SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2013
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                       to
o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission file number 001-35193

GRIFOLS, S.A.

(Exact name of Registrant as specified in its charter)

Kingdom of Spain

(Jurisdiction of incorporation)

Avinguda de la Generalitat, 152-158

Parc de Negocis Can Sant Joan

Sant Cugat del Vallès 08174

Barcelona, Spain

(Address of principal executive offices)

David Ian Bell

General Counsel

Grifols Inc.

2410 Lillyvale Ave

Los Angeles, CA 90032-3514

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered, pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
American Depositary Shares evidenced by American Depositary Receipts, each American Depositary Share representing one Class B non-voting share of Grifols, S.A.	The NASDAQ Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None.

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None.

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes   o No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes   x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o Yes   o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer o Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

US GAAP o International Financial Reporting Standards as issued
by the International Accounting Standards Board x Other o

If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17   x Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes   x No

Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of business covered by the annual report.

213,064,899 Class A Shares

130,712,555 Class B Shares

GRIFOLS, S.A.

TABLE OF CONTENTS

				Page
PRESENTATION OF FINANCIAL AND OTHER INFORMATION				i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS				ii
	PART I			1
		Item 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
		Item 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1
		Item 3.	KEY INFORMATION	1
		Item 4.	INFORMATION ON THE COMPANY	27
		Item 4.A.	UNRESOLVED STAFF COMMENTS	61
		Item 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	61
		Item 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	86
		Item 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	97
		Item 8.	FINANCIAL INFORMATION	101
		Item 9.	THE OFFER AND LISTING	104
		Item 10.	ADDITIONAL INFORMATION	109
		Item 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	126
		Item 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.	128
	PART II			129
		Item 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	129
		Item 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	129
		Item 15.	CONTROLS AND PROCEDURES	129
		Item 16.	[RESERVED]	130
		Item 16.A.	AUDIT COMMITTEE FINANCIAL EXPERT	130
		Item 16.B.	CODE OF ETHICS	130
		Item 16.C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	130
		Item 16.D.	EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	131
		Item 16.E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	131
		Item 16.F.	CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT	131

	Item 16.G.	CORPORATE GOVERNANCE	131
	Item 16.H.	MINE SAFETY DISCLOSURE	134
PART III			135
	Item 17.	FINANCIAL STATEMENTS	135
	Item 18.	FINANCIAL STATEMENTS	135
	Item 19.	EXHIBITS	135

GENERAL INFORMATION

As used in this annual report on Form 20-F, unless the context otherwise requires or as is otherwise indicated:

·all references to “Grifols,” the “Company,” “we,” “us” and “our” refer to Grifols, S.A., a company (sociedad anónima) organized under the laws of Spain, and our consolidated subsidiaries, and for all periods following the closing of the acquisition of Talecris Biotherapeutics Holdings Corp., on June 1, 2011, these terms include Talecris Biotherapeutics Holdings Corp.; and

·all references to the “Group” or the “Grifols Group” are to Grifols, S.A. and the group of companies owned or controlled by Grifols, S.A.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

The basis of presentation of financial information of Grifols in this document is in conformity with the International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, and other legislative provisions containing the applicable legislation governing our financial information, unless indicated otherwise.

Talecris has been included in our consolidated financial statements from June 2, 2011, the day following the consummation of the acquisition.

All references in this annual report on Form 20-F to (i) “euro,” “€” or “EUR” are to the common currency of the European Union and (ii) “U.S. dollar,” “$” or “USD” are to the currency of the United States, or U.S.

All tabular disclosures are presented in thousands of euro except share and per share amounts, percentages and as otherwise indicated.  Certain monetary amounts and other figures included in this annual report on Form 20-F have been subject to rounding adjustments.  Accordingly, any discrepancies in any tables between the totals and the sums of amounts listed are due to rounding.

Revenue variance in constant currency is presented in this document.  Revenue variance in constant currency is determined by comparing adjusted current period revenue, calculated using prior period monthly average exchange rates, to the prior period revenue. The resulting percentage variance in constant currency is considered to be a non-IFRS financial measure. Revenue variance in constant currency calculates revenue variance without the impact of foreign exchange fluctuations. We believe that constant currency revenue variance is an important measure of our operations because it neutralizes foreign exchange impact and better illustrates the underlying change in revenue from one year to the next. We believe that this presentation provides a more useful period over period comparison as changes due solely to changes in exchange rates are eliminated. Revenue variance in constant currency, as defined and presented by us, may not be comparable to similar measures reported by other companies. Revenue variance in constant currency has limitations, particularly because the currency effects that are eliminated constitute a significant element of our revenue and expenses and could impact our performance significantly. We do not evaluate our results and performance without considering revenue variances in constant currency on the one hand and changes in revenue prepared in accordance with IFRS on the other. We caution the reader to follow a similar approach by considering data regarding constant currency period over period revenue variance only in addition to, and not as a substitute for or superior to, other measures of financial performance prepared in accordance with IFRS. We present the fluctuation derived from IFRS revenue next to the fluctuation derived from non-IFRS revenue.

PRESENTATION OF MARKET INFORMATION

Market information (including market share, market position and industry data for our operating activities and those of our subsidiaries or of companies acquired by us) or other statements presented in this annual report on Form 20-F regarding our position (or that of companies acquired by us) relative to our competitors largely reflect the best estimates of our management.  These estimates are based upon information obtained from customers, trade or business organizations and associations, other contacts within the industries in which we operate and, in some cases, upon published statistical data or information from independent third parties.  Except as otherwise stated, our market share data, as well as our management’s assessment of our comparative competitive position, has been derived by comparing our sales figures for the relevant period to our management’s estimates of our competitors’ sales figures for such period, as well as upon published statistical data and information from independent third parties, and, in particular, the reports published and the information made available by, among others, the Marketing Research Bureau, or MRB.  You should not rely on the market share and other market information presented herein as precise measures of market share or of other actual conditions.

i

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains statements that constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  Forward-looking statements are typically identified by words such as “may,” “anticipate,” “believe,” “estimate,” “predict,” “expect,” “intend,” “forecast,” “will,” “would,” “should” or the negative of such terms or other variations on such terms or comparable or similar words or expressions.

These forward-looking statements reflect, as applicable, our management’s current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially.  These factors include, but are not limited to: our significant indebtedness; our ability to service our indebtedness, which in turn depends on our ability to generate cash; the restrictive covenants governing our debt; risks related to compliance with reporting obligations under U.S. securities laws and our internal control over financial reporting; limitations on the enforcement of civil liabilities under U.S. securities laws; the risks associated with the potential damage or contamination of plasma, our main raw material; side effects associated with our products; our adherence to current good manufacturing practice, or cGMP; our ability to procure adequate quantities of plasma and other materials that are acceptable for use in our manufacturing processes; fluctuations in the balance between supply and demand with respect to the market for plasma-derived products; product concentration risk; increased competition in our industry; the impact of competitive products and the pricing and actions of competitors; potential product liability claims or product recalls involving our products; the impact of our substantial capital expenditures; market risks, such as interest rate risk and foreign exchange rate risk; the unprecedented volatility in the global economy and fluctuations in the financial markets; unexpected shut-downs of our manufacturing and storage facilities or delays in opening new facilities; disruptions in our distribution channels; our ability to protect our intellectual property rights and defend against allegations of infringement by others; our ability to commercialize products in development; implementation of healthcare reform law in the U.S.; potential decreases or limitations on reimbursement for purchasers of our products; regulatory actions or lawsuits brought under federal or state laws; extensive environmental, health and safety laws and regulations; our ability to maintain compliance with government regulations and licenses, including those related to plasma collection, production, and marketing; and other factors that are set forth below under Item 3 of this Part I, “Key Information — D. Risk Factors.”

We include forward-looking statements in Item 4, Item 5 and Item 11 of this Part I, “Information on the Company,” “Operating and Financial Review and Prospects” and “Quantitative and Qualitative Disclosures About Market Risk,” respectively.  Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those listed above, and actual results may differ materially from those in the forward-looking statements.

The forward-looking statements contained in this annual report speak only as of the date of this annual report.  Except as required by law, we do not undertake to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

ii

PART I

Item 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A.Directors and Senior Management

Not applicable.

B.Advisers

Not applicable.

C.Auditor

Not applicable.

Item 2.OFFER STATISTICS AND EXPECTED TIMETABLE

A.Offer Statistics

Not applicable.

B.Method and Expected Timetable

Not applicable.

Item 3.KEY INFORMATION

A.Selected Financial Data

Selected Consolidated Financial Information

The following is a summary of our historical consolidated financial data for the periods ended and at the dates indicated below.  You are encouraged to read this information together with Item 5 of this Part I, “Operating and Financial Review and Prospects,” and our audited consolidated financial statements and the accompanying notes included in this annual report on Form 20-F.

The following table presents our consolidated financial data for the periods and as of the dates indicated.  Our consolidated balance sheet data as of December 31, 2013 and 2012 and our consolidated statement of operations data for the years ended December 31, 2013, 2012 and 2011 is derived from our audited consolidated financial statements for those years, which are included in this annual report on Form 20-F.  Our consolidated balance sheet data as of December 31, 2011, 2010 and 2009 and our consolidated statement of operations data for the years ended December 31, 2010 and 2009 is derived from our consolidated financial statements for those years, which are not included in this Form 20-F.

1

	As of December 31,
Consolidated Balance Sheet Data	2013		2012		2011		2010		2009
	(in thousands of euros)
ASSETS
Goodwill	1,829,141		1,869,899		1,895,101		189,448		174,000
Other intangible assets	946,435		969,095		1,008,307		78,299		69,385
Property, plant and equipment	840,238		810,107		775,869		434,131		371,705
Investments in equity accounted investees	35,765		2,566		1,001		598		383
Non-current financial assets	15,196		16,526		12,401		7,535		3,731
Deferred tax assets	34,601		24,717		18,106		34,889		33,395
Total non-current assets	3,701,376		3,692,910		3,710,785		744,900		652,599
Inventories	946,913		998,644		1,030,341		527,865		484,462
Trade and other receivables
Trade receivables	385,537		366,022		408,263		224,355		207,840
Other receivables	36,511		43,833		108,616		44,032		39,540
Current income tax assets	43,533		37,318		15,110		14,607		7,802
Trade and other receivables	465,581		447,173		531,989		282,994		255,182
Other current financial assets	1,200		460		16,904		12,946		8,217
Other current assets	17,189		14,960		9,395		80,628		7,345
Cash and cash equivalents	708,777		473,327		340,586		239,649		249,372
Total current assets	2,139,660		1,934,564		1,929,215		1,144,082		1,004,578
Total Assets	5,841,036		5,627,474		5,640,000		1,888,982		1,657,177
EQUITY AND LIABILITIES
Share capital	119,604		117,882		117,882		106,532		106,532
Share premium	910,728		890,355		890,355		121,802		121,802
Reserves	883,415		620,144		568,274		403,604		314,903
Treasury stock	0		(3,060	)	(1,927	)	(1,927	)	(677	)
Interim dividend	(68,755	)	0		0		0		0
Profit for the year attributable to the Parent	345,551		256,686		50,307		115,513		147,972
Total equity	2,190,543		1,882,007		1,624,891		745,524		658,572
Cash flow hedges	(25,791	)	(33,036	)	(21,184	)	(1,751	)	(1,948	)
Translation differences	(63,490	)	27,797		58,800		(50,733	)	(90,253	)
Other comprehensive income/(loss)	(89,281	)	(5,239	)	37,616		(52,484	)	(92,201	)
Equity attributable to the Parent	2,101,262		1,876,768		1,662,507		693,040		566,371
Non-controlling interests	5,942		3,973		2,487		14,350		12,157
Total Equity	2,107,204		1,880,741		1,664,994		707,390		578,528
LIABILITIES
Grants	7,034		5,855		1,366		2,088		2,311
Provisions	4,202		3,348		11,502		1,378		1,232
Non-current financial liabilities	2,553,211		2,690,819		2,945,788		675,859		715,738
Deferred tax liabilities	454,089		453,846		370,723		79,141		60,325
Total non-current liabilities	3,018,536		3,153,868		3,328,929		758,466		779,606
Provisions	51,459		55,139		81,112		4,365		4,702
Current financial liabilities	258,144		195,578		162,296		209,871		126,221
Debts with associates	2,683		2,668		2,435		1,162		—
Trade and other payables
Suppliers	273,621		228,405		280,722		160,678		120,909
Other payables	42,388		27,357		27,335		11,928		17,832
Current income tax liabilities	2,934		5,679		4,691		4,172		3,258
Total trade and other payables	318,943		261,441		312,748		176,778		141,999
Other current liabilities	84,067		78,039		87,486		30,950		26,121
Total current liabilities	715,296		592,865		646,077		423,126		299,043
Total Liabilities	3,733,832		3,746,733		3,975,006		1,181,592		1,078,649
Total Equity and Liabilities	5,841,036		5,627,474		5,640,000		1,888,982		1,657,177

2

	For the Year Ended December 31,
Consolidated Statement of Operations Data	2013		2012		2011(1)		2010(1)		2009(1)
	(in thousands of euros, except for per share and share data)
Continuing Operations
Net revenue	2,741,732		2,620,944		1,795,613		990,730		913,186
Cost of sales	(1,323,880	)	(1,291,345	)	(968,133	)	(529,400	)	(468,678	)
Gross Profit	1,417,852		1,329,599		827,480		461,330		444,508
Research and development	(123,271	)	(124,443	)	(89,360	)	(40,656	)	(35,387	)
Selling, general and administration expenses	(558,461	)	(545,072	)	(459,259	)	(210,991	)	(182,593	)
Operating Expenses	(681,732	)	(669,515	)	(548,619	)	(251,647	)	(217,980	)
Operating Results	736,120		660,084		278,861		209,683		226,528
Finance income	4,869		1,677		5,761		4,526		7,067
Finance costs	(239,991	)	(284,117	)	(200,562	)	(49,660	)	(27,087	)
Change in fair value of financial instruments	(1,786	)	13,013		1,279		(7,593	)	(587	)
Impairment of gains/(losses) on disposal of financial instruments	792		2,107		(805	)	91		(245	)
Exchange losses	(1,303	)	(3,409	)	(3,477	)	1,616		(1,733	)
Finance result	(237,419	)	(270,729	)	(197,774	)	(51,020	)	(22,585	)
Share of profit/(losses) of equity accounted investees	(1,165	)	(1,407	)	(1,064	)	(879	)	51
Profit before income tax from continuing operations	497,536		387,948		80,023		157,784		203,994
Income tax expense	(155,482	)	(132,571	)	(29,795	)	(42,517	)	(56,424	)
Profit after income tax from continuing operations	342,054		255,377		50,228		115,267		147,570
Consolidated profit for the year	342,054		255,377		50,228		115,267		147,570
Profit attributable to the Parent	345,551		256,686		50,037		115,513		147,972
Profit/(loss) attributable to non-controlling interests	(3,497	)	(1,309	)	(79	)	(246	)	(402	)
Basic earnings per ordinary share	1.01		0.75		0.16		0.45		0.58
Average number of shares	340,505,298		342,701,194		308,036,270		258,899,952		255,442,596
Basic earnings per ordinary share from continuing operations	1.01		0.75		0.16		0.45		0.58
Cash dividend per ordinary share	0.20		—		—		0.13		0.38
Cash dividend per preference share	0.01		—		—		—		—

(1)In 2012, we changed the presentation of the consolidated statement of operations data by functions instead of by nature. We believe that this will enable a better understanding of the profitability of our business. Consequently, comparative data for 2011, 2010 and 2009 has also been modified, to conform to the current presentation. For more information please see our audited consolidated financial statements, which are included in this annual report on Form 20-F.

3

	For the Year Ended December 31,
Consolidated Statement of Comprehensive Income	2013		2012		2011		2010		2009
	(in thousands of euros)
Consolidated profit for the year	342,054		255,377		50,228		115,267		147,570
Other comprehensive expenses
Items for reclassification to profit or loss
Translation differences	(91,610	)	(31,016	)	109,607		42,225		(4,145	)
Equity accounted investees(1)	(359	)	0		0		0		0
Available-for-sale financial assets — changes in fair value	0		0		0		0		(18	)
Available-for-sale financial assets — amounts taken to profit and loss	0		0		0		0		245
Cash flow hedges — effective part of changes in fair value	22,943		(25,140	)	(33,871	)	0		(3,275	)
Cash flow hedges — amounts taken to profit and loss	(11,471	)	6,300		2,870		324		80
Tax effect	(4,227	)	6,988		11,568		(127	)	1,178
Other comprehensive income/(loss) for the year, after tax	(84,742	)	(42,868	)	90,174		42,422		(5,935	)
Total comprehensive income for the year	257,330		212,509		140,402		157,689		141,635
Total comprehensive income attributable to the Parent	261,509		213,831		140,407		155,230		140,386
Total comprehensive income/(expense) attributable to non-controlling interests	(4,179	)	(1,322	)	(5	)	2,459		1,249

(1)In 2013, we changed the presentation of the consolidated statements of comprehensive income as required by IAS 1, effective for annual periods beginning on or after July 1, 2012.

4

Exchange Rates

The following tables show, for the periods indicated, the exchange rate between the U.S. dollar and the euro.  This information is provided solely for your information and we do not represent that euro could be converted into U.S. dollars at these rates or at any other rate, during the periods indicated or at any other time.  These rates are not the rates used by us in the preparation of our audited consolidated financial statements included in this annual report on Form 20-F.

As used in this annual report on Form 20-F, the term “Noon Buying Rate” refers to the rate of exchange for euro, expressed in U.S. dollars per euro, in the City of New York for cable transfers payable in foreign currencies as certified by the Federal Reserve Bank of New York for customs purposes.  The Noon Buying Rate for the euro on March 28, 2014 was $1.3753 = €1.00.  The following tables describe, for the periods and dates indicated, information concerning the Noon Buying Rate for the euro.  Amounts are expressed in U.S. dollars per €1.00.

Annual Data (Year Ended December 31,)	PeriodEnd ($)	AverageRate ($) (1)	High ($)	Low ($)
2009	1.4332	1.3955	1.5100	1.2547
2010	1.3269	1.3216	1.4536	1.1959
2011	1.2926	1.4002	1.4875	1.2926
2012	1.3186	1.2902	1.3463	1.2062
2013	1.3766	1.3281	1.3816	1.2774

Source:  Federal Reserve Bank of New York

(1)The average of the Noon Buying Rates for the euro on the last day reported of each month during the relevant period.

Recent Monthly Data	High ($)	Low ($)
September 2013	1.3537	1.3120
October 2013	1.3810	1.3490
November 2013	1.3606	1.3357
December 2013	1.3816	1.3552
January 2014	1.3682	1.3500
February 2014	1.3806	1.3507
March 2014 (through March 28th)	1.3927	1.3731

B.Capitalization and Indebtedness

Not Applicable.

C.Reasons for the Offer and Use of Proceeds

Not Applicable.

D.Risk Factors

Risk Relating to Our Structure, Shares and American Depositary Shares

Our substantial level of indebtedness could adversely affect our financial condition, restrict our ability to react to changes to our business, and prevent us from fulfilling our obligations under our debt.

On November 10, 2013, we entered into a share and asset agreement, or the Novartis Agreement, with Novartis Vaccines and Diagnostics, Inc., or “NVD,” and, solely as a Guarantor, Novartis Corporation, or “Novartis,” which was subsequently amended on December 27, 2013 and January 9, 2014 to acquire Novartis’ diagnostic business. The transactions contemplated by the Novartis Agreement are referred to herein as the Novartis Acquisition. In connection with the Novartis Acquisition, we (i) entered into a credit and guaranty agreement dated as of February 24, 2014 (as amended, the “New Credit Facilities”), which consists of the “Senior Term Loans” and the “Revolving Loans” and (ii) issued $1.0 billion aggregate principal amount of 5.25% senior notes due 2022 (the “Notes”). As of the date of this annual report on Form 20-F, no amounts have been drawn on the Revolving Loans. As of December 31, 2013, after giving pro forma effect to the Novartis Acquisition, the entry into the New Credit Facilities and the offering of the Notes and we would have $5.4 billion of indebtedness outstanding.  See Item 5 of this Part I, “Operating and Financial Review and

5

Prospects — B. Liquidity and Capital Resources — Sources of Credit,” for terms of the New Credit Facilities and Notes and for more detailed information.

Our high level of indebtedness could have significant adverse effects on our business, including the following:

·make it more difficult for us to satisfy our obligations with respect to our outstanding debt;

·make us more vulnerable to economic downturns and adverse developments in our business;

·our ability to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes may be impaired;

·we must use a substantial portion of our cash flow from operations to pay interest on our indebtedness, which will reduce the funds available to us for operations and other purposes;

·all of the indebtedness outstanding under our purchase money indebtedness, equipment financing, and real estate mortgages will have a prior ranking claim on the underlying assets;

·our ability to fund a change of control offer may be limited;

·place us at a competitive disadvantage compared to our competitors that may have proportionately less debt;

·our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and

·we may be restricted from making strategic acquisitions or exploiting other business opportunities.

We expect to use cash flow from operations to pay our expenses and amounts due under our outstanding indebtedness. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic, and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future and our anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness or to fund other liquidity needs. If we do not have enough money, we may be required to refinance all or part of our then existing debt, sell assets or borrow more money. We may not be able to accomplish any of these alternatives on terms acceptable to us, or at all. In addition, the terms of existing or future debt agreements, including the New Credit Facilities and the indenture governing the Notes, may restrict us from adopting any of these alternatives. The failure to generate sufficient cash flow or to achieve any of these alternatives could materially and adversely affect our business, results of operations and financial condition.

Despite our substantial indebtedness, we may still incur significantly more debt.  This could exacerbate the risks associated with our substantial leverage.

We may be able to incur substantial additional indebtedness, including additional secured indebtedness, in the future. Our business is capital intensive, and we regularly seek additional capital. Although the indenture governing the Notes and the New Credit Facilities contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances, debt incurred in compliance with these restrictions, including secured debt, could be substantial. Adding additional debt, including under the New Credit Facilities, to current debt levels could exacerbate the leverage related risks described above.  For more information on our indebtedness, see Item 5 of this Part I, “Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Sources of Credit.”

To service our indebtedness and other obligations, we will require a significant amount of cash.  Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future. A significant reduction in our operating cash flows resulting from changes in economic conditions, increased competition or other events beyond our control could increase the need for additional or alternative sources of liquidity and could have a material adverse effect on our business, financial condition, results of operations, prospects and our ability to service our debt and other obligations. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as reducing capital expenditures, selling assets, restructuring or refinancing

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our indebtedness or seeking additional equity capital. We cannot assure you that any of these alternative strategies could be effected on satisfactory terms, if at all, or that they would yield sufficient funds to make required payments on our indebtedness.

We cannot assure you that our business will generate sufficient cash flows from operations or that future borrowings will be available to us under the New Credit Facilities or otherwise in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before the maturity such indebtedness. We cannot assure you that we will be able to refinance any of our indebtedness, including the New Credit Facilities and our Notes, on commercially reasonable terms or at all.

Covenants in our debt agreements restrict our business in many ways.

The agreements governing our indebtedness and other financial obligations applicable to us contain various covenants, with customary caveats, that limit our ability and/or our restricted subsidiaries’ ability to, among other things:

·incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons;

·issue redeemable stock and preferred equity;

·pay dividends to the shareholders of Grifols, S.A. or distributions or redeem or repurchase capital stock;

·prepay, redeem or repurchase debt;

·make loans, investments and capital expenditures;

·enter into agreements that restrict distributions from our restricted subsidiaries;

·sell assets and capital stock of our subsidiaries;

·enter into certain transactions with affiliates; and

·consolidate or merge with or into, or sell substantially all of our assets to, another person.

A breach of any of these covenants could result in a default under our New Credit Facilities and/or our Notes. Upon the occurrence of an event of default under the New Credit Facilities, the lenders could elect to declare all amounts outstanding under the New Credit Facilities to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders could proceed against the collateral granted to them to secure that indebtedness. We have pledged a significant portion of our assets as collateral under the New Credit Facilities. If the lenders under the New Credit Facilities accelerate the repayment of borrowings, we may not have sufficient assets to repay the New Credit Facilities and our other indebtedness, including our Notes.  Our borrowings under the New Credit Facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease.

Our ability to meet our financial obligations depends on our ability to receive dividends and other distributions from our subsidiaries.

Our principal assets are the equity interests that we hold in our operating subsidiaries. As a result, we are dependent on dividends and other distributions from our subsidiaries to generate the funds necessary to meet our financial obligations, including the payment of principal and interest on our outstanding debt. Our subsidiaries may not generate sufficient cash from operations to enable us to make principal and interest payments on our indebtedness. In addition, any payment of dividends, distributions, loans or advances to us by our subsidiaries could be subject to restrictions on dividends or, in the case of foreign subsidiaries, restrictions on repatriation of earnings under applicable local law and monetary transfer restrictions in the jurisdictions in which our subsidiaries operate. In addition, payments to us by our subsidiaries will be contingent upon our subsidiaries’ earnings. Our subsidiaries are permitted under the terms of our indebtedness to incur additional indebtedness that may restrict payments from those subsidiaries to us. We cannot assure you that agreements governing current and future indebtedness of our subsidiaries will permit those subsidiaries to provide us with sufficient cash to fund payments on our indebtedness when due.

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Our subsidiaries are legally distinct from us and, except for existing and future subsidiaries that will be guarantors of certain indebtedness, have no obligation, contingent or otherwise, to pay amounts due on our debt or to make funds available to us for such payment.

We are a foreign private issuer under the rules and regulations of the Securities and Exchange Commission and, thus, are exempt from a number of rules under the Securities Exchange Act of 1934 and are permitted to file less information with the Securities and Exchange Commission than a company incorporated in the U.S.

As a foreign private issuer under the Securities Exchange Act of 1934, or Exchange Act, we are exempt from certain rules under the Exchange Act, including the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations.  Moreover, we are not required to file periodic reports and financial statements with the Securities and Exchange Commission, or SEC, as frequently or as promptly as U.S. companies with securities registered under the Exchange Act; we are not required to file financial statements prepared in accordance with United States generally accepted accounting principles; and we are not required to comply with SEC Regulation FD, which imposes certain restrictions on the selective disclosure of material information.  In addition, our officers, directors and principal shareholders are not subject to the reporting or short-swing profit recovery provisions of Section 16 of the Exchange Act or the rules under the Exchange Act with respect to their purchases and sales of our Class A shares or Class B shares.  Accordingly, you may receive less information about us than you would receive about a company incorporated in the U.S. and may be afforded less protection under the U.S. federal securities laws than you would be afforded with respect to a company incorporated in the U.S. If we lose our status as a foreign private issuer at some future time, we will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements as if we were a company incorporated in the U.S. The costs incurred in fulfilling these additional regulatory requirements could be substantial.

Additionally, pursuant to The NASDAQ Stock Market LLC, or NASDAQ, Listing Rules, as a foreign private issuer, we may elect to follow our home country practice in lieu of the corporate governance requirements of the NASDAQ Listing Rule 5600 Series, with the exception of those rules that are required to be followed pursuant to the provisions of NASDAQ Listing Rule 5615(a)(3).  We have elected to follow Spanish practices in lieu of the requirements of the NASDAQ Listing Rule 5600 Series to the extent permitted under NASDAQ Listing Rule 5615(a)(3).  See Item 16.G. of Part II, “Corporate Governance.”

If we discover material weaknesses or significant deficiencies in our internal control over financial reporting, it may adversely affect our ability to provide timely and reliable financial information and satisfy our reporting obligations under U.S. federal securities laws, which also could affect the market price of our American Depositary Shares or our ability to remain listed on NASDAQ.

Effective internal and disclosure controls are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company.  If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed.  A “significant deficiency” is a deficiency, or combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention of those responsible for oversight of our financial reporting.

To the extent that any material weakness or significant deficiency exists in our or our consolidated subsidiaries’ internal control over financial reporting, such material weakness or significant deficiency may adversely affect our ability to provide timely and reliable financial information necessary for the conduct of our business and satisfaction of our reporting obligations under U.S. federal securities laws, which could affect our ability to remain listed on NASDAQ.  Ineffective internal and disclosure controls could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our American Depositary Shares, or ADSs, or the rating of our debt.

The Grifols family may exercise significant influence over the conduct of our business.

The Grifols family and Scranton Enterprises B.V. own, directly and indirectly, 35.3% of our Class A shares.  The Class A shares exercise 100% of voting control of our company.  As a result, the Grifols family and Scranton Enterprises B.V. may exercise significant influence over matters requiring shareholders’ approval, including, among other things, the election of our board of directors, or Board, dividend policy and certain fundamental corporate action, such as the issuance of bonds, a merger or a dissolution.  Conflicts may arise between the interests of the principal shareholders and those of the other shareholders, and the principal shareholders may choose to resolve the conflict in a way that does not coincide with the interests of the other shareholders.

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The market price of our Class B ADSs on NASDAQ may be volatile.

The market price of our Class B ADSs may be volatile as a result of various factors, many of which are beyond our control.  These factors include, but are not limited to, the following:

·market expectations for our financial performance;

·actual or anticipated fluctuations in our results of operations and financial condition;

·changes in the estimates of our results of operations by securities analysts;

·potential or actual sales of blocks of our Class B ADSs in the market by any shareholder or short selling of our Class B ADSs.  Any such transaction could occur at any time or from time to time, with our without notice;

·the entrance of new competitors or new products in the markets in which we operate;

·volatility in the market as a whole; and

·the risk factors mentioned in this section.

The market price of our Class B ADSs may be adversely affected by any of the preceding or other factors regardless of operations and financial condition.

Fluctuations in the exchange rate between the U.S. dollar and the euro may increase the risk of holding our ADSs or shares.

The Spanish securities market for equity securities consists of four stock exchanges located in Madrid, Barcelona, Bilbao and Valencia, or, collectively, the Spanish Stock Exchanges.  The majority of the transactions conducted on the Spanish Stock Exchanges are done through the Spanish Automated Quotation System (Sistema de Inteconexión Bursátil Español, or SIBE).

Our Class A shares and Class B shares are listed on the Spanish Stock Exchanges and quoted on the Spanish Automated Quotation System in euro.  In addition, our Class B shares are traded in the U.S. on the NASDAQ Global Select Market in the form of ADSs, evidenced by American Depositary Receipts, or ADRs, in U.S. dollars.  Fluctuations in the exchange rate between the U.S. dollar and the euro may result in temporary differences between the value of our ADSs and the value of our shares, which may result in heavy trading by investors seeking to exploit such differences.  This may increase the volatility of, and have an adverse effect on, the price of our shares or ADSs.

In addition, as a result of fluctuations in the exchange rate between the U.S. dollar and the euro, the U.S. dollar equivalent of the proceeds that a holder of our ADSs would receive upon the sale in Spain of any shares withdrawn from the ADR depositary and the U.S. dollar equivalent of any cash dividends paid in euro on our shares represented by the ADSs could also decline.

Subscription (or preemptive) rights may be unavailable to U.S. holders of our shares or ADSs.

In the case of a future increase of our registered share capital, existing shareholders will generally be entitled to subscription (or preemptive) rights pursuant to Spanish law, unless waived by a resolution of the shareholders or, if such power has been delegated to the Board pursuant to a shareholders’ resolution, by a resolution of the Board and except in certain situations, such as capital increases made for an in-kind contribution, in which subscription (or preemptive) rights are not applicable by law.  Holders of the Class B shares will generally not have a right to vote on any resolution on a capital increase or on the waiver of subscription (or preemptive) rights, unless such resolution does not treat the Class B shares in the same way as the Class A shares, except in the limited circumstances set out in the Articles of Association of Grifols, S.A., or Articles of Association.

Even if preemptive rights are granted, holders of our ADSs or U.S. resident shareholders may not be able to exercise subscription (or preemptive) rights, in which case holders of our ADSs could be substantially diluted, unless a registration statement under the Securities Act of 1933, or Securities Act, is effective with respect to such rights and the shares for which they give such right or an exemption from the registration requirements of the Securities Act is available.

We intend to evaluate at the time of any rights offering the costs and potential liabilities associated with any such registration requirements, as well as the benefits of enabling the exercise of subscription (or preemptive) rights for the shares.  In doing so, we will also evaluate any other factors that we may consider appropriate at the time.

There can be no assurance that we will decide to comply with such registration requirements.  If no such registration requirements are satisfied, the depositary will sell the subscription (or preemptive) rights relating to the ADSs on deposit and will

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distribute the proceeds of such sale, if any, to the holders of the ADSs.  If the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case no value will be given for these rights.

ADS holders may be subject to limitations on the transfer of their ADSs.

ADSs are transferable on the books of the depositary.  However, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when the books of the depositary are closed or if such action is deemed necessary or advisable by the depositary or by us because of any requirement of law or of any government or governmental body or commission or under any provision of the deposit agreement.  Moreover, the surrender of ADSs and withdrawal of our shares may be suspended subject to the payment of fees, taxes and similar charges or if we direct the depositary at any time to cease new issuances and withdrawals of our shares during periods specified by us in connection with shareholders’ meetings, the payment of dividends or as otherwise reasonably necessary for compliance with any applicable laws or government regulations.

Your ability to enforce civil liabilities under U.S. securities laws may be limited.

We are a company organized under the laws of Spain, and many of our subsidiaries are also incorporated outside of the U.S.  A substantial portion of our assets and the assets of our subsidiaries are located outside of the U.S. In addition, nearly all of our directors and officers and certain of our subsidiaries’ officers are nationals or residents of countries other than the U.S., and all or a substantial portion of such persons’ assets are located outside the U.S. As a result, it may be difficult for investors to effect service of process within the U.S. upon us or certain subsidiaries or their directors or officers with respect to matters arising under the Securities Act or to enforce against them judgments of courts of the U.S. predicated upon civil liability under the Securities Act.  It may also be difficult to recover fully in the U.S. on any judgment rendered against such persons or against us or certain of our subsidiaries.

In addition, there is doubt as to the enforceability in Spain of original actions, or of actions for enforcement of judgments of U.S. courts of liabilities, predicated solely upon the securities laws of the U.S. If a judgment was obtained outside Spain and efforts were made to enforce the judgment in Spain, there is some doubt that Spanish courts would agree to recognize and enforce a foreign judgment.  Accordingly, even if you obtain a favorable judgment in a U.S. court, you may be required to re-litigate your claim in Spain.

Risks Relating to Our Business

Our manufacturing processes are complex and involve biological intermediates that may be susceptible to contamination and variations in yield.

Plasma is a raw material that is susceptible to damage and contamination and may contain human pathogens, any of which would render the plasma unsuitable for further manufacturing. For instance, contamination or improper storage of plasma by us or third-party suppliers may require us to destroy some of our raw material. If unsuitable plasma is not identified and discarded prior to its release to our manufacturing processes, it may be necessary to discard intermediate or finished product made from that plasma or to recall any finished product released to the market, resulting in a charge to cost of goods sold.

The manufacture of our plasma products is an extremely complex process of fractionation (separating the plasma into component proteins), purification, filling and finishing. Our products can become non-releasable or otherwise fail to meet our specifications through a failure of one or more of our product testing, manufacturing, process controls and quality assurance processes. We may detect instances in which an unreleased product was produced without adherence to our manufacturing procedures or plasma used in our production process was not collected or stored in a compliant manner consistent with cGMP regulations or other regulations, which would likely result in our determination that the impacted products should not be released and therefore should be destroyed.

Once we have manufactured our plasma-derived products, they must be handled carefully and kept at appropriate temperatures. Our failure, or the failure of third parties that supply, ship or distribute our products, to properly care for our plasma-derived products may require that such products be destroyed.

While we expect to write off small amounts of work in process inventories in the ordinary course of business due to the complex nature of plasma, our processes and our products, unanticipated events may lead to write-offs and other costs materially in excess of our expectations. Such write-offs and other costs could cause material fluctuations in our profitability. Furthermore, contamination of our products could cause investors, consumers or other third parties with whom we conduct business to lose confidence in the reliability of our manufacturing procedures, which could adversely affect sales and profits. In addition, faulty or

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contaminated products that are unknowingly distributed could result in patient harm, threaten the reputation of our products and expose us to product liability damages and claims.

Due to the nature of plasma, there will be variations in the biologic properties of the plasma we collect or purchase for fractionation that may result in fluctuations in the obtainable yield of desired fractions, even if cGMP regulations are followed. Lower yields may limit production of our plasma-derived products due to capacity constraints. If such batches of plasma with lower yields impact production for extended periods, it may reduce the total capacity of product that we could market and increase our cost of goods sold, thereby reducing our profitability.

Our manufacture of intermediate immunoassay antigens and antibodies to screen human donated blood and blood products is also a complex biologic process, subject to substantial production risks.

Once our products are approved and marketed, we must continually monitor them for signs that their use may result in serious and unexpected side effects, which could jeopardize our reputation and our ability to continue marketing our products.  We may also be required to conduct post-approval clinical trials as a condition to licensing a product.

As for all pharmaceutical products, the use of our products sometimes produces undesirable side effects or adverse reactions or events, or, collectively, “adverse events.”  For the most part, these adverse events are known, are expected to occur at some frequency and are described in the products’ labeling.  Known adverse events of a number of our products include allergic or anaphylactic reactions including shock and the transmission of infective agents.  Further, the use of certain products sometimes produces additional adverse events, which are detailed below.

·The use of albumin sometimes produces the following adverse events:  hypervolemia, circulatory overload, pulmonary edema, hyperhydration and allergic manifestations including urticaria, chills, fever and changes in respiration, pulse and blood pressure.

·The use of blood clotting factor ix, or Factor IX, sometimes produces the following adverse events:  the induction of neutralizing antibodies; thromboembolism, including myocardial infarction; disseminated intravascular coagulation; venous thrombosis and pulmonary embolism; and, in the case of treatment for immune tolerance induction, nephrotic syndrome.

·The use of the antihemophilic blood clotting factor, or Factor VIII, sometimes produces the following adverse events:  the induction of neutralizing antibodies, thromboembolic events and hemolytic anemia or hemolysis.

·The use of IVIG sometimes produces the following adverse events:  nausea, vomiting, asthenia, pyrexia, rigors, injection site reaction, allergic or anaphylactic reaction, aseptic meningitis, arthralgia, back pain, dizziness, headache, rash, pruritus, urticaria, hemolysis or hemolytic anemia, hyperproteinemia, increased serum viscosity and hyponatremia, thromboembolic reactions such as myocardial infarction, stroke, pulmonary embolism and deep vein thromboses, transfusion-related acute lung injury and renal dysfunction and acute renal failure.

·The use of anti-hepatitis B IVIG sometimes produces the following adverse events:  thromboembolic reactions such as myocardial infarction, stroke, pulmonary embolism and deep vein thromboses, aseptic meningitis, hemolytic anemia or hemolysis and acute renal failure.

·The use of Koate®-DVI, which we license exclusively in the U.S. to Kedrion S.p.A, a corporation organized under the laws of Italy, or Kedrion, sometimes produces the following adverse events:  allergic type reactions; tingling in the arm, ear and face; blurred vision; headache; nausea; stomach ache; and jittery feeling.

·The use of Prolastin® or its successor in the U.S. and Canada, Prolastin®-C, alpha-1 proteinase inhibitor, or A1PI, sometimes produces the following adverse events:  dyspnea, tachycardia, rash, chest pain, chills, influenza-like symptoms, hypersensitivity, hypotension and hypertension.

In addition, the use of our products may be associated with serious and unexpected adverse events, or with less serious reactions at a greater than expected frequency. This may be especially true when our products are used in critically ill patient populations. When these unexpected events are reported to us, we must undertake a thorough investigation to determine causality and implications for product safety. These events must also be specifically reported to the applicable regulatory authorities. If our evaluation concludes, or regulatory authorities perceive, that there is an unreasonable risk associated with the product, we would be obligated to withdraw the impacted lot(s) of that product. Furthermore, an unexpected adverse event caused by a new product may be

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recognized only after extensive use of the product, which could expose us to product liability risks, enforcement action by regulatory authorities and damage to our reputation.

Once we produce a product, we rely on physicians to prescribe and administer it as we have directed and for the indications described on the labeling. It is not, however, unusual for physicians to prescribe our products for unapproved, or off-label, uses or in a manner that is inconsistent with our directions. To the extent such off-label uses and departures from our administration directions become pervasive and produce results such as reduced efficacy or other adverse effects, the reputation of our products in the marketplace may suffer.

Our ability to continue manufacturing and distributing our products depends on our continued adherence to cGMP regulations at our facilities.

The manufacturing processes for our products are governed by detailed written procedures and federal regulations that set forth cGMP requirements for blood and blood products. Our quality operations unit monitors compliance with these procedures and regulations, and the conformance of materials, manufacturing intermediates and final products to their specifications. Failure to adhere to established procedures or regulations, or to meet a specification, could require that a product or material be rejected and destroyed.

Our adherence to cGMP regulations and the effectiveness of our quality systems are periodically assessed through inspections of our facilities by the FDA and analogous regulatory authorities of other countries. If deficiencies are noted during an inspection, we must take action to correct those deficiencies and to demonstrate to the regulatory authorities that our corrections have been effective. If serious deficiencies are noted or if we are unable to prevent recurrences, we may have to recall product or suspend operations until appropriate measures can be implemented. We are also required to report certain deviations from procedures to the FDA and even if we determine that the deviations were not material, the FDA could require us to take similar measures. Since cGMP reflects ever-evolving standards, we regularly need to update our manufacturing processes and procedures to comply with cGMP. These changes may cause us to incur costs without improving our profitability or the safety of our products. For example, more sensitive testing assays (if and when they become available) may be required or existing procedures or processes may require revalidation, all of which may be costly and time consuming and could delay or prevent the manufacturing of a product or launch of a new product.

Changes in manufacturing processes, including a change in the location where the product is manufactured or a change of a third-party manufacturer, may require prior FDA review and approval or revalidation of the manufacturing processes and procedures in accordance with cGMP regulations. There may be comparable foreign requirements.

For example, we finished the construction of a new plant at our facility located in Los Angeles, California in 2013, which we refer to as our Los Angeles facility, for the production of IVIG, as well as construction of a new fractionation plant at our Clayton, North Carolina plasma fractionation and manufacturing facility, which we refer to as our Clayton facility. We have begun the validation process for these plants with the appropriate regulatory authorities. We are also in the process of constructing a new, upgraded facility to assume production of the intermediate immunoassay antigen and antibody products now manufactured at our Emeryville, California plant. To validate our manufacturing processes and procedures following completion of upgraded facilities, we must demonstrate that the processes and procedures at the upgraded facilities are comparable to those currently in place at our other facilities. To provide such a comparative analysis, both the existing processes and the processes that we expect to be implemented at our upgraded facilities must comply with the regulatory standards prevailing at the time that our expected upgrade is completed. In addition, regulatory requirements, including cGMP regulations, continually evolve. Failure to adjust our operations to conform to new standards as established and interpreted by applicable regulatory authorities would create a compliance risk that could impair our ability to sustain normal operations.

Regulatory authorities, including the FDA and the European Medicines Agency, or EMA, routinely inspect our facilities to assess ongoing compliance with cGMP. If FDA, EMA or other authorities find our facilities to be out of compliance, our ongoing operations or plans to expand would be adversely affected.

A significant disruption in our supply of plasma could have a material adverse effect on our business and our growth plans.

The majority of our revenue depends on our access to U.S. source plasma (plasma obtained through plasmapheresis), the principal raw material for our plasma derivative products. Our ability to increase revenue depends substantially on increased access to plasma. If we are unable to obtain sufficient quantities of source plasma, we may be unable to find an alternative cost-effective source of plasma and we would be limited in our ability to maintain current manufacturing levels of plasma derivative products. As a result, we could experience a substantial decrease in net sales or profit margins, a loss of customers, a negative effect on our reputation as a reliable supplier of plasma derivative products or a substantial delay in our production growth plans.

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Our current business plan envisages an increase in the production of plasma derivative products, which depends on our ability to increase plasma collections or improve product yield. The ability to increase plasma collections may be limited, our supply of plasma could be disrupted or the cost of plasma could increase substantially, as a result of numerous factors, including:

·A reduction in the donor pool.  Regulators in most of the largest markets for plasma derivative products, including the U.S., restrict the use of plasma collected from specific countries and regions in the manufacture of plasma derivative products. For example, the appearance of the variant Creutzfeldt Jakob, or mad cow, disease, which resulted in the suspension of the use of plasma collected from U.K. residents and concern over the safety of blood products, which has led to increased domestic and foreign regulatory control over the collection and testing of plasma and the disqualification of certain segments of the population from the donor pool, have significantly reduced the potential donor pool. The appearance of new viral strains could further reduce the potential donor pool. Also, improvements in socioeconomic conditions in the areas where our and our suppliers’ collection centers are located could reduce the attractiveness of financial incentives for donors, resulting in increased donor fees or a reduction in the number of donors.

·Regulatory requirements.  See “—Disruption of the operations of our plasma collection centers would cause us to become supply constrained and our financial performance would suffer.”

·Plasma supply sources.  In recent years, there has been vertical integration in the industry as plasma derivatives manufacturers have been acquiring plasma collection centers. Any significant disruption in the supply of plasma or an increased demand for plasma may require plasma from alternative sources, which may not be available on a timely basis.

Disruption of the operations of our plasma collection centers would cause us to become supply constrained and our financial performance would suffer.

In order for plasma to be used in the manufacturing of our products, the individual centers at which the plasma is collected must be licensed by the FDA and approved by the regulatory authorities, such as the EMA, of those countries in which we sell our products. When a new plasma collection center is opened and on an ongoing basis after its licensure, it must be inspected by the FDA and the EMA for compliance with cGMP and other regulatory requirements. An unsatisfactory inspection could prevent a new center from being licensed or risk the suspension or revocation of an existing license.

In order for a plasma collection center to maintain its license, its operations must continue to conform to cGMP and other regulatory requirements. In the event that we determine a plasma collection center did not comply with cGMP in collecting plasma, we may be unable to use and may ultimately destroy plasma collected from that center, which would be recorded as a charge to cost of goods. Additionally, if noncompliance in the plasma collection process is identified after the impacted plasma has been pooled with compliant plasma from other sources, entire plasma pools, in-process intermediate materials and final products could be impacted. Consequently, we could experience significant inventory impairment provisions and write-offs.

We plan to obtain our supplies of plasma for use in our manufacturing processes through collections at our plasma collection centers and through selective acquisitions or remodeling and relocations of existing centers. This strategy is dependent upon our ability to successfully integrate new centers, to obtain FDA and other necessary approvals for the remaining unlicensed centers, to maintain a cGMP compliant environment in all centers, and to attract donors to our centers.

Our ability to increase and improve the efficiency of production at our plasma collection centers may be affected by: (i) changes in the economic environment and population in selected regions where we operate plasma collection centers; (ii) the entry of competitive centers into regions where we operate; (iii) our misjudging the demographic potential of individual regions where we expect to increase production and attract new donors; (iv) unexpected facility related challenges; or (v) unexpected management challenges at select plasma collection centers.

A significant portion of our net revenue has historically been derived from sales of our immunoglobulin products and we expect that they will continue to comprise a significant portion of our sales.  Any adverse market event with respect to these products would have a material adverse effect on us.

We have historically derived a significant portion of our net sales from our immunoglobulin products, including our IVIG products. In 2013, our IVIG products accounted for approximately 45% of our net sales. If any of these IVIG products were to lose significant sales or were substantially or completely displaced in the market, we would lose a significant and material source of our net revenue. Similarly, if either Flebogamma® or Gamunex®-C/Gamunex® were to become the subject of litigation or an adverse governmental ruling requiring us to cease sales of it, our business could be adversely affected. Although we do not currently anticipate

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any significant decrease in the sales of any of these products, a significant decrease could result from plasma procurement and manufacturing issues resulting in lower product availability for sales and changing market conditions.

Our products face increased competition.

Our products have experienced increased competition. Each of Baxter, Biotest, CSL Behring, Kedrion and Octapharma has a 10% liquid IVIG product in the U.S. Both Octapharma and Bio Products Laboratory have launched 5% liquid IVIG products. As competition has increased, some of our competitors have discounted the price of IVIG products as many customers have become increasingly price sensitive with respect to IVIG products. If customers demand lower priced products, we may lose sales or be forced to lower our prices.

Until December 2002, Talecris’ A1PI product, Prolastin® A1PI, was the only plasma product licensed and marketed for the therapy of congenital alpha-1 antitrypsin deficiency-related emphysema in the U.S. Baxter and CSL Behring received licenses for Aralast and Zemaira, respectively, which were launched in the U.S. in 2003. In addition, Kamada Ltd. received approval of its biological license application, or BLA, for its A1PI, Glassia, on July 1, 2010.

While LFB Biomedicaments has a license in France for Alfalastin, we have the only licensed A1PI products with EMA Community marketing authorization. Of our competitors that are currently pursuing licensing trials in Europe, one offers a more concentrated intravenous formulation than the ones we offer in Europe. Should our competitors receive approvals in Europe sooner than expected, it will impact our unit volumes and share of sales. Our current and future competitors may increase their sales, lower their prices or change their distribution model, causing harm to our product sales and financial condition. Also, if the attrition rate of our A1PI patient base accelerates faster than we have forecast, we would have fewer patients and lower sales volume.

Similarly, if a new A1PI formulation with a significantly improved rate of administration (such as aerosol inhalation) is developed, the market share of our A1PI products could be negatively impacted. Similarly, several companies are attempting to develop products which could be substitutions for A1PI, including retinoic acid, oral synthetic elastase inhibitors and gene therapy. While these products are in the early stages of development, they may eventually be successfully developed and launched.

In addition, our plasma-derived products face competition from non-plasma products and other courses of treatments. For example, in 2008, GSK and Amgen launched thrombopoietin inhibitors targeting ITP patients, which may reduce the demand for IVIG to treat ITP.

Other new treatments, such as small molecules, monoclonal or recombinant products, may also be developed for indications for which our products are now used. Recombinant Factor VIII and Factor IX products, which are currently available and widely used in the U.S. and Europe, compete with our own plasma-derived product in the treatment of hemophilia A and B and are perceived by many to have lower risks of disease transmission. Additional recombinant products, some with extended half-lives, could compete with our products and reduce the demand for our products. Crucell and Sanofi Pasteur have completed Phase II clinical trials for a monoclonal rabies product to compete with our rabies hyperimmune product. In February 2009, GTC Biotherapeutics obtained FDA approval of a competitive antithrombin III, or ATIII, a product derived from the milk of transgenic goats for the treatment of hereditary antithrombin deficiency. This product now directly competes with our product, Thrombate® III, which had previously been the only FDA-approved ATIII product. In addition, alternatives exist for albumin in its application as a plasma volume expander. If an increased use of alternative products for Factor VIII, Factor IX or albumin makes it uneconomical to produce our plasma-derived products, or if further technological advances improve these products or create other competitive alternatives to our plasma derivative products, our financial condition and results of operations could be materially adversely affected.

We do not currently sell any recombinant products. We are developing recombinant versions of A1PI and plasmin, but we cannot be certain that any of these products will ever be approved or commercialized. As a result, our product offerings may remain plasma-derived, even if our competitors offer competing recombinant products.

The introduction of products approved for alternative routes of administration, including the subcutaneous route of administration, may also adversely affect sales of our products. For example, in 2010, Biotest introduced a subcutaneous anti-hepatitis preparation and is registering the product in European countries in which we market our anti-hepatitis B IVIG, which could negatively impact our sales.

Beginning in the late 1980s, Talecris (and prior to 2005, Bayer HealthCare LLC, or Bayer) was the “supplier of record” for the Canadian blood system. Talecris was awarded five-year contracts with Canadian Blood Services and Héma-Québec, which jointly operated the Canadian blood system, in December 2007 that became effective April 2008 and terminated in March 2013. Canadian Blood Services and Héma-Québec ended their partnership in 2012 and now negotiate separately with suppliers. Operating separately, Canadian Blood Services comprises approximately 70% and Héma-Québec comprises approximately 30% of the Canadian market for

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plasma products and fractionation services. In 2013, Canadian Blood Services selected us as its primary supplier of both IVIG and fractionation services pursuant to a five-year contract that became effective in April 2013. Héma-Québec negotiated a reduced four-year contract with us that also became effective in April 2013, under which we supply a reduced portion of Héma-Québec’s plasma-derived products and no longer provide fractionation services. Under these new contracts, we maintained our position as the primary immunoglobulin supplier to Canada.

We face competition from companies with greater financial resources.

We operate in highly competitive markets. Our principal competitors include Baxter, CSL Behring and Octapharma. Some of our competitors have significantly greater financial resources than us. As a result, they may be able to devote more funds to research and development and new production technologies, as well as to the promotion of their products and business. These competitors may also be able to sustain for longer periods a deliberate substantial reduction in the price of their products or services. The development by a competitor of a similar or superior product or increased pricing competition may result in a reduction in our net sales or a decrease in our profit margins.

Technological changes in the production of plasma derivative products could render our production process uneconomical.

Technological advances have accelerated changes in many bioscience industries in recent years. Future technological developments could render our production processes for plasma derivative products uneconomical and may require us to invest substantial amounts of capital to upgrade our facilities. Such investments could have a material adverse effect on our financial condition and results of operations. In addition, we may not be able to fund such investment from existing funds or raise sufficient capital to make such investments.

The discovery of new pathogens could slow our growth and adversely affect profit margins.

The possible appearance of new pathogens could trigger the need for changes in our existing inactivation and production methods, including the administration of new detection tests. Such a development could result in delays in production until the new methods are in place, as well as increased costs that may not be readily passed on to our customers.

Product liability claims or product recalls involving our products or products we distribute could have a material adverse effect on our business.

Our business exposes us to the risk of product liability claims that are inherent in the manufacturing, distribution and sale of plasma-derived therapeutic protein products. We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and an even greater risk when we commercially sell any products. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

·decreased demand for our products and any product candidates that we may develop;

·injury to our reputation;

·withdrawal of clinical trial participants;

·costs to defend the related litigation;

·substantial monetary awards to trial participants or patients;

·loss of revenue; and

·the inability to commercialize any products that we may develop.

Like many plasma fractionators, we have been, and may in the future be, involved in product liability or related claims relating to our products, including claims alleging the transmission of disease through the use of such products. Plasma is a biological matter that is capable of transmitting viruses and pathogens, whether known or unknown. Therefore, our plasma and plasma derivative products, if donors are not properly screened or the plasma not properly collected, tested, inactivated, processed, stored and transported, could cause serious disease and possibly death to the patient. See also “—Our ability to continue to produce safe and effective products depends on a plasma supply free of transmittable diseases.” Any transmission of disease through the use of one of our products or third-party products sold by us could result in claims by persons allegedly infected by such products.

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Our potential product liability also extends to our Diagnostic and Hospital division products. In addition, we sell and distribute third-party products, and the laws of the jurisdictions where we sell or distribute such products could also expose us to product liability claims for those products. Furthermore, the presence of a defect in a product could require us to carry out a recall of such product.

A product liability claim or a product recall could result in substantial financial losses, negative reputational repercussions and an inability to retain customers. Although we have a program of insurance policies designed to protect us and our subsidiaries from product liability claims, and we self-insure a portion of this risk, claims made against our insurance policies could exceed our limits of coverage. We intend to expand our insurance coverage as our sales grow. However, as product liability insurance is expensive and can be difficult to obtain, a product liability claim could decrease our access to product liability insurance on acceptable terms. In turn, we may not be able to maintain insurance coverage at a reasonable cost and may not be able to obtain insurance coverage that will be adequate to satisfy any liability that may arise.

Our ability to continue to produce safe and effective products depends on a plasma supply free of transmittable diseases.

Despite overlapping safeguards, including the screening of donors and other steps to remove or inactivate viruses and other infectious disease-causing agents, the risk of transmissible disease through plasma-derived products cannot be entirely eliminated. If a new infectious disease was to emerge in the human population, the regulatory and public health authorities could impose precautions to limit the transmission of the disease that would impair our ability to procure plasma, manufacture our products or both. Such precautionary measures could be taken before there is conclusive medical or scientific evidence that a disease poses a risk for plasma-derived products.

In recent years, new testing and viral inactivation methods have been developed that more effectively detect and inactivate infectious viruses in collected plasma. There can be no assurance, however, that such new testing and inactivation methods will adequately screen for, and inactivate, infectious agents in the plasma used in the production of our products.

Plasma and plasma derivative products are fragile, and improper handling of our plasma or plasma derivative products could adversely affect results of operations.

Plasma is a raw material that is susceptible to damage. Almost immediately after its collection from a donor, plasma is stored and transported at temperatures that are at least -20 degrees Celsius (-4 degrees Fahrenheit). Once we manufacture plasma derivative products, they must be handled carefully and kept at appropriate temperatures. Our failure, or the failure of third parties that supply, ship or distribute our plasma and plasma derivative products, to properly care for our plasma or plasma derivative products may require us to destroy some raw materials or products. If the volume of plasma or plasma derivative products damaged by such failures were to be significant, the loss of that plasma or those plasma derivative products could have a material adverse effect on our financial condition and results of operations.

Past due receivables may negatively affect our working capital levels and increase financial costs.

Our receivables had an aging average of 52, 52 and 65 days at December 31, 2013, 2012 and 2011, respectively. The higher receivables aging average that we experienced in prior years was primarily due to a higher proportion of sales in Greece, Italy, Spain and Portugal. Sales to these countries accounted for approximately 11% of total net revenue in 2013. It is common to experience extended collection periods for balances due in these countries. In particular, in Spain, Italy and Portugal, it is common practice for government or local authority-backed entities to pay suppliers well after the 30- to 60-day period normally applied, with payments occurring very often after one year. We cannot assure you that our average receivables aging levels will not increase if sales to these markets increase. Failure to receive timely payments for the sale of our products negatively affects our working capital levels and may require us to obtain more short-term financing than would otherwise be needed.

Our future success depends on our ability to retain members of our senior management and to attract, retain and motivate qualified personnel.

We are highly dependent on the principal members of our executive and scientific teams. The loss of the services of any of these persons might impede the achievement of our research, development, operational and commercialization objectives. In particular, we believe the loss of the services of any of Víctor Grifols Roura, Ramón Riera Roca, Alfredo Arroyo Guerra, Carlos Roura Fernández, Vicente Blanquer Torre, Eva Bastida Tubau, Mateo Florencio Borrás Humbert, Antonio Viñes Páres, Montserrat Lloveras Calvo, David Ian Bell, Gregory Gene Rich, Shinji Wada, Alberto Grifols Roura, Francisco Javier Jorba Ribes, Nuria Pascual Lapeña or Joel Abelson would significantly and negatively impact our business. We do not maintain “key person” insurance on any of our senior management.

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Recruiting and retaining qualified operations, finance and accounting, scientific, clinical and sales and marketing personnel will be critical to our success. We may not be able to attract and retain these personnel on acceptable terms, given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. If we are unable to attract, retain and motivate qualified and experienced personnel, we could lose customers and suffer reduced profitability. Even if we are successful in attracting and retaining such personnel, competition for such employees may significantly increase our compensation costs and adversely affect our financial condition and results of operations.

Federal cGMP regulations also require that the personnel we employ and hold responsible for the collection, processing, testing, storage or distribution of blood or blood components be adequate in number, educational background, training (including professional training as necessary) and experience, or a combination thereof, and have capabilities commensurate with their assigned functions, a thorough understanding of the procedures or control operations they perform, the necessary training or experience and adequate information concerning the application of relevant cGMP requirements to their individual responsibilities. Our failure to attract, retain and motivate qualified personnel may result in a regulatory violation, affect product quality, require the recall or market withdrawal of affected product or result in a suspension or termination of our license to market our products, or any combination thereof.

Our business requires substantial capital to operate and grow and to achieve our strategy of realizing increased operating leverage, including the completion of several large capital projects.

We have implemented several large capital projects to expand and improve our Los Angeles and Clayton facilities and our manufacturing plant located in Parets del Vallès, near Barcelona, Spain, or the Parets facility, and to improve the structure of our plasma collection centers in the United States. These projects may run over budget or be delayed. We cannot be certain that these projects will be completed in a timely manner or that we will maintain our compliance with cGMP regulations, and we may need to spend additional amounts to achieve compliance. Additionally, by the time these multi-year projects are completed, market conditions may differ significantly from our assumptions regarding the number of competitors, customer demand, alternative therapies, reimbursement and public policy, and as a result, capital returns might not be realized.

We also plan on spending substantial sums on research and development, to obtain the approval of the FDA, and other regulatory agencies, for new indications for existing products, to develop new product delivery mechanisms for existing products and to develop innovative product additions. We face a number of obstacles to successfully converting these efforts into profitable products, including, but not limited to, the successful development of an experimental product for use in clinical trials, the design of clinical study protocols acceptable to the FDA and other regulatory agencies, the successful outcome of clinical trials, our ability to scale our manufacturing processes to produce commercial quantities or successfully transition technology, the approval of the FDA and other regulatory agencies of our products and our ability to successfully market an approved product or new indication.

For example, when a new product is approved, the Food and Drug Administration, or FDA, or other regulatory authorities may require post-approval clinical trials, sometimes called Phase IV clinical trials. If the results of such trials are unfavorable, this could result in the loss of the license to market the product, with a resulting loss of sales.

We are expecting significant capital spending as we are undertaking an investment plan that involves cumulative capital expenditures of approximately €450 million from 2014 through 2016. The amount and timing of future capital spending is dependent upon a number of factors, including market conditions, regulatory requirements and the extent and timing of particular projects, among other things. Our ability to grow our business is dependent upon the timely completion of these projects and obtaining the requisite regulatory approvals.

We may not be able to develop some of our international operations successfully.

We currently conduct sales in approximately 100 countries.  The successful operation of such geographically dispersed resources requires considerable management and financial resources.  In particular, we must bridge our business culture to the business culture of each country in which we operate.  In addition, international operations and the provision of services in foreign markets are subject to additional risks, such as changing market conditions, currency exchange rate fluctuations, trade barriers, exchange controls, regulatory changes, changes to tax regimes, foreign investment limitations, civil disturbances and war.  Furthermore, if an area in which we have significant operations or an area into which we are looking to expand suffers an economic recession or currency devaluation, our net sales and accounts receivable collections in that region will likely decline substantially or we may not be able to successfully expand or operate in that region.

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We are susceptible to interest rate variations.

We use issuances of debt and bank borrowings as a source of funding. At December 31, 2013, pro forma for the Novartis Acquisition, the offering of the Notes and the entry into the New Credit Facilities, $3.95 billion and €400 million, which represented 82%, of our senior interest bearing debt, bore interest at variable rates, at a spread over the London Interbank Offered Rate, or LIBOR, for our U.S. dollar denominated debt and at a spread over EURIBOR for our euro denominated debt. At December 31, 2013, we had entered into variable to fixed interest rate swaps for 26% of our U.S. dollar denominated pro forma debt and 27% of our euro denominated pro forma debt. However, there can be no assurance that such instruments will be successful at reducing the risks inherent in exposures to interest rate fluctuations. Any increase in interest rates payable by us, which could be adversely affected by, among other things, our inability to meet certain financial ratios, would increase our interest expense and reduce our cash flow, which could materially adversely affect our financial condition and results of operations.  See Item 11 of this Part I, “Quantitative and Qualitative Disclosures About Market Risk — Interest Rate Risk.”

Our results of operations and financial condition may be affected by adverse changes in foreign currency exchange rates, especially a significant shift in the value of the euro as compared to the U.S. dollar.

A significant portion of our business is conducted in currencies other than our reporting currency, the euro. In 2013, $2.66 billion (€1.97 billion), or 72%, of our net revenue of $3.7 billion (€2.7 billion) were denominated in U.S. dollars. We are also exposed to currency fluctuations with respect to other currencies, such as the British pound, the Brazilian real, the Canadian dollar and the Argentine, Mexican and Chilean pesos. Currency fluctuations among the euro, the U.S. dollar and the other currencies in which we do business result in foreign currency translation gains or losses which could be significant.

We are also exposed to risk based on the payment of U.S. dollar denominated indebtedness. At December 31, 2013, our U.S. dollar denominated senior debt totaled $3.2 billion and pro forma for the Novartis Acquisition, the offering of the Notes and the entry into the New Credit Facilities, we would have approximately $4.95 billion of U.S. dollar denominated senior debt. See Item 11 of this Part I, “Quantitative and Qualitative Disclosures About Market Risk — Currency Risk.”

If the Clayton, Los Angeles or Parets facilities were to suffer a crippling accident, or if a force majeure event materially affected our ability to operate and produce saleable products, a substantial part of our manufacturing capacity could be shut down for an extended period.

A substantial portion of our revenue is derived from plasma fractionation and products manufactured at our Clayton, Los Angeles facilities and Parets facilities. In addition, a substantial portion of our plasma supply is stored at facilities in City of Industry, California and Benson, North Carolina, as well as at our Clayton and Parets facilities. If any of these facilities were to be impacted by an accident or a force majeure event such as an earthquake, major fire or explosion, major equipment failure or power failure lasting beyond the capabilities of our backup generators, our revenue would be materially adversely affected. In this situation, our manufacturing capacity could be shut down for an extended period and we could experience a loss of raw materials, work in process or finished goods inventory. Other force majeure events such as terrorist acts, influenza pandemic or similar events could also impede our ability to operate our business. In addition, in any such event, the reconstruction of our Clayton, Los Angeles or Parets facilities or our plasma storage facilities, the regulatory approval of the new facilities, and the replenishment of raw material plasma could be time consuming. During this period, we would be unable to manufacture all of our products at other plants due to the need for FDA and foreign regulatory authority inspection and certification of such facilities and processes.

Our property damage and business interruption insurance may be insufficient to mitigate the losses from any such accident or force majeure event. We may also be unable to recover the value of the lost plasma or work in process inventories, as well as the sales opportunities from the products we would be unable to produce.

If we experience equipment difficulties or if the suppliers of our equipment or disposable goods fail to deliver key product components or supplies in a timely manner, our manufacturing ability would be impaired and our product sales could suffer.

We depend on a limited number of companies that supply and maintain our equipment and provide supplies such as chromatography resins, filter media, glass and stoppers used in the manufacture of our products. If our equipment should malfunction, the repair or replacement of the machinery may require substantial time and cost, which could disrupt our production and other operations. Our plasma collection centers rely on disposable goods supplied by third parties and information technology systems hosted by third parties. Our plasma collection centers cannot operate without an uninterrupted supply of these disposable goods and the operation of these systems. Alternative sources for key component parts or disposable goods may not be immediately available. And while we have experienced periodic outages of these systems, a material outage would affect our ability to operate our collection centers. Any new equipment or change in supplied materials may require revalidation by us or review and approval by the FDA or foreign regulatory authorities, including the EMA, which may be time consuming and require additional capital and other resources. We may not be able to find an adequate alternative supplier in a reasonable time period, or on commercially acceptable terms, if at all.

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As a result, shipments of affected products may be limited or delayed. Our inability to obtain our key source supplies for the manufacture of products may require us to delay shipments of products, harm customer relationships and force us to curtail operations.

If our shipping or distribution channels were to become inaccessible due to a crippling accident, an act of terrorism, a strike or any other force majeure event, our supply, production and distribution processes could be disrupted.

Not all shipping or distribution channels are equipped to transport plasma. If any of our shipping or distribution channels becomes inaccessible due to a crippling accident, an act of terrorism, a strike or any other force majeure event, we may experience disruptions in our continued supply of plasma and other raw materials, delays in our production process or a reduction in our ability to distribute our products directly to our customers.

We rely in large part on third parties for the sale, distribution and delivery of our products.

In the United States, we regularly enter into distribution, supply and fulfillment contracts with group purchasing organizations, or GPOs, home care companies, alternate infusion sites, hospital groups and others. We are highly dependent on these contracts for the successful sale, distribution and delivery of our products. For example, we rely principally on GPOs and on our distributors to sell our IVIG products. If such parties breach, terminate or otherwise fail to perform under the agreements, our ability to effectively distribute our products will be impaired and our business may be materially and adversely affected. In addition, through circumstances outside of our control, such as general economic decline, market saturation or increased competition, we may be unable to successfully renegotiate our contracts or secure terms which are as favorable to us. Furthermore, we rely in certain countries on distributors for sales of our products. Disagreements or difficulties with our distributors supporting our export business could result in a loss of sales.

We may not be able to commercialize products in development.

Before obtaining regulatory approval for the sale of our product candidates or for the marketing of existing products for new indicated uses, we must conduct, at our own expense, extensive preclinical tests to demonstrate the safety of our product candidates in animals and clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Preclinical and clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more of our clinical trials can occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of, preclinical testing and the clinical trial process that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including, without limitation:

·regulators or institutional review boards, or IRBs, may not authorize us to commence a clinical trial or conduct a clinical trial within a country or at a prospective trial site, respectively;

·the regulatory requirements for product approval may not be explicit, may evolve over time and may diverge by jurisdiction;

·our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical testing or clinical trials or to abandon projects that we had expected to be promising;

·the number of patients required for our clinical trials may be larger than we anticipate, enrollment in our clinical trials may be slower than we anticipate or participants may withdraw from our clinical trials at higher rates than we anticipate, any of which would result in significant delays;

·our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner;

·we may be forced to suspend or terminate our clinical trials if the participants are being exposed to unacceptable health risks or if any participant experiences an unexpected serious adverse event;

·regulators or IRBs may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements;

·undetected or concealed fraudulent activity by a clinical researcher, if discovered, could preclude the submission of clinical data prepared by that researcher, lead to the suspension or substantive scientific review of one or more of

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our marketing applications by regulatory agencies, and result in the recall of any approved product distributed pursuant to data determined to be fraudulent;

·the cost of our clinical trials may be greater than we anticipate;

·the supply or quality of our product candidates or other materials necessary to conduct our clinical trials may be insufficient or inadequate because currently we do not have any agreements with third-party manufacturers for the long-term commercial supply of any of our product candidates;

·an audit of preclinical or clinical studies by the FDA or other regulatory authorities may reveal noncompliance with applicable regulations, which could lead to disqualification of the results and the need to perform additional studies; and

·the effects of our product candidates may not achieve the desired clinical benefits or may cause undesirable side effects, or the product candidates may have other unexpected characteristics.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete our clinical trials or other testing, if the results of these trials or tests are not positive, or are only modestly positive or if there are safety concerns, we may be delayed in or unable to obtaining marketing approval or reimbursement for our product candidates, be able to obtain approval for indications that are not as broad as intended, or have the product removed from the market after obtaining marketing approval.

Our product development costs will also increase if we experience delays in testing or approvals. We do not know whether any preclinical tests or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, if at all. Significant preclinical or clinical trial delays also could shorten the patent protection period during which we may have the exclusive right to commercialize our product candidates or could allow our competitors to bring products to market before we do, impairing our ability to commercialize our products or product candidates.

Even if preclinical trials are successful, we still may be unable to commercialize a product due to difficulties in obtaining regulatory approval for its engineering process or problems in scaling that process to commercial production. Additionally, if produced, a product may not achieve an adequate level of market acceptance by physicians, patients, healthcare payors and others in the medical community to be profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, some of which are beyond our control, including:

·the prevalence and severity of any side effects;

·the efficacy and potential advantages over alternative treatments;

·the ability to offer our product candidates for sale at competitive prices;

·relative convenience and ease of administration;

·the willingness of physicians to prescribe new therapies and of the target patient population to try such therapies;

·the strength of marketing and distribution support; and

·sufficient third-party coverage or reimbursement.

Therefore, we cannot guarantee that any products we may seek to develop will ever be successfully commercialized, and to the extent they are not successfully commercialized, such products could involve significant expense with no corresponding revenue.

A breakdown in our information technology systems could result in a significant disruption to our business.

Our operations are highly dependent on our information technology systems, including internet-based systems, which may be vulnerable to breakdown, wrongful intrusions, data breaches and malicious attack. In addition, our systems are potentially vulnerable to data security breaches, whether by employees or others, which may expose sensitive data to unauthorized persons. Such data security breaches could lead to the loss of trade secrets or other intellectual property, or could lead to the public exposure of personal information (including sensitive personal information) of our employees, customers, plasma donors and others. If we were to suffer a

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breakdown in our systems, storage, distribution or tracing, we could experience significant disruptions affecting our manufacturing, accounting and billing processes.

Our success depends in large part on our ability to obtain and maintain protection in the U.S. and other countries of the intellectual property relating to or incorporated into our technology and products.

Our success depends in large part on our ability to obtain and maintain protection in the U.S. and other countries for the intellectual property covering or incorporated into our technology and products, especially intellectual property related to our purification processes. The patent situation in the field of biotechnology and pharmaceuticals generally is highly uncertain and involves complex legal and scientific questions. We may not be able to obtain additional issued patents relating to our technology or products. Even if patents are issued to us or to our licensors, they may be challenged, narrowed, invalidated, held to be unenforceable or circumvented, which could limit our ability to stop competitors from marketing similar products or limit the length of time our products have patent protection. Additionally, most of our patents relate to the processes we use to produce our products, not to the products themselves. In many cases, the plasma-derived products we produce or develop in the future will not, in and of themselves, be patentable. Since our patents relate to processes, if a competitor is able to design and utilize a process that does not rely on our protected intellectual property, that competitor could sell a plasma-derived or other product similar to one we developed or sell.

Our patents also may not afford us protection against competitors with similar technology. Because patent applications in the U.S. and many other jurisdictions are typically not published until 18 months after their filing, if at all, and because publications of discoveries in the scientific literature often lag behind actual discoveries, neither we nor our licensors can be certain that we or they were the first to make the inventions claimed in our or their issued patents or pending patent applications, or that we or they were the first to file for protection of the inventions set forth in such patent applications. If a third party has also filed a U.S. patent application covering our product candidates or a similar invention, we may be required to participate in an adversarial proceeding, known as an “interference proceeding,” declared by the U.S. Patent and Trademark Office to determine priority of invention in the U.S. The costs of these proceedings could be substantial and our efforts in them could be unsuccessful, resulting in a loss of our anticipated U.S. patent position.

Our patents expire at various dates. Our pending and future patent applications may not issue as patents or, if issued, may not issue in a form that will provide us with any competitive advantage. Even if issued, we cannot guarantee that: any of our present or future patents or patent claims or other intellectual property rights will not lapse or be invalidated, circumvented, challenged or abandoned; our intellectual property rights will provide competitive advantages; our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; any of our pending or future patent applications will be issued or have the coverage originally sought; our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; or we will not lose the ability to assert our intellectual property rights against, or to license our technology to, others and collect royalties or other payments. In addition, our competitors or others may design around our protected patents or technologies.

Effective protection of our intellectual property rights may be unavailable, limited or not applied for in some countries. Changes in patent laws or their interpretation in the U.S. and other countries could also diminish the value of our intellectual property or narrow the scope of our patent protection. In addition, the legal systems of certain countries do not favor the aggressive enforcement of patents, and the laws of foreign countries may not protect our rights to the same extent as the laws of the U.S. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. In order to preserve and enforce our patent and other intellectual property rights, we may need to make claims or file lawsuits against third parties. Such lawsuits could entail significant costs to us and divert our management’s attention from developing and commercializing our products.

We, like other companies in the pharmaceutical industry, may become aware of counterfeit versions of our products becoming available domestically and abroad. Counterfeit products may use different and possibly contaminated sources of plasma and other raw materials, and the purification process involved in the manufacture of counterfeit products may raise additional safety concerns, over which we have no control. Any reported adverse events involving counterfeit products that purport to be our products could harm our reputation and the sale of our products in particular and consumer willingness to use plasma-derived therapeutics in general.

Unauthorized use of our intellectual property may have occurred or may occur in the future. Although we have taken steps to minimize this risk, any failure to identify unauthorized use and otherwise adequately protect our intellectual property would adversely affect our business. For example, any unauthorized use of our trademarks could harm our reputation or commercial interests. Moreover, if we are required to commence litigation related to unauthorized use, whether as a plaintiff or defendant, such litigation would be time consuming, force us to incur significant costs and divert our attention and the efforts of our management and other employees, which could, in turn, result in lower revenue and higher expenses.

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In addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes and know-how.

We generally seek to protect proprietary information by entering into confidentiality agreements with our employees, consultants, scientific advisors and third parties. These agreements may not effectively prevent disclosure of confidential information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, our trade secrets may otherwise become known or be independently developed by our competitors or other third parties. To the extent that our employees, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to determine and enforce the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. We also rely on contractual protections with our customers, suppliers, distributors, employees and consultants and implement security measures designed to protect our trade secrets. We cannot assure you that these contractual protections and security measures will not be breached, that we will have adequate remedies for any such breach or that our suppliers, employees or consultants will not assert rights to intellectual property arising out of such contracts.

Since we rely on trade secrets and nondisclosure agreements, in addition to patents, to protect some of our intellectual property, there is a risk that third parties may obtain and improperly utilize our proprietary information to our competitive disadvantage. We may not be able to detect the unauthorized use of such information, prevent such use or take appropriate and timely steps to enforce our intellectual property rights.

We may infringe or be alleged to infringe intellectual property rights of third parties.

Our products or product candidates may infringe or be accused of infringing one or more claims of an issued patent or may fall within the scope of one or more claims in a published patent application that may be subsequently issued and to which we do not hold a license or other rights. Third parties may own or control these patents or patent applications in the U.S. and abroad. These third parties could bring claims against us or our collaborators that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages. Further, if a patent infringement suit were brought against us or our collaborators, we or they could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit.

If we are found to be infringing on the patent rights of a third party, or in order to avoid potential claims, we or our collaborators may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms.

There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference proceedings declared by the U.S. Patent and Trademark Office and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to our products. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.

Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We take steps to ensure that our employees do not use the proprietary information or know-how of others in their work for us. We may, however, be subject to claims that we or these employees have inadvertently or otherwise used or disclosed intellectual property, trade secrets or other proprietary information of any such employee’s former employer. Litigation may be necessary to defend against these claims and, even if we are successful in defending ourselves, could result in substantial costs to us or be distracting to our management. If we fail to defend any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.

We have in-licensed certain patent rights.

Our in-license agreements for certain patent rights may impose payment and/or other material obligations on us as a licensee.  Although we are currently in compliance with all of our material obligations under these licenses, if we were to breach any such

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obligations, our counterparty licensors may be entitled to terminate the licenses.  Such termination may restrict, delay or eliminate our ability to develop and commercialize our products, which could adversely affect our business.  We cannot guarantee that the third-party patents and technology we license will not be licensed to our competitors.  In the future, we may need to obtain additional licenses, renew existing license agreements or otherwise replace existing technology.  We are unable to predict whether these license agreements can be obtained or renewed or the technology can be replaced on acceptable terms, or at all.

Risks Relating to the Healthcare Industry

The implementation of the 2010 Healthcare Reform Law in the U.S. may adversely affect our business.

Through the March 2010 adoption of the Patient Protection and Affordable Care Act and the companion Healthcare and Education Reconciliation Act in the U.S., or collectively, the 2010 Healthcare Reform Law, substantial changes are being made to the current system for paying for healthcare in the U.S., including programs to extend medical benefits to millions of individuals who currently lack insurance coverage. The changes contemplated by the 2010 Healthcare Reform Law are subject to rule-making and implementation timelines that extend for several years, and this uncertainty limits our ability to forecast changes that may occur in the future. On June 28, 2012, the United States Supreme Court upheld as constitutional a key provision in the 2010 Healthcare Reform Law, often referred to as the “individual mandate,” which will require most individuals to have health insurance in 2014, or pay a penalty. However, the decision also invalidated a provision in the 2010 Healthcare Reform Law requiring states, in 2014, to expand their Medicaid programs or risk the complete loss of all federal Medicaid funding. The Court held that the federal government may offer states the option of accepting the expansion requirement, but that it may not take away pre-existing Medicaid funds in order to coerce states into complying with the expansion. Almost half the states have not yet accepted the Medicaid expansion, so the full extent of increased health care coverage under the 2010 Healthcare Reform Law is uncertain. Adding to this uncertainty, in responding to difficulties encountered in implementing 2010 Healthcare Reform, the White House and federal agencies have instituted various temporary implementation delays, such as regarding the “employer mandate” that generally requires employers with 50 or more full time employees to provide certain health insurance to those employees or pay specified fines.

Implementation of the 2010 Healthcare Reform Law has already begun with respect to certain significant cost-saving measures with respect to, for example, several government healthcare programs that cover the cost of our products, including Medicaid, Medicare Parts B and D and the 340B/Public Health Service, or PHS, program, and these efforts could have a material adverse impact on our financial performance.

For example, with respect to Medicaid, in order for a drug manufacturer’s products to be reimbursed by federal funding under Medicaid, the manufacturer must enter into a Medicaid drug rebate agreement with the Secretary of the U.S. Department of Health and Human Services, or HHS, and pay certain rebates to the states based on utilization data provided by each state to the manufacturer and to the Centers for Medicare & Medicaid Services, or CMS, and pricing data provided by the manufacturer to the federal government. The states share this savings with the federal government and sometimes implement their own additional supplemental rebate programs. Under the Medicaid drug rebate program, the rebate amount for most brand name drugs was previously equal to a minimum of 15.1% of the Average Manufacturer Price, or AMP, or AMP less Best Price, or AMP less BP, whichever is greater. Effective January 1, 2010, the 2010 Healthcare Reform Law generally increased the size of the Medicaid rebates paid by drug manufacturers for single source and innovator multiple source (brand name) drugs from a minimum of 15.1% to a minimum of 23.1% of the AMP, subject to certain exceptions (for example, for certain clotting factors, such as our Factor VIII and Factor IX products, the increase was limited to a minimum of 17.1% of the AMP). For non-innovator multiple source (generic) drugs, the rebate percentage was increased from a minimum of 11.0% to a minimum of 13.0% of AMP. In 2010, the 2010 Healthcare Reform Law also newly extended this rebate obligation to prescription drugs covered by Medicaid managed care organizations.

In addition, the statutory definition of AMP changed in 2010 as a result of the 2010 Healthcare Reform Law. In November 2010, CMS withdrew previously issued regulations defining AMP and in February 2012 issued proposed regulations that are not yet finalized, and CMS recently announced that a final rule will be issued in May 2014. We believe we are making reasonable assumptions regarding our reporting obligations with respect to this new definition, but, in the absence of final regulations from CMS, the adequacy of our assumptions is not certain. Once CMS issues final regulations, we may determine that our assumptions require amendment to comply with the regulatory definition of AMP.

The 2010 Healthcare Reform Law also created new rebate obligations for our products under Medicare Part D, a partial, voluntary prescription drug benefit created by the U.S. federal government primarily for persons 65 years old and over. The Part D drug program is administered through private insurers that contract with CMS. Beginning in 2011, the 2010 Healthcare Reform Law generally required that we provide a 50% discount to patients who fall within the Medicare Part D coverage gap, also referred to as the “donut hole,” which is a gap in Medicare Part D coverage for beneficiaries who have expended certain amounts for drugs.

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The availability of federal funds to pay for our products under Medicaid and Medicare Part B programs requires that we extend discounts under the 340B/PHS program, and changes to this program under the 2010 Healthcare Reform Law could adversely affect our financial performance. The 340B/PHS program extends discounts to a variety of community health clinics and other entities that receive health services grants from the PHS, as well as hospitals that serve a disproportionate share of certain low income individuals, and the 2010 Healthcare Reform Law expanded the number of qualified 340B entities eligible to purchase products for outpatient use, adding certain cancer centers, children’s hospitals, critical access hospitals and rural referral centers. The PHS price, or ceiling price, cannot exceed the AMP (as reported to CMS under the Medicaid drug rebate program) less the Medicaid unit rebate amount. We have entered into a pharmaceutical pricing agreement, or PPA, with the government in which we have agreed to participate in the 340B/PHS program by charging eligible entities no more than the PHS ceiling price for drugs intended for outpatient use.

The 2010 Healthcare Reform Law also introduced a biosimilar pathway that permits companies to obtain FDA approval of versions of existing biologics that are highly similar to innovative biologics based upon reduced documentation and data requirements deemed sufficient to demonstrate safety and efficacy than are required for the pioneer biologics. The new law provides that a biosimilar application may be submitted as soon as four years after the reference product is first licensed, and that the FDA may not make approval of an application effective until 12 years after the reference product was first licensed. Although drug manufacturers have begun efforts to develop biosimilar drugs for the U.S. market, none have yet been approved by the FDA. However, an approval pathway for biosimilar versions of our biological products now exists in the United States for the first time, and accordingly we expect in the future to face greater competition from biosimilar products, including a possible increase in patent challenges, all of which could adversely affect our financial performance. The FDA is actively implementing the biosimilar pathway, including through the issuance of draft guidance documents, and has indicated that final guidance documents may be issued in 2014.

Regarding access to our products, the 2010 Healthcare Reform Law established and provided significant funding for a Patient-Centered Outcomes Research Institute to coordinate and fund Comparative Effectiveness Research, as those terms are defined in the 2010 Healthcare Reform Law. While the stated intent of Comparative Effectiveness Research is to develop information to guide providers to the most efficacious therapies, outcomes of Comparative Effectiveness Research could influence the reimbursement or coverage for therapies that are determined to be less cost effective than others. Should any of our products be determined to be less cost effective than alternative therapies, the levels of reimbursement for these products, or the willingness to reimburse at all, could be impacted, which could materially impact our financial results.

A provision of the 2010 Healthcare Reform Law, generally referred to as the Physician Payment Sunshine Act or Open Payments Program, imposes new reporting and disclosure requirements for pharmaceutical and medical device manufacturers with regard to payments or other transfers of value made to certain U.S. healthcare practitioners, such as physicians and academic medical centers, and with regard to certain ownership interests held by physicians in reporting entities. On February 1, 2013, a final rule was issued to implement the Physician Payment Sunshine Act. Under this rule, data collection activities began on August 1, 2013, and first disclosure reports were due by March 31, 2014 for the period August 1, 2013 through December 31, 2013. As required under the Physician Payment Sunshine Act, information from these reports will be published on a publicly available website, including amounts transferred and the physician, dentist and teaching hospital identities, which is expected to be available to the public by September 30, 2014. It is difficult to predict how the new requirements, which also preempt similar state law reporting requirements, may impact existing relationships among manufacturers, physicians and teaching hospitals.

We could be adversely affected if other government or private third-party payors decrease or otherwise limit the amount, price, scope or other eligibility requirements for reimbursement for the purchasers of our products.

Prices in many countries, including many European countries, are subject to local regulation and certain pharmaceutical products, such as plasma derivative products, are subject to price controls in several of our principal markets, including Spain and countries within the European Union. In the U.S., where pricing levels for our products are substantially established by third-party payors, if payors reduce the amount of reimbursement for a product, it may cause groups or individuals dispensing the product to discontinue administration of the product, to administer lower doses, to substitute lower cost products or to seek additional price-related concessions. These actions could have a negative effect on our financial results, particularly in cases where our products command a premium price in the marketplace or where changes in reimbursement induce a shift in the location of treatment. The existence of direct and indirect price controls and pressures over our products has affected, and may continue to materially adversely affect, our ability to maintain or increase gross margins.

