Reporting 2021

Fundamental information about the company

BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877-, Bremen (BLG AG), a listed company, is the sole personally liable general partner of BLG LOGISTICS GROUP AG & CO. KG, Bremen (BLG KG). In this function, the company has assumed the management of BLG KG. BLG AG maintains a branch office in Bremerhaven.

BLG AG does not hold any share capital in BLG KG and is also not entitled to participate in the company’s profits. All limited partnership shares of BLG KG are held by the Free Hanseatic City of Bremen (municipality). BLG AG receives remuneration for the liability it has assumed and for its company management activities. The business of BLG KG is managed by the Board of Management of BLG AG as a body of the general partner. The Board of Management is fully accountable for managing the business in accordance with Section 76 (1) of the German Stock Corporation Act (AktG) and is not subject to instructions from the shareholders.

For the liability it has assumed, BLG AG receives remuneration from BLG KG in the amount of 5 percent of the equity reported in the annual financial statements for the respective previous year in accordance with Sections 266 ff. of the German Commercial Code (HGB). This liability remuneration must be paid regardless of BLG KG’s net income for the year. For its management activities, BLG AG receives remuneration in the amount of 5 percent of the net income of BLG KG prior to deduction of this remuneration. The remuneration amounts to a minimum of EUR 256,000 and a maximum of EUR 2,500,000. In addition, expenses directly incurred by BLG AG in connection with management activities at BLG KG are reimbursed by the latter. Further information on transactions with affiliated companies and related parties can be found in the notes to the financial statements.

Non-financial report

BLG LOGISTICS has prepared a non-financial Group statement in accordance with Section 315b HGB since the 2017 financial year. This statement is integrated into the sustainability report as a separate non-financial report, which can be downloaded from reporting.blg-logistics.com.

Report on economic position

Report on financial position, financial performance and cash flows

In accordance with its corporate function, BLG AG lent all cash funds available to it to BLG KG for proportionate financing of the working capital necessary for the provision of its services. This essentially takes place via the central cash management of BLG KG, in which BLG AG is included. The interest on the funds provided is based on unchanged conditions. As a result of higher balances in cash management, interest income from this increased by EUR 59,000 compared with the previous year.

In the reporting year, BLG AG received liability remuneration (EUR 1,026,000; previous year: EUR 1,047,000) and remuneration for management activities (EUR 256,000; previous year: EUR 256,000) from BLG KG. Remuneration accruing to the members of the Board of Management and Supervisory Board are reimbursed in full by BLG KG.

Earnings per share of EUR 0.30

The earnings per share are calculated by dividing the net income for the year by the average number of shares outstanding during the financial year. Unchanged from the previous year, there were 3,840,000 registered shares outstanding during the 2021 financial year.

In the outlook as of December 31, 2020 and in the interim report as of June 30, 2021, earnings (EBT) for the financial year 2021 were forecast to be at a similar level to or slightly lower than in the financial year 2020. Earnings before taxes in the 2021 financial year were ultimately up slightly year on year by EUR 45,000 and were thus higher than projected. This is explained primarily by the fact that – contrary to assumptions – it will once again not be possible to hold a physical Annual General Meeting in 2022 due to the coronavirus pandemic situation, and that for a virtual Annual General Meeting lower costs are incurred that had to be provisioned for.

Due to accumulated losses brought forward during the coronavirus crisis and low net investment income at BLG KG, the remuneration of the Board of Management of BLG KG was again at the minimum level of remuneration (EUR 256,000; previous year: EUR 256,000).

New refinancing for pensions

In the previous year, the pension commitments under individual contracts were adjusted. In order to enable insolvency-protected reinsurance cover or refinancing for the higher obligations resulting from the adjustment while continuing the previous reinsurance policies, a two-tier model with additional premium deposits to cover the outstanding premium payments for the reinsurance was introduced (see also disclosures in the Notes). For this reason, net pension obligations decreased significantly compared with the previous year, resulting in recognition of an excess of plan assets over post-employment benefit liability in the German GAAP financial statements.

