Equity

 
2016
2015
   
Balance at 1 January
5,631
5,936
   
Net profit
629
92
Net exchange differences
197
30
Net actuarial gains/(losses) on defined benefit obligations
(9)
(54)
Dividend
(301)
(310)
Proceeds from reissue of ordinary shares
253
176
Repurchase of shares
(273)
(122)
Disposals
-
(126)
Other changes
53
9
   
Balance at 31 December
6,180
5,631

Disposals in 2015 relates to the derecognition of the non-controlling interest in the bulk chemicals activities, see Note 17 ‘Non-controlling interests’.

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

Dividend

 
2016
2015
   
Per cumulative preference share A: €0.09 (2015: €0.23)
4
10
Per ordinary share: €1.75 (2015: €1.65)
306
288
   
Total
310
298

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 2016, the authorized capital amounted to €1,125 million (2015: €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 2015 and 2016 are shown in the following table.

Overview of shares

 
Issued shares
Treasury shares
 
Ordinary
Cumprefs A
Ordinary
    
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
    
    
Balance at 1 January 2016
181,425,000
44,040,000
6,501,973
Reissue of shares in connection with share-based payments
  
(3,243,102)
Repurchase of shares
  
5,200,000
Dividend in the form of ordinary shares
  
(2,035,537)
    
Balance at 31 December 2016
181,425,000
44,040,000
6,423,334
Number of treasury shares at 31 December 2016
(6,423,334)
-
 
   
Number of shares outstanding at 31 December 2016
175,001,666
44,040,000

The average number of ordinary shares outstanding in 2016 was 175,099,827 (2015: 174,357,139). 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 2016, no cumulative preference shares B were outstanding.

Share premium

Of the total share premium of €489 million (2015: €489 million), an amount of €104 million (2015: €106 million) can be regarded as entirely free of tax.

Treasury shares

On 31 December 2016, DSM possessed 6,423,334 ordinary shares (nominal value €10 million, 2.85% of the share capital). The average purchase price of the ordinary treasury shares was €52.77. As at 31 December 2016, 6,044,486 of the total number of treasury shares outstanding were held for servicing management and personnel share-option rights. The remainder, 378,848 shares, is the balance of shares that were purchased under the company's share buy-back program in 2007, 2008 and 2016 and shares that were reissued as stock dividend in the years 2011 through 2016.

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.

Other reserves in Shareholders' equity

 
Translation reserve
Hedging reserve
Reserve for share-based compensation
Fair value reserve
Total
      
Balance at 1 January 2015
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
      
Changes:
     
Fair-value changes of derivatives
-
(52)
-
-
(52)
Release to income statement
(19)
52
-
-
33
Release to deferred items
-
(4)
-
-
(4)
Fair-value changes of other financial assets
-
-
-
7
7
Exchange differences
216
-
-
-
216
Options and performance shares granted
-
-
32
-
32
Options and performance shares exercised/cancelled
-
-
(30)
-
(30)
Reclassification1
18
(2)
-
4
20
Income tax
1
2
-
-
3
      
Total changes
216
(4)
2
11
225
      
Balance at 31 December 2016
530
(207)
65
8
396

1 Reclassification to retained earnings

The increase in the Translation reserve in 2016 is mainly caused by strengthening of the US dollar and the Brazilian real compared to the euro. As a consequence the value of the subsidiaries in those countries increased, which led to a positive exchange difference of €216 million. This is offset by the €19 million release of the cumulative translation reserve at Patheon to the income statement following the IPO and secondary offering.

The increase in the Translation reserve in 2015 is mainly caused by strengthening of the US dollar, Chinese renminbi and Swiss franc compared to the euro, which led 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 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 7 to the 'Parent company financial statements'.