In the U.S., for example, beginning in 2005, the Medicare drug reimbursement methodology for physician and hospital outpatient payment schedules changed to Average Sales Price, or ASP, + 6%. This payment was based on a volume-weighted average of all brands under a common billing code. Medicare payments to physicians between the fourth quarter of 2004 and the first quarter of 2005 dropped 14% for both the powder and liquid forms of IVIG. Medicare payments to hospitals fell 45% for powder IVIG and 30% for liquid IVIG between the fourth quarter of 2005 and the first quarter of 2006. The Medicare reimbursement changes resulted

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in the shift of a significant number of Medicare IVIG patients to hospitals from physicians’ offices beginning in 2005, as many physicians could no longer recover their costs of obtaining and administering IVIG in their offices and clinics. After 2006, some hospitals reportedly began to refuse to provide IVIG to Medicare patients due to reimbursement rates that were below their acquisition costs. Subsequent changes have improved some of these Medicare reimbursement issues, although there has been variability in the reimbursement levels for separately payable, non-pass-through drugs and biologicals in the hospital outpatient setting over the past few years, making financial performance predictions difficult. On January 1, 2008, the CMS reduced the reimbursement for these separately covered drugs and biologicals, including IVIG, in the hospital outpatient setting from ASP + 6% to ASP + 5%, using 2006 Medicare claims data as a reference for this reduction. In addition, CMS reduced a hospital add on payment from $75 to $38 per infusion. Beginning January 1, 2009, CMS further reduced the hospital outpatient reimbursement for separately covered outpatient drugs, including IVIG, to ASP + 4%, and eliminated the add on payment. For 2010, the rate remained as ASP + 4%, based on a cost-based methodology that also involved reallocating certain overhead costs from packaged drugs to unpackaged drugs. CMS increased the rate to ASP + 6% for 2013, and maintained the same rate for 2014. In addition, under the Bipartisan Budget Act of 2013, Medicare is subject to a 2% reduction in federal spending, or “sequestration,” including drugs reimbursed under Medicare, for federal fiscal years 2013 through 2023. The full ramifications of this sequestration for Medicare reimbursement are not yet clear, as Congressional action may reduce, eliminate or otherwise change this payment reduction.

Also, the intended use of a drug product by a physician can affect pricing. Physicians frequently prescribe legally available therapies for uses that are not described in the product’s labeling and that differ from those tested in clinical studies and approved by the FDA or similar regulatory authorities in other countries. These off-label uses are common across medical specialties, and physicians may believe such off-label uses constitute the preferred treatment or treatment of last resort for many patients in varied circumstances. Industry data indicates that a significant portion of IVIG volume may be used to fill physician prescriptions for indications not approved by the FDA or similar regulatory authorities. If reimbursement for off-label uses of products, including IVIG, is reduced or eliminated by Medicare or other third-party payors, including those in the U.S. or the European Union, we could be adversely affected. For example, CMS could initiate an administrative procedure known as a National Coverage Determination, or NCD, by which the agency determines which uses of a therapeutic product would be reimbursable under Medicare and which uses would not. This determination process can be lengthy, thereby creating a long period during which the future reimbursement for a particular product may be uncertain. High levels of spending on IVIG products, along with increases in IVIG prices, increased IVIG utilization and the high proportion of off-label uses, may increase the risk of regulation of IVIG reimbursement by CMS. On the state level, similar limits could be proposed for therapeutic products covered under Medicaid.

Certain of our business practices are subject to scrutiny by regulatory authorities, as well as to lawsuits brought by private citizens under federal and state laws.  Failure to comply with applicable law or an adverse decision in lawsuits may result in adverse consequences to us.

The laws governing our conduct in the U.S. are enforceable by criminal, civil and administrative penalties. Violations of laws such as the Federal Food, Drug and Cosmetic Act, or the FDCA, the Federal False Claims Act, or the FCA, the PHS Act or a provision of the U.S. Social Security Act known as the “Anti-Kickback Law,” or any regulations promulgated under their authority, may result in jail sentences, fines or exclusion from federal and state programs, as may be determined by Medicare, Medicaid, the Department of Defense, other regulatory authorities and the courts. There can be no assurance that our activities will not come under the scrutiny of regulators and other government authorities or that our practices will not be found to violate applicable laws, rules and regulations or prompt lawsuits by private citizen “relators” under federal or state false claims laws.

For example, under the Anti-Kickback Law, and similar state laws and regulations, even common business arrangements, such as discounted terms and volume incentives for customers in a position to recommend or choose drugs and devices for patients, such as physicians and hospitals, can result in substantial legal penalties, including, among others, exclusion from Medicare and Medicaid programs, and arrangements with referral sources must be structured with care to comply with applicable requirements. Also, certain business practices, such as payment of consulting fees to healthcare providers, sponsorship of educational or research grants, charitable donations, interactions with healthcare providers that prescribe products for uses not approved by the FDA and financial support for continuing medical education programs, must be conducted within narrowly prescribed and controlled limits to avoid any possibility of wrongfully influencing healthcare providers to prescribe or purchase particular products or as a reward for past prescribing. Significant enforcement activity has been the result of actions brought by relators, who file complaints in the name of the United States (and if applicable, particular states) under federal and state False Claims Act statutes and can be entitled to receive up to 30% of total recoveries. Also, violations of the False Claims Act can result in treble damages, and each false claim submitted can be subject to a penalty of up to $11,000 per claim. Additional and stricter prohibitions could be implemented by federal and state authorities. Where practices have been found to involve improper incentives to use products, government investigations and assessments of penalties against manufacturers have resulted in substantial damages and fines. Many manufacturers have been required to enter into consent decrees or orders that prescribe allowable corporate conduct.

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Failure to satisfy requirements under the FDCA can also result in penalties, as well as requirements to enter into consent decrees or orders that prescribe allowable corporate conduct. In this regard, our Los Angeles facility was previously managed pursuant to a consent decree that was entered into in February 1998 based on action by the FDA and DOJ addressing FDCA violations committed by the former owner of the facility, Alpha Therapeutic Corporation, or Alpha. The consent decree provided for annual inspection of the plant by the FDA. On March 15, 2012, the United States District Court for the Central District of California entered an order vacating the consent decree on the Los Angeles facility.

Adverse consequences can also result from failure to comply with the requirements of the 340B/PHS program under the PHS Act, which extends discounts to a variety of community health clinics and other entities that receive health services grants from the PHS. For example, the 2010 Healthcare Reform Law requires the Secretary of HHS to develop and issue regulations for the 340B/PHS program establishing standards for the imposition of sanctions in the form of civil monetary penalties, or CMP, for manufacturers that knowingly and intentionally overcharge a covered entity for a 340B drug. The CMP can be up to $5,000 for each instance of overcharging a covered entity. HHS has never had CMP authority that addresses this area and has not yet issued final regulations to implement this new penalty provision, and accordingly, the impact of this CMP provision is uncertain. In September 2010, HHS’ Health Resources and Services Administration, or HRSA, issued a notice of proposed rulemaking in which it is considering imposing CMPs on manufacturers in certain cases where a covered entity has been unable to find a given product at a 340B price and has instead purchased the drug outside of the 340B Program at a price greater than the ceiling price. Certain of our products are subject to shortages and allocation issues can arise. Accordingly, if the HRSA adopts a CMP interpretation of this kind, it could potentially have adverse consequences on our financial performance.

In addition, companies in the U.S., Canada and the European Union are generally restricted from promoting approved products for other indications that are not specifically approved by the competent regulatory authorities (e.g., the FDA in the U.S.), nor can companies promote unapproved products. In the U.S., pharmaceutical companies have, to a limited extent, been recognized by the FDA as permitted to disseminate to physicians certain truthful and accurate information regarding unapproved uses of approved products, or results of studies involving investigational products. In addition, in December 2012, a federal appeals court in New York found that the criminal prosecution of a pharmaceutical manufacturer for truthful, non-misleading speech promoting the lawful, off-label use of an FDA-approved drug would violate the manufacturer’s constitutional rights of free speech, and the FDA chose not to appeal that decision. Improper promotion of unapproved drugs or devices or unapproved indications for a drug or device may subject us to warnings from, or enforcement action by, regulatory agencies, harm demand for our products, and subject us to civil and criminal sanctions. Further, sanctions under the FCA have recently been brought against companies accused of promoting off-label uses of drugs, because such promotion induces the use and subsequent claims for reimbursement under Medicare and other federal programs. Similar actions for off-label promotion have been initiated by several states for Medicaid fraud. The 2010 Healthcare Reform Law significantly strengthened provisions of the FCA, Medicare and Medicaid Anti-Kickback provisions, and other health care fraud provisions, leading to the possibility of greatly increased qui tam suits by relators for perceived violations. Industry data indicates that a significant portion of IVIG volume may be used to fill physician prescriptions for indications not approved by the FDA or similar regulatory authorities. Violations or allegations of violations of the foregoing restrictions could materially and adversely affect our business.

We are required to report detailed pricing information, net of included discounts, rebates and other concessions, to CMS for the purpose of calculating national reimbursement levels, certain federal prices and certain federal and state rebate obligations. We have established systems for collecting and reporting this data accurately to CMS and have instituted a compliance program to assure that the information collected is complete in all respects. If we report pricing information that is not accurate to the federal government, we could be subject to fines and other sanctions that could adversely affect their business.

To market and sell our products outside of the U.S., we must obtain and maintain regulatory approvals and comply with regulatory requirements in such jurisdictions. The approval procedures vary among countries in complexity and timing. We may not obtain approvals from regulatory authorities outside the U.S. on a timely basis, if at all, which would preclude us from commercializing products in those markets. In addition, some countries, particularly the countries of the European Union, regulate the pricing of prescription pharmaceuticals. In these countries, pricing discussions with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost effectiveness of our product candidate to other available therapies. Such trials may be time consuming and expensive and may not show an advantage in efficacy for our products. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, in either the U.S. or the European Union, we could be adversely affected.

We also are subject to certain laws and regulations concerning the conduct of our foreign operations, including the U.S. Foreign Corrupt Practices Act and anti-bribery laws and related laws, and laws pertaining to the accuracy of our internal books and records, which have been the focus of increasing enforcement activity in recent years. Under the FCPA, the U.S. has increasingly focused on regulating the conduct by U.S. businesses occurring outside of the U.S., generally prohibiting remuneration to foreign

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officials for the purpose of obtaining or retaining business. Also, in some countries we may rely on third parties for the marketing and distribution of our products, and these parties may lack sufficient internal compliance resources, and may operate in foreign markets involving substantial corruption. If our efforts to monitor these parties fail to detect potential wrongdoing, we could be held responsible for the noncompliance of these third parties with applicable laws and regulations, which may have a material adverse effect on our business.

We are subject to extensive government regulatory compliance and ethics oversight.

Our business is subject to extensive government regulation and oversight. We have enacted anticorruption, privacy, healthcare and corporate compliance policies and procedures that govern our business practices and those of our distributors and suppliers. These policies and procedures are effectuated through education, training and monitoring of our employees, distributors and suppliers. In addition, to enhance compliance with applicable health care laws and mitigate potential liability in the event of noncompliance, regulatory authorities, such as HHS’s Office of the Inspector General, or OIG, have recommended the adoption and implementation of a comprehensive health care compliance program that generally contains the elements of an effective compliance and ethics program described in Section 8B2.1 of the U.S. Sentencing Commission Guidelines Manual. Increasing numbers of U.S.-based pharmaceutical companies have such programs, and we have adopted U.S. healthcare compliance and ethics programs that generally incorporate the HHS OIG’s recommendations. However, our adoption and enforcement of these various policies and procedures does not ensure that we will avoid investigation or the imposition of penalties by applicable government agencies.

We are subject to extensive environmental, health and safety laws and regulations.

Our business involves the controlled use of hazardous materials, various biological compounds and chemicals. The risk of accidental contamination or injury from these materials cannot be eliminated. If an accident, spill or release of any regulated chemicals or substances occurs, we could be held liable for resulting damages, including for investigation, remediation and monitoring of the contamination, including natural resource damages, the costs of which could be substantial. As owner and operators of real property, we could also be held liable for the presence of hazardous substances as a result of prior site uses or activities, without regard to fault or the legality of the original conduct that caused or contributed to the presence or release of such hazardous substance on our property. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials and chemicals. Although we maintain workers’ compensation insurance to cover the costs and expenses that may be incurred due to injuries to our employees resulting from the use of these materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us for claims arising in the U.S. Additional or more stringent federal, state or local laws and regulations affecting our operations may be adopted in the future. We may incur substantial capital costs and operating expenses to comply with any of these laws or regulations and the terms and conditions of any permits required pursuant to such laws and regulations, including costs to install new or updated pollution control equipment, modify our operations or perform other corrective actions at our respective facilities. In addition, fines and penalties may be imposed for noncompliance with environmental and health and safety laws and regulations or for the failure to have or comply with the terms and conditions of required environmental permits.

Item 4.INFORMATION ON THE COMPANY

A.History of and Development of the Company

Introduction

We were founded in 1940 in Barcelona, Spain by Dr. José Antonio Grifols i Roig, a specialist and pioneer in blood transfusions and clinical analysis and the grandfather of our current Chairman of the Board.  We have been making and selling plasma derivative products for more than 70 years.  Over the last 25 years, we have grown from a predominantly domestic Spanish company into a global company by expanding both organically and through acquisitions throughout Europe, the United States, Latin America and Asia.

We were incorporated in Spain as a limited liability company on June 22, 1987 under the name Grupo Grifols, S.A., and we changed our name to Grifols, S.A. in 2005.  We conduct business under the commercial name “Grifols.”  Our principal executive office is located at Avinguda de la Generalitat, 152 Parque Empresarial Can Sant Joan, 08174 Sant Cugat del Vallès, Barcelona, Spain and our telephone number is +34 93 571 0500.  Our registered office is located at c/Jesús y María, 6, Barcelona, Spain.

We are a vertically integrated global producer of plasma derivatives.  Our activities include sourcing raw material, manufacturing various plasma derivative products and selling and distributing final products to healthcare providers.  We have 150 FDA-licensed plasma collection centers located across the United States.  We have expanded our plasma collection network through a

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combination of organic growth and acquisitions and the opening of new plasma collection centers.  Our acquisitions of SeraCare (now renamed Biomat USA) in 2002; PlasmaCare, Inc. in 2006; eight plasma collection centers from a subsidiary of Baxter in 2006; four plasma collection centers from Bio-Medics, Inc. in 2007; and one plasma collection center from Amerihealth Plasma LLC in 2008 have given us reliable access to United States source plasma.  Our acquisition of Talecris in June 2011 expanded our network by an additional 67 centers, and in 2012, we purchased three plasma collection centers in the United States from Cangene Corporation, a Canadian biopharmaceutical firm.  We also produce diagnostic and hospital products.

On June 1, 2011, we acquired all of the issued and outstanding shares for $3.7 billion of Talecris, a biopharmaceutical company that produced plasma-derived protein therapies in the United States, furthering our position as a diversified, global provider of life saving and life enhancing plasma protein therapeutics and making us the world’s third largest producer of plasma derivative products.

On January 9, 2014, we concluded the acquisition of a diagnostic business unit related to transfusion medicine and immunology of the Swiss company Novartis Corporation, or Novartis, for a total amount of $1.675 billion. See “— Important Events — The Novartis Acquisition and Related Financing.”

Our Class A shares have been listed on the Spanish Stock Exchanges since we completed our initial public offering on May 17, 2006 and are quoted on the Spanish Automated Quotation System under the ticker symbol “GRF.” In January 2008, we became part of the IBEX-35 Index, which comprises the top 35 listed Spanish companies by liquidity and market capitalization. Our Class B shares were issued as part of the consideration for the Talecris acquisition and were listed on the Spanish Stock Exchanges on June 2, 2011 and quoted on the Spanish Automated Quotation System under the ticker symbol “GRF.P.” Our Class B shares are also traded in the U.S. on the NASDAQ Global Select Market in the form of ADSs, evidenced by ADRs, under the symbol “GRFS.” Each ADS represents one of our Class B shares. Our ADSs are currently traded in U.S. dollars. In November 2011, our ADSs were added to the NASDAQ Biotechnology Index.

Important Events

The Novartis Acquisition and Related Financing

Overview

On November 10, 2013, we entered into a share and asset agreement to acquire Novartis’ diagnostic business. The Novartis Diagnostic Business (as defined herein) was part of Novartis’s Vaccines & Diagnostics Division, which was established following Novartis’s 2006 acquisition of Chiron Corporation.

We acquired from Novartis Vaccines and Diagnostics, Inc., or NVD, a complete line of products and systems to perform blood donor screening molecular tests aimed at detecting the pathogenic agents of transfusion-related infectious diseases such as HIV, hepatitis B, hepatitis C, and West Nile Virus. Under the Novartis Agreement (as defined herein), we acquired (and, with respect to certain intellectual property rights, we acquired co-ownership) from NVD and its affiliates substantially all of the assets and certain specified liabilities that were exclusively or primarily used in connection with the following businesses, collectively, the Novartis Diagnostic Business:

·the research, development, manufacture and commercialization of nucleic acid tests, or NAT, (instruments, assays and services) to screen human donated blood and blood products, including blood intended for autologous use, for blood-borne pathogens such as HIV, HBV, HCV and West Nile Virus, or the NAT Business;

·the business of generating royalty revenue from licenses in connection with the NAT Business;

·the research, development, manufacture and commercialization of immunoassay antigens and antibodies to screen human donated blood and blood products, including blood intended for autologous use (but not for immunotherapeutic purposes), for use in the detection of hepatitis, retroviruses and peptides for the purpose of clinical diagnostics, or the Immunoassay Business; and

·the business of commercializing automatic and semi-automatic analyzers for processing blood-typing cards using gel agglutination technology manufactured by Grifols, or the Immunohematology Business.

In addition, we acquired all of the issued and outstanding equity interests of Novartis Vaccines and Diagnostics (HK) Limited, a subsidiary of Novartis organized under the laws of Hong Kong that is engaged in the Novartis Diagnostic Business. We

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also licensed back to the Seller and its affiliates to certain rights to use the purchased intellectual property outside of the Novartis Diagnostic Business.

In 2013, the Novartis Diagnostic Business had $786 million (€582.2 million) of total revenue and $294 million (€217.8 million) of operating income. Currently, more than 80% of the U.S. blood supply is tested on Novartis Transfusion Diagnostic systems. The Novartis Diagnostic Business was headquartered in Emeryville, California, where its key manufacturing facility is located, and had 550 employees worldwide.

The Novartis Acquisition

On November 10, 2013, we entered into a share and asset agreement, or the Novartis Agreement, with NVD, and, solely as a Guarantor, Novartis, which was subsequently amended on December 27, 2013 and January 9, 2014 to acquire the Novartis Diagnostic Business.  The transactions contemplated by the Novartis Agreement, or the Novartis Acquisition, closed on January 9, 2014. We paid a purchase price of $1.675 billion.

The purchase price is subject to certain post-closing adjustments based on the actual levels of cash, inventory, accounts receivable and accounts payable at the closing as compared to prior estimates. The Novartis Agreement also includes customary representations and warranties about the Novartis Diagnostic Business and the purchased assets. In addition, Novartis agreed to a two-year non-competition restriction within the Novartis Diagnostic Business, subject to certain carve outs, including for existing businesses of Novartis and de minimis future acquisitions. Under the Novartis Agreement, each of NVD and Grifols Diagnostic Solutions Inc. (f/k/a Grifols Chiron Diagnostics Corp.) agreed to indemnify the other party for breaches of representations, warranties and covenants and, in the case of NVD, certain excluded liabilities of the Novartis Diagnostic Business, subject in some cases to certain limitations. The indemnification obligations of NVD under the Novartis Agreement are guaranteed by Novartis, and the indemnification obligations of Grifols Diagnostic Solutions Inc. are guaranteed by Grifols.

At the closing of the Novartis Acquisition, we entered into a transition services agreement with NVD, pursuant to which each of NVD and Grifols Diagnostic Solutions Inc. will provide certain services to the other party on a transitional basis, including information technology services, human resources services, finance services, procurement services, real estate services, hazardous materials management services and compliance and quality control services in order to facilitate the transactions contemplated by the Novartis Agreement and the migration of the Novartis Diagnostic Business from NVD to Grifols Diagnostic Solutions Inc. in accordance with the Novartis Agreement.

In addition, at the closing of the Novartis Acquisition, we entered into a global employment services agreement with NVD and Novartis pursuant to which NVD agreed to second to Grifols Diagnostic Solutions Inc. certain employees of Novartis and its affiliates who are engaged in the Novartis Diagnostic Business throughout the world (other than in Europe). These employees will be seconded to us for a maximum of six months, or until Grifols Diagnostic Solutions Inc. is able to implement an appropriate employee benefit plan, policy or other arrangement for these employees in the relevant jurisdictions. Upon the termination of the global employment services agreement, our expectation is that these seconded employees will become employees of Grifols Diagnostic Solutions Inc.  To finance the Novartis Acquisition, we entered into a credit and guaranty agreement with a syndicate led by Nomura Securities International, Inc., Banco Bilbao Vizcaya Argentaria, S.A., and Morgan Stanley Senior Funding, Inc., or the Bridge Loan Facility, pursuant to which we borrowed $1.5 billion of loans on January 3, 2014.

Refinancing

The Bridge Loan Facility and the Existing Facilities were repaid on February 27, 2014 with the proceeds of the New Credit Facilities that we entered into on February 27, 2014. The New Credit Facilities consist of the Senior Term Loans and the Revolving Loans (each, as defined herein), which are subject to customary flex provisions. For a description of the principal terms of the New Credit Facilities, please see Item 5 of this Part I, “Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Sources of Credit — New Credit Facilities.” On February 27, 2014, we also entered into the credit and guaranty agreement with a syndicate led by Nomura Securities International, Inc., or the New Interim Loan Facility, pursuant to which we borrowed $1.0 billion of loans. The proceeds from the New Interim Loan Facility were used to discharge the Existing Notes on February 27, 2014. The New Interim Loan Facility was refinanced pursuant to the offering of the Notes completed on March 12, 2014.

Other Acquisitions

TiGenix Acquisition

In November 2013, we acquired 21.30% of the common stock of the biotechnological company TiGenix N.V., or TiGenix, for €12.4 million. TiGenix is listed on the NYSE Euronext Brussels (TIG), and is based in Leuven, Belgium but has commercial

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offices in Madrid and Sittard Gellen (the Netherlands). TiGenix is a Belgian cell therapy company that is a global leader in the field of mesenchymal stem cell therapy, and the first European company that obtained an approval for a cell based medicinal product by EMA, namely ChondroCelect. This investment was carried out through Gri-Cel, S.A., our 100% owned subsidiary in which we centralize our investments in research and development projects in fields of medicine outside of our core business, such as advanced therapies.

Aradigm Stock Subscription

In August 2013, we closed a transaction with Aradigm Corporation, or Aradigm, a company engaged in the development and commercialization of inhaled drugs for the treatment of severe respiratory diseases. We entered into an exclusive worldwide license agreement to develop and commercialize Pulmaquin, an inhaled ciprofloxacin product. In conjunction with the licensing agreement, we acquired approximately 35% of Aradigm’s common stock on a fully diluted basis for $25.7 million (€20.6 million of acquisition costs are included).

Acquisition of Progenika

On March 4, 2013, we announced the acquisition of 60% of the economic and voting rights of Progenika for a total of €37.0 million (€34.6 million, net of cash and cash equivalents). Progenika is a Spanish company founded in 2000 that has developed tools for in vitro diagnostic genotyping testing, prognosis of diseases and prediction of response to drug treatment. Progenika has also developed its own technology to produce DNA chips for diagnoses.

Half of the purchase price was paid with 884,997 of our Class B shares and the remainder was funded using cash on hand. In addition, we and the selling shareholder have granted each other call and put options over the shares representing the remaining 35% of the share capital of Progenika, which may be exercised within three years from the date of the acquisition. The purchase price of the Progenika shares subject to the call and put option will be the same as the price per share we paid, increased at the rate of 5% per annum.

Investment in VCN Bioscience

In July 2012, we acquired 40% of the share capital of VCN Bioscience, S.L., or VCN Bioscience, a biotechnology firm specializing in the research and development of new therapeutic approaches for tumors based on the use of oncologic viruses, for €1.5 million.

VCN Bioscience’s most advanced project focuses on the treatment of pancreatic cancer, and our investment will enable it to continue to develop this new therapeutic approach, which is currently in the preclinical phase and scheduled to enter the clinical phase in 2013.  We have committed under certain conditions to finance VCN Bioscience’s ongoing projects for a minimum of €5 million, which we expect to achieve by increasing our share in the capital of VCN Bioscience.

Investment in Araclón Biotech, S.L.

On February 29, 2012, our subsidiary, Gri-Cel, S.A., acquired 51% of the share capital of Araclón Biotech, S.L., or Araclón. Araclón is primarily involved in the research and development of therapies and methods for the diagnosis of degenerative illnesses, with a particular concentration on Alzheimer’s disease. This acquisition reinforces our commitment to research and development of therapies to fight Alzheimer’s disease.

We have committed to finance Araclón’s ongoing projects for the next five years, subject to certain conditions. The total cost of such investments is expected to be less than €25 million, which we expect to achieve by increasing our share in the capital of Araclón.

Purchase of Remaining Woolloomooloo Shares

In August 2011, we acquired the remaining 51% of the share capital of Woolloomooloo Holdings Pty Ltd., the holding company of Lateral Medion, an Australian Swiss group that distributes diagnostic products in Australia and Switzerland and has a manufacturing facility in Switzerland. We previously held 49% of the share capital and 100% of the voting rights and had exercised control since March 3, 2009. The acquisition of the remaining 51% of the share capital totaled AUS dollars 12.5 million, or €9.5 million. The difference between the amount paid and the non-controlling interest was recorded as a €2.2 million increase in reserves.

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The Talecris Acquisition and Related Financing

On June 1, 2011, pursuant to the Agreement and Plan of Merger, dated as of June 6, 2010, or Merger Agreement, by and among Talecris, Merger Sub, Grifols, S.A. and Grifols Inc., as amended, we completed the acquisition of 100% of the share capital of Talecris for a total of $3.7 billion.  The total value of the transaction, including Talecris’ net debt, was approximately $3.3 billion.  The acquisition was effected through (i) the merger of Talecris with and into Stream Merger Sub, Inc., a Virginia corporation and wholly owned subsidiary of Talecris, or Merger Sub and (ii) the immediately subsequent merger of Grifols Inc., a Delaware corporation and wholly owned subsidiary of Grifols, S.A., with and into Merger Sub, with Merger Sub continuing as the surviving corporation and a wholly owned subsidiary of Grifols, S.A. Merger Sub was subsequently renamed Grifols Inc.

In connection with the consummation of the acquisition, each share of Talecris common stock, par value $0.01 per share, was converted into the right to receive $19 in cash and 0.6485 (or 0.641 for Talecris directors and Talecris Holdings, LLC) of a Class B share of Grifols, S.A. and cash in lieu of fractional Class B shares and any cash representing dividends or other distributions payable in accordance with the Merger Agreement.

On July 20, 2011, the Federal Trade Commission, or FTC, issued a final order, or Consent Order, settling the FTC’s May 31, 2011 charges that our acquisition of Talecris was anticompetitive and would have resulted in higher prices for consumers. Pursuant to the Consent Order, we divested to Kedrion, on June 2, 2011, certain assets, including Talecris’ Melville, New York manufacturing facility and United States marketing rights to Koate® antihemophilic factor, and an agreed quantity of plasma and subsequently transferred to Kedrion two plasma collection centers located in Mobile, Alabama, and Winston Salem, North Carolina. Further, pursuant to the Consent Order, we and Kedrion entered into a contract manufacturing agreement under which we are supplying to Kedrion, for a period of seven years ending in 2018, Koate® and private label IVIG and albumin, for sale by Kedrion in the United States, and we extended to Kedrion a five year option ending in 2016 for Kedrion to purchase a non-exclusive license to Koate® related intellectual property for use in the United States. In accordance with the Consent Order, we leased the Melville facility from Kedrion until July 1, 2013 when we turned over operations at the facility to Kedrion. The Consent Order provides for a monitor to oversee our compliance with the Consent Order and requires us to submit to the FTC annual compliance reports for ten years.  Our next compliance report is due in July 2014.

In order to finance the cash portion of the Talecris acquisition consideration and repay existing indebtedness, on November 23, 2010, we entered into a credit agreement that provided for (a) senior term loans aggregating $2.5 billion and €440 million and (b) revolving commitments in the amounts of $50 million, €36.7 million ($50 million equivalent) and the $200 million equivalent in multicurrencies.  In addition, on January 21, 2011, Giant Funding Corp., an escrow company formed solely for the purpose of issuing the Existing Notes, completed a private placement of 8.25% Senior Notes due 2018 (the “Existing Notes”).  The proceeds of the offering of the Existing Notes were held in an escrow account pending completion of the Talecris acquisition and the satisfaction of other conditions.  On June 1, 2011, upon completion of the acquisition, Giant Funding Corp. was merged with and into Grifols Inc., Grifols Inc. assumed all of Giant Funding Corp.’s obligations under the Existing Notes and the indenture governing the Existing Notes and the proceeds from the issuance of the Existing Notes were released from the escrow account.  The proceeds from the Existing Notes, together with funds drawn pursuant to the credit agreement, were used to finance the cash portion of the consideration for the Talecris acquisition.

On February 29, 2012, we entered into the amended senior credit agreement, which provided for the repricing of all of the senior term loans and revolving facilities via amended senior term loans aggregating $2.3 billion and €420 million and amended revolving credit facilities in the amounts of $35 million, €22 million and the $140 million equivalent in multicurrencies (collectively, the “Existing Facilities”).  We voluntarily prepaid $240 million of the Existing Facilities in 2012.  The Existing Facilities were repaid on February 27, 2014 with the proceeds of the New Credit Facilities that we entered into on February 27, 2014.

Class B ADS Purchase and Sale

On March 11, 2013, we purchased 4,402,986 of our Class B ADSs from various funds and accounts managed by Cerberus Capital Management, L.P.  and/or its affiliated advisory entities (such funds and accounts, “Cerberus”) for a total purchase price of $118,880,622, or $27.00 per ADS, pursuant to a purchase agreement dated March 8, 2013 (the “ADS Purchase Agreement”). We originally issued these Class B ADSs to Cerberus in June 2011, in connection with our acquisition of Talecris. Cerberus was the largest shareholder of Talecris.

Pursuant to the terms of the ADS Purchase Agreement we provided Cerberus with registration rights for their remaining 4,402,987 Class B ADSs. On April 23, 2013, we filed a Form F-3 registration statement covering the resale of such Class B ADS for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act. Cerberus paid all expenses related to the preparation and filing of the registration statement.

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The ADS Purchase Agreement contains customary representations, warranties and agreements by each party. In addition, the ADS Purchase Agreement contains customary indemnification obligations of us and Cerberus arising from the registration rights and obligations set forth therein, including for liabilities under the Securities Act and other obligations of the parties.

In November 2013, we sold 4,402,986 ADSs, representing all of our treasury stock, for €11.2 million.  As of December 31, 2013, we hold no treasury stock.

Sale-leaseback Transactions

In May 2011, we sold five properties in Spain for an aggregate amount of €80.4 million to Gridpan Invest, S.L., a wholly owned subsidiary of Scranton Enterprises, B.V., one of our major shareholders and a related party.  These properties related primarily to non-core assets such as offices, warehouses and a factory.  Two of the premises were sold together with their related mortgage loans for a total of €53.5 million.  As a result of the sale, we recognized a net loss of €7.4 million, which included €2.0 million in brokerage fees paid to Scranton Enterprises, B.V. The prices paid for the properties were established based on appraisals made by independent appraisers.  Simultaneous with the sale, we entered into operating lease agreements with Gridpan Invest, S.L. with respect to the aforementioned properties.  For a summary of the material terms of the lease agreements, see Item 7 of this Part I, “Major Shareholders and Related Party Transactions — B. Related Party Transactions — Sale-leaseback Transactions — Spain.”

In June 2011, we signed various contracts for the sale and leaseback of a production plant located at the Los Angeles facility, as well as its machinery and other equipment, to third-party investors California Biogrif 330, LP and LA 330 Biologicals Financing, LP, respectively.  We also signed a 99-year lease for the land on which the production plant is built.  We received $35.4 million (€24.6 million) for the sale of the production plant and $23.8 million (€16.5 million) for the sale of the machinery and other equipment.

The plant lease is considered an operating lease and the lease on the machinery and other equipment is considered a finance lease in accordance with the terms of the purchase option.  As a result of the sale of the plant, we incurred a net loss of $2.4 million (€1.3 million), mainly due to the expenses incurred during the plant’s operation.

The main terms of the plant operating lease contract are as follows:

·initial term of 20 years;

·initial rent established at market prices and subject to an annual 3% increase;

·on the first day of the sixth year, advance payment of the rent due through the twentieth year;

·option to extend the lease by a ten-year period at our discretion; and

·grant of purchase options in the sixth and twentieth years at a market price to be agreed to by our landlord and us, or as determined by an independent appraiser if we can not reach an agreement with our landlord.

The main terms of the finance lease contract for the machinery and other equipment are a term of five years and 60 monthly payments of $529,000 (€369,000).  The lease contract is non-extendable and anticipates the repurchase of the machinery and other equipment for the amount of $1.00 upon expiration of the lease term.

The rental expense incurred in 2013 for the operating contracts amounted to €1.8 million, coinciding with the minimum contractually agreed payments.

In December 2011, we entered into a number of contracts for the sale and subsequent leaseback of certain buildings and equipment under construction in Clayton, North Carolina with Scranton Enterprises USA, Inc., a company owned by Scranton Enterprises, B.V., one of our major shareholders and a related party.  The sale price was $199 million, of which $115 million was paid as of December 31, 2011.  The remaining $84 million was paid in June 2012.  For a summary of the material terms of the lease agreements, see Item 7 of this Part I, “Major Shareholders and Related Party Transactions — B. Related Party Transactions — Sale-leaseback Transactions — Clayton, North Carolina.”

For further details of our principal capital expenditures and divestitures, see Item 5 of this Part I, “Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Capital Expenditures.”

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Alpha Consent Decree

On March 15, 2012, the United States District Court for the Central District of California entered an order vacating the consent decree under which our Los Angeles facility previously operated.  See Item 8 of this Part I, “Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings — Alpha Consent Decree.”

B.Business Overview

General

We are a leading global specialty biopharmaceutical company that develops, manufactures and distributes a broad range of plasma derivative products.  Plasma derivatives are proteins found in human plasma, which once isolated and purified, have therapeutic value.  These protein-based therapies extend and enhance the lives of individuals who suffer from chronic and acute, often life-threatening, conditions, such as:  primary and secondary immunological deficiencies; CIDP; A1PI deficiency and related emphysema; immune-mediated ITP; Guillain Barré syndrome; Kawasaki disease; allogeneic bone marrow transplants; hemophilia A and B; von Willebrand disease; traumatic or hemorrhagic shock; and severe burns.  We also specialize in providing infusion solutions, nutrition products, medical devices, diagnostic instrumentation and reagents for use in hospitals and clinics.

Our products and services are used by healthcare providers in approximately 100 countries to diagnose and treat patients with hemophilia, immune deficiencies, infectious diseases and a range of other medical conditions, and we have a direct presence, through the operation of commercial subsidiaries, in 25 countries.

We organize our business into four divisions:  Bioscience, Diagnostic, Hospital and Raw Materials and Others.

Bioscience.  The Bioscience division includes activities relating to the manufacture of plasma derivatives for therapeutic use, including the reception, analysis, quarantine, classification, fractionation and purification of plasma, and the sale and distribution of end products. The main plasma products we manufacture are IVIG, Factor VIII, A1PI and albumin. We also manufacture intramuscular (hyperimmune) immunoglobulins, ATIII, Factor IX and plasma thromboplastin component, or PTC. Subsequent to the Talecris acquisition, Talecris’ operations were incorporated into our existing Bioscience division. This diversification of our Bioscience division, coupled with geographic expansion, has enabled us to adapt to the demands of patients and healthcare professionals and add value to our services. The Bioscience division accounted for €2.4 billion, or 89.3%, of our total net revenue of €2.7 billion in 2013 and approximately 74% of total net revenue of €3.3 billion pro forma for the Novartis Acquisition.

Diagnostic.  The Diagnostic division focuses on researching, developing, manufacturing and marketing in vitro diagnostics products, including analytical instruments and reagents for diagnostics, as well as blood bank products. We concentrate our Diagnostic business in immunohematology and hemostasis product lines. The Diagnostic division’s main customers are blood donation centers, clinical analysis laboratories and hospital immunohematology services. The Diagnostic division accounted for €130.3 million, or 4.8%, of our total net revenue in 2013. The Novartis Diagnostic Business we acquired in January 2014 produces a complete line of products and systems to perform blood donor screening molecular tests aimed at detecting the pathogenic agents of transfusion related infectious diseases such as HIV, hepatitis B, hepatitis C, and West Nile Virus. With the Novartis Acquisition, we expect the Diagnostic division to account for approximately 20% of our total net sales.

Hospital.  The Hospital division manufactures and in certain instances installs products used by and in hospitals, such as parenteral solutions and enteral and parenteral nutritional fluids, which are sold almost exclusively in Spain and Portugal. It also includes products that we do not manufacture but that we market as supplementary to products we do manufacture. The Hospital division and accounted for €97.1 million, or 3.5%, of our total net revenue in 2013 and approximately 3% pro forma for the Novartis Acquisition.

Raw Materials and Others.  Since 2011, the Raw Materials and Others division consists of (i) amounts earned under the agreements with Kedrion, which are described further in “— A. History and Development of the Company — Important Events — The Talecris Acquisition and Related Financing” above, (ii) royalty payments from third parties and (iii) revenue from engineering activities by our subsidiary, Grifols Engineering, S.A. The Raw Materials and Others division accounted for €65.4 million, or 2.4%, of our total net revenue in 2013.

Geographic Markets

We are a leading plasma derivatives producer globally, ranking as the third largest producer in the industry in terms of total sales behind Baxter Healthcare Corporation and CSL Group. We are the world’s largest producer of A1PI, which is used for the treatment of A1PI deficiency-related emphysema. Prolastin® is the leading A1PI product in the United States, and is licensed in 15 countries in Europe and competes with another licensed A1PI product only in France, representing a 66% market share globally.

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We currently operate in approximately 100 countries through distributors and subsidiaries in 25 countries. The United States is the largest sales region in the world for plasma derivative products. In addition, the United States does not regulate prices for plasma derivative products and trade credit periods are generally shorter than in other regions in which we sell our products, including our principal European sales regions. In the year ended December 31, 2013, the United States and Canada accounted for 62.3% of our total net revenue.

Certain sales regions, particularly in emerging markets, have experienced continuous growth, driven by enhanced socioeconomic conditions and more informed patients who are demanding better quality medical care, as well as increasing government healthcare spending on plasma derivative products and are expected to experience significant growth. Our presence and experience in Latin America, in countries such as Mexico, Colombia, Argentina, Chile and Brazil, where we have been marketing and selling products for over 20 years, has positioned us to benefit from this additional growth in both our Bioscience and Diagnostic divisions. In the Asia-Pacific region, we have established a presence through our subsidiaries and representative offices in Malaysia, China, Thailand, Singapore, Australia and Japan.

Our continued focus on international expansion and acquisitions that generate operational synergies was demonstrated by our acquisition of Talecris in June 2011, a United States based producer of plasma-derived protein therapies with an established presence in the United States and Canada. We also expanded internationally with the acquisition in March 2013 of a 60% stake in Progenika, a Spanish biotechnology firm with operations in the United States, Europe and the Middle East. We will continue to selectively consider acquisitions that would further enhance our operations.

The following chart reflects a summary of net revenue by each of our geographic regions for the past three years:

Summary of Net Revenue by Region	YearendedDecember 31, 2013	% of totalnet revenue	YearendedDecember 31, 2012	% of totalnet revenue	YearendedDecember 31, 2011	% of totalnet revenue
	(in thousands of euros, except for percentages)
European Union(1)	569,827	20.8	559,328	21.3	526,625	29.3
Spain	207,922	7.6	212,983	8.1	230,871	12.9
United States and Canada	1,707,620	62.3	1,658,548	63.3	948,730	52.9
Rest of the World	426,257	15.5	371,618	14.2	289,732	16.1
Subtotal	2,703,704	98.6	2,589,494	98.8	1,765,087	98.3
Raw Materials(2)	38,028	1.4	31,450	1.2	30,526	1.7
Total	2,741,732	100.0	2,620,944	100.0	1,795,613	100.0

(1)Net revenue earned in the European Union includes net revenue earned in Spain.

(2)We exclude net revenue derived from our Raw Materials division from our reported net revenue by region, because we believe that such net revenue does not represent part of our core recurrent business lines.  This net revenue consists primarily of net revenue earned under the agreements with Kedrion, which are described further in “— A. History and Development of the Company — Important Events — The Talecris Acquisition and Related Financing” above.

Principal Activities

We organize our business into four divisions:  Bioscience, Diagnostic, Hospital and Raw Materials and Others.

The following chart presents our total revenues by each of our divisions for the past three years:

Summary of Revenue by Division	YearendedDecember 31, 2013	% of total net revenue	YearendedDecember 31, 2012	% of total netrevenue	YearendedDecember 31, 2011	% of total netrevenue
	(in thousands of euros, except for percentages)
Bioscience	2,448,824	89.3	2,325,089	88.7	1,531,199	85.3
Diagnostic	130,339	4.8	134,341	5.1	117,358	6.5
Hospital	97,131	3.5	95,870	3.7	95,365	5.3
Raw Materials and Others(1)	65,438	2.4	65,644	2.5	51,691	2.9
Total	2,741,732	100.0	2,620,944	100.0	1,795,613	100.0

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(1)In 2011, 2012 and 2013, Raw Materials and Others primarily consisted of (i) amounts earned under the agreements with Kedrion, which are described further in “— A. History and Development of the Company — Important Events — The Talecris Acquisition and Related Financing” above, (ii) royalty payments from third parties and (iii) revenues from engineering activities by our subsidiary Grifols Engineering, S.A.

The Bioscience Division

The Bioscience division is responsible for the research and development, production and marketing of plasma derivative products. In 2013, the Bioscience division accounted for 89.3% of total net revenue.

Operational Structure

The following chart illustrates its operational structure:

From plasma donation to therapeutic application, there are four major steps in the industry value chain process:  (i) plasma collection, (ii) transport and logistics, (iii) manufacturing (fractionation) and (iv) marketing and distribution.  We are present at all levels of the value chain, from collection centers to distribution of the final products.  This vertical integration enables us to leverage our position at each stage to control the overall process, to benefit from lower prices and to introduce complementary products, such as those offered through the Hospital division and the Diagnostic division, to our customers.

Plasma Collection

Plasma is the key raw material used in the production of plasma-derived products. We obtain our plasma primarily from the United States through our 150 FDA licensed plasma collection centers and, to a much lesser extent, through agreements with third parties. In 2013, our plasma collection centers collected approximately 6.4 million liters of plasma (including specialty plasma). We believe that our plasma requirements through 2016 will be met through plasma collected at our plasma collection centers and approximately 0.6 million liters of plasma per year to be purchased from third-party suppliers pursuant to various plasma purchase agreements. As we source the majority of our plasma internally, we have been able to ensure the availability of plasma for our manufacturing needs, assure the quality of the plasma throughout our manufacturing process, and improve control over our plasma costs and our margins.

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We have implemented mechanisms to ensure that a plasma donor meets the guidelines set forth by applicable regulations regarding, among other things, health, age and frequency of donations.  Once the plasma donation is completed, as required by applicable United States and European regulations, we test every donation for pathogens such as HIV, hepatitis A, B and C, parvovirus B19 and syphilis.  If we discover a unit of plasma that is contaminated, we notify the donor and remove all plasma previously donated by such donor from our inventory.

Transport and Logistics

Once plasma has been collected, it is frozen at the collection center and sent to fractionation centers. One essential aspect of this process is the implementation of safety procedures to guarantee the quality and safety of the donated plasma. To ensure the preservation of the proteins found in plasma, plasma must be kept at a temperature of -20 degrees Celsius (-4 degrees Fahrenheit). In accordance with European and United States requirements, we store our plasma at a temperature of -30 degrees Celsius (-22 degrees Fahrenheit). During transportation, plasma is kept at a temperature of at least -20 degrees Celsius. Our frozen plasma is transported by one of two transport companies, which are the same used throughout the industry.

Fractionation and Purification

Once plasma has been obtained, it may be used immediately for blood transfusions. It may also be frozen (as fresh frozen plasma) and then manufactured into plasma derivatives through the fractionation process. The fractionation process consists of the separation of specific proteins through temperature and pH changes, as well as the use of filtration and centrifugation techniques. This process also includes a phase of administration of various viral inactivation procedures. Fractionation occurs in tanks at near freezing temperatures to maintain the integrity of the proteins. All known plasma derivative products can be fractionated from the same batch of plasma. As a result, the development of a new or higher yield plasma derivative product would likely generate incremental sales without increasing the requirement for additional plasma.

We currently operate nine manufacturing facilities in the United States, Spain, Mexico, Switzerland and Australia. Our plasma derivative products are manufactured at our Clayton, Los Angeles and Parets facilities, which have a combined fractionation capacity of 8.5 million liters per year. Our Clayton facility is one of the world’s largest integrated protein manufacturing sites, including fractionation, purification and aseptic filling and finishing of plasma-derived proteins.

Currently, the Clayton, Los Angeles and Parets facilities are equipped and licensed to produce certain plasma derivative products for the United States, European and other markets. For example, we produce our Flebogamma® DIF and Gamunex® IVIG products for all of our markets at the Clayton and Parets facilities.

We optimize utilization of our fractionation capacity by obtaining FDA and EMA licenses, and completing further requirements, that allow us to purify at any of our other facilities intermediate products that are produced at one of our facilities. In 2011, 2012 and 2013, we obtained the following FDA licenses, among others:

·to purify at our Clayton facility the Fraction II+III (an intermediate product) made at both our Los Angeles and Parets facilities to make Gamunex®;

·to use Fraction V obtained at the Clayton facility to produce albumin at the Los Angeles facility; and

·to use Fraction IV-I obtained in Los Angeles to produce Prolastina®, an A1PI we market in Spain, at the Clayton facility.

We are continuing our efforts to obtain additional FDA licenses of this nature.  The flexibility provided through such licenses allows us to increase production efficiency and to better address changes in demand between the United States, the European Union and other world markets.

For more information on our manufacturing facilities, see “— D. Property, Plant and Equipment” below.

Safety

We have never experienced a recall of any batch of our finished biological products due to a safety risk, although certain of our other products have been subject to non-material recalls.  Before being acquired by us, Talecris had experienced four recalls of its finished biological products.  Our philosophy is that the health of the plasma donor and the patient are the paramount considerations.  We strongly believe that our safety philosophy is consistent with the business objective of generating profit.  We also believe that we have a strong reputation for safety in our markets, thus making our products particularly attractive to customers.  Our vertically

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integrated business model allows us to assure the safety and quality of our plasma derivative products through the implementation of our safety standards throughout the value chain.

The plasma collection, fractionation and purification process is long, complex and highly regulated.  We have adopted and maintain rigorous safety standards that we believe exceed those required by health authorities in Europe and the United States.

We maintain standards consistent with other industry participants with regard to infectious disease screening and quarantine of units.  For example, source plasma inventory is held for not less than 60 days.  Some of our additional safety policies include look-back procedures for seroconversion.  We have also introduced innovative methods such as the Plasma Bottle Sampling® system, which automatically prepares, codes and labels test samples at the time of plasma donation, and the PediGri® On Line system, which provides full traceability of human plasma raw material throughout the plasma supply chain.  See “— Distribution Process” below.

Fractionation plants must be cleaned and sterilized frequently.  Our Parets facility was designed to minimize the clean area required for the plasma fractionation tanks and separates the tanks from the room temperature work area.  This allows us to perform all maintenance work from outside the room temperature area, decreasing the risk of contamination.

Periodically, we voluntarily shut down all of our manufacturing facilities to perform maintenance work, expansion projects and other capital investments.  Our manufacturing facilities have never been shut down because of regulatory noncompliance while under our operation.  We believe that our voluntary shutdown procedure lowers the risk of any mandatory shutdown.

After plasma derivatives are processed, we inspect each bottle for irregularities such as imperfect seals, bottle cracks, volume mismeasurements and the presence of foreign objects.

We have also developed and installed in our Parets facility a proprietary process of sterile filling of bottles designed to reduce the risk of contamination.  In our process, the bottle and stopper are sterilized together. Once both are sterilized the bottle is reopened in a small sterile room for only two seconds in order to insert the product and then resealed, greatly reducing exposure to the environment and reducing the risk of contamination.

Since January 1999, we have videotaped the filling process to enable us to identify the cause of, and rectify more easily, any related problem.  Our policy is to maintain each videotape for six years.  We also imprint an identification number on each of our bottles with a laser for easier identification in the event of a recall and to reduce the risk of tampering.  This allows us to protect the integrity of our manufacturing process.

We continually invest in the improvement of our manufacturing facilities and plasma fractionation process. During 2012, we completed a new ATIII purification and nanofiltration area in Clayton. During 2013, we completed a new albumin purification area at our Parets facility and began the validation process for the new fractionation facilities in Barcelona and Clayton.

Distribution Process

With each batch of plasma derivatives, we deliver electronic information regarding the origin, characteristics and controls of each of the units of plasma that we used in the preparation of the batch to our customers.  This feature, called the PediGri® On Line system, allows for full traceability of the human plasma raw material in the event of a problem with a specific product.  This tracking process is of utmost importance for containing the transmission of diseases in the event of a potential product recall.  We have had this system in place since 1996, and we believe we are the only fractionator that provides this feature to customers.

We have our own sales and distribution networks covering substantially all of our markets, staffed with highly trained personnel.  A majority of our sales in 2013 were made through our own distribution network, which is experienced in the proper handling of our products.  This network provides for greater safety because it allows us to track our products and react quickly in the case of a potential product recall.  In countries where we do not have our own distribution network, we use carefully selected distributors who follow all of our safety standards.  Additionally, outside of the United States, we are in the process of transitioning some of Talecris’ products from their existing distribution channels into our own, reducing the distribution costs of those products.

For further information, see “— Marketing and Distribution” below.

Bioscience Products and Services

Collected plasma, whether source or recovered, is fractionated into different component proteins.  We fractionate and purify a broad range of plasma derivative products that improve patient care.

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Our principal plasma derivative products are IVIG, A1PI, Factor VIII and albumin, each sold under various brand names, and their respective applications are as follows:

Product Description	Main Applications
Flebogamma® 5%. Immune Globulin Intravenous (Human).	IVIG assists in the treatment of: primary and secondary immunological deficiencies; immune-mediated ITP; Guillain Barré syndrome; Kawasaki disease; allogeneic bone marrow transplants; CIDP (Gamunex®/Gamunex®-C only).
Flebogamma® 5% and 10% DIF. Immune Globulin Intravenous (Human).
Gamunex®/Gamunex®-C. Immune Globulin Injection (Human), 10% Caprylate/Chomatography Purified.
Prolastin®/Prolastin®-C/Prolastina®/Pulmolast®. Alpha 1-Proteinase Inhibitor (Human).	Used to treat congenital alpha-1 antitrypsin deficiency-related emphysema.
Trypsone® A1PI. Alpha 1-Proteinase Inhibitor (Human).
Fahndi® and Alphanate®. Antihemophilic Factor/von Willebrand Factor Complex (Human).	Used for the prevention and control of bleeding in Factor VIII deficiency (hemophilia A), and indication for von Willebrand disease (in the U.S., for Alphanate® only).
Koate®-DVI. Antihemophilic Factor (Human).
Human Albumin Grifols®/Albutein®/Plasbumin®. Albumin (Human) 5%, 20% and 25%.	Used to re-establish and maintain circulation volume in the treatment of hypovolemia (i.e., traumatic or hemorrhagic shock and severe burns) and to treat complications related to cirrhosis.

Our acquisition of Talecris expanded our portfolio of IVIG and A1PI products.  Gamunex® IVIG, which was launched in the United States and Canada in 2003 as a premium ready-to-use liquid IVIG product, is one of the leading products in the IVIG segment.  We believe Gamunex® IVIG is considered to be the industry benchmark due to a comprehensive set of differentiated product characteristics that have positioned it as the premium product in its category since its launch.  Gamunex® IVIG is the only IVIG product approved for CIDP in the United States and Canada and, through mutual recognition procedures, in 16 European countries.  Further, the FDA granted Gamunex® IVIG orphan drug status, which provides marketing exclusivity for the CIDP indication in the United States through September 2015.

In addition, following the Talecris acquisition, we are the world’s largest producer of A1PI, which is used for the treatment of A1PI deficiency-related emphysema.  Prolastin® A1PI is the leading A1PI product in the United States, and in Europe, it is licensed in 15 countries and competes with another licensed A1PI product only in France.  In Italy and Spain, where we have previously distributed Prolastin® through third parties, we intend to begin distributing Proslastin® directly in 2013.  Additionally, Prolastin®-C is the only licensed A1PI product in Canada, and we are conducting clinical trials in Europe to obtain Prolastin®-C approval there.

Alphanate® and Fahndi®, our Factor VIII/von Willebrand factor products, are used both for the treatment of hemophilia and von Willebrand disease.  In addition, we offer our albumin product with reduced aluminum content, meeting European requirements and making our albumin product more attractive to biotechnology companies and genetic labs, as well as hospitals and physicians.

In addition to the products described above, we also produce intramuscular (hyperimmune) immunoglobulins, which are used for the treatment of tetanus, hepatitis B, and Rh factor complications during birth; Anbinex® and Thrombate® III, which are used in the prevention and treatment of thromboembolic complications; AlphaNine® and Factor IX Grifols®, which are used in the prevention and control of bleeding in patients with hemophilia B; and Niuliva® and Igantive®, used after liver transplants to prevent hepatitis B reinfection of the graft.

To sell plasma derivative products, we must first register the products with the relevant authorities of the jurisdictions where the products are to be marketed and sold.To comply with the regulatory requirements in a given jurisdiction, we have a core team in Spain and the United States that prepares, files and coordinates the registration process with the technical personnel at the subsidiary assigned to that jurisdiction.  We have approximately 670 hemoderivative product licenses registered in 90 countries throughout the

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European Union, United States, Latin America, Asia and the rest of the world.  Our most significant government-issued licenses for plasma derivative products are:

·Flebogamma®/Flebogamma® DIF/Gamunex®/Gamunex®-C Immunoglobulin.  We have 129 licenses for the marketing and sale of one or more of these immunoglobulin products;

·Fahndi®/Alphanate®/Koate® Factor VIII.  We have 101 licenses for the marketing and sale of one or more of these Factor VIII products;

·Human Albumin Grifols®/Albutein®/Plasbumin® Albumin.  We have 206 licenses for the marketing and sale of one or more of these albumin products in its various concentrations; and

·Prolastin®/Trypsone® A1PI.  We have 26 licenses for the marketing and sale of one or both of these A1PI products.

Pursuant to the Consent Order, we have granted Kedrion the exclusive license to sell Koate®-DVI in the United States.

In addition to the sale of the products described above, we have entered into a series of arrangements with certain Spanish transfusion organizations to fractionate recovered plasma (plasma separated from blood obtained from a blood donation) from such organizations and manufacture plasma derivatives under our own brand name for use by hospitals.  We charge the transfusion centers for the fractionation and manufacturing service.  We have similar, albeit smaller, arrangements with Czech and Slovak organizations.  We also provide virus photo-inactivation of transfusion plasma to hospitals and clinics in Spain.  The plasma is inactivated at our manufacturing facilities and then sent back to the clinic or hospital at which it was collected, where it is used for transfusions.

We also have contracts with Canadian Blood Services and Héma-Québec.  Talecris was awarded five-year contracts with Canadian Blood Services and Héma-Québec in December 2007 that became effective April 2008 and terminated in March 2013.  Canadian Blood Services and Héma-Québec ended their partnership in 2012 and now negotiate separately with suppliers.  Operating separately, Canadian Blood Services comprises approximately 70% and Héma-Québec comprises approximately 30% of the Canadian market for plasma products and fractionation services. In 2013, Canadian Blood Services selected us as its primary supplier of both IVIG and fractionation services pursuant to a five-year contract that became effective in April 2013. Héma-Québec negotiated a reduced four-year contract with us that also became effective in April 2013, under which we supply a reduced portion of Héma-Québec’s plasma-derived products and no longer provide fractionation services. Under these new contracts, we maintained our position as the primary immunoglobulin supplier to Canada.

The Diagnostic Division

The Diagnostic division focuses on researching, developing, manufacturing and marketing in vitro diagnostics products, including analytical instruments and reagents for diagnostics, as well as blood bank products. We believe that we have a significant market share of sales of immunohematology automated systems to hospital transfusion and blood centers. In 2011, we grouped our immunohematology and blood bank product lines into a category called Transfusion Medicine as part of a management optimization process. We believe that we also have a significant market share of sales of other in vitro diagnostic systems, including in the hemostasis and coagulation product lines. The Diagnostic division accounted for €130.3 million, or 4.8%, of total net revenue in 2013.

Our principal diagnostic products are:

Product Description	Main Applications
Transfusion Medicine:
WADiana®/Erytra® analyzers. Automated immunohematology analyzers that use gel agglutination technology to enable automatic processing of DG Gel® blood determination cards.	Used to perform routine blood typing, antibody screening, antibody identification and cross-match tests.
Tigris ®/Panther® analyzers. Automated chemistry and immunoassay instrumentation for molecular diagnostics.	Used to detect pathogenic agents of infectious diseases, including HIV, hepatitis B, hepatitis C and West Nile Virus.
Bloodchip®/ IDCore®TX. Genotyping blood tests.	Used to determine blood groups and antigens.
Antigens. Critical component of blood screening immunoassay tests.	Intermediate component for the production of immunoassay tests and donor screening assays.

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Leucored and Standard Blood bags. Blood bags configured according to all blood bank separation protocols. Leucored blood bags incorporate an in-line filtration system.	Used for collection and transfusion of blood.
In Vitro Diagnostic Systems:
Triturus® analyzers. Open and fully automated analyzer for enzyme-linked immunosorbent assay (ELISA) tests offering multi-test/multi-batch capability.	Allows clinical laboratories to automate the enzyme immunoassay tests in microtiter plate format and to process several batches of samples simultaneously.
Q-Coagulometer® analyzers. Fully automated hemostasis analyzer that uses reagents to measure coagulation levels.	Used to diagnose and measure coagulation status of patients with coagulation-related and hemorrhagic disorders.
Reagents, instrumentation and software. Instruments, reagents and software for coagulation testing.	Used to establish the coagulation status of patients and to handle the corresponding results.

We assemble our machines at the Parets facility and we manufacture our blood bags at the Murcia facility, which has an estimated capacity of eight million blood bags per year.  See “— D. Property, Plant and Equipment” below.

The production, marketing and sale of many of our Diagnostic division products are subject to the prior registration of such products with the relevant authorities of the applicable jurisdictions.  We have approximately over 1,000 diagnostic product licenses registered in a total of 58 countries in Europe, the United States, Latin America and Asia.

In addition to the products noted above, we offer our customers products manufactured by third-parties that we believe complement our product lines.  We expect to boost growth in this division through new exclusive distribution agreements for such products.

We currently distribute Diagnostic division products in the European Union, the United States, Asia, the Middle East and Latin America.  In 2012, we expanded the sales of our immunohematology products and distributed our Erytra® analyzers in Europe, Mexico, Brazil, Japan and Australia.  In 2013, we expanded the sales of our Erytra® analyzers to Qatar and our Q-Coagulometer® to Italy.

Transfusion Medicine

Our growth strategy for the transfusion medicine product line focuses mainly on expanding the sales of our WADiana® and Erytra® analyzers and related DG Gel® blood determination cards in key world markets directly or through distribution partners.

We have focused on obtaining FDA approvals for products and improving instrument software and hardware, specifically the programming, verification and validation of new techniques for the automation of specific reagents in the WADiana® analyzer and the DG Gel® card reader.

We continue to experience strong sales of the Erytra® analyzer, and the first Erytra® analyzer was installed in Qatar in 2013.

In 2013, sales of DG Gel® cards continued to drive growth in the Diagnostic division. In the United States, the FDA approved a new formulation, the DG Gel® 8 system, for antigen blood typing and pre-transfusion compatibility tests.

In addition, we have a cooperation agreement in place with Novartis’ diagnostic division for the sale of immunohematology products in the United States.  These products include BLOODchip® genetic tests manufactured by Progenika, which we distribute in several countries.  As discussed above, in March 2013 we acquired the majority of shares in Progenika.

We also recently entered into a collaboration agreement with the Blood Bank of Shanghai, which receives more than 300,000 donations annually, for it to use the BLOODchip® test to verify compatibility for blood transfusions.

In 2011, we entered into an agreement with a Brazilian distributor for blood extraction and fractionation blood bags, which led to increased sales to Brazil beginning in 2012. To strengthen our market position in Brazil, we intend to construct a manufacturing plant there. We have also entered into a distribution agreement with the Japanese company Kainos Laboratories, pursuant to which it will distribute our WADiana® and Erytra® analyzers and associated reagents in Japan.

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In Vitro Diagnostic Systems

Our Q-Coagulometer® and Triturus® analyzers remain key product lines in the Diagnostic division. In 2013, we commenced sales of a Protein S Assay Kit and a chromogenic Protein C Assay Kit for our Q-Coagulometer® analyzers. In addition, we launched new versions of the software for our Q-Coagulometer® analyzers and continued development work on a new analyzer with greater processing capacity. In 2013, we finalized development of the first QSmart® analyzer, which is a new mechanism for laboratories to automate and standardize hemostasis tests.

We continue to distribute our Triturus® analyzer. In 2013, we finalized the first phase of validation for a new Triturus® analyzer with greater processing capacity.

We also continue to expand the range of reagents in this line, introducing DG®-Chrom PC, a proprietary chromogenic kit for Protein C, and DG®-TT L human reagent, a liquid human thrombin for determining thrombin time.

Novartis Diagnostic Business

We acquired from Novartis a complete line of products and systems to perform blood donor screening molecular tests aimed at detecting the pathogenic agents of transfusion-related infectious diseases such as HIV, hepatitis B, hepatitis C, and West Nile Virus.

Two of its products, the Tigris® and Panther® analyzers, are trusted by blood banks and plasma processing labs to screen millions of blood and plasma units around the world. Most notably, the fully automated, high-throughput Tigris system can process 1,000 blood samples in about 14 hours.

The Procleix assays developed in collaboration with Hologic detect genetic virus materials based on innovative technologies including target capture and transcription-mediated amplification.

In addition, we acquired a product line of high quality antigens which are critical components of clinical diagnostic and blood screening immunoassay tests sold worldwide, which are produced through a joint business with Ortho Clinical Diagnostic.

The Novartis Diagnostic Business will be integrated in our current Diagnostic division and will result in a significant expansion of our product portfolio.

The Hospital Division

The Hospital division manufactures and in certain instances installs products used by and in hospitals, such as parenteral solutions and enteral and parenteral nutritional fluids, which are sold almost exclusively in Spain and Portugal.  It also includes products that we do not manufacture but that are related and we market as supplementary to products we do manufacture.  The Hospital division accounted for €97.1 million, or 3.5%, of our total net sales in 2013.  We are the leader in the Spanish intravenous therapy segment in intravenous solutions, with a 33% market share.  We believe that we are the leader in Spain for pharmacy preparation tools used to administer intravenous solutions and hospital logistics products.

Hospital logistics and IV Tools segments are also strategic areas for the Hospital Division. With IV Tools we are the leaders in bringing to the hospital pharmacy GMP procedures and product solutions, increasing the safety on their compounding needs. With the hardware and software solutions offered by the Hospital logistics area, we are the market leader in Spain and Latin America in terms of offering solutions to manage the flow of medications in hospitals.

The following table describes the principal hospital products that we manufacture, distribute or install and their respective applications:

Product Description	Main Applications
Intravenous therapy:
Intravenous fluid and electrolyte solutions. Main product groups include hypotonic solutions, isotonic solutions, hypertonic solutions and plasma volume expander solutions.	Fluid and electrolyte replacement and conduit for the administration of medicines.
Intravenous washing solutions. Washing solutions in specially designed containers.	Cleaning of injury and operation areas and urological irrigation.

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Intravenous mixtures. Ready-to-use intravenous mixtures of potassium, antibiotics, gastroprotective agents, levofloxacine and paracetamol.	Increases safety and efficiency by rendering unnecessary the mixing of solutions at in-hospital pharmacies.
IV Tools. Gri-fill® System uses sterile filtration to prepare intravenous mixtures at in-hospital pharmacies. We have marketed this product in the U.S. since 2004, and we complement it with Misterium™, Phocus® and specific software and hardware tools for the preparation of intravenous mixtures, including citotoxic drugs. We also distribute external technologies, such as Health Robotics systems, for the preparation of intravenous mixtures.	Improves safety of hospital pharmacy preparation procedures by assuring sterility and traceability.
Nutrition:
Dietgrif® enteral liquid diets. Oral diets with all the requirements for balanced nutrition. Different diets include standard, standard fiber, polypeptidic, hyperproteic and energetic.	For patients who are unable to eat enough to maintain a nutritious diet, administered through feeding tubes as well as orally.
Disposables for gastroenterology. Stents and special endoscopy disposables for gastroenterology patients.	For patients needing gastrointestinal recanalitation, normally used in endoscopic surgery.
Probiotics. Special complementary diets composed of live microorganisms.	Improves gastroenterology conditions that are the result of a lack of intestinal microflora.
Medical Devices: Disposable sterile therapeutic medical products.	The products have therapeutics uses in urology, radiology, cardiology, neurology hemodynamics, anesthesia, urodynamics and lithotripsy.
Hospital Logistics: This includes products such as furniture, transport carts and packaging instruments; software programs, including our own BlisPack®; and distribution systems, including Pyxis® and Kardex®, for inventory control.	Used in the logistical organization of hospital pharmacies and warehouses, in the preparation of unit dosing and in hospital management, admissions and accounting.

The production, marketing or sale of our various Hospital division products are subject to the prior registration of such products with the relevant authorities of the jurisdictions where the products are to be marketed and sold.  We have 262 licenses for our Hospital division products registered in 38 countries throughout the European Union, Latin America and the United States.  Our sales representatives sell primarily to pharmacy, nutrition and gastroenterology units in hospitals and other units in hospitals that use our medical devices, using our own distribution network.

As our Hospital division generates most of its revenue in Spain, it has been impacted by budgetary constraints in the Spanish health sector. However, in order to address these challenges more effectively, we are reorganizing our commercial structure in Spain, focusing on a more specialized, integrated model, both geographically and functionally. We are also continuing to promote international expansion in this division, mainly through the IV Tools and Hospital Logistics product lines and manufacturing and distribution agreements.  In 2013, sales in the Latin American and United States’ markets made up for the lost sales in Spain resulting from the increased constraints.

Intravenous Therapy

We manufacture and distribute intravenous solutions, primarily in Spain.  In addition, we have increased our focus on manufacturing pre-diluted pharmaceuticals for third parties. We believe this approach will contribute to the Hospital division’s geographic diversification and allow us to maximize productive use of the Parets facility.

We are continuing development of “ready-made” pre-diluted potassium solutions in polypropylene packaging.  The Parets facility was successfully inspected by the FDA in 2012, which we believe is an important step to obtaining FDA approval to sell products manufactured at this facility in the U.S.  Following the inspection, we received FDA approval to begin selling intravenous zoledronic acid mixtures in the U.S. through third-party distributors.  We are also in the process of developing intravenous

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paracetamol and levofloxacin acid mixtures for sales through third-party distributors in the U.S. and intravenous ibuprofen for sales through third-party distributors in Europe.

In 2013, we entered into agreements to manufacture pre-diluted drugs at our Parets facility for third parties, including Cadence, Inc. and Cumberland Pharmaceuticals, Inc. in the United States.

As a complement to our intravenous solutions, we also manufacture or distribute various tools to be used in connection with the administration of such products, which we refer to as IV Tools. Our principal product, the Gri-fill® System is used in the preparation of intravenous mixtures. The Gri-fill® System has been launched in the United States and Canada and we are developing adaptations to facilitate wider distribution in the U.S. market, including software improvements and Gamunex® dosing mechanisms. We also manufacture Misterium™, a mini sterile modular room, or cleanroom, which we design to order and install on site to customer specifications. In 2013, the principal market for Misterium™ was the United States.

We also provide our customers with automated pharmacy services, through the i.v.STATION Robot product. This product minimizes the risk of measurement error and eliminates the possibility of drug cross-contamination and hospital-acquired infections. As part of an existing exclusive agreement to distribute Health Robotics’ products in Spain, we have automated the pharmacy service at the Doctor Negrin University Hospital on Gran Canaria in the Canary Islands with the assembly and start-up of Health Robotics’ i.v.STATION Robot. This projects have reinforced our leading position as a provider of automation services to hospital pharmacies in Spain.

Nutrition

We manufacture and distribute parenteral nutrition products, including accessories such as feeding tubes and nutritional bags, for sale in the European Union by third parties. During 2013, we increased sales of probiotic VSL#3® in Spain; however, the main driver in the Nutrition segment was our distribution of nasogastric probes manufactured by Kimberly Clarke.

Medical Devices

We also sell medical devices, such as disposable sterile therapeutic medical products for urology, radiology, hemodynamics and anesthesia, as well as urodynamics and lithotripsy. All of these products are manufactured by third parties and complement our portfolio of Hospital division products. We are increasing our strategic efforts to sell medical devices that complement our portfolio of Bioscience division products. During 2013, our distribution contracts with Volcano and Concentric Medical terminated and as a result sales in our Medical Devices segment were reduced. We have begun substituting the loss in sales with new products, such as the Deflux, a product used in urology.

Hospital Logistics

We sell products related to the logistical organization of pharmacies and warehouses of hospitals, including furniture, transport carts, packaging instruments and software programs for hospital management, admissions and accounting departments. Most of these products are manufactured by third parties. These products include StocKey®, an automated Kanban system designed to optimize hospitals’ healthcare material restocking processes, and BlisPack®, a system designed and manufactured by us to automate the cutting of prescription pill blister packs and the electronic identification of specific drugs for individual patients to be used by hospitals.

In 2013, we renewed an exclusive license through June 2016 for Spain, Portugal, Italy and Latin America to distribute products manufactured by Care Fusion under the name Pyxis®. CareFusion distributes our BlisPack® system in a number of countries in Europe, Latin America, the Middle East and Asia. In 2013, we also renewed our distribution license for Kardex’ automated storage carousels in Spain, Portugal and Latin America.

Research and Development

Research and development is a significant aspect of our business. Our principal research and development objectives are (i) to discover and develop new products, (ii) to research new applications for existing products and (iii) the improvement of our manufacturing processes to improve yields, safety and efficiency. Research and development spending remained stable at €124.4 million in 2012 and €123.3 million in 2013. In addition, as of December 31, 2013, we had 673 scientists and support staff dedicated to research and development.

We have over 70 years of successful innovation history. For example, we developed a unique fractionation design that reduces the risk of contamination, reduces maintenance costs and increases the amount of product extracted per liter of plasma. We

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also developed the first centrifugation unit for the automated cleaning of blood cells. In addition, we were one of the first fractionators to conduct double viral inactivation processes for Factor VIII and have designed and implemented a new process for the sterile filling of vials that reduces exposure to potential contaminants as compared to other existing processes. Further, we recently developed a nanofiltration method of viral inactivation for our IVIG and ATIII products. As a result of our continuing investment in research and development, we believe that we are well positioned to continue as a leader in the plasma-derived therapies industry.

Bioscience Division Initiatives

The Talecris acquisition complemented our substantial Bioscience division research and development project portfolio, which we believe will ensure the quality of our research activity in the long term.

We have a number of patents and research and development projects in our Bioscience division underway, 17 of which are already past the preclinical development phase. The following table reflects the total number of research and development projects in our Bioscience division by development phase as of the end of the last three years.

	As of December 31,
Development Phase	2013	2012	2011
Discovery	15	24	24
Preclinical	18	5	4
Clinical	17	17	17
Post Commercialization Studies	9	6	7
Rest of projects	19	19	23
Total Bioscience Research and Development Projects	78	71	75

The table below presents the most important of our research and development projects:

Product Candidate	Therapeutic Area	Product Type	Potential Use	Development Phase
Albumin and IVIG	Alzheimer’s	Plasma- derived	Alzheimer’s disease	Phase III (began in April 2012)
Plasmin	Thrombolytic	Plasma- derived	Acute Peripheral Arterial Occlusion	Phase II (began in the fourth quarter of 2010)
Antithrombin	Intensive Care	Plasma- derived	Cardiovascular surgery	Phase II for Anbinex® (completed in June 2011) Phase II for Thrombate® III (prepared for start)
Fibrin glue	Surgical bleeding	Plasma- derived	Vascular, organ and soft-tissue surgery	Phase III (entered in October 2008)

AMBAR Study.  We are continuing our ongoing research into possible treatments for Alzheimer’s disease. The Alzheimer Management by Albumin Replacement, or AMBAR, study is a multicenter trial that complements two previous trials and involves combining therapeutic plasmapheresis with albumin and IVIG in different intervals and in varying doses. Since the AMBAR project is mainly based on albumin, the study also includes a treatment arm with albumin alone in order for both approaches, combination of albumin plus IVIG and albumin alone to be covered. Therefore, we have started a Phase III clinical trial to demonstrate the efficacy of plasmapheresis with Albutein (5% and 20%) combined with Flebogamma® DIF 5% or Albutein® alone for improving the cognitive status of patients with Alzheimer’s disease. We expect the study to include 364 patients and will be conducted in collaboration with hospitals in Spain and in the United States. We received approval for our study from both the Spanish Agency and the FDA and patient recruitment has begun.

We incurred costs in the amount of €2.7 million, €3.0 million and €0.8 million in connection with this project in 2013, 2012 and 2011, respectively.  We hold significant granted patents and patent applications on the production of Albumin and IVIG as well as on the combination of plasma exchange with Albumin replacement for the treatment of Alzheimer’s disease.

Plasmin.  Prior to our acquisition of Talecris, Talecris conducted several Phase I clinical trials in the U.S., the E.U. and other countries and initiated Phase II clinical trials to evaluate the safety and efficacy of the use of Plasmin in the treatment of acute peripheral arterial occlusion, or aPAO, a condition in which arterial blood flow to extremities, usually the legs, becomes blocked by a clot. Talecris completed Phase I clinical trials in the second quarter of 2010 and initiated a Phase II clinical trial in several countries outside of the U.S. in the fourth quarter of 2010. In Phase I and preclinical trials, Plasmin appeared able to dissolve blood clots

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without an elevated risk of bleeding. We are continuing the Phase II clinical trials initiated by Talecris. We have obtained approval of our regulatory CE (European Conformity) mark application.  We incurred costs in the amount of €5.1 million and €8.2 million in connection with this project in 2013 and 2012 respectively.

Antithrombin.  In 2008, we initiated research into the clinical efficacy of antithrombin for use on cardiac surgery patients with cardiopulmonary bypass. In June 2011, we concluded Phase II clinical trials involving the use of our antithrombin Anbinex®. We have prepared a second Phase II trial for the same indication using Thrombate® III.  We incurred costs in the amount of €0.6 million, €0.01 million and €0.5 million in connection with this project in 2013, 2012 and 2011, respectively.

Fibrin Glue.  We began clinical trials into the safety and efficacy of the use of fibrin glue as a supportive treatment for the improvement of hemostasis in vascular, organ and soft-tissue surgery in 2008. There are currently four clinical trials underway: (i) a Phase II/III clinical trial in the E.U. for the use of fibrin glue in vascular surgery, (ii) a Phase III clinical trial in the U.S. for the use of fibrin glue in solid organ surgery, (iii) a Phase III clinical trial in the U.S. for the use of fibrin glue in soft-tissue surgery and (iv) a Phase III clinical trial for the use of fibrin glue in vascular surgery in the U.S.

We incurred costs in the amount of €9.1 million, €8.0 million and €4.3 million in connection with this project in 2013, 2012 and 2011, respectively.  We hold significant granted patents on the fibrinogen and thrombin production processes.

Other Bioscience research and development projects undertaken during 2013 included:

·a clinical study to evaluate the effects of the prolonged administration of human albumin on cardiovascular, hepatic and renal function in patients with advanced cirrhosis and ascites.  One study involves the administration of Albutein® 20% and is being conducted at six Spanish hospitals;

·a study designed to evaluate the effects of plasma exchange on the functional capacity of serum albumin on cerebral, circulatory and renal dysfunction; and

·a study to obtain efficacy data for Gamunex®-C in the pediatric population by subcutaneous administration, which will be completed in 2014.

All clinical trials involve risks and uncertainties.  Preclinical and clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome.  A failure of one or more of our clinical trials can occur at any stage of testing.  We may experience numerous unforeseen events during or as a result of preclinical testing and the clinical trial process that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates.  For a discussion of these unforeseen events, see Item 3. of this Part I, “Key Information — D. Risk Factors — Risks Relating to Our Business — We may not be able to commercialize products in development.”  Upon the completion of each of the development stages we evaluate the results achieved as compared to the objectives pursued.  Each of our key projects listed above has met our expectations with respect to results at the various development stages and we expect to move forward with the development process for each of these projects.

We believe that our current liquidity is sufficient to fund the ongoing costs of our key projects listed above through their completion as well as our other research and development initiatives.

Diagnostic Division Initiatives

Research and development in the Diagnostic division is based on immunologic and molecular genetic technologies and is focused on the development of reagents and equipment for “in vitro” diagnoses, principally for pretransfusional testing, hemostasis diagnosis and biological drug monitoring. The principal research and development projects that we are undertaking in this division are: (i) the classification of blood types and compatibility testing through the use of gel technology; (ii) the genetic detection of red blood cell and platelet antigens; (iii) the development of a high throughput automatic ELISA system and a broad menu of drug and anti-drug ELISA kits; and (iv) a new hemostasis analyzer, complementary to the Q-Coagulometer®, that will be able to serve medium to large laboratories and will have about three times the capacity and output of the Q-Coagulometer®.

Hospital Division Initiatives

The research and development team in the Hospital division primarily focuses on developing complementary products and on improving the safety and efficiency of existing products. In the fluid therapy market, work continues on the study of the stability of various ready-to-use mixtures in polypropylene packaging, in order to increase the range of mixtures available for hospital use. Polypropylene replaced polyvinyl chloride for as the material used in the primary packaging for solutions in Spain and during 2013,

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we launched new products like a new lipid emulsion, new potassium concentrations in normal saline or glucose solutions to avoid dosing errors in its administration, and a new bag with a leur lock valve as the injection port that will allow drug administration in a fast and safe manner without the need for needles and thereby reducing risk of accidents to nurses. Additionally, the Hospital division is developing ready-to-use mixtures for third-party distribution, including intravenous paracetamol, levofloxacin, zoledronic acid and ibuprofen mixtures.

The Hospital division is also developing new applications, such as software and devices, to improve the warehousing control of medication, the administration of medication to the patient and the traceability of the pharmaceutical products inside the hospital. During 2013, we finished the first prototype of a RFID cabinet, used for the storage of high value medical devices, which will be installed in two hospitals in Spain.

As part of the AMBAR study, the Hospital division is collaborating on the development of special devices and containers specifically designed for the procedures and protocols of the study.

Other Initiatives

In addition, we are increasing our research and development activities in new fields. We conduct these activities through the creation of joint ventures participated in by our subsidiary Gri-Cel, S.A., through agreements to use patents owned by third parties and through selective acquisitions.

Our acquisitions of Araclón and VCN Bioscience in 2012 expanded our research and development capabilities in fields outside of our traditional business segments. Araclón is dedicated to finding solutions that promote new diagnostic and therapeutic approaches to Alzheimer’s disease. Araclón is working on the validation of an early diagnostic kit and the development of a vaccine to combat Alzheimer’s disease in the asymptomatic preclinical stage. The vaccine has passed the animal experimentation stage and a clinical trial in humans has begun. VCN Biosciences is investigating and developing new therapeutic approaches based on oncolytic adenoviruses to treat tumors for which there is currently no effective treatment. Its most advanced project focuses of the treatment of pancreatic cancer and two Phase I clinical trials have been approved by the Spanish Medicines Agency and are set to begin in the first quarter of 2014.

In 2013, Gri-Cel acquired approximately 21% of the Belgian cell therapy company, TiGenix, a global leader in the field of mesenchymal stem cell therapy, and the first European company that obtained an approval for a cell-based medicinal product by EMA, namely ChondroCelect. Currently TiGenix is conducting a Phase III clinical trial with their mesenchymal stem cells in complex peri-anal fistula in patients with Crohn’s disease. Results from the Phase trial are expected in during the second quarter of 2015.

Seasonality

Our businesses are not significantly affected by seasonal trends.

Raw Materials

The cost of plasma, the key raw material used in the production of plasma-derived products, decreased slightly in 2013 as compared to 2012.  We continue to monitor the efficiency of our plasma collection platform. In 2013, we have concentrated all of our plasma testing into our two laboratories in Austin, Texas.

The principal raw materials for our intravenous therapy products are plastic and glass bottles, which we purchase from various European suppliers.

Marketing and Distribution

We currently sell Bioscience, Diagnostic and Hospital products to hospitals and clinics, GPOs, governments and other distributors in approximately 100 countries.

In the United States, GPOs are entities that act as purchasing intermediaries for their members, which are primarily hospitals, nursing homes and other healthcare providers.  GPOs negotiate the price and volume of supplies, equipment and pharmaceutical products, including plasma derivatives, used by their members.  Hospitals report that GPOs save them 10% to 15% on their purchases.  The GPOs’ large market position and substantial purchasing volume provide them with significant negotiating power, resulting in price pressures for manufacturers, including us.  A substantial amount of our sales in the United States are made through GPOs.

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We market our products to GPO members and their clients through focused sales presentations.  Although price and volume are negotiated by the GPO, the actual sales are made to each GPO’s authorized distributor(s) at the contract price, and the distributor then sells the products to that GPO’s members.  For safety and post-sale service reasons, the distributor is required to provide us with the specifics of the ultimate delivery to the client.

The sales, marketing and distribution process is different in Europe, where the bulk of sales are generally made directly to hospitals, with private fractionation companies meeting most of European demand.  We have developed long-standing relationships with major hospitals in most of our European markets, and we believe that hospitals are loyal customers that recognize the high quality and safety of our products, our reliability as a supplier and the strong product expertise and service provided by our sales representatives.  Due to the nature of our customer base and the prevalence of repeat sales in the industry, we market our products through focused sales presentations rather than by advertising campaigns.

Sales to Eastern Europe, the Middle East and Japan are made mostly by third parties outside of our sales network.  Our sales in Latin America are made mainly by our sales network.

Sales Representatives

We require our sales representatives to be able to highlight the technical differences between our products and those of our competitors.  This skill requires a high degree of training, as the salesperson must be able to interact and discuss product differences with doctors, pharmacists and other medical staff.  Sales representatives call on departmental heads, purchasing agents, senior hospital directors and managers.  We compensate our sales representatives by means of a fixed salary and a bonus component based on sales.  We divide our sales efforts along the lines of our main product categories.  Our sales personnel are primarily located in Europe and the United States, but we also have sales personnel in Latin America and Asia.

In 2011, we reorganized our Bioscience sales forces.  We now utilize mixed sales units comprised of both marketing and sales personnel and product line-specific sales units for hemostasis, pulmonary and coagulation factors (Factor VIII, Factor IX and antithrombin).

Advertising

We do not conduct any widespread advertising.  Instead, we participate in medical conferences and fairs and occasionally publish advertisements in medical magazines.

Distribution

We believe that having our own distribution network staffed with highly trained personnel is a critical element of a successful sales and marketing effort.  Through this network, we are able to provide high-quality pre- and post-sales service, which we believe enhances brand recognition and customer loyalty.  Our distribution network is experienced in the proper handling of our products and allows us to know where our products are located, enabling us to act quickly in the event of a suspected problem or product recall.

Our distribution network personnel are located in Europe, Latin America, the United States and Asia and handle the distribution of our biopharmaceutical and other medical products as well as goods manufactured by other premier healthcare companies that complement our own products.

During 2013, we distributed the majority of our products through our own distribution network. In some cases, particularly in the field of Diagnostics, we distribute products through marketing partners and third-party distributors.  We have a direct presence in 25 countries and we carefully select distributors in the countries were we do not have a direct presence.  We have a responsive, effective logistics organization that is able to punctually meet the needs of hospital centers throughout the world.

Our sales, marketing and distribution network included 995 employees as of December 31, 2013, which included 848 sales and distribution personnel and 147 marketing employees.

Each of our commercial subsidiaries is responsible for the requirements of the local market.  It is our goal for each commercial subsidiary to be recognizable as one of our companies by its quality of service, ethical standards and knowledge of customer needs.  This strong local knowledge enables us to build and maintain long-term relationships with customers in the hospital to earn their trust and confidence.

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Patents, Trademarks and Licenses

Patents and Trademarks

As of December 31, 2013, we owned approximately 1,300 patents and patent applications, of which 459 are in the process of final approval. Generally, in some countries, these patents are granted a 20-year protection period. Only 304 of these patents are set to expire in the next ten years. As of December 31, 2013, we also owned approximately 2,100 trademarks, of which 86 are in the process of final approval.

We maintain a department with personnel in Spain and in the United States to handle the patent and trademark approval and maintenance process and to monitor possible infringements.  We are not aware of any infringements of our patents and trademarks and we do not license any of our patents to third parties.

Plasma Derivative Products

As of December 31, 2013, we owned approximately 980 patents and patent applications related to plasma derivatives, including 360 in Europe and 76 in the United States.  The most important of these patents relate to:

·process for the production of virus-inactivated human Gamma Globulin G;

·use of therapeutic human albumin for the preparation of a drug for the treatment of patients suffering from cognitive disorders; and

·process for removing viruses in fibrinogen solutions.

Hospital and Diagnostic Products

As of December 31, 2013, we owned approximately 320 patents and patent applications related to our Hospital and Diagnostic products throughout the European Union, the United States, Latin America, Asia and in the rest of the world.  The most important of these patents related to the:

·Gri-fill® System, a process for the sterile filling of flexible material bags;

·WADiana® machine for clinical analysis;

·Triturus® machine for automated laboratory tests; and

·BlisPack®, a blister handling machine.

Licenses from Third Parties

We license certain intellectual property rights from Bayer.  Under a licensing agreement with Bayer, Talecris was granted a royalty-free, worldwide and perpetual license covering certain intellectual properties not acquired by Talecris in connection with its formation transaction.  We assumed this licensing agreement in connection with the Talecris acquisition.

Licenses from Government Authorities

Government authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, approval, manufacturing, labeling, post-approval monitoring and reporting, packaging, promotion, storage, advertising, distribution, marketing and export and import of healthcare products such as those that we collect, manufacture, sell or are currently developing.

We have product licenses from the FDA for the sale in the United States of IVIG, A1PI, albumin, Factor VIII, Factor IX, ATIII and PTC, as well as licenses for the sale of these and other products in Canada, Europe, Latin America and Asia.