New remuneration system

Following preparatory work in 2020, the Supervisory Board adopted a new remuneration system for the members of the Board of Management of BLG AG on April 15, 2021, which complies with the requirements of the Second Shareholders’ Rights Directive (Gesetz zur Umsetzung der zweiten Aktionärsrechterichtlinie – ARUG II). At the proposal of the Supervisory Board, the Annual General Meeting of BLG AG on June 2, 2021 approved the remuneration system for the members of the company’s Board of Management set out below by a large majority.

The new remuneration system for the Board of Management was introduced retroactively as of January 1, 2021. The previous system was thus also terminated with retroactive effect from December 31, 2020 and the variable compensation components promised under it will accordingly no longer be paid out.

The changeover to the new Board of Management remuneration system in accordance with the requirements of ARUG II with short-term and long-term target components will lead to a significant increase in provisions, as the transfers for the long-term remuneration components will no longer be made in installments over time, but will take full effect upon conclusion of the target agreement. In the reporting year, EUR 2,799,000 more was recognized as provisions for variable remuneration of the Board of Management and termination agreements compared with the previous year. Furthermore, the relevant key performance indicators in the previous year meant that no variable bonus was paid for the 2020 financial year. Moreover, the Board of Management had voluntarily waived payment of a bonus for the 2020 financial year early on. Accordingly, wages and salaries within personnel expenses for the 2021 financial year and the offsetting reimbursement by BLG KG in other operating income also increased.

There were no other significant changes in the financial position, financial performance and cash flows compared with the previous year.

The BLG share

Turbulent year on the stock exchanges

2021 was once again dominated by the coronavirus pandemic. The year on the stock markets was also correspondingly turbulent. At the beginning of the year, public life was once again shut down with corresponding contact restrictions. The growing inoculation rate raised hopes, both for public life and for the economy, of soon returning to pre-pandemic normality. In this mood of optimism, the DAX reached one record high after another. But time and again, there were also significant dampers. The shortage of raw materials in industry and supply bottlenecks also in the retail sector affected the economy, inflation led to expectations of a more restrictive monetary policy by central banks and the new Omicron wave caused disruptions on the markets. Despite inflation, the European Central Bank maintained its low interest rate policy and many private investors discovered the opportunities of investing on the stock market in 2021.

In this environment, the German economy grew in 2021 by around 2.8 percent following the decline in the previous year. The DAX grew by around 15.8 percent and closed the year with 15,884 points.

Performance of BLG share relative to benchmarks

Performance of BLG share relative to benchmarks


BLG share1 falls 11.6 percent

After opening the 2021 financial year at EUR 12.37, the BLG share initially moved sideways in line with the major German indices. The highest closing price of the year was EUR 12.87 on March 10, 2021. In the second half of the 2021 financial year, the share price level fell and remained consistently below the opening price. The lowest price of EUR 10.83 was measured on August 20, 2021.

Due to the share’s low trading volume, even a small number of transactions can affect the price. The BLG share price fell by a total of 11.6 percent in the reporting year and was thus considerably below the general market level (DAX + around 16 percent, MDAX + around 14 percent, SDAX + around 11 percent). On the basis of the annual closing price of EUR 10.93 on December 30, 2021, market capitalization of the BLG share stood at EUR 42.0 million.

1 All market prices of BLG AG in this management report indicated as average on the listed stock exchanges

BLG share reference data  
ISIN DE0005261606
WKN 526160
Ticker symbol BLH
Share capital EUR 9,984,000
Authorized capital 3,840,000 shares
Class No-par value registered shares
Listed in Berlin, Hamburg, Frankfurt

Dividend of EUR 0.30

Primarily due to the lower remuneration year on year (minimum remuneration amounting to EUR 256,000) from BLG KG and holding the Annual General Meeting virtually for the second time, the annual financial statements of BLG AG showed slightly improved net retained profits in accordance with HGB of EUR 1,152,000 compared with the previous year (EUR 1,117,000). According to German law, net retained profits form the basis for the dividend distribution.

