D.15. Consolidated shareholders’ equity
D.15.1. Share capital
As of December 31, 2017, the share capital was €2,508,039,808, consisting of 1,254,019,904 shares with a par value of €2. Treasury shares held by Sanofi are as follows:
|
Number of shares |
% of share capital for |
|||||||
| December 31, 2017 | 0.2 | 0.01% | ||||||
| December 31, 2016 | 20.0 | 1.55% | ||||||
| December 31, 2015 | 4.0 | 0.30% | ||||||
| January 1, 2015 | 9.5 | 0.72% | ||||||
Treasury shares are deducted from shareholders’ equity. Gains and losses on disposals of treasury shares are recorded directly in equity and are not recognized in net income for the period.
Movements in the share capital of the Sanofi parent company over the last three years are set forth below:
| Date | Transaction | Number of shares | Share capital(a) |
Additional paid-in capital(a) |
Reserves(a) | |||||||||||||
| December 31, 2014 | 1,319,367,445 | 2,639 | 5,614 | - | ||||||||||||||
| During 2015 | Capital increase by exercise of stock subscription options(b) | 9,000,127 | 18 | 555 | - | |||||||||||||
| During 2015 | Capital increase by issuance of restricted shares(c) | 3,071,173 | 6 | (6) | - | |||||||||||||
| Board meeting of April 29, 2015 | Reduction in share capital by cancellation of treasury shares | (18,482,786) | (37) | (1,454) | - | |||||||||||||
| Board meeting of October 28, 2015 | Reduction in share capital by cancellation of treasury shares | (7,259,200) | (15) | (670) | - | |||||||||||||
| December 31, 2015 | 1,305,696,759 | 2,611 | 4,039 | - | ||||||||||||||
| During 2016 | Capital increase by exercise of stock subscription options(b) | 3,418,421 | 7 | 212 | - | |||||||||||||
| During 2016 | Capital increase by issuance of restricted shares(c) | 3,664,248 | 7 | (7) | - | |||||||||||||
| Board meeting of April 28, 2016 | Reduction in share capital by cancellation of treasury shares | (22,561,090) | (45) | (1,655) | - | |||||||||||||
| Board meeting of July 22, 2016 | Capital increase reserved for employees | 1,803,986 | 4 | 96 | - | |||||||||||||
| December 31, 2016 | 1,292,022,324 | 2,584 | 2,685 | - | ||||||||||||||
| During 2017 | Capital increase by exercise of stock subscription options(b) | 3,764,646 | 8 | 215 | - | |||||||||||||
| During 2017 | Capital increase by issuance of restricted shares(c) | 3,394,574 | 7 | (7) | - | |||||||||||||
| Board meeting of April 27, 2017 | Reduction in share capital by cancellation of treasury shares | (36,380,198) | (73) | (2,709) | - | |||||||||||||
| Board meeting of July 28, 2017 | Capital increase reserved for employees | 1,621,098 | 3 | 103 | - | |||||||||||||
| Board meeting of December 14, 2017 | Reduction in share capital by cancellation of treasury shares | (10,402,540) | (21) | (229) | (616) | |||||||||||||
| December 31, 2017 | 1,254,019,904 | 2,508 | 58 | (616) | ||||||||||||||
| (a) |
Amounts expressed in millions of euros. |
| (b) |
Shares issued on exercise of Sanofi stock subscription options. |
| (c) |
Shares vesting under restricted share plans and issued in the period. |
For the disclosures about the management of capital required under IFRS 7, refer to Note B.27.
D.15.2. Restricted share plans
Restricted share plans are accounted for in accordance with the policies described in Note B.24.3. The principal characteristics of those plans are as follows:
| 2017 | 2016 | 2015 | ||||||||||
| Type of plan | Performance share plan |
Performance share plan |
Performance share plan |
|||||||||
| Date of Board meeting approving the plan | May 10, 2017 | May 4, 2016 | June 24, 2015 | |||||||||
| Total number of shares awarded | 3,587,465 | 4,097,925 | 3,832,840 | |||||||||
| Of which plans subject to a 4-year service period | - | - | 2,546,420 | |||||||||
| Fair value per share awarded(a) | - | - | 79.52 | |||||||||
| Of which plans subject to a 3-year service period | 3,587,465 | 4,097,925 | 1,286,420 | |||||||||
| Fair value per share awarded(a) | 81.50 | 61.06 | 82.96 | |||||||||
| Fair value of plan at the date of grant (€ million) | 292 | 250 | 309 | |||||||||
| (a) |
Quoted market price per share at the date of grant, adjusted for dividends expected during the vesting period. |
The total expense recognized for all restricted share plans in the year ended December 31, 2017 was €238 million, compared with €219 million in the year ended December 31, 2016 and €187 million in the year ended December 31, 2015 (the 2016 and 2015 figures exclude the Animal Health business).