The Parets and Murcia facilities meet all requisite regulations and standards of the European health authorities.  In addition, the Instituto Grifols Bioscience plant at our Parets facility holds an establishment license granted by the FDA in 1995. The manufacturing facilities for parenteral solutions at our Parets facility were also successfully inspected by the FDA in 2012.

The Clayton, Los Angeles, Parets and Emeryville facilities are subject to regulation by the FDA.  The Los Angeles facility had previously operated under a consent decree from the FDA and the DOJ dating to the time the plant was owned and operated by

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Alpha.  On March 15, 2012, the United States District Court for the Central District of California entered an order vacating the consent decree.  See Item 8 of this Part I, “Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings — Alpha Consent Decree.”

We lease most of our plasma collection centers as well as our main laboratory facility located in Austin, Texas.  We believe that we maintain licenses with the appropriate regulatory authorities, including the FDA, for all of these locations.

For more information on government licenses and regulation, see “— Principal Activities” above and “— E. Regulatory Matters” below.

Regulatory

For detailed information regarding the regulations applicable to our business, see “— E. Regulatory Matters” below.

Insurance Coverage

General and Product Liability

We have a program of insurance policies designed to protect us and our subsidiaries from product liability claims.

Effective January 1, 2013, we have product liability insurance coverage for up to €150 million per claim and in annual aggregate for products manufactured in all of our facilities and for third-party products we sell. This policy expires on May 1, 2014. We have elected to self-insure the first €15 million per claim and in annual aggregate of our product liability policy through the purchase by one of our subsidiaries of such portion of the insurance policy.  See “— Self-insurance” below.

Our master liability program also protects us and our affiliates from certain environmental liabilities arising outside of the U.S. This risk is covered up to a maximum of €18 million per year in the aggregate.

Biomat USA, PlasmaCare and Talecris Plasma Resources maintain a separate liability insurance policy. The policy covers their plasmapheresis business activities and expires on May 1, 2014. The maximum amount of coverage for liability claims under the policy is $10 million per claim and in annual aggregate. In addition, we have general liability coverage for up to €150 million for those three subsidiaries.

Property Damage and Business Interruption

Our property damage and business interruption master insurance policy covers us and our subsidiaries (including our United States subsidiaries). This master policy, which expires on May 1, 2015, covers damages suffered by plants and buildings, equipment and machinery. Under the current terms, the insurer will cover damages to our facilities produced by fire, smoke, lightning and explosions, among others, for up to $1 billion per occurrence. It also covers material damages or losses produced by equipment or machinery breakdown and flooding, for up to €100 million per claim and in annual aggregate.

In addition, this policy covers loss of profit for a period of 24 months with a deductible equivalent to up to five business days of lost profits for our Australian, Spanish, Swiss and United States subsidiaries. Pursuant to the loss of profit benefit, in the event that any or all of our plants stop production due to an event not excluded under the policy, the insurer covers fixed expenses, in addition to net profits we did not earn during the term of coverage.

We also have a transit and inventory insurance program, which covers damages to raw materials, supplies, semi finished products and finished products for up to €15.5 million per claim for transit and €400 million for inventory in annual aggregate.

Self-insurance

We are self-insuring part of the risks described above through the purchase of a portion of the relevant insurance policies by Squadron Reinsurance Ltd., one of our wholly owned subsidiaries. We self-insure the first €15 million per claim per year of our product liability policy, the first €200,000 per loss for property damage and the first ten days of lost profits and the first €200,000 per claim for inventory losses. These amounts are in addition to the deductibles for each of the policies that make up our insurance coverage programs.

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C.Organizational Structure

Grifols, S.A. is the parent company of the Grifols Group, which was comprised at December 31, 2013 of 54 companies.  Subsidiaries in which Grifols, S.A. directly or indirectly owned the majority of equity or voting rights have been fully consolidated.  In addition, there were five companies that were accounted for using the equity method, because Grifols, S.A. owned between 20% and 50% of its share capital and had no power to govern its financial or operating policies.

See Notes 1(a) and 2(c) to our audited consolidated financial statements included in this annual report on Form 20-F for details of our consolidated and non-consolidated companies.

D.Property, Plant and Equipment

Our headquarters are located in Barcelona, Spain.  As of December 31, 2013, we owned or leased facilities in four countries.  We currently own or lease nine manufacturing facilities in six locations, three of which have plasma fractionation capabilities.  The table below shows the geographic location, size and business purpose of each facility as of December 31, 2013.

Location	Facility	Size (square meters)	Own/Lease	Business Purpose
Parets del Vallès, Spain	Industrial Facility One Parets	58,285	Own 45,647 square meters; the rest of the property is leased	Plasma fractionation Manufacture of plasma derivatives
	Industrial Facility Two Parets	35,525	Own 19,853 square meters; the rest of the property is leased	Manufacture of Diagnostic and Hospital products
	Industrial Facility Three Parets	40,113	Lease	Plasma storage
Los Angeles, California, USA	Industrial Facility USA	93,078	Own	Plasma fractionation Manufacture of plasma derivatives
Clayton, North Carolina, USA	Clayton Facility	69,203	Own 60,771 square meters; the rest of the property is leased	Plasma fractionation Manufacture of plasma derivatives
Temple, California, USA	City of Industry USA	5,000	Lease	Plasma storage
Murcia, Spain	Industrial Facility One Murcia	10,285	Lease	Manufacture of Hospital products
	Industrial Facility Two Murcia	26,873	Lease	Manufacture of Hospital products
Fribourg, Switzerland	Industrial Facility Switzerland	12,000	Lease	Manufacture of Diagnostic products
Melbourne, Australia	Industrial Facility Australia	3,838	Own	Manufacture of Diagnostic products
Austin, Texas, USA	Plasma Testing Lab	2,235	Lease	Plasma testing
San Marcos, Texas, USA	Plasma Testing Lab	7,670	Own	Plasma testing
Benson, North Carolina, USA	Benson Facility	3,642	Lease	Plasma storage
Sant Cugat del Vallès, Spain	Headquarters	32,211	Lease	Headquarters

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Plasma Fractionation Plants

Our plasma derivative products are manufactured at our Clayton, Los Angeles and Parets facilities. All of our fractionation facilities have EMA certification. The Spanish and American facilities currently have an aggregate fractionation capacity of 8.5 million liters of plasma per year, and this capacity is sufficient to cover our current production needs.

The Parets facility, which will have a fractionation capacity of 4.3 million liters per year upon approval by the FDA of the new facility, has a unique design that separates the maintenance area from the clean areas required for the fractionation and purification procedures. This design, which we developed in house, minimizes the risk of contamination and reduces maintenance costs. In addition to licenses from the European Union and other authorities for the production of various plasma derivative products, the Parets facility is licensed by the FDA for the production of albumin and IVIG. We are one of the few European plasma derivatives plants to be licensed by the FDA. In addition to the plasma fractionation facilities, the Parets facility also has energy generation, research and development, packaging and storage facilities for the Bioscience division and the Hospital division. The Parets facility holds ISO 14000 and ISO 9001 certifications for its parenteral solutions and diagnostic manufacturing facilities.

We acquired our Los Angeles facility in July 2003, in connection with our acquisition of Alpha’s plasma fractionation business. We subsequently made significant capital investments in the facility, including the construction of purification and aseptic filling areas for coagulation factors and albumin, which were completed in 2006 and 2009, respectively, and an increase of the fractionation capacity by 0.7 million liters to 2.2 million liters, which was approved by the FDA during 2009. The Los Angeles facility is subject to regulation by the FDA. From the date of acquisition through March 15, 2012, the Los Angeles facility operated under a consent decree from the FDA and the DOJ dating to the time the plant was owned and operated by Alpha. On March 15, 2012, the United States District Court for the Central District of California entered an order vacating the consent decree.

As a result of the Talecris acquisition, we acquired the Clayton facility. Since the acquisition, the Clayton facility has benefited from roughly €241million of capital investment, including compliance enhancements, general site infrastructure upgrades, capacity expansions and new facilities, such as its chromatographic purification facilities and its high capacity sterile filling facility. The Clayton facility is one of the world’s largest fully integrated facilities for plasma-derived therapies, including plasma receiving, fractionation, purification, filling/freeze drying and packaging capabilities as well as freezer storage, testing laboratories and a cGMP pilot plant for clinical supply manufacture. The Clayton facility has a fractionation capacity of approximately 2.6 million liters per year, which we believe will expand to approximately six million liters per year upon completion of our planned expansion of the fractionation facilities.

In connection with the Talecris acquisition, we also acquired the Melville facility, which we subsequently sold to Kedrion in accordance with the terms of the Consent Order. We then leased and operated the Melville facility to produce intermediate pastes that were then purified into final products at the Clayton facility. We turned over control of the Melville facility to Kedrion on July 1, 2013.

We are currently constructing new fractionation facilities in Clayton, North Carolina and Parets del Vallès, Barcelona. Construction of and the receipt of the necessary approvals for the new Clayton facility is expected to be completed in 2015. We expect this new facility to have a fractionation capacity of approximately six million liters per year. Construction of and the receipt of the necessary approvals for the new Parets del Vallès plant is expected to be completed in 2014. We expect this new facility to initially increase our fractionation capacity by an additional 2.2 million liters per year.

E.Regulatory Matters

Government Regulation

Government authorities in the United States, at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, approval, manufacturing, labeling, post-approval monitoring and reporting, packaging, promotion, storage, advertising, distribution, marketing and export and import of healthcare products such as those we collect, manufacture, sell or are currently developing.  The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.  The following is a summary of the overall regulatory landscape for our business.

United States Government Regulation

In the United States, the FDA regulates drugs, biologics and plasma collection under the FDCA and implementing regulations.  Failure to comply with the applicable FDA requirements at any time during the product-development process, approval process or after approval may result in administrative or judicial sanctions.  These sanctions could include, as applicable, the FDA’s

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imposition of a clinical hold on trials for drugs, devices or biologics, refusal to approve pending applications, withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution or any combination of these sanctions.  Any agency or judicial enforcement action could have a material adverse effect on us.

The BLA Approval Process

Drugs that are also biological products, such as our plasma derivative products IVIG, A1PI, Factor VIII and albumin, must also satisfy the requirements of the Public Health Service Act and its implementing regulations.  In order for a biological drug product to be legally marketed in the United States, the product must have a BLA approved by the FDA.

The steps for obtaining FDA approval of a BLA to market a biological product in the United States include:

·completion of preclinical laboratory tests, animal studies and formulation studies under the FDA’s good laboratory practices regulations;

·submission to the FDA of an Investigational New Drug Application, or IND, for human clinical testing, which must become effective before human clinical trials may begin and which must include approval by an independent IRB at each clinical site before the trials may be initiated;

·performance of adequate and well controlled clinical trials in accordance with “Good Clinical Practice,” as set forth by the International Conference on Harmonization, to establish the safety and efficacy of the product for each indication;

·submission to the FDA of a BLA, which contains detailed information about the chemistry, manufacturing and controls for the product, reports of the outcomes and full data sets of the clinical trials and proposed labeling and packaging for the product;

·satisfactory review of the contents of the BLA by the FDA, including the satisfactory resolution of any questions raised during the review;

·satisfactory completion of an FDA Advisory Committee review, if applicable;

·satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP to assure that the facilities, methods and controls are adequate to ensure the product’s identity, strength, quality and purity; and

·FDA approval of the BLA, including agreement on post-marketing commitments, if applicable.

Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies.  An IND sponsor must submit the results of the preclinical tests, together with manufacturing information and analytical data, to the FDA as part of the IND.  Some preclinical testing may continue after the IND is submitted.  The IND must become effective before human clinical trials may begin.  An IND will automatically become effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions about issues such as the conduct of the trials or supporting preclinical data as outlined in the IND.  In that case, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed.  In other words, submission of an IND may not result in the FDA allowing clinical trials to commence.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators.  Clinical trials are conducted under strict requirements to ensure the protection of human subjects participating in the trial and protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated.  A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.  In addition, an IRB (usually, but not necessarily specific to each study site) must approve the protocol, subject consent form and any amendments.  All research subjects must be informed, among other things, about the risks and benefits of the investigational product and provide their informed consent in writing.  Federal regulations governing the protection of human subjects in clinical trials have remained generally consistent for many years, subject to certain amendments.  In July 2011, HHS and the FDA issued an advance notice of proposed rulemaking seeking comments on proposals to substantially change aspects of these regulations, seeking comments, for example, on mandating the use of a single IRB for multi-site trials, imposing specified data security and information regulations on trials, imposing new consent requirements with respect to the use of biospecimens that have

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been stripped of patient-identifiers, and requiring the use of standardized consent forms.  The outcome of this regulatory review is not yet certain, and accordingly its impact on our operations is not clear.

Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined.

Phase I trials usually involve the initial introduction of the investigational drug into a small group of healthy volunteers (e.g., ten to 20 volunteers) to evaluate the product’s safety, dosage tolerance and pharmacokinetics and, if possible, to gain an early indication of its effectiveness.

Phase II trials usually involve controlled trials in a larger but limited patient population (e.g., a few hundred) to:

·evaluate dosage tolerance and appropriate dosage;

·identify possible adverse effects and safety risks; and

·provide a preliminary evaluation of the efficacy of the drug for specific indications.

Phase III trials usually further evaluate clinical efficacy and test further for safety in an expanded patient population (e.g., several hundred to several thousand patients).  Phase III trials usually involve comparison with placebo, standard treatments or other active comparators.  Usually two well controlled large Phase III or pivotal trials demonstrating safety and efficacy are required.  These trials are intended to establish the overall risk-benefit profile of the product and provide an adequate basis for physician labeling.  Phase III trials are usually larger, more time consuming, more complex and more costly than Phase I and Phase II trials.  Since most of our products are aimed at very small populations so that it is not always possible to conduct two large studies, regulators may accept one study on a smaller number of patients than would typically be required for pharmaceutical products in general, provided the data is sufficiently robust.

Phase I, Phase II and Phase III testing may not be completed successfully within any specified period, if at all.  Furthermore, we or the FDA may suspend or terminate clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk, have experienced a serious and unexpected adverse event, or that continued use in an investigational setting may be unethical.  Similarly, an IRB can suspend or terminate approval of research if the research is not being conducted in accordance with the IRB’s requirements or if the research has been associated with unexpected serious harm to patients.

Assuming successful completion of the required clinical testing, the results of the preclinical studies and of the clinical trials, together with other detailed information, including information on the chemistry, manufacture and composition of the product, are submitted to the FDA in the form of a BLA requesting approval to market the product for one or more indications.  In most cases, the BLA must be accompanied by a substantial user fee.  The FDA will initially review the BLA for completeness before it accepts the BLA for filing.  After the BLA submission is accepted for filing, the FDA reviews the BLA to determine, among other things, whether a product is safe and effective for its intended use and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality, purity and potency.

Under the Pediatric Research Equity Act of 2003, BLAs, or supplements to BLAs, must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective.  The FDA may grant deferrals for submission of data or full or partial waivers.  Unless otherwise required by regulation, the Pediatric Research Equity Act of 2003 does not apply to any drug for an indication for which orphan designation has been granted.

Before approving a BLA, the FDA generally will inspect the facility or the facilities at which the product is manufactured.  The FDA will not approve the product if it finds that the facility does not appear to be in cGMP compliance.  If the FDA determines the application, manufacturing process or manufacturing facilities are not acceptable, it will either disapprove the application or issue a complete response letter in which it will outline the deficiencies in the BLA and provide the applicant an opportunity to meet with FDA representatives and subsequently to submit additional information or data to address the deficiencies.  Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

Further, the 2010 Healthcare Reform Law introduced a biosimilar pathway that permits companies to obtain FDA approval of versions of existing biologics that are highly similar to innovative biologics based upon reduced documentation and data requirements deemed sufficient to demonstrate safety and efficacy than are required for the pioneer biologics. The new law provides that a biosimilar application may be submitted as soon as four years after the reference product is first licensed, and that the FDA may not make approval of an application effective until 12 years after the reference product was first licensed. Although drug manufacturers

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have begun efforts to develop biosimilar drugs for the U.S. market, none have yet been approved by the FDA. The FDA is actively implementing the biosimilar pathway, including through the issuance of draft guidance documents, and has indicated that final guidance documents may be issued in 2014.

The testing and approval processes require substantial time, effort and financial resources, and each process may take several years to complete.  Data obtained from clinical activities is not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval.  The FDA may not grant approval on a timely basis, or at all.  We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from marketing our products.  The FDA may limit the indications for use or place other conditions on any approvals that could restrict the commercial application of the products.  After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Post-approval Requirements

After regulatory approval of a product is obtained, we are required to comply with a number of post-approval requirements.  For example, as a condition of approval of a BLA, the FDA may require post-marketing testing and surveillance to monitor the product’s safety or efficacy.  In addition, holders of an approved BLA are required to keep extensive records, to report certain adverse reactions and production problems to the FDA, to provide updated safety and efficacy information and to comply with requirements concerning advertising and promotional labeling for their products.  Also, quality control and manufacturing procedures must continue to conform to cGMP regulations and practices, as well as the manufacturing conditions of approval set forth in the BLA.  The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes certain procedural, substantive and recordkeeping requirements.  Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

Future FDA inspections may identify compliance issues at our facilities or at the facilities of our third-party suppliers that may disrupt production or distribution, or require substantial resources to correct and prevent recurrence of any deficiencies, and could result in fines or penalties by regulatory authorities.  In addition, discovery of problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved BLA, including withdrawal or recall of the product from the market or other voluntary, FDA-initiated or judicial action that could delay or prohibit further marketing.  Newly discovered or developed safety or efficacy data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications.  The 2010 Healthcare Reform Law established and provided significant funding for a Patient-Centered Outcomes Research Institute to coordinate and fund Comparative Effectiveness Research.  Also, new government requirements, including those resulting from new legislation, may be established that could delay or prevent regulatory approval of our products under development.

Orphan Drug Designation

The FDA may grant orphan drug designation to drugs intended to treat a “rare disease or condition” that affects fewer than 200,000 individuals in the United States, or that affects more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such a disease or condition will be recovered from sales in the United States for that drug.  Orphan drug designation must be requested before submitting an application for marketing approval.  Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.  Orphan drug designation can provide opportunities for grant funding towards clinical trial costs, tax advantages and FDA user fee exemptions.  In addition, if a product that has an orphan drug designation subsequently receives the first FDA approval for the indication for which it has such designation, the product is entitled to orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or a meaningfully different mode of administration.  Competitors may receive approval of different drugs or biologics for the indications for which the orphan product has exclusivity.  However, if a company with orphan drug exclusivity is not able to supply the market, the FDA could allow another company with the same drug a license to market for said indication.  The FDA granted Gamunex® IVIG orphan drug status, which provides marketing exclusivity for the CIDP indication in the United States through September 2015. We also have an orphan drug designation in the U.S. for the use of Plasmin for aPAO but we do not yet have marketing authorization.

Fast Track Designation

The FDA’s fast track programs, one of which is fast track designation, are designed to facilitate the development and review of new drugs that are intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs for the conditions.  Fast track designation applies to a combination of the product and the specific indication for which it is being studied.  Thus, it is the development program for a specific drug for a specific indication that receives fast track designation.

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The sponsor of a product designated as being in a fast track drug development program may engage in close early communication with the FDA, including through timely meetings and feedback on clinical trials.  Products in fast track drug development programs also may receive FDA priority review or accelerated approval; in other words, the review cycle has a six-month review clock instead of a ten- or 12-month review clock).  Sponsors may also be able to submit completed portions of an application before the entire application is completed; however, the review clock will not officially begin until the entire completed BLA is submitted to and filed by the FDA.  The FDA may notify a sponsor that its program is no longer classified as a fast track development program if the fast track designation is no longer supported by emerging data, the designated drug development program is no longer being pursued, or another product that meets the unmet medical need for the same indication is approved first. We do not currently have any products on fast track.

Plasma Collection

The FDA requires a licensing and certification process for each plasma collection center prior to opening and conducts periodic inspections of facilities and processes.  Many states also regulate plasma collection, imposing similar obligations and additional inspections and audits.  Collection centers are subject to periodic inspections by regulatory authorities, which if noncompliance is alleged, may result in fines, citations, the temporary closing of the centers, loss or suspension of licenses or recall of finished products.

Diagnostic Devices.

Certain of our products are regulated as medical devices, which are typically subject to clearance for commercialization in the US, based on a pre-market notification to the FDA demonstrating the device to be marketed is safe and effective by proving substantial equivalence to a legally marketed device (predicate device). With respect to the manufacture and sale of immunoassay antigens and antibodies to screen human donated blood and blood products, these products are manufactured and sold under a BLA issued by the FDA.

Anti-fraud and Abuse Regulation

Since we supply products and services that are reimbursed by U.S. federally funded programs such as Medicare and Medicaid, our activities are also subject to regulation by CMS and enforcement by HHS OIG.  The Anti-Kickback Law prohibits providers and others from directly or indirectly soliciting, receiving, offering or paying any remuneration with the intent of generating referrals or orders for services or items covered by a government health care program.  Many states have similar laws.  Courts have interpreted this law very broadly, including by holding that a violation has occurred if even one purpose of the remuneration is to generate referrals, even if there are other lawful purposes.  There are statutory and regulatory exceptions, or safe harbors, that outline arrangements that are deemed lawful.  However, the fact that an arrangement does not fall within a safe harbor does not necessarily render the conduct illegal under the Anti-Kickback Law.  In sum, even legitimate business arrangements between the companies and referral sources could lead to scrutiny by government enforcement agencies and require extensive company resources to respond to government investigations.  Violations of the Anti-Kickback Law may be punished by civil and criminal penalties or exclusion from participation in federal health care programs, including Medicare and Medicaid.  The 2010 Healthcare Reform Law strengthened provisions of the Anti-Kickback Law.

The FCA is violated by any entity that “presents or causes to be presented” knowingly false claims for payment to the federal government.  In addition, the 2010 Healthcare Reform Law amended the FCA to create a cause of action against any person who knowingly makes a false statement material to an obligation to pay money to the government or knowingly conceals or improperly decreases an obligation to pay or transmit money or property to the government.  For the purposes of these recent amendments, an “obligation” includes an overpayment, which is defined broadly to include “any funds that a person receives or retains under Medicare and Medicaid to which the person, after applicable reconciliation, is not entitled ….”

The FCA is commonly used to sue those who submit allegedly false Medicare or Medicaid claims, as well as those who induce or assist others to submit a false claim.  Courts and government officials have found that “false claims” can result not only from noncompliance with the express requirements of applicable governmental reimbursement programs, such as Medicaid or Medicare, but also from noncompliance with other laws, such as the Anti-Kickback Law, or laws that require quality care in service delivery.  The qui tam and whistleblower provisions of the FCA allow private individuals to bring actions on behalf of the government alleging that the government was defrauded, with tremendous potential financial gain to private citizens who prevail.  When a private party brings a whistleblower action under the FCA, the defendant is not made aware of the lawsuit until the government starts its own investigation or makes a decision on whether it will intervene.  Many states have enacted similar laws that also apply to claims submitted to commercial insurance companies.  The bringing of any FCA action could require us to devote resources to investigate and defend the action.  Violations of the FCA can result in treble damages, and each false claim submitted can be subject to a penalty of up to $11,000 per claim.

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A provision of the 2010 Healthcare Reform Law, generally referred to as the Physician Payment Sunshine Act or Open Payments Program, imposes new reporting and disclosure requirements for pharmaceutical and medical device manufacturers with regard to payments or other transfers of value made to certain U.S. healthcare practitioners, such as physicians and academic medical centers, and with regard to certain ownership interests held by physicians in reporting entities. On February 1, 2013, a final rule was issued to implement the Physician Payment Sunshine Act. Under this rule, data collection activities began on August 1, 2013, and first disclosure reports were due by March 31, 2014 for the period August 1, 2013 through December 31, 2013. As required under the Physician Payment Sunshine Act, information from these reports will be published on a publicly available website, including amounts transferred and physician, dentist and teaching hospital identities, which is expected to be available to the public by September 30, 2014. It is difficult to predict how the new requirements, which also preempt similar state law reporting requirements, may impact existing relationships among manufacturers, physicians and teaching hospitals.

European Community Government Regulation

In addition to regulations in the United States, we are subject to a variety of regulations in other jurisdictions governing clinical trials and commercial sales and distribution of our products.  Whether or not we obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatory authorities of countries outside the United States before we can commence marketing that product in those countries.  The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval.  The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.  Also, in addition to approval of final products, U.S. plasma centers collecting plasma for manufacture into products to be distributed in the European Union must also be approved by the competent European health authority.

Medicines can be authorized in the European Union by using either the centralized authorization procedure or national authorization procedures.  The EMA is responsible for the centralized authorization procedure.

Centralized Authorization Procedure

The EMA is responsible for the centralized procedure, or Community authorization procedure, for human medicines.  This procedure results in Community marketing authorization, the single marketing authorization that is valid across the European Union, as well as in the European Economic Area/European Free Trade Association states Iceland, Liechtenstein and Norway.

The Community authorization procedure is compulsory for:

·medicinal products developed by using recombinant DNA technology, the controlled expression of genes coded for biologically active proteins in prokaryotes and eukaryotes, including transformed mammalian cells, or hybridoma or monoclonal antibody methods;

·advanced-therapy medicines, such as gene-therapy, somatic cell-therapy or tissue-engineered medicines;

·medicinal products for human use containing a new active substance that did not receive Community marketing authorization when the Community authorization procedure was first implemented, for which the therapeutic indication is the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune diseases and other immune dysfunctions or viral diseases; and

·officially designated orphan medicines.

The Community authorization procedure is optional for products:

·containing new active substances for indications other than the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune diseases and other immune dysfunctions or viral diseases;

·representing significant therapeutic, scientific or technical innovations; or

·for which the granting of a Community marketing authorization would be in the interests of European Union public health.

Our blood derivative products are not subject to compulsory Community authorization, but it is an option for our new products. Flebogamma® DIF 50 mg/ml and 100 mg/ml were approved through the Community authorization procedure.

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Applications through the Community authorization procedure are submitted directly to the EMA.  Evaluation by the EMA’s relevant scientific committee takes up to 210 days, at the end of which the committee adopts an opinion on whether the medicine should be marketed.  This opinion is then transmitted to the European Commission, which has the ultimate authority for granting marketing authorizations in the European Union.

Once a Community marketing authorization has been granted, the holder of that authorization can begin to make the medicine available to patients and healthcare professionals in all European Union countries.

National Authorization Procedures

Each European Union member state has its own procedures for the authorization, within its own territory, of medicines that fall outside the scope of the Community authorization procedure.  There are two possible routes available to companies for the authorization of such medicines in several countries simultaneously.

·Decentralized procedure.  Using the decentralized procedure, companies may apply for simultaneous authorization in more than one European Union country of medicines that have not yet been authorized in any European Union country and that do not fall within the mandatory scope of the centralized procedure.

·Mutual-recognition procedure.  In the mutual-recognition procedure, a medicine is first authorized in one European Union member state, in accordance with the national procedures of that country.  Following such authorization, further marketing authorizations can be sought from other European Union member states in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization.

Our product Niuliva 250 I.U./ml was approved through the decentralized procedure. Our products Prolastina® 1000 mg/ml and Gamunex® 10% were approved through the mutual-recognition procedure. All our other products were approved pursuant to individual national procedures. We expect to use the mutual-recognition procedure if we want to extend our product licenses to other European countries in the future.

In some cases, disputes arising in these procedures can be referred to the EMA for arbitration as part of a “referral procedure.”

Orphan Drug Designation

Applications for designation of orphan medicines are reviewed by the EMA through the Committee for Orphan Medicinal Products.  The criteria for orphan designation are:

·the medicinal product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting no more than five in 10,000 persons in the European Union at the time of submission of the designation application (prevalence criterion); or

·the medicinal product is intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition, and without incentives it is unlikely that the revenue after marketing of the medicinal product would cover the investment in its development; and

·either no satisfactory method of diagnosis, prevention or treatment of the condition concerned is authorized, or, if such method exists, the medicinal product will be of significant benefit to those affected by the condition.

Companies with an orphan designation for a medicinal product benefit from incentives such as:

·protocol assistance (scientific advice for orphan medicines during the product-development phase);

·direct access to centralized marketing authorization and 10-year marketing exclusivity;

·financial incentives (fee reductions or exemptions); and

·national incentives detailed in an inventory made available by the European Commission.

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Since December 2011, orphan medicinal products are eligible for the following level of fee reductions:

·full (100%) reduction for small- and medium-sized enterprises, or SMEs, for protocol assistance and follow-up, full reduction for non-SME sponsors for pediatric-related assistance and 40% reduction for non-SME sponsors for non-pediatric assistance;

·To determine which companies are eligible for SME incentives, the EMA applies the definition of micro-, small- and medium-sized enterprises provided in the Commission of the European Communities’ Commission Recommendation 2003/36/EC.  To qualify for assistance, companies must be established in the European Economic Area, employ less than 250 employees and have an annual turnover of not more than €50 million or an annual balance sheet total of not more than €43 million.

·full reduction for pre-authorization inspections and 90% reduction for post-authorization inspections for small- and medium-sized enterprises;

·full reduction for SMEs for new applications for Community marketing authorization; and

·full reduction for post-authorization activities including annual fees only to small and medium sized enterprises in the first year after granting a marketing authorization.

We have EMA Orphan Drug Designations for the following 3 products:

·Alpha-1 proteinase inhibitor (for inhalation use) for treatment of cystic fibrosis;

·Alpha-1 proteinase inhibitor (for inhalation use) for the treatment of congenital alpha-1 antitrypsin deficiency; and

·Human Plasmin / Treatment of acute peripheral arterial occlusion.

Because each of these products is already authorized for a non-orphan indication in the EU, in order to obtain marketing authorization for any of the above-mentioned orphan indications, we would be required to apply for a separate marketing authorization through the Community authorization procedure for such indication, using a different proprietary name. It is not be possible to extend the existing marketing authorization to cover the new orphan indication. Orphan and “non-orphan” indications cannot be covered by the same marketing authorization.

Canadian Regulatory Process

Authorization to Market.  Therapeutic products can be marketed in Canada after they have been subject to a review to assess their safety, efficacy and quality.  A New Drug Submission must be submitted to Health Canada for review, and a Notice of Compliance, or NOC, and/or a Drug Identification Number, or DIN, must be received by the sponsor prior to marketing a product in Canada.  Responsibility for review of pharmaceutical drug products resides with Health Canada’s Therapeutic Products Directorate, or TPD, while responsibility for review of biological products is under the Biologics, Radiopharmaceuticals and Genetic Therapies Directorate, or BGTD.  An active DIN is required for any product being marketed in Canada.  Our IVIG, A1PI, albumin and hyperimmune products are subject to these review and authorization processes.

Changes to Market Authorization.  There are four classes of changes to existing market authorizations in Canada.  Level 1 changes are considered “significantly different” and have the potential to impact safety, efficacy, quality or effectiveness of the product.  These require the filing of a Supplemental New Drug Submission, and an NOC must be issued by Health Canada prior to implementation of the change.  Level 2 changes are not considered “significant,” but a “Notifiable Change” submission must be filed to Health Canada for review, and approval is provided via a “No Objection” letter to the sponsor.  Level 3 changes have minimal potential to impact safety, quality or effectiveness and can be made without prior approval of Health Canada; a summary of these changes is reported to Health Canada with the sponsor’s Annual Drug Notification.  Level 4 changes are implemented without any notification to Health Canada, based on no expectation of risk.

Clinical Trials.  A Clinical Trial Application, or CTA, must be submitted to Health Canada prior to conducting any study protocol that proposes the use of a new product, or the use of an existing product, where the indication, target population, route of administration or dosing differs from the current market authorization.  The CTA should include summaries of preclinical and clinical studies conducted and (if applicable) chemistry, manufacturing and control data, and is submitted to either TPD (for drug products) or BGTD (for biological products) for review.  The TPD or BGTD are responsible for assessing protection and safety of the participants

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as well as quality of the product; they will issue a “No Objection” letter to sponsors for studies deemed acceptable.  Research ethics board approval for each trial is also required prior to conduct of the study.

Establishment Licensing.  All establishments in Canada that are involved in the fabrication, packaging/labeling, testing, import, distribution or warehousing of drug products must have a current establishment license (once an establishment license is issued, an annual report must be submitted by April 1 of each year to maintain the effectiveness of that license).  As an importer/distributor, part of the licensing requirements include demonstration that any foreign (non-Canadian) facilities involved in fabrication, packaging/labeling or testing of products imported/distributed under the license comply with cGMP.

Post-Approval Requirements.  The Health Products and Food Branch Inspectorate of Health Canada periodically inspects licensed establishments in Canada to verify compliance with cGMP.  Manufacturers and importers are required to monitor the safety and quality of their products and must report adverse reactions to the Marketed Health Products Directorate in accordance with a prescribed timeline and format.

Regulatory Process for Markets outside the United States, Canada and Europe

The majority of regulatory authorities in countries outside the United States, Canada and Europe require that a product first be approved by the FDA or European authority prior to granting the market authorization in their country. There are a limited number of countries (Bahamas, Bermuda, Guam, Oman and Qatar) that do not require further local product registration for products and they may be distributed based on the existing FDA approval.

In addition to requiring the submission of a license application containing documentation supporting the safety, efficacy and quality of the product, many countries require the submission of FDA Export Certificates for our products to provide assurance that such products can be legally marketed in the United States. The Certificate of Pharmaceutical Product, or CPP, and/or the Certificate to Foreign Government, or CFG, are issued by the FDA at the request of the manufacturer seeking licensure in the country outside the United States. The CPP conforms to the format established by the World Health Organization, or WHO, and is intended for use by the importing country when considering whether to license the product in question for sale in that country. The CFG serves to document that the product can be legally marketed in the United States and the manufacturer is in compliance with GMP. A limited number of regulatory authorities in countries outside United States, Canada and Europe conduct on site inspections to verify GMP compliance. Failure to maintain and document GMP compliance could result in withdrawal of marketing authorization. In addition changes to manufacturing or testing procedures for the product require approval of the change in the United States prior to the submission of the variation to the registration in the international market. These changes may require approval in each market in order to maintain product distribution. Furthermore, any changes in the distributors supporting our export business could result in a loss of sales.

Pharmaceutical Pricing and Reimbursement

In the United States and other countries, sales of any products for which we receive regulatory approval for commercial sale will depend in part on the availability of reimbursement from third-party payors.  Third-party payors include government health programs, managed care providers, private health insurers and other organizations.  These third-party payors are increasingly challenging the price and examining the cost-effectiveness of medical products and services.  In addition, significant uncertainty exists as to the reimbursement status of newly approved healthcare products.  Our products may not be considered cost-effective.  Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

In the United States, our products are reimbursed or purchased under several government programs, including Medicaid, Medicare Parts B and D and the 340B/PHS program, and pursuant to our contract with the Department of Veterans Affairs. Medicaid is a joint state and federal government health plan that provides covered outpatient prescription drugs for low income individuals. Under Medicaid, drug manufacturers pay rebates to the states based on utilization data provided by the states. The rebate amount for most brand name drugs had been equal to a minimum of 15.1% of the AMP or AMP less BP, whichever is greater. Effective January 1, 2010, the 2010 Healthcare Reform Law increased the size of the Medicaid rebates paid by drug manufacturers for most brand name drugs to a minimum of 23.1% of the AMP, with limitation of this increase on certain drugs, including, for example, certain clotting factors, such as Factor VIII and Factor IX, to a minimum of 17.1%. In 2010, the 2010 Healthcare Reform Law also extended this rebate obligation to prescription drugs covered by Medicaid managed care organizations. In addition, the statutory definition of AMP changed in 2010 as a result of the 2010 Healthcare Reform Law. In November 2010, CMS withdrew previously issued regulations defining AMP and in February 2012 it issued proposed regulations that are not yet finalized, and CMS recently announced that a final rule will be issued in May 2014. We believe we are making reasonable assumptions regarding our reporting obligations with respect to this new definition, but in the absence of final regulations from CMS, the adequacy of our assumptions is not certain.

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Medicare Part B reimburses providers for drugs provided in the outpatient setting based upon ASP. Recent federal government reforms to Medicare Part B have reduced the reimbursement rates for IVIG. Beginning January 1, 2008, CMS reduced the reimbursement for separately covered outpatient drugs and biologics, including IVIG in the hospital outpatient setting, from ASP + 6% to ASP + 5%, using 2006 Medicare claims data as a reference for this reduction. CMS reduced this reimbursement further in 2009 to ASP + 4%, using aggregate hospital cost report data as a reference for the reduction. For 2010, the rate remained as ASP + 4%, based on a cost-based methodology that also involved reallocating certain overhead costs from packaged drugs to unpackaged drugs. In 2011, relying on the 2010 methodology, CMS increased the rate to ASP + 5%. CMS decreased the rate to ASP + 4% for 2012 and increased the rate to ASP + 6% for 2013, and maintained ASP + 6% for 2014. In addition, under the Bipartisan Budget Act of 2013, Medicare is subject to a 2% reduction in federal spending, or “sequestration,” including drugs reimbursed under Medicare, for federal fiscal years 2013 through 2023. The full ramifications of this sequestration for Medicare reimbursement are not yet clear, as Congressional action may reduce, eliminate or otherwise change this payment reduction.

Medicare Part D is a partial, voluntary prescription drug benefit created by the federal government primarily for persons 65 years old and over.  The Part D drug program is administered through private insurers that contract with CMS.  Government payment for some of the costs of prescription drugs may increase demand for any products for which we receive marketing approval.  However, to obtain payments under this program, we are required to negotiate prices with private insurers operating pursuant to federal program guidance.  These prices may be lower than we might otherwise obtain.  In addition, beginning in 2011, the 2010 Healthcare Reform Law generally required that we provide a 50% discount to patients who have expended certain amounts for drugs and therefore fall within the Medicare Part D coverage gap.

The availability of federal funds to pay for our products under the Medicaid and Medicare Part B programs requires that we extend discounts under the 340B/PHS drug pricing program.  The 340B drug pricing program extends discounts to a variety of community health clinics and other specified entities that receive health services grants from the PHS, as well as hospitals that serve a disproportionate share of certain low income individuals.  The PHS ceiling price cannot exceed the AMP (as reported to CMS under the Medicaid drug rebate program) less the Medicaid unit rebate amount.  We have entered into a PPA with the government in which we agree to participate in the 340B/PHS program by charging eligible entities no more than the PHS ceiling price for drugs intended for outpatient use.  Additional legislative changes to the 340B program have been proposed, though it is too early to determine which changes will be adopted or what their impact will be.

We make our products available for purchase by authorized government users of the Federal Supply Schedule, or FSS, pursuant to their FSS contracts with the Department of Veterans Affairs.  Under the Veterans Health Care Act of 1992, companies are required to offer discounted FSS contract pricing to four federal agencies — the Department of Veterans Affairs, the Department of Defense, the Coast Guard and the PHS (including the Indian Health Service) — for federal funding to be made available for reimbursement of products under the Medicaid program and products eligible to be purchased by those four federal agencies.  FSS pricing to those four federal agencies must be equal to or less than the ceiling price, which is, at a minimum, 24% off the non-federal AMP for the prior fiscal year.

The 2010 Healthcare Reform Law imposes a fee on manufacturers and importers of branded prescription drugs and biologics based on their sales to United States government health programs. An aggregate annual fee of $3.0 billion will be imposed on all covered entities for 2014. The aggregate fee will be allocated among applicable manufacturers and importers, including us, based on their relative sales to government health programs. The aggregate fee is scheduled to increase up to $4.1 billion for 2018, and is scheduled to be reduced to $2.8 billion for 2019. Beginning in 2013, the 2010 Healthcare Reform Law also imposes a new excise tax on many medical devices equal to 2.3% of the sales price, and excludes devices generally purchased by the general public at retail for individual use. Diagnostic division equipment that we manufacture or import into the U.S. may be subject to these taxes. In addition, the Prescription Drug User Fee Act, or PDUFA, first enacted in 1992, sets forth user fees that pharmaceutical and biological companies pay to the FDA for: certain applications for approvals of drugs and biologicals; the establishments where the products are made; and the products themselves. The fees under PDUFA cover a substantial portion of the FDA’s operating budget, and the measure also addresses aspects of the regulatory approval process, such as timing and procedures. PDUFA is subject to reauthorization by Congress every five years, and in January 2012, after a lengthy process involving significant industry input, the FDA submitted its final recommendations to Congress for the fifth PDUFA reauthorization, which was signed into law in July 2012.

The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement.  Federal, state and local governments in the United States have enacted and continue to consider additional legislation to limit the growth of healthcare costs, including the costs of prescription drugs.  Existing and future legislation could limit payments for our existing products or for drug candidates that we are developing, including possibly permitting the federal government to negotiate prices directly with manufacturers.  In addition, an increasing emphasis on managed care in the United States has increased and will continue to increase the pressure on pharmaceutical pricing.  For a discussion of certain risks related to reimbursement and pricing, see Item 3 of this Part I, “Key Information — D. Risk

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Factors — Risks Relating to the Healthcare Industry — The implementation of the 2010 Healthcare Reform Law in the U.S. may adversely affect our business.”

Other Governmental Regulation

Our operations and many of the products that we manufacture or sell are subject to extensive regulation by numerous other governmental agencies, both within and outside the United States.  In the United States, apart from the agencies discussed above, our facilities, operations, employees, products (their manufacture, sale, import and export) and services are regulated by the Drug Enforcement Agency, the Environmental Protection Agency, the Occupational Health & Safety Administration, the Department of Agriculture, the Department of Labor, Customs and Border Protection, the Transportation Security Administration, the Department of Commerce, the Department of Treasury, the DOJ, the U.S. Office of Foreign Assets Control and others.  State and local agencies also regulate our facilities, operations, employees, products and services within their respective states and localities.  Government agencies outside the United States also regulate public health, product registration, manufacturing, environmental conditions, labor, exports, imports and other aspects of our global operations.  For further discussion of the impact of regulation on our business, see Item 3 of this Part I, “Key Information — D. Risk Factors — Risks Relating to the Healthcare Industry — Certain of our business practices are subject to scrutiny by regulatory authorities, as well as to lawsuits brought by private citizens under federal and state laws.  Failure to comply with applicable law or an adverse decision in lawsuits may result in adverse consequences to us.”

Item 4.A.UNRESOLVED STAFF COMMENTS

None.

Item 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following is a review of our financial condition and results of operations as of December 31, 2013 and 2012, and for the three years ended December 31, 2013, and of the key factors that have affected or are expected to be likely to affect our ongoing and future operations.  You should read the following discussion and analysis in conjunction with our audited consolidated financial statements and the accompanying notes included elsewhere in this annual report on Form 20-F.

Some of the information contained in this discussion, including information with respect to our plans and strategies for our business and our expected sources of financing, contain forward-looking statements that involve risk and uncertainties.  You should read “Cautionary Statement Regarding Forward-Looking Statements” in this Part I for a discussion of the risks related to those statements.  You should also read Item 3 of this Part I, “Key Information — D. Risk Factors” for a discussion of certain factors that may affect our business, financial condition and results of operations.

We have prepared our audited consolidated financial statements as of December 31, 2013 and 2012, and for the three years ended December 31, 2013 in accordance with IFRS, as issued by the IASB.  The financial information and related discussion and analysis contained in this item are presented in euro except as otherwise specified.  Unless otherwise specified the financial information analysis in this annual report on Form 20-F is based on our actual audited consolidated financial statements as of December 31, 2013 and 2012, and for the three years ended December 31, 2013.

See “Presentation of Financial and Other Information” in this Part I for further information on our presentation of financial information.

A.Operating Results.

Subsequent Events

Novartis Acquisition

In January 2014, we concluded the acquisition of a diagnostic business unit related to transfusion medicine and immunology of the Swiss company Novartis for a total amount of $1.675 billion. The Novartis Acquisition was structured through our newly created 100% owned subsidiary, Grifols Diagnostic Solutions Inc. (f/k/a Grifols Chiron Diagnostics Corp.).  See Item 4 of this Part I, “Information on the Company — A. History and Development of the Company — Important Events — The Novartis Acquisition and Related Financing.”

To finance the Novartis Acquisition, we entered into the Bridge Loan Facility, pursuant to which we borrowed $1.5 billion of loans on January 3, 2014.

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Refinancing

The Bridge Loan Facility and the Existing Facilities were repaid on February 27, 2014 with the proceeds of the New Credit Facilities that we entered into on February 27, 2014. The New Credit Facilities consist of the Senior Term Loans and the Revolving Loans, which are subject to customary flex provisions. For a description of the principal terms of the New Credit Facilities, please see “— B. Liquidity and Capital Resources — Sources of Credit.” On February 27, 2014, we also entered into the New Interim Loan Facility. The proceeds from the New Interim Loan Facility were used to discharge the Existing Notes on February 27, 2014. The New Interim Loan Facility was refinanced pursuant to the offering of the Notes completed on March 12, 2014.

Factors Affecting Our Financial Condition and Results of Operations

Price Controls

Certain healthcare products, including plasma derivative products, are subject to price controls in many of the markets where they are sold, including Spain and other countries in the European Union. The existence of price controls over these products has adversely affected, and may continue to adversely affect, our ability to maintain or increase our prices and gross margins.

As a result of the Talecris acquisition, we have significantly expanded our presence in the United States. The United States is the principal market in the world for plasma derivative products and prices for plasma derivative products are currently not regulated, with the exception of certain government healthcare programs.

Plasma Supply Constraints

Plasma is the key raw material used in the production of plasma-derived products. Our ability to continue to increase our revenue depends substantially on increased access to plasma. We obtain our plasma primarily from the United States through our plasma collection centers and, to a much lesser extent, through agreements with third parties.

A continued increase in demand for plasma products could lead to industry supply constraints. In response, we and certain of our competitors and independent suppliers could open a number of new plasma collection centers.

We have 150 FDA licensed plasma collection centers located across the United States. We have expanded our plasma collection network through a combination of organic growth and acquisitions and the opening of new plasma collection centers. Our acquisitions of SeraCare (now renamed Biomat USA) in 2002; PlasmaCare, Inc. in 2006; eight plasma collection centers from a subsidiary of Baxter in 2006; four plasma collection centers from Bio Medics, Inc. in 2007; and one plasma collection center from Amerihealth Plasma LLC in 2008 have given us reliable access to United States source plasma. Our acquisition of Talecris in June 2011 expanded our network by an additional 67 centers, and in 2012, we purchased three plasma collection centers in the United States from Cangene Corporation, a Canadian biopharmaceutical firm.

In 2013, our plasma collection centers collected approximately 6.4 million liters of plasma (including specialty plasma required for the production of hyperimmunes). We believe that our plasma requirements through 2016 will be met through: (i) plasma collected through our plasma collection centers and (ii) approximately 0.6 liters of plasma per year to be purchased from third-party suppliers pursuant to various plasma purchase agreements.

Acquisitions

TiGenix Acquisition

In November 2013, we acquired 21.30% of the common stock of the biotechnological company TiGenix N.V., or TiGenix, for €12.4 million. TiGenix is listed on the NYSE Euronext Brussels (TIG), and is based in Leuven, Belgium but has commercial offices in Madrid and Sittard Gellen (the Netherlands). TiGenix is a Belgian cell therapy company that is a global leader in the field of mesenchymal stem cell therapy, and the first European company that obtained an approval for a cell based medicinal product by EMA, namely ChondroCelect. This investment was carried out through Gri-Cel, S.A., our 100% owned subsidiary.

Aradigm Stock Subscription

In August 2013, we closed a transaction with Aradigm Corporation, or Aradigm, a company engaged in the development and commercialization of inhaled drugs for the treatment of severe respiratory diseases. We entered into an exclusive worldwide license agreement to develop and commercialize Pulmaquin, an inhaled ciprofloxacin product. In conjunction with the licensing agreement,

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we acquired approximately 35% of Aradigm’s common stock on a fully diluted basis for $25.7 million (€20.6 million of acquisition costs are included).

Acquisition of Progenika

On March 4, 2013, we announced the acquisition of 60% of the economic and voting rights of Progenika for a total of €37.0 million (€34.6 million, net of cash and cash equivalents). Progenika is a Spanish company founded in 2000 that has developed tools for in vitro diagnostic genotyping testing, prognosis of diseases and prediction of response to drug treatment. Progenika has also developed its own technology to produce DNA chips for diagnoses.

Half of the purchase price was paid with 884,997 of our Class B shares and the remainder was funded using cash on hand. In addition, we and the selling shareholder have granted each other call and put options over the shares representing the remaining 35% of the share capital of Progenika, which may be exercised within three years from the date of the acquisition. The purchase price of the Progenika shares subject to the call and put option will be the same as the price per share we paid, increased at the rate of 5% per annum.

Investment in Araclón Biotech, S.L.

On February 29, 2012, our subsidiary, Gri-Cel, S.A., acquired 51% of the share capital of Araclón Biotech, S.L., or Araclón. Araclón is primarily involved in the research and development of therapies and methods for the diagnosis of degenerative illnesses, with a particular concentration on Alzheimer’s disease. This acquisition reinforces our commitment to research and development of therapies to fight Alzheimer’s disease.

Purchase of Remaining Woolloomooloo Shares

In August 2011, we acquired the remaining 51% of the share capital of Woolloomooloo Holdings Pty Ltd., the holding company of Lateral Medion, an Australian Swiss group that distributes diagnostic products in Australia and Switzerland and has a manufacturing facility in Switzerland. We previously held 49% of the share capital and 100% of the voting rights and had exercised control since March 3, 2009. The acquisition of the remaining 51% of the share capital totaled AUS dollars 12.5 million, or €9.5 million. The difference between the amount paid and the non-controlling interest was recorded as a €2.2 million increase in reserves.

Talecris Acquisition

On June 1, 2011, we completed the acquisition of 100% of the share capital of Talecris for a total of $3.7 billion. The total value of the transaction, including Talecris’ net debt, was approximately $3.3 billion. In connection with the consummation of the acquisition, each share of Talecris common stock, par value $0.01 per share, was converted into the right to receive $19 in cash and 0.6485 (or 0.641 for Talecris directors and Talecris Holdings, LLC) of a Class B share of Grifols, S.A. and cash in lieu of fractional Class B shares and any cash representing dividends or other distributions payable in accordance with the merger agreement.

On July 20, 2011, the Federal Trade Commission, or FTC, issued a final order, or Consent Order, settling the FTC’s May 31, 2011 charges that our acquisition of Talecris was anticompetitive and would have resulted in higher prices for consumers. Pursuant to the Consent Order, we divested to Kedrion, on June 2, 2011, certain assets, including Talecris’ Melville, New York manufacturing facility and United States marketing rights to Koate® antihemophilic factor, and an agreed quantity of plasma and subsequently transferred to Kedrion two plasma collection centers located in Mobile, Alabama, and Winston Salem, North Carolina. Further, pursuant to the Consent Order, we and Kedrion entered into a contract manufacturing agreement under which we are supplying to Kedrion, for a period of seven years ending in 2018, Koate® and private label IVIG and albumin, for sale by Kedrion in the United States, and we extended to Kedrion a five year option ending in 2016 for Kedrion to purchase a non-exclusive license to Koate® related intellectual property for use in the United States. In accordance with the Consent Order, we leased the Melville facility from Kedrion until July 1, 2013 when we turned over operations at the facility to Kedrion. The Consent Order provides for a monitor to oversee our compliance with the Consent Order and requires us to submit to the FTC annual compliance reports for ten years.

Other Factors

Our financial and operating prospects can also be significantly affected by a number of other internal and external factors, such as unfavorable changes in governmental regulation or interpretation; increased competition; the inability to hire or retain qualified personnel necessary to sustain planned growth; the loss of key senior managers; problems in developing some of the international operations; and lack of sufficient capital, among others.

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Operating Results

Overview

The subsequent discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our consolidated results of operations.  You are encouraged to read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F.

The following discussion and analysis contains information regarding our results of operations for the year ended December 31, 2013 as compared to the year ended December 31, 2012:

	Year Ended December 31,				Change
	2013		2012		€		%
	(in thousands of euros, except for percentages)
Continuing Operations
Net revenue	2,741,732		2,620,944		120,788		4.6
Cost of sales	(1,323,880	)	(1,291,345	)	(32,535	)	2.5
Gross profit	1,417,852		1,329,599		88,253		6.6
Research and development	(123,271	)	(124,443	)	1,172		(0.9	)
Selling, general and administration expenses	(558,461	)	(545,072	)	(13,389	)	2.5
Operating expenses	(681,732	)	(669,515	)	(12,217	)	1.8
Operating results	736,120		660,084		76,036		11.5
Finance income	4,869		1,677		3,192		190.3
Finance costs	(239,991	)	(284,117	)	44,126		(15.5	)
Change in fair value of financial instruments	(1,786	)	13,013		(14,799	)	(113.7	)
Impairment and gains on disposal of financial instruments	792		2,107		(1,315	)	(62.4	)
Exchange losses	(1,303	)	(3,409	)	2,106		(61.8	)
Finance cost	(237,419	)	(270,729	)	33,310		(12.3	)
Share of profit/(losses) of equity accounted investees	(1,165	)	(1,407	)	242		(17.2	)
Profit before income tax	497,536		387,948		109,588		28.2
Income tax expense	(155,482	)	(132,571	)
					(22,911	)	17.3
Profit after income tax from continuing operations	342,054		255,377		86,677		33.9
Consolidated profit for the year	342,054		255,377		86,677		33.9

Net Revenue

Net revenue is calculated by subtracting certain chargebacks, cash discounts, volume rebates, Medicare and Medicaid discounts and other discounts from our gross revenue. See Note 24 to our audited consolidated financial statements included in this annual report on Form 20-F.

Net revenue from 2012 to 2013 increased by €120.8 million from €2.6 billion in 2012 to €2.7 billion in 2013. This 4.6% (7.4% at constant currency) net revenue increase is the result of the negative impact of USD/EUR exchange rate fluctuations in the amount of €72.5 million and an increase in operating results in the amount of €193.3 million driven by the increased sales in the Bioscience division across all regions in a flat price environment.

The following table reflects a summary of net revenue by each of our divisions for 2013 as compared to 2012:

Summary of Net Revenue by Division	Year ended December 31, 2013	% of total net revenue	Year ended December 31, 2012	% of total net revenue	% var		% var CC(1)
	(in thousands of euros, except for percentages)
Bioscience	2,448,824	89.3	2,325,088	88.7	5.3		8.2
Diagnostic	130,339	4.8	134,341	5.1	(3.0	)	(1.0	)
Hospital	97,131	3.5	95,870	3.7	1.3		2.6
Raw Materials and Others(2)	65,438	2.4	65,645	2.5	(0.3	)	1.6
Total	2,741,732	100.0	2,620,944	100.0	4.6		7.4

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(1)Net revenue variance in constant currency is determined by comparing adjusted current period net revenue, calculated using prior period monthly average exchange rates, to the prior period net revenue. See “Presentation of Financial Information.”

(2)In 2012 and 2013, Raw Materials and Others primarily consisted of (i) amounts earned under the agreements with Kedrion, which are described further in Item 4 of this Part I, “Information on the Company — A. History and Development of the Company — Important Events — The Talecris Acquisition and Related Financing,” (ii) royalty payments from third parties and (iii) net revenue from engineering activities by our subsidiary Grifols Engineering, S.A.

Bioscience.  Net revenue for the Bioscience division increased by 5.3% (8.2% at constant currency) from €2.3 billion in 2012 to €2.4 billion in 2013. Growth was principally driven by high sales volumes in the United States and Canada, Europe and the rest of the world for our main plasma derivative products, all in a flat price environment. Sales of albumin grew by over approximately 30%, boosted by sales in the United States and increased demand in China. Sales of A1PI also grew, driven by increased sales in United States and Canada, Germany and Spain, where commercialization of Prolastin® began in 2013.

Diagnostic.  Our Diagnostic division net revenue decreased by 3.0% from €134.3 million in 2012 to €130.3 million in 2013. The Diagnostic division’s loss of sales resulted from the termination of certain distribution agreements, such as our agreement with Ortho Diagnostic relating to their distribution of our devices in the United States. However, these loss of sales were partially offset by increased sales of DG® Gel cards, the installation of our first Erytra® analyzers in Japan and Qatar and the commencement of sales of the hemostasis Q® Smart analyzer in Italy.

Hospital.  Net revenue from the Hospital division remained stable, €97.1 million in 2013 compared to €95.9 million in 2012, representing a 1.3% increase. In 2013, sales in Spain continued to be affected by health sector cutbacks, however we continued to promote international expansion in this division and have increased our sales coming from outside of Spain. The non-Spanish sales were driven principally by an increase year over year in sales of products in our Hospital logistics line in Latin America and an increase in year over year sales of products in our IV Tools line in the United States. Sales excluding Spain increased in 2013 as compared to 2012.

Raw Materials and Others.  Net revenue from Raw Materials and Others remained relatively stable at €65.6 million in 2012 and €65.4 million in 2013.

The following table reflects a summary of net revenue by each of our geographic regions for 2013 as compared to 2012:

Summary of Net Revenue by Region	Year ended December 31, 2013	% of total net revenue	Year ended December 31, 2012	% of total net revenue	% var		% var CC(1)
	(in thousands of euros, except for percentages)
European Union(2)	569,827	20.8	559,328	21.3	1.9		2.2
Spain	207,922	7.6	212,983	8.1	(2.4	)	—
United States and Canada	1,707,620	62.3	1,658,548	63.3	3.0		6.1
Rest of the World	426,257	15.5	371,618	14.2	14.7		19.5
Subtotal	2,703,704	98.6	2,589,494	98.8	4.4		7.2
Raw Materials(3)	38,028	1.4	31,450	1.2	20.9		23.5
Total	2,741,732	100.0	2,620,944	100.0	4.6		7.4

(1)Net revenue variance in constant currency is determined by comparing adjusted current period net revenue, calculated using prior period monthly average exchange rates, to the prior period net revenue.  See “Presentation of Financial Information.”

(2)Net revenue earned in the European Union includes net revenue earned in Spain.

(3)We exclude net revenue derived from our Raw Materials division from our reported net revenue by region, because we believe that such net revenue does not represent part of our core recurrent business lines. This net revenue consist primarily of net revenue earned under the agreements with Kedrion, which are described further in “—Factors Affecting Our Financial Condition and Results of Operations—Acquisitions—Talecris Acquisition.”

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We believe that our ongoing internationalization has helped to improve our sales performance. We have seen a gradual reduction in the proportion of sales accounted for by Spain, falling to 7.6% in 2013 from 8.1% in 2012, as we continue to focus on increasing sales in regions less affected by austerity measures, with shorter payment periods and better margins. In 2013, 92.4% of net sales, or €2.5 billion, were derived from countries outside of Spain.

Cost of sales

Cost of sales increased by 2.5% from €1.29 billion in 2012 to €1.32 billion in 2013. The increase in cost of sales is the result of an overall increase in cost of supplies due to increased manufacturing volumes. However, cost of sales as a percentage of net revenue has decreased to 48.3% compared to 49.3% in 2012.

Gross Profit

The increase in gross profit margin during the period from 50.7% of sales in 2012 to 51.7% in 2013 was mainly due to the optimization of manufacturing costs resulting from the increased flexibility of our fractionation and purification processes between facilities that in turn increased the yield of finished product per liter of plasma.

Research and development

Research and development spending remained stable at €123.3 million (4.5% of sales) in 2013 and €124.4 million (4.7% of sales) in 2012 as our spending was focused on strengthening our pipeline. See Item 4 of this Part I, “Information on the Company — B. Business Overview — Research and Development” for details.

Selling, general and administration expenses

Selling, general and administration expenses increased by 2.5% from €545.1 million in 2012 to €558.5 million in 2013 as a result of the increase in the volume of products we sell. However, selling, general and administration expenses as a percentage of sales has decreased to 20.4%, compared to 20.8% in 2012. This decrease is the result of our continued policy of cost containment. Additionally, we recorded a charge in the amount of €2.8 million for the branded prescription drug, or BPD, fee in fiscal year 2013. The BPD fee is not tax deductible.

Net finance cost

Net finance cost decreased by 12.3% from €270.7 million in 2012 to €237.4 million in 2013. This decrease was primarily a result of a 13% decrease in finance expense from €284.1 million in 2012 to €246.7 million in 2013 because of the positive impact of the terms of the refinancing in 2012 of the Existing Facilities and overall improved market conditions. Net finance cost also includes the amortization of capitalized costs related to our debt.

Income tax expense

In 2013, we had a profit before income tax of €497.5 million and income tax expense of €155.5 million, which represents an effective tax rate of 31.3%. Our effective tax rate decreased from 34.2% in 2012 primarily due to research and development tax credits earned in the United States in 2012 that we were not able to apply until the first quarter of 2013 as well as the reduction in taxes we experienced when we combined all of our North Carolina companies onto one single state corporate tax return for 2013.

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011

Factors Affecting the Comparability of Our Results of Operations

Changes to the Presentation of the Consolidated Income Statement.  In 2012, we revised the presentation of the consolidated income statement to categorize income by function instead of by nature to enable a better understanding of the profitability of the business. Comparative data for 2011 has also been modified in our 2012 accounts.

Acquisition of Talecris in 2011.  We believe that the comparability of our financial results between the year ended December 31, 2012 and the year ended December 31, 2011 is significantly impacted by our acquisition of Talecris, a biopharmaceutical company that produced plasma-derived protein therapies in the United States.

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On June 1, 2011, we completed our acquisition of 100% of the share capital of Talecris for a total of $3.7 billion. The Talecris acquisition consideration consisted of a combination of cash consideration of $2.5 billion and non-cash consideration, through the issuance of our new Class B shares, of $1.2 billion. Our 2012 and 2013 results include the activity of the former Talecris companies for the entire period. The information for 2011 includes seven months of activity of the former Talecris companies.

The Talecris acquisition has been accounted for pursuant to the acquisition method of IFRS 3 (revised), Business Combinations. Under this acquisition method, assets and liabilities are recorded at their fair value on the date of purchase and the total purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed. As of the date of the preparation of our 2011 consolidated financial statements, we did not have all of the necessary information to determine the definitive fair value of intangible assets, liabilities and contingent liabilities acquired in connection with the business combination. During the second quarter of 2012, we obtained additional information on events and circumstances existing at the acquisition date that enabled us to accurately finalize the allocation of assets and liabilities and therefore the allocation of the purchase price. In 2012, goodwill increased by €2.5 million due to a change in the valuation of inventories and the recognition of a current provision arising from an onerous contract, both of which are net of tax effect. The increase in goodwill was allocated to our Bioscience segment. Goodwill for 2011 has not been restated, as we believe the changes are immaterial.

Total costs incurred in connection with the Talecris acquisition amounted to €61.3 million. For 2011, costs incurred in connection with the acquisition amounted to €44.3 million. Additionally, we incurred significant indebtedness in connection with the consummation of the Talecris acquisition, including the issuance of our Existing Notes and borrowings under a senior credit agreement (referred to herein as the “Existing Facilities”), and our total indebtedness and related interest expense is, and will continue to be, significantly higher than in previous periods. Finance expenses increased from €200.6 million in 2011 to €284.1 million in 2012. See Note 3(d) to our audited consolidated financial statements included in this annual report on Form 20-F for additional information with respect to the Talecris acquisition.

The following discussion and analysis contains information regarding our results of operations for the year ended December 31, 2012 as compared to the year ended December 31, 2011:

	Year Ended December 31,				Change
	2012		2011(restated)(1)		€		%
	(in thousands of euros, except for percentages)
Continuing Operations
Net revenue	2,620,944		1,795,613		825,331		46.0
Cost of sales	(1,291,345	)	(968,133	)	(323,212	)	33.4
Gross Profit	1,329,599		827,480		502,119		60.7
Research and development	(124,443	)	(89,360	)	(35,083	)	39.3
Selling, general and administration expenses	(545,072	)	(459,259	)	(85,813	)	18.7
Operating expenses	(669,515	)	(548,619	)	(120,896	)	22.0
Operating results	660,084		278,861		381,223		136.7
Finance income	1,677		5,761		(4,084	)	(70.9	)
Finance costs	(284,117	)	(200,562	)	(83,555	)	41.7
Change in fair value of financial instruments	13,013		1,279		11,734		917.4
Impairment and gains on disposal of financial instruments	2,107		(805	)	2,912		(361.7	)
Exchange losses	(3,409	)	(3,477	)	38		(1.1	)
Finance cost	(270,729	)	(197,774	)	(72,955	)	36.9
Share of profit/(losses) of equity accounted investees	(1,407	)	(1,064	)	(343	)	32.2
Profit before income tax	387,948		80,023		307,925		384.8
Income tax expense	(132,571	)	(29,795	)	(102,776	)	344.9
Profit after income tax from continuing operations	255,377		50,228		205,149		408.4
Consolidated profit for the year	255,377		50,228		205,149		408.4

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(1)In 2012, we changed the presentation of the consolidated statement of operations data by functions instead of by nature. We believe that this will enable a better understanding of the profitability of our business. Consequently, comparative data for 2011 has also been modified, to conform to the current presentation. For more information please see our audited consolidated financial statements, which are included in this annual report on Form 20-F.

Net Revenue

Net revenue increased by €825.3 million, or 46.0%, from 2011 to 2012. This net revenue increase is organic and acquisition related growth. Of the €197.3 million increase attributable to organic growth, €121.2 million was from the positive impact of USD/EUR exchange rate fluctuations in the amount of and €76.2 million primarily attributable to increases in sales volume.  Of the €628.0 million increase attributable to the acquisition of Talecris Biotherapeutics on June 1, 2011, €23.3 million was from the positive impact of USD/EUR exchange rate fluctuations and €604.7 million was primarily attributable to increases in sales volume.

The following table reflects a summary of net revenue by each of our divisions for 2012 as compared to 2011:

Summary of Net Revenue by Division	Year ended December 31, 2012	% of total net revenue	Year ended December 31, 2011	% of total net revenue	% var	% var CC(1)
	(in thousands of euros, except for percentages)
Bioscience	2,325,088	88.7	1,531,199	85.3	51.8	42.9
Diagnostic	134,341	5.1	117,358	6.5	14.5	11.9
Hospital	95,870	3.7	95,365	5.3	0.5	0.1
Raw Materials and Others(2)	65,645	2.5	51,691	2.9	27.0	18.7
Total	2,620,944	100.0	1,795,613	100.0	46.0	37.9

(1)Net revenue variance in constant currency is determined by comparing adjusted current period net revenue, calculated using prior period monthly average exchange rates, to the prior period net revenue.  See “Presentation of Financial Information.”

(2)In 2011 and 2012, Raw Materials and Others primarily consisted of (i) amounts earned under the agreements with Kedrion, which are described further in Item 4 of this Part I, “Information on the Company — A. History and Development of the Company — Important Events — The Talecris Acquisition and Related Financing,” (ii) royalty payments from third parties and (iii) net revenue from engineering activities by our subsidiary Grifols Engineering, S.A.

Bioscience.  Net revenue for the Bioscience division increased by 51.8% from €1.5 billion in 2011 to €2.3 billion in 2012.  Growth was principally driven by high sales volumes in the United States and Canada for our main plasma derivative products, most significantly in sales of albumin, our IVIG products and A1PI, with a slight positive contribution from the combination of product prices and market mix. However, as was the case in 2011, the most important factor for the year over year increase was our acquisition of Talecris. Fiscal year 2011 included only seven months of Talecris revenue while 2012 reflects the first full year of combined revenue.  We also experienced notably stronger Alphanate® Factor VIII sales following the divestment of Koate® in the United States as a result of agreements with the FTC.

Diagnostic.  Our Diagnostic division increased net revenue by 14.5% from €117.4 million in 2011 to €134.3 million in 2012.  Diagnostic division growth was driven by sales of DG Gel® cards, which increased in each market in which we operate and were particularly notable in emerging markets, such as Mexico, Turkey, China and Brazil.  In the instrumentation field, we have experienced strong sales of the Erytra® analyzer in Switzerland, Denmark, Sweden and Norway, and the first Erytra® analyzer was installed in Mexico in 2012. Sales of the hemostasis Q® analyzer were also strong in emerging markets, including Brazil and Turkey.

Hospital.  Net revenue from the Hospital division remained stable, at €95.9 million in 2012 compared to €95.4 million in 2011.  As this division generates most of its sales in Spain, it has been affected by health sector cutbacks. We are continuing to promote international expansion in this division, mainly through the IV Tools and Hospital logistics product lines and manufacturing and distribution agreements.  One key development was the commencement of distribution in Spain of probiotic VSL#3®, which is produced by Actial Farmacéutica. Our agreement with Actial Farmacéutica drove a 6.6% growth in our Nutrition products in 2012.  Additionally, pursuant to a 2011 distribution contract, CareFusion is selling our BlisPack® system in a number of countries in Europe, Latin America, the Middle East and Asia.  In 2012, we also entered into agreements to manufacture pre-diluted drugs at our Parets facility for third parties, including Mylan Institutional in the United States and Eurospital in Italy, through Grifols Partnership, a contract manufacturing service offered by Laboratorios Grifols S.A.

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Raw Materials and Others.  Net revenue from Raw Materials and Others increased from €51.7 million in 2011 to €65.6 million in 2012.  The increase over 2011 figures is the result of increased net revenue from the supply agreements with Kedrion related to the Talecris acquisition.

Robust revenue growth across all divisions has been driven by increases in sales volume in a flat price environment due to austerity measures in the European market. Our organic growth during 2012 is a result of increased sales in geographic regions with better economic conditions. The following table reflects a summary of net revenue by each of our geographic regions for 2012 as compared to 2011:

Summary of Net Revenue by Region	Year ended December 31, 2012	% of total net revenue	Year ended December 31, 2011	% of total net revenue	% var		% var CC(1)
	(in thousands of euros, except for percentages)
European Union(2)	559,328	21.3	526,625	29.3	6.2		5.8
Spain	212,983	8.1	230,871	12.9	(7.7	)	(7.7	)
United States and Canada	1,658,548	63.3	948,730	52.9	74.8		61.9
Rest of the World	371,618	14.2	289,732	16.1	28.3		22.3
Subtotal	2,589,494	98.8	1,765,087	98.3	46.7		38.7
Raw Materials	31,450	1.2	30,526	1.7	3.0		(4.7	)
Total	2,620,944	100.0	1,795,613	100.0	46.0		37.9

(1)Net revenue variance in constant currency is determined by comparing adjusted current period net revenue, calculated using prior period monthly average exchange rates, to the prior period net revenue.  See “Presentation of Financial Information.”

(2)Net revenue earned in the European Union includes net revenue earned in Spain.

We believe that our ongoing internationalization has helped improve our sales performance. We have seen a gradual reduction in the proportion of sales accounted for by Spain, falling to 8.1% in 2012, as we continue to focus on increasing sales in regions less affected by austerity measures, with shorter payment periods and better margins. In 2012, 91.9% of net sales, or €2.4 billion, were derived from countries outside of Spain. Sales in the United States and Canada totaled €1.7 billion, a figure that represents growth of 74.8% compared to €949 million in 2011.

Cost of sales

Cost of sales increased by 33.4% from €968.1 million in 2011 to €1.3 billion in 2012.  The increase in cost of sales is the result of an overall increase in cost of supplies due to increased manufacturing volumes and is consistent with net revenue growth resulting from our larger scale following the Talecris acquisition.  As a percentage of net revenue, cost of sales has decreased to 49.3% from 53.9% in 2011.

Gross profit

The increase in gross profit margin during the period from 46.1% of sales in 2011 to 50.7% in 2012 was mainly a result of synergies derived from the acquisition of Talecris, including (i) lower plasma collection costs due to improved efficiencies and economies of scale; (ii) improved manufacturing yields and optimized capacity utilization as a result of cross license approvals for several intermediate pastes; (iii) manufacturing cost efficiencies; and (iv) improved net revenue per liter of plasma.

Research and development

Research and development spending increased by 39.3% from €89.4 million (5.0% of sales) in 2011 to €124.4 million (4.7% of sales) in 2012. This increase is primarily attributable to an increase in the number of clinical trials under way, which is the result of our continuation of the Talecris research and development pipeline.

Selling, general and administration expenses.

Selling, general and administration, expenses increased by 18.7% from €459.3 million in 2011 to €545.1 million in 2012. This increase is the result of an increase in incremental expenses resulting from our larger scale following the Talecris acquisition.

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Additionally, we recorded a charge in the amount of €3.2 million for the BPD fee in 2012. The BPD fee is not tax deductible. The increased expenses were partially offset by savings from our optimization initiatives and continued focus on controlling discretionary spending. As a percentage of net revenue, Selling, general and administration expenses decreased to 20.8%, compared to 25.6% in 2011 as a result of the economies of scale.

Net finance cost

Net finance cost increased by 36.9% from €197.8 million in 2011 to €270.7 million in 2012.  This increase was primarily a result of an increase in finance expense by 41.7% from €200.6 million in 2011 to €284.1million in 2012, representing a full year of finance expense under the debt incurred in connection with the Talecris acquisition.  Net finance cost also includes the amortization of capitalized costs related to our debt.

Income tax expense

In 2012, we had a profit before income tax of €387.9 million and income tax expense of €132.6 million, which represents an effective tax rate of 34.2%.  Our effective tax rate decreased from 37.2% in 2011 primarily due to the relative effect of non-deductible expenses and non-recognized tax credits in 2012. While these amounts remained similar from one year to the other, the taxable profit increased significantly, thus reducing the effective tax rate.

Regulation

For detailed information regarding the regulations applicable to our business, see Item 4 of this Part I, “Information on the Company — E. Regulatory Matters.”

Inflation

We historically have not been affected materially by inflation in our core geographies.

B.Liquidity and Capital Resources

Our principal liquidity and capital requirements consist of costs and expenses relating to the operation of our business, capital expenditures for existing and new operations and debt service requirements relating to our existing and future debt. Historically, we have financed our liquidity and capital requirements through internally generated cash flows mainly attributable to revenue and debt financings. As of December 31, 2013, our cash and cash equivalents totaled €708.8 million. In addition, as of December 31, 2013, we had more than €340 million available under our debt agreements, including $35 million, €21.7 million and the $140 million equivalent in multicurrencies available under our Amended Revolving Credit Facilities.

We expect our cash flows from operations combined with our cash balances and availability under the Revolving Loans from the New Credit Facilities and other bank debt to provide sufficient liquidity to fund our current obligations, projected working capital requirements, and capital expenditures for at least the next twelve months. Currently, we do not generate significant cash in any country that might have restrictions for funds repatriation, and we estimate that the existing cash located in the U.S. and Spain, along with the cash generated from operations, will be sufficient to meet future cash needs in key countries.

Historical Cash Flows

Below are our consolidated statements of cash flow for the years ended December 31, 2011, 2012 and 2013 prepared under IFRS EU.

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Statements of Cash Flows

For the Years Ended December 31, 2013, 2012 and 2011

	Year Ended December 31,
	2013		2012		2011
	(in thousands of euros)
Cash flows from operating activities
Profit before tax	497,536		387,948		80,023
Adjustments for:	347,853		400,950		313,915
Amortization and depreciation	128,469		129,126		90,639
Other adjustments:	219,384		271,824		223,276
(Profit)/losses on equity accounted investments	1,165		1,407		1,064
Exchange (gains)/losses	1,303		3,409		3,447
Impairment of assets and net provision charges	4,611		8,104		23,806
(Profit)/losses on disposal of fixed assets	4,689		12,542		19,366
Government grants taken to income	(1,130	)	(930	)	(1,304	)
Finance expense / (income)	228,308		258,060		180,567
Other adjustments	(19,562	)	(10,768	)	(3,670	)
Changes in operating assets and liabilities	40,332		(43,617	)	(51,279	)
Change in inventories	17,277		14,509		6,909
Change in trade and other receivables	(35,694	)	44,258		(54,142	)
Change in current financial assets and other current assets	(2,612	)	(5,645	)	9,321
Change in current trade and other payables	61,361		(96,739	)	(13,367	)
Other cash flows from/(used in) operating activities	(293,710	)	(238,163	)	(122,431	)
Interest paid	(157,880	)	(180,539	)	(139,883	)
Interest recovered	5,423		2,923		3,582
Income tax (paid) / received	(141,253	)	(60,547	)	13,870
Net cash from operating activities	592,011		507,118		220,228
Cash flows from/(used in) investing activities
Payments for investments	(252,827	)	(177,195	)	(1,784,464	)
Group companies and business units	(69,172	)	(11,067	)	(1,624,869	)
Property, plant and equipment and intangible assets	(172,849	)	(166,128	)	(159,899	)
Property, plant and equipment	(138,460	)	(146,028	)	(137,200	)
Intangible assets	(34,389	)	(20,100	)	(22,699	)
Other financial assets	(10,806	)	—		304
Proceeds from the sale of investments	16,793		112,760		165,738
Property, plant and equipment	16,793		79,896		160,266
Associates	—		1,883		5,472
Other financial assets	—		30,981		—
Net cash (used in) investing activities	(236,034	)	(64,435	)	(1,618,726	)
Cash flows from/(used in) financing activities
Proceeds from and payments for equity instruments	35,221		(9	)	(2,830	)
Issue	20,461		—		(2,830	)
Payments for treasury stock	(120,429	)	(5,194	)	—
Sales of treasury stock	135,189		5,185		—
Proceeds from and payments for financial liability instruments	(79,413	)	(255,569	)	1,762,550
Issue	53,507		25,727		2,994,741
Redemption and repayment	(132,920	)	(281,296	)	(1,232,191	)
Dividends and interest on other equity instruments paid	(69,138	)	—		—
Dividends paid	(70,062	)	—		—
Dividends received	924		—		—
Other cash flows from/(used in) financing activities	8,184		(49,752	)	(284,748	)
Financing costs included on the amortized costs of the debt	—		(43,752	)	(285,088	)
Other amounts from / (used in) financing activities	8,184		(6,000	)	340
Net cash from/(used in) financing activities	(105,146	)	(305,330	)	1,474,972
Effect of exchange rate fluctuations on cash	(15,381	)	(4,612	)	24,463
Net increase in cash and cash equivalents	235,450		132,741		100,937
Cash and cash equivalents at beginning of the year	473,327		340,586		239,649
Cash and cash equivalents at end of the year	708,777		473,327		340,586

Net Cash from Operating Activities

In 2011, we generated net cash from operating activities of €220.2 million. The principal effects on working capital were:

·a €54.1 million increase in receivables, with the days sales outstanding ratio at 65 days, which was significantly lower than 2010 as a result of the Talecris acquisition and Talecris’ favorable sales outstanding ratio;

·a €6.9 million decrease in inventories with the stocks turnover ratio at 319 days, which is lower than 2010; and

·a €13.4 million decrease in current trade and other payable, due to the payment of transaction costs in 2011 which were outstanding as of December 31, 2010.

In 2012, we generated net cash from operating activities of €507.1 million. The principal effects on working capital were:

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·a €44.3 million decrease in receivables, with the days sales outstanding ratio at 52 days (as compared to 65 days in 2011), due to an increased proportion of sales coming from countries with shorter payment periods, and also due to our receipt of approximately €48 million under the Suppliers Payment Plan introduced by the Spanish Government in June 2012 to require central and regional Spanish governments to pay receivables that are overdue as of December 31, 2011;

·a €14.5 million decrease in inventories with the stocks turnover ratio at 281 days (as compared to 319 days in 2011), due to improvements in inventory management and reductions in safety stock; and

·a €96.7 million decrease in current trade and other payable, due to our payment of €36.8 million ($45 million) in connection with the finalization of the PCA litigation (see Item 8 of this Part I, “Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings — Plasma Centers of America, LLC”), as well as our payment in 2012 of trade payments related to integration and transaction costs that were outstanding as of December 31, 2011.

In 2013, we generated net cash from operating activities of €592 million. The principal effects on working capital were:

·a €35.7 million increase in receivables due to an increase in the absolute levels of receivables with days sales outstanding ratio unchanged from 2012;

·a €17.3 million decrease in inventories with the stocks turnover ratio at 262 days (as compared to 281 days in 2011), due to improvements in inventory management and reductions in safety stock; and

·a €61.4 million increase in current trade and other payables due to normal business operations

Net Cash from/(Used in) Investing Activities

Net cash used in investing activities amounted to €1.6 billion in 2011, €64.4 million in 2012 and €236 million in 2013. For 2011, most of the cash used in investing activities related to the Talecris acquisition. This was partially offset by €160.2 million in cash received as a result of sale leaseback transactions in the United States and Spain.

Investments made in 2012 included various capital expenditures, primarily investments for manufacturing facility expansion and improvement, the acquisition of 51% of the capital of Araclón for €6.2 million (net of cash and cash equivalents of Araclón), the acquisition of three plasma donation centers in the United States for €1.9 million and the acquisition by the Gri-Cel, S.A. Group of 40% of the capital of VCN Bioscience for €1.5 million. These uses were offset in part by €67 million received as a result of sale leaseback transactions in 2011 and from proceeds received from sales of other assets, such as futures and property, plant and equipment.

Investments made in 2013 include various capital expenditures, primarily investments for manufacturing facility expansion and improvement, the acquisition of 21.30% of the common stock of TiGenix for €12.4 million, the acquisition of approximately 35% of the outstanding shares of Aradigm on a fully diluted basis for $25.7 million (€20.6 million if acquisition costs are included) and the acquisition of 60% of the economic and voting rights of Progenika for €37 million (€34.6 million, net of cash and cash equivalents).

Net Cash from/(Used in) Financing Activities

Net cash from financing activities was €1.5 billion in 2011, primarily due to the issuance of $1.1 billion aggregate principal amount of our Existing Notes and borrowings under the Existing Facilities (excluding undrawn availability) as of December 31, 2011.

This $2.9 billion in cash from financing activities was offset by cash used for transaction costs paid in connection with the Talecris acquisition in the amount of €285 million. Additionally, pursuant to the terms of the Existing Facilities and in connection with the consummation of the Talecris acquisition, we refinanced substantially all of our and Talecris’ existing debt. On June 1, 2011, we redeemed all of the Grifols Inc. notes, which comprised $200.0 million aggregate principal amount of notes maturing in 12 years, $245.0 million, £25.0 million and €10 million aggregate principal amount of notes maturing in ten years and $100.0 million aggregate principal amount of notes maturing in seven years (collectively, the “Old Notes”) and repaid existing bank loans amounting to €297 million. We paid a €112 million make whole premium payment in connection with the redemption of the Old Notes. Between June and July 2011, we redeemed the $600 million aggregate principal amount of Talecris’ existing notes. We paid a €78 million make whole premium payment in connection with the redemption of the Talecris’ existing notes.

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Net cash used in financing activities was €305.3 million in 2012, mainly due to debt repayments totaling €255.6 million, which includes early repayments. In addition, the cost of the repricing of all of the senior term loans and revolving facilities pursuant to the Existing Facilities was €43.8 million.

Net cash used in financing activities was €105.1 million in 2013, mainly due to net debt repayments totaling €79.4 million and the payment of dividends totaling €70 million.

Working Capital

Our working capital, which is driven primarily by our trade receivables turnover and inventory aging, can vary significantly period to period depending on the activity.  Our capital requirements will depend on many factors, including our rate of sales growth, acceptance of our products, continued access to adequate manufacturing capacities, maintaining cGMP compliant facilities, the timing and extent of research and development activities, and changes in operating expenses, including costs of production and sourcing of plasma, all of which are subject to uncertainty.  We anticipate that our cash needs will be significant and that we may need to increase our borrowings under current or future debt agreements in order to fund our operations and strategic initiatives.  We anticipate that our working capital will increase in absolute terms in order to grow our business.

Inventory Aging

Inventory aging average has decreased from 2011 to 2013.  The synergies achieved in the Talecris acquisition have resulted in inventory optimization. As a result of improvements in inventory management and reductions in safety stock turnover days were reduced from 281 at December 31, 2012 to 262 at December 31, 2013.

Trade Receivables

Our receivables had an aging average of 52, 52 and 65 days at December 31, 2013, 2012 and 2011, respectively. The decrease from 2011 was primarily due to our acquisition of Talecris in June 2011 and its lower days sales outstanding ratio. The geographic redistribution of sales following the Talecris acquisition has significantly increased our sales volume in countries with shorter collection periods and reduced sales in southern European countries, which have relatively longer collection periods (Spain, Italy, Portugal and Greece) to approximately 11% of our total net revenue.

It is common to experience extended collection periods for balances due from Greece, Italy, Spain and Portugal. In particular, in Spain, Italy and Portugal, it is common practice for government or local authority-backed entities to pay suppliers well after the 30 to 60 day period normally applied, with payments occurring very often after one year. The failure to receive timely payments for the sale of our products negatively affects our working capital levels and may require us to obtain more short-term financing than we would otherwise need.

The following table presents the breakdown of our trade receivables by country in each of Greece, Italy, Spain and Portugal as of December 31, 2013:

	Balances with Public Entities				Balances with Third Parties
			Provision
	Balance (1)	Balance Past Due	for Doubtful Receivables (2)		Balance (3)	Balance Past Due	Provision for Doubtful Receivables (4)		Net Debt (1+2+3+ 4)
	(in thousands of euros)
Greece	118	118	(118	)	1,259	9	0		1,259
Italy	6,801	1,741	(144	)	14,847	9,057	(2,060	)	19,444
Spain	76,027	41,092	(175	)	7,656	4,919	(98	)	83,410
Portugal	10,999	8,559	(7,088	)	3,098	2,422	(1	)	7,008
Total	93,945	51,510	(7,525	)	26,860	16,407	(2,159	)	111,121

Allowances for doubtful accounts are recognized when there are indicators that the debt will not be repaid.  Although we have historically collected all trade receivables due from the government or funded by the government in each of Greece, Italy, Spain and Portugal, we are aware of the economic difficulties presently facing those countries.  Like in 2012, in 2013 we made a provision for doubtful receivables for each of these countries.  However, these amounts are not material.

During 2012, the Spanish government arranged for the payment of all public administration debt that was overdue at December 31, 2011. Receipt of the principal of such balances was conditioned upon waiver of any interest owed by the social security

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authorities.  As a result, we received approximately €50 million for overdue balances and we recognized a loss of €11.6 million in 2012 on the interest that we had claimed from the social security authorities.

When funds are required, we may sell certain receivables with a maturity beyond 30 days. Certain receivables are sold to financial institutions without recourse. We sold €244 million, €197 million and €157 million of receivables to third parties during 2013, 2012 and 2011, respectively.

Capital Expenditures and Intangible Assets

The following table presents our capital expenditure additions in the years ended December 31, 2013, 2012 and 2010, by division.

