44. Notes to the Segment Report

The Group’s segment report is prepared in accordance with the provisions of IFRS 8 Operating Segments and requires reporting on the basis of the internal reports to the Executive Board for the purpose of controlling the commercial activities. The segment performance indicator used is the internationally customary key figure EBIT (earnings before interest and taxes), which serves to measure the success in each segment and therefore aids the internal control function.

The accounting and valuation principles applied for internal reporting comply with the principles applied by the Group described in Note 6 “Accounting and Valuation Principles”.

In line with the Group’s reporting structure for management purposes and in accordance with the definition in IFRS 8, the following four independent segments were identified:

Container

The Container segment pools the Group’s container handling operations. The Group’s services in this segment consist primarily of handling container ships and transferring containers to other carriers (e.g. rail, truck or feeder ship). HHLA operates three container terminals in Hamburg (Altenwerder, Burchardkai and Tollerort) and another container terminal in Odessa, Ukraine. The portfolio is rounded off by supplementary container services, such as maintenance and repairs provided by its subsidiary HCCR.

Intermodal

As a core element of HHLA’s business model, which is vertically integrated along the transportation chain, the Intermodal segment provides a comprehensive seaport-hinterland rail and truck network. The rail companies METRANS and POLZUG and the trucking firm CTD complete HHLA’s range of services in this field. As of 2018, the activities of POLZUG have been fully integrated into the METRANS organisation.

Logistics

The Logistics segment encompasses specialist handling services and consulting. Its service portfolio comprises stand-alone logistics services and entire process chains for the international procurement and distribution of merchandise. The segment also provides consulting and management services for clients in the international port and transport sectors.

Real Estate

This segment is equivalent to the Real Estate subgroup. Its business activities encompass services such as the development, letting and management of properties. These include real estate in the Speicherstadt historical warehouse district and on the northern banks of the river Elbe (fish market area). Furthermore, industrial logistics properties and land in and around the Port of Hamburg are managed by the Holding/Other division.

The Holding/Other division used for segment reporting does not represent an independent business segment as defined by IFRS 8. However, it has been allocated to the segments within the Port Logistics subgroup in order to provide a complete and clear picture.

Due to the structure of the Group, it is necessary to issue a large number of invoices for inter-segmental services. These predominantly relate to the use of real estate, IT services, administrative services, workshop services and staff provided by the holding company. As a rule, services are valued at cost price. Transfer prices may not exceed the market price of the service in question. If the company providing the service predominantly sells the relevant service on the market outside the Group, it may charge the market price, even if the cost price is lower.

The details of the reconciliation of the segment variables with the corresponding Group variables are as follows:

Earnings

The reconciliation of the segment variable EBIT to consolidated earnings before taxes (EBT) incorporates transactions between the segments and the subgroups for which consolidation is mandatory, along with the proportion of companies accounted for using the equity method, net interest income and the other financial result.

Reconciliation of the Segment EBIT with Consolidated Earnings before Taxes (EBT)

in € thousand

 

2017

 

2016

Total segment earnings (EBIT)

 

171,306

 

162,726

Elimination of business relations between segments and subgroups

 

1,882

 

1,284

Group earnings (EBIT)

 

173,188

 

164,010

Earnings from associates accounted for using the equity method

 

4,778

 

4,677

Net interest

 

- 30,675

 

- 22,664

Earnings before tax (EBT)

 

147,291

 

146,023

Segment Assets

The reconciliation of segment assets to Group assets incorporates not only items and financial investments for which consolidation is mandatory, but also claims arising from current and deferred income taxes and financial funds which are not to be assigned to segment assets.

Reconciliation of the Segment Assets with Group Assets

in € thousand

 

31.12.2017

 

31.12.2016

Segment assets

 

1,631,145

 

1,640,634

Elimination of business relations between segments and subgroups

 

- 661,019

 

- 652,840

Current assets before consolidation

 

554,127

 

547,461

Financial assets

 

18,116

 

17,212

Deferred tax

 

87,093

 

82,720

Income tax receivables

 

4,302

 

488

Cash, cash equivalents and short-term deposits

 

201,514

 

177,192

Group assets

 

1,835,278

 

1,812,867

Other Segment Information

The reconciliation to Group investments totalling € - 176 thousand contains the elimination of internal invoices for inter-segmental services relating to the generation of intangible assets (previous year: € - 1,170 thousand for the elimination of internal invoices for services relating to the sale of property, plant and equipment and the generation of intangible assets).

In relation to the reconciliation of depreciation and amortisation amounting to € - 2,137 thousand (previous year: € - 2,200 thousand), the entire amount is attributable to the elimination of inter-company profits between the segments and the subgroups.

The reconciliation of non-cash items amounting to € 59 thousand (previous year: € 2 thousand) includes the elimination of intercompany profits and transactions between the segments and the subgroups for which consolidation is mandatory.

Information about Geographical Regions

For information by region, the segment revenue and disclosures on non-current segment assets are broken down in accordance with the affiliates’ respective locations.

Information about Geographical Regions

 

 

Germany

 

EU

 

Outside EU

 

Total

 

Reconciliation with Group assets

 

Group

in € thousand

 

2017

 

2016

 

2017

 

2016

 

2017

 

2016

 

2017

 

2016

 

2017

 

2016

 

2017

 

2016

The reconciliation of long-term segment assets to Group assets includes, in addition to consolidation items between the segments, in particular current assets, financial assets as well as current and deferred income taxes.

Segment income

 

849,845

 

794,038

 

354,585

 

326,858

 

47,376

 

56,772

 

1,251,806

 

1,177,668

 

0

 

0

 

1,251,806

 

1,177,668

Non-current segment assets

 

906,677

 

906,315

 

308,340

 

288,096

 

27,776

 

34,606

 

1,242,793

 

1,229,017

 

592,485

 

583,850

 

1,835,278

 

1,812,867

Investments in non-current segment assets

 

96,503

 

97,098

 

44,575

 

40,701

 

1,485

 

517

 

142,563

 

138,316

 

0

 

0

 

142,563

 

138,316

Information About Key Clients

Revenue of € 164,671 thousand (previous year: € 128,220 thousand) from a single client exceeds 10 % of Group revenue and relates to the Container and Intermodal segments.