Equity

 
2018
2017
     
Balance at 1 January
7,065
6,180
     
Net profit
1,079
1,781
Net exchange differences
143
(645)
Net actuarial gains/(losses) on defined benefit obligations
(66)
74
Dividend
(368)
(323)
Proceeds from reissue of ordinary shares
242
233
Repurchase of shares
(236)
(297)
Other changes
(44)
62
     
Balance at 31 December
7,815
7,065

In 2018, the following dividends were proposed by the Managing Board:

Dividend

 
2018
2017
     
Per cumulative preference share A: €0.17 (2017: €0.17)
8
8
Per ordinary share: €2.30 (2017: €1.85)
404
323
     
Total
412
331

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 Shareholders' equity.

Share capital

On 31 December 2018, the authorized capital amounted to €1,125 million (2017: €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 2017 and 2018 are shown in the following table.

Overview of shares

 
Issued shares
Treasury shares
 
Ordinary
Cumprefs A
Ordinary
       
Balance at 1 January 2017
181,425,000
44,040,000
6,423,334
Reissue of shares in connection with share-based payments
   
(2,238,144)
Repurchase of shares
   
4,500,000
Dividend in the form of ordinary shares
   
(1,903,665)
       
Balance at 31 December 2017
181,425,000
44,040,000
6,781,525
Number of treasury shares at 31 December 2017
(6,781,525)
   
     
Number of shares outstanding at 31 December 2017
174,643,475
44,040,000
       
       
Balance at 1 January 2018
181,425,000
44,040,000
6,781,525
Reissue of shares in connection with share-based payments
   
(2,090,107)
Repurchase of shares
   
2,700,000
Dividend in the form of ordinary shares
   
(1,616,993)
       
Balance at 31 December 2018
181,425,000
44,040,000
5,774,425
Number of treasury shares at 31 December 2018
(5,774,425)
   
     
Number of shares outstanding at 31 December 2018
175,650,575
44,040,000

The average number of ordinary shares outstanding in 2018 was 175,322,889 (2017: 174,794,656). 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 2018, no cumulative preference shares B were outstanding.

Share premium

Of the total share premium of €489 million (2017: €489 million), an amount of €99 million (2017: €101 million) can be regarded as entirely free of tax.

Treasury shares

At 31 December 2018, DSM possessed 5,774,425 (2017: 6,781,525) ordinary shares (nominal value €9 million, 2.56% (2017: 3.01%) of the share capital). The average purchase price of the ordinary treasury shares was €64.22 (2017: €58.70). At 31 December 2018, 5,616,235 (2017: 6,706,342) of the total number of treasury shares outstanding were held for servicing management and personnel share-option rights and share plans. The remainder, 158,190 shares (2017: 75,183), is the balance of the holding for this purpose at start of the year, the shares that were purchased under the company's share buy-back program and shares that were reissued as stock dividend.

Other reserves in Shareholders' equity

 
Translation reserve
Hedging
reserve
Reserve for share-based compensation
Fair value reserve
Total
           
Balance at 1 January 2017
530
(207)
65
8
396
           
Changes:
         
Fair-value changes of derivatives
-
98
-
-
98
Release to income statement
(14)
(39)
-
-
(53)
Fair-value changes of other financial assets
-
-
-
(3)
(3)
Exchange differences
(610)
-
-
-
(610)
Options and performance shares granted
-
-
26
-
26
Options and performance shares exercised/canceled
-
-
(22)
-
(22)
Reclassification1
-
-
(18)
-
(18)
Changes in joint ventures and associates
(4)
7
-
-
3
Income tax
(9)
(7)
-
-
(16)
           
Total changes
(637)
59
(14)
(3)
(595)
           
Balance at 31 December 2017
(107)
(148)
51
5
(199)
           
Changes:
         
Fair-value changes of derivatives
-
(44)
-
-
(44)
Release to income statement
14
22
-
-
36
Fair-value changes of other financial assets
-
-
-
16
16
Exchange differences
129
-
-
-
129
Options and performance shares granted
-
-
25
-
25
Options and performance shares exercised/canceled
-
-
(23)
-
(23)
Changes in joint ventures and associates
(1)
(3)
-
-
(4)
Income tax
2
7
-
-
9
           
Total changes
144
(18)
2
16
144
           
Balance at 31 December 2018
37
(166)
53
21
(55)

1 Reclassification to retained earnings

The increase in the Translation reserve in 2018 is mainly caused by a weakening of the euro against the US dollar and Swiss franc, partly offset by a strengthening against the Brazilian real. As a consequence, the value of the subsidiaries in those countries increased, which led to a positive exchange difference of €129 million. In addition, there was a €14 million release of the cumulative translation reserve of mainly DSM Sinochem Pharmaceuticals to the income statement.

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'.