	Year Ended
	December 31,
	2013	2012	2011
	(in thousands of euros)
Bioscience division	129,475	140,880	127,789
Hospital division	8,514	6,435	15,097
Diagnostic division	24,408	12,003	12,218
Shared infrastructure	19,582	14,154	12,395
Total	181,979	173,472	167,499

January 2011 through December 2013

Facilities.  The most important capital projects relating to the expansion and improvement of our manufacturing facilities were:

·investments related to Clayton facility of approximately €134.2 million in 2011, approximately €50.6 million in 2012 and approximately €20.5 million in 2013, mainly related to fractionation capacity expansion;

·further expenditures at our new plant at the Murcia facility of approximately €8.9 million in 2011 and approximately €2.1 million in 2012, which resulted in the commencement of operations at our new plant and an additional €3.6 million invested in 2013 to increase capacity;

·expenditures related to the construction of a new plasma fractionation plant at our Parets facility of approximately €1.1 million in 2011, additional investments in the facility of approximately €11.9 million in 2012, which resulted in the opening of a new fractionation plant that increased fractionation capacity to one million liters per year (expandable to two million liters per year) and additional investments in the facility of approximately €6.2 million in 2013, which resulted in the increase of the albumin purification capacity;

·expenditures related to acquisition of land in Curitiba, Brazil, on which we plan to construct, via Gri-Cel, S.A., a plant to manufacture bags used for collection, storage and transfusion of blood components;

·further expenses related to our headquarters and information technology projects of approximately €22.2 million in 2012 with an additional €8.9 million spent on refurbishing the headquarters in 2013 and additional investments in information technology projects of €6.3 million in 2013;

·extension of the installations in Clayton and Los Angeles used to purify Factor VIII, Factor IX, IVIG and albumin of approximately €10.1 million in 2012;

·the relocation and renovation of plasma centers of approximately €6.1 million in 2013;

·construction of a new plasma warehouse for approximately €5.2 million and new aseptic filling areas for €10.2 million at our Clayton facility in 2013; and

·investments in increasing our IVIG and albumin purification capacity at the Los Angeles plan for €10.2 million in 2013.

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January 2014 through December 2016

We are undertaking an investment plan that involves cumulative capital expenditures of approximately €450 million from 2014 through 2016. We plan to finance our projected capital expenditures with internally generated cash flow, cash on hand and debt financing. Additional capital expenditures will be needed as a result of the acquisition of the Novartis assets. These capital expenditures were not included in our current investment plan.

The majority of our investments benefit our Bioscience division, with the goal of improving the structure of our plasma collection centers in the United States and expanding our manufacturing facilities. As a result of these investments, we expect our combined plasma fractionation capacity to reach 12.5 million liters per year by 2016. We aim to optimize utilization of our fractionation capacity by obtaining FDA and EMA licenses and completing other requirements to purify any of our intermediate products at any of our plants.

We are also expanding and relocating plasma donation centers and improving infrastructures related to raw materials classification, preparation and storage facilities, logistics centers and analysis laboratories. As part of this process, we have already closed one and consolidated two plasma analysis laboratories in the United States.

Our principal planned capital expenditures for such period are listed below.

The most important planned capital projects relating to the expansion and improvement of our manufacturing facilities are:

·validation of the new filling zone facilities and equipment for liquid and lyophilized products at the Clayton facility;

·completion of the construction of the plant in Curitiba, Brazil that will manufacture bags used for collection, storage and transfusion of blood components;

·testing of operations at the new plasma fractionation plant at the Parets facility;

·completion of construction and bringing online the new plasma fractionation facility at Clayton;

·construction of a new Prolastin® plant at the Parets facility;

·construction of a new logistics center in Ireland;

·construction of offices and a raw materials warehouse at the Clayton facility; and

·further relation and renovation of our plasma donor centers.

We are undertaking research and development projects in all of our major product areas. See Item 4 of this Part I, “Information on the Company — B. Business Overview — Research and Development” for details of the major projects.

Sources of Credit

New Credit Facilities

On February 27, 2014 we entered into the New Credit Facilities with a syndicate led by Nomura Securities International, Inc., Banco Bilbao Vizcaya Argentaria, S.A., Morgan Stanley Senior Funding, Inc., HSBC Securities (USA) Inc. and Deutsche Bank Securities Inc. as the arrangers, which consists of the “Senior Term Loans” and the “Revolving Loans”. The Senior Term Loans were fully funded on February 27, 2014. The tranche A term loans, which amount to $700 million, will mature six years from February 27, 2014 and have a repayment schedule with quarterly amortization equal to 2.5%, 5.0% and 7.5% per annum of the original principal amount in years one, two and three through five, respectively, with the balance after the fifth anniversary from February 27, 2014 to the maturity date. The tranche B term loans, which amount to $3.250 billion and €400 million equivalent, will mature seven years from February 27, 2014 and will have a repayment schedule with quarterly amortization equal to 1.0% per annum of the original principal amount, with the remainder to be paid at maturity. The Revolving Loans, which amount to $300 million equivalent in multicurrencies, are available during the period commencing from February 27, 2014 and ending on the fifth anniversary of the closing of February 27, 2014.

The interest rates on the Senior Term Loans and the Revolving Loans are based on (a) in the case of dollar denominated loans, the base rate (the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50% and (iii) the applicable LIBOR rate plus

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1.00%) plus an applicable margin or (b) the applicable LIBOR rate, plus an applicable margin. The applicable margin for loans at the LIBOR rate is (a) 2.75% for the multicurrency revolving loans and the tranche A term loan, (b) 3.00% for the foreign tranche B term loan, and (c) 3.00% for the U.S. tranche B term loan, which are subject to customary market flex.

Borrowings under the New Credit Facilities are subject to mandatory prepayment upon the occurrence of certain events, including the incurrence of certain debt and the sale or other disposition of certain assets. In addition, a portion of the borrowings under the New Credit Facilities are subject to mandatory prepayment in the event we have excess cash flow, as defined therein. Both the Senior Term Loans and the Revolving Loans are guaranteed by Grifols, S.A. and certain subsidiaries of Grifols, S.A. that together with Grifols, S.A. represent, in the aggregate, at least 80% of the consolidated assets and consolidated EBITDA of Grifols, S.A. and its subsidiaries, and are secured by a perfected first priority security interest (subject to permitted liens, as defined in the credit and guaranty agreement) in all of the tangible and intangible assets of the U.S. credit parties and plasma inventory of the Borrower, as defined therein (subject to certain exclusions and limitations).

The New Credit Facilities include customary affirmative and negative covenants and events of default. Negative covenants include, among other limitations, limitations on additional debt, liens, asset sales and affiliate transactions. Events of defaults include, among other events, violation of covenants, material breaches of representations, cross default to other material debt, bankruptcy and insolvency and material judgments.

The terms of the New Credit Facilities contain limitations on our ability to pay ordinary dividends. We may pay dividends (a) in the ordinary course of business consistent with past practices in an amount not to exceed the lesser of (i) the sum of (A) the amount equal to the net cash proceeds received from the issuance or sale of equity interests in Grifols, S.A. after December 31, 2013 plus (B) if the leverage ratio is not greater than 5.0x, 50% of the consolidated net income of Grifols, S.A. and its subsidiaries accrued since March 31, 2013, less (C) amounts used to make certain restricted payments and (ii) 40% of the consolidated net income of Grifols, S.A. and its subsidiaries accrued since March 31, 2013 or (b) whether or not in the ordinary course of business so long as after giving effect thereto, the leverage ratio is not greater than 3.5x.

The borrower under the tranche A facility, the Euro denominated tranche B facility and the revolving facilities is Grifols Worldwide Operations Limited, an Irish entity our wholly owned direct subsidiary, and the borrower under the U.S. Dollar tranche B facility is Grifols Worldwide Operations USA, Inc., a Delaware corporation and a direct wholly owned subsidiary of Grifols Worldwide Operations Limited.

The New Credit Facilities are governed by New York law.

5.25% Senior Notes due 2022

On March 12, 2014, Grifols Worldwide Operations Limited completed the sale of the Notes to the initial purchasers thereof in an offering not registered under the Securities Act.  The initial purchasers subsequently resold the Notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act.  The proceeds from the Notes, together with cash on hand, was used to refinance the New Interim Loan Facility.

The Notes yield 5.25% to maturity and pay interest semi-annually in arrears on April 1 and October 1, commencing on October 1, 2014, to holders of record on the immediately preceding March 15 and September 15, respectively.  The Notes are guaranteed on a senior unsecured basis by Grifols, S.A. and the subsidiaries of Grifols, S.A. that are guarantors and co-borrower under the New Credit Facilities. As of the date of this annual report on Form 20-F, the Notes are guaranteed by Grifols, S.A., Biomat USA, Inc., Grifols Biologicals Inc., Grifols Inc., Grifols Diagnostic Solutions Inc. (f/k/a Grifols Chiron Diagnostics Corp.), Grifols Therapeutics, Inc., Instituto Grifols, S.A. and Grifols Worldwide Operations USA, Inc.

Grifols Worldwide Operations Limited may redeem the Notes, in whole or in part, at any time on and after April 1, 2017, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and additional interest, if any, on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on April 1 of the years indicated below:

Fiscal Year	Percentage
2017	103.938	%
2018	102.625	%
2019	101.313	%
2020 and thereafter	100.000	%

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Grifols Worldwide Operations Limited may redeem up to 35% of the outstanding Notes with money raised in one or more equity offerings by Grifols, S.A. at any time (which may be more than once) prior to April 1, 2017, as long as at least 65% of the aggregate principal amount of Notes issued remains outstanding immediately following any such offerings.

Grifols Worldwide Operations Limited may redeem some or all of the Notes at any time prior to April 1, 2017 at a price equal to 100% of the principal plus a premium as defined under the indenture (computed using a discount rate equal to the U.S. Treasury rate as of such redemption date plus 0.50%), plus accrued and unpaid interest and additional interest, if any.

Grifols Worldwide Operations Limited is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

If Grifols Worldwide Operations Limited experiences a change of control, it must give holders of the Notes the opportunity to sell Grifols Inc. their Notes at 101% of their face amount, plus accrued and unpaid interest.

Grifols, S.A., Grifols Worldwide Operations Limited and the guarantors of the Notes may incur additional indebtedness if our the fixed charge coverage ratio (as defined in the indenture governing the Notes) for Grifols, S.A. and the restricted subsidiaries (as defined in the indenture governing the Notes) on a consolidated basis for the most recently ended four full fiscal quarters immediately preceding the date on which such additional indebtedness is incurred would have been at least 2.00 to 1.00, determined on a pro forma basis.

The indenture governing the Notes contains certain covenants limiting, subject to exceptions, carve-outs and qualifications, Grifols, S.A.’s ability and its restricted subsidiaries’ ability to:  (i) pay dividends or make certain other restricted payments or investments; (ii) incur additional indebtedness or provide guarantees of indebtedness and issue disqualified stock; (iii) create liens on assets; (iv) merge, consolidate, or sell all or substantially all of our and our restricted subsidiaries’ assets; (v) enter into certain transactions with affiliates; (vi) create restrictions on dividends or other payments by our restricted subsidiaries; and (vii) create guarantees of indebtedness by restricted subsidiaries.  The indenture also contains certain customary events of default.

Other Bank Debt

We are party to a number of other short- and long-term bilateral credit facilities. These credit facilities are with various lenders and consist of long-term and short-term indebtedness of both us and Grifols, S.A. subsidiaries. As of December 31, 2013 we have $257 million of aggregate short-term credit availability under these facilities. The short-term credit facilities have maturity dates occurring in the next 12 months. The majority of the credit facilities provide that the lenders may terminate such facilities at will or change the terms unilaterally.

Grifols Inc. Existing Notes

On January 21, 2011, Giant Funding Corp., an escrow company formed solely for the purpose of issuing the Existing Notes, completed a private placement of 8.25% Senior Notes due 2018 (the “Existing Notes”).  The proceeds of the offering of the Existing Notes were held in an escrow account pending completion of the Talecris acquisition and the satisfaction of other conditions.  On June 1, 2011, upon completion of the acquisition, Giant Funding Corp. was merged with and into Grifols Inc., Grifols Inc. assumed all of Giant Funding Corp.’s obligations under the Existing Notes and the indenture governing the Existing Notes and the proceeds from the issuance of the Existing Notes were released from the escrow account.  The proceeds from the Existing Notes, together with funds drawn pursuant to a credit agreement that provided for (a) senior term loans aggregating $2.5 billion and €440 million and (b) revolving commitments in the amounts of $50 million, €36.7 million ($50 million equivalent) and the $200 million equivalent in multicurrencies, were used to finance the cash portion of the consideration for the Talecris acquisition.  The proceeds from the New Interim Loan Facility were used to discharge the Existing Notes on February 27, 2014.

Grifols Inc. Old Notes

On September 21, 2009, Grifols Inc. completed a private placement of the Old Notes.  On June 1, 2011, we redeemed all of the Old Notes and repaid existing bank loans amounting to €297 million. We paid a €112 million make whole premium payment in connection with the redemption of the Old Notes. Between June and July 2011, we redeemed the $600 million aggregate principal amount of Talecris’ existing notes. We paid a €78 million make whole premium payment in connection with the redemption of the Talecris’ existing notes.

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C.Research and Development, Patents and Licenses, etc.

We have made investments of €123.3 million, €124.4 million and €89.4 million in research and development in 2013, 2012 and 2011, respectively.  Our research and development spending, while decreasing slightly from 2012 to 2013, represented 4.5% of our net revenues in 2013.

The following table reflects the composition of our total research and development expenses for each period presented.

	Year ended December 31,
	2013		2012		2011
	(in thousands of euros)
Plasmin in treating acute peripheral arterial occlusion	5,123		8,235		8,582
Antithrombin in coronary surgery and severe burns	562		86		461
Fibrin glue in vascular, organ and soft-tissue surgery	9,135		7,984		4,326
Plasmapheresis with albumin and IVIG for Alzheimer	2,728		3,031		845
Total Key Projects Expenses	17,548		19,335		14,214
Net Research and Development Capitalization/Amortization	(5,916	)	(1,323	)	(1,913	)
Net Research and Development Key Projects	11,632		18,012		12,301
Discovery	5,437		8,180		6,592
Preclinical	11,095		5,176		3,420
Clinical	7,559		11,777		9,994
Post Commercialization Studies	7,280		6,377		7,896
Rest of projects	20,443		8,583		6,210
Other Bioscience Research and Development Projects	51,814		40,093		34,112
Bioscience Core Research and Development (1)	32,562		44,422		27,247
Bioscience	96,007		102,527		73,660
Diagnostic	21,308		15,367		10,111
Hospital	2,306		2,097		2,047
Miscellaneous	3,650		4,454		3,543
Total Research and Development	123,271		124,444		89,360

(1)Bioscience core research and development expenses consist of departments whose resources are utilized for general organization support including project management, medical affairs, regulatory licensing and quality assurance.

We do not anticipate that future research and development expenditures and the allocation of such expenses by division will differ materially from historical levels and current trends.  Historically, we have spent between 4% and 5% of our net revenues on research and development annually.  We expect research and development expenditures to continue in this range in the near term.  We also expect that projects within our Bioscience division will continue to comprise the majority of our research and development expenses.

For detailed information regarding our research and development activities, see Item 4 of this Part I, “Information on the Company — B. Business Overview — Research and Development.”

D.Trend Information

Plasma-derived protein therapies are essential to extend and improve the lives of individuals suffering from chronic, acute and life-threatening conditions including infectious diseases, such as hepatitis, immunological diseases, such as multiple sclerosis, hemophilia, von Willebrand disease, liver dialysis and acute conditions such as burns and severe blood loss.  For this reason, the administration of these products cannot be interrupted or postponed without putting patients’ lives at risk.  This ensures a stable demand for such products.  In addition, because of the nature of the diseases treated, the reimbursement rates for plasma derivative products in the U.S. are high.  Any changes to such rates would likely elicit a strong lobbying response in the U.S.

Based on recent MRB reports, sales in the human plasma-derived product industry have grown at a compound annual rate of 11% globally and 13% in the U.S. alone from 2003 to 2012.  We believe that many plasma derivative products are underutilized and will continue to benefit from strong demand.  Additionally, new indications are being explored for a number of plasma-derived therapies, such as the treatment of Alzheimer’s disease.  We believe that the volume of global sales of plasma derivative products will continue to grow annually at 6% to 8% over the long term, driven primarily by the same factors that have contributed to its historical growth, including:

·population growth;

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·the discovery and approval of new applications and indications for plasma-based products;

·an increase in the number of diagnosed patients and diagnosed but previously-untreated patients;

·geographic expansion; and

·physicians’ greater awareness of conditions and treatments.

Approximately 20.8% of our sales were generated in the European Union in 2013, as compared to 21.9% in 2012.  We anticipate that the percentage of our sales generated in the European Union will not significantly increase in 2014.

There are significant barriers to entry into the plasma derivative products industry, as the industry is highly regulated and requires significant expertise and capital investments.  We do not expect these barriers to decrease in the near term.

Regulatory Environment.  In order to operate in the plasma derivatives industry, manufacturers and distributors must comply with extensive regulation by the FDA, the EMA and comparable authorities worldwide.  As a result, significant investments are required to develop, equip and maintain the necessary storage, fractionation and purification facilities and to develop appropriate sale, marketing and distribution infrastructures.  Additionally, only proteins derived from plasma collected at FDA-approved centers can be marketed in the United States, so securing an adequate supply of U.S. source plasma is required to operate in the United States. We expect these regulatory restrictions to continue.

Product Pipeline.  We have an expanded portfolio of key products as a result of our recent acquisitions and will continue to invest in research and development with respect to new product and new indications for existing products.  Some key research and development projects underway include clinical studies of the use of albumin, diagnostic and vaccine therapies to treat Alzheimer’s disease, of albumin to treat advance cirrhosis and ascites, of antithrombin in heart surgery and of fibrin glue as a sealant to control bleeding during vascular, organ and soft tissue surgery.

Capital Expenditures.  We are undertaking an investment plan that involves cumulative capital expenditures of approximately €450 million from 2014 through 2016, including facility development.  As a result of these investments, we expect our combined plasma fractionation capacity to increase to 12.5 million liters per year by 2015. Additional capital expenditures will be needed as a result of the acquisition of the Novartis assets. These capital expenditures were not included in our current investment plan.

E.Off-balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

F.Contractual Obligations

The following table presents our principal existing contractual obligations as of December 31, 2013 requiring future payments:

	Payments Due by Period
	Total	Less thanone year	One tothreeyears	Three tofiveyears	Morethan fiveyears
	(in thousands of euros)
Operating leases(1)	261,641	52,520	105,968	50,445	52,708
Financial debt obligations(2)	2,897,739	252,714	484,616	2,154,433	5,976
Interest — financial debt obligations(3)	518,837	118,406	273,112	126,863	456
Licenses and royalties(4)	12,167	2,365	4,224	3,718	1,859
Total	3,690,384	426,005	867,920	2,335,459	60,999

(1)Operating leases include primarily leases for our plasma collection centers, leases from sale-leaseback transactions and marketing offices worldwide.  These amounts reflect only our contractual obligations as of December 31, 2013 and therefore assume that these operating leases will not be renewed or replaced with new operating leases upon expiration.  Our operating lease expenses will likely be substantially higher than the amounts provided in this table because our operations will require us to either renew or replace our operating leases.

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(2)Includes principal amortization for short and long-term debt including, among other things, capitalized lease obligations.  Our financial debt obligations primarily consist of $2.3 billion and €420 million outstanding under the Existing Facilities and $1.1 billion aggregate principal amount of our Existing Notes.  The remaining financial debt was made up largely of bilateral facilities that bore interest at market rate.

(3)Interest payments on debt and capital lease obligations are calculated for future periods using interest rates in effect at the end of 2013.  Certain of these projected interest payments may differ in the future based on changes in floating interest rates, foreign currency fluctuations or other factors or events.  The projected interest payments only pertain to obligations and agreements outstanding at December 31, 2013.  Refer to Notes 21 and 31 to our audited consolidated financial statements included in this annual report on Form 20-F for further discussion regarding our debt obligations and related interest rate agreements outstanding at December 31, 2013.

(4)License and royalty payment formulas are generally based on volume of sales.  The amounts presented in the table are calculated based on the net sales of 2013 without assuming any growth in sales.  Additionally, the column “More than five years” includes only one year of payments under the license agreement with Marca Grifols, S.L. which expires in January 2092.  See Item 7 of this Part I, “Major Shareholders and Related Party Transactions — B. Related Party Transactions — Patent and Trademark Use.”

This table does not give effect to the Novartis Acquisition, the $1.0 billion offering of the Notes or the entry into the New Credit Facilities and the use of proceeds therefrom.

G.Other Disclosures

Financial Derivatives

We signed two unquoted futures contracts, the underlying assets of which were shares in Grifols, S.A. accounted for at fair value through profit or loss. Such instruments were therefore exposed to risk of value fluctuations. We settled these contracts during 2012, obtaining cash of €31.5 million and finance income of €27.9 million.

In addition, in June 2011, we entered into a floor swap, which has an initial nominal amount of $1,550. In October 2011, we entered into a swap option that has an initial nominal amount of €100 million. In May 2012, we modified the €100 million variable to fixed interest rate swap, reducing the fixed interest rate and extending the maturity date from September 2014 to March 2016. As a result, both the swap floor and swap options have maturity dates in 2016. Both the swap floor and swap option values at December 31, 2013 are included in non-current financial assets.

See Note 31 to our audited consolidated financial statements included in this annual report on Form 20-F for additional information regarding our derivative instruments.

The New Credit Facilities permit us to enter into hedging transactions.

Critical Accounting Policies

The preparation of consolidated financial statements in accordance with IFRS requires us to make estimates and judgments in certain circumstances that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures of contingent assets and liabilities. A detailed description of our significant accounting policies is included in the notes to our audited consolidated financial statements included elsewhere in this annual report on Form 20-F.

We believe that certain of our accounting policies are critical because they require subjective and complex judgments, often requiring the use of estimates about the effects of matters that are inherently uncertain. We apply estimation methodologies consistently from year to year. Other than changes required due to the issuance of new accounting guidance, there have been no significant changes in our application of critical accounting policies during the periods presented. We periodically review our critical accounting policies and estimates with the Audit Committee of our Board. The following is a summary of accounting policies that we consider critical to our consolidated financial statements.

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(a)Business combinations

We apply IFRS 3 (revised), Business combinations in transactions made subsequent to January 1, 2010, applying the acquisition method of this standard to business combinations. The acquisition date is the date on which we obtain 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 capital increase costs are recognized as equity when the increase takes place and borrowing costs are deducted from the related financial liability when it is recognized.

At the acquisition date, we recognize the assets acquired and the liabilities assumed at fair value. Liabilities assumed include any contingent liabilities that represent present obligations arising from past events for which the fair value can be measured reliably. This criterion does not include non-current assets or disposable groups of assets which are classified as held for sale.

Assets and liabilities assumed 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.

When a business combination has been determined provisionally, 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 made to initial values only when errors must be corrected. Any potential benefits arising from tax losses and other deferred tax assets of the acquiree that were not recorded because 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.

(b)Property, plant and equipment

(i)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. We determine the depreciation charge separately for each component of property, plant and equipment with a cost that is significant in relation to the total cost of the asset.

Property, plant and equipment are depreciated using the following criteria:

	Depreciation method	Rates
Buildings	Straight line	1%-3%
Other property, technical equipment and machinery	Straight line	10%
Other property, plant and equipment	Straight line	7% -33%

We review 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.

(ii)Subsequent recognition

Subsequent to the 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 or 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.

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(iii)Impairment

We test for impairment and reversals of impairment losses on property, plant and equipment based on the criteria set out below in (d).

(c)Intangible assets

(i)Goodwill

Goodwill is generated in the course of business combinations and is calculated using the criteria described in the section on business combinations.

Goodwill is not amortized, but tested for impairment annually or more frequently if events indicate a potential impairment loss. Goodwill acquired in business combinations is allocated to the cash generating units, which we refer to as CGUs, or groups of CGUs that are expected to benefit from the synergies of the business combination, and we apply the criteria described in the footnotes to our audited consolidated financial statements included elsewhere in this annual report on Form 20-F. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

(ii)Internally generated intangible assets

Any research and development expenditure incurred during the research phase of projects is recognized as an expense when incurred.

Costs related with development activities are capitalized when:

·we have technical studies that demonstrate the feasibility of the production process;

·we have 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; and

·we have sufficient technical and financial resources to complete development of the asset and have developed budget control and cost accounting systems that enable monitoring of budgetary costs, modifications and the expenditures actually assigned to different projects.

The cost of internally generated assets 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 through the consolidated income statement.

Expenditures on activities that contribute to increasing the value of the different businesses in which we operate are expensed when incurred. Replacements or subsequent costs incurred on intangible assets are generally recognized as an expense, except where they increase the future economic benefits expected to be generated by the assets.

(iii)Other intangible assets

Other intangible assets are carried at cost, or at fair value if they arise on business combinations, less accumulated amortization and impairment losses.

Intangible assets with indefinite useful lives are not amortized but tested for impairment at least annually.

(iv)Intangible assets acquired in business combinations

The cost of identifiable intangible assets acquired in the business combination of Talecris includes the fair value of the currently marketed products sold and which are classified in “Other intangible assets”.

The cost of identifiable intangible assets acquired in the business combination of Araclón includes the fair value of research and development projects in progress.

The cost of identifiable intangible assets acquired in the business combination of Progenika includes the fair value of the currently marketed products sold, which are classified in “Other intangible assets” and “Development costs”.

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(v)Useful life and amortization rates

We assess whether the useful life of each intangible asset acquired is finite or indefinite. An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset will generate net cash inflows.

Intangible assets with finite useful lives are amortized by allocating the depreciable amount of an asset on a systematic basis over its useful life, by applying the following criteria:

	Amortisation method	Rates
Development expenses	Straight line	20% 33%
Concessions, patents, licences, trademarks and similar	Straight line	7% 20%
Computer software	Straight line	16% 33%
Currently marketed products	Straight line	3% 10%

The depreciable amount is the cost or deemed cost of an asset less its residual value.

(d)Impairment of goodwill, other intangible assets and other non-financial assets subject to depreciation or amortization

We evaluate 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.

We test goodwill, intangible assets with indefinite useful lives, and intangible assets with finite useful lives that are not available for use for potential impairment at least annually, irrespective of whether there is any indication that the assets may be impaired.

The recoverable amount of the assets is the higher of their fair value less costs of disposal and their value in use. An asset’s value in use is calculated based on an estimate of the future cash flows expected to derive from the use of the asset, expectations about possible variations in the amount or timing of those future cash flows, the time value of money, the price for bearing the uncertainty inherent in the asset and other factors that market participants would reflect in pricing the future cash flows deriving from the asset.

Negative differences arising from comparison of the carrying amounts of the assets with their recoverable amounts are recognized in the consolidated income statement. 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 CGU to which the asset belongs.

Impairment losses recognized for cash generating units are first allocated, where applicable, to reduce 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 (i) its fair value less costs of disposal, (ii) its value in use and (iii) zero.

At the end of each reporting period we assess 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 or loss. The increase in the 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 its assets, except for 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 value and the carrying amount that would have been obtained, net of amortization or depreciation, had no impairment loss been recognized.

(e)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.

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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 plasma is 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 EMA regulations, in order to guarantee that all the plasma is suitable for use in the production process.

To the extent that plasma storage costs are necessary to the production process, they are included as cost of inventories.

Indirect costs such as general management and administration costs are recognized as expenses in the period in which they are incurred.

The cost of raw materials and other supplies and the cost of merchandise are allocated to each inventory unit on a weighted average cost basis. The transformation cost is allocated to each inventory unit on a first in, first out basis.

We use 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 the net realizable value, materials are written down to net realizable value. Net realizable value is considered as detailed below.

·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 or 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 “Changes in inventories of finished goods and work in progress and supplies”.

(f)Revenue recognition

Revenue from the sale of goods or services is measured at the fair value of the consideration received or receivable. Revenue is presented net of VAT and any other amounts or taxes which are effectively collected on behalf of third parties. Volume or other types of discounts for prompt payment are recognized as a reduction in revenue if considered probable at the time of revenue recognition.

We recognize revenue from the sale of goods when:

·we have transferred to the buyer the significant risks and rewards of ownership of the goods;

·we retain neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

·the amount of revenue and the costs incurred or to be incurred can be measured reliably;

·it is probable that the economic benefits associated with the transaction will flow to us; and

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·the costs incurred or to be incurred in respect of the transaction can be measured reliably.

We participate in 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. Our gross revenue was reduced by €16.3 million and €9.9 million in each of the years 2012 and 2011, respectively, due to Medicaid and Medicare rebates. 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 we have signed with some of our customers entitle these customers to price discounts for a minimum purchase volume, volume discounts or prompt payment discounts. We recognize 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 United States, we enter into agreements with certain customers to establish contract pricing for our 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 we charge to the wholesaler, we provide the wholesaler with a credit referred to as a chargeback. We record the chargeback accrual at the time of the sale. The allowance for chargebacks is based on our 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. We periodically monitor the factors that influence the provision for chargebacks and make adjustments when we believe 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.

(g)Leases

(i)Lessee accounting records

We have rights to use certain assets through lease contracts.

Leases in which we assume substantially all the risks and rewards incidental to ownership are classified as finance leases, and all other leases are classified as operating leases.

·Finance leases:  We recognize finance leases as assets and liabilities at the commencement of the lease term, at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Initial direct costs are added to the asset’s carrying amount. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are recognized as expenses in the years in which they are incurred.

·Operating leases:  We recognize lease payments under an operating lease, excluding incentives, as expenses on a straight-line basis unless another systematic basis is representative of the time pattern of the lessee’s benefit.

(ii)Sale-leaseback transactions

Any profit on sale leaseback transactions that meet the conditions of a finance lease is deferred over the term of the lease.

When the leaseback is classified as an operating lease:

·If the transaction is at fair value, any profit or loss on the sale is recognized immediately in consolidated statement of profit or loss for the year; or

·If the sale price is below fair value, any profit or loss is recognized immediately in the consolidated statement of profit or loss. However, if the loss is compensated for by future below market lease payments, it is deferred in proportion to the lease payments over the period for which the asset is to be used.

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Changes in Accounting Standards

More information on newly issued accounting standards is included in Note 2 to our audited consolidated financial statements included in this annual report on Form 20-F.

Item 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.Directors and Senior Management

Directors

Set forth below are the names and current positions of the members of the Board:

Name	Title	Type	Director Since	Term Expires
Víctor Grifols Roura	Director, Chairman of the Board and Chief Executive Officer	Executive	July 1991(1)	May 2017
Juan Ignacio Twose Roura	Director	Executive	April 2000(2)	May 2017
Ramón Riera Roca	Director	Executive	April 2000(3)	May 2017
Tomás Dagá Gelabert	Director	Other External	April 2000	June 2015
Thorthol Holdings B.V. (represented by Mr. José Antonio Grifols Gras)	Director	Proprietary	January 2000(4)	May 2017
Thomas H. Glanzmann	Director	Other External	April 2006	May 2016
Edgar Dalzell Jannotta	Director	Independent	December 2006	June 2015
Anna Veiga Lluch	Director	Independent	December 2008	June 2015
William Brett Ingersoll	Director	Independent	June 2011	January 2016
Luís Isasi Fernández de Bobadilla	Director	Independent	May 2011	May 2016
Steven Francis Mayer	Director	Independent	June 2011	January 2016
Belén Villalonga Morenés	Director	Independent	May 2013	May 2018
Raimon Grifols Roura	Secretary non-member	n/a	July 2001	n/a
Nuria Martín Barnés	Vice Secretary non-member	n/a	July 2001	n/a

(1)Between July 8, 1991 and May 30, 2002, Mr. Víctor Grifols Roura was not a director but sat on the Board as representative of our then director Deria, S.A.

(2)Between May 25, 2001 and May 30, 2002, Mr. Juan Ignacio Twose Roura was not a director but sat on the Board as representative of our then director Grifols Engineering, S.A.

(3)Between May 25, 2001 and May 30, 2002, Mr. Ramón Riera Roca was not a director but sat on the Board as representative of our then director Grifols International, S.A.

(4)Thorthol Holdings B.V. is represented on the Board by Mr. José Antonio Grifols Gras.  Between January 20, 2000 and June 1, 2002, Thorthol Holdings B.V. was not a director but its current representative on the Board, Mr. José Antonio Grifols Gras, sat on the Board as director.

Director Biographies

Víctor Grifols Roura

Mr. Grifols Roura, who in 1985 succeeded his father as Chief Executive Officer of our predecessor, headed the 1987 reorganization that created the company that we are today.  Mr. Grifols Roura originally joined our predecessor in 1973 as an Export Manager and later served as Sales Manager.  Mr. Grifols Roura earned a business administration degree from the University of Barcelona.

Juan Ignacio Twose Roura

Mr. Twose has served as a director of our predecessor, and now Grifols, S.A., since 1973. He also served as our Vice President of Manufacturing from 1988 to September 2011 and as President of our Global Industrial Division from 2011 until December 31, 2013. Mr. Twose received a degree in Industrial Engineering from the Escuela Técnica Superior of Barcelona.

Ramón Riera Roca

Mr. Riera has served as our director since 2000.  He also serves as our Vice President of Marketing and Sales.  Mr. Riera joined our predecessor in 1977, became the Vice President of Marketing & Sales in 1988 and Managing Director of Grifols International in 1997.  Mr. Riera earned a degree in Chemical Sciences from the Autonomous University of Barcelona.

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Tomás Dagá Gelabert

Mr. Dagá has served as our director since April 2000.  Mr. Dagá is also a member of the board of directors of Scranton Enterprises B.V., Zambon, S.A., Pharmazam S.A. and StoraEnso Barcelona, S.A. Mr. Dagá is the managing partner of the law firm Osborne Clarke España, S.L.P., or Osborne Clarke.  Prior to joining Osborne Clarke, Mr. Dagá worked in the corporate and tax department of Peat Marwick Mitchell & Co. in Barcelona from December 1979 to September 1986.  Mr. Dagá earned a law degree from the University of Barcelona.

José Antonio Grifols Gras

Dr. Grifols has served as a director of Grifols, S.A. representing Thorthol Holdings B.V. since June 2002.  Dr. Grifols has been a professor of Theoretical Physics at the Autonomous University of Barcelona since September 1990 and the head of the Physics Department of the university since September 2002.  Dr. Grifols’ activities involve both teaching undergraduate and graduate courses (that include quantum mechanics, general relativity and cosmology) and doing research in high energy physics, astrophysics and cosmology.  Dr. Grifols trained as a physicist in many European and American institutions, including Max-Planck-Institut (Munich, 1971-1974, 1981), Stanford University (1976-1978), CERN (Geneva, 1983, 1984, 1987, 1995), Deutsches Elektronen Synchrotron (Hamburg, 1986, 1987, 1988), Oxford University (1984), University of Florida (Gainesville, 1985), Lawrence Berkeley Laboratory (Berkeley, 1987) and Fermi National Laboratory (Chicago, 1996).

Thomas H. Glanzmann

Mr. Glanzmann has served as our director since April 2006.  Following the Talecris acquisition, Mr. Glanzmann was appointed Chairman of Grifols Inc. and was hired by Grifols, S.A. to lead the integration of Talecris.  Mr. Glanzmann is the former Chief Executive Officer and President of Gambro AB and the former Chief Executive Officer and Managing Director of HemaCue.  He also was a Senior Advisor to the Executive Chairman and Acting Managing Director at The World Economic Forum.  Between 1988 and 2004, he held various positions at Baxter, including:  Senior Vice President and Corporate Officer of Baxter Healthcare Corporation; President of Baxter Bioscience; Chief Executive Officer of Immuno International; and President of the European Biotech Group, among other positions.  Between 1984 and 1988, he worked at Philip Morris where, among other positions, he was the country manager for Norway, Denmark and Iceland.  Mr. Glanzmann holds a M.B.A. from IMD in Switzerland and a B.A. in Political Science from Dartmouth College, USA.

Edgar Dalzell Jannotta

Mr. Jannotta has served as our independent director since December 2006.  In March 2001, he was named Chairman of William Blair & Company, L.L.C., an international investment banking firm.  Mr. Jannotta joined William Blair & Company in 1959 as an Associate, became a Partner in January 1965 and was Managing Partner from 1977 to 1995.  Before being appointed Managing Partner, Mr. Jannotta worked on investment banking and private equity transactions in the corporate finance department.  He was Chairman of the Securities Industry Association (1982) and has served as a director of the New York Stock Exchange Inc. He serves as a director on the boards of Aon Corporation, Commonwealth Edison Company, Molex Incorporated and Sloan Valve Company.  Mr. Jannotta completed his undergraduate studies at Princeton University and received his M.B.A. from Harvard Business School.

Anna Veiga Lluch

Ms. Veiga has served as our director since 2008. She graduated in Biology (1974-1979) and received her Ph.D. at Universidad Autonoma de Barcelona in 1991. She has been the IVF Laboratory Director at the Reproductive Medicine Service, Institut Universitari Dexeus from 1982 to 2005. She is the Director of the Barcelona Stem Cell Bank at the Centre for Regenerative Medicine in Barcelona, the Scientific Director at the Reproductive Medicine Service, Institut Universitari Dexeus and Associate Professor at the Departamento de Ciències Experimentals i de la Vida, Universitat Pompeu Fabra. Her main areas of interest are Clinical Embryology, Reproductive Genetics, Embryonic and Pluripotent Stem Cell research and Bioethics.

W. Brett Ingersoll

Mr. Ingersoll has served as our independent director since June 2011.  Prior to such time Mr. Ingersoll served as a member of the board of directors of Talecris Biotherapeutics Holdings Corp. from April 2005.  Mr. Ingersoll has served as managing director of Cerberus Capital Management, L.P. and predecessor entities since November 2002 and co-head of private equity of Cerberus globally.  From 1993 until 2002, Mr. Ingersoll served as a partner for J.P. Morgan Partners.  In addition, Mr. Ingersoll is also a member of the boards of directors of the following companies:  Steward Healthcare System, LLC, DynCorp International, EntreCap Financial, LLC,

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ACE Aviation Holdings, Inc., AerCap Holdings N.V. and EnduraCare Therapy Management, LLC. Mr. Ingersoll received his BA in Economics from Brigham Young University and his MBA from Harvard Business School.

Steven F. Mayer

Mr. Mayer has served as our independent director since June 2011. Prior to such time, Mr. Mayer served as a member of the board of directors of Talecris Biotherapeutics Holdings Corp. from April 2005. Mr. Mayer is the managing director of Cerberus California, LLC and predecessor entities since November 2002 and co-head of private equity of Cerberus globally. Mr. Mayer is also member of the boards of directors of BlueLinx Holdings, Inc., DecisionOne Corporation, LNR Property Holdings, Ltd. and Spyglass Entertainment, LLC. Mr. Mayer received his Bachelor of Arts from Princeton University and his Juris Doctor from Harvard Law School.

Luís Isasi Fernández de Bobadilla

Mr. Isasi has served as our independent director since May 2011.  He is president and managing director of Morgan Stanley España, country head for Spain, and board member of the Madrid Stock Exchange.  He joined Morgan Stanley in London in 1987.  Prior to that, he served as executive director at First Chicago Ltd. in London and, previously, worked in New York for the Latin American department of Morgan Guaranty Trust Co. Mr. Isasi started his professional career in Abengoa, in Seville (Spain) in 1977.  Mr. Isasi has a Bachelor’s Degree in Business from the University of Seville, and holds a M.B.A. from Columbia Business School in New York, United States, obtained in 1982.

Belén Villalonga Morenés

Ms. Villalonga has served as an independent director since May 2013. Ms. Villalonga is an Associate Professor with Tenure at New York University’s Stern School of Business. Between 2001 and June 2012 she was on the faculty at the Harvard Business School. Ms. Villalonga’s teaching, research, and consulting activities are focused on finance, strategy, and family business management. Since 2006, she has been serving as an independent director on the board of Acciona. Ms. Villalonga received her Ph.D. in Management and her M.A. in Economics from the University of California at Los Angeles. She also holds a second Ph.D. degree in Business Economics from the Complutense University of Madrid, and a B.A. in Business Administration from the Colegio Universitario de Estudios Financieros in Madrid. Before entering graduate school she worked at McKinsey & Co. in Paris.

Biographies of the Secretary Non-Members of the Board

Raimon Grifols Roura

Mr. Grifols has served as Secretary non-member of the Board since August 2001.  Mr. Grifols is also a member of the board of directors of Squadron Reinsurance Ltd., Marca Grifols, S.L., and Arrahona Optimus, S.A., a patron of the Probitas Fundación Privada and secretary of the board of directors of Instituto Grifols, S.A. and Xantic Spain, S.A.  Mr. Grifols is a partner at Osborne Clarke.  Mr. Grifols earned his law degree from the University of Barcelona.

Nuria Martín Barnés

Ms. Martín has served as Vice Secretary non-member of the Board since 2001.  She is also a member of the Board of Directors of Compañía General de Inversiones, S.A., S.I.C.A.V., Gesiuris S.G.I.I.C., S.A., CAT Patrimonis, S.I.C.A.V., S.A., URC Patrimonis, S.I.C.A.V., S.A. and Technetix Spain, S.L.  Ms. Martín is the managing partner of the Barcelona office of Osborne Clarke.  Prior to joining Osborne Clarke, she worked in the Corporate and Tax Department of KPMG Peat Marwick from 1982 to 1986.  Ms. Martín earned her law degree from the University of Barcelona.

Senior Management

Our senior management currently consists of the following persons:

Name	Title	Since
Víctor Grifols Roura	President and Chief Executive Officer	1985
Ramón Riera Roca	EVP and President of Global Commercial Division	1988
Alfredo Arroyo Guerra	Corporate Vice President (CVP) and Chief Financial Officer	2007
Carlos Roura Fernández	CVP and President of Global Industrial Division	1987
Montserrat Lloveras Calvo	CVP and Director of Corporate Accounting and Reporting	1991
Antonio Viñes Páres	CVP and Director of Corporate Planning and Control	1994

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Eva Bastida Tubau	CVP and Director of Scientific and Medical Affairs	2007
Vicente Blanquer Torre	CVP and Technical Director of Biological Industrial Group	1993
Mateo Florencio Borrás Humbert	CVP and Director of Global Human Resources	2008
Francisco Javier Jorba Ribes	CVP and President of Biological Industrial Group	1995
Gregory Gene Rich	CVP and President and Chief Executive Officer of Grifols Inc.	2001
David Ian Bell	CVP and General Counsel of Grifols Inc.	2003
Alberto Grifols Roura	CVP and Co-President of Instituto Grifols, S.A.	1999
Nuria Pascual Lapeña	CVP and Director of Finance and Corporate Investor Relations Officer	1997
Shinji Wada	CVP and President of Plasma Operations of Grifols Inc.	2003
Joel Abelson	CVP and President of North America Commercial Division of Grifols Inc.	2011

Senior Management Biographies

The following are the biographies of our senior management who are not also directors:

Alfredo Arroyo Guerra

Mr. Arroyo has served as our Corporate Vice President and Chief Financial Officer since January 2007.  Previously, Mr. Arroyo served as a CFO and in various Senior Finance positions in companies including KPMG, Carrefour, Chupa Chups, Reckitt Benckiser and Winterthur.  Mr. Arroyo received a degree in Economics and is a Certified Public Accountant in Spain.

Carlos Roura Fernández

Mr. Roura joined us in 1977 and has held several positions since that time. Mr. Roura served as Corporate Vice President and a co-President of the Global Industrial Division (previously the General Manager of Hospital Operations) from 1987 to 2013. Since January 1, 2014, Mr. Roura has served as Corporate Vice President and President of the Global Industrial Division. Beginning in 2002, he has served as President of Farmafluid, a Spanish association of medical parenteral nutritional fluid laboratories. From 2008 to 2013, Mr. Roura served as deputy Vice President of the Industrial Division. Mr. Roura is an Industrial Engineer.

Montserrat Lloveras Calvo

Mrs. Lloveras has served as Corporate Vice President and the Director of Corporate Accounting and Reporting (previously the Administration Director and Controller) since 1991.  She joined our predecessor in 1984 as the Costs Analyst of the Financial Department and in 1988 was promoted to the position of Administration Director.  Mrs. Lloveras received a degree and an M.B.A. from the Escuela Superior de Administración y Dirección de Empresas in Barcelona.

Antonio Viñes Páres

Mr. Viñes has served as our Corporate Vice President and the Director of Corporate Planning and Control (previously the Planning and Control Director) since 1994.  He joined us in 1978, occupying several positions in the Commercial and Marketing Departments.  Mr. Viñes received a degree in Biology from the Autonomous University of Barcelona.

Eva Bastida Tubau

Mrs. Bastida joined us in 2004 as the Medical Marketing Director of Grifols International, S.A. and took on the position of our Corporate Vice President and Director of Scientific and Medical Affairs (previously Executive Scientific Director) in 2007. Previously, Mrs. Bastida worked as a clinical Scientist in the Hemostasis Department of the Hospital Clinic in Barcelona, Spain. From 1993 to 1998, she was the Head of Clinical Development at Sanofi in Barcelona, Spain and from 1999 to 2003, she was responsible for Worldwide Clinical Development at Sanofi Synthelabo in Paris, France. Mrs. Bastida has obtained her Pharmacy & Medical Pharmacology Degree from the University of Barcelona and a PhD in Cell Biology at the American Red Cross in Bethesda, Maryland. She holds a PDD by IESE and she has more than 24 years of experience, six of them with us.

Vicente Blanquer Torre

Mr. Blanquer has served as our Corporate Vice President and the Technical Director of the Biological Industrial Group (previously the Pharmaceutical Technical Director) since 1993, and is responsible for both Bioscience’s quality assurance and quality control.  From 1987 until 1993, he was the Deputy Technical Director, responsible for process quality control concerning plasma derivatives manufacturing.  Mr. Blanquer received a Degree in Pharmacy from the University of Barcelona.

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Mateo Florencio Borrás Humbert

Mr. Borrás has served as our Corporate Vice President and the Director of Global Human Resources (previously Human Resources Director) since 2008. Previously, he served as a HR Director at different companies, including EMAYA, Nissan Motor Ibérica and others. He is a member of AEDIPE (Spanish Association of People Management and Development) and he is an Arbitrator at the Arbitrator Corps of Catalonian Labor Court. Mr. Borrás received a degree in Psychology and a Postgraduate on Labour and Social Security, both at the University of Barcelona.

Francisco Javier Jorba Ribes

Mr. Jorba has served as Corporate Vice President and President of the Biological Industrial Group (previously the General Manager of Bioscience Operations) since 1995.  He joined us in 1979 as Director of Plasma Procurement and Director of the A.I.P.H. Program.  He was also General Manager of Biomat, S.A. from 1991 until 1995 and Managing Director of Instituto Grifols, S.A. until the consummation of the Talecris acquisition.  At present, Mr. Jorba is Co-President of the Global Industrial Division.  Mr. Jorba received a degree in General Medicine and Surgery in 1975 from the University of Barcelona and completed his Residency in Pediatrics in 1978 at the same university.

Gregory Gene Rich

Mr. Rich has served as Corporate Vice President and President of U.S. Operations and Chief Executive Officer and Chairman of the Grifols Inc. board of directors since December 2001. Previously, Mr. Rich worked for Grupo Picking Pack, as Chief Operating Officer from December 2000 to December 2001 and from July 1997 to August 2000, as Senior Vice President for Green Cross International, the then parent of Alpha. Mr. Rich also worked for Alpha as Vice President and General Manager of International Operations from October 1995 to July 1997. In between his two terms at Alpha, Mr. Rich worked for us from January 1983 to October 1995 and served as our co-President for the period December 1985 through his departure in 1995. Mr. Rich earned a Bachelor’s of Science degree from California Polytechnic University, Pomona.

David Ian Bell

Mr. Bell joined us as a Corporate Vice President of Grifols Inc. in July 2003 and has since been responsible for Corporate Operations and Development. He also serves as General Counsel and is a member of our Executive Committee in Spain. Mr. Bell is responsible for all legal activities of our U.S. operations, including litigation, mergers and acquisitions, real estate transactions, intellectual property and contracts. He is also responsible for regulatory, registrations and licensing, governmental and public affairs and human resources. Prior to joining us, Mr. Bell was Vice President and General Counsel for Alpha. Additionally, he was a partner in the U.S. law firm of Knapp, Petersen & Clarke where he specialized in complex litigation involving healthcare, pharmaceutical and biotechnology regulation and liability. Mr. Bell attended the University of California, Irvine, Southwestern University School of Law and a postgraduate program at Harvard Law School. He is a member of the California State Bar and is admitted to practice before the United States Supreme Court and numerous federal appellate and district courts.

Alberto Grifols Roura

Mr. Grifols joined us in September 1985.  From 1995 to 1999, he served as the Director of the international subsidiaries, from 1999 to 2008, he served as the Managing Director of Biomat, S.A., and from 2009 to 2011, he served as Managing Director of Laboratorios Grifols, S.A. From January 1, 2011 through the consummation of the Talecris acquisition Mr. Grifols was the Managing Director of the Diagnostic Industrial Division.  Following the consummation of the Talecris acquisition, Mr. Grifols serves as Corporate Vice President and Co-President of Instituto Grifols, S.A.  Mr. Grifols is an Industrial Engineer.  He received his degree from the Higher Technical School of Engineers of Terrassa (Polytechnic University of Catalonia).

Nuria Pascual Lapeña

Ms. Pascual joined us in 1996.  She currently serves as Corporate Vice President and Director of Finance and Corporate Investor Relations Officer.  Prior to joining us, she served in different positions at Deutsche Bank and Banco Santander de Negocios.  She is a member of the board of directors of several companies related to her family’s businesses.  Ms. Pascual received a degree in Economics & Business Administration and received a Masters of Sciences in Economics from the London School of Economics and Political Sciences.

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Shinji Wada

Mr. Wada started his career in the plasma industry in 1981 working for a Japanese plasma fractionation company, the Green Cross Corporation, parent company of Alpha in Los Angeles. He assumed various positions at Alpha, including M&A, International Sales and Marketing. After our acquisition of Alpha’s plasma fractionation business, he was assigned to manage Biomat USA, Inc., our U.S. plasma collection arm, and he was CEO of Biomat USA, Inc. from 2005 to today. Mr. Wada currently also serves as Corporate Vice President and President of Plasma Operations of Grifols Inc.

Joel Abelson

Mr. Abelson joined Grifols Inc. in June 2011 as Corporate Vice President and President of North American Commercial Operations.  He also serves as Corporate Vice President of Grifols Inc.  Mr. Abelson worked for Talecris from March 2006 to June 2011, serving most recently as Senior Vice President and General Manager, Portfolio Management and International Business.  Prior to joining Talecris, Mr. Abelson worked from 1994 to 2005 for Bayer, where he held several senior management positions in Canada and the U.S., including Vice President, Global Strategic Marketing, Biological Products Division.  Prior to joining the private sector, Mr. Abelson held various policy and management positions with the Government of Ontario, Canada from 1984 to 1994, including service in the Cabinet Office as a Senior Policy Advisor to the Premier’s Policy and Priorities Board.  Mr. Abelson has a Bachelor of Arts (Honours) degree from Carleton University in Ottawa, Canada and a Master’s degree in Public Administration from the University of Toronto.

Family Relationships

Mr. Víctor Grifols Roura, the Chairman of the Board and our Chief Executive Officer, and Mr. Raimon Grifols Roura, the Secretary non-member of the Board, are brothers.

Messrs. Víctor Grifols Roura, Raimon Grifols Roura and José Antonio Grifols Gras are the grandchildren of Mr. José Antonio Grifols i Roig, our founder.

Mr. Juan Ignacio Twose Roura, one of our directors and Mr. Carlos Roura Fernandez, the President of our Global Industrial Division, are cousins of Messrs. Víctor Grifols Roura and Raimon Grifols Roura. Mr. Francisco Javier Jorba Ribes is the brother-in-law of Mr. Víctor Grifols Roura.

Arrangements Pursuant to Which Certain Directors or Senior Management Were Selected

The following is a description of all arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any person named above was appointed.

Pursuant to the terms of the Merger Agreement, we agreed to appoint two individuals designated by Talecris to our Board, upon consummation of the Talecris acquisition, each for a five-year term.  Messrs. Ingersoll and Mayer were designated for such appointments and were appointed as directors in June 2011.

Thorthol Holdings B.V., one of our major shareholders and a related party, is represented on the Board by Mr. José Antonio Grifols Gras.  The various members of the Grifols Gras family hold their respective shares indirectly through Thorthol Holdings B.V.

B.Compensation

Compensation of Members of the Board

Our directors are entitled to receive compensation for serving on the Board.  The Articles of Association generally set forth the processes for the determination of the compensation paid to the members of the Board.  Article 20 of the Articles of Association provides that the maximum aggregate amount to be paid to our directors is to be established by our shareholders at our general shareholders’ meeting.  The Board then determines, pursuant to Article 26 of the Regulations of the Internal Functioning of the Board of Directors of Grifols, S.A. (reglamento de funcionamiento interno del consejo de administración), or Board Regulations, how much of the shareholder-approved aggregate compensation amount will be allocated to each director as compensation, taking into account the recommendations of our appointments and remuneration committee (comisión de nombramientos y retribuciones), or Appointments and Remuneration Committee, and their dedication to our business.

Our director compensation philosophy, as set forth in Article 27 of the Board Regulations, provides that the remuneration of external directors (consejeros externos) shall be established in a manner that provides incentives for our directors to be dedicated and involved while not creating an obstacle to their independence.  To that end, Article 27 further establishes that the Board, following the advice of the Appointments and Remuneration Committee, shall take the necessary measures to ensure that external directors’

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remuneration adheres to the following guidelines:  (a) their remuneration should be relative to their dedication, abilities and functions; and (b) they are excluded from any plans (x) consisting of the delivery of equity awards or options or other instruments linked to the value of our shares, (y) linked to our performance or (z) including retirement benefits.  However, external directors may be remunerated with our shares only if they agree to hold them for the duration of the term that they hold their office.

In accordance with the compensation policy outlined in the Articles of Association, at the shareholders’ meeting on May 24, 2013, the shareholders set the maximum annual amount available for compensation to the external directors at €100,000 per director, other than those external directors of the Board that render remunerated professional services to us. As a result, in 2013, seven of our nine external directors received compensation, namely, José Antonio Grifols Gras (as a representative of Thorthol Holdings B.V.), Edgar Dalzell Jannotta, Anna Veiga Lluch, William Brett Ingersoll, Steven F. Mayer, Luís Isasi Fernández de Bobadilla and Belén Villalonga Morenés, who was appointed and joined the Board as an independent director at the shareholders’ meeting on May 24, 2013.

In June 2011, Messrs. Ingersoll and Mayer joined the Board as independent directors in conformity with Exchange Act requirements and NASDAQ Listing Rules and as other external directors (and not independent) in conformity with Spanish rules. As of the date of this annual report on Form 20-F, Edgar Dalzell Jannotta, Anna Veiga Lluch, Luís Isasi Fernández de Bobadilla, W. Brett Ingersoll, Steven F. Mayer and Belén Villalonga Morenés are our independent directors in conformity with Exchange Act requirements and NASDAQ Listing Rules.

The total compensation paid to directors in 2013, in the aggregate, amounted to approximately €4,404,779. Of the total director compensation amount, executive directors (consejeros ejecutivos) received €2,149,391 in fixed compensation and €1,555,388 in variable compensation for their service as an executive, and external directors, including the proprietary director (other than those who render remunerated professional services to us) received €700,000. The external directors nominated by an individual shareholder based on the extent of his or her shareholding, referred to as a “proprietary director” (consejeros dominicales), received remuneration of €100,000 during 2013. These figures include accruals for contingent or deferred compensation. None of our directors received attendance fees for meetings of the Board or committees of the Board. Finally, pursuant to Article 20 of the Articles of Association, our directors are reimbursed for all expenses incurred in connection with their service as a director.

Compensation of Senior Management

In 2013, our senior management (excluding those who also served as members of the Board) were paid compensation amounting to €9,130,305 in the aggregate. This figure includes accruals for contingent or deferred compensation earned in respect of 2013 service. The breakdown of the aggregate amount paid to such senior management for discharging their duties in 2013 is set forth in the table below.

Component	Amount Paid in 2013
Salaries	€	5,521,980
Variable Compensation	€	3,608,325
Stock options or other securities	N/A
Other — e.g., life and health insurance	N/A
Other — e.g., pensions/savings	N/A

Salaries paid in U.S. dollars have been calculated at the exchange rate between the U.S. dollar and the euro as of December 31, 2013 of U.S. $1.37 to €1.00.

Equity and Other Incentive Programs

In 2013, no compensation was paid pursuant to a profit sharing plan or any stock option and no other equity compensation was awarded to any of our directors or senior management.

Pension and Retirement Compensation Programs

In 2013, neither we nor our subsidiaries set aside or accrued amounts to provide pension, retirement or similar benefits for our directors or senior management.

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C.Board Practices

Board of Directors

Pursuant to the Articles of Association, we are managed by a Board, which may be composed of not less than three and not more than 15 directors.  Our current Board has 12 directors.  Directors may be either individuals or legal entities represented by individuals.  Under Spanish law, the Board is responsible for management, administration and representation in all matters concerning the business, subject to the provisions of the Articles of Association and the powers conferred at the general shareholders’ meeting.

Appointment and Dismissal

Pursuant to the Articles of Association, directors are elected by our shareholders to serve for a term of five years and may be reelected to serve for an unlimited number of terms, except in the case of independent directors, who pursuant to the Board Regulations, shall not serve as such for more than 12 years.  We do not provide for the reelection of directors at staggered intervals or cumulative voting for such directors or otherwise.

A director may either be an individual or an entitiy represented by an individual. If a director ceases to hold office prior to the expiration of his or her term, the Board may fill the vacancy by appointing, from among our shareholders, a new director to replace the outgoing director.  Any director so appointed will hold office until the next general shareholders’ meeting when the appointment may be confirmed or revoked by our shareholders.  Any such appointment will be only for the remainder of the term of the outgoing director, without prejudice to such director’s eventual election.  A director may resign, or be removed, from office by a resolution of our general shareholders’ meeting at any time.  A director who is also a shareholder may vote freely on any of our shareholders’ resolutions relating to the appointment and dismissal of directors (including the appointment or dismissal of that director).

In addition, pursuant to the Board Regulations, a director must tender a resignation to the Board and the Board may accept such resignation, in its discretion, under the following circumstances:  (i) when the director ceases to hold the executive position to which such director’s appointment to the Board was related; (ii) when the director becomes unable to hold the office due to a legal cause of ineligibility or incompatibility; (iii) when the director has been formally charged with certain crimes (including, but not limited to, crimes against personal freedom, economic crimes and crimes against the justice administration) or a formal inquiry is opened against him or her by a regulator; (iv) when the director has been severely admonished by our audit committee (comité de auditoría), or Audit Committee, for having breached his or her duties as director; (v) when the director’s participation on the Board may jeopardize our interests or when the reasons for his or her appointment cease to exist; and (vi) in the case of a proprietary director, when the relevant shareholder ceases to hold its stake in us, or reduces its stake below the level that reasonably justified the appointment of such director.

In addition, under Spanish corporate law, a holder of voting shares (or group of shareholders of voting shares acting together) may, subject to availability of seats on the Board, appoint a number of directors proportionate to that shareholder’s (or group of shareholders’) interest in our voting capital.  If the voting capital stock represented by the shares held by such shareholder (or group of shareholders) is equal to or greater than the result of dividing our total voting capital stock by the number of directors, such shareholder (or group of shareholders) shall have the right to appoint a proportionate number of directors.  For example, a shareholder holding 20 voting shares out of a total of 100 voting shares in a company with five directors will be entitled to appoint one director.  Should this power be exercised, shares so pooled shall not participate in the voting for the other members of the Board.  However, they may exercise their voting rights with respect to the removal of existing directors.  Since such rights apply only to voting shares or Class B shares that have recovered their voting rights, our Class B shares and the Class B ADSs that represent them in the U.S. do not count towards the proportional representation right.

The Board must appoint a Chairman of the Board from among its members.  Mr. Víctor Grifols Roura is the current Chairman.  The Board shall also designate one or more Vice Chairmen, who shall be numbered consecutively, and who shall replace the Chairman in the event of impossibility to act or absence.

The Board may also appoint a Secretary and a Vice Secretary.  Neither the Secretary nor the Vice Secretary is required to be a member of the Board; however, the Secretary or the Vice Secretary will not be entitled to vote on matters before the Board unless he or she is a member of the Board.  Mr. Raimon Grifols Roura is the current Secretary non-member of the Board and Ms. Nuria Martín Barnés is the current Vice Secretary non-member of the Board.

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Meetings of the Board

Pursuant to the Articles of Association, a meeting of the Board may be called by the Chairman whenever he considers such a meeting necessary or suitable.  The Chairman is also required to call a meeting at the request of one-third of the directors.  Meetings of the Board are called using any means of notice at least ten days before the date of the meeting, unless exigent circumstances require a shorter term.  Such notice of a meeting of the Board must state the place, date and time as well as the issues to be discussed.  The Board generally holds a meeting at least every three months and is required to meet at least once a year.  The Revised Text of the Spanish Companies Act (Texto Refundido de la Ley de Sociedades de Capital), or Spanish Companies Act, and our Articles of Association provide that a majority of the directors (half plus one of the directors present at a meeting) of the Board (represented in person or by proxy by another director on the Board) constitutes a quorum.  Except as otherwise provided by law or specified in the Articles of Association, resolutions of the Board must be passed by an absolute majority of the directors present or represented at a meeting, with the Chairman having the right to cast a deciding vote in the event of a tie.

Delegation of Powers

Pursuant to Spanish law and our Articles of Association, the Board may delegate its powers either to an executive committee (Comisión Ejecutiva) or to one or more chief executive officers.  Spanish corporate law provides that resolutions appointing an executive committee, any chief executive officer or authorizing the permanent delegation of all, or part of, such board of directors’ powers, requires a two-thirds majority of the members of such board of directors and the registration of such resolution in the Spanish Commercial Registry (Registro Mercantil), or Commercial Registry.  The Board may also revoke such powers at any time.

Under Spanish corporate law, a board of directors may also grant general or specific powers of attorney to any person whether or not that person is a director or a shareholder.  General powers of attorney must be registered in the Commercial Registry.  However, Spanish law provides that the following powers may not be delegated:  (i) the formulation and submission for approval of the yearly financial statements at the general shareholders’ meeting; and (ii) those powers granted to the board of directors by a general shareholders’ meeting (unless otherwise provided in the relevant shareholders’ resolution).

Mr. Víctor Grifols Roura is currently our Chairman of the Board and Chief Executive Officer.

Expiration of Current Terms

The periods during which our directors and senior management have served in their offices, as well as the date of expiration of each director’s term, are shown in the tables under “— A. Directors and Senior Management” above.

Termination Benefits

We have entered into employment contracts with all members of our senior management that entitle them to unilaterally rescind their employment contracts and receive termination benefits of two to five years’ salary in the event that we undergo a change of control. In addition to this, five members of our senior management are contractually entitled to termination benefits of one to two years’ salary under certain circumstances other than a change of control.

See Notes 30(c) and 32(a) to our audited consolidated financial statements included in this annual report on Form 20-F for further details of the payments received by employees.

Committees of the Board

The Board has an Audit Committee and an Appointments and Remuneration Committee.  The following is a brief description of such committees.

Audit Committee

The Board established an Audit Committee in compliance with Articles 24.bis and 24.ter of the Articles of Association and Article 14 of the Board Regulations.

The regulations applicable to the Audit Committee are set forth in the provisions referred to above, as well as the bylaws of the Audit Committee, which were approved by the Board and the Audit Committee on December 9, 2008.  In connection with the Talecris acquisition, at a Board meeting held on May 24, 2011, the Articles of Association and Board Regulations were amended to conform to NASDAQ Listing Rules and to facilitate the listing of our Class B ADSs on NASDAQ.

The Audit Committee consists of a minimum of three directors and a maximum of five directors who are appointed by the Board based on such directors’ knowledge, competence and experience in accounting, audit and risk management matters.  The

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majority of the members of the Audit Committee must be external directors, which includes independent directors and proprietary directors.  In addition, all members of the Audit Committee, including the chairman, must meet the independence, experience and other requirements set forth in the Exchange Act and NASDAQ Listing Rules.

The responsibilities of the Audit Committee include:

·reporting to the shareholders at general shareholders meetings regarding matters for which the Audit Committee is responsible;

·having sole authority to recommend to the Board the appointment, hiring and replacement of the external auditor regardless of the faculties vested in the general shareholders’ meeting and the Board with regard to the approval of such resolutions under Spanish law;

·(i) monitoring the internal audit services and proposing the selection, appointment, reelection and resignation of the manager of our internal audit department; (ii) proposing the budget for our internal audit department; (iii) receiving periodic information on our internal audit department’s activities (including the annual work plan and annual activities reports prepared by the manager); and (iv) ensuring that management takes the conclusions and recommendations of their reports into account;

·setting up and supervising procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls or auditing matters, as well as the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

·knowing the process for gathering financial information and the internal control system; reviewing the financial statements and the periodic financial statements that should be submitted to the securities regulatory authorities and making sure that the appropriate accounting standards are followed; reporting to the Board on any change in the accounting standards and on balance sheet and off balance sheet risks;

·receiving information from the auditors regarding matters that could impair their independence, or any other matters relating to conduct of audits of the financial statements as well as any other communications provided for in the legislation governing audits of financial statements and in technical auditing regulations;

·supervising any transactions entered into with significant shareholders as set forth in the Board Regulations; and

·(i) ensuring compliance with the Internal Code of Conduct of Grifols, S.A. in Matters Relating to the Stock Market, or Stock Market Code of Conduct, the Code of Conduct for Grifols’ Employees, or Employee Code of Conduct, and the Board Regulations (each available on our website, which does not form part of this annual report on Form 20-F, at www.grifols.com) and, in general, any other corporate regulations and (ii) making any necessary proposals to improve such regulations.

The Audit Committee currently consists of Messrs. Luís Isasi Fernández de Bobadilla, Steven F. Mayer, W. Brett Ingersoll and Ms. Belén Villalonga Morenés. Each of Messrs. Isasi, Mayer, Ingersoll and Ms. Villalonga is independent in conformity with Exchange Act requirements and NASDAQ Listing Rules, and each of them is an external director. Mr. Tomás Dagá Gelabert serves as Secretary non-member of the Audit Committee.

Appointments and Remuneration Committee

The Board established an Appointments and Remunerations Committee in compliance with Article 24.bis of the Articles of Association and Article 15 of the Board Regulations.

Pursuant to Article 15 of the Board Regulations, the Appointments and Remuneration Committee is required to consist of between three and five members, the majority of which must be external directors, which includes independent directors and proprietary directors.

The responsibilities of the Appointments and Remuneration Committee include:

·assisting in the nomination of directors, including evaluating potential nominees in light of the level of knowledge, competence and experience necessary to serve on the Board;

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·reporting and making proposals to the Board on the appointment of members to the various committees of the Board and on the persons who should hold the office of Secretary and Vice Secretary of the Board;

·making proposals for the orderly and planned succession of the Chairman of the Board and the Chief Executive Officer;

·reporting on proposals for the appointment and removal of any members of senior management made by the Chief Executive Officer;

·making proposals on the remuneration plans for the Board and senior management;

·periodically reviewing the remuneration plans of senior management, including considering their suitability and performance; and

·reporting on transactions in which directors may have a conflict of interest.

Our Appointments and Remuneration Committee (Comisión de Nombramientos y Retribuciones) is required, pursuant to Article 15 of the Board Regulations, to consist of between three and five members, the majority of which must be external directors. In accordance with Spanish corporate governance requirements and consistent with NASDAQ Listing Rules for foreign private issuers, our Appointments and Remuneration Committee currently consists of Mr. Víctor Grifols Roura, Mr. Edgar Dalzell Jannotta and Ms. Anna Veiga Lluch as directors, with Mr. Jannotta and Ms. Veiga qualifying as independent directors in conformity with Exchange Act requirements and NASDAQ Listing Rules. Mr. Raimon Grifols Roura serves as Secretary non-member of the Appointments and Remuneration Committee.

D.Employees

The table below indicates the average number of employees by department for the years ended December 31, 2013, 2012 and 2011:

Department	2013	2012	2011
Manufacturing	9,095	8,571	7,403
Research & development — technical area	666	693	315
Administration and others	874	777	562
General management	149	147	104
Marketing	147	133	106
Sales and distribution	848	787	609
Total	11,779	11,108	9,099

The table below indicates the average number of employees by geographic region for the years ended December 31, 2013, 2012 and 2011:

Geographic Region	2013	2012	2011
Spain	2,637	2,475	2,390
North America	8,596	8,124	6,245
Rest of the World	546	509	464
Total	11,779	11,108	9,099

We actively train our employees.  The Grifols Academy opened in Spain during the second quarter of 2011.  It is a meeting point for advanced training on all processes related to the preparation and production of plasma-derived medicines.  In addition, the Grifols Academy serves to actively spread and strengthen the “Grifols’ spirit” that guides employee actions and their understanding of the business.  It also acts as a center of technical, scientific and management training for the Group’s personnel, fostering a continued exchange among experts and external bodies, such as professional healthcare associations, hospitals, schools and universities.

The Grifols Academy works closely with the Grifols Academy of Plasmapheresis, which opened in Phoenix, Arizona in 2009.  The Grifols Academy of Plasmapheresis has two U.S. campuses, Glendale, Arizona and Indianapolis, Indiana.

Our Spanish employees are represented by two labor unions, the Workers’ Commissions (Comisiones Obreras) and the Workers General Union (Unión General de Trabajadores).  The employees of some of our subsidiaries in Spain, Germany, Italy,

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France and Argentina are covered by collective bargaining agreements.  The remainder of our employees are not represented by labor unions.  We have not experienced any significant work stoppages in the last 15 years, except for a one-day general strike in Spain in June 2002.  We generally consider our employee relations to be good.

We subscribe to an insurance policy that covers death or permanent disability of employees caused by work accidents. All of our employees are covered under this policy. We implemented a defined contribution pension plan in all our Spanish entities beginning on January 1, 2002, which excludes top management and which requires us to make matching payments to these employees. Our contribution to this pension plan was approximately €595,000 in 2013, compared to approximately €558,000 in 2012. We also sponsor a savings plan for the benefit of U.S. employees, which qualifies as a defined contribution plan under Section 401(a) of the Internal Revenue Code of 1986, as amended. We make fully vested matching contributions to the savings plan which totaled approximately $11.2 million for 2013, compared to $11.3 million for 2012. For certain employees in Germany, we have a defined benefit pension plan, as required by statutory law. The pension cost relating to this plan is not material.

E.Share Ownership

For information on the direct, indirect and represented holdings of our current directors and executive officers with respect to our Class A shares as of December 31, 2013, see Item 7 of this Part I, “Major Shareholders and Related Party Transactions — A. Major Shareholders.”

We do not have any agreements, plans or arrangements in effect that provide for the issue or grant of options or shares or securities.

Item 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.Major Shareholders

The following table sets forth certain information, including information regarding beneficial ownership of our Class A (voting) shares as of December 31, 2013, for (i) our major shareholders, including, in accordance with applicable Spanish regulations, each person or entity that is known to us to be the beneficial owner of more than 3% of our Class A shares, (ii) each of our directors and (iii) each member of our senior management.  As of that date, there were a total of 213,064,899 Class A shares issued and outstanding.

Since our Class A shares are represented through book entries, their exact ownership structure cannot be known, except through the information that the shareholders provide voluntarily or in compliance with applicable regulations, and information provided by the Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A., or Iberclear, on which the shares are settled and cleared, and its participant entities (entidades participantes).

Name of Beneficial Owner	Number of Ordinary Shares	Percentage of Ordinary Shares
Major Shareholders
Capital Research and Management Company(1)	21,257,231	9.977
Deria S.A.(2)	18,687,588	8.771
Scranton Enterprises B.V.(3)	16,149,937	7.580
BlackRock, Inc.(4)	15,662,403	7.351
Thorthol Holdings B.V.(5)	13,112,187	6.154
Víctor Grifols Lucas(6)	6,571,022	3.084
Directors
José Antonio Grifols Gras(4)	15,042,766	7.060
Víctor Grifols Roura	440,450	*
Edgar Dalzell Jannotta	254,127	*
Ramón Riera Roca	169,085	*
Juan Ignacio Twose Roura	119,274	*
Thomas H. Glanzmann(7)	83,561	*
Tomás Dagá Gelabert	51,898	*
Anna Veiga Lluch	100	*
Luís Isasi Fernández de Bobadilla	100	*
Steven F. Mayer	—	—
W. Brett Ingersoll	—	—
Belén Villalonga Morenés	—	—
Senior Management
Antonio Viñes Parés	111,115	*
Gregory Gene Rich	71,598	*
Carlos Roura Fernández	48,314	*
Francisco Javier Jorba Ribes	47,364	*
Montserrat Lloveras Calvo	34,459	*
Vicente Blanquer Torre	22,377	*
Alberto Grifols Roura	13,500	*
David Ian Bell	10,000	*
Nuria Pascual Lapeña	9,796	*
Mateo Florencio Borrás Humbert	491	*
Alfredo Arroyo Guerra	—	—
Eva Bastida Tubau	—	—
Shinji Wada	—	—
Joel Abelson	—	—

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*Less than 1%.

(1)Capital Research and Management Company has indirect voting rights over all 21,257,231 of our Class A shares.

(2)The various members of the Grifols Roura family hold their respective shares indirectly through Deria S.A.

(3)Scranton Enterprises B.V. is a corporation whose shares are owned by certain of our directors and by William Blair & Co. L.L.C. Some Grifols family members who are directors or executive officers hold part of their shares indirectly through Scranton Enterprises B.V.

(4)BlackRock, Inc. has indirect voting rights over 15,662,403 of our Class A shares.

(5)The various members of the Grifols Gras family hold their respective shares indirectly through Thorthol Holdings B.V., which is represented on the Board by José Antonio Grifols Gras.

(6)13,112,187 Class A shares are held directly by Rodellar Amsterdam B.V., through which Víctor Grifols Lucas exercises indirect voting rights.

(7)65,000 Class A shares are held indirectly through Kolholmen Investments AB.

To our knowledge, we are not controlled, directly or indirectly, by any other corporation, government or any other natural or legal person.  We do not know of any arrangements which would result in a change in our control.

Significant Changes in Ownership

In accordance with Spanish reporting requirements, the following transfers of shares were reported to the Spanish National Securities Market Commission (Spanish Comisión Nacional del Mercado de Valores), or CNMV, as of December 31, 2013: (i) on May 25, 2011, Fidelity International Limited disposed of a number of Class A shares that decreased its percentage of ownership of voting share capital below 1%; (ii) on June 30, 2011, Capital Research and Management Company acquired a number of Class A shares that increased its percentage of ownership of voting share capital above 15%; (iii) on August 4, 2011, Blackrock, Inc. disposed of a number of Class A shares that decreased its percentage of ownership of voting share capital below 3%; (iv) on March 1, 2012, BlackRock, Inc. acquired a number of Class A shares that increased its percentage of ownership of voting share capital above 3%; (v) on June 19, 2012, Capital Research and Management Company disposed of a number of Class A shares that decreased its percentage of ownership of voting share capital below 15%; (vi) on November 26, 2012, American Funds Insurance Series Growth Fund disposed of a number of Class A shares that decreased its percentage of ownership of voting share capital below 3%; (vii) on November 29, 2012, Capital Research and Management Company disposed of a number of Class A shares that decreased its percentage of ownership of voting share capital below 10%; and (viii) on December 17, 2012 BlackRock, Inc. acquired a number of Class A shares that increased its percentage of ownership of voting share capital above 5%.

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Voting Rights

Each of our Class A shares is entitled to one vote, except that the voting rights of Class A shares held in treasury by us or by any of our direct subsidiaries are suspended.  Class A shares held by our major shareholders, directors or senior management do not entitle such shareholders to different voting rights.

Our Class B shares generally do not have voting rights, except with respect to certain extraordinary matters which require approval by a majority of outstanding Class B shares, as set forth in Item 10 of this Part I, “Additional Information — B. Memorandum and Articles of Association — Shareholder Rights — Class B Shares — Separate Vote at General Shareholder Meetings on Extraordinary Matters.”

See Item 10 of this Part I, “Additional Information — B. Memorandum and Articles of Association — Shareholder Rights” for further details regarding our Class A shares and Class B shares.

B.Related Party Transactions

Trademark Use

Mr. José Antonio Grifols Gras, a member of the Board, is the manager of Marca Grifols, S.L., which owns the trademark “Grifols.” In addition, the Grifols family is the controlling shareholder of Marca Grifols, S.L. We entered into a license agreement with Marca Grifols, S.L. on January 26, 1993 that permits us to use the “Grifols” trademark for 99 years. The license agreement provides that we must pay an annual fee for the license, which is based on inflation and our net sales. In 2013, the fees for this license were €1.9 million.

Sale-leaseback Transactions

Spain

In May 2011, we sold five properties in Spain for an aggregate amount of €80.4 million to Gridpan Invest, S.L., a wholly owned subsidiary of Scranton Enterprises, B.V., one of our major shareholders.  These properties related primarily to non-core assets such as offices, warehouses and a factory.  Two of the premises were sold together with their related mortgage loans for a total of €53.5 million.  As a result of the sale, we recognized a net loss of €7.4 million, which included €2.0 million in brokerage fees paid to Scranton Enterprises, B.V.  The prices paid for the properties were established based on appraisals made by independent appraisers.

Simultaneous with the sale, we entered into operating lease agreements with Gridpan Invest, S.L. with respect to the aforementioned properties.  The key terms of the operating lease agreements are:

·an initial term of five years;

·initial rent established at market prices, to be reviewed annually, based on the percentage variation in the Spanish Consumer Price Index;

·automatic extensions for five-year periods that can be terminated by either party with six months advance notice; and

·upon us vacating the premises, reimbursement from the lessor for the remaining value of any leasehold improvements.

In addition, we entered into a purchase option with respect to the shares of Gridpan Invest, S.L. exercisable between May 10, 2016 and May 10, 2017.  The exercise price will be at market value at the date of exercise, based on appraisals made by independent appraisers.

The lease expenses incurred in 2013 for these contracts amounted to €8.2 million, which related to the minimum contractual payments.

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Clayton, North Carolina

In December 2011, we entered into a number of contracts for the sale and subsequent leaseback of certain buildings and equipment under construction in Clayton, North Carolina, with Scranton Enterprises USA, Inc., a company owned by Scranton Enterprises, B.V., one of our major shareholders.

The sale price was $199 million, of which $115 million was paid as of December 31, 2011 and the remaining $84 million was paid in June 2012.

As a result of the transaction, we recognized a net loss of $12.1 million in 2011, primarily due to the brokerage fees paid to Scranton Enterprises, B.V., which amounted to $10 million.

The key terms of the building operation lease are as follows:

·an initial lease period of eight years;

·annual rent established at a minimum of $20.5 million, subject to annual increases in line with inflation;

·optional five-year renewal term;

·automatic renewal for subsequent five-year periods unless one of the parties provides six months’ advance notice;

·upon us vacating the premises, compensation by the lessor for any on-site assets in which we have invested, insofar as these have a residual value and are not recoverable by us; and

·the requirement that we lodge a cash or bank guarantee of $25 million upon the request of Scranton Enterprises USA Inc.

We are leasing the land for an initial lease period of 99 years at a minimum annual rent of $1.00 per year.

We also entered into a purchase option for the shares of Scranton Investments, B.V.  This option, which cost $4 million, is exercisable on the date on which a license is granted by the FDA, five and ten years from such date, and on the expiration date of the building operation lease.  The purchase price will vary depending on the market value determined on the date the option is exercised.

The lease expenses incurred in the year ended December 31, 2013 for these contracts amounted to €15.8 million, which related to the minimum contractual payments.

See Note 9(c) and Note 32 to our audited consolidated financial statements included in this annual report on Form 20-F for further details of our sale-leaseback transactions with related parties.

ADS Purchase Agreement

On March 8, 2013, we entered into the ADS Purchase Agreement with Cerberus, pursuant to which we purchased 4,402,986 of our Class B ADSs from Cerberus for a total purchase price of $118,880,622, or $27.00 per ADS, on March 11, 2013. Our directors, W. Brett Ingersoll and Steven F. Mayer, serve as senior managing directors of Cerberus Capital Management, L.P.

For a summary of the material terms of the ADS Purchase Agreement, see Item 5 of this Part I, “Operating and Financial Review and Prospects — A. Operating Results — Subsequent Events.”

On April 23, 2013, we filed a registration statement on Form F-3 with the SEC pursuant to the ADS Purchase Agreement and all shares registered thereunder have since been sold by the Cerberus affiliates.

Charitable Contributions

In 2013, we contributed to three charitable foundations, the Mr. Víctor Grifols i Lucas Foundation, the Probitas Private Foundation and the Jose Antonio Grifols Lucas Foundation, which were formed by us, and certain of our current officers and directors serve as patrons of the Probitas Private Foundation.

The Mr. Víctor Grifols i Lucas Foundation provides grants to further the study of bioethics.  It was created in 1998 with the mission of promoting bioethics through dialogue between specialists in a range of areas.  The Víctor Grifols i Lucas Foundation seeks to foster ethical attitudes in organizations, companies and individuals active in the field of human health, offering a discussion

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platform that provides a forum for the exchange of different perspectives.  Mr. Víctor Grifols i Lucas is our former Chief Executive Officer and is the father of both Mr. Víctor Grifols Roura, our Chairman of the Board and Chief Executive Officer, and Mr. Raimon Grifols Roura, the Secretary non-member of the Board.  In 2013, we contributed €0.5 million to the Víctor Grifols i Lucas Foundation.

The Probitas Private Foundation provides medical and sanitary assistance to international communities that lack medical and sanitary resources or that have an urgent and essential need for such services due to catastrophes.  The Probitas Private Foundation was founded by us in 2008.  Messrs. Raimon Grifols Roura, a Secretary non-member of our Board, and Tomás Dagá Gelabert, one of our directors, are patrons of the Probitas Private Foundation.  In 2013, we contributed €3.3 million to the Probitas Private Foundation.  We contribute to the Probitas Private Foundation an amount equal to 0.7% of our profits before tax each year.

The Jose Antonio Grifols Lucas Foundation provides grants for education and research into the science of plasmapheresis. Additionally, the foundation assists plasma donors who may be unable to care for themselves. In 2013, we contributed €0.2 million to the Jose Antonio Grifols Lucas Foundation to support, among other purposes, a major study on the effect of plasmapheresis on the cholesterol levels of plasma donors.

Consultant Agreement

In 2011, subsequent to the Talecris acquisition, one of our directors entered into a consulting services contract for a term of three years, pursuant to which he will receive compensation in the amount of $1.0 million per year with an additional $2.0 million payable upon the fulfillment of certain conditions. In each of 2012 and 2013, we paid such director $1.0 million pursuant to this agreement.

Loans

We have not extended any advances or loans to members of the Board or key management personnel nor have we assumed any guarantee commitments on their behalf.  We also have not assumed any pension or life insurance obligations on behalf of former or current members of the Board or key management personnel.

C.Interests of Experts and Counsel

Not Applicable.

Item 8.FINANCIAL INFORMATION

A.Consolidated Statements and Other Financial Information

Financial Statements

See our audited consolidated financial statements and the related notes starting on page F-1 of this annual report on Form 20-F.

Legal Proceedings

We are involved in various legal proceedings in the ordinary course of our business.  In the event of adverse outcomes of these proceedings, we believe that resulting liabilities will either be covered by insurance or not have a material adverse effect on our financial condition or results of operations.  See Note 30(e) to our audited consolidated financial statements included in this annual report on Form 20-F for additional information regarding the legal proceedings in which we are involved.

Alpha Consent Decree

Until March 15, 2012, our Los Angeles facility was operating under a consent decree, which it had been operating under since 1998.  The consent decree was agreed to by Alpha, the operator of the plant at that time, the FDA and the DOJ as a result of certain quality deficiencies.  We acquired this plant from Alpha in 2003 with the consent decree in place.  The consent decree provided for annual inspection of the plant by the FDA.  On March 15, 2012, the United States District Court for the Central District of California entered an order vacating the consent decree on the Los Angeles facility.

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Hemophilia Associations

In 2007, we were notified of a product liability claim for maximum damages of €12,960,000 filed by a group of 100 Catalan hemophiliacs against all plasma fractionation companies.  During 2008, this claim was rejected.  The ruling was appealed, but the claim was rejected by the Appeals Court of Barcelona in January 2011.  The claimant filed another appeal before the Catalan High Court in, and that appeal was rejected in January 2012.  The claimant has filed an appeal before the Supreme Court of Spain, which is pending resolution.

Plasma Centers of America, LLC

Talecris had a three-year Amended and Restated Plasma Sale/Purchase Agreement with Plasma Centers of America, LLC, or PCA (the “PCA Agreement”) under which Talecris was required to purchase annual minimum quantities of plasma from plasma collection centers approved by Talecris, including the prepayment of 90% for unlicensed plasma.  Talecris was also committed to finance the development of up to eight plasma collection centers, which were to be used to source plasma for Talecris.  Under the terms of the PCA Agreement, Talecris had a conditional obligation to purchase such centers under certain conditions for a sum determined by a formula set forth in the PCA Agreement.  Talecris provided approximately $4 million (excluding accrued interest) in financing related to the development of such centers and advanced payments for unlicensed plasma.  Talecris recorded a provision within selling, general and administrative expenses during 2008 related to loans and advances provided.

In August 2008, Talecris notified PCA that it was in breach of the PCA Agreement.  Talecris terminated the PCA Agreement in September 2008.  In November 2008, Talecris Plasma Resources filed suit in federal court in Raleigh, North Carolina against the G&M Crandall Limited Family Partnership and its individual partners as guarantors of obligations of PCA.  Talecris was served in January 2009 in a parallel state action by PCA, alleging breach of contract by Talecris Plasma Resources.  The federal case has been stayed.  On December 13, 2010, a jury in the state court case rendered a verdict in the amount of $37 million in favor of PCA against Talecris Plasma Resources in a breach of contract claim.  Talecris management filed an appeal to the North Carolina Court of Appeals to review the judgment entered in this case.

At December 31, 2011, the current provision for the PCA judgment on our consolidated balance sheet amounted to $46.6 million.  During the third quarter of 2012, this litigation was finalized, and we paid a total amount of $45 million (€36.8 million) related to PCA litigation. As a result of the reversal of the provision made prior to payment, we have recognized income of $3.2 million included under selling, general and administration expenses for 2012.

Foreign Corrupt Practices Act Investigations

We are continuing an internal investigation into potential violations of the FCPA by Talecris relating to events prior to the Talecris acquisition. The FCPA investigation is being conducted by outside counsel under the direction of the Board.

In July 2009, Talecris voluntarily contacted the DOJ to advise it that it was conducting an internal investigation into potential violations of the FCPA.  The investigation into possible improper payments to individuals and entities made after Talecris’ formation initially focused on payments made in connection with sales in certain Eastern European and Middle Eastern countries, primarily Belarus, Russia and Iran, but we are also reviewing sales practices in Brazil, Bulgaria, China, Georgia, Libya, Poland, Turkey, Ukraine and other countries as deemed appropriate.

As a result of this investigation, shipments to some of these countries have been suspended while we put additional safeguards in place. In some cases, safeguards involved terminating consultants and suspending relations with or terminating distributors in countries under investigation as circumstances warranted. In addition, as a consequence of the investigation, an agreement with a Turkish distributor was terminated giving rise to an arbitration between the parties that has now concluded. Grifols has now identified a new distributor in Turkey for the distribution of its products.

In November 2012, we were notified by the DOJ that the proceedings would be closed, without prejudice to the fact that they could be re-opened in the future should new information arise. We are continuing an in depth review of potential irregular practices.

