Group structure and
consolidation principles

38. Group of consolidated companies

In addition to BLG AG and BLG KG, the consolidated financial statements include the companies listed below:

Three companies are included in the consolidated financial statements using the equity method due to immateriality, despite voting majorities, as they are of only minor importance for presenting a true and fair view of the net assets, financial position and results of operations of BLG LOGISTICS. Materiality is determined on the basis of total assets. The cumulative total assets of the three companies accounted for using the equity method amounted to EUR 784,000 (previous year: EUR 717,000) in 2020.

A total of 12 companies in which a majority of shares and voting rights are held are not fully consolidated due to immateriality. These are general partner companies with only limited operations, one company with no operations and one company in liquidation. These companies are of only minor importance for presenting a true and fair view of the net assets, financial position and results of operations of BLG LOGISTICS and are therefore not included in the consolidated financial statements. Materiality is determined on the basis of net profit for the year. The cumulative net profit of the unconsolidated subsidiaries was EUR -426,000 (previous year: EUR 4,000).

The structure of BLG LOGISTICS with the AUTOMOBILE, CONTRACT and CONTAINER Divisions, the latter accounted for using the equity method, is shown in note 3.

A complete list of subsidiaries, joint ventures, associates and other long-term equity investments is attached to the notes to the consolidated financial statements.

The assumptions regarding control in companies in which the shareholding does not exceed 50 percent are shown below.

BLG AutoRail GmbH, Bremen (shareholding: 50 percent)

The shares in BLG AutoRail GmbH are held by BLG Automobile Logistics GmbH & Co. KG. Due to pooled voting rights under the partnership arrangement, BLG LOGISTICS exercises control over this company. The company is therefore accounted for using the full consolidation method.

BLG RailTec GmbH, Uebigau-Wahrenbrück (shareholding: 50 percent)

BLG RailTec GmbH was established as a wholly owned subsidiary of BLG AutoRail GmbH, Bremen. The indirect shareholding is 50 percent. Control of BLG AutoRail GmbH, Bremen, exists, so there is also indirect control of the wholly owned subsidiary BLG RailTec GmbH. As the operational leadership of the company was taken over due to a control and profit and loss transfer arrangement, this company is fully consolidated.

39. Consolidation principles

The date of initial consolidation is the date on which, from an economic point of view, the conditions established under IFRSs for the existence of a subsidiary, an associate or a joint venture are met for the first time. Similarly, the deconsolidation date is determined by the absence of control, joint control or material influence.

Subsidiaries

Subsidiaries are companies that are controlled by BLG LOGISTICS.

BLG LOGISTICS controls an investee if there is an exposure to risk as a result of a right to variable returns from the investment and the power over the investment can be used to affect the amount of the returns.

All major subsidiaries are consolidated in the consolidated financial statements.

Subsidiaries are generally fully consolidated in accordance with IFRS 10. Deviating from this, certain companies of BLG LOGISTICS are not consolidated for reasons of materiality (see note 38).

When a subsidiary is initially consolidated, the acquisition value of the equity investment is compared with the Group’s share in the equity of the respective company that is remeasured in accordance with IFRS 3. In this process, assets and liabilities are recognized at their fair values and previously unrecognized intangible assets that may be recognized under IFRSs and contingent liabilities are recognized at fair value in assets or liabilities. In subsequent consolidations, the hidden assets and liabilities disclosed in this way are carried forward, amortized or reversed in the same way that the corresponding assets and liabilities are treated. Any excess of the acquisition cost of the equity investment over the proportionate net fair value of the identifiable assets, liabilities and contingent liabilities (positive difference) resulting from initial consolidation is recognized as goodwill and is subject to annual impairment testing (see note 12).

If any negative difference remains, the identification and measurement of assets, liabilities and contingent liabilities and the deriviation of the purchase price are reassessed. Any negative goodwill remaining after this reassessment is recognized immediately through profit or loss.

Companies accounted for using the equity method

The companies accounted for using the equity method include investments in joint ventures and associates.

Joint ventures exist when there are arrangements in which BLG LOGISTICS exercises joint control with at least one partner company, whereby the Group has rights to its net assets instead of rights to the assets and obligations from the liabilities of the arrangement. This applies in particular to the CONTAINER Division, which is accounted for using the equity method via the stake in the operational management company EUROGATE GmbH & Co. KGaA, KG, Bremen.

Associates are companies in which BLG LOGISTICS has material influence over the financial and operational policies, but does not exercise control or joint management.

The carrying amounts of the equity investments accounted for using the equity method are increased or decreased annually to recognize BLG LOGISTICS’ share of the profit or loss of the investee arising from changes in the equity of the joint venture or the associate. The principles applicable to full consolidation are applied mutatis mutandis to the allocation and adjustment of the carrying amount of the investee to reflect the excess of the purchase price of the investment over the pro rata share of the company’s equity.

Non-controlling interests

Non-controlling interests include minority interests in the equity of fully consolidated subsidiaries.

Non-controlling interests in acquired companies are recognized based on the proportionate share of the net assets of the acquired company.

