Capital structure

20. Equity

The breakdown of and changes to equity in the 2020 and 2019 financial years are presented in the consolidated statement of changes in equity as a separate component of the consolidated financial statements as of December 31, 2020.

a) Consolidated capital of BLG AG

The share capital (subscribed capital) amounts to EUR 9,984,000.00 and is divided into 3,840,000 approved, no-par registered shares with voting rights. Transfer of the shares requires the approval of the company in accordance with Section 5 of the Articles of Incorporation. The share capital is fully paid as of December 31, 2020.

The retained earnings include the statutory reserve pursuant to Section 150 of the German Stock Corporation Act (AktG) of EUR 998,000 (previous year: EUR 998,000), which is allocated in full, as well as other retained earnings of EUR 9,541,000 (previous year: EUR 9,960,000). In the 2020 financial year, no transfers to or withdrawals from other revenue reserves were made (previous year: withdrawal of EUR 82,000).

b) Consolidated capital of BLG KG

The capital attributable to the limited partner of BLG KG is recognized. The limited liability capital and the capital reserves were almost exclusively provided by contributions in kind.

The capital reserves include elimination of consolidation differences presented on the assets side from the time before transition of the consolidated financial statements to IFRSs.

Retained earnings include, in addition to undistributed profits from previous years, dividend payments and other withdrawals, previous changes in the group of consolidated companies recognized through other comprehensive income, and other changes and shares of consolidated net profit. In addition, retained earnings also include the differences between the German Commercial Code (HGB) and IFRSs existing on January 1, 2004 (date of transition). There is no separate presentation of the net profit or loss of consolidated companies.

The actuarial gains and losses recognized through other comprehensive income from the measurement of gross pension obligations in accordance with IAS 19 and the difference between the expected and actual return on plan assets are reported in “Other reserves”.

The reserve from the fair value measurement of financial instruments includes net gains or losses recognized through other comprehensive income from changes in the fair value of the effective portion of the cash flow hedges. Reserves are generally reversed upon settlement of the underlying transaction. In addition, the reserves are reversed on expiration, disposal, termination or exercise of the hedging instrument, in the event of revocation of the designation of the hedging relationship or non-fulfillment of the requirements for a hedge under IFRS 9. In addition, the reserve contains changes in the measurement of equity investments measured at fair value. Further disclosures on hedge accounting are presented in note 32 in the “Derivative financial instruments” section.

As of the end of the reporting period, the reserve consisted of the fair values of the interest rate swaps qualifying as hedges of EUR -13,183,000 (previous year: EUR -9,025,000), deferred taxes on this amount recognized through other comprehensive income of EUR 453,000 (previous year: EUR 453,000) as well as EUR -221,000 (previous year: EUR -329,000) from the fair values of financial instruments at associates recognized through other comprehensive income.

The foreign currency translation reserve includes foreign exchange effects from the translation of financial statements of consolidated companies in currencies other than the euro.

c) Equity of non-controlling interests

This item contained EUR 5,532,000 (previous year: EUR 8,656,000) for the minority interests in the equity of fully consolidated subsidiaries.

For the development of the individual equity components, please see the separate Consolidated statement of changes in equity.

21. Earnings per share BLG AG

In accordance with IAS 33, basic earnings per share are calculated by dividing the consolidated net profit attributable to BLG AG by the average number of shares. Basic earnings per share for the 2020 financial year amount to EUR 0.29 (previous year: EUR 0.38). This calculation is based on the portion of the consolidated net profit of EUR 1,117,000 (previous year: EUR 1,454,000) attributable to BLG AG and the unchanged number of shares of 3,840,000.

In the calculation of diluted earnings per share, the average number of issued shares is adjusted for the number of all potentially dilutive shares. As in the previous year, there was no deviation in amount from the basic earnings in the reporting year.

Like basic earnings per share, diluted earnings per share are fully attributable to continuing operations.

22. Dividend per share

On June 10, 2020, the Annual General Meeting of BLG AG approved the proposal of the Board of Management and the Supervisory Board to use the net retained profits (in accordance with HGB) of EUR 1,536,000 reported on December 31, 2019 to pay a dividend of EUR 0.40 per share. This represents a pay-out ratio of 105.6 percent. The dividend was distributed to shareholders on June 15, 2020.