The number of restricted shares not yet fully vested as of December 31, 2017 was 12,867,519, comprising 3,468,576 under the 2017 plans; 3,798,073 under the 2016 plans; 3,438,420 under the 2015 plans; and 2,162,450 under the 2014 plans.
The number of restricted shares not yet fully vested was 13,543,254 as of December 31, 2016 and 14,076,259 as of December 31, 2015.
On March 5, 2014, the Board of Directors approved a performance share unit (PSU) plan, vesting at the end of a three-year service period and subject to performance conditions. That plan expired on March 5, 2017, resulting in a cash payment of €27 million based on attainment of the performance criteria. The corresponding expense was recognized on a straight line basis over the vesting period, in accordance with the policies described in Note B.24.3.
D.15.3. Capital increases
On March 2, 2017, the Sanofi Board of Directors approved an employee share ownership plan in the form of a capital increase reserved for employees. Employees were offered the opportunity to subscribe to the capital increase at a price of €70.01 per share, representing 80% of the average of the opening quoted market prices of Sanofi shares during the 20 trading days preceding June 14, 2017.
The subscription period was open from June 19 through June 30, 2017. The plan resulted in a total of 1,528,982 shares being subscribed for, and the immediate issuance of a further 92,116 shares as an employer’s contribution under the terms of the plan.
An expense of €21 million was recognized for this plan in the year ended December 31, 2017, of which €8 million was related to the employer’s contribution.
On March 3, 2016, the Sanofi Board of Directors approved an employee share ownership plan in the form of a capital increase reserved for employees. Employees were offered the opportunity to subscribe to the capital increase at a price of €57.25 per share, representing 80% of the average of the opening quoted market prices of Sanofi shares during the 20 trading days preceding June 8, 2016.
The subscription period was open from June 13 through June 24, 2016. The plan resulted in a total of 1,756,972 shares being subscribed for, and the immediate issuance of a further 47,014 shares as an employer’s contribution under the terms of the plan.
An expense of €16 million (excluding Animal Health) was recognized for this plan in the year ended December 31, 2016, of which €3 million was related to the employer’s contribution.
There were no capital increases reserved for employees in 2015.
D.15.4. Repurchase of Sanofi shares
On May 10, 2017, the Annual General Meeting of Sanofi shareholders approved a share repurchase program for a period of 18 months. Under that program (and that program alone), Sanofi repurchased 8,428,935 of its own shares during 2017 for a total amount of €702 million.
On May 4, 2016, the Annual General Meeting of Sanofi shareholders approved a share repurchase program for a period of 18 months. Under that program (and that program alone), Sanofi repurchased 18,426,601 of its own shares during 2017 for a total amount of €1,453 million, and 19,947,202 of its own shares during 2016 for a total amount of €1,503 million.
On May 4, 2015, the Annual General Meeting of Sanofi shareholders approved a share repurchase program for a period of 18 months. Under that program (and that program alone), Sanofi repurchased 18,764,233 of its own shares during 2016 for a total amount of €1,402 million, and 6,527,368 of its own shares during 2015 for a total amount of €551 million.
Transactions carried out under the liquidity contract in 2017 had a negative impact of €4 million on shareholders’ equity.
D.15.5. Reductions in share capital
Reductions in share capital for the accounting periods presented are described in the table included at Note D.15.1 above.
Those reductions have no impact on shareholders’ equity.
D.15.6. Currency translation differences
Currency translation differences comprise the following:
| (€ million) | 2017 | 2016 | 2015 | |||||||||
| Attributable to equity holders of Sanofi | (1,439) | 1,787 | 701 | |||||||||
| Attributable to non-controlling interests | (32) | (18) | (22) | |||||||||
| Total | (1,471) | 1,769 | 679 | |||||||||
The balance as of December 31, 2017 includes an after-tax amount of €66 million relating to hedges of net investments in foreign operations (refer to Note B.8.4. for a description of the relevant accounting policy), compared with €66 million as of December 31, 2016 and December 31, 2015.