Transactions with non-controlling interests are treated as transactions with equity owners of BLG LOGISTICS. Any difference between the consideration paid and the relevant share of the carrying amount of the net assets of the subsidiary arising from the purchase is recognized in equity. Gains and losses which are realized on the disposal of non-controlling interests are also recognized in equity.

Other equity investments

Other equity investments are stated at fair value in accordance with IFRS 9. If there is no active market and the fair value cannot be determined reliably using measurement methods, cost is an appropriate approximation of fair value.

Loss of control

If BLG LOGISTICS ceases to have control or material influence over an entity, the remaining interest is remeasured to fair value and the resulting difference is recognized in profit or loss. The fair value is the fair value determined on initial recognition of an associate, joint venture or financial asset.

In addition, all amounts reported in other comprehensive income in respect of that entity are accounted for as would be required if the parent company had sold the corresponding assets and liabilities directly. This means that a profit or loss previously recognized in other comprehensive income is reclassified from equity to comprehensive income.

If the shareholding in an associate has decreased, but the entity remains an associate, only the pro rata share of net profit or loss previously recognized in other comprehensive income is reclassified to profit or loss.

Elimination of transactions as part of consolidation

The effects of intragroup transactions are eliminated:

Receivables and payables between the consolidated companies are netted against each other, intragroup profits and losses on non-current assets and inventories are eliminated. Intragroup income is offset against the corresponding expenses. Taxes are deferred for temporary differences from consolidation as required by IAS 12.

The consolidation method is unchanged from the previous year.

40. Changes in group of consolidated companies

Business combinations

Business combinations under IFRS 3 exist when an entity acquires control over one or more business operations through the acquisition of shares or other events. Business operations within the meaning of IFRS 3 are integrated sets of activities and assets that are managed with the aim of generating income or achieving cost reductions or other economic benefits for the shareholders or other owners, interests, or stakeholders. The establishment of joint ventures and the combination of entities under common control do not represent business combinations within the meaning of IFRS 3.

In a gradual business combination, the previously acquired equity share of the entity is recalculated at the fair value at the time of acquisition. The resulting profit or loss is recorded in the income statement.

There were no business combinations in the reporting year.

Other changes in group of consolidated companies

AUTOMOBILE Division

Fully consolidated companies (subsidiaries)

In the AUTOMOBILE Division, BLG Automobile Logistics Italia S.r.l. i. L., Gioia Tauro, Italy, was deconsolidated in the reporting year following entry into liquidation. The associated deconsolidation resulted in income of EUR 17,000, which is reported under other operating income in the non-operating result.

As part of an internal Group restructuring, BLG WindEnergy Logistics GmbH & Co. KG, Bremerhaven, was absorbed into BLG AutoTerminal Bremerhaven GmbH & Co. KG, Bremerhaven, and was thus no longer included in the group of consolidated companies.

CONTRACT Division

Fully consolidated companies (subsidiaries)

In the CONTRACT Division, BLG Handelslogistik GmbH & Co. KG, Bremen, increased its shareholding in BLG Sports & Fashion Logistics GmbH, Hörsel, by 49 percent to 100 percent in the reporting year. This does not constitute the acquisition of non-controlling interests, as a forward purchase of the remaining shares was already agreed at the time of acquisition of the 51 percent equity interest in 2015.

Under a purchase agreement dated November 24, 2020, BLG Industrielogistik GmbH & Co. KG, Bremen, sold its shares in BLG Automotive Logistics of South America Ltda., São Paulo, Brazil. The associated deconsolidation resulted in expenses of EUR 5,000, which are reported under other operating expenses in the non-operating result.

Companies accounted for using the equity method

Joint ventures

As part of the sale of BLG Automotive Logistics of South America Ltda., São Paulo, Brazil, the shares in BMS Logistica Ltda., São Paulo, Brazil, were also divested. No income was generated from the deconsolidation.

Non-consolidated structured companies

BLG Unterstützungskasse GmbH, Bremen (shareholding: 100 percent)

BLG KG owns 100 percent of the shares in BLG Unterstützungskasse GmbH, Bremen. The purpose of the company is to provide ongoing support to former employees and former Board of Management members of BLG and their survivors. The necessary funds are provided to the company by the Free Hanseatic City of Bremen (municipality), as it has accepted the obligations arising from the pension entitlements. An exposure to risk as a result of or a claim to variable returns from the investment and the opportunity to influence the operations of BLG Unterstützungskasse GmbH, Bremen, are therefore contractually precluded. Accordingly, control does not exist, despite the ownership of 100 percent of the voting shares, with the result that the company is not consolidated.

The carrying amount of the shares is EUR 30,000 (previous year: EUR 30,000) and corresponds to the fair value. They are reported in other financial assets under other financial investments. The maximum exposure to loss is the carrying amount of the investment.

Currency translation

In accordance with IAS 21, the financial statements of consolidated companies prepared in foreign currencies are translated into euros in keeping with the concept of functional currencies. The functional currency of all foreign companies of the BLG Group is the local currency, as the companies conduct their business independently in financial, economic and organizational terms. Accordingly, the assets and liabilities are translated at the exchange rate on the reporting date, while expenses and income are in principle translated at the average annual exchange rate. The resulting currency translation differences are recognized directly in equity.