For the 2021 financial year, the Board of Management and the Supervisory Board will propose to the Annual General Meeting on June 1, 2022 that a dividend of EUR 0.30 per share (previous year: statutory minimum dividend of EUR 0.11 per share) be distributed on the dividend-eligible share capital of EUR 9,984,000.00, corresponding to 3,840,000 shares (registered shares). This represents a distribution payout of EUR 1,152,000 and a distribution rate of 99.8 percent. Based on the year-end share price of EUR 10.93, this results in a dividend yield of 2.7 percent for the 2021 financial year.

    2021 2020 2019 2018 2017
Earnings per share EUR 0.30 0.29 0.38 0.66 0.60
Dividend per share EUR 0.30 0.11 0.40 0.45 0.40
Dividend Percent 11.5 4.2 15.4 17.3 15.4
Dividend yield Percent 2.7 0.9 3.1 3.8 2.8
Share price at year-end EUR 10.93 12.33 12.97 11.87 14.49
High EUR 12.87 14.47 14.10 15.10 19.27
Low EUR 10.83 11.70 11.93 11.13 12.87
Distribution amount EUR thousand 1,152 422 1,536 1,728 1,536
Distribution ratio Percent 99.8 37.8 105.6 68.0 66.3
Price/earnings ratio   36.4 42.4 34.3 17.9 24.0
Market capitalization EUR million 42.0 47.3 49.8 45.6 55.6

We will continue in the future to pursue the goal of an earnings-related and consistent dividend policy. Accordingly, we will allow our shareholders to participate appropriately in earnings in line with our business performance.

Shareholder structure of BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877-
as of December 31, 2021

Shareholder structure of BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877- as of December 31, 2021

The share capital of BLG AG amounted to EUR 9,984,000.00 and was divided into 3,840,000 no-par value registered shares with voting rights (registered shares). Transfer of the shares requires the approval of the company in accordance with Section 5 of the Articles of Incorporation.

As of December 31, 2021, the Free Hanseatic City of Bremen (municipality) was the main shareholder of BLG AG with a share of 50.4 percent. Other large institutional investors are Finanzholding der Sparkasse in Bremen and Panta Re AG, Bremen, each with a share of 12.6 percent, and the Waldemar Koch Foundation, Bremen, with a share of 5.9 percent. 18.5 percent of shares are in free float, corresponding to around 710,000 shares. 1.1 percent of the free float is held by institutional investors; the remaining 17.4 percent is held by private investors.

Corporate governance statement

In accordance with German statutory requirements, the auditor only audited the existence of disclosures on corporate governance within the meaning of Section 289 HGB. To avoid duplication, these are reported elsewhere in the financial report together with the corporate governance statement pursuant to Section 289f HGB; see Chapter 04 “Further Information”.

Takeover-related disclosures in accordance with Section 289a (1) HGB

Takeover-related disclosures are also reported in the corporate governance statement; see Chapter 04 “Further Information”.

Remuneration report and remuneration system

The applicable remuneration system of the Board of Management pursuant to Section 87a (1) and (2) sentence 1 of the German Stock Corporation Act (AktG), which was approved by the Annual General Meeting on June 2, 2021, and the system for the remuneration of the members of the Supervisory Board (Section 113 (3) AktG), which was also approved by the Annual General Meeting on June 2, 2021, are publicly available under www.blg-logistics.com/ir (under Corporate Governance). The remuneration report, including the auditor’s audit opinion pursuant to Section 162 AktG, is made publicly available in the download area at the same Internet address.

Risk report

Opportunity and risk management

Corporate activity is accompanied by opportunities and risks. Responsible handling of potential risks is a key element of sound corporate governance for BLG AG. At the same time it is important to identify and take advantage of opportunities. Our opportunities and risks policy aims to increase the company’s value without taking any inappropriately high risks.

The Board of Management of BLG AG assumes responsibility for formulating risk policy principles and earnings-oriented management of overall risk. The Board of Management regularly informs the Supervisory Board of decisions holding potential risk in connection with the dutiful discharge of its responsibilities under company law.

