3. Consolidation, accounting and valuation principles

3.1 Basis for preparation of the financial statements

The condensed interim consolidated financial statements for the period from 1 January to 30 June 2019 were prepared in compliance with the rules of IAS 34.

The IFRS requirements that apply in the European Union have been met in full.

The condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of 31 December 2018.

3.2 Principal accounting and valuation methods

The accounting and valuation methods used for the preparation of the condensed interim consolidated financial statements correspond to the methods used in the preparation of the consolidated financial statements as of 31 December 2018.

The company started applying the following new standards on 1 January 2019:

  • Amendments to IAS 19 Plan Amendment, Curtailment or Settlement
  • Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures
  • IFRS 16 Leases
  • Amendments to IFRS 9 Prepayment Features with Negative Compensation
  • IFRIC 23 Accounting for Uncertainties in Income Taxes
  • Improvements to IFRS 2015–2017 Cycle

IFRS 16 entails major amendments to reporting standards for lessees. In general, all leases will be recognised as rights of use for accounting purposes as of the time of initial application.

The HHLA Group shall take into account the modified retrospective approach during the initial application of IFRS 16. With this method, the comparative prior-year figures are not adjusted; changeover effects must therefore be recognised as adjustments to revenue reserves as of 1 January 2019. As part of the modified retrospective approach, an average incremental borrowing rate of 2.5 % as of 1 January 2019 has been used to calculate the lease liability. Within Germany, the incremental borrowing rate ranges between 0.4 % and 2.2 %. As a result of the materiality of longer-term lease agreements, the average German incremental borrowing rate is 2.0 %. Outside of Germany, this value ranges between 2.1 % and 12.7 %. As a result of the higher proportion of countries with lower financing costs, the average incremental borrowing rate outside of Germany is 3.5 %.

In respect of many of the contracts, HHLA recognises the usage rights for leased assets under property, plant and equipment in the amount of the corresponding present value of lease liabilities at first-time application, meaning that no equity effects will arise at this time. Due to their material importance, usage rights for rental agreements for space at the Port of Hamburg, which were previously recognised as operating leases, will be recognised at their carrying amounts, as though IFRS 16 had applied since the start of the lease. This results in significant changeover effects as of 1 January 2019, which are shown as adjustments to revenue reserves.

As a lessee, HHLA takes the opportunity not to recognise usage rights and lease liabilities for short-term leases whose term is a maximum of twelve months, or leases where the underlying asset is of low value. For these leases, lease payments are recorded as expenses instead.

The following table shows the reconciliation of carrying amounts from IAS 17 to IFRS 16:

Reconciliation of carrying amounts from IAS 17 to IFRS 16

in € thousand

 

Carrying amounts according as at 31 December 2018

 

Reclassifi­cations of finance leases

 

Adjust­ments due to IFRS 16 (modified retroactively, Option a)

 

Adjustments due to IFRS 16 (modified retroactively, Option b)

 

Carrying amounts according as at 1 January 2019

Assets

 

 

 

 

 

 

 

 

 

 

Option a): Assets are measured using the incremental borrowing rate at the date of transition as if IFRS 16 had been applied from the inception of the lease (IFRS 16.C8 (b) (i)).

Option b): The asset is measured at the same value as the liability at the time of initial application (IFRS 16.C8 (b) (ii)).

Property, plant and equipment

 

 

 

 

 

 

 

 

 

 

Land/buildings

 

453,200

 

- 91,285

 

 

 

 

 

361,915

Rights of use - Land/buildings

 

0

 

91,285

 

341,384

 

161,021

 

593,690

Technical equipment and machinery

 

306,095

 

- 14,596

 

 

 

 

 

291,499

Rights of use - Technical equipment and machinery

 

0

 

14,596

 

 

 

208

 

14,804

Other plant, operating and office equipment

 

219,464

 

- 34,525

 

 

 

 

 

184,939

Rights of use - Other plant, operating and office equipment

 

0

 

34,525

 

 

 

49,532

 