That balance also includes €144 million of currency translation differences relating to the Animal Health business as of December 31, 2016 (€195 million as of December 31, 2015), presented in Assets held for sale or exchange and Liabilities related to assets held for sale or exchange for those periods.
The movement in Currency translation differences is mainly attributable to the US dollar.
D.15.7. Other comprehensive income
Movements within other comprehensive income are shown below:
| (€ million) | 2017 | 2016 | 2015 | |||||||||
| Balance, beginning of period | 973 | 45 | (2,315) | |||||||||
| Attributable to equity holders of Sanofi | 992 | 67 | (2,287) | |||||||||
| Attributable to non-controlling interests | (19) | (22) | (28) | |||||||||
| Actuarial gains/(losses): | ||||||||||||
|
∎ Actuarial gains/(losses) excluding investments accounted for using the equity method (see Note D.19.1.) |
(30) | (104) | 650 | |||||||||
|
∎ Actuarial gains/(losses) from investments accounted for using the equity method, net of taxes |
2 | (2) | 2 | |||||||||
|
∎ Tax effects(a) |
(90) | (22) | (187) | |||||||||
| Items not subsequently reclassifiable to profit or loss(b) | (118) | (128) | 465 | |||||||||
| Available-for-sale financial assets: | ||||||||||||
|
∎ Change in fair value (excluding investments accounted for using the equity method)(c) |
837 | (104) | (29) | |||||||||
|
∎ Change in fair value (investments accounted for using the equity method, net of taxes) |
1 | (1) | (8) | |||||||||
|
∎ Tax effects |
(145) | 50 | 16 | |||||||||
| Cash flow hedges: | ||||||||||||
|
∎ Change in fair value (excluding investments accounted for using the equity method)(d) |
(24) | 30 | (3) | |||||||||
|
∎ Change in fair value (investments accounted for using the equity method, net of taxes) |
- | 1 | - | |||||||||
|
∎ Tax effects |
8 | (10) | 1 | |||||||||
| Change in currency translation differences: | ||||||||||||
|
∎ Currency translation differences on foreign subsidiaries (excluding investments accounted for using the equity method)(d)/(e) |
(2,956) | 1,033 | 1,681 | |||||||||
|
∎ Currency translation differences (investments accounted for using the equity method) |
(284) | 57 | 243 | |||||||||
|
∎ Hedges of net investments in foreign operations |
- | - | (9) | |||||||||
|
∎ Tax effects |
- | - | 3 | |||||||||
| Items subsequently reclassifiable to profit or loss | (2,563) | 1,056 | 1,895 | |||||||||
| Balance, end of period | (1,708) | 973 | 45 | |||||||||
| Attributable to equity holders of Sanofi | (1,674) | 992 | 67 | |||||||||
| Attributable to non-controlling interests | (34) | (19) | (22) | |||||||||
| (a) |
Includes the impact of changes in corporate income tax rates: €(127) million in 2017, €(37) million in 2016. |
| (b) |
Items not subsequently reclassifiable to profit or loss and attributable to the Animal Health business divested on January 1, 2017: €(3) million in 2016, €(6) million in 2015. |
| (c) |
Includes reclassifications to profit or loss: €(89) million in 2017, €447 million in 2016 and €(35) million in 2015. |
| (d) |
Includes reclassifications to profit or loss: €(23) million in 2017, €2 million in 2016 and €(3) million in 2015. |
| (e) |
Items subsequently reclassifiable to profit or loss and attributable to the Animal Health business divested on January 1, 2017: €(170) million in 2017 on divestment (comprising €(147) million of currency translation differences and €(23) million of cash flow hedges), €(51) million in 2016 and €(92) million in 2015. |
D.15.8. Stock options
Stock option plans awarded
On May 10, 2017, the Board of Directors granted 378,040 stock subscription options at an exercise price of €88.97 per share. The vesting period is four years and the plan expires on May 10, 2027.
On May 4, 2016, the Board of Directors granted 402,750 stock subscription options at an exercise price of €75.90 per share. The vesting period is four years and the plan expires on May 4, 2026.