There is an ongoing investigation in Italy in connection with a criminal lawsuit initiated in Naples against five of our employees, including the former general director. The investigation is expected to be concluded in 2015. We and our legal advisors consider that this investigation will be limited to the referred employees, being improbable that this matter may come to affect us.

Antitrust Approval of Talecris-Grifols Merger

On July 20, 2011, the FTC issued the Consent Order to settle its May 31, 2011 charges that our acquisition of Talecris was anticompetitive and would have resulted in higher prices for consumers. Pursuant to the Consent Order, we divested to Kedrion, on June 2, 2011, certain assets, including Talecris’ Melville, New York manufacturing facility and United States marketing rights to

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Koate® DVI antihemophilic factor, and an agreed quantity of plasma and subsequently transferred to Kedrion two plasma collection centers located in Mobile, Alabama, and Winston Salem, North Carolina. Further, pursuant to the Consent Order, we and Kedrion entered into a contract manufacturing agreement under which we are supplying to Kedrion, for a period of seven years ending in 2018, Koate® DVI and private label IVIG and albumin, for sale by Kedrion in the United States, and we extended to Kedrion a five year option ending in 2016 for Kedrion to purchase a non-exclusive license to Koate®  DVI related intellectual property for use in the United States. In accordance with the Consent Order, we leased the Melville facility from Kedrion until July 1, 2013.

Effective July 1, 2013 Grifols and Kedrion agreed to an early termination of the lease agreement and completed the transfer of operations at the Melville facility to Kedrion. The parties further entered into a 3 year fractionation agreement whereby Kedrion would continue to fractionate limited amounts of plasma for further manufacture by Grifols.

The Consent Order provides for a monitor to oversee our compliance with the Consent Order and requires us to submit to the FTC annual compliance reports for ten years. We filed our first compliance report, pursuant to paragraph IX.B of the Consent Order, on July 20, 2012. Grifols filed its second compliance report in July 2013. There has been no further action by the FTC. Our next compliance report is due in July 2014.

Dividend Policy

Class A Shares

Our dividend policy is to pay out approximately 40% of our net consolidated profits.  However, the New Credit Facilities contain limitations on our ability to pay cash dividends depending on our debt levels. We may only pay cash dividends if our Leverage Ratio (as defined in the New Credit Facilities) is less than 3.50:1.00.  As of February 28, 2014, this restriction does not currently apply.  For a further discussion of the terms of the New Credit Facilities, see Item 5 of this Part I, “Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Sources of Credit—New Credit Facilities.”

The declaration and payment of dividends is reviewed annually by the Board based upon a review of our balance sheet and cash flow, the ratio of current assets to current liabilities, our expected capital and liquidity requirements, the provisions of our governing documents and the provisions in our financing arrangements governing cash dividends.  The payment of future dividend will be determined by the Board, based upon the factors described above and other factors that it deems relevant at the time that declaration of a dividend is considered. There can be no assurance as to whether or in what amounts any future dividend might be paid.

In addition, the availability of the reserves for distribution is subject to limitations under Spanish law.  The distributable reserves of us and our Spanish subsidiaries are limited by the amount of mandatory reserves, which include, for us and each of our Spanish subsidiaries, the legal reserves and the amount of capitalized research and developments pending to be amortized by us and each of our Spanish subsidiaries.  This limitation on distributable reserves due to capitalized research and developments expenditure amounted, on a consolidated basis, to €49 million at December 31, 2013.

At the general meeting held on May 24, 2013, our shareholders approved the distribution of an interim dividend of €0.20 for each Class A share, for an aggregate interim dividend of €42.6 million.

The Board intends to propose to shareholders at the upcoming annual general meeting of shareholders that profits for the year ended December 31, 2013 in the amount of €29 million be transferred to reserves.

Class B Shares

Each Class B share entitles its holder to receive a minimum annual preferred dividend out of the distributable profits at the end of each fiscal year the share is outstanding equal to €0.01 per Class B share, if the aggregate preferred dividend does not exceed the distributable profits for that year and provided that the distribution of dividends has been approved by our shareholders.  In any given fiscal year, we will pay a preferred dividend to the holders of the Class B shares before any dividend out of the distributable profits for such fiscal year is paid to the holders of Class A shares.  The preferred dividend on all issued Class B shares will be paid by us within the nine months following the end of that fiscal year, in an amount not to exceed the distributable profits obtained during that fiscal year.

At the general meeting held on May 24, 2013, our shareholders approved the distribution of interim dividend of €0.20 for each Class B share, for an aggregate interim dividend of €26.1 million.  Additionally, our shareholders approved the distribution of a preferred dividend of €0.01 for each Class B share, for an aggregate preferred dividend of €1.3 million.

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B.Significant Changes

See Item 5 of this Part I, “Operating and Financial Review and Prospects — A. Operating Results — Subsequent Events.”

Item 9.THE OFFER AND LISTING

A.Offer and Listing Details

Price History of Class A Shares and Class B Shares

Our Class A shares have been listed on the Spanish Stock Exchanges since we completed our initial public offering on May 17, 2006 and are quoted on the Spanish Automated Quotation System under the ticker symbol “GRF.”  The following table sets forth the high and low market prices, in euro, for our Class A shares for the periods indicated, as reported on the Spanish Automated Quotation System (prices are non-adjusted and exclude the impact of distributions on historic data):

	Class A Shares
	High (€)	Low (€)
Fiscal Year 2009
Annual	14.53	10.10
Fiscal Year 2010
Annual	12.45	8.11
Fiscal Year 2011
Annual	15.80	9.85
Fiscal Year 2012
First Quarter	16.60	12.73
Second Quarter	20.49	15.50
Third Quarter	27.00	20.06
Fourth Quarter	27.72	24.02
Fiscal Year 2013
First Quarter	29.44	23.51
Second Quarter	32.04	25.06
Third Quarter	33.28	28.32
Fourth Quarter	35.15	28.25
Recent Months
October 2013	30.85	28.25
November 2013	34.20	29.75
December 2013	35.15	31.52
January 2014	38.81	34.07
February 2014	41.03	35.95
March 2014	42.09	38.64

Our Class B shares have been listed on the Spanish Stock Exchanges since June 2, 2011 and quoted on the Spanish Automated Quotation System under the ticker symbol “GRF.P.” The following table sets forth the high and low market prices, in euro, for our Class B shares for the periods indicated, as reported on the Spanish Automated Quotation System (prices are non-adjusted and exclude the impact of distributions on historic data):

	Class B Shares
	High (€)	Low (€)
Fiscal Year 2011
Second Quarter (from June 2nd)	11.42	10.00
Third Quarter	11.70	8.00
Fourth Quarter	10.00	7.40
Fiscal Year 2012
First Quarter	12.00	8.30
Second Quarter	15.50	11.42
Third Quarter	18.99	14.86
Fourth Quarter	20.40	16.90
Fiscal Year 2013
First Quarter	23.99	18.05
Second Quarter	24.50	19.00
Third Quarter	25.69	21.57
Fourth Quarter	26.40	21.03
Recent Months
October 2013	22.98	21.03
November 2013	25.59	22.00
December 2013	26.40	23.95
January 2014	29.79	25.60
February 2014	30.95	26.81
March 2014	31.40	28.67

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Price History of the Class A ADSs and Class B ADSs

Our Class A ADSs are not listed on a national exchange and have traded on the Over the Counter Bulletin Board, an electronic stock listing service provided by NASDAQ, since July 2009.

Our Class B ADSs have been listed and traded on the NASDAQ Global Select Market under the symbol “GRFS” since June 2, 2011.  Since July 23, 2012, each Class B ADS has represented one Class B share. Prior to July 23, 2012, each Class B ADS represented one-half of one Class B share. We effected the adjustment to the ADS to share ratio through an amendment to the depositary agreement.

The following table sets forth the high and low market prices, in U.S. dollars, for the Class B ADSs for the periods indicated, as reported by NASDAQ:

	Class B Shares
	High ($)	Low ($)
Fiscal Year 2011
Second Quarter (from June 2nd)	8.50	6.85
Third Quarter	8.16	5.30
Fourth Quarter	6.75	4.77
Fiscal Year 2012
First Quarter	7.90	5.32
Second Quarter	9.76	7.64
Third Quarter (through July 22)*	10.61	9.50
Third Quarter (from July 23)	22.97	18.51
Fourth Quarter	27.78	22.64
Fiscal Year 2013
First Quarter	31.03	24.09
Second Quarter	31.63	25.13
Third Quarter	33.12	28.75
Fourth Quarter	36.45	28.57
Recent Months
October 2013	31.00	28.57
November 2013	34.53	29.50
December 2013	36.45	32.82
January 2014	40.23	34.63
February 2014	42.60	36.16
March 2014	43.45	39.00

*All prices reported on the NASDAQ from June 2, 2011 through July 22, 2012 reflect the prior ratio of Class B ADS to Class B shares of 2 to 1.  One July 23, 2012 the depositary agreement was amended to provide that one Class B ADS represents one Class B share.

B.Plan of Distribution

Not Applicable

C.Markets

Our Class A shares have been listed on the Spanish Stock Exchanges since May 17, 2006 and are quoted on the Spanish Automated Quotation System under the ticker symbol “GRF.”  Our Class B shares were issued as part of the consideration for the

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Talecris acquisition and were listed on the Spanish Stock Exchanges on June 2, 2011 and quoted on the Spanish Automated Quotation System under the ticker symbol “GRF.P.”

Spanish Securities Market

The Spanish Stock Exchanges consist of four stock exchanges located in Madrid, Barcelona, Bilbao and Valencia.  The majority of the transactions conducted on them are done through the Spanish Automated Quotation System.  During 2013, the Spanish Automated Quotation System accounted for the majority of the total trading volume of equity securities on the Spanish Stock Exchanges.

Spanish Automated Quotation System

The Spanish Automated Quotation System was introduced in 1989 and links the Spanish Stock Exchanges, providing those securities listed on it with a uniform continuous market that eliminates most of the differences among the Spanish Stock Exchanges.  The principal feature of the system is the computerized matching of buy and sell orders at the time of entry of the order.  Each order is executed as soon as a matching order is entered, but can be modified or canceled until executed.  The activity of the market can be continuously monitored by investors and brokers.  The Spanish Automated Quotation System is operated and regulated by the Sociedad de Bolsas, a corporation owned by the companies that manage the Spanish Stock Exchanges.  All trades on the Spanish Automated Quotation System must be placed through a bank, brokerage firm, an official stock broker or a dealer firm member of a local exchange directly.

There is a pre-opening session held from 8:30 a.m. to 9:00 a.m. local time each trading day, during which orders are placed.  The computerized trading hours are from 9:00 a.m. to 5:30 p.m. Each session ends with a five-minute auction, between 5:30 and 5:35 p.m., with a random closedown of 30 seconds.  The price resulting from each auction is the closing price of the session.

On May 14, 2001, new rules came into effect regarding the maximum price fluctuations in the price of stocks.  Under the new rules, each stock in the continuous market is assigned a static and a dynamic range within which the price can fluctuate.  The price of a stock may rise or fall by its static range (which is published once a month and is calculated according to the stock’s average historic price volatility) above or below its opening price (which is the closing price of the previous session).  When the stock trades outside of this range, the trading of the stock is suspended for five minutes, during which an auction takes place.  After this auction, the price of the stock can once again rise or fall by its static range above or below its last auction price (which will be considered as the new static price before triggering another auction).  Furthermore, the price of a stock cannot rise or fall by more than its dynamic price range (which is fixed and published once a month and is calculated according to the stock’s average intra-day volatility), from the last price at which it has traded.  If the price variation exceeds the stock’s dynamic range, a five-minute auction is triggered.

Moreover, there is a block market (el mercado de bloques) allowing for block trades between buyers and sellers from 9:00 a.m. to 5:30 p.m. during the trading session.  Under certain conditions, this market allows cross-transactions of trades at prices different from prevailing market prices.  Trading in the block market is subject to certain limits with regard to price deviations and volumes.

Between 5:30 p.m. and 8:00 p.m., trades may occur outside the computerized matching system without prior authorization of the Sociedad de Bolsas, at a price within the range of 5% above the higher of the average price and closing price for the day and 5% below the lower of the average price and closing price for the day, if there are no outstanding bids or offers, as the case may be, on the system matching or bettering the terms of the proposed off-system transaction, and if the trade involves more than €300,000 and more than 20% of the average daily trading volume of the stock during the preceding quarter.  At any time before 8:00 p.m., a trade may take place (with the prior authorization of the Sociedad de Bolsas) at any price if:

·the trade involves more than €1.5 million and more than 40% of average daily trading volume of the stock during the preceding quarter;

·the trade relates to a merger or spin-off of a listed company;

·the trade relates to the reorganization of a business group;

·the trade is executed for the purposes of settling litigation;

·the trade involves certain types of contracts or complex transactions; or

·the Sociedad de Bolsas finds other justifiable cause.

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Information with respect to computerized trades between 9:00 a.m. and 5:30 p.m. is made public immediately, and information with respect to trades outside the computerized matching system is reported to the Sociedad de Bolsas and published in the Stock Exchange Daily Bulletin (Boletín Diario de Cotización) and in the Spanish Automated Quotation System by the next trading day.

Clearance and Settlement System

Until April 1, 2003, transactions carried out on the Spanish Stock Exchanges and the continuous market were cleared and settled through the Servicio de Compensación y Liquidación de Valores, S.A. Since April 1, 2003, the settlement and clearance of all trades on the Spanish Stock Exchanges, the Public Debt Market (Mercado de Deuda Pública), the AIAF Fixed Income Market (Mercado AIAF de Renta Fija) and the Market for Latin-American Stocks in Euros (Mercado de Valores Latinoamericanos en Euros) have been made through Iberclear, which was formed as a result of a merger between the Servicio de Compensación y Liquidación de Valores, S.A and Central de Anotaciones del Mercado de Deuda Pública, which was managed by the Bank of Spain.

Book-entry System

Ownership of shares listed on any Spanish Stock Exchange is required to be represented by entries in a register maintained by Iberclear, and transfers or changes in ownership are effected by entries in such register.  The securities register system is structured in two levels:  the central registry managed by Iberclear, which keeps the securities balances of the participants, and a detailed registry managed by the participants where securities are listed by holder’s name.

Securities Market Legislation

The Spanish Securities Market Act (Ley 24/1988, de 28 de Julio, del Mercado de Valores), or Securities Market Act, which came into effect in 1989, among other things:

·established an independent regulatory authority, the CNMV, to supervise the securities markets;

·established a framework for the regulation of trading practices, tender offers and insider trading;

·required stock exchange members to be corporate entities;

·required companies listed on a Spanish Stock Exchange to file annual audited financial statements and to make public quarterly financial information;

·established a framework for integrating quotations on the Spanish Stock Exchanges by computer;

·exempted the sale of securities from transfer and value added taxes;

·deregulated brokerage commissions as of 1992; and

·provided for transfer of shares by book-entry or by delivery of evidence of title.

The Securities Market Act was amended by, among others, Law 37/1998, which implemented two European Union directives that innovated the Securities Market Act.  The first was the recognition that both Spanish and other European Union member state companies authorized to provide investment services have full access to the official secondary securities markets, with full capacity to operate, thereby enabling the direct admission of banking entities into the stock exchange area.  The second innovation was that the scope of the Securities Market Act was enlarged to include a list of financial instruments, such as financial exchange contracts, or installment financial contracts, which expanded the categories of securities included.

The Securities Market Act was further amended by Law 44/2002 (November 22, 2002) on reform measures of the financial system, which introduced certain modifications to the laws governing financial markets and corporations generally, including:

·provisions requiring listed companies to establish an audit committee, redefining the reporting requirements for relevant events, establishing rules relating to the treatment of confidential and insider information and related party transactions, preventing manipulative and fraudulent practices with respect to market prices and otherwise regarding market transparency;

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·the establishment of Iberclear; and

·the authorization of the Ministry of Economy and Finance (Ministerio de Economía y Hacienda) to regulate financial services electronic contracts.

On July 17, 2003, the Securities Market Act was amended by Law 26/2003 in order to reinforce the transparency of listed companies.  It introduced:

·information and transparency obligations including detailed requirements of the contents of the corporate website of listed companies and the obligation to file with the CNMV an annual corporate governance report; and

·the obligation to implement a series of corporate governance rules including, among others, regulations regarding the boards of directors and the general shareholders’ meeting.

On March 11, 2005, Law 5/2005 was approved, modifying the Securities Market Act in order to implement Directive 2003/71/EC of the European Parliament and of the Council of the European Union, or Council, on the prospectus to be published when securities are offered to the public or admitted to trading.  The Directive (i) harmonizes the requirements for the process of approval of prospectuses, which enables a prospectus to be valid throughout the European Union and (ii) incorporates the application of the country-of-origin principle later set forth in Spanish Royal Decree, or Royal Decree, 1362/2007.

Royal Decree 1333/2005, of November 11, 2005, developed the Securities Market Act in relation to market abuse.

Law 12/2006, of May 16, 2005, amended the Securities Market Act by (i) introducing a new article relating to notifications to the CNMV of transactions that might constitute insider dealing or market manipulation, (ii) completing the regulation of Bolsas y Mercados Españoles, which operates the Spanish Stock Exchanges and financial markets and (iii) clarifying the regulation of significant participations in the entities that manage the clearing and settlement of securities and the Spanish secondary securities markets.

Law 6/2007, of April 12, 2007, amended the Securities Market Act to modify the rules for takeover bids and for issuer transparency.  This Law came into effect on August 13, 2007, and partially integrates into the Spanish legal system Directive 2004/25/EC of the European Parliament and of the Council, of April 21, 2004, on takeover bids and Directive 2004/109/EC of the European Parliament and of the Council, of December 15, 2004, on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC.  This Law was further developed by Royal Decree 1066/2007, of July 27, 2007, on rules applicable to takeover bids for securities; by Royal Decree 1362/2007, of October 19, 2007, on transparency requirements for issuers of listed securities; and by Royal Decree 1698/2012, of December 21, 2012, to implement Directive 2010/73/EC of the European Parliament and of the Council, of December 24, 2010 (amending Directive 2004/109/EC).

Law 6/2007 (i) introduced several changes to the periodic financial information (annual, biannual and quarterly) to be published by issuers of listed securities and (ii) introduced new developments to the system that establishes the duty to provide notice of significant stakes in an enterprise.  These duties include notification requirements such as:

·anyone with a right to acquire, transfer or exercise voting rights granted by the shares, regardless of the actual ownership of the shares, and anyone owning, acquiring or transferring other securities or financial instruments that grant a right to acquire shares with voting rights must provide notice of the holding of a significant stake in accordance with the regulations;

·directors of listed companies, in addition to providing notice of any transaction concerning the shares or other securities or financial instruments of the issuer that are linked to these shares, must inform the CNMV of their stake upon appointment or resignation; and

·listed companies must provide notice of transactions concerning their treasury shares in certain cases, which will be established in the developing regulations.

Law 12/2010, of June 30, 2010, amended the Securities Market Act to require listed companies to create electronic shareholders forums on their websites to facilitate communication prior to the holding of general meetings.  It also established that shareholders of listed companies may create associations to exercise their rights and coordinate the defense of their common interests.

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Such associations must enroll in a special CNMV registry.  Finally, Law 12/2010 also amended the Securities Market Act to change the regulations regarding the composition and functions of audit committees.

Royal Legislative Decree 1/2010, of July 2, 2010, approved the Spanish Companies Act in order to consolidate and clarify the laws applicable to public limited companies, limited share partnerships and limited liability companies.

Law 2/2011, of March 4, 2011, on Sustainable Economy (Ley de Economía Sostenible) amended the Securities Market Act’s provisions related to the requirements for annual reports on corporate governance and management reports.  The Law also made certain corporate governance and shareholder disclosure recommendations in the Spanish Unified Good Governance Code for Listed Companies (Código Unificado de Buen Gobierno de las Sociedades Cotizadas), or CNMV Governance Code, regarding the composition of boards of directors and its committees and the qualification of directors as executive, proprietary or independent mandatory.

Law 25/2011, of August 1, 2011, amended the Securities Market Act to implement Directive 2007/36/CE of the European Parliament and of the Council, regarding the exercise of certain rights of the shareholders of listed companies, to simplify and promote the right to information and shareholder voting rights.

Law 1/2012, of June 22, 2012, amended the Spanish Companies Act by making corporate websites mandatory for listed companies and introducing other new requirements regarding the creation, amendment, transfer and removal of corporate websites, as well as the obligations of directors arising in connection with the contents of such websites.

D.Selling Shareholders

Not Applicable.

E.Dilution

Not Applicable.

F.Expense of the Issue

Not Applicable.

Item 10.ADDITIONAL INFORMATION

A.Share Capital

Not Applicable.

B.Memorandum and Articles of Association

The following is a summary of the material terms of our Articles of Association and Board Regulations, as amended and currently in effect.  This summary is not meant to be complete and is qualified in its entirety by reference to each of the Articles of Association and Board Regulations.  Because this is a summary, it does not contain all the information that may be important to you.  You should read the Articles of Association and Board Regulations carefully.  The current Articles of Association are included as Exhibit 1.1 and Exhibit 1.2 (English translation) to this annual report on Form 20-F.  The Articles of Association and the Board Regulations are also available on our website, which does not form part of this annual report on Form 20-F, at www.grifols.com under the headings “Investor Relations — General information — Articles of association” and “Investor Relations — Corporate governance — Board of directors regulations.”

The Articles of Association were originally approved and incorporated with the Commercial Registry on June 22, 1987.  The Board Regulations were initially approved by the Board on April 5, 2006.

At the general shareholder meeting on extraordinary matters held on January 25, 2011, our shareholders agreed to increase share capital by issuing 83,811,688 Class B shares to complete the Talecris acquisition.  The shareholders also agreed to amend the Articles of Association by modifying Article 6 to include the terms and conditions of the Class B shares and adding a new Article 6.bis to include the rights and obligations of the Class B shares.

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Following our application to list our Class B ADSs on NASDAQ, we held a general ordinary shareholder meeting on May 24, 2011.  To satisfy NASDAQ Listing Rules, our shareholders resolved to (i) modify Article 24.ter of the Articles of Association to reorganize the Audit Committee and (ii) amend the Board Regulations.  Our Board approved the amendment to the Board Regulations on the same day.

At the general shareholder meeting on extraordinary matters held on December 2, 2011, our shareholders agreed to increase share capital by issuing 29,687,658 Class B shares, without a share premium and with a charge to voluntary reserves, to remunerate the Class A and Class B shareholders.  The issuance took the form of a free allocation of one new Class B share for every ten Class A or Class B shares owned.  The shareholders also agreed to delegate to the Board the authority to increase our share capital by up to 50% of the then current share capital, at any time or from time to time within five years following the date of the meeting, by issuing new shares, with or without a share premium, for cash.  Further, the shareholders agreed to make qualitative improvements to the Articles of Association and to otherwise conform them to the requirements of the Spanish Companies Act, as amended.

At the general shareholder meeting on extraordinary matters held on December 4, 2012, our shareholders agreed to increase share capital by issuing an additional 16,328,212 Class B shares, without a share premium and with a charge to voluntary reserves, in order to remunerate the Class A and Class B shareholders.  The issuance took the form of a free allocation of one new Class B share for every 20 Class A or Class B shares owned.  The shareholders also revoked the December 2, 2011 delegation to the Board of the authority to increase share capital and agreed to delegate to the Board the authority to increase our share capital by up to 50% of the then current share capital, at any time or from time to time within five years following the date of the meeting, by issuing new shares, with or without a share premium, for cash.  Further, the shareholders agreed to delegate to the Board the authority to effect a two-to-one split of the Class A and Class B shares, within one year following the date of the meeting, by reducing the nominal value and increasing the number of such shares, without changing the total nominal value of the share capital.  The shareholders also agreed to delegate to the Board the authority to apply for the listing of the Class A shares on NASDAQ, via Class A ADSs, within one year following the date of the meeting.

The full text of each of the amendments to the Articles of Association detailed above is available on our website, which does not form part of this annual report on Form 20-F, at www.grifols.com under the heading “Investor Relations — Corporate governance.”

General

As of December 31, 2013, our share capital was €119,603,705 and comprised:

·Class A shares:  213,064,899 ordinary shares with a par value of €0.50 each.  All of the Class A shares belong to the same class and series.

·Class B shares:  130,712,555 non-voting preference shares with a par value of €0.10 each.  All of the Class B shares belong to the same class and series and have the preferential rights set forth in the Articles of Association.

All of our shares are fully paid and non-assessable.  Both share classes are issued in book-entry form, governed by the Securities Market Act, as amended, and such other provisions as may be applicable.  The book-entry registry is maintained by Iberclear and its participant entities.

Register

We are a public limited trading company registered with the Commercial Registry of Barcelona.  Our fiscal identification number is A-58389123.

Our principal executive office is located at Avinguda de la Generalitat, 152 Parque Empresarial Can Sant Joan, 08174 Sant Cugat del Vallès, Barcelona, Spain.  Our registered office is located at c/Jesús y María, 6, Barcelona (08022).  We were incorporated on June 22, 1987.  Our fiscal year runs from January 1 to December 31, the exception being the year ending on December 31, 1997, which began on August 1, 1997.

Corporate Purpose

Section 2 of the Articles of Association states that our corporate purpose is to provide administration, management and supervision services of companies and businesses as well as investments in movable and real estate assets.

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Board of Directors

Under Article 31 of the Board Regulations, a director shall abstain from attending or intervening in deliberations that affect matters in which he finds himself personally involved, directly or indirectly.  A director cannot carry out professional or commercial transactions with us, directly or indirectly, unless he previously informs the Board about the conflict of interest, and the Board, following a report from our Appointments and Remuneration Committee, approves the transaction.

Under Article 15 of the Board Regulations, the Appointments and Remuneration Committee will in all cases be composed of a majority of external directors, and the chairperson will be an external director and, to the extent possible, an independent director.

The Board, with the advice of the Appointments and Remuneration Committee, sets director compensation.  As set forth in Article 26 of the Board Regulations, remuneration of the Board is fixed according to statutory provisions and will be reasonable and in line with market rates.  As set forth in Article 27 of such Board Regulations, external directors should be excluded from receiving remuneration linked to our profits or welfare systems, other than shares in Grifols, S.A., that they must hold until their resignation as directors.  Further, the establishment of equity compensation plans in which members of the Board participate must be authorized in the Articles of Association and requires the shareholders’ prior approval at a shareholders’ meeting.  Additionally, the amount of external directors’ remuneration should be calculated in order to incentivize dedication but not become an obstacle to independence.

For more information regarding related party transactions, see Item 7 of this Part I, “Major Shareholders and Related Party Transactions — B. Related Party Transactions.”

We do not impose an age limit requirement for the retirement or non-retirement of directors.  We also do not impose a shareholding requirement for director qualification.  Article 6 of the Board Regulations does provide, however, that a director cannot qualify as an independent external director if he or she has a significant shareholding in us.

For information regarding the provisions of the Articles of Association as applied to the Board, see Item 6 of this Part I, “Directors, Senior Management and Employees — A. Directors and Senior Management — Directors” and “Directors, Senior Management and Employees — C. Board Practices.”

Shareholder Rights

The following summary of material considerations concerning our share capital briefly describes certain material provisions of the Articles of Association and Spanish law relating to our share capital.  Because it is a summary, it is not meant to be complete, is qualified by reference to the applicable Spanish laws and our Articles of Association and does not contain all the information that may be important to you.

Neither Spanish law nor our Articles of Association limit the right to own our securities, including the rights of non-resident or foreign shareholders to hold or exercise voting rights on the securities.

Under Spanish law, the rights of shareholders may be changed only by an amendment to the articles of association of a company that complies with the requirements explained below under “— Class A Shares — Shareholders’ Meetings and Voting Rights.”  Our Articles of Association do not further specify what actions or quorums are required to change the rights of our shareholders, other than that they classify an amendment thereto as an extraordinary matter, as described below in “— Class B Shares — Separate Vote at General Shareholder Meetings on Extraordinary Matters.”

Class A Shares

Shareholders’ Meetings and Voting Rights

Pursuant to Article 13 of our Articles of Association and the Spanish Companies Act, the annual general shareholders’ ordinary meeting shall be held during the first six months of each fiscal year on a date fixed by the Board.  Resolutions presented at duly constituted general shareholders meetings are, except as indicated herein, passed by a simple majority vote of the voting capital present or represented at the meeting.

Extraordinary meetings may be called by the Board whenever it deems it appropriate or at the request of one or more shareholders representing at least 5% of our share capital.  Under Spanish law and per the Articles of Association, we are required to publish a “calling of the meeting,” which sets forth the matters to be voted on at each general shareholders’ meeting, at least one month prior to the date set for the meeting in at least:  (i) the Official Gazette of the Commercial Registry (Boletin Oficial de Registro Mercantil) or one of the local newspapers of wide circulation in the province where we are domiciled (currently Barcelona, Spain); (ii) CNMV’s website; and (iii) our website.

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Holders of ordinary and Class B shares duly registered in the book-entry records maintained by Iberclear and its participant entities at least five days prior to the day on which a shareholders’ meeting is scheduled, in the manner provided in the notice for such meeting, may attend such meeting (in person or represented by proxy) and, where so entitled, may vote.  Holders of the our Class B shares generally do not have voting rights, except with respect to certain extraordinary matters that require approval by a majority of our outstanding Class B shares, as set forth below in “— Class B Shares — Separate Vote at General Shareholder Meetings on Extraordinary Matters.”

For an ordinary or extraordinary general meeting of shareholders to be duly constituted, the presence in person or by proxy of shareholders representing 25% of our issued voting share capital is required.  On second call, there is no quorum requirement.

Under Spanish law, the following shareholder actions require approval by the affirmative vote of the holders of a majority of our Class A shares present in person or represented by proxy at a duly constituted meeting of holders of our Class A shares at which meeting, if (i) on first call, a quorum of at least 50% of the issued voting share capital is present or represented by proxy or (ii) on second call, a quorum of at least 25% of the issued voting share capital is present or represented by proxy (unless on such second call less than 50% of the issued voting share capital is present or represented by proxy, in which case those matters require the affirmative vote of at least two-thirds of the share capital present or represented at such meeting):

·the issuance of bonds;

·an increase or reduction of the share capital;

·the transformation of Grifols (change in corporate nature);

·a merger, de-merger, split, spin-off or other structural change subject to Law 3/2009;

·any other amendment of the Articles of Association; and

·a dissolution.

For purposes of determining the quorum, those shareholders who vote by mail or through the internet are counted as being present at the meeting, as provided by the Regulations of the General Shareholders’ Meeting of Grifols, S.A (Reglamento de la Junta General de Accionistas).  Such Regulations are available on our website, which does not form part of this annual report on Form 20-F, at www.grifols.com under the heading “Investor Relations — Corporate governance — Regulations of the general shareholders’ meeting.”

In general, resolutions passed at a general shareholders’ meeting are binding upon all shareholders.  In very limited circumstances, Spanish law gives dissenting or absent shareholders, including those holding Class B shares, the right to have their Grifols’ shares redeemed by us at prices determined in accordance with established formulas or criteria.

Dividends

Payment of dividends must be proposed by the Board and authorized by our shareholders at a general shareholders’ meeting.  Interim dividends may be declared by the Board on account of profits for the then current fiscal year, subject to certain limitations.

Spanish law requires each company to apply at least 10% of its net income each year to a legal reserve until the balance of such reserve is equivalent to at least 20% of such company’s issued share capital.  A company’s legal reserve is not available for distribution to its shareholders except upon such company’s liquidation.  According to Spanish law, dividends may only be paid out of profits (after deduction of any amounts required to be applied to the legal reserve) or distributable reserves and only if the value of a company’s net worth is not, and as a result of distribution would not be, less than such company’s share capital.

In addition, no profits may be distributed unless the amount of the distributable reserves is at least equal to the amount of research and development expenses recorded as an asset on a company’s consolidated balance sheet.

Spanish law also requires the creation of a non-distributable reserve equal to the amount of goodwill recorded as an asset on a company’s consolidated balance sheet and that an amount at least equal to 5% of such goodwill be transferred from the profit from each financial year to such non-distributable reserve until such time as the non-distributable reserve is of an amount at least equal to the goodwill recorded on such company’s consolidated balance sheet.  If, in any given financial year, there are no or insufficient

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profits to transfer an amount equal to 5% of the goodwill recorded as an asset on a company’s consolidated financial statement, Spanish law requires that the shortfall be transferred from freely distributable reserves to the non-distributable legal reserve.

In the event of a reduction in share capital to offset losses, dividends may not be distributed until the legal reserve reaches 10% of the new share capital.

Distributions of dividends to our Class A shareholders will be made in proportion to the capital that they have paid up.  The shareholders at the general shareholders meeting shall decide the amount, time and form of payment of the dividends.  If these details are not so determined, the dividend will be payable at our registered office on the day following the date of the resolution.

The right to a dividend lapses and reverts to us if it is not claimed within five years after it becomes payable.  Dividends payable by us to non-residents of Spain may be subject to a Spanish withholding tax of 21%, effective January 1, 2012.  However, residents of certain countries are entitled to the benefits of the Convention Between the United States of America and the Kingdom of Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, as described below in “— E. Taxation — Spanish Tax Considerations.”

As set forth below under “— Class B Shares — Preferred Dividend,” since the issuance of the our Class B shares, the dividend rights of our Class A shareholders have been subordinated to the €0.01 per share preferred dividend of our Class B shares.

Liquidation Rights

Upon our winding-up and liquidation, holders of our Class A shares and Class B shares will be entitled to receive a pro rata portion of any assets remaining after the payment of our debts, taxes and the expenses of the liquidation as follows:  (i) before any amount is distributed to the holders of Class A shares, the holders of Class B shares will receive the nominal value and share premium paid up for such Class B shares at the time of issuance and (ii) once such liquidation preference is received, the holders of the Class A shares and Class B shares will share pari passu in the amounts distributed.

Subscription (or Preemptive) Rights and Increases of Share Capital

Pursuant to the Spanish Companies Act, shareholders and holders of convertible bonds have subscription (or preemptive) rights to subscribe for any new shares (or other securities convertible into, or exchangeable for, shares) issued by a company in a capital increase via monetary contributions.

In accordance with the Spanish Companies Act, such subscription (or preemptive) rights may be waived under special circumstances by a resolution passed at a meeting of shareholders or the Board (such as when we listed on the Spanish Stock Exchanges), and the general shareholders’ meeting delegates to the Board the right to increase the share capital or to issue securities convertible into, or exchangeable for, shares and to waive subscription (or preemptive) rights).  See Item 3 of this Part I, “Key Information — D. Risk Factors — Risks Relating to our Structure, Shares and American Depositary Shares — Subscription (or preemptive) rights may be unavailable to U.S. holders of our shares or ADSs.”

Further, subscription (or preemptive) rights, in any event, will not be available in the event of certain capital increases, such as those in which we receive an in-kind contribution, those effected to meet the requirements of a convertible bond issue or those for a merger in which shares are issued as consideration.  Subscription (or preemptive) rights are transferable, may be traded on the Spanish Automated Quotation System and may be of value to existing shareholders because new shares may be offered for subscription at prices lower than prevailing market prices.  In the case of a share capital increase against reserves, the same rule applies to the free allotment (derecho de asignación gratuita) rights.

Finally, as described below in “— Class B Shares — Subscription Rights,” in connection with an issuance of securities where subscription (or preemptive) rights apply, our Class B shares may only be granted preemptive rights with respect to additional Class B shares if our Class A shares are granted preemptive rights with respect to additional Class A shares.  The preemptive rights of each class must be otherwise equal.

Registration and Transfers

Our Class A shares are in book-entry form on Iberclear and are indivisible.  Joint holders of one share must designate a single person to exercise their shareholders’ rights, but they are jointly and severally liable to us for all the obligations flowing from their status as shareholders, such as the payment of any pending capital calls.

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Iberclear maintains the central registry reflecting the number of shares held by each of its participant entities.  Each participant entity, in turn, maintains a registry of the owners of such shares.

Transfers of shares quoted on the Spanish Stock Exchanges are normally made through credit entities or investment companies that are members of the Spanish Stock Exchanges.

Reporting Requirements

Pursuant to Royal Decree 1362/2007, any individual or legal entity that, by whatever means, acquires or transfers shares with voting rights in a company for which Spain is listed as the Country of Origin (Estado Miembro) (as defined therein) and which is listed on an official secondary securities market or other regulated market in the European Union must notify the issuer and the CNMV, if, as a result of such transaction, the proportion of voting rights held by that individual or legal entity reaches, exceeds or thereafter falls below a 3% threshold of that company’s total voting rights.  The notification obligations are also triggered at thresholds of 5% and multiples thereof (excluding 55%, 65%, 85%, 95% and 100%).  The applicable threshold is 1% (or its successive multiples thereof) for persons or entities located in designated “tax havens” (as defined in Royal Decree 1080/1991) or other jurisdictions lacking adequate supervision.

The individual or legal entity obliged to provide the notification must serve the notification by means of the form approved by the CNMV from time to time for such purpose, within four business days from the date on which the transaction is acknowledged.  Royal Decree 1362/2007 deems that a transaction is “acknowledged” within two business days from the date on which such transaction is entered into.

The reporting requirements apply not only to the purchase or transfer of voting shares, but also to those transactions in which, without a purchase or transfer, the proportion of voting rights of an individual or legal entity reaches, exceeds or thereafter falls below the threshold that triggers the obligation to report as a consequence of a change in the total number of voting rights of a company on the basis of the information reported to the CNMV and disclosed by such individual or legal entity.

Regardless of the actual ownership of the voting shares, any individual or legal entity with a right to acquire, transfer or exercise voting rights of the shares, and any individual or legal entity that owns, acquires or transfers, whether directly or indirectly, other securities or financial instruments that grant a right to acquire shares with voting rights, will also have an obligation to notify us and the CNMV of the holding of a significant stake in accordance with the regulations.

Furthermore, all members of the Board must report to both us and the CNMV the percentage and number of voting rights in Grifols held by them at the time of becoming or ceasing to be a member of the Board.  All members of the Board must also report any change in the percentage of voting rights they hold, regardless of the amount, as a result of any acquisition or disposition of our shares or voting rights, or financial instruments that carry a right to acquire or dispose of shares that have voting rights attached, including any stock-based compensation that they may receive pursuant to any of our compensation plans.

In addition, pursuant to Royal Decree 1333/2005, of November 11, 2005, (implementing European Directive 2004/72/EC), any member of the Board or our senior management and any parties closely related to any member of the Board or our senior management must similarly report any acquisition or disposal of our shares (in this case, either ordinary or Class B shares), derivatives or other financial instruments relating to our shares regardless of the size, including information on the percentage of voting rights which they hold as a result of the relevant transaction within five business days of such transaction.

Additional disclosure obligations apply in respect of voting agreements.  In this respect, the Spanish Companies Act requires parties to disclose certain types of shareholders’ agreements that affect the exercise of voting rights at a general shareholders’ meeting or contain restrictions or conditions on the transferability of shares or bonds that are convertible or exchangeable into shares.

Moreover, persons holding a net aggregate short position in our shares must report the short position to the CNMV on a confidential basis whenever it reaches 0.2% and notify the CNMV of any subsequent decrease or increase by 0.1% (and successive multiples thereof) within the day immediately following the relevant trade.  The CNMV publishes individual net short positions of 0.5% or more and aggregate information on net short positions between 0.2% and 0.5%.

The Articles of Association do not contain additional provisions governing the ownership threshold above which shareholder ownership must be disclosed.

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Class B Shares

Our Class B shares have substantially similar dividend and other economic rights as our Class A shares, summarized above in “— Class A Shares,” but differ from the Class A shares in some important respects that are outlined below.

Voting Rights

Holders of our Class B shares generally do not have voting rights, except with respect to certain extraordinary matters, with respect to which approval by a majority of our outstanding Class B shares is required.

Separate Vote at General Shareholder Meetings on Extraordinary Matters

Notwithstanding the lack of voting rights of our Class B shares generally, resolutions on the matters detailed below (each, an “extraordinary matter”) require the approval of a majority of our outstanding Class B shares.

·Any resolution (i) authorizing us or any of our subsidiaries to repurchase or acquire any of our Class A shares, except for pro rata repurchases available equally to holders of our Class B shares on the same terms and at the same price as offered to holders of our Class A shares or (ii) approving the redemption of any of our shares and any share capital reductions (through repurchases, cancellation of shares or otherwise), other than (a) those redemptions required by law and (b) those redemptions which affect equally our Class A shares and Class B shares and in which each Class B share is treated the same as a Class A share in such transaction.

·Any resolution approving the issuance, granting or sale (or authorizing the Board to issue, grant or sell) (i) any of our shares, (ii) any rights or other securities exercisable for or exchangeable or convertible into our shares or (iii) any options, warrants or other instruments giving the right to the holder thereof to purchase, convert, subscribe or otherwise receive any of our securities, except if (a) each Class B share is treated the same as a Class A share in the relevant issuance, grant or sale and, therefore, has a preferential subscription right (derecho de suscripción preferente) or a free allotment right in the relevant issuance, grant or sale to the same extent, if any, as a Class A share or (b) if the issuance is made in accordance with the subscription rights described in “— Subscription Rights” below.

·Any resolution approving unconditionally or not (i) a transaction subject to Law 3/2009 (including, without limitation, a merger, split-off, cross-border reconciliation or global assignment of assets and liabilities), except if in such transaction each Class B share is treated the same as a Class A share or (ii) our dissolution or winding-up, except where such resolution is required by law.

·Any resolution for the delisting of any Grifols shares from any stock exchange.

·Generally, any resolution and any amendment of the Articles of Association that directly or indirectly adversely affects the rights, preferences or privileges of our Class B shares (including any resolution that adversely affects our Class B shares relative to our Class A shares or that positively affects our Class A shares relative to our Class B shares, or that affects the provisions in the Articles of Association relating to our Class B shares).

The general shareholders’ meeting has the power to decide on all matters assigned to it by law or by the Articles of Association and, in particular, without limitation to the foregoing, shall be the only corporate body or office entitled to decide on these extraordinary matters.

Preferred Dividend

Each of our Class B shares entitles its holder to receive a minimum annual preferred dividend out of the distributable profits at the end of each fiscal year the share is outstanding equal to €0.01 per Class B share.  In any given fiscal year, we will pay a preferred dividend to the holders of our Class B shares before any dividend out of the distributable profits for such fiscal year is paid to the holders of our Class A shares.  The preferred dividend on all issued Class B shares will be paid by us within the nine months following the end of that fiscal year, in an amount not to exceed the distributable profits obtained by us during that fiscal year.

If, during a fiscal year, we have not obtained sufficient distributable profits to pay in full, out of those profits, the preferred dividend on all the Class B shares outstanding, the preferred dividend amount exceeding the distributable profits obtained by us will not be paid and will not be accumulated as a dividend payable in the future.

Lack of payment, total or partial, of the preferred dividend during a fiscal year due to insufficient distributable profits to pay in full the preferred dividend for that fiscal year will not cause our Class B shares to recover any voting rights.

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As set forth above in “— Class A Shares — Dividends,” the dividend rights of our Class A shareholders are subordinated to the preferred dividend described in this section.

Other Dividends

Each Class B share is entitled to receive, in addition to the preferred dividend referred to above, the same dividends and other distributions (in each case, whether in cash, securities of Grifols or any of our subsidiaries, or any other securities, assets or rights) as one Class A share.  Each Class B share is treated as one Class A share for the purpose of any dividends or other distributions made on our Class A shares, including as to the timing of the declaration and payment of any such dividend or distribution.

Redemption Rights

Each holder of our Class B shares is entitled to redeem those shares as set forth in this section if a tender offer for all or part of our share capital is made and settled (in whole or in part), except if holders of our Class B shares were entitled to (i) participate in such offer and (ii) have their shares acquired in such offer equally and on the same terms as holders of our Class A shares (including, without limitation, for the same consideration).

Upon the closing and settlement (in whole or in part) of a tender offer for our shares in which holders of our Class B shares were not entitled to (i) participate and (ii) have their shares acquired in such offer equally and on the same terms as holders of our Class A shares (including, without limitation, for the same consideration), the redemption process will follow the process detailed below.

·We will, within ten days of the date on which the redemption event occurred (i.e., the date on which the triggering tender offer settled), publish in the Commercial Registry Gazette, the Spanish Stock Exchanges’ Gazettes and in at least two of the newspapers with widest circulation in Barcelona an announcement informing the holders of our Class B shares of the redemption event and the process for the exercise of redemption rights in connection with such redemption event.

·Each holder of our Class B shares will be entitled to exercise its redemption right for two months from the first date of settlement of the tender offer triggering the redemption right by notifying us of its decision.  We will ensure that mechanisms are in place so that the notification of the exercise of the redemption right may be made through Iberclear.

·The redemption price to be paid by us for each Class B share for which the redemption right has been exercised will be the sum of (i) the amount in euro of the highest consideration paid in the tender offer triggering the redemption right plus (ii) interest on the amount referred to in (i), from the date such tender offer is first settled until the date of full payment of the redemption price, at a rate equal to the one-year EURIBOR plus 300 basis points.  For the purposes of this calculation, the amount in euro corresponding to any non-cash consideration paid in the tender offer will be the market value of such non-cash consideration as of the date the tender offer is first settled.  The calculation of such market value shall be supported by at least two independent experts designated by us from auditing firms of international repute.

·We will, within 40 days of the date on which the period for notification of the exercise of redemption rights following a tender offer lapses, take all the necessary actions to (i) effectively pay the redemption price for our Class B shares for which the redemption right has been exercised and complete the capital reduction required for the redemption and (ii) reflect the amendment to Article 6 of the Articles of Association (related to share capital) deriving from the redemption.

The number of our Class B shares redeemed shall not represent a percentage over our total Class B shares issued and outstanding at the time the tender offer is made in excess of the percentage that the sum of our Class A shares (i) to which the tender offer is addressed, (ii) held by the offerors in that offer and (iii) held by persons acting in concert with the offerors or by persons having reached an agreement relating to the offer with the offerors represent over the total Class A shares issued and outstanding at the time the tender offer causing the redemption of our Class B shares is made.

Payment of the redemption price will be subject to us having sufficient distributable reserves but, after a tender offer occurs and until the redemption price for our Class B shares is paid in full, we will not be able to declare or pay any dividends nor any other distributions to our shareholders (in each case, whether in cash, securities of Grifols or any of our subsidiaries, or any other securities, assets or rights).

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Liquidation Rights

Each Class B share entitles its holder to receive, upon our winding-up and liquidation, an amount equal to the sum of (i) the nominal value of such Class B share and (ii) the share premium paid up for such Class B share when it was subscribed for.

We will pay the liquidation amount to the holders of our Class B shares before any amount on account of liquidation is paid to the holders of our Class A shares.

Each of our Class B shares entitles its holder to receive, in addition to the liquidation preference amount, the same liquidation amount paid for a Class A share.

Subscription Rights

Each Class B share entitles its holder to the same rights (including preferential subscription rights and free allotment rights) as one Class A share in connection with any issuance, granting or sale of (i) any shares in Grifols, (ii) any rights or other securities exercisable for, exchangeable or convertible into shares in Grifols or (iii) any options, warrants or other instruments giving the right to the holder thereof to purchase, convert, subscribe or otherwise receive any securities in Grifols.

As an exception, the preferential subscription rights and the free allotment rights of the Class B shares will only be for new Class B shares or for instruments giving the right to purchase, convert, subscribe for or otherwise receive Class B shares, and the preferential subscription right and the free allotment right of an Class A share will only be for new Class A shares or for instruments giving the right to purchase, convert, subscribe or otherwise receive Class A shares, for each capital increase or issuance that meets the following three requirements:  (i) the issuance of Class A shares and Class B shares is in the same proportion of our share capital as they represent at the time the resolution on the capital increase is passed; (ii) grants of preferential subscription rights or free allotment rights, as applicable, to the Class B shares for the Class B shares are under the same terms as the preferential subscription rights or free allotment rights, as applicable, granted to the Class A shares for the Class A shares; and (iii) no other shares or securities are issued.

Registration and Transfers

Class B shares are in book-entry form on Iberclear and are indivisible, as indicated with respect to Class A shares above in “— Class A Shares — Registration and Transfers.”

Change in Control

The Articles of Association do not contain any provisions that would have the effect of delaying, deferring or preventing a change in control of Grifols.

Changes in Share Capital

Changes in share capital are considered extraordinary matters and must be approved by our shareholders in accordance with the procedures explained above in “— Class A Shares — Shareholders’ Meetings and Voting Rights” and “— Class B Shares — Separate Vote at General Shareholder Meetings on Extraordinary Matters.”

A capital increase may be affected by issuing new shares or by increasing the par value of existing shares.  A capital reduction may be effected by reducing the par value of existing shares or by redeeming or repurchasing existing shares.

At the general shareholder meeting on extraordinary matters held on January 25, 2011, our shareholders agreed to increase share capital by issuing 83,811,688 Class B shares to complete the Talecris acquisition.

At the general shareholder meeting on extraordinary matters held on December 2, 2011, our shareholders agreed to increase share capital by issuing 29,687,658 Class B shares, without a share premium and with a charge to voluntary reserves, to remunerate the Class A and Class B shareholders.  The issuance took the form of a free allocation of one new Class B share for every ten Class A or Class B shares owned.  The issuance of these shares increased share capital by a nominal amount of €2.97 million.

At the general shareholder meeting on extraordinary matters held on December 4, 2012, our shareholders agreed to increase share capital by issuing an additional 16,328,212 Class B shares, without a share premium and with a charge to voluntary reserves, in order to remunerate the Class A and Class B shareholders.  The issuance took the form of a free allocation of one new Class B share for every 20 Class A or Class B shares owned. The issuance of these shares increased share capital by a nominal amount of €1.63 million.

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Also, at the general shareholder meeting on extraordinary matters held on December, 4 2012, our shareholders authorized the board of directors to increase share capital up to 50% of the existing share capital at that time. Within this authorization, on April 16, 2013, the board of directors adopted an increase by issuing an additional 884,997 Class B shares, with a share premium of €23.02, in order to pay half of the purchase price of the Progenika acquisition.  The issuance of these shares increased share capital by a nominal amount of €0.09 million.

Sinking Fund

The Articles of Association do not contain any sinking fund provisions.

C.Material Contracts

The following contracts have been entered into by us within the two years immediately preceding the date of this annual report on Form 20-F or contain provisions under which we or another member of the Grifols Group has an obligation or entitlement that is material to us:

5.25% Senior Notes due 2022

For a summary of the material terms of the Notes, see Item 5 of this Part I, “Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Sources of Credit — 5.25% Senior Notes due 2022.”

New Credit Facilities

For a summary of the material terms of the New Credit Facilities, see Item 5 of this Part I, “Operating and Financial Review and Prospects — B. Liquidity and Capital Resources — Sources of Credit — New Credit Facilities.”

New Interim Loan Facility

For a summary of the material terms of the New Interim Loan Facility, see Item 4 of this Part I, “Information on the Company — A. History and Development of the Company — Important Events — The Novartis Acquisition and Related Financing — Refinancing.”

Bridge Loan Facility

For a summary of the material terms of the Bridge Loan Facility, see Item 4 of this Part I, “Information on the Company — A. History and Development of the Company — Important Events — The Novartis Acquisition and Related Financing — The Novartis Acquisition.”

Novartis Agreement

For a summary of the material terms of the Novartis Agreement, see Item 4 of this Part I, “Information on the Company — A. History and Development of the Company — Important Events — The Novartis Acquisition and Related Financing.”

ADS Purchase Agreement

For a summary of the material terms of the ADS Purchase Agreement, see Item 4 of this Part I, “Information on the Company — A. History and Development of the Company — Important Events — Class B ADS Purchase and Sale.”

D.Exchange Controls

Restrictions on Foreign Investment

Under present regulations, foreign investors may transfer invested capital, capital gains and dividends out of Spain without limitation on the amount other than applicable taxes.  Law 19/2003, of July 4, 2003, updated Spanish exchange control and money laundering prevention provisions, by recognizing the principle of freedom of the movement of capital between Spanish residents and nonresidents.

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The law establishes procedures for the declaration of capital movements for purposes of administrative or statistical information and authorizes the Spanish government to take measures which are justified on grounds of public policy or public security.  It also provides the mechanism to take exceptional measures with regard to third countries if such measures have been approved by the European Union or by an international organization to which Spain is a party.

The Spanish Stock Exchanges and securities markets are open to foreign investors.  Royal Decree 664/1999, on Foreign Investments, of April 23, 1999, established a new framework for the regulation of foreign investments in Spain that, on a general basis, no longer requires any prior consents or authorizations from authorities in Spain (without prejudice to specific regulations for several specific sectors, such as television, radio, mining, telecommunications, etc.).  Royal Decree 664/1999 requires notification of all foreign investments in Spain and liquidations of such investments upon completion of such investments to the Investments Registry of the Ministry of Economy and Finance, strictly for administrative statistical and economical purposes.  Where the investment or divestiture is made in shares of a Spanish company listed on any of the Spanish Stock Exchanges, the duty to provide notice of a foreign investment or divestiture lies with the relevant entity with whom the shares (in book-entry form) have been deposited or that has acted as an intermediary in connection with the investment or divestiture.

Only investments from tax haven countries require notice before and after execution of the investment, except that no prior notice is required for:  (i) investments in listed or publicly negotiable securities or in participations in collective investment schemes that are registered with the CNMV and (ii) investments that do not increase the foreign ownership of the share capital of a Spanish company to over 50%.  In specific instances, the Council of Ministers may agree to suspend all or part of Royal Decree 664/1999 following a proposal of the Ministry of Economy and Finance, or, in some cases, a proposal by the head of the government department with authority for such matters and a report of the Foreign Investment Body.  These specific instances include a determination that the investments, due to their nature, form or condition, affect or may potentially affect activities relating to the exercise of public powers, national security or public health.  Royal Decree 664/1999 is currently suspended for investments relating to national defense.  In those cases in respect of which Royal Decree 664/1999 is suspended, the affected investor must obtain prior administrative authorization in order to carry out the investment.

Exchange Controls

Law 10/2010, on the prevention of money laundering and funding of terrorism, was adopted on April 28, 2010 and entered into force on April 30, 2010.  This Law requires a person moving (i) paper money and coins in any currency, (ii) bearer checks in any currency or (iii) any other physical medium, including electronic media, designed for use as payment to the bearer to declare such payment to the Spanish exchange control authorities if it exceeds €10,000 (or the foreign currency equivalent).

E.Taxation

In General

Treatment of Holders of ADSs

This section describes the material United States federal income and Spanish tax consequences of owning shares or ADSs.  It applies to you only if you hold your shares or ADSs as capital assets for tax purposes.  This section does not apply to you if you are a member of a special class of holders subject to special rules, including:

·a dealer in securities;

·a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;

·a tax-exempt organization;

·a life insurance company;

·a person liable for alternative minimum tax under the Code (as defined below);

·a person that actually or constructively owns 10% or more of our voting stock;

·a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction; or

·a U.S. Holder (as defined below) whose functional currency is not the U.S. dollar.

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This section is based on the Internal Revenue Code of 1986, as amended, or the Code, its legislative history, existing and proposed regulations, published rulings and court decisions, in each case as in effect as of the date hereof and all of which are subject to change, possibly on a retroactive basis, as well as the tax laws of Spain and regulations thereunder and the Convention Between the United States of America and the Kingdom of Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, or the Treaty, in each case as in effect as of the date hereof and subject to change.  On January 14, 2013, the U.S. and Spain signed a protocol amending the Treaty (the “Protocol”), which, depending on a holder’s individual circumstances, could alter either the United States federal income tax consequences, the Spanish tax consequences, or both, of owning shares or ADSs.  However, the Protocol will not become effective until formal ratification procedures are completed by both countries, and the timing for the completion of such ratification procedures is not certain.  As a result, it is not certain when any changes to the United States federal income tax consequences or Spanish tax consequences of owning shares of ADSs resulting from the Protocol would come into effect, and in any case such changes would, in general, be prospective only.

You are a “U.S. Holder” if you are a beneficial owner of shares or ADSs and you are:

·a citizen or resident of the United States;

·a corporation or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

·an estate whose income is subject to United States federal income tax regardless of its source; or

·a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.

An “eligible U.S. Holder” is a U.S. Holder that:

·is a resident of the United States for purposes of the Treaty;

·does not maintain a permanent establishment or fixed base in Spain to which shares or ADSs are attributable and through which the U.S. Holder carries on or has carried on business (or, in the case of an individual, performs or has performed independent personal services); and

·is otherwise eligible for benefits under the Treaty with respect to income and gain from the shares or ADSs.

A “non-U.S. Holder” is a beneficial owner of shares or ADSs that is not a U.S. Holder.

In addition, if a partnership (including any entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of shares or ADSs, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership.  A beneficial owner of shares or ADSs that is a partnership, and partners in such partnership, should consult their own tax advisors regarding the tax consequences of owning and disposing of shares or ADSs.

You should consult your own tax advisor regarding the United States federal, state and local and the Spanish and other tax consequences of owning and disposing of shares and ADSs in your particular circumstances.  In particular, you should confirm your status as an eligible U.S. Holder with your advisor and should discuss any possible consequences of failing to qualify as an eligible U.S. Holder.

This discussion addresses only United States federal income taxation and Spanish income taxation, gift and inheritance taxation, wealth taxation and transfer taxation.

Treatment of Holders of ADRs

In general, and taking into account the earlier assumptions, for United States federal income and Spanish tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of the shares represented by those ADRs.  Exchanges of shares for ADRs, and ADRs for shares, generally will not be subject to United States federal income or to Spanish tax.

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Spanish Tax Considerations

This discussion of Spanish tax consequences applies only to owners of ADSs or shares who are eligible U.S. Holders.  The following is a summary of material Spanish tax matters and is not exhaustive of all the possible tax consequences to individuals or entities of the acquisition, ownership and disposition of ADSs or shares.

Taxation of Dividends

Under Spanish law, dividends paid by a Spanish resident company to a holder of ordinary shares or ADSs not residing in Spain for tax purposes and not operating through a permanent establishment in Spain are subject to Spanish Non-Resident Income Tax of 21%, effective January 1, 2012.

In addition, according to Royal Legislative Decree 5/2004, of March 5, 2004, on the Non-Resident Income Tax Law, individuals who are residents of the European Union or a country, such as the United States, with which Spain has an effective “exchange of information” for tax purposes (as defined in Law 36/2006, of November 30, 2006, related to measures to prevent tax fraud) who do not operate in Spain through a permanent establishment, are exempt from Spanish taxation on dividends up to 1,500 euro, considering all Spanish-source dividends obtainable in the calendar year.  However, Spanish withholding tax will nevertheless be deducted from the gross amount of the dividends, and individuals will have to seek a refund of such withholding taxes from the Spanish tax authorities, following the standard refund procedure described below.

We will levy an initial withholding tax on the gross amount of dividends at a 21% tax rate, following the procedures set forth by the Spanish Ministerial Order, or Order, of April 13, 2000.  However, under the Treaty and subject to the fulfillment of certain requirements, individuals and entities may be entitled to a reduced rate of 15%.

To benefit from the Treaty’s reduced rate of 15%, an individual or entity must provide the depositary with a certificate from the U.S. Internal Revenue Service, or IRS, stating that, to the knowledge of the IRS, it is a resident of the United States within the meaning of the Treaty.  The IRS certificate may be obtained by filing an IRS Form 8802 and is valid for a period of one year.

According to the Order of April 13, 2000, to get a direct application of the Treaty’s reduced rate of 15%, the certificate referred to above must be provided to the depositary before the tenth day following the end of the month in which the dividends were distributable by us.  If an individual or entity fails to timely provide the depositary with the required documentation, it may obtain a refund of the 6% in excess withholding that would result from the Spanish tax authorities in accordance with the procedures below.

Spanish Refund Procedure

According to Royal Decree 1776/2004, of July 30, 2004, as amended, which further develops the Royal Legislative Decree 5/2004 on the Non-Resident Income Tax Law, a refund of the amount withheld in excess of the rate provided by the Treaty can be obtained from the relevant Spanish tax authorities.  An eligible U.S. Holder may pursue the refund claim by filing all of the following:

·a Spanish 210 Form;

·the certificate from the IRS referred to above in “— Taxation of Dividends”; and

·evidence that non-resident income tax was withheld with respect to it.

The refund claim must be filed within four years of the date on which the withheld tax was collected by the Spanish tax authorities.  According to Order EHA/3316, of December 17, 2010, for dividends paid as of January 2011, the 210 Form must be filed as from February 1st of the calendar year following the year in which the dividend was paid.

Individuals and entities are urged to consult their own tax advisers regarding refund procedures and any U.S. tax implications of refund procedures.

Taxation of Capital Gains

Under Spanish law, any capital gains derived from securities issued by persons residing in Spain for tax purposes are considered to be Spanish source income and, therefore, are taxable in Spain.  For U.S. residents, income from the sale of ADSs or shares will be treated as capital gains for Spanish tax purposes.  Effective January 1, 2012, Spanish Non-Resident Income Tax is levied at a 21% rate on capital gains realized by persons not residing in Spain for tax purposes who are not entitled to the benefit of any applicable treaty for the avoidance of double taxation.

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Notwithstanding the above, capital gains derived from the transfer of shares on an official Spanish secondary securities market by any holder who is a resident of a country that has entered into a treaty for the avoidance of double taxation with Spain containing an exchange of information clause will be exempt from taxation in Spain.  In addition, under the Treaty, capital gains realized by an individual or entity upon the disposition of ADSs or shares will not be taxed in Spain provided that the individual or entity has not held, directly or indirectly, 25% or more of our stock during the twelve months preceding the disposition of the stock.  An individual or entity is required to establish that it is entitled to this exemption by providing to the relevant Spanish tax authorities an IRS certificate of residence in the United States, together with the appropriate Spanish 210 tax form, between January 1st and January 20th of the calendar year following the year in which the transfer of shares took place.

Spanish Wealth Tax

On September 16, 2011, Royal Decree 13/2011 approved the reintroduction of the Spanish wealth tax (originally introduced under Law 19/1991) for 2011 and 2012. The Spanish wealth tax was has been extended to apply also in 2013 pursuant to Law 16/2012, of December 27, 2012, adopting various tax measures aimed at strengthening public finances and economic activity, and it has been extended again for 2014 through Law 22/2013, of December 23, on the General State Budget for 2014. As a result, individuals not residing in Spain who hold shares or ADSs located in Spain are subject to the Spanish wealth tax, which imposes a tax on property located in Spain on the last day of any year. The Spanish tax authorities may take the view that all shares of Spanish corporations and all ADSs representing such shares are located in Spain for Spanish tax purposes. If the tax authorities take this view, individuals subject to the Spanish wealth tax will be taxed at marginal rates of 0.2% to 2.5% (as published by the Spanish Ministry of Economy and Public Administrations) of the average market value of their shares or ADSs during the last quarter of the relevant year, subject to a tax-free allowance of €700,000.

An individual is required to file Spanish wealth tax forms if he or she has a positive wealth tax liability or has assets or rights in Spain valued, in the aggregate, at more than €2,000,000.

Spanish Inheritance and Gift Taxes

Under Law 29/1987, transfers of shares or ADSs upon death or by gift are subject to Spanish inheritance and gift taxes if the transferee is a resident of Spain for tax purposes, or if the shares or ADSs are located in Spain at the time of gift or death, or the rights attached thereto could be exercised or have to be fulfilled in the Spanish territory, regardless of the residence of the beneficiary.  In this regard, the Spanish tax authorities may determine that all shares of Spanish corporations and all ADSs representing such shares are located in Spain for Spanish tax purposes.  The applicable tax rate, after applying all relevant factors, ranges between 0% and 81.6% for individuals.

Effective January 1, 2012, gifts granted to corporations not resident in Spain are subject to Spanish Non-Resident Income Tax of 21% of the fair market value of the shares as a capital gain.  If the donee is a United States corporation, the exclusions available under the Treaty described above in “— Taxation of Capital Gains” will be applicable.

Expenses of Transfer

Transfers of ADSs or shares will be exempt from any Spanish transfer tax or value-added tax.  Additionally, no Spanish stamp tax will be levied on such transfers.

United States Federal Income Tax Considerations

Taxation of Dividends

U.S. Holders

Under the United States federal income tax laws, and subject to the passive foreign investment company, or PFIC, rules discussed below, if you are a U.S. Holder, the gross amount of any dividend (including any preferred dividends on our Class B shares) we pay out of our current or accumulated earnings and profits (as determined for United States federal income tax purposes) is subject to United States federal income taxation.  If you are a noncorporate U.S. Holder, dividends (including any preferred dividends on our Class B shares) paid to you that constitute qualified dividend income will be taxable to you at a maximum tax rate of 20% provided that you hold the shares or ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meet other holding period requirements.  Dividends we pay (including any preferred dividends on our Class B shares) with respect to the shares or ADSs generally will be qualified dividend income.

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With respect to any dividend we pay (including any preferred dividends on our Class B shares) you must include any Spanish tax withheld from the dividend payment in the gross amount of such dividend even though you do not in fact receive it.  Dividends are taxable to you when you, in the case of shares, or the Depositary, in the case of ADSs, receive such dividend, actually or constructively.  Such dividends will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations.  The amount of a dividend distribution that you must include in your income as a U.S. Holder will be the U.S. dollar value of the euro payments made, determined at the spot euro/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars.  Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include a dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income.  The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.  Distributions in excess of current and accumulated earnings and profits, as determined for United States federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the shares or ADSs and thereafter as capital gain.

Subject to certain limitations, the Spanish tax withheld in accordance with the Treaty and paid over to Spain will be creditable or deductible against your United States federal income tax liability.  Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 20% tax rate.  To the extent a refund of the tax withheld is available to you under Spanish law or under the Treaty, the amount of tax withheld that is refundable will not be eligible for credit against your United States federal income tax liability.  See “— Spanish Tax Considerations — Spanish Refund Procedure” above for the procedures for obtaining a tax refund.

Dividends will be income from sources outside the United States, and dividends paid will, depending on your circumstances, be “passive” or “general” income which, in either case, is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you.

A U.S. Holder may make an election to treat all foreign taxes paid as deductible expenses in computing taxable income, rather than as a credit against tax, subject to generally applicable limitations.  Such an election, once made, applies to all foreign taxes paid for the taxable year subject to the election.  The rules governing foreign tax credits are complex and, therefore, U.S. Holders are strongly encouraged to consult their own tax advisors to determine whether they are subject to any special rules that may limit their ability to make effective use of foreign tax credits and whether or not an election would be appropriate based on their particular circumstances.

Non-U.S. Holders

If you are a non-U.S. Holder, dividends (including any preferred dividends on our Class B shares) paid to you in respect of shares or ADSs will not be subject to United States federal income tax unless such dividends are “effectively connected” with your conduct of a trade or business within the United States, and such dividends are attributable to a permanent establishment that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to United States taxation on a net income basis.  In such cases you generally will be taxed in the same manner as a U.S. Holder.  If you are a corporate non-U.S. Holder, “effectively connected” dividends may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

Taxation of Capital Gains

U.S. Holders

Subject to the PFIC rules discussed below, if you are a U.S. Holder and you sell or otherwise dispose of your shares or ADSs, you will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your shares or ADSs.  Capital gain of a noncorporate U.S. Holder is generally taxed at a maximum rate of 20% where such noncorporate U.S. Holder has a holding period greater than one year.  Such gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

Non-U.S. Holders

If you are a non-U.S. Holder, you will not be subject to United States federal income tax on gain recognized on the sale or other disposition of your shares or ADSs unless:

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·the gain is “effectively connected” with your conduct of a trade or business in the United States, and the gain is attributable to a permanent establishment that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to United States taxation on a net income basis; or

·you are an individual, you are present in the United States for 183 or more days in the taxable year of the sale, and certain other conditions exist.

If you are a corporate non-U.S. Holder, “effectively connected” gains that you recognize may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

Passive Foreign Investment Company Considerations

We believe that our shares and ADSs should not be treated as stock of a PFIC for United States federal income tax purposes, but this conclusion is a factual determination that is made annually and thus may be subject to change.  If we were to be treated as a PFIC, gain realized on the sale or other disposition of your shares or ADSs would in general not be treated as capital gain.  Instead, if you are a U.S. Holder, you would be treated as if you had realized such gain and certain “excess distributions” ratably over your holding period for the shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year.  With certain exceptions, your shares or ADSs will be treated as stock in a PFIC if we were a PFIC at any time during your holding period in your shares or ADSs.  Certain elections may be available that would result in alternative treatments (such as mark-to-market or QEF treatment) of the ADSs or shares.  Dividends that you receive from us will not be eligible for the special tax rates applicable to qualified dividend income if we are treated as a PFIC with respect to you either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.

Medicare Contribution Tax on Unearned Income

A U.S. Holder that is an individual is subject to a 3.8% tax on the lesser of (1) such U.S. Holder’s “net investment income” for the relevant taxable year and (2) the excess of such U.S. Holder’s modified adjusted gross income for the taxable year over a certain threshold (between $125,000 and $250,000, depending on the individual’s circumstances). A U.S. Holder that is an estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) such U.S. Holder’s undistributed “net investment income” for the relevant taxable year and (2) the excess of such U.S. Holder’s adjusted gross income for the taxable year over the amount at which the highest tax bracket begins for that taxable year (currently $7,500). A U.S. Holder’s net investment income will generally include, among other items, the amount of gross dividend income and the amount of any net gains from such U.S. Holder’s disposition of your shares or ADSs, unless such dividends or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). U.S. Holders that are individuals, estates or trusts should consult their own tax advisors regarding the applicability of this tax to income and gains in respect of their investment in the shares or ADSs.

Backup Withholding and Information Reporting

If you are a noncorporate U.S. Holder, information reporting requirements, on Internal Revenue Service Form 1099, generally will apply to:

·dividend payments or other taxable distributions made to you within the United States; and

·the payment of proceeds to you from the sale of shares or ADSs effected at a United States office of a broker.

Additionally, backup withholding may apply to such payments if you are a noncorporate U.S. Holder that:

·fails to provide an accurate taxpayer identification number;

·is notified by the Internal Revenue Service that you have failed to report all interest and dividends required to be shown on your federal income tax returns; or

·in certain circumstances, fails to comply with applicable certification requirements.

If you are a non-U.S. Holder, you are generally exempt from backup withholding and information reporting requirements with respect to:

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·dividend payments made to you outside the United States by us or another non-United States payor; and

·other dividend payments and the payment of the proceeds from the sale of shares or ADSs effected at a United States office of a broker, as long as the income associated with such payments is otherwise exempt from United States federal income tax, and

·the payor or broker does not have actual knowledge or reason to know that you are a United States person and you have furnished the payor or broker:

·an Internal Revenue Service Form W-8BEN or an acceptable substitute form upon which you certify, under penalties of perjury, that you are a non-United States person, or

·other documentation upon which it may rely to treat the payments as made to a non-United States person in accordance with U.S. Treasury regulations, or

·you otherwise establish an exemption.

Payment of the proceeds from the sale of shares or ADSs effected at a foreign office of a broker generally will not be subject to information reporting or backup withholding.  However, a sale of shares or ADSs that is effected at a foreign office of a broker will be subject to information reporting and backup withholding if:

·the proceeds are transferred to an account maintained by you in the United States;

·the payment of proceeds or the confirmation of the sale is mailed to you at a United States address; or

·the sale has some other specified connection with the United States as provided in U.S. Treasury regulations,

unless the broker does not have actual knowledge or reason to know that you are a United States person and the documentation requirements described above are met or you otherwise establish an exemption.

In addition, a sale of shares or ADSs effected at a foreign office of a broker will be subject to information reporting if the broker is:

·a United States person;

·a controlled foreign corporation for United States federal income tax purposes;

·a foreign person 50% or more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period; or

·a foreign partnership, if at any time during its tax year:

·one or more of its partners are “U.S. persons,” as defined in U.S. Treasury regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership, or

·such foreign partnership is engaged in the conduct of a United States trade or business,

unless the broker does not have actual knowledge or reason to know that you are a United States person and the documentation requirements described above are met or you otherwise establish an exemption.  Backup withholding will apply if the sale is subject to information reporting and the broker has actual knowledge that you are a United States person.

Backup withholding is not an additional tax.  You generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed your income tax liability by filing a refund claim with the United States Internal Revenue Service.

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Disclosure of Information with Respect to Foreign Financial Assets

Certain U.S. individuals who hold any interest in “specified foreign financial assets,” including our shares or ADSs, during such holder’s taxable year must attach to their U.S. tax return for such year certain information with respect to each such asset if the aggregate value of all of such assets exceeds $50,000 (or a higher dollar amount prescribed by the Internal Revenue Service), unless such shares or ADSs are held in an account maintained by a U.S. payor, such as a U.S. financial institution or the U.S. branch of a foreign bank or insurer.  For this purpose, a “specified foreign financial asset” includes any depositary, custodial or other financial account maintained by a foreign financial institution, and certain assets that are not held in an account maintained by a financial institution, including any stock or security issued by a person other than a U.S. person.  A taxpayer subject to these rules who fails to furnish the required information may be subject to a penalty of $10,000, and an additional penalty may apply if the failure continues for more than 90 days after the taxpayer is notified of such failure by the Internal Revenue Service, unless the taxpayer demonstrates a reasonable cause for such failure to comply.  An accuracy-related penalty of 40% is imposed for an underpayment of tax that is attributable to an “undisclosed foreign financial asset understatement,” which for this purpose is the portion of the understatement of gross income for any taxable year that is attributable to any transaction involving an “undisclosed foreign financial asset,” including any asset that is subject to information reporting requirements under these rules, which would include our shares or ADSs if the dollar threshold described above were satisfied.

The applicable statute of limitations for assessment of U.S. federal income taxes is extended to six years if a taxpayer omits from gross income more than $5,000 and such omission is attributable to a foreign financial asset as to which reporting is required under the rules described in the preceding paragraph or would be so required if such rules were applied without regard to the dollar threshold or any other exceptions specified by the Internal Revenue Service.  In addition, the statute of limitations will be suspended if a taxpayer fails to provide in a timely manner either information with respect to specified foreign financial assets required to be reported or the annual information reports required for holders of PFIC stock, including PFIC stock for which a QEF election is made.  You should consult your own tax advisor concerning any obligation you may have to furnish information to the Internal Revenue Service as a result of holding our shares or ADSs.

F.Dividends and Paying Agents

Not Applicable.

G.Statement by Experts

Not Applicable.

H.Documents on Display

We are subject to the information requirements of the Exchange Act, except that, as a foreign private issuer, we are not subject to the proxy rules or the short-swing profit disclosure rules of the Exchange Act.  In accordance with these information requirements, we file or furnish reports and other information with the SEC.  Reports and other information filed or furnished by us with the SEC may be inspected and copied at the public reference facilities maintained by the SEC at Room 1024, 100 F Street, N.E., Washington, D.C. 20549, and at the SEC’s regional offices at 233 Broadway, New York, New York 10279 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.

Copies of such material may also be inspected at the offices of NASDAQ, 4 Times Square, New York, New York 10036, on which our ADSs are listed.  In addition, information filed electronically with the SEC is publicly available on the SEC’s website, which does not form part of this annual report on Form 20-F, at http://www.sec.gov.

I.Subsidiary Information

Not Applicable.

Item 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The risks inherent in our market-sensitive instruments are potential losses that may arise from adverse changes to interest rates, foreign exchange rates and market prices.  We are subject to market risk resulting from changes in interest rates because such changes may affect the cost at which we obtain financing.  We are subject to exchange rate risk with respect to our debt denominated in foreign currencies.  We are subject to market price risk through the valuation of some of our derivatives.

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Currency Risk

We operate internationally and are exposed to currency risks when operating in foreign currencies, in particular with respect to the U.S. dollar. Currency risk is associated with future commercial transactions, recognized assets and liabilities, and net investments in foreign operations.

We hold several investments in foreign operations, the net assets of which are exposed to currency risk. Currency risk affecting net assets of our foreign operations in U.S. dollars are mitigated primarily through borrowings in this foreign currency. Our main exposure to currency risk is to the U.S. dollar, which is used in a significant percentage of our transactions in foreign currencies.

We hold several investments in foreign operations, the net assets of which are exposed to currency risk.  Currency risk affecting net assets of our foreign operations in U.S. dollars are mitigated primarily through borrowings in this foreign currency.  Our main exposure to currency risk is to the U.S. dollar, which is used in a significant percentage of our transactions in foreign currencies.

If the U.S. dollar had strengthened by 10% against the euro at December 31, 2013, equity would have increased by €204 million (€145.9 million at December 31, 2011) and profit would have decreased by €20 million (€4.8 million at December 31, 2012).  This analysis assumes that all other variables are held constant, especially that interest rates remain constant.  A 10% weakening of the U.S. dollar against the euro at December 31, 2013 and 2012 would have had the opposite effect for the amounts shown above, all other variables being held constant.

Interest Rate Risk

Our interest rate risks arise from current and non-current borrowings. Borrowings at variable interest rates expose us to cash flow interest rate risks. The purpose of managing interest rate risk is to balance the debt structure, maintaining part of borrowings at fixed rates and hedging part of variable rate debt. We manage cash flow interest rate risks through variable to fixed interest rate swaps.

A significant part of the financing obtained during 2013 accrues interest at fixed rates. This fixed interest debt amounts to $1.1 billion, which represents approximately 29% of our total U.S. dollar denominated debt.

With respect to the remaining senior U.S. dollar denominated debt, which totaled $2.1 billion at December 31, 2013 and is at variable rates, we have contracted a variable to fixed interest rate swap. At December 31, 2013, the nominal part of this hedging instrument amounted to $1.2 billion. This nominal part will decrease over the term of the debt, based on the scheduled repayments of the principal. The purpose of the swaps is to convert borrowings at variable interest rates into fixed interest rate debt. Through these swaps, we undertake to exchange the difference between fixed interest and variable interest with other parties periodically. The notional amount of the swap hedged 57% of our variable interest rate senior U.S. dollar denominated debt at December 31, 2013 (63% at December 31, 2012).

Our variable interest rate senior euro denominated debt totaled €372 million at December 31, 2013, and represented approximately 14% of our total debt (14% at December 31, 2012). All of such debt is at variable rates. We manage cash flow interest rate risks through euro denominated variable to fixed interest rate swaps. The nominal part of this hedging instrument amounted to €100 million, representing hedging of 27%, of our variable interest rate senior euro denominated debt at December 31, 2013 (25% at December 31, 2012).

The fair value of interest rate swaps contracted to reduce the impact of rises in variable interest rates is accounted for on a monthly basis. These derivative financial instruments comply with hedge accounting requirements for financial hedging instruments.

If the interest rate at December 31, 2013 had been 100 basis points higher, our interest expense would have increased by €9.7 million (€6.2 million at December 31, 2012), the finance expense due to changes in the value of derivatives would have been €10.4 million lower (€23.6 million at December 31, 2012) and equity would have increased by €18.8 million (€27.8 million at December 31, 2012) as a result of changes in derivatives to which hedge accounting is applied.

Market Price Risk

We are subject to price risk with respect to raw materials, which is mitigated by the vertical integration of the hemoderivatives business in a sector that is highly concentrated.

We signed two unquoted futures contracts, the underlying assets of which were shares in Grifols, S.A. accounted for at fair value through profit or loss.  Such instruments were therefore exposed to risk of value fluctuations.  We settled these contracts during 2012, obtaining cash of €31.5 million and finance income of €27.9 million.

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Item 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

A.Debt Securities

Not Applicable.

B.Warrants and Rights

Not Applicable.

C.Other Securities

Not Applicable.

D.American Depositary Shares

Deutsche Bank Trust Company Americas serves as the depositary for both our Class A ADSs and our Class B ADSs, and its principal executive office is located at 60 Wall Street, New York, NY 10005, USA.  The custodian is Deutsche Bank Sociedad Anónima Española, and its principal office in Spain is located at Ronda General Mitre 72-74, 08017 Barcelona, Spain.

Each Class A ADS represents the right to receive one half of one Class A ordinary share of Grifols, S.A. Each Class B ADS represents the right to receive one Class B non-voting preference share of Grifols, S.A.

The following is a summary of the fee provisions of the deposit agreements for each of the Class A ADSs and Class B ADSs.  For more complete information, you should read each deposit agreement in its entirety.

Associated Fee	Depositary Action
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)	Issuance of ADSs, including issuance resulting from a distribution of shares or rights or other property. Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates.
$2.00 (or less) per 100 ADSs (or portion of 100 ADSs)	Distribution of cash proceeds, including cash dividends or sale of rights and other entitlements.
$2.00 (or less) per 100 ADSs (or portion of 100 ADSs) per calendar year, provided that this fee, when combined with the fee for distribution of cash proceeds, including cash dividends or sale of rights and other entitlements, shall not exceed $2.00 (or less) per 100 ADSs (or portion of 100 ADSs) in any calendar year	Depositary operation and maintenance costs.
Annual fee of $1.00 per 100 ADSs	Inspections of the relevant share register.
Registration or transfer fees	Transfer and registration of our shares on its share register to or from the name of the depositary or its agent when you deposit or withdraw our shares.
Expenses of the depositary	Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement). Converting foreign currency to U.S. dollars.
Taxes and other governmental charges the depositary or the custodian has to pay on any ADS or share underlying an ADS, including any applicable interest and penalties thereon and any share transfer or other taxes or governmental charges, for example, stock transfer taxes, stamp duty or withholding taxes	As necessary.
Any fees and expenses incurred by the depositary in connection with the conversion of a foreign currency in compliance with the applicable exchange control and other regulations, and the delivery of deposited securities, including any fees of a central depository, and any additional fees, charges, costs, or expenses, that may be incurred by the depositary from time to time	As necessary.
Any additional fees, charges, costs or expenses that may be incurred by the depositary from time to time	As necessary.

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The depositary collects its fees for issuance and cancellation of our ADSs directly from investors depositing shares or surrendering our ADSs for the purpose of withdrawal or from intermediaries acting for them.  The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees.  The depositary may collect its annual fee for depositary services by deduction from cash distributions, by directly billing investors or by charging the book-entry system accounts of participants acting for such investors.  The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

The fees and charges holders of our ADSs may be required to pay may vary over time and may be changed by us and by the depositary.  Our ADS holders will receive prior notice of such changes.

Fees Paid by the Depositary to Grifols

Deutsche Bank Trust Company Americas, as depositary, has agreed to reimburse or pay on behalf of Grifols, S.A. certain reasonable expenses related to our ADR programs and incurred by us in connection with the programs, such as investor relations activities and ongoing maintenance expenses and listing fees.  It has covered all such expenses incurred by us during 2013 for an amount of $1.03 million.  The amounts the depositary reimbursed or paid are not perforce related to the fees it collected from ADS holders.

As part of its service to us, Deutsche Bank Trust Company Americas has also agreed to waive the cost of providing administrative and reporting services, including the cost of accessing its intelligence database for our ADR programs, which totaled $160,000 for 2013.

PART II

Item 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable.

Item 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not Applicable.

Item 15.CONTROLS AND PROCEDURES

A.Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this annual report on Form 20-F, have concluded that, as of such date, our disclosure controls and procedures were effective.

B.Management’s Report on Internal Control over Financial Reporting

Our management, under the supervision of our Chief Executive Officer and our Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  Our internal control system is designed to provide reasonable assurance as to the reliability of financial reporting and the preparation of the published financial statements under generally accepted accounting principles.  For Grifols, S.A., “generally accepted accounting principles” means IFRS as issued by IASB.

Our internal control over the financial reporting system includes those policies and procedures that:  (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of our company are being made only in accordance with authorizations of management and directors of our company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our company assets that could have a material effect on the financial statements.

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Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by IASB. Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2013.  In making this assessment, they used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework (2013).  Based on their assessment under these criteria, our management believes that, at December 31, 2013 our internal control over financial reporting is effective.

C.Attestation Report of the Registered Public Accounting Firm

KPMG Auditores, S.L., an independent registered public accounting firm, who also audit the Group’s consolidated financial statements, has audited the effectiveness of Grifols S. A.’s internal control over financial reporting, and has issued an unqualified report thereon, which is included on page F-1 of this annual report on Form 20-F.

D.Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16.[RESERVED]

Item 16.A.AUDIT COMMITTEE FINANCIAL EXPERT

The Board has determined that each of Steven F. Mayer and W. Brett Ingersoll is an “audit committee financial expert,” as defined in Item 16A of Form 20-F, and is an independent director under Rule 10A-3 under the Exchange Act.

Item 16.B.CODE OF ETHICS

We have adopted the Employee Code of Conduct, which applies to all of our employees, directors and officers, including our principal executive officer, principal financial officer and principal accounting officer.  This Code is intended to meet the definition of “code of ethics” under Item 16B of Form 20-F.

If the Employee Code of Conduct is amended, or if a waiver is granted, we will disclose such amendment or waiver.

Item 16.C.PRINCIPAL ACCOUNTANT FEES AND SERVICES

The table below sets forth the total fees paid to KPMG Auditores, S.L., our principal accountants, and to other member firms of the KPMG international organization, for services performed in the years 2013 and 2012, and breaks down these amounts by category of service:

	2013	2012
	(in thousands of euros)
Audit fees	3,338	3,231
Audit-related fees(1)	48	12
Tax fees	23	32
All other fees(2)	297	71
	3,706	3,346

(1)Audit-related fees are fees for assurance services or other work traditionally provided to us by external audit firms in their

role as statutory auditors.

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(2)All other fees primarily relate to due diligence of businesses acquired and training.

The table below sets forth the total fees paid to other auditors for services performed in the years 2013 and 2012, and breaks down these amounts by category of service:

	2013	2012
	(in thousands of euros)
Audit fees	32	23
Audit-related fees	13	8
Tax fees	45	—
All other fees	51	52
	141	83

Pre-approval Policies and Procedures

Subject to shareholder approval of the independent auditor in accordance with Spanish law, the Audit Committee makes recommendations to the Board regarding the appointment, retainer and replacement of the independent auditor.  The Audit Committee is also directly responsible for the compensation and oversight of the work of the independent auditor.  We have developed a policy regarding the engagement of professional services by our external auditor, in accordance with the Spanish Audit Law and the Sarbanes-Oxley Act of 2002.  This policy generally provides that we will not engage our independent auditors to render audit or non-audit services unless the service is specifically approved in advance by the Audit Committee.

In accordance with the pre-approval policy, all audit and permitted non-audit services performed for us by our principal accountants, or any of its affiliates, were approved by the Audit Committee, which concluded that the provision of such services by the independent accountants was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.

Item 16.D.EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

Item 16.E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The following table includes information about our share purchases during 2013:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Number of Shares that May Yet Be Purchased Under the Programs
March 1, 2013 through March 31, 2013(1)	4,402,986 Class B Shares	$	27.00	0	N/A

(1)On March 11, 2013, we purchased 4,402,986 of our Class B ADSs from Cerberus for a total purchase price of $118,880,622, or $27 per ADS, pursuant to the ADS Purchase Agreement. For a summary of the material terms of the ADS Purchase Agreement, see Item 5 of this Part I, “Operating and Financial Review and Prospects — A. Operating Results — Subsequent Events.”