84,057

Payments on account and plants under construction

 

81,504

 

 

 

 

 

- 9,267

 

72,237

Deferred taxes

 

82,126

 

 

 

28,356

 

 

 

110,482

 

 

 

 

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

Retained earnings of the parent company

 

512,369

 

 

 

- 55,252

 

1,003

 

458,120

Non-controlling interests

 

- 8,812

 

 

 

- 4,250

 

 

 

- 13,062

Other non-current provisions

 

110,138

 

 

 

 

 

- 5,920

 

104,218

Other non-current provisions from leases

 

5,920

 

 

 

 

 

- 5,920

 

0

Non-current liabilities to related parties

 

104,999

 

 

 

408,193

 

 

 

513,192

Liabilities from leases
Maturity 1 to 5 years

 

2,796

 

 

 

97,120

 

 

 

99,916

Liabilities from leases
Maturity over 5 years

 

102,203

 

 

 

311,073

 

 

 

413,276

Non-current financial liabilities

 

429,886

 

 

 

 

 

187,170

 

617,056

Liabilities from leases
Maturity 1 to 5 years

 

10,839

 

 

 

 

 

56,414

 

67,253

Liabilities from leases
Maturity over 5 years

 

22,946

 

 

 

 

 

130,756

 

153,702

Other current provisions

 

28,045

 

 

 

- 1,371

 

- 371

 

26,303

Other current provisions from leases

 

1,742

 

 

 

- 1,371

 

- 371

 

0

Current liabilities to related parties

 

7,940

 

 

 

22,420

 

 

 

30,360

Liabilities from leases

 

471

 

 

 

22,420

 

 

 

22,891

Current financial liabilities

 

82,684

 

 

 

 

 

19,612

 

102,296

Liabilities from leases

 

5,124

 

 

 

 

 

19,612

 

24,736

The reconciliation of off-balance sheet lease obligations as of 31 December 2018 with lease obligations recorded on the balance sheet as of 1 January 2019 is as follows:

Reconciliation

in € thousand

 

 

Minimum lease payments due to non-cancellable operating leases as of December 31, 2018

 

1,015,936

Minimum lease payments on finance lease liabilities as of 31 December 2018

 

271,275

Less application facilitation for short-term leases

 

- 8,214

Less application facilitation for leases of low value assets

 

- 209

Less conditional rental payments

 

- 112,997

Less other

 

- 34,535

Gross lease liabilities under IFRS 16 as of January 1, 2019

 

1,131,256

Less interest portion included in lease liabilities

 

- 349,482

Lease liabilities according to IFRS 16 as of January 1, 2019

 

781,774

Less present value of liabilities from finance leases according to IAS 17 as of December 31, 2018

 

- 144,379

Additional lease liabilities due to the first-time adoption of IFRS 16 as of January 1, 2019

 

637,395

No effects on the consolidated financial statements arise from the application of any other standards.

The following new amendments to standards can be applied on a voluntary basis for the financial year under review. They have not been applied by HHLA:

  • Amendments to IAS 1 and IAS 8 Definition of Materiality
  • Amendments to IFRS 3 Definition of a Business
  • Amendments to References to the Conceptual Framework in IFRS Standards

3.3 Changes in the group of consolidated companies

The company TIP Žilina, s.r.o., Dunajska Streda, Slovakia, was included in the HHLA group of consolidated companies for the first time in the first quarter of 2019. This company was founded in 2017 and began operating in the second quarter of 2019.

With the participation and shareholder agreement of 20 December 2018, HHLA acquired 25.1 % of the shares in Spherie UG (limited liability), Hamburg, as of the transfer date on 1 January 2019. The object of the company is the development, production and distribution of aerial systems exclusively for the capture of 360º sensor data, as well as services connected with the aerial systems to capture 360º sensor data. The company was included in HHLA’s consolidated financial statements in the first quarter of 2019 using the equity method and is assigned to the Logistics segment.

No other changes in the group of consolidated companies took place during the reporting period.