35. Equity

Changes in the individual components of equity for the reporting period and the previous year are shown in the statements of changes in equity.

Subscribed capital

As of the balance sheet date, HHLA’s share capital consists of two different share classes: Class A shares and Class S shares. Subscribed capital totals € 74,405 thousand (31 December 2019: € 72,753 thousand), divided into 71,700,215 Class A shares (31 December 2019: 70,048,834 Class A shares) and 2,704,500 Class S shares; each no-par-value share represents € 1.00 of the share capital on paper. The share capital has been fully paid in.

In the course of the stock flotation on 2 November 2007, 22,000,000 Class A shares were placed on the market. This corresponds to a free float of approx. 30 % of the company’s share capital. As of the balance sheet date, the Free and Hanseatic City of Hamburg holds 70.11 % of the voting rights through the company HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH, Hamburg (31 December 2019: 69.58 %).

In the financial year, a capital increase was carried out in connection with the dividend distribution to holders of Class A shares. A resolution was passed at the Annual General Meeting held on 20 August 2020 to distribute a portion of the distributable profit for the 2019 financial year through the payment of a dividend to holders of common shares in the amount of € 0.70 per Class A share and € 2.10 per Class S share. On the basis of a subscription offer to all holders of Class A shares, Class A shareholders were granted the right to assert the dividend entitlements arising from the resolution on the appropriation of net income on a pro rata basis in the amount of € 0.49 (pro rata dividend entitlement) as a contribution in kind for the granting of new Class A shares from a capital increase from Authorised Capital I (Section 3 [4] of the articles of association) (share dividend). The remaining portion of the dividend in the amount of € 0.21 was paid in cash – irrespective of the exercise of the option right by Class A shareholders. No corresponding option right was granted to holders of Class S shares.

The option right in favour of the share dividend was exercised for a total of 51,357,949 Class A shares. On the basis of the subscription ratio, the subscription price and further regulations governing the share dividend, a total of 1,651,381 new Class A shares, each representing € 1.00 of the company’s share capital, were issued from Authorised Capital I. The share capital of Hamburger Hafen und Logistik Aktiengesellschaft (HHLA) now amounts to 74,404,715 shares: 71,700,215 Class A shares and an unchanged 2,704,500 Class S shares. For further information, please refer to Note 21. The remaining undistributed profit was carried forward to new account.

In September 2020, shareholder dividend entitlements in the amount of € 25,165 thousand were thus asserted from Authorised Capital I. Following deduction of the incurred transaction costs recognised directly in equity, capital reserves rose by € 23,015 thousand to € 164,599 thousand.

Authorised capital

As of the balance sheet date, the company has Authorised Capital I for the issue of Class A shares and Authorised Capital II for the issue of Class S shares.

Authorised Capital I

Using Authorised Capital I (cf. Article 3 [4] of the articles of association) and subject to the approval of the Supervisory Board, the Executive Board is still authorised – following the partial utilisation of Authorised Capital I in connection with the scrip dividend – to increase the company’s share capital until 20 June 2022 by up to € 33,373,036.00 by issuing up to 33,373,036 new registered Class A shares for subscription in cash and/or in kind in one or more stages. The statutory subscription rights of holders of Class S shares shall be excluded. The Executive Board is additionally authorised, subject to the approval of the Supervisory Board, to exclude the statutory subscription rights of holders of Class A shares in those cases covered in more detail in the resolution, such as issue for contributions in kind. Furthermore, the issue of new Class A shares while excluding the subscription rights of Class A shareholders is limited to a total of 20 % of the share capital attributable to Class A shares. All Class A shares issued or that could be issued under other authorisations with the exclusion of subscription rights count towards this 20 % limit.

Authorised Capital II

Using Authorised Capital II (cf. Article 3 [5] of the articles of association), the Executive Board is authorised, subject to the approval of the Supervisory Board, to increase the company’s share capital until 20 June 2022 by up to € 1,352,250.00 by issuing up to 1,352,250 new registered Class S shares for subscription in cash and/or in kind in one or more stages. The statutory subscription rights of holders of Class A shares shall be excluded. The Executive Board is authorised, with the approval of the Supervisory Board, to exclude the statutory subscription rights of holders of Class S shares as is necessary to equalise fractional amounts.

