DCSIMG
16 Equity - Annual Report 2015 - DSM

16 Equity

Table 1

 
2015
2014
     
Balance at 1 January
5,936
6,096
     
Net profit
92
99
Net exchange differences
30
310
Net actuarial gains/(losses) on defined benefit obligations
(54)
(141)
Dividend
(310)
(307)
Proceeds from reissue of ordinary shares
176
160
Repurchase of shares
(122)
(189)
Disposals
(126)
-
Other changes
9
(92)
     
Balance at 31 December
5,631
5,936

Disposals in 2015 relates to the derecognition of the non-controlling interest in the Bulk Chemicals activities, see note 18 ‘Non-controlling interests’.

After the balance sheet date the following dividends were declared by the Managing Board:

Table 2: Dividend

Dividend
 
2015
2014
     
Per cumulative preference share A: €0.23 (2014: €0.23)
10
10
Per ordinary share: €1.65 (2014: €1.65)
288
286
     
Total
298
296

The proposed final dividend on ordinary shares is subject to approval by the Annual General Meeting of Shareholders and has not been deducted from Equity.

For a description of the rules of profit appropriation and of the statutory rights attached to preference shares B, see Profit appropriation.

Share capital

On 31 December 2015, the authorized capital amounted to €1,125 million (2014: €1,125 million), distributed over 330,960,000 ordinary shares, 44,040,000 cumulative preference shares A and 375,000,000 cumulative preference shares B. All shares have a nominal value of €1.50 each.

The changes in the number of issued and outstanding shares in 2014 and 2015 are shown in the following table.

Table 3: Overview of shares

Overview of shares
 
Issued shares
Treasury shares
 
Ordinary
Cumprefs A
Ordinary
       
Balance at 1 January 2014
181,425,000
44,040,000
7,461,588
Reissue of shares in connection with share-based payments
   
(725,210)
Repurchase of shares
   
3,733,055
Dividend in the form of ordinary shares
   
(2,581,248)
       
Balance at 31 December 2014
181,425,000
44,040,000
7,888,185
Number of treasury shares at 31 December 2014
(7,888,185)
-
 
     
Number of shares outstanding at 31 December 2014
173,536,815
44,040,000
       
       
Balance at 1 January 2015
181,425,000
44,040,000
7,888,185
Reissue of shares in connection with share-based payments
   
(1,056,880)
Repurchase of shares
   
2,300,000
Dividend in the form of ordinary shares
   
(2,629,332)
       
Balance at 31 December 2015
181,425,000
44,040,000
6,501,973
Number of treasury shares at 31 December 2015
(6,501,973)
-
 
     
Number of shares outstanding at 31 December 2015
174,923,027
44,040,000

The average number of ordinary shares outstanding in 2015 was 174,357,139 (2014: 172,605,434). All shares issued are fully paid.

The cumulative preference shares A have been classified as equity because there is no mandatory redemption and distributions to the shareholders are at the discretion of DSM.

On 31 December 2015, no cumulative preference shares B were outstanding.

Share premium

Of the total share premium of €489 million (2014: €489 million), an amount of €106 million (2014: €108 million) can be regarded as entirely free of tax.

Treasury shares

On 31 December 2015, DSM possessed 6,501,973 ordinary shares (nominal value €10 million, 2.9% of the share capital). The average purchase price of the ordinary treasury shares was €49.05. As at 31 December 2015, 5,087,588 of the total number of treasury shares outstanding were held for servicing management and personnel share-option rights. The remainder, 1,414,385 shares, is the balance of shares that were purchased under the company's share buy-back program in 2007 and 2008 and shares that were reissued as stock dividend in the years 2011 through 2015.

On 31 December 2014, DSM possessed 7,888,185 ordinary shares (nominal value €12 million, 3.5% of the share capital). The average purchase price of the ordinary treasury shares was €44.27. As at 31 December 2014, 3,844,468 of the total number of treasury shares outstanding were held for servicing management and personnel share-option rights. The remainder, 4,043,717 shares, is the balance of shares that were purchased under the company's share buy-back program in 2007 and 2008 and shares that were reissued as stock dividend in the years 2011 through 2014.

Other reserves in Shareholder's equity

Table 4

 
Translation
reserve
Hedging
reserve
Reserve for
share-based
compensation
Fair value
reserve
Total
           
Balance at 1 January 2014
16
(7)
41
(15)
35
           
Changes:
         
Fair-value changes of derivatives
-
(174)
-
-
(174)
Release to income statement
-
(9)
-
-
(9)
Release to share of subsidiaries (acquisition)
-
2
-
-
2
Fair-value changes of other financial assets
-
-
-
4
4
Exchange differences
282
-
-
-
282
Options and performance shares granted
-
-
19
-
19
Options and performance shares exercised/cancelled
-
-
(11)
-
(11)
Income tax
-
18
-
-
18
           
Total changes
282
(163)
8
4
131
           
Balance at 31 December 2014
298
(170)
49
(11)
166
           
Changes:
         
Fair-value changes of derivatives
-
(51)
-
-
(51)
Release to income statement
(59)
51
-
-
(8)
Release to retained earnings
(7)
-
-
-
(7)
Reclassification to deferred items
-
(4)
-
-
(4)
Fair-value changes of other financial assets
-
-
-
8
8
Exchange differences
57
-
-
-
57
Options and performance shares granted
-
-
29
-
29
Options and performance shares exercised/cancelled
-
-
(15)
-
(15)
Income tax
25
(29)
-
-
(4)
           
Total changes
16
(33)
14
8
5
           
Balance at 31 December 2015
314
(203)
63
(3)
171

The increase in the Translation reserve is mainly caused by strengthening of the US dollar, Chinese renminbi and Swiss franc compared to the euro. As a consequence the value of the subsidiaries in those countries increased which lead to a positive exchange difference impact of €57 million. This is offset by the €59 million release of the cumulative translation reserve at the Bulk Chemical entities to the income statement upon their disposal.

The significant increase in the Translation reserve in 2014 amounting to €282 million is the result of the weakening of the euro in 2014. As a consequence the value of the US, Swiss and Brazilian subsidiaries of DSM increased. The decrease of the hedging reserve is the consequence of value changes of interest rate hedges for which cash flow hedge accounting is applied.

The Translation reserve, Hedging reserve and the Fair value reserve are legal reserves in accordance with Dutch law and cannot be distributed to shareholders. Additional information is provided in note 6 to the 'Parent company financial statements'.