Letter of the President

Fotografía Víctor Grífols

Dear shareholders,

Before reviewing our results for 2015, I would like to take a moment to recall that this year also saw us celebrate our 75th anniversary: three quarters of a century during the course of which we have built a business that is both robust and profitable, transforming the company that was founded in Barcelona back in 1940 into the world's third-largest producer of plasma-derived medicines, and one of the leaders in transfusion medicine.

This successful company has benefited from the contributions of a number of individuals. Among them were my grandfather, my uncle, and my father. But they also include all of our partners, investors, shareholders, donors, patients, health professionals and, of course, employees.

Praising our past has lead me to plan for the future. The succession plan approved unanimously by the Board of Directors provides for generational succession and reflects the commitment of our founders. From 2017, my brother, Raimon Grífols Roura, and my son, Víctor Grífols Deu, will be appointed joint CEOs, while I will remain as non-executive Chairman of the Board of Directors. They represent a modern and current leadership, well prepared and in tune with the challenges of todays' world, and they will be the fourth Grifols generation to lead the company. They have a clear route map, based on the policies that have delivered growth.

The performance for 2015 has been very positive: we have generated employment, with the workforce rising by 5.4% globally to a total of 14,700 employees, and by 9.2% in Spain, with over 3,250 employees; we have allocated more than 236 million euros to R&D to accelerate projects to improve the treatment of Alzheimer's disease and cirrhosis of the liver; we have met our environmental targets to minimize and control the potential impact of our activities on the environment; and we have maintained shareholder rewards with a dividend payout of 40% of consolidated net profit.

Many of these achievements would not have been possible without a strong financial performance. Revenue grew by 17.3% to 3,934.6 million euros. The Bioscience Division generated over 3,000 million euros of revenue for the first time, while the Diagnostic Division generated 690 million euros, and the Hospital Division generated more than 96 million euros.

As a result of commercial reorganization, we now have more specialized commercial teams with better knowledge of the local markets in which we operate. This has delivered strong sales performances in the main regions, in particular in regions other than Europe and the United States.

The combination of a local commercial presence with manufacturing planned at the global level has led to improvements in efficiency and productivity, with EBITDA rising by 11% to 1,162 million euros. These are very solid results, with net profit increasing by 13.2% to exceed 532 million euros.

In 2015 we achieved the strategic objectives that provide a pathway to growth, focusing on consolidating the organic growth of the Bioscience Division; fully integrating the Diagnostic Division; continuing innovation to differentiate products and adapt them to meet the needs of patients and health professionals; geographical expansion; accelerating investments related to plasma supply and manufacturing capacity; evaluation of R&D projects and redefining strategic action lines, as well as strengthening the group's financial position.

I would like to end by thanking everyone, once again, for the trust they have placed in our management of the company.

Sincerely,

Firma Víctor Grífols

Víctor Grífols
Chairman and CEO of Grifols

Annual evolution

Revenue

€ 3,934.6 M
+17.3% GROWTH SUPPORTED BY THE APPRECIATION OF THE DOLLAR

  • Revenue of Bioscience Division exceeds € 3,000 million for the first time
  • Significant increases in revenue in US and Canada (+22.7%) and ROW (+24.5%)
  • Diversified revenue: direct commercial presence in 30 countries and sales in more than 100
  • 95% of revenue generated in international markets

EBITDA & EBIT

EBITDA: € 1,162.6 M
+11.0% growth
EBIT: € 970.4 M
+13.1% growth

  • Maximizing the use of each liter of plasma and achieving leadership in capacity to meet the growing demand for plasma proteins remain strategic objectives
  • Net investment in R&D increases by 21.2% to reach € 236.1 million
  • The company now has 160 plasma collection centers

EBITDA & EBIT margin

Margen EBITDA: 29.5%
of revenue
Margen EBIT: 24.7%
of revenue

  • Improved manufacturing and operating efficiencies at the group's plants
  • Impact of the competitive immunoglobulin market (IVIG) in the US and of the new plasma fractionation plant in Clayton

Net profit

€ 532.1 M
+13.2% growth

  • Stable financial result despite the US dollar appreciation. Down by -9.7% at constant currency

Leverage ratio

3.19x EBITDA
(2.92x at cc*)

