABERT RAMÓN RIERA ROCA ENRIQUETA FELIP FONT STEVEN F. MAYER VICE CHAIRMAN NON-EXECUTIVE VICE-SECRETARY NURIA MARTÍN BARNÉS EXECUTIVE DIRECTOR INDEPENDENT DIRECTOR SECRETARY / NON-MEMBER PROPIETARY DIRECTOR OTHER EXTERNAL DIRECTOR The Ordinary General Shareholders’ Meeting, held on October 9, 2020, was notified of the non-reelection of Luis Isasi Fernández de Bobadilla as board member due to the expiry of his term of office, as well as the appointment of James Costos as an independent board member. In addition, Víctor Grífols Deu, Thomas Glanzmann and Steven F. Mayer were all re-elected as board members. NON DIRECTOR AUDIT COMMITTEE APPOINTMENTS & REMUNERATION COMMITTEE SUSTAINABILITY COMMITTEE More information on Grifols’ board of directors and their roles: www.grifols.com

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_13.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 63 DIVERSITY OF GENDER, AGE AND NATIONALITIES DIVERSITY OF EXPERIENCE AND AREAS OF EXPERTISE NATURE OF THE POSITION EFFECTIVENESS 7 of 13 INDEPENDENT DIRECTORS 54% 3 of 13 OTHER EXTERNAL DIRECTORS 23% 1 of 13 PROPRIETARY DIRECTORS 8% 2 of 13 EXECUTIVE DIRECTORS 15% 4 of 13 FEMALE BOARD MEMBERS 31% 4 of 13 AMERICAN 31% 1 of 13 40-50 YEARS OLD 8% 5 of 13 50-60 YEARS OLD 38% 7 of 13 >60 YEARS OLD 54% 13 of 13 IN GLOBAL EXPANSION 100% 5 of 13 IN HEALTH AND SCIENCE 38% 5 of 13 IN FINANCE 38% 5 of 13 IN MANAGEMENT 38% 2 of 13 IN DIGITALIZATION 15% 2 of 13 IN LEGAL ISSUES 15% 4 of 13 IN SUSTAINABILITY 31% BOARD 10 MEETINGS 99% ATTENDANCE AUDIT COMMITTEE 6 MEETINGS 94% ATTENDANCE APPOINTMENTS & REMUNERATION COM-MITTEE 5 MEETINGS 100% ATTENDANCE A DIVERSE AND WELL-BALANCED BOARD IN TERMS OF EXPERTISE, BACKGROUNDS, EXPERIENCES, NATIONALITIES, AGE AND GENDER. MEMBERS REFLECT DIVERSE PROFESSIONAL PROFILES AND INDUSTRIES, INCLUDING THE FINANCIAL, HEALTHCARE, SCIENTIFIC AND LEGAL SECTORS, AMONG OTHERS

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_14.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 64 INDEPENDENCE OF THE BOARD OF DIRECTORS BOARD OF DIRECTORS PROFILE ANNUAL ASSESSMENT OF THE BOARD OF DIRECTORS AND COMMITTEES GRIFOLS STRIVES TO INCREASE THE PRESENCE OF WOMEN ON ITS BOARD OF DIRECTORS • Separation of Chairman and CEO roles since 2016. Existence of a Lead Independent Director All board committees are formed by non-executive directors, with at least two independent directors. • Diverse and balanced board in terms of expertise, backgrounds, experiences, nationalities, age and gender. Members reflect diverse professional profiles, including financial, healthcare, scientific and legal sectors. The company complies with good-governance recommendations and in 2020 more than 30% of board members are women, with plans to increase this percentage. In 2020, the Board of Directors in full evaluated the quality and effectiveness of its operations, the performance of the company’s chairman and co-CEOs, and the performance of board committees. In addition to carrying out an annual performance review, the Board of Directors assesses its performance on a continuous basis in order to incorporate any necessary improvements as promptly. In 2020, this assessment was performed internally by Grifols’ Board of Directors with the support of the Appointments and Remunerations Committee and the Secretary of the Board. • • • • Furthermore, in accordance with the Companies Act and the Good Governance Code of Listed Companies, an independent expert is hired every three years to carry out the performance assessment. Prior to the last board meeting of the year, board committees also conduct their own assessments by stating their satisfaction or dissatisfaction with the performance of each committee and communicating whether they require additional resources to carry out their functions. More information on Grifols’ corporate governance evaluation processes: https://www.grifols.com/ documents/51507592/1023162936/iagc-2019-es. pdf/97d42f0e-a6c5-471b-be2b-aa42a3dd6d85

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_15.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 65 CONTRACT TERMS. VARIABLE RETRIBUTION The co-CEOs’ contracts are standard, with no special conditions for this type of agreement. Notwithstanding this, they do include clauses by virtue of which, in the event of a corporate takeover, the co-CEOs have the option of remaining in the company or finalizing their contractual relationship. The latter case would entitle them to severance payments equivalent to five years’ salary. Severance in the case of termination –either at the company’s discretion or due to a change in general management – would entitle the co-CEOs to the equivalent of two years’ salary, which is in line with indemnity agreements in analogous companies. The co-CEOs’ contracts also establish a post-contractual non-compete clause. According to this agreement, they are unable to provide services in companies similar to Grifols for one year following the finalization of their contracts. In parallel, the co-CEOs’ contracts establish that the company will be entitled to demand the reimbursement of previously paid variable remuneration in two concrete cases: (1) if payment does not adhere to the performance conditions or results required for their accrual, or (2) if payment was made on the basis of data which later proved to be manifestly misstated. Severance payments in the event of a corporate takeover are calculated on a five-year basis, which is lower (in absolute terms) than other companies, many of which offer two-year severance agreements that nonetheless yield higher total severance payments. This discrepancy stems from Grifols’ lower-than-average executive compensation, which is less than the mean offered in Ibex-35 companies. The unique characteristics of the plasma derivatives industry, with few major players, led Grifols to opt for a specific compensation policy.

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_16.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 66 BOARD REMUNERATION NO INCREASE IN BOARD COMPENSATION WAS APPROVED IN 2020 A REMUNERATION THAT RECOGNIZES THEIR COMMITMENT TO CREATING LONG-TERM VALUE Grifols’ remuneration policy for board members aspires to generate value for the company, while seeking sound and prudent risk management, alignment with shareholder interests and strict compliance with best practices and regulations regarding the remuneration of directors of listed companies. In 2020, the remuneration policy in force was the one approved during the 2017 Ordinary General Shareholders’ Meeting, valid until the end of 2020. As a result, the remunerations policy approved in the Ordinary General Shareholders’ Meeting on October 9, 2020, is essentially the same one ratified in 2017, up to and including 2020. It will be in force for the three fiscal years following its approval (up to and including 2023), unless expressly amended by the General Shareholders’ Meeting. The policy, among other principles and rationale, aims to compensate directors based on their dedication, qualifications and specific roles and responsibilities, while not undermining their independence. The remuneration of Grifols directors in their capacity as such includes a fixed cash allowance based on their role and responsibility, amounting to EUR 100,000 per year for each member of the Board of Directors. In addition, directors who serve as a member or chair a board committee receive additional remuneration, as does the lead independent director. Under no circumstances will a non-executive director receive more than EUR 150,000 per year in compensation for the performance of his or her duties. Board members who render remunerated professional services to the company or group will not receive additional compensation for their role as directors or executive directors. Remuneration systems for non-executive directors are not based on Grifols’ shares, unless they retain shares until they no longer serve as directors on the board. The annual variable remuneration of executive directors is tied to the fulfillment of certain annual objectives, following normal practices in comparable firms. Targets are linked to Grifols’ overall performance based on EBIT – widely accepted as one of the most important management indicators – as a reference point. Reflecting the firm’s evolution as a whole, EBIT is calculated by adding earnings from all business units before subtracting interest and taxes, as is considered the best metric for evaluating the executive directors’ operational management. It should be noted that the 2019 Annual Remuneration Report, approved by Grifols’ Board of Directors in February 2020, mentioned addressing a possible increase in compensation paid to Grifols’ directors – including directors in their capacity as such, those who chair the various board committees, the lead independent director and the non-executive chairman – at the 2020 General Shareholders’ Meeting. Of its own accord as an exercise of prudence and in view of the uncertainty generated by COVID-19, the Board of Directors ultimately resolved not to submit this proposal to the General Shareholders’ Meeting. Consequently, the company maintained its current remuneration levels, with no compensation increases approved for Grifols’ directors. This policy takes into account Grifols’ long-term This parameter is published every quarter to facilitate transparency in the variable-compensation system. Variable payments require a 90% degree of compliance with the objectives set forth. In order to determine the applicable percentage, various ranges of variable remuneration have been established based on the attainment of EBIT-related objectives. These range from 0% to 65% of the annual fixed salary. economic and management objectives to mitigate exposure to excessive risk, and therefore provides for the possibility of including a variable in the annual remuneration of its senior managers and executive directors. Executive directors’ compensation is based on the recommendations of the Appointments and Remuneration Committee, using remunerations for similar positions in similar companies and a comparative analysis done by Grifols’ Human Resources Department as benchmarks.

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_17.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 67 This variable remuneration system aligns with IBEX-35 practices. According to the CNMV’s 2019 Annual Report on the Remuneration of Directors of Listed Companies, all IBEX-35 companies have formal short-term (annual) variable remuneration plans for executive directors. These plans are generally based on internal parameters such as the evolution of the company’s net profit or operating results. along with their clear desire to remain shareholders, ensures alignment with corporate interests and a firm commitment to continue creating long-term value for all Grifols stakeholders, including investors and shareholders. On the other hand, the remuneration allocated to the Chairman of the Board of Directors differs from that of other directors based on his involvement and proven experience as a director and CEO; his vast knowledge of the company and the sector in which it operates; and the specific functions he performs in his capacity as non-executive chairman. taken into account, in addition to other legal edicts established by the Companies Act for the position of chairman of the Board of Directors. More information: CNMV Annual Report on Remunerations of Directors of Listed Companies More information: Board of directors remuneration policy Grifols’ internal analysis that was carried used comparable IBEX-35 companies as benchmarks, taking into account their size, global reach and core characteristics, as well as firms operating in the plasma sector. Based on these findings, Grifols’ remuneration is considered moderate and appropriate, especially when compared within stock market capitalization. The remuneration of the non-executive chairman consists solely of a fixed annual allowance equivalent to the fixed amount received during the 2016 fiscal year, with no variable compensation. When determining this remuneration, the additional functions performed were Grifols does not have a longer-term remuneration system because its executive directors already hold a significant number of shares in the company. This fact, SUMMARY OF GRIFOLS BOARD MEMBERS’ REMUNERATIONS Remuneration for participation on board committees Short-term variable remuneration Fixed remuneration 2020 total 2019 total Tomás Dagá Gelabert - - - - - Thomas Glanzmann 100 - - 100 320 Raimon Grífols Roura 895 - 276 1,171 1,107 Ramon Riera Roca 100 - - 100 100 Víctor Grífols Roura 965 - - 965 965 Víctor Grífols Deu 895 - 276 1,171 1,038 Belén Villalonga Morenés 100 25 - 125 125 Luis Isasi Fernández de Bobadilla 75 19 - 94 125 Carina Szpilka Lázaro 100 50 - 150 150 Marla Elizabeth Salmon 100 50 - 150 150 Steven Mayer 100 25 - 125 125 Íñigo Sánchez-Asiaín Mardones 100 50 - 150 150 Enriqueta Felip Font 100 - - 100 50 James Costos 25 6 - 31 - *The short-term variable remuneration of Grifols’ two executive directors corresponds with the fulfillment of 2019 objectives and was paid in 2020.

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_18.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I SOLID AND STRATEGIC CORPORATE GOVERNANCE I 68 z RESPONSIBLE OVERSIGHT The senior leadership team’s main responsibility is to manage the company in accordance with the strategy approved by the Board of Directors. This includes a continuous quest for long-term growth, value creation for stakeholders, and maintaining effective risk management structures and robust internal controls. Name Position Robert Jagt President, Hospital Commercial Division Matthew Murawski VP Innovation Oper & Analytics Maria Teresa Rioné Llano VP, Corporate Communications Joel Edward Abelson President, Bioscience Commercial Division Javier Sueiras Gil Chief IT Officer Grifols’ top-tier leadership boasts broad experience in driving organic growth, as well as a proven track of identifying opportunities and integrating successful acquisitions, which have been key to transforming Grifols into a global healthcare player. Luis Twose Garçon Managing Director Laboratorios Grifols Albert Grifols Coma-Cros President, GWWO Lafmin Cleofus Morgan Chief Commercial Officer Alfredo Arroyo Guerra Chief Financial Officer Nuria Pascual Lapeña VP, Corp Treasury & Investors Relations Alberto Grifols Roura President Bio Supplies Division The team convenes mainly around the Executive Management Board, which holds at least one meeting per month led by Grifols’ co-CEOs. In 2020, Grifols’ executive board convened 11 times. Miguel Pascual Montblanch President, Commercial Operations Management Eduardo Raimundo Herrero Jiménez President Bioscience Industrial Group Vicente Blanquer Torre VP, Quality & Regulatory Affairs Mateo Florencio Borras Humbert Chief Human Resources Officer Daniel Fleta Coit Chief Industrial Officer David Bell Chief Innov. Officer & Gen. Counsel NA Antoni Jauma Fages President, Diagnostic Manufacturing Operations Antonio Martínez Martínez President, Diagnostic Scientific & R&D Fernando Sebastián Rodríguez Haro VP Corporate Planning & Control Sergio Roura Adell President, Commercial Tech Support Chris Healey President NA Corporate Affairs COVID-19 CRISIS MANAGEMENT COMMITTEE Even before the WHO declared a state of emergency, Grifols created a specific committee to monitor, evaluate and manage the scope and impact of the coronavirus crisis on its operations, keeping Grifols’ Board of Directors informed at all times. The COVID-19 Crisis Committee, comprised by members of the Executive Committee and driven by Grifols’ CEOs, works to: guarantee the supply of essential products and medicines for patients who need them; promote agile measures to safeguard the health of Grifols’ workforce; and strengthen relations with the main national and international health and scientific institutions by contributing to the search for potential treatments and offering its vast know-how and experience on the therapeutic benefits of plasma. During the most difficult weeks of the crisis and confinement, Grifols’ efforts to maintain its activities and protect the group from operational risks tested its contingency plans and the continuity of its operations. This committee continues to work to bolster the resilience of the company and the group in the short, medium and long term.

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_19.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I CORE PILLARS OF GRIFOLS’ CORPORATE GOVERNANCE I 69 z HUMAN RIGHTS A deep-seated respect for human dignity and human rights underpins all Grifols’ operations. The fundamental principles of bioethics guide the company’s research, development, production and marketing of its products in order to guarantee the safety and dignity of everyone involved in the value chain. At the same time, they ensure the company’s efforts to advance the healthcare sector through an ethical approach. A range of regulations, declarations and codes – among them, the Universal Declaration of Human Rights (1948), the Helsinki Declaration (1964) and UNESCO’s Universal Declaration on Bioethics and Human Rights (2005) – form the foundation of these principles. z DRIVEN BY ETHICS AND INTEGRITY The Grifols Ethics Helpline allows employees and outside collaborators to confidentially raise their concerns of possible legal non-compliance or misconduct. All allegations follow a standard operating procedure to make sure they are adequately investigated, resolved and closed. The Ethics Ombudsperson plays a key role in the process by reviewing all submissions and ensuring compliance-related allegations and complaints are properly channeled and investigated. Grifols does not tolerate retaliation of any kind against those who in good faith report possible violations of applicable laws, rules and regulations or non-compliance with internal policies and procedures. Retaliation could result in disciplinary action, including dismissal. The company aims to encourage and preserve the welfare of all communities in which it operates. Grifols promotes corporate responsibility and human rights in all of its activities, using international references as a starting point (United Nations Global Impact, OECD Guidelines for Multinational Enterprises, UN Human Rights, and ILO Tripartite Declaration of Principles Concerning Multinational Companies), including the refusal of any child or form of forced labor in the entire value chain. In 2020, the Grifols Ethics Helpline received 169 allegations (226 allegations in 2019), mostly reported in North America (152), in addition to thirteen (13) in Europe and four (4) in other countries. The company encourages the use of the Grifols Ethics Helpline in all of its countries of operation. GRIFOLS ETHICS HELPLINE In this regard, Grifols’ Code of Conduct governs the activities of all employees and collaborators and upholds strict compliance with the legislation applicable to its operations and activities. The company also offers employees and third-party collaborators a communication channel to confidentially report any concerns of potential legal non-compliance or improper conduct (Grifols Ethics Helpline). 2020 2019 2018 General concern 24% 20% 31% Workplace harassment 20% 23% 22% Misconduct or inappropriate behavior 11% 11% 14% Improper employment or disciplinary action 6% 5% 3% Discrimination 8% 11% 5% Conflict of interest 0% 2% 2% Health, safety and environment 10% 5% 2% Lack of compliance quality, legislation or quality standards 1% 1% 1% Sexual harassment 2% 3% 4% Others 18% 19% 16% More information on the Grifols Ethics Helpline: http://grifols.ethicspoint.com CORE PILLARS OF GRIFOLS’ CORPORATE GOVERNANCE

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_20.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I CORE PILLARS OF GRIFOLS’ CORPORATE GOVERNANCE I 70 z AGAINST CORRUPTION AND BRIBERY CRIME PREVENTION POLICY AND CRIMINAL RISK MANAGEMENT SYSTEM ANTI-COMPETITIVE PRACTICES MONEY LAUNDERING Grifols has a Crime Prevention Policy to reinforce its unequivocal rejection of the commission of crimes, criminal acts or other types of unethical behavior and to do everything in its power to prevent them. Developed by the Crime Risk Management System (CRMS), the Crime Prevention Policy is available to all employees and third parties on the corporate website. Grifols’ Code of Conduct underlines the company’s commitment to free competition to promote social welfare and compliance with free-market regulations in all its countries of operation. The company forbids the participation in agreements – both written and verbal – that violate competition laws including, but not limited to, price-setting; discounts or preferential terms of sale; division of markets, clients or geographic regions; and boycotting or refusal to do business with third parties. Grifols has mechanisms, procedures and policies in place to prevent money laundering and address any possible breaches detected in the course of its business operations. and prevent future occurrences. Grifols also collaborates with the competent authorities in each country to combat money laundering and the financing of terrorist activities, providing all information requested in accordance with current legislation and reporting any suspicious transactions. • Prevention: The Code of Ethics and Code of Conduct include measures to prevent money laundering, serving as critical guideposts for the entire organization and its employees. As part of the CMRS criminal risk analysis, Grifols assesses its exposure to the risk of money laundering and terrorist financing by identifying activities with higher risk and identifying the risk-control mechanisms in place. The CRMS serves to assure public administrations, judicial and administrative bodies and third parties that Grifols effectively supervises, monitors and controls its board members, executives, employees, subsidiaries and other individuals regarding its crime-prevention measures. The company prohibits conduct that impedes the development and maintenance of effective competition, including tied selling, abusive pricing, market restrictions and price pressure. For Grifols, holding a dominant market position is a responsibility, not merely an advantage. The CRMS is subject to review by an independent expert to make sure it complies with current legislation and includes sufficient control measures, both in terms of its design and operational effectiveness, to prevent and detect crime. • Detection: The CRMS carries out routine controls to detect the risk of money laundering. The company offers employees and third parties a communication channel to confidentially report any concerns of possible ethical misconduct (Grifols Ethics Helpline). The Crime Risk Management System includes the identification and evaluation of potential risk scenarios related to anti-competitive practices. In 2020, Grifols had no confirmed incidents of anti-competitive practices in the markets in which it operates. • Reaction and response: Grifols has a reaction-and-response protocol and a sanctions system to address any claims of unethical behavior or irregularities, take corrective actions if necessary

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_21.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I CORE PILLARS OF GRIFOLS’ CORPORATE GOVERNANCE I 71 ANTI-CORRUPTION POLICY The company’s Anti-Corruption Policy applies to all employees of Grifols, S.A., its subsidiaries and investee companies, as well as external collaborators. Several review processes are in force to ensure compliance with this policy as part of Grifols Global Anticorruption Program. Training sessions are designed and delivered with different content, formats and media to tailor them to each audience’s culture and language, as well as to the different business divisions and functions. In this regard, employees who work in the Grifols U.S. sales and marketing department receive specific training on the Code of Conduct and Anti-Corruption Policy as part of the firm’s training and education programs on regulatory compliance in the health sector. Additionally, Grifols’ Internal Audit department routinely audits departments and business units, including the review and monitoring of anticorruption policy compliance when applicable. This process entails identifying process improvements carried out in the ethics and compliance domain and in other departments; the review of third-party contracts and agreements related to Grifols’ international operations; the performance of due diligence of third parties and their certifications assuring compliance with Grifols’ anti-corruption policy; and the performance of sample testing of expense accounts related to international transactions. External and independent audits are also conducted to review and evaluate different aspects of the Grifols Anti-Corruption Program. GRIFOLS ENFORCES A “ZERO-TOLERANCE” APPROACH TO ACTS OF BRIBERY AND CORRUPTION Available to all employees and third parties via the corporate website, the policy outlines appropriate standards of conduct for interactions with public officials or public organizations, as well as with individuals and entities operating in the private sector. It also sets forth the ethical standards that Grifols expects from its third-party business and commercial partners. Compliance with the Anti-Corruption Policy is also reinforced through various review processes, managed by the Global Compliance Department according to the type of interaction. With particular attention given to higher-risk operations, compliance reviews analyze interactions with government officials, public agencies, healthcare professionals and/or healthcare organizations to discern potential conflicts of interest. The review processes aim to cover the whole range of Grifols’ activities in the market: those aimed at promoting Grifols’ products, services and name; those that relate to Grifols R+D+i projects; those which purpose is to support the continuous education and knowledge of healthcare professionals; Grifols’ relation with patient advocacy groups and public authorities. THE COMPANY HAD NO CONFIRMED INCIDENTS OF CORRUPTION IN 2020 To ensure compliance with its anti-corruption policies and procedures, the company routinely offers training sessions for both new and current employees, as well as supplementary training for employees whose roles entail frequent interactions with the market or who carry out functions related to the promotion of Grifols products or services. The Global Compliance Review Board (GCRB) supports the Board of Directors Audit Committee in overseeing Grifols’ Global Anti-Corruption Program by providing senior management oversight. The GCRB also supports the compliance function by offering cross-functional input and resources regarding the suitability and effectiveness of the Anti-Corruption Program, as well as by helping to foster an ethics-driven culture throughout the organization, from management to everyone on staff. In 2020, 3,044 interactions between employees and public officials or other individuals mentioned were subject to review.

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_22.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I CORE PILLARS OF GRIFOLS’ CORPORATE GOVERNANCE I 72 In the case of a potential incident of corruption, an internal investigation is launched with the involvement of the Internal Audit Department and/or Grifols Legal Advisors, as applicable. All internal investigations entail all relevant stakeholders and are managed thoroughly and cursorily. They conclude with an appropriate action plan, including corrective measures if deemed necessary. ANTI-CORRUPTION TRAINING IN 2020 As of December 31, 2020, more than 92% of employees whose roles and responsibilities increase their likelihood of witnessing acts of corruption (full and part-time employees) had received special training on Grifols Anti-Corruption Policy and other internal controls that support it. Roughly 60% received training in 2020. In addition to its ongoing education efforts, Global Compliance is in permanent contact with Grifols employees to update them on any changes or novelties regarding policies and procedures, as well as relevant resolutions made by public authorities such as the U.S. Department of Justice and the Spanish courts. These initiatives contribute to continuously fostering ethical conduct within the organization. Number of top management members informed on anti-corruption policies and procedures Employees with a higher probability of exposure to acts of corruption who received specific anti-corruption training Grifols enforces a “zero-tolerance” approach to acts of bribery and corruption. At Grifols, bribery and corruption are unacceptable in all circumstances, no matter how small the infraction. Likewise, Grifols does not tolerate retaliation of any kind against those who in good faith report a potential violation of applicable laws, rules and regulations, or noncompliance with internal policies and procedures. As described in internal procedures, violations of Grifols’ Anti-Corruption Policy may result in disciplinary actions. To this end, the company has an internal procedure in place with a listing of disciplinary measures of any breaches detected, including the possibility of dismissal. Informed before 2020 Informed during 2020 Trained before Trained during Total Total 2020 2020 l North America l Europe l Rest of the world Grifols had no confirmed incidents of corruption in 2020. Employees with a higher probability of exposure to acts of corruption informed on anti-corruption policies and procedures Informed before 2020 Informed during 2020 TOTAL 1.9% l Executives 3 21 24 7.7% l Directors 10 94 104 8.7% l Senior management 31 177 208 l Management 44 18 49 163 348 193 207 366 242 16.4% Informed during 2020 l Senior professionals lProfessional staff Administrative staff / Manufacturing workers l 28 83 111 32.3% Total 183 1,079 1,262 37 26 16 12 11 172 486 209 522 477 277

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_23.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I CORE PILLARS OF GRIFOLS’ CORPORATE GOVERNANCE I 73 ANTI-CORRUPTION MEASURES FOR THIRD-PARTY COLLABORATORS All Grifols’ commercial and business partners undergo a verification process before any transactions are conducted. The third party anti-corruption management program includes various control mechanisms for outside parties with whom Grifols intends to establish commercial or business relationships. In addition, Grifols requires its distributors to provide an annual certification of applicable anti-corruption regulations. These contracts also include a clause authorizing Grifols to perform audits and terminate commercial relations in the case of non-compliance with anti-corruption norms. MORE THAN 92% OF STAFF WITH A HIGHER PROBABILITY OF WITNESSING ACTS OF CORRUPTION HAVE RECEIVED SPECIFIC TRAINING. BUSINESS PARTNERS MUST ALSO COMPLY WITH GRIFOLS’ ANTI-CORRUPTION POLICY Before entering any commercial relationship with Grifols, third parties are subject to a thorough two-part verification process: Grifols first establishes the legitimacy of the potential commercial transaction, and second, performs due diligence, including an in-depth analysis of the third party’s organizational structure, key employees, business approach and corporate reputation, among other aspects. In addition to the aforementioned and the violation-alert system for authorized third-party collaborators, Grifols’ employees are required to continuously monitor the day-to-day activities of the third parties they manage. This ongoing monitoring system allows the company to stay abreast of the third party’s internal organization, market position and commercial activities related to Grifols’ products and services. Both the violation-alert system and continuous monitoring process are made to detect possible red flags, which Grifols addresses as expeditiously and effectively as possible. Subsequent third-party contracts also include current anti-corruption obligations, as well as an annex with a summary of Grifols’ Anti-Corruption Policy. At least once a year, they are required to certify full compliance with these ethical standards. In some cases, third-party collaborators, such as international distributors, are also required to complete online training periodically on anti-corruption issues, for instance, the U.S. Foreign Corrupt Practices Act (FCPA).

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_24.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I TRANSPARENCY AS A VALUE, OBLIGATION AND COMMITMENT  I 74 z INTERACTIONS WITH HEALTHCARE ORGANIZATIONS AND PROFESSIONALS As a pioneer in the healthcare sector, Grifols has vast experience and expertise in patient behavior and disease management. Its ongoing interactions with healthcare organizations and professionals serve as a continual source of new knowledge, ideas and insights. Leveraging this expertise is crucial to guide the industry and enhance the quality of patient care and treatment options. These interactions should be grounded in integrity and transparency. and transfers of value made to certain healthcare organizations and professionals, such as physicians and teaching hospitals. Additionally, under the PPS Act, manufacturers and group purchasing organizations must disclose if a physician has ownership interests in said companies. Every June, the Centers for Medicare and Medicaid Services (CMS) publishes information extracted from these reports, including the amounts transferred and names of reported healthcare practitioners and organizations. long as their qualifications and expertise respond to a specific need, they are paid fair-market value and their relationship with the company is formalized via a written contract. MORE THAN 70% OF TOTAL TRANSFERS OF VALUE REPORTED IN THE U.S. AND EUROPE ARE RELATED TO R&D Grifols also complies with all local regulations. In accordance with California’s Health and Safety Code, Sections 119400-119402, Grifols has a total fixed annual limit of USD 1,500 for promotional materials, jpgts, and other items or activities that it may provide to an individual healthcare professional who practices in the state of California. The Grifols Global Compliance Program establishes internal processes and procedures regarding transfers of value to healthcare professionals and organizations, including their approval on behalf of the pertinent committees. Grifols has a specific policy and procedure in place that describes how it implements its transparency program to ensure compliance with U.S. federal and state reporting obligations. In the United States, the Sunshine Act (PPS Act) – also known as the Open Payment Program or Transparency Reports and Reporting of Physician Ownership or Investment Interests – requires manufacturers and group purchasing organizations of pharmaceuticals, biologicals, medical devices and medical supplies to itemize all information relating to payments In the U.S., Grifols also adheres to the Pharmaceutical Research and Manufacturers of America Code (Code)1. Updated in 2019, the Code reinforces ethical standards and principles when research-based pharmaceutical and biotechnology companies interact with the healthcare community. Grifols can also hire healthcare professionals as consultants or advisors as (1) More details on the code are available on www.grifols.com (2) The following countries are included within the scope of the EFPIA Code: Austria, Belgium, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Iceland, Italy, Latvia, Lithuania, Malta, North Macedonia, Norway, the Netherlands, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine and United Kingdom. Grifols’ corporate website includes a methodology note and specific reports on transfers of value to healthcare professionals and organizations in concrete countries: www.grifols.com TRANSPARENCY AS A VALUE, OBLIGATION AND COMMITMENT

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_25.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I TRANSPARENCY AS A VALUE, OBLIGATION AND COMMITMENT  I 75 In 2019, the company rolled out a new transparency-training program for new and current employees whose roles include regular interactions with healthcare organizations and professionals. The company also established a quarterly sub-certification process to promote data integrity, facilitate compliance with external transparency requirements, and enhance the certification of decision-makers to ensure accountability is evenly and globally extended throughout the organization. AGGREGATE SUM OF TRANSFERS OF VALUE In 2019, Grifols distributed EUR 15.7 million in transfers of value in accordance with the EFPIA Code. This reflects a 27% increase since 2018 as a result of a 28% upturn in R+D expenditures, which totaled EUR 11.3 million in 2019 and accounted for 72% of total transfers of value. Spain generated 55% of total transfers of value in Europe in 2019 and 64% to R+D related transfers. registered in 2018. This decline is the result of fewer R+D-related activities, which represents 71% of the total reported. Under the Open Payment Program, Grifols’ transfers of value in the U.S. in 2019 amounted to USD 5.9 million, a 36% drop compared to the USD 9.3 million In Europe2, Grifols voluntarily adopted practices outlined in Chapter 5 of the European Federation of Pharmaceutical Industries and Associations (EFPIA) Code and made them extensive to all corporate divisions and operations in 2015. In 2020, for the fifth consecutive year, Grifols disclosed all payments and transfers of value to healthcare organizations and professionals in the diverse European countries defined within the scope of EFPIA. The company also has policies and procedures describing how it carries out its transparency program to comply with this initiative. In addition, as a member of MedTech Europe, Grifols also integrates its transparency guidelines in its Code of Ethical Business Practice, alongside the ‘Training Grants’ carried out in 2019. In addition, Grifols discloses all information related to country-specific transfers of value in compliance with local regulations. Transfers of value by type in Europe1 2019 2018 2017 Euros % Euros % Euros % Services 1,113,493 7% 1,082,272 9% 1,090,373 9% Contribution toward cost of events HCD 436,741 3% 311,021 3% 651,981 6% Contribution toward cost of events HCP 2,361,468 15% 1,737,080 14% 1,392,537 12% Donations 409,521 3% 363,957 3% 236,007 2% R+D collaboration with third parties2 11,339,366 72% 8,849,275 72% 8,344,765 71% TOTAL 15,660,589 100% 12,343,606 100% 11,715,663 100% (1) Transfers of value in Europe in accordance with the definition of the EFPIA code. (2) Includes research grants. Research data is included in accordance with the definition of the Code of EFPIA, but does not reflect the total amount invested by Grifols in R+D. Transfers of value by type in the U.S. 2019 2018 2017 USD % USD % USD % Services 1,017,565 17% 979,471 11% 1,378,315 10% Contribution toward cost of events HCP 671,040 11% 631,180 7% 754,160 6% Grants 15,000 - 99,000 1% 63,500 0% R+D collaboration with third parties 3,890,209 66% 7,373,724 79% 10,844,688 80% Investigator sponsored research 355,383 6% 201,882 2% 545,497 4% TOTAL 5,949,196 100% 9,285,257 100% 13,586,160 100%

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_26.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I TRANSPARENCY AS A VALUE, OBLIGATION AND COMMITMENT  I 76 z MANAGEMENT OF PUBLIC AFFAIRS Advocacy is a legitimate and essential part of the democratic process that allows interest groups to share their perspectives and concerns with them. For Grifols, this entails educating them about the unique nature of plasma medicines and the importance of unrestricted access for patients to all products in all appropriate sites of services. The Grifols Code of Conduct and Anti-Corruption Policy offer guidelines and standards of interaction between Grifols and public officials. 2019 2018 2017 Lobbying Expenditures in the U.S. as Reported Under the LDA. These amounts reference lobbying expenses, not political campaign contributions. Grifols does not make political campaign contributions in the U.S. USD 510,000 USD 550,000 USD 560,000 Estimated annual costs related to activities covered by the European Transparency Register EUR 50,000-99,000 EUR 50,000-99,000 - In Europe, Grifols allocates two employees – one on a part-time basis and another on a quarter-time basis, equivalent to an 80% full-time employee – to take part in EU events on these issues. In the U.S., the team includes four employees who engage in advocacy as part of their work portfolio. In the U.S., Grifols complies with all federal, state and local regulations. This includes submitting regular transparency filings to the U.S. Congress as required by the Lobbying Disclosure Act (LDA). As of October 15, 2019, Grifols is also a voluntary member of the European Union Lobbying Transparency Register, integrating the principles governing the rules of conduct for EU institutions in its Code of Conduct. In this regard, the company’s main focus is on European legislation and policies related to blood and plasma. Additionally, the company is also a voluntary member of three other organizations listed on the European Union Transparency Register: the Plasma Protein Therapeutics Association (PPTA), the European Confederation of Pharmaceutical Entrepreneurs (EUCOPE) and MedTech Europe.

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_27.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I PRIVACY AND PERSONAL DATA PROTECTION  I 77 Technological advances open up countless opportunities, while at the same time pose challenges to ensure the protection and privacy of personal data. The company processes the personal data of numerous stakeholders as an essential part of its scientific research, talent management and interactions with donors and patients, among others. Transparency with regard to the processing of personal data is fundamental to strengthening relationships based on trust with all our stakeholders. For Grifols, guaranteeing the privacy and protection of our stakeholders’ personal data, as well as preventing data breaches and IT system failures, are of utmost importance. The company has rigorous security measures, both technical and organizational, as well as insurance policies to protect the organization’s assets and users in a cyber-environment. Personal data and medical information collected at plasma donation centers and during clinical trials are protected to maintain their confidentiality. GRIFOLS COMPLIES WITH ALL DATA PROTECTION LAWS AND HAS RIGOROUS CYBER-PROTECTION SYSTEMS The company has numerous processes and systems in place to protect against the loss, unauthorized access, improper use or alteration of personal information of its plasma donors and clinical trial subjects. All clinical trials adhere to the guidelines established by the European Medicines Agency’s Good Clinical Practice ICH E6 (R2) and U.S. Food and Drug Administration. In addition, audits performed on both clinical trials and pharmacovigilance procedures include a compliance review of applicable privacy regulations. Grifols complies with all applicable data protection laws and only works with suppliers that offer sufficient guarantees of data protection integrity. Grifols has a global privacy and data protection policy, which is mandatory for all employees. This policy establishes a framework for the processing of personal data in the diverse regions where Grifols operates and outlines the relevant principles with regard to personal data protection and security, as well as their implementation. Grifols offers the possibility of receiving training on the Global Privacy and Data Protection Policy to the entire staff and also gives specific training to employees whose roles require them to process personal data on a regular basis. PRIVACY AND PERSONAL DATA PROTECTION

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_28.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I CYBERSECURITY I 78 Grifols has an internal security and cybersecurity policy implemented through a regulatory framework, decision-making and control bodies, internal cybersecurity and cyber risk management functions, as well as specialized external services aimed at effectively managing the security of the information handled by its IT systems and the assets involved in its processes, ensuring the correct operation of the company at all times. The policy’s core principles are as follows: guarantee that Grifols’ information and telecommunications systems have acceptable levels of cybersecurity and resilience; strengthen the company’s capacity for prevention, detection, reaction, analysis, recovery, response, research and coordination in the face of new threats; and raise awareness of cybersecurity risks among all employees, collaborators and third parties. Grifols’ cybersecurity management model is based on international and national regulations, using all the means possible in proportion to detected threats. In this regard, the company has the necessary resources to ensure its corporate environment aligns with its business objectives and cybersecurity goals. Therefore, it has rigorous procedures, tools, the latest technology and insurance policies in place to protect the organization’s assets and users in a cyber environment. The risk arising from the use of third-party or cloud-based services is managed through a program of periodic reviews with defined requirements for security, privacy and compliance with applicable regulations. As preventative measures, Grifols also has a robust IT-cybersecurity incident-response system, which includes the development of specific contingency plans to guarantee, at all times, the continuity of its operations in the event of an attack. GRIFOLS’ INFORMATION AND TELECOMMUNICATIONS SYSTEMS GUARANTEE OPTIMAL LEVELS OF CYBERSECURITY AND RESILIENCE CYBERSECURITY

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_29.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT CORPORATE GOVERNANCE I RISK CONTROL AND MANAGEMENT I 79 z PRINCIPLES OF GRIFOLS’ RISK CONTROL AND MANAGEMENT SYSTEM Grifols’ risk management system extends to all companies in the group, including investee firms. Approved by the Board of Directors, Grifols’ risk control and management policy is designed to provide greater security to patients, donors, employees, shareholders, customers, suppliers and other stakeholders through the prevention, control and management of risks to which Grifols is exposed. This policy is firmly integrated in a comprehensive risk control and management system, based on the principles of the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The system includes the following elements: governance and culture; strategy and objectives; performance; review; information, communication and reporting. The risk control and management system is based on the following principles: At Grifols, categories: risks are grouped into the following • Environmental, Social and Governance risks (ESG): environmental, social, and governance-related risks that may impact the organization, including climate change, 2 human capital and breaches of laws, regulations, internal standards, ethical value and contracts. Governance risks also include fraud and corruption risks. 1. Establishment of a risk appetite framework, with the levels of risk the Company deems acceptable. These levels of risk are consistent with the Grifols objectives. • Strategic Company’s risks: risks that can impact the business strategy and strategic objectives; including market risks uncertainties, such as socio-political, and reputational risks. 2. Leadership of management, who will provide the necessary resources. • Financial risks: risks that can impact cash flows if not effectively managed, leading to a loss in revenue, shareholder value or the overall stability of the organization. Financial risks also include contingent liabilities and other off-balance sheet risks. • Legal and Regulatory risks: risks arising from new or modified legislation, regulation and interpretation. 3. Integration in management processes, especially those related to strategy and planning. At the date of preparing its consolidated annual 4. Segregation of duties between the business areas and the areas of supervision and assurance. accounts, Grifols has adopted the measures it considers necessary to mitigate any possible effects arising from the aforementioned events. The Board of Directors, through the Audit Committee, oversees the effectiveness of the risk control and management system to ensure the company reaches its corporate and strategic objectives and meets stakeholder expectations. The Corporate Risk Committee oversees management’s responsibilities to evaluate, manage and control risks and the integration of risk management at Grifols via the risk management process. • Operational risks: risks related to direct or 5. Comprehensive and harmonized management, so that all risks are managed through a common process for identification, assessment and treatment. indirect economic losses resulting from inadequate internal procedures, technical failures, human error, or certain external events. Operational risks also include information technologies. 6. Continuous improvement through periodic reviews of the suitability and efficiency of applying the system and the best practices and recommendations in the area of risks. • Cybersecurity risks: risk of breaches of or attacks on information systems by malicious insiders and outsiders. RISK CONTROL AND MANAGEMENT

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_30.jpg Our quality and safety standards, based on policies and procedures, go beyond strict legal requirements. They are core values for the company and are part of our corporate identity. For this reason, we have continuous supplier evaluation processes, we ensure control at all stages of our value supply chain and we promote quality management systems, audits and inspections that generate confidence in our products and services among patients and healthcare professionals. S AND QUALITY OBLIGATORY RECALL OF PRODUCTS OR INCIDENTS 0 AUDITS AND INSPECTIONS 675

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_31.jpg SAFETY AND QUALITY

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_32.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY  I 82 As a company which operates in the health sector, patients and healthcare professionals are at the heart of Grifols’ operations. Guaranteeing maximum safety and quality of products is part of Grifols’ commitment which, driven by senior management and ratified in the Code of Ethics for Grifols executives, applies to the entire company and is extended to the entire organization through the Code of Conduct. world. The core tenets of Grifols’ Code of Conduct, including the adoption of anti-competitive practices; the anticorruption policy, which promotes internal processes and third-party management principles; and in-house measures to ensure complete alignment with Grifols’ ethical commitment, are also reflected in this policy. The favorable results of audits and inspections by health authorities and international organizations in 2020 reflect this commitment to quality and safety. Throughout the year, Grifols reported no cases of regulatory non-compliance, warnings or non-compliance with voluntary codes. FOR GRIFOLS, ENSURING SAFETY AND QUALITY IS MORE THAN JUST A LEGAL REQUIREMENT Grifols outlines all key legal and regulatory procedures in its Consolidated Annual Accounts. Grifols’ quality-assurance methods encompass all corporate operations and include training policies and continuous-development initiatives to ensure employees are able to successfully fulfill their responsibilities while meeting the company’s rigorous quality and safety standards. Safety and quality is more than just a legal requirement. Each division has robust policies and procedures to guarantee maximum levels of quality, safety and efficacy throughout the value chain. The Bioscience Division adheres to the Industrial Quality Policy, which outlines both the safety and quality criteria and legal regulations applicable to all companies that develop, manufacture and market plasma-derived medicines. Furthermore, Grifols’ vertically integrated business model allows for additional control over the manufacturing process. At the same time, diverse quality-control committees routinely evaluate quality systems and processes in order to monitor key performance indicators (KPIs), control markers and compliance with good manufacturing practices (GMP). In this regard, Grifols routinely assesses corporate objectives based on these evaluations to assure excellence in the production, supply and timely delivery of its products. These objectives are established on an annual basis in accordance with corporate policy. In addition, Grifols Commercial Division with its Global Quality Policy establishes guidelines to assure the highest levels of quality, safety and efficacy in the sale and distribution of Grifols’ products around the More information: https://www.grifols.com/documents/51507592/51526409/quality-policy-commercial-division-es. pdf/4047432b-db41-4898-9f15-10bbe46c3206 SAFETY AND QUALITY

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_33.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY  I 83 z MANAGEMENT FROM THE SOURCE: SUPPLIER RELATIONS Each Grifols’ division has its own qualified suppliers whose technical, management and control expertise have been assessed and approved by the quality-assurance department. In time, more social and environmental benchmarks will be integrated into Grifols’ vendor-evaluation process. In accordance with corporate policy, all suppliers whose products or services could impact the value chain must be previously qualified. Qualifications are granted for a specific material or service, with concrete criteria established for each. With regard to the logistics and distribution of finished products, Grifols’ global quality policy provides a framework to efficiently manage and monitor international suppliers and distributors, ensuring solid measures are in place to guarantee that the suppliers and distributors fulfill the established requirements. the plan will integrate additional criteria related to ethical, social, environmental and data-privacy issues. These benchmarks are also integrated into the new Sustainability Policy, which outlines the core principles and commitments related to environmental and social responsibility as seen throughout Grifols’ business model. IN 2020, GRIFOLS WORKED TO INTEGRATE SOCIAL AND ENVIRONMENTAL REQUIREMENTS IN ITS SUPPLIER CONTRACTS At the end of 2019, Grifols began developing a consolidated supplier-policy plan with global guidelines to assess the degree of risk and participation throughout the supply chain. In addition to ensuring compliance with the strictest quality standards, In 2020, Grifols worked to redefine the contractual framework for suppliers and integrate social and environmental requirements into its supplier contracts, as well as in other initiatives like the virtual-communication program. These efforts will significantly advance the company’s aim of evaluating suppliers based on ESG factors. (technical specifications) if applicable contract allocation receipts PURCHASING MANAGEMENT PROCESS Request> Supplier qualification,> Negotiation/ > Formalization > Orders/> Invoices> Follow-up / audits

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_34.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY  I 84 The company is also working on a comprehensive procurement-management model. Based on a global structure with a local focus, this model will enhance the communication and coordination with international and alignment with specific needs of its diverse business lines. As part of these efforts, Grifols created a new Global Procurement Organization model to optimize purchasing processes and identify opportunities and synergies among the Group’s various departments and companies. Reporting directly to Grifols’ CEOs, the procurement officer is responsible for managing direct and indirect procurements and improving operational efficiencies, such as the smooth integration of new acquisitions. 2021. The company is also considering the creation of a specific Code of Conduct for suppliers that aligns with its own internal code. THE GLOBAL PROCUREMENT ORGANIZATION WILL COVER 100% OF GRIFOLS’ ACTIVITIES BY THE END OF 2021 The Global Procurement Organization will be rolled out in phases across the Group’s various companies and is expected to be fully implemented by the end of

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_35.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY  I 85 CONTINUOUS EVALUATION PROCEDURES Grifols has continuous evaluation procedures in place to evaluate suppliers according to the level of risk of the material or service they provide and its impact on the value chain. New suppliers undergo regular audits as part of the evaluation and monitoring process. Audits of suppliers of raw materials and services focus on the quality and safety of the products and services provided, as well as specific environmental criteria. In this regard, all transportation agents are assessed by Grifols Commercial Division following concrete environmental parameters (ISO 14001, biodiesel and next-generation fuel certifications). The supplier-selection process uses the ISO 14001 standard as a guidepost, among other criteria, to factor in environmental issues. Summary of 2020 Audits Division / Area Type of supplier Results Pending evaluation and final report No. of quality audits Favorable Not favorable Raw material suppliers 260 251 0 9 Bioscience Division Service suppliers 76 72 1 3 Raw material suppliers 18 18 0 0 Diagnostic Division Service suppliers 5 5 0 0 Raw material suppliers 11 11 0 0 Hospital Division Service suppliers 0 0 0 0 Raw material suppliers 0 0 0 0 Distributors 41 23 2 16 Grifols global subsidiaries Transport companies 12 11 1 0 Service suppliers 12 10 1 1 Raw material suppliers 4 1 0 3 Others (Grifols Engineering, GWWO, KIRO) As part of Grifols’ quality-audit system, suppliers are required to document and deliver a solid and continuous-development program. Service suppliers 74 74 0 0 Grifols continues working on integrating environmental certifications in its supplier assessment process, including ISO 14001 (environmental management systems) and OSHAS (Occupational Health and Safety Management) as part of its supplier selection and qualification process. *It includes the number of inspections by health authorities and accredited institutions, as well as the number of internal audits. EVOLUTION OF ANNUAL AUDITS AND INSPECTIONS INCIDENTS PRODUCT 202020192018 WITHDRAWALS 00675 685 705

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_36.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY  I 86 z CUSTOMER RELATIONS: PATIENTS AND HEALTHCARE PROFESSIONALS The company’s manufacturing and distribution processes are subject to a rigorous regulatory framework in order to promote the quality, safety and availability of Grifols plasma-derived medicines and healthcare products. Grifols has made a commitment to comply with all applicable laws and regulations and is especially transparent in its interactions with healthcare professionals and organizations. HEALTH, SAFETY AND PHARMACOVIGILANCE MEASURES Furthermore, Grifols has a Pharmacovigilance System in place to monitor adverse reactions derived from the administration of its plasma-derived medicines, as well as a Surveillance System to monitor negative reactions derived from the use of its medical devices. Within the framework of these essential programs, the company has a system to report suspected adverse reactions and safety incidents. Moreover, all three main divisions have claims systems to register and assess all notifications received from healthcare centers, patients or users in association with assessments of possible defects of Grifols products. In conjunction with this, Grifols performs regular in-house audits in accordance with its quality control systems. Both systems are also subject to outside inspections by competent healthcare authorities. Within the framework of Grifols’ Quality and Safety Policy, the company identifies the critical attributes of its products, carrying out comprehensive controls to ensure the highest levels of quality and safety of its raw materials, manufacturing process and finished products. In accordance with the quality-assurance management department, this information is compiled and robust procedures are considered to make sure that all products manufactured by Grifols comply with pre-established quality and safety criteria. This system also enables the company to detect, register and manage any issues that could impact the products’ life cycles. All medical devices are evaluated in adherence to the REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) regulation and safety data sheets are available to all clients who request them. MANUFACTURING AND DISTRIBUTION PROCESSES OF MEDICINES AND MEDICAL DEVICES ARE SUBJECT TO A RIGOROUS REGULATORY FRAMEWORK All activities and requirements of the Pharmacovigilance System and Surveillance System for Medical Devices are outlined in Grifols’ standard operating procedures and updated on a regular basis. Measures applied by division Pharmacovigilance system Medical device surveillance system Division / area Type of product Bioscience Division Medicines Applicable Not applicable Diagnostic Division Medical devices Not applicable Applicable Hospital Division Medicines and medical devices Applicable Applicable See Chapter 3 on Corporate Governance for more information on Grifols’ commitment to transparency with healthcare providers and organizations

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_37.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY  I 87 PHARMACOVIGILANCE SYSTEM FOR MEDICINES SURVEILLANCE SYSTEM FOR MEDICAL DEVICES Pharmacovigilance includes all activities related to the detection, assessment, understanding and prevention of adverse effects or any other complications related to the use of medicines. Each division has a qualified manager responsible for implementing and maintaining this system. This role requires availability 24 hours a day to receive healthcare inspections or respond to consultations regarding Grifols’ pharmacovigilance and the safety of its medicines. Medical device manufacturers are required to establish and maintain procedures to identify and monitor any adverse effects related to the use of their products. Grifols appoints qualified personnel or technical managers to maintain this system in its business divisions where applicable. Grifols does not outsource the core activities of its pharmacovigilance or medical-device surveillance systems to third parties. All employees involved in Grifols’ pharmacovigilance system are adequately trained on pharmacovigilance procedures, including the proper identification and reporting of adverse effects, among other aspects, in alignment with the system’s continuous development processes.