Potential risks are identified at an early stage within the framework of continuous risk controlling and a risk management and reporting system geared to the corporate structure under company law. In this regard, we give special consideration to risks to the company’s continued existence as a going concern arising from strategic decisions. Currently no going concern risks can be identified in the context of an overall analysis. Our financial base in tandem with expanding the range of services in all strategic divisions of the Group continues to offer good opportunities for BLG AG’s stable corporate development.

Description of the main features of the internal control and risk management system with regard to the accounting process in accordance with Section 289 (4) HGB

Definition and elements of the internal control and risk management system

BLG AG’s principles of risk management are documented in a policy guideline. The regulations and necessary documentation as well as reporting cycles defined there are supported by standard software to ensure a uniform process standard.

The internal control system of BLG LOGISTICS with regard to the accounting process includes all principles, procedures and measures to ensure the correct and legally compliant recognition, measurement and presentation of business transactions in the financial statements. The aim is to avoid any material misstatements in financial accounting and external reporting.

Since the internal control system is an integral component of the risk management system, they are presented in summarized form.

The internal monitoring and management systems are components of the internal control system. The Board of Management of BLG AG has assigned responsibility for the internal management system in particular to the Financial Controlling, Finance and Accounting departments (Financial Services).

The internal monitoring system comprises controls that are both integrated into and independent of the financial reporting process. The controls integrated into the process particularly include the dual control principle and IT-supported controls, as well as the involvement of internal departments such as Legal or Tax departments and of external experts.

Controls that are independent of the process are carried out by the Internal Audit department, the Quality Management department and the Supervisory Board, in the latter case principally through its Audit Committee. The Audit Committee concerns itself in particular with the accounting for the company and the Group, including reporting. The activities of the Audit Committee also focus on the risk situation, monitoring the further development of risk management and on compliance issues. This also includes the effectiveness of the internal control system.

Process-independent audit activities are also performed by external auditing bodies such as the auditing company or the tax auditor. With regard to the financial reporting process, the audit of the annual and consolidated financial statements and the financial statements pursuant to Section 315e HGB by the auditing company forms the main component of the process-independent review.

Accounting-related risks

Accounting-related risks can arise, for example, through the conclusion of unusual or complex business dealings or the establishment of business combinations as well as the processing of non-routine transactions.

Potential risks also result from discretionary scope in the recognition and measurement of assets and liabilities, or from the effect of estimates on the annual financial statements, such as for provisions or contingent liabilities.

Accounting process and measures to ensure its correctness

Business transactions are generally accounted for in the single-entity financial statements of the subsidiaries of BLG AG using the standard software SAP R/3.

BLG AG has issued accounting guidelines for financial reporting in accordance with the International Financial Reporting Standards (IFRSs) to ensure consistent recognition and measurement. In addition to general principles, these guidelines cover in particular accounting principles and policies and regulations on the statement of profit or loss and other comprehensive income, consolidation principles and special topics. To ensure the implementation of consistent, standardized and efficient accounting and financial reporting, guidelines for uniform Group-wide accounting have also been drawn up. In addition, a code of practice for the notes and the management report has also been defined that aims to ensure consistent reconcilability of the various sets of financial statements.

Impairment tests for the Group’s cash-generating units are carried out centrally. This ensures that consistent and standardized measurement criteria are used. The same applies to the specification of the parameters to be used for the measurement of pension provisions and other provisions based on expert opinions.

When preparing the debt consolidation, internal balances are regularly reconciled in order to clarify and remedy any differences in good time.

Special software is used for tax accounting. Current and deferred taxes are calculated at the level of the individual subsidiaries and the recoverability of the deferred tax assets is tested. Current and deferred taxes to be recognized are thus calculated at the Group level in the statement of financial position and in the statement of profit or loss and other comprehensive income taking into account the effects of consolidation.

The audited financial statements in accordance with Section 315e HGB are converted into the ESEF-compliant format for submission to the German Federal Gazette (Bundesanzeiger) using dedicated software, and the necessary checks are carried out and documented in accordance with a published ESEF technical concept based on the dual control principle.