In November 2013, we sold 4,402,986 ADSs, representing all of our treasury stock, for €11.2 million.  As of December 31, 2013, we hold no treasury stock.

Item 16.F.CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

Item 16.G.CORPORATE GOVERNANCE

Pursuant to NASDAQ Listing Rules, as a foreign private issuer, we may elect to follow our home country practice in lieu of the corporate governance requirements of the NASDAQ Listing Rule 5600 Series, with the exception of those rules that are required

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to be followed pursuant to the provisions of NASDAQ Listing Rule 5615(a)(3).  We have elected to follow Spanish practices in lieu of the requirements of the NASDAQ Listing Rule 5600 Series to the extent permitted under NASDAQ Listing Rule 5615(a)(3).  Set forth below is a summary of the significant differences between the corporate governance practices we follow under Spanish law and those followed by NASDAQ-listed U.S. domestic issuers.

Corporate Governance

Under NASDAQ Listing Rules, a U.S. domestic issuer is required to establish a quorum as specified in its bylaws for any meeting of the holders of common stock, provided, however, that such quorum is not permitted to be less than 33 1/3% of the outstanding shares of voting stock.  The Articles of Association provide that, on the first call of our general shareholders’ meetings, a duly constituted meeting requires a quorum of at least 25% of our subscribed share capital with voting rights, and, if a quorum is not obtained on the first call, a meeting is validly convened on the second call regardless of the share capital in attendance.  However, certain major corporate actions (such as issuing additional ordinary shares, increasing or decreasing our share capital, issuing debt securities, amending the Articles of Association or approving merger transactions) require shareholder approval at a meeting at which at least 50% of our subscribed share capital with voting rights is present or represented on the first call or at least 25% of the our share capital with voting rights present or represented on the second call.  However, when the number of shareholders attending a meeting represents less than 50% of our subscribed share capital with voting rights, resolutions on any of these major corporate actions must be adopted by the affirmative vote of at least two-thirds of the share capital present or represented at such meeting.

In addition, all actions described in Article 6.bis of the Articles of Association, which are considered to affect the economic rights of our Class B shares, must be approved at a shareholders meeting by the holders of at least a majority of Class B shares.

Under NASDAQ Listing Rules, U.S. domestic issuers are required to solicit proxies, provide proxy statements for all shareholders’ meetings and provide copies of such proxy materials to NASDAQ.  As a foreign private issuer, we are generally exempt from the SEC rules governing the solicitation of shareholder proxies.  However, under Spanish law and per the Articles of Association, we are required to publish a calling of the meeting at least one month prior to the date set for each general shareholders’ meeting in at least:  (i) the Official Gazette of the Commercial Registry or one of the local newspapers of wide circulation in the province where we are domiciled (currently Barcelona, Spain); (ii) CNMV’s website; and (iii) our website.  We distribute a copy of the notice of the meeting and a form of proxy to our U.S. shareholders and also make these materials available through our website in advance of such meeting.

Under NASDAQ Listing Rules, shareholders of U.S. domestic issuers must be given the opportunity to vote on equity compensation plans and material revisions thereto, with limited exceptions set forth in NASDAQ Listing Rules, including an exception for foreign private issuers who follow the laws of their home country.  Under Spanish law, equity compensation plans involving the issuance of our securities require prior shareholder approval.  Additionally, equity compensation plans in which our officers and employees participate can be approved by the Board without shareholder approval.  However, the establishment of equity compensation plans in which members of the Board participate must be authorized in the Articles of Association and requires the shareholders’ prior approval at a shareholders’ meeting.

Under NASDAQ Listing Rules, shareholders of U.S. domestic issuers must approve the issuance of securities when such issuance would result in a change in control of such issuer.  Under Spanish law, any issuance of our securities, regardless of whether such issuance would result in a change of control, requires prior shareholder approval.

In Spain, companies with securities listed on a Spanish Stock Exchange are:

(i)recommended to follow the provisions of the CNMV Governance Code;

(ii)required by law to publish an Annual Report on Corporate Governance as well as corporate governance information on their websites;

(iii)required by law to publish an Annual Report on Remuneration of the members of the Board; and

(iv)required by law to comply with the regulations with respect to audit committees set forth in the Securities Market Act, as amended.

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Board Practices

Independence of Directors

Pursuant to NASDAQ Listing Rules, a majority of the directors of a listed U.S. company are required to be “independent,” as such term is defined by NASDAQ Listing Rules.  As a foreign private issuer, we are exempt from such requirement, and Spanish law does not contain any such requirements.

Spanish law establishes that the category of directors and the indispensable requirements to determine their independence are regulated by the Ministry of Economy and Finance, or, with its authorization, by the CNMV.  The Articles of Association and Board Regulations, following the non-binding recommendations of the CNMV Governance Code, recognize two main categories of directors:  (i) executive directors; and (ii) external directors, who can be divided into (a) proprietary directors, (b) independent directors and (c) other directors who cannot be considered proprietary or independent.

The definition of “independent director,” as set forth in the CNMV Governance Code and Article 6 of the Board Regulations, provides that the persons listed below may not be nominated or designated as independent directors.

(i)Employees or executive directors of any Group companies, unless three or five years have elapsed, respectively, since the termination of the relationship.

(ii)Persons that have received some payment from us or from the Group in addition to their directors’ remuneration, unless the amount involved is not significant.  Dividends or pension supplements received by a director for prior employment or professional services are excluded, provided that such payments are non-contingent (i.e., the paying company has no discretionary power to suspend, modify or revoke the payment).

(iii)Persons that have been, during the last three years, partners of the external auditors or the firm responsible for the audit report, whether with respect to the audit of us or any other company in the Group for those years.

(iv)Executive directors or senior officers of other companies in which any of our executive directors or senior officers is an external director.

(v)Persons that have or had, during the last year, material business relationships with us or with any other company in the Group, whether in their own name or as a significant shareholder, director or senior officer of a company that has or had such a relationship.  For purposes of this paragraph (v), “business relationships” means any relationship with suppliers of goods or services, including financial, advisory and consultancy services.

(vi)Significant shareholders, executive directors or senior officers of an entity which receives or has received, during the last three years, significant donations from us or the Group.  This provision does not apply to those who are merely trustees of a foundation receiving donations.

(vii)Spouses or related persons maintaining an analogous relationship or close relatives of one of our executive directors or senior officers.

(viii)Any person not proposed for appointment or renewal by the Appointments and Remuneration Committee.

(ix)Persons in any of the situations set out in (i), (v), (vi) or (vii) above with regard to a significant shareholder or a shareholder with Board representation.  In the case of the family relations set out in (vii) above, the limitation applies not only in connection with the shareholder but also with our proprietary directors.

The proprietary directors who lose this status as a consequence of the sale of the shareholding by the shareholder they represent, can be reelected as independent directors only when such shareholder has sold the total amount of its shares.

Finally, any member of the Board that owns our shares can be considered independent, as long as the shareholding is not significant and satisfies all the above-mentioned conditions.

We have not determined whether our directors would be considered independent under NASDAQ Listing Rules, except for the three directors who are members of the Audit Committee and as such must meet NASDAQ independence criteria.  Two members of the Board are independent directors in accordance with the Board Regulations and the CNMV Governance Code.

Furthermore, we follow the Spanish Companies Act, which does not, unlike NASDAQ Listing Rules, require independent directors to hold meetings where only such independent directors are present.

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For a detailed discussion of the composition, responsibilities and terms of our Audit Committee, see Item 6 of Part I, “Directors, Senior Management and Employees — C. Board Practices — Committees of the Board — Audit Committee.”

Audit Committee

Responsibilities and Terms.  In accordance with NASDAQ Listing Rules, our Audit Committee is in charge of the appointment, compensation, retention and oversight of the services of any registered public accounting firm engaged for the purpose of preparing and issuing any audit report, or for performing other audit reviews or related services.  Notwithstanding the above, Spanish laws provide our shareholders with the authority to appoint and replace the independent auditor at a general shareholders meeting.

Independence of the Audit Committee.  All of the members of our Audit Committee meet the independence criteria set out in NASDAQ Listing Rules.  In addition, the Securities Market Act requires that (a) the Audit Committee be composed of a majority of non-executive directors (at least one of them being independent and appointed due to his knowledge and experience in accounting or auditing matters) and (b) the chairman of the Audit Committee is an external director.  For a further discussion regarding the composition of our Audit Committee, see Item 6 of Part I, “Directors, Senior Management and Employees — C. Board Practices — Committees of the Board — Audit Committee.”

Internal Audit Department.  We have an internal audit department responsible for internal audit matters and ensuring the efficiency of the internal audit control process of our different business units.  Our internal audit department reports directly to the Audit Committee, supporting the adequate performance of all its functions.

Appointments and Remuneration Committee

Pursuant to NASDAQ Listing Rules, foreign private issuers are exempt from the requirements regarding independent nominating and compensation committees.  Foreign private issuers are permitted to follow their home country corporate governance practice in this respect.

Spanish law does not mandate that a company have an appointments and remuneration committee or, if such a committee is formed, that the committee be comprised of independent directors.  However, the CNMV Governance Code recommends that Spanish listed companies have an appointments and remuneration committee and that a majority of the members of such committee are independent directors.

Our Appointments and Remuneration Committee is comprised of a majority of external directors and is chaired by an external director.  However, Mr. Víctor Grifols Roura, our Chief Executive Officer, is also a member of this committee.  For a detailed discussion of our Appointments and Remuneration Committee, see Item 6 of Part I, “Directors, Senior Management and Employees — C. Board Practices — Committees of the Board — Appointments and Remuneration Committee.”

Code of Conduct and Business Ethics

Under NASDAQ Listing Rules, we are required to adopt a code of business conduct and ethics applicable to all directors, officers and employees, which must be publicly available.  Furthermore, under Spanish law, Grifols’ is required to adopt an internal code of conduct for securities markets, in order to prevent insider trading, misconduct, and to control possible conflicts of interest.

In order to comply with the requirements of Spanish law, in 2006, Grifols adopted the Stock Market Code of Conduct.  Additionally, the Board Regulations set out in detail the directors’ main obligations relating to conflicts of interest concerning business opportunities, use of Grifols’ assets, confidentiality and non-competition.  Both the Stock Market Code of Conduct and the Board Regulations are publicly available on our website, which does not form part of this annual report on Form 20-F, at www.grifols.com.  Although not mandatory under Spanish laws, the Board of Grifols also approved the Code of Conduct for Grifols Employees, which is publicly available on our website, which does not form part of this annual report on Form 20-F, at www.grifols.com.

Item 16.H.MINE SAFETY DISCLOSURE

Not applicable.

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PART III

Item 17.FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 18 of this Part III.

Item 18.FINANCIAL STATEMENTS

The audited consolidated financial statements as required under Item 18 of this Part III are attached hereto starting on page F-1 of this annual report on Form 20-F.  The audit report of KPMG, our independent registered public accounting firm, is included herein preceding the audited consolidated financial statements.

Item 19.EXHIBITS

Exhibit Number	Description
1.1	Articles of Association (Estatutos) of Grifols, S.A.
1.2	Articles of Association (Estatutos) of Grifols, S.A. (English translation)
2.1	Amendment No. 1 to Deposit Agreement dated as of March 14, 2011 among Grifols, S.A., Deutsche Bank Trust Company Americas, as depositary, and all Holders from time to time of American Depositary Shares evidenced by American Depositary Receipts issued thereunder (incorporated herein by referenced to Exhibit (a)(2) to our Registration Statement on Form F-6 (File No. 333-182636 filed July 12, 2012))
2.2	Form of Deposit Agreement among Grifols, S.A., Deutsche Bank Trust Company Americas, as depositary, and all Holders from time to time of American Depositary Shares evidenced by American Depositary Receipts issued thereunder (incorporated herein by reference to Exhibit (a) to our Registration Statement on Form F-6 (File No. 333-172688) filed March 9, 2011)
2.3	Form of Deposit Agreement among Grifols, S.A., Deutsche Bank Trust Company Americas, as depositary, and all Holders from time to time of American Depositary Shares evidenced by American Depositary Receipts issued thereunder (incorporated herein by reference to Exhibit (a) to our Registration Statement on Form F-6 (File No. 333-159327) filed May 18, 2009)
2.4*	Senior Notes Indenture, dated as of March 12, 2014, relating to the 5.25% Senior Notes due 2022, among Grifols Worldwide Operations Limited, the guarantors signatory thereto and The Bank of New York Mellon Trust Company, N.A., as trustee
2.5*	Form of 5.25% Senior Note (included as Exhibit A to Exhibit 4.1)
2.6*	Registration Rights Agreement, dated March 12, 2014, by and among Grifols Worldwide Operations Limited and Nomura Securities International, Inc., as representative of the several initial purchasers
2.7	American Depositary Share Purchase Agreement, dated March 8, 2013, by and among Grifols, S.A. and the selling entities party thereto (incorporated herein by reference to Exhibit 2.8 of our Annual Report on Form 20-F (File No. 001-35193) filed on April 5, 2013)
4.1*	Share and Asset Purchase Agreement, dated November 10, 2013, among Novartis Vaccines and Diagnostics, Inc., Novartis Corporation, G-C Diagnostics Corp. and Grifols, S.A.†
4.2*	Amendment No. 1 to Share and Asset Purchase Agreement, dated December 27, 2013, among Novartis Vaccines and Diagnostics, Inc., Novartis Corporation, G-C Diagnostics Corp. and Grifols, S.A.
4.3*	Amendment No. 2 to Share and Asset Purchase Agreement, dated January 9, 2014, among Novartis Vaccines and Diagnostics, Inc., Novartis Corporation, G-C Diagnostics Corp. and Grifols, S.A.†
4.4*	Credit and Guaranty Agreement, dated as of February 27, 2014, among Grifols Worldwide Operations Limited, Grifols Worldwide Operations USA, Inc., Grifols, S.A, certain subsidiaries of Grifols, S.A., the lenders party thereto, and Deutsche Bank AG New York Branch, as administrative and collateral agent
4.5*	U.S. Pledge and Security Agreement, dated February 27, 2014, among Grifols Worldwide Operations Limited, each of the subsidiaries of Grifols, S.A. as grantors, and Deutsche Bank AG New York Branch, as collateral agent for the secured parties
4.6*	Amendment to Credit Agreement and Amendment to Security Agreement, dated as of March 17, 2014, among

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Exhibit Number	Description
	Grifols Worldwide Operations Limited, Grifols Worldwide Operations USA, Inc., Grifols, S.A, certain subsidiaries of Grifols, S.A., the lenders party thereto, and Deutsche Bank AG New York Branch, as administrative and collateral agent
4.7*	Pledge Agreement, dated as of February 27, 2014, between Grifols, S.A. and Deutsche Bank AG New York Branch, as collateral agent
4.8*	Patent Security Agreement, dated as of February 27, 2014, among the grantors party thereto and Deutsche Bank AG New York Branch, as collateral agent for the secured parties
4.9*	Trademark Security Agreement, dated as of February 27, 2014, among the grantors party thereto and Deutsche Bank AG New York Branch, as collateral agent for the secured parties
4.10*	Credit and Guaranty Agreement, dated as of January 3, 2014, among Grifols, S.A., certain subsidiaries of Grifols, S.A. and Nomura Corporate Funding Americas, LLC, as administrative agent
4.11*	Credit and Guaranty Agreement, dated as of February 27, 2014, by and among Grifols Worldwide Operations Limited, Grifols, S.A., certain subsidiaries of Grifols S.A. and Deutsche Bank AG Cayman Islands Branch, as administrative agent
8.1	List of subsidiaries (see Notes 1(a) and 2(c) to our audited consolidated financial statements starting on page F-1 of this annual report on Form 20-F)
12.1*	Principal Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*	Principal Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1*	Principal Executive Officer and Principal Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Filed herewith.

† Confidential treatment is requested for certain confidential portions of this exhibit pursuant to Rule 24b-2 under the Exchange Act. In accordance with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately with the Commission.

136

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	GRIFOLS, S.A.
	By:	/s/ Víctor Grifols Roura
		Name:	Víctor Grifols Roura
		Title:	Chairman of the Board of Directors and Chief Executive Officer
Date:  April 4, 2014

137

GRIFOLS, S.A. AND SUBSIDIARIES

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets at December 31, 2013 and 2012	F-2
Consolidated Statement of Profit or Loss for the years ended December 31, 2013, 2012 and 2011	F-4
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011	F-6
Statement of Changes in Consolidated Equity for the years ended December 31, 2013, 2012 and 2011	F-7
Notes to the Consolidated Financial Statements	F-8
Appendix I — Information on Group Companies, Associates and Others	F-96
Appendix II — Operating Segments and Geographical Information	F-101
Appendix III — Changes in Other Intangible Assets	F-103
Appendix IV — Changes in Property, Plant and Equipment	F-105
Appendix V — Non-current Loans and Borrowings	F-107
Appendix VI — Condensed Consolidated Financial Information	F-108

138

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Grifols, S.A.

We have audited the accompanying consolidated balance sheets of Grifols, S.A. and subsidiaries (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statement of profit or loss, and consolidated statements of comprehensive income, changes in consolidated equity and cash flows for each of the years in the three-year period ended December 31, 2013. We also have audited Grifols S.A.’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Grifols S.A.’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on Grifols S.A.’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Grifols, S.A. and subsidiaries as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, Grifols S.A. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

KPMG Auditores, S.L.

Barcelona, Spain

April, 4 2014

F-1

GRIFOLS, S.A. AND SUBSIDIARIES

Consolidated Balance Sheets

at 31 December 2013 and 2012

Assets	31/12/13	31/12/12
	(Expressed in thousands of Euros)
Goodwill (note 7)	1,829,141	1,869,899
Other intangible assets (note 8)	946,435	969,095
Property, plant and equipment (note 9)	840,238	810,107
Investments in equity-accounted investees (note 10)	35,765	2,566
Non-current financial assets (note 11)	15,196	16,526
Deferred tax assets (note 2(a) and 28)	34,601	24,717
Total non-current assets	3,701,376	3,692,910
Inventories (note 12)	946,913	998,644
Trade and other receivables
Trade receivables	385,537	366,022
Other receivables	36,511	43,833
Current tax assets	43,533	37,318
Trade and other receivables (note 13)	465,581	447,173
Other current financial assets (note 11)	1,200	460
Other current assets (note 14)	17,189	14,960
Cash and cash equivalents (note 15)	708,777	473,327
Total current assets	2,139,660	1,934,564
Total assets	5,841,036	5,627,474

The accompanying notes form an integral part of the consolidated financial statements.

F-2

GRIFOLS, S.A. AND SUBSIDIARIES

Consolidated Balance Sheets

at 31 December 2013 and 2012

Equity and liabilities	31/12/13		31/12/12
	(Expressed in thousands of Euros)
Share capital	119,604		117,882
Share premium	910,728		890,355
Reserves	883,415		620,144
Treasury stock	0		(3,060	)
Interim dividend	(68,755	)	0
Profit for the year attributable to the Parent	345,551		256,686
Total equity	2,190,543		1,882,007
Cash flow hedges	(25,791	)	(33,036	)
Translation differences	(63,490	)	27,797
Other comprehensive expenses	(89,281	)	(5,239	)
Equity attributable to the Parent (note 16)	2,101,262		1,876,768
Non-controlling interests (note 18)	5,942		3,973
Total equity	2,107,204		1,880,741
Liabilities
Grants (note 19)	7,034		5,855
Provisions (note 20)	4,202		3,348
Non-current financial liabilities (note 21)	2,553,211		2,690,819
Deferred tax liabilities (notes 2(a) and 28)	454,089		453,846
Total non-current liabilities	3,018,536		3,153,868
Provisions (note 20)	51,459		55,139
Current financial liabilities (note 21)	258,144		195,578
Debts with associates (note 32)	2,683		2,668
Trade and other payables
Suppliers	273,621		228,405
Other payables	42,388		27,357
Current tax liabilities	2,934		5,679
Total trade and other payables (note 22)	318,943		261,441
Other current liabilities (note 23)	84,067		78,039
Total current liabilities	715,296		592,865
Total liabilities	3,733,832		3,746,733
Total equity and liabilities	5,841,036		5,627,474

The accompanying notes form an integral part of the consolidated financial statements.

F-3

GRIFOLS, S.A. AND SUBSIDIARIES

Consolidated Statement of Profit or Loss

for the years ended 31 December 2013, 2012 and 2011

	31/12/13		31/12/12		31/12/11
	(Expressed in thousands of Euros)
Continuing Operations
Net revenue (note 24)	2,741,732		2,620,944		1,795,613
Cost of sales	(1,323,880	)	(1,291,345	)	(968,133	)
Gross Profit	1,417,852		1,329,599		827,480
Research and Development	(123,271	)	(124,443	)	(89,360	)
Sales, General and Administration expenses	(558,461	)	(545,072	)	(459,259	)
Operating Expenses	(681,732	)	(669,515	)	(548,619	)
Operating Results	736,120		660,084		278,861
Finance income	4,869		1,677		5,761
Finance costs	(239,991	)	(284,117	)	(200,562	)
Change in fair value of financial instruments	(1,786	)	13,013		1,279
Impairment and gains /(losses) on disposal of financial instruments	792		2,107		(805	)
Exchange losses	(1,303	)	(3,409	)	(3,447	)
	(237,419	)	(270,729	)	(197,774	)
Share of losses of equity accounted investees (note 10)	(1,165	)	(1,407	)	(1,064	)
Profit before income tax from continuing operations	497,536		387,948		80,023
Income tax expense (note 28)	(155,482	)	(132,571	)	(29,795	)
Profit after income tax from continuing operations	342,054		255,377		50,228
Consolidated profit for the year	342,054		255,377		50,228
Profit attributable to the Parent	345,551		256,686		50,307
Loss attributable to non-controlling interest (note 18)	(3,497	)	(1,309	)	(79	)
Basic earnings per share (Euros) (see note 17)	1.01		0.75		0.16
Diluted earnings per share (Euros) (see note 17)	1.01		0.75		0.16

The accompanying notes form an integral part of the consolidated financial statements.

F-4

GRIFOLS, S.A. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

for the years ended 31 December 2013, 2012 and 2011

	31/12/13		31/12/12		31/12/11
	(Expressed in thousands of Euros)
Consolidated profit for the year	342,054		255,377		50,228
Other comprehensive expenses
Items for reclassification to profit or loss
Translation differences	(91,610	)	(31,016	)	109,607
Equity accounted investees (note 10)	(359	)	0		0
Cash flow hedges - effective part of changes in fair value	22,943		(25,140	)	(33,871	)
Cash flow hedges - amounts taken to profit and loss	(11,471	)	6,300		2,870
Tax effect	(4,227	)	6,988		11,568
Other comprehensive income for the year, after tax	(84,724	)	(42,868	)	90,174
Total comprehensive income for the year	257,330		212,509		140,402
Total comprehensive income attributable to the Parent	261,509		213,831		140,407
Total comprehensive expense attributable to the non-controlling interests	(4,179	)	(1,322	)	(5	)

The accompanying notes form an integral part of the consolidated financial statements.

F-5

GRIFOLS, S.A. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

for the years ended 31 December 2013, 2012 and 2011

	31/12/13		31/12/12		31/12/11
	(Expressed in thousands of Euros)
Cash flows from operating activities
Profit before tax	497,536		387,948		80,023
Adjustments for:	347,853		400,950		313,915
Amortisation and depreciation (note 26)	128,469		129,126		90,639
Other adjustments:	219,384		271,824		223,276
(Profit) / losses on equity accounted investments (note 10)	1,165		1,407		1,064
Exchange gains	1,303		3,409		3,447
Impairment of assets and net provision charges	4,611		8,104		23,806
(Profit) / losses on disposal of fixed assets	4,689		12,542		19,366
Government grants taken to income (note 19)	(1,130	)	(930	)	(1,304	)
Finance expense / (income)	228,308		258,060		180,567
Other adjustments	(19,562	)	(10,768	)	(3,670	)
Change in operating assets and liabilities	40,332		(43,617	)	(51,279	)
Change in inventories	17,277		14,509		6,909
Change in trade and other receivables	(35,694	)	44,258		(54,142	)
Change in current financial assets and other current assets	(2,612	)	(5,645	)	9,321
Change in current trade and other payables	61,361		(96,739	)	(13,367	)
Other cash flows used in operating activities	(293,710	)	(238,163	)	(122,431	)
Interest paid	(157,880	)	(180,539	)	(139,883	)
Interest recovered	5,423		2,923		3,582
Income tax (paid) / received	(141,253	)	(60,547	)	13,870
Net cash from operating activities	592,011		507,118		220,228
Cash flows from investing activities
Payments for investments	(252,827	)	(177,195	)	(1,784,464	)
Group companies and business units (notes 2 (c) and 3)	(69,172	)	(11,067	)	(1,624,869	)
Property, plant and equipment and intangible assets	(172,849	)	(166,128	)	(159,899	)
Property, plant and equipment	(138,460	)	(146,028	)	(137,200	)
Intangible assets	(34,389	)	(20,100	)	(22,699	)
Other financial assets	(10,806	)	—		304
Proceeds from the sale of investments	16,793		112,760		165,738
Property, plant and equipment	16,793		79,896		160,266
Associates	—		1,883		5,472
Other financial assets	—		30,981		—
Net cash used in investing activities	(236,034	)	(64,435	)	(1,618,726	)
Cash flows from financing activities
Proceeds from and payments for equity instruments	35,221		(9	)	(2,830	)
Issue	20,461		—		(2,830	)
Payments for treasury stock (note 16 (d))	(120,429	)	(5,194	)	—
Sales of treasury stock (note 16 (d))	135,189		5,185		—
Proceeds from and payments for financial liability instruments	(79,413	)	(255,569	)	1,762,550
Issue	53,507		25,727		2,994,741
Redemption and repayment	(132,920	)	(281,296	)	(1,232,191	)
Dividends and interest on other equity instruments	(69,138	)	—		—
Dividends paid	(70,062	)	—		—
Dividends received	924		—		—
Other cash flows from / (used in) financing activities	8,184		(49,752	)	(284,748	)
Financing costs included on the amortized costs of the debt	—		(43,752	)	(285,088	)
Other amounts from / (used in) financing activities	8,184		(6,000	)	340
Net cash from/(used in) financing activities	(105,146	)	(305,330	)	1,474,972
Effect of exchange rate fluctuations on cash	(15,381	)	(4,612	)	24,463
Net increase in cash and cash equivalents	235,450		132,741		100,937
Cash and cash equivalents at beginning of the year	473,327		340,586		239,649
Cash and cash equivalents at end of year	708,777		473,327		340,586

The accompanying notes form an integral part of the consolidated financial statements

F-6

GRIFOLS, S.A. AND SUBSIDIARIES

Statement of Changes in Consolidated Equity

for the years ended 31 December 2013, 2012 and 2011

(Expressed in thousands of Euros)

	Attributable to equity holders of the Parent
					Profit attributable						Accumulated other comprehensive income				Equity attributable
	Share	Share			to		Interim		Treasury		Translation		Cash flow		to		Non-controlling
	capital	premium	Reserves *		Parent		dividend		stock		differences		hedges		Parent		interests		Equity
Balances at 31 December 2010	106,532	121,802	403,604		115,513		—		(1,927	)	(50,733	)	(1,751	)	693,040		14,350		707,390
Translation differences	—	—	—		—		—		—		109,533		—		109,533		74		109,607
Cash flow hedges	—	—	—		—		—		—		—		(19,433	)	(19,433	)	—		(19,433	)
Other comprehensive income for the year	—	—	—		—		—		—		109,533		(19,433	)	90,100		74		90,174
Profit/(loss) for the year	—	—	—		50,307		—		—		—		—		50,307		(79	)	50,228
Total comprehensive income / (expense) for the year	—	—	—		50,307		—		—		109,533		(19,433	)	140,407		(5	)	140,402
Capital increase June 2011 (note 16(a))	8,382	768,553	(2,514	)	—		—		—		—		—		774,421		—		774,421
Capital increase December 2011 (note 16(a))	2,968	—	(3,325	)	—		—		—		—		—		(357	)	—		(357	)
Other changes (note 16)	—	—	52,828		—		—		—		—		—		52,828		(213	)	52,615
Acquisition of Non-controlling interest (note 3)	—	—	2,168		—		—		—		—		—		2,168		(11,645	)	(9,477	)
Distribution of 2010 profit
Reserves	—	—	115,513		(115,513	)	—		—		—		—		—		—		—
Operations with equity holders or owners	11,350	768,553	164,670		(115,513	)	—		—		—		—		829,060		(11,858	)	817,202
Balance at 31 December 2011	117,882	890,355	568,274		50,307		—		(1,927	)	58,800		(21,184	)	1,662,507		2,487		1,664,994
Translation differences	—	—	—		—		—		—		(31,003	)	—		(31,003	)	(13	)	(31,016	)
Cash flow hedges	—	—	—		—		—		—		—		(11,852	)	(11,852	)	—		(11,852	)
Other comprehensive expense for the year	—	—	—		—		—		—		(31,003	)	(11,852	)	(42,855	)	(13	)	(42,868	)
Profit/(loss) for the year	—	—	—		256,686		—		—		—		—		256,686		(1,309	)	255,377
Total comprehensive income / (expense) for the year	—	—	—		256,686		—		—		(31,003	)	(11,852	)	213,831		(1,322	)	212,509
Other changes	—	—	1,563		—		—		(1,133	)	—		—		430		(59	)	371
Acquisition of Non-controlling interest (note 3 (b))	—	—	—		—		—		—		—		—		—		2,867		2,867
Distribution of 2011 profit
Reserves	—	—	50,307		(50,307	)	—		—		—		—		—		—		—
Operations with equity holders or owners	—	—	51,870		(50,307	)	—		(1,133	)	—		—		430		2,808		3,238
Balance at 31 December 2012	117,882	890,355	620,144		256,686		—		(3,060	)	27,797		(33,036	)	1,876,768		3,973		1,880,741
Translation differences	—	—	—		—		—		—		(91,287	)	—		(91,287	)	(682	)	(91,969	)
Cash flow hedges (note 16 (f))	—	—	—		—		—		—		—		7,245		7,245		—		7,245
Other comprehensive income / (expense) for the year	—	—	—		—		—		—		(91,287	)	7,245		(84,042	)	(682	)	(84,724	)
Profit/(loss) for the year	—	—	—		345,551		—		—		—		—		345,551		(3,497	)	342,054
Total comprehensive income / (expense) for the year	—	—	—		345,551		—		—		(91,287	)	7,245		261,509		(4,179	)	257,330
Net change in treasury stock (note 16 (d))	—	—	11,806		—		—		3,060		—		—		14,866		—		14,866
Capital increase January 2013 (note 16 (a))	1,633	—	(1,665	)	—		—		—		—		—		(32	)	—		(32	)
Capital increase April 2013 (note 16 (a))	89	20,373	(375	)	—		—		—		—		—		20,087		—		20,087
Acquisition of non-controlling interests (note 16 (c))	—	—	(2,800	)	—		—		—		—		—		(2,800	)	2,895		95
Acquisition of non-controlling interests in investees (note 3 (a))	—	—	—		—		—		—		—		—		—		1,712		1,712
Other changes	—	—	2		—		—		—		—		—		2		1,541		1,543
Interim dividend	—	—	924		—		(68,755	)	—		—		—		(67,831	)	—		(67,831	)
Distribution of 2012 profit
Reserves	—	—	255,379		(255,379	)	—		—		—		—		—		—		—
Dividends (Class B shares)	—	—	—		(1,307	)	—		—		—		—		(1,307	)	—		(1,307	)
Operations with equity holders or owners	1,722	20,373	263,271		(256,686	)	(68,755	)	3,060		—		—		(37,015	)	6,148		(30,867	)
Balance at 31 December 2013	119,604	910,728	883,415		345,551		(68,755	)	—		(63,490	)	(25,791	)	2,101,262		5,942		2,107,204

* Reserves include accumulated earnings, legal reserves and other reserves

The accompanying notes form an integral part of the consolidated fnancial statements

F-7

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(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) (see note 16).

In November 2011 the Company registered its High-Yield Senior Unsecured Notes at the Securities Exchange Commission (SEC) (see note 21).

Grifols, S.A. is the Parent of the subsidiaries listed in Appendix I of this note to the consolidated financial statements.

Grifols, S.A. and subsidiaries (hereinafter the Group) act on an integrated basis and under common management and their principal activity is the procurement, manufacture, preparation and sale of therapeutic products, especially haemoderivatives.

The main factory locations of the Group’s Spanish companies are in Barcelona, Parets del Vallés (Barcelona) and Torres de Cotilla (Murcia), while the US companies are located in Los Angeles, (California, USA) and Clayton (North Carolina, USA).

(2)Basis of Presentation

The consolidated financial statements have been prepared on the basis of the accounting records of Grifols, S.A. and of the Group companies. The consolidated financial statements for 2013, 2012 and 2011 have been prepared under International Financial Reporting Standards as issued by the International Accounting Standard Board (IFRS-IASB) and other legislative provisions contained in the applicable legislation governing financial information to present fairly the consolidated equity and consolidated financial position of Grifols, S.A. and subsidiaries at 31 December 2013 and 2012, as well as the consolidated results from their operations, consolidated cash flows and consolidated changes in equity for each of the years in the three-year period then ended.

The Group adopted IFRS-EU for the first time on 1 January 2004 and has been preparing its annual accounts under International Financial Reporting Standards, as adopted by the European Union (IFRS-EU) as required by Capital markets regulations governing the presentation of financial statements by companies whose debt or own equity instruments are listed on a regulated market.

The Group’s consolidated financial statements for 2013, 2012 and 2011 have been prepared under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board, and in the case of Grifols, S.A. and subsidiaries do not differ from IFRS as adopted by the European Union taking into account all mandatory accounting policies and rules and measurement bases with material effect, as well as the alternative treatments permitted by the relevant standards in this connection.

F-8

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(a)Comparative information

Changes to presentation of the statement of comprehensive income

As a result of the application of IAS 1 as amended, the Group has changed the presentation of the items included in the statement of comprehensive income to show separately those that will be transferred to the statement of profit or loss in the future from those which will not. Comparative information has been revised in this regard. Furthermore, in accordance with the transitional provisions of IFRS 13, the comparative information for 2012 and 2011 does not include the information required by this rule breakdown.

Acquisition of Talecris Group in 2011

As explained in note 3(d), on 2 June 2011 the Group acquired a 100% interest in the US company Talecris Biotherapeutics Holdings Corp. Therefore, the information for the year ended 31 December 2011 includes 7 months of activity of the Talecris companies.

(b)Relevant accounting estimates, assumptions and judgements used when applying accounting principles

The preparation of the consolidated financial statements in conformity with IFRS-IASB requires management to make judgements, estimates and assumptions that affect the application of Group accounting policies. The following notes include a summary of the relevant accounting estimates and judgements used to apply accounting policies which have the most significant effect on the amounts recognised in the consolidated financial statements.

·The assumptions used for calculation of the fair value of financial instruments, in particular, financial derivatives. Financial derivatives are measured based on observable market data (level 2 of fair value hierarchy) (see notes 4(k) and 31). The High Yield Senior Unsecured Notes and senior secured debt are valued at their quoted price in active markets (level 1 in the fair value hierarchy). Regarding the valuation of derivative instruments, the selection of the appropriate data within the alternatives requires the use of judgement in qualitative factors such as, which methodology and valuation models are used, and in quantitative factors, data required to be included within the chosen models.

·The 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.

·Useful lives of property, plant and equipment and intangible assets. The estimated useful lives of each category of property, plant and equipment and intangible assets are set out in notes 4(g) and 4(h). Although estimates are calculated by the Company’s management based on the best information available at 31 December 2013, future events may require changes to these estimates in subsequent years. Given the large number of individual items of property, plant and equipment it is not considered likely that a reasonably possible change in the assumptions would lead to a material adverse effect. Potential changes to the useful lives of intangible assets are mainly related to the currently marketed products and the useful lives will depend on the life cycle of the same. No significant changes to useful lives are expected. Adjustments made in subsequent years are recognised prospectively.

·Evaluation of the effectiveness of hedging derivatives. The key assumption relates to the measurement of the effectiveness of the hedge. Hedge accounting is only applicable when the hedge is expected to be highly effective at the inception of the hedge and, in subsequent years, in achieving offsetting changes in fair value or cash flows attributable to the hedged risk, throughout the period for which the hedge was

F-9

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

designated (prospective analysis) and the actual effectiveness, which can be reliably measured, is within a range of 80%-125% (retrospective analysis) (see notes 4(l), 16(f) and 31).

·Evaluation of the nature of leases (operating or finance). The Group analyses the conditions of the lease contracts at their inception in order to conclude if the risks and rewards have been transferred (see note 4(j) and 9(c)). If the lease contract is renewed or amended the Group conducts a new evaluation.

·Assumptions used to determine 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 capitalisation 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 30.

·Evaluation of the recoverability of receivables from public entities in countries facing liquidity problems, specifically in Italy, Portugal and Spain. The key assumption is the estimation of the amounts expected to be collected from these public entities (see notes 5 and 31).

·Evaluation of the recoverability of tax credits, including tax loss carryforwards and rights for deductions. Deferred tax assets are recognised to the extent that future taxable profits will be available against which the temporary differences can be utilised, based on management’s assumptions relating to the amount and timing of future taxable profits. Capitalisation of deferred tax assets relating to investments in Group companies depends on whether they will reverse in the foreseeable future (see notes 4(t) and 28).

No changes have been made to prior year judgements relating to existing uncertainties.

The Group is also exposed to interest rate and currency risks. Refer to sensitivity analysis in note 31.

Grifols management does not consider that there are any assumptions or causes for uncertainty in the estimates which could imply a significant risk of material adjustments arising in the next financial year.

(c)Basis of consolidation

Appendix I shows details of the percentages of direct or indirect ownership of subsidiaries by the Company at 31 December 2013, 2012 and 2011, as well as the consolidation method used in each case for preparation of the accompanying consolidated financial statements.

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.

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.

F-10

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

On 9 March 2010 one of the Group companies acquired 51% of Nanotherapix, S.L., a technologically based company which engages in advisory services, training of researchers, design and development of technologies, services, know-how, molecules and products applied to biotechnology, biomedicine and pharmaceutical fields. The acquisition of Nanotherapix, S.L. has been treated as an equity-accounted joint venture, as the company’s strategic and operational decisions require shareholder approval and Grifols does not avail of the majority of the members of the board of directors.

Changes in subsidiaries

In 2013 Grifols incorporated the following companies:

·G-C Diagnostics Corp. (USA)

·Grifols Switzerland AG (Switzerland)

·Grifols Pharmaceutical Consulting (Shanghai) Co. Ltd (China)

·Grifols Worldwide Operations, Ltd (Ireland)

On 27 February 2013 the Group acquired  shares representing 60% of the economic and voting rights (56.1% after Ekarpen capital increase) of the Spanish biotechnology group of companies headed by Progenika Biopharma, S.A. (hereinafter Progenika) for an amount of Euros 37,010 thousand (see note 3(a)).

During the second half of 2013 Talecris Biotherapeutics Overseas Services, Corp. was wound up. The assets and liabilities of these companies have been integrated into Grifols Therapeutics, Inc.

On 29 February 2012 and in relation to the strategic R&D priorities of the Group, Grifols acquired 51% of the capital of Araclon Biotech, S.L. for a total of Euros 8,259 thousand (see note 3 (b)). As explained in note 16 (c), in May 2013 Araclon Biotech, S.L. carried out a share capital increase of Euros 7 million, Euros 6.9 million of which were subscribed by the Group.

During the first half of 2012, Grifols incorporated a new company, under the name Gri-Cei, S/A Produtos para transfusão with the Brazilian company CEI Comercio Exportação e Importação de Materiais Médicos, Ltda in which Grifols owns 60% of shares and has the control of the company. Gri-Cei was established in order to manufacture bags for extraction, separation, conservation and transfusion of blood components in Brazil. During 2013 Grifols, S.A. carried out a share capital increase of Euros 2,320 thousand.

On 2 June 2011, the Group acquired 100% of the share capital of the US company Talecris Biotherapeutics Holdings Corp. (hereinafter Talecris), which also specialises in the production of plasma-derived biological medicines, for a total of Euros 2,593 million (US Dollars 3,737 million) (see note 3(d)).

In August 2011, the Group acquired the remaining 51% of the share capital of the holding company of the Australian-Swiss group Lateral-Medion, of which it had acquired 49% of the share capital and 100% of the voting rights on 3 March 2009 (see note 3 (e)). During the third quarter of 2012 all of the Australian companies have been wound up, with the exception of Grifols Australia Pty Ltd. The assets and liabilities of these companies have been integrated into Grifols Australia Pty. Ltd.

Changes in associates

On 19 November 2013, the Group company Gri-Cel, S.A., which is the affiliate that centralises the Company’s investments in R&D companies and projects in fields of medicine other than its core business, acquired 21.3% of TiGenix N.V. for a total of Euros 12,443 thousand. This investment has been accounted for using the equity method.

On 20 May 2013 the Group announced the signing of a worldwide exclusive licensing agreement with Aradigm Corporation to develop and commercialise Pulmaquin and Lipoquin, on the condition that Grifols, S.A. would participate in the capital increase.

On 27 August 2013 the Group acquired a 35% interest in Aradigm Corporation for a total of US Dollars 26 million (Euros 20.6 million) and, therefore, the exclusive worldwide licensing agreement to develop and

F-11

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

commercialise Pulmaquin and Lipoquin became effective (see note 10). All shares have the same voting and economic rights.

On 6 July 2012, the Group company Gri-Cel, S.A. acquired 40% of the capital of VCN Bioscience, S.L. for a total of Euros 1,500 thousand. This investment has been accounted for using the equity method. VCN Bioscience, S.L. is specialised in the research and development of new therapeutic approaches for tumours based on the use of oncologic viruses. Grifols has committed under certain conditions to finance VCN Bioscience, S.L.’s on-going projects for a minimum amount of Euros 5 million and it can result in Grifols increasing its share in the capital of VCN Bioscience, S.L.

(d)Amendments to IFRS-IASB in 2013, 2012 and 2011

In accordance with IFRSs, the following should be noted in connection with the scope of application of IFRS and the preparation of these consolidated financial statements of the Group.

Effective date in 2011

Standards effective as of 1 January 2011

·Amendment to IAS 32 Classification of Rights Issues. Effective for annual periods beginning on or after 1 February 2010.

·IAS 24 Related Party Disclosures. Effective for annual periods beginning on or after 1 January 2011.

·IFRIC 14 Prepayments of a Minimum Funding Requirement. Effective for annual periods beginning on or after 1 January 2011.

·IFRS 1 Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters. Effective for annual periods beginning on or after 1 July 2010. (EU: annual periods beginning on or after 30 June 2010).

·Improvements to IFRSs issued in May 2010.

·IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments. Effective for annual periods beginning on or after 1 July 2010.

Effective date in 2012

Standards effective as of 1 January 2012

·Amendment to IFRS 7 Financial Instruments: Disclosures — Transfers of Financial Assets (effective date for annual periods beginning on or after 1 July 2011).

Effective date in 2013

Standards effective as of 1 January 2013

·Amendments to IFRS 1: — Government Loans. Effective for annual periods beginning on or after 1 January 2013.

·Amendments to IAS 1 Presentation of Components of Other Comprehensive Income. Effective for annual periods beginning on or after 1 July 2012.

·IAS 19 Employee Benefits Effective for annual periods beginning on or after 1 January 2013.

F-12

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

·IAS 27 Separate Financial Statements. Effective for annual periods beginning on or after 1 January 2013.

·IAS 28 Investments in Associates and Joint Ventures. Effective for annual periods beginning on or after 1 January 2013.

·Amendments to IFRS 7: Offsetting Financial Assets and Financial Liabilities: Disclosure. Effective for annual periods beginning on or after 1 January 2013.

·IFRS 10 Consolidated Financial Statements. Effective for annual periods beginning on or after 1 January 2013.

·IFRS 11 Joint Arrangements. Effective for annual periods beginning on or after 1 January 2013.

·IFRS 12 Disclosures of Interests in Other Entities. Effective for annual periods beginning on or after 1 January 2013.

·Consolidated financial statements, joint arrangements and disclosure of interests in other entities: Transition guidance (issued on 28 June 2012). Improvements to IFRSs 10, 11 and 12. Effective for annual periods beginning on or after 1 January 2013.

·IFRS 13 Fair Value Measurement. Effective for annual periods beginning on or after 1 January 2013.

·Improvements to IFRSs (2009-2011) issued on 17 May 2012. Effective for annual periods beginning on or after 1 January 2013.

Standards issued but not effective on 2013

·IAS 32 Financial Instruments: Presentation: Amendments to Offsetting Financial Assets and Financial Liabilities. Effective for annual periods beginning on or after 1 January 2014.

·Amendments to IAS 36: Recoverable amount Disclosures for Non-Financial Assets. Effective for annual periods beginning on or after 1 January 2014.

·Amendment to IAS 39: Novation of derivatives and continuation of hedge accounting. Effective for annual periods beginning on or after 1 January 2014.

·Investment Entities. Amendments to IFRS 10, IFRS 12 and IAS 27, Investment companies. Effective for annual periods beginning on or after 1 January 2014.

·IFRIC 21 Levies. Effective for annual periods beginning on or after 1 January 2014.

·IAS 19 Employee Benefits. Defined benefit pension plans. Effective for annual periods beginning on or after 1 July 2014.

·Improvements to IFRS (2010-2012). Effective for annual periods beginning on or after 1 July 2014.

·Improvements to IFRS (2011-2013). Effective for annual periods beginning on or after 1 July 2014.

The application of these standards and interpretations has had no material impact on these consolidated financial statements. In regards to IAS 1 as amended, which requires the separate presentation of other income and expense recognized directly in equity that can be transferred to the statement of profit or loss in the future from those which can not be transferred, the consolidated statement of comprehensive income has been adapted for the year 2013 as well as for the comparative figures.

F-13

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(3)Business Combinations

2013

(a)Progenika Biopharma

On 27 February 2013 the Group acquired  shares representing 60% of the economic and voting rights (56.1% after Ekarpen capital increase mentioned below) of the Spanish biotechnology group of companies headed by Progenika Biopharma, S.A. (hereinafter Progenika) for an amount of Euros 37,010 thousand. The acquisition was paid through the following:

·50% of the purchase price has been paid in exchange for 884,997 Class B non-voting Grifols shares, with a fair value of Euros 20.91 per share. The Group granted to the selling shareholders the option to resell the Class B shares at the same price during the first five days following the acquisition date. Selling shareholders representing 879,913 shares executed this option, and the cash paid amounted to Euros 18,399 thousand, being considered as cash for investment activities in the statement of cash flows.

·The remaining 50% of the price has been paid in cash (Euros 18,505 thousand).

The non-voting Grifols Class B shares have been provided by a related party under a loan agreement signed on 12 February 2013 (see note 32). On 16 April 2013, the Company´s share capital has been increased in the nominal amount of Euros 88,499.70 by issuing and placing in circulation 884,997 new Class B shares without voting rights. The share capital increase has enabled Grifols to issue the number of shares needed to pay the price for the acquisition of Progenika in shares and thus return the Lender the non-voting shares that were lent pursuant to the provisions of the Loan Agreement (see note 16).

Additionally, the Group and the selling shareholders have granted each other call and put option rights over the shares representing 35% (32.9% after Ekarpen capital increase mentioned below) of the remaining share capital held by the aforementioned sellers, with may be exercised in three years. The purchase price of the shares subject to the put and call option amounts to Euros 21,701 thousand, increased at the rate of 5% per annum and has been treated as a financial liability (see note 21 (e)). The conditions of the payment of these shares will be the same as the initial acquisition.

Grifols, Progenika and the investment vehicle EKARPEN SPE, S.A. (hereinafter “Ekarpen”), owned by the Basque Government, Kutxabank, Caja Laboral —Euskadiko Kutxa, Lagun Aro and the Provincial Governments of the Basque Country, have agreed that Ekarpen subscribes a share capital increase pursuant to which, for an amount of Euros 5,000 thousand, Ekarpen has received new shares representing approximately 6.5% of the share capital of Progenika. These shares are subject to a call and put option which may be exercised at the end of a 5-year period for a purchase price of Euros 5,000 thousand and has been treated as financial liability (see note 21 (e)). The call option has premium costs of Euros 300 thousand for each of the 5-year period.

As the non-controlling shareholders do not have present access to the economic benefits associated with the underlying ownership interests related to shares under the put and call options, the Group has applied the anticipated-acquisition method. Under this method, Grifols recognises the contract as an anticipated acquisition of the underlying non-controlling interest, as if the put option had already been exercised by the non-controlling shareholders.

Progenika specialises in the development of technology for personalised medicine, focusing on the design and manufacture of in-vitro genome and proteome-based diagnostic tests, disease prognosis and prediction and monitoring of responses to pharmacological treatment. It has also developed its own technology for the production of DNA chips for diagnosis and prognosis and it is an international leader in this field. In particular, Progenika has pioneered the development of molecular biology tests for the performance of transfusional compatibility studies.

Details of the aggregate business combination cost, the fair value of the net assets acquired and goodwill at the acquisition date (or the amount by which the business combination cost exceeds the fair value of the net assets acquired) are provided below:

F-14

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	Thousands of Euros
Payment in cash	18,505
Payment in Class B shares	18,505
Deferred acquisition costs (put and call option)	26,701
Total cost of the business combination	63,711
Fair value of net assets acquired	23,195
Goodwill (note 7)	40,516
Payment in cash	36,904
Cash and cash equivalents of the acquired company	(2,283	)
Net cash outflow for the acquisition	34,621

Had the acquisition taken place at 1 January 2013, the Group’s revenue and consolidated profit for the year ended 31 December 2013 would not have varied significantly.

At the date of acquisition the consolidated amounts of recognised assets, liabilities and contingent liabilities are as follows:

	Fair value
	Thousands of Euros
Intangible assets (note 8)	29,585
Property, plant and equipment (note 9)	7,277
Non-current financial assets	210
Deferred tax assets (note 28)	11,549
Inventories	481
Trade and other receivables	10,177
Other current assets	151
Cash and cash equivalents	2,283
Total assets	61,713
Non-current financial liabilities	18,792
Deferred tax liabilities (note 28)	6,678
Current financial liabilities	5,540
Trade and other payables	1,592
Current provisions (note 20 (b))	37
Other current liabilities	4,167
Total liabilities and contingent liabilities	36,806
Total net assets of the business acquired	24,907
Non-controlling interests (note 18)	(1,712	)
Total net assets acquired	23,195

The fair value of intangible assets (primarily the currently marketed products) has been calculated based on “excess earnings” (income approach), whereby the asset is measured after deducting charges or rentals that must be settled to enable use of the remaining assets required to operate the intangible asset being measured.

Definitive goodwill generated in the acquisition includes the future development of unique technology and products, as well as the workforce and other synergies related to the R&D activity and has been allocated to the Diagnostic segment. Goodwill is not expected to be tax deductible.

F-15

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

2012

(b)Araclon Biotech, S.L.

On 29 February 2012 and in relation to the Group’s strategic R&D priorities, Grifols acquired 51% of the capital of Araclon Biotech, S.L. for a total of Euros 8,259 thousand.

Araclon Biotech, S.L. was founded as a spin-off from the University of Zaragoza in 2004. Its main areas of research focus on the validation and marketing of a blood diagnosis kit for Alzheimer’s and the development of an effective immunotherapy (vaccine) for this disease.

The operation was carried out by the investment vehicle, Gri-Cel, S.A., that centralizes the Group’s investments in R&D projects in fields of medicine other than its core business, such as advanced therapies.

Grifols has committed under certain conditions to finance Araclon Biotech, S.L.’s on-going projects for the next five years. The total amount is expected not be higher than Euros 25 million and it will result in Grifols, S.A. increasing its share in the capital of Araclon Biotech, S.L. During 2013 the Group has made a contribution of Euros 6.9 million.

Details of the aggregate business combination cost, the fair value of the net assets acquired and goodwill at the acquisition date (or the amount by which the business combination cost exceeds the fair value of the net assets acquired) are provided below:

	Thousands of Euros
Payment in cash	8,259
Total business combination cost	8,259
Fair value of net assets acquired (Euros 4,448 thousand x 51%)	2,259
Goodwill (note 7)	6,000
Payment in cash	8,259
Cash and other liquid cash equivalents of the acquired company	(2,089	)
Net cash outflow paid for the acquisition	6,170

Goodwill generated in the acquisition is attributed to the workforce and other synergies related to the R&D activity and tax deductions and unrecognised tax losses. This goodwill is allocated to the Diagnostic segment.

Had the acquisition taken place at 1 January 2012, the Group’s revenue and consolidated profit for the year ended 31 December 2012 would not have varied significantly.

F-16

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

At the date of acquisition the amounts of recognised assets, liabilities and contingent liabilities are as follows:

	Fair Value
	Thousands of Euros
Intangible assets (note 8)	12,525
Property, plant and equipment (note 9)	668
Non-current financial assets	600
Trade and other receivables	142
Cash and cash equivalents	2,089
Total assets	16,024
Non-current financial liabilities	3,932
Deferred tax liabilities (note 28)	138
Current financial liabilities	6,770
Trade and other payables	736
Total liabilities and contingent liabilities	11,576
Total net assets acquired	4,448

It is not expected that goodwill will be tax deductible.

(c)Plasma centres

On 22 October 2012 the Group acquired three plasma donation centres from the Canadian biopharmaceutical company Cangene Corporation. These plasma centres are located in Frederick, MD, Altamonte Springs, FL and Van Nuys, CA. (USA).

Aggregate details of the combination cost, fair value of the net assets acquired and goodwill at the acquisition date (or surplus net assets acquired over the combination cost) are as follows:

	Thousands of Euros
Payment in cash	1,925
Total bussines combination cost	1,925
Fair Value of net assets acquired	1,133
Goodwill (note 7)	792

The fair value of net assets acquired includes property, plant and equipment amounting to Euros 1,054 thousand (see note 9).

Goodwill is allocated to the Bioscience segment.

Had the acquisition taken place at 1 January 2012, the Group’s revenue and consolidated profit for the year ended 31 December 2012 would not have varied significantly.

2011

(d)Talecris Biotherapeutics Holdings Corp. and subsidiaries

On 2 June 2011, the Group acquired 100% of the share capital of the US company Talecris Biotherapeutics Holdings Corp. (hereinafter Talecris), which also specialises in the production of plasma-derived biological medicines, for a total of Euros 2,593 million (US Dollars 3,737 million).

F-17

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The operation was performed through a combined offer of cash and new Grifols shares with no voting rights (hereinafter Class B shares) (see note 16).

The offer was made in relation to all Talecris shares and the price offered per share amounts to US Dollars 19 in cash (total of US Dollars 2,541 million) and 0.641 Class B shares in Grifols for each share in circulation of Talecris LLC. and the directors of Talecris and 0.6485 Grifols shares with no voting rights for each share in circulation of Talecris (total of US Dollars 1,196 million).

On 2 May 2011, the Group signed a Consent Agreement with the staff of the Bureau of Competition of the US Federal Trade Commission (FTC) to establish the terms of the agreement for the merger between the two companies.

In order to fulfil the terms of the Consent Agreement, the Group signed agreements for the sale of assets and entered into certain trade agreements for rentals and manufacture with the Italian company Kedrion for periods of up to seven years. These agreements have been implemented in 2011 and 2012.

The agreements refer to the following areas:

·Kedrion and Grifols enter into a manufacturing agreement to fractionate and purify Kedrion’s plasma to deliver IVIG and Albumin under Kedrion’s own brand name and Factor VIII under the trade name Koate, all of them for sale only in the US.

·Grifols undertakes to sell its Melville fractionation facility to Kedrion. Grifols will manage the facility during a three-year period under a long-term lease agreement with Kedrion, renewable for an additional year on Grifol’s request.

·Grifols transfers the technology and sales agreements for Koate (Factor VIII) in the USA to Kedrion. Grifols will produce this product for Kedrion during a seven-year period.

·Grifols undertakes to sell to Kedrion two plasma collection centres. In addition, Grifols undertakes to sell to Kedrion 200,000 litres of plasma at a fixed price.

·Grifols authorises Kedrion to sell IVIG and Albumin produced by Grifols for Kedrion on the US market.

As required by the Consent Agreement, Grifols implemented the terms contained therein within a ten-day period following the acquisition date.

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		Thousands of
	Euros		Dollars
Business combination cost (measurement of Class B shares)	829,799		1,195,574
Cash paid (US Dollars 19 per share)	1,763,601		2,540,997
Total business combination cost	2,593,400		3,736,571
Fair value of net assets acquired	1,052,163		1,515,957
Goodwill (excess of cost of business combination cost as percentage of fair value of net assets acquired) (see note 7)	1,541,237		2,220,614
Payment in cash	1,763,601		2,540,996
Cash and other liquid cash equivalent of the acquired company	(149,693	)	(215,678	)
Cash flow paid for the acquisition	1,613,908		2,325,318

F-18

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

At 2 June 2011 the Group did not have all the necessary information to determine the definitive fair value of intangible assets, liabilities and contingent liabilities acquired in the business combination. During the second quarter of 2012 the Group obtained additional information on events and circumstances existing at the acquisition date which enabled it to accurately finalise the allocation of assets and liabilities as detailed in the table above. The allocation of the purchase price is therefore definitive. Goodwill increased by Euros 2,514 thousand (see note 7) due to a change in the valuation of inventories and the recognition of a current provision arising from an onerous contract, both of which are net of tax effect. Comparative data for 2011 has not been re-expressed, as changes are immaterial. Goodwill was allocated to Talecris Biotherapeutics, Inc., currently designated Grifols Therapeutics, Inc, which belongs to the Bioscience segment.

The fair value of Class B shares was determined by the average price of the first weeks of issue of the shares, as this period is considered to provide a reference for determining the fair value of the shares as they were first listed on 2 June 2011.

Total expenses incurred in the transaction amounted to Euros 61.3 million, of which a total of Euros 44.3 million related to expenses for 2011 and a total of Euros 17 million in 2010.

Goodwill generated in the acquisition is attributed to the synergies, workforce and other expected benefits from the business combination of the assets and activities of the Group.

The acquisition of Talecris consolidated the Group’s position as the third largest producer of plasma products in the world, significantly increasing its presence in the USA. The acquisition led to greater availability of products on the market due to increased plasma collection and fractionation capacity.

Had the acquisition taken place at 1 January 2011, the Group’s revenue would have increased by Euros 507,039 thousand and consolidated profit for the year, excluding non-recurring expenses such as those related to the transaction and stock option cancellation costs derived from the change of control, would have increased by Euros 74,705 thousand. The revenue and profit of Talecris between the acquisition date and 31 December 2011 amounted to Euros 750,484 thousand and Euros 133,075 thousand, respectively.

At the date of acquisition the amounts of recognised assets, liabilities and contingent liabilities are as follows:

F-19

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	Fair Value		Book value
	Thousands of	Thousands of	Thousands of	Thousands of
	Euros	US Dollars	Euros	US Dollars
Intangible assets (note 8)	846,504	1,219,643	21,122	30,432
Property, plant and equipment (note 9)	466,674	672,384	306,401	441,462
Non-current financial assets	1,466	2,112	1,466	2,112
Deferred tax assets	—	—	40,860	58,871
Assets held for sale	8,200	11,814	2,254	3,247
Inventories	449,049	646,989	490,976	707,398
Trade and other receivables	188,067	270,969	188,068	270,968
Other assets	2,364	3,406	2,364	3,406
Cash and cash equivalents	149,693	215,678	149,693	215,678
Total assets	2,112,017	3,042,995	1,203,204	1,733,574
Non-current provisions (note 20)	9,250	13,327	9,250	13,327
Non-current financial liabilities	6,289	9,061	6,289	9,061
Current financial liabilities	473,085	681,621	473,085	681,621
Current provisions (note 20)	68,738	99,038	31,180	44,924
Trade and other payables	152,844	220,218	152,844	220,218
Other current liabilities	48,533	69,927	43,510	62,689
Deferred tax liabilities	301,115	433,846	—	—
Total liabilities and contingent liabilities	1,059,854	1,527,038	716,158	1,031,840
Total net assets acquired	1,052,163	1,515,957	487,046	701,734

Fair values were determined using the following methods:

·Intangible assets: the fair value of intangible assets (primarily the currently marketed products) has been calculated based on “excess earnings” (income approach), whereby the asset is measured after deducting charges or rentals that must be settled to enable use of the remaining assets required to operate the intangible asset being measured.

·Property, plant and equipment: the fair value of property, plant and equipment has been determined using the “cost approach”, whereby the value of an asset is measured at the cost of rebuilding or replacing that asset with other similar assets.

·Inventories: the fair value of inventories has been determined using the “market approach”, by analysing similar transactions.

·Contingent liabilities: the fair value of contingent liabilities has been determined using the “income approach” based on forecast payments and a probability scenario.

(e)Australian-Swiss Group

In August 2011, the Group acquired the remaining 51% of the share capital of Woolloomooloo Holdings Pty Ltd, the holding company of the Australian-Swiss group Lateral-Medion, of which it had acquired 49% of the share capital and 100% of the voting rights on 3 March 2009 and over which it had exercised control since that date. The acquisition of the remaining 51% of the share capital amounted to AUS Dollars 12.5 million (Euros 9.5 million). The difference between the amount paid and the non-controlling interest was recorded as a Euros 2.2 million increase in reserves.

F-20

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(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. Control exists when investors are exposed to variable returns from the subsidiaries and have the ability to affect those returns through their decision-making power over the subsidiary.

The income, expenses and cash flows of subsidiaries are included in the consolidated financial statements 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 unrealised gains or losses have been eliminated upon consolidation.

The accounting policies of subsidiaries have been adapted to those of the Group for transactions and other events in similar circumstances.

The financial statements of consolidated subsidiaries have been prepared as of the same date and for the same reporting period as the financial statements of the Company.

Associates are entities over which the Company, either directly or indirectly through subsidiaries, exercises significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those entities. The existence of potential voting rights that are exercisable or convertible at the end of each reporting period, including potential voting rights held by the Group or other entities, are considered when assessing whether an entity has significant influence.

Investments in associates are accounted for using the equity method from the date that significant influence commences until the date that significant influence ceases.

Investments in associates are initially recognised at acquisition cost, including any cost directly attributable to the acquisition and any consideration receivable or payable contingent on future events or on compliance with certain conditions.

The excess of the cost of the investment over the Group’s share of the fair values of the identifiable net assets is recognised 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 recognised as income when determining the investor’s share of the profit or loss of the associate for the year in which it was acquired.

The accounting policies of associates have been harmonised in terms of timing and measurement, applying the policies described for subsidiaries.

The Group’s share of the profit or loss of an associate from the date of acquisition is recognised as an increase or decrease in the value of the investments, with a credit or debit to share of the profit or loss for the year of equity-accounted associates in the consolidated statement of profit or loss (consolidated statement of comprehensive income). The Group’s share of other comprehensive income of associates from the date of acquisition is recognised as an increase or decrease in the investments in associates with a balancing entry recognised by nature in other comprehensive income. The distribution of dividends is recognised as a decrease in the value of the investment. The Group’s share of profit or loss, including impairment losses recognised by the associates, is calculated based on income and expenses arising from application of the acquisition method.

The Group’s share of the profit or 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

F-21

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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, 1 January 2004, the Group applied the exception permitted under IFRS 1 “First-time adoption of International Financial Reporting Standards”, whereby only those business combinations performed as from 1 January 2004 have been recognised using the acquisition method. Entities acquired prior to that date were recognised 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.

Business combinations made subsequent to 1 January 2010

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 recognised as equity when the increase takes place and borrowing costs are deducted from the financial liability when it is recognised.

At the acquisition date the Group recognises 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 recognises indemnification assets transferred by the seller at the same time and following the same measurement criteria as the item that is subject to indemnification from the 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 disposable 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.

Assets and liabilities assumed 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 recognised 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 recognised in profit or loss.

When a business combination has been provisionally determined, net identifiable assets have initially been recognised 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 recognised at that date. Once this period has elapsed, adjustments are only made to initial values when

F-22

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 recognised in consolidated profit or loss. The contingent consideration classified, where applicable, as equity is not subject to subsequent change, with settlement being recognised in equity. The contingent consideration classified, where applicable, as a provision is recognised subsequently in accordance with the relevant measurement standard.

Business combinations made prior to 1 January 2010

The cost of the business combination is calculated as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred or assumed, and equity instruments issued by the Group, in exchange for control of the acquiree, plus any costs directly attributable to the business combination. Any additional consideration contingent on future events or the fulfilment of certain conditions is included in the cost of the combination provided that it is probable that an outflow of resources embodying economic benefits will be required and the amount of the obligation can be reliably estimated. Subsequent recognition of contingent considerations or subsequent variations to contingent considerations is recognised as a prospective adjustment to the cost of the business combination.

Where the cost of the business combination exceeds the Group’s interest in the fair value of the identifiable net assets of the entity acquired, the difference is recognised as goodwill, whilst the shortfall, once the costs of the business combination and the fair values of net assets acquired have been reconsidered, is recognised in profit or loss.

(c)Non-controlling interests

Non-controlling interests in subsidiaries acquired after 1 January 2004 are recognised 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 recognised 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 or loss for the year (and in consolidated comprehensive income for the year) is disclosed separately in the consolidated statement of profit or loss (consolidated statement of comprehensive income).

The consolidated profit or 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, whether or not control exists is determined taking into account the possible exercise of potential voting rights and other derivative financial instruments which, in substance, currently allow access to the economic benefits associated with the interests held, such as entitlement to a share in future dividends and changes in the value of subsidiaries.

Profit and loss and each component of other comprehensive income are assigned to equity attributable to shareholders of the Parent and to non-controlling interests in proportion to their interest, although this implies a balance receivable from non-controlling interests. Agreements signed between the Group and the non-controlling interests are recognised as a separate transaction.

The increase and reduction of non-controlling interests in a subsidiary in which control is retained is recognised 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 recognised in the reserves of the investor, without

F-23

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 recognised 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.

Investments in joint arrangements are accounted for using the equity method.

The acquisition cost of investments in joint arrangements is determined consistently with that established for investments in associates.

(e)Foreign currency transactions and balances

(i)Functional and presentation currency

The consolidated financial statements 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 recognised 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 recognised in profit or loss.

(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 recognised in other comprehensive income.

F-24

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(f)Borrowing costs

In accordance with IAS 23 “Borrowing Costs”, since 1 January 2009 the Group recognises interest cost 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 capitalisation is determined as the actual borrowing costs incurred, less any investment income on the temporary investment of those funds. Capitalised interest 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 capitalised cannot exceed the amount of borrowing costs incurred during that period. The capitalised interest cost includes adjustments to the carrying amount of financial liabilities arising from the effective portion of hedges entered into by the Group.

The Group begins capitalising borrowing costs as part of the cost of a qualifying asset when it incurs expenditures for the asset, interest is accrued, and it undertakes activities that are necessary to prepare the asset for its intended use or sale, and ceases capitalising borrowing costs when all or substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Nevertheless, capitalisation of borrowing costs is suspended when active development is interrupted for extended periods.

(g)Property, plant and equipment

(i)Initial recognition

Property, plant and equipment are recognised at cost or deemed cost, less accumulated depreciation and any accumulated impairment losses. The cost of self-constructed assets is determined using the same principles as for an acquired asset, while also considering the criteria applicable to production costs of inventories. Capitalised production costs are recognised by allocating the costs attributable to the asset to “Self-constructed non-current assets” in the consolidated statement of profit or loss.

At 1 January 2004 the Group opted to apply the exemption regarding fair value and revaluation as deemed cost as permitted by IFRS 1 First time Adoption of International Financial Reporting Standards.

(ii)Depreciation

Property, plant and equipment are depreciated by allocating the depreciable amount of an asset on a systematic basis over its useful life. The depreciable amount is the cost or deemed cost of an asset, less its residual value. The Group determines the depreciation charge separately for each item for a component of property, plant and equipment with a cost that is significant in relation to the total cost of the asset.

Property, plant and equipment are depreciated using the following criteria:

	Depreciation method	Rates
Buildings	Straight line	1% - 3%
Other property, technical equipment and machinery	Straight line	10%
Other property, plant and equipment	Straight line	7% - 33%

The Group reviews residual values, useful lives and depreciation methods at each financial year end. Changes to initially established criteria are accounted for as a change in accounting estimates.

F-25

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(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 capitalised. Costs of day-to-day servicing are recognised in profit or loss as incurred.

Replacements of property, plant and equipment which qualify for capitalisation are recognised as a reduction in the carrying amount of the items replaced. Where the cost of the replaced items has not been depreciated independently and it is not possible to determine the respective carrying amount, the replacement cost is used as indicative of the cost of items at the time of acquisition or construction.

(iv)Impairment

The Group tests for impairment and reversals of impairment losses on property, plant and equipment based on the criteria set out in note 4(i) below.

(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 amortised, but is tested for impairment annually or more frequently whenever there is an indication that goodwill may be impaired. Goodwill acquired in business combinations is allocated to the cash-generating units (CGUs) or groups of CGUs which are expected to benefit from the synergies of the business combination and the criteria described in note 7 are applied. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

(ii)Internally generated intangible assets

Any research and development expenditure incurred during the research phase of projects is recognised as an expense when incurred.

Costs related with development activities are capitalised 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, modifications and the expenditure actually attributable to the different projects.

The cost of internally generated assets is calculated using the same criteria established for determining production costs of inventories. The production cost is capitalised by allocating the costs attributable to the asset to self-constructed non-current assets in the consolidated statement of profit or 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 recognised as an expense, except where they increase the future economic benefits expected to be generated by the assets.

F-26

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iii)Other intangible assets

Other intangible assets are carried at cost, or at fair value if they arise on business combinations, less accumulated amortisation and impairment losses.

Intangible assets with indefinite useful lives are not amortised but tested for impairment at least annually.

(iv)Intangible assets acquired in business combinations

The cost of identifiable intangible assets acquired in the business combination of Talecris includes the fair value of the currently marketed products sold and which are classified in “Other intangible assets”.

The cost of identifiable intangible assets acquired in the business combination of Araclon Biotech, S.L. includes the fair value of research and development projects in progress.

The cost of identifiable intangible assets acquired in the business combination of the Progenika Group includes the fair value of the currently marketed products sold and which are classified in “Other intangible assets” and “Development costs”.

(v)Useful life and amortisation 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 amortised by allocating the depreciable amount of an asset on a systematic basis over its useful life, by applying the following criteria:

	Amortisation method	Rates
Development expenses	Straight line	20% - 33%
Concessions, patents, licences, trademarks and similar	Straight line	7% - 20%
Computer software	Straight line	16% - 33%
Currently marketed products	Straight line	3% - 10%

The depreciable amount is the cost or deemed cost of an asset, less its residual value.

The Group does not consider the residual value of its intangible assets to be material. The Group reviews the residual value, useful life and amortisation method for intangible assets at each financial year end. Changes to initially established criteria are accounted for as a change in accounting estimates.

(i)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 amortisation or depreciation, to verify whether the carrying amount of these assets exceeds the recoverable amount.

The Group tests goodwill, intangible assets with indefinite useful lives and intangible assets with finite useful lives that are not available for use for potential impairment at least annually, irrespective of whether there is any indication that the assets may be impaired.

The recoverable amount of the assets is the higher of their fair value less costs of disposal and their value in use. An asset’s value in use is calculated based on an estimate of the future cash flows expected to derive from the use of the asset, expectations about possible variations in the amount or timing of those future cash flows,

F-27

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 recognised in the consolidated statement of profit or 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 recognised for cash-generating units are first allocated to reduce, where applicable, the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro rata on the basis of the carrying amount of each asset. The carrying amount of each asset may not be reduced below the highest of its fair value less costs of disposal, its value in use and zero.

At the end of each reporting period the Group assesses whether there is any indication that an impairment loss recognised in prior periods may no longer exist or may have decreased. Impairment losses on goodwill are not reversible. Impairment losses on other assets are only reversed if there has been a change in the estimates used to calculate the recoverable amount of the asset.

A reversal of an impairment loss is recognised in consolidated profit or 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 amortisation, had no impairment loss been recognised.

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 amortisation or depreciation, had no impairment loss been recognised.

(j)Leases

(i)Lessee accounting records

The Group has rights to use certain assets through lease contracts.

Leases in which the Group assumes substantially all the risks and rewards incidental to ownership are classified as finance leases, otherwise they are classified as operating leases.

·Finance leases

At the commencement of the lease term, the Group recognises finance leases as assets and liabilities at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Initial direct costs are added to the asset’s carrying amount. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are recognised as an expense in the years in which they are incurred.

·Operating leases

Lease payments under an operating lease (excluding incentives) are recognised as an expense on a straight-line basis unless another systematic basis is representative of the time pattern of the user’s benefit.

(ii)Leasehold investments

Non-current investments in properties leased from third parties are recognised on the basis of the same criteria for property, plant and equipment. Investments are amortised over the lower of their useful lives

F-28

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

and the term of the lease contract. The lease term is consistent with that established for recognition of the lease.

(iii)Sale and leaseback transactions

Any profit on sale and leaseback transactions that meet the conditions of a finance lease is deferred over the term of the lease.

When the leaseback is classed as an operating lease:

·If the transaction is established at fair value, any profit or loss on the sale is recognised immediately in the consolidated statement of profit or loss for the year.

·If the sale price is below fair value, any profit or loss is recognised immediately in the consolidated statement of profit or loss. However, if the loss is compensated for by future lease payments at below market price, it is deferred in proportion to the lease payments over the period for which the asset is to be used.

(k)Financial instruments

(i)Classification of financial instruments

Financial instruments are classified on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, a financial asset and an equity instrument set out in IAS 32, Financial Instruments: Presentation.

Financial instruments are classified into the following categories for valuation purposes: financial assets and financial liabilities at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets and financial liabilities. Financial instruments are classified into different categories based on the nature of the instruments and the Group’s intentions on initial recognition.

Regular way purchases and sales of financial assets are recognised using trade date accounting, i.e. when the Group commits itself to purchase or sell an asset.

a)Financial assets at fair value through profit or loss

Financial assets and financial liabilities at fair value through profit or loss are those which are classified as held for trading or which the Group designated as such on initial recognition.

A financial asset or financial liability is classified as held for trading if it:

·  It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;

·  it forms part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent pattern of short-term profit-taking, or

·  It is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument.

Financial assets and financial liabilities at fair value through profit or loss are initially recognised at fair value. Transaction costs directly attributable to the acquisition or issue are recognised as an expense when incurred.

After initial recognition, they are recognised at fair value through profit or loss.

F-29

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group does not reclassify any financial assets or liabilities from or to this category while they are recognised in the consolidated balance sheet.

b)Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than those classified in other financial asset categories. These assets are recognised initially at fair value, including transaction costs, and subsequently measured at amortised cost using the effective interest method.

c)Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated specifically to this category or do not comply with requirements for classification in the above categories.

Available-for-sale financial assets are initially recognised at fair value plus transaction costs directly attributable to the acquisition.

After initial recognition, financial assets classified in this category are measured at fair value and any gain or loss, except for impairment losses, is accounted for in other comprehensive income recognised in equity. On disposal of the financial assets, amounts recognised in other comprehensive income or the impairment loss are reclassified to profit or loss.

d)Financial assets and financial liabilities carried at cost

Investments in equity instruments whose fair value cannot be reliably measured and derivative instruments that are linked to these instruments and that must be settled by delivery of such unquoted equity instruments, are measured at cost. Nonetheless, if the financial assets or liabilities can be reliably measured subsequently on an ongoing basis, they are accounted for at fair value and any gain or loss is recognised in accordance with their classification.

(ii)Offsetting principles

A financial asset and a financial liability are offset only when the Group currently has the legally enforceable right to offset the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

(iii)Fair value

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as posible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

·Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.

·Level 2: inputs other than prices included in Level 1 that are observable for the asset or liability, either directly (i.e. derived from prices).

·Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

F-30

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iv)Amortised cost

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction for impairment or uncollectibility.

(v)Impairment of financial assets carried at cost

The amount of the impairment loss on assets carried at cost is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses cannot be reversed and are therefore recognised directly against the value of the asset and not as an allowance account.

(vi)Impairment of financial assets carried at amortised cost

In the case of financial assets carried at amortised cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. For variable income financial assets, the effective interest rate corresponding to the measurement date under the contractual conditions is used.

The Group recognises impairment losses and unrecoverable loans and receivables and debt instruments by recognising an allowance account for financial assets. When impairment and uncollectibility are considered irreversible, their carrying amount is eliminated against the allowance account.

The impairment loss is recognised in profit or loss and may be reversed in subsequent periods if the decrease can be objectively related to an event occurring after the impairment has been recognised. The loss can only be reversed to the limit of the amortised cost of the assets had the impairment loss not been recognised. The impairment loss is reversed against the allowance account.

(vii)Impairment of available-for-sale financial assets

When a decline in the fair value of an available-for-sale financial asset at fair value through profit or loss has been accounted for in other comprehensive income, the accumulative loss is reclassified from equity to profit or loss when there is objective evidence that the asset is impaired, even though the financial asset has not been derecognised. The impairment loss recognised in profit or loss is calculated as the difference between the acquisition cost, net of any reimbursements or repayment of the principal, and the present fair value, less any impairment loss previously recognised in profit or loss for the year.

Impairment losses relating to investments in equity instruments are not reversible and are therefore recognised directly against the value of the asset and not as an allowance account.

If the fair value of debt instruments increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the increase is recognised in profit or loss up to the amount of the previously recognised impairment loss and any excess is accounted for in other comprehensive income recognised in equity.

(viii)Financial liabilities

Financial liabilities, including trade and other payables, which are not classified at fair value through profit or loss, are initially recognised at fair value less any transaction costs that are directly attributable to the issue of the financial liability. After initial recognition, liabilities classified under this category are measured at amortised cost using the effective interest method.

F-31

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ix)Derecognition of financial assets

The Group applies the criteria for derecognition of financial assets to part of a financial asset or part of a group of similar financial assets or to a financial asset or group of similar financial assets.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Where the Group retains the contractual rights to receive cash flows, it only derecognises financial assets when it has assumed a contractual obligation to pay the cash flows to one or more recipients and if the following requirements are met:

·Payment of the cash flows is conditional on their prior collection.

·The Group is unable to sell or pledge the financial asset.

·The cash flows collected on behalf of the eventual recipients are remitted without material delay and the Group is not entitled to reinvest the cash flows. This criterion is not applicable to investments in cash or cash equivalents made by the Group during the settlement period from the collection date to the date of required remittance to the eventual recipients, provided that interest earned on such investments is passed on to the eventual recipients.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, it determines whether it has retained control of the financial asset. In this case:

·If the Group has not retained control, it derecognises the financial asset and recognises separately as assets or liabilities any rights and obligations created or retained in the transfer.

·If the Group has retained control, it continues to recognise the financial asset to the extent of its continuing involvement in the financial asset and recognises an associated liability. The extent of the Group’s continuing involvement in the transferred asset is the extent to which it is exposed to changes in the value of the transferred asset. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. The associated liability is measured in such a way that the carrying amount of the transferred asset and the associated liability is equal to the amortised cost of the rights and obligations retained by the Group, if the transferred asset is measured at amortised cost, or to the fair value of the rights and obligations retained by the Group, if the transferred asset is measured at fair value. The Group continues to recognise any income arising on the transferred asset to the extent of its continuing involvement and recognises any expense incurred on the associated liability. Recognised changes in the fair value of the transferred asset and the associated liability are accounted for consistently with each other in profit or loss or equity, following the general recognition criteria described previously, and are not offset.

If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the consideration received is recognised in liabilities. Transaction costs are recognised in profit or loss using the effective interest method.

(x)Derecognition and modifications of financial liabilities

A financial liability, or part of it, is derecognised when the Group either discharges the liability by paying the creditor, or is legally released from primary responsibility for the liability either by process of law or by the creditor.

The exchange of debt instruments between the Group and the counterparty or substantial modifications of initially recognised liabilities are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability, providing the instruments have substantially different terms.

The Group considers the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original

F-32

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

effective interest rate, is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability.

If the exchange is accounted for as an extinguishment of the financial liability, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.

The difference between the carrying amount of a financial liability, or part of a financial liability, extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(l)Hedge accounting

Derivative financial instruments are initially recognised using the same criteria as those described for financial assets and financial liabilities. Derivative financial instruments that do not meet the hedge accounting requirements are classified and measured as financial assets and financial liabilities at fair value through profit or loss. Derivative financial instruments which qualify for hedge accounting are initially measured at fair value.

At the inception of the hedge the Group formally designates and documents the hedging relationships and the objective and strategy for undertaking the hedges. Hedge accounting is only applicable when the hedge is expected to be highly effective at the inception of the hedge and in subsequent years in achieving offsetting changes in fair value or cash flows attributable to the hedged risk, throughout the period for which the hedge was designated (prospective analysis) and the actual effectiveness, which can be reliably measured, is within a range of 80%-125% (retrospective analysis).

(i)Cash flow hedges

The Group recognises the portion of the gain or loss on the measurement at fair value of a hedging instrument that is determined to be an effective hedge in other comprehensive income. The ineffective portion and the specific component of the gain or loss or cash flows on the hedging instrument, excluding the measurement of the hedge effectiveness, are recognised with a debit or credit to finance costs or finance income.

If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains or losses that were recognised in other comprehensive income are reclassified from equity to profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss and under the same caption of the consolidated statement of profit or loss (consolidated statement of comprehensive income).

(m)Equity instruments

The Group’s acquisition of equity instruments of the Parent is recognised 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 recognised in consolidated profit or 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 accumulated gains. 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.

F-33

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(n)Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The costs of conversion of inventories include costs directly related to the units of production and a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. The allocation of fixed indirect overheads is based on the higher of normal production capacity or actual production.

The raw material used to produce haemoderivatives is human plasma, which is obtained from our donation centres using the plasmapheresis method. The cost of inventories includes the amount paid to plasma donors, or the amount billed by the seller when purchased from third parties, as well as the cost of products and devices used in the collection process, rental expenses and storage. This plasma has to be stored before use, which is an essential part of the production process. During the storage period, the plasma undergoes various virological tests and should be kept in quarantine in accordance with FDA and European Medicines Agency regulations, in order to guarantee that all the plasma is suitable for use in the production process.

To the extent that plasma storage costs are necessary to the production process, they are included as cost of inventories.

Indirect costs such as general management and administration costs are recognized as expenses in the period in which they are incurred

The cost of raw materials and other supplies and the cost of merchandise are allocated to each inventory unit on a weighted average cost basis.

The transformation cost is allocated to each inventory unit on a FIFO (first-in, first-out) basis.

The Group uses the same cost model for all inventories of the same nature and with a similar use.

Volume discounts extended by suppliers are recognised 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 recognised as a reduction in the cost of the inventories acquired.

When the cost of inventories exceeds net realisable value, materials are written down to net realisable 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 recognised write-down is reversed against profit or 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 realisable value because of changed economic circumstances. The reversal of the write-down is limited to the lower of the cost and revised net realisable value of the inventories. Write-downs may be reversed with a credit to “Changes in inventories of finished goods and work in progress” and “Supplies”.

F-34

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(o)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.

(p)Government grants

Government grants are recognised 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 recognised as deferred income in the consolidated balance sheet. Income from capital grants is recognised as other income in the consolidated statement of profit or loss in line with the depreciation of the corresponding financed assets.

(ii)Operating grants

Operating grants received to offset expenses or losses already incurred, or to provide immediate financial support not related to future disbursements, are recognised as other income in the consolidated statement of profit or loss.

(iii)Interest rate grants

Financial liabilities comprising implicit assistance in the form of below-market interest rates are initially recognised at fair value. The difference between this value, adjusted where necessary for the issue costs of the financial liability and the amount received, is recognised as a government grant based on the nature of the grant awarded.

(q)Employee benefits

(i)Defined contribution plans

The Group recognises the contributions payable to a defined contribution plan in exchange for a service in the period in which contributions are accrued. Accrued contributions are recognised as an employee benefit expense in the corresponding consolidated statement of profit or loss in the year that the contribution was made.

(ii)Termination benefits

Termination benefits payable that do not relate to restructuring processes in progress are recognised when the Group is demonstrably committed to terminating the employment of current employees prior to retirement date. The Group is demonstrably committed to terminating the employment of current employees when a detailed formal plan has been prepared and there is no possibility of withdrawing or changing the decisions made.

(iii)Short-term employee benefits

The Group recognises 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 recognised when the absences occur.

F-35

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group recognises 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.

(r)Provisions

Provisions are recognised when the Group has a present obligation (legal or implicit) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account all risks and uncertainties surrounding the amount to be recognised as a provision and, where the time value of money is material, the financial effect of discounting provided that the expenditure to be made each period can be reliably estimated. The discount rate is a pre-tax rate that reflects the time value of money and the specific risks for which future cash flows associated with the provision have not been adjusted at each reporting date.

If it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed against the consolidated statement of profit or loss item where the corresponding expense was recognised.

(s)Revenue recognition

Revenue from the sale of goods or services is measured at the fair value of the consideration received or receivable. Revenue is presented net of VAT and any other amounts or taxes which are effectively collected on the behalf of third parties. Volume or other types of discounts for prompt payment are recognised as a reduction in revenues if considered probable at the time of revenue recognition.

(i)Sale of goods

The Group recognises revenue from the sale of goods when:

·The Group has transferred to the buyer the significant risks and rewards of ownership of the goods.

·It retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

·The amount of revenue and the costs incurred or to be incurred can be measured reliably;

·It is probable that the economic benefits associated with the transaction will flow to the Group; and

·The costs incurred or to be incurred in respect of the transaction can be measured reliably.

The Group participates in the government-managed Medicaid programmes in the United States, accounting for Medicaid rebates by recognising 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 programme and any new information regarding changes in the programme regulations and guidelines that would affect rebate amounts. Outstanding Medicaid claims, Medicaid payments and inventory levels are analysed 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 recognises these discounts as a reduction in sales and receivables in the

F-36

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 authorised 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 believes that actual chargebacks may differ from established allowances. These adjustments occur in a relatively short period of time. As these chargebacks are typically settled within 30 to 45 days of the sale, adjustments for actual experience have not been material.

(ii)Services rendered

Revenues associated with the rendering of service transactions are recognised 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 recognised only to the extent of costs incurred that are recoverable.

(iii)Interest income

Until June 2012 the Group has been recognising interest receivable from the different Social Security affiliated bodies, to which it provides goods or services, on an accrual basis, and only for those bodies to which historically claims have been made and from which interest has been collected. As a result of the terms imposed by the Spanish Government in 2012 regarding the waiver of late payment interest on overdue receivables, the Group modified its estimate regarding late payment interest. In this respect, since June 2012 the Group has been recognizing only late payment interest on receivables from Social Security affiliated bodies on the date on which delayed invoices are collected, as it is highly likely that they will be collected as of that date and if the Spanish Government has not imposed to waiver the late payment interests.

(t)Income taxes

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 recognised as income or an expense and included in profit or loss for the year, except to the extent that the tax arises from a transaction or event which is recognised, in the same or a different year, directly in equity, or from a business combination.

F-37

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(i)Taxable temporary differences

Taxable temporary differences are recognised in all cases except where:

·They arise from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable income.