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_38.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY  I 88 LABELLING AND PRODUCT INSERTS CLAIMS SYSTEM Grifols’ three main divisions have a complaints system to record and evaluate all notifications received by healthcare centers, patients or users related to consumer appraisals of possible defects in product quality. The information contained in product leaflets and labels complies with the standards and regulations applicable in each country where Grifols products are distributed, including Directive 2001/83/EC for medicines marketed in Europe and Title 21 Code of Federal Regulations (CFR) in the United States, in addition to local regulations applicable in other markets. In each division, a trained professional or technical director is appointed to assess any and all claims, carry out the relevant inquiries, implement corrective and preventative measures, notify healthcare authorities if necessary, and communicate with the client regarding the conclusions of the claims process. In the case of medical devices, labels and product leaflets also include any mitigating measures identified through risk analysis activities, performed in accordance with the application of risk management to medical devices (EN ISO 14971:2012 Medical Devices) or other requirements communicated by health authorities following the review stage of the product-licensing process. Complaints received Division 2020 2019 Bioscience Division 1 for every 74,669 units distributed 1 for every 94,030 units distributed Diagnostic Division 1 for every 656.212 diagnostic tests N/A* Hospital Division (Medicines) 1 for every 4,611,814 units distributed 1 for every 1,888,014 units distributed Hospital Division (Medical Devices) 1 for every 120,123 units distributed 1 for every 112,321 units distributed * Ratio not applicable for the type of product manufactured by the Diagnostic Division

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_39.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY  I 89 PRODUCT RECALL SYSTEM RESPONSIBLE MARKETING: TRUTHFULNESS AND RIGOR IN PROMOTIONAL AND EDUCATIONAL MATERIALS Each division has a product recall system. The claims and recall systems are outlined in Grifols’ standard operating procedures and internally audited to corroborate their effectiveness and compliance with current legislation. They are also subject to inspections by the competent healthcare authorities. The product claims and recall systems include As part of its commitment to responsible marketing and sales practices, the company ensures all of its promotional and educational materials comply with applicable laws and regulations; align with industry policies and codes voluntarily adopted by the company; adequately address the target audience and end users; and contain information that is truthful, accurate, comprehensive, clear and balanced. The approval process for marketing materials consists of several review stages and the participation of decision makers from diverse corporate areas, including the legal, medical affairs, regulatory and communication departments. In 2019, a new and improved tool for electronic review and approval of materials was implemented through the GRP system. The material and content are solely approved for specific uses and countries, and can only be used without any alterations. All promotional and educational materials are reviewed on a regular basis to ensure their content is valid and complies with current standards and codes. procedures to notify healthcare authorities, patient associations, patients and healthcare professionals regarding the potential risks of the recalled product. Reflecting its overriding commitment to transparency, Grifols has a customer service call center and dedicated webpages for specific products to communicate potential risks. The company also prohibits the use of any recalled product in clinical trials. Grifols had no product recalls, either mandatory or voluntary, in 2020. The company’s product recall system goes beyond legal compliance and includes the voluntary withdrawal of products that fail to meet its safety and quality standards. All Grifols teams involved in possible product recalls, whether voluntary or mandatory, receive specific training to adequately manage possible incidents and additionally, Grifols periodically runs product-recall drills to make sure all crisis-management procedures and protocols work smoothly and to identify any areas for improvement. Grifols has a standard operating procedure – the Grifols Review Process or GRP – that defines the activities and responsibilities related to the approval, review and control of promotional and educational materials used to communicate Grifols’ products and services to external audiences. Appropriate training is provided on responsible marketing and sales practices in line with Grifols Code of Conduct and Anti-corruption Policy. 2020 2019 Materials reviewed 3,731 4,247 Materials approved 3,637 3,949 GRIFOLS HAD NO PRODUCT RECALLS, EITHER MANDATORY OR VOLUNTARY, IN 2020

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_40.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY IN THE BIOSCIENCE DIVISION I 90 DONATION INVENTORY HOLD • WHO: recommendations for the production, control and regulation of human plasma for fractionation (WHO Technical Report Series, No. 941) • Directive 2002/98/CE that sets the standards for the quality and safety for the collection, testing, processing, storage and distribution of human blood and blood components • EMA Guideline on Plasma-Derived Medicinal Products • 21CFR Part 640: additional standards for human blood and blood components • Local regulations in countries where hemoderivatives are distributed • PPTA standards adhered to voluntarily by Grifols • European Pharmacopoeia DONOR SELECTION All plasma units that pass the initial viral testing are subject to a 60-day inventory hold before being released into production. The results of the hold sample are verified against the new donation to reconfirm the absence of viruses and pathogens. During the pandemic, the FDA reduced the required inventory hold from 60 to 45 days to guarantee sufficient supply of plasma-derived medicines. Grifols has applied the new regulation, under exceptional circumstances, for a limited amount of plasma in order to help guarantee the supply of plasma medicines while maintaining the same levels of safety and quality. Grifols only uses plasma from qualified donors collected in centers approved by competent health authorities. Donors are subject to annual medical exams and routine health screenings before every donation. The company does not discriminate against potential donors on the basis of ethnicity, gender or socioeconomic status. Only donors who are committed to the donation process, have a permanent local residence and meet rigorous health and safety criteria are accepted. Grifols plasma centers are subject to regular inspections. ANALYSIS OF DONATED PLASMA All units of donated plasma are analyzed in laboratories licensed by the FDA, EMA and other healthcare authorities. More than 10 analyses are performed on each unit of plasma, including tests for hepatitis A, B and C, HIV and parvovirus B19, using highly sensitive techniques such as NAT (Nucleic Amplification Techniques) and ELISA (Enzyme-Linked Immunosorbent Assay) to detect viral antigens, antibodies or pathogens. Once the plasma units are in production, every batch is tested at various stages during the production process. In total, 18 different analyses are performed depending on the type of plasma. See Chapter 6 on Donors for more information. SAFETY AND QUALITY IN THE BIOSCIENCE DIVISION

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_41.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY IN THE BIOSCIENCE DIVISION I 91 POST-SALES PRODUCTION PRODUCT TRACKING AND TRACEABILITY Before releasing any plasma-derived medicine, Grifols labels product vials with a unique code, which includes a laser etching of the lot number to ensure traceability. Moreover, all products include a holographic seal to verify their inviolability and authenticity. A robust Pharmacovigilance System is just another reflection of the company’s safety pledge. QUALITY MANAGEMENT SYSTEMS IN ALL PRODUCTION FACILITIES Additionally, Grifols voluntarily rolled out the PEDIGRI® system, which provides healthcare professionals detailed information on the plasma used to manufacture a specific unit of product, as well as a certificate of the testing performed. For more than 20 years, Grifols has been the only company to offer information on the source and traceability of its plasma STERILE FILLING After plasma has been approved for production, the manufacturing process begins. This process primarily entails the fractionation or protein separation process; purification; specific viral-inactivation processes; sterile filling; and secondary packaging. All operations are carried out in accordance with Good Manufacturing Practices (GMP). All of Grifols’ manufacturing plants have a Pharmaceutical Quality System and a rigorous quality-control system. The production processes are also subject to a strict internal quality control program that ensures the quality, safety and efficacy of each manufactured batch. Additionally, the competent authorities carry out their own corresponding controls in accordance with the regulations in force in each country before any commercialization. Grifols’ production facilities have never been closed due to non-compliance with regulations. ELIMINATION OF VIRUSES AND OTHER PATHOGENS After purification, the product is sterilized using a proprietary sterile-filling process developed in-house by Grifols Engineering. Grifols’ sterilization process is used as a reference within the industry. During the production phase, approved plasma undergoes rigorous testing and purification processes, including several pathogen-elimination steps, viral inactivation and virus-removal techniques to guarantee the highest possible levels of safety. Depending on the product, the manufacturing process may include heat, pasteurization, solvent/detergent and/or nanofiltration treatments. • Good Pharmacovigilance Practices, EMA • 21 CFR 50 • Local regulations in countries where hemoderivatives are distributed • Good Pharmacovigilance Practices, EMA • Code of Federal Regulations (CFR): 21 CFR 11, 21 CFR 210, 21 CFR 211, 21 CFR 600, 601, 610, 630 and 640 • Local regulations in countries where hemoderivatives are distributed • Good Manufacturing Practices, Pharmaceutical Inspection Co-operation Scheme (PIC/S) • European Pharmacopoeia • American Pharmacopoeia • Local regulations in countries where hemoderivatives are distributed

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_42.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY IN THE BIOSCIENCE DIVISION I 92 z SAFETY AND QUALITY MANAGEMENT INTERNAL CONTROL FRAMEWORK EXTERNAL CERTIFICATIONS SUPPLIER CONTROL SYSTEM IN-HOUSE AND EXTERNAL QUALITY AUDITS • Certifications of Good Business Manufacturing Practices of the European Union, the United States and other countries, where required. Grifols’ Supplier Qualification Management System ensures that all raw materials – including plasma from outside providers as well as non-plasma supplies – follow a strict qualification process. The company runs a robust program of routine supplier audits to assure compliance with GMP norms and quality standards. In 2020, 336 audits were carried out as part of the qualification or evaluation processes, compared to 188 in 2019. Audits performed on suppliers of raw materials and services focus on the quality and safety of their offerings. Grifols’ rigorous safety system for its plasma-derived products depends on the dedication of its highly trained staff; a robust process and product design; leading-edge technologies developed in-house by Grifols Engineering; and full traceability from plasma donation to the final product. Throughout the value chain, the diverse materials and procedures that intervene in the production process are monitored by Grifols quality-assurance managers. This supervision includes controls in both manufacturing processes and final products to ensure the quality, safety and efficacy of each lot. It also involves the review and follow-up of production processes to guarantee compliance with best manufacturing practices and promote ongoing improvements. Systems to scale relevant events and take appropriate actions through Grifols’ Quality Committees are also in place to evaluate key performance indicators (KPIs) and quality markers. • Grifols’ senior management implements and maintains an effective organization-wide quality management system. Internal auditors regularly inspect plasma centers, laboratories, manufacturing and storage facilities to ensure compliance with GMP regulations and quality standards. • IQPP & QSEAL Certifications of the Plasma Protein Therapeutics Association (PPTA). • International Quality Plasma Program (IQPP) Certification, a voluntary standards program that includes the management of donors and plasma centers. • The independent corporate auditing department conducts routine reviews of collected plasma, manufacturing records and other quality-related documentation, in addition to independently overseeing and verifying the company’s operational processes. More information: https://www. pptaglobal.org/safety-quality/standards/iqpp Breakdown available in “MANAGEMENT FROM THE SOURCE: SUPPLIER RELATIONS” section • The U.S. (FDA) and European (EMA) health authorities, among others, periodically inspect all plasma donation centers, production plants, warehouses, laboratories and transport centers. The PPTA regularly inspects Grifols’ collection centers and fractionation facilities. • Quality Standards of Excellence, Assurance and Leadership Certification (QSEAL) that apply to the manufacture of plasma-derived medicines, with voluntary certification and adhesion to the program. Grifols also forms part of the National Donor Deferral Registry (NDDR), a voluntary self-regulating initiative to guarantee the quality and safety of plasma that applies to all U.S. donors. This database makes certain that all U.S. donors who test positive for the viral agents for HIV, HBV, and HCV are permanently prohibited from donating any sources. Despite the pandemic and mobility restrictions, high levels of both in-house and external audits and inspections were maintained in 2020. More information: https://www.pptaglobal.org/safety-quality/standards/qseal) Breakdown main indicators on page 97 More information: https://www.pptaglobal.org/safety-quality/national-donor-deferral-registry

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_43.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY IN THE BIOSCIENCE DIVISION I 93 ENSURING THE SAFETY AND QUALITY OF PLASMA-DERIVED MEDICINES IN TIMES OF COVID CORONAVIRUS DOES NOT that form part of the production of plasma-derived Grifols plasma donation centers are not only clean, essential services; prioritize PPE (masks, gloves, etc.) UNDERMINE THE SAFETY OF medicines. These include the use of solvent-detergent, highly controlled and supervised places but they are for plasma centers the same way as hospitals; and PLASMA-DERIVED MEDICINES low pH incubation, pasteurization, nanofiltration and also subject to strict regulations to guarantee rigorous establish plasma-contingency plans, among other fractionation processes, etc. Furthermore, COVID-19health, quality and safety standards, methods that weremeasures. As soon as the SARS-CoV-2 outbreak in China andis a respiratory virus, with no evidence of viralalready in place before the pandemic. Nonetheless, its potential to expand globally made headlines, transmission through the blood or blood components, further actions were taken to further the safety of In addition, U.S. and European healthcare authorities the hemoderivatives sector in general and Grifols in including plasma and plasma-derived medicines. plasma-center employees and donors, including issued public appeals to increase plasma donations particular took all necessary measures to continuously increased efforts to disinfect contact zones, shorter to guarantee the regular production of plasma-monitor, analyze and evaluate its possible impact on DONORS AND THEIR SAFETY ARE waiting times for donors, and enhanced ventilation and derived medicines, in addition to the use plasma the safety and quality of plasma-derived medicines. A PRIORITY FOR GRIFOLS social-distancing measures. from convalescent COVID-19 patients as a potential treatment against the virus. In December 2019, the Pathogen Safety SteeringSince the onset of the pandemic, plasma donations PLASMA, DONORS AND PLASMA Committee (PSSC) of the Plasma Protein Therapeutic have remained safe and there have been no reported CENTERS ARE CATEGORIZED AS A STRICT CONTROL AND Association (PPTA) confirmed SARS-CoV-2 was cases of coronavirus transmissions resulting from ESSENTIAL SERVICES SUPERVISORY FRAMEWORK not a safety threat for plasma-derived medicines. blood or plasma donations. DURING THE PANDEMIC This notification was communicated to the foremost On March 28, 2020, the U.S. Department of national and international public healthcare authorities, Grifols decided to take additional prevention and Homeland Security classified plasma donation Grifols’ plasma centers and manufacturing facilities including the World Health Organization (WHO), the safety measures by preventing people with COVID-19 centers and production facilities as essential and continued to enforce robust internal controls and European Centre for Disease Prevention and Control symptoms from donating plasma in order to protect critical infrastructure, designating related personnel supervision since the beggining of the pandemic. As (ECDC) and the U.S. Centers for Disease Control and donor health and guarantee plasma quality during the as essential workers. Thus, Grifols’ centers have a result of mobility restrictions, organisms like the Prevention (CDC), among others. pandemic. Meanwhile, pre-donation questionnaires remained operational throughout the pandemic. European Medicines Agency (EMA), PPTA and FDA were updated with a series of COVID-19-related have carried out GMP/GDP inspections remotely. The reasons behind this conclusion stem from the questions for this very purpose and pre-donation The European Centre for Disease Prevention and nature of the virus itself. The SARS-CoV-2 virus is medical checkups now include temperature checks Control (ECDC) and European Commission also large (approximately 120 nm in diameter) and has a and questions regarding breathing difficulties or chest deemed plasma donors and plasma donation centers lipid encapsulation, which renders it totally vulnerable pain, among others. as essential and urged healthcare authorities in each to the viral inactivation and elimination processes country to take the following actions: classify them as More information: https://www.pptaglobal.org/media-and-information/ppta-statements/1055-2019-novel-coronavirus-2019-ncov-and-plasma-protein-therapies More information on critical infrastructure workforce: https://www.cisa.gov/publication/guidance-essential-critical-infrastructure-workforce More information on critical infrastructure in Europe: https://www.ecdc.europa.eu/en/publications-data/coronavirus-disease-2019-covid-19-and-supply-substances-human-origin https://ec.europa.eu/home-affairs/sites/homeaffairs/files/what-we-do/policies/european-agenda-migration/20200316_covid-19-guidelines-for-border-management.pdf

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_44.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY IN THE DIAGNOSTIC DIVISION I 94 NEW DEVELOPMENTS • Code of Federal Regulations (CFR): 21CFR sec 820.50 “Purchasing controls” • ISO 13485:2016 Sc. 7.4.1 “Purchasing process” The Diagnostic Division has processes overseeing the development of new products and design changes based on three core elements: risk management; the integration of the diverse components used in each diagnostic system; and comprehensive traceability, from stipulations for deliverables used in the manufacturing process to customer support services. All products are subject to a numerous verifications and validations, including analytical and clinical performance studies; hardware and software verifications; and analyses to achieve interoperability of system elements, usability and reliability. SUPPLIER CONTROLS The Diagnostic Division defines requirements to assess, approve and monitor suppliers, and classifies them according to their relevance in the production process, giving preference to local suppliers whenever possible. Results are documented in a supplier evaluation registry, with potential new suppliers accepted or rejected depending on the results of this analysis and a detailed homologation of the supplied materials. Grifols reassesses its quality system and standards for key suppliers every three years - and every five years in the case of important suppliers - to guarantee quality compliance at all times. The division also regularly evaluates its quality markers. SAFETY AND QUALITY IN THE DIAGNOSTIC DIVISION

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_45.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY IN THE DIAGNOSTIC DIVISION I 95 SAFETY AND CONTROL STANDARDS IN PRODUCTION The Diagnostic Division ensures the safety, efficacy and quality of its products through a range of production and quality management processes based on risk analysis, qualification and validation of processes, industrial equipment and analytical techniques. The division also implements lean manufacturing techniques, GMPs, automation, digitalization, continuous-improvement practices and ongoing training to assure the quality of its processes. CONTROL AND SAFETY IN THE MARKET The Diagnostic Division has a global system established to manage maintenance, claims and customer services. This system enables traceability of the device, reagent batch and healthcare provider associated with the surveillance system. All changes to products follow a strict protocol to ensure their proper functioning in client installations, including information updates. Grifols diagnostic products include a Unique Device Identifier (UDI), in accordance with the GS1 standard. PRODUCT LICENSES Grifols installations and industrial equipment are designed and developed to comply with the highest standards in the biotech sector. The production, marketing and sale of products must obtain installation, manufacturing, import and distribution licenses, as well as product authorizations and registrations from the competent authorities in countries where they are sold. • ISO 14971:2019 “Medical devices – Application of risk management to medical devices” • Code of Federal Regulations (CFR): 21CFR820 “Quality System Regulation” • Code of Federal Regulations (CFR): 21CFR600 “Biological Products: General” • ISO 13485:2016 “Medical devices – Quality management systems – Requirements for regulatory purposes” • Regulations under the Medical Device Single Audit Program (MDSAP) • ISO 14971 “Medical devices – Application of risk management to medical devices” • IEC 62304:2006 “Medical devices software – Software life cycle processes The Diagnostic Division also has procedures to safeguard cybersecurity and protect personal data collected in in-vitro diagnostic programs and devices, in accordance with applicable standards and regulations. • ISO 13485, MDSAP, IVDD, IVDR, 21CFR 600, 21CFR820 and country-specific regulations

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_46.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SAFETY AND QUALITY IN THE HOSPITAL DIVISION I 96 PRODUCT LICENSES The production, marketing and sale of products are subject to registration with the competent authorities in the countries where they are sold. SUPPLIER CONTROLS Grifols has implemented a quality system to approve, track and evaluate service providers and manufacturers of materials used during the production process. The Hospital Division’s quality system includes two core components: • Applicable regulations in compliance with local jurisprudence for obtaining product licenses. SAFETY AND MANUFACTURING CONTROLS Quality Assurance (QA) This department registers relevant quality documentation for internal information systems, including GMP and ISO certifications, among others, which are continuously updated. Grifols adheres to the highest standards of quality and safety in its manufacturing facilities to make sure its products and services comply with all applicable guidelines. This commitment to safety allows Grifols to continuously improve the quality and efficiency of its processes to benefit patients and healthcare professionals. Several committees – quality standards, suppliers, production quality, change control and R+D+i – oversee the evaluation system, placing particular emphasis on quality, KPIs and quality objectives planning. Supplier Quality Committee The committee holds at least one meeting every six months to verify the quality of suppliers and manufacturers. The committee includes QA leaders, technical directors from the Barcelona and Murcia plants and senior managers from R+D+i, purchasing, production and quality assurance. Grifols also uses a change management system to ensure the traceability and safety of any modifications in the product, process or facilities. The impact of every change is analyzed and assessed from regulatory, quality, validations, documentary, normative, occupational health and safety perspectives. A risk assessment is carried out to evaluate the impact of this change on these areas and finally, the Change Control Committee analyzes and assesses the information and, when appropriate, authorizes the change and its implementation. • Quality Management System Control: GMP, ISO Certifications 1348, MDSAP, FDA 21CFR820 and CFR 210, ANVISA, SOR 98-282, among others. • Applicable GMP-related regulations and 13485 certification for medical devices. SAFETY AND QUALITY IN THE HOSPITAL DIVISION

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_47.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT SAFETY AND QUALITY  I SUMMARY OF INDICATORS I 97 As a result of the COVID-19 global healthcare crisis, in-person inspections, audits and controls can pose a health risk. At the same time, both inspectors and those being inspected are subject to mobility restrictions and limited access to facilities. In 2020, to minimize risks and maintain normal supervisory procedures, most supplier audits were carried out remotely. Grifols installed leading-edge video-communication and document-exchange platforms, with access to both in-house and third-party systems, to facilitate this process. BIOSCIENCE DIVISION INTERNAL AUDITS INSPECTION DAYS IN PLASMA CENTERS INSPECTIONS BY HEALTH AUTHORITIES AND ACCREDITED INSPECTION AGENCIES SUPPLIER QUALITY AUDITS 336 100% favorable 87% remotely 314 308 269 DIAGNOSTIC DIVISION HOSPITAL DIVISION ROUTINE INSPECTIONS BY OFFICIAL INSTITUTIONS SUPPLIER QUALITY AUDITS ROUTINE INSPECTIONS BY OFFICIAL INSTITUTIONS SUPPLIER QUALITY AUDITS INTERNAL AUDITS 45 INTERNAL AUDITS 32 23 100% favorable 83% remotely 11 100% favorable 64% remotely 9 6 SUMMARY OF INDICATORS

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_48.jpg NET INVESTMENT IN R&D+i 298 M€ COVID INITIATIVES +25 projects Innovation is in Grifols’ DNA. Pioneers of the plasmapherisis technique, the company boasts a robust research strategy to develop new therapeutic and diagnostic solutions. By leveraging both in-house and external efforts, Grifols was able to deliver a rapid, international response to COVID-19, while continuing to build on its leadership in the plasma science sector. VATION

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_49.jpg INNOVATION5

 

 

 

 

7998-1-mo_part 4 of 5 2020 consolidated directors' report_part2_page_50.jpg INNOVATION I INNOVATION IN GRIFOLS I 100 2020 CONSOLIDATED DIRECTORS’ REPORT Grifols’ R+D+i strategy is based on a comprehensive approach that encompasses both in-house and investee-led initiatives that are complementary to the company’s core operations, with third-party investments and collaborations serving as an extension of its R+D+i efforts. This holistic research approach, combined with its sustainable growth strategy, further reinforces Grifols commitment to patients as a fundamental pillar, and has led the company to continue to focus, even more, on disease management, promoting innovation beyond plasma-derived therapies. hematology, pneumology, neurodegeneration, and New Technology (GIANT), responsible for channeling the group’s investments in R+D+i firms and research-related initiatives; plasma-science projects led by Alkahest; the Scientific Innovation Operations department; the Medical Affairs area; and the Intellectual Property Office, which manages issues related to patents and trademarks. The company also has a Scientific Review Board, which monitors and reviews the progress of in-house research initiatives from a technical standpoint and assesses the potential value of research opportunities in Grifols’ investees. This cross-functional committee includes executives from Grifols Scientific Innovation Office and from the R+D+i areas of the Bioscience and Diagnostic Divisions. hepatology, autoimmunity and neuroimmunology. Grifols Scientific Innovation Office spearheads company’s global R+D+i strategy. As part of the its functions, the Scientific Innovation Office evaluates and expedites research projects; oversees the development of innovative treatments, products and services; and promotes continuous improvement of existing products and operations. It also nurtures ties with key agents in the innovation ecosystem, including academic and research institutions. Grifols Scientific Innovation Office is led by the Chief Scientific Innovation Officer, who reports directly to the CEOs and liaises with various functional areas to submit projects for review before interdisciplinary committees. Defined by therapeutic areas, these in-house committees convene regularly to assess projects and identify, evaluate and prioritize new opportunities. Grifols’ integrated research strategy, which includes both in-house and external projects, is centered on these major therapeutic areas: immunology, The scope of Grifols Scientific Innovation Office spans across different corporate areas: the Bioscience Division’s R+D+i department; Grifols Innovation CORE OBJECTIVES OF GRIFOLS SCIENTIFIC INNOVATION OFFICE RESPOND ADVANCE IMPROVE GROW Meet market needs and Deliver new therapies, products or Enhance production processes Drive long-term growth & profitability promote competitiveness services and improve existing oneswhile expanding the product portfolio INNOVATION IN GRIFOLS

 

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_01.jpg INNOVATION I R+D+i RESOURCE ALLOCATIONS  I 101 2020 CONSOLIDATED DIRECTORS’ REPORT +4 X the European to COVID-19 over revenues M€ HUMAN RESOURCES RESEARCH CENTERS 1,107 +100 • Emeryville, Los Angeles and • Barcelona: Bioscience and • Dündingen: Diagnostic Division research centers Diagnostic • Bilbao and Zaragoza: authorities around the world San Carlos: Bioscience Divisions INVESTMENT IN R+D+i +16.8M€298 +5.6%INNOVATION INTENSITY average RESOURCES ALLOCATED TO COVID-19 • More than 30 people dedicated toUnited StatesSpain Switzerland researching and advancing treatments and detection tests • Coordinated efforts between U.S. and Spanish Employees dedicated to R+D+i San Diego: Bioscience and Diagnostic Divisions • Collaborations with research and healthcare • Research Triange Park and Bioscience and Diagnostic • More than 25 projects underway• Denver: Hospital External researchers R+D+i RESOURCE ALLOCATIONS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_02.jpg INNOVATION I A ROBUST INNOVATION ECOSYSTEM  I 102 2020 CONSOLIDATED DIRECTORS’ REPORT z GRIFOLS’ INNOVATION ECOSYSTEM INCLUDES BOTH IN-HOUSE AND EXTERNAL INITIATIVES DIGITAL TRANSFORMATION COMMITTEE INTERNAL REACH EXTERNAL SCOPE SCIENTIFIC ANALYSIS COMMITTEE INVESTEES AlbaJuna Therapeutics · Spain: Development of a new antibody-based treatment with high potential to neutralize HIV and viral reservoirs at the cellular level Araclon · Spain: Specialized in the research and development of new treatments and diagnostic tests for Alzheimer’s disease GigaGen · USA: Research and development of new recombinant immunoglobulins using immune-system cells from donors VCN Biosciences · Spain: Research and development of oncolytic viruses to treat solid tumors A ROBUST INNOVATION ECOSYSTEM

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_03.jpg INNOVATION I A ROBUST INNOVATION ECOSYSTEM  I 103 2020 CONSOLIDATED DIRECTORS’ REPORT z GRIFOLS’ INNOVATION BEYOND PLASMA-DERIVED PRODUCTS IN DIVERSE THERAPEUTIC AREAS Therapeutic Area Disorders/Illnesses failure Emerging pathogens– COVID-19 Secondary Immunodeficiencies (SIDs) Infectious Diseases Oncology Polineuropathy (CIDP) Disease (COPD) Diabetic Retinopathy macular degeneration) HEMATOLOGY Coagulation Disorders Stroke Wound healing HEPATOLOGY CirrhosisAcute liver failure and chronic liver IMMUNOLOGY Primary Immunodeficiencies (PIDs) Disease (SARS-CoV-2 coronavirus) AUTOIMMUNE Immune thrombocytopenia (ITP)Kawasaki DiseaseOther autoimmune diseases NEUROIMMUNOLOGY Myasthenia gravis (MG)Chronic Inflammatory Demyelinating Guillain-Barré SyndromeMultifocal Motor Neuropathy (MMN)Post-Polio Syndrome PNEUMOLOGY Alpha 1-antitrypsin deficiency (AATD) Inflammatory response Non-Cystic Fibrosis Bronchiectasis Chronic Obstructive Pulmonary NEURODEGENERATION Mild cognitive impairment Alzheimer’s Disease (AD)Parkinson’s DiseaseParkinson’s Disease and associated DementiaOther Cognitive Disorders dementia OTHERS Bullous Pemphigoid OncologyWet or neovascular AMD (age-related

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_04.jpg INNOVATION I A ROBUST INNOVATION ECOSYSTEM  I 104 2020 CONSOLIDATED DIRECTORS’ REPORT z AN INNOVATION ECOSYSTEM THAT DRIVES KNOWLEDGE AND PURSUES OPPORTUNITIES AND COLLABORATIONS Collaborations Type of collaboration Entity and objective ETHICON Development of plasma-based biological sealant to control bleeding during surgery, among others Strategic agreement for product development RIGEL PHARMACEUTICALS Provide an alternative treatment for adult patients with immune thrombocytopenic purpura (PTI) refractory to other treatments Licensing agreement GIGAGEN Research on the world’s first polyclonal recombinant immunoglobulin to treat infectious diseases Participation in research company EUROPEAN FOUNDATION FOR THE STUDY OF CHRONIC LIVER FAILURE (EF-CLIF) Promote research and raise awareness of chronic liver diseases Collaboration with renowned research centers IRSICAIXA Financial support for projects relating to the discovery of antibodies and diagnostic tests based on virus-cell interaction of the Siglec-1 receptor in infectious diseases like HIV and Ebola; microbiome profiling in patients with HIV and related diseases; development of a vaccine platform based on virus-like particles (VLPs) with applications for infectious diseases; design of “pancoronavirus” vaccine models that can attack potential new viruses (together with Barcelona Supercomputing Center, the Animal Health Research Center IRTA-CReSA). Collaboration with renowned research centers A BOY OVERCOMES RETINAL CANCER THANKS TO A GROUNDBREAKING TREATMENT BASED ON AN ONCOLYTIC VIRUS A joint collaboration between the biotechnology company VCN Biosciences, a Grifols company, and a team enable it to identify, infect and multiply only inside cancer cells. This means that the virus can not only identify of researchers at Sant Joan de Déu Hospital have developed the world’s first treatment for chemotherapy-but also selectively attack cancer cells while leaving healthy cells unharmed. resistant retinal cancer, which consists of injecting a genetically modified virus capable of selecting, attacking and destroying cancer cells into the tumor-affected eye.The result of five years of research, this new retinal cancer treatment highlights the importance of translational research at Sant Joan de Déu Barcelona Children’s Hospital. In 2019, this research was featured on the cover Administered as part of a clinical trial, the treatment is derived from the adenovirus, a common virusof the prestigious journal Science Translational Medicine and honored with the Odile Schweisguth prize, one of that normally causes cold symptoms and is currently also being used in research related to developing athe most prestigious pediatric oncology awards. COVID-19 vaccine. In the case of the retinal cancer treatment, VCN Biosciences modified the adenovirus to

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_05.jpg INNOVATION I A ROBUST INNOVATION ECOSYSTEM  I 105 2020 CONSOLIDATED DIRECTORS’ REPORT z GRIFOLS’ INNOVATION ECOSYSTEM COORDINATED A GLOBAL RESPONSE TO HELP COMBAT COVID-19 As part of its solid commitment to society, Grifols organized a global response with different research entities working to combat COVID-19. In this regard, the company collaborates with researchers and health authorities in the United States, Spain and Germany and promotes research on clinical trials using convalescent plasma inactivated with methylene blue, as well as specialty plasma-derived products such as immunoglobulin, hyperimmune immunoglobulin, alpha-1 antitrypsin and antithrombin III. Viral neutralization in Boston University Proteomic samples – Alkahest and Somalogic Hyperimmune ITAC trial NIH a-1 ICU ed patients Multiple Clinical Trials with Convalescent Plasma, IVIG and AAT the SARS-CoV-2 virus IVIG-IGIV and plasmapheresis IVIG – Product IVIG Product Characterization (CSIC, CNB and IRTA) Characteization in UCLA Antithrombin for COVID-19 Clinical Trials with Gamunex and AAT Design and development of immunoassays for the detection of SARS-CoV-2 antibodies Antithrombin for COVID-19 Design and development of antigens and antibodies for development of immunoassays for SARS-CoV-2 and anti SARS-CoV-2 antibodies detection Extension of Clinical Trial with Liquid AAT to several Collaborative initiatives In-house initiatives LATAM countries / NIAID Hyperimmune trial sponsored by Grifols Alph Ventilat TMA molecular test to detect

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_06.jpg INNOVATION I A ROBUST INNOVATION ECOSYSTEM  I 106 2020 CONSOLIDATED DIRECTORS’ REPORT JOINING FORCES AGAINST THE PANDEMIC Grifols leads on the development of immunoglobulins Grifols has also developed a specific TMA with specific antibodies against the SARS-CoV-2 (Transcription-Mediated Amplification) molecular test virus using plasma from recovered COVID-19 to rapidly and accurately detect the SARS-CoV-2 patients. In October 2020, in collaboration with other virus by generating multiple copies of unique genetic companies and diverse U.S. healthcare agencies, sequences specific to the virus from plasma, blood Grifols launched the Inpatient Treatment With Anti-and respiratory samples. The test’s sensitivity is the Coronavirus Immunoglobulin (ITAC) clinical trial, a same or even higher than other molecular tests like multicenter, randomized and double-blind study PCRs (polymerase chain reaction). designed to test the efficacy and safety of anti-SARS-CoV-2 hyperimmune globulin plasma in critically ill The company also distributes two immunological hospitalized patients. Furthermore, in early 2021, the diagnostic tests to identify anti-SARS-CoV-2 company also initiated a new clinical trial in Spain antibodies. In June 2020, Grifols combined forces to assess a subcutaneously administered anti-SARS-with Hologic to increase the country’s testing CoV-2 immunoglobulin. This outpatient treatment capacity for detecting COVID-19 in Spain. As part of could provide immediate protection against the virus this unique collaboration, Grifols began expanding and could be especially beneficial for the elderly, sales of its Procleix® SARS CoV-2 assay in molecular healthcare professionals and immunocompromised diagnostic testing laboratories in Spain. The Procleix® patients, among others, for whom vaccination is not SARS-CoV-2 assay, developed by Grifols, runs on recommended. the Procleix® Panther® system, an automated, high-throughput molecular diagnostic platform. Grifols’ hyperimmune immunoglobulins contain a high and consistent concentration of purified neutralizing Grifols continues to make progress on the validation antibodies against the novel coronavirus and provide to develop sample pooling strategies. The objective passive immunity. If proven effective, they could be is to contribute to further increase the analytical used to both treat and prevent the disease. capacity of existing equipment and join efforts to meet the current diagnostic needs.

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_07.jpg INNOVATION I A ROBUST INNOVATION ECOSYSTEM  I 107 2020 CONSOLIDATED DIRECTORS’ REPORT • Clinical trial in the U.S. and other countries in collaboration with the FDA, BARDA and NIH to assess the AND RESPIRATORY SAMPLES COVID-19 patients. solutions. CONVALESCENT PLASMA varying degrees of severity. CLINICAL TRIALS DIAGNOSTIC IGIV-HYPERIMMUNE AND IMMUNOMODULATION BY IVIG MOLECULAR TEST TO DETECT SARS-COV-2 IN PLASMA, BLOOD safety, efficacy and tolerability of an IV-administered hyperimmune globulin in hospitalized patients. Grifols• Specialty molecular TMA (transcription-mediated amplification) tests. manufactures the treatment using plasma from recovered COVID-19 donors collected in Grifols’ plasma • Collaboration with Hologic to significantly increase the capacity for COVID-19 centers and in collaboration with Spanish blood banks.testing in Spain. • Research on the efficacy of high-dosage intravenous immunoglobulin to stabilize or improve the health of • Advances to validate the development of sample pooling and saliva-based • Immunoassay based on ELISA technology to identify patients who have been SUBCUTANEOUS IMMUNOGLOBULIN exposed to the virus and have developed IgG antibodies against it. • Clinical trial in Spain to evaluate the safety and efficacy of an anti-SARS-CoV-2 immunoglobulin, which would especially benefit and provide immediate protection after exposure to the virus to elderly people, healthcare professionals and immunocompromised patients, among others, for whom vaccination is not currently recommended • Doctors Oriol Mitjà and Bonaventura Clotet, from Germans Trias i Pujol Hospital in Barcelona, are the lead researchers.GRIFOLS LEADS SEVERAL DIAGNOSTIC AND TREATMENT INITIATIVES AGAINST • Collection of convalescent plasma in the United States, Spain and Germany.COVID-19. IT PARTICIPATES IN MORE THAN • Clinical trials in Spain in collaboration with blood banks to study the efficacy of inactivated plasma from 25 RESEARCH PROJECTS AROUND THE recovered COVID-19 donors for direct transfusions in non-hospitalized patients and hospitalized patients with WORLD TO COMBAT THE PANDEMIC OTHER PLASMA-DERIVED MEDICINES • Collaboration in clinical trials in Europe and the United States to evaluate the safety and efficacy of other plasma-derived medicines such as antithrombin III and alpha-1 antitrypsin for COVID-19 patients requiring hospitalization and intensive care.

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_08.jpg INNOVATION I ETHICS, SCIENCE AND INNOVATION I 108 2020 CONSOLIDATED DIRECTORS’ REPORT z GRIFOLS’ PLEDGE IN CLINICAL TRIALS Grifols is firmly committed to ensuring the safety of patients who participate in the clinical trials it oversees and sponsors. All clinical research led by Grifols or on its behalf adheres to the standards established by the International Conference on Harmonisation of Good Clinical Practice (ICH GCP); the protection of human beings under the Helsinki Declaration (1964); and applicable local laws and regulations. The company does everything within its means to protect the rights, safety and well-being of everyone involved in its clinical trials. For Grifols, these principles are more important than and should prevail over corporate, scientific or social interests. the institution, ICH GCP and any applicable regulatory requirements, including approval by the corresponding health authorities. results are published on publicly accessible registries such as www.clinicaltrials.gov. In addition, the results of clinical trials carried out within the framework of the European Medicines Agency (EMA) are also published on the EudraCT website. GRIFOLS DOES EVERYTHING POSSIBLE TO PROTECT THE RIGHTS, SAFETY AND WELL-BEING OF CLINICAL TRIAL PARTICIPANTS Each participant must submit a written, informed consent form, personally signed and dated. The Principal Investigator (or assigned healthcare professional) provides appropriate information, resolves any doubts and gives potential clinical-trial subjects sufficient time to make an informed decision on their participation. The participation agreement is strictly voluntary and subjects can freely withdraw their consent at any time during the clinical trial. Furthermore, Grifols discloses the results of many of its clinical trials in international conferences and scientific journals. Grifols has standard operating procedures in place to ascertain that the management of clinical trials, as well as data collection, documentation and notification, all comply with protocols, ICH GCP, and all applicable regulatory requirements. Moreover, an additional procedure allows clinical personnel to detect and document any potential fraud or misconduct during clinical trials. All clinical trials follow a detailed protocol to guarantee participants’ safety and the integrity of the collected data. Before the start of any clinical trial, Grifols sends the protocol to regulatory authorities and external ethics committees comprised of healthcare professionals and cross-sectoral specialists to confirm it respects the dignity, rights, safety and well-being of trial participants. Clinical trials do not launch until a favorable decision has been handed down and once approved, the company strictly adheres to the guidelines established by the Ethics Committee, The company has implemented several measures to maintain the anonymity of its subjects and promote the transparency of its clinical trial data. More information on the protocol, status of clinical trials and all related More information: ClincialTrials.gov and EudraCT ETHICS, SCIENCE AND INNOVATION

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_09.jpg INNOVATION I ETHICS, SCIENCE AND INNOVATION I 109 2020 CONSOLIDATED DIRECTORS’ REPORT z OUR COMMITMENT TO RESPONSIBLE TESTING WHEN DEVELOPING NEW TREATMENTS The use of animals in biomedical research to test the efficacy and safety of medications has led to important medical advances for both human and animal health over the last decades. Therefore, Grifols is committed to the responsible use of laboratory animals in cases in which animal testing is indispensable to develop new life-saving therapies. where research is conducted. In the United States, Grifols’ facilities are certified by the Association for Assessment and Accreditation of Laboratory Animal Care (AAALAC), or equivalent organizations, and possess the highest accreditation possible for laboratories that perform animal testing. In Europe, all laboratories comply with the Directive EU 2010/63 on the protection of animals used for scientific purposes and undergo inspections by the competent authorities in each country. In all of Grifols’ studies, whether carried out in university settings or contract external laboratories, researchers work closely with regulatory agencies and the Institutional Animal Care and Use Committee (IACUC) to ensure the safe and humane treatment of research animals. The company also follows “Alternatives and the 3Rs” guidelines in the treatment of animal testing, which advocates (1) replacing the use of animals whenever possible or avoiding their use altogether; (2) reducing the number of animals used to a minimum; and (3) refining the way research is carried out to ensure animals suffer as little as possible. All Grifols’ collaborating research institutions are approved by the competent authorities in regions

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_10.jpg INNOVATION I CORE RESEARCH PROJECTS I 110 2020 CONSOLIDATED DIRECTORS’ REPORT z FIGHTING ALZHEIMER’S DISEASE: THE AMBAR PROJECT AMBAR IS A NEW APPROACH TO TREAT ALZHEIMER BASED ON PLASMA EXCHANGE AMBAR is an international, multicenter, randomized, double-blind, placebo-controlled with parallel-group assignment clinical trial that enrolled patients with mild and moderate Alzheimer’s from 41 treatment centers in Spain and the United States. The study was designed to evaluate the efficacy and safety of short-term plasma exchange followed by long-term plasmapheresis with infusion of albumin combined with intravenous immunoglobulin in patients with mild and moderate Alzheimer’s disease (AD). AMBAR targets a multimodal approach to managing AD based on the hypothesis that most of the amyloid-beta protein – one of the proteins accumulated in the brains of Alzheimer’s patients – is bound to albumin and circulates in plasma. Extracting this plasma may flush amyloid-beta peptide from the brain into the plasma, thus limiting the disease’s impact on the patient’s cognitive functions. Additionally, albumin has binding capacity and antioxidant properties, and both albumin and immunoglobulin display immunomodulatory and two pilot studies and a Phase II clinical trial before launching the AMBAR trial. The result of 15 years of rigorous research, these findings strengthen Grifols’ investigative approach using Plasma Protein Replacement Therapies. anti-inflammatory properties. The AMBAR study included 496 mild and moderate Alzheimer’s patients between 55 and 85 years old, who were randomized into three treatment groups and one control (placebo) group. The company began its research on Alzheimer’s disease in 2004 with several preclinical trials, RESEARCH DESIGN INTERNATIONAL 41 HOSPITALS496 PATIENTSASSESSMENT DISTRIBUTION International, multicenter19 in Spain,55-85 years old, Assessment of plasma Patients randomized in three and double-blind22 in the U.S.with mild-to-moderateexchange with different treatment groups and one Alzheimer’svolumes and concentrations control group of albumin CORE RESEARCH PROJECTS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_11.jpg INNOVATION I CORE RESEARCH PROJECTS I 111 2020 CONSOLIDATED DIRECTORS’ REPORT AMBAR’S FINDINGS PUBLISHED IN ALZHEIMER’S & DEMENTIA: THE JOURNAL OF THE ALZHEIMER’S ASSOCIATION GRIFOLS MOVES FORWARD WITH ITS PLANS TO MAKE AMBAR A VIABLE TREATMENT OPTION FOR ALZHEIMER’S PATIENTS The results of Grifols’ AMBAR study were featured in the prestigious peer-reviewed publication Alzheimer’s & Dementia: The Journal of the Alzheimer’s Association. These promising findings reveal a positive impact in reducing the progression of Alzheimer’s symptoms in patients treated over a 14-month period compared to untreated patients. Specifically, the results of the clinical trial’s primary endpoints were supported by those obtained in the most relevant secondary endpoints, in which similar effects were observed, demonstrating both the effectiveness and safety of the treatment. Within the framework of its corporate plan, the company is considering opening AMBAR Excellence Centers as pilot facilities, following the standard clinical practices established in the AMBAR study. In addition to benefiting AD patients, this initiative would also reinforce the findings of the clinical trial by offering a means to collect more data and real-world evidence. Grifols plans on opening five AMBAR centers in 2021: two in Spain and individual centers in Germany, the United States and China. Among these are the Fundació ACE in Barcelona and the University of Pittsburgh’s Alzheimer’s Disease Research Center (U.S.), key players in the study’s design and development and Grifols’ collaborators since 2004, when the company launched. The results of the AMBAR clinical trial were previously presented at several international medical congresses. More information on AMBAR: https://www.grifols.com/es/ ambar To access the scientific paper : https://alz-journals. onlinelibrary.wiley.com/doi/full/10.1002/alz.12137 ALZHEIMER’S & DEMENTIA: THE JOURNAL OF THE ALZHEIMER’S ASSOCIATION PUBLISHES AMBAR RESULTS JULY 2020 12TH CLINICAL TRIALS ON ALZHEIMER’S DISEASE (CTAD) CONGRESS 2019 SAN DIEGO (U.S.) DECEMBER 2019 Neuroimaging and biomarkers ALZHEIMER’S ASSOCIATION INTERNATIONAL CONFERENCE (AAIC) 2019 LOS ANGELES (U.S.) JULY 2019 OtheSrerceolnedvaryt seencdopnodinatrsy seuncdhpoaisntms etomeovrya,luate lfaunngcutiaognealaannddpcrocneistsivinegcaspeceidty (CDR-Sb and ADCS-CGIC), 11TH CLINICAL TRIALS ON ALZHEIMER’S DISEASE (CTAD) CONGRESS BARCELONA (SPAIN) DECEMBER 2018 Primary efficacy endpoints – the ADAS – Cog1 and ADCS-ADL2 scales 14TH INTERNATIONAL CONFERENCE ON ALZHEIMER’S AND PARKINSON’S DISEASES LISBON (PORTUGAL) MARCH 2019

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_12.jpg INNOVATION I CORE RESEARCH PROJECTS I 112 2020 CONSOLIDATED DIRECTORS’ REPORT z DRIVING PLASMA SCIENCE THROUGH ALKAHEST Grifols researches the therapeutic use of plasma proteins for age-related diseases through Alkahest, which currently has four candidates covering therapeutic products for neurodegenerative diseases, cognitive decline, neuromuscular disorders and ophthalmic indications. Grifols acquired 100% of the company in 2020. ALKAHEST HAS ALREADY IDENTIFIED MORE THAN 8,000 SEPARATE PROTEINS, SOME OF WHICH COULD RESULT IN NEW TREATMENTS FOR ALZHEIMER OR PARKINSON’S DISEASE 4 GRF6019 & 6021 Plasma proteins 4 4 In addition to the clinical development of specific plasma fractions and protein inhibitors, Alkahest’s research is centered on better understanding the human plasma proteome. As a result, the company has developed a map of the human plasma proteome to facilitate the identification of plasma proteins and their recombinant analogues as potential therapeutic medicines. This unique proteomic platform of targets will help unlock new therapeutics and diagnostics, as well as develop new plasma proteins, new indications for currently licensed plasma proteins, biomarkers for diagnostics, recombinant proteins and antibodies, as well as small-molecule drugs. 4 AKST4290 Small Molecule Inhibitor of CCR3 AKST1210 Alkahest focuses on proteins with biological impact that change with age and has identified more than 8,000 separate proteins to date. Through the use of advanced techniques of molecular analysis at the cellular level, an array of new products are expected to enter in Grifols’ discovery and development pipeline and bring new therapeutic medicines to the market. l Jointly developed with Grifols l Previously developed only by Alkahest - New in our pipeline 4 Phase 2a Data Avalaible End-Stage Renal Disease (ESRD) Cognitive Impairment Bullous Pemphigoid Parkinson’s Disease Neovascular Age-Related Macular Denegeration Alzheimer’s Disease: Mild and moderate patients Alzheimer’s Disease: Severe Parkinson’s Disease with Mild Cognitive Impairment or Dementia Post-Operative Recovery Phase 2 Product Disease

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_13.jpg INNOVATION I R+D+i BY DIVISIONS I 113 2020 CONSOLIDATED DIRECTORS’ REPORT Grifols’ leadership in the plasma proteins sector is based on new therapeutic indications from plasma-derived products, the discovery of new proteins and ongoing manufacturing innovations that enhance the efficiency and safety of its products. The company also actively pursues collaborations and agreements with third parties whose research complements the companies plasma-based therapies in order to expand treatment options for patients and healthcare professionals in diverse therapeutic areas. Resarch Pipeline Protein Brief project description Albumin • Development of new formulation in pre-clinical phase • Albumin for Alzheimer’s (AMBAR study) • Albumin for liver cirrhosis (PRECIOSA). New indication in clinical trial phase • Albumin for liver insufficiency (APACHE study). New indication in clinical trial phase • Albumin in acute-on-chronic liver failure (ACLF) and action mechanisms of plasma exchange with albumin in decompensated cirrhotic patients with systemic inflammation and ACLF (ALADDIN study) • Development of new administration format in flexible packaging Immunoglobulin • New manufacturing process of Gamunex® in clinical phase • Development of immunoglobulins with specific anti-infectious properties for new antigens in pre-clinical phaseNew administration format of immunoglobulin in flexible packaging • New administration format of subcutaneous immunoglobulin in pre-filled syringes • Development of immunoglobulin M (IgM) for bacteriemia • Anti-SARS-CoV-2 hyperimmune immunoglobulin (intravenous and subcutaneous) and IVIG studies against COVID-19 • Immunoglobulin for post-polio syndrome. New indication in pre-clinical phase Alpha-1 •Development of subcutaneous alpha-1 in clinical phase • New administration format of lyophilized formulation of alpha-1 (Prolastin®) • Alpha-1 in patients with pulmonary emphysema caused by AADT • COVID-19 studies with con alpha-1 (Prolastin®) Clotting factors • Factor VIII as induction therapy for Immune Tolerance Induction (ITI). New indication in clinical trial phase • Development of lower volume of distribution of plasma factor VIII PPF (Plasma Protein Fraction) • New PPF administration format in flexible packaging • New production process in development Fibrinogen • Fibrin sealant for pediatric use in clinical trial phase Convalescent plasma • Methylene blue inactivation study with convalescent plasma for COVID-19 BIOSCIENCE DIVISION R+D+i BY DIVISIONS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_14.jpg INNOVATION I R+D+i BY DIVISIONS I 114 2020 CONSOLIDATED DIRECTORS’ REPORT The following table summarizes the Bioscience Division’s R+D+i projects over the last three years according to their stage of development: Number of R+D projects according to their development phase 2020 2019 2018 Discovery 12 15 12 Pre-clinical 25 19 12 Clinical 21 21 28 Post-marketing studies 11 10 9 Other projects 19 19 16 Total Bioscience R+D projects 88 84 77 BIOSCIENCE DIVISION’S R+D+i PIPELINE INCLUDES 88 PROJECTS MILESTONES AND BREAKTHROUGHS IN 2020 • Completion of studies on Gamunex® as maintenance therapy for myasthenia gravis (MG). • Development of phase III PRECIOSA trial on the potential benefits of albumin to treat liver cirrhosis and phase III APACHE trial to treat acute-on-chronic liver failure (ACLF) with albumin. • Approval and market launches of new formulations and indications, which expand Grifols’ product portfolio and meet the evolving needs of patients and healthcare professionals: • FDA approval of Prolastin®-C Liquid 0.5-gram and 4-gram vials to treat alpha-1 antitrypsin deficiency. • EU approval of Gamunex® to treat severe acute exacerbations of MG. • FDA approval of anti-hepatitis B and anti-tetanus immunoglobulins following the Gamunex (IGIM-C) production method. • New 3-ml vial format of high-potency anti-rabies immunoglobulins (HyperRAB® 900IU) to treat patients with rabies exposure. • German market launch of VERASEAL®, a fibrin sealant used to control surgical bleeding. • EMA registry application submitted for Xembify®, a 20% subcutaneous immunoglobulin to treat primary immunodeficiencies. • European market launch of TAVLESSE® (fostamatinib) to treat immune thrombocytopenia (PTI) in adult patients refractory to previous treatments. • FDA approval authorizing Grifols as an alternative manufacturer of EVITHROM (Omrix human thrombin developed by Ethicon). BIOSCIENCE DIVISION

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_15.jpg INNOVATION I R+D+i BY DIVISIONS I 115 2020 CONSOLIDATED DIRECTORS’ REPORT Grifols continuously drives innovation and promotes its corporate mission and the integrated strategy set forth by the World Health Organization by delivering diagnostic solutions that enhance the safety of blood and plasma donations. The Diagnostic Division’s R+D+i initiatives center on developing comprehensive value-added solutions that increase safety throughout the value chain, from donations to transfusion. The main focal point of these efforts is the development of new systems and technologies, including new reagents and analyzers to identify blood groups and detect relevant pathogens in blood and plasma donations. Research pipeline Line of action Brief project description Projection of Diagnostic solutions using NAT (Nucleic Acid Test) technology • Molecular diagnostic test to simultaneously detect various pathogens (multiplexed) • New diagnostic tests to detect emerging pathogens • Pathogen detection through next-generation sequencing Serology • Development of new ultra-sensitive assays to simultaneously identify various relevant pathogens in blood transfusions Expansion of recombinant proteins • Development of new antigens and antibodies to develop immunoassays in blood transfusions, infectious diseases and immunohematology In the field of specialty diagnostics – one of the areas with the greatest potential for growth – Grifols produces genomic and proteomic tests for in-vitro diagnostics, prognosis assessment, response prediction and biologic drug monitoring. It also develops molecular diagnostic and prognosis tests for therapeutic areas related to respiratory diseases, oncology, autoimmunity, cardiovascular medicine and neurodegeneration. In 2020, additional efforts largely focused on the development of a Transcription Mediated Amplification (TMA) molecular test to detect the SARS-CoV-2 virus in response to the COVID-19 pandemic. MILESTONES AND BREAKTHROUGHS IN 2020 • FDA approval of the Procleix® Panther system with Automation Ready Technology (ART) to use with approved screening tests for Zika, HIV, hepatitis C and hepatitis B. This technology improves system usability, increases operator walk-away time and allows laboratories to select efficient configurations for current or future blood donor screening automation needs. • Development of a TMA molecular test to detect SARS-CoV-2 with high sensitivity and specificity. • Development of antigens, antibodies and immunoassays to detect SARS-CoV-2 or antibodies against the virus. • Completion of two immunohematology projects: the Beyond Trust software, which enables secure remote access to immunohematology instruments to carry out remote maintenance tasks, and the BT Manager software, which allows clients to remotely manage tests and results of one or more instruments. DIAGNOSTIC DIVISION

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_16.jpg INNOVATION I R+D+i BY DIVISIONS I 116 2020 CONSOLIDATED DIRECTORS’ REPORT The Hospital Division’s research and development efforts focus on expanding a range of hardware and software solutions to support medication management and IV compounding and control for hospital pharmacies as well as providing sterile intravenous solutions. Currently 10% of hospital prescriptions require IV compounding, a process that entails the preparation of a unique intravenous therapy by modifying the medication’s formulation to meet specific patient needs. Most personalized compounds are produced manually, a costly process that requires cleanrooms, equipment, and ongoing maintenance all in a highly sterile environment. Specialized design and building materials, as well as software and automation can improve quality, enhance patient safety, and reduce hospital costs in the IV compounding area. MILESTONES AND BREAKTHROUGHS IN 2020 • In 2020, the PharmacyKeeper suite of software added important features such as advanced analytics and integrations with educational platforms and environmental monitoring. These advances help customers to make more informed decisions, facilitate the safe preparation of IV treatments, and support customers in meeting stringent compliance requirements, collectively producing a more cohesive customer experience. PharmacyKeeper is part of the expanding Grifols’ inclusiv® Portfolio of innovative solutions for the IV Compounding Pharmacy. • Gri-fill 4.0, a unique compounding device to improve safety, speed and accuracy of sterile IV preparations, was launched. This latest version of the Gri-fill platform boasts improved throughput, connectivity with hospital information systems, and bluetooth capabilities, among other new features. • In the area of IV Fluids and Contract manufacturing, the production of anticoagulant solution was initiated as part of a vertical integration strategy to support Grifols’ donor centers. In addition, the Fleboflex line of Non-PVC, non-DEHP and non-latex flexible IV bags was expanded with the approval of a needle free version, Fleboflex Luer, in the US for saline 0.9%. • In the Pharmatech area - PharmacyKeeper Verification IV workflow software, designed to reduce medication errors was selected as the Category Leader for Intravenous Workflow Management for the fourth consecutive year by KLAS, the prestigious healthcare IT research firm. HOSPITAL DIVISION

