16 Equity
2019 | 2018 | |
Balance at 1 January | 7,815 | 7,065 |
|---|---|---|
Net profit | 764 | 1,079 |
Other comprehensive income | 140 | 75 |
Options / performance shares granted | 34 | 25 |
Dividend | (418) | (368) |
Proceeds from reissue of ordinary shares | 324 | 242 |
Acquisition of NCI without a change in control | (4) | - |
Acquisition (divestment) of subsidiary with NCI | 57 | (67) |
Repurchase of shares | (869) | (236) |
Other changes | (8) | - |
Balance at 31 December | 7,835 | 7,815 |
'Acquisition of subsidiary with NCI' relates to the acquisitions of Andre Pectin and Yimante. See Note 17 'Non-controlling interests'.
Other changes of -€8 million mainly relates to transactions with minority shareholders, together with a transfer of the fair value reserve to retained earnings.
In 2019, the following dividends were proposed by the Managing Board:
Dividend
2019 | 2018 | |
Per cumulative preference share A: €0.17 (2018: €0.17) | 8 | 8 |
Per ordinary share: €2.40 (2018: €2.30) | 417 | 404 |
Total | 425 | 412 |
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 Note 7 'Shareholders' equity'.
Share capital
On 31 December 2019, the authorized capital amounted to €1,125 million (2018: €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 2018 and 2019 are shown in the following table.
Overview of shares
Issued shares | Treasury shares | ||
Ordinary | Cumprefs A | Ordinary | |
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 | |
Balance at 1 January 2019 | 181,425,000 | 44,040,000 | 5,774,425 |
Reissue of shares in connection with share-based payments | (3,395,405) | ||
Repurchase of shares | 7,962,936 | ||
Dividend in the form of ordinary shares | (1,365,711) | ||
Balance at 31 December 2019 | 181,425,000 | 44,040,000 | 8,976,245 |
Number of treasury shares at 31 December 2019 | (8,976,245) |
| |
Number of shares outstanding at 31 December 2019 | 172,448,755 | 44,040,000 | |
The average number of ordinary shares outstanding in 2019 was 175,730,949 (2018: 175,322,889). 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 2019, no cumulative preference shares B were outstanding (same as 2018).
Share premium
Of the total share premium of €489 million (2018: €489 million), an amount of €93 million (2018: €99 million) can be regarded as entirely free of tax.
Treasury shares
On 1 April 2019, DSM started a €1 billion share buy-back program with the intention to reduce its issued capital. In the reporting year, €601 million was realized, being 5.4 million shares.
At 31 December 2019, DSM possessed 8,976,245 (2018: 5,774,425) ordinary shares with a nominal value of €13 million, or 3.98% (2018: 2.56%) of the share capital. The average purchase price of the ordinary treasury shares as at 31 December 2019 was €100.78 (2018: €64.22). At 31 December 2019, 3,020,830 (2018: 5,616,235) of the total number of treasury shares outstanding were held for servicing share-option rights and share plans, 592,479 (2018: 158,190) shares for stock dividend, and 5,362,936 (2018: 0) shares earmarked for capital reduction.
Other reserves in Shareholders' equity
Translation reserve | Hedging | Reserve for share-based compensation | Fair value reserve | Total | |
Balance at 1 January 2018 | (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) |
Changes: | |||||
Fair-value changes of derivatives | - | (18) | - | - | (18) |
Release to income statement | (9) | 66 | - | - | 57 |
Fair-value changes of other financial assets | - | - | - | (21) | (21) |
Exchange differences | 134 | - | - | - | 134 |
Options and performance shares granted | - | - | 34 | - | 34 |
Options and performance shares exercised/canceled | - | - | (36) | - | (36) |
Transfer to retained earnings | - | - | - | 4 | 4 |
Changes in joint ventures and associates | - | - | - | 1 | 1 |
Income tax | - | (4) | - | - | (4) |
Total changes | 125 | 44 | (2) | (16) | 151 |
Balance at 31 December 2019 | 162 | (122) | 51 | 5 | 96 |
The increase in the Translation reserve in 2019 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 total value of the subsidiaries increased, which led to a positive exchange difference of €134 million. In addition, there was a €9 million release of the cumulative translation reserve 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'.