Note 27 - Equity

27.1 SHARE CAPITAL​
At 31 December 2019 and 31 December 2018, the share capital of Lagardère SCA amounted to €799,913,044.60, represented by 131,133,286 shares with a par value of €6.10 each, all ranking pari passu and fully paid up.

27.2 TREASURY SHARES​
Changes in the number of shares held in treasury over the last two years were as follows:

  2019 2018
Number of treasury shares held at 1 January​ 1 260 478 1 575 218
Purchases of treasury shares 2 587 474 883 813
Sales of treasury shares (989 974) (716 313)
Capital reduction by cancellation of treasury shares (581 012) (482 240)
Number of treasury shares held at 31 December​ 2 276 966 1 260 478

At 31 December 2019, shares held in treasury represented 1.74% of Lagardère SCA’s share capital and were allocated for the following purposes:

  • 1,946,966 shares for future allocation to employees;
  • 330,000 shares for market-making purposes.

In 2019, Lagardère SCA purchased 1,500,000 treasury shares for future allocation to employees, for a total cost of €29 million. As part of the liquidity agreement entered into in 2008 with Crédit Agricole Cheuvreux for the purposes of market-making, Lagardère SCA purchased 1,087,474 treasury shares during the year for a total cost of €23 million and sold 989,974 treasury shares for a total of €22 million, giving rise to a €1 million net disposal loss which was recorded directly in equity.
The Group also carried out a number of capital reductions by cancelling 581,012 treasury shares for €15 million. These operations took place following capital increases carried out by capitalising reserves and involving the same number of shares. The newly-issued shares were allocated in 2019 to the Group’s Co-Managing Partners and salaried employees who are beneficiaries under the 1 April 2015 and 9 May 2016 plans.
In 2018, Lagardère SCA purchased 883,813 treasury shares for a total cost of €21 million and sold 716,313 treasury shares for a total of €17 million, generating a €4 million net disposal loss which was recorded directly in equity.
The Group also carried out a number of capital reductions during the year by cancelling 482,240 treasury shares for €15 million. These operations took place following capital increases carried out by capitalising reserves and involving the same number of shares. The newly-issued shares were allocated in 2018 to the Group’s Co-Managing Partners and salaried employees who are beneficiaries under the 22 December 2014 and 1 April 2015 plans.

27.3 OTHER RESERVES

Translation reserve
The translation reserve corresponds to cumulative exchange differences arising on translation of the financial statements of foreign subsidiaries whose functional currency is not the euro.

Valuation reserve
The valuation reserve comprises cumulative gains and losses arising on changes in value of:

  • derivative financial instruments used as cash flow hedges; and
  • available-for-sale investments.

27.4 MINORITY INTERESTS
Minority interests do not represent a material amount in the Group’s consolidated financial statements. Minority interests in the net assets and profits of consolidated companies break down as follows:

  Minority interests in
subsidiaries		 Balance sheet Income statement Dividends paid to
minority shareholders
of subsidiaries
  31 Dec.
2019		 31 Dec.
2018		 31 Dec.
2019		 31 Dec.
2018		 2019 2018 2019 2018
Lagardère Publishing     29 26 6 4 4 4
o/w Librairie Générale Française 40% 40% 21 20 4 3 3 3
o/w Pika Editions 33,33 % 33,33 % 6 6 - - - -
Lagardère Travel Retail     118 122 21 18 22 22
o/w Paradies sub-group(*) N/A N/A 59 62 14 12 16 22
o/w Hojeij Branded Foods sub-group(*) N/A N/A 22 23 1 - 3 -
o/w Lagardère Duty Free SAS (Aelia) sub-group 9,96 % 9,96 % 26 24 2 2 - -
o/w Airest sub-group(**) 50% 50% 15 11 4 4 3 -
Lagardère Active     2 4 1 - 3 1
o/w Mezzo   40%   3 - 1 2 1
Lagardère Sports and Entertainment     1 2 (2) - - -
o/w Lagardère Sports Asia sub-group 19,26 % 19,26 % 1 2 (2)​ - - -
Total 150 154 26 22 29 27