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_17.jpg INNOVATION I PATENTS AND TRADEMARKS I 117 2020 CONSOLIDATED DIRECTORS’ REPORT NORTH AMERICA EUROPE ROW GRIFOLS PROTECTS THE INTELLECTUAL PROPERTY OF ITS MAIN PRODUCTS THROUGH PATENT OWNERSHIP, CO-OWNERSHIP AND LICENSING. AN INTERNATIONAL TEAM SPREAD ACROSS SPAIN, IRELAND AND NORTH AMERICA MANAGE PATENT APPROVALS AND TRADEMARKS, SUPERVISE THEIR IMPLEMENTATION AND MONITOR ANY POSSIBLE VIOLATIONS 288 patents 182 trademarks 1,584 patents 1,107 trademarks 1,155 patents 2,189 trademarks PATENTS AND PATENT APPLICATIONS 3,027 Total number of patents 634 Patent applications 1,344 Patents that will expire over the next 10 years PATENTS AND TRADEMARKS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_18.jpg INNOVATION I MANUFACTURING INNOVATIONS I 118 2020 CONSOLIDATED DIRECTORS’ REPORT Technological innovations in Grifols’ manufacturing operations aim to identify solutions to continuously optimize efficiencies through in-house and third-party collaborations. In 2020, the following projects are of note. GRIFOLS PROMOTES TECHNOLOGICAL INNOVATION IN ITS MANUFACTURING PROCESSES THROUGH GRIFOLS ENGINEERING AND COLLABORATION AGREEMENTS GRIFOLS ENGINEERINGBCN SUPERCOMPUTING CENTER Fully automated plasma-bottle openingCollaboration to model and optimize Bioscience system, leading to a 50% increase inDivision production processes performance. YIM system for improving plasma recovery MONDRAGON UNIVERSITY (SPAIN) Technical collaboration agreement to develop robotic and instrumentation solutions for medical and pharmaceutical uses MANUFACTURING INNOVATIONS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_19.jpg INNOVATION I DIGITAL INNOVATION  I 119 2020 CONSOLIDATED DIRECTORS’ REPORT The current business landscape and growth opportunities continue to make digital innovation a transversal axis within the organization. The Digital Committee leads the company’s digital transformation by exploring, evaluating and implementing digital tools that add value to Grifols’ business model. In this role, it also defines priorities and objectives, prioritizes digital initiatives and fosters a digital culture grounded in cross-disciplinary collaboration and shared experiences. They also include tools and processes to address the needs and opportunities the pandemic raised in terms of collaboration, customer and partner relationships, remote services, etc. In 2020, Grifols also reinforces its market explorations, benchmarking and external collaborations to expand and enhance its capabilities. THE DIGITAL COMMITTEE LEADS THE COMPANY’S DIGITAL TRANSFORMATION BY EXPLORING, EVALUATING AND IMPLEMENTING DIGITAL TOOLS THAT ADD VALUE TO GRIFOLS’ BUSINESS MODEL The Digital Committee includes different groups or Digital Transformation Teams (DTTs) that analyze and recommend digital proposals or initiatives with the greatest potential for transformation. In 2020, Grifols analyzed about 60 new digital-innovation initiatives. One of the projects launched included the implementation of computational tools to identify new clinical applications for plasma proteins and characterize their mechanism of action. Other initiatives focused on interconnecting devices and amplifying the analytical power of available data in order to drive industrial efficiencies and quality improvements, and promoting the most appropriate treatments for patients by leveraging analytical modeling of clinical data and information collected both internally and externally. DIGITAL COMMITTEE COMMERCIALINDUSTRIAL PLASMA Focus on Customer Centricity Focus on Supply Chain Optimization Focus on Donor Experience and Value Expansionand Operations Excellence and Efficiencies R+D+I QUALITY CORPORATE Focus on New Value SourcesFocus on SafetyFocus on Process Optimization and Employee Experience DIGITAL INNOVATION

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_20.jpg INNOVATION I SUPPORTING GLOBAL RESEARCH I 120 2020 CONSOLIDATED DIRECTORS’ REPORT z GRIFOLS SCIENTIFIC AWARDS The Grifols Scientific Awards are a reflection of the company’s longstanding commitment to the global research community. These recognitions promote and distinguish research related to Grifols’ core areas of operations. Grifols Scientific Awards Award Objectives Funding Martin Villar Haemostasis Awards Awards for young investigators whose clinical or basic research focuses on hemostasis, hemophilia and von Willebrand disease Two separate EUR 50,000 awards to finance up to 12 months of research. One is for clinical projects and the other is for basic research SPIN, Scientific Progress Immunoglobulins In Neurology Award Awarded to research projects that develop new immunoglobin applications for neurological conditions EUR 50,000 awards for the proposal that best reflects the program’s objectives, as assessed by an independent review committee. Funding is intended to support a 12-month project ALTA, Alpha-1 Antitrypsin Laurell’s Training Award Identify and support innovative clinical and basic research focused on expanding knowledge about the biological functions of alpha-1 antitrypsin Two EUR 50,000 scholarships. Funding is intended to support a 12-month project MORE THAN EUR 1.6 MILLION WERE ALLOCATED TO SCIENTIFIC AWARDS AND RESEARCH SCHOLARSHIPS IN 2020 Albus, Albumin Awards Program Recognize research that broadens knowledge of the therapeutic applications of albumin Two annual EUR 50,000 awards. Funding is intended to support a 12-month project GATRA*, Grifols AntiThrombin Research Awards Identify and support research projects on new and existing uses of antithrombin Two annual EUR 50,000 awards. Funding is intended to support a 12-month project GHAGA. Grifols Hemophilia Awareness Global Awards Encourage healthcare professionals, treatment centers and hemophilia associations that contribute to enhance the care and quality of life of hemophilia patients Four EUR 50,000 awards ASPIRE, Award for Scientific Progress in Immunodeficiency Research. This award showcases and supports innovative clinical research projects that will expand knowledge on primary and secondary immunodeficiencies, including those aimed at raising awareness, diagnosis and disease management, as well as the development of new research on immunoglobulin therapies. One EUR 50,000 award to finance a project of up to 24 months in duration. SUPPORTING GLOBAL RESEARCH

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_21.jpg INNOVATION I SUPPORTING GLOBAL RESEARCH I 121 2020 CONSOLIDATED DIRECTORS’ REPORT z SPONSORING FRONTLINE RESEARCH: ISR PROGRAM z GRIFOLS CHAIR FOR THE STUDY OF CIRRHOSIS CELEBRATES ITS FIFTH ANNIVERSARY The Grifols Investigator Sponsored Research (ISR) Program supports and promotes pre-clinical and clinical research that broadens the body of knowledge on plasma proteins. These projects are coordinated and sponsored through the Grifols Scientific & Medical Affairs area, which grants funding based on an established operating procedure. The most promising proposals are evaluated by a cross-functional committee with representatives from clinical and pre-clinical research, the Bioscience Division marketing department and Medical Affairs. The final decisions on whether to fund the project are based primarily on scores across five core areas: 1) strategic alignment with corporate objectives; 2) scientific merit; 3) research design; 4) budget requested; and 5) the researcher’s experience. In 2015, Grifols established The Grifols Chair for the Study of Cirrhosis, a private chair with international reach aimed at generating research and education on liver diseases. The Grifols Chair and the European Consortium for the Study of Chronic Liver Failure are led and coordinated by Prof. Vicente Arroyo through the European Foundation for the Study of Chronic Liver Failure (EF-CLIF). Grifols has a representative on the Executive Board of the EF-CLIF. Over the last 5 years, within the framework of the Grifols Chair, Grifols has allocated more than EUR 14 million to advance research aimed at expanding knowledge on liver diseases and the potential benefits of plasma proteins. It has also contributed to funding other research projects such as INFECIR 2, designed to test the effects of albumin in patients with advanced cirrhosis; and PREDICT, which includes 1,200 patients hospitalized with liver cirrhosis with acute decompensation. Prof. Vicente Arroyo is the director of the Grifols Chair, Prof. Richard Moreau is the deputy director and Prof. Joan Clària serves as the secretary. Over the last five years, Grifols has allocated more than USD 10 million to sponsoring basic research projects that allow for additional financing through public-sector funds. More information on the Grifols Chair: Grifols chair for translational research | EF Clif | European Foundation for the study of chronic liver failure OVER THE LAST FIVE YEARS, MORE THAN EUR 10 MILLON WERE ALLOCATED TO PRECLINCAL AND CLINICAL RESEARCH THROUGH THE ISR PROGRAM, AS WELL AS EUR 14 MILLION ON LIVER-DISEASE RESEARCH THROUGH THE GRIFOLS CHAIR

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_22.jpg INNOVATION I RESEARCH PUBLICATIONS I 122 2020 CONSOLIDATED DIRECTORS’ REPORT The company also promotes the generation of knowledge within the organization. A number of prestigious publications have featured the work of Grifols scientists and researchers. Therapeutic Area Product Title Author(S) Publication NEURODEGENERA-TION Albumin A randomized, controlled clinical trial of plasma ex-change with albumin replacement for Alzheimer’s di-sease: primary results of the AMBAR Study Boada M, Lopez O, Olazarán J, Núñez L, Pfeffer M, Paricio M, Lorites J, Pi-ñol-Ripoll G, Gámez JE, Anaya F, Kiprov D, Lima J, Grifols C, Torres M, Costa M, Bozzo J, Szczepiorkowski Z, Hendrix S, Páez A, on behalf of the AMBAR Clinical Investigation Study G Alzheimers Dement. 2020 Oct;16(10):1412-1425 Albumin The AMBAR study: A randomized trial of plasma ex-change with albumin replacement for Alzheimer’s disease management Boada M, Lopez O, Núñez L, Olazarán J, Pfeffer M, Paricio M, Lorites J, Piñol G, Anaya F, Ortiz P, Kiprov D, Grifols C, Torres M, Bozzo J, Szczepiorkowski Z, Páez A, on behalf of the AMBAR Clinical Investigation Study Group Alzheimers Dement. 2020 Oct;16(10):1412-1425 HEPATOLOGY Albumin Albumin internalizes and inhibits endosomal TLR sig-naling in leukocytes from patients with decompensated cirrhosis Casulleras M, Alcaraz-Quiles J, Duran-Güell M, Flores-Costa R, Titos E, López-Vicario C, Fernández J, Horrillo R, Costa M, de la Grange P, Moreau R, Arroyo V, Clària J Sci Translat Med 2020; 12 (566): eaax5135 CLOTTING / HEMATOLOGY Factor VIII Non-additive effect on thrombin generation when a plas-ma-derived factor VIII/ von Willebrand factor (FVIII/VWF) is combined with emicizumab in vitro Bravo MI, Raventós A, Pérez A, Costa M, Willis T J Thromb Haemost. 2020 Aug;18(8):1934-1939 "NEUROLOGY / IMMUNITY" Immunoglobulin Cross-neutralization activity against SARS-CoV-2 is pre-sent in currently available intravenous immunoglobulins Díez JM, romero C, Vergara-Alert J, Belló-Pérez M, Rodon J, Honrubia JM, Segales J, Sola I, Enjuanes L, Gajardo R Immunotherapy 2020 Dec;12(17):1247-1255 Immunoglobulin Currently available intravenous immunoglobulin contains antibodies reacting against SARS-CoV-2 antigens Díez JM, Romero C, Gajardo R Immunotherapy. 2020 Jun;12(8):571-576 Immunoglobulin Immune globulin subcutaneous, human 20% solution (Xembify®), a new high concentration immunoglobulin product for subcutaneous administration William Alonso, Pete Vandeberg, John Lang, Jeffrey Yuziuk, Rebecca Silvers-tein, Kenya Stokes, Dennis McBride, Maria Cruz, Doug Burns, W. Keither Me-rritt, Todd Willis, Juan I. Jorquera Biologicals. 2020 Mar;64:34-40 Immunoglobulin Polyvalent Human Immune Globulin: A Prospective, Open-Label Study Assessing Anti-Hepatitis A Virus (HAV) Antibody Levels, Pharmacokinetics, and Safety in HAV-Seronegative Healthy Subjects Martin Kankam, Rhonda Griffin, Jeffrey Price, Josée Michaud, Wei Liang, Ma-riona Bassas, Ana Sanz, David Vilardell, Bradley Vince Adv Ther 2020 May;37(5):2373-2389 Immunoglobulin Plasma Donors in the Southwestern United States Po-sitively Contribute to the Diverse Therapeutic Antibody Profile of Immune Globulin Products Jonathan M Ciencewicki; Katherine R Schouest, Todd M Gierman; Peter J Van-deberg and Barry D Gooch Sci Rep. 2020; 10: 6850 RESEARCH PUBLICATIONS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_23.jpg INNOVATION I RESEARCH PUBLICATIONS I 123 2020 CONSOLIDATED DIRECTORS’ REPORT Therapeutic Area Product Title Author(S) Publication PNEUMOLOGY Alpha-1 antitrypsin Human plasma-derived alpha1-proteinase inhibitor in patients with new-onset type 1 diabetes mellitus: a ran-domized, placebo-controlled proof-of-concept study William H. Lagarde, Kecia L. Courtney, Barry Reiner, Kimberly Steinmann, Eva Tsalikian, Steven M. Willi Pediatric Diabetes, 2020 Nov 26. doi: 10.1111/pedi.13162. Online ahead of print. Alpha-1 antitrypsin Results of a diagnostic procedure based on multiplex technology on dried blood spots and buccal swabs for subjects with suspected alpha1 antitrypsin deficiency López-Campos JL, Casas-Maldonado F, Torres-Duran M. Medina-gonzálvez A, García-Rivero JL, Carrascosa I, Calle M, Osaba L, Rapun N, Drobnic E, Miravit-lles M Arch Bronconeumol 2021; 57(1): 42-50 Alpha-1 antitrypsin Comorbidity Associations With AATD Among Commer-cially Insured and Medicare Beneficiaries With COPD in the U.S. Robert Sandhaus, Charlie Strange, Glenda Stone, M Chris Runken, Christopher M Blanchette, Reuben Howden Int J COPD 2020; 15: 2389-239 OTHERS Alpha-1 antitrypsin Alpha1-antitrypsin ameliorates islet amyloid-induced glucose intolerance and cell dysfunction Rodríguez-Comas J, Moreno-Vedia, Obach M, Mestre A, Horrilo R, Costa M, Novials A, Servitja JM Molec Metab 2020 Jul;37:100984. Nanofiltration Nanofiltration as a robust methodology contributing to viral safety of plasma-derived therapeutics. 20 years’ experience of the plasma protein manufacturers. A data collection from PPTA member companies Roth N, Dichtelmueller H, Fabbrizzi F, Flechsig E, Grőner A, Gustafson M, Jorquera J, Kreil T, Misztela D, Moretti E, Moscardini M, Poelsler G, More J, Roberts P, Wieser A, Gajardo R Transfusion 2020 Nov;60(11):2661-2674 Kiro Oncology Evaluation of the efficacy of a self-cleaning automated compounding system for the decontamination of cyto-toxic drugs Telleria N. García N, Grisaleña J, Algaba N, Bergareche E, Tamés MJ, Cajara-ville G J Oncol Pharm Pract 2020: doi: 10.1177/1078155220951866. BloodChip The Concordance of Two PCR-based, Blood Group Ge-notyping Platforms in Patients with Sickle Cell Disease Chelsea A. Sheppard, Nicole L. Bolen, Geralyn Meny, Monica Kalvelage, Gorka Ochoa-Garay Immuno hematology 2020; 36(4): 123-128 ID CORE XT The Concordance of Two PCR-based, Blood Group Ge-notyping Platforms in Patients with Sickle Cell Disease Sheppard C, Bolen N, Meny G, Kalvelage M, Ochoa-Garay G Immuno hematology 2020; 36(4): 123-128 ID CORE XT RH genotyping by non-specific quantitative next-genera-tion sequencing Stef M, Fennell K, Apraiz I, Arteta D, González C, Nogués N, Ochoa-Garay G Transfusion 2020; doi.org/10.1111/ trf.16034 SEQPRO LIPO S Mutation type classification and pathogenicity assign-ment of missense variants located in the EGF precursor domain of the LDL receptor Galicia-Garcial U, Benito-Vicente A, Uribe KB, Jebari S, Larrea-Sebal A, Alonso--Estrada R, Aguilo-Arce J, Ostolaza H, Palacios L, Martin C Sci Rep. 2020; 10(1): 1727. ABtest Longitudinal Evaluation of the Natural History of Abeta in Plasma and Brain Burnham C, Fandos N, Fowler C, Pérez-Grijalba V, Dore V, Doecke JD, Shishe-gar R, Fripp J, Rowe C, Sarasa M, Masters CL, Pesini P, Villemagne VL Brain Communications 2020; 2(1): fcaa041 ABtest Total Aβ42/Aβ40 ratio in plasma predict amyloid-PET status, independent of clinical AD diagnosis Doecke JD, Pérez-Grijalba V, Fandos N, Fowler C, Villemagne VL, Masters CL, Pesini P, Sarasa M, and the AIBL Research Group. Neurology 2020; 94(15): e1580-e1591

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_24.jpg Plasma is the essential raw material in the production of life-saving plasma-based medicines. Grifols serves as the bridge between patients and donors, whose generosity makes these therapies possible. Grifols’ network of U.S. and European plasma centers is the largest in the world, and our standards of quality, safety and transparency are a reference in the industry. DONORS IMPACT OF GRIFOLS’ PLASMA CENTERS 41,000 JOBS CREATED SOCIAL VALUE FOR DONORS AND COMMUNITIES 2,550 M€

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_25.jpg OUR DONORS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_26.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I PLASMA, DONATIONS AND DONORS I 126 DEL PLASMA: GLOBULINS CELLS AND WATER RED BLOOD PROTEINS FACTORS 1% 3% 15% 21% 60% OTHERS PLASMA WHAT IS PLASMA? A clear and slightly yellowish liquid, plasma is the mlaraginesctocmompopnoennetnotfohfuhmumananblobolodo,dr,erperperseesnetnintgingaraoruonudnd555%5%ofotfotoatlabllobolododvovluomlume.eA. A707-0k-gkgpepresrosnonwiwll ihllahvaevearaoruonudndfivfievelitelitresrosfobflobolodo,do,fowf hwichhic,hthtrhereearaereplpalsamsma.a. Plasma includes the blood cells – red blood cells, white blood cells and platelets –– aass wweell aasswwaatteerr((9900%%)),,mminineerraallssaaltltssaannddeasslaerngteialpporotitoeninosf aensdseannttiaiblopdrioetse,inwshaicnhdaarneticbroitdicieasl ,fowrhtihceh parroepcerritfiucnalctfioorntihneg porfotphe bfoudnyc.tTiohneinsge oinfctlhuedeboimdym. Tuhneosgeloibnuclliundse, cimlotmtinugnofagclotobrusli,nasl,bculmotitninagnfdacatloprhsa, -a1lbaunmtiitnryapnsdin,aalpmhao-n1g aonthtietrrysp. sAins,haomrtoangge ofhaenrys.ofAthshesoertapglaesomfaanpyrootef itnhsesceanpllaesamd atopsreorteioinus caannd leevaedntolifes-etrhioreuasteanidngevdeinselaifsee-tsh.reatening diseases. BLOODPLASMA CONTAINS:CONTAINS:LAS PROTEINAS ALBUMIN WHITE BLOOD ALPHA+BETA PLATELETS 90% IMMUNOGLOBULINS FIBRINOGEN 7% CLOTTING 55% 3% 3% 42% CELLS PLASMA, DONATIONS AND DONORS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_27.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I PLASMA, DONATIONS AND DONORS I 127 z THE GENEROSITY OF PLASMA DONORS MAKES PLASMA-DERIVED MEDICINES POSSIBLE Plasma is an essential raw material in the manufacture of plasma-derived therapies, which are used to treat and prevent potentially life-threatening diseases and conditions for patients around the world. In 2020, the importance of plasma, plasma-derived medicines and donors were brought to the forefront as a result of the COVID-19 pandemic. Plasma from recovered COVID-19 patients – known as convalescent plasma – contains antibodies to the SARS-CoV-2 virus that might prove effective in treating the disease. Grifols is working to find treatments from this plasma. Hundreds of donations are needed to produce enough plasma-derived medicines to treat one patient for one year. It is impossible to artificially create or manufacture plasma in a lab. Plasma donations are the only means possible to produce plasma-derived medicines and enhance the quality of life of patients who require them. Hundreds of donations are needed to produce enough plasma-based medicine to treat one patient for a year. 70 kg PRIMARY IMMUNODEFICIENCIES ALPHA-1 ANTITRYPSIN DEFICIENCY 130 DONATIONS 900 DONATIONS 2020 HIGHLIGHTED THE VITAL IMPORTANCE OF PLASMA, PLASMA-DERIVED TREATMENTS AND PLASMA DONORS CIDP* HEMOPHILIA 465 DONATIONS 1.200 DONATIONS *Chronic inflammatory demyelinating polyneuropathy

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_28.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I DONATING PLASMA IS SAFE I 128 z REGULATIONS FOR PLASMA DONATIONS PLASMAPHERESIS: A WAY OF DONATING PLASMA SAFE ONLY There are two ways to obtain plasma: recovered plasma, derived from whole blood, and source plasma, obtained through plasmapheresis. the donor. Plasmapheresis is the most effective way to remove plasma from the blood, shortening the recovery process and in turn, facilitating a higher frequency of plasma donations without impacting the donor’s health. WITH A NORMAL DAILY DIET AND ADEQUATE INTAKE OF WATER, THE BODY CAN RECOVER THE PLASMA PROTEINS AND LIQUID EXTRACTED DURING DONATION WITHIN A DAY The collection of source plasma exclusively for fractionation purposes is regulated by the U.S. Food and Drug Administration (FDA) and other global health authorities. In addition to universal good manufacturing norms and procedures by health agencies, the Plasma Protein Therapeutics Association (PPTA) also defines and monitors additional voluntary standards as part of the voluntary IQPP (International Quality Plasma Program) certification. In Europe, it is regulated by the European Medicines Agency (EMA). Plasmapheresis is an automatic plasma-extraction process used in all of Grifols’ donation centers. A safe and sterile medical procedure, it involves separating plasma from the blood and returning the remaining components (including red and white blood cells) to Plasmapheresis is a technique by which plasma is separated and removed and blood cells, platelets and other components are returned to the donor. The body is able to regenerate the volume of collected proteins in less than 24 hours following a plasma donation, a shorter recovery compared to that whole-blood donations. The requirements for donating convalescent plasma are regulated by healthcare authorities, including the FDA and EMA. More information visit https://www.fda.gov/about-fda/fda-en-espanol/done-plasma-del-covid-19 https://ec.europa.eu/health/blood_tissues_organs/covid-19_en BLOOD AND PLASMA SEPARATION WHOLE-BLOOD COLLECTION ONLY PLASMA IS COLLECTED RED AND WHITE BLOOD CELLS ARE RETURNED AaPpRrOoXx 50-70 min IT VARIES DEPENDING ON THE WEIGHT OF THE DONOR DONATING PLASMA IS SAFE

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_29.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I DONATING PLASMA IS SAFE I 129 z REASONS TO DONATE CONVALESCENT PLASMA CAN HELP IN THE FIGHT AGAINST COVID-19 PLASMA DONATIONS SAVE LIVES PLASMA CANNOT BE ARTIFICIALLY MANUFACTURED Plasma-derived medicines are used to treat or prevent severe conditions and diseases in various medical fields including pneumology, hematology, immunology, neurology, infectious diseases and traumatology. Plasma donors help save lives and improve the quality of life of thousands of patients worldwide. Plasma cannot be created in a lab or produced synthetically. These life-saving medicines are possible thanks to the generosity of volunteer plasma donors. Plasma from recovered COVID-19 patients – also known as convalescent or convalescent plasma – is a therapeutic option to combat the disease since it contains specific antibodies against SARS-CoV-2, the virus responsible for COVID-19. It can be used for both direct transfusions and to produce hyperimmune immunoglobulin.

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_30.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I DONATING PLASMA IS SAFE I 130 z ONLY TRULY COMMITTED PEOPLE ARE QUALIFIED DONORS Grifols only collects plasma from qualified and regular donors, who must undergo a physical exam and thorough medical evaluation to be classified as qualified donors and begin the donation process. In addition, they must also carry out two separate donations over a six-month period. Collected plasma is subject to rigorous analyses to screen for possible communicable diseases. discarded. Grifols never uses plasma from occasional or sporadic donors. Plasma donors commit themselves to undertake regular donations, and once they become qualified donors, they are subject to annual medical exams and routine health screenings before every donation. THE COVID-19 PANDEMIC HIGHLIGHTED THE IMPORTANCE OF PEOPLE WHO HAVE RECOVERED FROM THE DISEASE IN DONATING PLASMA TO HELP OTHERS CONVALESCENT PLASMA DONORS, IN ADDITION TO COMPLYING WITH ELIGIBILITY CRITERIA APPLICABLE TO ALL PLASMA DONORS, MUST BE CERTIFIED WITH A PREVIOUS COVID-19 DIAGNOSTIC AND THE ABSENCE OF SYMPTOMS FOR AT LEAST 28 DAYS BEFORE EACH DONATION Collecting plasma from two different donations makes it easier to determine if the donor is healthy and suitable to donate plasma. Without a second donation, the first donation cannot be used and must be WHEN IS DONATING PLASMA NOT ALLOWED? Grifols goes beyond legal requirements in many cases by establishing additional criteria to determine eligibility. The individual’s medical history is essential to evaluate eligibility. Recent surgeries, changes in medications, history of diabetes, heart diseases and autoimmune diseases, among others, are evaluated. Donors must postpone the donation process if their medical evaluations show abnormal levels or irregularities in certain parameters since these could be a sign of an underlying health issue. By conducting regular medical exams in its plasma donation centers, Grifols helps monitor the health of their donors, whose health is a topmost priority for the company. • Irregular heart rate • High total protein • High body temperature • Low total protein • High hematocrit • Lipemic plasma • Low hematocrit

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_31.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I DONATING PLASMA IS SAFE I 131 REQUIREMENTS FOR PLASMA DONORS DOCUMENTATION • A qualified donor must donate at least twice over a six-month period • A qualified donor can donate as often as twice in a seven-day period, with a full rest day in between in the U.S. and two days in Europe • Valid photo ID: Driver’s license, state-issued ID, passport, military identification or student ID card • Proof of Social Security Number • Proof of residence DONORS UNDERGO BLOOD TESTS FOR EVERY DONATION VERIFICATION OF WEIGHT, BLOOD PRESSURE, PULSE AND TEMPERATURE, AND ANEMIA AND PROTEIN LEVELS CONTROL • Screening for HAV, HBV, HCV, HIV and B19 virus using genomic amplification tests (Nucleic Amplified Testing; NAT) • Serologic tests for HBsAg (Hepatitis B surface antigen), Hepatitis C antibodies (anti-HCV) and HIV antibodies • Other periodic tests PLASMA FROM FIRST-TIME DONORS WHO DO NOT RETURN FOR A SECOND DONATION IS NEVER USED TO MANUFACTURE PLASMA-DERIVED MEDICINES. THESE UNITS ARE DESTROYED OR USED FOR DIAGNOSTIC PURPOSES AS A REAGENT

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_32.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I DONATING PLASMA IS SAFE I 132 z ENSURING DONORS’ SAFETY z SAFETY AND QUALITY CONTROLS IN GRIFOLS DONATION CENTERS Donating plasma is an extremely safe process with few-to-no side effects. In their first visit and at least once a year thereafter, donors undergo a physical exam and an in-depth evaluation of their medical, social and travel history. This information is recorded in the donor’s file, (see Privacy and Data Protection section in Chapter 3, Corporate Governance, for more detail). This process ensures the safety of both donors and patients treated with donor plasma therapies. Before every donation, Grifols checks the donor’s vital signs and inquires about their health and travel history since their last visit. Their levels of hematocrit (the percentage of red blood cells in blood, by volume) and plasma protein levels are also evaluated to ensure it is safe to donate. Grifols donation centers adhere to the highest quality and safety standards to ensure donors’ health and the quality of donated plasma. Regulatory inspections in Grifols plasma centers in 2020 Regulatory Body Inspection Days Administrative Actions** FDA* 104 0 The catheters and other materials used in the extraction process are sterilized and subsequently discarded. New and sterile materials are used with every single donation. EMEA 74 0 CLIA-COLA 51 0 PPTA 79 0 0 TOTAL 308 (*) More than 95% of FDA inspections resulted in 0 observations (**) Suspension, revocation or loss of any license or certification; warning letter, imposed suspension of any regulated activity, etc. Grifols’ requirements to carry out a safe donation, as well as detailed information on the donation process, are available at www. grifolsplasma.com

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_33.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I DONATING PLASMA IS SAFE I 133 CONVALESCENT-PLASMA DONORS ARE PLAYING A CRITICAL ROLE IN THE FIGHT AGAINST COVID-19 After recuperating from COVID-19, patients develop antibodies to defend themselves against the virus. For this reason, plasma from recovered COVID-19 patients – known as convalescent or convalescent plasma – might prove effective in treating the disease. Since the discovery of the novel coronavirus, the use of convalescent plasma to treat infected people could be a promising treatment both for direct transfusion and to produce a specific medicine: hyperimmune immunoglobulins. DIRECT TRANSFUSION HOSPITALIZED PATIENTS CONVALESCENT PLASMA INTRAVENOUS ADMINISTRATION FOR TRANSFUSION PLASMAPHERESIS CONVALESCENT PLASMA WITH ANTI-SARS-COV-2 DONORS ANTIBODIES RECOVERED HOSPITALIZED PATIENTS FROM COVID-19 PLASMA-DERIVED INTRAVENOUS ADMINISTRATION MEDICINE ANTI-SARS-COV-2 HYPERIMMUNE GLOBULIN ASYMPTOMATIC PATIENTS SUBCUTANEOUS ADMINISTRATION

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_34.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I GRIFOLS’ COMMITMENT TO DONORS  I 134 • Respect for human dignity and human rights are embedded in all Grifols operations, which support the fundamental pillars of the Universal Declaration of Human Rights (1948), the Helsinki Declaration (1964) and UNESCO’s Universal Declaration on Bioethics and Human Rights (2005). • Grifols does not discriminate donors based on their gender, race, ethnicity or socioeconomic status, although it only uses plasma from qualified donors to produce its plasma-derived medicines in accordance with the regulation of the countries where it operates. • Ensuring the health, safety, well-being and dignity of plasma donors is Grifols’ top priority. BASED ON THE DECLARATION OF HUMAN RIGHTS • Grifols adheres to the same quality and safety criteria in all of its plasma centers and for all of its donors. • Donors throughout Grifols’ network of plasma centers benefit from the same strict criteria of quality and safety, regardless of where they come from. There are no exceptions. EQUAL TREATMENT • Grifols recognizes the time and effort that it takes donors to donate plasma on a regular basis and compensates them for it. Grifols compensates donors for their commitment, which includes undergoing thorough health screenings, and for being regular plasma donor. • The compensation serves as an incentive an fosters altruism. Thanks to its donor compensation policy, Grifols is able to collect plasma to provide patients worldwide with essential life-saving plasma-derived medicines. • Grifols’ compensation policy applies equally to all donors. No distinction is made in terms of the volume of plasma collected or donors’ weight, although they must weigh at least 50 kg. to donate plasma. • The compensation that Grifols’ regular donors receive for their time supplements their monthly income and positively impacts the communities where donation centers are located. More information on the company’s social impact on donors and local communities, please see the “Grifols’ Social Impact” section. • Plasma donors also have the option of waiving part or all of their compensation to support one of the non-profit organizations under the umbrella of Grifols’ non-profit Plasma Possibilities program. Since the program was launched in 2017, Plasma Possibilities offers the chance to help twice: by donating plasma and by helping NGOs. It has helped raise more than USD 80,000 (USD 35,000 in 2020) for more than 40 U.S. non-profit charity organizations (19 in 2020). RECOGNITION FOR DONORS’ TIME AND COMMITMENT GRIFOLS’ COMMITMENT TO DONORS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_35.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I GRIFOLS’ COMMITMENT TO DONORS  I 135 z GRIFOLS PLASMA DONORS REPRESENT A CROSS-SECTION OF SOCIETY +60% OF DONORS ARE BETWEEN 26 AND 55 YEARS OLD 32% 18-25 YEARS 34% 26-35 YEARS 18% 36-45 YEARS 11% 46-55 YEARS 5% 56-65 YEARS 0% >66 YEARS DISTRIBUTION BETWEEN MEN AND WOMEN 73% OF DONORS HOLD UNIVERSITY DEGREES AND 90% HAVE A HIGH SCHOOL DEGREE EMPLOYMENT 62% ARE EMPLOYED FULL-TIME 37% 17% 57% High School Diploma Some College College Degree Men Women 37% 43%

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_36.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I ENSURING THE HEALTH OF OUR DONORS IS OUR HIGHEST PRIORITY  I 136 z PLASMA SURVEILLANCE DATA SUPPORTS THE SAFETY OF DONATIONS In line with data from previous years, Grifols’ plasma surveillance information from 2019 indicates that side effects in donors, or Donor Adverse Effects (DAEs), were very low. Considering the 9 categories established by the Plasma Protein Therapeutics Association (PPTA) and as a percentage per 10,000 donations, only 0.2% of all donations in 2020 caused any side effects. With regard to serious adverse effects, including embolisms, anaphylaxis, severe reactions to immunization or cardiovascular events, none has been registered. The predominant, but minimal, side effects are local injuries related to phlebotomy events, mainly hematomas, and hypotensive events, accounting for about 0.1% of total Grifols’ donations each. ENSURING THE HEALTH OF OUR DONORS IS OUR HIGHEST PRIORITY

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_37.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I ENSURING THE HEALTH OF OUR DONORS IS OUR HIGHEST PRIORITY  I 137 z STUDIES THAT CONFIRM DONOR SAFETY As part of its commitment to the health and safety of plasma donors, Grifols spearheads a range of initiatives, both directly and through collaborations with scientific organizations, to support research on the potential residual effects of plasmapheresis on donors: STUDY ON BLOOD PRESSURE STUDY ON CHOLESTEROL LEVELS STUDY TO EVALUATE IRON LEVELS Donating plasma through plasmapheresis involves the removal of a weight-adjusted volume of plasma and the return of cellular components to the donor. Although plasma volumes generally return to normal, a study was carried out to determine the possible residual effects of plasmapheresis on blood pressure. LDL apheresis is used to treat patients with familial hypercholesterolemia, and low-volume plasmapheresis for plasma donation may similarly lower cholesterol levels in some donors. This study was designed to assess the effect of plasmapheresis on total LDL and HDL cholesterol levels in a plasma donor population. Whole blood and red blood cell (RBC) donors are at risk of iron deficiency. In plasma donations using the plasmapheresis technique, only plasma is removed and red blood cells are returned to the donor, so the risk of iron depletion appears low. The study concludes that few source plasma donors have iron depletion and it is not higher in frequent donors. Frequent source plasma donation does not adversely impact iron stores, making it unnecessary to monitor donor iron status or iron supplementation. The findings indicate that systolic and diastolic blood pressure may decrease following plasmapheresis used for plasma donations at less-than-14-day intervals in donors with high baseline blood pressure levels. Based on the study’s fndings, total and LDL cholesterol levels in donors with elevated baseline cholesterol levels may decrease during routine voluntary plasmapheresis. For donors with normal blood pressure, no reduction in blood pressure levels was observed. For donors with normal cholesterol levels, no reduction in those levels was observed. Research reference: The Effect of Plasmapheresis on Blood Pressure in Voluntary Plasma Donors - PubMed (nih.gov) Reference: Prospective Multicentre Study of the Effect of Voluntary Plasmapheresis on Plasma Cholesterol Levels in Donors - PubMed (nih.gov) Reference: Frequent Source Plasma Donors Are Not at Risk of Iron Depletion: The Ferritin Levels in Plasma Donor (FLIPD) Study - PubMed (nih.gov)

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_38.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I GRIFOLS PLASMA DONATION CENTERS CREATE VALUE  I 138 z GRIFOLS PLASMA CENTERS ARE LOCATED IN COMMITTED COMMUNITIES U.S. PLASMA CENTERS EUROPE PLASMA CENTERS 264 48 WEST MIDWEST NORTHEAST SOUTH In 2020, Grifols’ network included 264 plasma When it comes to choosing a suitable site for its plasma centers, Grifols considers primarily small and medium-sized cities with a solid commitment to community progress, manifested by active chambers of commerce and ongoing initiatives to promote social progress. For Grifols, active community participation in the plasma donation process is key in order to guarantee a long-term supply of this core raw material, essential to producing life-saving medications. vital role of plasma and the production of plasma-derived therapies. centers in the U.S. and 48 in Europe. Although donor communities are diverse, they all share a common commitment to continuous development. In the U.S., Grifols’ centers are located throughout the country, with no particular concentration in a specific region. To this end, members of Grifols’ plasma centers actively participate in their communities, taking proactive steps to get to know local residents and organizing educational and awareness events on the When developing new centers, the company also seeks healthy communities with low viral markers, lower-than-average crime rates and heterogeneity among area residents to ensure a diverse donor pool, among other criteria. LOCATION 24%27%3%46% GRIFOLS PLASMA DONATION CENTERS CREATE VALUE

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_39.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR DONORS I GRIFOLS PLASMA DONATION CENTERS CREATE VALUE  I 139 z MEASURING THE SOCIAL VALUE OF GRIFOLS PLASMA DONATION CENTERS In 2020, Grifols finalized its first study to measure the social value generated by its plasma centers. It followed the SROI methodology which enabled us to unveil the social value created for donors and communities in 2019. EDUCATIONAL EXPENSES HEALTHCARE AWARENESS MAIN SOCIAL IMPACTS PHYSICAL AND PSYCHOLOGICAL WELL-BEING Donors are more confident about their future since they can better afford tuition and pay for other college-related expenses. A healthier community since donors must be in good health in order to donate. More people benefit from plasma-derived proteins. Donors feel better about themselves, enjoy a better social life and spend more time with family and friends. TOTAL IMPACT 1,828 M€ TOTAL IMPACT 722 M€ FINANCIAL STABILITY ECONOMIC IMPACT IN DONOR COMMUNITIES Donors have more income to meet their day-to-day needs and cover their monthly living expenses. HEALTHIER LIVES A sizeable amount of money reverts back to the community, with around 77% of compensations injected within a 20-mile radius. Their health improves since they are able to afford better-quality food and exercise more frequently. SOCIO-ECONOMIC IMPACT Estimated wealth creation and employment generation from Grifols plasma centers in the U.S. and Germany in 2020. TOTAL JOBS GENERATED 41,000 TOTAL SOCIO-ECONOMIC IMPACT 2,800 M€ M N

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_40.jpg WOMEN 60% PERMANENT CONTRACTS Without a doubt, Grifols employees the company’s most vital asset. Inspired by their work and dedication during the COVID-19 pandemic, we continue to promote diversity, continuous development, equal opportunities and gender equality in the workplace. Grounded on solid ethical values, Grifols’ corporate culture reflects solid ethical values and a humanistic approach to leadership, aimed at continuously fostering our employees’ personal and professional growth. 98% PEOPLE

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_41.jpg OUR PEOPLE

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_42.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I PEOPLE MANAGEMENT I 142 PEOPLE MANAGEMENT Grifols’ employees drive the company’s innovation and growth. While the COVID-19 pandemic has been challenging on many levels, it has brought out the best in the entire team, especially employees in Grifols plasma centers and production facilities. Thanks to their dedication, the company has been able to guarantee that its life-enhancing therapies, products and services reach the patients who need them. Grifols works to ensure equal opportunities in all areas, while actively promoting diversity, inclusion and employee development. The company’s commitment to its team is applied organization-wide and articulated through diverse policies, guidelines and management initiatives. POLICIES, GUIDELINES AND MANAGEMENT TOOLS • Selection processes follow Grifols Recruiting Policy to ensure systematic hiring procedures that comply with current legal frameworks and support corporate values. • Grifols makes no distinction based on race, ethnicity, gender identity, sexual orientation, age, religion or between men and women in its hiring practices, compensation or benefits packages. In accordance with the Equal Opportunities Principle, salaries for new hires are the same regardless of gender, race, religion, age, sexual identity or orientation. • The Grifols Performance System (GPS) is used to evaluate the professional performance of the team on an individual basis each year. • Grifols’ Occupational Health and Safety Policy sets out a rigorous system for occupational health, safety and risk-prevention in the workplace. GRIFOLS’ COMMITMENTS TO ITS TEAM Serve as a responsible and sustainable company Reflect a diverse and inclusive company that that contributes to generating economic, social andguarantees equal opportunity for all of its employees. environmental value by fostering team engagement and a values-driven corporate culture. Maintain an open dialogue based on trust and respectEncourage teamwork to drive innovation by sharing with employee representatives. insights and experiences. Ensure the ongoing improvement of the Foster the acquisition of new knowledge and occupational health, well-being and safety continuous training adapted to the needs of of all employees. each employee by combining specialized and transversal competencies. Offer a professional development model based onOffer competitive pay packages and properly a systematic approach to assess attitudes, performance compensate employees who contribute to the company’s and behavior, and identify strengths and areascontinued development and demonstrate significant for growth. individual and professional performance.

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_43.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I PEOPLE MANAGEMENT I 143 Grifols’ team has always been its top priority. Throughout the pandemic, the company has been – and will continue to be – fully committed to its employees. • Implementation of preventive measures: social distancing, hygienic measures, dining-hall shifts, gel dispensers, signage, etc. • Body temperature controls at all building access points • Regular COVID-19 detection tests for all employees • Expansion of medical service, 24 hours a day and seven days a week • Installation of protective screens to fulfill safety measures when necessary • Ongoing assessment of specific COVID-19-related risks • Daily security rounds in all facilities • Emotional support through psychological services and coaching sessions • Hazard pay for manufacturing and plasma center employees • Enhanced communication: management guidelines for mid-level managers and specific training sessions • 156 virtual expert-led sessions focused on effectively managing crisis situations, drawing more than 2,400 participants • 74 sessions on stress-management and strategies to improve physical, emotional and mental health, as well as the ability to manage stress • 82 sessions on how to adapt to change, communication and collaboration in a virtual environment COVID-19 has transformed the way the company works, as well as accelerated changes in its team and employee management. Guided by senior management, Grifols has prioritized the safety and physical and emotional well-being of its employees and made important strides in embracing a more humane style of leadership, which in turn has fostered greater collaboration and innovation. COVID-19: OUR TEAM IS OUR TOP PRIORITY Since the onset of the pandemic, Grifols’ efforts have focused on three core concerns: protecting the health and safety of all employees; ensuring the continuity of its operations; and maintaining the supply of medicines for patients worldwide. In the Human Resources department, all decisions taken have prioritized the well-being of workers, safeguarding their employment and giving them support on all levels. ENSURE THE PRODUCTION OF PLASMA MEDICINES: ECONOMIC AND FLEXIBILITY MEASURES TO PROTECT EMPLOYEES: CONTINGENCY AND RETURN-TO-WORK PLANS: • Identification of critical groups – employees in reserve with time-accrual systems – to ensure the ongoing production of plasma and donations • Shift flexibility and mobility to adapt to production needs • Agreements with worker organizations that legally represent employees in Spain to facilitate continued production • More than 25 contingency plans in place for manufacturing facilities, donation centers and global offices in the case of prolonged pandemic-related restrictions • Management of return-to-work plans to ensure the gradual return of employees in all countries of operations • Creation of a special travel policy for business trips • Paid absences for employees in quarantine (with and without symptoms, but without positive-test confirmation) • 100% of salary paid to employees with COVID-19 until recovery - in those countries that do not pay for employees’ absences. • Salary payment to employees detected as sensitive/high risk who are unable to come to work • A time-accrual system to facilitate work-life balance • 100% of salary paid to employees at donation centers even if temporarily closed • Coordinating work from home for all employees able to perform their roles remotely

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_44.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I OUR TEAM DRIVES ONGOING IMPROVEMENTS  I 144 Knowing the opinions and perspectives of Grifols’ workforce is fundamental for confronting new challenges as a company. The pandemic has forced the company to change its way of working, habits and daily routines. Conscious of the efforts of its staff, Grifols launched the “Working: During the COVID-19 Pandemic” survey in April 2020 to gather the insights of employees and gain a better understanding of their emotional state, support needs and the perceived clarity of communications and instructions on preventive measures and other COVID-19-related issues. Through this initiative, it seeks to give further support to employees during these uncertain times. A total of 7,858 surveys were sent to employees in offices, production facilities and donation centers, garnering 51% participation. The main results, illustrated alongside this text, led to the creation of actions plans over the following months. SURVEY SUMMARY OF “WORKING DURING THE COVID-19 PANDEMIC” YOUR EMOTIONAL STATE SUPPORT FROM YOUR CLARITY OF DURING THE PANDEMIC MANAGERCOMMUNICATIONS 47%88% 79% UNDERSTANDING OF PRIDE IN GRIFOLS’ PREVENTIVE MEASURESMANAGEMENT 91%86% Surveys sent: 7,858 Surveys answered: 4,044 Participation: 51% OUR TEAM DRIVES ONGOING IMPROVEMENTS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_45.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I OUR TEAM DRIVES ONGOING IMPROVEMENTS  I 145 z 2019-2020 GLOBAL SURVEY OF GRIFOLS EMPLOYEES Between October 2019 and October 2020, the company conducted a new global employee survey (starting with the sales team in 2019, followed by the remaining divisions in 2020) to better understand our employees’ opinions and needs. Results were compared with the survey carried out in 2017 to identify employees’ key considerations and opinions about working at Grifols and design necessary action plans based on their feedback. PARTICIPATION OF RESULTS AND EVOLUTION CHARACTERISTICS OF GRIFOLS’ 2020 GLOBAL EMPLOYEE SURVEY: IN 2020, GRIFOLS LAUNCHED TWO GLOBAL SURVEYS: ONE SPECIFIC TO COVID-19 SENT TO NEARLY 8,000 EMPLOYEES AND ANOTHER GENERAL SURVEY, SENT TO MORE THAN 22,200 EMPLOYEES Participation was 78% in the sales area and 71% in remaining areas. This reflects an increase of 20 points compared with the 2017 survey, which obtained 51% participation. The results show a significant improvement in employees’ assessment of corporate values, especially in the dimensions of “Excellence” (maximizing performance with available resources), “Pride” (a company built by employees) and “Innovation and Improvement” (ongoing innovation and improvement to remain a global reference). The 2020 survey was sent to 22,217 employees through different channels to ensure everyone had the opportunity to express their opinions. The questionnaire evaluated 17 dimensions through 69 closed-ended questions and two open-ended questions, while guaranteeing confidentiality through a two-layer system. The obtained results are similar to average industry results (similar businesses in other sectors) and high-performance listed companies. This positive feedback was the result of multiple lines of action based on feedback from the 2017 survey, including annual team leader meetings, weekly organization-wide meetings and enhanced training programs, among others. The overall results of the 2020 survey were shared throughout the organization. In 2021, the company will host meetings in each installation to review them in greater depth and define improvement action plans moving forward.

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_46.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TEAM DEVELOPMENT  I 146 At the end of 2020, Grifols’ workforce was made up of 23,655 employees. The number of women in the category of executives increased to 37 (+15.6%); directors to 166 (+3.1%), senior management to 237 (+5.5%); and management to 602 (+5.0%). The workforce grew across all geographic areas where the company operates, except for the U.S. This lack of growth mainly stems from the elevated levels of employee turnover, which are generally high in the industry. As a result, Grifols was able to adjust the size of its workforce in response to COVID-19-related fluctuations in its activities. In 2020, 5,351 people were hired (6,276 in 2019) and no layoffs or other social measures were implemented. Employees have always been a priority for the company, and in 2020, Grifols once again confirmed its commitment to job creation and employment. Additionally, no Temporary Redundancy Program was presented in any of the countries where the company operates. TOTAL EMPLOYEES 60% 23,65540% WOMEN MEN 98% 52%88 93% PERMANENT CONTRACTS BETWEEN 30-50 YEARS OLD NATIONALITIES EMPLOYED FULL-TIME WE CONTINUE TO PROMOTE EQUALITY BETWEEN MEN AND WOMEN 98% 92%62% OF WOMEN WITH PERMANENT CONTRACTS OF WOMEN EMPLOYED FULL-TIME OF PROMOTIONS ARE WOMEN 36%41%52% OF DIRECTORS ARE WOMEN OF SENIOR MANAGEMENT ARE WOMEN OF PROFESSIONALS ARE WOMEN 166 237 1,428 TEAM DEVELOPMENT

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_47.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TEAM DEVELOPMENT  I 147 z DIVERSITY AND INCLUSION: LINCHPINS OF GRIFOLS’ SUCCESS Grifols views diversity as a key driver of innovation. The ability to draw from employees who reflect different mindsets, backgrounds, cultures and beliefs is vital for developing new ideas and promoting continuous innovation. The company will continue to expand its diversity and inclusion efforts in 2021 with the launch of a three-year strategic plan, whose objectives include: In appreciation of the different realities in its diverse regions of operation, Grifols will establish one model for the United States and another for Spain and other countries. The action plan will highlight one topic per year, while gender equality will be addressed globally. This action plan includes initiatives related to leadership, people management policies and processes, culture and communication for each topic. DIVERSITY OF THOUGHT, CULTURES, OPINION AND PERSONALITIES IS FUNDAMENTAL TO BUILDING HIGH-PERFORMANCE TEAMS • Reflect the diversity of the communities where the company operates. • Continue fostering diversity and inclusion in Grifols’ corporate culture and work practices. • Position Grifols as a global benchmark of diversity and inclusion. In March 2020, the CEOs signed a statement on diversity and inclusion, which was shared throughout the organization to underscore the company’s firm commitment to this area. U.S. REPRESENTATION OF MINORITIES WORK VALUES ACROSS GENERATIONS INCLUSION OF PEOPLE WITH DISABILITIES GENDER EQUALITY YEAR 2 YEAR 3 YEAR 1 GENDER EQUALITY INCLUSION OF PEOPLE WITH DISABILITIES WORK VALUES ACROSS GENERATIONS REPRESENTATION OF MINORITIES SPAIN + ROW

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_48.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TEAM DEVELOPMENT  I 148 z DIVERSITY AT A GLANCE IN 2020 RACE DIVERSITY IN THE U.S. 43% CAUCASIAN 22% HISPANIC 22% AFRO-AMERICAN 6% ASIAN 6% MIXED RACE AND OTHERS 1% NATIVE AMERICAN NATIONALITY DIVERSITY GENDER DIVERSITY 88 60% WOMEN 26% WOMEN EXECUTIVES 36% WOMEN DIRECTORS 31% NATIONALITIES WOMEN ON THE BOARD OF DIRECTORS AGE DIVERSITY 29% UNDER 30 YEARS 52% BETWEEN 30-50 YEARS 19% OVER 50 YEARS

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_49.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TEAM DEVELOPMENT  I 149 z EQUAL OPPORTUNITIES Grifols makes no distinction between men and women in its hiring practices, compensation or benefits packages. In accordance with its philosophy of equality, salaries for new hires are the same regardless of gender. • Dissemination of the Equal Treatment and Opportunities Plan • Incorporation of specific training actions regarding equality in the Grifols Development Plans The company has implemented a series of equal opportunity guidelines in reflection of its commitment to the principle of non-discrimination and equal treatment and opportunities, and in accordance with the Law of Equality of 3/2007 of March 22. Actions included are aligned with the basic principles established in the Grifols’ Code of Conduct and Code of Ethics for executives. • Consolidation of positive actions for selection and hiring processes to favor under-represented groups when recruiting, hiring and promoting individuals in the case of equal competencies, skills and suitability of other candidates in specific professional areas and groups • Establishment of a professional classification system to ensure equal opportunities among men and women Based on the inherent commitment of the company, in terms of equality and gender in the integral management of the company’s people, equality committees have recently been established in the group’s various companies. These committees are negotiating new equality plans which will reflect the new 2020 norm and include the following measures, among others: • Dissemination of awareness-raising actions to prevent gender-based and sexual harassment and implement a preventive protocol for sexual harassment based on gender or other circumstances • Establishment of a protocol in case of a situation of misogynistic behavior or gender violence among staff • Identification of existing salary gaps, requiring mandatory correction • Flexibility and work-life measures to help employees balance work, family and personal commitments • Educational actions to raise awareness and support the use of inclusive language

 

 

 

 

7998-1-mm-03_part 4 of 5 2020 consolidated directors' report_part3_page_50.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TEAM DEVELOPMENT  I 150 z INTEGRATION OF PEOPLE WITH DISABILITIES z ANTI-DISCRIMINATION PRINCIPLES AND ACTIONS The company is committed to hiring individuals with disabilities and adopts alternative measures only in cases where it is not technically or organizationally feasible, in accordance with the General Law on Persons with Disabilities applicable to private-and public-sector firms in Spain. • Educational actions on unconscious biases Grifols subscribes to the principles of the International Labor Organization (ILO), aimed at promoting social justice, human rights and the recognition of fundamental labor standards. As such, Grifols adheres to the principles of equal opportunity and non-discrimination in the recruitment and hiring of new employees. Grifols has zero-tolerance for any type of discrimination and the company has continued its efforts to cultivate a workplace free of discrimination. In 2020, 53 discrimination incident reports were submitted from a pool of 23,655 employees; in 2019, there were 55 incident reports from a pool of 24,003 employees; and 33 incidents from a base of 21,230 employees in 2018. Appropriate investigations and analyses were carried out and, although none of the claims were considered discriminatory in legal terms, measures were taken to ensure a discrimination-free environment. • Meetings with top management in manufacturing facilities to raise awareness on disabilities • Establishment of an onboarding process to enable new employees and their colleagues to work in an adaptable work environment Grifols promotes universal access for individuals with disabilities. Its accessibility principles include the removal of architectural barriers and a pledge to offer equal opportunities to individuals with disabilities. The company’s new buildings and facilities comply with current legislation and necessary structural reforms are carried out when necessary. In the U.S., it complies with regulations issued by the Office of Federal Contract Compliance Programs (OFCCP) of the U.S. Department of Labor. These regulations require that employers, such as Grifols, take active measures to ensure equal employment opportunities and avoid discrimination based on race, sex and disability, among other characteristics. Affirmative Action Plans (AAPs), which are aimed at increasing the employment of women and persons belonging to minority groups protected by law, apply to all companies with more than 50 employees. • Establishment of follow-up milestones that allow making necessary adjustments provide position adaptation to ensure and • Establishment of special measures to address COVID-19 for people with disabilities In the U.S., the company complies with unemployment regulations according to the Americans with Disabilities Act (ADA), a federal law aimed at preventing discrimination and providing equal access and opportunities to people with disabilities. In 2021, Grifols’ diversity and inclusion strategic plan extends these lines of action to other subsidiaries, including Germany and Ireland. In 2020, 599 people with some type of disability formed part of the Grifols’ team, of whom 70 worked in Spain, 474 in the U.S. and 55 in Germany. Over the years, the company has gradually incorporated and integrated more people with disabilities on its team. In 2019, 558 people with some type of disability formed part of the staff and 461 in 2018. In 2020, these plans resulted in 83 specific action measures. In 2019, 106 action measures were taken and, in 2018, 96 measures were included. In 2019 in Spain, a multidisciplinary team was created in Human Resources to improve the experience of disabled employees in the company. The following actions in 2020 are worth highlighting: • Establishment of a network of social entities made up of foundations, associations and others that provide access to diverse talent • Design of new Human Resources processes aimed at offering an inclusive experience

 