For the 2020 financial year, due to the impacts of the coronavirus pandemic on the entire BLG Group, it is proposed to distribute the statutory minimum dividend in accordance with Section 254 of the German Stock Corporation Act (AktG) of EUR 0.11 per share (previous year: EUR 0.40). This represents a pay-out of EUR 422,000. The Board of Management and Supervisory Board propose that the remaining portion of the net retained profits of BLG AG in the amount of EUR 695,000 be appropriated to other reserves.

Shareholders’ rights to dividend payments are recognized as a liability in the period in which the corresponding resolution is passed.

23. Non-current loans

Of the loans taken out from banks, a total of EUR 63,529,000 (previous year: EUR 50,297,000) had fixed interest rates and EUR 103,907,000 (previous year: EUR 54,414,000) had variable interest rates.

Assurances have been made to all partner banks with regard to equal treatment and the change-of-control clause.

24. Other financial liabilities

Financial liabilities are recognized as liabilities when the BLG Group becomes party to an agreement. The liabilities are measured at fair value on initial recognition. They are subsequently measured, with the exception of derivatives, at amortized cost using the effective interest method. The measurement of derivatives is described in note 32.

Please refer to note 14 for information on the measurement of lease receivables.

Financial assets and liabilities are only netted and the net amount reported in the statement of financial position when there is a legally enforceable right to do so and there is an intention to settle on a net basis or to settle the corresponding liability at the same time as the relevant asset is sold.

Liabilities are derecognized after settlement, waiver or expiration.

Other financial liabilities break down as follows:

The outstanding purchase price payments from corporate acquisitions in the previous year related entirely to liabilities arising from the forward purchase of the remaining 49 percent of the shares in
BLG Sports & Fashion Logistics GmbH, Hörsel. The forward purchase was made in January 2020.

Other financial liabilities in the previous year included obligations from the acquisition of shares in E.H. Harms Automobile-Logistics in the amount of EUR 2,158,000, which were attributable in the full amount to the current portion and were settled in 2020.

The average effective interest rates as of the end of the reporting period of current account liabilities to banks amounted to 0.5 percent (previous year: 0.6 percent).

Information on (undiscounted) future cash flows from lease liabilities is given in note 32 under “Liquidity risk”.

25. Deferred government grants

Investment grants from the government are not recognized until there is reasonable assurance that the attached conditions will be met and that the grant will be awarded. Grants are reported separately under liabilities using the gross method. They are amortized pro rata temporis in accordance with the depreciation of the subsidized assets.

The items set forth in the tables above are deferrals for asset-related grants. The grants of the AUTOMOBILE Division included EUR 1,308,000 (previous year: EUR 1,361,000) for grants from the Federal Railway Authority for replacements and renovations in the rail infrastructure. The deferrals are reversed in line with the depreciation of the subsidized assets. Total income from the reversal of the deferrals totaling EUR 98,000 (previous year: EUR 98,000) was recorded in 2020.

In addition, further income of EUR 3,778,000 was recorded during the year (previous year: EUR 926,000), the full amount of which relates to grants recognized through profit or loss. EUR 2,898,000 of this amount relates to reimbursements of social security contributions by the Agentur für Arbeit (Federal Labor Agency) in connection with the introduction of short-time work. These are reported gross under other operating income.

26. Non-current provisions

Pension obligations are post-employment benefits within the meaning of IAS 19. Pension provisions are measured using the projected unit credit actuarial method prescribed in IAS 19 for defined benefit pension plans. In addition to pension obligations existing at the end of the reporting period, this method also takes into account the future earnings trend, expected pension increases and expected fluctuation. Actuarial gains and losses are fully recognized in other comprehensive income in the period in which they arise. The net interest component, which includes interest expense from the interest cost of the gross pension obligations less the expected return on plan assets, is shown in the financial result. The plan assets bear interest at the applied discount rate on which the measurement of the pension obligations is based. The obligations presented in the statement of financial position are net obligations after offsetting against plan assets.