On June 24, 2015, the Board of Directors granted 435,000 stock subscription options at an exercise price of €89.38 per share. The vesting period is four years and the plan expires on June 24, 2025.
Measurement of stock option plans
The fair value of the stock subscription option plan awarded in 2017 is €5 million. That amount is recognized as an expense over the vesting period, with the other side of the entry recognized directly in equity. On that basis, an expense of €0.7 million was recognized in the year ended December 31, 2017.
The fair value of the stock subscription option plan awarded in 2016 is €3 million.
Sanofi used the following assumptions in determining the fair value of the plans:
| ∎ |
dividend yield: 3.56% (2017 plan), 4.51% (2016 plan) and 3.64% (2015 plan); |
| ∎ |
volatility of Sanofi shares, computed on a historical basis: 23.74% (2017 plan), 24.54% (2016 plan) and 27.52% (2015 plan); |
| ∎ |
risk-free interest rate: 0.270% (2017 plan), 0.056% (2016 plan) and 0.65% (2015 plan); and |
| ∎ |
plan maturity: 7 years (2017, 2016 and 2015 plans). The plan maturity is the average expected remaining life of the options, based on observations of historical employee behavior. |
Fair values per option awarded are €12.21, €6.60 and €16.12 for the 2017, 2016 and 2015 plans, respectively.
The expense recognized for stock option plans (and the corresponding amounts recognized in equity) are €4 million for 2017, and €6 million for 2016 and 2015.
As of December 31, 2017, the total unrecognized cost of unvested stock options was €8 million (versus €9 million as of December 31, 2016 and €12 million as of December 31, 2015), to be recognized over a weighted average period of 2.5 years. The current tax benefit related to the exercise of stock options in 2017 was €6 million (versus €2 million in 2016 and €12 million in 2015).
Stock purchase option plans
The table shows all Sanofi stock purchase option plans still outstanding or under which options were exercised in the year ended December 31, 2017.
| Source | Date of grant | Number of options granted |
Start date of exercise period |
Expiry date | Exercise price (€) |
Number of options outstanding as of 12/31/2017 |
||||||||||||||||||
| Synthélabo | 03/30/1999 | 716,040 | 03/31/2004 | 03/30/2019 | 38.08 | 104,701 | ||||||||||||||||||
| Total | 104,701 | |||||||||||||||||||||||
Sanofi shares acquired to cover stock purchase option plans are deducted from shareholders’ equity. The exercise of all outstanding stock purchase options would increase shareholders’ equity by €4 million.
Stock subscription option plans
Details of the terms of exercise of stock subscription options granted under the various plans are presented below in Sanofi share equivalents. These plans were awarded to certain corporate officers and employees of Sanofi companies.
The table shows all Sanofi stock subscription option plans still outstanding or under which options were exercised in the year ended December 31, 2017.
| Source | Date of grant |
Number of options granted |
Start date of exercise |
Expiry date |
Exercise price (€) |
Number of options outstanding as of 12/31/2017 |
||||||||||||||||||
| Sanofi-aventis | 12/13/2007 | 11,988,975 | 12/14/2011 | 12/13/2017 | 62.33 | - | ||||||||||||||||||
| Sanofi-aventis | 03/02/2009 | 7,736,480 | 03/04/2013 | 03/01/2019 | 45.09 | 1,679,020 | ||||||||||||||||||
| Sanofi-aventis | 03/01/2010 | 8,121,355 | 03/03/2014 | 02/28/2020 | 54.12 | 2,726,260 | ||||||||||||||||||
| Sanofi-aventis | 03/09/2011 | 874,500 | 03/10/2015 | 03/09/2021 | 50.48 | 242,578 | ||||||||||||||||||
| Sanofi | 03/05/2012 | 814,050 | 03/06/2016 | 03/05/2022 | 56.44 | 528,001 | ||||||||||||||||||
| Sanofi | 03/05/2013 | 788,725 | 03/06/2017 | 03/05/2023 | 72.19 | 531,605 | ||||||||||||||||||
| Sanofi | 03/05/2014 | 1,009,250 | 03/06/2018 | 03/05/2024 | 73.48 | 863,815 | ||||||||||||||||||
| Sanofi | 06/24/2015 | 435,000 | 06/25/2019 | 06/24/2025 | 89.38 | 433,500 | ||||||||||||||||||
| Sanofi | 05/04/2016 | 402,750 | 05/05/2020 | 05/04/2026 | 75.90 | 401,500 | ||||||||||||||||||
| Sanofi | 05/10/2017 | 378,040 | 05/11/2021 | 05/10/2027 | 88.97 | 378,040 | ||||||||||||||||||
| Total | 7,784,319 | |||||||||||||||||||||||
The exercise of all outstanding stock subscription options would increase shareholders’ equity by approximately €470 million. The exercise of each option results in the issuance of one share.