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_01.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TALENT MANAGEMENT  I 151 z ATTRACTING, INCORPORATING AND RETAINING THE BEST TALENT ARE KEYS TO GRIFOLS’ SUCCESS Grifols’ corporate values reflect their unique approach to business and the cornerstone of its successful century-old track record. There core tenets are interweaved in employees day-to-day and reflected in the Grifolsmap framework. Grifolsmap reflects the following pillars: • People are the core asset company of a growth-driven • People add value to the group Grifolsmap aims to translate the company’s values by serving as a guide to promote the personal and professional development of each member of Grifols’ employee pool. In parallel, it offers principles to attract and retain the world’s best talent. In an increasingly competitive global labor marketplace, Grifols’ Employer Branding project has become one of the company’s top priorities. Its objectives center on attracting and retaining talent, improving brand recognition, increasing commitment and differentiating the company from its competitors. New measures that have been carried out during the pandemic: • Internal promotions enable Grifols to meet future challenges • From April through August 2020, all hiring processes were carried out virtually. Guides for virtual interviews were created for candidates, hiring professionals and managers to facilitate this process. • Grifols relies on professionals who align with corporate culture In 2020, the main objectives focused on strengthening Grifols’ ability to attract the best professionals who can contribute to the group’s success and growth, while supporting its corporate values. Of note are the following activities that were carried out in 2020: • Starting in September, interviews were held virtually with the exception of the last meeting with the final candidates, which was held in person in compliance with all applicable safety and health measures. TALENT • Updating of Grifols’ Hiring Policy, adding a section related to potential conflicts of interest in the hiring process In 2020, the company hired 6,762 new employees. ACQUISITION INTERNAL GROWTH TRAINING AND DEVELOPMENT • Formalization of new agreements with more than 10 foundations and associations to expand the dissemination of job offers and attract groups at risk of social exclusion and profiles with different abilities grifolsmap • Adaptation of the web (“Work with Us”) to mobile devices to expand accessibility to candidates who use mobile devices as opposed to computers or laptops TALENT AND SUCCESSION PERFORMANCE MANAGEMENT COMMITMENT AND RETENTION TALENT MANAGEMENT

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_02.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TALENT MANAGEMENT  I 152 z EMPLOYEE TRAINING: THE KEY TO GRIFOLS’ SUSTAINABLE GROWTH Grifols offers continuous development opportunities for its workforce, which it considers an essential asset to effectively compete in today’s complex and globalized business landscape. The company also created an in-house online portal with a broad catalogue of resources for all Grifols employees, including virtual sessions, informative articles, videos and coaching sessions on well-being, time management, digital collaboration and communication, skills development and virtual leadership, among other topics. Resources were adapted to the needs of each region, including those specific to Spain, the U.S. and other countries where the company operates. • In the area of industrial training, Grifols harnessed the power of virtual reality to offer non-intrusive training via simulations of activities and processes. During the confiinement, employees were able to carry out hands-on training on the viral inactivation process, bridging the gap between Grifols installations and avoiding the need for travel. MOST TRAINING INITIATIVES FOCUSED ON HELPING EMPLOYEES BETTER MANAGE NEW CHALLENGES GENERATED BY COVID-19 In 2020, a significant part of Grifols’ training efforts focused on helping employees navigate the pandemic in the best way possible. At the same time, the company continued to offer training sessions and corporate and leadership-competency programs to promote its corporate values and ensure the highest standards of quality, safety and technical excellence. Training reached all professional levels of the company. In total, Grifols’ employees collectively participated in 2 million training hours* in 2020. Women received more than 64% of training hours and men the remaining 36%. In addition, the company maintained its continuous development initiatives, although it had to adapt some in-person courses to a virtual format due to COVID-19 mobility restrictions. Some examples are as follows: In 2020, 70% of training courses were carried out virtually due to the pandemic. • Commercial training was held via virtual interactive sessions through the team’s platform and supplemented with microsites to offer pre-course content and interactive activities using pre-designed whiteboards and breakout rooms to foster team dynamics. These platforms remain available upon consultation. In the Bioscience Division, an app was created for product training. Accessible by mobile devices, it featured different gamification techniques to offer training capsules on different product lines and was received very positively by the sales network. *91.8% of staff reported data.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_03.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TALENT MANAGEMENT  I 153 z OVERVIEW OF TRAINING AT GRIFOLS 2,015,062 TOTAL TRAINING HOURS IN 2020 +116,000 TRAINING HOURS IN OCCUPATIONAL SAFETY, HEALTH AND ENVIRONMENT 99 AVERAGE NUMBER OF TRAINING HOURS PER PERSON 64% TRAINING HOURS RECEIVED BY WOMEN 36% TRAINING HOURS RECEIVED BY MEN 70% ONLINE TRAINING HOURS OVERVIEW OF TRAINING HOURS BY PROFESSIONAL CATEGORY (TOTAL HOURS): +2,000 EXECUTIVES +11,000 DIRECTORS +24,000 SENIOR MANAGEMENT +44,000 MANAGEMENT +82,000 SENIOR PROFESSIONALS +110,000 PROFESSIONALS +1,737,000 ADMINISTRATIVE STAFF/ MANUFACTURING OPERATORS TRAINING HOURS BY REGION 1,532,016 U.S. 327,436 SPAIN 155,610 REST OF THE WORLD

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_04.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TALENT MANAGEMENT  I 154 z TRAINING PROGRAMS Grifols is highly committed to investing in its employee pool, which has grown significantly in recent years. Today and in the future, in-house talent plays a pivotal role in the company’s sustainable growth model. EXECUTIVE DEVELOPMENT ASSOCIATION WITH THE COLLEGE FOR AMERICA In order to maintain business growth through strong leadership development, the Professional Development Academy offers a complete catalog of Leadership Development opportunities, with initiatives aimed at all management levels to support Grifols leaders at different stages of their careers. The Professional Development Academy is continually offering, expanding and improving its Leadership Development Program. It is comprised of various modules and is available for all Grifols’ worldwide managers. In 2013, The Grifols Academy joined the College for America program, led by Southern New Hampshire University, to offer its team the opportunity to obtain university degrees through scholarship funding. To date, 86 Grifols employees have graduated, while 59 continue to pursue their undergraduate degrees thanks to this collaboration. In Grifols, continuous development efforts aim to promote the professional and personal growth of the company’s talent. Together, these interconnected threads form the “Grifolsmap”, which includes corporate values with a special emphasis on the development of common and leadership competencies. Most training programs are channeled through the Grifols Academy, created to enhance the educational and professional development of all employees while leveraging the company’s more than 100-year history. In addition, Grifols offers an executive development program for high-level executives in the organization. In 2020, changes have been made to improve and give continuity to this program and prepare for its relaunch in 2021. In addition to the leadership development program in effect throughout 2020, new programs were also created to help managers face new challenges posed by the COVID-19 pandemic. Among the global initiatives carried out in 2020, highlights included sessions on virtual leadership; how to lead teams and navigate in volatile, uncertain, complex and ambiguous (VUCA) contexts; and Leadership Executive Development (LED) Working Sessions. These last sessions aim to help managers and their teams lead in complex, virtual settings by providing strategies and resources to manage change and motivate teams in remote-work environments. These sessions attracted 289 participants from 23 countries. TUITION PROGRAMS – EDUCATIONAL EXPENSES REIMBURSEMENT PROGRAM The Academy of Plasmapheresis also includes the Center Leadership Development Program (CLDP), aimed at preparing future generations of leaders at the company’s plasma donation centers. In 2019, the CLDP obtained ICE 1100 accreditation by the Institute for Credential Excellence (ICE), which recognized its unique training focus. This distinction demonstrates Grifols’ commitment to professional training and development, based on solid ethical values. Since its foundation, Grifols Academy has trained thousands of managers around the world. Grifols also offers its employees training opportunities outside the company. It also helps to foster a culture of training and continuous learning. This is achieved by making a range of financial subsidies available to employees who wish to further their academic training. Thanks to this flexibility, Grifols’ employees have been able to earn a graduate and post-graduate education, as well as certifications (in some cases at an advanced level) to strengthen their professional development. CLOSE TO 13,400 EMPLOYEEES TRAINED THROUGH GRIFOLS ACADEMY PROGRAMS AND INITIATIVES EXECUTIVE DEVELOPMENT TRAINED STAFF 2020 2019 2020 2019 Executives trained 594 1,206 Graduates 8 12 Professionals 449 690

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_05.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TALENT MANAGEMENT  I 155 GRIFOLS ACADEMY Grifols established The Grifols Academy in 2009 as part of its staunch dedication to employees and other stakeholders. It encompasses the Professional Development Academy, the Academy of Plasmapheresis and the Academy of Transfusion Medicine. Through the Academy, Grifols offers its employees a platform for educational and professional development; cultivates its corporate philosophy and values; and provides resources and services to medical professionals dedicated to improving client care. In addition to educating, Grifols’ Academy training programs and initiatives share the common objective of actively driving the exchange of knowledge and experiences specific to the plasma sector. This industry focus differentiates it from other traditional learning centers. This Academy offers professional training and development to Grifols This Academy offers general and specialized training in key leadership This Academy offers educational programs on transfusion medicine to employees and seeks to strengthen corporate competencies and values. disciplines, quality, operations and medication in the field of plasma professionals globally. Its goal is to contribute to advancing knowledge in It has three central training areas: corporate competency development, science, with the aim of strengthening opportunities for the professional this field in order to provide better patient care. leadership development and support for new employees. and educational development of Grifols employees. The pandemic that began in March 2020 led to an increase in online Moreover, The Accrediting Commission of the Accrediting Council training hours compared with in-person sessions that had been carried for Continued Education & Training (ACCET), re-approved The Grifols out until that time. As a result, 6,398 online training hours were carried Academy of Plasmapheresis for another five years until December 30, out in 2020. 2024. The Academy received its first accreditation in 2015 for its standardized educational programs and commitment to employee development. This accreditation provides an impartial third-party validation confirming the Academy’s compliance with U.S. educational standards. 202020192020201920202019 Employee participations 3,706 3,916 Employees trained 6,225 1,741 Transfusion medicine professionals trained 3,575 2,551 Number of training sessions 249 220 Participants on campuses 256 1,401 Total educational programs 15 16 Online training hours 6,398 Distance participants 100 340 Webinars 15 8 Online hours 23,783 31,827 Courses 0 5 Hours of distance training 1,496 4,547 Practical workshops 0 3

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_06.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TALENT MANAGEMENT  I 156 z CORPORATE INTERNSHIP PROGRAMS z INTEGRATION OF NEW TEAMS The global internship program at Grifols seeks to identify and recruit talent for diverse areas of the company such as IT, engineering, finance, and marketing in order to later join the staff. Since 2017, Grifols has implemented an internship policy by which a Grifols tutor or representative supports the intern in their learning journey, among other actions. The result is an educational project that identifies the educational objectives and activities to be carried out. Agreements for internships at Grifols have a minimum duration of six months and a maximum of 18 months. Grifols’ growth is due in part to corporate acquisitions and operations, which have enabled it to continue expanding and strengthening key areas of its business model. Recent incorporations from MedKeeper (2020) and the acquisition of manufacturing facilities in Canada and Green Cross plasma centers in the U.S. (2020) are a few examples of the group’s solid experience. Effective onboarding of employees and teams is critical to ensuring the success of these operations. Acquisitions in 2020 led to the incorporation of more than 600 people to Grifols’ team. To meet new needs caused by the pandemic, the in-person onboarding process for new employees shifted to a virtual model. A highlight was the launch of Grifols Orientation, a program designed to improve knowledge of Grifols’ business and culture, promoting collaboration based on virtual experiences. The first edition included more than 100 people in Spain, the U.S., Japan, China, Germany, Ireland, Slovakia and Italy. Grifols collaborates with different educational institutions (mainly universities) to offer their students the possibility of carrying out internships in the company. These internships help students apply and complement the knowledge they have acquired through their academic education and supports the acquisition of competencies in preparation for their professional futures. At the early stages of acquisition operations, Grifols creates onboarding committees to facilitate the merging of teams. They execute a unique internal communications strategy that – with the needs of each organization in mind – facilitates the entire transaction process by mitigating uncertainty and leveraging the overall team strengths. Therefore, an internal communication process has been established, with guidelines to welcome new hires; welcome letters from senior management; and meetings with the different areas of Human Resources. Maintaining fluid, open and direct communication channels with the workforce is a priority.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_07.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I QUALITY EMPLOYMENT  I 157 z GRIFOLS GENDER PAY GAP: A COMMITMENT TO IMPROVEMENT Grifols reaffirms its commitment to effective equality, which regardless of gender provides the same opportunities and the same pay for work of equal value. As part of Grifols’ continued efforts to promote equal pay, the company, advised by EY as an external consultant for the year, carried out an adjusted and unadjusted gender wage gap calculation project in 2020. level or geographical area), and in their job post (type of working hours, type of activity or professional category). The 2020 analysis, much like the one for 2019, concludes that Grifols remains committed to the principle of equality between men and women, including remuneration, as shown by the data relating to the gap percentages that need to be closed. analysis carried out, the company has designed an action plan which will be included in the Global Diversity Plan 2021-2023. This plan will establish measures aimed at increasing the representation of women in positions of responsibility, ensuring bias-free selection processes, as well as measures for work-life balance and flexibility, among other actions. Grifols, as part of its commitment to equal opportunities and conditions for men and women, includes in this report for the first time an analysis of the pay gap in Ireland and Germany, as well as in the United States and Spain. This new analysis covers more than 90% of the group’s workforce and will serve as a reference for establishing action plans to help advance pay policies, among other aspects. The results for each country are shown separately to avoid distortions when applying a currency exchange rate. In all countries, Grifols’ unadjusted pay gap is below the national average pay gap to be closed according to the World Economic Forum’s Global Gender Gap Report 2020. In addition, work is underway to adapt existing measures to the new requirements of Royal Decree 902/2020 of October 13, 2019, which defines new transparency obligations in terms of compensation audits and job evaluation. The unadjusted gender pay gap is calculated as the percentage difference between the gross salary received for each hour worked by men and women. On the other hand, the adjusted gender pay gaps are calculated using econometric models which allow for the isolation of the effect on wages of the differences between men and women, both in their socio-economic characteristics (age, seniority, educational Although in general terms the differences found for the adjusted gap in Spain, the United States and Ireland are decreasing compared to the previous year, they still highlight the need to continue working in this area. In order to make further progress in Grifols’ commitment to effective equality, and taking into account the Spain* Grifols in Spain U.S.* Grifols in U.S. Ireland* Grifols in Ireland Germany* Grifols in Germany Pay equality for similar jobs / % closing gap 44.2% 3.1% (adjusted)** 30.1% 2.2% (adjusted)** 31.40% n.a. 32.90% 1.3% (adjusted)** 14.3% (unadjusted)*** 29.2% (unadjusted)*** 21.9% (unadjusted)*** 19.0% (unadjusted)*** Workforce - % women 43% 45.2% 47% 63.4% 43% 42.3% 33% 74.1% % of women on the Board of Directors in listed companies 22% 31% *Source: Global Gender Gap Report 2020 - http://www3.weforum.org/docs/WEF_GGGR_2020.pdf ** Methodological note and comments on its calculation are available in Chapter 10 “About This Report.” *** Difference between men’s and women’s salaries, calculated as the percentage differential between the average gross salary per hour worked by men and women ([men average salary - women average salay] / men average salary) QUALITY EMPLOYMENT

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_08.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I QUALITY EMPLOYMENT  I 158 z GRIFOLS’ PROGRESS TOWARDS GENDER EQUALITY According to the latest report published by the World Economic Forum, the gender equality wage gap improved globally last year, although on average (population-weighted) an estimated 31.4% gap remains. Grifols’ commitment to diversity and equal opportunities encompasses various initiatives aimed at improving equality, including efforts to promote women and address the wage gap. Additionally, the company takes other measures to prevent discrimination based on race, religion, sexual orientation, disabilities and other personal characteristics. GRIFOLS IN SPAIN: EQUALITY AND WAGE GAP GRIFOLS IN THE U.S.: EQUALITY AND WAGE GAP GRIFOLS IN IRELAND: EQUALITY AND WAGE GAP GRIFOLS IN GERMANY: EQUALITY AND WAGE GAP Grifols’ adjusted pay gap in Spain in 2020 stands at 3.1% (14.3% unadjusted), a decrease compared to 2019, when the adjusted gap stood at 5.1% (17.5% unadjusted). Grifols’ adjusted pay gap in the U.S. stands at 2.2% (29.2% unadjusted) which, compared to the U.S. pay gap (30.1% unadjusted), highlights the progress towards wage parity driven by Grifols’ remuneration policy. The unadjusted pay gap for Grifols in Ireland is 21.9%, although the average unadjusted pay gap for the country is 31.4%. In the case of Ireland, the adjusted pay gap data is not shown as it is still too small a group to obtain data with sufficient statistical significance using the econometric model. Grifols’ adjusted pay gap in Germany stands at 1.3% (19% unadjusted), significantly below the German average of 32.9% unadjusted. In this respect, the company is close to achieving equal pay for similar jobs. Compared to the country’s wage gap, which stands at 44.2% unadjusted, the gap reported by Grifols in 2020 highlights the work the company is doing to ensure that pay policies ensure that men and women have the same conditions when performing the same role. In the case of plasma centers, the gender pay gap reflects the organizational structure, with proportionally more women than men in plasma collection centers and more men in senior leadership teams. The company has 74.1 % of women in its workforce, compared to the German average of 47 %. In line with the U.S., this high representation is explained by the greater presence of women in plasma centers. Ireland, according to the World Economic Forum, is making efforts to increase the representation of women in senior management positions and currently has an average of 36% of women in these positions. At Grifols, 25% of women hold senior management positions, and the company has set itself the objective of improving the presence of women in these positions. According to the World Economic Forum, progress toward gender parity has plateaued in the U.S., maintaining a 27.6% gap to close. Progress toward pay equality has not progressed and has only closed 69.9% of its pay gap. Although economic disparities are the main source of gender inequality in the workplace, labor force participation has improved to 47%, even though there is still a need to further promote women’s participation in senior management positions. With regard to the representation of women in senior positions in the organization, Grifols has 31% of women on its Board of Directors, compared to the Spanish average of 22%. Germany, according to the World Economic Forum, continues to have a limited presence of women in positions of responsibility, with an average of 29.3% in these positions. At Grifols, 31% of senior positions are occupied by women. This representation increases to 56% if we include the professional categories of manager and senior manager, a figure which demonstrates the company’s efforts to develop internal female talent so that more women can access positions of greater responsibility in the future. Details of gender gap is summarized in the tables at the end of this chapter.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_09.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I QUALITY EMPLOYMENT  I 159 z REMUNERATIONS Grifols strives to offer competitive compensation packages and support employees who contribute to the ongoing development of the company and show significant individual and professional performance. In line with its corporate policies, each country offers a remuneration and benefits system adapted to their region. In general, the remuneration policy mainly includes: z LONG-TERM SAVING In Spain, retirement savings are framed within a public protection system. The U.S. model transfers the coverage of pension services to the private sector and to personal initiative, as established mainly in the standards of the Employee Retirement Income Security Act (ERISA). In accordance with Grifols’ remuneration policy, every year an external analysis of the competitiveness of the remuneration package for all employees is carried out in order to review the adequacy of remuneration levels and ensure that they are in line with market standards Furthermore, in December 2019 in Spain, the partial Retirement Agreement signed with unions came into effect, which regulates access to partial retirement at Grifols until December 2022. in other companies in the sector equivalent levels of responsibility. and consider Taking into account the characteristics of each model and the legal regulations in effect in each country, the contributions made by Grifols for pension plans in 2020, 2019 and 2018 are detailed at the end of the chapter. In both countries, the company offers employees the possibility of participating in a long-term savings plan. This analysis allows the company to improve • A fixed salary based on the level of responsibility of the position, the person’s professional career and labor market practice, and in accordance with the regulations applicable in each country. compensation packages and adapt them to the context and preferences of our employees. As a result of this analysis, several lines of work have been initiated based on a total compensation approach, such as improving the recognition of individuals, continuing to implement tax optimization measures, improving the communication of compensation elements, or expanding the catalog of flexibility measures. z SOCIAL DIALOGUE Grifols subscribes to the Declaration of the International Labor Organization (ILO) on fundamental principles and rights at work and its framework for action, which includes eight fundamental rights. Among these is respect on behalf of the organization for the right of employees and employers to form and join their own organizations as an integral part of a free and open society, as reflected in the “Freedom of Association and Protection of the Right to Organize Convention” (1948, No. 87) and the “Right to Organize and Collective Bargaining Convention” 1949 (No. 98), although the U.S. Congress has not ratified both agreements. • Variable compensation in the form of bonuses or incentives linked to the achievement of specific and measurable objectives that were previously established and which seek to promote behaviors aligned with the company’s strategy and values. For Grifols, it is essential to engage in social dialogue with workers’ representatives in order to integrally address cross-cutting issues that require collective bargaining in its diverse facilities. For this reason, the group has labor unions and company committees in different areas to carry out functions recognized by current legislation. Grifols is committed to fluid and transparent communications with labor representatives. Significant operational changes which could significantly impact employees are communicated in advance, in compliance with laws and applicable collective bargaining agreements. Details of remuneration by professional category and gender are summarized in the tables at the end of this chapter. • A package of benefits and complementary aids aligned with market trends and the needs of employees. In this regard, it is worth highlighting the Flexibility and Social Benefits Pact established in September 2020, which has boosted the amount of benefits for employees with children with functional diversity, and has renewed school benefits for the children of Grifols employees, among others. In Spain, the labor-relations system establishes two types of representation in companies – union representation and unitary or elective representation – which includes members of trade unions, company committees and personnel delegates.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_10.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I QUALITY EMPLOYMENT  I 160 z COLLECTIVE AGREEMENTS z REPRESENTATION COMMITTEES Employees who work in some of Grifols’ subsidiaries in Spain, Germany (commercial subsidiary), Italy, France, Argentina and Brazil are covered by collective agreements. In 2020, the number of people covered by these agreements was more than 4,567 employees, which represents 19% of the entire Grifols employee base. y Servicios - FAECYS (Argentina). In Spain, Chile and Germany, where labor committees are established by law, Grifols employees are tasked with the prevention of health and safety risks. In these countries, there is ongoing communication through OHS meetings. In the context of the current pandemic and as a result of intense efforts, Grifols and main union representatives in Spain reached and extended various agreements since March to address the state of alarm announced by the Spanish government and respond to health needs. The agreements include diverse measures to ensure continuity and the company’s activities in the distribution of its products to hospitals as well as health and patient centers, while guaranteeing the safety and health of employees. In the United States, collective agreements occur at the company level since no collective bargaining exists at the industry level. The Taft-Hartley Law regulates industry-based benefit plans and gives federal courts jurisdiction to enforce collective bargaining agreements. In the case of Grifols, the company abides by the General Chemical Industry Collective Bargaining Agreement, which expired on December 31, 2020 and is currently under negotiation. In 2020, 75% of employees in Spain were represented by a joint committee of employees and managers in occupational health and safety, a level similar to/ higher than the 72% recorded in 2019. In Chile and Germany, 100% of the workers were represented on these committees. In Spain, the company is generally governed by the chemical industry’s general agreement, as it has production centers, although it incorporates improvement agreements to adapt to the reality of the Grifols’ team. Highlights of these agreements include the Flexibility Pact to address COVID-19 which, among other measures, prioritizes telework; provides special protection for particularly sensitive or vulnerable groups and people in quarantine, paying 100% of their salary in the case of work-related medical leave, as well as pregnant women, who can opt for paid leave and receive 100% of their salary; and the possibility of recuperating work hours to mitigate the impact on salaries. In Brazil, the Collective Labor Agreements (CCT) are applied. In the State of São Paulo, these are signed by the employer’s union and the Sindicato dos Propagandistas-Vendors e Vendors de Produtos Farmacêuticos for employees in the São Paulo facilities. For employees in the Campo Largo facility, the CCT is signed by the employer’s union and the Sindicato dos Trabalhadores nas Indústrias Químicas e Farmacêuticas do Estado do Paraná. In the remaining subsidiaries, there is no formal representation, but Grifols carries out communication and consultations with employees on a regular basis. The workers in these subsidiaries establish committees in which all employees can participate in or submit proposals. Each subsidiary defines the frequency of these meetings and monitors the specific plans, actions or measures determined by these committees. In Germany, Italy, France and Argentina, where activity is mainly focused on sales, the following agreements are applied: Deutschland Labor Law Agreements Compilation in GDE (Germany), CCNL Chimico Farmacéutico (Italy), Convention Collective Nationale de l’Industrie Pharmaceutique (France) and Convenio de la Federación Argentina de Empleados de Comercio https://industria.ccoo.es/noticia:467420--CCOO_valora_ positivamente_el_acuerdo_alcanzado_con_Grifols_Espana_ para_afrontar_la_situacion_derivada_del_coronavirus&opc_ id=e50a4c46d8f65cbd7ba957222dc3bcca) https://grifols.ccoo.cat/wp-content/uploads/sites/6/2020/10/ acuerdo-flexibilidad-y-beneficios-sociales.pdf (only Spanish version available) 102-41

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_11.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I OCCUPATIONAL HEALTH AND WELL-BEING  I 161 z COMPREHENSIVE HEALTH AND SAFETY MANAGEMENT The Occupational Health and Safety area establishes annual health and safety objectives based on each year’s results and its mission to be a reference in the pharmaceutical industry. It also supervises Health and Safety Management Systems of its subsidiaries through an audit program. Each company administers and implements its own health and safety management system. In 2020, the most important arrangement for the Department of Occupational Health and Safety has been to set up COVID-19 preventive measures and ensure fulfillment of them. SINCE THE PANDEMIC WAS DECLARED, GRIFOLS HAS TAKEN ALL POSSIBLE MEASURES TO PROTECT THE HEALTH OF ITS EMPLOYEES Identification of hazards and risk minimization Integrated in the design phase of facilities, process changes and the acquisition of new equipment. Training and health and safety awareness programs This is aimed at ensuring all employees receive information and training on safety and health. Participation begins when the employee joins the group, when there are job placement changes and throughout the employees’ work life, in accordance with the job carried out. Training is a key management tool and in 2020 investments to make it more agile and appropriate to the workplace were made. Grifols centers in Spain have obtained OHSAS 18.001:2007 certification, with 2020 being the last year this certification is in effect. Currently, migration to ISO 45001 for all work centers in Spain is underway and the plan is to gradually incorporate its industrial facilities under the ISO 45001 standards in the coming years. Strengthening employee well-being and health Grifols has several programs to promote the well-being of its employees in the main countries in which it operates. In the U.S., the program includes a personal health advisor and wellness markers. In Spain, a physiotherapist forms part of the corporate wellness program. In 2020, educational and informative initiatives on health well-being were continued, although the pandemic required adaptation to a virtual format in order to carry these out at home. Instructive videos related to individual protection equipment were also made to prevent the spread of COVID-19 and specific training was given in Spain on COVID-19. Grifols has a Corporate Health and Safety Department that provides services to the entire group. Control of the corporate health and safety program is carried out at three levels: 1. Monthly monitoring of key performance indicators 2. Assessment visits to all companies and monitoring of preventive plans 3. Corporate audits OCCUPATIONAL HEALTH AND WELL-BEING

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_12.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I OCCUPATIONAL HEALTH AND WELL-BEING  I 162 z PERFORMANCE IN THE AREA OF HEALTH AND SAFETY The U.S. and Spanish teams together represent about 90% of Grifols’ total staff. Various indicators are tracked in all subsidiaries, including accident rates. The total number of accidents in Spain has decreased slightly, with a 50% reduction in accidents with sick leave being more significant. This is due to the implementation of the 3-year action plan approved by the management of each company, where one of the actions has been the increased monitoring of accidents and the corrective actions derived from them. As a result, sponsors have been created for each area. conferencing and other virtual technologies. This has limited external visits to work and production centers. MORE THAN 47,000 TESTS CARRIED OUT TO ENSURE THE BEST CONDITIONS FOR EMPLOYEES Also, protocols have included testing, both molecular (TMA/PCR) as well as serological, so that the return to work could be carried out in the best possible health conditions for staff. In this way, the recommendation of the World Health Organization (WHO) to carry out these tests to fight the pandemic as soon as possible was addressed and, as a result, tests have been carried out since May 2020, with more than 47,000 tests conducted on the team all over the world. In addition, in Spain and the United States, third-party collaborators have been included in testing. The company is continuously working to improve its prevention systems and Grifols investigates all accidents, including those with leave, minor incidents and accidents in itinere in countries where these are regulated. In the U.S. and ROW (rest of the world/other parts of the world) there were no significant changes with respect to the previous year. At Grifols facilites, a low rate of work-related illnesses is reported as all processes including plasma, follow a rigorous protocol and technical, organizational and personal preventive measures are taken at all times. The plasma donation centers present a risk of possible infection due to contact with blood at the time of extraction. Grifols has implemented an exposure control program to anticipate accidents and, when appropriate, take action. Following the World Health Organization’s declaration of a pandemic in March, Grifols adopted all possible measures to protect the health of its team. Starting at the end of February, Grifols cancelled all international travel and later extended this measure to national trips. This measure lasted until June 1. Since then, travel has been limited to only that necessary for continuing activities. Moreover, a flexible telework policy was implemented and continues to prioritize video Details of accidents are summarized in the tables at the end of this chapter

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_13.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I OCCUPATIONAL HEALTH AND WELL-BEING  I 163 MAIN ACTIONS TAKEN TO MITIGATE THE EFFECTS OF COVID-19 OCCUPATIONAL HEALTH SAFETY LINES OF ACTION AND EMPLOYEE COMMUNICATION AND PROTOCOLS INFORMATION • Extension of service for 24-hour coverage in Spain• Risk assessment for COVID-19 • Creation of COVID-19 protocols and action • Specific information about COVID-19• Body temperature control or declaration of • Occupational health and safety inquiries answered procedures, both in case of positive confirmation • Videos demonstrating hygienic measures for the use responsibility in the production centers by phone and email and in probable or possible casesof masks for all staff • Personal logistics protocol for Spain• Regularcommunicationsontheinternal • In-person, telephone and telematic consultations • Specific video for medical visitors with hygiene• Events protocol communications portal on new measures and • Monitoring of suspected, probable and confirmed measures and use of Personal Protective Equipment• External personnel protocolprotocols cases• Specific COVID-19 visits for Spanish manufacturing • Travel protocol • Regular meetings with global manufacturing • Handling of contacts, either at work or in socialfacilities • Self-cleaning pointsmanagers to monitor health and safety actions settings• Technical notes in Spain: design criteria and choice of • Regular meetings with sales management to monitor • Home monitoring to ensure safe return screens, smoking areas, signaling guides (distance,health and safety actions • Assessment of vulnerable personnel to determine capacity), etc. their sensitivity in the de-escalation phase • Information/training sessions to answer questions from shift personnel • Notification to the health epidemiological surveillance authority of each of the countries where Grifols operates

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_14.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I OCCUPATIONAL HEALTH AND WELL-BEING  I 164 z ABSENTEEISM z WORK-LIFE BALANCE The occupational health, safety and well-being of Grifols’ employees have a direct impact on absentee rates. The company works with an absenteeism management model with established benchmarks to quantify its cost impact. These include complementary accident insurance Grifols works to promote a corporate culture that ensures a balance between personal and work life, allowing employees to combine their professional development with their personal life. To confront the challenges of COVID-19, the company has provided employees with flexibility measures to achieve a better work-life balance. These include, among others: and corporate medical services with physiotherapy sessions based on task-observation protocol to prevent musculoskeletal injuries. The company also carries out awareness sessions, return-to-work interviews after extended sick leaves, and communication protocols for employee absences. Since December 2019 in Spain, Grifols has implemented a series of work-life balance measures (*), including: • The possibility of remote work for all employees whose roles offer this option. Grifols implemented several measures to foster the integrated health management of its workforce in order to address the root causes of absenteeism. • The option of shift changes, timetable adaptations and schedule reductions for frontline employees (donation centers and manufacturing facilities). • Flexible entry and exit schedule • Guidelines for digital disconnection Details of abseentism are summarized in the tables at the end of this chapter In addition, when countries permitted the return of employees to offices, Grifols executives were given a support kit that included a managerial guide with strategies on leading their teams during these unprecedented times, including the need to consider their unique personal situations and facilitate flexibility whenever possible. • Option of dividing a vacation day into hours • Promoting teleworking • Shorter working schedules on Fridays (*) Applicable according to profile.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_15.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TABLES  I 165 WORKFORCE DISTRIBUTION BY REGION AND TYPE OF CONTRACT WORKFORCE DISTRIBUTION BY COUNTRY 2020 2019 2018 2020 2019 Permanent Temporary Total Permanent Temporary Total Permanent Temporary Total Spain 4,292 4,134 U.S. 16,597 7 16,604 17,442 8 17,450 15,330 - 15,330 U.S. 16,604 17,450 Europe 5,990 431 6,421 5,589 467 6,056 5,119 348 5,467 Rest of the world 2,759 2,419 Rest of the world 613 17 630 480 17 497 417 16 433 Total 23,655 24,003 Total 23,200 455 23,655 23,511 492 24,003 20,866 364 21,230 WORKFORCE DISTRIBUTION BY GENDER AND WORKING HOURS* WORKFORCE DISTRIBUTION BY AGE 2020 2019 2018 2020 2019 Permanent Temporary Total Permanent Temporary Total Permanent Temporary Total <30 6,885 7,562 Women 13,921 221 14,142 14,243 250 14,493 12,402 164 12,566 30-50 12,243 12,147 Men 9,279 234 9,513 9,268 242 9,510 8,464 200 8,664 >50 4,527 4,294 Total 23,200 455 23,655 23,511 492 24,003 20,866 364 21,230 Total 23,655 24,003 % 98.1% 1.9% 100.0% 98.0% 2.0% 100.0% 97.7% 2.3% 100.0% *Data for 2019 and 2018 have been adjusted considering partial retirees and duals as Full-Time. WORKFORCE DISTRIBUTION BY GENDER AND WORKING HOUR 2020 2019 2018 Full time Part time Total Full time Part time Total Full time Part time Total Women 12,999 1,143 14,142 13,237 1,256 14,493 11,610 956 12,566 Men 9,114 399 9,513 9,055 455 9,510 8,306 358 8,664 Total 22,113 1,542 23,655 22,292 1,711 24,003 19,916 1,314 21,230 % 93.5% 6.5% 100.0% 92.9% 7.1% 100.0% 93.8% 6.2% 100.0% WORKFORCE DISTRIBUTION BY GENDER AND WORKING HOUR WORKFORCE DISTRIBUTION BY AGE AND TYPE OF CONTRACT 2020 2020 <30 30-50 >50 Total <30 30-50 >50 Total Full time 6,172 11,665 4,276 22,113 Permanent 6,715 12,052 4,433 23,200 Part time 713 578 251 1,542 Temporary 170 191 94 455 Total 6,885 12,243 4,527 23,655 Total 6,885 12,243 4,527 23,655 102-48 TABLES

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_16.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TABLES  I 166 WORKFORCE DISTRIBUTION BY GENDER AND PROFESSIONAL CATEGORY WORKFORCE DISTRIBUTION BY PROFESSIONAL CATEGORY AND TYPE OF CONTRACT 2020 2019 2018 2020 W % M % Total W % M % Total W % M % Total Permanent Temporary Total Executives 26.1% 73.9% 142 23.4% 76.6% 137 32.0% 68.0% 542 Executives 139 3 142 Directors 36.3% 63.7% 457 34.8% 65.2% 462 Directors 455 2 457 Senior management 40.6% 59.4% 584 41.0% 59.0% 548 41.0% 59.0% 495 Senior management 580 4 584 Management 46.1% 53.9% 1,305 46.0% 54.0% 1,246 48.0% 52.0% 1,224 Management 1,293 12 1,305 Senior Professional 46.0% 54.0% 2,063 47.0% 53.0% 2,059 47.0% 53.0% 1,816 Senior Professional 2,041 22 2,063 Professionals 51.7% 48.3% 2,763 58.0% 42.0% 3,072 56.0% 44.0% 2,474 Professionals 2,666 97 2,763 Administrative staff / Manufacturing operators Administrative staff / Manufacturing operators 16,026 315 16,341 65.6% 34.4% 16,341 65.0% 35.0% 16,479 64.0% 36.0% 14,679 Total 23,200 455 23,655 Total 59.8% 40.2% 23,655 60.0% 40.0% 24,003 59.0% 41.0% 21,230 WORKFORCE DISTRIBUTION BY PROFESSIONAL CATEGORY AND WORKING HOUR WORKFORCE DISTRIBUTION BY PROFESSIONAL CATEGORY AND AGE 2020 2020 2019 Full time Part time Total <30 30-50 >50 Total <30 30-50 >50 Total Executives 142 - 142 Executives 0.7% 33.1% 66.2% 142 0.0% 31.0% 69.0% 137 Directors 416 41 457 Directors 0.4% 41.8% 57.8% 457 0.0% 44.0% 56.0% 462 Senior management 578 6 584 Senior management 0.2% 52.4% 47.4% 584 1.0% 55.0% 44.0% 548 Management 1,275 30 1,305 Management 2.0% 64.7% 33.3% 1,305 2.0% 65.0% 33.0% 1,246 Senior Professional 2,006 57 2,063 Senior Professional 7.8% 65.2% 27.0% 2,063 9.0% 65.0% 26.0% 2,059 Professionals 2,653 110 2,763 Professionals 16.3% 63.9% 19.8% 2,763 18.0% 63.0% 19.0% 3,072 Administrative staff / Manufacturing operators 15,043 1,298 16,341 Administrative staff / Manufacturing operators 38.2% 47.4% 14.4% 16,341 41.0% 46.0% 13.0% 16,479 Total 22,113 1,542 23,655 Total 29.1% 51.8% 19.1% 23,655 31.0% 51.0% 18.0% 24,003 WORKFORCE DISTRIBUTION BY GENDER AND REGION 2020 2020 2019 2019 Women Men Total Women Men Total Women Men Total Women Men Total USA 10,520 6,084 16,604 63% 37% 100% 11,131 6,319 17,450 64% 36% 100% Spain 1,942 2,350 4,292 45% 55% 100% 1,870 2,264 4,134 45% 55% 100% ROW 1,680 1,079 2,759 61% 39% 100% 1,492 927 2,419 62% 38% 100% Total 14,142 9,513 23,655 60% 40% 100% 14,493 9,510 24,003 60% 40% 100%

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_17.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TABLES  I 167 EMPLOYEE TURNOVER DISMISSAL BY GENDER AND REGION 2020 2019 2018 2020 2019 W M Total W M Total W M Total Women Men Total Women Men Total Total number of employees Spain 10 17 27 17 26 43 14,142 9,513 23,655 14,493 9,510 24,003 12,566 8,664 21,230 U.S. 743 331 1,074 825 345 1,170 Leavers 5,552 2,136 7,688 5,557 2,211 7,768 4,205 1,843 6,048 ROW 67 31 98 70 32 102 Ratio (Leavers/ total number of employees) Total 820 379 1,199 912 403 1,315 39.3% 22.5% 32.5% 38.3% 23.2% 32.4% 33.5% 21.3% 28.5% % 68.4% 31.6% 100.0% 69.4% 30.6% 100.0% RATIO OF NEW HIRES DISMISSAL BY PROFESSIONAL CATEGORY AND REGION 2020 2019 2018 2020 2019 W M Total W M Total W M Total Spain U.S. ROW Spain U.S. ROW Total number of employees Executives 1 1 1 14,142 9,513 23,655 14,493 9,510 24,003 12,566 8,664 21,230 Directors 1 7 1 4 1 Leavers* 4,841 1,921 6,762 5,854 2,525 8,379 5,036 2,199 7,235 Senior management 2 4 1 1 4 0 Ratio (Leavers/ total number of employees) Management 6 5 6 9 9 34.2% 20.2% 28.6% 40.4% 26.6% 34.9% 40.1% 25.4% 34.1% Senior professionals 1 16 4 5 12 0 Professionals 1 40 13 6 47 46 *Employees from acquisitions on the acquisition date are not included as joiners. Subsequent increases in headcount do. Administrative staff / Manufacturing operators 21 1,001 74 24 1,093 46 Total 27 1,074 98 43 1,170 102 DISMISSAL BY AGE AND REGION 2020 2019 <30 30-50 >50 Total <30 30-50 >50 Total Spain 8 16 3 27 15 24 5 44 U.S. 523 446 105 1,074 597 484 89 1.170 ROW 29 47 22 98 31 54 17 102 Total 560 509 130 1,199 643 562 111 1.316 % 46.7% 42.5% 10.8% 100.0% 48.9% 42.7% 8,4% 100,0%

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_18.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TABLES  I 168 BREAKDOWN OF ABSEENTISM BY TYPE AND REGION* 2020 2019 Spain U.S. Rest of the world Total general Spain U.S. Rest of the world Total general Illness 311,932 564,523 293,958 1,170,413 291,076 384,397 185,929 861,402 Work accident 66,809 35,159 4,314 106,282 20,360 27,476 3,198 51,034 Maternity / Paternity 81,363 145,309 116,389 343,061 49,024 158,699 174,554 382,277 Paid leave 115,581 425,152 11,919 552,651 61,167 36,750 4,729 102,646 Unpaid leave 1,870 254,972 18,317 275,159 3,275 93,193 13,840 110,308 Total 577,555 1,425,115 444,896 2,447,566 424,902 700,516 382,250 1,507,668 *Data for 2019 in U.S. has been recalculated BREAKDOWN OF ABSEENTISM BY TYPE AND GENDER* 2020 2019 W M Total general W M W M Total general W M Illness 838,705 331,708 1,170,413 72% 28% 590,517 270,885 861,402 69% 31% Work accident 62,072 44,210 106,282 58% 42% 33,305 17,729 51,034 65% 35% Maternity / Paternity 302,923 40,138 343,061 88% 12% 318,458 63,820 382,278 83% 17% Paid leave 367,349 185,301 552,651 66% 34% 60,131 42,516 102,646 59% 41% Unpaid leave 213,239 61,920 275,159 77% 23% 87,322 22,986 110,308 79% 21% Total 1,784,288 663,278 2,447,565 73% 27% 1,089,733 417,936 1,507,668 72% 28% *Data for 2019 in U.S. has been recalculated BREAKDOWN IN TRAINING HOURS BY PROFESSIONAL CATEGORY AND GENDER BREAKDOWN IN TRAINING HOURS BY REGION AND GENDER 2020 2019 2020 Women Men Total Women Men Total W M Total general Executives 619 1,444 2,064 1,076 2,413 3,489 Spain 153,864 173,572 327,435 Directors 4,553 6,950 11,503 5,610 9,916 15,527 U.S. 988,336 543,681 1,532,016 Senior management 9,455 14,917 24,372 10,520 15,598 26,118 ROW 89,195 66,415 155,610 Management 19,903 24,665 44,568 21,828 24,390 46,218 Total 1,231,394 783,667 2,015,062 Senior professionals 37,950 44,320 82,271 44,395 50,949 95,344 *Data have been reported for 91,8% of the workforce Professionals 52,388 60,736 113,124 46,808 58,960 105,768 Administrative staff / Manufacturing operators 1,155,108 582,053 1,737,161 1,125,631 575,284 1,700,915 Total 1,279,976 735,085 2,015,062 1,255,868 737,511 1,993,379 % by gender 64% 36% 100% 63% 37% 100% Average workforce 11,719 8,562 20,281 10,165 7,680 17,845 Ratio 109.22 85.85 99.36 124 96 112 *Data have been reported for 91,8% of the workforce 102-48

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_19.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TABLES  I 169 AVERAGE RETRIBUTION OF BOARD MEMBERS AND EXECUTIVES BY GENDER 2020 2019 Euros Women Men Total employees Women Men Total employees Total average salary 217,543.0 273,101.7 254,582.2 216,693.9 270,392.2 253,009.4 Executives, employees and board members 170 340 510 157 328 485 Salary gap 20.3% 19.9% * To avoid distorting the results, the average fixed salary excludes salaries based on seniority or individual/personal events CONTRIBUTION TO LONG-TERM SAVINGS SYSTEMS 2020 2019 Women Men Total Women Men Total Spain 390.6 505.1 895.7 365.7 467.7 833.4 U.S. 12,431.0 14,462.0 26,893.0 12,352.0 13,787.8 26,139.8 ROW* 298.3 289.1 587.4 Not reported Not reported Not reported Total 13,120.0 15,256.2 28,376.1 12,717.7 14,255.5 26,973.2 % 46.2% 53.8% 100.0% 47.1% 52.9% 100.0% GENDER PAY GAP UNITED STATES Rest of activities SPAIN UNITED STATES Plasma centers IRELAND GERMANY Adjusted Gender Pay Gap 2020 Adjusted Gender Pay Gap 2020 Adjusted Gender Pay Gap 2020 Adjusted Gender Pay Gap 2020 Adjusted Gender Pay Gap 2020 Gender Pay Gap 2020 Gender Pay Gap 2020 Gender Pay Gap 2020 Gender Pay Gap 2020 Gender Pay Gap 2020 Executives n.a. 19.3% n.a. 7.5% n.a. 24.0% n.a. n.a. n.a. n.a. Directors n.a. 16.2% n.a. 4.0% 4.6% 4.8% n.a. n.a. n.a. -8.6% Senior management 1.2% 2.6% n.a. -1.6% -2.0% 0.4% n.a. n.a. n.a. 19.6% Management 6.8% 7.7% n.a. 4.9% 5.0% 5.0% n.a. 12.3% n.a. 9.1% Senior professionals 4.3% 7.2% 5.0% 5.3% 3.0% 1.9% n.a. -0.3% n.a. 7.6% Professionals 3.9% 4.7% 5.1% 4.9% 5.9% 6.6% n.a. 3.9% 3.5% 3.5% Admin./Manuf. Operators 0.7% 2.4% -1.5% -1.8% 3.6% 4.6% n.a. 2.0% -1.3% -2.6% For confidentiality and personal data protection reasons, no pay gap data is shown in those professional categories in which there is not a minimum of 3 people of each gender. The adjusted gender pay gap is not shown in those categories for which it is not possible to obtain data with enough statistical significance through the econometric model.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_20.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TABLES  I 170 AVERAGE WAGE* BY PROFESSIONAL CATEGORY AND GENDER IN SPAIN IN EUROS AVERAGE WAGE* BY PROFESSIONAL CATEGORY AND GENDER IN THE U.S. IN USD Fixed wage - Average 2020 Fixed wage - Average 2019 Fixed wage - Average 2018 Fixed wage - Average 2020 Fixed wage - Average 2019 Fixed wage - Average 2018 PLASMA CENTERS Women 236,614.2 190,937.2 215,868.7 Women 352,263.5 346,785.2 347,699.3 Executives Executives Men 293,358.1 289,865.1 212,953.0 Men 380,995.7 380,623.4 375.,785.9 Women 104,228.4 100,628.2 98,924.8 Women 208,555.6 207,708.8 207,697.9 Directors Directors Men 124,396.9 123,177.3 125,071.7 Men 217,271.4 212,464.9 209,694.5 Women 78,342.0 77,288.9 76,002.9 Women 152,708.0 137,173.1 122,292.4 Senior management Senior management Men 80,413.0 78,465.1 80,315.1 Men 150,236.0 123,074.4 123,810.3 Women 54,357.8 52,634.3 51,989.7 Women 104,709.3 97,825.7 97,009.0 Management Management Men 58,921.7 57,781.7 57,588.3 Men 110,151.9 107,015.0 107,175.5 Women 41,585.4 40,595.9 39,644.6 Women 86,063.6 83,818.7 85,205.8 Senior professional Senior professional Men 44,829.2 43,729.1 43,565.1 Men 90,880.2 89,639.0 88,145.0 Women 36,119.2 35,035.3 34,304.5 Women 62,882.7 62,370.8 63,334.0 Professional Professional Men 37,893.0 37,331.8 36,628.8 Men 66,155.5 65,799.0 67,937.4 Women 27,048.6 26,209.3 25,558.4 Women 35,659.4 34,686.3 34,075.4 Admin./Manuf. Operators Admin./Manuf. Operators Men 27,700.6 26,875.4 26,290.0 Men 35,017.3 34,236.9 34,060.5 AVERAGE WAGE* BY PROFESSIONAL CATEGORY AND GENDER IN IRELAND IN EUROS AVERAGE WAGE* BY PROFESSIONAL CATEGORY AND GENDER IN THE U.S. IN USD Fixed wage - Average 2020Fixed wage - Average 2019 Fixed wage - Average 2020 Fixed wage - Average 2019 Fixed wage - Average 2018 REST OF ACTIVITIES Women n.a. n.a. Executives Men n.a. n.a. Women 309,867.4 292,335.6 298,486.0 Executives Women n.a. n.a. Men 407,974.4 391,118.1 334,280.9 Directors Men n.a. n.a. Women 207,781.0 201,665.2 194,198.9 Directors Women n.a. n.a. Men 219,348.1 209,694.7 204,280.6 Senior management Men n.a. n.a. Women 168,071.5 162,482.7 159,042.8 Senior management Women 68,352.2 65,414.6 Men 168,751.0 165,214.0 161,570.1 Management Men 77,902.6 74,716.0 Women 125,690.3 122,128.2 121,734.5 Management Women 52,791.0 51,882.4 Men 132,191.4 129,211.7 127,429.6 Senior professional Men 52,654.0 51,355.8 Women 104,468.4 101,501.2 100,294.3 Senior professional Women 44,874.8 42,809.4 Men 106,542.7 103,591.0 102,983.8 Professional Men 46,715.1 45,312.4 Women 71,969.8 70,450.9 71,395.5 Professional Women 36,471.1 35,112.9 Men 77,004.3 76,375.1 75,281.2 Admin./Manuf. Operators Men 37,221.7 35,329.1 Women 57,175.5 54,985.7 53,490.9 Admin./Manuf. Operators Men 59,742.6 57,871.6 56,142.5 AVERAGE WAGE* BY PROFESSIONAL CATEGORY AND GENDER IN GERMANY IN EUROS Fixed wage - Average 2020Fixed wage - Average 2019 * To avoid distorting the results, the average fixed salary excludes salaries based on seniority or individual/personal events Note: Data related to the average remuneration for 2019 and 2018 has been adapted to the new professional categories reported in 2020 Women n.a. n,a Executives Men n.a. n,a Women 172,018.2 165,896.3 Directors Men 158,361.4 152,464.0 Women 93,098.6 93,875.6 Senior management Men 115,787.1 110,835.5 Women 75,927.0 75,367.4 Management Men 83,514.7 77,491.4 Women 55,902.3 53,880.2 Senior professional Men 60,519.8 59,531.8 Women 59,479.1 56,854.4 Professional Men 61,649.6 59,503.0 Women 28,349.3 26,318.5 Admin./Manuf. Operators Men 27,632.7 25,718.3

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_21.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT OUR PEOPLE I TABLES  I 171 AVERAGE WAGE* BY AGE IN IRELAND IN EUROS AVERAGE WAGE* BY AGE IN SPAIN IN EUROS Age Fixed wage - Average 2020 Fixed wage - Average 2019 Fixed wage - Average 2020 Fixed wage - Average 2019 Fixed wage - Average 2018 Age <30 44,382.0 41,105.5 <30 30,569.3 29,347.3 28,310.4 30-50 56,338.7 55,318.6 30-50 39,790.9 38,706.4 37,174.0 >50 95,269.4 135,138.1 >50 58,703.3 57,642.2 53,587.2 AVERAGE WAGE* BY AGE IN GERMANY IN EUROS AVERAGE WAGE* BY AGE IN THE U.S. IN USD Age Fixed wage - Average 2020 Fixed wage - Average 2019 Fixed wage - Average 2020 Fixed wage - Average 2019 Fixed wage - Average 2018 Age <30 30,762.5 28,916.9 30-50 38,132.7 36,552.1 <30 34,501.9 33,508.4 31,022.7 >50 49,258.6 46,376.4 30-50 58,880.9 56,716.7 56,864.3 >50 92,155.3 89,417.7 86,057.3 *To avoid distorting the results, the average fixed salary excludes salaries based on seniority or individual/personal events ACCIDENT RATE U.S. 2019 U.S. 2020 Spain 2019 Spain 2020 ROW 2019 ROW 2020 W M W M W M W M W M W M Total number of work accidents with leave* (LTI), without leave (NLTI) and first aid (FA) 619 245 608 243 118 138 84 126 71 6 77 29 Total number of work accidents with leave* (LTI) 49 17 42 24 41 58 13 38 35 9 30 17 Hours worked 16,272,910 10,709,807 2,840,935 3,621,720 2,655,264 1,951,424 Accident Frequency Index 3.0 1.7 2.6 2.2 15.1 16.5 4.6 10.5 10.4 5.7 11.3 8.7 Severity Index 0.15 0.03 0.06 0.03 0.39 0.34 0.07 0.24 0.16 0.13 0.13 0.06 *Total number of accidents with sick leave (non itinere) without sick leave and first aid, **Total number of accidents with sick leave (non itinere) excluding COVID In 2020, 3 occupational diseases was recorded in the U.S. (2 men and 1 woman) and 1 occupational disease (1 woman) in ROW, including ergonomic diseases ***Number of occupational accidents with sick leave (non itinere) excluding COVID / total no. of actual hours worked *10^6 ****Nº of days not worked due to occupational accidents with sick leave (non itinere) excluding COVID /nº of actual hours worked *10^3), The days lost are counted as the difference between the calendar days (without discounting holidays or vacations in the calculation) between the date of discharge and the date of sick leave,

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_22.jpg SOCIAL OUTREACH INITIATIVES Grifols is committed to positively contributing to social progress. In addition to offering life-enhancing medicines and diagnostic solutions, the company actively participates in local communities where its operations are based, contributing to job creation, social value and economic development. 41M€ SAVINGS IN THE SPANISH HEALTHCARE SYSTEM 67 M€ COMMITTED TO SOCIETY

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_23.jpg COMMITTED TO SOCIETY