Other authorisations

The Annual General Meeting of HHLA held on 18 June 2019 authorised the Executive Board, subject to the approval of the Supervisory Board, to issue on one or more occasions up to 17 June 2024 bearer or registered bonds with warrants and/or convertible bonds or combinations of these instruments (hereinafter known collectively as “debenture bonds”) with a total nominal value of up to € 300,000,000.00 and to grant the bearers or creditors of the debenture bonds warrants or conversion rights for up to 10,000,000 new registered Class A shares in the company, each representing € 1.00 of the share capital, subject to the detailed terms of the bonds with warrants and/or convertible bonds. The respective terms may also provide for a warrant or conversion obligation as well as an issuer put option to provide Class A shares in the company as of the end of the term or at an earlier date. The detailed terms of the resolution state that shareholders’ subscription rights may also be excluded when the debenture bonds are issued. As per Article 3 (6) of the articles of association, conditional capital of € 10,000,000.00 is available to service warrants and conversion rights and obligations as well as any tender rights. This is made up of 10,000,000 new registered Class A shares.

The Annual General Meeting held on 16 June 2016 additionally authorised the company’s Executive Board to purchase Class A treasury shares up to a maximum of 10 % of the portion of the company’s share capital accounted for by Class A shares at the time of the resolution or, if lower, at the time the authorisation is exercised. In addition to being sold on the stock exchange or offered to all shareholders in line with their shareholdings, the Class A treasury shares acquired under this authorisation or previous authorisations may – subject to the approval of the Supervisory Board – be used in the cases stipulated by the resolution excluding other shareholders’ subscription rights and/or be redeemed either in whole or in part without the need for an additional resolution by the Annual General Meeting. This authorisation expires on 15 June 2021. The authorisation may be used for any legally permissible purpose, except for trading in treasury shares.

HHLA does not currently hold any treasury shares. There are no plans to buy back shares.

Capital reserve

The Group’s capital reserve includes premiums from share issues and the associated costs of issue, which are deducted from the capital reserve. It also comprises premiums from capital increases at subsidiaries with non-controlling interests, premiums from a reserve increase from an employee stock purchase plan and premiums from a capital increase in connection with a dividend distribution for Class A shares for contributions in kind.

Retained earnings

Retained earnings include net profits from prior years for companies included in the Consolidated Financial Statements, insofar as these were not distributed as dividends. This item also encompasses differences between HGB and IFRS as of 1 January 2006 (the transitional date).

Other comprehensive income

In accordance with the currently applicable version of IAS 19 (revised 2011), the HHLA Group’s other comprehensive income includes all actuarial gains and losses from defined benefit pension plans. This item additionally comprises changes in the fair value of hedging instruments (cash flow hedges) and the corresponding tax effects.

The reserve for translation differences enables the recognition of differences arising on the translation of financial statements for foreign subsidiaries.

Non-controlling interests

Non-controlling interests comprise outside interests in the Group companies’ consolidated equity.

As per the provisions of IAS 32, non-controlling interests are reduced mainly by the reclassification of a minority shareholder’s future estimated entitlements to financial settlements as financial liabilities for the term of the profit and loss transfer agreement, see Note 6 and Note 38. This was chiefly offset by the inclusion of current total comprehensive income.

Notes on capital management

Capital management at the HHLA Group aims to ensure the Group’s long-term financial stability and flexibility in order to safeguard the Group’s growth and enable its shareholders to reasonably participate in its success. Balance sheet equity is the primary benchmark in this regard. The key value-oriented performance indicator at the HHLA Group is the return on capital employed (ROCE). The equity ratio is also monitored in order to maintain a stable capital structure.

The decline in equity is primarily attributable to the dividend payouts of € 55,741 thousand, the reclassification of a future financial settlement totalling € 23,377 thousand as a non-current financial liability, the interest-related change of € 15,155 thousand in actuarial losses including tax effects not recognised in profit or loss and the change of € 16,221 thousand in the reserve for translation differences. This was offset by the capital increase from the dividend payment in return for non-cash contributions amounting to € 24,666 thousand and the pandemic-related decline in net income of € 74,133 thousand in the reporting period.

External minimum capital requirements were fulfilled at all agreed audit points throughout the reporting year. See Note 38 for more information.