  • Gradual reduction of leverage
  • Stable credit ratings and improved outlook from Moody's

Cash

€ 1,142.5 M
Liquidity position exceeds €1,600 M

  • Strong operating cash flow provides a basis for funding strategic investments
  • Operating activities generate € 742.8 million
  • € 266.4 million allocated to capital expenditures (CAPEX). 25% invested in Spain

Dividend

€ 221.8 M paid

  • Dividend policy of 40% of consolidated net profit
  • Commitment to this payout ratio

Balance sheet

Total consolidated
assets rise to
€ 9,601.7 M

  • Solid results and improved cash flow strengthen the balance sheet
  • Optimization of working capital management

Share and share performance**

Class A: Euros 42.63  ·  Class B: Euros 29.92  ·  ADR B: USD 32.40
Share split***: 426.129.798   Class A (0.25 €/share)   Class B (0.05 €/share)

 

* Constant Currency (cc) excludes the impact of exchange rate movements
** Closing prices at December 31, 2015
*** The stock split became effective on January 4, 2016

Profit and loss account summary

(In millions of euros except %) 2015 2014 % var.
Net revenue 3,934.6 3,355.4 17.3%
Cost of sales (2,003.6) (1,656.2) 21.0%
Gross margin 1,931.0 1,699.2 13.6%
% net revenue 49.1% 50.6%  
R&D (224.2) (180.8) 24.0%
SG&A (736.4) (660.8) 11.5%
Operating result (EBIT) 970.4 857.7 13.1%
% net revenue 24.7% 25.6%  
Financial result (271.8) (261.4) 4.0%
Group profit 532.1 470.3 13.1%
% net revenue 13.5% 14.0%  

 

Profit and loss account summary

(In millions of euros except %)
Net revenue
2015 3,934.6
2014 3,3355.4
% var. 17.3%
Cost of sales
2015 (2,003.6)
2014 (1,656.2)
% var. 21.0%
Gross margin
2015 3,934.6
2014 3,3355.4
% var. 17.3%
% net revenue
2015 49.1%
2014 50.6%
R&D
2015 (224.2)
2014 (180.8)
% var. 24.0%
SG&A
2015 (736.4)
2014 (660.8)
% var. 11.5%
Operating result (EBIT)
2015 970.4
2014 857.7
% var. 13.1%
% net revenue
2015 24.7%
2014 25.6%
Financial result
2015 (271.8)
2014 (261.4)
% var. 4.0%
Group profit
2015 532.1
2014 470.3
% var. 13.2%
% net revenue
2015 13.5%
2014 14.0%

 

Key financial figures

(in million of euros except % eps and leverage ratio) 2015 2014 % var.
EBITDA 1,162.6 1,047.2 11.0%
Adjusted group profit* 614.2 597.9 2.7%
% net revenue 15.6% 17.8%  
Cash & cash equivalents 1,142.5 1,079.2 5.9%
Leverage ratio 3.19x 3.01x  
Earnings per share (eps)** 0.78 0.69 13.0%
Dividend paid during the year 221.8 156.0 42.2%
 

* Excludes non-recurring costs and associated with recent acquisitions, amortization of deferred expenses associated to the refinancing and amortization of intangible assets related to acquisitions

** EPS taking into consideration the 2:1 split effective 4 January 2016

Key financial figures

(in million of euros except % eps and leverage ratio)
EBITDA
2015 1,162.6
2014 1,047.2
% var 11.0%
Adjusted group profit*
2015 614.2
2014 597.9
% var 2.7%
% net revenue
2015 15.6%
2014 17.8%
Cash & cash equivalents
2015 1,142.5
2014 1,079.2
% var 5.9%
Leverage ratio
2015 3.19x
2014 3.01x
Earnings per share (eps)**
2015 0.78
2014 0.69
% var 13.0%
Dividend paid during the year
2015 221.8
2014 156.0
% var 42.2%
 

* Excludes non-recurring costs and associated with recent acquisitions, amortization of deferred expenses associated to the refinancing and amortization of intangible assets related to acquisitions