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_24.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I COMMITTED TO SOCIETY I 174 Grifols has been dedicated to enhancing the health and well-being of people around the world since its establishment. Grifols’ social commitment is grounded in four core principles designed to benefit a diverse group of stakeholders while promoting the United Nation’s Sustainable Development Goals (SDGs). Specifically, these include SDG 3, regarding health and well-being; SDG 10, aimed at reducing inequality; and SDG 17, on the need to forge partnerships to collectively attain these objectives, among others. The company’s new Sustainability Policy outlines the core principles and commitments of Grifols’ social and environmental responsibility, while serving as a framework to clearly and systematically integrate them into the business model. This policy not only sets the company’s commitment to its social environment as an objective but also ensures that Grifols’ business activities have a positive impact on its core stakeholders – employees, patients, donors, customers, suppliers and society as a whole. COMMUNITIES In accordance with the principles and guidelines outlined in its Sustainability Policy, Grifols has started working on a new global Social Action Policy that supports its corporate strategy and is aligned with the Sustainable Development Goals. M€ M€ In this regard, Grifols contributes to the development of society by promoting and participating in an array of social outreach initiatives that align with its business objectives and trigger a positive ripple effect beyond financial performance. OTHERS GRIFOLS ALLOCATED OVER EUR 41 MILLION TO SOCIAL OUTREACH INITIATIVES IN 2020 More information on Grifols’ contribution to SDGs is included at the beginning of this report. Detailed information on actions taken in 2020 is publicly available on Grifols’ corporate website. TOTAL SOCIAL INVESTMENT: 41.2 M€ PATIENT ORGANIZATIONS SOCIAL ACTION TO AND PROGRAMSDONORS AND LOCAL 21.42.1 SCIENTIFIC, RESEARCH AND SPECIAL PROJECTS, EDUCATIONAL AWARDS SPONSORSHIPS AND 4.0 M€ 6.9 M€ FOUNDATIONS 6.8 M€ COMMITTED TO SOCIETY

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_25.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I COMMITTED TO SOCIETY I 175 z PRINCIPLES AND MAIN STAKEHOLDERS Scientific awards, scholarships and collaborative research initiatives Promoting self-sufficiency of plasma-derived medicines Contributing to reduce global healthcare costs More information in Chapter 5: “Innovation”. SOCIAL COMMITMENT Local initiatives Educational initiatives Health initiatives Environmental initiatives Grifols Academy More information in Chapter 7: “Our People” Collaborations and programs Production capacity and supply commitment Access to treatments Probitas Foundation José Antonio Grífols i Lucas Foundation Víctor Grífols Lucas Foundation

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_26.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I COMMITTED TO SOCIETY I 176 2020, by the World Health Organization (WHO). initiatives to address the global healthcare crisis, GRIFOLS’ SOCIAL ACTIONS DURING COVID-19 COVID-19 was declared a pandemic on March 11, z AWARENESS CAMPAIGNS AND PROMOTION OF PLASMA AS AN Since then, Grifols has spearheaded numerous ESSENTIAL RAW MATERIAL while doing its utmost to serve all stakeholders by minimizing production and delivery delays of any of its products and services, which are essential GIVE YOUR LIGHT THE FIGHT IS IN US for patients and healthcare professionals worldwide. In July 2020, a multi-channel plasma-donor recruitment campaign was launched Grifols partnered with U.S. leading organizations including national blood collectors, in the U.S. to raise awareness about the importance of plasma donation and recruit research entities, non-profits and other plasma-derived therapy manufacturers on Part of Grifols’ efforts have focused on recoveringmore plasma donors into Grifols’ plasma centers network. The campaign was “The Fight Is in Us” (TFIIUS) campaign, aimed at educating and raising awareness on levels of plasma donations by leading and encompassed TV, radio, social media, digital and other platforms to reach potentialthe importance of convalescent plasma donation. participating in global education and advocacydonors. Patient organizations also participated actively through their social media campaigns to raise awareness of plasma inplatforms, websites and newsletters. general and, more specifically, the need for convalescent plasma (antibody-rich plasma from people who have recovered from COVID-19), also known as hyperimmune plasma.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_27.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I COMMITTED TO SOCIETY I 177 FOUNDATION DURING THE PANDEMIC, resources to develop potential COVID-19 treatments centers collected more than 225,000 kgs of food The COVID-19 pandemic has unleashed extremely technical and logistical assistance to hospitals for the at-risk families. To alleviate this problem, the Probitas INCLUDED SUPPORT FOR economic vulnerability. In response to this, Grifols products, as well as support to remodel and expand ensure children in at-risk households receive a healthy or hyperimmune plasma SARS-CoV-2, similar to PCR 2,600 participants, these events included: z SERVING SOCIETY: COVID-19 TREATMENTS AND DETECTION TESTS z PROBITAS THE TWIN FAMILIES INITIATIVE Grifols has offered its wealth of experience andEquipment donation campaigns in the areas most DURING COVID-19 expertise on plasma and allocated substantial R+D+iaffected by the pandemic. In the U.S., Grifols plasma GRIFOLS’ and detection tests since the outbreak of the pandemic. for local food banks. The company has also offered negative socio-economic repercussions, especially for SOCIAL INITIATIVES COVID-19 has heightened social inequality and storage, preparation and dispensation of medicinal Foundation launched the “Twin Families” initiative to HOSPITALS AND FOOD has organized food drives and Personal Protective their facilities to treat COVID-19 patients. meal every day in their school cafeteria COLLECTION z VÍCTOR GRÍFOLS I LUCAS FOUNDATION ADDRESSING COVID-19 FROM A BIOETHICAL STANDPOINT The Foundation spearheaded 10 initiatives to spark debate and spread knowledge on a range of issues, mostly relating to the pandemic. Welcoming more than • COVID-19: Bioethics in the Spotlight • COVID-19: Individual Freedoms Versus the Common Good • Information Ethics in Times of COVID-19 • Science and Ethics in a Post-Pandemic World • Bioethics and the Society, Post-COVID-19 Production of a hyperimmune More than 300 donation centers Direct transfusion of convalescentimmunoglobulin fromsupporting the collection ofMolecular test for the detection of convalescent plasmaconvalescent plasma Inactivation service withClinical trial stage CollaborationIn collaboration with Hologic methylene blue United States and Europe,United States and SpainUnited States and GermanyEurope, including Spain, Andorra including Spainand others

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_28.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I COMMITTED TO SOCIETY I 178 z MEASURING SOCIAL AND ECONOMIC IMPACTS For Grifols, achieving solid economic results goes hand in hand with creating value for its main stakeholders. In 2020, Grifols also finalized its first project to estimate its contribution to community welfare. Initiated in 2019, the project uses the Social Return on Investment (SROI) methodology to measure the social value created by Grifols’ U.S. donation centers, analyzing and quantifying their impact on donors, patients and local communities where these centers are based. This approach promotes Grifols’ efforts to capture value beyond financial performance gain by assessing the changes its activities produce in the lives of these key stakeholders. In addition, it serves as a powerful tool in the company’s ongoing quest for operational excellence by offering an in-depth understanding of how the change is produced and its consequent impact. With this objective in mind, Grifols calculated the total socio-economic impact of its operations in the United States, Spain, Germany and Ireland in terms of wealth generation and job creation using an input-output analysis. Following this approach, it assessed the inputs from these four countries: outlays on local suppliers of goods and services; R+D+i and capital investments; main taxes paid; financial expenses; dividend payments; and employee expenditures based on wages received; and the associated outputs stemming from its operations. The main indicators are outlined at the beginning of this report and the specific report is available on Grifols’ website in the Corporate Stewardship Reports section. The main indicators are outlined at the beginning of this report and the specific report is available on Grifols’ website in the Corporate Stewardship Reports section.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_29.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SUPPORTING PATIENTS AND PATIENT ORGANIZATIONS  I 179 Grifols’ commitment to patients is manifest in its research, development and manufacture of life-saving plasma-derived medicines, hospital pharmacy solutions and diagnostic systems. As an especially difficult year on many fronts, 2020 highlighted the importance of better understanding the patient experience. In alignment with its Strategic plan, Grifols places patients at the heart of its decision-making to ensure an in-depth understanding of their evolving needs and challenges. Since the start of the pandemic, it has collaborated closely with numerous patient organizations to closely follow the impact of COVID-19 and offer needed support to these communities. Grifols partners with patient organizations to help further their missions through a range of initiatives aimed at engagement, education, access to treatment and support. Grifols demonstrates a commitment to patient organization partners by working together strategically to prioritize activities and maximize its impact to patient communities. These collaborations always respect applicable transparency principles and country-specific regulations, including stipulations on public disclosures of information. Grifols follows standard operating procedures (SOPs) to serve as a framework for the eligibility, compliance, ethics and transparency of diverse collaboration agreements, contributions and donations to patient organizations. In 2020, Grifols allocated over EUR 21.4 million – 6.5% more than in 2019 – to support product donations and patient-centered programs, among other initiatives. COMMITMENTS • Serve as a source of reliable information for patients • Promote and facilitate access to Grifols treatments • Preserve and foster Grifols’ emblematic history, passion and pioneering spirit • Support and participate in patient-centric educational initiatives SUPPORTING PATIENTS AND PATIENT ORGANIZATIONS

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_30.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SUPPORTING PATIENTS AND PATIENT ORGANIZATIONS  I 180 z COLLABORATIONS AND PROGRAMS EDUCATE ENGAGE ADVOCATE PATIENT ORGANIZATIONS HAVE BEEN ACTIVE IN PLASMA AWARENESS AND EDUCATION CAMPAIGNS Grifols’ awareness campaigns and initiatives achieved record participation among patient organizations in 2020. These programs primarily addressed the role of plasma and industry challenges during the pandemic. 2020 required flexibility to ensure communication and engagement with patients, employees, plasma donors and communities. Grifols rapidly adapted to virtual events early in the year and maintained close connections through this model. In the U.S., Grifols worked with patient communities in support of bipartisan legislation HR 7839, the Continuing Access to In-Home IVIG Act. This legislation extends a Medicare demonstration program enabling primary immune deficiency (PID) patients to receive coverage for the administration of IVIG at home. This will ensure that these patients retain access to home infusions for the next three years. In the U.S., Grifols led the “Give Your Light” campaign, divulged widely by patient organizations, and played an active role in “The Fight Is in Us” campaign. The company has made determined efforts in recent years to establish and expand ties with local communities where its operations are based. These connections intensified in 2020, with joint collaborations to raise awareness on the importance of plasma. Various local organizations shared information on their social networks, websites and newsletters, leveraging their communication channels to help spread the word. • Patient speakers: Hosted 9 patient speakers, in-person and virtually, during 9 larger Grifols meetings, reaching over 1,000 global employees across all divisions. • Plasma Donor-Center Tours: Hosted three in-person patient group tours at three U.S. plasma donor centers, welcoming over 30 patients. • Patient Thank-You Videos: Captured and shared word of gratitude directed at plasma donors and staff, which were shared with essential workers and donors, who continued to safely come into the plasma centers during the pandemic to ensure plasma was collected for patients who require it. In Europe, there has been an increased focus on helping countries achieve self-sufficiency in plasma-derived medicines. Grifols supported relevant EU patient organizations to carry out specific campaigns to support plasma donation. Likewise, educational and policy materials were co-developed with patient organizations in Germany. • Patient Organization Presentations: Grifols presented to four patient organizations, delivering up-to-date information about Grifols’ plasma-collection efforts and response to the pandemic.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_31.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SUPPORTING PATIENTS AND PATIENT ORGANIZATIONS  I 181 z PRODUCTION CAPACITY AND SUPPLY COMMITMENT SUPPORT z SUPPORT FOR THE SPANISH FEDERATION OF RARE DISEASES about AATD and diverse activities to help patients better cope with the disease. Grifols has rolled out similar programs in other countries including the U.S., Germany and Canada. Grifols is committed to providing patients with the plasma therapies they need, today and in the future. In order to fulfill this pledge, the company leads in infrastructure investments, both in terms of increasing its access to plasma and optimizing its production facilities, such as its fractionation and purification plants. Grifols made strategic investments in recent years to increase its access to plasma, enabling it to boost its inventory levels by 28% in 2018 and 13% in 2019. These strategic decisions, as well as other initiatives to improve its supply chain operations, enhanced the company’s resilience by mitigating the risks of potential breaks in supply. One of the most important initiatives in 2020 was the agreement signed with the Spanish Federation of Rare Diseases (FEDER), whose membership encompasses all of the patient communities that Grifols serves in Spain. Although COVID-19 slowed down the pace of enrollment, AlfaCare has continued its efforts to enhance patient care, drawing on around 200 new registrations during 2020 (roughly 180 patients had signed up through December 2019). Grifols made a special effort to transition its initiatives to a digital format in order to continue to offer support to alpha-1 patients during the pandemic. Among the activities offered were more than 15 virtual-coffee meetings to replace face-to-face patient workshops; Q&A video with pulmonologists to address patients’ COVID/AATD-related questions; three webinars with tips on confronting the pandemic; and ongoing online physical activities led by respiratory physiotherapists. Additionally, the recently updated EU supplementary protection certificates (SPCs) – which extends patent protection for new medical products subject to prior marketing approval – opens the door to offer home infusion services in 2021. This option is already available in countries such as Argentina. The COVID-19 pandemic underscored the strategic relevance of plasma and plasma-derived medicines in ensuring quality of life for thousands of people around the world. Even before the pandemic was declared, the company was working to ensure that its plasma donation centers, production facilities and sales networks remained operational to guarantee the production of its therapies, products and services with minimal delays and disruptions. Therefore, when the pandemic struck, Grifols was still able to deliver an uninterrupted supply of main plasma proteins throughout 2020 due to the efforts previously made by the company to build a robust inventory of plasma and plasma derivatives. Through this collaboration, which included a EUR 42,000 donation, FEDER was able to offer its members online versions of their highly successful educational workshops to rare disease patient organizations. z SUPPORT FOR PATIENTS WITH ALPHA-1 ANTITRYPSIN DEFICIENCY AlfaCare is the first support program for patients with alpha-1 antitrypsin deficiency (AATD). The initiative was launched in Spain in 2018 in collaboration with the Alfa-1 Spain patient organization and backed by a multidisciplinary team of professionals, including psychologists and patient mentors. Highly regarded by AATD patients, AlfaCare complements standard healthcare services with personalized emotional and psychological support, easy-to-understand information GRIFOLS PROVIDED AN UNINTERRUPTED SUPPLY OF PLASMA-DERIVED MEDICINES THROUGHOUT 2020

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_32.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SUPPORTING PATIENTS AND PATIENT ORGANIZATIONS  I 182 z ACCESS TO TREATMENTS GRIFOLS PLASMA-BASED THERAPIES: VALUE FOR PATIENTS PRICE-SETTING POLICY PROGRAMS TO PROMOTE ACCESS TO TREATMENT The production of plasma-derived medicines is a complex and highly regulated process that takes seven to twelve months to complete. As such, increasing product availability is a gradual process that involves expanding the supply of plasma, laboratory facilities and productive capacities. In 2020, Grifols finalized its first study to measure the value created by its plasma-derived medicines. Initiated in 2019, the project follows the Social Return on Investment (SROI) methodology to measure the social value generated for patients and estimates the global cost-benefit of its treatments in 2019. The company has been actively working to increase access to treatment. Since 2006, Grifols has supported the PatientCare program to facilitate treatment for hemophilia and primary immunodeficiency patients in the United States. The program has three main projects to address specific needs: From 2014-2021, the company has pledged to donate 200 million international units (IU) of clotting factor medicines to ensure patients in developing countries receive adequate treatment. Based on WFH estimates, these donations will provide around 10,300 doses per year to treat severe bleeding episodes in 6,000 patients during this eight-year timeframe. Grifols is an industry leader in these types of Based on these findings, the quality-of-life improvement (measured in QALYs) of patients treated with Grifols’ plasma-based medicines (for the main diseases for which they are indicated) totals EUR 3,636 million. This estimate is calculated by assessing the impact of the main plasma proteins (immunoglobulin, alpha-1 antitrypsin and factor VIII) on patients, compared to alternative treatments or the absence of treatment, based on available scientific sources. The improvement in patients’ quality of life compared to the cost of treatment is estimated at 30% globally. investments in reflection of its longstanding commitment to patients, medical professionals and hospitals. • Grifols Assurance for Patients (GAP), which covers the cost of Grifols products during lapses in medical insurance coverage. As part of its pledge, Grifols has donated more than 170 million IU of product to date, including 43 million IU in 2020. The company’s price-setting policy is grounded in two core principles: first, cost should never be an obstacle to receiving optimal patient care and treatment, as highlighted in the SROI analysis; and second, pricing should guarantee the firm’s long-term sustainability and reinforce its commitment to researching and developing new therapies. • Grifols Patient Assistance (GPA), which offers treatment to patients who need help temporarily. Grifols has been a proud supporter of the WFH’s efforts to improve access to hemophilia treatments for over a decade. In 2020, the WFH agreement extended to include products manufactured outside the U.S., significantly expanding its capacity to benefit more patients worldwide. • Emergency Supply System, which provides immunoglobulin to physicians to treat patients in emergency situations. Globally, 75% of hemophilia patients do not have access to adequate treatment. Grifols considers it a moral obligation to provide medicines to patients who require them. In reflection of its commitment to serve patient communities around the world, Grifols has collaborated with the World Federation of Hemophilia (WFH) Humanitarian Aid Program since 2014. Today, Grifols’ pricing of plasma-derived therapies enables it to meet supply security, equity and the economic sustainability criteria. It also further ensures that price is not a barrier to treatment for patients. MORE THAN 43 MILLION INTERNATIONAL UNITS OF CLOTTING FACTOR MEDICINES DONATED IN 2020 More information on SROI indicators are available at the beginning of this document and the full report is available on Grifols’ website in the Corporate Stewardship Reports section.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_33.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SUPPORTING PATIENTS AND PATIENT ORGANIZATIONS  I 183 HEALTHCARE FOR PRIORITY DISEASES Centers of Excellence from AD worldwide (55-60% fatality rate) prevalence in the U.S. and Europe Phase III APACHE Use of albumin to treat patients with acute-on-chronic liver failure Disease Addressed by GrifolsCountryPotential Impact ACLF is associated with multiple organ failure and high mortality, Acute-on-chronic liver failure (ACLF)affecting roughly 30% of patients hospitalized with cirrhosis complications Phase III PRECIOSA Use of albumin to treat cirrhosis Disease Addressed by GrifolsCountryPotential Impact Cirrhosis800,000 deaths per year - High Ebola Project A non-profit initiative to produce anti-Ebola immunoglobulin as a potential treatment Disease Addressed by GrifolsCountryPotential Impact EbolaLiberia Highly infectious and deadly disease AMBAR (Alzheimer Management By Albumin Replacement) plasma exchange protocol with albumin as a potential treatment for mild-to-moderate Alzheimer’s disease Disease Addressed by GrifolsCountryPotential Impact Alzheimer U.S. / Europe / China – Design ofMore than 35 million people suffer

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_34.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SUPPORTING PATIENTS AND PATIENT ORGANIZATIONS  I 184 DIAGNOSTIC SOLUTION: A VITAL SERVICE FOR DEVELOPING COUNTRIES India Priority country* surgeries and treating injuries Ecuador considered a priority in a priority Tanzania - Tuberculosis in Sierra Leone Belize - Malaria in Angola *As defined by the Access to Medicine Foundation based on WHO data. https://accesstomedicinefoundation.org/media/uploads/downloads/5e27136ad13c9_Access_to_Medicine_Index_2018.pdf Enhance and optimize clinical diagnostics laboratories in vulnerable regions of the world to increase rates of diagnosis through the Probitas Foundation Disease Addressed by GrifolsCountryPotential Impact HIV Mali Sierra LeoneThe following diseases are Peru country: Bolivia-HIV in Tanzania Angola Ghana Tuberculosis Malaria Other overlooked tropical and chronic diseases Transfusion Diagnostics Expand the reach of transfusion diagnostic in low-to-middle-income countries, since the use of basic hygiene measures to ensure safe transfusions is not universal Disease Addressed by GrifolsCountryPotential Impact PhilippinesPriority country* Ensure safe transfusions, critical forEgyptPriority country* IndonesiaPriority country* ChinaPriority country* Specialty Diagnostics Virological analysis using nucleic acid amplification techniques (NAT) for virus detection Disease Addressed by GrifolsCountryPotential Impact HIV High clinical impact due to its contribution to the medical decision-making process Hepatitis B Hepatitis C Zika virus West Nile virus Babesiosis

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_35.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SUPPORTING PUBLIC HEALTHCARE SYSTEMS  I 185 z COMMITMENT AND CONTRIBUTION TO HELPING COUNTRIES ATTAIN SELF-SUFFICIENCY IN PLASMA-DERIVED MEDICINES The World Health Organization (WHO), the Council of Europe and other institutions have urged all countries to strengthen their self-sufficiency in plasma-based medicines for the sake of patients. Grifols advances this commitment by supporting and collaborating with countries to help them reach higher levels of self-sufficiency and improve their healthcare systems by lessening their dependency on third parties. In 2020, Grifols’ commitment achieved three important milestones: • Acquisition of production facilities in Canada to help the country increase its supply of plasma-derived medicines, working in close collaboration with national health authorities. With this operation, Grifols plans to remodel the industrial facilities, which will create numerous jobs for the country. For more than three decades, it has provided safe plasma medications to Canadian patients and healthcare providers by processing its plasma through an industrial plasma fractionation service contract. Following this acquisition, it becomes the only large-scale commercial manufacturer of plasma medicines in Canada. • Strategic alliance with Egypt’s National Service Projects Organization (NSPO) to develop the country’s hemoderivatives market through the opening of 20 plasma centers and the construction of production facilities, including plasma-fractionation and protein-purification plants, a logistics warehouse and a quality-control laboratory. Through this agreement, Grifols will offer its vast industry knowledge and expertise; intellectual property; and all its support, guidance, training, engineering solutions, manufacturing services, know-how and technology expertise. Local operations will abide by the highest safety and quality standards. This added value will help Egypt develop its own infrastructures to strengthen its healthcare system and meet its plasma-supply needs in the medium term. • Agreement with Italy’s Emilia-Romagna region in collaboration with the Italian company Kedrion to process plasma through its industrial plasma-fractionation service. This agreement will also provide plasma-derived medicines to patients in the region. Grifols’ leadership in the manufacture of plasma-derived products, technical expertise and solid reputation in the construction and management of plasma donation centers and production facilities are differential factors that enable it to forge strategic partnerships with global healthcare authorities. SUPPORTING PUBLIC HEALTHCARE SYSTEMS

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_36.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SUPPORTING PUBLIC HEALTHCARE SYSTEMS  I 186 z CONTRIBUTING TO REDUCING HEALTHCARE COSTS Complementary to its usual activity, Grifols offers its facilities, technology, know-how and technical expertise to public donation centers and public health organizations to process their surplus plasma, purify the proteins and return them as plasma-derived medicines. Regulated by fractionation service agreements, these collaborations generate significant cost savings for public healthcare systems. For example, in Spain, the public healthcare system saved an estimated EUR 67 million in 2020 thanks to this collaboration. The company offers this service in Spain, the Slovak Republic, Italy and Canada. SPAIN’S PUBLIC HEALTHCARE SYSTEM SAVED EUR 67 MILLION GRIFOLS’ INDUSTRIAL FRACTIONATION PROGRAMS EXPERIENCE, KNOWLEDGE AND EXPERTISE AT THE SERVICE OF BLOOD-BANK AND TRANSFUSION-CENTER PROFESSIONALS Grifols’ industrial fractionation service for hospital plasma is a comprehensive solution that encompasses the logistics of plasma (collection, transport, control and analysis) and its fractionation, purification, dosage and delivery as a finished product. Collaborative solution Safety in the plasma Integrated control of the production supply chain process. Complete confidence in Grifols’ manufacturing systems

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_37.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SUPPORTING PUBLIC HEALTHCARE SYSTEMS  I 187 z A RANGE OF PROGRAMS TO MEET THE NEEDS OF BLOOD BANKS • Transport and plasma storage services to guarantee the quality of transfusion plasma, including the Contingency Program to address issues with refrigeration equipment; the IPTH Program, which offers additional viral safety measures; and the Secure Program, which focuses on the collection, storage and recovery of frozen plasma. • Quality services, including the Quality Program, an initiative that provides expert advice on management and quality control systems, as well as plasma-related training initiatives, workshops and educational programs delivered through the Grifols Academy of Plasmapheresis. • Grifols Plasma Management Service, a tool developed to improve and facilitate communication among the various parties that intervene in the follow-up of industrial fractionation contracts. • Plasma for hemoderivatives, including the Apheresis Program, a collaborative effort with blood banks and transfusion centers to encourage plasma donation through plasmapheresis. Since the onset of the pandemic, Grifols has also worked closely with health authorities in countries where it has a major presence, including the United States, Spain and China, to share its knowledge and technology on plasma inactivation for direct transfusions and the potential benefits of convalescent plasma to develop a possible treatment using hyperimmune immunoglobulins. • Laboratory services, including the Biolab Program, which offers various services including analyses of samples, immunohematology tests and quality control of plasma for laboratories, among others. DURING THE COVID-19 PANDEMIC, GRIFOLS INACTIVATED CONVALESCENT PLASMA FROM BLOOD BANKS FOR DIRECT TRANSFUSION AS A TREATMENT WITHIN THE FRAMEWORK OF SEVERAL ONGOING CLINICAL TRIALS

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_38.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 188 In alignment with the principles and guidelines in Grifols’ Sustainability Policy and the newly created Sustainability Committee, the company has started working on a new Global Social Action Policy integrated into its corporate strategy. Grifols’ plan for social action offers the opportunity to contribute to the United Nations 2030 Agenda for Sustainable Development by using corporate resources, such as monetary support, in-kind services and time dedicated by its global employees. opportunities in the communities where Grifols operates the communities where Grifols operates GRIFOLS’ SOCIAL INITIATIVES CONTRIBUTE TO THE SDGs THROUGH MONETARY SUPPORT, IN-KIND SERVICES AND TIME DEDICATED BY ITS EMPLOYEES development Promote science as a driver of positive change GRIFOLS’ SOCIAL ACTION PLAN LOCAL EDUCATION DEVELOPMENT Contribute to guarantee access to education and equality ofMaximize positive impacts and opportunities to generate shared value in Contribute to drive positive change: gender equality, ethics and values Get closer to donor communities and engage with communities where production facilities are located Community programs in other countries and humanitarian aid HEALTH AND ENVIRONMENT WELL-BEING Promote and improve access to healthcare Contribute to recover and enhance natural and environmental patrimony Direct and foundation-led initiatives Create transversal hub uniting education, health and well-being to local Direct initiatives and joint projects in collaboration with nature conservation associations SOCIAL INITIATIVES AND COMMUNITY SUPPORT

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_39.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 189 Grifols’ decisions on investments and donations to social programs and actions are governed by the general guidelines established in its Code of Conduct. The company follows explicit procedures to ensure transparency and fairness of all initiatives and collaborations, as well as alignment with its corporate mission. These committees follow a standard operating procedure to supervise all grant and donation applications received in their geographical region and ensures they align with Grifols’ Sustainability Policy and corporate mission. To determine eligibility for Grifols’ charitable donations, the following criteria are applied: • They positively impact communities where Grifols has a permanent office or project site. MORE THAN 2,000 EMPLOYEES VOLUNTEERED IN GRIFOLS’ SOCIAL OUTREACH ACTIONS, TOGETHER CONTRIBUTING OVER 9,000 HOURS OF THEIR TIME TO LOCAL COMMUNITIES Grifols has eight Grants Committees – operational in Clayton (North Carolina), Emeryville, Los Angeles, and San Diego (California) and in Denver (Colorado), Dublin (Ireland), Frankfurt (Germany), San Diego (California) and San Marcos (Texas) – which examine projects where the company could provide the largest impact. Grifols has has local community relations grant committees at each major site to coordinate and manage all of the company’s non-healthcare-related donations and in-kind services. In this role, it reviews and approves charitable donations that aim to support community needs. • The recipient must be considered a charitable organization. In the U.S., entities must be tax-exempt under section 501(c)(3) of the Internal Revenue Service Tax code for schools and academic institutions. Based on these assessments, they collectively allocated USD 250,000 to various projects and initiatives. Donations totaling USD 335,000 were also approved for Habitat for Humanity and the United Services Organization. • Their primary mission includes efforts to encourage education and STEAM (science, technology, engineering, art and math) vocations, alleviate homelessness and hunger, or improve the natural environment.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_40.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 190 z PROMOTING EDUCATION Grifols strives to ensure access to education and equal opportunities for young people in communities where it operates, with the goal of generating shared value and sparking interest in STEAM (Science, Technology, Engineering, Arts and Mathematics) fields. The company also supports educational programs to promote gender equality and the formation of ethical values. COLLABORATIONS WITH EDUCATIONAL INITIATIVES Grifols supports initiatives designed to elevate the access and quality of education through donations and alliances for science-oriented local schools and organizations, where it can contribute its knowledge and expertise. The following table highlights these partnerships. UNITED STATES GERMANY Discover the plasma. A collaboration with Johnston Community College and Johnston County (North Carolina) public schools to develop a module for middle-school students as part of the county’s science curriculum. Professional development and internships Grifols collaborates with universities to offer student internships at its German facilities, as well as promotes professional development by mentoring trainees in its plasma centers and other departments. In 2020, Grifols trained 37 people in medical and sales internships. Operational in 2020 until schools closed as result of the pandemic, it included the purchase of academic materials and educational online support for newly hired teachers in Johnston County. Collaboration with stART e.V. College Scholarship for Women Grifols supports the education of migrant children and young people, helping them acquire German-language skills to prepare them for entry into schools and learning centers. DESPITE THE PANDEMIC, GRIFOLS LED OR PARTICIPATED IN MORE THAN 100 TRAINING AND EDUCATIONAL ACTIVITIES College scholarship at Johnston Community College to support the objectives of the Linda Van Lassiter Women’s Society, a philanthropic organization focused on providing higher education opportunities for young women in economically disadvantaged areas of Johnston County. Orientation Sessions The company offers professional orientation sessions to German students.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_41.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 191 MAIN INITIATIVES SCOPE COUNTRY COLLABORATION WITH GRIFOLS EMPLOYEES ACTION Educational programs with local communities U.S. “Discover the Plasma” program in local schools in Johnston County public schools until their closing due to the pandemic U.S. 4 Scholarship at Johnston Community College to support the objectives of Linda Van Lassiter Women's Society, a philanthropic organization focused on providing higher education opportunities for young women in economically disadvantaged areas of Johnston County U.S. 4 Grifols “Popsicle Stick Bridge Contest” to spark students’ interest in science, math and engineering fields U.S. 4 Development of programs to promote STEM knowledge: “The Importance of Plasma and Grifols, a Great Place to Work” U.S. 4 Participation in the San Diego State University (SDSU) Spring Festival U.S. 4 Participation in “Children in need,” an after-school enrichment program U.S. 4 Collection of books from donors and delivery to local schools and public libraries U.S. 4 Participation in Chocopalooza to raise funds for the Royal Family Kids’ Camps U.S. 4 Collaboration with the stART e.V. program Germany Factory tours and talks with students and interns Germany 4 Apprentice program at Haema as part of their professional training Germany 4 Collaborations with universities for internships in Grifols facilities Germany 4 Professional orientation sessions Germany 4

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_42.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 192 z LOCAL DEVELOPMENT: SUPPORTING GRIFOLS’ COMMUNITIES Grifols strives to maximize its positive impact and value creation in its regions of operation, including communities where its plasma donation centers and production facilities are located. Grifols’ plasma donation centers network allows the company to work closely with local communities and directly impact their development. ACTIVITIES AND PROGRAMS z SOCIAL OUTREACH PROGRAMS IN AREAS WHERE PLASMA DONATION CENTERS ARE LOCATED Grifols’ staunch commitment to donors also extends to the communities where its plasma centers are located. The company organizes events that nurture its ties with local communities including donations and volunteer activities. In 2020, despite COVID-19 restrictions, the number of social outreach initiatives remained stable, with more than 1,700 projects implemented during the year with a very positive impact. In addition, average of 1,900 employees in Grifols’ plasma donation centers volunteered over 10,000 hours of their time for food drives, awareness initiatives, school-support programs and fundraising campaigns for non-profit organizations. The following table highlights some of these initiatives. In 2020, Grifols completed its first project to estimate its contribution to community welfare, following the Social Return on Investment (SROI) methodology. This analysis has allowed Grifols to measure the change its operations generate on donors, patients and local communities where its plasma donation centers are located. UNITED STATES “Box Out Hunger” food collection campaign “Plasma Possibilities” initiative, another example of the commitment of donors and donation centers to their communities In 2020, most of Grifols’ plasma donation centers participated in the “Box Out Hunger” campaign, working in collaboration with local food banks to help alleviate food scarcity in their communities. Despite the uncertainty unleashed by the pandemic, Grifols’ plasma donation centers collected more than 225,000 kg of food, compared to the 113,000 kg in 2019. Doubling its collections, Grifols helped supply provisions to more than 200 food banks around the country and provide 422,000 meals to 100,000 families. Grifols’ plasma donors can support their communities by participating in Plasma Possibilities, a unique initiative that allows them to “give back twice” by partially or totally contributing their donor remuneration to one of the participating non-profit organizations. Since its launch in 2017, Plasma Possibilities offers the chance to help twice: by donating plasma and by helping NGOs. It has helped raise more than USD 80,000 (USD 35,000 in 2020) for more than 40 U.S. non-profit charity organizations (19 in 2020). More information on SROI indicators are available at the beginning of this document and the full report is available on Grifols’ website in the Corporate Stewardship Reports section.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_43.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 193 z HABITAT FOR HUMANITY z UNITED SERVICES ORGANIZATION (USO) Grifols has collaborated with Habitat for Humanity in the U.S. since 2014. This NGO organizes efforts to build simple yet dignified homes to improve the living conditions of those most in need and strengthen the fabric of local communities in various cities and areas where Grifols operates. In 2020, Grifols expanded its collaboration with the United Services Organization (USO), a non-profit charity organization chartered by the U.S. Congress that provides welfare and recreational programs and services to military service members and their families. As part of this partnership, the USO helped spread the word on the importance of plasma and plasma donors near USO sites and participate in activities to support the troops. These include activities to support USO mobile units, “No Dough Dinners,” movie nights and homecoming events. Despite COVID-19 restrictions, which limited Grifols’ access to USO sites, the company took part in 11 events, with 33 employees who collectively volunteered 100 hours of their time. In 2020, the company sponsored the construction of four homes, with the participation of Grifols’ volunteers on building days. In total, 75 employees contributed 600 hours of their time to help build new homes. In addition, the company donated USD 207,500 towards building materials. ECONOMIC CONTRIBUTION VOLUNTEERS AND HOURS Habitat for Humanity - Greater Los Angeles, California USD 75,000 4 construction days, 75 employees who volunteered a total of 600 hours Habitat for Humanity East Bay/Silicon Valley, California USD 75,000 No construction days due to COVID-19 restrictions In 2020, Grifols’ collaboration focused on USO centers in: Jacksonville, El Paso, South Texas, Northeast Florida, San Antonio, North Carolina, Hampton Roads and Central, Central Virginia, Las Vegas, Fort Hood, San Diego and Colorado Springs. Habitat for Humanity Wake County, North Carolina USD 32,500 No construction days due to COVID-19 restrictions Habitat for Humanity Austin, Texas USD 25,000 No construction days due to COVID-19 restrictions Habitat for Humanity San Diego, California USD 10,000 No construction days due to COVID-19 restrictions MAIN INITIATIVES SCOPE COUNTRY COLLABORATION WITH GRIFOLS EMPLOYEES ACTION Habitat for Humanity U.S. 4 Support for United Services Organization (USO) U.S. 4 COVID 19: "Box Out Hunger" campaign U.S. 4 Food drives for local food banks in communities affected by the Derecho storm U.S. 4 Aid campaign for forest fires with product donations to Women's Space. Monetary donations to the United Way U.S. 4 Collaboration with Street Angel, an organization dedicated to helping the homeless and low-income individuals Germany Collaboration with VKKK, an association that helps pediatric cancer patients and handicapped children Germany Collaborations with diverse associations and NGOs Germany Awareness campaign on the importance of blood and plasma donations Germany 4

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_44.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 194 z PROMOTING HEALTH AND WELL-BEING Another major focus of Grifols’ social action is to support and promote solidarity actions to enhance the health and well-being of those affected by natural disasters, pandemics and other exceptional events. ACTIVITIES AND PROGRAMS z COVID-19 z DIRECT RELIEF: SUPPORT IN EMERGENCY SITUATIONS WITH MEDICAL PRODUCTS DONATIONS z SUPPORTING SPAIN’S HEALTHCARE SYSTEM The COVID-19 outbreak has dramatically heightened social inequality and vulnerability. In the wake of rising unemployment and financial hardship, hunger has become one of the pandemic’s leading threats and after-effects. To address this critical challenge, Grifols has organized food drives and Personal Protective Equipment (PPE) donation campaigns in the regions hardest hit by the pandemic. At the same time, it has worked to offer hospitals technical and logistical support to store, prepare and dispense medicines, as well as remodel and expand their facilities to treat COVID-19 patients. Grifols supports emergency relief actions by donating critical products and medicines to Direct Relief, a charitable organization that mobilizes and provides essential medical resources to people affected by poverty or emergency situations. Working closely with local agents, emergency management organizations and field teams, Direct Relief helps identify needs and coordinate the distribution of medical aid to communities where and when it is most needed. Nearly 300 Grifols employees participated in the 10-km, 30-km and 40-km walks of the Magic Line Solidarity Walk in Barcelona, organized by the SJD Hospital in Barcelona. Achieving record-high employee participation, the company raised EUR 21,165. GRIFOLS COLLECTED MORE THAN 225,000 KG OF FOOD FOR LOCAL FOOD BANKS AND OFFERED HOSPITALS TECHNICAL AND LOGISTICAL SUPPORT In 2020, Grifols partnered with direct relief to provide employees in the U.S. in order to manage HyperTet, Albutein and Plasbumin product donations, among others, and their delivery to Haiti, Pakistan, El Salvador, Dominican Republic, Fiji, Cambodia, Liberia, Malawi, Ghana and Lebanon.

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_45.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 195 MAIN INITIATIVES SCOPE COUNTRY COLLABORATION WITH GRIFOLS EMPLOYEES ACTION Direct Relief: product donations U.S. 4 Participation in SDSU’s spring festival U.S. 4 Online delivery of information on COVID-19 via Facebook U.S. 4 Campaign to collect hygiene products for the Vermillion community U.S. 4 Children’s masks: 5 employees and their partners made 80-100 masks and donated them to schools to give to needy children U.S. 4 Association with the local boys’ and girls’ clubs to provide health articles to the families of healthcare workers U.S. Donation of "Hygiene Bags" for the needy, including bottled water, soap, hand sanitizer, disposable masks, deodorant, feminine hygiene products, wet wipes and snacks U.S. Donation of masks for the needy U.S. Shipment of supplies to hospitals in Tijuana, California U.S. 4 Participation in the job fair and informational session at Metro State University in Denver, Colorado U.S. 4 Participation in the Magic Line Walk Spain 4 Sponsorship of the “Walk Against Cancer” in Parets del Vallès (Barcelona) Spain 4 Sponsorship of Sports Week in Parets del Vallès, with funds raised for COVID-19 research Spain 4

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_46.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 196 z ENGAGED WITH THE ENVIRONMENT Contributing to the recovery and enhancement of natural and environmental resources is part of Grifols’ social action, acting as a cross-cutting hub entailing education, health, well-being and local development. To this end, the company promotes initiatives, both directly and in collaboration with associations dedicated to environmental protection. Particularly noteworthy is the Grifols Wildlife program, aimed at protecting the biodiversity of company-owned land and ACTIVITIES AND PROGRAMS z BEAUTIFYING CLAYTON’S PROTECTED AREA z REHABILITATION OF THE BESÒS RIVER BASIN IN BARCELONA z BEACH CLEAN-UP EFFORTS Grifols participates in the Wildlife at Work and Corporate Lands for Learning programs, certified by the Wildlife Habitat Council. Students from North Carolina State University (NCSU) visit the property every year to conduct flora and fauna inventories and offer advice on how to improve their protection. In 2014, Grifols signed a collaboration agreement with the Consortium Besòs Tordera to support the rehabilitation of the Tenes River waterways and research on the resurgence of the otter, considered an unequivocal sign of improved biodiversity and water quality. A group of Grifols’ employees proactively joined forces to clean North Carolina’s North Topsail beach. favoring CO capture. 2 Other activities include community seminars on the importance of protecting the river basin and the headway that has been made to date. Grifols renewed this collaboration for three years with the Rivus Foundation, focusing on the study of mammals and fish in the area. GRIFOLS PROMOTES INITIATIVES, BOTH DIRECTLY AND IN COLLABORATION WITH OTHER ASSOCIATIONS, ON ENVIRONMENTAL-PROTECTION INIATIVES MAIN INITIATIVES SCOPE COUNTRY COLLABORATION WITH GRIFOLS EMPLOYEES ACTION Beach clean-up U.S. 4 Enhancement of Clayton’s protected area U.S. 4 Rehabilitation support for Besòs River basin in Barcelona Spain 4

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_47.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I SOCIAL INITIATIVES AND COMMUNITY SUPPORT  I 197 z SPONSORSHIPS AND PATRONAGE IN SPAIN Approved in 2019, the Grifols Social Initiatives program (GSI) in Spain governs the company’s collaborations with organizations focused on promoting social programs, including those related to sports, social needs, culture and education. The endowment in 2020 totaled EUR 600,000. • Support, complement or extend Grifols’ mission and values. • Comply with all corporate policies on ethics, transparency, conflict of interest, data protection and codes of conduct. • Have a maximum duration of 3 years, extendable to 5 in exceptional cases. All projects with more than one year of duration are reviewed annually to confirm continuation. • Have a clear social objective which must be clearly stated in the the application form that candidates must submit. As part of the admission and evaluation process, applicants must: ACTIVITIES AND PROGRAMS z FULBRIGHT SCHOLARSHIPS • Confirm that their initiatives fall within the scope of Grifols’ key action areas: sports, social actions, culture or education. • Certify honorability, good reputation and good practices in their sphere of activity. • Be up to date with all payments and obligations to government authorities. Grifols has collaborated with the prestigious Fulbright Scholarship Program since 2013. Thanks to its contributions, Spanish scholarship recipients were able to pursue and finalize master’s degrees in molecular medicine at the University of Maryland-Baltimore and in pharmaceutical sciences (Translational Medicine and Drug Discovery) at Northeastern University in Boston. Fulbright scholarships are part of an academic aid program sponsored by the U.S. State Department’s Bureau of Educational and Cultural Affairs, governments of other countries and private-sector entities. Grifols uses a set of criteria to determine the eligibility of alliances with organizations, projects and activities. An Evaluation Committee determines which projects receive funding and the duration of the collaboration. All GSI programming. Grifols does not accept applications from entities whose management includes relatives of company employees. In 2020, the company received 46 applications, formally processed 26 and selected 18 for sponsorship. MAIN INITIATIVES z COLLABORATION WITH “LA MARATÓ DE TV3” CAMPAIGN ACCIÓN CATEGORÍA In 2020, Grifols collaborated with the special edition of “La Marató de TV3,” a televised campaign to raise funds for COVID-19 research. Grifols’ fully matched the final amount raised during the event. Donation to the Viver de Bell-lloc Foundation for the construction of an occupational center Social Bioinfo4Women Program: Donation to highlight the contribution of women in diverse scientific fields Social Donation to the Maria Canals Association to promote music in hospitals as a complementary therapy Social Sponsorship of the “Liceu Aprèn” program organized by Gran Teatre del Liceu (Barcelona’s opera house) to encourage creativity and bring opera to a wider audience Cultural Sponsorship of the social outreach program “Palau Vincles” (Palace Connections) of Barcelona’s Palau de la Música to foster social inclusion through choral singing Cultural Sponsorship of the Sant Cugat Volleyball Club Sports Sponsorship of the Junior FC Hockey Team Sports Fulbright scholarships Education Collaboration with “La Marató de TV3” Social

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_48.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I INITIATIVES THROUGH ASSOCIATIONS AND NGOs  I 198 z PROBITAS FOUNDATION: IMPROVING THE HEALTH OF AT-RISK POPULATIONS The Probitas Foundation was created in 2008 to improve healthcare in areas with limited resources by leveraging Grifols’ expertise in global healthcare and clinical diagnostic solutions. The company’s shareholders approved an annual allocation of 0.7% of corporate profits before taxes to support this private foundation. SUPPORTING THE CORE PRINCIPLES OF THE WORLD HEALTH ORGANIZATION TWIN FAMILIES INITIATIVE DURING COVID-19 In 2020, Probitas sponsored a range of local programs offering nutritional, socio-educational, psychosocial and health resources to promote the physical, psychological and emotional health and well-being of children and teenagers in vulnerable populations. Collaborations with community authorities and social organizations included a meal program to ensure students ate a healthy meal every day in the school cafeteria, in addition to socio-educational and leisure activities in safe spaces. The Foundation also sponsored activities and workshops to promote the importance of acquiring healthy habits for eating, rest, hygiene, sport and emotional well-being. The COVID-19 pandemic has generated socioeconomic difficulties for many, especially at-risk families. To alleviate this problem, the Probitas Foundation launched the Twin Families campaign, pairing families with other more vulnerable families to ensure their children eat a healthy meal every day in the school canteen. In addition to addressing their nutritional needs, meals in school cafeterias offer children at risk of social exclusion a fundamental protective environment, while promoting healthy living habits (food, personal hygiene, physical activity, emotional well-being and rest) and a holistic vision of health. Probitas combines in-house programs – among them, the Global Laboratory Initiative (GLI) and the Child Nutrition Support Program – with external collaborations, including Spain’s Child Nutrition Reinforcement Program (Refuerzo de la Alimentación Infantil). These initiatives are channeled through local social and healthcare-focused entities, international NGOs (Red Cross, Save the Children, etc.) and United Nations agencies such as WHO, UNICEF and ACNUR, among others. This project offers socially committed families a platform to help the most vulnerable children and youth in their local communities. Probitas cooperates with research centers, hospitals, foundations and other partners active in the mental health sphere to support services not covered by the public health systems. These alliances aspire to heighten awareness on the reality of children with mental health issues, as well as efforts to improve early detection, foster social inclusion and reduce the stigma surrounding mental disorders. To support this effort, the Grifols People Experience organized the “Donate Your Christmas Basket to Twin Families” campaign among employees in collaboration with Probitas, which defined a list of healthy staple products to donate. Baskets included fresh fruits and vegetables, healthy frozen foods, nuts, dried fruits, legumes, eggs and traditional Christmas foods. Also included were COVID-19 items (masks, hand sanitizer and disposable gloves), diapers and personal hygiene products. The Foundation also works with international health programs targeting the world’s most vulnerable collectives in remote, economically disadvantaged regions. In 2020, Probitas offered both monetary and non-financial support by funding sustainable health projects, as well as coordinating, managing and training local collaborators to help them become self-sufficient in the near future. Thanks to this initiative, 1,000 economically vulnerable families were jpgted with an assortment of food and other provisions, which were delivered through a network of 17 small-and medium-sized social outreach organizations in Spain. These contributions by Grifols’ Spanish personnel were valued at EUR 83,4000. In 2020, the Probitas Foundation voiced its support once again for the WHO’s basic principles of primary health care: universal access to care and need-based coverage; commitment to health equity as part of social justice-oriented development; community participation when defining and implementing health agendas; and cross-industry approaches to health. More than 50 employees participated in the Probitas Foundation’s Twin Families initiative through either monthly donations or regular payroll contributions, donating around EUR 20,000 in resources. The initiative also included the participation of collaborating companies such as Osborne Clarke, Kreab, Juve & Camps and Barentz. To learn more about Probitas and its core programs, please visit http://www.fundacionprobitas.org INITIATIVES THROUGH ASSOCIATIONS AND NGOs

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_49.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I INITIATIVES THROUGH ASSOCIATIONS AND NGOs  I 199 z CORE PROGRAMS Objective: Improve the health and nutrition of children in at-risk collectives Launch: 2012 Scope: 195 schools and 80-day centers 25,375 beneficiaries 2.8 million meals or snacks provided PROGRAMS AND INITIATIVES ALIGNED WITH SDGs 1. Strengthen the capacity of clinical diagnostic laboratories in the world’s most vulnerable regions by accessing techniques used in developed countries: Through its Global Laboratory Initiative (GLI), the Probitas Foundation improves global health systems by helping countries diagnose diseases like tuberculosis, HIV and malaria, as well as other communicable and chronic diseases. 4. Support projects aiming to improve children, youth and their families’ health by offering services not covered by the public health system: The Health, Innovation and Therapies (SIT) program supports direct intervention and innovative therapies, in addition to training, prevention and awareness for healthcare and social welfare professionals who work with children and youth. Objective: Enhance the health of children and their families in situations not covered by the public health system Launch: 2018 Scope: 13 entities 7,200 beneficiaries 5. Actions to help young people thrive in their country of origin: The Yakaar Project helps young people develop a business plan or employment search strategy in their country of origin after a training period in Barcelona, with the support of country-specific experts. PCI 2. International cooperation to end the fight against neglected tropical diseases (NTDs), among others: Probitas International Cooperation Program works to improve local sanitation infrastructures and ensure the availability of water, sanitation and hygiene to prevent and raise awareness of these diseases. Objective: Support health projects for the fight against Neglected Tropical Diseases (NTDs) Launch: 2010 Scope: 18 countries 21 entities 114,000 direct and 4.1 million indirect beneficiaries 6. Contribute to combat Ebola: The Foundation has collaborated with Grifols Ebola Project in Liberia since 2015. Its on-the-ground knowledge of the African continent and close ties with the Liberian Ministry of Health and local and international NGOs has helped identify recovered Ebola patients and determine their suitability as potential donors of convalescent plasma, used to manufacture an anti-Ebola immunoglobulin. To date, the Foundation has made more than 3,000 field trips to the country’s Plasmapheresis Modular Center in Liberia; trained and hired six local healthcare professionals; and established programs to offer nutritional and medical assistance in local communities aimed at both plasma donors and at-risk families. Objective: Strengthen the capacity of clinical diagnostics laboratories in the world’s most vulnerable regions Launch: 2010 Scope: 11 countries 29 laboratories, including 4 new labs opened in 2020 68,479 direct and 403,000 indirect beneficiaries 3. Improve the health and well-being of at-risk youth through a holistic approach: The Foundation’s Reinforcing Childhood Nutrition (RAI) program guarantees nursery, primary and high-school students a healthy meal a day in the school cafeteria, as well as providing summer school programs. YAKAAR PROJECT Objective: Develop young people professionally in order to return to their country of origin Launch: 2019-2020 7 entrepreneurs’ scholarships SOCIAL ACTION CALLS FOR PROPOSALS Objetive: Promote the personal development of at-risk youth Scope: 13 entities - 10,249 beneficiaries

 

 

 

 

7998-1-mm-05_part 4 of 5 2020 consolidated directors' report_part4_page_50.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I INITIATIVES THROUGH ASSOCIATIONS AND NGOs  I 200 z JOSÉ ANTONIO GRÍFOLS LUCAS FOUNDATION: SUPPORTING COMMUNITIES WHERE DONORS LIVE The José Antonio Grífols Lucas Foundation was created in 2008 in honor of Dr. Josep Antoni Grífols i Lucas, a global forerunner in the plasmapheresis technique. The Foundation supports a range of activities, including educational and health programs to improve the welfare of the communities and social environments where Grifols U.S. plasma centers are based. In addition, it also promotes research related to donor health and well-being. EL SERENO MIDDLE SCHOOL - EL SERENO, CALIFORNIA WOLF RIVER CONSERVANCY - MEMPHIS, TENNESEE EL PASOANS FIGHTING HUNGER FOOD BANK - EL PASO, TEXAS In 2020, Grifols revamped the Foundation by broadening its mission and positive impact on the lives of donors and their communities. The Foundation established a new board, updated its by-laws and state filings and has started developing its long-term strategic vision. The Board of Directors includes five members: three who represent plasma-donor interests and local communities, and two Grifols representatives, all of them serving on a voluntary basis. El Sereno Middle School is a public school in the city of Los Angeles, California. The grant was used to purchase new computers for the school’s STEM lab, which supports over 1,000 local students from diverse backgrounds. The Wolf River Conservancy is dedicated to the This initiative offers home deliveries of food for community members who do not have access to the many food pantry distributions or are quarantined due to COVID-19. The funding resulted in an estimated 1,388 food deliveries. protection and enhancement of the Wolf River and its watershed as a sustainable natural resource. The grant will support their continuous online education program for STEAM students. As part its re-launch, the Board of Directors approved 11 community enhancement grants in 2020 totaling USD 300,000 to support civic, social and educational programs in areas where Grifols donation centers are located. Grants were made with the goal of strengthening community bonds and supporting the needs of the community. BUSH HILLS CONNECTIONS. BIRMINGHAM. ALABAMA FRIENDS OF BERSTON FIELD HOUSE. FLINT. MICHIGAN VILLAGE OF MAYWOOD CONOR-HEISE MEMORIAL PARK. MAYWOOD. ILLINOIS The following table highlights a selection of the organizations supported in 2020. Bush Hills Community Garden & Urban Farm offers a space for residents to learn how to plant, cultivate, harvest, preserve and prepare a large variety of fresh produce. The grant will support the harvest and distribution of over 9 tons of free fresh produce to local families, public service agencies and shelters. Berston Field House was the first Flint community center available to African Americans. The grant supports the renovation of basketball courts where community residents gather and local tournaments are hosted. This grant will support the beautification and modernization of three basketball courts in Conner/ Heise Park, to enhance an important part of the Maywood community, as well as encourage health and wellness through sports and recreation.

 

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_01.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I INITIATIVES THROUGH ASSOCIATIONS AND NGOs  I 201 THE GRIFOLS FOUNDATION SUPPORTS INITIATIVES THAT HAVE A POSITIVE IMPACT ON THE LIVES OF DONORS AND THEIR COMMUNITIES CANYON SCHOOL DIST. FOUNDATION - SANDY, UTAH BOCA HELPING HANDS - BOCA RATON, FLORIDA SCHOOL FUEL - SAN MARCOS, TEXAS Canyon School District Foundation is partnering with organizations to provide computing devices and connectivity to students who are unable to attend class in person. The grant went to Sandy Elementary, a Title I school, to equip students for virtual learning. Boca Helping Hands provides food, medical and financial assistance to meet basic human needs, in addition to education, job training and guidance to foster self-sufficiency. The organization supports Boca Raton and the surrounding Palm Beach County and beyond. School Fuel’s mission is to provide the “fuel” for a better learning environment by eliminating hunger in San Marcos classrooms. The Foundation’s grant went to weekend nutrition for San Marcos students – an additional 100 children – increasing the organization’s reach by 10%. THE ROAD HOME - SALT LAKE CITY, UTAH FEEDING SOUTH FLORIDA - PEMBROKE PARK, FLORIDA The Road Home assists individuals and families experiencing homelessness in Salt Lake County. The Foundation supported their Emergency Shelter and Resource Center Program, a safety net that helps the homeless gain access to essential services and boost their self-sufficiency. Feeding South Florida is the largest, food bank serving Palm Beach, Broward, Miami-Dade and Monroe Counties. The pandemic has significantly impacted the South Florida region, which relies heavily on tourism. The Foundation’s contribution helped Feeding South Florida source and distribute around 126 tons of food for roughly 231,481 meals.

