Note F: Shareholders’ equity

Statement of changes in equity

 

 

Legal reserves

 

 

 

 

 

In € millions

Sub-
scribed share capital

Cash
flow hedge reserve

Other
legal reserves

Cumu-
lative
trans-
lation
reserves

Actuarial gains & losses

Other reserves

Undistri-
buted
results

Share-
holders’
equity

Balance at January 1, 2020

100

211

(469)

(2,684)

8,735

457

6,350

Changes in exchange rates in respect of subsidiaries, associates and joint ventures

(404)

(404)

Post-retirement benefits

97

 

97

Net income

630

630

Comprehensive income

(404)

97

630

323

Dividend

(366)

(366)

Equity-settled transactions

13

13

Share buyback

(5)

(540)

(545)

Acquisition of non-controlling interests

(29)

(29)

Addition to other reserves

35

138

(173)

Balance at December 31, 2020

95

246

(873)

(2,587)

8,317

548

5,746

Changes in exchange rates in respect of subsidiaries, associates and joint ventures

380

380

Other comprehensive income/(expense)

(19)

(19)

Post-retirement benefits

(26)

(26)

Net income

829

829

Comprehensive income

(19)

380

(26)

829

1,164

Dividend

(365)

(365)

Equity-settled transactions

16

16

Share buyback

(4)

(1,131)

(1,135)

Acquisition of non-controlling interests

(1)

(1)

Addition to other reserves

29

234

(263)

Balance at December 31, 2021

91

(19)

275

(493)

(2,613)

7,435

749

5,425

The holders of common shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the Annual General Meeting of shareholders. The holders of the priority shares are entitled to a dividend of 6% per share or the statutory interest in the Netherlands, whichever is lower, plus any accrued and unpaid dividends. They are entitled to 800 votes per share (in accordance with the 800 times higher nominal value per share) at the Annual General Meeting of shareholders. In addition, the holders of priority shares have the right to draw up binding lists of nominees for appointment to the Supervisory Board and the Board of Management; amendments to the Articles of Association are subject to the approval of the Meeting of Holders of Priority Shares.

Priority shares may only be transferred to a transferee designated by a Meeting of Holders of Priority Shares and against payment of the par value of the shares, plus interest at the rate of 6 percent per annum or the statutory interest in the Netherlands, whichever is lower, for the period between the beginning of the year and the date of transfer. There are no restrictions on voting rights of holders of common or priority shares. The Articles of Association set out procedures for exercising voting rights. The Annual General Meeting of shareholders has resolved in 2021 to authorize the Board of Management for a period of 18 months (i) to issue shares (or grant rights to shares) in the capital of the company up to a maximum of 10%, which in case of mergers or acquisitions can be increased by up to a maximum of 10%, of the total number of shares outstanding (and to restrict or exclude the pre-emptive rights to those shares) and (ii) to acquire shares in the capital of the company, provided that the shares that will at any time be held will not exceed 10% of the issued share capital. The issue or repurchase of shares requires the approval of the Supervisory Board.

Unrestricted reserves at year-end

In € millions

2020

2021

Shareholders’ equity at year-end

5,746

5,425

Subscribed share capital

(95)

(91)

Subsidiaries’ restrictions to transfer funds

(163)

(174)

Reserve for development costs

(83)

(101)

Unrestricted reserves

5,405

5,059

During 2021, 9,247,489 common shares repurchased in 2020 and 2021 were cancelled (2020: 9,331,481 common shares). We held 2,744,210 repurchased common shares to be cancelled at year-end 2021 (year-end 2020: 695,776).

On October 23, 2019, a €500 million buyback program was announced, for which 0.4 million common shares were acquired in 2019 and 6.2 million shares in 2020, which have all been cancelled. On October 21, 2020, a €300 million share buyback program was announced which was completed in 2021. On February 16, 2021, a €1 billion share buyback program was announced, which was completed in January 2022. This program started in April 2021. As at December 31, 2021, a total of 8.6 million shares had been acquired under this program, of which 5.9 million were cancelled.

Of the shareholders’ equity of €5.4 billion (2020: €5.7 billion), €5.1 billion (2020: €5.4 billion) was unrestricted and available for distribution, subject to the relevant provisions of our Articles of Association and Dutch law.

Legal reserves include a €174 million reserve relating to earnings retained by subsidiaries, associates and joint ventures after the year 1983, to the extent that there are limitations to arrange profit distributions; and the €101 million reserve for capitalized development costs.

Dividend

Our dividend policy is to pay a stable to rising dividend.

In 2021, an interim dividend of €0.44 (2020: €0.43) per common share was paid. We propose a 2021 final dividend of €1.54 (2020: €1.52) per common share, which would equal a total 2021 dividend of €1.98 (2020: €1.95).