Company: GIFLF
Filing Date: 2025-02-26
Form Type: 6-K
Source: 0001104659-25-017501
Chunk: 34

Company: Grifols SA
Filing Date: 2025-02-26
Form: 6-K
Chunk 34
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 hedging relationship, and through periodic prospective        
 effectiveness assessments to ensure that there is an economic relationship between the hedged item and the              
 hedging instrument.                                                                                                     
 In derivatives such as the euro/Dollar cross-currency swap, the Group uses the hypothetical derivative method           
 to assess effectiveness. This hypothetical derivative is constructed without the inclusion of credit risk and           
 currency spread. Under the hypothetical derivative method, the cumulative change in the fair value of the actual        
 currency swap, excluding the effect of the currency spread, will be compared to the cumulative change in the            
 fair value of the hypothetical swap. Therefore, the hypothetical derivative is constructed as a cross-currency          
 swap with fixed euro payment, fixed U.S. Dollar receipt without the inclusion of credit risk and foreign                
 currency spread and with a fair value of zero at the date of designation.                                               
 Recognition                                                                                                             
 At the inception of the hedging relationship, the Group documents the economic relationship between the                 
 hedging instruments and the hedged items, including whether changes in cash flows of the hedging instruments            
 are expected to offset changes in cash flows of the hedged items. The Group documents its risk management               
 objective and strategy for undertaking its hedging transactions.                                                        
 The effective portion of changes in the fair value of derivatives designated and classified as cash flow hedges is      
 recognized in equity under "Cash flow hedge reserve". In the case of cross-currency swaps, the currency spread          
 of the hedging relationship is excluded and treated as hedging costs in equity. The gain or loss corresponding to       
 the ineffective portion is recognized immediately in profit or loss for the year under the heading "Change in fair      
 value of financial instruments".                                                                                        
 Amounts accumulated in the hedging reserve included in shareholders' equity are transferred to profit or loss           
 when the hedged item affects profit or loss or when ineffectiveness is identified.                                      
 The fair value of derivatives designated as hedges is detailed in note 30 Movements in the hedging reserve              
 included in shareholders' equity are shown in note 17(c).                                                               
 (ii) Derivatives that do not qualify for hedge accounting                                                               
 When derivatives do not meet the criteria for hedge accounting, they are classified as "held for trading".              
 Changes in fair value are recognized immediately in the consolidated statement of profit and loss.                      
 In addition, Grifols assesses whether embedded derivatives are present in contracts and financial instruments.          
 Financial instruments that combine a host contract and a financial derivative (embedded derivative) are known           
 as hybrid