(*) Paradies and Hojeij Branded Foods groups include the minority interests resulting from the acquisition of Paradies on 22 October 2015 and of Hojeij Branded Foods on 19 November 2018. In accordance with US legislation (Airport Concessions Disadvantaged Business Enterprises (ACDBE) Program), the Travel Retail activities in North America are operated in numerous airports by legal entities that include minority partners. The percentages of minority interests are different in each of the sub-group’s subsidiaries.
(**) Exercise of call options on minority interests in the Airest sub-group in 2015. However, the percentage of minority interests remains unchanged in the Airest SPA subsidiaries (Venice Treviso, Verona, Bari and Palermo airports).

27.5 CAPITAL MANAGEMENT
Lagardère closely monitors its ownership and shareholding structure. As all Lagardère SCA shares are in registered form, the Group has a good knowledge of its ownership structure and the changes in shareholdings that occur over time. The free float represents a significant portion of the Company’s outstanding shares, at around 93%, which guarantees good liquidity. Lagardère Capital & Management, which is controlled by Arnaud Lagardère, the Group’s General and Managing Partner, has a 7.26% shareholding. The large free float guarantees good liquidity for the Group’s share. Lagardère has not raised capital on the market for several years and applies a policy of regularly paying out dividends. To reward shareholder stability, the Company has granted double voting rights for shares registered in the name of the same shareholder for at least four years.
As part of its long-term development strategy, the Group optimises its debt/equity ratio. Given the current level of cash, external growth can be financed by borrowings.
The shares due to be remitted to executives and employees under the free share plans are generally new shares created through a capital increase by capitalising reserves. An equivalent number of treasury shares is cancelled in order to neutralise the resulting dilutive impact on shareholders. In order to maintain a constant level of treasury shares further to such transactions, the Group may purchase shares on the market.
In 2008, the Group put in place a liquidity agreement for the purpose of ensuring a liquid market for its shares and stabilising the share price.

27.6 OTHER COMPREHENSIVE INCOME (EXPENSE) FOR THE YEAR
The components of other comprehensive income (expense) can be analysed as follows:

  2019 2018
  Attributable
to owners(*)		 Minority
interests		 Total equity Attributable
to owners(*)		 Minority
interests		 Total equity
Translation reserve 54 1 55 38 3 41
  • Currency translation adjustments
 53 1 54 38 3 41
  • Share of other comprehensive income (expense) of equity accounted companies, net of tax
 1 - 1 - - -
Valuation reserve (25) - (25) (10) - (10)
Change in fair value of derivative
financial instruments		 (25) - (25) (9) - (9)
  • Unrealised gains (losses) recognised directly in equity
 (31) - (31) (13) - (13)
  • Amounts reclassified from equity to profit or loss
 1 - 1 1 - 1
  • Tax effect
 5 - 5 3 - 3
Change in fair value of investments
in non-consolidated companies		 - - - (1) - (1)
  • Unrealised gains (losses)
    recognised directly in equity
 - - - (1) - (1)
  • Amounts reclassified from equity
    to profit or loss
 - - - - - -
  • Tax effect
 - - - - - -
Other reserves (14) - (14) 6 - 6
  • Actuarial gains and losses on pensions
    and other post-employment benefit
    obligations
 (19) - (19) 8 - 8
  • Tax effect
 5 - 5 (2) - (2)
Other comprehensive income (expense)
for the year, net of tax		 15 1 16 34 3 37

(*) Equity attributable to owners of the Parent.

Currency translation adjustments recognised within other comprehensive income (expense) relate mainly to the following currencies:

  2019 2018
US dollar: €23m €47m
Pound sterling: €26m €( 5)m
Other: €5m €( 1)m
Total €54m €41m