** EPS taking into consideration the 2:1 split effective 4 January 2016

Sales performance by division

(In thousands of euros) Bioscience Diagnostic Hospital Subtotal Raw materials
and others
Total
2015 3,032,111 691,452 96,245 3,819,808 114,755 3,934,563
% net revenue 77.1% 17.6% 2.4% 97.1% 2.9% 100.0%
2014 2,513,510 620,022 94,800 3,228,332 127,052 3,355,384
% net revenue 74.9% 18.5% 2.8% 96.2% 3.8% 100.0%
Var 20.6% 11.5% 1.5% 18.3% (9.7%) 17.3%
Var cc* 4.8% (0.9%) (0.2%) (3.5%) (22.2%) 2.5%
2013 2,448,824 130,339 97,131 2,676,294 65,438 2,741,732
% net revenue 89.3% 4.8% 3.5% 97.6% 2.4% 100.0%

 

Sales performance by division

(In thousands of euros)
Bioscience
2015 3,032,111
% Net revenue 77.1%
2014 2,513,510
Net revenue 74.9%
Var 20.6%
Var cc* 4.8%
2013 2,448,824
Net revenue 89.3%
Diagnostic
2015 691,452
% Net revenue 17.6%
2014 620,022
% Net revenue 18.5%
Var 11.5%
Var cc* (0.9%)
2013 130,339
% Net revenue 4.8%
Hospital
2015 96,245
% Net revenue 2.4%
2014 94,800
% Net revenue 2.8%
Var 1.5%
Var cc* (0.2%)
2013 97,131
% Net revenue 3.5%
Subtotal
2015 3,819,808
% Net revenue 97.1%
2014 3,228,332
% Net revenue 96.2%
Var 18.3%
Var cc* (3.5%)
2013 2,676,294
% Net revenue 97.6%
Raw materials and others
2015 114,755
% Net revenue 2.9%
2014 127,052
% Net revenue 3.8%
Var (9.7%)
Var cc* (22.2%)
2013 65,438
% Net revenue 2.4%
Total
2015 3,934,563
% Net revenue 100.0%
2014 3,355,384
% Net revenue 100.0%
Var 17.3%
Var cc* 2.5%
2013 2,741,732
% Net revenue 100.0%

 

Sales performance by region

(in thousands of euros) US+Canada U.E. R.O.W. Subtotal Raw materials
and others
Total
2015 2,505,791 662,917 651,100 3,819,808 114,755 3,934,563
% Net revenue 63.7% 16.8% 16.6% 97.1% 2.9% 100.0%
2014 2,042,700 662,802 522,830 3,228,332 127,052 3,355,384
Net revenue 60.9% 19.8% 15.5% 96.2% 3.8% 100.0%
Var 20.6% 0.0% 24.5% 18.3% (9.7%) 17.3%
Var cc* 2.8% (1.7%) 12.8% 3.5% (22.2%) 2.5%
2013 1,694,361 556,325 425,608 2,676,294 65,438 2,741,732
% Net revenue 61.8% 20.3% 15.5% 97.6% 2.4% 100.0%

 

Sales performance by region

(En miles de euros)
US+Canada
2015 2,505,791
% Net revenue 63.7%
2014 2,042,700
% Net revenue 60.9%
Var 20.6%
Var cc* 2.8%
2013 1,694,361
% Net revenue 61.8%
U.E.
2015 662,917
% Net revenue 16.8%
2014 662,802
% Net revenue 19.8%
Var 0.0%
Var cc* (1.7%)
2013 556,325
% Net revenue 20.3%
R.O.W.
2015 651,100
% Net revenue 16.6%
2014 522,830
% Net revenue 15.5%
Var 24.5%
Var cc* 12.8%
2013 425,608
% Net revenue 15.5%
Subtotal
2015 3,819,808
% Net revenue 97.1%
2014 3,228,332
% Net revenue 96.2%
Var 18.3%
Var cc* 3.5%
2013 2,676,294
% Net revenue 97.6%
Raw materials and others
2015 114,755
% Net revenue 2.9%
2014 127,052
% Net revenue 3.8%
Var (9.7%)
Var cc* (22.2%)
2013 65.438
% Net revenue 2.4%
Total
2015 3,934,563
% Net revenue 100.0%
2014 3,355,384
% Net revenue 100.0%
Var 17.3%
Var cc* 2.5%
2013 2,741,732
% Net revenue 100.0%