As of December 31, 2020, currency translation differences of EUR 10,895,000 (previous year: EUR 6,596,000) were recognized in equity (see also the Statement of changes in equity). Currency translation is based on the exchange rates shown in the table:

In the separate financial statements of the consolidated companies presented in local currency, receivables and payables are translated at the end of the reporting period in accordance with IAS 21. Currency translation differences are recognized through profit or loss as other operating income or expenses. Non-monetary assets that are measured on the basis of cost are measured at the exchange rate on the day of the transaction.

43. Related party disclosures

Identification of related parties

In accordance with IAS 24, relationships with related parties that control BLG LOGISTICS or are controlled by it or on which BLG LOGISTICS can exercise significant influence must be disclosed.

Related parties include in particular majority shareholders, subsidiaries, provided that they are not already included as consolidated companies in the consolidated financial statements, joint ventures, associates or intermediary companies.

In addition, the Board of Management and the Supervisory Board of BLG AG and the first tier of management are also related parties as defined in IAS 24; this also includes family members of the aforementioned groups. A list of the composition of the Board of Management and the Supervisory Board as well as further information about these groups is provided in note 45. There were no reportable transactions between members of the Board of Management, the Supervisory Board, the first tier of management and their family members and BLG LOGISTICS during the 2020 financial year.

Material transactions with shareholders: Relationships with the Free Hanseatic City of Bremen (municipality)

As of December 31, 2020, the Free Hanseatic City of Bremen (municipality) was the majority shareholder of BLG AG with a 50.42 percent (previous year: 50.42 percent) share of the subscribed capital. The Free Hanseatic City of Bremen (municipality) received a dividend as a result of the resolution on the appropriation of net retained profits for 2019.

In accordance with Article 148 of the Constitution of the Free Hanseatic City of Bremen, the Bremen Senate is both the state government and statutory body of the municipality of Bremen. Due to the fact that the statutory bodies of the Free Hanseatic City of Bremen (municipality) and the Free Hanseatic City of Bremen (state) are identical, this body is consequently considered a related party or ultimate controlling party within the meaning of IAS 24. The Free Hanseatic City of Bremen (municipality) has provided BLG KG with heritable building rights with a remaining term of up to 28 years for the land used by the company and its subsidiaries. As of December 31, 2020, lease liabilities for heritable building rights existed in the amount of EUR 303.0 million (previous year: EUR 298.2 million) toward the Free Hanseatic City of Bremen (municipality). The BLG Group paid a total of EUR 3.8 million (previous year: EUR 14.9 million) for ground rent in 2020. In addition, ground rent of EUR 11.1 million (previous year: 0.0 million) was deferred in the reporting year. The ground rent is subject to regular increases on the basis of the consumer price index every five years. The increase planned for the reporting period was deferred to support Bremen’s port and logistics industry in connection with the coronavirus crisis in 2020. BLG LOGISTICS additionally has the possibility to participate in the cash pooling facility of the Free Hanseatic City of Bremen in an amount of up to EUR 50 million, as well as to take out a non-current loan of EUR 50 million via a state guarantee through Bremer Aufbau-Bank together with a partner bank.

Transactions with affiliated companies of the Free Hanseatic City of Bremen (municipality) and (state)

Individual companies of BLG LOGISTICS maintain ongoing business relationships with affiliated companies of the Free Hanseatic City of Bremen (municipality).

BLG KG took out several loans from BLG Unterstützungskasse GmbH, Bremen. The loan liabilities amounted to EUR 25,600,000 as of December 31, 2020 (previous year: EUR 25,600,000). In the reporting year, no loan liabilities were repaid and no new loan liabilities were taken out. Interest of EUR 505,000 (previous year: EUR 519,000) was paid. In addition, BLG Unterstützungskasse GmbH has been included in the central cash management of BLG KG since September 1, 2012. The interest on the funds provided is based on unchanged conditions. At the end of the reporting period, receivables from cash management were EUR 7,429,000 (previous year: liabilities of EUR 1,619,000).

Relationships with non-consolidated affiliated companies, joint ventures and associates

Transactions by the Group companies with joint ventures, associates and non-consolidated affiliated companies all arose in the ordinary course of business. Services were provided to these related parties on the basis of prices and conditions also applicable to third parties. The receivables include lease receivables of EUR 183,835,000 (previous year: EUR 181,720,000). The outstanding balances, with the exception of non-current lease receivables of EUR 174,320,000 (previous year: EUR 178,071,000), are unsecured and due in the short term. The following table shows the extent of the business relationships of the joint ventures and associates:

Loss allowances of EUR 36,000 (previous year: EUR 10,000) were recognized for expected credit losses on receivables from joint ventures and associates using the simplified approach. In addition, receivables from joint ventures of EUR 0 (previous year: EUR 17,000) were derecognized in the reporting year and loans to joint ventures and associates in the amount of EUR 1,410,000 (previous year: EUR 90,000) were written down. Receivables from non-consolidated affiliated companies were, as in the previous year, neither impaired nor derecognized.