·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 recognised provided that:

·It is probable that sufficient taxable income will be available against which the deductible temporary difference can be utilised, 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 utilised.

(iii)Measurement

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the years when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted. The tax consequences that would follow from the manner in which the Group expects to recover or settle the carrying amount of its assets or liabilities are also reflected in the measurement of deferred tax assets and liabilities.

At year end the Group reviews the fair value of deferred tax assets to write down the balance if it is not probable that sufficient taxable income will be available to apply the tax asset.

Deferred tax assets which do not meet the above conditions are not recognised in the consolidated balance sheet. At year end the Group assesses whether deferred tax assets which were previously not recognised 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 recognised amounts and intends either to settle on a net basis, or to realise 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 realise 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.

F-38

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Deferred tax assets and liabilities are recognised in the consolidated balance sheet under non-current assets or liabilities, irrespective of the expected date of recovery or settlement.

(u)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.

(v)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 realised 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 realised 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 monthsafter 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 financial statements are authorised for issue.

(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 31 to the consolidated financial statements.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, define appropriate risk limits and controls and to control risks and comply with limits. Risk management policies and procedures are reviewed regularly so that they reflect changes in market conditions and the Group’s activities. The Group’s management procedures and rules are designed to create a strict and constructive control environment in which all employees understand their duties and obligations.

The Group’s Audit Committee supervises how management controls compliance with the Group’s risk management procedures and policies and reviews whether the risk management policy is suitable considering the risks to which the Group is exposed. This committee is assisted by Internal Audit which acts as supervisor.

F-39

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 a 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 delayed payments, which is mitigated through the possibility of claiming interest as foreseen by prevailing legislation. During 2012, as a result of the condition imposed by the Spanish Government to waive late payment interest on past due receivables, the Group recognised a loss due to the waiving of interest owed by the Social Security (see note 13). No significant bad debt or late payment issues have been detected for sales to private entities.

The Group recognises impairment based on its best estimate of the losses incurred on trade and other receivables. The main impairment losses recognised are due to specific losses relating to individually identified risks. At year end, these impairment losses are immaterial.

Details of exposure to credit risk are disclosed in note 31.

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 29 February 2012 the Group finished amending the terms and conditions of the senior debt agreement entered into in November 2010. In addition to the improved conditions and the elimination of certain bank covenants, the Group repaid in advance approximately US Dollars 240 million from the non-current senior debt.

Subsequent to this re-financing, the Group has a Euros, US Dollars and Multicurrency revolving credit facility of Euros 149 million at 31 December 2013 (unused at year end) and a non-current loan consisting of two tranches amounting to US Dollars 2,649 million. The Group also has US Dollars 1,100 million (Euros 797 million) of corporate bonds issued in January 2011.

At 31 December 2013 the Group has total cash and cash equivalents of Euros 709 million. The Group also has approximately Euros 340 million in unused credit facilities, including Euros 149 million on the revolving credit facility.

Market risk

Market risk comprises the risk of changes in market prices, for example, exchange rates, interest rates, or the prices of equity instruments affecting the Group’s revenues or the value of financial instruments it holds. The objective of managing market risk is to manage and control the Group’s exposure to this risk within reasonable parameters at the same time as optimising returns.

F-40

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(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 Dollars. Currency risk is associated with future commercial transactions, recognised 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 due to the US Dollars, 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 2013 and 2012 of the most significant financial instruments are shown in note 31.

(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 purpose of managing interest-rate risk is to balance the debt structure, maintaining part of borrowings at fixed rates and hedging part of variable rate debt.

The Group manages cash flow interest rate risks through variable to fixed interest rate swaps.

A significant part of the financing obtained accrues interest at fixed rates. This fixed interest debt (High Yield Senior Unsecured Notes) amounts to US Dollars 1,100 million, which represents approximately 29% of the Group’s total debt in US Dollars.

For the remaining senior debt in US Dollars, which totals US Dollars 2,136 million, the Group has partially contracted a variable to fixed interest rate swap. At 31 December 2013 the nominal part of this hedging instrument amounts to US Dollars 1,225 million. This nominal part will decrease over the term of the debt, based on the scheduled repayments of the principal. The purpose of these swaps is to convert borrowings at variable interest rates into fixed interest rate debt. Through these swaps the Group undertakes to exchange the difference between fixed interest and variable interest with other parties periodically. The difference is calculated based on the contracted notional amount (see notes 16 (f) and 31). The notional amount of the swap contracted by the Group hedges 57% (63% at 31 December 2012) of the senior variable interest rate debt denominated in US Dollars at 31 December 2013.

Senior debt in Euros represents approximately 14% of the Group’s total debt at 31 December 2013 (14% at 31 December 2012). The total senior debt is at variable rates. In order to manage the cash flow interest rate risks a hedging operation has taken place by contracting derivative financial instruments consisting of variable to fixed interest rate swaps. The nominal part of this hedging instrument amounts to Euros 100 million, representing hedging of 27% (25% at 31 December 2012) of the senior variable interest rate debt denominated in Euros at 31 December 2013 (see notes 16 (f) and 31).

The fair value of interest rate swaps contracted to reduce the impact of rises in variable interest rates (Libor and Euribor) is accounted for on a monthly basis. These derivative financial instruments comply with hedge accounting requirements.

Total fixed-interest debt plus interest rate hedging represent a total of 66% of debt at 31 December 2013.

F-41

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iii)Market Price risk

Price risk affecting raw materials is mitigated by the vertical integration of the haemoderivatives business in a sector which is highly concentrated.

The Group has signed two unquoted futures contracts, the underlying asset of which is shares in Grifols, S.A. and it was therefore exposed to risk of value fluctuations. These contracts were settled during 2012 (see note 31).

(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:

·The directors control capital performance using rates of returns on equity (ROE). In 2013, the ROE stood at 16% (14% in December 2012). The ROE is calculated by dividing profit attributable to the Parent by the equity attributable to the Parent.

·In accordance with the senior secured debt contract, at 31 December 2013 the net financial debt should be 3.6 times lower than adjusted EBITDA. In 2013 the leverage ratio is 2.28 times adjusted EBITDA (2.87 times adjusted EBITDA at 31 December 2012).

·Consideration of the Company’s credit rating (see note 21).

The Group has no share-based payment schemes for employees.

At 31 December 2013 the Group holds no treasury stock (at 31 December 2012 it had treasury stock equivalent to 0.05% of share capital). The Group does not have a formal plan for repurchasing shares.

In accordance with the senior unsecured debt contract, Grifols will not be able to distribute dividends while the leverage ratio (net financial debt/adjusted EBITDA) is higher than 4.5.

(6)Segment Reporting

In accordance with IFRS 8 “Operating Segments” (Chief Operating Decision Maker), financial information for operating segments is reported in the accompanying Appendix II, which forms an integral part of this note to the consolidated financial statements.

Group companies are divided into three areas: companies from the industrial area, companies from the commercial area and companies from the services area. Within each of these areas, activities are organised 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: cash and cash equivalents, other receivables, public entities, deferred tax assets and liabilities, loans and borrowings and certain payables.

·Statement of profit or loss: general administration expenses, finance result and income tax.

There have been no significant inter-segment sales.

F-42

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(a)Operating segments

The operating segments defined by the steering committee are as follows:

·Bioscience: including all activities related with products deriving 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.

·Raw materials: including sales of intermediate biological products and the rendering of manufacturing services to third party companies.

Details of net sales by groups of products for 2013, 2012 and 2011 as a percentage of net sales are as follows:

	Thousands of Euros
	2013	2012	2011
Bioscience
Hemoderivatives	2,448,082	2,324,237	1,530,063
Other hemoderivatives	742	851	1,137
Diagnostic
Transfusional medicine	102,350	103,809	86,591
In vitro diagnosis	27,989	30,532	30,767
Hospital
Fluid therapy and nutrition	55,553	53,556	52,693
Hospital supplies	41,578	42,315	42,671
Raw materials and others	65,438	65,644	51,691
Total	2,741,732	2,620,944	1,795,613

The Group has concluded that the haemoderivative 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

F-43

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For management purposes, the Group excludes the Raw Material segment from the geographical details as it relates to operations which do not form part of the Group’s core business. Sales and assets of the Raw Material segment correspond mainly to the USA.

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 customer

Income from a Bioscience segment customer represents approximately 11.2% of the Group’s total income (10.3% in 2012 and 10.2% in 2011).

(7)Goodwill

Details of and movement in this caption of the consolidated balance sheet at 31 December 2012 is as follows:

		Thousands of Euros
		2011	Business	Translation		2012
	Segment	Balance	Combination	differences		Balance
Net value
Grifols UK,Ltd. (UK)	Bioscience	8,225	—	195		8,420
Grifols Italia,S.p.A.(Italy)	Bioscience	6,118	—	—		6,118
Biomat USA, Inc. (USA)	Bioscience	116,748	792	(2,269	)	115,271
Plasmacare, Inc. (USA)	Bioscience	39,722	—	(768	)	38,954
Grifols Australia Pty Ltd.
(Australia) / Medion Diagnostics AG (Switzerland)	Diagnostic	10,870	—	25		10,895
Grifols Therapeutics, Inc. (USA)	Bioscience	1,713,418	2,514	(31,691	)	1,684,241
Araclon Biotech, S.L. (Spain)	Diagnostic	—	6,000	—		6,000
		1,895,101	9,306	(34,508	)	1,869,899

(note 3 (b), (c) and (d))

Details of and movement in this caption of the consolidated balance sheet at 31 December 2013 is as follows:

		Thousands of Euros
		2012	Business	Translation		2013
	Segment	Balance	Combination	differences		Balance
Net value
Grifols UK.Ltd. (UK)	Bioscience	8,420	—	(178	)	8,242
Grifols Italia.S.p.A. (Italy)	Bioscience	6,118	—	—		6,118
Biomat USA. Inc. (USA)	Bioscience	115,271	—	(4,990	)	110,281
Plasmacare. Inc. (USA)	Bioscience	38,954	—	(1,686	)	37,268
Grifols Australia Pty Ltd.
(Australia) / Medion Diagnostics AG (Switzerland)	Diagnostic	10,895	—	(1,510	)	9,385
Grifols Therapeutics, Inc. (USA)	Bioscience	1,684,241	—	(72,910	)	1,611,331
Araclon Biotech, S.L. (Spain)	Diagnostic	6,000	—	—		6,000
Progenika Biopharma, S.A. (Spain)	Diagnostic	—	40,516	—		40,516
		1,869,899	40,516	(81,274	)	1,829,141

(note 3(a))

F-44

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Impairment testing:

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 are expected to arise on the acquisition of Talecris, and in light of the vertical integration of the business and the lack of an independent organised 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. For the remaining segments CGUs identified by management are tested for impairment. The following CGUs have been identified in the Diagnostic segment as a result of the business combinations carried out by the Group:

·Australia-Medion

·Progenika

·Araclon

The recoverable amount of the CGUs was calculated based on their value in use, with the exception of Araclon Biotech, S.L and Progenika, the recoverable amount of which has been determined on the basis of fair value less costs of disposal due to the fact that the transaction is recent. The level of hierarchy used to determine the fair value has been level 2. This value in use and fair value calculations use cash flow projections for five years based on the financial budgets approved by management. Cash flows estimated as of the year in which stable growth in the CGU has been reached are extrapolated using the estimated growth rates indicated below.

The key assumptions used in calculating impairment of the CGUs for 2012 were as follows:

	Perpetual Growth rate		Pre-tax discount rate
Bioscience	2	%	11.33	%
Diagnostic-Australia	2	%	10.55	%

The key assumptions used in calculating impairment of the CGUs for 2013 have been as follows:

	Perpetual Growth rate		Pre-tax discount rate
Bioscience	2	%	10.60	%
Diagnostic-Australia	2	%	9.05	%

Management determined budgeted gross margins based on past experience, investments in progress which would imply significant growth in production capacity and its forecast international market development. Perpetual growth rates are coherent with the forecasts included in industry reports. The discount rate used reflects specific risks related to the CGU.

As the recoverable amount of the Bioscience CGU is much higher than the carrying amount of the Bioscience segment’s net assets, specific information from the impairment test sensitivity analysis is not included.

Based on the results of the impairment test performed on the Australia-Medion CGU, the Group recognised impairment of Euros 13 million for goodwill in 2011. On the basis of the impairment test for 2013, a 4.5% reduction in the gross margin of projections would mean that the value in use of the business would be equal to the carrying amount of the CGU’s assets (reduction of 15% in the gross margin of projections for 2012).

At 31 December 2013 Grifols’ stock market capitalisation totals Euros 10,790 million (Euros 7,784 million at 31 December 2012).

F-45

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(8)Other Intangible Assets

Details of other intangible assets and movement during the years ended 31 December 2013 and 2012 are included in Appendix III, which forms an integral part of these notes to the consolidated financial statements.

Intangible assets mainly include currently marketed products. Identifiable intangible assets correspond to Gamunex and have been recognised at fair value at the acquisition date of Talecris and classified as currently marketed products (see note 3(d)).

Intangible assets acquired from Progenika mainly include currently marketed products. Identifiable intangible assets correspond to blood, immunology and cardiovascular genotyping. These assets have been recognised at fair value at the acquisition date of Progenika and classified as currently marketed products (see note 3(a)).

The cost and accumulated amortisation of currently marketed products acquired from Talecris at 31 December 2012 is as follows:

	Thousands of Euros
	2011				Translation		2012
	Balance		Additions		differences		Balance
Cost of currently marketed products - Gamunex	927,429		—		(17,925	)	909,504
Accumulated amortisation of currently marketed products - Gamunex	(18,033	)	(31,125	)	1,157		(48,001	)
Carrying amount of currently marketed products - Gamunex	909,396		(31,125	)	(16,768	)	861,503

The cost and accumulated amortisation of currently marketed products acquired from Talecris at 31 December 2013 is as follows:

	Thousands of Euros
	2012				Translation		2013
	Balance		Additions		differences		Balance
Cost of currently marketed products - Gamunex	909,504		—		(39,371	)	870,133
Accumulated amortisation of currently marketed products - Gamunex	(48,001	)	(30,238	)	3,311		(74,928	)
Carrying amount of currently marketed products - Gamunex	861,503		(30,238	)	(36,060	)	795,205

Intangible assets recognised relate to currently marketed products acquired from Talecris and comprise the rights on the Gamunex product, its commercialisation and distribution licence, trademark, as well as relations with hospitals. Each of these components are closely linked and fully complementary, are subject to similar risks and have a similar regulatory approval process.

The estimated useful life of the currently marketed products is considered limited, has been estimated at 30 years on the basis of the expected life cycle of the product (Gamunex)  and is amortised on a straight-line basis.

At 31 December 2013 the residual useful life of currently marketed products is 27 years and 5 months (28 years and 5 months at 31 December 2012).

F-46

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The cost and accumulated amortisation of currently marketed products acquired from Progenika at 31 December 2013 is as follows:

	Thousands of Euros
	2012	Business			2013
	Balance	combinations	Additions		Balance
Cost of currently marketed products	—	23,792	—		23,792
Accumulated amortisation of currently marketed products	—	—	(1,983	)	(1,983	)
Carrying amount of currently marketed products	—	23,792	(1,983	)	21,809

The estimated useful life of the currently marketed products is considered limited, has been estimated at 10 years on the basis of the expected life cycle of the product and is amortised on a straight-line basis.

At 31 December 2013 the residual useful life of currently marketed products is 9 years and 2 months.

(a)Self – constructed intangible assets

At 31 December 2013 the Group has recognised Euros 19,244 thousand as self-constructed intangible assets (Euros 14,734 thousand at 31 December 2012).

(b)Purchase commitments

At 31 December 2013 the Group has intangible asset purchase commitments amounting to Euros 361 thousand (Euros 764 thousand at 31 December 2012).

(c)Intangible assets with indefinite useful lives and development costs in progress

At 31 December 2013 the Group has plasma centre licenses with indefinite useful lives under intangible assets for a carrying amount of Euros 23,833 thousand (Euros 24,921 thousand at 31 December 2012).

The Group has also an amount of Euros 27,435 thousand as development costs in progress (Euros 26,254 thousand at 31 December 2012).

(d)Losses on disposal of intangible assets

Total losses incurred on disposals of intangible assets in 2013 amount to Euros 2.5 million (losses of Euros 6.1 million in 2012).

(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).

(9)Property, Plant and Equipment

Details of property, plant and equipment and movement in the consolidated balance sheet at 31 December 2013 and 2012 are included in Appendix IV, which forms an integral part of this note to the consolidated financial statements.

Property, plant and development under construction at 31 December 2013 and 2012 mainly comprise investments made to extend the companies’ equipment and to increase their productive capacity.

F-47

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(a)Insurance

Group policy is to contract sufficient insurance coverage for the risk of damage to property, plant and equipment. At 31 December 2013 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)Profit on disposal of property, plant and equipment

In July 2012 the Group sold the Melville fractionation plant for US Dollars 22.7 million (Euros 18.3 million) to Kedrion, generating a profit of Euros 0.6 million. The Group has a lease contract for this plant.

Total losses incurred on disposals of property, plant and equipment for 2013 amount to Euros 2.1 million (Euros 7.7 million in 2012).

(c)Assets under finance lease

The Group had contracted the following types of property, plant and equipment under finance leases at 31 December 2012:

	Thousands of Euros
		Accumulated
	Cost	depreciation		Carrying amount
Land and buildings	2,089	(540	)	1,549
Plant and machinery	31,811	(8,988	)	22,823
	33,900	(9,528	)	24,372

The Group has contracted the following types of property, plant and equipment under finance leases at 31 December 2013:

	Thousands of Euros
		Accumulated
	Cost	depreciation		Carrying amount
Land and buildings	1,741	(524	)	1,217
Plant and machinery	30,374	(10,961	)	19,413
	32,115	(11,485	)	20,630

Details of minimum lease payments and the present value of finance lease liabilities, disclosed by maturity date, are detailed in note 21 (c).

During 2011 the Group signed a number of contracts for the sale and leaseback of a production plant and the corresponding machinery and other equipment to third party companies California Biogrif 330, LP and LA 300 Biological Financing, LP, respectively.  The Group also entered into a 99-year lease contract with the same lessor for the land on which the plant sold is built. The lease for the plant was considered as an operating lease while the lease for the machinery and other equipment was considered a finance lease, taking into account the terms of the related purchase option (see note 9f (ii)).

(d)Self — constructed property, plant and equipment

At 31 December 2013 the Group has recognised Euros 41,134 thousand as self -constructed property, plant and equipment (Euros 36,877 thousand at 31 December 2012).

F-48

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(e)Purchase commitments

At 31 December 2013 the Group has property, plant and equipment purchase commitments amounting to Euros 35,956 thousand (Euros 24,774 thousand at 31 December 2012).

(f)Sale and leaseback of buildings

(i)Sale and leaseback of Spanish properties

On 10 May 2011 the Group sold five properties located in Spain to Gridpan Invest, S.L., a wholly owned subsidiary of Scranton Enterprises, B.V., a shareholder of Grifols, S.A., for Euros 80.4 million (see note 32). These properties related to non-core assets such as offices, warehouses and factory premises. Two of the properties were sold together with their related mortgage loans for a total of Euros 53.5 million.As a result of this operation, the Group incurred a net loss of Euros 7.4 million in 2011, which included Euros 2 million in brokerage fees paid to a related company. The prices paid for the properties were established based on appraisals made by independent appraisers.

At the same time, operating lease agreements for the aforementioned properties were entered into with Gridpan Invest, S.L., the key terms of which were as follows:

·Compulsory initial term of five years

·Initial rent established at market prices and subject to annual review, based on the percentage variation in the Spanish Consumer Price Index (CPI)

·Automatic extensions for five-year periods that can be terminated by either party by advance six months notice.

·Upon vacating the premises, Grifols will be compensated by the lessor for any on-site assets in which it has invested, insofar as these have a residual value and are not recoverable by Grifols.

Grifols also signed a call option on the shares of Gridpan Invest, S.L., which is exercisable between 10 May 2016 and 10 May 2017 and for which no consideration was required. The strike price will be calculated as the exercise date market value, as determined by independent appraisers.

The rental expense incurred by the Group in 2013 for these contracts amounted to Euros 8,210 thousand (Euros 8,020 thousand during 2012), coinciding fully with the minimum contractual payments.

(ii)Sale and leaseback of properties, machinery and other equipment in the USA

Los Angeles, CA, USA

On 9 June 2011 the Group signed various contracts for the sale and leaseback of a production plant located in Los Angeles, CA, USA with its machinery and other equipment to institutional investors California Biogrif 330, LP and LA 300 Biological Financing, LP, respectively. The Group also entered into a 99-year lease contract with the same lessor for the land on which the plant sold is built. An amount of US Dollars 35.4 million (Euros 24.6 million) was received for the sale of the plant, whilst an amount of US Dollars 23.8 million (Euros 16.5 million) was received for the sale of the machinery and other equipment.

The plant lease was considered an operating lease whilst the lease on the machinery and other equipment was considered a finance lease in accordance with the terms of the purchase option. As a result of the sale of the plant, the Group incurred a net loss of US Dollars 2.4 million in 2011 (Euros 1.3 million), mainly due to the expenses incurred by the Group during the operation.

The main terms of the plant operating lease contract are as follows:

·Compulsory initial term of 20 years

·Initial rent established at market prices and subject to an annual 3% increase. On the first day of the sixth year, the rent remaining up until the 20th year will be paid in advance.

·Option to extend the lease by a ten-year period at the discretion of the Grifols Group.

F-49

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

·Awarding of purchase options in the sixth and 20th years at a market price to be determined by independent appraisers.

The main terms of the finance lease contract for the machinery and other equipment are: a compulsory term of five years and sixty (60) monthly payments of US Dollars 529 thousand (Euros 369 thousand). The lease contract is non-extendable and anticipates the repurchase of the machinery and other equipment for the amount of US Dollars 1 on expiry of the lease term.

The rental expense incurred by the Group in 2013 for the operating lease contracts amounted to Euros 1,812 thousand (Euros 1,878 thousand in 2012), coinciding fully with the minimum contractual payments.

North Carolina, NC, USA

On 29 December 2011, the Group signed a number of contracts for the sale and leaseback of certain buildings and equipment under construction (jointly denominated “New Fractionation Facility” or “NFF”), located in Clayton, North Carolina (USA), with the related company Scranton Enterprises USA, Inc, (hereinafter “Scranton”) (see note 32).

The sale price was US Dollars 199 million (Euros 152 million), which has been collected as follows:

·In December 2011 the Group received US Dollars 115 million (Euros 88 million).

·In June 2012 the Group received the whole outstanding amount for a total of US Dollars 84 million (Euros 67 million).

As a result of the transaction, the Group recognised a net loss of US Dollars 12.1 million (Euros 8,9 million) in 2011, primarily due to the brokerage fees paid to a related company, which amounted to US Dollars 10 million.

The main terms of the operating lease contract for the building are as follows:

·Compulsory initial lease term: eight years

·The annual rent was established at a minimum of US Dollars 20.5 million, subject to annual increases in line with inflation.

·Option enabling Grifols to renew and extend the contract for a further five years.

·Automatic renewal for additional five-year periods unless one of the parties gives six months’ notice to the contrary.

·Upon vacating the premises, Grifols will be compensated by the lessor for any on-site assets in which it has invested, insofar as these have a residual value and are not recoverable by Grifols.

·Scranton Enterprises USA Inc. has required Grifols to lodge a cash or bank guarantee of US Dollars 25 million.

The main terms of the lease contract for the land on which the NFF building is located are as follows:

·Initial lease period: 99 years

·The annual rent has been established at a minimum of US Dollars 1 per year.

The Group contracted a call option on the shares of Scranton Investments, B.V., a shareholder of Scranton Enterprises USA, Inc. This option, which had a cost of US Dollars 4 million (see note 11), can be exercised on the date on which the license is granted by the Food and Drug Administration (FDA), at five and ten years from that date, and on the expiry date of the lease contract. The purchase price will vary depending on the market value determined on the date the option is exercised.

The rental expense incurred by the Group in 2013 for the operating lease contracts amounted to Euros 15,811 thousand (Euros 16,037 thousand in 2012), coinciding fully with the minimum contractual

F-50

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

payments.

(g)Impairment

One of the CGUs forming part of the Hospital segment has been tested for impairment due to the decrease in the results of the segment and no impairment has been observed. The recoverable amount of the mentioned CGUs is calculated based on the fair value less cost of disposal, using cash flow projections based on 5-year financial budgets approved by management. Cash flows estimated as of the year in which stable growth has been reached in the CGU are extrapolated using a pre-tax discount rate of 10.4% and a perpetual growth rate of 2%.

(10)Equity Accounted Investees

Details of this caption in the consolidated balance sheet at 31 December 2013 and 2012 are as follows:

	Thousands of Euros
	% ownership		2013	2012
Nanotherapix, S.L.	51.00	%	1,354	1,387
VCN Bioscience, S.L.	40.00	%	802	1,179
Aradigm Corporation	35.00	%	21,002	0
TiGenix N.V.	21.30	%	12,443	0
Mecwins, S.L.	25.00	%	164	0
			35,765	2,566

The Group has determined that it has significant influence over these investments and has not considered any of them as material.

An aggregate summary of the impact on the consolidated statement of profit or loss and consolidated statement of comprehensive income is as follows:

	Thousands of Euros
	2013		2012		2011
Profit / (Loss)
Consolidated statement of profit or loss	(1,165	)	(1,407	)	(1,064	)
Other consolidated comprehensive income	(359	)	0		0
	(1,524	)	(1,407	)	(1,064	)

Aradigm Corporation

On 20 May 2013 the Group announced the signing of a worldwide exclusive licensing agreement with Aradigm Corporation to develop and commercialise Pulmaquin and Lipoquin, on the condition that Grifols, S.A. would participate in the capital increase.

On 27 August 2013 the Group acquired a 35% interest in Aradigm Corporation for a total of US Dollars 26 million (Euros 20.6 million) and, therefore, the exclusive worldwide licensing agreement to develop and commercialise Pulmaquin and Lipoquin became effective. All shares have the same voting and economic rights.

Aradigm’s headquarters are based in Hayward, California, and its shares trade in the Nasdaq OTC BB market.

F-51

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Pulmaquin and Lipoquin are inhaled ciprofloxacin formulations for the treatment of severe respiratory diseases, including non-cystic fibrosis bronchiectasis. Aradigm has completed phase 2b clinical trials with Pulmaquin and Lipoquin in bronchiectasis patients.

Aradigm has been granted orphan drug designation for liposomal ciprofloxacin for cystic fibrosis in the US and the EU and for the combination of liposomal ciprofloxacin and free ciprofloxacin for bronchiectasis in the US.

Grifols and Aradigm have agreed to advance the formulations of Pulmaquin and Lipoquin into phase III clinical trials in bronchiestasis.

Pulmaquin will complement Grifols’ existing pulmonary business activity.

Grifols will be responsible for all development and clinical expenses up to a maximum of US Dollars 65 million for the bronchiectasis indication. In addition, Aradigm will also be entitled to receive cash payments of up to a maximum of US Dollars 25 million from Grifols, upon achievement of development milestones. Grifols will be responsible for all commercialisation activities and will pay Aradigm royalties on worldwide sales of products.  In relation to this agreement, Grifols has paid an amount of US Dollars 13 million (Euros 9 million) as upfront licensing fees, which have been capitalised under “Other intangible assets” at 31 December 2013.

The acquisition of Aradigm is accounted for as an “Investment in equity-accounted investee”, as Grifols does not control the decisions regarding relevant activities nor the governing bodies of the company.

TiGenix N.V.

On 19 November 2013, the Group company Gri-Cel, S.A., acquired 21.3%, through the subscription of a capital increase with exclusion of preferential subscription right, of the biotechnology company TiGenix N.V.  (hereinafter TiGenix), which is listed on NYSE Euronext Brussels (TIG), with head office in Lovaina and offices in Madrid and Sittard-Geleen (the Netherlands).

TiGenix holds a 100% interest in TiGenix, S.A. (formerly Cellerix, S.A.), which engages in research and development of stem cells taken from fatty tissue. Phase III clinical trials are currently at an advanced stage for the treatment of complex perianal fistulas in patients with Crohn’s disease (“Cx601”), and the product achieved orphan drug status from the European Medicines Agency.

The agreement with TiGenix envisages the appointment of two directors by Grifols and a preferential right to negotiate the development and commercialisation of any product owned by TiGenix (with the exception of ChondroCelect).

The price paid for 21.30% of TiGenix was Euros 12 million.

(11)Financial Assets

Details of non-current financial assets on the consolidated balance sheet at 31 December 2013 and 2012 are as follows:

	Thousands of Euros
	2013	2012
Non-current deposits and guarantees	3,414	3,203
Non-current derivatives (note 31)	3,155	4,502
Loans to third parties	4,962	5,420
Loan to associates (note 32)	300	—
Other non-current financial assets (note 9(f)(ii))	3,365	3,401
Total non-current financial assets	15,196	16,526

F-52

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Loans to third parties primarily comprise three mortgage loans extended to the owners of several plasma centres. These loans have a term of 20 years, bear interest at fixed rates and have been secured with mortgage collateral and personal guarantees.

Details of other current financial assets on the consolidated balance sheet at 31 December 2013 and 2012 are as follows:

	Thousands of Euros
	2013	2012
Deposits and guarantees	232	192
Loans to associates (note 32)	700	—
Current loans to third parties	268	268
Total other current financial assets	1,200	460

(12)Inventories

Details of inventories at 31 December are as follows:

	Thousands of Euros
	2013		2012
Goods for resale	97,945		95,845
Raw materials and supplies	280,535		342,536
Work in progress and semi-finished goods	317,155		372,520
Finished goods	283,197		232,484
	978,832		1,043,385
Less, inventory provision	(31,919	)	(44,741	)
	946,913		998,644

Movement in the inventory provision was as follows:

	Thousands of Euros
	2013		2012		2011
Balance at 1 January	44,741		35,542		4,584
Net charge for the year	(10,030	)	13,019		7,333
Business combinations	—		4,036		37,668
Net cancellations for the year	(528	)	(8,567	)	(17,315	)
Translation differences	(2,264	)	711		3,272
Balance at 31 December	31,919		44,741		35,542

F-53

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(13)Trade and Other Receivables

Details at 31 December 2013 and 2012 are as follows:

	Thousands of Euros
	2013		2012
Trade receivables	401,531		378,821
Bad debt provision (note 31)	(15,994	)	(12,799	)
Trade receivables	385,537		366,022
Other receivables	15,480		20,272
Receivables from associates (note 32)	27		26
Personnel	324		315
Advances for fixed assets	590		147
Other advances	3,304		5,506
Taxation authorities, VAT recoverable	12,541		14,101
Other public entities	4,245		3,466
Other receivables	36,511		43,833
Current income tax assets	43,533		37,318
	465,581		447,173

Trade receivables

At the end of June 2012 the Group received an amount of Euros 157 million from the Spanish Government relating to receivables from the Social Security, of which Euros 109 million of which comprise receivables previously sold to a financial institution.

The Spanish Government imposed the condition that the interest owed by the Social Security authorities should be waived, in order to collect the principal of the receivables. The Group recognised a loss of approximately Euros 11.6 million in its financial statements for the interest claimed from the Social Security authorities which was waived and included under finance result for 2012.

Other receivables

During 2013, 2012 and 2011 certain Spanish companies of the Grifols Group have sold receivables from several public entities, without recourse, to certain financial institutions. Under some of these contracts, the Group receives an initial payment which usually amounts to approximately 90% of the nominal amount of the receivables sold less the associated sale and purchase costs. The deferred collection (equivalent to the rest of the nominal amount) will be made by the Group once the financial institution has collected the nominal amount of the receivables (or the interest, if the balances are received after more than 36 months, depending on the terms of each particular contract) and this amount is recognised in the balance sheet as a balance receivable from the financial institution. The deferred amount (equivalent to the continuing involvement) represents an amount of Euros 6,463 thousand at 31 December 2013 (Euros 6,132 thousand at 31 December 2012), which does not differ significantly from its fair value and coincides with the amount with maximum exposure to losses. The financial institution makes the initial payment when the sale is completed and therefore, the bad debt risk associated with this part of the nominal amount of the receivables is transferred. The Group has transferred the credit risk and control of the receivables to certain financial institutions and has therefore derecognised the asset transferred, as the risks and rewards inherent to ownership have not been substantially retained.

Certain foreign Group companies have also entered into a contract to sell receivables without recourse to various financial institutions.

Total balances receivable without recourse sold to financial institutions through the aforementioned contracts in 2013 amount to Euros 244 million (Euros 197 million in 2012).

F-54

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The finance cost of these operations for the Group totals approximately Euros 6,972 thousand which has been recognised under finance result in the consolidated statement of profit or loss for 2013 (Euros 7,406 thousand in 2012 and Euros 6,185 thousand in 2011) (see note 27).

Details of balances with related parties are shown in note 32.

(14)Other Current Assets

Details of this caption of the consolidated balance sheet at 31 December 2013 and 2012 are as follows:

	Thousands of Euros
	2013	2012
Prepaid expenses – professional services	5,262	5,436
Prepaid expenses – insurance	3,110	4,063
Prepaid expenses – leases	3,704	2,357
Other prepaid expenses	5,113	3,104
Total other current assets	17,189	14,960

(15)Cash and Cash Equivalents

Details of this caption of the consolidated balance sheet at 31 December 2013 and 2012 are as follows:

	Thousands of Euros
	2013	2012
Current deposits	283,546	296,437
Cash in hand and at banks	425,231	176,890
Total cash and cash equivalents	708,777	473,327

During 2013 the Group recognised the following transactions which did not require the use of cash and/or cash equivalents:

·Put and call options relating to the acquisition of Progenika Biopharma, S.A. (see note 3 (a)).

·Loan of class B shares to a related party (see note 16).

·Issue of new shares on 4 January 2013 (see note 16).

(16)Equity

Details of consolidated equity and movement are shown in the consolidated statement of changes in equity.

(a)Share capital

At 31 December 2010 the Company’s share capital was represented by 213,064,899 ordinary shares of Euros 0.50 par value each, which are subscribed and fully paid and have the same voting and profit-sharing rights.

At the extraordinary general shareholders’ meeting held on 25 January 2011, the shareholders of Grifols agreed to increase share capital by issuing 83,811,688 new shares without voting (Class B shares) rights to complete

F-55

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

the acquisition of Talecris. The Class B non-voting shares were listed on the NASDAQ (USA) and the Spanish Automated Quotation System (SIBE/Continuous Market).

On 1 June 2011 the Company announced that the “Nota sobre Acciones” (Securities Note) requested for the flotation of Class B Shares was registered. Grifols requested the flotation of the Class B Shares on the Stock Exchanges of Madrid, Barcelona, Bilbao and Valencia, as well as on the Spanish Automated Quotation System (“mercado continuo”) and, through the American Depositary Shares (ADSs), on the National Association of Securities Dealers Automated Quotation (NASDAQ). The trading of Class B Shares on the Spanish Automated Quotation System and the ADSs on the NASDAQ started on 2 June 2011.

At the extraordinary general shareholders’ meeting held on 2 December 2011, the shareholders of Grifols agreed to increase share capital by Euros 2,969 thousand with a charge to voluntary reserves by issuing 29,687,658 new shares without voting rights to remunerate the shareholders.

The total transaction costs incurred by the Group in relation to the aforementioned capital increases amounted to Euros 2,870 thousand at 2011.

The fair value of the Class B shares issued in June 2011 was estimated based on their market value during the first few weeks of listing as they were first listed on 2 June 2011. The positive difference, totalling Euros 52,864 thousand, arose from the difference between their fair value assigned by deed (Euros 776,935 thousand) and their fair value (Euros 829,799 thousand), and was recognised in reserves.

On 4 December 2012, the shareholders of Grifols approved a share capital increase through the issue of 16,328,212 new Class B non-voting shares, with a charge to voluntary reserves. This issue was executed in a public deed on 4 January 2013 and the shares were admitted for trading on the four Spanish stock exchanges and the Spanish Automated Quotation System on 14 January 2013.

On 16 April 2013 Grifols increased its share capital by issuing 884,997 Class B non-voting shares of Euros 0.10 par value each, with a share premium of Euros 23.02 per share. Therefore, the total amount of the share capital increase has been Euros 20,461 thousand, of which Euros 88 thousand corresponds to the par value and Euros 20,373 thousand to share premium. The board of directors has agreed to suppress the pre-emptive subscription rights in connection with the share capital increase.

The aforementioned share capital increase has enabled Grifols to return to the lender the non-voting shares to comply with the commitment with the vendors of Progenika shares pursuant to the provisions of the share loan agreement signed in February 2013 (see note 3 (a) and section (d) of this note and note 32).

At 31 December 2013, the Company’s share capital amounts to Euros 119,603,705 and comprises:

·    Class A shares: 213,064,899 ordinary shares of Euros 0.50 par value each, subscribed and fully paid and of the same class and series.

·    Class B shares: 130,712,555 non-voting preference shares of 0.10 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.

F-56

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

·    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.

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 2013 and 2012:

	Percentage ownership
	2013		2012
Capital Research and Management Company	9.98	%	9.98	%
Other	90.02	%	90.02	%
	100.00	%	100.00	%

At 31 December 2013 and 2012, the number of outstanding shares is equal to the total number of Company shares, less treasury stock.

Movement in outstanding shares during 2012 is as follows:

	Class A shares	Class B shares
Balance at 1 January 2012	212,906,573	113,483,514
(Acquisition) / disposal of treasury stock	0	(250	)
Balance at 31 December 2012	212,906,573	113,483,264

(note 16 (d))

Movement in outstanding shares during 2013 is as follows:

	Class A shares	Class B shares
Balance at 1 January 2013	212,906,573	113,483,264
Capital increase with charge to reserves	0	17,213,209
(Acquisition) / disposal of treasury stock	158,326	15,429
Balance at 31 December 2013	213,064,899	130,711,902

(note 16 (d))

F-57

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(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 financial statements.

(c)Reserves

The drawdown of accumulated gains is subject to legislation applicable to each of the Group companies. At 31 December 2013, Euros 49,601 thousand equivalent to the carrying amount of development costs pending amortisation of certain Spanish companies (Euros 33,097 thousand at 31 December 2012) (see note 8) are, in accordance with applicable legislation, restricted reserves which cannot be distributed until these development costs have been amortised.

In February 2013 a related party lent the Group 884,997 Class B shares with a fair value of Euros 18 million, which were used to acquire Progenika (see note 3(a)). Under the Class B share loan agreement, the Group had the commitment to return the same number of Class B shares on or before 31 December 2013. On 16 April 2013 share capital was increased by a nominal amount of Euros 88,499.70, and has enabled Grifols to return the non-voting shares to the lender.

In May 2013 Araclon Biotech, S.L. increased capital by an amount of Euros 7 million, Euros 6.9 million of which were subscribed by the Group. As a result, the Group has increased its investment from 51% to 61.12%. The difference between the share capital increase carried out by the Group and the non-controlling interest has been recognised as a Euros 2.8 million decrease in reserves.

In November 2013 the Company sold 4,402,986 treasury stocks (ADSs), generating a profit of Euros 11.2 million, recognised in reserves.

At 31 December 2013 and 2012 reserves include the IFRS-IASB 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 2013 the legal reserve of the Company amounts to Euros 23,576 thousand (Euros 21,323 thousand at 31 December 2012).

Distribution of the legal reserves of Spanish companies is subject to the same restrictions as those of the Company and at 31 December 2013 the balance of the legal reserve of other Spanish companies amounts to Euros 2,113 thousand (Euros 2,106 thousand at 31 December 2012).

Other foreign Group companies have a legal reserve amounting to Euros 587 thousand at 31 December 2013 and 2012.

(d)Treasury stock

Movement in Class A treasury stock during 2012 is as follows:

F-58

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	No. of Class A shares		Thousands of Euros
Balance at 1 January 2012	158,326		1,927
Acquisition of Class A shares	210,257		5,192
Disposal of Class A shares	(210,257	)	(4,061	)
Balance at 31 December 2012	158,326		3,058

Movement in Class B treasury stock during 2012 is as follows:

	No. of Class B shares	Thousands of Euros
Balance at 1 January 2012	15,832	—
Acquisition of Class B shares	250	2
Balance at 31 December 2012	16,082	2

Movement in Class A treasury stock during 2013 is as follows:

	No. of Class A shares		Thousands of Euros
Balance at 1 January 2013	158,326		3,058
Acquisition of Class A shares	448,802		11,040
Disposal of Class A shares	(607,128	)	(14,098	)
Balance at 31 December 2013	0		0

Movement in Class B treasury stock during 2013 is as follows:

	No. of Class B shares		Thousands of Euros
Balance at 1 January 2013	16,082		2
Cash acquisition of Class B shares	6,177,372		127,788
Non-cash acquisition of Class B shares	884,997		17,744
Cash disposal of Class B shares	(5,307,804	)	(107,329	)
Non-cash disposal of Class B shares	(1,769,994	)	(38,205	)
Balance at 31 December 2013	653		0

On 11 March 2013 Grifols S.A. purchased 4,402,986 of its American Depositary Shares (“ADSs”) from various funds managed by Cerberus Capital Management, L.P. and/or its affiliated advisory entities for a total of Euros 88.9 million (US Dollars 118.9 million, or US Dollars 27 per ADS). Grifols originally issued the ADSs to Cerberus in June 2011 in connection with the acquisition of Talecris Biotherapeutics Corp. Cerberus was the majority shareholder of Talecris. In November 2013, the Company sold all the ADSs forming part of its treasury stock. The sale generated a profit of Euros 11.2 million, which has been recognised in reserves.

Cash acquisitions Class B include the purchase of the Class B shares from the vendor shareholders of Progenika for which Grifols exercised the cash option for an amount of Euros 18,399 thousand. This amount has been considered as cash used in investing activities in the statement of cash flows.

Cash acquisitions also include purchases of Class B shares issued on 16 April 2013 and subscribed by a financial institution (see section (a) of this note).

F-59

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Non-cash acquisitions and disposals of Class B shares include a share loan transaction entered into with a related party (see note 32). Subsequent disposals include Class B shares exchanged in the acquisition of Progenika Biopharma, S.A. (see notes 3(a) and 15).

Cash obtained through disposals of Class A and B shares amounts to Euros 15,286 thousand and Euros 119,903 thousand, respectively.

The Parent held Class A and B treasury stock equivalent to 0.05% of its capital at 31 December 2012. The Parent does not hold any Class A treasury stock at 31 December 2013.

(e)Distribution of profit

The profits of Grifols, S.A. and subsidiaries will be distributed as agreed by respective shareholders at their general meetings.

Grifols will not be able to distribute dividends while the leverage ratio (net financial debt/adjusted EBITDA) is higher than 4.5.

The proposed distribution of profit of the Parent Grifols, S.A. for the years ended 31 December 2013 and the distribution approved for the year 2012 is as follows:

	Thousands of Euros
	2013	2012
Legal Reserve	344	2,254
Voluntary reserve	29,189	48,808
Preferred dividend	1,307	1,307
Interim dividend	68,755	0
Dividend	68,756	0
Profit of the Parent	168,351	52,369

The following dividends were paid in 2013:

	2013
	% of par value		Euros per share	Thousands of Euros
Ordinary shares (interim dividend)	40	%	0.2	42,612
Non-voting shares (interim dividend)	200	%	0.2	26,143
Non-voting shares (preferred dividend)	10	%	0.01	1,307
Total dividends paid				70,062

At the general meeting held on 24 May 2013, the shareholders of Grifols approved the distribution of interim dividend for 2013 of Euros 0.20 for each Class A and B share, recognising a total of Euros 68,755 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 2013 prepared in accordance with legal requirements and which shows the existence of sufficient liquidity to be able to distribute the aforementioned dividend is provided in Appendix V.

F-60

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

At a general meeting held on 24 May 2013 the shareholders approved the distribution of a preferred dividend of Euros 0.01 for every Class B non-voting share.

The distribution of the profit for the year ended 31 December 2012 is presented in the consolidated statement of changes in equity.

(f)Cash flow hedges

In June and October 2011 Grifols contracted variable to fixed interest-rate swaps for initial nominal amounts of US Dollars 1,550 million and Euros 100 million, respectively, to hedge interest-rate risk on its senior debt. The Group has recognised these financial derivatives as cash flow hedges (see notes 5 (a) and 31).

Ineffective cash flow hedges recognised as finance income and cost in the consolidated statement of profit or loss (consolidated statement of comprehensive income) for 2013 amount to Euros 1,015 thousand (Euros 226 thousand in 2012).

(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
	2013	2012	2011
Profit for the year attributable to equity holders of the Parent (thousands of Euros)	345,551	256,686	50,307
Weighted average number of ordinary shares outstanding	340,505,298	342,701,194	308,036,270
Basic earnings per share (Euros per share)	1.01	0.75	0.16

The weighted average number of ordinary shares issued (basic and diluted) is determined as follows:

	Number of shares
	2013		2012		2011
Issued shares outstanding at 1 January	342,708,823		342,709,051		258,897,363
Effect of shares issued	627,984		—		49,138,907
Effect of treasury stock	(2,831,509	)	(7,857	)	—
Average weighted number of ordinary shares outstanding at 31 December	340,505,298		342,701,194		308,036,270

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. At 31 December 2013, 2012 and 2011 basic and diluted earnings per share are the same as no potential diluting effects exist.

F-61

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(18)Non-Controlling Interests

Details of non-controlling interests and movement at 31 December 2012 are as follows:

	Thousands of Euros
				Business
				Combination /
				Additions to
	2011			consolidated			Translation		2012
	Balance	Additions		Group	Disposals		differences		Balance
Grifols (Thailand) Pte Ltd	1,770	22		—	(59	)	28		1,761
Grifols Malaysia Sdn Bhd	717	(16	)	—	—		12		713
Araclon Biotech, S.A.	—	(1,316	)	2,188	—		—		872
Medion Grifols Diagnostic AG	—	23		—	—		5		28
GRI-CEI S/A Productos para transfusao	—	(22	)	679	—		(58	)	599
	2,487	(1,309	)	2,867	(59	)	(13	)	3,973

Details of non-controlling interests and movement at 31 December 2013 are as follows:

	Thousands of Euros
				Business
				Combination /
				Additions to
	2012			consolidated		Capital			Translation		2013
	Balance	Additions		Group		increases	Disposals		differences		Balance
Grifols (Thailand) Pte Ltd	1,761	(18	)	—		—	(6	)	(183	)	1,554
Grifols Malaysia Sdn Bhd	713	74		—		—	—		(86	)	701
Araclon Biotech, S.A.	872	(2,955	)	—		2,895	—		—		812
Medion Grifols Diagnostic AG	28	(309	)	—		—	—		(1	)	(282	)
GRI-CEI S/A Productos para				—			—				1,721
transfusao	599	(5	)			1,547			(420	)
Progenika Biopharma, S.A.	—	14		1,093		—	—		8		1,115
Brainco Biopharma, S.L.	—	(283	)	664		—	—		—		381
Abyntek Biopharma, S.L.	—	(15	)	(45	)	—	—		—		(60	)
	3,973	(3,497	)	1,712		4,442	(6	)	(682	)	5,942

(note 3 (a) )

(19)Grants

Details are as follows:

	Thousands of Euros
	2013	2012
Capital grants	5,977	4,826
Interest rate grants (preference loans)	1,057	1,029
	7,034	5,855

F-62

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Details of capital grants are as follows:

	Thousands of Euros
	2013		2012
Total grant amount:
Prior years	10,351		6,144
Current year	1,864		4,207
	12,215		10,351
Less, income recognised:
In prior years	(5,309	)	(4,781	)
During the year	(558	)	(528	)
	(5,867	)	(5,309	)
Translation differences	(371	)	(216	)
Carrying amount of capital grants	5,977		4,826

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.

Movement for 2011 is as follows:

	Thousands of Euros
	2010		Transfer to profit		2011
	Balance	Additions	and loss		Balance
Interest rate grants (preference loans)	258	225	(275	)	208

Movement for 2012 is as follows:

	Thousands of Euros
	2011		Transfer to profit		2012
	Balance	Additions	and loss		Balance
Interest rate grants (preference loans)	208	1,255	(434	)	1,029

Movement for 2013 is as follows:

	Thousands of Euros
	2012		Transfer to profit		2013
	Balance	Additions	and loss		Balance
Interest rate grants (preference loans)	1,029	600	(572	)	1,057

F-63

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(20)Provisions

Details of provisions at 31 December 2013 and 2012 are as follows:

	Thousands of Euros
Non-current provisions (a)	2013	2012
Provisions for pensions and similar obligations	2,595	2,049
Other provisions	1,607	1,299
Non-current provisions	4,202	3,348

	Thousands of Euros
Current provisions (b)	2013	2012
Trade provisions	51,459	55,139
Current provisions	51,459	55,139

(a)Non-current provisions

At 31 December 2013, 2012 and 2011 provisions for pensions and similar obligations mainly comprise a provision made by certain foreign subsidiaries in respect of labour commitments with certain employees.

Movement in provisions during 2011 is as follows:

	Thousands of Euros
	2010	Business				Translation	2011
	Balance	combination	Net Charge	Cancellations		differences	Balance
Non-current provisions	1,378	9,250	1,848	(2,254	)	830	11,052
	1,378	9,250	1,848	(2,254	)	830	11,052
		(note 3(d))

Movement in provisions during 2012 is as follows:

	Thousands of Euros
	2011							Translation	2012
	Balance	Net Charge		Cancellations		Reclassifications		differences	Balance
Non-current provisions	11,052	(695	)	(470	)	(6,641	)	102	3,348
	11,052	(695	)	(470	)	(6,641	)	102	3,348

Movement in provisions during 2013 is as follows:

	Thousands of Euros
					Translation
	2012 Balance	Net Charge	Cancellations		differences		2013 Balance
Non-current provisions	3,348	1,776	(854	)	(68	)	4,202
	3,348	1,776	(854	)	(68	)	4,202

F-64

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(b)Current provisions

Movement in trade provisions during 2011 is as follows:

	Thousands of Euros
	2010	Business				Translation	2011
	Balance	combination	Net Charge	Cancellations		differences	Balance
Trade provisions	4,365	67,965	2,045	(1,117	)	7,854	81,112
	4,365	67,965	2,045	(1,117	)	7,854	81,112
		(note 3(d))

Movement in trade provisions during 2012 is as follows:

	Thousands of Euros
	2011	Business						Translation	2012
	Balance	combinations	Net Charge		Cancellations		Reclassifications	differences	Balance
Trade provisions	81,112	773	(2,158	)	(37,758	)	12,601	569	55,139
	81,112	773	(2,158	)	(37,758	)	12,601	569	55,139
		(note 3(d))

Movement in trade provisions during 2013 is as follows:

	Thousands of Euros
	2012	Business				Translation		2013
	Balance	combination	Net Charge	Cancellations		differences		Balance
Trade provisions	55,139	37	418	(2,050	)	(2,085	)	51,459
	55,139	37	418	(2,050	)	(2,085	)	51,459
		(note 3(a))

At 31 December 2011 trade provisions, arising from the Talecris business combination, included US Dollars 46.6 million (Euros 36 million) relating to litigation with Plasma Centers of America, LLC (PCA) and G&M Crandall Limited Family Partnership. During the third quarter of 2012, this litigation ended and the Group has paid a total of US Dollars 45 million (Euros 36.8 million). As a result of the reversal of the provision made prior to payment, the Group realised a net profit of US Dollars 3.2 million (Euros 2.6 million). This profit is included under selling, general and administration expenses in the consolidated statement of profit or loss.

F-65

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(21)Financial Liabilities

This note provides information on the contractual conditions of the loans obtained by the Group, which are measured at amortised cost, except the financial derivatives, which are measured at fair value. 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 31.

Details at 31 December 2013 and 2012 are as follows:

	Thousands of Euros
	2013	2012
Financial liabilities
Non-current obligations (a)	717,590	727,608
Senior secured debt (b)	1,677,607	1,807,339
Other loans (b)	30,680	33,449
Finance lease liabilities (c)	12,099	17,592
Financial derivatives (note 31)	68,033	93,515
Other non-current financial liabilities (e)	47,202	11,316
Total non-current financial liabilities	2,553,211	2,690,819
Current obligations (a)	72,629	42,968
Senior secured debt (b)	112,422	83,659
Other loans (b)	56,568	55,703
Finance lease liabilities (c)	7,087	7,005
Other current financial liabilities (e)	9,438	6,243
Total current financial liabilities	258,144	195,578

(a)Bonds

On 13 January 2011, the Group concluded its planned issue of High Yield Senior Unsecured Notes for an amount of US Dollars 1,100 million, with a seven-year maturity period (2018) and an annual coupon of 8.25%. This issue, in conjunction with the already completed syndicated loan described in paragraphs below enabled the Group to obtain the necessary funds to finance the acquisition of Talecris (see note 3 (d)) on 2 June 2011. In November 2011 the Group registered its corporate notes in the Securities Exchange Commission (SEC) using form F4.

On 2 June 2011 and in accordance with the requirements of the new credit agreement, the Group cancelled corporate bonds amounting to US Dollars 600 million and recognised all the associated transaction costs in profit or loss. The costs of cancelling the corporate bonds amounted to Euros 112 million. These costs were included as transaction costs as this was one of the necessary requirements for obtaining additional financing. These costs, together with other costs deriving from the debt issue (underwriting fees, ticking fees, closing fees etc.) were deferred as transaction costs and will be taken to profit or loss in accordance with the effective interest rate.

Unamortised financing costs of High Yield Senior Unsecured Notes amounted to Euros 80 million at 31 December 2013 (Euros 106 million at 31 December 2012).

Details of movement in the High Yield Senior Unsecured Notes at 31 December 2012 are as follows:

F-66

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	Thousands of Euros
	Opening outstanding	Translation		Closing outstanding
	balance 01/01/12	differences		balance 31/12/12
High Yield Senior Unsecured Notes (nominal amount)	850,143	(16,431	)	833,712
Total	850,143	(16,431	)	833,712

Details of movement in the High Yield Senior Unsecured Notes at 31 December 2013 are as follows:

	Thousands of Euros
	Opening outstanding	Translation		Closing outstanding
	balance 01/01/13	differences		balance 31/12/13
High Yield Senior Unsecured Notes (nominal amount)	833,712	(36,090	)	797,622
Total	833,712	(36,090	)	797,622

At 31 December 2013 and 2012 the current bonds caption includes the issue of bearer promissory notes to Group employees, as follows:

	2012
			Nominal			Promissory			Interest
			amount of			notes			pending
			promissory			subscribed	Buy back		accrual
		Maturity	notes	Interest		(Thousands of	(Thousands		(Thousands of
	Issue date	date	(Euros)	rate		Euros)	of Euros)		Euros)
Issue of bearer promissory notes	04/05/12	04/05/13	3,000	5.00	%	14,703	(156	)	(238	)

	2013
			Nominal			Promissory		Interest
			amount of			notes		pending
			promissory			subscribed	Buy back	accrual
		Maturity	notes	Interest		(Thousands of	(Thousands	(Thousands of
	Issue date	date	(Euros)	rate		Euros)	of Euros)	Euros)
Issue of bearer promissory notes	04/05/13	04/05/14	3,000	5.00	%	43,830	2,115	(733	)

F-67

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(b)Loans and borrowings

Details of loans and borrowings at 31 December 2013 and 2012 are as follows:

					Thousands of Euros
					2013				2012
			Date	Maturity	Amount		Carrying		Amount		Carrying
Credit	Currency	Interest rate	awarded	date	extended		amount		extended		amount
Senior debt - Tranche A	Euros	Euribor + 3.5%	23/11/2010	01/06/2016	220,000		143,000		220,000		176,000
Senior debt - Tranche B	Euros	Euribor + 3.5%	23/11/2010	01/06/2017	200,000		194,000		200,000		196,000
Senior debt - Tranche A	US Dollars	Libor + 3.25%	23/11/2010	01/06/2016	435,066		282,793		454,752		363,802
Senior debt - Tranche B	US Dollars	Libor + 3.5%	23/11/2010	01/06/2017	1,232,688		1,184,831		1,288,464		1,255,116
Total senior debt					2,087,754		1,804,624		2,163,216		1,990,918
Revolving Credit	Euros	Euribor + 3.25%	23/11/2010	01/06/2016	21,700		—		21,700		—
Revolving Credit	US Dollars	Libor + 3.25%	23/11/2010	01/06/2016	25,379		—		26,527		—
Revolving Credit	Multicurrency	Libor + 3.25%	23/11/2010	01/06/2016	101,515		—		106,109		—
Total Revolving Credit					148,594		—		154,336		—
Other non-current loans	Euros	Euribor-Euribor+4%	30/07/2009	25/06/2020	39,800		30,707		39,310		33,449
Loan transaction costs					—		(127,044	)	—		(183,579	)
Non-current loans and borrowings					2,276,148		1,708,287		2,356,862		1,840,788
Senior debt - Tranche A	Euros	Euribor + 3.5%	23/11/2010	01/06/2016	(*	)	33,000		(*	)	23,375
Senior debt - Tranche B	Euros	Euribor + 3.5%	23/11/2010	01/06/2017	(*	)	2,000		(*	)	200
Senior debt - Tranche A	US Dollars	Libor + 3.25%	23/11/2010	01/06/2016	(*	)	65,260		(*	)	48,317
Senior debt - Tranche B	US Dollars	Libor + 3.5%	23/11/2010	01/06/2017	(*	)	15,952		(*	)	16,674
Total senior debt					—		116,212		—		88,566
Other current loans		1.04%-12%			235,700		56,794		192,466		57,503
Loan transaction costs					—		(4,016	)	—		(6,707	)
Current loans and borrowings					235,700		168,990		192,466		139,362

(*) See amount granted under non-current debt

F-68

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Current loans and borrowings include accrued interest amounting to Euros 332 thousand (Euros 338 thousand at 31 December 2012).

On 23 November 2010 the Company signed senior debt agreements of US Dollars 3,400 million for the purchase of Talecris. On 29 February 2012 the Company closed the negotiations to amend and improve the terms and conditions of the senior debt. The present value discounted from cash flows under the new agreement, including costs for fees paid and discounted using the original effective interest rate differs by less than 10% of the present value discounted from cash flows remaining in the original debt, whereby the new agreement is not substantially any different to the original agreement.

The costs of refinancing the senior debt amounted to Euros 43.8 million. The modification of the terms in the embedded derivatives of the senior debt formed part of the refinancing (see note 31) and the resulting change in the present values amounting to Euros 65 million have reduced the financing cost. Based on an analysis of the quantitative and qualitative factors, the Group concluded that the renegotiation of conditions of the senior debt did not trigger a derecognition of the liability. Therefore, the net amount of the financing cost reduced the previous amount recognised and will form part of the amortised cost over the duration of the debt. Unamortised financing costs from the senior secured debt amount to Euros 131 million at 31 December 2013 (Euros 190 million at 31 December 2012).

The main amendments were basically as follows:

·Reduction of interest rates, retranching (US Dollars 600 million from Tranche A to Tranche B) and modification of the embedded floor;

·Removal of covenants relating to limitations in fixed assets investments and the debt service coverage ratio;

·Amendment to the leverage ratio limiting the distribution of dividends, improving from the current 3.75 to the new ratio of 4.5, as well as relaxing certain conditions relating to certain contracts;

The Group repaid in advance approximately US Dollars 240 million from the non-current senior debt during 2012.

Details of the Tranche A principal by maturity at 31 December 2013 are as follows:

	Tranche A in US Dollars			Tranche A in Euros
		Amortisation in	Amortisation in
		thousands of US	thousands of		Amortisation in
	Currency	Dollars	Euros	Currency	thousands of Euros
Maturity
2014	US Dollars	90,000	65,260	Euros	33,000
2015	US Dollars	292,500	212,095	Euros	107,250
2016	US Dollars	97,500	70,698	Euros	35,750
Total	US Dollars	480,000	348,053	Euros	176,000

F-69

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Details of the Tranche B principal by maturity at 31 December 2013 are as follows:

	Tranche B in US Dollars			Tranche B in Euros
		Amortisation in	Amortisation in
		thousands of US	thousands of		Amortisation in
	Currency	Dollars	Euros	Currency	thousands of Euros
Maturity
2014	US Dollars	22,000	15,952	Euros	2,000
2015	US Dollars	22,000	15,952	Euros	2,000
2016	US Dollars	22,000	15,952	Euros	2,000
2017	US Dollars	1,590,000	1,152,927	Euros	190,000
Total	US Dollars	1,656,000	1,200,783	Euros	196,000

The issue of High Yield Senior Unsecured Notes and senior debt is subject to compliance with certain covenants: leverage ratio and interest coverage ratio. At 31 December 2013 the Group complies with these financial covenants.

In addition, the Company and Grifols Inc. have pledged their assets as collateral, and the shares of certain group companies have been pledged, to guarantee repayment of the senior debt.

Grifols will not be able to distribute dividends while the leverage ratio (net financial debt/adjusted EBITDA) is higher than 4.5.

Grifols, S.A., Grifols Inc. and other significant Group companies, act as guarantor for the High Yield Senior Unsecured Notes. Significant Group companies are those companies that contribute 85% of earnings before interest, tax, depreciation and amortisation (EBITDA), 85% of the Group’s consolidated assets and 85% of total revenues, and those companies that represent more than 3% of the above mentioned indicators.

On 17 March 2014 the Group has concluded the refinancing process of its debt (see note 33).

(c)Finance lease liabilities

Details of minimum payments and the present value of finance lease liabilities, by maturity date, are as follows:

	Thousands of Euros
	2013			2012
	Minimum		Present	Minimum		Present
	payments	Interest	Value	payments	Interest	Value
Maturity at:
Less than one year	8,519	1,432	7,087	9,119	2,114	7,005
Two years	7,184	870	6,314	8,492	1,524	6,968
Three years	3,650	327	3,323	6,815	838	5,977
Four years	1,391	195	1,196	3,250	269	2,981
Five years	1,077	102	975	957	120	837
More than five years	311	20	291	880	51	829
Total	22,132	2,946	19,186	29,513	4,916	24,597

(d)Credit rating

On 15 July 2013 Moody’s Investors Service upgraded Grifols’ corporate credit rating to Ba2, its senior debt rating to Ba1 and its corporate bond rating to B1, with a positive outlook. As a result of the announcement of the acquisition of the transfusion diagnostics and immunology business from the Swiss company Novartis

F-70

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

International ADG on 21 November 2013, Moody’s Investors Service re-confirmed Grifols’ corporate rating and changed the outlook to negative.

On 13 November 2013 Standard & Poor’s confirmed the global corporate credit rating of Grifols, issued on 1 August 2012, at BB, with senior secured debt being BB+ and the corporate bond being B+. All the ratings have a stable outlook.

(e)Other financial liabilities

At 31 December 2013 other financial liabilities include interest-free loans extended by governmental institutions amounting to Euros 22,282 thousand (Euros 12,660 thousand at 31 December 2012). The portion of the loans considered a grant and still to be taken to profit or loss amounts to Euros 1,057 thousand (Euros 1,029 thousand at 31 December 2012) (see note 19).

At 31 December 2013 other non-current financial liabilities include Euros 27,624 thousand relating to the put and call option extended by the Group and the shareholders of Progenika (see note 3(a)).

At 31 December 2013 and 2012 other current financial liabilities also include approximately Euros 3,955 thousand and Euros 2,631 thousand, respectively, which have been collected directly from Social Security affiliated bodies and transferred to financial institutions (see note 13).

Details of the maturity of other financial liabilities are as follows:

	Thousands of Euros
	2013	2012
Maturity at:
Up to one year	9,438	6,243
Two years	4,195	3,092
Three years	26,242	2,396
Four years	3,318	1,950
Five years	7,352	1,572
Over five years	6,095	2,306
	56,640	17,559

(22)   Trade and Other Payables

Details are as follows:

	Thousands of Euros
	2013	2012
Suppliers	273,621	228,405
VAT payable	8,608	5,518
Tax authorities, withholdings payable	4,062	3,798
Social security payable	5,938	3,745
Other public entities	23,780	14,296
Other payables	42,388	27,357
Current tax liabilities	2,934	5,679
	318,943	261,441

Suppliers

Details of balances with related parties are shown in note 32.

F-71

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group’s exposure to currency risk and liquidity risk associated with trade and other payables is described in note 31.

(23)   Other Current Liabilities

Details at 31 December are as follows:

	Thousands od Euros
	2013	2012
Salaries payable	75,421	75,122
Other payables	1,183	2,917
Deferred income	2,395	0
Advances received	5,068	0
Other current liabilities	84,067	78,039

(24)   Net revenues

Net revenues are mainly generated by the sale of goods.

The distribution of net consolidated revenues for 2013, 2012 and 2011 by segment is as follows:

	Thousands of Euros
	2013	2012	2011
Bioscience	2,448,824	2,325,088	1,531,199
Diagnostic	130,339	134,342	117,358
Hospital	97,131	95,870	95,365
Raw Material and others	65,438	65,644	51,691
	2,741,732	2,620,944	1,795,613

The geographical distribution of net consolidated revenues is as follows:

	Thousands of Euros
	2013	2012	2011
USA and Canada	1,707,620	1,658,548	948,730
Spain	207,922	212,983	230,871
European Union	361,905	346,345	295,754
Rest of the world	426,257	371,618	289,732
Subtotal	2,703,704	2,589,494	1,765,087
Raw Materials	38,028	31,450	30,526
Consolidated	2,741,732	2,620,944	1,795,613

F-72

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Details of discounts and other reductions to gross income are as follows:

	Thousands of Euros
	2013		2012		2011
Gross sales	2,915,496		2,741,405		1,901,171
Chargebacks	(58,065	)	(34,102	)	(38,248	)
Cash discounts	(28,831	)	(27,447	)	(16,135	)
Volume rebates	(50,505	)	(29,391	)	(25,079	)
Medicare and Medicaid	(18,961	)	(16,332	)	(9,945	)
Other discounts	(17,402	)	(13,189	)	(16,151	)
Net sales	2,741,732		2,620,944		1,795,613

Movement in discounts and other reductions to gross income during 2011 were as follows:

	Thousands of Euros
			Cash		Volume		Medicare /		Other
	Chargebacks		discounts		rebates		Medicaid		discounts		Total
Balance at 31 December 2010	—		1,150		3,229		2,957		833		8,169
Business combinations	2,466		1,199		7,506		6,352		—		17,523
Current estimate related to sales made in current and prior year	38,248		16,135		25,079		9,945		16,151		105,558	(1)
(Actual returns or credits in current period related to sales made in current period)	(35,145	)	(16,698	)	(16,561	)	(5,336	)	(15,472	)	(89,212	)(2)
(Actual returns or credits in current period related to sales made in prior periods)	(2,032	)	—		(10,822	)	(5,210	)	(833	)	(18,897	)(3)
Balance at 31 December 2011	3,537		1,786		8,431		8,708		679		23,141

Movement in discounts and other reductions to gross income during 2012 were as follows:

	Thousands of Euros
			Cash		Volume		Medicare /		Other
	Chargebacks		discounts		rebates		Medicaid		discounts		Total
Balance at 31 December 2011	3,537		1,786		8,431		8,708		679		23,141
Current estimate related to sales made in current and prior year	34,102		27,447		29,391		16,332		13,189		120,461	(1)
(Actual returns or credits in current period related to sales made in current period)	(27,655	)	(25,277	)	(20,345	)	(10,212	)	(13,189	)	(96,678	)(2)
(Actual returns or credits in current period related to sales made in prior periods)	(3,663	)	(1,645	)	(9,841	)	(8,495	)	(679	)	(24,323	)(3)
Translation differences	(15	)	(191	)	2,683		451		(30	)	2,898
Balance at 31 December 2012	6,306		2,120		10,319		6,784		(30	)	25,499

F-73

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Movement in discounts and other reductions to gross income during 2013 were as follows:

	Thousands of Euros
			Cash		Volume		Medicare /		Other
	Chargebacks		discounts		rebates		Medicaid		discounts		Total
Balance at 31 December 2012	6,306		2,120		10,319		6,784		(30	)	25,499
Current estimate related to sales made in current and prior year	58,065		28,831		50,505		18,961		17,402		173,764	(1)
(Actual returns or credits in current period related to sales made in current period)	(41,209	)	(25,428	)	(33,510	)	(15,948	)	(17,167	)	(133,262	)(2)
(Actual returns or credits in current period related to sales made in prior periods)	(5,201	)	(2,112	)	(8,252	)	(1,901	)	27		(17,439	)(3)
Translation differences	(983	)	(144	)	(765	)	(339	)	(22	)	(2,253	)
Balance at 31 December 2013	16,978		3,267		18,297		7,557		210		46,309

(1) Net impact in income statement: estimate for the current year plus prior years’ adjustments. Adjustments made

during the year corresponding to prior years’ estimates have not been significant.

(2) Amounts credited and posted against provisions for current period

(2) Amounts credited and posted against provisions for prior period

(25)Personnel Expenses

Details of personnel expenses by function are as follows:

	Thousands of Euros
	2013	2012	2011
Cost of sales	412,660	410,382	310,550
Research and development	57,012	59,925	38,626
Selling, general & administrative expenses	203,944	193,631	139,465
	673,616	663,938	488,641

Details by nature are as follows:

	Thousands of Euros
	2013	2012	2011
Wages and salaries	549,703	534,554	394,714
Contributions to pension plans (note 30)	10,233	10,637	8,785
Other social charges	14,059	13,803	10,202
Social Security	99,621	104,944	74,940
	673,616	663,938	488,641

F-74

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(26)Expenses by Nature

(a)Amortisation and depreciation

Expenses for the amortisation and depreciation of intangible assets and property, plant and equipment, incurred during 2013, 2012 and 2011 classified by functions are as follows:

	Thousands of Euros
	2013	2012	2011
Cost of sales	69,091	66,200	49,297
Research and development	12,018	9,693	9,669
Selling, general & administrative expenses	47,360	53,233	31,673
	128,469	129,126	90,639

(b)Other operating income and expenses

Other operating expenses and income incurred during 2013, 2012 and 2011 by function are as follows:

	Thousands of Euros
	2013	2012	2011
Cost of sales	202,860	210,817	186,665
Research and development	54,854	54,673	41,273
Selling, general & administrative expenses	344,215	308,738	242,733
	601,929	574,228	470,671

Details by nature are as follows:

	Thousands of Euros
	2013	2012	2011
Changes in trade provisions	5,168	9,135	3,809
Professional services	121,467	99,641	132,630
Commissions	18,327	19,780	14,035
Supplies and auxiliary materials	78,993	80,461	70,282
Operating leases (note 29)	69,522	67,991	36,132
Freight	54,177	52,280	35,283
Repair and maintenance expenses	55,242	50,256	33,128
Advertising	48,115	43,429	40,236
Insurance	16,178	16,745	15,424
Royalties	3,831	5,824	6,163
Travel expenses	33,258	27,353	21,656
External services	43,681	49,222	20,487
Other	53,970	52,111	41,406
Other operating expenses	601,929	574,228	470,671

F-75

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(27)Finance Result

Details are as follows:

	Thousands of Euros
	2013		2012		2011
Finance income	4,869		1,677		5,761
Finance cost from High Yield Senior Unsecured Notes (note 21)	(91,002	)	(96,711	)	(48,759	)
Finance cost from senior debt-Tranche A (note 21)	(38,308	)	(58,731	)	(50,561	)
Finance cost from senior debt-Tranche B (note 21)	(95,172	)	(103,687	)	(57,692	)
Club Deal	—		—		(1,473	)
Finance cost from sale of receivables (note 13)	(6,972	)	(7,406	)	(6,185	)
Finance cost on corporate bonds in USA (USPP)	—		—		(20,847	)
Capitalised interest	9,131		7,344		7,612
Other finance costs	(17,668	)	(24,926	)	(22,657	)
Finance costs	(239,991	)	(284,117	)	(200,562	)
Change in fair value of financial derivatives (note 31)	(1,786	)	13,013		1,279
Impairment and gains / (losses) on disposal of financial instruments	792		2,107		(805	)
Exchange differences	(1,303	)	(3,409	)	(3,447	)
Finance result	(237,419	)	(270,729	)	(197,774	)

During 2013 the Group has capitalised interest at a rate of between 4.4% and 6.2% based on the financing received (between 4.7% and 6.5% during 2012) (see note 4 (f)).

(28)Taxation

Grifols, S.A. is authorised to present a consolidated tax return with Diagnostic Grifols, S.A., Movaco, S.A., Laboratorios Grifols, S.A., Instituto Grifols, S.A., Logister, S.A., Biomat, S.A., Grifols Viajes, S.A., Grifols International, S.A., Grifols Engineering, S.A., Arrahona Optimus, S.L. and Gri-Cel, S.A. Grifols, S.A., in its capacity as Parent, is responsible for the presentation and payment of the consolidated tax return. Under prevailing tax law, the Spanish companies pay 30% tax, which may be reduced by certain deductions.

The North American company Grifols Inc. is also authorised to present consolidated tax returns in the USA with Grifols Biologicals Inc., Grifols USA, LLC., Biomat USA, Inc., Plasmacare, Inc, Grifols Therapeutics Inc. and Talecris Plasma Resources, Inc. The profits of the companies domiciled in the USA, determined in accordance with prevailing tax legislation, are subject to tax of approximately 37.5% of taxable income, which may be reduced by certain deductions.

F-76

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(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
	2013		2012		2011
Profit for the year before income tax	497,536		387,948		80,023
Tax at 30%	149,261		116,384		24,007
Permanent differences	(3,771	)	3,965		11,111
Effect of different tax rates in US companies	23,216		24,291		6,665
Effect of different tax rates in other countries	5,734		3,172		(638	)
Tax credits (deductions)	(24,465	)	(16,632	)	(15,695	)
Prior year income tax expense	(2,175	)	(1,677	)	(613	)
Other income tax expenses/(income)	7,682		3,068		4,958
Total income tax expense	155,482		132,571		29,795
Deferred tax	14,922		97,018		(13,509	)
Current tax	140,560		35,553		43,304
Total income tax expense	155,482		132,571		29,795

F-77

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(b)Deferred tax assets and liabilities

Details of deferred tax assets and liabilities are as follows:

	Thousands of Euros
	Tax effect
	2013		2012		2011
Assets
Inventories	18,972		20,871		15,504
Fixed assets, amortisation and depreciation	1,466		1,615		1,482
Tax credits (deductions from Spain)	8,404		—		—
Tax loss carryforwards in Spain	4,247		—		—
Tax loss carryforwards in other Companies	368		—		—
Provisions	746		1,416		977
Other	398		815		143
	34,601		24,717		18,106
Liabities
Goodwill	(42,039	)	(38,809	)	(35,611	)
Intangible assets	(318,128	)	(324,787	)	(342,842	)
Fixed assets	(121,667	)	(120,719	)	(132,559	)
Debt cancellation costs	(55,755	)	(72,584	)	(27,826	)
Others	—		—		(2,585	)
Subtotal, liabilities	(537,589	)	(556,899	)	(541,423	)
Tax credits (deductions from Spain)	5,298		8,980		11,940
Tax credits (deductions from the US)	—		4,505		22,775
Tax loss carryforwards in the US	6,184		7,886		18,797
Inventories	8,187		21,184		49,911
Cash flow hedges	15,293		20,188		13,658
Provisions	40,693		35,972		53,619
Other	7,845		4,338		—
Subtotal, net assets	83,500		103,053		170,700
Net deferred Liabilities	(454,089	)	(453,846	)	(370,723	)

Movement in deferred tax assets and liabilities is as follows:

	Thousands of Euros
Deferred tax assets and liabilities	2013		2012		2011
Balance at 1 January	(429,129	)	(352,617	)	(44,252	)
Movements during the year	(14,922	)	(97,018	)	13,509
Movements in equity during the year	(4,227	)	6,988		12,687
Business combination (note 3)	4,871		1,383		(302,636	)
Translation differences	23,919		12,135		(31,925	)
Balance at 31 December	(419,488	)	(429,129	)	(352,617	)

F-78

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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.

Details of deferred tax assets and liabilities on items directly debited and credited to equity during the year are as follows:

	Thousands of Euros
	Tax effect
	2013	2012		2011
Cash flow hedges (note 16 (f))	4,227	(6,988	)	(12,687	)
	4,227	(6,988	)	(12,687	)

The remaining assets and liabilities recognised in 2013, 2012 and 2011 were recognised on the statement of profit or loss.

Estimated net deferred tax liabilities to be reversed in a period of less than 12 months amount to Euros 32,246 thousand at 31 December 2013 (Euros 45,224 thousand at 31 December 2012).

The majority of the tax deductions pending application from other Spanish companies (except for those located in the Basque Country where the majority of tax deductions do not mature), relating mainly to research and development, mature in 15 years, whilst most tax deductions pending application from US companies mature in 20 years.

At 31 December 2013 the Group has recognised an amount of Euros 5,298 thousand from Spanish companies (Euros 8,980 thousand at 31 December 2012), Euros 8,404 thousand from the Progenika Group companies acquired as their future recovery was estimated as likely, and the total amount from from US companies has been fully applied (Euros 4,505 thousand at 31 December 2012) in respect of tax credits derived from deductions pending application.

At 31 December 2013 the tax Group in Spain has an amount of Euros 22,413 thousand (Euros 22,837 thousand at 31 December 2012) pending application for tax amortisation as a result of goodwill generated on the acquisition of Biomat USA, Inc. This amount will be applied annually, with no limit, provided that the current amortisation rates are maintained (stipulated by law until 2015) until 2066. In the event of applying a tax amortisation rate of 5%, the amount pending tax amortisation would be applied until 2025. The yearly amount that has been applied in 2013 at the tax rate of 30% has been Euros 424 thousand (Euros 424 thousand in 2012). The Group has recognised a deferred tax liability of Euros 16,120 thousand for the tax amortisation of goodwill at 31 December 2013 (Euros 15,696 thousand at 31 December 2012).

At 31 December 2013 the tax Group in Spain has an amount of Euros 9,342 thousand (Euros 9,471 thousand at 31 December 2012) pending application for tax amortisation as a result of goodwill generated on the acquisition of Plasmacare, Inc. This amount will be deducted annually, with no limit, provided that the current amortization rates are maintained (stipulated by law until 2015) until 2086. In the event of applying a tax amortization rate of 5% the amount pending tax amortization would be applied until 2029.  The yearly amount that has been applied in 2013 at the tax rate of 30% has been Euros 128 thousand (Euros 128 thousand in 2012). The Group has recognised a deferred tax liability of Euros 3,485 thousand for the tax amortization of goodwill at 31 December 2013 (Euros 3,356 thousand at 31 December 2012).

At 31 December 2013 the Group has recognised tax loss carryforwards of Euros 6,184 thousand (Euros 7,886 thousand at 31 December 2012). These tax credits derive from the US companies and are available for 20 years from their date of origin.

At 31 December 2013 the Group has recognised loss carryforwards of Euros 4,247 thousand from Progenika Group companies acquired which are pending offset and have no maturity date.

F-79

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group has not recognised as deferred tax assets the tax effect of the tax loss carryforwards of Group companies, which amount to Euros 35,657 thousand (Euros 12,456 thousand at 31 December 2012). The rise for 2013 is mainly due to the Euros 15,205 thousand losses from the Progenika Group companies.

(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 Group has the following tax inspections underway:

·Logística Grifols, S.A. de CV: Tax report on the financial statements for 2005 and 2006.

·Grifols Inc. and subsidiaries: notification of an inspection of federal income tax for the year ended 1 June 2011.

·Grifols Inc. and subsidiaries: notification of an inspection of federal income tax for the years ended 31 December 2010 and 31 December 2011.

Group management does not expect any significant liability to derive from these inspections.

No significant liabilities have arisen from completion of the tax inspection in 2013 of California franchise tax for 2009 to 2010 in Grifols Inc. (formerly Talecris Biotherapeutics Holdings Corp and subsidiaries).

No significant liabilities have arisen from completion of the tax inspection in 2013 of Indiana income tax for 2009 to 2011 in Talecris Plasma Resources, Inc.

(29)Operating Leases

(a)Operating leases (as lessee)

At 31 December 2013, 2012 and 2011 the Group leases buildings from third parties under operating leases.

In addition to the lease contracts described in note 9 (f (i)), the Group has warehouses and buildings contracted under operating lease. The duration of these lease contracts ranges from between 1 to 30 years. Contracts may be renewed on termination. Lease instalments are adjusted periodically in accordance with the price index established in each contract. One Group company has entered into lease contracts which include contingent rents. These contingent rents have been based on production capacity, surface area used and the real estate market and are expensed on a straight line basis.

Operating lease instalments of Euros 69,522 thousand have been recognised as an expense for the year at 31 December 2013 (Euros 67,991 thousand at 31 December 2012 and Euros 36,095 thousand at 31 December 2011) and comprise minimum lease payments.

Future minimum payments on non-cancellable operating leases at 31 December 2013, 2012 and 2011 are as follows:

	Thousands of Euros
	2013	2012	2011
Maturity at:
Up to 1 year	52,520	54,080	53,054
Between 1 and 5 years	156,413	171,315	180,802
More than 5 years	52,708	67,864	72,744
Total future minimum payments	261,641	293,259	306,600

F-80

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(b)Operating leases (as lessor)

At 31 December 2013, 2012 and 2011 the Group has no lease contracts as lessor.

(30)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.

(c)Obligations with personnel

The Group’s annual contribution to defined contribution pension plans of Spanish Group companies for 2013 has amounted to Euros 595 thousand (Euros 558 thousand for 2012).

In successive years this contribution will be defined through labour negotiations.

In the event that control is taken of the Company, the Group has agreements with 89 employees/directors/senior management 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 directors entitling them to termination benefits ranging from one to two years of their salary due to various circumstances.

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 3% of employee contributions and 50% of the next 2%. Group and employee contributions are fully vested when contributed. The plan assets are held in trust and invested as directed by the plan participants. The total cost of matching contributions to the savings plan was US Dollars 11.2 million for 2013 (US Dollars 11.3 million for 2012). The recognition of the cost of these contributions is consistent with each participant’s salary.

Other plans

The Group has a defined benefit pension plan for certain Talecris Biotherapeutics, GmbH employees in Germany as required by statutory law. The pension cost relating to this plan was not material for the periods presented.

(d)Purchase commitments

Details of the Group’s commitments mainly to purchase plasma at 31 December 2013 are as follows:

	Thousands of Euros
2014	84,814
2015	73,977
2016	68,668
2017	39,407
2018	38,658
2019	2,478

F-81

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(e)Judicial procedures and arbitration

Details of legal proceedings in which the Company or Group companies are involved are as follows:

Catalan haemophiliacs

Instituto Grifols, S.A. was notified in 2007 of a claim for maximum damages of Euros 12,960 thousand filed by a group of 100 Catalan haemophiliacs against all plasma fractionation companies. During 2008 this claim was rejected, and the ruling appealed. Notification was published on 21 January 2011 that on 18 January 2011 the Barcelona Provincial Court had rejected the haemophiliacs’ claim. An appeal was subsequently filed by the counterparty in the Catalan High Court, which was rejected. The Group is currently awaiting the ruling on the appeal filed again by the group of haemophiliacs at the Spanish Supreme Court.

Foreign Corrupt Practices Act (FCPA)

The Group is carrying out an internal investigation, already started prior to the acquisition of Talecris, in relation to possible breaches of the Foreign Corrupt Practices Act (FCPA) of which Talecris was aware in the context of a review unrelated to this matter. This FCPA investigation is being carried out by an external legal advisor. In principle, the investigation has been focused on sales to certain Central and Eastern European countries, specifically Belarus and Russia, although trading practices in Brazil, China, Georgia, Iran and Turkey are also being investigated, in addition to other countries considered necessary.

In July 2009, the Talecris Group voluntarily contacted the U.S. Department of Justice (DOJ) to inform them of an internal investigation that the Group was carrying out regarding possible breaches of the FCPA in certain sales to certain central and East European countries and to offer the Group’s collaboration in any investigation that the DOJ wanted to carry out. As a result of this investigation the Group suspended shipments to some of these countries. In certain cases, the Group had safeguards in place which led to terminating collaboration with consultants and suspending or terminating relations with distributors in those countries under investigation as circumstances warranted.

As a consequence of the investigation, the agreement with Talecris’ Turkish distributor was terminated and a settlement agreement has been reached between the parties.

In November 2012, the Group was notified by the DOJ that the proceedings would be closed, without prejudice to the fact that they could be re-opened in the future should new information arise. The Group continues with the in-depth review of potential irregular practices.

Furthermore an investigation has been opened in Italy, in relation with the criminal prosecution in Naples against 5 employees of the Company, including the former General Manager. The Company and its legal advisors consider this investigation will be limited to the individual employees and the likelihood is remote this issue will affect the Company.

The legal advisors recommend limiting disclosure of the aforementioned information in these consolidated financial statements, because the matter is currently under legal dispute.

F-82

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

(31)Financial Instruments

Classification

Disclosure of financial instruments by nature, category and fair value is as follows:

	Thousand of Euros
	2012
	Carrying amount							Fair Value
	Loans and	Financial instruments		Debts and
	receivables	held for trading		payables		Total		Level 1		Level 2		Level 3	Total
Financial derivatives	—	4,502		—		4,502		—		4,502		—	4,502
Financial assets at fair value	—	4,502		—		4,502
Non-current financial assets	12,024	—		—		12,024
Other current financial assets	460	—		—		460
Trade and other receivables	392,288	—		—		392,288
Cash and cash equivalents	473,327	—		—		473,327
Financial assets not mesured at fair value	878,099	—		—		878,099
Financial derivatives	—	(93,515	)	—		(93,515	)	—		(93,515	)	—	(93,515	)
Financial liabilities at fair value	—	(93,515	)	—		(93,515	)
High Yield Senior Unsecured Notes	—	—		(756,267	)	(756,267	)	(918,195	)	—		—	(918,195	)
Promissory Notes	—	—		(14,309	)	(14,309	)
Senior secured debt	—	—		(1,890,998	)	(1,890,998	)	(2,129,522	)	—		—	(2,129,522	)
Other bank loans	—	—		(89,152	)	(89,152	)
Finance lease payables	—	—		(24,597	)	(24,597	)
Other financial liabilities	—	—		(17,559	)	(17,559	)
Trade and other payables	—	—		(228,405	)	(228,405	)
Debts with associates	—	—		(2,668	)	(2,668	)
Other current liabilities	—	—		(2,917	)	(2,917	)
Financial liabilities at fair value	—	—		(3,026,872	)	(3,026,872	)
	878,099	(89,013	)	(3,026,872	)	(2,237,786	)

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.