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_02.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I INITIATIVES THROUGH ASSOCIATIONS AND NGOs  I 202 z VÍCTOR GRÍFOLS LUCAS FOUNDATION: GUIDED BY BIOETHICS Grifols founded the Victor Grifols i Lucas Foundation in 1988 to spark cross-disciplinary debate and dialogue on the subject of bioethics. The Foundation aims to foster ethical attitudes among healthcare organizations, companies and professionals and serve as the catalyst for new ideas, insights and perspectives on the ethics of life. ACTIVITIES EDUCATIONAL INITIATIVES: GRIFOLS CHAIR OF BIOETHICS In 2020, the Foundation organized 10 workshops, conferences and seminars to explore ethical questions, attracting more than 2,000 participants. Created in collaboration with the University of Vic-Central University (UVIC-UCC), the Grifols Chair of Bioethics aims to generate and transfer knowledge in the sphere of bioethics. • Bioethics and Society Post-COVID-19 The Grifols Chair of Bioethics also supported frontline research: AWARDS AND SCHOLARSHIPS The Chair imparted 10 training and informational sessions in 2020, attracting more than 2,600 participants, most of whom were healthcare professionals. Some of the most noteworthy events centered on the ethical ramifications of COVID-19: • Collaboration with the “UNIV-UCC Students and the ‘Big Five’” on the main roots of burnout among healthcare professionals In 2020, the Víctor Grífols i Lucas Foundation granted eight scholarships towards bioethics research, three research awards for high school students, three awards for education centers toward ethics and science projects and an award for an audiovisual project on bioethics. • Participation in the research project on the impact of COVID-19 in nursing homes, in cooperation with M3O A and the Palliative Care Chair • COVID-19: Bioethics in the Spotlight • COVID-19: Individual Freedoms Versus the Common Good • Collaboration with the Bioinformàtics Barcelona platform on the “Ethics and Safety of Bioinformatics” research project PUBLICATIONS AND ARTICLES • Information Ethics in Times of COVID-19 The Foundation has three editorial collections: “Foundation Notebooks” aimed at disseminating upcoming conferences, debate seminars and workshops; “Reports,” which offer summaries and recommendations on current studies; and “Ethical Enriquiries,” which highlight reflections and conclusions of experts who weigh in on ethical debates. • Science and Ethics in a Post-Pandemic World In 2020, the Foundation sponsored five publications and articles on bioethical issues, as well as participated in several case studies. More information on the Grifols Foundation: www.fundaciogrifols.org

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_03.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT COMMITTED TO SOCIETY  I ALLIANCES AND ASSOCIATIONS  I 203 Grifols collaborates with various public-and private-sector entities, inspired by the power of collective action to drive positive social change. z MAIN ALLIANCES The following table details the type of activity and puts in order the most representative financial contributions made by Grifols to the main associations with which it collaborates: CONTRIBUTIONS 2020 ACTIVITY DESCRIPTION OF POSITIONING/COMMITMENT Grifols supports various industry-related projects including joint efforts to promote: a global code of conduct; awareness campaigns on plasma and its multiple uses; access to its clinical treatments; plasma as an essential raw material; and rare diseases, among other topics PLASMA INDUSTRY EUR 1,703,269 Advocacy of policies and practices to support the discovery of life-saving medicines and vaccines and their access around the world. Efforts to strengthen regulatory systems to provide maximum safety, from the production plant to the patient, within an ethical framework grounded on solid codes of conduct (1) PHARMACEUTICAL INDUSTRY EUR 174,694 Initiatives to underscore the important impact of medical technologies on society, facilitating their access to individuals, patients, healthcare professionals, operators and healthcare systems. Promotion of value-based innovation to encourage greater sustainability in global healthcare systems and address their evolving needs and expectations. Serve as a reference point of the highest ethical standards in the medical technology industry for activities related to ongoing training, medical education and interactions with healthcare professionals (2) MEDICAL TECHNOLOGY INDUSTRY EUR 122,559 Participation in various national non-profit associations of biotechnology companies, created to raise awareness of their social impact and promote public policies that support the industry’s growth; serving as the sector’s voice on local and international levels to enhance its continuous innovation in benefit of human health, agriculture, industry and the environment (3) BIOTECH INDUSTRY EUR 396,278 (1) IFPMA - Homepage: (https://www.ifpma.org/ (2) Medtech Europe – Homepage (https://www.medtecheurope.org/) (3) ICBA – Homepage (https://internationalbiotech.org/about/) For more details on Grifols’ transfer of value in North America are available on the official Open Payment website: https://openpaymentsdata.cms.gov CORE ALLIANCES: SCOPE AND CONTRIBUTION • AECOC: Spanish Association of Manufacturers and• Organization for International Investment: an Distributors association of globally focused U.S. firms that • AENE: Spanish Association of Manufacturers and promotes foreign investment in the country Distributors of Enteral Nutrition Products• ISPE: International Society of Pharmaceutical • AmCham: American Chamber of Commerce in Engineering Spain, China and Thailand • JACRI: Japanese Association of Clinical Reagents Industry • ASEBIO: Spanish Association of Bio Companies • LEEM: French industry association representing • BIOcom Life Sciences Organization of California drug companies operating in France • Biotechnology Innovation Organization (BIO): the • MedTech Europe: Trade association representing world’s premier biotech trade association whose the medical technology industries, manufacturers membership includes industry firms, academic of in vitro diagnostics and medical devices institutions and U.S. state-level centers and operating in Europe and diverse national organizations associations. • CAEME: Argentine Association for Pharmaceutical • National Health Council (U.S.): platform for diverse and Biotech Products organizations to forge consensus and drive • CANIFARMA: Mexican Association of the Pharmacy patient-centered health policy and Medical Device Industries• North Carolina BIO: trade association for North • CBDL: Brazilian Chamber of In Vitro Diagnostics Carolina’s life science industry whose membership Companiesincludes companies and research institutions • EMIG: Ethical Medicines Industry Group working in the pharmaceutical, medical device, • EUCOPE: trade association representing small-diagnostic, clinical research and agricultural to medium-sized pharmaceutical and med-tech biotechnology sectors firms in Europe• PPTA: Plasma Protein Therapeutics Association • EURORDIS: a non-governmental patient-driven • SIGRE: not-for-profit organization established to alliance representing 956 rare disease patient ensure proper environmental management of organizations in 73 countries medicines and their in-house packaging • Farmafluid: Spanish Association of Fluid Therapy • SINDUSFARMA: Brazilian Association of andParenteral Nutrition Pharmaceutical Pharmaceutical Companies Laboratories • United States-Spain Council: An organization of • Farmindustria: ItalianAssociationof U.S. and Spanish leaders who work to cultivate Pharmaceutical Companiesstronger ties between the two countries ALLIANCES AND ASSOCIATIONS

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_04.jpg ENVIRONMENTAL RESOURCES 23M€ CO2e EMISSION REDUCTION -13% emissions Grifols is firmly committed to promoting a circular economy and minimizing its environmental impact. The company advocates a sustainable growth model based on a responsible use of energy resources and proper waste management, among other measures. In parallel, it strives to raise awareness among its key stakeholders on the need protect the planet and work toward the common good. CLIMATE CHANGE

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_05.jpg CHANGE9 ENVIRONMENT AND CLIMATE

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_06.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I GRIFOLS’ ENVIRONMENTAL MANAGEMENT I 206 Grifols makes concerted efforts to minimize any potential environmental impact that could result from its operations. The company has a range of policies and guidelines to ensure efficient use of all resources and advance its commitment to sustainable development. Grifols’ environmental management, approved by senior management and shared organization-wide, are defined by: SUSTAINABILITY POLICY ENVIRONMENTAL POLICY ENERGY POLICY The new Sustainability Policy establishes the organization’s core principles and commitments regarding its environmental and social responsibility and offers a framework to ensure their integration into the business model Defines company-wide principles and commitments aimed at monitoring and improving Grifols’ environmental impact Defines company-wide principles and commitments to optimize energy resources and promote the use of renewable resources CORPORATE ENVIRONMENT MANUAL ENVIRONMENTAL COMMITTEE Reference manual on Grifols’ environmental performance applicable to most manufacturing facilities and other ISO-14001-certified centers or in the process of obtaining certification. It is the framework for the environmental performance of the entire organization • Involvement of senior management from each ISO-14001-certified company or companies in the process of obtaining certification • Control and follow-up of all of the group’s environmental system • Proposals, follow-up and supervision of environmental goals • Review of follow-up indicators, application of corrective measures and compliance with current legislation • Identification of opportunities for improvement GRIFOLS’ ENVIRONMENTAL POLICY It contains the following commitments: • Raise awareness among employees and increase training opportunities to accelerate the adoption of good environmental practices • Minimize the environmental impact of new products and processes at different stages of their life cycle • Identify and comply with applicable regulatory requirements • Establish environmental objectives and targets to promote continual improvement • Implement pollution-prevention techniques to mitigate the environmental risks of its operations, including the effects of climate change • Organize a system to communicate and engage with stakeholders interested in the company’s environmental management • Set up environmental protection and conservation programs for natural spaces on Grifols’ properties and areas of influence GRIFOLS’ ENVIRONMENTAL MANAGEMENT

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_07.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I GRIFOLS’ ENVIRONMENTAL MANAGEMENT I 207 z CIRCULAR ECONOMY Grifols’ environmental management is based on the concept of a circular economy. Consequently, it prioritizes the efficient use of material resources, water and energy, and aims to reduce waste, while taking into account the life cycles of its products and services. This strategy incorporates the transition towards a low-carbon economy aimed at minimizing the impact of climate change. • Environmental criteria in engineering projects • Eco-design of equipment (diagnostic & engineering) • Environmental criteria in R+D • Container and packaging design • Good environmental practices in the procurement process • Certification of raw-material suppliers • Certification of transport companies • Optimization of routes and means of transportation • Proximity of suppliers • Water recovery systems • Optimized water consumption • Energy efficiency • Renewable energy consumption • Cogeneration plant • LEED/Green Globes building certification • Residual waste recovery • Energy recovery from waste • Anaerobic digestion • Zero Waste to Landfill initiative • In-house treatment of wastewater • Minimization of atmospheric emissions CIRCULAR ECONOMY • Optimization of packaging • Recycled/recyclable packaging materials • Certification of transport companies • Optimization of routes and means of transportation • Recycling of recoverable waste • Internal reuse of ethanol • Recovery of intermediate products • New biological products marketed by the Bio Supplies Division • Reuse of ethanol in production processes • Intermediate products: PEG + sorbitol • Grifols Engineering machine manuals • Equipment manuals (diagnostic) • SIGRE - Integrated Management System of drugs out of specification • Collection and management of electric and electronic equipment placed in the market

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_08.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I GRIFOLS’ ENVIRONMENTAL MANAGEMENT I 208 z MANAGEMENT AIMS TO OPTIMIZE RESOURCES AND REDUCE ENVIRONMENTAL RISKS Grifols’ environmental management includes several key areas, which collectively aim to optimize resource efficiencies and minimize possible environmental risks. • Systematic integration of environmental criteria in the design of projects, products and services in order to incorporate appropriate prevention and eco-efficiency measures that minimize the company’s environmental impact • The R&D, Engineering and Grifols Engineering Departments assess and apply the most eco-efficient alternatives from a life cycle perspective • Use of Grifols’ “Guidelines for the Design of Containers and Packaging with Environmental Criteria” Eco-efficiency • Routine review of preventive measures aimed at mitigating the possible impact of environmental risks identified by the company • Periodic drills in production facilities to evaluate their capacity to react in the event of environmental emergencies or incidents • Specific employee training Prevention Specific self-protection plans for each production facility • Define action plans in the event of environmental incidents and assign teams to oversee their implementation Legal compliance • Legislative monitoring systems to identify the requirements applicable for each production facility and establish a framework for periodic compliance audits • Establishment of 6 environmental commitments for 2030 as part of the company’s priority lines of action • The 2020-2022 Environmental Program details the environmental objectives for this period, each of which has specific goals for Grifols’ facilities, worldwide Environmental objectives • Promotion of communication channels to enhance engagement between the company and its main interest groups regarding environmental issues • Communication procedures (internal and external) to guarantee an adequate response for each type of communication received • Activities to raise awareness related to environmental preservation and the importance of protecting natural resources and ecosystems, developed within the framework of World Environment Day (Barcelona facilities) and Earth Day (industrial complexes in Clayton, North Carolina, and in Emeryville and Los Angeles, California). In 2020, some in-person events were suspended due to COVID-19 restrictions. • Implementation of training and educational activities to inform and update Grifols employees on environmental management issues Environmental engagement and communication initiatives Commitment to environmentally-focused suppliers • The company advocates for collaborations with environmentally responsible suppliers and partners to amplify the benefits of its sustainable approach and indirectly reduce negative environmental impact

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_09.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I GRIFOLS’ ENVIRONMENTAL MANAGEMENT I 209 z ENVIRONMENTAL CERTIFICATIONS z PROVISIONS AND GUARANTEES FOR ENVIRONMENTAL RISKS Grifols’ environmental management system is certified by ISO 14001 standards, which ensures the identification and compliance with all applicable environmental legislation; knowledge of the environmental impacts of its products and processes; the implementation of necessary preventative and corrective measures; and the establishment of objectives to boost its environmental performance. plants are thoroughly audited at least every three years by TÜV Rheinland, an independent inspection entity. Grifols has liability insurance to cover accidental contamination to the environment, understood as the disturbance of the natural state of air, groundwater, flora or fauna (or any other situation legally deemed as environmentally harmful), caused by emissions from Grifols facilities due to accidental, sudden and extends to all of its companies, manufacturing facilities and sales offices in all of the countries in which it operates. The company continues its efforts to integrate the highest standards of sustainability and in 2018, the Clayton plant was honored with the Leadership in Energy and Environmental (LEED) Award for its sustainable design. Furthermore, in 2019, the new Clayton fractionation plant obtained the Green Globes Certification on behalf of the Green Building Initiative® (GBI), an entity that assesses and certifies the design and operations of sustainable buildings. The building was also recognized with the Two Green Globes distinction after demonstrating continued solid performance throughout the year. In 2020, the company received no economic sanctions in regards to environmental damage. unforeseen consequences. Grifols’ responsibility The company continues its efforts to obtain ISO 14001 certification in all of its manufacturing facilities. In Spain, all of Grifols’ plants have been ISO-14001-certified since 2004 and 2005. In the U.S., the North Carolina (U.S.) plants are also ISO-14001-certified: the Bioscience Division’s Clayton plant was certified in 2016 and the Raleigh offices in 2019. The Diagnostic Division’s Emeryville (California) complex has also been ISO-certified since 2018. The company is working to certify the Bioscience Division’s Los Angeles plant and continues to make efforts to certify all facilities, prioritizing those with larger manufacturing facilities ahead of those that are smaller in size and have less environmental impact. 2 In 2020, Grifols improved its rating on the Carbon Disclosure Project (CDP), the global disclosure system that annually evaluates organizations’ environmental strategies and their climate-change performance. The company has improved its rating over recent years, achieving an “A-“ rating. 2 At the close of 2020, 75% of Grifols’ total production was manufactured in ISO-14001-certified facilities. In parallel, 75% of personnel dedicated to manufacturing operations worked in certified plants. All of Grifols’ THE ENVIRONMENTAL IMPACT OF COVID-19 The outbreak of COVID-19 led to mobility restrictions for most of the world’s population, leading to a dramatic reduction in CO emissions. In Grifols’ case, the pandemic significantly reduced airline travel, which fell by 72% remote connections by 369%. For its part, the roll-out of teleworking practices led to a 12.9% reduction in Grifols’ total CO e emissions during the year. In terms of changes in waste management, no changes were noted since they types of waste Grifols generates remained stable.

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_10.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I RESOURCE ALLOCATION TO MINIMIZE ENVIRONMENTAL IMPACTS  I 210 Despite the global challenges of 2020, Grifols allocated significant resources to environmental activities as part of its efforts to bolster its environmental performance and advance its 2020-2022 Environmental Program objectives. TOTAL RESOURCES ALLOCATED TO ENVIRONMENTAL MANAGEMENT INCREASED BY 6.9%. In 2020, Grifols allocated EUR 23.2 million to minimize its environmental impact, a 6.9% increase over the previous year. Total investment in environmental assets totaled EUR 2.8 million in 2020 compared to EUR 1.9 million in 2019, representing a 55% increase. Forty percent (40%) of this investment were allocated to reduce energy consumption and atmospheric emissions. RESOURCES ALLOCATED RESOURCES ALLOCATED TO THE ENERGY AND OTHERS Throughout Grifols’ various facilities, seventy-three percent (72%) of environmental expenditure stem from waste management. Thus, expenses rose to EUR 20.5 million, an increase from the EUR 19.9 million reported in 2019. RESOURCE ALLOCATION (INCLUDING EXPENSES AND INVESTMENTS) 23 RESOURCES ALLOCATED TO TO WASTE MANAGEMENT WATER CYCLE REDUCE ATMOSPHERIC EMISSIONS, 66% 26%8% M€ RESOURCE ALLOCATION TO MINIMIZE ENVIRONMENTAL IMPACTS

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_11.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I RESOURCE ALLOCATION TO MINIMIZE ENVIRONMENTAL IMPACTS  I 211 potential environmental risks. To this end, all employees involved SLOVAKIA CZECH REPUBLIC UNITED KINGDOM receive specific training in accordance with Grifols’ continuous l PRESENCE THROUGH DISTRIBUTORS U.S. JAPAN MEXICO INDONESIA INDIA SINGAPORE HUMAN CAPITAL TO PREVENT ENVIRONMENTAL RISKS Grifols’ centers have a management system designed to mitigate SPAIN SWITZERLANDPORTUGAL in the company’s environmental risk management efforts POLANDFRANCEITALY development initiatives. Grifols manages the prevention of GERMANYIRELAND environmental risks through an organizational system with a broad global reach. CANADA MANUFACTURING FACILITIES l GRIFOLS’ SUBSIDIARIES CHINA HONG KONG TAIWAN COLOMBIA DUBAI BRAZIL THAILAND CHILE ARGENTINA AUSTRALIA CORPORATE SUBSIDIARY ENVIRONMENTAL ENVIRONMENTAL DEPARTMENT COORDINATORS COMMITTEES TEAMS 120 114

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_12.jpg 2020 ANNUAL INTEGRATED REPORT SIX COMMITMENTS FOR 2030 REDUCING EMISSIONS ENERGY EFFICIENCY RENEWABLE ENERGIES DECARBONIZATION GOAL Reduce greenhouse gas emissions per unit of product by 40% Increase energy efficiency per unit of product by 15% by systematically integrating eco-efficiency measures in new projects and existing facilities Consume 70% of electricity using renewable energies Facilitate the decarbonization of transport in business trips and employee commutes by reducing air travel, carbon offsetting and promoting work from home, among other measures. PROGRESS IN 2020 In 2020, CO e emissions per unit of sales fell by PROGRESS IN 2020 Grifols’ total energy consumption in 2020 declined by 9.4% compared to unit sales. Sales increased by 19% compared to 2018 and energy consumption only increased by 7.8% in absolute terms. In the Bioscience Division, which generated 79% of Grifols’ total sales in 2020, energy consumption per unit of production was 2.1% higher than in 2018. In some facilities, production levels were lower than expected due to COVID-19 restrictions and constraints in the supply of some raw materials. Nevertheless, Grifols’ facilities continue to maintain their baseline energy consumption. Some of the new facilities made further inroads in their validation processes, including facilities in the United States and Ireland, which increased energy consumption without increasing production. Consumption in plasma centers remained stable. PROGRESS IN 2020 In 2020, renewable energy accounted for 5.4% of Grifols’ renewable electricity consumption. At the end of 2020, one of the two photovoltaic plants planned for the Hospital Division’s Murcia facilities launched operations. Grifols purchased 16 million kWh of renewable electricity for its plants in Spain and 7 million kWh for the Bioscience Division’s plant in Ireland. These actions, initiated in 2020, along with others defined in the Corporate Environmental Program, will enable the company to reach its 2030 target. PROGRESS IN 2020 The pandemic significantly catalyzed this process, accelerating practices originally planned for 2020 but were not yet fully implemented. This year, 20,000 fewer business airline trips were made 2 8.1% in relation to 2018, taking into account Scope 1 and Scope 2 emissions. Higher consumption of renewable electricity sources favored the decrease in emissions. compared to 2018, reducing air-travel-related CO e 2 emissions by 75%. In total, the decline in business travel led to a 8,631 tCO e decrease in emissions, 2 68% less than in 2018. The average number of employees working remotely increased by 505% compared to 2018. CO e emissions from employee 2 commutes fell11,869 tCO e, 30% by 2 of 2018 levels.

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_13.jpg BIODIVERSITY 2020 ANNUAL INTEGRATED REPORT CLAYTON’S CONSERVATION AREAS Grifols owns more than 121 hectares (300 acres) of forest adjacent to its Clayton production facilities, which employees and their families are free to enjoy. This protected area provides a suitable habitat for numerous aquatic and terrestrial species and is certified by the Wildlife at Work and Corporate Lands for Learning programs, an initiative promoted by the Wildlife Habitat Council (WHC). Various biodiversity-protection and educational activities are carried out throughout the year within the framework of these programs, developed under the guidance of WHC Forest, Grasslands, Wetlands and Water Bodies projects. In 2020, these included the following: • Flora and fauna inventory • Collaboration with students from the University of North Carolina’s (NCSU) Fisheries, Wildlife, and Conservation Biology Program to conduct inventories, build and monitor bluebird houses, maintain and improve roads, bridges and signage at the Grifols Wildlife Habitat, to ensure that it is accessible, safe, and attractive for educational and recreational use • Removal of invasive species in the forested area to favor the establishment of native species • Fishing site for Grifols employees • Improved signage, trail maintenance and installation of benches CIRCULAR ECONOMY PROTECTING BIODIVERSITY Continue to implement circular economy measures in every stage of the operational life cycle to encourage waste reduction and recovery, as well as optimize the consumption of water, raw materials and intermediate products. Protect biodiversity on Grifols properties through the Grifols Wildlife Program, promoting CO capture 2 In 2020, the WHC recertified the Wildlife Habitat Area in the “silver” category until 2022. Throughout the year, some activities had to be cancelled or postponed due to pandemic-related restrictions. PROGRESS IN 2020 The Bio Supplies Division continued to market Bioscience Division materials not used in any of Grifols’ plasma-derived products. Obtained from Grifols’ facilities in Spain, the United States and Germany, these materials were previously considered waste and managed by authorized waste managers. Today, they are marketed and sold as diagnostic products to companies that produce reagents. In 2020, the Bioscience Division’s U.S. reverse osmosis systems were fully operational, further boosting water savings from what was already achieved in 2019. PROGRESS IN 2020 Promotion of Grifols Wildlife program, which includes several projects in the conservation area surrounding the company’s Clayton, North Carolina (U.S.) plants Collaboration agreement to promote initiatives in Barcelona’s Besòs River basin (Spain). BESÒS RIVER BASIN IN BARCELONA In 2019, Grifols signed a three-years (2020-2022) collaboration agreement with the Rivus Foundation, promoted by the Besòs Tordera Consortium, to finance two lines of research and support conservation and environmental education projects in the Besòs river system. In 2014, images of an otter were captured in the Tenes River, a milestone event since the species had virtually disappeared from the basin during the 1960s. Since then, Grifols collaborates in an agreement to support research on the return of the otter in the Besòs and Tordera River basins, regarded as the latest fronts of expansion and recovery of the otter in Catalonia, since virtually disappearing at the end of the last century from the entire region. The main activities carried out in 2020 included the following: • Four otter-monitoring campaigns and two fish-monitoring campaigns in the Besòs and Tordera basins, with a total of 70 stations evaluated. Both the otter, as the top of the aquatic food chain, and the fish are good indicators of the river system’s water quality. • In the area of education, training and communication: the production of films for audiovisual content, outreach initiatives through different media, creation of informational material and educational activities in schools and universities were carried out.

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_14.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I COMPLIANCE WITH THE 2020-2022 ENVIRONMENTAL PLAN  I 214 Grifols’ 2020-2022 Environmental Plan outlines the objectives established for this period, with concrete targets for the company’s global facilities. The following table summarizes these objectives and their corresponding degrees of fulfillment to date. z ATMOSPHERIC EMISSIONS SCOPE OF CARBON FOOTPRINT OBJECTIVE TARGET PROGRESS IN 2020 • Construction of a 150 kW photovoltaic plant in Murcia (Spain) for the Hospital Division • Purchase of 18 million kWh of renewable electrical energy per year through a PPA (Power Purchasing Agreement) for the Bioscience division’s facilities in Barcelona Reduction of CO e emissions by 23,400 2 tons per year by using 68 million kWh of renewable electric energy SCOPE 2 50% • Purchase of 50 million kWh of renewable electricity per year among Grifols’ different plants. Savings of 17,000 tonnes of CO 2 • Study improvements in the cooling system in the Bioscience Division’s Barcelona plant • Increase the electrical energy generated and useful heat produced by the cogeneration plant in the Bioscience Division facility in Barcelona • Installation of a new variable speed compressor in the Bioscience Division facility in Clayton • Improvements in the compressed-air network in the Hospital Division plant in Murcia • Implementation of a building management system (BMS) in the Madrid work center • Replace refrigerant gases with others with lower Global Warming Potential (GWP) in cooling systems in the Haema (Germany) and Biomat (Barcelona) facilities • Apply eco-efficiency measures in lighting and air conditioning systems in Grifols’ Italian offices and warehouse • Replace current lighting with LED in Bioscience Division’s quality control building in the Los Angeles facility Reduction of CO e emissions by 6,700 2 tons per year by implementing eco-efficiency measures in existing plants 50% SCOPE 1 AND 2 • Implement LEED Certification (silver/gold) measures in the new SC5 building in Sant Cugat del Vallès. Savings of 188,000 kWh per year compared to a standard building Reduction of CO e emissions by 1,860 2 tons per year by implementing eco-efficiency measures in new plants • Earn Green Globes certification for the new manufacturing buildings of the Bioscience Division in Clayton. Savings of 1,800 tons of CO . 55% 2 • Installation of a new refrigeration plant with ammonia as a natural refrigerant gas in Grifols’ international warehouse in Barcelona. Zero Global Warming Potential (GWP) • Increase teleworking in all of Grifols facilities where feasible. • Increase the use of videoconferencing to reduce business travel • Carbon offsetting in business travel with airlines and car rental companies Decarbonization in business trips and employee commutes SCOPE 3 65% COMPLIANCE WITH THE 2020-2022 ENVIRONMENTAL PLAN

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_15.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I COMPLIANCE WITH THE 2020-2022 ENVIRONMENTAL PLAN I 215 z ALTERNATIVES TO BOOST ENERGY EFFICIENCY CARBON FOOTPRINT OBJECTIVE TARGET DEGREE OF FULFILLMENT OF OBJECTIVES (2020 OVERVIEW) • Perform energy audits in the Haema facilities (Germany) and an energy study in Biomat’s refrigeration units in Barcelona • Adapt work instructions to include good practices in energy efficiency in the R+D+i building in Raleigh, North Carolina SCOPE 2 Study options to boost energy efficiency 30% z WATER OBJECTIVE TARGET DEGREE OF FULFILLMENT OF OBJECTIVES (2020 OVERVIEW) Reduction of water consumption of 87,700 m3 per year in existing facilities • Replace a reverse osmosis unit to treat processed water with a high-efficiency unit in the Bioscience Division in Clayton • Implement more efficient automated cleaning processes in specific manufacturing areas of the Bioscience and Hospital Divisions in Spain • Implement projects to recover water from water albumin pasteurization machines in the Bioscience Division facilities in the United States and Ireland. Action in development at a site located in a water-stressed area in California 35% 400 m3 water savings per year in the new facilities • Implement measures to reduce consumption and reuse water in the new building in Sant Cugat del Vallès as part of the LEED Certification project 35% Explore systems for conserving water during the manufacturing process and other uses • Explore water-conservation options for irrigation in the Bioscience Division’s Los Angeles facilities and implementation of good water conversation practices in the Clayton manufacturing facilities. Action in development at a site located in a water-stressed area in California 15% Reduce parameters of wastewater discharges • Expand Bioscience Division’s wastewater treatment plants in Barcelona (Spain) and Clayton (U.S.) to reduce discharge levels of organic matter • Reduce suspended solids and nitrogen discharged into wastewater in the Clayton facility (U.S.) 50 % for actions to reduce organic matter 30% for actions to reduce nitrogen and suspended solids

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_16.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I COMPLIANCE WITH THE 2020-2022 ENVIRONMENTAL PLAN  I 216 z WASTE TARGET PROGRESS IN 2020 OBJECTIVE Maintain “Zero Waste to Landfill” certification • Maintain certification in the Bioscience plant in Clayton, North Carolina 100% Reduce quantity of generated waste by 4,700 tons per year • Expand capacity for storage and treatment of polyethylene glycol in the Bioscience facilities in Barcelona 0% Increase waste recycling by 500 tons per year • Install a new plastic bottle shredder and cleaning system in the Bioscience Division’s Clayton facilities to recycle all emptied plasma bottles 100% • Carry out a study to reduce 618 tons of hazardous waste in the Bioscience Division’s Barcelona plant • Reduce the quantity of landfilled or incinerated waste by 9.5 tons per year in the Los Angeles and Emeryvilleplants Study more sustainable management solutions for 628 tons of waste in Bioscience and Diagnostic Divisions 65% New hazardous waste storage in Clayton • Build a new hazardous waste storage with 70 drums capacity in the Bioscience Division’s Clayton facilities 5% z RAW MATERIAL CONSUMPTION TARGET PROGRESS IN 2020 OBJECTIVE Increase alcohol recycling by 76 tons per year • Implement improvements in the ethanol distillation tower in the Los Angeles manufacturing plant to increase ethanol recycling by 8% 60% Decrease caustic soda consumption by 28 tons per year • Implement higher-efficiency automated cleaning reactors and production lines in the Bioscience and Hospital Division facilities in Barcelona 35% Reduce consumption of cardboard and plastic by 1.1 tons per year • Modify packaging of diagnostic products manufactured in the Diagnostic Division’s Barcelona facilities to reduce the amount of packaging materials 50% z OTHER TARGET PROGRESS IN 2020 OBJECTIVE Develop biodiversity protection programs in natural areas around Grifols' • Maintain protection, inventory and training programs and the Wildlife Habitat Area certification in the natural areas of Clayton • Establish collaboration agreements to protect the biodiversity of Grifols’ areas of influence near its Barcelona facilities 100% Promote the use of clean energy and good commuting practices • Install new charging stations for electric vehicles in the Hospital Division facilities in Murcia 0% • Earn Silver or Gold LEED for the new office building in Sant Cugat del Vallès • Earn the Green Globes certification in all new Bioscience Division’s manufacturing buildings in Clayton Promote the sustainable construction of new buildings: LEED or Green Globes certifications 70%

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_17.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I CLIMATE CHANGE: MITIGATION AND ADAPTION I 217 z MANAGING CLIMATE RISKS AND OPPORTUNITIES Grifols recognizes the importance of informing its stakeholders on the company’s climate-change impact and measures to manage associated risks and opportunities. In 2020, Grifols confirmed its management of climate-related risks and opportunities, identified in 2019 following the Task Force on Climate-Related Financial Disclosures (TCFD) guidelines, with a focus on four main areas: governance, risk management, strategy and establishment of objectives and metrics. stakeholders through the continuous improvement of its economic, social, environmental and corporate governance performance. human resources required to meet those objectives. Furthermore, the CIO approves the Grifols Energy Policy and oversees the Global Facilities Department, responsible for approving investments related to energy efficiency projects and the control of energy expenditures, in addition to reducing atmospheric emissions. BOARD OF SUSTAINABILITY DIRECTORS COMMITTEE The Sustainability Committee will establish the core principles and commitments regarding the company’s environmental and social responsibility and oversee the integration of financial and non-financial information related to ESG (environment, social and corporate governance) factors. In this context, Grifols’ Board of Directors has also approved a new Sustainability Policy, aimed at reinforcing these basic principles and commitments and facilitating their integration into Grifols’ business model. Finally, the Risk Committee, which reports to the Board of Directors, is responsible for developing the risk management model and supervising the most relevant risks, including climate-related risks. 1. GOVERNANCE EXECUTIVE COMMITTEE Grifols Board of Directors is responsible for approving the corporate risk policy, corporate responsibility policy and the environmental policy, which include the management of environmental risks associated with regulatory changes and the establishment of commitments to mitigate climate change risk. Furthermore, the Board of Directors has approved this report, which includes objectives and performance indicators related to climate change. The Executive Committee is the committee that routinely monitors Grifols’ performance on its diverse environmental programs, including indicators and action lines related to climate change. It also supervises this report, which outlines Grifols’ performance on climate-change issues. ENVIRONMENTAL COMMITTEE OMMITTEE The Chief Industrial Officer (CIO), in addition to serving on the Executive Committee, is a member of the Environmental Committee. The CIO is responsible for regularly updating the CEOs on the company’s environmental performance. The CIO also approves the Environmental Plan and the economic and Grifols’ Board of Directors continued to reinforce the company’s corporate governance with the creation of a new sustainability committee at the end of 2020. This committee will advance Grifols’ efforts as a responsible and transparent company, committed to its diverse BUSINESS UNITS ENVIRONMENTAL COMMITTEES RISK COMMITTEES RISK C CLIMATE CHANGE: MITIGATION AND ADAPTION

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_18.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I CLIMATE CHANGE: MITIGATION AND ADAPTION  I 218 2. RISK MANAGEMENT Based on its internal risk management procedure and Task Force recommendations, Grifols adapted and prioritized its climate risks and opportunities identification to TCFD rating, taking into account their probability of occurrence and financial impact on previously defined timeframes. – High: > 200 M€ – Medium-high: >20 M€ ≤ 200 M€ – Medium: >10 M€ ≤ 20 M€ – Low: ≤10 M – Likelihood of occurrence, classified as unlikely, likely or very likely None of the risks were determined to have a high or medium-high impact. In terms of physical risks and their corresponding financial impacts, the following were determined as relevant, all with a medium impact (between EUR 10 million and 20 million). – Timeframe: - Short term: 0 ≤ 3 years - Medium term: >3 ≤ 6 years - Long term: > 6 years The financial impact associated with all transitory risks was deemed low, while the impact of specific physical risks and opportunities was determined as medium. As shown in the following table, additional aspects were assessed for risks and opportunities with impacts higher than EUR 10 million: A complete list of climate risks and opportunities, each reflecting their financial impact on the business model, is included in the annex at the end of this chapter. To formulate this table, the first step was categorizing the financial impacts as follows: – Area of financial impact: - OPEX - CAPEX - Acquisition or divestment - Access to capital Impact on financial strategy Relevant climate risk Associated financial impact Probability Timeframe Acute physical risk: Increase in frequency and severity of extreme weather events Increase of costs due to unexpected losses of damaged facilities Likely Long term OPEX and CAPEX Decrease of revenues due to lower production capacity (transportation difficulties or supply chain interruptions) Likely Long term OPEX Chronic physical risk: Changes in weather patterns Increase in operational costs due to variability in available resources, e.g. water scarcity Likely Long term OPEX

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_19.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I CLIMATE CHANGE: MITIGATION AND ADAPTION I 219 In line with its internal risk management procedure, Grifols is currently managing these risks by diversifying its production, establishing contingency and emergency plans, designing facilities to withstand extreme weather events and cutting down on water consumption in production processes. is no historical record of such an occurrence, so its probability is low, although climate-change events could increase its likelihood in the future. These facilities have been specifically designed to resist extreme weather events, so damages would primarily only affect facades and roof replacements. In the North Carolina facilities, emergency and contingency plans have been developed to ensure they can withstand extreme events like hurricanes and in the design stage extreme-weather-resistant materials and structures were selected. The management cost related is nil. Some of Grifols most important production centers are based in Barcelona and Murcia, Spain and the U.S. state of California, all of which have a Mediterranean climate. These plants could be affected by droughts – more likely as a result of climate change – which in turn could affect the availability of groundwater used in the production process. In Barcelona, water used in manufacturing comes from municipal sources and Grifols’ own wells, which could be impacted after a long period without rain. In 2020, Grifols consumed 864,079 m3 of water in Spain, 36% of which came from wells, down from 37.8% in 2019. That said, the municipal network provides more than enough water to meet the plants’ needs and it is unlikely this supply would diminish since Grifols is considered an essential company. Using the same aforementioned method, no high or medium-high impact opportunities were identified. The opportunities deemed as relevant and their associated financial impacts (between EUR 10 million and 20 million) are outlined in the following table: One of Grifols’ most important manufacturing plants is located in North Carolina, an area prone to heavy rains or hurricanes. In Barcelona, Grifols’ packaging facility is located near the Tenes River, a small waterway. While it could potentially be affected by floods, there Impact on financial strategy Relevant climate opportunity Associated financial impact Likelihood Timeframe More efficient production and distribution processes Reduction of operational costs due to lower energy and water expenditures Likely Long term OPEX and CAPEX Circular economy Reduction of operational costs by taking the complete life cycle into consideration Likely Long term OPEX OPEX, CAPEX and Access to capital Access to new markets Increase in revenues due to access to new and/or emerging markets Likely Long term Resilience Increase in market value through resilience and/or adaptive capacity Likely Long term CAPEX To manage these relevant opportunities, Grifols integrated its eco-efficiency and circular economy objectives into its 2020-2022 Environmental Program. It also predicts access to new markets through new diagnostic solutions, to address the possibility of future needs arising from climate change. Lastly, the company manages its resilience or adaptive capacity by continuously promoting innovation and development, including the design of high-efficiency technologies.

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_20.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I CLIMATE CHANGE: MITIGATION AND ADAPTION  I 220 3. STRATEGY As mentioned in the “About Grifols” chapter, business excellence and innovation are two fundamental pillars of Grifols’ corporate strategy. Both rely directly on climate-change objectives outlined in the Environmental Program and are driven by the Corporate Risk and Energy Policies. In this way, climate-related risks and opportunities are already interwoven into Grifols’ strategy and decision-making framework. especially measures when implementing eco-efficiency and strategies to reduce atmospheric Taking into account the worst-case physical scenario provided by Spain’s State Meteorology Agency (RCP 8.5 2046-2065), Grifols has a robust strategy with respect to its current management model. However, this scenario could increase the relevance of risks in the Murcia plant, where the associated financial impact of water scarcity could grow. Grifols is currently managing these risks and specifically designed the plant to enhance its water consumption efficiency. Nonetheless, the company is aware of the need to increase its strategic resilience in this region. the United States. Based on these scenarios, 2040 variables would not be substantially affected in North Carolina or California. As mentioned in previous yearly reports, Grifols is aware that its California plants are located in high-water-stress regions. As a result, it makes concerted efforts to reduce water consumption as part of a robust and resilient long-term strategy emissions. Grifols also takes into account existing and future regulatory requirements, implementing procedures to ensure compliance (EV-SOP-000004 Compliance Obligations), which are subject to bi-annual audits. The Environmental Committee is responsible for carrying out any necessary corrective measures. Climate risks and opportunities affect Grifols’ business, financial strategy and planning, particularly in the areas of operations, products and services. For this reason, climate change is used as an input in operational cost planning and capital allocations, Since the risks determined as relevant are physical, Grifols’ climate strategy also includes the qualitative analysis of future physical scenarios, the most relevant being those related to water stress, both for Spain as well as for the United States. Using the World Resources Institute’s risk-mapping tool, “WRI Aqueduct Water Risk Atlas,” Grifols has also taken into account future physical scenarios in

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_21.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I CLIMATE CHANGE: MITIGATION AND ADAPTION I 221 4. METRICS AND OBJECTIVES Grifols continuously measures and monitors its achievements of the objectives included in its environmental programs, allowing it to mitigate its relevant physical risks and leverage transitional opportunities. These programs include both qualitative and quantitative objectives aimed at reducing atmospheric emissions (currently measured in Grifols is analyzing its areas of improvement with respect to the TCFD recommendations in its four main areas: governance, risk management, strategy, objectives and metrics. In this regard, it will devise an action plan to continue improving its performance and communication initiatives on climate-related issues. Some of these possible actions include: change. The 2020 questionnaire was submitted in July, with Grifols earning an “A-“ rating for its efforts to effectively diminish its impact on climate change. Grifols has various objectives focused on reducing its atmospheric emissions, measuring and managing their impact, risks and opportunities, and developing solid policies and strategies to both minimize its environmental impact while leveraging opportunities. GRIFOLS SETS TARGETS TO REDUCE IT ATMOSPHERIC EMISSIONS AND MANAGES ITS ENVIRONMENTAL-RELATED RISKS AND IMPACTS reduction of tons of CO e) and decreasing water 2 consumption to manage risks associated with water shortages. Within the framework of the European Union objectives, Grifols also commits to using 70% of renewable electric energy by 2030. • Integrating relevant climate-related risks into current decision making and strategy formulation, including planning, assumptions and objectives. The following table summarizes the key performance indicators used to measure Grifols’ performance regarding financial impacts of relevant risks: • Defining specific metrics and objectives in order to measure and manage all relevant climate risks and opportunities. With regard to the link between the remuneration policy and performance indicators, it should be noted that the Energy Manager’s incentives are tied to energy-efficiency improvements in Grifols’ production processes. Finally, it is also worth highlighting that the company is not subject to emission-trading schemes nor an internal carbon price. Every year, Grifols participates in the Carbon Disclosure Project (CDP), which assesses the firm’s corporate strategy and performance related to climate Relevant climate risks Associated financial impact KPIs Increase in costs due to unexpected losses of damaged facilities Reduction of income due to a decrease in production capacity (transportation difficulties or – Annual losses due to damage to the facilities, derived from extreme weather events (€) – Increase in associated costs (€) – Number of extreme weather events that occurred in the areas of operation in the last year. – Production capacity (Liters of plasma in Bioscience, sales in Diagnostic, liters packed in Hospital) – Water consumption (m3) – Water costs (€) per facility – Renewable energy consumption (MWh) – Electricity consumption (MWh) – Electricity costs (€) per facility – Natural gas consumption (MWh) – Natural gas costs per facility – Carbon footprint / atmospheric emissions (tCO e) Acute physical risk: Increase in the frequency and severity of extreme climate events interruptions in the supply chain) Chronic physical risk: Changes in climate patterns Increase in operational costs due to the variability of resources, such as water scarcity 2 These consumption and emission indicators are expressed both in absolute value and relative to production (Liters of plasma in Bioscience, sales in Diagnostic, liters packed in Hospital)

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_22.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I CLIMATE CHANGE: MITIGATION AND ADAPTION  I 222 z EMISSIONS Grifols calculates its carbon footprint to identify greenhouse gas emissions generated by its operations and their impact on climate change. These calculations are based on the Greenhouse Gas Protocol (GHG), the international standard used to measure and report GHG emissions. EMISSIONS ARE CLASSIFIED INTO THREE SCOPES DIRECT EMISSIONS INDIRECT EMISSIONS OTHER INDIRECT EMISSIONS generated by its own activity, mainly through the consumption of natural gas and other fuels and leakage of emissions such as those from refrigerant gases from electricity consumption and other external energy sources business travel, commuting transportation of employees, as well as emissions resulting from waste treatment and recovery TELEWORK CONTRIBUTES TO REDUCING GRIFOLS CO EMISSIONS, WHICH FELL BY 12.9% IN 2020 2 At the end of this chapter, total emissions broken down by Scope according to the GHG methodology are shown 1 2 3

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_23.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I CLIMATE CHANGE: MITIGATION AND ADAPTION I 223 Globally, Grifols’ efforts have led to an 8.1% reduction Refrigerant gas leaks increased by 5.4% compared to the previous year as a result of an increase in manufacturing operations in the Bioscience Division’s U.S. facilities. For this reason, the 2020-2022 Environmental Plan includes specific objectives to replace some of the Bioscience Division’s current refrigerant installations with systems whose refrigerant gas has a lower Global Warming Potential (GWP). in its Scope 1 and 2 CO e emissions compared to 2018. 2 The company aspires to reduce its CO e emissions by 2 32,360 metric tons by 2022 in accordance with the 2020-2022 Environmental Program. In 2020, total emissions amounted to 287,992 tonnes of CO e, a 12.9% decrease over the previous year, 2 stemming primarily from an increase in teleworking and greater use of videoconferencing, and a consequent decline in employee Commuting and fewer business trips. At the same time, changes in other emission factors like electricity and discharges from waste generation also impacted this value. The reduction of the emission factors associated with the generation of electricity in the different geographical areas has resulted in a containment of carbon dioxide emissions. Furthermore, atmospheric emissions of other pollutants such as NOx, CO and SO are generated by 2 the combustion of natural gas in Grifols’ production facilities, as well as by the fuel used in the generators. However, the emissions of these compounds in Grifols production plants are below the limits established by the corresponding environmental authorities. GRIFOLS LAUNCHED A NUMBER OF INITIATIVES TO REDUCE ITS GREENHOUSE GAS EMISSIONS AND IMPROVE ITS ENERGY PERFORMANCE, AS OUTLINED IN ITS 2020-2022 ENVIRONMENTAL PROGRAM • In 2020, generation began in one of the two planned photovoltaic plants in the Hospital Division’s Murcia facilities. The plant has a capacity of 100 kW and is installed on the roof of the silo, located on the compound. The annual 150,000 kWh generated will partially cover the demand from the facilities. • Purchase of 16 million kWh of renewable electricity for Spanish plants and 7 million kWh for the Bioscience Division’s plant in Ireland. • Realization of a viability study to purchase 25 million kWh per year of green energy in Spain through a PPA, expected to launch in the coming months. • Increase in the generation of electrical energy and useful heat produced by the cogeneration plant in the Bioscience Division’s Barcelona facility, boosting operating hours by 20% compared to 2018. • Various energy audits carried out in headquarters, donation centers and analytical labs in the manufacturing facilities of the Bioscience and Bio Supplies Divisions in Germany. • Completion of a study to replace refrigerant gases in the cooling systems of the Bioscience Division facilities in Spain with others that have a lower Global Warming Potential.

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_24.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I CLIMATE CHANGE: MITIGATION AND ADAPTION  I 224 z INITIATIVES TO REDUCE ATMOSPHERIC EMISSIONS LIMITING AIR TRAVEL GRIFOLS OFFSETS CARBON EMISSIONS FROM ITS BUSINESS TRAVEL INCREASE IN WORKING FROM HOME EFFORTS TO MITIGATE TRANSPORT-RELATED ENVIRONMENTAL IMPACTS Grifols is cutting back on air travel to reduce the environmental footprint caused by aircraft emissions. In 2020, the COVID-19 pandemic exceptionally limited airline travel, which dropped by 72%. After the WHO declared a pandemic, the number of videoconferences from corporate offices increased and the use of remote tools increased exponentially, greatly facilitating work from home. In 2019, Grifols signed an agreement with Air France, KLM and Delta Airlines to offset its travel-related carbon footprint. This accord – a groundbreaking initiative for a company in the healthcare sector – is important given the global reach of Grifols’ production, industrial and commercial operations. At the end of 2019, Grifols launched a pilot plan to facilitate working from home whenever feasible, offering employees the option to work remotely. In 2020, the pandemic accelerated its implementation and made it the norm. Daily remote connections have increased by 369% since 2019 and employees engaged in more than 500,000 connections via online systems like Skype or MS Teams. Grifols has carried out various initiatives over the years to reduce the impact of emissions generated from employees commuting to and from work. • At the Diagnostic Division’s facilities in Switzerland, Grifols subsidizes the purchase of public transport passes. • The Diagnostic Division launched the Secure Remote Support project which consists of remotely connecting the systems distributed by the subsidiaries of this division with the Grifols’ technical service to solve customer incidents remotely and avoid the need for displacements. Scheduled to be fully deployed by 2021, this initiative will help to reduce atmospheric emissions generated by various means of transport, especially airline travel in geographically extensive areas. • The Parets del Vallès facility offers its staff a bus service from various locations at different times throughout the day. Despite offsetting 1,500 tons of CO ein • At the Sant Cugat headquarters, in collaboration with other companies, public transport lines were created from Barcelona, although these have been temporarily suspended due to the rise in teleworking. 2 2019 through reforestation projects, this initiative was slowed down in 2020 due to COVID-19 impacts on the airline industry. Grifols intends to reinitiate and expand these programs once the global situation has recovered. In 2020, emission reductions from this initiative fell by 8,768 DRIVING BIODIVERSITY THROUGH GRIFOLS WILDLIFE • The North Carolina complex offers employees a vanpooling service, subsidized by the company. tons of CO e. 2 Details in specific section on Biodiversity included in this chapter. • In recent years, electric car charging stations have been installed at the main manufacturing centers.

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_25.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I SUSTAINABLE RESOURCE MANAGEMENT  I 225 z WATER CYCLE WATER CONSUMPTION Grifols operates in regions prone to water shortages, which is why it applies water-saving measures when designing new facilities and modifies existing facilities to reduce water consumption. Among these measures are the recovery of clean water from manufacturing processes for auxiliary purposes, the use of automated CIP cleaning systems to reduce the amount of water used to clean reactors and equipment, and reducing consumption in water treatment systems through reverse osmosis. Consumption per division is as follows: In 2020, 19.3% of Grifols’ water consumption occurred in water-stressed regions, maintaining similar levels as previous years. Municipal utilities provide 89.9% of the water consumed, while the remaining 10.2% comes from wells located around Grifols’ Barcelona manufacturing facilities. GRIFOLS REDUCED ITS WATER CONSUMPTION BY 4% FOR THE SECOND CONSECUTIVE YEAR • The Bioscience Science, which generates 79% of the group’s revenues, reduced its water consumption by 4% due to lower production levels stemming from the pandemic and the implementation of new reverse osmosis equipment installed in recent years. In 2020, the abbreviated version of the CDP Water Security was presented for the first time. • The Diagnostic Division’s consumption remained stable despite higher sales volumes, reducing its per-unit consumption by 6%. As a result, the company is able to limit its water consumption while expanding its industrial activity. Grifols has established water-saving measures in 75% of its manufacturing centers, which account for more than 95% of its production. • The Hospital Division decreased its per-unit consumption by 21% after consolidating its Murcia manufacturing centers into a single facility. The Barcelona plant installed a more efficient automatic reactor cleaning system (CIP), which saves 1,200 m3 per year in water and reduces the consumption of chemical products like caustic soda. In 2020, total water consumption totaled 3,056,928 m3, a 4% decline compared to 2019, the same variation that occurred between 2019 and 2018. SUSTAINABLE RESOURCE MANAGEMENT

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_26.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I SUSTAINABLE RESOURCE MANAGEMENT  I 226 WASTEWATER / DISCHARGE In water-stressed regions, the distribution of discharges corresponds with water consumption, with no significant variations from previous years. Grifols complies with all legislation and permits applicable to the elimination of wastewater in all of its facilities. Wastewater is pre-treated in its plants and purified in municipal treatment systems. In 2020, 2.4 million m3 of wastewater were discharged into public sewage systems. The most significant discharge parameter in Grifols’ companies is Chemical Oxygen Demand (COD), used to measure the need to oxidize of organic and inorganic materials. In 2020, 2,450 tons of COD were discharged, deriving primarily from the Bioscience Division’s facilities in Barcelona. In addition, 575 tons of suspended solids were discharged. Of the water consumed, 20% is incorporated into the product during the manufacturing process or used in auxiliary processes such as cooling towers, while 80% is discharged systems. In 2020, the Barcelona and Clayton facilities treated 1,032,030 m3 (42.2%) of wastewater in-house with biological systems prior to discharge. Projects are underway to expand in-house treatments in both plants, as outlined in the 2022-2022 Environmental Program. Grifols does not work with genetically modified organisms or products capable of creating persistent organic compounds, so it generates no discharges of this nature. The contribution of nitrogen or phosphorous to wastewater is minor since it stems mainly from biomedical and non-production-related discharges. GRIFOLS TREATS MORE THAN 40% OF ITS WASTEWATER USING A BIOLOGICAL PROCESS SYSTEM

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_27.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I SUSTAINABLE RESOURCE MANAGEMENT  I 227 z ENERGY CONSUMPTION ENERGY CONSUMPTION WORLDWIDE consumption to power auxiliary air-conditioning, air-treatment and lighting installations. The division’s consumption also includes electricity used in Grifols’ plasma centers, which increased in 2020. Electrical consumption of the albumin manufacturing plant in Ireland, whose validation began in 2020, also rose considerably. NATURAL GAS In 2020, Grifols consumed 420.6 million kWh in natural gas, 4% less than in 2019. The Bioscience Division accounts for 88.8% of this total, of which 30% is used at its cogeneration plant in Spain. The division’s 2020 consumption was 113.4 million of kWh in natural gas, similar to 2019. Grifols’ energy consumption comes from several GRIFOLS’ ENERGY CONSUMPTION RELATIVE TO SALES DECREASED BY 3% sources including electricity, natural gas, other fuels and thermal energy (“District heating”). In 2020, overall consumption totaled 824 million kWh. Energy consumption relative to sales was 154.316 kWh/M€, a 3% decrease over 2019. The Diagnostic Division’s electricity consumption increased by 1.5% to 33.2 million kWh, growing at a lower rate than output. In 2020, Grifols’ Murcia manufacturing processes were consolidated in a more energy-efficient plant thus resulting in the Hospital Division consuming 13.1 million kWh, a 27.4% decline relative to production.. The Diagnostic Division increased its consumption of natural gas by 4% in absolute terms, although these levels declined related to sales. The Hospital Division decreased its consumption by 14% compared to 2019 in absolute terms and by 22.8% relative to production. ELECTRICITY In 2020, Grifols consumed a total of 428 million kWh, a 4.7% increase compared to 2019. Consumption relative to sales remained stable, while consumption relative to production increased in the Bioscience and Bio Supplies Division and decreased in the Diagnostic and Hospital Divisions. The Environmental Program outlines several measures to reduce electrical consumption across all Grifols divisions. THE NEW 100 KW PHOTOVOLTAIC PLANT IN MURCIA GENERATES 150,000 KWH PER YEAR FOR SELF-CONSUMPTION, ENABLING THE PLANT TO REDUCE ITS ENERGY DEMAND By region, the United States and Spain – where most of the Bioscience Division’s manufacturing activities are located – accounted for most of Grifols’ natural gas consumption. In terms of consumption by geographic region, 74% was consumed in the United States, where several manufacturing plants and most plasma donation centers are located. The Bioscience Division consumes 86.7% of all the electrical energy consumed by Grifols. When considering the Bioscience Division as a whole, energy consumption increased by 6%, while production decreased by 4.4%. This gap stems from a minimum base usage uncorrelated with production, such as In 2020, 23.2 million kWh of renewable energy was consumed in Spain and Ireland.