Anniversary provisions are other long-term employee benefits within the meaning of IAS 19. They are also measured using the projected unit credit actuarial method. The interest component included in the anniversary expenses is shown in the financial result.

Provisions for pensions

All the plans of BLG LOGISTICS are defined benefit plans within the meaning of IAS 19. There are no minimum funding requirements.

The individual commitments of the Group companies form the legal basis for granting benefits. In addition, there are obligations for the payment of a disability pension and a retirement pension from the collective framework agreement for the port employees of German seaport companies, including the special provisions for the ports in the state of Bremen of May 12, 1992. On January 1, 1998, the pension obligations existing at BLG AG up to this date were assumed by the Free Hanseatic City of Bremen (municipality).

There are also pension obligations in accordance with the guidelines of the Siemens pension insurance for employees who were transferred as of October 1, 2001 from SRI Radio Systems GmbH and as of May 1, 2003 from Siemens AG to BLG Logistics Solutions GmbH & Co. KG.

Pension obligations exist for employees who were transferred from Schenker AG as of April 1, 2015 and from Kühne+Nagel (AG & Co.) KG as of January 1, 2016 to BLG Industrielogistik GmbH & Co. KG pursuant to Schenker AG’s “Benefit plan 2000” works agreement of February 28, 2003, as well as Schenker AG’s “Pension component employee participation” company-wide works agreement of June 9, 2011.

Due to a transfer of operations, BLG Handelslogistik GmbH & Co. KG assumed obligations from Puma AG in the form of identical individual commitments as of October 1, 2018.

In addition, there are obligations to grant and pay retirement, disability and survivor’s pensions due to a Group works agreement on ensuring the social future dated March 15, 2005 (future social concept). Significant portions of this benefit plan are made up of annually agreed compensation waivers to be negotiated with the participating employees, while the components of the bonus plan result annually from an employee profit sharing plan established after the end of the financial year.

For parts of the individual commitments and for the obligations within the framework of the future social concept, there are plan assets in the form of qualified insurance contracts within the meaning of IAS 19. The plan assets are managed externally by insurance companies, and specifically include reinsurance cover for pension commitments. The asset values determined by the insurance companies are recognized as fair values.

The provisions are calculated, taking into account the respective underlying contractual agreement in each case, by qualified actuaries applying the projected unit credit method in accordance with IAS 19.

The Group is exposed to various risks in connection with the defined benefit plans. In addition to the general risks of a change in demographic assumptions, these are, in particular, interest rate risk and capital market or investment risk. There are no concentrations of risk.

Present value of pension obligations

The present value of the defined benefit obligations changed as follows:

The weighted average maturity (duration) of the defined benefit obligations was as follows:

Fair value of plan assets

The fair value of the plan assets changed as follows:

Net pension expense

The portion of the net pension expense recognized in profit or loss for the period was made up as follows:

The service cost is recognized in the consolidated income statement as personnel expense, and the interest cost for the expected pension obligations is recognized as interest expense. The expected return on plan assets reduces the interest expense.

The actual income from plan assets as of December 31, 2020 amounted to EUR 1,530,000 (previous year: EUR 1,295,000).

Actuarial parameters

The actuarial computation of the material defined benefit pension obligations was based on the following parameters (given in the form of weighted average factors):

The mortality rate underlying the calculation of the present value of the material defined benefit pension obligations is based as in the previous year on the 2018 G mortality tables by Prof. Dr. Klaus Heubeck.

Sensitivity analyses

The present value of the pension obligations depends on a number of factors based on actuarial assumptions. The net expense (or income) used in determining assumptions for pensions includes the discount rate. Any change in these assumptions will impact the carrying amount of the pension obligation.

BLG LOGISTICS determines the appropriate discount rate at the end of each year. This is the interest rate used in determining the present value of expected future cash outflows required to settle the obligation. In determining the discount rate, the Group uses as its basis the interest rates of top-rated corporate bonds that are denominated in the currency in which the benefits are paid and with maturities corresponding to those of the pension obligation.

