Note 26 - Equity
26.1 SHARE CAPITAL
At 31 December 2020 and 31 December 2019, 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.
26.2 TREASURY SHARES
Changes in the number of shares held in treasury over the last two years were as follows:
| 2020 | 2019 | |
| Number of treasury shares held at 1 January | 2,276,966 | 1,260,478 |
| Purchases of treasury shares | 1,471,624 | 2,587,474 |
| Sales of treasury shares | (1,702,787) | (989,974) |
| Awards | (8,157) | - |
| Capital reduction by cancellation of treasury shares | (447,018) | (581,012) |
| Number of treasury shares held at 31 December | 1,590,628 | 2,276,966 |
At 31 December 2020, shares held in treasury represented 1.21% of Lagardère SCA’s share capital and were allocated for the following purposes:
- 1,491,791 shares for future allocation to employees;
- 98,837 shares for market-making purposes.
In 2020, under the liquidity agreement entered into in 2008 with Crédit Agricole Cheuvreux for the purposes of market-making, Lagardère SCA purchased 1,471,624 treasury shares during the year for a total cost of €24 million and sold 1,702,787 treasury shares for a total of €29 million, giving rise to a €5 million net disposal gain which was recorded directly in equity.
The Group also carried out a number of capital reductions by cancelling 447,018 treasury shares for €13 million. These operations took place following capital increases carried out by capitalising reserves and involving the same number of shares. The newlyissued shares were allocated in 2020 to the Group’s Co-Managing Partners and salaried employees who are beneficiaries under the 9 May 2016 and 6 April 2017 plans.
In 2019, Lagardère SCA purchased 1,500,000 treasury shares for future allocation to employees, for a total cost of €29 million. Under the liquidity agreement, Lagardère SCA had purchased 1,087,474 treasury shares for a total cost of €23 million and sold 989,974 treasury shares for a total of €22 million, generating a €1 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 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.
26.3 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
- investments in non-consolidated companies
26.4 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. 2020 | 31 Dec. 2019 | 31 Dec. 2020 | 31 Dec. 2019 | 2020 | 2019 | 2020 | 2019 | |
| Lagardère Publishing | 36 | 29 | 7 | 6 | 5 | 4 | ||
| o/w Librairie Générale Française | 40% | 40% | 22 | 21 | 4 | 4 | 4 | 3 |
| o/w Pika Editions | 33.33% | 33.33% | 6 | 6 | 1 | - | - | - |
| o/w Le Livre Scolaire | 30% | N/A | 4 | 1 | - | |||
| Lagardère Travel Retail | 65 | 118 | (37) | 21 | 8 | 22 | ||
| o/w Paradies sub-group(*) | N/A | N/A | 39 | 59 | (10) | 14 | 6 | 16 |
| o/w Hojeij Branded Foods sub-group(*) | N/A | N/A | 10 | 22 | (5) | 1 | 2 | 3 |
| o/w Lagardère Duty Free SAS (Aelia) sub-group | 9.96% | 9.96% | 7 | 26 | (17) | 2 | - | - |
| o/w Airest sub-group(**) | 50% | 50% | 11 | 15 | (4) | 4 | - | 3 |
| Other Activities | 1 | - | - | |||||
| Lagardère Active | - | 2 | - | 1 | - | 3 | ||
| Lagardère Sports | 1 | 2 | (2) | - | - | |||
| o/w Lagardère Sports Asia sub-group | 19.26% | 1 | 2 | (2) | - | - | ||
| Total | 102 | 150 | (28) | 26 | 13 | 29 | ||
(*) 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).
26.5 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. There were significant changes in Lagardère SCA’s ownership structure in 2020, with an existing shareholder suddenly increasing its investment and two new shareholders rapidly building up a sizeable stake in the capital. At 31 December 2020, the five largest shareholders held around 77% of the share capital.
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.
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.
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.
As detailed in note 29, in 2020 the Group consolidated its financial position, signed an agreement to amend and extend its syndicated credit facility and was granted a loan, 80% of which is guaranteed by the French state. The one-year term of this loan can be extended for up to five additional one-year periods. These agreements were signed on 18 December 2020 and took effect on 8 January 2021.
They contain default clauses which include redefined covenants along with specific rules on dividend payments and sums allocated to share buybacks outside the scope of the liquidity agreement.
26.6 OTHER COMPREHENSIVE INCOME (EXPENSE) FOR THE PERIOD
The components of other comprehensive income (expense) can be analysed as follows:
| 2020 | 2019 | |||||
| Attributable to owners(*) | Minority interests | Total equity | Attributable to owners(*) | Minority interests | Total equity | |
| Translation reserve | (120) | (4) | (124) | 54 | 1 | 55 |
| - Currency translation adjustments | (120) | (4) | (124) | 53 | 1 | 54 |
| - Share of other comprehensive income (expense) of equity-accounted companies, net of tax | - | - | - | 1 | - | 1 |
| Valuation reserve | 8 | - | 8 | (25) | - | (25) |
| Change in fair value of derivative financial instruments | 8 | - | 8 | (25) | - | (25) |
| - Unrealised gains (losses) recognised directly in equity | 14 | - | 14 | (31) | - | (31) |
| - Amounts reclassified from equity to profit or loss | - | - | - | 1 | - | 1 |
| - Tax effect | (6) | - | (6) | 5 | - | 5 |
| Change in fair value of investments in non-consolidated companies | - | - | - | - | - | - |
| - Unrealised gains (losses) recognised directly in equity | - | - | - | - | - | - |
| - Amounts reclassified from equity to profit or loss | - | - | - | - | - | - |
| - Tax effect | - | - | - | - | - | - |
| Other reserves | (7) | - | (7) | (14) | - | (14) |
| Change in provisions for pensions and other post-employment benefit obligations | (7) | - | (7) | (14) | - | (14) |
| - Actuarial gains and losses on pensions and other post-employment benefit obligations | (8) | - | (8) | (19) | - | (19) |
| - Tax effect | 1 | - | 1 | 5 | - | 5 |
| Other comprehensive income (expense) for the period, net of tax | (119) | (4) | (123) | 15 | 1 | 16 |
(*) Equity attributable to owners of the Parent.
Currency translation adjustments recognised within attributable other comprehensive income (expense) relate mainly to the following currencies:
| 31 Dec. 2020 | 31 Dec. 2019 | |
|---|---|---|
| US dollar: | €(90) million | €23 million |
| Pound sterling: | €(27) million | €26 million |
| Other: | €(3) million | €5 million |
| Total | €(120) million | €54 million |