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Last Update: 03/12/2009
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Part of the audited Consolidated Financial Statements and Management´s Analysis

17 -- Capital and reserves

On April 24, 2008, the Annual Meeting of BASF resolved a two-for-one stock split. Shareholders received one additional share for each BASF share held at no additional cost. The adjustment of the securities deposit accounts and the stock exchange listing took place on June 27, 2008. All shares are qualifying for 2008. BASF’s shares are no-par-value shares. All figures have been adjusted accordingly.

In 2008, a total of 37,891,306 shares were repurchased for cancellation. Of these 4,649,873 shares had not been cancelled as of December 31, 2008, but were deducted from capital. A total of 57,841,433 shares were cancelled in 2008. Thereof were included 24,600,000 shares that were acquired for the purpose of cancellation in 2007. The subscribed capital of BASF was reduced by the resulting attributable amount of €74 million (57,841,433 shares).

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Subscribed capital (million €)

 

 

Number of
shares

Subscribed capital

Outstanding shares as of December 31, 2007

490,485,000

1,256

Shares cancelled until June 27, 2008

(17,470,000)

(45)

Outstanding shares before the stock split

473,015,000

1,211

Issuance of new shares as part of the stock split

473,015,000

Outstanding shares as of June 27, 2008

946,030,000

1,211

Cancelled shares until December 31, 2008

(22,901,433)

(29)

Outstanding shares as of December 31, 2008

923,128,567

1,182

Repurchased shares intended to be cancelled

(4,649,873)

(6)

Outstanding shares as disclosed in the
financial statements

918,478,694

1,176

Share buyback/Own shares

The Board of Executive Directors received approval at the Annual Meeting on April 24, 2008, to buy back BASF shares to a maximum amount of 10% of subscribed capital by October 23, 2009. The shares shall be purchased on the stock exchange or through a public purchase offer open to all shareholders. If BASF shares are purchased on a stock exchange, the price paid for the shares may not be higher than the highest market price on the buying day and may not be more than 25% lower than that highest price. In the case of a public purchase offer, the price offered by BASF may be a maximum of 10% higher than the highest market price on the third trading day prior to the announcement of the public purchase offer. This authorization supersedes the validity of the prior authorization to repurchase BASF shares granted by the Annual Meeting on April 26, 2007.

The Board of Executive Directors is authorized to cancel the repurchased shares without the approval of a further resolution at an Annual Meeting.

A sale of treasury shares is only authorized after a corresponding resolution at the Annual Meeting, unless, with the approval of the Supervisory Board, the shares are used to acquire companies, parts of companies or participations in companies in return for shares.

In 2008, a total of 37,891,306 shares, or 3.86% of the issued shares, were acquired under the respective approvals. The average purchase price was €42.70 per share. As of the balance sheet date, 4,649,873 shares of BASF stock were held by BASF. They were purchased for cancellation and are deducted from subscribed capital.

BASF spent a total of €1,618 million on the share buyback program in 2008. €48 million thereof was expensed through the reduction of subscribed capital and €1,570 million through the reduction of other retained earnings. Retained earnings were also reduced by €74 million due to the reclassification of computed nominal value of the own shares cancelled in 2008 to capital surplus. Of this amount, €31 million related to shares purchased for cancellation in the previous year.

In 2007, 42,990,000 shares, or 4.29% of the issued shares, were acquired. The average purchase price was €44.18 per share.

Conditional capital

A residual amount of less than €10,000 is reserved to meet compensation claims of former shareholders of Wintershall. These compensation claims expired in July 2004. BASF SE will therefore issue no more shares from conditional capital nor fulfill compensation claims.

Authorized capital

At the Annual Meeting of April 29, 2004, shareholders authorized the Board of Executive Directors to increase subscribed capital by issuing new shares in an amount of up to €500 million against cash or contribution in kind with the approval of the Supervisory Board through May 1, 2009. The Board of Executive Directors is empowered to decide on the exclusion of shareholders’ subscription rights for these new shares.

Capital surplus

Capital surplus includes share premiums from the issuance of shares, the fair value of options and negative goodwill from the capital consolidation resulting from acquisitions of subsidiaries in exchange for the issue of BASF shares at par value.

Capital structure management

The goal of capital structure management is to maintain the financial flexibility needed to continually develop our business portfolio and take advantage of strategic opportunities. The objectives of our financing policy are to ensure liquidity, limit financial risks and optimize capital costs by means of an appropriate capital structure. The capital structure is orientated to the needs of the operational business and the company’s strategic direction.

Capital structure management at BASF is in line with the definition of stockholders’ equity. We plan and control the capital structure of BASF using selected financial ratios, within the framework of our financial management. The stockholders’ equity as reported on the balance sheet amounted to €18,722 million as of December 31, 2008 (December 31, 2007: €20,098 million). The equity ratio amounted to 36.8% on December 31, 2008 (December 31, 2007: 42.9%).

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