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_28.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I SUSTAINABLE RESOURCE MANAGEMENT  I 228 OTHER FUELS COGENERATION Although to a lesser extent, the Bioscience Division also consumes other fuels besides natural gas, including diesel, gasoline and propane for its boilers, emergency generators, equipment and vehicles. The division consumed 6.3 million of kWh in 2020, a 27% increase compared to 2019 due primarily to COVID-19 impacts. The Bioscience Division’s facilities in Barcelona are equipped with a 6.1 MW cogeneration plant. This plant generates electricity which is sold back to the grid and useful heat utilized in Grifols facilities. In 2020, the cogeneration plant produced 41.3 million of kWh of electricity, a 2% increase over the previous year, and 30.5 million of kWh of useful heat. Meanwhile, it led to a primary energy saving (PES) of 16.0% and a More specifically, the Clayton facility had to use diesel instead of natural gas during the gas provider’s maintenance operations and also consumed more propane to process convalescent plasma. decline in CO e emissions of 3,880 tonnes compared 2 to emissions generated by conventional plants. In Germany, some facilities use district heating for heating and water heating. This system entails the production of thermal energy in centralized plants and its distribution to consumers through a network of insulated pipes – usually underground – with a fluid, usually hot water. In 2020, consumption via this system totaled 9.9 million of kWh. THE BARCELONA COGENERATION PLANT GENERATED 2% MORE ELECTRICITY, LEADING TO A 16% SAVINGS IN PRIMARY ENERGY

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_29.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I SUSTAINABLE RESOURCE MANAGEMENT  I 229 z RAW MATERIALS CONSUMPTION Sustainable consumption and production optimizing use of energy and resources. require On the other hand, plasma not suitable for fractionation is managed through authorized incineration plants. In relation to other raw materials, 74% (73% in 2019) of ethanol consumed was recovered in distillation towers and reutilized in Grifols’ facilities. polypropylene packaging, and glass. In 2020, its main raw material was polypropylene used to manufacture bags for intravenous solutions. Total purchased materials amounted to 931 tons in 2020 (799 tons in 2019). Bags for parenteral solutions containing PVC are not manufactured. PLASMA IS THE MAIN RAW MATERIAL USED IN GRIFOLS’ MANUFACTURING FACILITIES Plasma is the main raw material used by the Bioscience Division while ethanol, polyethylene glycol and sorbitol, among other materials, are used during the fractionation and purification processes of different plasma proteins. In the Diagnostic Division, the main raw material is plastic, used to manufacture DG Gel® diagnostic cards, base panels in machines (41,340 units in 2020) and red-blood-cell reagents in diagnostic kits (263,294 liters in 2020). PVC is also used to manufacture storage and collection bags for blood components (505 tons in 2020). In 2020, Grifols fractionated a total of 11 million liters of plasma, a process that entails extracting proteins with therapeutic properties for use in Grifols’ products. During fractionation, plasma undergoes several variations of temperature, pH and alcohol concentration (ethanol) levels. Each adjustment facilitates the precipitation of one of these proteins. Once all of the therapeutic proteins have been extracted from the plasma, the remaining solids are discarded. Although waste-management practices vary depending on the product and region in question, these solids may be discharged in various ways: to controlled landfills for non-hazardous waste, facilities dedicated to the manufacture of substitute solid fuel (for cases when the pulp has a certain calorific value), anaerobic digestion or autoclave management. In 2020, the division reduced its plastic consumption by 0.752 million tons by eliminating the diagnostic cardholders. The division also consumed less plastic by reducing the number of CDs in its diagnostic kits, in particular the BLOODchip product line. Customers can now access this information on the DxNET web platform, a modification that decreased the number of CDs by 1,500 units per year. In the Hospital Division, all materials relate to the production of glucose solutions, saline solutions in

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_30.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I WASTE  I 230 Grifols waste management strategy aims to prevent and reduce waste and encourage recovery whenever possible rather than landfill disposal or incineration. In 2020, the volume of recovered waste amounted to 20,276 metric tons, which represents 41% of total generated waste. The company continues to reinforce its commitment to waste management treatments by promoting anaerobic digestion, energy recovery and recycling, with the aim of increasing its waste recycling by 500 tons more per year. Grifols manufacturing facilities generated 25,334 tonnes of waste, of which 74% was recovered (through recycling, reuse, composting, energy recovery or by-products). On the other hand, other facilities such as donation centers and offices generated 23,644 tonnes of waste, of which 6% was recovered. In the case of plasma donation centers, waste recovery is difficult given their broad geographic distribution, smaller size in comparison to industrial facilities, the characteristics of the biomedical waste generated, and the availability of recycling points in each location. z MEDICATION WASTE MANAGEMENT Most of Grifols’ products are utilized in hospital environments, which apply recycling and waste management criteria specific to each center. Grifols products intended for home use are dispensed in pharmacies by home care companies or hospital suppliers. Each of these entities has its own procedures regarding the safe collection and disposal of self-injectable devices. For cases in which Grifols medications are not marketable, the company employs waste handlers who separate the packaging from the medicines and classify them by material (paper, cardboard, glass, plastics, etc.) for subsequent recycling by companies specialized in each material. The medicine is disposed of through authorized waste handlers. Other methods used by contracted waste handlers are incineration and incineration with energy recovery. Grifols generated a total of 48,978 metric tons of waste in 2020, 7% more than in 2019. The most significant change was in the Bioscience Division due to the increase in polyethylene glycol waste management, and waste from the construction of a new protein purification plant at the North Carolina complex, including concrete, wood, plastic and scrap waste. On the other hand, the management of biomedical and general waste increased due to the expansion in plasma donation centers in the United States. In the rest of the world, waste management grew in Germany and Brazil as a result of significant upturns in production. With regard to electric and electronic equipment Grifols also takes part in various drug waste released in the European market, Grifols oversees their waste management at the end of their useful lives in accordance with current EU legislation. management programs. In Spain, the company participates in SIGRE, an integrated system for the management and recycling of medicines and packaging; and in the U.S., it forms part of the Pharmaceutical Product Stewardship Work Group (PPSWG), an association of major manufacturers of prescription and over-the-counter medicines formed to address household disposal regulations. PPSWG offers members a platform to organize and present science-based data on safe pharmaceutical disposal practices. It also leads industry efforts to raise awareness on proper disposal methods and incorporate new waste-disposal legislation. Drug package inserts indicate the correct waste management practices in accordance with country-specific legislation. Grifols participates in various waste management programs for the handling and recycling of electric and electronic equipment, including ECOASIMELEC in Spain and Recycla in Chile. The Bioscience Division’s production facilities in Clayton maintain their “Zero Waste to Landfill” certification for obtaining a waste recovery rate of more than 98%. GRIFOLS ADVANCES ITS COMMITMENT TO “ZERO WASTE TO LANDFILL” WASTE

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_31.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I TABLES I 231 z ENVIRONMENTAL COSTS z ENVIRONMENTAL INVESTMENTS EXPENSES INVESTMENTS Thousands of euros Thousands of euros 2020 2019 2018 2020 2019 2018 Waste management 14,845.4 14,191.0 11,419.2 Waste management 506.7 130.1 52.6 Water cycle 5,159.1 5,099.5 3,718.2 Water cycle 909.8 630.2 2,084.6 Reducing atmospheric emissions, energy 73.3 94.1 74.2 Reducing atmospheric emissions, energy 1,096.0 515.0 121.5 Others 416.7 489.9 290.3 Others 238.0 601.0 474.0 TOTAL 20,494.5 19,874.5 15,501.9 TOTAL 2,750.6 1,876.3 2,732.7 z EMISSIONS TOTAL EMISSIONS % 2020 Spain U.S. Rest of the world 2019 Spain U.S. Rest of the world Scope 1 111,435 31.0% 63.4% 5.6% 112,564 31.5% 63.4% 5.1% Scope 2 127,596 8.2% 85.9% 5.9% 131,441 12.1% 84.0% 3.8% Scope 3 48,961 21.7% 73.6% 4.6% 86,515 16.1% 77.1% 6.8% TOTAL EMISSIONS BY ORIGIN REFRIGERANT GAS LEAKS T CO e 2020 2019 2018 Absolute value, T 2020 2019 2018 2 Scope 1 111,435 112,564 98,043 HCFC (T) 4.65 1.19 0.34 Natural Gas 76,629 79,833 75,556 HFC (T) 10.15 5.60 5.75 Fugitive Emissions 32,737 31,057 19,975 Others (T) 0.40 0.00 0.01 Other fuel (Gasoline, diesesl and propane) 2,069 1,674 2,512 Scope 2 127,596 131,442 120,493 OTHER EMISSIONS Electricity 125,300 131,442 120,493 Absolute value, T 2020 2019 2018 District heating 2,296 - - NOx (T) 59.96 59.07 66.51 Scope 3 48,961 86,515 77,388 CO (T) 52.64 59.53 58.47 Employee Commuting 28,307 50,211 40,076 SO2 (T) 0.42 0.44 1.44 Business Travel 3,904 11,343 12,535 Waste Management 9,754 17,056 16,112 NOx EMISSIONS INTENSITY Container Transportation 6,995 7,905 8,665 TOTAL 287,992 330,521 295,924 T NOx/million euros 2020 2019 2018 Source emission factors: GHG Protocol. Catalan Office of Climate Change. Environmental Protection Agency (US). Department for Environment. Food & Rural Affairs (UK) Total Grifols 0.01 0.01 0.01 TABLES

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_32.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I TABLES I 232 CO EMISSIONS INTENSITY z SUSTAINABLE RESOURCE MANAGEMENT WATER CYCLE T CO/million euros 2019 2019 2018 Total Grifols 0.01 0.01 0.01 BY DIVISION SO EMISSIONS INTENSITY 2 m 3 2020 2019 2018 T SO2/million euros 2019 2019 2018 Bioscience 2,675,514 2,784,960 2,974,699 Total Grifols 0.00 - - Diagnostic 165,422 167,039 177,106 Hospital 191,193 209,420 168,578 Bio Supplies 19,390 20,819 - CO e EMISSIONS INTENSITY TOTAL 3,051,519 3,182,238 3,320,383 2 Others 5,409 3,222 1,186 T CO2e/million euros 2020 2019 2018 TOTAL 3,056,928 3,185,460 3,321,569 Total Grifols 53.93 64.8 66.6 VALUE RELATIVE TO PRODUCTION m3/Production index 2020 2019 2018 SCOPE 1+2 CO EMISSIONS INTENSITY 2 Bioscience* 0.058 0.058 0.068 T CO2e/million euros 2020 2019 2018 Diagnostic** 213 228 252 Total Grifols 44.76 47.86 48.71 Hospital*** 0.007 0.009 0.007 Bio Supplies ** 87 78 - Production index: * liters of plasma: fractionated+ equivalent ** sales *** liters dosed and filled CO EMISSIONS RELATED TO TRANSPORTATION VALUE RELATIVE TO SALES 2 2020 2019 2018 m3/million euros 2020 2019 2018 CO emissions from transportation* (t CO2) 39,207 69,459 61,276 Bioscience 631 697 846 2 CO emissions from transportation / Sales Diagnostic 213 228 252 7.3 13.62 13.66 2 (T CO2 / million euros) Hospital 1,611 1,558 1,411 Bio Supplies 87 78 - * Emissions from container transport, employee commuting and business travel have been considered. Others 169 141 - TOTAL 573 625 770 METRIC TONS OF CO e 2 Year Scope 1 Scope 1 Scope 2 Scope 2 Scope 1+2 Scope 1+2 Scope 3 Scope 3 Scope 3 Disclosed Estimate Key Disclosed Estimate Key Disclosed Estimate Key upstream downstream undefined 2020 111,435 NA 127,596 NA 239,031 NA 2,170 14,580 32,211 2019 112,564 NA 131,442 NA 244,006 NA 2,259 22,702 61,554 2018 98,043 NA 120,493 NA 218,536 NA 298 21,796 52,611

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_33.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I TABLES I 233 BY COUNTRY SUSPENDED SOLIDS DISCHARGED m3 2020 2019 2018 2020 Spain 864,079 916,778 861,075 Total (T) 575 U.S. 2,107,996 2,215,723 2,434,000 Relative to sales (T/million euros) 0.11 Rest of the world 84,853 52,959 26,494 TOTAL 3,056,928 3,185,460 3,321,569 BY SOURCE AND WATER-STRESSED REGIONS WASTEWATER DISCHARGED BY SOURCE AND STRESS AREAS % of consumption in water-stressed regions* By source 2020 By destination By treatment By region 2020 Total Third-party water Biological systems prior to discharge** % of discharged on water-stressed regions*** Groundwater Total (Public sewer system) No internal treatment* Bioscience 2,675,514 187,582 2,487,932 18.0% Bioscience 2,145,941 1,113,911 1,032,030 14.5% Diagnostic 165,422 165,422 62.0% Water consumption (m3) Diagnostic 137,816 137,816 64.6% Hospital 191,193 120,182 71,011 0.0% Water discharged (m3) Hospital 137,649 137,649 0.0% Bio Supplies 19,390 19,390 0.0% Bio Supplies 19,390 19,390 0.0% Others 5,409 2,785 2,624 0.0% Others 4,709 4,709 0.0% TOTAL 3,056,928 310,549 2,746,379 19.3% TOTAL 2,445,505 1,413,475 1,032,030 16.3% *Areas with high and extremely high risk according to World Resources Institute * Wastewater discharged into the sewer system with subsequent treatment of municipal services ** Internal pretreatment processes *** Areas with high and extremely high risk according to World Resources Institute % of consumption in water-stressed regions* By source 2019 Total Third-party water Groundwater Bioscience 2,784,960 235,534 2,549,426 16.6% 2019 By destination By treatment By region Diagnostic 167,039 167,039 68.8% Water consumption (m3) Biological systems prior to discharge** % of discharged on water-stressed regions*** Total (Public sewer system) No internal treatment* Hospital 209,420 111,125 98,295 0.0% Bio Supplies 20,819 20,819 0.1% Others 3,222 3,222 0.0% Bioscience 1,910,350 900,128 1,010,222 13.5% Water discharged (m3) TOTAL 3,185,460 346,659 2,838,801 18.2% Diagnostic 109,413 109,413 67.6% Hospital 138,174 138,174 0.0% *Areas with high and extremely high risk according to World Resources Institute WASTEWATER Bio Supplies 20,779 20,779 0.1% Others 1,623 1,623 0.0% TOTAL 2,180,339 1,170,117 1,010,222 14.6% COD DISCHARGED * Wastewater discharged into the sewer system with subsequent treatment of municipal services ** Internal pretreatment processes *** Areas with high and extremely high risk according to World Resources Institute 2020 2019 2018 Total (T) 2,450 2,147 2,157 Relative to sales (T/million euros) 0.46 0.42 0.48

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_34.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I TABLES I 234 ELECTRICITY NATURAL GAS BY DIVISION BY DIVISION kWh 2020 2019 2018 kWh 2020 2019 2018 Bioscience 371,404,503 351,397,467 333,293,034 Bioscience 373,530,824 388,359,652 358,704,138 Diagnostic 33,240,848 32,741,087 34,367,035 Diagnostic 25,751,915 24,809,400 26,052,844 Hospital 13,188,914 15,690,577 16,380,793 Hospital 20,629,846 24,019,915 20,886,079 Bio Supplies 10,221,448 9,275,108 - Bio Supplies 716,183 1,028,809 - TOTAL 428,055,713 409,104,239 384,040,862 TOTAL 420,628,768 438,217,776 405,643,061 Others 330,561 226,747 6,716 TOTAL 428,386,274 409,330,986 384,047,578 BY COUNTRY kWh 2020 2019 2018 BY COUNTRY Spain * 172,171,007 176,214,583 158,062,145 U.S. 245,442,818 261,524,254 247,161,414 kWh 2020 2019 2018 Rest of the world 3,014,943 478,939 419,502 Spain 91,596,849 87,807,905 89,577,371 TOTAL 420,628,768 438,217,776 405,643,061 U.S. 316,886,948 304,578,749 281,689,624 * Cogeneration plant natural gas consumption is included in Spain totals. Rest of the world 19,902,477 16,944,332 12,780,583 TOTAL 428,386,274 409,330,986 384,047,578 VALUE RELATIVE TO SALES kWh/million euros 2020 2019 2018 VALUE RELATIVE TO SALES Bioscience 88,045 97,249 102,000 kWh/million euros 2020 2019 2018 Diagnostic 33,190 33,819 37,098 Bioscience 87,544 87,993 94,774 Hospital 173,835 178,666 174,846 Diagnostic 42,842 44,631 48,937 Bio Supplies 3,196 3,860 - Hospital 111,135 116,711 137,131 TOTAL 78,769 85,947 90,410 Bio Supplies 45,613 34,798 - Others 10,333 9,936 - VALUE RELATIVE TO PRODUCTION TOTAL 80,222 80,282 85,596 kWh/Production index 2020 2019 2018 Bioscience* 8.2 8.1 8.2 VALUE RELATIVE TO PRODUCTION Diagnostic** 33,190 33,819 37,098 kWh/Production index 2020 2019 2018 Hospital*** 0.8 1.0 0.8 Bioscience* 8.12 7.34 7.65 Bio Supplies ** 3,196 3,860 - Diagnostic** 42,842 44,630 48,937 Hospital*** 0.49 0.68 0.66 Production index: * liters of plasma: fractionated+ equivalent ** sales *** liters dosed and filled Bio Supplies ** 45,613 34,798 - Production index: * liters of plasma: fractionated+ equivalent ** sales *** liters dosed and filed

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_35.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I TABLES I 235 TOTAL ENERGY CONSUMPTION COGENERATION PLANT COGENERATION FIGURES CONSUMPTION VALUE RELATIVE TO SALES Cogeneration 2020 2019 2018 kWh 2020 2019 2018 Natural gas consumed (kwh) 113,433,940 114,823,979 89,417,050 Bioscience 714,646,381 704,141,701 666,727,048 Total electricity generated (kwh) 41,257,500 40,567,330 32,984,680 Diagnostic 59,045,724 57,550,487 60,419,879 Useful heat recovered (kwh) 30,522,770 30,827,760 25,266,980 Hospital 33,818,760 39,710,492 37,266,872 Global output 70.4% 69.4% 71.6% Bio Supplies 16,214,210 10,303,917 - Primary energy saving (pes) 16.0% 13.9% 17.6% Others 330,561 226,747 6,716 CO2 emissions (t) 20,418 20,898 16,315 TOTAL 824,055,636 811,933,344 764,420,515 CO2 emissions savings (t) 3,880 3,363 3,492 Emissions savings have been calculated following the basis of the European Union Emission Trading Scheme EU ETS. TOTAL ENERGY CONSUMPTION RELATIVE TO SALES CONSUMPTION VALUE RELATIVE TO SALES MAIN MATERIALS kWh/million euros 2020 2019 2018 Bioscience 168,449 176,324 189,589 BIOSCIENCE MAIN MATERIALS CONSUMED Diagnostic 76,100 78,449 86,036 Total Quantity (T) 2020 2019 2018 Hospital 284,970 295,377 311,977 Sorbitol 1,405 1,891 1,994 Bio Supplies 72,356 38,658 - Ethanol 3,071 3,303 2,781 Others 10,332 9,936 299 Polyethylene glycol 1,597 2,088 2,245 TOTAL 154,316 159,244 170,374 Glass packaging 321 292 325 Total 6,394 7,574 7,345 DIAGNOSTIC MAIN MATERIALS CONSUMED Total Quantity (T) 2020 2019 2018 Circuit boards (units) 41,340 39,144 31,991 PP Plastic Cards 269 264.6 248 Glass packaging 33 22.6 20 Plastic packaging 20 18 23 Red cell reagents (liters) 263,294 234,382 274,034 PVC 505 463 573

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_36.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I TABLES I 236 HOSPITAL MAIN MATERIALS CONSUMED GENERATED WASTE BY TYPE AND DISPOSAL METHOD RELATIVE VALUE T/million euros TREATMENT 2020 Total Quantity (T) 2020 2019 2018 PP 931 798 618 Energy recovery and by-products 0.13 Hazardous waste Glucose 276 192 206 Reused 0.02 Sodium chloride 204 246 212 Recycled 0.51 Waste diverted from disposal Glass packaging 1,162 930 800 Energy recovery and by-products 1.01 Non-hazardous waste Total 2,573 2,166 1,836 Reused 0.04 Recycled 1.70 z WASTE Composted 0.38 Incineration (with energy recovery) 0.00 Incineration (without energy recovery) 0.00 Hazardous waste GENERATED WASTE BY TYPE AND DISPOSAL METHOD ABSOLUTE VALUE Landfill disposal 0.00 T TREATMENT 2020 Other disposal treatments 1.28 Waste directed to disposal Energy recovery and by-products 695 Incineration (with energy recovery) 0.00 Hazardous waste Non-hazardous waste Reused 97 Incineration (without energy recovery) 0.01 Recycled 2.745 Landfill disposal 3.76 Waste diverted from disposal Energy recovery and by-products 5.416 Other disposal treatments 0.33 Non-hazardous waste Reused 218 TOTAL 9.17 Recycled 9.080 Composted 2.025 Incineration (with energy recovery) 0 ABSOLUTE VALUE BY DIVISION Incineration (without energy recovery) 0 Hazardous waste T 2020 2019 2018 Landfill disposal 5 Bioscience 44,746 41,906 38,909 Other disposal treatments 6.809 Waste directed to disposal Diagnostic 1,302 833 810 Incineration (with energy recovery) 0 Hospital 1,122 1,219 1,505 Non-hazardous waste Incineration (without energy recovery) 27 Bio Supplies 1,763 1,790 - Landfill disposal 20.076 Others 45 86 0 Other disposal treatments 1.785 Total 48,978 45,834 41,224 TOTAL 48.978 ABSOLUTE VALUE BY COUNTRY T 2020 2019 2018 Spain 5,846 5,888 6,237 U.S. 41,689 38,556 34,148 Rest of the world 1,443 1,390 839 TOTAL 48,978 45,834 41,224

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_37.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I APPENDIX I 237 Climate-Related Risks & Opportunities Potential Financial Impacts Gross Impact Increased operating costs, due to more expensive carbon rights Low Increased pricing of GHG emissions Increased operating costs, due to the increase in energy taxes (fossil fuels) Low Enhanced emissions-reporting obligations Increased operating costs, including higher compliance costs related to reporting obligations Low Increased operating costs, including higher insurance premiums Low Mandates on and regulation of existing products and services Write-offs, asset impairment and early retirement of existing assets due to policy changes Low Depreciation of office buildings due to policy changes Low Exposure to litigation Increased operating costs and/or reduced demand for products and services resulting from fines and judgments Low Substitution of existing products and services with lower emissions options Write-offs and early retirement of existing assets Low Unsuccessful investment in new technologies Write-offs and early retirement of existing assets Low Research and development (R&D) expenditures in new and alternative technologies Low Costs of transitioning to lower emissions technology Costs to adopt/deploy new practices and processes Low Changing customer behavior Reduced demand for goods and services due to shift in consumer preferences Low Abrupt and unexpected shifts in energy costs Low Uncertainty in market signals Changes in revenue mix and sources, resulting in decreased revenues Low Re-pricing of assets (e.g., fossil fuel reserves, land valuations, securities valuations) Low Increased cost of raw materials Increased production costs due to changing input prices (e.g., energy, water) and output requirements Low Shifts in consumer preferences Reduced revenue from decreased demand for goods/services in carbon intensive sectors Low Reduction in capital availability Low Sector Stigmatization Reduced revenue from decreased production capacity (e.g., delayed planning approvals, supply chain interruptions) Low Reduced revenues due to the sustainability performance not aligning with customer expectation Low Increased stakeholder concern or negative stakeholder feedback Reduced revenues due to non-compliance with Grifols own voluntary commitments having a negative effect on clients, employees and other stakeholders Low Reputation Market Technology Transitional Risks Political and legal APPENDIX: COMPLETE LIST OF ANALYZED CLIMATE RISKS AND OPPORTUNITIES

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_38.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I APPENDIX I 238 Climate-Related Risks & Opportunities Potential Financial Impacts Gross Impact Increased insurance claims liability arising from climate-related impacts on assets in "high-risk" locations Low Increased capital costs due to unexpected losses from damage to facilities Medium Increased frequency and severity of extreme weather events such as cyclones and floods Reduced revenue from decreased production capacity (transport difficulties, supply chain interruptions) Medium Higher costs from negative impacts on workforce (health, safety, absenteeism) Low Write-offs and early retirement of existing assets located in "high-risk regions" Low Changes in precipitation patterns and extreme variability in weather patterns Increased operating costs (e.g., higher compliance costs, increased insurance premiums) - Increased operating costs due to resources variability (eg. water) and higher compliance/insurance costs Medium Rising mean temperatures Increased operating costs due to more energy demand, including refrigeration costs Low Increased insurance premiums on assets in “high-risk” locations, especially in the Mediterranean region (higher likelihood of a rise in sea levels) Rising sea levels Low Reduced operating costs through the promotion of more efficient modes of transport in the company’s fleet (Scope 1) Low Use of more efficient modes of transport Reduced operating costs through the promotion of more efficient modes of transport on business trips (Scope 3) Low Use of more efficient production and distribution processes (energy and water). Reduced operating costs by improvements of operational eco-efficiency, especially in terms of consumption and management of energy and water. This impact includes the adoption of Voluntary Standards such as ISO14001 or EMAS Medium Circular economy Reduced operating costs, taking into account the infrastructure life cycle assessment Medium Increased value of fixed assets (highly rated energy efficient buildings) Low Move to more efficient buildings Increased benefits from new services related to energy efficiency in buildings Low Reduced operating costs due to value decrease of utilities bills Low Reduced sensitivity to changes in carbon prices, due to GHG emissions reduction Low Reduced exposure to increases in future fossil fuel prices Low Returns on investment in low-emission technology Low Use of lower-emission energy sources Increased capital availability (e.g., as more investors favor lower-emissions producers) Low Reputational benefits resulting in increased demand for goods/services Low Reduced operational costs (e.g., through the use of lowest cost abatement) Low Use of supportive policy incentives Reduced operational and compliance costs to adapt to new legislative trends and requirements Low Reduced operational costs due to the usage of new and more efficient technologies Low Use of new technologies Increased capital availability (e.g., as more investors favor lower-emissions producers) Low Participation in the carbon market Increased benefits from participation in the carbon market Low Energy Source Opportunities Resource Efficiency Chronic Risks Physical Risks Accute Risks

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_39.jpg 2020 ANNUAL INTEGRATED REPORT ENVIRONMENT AND CLIMATE CHANGE I APPENDIX I 239 Climate-Related Risks & Opportunities Potential Financial Impacts Gross Impact Increased revenue through the demand for lower emissions products and services Low Development and/or expansion of low emission goods and services Better competitive position to reflect shifting consumer preferences, resulting in increased revenues Low Development of climate adaptation Increased revenue through new solutions to adaptation needs (related to the core business) Low Development of new products or services through R&D and innovation Increased revenue through new products for new diseases related to climate change. Low Ability to diversify business activities Increased revenue from alternative energy activities, different to the core business ones Low Shift in consumer preferences Increased revenue through a better competitive position that reflects shifting consumer preferences Low Increased revenues through access to new and emerging markets (e.g., partnerships with governments, development banks) Medium Access to new markets Increased diversification of financial assets (e.g., green bonds and infrastructure) Low Increased share of revenues from the participation and agreements with public-sector initiatives and shareholders Low Participation in renewable energy programs and the adoption of energy efficiency measures Increased market valuation through resilience planning or adaptation capabilities. For example, through R&D in more efficient technologies Medium Resource substitutes/diversification Increased supply chain reliability and the ability to operate under various conditions Low Resilience Markets Products and services

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_40.jpg This annual report reflects Grifols’ commitment to transparency regarding its financial and non-financial performance. These disclosures comply with current legislation, as well as provide an overview of the company’s efforts to promote Sustainable Development Goals. THIS REPORT COMMITMENT TO TRANSPARENCY AND DISCLOSURE REGULATORY FRAMEWORK: GRI, SABS, LAW 11/2018 AND SDGs

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_41.jpg ABOUT THIS REPORT

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_42.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ABOUT THIS REPORT I 242 In its commitment to transparency and efficiency, Grifols has prepared a Consolidated Directors’ Report based on the recommendations contained in the “International Integrated Reporting Framework” of the International Integrated Reporting Council (IIRC) and the “International Integrated Reporting Council (IIRC), the “Guidelines for Preparation of the Listed Company Management Reports” of the Spanish National Securities Market Commission. This Consolidated Director’s Report presents Group’s financial and non-financial information which complies with the provisions of current regulations1. This report has been prepared in accordance with the GRI Standards: Core Option, as detailed in Annex II “GRI Content Index”. In addition, the SASB standards referring to the “Biotechnology and Pharmaceuticals” sector have been included, as can be seen in Annex III “SASB Content Index”. z BASES FOR THE PREPARATION OF THE NON-FINANCIAL INFORMATION STATEMENT In compliance with Law 11/2018, of December 28, regarding non-financial information and diversity, Grifols includes its Non-Financial Information Statement (EINF, for its initials in Spanish) in the Consolidated Director’s Report for the period January 1 to December 31, 2020 as a separate document from the consolidated annual accounts. This report is public and can be consulted on the corporate website www. grifols.com. Grifols performs an annual materiality analysis to identify the most relevant non-financial risks and issues which could impact its stakeholders. As detailed in Annex I “Index of context required by Law 11/2018, of December 28, regarding non-financial information and diversity”, the EINF has been prepared taking into account the standards of the Global Reporting Initiative (GRI). For this, Grifols has defined its content taking into account the inclusion of stakeholders, the context of sustainability and the principles of materiality and completeness. In addition, this report shows Grifols’ commitment in relation to its contribution to the Sustainable Development Goals. Annex IV “Index of Grifols’ contribution to the SDGs” contains the list of the SDGs to which it contributes, as well as a detail of the main contributions made in 2020. This report also includes the Statement of Non-Financial Information (see Annex I “Index of context required by Law 11/2018, of December 28, regarding non-financial information and diversity”) also presents the impact of its business on environmental and social issues, as well as on workforce, on human rights and the fight against corruption and bribery, including any measures that may have been adopted to support the principle of equality and opportunity among men and women, non-discrimination and inclusion of the disabled and universal accessibility. The financial information presented in this report, unless expressly stated to the contrary, was prepared in accordance with the Group’s reporting model and should be read jointly with the 2020 Consolidated Financial Statements, which have been subject to an external audit. Some of the financial indicators and ratios are classified as Alternative Performance Metrics (APMs) in accordance with European Securities Markets Authority (ESMA) guidelines. Annex V, “Non-GAAP Measures Reconciliation”, includes the reconciliation between the adjusted figures and those corresponding to IFRS-EU financial information. (1) Among others, the Spanish Code of Commerce, the Consolidated Text of the Spanish Companies Act and Law 11/2018 (28 December), which amends the Code of Commerce, the Spanish Companies Act and the Audit Act with respect to non-financial and diversity information, and transposes Directive 2014/95/ EU regarding the disclosure of non-financial information into Spanish Law. 102-43, 102-46, 102-49 ABOUT THIS REPORT

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_43.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ABOUT THIS REPORT I 243 z SCOPE OF THIS REPORT z PRINCIPLES This report has been prepared in accordance with the GRI Standards: Core option. z STAKEHOLDERS RELATIONS Deeply aware of the vital role that stakeholders play in its success, Grifols has several communication channels in place in order to ensure an open and fluid dialogue and stay abreast of their needs and expectations. This report serves as yet another platform to offer information to stakeholders in a clear, concise and ethical manner. This report covers the period from January 1 to December 31, 2020, corresponding with Grifols’ fiscal year. In sections with historical data, figures appear from the last three years (2018-2020), classified by Grifols’ four main divisions (Bioscience, Hospital, Diagnostics and Bio Supplies) and regions. • The indicators contained herein were compiled by Grifols. The procedure used to obtain information ensures methodological comparisons. rigor and historical Grifols defined the content of this report using GRI standards: Chapter 9: Environment and Climate Change Stakeholder inclusiveness: Grifols maintains an ongoing dialogue with its stakeholders. The group is able to effectively address their expectations and interests by anticipating their needs. For the purposes of this report, Grifols S.A. and its subsidiaries will be considered “Grifols”. The information reported includes all subsidiaries with a shareholding of more than 51%, meaning all companies in which the Company has control and therefore are fully consolidated. A list of Grifols subsidiaries is available in Appendix I in the 2020 Consolidated Financial Statements. • The data provided by Grifols in this section represents both its production and commercial activity, except for the commercial subsidiaries with less than 10 employees, as well as Plasmavita Healthcare GmbH, Green Cross North America, Inc, Green Cross Biotherapeutics, Inc. and Alkahest, Inc. Grifols uses a variety of communication channels to interact with its stakeholder corporate website. groups, including its Context of sustainability: Grifols aspire to contribute to economic, environmental and social progress on local, regional and global levels. Its 2020 performance is contextualized within its countries of operation. • Since most of Grifols’ manufacturing facilities are based in the U.S. and Spain, the environmental information included in this section is classified by division and region: U.S., Spain and Rest of the World (ROW). Financial information included in this report comes from the Consolidated Financial Statements of the fiscal year ending on December 31, 2020. Materiality: This report features the corporate issues that had the greatest economic, environmental and social impact, as well as those that could significantly shape stakeholder decisions and opinions. The report addresses the entirety of Grifols’ operations, ranging from procurement (including plasma collection) and manufacturing processes to commercial subsidiaries, taking into consideration the following points: Chapter 7: Our People Completeness: The topics highlighted in this report adequately reflect the group’s most significant social, economic and environmental impacts, and allow stakeholders to assess their effectiveness throughout the 2020 fiscal year. • Grifols has included figures from the past two years and classified them by gender (male, female), age and region (North America, Europe and ROW) in all cases where historical figures are available. North America includes the U.S. and Canada, while Europe includes the Czech Republic, France, Germany, Ireland, Italy, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom. • Due to the complexity and global distribution of Grifols’ business operations, the scope of some of the non-financial indicators may differ from the established standard. In cases in which reported indicators have exceptions to the scope, these have been adequately identified. • The calculation of the accident rates includes the most significant facilities, excluding investees dedicated to research initiatives. 102-42, 102-43, 102-46, 102-49

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_44.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ABOUT THIS REPORT I 244 Communication Channels Stakeholders collection centers and the website. Systems) to provide clear and honest information about all of our products. authorizations, validation of production facilities and other authorizations regarding the commercialization of therapeutic treatments, including new drugs, indications. Formal communication channels are used during certification processes, assessments and audits. For daily operations, informal channels are also used. materials) meetings, conference calls and roadshows. Furthermore, Grifols publishes an annual report and quarterly earnings releases, and press releases on the Grifols corporate website and company operates. like quarterly and annual results, organizes regular visits to manufacturing facilities and hosts an annual meeting with journalists (Annual Press Day). related meetings. 102-40, 102-42 Patients, patient organizations Grifols has open lines for on-going communications (email, phone calls). It organizes monthly calls with patient organizations to discuss key updates, topics and events. Plasma donors Grifols provides information to plasma donors through its website, educational videos and other communication channels. Donors can communicate with Grifols through plasma Customers Grifols engages with customers (public and private; wholesalers, distributors, group purchasing organizations (GPOs), blood banks, hospitals and care institutions, National Health Regulatory bodies Grifols uses formal channels when engaging with regulatory bodies such as the FDA, EMA and AEMPS and others, for matters related to clinical trials, plasma donation center Suppliers (non-plasma As appropriate, Grifols discloses material information in compliance with regulations of stock exchanges where the company is listed (CNMV, SEC, NASDAQ, ISE, etc.) and uses the suitable channel for each case. Financial community Grifols communicates with all of its shareholders, investors, analysts and other stakeholders by organizing and attending meetings, including General Shareholders Meetings, work makes them available through distribution lists when necessary. Grifols hosts an annual capital-markets day designed specifically for investors and analysts that features more in-depth management presentations. Grifols maintains a continuously updated intranet site for employees, and has a screen system in their facilities that displays information of general interest for its employees. It also Employees publishes an in-house magazine (Revista GO) and organizes biannual meetings, as well as engaging in informal day-to-day communications with employees. Meetings with the employees’ legal representatives are also regularly held. Local community & NGOsGrifols works collaboratively and in partnership with numerous NGOs through its foundations and directly and supports a range of community initiatives in locations where the MediaGrifols maintains clear and transparent communications with journalists and other media representatives. The company publishes press releases to announce important events Scientific community, Collaboration with research partners and other scientific institutions is essential to the ongoing innovation of Grifols products and processes. Activities with the scientific research partners community include involvement in R+D+i projects, investments and partnerships. Institutional bodies Institutional bodies, trade groups and other professional organizations are engaged in both formal and informal channels to organize forums, congresses and other business-

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_45.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ABOUT THIS REPORT I 245 z MATERIALITY On an annual basis, Grifols conducts a materiality study in order to identify the most relevant matters for its stakeholders, as well as those that have the greatest impact on its business. TOPICS IDENTIFICATION In this first step, material issues from previous years are taken as a reference along with other proposed issues derived from current trends. Next, an analysis of these issues and the subtopics they include is carried out, taking into account their relevance in the following strategic sources and resources: • Selection of topics from the GRI Standards • New issues in the information sources consulted • The sectoral materiality of the Sustainability Accounting Standards Board (SASB) for the “Biotechnology and Pharmaceuticals” and “Medical Equipment and Supplies” industries Based on this analysis, the following is determined: new topics that must be added to the materiality matrix, new topics that must be modified, new subtopics to be included, and topics that must be eliminated because they do not seem relevant in the current study. The final list of topics is shown below, indicating the area to which they belong: economic area (blue), social area (red) and environmental area (green). This study allows the company to know the importance of matters related to the business strategy, identify the expectations and needs of the interested parties and specify the planning for accountability. It combines the internal vision of the different businesses and the external vision of the stakeholders, applying the “Reporting Principles for defining report content” of Global Reporting Initiative (GRI) in accordance to the GRI 101: Foundation Standard. • Topics highlighted as relevant by SAM Corporate Sustainability Assessment (CSA) for the pharmaceutical sector • Matters highlighted asrelevant Corporate Sustainability Assessment by SAM (CSA) in the “Biotechnology”, “Health Care Equipment & Supplies” and “Pharmaceuticals” sectors • Topics identified as relevant to the pharmaceutical sector in the GRI Sustainability Topics for Sectors document titled “What Do Stakeholders Want to Know” • Latest Global Risk Report published by the World Economic Forum 102-43, 102-44, 102-46 THE METHODOLOGY INCLUDES THE FOLLOWING PHASES Topics identification> Internal prioritization> External prioritization> Validation > Content definition

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_46.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ABOUT THIS REPORT I 246 Very relevant issues ISSUES Linked SASB Standards Very relevant issues ISSUES Linked SASB Standards 102-44, 102-46, 102-47 Commitment to the patient Education and Awareness about treatments HC-BP-210a.1 Support to patient organizations Public and private partnerships to improve access to treatments HC-BP-240a.1. Accessibility Business strategy and value creation Economic results and value creation Investments and acquisitions Fiscal strategy; Global expansion Health, safety and occupational well-being Health and safety performance Risk prevention measures; Wellness Promotion Programs Training and awareness Data Protection & Cybersecurity Data privacy in donors, patients, staff, health professionals, suppliers and customers Cybersecurity Climate strategy Carbon footprint measurement Strategy to reduce greenhouse gas emissions Risk management and climate opportunities, including water stress Use of renewable energy Eco-efficiency and Circular Economy Environmental policies and programs Efficient use of resources: water, materials and energy Strategy to prevent and minimize waste Hazardous waste and wastewater management Commitment to the community Social contribution and philanthropy Commitment to local communities Foundations; Scholarships, sponsorships and distinctions in technological research Diversity and inclusion Equal opportunities; gender gap, conciliation and disability Diversity: promotion and awareness Anti-discrimination policies; Formal Complaint Mechanisms Innovation Strategy and investments in I+D Intellectual property Product innovation; Research projects; Digitization Contribution to global health and the fight against future challenges Safety and quality in the supply chain Product quality and safety to meet customer expectations Quality management in the supply chain Safety standards Traceability HC-BP 260a.1 Product recall management HC-BP 250a.3 Plasma and plasma donors Donor Commitment Ethical standards in plasma donation Donor Eligibility Plasma donation Commitment to donor communities Business ethics Codes and policies in ethicsHC-BP-510a.2 Anti-corruption, bribery and money laundering Complaint channels; Responsible marketingHC-BP-270a.2 Bioethics: Ethical research practices in the process of developing medicines and therapies Attraction and retention of talent RecruitmentHC-BP-330a.1 Formation and development; Performance review; Compensation & Benefits Transparency Reporting Practices Transparency in value transfers Transparency in clinical trials Risks and compliance Normative compliance Risk management, including the violation of human rights

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_47.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ABOUT THIS REPORT I 247 INTERNAL PRIORITIZATION EXTERNAL PRIORITIZATION The objective of this step is to assess the importance that Grifols gives internally to the topics identified above and to determine its priority ones. To carry out the external prioritization of the topics, an analysis of the following sources and resources is carried out: To carry out this prioritization, face-to-face interviews are held with the Directors and those responsible for the areas related to these matters. Among them: Human Resources, Health and Safety, Quality, Innovation, Environment, Public Affairs and Patient Relationship. Likewise, relevance given by the Grifols Strategic Plan and 20-F to each of these topics is analyzed. • Trends defined by Forbes in “Trends that Will Shake the World,” the World Economic Forum’s “World Risks Landscape” and the changing regulatory environment • Press analysis in the last year • Benchmarking of the main competitors Finally, the scores attributed by the analyzed sources for each identified topic are consolidated taking into account the weight attributed. The results are normalized, shown on the X-axis of the materiality matrix below. • Dow Jones Sustainability Index evaluation criteria in the “Biotechnology” sector Finally, the scores attributed by the analyzed sources for each identified topic are consolidated taking into account the weight attributed. The results are normalized, shown on the Y-axis of the materiality matrix below. SIGNIFICANCE TO BUSINESS l Very relevant l Relevant l Less relevant VALIDATION CONTENT DEFINITION The resulting matrix is validated by Grifols’ The “GRI Content Index” section of this report shows the GRI Standards associated to each issue, its coverage according to the Disclosure 103-1 from the GRI Standard GRI 103 and the location of the response for each of them. Finally, in 2020 it is necessary to highlight: • The extension of the response to the SASB Standards of the Biotechnology and Pharmaceutical sector as detailed in Annex III “SASB Content Index”. Sustainability responsible team, verifying the consistency of the evaluations given in the previous phases. • The introduction of extra information content related to the management of Covid-19 in the main chapters of the Consolidated Director’s Report. 102-44, 102-46, 102-47 IMPACT ON STAKEHOLDERS Transparency Innovation Supply chain Quality & Safety Plasma and plasma donors Business ethics Talent atraction and retention Climate Strategy Ecoefficiency and circular economy Diversity & inclusion Risk & Compliance Commitment with patient Business strategy and value creation Employee safety health and well-being Data protection & Cibersegurity Community engagement and socal contribution

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_48.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ABOUT THIS REPORT I 248 z INDEPENDENT REVIEW REPORT KPMG Asesores, S.L. Plaça d’Europa, 41-43 08908 L’Hospitalet de Llobregat Barcelona Independent Assurance Report on the Consolidated Directors’ Report of Grifols, S.A. and subsidiaries for the year 2020 (Free translation from the original in Spanish. In case of discrepancy, the Spanish language version prevails.) To the shareholders of Grifols, S.A.: We have been engaged by Grifols, S.A. management to perform a limited assurance review of the accompanying Consolidated Directors’ Report for the year ended 31 December 2019 of Grifols, S.A. (hereinafter, the Parent) and subsidiaries (hereinafter, the Group), prepared in accordance with the Sustainability Reporting Standards of the Global Reporting Initiative (GRI Standards) in its core option and with the Sustainability Accounting Standards Board (SASB) Standards for Biotechnology & Pharmaceuticals sector (hereinafter, the Report). In addition, pursuant to article 49 of the Spanish Code of Commerce, we have performed a limited assurance review to verify that the Consolidated Non-Financial Information Statement (hereinafter NFIS) for the year ended 31 December 2020 of the Group, included in the Report, has been prepared in accordance with the contents required by prevailing mercantile legislation. The Report includes additional information to that required by GRI standards in its core option and prevailing mercantile legislation governing non-financial information that has not been the subject of our assurance engagement. In this regard, our work was limited only to providing assurance on the information contained in the “GRI Content Index”, in the “Appendix I. Table of contents pursuant to Act 11/18 of 28 December on non-financial information and diversity” and in the “SASB Content Index” of the accompanying Report. Directors’ and Management responsibilities The Board of Directors of the Parent is responsible for the contents and the authorization for issue of the Report, that includes the NFIS. The NFIS has been prepared in accordance with the contents required by prevailing mercantile legislation and GRI Standards, in accordance with each subject area in the “Appendix I. Table of contents pursuant to Act 11/18 of 28 December on non-financial information and diversity” of the aforementioned Report. Management of the Parent is responsible for the preparation of the Report in accordance with the GRI Standards in its core option and with the SASB Standards for Biotechnology & Pharmaceuticals sector, in accordance with each subject area in the “GRI Content Index” and in the “SASB Content Index”, respectively, of the aforementioned Report. These responsibilities also encompasses the design, implementation and maintenance of internal control deemed necessary to ensure that the Report is free from material misstatement, whether due to fraud or error. KPMG Asesores S.L., a limited liability Spanish company and a member firm of the Reg. Mer Madrid, T. 14.972, F. 53, Sec. 8 , H. M -249.480, Inscrip. 1.ª KPMG global organization of independent member firms affiliated with KPMGN.I.F. B-82498650 International Limited, a private English company limited by guarantee. Plaça d’Europa, 41-43 - 08908 L’Hospitalet de Llobregat – Barcelona

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_49.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ABOUT THIS REPORT I 249 respectively, of the aforementioned Report. legislation and with the GRI Standards in accordance with each subject area in the “Appendix I. prepared for Grifols, S.A. in relation to its Consolidated Directors’ Report and for no other purpose or established in prevailing mercantile legislation in Spain, and thus may not be suitable for other 3 - Review of the information relating to the risks, policies and management approaches applied in relation to the material aspects presented in the Report for 2020. - Corroboration, through sample testing, of the information relative to the content of the Report for 2020 and whether it has been adequately compiled based on data provided by information sources. - Procurement of a representation letter from the Directors and management. Conclusion Based on the assurance procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe that: a.) The Consolidated Directors’ Report of Grifols, S.A and subsidiaries for the year ended 31 December 2020, has not been prepared, in all material respects, in accordance with the GRI Standards in its core option and with the SASB Standards for Biotechnology & Pharmaceuticals sector, as described in point 102-54 of the “GRI content index” and in “SASB Content index”, b.) The NFIS of Grifols, S.A. and subsidiaries for the year ended 31 December 2020 has not been prepared, in all material respects, in accordance with the contents included in prevailing mercantile Table of contents pursuant to Act 11/18 of 28 December on non-financial information and diversity” of the Report. Use and distribution In accordance with the terms of our engagement, this Independent Assurance Report has been in any other context. In relation to the Consolidated NFIS, this report has been prepared in response to the requirement purposes and jurisdictions. KPMG Asesores, S.L. (Signed on original in Spanish) Patricia Reverter Guillot 25 February 2021 2 The Board of Directors of the Parent is also responsible for defining, implementing, adapting and maintaining the management systems from which the information necessary for preparing the Report was obtained. Our Independence and quality control We have complied with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including international independence standards) issued by the Internal Ethics Standards Board for Accountants (IESBA), which is based on the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our firm applies International Standard on Quality Control 1 (ISQC1) and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. The engagement team was comprised of professionals specialised in reviews of non-financial information and, specifically, in information on economic, social and environmental performance. Our responsibility Our responsibility is to express our conclusions in an independent limited assurance report based on the work performed. We conducted our review engagement in accordance with International Standard on Assurance Engagements, “Assurance Engagements other than Audits or Reviews of Historical Financial Information” (ISAE 3000 (Revised), issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC), and with the Performance Guide on assurance engagements on the Non-Financial Information Statement issued by the Spanish Institute of Registered Auditors (ICJCE). The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement, and consequently, the level of assurance provided is also lower. Our work consisted of making inquiries of management, as well as of the different units of the Group that participated in the preparation of the Report, in the review of the processes for compiling and validating the information presented in the Report and in the application of certain analytical procedures and sample review testing described below: - Meetings with the Group personnel to gain an understanding of the business model, policies and management approaches applied, the principal risks related to these questions and to obtain the information necessary for the external review. - Analysis of the scope, relevance and completeness of the content of the Report based on the materiality analysis performed by the Group and described in the section “About this report” considering the content required by prevailing mercantile legislation. - Analysis of the processes for compiling and validating the data presented in the Report for 2020.