An increase or decrease in the principal actuarial assumptions in the amount of the expected future development would have the following effects compared to the parameters actually applied to the present value of pension obligations:

The sensitivity calculations are based on the average maturity of the pension obligations determined as of December 31, 2020. The calculations were carried out on an isolated basis for actuarial assumptions which have been identified as significant to separately illustrate the potential impact on the calculated present value of pension obligations. As the average duration of the expected pension liabilities is based on the sensitivity analyses and consequently the expected payment dates are not taken into consideration, they only result in approximate information or statements about trends.

Funding of pension obligations

The funding of the pension contracts entered into for the Board of Management and senior staff and the agreements for the future social concept are fully covered by reinsurance cover for pension commitments pledged in favor of the beneficiaries. The pension contracts are solely funded by the employer; the future social concept is funded by contributions made by employees and a performance bonus paid by the employer. There is no obligation to participate in the future social concept. The port pension does not contain any plan assets.

For the subsequent financial year, the company expects payments to the defined benefit plans of EUR 2,249,000 (previous year: EUR 2,823,000).

Anniversary provisions

Provisions for anniversaries take into consideration the contractually guaranteed rights of Group employees to receive anniversary bonuses. Recognition is based on actuarial reports, which make calculations based on a discount rate of 1.2 percent (previous year: 0.8 percent). The interest cost of EUR 84,000 was included in the addition for the reporting year of EUR 568,000.

Other non-current provisions

Other non-current provisions amounted to EUR 11,000 (previous year: EUR 11,000).

Non-current provisions with a remaining maturity of more than one year are discounted at the capital market interest rate corresponding to their maturity.

27. Trade payables

28. Other financial and non-financial liabilities

Liabilities from partial retirement agreements as obligations arising from post-employment benefits (termination benefits) are measured using the projected actuarial unit credit method.

A liability is recognized based on collective bargaining and individual agreements. Recognition, which includes payments in arrears from current partial retirement arrangements and top-up amounts for building reserves, is based on actuarial reports.

The Group’s accounting policies for contract liabilities are presented in note 4.

29. Current provisions

Provisions are recognized if a liability to a third party results from a past event which is expected to result in an outflow of assets and can be reliably measured. They represent uncertain liabilities that are recognized at the amount of the best estimate. The amount of the provision also includes the expected cost increases.

The allocations for insurance costs primarily result from obligations with respect to the liability loss compensation fund of German metropolitan areas.

The provisions for onerous contracts were allocated as follows: EUR 8,728,000 to the CONTRACT Division, EUR 100,000 to the AUTOMOBILE Division. The provisions relate to contracts with customers for which the estimated costs are not expected to be covered by the agreed revenue. The level of the risks from onerous contracts may increase significantly as a result of changes in circumstances over time. Based on our current estimation, a risk of this kind should be viewed as low.

For warranty risks from possible warranty liabilities and fair-dealing obligations, provisions of EUR 2,673,000 were carried forward from previous years. Overall, there is broad discretion in measuring these provisions, as there are no comparable items or other historical data.

Miscellaneous other provisions included other operating taxes of EUR 753,000 (previous year: EUR 470,000) and archiving costs of EUR 1,348,000 (previous year: EUR 1,348,000). In addition, miscellaneous other provisions included potential obligations in connection with recourse claims by business partners of EUR 3,000,000 (previous year: EUR 0) as well as maintenance obligations toward third-parties at rented halls/surface areas of EUR 1,246,000 (previous year: EUR 1,055,000).

30. Contingent liabilities

The existing contingent liabilities at BLG LOGISTICS in favor of companies accounted for using the equity method are presented below.

Contingent liabilities are measured at their nominal amounts. Maximum guarantees are recognized at their maximum amount. Based on the relationships at the end of the reporting period, the actual contingent liabilities totaled EUR 47,000 (previous year: EUR 204,000) on the basis of the underlying liabilities. The contingent liabilities primarily relate to the collateralization of credit lines.

Taking into account the knowledge gained up to the time this document was prepared, it can currently be assumed that all obligations underlying the contingent liabilities can be met by the respective principal debtors. The risk of a claim is considered low.

31. Other financial liabilities

Other financial obligations are measured at their nominal amounts. The order commitments result from contracts entered into for the purchase of property, plant and equipment. Most of the net obligations arising from the order commitments are due within the next two years.