Qualifying notes

The internal control and risk management system ensures the correctness of the accounting process and compliance with the relevant legal requirements.

Discretionary decisions, controls containing errors or malicious acts may, however, limit the effectiveness of the internal control and risk management system, with the effect that the systems established cannot guarantee with absolute certainty that the risks will be identified and managed.

Risks and opportunities of future development

Risks for the company result from its position as general partner of BLG KG, Bremen. There is no identifiable risk of being subject to claims. A risk but also an opportunity arises from the development of earnings of BLG KG, including its equity investments, on which the amount of the company’s remuneration for management activities depends. Market, macroeconomic, political and other risks (e.g. high competitive pressure, economic development, supply chain disruption, ongoing effects of the coronavirus crisis) can have a direct impact. In this regard, we also refer to the group management report prepared by BLG AG and BLG KG as part of their jointly prepared consolidated financial statements for the 2021 financial year. A credit risk results from the receivables from loans and cash management with respect to BLG KG. There is currently no identifiable credit risk.

Due to the coronavirus crisis, the remuneration for the Board of Management (remuneration for services) fell in the previous year to the minimum level of EUR 256,000, with a corresponding negative impact on the income of BLG AG. Due to accumulated losses brought forward and lower investment income from subsidiaries, the minimum level remained in place in the 2021 financial year. For 2022, earnings risks for BLG KG are again expected due to the war in Ukraine and its effects on the domestic and global economy, as well as due to the sharp rise in energy prices (see also Outlook). Further isolated risks for BLG AG are currently not apparent, as its business activities essentially consist of the liability and management function for BLG KG. Based on what is known at present, climate change and the related legal restraints as well as the ongoing phase of low interest rates similarly have no isolated impact on the risk assessment for BLG AG.

Outlook

Report on forecasts and other statements regarding expected development

Besides the Omicron wave of the coronavirus pandemic that was prevalent at the beginning of the year, the other central issue now is the war between Russia and Ukraine. This has given rise to a renewed high level of insecurity concerning planning for the 2022 financial year. It is still too early to accurately measure the impact this will have on the world economy, global trade flows and BLG LOGISTICS’ customers, so that it is again not possible to make a reliable forecast for the current year.

Based on what we know to date, BLG AG forecasts that due to the war between Russia and Ukraine, a shortage of components for industry, delivery disruptions and turbulence in global supply chains as well as significantly higher energy prices will again pose challenges for BLG KG’s business development and earnings in the 2022 financial year. Exports to and imports from the affected regions are also expected to decline or even stop completely. As with the management of the coronavirus crisis, BLG LOGISTICS has set up a crisis committee to continuously assess the situation from a social and financial perspective and initiate the necessary steps.

Against this backdrop, it is to be expected that there will be no material change in BLG AG’s financial performance because, besides the liability remuneration, the remuneration for the Board of Management is likely to remain at a similar level (minimum remuneration). In addition, it is still not certain whether it will be necessary to provision for higher expenses in the coming year for an in-person Annual General Meeting compared to a virtual Annual General Meeting. BLG AG’s earnings (EBT) for 2022 will therefore likely be at a similar level to 2021 or slightly lower. With respect to the dividend, we will continue in the future to allow our shareholders to participate appropriately in earnings in line with our business performance.

Apart from historical financial information, this annual report contains forward-looking statements on the future development of the business and the operating performance of BLG AG, which are based on estimates, forecasts and expectations, and can be identified by wording such as “assume,” “expect” and similar terms. These statements may, of course, vary from actual future events or developments. We are not under any obligation to update these forward-looking statements with new information.

Final statement of the Board of Management in accordance with Section 312 (3) of the German Stock Corporation Act

BLG AG received appropriate consideration for each legal transaction indicated in the report on relationships with affiliated companies. No other measures were taken or omitted. This assessment is based on the circumstances known to us at the time the reportable transactions were conducted.

Bremen, March 29, 2022

BREMER LAGERHAUS-GESELLSCHAFT
-Aktiengesellschaft von 1877-

THE BOARD OF MANAGEMENT