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4.2 Shareholders' equity
Accounting policies
The Group classifies the instruments it has issued either in equity or in financial liabilities based on their nature. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Expenses related to the issuance or acquisition of equity instruments are presented as an allowance for equity. If Kesko Corporation acquires equity instruments of its own, their cost is deducted from equity.
The dividend proposed by the Board of Directors to the General Meeting has not been deducted from equity. Instead, dividends are recognised on the basis of the resolution by the General Meeting.
At the end of December 2017, the total number of Kesko Corporation shares was 100,019,752, of which 31,737,007, or 31.7%, were A shares and 68,282,745, or 68.3%, were B shares. All issued shares have been fully paid. The maximum number of A shares is 250 million and the maximum number of B shares is also 250 million, so that the total number of shares is 400 million at maximum. Each A share carries ten (10) votes and each B share one (1) vote. The total number of votes attached to all shares was 385,652,815. At the end of December 2017, Kesko Corporation's share capital was €197,282,584.
Changes in share capital
Number of shares
Share capital A B Total Share
capital
€ million
Reserve of
invested
non-
restricted
equity
€ million
Share
premium
€ million
Total
€ million
1 January 2016 31,737,007 67,405,168* 99,142,175* 197.3 22.8 197.8 417.8
Transfer of treasury shares 131,468 131,468
31 December 2016 31,737,007 67,536,636* 99,273,643* 197.3 22.8 197.8 417.8
Transfer of treasury shares 182,972 182,972
31 December 2017 31,737,007 67,719,608* 99,456,615* 197.3 22.8 197.8 417.8
Number of votes 317,370,070 67,719,608 385,089,678
* Excluding treasury shares which totalled 563,137 (746,109) at the end of the financial year.
Treasury shares
Authorised by the General Meeting, the Board of Directors acquired a total of 1,200,000 of the Company’s own B shares in the financial years 2011 and 2014. The shares are held by the Company as treasury shares and the Company Board is entitled to transfer them. The acquisition cost of the shares held by the Company, €23.5 million, has been deducted from retained earnings in equity. Information on share-based payments has been given in note 5.4.
pcs
B shares held by the Company as at 31 Dec. 2016 746,109
Transfer, share-based compensation plan -192,822
Returned during the period 9,850
B shares held by the Company as at 31 Dec. 2017 563,137
Dividends
After the balance sheet date, the Board of Directors has proposed that €2.20 per share be distributed as dividends. A dividend of €2.00 per share was distributed on the profit for 2016.
Equity and reserves
Equity consists of share capital, share premium, reserve of invested non-restricted equity, other reserves, revaluation reserve, currency translation differences and retained earnings net of treasury shares. In addition, the portion of accumulated depreciation difference and optional provisions net of deferred tax liabilities are included in equity.
Share premium
The amount exceeding the par value of share received by the Company in connection with share subscriptions was recorded in the share premium in cases where options had been granted under the old Limited Liability Companies Act (29 Sept. 1978/734). As at the end of the financial year, the share premium was €197.8 million.
Reserve of invested non-restricted equity
The reserve of invested non-restricted equity, €22.8 million, includes the other equity-related investments and share subscription prices to the extent not designated to be included in share capital.
Other reserves
Other reserves, a total of €244.2 million, have mainly been created and increased as a result of resolutions by the General Meeting. Other reserves mainly comprise contingency reserves to a total amount of €242.3 million at the end of the financial year.
Currency translation differences
Currency translation differences arise from the translation of foreign operations’ financial statements. Gains and losses arising from net investment hedges in foreign operations are also included in currency translation differences, provided they qualify for hedge accounting. The change in currency translation differences is stated within comprehensive income.
Revaluation reserve
The revaluation reserve includes the change in the fair value of available-for-sale financial instruments and the effective portion of the change in the fair value of derivatives for which cash flow hedge accounting is applied. Cash flow hedges include electricity derivatives and interest rate derivatives hedging the Private Placement note interest. The change in the reserve is stated within comprehensive income. The result of cash flow hedging has been presented in note 4.3 Financial risks.