7 Shareholders' equity
2019 | 2018 | |
Balance at 1 January | 7,782 | 6,962 |
|---|---|---|
Net profit | 758 | 1,077 |
Exchange differences, net of income tax | 125 | 144 |
Net actuarial gains/(losses) on defined benefit obligations | (15) | (66) |
Dividend | (414) | (365) |
Repurchase of shares | (869) | (236) |
Proceeds from reissue of ordinary shares | 324 | 242 |
Other changes | 40 | 24 |
Balance at 31 December | 7,731 | 7,782 |
For details see the consolidated statement of changes in Note 16 'Equity'.
Legal reserve
In Shareholders' equity, an amount of €162 million (2018: €37 million) is included for Translation reserve, -€122 million (2018: -€166 million) for Hedging reserve, €5 million (2018: €21 million) for Fair value reserve and €267 million (2018: €253 million) for intangible assets related to product development projects. In addition, a legal reserve of €116 million (2018: €108 million) is recognized for profits that cannot be distributed and received in the Netherlands.
Profit appropriation
According to article 32 of the Articles of Association of Koninklijke DSM N.V. and with the approval of the Supervisory Board, every year the Managing Board determines the portion of the net profit to be appropriated to the reserves. For the year 2019, the net profit is €758 million (2018: €1,077 million) and the amount to be appropriated to the reserves has been established at €333 million (2018: €665 million). From the subsequent balance of the net profit of €425 million (2018: €412 million), dividend is first distributed on the cumulative preference shares B. At the end of 2019 no cumprefs B were in issue (same as for 2018). Subsequently, a 3.26% (2018: 3.26%) dividend is distributed on the cumulative preference shares A, based on a share price of €5.29 (2018: €5.29) per cumulative preference share A. For 2019, this distribution amounts to €0.17 (2018: €0.17) per share, which is €8 million in total. An interim dividend of €0.06 per cumulative preference share A having been paid in August 2019, the final dividend will then amount to €0.11 per cumulative preference share A.
The profit remaining after distribution of these dividends on the cumulative preference shares A of €750 million (2018: €1,069 million) will be put at the disposal of the Annual General Meeting of Shareholders in accordance with the provisions of Article 32, section 5 of the Articles of Association.
The Managing Board proposes a dividend on ordinary shares outstanding for the year 2019 of €2.40 (2018: €2.30) per share. With an interim dividend of €0.77 (2018: €0.77) per ordinary share having been paid in August 2019, the final dividend would then amount to €1.63 (2018: €1.53) per ordinary share.
If the Annual General Meeting of Shareholders makes a decision in accordance with the proposal, the net profit will be appropriated as follows:
Profit appropriation
2019 | 2018 | |
Net profit | 758 | 1,077 |
Profit appropriation: | ||
| 333 | 665 |
| 8 | 8 |
| 136 | 135 |
| 281 | 269 |