 

 

 

 

7998-1-mm-07_part 4 of 5 2020 consolidated directors' report_part5_page_50.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX I I 250 z ANNEX I: “INDEX OF CONTENTS REQUIRED BY LAW 11/2018, OF DECEMBER 28, REGARDING NON-FINANCIAL INFORMATION AND DIVERSITY” The selected GRI Disclosures below refer to those published in 2016, except those that have undergone updates and in which case the year of publication is indicated. Reporting criteria: GRI (2016 version except indicated) Information requested by the Law 11/2018 Materiality Page number(s) GRI 102-2 GRI 102-7 A brief description of the business model that includes its business environment, its organization and structure Material 18-20, 24-25 GRI 102-3 GRI 102-4 GRI 102-6 Markets in which it operates Material 30-31 Objectives and strategies of the organization Material 32-33 GRI 102-14 Main factors and trends that can affect its future evolution Material 54-55 GRI 102-14 Reporting framework used Material 242 GRI 102-54 GRI 102-46 GRI 102-47 Principle of materiality Material 245-247 Management approach: description and results of the policies related to these issues, as well as the main risks related to those issues related to the group’s activities. GRI 102-15 GRI 103-2 Material 206 Detailed information on the actual and predictable effects of the company’s activities on the environment and, when applicable, health and safety. Material 208 GRI 102-15 Environmental assessment or certification procedures Material 209 GRI 103-2 Resources dedicated to the prevention of environmental risks Material 210-211, 231 GRI 103-2 Application of the precautionary principle Material 208 GRI 102-11 Amount of provisions and guarantees for environmental risks Material 209 GRI 103-2 Measures to prevent, reduce or repair emissions that seriously affect the environment; considering any form of activity-specific air pollution, including noise and light pollution GRI 103-2 GRI 305-7 Material 224 Contamination Detailed general information Environmental Issues General information

 

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_01.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX I I 251 Reporting criteria: GRI (2016 version except indicated) Information requested by the Law 11/2018 Materiality Page number(s) GRI 103-2 GRI 306-3 (2020) GRI 306-4 (2020) GRI 306-5 (2020) Prevention, recycling, reutilization and other recovery and waste disposal measures. Material 207, 210, 213, 216, 230 Actions to fight food waste Not material 246 No aplica Water consumption and supply in accordance with the local limitations Material 225, 232-233 GRI 303-5 (2018) Consumption of raw materials and measures taken to improve the efficiency of their use Material 207, 213, 229, 235-236 GRI 301-1 GRI 302-1 GRI 302-3 Direct and indirect energy consumption Material 212, 227-228, 234-235 GRI 103-2 GRI 302-4 Measures taken to improve energy efficiency Material 212 Use of renewable energy Material 212, 223, 227-228, 235 GRI 302-1 GRI 305-1 GRI 305-2 GRI 305-3 GRI 305-4 Greenhouse gas emissions generated as a result of the company’s activities, including the use of the goods and services it produces Material 222-224, 231-232 GRI 103-2 GRI 201-2 Measures taken to adapt to the consequences of climate change Material 224 Voluntary measures for medium and long-term reduction goals to reduce greenhouse gas emissions and the means implemented for this purpose Material 212, 214 GRI 103-2 Measures taken to preserve or restore biodiversity Material 196, 213, 216, 224 GRI 103-2 Impacts caused by activities or operations in protected areas Material 213 GRI 304-2 Management approach: description and results of the policies related to these matters as well as the main risks related to those issues linked to the group’s activities. GRI 102-15 GRI 103-2 Material 142-143 GRI 102-8 GRI 405-1 Total number and distribution of employees by country, gender, age and professional category Material 63, 146, 148, 165-166 Total number and distribution of employment contract modalities and annual average of indefinite contracts, temporary contracts and part-time contracts by gender, age and professional category Material 146, 165-166 GRI 102-8 Employment Social and Personnel matters Biodiversity Protection Climate Change Sustainable Use of Resources Circular Economy and Waste Prevention and Management

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_02.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX I I 252 Reporting criteria: GRI (2016 version except indicated) Information requested by the Law 11/2018 Materiality Page number(s) GRI 103-2 GRI 401-1 Number of dismissals by gender, age and professional classification Material 167 GRI 103-2 GRI 405-2 Average remuneration and its evolution disaggregated by sex, age and professional classification or equal value Material 170-171 GRI 103-2 GRI 405-2 Gender gap, the remuneration of equal or average company jobs Material 157-158, 169 Average remuneration of directors and executives, including variable remuneration, allowances, allowances, payment to long-term savings forecasting systems and any other perception disaggregated by sex GRI 103-2 GRI 405-2 Material 169 Implementation of policies work disconnection Material 164 GRI 103-2 Number of employees with disabilities Material 150 GRI 405-1 b Organization of working time Material 142, 164 GRI 103-2 Number of hours of absenteeism Material 168 GRI 103-2 GRI 103-2 GRI 401-3 Measures aimed at facilitating the enjoyment of conciliation and promoting the co-responsible exercise of these by both parents Material 164 GRI 103-2 GRI 403-1 (2018) GRI 403-2 a (2018) GRI 403-3 (2018) GRI 403-7 (2018) Health and safety conditions at work Material 161-163 GRI 403-9 a, d, e (2018) GRI 403-10 a (2018) Occupational accidents, their frequency and severity, as well as occupational diseases; disaggregated by gender Material 171 Organization of social dialogue including procedures for informing and consulting staff and negotiating with them Material 159 GRI 103-2 Percentage of employees covered by collective agreement by country Material 160 GRI 102-41 Balance of collective agreements, particularly in the field of health and safety at work Material 160 GRI 403-4 (2018) GRI 103-2 GRI 404-2 Policies implemented in the field of training Material 151-156 Total number of training hours by professional category Material 153, 168 GRI 404-1 Training Social Relationships Health and Safety Organization of Work

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_03.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX I I 253 Reporting criteria: GRI (2016 version except indicated) Information requested by the Law 11/2018 Materiality Page number(s) Integration and universal accessibility of people with disabilities Material 150 GRI 103-2 Measures taken to promote equal treatment and opportunities for women and men Material 147,149 GRI 103-2 Equality plans, measures taken to promote employment, protocols against sexual and gender harassment Material 149-150 GRI 103-2 Policy against all types of discrimination and, when applicable, diversity management Material 147, 150 GRI 103-2 Management approach: description and results of the policies related to these matters as well as the main risks related to those issues linked to the group’s activities. GRI 102-15 GRI 103-2 Material 69, 134 Application of due diligence procedures in the field of human rights and prevention of risks of violation of human rights and, where appropriate, measures to mitigate, manage and repair possible abuses committed GRI 102-16 GRI 102-17 Material 69 69 - The Global Compact considers discrimination as a violation of human rights. Grifols’ Code of Conduct includes a commitment to maintain a work environment free of discrimination and harassment based on race, religion, nationality, gender, disability, sexual orientation, age, or for any other reason. Alle-gations of discrimination received through the Grifols Ethics Helpline have been investigated and, where appropriate, corrective action has been taken. GRI 103-2 GRI 406-1 Complaints for cases of human rights violation Material Measures implemented to promote and comply with the provisions of the ILO fundamental conventions related to respect for freedom of association and the right to collective bargaining; the elimination of discrimination in employment and occupation; the elimination of forced or compulsory labor; the effec-tive abolition of child labor Material 69 GRI 103-2 Aplicación de procedimientos de diligencia debida Respect for human rights Equality Universal accessibility

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_04.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX I I 254 Reporting criteria: GRI (2016 version except indicated) Information requested by the Law 11/2018 Materiality Page number(s) Management approach: description and results of the policies related to these matters as well as the main risks related to those issues linked to the group’s activities. GRI 102-15 GRI 103-2 Material 58, 60 GRI 103-2 GRI 102-16 GRI 102-17 GRI 205-3 Measures taken to prevent corruption and bribery Material 70-73 GRI 103-2 GRI 102-16 GRI 102-17 Measures to fight money laundering Material 70 Contributions to foundations an NGOs Material 203 GRI 102-13 Management approach: description and results of the policies related to these matters as well as the main risks related to those issues linked to the group’s activities. GRI 102-15 GRI 103-2 Material 18-23, 174-175 The impact of the company’s activity on employment and local development Material 26-27, 178, 190, 202 GRI 103-2 28-29, 174, 178, 186, 192, 198-201 The impact of society’s activity on local populations and in the territory Material GRI 103-2 The relations maintained with the actors of the local communities and the modalities of the dialogue with these Material 180,181, 187-188 GRI 102-43 174, 179, 181-182,189, 193-194, 197 Partnership or sponsorship actions Material GRI 103-2 Inclusion in the purchasing policy of social, gender equality and environmental issues Material 84-85 GRI 103-2 Consideration in the relations with suppliers and subcontractors of their social and environmental responsibility Material 84-85 GRI 102-9 Supervision and audit systems and their results Material 85 GRI 102-9 GRI 103-2 GRI 416-1 Measures for the health and safety of consumers Material 77, 82-85 GRI 103-2 GRI 418-1 Complaint systems, complaints received and resolution thereof Material 88 Profit obtained country by country Material 52 GRI 103-2 Taxes earned on benefits paid (per country) Material 52 GRI 103-2 Public grants received (per country) Material 52 GRI 201-4 Tax information Consumers Subcontracting and suppliers Commitment of the company to sustainable development Information about society Fight against corruption and bribery

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_05.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX II I 255 z ANNEX II: GRI CONTENT INDEX For the Materiality Disclosures Service, GRI Services reviewed that the GRI content index is clearly presented and the references for Disclosures 102-40 to 102-49 align with appropriate sections in the body of the report. The service was performed on the English version of the report. GRI 101: Foundation 2016 08174 Sant Cugat del Vallés investor-relations/annual-corporate-governance-report General Disclosures GRI 102: General Disclosures 2016 Organizational Profile 102-1Name of the organizationGrifols S.A. 102-2Activities, brands, products and services24 102-3Location of headquartersAvinguda de la Generalitat, 152-158 102-4Location of operations30-31 102-5Ownership and legal formDetails available in the Annual Corporate Governance Report https://www.grifols.com/en/web/international/ 102-6Markets served24, 30-31 102-7Scale of the organization10-11, 37 102-8Information on employees and other workers146, 165 102-9Supply chain83-84, 90-91, 94-96 102-10Significant changes to the organization and its supply chain 83-84 102-11Precautionary principle or approach 206 102-12External initiativesGrifols has not adopted any externally-developed economic, environmental or social projects or principles 102-13Membership of associations203 Strategy 102-14Statement from senior decision-maker5-7 Ethics and Integrity 102-16Values, principles, standards and norms of behavior18, 60 Governance 102-18Governance structure58, 61-62, 68 GRI StandardDisclosurePage Number (s), URL and/or direct answer Identified omission(s)

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_06.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX II I 256 GRI StandardDisclosurePage Number (s), URL and/or direct answer Identified omission(s) GRI 102: General Disclosures 2016 Stakeholder Engagement 102-40 List of stakeholder groups244 102-41 Collective bargaining agreements 160 102-42 Identifying and selecting stakeholders243-244 102-43 Approach to stakeholder engagement242-243, 245 102-44 Key topics and concerns raised245-247 Reporting practice 102-45 A list of Grifols subsidiaries is disclosed in the Annex I of the Consolidated Entities included in the consolidated financial statementsFinancial Statements on the following link: https://www.grifols.com/en/annual-accounts 102-46 Defining report content and topic boundaries242-243, 245-247 102-47 List of material topics246-247 102-48 Restatements of information165, 168 Information included with a different organizational or time scope to the one used in 2019, has been explained and disclosed. 102-49 Changes in reporting242-243 102-50Reporting period242 102-51Date of most recent report2019 Integrated Annual Report was published on February 2020. 102-52Reporting cycleAnnual Contact point for questions regarding the reportGRIFOLS S.A. - Investor Relations Avinguda de la Generalitat, 152 Parc empresarial Can Sant Joan 08174 Sant Cugat del Vallès, Barcelona - España 102-53 Contact information: Tel. (+34) 935 710 221 Fax: (+34)34 935 712 201 inversores@grifols.com Claims of reporting in accordance with the GRI Standards242 102-54This report has been prepared in accordance with the GRI Standards: Core option 102-55GRI content index255-263 102-56External assurance248-249

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_07.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX II I 257 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact relations. 416-1 service categories 97 safety impacts of products and services 85 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 205-2 taken in the collection of information and procedures GRI StandardDisclosurePage Number (s), URL and/or direct answer Identified omission(s) Material topics Innovation GRI 103: Management Approach 2016 246 103-2The management approach and its components100, 102-109, 118-121 103-3Evaluation of the management approach 101, 110-117, 122-123 Safety and Quality in the Supply Chain (GRI 416: Customer Health and Safety 2016) GRI 103: Management Approach 2016 246 103-1Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization is linked to the impact through its business 103-2The management approach and its components82-89 103-3Evaluation of the management approach 97 GRI 416: Customer Health and Safety 2016 Assessment of the health and safety impacts of product and 416-2Incidents of non-compliance concerning the health and Plasma and plasma donnors GRI 103: Management Approach 2016 246 103-2The management approach and its components127-134, 136-138 103-3Evaluation of the management approach 132, 134-136, 138-139 Business Ethics (GRI 205: Anti-corruption 2016, GRI 206: Anti-competitive Behavior 2016) GRI 103: Management Approach 2016 246 103-2The management approach and its components18-19, 60, 69-73 103-3Evaluation of the management approach 18, 72-73 GRI 205: Anti-corruption 2016 205-1Operations assessed for risks related to corruption71 Training breakdown by category is not available for publication in this Communication and training about anti-corruption policiesreport. Specific measures are being and the process to treat the data to be able to give this detail in the next 72-73five years 205-3Confirmed incidents of corruption and actions taken71-72

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_08.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX II I 258 monopoly practices 70 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact >50: 629 employees, rate 14% people (268 women and 131 men) have returned to work after the end of parental leave, which represents GRI StandardDisclosurePage Number (s), URL and/or direct answer Identified omission(s) GRI 206: Anti-competitive Behavior 2016 206-1Legal actions for anti-competitive behavior, anti-trust and Attraction and retention of talent (GRI 401: Employment 2016, GRI 402: Labor/Management Relations 2016, GRI 404: Training and education 2016) GRI 103: Management Approach 2016 246 103-2The management approach and its components142-143, 151-156 103-3Evaluation of the management approach 144-145, 153 GRI 401: Employment 2016 New employee hires and employee turnover167 New hires by region: United States: 5,684 employees, rate 34% Europe: 1,033 employees, rate 16% Rest of the world: 45 employees, rate 7% New hires by age group: <30: 4,011 employees, rate 58% 30-50: 2,354 employees, rate 19% 401-1>50: 397 employees, rate 9% Total number of departures and turnover rate by region: United States: 6,930 employees, rate 42% Europe: 711 employees, rate 11% Rest of the world: 47 employees, rate 7% Total number of departures and turnover rate by age group: <30: 4,081 employees, rate 59% 30-50: 2,978 employees, rate 24% Benefits provided to full-time employees that are not provi-All employees at the main locations, except from the U.S., receive the same benefits and employment benefits ded to temporary or part-time employeesaccording to their category, regardless of the type of contract (full-time or part-time). In the U.S., all full-time employees who work an average of 30 hours or more per week, as well as their spouse and children, are covered by various insurance policies (life insurance, group accident insurance, short-term and long-term 401-2disability insurance, and occupational travel accident insurance). They also have access to a Health Reimbur-sement Account (for EHP members only), participate in the Employee Assistance Program, LiveWell Wellness Incentive Program, 401k Match, training reimbursement, PTO Pay, Holiday Pay, and adoption assistance. Part-time workers receive the 401k, work travel accident insurance, and participate in the Employee Assistan-ce Program. Parental leave100% of Grifols employees are entitled to maternity/paternity leave where provided for by state, federal, regional or local laws; in 2020, 326 women and 145 men between Spain, the United States and the Rest 401-3of the World (considering Ireland and Germany) have taken parental leave. During the reporting period 399 a return to work rate of 96% (95% in women and 99% in men). Of the total number of people who returned to work after finishing parental leave in 2019, 71% (65% women and 84% men) are still with the company.

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_09.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX II I 259 Senior 42.82h; Professionals 46.33h; Administrative/ Production operators 127.36h. assistance programs 154-156 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 207-3 related to tax 51, 53 GRI StandardDisclosurePage Number (s), URL and/or direct answer Identified omission(s) GRI 402: Labor/ Management Relations 2016 Minimum notice periods regarding operational changesSignificant operational changes in the organization that may substantially affect employees are notified 402-1with the minimum notice required in compliance with applicable legislation and collective bargaining agreements. GRI 404: Training and Education 2016 Average hours of training per year per employee 168 Average training hours per employee by professional category: 404-1Executives 17.38h; Directors 27.65h; Senior management 44.12h; Management 37.43h; Professional Average training hours per employee are based on the accumulated average number of employees (FTE average). 404-2Programs for upgrading employee skills and transition Percentage of employees receiving regular performance and In 2020, 90.5% of all subject employees have participated in a regular performance and professional career development reviewsdevelopment evaluation. Males: 89.1%. Women: 91.6% By professional category: 404-3Executives: 73.8%. Directors: 93.3% Senior Management: 94.0% Management: 94.6% Senior Professional: 95.9% Professional: 92.2% Administratives/Manufactiring operators: 89.0% Transparency (GRI 207: Tax 2019) GRI 103: Management Approach 2016 246 103-2The management approach and its components51-53, 74-76 103-3Evaluation of the management approach 52, 75-76 GRI 207: Tax 2019 207-1Approach to tax51-53 207-2Tax governance, control, and risk management51, 53 Stakeholder engagement and management of concerns Country-by-country information is 207-4Country-by-country reportingnot available for publication in this 52report.

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_10.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX II I 260 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact GRI StandardDisclosurePage Number (s), URL and/or direct answer Identified omission(s) Risks and compliance GRI 103: Management Approach 2016 246 103-2The management approach and its components58, 60, 69-73, 79 103-3Evaluation of the management approach 60, 69, 72 Compromise with the patient GRI 103: Management Approach 2016 246 103-2The management approach and its components179-184 103-3Evaluation of the management approach 179-184 Business Strategy and Value Creation (GRI 201: Economic Performance 2016) GRI 103: Management Approach 2016 246 103-2The management approach and its components36-42 103-3Evaluation of the management approach 36-42 GRI 201: Economic Performance 2016 201-1Direct economic value generated and distributed37, 42 Health, safety and occupational well-being (GRI 403: Occupational Health and Safety 2018) GRI 103: Management Approach 2016 246 103-2The management approach and its components161-163 103-3Evaluation of the management approach 161-162

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_11.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX II I 261 investigation 161 403-4 occupational health and safety 160 impacts directly linked by business relationships 163-163 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 418-1 There has not been any claim regarding privacy violations and client’s data loss privacy and losses of customer data 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 201-2 to climate change 217-221 GRI StandardDisclosurePage Number (s), URL and/or direct answer Identified omission(s) GRI 403: Occupational Health and Safety 2018 403-1Occupational health and safety management system161-163 403-2Hazard identification, risk assessment, and incident 403-3Occupational health services161 Worker participation, consultation, and communication on 403-5Worker training on occupational health and safety152-153, 161, 163 403-6Promotion of worker health161-163 403-7Prevention and mitigation of occupational health and safety 403-9Work-related injuries171 403-10Work-related ill health171 Data Protection (GRI 418: Customer Privacy 2016) GRI 103: Management Approach 2016 246 103-2The management approach and its components77-78 103-3Evaluation of the management approach 77-78 GRI 418: Customer Privacy 2016 Substantiated complaints concerning breaches of customer Climate Strategy (GRI 201: Economic Performance 2016; GRI 305: Emissions 2016) GRI 103: Management Approach 2016 246 103-2The management approach and its components206-207, 209, 222-224 103-3Evaluation of the management approach 214-216, 221 GRI 201: Economic Performance 2016 Financial implications and other risks and opportunities due

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_12.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX II I 262 cant aire emissions 223, 231-232 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 301-1 Materials used by weight or volume renewable and not renewable is not 302-3 Energy intensity All rates are reported using energy consumption within the organization GRI StandardDisclosurePage Number (s), URL and/or direct answer Identified omission(s) GRI 305: Emissions 2016 305-1Direct (Scope 1) GHG emissions223, 231-232 305-2Energy indirect (Scope 2) GHG emissions223, 231-232 305-3Other indirect (Scope 3) GHG emissions223, 231-232 305-4GHG emissions intensity223, 231-232 305-6Emissions of ozone-depleting substances (ODS)223 305-7Nitrogen oxides (NOx), sulfur oxides (SOx) and other signifi-Eco-efficiency and Circular Economy (GRI 301: Materials 2016, GRI 302: Energy 2016, GRI 303: Water and Effluents 2018, GRI 306: Waste 2020, GRI 307: Environmental Compliance 2016) GRI 103: Management Approach 2016 246 103-2The management approach and its components206-209 103-3Evaluation of the management approach 214-216, 221 GRI 301: Materials 2016 Due to the nature of the materials used by Grifols, disclosure by 229, 235-236applicable GRI 302: Energy 2016 302-1Energy consumption within the organization234-235 234-235 302-4Reduction of energy consumption227-228 GRI 303: Water and Effluents 2018 303-1Interactions with water as a shared resource225-226 303-2Management of water discharge-related impacts225-226 303-05Water consumption232-233

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_13.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX II I 263 in the collection of information and 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 103-1 Explanation of the material topic and its Boundary Coverage: Inside and outside the organization. The organization contributes directly to the impact 406-1 69, 150 GRI StandardDisclosurePage Number (s), URL and/or direct answer Identified omission(s) GRI 306: Waste 2020 306-1Waste generation and significant waste-related impacts230 Management of significant waste-related impactsThe information regarding significant waste-related impacts is not avai-lable for publication in this report. 306-2Specific measures are being taken the process to treat the data to be able to give this detail in the next 230five years 306-4Waste diverted from disposal236 306-5Waste directed to disposal236 GRI 307: Environmental Compliance 2016 Non-compliance with environmental laws and regulations 307-1 209 Compromise with the Community (GRI 203: Indirect Economic Impacts 2016) GRI 103: Management Approach 2016 246, 175 103-2The management approach and its components174-177, 179, 181-192 103-3Evaluation of the management approach 26-29, 139, 178-179, 183-184, 199 GRI 203: Indirect Economic Impacts 2016 203-1Infrastructure investments and services supported 9, 139 Diversity and Inclusion (GRI 405: Diversity and Equal Opportunity 2016, GRI 406: Non-discrimination 2016) GRI 103: Management Approach 2016 246 103-2The management approach and its components146-150, 157-158 103-3Evaluation of the management approach 148, 150, 157 GRI 405: Diversity and Equal Opportunity 2016 Diversity of governance bodies and employees 405-1 63, 148, 166 GRI 406: Non-discrimination 2016 Incidents of discrimination and corrective actions taken

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_14.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX III I 264 z ANNEX III: SASB CONTENT INDEX Sustainability Accounting Standards Board (SASB) - Biotechnology & Pharmaceuticals SASB Indicator Accounting metric Disclosure and/or references Pg. 108 - Grifol’s pledge in clinical trials Discussion, by world region, of management process for ensuring quality and patient safety during clinical trials For more information please visit: https://www.clinicaltrialsregister.eu/ctr-search/search/ https://www.clinicaltrials.gov/ https://eudract.ema.europa.eu/ HC-BP-210a.1 Number of FDA Sponsor Inspections related to clinical trial management and pharmacovi-gilance that resulted in: (1) Voluntary Action Indicated (VAI) and (2) Official Action Indicated (OAI) Grifols has not received any FDA Sponsor Inspections related to clinical trial management and pharmacovigilance that resulted in VAI or OAI. HC-BP-210a.2 Total amount of monetary losses as a result of legal proceedings associated with clinical trials in developing countries HC-BP-210a.3 There has not been any monetary loss as a result of legal proceedings associated with clinical trials in developing countries. Description of actions and initiatives to promote access to health care products for priority diseases and in priority countries as defined by the Access to Medicine Index Pg. 22 - Further information on SDG 3 is at Grifols Sustainability Development Goals Contribution Report 2020, available on Grifols website (Corporate Stewardship Reports section) HC-BP-240a.1 List of products on the WHO List of Prequalified Medicinal Products as part of its Prequalifi-cation of Medicines Programme (PQP) HC-BP-240a.2 Grifols has no products on the WHO List of Prequalified Medicinal Products. Number of settlements of Abbreviated New Drug Application (ANDA) litigation that involved payments and/or provisions to delay bringing an authorized generic product to market for a defined time period HC-BP-240b.1 Grifols does not market generic products. Percentage change in: (1) average list price and (2) average net price across U.S. product portfolio compared to previous year HC-BP-240b.2 This information is not reported regarding confidentiality issues Percentage change in: (1) list price and (2) net price of product with largest increase compared to previous year HC-BP-240b.3 This information is not reported regarding confidentiality issues List of products listed in the Food and Drug Administration’s (FDA) MedWatch Safety Alerts for Human Medical Products database Available at FDA Safety Information and Adverse Event Reporting Program: https://www.fda.gov/safety/medwatch-fda-safe-ty-information-and-adverse-event-reporting-program HC-BP-250a.1 Available at FDA Adverse Event Reporting System (FAERS) Public Dashboard https://www.fda.gov/drugs/questions-and-answers-fdas-adverse-event-reporting-system-faers/fda-adverse-event-repor-ting-system-faers-public-dashboard Number of fatalities associated with products as reported in the FDA Adverse Event Reporting System HC-BP-250a.2 Pg. 85 - Evolution number of audits and inspections Pg. 89 - Product recall system HC-BP-250a.3 Number of recalls issued, total units recalled HC-BP-250a.4 Total amount of product accepted for takeback, reuse, or disposal Pg. 230 - Medication waste management Drug Safety Affordability & Pricing Access to Medicines Safety of Clinical Trial Participants

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_15.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX III I 265 Sustainability Accounting Standards Board (SASB) - Biotechnology & Pharmaceuticals SASB Indicator Accounting metric Disclosure and/or references The FDA performed 26 inspections to Grifols Plasma Centers and Fractionation Facilities and issued 3 Form 483 observations in 2020. Grifols did not receive any FDA enforcement actions associated with warning letters, seizures, recalls or consent decrees in 2020. Grifols responded to the FDA with the appropriate Corrective and Preventive Actions to address the observations received. Number of FDA enforcement actions taken in response to violations of current Good Manu-facturing Practices (cGMP), by type HC-BP-250a.5 Description of methods and technologies used to maintain traceability of products throu-ghout the supply chain and prevent counterfeiting HC-BP-260a.1 Pg. 91 - Safety and quality in the Bioscience division - Product tracking and traceability Grifols has an internal Policy on prevention, detection and communication of falsifications. According to this policy, suspected counterfeit drugs and counterfeit product detection confirmation must be notified to the corresponding regulatory authorities in a timely manner and in accordance with the current applicable regulation. Discussion of process for alerting customers and business partners of potential or known risks associated with counterfeit products HC-BP-260a.2 Number of actions that led to raids, seizure, arrests, and/or filing of criminal charges related to counterfeit products HC-BP-260a.3 This information is not reported regarding confidentiality issues Grifols publishes all the legal and regulatory procedures required on The Annual Form 20-F, as well as in Note 29 of the Conso-lidated Annual Accounts 20-F 2020: https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001438569&owner=exclude&count=40 Group Annual Consolidated Accounts 2020: https://www.grifols.com/en/annual-accounts Total amount of monetary losses as a result of legal proceedings associated with false marketing claims HC-BP-270a.1 Pg. 60 - Compliance and character: Our Ethical Approach Pg. 74-75 - Interactions with healthcare organizations and professionals HC-BP-270a.2 Description of code of ethics governing promotion of off-label use of products Discussion of talent recruitment and retention efforts for scientists and research and development personnel HC-BP-330a.1 Pg. 151-156 - Talent management (1) Voluntary and (2) involuntary turnover rate for: (a) executives/senior managers, (b) midlevel managers, (c) professionals, and (d) all others HC-BP-330a.2 Pg. 167 - Tables of Personnel Turnover and dismissal Percentage of (1) entity’s facilities and (2) Tier I suppliers’ facilities participating in the Rx-360 International Pharmaceutical Supply Chain Consortium audit program or equivalent third party audit programs for integrity of supply chain and ingredients Grifols does not have its own facilities, nor Tier I suppliers participating in the audit program of the Rx-360 International Phar-maceutical Supply Chain Consortium or equivalent programs. HC-BP-430a.1 Grifols publishes all the legal and regulatory procedures required on The Annual Form 20-F, as well as in Note 29 of the Conso-lidated Annual Accounts 20-F 2020: https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001438569&owner=exclude&count=40 Group Annual Consolidated Accounts 2020: https://www.grifols.com/en/annual-accounts Total amount of monetary losses as a result of legal proceedings associated with corrup-tion and bribery HC-BP-510a.1 Pg. 60 - Compliance and character: Our Ethical Approach Pg. 74-75 - Interactions with healthcare organizations and professionals HC-BP-510a.2 Description of code of ethics governing interactions with health care professionals HC-BP-000.A Number of patients treated This information is not reported regarding confidentiality issues HC-BP-000.B Number of drugs (1) in portfolio and (2) in research and development (Phases 1-3) This information is not reported regarding confidentiality issues Activity metrics Business Ethics Supply Chain Management Employee Recruitment, Development & Retention Ethical Marketing Counterfeit Drugs

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_16.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX IV I 266 z ANNEX IV: INDEX OF GRIFOLS’ CONTRIBUTION TO THE SDGs This index includes the SDGs, their respective targets and Grifols contribution to their achievement. The main references where supporting information on the contribution to each target can be found in the 2020 CONSOLIDATED DIRECTORS’ REPORT are listed below. The report “Joining Efforts: Grifols’ Contribution to the 2020 Sustainable Development Goals” - available at www.grifols.com - includes detailed information on the contribution to the Sustainable Development Goals. Section within the Integrated Annual Report Sub-section within the Integrated Annual Report SDG Targets Detailed information on the contribution Grifols’ innovation ecosystem coordinated a global response to help combat covid-19 - page 105-107 · A robust innovation ecosystem 5. Innovation · · · Bioscience Division - page 113-114 Diagnostic Division – page 115 Hospital Division - page 116 R&D by divisions 3.3. End the epidemics of AIDS, tuberculosis, malaria, and neglected tropical diseases and combat hepatitis, water-borne diseases, and other communicable diseases. · Only the generosity of plasma donors makes plasma-derived medicines possible - page 127 Plasma, donation and donors 6. Our donors Hyperimmune-plasma donors are playing a critical role in the fight against Covid-19 - page 133 · Donating plasma is safe Programs and initiatives aligned with the SDGs Global Laboratory Initiative (GLI) – page 199 · 8. Committed to society - Ebola project - page 199 · Grifols’ innovation beyond plasma-derived products in diverse therapeutic areas - page 103 A robust innovation ecosystem 3.4. Reduce pre-mature mortality from non-communicable diseases (NCDs) by one-third through prevention and treatment and promote mental health and wellbeing. Core research projects Fighting Alzheimer’s disease: the AMBAR project - page 110-111 5. Innovation Priority Objectives · · · Bioscience Division - page 113-114 Diagnostic Division – page 115 Hospital Division - page 116 R&D by divisions Grifols creates value beyond its financial performance 1. About Grifols · Grifols’ socioeconomic impact in 2020 – page 26-27 Team development Team development - page 146 · 8.5. Provide decent work for all women and men, including young people and persons with disabilities through full and productive employment with equal pay. Diversity and inclusion: linchpins of success - page 147 Equal opportunities - page 149 Integration of people with disabilities – page 150 Anti-discrimination principles and actions - page 150 · · · · Team development 7. Our people · · Grifols gender pay gap: a commitment to improvement – page 157 Grifols’ progress towards gender equality - page 158 Quality employment · · · Comprehensive health and safety management – page 161 Performance in the area of health and safety - page 162 Work-life balance - page 164 8.8. Protect labor rights and promote safe and secure working environments for all workers. 7. Our people Occupational health and well-being

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_17.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX IV I 267 Section within the Integrated Annual Report Sub-section within the Integrated Annual Report SDG Targets Detailed information on the contribution · · · Bioscience Division - page 113-114 Diagnostic Division – page 115 Hospital Division - page 116 9.4. Upgrade infrastructure and retrofit industries to make them sustainable and with increased resources use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes R&D by divisions 5. Innovation Digital innovation · Digital innovation - page 119 R+D+I resource allocations · R+D+I resource allocations – page 101 Ethics, science and innovation · Grifols’ pledge in clinical trials – page 108-109 9.5 Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries, including encouraging innovation and substantially increasing the number of research and development workers and public and private research and development spending. Core research projects · Fighting Alzheimer’s disease: the AMBAR project - page 110-111 5. Innovation · · · · Grifols Scientific Awards - page 120 Sponsoring frontline research: ISR program - page 121 Grifols Chair for the Study of Cirrhosis celebrates its fifth anniversary – page 121 Research publications - page 122-132 Supporting global research Grifols’ environmental management · Grifols’ environmental management – page 207 Priority Objectives Resource allocation to minimize environmental impacts · · Resource Allocation (including expenses and investments)-page 210 Human capital to prevent environmental risks – page 211 12.2. Achieve sustainable management and efficient use of natural resources. 9. Environment and climate change · · · Water cycle - page 225-226 Energy consumption - page 227-228 Raw materials consumption – page 228 Sustainable resource management Grifols’ environmental management · Circular economy - page 207 12.5. Substantially reduce waste generation through prevention, reduction, recycling, and reuse. 9. Environment and climate change Waste · Waste - page 230 Managing climate risks and opportunities - page 217-221 Emissions - page 222-223 Initiatives to reduce atmospheric emissions – page 224 · · · 13.1. Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries. 9. Environment and climate change Climate change: mitigation and adaption

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_18.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX IV I 268 Section within the Integrated Annual Report Sub-section within the Integrated Annual Report SDG Targets Detailed information on the contribution · · · Employee training: the key to Grifols’ sustainable growth - page 152 Overview of training at Grifols – page 153 Training programs - page 154-155 7. Our people Talent management 4.3. Ensure equal access for all women and men to affordable and quality technical, vocational, and tertiary education. 4.5. Eliminate gender disparities in education by ensuring equal access to all levels of educational and vocational training for the vulnerable, including persons with disabilities, indigenous peoples, and children in vulnerable situations Supporting patients and patient organizations · Collaborations and programs - page 180 8. Committed to society Promoting education: collaborations with educational initiatives - page 190 · Social actions and community support José Antonio Grífols Lucas foundation: driving healthcare and educational programs – page 200-201 · Team development · Equal opportunities - page 149 5.1. End all forms of discrimination against women and girls everywhere. 7. Our people · · Grifols gender pay gap: a commitment to improvement – page 157 Grifols’ progress towards gender equality - page 158 Quality employment 5.5. Ensure equal opportunities for leadership and full and effective participation for women at all levels of decision-making in political, economic, and public life. · · Team development - page 146 Diversity at a glance in 2020 – page 148 7. Our people Team development Grifols plasma donation centers create value 6. Our donors Measuring the social value of Grifols plasma donations centers - page 139 · Relevant Objectives Grifols’ social commitment · 2020 initiatives - page 174 Supporting patients and patient organizations · · Collaborations and programs - page 180-181 Access to treatments - page 182 10.2. Empower and promote the social, economic and political inclusion of all irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status. · · · · Promoting education - page 190-191 Local development: supporting Grifols’ communities-page 191-192 Promoting health and well-being – page 194-195 Initiatives through associations and NGOs - page 198-202 8. Committed to society Social actions and community support Local development: supporting local communities - Volunteering in the U.S. - page 192 Corporate pillars of Grifols’ corporate governance · Driven by ethics and integrity - page 69 · Against corruption and bribery - page 70-73 16.5 Substantially reduce corruption and bribery in all its forms. 3. Corporate governance 16.10 Ensure public access to information and protect fundamental freedoms, in accordance with national legislation and international agreements. Corporate pillars of Grifols’ corporate governance 3. Corporate governance · Transparency as a value, obligation, and commitment - page 74-76

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_19.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX IV I 269 Section within the Integrated Annual Report Sub-section within the Integrated Annual Report SDG Targets Detailed information on the contribution · A boy overcomes retinal cancer thanks to a groundbreaking treatment based on an oncolytic virus - page 104 17.6 Enhance North-South, South-South and triangular regional and international cooperation on and access to science, technology and innovation and enhance knowledge sharing on mutually agreed terms, including through improved coordination among existing mechanisms, in particular at the United Nations level, and through a global technology facilitation mechanism. 5. Innovation A robust innovation ecosystem · Commitment and contribution to helping countries attain self-sufficiency of plasma-derived medicines - page 185 8. Committed to society Supporting public healthcare systems Social actions and community support · Initiatives through associations and NGOs - page 198-202 5. Innovation R+D+I resource allocations · R+D+I resource allocations – page 101 17.16 Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the sustainable development goals in all countries, in particular developing countries. · Grifols moves forward with its plans to make AMBAR a viable treatment option for Alzheimer’s patients - page 111 Transversal Objective Core research projects Manufacturing innovations · Manufacturing innovations – page 118 7. Our people Talent management · Executive development – page 154 · Participation in SIGRE program, Pharmaceutical Products Administration Working Group, ECOASIMELEC program and Zero Waste to Landfill program of Underwriters Laboratories (UL),-page 230 9. Environment and climate change Waste 17.17 Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships. 8. Committed to society Supporting public healthcare systems · Contributing to reducing healthcare costs: industrial fractionation-page 186 · · Embellishing Clayton’s protected area - page 196 Rehabilitation of the Besós river basin in Barcelona – page 196 Engaged with the environment

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_20.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX V I 270 z ANNEX V: NON-GAAP MEASURES RECONCILIATION In thousands of euros 12M 2020 12M 2019 % Var NET REVENUE RECONCILIATION BY DIVISION AT CONSTANT CURRENCY REPORTED INTERSEGMENTS NET REVENUES (53,107) (52,176) 1.8% In thousands of euros 12M 2020 12M 2019 % Var VARIATION DUE TO EXCHANGE RATE EFFECTS (484) REPORTED NET REVENUES 5,340,038 5,098,691 4.7% REPORTED INTERSEGMENTS NET REVENUES AT CONSTANT CURRENCY VARIATION DUE TO EXCHANGE RATE EFFECTS 67,927 (53,591) (52,176) 2.7% NET REVENUES AT CONSTANT CURRENCY 5,407,965 5,098,691 6.1% NET REVENUE RECONCILIATION BY REGION AT CONSTANT CURRENCY In thousands of euros 12M 2020 12M 2019 % Var In thousands of euros 12M 2020 12M 2019 % Var REPORTED BIOSCIENCE NET REVENUES 4,242,502 3,993,462 6.2% REPORTED U,S, + CANADA NET REVENUES 3,599,746 3,390,811 6.2% VARIATION DUE TO EXCHANGE RATE EFFECTS 53,508 VARIATION DUE TO EXCHANGE RATE EFFECTS 33,107 REPORTED BIOSCIENCE NET REVENUES AT CONSTANT CURRENCY 4,296,010 3,993,462 7.6% U.S. + CANADA NET REVENUES AT CONSTANT CURRENCY 3,632,853 3,390,811 7.1% In thousands of euros 12M 2020 12M 2019 % Var In thousands of euros 12M 2020 12M 2019 % Var REPORTED DIAGNOSTIC NET REVENUES 775,889 733,604 5.8% REPORTED EU NET REVENUES 834,492 799,460 4.4% VARIATION DUE TO EXCHANGE RATE EFFECTS 11,318 VARIATION DUE TO EXCHANGE RATE EFFECTS 1,094 REPORTED DIAGNOSTIC NET REVENUES AT CONSTANT CURRENCY 787,207 733,604 7.3% EU NET REVENUES AT CONSTANT CURRENCY 835,586 799,460 4.5% In thousands of euros 12M 2020 12M 2019 % Var In thousands of euros 12M 2020 12M 2019 % Var REPORTED HOSPITAL NET REVENUES 118,675 134,441 (11.7%) REPORTED ROW NET REVENUES 905,800 908,420 (0.3%) VARIATION DUE TO EXCHANGE RATE EFFECTS 1,948 VARIATION DUE TO EXCHANGE RATE EFFECTS 33,726 REPORTED HOSPITAL NET REVENUES AT CONSTANT CURRENCY 120,623 134,441 (10.3%) ROW NET REVENUES AT CONSTANT CURRENCY 939,526 908,420 3.4% In thousands of euros 12M 2020 12M 2019 % Var REPORTED BIO SUPPLIES NET REVENUES 224,090 266,540 (15.9%) VARIATION DUE TO EXCHANGE RATE EFFECTS 1,578 REPORTED BIO SUPPLIES NET REVENUES AT CONSTANT CURRENCY 225,668 266,540 (15.3%) In thousands of euros 12M 2020 12M 2019 % Var REPORTED OTHERS NET REVENUES 31,989 22,820 40.2% VARIATION DUE TO EXCHANGE RATE EFFECTS 58 REPORTED OTHERS NET REVENUES AT CONSTANT CURRENCY 32,047 22,820 40.4%

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_21.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX V I 271 GROUP PROFIT RECONCILIATION In millions of euros 12M 2020 12M 2019 % Var In millions of euros 2020 2019 % Var R&D RECURRENT EXPENSES IN P&L 294.2 276.0 GROUP PROFIT 618.5 625.1 (1.1%) R&D CAPITALIZED 35.2 53.6 % Net revenues 11.6% 12.3% - R&D DEPRECIATION & AMORTIZATION & WRITE OFFS (32.8) (22.5) Amortization of deferred financial expenses 50.5 62.3 (18.9%) R&D CAPEX FIXED ASSETS 1.7 5.2 Amortization of intangible assets acquired in business combinations R&D EXTERNAL - 16.7 48.3 49.9 (3.2%) R&D NET INVESTMENT 298.3 329.0 (9.3%) Non-recurring items (1) (161.5) 32.2 (601.6%) IFRS 16 23.2 27.4 (15.3%) In thousands of euros 12M 2020 12M 2019 % Var Deferred financial expenses impact related to refinancing - (97.9) - PP&E ADDITIONS 296,759 325,277 Tax impacts (8.7) (8.1) 7.4% SOFTWARE ADDITIONS 27,939 21,846 COVID-19 impact 205.0 - - INTEREST CAPITALIZED (16,606) (14,894) Tax impacts COVID-19 impacts (38.9) - - CAPEX 308,092 332,229 (7.3%) ADJUSTED GROUP NET PROFIT 736.4 690.9 6.6% % Net revenues 13.8% 13.6% - In millions of euros except ratio 12M 2020 12M 2019 % Var NET FINANCIAL DEBT 5,713.7 5,724.9 (1) 2020 non-recurring items mainly include EUR 56.5 million capital gain related to the closing of the Shanghai RAAS transaction and EUR 86.7 million write-up of the equity stake in Alkahest following the acquisition of the remaining equity capital. EBITDA ADJUSTED 12M 1,263.9 1,373.3 NET LEVERAGE RATIO (1) 4.52 x 4.17 x (1) Excludes the impact of IFRS 16 In thousands of euros 12M 2020 12M 2019 % Var EBIT 996,132 1,131,365 D&A 327,912 302,455 EBITDA 1,324,044 1,433,820 (7.7%) % NR 24.8% 28.1% In thousands of euros 12M 2020 12M 2019 % Var EBIT 996,132 1,131,365 D&A 327,912 302,455 IFRS 16 (74,432) (65,483) NON-RECURRING ITEMS (2) 14,327 4,918 EBITDA ADJUSTED 12M 1,263,939 1,373,255 (8.0%) (2) Non-recurring items related to acquisitions

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_22.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX VI I 272 z ANNEX VI: SOCIOECONOMIC IMPACT Grifols determined the socio-economic impact of its operations in terms of wealth generation and job creation in the United States, Spain, Germany and Ireland. INPUT-OUTPUT MODEL An input-output analysis was used for this purpose. Following this approach, it is possible to estimate the outputs associated with Grifols’ activities based on core inputs (expenditures on supplies of goods and services, R+D+i and capital investments, main taxes paid, financial expenses, dividend payments, and employee expenditures based on wages received). The input-output framework is an accounting instrument that represents all production and distribution operations of an economy in a given timeframe. This model enables observing the different flows of intersectoral transactions in a specific economy in a reference year. Spain Ireland Germany: Except plasma centers Germany: plasma centers Total Germany % of plasma centers in Germany Direct 731 102 48 128 176 73% Indirect 353 52 23 57 79 71% Induced 431 55 21 51 72 71% Total impact 1,515 209 91 236 327 72% Direct 4,134 239 137 1,382 1,519 91% Indirect 9,133 565 385 1,148 1,532 75% Induced 2,951 124 127 327 455 72% Total employment 16,218 928 649 2,857 3,506 81% U.S.: Except plasma centers U.S.: plasma centers Total U.S. % in plasma centers Direct 1,762 1,724 3,487 49% Indirect 750 720 1,469 49% Induced 591 596 1,187 50% Total impact 3,104 3,040 6,143 49% Direct 4,416 12,188 16,604 73% Indirect 33,682 63,563 97,245 65% Induced 2,175 2,416 4,592 53% Total employment 40,273 78,167 118,440 66% Impact on the employment (nº people) Economic impact (Millions of dollars) Impact on the employment (nº people) Economic impact (Millions of euros) MULTIPLIER IMPACT TOTAL IMPACT ECONOMIC IMPACT JOB CREATION INDUCED IMPACT INDIRECT IMPACT DIRECT IMPACT

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_23.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX VII I 273 z ANNEX VII: METHODOLOGY AND CALCULATION OF THE ADJUSTED AND UNADJUSTED WAGE GAP • The following groups have been excluded from the calculation: • For the calculation of the adjusted and unadjusted wage gap, the gross annual fixed salaries of each person at full time have been taken into account. - Co-CEOs - Partial retirees - Expatriates or displaced employee - Employees of foundations - Aigües Minerals Vilajuïga, Alkahest, Green Cross, MedKeeper and IBBI since these companies are still not 100% integrated into Grifols’ systems and policy framework. • For the econometric calculation of the adjusted wage gap, the following variables were taken into account: age, seniority, educational level, maternity / paternity leave, professional category, contract type and work schedule. • In addition, for the U.S., the type of activity (plasma/non-plasma) was also taken into account. In order to attain an accurate figure, the calculation excluded workers for whom up-to-date information was lacking on any of the variables. • In total, 20,593 employees have been included in the wage gap calculation, distributed by country as follows: • In contrast to last year, the information of the professional category called “Top Management”, which has been disclosed in the 2019 Consolidated Annual Report, has been separated in two levels (“Executives” and “Directors”). - U.S.: 14,769 - Spain: 4,214 - Germany: 1,374 - Ireland: 236 • The results for each country are shown separately, so as not to have to apply a currency exchange rate that distorts the result. • In 2020, the adjusted wage gap was also computed. The methodology consisted of the use of econometric models that compare the annual salaries at 100% of the working hours of men and women, isolating the effects generated by any and all possible differences identified between the two (socioeconomic factors, job characteristics, etc.). In other words, the adjusted salary gap measures the difference in retribution for the same job or one of equal value and is calculated using the multiple lineal regression model as follows: • For reasons of confidentiality and protection of personal data, wage gap data are not shown for those professional categories in which there is not a minimum of 3 persons of each sex. • In the case of Ireland or other small groups, the adjusted wage gap data is not shown because it was not possible to obtain data with sufficient statistical significance using the econometric model. For these cases, only the unadjusted wage gap data is shown.

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_24.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX VIII I 274 z ANNEX VIII: GLOSSARY AND ABBREVIATIONS • Alpha-1 antitrypsin deficiency (AATD): Inherited disease characterized by low levels of, or no,alpha-1 antitrypsin (AAT) in the blood. This protein made in the liver, reaches other organs (such as the lungs), after being released into the blood stream, enabling its normal function. • Cirrhosis: Medical condition which is a result of advanced liver disease. It is characterized by there placement of liver tissue by fibrosis (scar tissue) and regenerative nodules (lumps that occur due to attempted repair of damaged tissue). • Fibrin sealant: Surgical adhesive material derived from plasma. • Hemotherapy: Treatment of a disease using blood, blood components and its derivatives. • Fibrinogen: Coagulation factor found plasma crucial for blood clot formation. in human • HAE (Hereditary Angioedema): Rare but serious genetic disorder characterized by recurrent episodes of severe swelling (angioedema), particularly of the face and airways, and abdominal cramping. It is caused by low levels or improper function of the C1-esterase inhibitor protein. • COVID-19: Infectious disease caused by a new strain of coronavirus. ‘CO’ stands for corona, ‘VI’ for virus, and ‘D’ for disease. • Fractionation: Process of separating plasma into its component parts, such as albumin, immunoglobulin, alpha-1 antitrypsin and coagulation factors. • Albumin: The most abundant protein found in plasma (approximately 60% of human plasma). Produced in the liver, it is important in regulating blood volume by maintaining the oncotic pressure of the blood compartment. • ELISA: Enzyme-linked immunosorbent assay. • GPO: Group Purchasing Organization. • HIV: Human Immunodeficiency Virus. • EMA: European Medicines Agency • HBV: Hepatitis B Virus. • IA: Immunoassays. These are systems available in several formats that may be used to detect antibodies, recombinant proteins or a combination of the two. • Alzheimer’s disease: This is the most common form of dementia. This incurable, degenerative, and terminal disease was first described by German psychiatrist and neuropathologist Alois Alzheimer in 1906 and was named after him. • Factor VIII or FVIII: This is an essential blood clotting factor also known as anti-hemophilic factor(AHF). In humans, Factor VIII is encoded by the F8 gene. Defects in this gene results in hemophilia A, a sex-linked disease that occurs predominantly in males. FVIII concentrated from donated blood plasma, or alternatively recombinant FVIII, or rFVIII can be given to hemophiliacs to restore hemostasis. • HCV: Hepatitis C Virus. • Hematology: The study of blood, blood-forming organs, and blood diseases. • Immunoglobulins: Also known as antibodies, are proteins derived from plasma. They control de body’s immune response. They have multiple indications and some of their main uses are to treat: (i) immune deficiencies, (ii) inflammatory and autoimmune diseases and (iii) acute infections. IVIG is an immunoglobulin administered intravenously that contains IgG (immunoglobulin (antibody) G). • Autoimmune disease: Condition in which the immune system mistakenly attacks healthy cells. • Hemoderivative: Proteins obtained by fractionation of human blood plasma. See plasma derived proteins • Babesiosis/Babesia virus: Disease caused by microscopic parasites that infect red blood cells. • Hemophilia: Genetic deficiency characterized by the lack of one of the clotting factors. It has two main variants: • Factor IX: This is an important blood clotting factor also known as Christmas factor or plasma thromboplastin component (PTC). It is one of the serine proteases of the coagulation system and belongs to the peptidase family S1. In humans, a deficiency of this protein causes hemophilia B, a sex-linked disease that occurs predominantly in males. • Beta-amyloid: Protein strongly implicated in Alzheimer’s diseases. Beta-amyloid is the main component of certain deposits found in the brains of patients of Alzheimer’s disease. – Hemophilia A: genetic deficiency of coagulation Factor VIII, which causes increased bleeding (usually affects males). • Intravenous: Administration of drugs or fluids directly into a vein. • Immunohematology: A branch of hematology related to the study of recombinant proteins and antibodies and their effects on blood and the relationships between blood disorders and the immune system. Also referred to as Transfusional Medicine - blood • CIDP (Chronic Inflammatory Demyelinating – Hemofilia Factor IX. B: genetic deficiency of coagulation Polyneuropathy): Neurological disorder which causes gradual weakness, numbness, pain in arms and legs and difficulty in walking. • FDA: Food and Drug Administration. U.S. Health Authority.

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_25.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX VIII I 275 bank, its main activities include blood typing, compatibility tests and crossmatching and antibody identification. • IV solutions/Intravenous solution: Medicine or homogeneous mixture of a substance in liquid, enabling it to be infused into the circulatory system through a needle. • Pandemic: The worldwide spread of a new disease. and the donor is able to make donations more frequently. Plasmapheresis was developed by Jose Antonio Grifols Lucas in the year 1951. It is the only procedure that is capable of obtaining sufficient quantities of plasma to cover the manufacturing needs for the different plasma protein therapies. • PCR: Polymerase chain reaction is a method widely used to rapidly make millions to billions of copies of a specific DNA sample, allowing scientists to take a very small sample of DNA and amplify it to a large enough amount to study in detail. • Immunology: This is a branch of biomedical science that covers the study of all aspects of the immune system in organisms. It deals with the physiological functioning of the immune system in states of both health and disease; malfunctions (autoimmune diseases, hypersensitivities, immune deficiency, transplant rejection) and the physical, chemical and physiological characteristics of the components of the immune system in vitro, in situ, and in vivo. • Molecular Diagnostics: Discipline that studies genomic (DNA) and proteomic (proteins)expression patterns and uses the information to distinguish • PPTA: Plasma Protein Therapeutics Association. between normal, precancerous, tissues at the molecular level. and cancerous • pdFVIII: Plasma-derived Factor VIII. • Primary immunodeficiency: Inherited condition where there is an impaired immune response, weakening the immune system and allowing infections and other health problems to occur more easily. It may be in one or more aspects of the immune system. • Pharmacovigilance: Practice of monitoring the • Monoclonal antibody (mAb): Antibody produced by a single clone of cells typically used in immunotherapy (such as in the treatment of autoimmune or inflammatory disorders and cancer), diagnostic testing and cell identification and tracing. Monoclonal antibodies are a cornerstone of immunology and are increasingly coming into use as therapeutic agents. effects of medical drugs after they have been licensed for use, especially in order to identify and evaluate previously unreported adverse reactions • Immunoglobulin (IgG): Also known as antibodies, are proteins derived from plasma. They control de body’s immune response. They have multiple indications and some of their main uses are to treat: (i) immune deficiencies, (ii) inflammatory and autoimmune diseases and (iii) acute infections. IVIG is an immunoglobulin administered intravenously that contains IgG (immunoglobulin (antibody) G). • Plasma: Yellow-coloured liquid part of the blood, consisting of a mix of a large number of proteins in solution. • Prolastin®/Prolastin® -C: This is a concentrated form of alpha-1 antitrypsin (AAT), derived from human plasma and approved only for chronic, or ongoing, replacement therapy in people with genetic AAT deficiency. Given as prescribed, Prolastin raises the levels of AAT in the blood and lungs. Raising the AAT level may help reduce the damage to the lungs caused by destructive enzymes. • Myasthenia Gravis (MG): Chronic autoimmune, neuromuscular disease that causes weakness in the skeletal muscles that worsens after periods of activity and improves after periods of rest. These • Plasma-derived proteins: Purified plasma proteins with therapeutic properties that are obtained through the fractionation of human plasma. Albumin, immunoglobulins, factor VIII and alpha-1 antitrypsin are the main plasma proteins. • ITP (Chronic immune thrombocytopenia): muscles are responsible for functions breathing and moving parts of the body. involving Autoimmune disorder in which patients produce antiplatelet autoantibodies and specialized white blood cells that destroy their blood platelets. This results in a low blood platelet count (thrombocytopenia) that may produce bruising or excessive bleeding. • Recombinant: Protein prepared by recombinant technology, coded by the manipulated gene. Procedures are used to join together segments in a cell-free system (an environment outside a cell organism). They are known as highly potent medicines that are safe from off-target side effects and take a shorter time to develop than small molecules. • Plasmapheresis: Plasmapheresis is a technique which separates plasma from other blood components, such as red blood cells, platelets and other cells. These unused blood components are suspended in saline solution and immediately re-injected back into the donor. Because the donor is only providing plasma and not whole blood, the recovery process is faster and better tolerated, • NAT: Nucleic Acid Amplification Testing. • Neurology: Science that deals with the anatomy, functions and organic disorders of nerves and the nervous system. • IVD: In vitro Diagnostic. • Northamerica: includes the U.S. and Canada

 

 

 

 

7998-1-mm-09_part 4 of 5 2020 consolidated directors' report_part6_page_26.jpg 2020 CONSOLIDATED DIRECTORS’ REPORT ABOUT THIS REPORT I ANNEX VIII I 276 • rFVIII: Recombinant Factor VIII is the anti-hemophilic factor A, obtained using recombinant DNA technology. With this technology, pure factor is synthesized in the laboratory instead of being extracted from blood plasma. • SARS-CoV-2: Severe acute respiratory syndrome coronavirus 2 is the strain of coronavirus that causes coronavirus disease 2019 (COVID-19), the • Transfusion medicine: Branch of medicine that encompasses among others, immunohematology, blood and plasma screening and blood typing. • Zika virus: Infectious disease spread by the bite of an infected Aedes species mosquito. respiratory pandemic. illness responsible for the COVID-19 • West Nile Virus (WNV): Virus transmitted by mosquitoes. Humans are mainly infected through mosquito bites, but infection can occur through organ transplantation and blood. • Rh (Rhesus) blood group system: Most important blood group system after ABO. The Rh blood group system consists of 50 defined blood-group recombinant proteins, among which the five recombinant proteins D,C, c, E and e are the most important. The commonly used terms Rh factor, Rh positive and Rh negative refer to the D antigen only. • Secondary immunodeficiency: Occurswhen the immune system is compromised due to an environmental factor. Examples of these outside forces include HIV, chemotherapy, severe burns or malnutrition. • Von Willebrand Disease (vWD): This is the most common hereditary coagulation abnormality described in humans, although it can also be acquired as a result of other medical conditions. It arises from a qualitative or quantitative deficiency of von Willebrand factor (vWF), a multimeric protein that is required for platelet adhesion. • SubQ: Sub-cutaneous. • ROW: Rest of the World • Thrombin: Enzyme that presides over the conversion of a substance called fibrinogen to fibrin, which promotes blood clotting.

 

 

 

 

7567-2-be_part 5 of 5 2020 certification consolidated fs.jpg GRIFOLS, S.A. AND SUBSIDIARIES (Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails) At their meeting held on 19 February 2021, pursuant to legal requirements, the Directors of Grifols, S.A. authorized for issue the consolidated annual accounts and consolidated directors’ report for the period from 1 January 2020 to 31 December 2020. The consolidated annual certification. accounts comprise the documents that precede this Victor Grifols Roura (signed) Chairman Víctor Grifols Deu (signed) Chief Executive Officer Raimon Grifols Roura (signed) Chief Executive Officer Carina Szpilka Lázaro (signed) Board member Tomás Dagà Gelabert (signed) Board member Thomas Glanzmann (signed) Vice-Chairman Iñigo Sánchez-Asiaín Mardones (signed) Board member Enriqueta Felip Font James Costos (signed) (signed) Board member Board member Steven F. Mayer Belen Villalonga Morenés (signed) Board member Marla E. Salmon (signed) Board member (signed) Board member Ramón Riera Roca Nuria Martín Barnés (signed) Board Member (signed) Secretary to the Board

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

  Grifols, S.A.
     
     
  By:   /s/ David I. Bell
    Name: David I. Bell
    Title: Authorized Signatory

 

Date:  February 26, 2021