F-83

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

	Thousand of Euros
	2013
	Carrying amount							Fair Value
	Loans and	Financial instruments		Debts and
	receivables	held for trading		payables		Total		Level 1		Level 2		Level 3	Total
Financial derivatives	—	3,155		—		3,155		—		3,155		—	3,155
Financial assets at fair value	—	3,155		—		3,155
Non-current financial assets	11,741	—		—		11,741
Other current financial assets	500	—		—		500
Trade and other receivables	405,262	—		—		405,262
Cash and cash equivalents	708,777	—		—		708,777
Financial assets not mesured at fair value	1,126,280	—		—		1,126,280
Financial derivatives	—	(68,033	)	—		(68,033	)	—		(68,033	)	—	(68,033	)
Financial liabilities at fair value	—	(68,033	)	—		(68,033	)
High Yield Senior Unsecured Notes	—	—		(745,008	)	(745,008	)	(851,461	)	—		—	(851,461	)
Promissory Notes	—	—		(45,211	)	(45,211	)
Senior secured debt	—	—		(1,790,029	)	(1,790,029	)	(1,961,341	)	—		—	(1,961,341	)
Other bank loans	—	—		(87,248	)	(87,248	)
Finance lease payables	—	—		(19,186	)	(19,186	)
Other financial liabilities	—	—		(56,640	)	(56,640	)
Trade and other payables	—	—		(273,621	)	(273,621	)
Debts with associates	—	—		(2,683	)	(2,683	)
Other current liabilities	—	—		(8,646	)	(8,646	)
Financial liabilities at fair value	—	—		(3,028,272	)	(3,028,272	)
	1,126,280	(64,878	)	(3,028,272	)	(1,966,870	)

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.

F-84

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

Financial derivatives

At 31 December 2013 and 2012 the Group has recognised the following derivatives:

		Nocional	Nocional	Thousands of Euros
		amount at	amount at	Value at		Value at
Financial derivatives	Currency	31/12/2013	31/12/2012	31/12/13		31/12/12		Maturity
Interest rate swap (cash flow hedges)	USD	1,224,777,500	1,398,875,000	(40,004	)	(50,900	)	30/06/2016
Interest rate swap (cash flow hedges)	EUR	100,000,000	100,000,000	(4,025	)	(5,704	)	31/03/2016
Swap Option	EUR	100,000,000	100,000,000	0		8		31/03/2016
Swap Floor	USD	1,224,777,500	1,398,875,000	3,155		4,494		30/06/2016
Embedded floor of senior debt	EUR	196,000,000	198,000,000	(3,539	)	(5,965	)	01/06/2017
Embedded floor of senior debt	USD	1,656,000,000	1,678,000,000	(20,465	)	(30,946	)	01/06/2017
Total				(64,878	)	(89,013	)
Total Assets (notes 11)				3,155		4,502
Total Liabilities (note 21)				(68,033	)	(93,515	)

(a)Derivative financial instruments at fair value through profit or loss

Derivative financial instruments that do not meet the hedge accounting requirements are classified and measured as financial assets or financial liabilities at fair value through profit or loss.

The floor included in the syndicated financing of Tranches A and B of the senior debt is in the money and an embedded derivative exists on these contracts, which was measured at fair value and recognised separately from the loans. As a result of the refinancing entered into on 29 February 2012 the embedded derivatives have been amended and improved. The embedded derivative included in Tranche A has been eliminated, whilst the embedded derivative included in Tranche B has decreased from 1.75% to 1.00%. Consequently, the nominal amounts of the embedded floors of the senior debt have been significantly reduced in Euros and US Dollars. The decrease in the value of embedded derivatives amounted to US Dollars 71.6 million (Euros 53.5 million) and Euros 12.2 million at 29 February 2012, which reduced the refinanced senior debt.

Futures contracts matured on 29 June 2012. On 29 June 2012 it was agreed to extend the futures contract to 28 September 2012, through a novation without liquidation under the same terms and conditions. During 2012 the Group sold unquoted futures, obtaining cash income of Euros 31.5 million and finance income of Euros 27.9 million.

(b)Hedging derivative financial instruments

See explanation in note 16 (f).

In June 2011, the Group contracted two derivatives in order to comply with the compulsory hedging requirements stipulated in the credit agreement. These derivatives comprise a step-up interest rate swap and a floor swap, which had an initial nominal amount of US Dollars 1,550 million each. Both the interest rate swap and the floor are amortised on a quarterly basis in order to remain less than the amounts borrowed and avoid excess hedging. In December 2013 the nominal amount of the derivatives stands at US Dollars 1,225 million each (Euros 1,399 million at 31 December 2012). The interest rate swap complies with hedge accounting criteria.

F-85

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

Furthermore, in May 2012 the interest rate swap in Euros was modified, reducing the fixed interest rate and extending the maturity date from September 2014 to March 2016. The interest rate swap complies with hedge accounting criteria.

Credit risk

(a)Exposure to credit risk

The carrying amount of financial assets represents the maximum exposure to credit risk. At 31 December 2013 and 2012 the maximum level of exposure to credit risk is as follows:

		Thousands of Euros
Carrying amount	Note	2013	2012
Non-current financial assets	11	11,741	12,024
Non-current financial derivatives	11	3,155	4,502
Other current financial assets		500	460
Trade receivables	13	385,537	366,022
Other receivables	13	19,725	26,266
Cash and cash equivalents	15	708,777	473,327
		1,129,435	882,601

The maximum level of exposure to risk associated with receivables at 31 December 2013 and 2012, by geographical area, is as follows.

	Thousands of Euros
Carrying amount	2013	2012
Spain	95,491	104,676
EU countries	54,526	66,238
United States of America	164,582	139,073
Other European countries	1,516	4,427
Other regions	89,147	77,874
	405,262	392,288

Details of balances receivable as per country such as Greece, Italy, Spain and Portugal at 31 December 2012 are as follows:

	Thousands of Euros
	Balances with public entities				Balance with third parties
			Provision				Provision
			for doubtful				for doubtful
		Balance	receivables		Balance	Balance	receivables		Net debt
	Balance (1)	past due	(2)		(3)	past due	(4)		(1)+(2)+(3)+(4)
Greece	317	273	(317	)	2,026	199	—		2,026
Italy	8,693	4,667	(557	)	16,167	7,386	(1,193	)	23,110
Spain	82,599	48,601	(175	)	13,651	11,632	(172	)	95,903
Portugal	21,028	15,615	(4,081	)	629	520	(210	)	17,366
	112,637	69,156	(5,130	)	32,473	19,737	(1,575	)	138,405

F-86

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

Details of balances receivable as per country such as Greece, Italy, Spain and Portugal at 31 December 2013 are as follows:

	Thousands of Euros
	Balances with public entities				Balance with third parties
			Provision				Provision
			for doubtful				for doubtful
		Balance	receivables		Balance	Balance	receivables		Net debt
	Balance (1)	past due	(2)		(3)	past due	(4)		(1)+(2)+(3)+(4)
Greece	118	118	(118	)	1,259	9	—		1,259
Italy	6,801	1,741	(144	)	14,847	9,057	(2,060	)	19,444
Spain	76,027	41,092	(175	)	7,656	4,919	(98	)	83,410
Portugal	10,999	8,559	(7,088	)	3,098	2,422	(1	)	7,008
	93,945	51,510	(7,525	)	26,860	16,407	(2,159	)	111,121

Provision has been made for balances receivable from Portuguese public entities on the basis of the best estimate of their expected collection in view of the current situation regarding negotiations. The Group does not currently have any reason to consider that the receivables from public entities in Italy and Spain will not be recoverable.

(b)Impairment losses

Details of the maturity of trade receivables, net of impairment provisions are as follows:

	Thousands of Euros
	2013	2012
Not matured	305,111	282,803
Less than 1 month	42,298	34,103
1 to 4 months	35,734	34,732
4 months to 1 year	15,147	29,246
More than one year	6,972	11,404
	405,262	392,288

Unimpaired receivables that are past due mainly relate to public entities.

Movement in the inventory provision was as follows:

	Thousands of Euros
	2013		2012		2011
Opening balance	12,799		8,871		3,777
Business combination	722		—		2,251
Net charges for the year	4,750		5,248		2,974
Net cancellations for the year	(1,617	)	(1,248	)	(323	)
Translation differences	(581	)	(72	)	192
Closing balance	16,073		12,799		8,871

An analysis of the concentration of credit risk is provided in note 5 (a).

F-87

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

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		6				More
		amount at	Contractual	months	6 - 12	1-2		than 5
Carrying amount	Note	31/12/12	flows	or less	months	years	2- 5 years	years
Financial liabilities
Bank loans	21	1,980,150	2,509,660	135,776	99,268	209,243	2,054,190	11,183
Other financial liabilities	21	17,559	19,636	4,496	1,824	3,508	6,699	3,109
Bonds and other marketable securities	21	770,576	1,226,319	48,700	34,391	68,781	206,344	868,103
Finance lease payables	21	24,597	24,597	3,689	3,316	6,968	9,795	829
Payable to associates	32	2,668	2,668	2,668	—	—	—	—
Payable to suppliers	22	228,405	228,405	228,286	119	—	—	—
Other current liabilities	23	2,917	2,917	2,843	74	—	—	—
Derivative financial liabilities	21	36,911	31,412	3,890	3,994	7,676	15,852	—
Financial liabilities for hedging derivatives	21	56,604	56,953	4,770	8,899	19,242	24,042	—
Total		3,120,387	4,102,567	435,118	151,885	315,418	2,316,922	883,224

		Thousands of Euros
		Carrying		6				More
		amount at	Contractual	months	6 - 12	1-2		than 5
Carrying amount	Note	31/12/13	flows	or less	months	years	2- 5 years	years
Financial liabilities
Bank loans	21	1,877,277	2,256,838	146,822	105,206	416,706	1,581,963	6,141
Other financial liabilities	21	56,640	56,640	5,739	3,699	4,195	36,911	6,096
Bonds and other marketable securities	21	790,219	1,138,951	78,114	32,902	65,804	962,131	—
Finance lease payables	21	19,186	20,787	4,164	3,912	6,861	5,559	291
Payable to associates	32	2,683	2,683	2,683	—	—	—	—
Payable to suppliers	22	273,621	273,621	272,829	792	—	—	—
Other current liabilities	23	8,646	8,647	7,664	983	—	—	—
Derivative financial liabilities	21	24,004	45,876	4,524	14,070	27,282	—	—
Financial liabilities for hedging derivatives	21	44,029	25,637	3,573	8,475	11,727	1,862	—
Total		3,096,305	3,829,680	526,112	170,039	532,575	2,588,426	12,528

F-88

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

Currency risk

The Group’s exposure to currency risk is as follows:

	Thousands of Euros
	2012
	EUR (*)		USD (**)
Trade receivables	68		3,107
Receivables from Group companies	—		45
Loans to Group companies	—		6
Cash and cash equivalents	858		24,977
Trade payables	(1,508	)	(2,684	)
Payables to Group companies	(7,357	)	(56,405	)
Loans to Group companies	(8,929	)	—
Balance sheet exposure	(16,868	)	(30,954	)

(*) Balances in Euros in subsidiaries with US Dollars functional currency

(**) Balances in US Dollars in subsidiaries with Euros functional currency

	Thousands of Euros
	2013
	EUR (*)		USD (**)
Trade receivables	267		2,637
Receivables from Group companies	28,472		5,898
Loans to Group companies	—		204,480
Cash and cash equivalents	16,524		95,177
Trade payables	(602	)	(15,730	)
Payables to Group companies	(7,502	)	(19,359	)
Loans to Group companies	28,411		(135,418	)
Balance sheet exposure	65,570		137,685

(*) 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 2013 and 2012 year ends are as follows:

	Closing exchange rate
Euros	2013	2012
US Dollars	1.3791	1.3194

A sensitivity analysis for foreign exchange fluctuations is as follows:

Had the US Dollar strengthened by 10% against the Euro at 31 December 2013, equity would have increased by Euros 204,191 thousand (Euros 145,895 thousand at 31 December 2012) and profit would have increased by Euros 20,326 thousand (at 31 December 2012 it would have decreased by Euros 4,782 thousand). 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 2013 and 2012 would have had the opposite effect for the amounts shown above, all other variables being held constant.

F-89

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

Interest rate risk

(a)Interest-rate profile

To date, the profile of interest on interest-bearing financial instruments is as follows:

	Thousands of Euros
	2013		2012
Fixed-interest financial instruments
Financial assets	5,230		5,688
Financial liabilities	(817,843	)	(770,576	)
	(812,613	)	(764,888	)
Variable-interest financial instruments
Financial liabilities	(1,896,463	)	(2,004,747	)
	(1,896,463	)	(2,004,747	)
	(2,709,076	)	(2,769,635	)

(b)Sensitivity analysis

Had the interest rate curve at 31 December 2013 been 100 basis points higher, the interest expense would have increased by Euros 9.7 million, the finance cost due to changes in the value of derivatives would have been Euros 10.4 million lower and equity would have increased by Euros 18.8 million as a result of changes in derivatives to which hedge accounting is applied.

Had the interest rate at 31 December 2012 been 100 basis points higher, the interest expense would have increased by Euros 6.2 million, the finance cost due to changes in the value of derivatives would have been Euros 23.6 million lower and equity would have increased by Euros 27.8 million as a result of changes in derivatives to which hedge accounting is applied.

(32)Balances and Transactions with Related Parties

Details of balances with related parties are as follows:

	Thousands of Euros
	2013		2012
Receivables from associates	27		26
Loans to associates	1,000		—
Debts with associates	(2,683	)	(2,668	)
Debts with key management personnel	(4,017	)	(1,250	)
Payables to members of the board of directors	(400	)	(458	)
Payables to other related parties	(7,906	)	(5,969	)
	(13,979	)	(10,319	)

Payables are included in suppliers and trade payables (see note 22).

F-90

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

(a)Group transactions with related parties

Group transactions with related parties during 2011 were as follows:

	Thousands of Euros
			Key management		Other related		Board of directors
	Associates		personnel		parties		of the Company
Net sales	102		—		—		—
Net purchases	(1,690	)	—		—		—
Other service expenses	—		—		(30,671	)	—
Operating lease expense (note 9)	—		—		(4,909	)	—
Sale of fixed assets (note 9)	—		—		233,629		—
Remuneration	—		(5,718	)	—		(2,518	)
	(1,588	)	(5,718	)	198,049		(2,518	)

Group transactions with related parties during 2012 were as follows:

	Thousands of Euros
		Key management		Other related		Board of directors
	Associates	personnel		parties		of the Company
Net sales	186	—		—		—
Other service expenses	—	—		(6,072	)	(1,270	)
Operating lease expense (note 9)	—	—		(24,057	)	—
Remuneration	—	(7,871	)	—		(3,688	)
	186	(7,871	)	(30,129	)	(4,958	)

Group transactions with related parties during 2013 are as follows:

	Thousands of Euros
			Key management		Other related		Board of directors
	Associates		personnel		parties		of the Company
Net sales	263		—		—		—
Other service expenses	—		—		(5,849	)	(1,269	)
Operating lease expense (note 9)	—		—		(23,985	)	—
Remuneration	—		(9,130	)	—		(4,405	)
R&D agreements	(9,802	)	—		—		—
Finance costs	(36	)	—		(210	)	—
	(9,575	)	(9,130	)	(30,044	)	(5,674	)

Every year the Group contributes 0.7% of its profits before tax to a non-profit organisation.

“Other service expenses” include contributions to non-profit organisations totalling Euros 2,779 thousand in 2013 (Euros 3,012 thousand in 2012 and Euros 653 thousand in 2011).

Other expenses for services in 2011 also included costs for professional services with related companies amounting to Euros 10,388 thousand. These costs correspond to those incurred in increasing share capital and the issue of debt carried out relating to the acquisition of Talecris. This item also included brokerage fees relating to sale and leaseback transactions in Spain and North Carolina amounting to Euros 9,309 thousand.

F-91

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

Interest expense to related parties for the year 2013 include interest accrued on the loan of Class B shares (see note 3 (a) and 16).

During 2011 one of the Company’s directors signed a three-year consulting services contract. The director will receive annual fees of US Dollars 1 million for these services and an additional bonus of US Dollars 2 million for complying with certain conditions.

Directors representing shareholders interests have received remuneration of Euros 100 thousand during 2013 and 2012 (no remuneration in 2011).

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 30 (c)).

(b)Investments and positions held by directors of the Parent in other companies and related parties

The directors and related parties do not hold any investments, nor do they hold positions or carry out functions or activities in companies with an identical, similar or complementary statutory activity to that of the Company.

(33)Events after the Reporting Period

Signing of a bridge loan for the acquisition of Novartis’ Diagnostic unit

On 3 January 2014 the Group signed a US Dollars 1,500 million bridge loan, fully entered into in equal parts by Nomura, BBVA and Morgan Stanley. This loan was taken out to pay for the acquisition of Novartis’ Diagnostic unit relating to transfusional medicine and immunology. There are no financial restrictions on this loan relating to Grifols dividends or investments.

Closing of the purchase of Novartis’ Diagnostic unit

On 9 January 2014 the Group acquired the transfusion medicine and immunology Diagnostic unit of the Swiss company Novartis International AG for approximately US Dollars 1,650 million (Euros 1,222 million).

This transaction has been structured through a newly-created 100% Grifols-owned subsidiary, G-C Diagnostics Corp. (USA) and this transaction has been financed through a US Dollars 1,500 million bridge loan.

Grifols will expand its portfolio by including Novartis’ diagnostic products for transfusion medicine and immunology, including its highly innovative, market-leading NAT technology (Nucleic Acid Amplification Techniques), instrumentation and equipment for blood screening, specific software and reagents. The assets acquired include patents, brands and licenses, together with the production plant at Emeryville (California, United States) and commercial offices in United States, Switzerland and Hong Kong (for the Asia-Pacific region) among others.

This strategic operation will strengthen Grifols’ Diagnostic division, particularly in the US, with a very strong and specialized commercial organisation. It will also diversify Grifols’ business by promoting an activity area that complements the Bioscience division. The diagnostic business being purchased from Novartis, focused on guaranteeing the safety of blood donations for transfusions or to be used in the production of plasma derivatives, complements and expands Grifols’ existing product range. Grifols will become a vertically integrated company able to provide solutions for blood and plasma donor centres, with the most complete product portfolio in the immunohaematology field, including reagents using gel technology, multicard and the new genotyping technologies from Progenika.

Grifols’ workforce will increase by approximately 550 employees, after taking on the employees of Novartis.

F-92

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

At the date of issue of these consolidated financial statements the Group did not have all the necessary information to determine the definitive fair value of intangible assets, liabilities and contingent liabilities acquired in the business combination.

Details of the aggregate business combination cost, the provisional fair value of the net assets acquired and provisional goodwill at the acquisition date (or the amount by which the business combination cost exceeds the fair value of the net assets acquired) are provided below as well as details on the manner the amounts have been provisionally determined based on the information available at this stage. The values shown in the table below should be considered provisional.

For practical purposes, for the present transaction, the exchange rate Euro / Dollar 1.35 was used for all purposes.

The Novartis’ Diagnostic business did not operate as a separate legal entity or segment, so the acquired business was structured as an asset deal, with the exception of the Hong Kong subsidiary, which was acquired via a share deal. For this reason the combined financial information presented in respect to the acquired business has been prepared based on ‘‘carve-out’’ financial information, using the directly attributable assets and liabilities and the historical results of operations, which include allocations of expenses attributable to the acquired business from the Diagnostic division within the Novartis Group. The combined financial information is therefore not indicative of the results of operations or financial position that would have occurred if the carve-out Diagnostic division had been a separate stand-alone entity during the year presented, or of the future results of the carve-out Diagnostic division.

	Thousands of Euros	Thousands of US Dollars
Cost of the business combination
Payment in cash	1,222,222	1,650,000
Total business combination cost	1,222,222	1,650,000
Fair value of net assets acquired	256,060	345,681
Goodwill (excess of the cost of the business combination over the fair value of net assets acquired)	966,162	1,304,319

Provisional goodwill generated in the acquisition is attributed to the synergies, workforce and other expected benefits from the business combination of the assets and activities of the Group.

The expenses incurred in this transaction in 2013 amount to approximately Euros 19 million.

F-93

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

The amounts provisionally determined at the date of acquisition of assets, liabilities and contingent liabilities acquired are as follows:

	Fair Value
	Thousands of Euros	Thousands of US Dollars
Property, plant and equipment	107,397	144,986
Inventories	64,800	87,480
Trade and other receivables	112,347	151,669
Other current assets	8,889	12,000
Total assets	293,433	396,135
Trade and other payables	28,372	38,302
Other current liabilities	9,001	12,152
Total liabilities and contingent liabilities	37,373	50,454
Total net assets acquired	256,060	345,681

The result for the year 2013 of the acquired business, until operating result, is presented as follows:

	Thousands of Euros		Thousands of US Dollars
Net revenue	582,222		786,000
Cost of sales	(289,630	)	(391,000	)
Gross Profit	292,593		395,000
Research and development	(21,481	)	(29,000	)
Selling, general and administration expense	(53,333	)	(72,000	)
Operating result	217,778		294,000

Refinancing

On 17 March 2014 the Group has concluded the refinancing process of its debt. The total debt refinanced amounts to US Dollars 5,500 million (Euro 4,075 million) and represents the company’s entire debt, including the US Dollars 1,500 million bridge loan obtained for the acquisition of Novartis’ transfusional diagnostics unit. Following the refinancing process, Grifols’ debt structure consists of a US Dollars 4,500 million long-term loan with institutional investors and banks segmented in two tranches (Term Loan A and Term Loan B), and a US Dollars 1,000 million bond issuance (senior unsecured notes).

In a first step, on 5 March 2014, Grifols Worldwide Operations Limited, 100% subsidiary of Grifols, has issued US Dollars 1,000 million Senior Unsecured Notes (the “Notes”) that will mature on 2022 and will bear an anual interest at 5.25%. These notes replaced the Senior Unsecured Notes issued in 2011 amounting to US Dollars 1,100 million, with a maturity in 2018 and an interest of 8.25% (see note 21 (a)).

Furthermore, on 17 March 2014 the Group refinanced its Senior Secured Debt (see note 21(b)).

The new senior debt consist of a Term Loan A (“TLA”), which amounts to US Dollars 700 million with a 2.50% margin over LIBOR and maturity in 2020 and a Term Loan B (“TLB”) that amounts to US Dollars 3,800 million with a 3.00% over LIBOR margin and maturity in 2021. Furthermore, the embedded floor included in the former senior debt, has been terminated. Grifols Worldwide Operations Limited is the sole borrower of this new financing.

F-94

GRIFOLS, S.A. AND SUBSIDIARIES

Notes to the Consolidated Financial statements

Following the refinancing process, the financing structure of Grifols is as follows:

	Millions US Dollars	New Conditions
Term Loan A (TLA) - Long-term loan with banks		Interest rate: US LIBOR 1 month+ 250
	700	Maturity: 2020
Term Loan B (TLB) - Long-term loan with institutional investors		Interest rate: US LIBOR 1 month + 300
	3,800	Maturity: 2021
Total Senior Secured Debt	4,500
Senior Unsecured Notes	1,000	Interest rate: 5.25% Maturity: 2022
Total Debt	5,500

Based on an analysis of the quantitative and qualitative factors, the Group concluded that the issuance of the notes and the conditions of the renegotiated senior debt did not trigger a derecognition of the liability.

(34)Condensed Consolidating Financial Information

The High Yield Senior Unsecured Notes were issued by Grifols Inc., which is a wholly-owned subsidiary of Grifols, S.A., and are jointly and severally, irrevocably and fully and unconditionally guaranteed by Grifols, S.A. and certain other of its wholly-owned subsidiaries (‘the Guarantors’). Supplemental condensed consolidating financial information is presented in Appendix VI comprising the Group’s statements of profit or loss and cash flow statements, both consolidated, for Fiscal 2013, Fiscal 2012 and Fiscal 2011 and its consolidated balance sheets as at December 31, 2013 and December 31, 2012, showing the amounts attributable to Grifols, S.A., Grifols Inc. and those of its other subsidiaries that were Guarantors as at December 31, 2013 separately from the amounts attributable to those of its subsidiaries that were not Guarantors. The condensed consolidated financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered”, which is included in Appendix VI.

The Board of directors of Grifols, S.A. approved these Consolidated Financial Statements on 2 April 2014.

F-95

APPENDIX I

GRIFOLS, S.A.  AND SUBSIDIARIES

Information on Group Companies, Associates and others for the years ended 31 December 2013, 2012 and 2011

			Acquisition /			12/31/2013				12/31/2012				12/31/2011
	Registered	Registered	Incorporation			% shares				% shares				% shares
Name	Offices	Offices	date	Activity	Statutory Activity	Direct		Indirect		Direct		Indirect		Direct		Indirect
Fully Consolidated Companies
Diagnostic Grifols, S.A.	Spain	Polígono Levante Calle Can Guasch, s/n 8150 Parets del Vallès (Barcelona) Spain	1987	Industrial	Development and manufacture of diagnostic equipment, instruments and reagents.	99.998	%	0.002	%	99.998	%	0.002	%	99.998	%	0.002	%
Instituto Grifols, S.A.	Spain	Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain	1987	Industrial	Plasma fractioning and the manufacture of haemoderivative pharmaceutical products.	99.998	%	0.002	%	99.998	%	0.002	%	99.998	%	0.002	%
Logister, S.A.	Spain	Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain	1987	Industrial	Manufacture, sale and purchase, commercialisation and distribution of all types of computer products and materials.	—		100.000	%	—		100.000	%	—		100.000	%
Laboratorios Grifols, S.A.	Spain	Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain	1989	Industrial	Production of glass- and plastic-packaged parenteral solutions, parenteral and enteral nutrition products and blood extraction equipment and bags.	99.998	%	0.002	%	99.998	%	0.002	%	99.998	%	0.002	%
Biomat, S.A.	Spain	Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain	1991	Industrial	Analysis and certification of the quality of plasma used by Instituto Grifols, S.A. It also provides transfusion centres with plasma virus inactivation services (I.P.T.H).	99.900	%	0.100	%	99.900	%	0.100	%	99.900	%	0.100	%
Grifols Engineering, S.A.	Spain	Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain	2000	Industrial	Design and development of the Group’s manufacturing installations and part of the equipment and machinery used at these premises. The company also renders engineering services to external companies.	99.950	%	0.050	%	99.950	%	0.050	%	99.950	%	0.050	%
Biomat USA, Inc.	United States	2410 Lillyvale Avenue Los Angeles (California) United States	2002	Industrial	Procuring human plasma.	—		100.000	%	—		100.000	%	—		100.000	%
Grifols Biologicals, Inc.	United States	5555 Valley Boulevard Los Angeles (California) United States	2003	Industrial	Plasma fractioning and the production of haemoderivatives.	—		100.000	%	—		100.000	%	—		100.000	%
PlasmaCare, Inc.	United States	1128 Main Street, Suite 300 Cincinnati (Ohio) United States	2006	Industrial	Procuring human plasma.	—		100.000	%	—		100.000	%	—		100.000	%
Grifols Australia Pty Ltd.	Australia	Unit 5/80 Fairbank Clayton South Victoria 3149 Australia	2009	Industrial	Distribution of pharmaceutical products and the development and manufacture of reagents for diagnostics.	100.000	%	—		100.000	%	—		—		100.000	%
Medion Grifols Diagnostic AG	Switzerland	Bonnstrasse,9 3186 Dügingen Switzerland	2009	Industrial	Development and manufacturing activities in the area of biotechnology and diagnostics.	80.000	%	—		80.000	%	—		—		80.000	%
Grifols Therapeutics, Inc.	United States	4101 Research Commons (Principal Address), 79 T.W. Alexander Drive, Research Triangle Park, Carolina del Norte 277709, United States	2011	Industrial	Plasma fractioning and the production of haemoderivatives.	—		100.000	%	—		100.000	%	—		100.000	%
Talecris Plasma Resources, Inc.	United States	4101 Research Commons (Principal Address), 79 T.W. Alexander Drive, Research Triangle Park, Carolina del Norte 277709, United States	2011	Industrial	Procuring human plasma.	—		100.000	%	—		100.000	%	—		100.000	%
GRI-CEI, S/A Produtos para transfusao	Brazil	Rua Umuarama, 263 Condominio Portal da Serra Vila Perneta CEP 83.325-000 Pinhais Paraná, Brazil	2012	Industrial	Production of bags for the extraction, separation, conservation and transfusion of blood components.	60.000	%	—		60.000	%	—		—		—
Grifols Worldwide Operations Limited		70 Sir John Rogerson’s Quay Dublin 2 Ireland	2012	Industrial	Packaging, labelling, storage, distribution, manufacture and development of pharmaceutical products and rendering of financial services to Group companies.	100.000	%	—		—		—		—		—
Progenika Biopharma, S.A.		Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain	2013	Industrial	Development, production and commercialisation of biotechnological solutions.	56.150	%	—		—		—		—		—
Proteomika, S.L.U		Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain	2013	Industrial	Development, production and commercialisation of biotechnological solutions.	—		56.150	%	—		—		—		—

This appendix forms an integral part of note 2 to the consolidated financial statements

F-96

APPENDIX I

GRIFOLS, S.A.  AND SUBSIDIARIES

Information on Group Companies, Associates and others for the years ended 31 December 2013, 2012 and 2011

			Acquisition /			12/31/2013				12/31/2012				12/31/2011
	Registered	Registered	Incorporation			% shares				% shares				% shares
Name	Offices	Offices	date	Activity	Statutory Activity	Direct		Indirect		Direct		Indirect		Direct		Indirect
Progenika Latina, S.A. de CV		Periferico Sur Nº 4118 Int 8 Col. Jardines del Pedregal CP 01900 Alvaro Obregon DF Mexico	2013	Industrial	Development, production and commercialisation of biotechnological solutions.	—		56.150	%	—		—		—		—
Progenika Inc.		Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, DE 19808 United States	2013	Industrial	Development, production and commercialisation of genetic tools, diagnostic equipment and therapeutic systems and products for personalised medicine and the highest quality healthcare in general.	—		56.150	%	—		—		—		—
Preventia 2.0 Genetics, S.L.		Calle Ercilla 17 - 3º 48009 Bilbao-Vicaya Spain	2013	Industrial	Research, development and commercialisation of diagnostic products, treatment of diseases and rendering of related services.	—		56.150	%	—		—		—		—
Brainco Biopharma, S.L.		Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain	2013	Industrial	Development of products for the treatment and diagnosis of psychiatric illnesses	—		28.423	%	—		—		—		—
Abyntek Biopharma, S.L.		Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain	2013	Industrial	Research, development and transfer of biotechnological products and processes, as well as the commercialiation of products and services related to the biosciences.	—		43.763	%	—		—		—		—
Asociación I+D Progenika	Spain	Parque Tecnológico de Vizcaya, Edificio 504 48160 Derio (Vizcaya) Spain	2013	Industrial	Coordination, representation, management and promotion of the common interests of associated companies, in addition to contributing to the development, growth and internationalisation of its associates and of the biosciences sector in the Basque Country.	—		56.150	%	—		—		—		—
G-C Diagnostics Corp.		4560 Horton Street 94608 Emeryville, California United States	2013	Industrial	Participation in any activity to facilitate the organisation of the companies under the jurisdiction of Delaware.	100.000	%	—		—		—		—		—
Grifols Asia Pacific Pte, Ltd	Singapore	501 Orchard Road nº20-01 238880 Wheelock Place, Singapore	2003	Commercial	Distribution and sale of medical and pharmaceutical products.	100.000	%	—		100.000	%	—		100.000	%	—
Grifols Movaco, S.A.		Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain	1987	Commercial	Distribution and sale of reagents, chemical products and other pharmaceutical specialities, and of medical and surgical materials, equipment and instruments for use by laboratories and health centres.	99.999	%	0.001	%	99.999	%	0.001	%	99.999	%	0.001	%
Grifols Portugal Productos Farmacéuticos e Hospitalares, Lda.	Portugal	Rua de Sao Sebastiao,2 Zona Industrial Cabra Figa 2635-448 Rio de Mouro Portugal	1988	Commercial	Import, export and commercialisation of pharmaceutical and hospital equipment and products, particularly Grifols products.	0.010	%	99.990	%	0.010	%	99.990	%	0.010	%	99.990	%
Grifols Chile, S.A.	Chile	Avda. Americo Vespucio, 2242 Comuna de Conchali Santiago de Chile Chile	1990	Commercial	Development of pharmaceutical businesses, which can involve the import, production, commercialisation and export of related products.	99.000	%	—		99.000	%	—		99.000	%	—
Grifols USA, LLC.	United States	Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, DE 19808 United States	1990	Commercial	Distribution and marketing of company products.	—		100.000	%	—		100.000	%	—		100.000	%
Grifols Argentina, S.A.	Argentina	Bartolomé Mitre 3690/3790, CPB1605BUT Munro Partido de Vicente Lopez Argentina	1991	Commercial	Clinical and biological research. Preparation of reagents and therapeutic and diet products. Manufacture and commercialisation of other pharmaceutical specialities.	95.010	%	4.990	%	99.260	%	0.740	%	99.260	%	0.740	%
Grifols s.r.o.	Czech Republic	Calle Zitna,2 Prague Czech Republic	1992	Commercial	Purchase, sale and distribution of chemical-pharmaceutical products, including human plasma.	100.000	%	—		100.000	%	—		100.000	%	—

F-97

APPENDIX I

GRIFOLS, S.A.  AND SUBSIDIARIES

Information on Group Companies, Associates and others for the years ended 31 December 2013, 2012 and 2011

			Acquisition /			12/31/2013				12/31/2012				12/31/2011
	Registered	Registered	Incorporation			% shares				% shares				% shares
Name	Offices	Offices	date	Activity	Statutory Activity	Direct		Indirect		Direct		Indirect		Direct		Indirect
Grifols (Thailand) Ltd	Thailand	191 Silom Complex Building  21st Follor, Silom Road, Silom, Bangrak 10500 Bangkok Thailand	2003	Commercial	Import, export and distribution of pharmaceutical products.	—		48.000	%	—		48.000	%	—		48.000	%
Grifols Malaysia Sdn Bhd	Malaysia	Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur Malaysia	2003	Commercial	Distribution and sale of pharmaceutical products.	—		30.000	%	—		30.000	%	—		30.000	%
Grifols International, S.A.	Spain	Polígono Levante Calle Can Guasch, s/n 08150 Parets del Vallès (Barcelona) Spain	1997	Commercial	Coordination of the marketing, sales and logistics for all the Group’s subsidiaries operating in other countries.	99.900	%	0.100	%	99.900	%	0.100	%	99.900	%	0.100	%
Grifols Italia S.p.A	Italy	Via Carducci, 62d 56010 Ghezzano Pisa, Italy	1997	Commercial	Purchase, sale and distribution of chemical-pharmaceutical products.	100.000	%	—		100.000	%	—		100.000	%	—
Grifols UK Ltd.	United Kingdom	Gregory Rowcliffe & Milners, 1 Bedford Row, London WC1R 4BZ United Kingdom	1997	Commercial	Distribution and sale of therapeutic and other pharmaceutical products, especially haemoderivatives.	100.000	%	—		100.000	%	—		100.000	%	—
Grifols Brasil, Ltda.	Brazil	Rua Umuarama, 263 Condominio Portal da Serra Vila Perneta CEP 83.325-000 Pinhais Paraná, Brazil	1998	Commercial	Import and export, preparation, distribution and sale of pharmaceutical and chemical products for laboratory and hospital use, and medical-surgical equipment and instruments.	100.000	%	—		100.000	%	—		100.000	%	—
Grifols France, S.A.R.L.	France	Arteparc, Rue de la Belle du Canet, Bât. D, Route de la Côte d’Azur, 13590 Meyreuil France	1999	Commercial	Commercialisation of chemical and healthcare products.	99.990	%	0.010	%	99.990	%	0.010	%	99.990	%	0.010	%
Alpha Therapeutic Italia, S.p.A.(merged with Grifols Italia S.p.A. in 2012)	Italy	Corso di Porta Vittoria, 9, 20122 Milan (Italy)	2000	Commercial	Distribution and sale of therapeutic products, especially haemoderivatives.	—		—		—		—		100.000	%	—
Grifols Polska Sp.z.o.o.	Poland	Grzybowska 87 street00-844 Warsaw, Poland	2003	Commercial	Distribution and sale of pharmaceutical, cosmetic and other products.	100.000	%	—		100.000	%	—		100.000	%	—
Logística Grifols, S.A. de C.V.	Mexico	Calle Eugenio Cuzin, nº 909-913 Parque Industrial Belenes Norte 45150 Zapopán Jalisco, Mexico	2008	Commercial	Manufacture and commercialisation of pharmaceutical products for human and veterinary use.	99.990	%	0.010	%	99.990	%	0.010	%	99.990	%	0.010	%
Grifols México, S.A. de C.V.	Mexico	Calle Eugenio Cuzin, nº 909-913 Parque Industrial Belenes Norte 45150 Zapopán Jalisco, Mexico	1970	Commercial	Production, manufacture, adaptation, conditioning, sale and purchase, commissioning, representation and consignment of all kinds of pharmaceutical products and the acquisition of machinery, equipment, raw materials, tools, movable goods and property for the aforementioned purposes.	99.990	%	0.010	%	99.990	%	0.010	%	99.990	%	0.010	%
Medion Diagnostics GmbH	Germany	Lochamer Schlag, 12D 82166 Gräfelfing Germany	2009	Commercial	Distribution and sale of biotechnological and diagnostic products.	—		80.000	%	—		80.000	%	—		80.000	%
Grifols Nordic, AB	Sweden	Sveavägen 166 11346 Stockholm Sweden	2010	Commercial	Research and development, production and marketing of pharmaceutical products, medical devices and any other asset deriving from the aforementioned activities.	100.000	%	—		100.000	%	—		100.000	%	—
Grifols Colombia, Ltda	Colombia	Carrera 7 No. 71 52 Torre B piso 9 Bogotá. D.C. Colombia	2010	Commercial	Sale, commercialisation and distribution of medicines, pharmaceutical (including but not limited to haemoderivatives) and hospital products, medical devices, biomedical equipment, laboratory instruments and reagents for diagnosis and/or healthcare software.	99.000	%	1.000	%	99.000	%	1.000	%	99.000	%	1.000	%

This appendix forms an integral part of note 2 to the consolidated financial statements

F-98

APPENDIX I

GRIFOLS, S.A.  AND SUBSIDIARIES

Information on Group Companies, Associates and others for the years ended 31 December 2013, 2012 and 2011

			Acquisition /			12/31/2013				12/31/2012				12/31/2011
	Registered	Registered	Incorporation			% shares				% shares				% shares
Name	Offices	Offices	date	Activity	Statutory Activity	Direct		Indirect		Direct		Indirect		Direct		Indirect
Grifols Deutschland GmbH	Germany	Lyoner Strasse 15, D-60528 Frankfurt am Main Germany	2011	Commercial	Procurement of the official permits and necessary approval for the production, commercialisation and distribution of products deriving from blood plasma, as well as the import, export, distribution and sale of reagents and chemical and pharmaceutical products, especially for laboratories and health centres and surgical and medical equipment and instruments.	100.000	%	—		100.000	%	—		100.000	%	—
Australian Corporate Number 073 272 830 Pty Ltd.	Australia	Unit 5/80 Fairbank, Clayton South, Victoria 3169 (Australia)	2009	Commercial	Distribution of pharmaceutical products and reagents for diagnostics.	—		—		—		—		—		100.000	%
Grifols Canada, Ltd.	Canada	5060 Spectrum Way, Suite 405 (Principal Address) Mississauga, Ontario L4W 5N5 Canada	2011	Commercial	Provision of various services (marketing) to Grifols Therapeutics Inc.	—		100.000	%	—		100.000	%	—		100.000	%
Grifols Pharmaceutical Consulting (Shanghai) Co., Ltd.		Unit 901-902, Tower 2, No. 1539, West Nanjing Rd., Jing’an District, Shanghai 200040 China	2013	Commercial	Pharmaceutical consultancy services (except for diagnosis), technical and logistical consultancy services, business management and marketing consultancy services.	100.000	%	—		—		—		—		—
Grifols Switzerland AG		Steinengraben, 5 40003 Basel Switzerland	2013	Commercial	Research, development, import and export and commercialisation of pharmaceutical products, devices and diagnostic instruments.	100.000	%	—		—		—		—		—
Grifols Viajes, S.A.	Spain	Can Guasch, 2 08150 Parets del Vallès Barcelona, Spain	1995	Services	Travel agency exclusively serving Group companies.	99.900	%	0.100	%	99.900	%	0.100	%	99.900	%	0.100	%
Squadron Reinsurance Ltd.	Ireland	The Metropolitan Building, 3rd Fl. James Joyce Street, Dublin Ireland	2003	Services	Reinsurance of Group companies’ insurance policies.	—		100.000	%	100.000	%	—		100.000	%	—
Arrahona Optimus, S.L.	Spain	Avenida de la Generalitat 152 Sant Cugat del Valles (Barcelona) Spain	2008	Services	Development and construction of offices and business premises.	99.990	%	0.010	%	99.990	%	0.010	%	99.990	%	0.010	%
Grifols, Inc.	United States	2410 Lillivale Avenue 90032 Los Angeles, California United States	2011	Services	Acquisition, manufacture and sale of therapeutic products, especially haemoderivatives extracted using plasma fractioning through a network of donation centres owned by the Group in the USA.	100.000	%	—		100.000	%	—		100.000	%	—
Talecris Biotherapeutics Overseas Services, Corp.	United States	4101 Research Commons (Principal Address), 79 T.W. Alexander Drive, Research Triangle Park, North Carolina 277709, United States	2011	Services	Provision of support services for the sale of biotherapeutic products outside the USA and participation in any other activity for which the companies may be organised in accordance with the General Corporation Law of Delware.	—		—		—		100.000	%	—		100.000	%
Gri-Cel, S.A.	Spain	Avenida de la Generalitat 152 Sant Cugat del Valles (Barcelona) Spain	2009	Research	Research and development in the field of regenerative medicine, awarding of research grants, subscription to collaboration agreements with entities and participation in projects in the area of regenerative medicine.	0.001	%	99.999	%	0.001	%	99.999	%	0.001	%	99.999	%
Araclon Biotech, S.L.	Spain	Paseo de Sagasta, 17 2º izqda. Zaragoza, Spain	2012	Research	Creation and commercialisation of a blood diagnosis kit for the detection of Alzheimer’s and development of effective immunotherapy (vaccine) against this disease.	—		61.12	%	—		51.000	%	—		—
Saturn Australia Pty Ltd.	Australia	Unit 5/80 Fairbank, Clayton South, Victoria 3169 (Australia)	2009	Investment	Its activity consists of holding shares and real estate investments.	—		—		—		—		—		100.000	%
Saturn Investments AG	Switzerland	c/o Dr. Christoph Straub, Hanibuel 8, CH 6300 Zug (Switzerland)	2009	Investment	Its activity consists of holding shares and real estate investments.	—		—		—		—		—		100.000	%
Woolloomooloo Holdings Pty Ltd.	Australia	Unit 5/80 Fairbank, Clayton South, Victoria 3169 (Australia)	2009	Investment	Its activity consists of holding shares and real estate investments.	—		—		—		—		—		100.000	%

F-99

APPENDIX I

GRIFOLS, S.A.  AND SUBSIDIARIES

Information on Group Companies, Associates and others for the years ended 31 December 2013, 2012 and 2011

		Acquisition /			12/31/2013				12/31/2012			12/31/2011
	Registered	Incorporation			% shares				% shares			% shares
Name	Offices	date	Activity	Statutory Activity	Direct		Indirect		Direct	Indirect		Direct	Indirect
Equity accounted investees
Nanotherapix, S.L.	Avenida de la Generalitat 152 Sant Cugat del Valles (Barcelona) Spain	2010	Research	Development, validation and production of the technology required to implement the use of genetic and cellular therapy for the treatment of human and animal pathologies.	—		51.000	%	—	51.000	%	—	51.000	%
VCN Bioscience, S.L.	Avenida de la Generalitat 152 Sant Cugat del Valles (Barcelona) Spain	2012	Research	Research and development of therapeutic approaches for tumours for which there is currently no effective treatment.	—		40.000	%	—	40.000	%	—	40.000	%
Aradigm Corporation	3929 Point Eden Way Hayward, California United States	2013	Research	Development and commercialisation of drugs delivered by inhalation for the prevention and treatment of severe respiratory diseases.	35.000	%	—		—	—		—	—
TiGenix N.V.	Romeinse straat 12 bus 2, 3001 Leuven, Belgium	2013	Research	Research and development of therapies based on stem cells taken from adipose tissue.	—		21.300	%	—	—		—	—
Mecwins, S.L.	Avenida Fernandos Casas Novoa, 37 Santiago de Compostela Spain	2013	Research	Research and production of nanotechnological, biotechnological and chemical solutions.	—		14.038	%	—	—		—	—

F-100

APPENDIX II

GRIFOLS, S.A.  AND SUBSIDIARIES

Operating Segments for the years ended 31 December 2013, 2012 and 2011

(Expressed in thousands of Euros)

	Bioscience				Hospital				Diagnostic					Raw materials			Others/Unallocated						Consolidated
	2013		2012	2011	2013	2012	2011		2013		2012	2011		2013	2012	2011	2013		2012		2011		2013		2012		2011
Revenues from external customers	2,448,824		2,325,088	1,531,199	97,131	95,870	95,365		130,339		134,341	117,358		38,028	31,450	30,526	27,410		34,195		21,165		2,741,732		2,620,944		1,795,613
Total operating income	2,448,824		2,325,088	1,531,199	97,131	95,870	95,365		130,339		134,341	117,358		38,028	31,450	30,526	27,410		34,195		21,165		2,741,732		2,620,944		1,795,613
Profit/(Loss) for the segment	980,835		888,094	515,214	139	1,177	7,610		(3,819	)	9,291	(14,551	)	11,664	10,657	6,749	27,306		33,881		17,355		1,016,125		943,100		532,377
Unallocated expenses																	(280,005	)	(283,016	)	(253,516	)	(280,005	)	(283,016	)	(253,516	)
Operating profit																							736,120		660,084		278,861
Finance result																							(237,419	)	(270,729	)	(197,774	)
Share of profit/(loss) of equity accounted investees	725		—	—	—	—	—		—		—	—		—	—	—	(1,890	)	(1,407	)	(1,064	)	(1,165	)	(1,407	)	(1,064	)
Income tax expense																							(155,482	)	(132,571	)	(29,795	)
Profit for the year after tax																							342,054		255,377		50,228
Segment assets	4,501,977		4,581,022	4,722,315	81,500	79,947	120,458		215,990		144,833	107,689		394	15,792	1,305	—		—		—		4,799,861		4,821,594		4,951,767
Equity accounted investments	21,002		—	—	—	—	—		—		—	—		—	—	—	14,763		2,566		1,001		35,765		2,566		1,001
Unallocated assets																	1,005,410		803,314		687,232		1,005,410		803,314		687,232
Total assets																							5,841,036		5,627,474		5,640,000
Segment liabilities	230,412		264,160	337,960	241	397	12,932		14,801		12,040	12,511		—	—	—	—		—		—		245,454		276,597		363,403
Unallocated liabilities																	3,488,378		3,470,136		3,611,603		3,488,378		3,470,136		3,611,603
Total liabilities																							3,733,832		3,746,733		3,975,006
Other information:
Amortisation and depreciation	91,350		91,564	62,062	5,695	5,382	5,382		15,492		11,310	10,102		—	—	—	15,932		20,870		13,093		128,469		129,126		90,639
Expenses that do not require cash payments	(11,090	)	11,683	4,497	141	248	(33	)	337		247	4,826		—	—	—	2,979		4,946		907		(7,633	)	17,124		10,197
Additions for the year of property, plant & equipment and intangible assets	129,475		140,880	127,789	8,514	6,435	15,097		24,408		12,003	12,218		—	—	—	19,582		14,154		12,395		181,979		173,472		167,499

This appendix forms an integral part of note 6 to the consolidated financial statements

F-101

APPENDIX II

GRIFOLS, S.A.  AND SUBSIDIARIES

Reporting by geographical area

for the years ended 31 December 2013, 2012 and 2011

(Expressed in thousands of Euros)

	Spain			Rest of European Union			USA + Canada			Rest of World			Subtotal			Raw material			Consolidated
	2013	2012	2011	2013	2012	2011	2013	2012	2011	2013	2012	2011	2013	2012	2011	2013	2012	2011	2013	2012	2011
Net Revenue	207,922	212,983	230,871	361,905	346,345	295,754	1,707,620	1,658,548	948,730	426,257	371,618	289,732	2,703,704	2,589,494	1,765,087	38,028	31,450	30,526	2,741,732	2,620,944	1,795,613
Assets by geographical area	933,722	759,670	740,276	280,510	126,041	130,651	4,487,429	4,573,400	4,632,222	138,981	152,571	135,546	5,840,642	5,611,682	5,638,695	394	15,792	1,305	5,841,036	5,627,474	5,640,000
Other information:
Additions for the year of property, plant & equipment and intangible assets	55,978	51,014	47,622	14,847	3,081	2,759	106,274	114,109	113,041	4,880	5,268	4,077	181,979	173,472	167,499	—	—	—	181,979	173,472	167,499

This appendix forms an integral part of note 6 to the consolidated financial statements

F-102

APPENDIX III

GRIFOLS, S.A.  AND SUBSIDIARIES

Changes in Other Intangible Assets

for the year ended

31 December 2012

(Expressed in thousands of Euros)

	Balances at				Business						Translation		Balances at
	2011		Additions		Combination		Transfers		Disposals		differences		2012
Development costs	69,783		9,825		11,282		0		(3,969	)	(18	)	86,903
Concessions, patents, licenses brands & similar	52,929		80		1,575		(31	)	0		(578	)	53,975
Computer software	67,967		10,033		69		3,508		(7,338	)	(6,549	)	67,690
Currently marketed products	927,429		0		0		0		0		(17,925	)	909,504
Other intangible assets	2,476		162		0		31		(314	)	(38	)	2,317
Total cost of intangible assets	1,120,584		20,100		12,926		3,508		(11,621	)	(25,108	)	1,120,389
Accum. amort. of development costs	(40,078	)	(4,957	)	(122	)	0		1,724		18		(43,415	)
Accum. amort of concessions, patents, licenses, brands & similar	(18,866	)	(1,012	)	(246	)	0		0		347		(19,777	)
Accum. amort. of computer software	(34,122	)	(11,779	)	(33	)	0		3,222		4,258		(38,454	)
Accum. amort. of currently marketed products	(18,033	)	(31,125	)	0		0		0		1,157		(48,001	)
Accum. amort. of other intangible assets	(914	)	(630	)	0		0		0		6		(1,538	)
Total accum. amort intangible assets	(112,013	)	(49,503	)	(401	)	0		4,946		5,786		(151,185	)
Impairment of other intangible assets	(264	)	155		0		0		0		0		(109	)
Carrying amount of intangible assets	1,008,307		(29,248	)	12,525		3,508		(6,675	)	(19,322	)	969,095
					(note 3 (b))

This appendix forms an integral part of note 8 to the consolidated financial statements.

F-103

APPENDIX III

GRIFOLS, S.A.  AND SUBSIDIARIES

Changes in Other Intangible Assets

for the year ended

31 December 2013

(Expressed in thousands of Euros)

	Balances at				Business						Translation		Balances at
	2012		Additions		combinations		Transfers		Disposals		differences		2013
Development costs	86,903		11,309		13,721		0		(98	)	(47	)	111,788
Concessions, patents, licenses brands & similar	53,975		41		2,717		(5	)	(2,758	)	(1,163	)	52,807
Computer software	67,690		13,227		668		22,268		(4,545	)	(1,681	)	97,627
Currently marketed products	909,504		0		23,792		0		0		(39,371	)	893,925
Other intangible assets	2,317		9,810		0		0		(238	)	(363	)	11,526
Total cost of intangible assets	1,120,389		34,387		40,898		22,263		(7,639	)	(42,625	)	1,167,673
Accum. amort. of development costs	(43,415	)	(5,206	)	(9,251	)	0		0		42		(57,830	)
Accum. amort of concessions, patents, licenses, brands & similar	(19,777	)	(1,113	)	(1,654	)	1		863		262		(21,418	)
Accum. amort. of computer software	(38,454	)	(7,422	)	(408	)	(21,285	)	3,773		681		(63,115	)
Accum. amort. of currently marketed products	(48,001	)	(32,221	)	0		0		0		3,311		(76,911	)
Accum. amort. of other intangible assets	(1,538	)	(424	)	0		0		0		22		(1,940	)
Total accum. amort intangible assets	(151,185	)	(46,386	)	(11,313	)	(21,284	)	4,636		4,318		(221,214	)
Impairment of other intangible assets	(109	)	85		0		0		0		0		(24	)
Carrying amount of intangible assets	969,095		(11,914	)	29,585		979		(3,003	)	(38,307	)	946,435
					(note 3 (a))

This appendix forms an integral part of note 8 to the consolidated financial statements.

F-104

APPENDIX IV

GRIFOLS, S.A.  AND SUBSIDIARIES

Movement in Property, Plant and Equipment

for the year ended

31 December 2012

(Expressed in thousands of Euros)

	Balances at				Business						Translation		Balances at
	2011		Additions		combination		Transfers		Disposals		differences		2012
Cost:
Land and buildings	156,868		2,049		0		38,176		(9,006	)	(5,877	)	182,210
Plant and machinery	773,215		26,258		3,822		(17,947	)	(26,346	)	(11,346	)	747,656
Under construction	121,219		125,065		0		(23,831	)	(5,413	)	(3,862	)	213,178
	1,051,302		153,372		3,822		(3,602	)	(40,765	)	(21,085	)	1,143,044
Accumulated depreciation:
Buildings	(15,434	)	(5,302	)	0		2,335		1,398		1,921		(15,082	)
Technical installations and other items	(252,787	)	(74,321	)	(2,100	)	(2,241	)	11,006		7,727		(312,716	)
	(268,221	)	(79,623	)	(2,100	)	94		12,404		9,648		(327,798	)
Impairment of other property, plant and equipment	(7,212	)	(1,597	)	0		0		3,954		(284	)	(5,139	)
Carrying amount	775,869		72,152		1,722		(3,508	)	(24,407	)	(11,721	)	810,107
					(note 3 (b))

This appendix forms an integral part of note 9 to the consolidated financial statements.

F-105

APPENDIX IV

GRIFOLS, S.A.  AND SUBSIDIARIES

Movement in Property, Plant and Equipment

for the year ended

31 December 2013

(Expressed in thousands of Euros)

	Balances at				Business						Translation		Balances at
	2012		Additions		combination		Transfers		Disposals		differences		2013
Cost:
Land and buildings	182,210		4,888		5,298		25,954		(923	)	(7,764	)	209,663
Plant and machinery	747,656		62,644		7,093		156,076		(27,028	)	(25,570	)	920,871
Under construction	213,178		80,060		8		(176,880	)	(769	)	(5,732	)	109,865
	1,143,044		147,592		12,399		5,150		(28,720	)	(39,066	)	1,240,399
Accumulated depreciation:
Buildings	(15,082	)	(6,399	)	(605	)	(1,717	)	426		617		(22,760	)
Technical installations and other items	(312,716	)	(75,684	)	(4,517	)	(4,412	)	15,663		8,812		(372,854	)
	(327,798	)	(82,083	)	(5,122	)	(6,129	)	16,089		9,429		(395,614	)
Impairment of other property, plant and equipment	(5,139	)	186		0		0		0		406		(4,547	)
Carrying amount	810,107		65,695		7,277		(979	)	(12,631	)	(29,231	)	840,238

(note 3 (a))

F-106

APPENDIX  V

GRIFOLS, S.A.  AND SUBSIDIARIES

Statement of Liquidity for Distribution of Interim Dividend 2013

(Expressed in thousands of Euros)

	Thousands of Euros
Forecast profits distributable for 2013:
Projected profits net of taxes until 31/12/2013	155,433
Less, charge required to legal reserve	(344	)
Estimated profits distributable for 2013	155,089
Interim dividend distributed	68,755
Forecast cash for the period 24 May 2013 to 24 May 2014:
Cash balances at 24 May 2013	70,594
Projected amounts collected	459,308
Projected payments, including interim dividend	252,206
Projected cash balances at 24 May 2014	277,696

F-107

GRIFOLS, S.A.  AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

at  31 December 2012

			Guarantor	Non- Guarantor	Consolidating
Assets	Parent	Issuer	Subsidiaries	Subsidiaries	Adjustments		31/12/12
	(expressed in thousands of euros)
Non-current assets
Goodwill	0	0	162,069	0	1,707,830		1,869,899
Other intangible assets	2,919	11,750	69,485	17,331	867,610		969,095
Property, plant and equipment	64,990	31,094	521,087	43,467	149,469		810,107
Investments in Subsidiaries	1,167,286	3,057,126	35,389	23,255	(4,283,056	)	0
Advances and notes between parent and subsidiaries	3,313	0	0	0	(3,313	)	0
Investments in equity- accounted investees	0	0	0	0	2,566		2,566
Non-current financial assets	3,769	10,013	1,834	910	0		16,526
Deferred tax assets	0	0	1,121	3,603	19,993		24,717
Total non-current assets	1,242,277	3,109,983	790,985	88,566	(1,538,901	)	3,692,910
Current assets
Inventories	929	0	1,022,347	70,483	(95,115	)	998,644
Trade and other receivables
Trade receivables	612	0	279,296	86,114	0		366,022
Other receivables	9,182	1,911	19,650	13,085	5		43,833
Current income tax assets	17,669	13,572	3,787	2,290	0		37,318
Trade and other receivables	27,463	15,483	302,733	101,489	5		447,173
Advances and notes between parent and subsidiaries	293,641	388,712	239,378	39,619	(961,350	)	0
Other current financial assets	4	244	167	45	0		460
Acciones de la sociedad dominante a corto plazo
Other current assets	3,536	540	9,779	1,105	0		14,960
Cash and cash equivalents	90,970	304,251	25,607	52,499	0		473,327
Total current assets	416,543	709,230	1,600,011	265,240	(1,056,460	)	1,934,564
Total assets	1,658,820	3,819,213	2,390,996	353,806	(2,595,361	)	5,627,474

F-108

GRIFOLS, S.A.  AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

at  31 December 2012

					Guarantor		Non- Guarantor		Consolidating
Equity and liabilities	Parent		Issuer		Subsidiaries		Subsidiaries		Adjustments		31/12/12
	(expressed in thousands of euros)
Equity
Share capital	117,882		0		41,274		45,440		(86,714	)	117,882
Share premium	890,355		849,867		667,804		27,984		(1,545,655	)	890,355
Reserves	113,677		142,922		470,333		97,316		(204,104	)	620,144
Treasury stock	(3,060	)	0		0		0		0		(3,060	)
Interim Dividend	0		0		0		0		0		0
Profit for the year attributable to the Parent	61,968		(151,119	)	441,356		2,137		(97,656	)	256,686
Total	1,180,822		841,670		1,620,767		172,877		(1,934,129	)	1,882,007
Cash flow hedges	(2,556	)	(30,496	)	16		0		0		(33,036	)
Translation differences	0		97,125		40,829		(786	)	(109,371	)	27,797
Other comprehensive income	(2,556	)	66,629		40,845		(786	)	(109,371	)	(5,239	)
Equity attributable to the Parent	1,178,266		908,299		1,661,612		172,091		(2,043,500	)	1,876,768
Non-controlling interests	0		0		0		0		3,973		3,973
Total equity	1,178,266		908,299		1,661,612		172,091		(2,039,527	)	1,880,741
Liabilities
Grants	816		147		4,413		479		0		5,855
Provisions	0		0		2,995		353		0		3,348
Non-current financial liabilities	370,200		2,262,885		238,514		10,231		(191,011	)	2,690,819
Deferred tax liabilities	2,913		46,505		25,639		2,487		376,302		453,846
Total non-current liabilities	373,929		2,309,537		271,561		13,550		185,291		3,153,868
Current liabilities
Provisions	149		0		8,127		6,693		40,170		55,139
Current financial liabilities	60,752		575,187		(17,130	)	75,885		(499,116	)	195,578
Debts with associates	2,668		0		0		0		0		2,668
Trade and other payables
Suppliers	36,043		32,299		374,806		67,436		(282,179	)	228,405
Other payables	1,419		19		20,770		5,149		0		27,357
Current income tax liabilities	0		(11,855	)	15,130		2,404		0		5,679
Total trade and other payables	37,462		20,463		410,706		74,989		(282,179	)	261,441
Other current liabilities	5,594		5,727		56,120		10,598		0		78,039
Total current liabilities	106,625		601,377		457,823		168,165		(741,125	)	592,865
Total liabilities	480,554		2,910,914		729,384		181,715		(555,834	)	3,746,733
Total equity and liabilities	1,658,820		3,819,213		2,390,996		353,806		(2,595,361	)	5,627,474

F-109

GRIFOLS, S.A. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

at  31 December 2013

			Guarantor	Non- Guarantor	Consolidating
Assets	Parent	Issuer	Subsidiaries	Subsidiaries	Adjustments		31/12/13
	(expressed in thousands of euros)
Non-current assets
Goodwill	0	0	56,544	0	1,772,597		1,829,141
Other intangible assets	5,220	15,945	62,054	36,035	827,181		946,435
Property, plant and equipment	65,932	38,553	564,245	56,904	114,604		840,238
Investments in Subsidiaries	1,311,317	2,924,785	32,472	59,780	(4,328,354	)	0
Advances and notes between parent and subsidiaries	18,159	86,202	0	4,465	(108,526	)	300
Investments in equity- accounted investees	0	0	0	0	35,765		35,765
Non-current financial assets	3,712	8,217	1,820	1,147	0		14,896
Deferred tax assets	0	0	1,565	20,722	12,314		34,601
Total non-current assets	1,404,340	3,073,702	718,700	179,053	(1,674,419	)	3,701,376
Current assets
Inventories	1,056	0	941,548	81,585	(77,276	)	946,913
Trade and other receivables
Trade receivables	824	0	305,553	79,160	0		385,537
Other receivables	8,387	803	13,427	15,765	(1,871	)	36,511
Current income tax assets	22,340	19,278	509	1,406	0		43,533
Trade and other receivables	31,551	20,081	319,489	96,331	(1,871	)	465,581
Advances and notes between parent and subsidiaries	550,707	443,159	451,650	150,389	(1,595,205	)	700
Other current financial assets	16	243	166	75	0		500
Other current assets	2,848	2,604	8,821	2,916	0		17,189
Cash and cash equivalents	110,536	424,935	30,556	142,750	0		708,777
Total current assets	696,714	891,022	1,752,230	474,046	(1,674,352	)	2,139,660
Total assets	2,101,054	3,964,724	2,470,930	653,099	(3,348,771	)	5,841,036

F-110

GRIFOLS, S.A. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

at  31 December 2013

					Guarantor		Non- Guarantor		Consolidating
Equity and liabilities	Parent		Issuer		Subsidiaries		Subsidiaries		Adjustments		31/12/13
	(expressed in thousands of euros)
Equity
Share capital	119,604		0		41,274		52,968		(94,242	)	119,604
Share premium	910,728		849,867		667,804		138,992		(1,656,663	)	910,728
Reserves	189,039		(8,199	)	702,010		83,563		(82,998	)	883,415
Treasury stock	0		0		0		(378	)	378		0
Interim Dividend	(68,755	)	0		(90,000	)	(20,500	)	110,500		(68,755	)
Profit for the year attributable to the Parent	171,407		(176,233	)	588,202		(25,822	)	(212,003	)	345,551
Total	1,322,023		665,435		1,909,290		228,823		(1,935,028	)	2,190,543
Cash flow hedges	(670	)	(24,801	)	(320	)	0		0		(25,791	)
Translation differences	0		69,113		(39,536	)	(12,981	)	(80,086	)	(63,490	)
Other comprehensive income	(670	)	44,312		(39,856	)	(12,981	)	(80,086	)	(89,281	)
Equity attributable to the Parent	1,321,353		709,747		1,869,434		215,842		(2,015,114	)	2,101,262
Non-controlling interests	0		0		0		0		5,942		5,942
Total equity	1,321,353		709,747		1,869,434		215,842		(2,009,172	)	2,107,204
Liabilities
Grants	106		128		5,995		3,008		(2,203	)	7,034
Provisions	0		0		3,800		402		0		4,202
Non-current financial liabilities	456,443		2,131,363		44,101		33,496		(112,192	)	2,553,211
Deferred tax liabilities	4,284		37,395		65,161		(1,457	)	348,706		454,089
Total non-current liabilities	460,833		2,168,886		119,057		35,449		234,311		3,018,536
Provisions	0		0		6,566		6,462		38,431		51,459
Current financial liabilities	255,937		957,640		52,781		247,063		(1,255,277	)	258,144
Debts with associates	2,683		0		0		0		0		2,683
Trade and other payables
Suppliers	50,986		114,086		347,472		111,765		(350,688	)	273,621
Other payables	1,536		22,856		11,528		6,468		0		42,388
Current income tax liabilities	0		(18,430	)	19,557		1,807		0		2,934
Total trade and other payables	52,522		118,512		378,557		120,040		(350,688	)	318,943
Other current liabilities	7,726		9,939		44,535		28,243		(6,376	)	84,067
Total current liabilities	318,868		1,086,091		482,439		401,808		(1,573,910	)	715,296
Total liabilities	779,701		3,254,977		601,496		437,257		(1,339,599	)	3,733,832
Total equity and liabilities	2,101,054		3,964,724		2,470,930		653,099		(3,348,771	)	5,841,036

F-111

GRIFOLS, S.A. AND SUBSIDIARIES

Condensed Consolidated Statement of Profit or Loss

for the year ended 31 December 2011

(Expressed in thousands of Euros)

					Guarantor		Non- Guarantor		Consolidating
	Parent		Issuer		Subsidiaries		Subsidiaries		Adjustments		Consolidated
Continuing Operations
Net revenue	63,490		25,567		2,480,571		453,739		(1,227,754	)	1,795,613
Cost of sales	(4,901	)	—		(1,687,165	)	(319,220	)	1,043,153		(968,133	)
Gross Profit	58,589		25,567		793,406		134,519		(184,601	)	827,480
Research and Development	(3,833	)	(3,531	)	(88,808	)	(3,866	)	10,678		(89,360	)
Sales, General and Administration expenses	(117,312	)	(26,367	)	(324,662	)	(137,930	)	147,012		(459,259	)
Operating Expenses	(121,145	)	(29,898	)	(413,470	)	(141,796	)	157,690		(548,619	)
Operating Results	(62,556	)	(4,331	)	379,936		(7,277	)	(26,911	)	278,861
Finance income	10,968		23,352		(41,519	)	1,457		11,503		5,761
Finance expenses	(28,141	)	(165,253	)	(37,550	)	(6,837	)	37,219		(200,562	)
Change in fair value of financial instruments	4,501		(4,980	)	1,758		—		—		1,279
Impairment and gains /(losses) on disposal of financial instruments	(19,930	)	—		(5,697	)	(1,022	)	25,844		(805	)
Exchange losses	184		7,001		(7,877	)	(2,755	)	—		(3,447	)
Dividends	53,352		—		—		159		(53,511	)	—
Finance result	20,934		(139,880	)	(90,885	)	(8,998	)	21,055		(197,774	)
Share of losses of equity accounted investees	—		—		144		—		(1,208	)	(1,064	)
Profit before income tax from continuing operations	(41,622	)	(144,211	)	289,195		(16,275	)	(7,064	)	80,023
Income tax expense	23,757		54,149		(93,501	)	(1,313	)	(12,887	)	(29,795	)
Profit after income tax from continuing operations	(17,865	)	(90,062	)	195,694		(17,588	)	(19,951	)	50,228
Consolidated profit for the period	(17,865	)	(90,062	)	195,694		(17,588	)	(19,951	)	50,228
Profit attributable to the Parent	(17,865	)	(90,062	)	195,694		(17,588	)	(19,872	)	50,307
Loss attributable to non-controlling interest	—		—		—		—		(79	)	(79	)

F-112

GRIFOLS, S.A. AND SUBSIDIARIES

Condensed Consolidated Statement of Profit or Loss

for the year ended 31 December 2012

(Expressed in thousands of Euros)

					Guarantor		Non- Guarantor		Consolidating
	Parent		Issuer		Subsidiaries		Subsidiaries		Adjustments		Consolidated
Continuing Operations
Net revenue	74,180		73,149		4,019,222		459,674		(2,005,281	)	2,620,944
Cost of sales	(5,332	)	(1,981	)	(2,739,062	)	(325,939	)	1,780,969		(1,291,345	)
Gross Profit	68,848		71,168		1,280,160		133,735		(224,312	)	1,329,599
Research and Development	(3,843	)	(5,650	)	(120,904	)	(8,666	)	14,620		(124,443	)
Sales, General and Administration expenses	(77,340	)	(77,453	)	(451,808	)	(113,022	)	174,551		(545,072	)
Operating Expenses	(81,183	)	(83,103	)	(572,712	)	(121,688	)	189,171		(669,515	)
Operating Results	(12,335	)	(11,935	)	707,448		12,047		(35,141	)	660,084
Finance income	6,479		18,603		22,858		1,459		(47,722	)	1,677
Finance expenses	(26,286	)	(259,375	)	(39,460	)	(6,820	)	47,824		(284,117	)
Change in fair value of financial instruments	21,049		(8,036	)	—		—		—		13,013
Impairment and gains /(losses) on disposal of financial instruments	2,826		—		(10,437	)	(1,157	)	10,875		2,107
Exchange losses	(208	)	(308	)	(1,822	)	(1,071	)	—		(3,409	)
Dividends	63,990		—		—		87		(64,077	)	—
Finance result	67,850		(249,116	)	(28,861	)	(7,502	)	(53,100	)	(270,729	)
Share of losses of equity accounted investees	—		—		—		—		(1,407	)	(1,407	)
Profit before income tax from continuing operations	55,515		(261,051	)	678,587		4,545		(89,648	)	387,948
Income tax expense	6,453		109,932		(237,231	)	(2,408	)	(9,317	)	(132,571	)
Profit after income tax from continuing operations	61,968		(151,119	)	441,356		2,137		(98,965	)	255,377
Consolidated profit for the period	61,968		(151,119	)	441,356		2,137		(98,965	)	255,377
Profit attributable to the Parent	61,968		(151,119	)	441,356		2,137		(97,656	)	256,686
Loss attributable to non-controlling interest	—		—		—		—		(1,309	)	(1,309	)

F-113

GRIFOLS, S.A. AND SUBSIDIARIES

Condensed Consolidated Statement of Profit or Loss

for the year ended 31 December 2013

(Expressed in thousands of Euros)

					Guarantor		Non- Guarantor		Consolidating
	Parent		Issuer		Subsidiaries		Subsidiaries		Adjustments		Consolidated
Continuing Operations
Net revenue	85,589		86,330		4,404,773		612,151		(2,447,111	)	2,741,732
Cost of sales	(6,006	)	0		(3,034,940	)	(341,642	)	2,058,708		(1,323,880	)
Gross Profit	79,583		86,330		1,369,833		270,509		(388,403	)	1,417,852
Research and Development	(4,350	)	(19,358	)	(112,404	)	(14,271	)	27,112		(123,271	)
Sales, General and Administration expenses	(126,655	)	(114,492	)	(386,140	)	(261,009	)	329,835		(558,461	)
Operating Expenses	(131,005	)	(133,850	)	(498,544	)	(275,280	)	356,947		(681,732	)
Operating Results	(51,422	)	(47,520	)	871,289		(4,771	)	(31,456	)	736,120
Finance income	4,775		5,912		3,596		622		(10,036	)	4,869
Finance expenses	(24,195	)	(208,700	)	(10,923	)	(6,128	)	9,955		(239,991	)
Change in fair value of financial instruments	(757	)	(1,113	)	0		84		0		(1,786	)
Impairment and gains /(losses) on disposal of financial instruments	(7,256	)	0		(3,545	)	(12,663	)	24,256		792
Exchange losses	6,778		(52	)	(3,941	)	(4,012	)	(76	)	(1,303	)
Dividends	222,693		0		0		12		(222,705	)	0
Finance result	202,038		(203,953	)	(14,813	)	(22,085	)	(198,606	)	(237,419	)
Share of losses of equity accounted investees	0		0		0		0		(1,165	)	(1,165	)
Profit before income tax from continuing operations	150,616		(251,473	)	856,476		(26,856	)	(231,227	)	497,536
Income tax expense	20,791		75,240		(268,274	)	1,034		15,727		(155,482	)
Profit after income tax from continuing operations	171,407		(176,233	)	588,202		(25,822	)	(215,500	)	342,054
Consolidated profit for the period	171,407		(176,233	)	588,202		(25,822	)	(215,500	)	342,054
Profit attributable to the Parent	171,407		(176,233	)	588,202		(25,822	)	(212,003	)	345,551
Loss attributable to non-controlling interest	0		0		0		0		(3,497	)	(3,497	)

F-114

GRIFOLS, S.A. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

for the year ended 31 December 2011

					Guarantor		Non- Guarantor		Consolidating
	Parent		Issuer		Subsidiaries		Subsidiaries		Adjustments		Consolidated
	(expressed in thousands of euros)
Cash flows from/(used in) operating activities
Profit before income tax	(41,622	)	(144,211	)	289,195		(16,275	)	(7,064	)	80,023
Adjustments for:	(21,252	)	159,350		134,874		52,945		(12,002	)	313,915
Amortisation and depreciation	6,803		1,033		48,792		8,037		25,974		90,639
Other adjustments:	(28,055	)	158,317		86,082		44,908		(37,976	)	223,276
(Profit) /losses on equity accounted investments	—		—		—		—		1,064		1,064
Exchange differences	(184	)	(7,001	)	7,877		2,755		—		3,447
Impairment of assets and net provision charges	20,194		—		11,772		16,672		(24,832	)	23,806
(Profits) / losses on disposal of fixed assets	(7,134	)	—		5,141		21,359		—		19,366
Government grants taken to income	(333	)	—		(971	)	—		—		(1,304	)
Net finance expense	(40,902	)	165,257		(21,762	)	3,773		74,201		180,567
Other adjustments	304		61		84,025		349		(88,409	)	(3,670	)
Change in operating assets and liabilities	(90,489	)	(216,226	)	(179,614	)	(5,265	)	440,315		(51,279	)
Change in inventories	(98	)	—		24,032		(7,100	)	(9,925	)	6,909
Change in trade and other receivables	5,213		8,423		(178,585	)	(4,069	)	114,876		(54,142	)
Change in current financial assets and other current assets	(93,754	)	(227,148	)	(96,487	)	1,326		425,384		9,321
Change in current trade and other payables	(1,850	)	2,499		71,426		4,578		(90,020	)	(13,367	)
Other cash flows used in operating activities	52,608		(78,895	)	(29,275	)	(4,707	)	(62,163	)	(122,431	)
Interest paid	(19,370	)	(113,158	)	(5,686	)	(3,007	)	1,338		(139,883	)
Interest received	10,148		254		3,328		—		(10,148	)	3,582
Dividends received	53,352		—		—		—		(53,352	)	—
Income tax paid	8,478		34,009		(26,917	)	(1,700	)	—		13,870
Net cash from operating activities	(100,755	)	(279,982	)	215,181		26,698		359,087		220,228
Cash flows from/(used in) investing activities
Payments for investments	(47,550	)	(1,769,568	)	11,048		(17,966	)	39,572		(1,784,464	)
Group companies and business units	(39,627	)	(1,763,601	)	143,293		(1,509	)	36,575		(1,624,869	)
Property, plant and equipment and intangible assets	(7,338	)	(3,991	)	(132,648	)	(15,922	)	—		(159,899	)
Other financial assets	(585	)	(1,976	)	403		(535	)	2,997		304
Proceeds from the sale of investments	33,279		(1	)	150,178		(17,718	)	—		165,738
Property, plant and equipment	33,279		(1	)	144,706		(17,718	)	—		160,266
Associates	—		—		5,472		—		—		5,472
Net cash used in investing activities	(14,271	)	(1,769,569	)	161,226		(35,684	)	39,572		(1,618,726	)
Cash flows from/(used in) financing activities
Proceeds from and payments for equity instruments	(2,870	)	—		—		1,810		(1,770	)	(2,830	)
Issue	(2,870	)	—		—		1,810		(1,770	)	(2,830	)
Proceeds from and payments for financial liability instruments	197,027		2,250,242		(253,087	)	18,608		(450,240	)	1,762,550
Issue	463,300		2,524,290		13,163		(6,012	)	—		2,994,741
Redemption and repayment	(247,834	)	(428,667	)	(554,942	)	(748	)	—		(1,232,191	)
Debts with group companies	(18,439	)	154,619		288,692		25,368		(450,240	)	—
Dividends and interest on other equity instruments paid	—		—		(47,600	)	(5,752	)	53,352		—
Other cash flows from financing activities	(17,917	)	(266,335	)	(496	)	—		—		(284,748	)
Deferred acquisition costs of financial instruments related to acquisition of Talecris	(18,257	)	(266,335	)	(496	)	—		—		(285,088	)
Other amounts received from financing activities	340		—		—		—		—		340
Net cash from/(used in) financing activities	176,240		1,983,907		(301,183	)	14,666		(398,658	)	1,474,972
Effect of exchange rate fluctuations on cash	—		7,436		17,103		(76	)	—		24,463
Net increase / (decrease) in cash and cash equivalents	61,214		(58,208	)	92,327		5,604		—		100,937
Cash and cash equivalents at beginning of the year	25		227,456		1,444		10,724		—		239,649
Cash and cash equivalents at end of year	61,239		169,248		93,771		16,328		—		340,586

F-115

GRIFOLS, S.A. AND SUBSIDIARIES

Condensed Consolidated Statement of Cash Flows

for the year ended 31 December 2012

					Guarantor		Non- Guarantor		Consolidating
	Parent		Issuer		Subsidiaries		Subsidiaries		Adjustments		Consolidated
	(expressed in thousands of euros)
Cash flows from operating activities
Profit before tax	55,515		(261,051	)	678,587		4,545		(89,647	)	387,948
Adjustments for:	(61,305	)	246,339		76,179		26,020		113,716		400,949
Amortisation and depreciation	7,118		1,932		61,255		10,186		48,635		129,126
Other adjustments:	(68,423	)	244,407		14,924		15,834		65,081		271,823
(Profit)/ losses on equity accounted investments	—		—		—		—		1,407		1,407
Exchange differences	208		308		1,822		1,071		—		3,409
Impairment of assets and net provision charges	(2,982	)	(97	)	14,613		7,445		(10,875	)	8,104
(Profit) / losses on disposal of fixed assets	5		9		11,973		555		—		12,542
Government grants taken to income	(233	)	—		(539	)	(158	)	—		(930	)
Net finance expense	(65,549	)	248,784		6,650		4,098		64,077		258,060
Other adjustments	128		(4,597	)	(19,595	)	2,823		10,472		(10,769	)
Changes in operating assets and liabilities	37,858		(14,988	)	1,619		2,736		(70,842	)	(43,617	)
Change in inventories	(35	)	—		46,071		(5,614	)	(25,913	)	14,509
Change in trade and other receivables	(23,834	)	(42,638	)	31,651		(11,046	)	90,125		44,258
Change in current financial assets and other current assets	57,508		(391	)	(3,111	)	15,329		(74,980	)	(5,645	)
Change in current trade and other payables	4,219		28,041		(72,992	)	4,067		(60,074	)	(96,739	)
Other cash flows from operating activities	54,354		(168,942	)	(44,812	)	(9,966	)	(68,797	)	(238,163	)
Interest paid	(19,792	)	(155,880	)	(27,881	)	(5,016	)	28,030		(180,539	)
Interest received	7,135		3,244		24,195		1,099		(32,750	)	2,923
Dividends received	63,990		—		—		87		(64,077	)	—
Income tax paid	3,021		(16,306	)	(41,126	)	(6,136	)	—		(60,547	)
Net cash from operating activities	86,422		(198,642	)	711,573		23,335		(115,570	)	507,117
Cash flows from investing activities
Payments for investments	(24,597	)	(10,178	)	(159,726	)	(27,380	)	44,686		(177,195	)
Group companies and business units	(14,356	)	—		(27,444	)	(12,858	)	43,591		(11,067	)
Property, plant and equipment and intangible assets	(10,241	)	(10,178	)	(132,282	)	(14,522	)	1,095		(166,128	)
Property, plant and equipment	(8,622	)	(5,151	)	(119,561	)	(13,469	)	775		(146,028	)
Intangible assets	(1,619	)	(5,027	)	(12,721	)	(1,053	)	320		(20,100	)
Other financial assets	—		—		—		—		—		—
Proceeds from the sale of investments	30,687		1		81,877		1,651		(1,456	)	112,760
Property, plant and equipment	310		(1	)	79,905		1,138		(1,456	)	79,896
Asscoiated companies	—		—		1,883		—		—		1,883
Other financial assets	30,377		2		89		513		—		30,981
Net cash used in investing activities	6,090		(10,177	)	(77,849	)	(25,729	)	43,230		(64,435	)
Cash flows from financing activities
Proceeds from and payments for equity instruments	(9	)	—		10,000		40,586		(50,586	)	(9	)
Issue	—		—		10,000		40,586		(50,586	)	—
Acquisition of Owns Shares	(5,194	)	—		—		—		—		(5,194	)
Disposal of Own Shares	5,185		—		—		—		—		5,185
Proceeds from and payments for financial liability instruments	(55,727	)	382,948		(641,783	)	1,178		57,815		(255,568	)
Issue	521		—		14,879		—		10,327		25,727
Redemption and repayment	(43,848	)	(204,490	)	(13,756	)	(8,875	)	(10,327	)	(281,296	)
Debts with group companies	(12,400	)	587,438		(642,906	)	10,053		57,815		—
Dividends and interest on other equity instruments paid	—		—		(60,939	)	(3,138	)	64,077		—
Other cash flows from financing activities	(7,045	)	(35,856	)	(8,045	)	160		1,034		(49,752	)
Costs of financial instruments issued	(7,935	)	(35,817	)	—		—		—		(43,752	)
Other amounts received from financing activities	890		(39	)	(8,045	)	160		1,034		(6,000	)
Net cash from financing activities	(62,781	)	347,092		(700,767	)	38,786		72,340		(305,329	)
Effect of exchange rate fluctuations on cash	—		(3,270	)	(1,121	)	(221	)	—		(4,612	)
Net increase / (decrease) in cash and cash equivalents	29,731		135,003		(68,164	)	36,171		—		132,741
Cash and cash equivalents at beginning of the period	61,239		169,248		93,771		16,328		—		340,586
Cash and cash equivalents at end of period	90,970		304,251		25,607		52,499		—		473,327

F-116

GRIFOLS, S.A. AND SUBSIDIARIES

Condensed Consolidated Statement of Cash Flows

for the year ended 31 December 2013

					Guarantor		Non- Guarantor		Consolidating
	Parent		Issuer		Subsidiaries		Subsidiaries		Adjustments		Consolidated
	(expressed in thousands of euros)
Cash flows from operating activities
Profit before tax	150,616		(251,473	)	856,476		(26,856	)	(231,227	)	497,536
Adjustments for:	(197,464	)	222,887		27,552		36,252		258,626		347,853
Amortisation and depreciation	5,786		4,092		55,929		14,338		48,324		128,469
Other adjustments:	(203,250	)	218,795		(28,377	)	21,914		210,302		219,384
(Profit)/ losses on equity accounted investments	—		—		—		—		1,165		1,165
Exchange differences	(6,778	)	52		3,941		4,012		76		1,303
Impairment of assets and net provision charges	7,170		—		4,209		12,420		(19,188	)	4,611
(Profit) / losses on disposal of fixed assets	1		726		(1,545	)	601		4,906		4,689
Government grants taken to income	21		—		(626	)	(525	)	—		(1,130	)
Net finance expense	(203,663	)	203,904		557		4,609		222,901		228,308
Other adjustments	(1	)	14,113		(34,913	)	797		442		(19,562	)
Changes in operating assets and liabilities	(142,424	)	65,489		(77,733	)	(69,997	)	264,997		40,332
Change in inventories	(126	)	—		49,859		(16,097	)	(16,359	)	17,277
Change in trade and other receivables	16,391		(20,677	)	(103,584	)	(104,665	)	176,841		(35,694	)
Change in current financial assets and other current assets	(174,647	)	(2,087	)	592		(1,805	)	175,335		(2,612	)
Change in current trade and other payables	15,958		88,253		(24,600	)	52,570		(70,820	)	61,361
Other cash flows from operating activities	251,520		(185,612	)	(123,740	)	(9,799	)	(226,079	)	(293,710	)
Interest paid	(16,186	)	(137,330	)	(9,119	)	(3,099	)	7,854		(157,880	)
Interest received	4,662		24,516		(11,200	)	(1,327	)	(11,228	)	5,423
Dividends received	222,693		—		—		12		(222,705	)	—
Income tax paid	40,351		(72,798	)	(103,421	)	(5,385	)	—		(141,253	)
Net cash from operating activities	62,248		(148,709	)	682,555		(70,400	)	66,317		592,011
Cash flows from investing activities
Payments for investments	(129,376	)	(28,394	)	(115,065	)	(64,914	)	84,922		(252,827	)
Group companies and business units	(119,049	)	(1	)	105		(30,609	)	80,382		(69,172	)
Property, plant and equipment and intangible assets	(9,019	)	(19,055	)	(115,139	)	(34,176	)	4,540		(172,849	)
Property, plant and equipment	(5,265	)	(11,240	)	(104,954	)	(18,209	)	1,208		(138,460	)
Intangible assets	(3,754	)	(7,815	)	(10,185	)	(15,967	)	3,332		(34,389	)
Other financial assets	(1,308	)	(9,338	)	(31	)	(129	)	—		(10,806	)
Proceeds from the sale of investments	237		239		20,679		177		(4,539	)	16,793
Property, plant and equipment	237		239		20,679		177		(4,539	)	16,793
Net cash used in investing activities	(129,139	)	(28,155	)	(94,386	)	(64,737	)	80,383		(236,034	)
Cash flows from financing activities
Proceeds from and payments for equity instruments	35,221		—		—		83,177		(83,177	)	35,221
Issue	20,461		—		—		83,177		(83,177	)	20,461
Acquisition of Owns Shares	(120,429	)	—		—		—		—		(120,429	)
Disposal of Own Shares	135,189		—		—		—		—		135,189
Proceeds from and payments for financial liability instruments	121,105		310,732		(391,849	)	166,830		(286,231	)	(79,413	)
Issue	7,615		—		44,525		1,367		—		53,507
Redemption and repayment	(18,765	)	(64,425	)	(33,965	)	(15,765	)	—		(132,920	)
Debts with group companies	132,255		375,157		(402,409	)	181,228		(286,231	)	—
Dividends and interest on other equity instruments paid	(69,138	)	(13	)	(194,407	)	(28,301	)	222,708		(69,151	)
Dividends paid	(70,062	)	(13	)	(194,407	)	(28,301	)	222,708		(70,075	)
Dividends received	924		—		—		—		—		924
Other cash flows from financing activities	(731	)	(13	)	3,438		5,490		—		8,184
Other amounts received from financing activities	(731	)	(13	)	3,438		5,490		—		8,184
Net cash from financing activities	86,457		310,706		(582,818	)	227,196		(146,700	)	(105,159	)
Effect of exchange rate fluctuations on cash	—		(13,171	)	(402	)	(1,808	)	—		(15,381	)
Net increase / (decrease) in cash and cash equivalents	19,566		120,671		4,949		90,251		0		235,437
Cash and cash equivalents at beginning of the period	90,970		304,251		25,607		52,499		—		473,327
Cash and cash equivalents at end of period	110,536		424,935		30,556		142,750		—		708,777

F-117