Summary of stock option plans
A summary of stock options outstanding at each balance sheet date, and of movements during the relevant periods, is presented below:
| Number of options |
Weighted exercise price per share (€) |
Total (€ million) |
||||||||||
| Options outstanding at January 1, 2015 | 25,602,256 | 61.14 | 1,565 | |||||||||
| Options exercisable | 22,225,731 | 60.79 | 1,351 | |||||||||
| Options granted | 435,000 | 89.38 | 39 | |||||||||
| Options exercised | (9,033,607) | 63.50 | (573) | |||||||||
| Options cancelled(a) | (179,634) | 60.04 | (11) | |||||||||
| Options forfeited | (956,400) | 70.38 | (67) | |||||||||
| Options outstanding at December 31, 2015 | 15,867,615 | 60.03 | 953 | |||||||||
| Options exercisable | 13,028,045 | 57.56 | 750 | |||||||||
| Options granted | 402,750 | 75.90 | 31 | |||||||||
| Options exercised | (3,441,429) | 63.83 | (220) | |||||||||
| Options cancelled(a) | (161,863) | 68.09 | (11) | |||||||||
| Options forfeited | (601,271) | 67.00 | (40) | |||||||||
| Options outstanding at December 31, 2016 | 12,065,802 | 59.03 | 713 | |||||||||
| Options exercisable | 9,646,903 | 54.67 | 527 | |||||||||
| Options granted | 378,040 | 88.97 | 33 | |||||||||
| Options exercised | (3,796,788) | 58.92 | (224) | |||||||||
| Options cancelled(a) | (130,312) | 69.06 | (9) | |||||||||
| Options forfeited | (627,722) | 62.33 | (39) | |||||||||
| Options outstanding at December 31, 2017 | 7,889,020 | 60.08 | 474 | |||||||||
| Options exercisable | 5,812,165 | 52.93 | 308 | |||||||||
| (a) |
Mainly due to the grantees leaving Sanofi. |
The table below provides summary information about options outstanding and exercisable as of December 31, 2017:
| Outstanding | Exercisable | |||||||||||||||||||
| Range of exercise prices per share |
Number of options |
Average residual life (years) |
Weighted average exercise price per share (€) |
Number of options |
Weighted average exercise price per share (€) |
|||||||||||||||
| From €30.00 to €40.00 per share | 104,701 | 1.24 | 38.08 | 104,701 | 38.08 | |||||||||||||||
| From €40.00 to €50.00 per share | 1,679,020 | 1.16 | 45.09 | 1,679,020 | 45.09 | |||||||||||||||
| From €50.00 to €60.00 per share | 3,496,839 | 2.54 | 54.22 | 3,496,839 | 54.22 | |||||||||||||||
| From €70.00 to €80.00 per share | 1,796,920 | 6.37 | 73.64 | 531,605 | 72.19 | |||||||||||||||
| From €80.00 to €90.00 per share | 811,540 | 8.36 | 89.19 | - | - | |||||||||||||||
| Total | 7,889,020 | 5,812,165 | ||||||||||||||||||
D.15.9. Number of shares used to compute diluted earnings per share
Diluted earnings per share is computed using the number of shares outstanding plus stock options with dilutive effect and restricted shares.
| (million) | 2017 | 2016 | 2015 | |||||||||
| Average number of shares outstanding | 1,256.9 | 1,286.6 | 1,306.2 | |||||||||
| Adjustment for stock options with dilutive effect | 2.7 | 2.6 | 6.0 | |||||||||
| Adjustment for restricted shares | 7.2 | 6.8 | 8.5 | |||||||||
| Average number of shares used to compute diluted earnings per share | 1,266.8 | 1,296.0 | 1,320.7 | |||||||||
In 2017, 0.8 million stock options were not taken into account in computing diluted earnings per share because they had no dilutive effect, compared with 2.4 million in 2016 and 0.4 million in 2015.